DEF: Nauticus Robotics Seeks Shareholder Approval for Reverse Stock Split and Incentive Plan Amendment

Nauticus Robotics is asking shareholders to vote on proposals including a reverse stock split, an amendment to the 2022 Omnibus Incentive Plan, and the election of a Class III director at its upcoming annual meeting.

Summary

• Nauticus Robotics will hold its 2025 Annual Meeting of Shareholders on June 9, 2025, in Houston, Texas.
• Shareholders will vote on five proposals, including the election of one Class III director, ratification of Whitley Penn, LLP as the independent accounting firm, and an amendment to the 2022 Omnibus Incentive Plan to increase available shares to 2,750,000.
• A key proposal involves authorizing the Board to enact a reverse stock split at a ratio between one to two and one to nine.
• The board recommends voting for all proposals.
• The company's proxy materials and 2024 Annual Report are available online.

Sentiment

Score: 6

Explanation: The document is neutral in tone, presenting factual information about the upcoming shareholder meeting and proposals. The inclusion of risks associated with the reverse stock split tempers any potential positive sentiment.

Positives

• The proposed reverse stock split aims to avoid potential delisting from NASDAQ and improve the marketability and liquidity of the common stock.
• Increasing the number of shares available under the 2022 Omnibus Incentive Plan will help attract, retain, and motivate key personnel.
• The company has a clawback policy in place to recover compensation in the event of financial restatements.

Negatives

• The company is seeking shareholder approval for a reverse stock split, which can be perceived negatively by some investors.
• The company has had issues with Section 16(a) reporting compliance, with some directors and officers filing reports late.
• The company restated its unaudited condensed consolidated financial statements as of and for the quarterly periods ended March 31, June 30 and September 30, 2024.

Risks

• The company acknowledges that the price per share of common stock after the reverse stock split may not reflect the ratio implemented and may not be maintained.
• The company may still run the risk of non-compliance under the listing standards of NASDAQ in the future, which could cause the Company to be delisted or subject to delisting.
• The trading liquidity of the company's common stock could be adversely affected by the reduced number of shares outstanding after the reverse stock split.
• The company completed a reverse stock split on July 18, 2024 and it is currently within one year period since the July 2024 Reverse Stock Split.

Future Outlook

The company projects that the shares available under the Plan after the proposed amendment will be sufficient to provide grants until 2026.

Management Comments

• On behalf of the Board and the executive team of the Company, I thank you for your support and participation.
• The Board of Directors believes that a proposed reverse stock split authorization is desirable to avoid future delisting by NASDAQ or delisting warnings from NASDAQ, and to ensure that shares will be available, if needed, for issuance of grants of equity awards, possible acquisitions of companies, products, or technologies, potential business and financial transactions, and other corporate purposes.

Industry Context

The document does not provide explicit industry context beyond the company's operations in robotics and related technology. The reverse stock split is a common strategy for companies facing potential delisting from exchanges like NASDAQ.

Comparison to Industry Standards

• The document does not provide specific comparisons to industry standards.
• The executive compensation discussion mentions considering data from published survey sources to evaluate executive compensation, but does not provide specific benchmarks.
• The document does not provide specific comparisons to industry standards.

Related Party Transactions

• As of December 31, 2024 ATW Special Situations I LLC (ATW I), and Material Impact Fund II, L.P. (MIF) held 336 and 106,194 warrants (the SPA Warrants), issued pursuant to that certain Securities Purchase Agreement dated December 16, 2021, as amended (the SPA Warrants), respectively.
• On January 30, 2024, the Company and certain of its subsidiaries and ATW I entered into an Amendment and Exchange Agreement (the Amendment and Exchange Agreement), pursuant to which ATW I transferred its existing 5% Original Issue Discount Senior Secured Convertible Debenture to the Company in exchange for a new Original Issue Discount Exchanged Senior Secured Convertible Debenture due September 9, 2026 (the New Debenture) in the aggregate principal amount of $29,591,600.
• On November 4, 2024, the Company entered into the Second Amendment and Exchange Agreement (the Exchange Agreement), by and among the Company and ATW I, SLS and MIF pursuant to which such investors would exchange the remaining portion of the amount outstanding under the 5% original issue discount senior secured convertible debentures and certain other amounts outstanding with respect thereto, into shares of Series A preferred convertible stock.
• On November 4, 2024, the Company entered into a Securities Purchase Agreement with ATW I, pursuant to which ATW I purchased, in a private placement, $1,150,000 in principal amount of debentures, with an option to purchase up to an additional aggregate of $20,000,000 in principal amount of original issue discount senior secured convertible debentures (the November 2024 Debentures).
• On September 18, 2023, the Company entered into a convertible senior secured term loan agreement (the 2023 Term Loan Agreement) with ATW II as collateral agent and lender, and Transocean Finance Limited, ATW I, MIF and RCB Equities #1, LLC, as lenders.
• On January 30, 2024, the Company also entered into a senior secured term loan agreement (the 2024 Term Loan Agreement) with ATW Special Situations Management LLC, as collateral agent (in such capacity, the Collateral Agent) and lender, and ATW Special Situations III LLC (ATW III), MIF, VHG Investments LLC, ATW Special Situations II LLC (ATW II) and ATW I, as lenders.
• Flexible Consulting, LLC is considered to be a related party from December 1, 2023.

Stakeholder Impact

• Shareholders will be directly impacted by the reverse stock split and the potential dilution from increased shares available under the incentive plan.
• Employees and executives may be impacted by changes to the incentive plan and equity compensation.
• The company's ability to attract and retain talent could be affected by the proposed changes to the incentive plan.

Next Steps

• Shareholders are urged to review the proxy materials and vote as soon as possible.
• The company will announce preliminary voting results during the Meeting and report the final voting results within four business days of the Meeting on a Current Report on Form 8-K.
• If the stockholders approve the Amendment to the Long-Term Incentive Plan, the company intends to file with the SEC a registration statement on Form S-8 covering the additional 1,762,699 shares of common stock issuable under the Long-Term Incentive Plan.

Key Dates

Keywords

reverse stock split, proxy statement, incentive plan, shareholders, directors, governance, compensation, Nauticus Robotics, stock options, annual meeting