As filed with the U.S. Securities and Exchange Commission on August 5, 2022

Registration No. 333-262431

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________

Amendment No. 9 to
Form S
-4
REGISTRATION STATEMENT

UNDER
THE SECURITIES ACT OF 1933

_____________________

CLEANTECH ACQUISITION CORP.

(Exact name of registrant as specified in its charter)

_____________________

Delaware

 

6770

(State or other jurisdiction of
incorporation or organization)

 

(Primary Standard Industrial
Classification Code Number)

207 West 25th Street, 9th Floor
New York, NY 10001
(212) 494
-9005

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

_____________________

Eli Spiro
Chairman and Chief Executive Officer

CleanTech Acquisition Corp.

207 West 25th Floor, 9th Floor
New York, NY 10001

(212) 494-9005

(Name, address, including zip code, and telephone number, including area code, of agent for service)

_____________________

Copies to:

Mitchell S. Nussbaum
Giovanni Caruso
Jane Tam
Loeb & Loeb LLP
345 Park Avenue
New York, NY 10154
Telephone: (212) 407
-4000

 

Michael Blankenship
Douglas C. Lionberger
Winston & Strawn LLP
800 Capitol Street, Suite 2400
Houston, TX 77002
-2925
Telephone: (713) 651
-2600

_____________________

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement and the satisfaction or waiver of all other conditions under the Merger Agreement described herein.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box:

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b–2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

   

Non-accelerated filer

 

 

Smaller reporting company

 

           

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. 

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

 

Exchange Act Rule 13e-4 (i) (Cross-Border Issuer Tender Offer)

 

   
   

Exchange Act Rule 14d-1 (d) (Cross-Border Third-Party Tender Offer)

 

   

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

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The information in this proxy statement/prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus is not an offer to sell and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

PRELIMINARY PROXY STATEMENT/PROSPECTUS SUBJECT TO COMPLETION, DATED
AUGUST 5, 2022

PROPOSED MERGER

YOUR VOTE IS VERY IMPORTANT

Dear Stockholders:

You are cordially invited to attend the special meeting of the stockholders (the “Meeting”) of CleanTech Acquisition Corp. (“CleanTech” or “CLAQ”), which will be held at            a.m./p.m., Eastern time, on             , 2022. The Board of Directors has determined to convene and conduct the Meeting in a virtual meeting format at             . Stockholders will NOT be able to attend the Meeting in-person. This proxy statement/prospectus includes instructions on how to access the virtual Meeting and how to listen, vote, and submit questions from home or any remote location with internet connectivity.

CleanTech is a Delaware blank check company established for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business transaction with one or more businesses or entities, which we refer to as a “target business.” Holders of CleanTech’s Common Stock, will be asked to approve, among other things, the Merger Agreement, dated as of December 16, 2021, as amended on January 30 and June 6, 2022 (the “Merger Agreement”), by and among CleanTech, CleanTech Merger Sub, Inc., a Texas corporation and wholly-owned subsidiary of CleanTech (“Merger Sub”) and Nauticus Robotics, Inc. (formerly known as “Houston Mechatronics, Inc.”), a Texas corporation (“Nauticus” or “Nauticus Robotics”), and the other related Proposals.

Upon the closing of the transactions contemplated in the Merger Agreement, Merger Sub will merge with and into Nauticus (the “Business Combination”) with Nauticus surviving the Merger as a wholly owned subsidiary of CleanTech. In addition, in connection with the consummation of the Merger, CleanTech will be renamed “Nauticus Robotics, Inc.” and the current Nauticus Robotics, Inc. will be renamed “Nauticus Robotics (Texas), Inc.” The transactions contemplated under the Merger Agreement relating to the Merger are referred to in this proxy statement/prospectus as the “Business Combination” and the combined company after the Business Combination is referred to in this proxy statement/prospectus as the “Combined Company.”

Pursuant to the Merger Agreement, as amended, the following actions will be taken, and the following consideration will be paid, in connection with the Business Combination:

Preferred Stock.    Immediately prior to the Effective Time, each share of Nauticus Preferred Stock that is issued and outstanding immediately prior to such time shall automatically convert into shares of Nauticus Common stock, par value $0.01 per share (the “Nauticus Common Stock”), in accordance with its Certificate of Incorporation (collectively, the “Nauticus Preferred Stock Conversion”). An aggregate of 15,062,524 shares of CLAQ Common Stock will be issued to the holders of Nauticus Preferred Stock.

Convertible Notes.    Immediately prior to the Effective Time, each of (i) that certain Unsecured Convertible Promissory Note, dated June 19, 2021, by and between Goradia Capital, LLC and Nauticus, as amended on December 16, 2021, (ii) that certain Unsecured Convertible Promissory Note, August 3, 2021, by and between Material Impact Fund II, L.P. and Nauticus, as amended on December 16, 2021, (iii) that certain Unsecured Convertible Promissory Note, dated October 22, 2021, by and between In-Q-Tel, Inc. and Nauticus, as amended on December 16, 2021, (iv) that certain Unsecured Convertible Promissory Note, dated July 28, 2020, by and between Schlumberger Technology Corporation and Nauticus, as amended on December 16, 2021, and (v) that certain Unsecured Convertible Promissory Note, dated December 7, 2020, by and between Transocean Inc. and Nauticus, as amended on December 16, 2021 (each, a “Nauticus Convertible Note” and collectively, the “Nauticus Convertible Notes”) shall automatically convert into shares of Nauticus Common Stock in accordance with the terms of each such Nauticus Convertible Note (collectively, the “Nauticus Convertible Notes Conversion”). An aggregate of 5,299,543 shares of CLAQ Common Stock will be issued to the holders of Nauticus Convertible Notes.

Common Stock.    At the Effective Time, following the Nauticus Preferred Stock Conversion and Nauticus Convertible Notes Conversion, each share of Nauticus Common Stock (including shares of Nauticus Common Stock outstanding as a result of the Nauticus Preferred Stock Conversion and Nauticus Convertible Notes Conversion, but excluding shares of the holders of which perfect rights of appraisal under Delaware law) will be converted into the right

 

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to receive the Per Share Merger Consideration of 14.2069 (as defined below) shares of CLAQ Common Stock and the Earnout Shares (as defined below). An aggregate of 9,669,216 shares of CLAQ Common Stock will be issued to the holders of Nauticus Common Stock.

Stock Options.    At the Effective Time, each outstanding option to purchase shares of Nauticus Common Stock (a “Nauticus Option”), whether or not then vested and exercisable, will be assumed by CLAQ and converted automatically (and without any required action on the part of such holder of outstanding option) into an option to purchase shares of the CLAQ’s Common Stock equal to the number of shares determined by multiplying the number of shares of the Nauticus Common Stock subject to such Nauticus Option immediately prior to the Effective Time by the Exchange Ratio of 14.2069 (as defined below), which product shall be rounded down to the nearest whole number of shares, at a per share exercise price determined by dividing the per share exercise price of such Nauticus Option immediately prior to the Effective Time by the Exchange Ratio. Options to purchase an aggregate of 3,970,266 shares of CLAQ Common Stock will be issued to the holders of Nauticus Options.

Earnout Shares.    Following the closing of the merger, former holders of shares of Nauticus Common Stock (including shares received as a result of the Nauticus Preferred Stock conversion and the Nauticus Convertible Notes conversion, the “Stockholder Earnout Group”) shall be entitled to receive their pro rata share of up to 7,500,000 additional shares of Combined Company Common Stock (the “Earnout Shares”). The Earnout Shares will be released and delivered to the Stockholder Earnout Group upon occurrence of the following (each, a “Triggering Event”):

(i)     one-half of the Escrow Shares will be released if, within a 5-year period following the signing date of the Merger Agreement, the volume-weighted average price of the Combined Company Common Stock equals or exceeds $15.00 per share over any 20 trading days within a 30-day trading period;

(ii)    one-quarter of the Escrow Shares will be released if, within a 5-year period following the signing date of the Merger Agreement, the volume-weighted average price of the Combined Company Common Stock equals or exceeds $17.50 per share over any 20 trading days within a 30-day trading period; and

(iii)   one-quarter of the Escrow Shares will be released if, within a 5-year period following the signing date of the Merger Agreement, the volume-weighted average price of the Combined Company Common Stock equals or exceeds $20.00 per share over any 20 trading days within a 30-day trading period.

On or about December 14, 2021, CLAQ entered into subscription agreements, with certain investors pursuant to which, among other things, CLAQ agreed to issue and sell, in a private placement to close immediately prior to the closing of the Business Combination, an aggregate of 3,530,000 shares of our common stock for $10.00 per share for a total of $35.3 million (the “Equity Financing”). On December 16, 2021, CLAQ entered into a Securities Purchase Agreement with certain investors purchasing up to an aggregate of $40.0 million in principal amount of secured debentures (the “Debentures”) and warrants substantially concurrently with the closing of the Business Combination. The number of shares of common stock into which the Debentures are convertible is equal to 120% of the outstanding principal amount of the Debentures divided by the conversion price of $15.00, and the number of shares of common stock into which the associated warrants are exercisable is equal to 120% of the outstanding principal amount of the Debentures divided by the conversion price, with an exercise price equal to $20, subject to adjustment (the “Debt Financing,” and together with the Equity Financing, the “PIPE Investment”). There will be an original issue discount of 2% from the issued amount of the Debentures. Interest will accrue on all outstanding principal amount of the Debentures at 5% per annum, payable quarterly. The Debentures will be secured by first priority interests, and liens on, all present and after-acquired assets of the Combined Company, and will mature on the fourth anniversary of the date of issuance. As of the date of this proxy statement/prospectus, ATW Special Situations I LLC (“ATW”) is the only purchaser and has subscribed for Debentures in the an aggregate principal amount of $37,959,184 which is convertible into 3,036,735 shares of the Combined Company’s common stock and associated warrants for an additional 3,036,735 shares of the Combined Company’s common stock. ATW is managed by ATW Partners Opportunities Management, LLC, which is an affiliate of Chardan Capital Markets, LLC (“Chardan”), and our director, Mr. Jonas Grossman, is the Managing Partner and President of Chardan. Chardan will not receive any fees or compensation for ATW’s participation in the Debt Financing.

The obligations to close the Debt Financing are conditioned upon, among other things, (i) raising $25,000,000 in equity financing from strategic investors, (ii) hiring a chief financial officer with public company experience, and (iii) all conditions precedent to the Merger set forth in the Merger Agreement having been satisfied or waived. The Equity Financing will satisfy the closing condition related to the equity financing requirement for the Debt

 

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Financing, and the PIPE Investment alone will satisfy the Minimum Cash Condition under the Merger Agreement. Mr. Rangan Padmanabhan, Nauticus’ current CFO will be the CFO of the Company effective as of the date of the merger, satisfying the closing condition related to the hiring of a CFO with public company experience requirement for the Debt Financing.

It is anticipated that upon completion of the Business Combination and assuming minimum redemptions by CLAQ public stockholders, CLAQ’s public stockholders (other than the Equity Financing investors) would retain an ownership interest of approximately 5.5% in the Combined Company, the Equity Financing investors will own approximately 7.4% of the Combined Company (such that the public stockholders, including the Equity Financing investors, would own approximately 12.9% of the Combined Company), the Co-Sponsors, officers, directors and other holders of founder shares will retain an ownership interest of approximately 9.0% of the Combined Company and the Nauticus stockholders will own approximately 78.1% (including the 7,500,000 Earnout Shares) of the Combined Company. The ownership percentage with respect to the Combined Company does not take into account (i) the redemption of any shares by the CLAQ public stockholders, (ii) the issuance of any additional shares upon the closing of the Business Combination under the 2015 Equity Incentive Plan, or (iii) the issuance of the Debentures and associated warrants in connection with the Debt Financing. If the actual facts are different from these assumptions (which they are likely to be), the percentage ownership retained by the CLAQ stockholders will be different. See “Unaudited Pro Forma Condensed Combined and Consolidated Financial Information.”

In connection with CLAQ’s Special Meeting of Stockholders on July 18, 2022 where the stockholders approved certain proposals giving CLAQ the right to extend the date by which it has to complete a business combination six (6) times for an additional one (1) month each time, from July 19, 2022 to January 19, 2023, a total of 15,466,711 shares were tendered for redemption. Approximately $156.5 million was withdrawn from CLAQ’s trust account (the “Trust Account”) to pay for the redemption, leaving approximately $18.1 million in the Trust Account as of August 1, 2022. As a result of the redemptions, we now have less liquidity and fewer round-lot holders of our public shares, which may make it more difficult to meet Nasdaq listing requirements. Since it is a condition to closing to receive the approval for listing by Nasdaq of the shares of CLAQ’s Common Stock to be issued in connection with the transactions contemplated by the Merger Agreement, CLAQ’s reduced public float may make it more difficult for us to meet one of the Nasdaq listing requirements, and to consummate the Business Combination.

On            , 2022, the record date for the Meeting of stockholders, the last sale price of CLAQ’s Common Stock was $            per share.

Each stockholder’s vote is very important. Whether or not you plan to participate in the virtual Meeting, please submit your proxy card without delay. Stockholders may revoke proxies at any time before they are voted at the meeting. Voting by proxy will not prevent a stockholder from voting virtually at the Meeting if such stockholder subsequently chooses to participate in the Meeting.

We encourage you to read this proxy statement/prospectus carefully. In particular, you should review the matters discussed under the caption “Risk Factors” beginning on page 46.

CLAQ’s board of directors recommends that CLAQ stockholders vote “FOR” approval of each of the Proposals.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in the Business Combination or otherwise, or passed upon the adequacy or accuracy of this proxy statement. Any representation to the contrary is a criminal offense.

This proxy statement/prospectus is dated            , 2022, and is first being mailed to stockholders of CLAQ and Nauticus on or about            , 2022.

/s/ Eli Spiro

   

Eli Spiro

   

Chief Executive Officer

   

CleanTech Acquisition Corp.

   

            , 2022

   

 

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CLEANTECH ACQUISITION CORP.
207 West 25
th Street, 9th Floor
New York, NY 10001
Telephone: (212) 494-9005

NOTICE OF SPECIAL MEETING OF
CLEANTECH ACQUISITION CORP. STOCKHOLDERS
To Be Held on
            , 2022

To CleanTech Acquisition Corp. Stockholders:

NOTICE IS HEREBY GIVEN, that you are cordially invited to attend a meeting of the stockholders of CleanTech Acquisition Corp. (“CLAQ,” “we”, “our”, or “us”), which will be held at            a.m./p.m., Eastern time, on            , 2022, at            (the “Meeting”). In light of COVID-19 we will hold the Meeting virtually. You can participate in the virtual Meeting as described in “The Meeting.”

During the Meeting, CLAQ’s stockholders will be asked to consider and vote upon the following proposals, which we refer to herein as the “Proposals”:

1.      To consider and vote upon a proposal to approve the transactions contemplated under the Merger Agreement, dated as of December 16, 2021, as amended on January 30 and June 6, 2022 (the “Merger Agreement”), by and among CleanTech, CleanTech Merger Sub, Inc., a Texas corporation and wholly-owned subsidiary of CleanTech (“Merger Sub”) and Nauticus Robotics, Inc., a Texas corporation (“Nauticus” or “Nauticus Robotics”), (the “Business Combination”), a copy of which is attached to this proxy statement/prospectus as Annex A. This Proposal is referred to as the “Business Combination Proposal” or “Proposal 1.”

2.      To consider and vote upon a proposal to approve the Second Amended and Restated Certificate of Incorporation of CleanTech, a copy of which is attached to this proxy statement/prospectus as Annex B (the “Amended Charter”) to, among other things, change CleanTech’s name to “Nauticus Robotics, Inc.,” to be effective upon the consummation of the Business Combination. This Proposal is referred to as the “Charter Approval Proposal” or “Proposal 2.”

3.      To consider and vote upon a proposal to approve the Amended and Restated Bylaws of CleanTech, a copy of which is attached to this proxy statement/prospectus as Annex C (the “Amended Bylaws”) to, among other things, to be effective upon the consummation of the Business Combination. This Proposal is referred to as the “Bylaws Proposal” or “Proposal 3.”

4.        To approve and adopt, on a non-binding advisory basis, certain differences, in the governance provisions set forth in the Amended Charter, as compared to our Current Charter, which are being presented in accordance with the requirements of the U.S. Securities and Exchange Commission (the “SEC”) as five (5) separate sub-proposals. These Proposals are referred to as the “Governance Proposals” or “Proposals 4A-4E.”

5       To consider and vote upon a proposal to elect, effective as of the consummation of the Business Combination, Nicolaus Radford, Eli Spiro, Mark Mey, Lisa Porter, Jim Bellingham, Adam Sharkawy, John W. Gibson Jr. and Joseph W. Dyer to serve on the Board until their respective successors are duly elected and qualified. This Proposal is referred to as the “Directors Proposal” or “Proposal 5.”

6.      To consider and vote upon a proposal to approve the Nauticus Robotics, Inc. 2022 Incentive Award Plan (the “Incentive Award Plan”), a copy of which is to be attached to this proxy statement/prospectus as Annex D, to be effective upon the consummation of the Business Combination. This Proposal is referred to as the “Stock Plan Proposal” or “Proposal 6.”

7.      To consider and vote upon a proposal to approve for purposes of complying with Nasdaq Listing Rule 5635(a) and (b), the issuance of more than 20% of the issued and outstanding shares of common stock and the resulting change in control in connection with the Merger. This Proposal is referred to as the “Nasdaq Merger Proposal” or “Proposal 7.”

 

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8.      To consider and vote upon a proposal to approve for purposes of complying with Nasdaq Listing Rule 5635(d), the issuance or potential issuance of more than 20% of the common stock in connection with the PIPE Investment in connection with the Business Combination. This Proposal is referred to as the “Nasdaq PIPE Proposal” or “Proposal 8.”

9.      To consider and vote upon a proposal to approve the adjournment of the Meeting by the chairman thereof to a later date, if necessary, under certain circumstances, including for the purpose of soliciting additional proxies in favor of the foregoing Proposals, in the event CleanTech does not receive the requisite stockholder vote to approve the Proposals. This Proposal is called the “Adjournment Proposal” or “Proposal 9.”

The Business Combination Proposal is conditioned upon the approval of Proposals 2, 3, 5, 6, 7 and 8. Proposals 2, 3, 4, 5, 6, 7 and 8 are dependent upon approval of the Business Combination Proposal. It is important for you to note that in the event that the Business Combination Proposal is not approved, CLAQ will not consummate the Business Combination. If CLAQ does not consummate the Business Combination and fails to complete an initial business combination by August 19, 2022, CLAQ will be required to dissolve and liquidate, unless we extend the date by which the Business Combination may be consummated (the “Combination Period”) for an additional one (1) month each time up to five (5) additional times until January 19, 2023.

Approval of the Business Combination Proposal, the Bylaws Proposal, Governance Proposals, the Stock Plan Proposal, the Nasdaq Merger Proposal, the Nasdaq PIPE Proposal, and the Adjournment Proposal will each require the affirmative vote of the holders of a majority of the issued and outstanding shares of common stock present in person by virtual attendance or represented by proxy and entitled to vote at the Meeting or any adjournment thereof. Approval of the Charter Approval Proposal will require the affirmative vote of a majority of the issued and outstanding shares of common stock. Approval of the Directors Proposal will require the plurality of votes cast.

As of            , 2022, there were 6,095,789 shares of common stock issued and outstanding and entitled to vote. Only CLAQ stockholders who hold common stock of record as of the close of business on            , 2022 are entitled to vote at the Meeting or any adjournment of the Meeting. This proxy statement/prospectus is first being mailed to CLAQ stockholders on or about            , 2022.

Investing in CLAQ’s securities involves a high degree of risk. See “Risk Factors” beginning on page 46 for a discussion of information that should be considered in connection with an investment in CLAQ’s securities.

YOUR VOTE IS VERY IMPORTANT. PLEASE VOTE YOUR SHARES PROMPTLY.

Whether or not you plan to participate in the virtual Meeting, please complete, date, sign and return the enclosed proxy card without delay, or submit your proxy through the internet or by telephone as promptly as possible in order to ensure your representation at the Meeting no later than the time appointed for the Meeting or adjourned meeting. Voting by proxy will not prevent you from voting your shares of common stock online if you subsequently choose to participate in the virtual Meeting. Please note, however, that if your shares are held of record by a broker, bank or other agent and you wish to vote at the Meeting, you must obtain a proxy issued in your name from that record. Only stockholders of record at the close of business on the record date may vote at the Meeting or any adjournment or postponement thereof. If you fail to return your proxy card or fail to instruct your bank, broker or other nominee how to vote, and do not participate in the virtual Meeting, your shares will not be counted for purposes of determining whether a quorum is present at, and the number of votes voted at, the Meeting.

You may revoke a proxy at any time before it is voted at the Meeting by executing and returning a proxy card dated later than the previous one, by participating in the virtual Meeting and casting your vote by hand or by ballot (as applicable) or by submitting a written revocation to Advantage Proxy, that is received by the proxy solicitor before we take the vote at the Meeting. If you hold your shares through a bank or brokerage firm, you should follow the instructions of your bank or brokerage firm regarding revocation of proxies.

CLAQ’s board of directors recommends that CLAQ stockholders vote “FOR” approval of each of the Proposals.    When you consider CLAQ’s Board of Director’s recommendation of these Proposals, you should keep in mind that CLAQ’s directors and officers have interests in the Business Combination that may conflict or differ from your interests as a stockholder. See the section titled “Proposals to be Considered by CLAQ Stockholders: The Business Combination — Interests of CLAQ’s Directors, Officers and Certain Stockholders in the Business Combination.”

 

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On behalf of the CLAQ Board of Directors, I thank you for your support and we look forward to the successful consummation of the Business Combination.

By Order of the Board of Directors,

   

/s/ Eli Spiro

   

Eli Spiro

   

Chief Executive Officer

   

CleanTech Acquisition Corp.

   

            , 2022

   

IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS.

TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST (I) IF YOU:    (A) HOLD PUBLIC COMMON STOCK, OR (B) HOLD PUBLIC COMMON STOCK THROUGH PUBLIC UNITS AND YOU ELECT TO SEPARATE YOUR PUBLIC UNITS INTO THE UNDERLYING PUBLIC COMMON STOCK PRIOR TO EXERCISING YOUR REDEMPTION RIGHTS WITH RESPECT TO THE PUBLIC COMMON STOCK; AND (II) PRIOR TO            A.M./P.M., EASTERN TIME, ON            , 2022, (A) SUBMIT A WRITTEN REQUEST TO CONTINENTAL THAT CLAQ REDEEM YOUR PUBLIC COMMON STOCK FOR CASH AND (B) DELIVER YOUR PUBLIC COMMON STOCK TO CONTINENTAL, PHYSICALLY OR ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM, IN EACH CASE, IN ACCORDANCE WITH THE PROCEDURES DESCRIBED IN THE PROXY STATEMENT/PROSPECTUS. IF THE BUSINESS COMBINATION IS NOT CONSUMMATED, THEN THE PUBLIC SHARES WILL NOT BE REDEEMED FOR CASH. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. SEE “THE MEETING — REDEMPTION RIGHTS” IN THIS PROXY STATEMENT/PROSPECTUS FOR MORE SPECIFIC INSTRUCTIONS.

 

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HOW TO OBTAIN ADDITIONAL INFORMATION

This proxy statement/prospectus incorporates important business and financial information about CLAQ that is not included or delivered herewith. If you would like to receive additional information or if you want additional copies of this document, agreements contained in the appendices or any other documents filed by CLAQ with the Securities and Exchange Commission, such information is available without charge upon written or oral request. Please contact our proxy solicitor:

ADVANTAGE PROXY
P.O. Box 13581
Des Moines, WA 98198
Toll Free: (877) 870-8565
Collect: (206) 870-8565
Email: ksmith@advantageproxy.com

If you would like to request documents, please do so no later than            , to receive them before the Meeting.    Please be sure to include your complete name and address in your request. Please see “Where You Can Find Additional Information” to find out where you can find more information about CLAQ and Nauticus.

 

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ABOUT THIS PROXY STATEMENT/PROSPECTUS

This document, which forms part of a registration statement on Form S-4 filed with the SEC by CLAQ, constitutes a prospectus of CLAQ under the Securities Act of 1933, as amended (the “Securities Act”), with respect to the shares of common stock of CLAQ to be issued to Nauticus’ stockholders under the Merger Agreement. This document also constitutes a proxy statement of CLAQ under Section 14(a) of the Exchange Act.

You should rely only on the information contained in this proxy statement/prospectus in deciding how to vote on the Business Combination. Neither CLAQ nor Nauticus has authorized anyone to give any information or to make any representations other than those contained in this proxy statement. Do not rely upon any information or representations made outside of this proxy statement. The information contained in this proxy statement/prospectus may change after the date of this proxy statement. Do not assume after the date of this proxy statement/prospectus that the information contained in this proxy statement/prospectus is still correct.

Information contained in this proxy statement/prospectus regarding CLAQ and its business, operations, management and other matters has been provided by CLAQ and information contained in this proxy statement/prospectus regarding Nauticus and its business, operations, management and other matters has been provided by Nauticus.

This proxy statement/prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities, or the solicitation of a proxy or consent, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.

MARKET AND INDUSTRY DATA

Certain information contained in this document relates to or is based on studies, publications, surveys and other data obtained from third-party sources and CLAQ’s and Nauticus’ own internal estimates and research. While we believe these third-party sources to be reliable as of the date of this proxy statement/prospectus, we have not independently verified the market and industry data contained in this proxy statement/prospectus or the underlying assumptions relied on therein. Finally, while we believe our own internal research is reliable, such research has not been verified by any independent source.

TRADEMARKS

This document contains references to trademarks, trade names and service marks belonging to other entities. Solely for convenience, trademarks, trade names and service marks referred to in this proxy statement/prospectus may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

 

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TABLE OF CONTENTS

 

PAGE

FREQUENTLY USED TERMS

 

1

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

4

QUESTIONS AND ANSWERS ABOUT THE PROPOSALS

 

6

SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

 

22

SELECTED HISTORICAL FINANCIAL DATA OF CLAQ

 

43

SELECTED HISTORICAL FINANCIAL DATA OF NAUTICUS

 

44

TRADING MARKET AND DIVIDENDS

 

45

RISK FACTORS

 

46

THE MEETING

 

94

PROPOSAL 1 — THE BUSINESS COMBINATION PROPOSAL

 

98

PROPOSAL 2 — THE CHARTER APPROVAL PROPOSAL

 

134

PROPOSAL 3 — THE BYLAWS PROPOSAL

 

137

PROPOSALS 4A-4E — THE GOVERNANCE PROPOSALS

 

138

PROPOSAL 5 — THE DIRECTORS PROPOSAL

 

141

PROPOSAL 6 — THE STOCK PLAN PROPOSAL

 

143

PROPOSAL 7 — THE NASDAQ MERGER PROPOSAL

 

149

PROPOSAL 8 — THE NASDAQ PIPE PROPOSAL

 

151

PROPOSAL 9 — THE ADJOURNMENT PROPOSAL

 

153

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

 

154

CLAQ’S BUSINESS

 

162

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF CLAQ

 

165

INFORMATION ABOUT NAUTICUS ROBOTICS, INC.

 

169

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF NAUTICUS

 

183

UNAUDITED PRO FORMA CONDENSED COMBINED AND CONSOLIDATED FINANCIAL INFORMATION

 

199

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED AND CONSOLIDATED FINANCIAL INFORMATION

 

206

DESCRIPTION OF CLAQ’S SECURITIES

 

210

COMPARISON OF STOCKHOLDERS’ RIGHTS

 

218

DIRECTORS AND EXECUTIVE OFFICERS OF CLAQ

 

229

DIRECTORS AND EXECUTIVE OFFICERS OF NAUTICUS

 

235

2021 SUMMARY COMPENSATION TABLE

 

237

OUTSTANDING EQUITY AWARDS AT 2020 FISCAL YEAR-END

 

239

DIRECTOR COMPENSATION

 

239

DIRECTORS AND EXECUTIVE OFFICERS OF THE COMBINED COMPANY AFTER THE BUSINESS COMBINATION

 

240

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

246

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

249

LEGAL MATTERS

 

255

EXPERTS

 

255

APPRAISAL RIGHTS

 

255

DELIVERY OF DOCUMENTS TO STOCKHOLDERS

 

256

TRANSFER AGENT AND REGISTRAR

 

256

SUBMISSION OF STOCKHOLDER PROPOSALS

 

256

FUTURE STOCKHOLDER PROPOSALS

 

256

WHERE YOU CAN FIND MORE INFORMATION

 

257

INDEX TO FINANCIAL STATEMENTS

 

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FREQUENTLY USED TERMS

Unless otherwise stated in this proxy statement, the terms, “we,” “us,” “our” “CleanTech” or “CLAQ” refer to CleanTech Acquisition Corp., a Delaware corporation. Further, in this document:

        “Amended Charter” means the Second Amended and Restated Certificate of Incorporation of CLAQ.

        “Board” means the board of directors of CLAQ.

        “Business Combination” means the merger contemplated by the Merger Agreement.

        “CLAQ Rights” or “Rights” means the rights as part of the Units sold by CLAQ in its IPO.

        “CLAQ Warrants” or “Warrants” means the redeemable warrants that entitle the holder thereof to purchase one share of common stock at a price of $11.50 per share.

        “Certificate of Incorporation” or “Current Charter” means CLAQ’s current Amended and Restated Certificate of Incorporation, as amended on July 19, 2022.

        “Chardan” or “Chardan Capital Markets, LLC” means Chardan Capital Markets, LLC, the representative of the underwriters in CLAQ’s initial public offering.

        “CleanTech Investments” means CleanTech Investments, LLC, an entity affiliated with certain of CLAQ’s investors and Chardan.

        “CleanTech Sponsor” means CleanTech Sponsor I LLC, an entity affiliated with certain of CLAQ’s directors and officers.

        “Closing” means the consummation of the Business Combination.

        “Closing Date” means date of the consummation of the Business Combination.

        “Co-sponsors” means CleanTech Sponsor and CleanTech Investments.

        “Code” means the Internal Revenue Code of 1986, as amended.

        “Closing Share Price” means $10.00 per share.

        “Combined Company” means CLAQ after the Business Combination, renamed “Nauticus Robotics, Inc.”

        “Combination Period” means the period of time from the closing of the IPO to consummate the initial Business Combination pursuant to CLAQ’s Current Charter.

        “common stock” means the shares of common stock, par value $0.0001 per share, of CLAQ prior to the Closing, and the Common Stock of the Combined Company following the Closing.

        “Continental” means Continental Stock Transfer & Trust Company, CLAQ’s transfer agent.

        “Duff & Phelps” means Kroll LLC operating through its Duff & Phelps Opinions Practice.

        “Effective Time” means the time at which the Business Combination becomes effective.

        “Equity Value” means the sum of (i) Three Hundred Million ($300,000,000) plus (ii) the amount by which (x) the outstanding liabilities and obligations of CLAQ with respect to the Transactions (including with respect to Indebtedness of CLAQ and Outstanding CLAQ Expenses) at the Closing (but prior to repayment thereof at the Closing) exceeds (y) $35,000,000. For the avoidance of doubt, the amount described in sub-clause (ii) of this definition of Equity Value shall not be less than zero (0) and the Equity Value shall not be less than Three Hundred Million ($300,000,000).

        “Exchange Act” means the Securities Exchange Act of 1934, as amended.

        “Exchange Ratio” means the ratio determined by dividing (a) the Per Share Merger Consideration Value, by (b) the Closing Share Price.

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        “founder shares” means an aggregate of 4,312,500 shares of common stock held by our co-sponsors, directors and officers, consisting of (i) 2,595,000 shares of common stock held by CleanTech Investments; (ii) 1,437,500 shares of common stock held by CleanTech Sponsor; and (iii) an aggregate of 280,000 shares of common stock held by CLAQ officers, directors and certain advisors.

        “GAAP” means accounting principles generally accepted in the United States of America.

        “Incentive Award Plan” means the Nauticus Robotics, Inc. 2022 Incentive Award Plan.

        “Initial Stockholders” means the Co-sponsors and any other initial holders of CLAQ common stock and Private Warrants.

        “IPO” means the initial public offering of 15,000,000 Units of CLAQ consummated on July 19, 2021, including the additional 2,250,000 Units sold to cover the over-allotment option on July 28, 2021.

        “IRS” means the United States Internal Revenue Service.

        “Meeting” means the special meeting of the stockholders of CLAQ, which will be held at            a.m./p.m., Eastern time, on            , 2022.

        “Merger Agreement” means that certain Merger Agreement, dated as of December 16, 2021, as amended on January 30 and June 6, 2022, by and among CLAQ, Merger Sub and Nauticus.

        “Merger Sub” means CleanTech Merger Sub, Inc., a Texas corporation and wholly-owned subsidiary of CLAQ.

        “Minimum Cash Condition” means the aggregate cash available to CLAQ at Closing from the Trust Account and the PIPE Investment (after giving effect to the redemption and the payment of all expenses) shall equal or exceed $50,000,000.

        “Nauticus” or “Nauticus Robotics” means Nauticus Robotics, Inc., a Texas corporation, formerly known as Houston Mechatronics, Inc.

        “Nauticus Convertible Notes” means (i) that certain Unsecured Convertible Promissory Note, dated June 19, 2021, by and between Goradia Capital, LLC and Nauticus, as amended on December 16, 2021, (ii) that certain Unsecured Convertible Promissory Note, August 3, 2021, by and between Material Impact Fund II, L.P. and Nauticus, as amended on December 16, 2021, (iii) that certain Unsecured Convertible Promissory Note, dated October 22, 2021, by and between In-Q-Tel, Inc. and Nauticus, as amended on December 16, 2021, (iv) that certain Unsecured Convertible Promissory Note, dated July 28, 2020, by and between Schlumberger Technology Corporation and Nauticus, as amended on December 16, 2021, and (v) that certain Unsecured Convertible Promissory Note, dated December 7, 2020, by and between Transocean Inc. and Nauticus, as amended on December 16, 2021 (each, a “Nauticus Convertible Note” and collectively, the “Nauticus Convertible Notes”).

        “Per Share Merger Consideration” means with respect to any share of Nauticus Common Stock, issued and outstanding immediately prior to the Effective Time, including those issued in connection with the Nauticus Preferred Stock Conversion and the Nauticus Convertible Note Conversion, a number of shares of the Combined Company’s Common Stock equal to (i) the Per Share Merger Consideration Value divided by (ii) the Closing Share Price.

        “Per Share Merger Consideration Value” means $142.069.

        “PIPE Investment” means the sale and issuance of (i) 3,530,000 shares of common stock to certain investors for an aggregate purchase price of $35.3 million in a private placement immediately prior to the closing of the Business Combination (the “Equity Financing”); and (ii) up to an aggregate of $40.0 million in principal amount of secured debentures (the “Debentures”) (of which we have entered into agreements for $37,959,184 of Debentures) and warrants to certain investors named in the Securities Purchase Agreement dated December 16, 2021, substantially concurrently with the closing of the Business Combination (the “Debt Financing”).

        “public stockholders” means holders of Public Common Stock.

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        “Public Common Stock” means Common Stock sold in the IPO as part of the Units, whether they were purchased in the IPO or thereafter in the open market.

        “Public Warrants” means warrants sold in the IPO as part of the Units, whether they were purchased in the IPO or thereafter in the open market.

        “Private Warrants” mean the 7,175,000 Warrants issued to the Co-Sponsors, consisting of (i) 4,783,333 Private Warrants issued to CleanTech Sponsor; and (ii) 2,391,667 Private Warrants issued to CleanTech Investments, in a private placement in connection with the consummation of the IPO.

        “RaaS” means Robotics as a Service.

        “SEC” means the U.S. Securities and Exchange Commission.

        “Securities Act” means the Securities Act of 1933, as amended.

        “Trust Account” means CLAQ’s trust account maintained by Continental.

        “Trust Agreement” means the Investment Management Trust Agreement with Continental Stock Transfer & Trust Company, dated July 14, 2021, as amended on July 19, 2022.

        “Units” means the units of CLAQ, each consisting of one share of common stock, one right and one-half of one redeemable warrant.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement/prospectus contains forward-looking statements, including statements about the parties’ ability to close the Business Combination, the anticipated benefits of the Business Combination, and the financial condition, results of operations, earnings outlook and prospects of CLAQ and/or Nauticus and may include statements for the period following the consummation of the Business Combination. Forward-looking statements appear in a number of places in this proxy statement/prospectus including, without limitation, in the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Nauticus” and “Business of Nauticus.” In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Forward-looking statements are typically identified by words such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “should,” “would” and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking.

The forward-looking statements are based on the current expectations of the management of CLAQ and Nauticus as applicable and are inherently subject to uncertainties and changes in circumstances and their potential effects and speak only as of the date of such statement. There can be no assurance that future developments will be those that have been anticipated. These forward-looking statements involve a number of risks, uncertainties or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in “Risk Factors,” those discussed and identified in public filings made with the SEC by CLAQ and the following:

        the inability of the parties to successfully or timely consummate the Business Combination, including the risk that any required regulatory approvals are not obtained, are delayed or are subject to unanticipated conditions that could adversely affect Nauticus or the expected benefits of the Business Combination, if not obtained;

        the failure to realize the anticipated benefits of the Business Combination;

        matters discovered by the parties as they complete their respective due diligence investigation of the other parties;

        the ability of CLAQ prior to the Business Combination, and the Combined Company following the Business Combination, to maintain the listing of CLAQ’s securities on Nasdaq;

        costs related to the Business Combination;

        the failure to satisfy the conditions to the consummation of the Business Combination, including the approval of the definitive merger agreement by the stockholders of CLAQ, the satisfaction of the minimum cash requirements of the definitive merger agreement following any redemptions by CLAQ’s public stockholders;

        the risk that the Business Combination may not be completed by the stated deadline and the potential failure to obtain an extension of the stated deadline; the inability to complete a PIPE Investment;

        the outcome of any legal proceedings that may be instituted against CLAQ or Nauticus related to the Business Combination;

        the attraction and retention of qualified directors, officers, employees and key personnel of CLAQ and Nauticus prior to the Business Combination, and the Combined Company following the Business Combination;

        the ability of Nauticus to compete effectively in a highly competitive market;

        the ability to protect and enhance Nauticus’ corporate reputation and brand;

        the impact from future regulatory, judicial, and legislative changes in Nauticus’ industry;

        the uncertain effects of the COVID-19 pandemic;

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        competition from larger technology companies that have greater resources, technology, relationships and/or expertise;

        future financial performance of the Combined Company following the Business Combination including the ability of future revenues to meet projected annual bookings;

        the ability of Nauticus to forecast and maintain an adequate rate of revenue growth and appropriately plan its expenses;

        the ability of Nauticus to generate sufficient revenue from each of our revenue streams;

        the ability of Nauticus’ patents and patent applications to protect Nauticus’ core technologies from competitors;

        Nauticus’ ability to manage a complex set of marketing relationships and realize projected revenues from subscriptions, advertisements;

        product sales and/or services;

        Nauticus’ ability to execute its business plans and strategy; and

        those factors set forth in documents of CLAQ filed, or to be filed, with SEC.

Should one or more of these risks or uncertainties materialize or should any of the assumptions made by the management of CLAQ and Nauticus prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.

All subsequent written and oral forward-looking statements concerning the Business Combination or other matters addressed in this proxy statement/prospectus and attributable to CLAQ, Nauticus or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this proxy statement/prospectus. Except to the extent required by applicable law or regulation, CLAQ and Nauticus undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this proxy statement/prospectus or to reflect the occurrence of unanticipated events.

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QUESTIONS AND ANSWERS ABOUT THE PROPOSALS

The following are answers to some questions that you, as a stockholder of CLAQ, may have regarding the Proposals being considered at the Meeting. We urge you to read carefully the remainder of this proxy statement/prospectus because the information in this section does not provide all the information that might be important to you with respect to the Proposals and the other matters being considered at the Meeting. Additional important information is also contained in the annexes to and the documents incorporated by reference into this proxy statement/prospectus.

Q:     What is the purpose of this document?

A:     CLAQ, Merger Sub, and Nauticus, have agreed to the Business Combination under the terms of the Merger Agreement, which is attached to this proxy statement/prospectus as Annex A, and is incorporated into this proxy statement/prospectus by reference. The Board is soliciting your proxy to vote for the Business Combination and other Proposals at the Meeting because you owned common stock at the close of business on            , 2022, the “Record Date” for the Meeting, and are therefore entitled to vote at the Meeting. This proxy statement/prospectus summarizes the information that you need to know in order to cast your vote.

Q:     What is being voted on?

A:     Below are the Proposals that the CLAQ stockholders are being asked to vote on:

        Proposal 1 — The Business Combination Proposal to approve the Merger Agreement and the Business Combination.

        Proposal 2 — The Charter Approval Proposal to approve the Second Amended and Restated Certificate of Incorporation attached to this proxy statement/prospectus as Annex B.

        Proposal 3 — The Bylaws Proposal to approve the Amended and Restated Bylaws attached to this proxy statement/prospectus as Annex C.

        Proposals 4A-4E — The Governance Proposals to approve and adopt, on a non-binding advisory basis, certain differences, in the governance provisions set forth in the Amended Charter, as compared to our Current Charter.

        Proposal 5 — The Directors Proposal to elect, effective as of the consummation of the Business Combination, Nicolaus Radford, Eli Spiro, Mark Mey, Lisa Porter, Jim Bellingham, Adam Sharkawy, Joseph W. Dyer, and John W. Gibson, Jr. to serve on the Board until their respective successors are duly elected and qualified.

        Proposal 6 — The Stock Plan Proposal to approve the Incentive Award Plan.

        Proposal 7 — The Nasdaq Merger Proposal to approve the issuance of more than 20% of the issued and outstanding shares of common stock in connection with the terms of the Merger Agreement, which will result in a change of control, as required by Nasdaq Listing Rule 5635(a)and (b).

        Proposal 8 — The Nasdaq PIPE Proposal to approve the issuance or potential issuance of more than 20% of the issued and outstanding shares of common stock in connection with the PIPE Investment, as required by Nasdaq Listing Rule 5635(d).

        Proposal 9 — The Adjournment Proposal to approve the adjournment of the Meeting.

Q:     What vote is required to approve the Proposals?

A:     Proposal 1 — The Business Combination Proposal requires the affirmative vote of the majority of the issued and outstanding shares of common stock present by virtual attendance or represented by proxy and entitled to vote at the Meeting. An abstention will have the effect of a vote “AGAINST” Proposal 1. Broker non-votes will have no effect on the vote for Proposal 1.

Proposal 2 — The Charter Approval Proposal requires the affirmative vote of the majority of the issued and outstanding shares of common stock. Abstentions and broker non-votes will have the effect of a vote “AGAINST” Proposal 2.

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Proposal 3 — The Bylaws Proposal requires the affirmative vote of the majority of the issued and outstanding shares of common stock present in person by virtual attendance or represented by proxy and entitled to vote. An abstention will have the effect of a vote “AGAINST” Proposal 3. Broker non-votes will have no effect on the vote for Proposal 3.

Proposals 4A-4E — The Governance Proposals require the affirmative vote of the majority of the issued and outstanding shares of common stock present in person by virtual attendance or represented by proxy and entitled to vote. Abstentions will have the effect of a vote “AGAINST” Proposals 4A-4E. Broker non-votes will have no effect on the vote for Proposals 4A-4E.

Proposal 5 — The Directors Proposal requires a plurality of the votes cast. Withhold votes and broker non-votes will have no effect on the vote for Proposal 5.

Proposal 6 — The Stock Plan Proposal requires the affirmative vote of the majority of the issued and outstanding shares of common stock present in person by virtual attendance or represented by proxy and entitled to vote. Abstentions will have the effect of a vote “AGAINST” Proposal 6. Broker non-votes will have no effect on the vote for Proposal 6.

Proposal 7 — The Nasdaq Merger Proposal requires the affirmative vote of the majority of the issued and outstanding shares of common stock present by virtual attendance or represented by proxy and entitled to vote at the Meeting. Abstentions will have the effect of a vote “AGAINST” Proposal 7. Broker non-votes will have no effect on the vote for Proposal 7.

Proposal 8 — The Nasdaq PIPE Proposal requires the affirmative vote of the majority of the issued and outstanding shares of common stock present by virtual attendance or represented by proxy and entitled to vote at the Meeting. Abstentions will have the effect of a vote “AGAINST” Proposal 8. Broker non-votes will have no effect on the vote for Proposal 8.

Proposal 9 — The Adjournment Proposal requires the affirmative vote of the majority of the issued and outstanding shares of common stock present in person by virtual attendance or represented by proxy and entitled to vote at the Meeting. Abstentions will have the effect of a vote “AGAINST” Proposal 9. Broker-non votes have no effect on the vote for Proposal 9.

Q:     Are any of the Proposals conditioned on one another?

A:     The Business Combination Proposal is conditioned upon the approval of Proposals 2, 3, 5, 6, 7 and 8. Proposals 2, 3, 4, 5, 6, 7 and 8 are dependent upon approval of the Business Combination Proposal. It is important for you to note that in the event that the Business Combination Proposal is not approved, CLAQ will not consummate the Business Combination. If CLAQ does not consummate the Business Combination and fails to complete an initial business combination by August 19, 2022, CLAQ will be required to dissolve and liquidate, unless we extend the date by which the Business Combination may be consummated (the “Combination Period”) five (5) additional times for an additional one (1) month each time until January 19, 2023.

Q:     What will happen in the Business Combination?

A:     At the closing of the Business Combination, Merger Sub will merge with and into Nauticus, with Nauticus surviving such merger as the surviving entity. Upon consummation of the Business Combination, Nauticus will become a wholly-owned subsidiary of CLAQ. In connection with the Business Combination, the cash held in the Trust Account after giving effect to any redemption of shares by CLAQ’s public stockholders and the proceeds from the PIPE Investment will be used to pay certain fees and expenses in connection with the Business Combination, and for working capital and general corporate purposes. A copy of the Merger Agreement is attached to this proxy statement/prospectus as Annex A.

Q:     How will the Initial Stockholders vote?

A:     In connection with the execution of the Merger Agreement, the Co-Sponsors entered into the Sponsor Support Agreement with Nauticus pursuant to which they agreed to vote all shares of common stock beneficially owned by them in favor of the Business Combination Proposal (“Sponsor Support Agreement”).

As of             , 2022, a total of 4,032,500 shares of common stock or approximately 66.2% of the outstanding shares were subject to the Sponsor Support Agreement. In addition, pursuant to a letter agreement dated July 14, 2021, the Initial Stockholders agreed to vote their respective shares of common stock acquired by them prior to the IPO and any shares of common stock purchased by them in the open market after the IPO in favor of the Business Combination

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Proposal (“Letter Agreement”). As of            , 2022, the Initial Stockholders holding a total of 4,312,500 shares of common stock, or approximately 70.7% of the outstanding shares were subject to the Letter Agreement. As a result, no public stockholders will need to be present in person by virtual attendance or by proxy to satisfy the quorum requirement for the meeting. In addition, as the vote to approve the Business Combination Proposal is a majority of the then outstanding shares of common stock present and entitled to vote at the Meeting, no public stockholders’ vote is required for the Business Combination Proposal to be approved.

Pursuant to the Nauticus Support Agreement (defined below), Nauticus’ directors, executive officers and their affiliates have agreed to vote in favor of the Business Combination at Nauticus’ special meeting to approve the Business Combination. These directors, executive officers and their affiliates represent the holders of approximately 88.8% of the voting power of Nauticus. As such, they do not require additional votes from other stockholders to vote in favor of the Business Combination.

Q:     How many votes do I and others have?

A:     You are entitled to one vote for each share of common stock that you held as of the Record Date. As of the close of business on the Record Date, there were            outstanding shares of common stock.

Q:     Will the transaction qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended?

A:     While the parties intend for the transaction to qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code, there is no assurance that will indeed be the case. In the event that the transaction fails to qualify as such, there would be no adverse tax consequences to CLAQ or Merger Sub.

Q:     Did the CLAQ Board obtain a fairness opinion in determining whether or not to proceed with the Business Combination?

A:     After careful consideration of the terms and conditions of the Merger Agreement, the CLAQ Board determined in December 2021 that Business Combination and the transactions contemplated thereby are fair to, and in the best interests of, CLAQ and its stockholders. In reaching its decision with respect to the Business Combination and the transactions contemplated thereby, the CLAQ Board reviewed various industry and financial data and the evaluation of materials provided by Nauticus. Although the CLAQ Board did not obtain a third-party valuation or fairness opinion in connection with its resolution to approve the Merger but determined that CLAQ’s management, CleanTech Sponsor and the members of the Board had substantial experience in evaluating the operating, financial and business merits of companies similar to Nauticus, sufficient to make its own determination of the merits of a business combination with Nauticus.

On January 28, 2022, in order to provide added transparency to the transactions contemplated by the Merger Agreement and greater certainty to close the Business Transaction in the current turbulent market, CLAQ retained Duff & Phelps to serve as an independent financial advisor to the Board of CLAQ, specifically to provide to the Board a fairness opinion in connection with the Business Combination. On March 24, 2022, the CLAQ Board (solely in their capacity as members of the CLAQ Board) obtained an opinion from Duff & Phelps that the consideration to be paid by CLAQ to the Nauticus securityholders in the Business Combination pursuant to the Merger Agreement is fair to CLAQ, from a financial point of view. There was no separate opinion rendered on the fairness of the Business Combination to the public shareholders or shareholders unaffiliated with the Co-Sponsors or their affiliates. See “Proposal 1 — The Business Combination Proposal — Opinion of CLAQ’s Financial Advisor” and the opinion (as described below) attached to the proxy statement/prospectus as Exhibit F.

Q:     What is the consideration being paid to Nauticus security holders?

Preferred Stock.    Immediately prior to the Effective Time, each share of Nauticus Preferred Stock that is issued and outstanding immediately prior to such time shall automatically convert into shares of Nauticus Common stock, par value $0.01 per share (the “Nauticus Common Stock”), in accordance with its Certificate of Incorporation (collectively, the “Nauticus Preferred Stock Conversion”). As a result of the Merger, an aggregate of 15,062,524 shares of CLAQ Common Stock will be issued to the holders of Nauticus Preferred Stock.

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Convertible Notes.    Immediately prior to the Effective Time, each of (i) that certain Unsecured Convertible Promissory Note, dated June 19, 2021, by and between Goradia Capital, LLC and Nauticus, as amended on December 16, 2021, (ii) that certain Unsecured Convertible Promissory Note, August 3, 2021, by and between Material Impact Fund II, L.P. and Nauticus, as amended on December 16, 2021, (iii) that certain Unsecured Convertible Promissory Note, dated October 22, 2021, by and between In-Q-Tel, Inc. and Nauticus, as amended on December 16, 2021, (iv) that certain Unsecured Convertible Promissory Note, dated July 28, 2020, by and between Schlumberger Technology Corporation and Nauticus, as amended on December 16, 2021, and (v) that certain Unsecured Convertible Promissory Note, dated December 7, 2020, by and between Transocean Inc. and Nauticus, as amended on December 16, 2021 (each, a “Nauticus Convertible Note” and collectively, the “Nauticus Convertible Notes”) shall automatically convert into shares of Nauticus Common Stock in accordance with the terms of each such Nauticus Convertible Note (collectively, the “Nauticus Convertible Notes Conversion”). As a result of the Merger, an aggregate of 5,299,543 shares of CLAQ Common Stock will be issued to the holders of Nauticus Convertible Notes.

Common Stock.    At the Effective Time, following the Nauticus Preferred Stock Conversion and Nauticus Convertible Notes Conversion, each share of Nauticus Common Stock (including shares of Nauticus Common Stock outstanding as a result of the Nauticus Preferred Stock Conversion and Nauticus Convertible Notes Conversion, but excluding shares of the holders of which perfect rights of appraisal under Delaware law) will be converted into the right to receive the Per Share Merger Consideration of 14.2069 (as defined below) shares of CLAQ Common Stock and the Earnout Shares (as defined below). As a result of the Merger, an aggregate of 9,669,216 shares of CLAQ Common Stock will be issued to the holders of Nauticus Common Stock (not including the Earnout Shares).

Stock Options.    At the Effective Time, each outstanding option to purchase shares of Nauticus Common Stock (a “Nauticus Option”), whether or not then vested and exercisable, will be assumed by CLAQ and converted automatically (and without any required action on the part of such holder of outstanding option) into an option to purchase shares of the CLAQ’s Common Stock equal to the number of shares determined by multiplying the number of shares of the Nauticus Common Stock subject to such Nauticus Option immediately prior to the Effective Time by the Exchange Ratio of 14.2069 (as defined below), which product shall be rounded down to the nearest whole number of shares, at a per share exercise price determined by dividing the per share exercise price of such Nauticus Option immediately prior to the Effective Time by the Exchange Ratio. As a result of the Merger, an aggregate of 3,970,266 shares of CLAQ Common Stock will be issuable upon exercise of these options.

Earnout Shares.    Following the closing of the merger, former holders of shares of Nauticus Common Stock (including shares received as a result of the Nauticus Preferred Stock conversion and the Nauticus Convertible Notes conversion, the “Stockholder Earnout Group”) shall be entitled to receive their pro rata share of up to 7,500,000 additional shares of Combined Company Common Stock (the “Earnout Shares”). The Earnout Shares will be released and delivered to the Stockholder Earnout Group upon occurrence of the following (each, a “Triggering Event”):

(i)     one-half of the Escrow Shares will be released if, within a 5-year period following the signing date of the Merger Agreement, the volume-weighted average price of the Combined Company Common Stock equals or exceeds $15.00 per share, over any 20 trading days within a 30-day trading period.

(ii)    one-quarter of the Escrow Shares will be released if, within a 5-year period following the signing date of the Merger Agreement, the volume-weighted average price of the Combined Company Common Stock equals or exceeds $17.50 per share over any 20 trading days within a 30-day trading period; and

(iii)   one-quarter of the Escrow Shares will be released if, within a 5-year period following the signing date of the Merger Agreement, the volume-weighted average price of the Combined Company Common Stock equals or exceeds $20.00 per share over any 20 trading days within a 30-day trading period.

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Q:     What equity stake will current stockholders of CLAQ and Nauticus stockholders hold in the Combined Company after the closing?

A.     It is anticipated that upon completion of the Business Combination and assuming minimum redemptions by CLAQ public stockholders, CLAQ’s public stockholders (other than the PIPE Investors) will retain an ownership interest of approximately 5.5% in the Combined Company the PIPE Investors will own approximately 7.4% of the Combined Company, the Co-Sponsors, officers, directors and other holders of founder shares will retain an ownership interest of approximately 9.0% of the Combined Company, and the Nauticus stockholders will own approximately 78.1% (including the 7,500,000 Earnout Shares) of the Combined Company.

The ownership percentage with respect to the Combined Company does not take into account (i) the redemption of any Public Common Stock by the CLAQ public stockholders, (ii) the issuance of any additional shares upon the closing of the Business Combination under the Incentive Award Plan, and (iii) the issuance of the Debentures and associated warrants in connection with the Debt Financing. If the actual facts are different from these assumptions (which they are likely to be), the percentage ownership retained by the CLAQ stockholders will be different. See “Unaudited Pro Forma Condensed Combined and Consolidated Financial Information.”

The following table illustrates varying ownership levels in the Combined Company, assuming consummation of the Business Combination and minimum redemptions by CLAQ public stockholders, 10% redemption by CLAQ public stockholders, 50% redemption by CLAQ public stockholders, 75% redemption by Public Shareholders and the maximum redemptions by CLAQ public stockholders:

 

Minimum
Redemptions
(1)

 

%

 

10%
Redemption
(2)

 

%

 

50%
Redemption
(3)

 

%

 

75%
Redemption
(4)

 

%

 

Maximum
Redemption
(5)

 

%

Nauticus stockholders(6)

 

41,501,545

 

56.1

%

 

41,501,545

 

56.3

%

 

41,501,545

 

56.9

%

 

41,501,545

 

57.3

%

 

41,501,545

 

57.6

%

CLAQ public stockholders(7)

 

11,270,789

 

15.3

%

 

11,092,460

 

15.1

%

 

10,379,145

 

14.2

%

 

9,933,322

 

13.7

%

 

9,487,500

 

13.2

%

Initial Stockholders(8)(9)

 

11,487,500

 

15.6

%

 

11,487,500

 

15.6

%

 

11,487,500

 

15.7

%

 

11,487,500

 

15.8

%

 

11,487,500

 

15.9

%

PIPE Investment investors(10)

 

9,603,470

 

13.0

%

 

9,603,470

 

13.0

%

 

9,603,470

 

13.2

%

 

9,603,470

 

13.2

%

 

9,603,470

 

13.3

%

Pro forma fully diluted Common Stock at March 31, 2022

 

73,863,304

 

100.0

%

 

73,684,975

 

100.0

%

 

72,971,660

 

100.0

%

 

72,525,837

 

100.0

%

 

72,080,015

 

100.0

%

____________

(1)      Assumes that no CLAQ public stockholders are redeemed.

(2)      Assumes that 178,329 Public Common Stock is redeemed for aggregate redemption payments of approximately $1,814,812, assuming a $10.18 per share redemption price and based on funds in the Trust Account as of July 19, 2022. The Merger Agreement includes a condition to the closing that at the closing having an amount of available cash from the Trust Account and the PIPE Investment (after giving effect to the redemption of any Public Common Stock in connection with the IPO and the payment of the transaction expenses), of no less than $50,000,000.

(3)      Assumes that 891,645 Public Common Stock is redeemed for aggregate redemption payments of approximately $9,074,061, assuming a $10.18 per share redemption price and based on funds in the Trust Account as of July 19, 2022. The Merger Agreement includes a condition to the closing that at the closing having an amount of available cash from the Trust Account and the Equity Financing (as defined in the Merger Agreement) (after giving effect to the redemption of any Public Common Stock in connection with the IPO and the payment of the transaction expenses), of no less than $50,000,000.

(4)      Assumes that 1,337,467 Public Common Stock is redeemed for aggregate redemption payments of approximately $13,611,091, assuming a $10.18 per share redemption price and based on funds in the Trust Account as of July 19, 2022. The Merger Agreement includes a condition to the closing that at the closing having an amount of available cash from the Trust Account and the Equity Financing (as defined in the Merger Agreement) (after giving effect to the redemption of any Public Common Stock in connection with the IPO and the payment of the transaction expenses), of no less than $50,000,000.

(5)      Assumes that 1,783,289 Public Common Stock is redeemed for aggregate redemption payments of approximately $18,148,121, assuming a $10.18 per share redemption price and based on funds in the Trust Account as of July 19, 2022. The Merger Agreement includes a condition to the closing that at the closing having an amount of available cash from the Trust Account and the PIPE Investment (after giving effect to the redemption of any Public Common Stock in connection with the IPO and the payment of the transaction expenses), of no less than $50,000,000.

(6)      Includes 7,500,000 shares of Common Stock subject to the Earnout Terms and the exercise of 3,970,266 Nauticus Options. The Earnout Shares subject to the Triggering Events will be deposited into escrow in accordance with the terms of the Merger Agreement and will be subject to reduction or forfeiture in accordance with the terms of the Merger Agreement. However, registered holders will maintain voting rights related to such shares unless forfeited.

(7)      Includes 8,625,000 Public Warrants and the issuance of 862,500 shares of Common Stock pursuant to the Rights. Non-redeeming public stockholders could suffer additional dilution in their ownership and voting interest of the combined company upon exercise of the Public Warrants held by redeeming CLAQ public stockholder who continue to hold these warrants, which could have an aggregate value of $3,967,500, based on the closing trading price per Public Warrant as of May 16, 2022.

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(8)      Includes 4,312,500 outstanding founder shares and 7,175,000 Private Warrants.

(9)      Total of 4,312,500 outstanding founder shares includes 1,437,500 founder shares held by the Sponsor, 2,595,000 founder shares held by CleanTech Investments, and 280,000 founder shares held by the officers and directors of CleanTech. Please see the section titled “Beneficial Ownership of Securities.”

(10)    Assumes the sale of an aggregate of 3,530,000 shares of CleanTech Common Stock, for a purchase price of $10.00 per share and an aggregate purchase price of $35,300,000, conversion of the Debentures at a conversion price of $15.00 and exercise and conversion of the Warrants income Common Stock.

The following table illustrates estimated ownership levels in the Combined Company, immediately following the consummation of the Business Combination, based on the varying levels of redemptions by the CLAQ public stockholders and the following additional assumptions and the potential impact of redemptions on the value, on a per-share basis, of the shares owned by non-redeeming CLAQ public stockholders across varying levels of redemptions:

 

Minimum
Redemptions
(1)

 

10%
Redemption
(2)

 

50%
Redemption
(3)

 

75%
Redemption
(4)

 

Maximum
Redemption
(5)

   

Shares

 

Value
Per
Share
(6)

 

Shares

 

Value
Per
Share
(6)

 

Shares

 

Value
Per
Share
(6)

 

Shares

 

Value
Per
Share
(6)

 

Shares

 

Value
Per
Share
(6)

Base Scenario(7)

 

48,019,568

 

$

10.00

 

47,841,239

 

$

10.00

 

47,127,924

 

$

10.00

 

46,682,101

 

$

10.00

 

46,236,279

 

$

10.00

Exercising Public Warrants(8)(12)

 

56,644,568

 

$

8.48

 

56,466,239

 

$

8.47

 

55,752,924

 

$

8.45

 

55,307,101

 

$

8.44

 

54,861,279

 

$

8.43

Exercising Private Warrants(9)(12)

 

55,194,568

 

$

8.70

 

55,016,239

 

$

8.70

 

54,302,924

 

$

8.68

 

53,857,101

 

$

8.67

 

53,411,279

 

$

8.66

Exercising Public and Private Warrants(10)(12)

 

63,819,568

 

$

7.52

 

63,641,239

 

$

7.52

 

62,927,924

 

$

7.49

 

62,482,101

 

$

7.47

 

62,036,279

 

$

7.45

Exercising Public, Private Warrants, Nauticus Options, Debentures and Warrants(11)(12)

 

73,863,304

 

$

6.50

 

73,684,975

 

$

6.49

 

72,971,660

 

$

6.46

 

72,525,837

 

$

6.44

 

72,080,015

 

$

6.41

____________

(1)      Assumes that no Public Common Stock is redeemed.

(2)      Assumes that 178,329 Public Common Stock is redeemed for aggregate redemption payments of approximately $1,814,812, assuming a $10.18 per share redemption price and based on funds in the Trust Account as of July 19, 2022. The Merger Agreement includes a condition to the closing that at the closing having an amount of available cash from the Trust Account and the PIPE Investment (after giving effect to the redemption of any Public Common Stock in connection with the IPO and the payment of the transaction expenses), of no less than $50,000,000.

(3)      Assumes that 891,645 Public Common Stock is redeemed for aggregate redemption payments of approximately $9,074,061, assuming a $10.18 per share redemption price and based on funds in the Trust Account as of July 19, 2022. The Merger Agreement includes a condition to the closing that at the closing having an amount of available cash from the Trust Account and the Equity Financing (as defined in the Merger Agreement) (after giving effect to the redemption of any Public Common Stock in connection with the IPO and the payment of the transaction expenses), of no less than $50,000,000.

(4)      Assumes that 1,337,467 Public Common Stock is redeemed for aggregate redemption payments of approximately $13,611,091, assuming a $10.18 per share redemption price and based on funds in the Trust Account as of July 19, 2022. The Merger Agreement includes a condition to the closing that at the closing having an amount of available cash from the Trust Account and the Equity Financing (as defined in the Merger Agreement) (after giving effect to the redemption of any Public Common Stock in connection with the IPO and the payment of the transaction expenses), of no less than $50,000,000.

(5)      Assumes that 1,783,289 Public Common Stock is redeemed for aggregate redemption payments of approximately $18,148,121, assuming a $10.18 per share redemption price and based on funds in the Trust Account as of July 19, 2022. The Merger Agreement includes a condition to the closing that at the closing having an amount of available cash from the Trust Account and the PIPE Investment (after giving effect to the redemption of any Public Common Stock in connection with the IPO and the payment of the transaction expenses), of no less than $50,000,000.

(6)      Based on a post-transaction equity value of approximately $480.2 million, $478.4 million, $471.3 million, $466.8 million, and $462.4 million under the Minimum Redemptions, 10% Redemption, 50% Redemption, 75% Redemption, and Maximum Redemption scenarios, respectively.

(7)      Represents the post-Closing share ownership assuming various levels of redemption by CLAQ Public Stockholders.

(8)      Represents the Base Scenario plus the full exercise of the 8,625,000 Public Warrants.

(9)      Represents the Base Scenario plus the full exercise of the 7,175,000 Private Warrants.

(10)    Represents the Base Scenario plus the full exercise of the 8,625,000 Public Warrants and the 7,175,000 Private Warrants.

(11)    Represents the Base Scenario plus the full exercise of the 8,625,000 Public Warrants, 7,175,000 Private Warrants, 3,970,266 Nauticus Options, 3,036,735 shares of Common Stock pursuant to the conversion of the Debentures and 3,036,735 shares of Common Stock pursuant to the full exercise of the Warrants.

(12)    Analysis does not account for exercise prices to be paid in connection with the exercise of warrants.

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Q:     Do any of CLAQ’s directors or officers have interests that may conflict with my interests with respect to the Business Combination?

A:     In considering the recommendation of the Board to approve the Merger Agreement, CLAQ stockholders should be aware that certain CLAQ executive officers and directors have interests in the Business Combination that are different from, or in addition to, those of CLAQ stockholders generally. When you consider the recommendation of the Board in favor of adoption of the Business Combination Proposal and other Proposals, you should keep in mind that CLAQ’s directors and officers and their affiliates have interests in the Business Combination that are different from, or in addition to, your interests as a shareholder, including:

        CLAQ’s Co-sponsors have a fiduciary obligation to each of their respective members and Eli Spiro, (CLAQ’s Chief Executive Officer and Director) and Jonas Grossman (a CLAQ Director) are the controlling members of our Co-sponsors. Because each of Mr. Spiro and Mr. Grossman have a fiduciary obligation to both CLAQ and the Co-sponsors, they had a conflict of interest when voting on the Business Combination;

        At the special meeting of stockholders held on July 18, 2022, CLAQ’s stockholders approved an amendment to CLAQ’s certificate of incorporation (the “Charter Amendment Proposal”) and an amendment to the Investment Management Trust Agreement with Continental Stock Transfer & Trust Company, dated July 14, 2021 (the “Trust Agreement Proposal”), giving CLAQ the right to extend the Combination Period six (6) times for an additional one (1) month each time by depositing into the Trust Account $100,000 for each one-month extension, up to January 19, 2023 (the first extension to August 19, 2022 was already made). We refer to the amendments to the certificate of incorporation and to the Trust Agreement collectively as the “July 18 Amendments.” As a result of the July 18 Amendments, public stockholders forfeited their right to receive up to $1,725,000, and up to an aggregate of $3,450,000 under certain agreements entered into in connection with CLAQ’s IPO, if CLAQ seeks to extend the Combination Period for three or six months, respectively, but does not consummate a business combination;

        As a result of the July 18 Amendments, CLAQ’s Co-Sponsors are no longer be required to deposit into the Trust Account $1,725,000 prior to each three-month extension (up to $3,450,000 in the aggregate) and these amounts will not be repaid if a business combination is not consummated to the extent funds are not available outside of the Trust Account;

        As a result of the July 18 Amendments, CLAQ may extend the Combination Period up to January 19, 2023, by depositing into the Trust Account for the benefit of the public stockholders $100,000 for each one (1) month extension (or an aggregate of $600,000 if the Combination Period is extended six times). The additional redemption amount added to the Trust Account was reduced from what was included in CLAQ’s initial public offering prospectus, which was $0.10 per share for each three-month extension to approximately $0.06 per share for each one-month extension.

        As a result of the July 18 Amendments, the Co-Sponsors are expected to contribute to CLAQ up to $600,000 (if the full 6-month extension is sought) in an interest-free loan for the full extension of the Combination Period on an as-needed basis. If the July 18 Amendments were not adopted, the Co-Sponsors would be expected to deposit into the Trust Account an aggregate of $3,450,000 (if the full 6-month extension is sought) in an interest-free loan. Since both loans will become payable only after Closing of the Business Combination, CLAQ’s Co-Sponsors will lose repayment of $600,000 loan if the Business Combination is not completed after the full 6-month extension. As of the date of this proxy statement/prospectus, the Co-Sponsors have contributed $100,000 for the extension of the Combination Period for one (1) month until August 19, 2022. No funds from the Trust Account would be used to repay such loans in the event of CLAQ’s liquidation.

        If an initial business combination, such as the Business Combination, is not completed, CLAQ will be required to dissolve and liquidate. In such event, the 4,312,500 founder shares currently held by the Initial Stockholders, which were acquired prior to the IPO will be worthless because such holders have agreed to waive their rights to any liquidation distributions. The founder shares were purchased for an aggregate purchase price of $25,000, and had an aggregate market value of approximately $43.8 million based on the closing price of $10.18 per share of CLAQ common stock on the Nasdaq Stock Market as of August 1, 2022.

        If an initial business combination, such as the Business Combination, is not completed, an aggregate of 7,175,000 Private Warrants purchased by CLAQ’s Co-sponsors for a total purchase price of $7,175,000, will be worthless. The Private Warrants had an aggregate market value of approximately $2.3 million based on the closing price of $0.32 per Public Warrant on the Nasdaq Stock Market as of August 1, 2022.

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        Because of these interests, CLAQ’s Initial Stockholders could benefit from the completion of a business combination that is not favorable to its public shareholders and may be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to public shareholders rather than liquidate. For example, if the share price of the CLAQ common stock declined to $5.00 per share after the close of the business combination, CLAQ’s public shareholder that purchased shares in the initial public offering, would have a loss of $5.00 per share, while CLAQ’s Sponsor would have a gain of $4.99 per share because it acquired the founder shares for a nominal amount. In other words, CLAQ’s Initial Stockholders can earn a positive rate of return on their investment even if public shareholders experience a negative rate of return in the post-combination company.

        One of CLAQ’s Co-sponsors is CleanTech Sponsor, and the managing member of CleanTech Sponsor is Eli Spiro, CLAQ’s Chief Executive Officer and Director. If an initial business combination, such as the Business Combination, is not completed, CleanTech Sponsor will lose an aggregate of approximately $28.5 million (not including any extension loan after July 18, 2022), comprised of the following:

        approximately $26.4 million (based on the closing price of $10.18 per share of CLAQ common stock on the Nasdaq Stock Market as of August 1, 2022) of the 2,595,000 founder shares CleanTech Sponsor holds;

        approximately $1.5 million (based on the closing price of $0.32 per Public Warrant on the Nasdaq Stock Market as of August 1, 2022) of the 4,783,333 Private Warrants CleanTech Sponsor holds; and

        repayment of an interest-free loan of $567,000 (as of July 18, 2022) by CleanTech Sponsor since the loan will become payable only after Closing of the Business Combination, or the date on which CLAQ determines that it is unable to effect a business combination.

        CLAQ’s other Co-sponsor, CleanTech Investments, is an affiliate of Chardan, and CLAQ’s director, Mr. Jonas Grossman, is the Managing Partner and President of Chardan. If an initial business combination, such as the Business Combination, is not completed, Chardan will lose an aggregate of approximately $23.9 million (not including any extension loan after July 18, 2022), comprised of the following:

        approximately $14.6 million (based on the closing price of $10.18 per share of CLAQ common stock on the Nasdaq Stock Market as of August 1, 2022) of the 1,437,500 founder shares CleanTech Investment holds;

        approximately $0.8 million (based on the closing price of $0.32 per Public Warrant on the Nasdaq Stock Market as of August 1, 2022) of the 2,391,667 Private Warrants CleanTech Investment holds;

        a marketing fee of $6,037,500 for certain services pursuant to a Business Combination Marketing Agreement;

        a placement fee of $2,118,000 (i.e., 6.0% of the PIPE Investment that is not sold to an affiliate of Chardan) for certain services pursuant to the Financial Advisory Agreement (pursuant to the Financial Advisory Agreement, Chardan also has a right of first refusal to act as a book-running manager with minimum economics of 15% for the first two public or private equity offerings by CLAQ or any successor or subsidiary of CLAQ);

        repayment of an interest-free loan of $283,000 (as of July 18, 2022) by CleanTech Investments since the loan will become payable only after Closing of the Business Combination, or the date on which CLAQ determines that it is unable to effect a business combination; and

        the $10,000 monthly administrative fee under the Administrative Support Agreement pursuant to which CLAQ may delay payment of the same until the consummation of a business combination. As of June 30, 2022, there is an accrued and unpaid balance of $113,333 owed to Chardan under the Administrative Support Agreement.

        If an initial business combination, such as the Business Combination, is not completed, the Initial Stockholders will lose a combined aggregate amount of approximately $47.0 million (including the Co-sponsors’ loans and securities held based on the closing price of $10.18 per share of CLAQ common stock and $0.32 per Public Warrant on August 1, 2022), and the Initial Stockholders together with their affiliates (including Chardan) will lose a combined aggregate amount of approximately $55.2 million (including Chardan’s fees contingent upon the Closing of the Business Combination.)

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        If the proposed Business Combination is not completed, CLAQ’s Initial Stockholders will not have the potential ownership interest of approximately 9.0% (assuming minimum redemptions) or 9.3% (assuming maximum redemption) in the combined company, assuming exercise and conversion of all securities.

        As of the date of this proxy statement/prospectus, ATW is the only purchaser for the Debentures and associated Warrants in the Debt Financing. ATW is managed by ATW Partners Opportunities Management, LLC, which is an affiliate of Chardan, and our director, Mr. Jonas Grossman, is the Managing Partner and President of Chardan.

        The exercise of CLAQ’s directors’ and officers’ discretion in agreeing to changes or waivers in the terms of the transaction may result in a conflict of interest when determining whether such changes or waivers are appropriate and in our stockholders’ best interest.

        If the Business Combination is completed, Nauticus will designate all members of the Combined Company’s Board of Directors, except for the Transocean Designee).

See “Proposal 1 — The Business Combination Proposal — Interests of Certain Persons in the Business Combination” beginning on page 128.

Q:     Are there any arrangements to help ensure that CLAQ will have sufficient funds, together with the proceeds in its Trust Account, to fund the consideration?

A:      Yes. CLAQ entered into subscription agreements, dated as of December 14, 2021, with certain investors pursuant to which, among other things, CLAQ agreed to issue and sell, in a private placement to close immediately prior to the closing of the Business Combination, an aggregate of 3,530,000 shares of our common stock for $10.00 per share for a total of $35.3 million (the “Equity Financing”). To the extent not utilized to consummate the Business Combination, the proceeds from the Trust Account will be used for general corporate purposes, including, but not limited to, working capital for operations, capital expenditures and future acquisitions. CLAQ will agree that it (or its successor) will file with the SEC a registration statement registering the resale of the shares purchased in the Equity Financing and use its commercially reasonable efforts to have the registration statement declared effective as soon as practicable.

In addition, CLAQ entered into a Securities Purchase Agreement with certain investors purchasing up to an aggregate of $40.0 million in principal amount of secured debentures (the “Debentures”) and warrants. The number of shares of common stock into which the Debentures are convertible is equal to 120% of the outstanding principal amount of the Debentures divided by the conversion price of $15.00, and the number of shares of common stock into which the associated warrants are exercisable is equal to 120% of the outstanding principal amount of the Debentures divided by the conversion price, with an exercise price equal to $20, subject to adjustment (the “Debt Financing,” and together with the Equity Financing, the “PIPE Investment”). The exercise price of the associated warrant will be subject to (i) customary anti-dilution adjustments; and (ii) in the case of a subsequent equity sale at a per share price below the exercise price, the exercise price of the associated warrant will be adjusted to such lower price, and the number of shares underlying the warrant will increase proportionately. In the event of a rights offering or dividend, the warrant holder will be treated as though the shares underlying the warrant he/she holds were outstanding. These warrants can be exercised on a cashless basis. There will be an original issue discount of 2% from the issued amount of the Debentures. Interest will accrue on all outstanding principal amount of the Debentures at 5% per annum, payable quarterly. The Debentures will be secured by first priority interests, and liens on, all present and after-acquired assets of the Combined Company, and will mature on the fourth anniversary of the date of issuance. As of the date of this proxy statement/prospectus, ATW Special Situations I LLC (“ATW”) is the only purchaser and has subscribed for Debentures in the an aggregate principal amount of $37,959,184 (out of the aggregate $40.0 million) which is convertible into 3,036,735 shares of the Combined Company’s common stock and associated warrants for an additional 3,036,735 shares of the Combined Company’s common stock. ATW is managed by ATW Partners Opportunities Management, LLC, which is an affiliate of Chardan Capital Markets, LLC (“Chardan”), and our director, Mr. Jonas Grossman, is the Managing Partner and President of Chardan. Chardan will not receive any fees or compensation for ATW’s participation in the Debt Financing. The obligations to consummate the transactions contemplated by the Securities Purchase Agreement are conditioned upon, among other things, (i) raising $25,000,000 in equity financing from strategic investors, (ii) hiring a chief financial officer with public company experience, and (iii) all conditions precedent to the Merger set forth in the Merger Agreement having been satisfied or waived. The Equity Financing will satisfy the closing condition related to the equity financing requirement for the Debt Financing, and the PIPE Investment alone will satisfy the Minimum Cash Condition under the Merger Agreement. Mr. Rangan Padmanabhan, Nauticus’ current CFO will be the CFO of the Company effective as of the date of the merger, satisfying the closing condition related to the hiring of a CFO with public company experience requirement for the Debt Financing.

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Q:     What are the material differences, if any, in the terms and price of securities issued at the time of the CLAQ IPO as compared to the securities that will be issued a part of the PIPE Investment at the closing of the Business Combination? Will CLAQ Sponsor or any of its directors, officers or affiliates invest in the PIPE Investment?

A:     The CLAQ units issued at the time of the CLAQ IPO consisted of one share of CLAQ Class A Common Stock, one-half of one CLAQ warrant, and one right at an offering price of $10.00 per unit. CLAQ entered into subscription agreements, dated as of December 14, 2021, with the Equity Financing investors pursuant to which, among other things, CLAQ agreed to issue and sell, in a private placement to close immediately prior to the closing of the Business Combination, an aggregate of 3,530,000 shares of our common stock for $10.00 per share for a total of $35.3 million.

In addition, CLAQ entered into a Securities Purchase Agreement with certain investors purchasing up to an aggregate of $40.0 million in principal amount of Debentures and warrants. The number of shares of common stock into which the Debentures are convertible is equal to 120% of the outstanding principal amount of the Debentures divided by the conversion price of $15.00, and the number of shares of common stock into which the associated warrants are exercisable is equal to 120% of the outstanding principal amount of the Debentures divided by the conversion price, with an exercise price equal to $20, subject to adjustment. The exercise price of the associated warrant will be subject to (i) customary anti-dilution adjustments; and (ii) in the case of a subsequent equity sale at a per share price below the exercise price, the exercise price of the associated warrant will be adjusted to such lower price, and the number of shares underlying the warrant will increase proportionately. In the event of a rights offering or dividend, the warrant holder will be treated as though the shares underlying the warrant he/she holds were outstanding. These warrants can be exercised on a cashless basis. There will be an original issue discount of 2% from the issued amount of the Debentures. Interest will accrue on all outstanding principal amount of the Debentures at 5% per annum, payable quarterly. The Debentures will be secured by first priority interests, and liens on, all present and after-acquired assets of the Combined Company, and will mature on the fourth anniversary of the date of issuance. As of the date of this proxy statement/prospectus, ATW is the only purchaser and has subscribed for Debentures in the an aggregate principal amount of $37,959,184 (out of the aggregate $40.0 million) which is convertible into 3,036,735 shares of the Combined Company’s common stock and associated warrants for an additional 3,036,735 shares of the Combined Company’s common stock. ATW is managed by ATW Partners Opportunities Management, LLC, which is an affiliate of Chardan, and our director, Mr. Jonas Grossman, is the Managing Partner and President of Chardan. Chardan will not receive any fees or compensation for ATW’s participation in the Debt Financing. The obligations to consummate the transactions contemplated by the Securities Purchase Agreement are conditioned upon, among other things, (i) raising $25,000,000 in equity financing from strategic investors, (ii) hiring a chief financial officer with public company experience, and (iii) all conditions precedent to the Merger set forth in the Merger Agreement having been satisfied or waived. The Equity Financing will satisfy the closing condition related to the equity financing requirement for the Debt Financing, and the PIPE Investment alone will satisfy the Minimum Cash Condition under the Merger Agreement. Mr. Rangan Padmanabhan, Nauticus’ current CFO will be the CFO of the Company effective as of the date of the merger, satisfying the closing condition related to the hiring of a CFO with public company experience requirement for the Debt Financing.

CLAQ Sponsors and its directors, officers and its affiliates will not invest in the PIPE Investment. The shares issued in the PIPE Investment will not be registered under the Securities Act, in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act.

Q:     When and where is the Meeting?

A:     The Meeting will take place at            , on            , 2022, at            a.m./p.m.

Q:     Who may vote at the Meeting?

A:     Only holders of record of common stock as of the close of business on            , 2022 may vote at the Meeting of stockholders. As of            , there were            shares of common stock outstanding and entitled to vote. Please see “The Meeting — Record Date; Who is Entitled to Vote” for further information.

Q:     What is the quorum requirement for the Meeting?

A:     Stockholders representing a majority of the shares of common stock issued and outstanding as of the Record Date and entitled to vote at the Meeting must be present in person by virtual attendance or represented by proxy in order to hold the Meeting and conduct business. This is called a quorum. Shares of our common stock will

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be counted for purposes of determining if there is a quorum if the stockholder (i) is present and entitled to vote at the meeting, or (ii) has properly submitted a proxy card or voting instructions through a broker, bank or custodian. In the absence of a quorum, stockholders representing a majority of the votes present in person or represented by proxy at such meeting may adjourn the meeting until a quorum is present.

Q:     Am I required to vote against the Business Combination Proposal in order to have my Public Common Stock redeemed?

A:     No. You are not required to vote against the Business Combination Proposal in order to have the right to demand that CLAQ redeem your Public Common Stock for cash equal to your pro rata share of the aggregate amount then on deposit in the Trust Account (before payment of deferred underwriting commissions and including interest earned on their pro rata portion of the Trust Account, net of taxes payable). These rights to demand redemption of Public Common Stock for cash are sometimes referred to herein as “redemption rights”. If the Business Combination is not completed, holders of Public Common Stock electing to exercise their redemption rights will not be entitled to receive such payments and their shares of common stock will be returned to them.

Q:     How do I exercise my redemption rights?

A:     If you are a public stockholder and you seek to have your Public Common Stock redeemed, you must (i) demand, no later than 5:00 p.m., Eastern Time on            , 2022 (at least two business days before the Meeting), that CLAQ redeem your shares into cash; and (ii) submit your request in writing to Continental, at the address listed at the end of this answer and deliver your shares to Continental physically or electronically using The Depository Trust Company’s (“DTC”) DWAC (Deposit/Withdrawal at Custodian) System at least two business days before the Meeting.

Any corrected or changed written demand of redemption rights must be received by Continental two business days before the Meeting. No demand for redemption will be honored unless the holder’s shares have been delivered (either physically or electronically) to Continental at least two business days before the Meeting.

You may seek to have your Public Common Stock redeemed regardless of whether you vote for or against the Business Combination and whether or not you are holders of common stock as of the Record Date. Any public stockholder who holds shares of common stock on or before            , 2022 (two business days before the Meeting) will have the right to demand that his, her or its shares be redeemed for a pro rata share of the aggregate amount then on deposit in the Trust Account, less any taxes then due but not yet paid, at the consummation of the Business Combination.

The actual per share redemption price will be equal to the aggregate amount then on deposit in the Trust Account (before payment of deferred underwriting commissions and including interest earned on their pro rata portion of the Trust Account, net of taxes payable), divided by the number of shares of common stock underlying the CLAQ Units sold in the IPO. Please see the section titled “The Meeting — Redemption Rights” for the procedures to be followed if you wish to redeem your shares of common stock for cash.

Exercise of your redemption rights will not result in either the exercise or loss of any of the warrants you may hold. Your warrants will continue to be outstanding following a redemption of your Public Common Stock and will become exercisable in connection with the completion of the Business Combination.

If you intend to seek redemption of your Public Common Stock, you will need to deliver your shares (either physically or electronically) to Continental, our Transfer Agent, prior to the Meeting, as described in this Proxy Statement/Prospectus. If you have questions regarding the certification of your position or delivery of your shares, please contact:

Continental Stock Transfer & Trust Company
One State Street, 30th Floor
New York, New York 10004
Attention: Mark Zimkind
E-mail: mzimkind@continentalstock.com

Q:     What are the U.S. federal income tax consequences of exercising my redemption rights?

A:     In the event that a U.S. Holder elects to redeem its common stock for cash, the treatment of the transaction for U.S. federal income tax purposes will depend on whether the redemption qualifies as a sale or exchange of common stock under Section 302 of the Code or is treated as a distribution under Section 301 of the Code.

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Whether the redemption qualifies as a sale or exchange or is treated as a distribution will depend on the facts and circumstances of each particular U.S. Holder at the time such U.S. Holder exercises his, her, or its redemption rights. If the redemption qualifies as a sale or exchange of the common stock, the U.S. Holder will be treated as recognizing capital gain or loss equal to the difference between the amount realized on the redemption and such U.S. Holder’s adjusted tax basis in the common stock surrendered in such redemption transaction. Any such capital gain or loss generally will be long-term capital gain or loss if the U.S. Holder’s holding period for the common stock redeemed exceeds one year. The deductibility of capital losses is subject to limitations. See “Material U.S. Federal Income Tax Consequences — Certain Material U.S. Federal Income Tax Consequences of Exercising Redemption Rights” for a more detailed discussion of the U.S. federal income tax consequences of a U.S. Holder electing to redeem its common stock for cash.

Q:     What are the material U.S. federal income tax consequences of the Merger to holders of Nauticus Common Stock?

A:     CLAQ and Nauticus intend for the Merger to qualify as a tax-deferred “reorganization” within the meaning of Section 368(a) of the Code. In connection with the filing of this registration statement, Nauticus is receiving an opinion of legal counsel, based on certain factual representations from CLAQ, Merger Sub and Nauticus and certain customary factual assumptions, to the effect that the Merger will qualify as a tax-deferred “reorganization.” Certain material U.S. federal income tax considerations that may be relevant to holders of Nauticus Common Stock in respect of the Merger are discussed in more detail in the section entitled “Material U.S. Federal Income Tax Consequences — U.S. Federal Income Tax Considerations for Holders of Nauticus Common Stock.” The discussion of the U.S. federal income tax consequences contained in this proxy statement/prospectus is intended to provide only a general discussion and is not a complete analysis or description of all of the U.S. federal income tax considerations that are applicable to holders of Nauticus common stock in respect of the Merger, nor does it address any tax considerations arising under U.S. state or local or non-U.S. tax laws.

TAX MATTERS ARE COMPLICATED, AND THE TAX CONSEQUENCES OF THE MERGER WILL DEPEND ON THE FACTS APPLICABLE TO EACH HOLDER OF NAUTICUS COMMON STOCK. EACH HOLDER OF NAUTICUS COMMON STOCK SHOULD CONSULT THEIR OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO SUCH HOLDER BASED ON SUCH HOLDER’S PARTICULAR CIRCUMSTANCES.

Q:     What do I need to do now?

A:     You are urged to read carefully and consider the information contained in this proxy statement/prospectus, including the annexes, and to consider how the Business Combination will affect you as a stockholder. You should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card or, if you hold your shares through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or nominee.

Q:     How can I vote?

A:     If you are a stockholder of record, you may vote online at the virtual Meeting or vote by proxy using the enclosed proxy card, the Internet or telephone. Whether or not you plan to participate in the Meeting, we urge you to vote by proxy to ensure your vote is counted. Even if you have already voted by proxy, you may still attend the virtual Meeting and vote online, if you choose.

To vote online at the virtual Meeting, follow the instructions below under “How may I participate in the virtual Meeting?”

To vote using the proxy card, please complete, sign and date the proxy card and return it in the prepaid envelope. If you return your signed proxy card before the Meeting, we will vote your shares as you direct.

To vote via the telephone, you can vote by calling the telephone number on your proxy card. Please have your proxy card handy when you call. Easy-to-follow voice prompts will allow you to vote your shares and confirm that your instructions have been properly recorded.

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To vote via the Internet, please go to            and follow the instructions. Please have your proxy card handy when you go to the website. As with telephone voting, you can confirm that your instructions have been properly recorded.

Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day until 11:59 p.m. Eastern Time on            , 2022. After that, telephone and Internet voting will be closed, and if you want to vote your shares, you will either need to ensure that your proxy card is received before the date of the Meeting or attend the virtual Meeting to vote your shares online.

If your shares are registered in the name of your broker, bank or other agent, you are the “beneficial owner” of those shares and those shares are considered as held in “street name.” If you are a beneficial owner of shares registered in the name of your broker, bank or other agent, you should have received a proxy card and voting instructions with these proxy materials from that organization rather than directly from us. Simply complete and mail the proxy card to ensure that your vote is counted. You may be eligible to vote your shares electronically over the Internet or by telephone. A large number of banks and brokerage firms offer Internet and telephone voting. If your bank or brokerage firm does not offer Internet or telephone voting information, please complete and return your proxy card in the self-addressed, postage-paid envelope provided.

If you plan to vote at the virtual Meeting, you will need to contact Continental at the phone number or email below to receive a control number and you must obtain a legal proxy from your broker, bank or other nominee reflecting the number of shares of common stock you held as of the Record Date, your name and email address. You must contact Continental for specific instructions on how to receive the control number. Please allow up to 48 hours prior to the meeting for processing your control number.

After obtaining a valid legal proxy from your broker, bank or other agent, to then register to attend the Meeting, you must submit proof of your legal proxy reflecting the number of your shares along with your name and email address to Continental. Requests for registration should be directed to 917-            -            or email proxy@continentalstock.com. Requests for registration must be received no later than ________ p.m., Eastern Time, on ________, 2022.

You will receive a confirmation of your registration by email after we receive your registration materials. We encourage you to access the Meeting prior to the start time leaving ample time for the check in.

Q:     How may I participate in the virtual Meeting?

A.     If you are a stockholder of record as of the Record Date for the Meeting, you should receive a proxy card from Continental, containing instructions on how to attend the virtual Meeting including the URL address, along with your control number. You will need your control number for access. If you do not have your control number, contact Continental at 917-            -            or email proxy@continentalstock.com.

You can pre-register to attend the virtual Meeting starting on            , 2022. Go to http://            , enter the control number found on your proxy card you previously received, as well as your name and email address. Once you pre-register you can vote or enter questions in the chat box. At the start of the Meeting you will need to re-log into http://            using your control number.

If your shares are held in street name, and you would like to join and not vote, Continental will issue you a guest control number. Either way, you must contact Continental for specific instructions on how to receive the control number. Please allow up to 48 hours prior to the meeting for processing your control number.

Q:     Who can help answer any other questions I might have about the virtual Meeting?

A.     If you have any questions concerning the virtual Meeting (including accessing the meeting by virtual means) or need help voting your shares of common stock, please contact Continental at 917-            -            or email proxy@continentalstock.com.

The Notice of Special Meeting, proxy statement/prospectus and form of Proxy Card are available at:            .

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Q:     If my shares are held in “street name” by my bank, brokerage firm or nominee, will they automatically vote my shares for me?

A:     No. If you are a beneficial owner and you do not provide voting instructions to your broker, bank or other holder of record holding shares for you, your shares will not be voted with respect to any Proposal for which your broker does not have discretionary authority to vote. If a Proposal is determined to be discretionary, your broker, bank or other holder of record is permitted to vote on the Proposal without receiving voting instructions from you. If a Proposal is determined to be non-discretionary, your broker, bank or other holder of record is not permitted to vote on the Proposal without receiving voting instructions from you. A “broker non-vote” occurs when a bank, broker or other holder of record holding shares for a beneficial owner does not vote on a non-discretionary proposal because the holder of record has not received voting instructions from the beneficial owner.

Each of the Proposals to be presented at the Meeting is a non-discretionary proposal. Accordingly, if you are a beneficial owner and you do not provide voting instructions to your broker, bank or other holder of record holding shares for you, your shares will not be voted with respect to any of the Proposals. A broker non-vote would have the same effect as a vote against the Business Combination Proposal, and the Adjournment Proposal.

Q:     What if I abstain from voting or fail to instruct my bank, brokerage firm or nominee?

A:     CLAQ will count a properly executed proxy marked “ABSTAIN” with respect to a particular Proposal as present for the purposes of determining whether a quorum is present at the Meeting. For purposes of approval, an abstention on any Proposals will have the same effect as a vote “AGAINST” such Proposal.

Q:     If I am not going to attend the Meeting, should I return my proxy card instead?

A.     Yes. Whether you plan to attend the Meeting virtually or not, please read the enclosed proxy statement/prospectus carefully, and vote your shares by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.

Q:     How can I submit a proxy?

A.     You may submit a proxy by (a) visiting            and following the on screen instructions (have your proxy card available when you access the webpage), or (b) calling toll-free            in the U.S. or            from foreign countries from any touch-tone phone and follow the instructions (have your proxy card available when you call), or (c) submitting your proxy card by mail by using the previously provided self-addressed, stamped envelope.

Q:     Can I change my vote after I have mailed my proxy card?

A:     Yes. You may change your vote at any time before your proxy is voted at the Meeting. You may revoke your proxy by executing and returning a proxy card dated later than the previous one, or by attending the virtual Meeting in person and casting your vote or by voting again by the telephone or Internet voting options described below, or by submitting a written revocation stating that you would like to revoke your proxy that our proxy solicitor receives prior to the Meeting. If you hold your shares of common stock through a bank, brokerage firm or nominee, you should follow the instructions of your bank, brokerage firm or nominee regarding the revocation of proxies. If you are a record holder, you should send any notice of revocation or your completed new proxy card, as the case may be, to:

ADVANTAGE PROXY
P.O. Box 13581
Des Moines, WA 98198
Toll Free: (877) 870-8565
Collect: (206) 870-8565
Email: ksmith@advantageproxy.com

Unless revoked, a proxy will be voted at the virtual Meeting in accordance with the stockholder’s indicated instructions. In the absence of instructions, proxies will be voted FOR each of the Proposals.

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Q:     What will happen if I return my proxy card without indicating how to vote?

A:     If you sign and return your proxy card without indicating how to vote on any particular Proposal, the shares of common stock represented by your proxy will be voted in favor of each Proposal. Proxy cards that are returned without a signature will not be counted as present at the Meeting and cannot be voted.

Q:     Should I send in my share certificates now to have my shares of common stock redeemed?

A:     CLAQ stockholders who intend to have their Public Common Stock redeemed should send their certificates to Continental at least two business days before the Meeting. Please see “The Meeting — Redemption Rights” for the procedures to be followed if you wish to redeem your Public Common Stock for cash.

Q:     Who will solicit the proxies and pay the cost of soliciting proxies for the Meeting?

A:     CLAQ will pay the cost of soliciting proxies for the Meeting. CLAQ has engaged Advantage Proxy to assist in the solicitation of proxies for the Meeting. CLAQ has agreed to pay Advantage Proxy a fee of $10,000, plus disbursements, and will reimburse Advantage Proxy for its reasonable out-of-pocket expenses and indemnify Advantage Proxy and its affiliates against certain claims, liabilities, losses, damages, and expenses. CLAQ will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of common stock for their expenses in forwarding soliciting materials to beneficial owners of the common stock and in obtaining voting instructions from those owners. Our directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

Q:     What happens if I sell my shares before the Meeting?

A:     The Record Date for the Meeting is earlier than the date of the Meeting, as well as the date that the Business Combination is expected to be consummated. If you transfer your shares of common stock after the Record Date, but before the Meeting, unless the transferee obtains from you a proxy to vote those shares, you would retain your right to vote at the Meeting, but will transfer ownership of the shares and will not hold an interest in CLAQ after the Business Combination is consummated.

Q:     When is the Business Combination expected to occur?

A:     Assuming the requisite regulatory and stockholder approvals are received, CLAQ expects that the Business Combination will occur as soon as possible following the Meeting.

Q:     Are Nauticus’ stockholders required to approve the Business Combination?

A:     Yes. The Nauticus stockholders are required to also approve the Business Combination and have approved it.

Q:     Are there risks associated with the Business Combination that I should consider in deciding how to vote?

A:     Yes. There are a number of risks related to the Business Combination and other transactions contemplated by the Merger Agreement, that are discussed in this proxy statement/prospectus. Please read with particular care the detailed description of the risks described in “Risk Factors” beginning on page 46 of this proxy statement/prospectus.

Q:     May I seek statutory appraisal rights or dissenter rights with respect to my shares?

A:     No. Appraisal rights are not available to holders of shares of common stock in connection with the proposed Business Combination. For additional information, see the section titled “The Meeting — Appraisal Rights.”

Q:     What happens if the Business Combination is not consummated?

A:     If CLAQ does not consummate the Business Combination by August 19, 2022 (or January 19, 2023, the date that is 18 months from the closing of the IPO, if extended by the full amount of time allowed under CLAQ’s Current Charter), then pursuant to Article Sixth of its Curent Charter, CLAQ’s officers must take all actions necessary in accordance with the DGCL to dissolve and liquidate CLAQ as soon as reasonably possible. Following dissolution, CLAQ will no longer exist as a company. In any liquidation, the funds held in the Trust Account, plus any interest earned thereon (net of taxes payable), together with any remaining out-of-trust net assets, will

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be distributed pro-rata to holders of shares of common stock who acquired such shares in the IPO or in the aftermarket. The estimated consideration that each share of common stock would be paid at liquidation would be approximately $10.18 per share for stockholders based on the amount on deposit in the Trust Account as of August 1, 2022. The closing price of our common stock on the Nasdaq Stock Market as of August 1, 2022 was $10.18. The Initial Stockholders waived the right to any liquidation distribution with respect to any shares of common stock held by them.

Q:     What happens to the funds deposited in the Trust Account following the Business Combination?

A:     Following the closing of the Business Combination, holders of public shares of CLAQ exercising redemption rights will receive their per share redemption price out of the funds in the Trust Account. The balance of the funds will be released to Nauticus to fund working capital needs of the Combined Company. As of August 1, 2022, there was approximately $18.1 million in the Trust Account. CLAQ estimates that approximately $10.18 per share of Common Stock will be paid to the public stockholders exercising their redemption rights.

Q:     Who will manage the Combined Company after the Business Combination?

A:     As a condition to the closing of the Business Combination, all of the officers and directors of CLAQ will resign, other than Mr. Eli Spiro, who will serve as a director of the Combined Company, subject to certain closing conditions. For information on the anticipated management of the Combined Company, see the section titled “Directors and Executive Officers of the Combined Company after the Business Combination” in this proxy statement/prospectus.

Q:     Who can help answer my questions?

A:     If you have questions about the Proposals or if you need additional copies of this proxy statement/prospectus or the enclosed proxy card, you should contact CLAQ’s proxy solicitor at:

ADVANTAGE PROXY
P.O. Box 13581
Des Moines, WA 98198
Toll Free: (877) 870-8565
Collect: (206) 870-8565
Email: ksmith@advantageproxy.com

You may also obtain additional information about CLAQ from documents filed with the SEC by following the instructions in the section titled “Where You Can Find More Information.”

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SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

This summary highlights selected information from this proxy statement/prospectus but may not contain all of the information that may be important to you. Accordingly, CLAQ encourages you to read carefully this entire proxy statement, including the Merger Agreement attached as Annex A. Please read these documents carefully as they are the legal documents that govern the Business Combination and your rights in the Business Combination.

Unless otherwise specified, all share calculations assume no exercise of the redemption rights by CLAQ’s stockholders.

The Parties to the Business Combination

CleanTech Acquisition Corp.

CLAQ was incorporated as a blank check company formed under the laws of the State of Delaware on June 18, 2020. CLAQ was formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities.

On July 19, 2021, CLAQ consummated the IPO of 15,000,000 Units at $10.00 per Unit, generating gross proceeds of $150,000,000. Simultaneously with the closing of the IPO, CLAQ consummated the sale of 4,333,333 warrants at a price of $1.00 per Private Warrant in a private placement to CleanTech Sponsor ( “CleanTech Sponsor”), and 2,166,667 warrants (together, the “Private Warrants”) at a price of $1.00 per Private Warrant in a private placement to CleanTech Investments LLC, an affiliate of CleanTech Sponsor (“CleanTech Investments,” together with CleanTech Sponsor, the “Co-sponsors”), generating gross proceeds of $6,500,000.

CLAQ granted the underwriters in the IPO a 45-day option to purchase up to 2,250,000 additional Units to cover over-allotments, if any. On July 28, 2021, the underwriters exercised the over-allotment option in full to purchase 2,250,000 Units, generating an aggregate of gross proceeds of $22,500,000. In connection with the underwriters’ exercise of their over-allotment option, CLAQ also consummated the sale of an additional 450,000 Private Warrants at $1.00 per Private Warrant to CleanTech Sponsor and 225,000 Private Warrants at $1.00 per Private Warrant to CleanTech Investments, generating gross proceeds of $675,000.

The amounts held in the Trust Account may only be used by CLAQ upon the consummation of a business combination, except that there can be released to CLAQ, from time to time, any interest earned on the funds in the Trust Account that it may need to pay its tax obligations. The remaining interest earned on the funds in the Trust Account will not be released until the earlier of the completion of a business combination and CLAQ’s liquidation. CLAQ executed the Merger Agreement on December 16, 2021 and it must liquidate unless a business combination is consummated by August 19, 2022 (or January 19, 2023, the date that is 18 months from the closing of the IPO, if the Combination Period is extended by the full amount of time allowed under CLAQ’s Current Charter).

After deducting the underwriting discounts, offering expenses, and commissions from the IPO (including the over-allotment option) and the sale of the Private Warrants, a total of $174,500,000 was deposited into the Trust Account, and the remaining $1,500,000 of the net proceeds were outside of the Trust Account and made available to be used for business, legal and accounting due diligence on prospective business combinations and continuing general and administrative expenses.

At the special meeting of stockholders held on July 18, 2022, CLAQ’s stockholders approved the Charter Amendment Proposal and the Trust Agreement Proposal, giving CLAQ the right to extend the Combination Period six (6) times for an additional one (1) month each time by depositing into the Trust Account $100,000 for each one-month extension. As of July 19, 2022, CLAQ had $342,847 cash outside the Trust Account available for its working capital needs, and $100,000 of that has been set aside for deposit into the Trust Account in August 2022 in case management finds it necessary to extend the Combination Period from August 19, 2022 to September 19, 2022. As of August 1, 2022, there was approximately $18.1 million held in the Trust Account.

The Units, Common Stock, Rights and Warrants are currently listed on the Nasdaq Stock Market, under the symbols “CLAQU,” “CLAQ,” “CLAQR” and “CLAQW,” respectively. The Units, Common Stock and Warrants commenced trading on the Nasdaq Stock Market separately on or about August 4, 2021.

CLAQ’s principal executive offices are located at 207 West 25th Street, 9th Floor, New York, NY 10001 and its telephone number is (212) 494-9005.

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Nauticus Robotics, Inc.

Nauticus Robotics, Inc. is a Houston-area developer of ocean robots, cloud software, and services delivered in a modern business model to the ocean industry. Nauticus was initially incorporated as Houston Mechatronics, Inc. on March 27, 2014, in the State of Texas. Nauticus’ robotics products and services will be delivered to commercial and government-facing customers through a Robotics as a Service (“RaaS”) business model and direct product sales for both hardware platforms and software licenses. Besides a standalone service offering and forward facing products, Nauticus’ approach to ocean robotics has also resulted in the development of a range of technology products for retrofit/upgrading legacy systems and other 3rd party vehicle platforms. Nauticus’ services provide customers with the necessary data collection, analytics, and subsea manipulation capabilities to support and maintain assets while reducing their operational footprint, operating cost, and greenhouse gas emissions, to improve offshore health, safety, and environmental exposure.

The Robotics as a Service revenue model emulates the Software as a Service (SaaS) revenue model, which is commonly used for consumer and business software licensing, but extends the model to include robots. In the SaaS model, the end user pays a fixed fee for a set period of time in order to use of the software. In the case of Nauticus’ RaaS model, clients will be charged a flat fee for performing the service over a period of time as required to complete the task. This fixed fee supports full use of Aquanaut, Hydronaut, ToolKITT, the communication infrastructure, and the personnel required to support the servicing mission. The RaaS fee approach encompasses the complete technology stack that is required to complete the contracted work. This can be contrasted with the industry’s current commercial approach which bills clients based on the individual elements for performing the servicing mission (e.g., an itemized invoice for deployment of the equipment, tooling, crew, boat fuel, vessel, etc.). With the RaaS model, a flat rate, currently estimated to be $40,000/day, will be billed to cover all equipment and personnel required to perform the service, irrespective of exactly which tasks are being performed. In Nauticus’ RaaS model, the subscriber pays for the service and not the rolled-up costs individually, as is frequently done today via an a la carte menu fashion. All other costs are covered in the subscription fee, including the long-term maintenance and servicing of the robots. At this stage, Nauticus proposes the use of a Robotics as a Service business model for delivering services to commercial clients only.

In contrast to the other robotics systems, the Argonaut is handled differently and does not currently fall under the RaaS business model. The client base for Argonaut purchases the platform outright. There is longer term service revenue associated with each platform around maintenance and addon enhancements and payloads.

Nauticus’ mission is to disrupt the current ocean services paradigm through the introduction and integration of advanced robotic technologies. These key technologies are supervised autonomy control software, novel robotic platforms capable of implementing autonomous behaviours, acoustic communications networking protocols, force/torque controllable electric manipulation, perception, artificial intelligence, and machining learning software, and multimodal 3-D workspace sensors. Implementation of these technologies enables substantially improved operations at significantly reduced costs and greenhouse gas emissions over conventional methods based on the size of legacy surface support vessels, their crew, and required communications and power links. Legacy surface support vessels are typically 75 meter vessels, requiring a large crew and substantial equipment. Further, using tethered ROVs, the surface support vessel must support large spools of communication and power cable that can link the surface to the ROV, for example, down to 3,000m. This outfit can cost upwards of $100,000 per day, based on the size of the crew, the cost or the surface support vessel and equipment. In comparison, Nauticus’ cost estimates, which it validated through testing of the Hydronaut and Aquanaut, show that these day rate costs can be reduced by up to 60% when the full complement of Nauticus technologies are deployed. This is because the cost to outfit and hire the vessel are reduced as the Hydronaut is a 18 meter vessel, requiring fewer crew and resources. And, the reduced crew and vessel size leads to similar reductions in greenhouse gases emitted during these operations. Further, because the Aquanaut is an untethered remotely operated vehicle (“ROV”), it does not require the amounts of communication and power cables that a tethered ROV requires, reducing the cost of operations.

Robotics Systems:

A sample set of Nauticus’ portfolio of robotics systems include:

        Aquanaut.    The Aquanaut is designed to be launched from shore or off the back of an autonomous surface vessel to operate as a free-swimming subsea vehicle that is controlled through an acoustic communication system and capable of performing a wide range of inspection and manipulation tasks. The defining capability of Aquanaut is to operate in two separate modes — Inspection and Intervention. The Inspection mode involves the use of sensors during vehicle transit and the Intervention mode uses work class manipulators (Nauticus’ Olympic Arms) to perform work in the subsea environment.

The Aquanaut is currently offered through direct sales to strategic clients and will be offered through RaaS when available.

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Nauticus has produced two units to date. Both of which may be considered “pre-production units” but for internal purposes are distinguished as being a “developmental unit” and a “pre-production unit”. The initial unit, referred to herein as the “developmental unit” was built to identify the key developmental challenges (hence why the moniker “developmental unit” is sometimes used to refer to this initial vehicle) of building a transformable subsea vehicle that could perform dexterous manipulation over low-capacity bandwidth and latent communication techniques (i.e., those indicative of acoustic communications rates — to which Nauticus was granted a patent). Once the “developmental unit” was produced, Nauticus tested this vehicle in Nauticus’ own test tank, NASA’s indoor Neutral Buoyancy Laboratory, Seanic’s outdoor pool, and in other inland outdoor bodies of water to identify other design aspects for further engineering improvements.

This “developmental unit” vehicle testing motivated the redesign of subsystems for the subsequent Aquanaut vehicle, referred herein as the “pre-production unit” vehicle. Nauticus chose to apply the pre-production classification to the second unit because the vehicle still had not gone through a design evolution for deep water and mass production (defined as tens of units per year) considerations. However, the second pre-production vehicle still incorporated several key improvements over the initial “developmental unit” including aluminum space frame hull structure and other materials enhancements, improved thrust and sensor payloads, improved vehicle performance, and most importantly an improved power electronics and avionics architecture. The second “pre-production unit” vehicle also expanded the test regime to the Gulf of Mexico Galveston Bay area. The purpose of this second “pre-production unit” vehicle was to demonstrate expanded and advanced capabilities in perception, embedded computing, and autonomous manipulation and to further inform the manufacturing techniques for the production vehicles. The developmental unit is currently under contract with our Large Confidential Government Contractor (as defined below). The “generational” approach described above, that Nauticus has utilized in the development of the Aquanaut, is a very common engineering practice that mitigates final product risk through incremental vehicle improvements.

Three units are in production (which are being assembled through a trusted and experienced subsea vehicle manufacturing partner incorporating processes for tighter quality control, volume manufacturing that will allow repeatable low volume mass production and also some improved deep-water design changes) and were expected to be completed by the end of the third quarter of 2022. However, due to supply chain disruptions the three Aquanauts are expected to be completed by the end of the fourth quarter 2022 and commissioned in early 2023. The current production timeline for a single Aquanaut is six months, but Nauticus expects that timeline to decrease to three months in coming years, with production efficiency gains and economies of scale. Nauticus expects that it will be able to sell, lease, or add to its commercial service fleet each Aquanaut within a maximum of 90 days of completed production.

        Argonaut.    A derivative of the Aquanaut vehicle is the Argonaut which has enhanced capabilities for transit and autonomous operations. This vehicle has been orchestrated to provide Nauticus’ government-facing customers with the capabilities to perform their specialized mission scenarios. The Argonaut is completing final assembly in our facility. Upon completion, expected in the third quarter of 2022, the first Argonaut vehicle will undergo commissioning in the Gulf of Mexico leading to its acceptance by the customer, a large confidential government contractor (a “Large Confidential Government Contractor”), for further use in US government applications. Specifically, this vehicle will be used by a Large Confidential Government Contractor, in conjunction with Nauticus, to perform under a current contract. This product and other variants are already available for direct sales to U.S. Department of Defense entities, contractors, and is planned for future commercial services through a RaaS contract for ongoing services.

Since there is very little difference between Argonaut and Aquanaut except for the outer mold line (“OML”), and minor navigational and other sensors, the current production timeline for a single Argonaut is also six months. But Nauticus expects that timeline to similarly decrease to three months in coming years. Nauticus expects that it will be able to sell or lease an Argonaut within 90 days of completed production.

        Olympic Arm.    An all-electric, work-class manipulator built to serve ROV and hovering and resident AUV markets, providing an electric advantage that allows for more perception-driven decision making for semi-autonomous tasking. The current existing hydraulic solutions are undesirous for both operating costs and environmental concerns. Fully electric systems that make use of advanced sensing and control techniques will increase reliability and reduce time-on-task (vessel days saved). Further the all-electric architecture helps prevent hydraulic oil spills for the current offering for more environmentally sensitive areas. (e.g., North Sea, Canada, etc.).

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The Olympic Arm is currently offered as both a standalone product and as a component to both the Aquanaut and in future models of the Argonaut. As such, the Olympic Arm is offered through direct sales and is planned for future commercial services through RaaS. As a standalone product, Nauticus is preparing to deliver the first unit to the first customer, IKM Subsea, followed by a second unit to an additional customer by the end of the third quarter of 2022. The current production timeline for a single Olympic Arm is two months, but Nauticus expects that timeline to decrease to one month in coming years, with production efficiency gains. Nauticus expects that it will be able to sell or lease an Olympic Arm, or incorporate it into an existing product order, within 90 days of completed production.

        ToolKITT.    This software suite is a multi-layered, multi-tool, software platform that can operate the Aquanaut, Argonaut, Olympic Arm, or other 3rd party ocean robotic vehicles through all mission phases. Its capabilities include navigational guidance, vehicle, and manipulator control as well as perception and planning and execution of tasks. ToolKITT is currently generating revenue through a Defense Innovation Unit contract. Under this contract, the ToolKITT operates and controls a 3rd party ROV called a VideoRay Defender (a “Defender ROV”) to perform a set of tasks in support of subsea defense operations. Upon the successful completion of this contract, Nauticus will have the opportunity to license ToolKITT to the U.S. Department of Defense for use on their existing fleet of Defender ROVs.

        Hydronaut.    A small, optionally crewed autonomous surface vessel that will support the real-time operations of Aquanaut in long range and deep water commercial applications. Hydronaut will ferry Aquanaut to and from the worksite and support battery recharging and the over-the-horizons communications link to shore.

The first Hydronaut (“Hydronaut 1”) is currently fulfilling charter days for a Large Confidential Government Contractor, related to a Department of Defense customer. Hydronaut 1 is chartered through the engineering services portion of the contract with a Large Confidential Government Contractor and is not operating under a separate lease agreement. The lease agreement for Hydronaut 1 was based on a usage rate of $6,000 per day, with no fixed number of operational days, beginning on January 31, 2022. Through the four months ended April 30, 2022, the vessel had only been utilized three (3) days for a total revenue of $18,000. Hydronaut will support the RaaS model, when implemented, for Aquanaut. Nauticus will also independently offer Hydronaut through RaaS, when available, and currently offers Hydronaut through direct sales. Nauticus currently has one Hydronaut in service. It also has two more Hydronauts in production with Diverse Marine, in the UK, which were expected to be completed during the first quarter of 2023. However, due to supply chain disruptions the two Hydronauts are expected to be completed and commissioned in Q2 2023. Nauticus expects that it will be able to sell, lease, or add to its commercial service fleet, a Hydronaut within 90 days of completed production.

Robotics Team:

Nauticus has an experienced team with deep operational expertise in bringing emerging technologies to market. Nauticus’ engineering and design efforts are led by a highly experienced robotics team with over 200 years of cumulative robotics experience. Nauticus’ core engineering team has been working together for over 15 years and has designed and deployed advanced robotics systems for both public and private market applications.

Nauticus’ engineering process is a blend of Agile principles and a traditional phase-gate development workflows. The nature of robotics is highly intra- and multidisciplinary, containing both hardware and software components and requires a blend of both design methodologies. On the hardware side, Nauticus has created two design workflows (Standard Design and Simplified Design) that allow for quick-turn development as well as rigorous and detailed engineering work. Nauticus has also implemented a modified Agile Scrum workflow that allows for continual delivery of value, ability to change priorities, and resolve problems quickly.

Services and Revenue:

Nauticus is within an industry that operates on a service-based daily rate model, often with very lengthy master service agreements. These master service agreements can span from two to four years, or more, for each device dedicated to one customer, resulting in low utilization per asset. Nauticus differentiates itself by employing a more opportunistic view which expands across different customers for shorter periods of time, thus facilitating higher utilization rates.

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However, similar to the current service model, our RaaS business model (planned for future commercial services but yet to be implemented) is characterized by a recurring revenue stream granted in exchange for services provided, in this case through usage of our Nauticus robotic vehicles. The RaaS model should be considered within a range of revenue models that have this recurring characteristic. The RaaS model, as described in this prospectus, covers a range of conventional service contracts through an ongoing contract to provide services in a local area. As Nauticus deploys its initial service fleet (currently projected to commence in late 2022 with the preproduction Aquanaut and preproduction Hydronaut at a rate that is lower than the intended market rate of $40,000 per day, but really in force in 2023 with the production Aquanaut and production Hydronaut at the intended market rate of $40,000 per day) we anticipate that the initial services will be paid through conventional contracting methods, directly with the customer or in regional partnerships with an in-country service entity.

These conventional contracting methods typically revolve around a long-term master service agreement (MSA) with an end client and service company. As a go to market strategy, Nauticus Robotics aligned interests with regional partners (e.g., Stinger Technology AS in Norway) to offer this conventional method within already awarded frame agreements. This allows Nauticus Robotics to shorten the adoption time of the service technology solution to an end client without having the end client fully adopt the entire RaaS model. There is however nothing that would prevent the end client from contracting directly with Nauticus Robotics under the RaaS offering. Thus use of the conventional contracting method does not exclude the providing of such services through the RaaS business model. Nonetheless, this conventional contracting method provides a quicker alternative if the RaaS business model is initially undesirable — a prominent reason being that the current contract is not up for rebid until much later. This allows Nauticus Robotics to provide and the client to access Nauticus Robotics technology sooner. This in turn also allows Nauticus Robotics to rapidly expand into new regions since it will use the in-country facilities and business resources of the regional partner.

Nauticus’ RaaS business model accommodates this type of contracting mechanism. However, as the new service paradigm matures and this technology is utilized by more customers, increased fleet assets will create a network effect in specific market regions (e.g., the North Sea, Gulf of Mexico, etc.). These assets will provide a continuous virtual residency of vehicles that serve the customer base. This ‘residency’ of available assets will enable a new approach to services at a further reduced cost, as customers share the operational overhead of supporting this new type of service infrastructure through ongoing subscription-based contracting.

The RaaS business model will be applied to the commercial fleet services aspect of our business. These services will be deployed through various RaaS contracting mechanisms as the market requires. The ToolKITT software platform is intended to be licensed on a SaaS basis or, in some cases, sold to end customers through a perpetual license. In the latter case, end users will be contracted for software support and maintenance. New versions and upgrades will be sold to customers set to retain the recurring revenue nature of the SaaS/RaaS model.

Although the sale of Nauticus’ products may occur on either point sales or RaaS/SaaS models, the fleet services and software (ToolKITT) are targeted for this type of recurring revenue sales. Other products such as Argonaut (US Defense) and Olympic Arms (for existing ROVs) are anticipated to be sold through conventional sales contracts with accompanying software licenses. Aquanaut, the commercial subsea vehicle, may also be sold to selective customers, when those sales are not expected to cannibalize or compete with other Nauticus fleet services.

To date, Nauticus has generated revenue through U.S. defense contracts utilizing Aquanaut, Hydronaut, ToolKITT and commercial contracts for engineering services. A recent purchase order from IKM Group (Norway) marks the first commercial sale of Nauticus’ Olympic Arm (all-electric, work class, subsea manipulator). The upcoming delivery of the Argonaut vehicle to a Large Confidential Government Contractor in the third quarter of 2022 represents the first sale of a vehicle to a commercial customer. Nauticus intends to continue to support the U.S. Department of Defense as a contract performer, both on its own and with a Large Confidential Government Contractor. These contracts support further technology development for Nauticus and further opportunities to migrate aspects of this work to the commercial sector. Both Nauticus and our partner, a Large Confidential Government Contractor, plan to actively pursue sales and services in the U.S. defense and intelligence communities through the Argonaut vehicle. Engineering services for ad hoc projects will be naturally phased out of the revenue mix as Nauticus focuses on deploying its service fleet and conducting subsea services.

Currently, the Nauticus has limited product sales as its core products are still under development. Product sales to date have been for HaloGuard, a red zone monitoring solution we developed.

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The following table provides a breakdown of the actual and projected revenue by services and direct product sales (1)(2):

Category

 

2021A

 

2022E

 

2023E

 

2024E

Services

 

8.6

 

13.9

 

57.7

 

146.0

Direct Product Sales

 

0.0

 

9.5

 

36.8

 

56.1

Total

 

8.6

 

23.4

 

94.5

 

202.1

____________

(1)      The projected revenue by Services and Direct Product Sales disclosed in the table above is subject to the same qualifications and assumptions applied to the revenue projections disclosed under “Proposal 1 — The Business Combination Proposal — Certain Nauticus’ Projected Financial Information”.

(2)      The projected revenue by Services and Direct Product Sales disclosed in the table above is the same that was presented and prepared as part of the projected financial information that Nauticus provided to CLAQ prior to its approval of the Business Combination.

The services reflected in the above table includes revenue from the RaaS model (as projected) applied to commercial services (primarily subsea energy/offshore wind), engineering services (primarily the Defense market), the lease of vehicles to commercial customers, and software licenses (SaaS). The Direct Product Sales category summarizes the sales of Aquanaut and Argonaut vehicles directly to commercial and defense customers.

The RaaS model is anticipated to commence in late 2022 with the currently available Hydronauts and Aquanauts in Nauticus’ inventory. The RaaS model will initially be offered through a preproduction Hydronaut and preproduction Aquanaut pair at a price point that is less than the anticipated $40,000 per day rate (disclosed herein). After delivery of additional vehicles to increase the fleet size and after their respective commissioning, the RaaS model is anticipated to continue in 2023 with the production Hydronaut and production Aquanaut at the expected market rate of $40,000 per day. Since the vehicles will have limited calendar space to generate revenue in 2022, the RaaS service model is expected to account for just a small portion, approximately $0.35 million of the $13.9 million, in the broader Services category (as defined above) revenue for 2022. These vehicles, along with the new builds projected in 2023, are expected to generate approximately $12.6 million of the $57.7 million Services revenue in 2023 with the balance of the revenue coming from the other services and product sales within government markets. In 2024, the service fleet is expected to expand and the revenue from the RaaS business is estimated to account for $117.4 million of the total projected revenue of $146.0 million from services.

Contact:

Nauticus’ principal executive offices are located at 17146 Feathercraft Lane, Suite 450, Webster, TX 77598. Nauticus’ telephone number in the USA is (281) 942-9069. Additional company and product information is available at www.nauticusrobotics.com.

For more information on Nauticus, please see the sections titled “Information about Nauticus Robotics, Inc.” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Nauticus”

Merger Sub

Merger Sub is a wholly-owned subsidiary of CLAQ formed to consummate the Business Combination. Following the consummation of the Business Combination, Merger Sub will have merged with and into Nauticus, with Nauticus surviving the Merger as a wholly-owned subsidiary of CLAQ.

The Merger Agreement

On December 16, 2021, CLAQ, entered into an Merger Agreement with Merger Sub, and Nauticus. Pursuant to the terms of the agreement, a business combination between CLAQ and Nauticus will be effected through the merger of Merger Sub with and into Nauticus, with Nauticus surviving the Merger as a wholly owned subsidiary of CLAQ. On January 30, 2022, the Merger Agreement was amended to, among other things, (i) correct certain defined terms in the Merger Agreement; and (ii) include the cash available from the Debt Financing in meeting the “Minimum Cash Condition” defined in the Merger Agreement.

The Board of Directors of CLAQ (the “Board”) has (i) approved and declared advisable the Merger Agreement, the Business Combination and the other transactions contemplated thereby and (ii) resolved to recommend approval of the Merger Agreement and related matters by the stockholders of CLAQ.

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On June 6, 2022, the Merger Agreement was amended to increase the aggregate number of shares of the Combined Company’s Common stock to be reserved for issuance pursuant to the Incentive Plan (defined below) from 5% to 10% of the fully diluted outstanding shares of its Common Stock after Closing, which share reserve shall be automatically increased on an annual basis by 3% of the total number of Common Stock outstanding as provided under the Incentive Plan.

The Merger Consideration

The Business Combination implies a $561 million post-closing equity value and a current equity value of Nauticus at $300 million. Prior to the Closing, Nauticus will (i) effect the Nauticus Preferred Stock Conversion, (ii) effect the Nauticus Convertible Notes Conversion, and (iii) convert each share of Nauticus Common Stock (including shares of Nauticus Common Stock outstanding as a result of the Nauticus Preferred Stock Conversion and Nauticus Convertible Notes Conversion, but excluding shares of the holders who perfect rights of appraisal under Delaware law) into the right to receive (a) the Per Share Merger Consideration and (b) Earnout Shares. As a result of these transactions, each outstanding share of Nauticus Common Stock will have a value at the time of the Business Combination of $10.00 (based on the $300 million equity value of Nauticus).

In addition, in connection with the Closing, CLAQ will issue the Earn-Out Shares to the former holders of Nauticus Common Stock and such holders will deliver the Earnout-Out Shares to the Escrow Agent. The release of the Earn-Out Shares to the former holders of Nauticus Common Stock will be subject to restrictions linked to milestones (based on the achievement of certain target prices of CleanTech Common Stock following the Closing) as further described in the section entitled “Proposal 1 — The Business Combination Proposal — The Merger Agreement — Treatment of Nauticus Securities — Earn-Out Shares.” In the event such milestones are not met, all of the Earn-Out Shares will be automatically released to CleanTech for cancellation and the former holders of Nauticus Common Stock shall not have any right to receive such Earnout Shares or any benefit therefrom.

Treatment of Nauticus Securities

Preferred Stock.    Immediately prior to the Effective Time, each share of Nauticus Preferred Stock that is issued and outstanding immediately prior to such time shall automatically convert into shares of Nauticus Common stock, par value $0.01 per share (the “Nauticus Common Stock”), in accordance with its Certificate of Incorporation (collectively, the “Nauticus Preferred Stock Conversion”). As a result of the Merger, an aggregate of 15,062,524 shares of CLAQ Common Stock will be issued to the holders of Nauticus Preferred Stock.

Convertible Notes.    Immediately prior to the Effective Time, each of (i) that certain Unsecured Convertible Promissory Note, dated June 19, 2021, by and between Goradia Capital, LLC and Nauticus, as amended on December 16, 2021, (ii) that certain Unsecured Convertible Promissory Note, August 3, 2021, by and between Material Impact Fund II, L.P. and Nauticus, as amended on December 16, 2021, (iii) that certain Unsecured Convertible Promissory Note, dated October 22, 2021, by and between In-Q-Tel, Inc. and Nauticus, as amended on December 16, 2021, (iv) that certain Unsecured Convertible Promissory Note, dated July 28, 2020, by and between Schlumberger Technology Corporation and Nauticus, as amended on December 16, 2021, and (v) that certain Unsecured Convertible Promissory Note, dated December 7, 2020, by and between Transocean Inc. and Nauticus, as amended on December 16, 2021 (each, a “Nauticus Convertible Note” and collectively, the “Nauticus Convertible Notes”) shall automatically convert into shares of Nauticus Common Stock in accordance with the terms of each such Nauticus Convertible Note (collectively, the “Nauticus Convertible Notes Conversion”). As a result of the Merger, an aggregate of 5,299,543 shares of CLAQ Common Stock will be issued to the holders of Nauticus Convertible Notes.

Common Stock.    At the Effective Time, following the Nauticus Preferred Stock Conversion and Nauticus Convertible Notes Conversion, each share of Nauticus Common Stock (including shares of Nauticus Common Stock outstanding as a result of the Nauticus Preferred Stock Conversion and Nauticus Convertible Notes Conversion, but excluding shares of the holders of which perfect rights of appraisal under Delaware law) will be converted into the right to receive the Per Share Merger Consideration (as defined below) and the Earnout Shares (as defined below). As a result of the Merger, an aggregate of 9,669,216 shares of CLAQ Common Stock will be issued to the holders of Nauticus Common Stock (not including the Earnout Shares).

Stock Options.    At the Effective Time, each outstanding option to purchase shares of Nauticus Common Stock (a “Nauticus Option”), whether or not then vested and exercisable, will be assumed by CLAQ and converted automatically (and without any required action on the part of such holder of outstanding option) into an option to purchase shares of the CLAQ’s Common Stock equal to the number of shares determined by multiplying the number of

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shares of the Nauticus Common Stock subject to such Nauticus Option immediately prior to the Effective Time by the Exchange Ratio (as defined below), which product shall be rounded down to the nearest whole number of shares, at a per share exercise price determined by dividing the per share exercise price of such Nauticus Option immediately prior to the Effective Time by the Exchange Ratio. As a result of the Merger, an aggregate of 3,970,266 shares of CLAQ Common Stock will be issuable upon exercise of these options.

Earnout Shares.    Following the closing of the merger, former holders of shares of Nauticus Common Stock (including shares received as a result of the Nauticus Preferred Stock conversion and the Nauticus Convertible Notes conversion, the “Stockholder Earnout Group”) shall be entitled to receive their pro rata share of up to 7,500,000 additional shares of CleanTech Common Stock (the “Earnout Shares”). The Earnout Shares will be released and delivered to the Stockholder Earnout Group upon occurrence of the following (each, a “Triggering Event”):

(i) one-half of the Escrow Shares will be released if, within a 5-year period following the signing date of the Merger Agreement, the volume-weighted average price of the Combined Company Common Stock equals or exceeds $15.00 per share, over any 20 trading days within a 30-day trading period;

(ii) one-quarter of the Escrow Shares will be released if, within a 5-year period following the signing date of the Merger Agreement, the volume-weighted average price of the Combined Company Common Stock equals or exceeds $17.50 per share over any 20 trading days within a 30-day trading period; and

(iii) one-quarter of the Escrow Shares will be released if, within a 5-year period following the signing date of the Merger Agreement, the volume-weighted average price of the Combined Company Common Stock equals or exceeds $20.00 per share over any 20 trading days within a 30-day trading period.

Representations and Warranties

The Merger Agreement contains customary representations and warranties of the parties thereto with respect to, among other things, (a) entity organization, good standing and qualification, (b) capital structure, (c) authorization to enter into the Merger Agreement, (d) compliance with laws and permits, (e) taxes, (f) financial statements and internal controls, (g) real and personal property, (h) material contracts, (i) environmental matters, (j) absence of changes, (k) employee matters, (l) litigation, and (m) brokers and finders.

Covenants

The Merger Agreement includes customary covenants of the parties with respect to operation of their respective businesses prior to consummation of the Merger and efforts to satisfy conditions to consummation of the Merger. The Merger Agreement also contains additional covenants of the parties, including, among others, covenants providing for CleanTech and Nauticus to use reasonable best efforts to cooperate in the preparation of the Registration Statement and Proxy Statement (as each such term is defined in the Merger Agreement) required to be filed in connection with the Merger and to obtain all requisite approvals of their respective stockholders including, in the case of CleanTech, approvals of the restated certificate of incorporation, the share issuance under Nasdaq rules and the omnibus incentive plan. CleanTech has also agreed to include in the Proxy Statement the recommendation of its board that stockholders approve all of the proposals to be presented at the special meeting.

Nauticus Robotics, Inc. Incentive Plan

CleanTech has agreed to approve and adopt a 2022 omnibus incentive plan (the “Incentive Plan”) to be effective as of the Closing and in a form mutually acceptable to CleanTech and Nauticus. The Incentive Plan shall provide for an initial aggregate share reserve equal to 10% of the number of shares of CleanTech Common Stock on a fully diluted basis at the Closing. Subject to approval of the Incentive Plan by the CleanTech’s stockholders, CleanTech has agreed to file a Form S-8 Registration Statement with the SEC following the Effective Time with respect to the shares of CleanTech Common Stock issuable under the Incentive Plan.

Non-Solicitation Restrictions

Each of CleanTech and Nauticus has agreed that from the date of the Merger Agreement to the Effective Time or, if earlier, the valid termination of the Merger Agreement in accordance with its terms, it will not initiate any negotiations with any party, or provide non-public information or data concerning it or its subsidiaries to any party

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relating to an Acquisition Proposal or Alternative Transaction (as such terms are defined in the Merger Agreement) or enter into any agreement relating to such a proposal. Each of CleanTech and Nauticus has also agreed to use its reasonable best efforts to prevent any of its representatives from doing the same.

Conditions to Closing

The consummation of the Merger is conditioned upon, among other things, (i) receipt of the CleanTech stockholder approval and Nauticus stockholder approval, (ii) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iii) the absence of any governmental order, statute, rule or regulation enjoining or prohibiting the consummation of the Transactions, (iv) the effectiveness of the Registration Statement under the Securities Act, (v) CleanTech having at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), (vi) solely with respect to CleanTech, (A) the representations and warranties of Nauticus being true and correct to applicable standards applicable and each of the covenants of Nauticus having been performed or complied with in all material respects and (B) the approval of the conversion of the convertible notes and (vii) solely with respect to Nauticus, (A) the representations and warranties of CleanTech being true and correct to applicable standards applicable and each of the covenants of CleanTech having been performed or complied with in all material respects (B) the receipt of the approval for listing by Nasdaq of the shares of CleanTech Common Stock to be issued in connection with the transactions contemplated by the Merger Agreement, (C) the effective resignations of certain directors and executive officers of CleanTech, (D) the amount of Minimum Cash Condition (as defined in the Merger Agreement) being equal to or exceeding $50,000,000.

Termination

The Merger Agreement may be terminated at any time prior to the Effective Time as follows:

(i)     by mutual written consent of CleanTech and Nauticus;

(ii)    by either CleanTech or Nauticus if the other party has breached its representations, warranties, covenants or agreements in the Merger Agreement such that the conditions to closing cannot be satisfied and such breach cannot be cured within certain specified time periods, provided that the party seeking to breach is not itself in breach of the Merger Agreement;

(iii)   by either CleanTech or Nauticus if the transactions are not consummated on or before June 30, 2022, provided that the failure to consummate the transaction by that date is not due to a material breach by the party seeking to terminate and which such breach is the proximate cause for the conditions to close not being satisfied;

(iv)   by either CleanTech or Nauticus if a governmental entity shall have issued a law or final, non-appealable governmental order, rule or regulation permanently enjoining or prohibiting the consummation of the Merger, provided that, the party seeking to terminate cannot have breached its obligations under the Merger Agreement and such breach has proximately contributed to the governmental action;

(v)    by either CleanTech or Nauticus if the CleanTech stockholders do not approve the Merger Agreement at a meeting held for that purpose;

(vi)   by written notice from CleanTech to Nauticus if the Nauticus stockholders do not approve the Merger Agreement due to the failure of Nauticus to hold a stockholder vote; or

(vii)   by written notice from Nauticus to CleanTech if the CleanTech board shall have publicly withdrawn, modified or changed in an adverse manner its recommendation to vote in favor of the merger and other proposals.

The Merger Agreement and other agreements described below have been included to provide investors with information regarding their respective terms. They are not intended to provide any other factual information about CleanTech, Nauticus or the other parties thereto. In particular, the assertions embodied in the representations and warranties in the Merger Agreement were made as of a specified date, are modified or qualified by information in one or more confidential disclosure letters prepared in connection with the execution and delivery of the Merger Agreement, may be subject to a contractual standard of materiality different from what might be viewed as material to investors, or may have been used for the purpose of allocating risk between the parties. Accordingly, the representations and warranties in the Merger Agreement are not necessarily characterizations of the actual state of facts about CleanTech, Nauticus or the other

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parties thereto at the time they were made or otherwise and should only be read in conjunction with the other information that CleanTech makes publicly available in reports, statements and other documents filed with the SEC. CleanTech and Nauticus investors and securityholders are not third-party beneficiaries under the Merger Agreement.

Certain Related Agreements

Support Agreements.    In connection with the execution of the Merger Agreement, CleanTech Sponsor I LLC and CleanTech Investments, LLC (each, a “Sponsor,” and collectively, the “Co-Sponsors”) entered into a support agreement (the “Sponsor Support Agreement”) with Nauticus pursuant to which the Sponsors have agreed to vote all shares of CleanTech Common Stock beneficially owned by them in favor of the Merger.

In addition, in connection with the execution of the Merger Agreement, certain stockholders of Nauticus owning approximately 88.8% of the voting power of Nauticus entered into a support agreement (the “Nauticus Support Agreement”) with CleanTech and Nauticus pursuant to which the stockholders agreed to vote all shares of Nauticus beneficially owned by them in favor of the Merger.

Subscription Agreements.    In connection with the execution of the Merger Agreement, CleanTech entered into subscription agreements (collectively, the “Subscription Agreements”) with certain parties subscribing for shares of CleanTech Common Stock (the “Subscribers”) pursuant to which the Subscribers have agreed to purchase, and CleanTech has agreed to sell to the Subscribers, an aggregate of 3,530,000 shares of CleanTech Common Stock, for a purchase price of $10.00 per share and an aggregate purchase price of $35.3 million (the “Equity Financing”). The obligations to consummate the transactions contemplated by the Subscription Agreements are conditioned upon, among other things, customary closing conditions and the consummation of the transactions contemplated by the Merger Agreement.

Securities Purchase Agreement.    In connection with the execution of the Merger Agreement, CleanTech and Nauticus entered into Securities Purchase Agreement with certain investors purchasing up to an aggregate of $40.0 million in principal amount of secured debentures (the “Debentures”) and warrants. The number of shares of common stock into which the Debentures are convertible is equal to 120% of the outstanding principal amount of the Debentures divided by the conversion price of $15.00, and the number of shares of common stock into which the associated warrants are exercisable is equal to 120% of the outstanding principal amount of the Debentures divided by the conversion price, with an exercise price equal to $20, subject to adjustment (the “Debt Financing,” and together with the Equity Financing, the “PIPE Investment”). The exercise price of the associated warrant will be subject to (i) customary anti-dilution adjustments; and (ii) in the case of a subsequent equity sale at a per share price below the exercise price, the exercise price of the associated warrant will be adjusted to such lower price, and the number of shares underlying the warrant will increase proportionately. In the event of a rights offering or dividend, the warrant holder will be treated as though the shares underlying the warrant he/she holds were outstanding. These warrants can be exercised on a cashless basis. There will be an original issue discount of 2% from the issued amount of the Debentures. Interest will accrue on all outstanding principal amount of the Debentures at 5% per annum, payable quarterly. The Debentures will be secured by first priority interests, and liens on, all present and after-acquired assets of the Combined Company, and will mature on the fourth anniversary of the date of issuance. As of the date of this proxy statement/prospectus, ATW is the only purchaser and has subscribed for Debentures in the aggregate principal amount of $37,959,184 (out of the aggregate $40.0 million) which is convertible into 3,036,735 shares of the Combined Company’s common stock and associated warrants for an additional 3,036,735 shares of the Combined Company. ATW is managed by ATW Partners Opportunities Management, LLC, which is an affiliate of Chardan Capital Markets, LLC (“Chardan”), and our director, Mr. Jonas Grossman, is the Managing Partner and President of Chardan. Chardan will not receive any fees or compensation for ATW’s participation in the Debt Financing. The obligations to consummate the transactions contemplated by the Securities Purchase Agreement are conditioned upon, among other things, (i) raising $25,000,000 in equity financing from strategic investors, (ii) hiring a chief financial officer with public company experience, and (iii) all conditions precedent to the Merger set forth in the Merger Agreement having been satisfied or waived. The Equity Financing will satisfy the closing condition related to the equity financing requirement for the Debt Financing, and the PIPE Investment alone will satisfy the Minimum Cash Condition under the Merger Agreement. Mr. Rangan Padmanabhan, Nauticus’ current CFO will be the CFO of the Company effective as of the date of the merger, satisfying the closing condition related to the hiring of a CFO with public company experience requirement for the Debt Financing.

Amended and Restated Registration Rights Agreement.    In connection with the Closing, Nauticus, CleanTech and certain stockholders of each of Nauticus and CleanTech who will receive shares of CleanTech Common Stock pursuant to the Merger Agreement, will enter into an amended and restated registration rights agreement (“Registration Rights Agreement”) mutually agreeable to CleanTech and Nauticus, which will become effective upon the consummation of the Merger.

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Lock-up Agreement and Arrangements.    In connection with the Closing, the Sponsors and certain Nauticus stockholders will enter into a lock-up agreement (the “Sponsor Lock-Up Agreement” and “Company Stockholder Lock-up Agreement) with Nauticus and CleanTech, pursuant to which each will agree, subject to certain customary exceptions, not to:

(i)     offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any shares of CleanTech Common Stock received as merger consideration and held by it immediately after the Effective Time (the “Lock-Up Shares”), or enter into a transaction that would have the same effect;

(ii)    enter into transaction that would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of any of such shares, whether any of these transactions are to be settled by delivery of such shares, in cash or otherwise; or

(iii)   publicly disclose the intention to make any offer, sale, pledge or disposition, or to enter into any transaction, swap, hedge or other arrangement, or engage in any “Short Sales” (as defined in the Sponsor Lock-Up Agreement and Company Stockholder Lock-up Agreement) with respect to any security of CleanTech;

during a “Lock-Up Period” under their respective agreements.

Under the Sponsor Lock-up Agreement, the Lock-Up period means the period commencing on the Closing Date and ending on the earlier of (x) the one year anniversary of the Closing Date; (y) the date on which the volume weighted average price of shares of common stock equals or exceeds $13.00 per share for twenty (20) of any thirty (30) consecutive trading days commencing after the Closing on Nasdaq, and (z) the date specified in a written waiver duly executed by Nauticus; provided that the restrictions set forth in the Sponsor Lock-up Agreement do not apply to (1) transfers or distributions to such stockholder’s current or former general or limited partners, managers or members, stockholders, other equity holders or direct or indirect affiliates (within the meaning of Rule 405 under the Securities Act of 1933, as amended) or to the estates of any of the foregoing; (2) transfers by bona fide gift to a member of the stockholder’s immediate family or to a trust, the beneficiary of which is the stockholder or a member of the stockholder’s immediate family for estate planning purposes; (3) by virtue of the laws of descent and distribution upon death of the stockholder; or (4) pursuant to a qualified domestic relations order, in each case where such transferee agrees to be bound by the terms of the Sponsor Lock-up Agreement.

Under the Company Lock-up Agreement, the Lock-Up period means the period commencing on the Closing Date and ending on the earlier of (x) the date that is 180 calendar days after the consummation of the Business Combination, (y) the date on which the volume weighted average price of shares of common stock equals or exceeds $13.00 per share for twenty (20) of any thirty (30) consecutive trading days commencing after the Closing on Nasdaq, and (z) the date specified in a written waiver duly executed by the Sponsors and CleanTech; provided that the restrictions set forth in the Company Lock-up Agreement do not apply to (1) transfers or distributions to such stockholders current or former general or limited partners, managers or members, stockholders, other equityholders or other direct or indirect affiliates (within the meaning of Rule 405 under the Securities Act of 1933, as amended) or to the estates of any of the foregoing; (2) transfers by bona fide gift to a member of the stockholder’s immediate family or to a trust, the beneficiary of which is the stockholder or a member of the stockholder’s immediate family for estate planning purposes; (3) by virtue of the laws of descent and distribution upon death of the stockholder; (4) pursuant to a qualified domestic relations order, in each case where such transferee agrees to be bound by the terms of this Agreement; (5) transfers or distributions of, or other transactions involving, securities other than the Lock-up Shares (including, without limitation, securities acquired in the PIPE or in open market transactions); or (6) in the case of Angela Berka (or Reginald Berka with respect to any community, marital or similar interest he may have in the following shares), the transfer of up to 1,000,000 shares of Lock-up Shares in a privately negotiated sale to another company stockholder, who shall enter into a Lock-Up Agreement (or amend an existing Lock-Up Agreement) containing the same terms and conditions as this Agreement with respect to such shares, or the entry into any agreement with respect to such a sale entered into before, at or after the Effective Time.

Director Nomination Agreement.    In connection with the Closing, CleanTech, the Sponsors and Nauticus will enter into a Director Nomination Agreement (the “Director Nomination Agreement”) pursuant to which CleanTech will agree to nominate Eli Spiro, an individual designated by the Sponsors to the Board of Directors of the combined company, effective as of immediately prior to the Closing.

Director Designation Agreement.    In connection with the execution of the Merger Agreement, CleanTech, Nauticus and certain Nauticus stockholders entered into a director designation agreement with Transocean, Inc. (“Transocean”) to take all necessary action to cause a member designated by Transocean (the “Transocean Designee”)

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to remain on, or otherwise be appointed to, the Board, from and after the effective time of the Merger, as a Class III member of the Board, for an initial term expiring at the third annual meeting following the date of the Second Amended and Restated Certificate of Incorporation to be adopted in connection with the Merger.

Indemnification Agreements.    In connection with the Closing, CleanTech has agreed to enter into customary indemnification agreements, in form and substance reasonably acceptable to CleanTech and Nauticus, with the individuals who will be nominated and, subject to stockholder approval, elected to CleanTech’s board of directors effective as of the Closing.

Management

Effective as of the closing of the Business Combination, all of the executive officers of CLAQ immediately prior to the closing of the Business Combination shall resign and the individuals serving as executive officers of the Combined Company immediately after the closing the Business Combination will be the same individuals (in the same offices) as those of Nauticus immediately prior to the closing of the Business Combination.

See “Directors and Executive Officers of the Combined Company after the Business Combination” for additional information.

Voting Securities

As of the Record Date, there were            shares of common stock issued and outstanding. Only CLAQ stockholders who hold shares of common stock of record as of the close of business on            , 2022 are entitled to vote at the Meeting or any adjournment thereof. Approval of the Business Combination Proposal, the Stock Plan Proposal, the Nasdaq Merger Proposal, the Nasdaq PIPE Proposal, and the Adjournment Proposal will each require the affirmative vote of the holders of a majority of the issued and outstanding shares of common stock present in person by virtual attendance or represented by proxy and entitled to vote at the Meeting or any adjournment thereof. Approval of the Charter Approval Proposal will require the affirmative vote of a majority of the issued and outstanding shares of common stock. Approval of the Directors Proposal will require the plurality of votes cast.

Attending the Meeting either in person by virtual attendance or by submitting your proxy and abstaining from voting will have the same effect as voting against all the Proposals and, assuming a quorum is present, broker non-votes will have no effect on the Proposals, other than the Charter Approval Proposal, for which it will have the same effect as voting against the Proposal.

With respect to the Business Combination, pursuant to the Letter Agreement, the Initial Stockholders holding an aggregate of 4,312,500 shares (or 70.7% of the outstanding shares) of common stock have agreed to vote their shares of common stock in favor of the Business Combination Proposal. Pursuant to the Sponsor Support Agreement, the Co-Sponsors holding an aggregate of 4,032,500 shares of common stock (or 66.2% of the outstanding shares) have agreed to vote their shares in favor of each of the Business Combination Proposal. As a result, no public stockholders will need to be present in person by virtual attendance or by proxy to satisfy the quorum requirement for the meeting. In addition, as the vote to approve the Business Combination Proposal is a majority of the then outstanding shares of common stock present and entitled to vote at the meeting, no public stockholders’ vote is required for the Business Combination Proposal to be approved.

Appraisal Rights

Appraisal rights are not available to holders of shares of common stock in connection with the proposed Business Combination under Delaware law.

Redemption Rights

Pursuant to CLAQ’s Certificate of Incorporation, holders of Public Common Stock may elect to have their shares redeemed for cash at the applicable redemption price per share equal to the quotient obtained by dividing (i) the aggregate amount on deposit in the trust account as of two business days prior to the consummation of the Business Combination, including interest (net of taxes payable), by (ii) the total number of then-outstanding Public Common Stock. As of            , 2022, this would have amounted to approximately $10.18 per share.

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You will be entitled to receive cash for any Public Common Stock to be redeemed only if you:

(i)     (a) hold Public Common Stock, or

(b) hold Public Common Stock through Units and you elect to separate your Units into the underlying Public Common Stock prior to exercising your redemption rights with respect to the Public Common Stock; and

(ii)    prior to            , Eastern Time, on            , 2022, (a) submit a written request to Continental that CLAQ redeem your Public Common Stock for cash and (b) deliver your Public Common Stock to Continental, physically or electronically through DTC.

Holders of outstanding Units must separate the underlying Public Common Stock prior to exercising redemption rights with respect to the Public Common Stock. If the Units are registered in a holder’s own name, the holder must deliver the certificate for its Units to Continental, with written instructions to separate the Units into their individual component parts. This must be completed far enough in advance to permit the mailing of the certificates back to the holder so that the holder may then exercise his, her or its redemption rights upon the separation of the Public Common Stock from the Units.

If a holder exercises his/her redemption rights, then such holder will be exchanging his/her Public Common Stock for cash and will no longer own shares of the Combined Company. Such a holder will be entitled to receive cash for its Public Common Stock only if it properly demands redemption and delivers its Public Common Stock (either physically or electronically) to Continental in accordance with the procedures described herein. Please see the section titled “The Meeting — Redemption Rights” for the procedures to be followed if you wish to redeem your Public Common Stock for cash.

Ownership of the Post-Business Combination Company After the Closing

It is anticipated that upon completion of the Business Combination and assuming minimum redemptions by CLAQ public stockholders, CLAQ’s public stockholders (other than the Equity Financing investors) will retain an ownership interest of approximately 5.5% in the Combined Company the Equity Financing investors will own approximately 7.4% of the Combined Company, the Co-Sponsors, officers, directors and other holders of founder shares will retain an ownership interest of approximately 9.0% of the Combined Company, and the Nauticus stockholders will own approximately 78.1% (including the 7,500,000 Earnout Shares) of the Combined Company.

The following tables illustrate estimated ownership levels in the Company, immediately following the consummation of the Business Combination, based on the varying levels of redemptions by CLAQ public stockholders and the following additional assumption:

 

Minimum Redemptions (1)

 

%

 

10% Redemption (2)

 

%

 

50% Redemption (3)

 

%

 

75% Redemption (4)

 

%

 

Maximum Redemption (5)

 

%

Nauticus stockholders(6)

 

37,531,279

 

78.1

%

 

37,531,279

 

78.4

%

 

37,531,279

 

79.6

%

 

37,531,279

 

80.4

%

 

37,531,279

 

81.2

%

CLAQ public stockholders(7)

 

2,645,789

 

5.5

%

 

2,467,460

 

5.2

%

 

1,754,145

 

3.7

%

 

1,308,322

 

2.8

%

 

862,500

 

1.9

%

Initial Stockholders(8)(9)

 

4,312,500

 

9.0

%

 

4,312,500

 

9.0

%

 

4,312,500

 

9.2

%

 

4,312,500

 

9.2

%

 

4,312,500

 

9.3

%

PIPE Investment investors(10)

 

3,530,000

 

7.4

%

 

3,530,000

 

7.4

%

 

3,530,000

 

7.5

%

 

3,530,000

 

7.6

%

 

3,530,000

 

7.6

%

Pro forma common stock at March 31, 2022

 

48,019,568

 

100.0

%

 

47,841,239

 

100.0

%

 

47,127,924

 

100.0

%

 

46,682,101

 

100.0

%

 

46,236,279

 

100.0

%

Potential sources of dilution:

       

 

       

 

       

 

       

 

       

 

Public Warrants

 

8,625,000

 

18.0

%

 

8,625,000

 

18.0

%

 

8,625,000

 

18.3

%

 

8,625,000

 

18.5

%

 

8,625,000

 

18.7

%

Private Warrants

 

7,175,000

 

14.9

%

 

7,175,000

 

15.0

%

 

7,175,000

 

15.2

%

 

7,175,000

 

15.4

%

 

7,175,000

 

15.5

%

Nauticus Options

 

3,970,266

 

8.3

%

 

3,970,266

 

8.3

%

 

3,970,266

 

8.4

%

 

3,970,266

 

8.5

%

 

3,970,266

 

8.6

%

Debentures

 

3,036,735

 

6.3

%

 

3,036,735

 

6.3

%

 

3,036,735

 

6.4

%

 

3,036,735

 

6.5

%

 

3,036,735

 

6.6

%

Warrants

 

3,036,735

 

6.3

%

 

3,036,735

 

6.3

%

 

3,036,735

 

6.4

%

 

3,036,735

 

6.5

%

 

3,036,735

 

6.6

%

____________

(1)      Assumes that no additional CLAQ public stockholders are redeemed and excludes potential dilution from sources of dilution.

(2)      Assumes that 178,329 Public Common Stock is redeemed for aggregate redemption payments of approximately $1,814,812, assuming a $10.18 per share redemption price and based on funds in the Trust Account as of July 19, 2022. The Merger Agreement includes a condition to the closing that at the closing having an amount of available cash from the Trust Account and the PIPE Investment (after giving effect to the redemption of any Public Common Stock in connection with the IPO and the payment of the transaction expenses), of no less than $50,000,000.

(3)      Assumes that 891,645 Public Common Stock is redeemed for aggregate redemption payments of approximately $9,074,061, assuming a $10.18 per share redemption price and based on funds in the Trust Account as of July 19, 2022. The Merger Agreement includes a condition to the closing that at the closing having an amount of available cash from the Trust Account and the Equity Financing (as defined in the Merger Agreement) (after giving effect to the redemption of any Public Common Stock in connection with the IPO and the payment of the transaction expenses), of no less than $50,000,000.

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(4)      Assumes that 1,337,467 Public Common Stock is redeemed for aggregate redemption payments of approximately $13,611,091, assuming a $10.18 per share redemption price and based on funds in the Trust Account as of July 19, 2022. The Merger Agreement includes a condition to the closing that at the closing having an amount of available cash from the Trust Account and the Equity Financing (as defined in the Merger Agreement) (after giving effect to the redemption of any Public Common Stock in connection with the IPO and the payment of the transaction expenses), of no less than $50,000,000.

(5)      Assumes that 1,783,289 Public Common Stock is redeemed for aggregate redemption payments of approximately $18,148,121, assuming a $10.18 per share redemption price and based on funds in the Trust Account as of July 19, 2022. The Merger Agreement includes a condition to the closing that at the closing having an amount of available cash from the Trust Account and the PIPE Investment (after giving effect to the redemption of any Public Common Stock in connection with the IPO and the payment of the transaction expenses), of no less than $50,000,000.

(6)      Includes 7,500,000 Earnout Shares subject to the Triggering Events. Such shares will be deposited into escrow in accordance with the terms of the Merger Agreement and will be subject to reduction or forfeiture in accordance with the terms of the Merger Agreement. However, registered holders will maintain voting rights related to such shares unless forfeited.

(7)      Excludes 8,625,000 Public Warrants and includes the issuance of 862,500 shares of Common Stock pursuant to the Rights. If all potential sources of dilution were exercised and converted into Common Stock the CLAQ public stockholders would hold approximately 3.6%, 3.3%, 2.4%, 1.8% and 1.2% under the Minimum Redemptions, 10% Redemption, 50% Redemption, 75% Redemption, and Maximum Redemption scenarios, respectively. See “Risk Factors — Risks Related to CLAQ’s Business and the Business Combination — The CLAQ Public Stockholders will experience dilution as a consequence of, among other transactions, the issuance of Common Stock as consideration in the Business Combination and the PIPE Investment” for additional information related to the risk of dilution to our public stockholders.

(8)      Excludes 7,175,000 Private Warrants. If all potential sources of dilution were exercised and converted into Common Stock the Initial Stockholders would hold approximately 5.8%, 5.9%, 5.9%, 5.9% and 6.0% under the Minimum Redemptions, 10% Redemption, 50% Redemption, 75% Redemption, and Maximum Redemption scenarios, respectively. See “Risk Factors — Risks Related to CLAQ’s Business and the Business Combination — The CLAQ Public Stockholders will experience dilution as a consequence of, among other transactions, the issuance of Common Stock as consideration in the Business Combination and the PIPE Investment” for additional information related to the risk of dilution to our public stockholders.

(9)      Total of 4,312,500 outstanding founder shares includes 1,437,500 founder shares held by the Sponsor, 2,595,000 founder shares held by CleanTech Investments, and 280,000 founder shares held by the officers and directors of CleanTech. Please see the section titled “Beneficial Ownership of Securities.”

(10)    Assumes the sale of an aggregate of 3,530,000 shares of CleanTech Common Stock, for a purchase price of $10.00 per share and an aggregate purchase price of $35,300,000. Excludes the dilution that could be caused by the conversion of the Debentures and Warrants issued pursuant to the Securities Purchase Agreement.

Additionally, in connection with the Business Combination, CLAQ plans to adopt a new Incentive Award Plan. Pursuant to the Merger Agreement, 10% of the aggregate number of shares of common stock issued and outstanding immediately after the consummation of the Business Combination may be granted to employees, non-employee directors and consultants. The total number of shares of common stock of the Combined Company that will be reserved and that may be issued under the Incentive Award Plan will automatically increase on the first trading day of each calendar year, beginning with calendar year 2023, by a number of shares equal to three percent (3%) of the total number of shares of common stock of the Combined Company outstanding on the last day of the prior calendar year.

Pursuant to a Business Combination Marketing Agreement with Chardan Capital Markets, LLC (“Chardan”), CLAQ has agreed to pay Chardan a marketing fee of $6,037,500, representing 3.5% of the gross proceeds received from CLAQ’s IPO, for holding meetings with the stockholders to discuss the potential Business Combination and the target business’s attributes, introducing CLAQ to potential investors that are interested in purchasing the securities in connection with the potential Business Combination, assisting CLAQ in obtaining stockholder approval for the Business Combination and assisting CLAQ with press releases and public filings in connection with the Business Combination. The marketing fee will be payable after the closing of the Business Combination. Additionally, pursuant to a Financial Advisory Agreement with Chardan, CLAQ has agreed to pay Chardan a placement fee of $2,118,000, representing 6.0% of the gross proceeds received from the PIPE Investment that is not sold to an affiliate of Chardan, for certain financial advisory services. The placement fee will be payable at the closing of the PIPE Investment.

In order to broaden CLAQ and Nauticus’ reach to additional potential investors, parties interviewed a number of investment banks. After having considered the relative strengths and customer bases of different investment banks and advisory services providers, parties entered into letter agreements with four investment banks for their capital markets and financial advisory services between February and April 2022. None of these four investment banks are affiliated with CLAQ, its officers and directors or any of their affiliates. Pursuant to a letter agreement dated February 11, 2022 with Roth Capital Partners, LLC (“Roth”), CLAQ has agreed to pay Roth a cash advisory fee of $350,000 following the closing of the Business Combination during the term of the agreement or within six months following any termination of the agreement, in return for Roth’s capital markets advisory services which include, among other things, (i) providing

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advice and assistance to CLAQ regarding defining objectives and potential equity offerings (including with respect to structure, marketing strategy and execution); (ii) assisting the evaluation of CLAQ’s equity securities; and (iii) performing analyses of equity capital markets and shareholder engagement. The term of the agreement with Roth shall continue until terminated by either party. Pursuant to a letter agreement dated February 28, 2022 with Lake Street Capital Markets (“Lake Street”), CLAQ and Nauticus have agreed that the Combined Company will pay Lake Street a non-refundable retainer of $350,000 within ten days following the closing of the Business Combination in return for Lake Street’s capital markets advisory services which include, among other things, (i) providing advice and assistance to CLAQ in evaluating its capital raising strategies and alternatives; (ii) assisting CLAQ in refining and communicating its investor presentation; and (iii) working and coordinating with CLAQ’s investors relations resources to conduct a non-deal investor roadshow in the U.S. and solicit, and analyze investors’ feedback. The term of the agreement with Lake Street shall expire on the earlier of (a) February 28, 2023, or (b) the closing of the Business Combination. Pursuant to a letter agreement dated March 23, 2022 with Cowen and Company, LLC (“Cowen”), Nauticus has agreed to pay Cowen an advisory fee of $1,750,000 (the “Business Combination Fee”) upon closing of the Business Combination in return for Cowen’s capital market advisory services which include, among other things, (i) familiarizing itself with the business, properties and operation of each of CLAQ and Nauticus; (ii) advising Nauticus on investor outreach, assisting Nauticus in scheduling and arranging meetings with current and potential holders of its securities; and (iii) assisting Nauticus in formulating a marketing strategy for the Business Combination. If this agreement with Cowen is terminated, the Business Combination Fee will still be payable if a business combination is consummated within twelve months from the date of the termination of the agreement (the “Residual Period”). If during the term of this agreement with Cowen or the Residual Period, Nauticus proposes to effect any restructuring, acquisition or disposition, or certain sales of securities, Nauticus has agreed to engage Cowen and offer Cowen no less than 35% of the total economics for any such capital raising transaction. Pursuant to an amended and restated letter agreement dated April 25, 2022 with Coastal Equities, Inc. (“Coastal”), Nauticus has agreed to pay Coastal a cash fee of $7,600,000 (“Cash Fee”) upon closing of the Business Combination or any other transaction defined as a “Sale” of Nauticus pursuant to the letter agreement in return for Coastal’s financial advisory services which include, among other things, (i) facilitating potential purchasers’ or financing participants’ due diligence investigation; (ii) performing valuation analyses; (iii) identifying opportunities for the Sale of Nauticus; and (iv) as requested by Nauticus, participating on Nauticus’ behalf in negotiations concerning such Sale. If this letter agreement with Coastal is terminated, the Cash Fee will still be payable if the Sale of Nauticus occurs within 9 months from March 29, 2022, the effective date of the letter agreement.

The following table illustrates the amounts and form of capital market and financial advisory fees payable from trust proceeds at each redemption level identified below:

 

Minimum
Redemptions

 

10%
Redemption

 

50%
Redemption

 

75%
Redemption

 

Maximum
Redemption

Unredeemed public
shares

 

 

2,645,789

 

 

 

2,467,460

 

 

 

1,754,145

 

 

 

1,308,322

 

 

 

862,500

 

Trust proceeds to
Nauticus

 

$

18,148,121

 

 

$

16,333,309

 

 

$

9,074,060

 

 

$

4,537,030

 

 

$

 

PIPE Investment

 

$

72,500,000

 

 

$

72,500,000

 

 

$

72,500,000

 

 

$

72,500,000

 

 

$

72,500,000

 

Business Combination Marketing Agreement – Chardan

 

$

6,037,500

 

 

$

6,037,500

 

 

$

6,037,500

 

 

$

6,037,500

 

 

$

6,037,500

 

Financial Advisory Agreement – Chardan

 

$

2,118,000

 

 

$

2,118,000

 

 

$

2,118,000

 

 

$

2,118,000

 

 

$

2,118,000

 

Amended and Restated Financial Advisory Agreement – Coastal

 

$

7,600,000

 

 

$

7,600,000

 

 

$

7,600,000

 

 

$

7,600,000

 

 

$

7,600,000

 

Capital Market Advisory Agreement – Roth

 

$

350,000

 

 

$

350,000

 

 

$

350,000

 

 

$

350,000

 

 

$

350,000

 

Capital Market Advisory Agreement – Lake Street

 

$

350,000

 

 

$

350,000

 

 

$

350,000

 

 

$

350,000

 

 

$

350,000

 

Capital Market Advisory Agreement – Cowen

 

$

1,750,000

 

 

$

1,750,000

 

 

$

1,750,000

 

 

$

1,750,000

 

 

$

1,750,000

 

Effective fee (%)

 

 

20.08

%

 

 

20.49

%

 

 

22.32

%

 

 

23.63

%

 

 

25.11

%

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SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED AND
CONSOLIDATED FINANCIAL INFORMATION

The following summary unaudited pro forma condensed combined and consolidated financial information (the “Summary Pro Forma Information”) gives effect to the Business Combination. The Business Combination will be accounted for as a reverse recapitalization, in accordance with GAAP. Under this method of accounting, CLAQ will be treated as the “acquired” company for financial reporting purposes. Accordingly, the Business Combination will be reflected as the equivalent of Nauticus issuing shares for the net assets of CLAQ, followed by a recapitalization whereby no goodwill or other intangible assets are recorded. Operations prior to the Business Combination will be those of Nauticus. There will be no accounting effect or change in the carrying amount of the assets and liabilities as a result of the Business Combination. The summary unaudited pro forma condensed combined and consolidated balance sheet as of March 31, 2022 gives effect to the Business Combination as if it had occurred on March 31, 2022. The summary unaudited pro forma condensed combined and consolidated statement of operations for the three months ended March 31, 2022 and the year ended December 31, 2021 gives effect to the Business Combination as if they had occurred on January 1, 2021.

The Summary Pro Forma Information has been derived from, and should be read in conjunction with, the more detailed unaudited pro forma condensed combined and consolidated financial information included in the section titled “Unaudited Pro Forma Condensed Combined and Consolidated Financial Information” in this proxy statement/prospectus and the accompanying notes thereto. The unaudited pro forma condensed combined and consolidated financial information is based upon, and should be read in conjunction with, the historical financial statements and related notes of CLAQ and Nauticus for the applicable periods included elsewhere in this proxy statement/prospectus. The Summary Pro Forma Information has been presented for informational purposes only and is not necessarily indicative of what CLAQ’s financial position or results of operations actually would have been had the Business Combination been completed as of the dates indicated. In addition, the Summary Pro Forma Information does not purport to project the future financial position or operating results of CLAQ following the reverse recapitalization.

The unaudited pro forma condensed combined and consolidated financial information has been prepared using the assumptions below with respect to the potential redemption into cash of shares of CLAQ ordinary shares:

        Assuming Minimum Redemptions:    This scenario, which we refer to as the “Minimum Redemption Scenario”, assumes that the only shares of common stock redeemed by the Public Stockholders are those that have already been redeemed prior to July 20, 2022.

        Assuming Maximum Redemptions:    This scenario assumes that 1,783,289 CLAQ Common Stock subject to redemption are redeemed for an aggregate payment of approximately $18.1 million (based on an estimated per share redemption price of approximately $10.18 that was calculated using the $18.1 million of cash in the Trust Account divided by 1,783,289 CLAQ shares of Common Stock subject to redemption assuming the pro forma maximum redemption scenario pursuant to the Merger Agreement). Under the terms of the Merger Agreement, the aggregate cash proceeds received from the Trust Account, together with the proceeds from the Subscription Agreements and after the payment of transaction expenses, must equal no less than $50.0 million.

 

Pro Forma Combined

   

Assuming
Minimum
Redemptions

 

Assuming
Maximum
Redemptions

Summary Unaudited Pro Forma Condensed Combined and Consolidated Statement of Operations Data

For the Three Months Ended March 31, 2022

 

 

 

 

 

 

 

 

Net loss

 

$

(2,054,245

)

 

$

(2,054,245

)

Basic and diluted net loss per share

 

$

(0.05

)

 

$

(0.05

)

Weighted average shares outstanding

 

 

40,519,568

 

 

 

38,736,279

 

   

 

 

 

 

 

 

 

Summary Unaudited Pro Forma Condensed Combined and Consolidated Statement of Operations Data

For the Year Ended December 31, 2021

 

 

 

 

 

 

 

 

Net loss

 

$

(28,054,641

)

 

$

(28,054,641

)

Basic and diluted net loss per share

 

$

(0.69

)

 

$

(0.72

)

Weighted average shares outstanding

 

 

40,519,568

 

 

 

38,736,279

 

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Pro Forma Combined

   

Assuming
Minimum
Redemptions

 

Assuming
Maximum
Redemptions

Summary Unaudited Pro Forma Condensed Combined and Consolidated Balance Sheet Data

As of March 31, 2022

 

 

   

 

 

Total assets

 

$

75,327,614

 

$

57,179,493

Total liabilities

 

$

29,911,173

 

$

29,911,173

Total stockholders’ equity

 

$

45,416,441

 

$

27,268,320

Interests of Certain Persons in the Business Combination

When you consider the recommendation of the Board in favor of adoption of the Business Combination Proposal and other Proposals, you should keep in mind that CLAQ’s directors and officers and their affiliates have interests in the Business Combination that are different from, or in addition to, your interests as a shareholder, including:

        CLAQ’s Co-sponsors have a fiduciary obligation to each of their respective members and Eli Spiro, (CLAQ’s Chief Executive Officer and Director) and Jonas Grossman (a CLAQ Director) are the controlling members of our Co-sponsors. Because each of Mr. Spiro and Mr. Grossman have a fiduciary obligation to both CLAQ and the Co-sponsors, they had a conflict of interest when voting on the Business Combination.

        At the special meeting of stockholders held on July 18, 2022, CLAQ’s stockholders approved the Charter Amendment Proposal and the Trust Agreement Proposal, giving CLAQ the right to extend the Combination Period six (6) times for an additional one (1) month each time by depositing into the Trust Account $100,000 for each one-month extension, up to January 19, 2023 (the first extension to August 19, 2022 was already made). As a result of the July 18 Amendments, public stockholders forfeited their right to receive up to $1,725,000, and up to an aggregate of $3,450,000 under certain agreements entered into in connection with CLAQ’s IPO, if CLAQ seeks to extend the Combination Period for three or six months, respectively, but does not consummate a business combination;

        As a result of the July 18 Amendments, CLAQ’s Co-Sponsors are no longer be required to deposit into the Trust Account $1,725,000 prior to each three-month extension (up to $3,450,000 in the aggregate) and these amounts will not be repaid if a business combination is not consummated to the extent funds are not available outside of the Trust Account;

        As a result of the July 18 Amendments, CLAQ may extend the Combination Period up to January 19, 2023, by depositing into the Trust Account for the benefit of the public stockholders $100,000 for each one (1) month extension (or an aggregate of $600,000 if the Combination Period is extended six times). The additional redemption amount added to the Trust Account was reduced from what was included in CLAQ’s initial public offering prospectus, which was $0.10 per share for each three-month extension to approximately $0.06 per share for each one-month extension.

        As a result of the July 18 Amendments, the Co-Sponsors are expected to contribute to CLAQ up to $600,000 (if the full 6-month extension is sought) in an interest-free loan for the full extension of the Combination Period on an as-needed basis. If the July 18 Amendments were not adopted, the Co-Sponsors would be expected to deposit into the Trust Account an aggregate of $3,450,000 (if the full 6-month extension is sought) in an interest-free loan. Since both loans will become payable only after Closing of the Business Combination, CLAQ’s Co-Sponsors will lose repayment of $600,000 loan if the Business Combination is not completed after the full 6-month extension. As of the date of this proxy statement/prospectus, the Co-Sponsors have contributed $100,000 for the extension of the Combination Period for one (1) month until August 19, 2022. No funds from the Trust Account would be used to repay such loans in the event of CLAQ’s liquidation.

        If an initial business combination, such as the Business Combination, is not completed, CLAQ will be required to dissolve and liquidate. In such event, the 4,312,500 founder shares currently held by the Initial Stockholders, which were acquired prior to the IPO will be worthless because such holders have agreed to waive their rights to any liquidation distributions. The founder shares were purchased for an aggregate

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purchase price of $25,000, and had an aggregate market value of approximately $43.8 million based on the closing price of $10.18 per share of CLAQ common stock on the Nasdaq Stock Market as of August 1, 2022.

        If an initial business combination, such as the Business Combination, is not completed, an aggregate of 7,175,000 Private Warrants purchased by CLAQ’s Co-sponsors for a total purchase price of $7,175,000, will be worthless. The Private Warrants had an aggregate market value of approximately $2.3 million based on the closing price of $0.32 per Public Warrant on the Nasdaq Stock Market as of August 1, 2022.

        Because of these interests, CLAQ’s Initial Stockholders could benefit from the completion of a business combination that is not favorable to its public shareholders and may be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to public shareholders rather than liquidate. For example, if the share price of the CLAQ common stock declined to $5.00 per share after the close of the business combination, CLAQ’s public shareholder that purchased shares in the initial public offering, would have a loss of $5.00 per share, while CLAQ’s Sponsor would have a gain of $4.99 per share because it acquired the founder shares for a nominal amount. In other words, CLAQ’s Initial Stockholders can earn a positive rate of return on their investment even if public shareholders experience a negative rate of return in the post-combination company.

        One of CLAQ’s Co-sponsors is CleanTech Sponsor, and the managing member of CleanTech Sponsor is Eli Spiro, CLAQ’s Chief Executive Officer and Director. If an initial business combination, such as the Business Combination, is not completed, CleanTech Sponsor will lose an aggregate of approximately $28.5 million (not including any extension loan after July 18, 2022), comprised of the following:

        approximately $26.4 million (based on the closing price of $10.18 per share of CLAQ common stock on the Nasdaq Stock Market as of August 1, 2022) of the 2,595,000 founder shares CleanTech Sponsor holds;

        approximately $1.5 million (based on the closing price of $0.32 per Public Warrant on the Nasdaq Stock Market as of August 1, 2022) of the 4,783,333 Private Warrants CleanTech Sponsor holds; and

        repayment of an interest-free loan of $567,000 (as of July 18, 2022) by CleanTech Sponsor since the loan will become payable only after Closing of the Business Combination, or the date on which CLAQ determines that it is unable to effect a business combination.

        CLAQ’s other Co-sponsor, CleanTech Investments, is an affiliate of Chardan, and CLAQ’s director, Mr. Jonas Grossman, is the Managing Partner and President of Chardan. If an initial business combination, such as the Business Combination, is not completed, Chardan will lose an aggregate of approximately $23.9 million (not including any extension loan after July 18, 2022), comprised of the following:

        approximately $14.6 million (based on the closing price of $10.18 per share of CLAQ common stock on the Nasdaq Stock Market as of August 1, 2022) of the 1,437,500 founder shares CleanTech Investment holds;

        approximately $0.8 million (based on the closing price of $0.32 per Public Warrant on the Nasdaq Stock Market as of August 1, 2022) of the 2,391,667 Private Warrants CleanTech Investment holds;

        a marketing fee of $6,037,500 for certain services pursuant to a Business Combination Marketing Agreement;

        a placement fee of $2,118,000 (i.e., 6.0% of the PIPE Investment that is not sold to an affiliate of Chardan) for certain services pursuant to the Financial Advisory Agreement (pursuant to the Financial Advisory Agreement, Chardan also has a right of first refusal to act as a book-running manager with minimum economics of 15% for the first two public or private equity offerings by CLAQ or any successor or subsidiary of CLAQ);

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        repayment of an interest-free loan of $283,000 (as of July 18, 2022) by CleanTech Investments since the loan will become payable only after Closing of the Business Combination, or the date on which CLAQ determines that it is unable to effect a business combination; and

        the $10,000 monthly administrative fee under the Administrative Support Agreement pursuant to which CLAQ may delay payment of the same until the consummation of a business combination. As of June 30, 2022, there is an accrued and unpaid balance of $113,333 owed to Chardan under the Administrative Support Agreement.

        If an initial business combination, such as the Business Combination, is not completed, the Initial Stockholders will lose a combined aggregate amount of approximately $47.0 million (including the Co-sponsors’ loans and securities held based on the closing price of $10.17 per share of CLAQ common stock and $0.32 per Public Warrant on August 1, 2022), and the Initial Stockholders together with their affiliates (including Chardan) will lose a combined aggregate amount of approximately $55.2 million (including Chardan’s fees contingent upon the Closing of the Business Combination.)

        If the proposed Business Combination is not completed, CLAQ’s Initial Stockholders will not have the potential ownership interest of approximately 9.0% (assuming minimum redemptions) or 9.3% (assuming maximum redemption) in the combined company, assuming exercise and conversion of all securities.

        As of the date of this proxy statement/prospectus, ATW is the only purchaser for the Debentures and associated Warrants in the Debt Financing. ATW is managed by ATW Partners Opportunities Management, LLC, which is an affiliate of Chardan, and our director, Mr. Jonas Grossman, is the Managing Partner and President of Chardan.

        The exercise of CLAQ’s directors’ and officers’ discretion in agreeing to changes or waivers in the terms of the transaction may result in a conflict of interest when determining whether such changes or waivers are appropriate and in our stockholders’ best interest.

        If the Business Combination is completed, Nauticus will designate all members of the Combined Company’s Board of Directors, except for the Transocean Designee).

See “Proposal 1 — The Business Combination Proposal — Interests of Certain Persons in the Business Combination” for additional information.

Anticipated Accounting Treatment

For a discussion summarizing the anticipated accounting treatment of the Business Combination, please see “Anticipated Accounting Treatment.”

Recommendations of the Board and Reasons for the Business Combination

After careful consideration of the terms and conditions of the Merger Agreement, the Board has determined that Business Combination and the transactions contemplated thereby are fair to, and in the best interests of, CLAQ and its stockholders. In reaching its decision with respect to the Business Combination and the transactions contemplated thereby, the Board reviewed various industry and financial data and the evaluation of materials provided by Nauticus. On January 28, 2022, in order to provide added transparency to the transactions contemplated by the Merger Agreement and greater certainty to close the Business Transaction in the current turbulent market, CLAQ retained Duff & Phelps to serve as an independent financial advisor to the Board of CLAQ, specifically to provide to the Board a fairness opinion in connection with the Business Combination. On March 24, 2022, the Board obtained a fairness opinion from Duff & Phelps. The Board recommends that CLAQ stockholders vote:

        FOR the Business Combination Proposal;

        FOR the Charter Approval Proposal;

        FOR the Bylaws Proposal;

        FOR the Governance Proposals;

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        FOR the Directors Proposal;

        FOR the Stock Plan Proposal;

        FOR the Nasdaq Merger Proposal;

        FOR the Nasdaq PIPE Proposal; and

        FOR the Adjournment Proposal.

Summary Risk Factors

In evaluating the Business Combination and the Proposals to be considered and voted on at the Meeting, you should carefully review and consider the risk factors set forth under the section entitled “Risk Factors” beginning on page 46 of this proxy statement/prospectus. Some of these risks related to are summarized below. References in the summary below to “Nauticus” or “Nauticus Robotics” generally refer to Nauticus in the present tense or the Combined Company from and after the Business Combination.

The following summarizes certain principal factors that make an investment in the Combined Company speculative or risky, all of which are more fully described in the “Risk Factors” section below. This summary should be read in conjunction with the “Risk Factors” section and should not be relied upon as an exhaustive summary of the material risks facing CLAQ’s, Nauticus’ and/or the Combined Company’s business.

Risks Related to Nauticus’ Business and Industry

        Nauticus is an early-stage company with a history of losses, and it expects to incur significant expenses for the foreseeable future.

        Almost all of Nauticus’ revenues in 2020, 2021, and the first quarter of 2022 were derived from three customers. A substantial portion of Nauticus’ current revenue is generated by sales to government entities, which are subject to a number of uncertainties, challenges, and risks.

        If Nauticus fails to effectively manage its growth, Nauticus may not be able to design, develop, manufacture, market, and launch new generations of its robotic systems successfully.

        Nauticus’ operating and financial projections rely on management assumptions and analyses. If these assumptions or analyses prove to be incorrect, Nauticus’ actual operating results may be materially different from its forecasted results.

        Nauticus’ business plans require a significant amount of capital. Nauticus’ future capital needs may require Nauticus to sell additional equity or debt securities that may dilute its stockholders or introduce covenants that may restrict its operations or its ability to pay dividends.

        Nauticus will incur significant increased expenses and administrative burdens as a public company, which could have a material adverse effect on its business, prospects, financial condition and operating results.

        Nauticus operates in a competitive industry that is subject to rapid technological change, and Nauticus expects competition to increase.

        Nauticus’ financial results may vary significantly from period to period due to fluctuations in its operating costs, product demand and other factors.

        Nauticus has yet to achieve positive operating cash flow and, given its projected funding needs, its ability to generate positive cash flow is uncertain.

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Risks Related to CLAQ’s Business

        CLAQ’s independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about CLAQ’s ability to continue as a “going concern.”

        Failure to comply with applicable anti-corruption legislation and other governmental laws and regulations could result in fines, criminal penalties and materially adversely affect its business, financial condition and results of operations.

        The continuation or worsening of the COVID-19 pandemic, or other similar public health developments, could have an adverse effect on business, results of operations, and financial condition.

        CLAQ will be forced to liquidate the Trust Account if it cannot consummate a business combination by July 19, 2022, the date that is 12 months from the closing of the IPO (or January 19, 2023, the date that is 18 months from the closing of the IPO, if the Combination Period is extended by the full amount of time allowed under CLAQ’s Current Charter). In the event of a liquidation, CLAQ’s public stockholders will receive $10.18 per share and the CLAQ Warrants and Rights will expire worthless.

Risks Related to the Business Combination

        You must tender your Public Common Stock in order to validly seek redemption at the Meeting of stockholders.

        If third parties bring claims against CLAQ, the proceeds held in trust could be reduced and the per-share liquidation price received by CLAQ’s stockholders may be less than $10.18.

        Any distributions received by CLAQ stockholders could be viewed as an unlawful payment if it was proved that immediately following the date on which the distribution was made, CLAQ was unable to pay its debts as they fell due in the ordinary course of business.

        If CLAQ’s due diligence investigation of Nauticus was inadequate, then stockholders of CLAQ following the Business Combination could lose some or all of their investment.

        We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your Public Warrants worthless.

Risks Related to the Combined Company’s Common Stock

        Because the Combined Company will become a public reporting company by means other than a traditional underwritten initial public offering, the Combined Company’s stockholders may face additional risks and uncertainties.

        The market price of the Combined Company’s Common stock is likely to be highly volatile, and you may lose some or all of your investment.

        Volatility in the Combined Company’s share price could subject the Combined Company to securities class action litigation.

Risks Related to the Combined Company Operating as a Public Company

        Our management team has limited skills and experience related to managing a public company.

        We will incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives and corporate governance practices.

        Our stock price has fluctuated historically and may continue to fluctuate.

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SELECTED HISTORICAL FINANCIAL DATA OF CLAQ

CLAQ is providing the following summary historical financial information to assist you in your analysis of the financial aspects of the Business Combination.

CLAQ’s consolidated statements of operations data for the three months ended March 31, 2022 and the audited consolidated financial statements of CLAQ as of December 31, 2021 and consolidated balance sheet data as of March 31, 2022 are derived from CLAQ’s consolidated financial statements included elsewhere in this proxy statement/prospectus.

This information is only a summary and should be read in conjunction with CLAQ’s consolidated financial statements and related notes and the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of CLAQ” included elsewhere in this proxy statement/prospectus. The historical results included below and elsewhere in this proxy statement are not indicative of the future performance of CLAQ.

 

March 31,
2022

Balance Sheet Data:

 

 

 

 

Cash

 

$

296,381

 

Investments held in Trust Account

 

$

174,247,973

 

Total assets

 

$

174,589,345

 

Total liabilities

 

$

6,121,361

 

Common stock subject to possible redemption

 

$

174,225,000

 

Total stockholders’ deficit

 

$

(5,757,016

)

 

For the
Three Months
Ended
March 31,
2022

 

For the
Year Ended
December 31,
2021

Statement of Operations Data:

 

 

 

 

 

 

 

 

Loss from operations

 

$

(479,375

)

 

$

(1,298,583

)

Transaction costs

 

$

 

 

$

(155,037

)

Change in fair value of warrant liabilities

 

$

2,413,500

 

 

$

1,077,750

 

Change in fair value of over-allotment option liability

 

$

 

 

$

(225,000

)

Net gain on investments held in Trust Account

 

$

17,545

 

 

$

5,428

 

Net income (loss)

 

$

1,951,670

 

 

$

(595,442

)

Basic weighted average shares outstanding

 

 

21,562,500

 

 

 

11,781,678

 

Basic net income (loss) per share of common stock

 

$

0.09

 

 

$

(0.05

)

Diluted weighted average shares outstanding

 

 

21,562,500

 

 

 

11,781,678

 

Diluted net income (loss) per share of common stock

 

$

0.09

 

 

$

(0.05

)

Statement of Cash Flows Data:

 

 

 

 

 

 

 

 

Net cash used in operating activities

 

$

(489,524

)

 

$

(1,039,814

)

Net cash used in investing activities

 

$

 

 

$

(174,225,000

)

Net cash provided by financing activities

 

$

267,000

 

 

$

175,758,719

 

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SELECTED HISTORICAL FINANCIAL DATA OF NAUTICUS

The following tables contain selected historical financial data of Nauticus for the periods and as of the dates indicated. Such data as of and for the years ended December 31, 2021 and 2020 are derived from the audited financial statements of Nauticus, which are included elsewhere in this proxy statement/prospectus. Such data as of and for the three months ended March 31, 2022 and 2021 are derived from the unaudited financial statements of Nauticus included elsewhere in this proxy statement/prospectus.

The following selected historical financial data should be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Nauticus”, Nauticus’ audited financial statements and related notes thereto, and unaudited interim financial statements included elsewhere in this proxy statement/prospectus. The selected historical financial data in this section is not intended to replace our audited financial statements, unaudited consolidated financial statements, and related notes and are qualified in their entirety thereby. The historical results included below and elsewhere in this proxy statement/prospectus are not indicative of the future performance of Nauticus.

 

For the
Three Months
ended
March 31,
2022

 

For the
Three Months
ended
March 31,
2021

 




Year Ended December 31,

   

2021

 

2020

Statement of Operations Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

2,235,965

 

 

$

302,743

 

 

$

8,591,540

 

 

$

3,994,440

 

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

$

1,899,161

 

 

$

698,888

 

 

 

6,850,248

 

 

 

4,059,991

 

Depreciation

 

$

111,319

 

 

$

87,716

 

 

 

365,097

 

 

 

400,432

 

Research and development

 

$

1,267,412

 

 

$

1,202,718

 

 

 

3,533,713

 

 

 

4,951,619

 

General and administrative

 

$

1,646,041

 

 

$

659,706

 

 

 

4,362,400

 

 

 

3,319,455

 

Total costs and expenses

 

$

4,923,933

 

 

$

2,649,028

 

 

 

15,111,458

 

 

 

12,731,497

 

Operating loss

 

$

(2,687,968

)

 

$

(2,346,285

)

 

 

(6,519,918

)

 

 

(8,737,057

)

Other expense (income)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

$

14,060

 

 

$

(888,153

)

 

 

(1,601,568

)

 

 

(1,609,962

)

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

9,484,113

 

 

 

 

Interest expense (income), net

 

$

801,974

 

 

$

61,550

 

 

 

725,166

 

 

 

66,943

 

Net loss

 

$

(3,504,002

)

 

$

(1,519,682

)

 

$

(15,127,629

)

 

$

(7,194,038

)

Basic and diluted weighted average shares outstanding

 

$

680,600

 

 

$

678,400

 

 

 

678,406

 

 

 

678,400

 

Basic and diluted net loss per share of common stock

 

$

(5.15

)

 

$

(2.24

)

 

$

(22.30

)

 

$

(10.60

)

Statement of Cash Flows Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash used in operating activities

 

$

(4,200,250

)

 

$

(2,314,957

)

 

$

(5,923,190

)

 

$

(4,499,775

)

Net cash (used in) provided by investing activities

 

$

(1,675,238

)

 

 

 

 

$

(922,487

)

 

$

996,482

 

Net cash provided by financing activities

 

 

 

 

$

1,459,661

 

 

$

24,500,364

 

 

$

2,539,909

 

 

As of
March 31,
2022

 


As of December 31,

   

2021

 

2020

Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

15,077,379

 

 

$

20,952,867

 

 

$

3,298,180

 

Total assets

 

$

22,033,584

 

 

$

25,167,372

 

 

$

5,332,612

 

Total liabilities

 

$

31,948,886

 

 

$

31,778,829

 

 

$

6,761,333

 

Total stockholders’ deficit

 

$

(9,915,302

)

 

$

(6,611,457

)

 

$

(1,428,721

)

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TRADING MARKET AND DIVIDENDS

CLAQ

Units, Common Stock, Rights and Warrants

The Units, Common Stock, Rights and Warrants are each quoted on the Nasdaq Stock Market, under the symbols “CLAQU,” “CLAQ,” “CLAQR,” and “CLAQW,” respectively. Each of CLAQ’s Units consists of one share of common stock, one Right and one-half of a Warrant. Each Right entitles the holder thereof to receive one-twentieth (1/20) of one share of common stock. Each whole Warrant entitles the holder thereof to purchase one share of common stock at a price of $11.50 per share. The Units, common stock, Rights and Warrants commenced trading on the Nasdaq Stock Market separately on or about August 4, 2021.

CLAQ’s Dividend Policy

CLAQ has not paid any cash dividends on its shares of common stock to date and does not intend to pay cash dividends prior to the completion of a business combination. The payment of cash dividends in the future will be dependent upon CLAQ’s revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of a business combination. Further, if we incur any indebtedness, CLAQ’s ability to declare dividends may be limited by restrictive covenants CLAQ may agree to in connection therewith. The payment of any dividends subsequent to a business combination will be within the discretion of the Combined Company’s Board of Directors. It is the present intention of the Board to retain all earnings, if any, for use in its business operations and, accordingly, the Board does not anticipate declaring any dividends in the foreseeable future.

Nauticus

Holders of Nauticus

As of the Record Date, there were            holders of record of Nauticus stock.

Dividend Policy of Nauticus

Nauticus has not paid any cash dividends on its stock to date and does not intend to pay cash dividends prior to the completion of the Business Combination.

Combined Company

Dividend Policy

Following completion of the Business Combination, the Combined Company’s Board of Directors will consider whether or not to institute a dividend policy. It is presently intended that the Combined Company retain its earnings for use in business operations and accordingly, we do not anticipate Combined Company’s Board of Directors declaring any dividends in the foreseeable future.

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RISK FACTORS

You should consider carefully the following risk factors, as well as the other information set forth in this proxy statement/prospectus, before making a decision on the Business Combination. Risks related to Nauticus, including risks related to Nauticus’ business, financial position and capital requirements, development, regulatory approval and commercialization, dependence on third parties, intellectual property and taxation, will continue to be applicable to the Combined Company after the closing of the Business Combination.

Risks Related to Nauticus’ Business and Industry

Nauticus is an early-stage company with a history of losses, and it expects to incur significant expenses for the foreseeable future.

Nauticus incurred a net loss of $3.5 million for the three months ended March 31, 2022 and $15.1 million and $7.2 million for the years ended December 31, 2021 and 2020, respectively. Nauticus believes that it will continue to incur operating and net losses each quarter until at least the fourth quarter of 2022. Even though Nauticus has commercial traction for platform sales, it may not attract customers for its RaaS offering, Nauticus’ potential profitability is dependent upon the successful adoption on a larger scale of its robotics systems, which may not occur. There can be no assurance that Nauticus will be financially successful.

Nauticus expects the rate at which it will incur losses will be significantly higher in future periods as Nauticus:

        continues to design, develop, manufacture and commercialize its ocean robotic systems;

        continues to utilize and develop potential new relationships with third-party partners for supply, design to manufacturing and manufacturing;

        expands its production capabilities, including costs associated with potential outsourcing the manufacturing of its ocean robotic systems;

        builds up inventories of parts and components for its ocean robotic systems;

        matures its maintenance and servicing capacity, capabilities, and replacement parts inventory;

        manufactures an inventory of its ocean robotic systems;

        increases its sales and marketing activities and enhances its sales and distribution infrastructure;

        further develop its remote monitoring, updating, and other cloud-based services;

        refines its safety measures for the ocean robotic systems;

        expands its technology infrastructure and cybersecurity measures, policies, and controls; and

        increases its general and administrative functions to support its growing operations and to operate as a public company.

Because Nauticus will incur costs and expenses from these efforts before it receives any incremental revenues with respect thereto, Nauticus’ losses in future periods will be significant. In addition, Nauticus may find that these efforts are more expensive than it currently anticipates or that these efforts may not result in revenues, which would further increase Nauticus’ losses.

Nauticus has identified a material weakness in its internal control over financial reporting. This material weakness could continue to adversely affect Nauticus’ ability to report its results of operations and financial condition accurately and in a timely manner.

Nauticus management is responsible for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with GAAP. Nauticus’ management is likewise required, on a quarterly basis, to evaluate the effectiveness of its internal controls. Nauticus has identified a material weakness in its internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of Nauticus’ annual or interim financial statements will not be prevented or detected on a timely basis.

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Nauticus identified certain accounting errors related to the financial statements. As a result, Nauticus management concluded that a material weakness existed in its internal control over financial reporting related to the identification and review of technical issues associated with certain unique, unusual and nonstandard transactions within Nauticus’ equity process. As a result of this material weakness, Nauticus’ management concluded that its internal control over financial reporting was not effective as of December 31, 2021.

To address this material weakness, Nauticus has engaged a technical accounting and financial reporting consulting firm to assist the company with (i) its financial accounting close, (ii) the application of technical accounting literature, (iii) the preparation of its financial statements, and (iv) the independent audit of its financial statements. Nauticus' plan is to employ additional financial and accounting personnel in key finance and accounting positions. The company has identified some new personnel and expects to secure their full-time employment by the end of third quarter 2022. As of March 31, 2022, Nauticus has filled positions of Senior Accountant and Accounts Receivable to remediate this weakness in its internal controls. In addition, Nauticus has recently added a Chief Financial Officer to strengthen its internal controls and financial reporting. Nauticus plans to transition two current contracted personnel to accounting leadership and controller positions. Nauticus is also strengthening internal controls over financial reporting by implementing an Enterprise Resource Planning system (“ERP”), a software used to automate business processes, containing workflows and business rules that ensure process is followed by approved policies, roles, and procedures. The Company expects to complete the ERP implementation within 6 months.

The resulting fully integrated system will enhance financial reporting and transactional interfaces. Nauticus will also add RaaS operations personnel as required when the production Aquanauts are completed, commissioned, and put into service. Nauticus’ management will make an assessment of these remediation steps and add additional staff, if necessary to remediate the weakness.

Nauticus expects to incur on-going significant costs to meet the corporate governance provisions of the Sarbanes-Oxley Act of 2002, related regulations of the SEC, and the requirements of NASDAQ, with which Nauticus is not required to comply presently as a private company. Complying with these statutes, regulations, and requirements will occupy a significant amount of the Nauticus board of director's and management's time and will significantly increase its costs and expenses.

While Nauticus believes these actions will address the reported material weakness, Nauticus can give no assurances that these actions will remediate the deficiency in internal control or that additional material weaknesses or significant deficiencies in its internal control over financial reporting will not be identified in the future. Nauticus' failure to implement and maintain effective internal control over financial reporting could result in errors in its financial statements that could result in a restatement of its financial statements and cause it to fail to meet its reporting obligations.

In addition to the steps already taken, Nauticus plans to continue to devote, significant effort and resources to the remediation and improvement of its internal control over financial reporting. While Nauticus has processes to identify and appropriately apply applicable accounting requirements, Nauticus plans to enhance these processes to better evaluate its research and understanding of the nuances of the complex accounting standards that apply to its consolidated financial statements. These include providing enhanced access to accounting literature, research materials and documents, increased communication among its personnel, hiring additional technical accounting resources, and third-party professionals with whom Nauticus consults regarding complex accounting applications. The elements of its continued remediation plan can only be accomplished over time, and Nauticus can offer no assurances that these initiatives will ultimately have all or some of the intended effects.

Any failure to maintain such internal control could adversely impact Nauticus’ ability to report its financial position and results of operations on a timely and accurate basis. If Nauticus’ financial statements are not accurate, investors may not have a complete understanding of its operations. Likewise, if after the Business Combination, Nauticus’ financial statements are not filed on a timely basis, Nauticus could be subject to sanctions or investigations by the stock exchange on which its common stock is listed, the SEC or other regulatory authorities. In either case, that could result in a material adverse effect on Nauticus’ business. Ineffective internal controls could also cause investors to lose confidence in Nauticus’ reported financial information which could have a negative effect on the trading of Nauticus stock.

Nauticus can give no assurances that going forwards the measures it plans to take in the future will remediate any additional material weaknesses or restatements of financial results will not arise in the future due to failure to implement and maintain adequate control over financial reporting or circumvention of these controls. In addition, even if Nauticus is successful in strengthening its controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair preparation and presentation of our consolidated financial statements.

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For more information please see the Risk Factor “If Nauticus fails to maintain an effective system of internal controls, its ability to produce timely and accurate financial statements or comply with applicable regulations could be adversely affected.”

Almost all of Nauticus’ revenues in 2020, 2021, and the first quarter of 2022 were derived from three customers. A substantial portion of Nauticus’ current revenue is generated by sales to government entities, which are subject to a number of uncertainties, challenges, and risks.

Nauticus currently has a limited number of customers. For the three months ended March 31, 2022, sales to one customer accounted for 95% of total revenue, sales to another customer accounted for 4% of total revenue, and sales to another customer accounted for 1% of total revenue. For the year ended December 31, 2021, sales to one customer accounted for 89% of total revenue and the total balance due from this customer as of December 31, 2021 made up 82% of accounts receivable. For the year ended December 31, 2020, sales to one customer accounted for 61% of total revenue, sales to another customer accounted for 20% of total revenue, and sales to another customer accounted for 17% of total revenue. The total balances due from these customers as of December 31, 2020 made up 100% of accounts receivable. Sales to government entities are subject to a number of risks. Selling to government entities can be highly competitive, expensive, and time-consuming, often requiring significant upfront time and expense without any assurance that these efforts will generate a sale. In the event that Nauticus is successful in being awarded further government contracts, such awards may be subject to appeals, disputes, or litigation, including, but not limited to, bid protests by unsuccessful bidders. Government demand and payment for Nauticus’ solutions may be impacted by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for Nauticus’ solutions. Government entities may have statutory, contractual, or other legal rights to terminate Nauticus’ contracts for convenience or default. For purchases by the U.S. federal government, the government may require certain products to be manufactured in the United States and other high cost manufacturing locations, and Nauticus or any third-party manufacturers may not manufacture all products in locations that meet government requirements, and as a result, Nauticus’ business and results of operations may suffer.

As a government contractor or subcontractor, Nauticus must comply with laws, regulations, and contractual provisions relating to the formation, administration, and performance of government contracts and inclusion on government contract vehicles, which affect how Nauticus and its partners do business with government agencies. As a result of actual or perceived noncompliance with government contracting laws, regulations, or contractual provisions, Nauticus may be subject to non-ordinary course audits and internal investigations which may prove costly to its business financially, divert management time, or limit Nauticus’ ability to continue selling its products to its government customers. These laws and regulations may impose other added costs on Nauticus’ business, and failure to comply with these or other applicable regulations and requirements, including non-compliance in the past, could lead to claims for damages, downward contract price adjustments or refund obligations, civil or criminal penalties, and termination of contracts and suspension or debarment from government contracting for a period of time with government agencies. Any such damages, penalties, disruption, or limitation in Nauticus’ ability to do business with a government would adversely impact, and could have a material adverse effect on, Nauticus’ business, prospects, financial condition and operating results.

If Nauticus fails to effectively manage its growth, Nauticus may not be able to design, develop, manufacture, market, and launch new generations of its robotic systems successfully.

Nauticus intends to invest significantly in order to expand its business. Any failure to manage Nauticus’ growth effectively could materially and adversely affect Nauticus’ business, prospects, financial condition, and operating results. Nauticus intends to expand its operations significantly. Nauticus expects its expansion to include:

        expanding the management, engineering, and product teams;

        identifying and recruiting individuals with the appropriate relevant experience;

        hiring and training new personnel;

        launching commercialization of new products and services;

        forecasting production and revenue and implementing enterprise resource planning (ERP) systems;

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        entering into relationships with one or more third-party design for manufacturing partners and third-party manufacturers and/or expanding its internal manufacturing capabilities;

        controlling expenses and investments in anticipation of expanded operations;

        carrying out acquisitions and entering into collaborations, in-licensing arrangements, joint ventures, strategic alliances or partnerships;

        expanding and enhancing internal information technology, safety, and security systems;

        establishing or expanding sales, customer service and maintenance and servicing facilities and organization;

        conducting demonstrations of ocean robotic systems;

        entering into agreements with suppliers and service providers; and

        implementing and enhancing administrative infrastructure, systems, and processes.

Nauticus intends to continue to hire a significant number of additional personnel, including engineers, design and production personnel and service technicians for its ocean robotic systems and services. Because of the innovative nature of Nauticus’ technology, individuals with the necessary experience may not be available to hire, and as a result, Nauticus will need to expend significant time and expense to recruit and retain experienced employees and appropriately train any newly hired employees. Competition for individuals with experience designing, producing, and servicing dexterous ocean robots and their software is intense, and Nauticus may not be able to attract, integrate, train, motivate or retain additional highly qualified personnel. The failure to attract, integrate, train, motivate and retain these additional employees could seriously harm Nauticus’ business, prospects, financial condition and operating results.

Nauticus’ operating and financial projections rely on management assumptions and analyses. If these assumptions or analyses prove to be incorrect, Nauticus’ actual operating results may be materially different from its forecasted results.

Nauticus is an ocean robotics and services company, with limited experience commercializing its products and services. The projected financial and operating information appearing elsewhere in this proxy statement/prospectus reflect estimates of future performance and is based on multiple financial, technical, and operational assumptions, including hiring of additional skilled personnel in a timely way to support continued development and commercialization of the core products, timing of commercial launch of the ocean robotic systems, the level of demand for Nauticus’ ocean robotic systems, the performance of Nauticus’ ocean robotic systems, the utilization of the ocean robot fleet, commercial interest in the RaaS subscription model, the useable life of the ocean robotic systems, cost of manufacturing, cost of components and availability of adequate supply, the nature and length of the sales cycle, maintenance and servicing costs and the costs of refurbishing the ocean robotic systems. However, given Nauticus’ limited commercial experience, it is likely that many of these assumptions will prove incorrect. The projections are forward-looking statements that are inherently subject to significant uncertainties and contingencies, many of which are beyond Nauticus’ control. See “Risk Factors,” Nauticus’ Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Cautionary Note Regarding Forward-Looking Statements.” Whether actual operating and financial results and business developments will be consistent with Nauticus’ expectations and assumptions as reflected in its forecast depends on a number of other factors, many of which are outside Nauticus’ control, including, but not limited to:

        whether Nauticus can obtain sufficient capital to sustain and grow its business;

        Nauticus’ ability to manage its growth;

        the contractual terms of one or more agreements with third-party manufacturers;

        whether Nauticus can manage relationships with key suppliers and partners;

        the timing and costs of the required marketing and promotional efforts;

        the timing and cost of each sale or RaaS subscription;

        whether customers and their employees will adopt the ocean robotic systems offered by Nauticus;

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        the timing required and success of customer testing of Nauticus’ technology;

        competition, including from established and future competitors;

        Nauticus’ ability to retain existing key management, to attract additional leaders, to integrate recent hires and to attract, retain and motivate qualified personnel, including engineers, design and production personnel, and service technicians;

        the overall strength and stability of domestic and international economies;

        demand for currently available and future ocean robots;

        regulatory, legislative, and political changes; and

        customer requirements and preferences.

Unfavorable changes in any of these or other factors, most of which are beyond Nauticus’ control, could cause Nauticus to fail to meet its operating and financial projections and could materially and adversely affect its business, prospects, financial condition and operating results. For more information regarding Nauticus’ projections, please see the section entitled “Proposal 1 — The Business Combination Proposal — Certain Nauticus’ Projected Financial Information.”

We rely on third party manufacturers/suppliers and expect to continue to do so for the foreseeable future. This reliance on third parties increases the risk that we will not have sufficient quantities of our products or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts.

We rely, and expect to continue to rely, on third party manufacturers/suppliers. This reliance on third party manufacturers/suppliers increases the risk that we will not have sufficient quantities of our products or such quantities at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts. Additionally, we may be unable to establish or continue any agreements with third-party manufacturers/suppliers or to do so on acceptable terms. Even if we are able to establish agreements with third-party manufacturers/suppliers, reliance on third-party manufacturers/suppliers entails additional risks, including:

        failure of third-party manufacturers/suppliers to comply with regulatory requirements and maintain quality assurance;

        breach of the manufacturing/supply agreement by the third party;

        failure to manufacture/supply our product according to our specifications;

        failure to manufacture/supply our product according to our schedule or at all;

        misappropriation of our proprietary information, including our trade secrets and know-how; and

        termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us.

If our current or future third-party manufacturers/suppliers cannot perform as agreed, we may be required to replace such manufacturers/suppliers and we may be unable to replace them on a timely basis or at all. Our current and anticipated future dependence upon third party manufacturers/suppliers may adversely affect our future profit margins and our ability to commercialize any products that receive marketing approval on a timely and competitive basis.

The commercial RaaS launch of Nauticus’ core product, Aquanaut, may be delayed beyond the end of 2022.

Nauticus expects to commercially launch its RaaS business model to the public at large by the end of 2022. A delay in the delivery and readiness of its core product, Aquanaut, due to the factors mentioned below would also delay the generation of revenue through the RaaS business model. Both Aquanaut and the subsequent RaaS revenue stream may be delayed if the risks mentioned herein are not mitigated. Among the significant current challenges that could delay the commercial launch are:

        The COVID-19 pandemic and general labor shortages of qualified applicants has affected and may continue to affect Nauticus’ ability to recruit skilled employees to join its team, negatively affecting the timeline.

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        Nauticus and its suppliers are currently experiencing increases in cost of and an interruption in the supply and shortage of materials. Due to the nature of Nauticus’ products, each unit contains several major subsystem components. Difficulty securing any components and materials could result in delays in the production of these platforms, which delays could be compounded if components or units require redesign.

        Delays in the production of Aquanaut due to these challenges also affect negotiations with third party contract manufacturers, as such negotiations are more complicated if the units and/or components are undergoing improvements. If Nauticus is unable to enter into definitive agreements or is only able to do so on terms that are less commercially favorable to Nauticus, it may need to enhance its own manufacturing and production capabilities, which may impact Nauticus’ operating expenditures and profitability.

Nauticus’ financial projections, particularly its projected increases in revenue starting in 2023, were premised on a commercial launch of the RaaS business model by the 4th quarter, 2022. Delays in this launch will result in a commensurate delay in revenues and profitability.

Nauticus has limited experience commercializing its products at a large scale and may not be able to do so efficiently or effectively.

Although Nauticus has sold products to a limited number of individual customers in the past, it has limited experience commercializing ocean robotic systems at a large scale and may not be able to do so efficiently or effectively. A key element of Nauticus’ long-term business strategy is the continued growth in sales, marketing, training, customer service and maintenance and servicing operations, including hiring personnel with the necessary experience. Managing and maintaining these operations is expensive and time consuming, and an inability to leverage such an organization effectively or at all could inhibit potential sales or subscriptions and the penetration and adoption of Nauticus’ products into new markets. In addition, certain decisions Nauticus makes regarding staffing in these areas in its efforts to maintain an adequate spending level could have unintended negative effects on its revenues, such as by weakening the sales, marketing and maintenance and servicing infrastructures or lowering the quality of customer service.

Nauticus’ business plans require a significant amount of capital. Nauticus’ future capital needs may require Nauticus to sell additional equity or debt securities that may dilute its stockholders or introduce covenants that may restrict its operations or its ability to pay dividends.

Nauticus will require significant capital to operate its business and fund its capital expenditures for the next several years. While Nauticus expects that following the Business Combination, Nauticus will have sufficient capital to fund its currently planned operations for the foreseeable future, it is possible that Nauticus will need to raise additional capital to fund its business, including to finance ongoing research and development costs, manufacturing, any significant unplanned or accelerated expenses, and new strategic alliances or acquisitions. The fact that Nauticus has limited experience commercializing its ocean robotic systems on a large scale, coupled with the fact that Nauticus’ products represent a new product category in the commercial and industrial ocean robotic market, means Nauticus has limited historical data on the demand for its robotic systems. In addition, Nauticus expects its capital expenditures to continue to be significant in the foreseeable future as it continues generational improvements for its commercial products, and that its level of capital expenditures will be significantly affected by customer demand for its ocean robotic systems. As a result, Nauticus’ future capital requirements may be uncertain and actual capital requirements may be different from those it currently anticipates. Nauticus may need to seek equity or debt financing to finance a portion of its capital expenditures. Such financing might not be available to Nauticus in a timely manner or on terms that are acceptable, or at all.

Nauticus’ ability to obtain the necessary financing to carry out its business plan is subject to a number of factors, including general market conditions and investor acceptance of Nauticus’ business model. These factors may make the timing, amount, terms, and conditions of such financing unattractive or unavailable to Nauticus. If Nauticus is unable to raise sufficient funds, it will have to significantly reduce its spending, delay or cancel its planned activities or substantially change its corporate structure. Nauticus might not be able to obtain any funding, and it might not have sufficient resources to conduct its business as projected, both of which could mean that Nauticus would be forced to curtail or discontinue its operations.

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In addition, Nauticus’ future capital needs and other business reasons could require it to sell additional equity or debt securities or obtain a credit facility. The sale of additional equity or equity-linked securities could dilute its stockholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict Nauticus’ operations.

If Nauticus cannot raise additional funds when it needs or want them, its operations and prospects could be negatively affected.

To date, Nauticus’ cash needs have been met with debt and equity funding from its principal stockholders. If the Business Combination is not consummated and Nauticus is not able to obtain sufficient funding, its business, prospects, financial condition and operating results will be harmed and Nauticus may be unable to continue as a going concern.

Nauticus’ products and services are disruptive to the ocean services industries, and important assumptions about the market demand, pricing, adoption rates and sales cycle, for its current and future products and services may be inaccurate.

Nauticus’ core offering, its tetherless surface and subsea robot pair, are a new service paradigm in the ocean services markets and which are currently dominated by conventional, tethered devices with large surface vessels. The market demand for and adoption of Nauticus’ offering is unproven, and important assumptions about the characteristics of targeted markets, pricing, and sales cycles may be inaccurate. Although Nauticus has engaged in ongoing dialogue with potential customers, it has few binding commitments to purchase its products and services and no hard commitments to enter into RaaS subscriptions. Existing or new regulatory or safety standards, or resistance by customer employees and labor unions, all of which are outside of Nauticus’ control, could cause delays or otherwise impair adoption of these new technologies, which will adversely affect Nauticus’ growth, financial position, and prospects. Given the evolving nature of the markets in which Nauticus operates, it is difficult to predict customer demand or adoption rates for its products or the future growth of the markets Nauticus expects to target. If one or more of the targeted markets experience a shift in customer or prospective customer demand, Nauticus’ products may not compete as effectively, if at all, and they may not be fully developed into commercial products. As a result, the financial projections in this proxy statement/prospectus necessarily reflect various estimates and assumptions that may not prove accurate and these projections could differ materially from actual results because of the risks included in this “Risk Factors” section, among others. If demand does not develop as expected or if Nauticus cannot accurately forecast pricing, adoption rates and sales cycle for its products, its business, results of operations and financial condition will be adversely affected.

With Nauticus’ service offering still being commercialized at a large scale, Nauticus has limited current customers and no hard contracts for the RaaS offering, and there is no assurance that expected customer demand will result in binding orders or subscriptions.

Nauticus expects to launch its core RaaS offering by the end of 2022 with the currently available preproduction Hydronauts and preproduction Aquanauts in Nauticus’ inventory. This evaluation is based on the time to complete production of the initial RaaS fleet. With initial fleet still under production, Nauticus has no binding commitments for its RaaS offering. At present, Nauticus has contracts for delivery of pre-production units with U.S. government customers and it also has had and currently has revenue generating contracts with both commercial and U.S. Government customers. Pre-production means that the unit that has not gone through a subsequent design evolution for mass production (defined as tens of units per year). Although Nauticus has engaged in dialogue (i.e. MOUs) with potential customers about their interest in Nauticus’ offering, there is no assurance that expected customer trials and discussions will result in binding commitments. There may be variability in the customer testing time that will be required to adopt its RaaS offering. As such, customer testing may be longer than anticipated by Nauticus, and Nauticus may not be able to provide such testing to the satisfaction of prospective customers, which could result in longer sales cycles and lower subscriptions revenue than anticipated. In addition, in order to build and maintain its business, Nauticus must maintain confidence among customers, suppliers, analysts, ratings agencies and other parties in its ocean robotic systems, long-term financial viability and business prospects. Maintaining such confidence may be particularly complicated by certain factors including those that are largely outside of Nauticus’ control, such as its limited commercial experience, customer unfamiliarity with its products, any delays in scaling production, inability of delivery and service operations to meet demand, competition and uncertainty regarding the future of ocean robotics. If Nauticus does not receive a sufficient number of binding orders for its products or RaaS subscriptions, its business, prospects, financial condition and operating results could be materially and adversely affected.

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The benefits of Nauticus’ products to customers and projected return on investment have not been substantiated through long-term trials or use.

Nauticus’ core products’ benefits to customers and projected return on investment have not been substantiated through long-term trials or use. Nauticus currently has a limited frame of reference by which to evaluate the performance of its ocean robotic systems upon which its business prospects depend. There can be no assurance that such units will provide the expected benefit to customers. Nauticus’ ocean robotic systems may not perform consistently with customers’ expectations or consistently with other robotics products which may become available. Any failure of Nauticus’ robotic systems and software to perform as expected could harm Nauticus’ reputation and result in adverse publicity, lost revenue, delivery delays, product recalls, product liability claims and significant warranty and other expenses and could have a material adverse impact on Nauticus’ business, prospects, financial condition and operating results. Additionally, problems and defects experienced by competitors or others in the ocean robotics market could, by association, have a negative impact on perception and customer demand for Nauticus’ ocean robotic systems.

Nauticus may fail to attract or retain customers for RaaS business model at sufficient rates or at all.

Nauticus has limited experience commercializing its RaaS business model and may not be able to do so efficiently or effectively. Although Nauticus has engaged in ongoing dialogue with potential future customers, there are currently no binding commitments with commercial customers to enter into RaaS agreements with respect to its ocean services. To grow its customer base, Nauticus must achieve binding commitments from expected customers and add new customers, which Nauticus may not be able to do in sufficient numbers or at all. Even if Nauticus is able to attract customers, these customers may not maintain a high level of commitment to Nauticus’ products and services. In addition, Nauticus will incur marketing, sales or other expenses, including referral fees, to attract new customers, which will offset revenues from such customers. For these and other reasons, Nauticus could fail to achieve revenue growth, which could adversely affect its results of operations, prospects and financial condition.

If customers or their employees do not perceive Nauticus’ product and service offerings to be of value, Nauticus may not be able to attract and retain customers and customers may fail to purchase additional units or renew their RaaS subscriptions. If Nauticus’ efforts to satisfy and retain its existing customers are not successful, it may not be able to attract customers, and as a result, its ability to maintain and/or grow its business will be adversely affected. Customers may fail to purchase additional units or cancel Nauticus’ subscription/contracts for many reasons including inadequate customer service or maintenance and servicing issues that are not satisfactorily resolved. Customer retention will also be largely dependent on the quality and effectiveness of Nauticus’ customer service and maintenance and servicing operations, which may be handled internally by Nauticus’ personnel and also by third-party service providers. Outsourcing of certain customer service and claims administration or maintenance and servicing functions may reduce Nauticus’ ability to ensure consistency in its overall customer service processes. If Nauticus is unable to successfully retain existing customers and attract new customers, Nauticus’ business, prospects, financial condition and operating results will be adversely affected.

Even if Nauticus successfully markets its products and services, the purchase or subscription, adoption and use of the products and services may be materially and negatively impacted if Nauticus’ customers resist the use and adoption of the products and services.

Nauticus has designed and developed its robotic systems with the goal of reducing operating costs and greenhouse gases through the use of smaller surface vessels (Hydronaut) and all electric robot subsystems. Even if Nauticus successfully markets its products and services to customers, the purchase or subscription, adoption and the use of the products and services may be materially and negatively impacted if Nauticus’ customers resist or delay the use and adoption of these new technology products and services. Customers may resist or delay the adoption of Nauticus’ products and services for several reasons, including lack of confidence in autonomous and semi-autonomous ocean vehicles. Nauticus will spend significant time and resources on beta units of its Aquanaut for customer testing. If Nauticus’ customers resist or delay adoption of Nauticus’ ocean robotic platforms, Nauticus’ business, prospects, financial condition and operating results will be materially and adversely affected.

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Nauticus’ RaaS subscription model (planned for future commercial services but yet to be implemented) has yet to be tested and may fail to gain commercial acceptance.

Nauticus’ ability to derive revenue from its products depends on its ability to successfully market its products and develop a network of ongoing customers for its new RaaS revenue model. Investors should be aware of the difficulties normally encountered by a new business model, many of which are beyond Nauticus’ control, including substantial risks and expenses while establishing or entering new markets, setting up operations and undertaking marketing activities. There can be no assurance that customers will perceive benefits to the RaaS subscription model.

Because Nauticus will continue to own units while they are used by the customers, Nauticus will be subject to risks associated with ongoing ownership of the units, including the risks of deterioration, damage or theft and higher maintenance and servicing costs. All of these could result in higher costs to Nauticus, and could lead to customer dissatisfaction. The likelihood of Nauticus’ success must be considered in light of these risks, expenses, complications, delays, and the competitive environment in which Nauticus operates. There is, therefore, nothing at this time upon which to base an assumption that Nauticus’ RaaS business model will prove successful.

If Nauticus is successful in commercializing its products and services, Nauticus’ revenue will be concentrated in a limited number of models for the foreseeable future.

If Nauticus is successful in commercializing its products and services, its revenue will be concentrated in a limited number of models for the foreseeable future. Nauticus launched the Aquanaut platform in 2021 and expects to launch the commercial production versions of the Aquanaut robotic system under the RaaS business model by the end of 2022. Such timeline may be delayed, including due to challenges in recruiting skilled employees, difficulties in securing components and materials, development delays, difficulties relating to manufacturing of the units and other factors. Such challenges may result in delay of the anticipated commercial launch of one or more of the products and services, which would adversely affect Nauticus’ financial and operating results. To the extent Nauticus’ products and services do not meet customer expectations, or cannot be completed or manufactured or delivered on their projected timelines and in line with cost and volume targets, Nauticus’ future sales and operating results may be adversely affected. Given that for the foreseeable future Nauticus’ business will depend on a limited number of product models, to the extent a particular product model is not well-received by the market, Nauticus’ revenue could be materially and adversely affected. This could have a material adverse effect on Nauticus’ business, prospects, financial condition and operating results.

Nauticus may not be able to complete or enhance its product and service offerings through its research and development efforts.

To commercially launch the RaaS business model, Nauticus will need to continue to advance and evolve its products in response to the evolving demands of its customers in the various industries it expects to serve. Nauticus expects to launch newer versions of two (2) subsea vehicle products by the end of 2022: the Aquanaut, a mobile subsea robotic system, and the Argonaut, a defense-oriented subsea vehicle. Each of these products and setup of associated services will require significant additional expenses, and Nauticus may not be successful in commercializing or marketing such products and services at all or within the currently expected timeline.

In addition, notwithstanding Nauticus’ market research efforts, its future products and services may not be accepted by customers or their employees. The success of any proposed product and service offerings will depend on numerous factors, including Nauticus’ ability to:

        attract, recruit and retain qualified personnel, including engineers, design and production personnel and service technicians;

        identify the preferred product and service features in multiple industries, such as offshore wind energy, defense, and subsea oil and gas and successfully incorporate those features into its products;

        develop and introduce proposed products and services in sufficient quality and quantities and in a timely manner;

        adequately protect its intellectual property and avoid infringing upon the intellectual property rights of third parties; and

        demonstrate the cost savings and efficacy of the proposed products and services.

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Nauticus has managed and expects to continue to manage its product development efforts through the development of alpha units, beta units and commercial units. If Nauticus fails to adequately communicate to customers the improvements that are expected from one development stage to the next, or if customer feedback from one development stage is not adequately reflected in the next, customers may not be persuaded of the value of Nauticus’ products and services. If Nauticus fails to generate demand by developing products that incorporate features desired by customers, Nauticus may fail to generate RaaS subscriptions sufficient to achieve or maintain profitability. Nauticus has in the past experienced, and may in the future experience, delays in various phases of product development, including during research and development, manufacturing, limited release testing, marketing and customer education efforts. Further, delays in product development would postpone demonstrations and customer testing, important opportunities for customer engagement, and cause Nauticus to miss expected timelines. Such delays could cause customers to delay or forgo purchases of or subscriptions to Nauticus’ products and services, or to purchase or subscribe for competitors’ products and services. Even if Nauticus is able to successfully develop proposed products when anticipated, these products and their related services may not produce revenue in excess of the costs of development and service, and they may be quickly rendered obsolete by changing customer preferences or the introduction by competitors of products and services embodying new technologies or features. If Nauticus is unable to successfully manage its product development and communications with customers, customers may choose to not adopt, to cancel or to not renew RaaS subscriptions, which would adversely affect Nauticus’ business, prospects, financial condition, and operating results.

Defects, glitches, or malfunctions in Nauticus’ products or the software that operates them, failure of its products to perform as expected, connectivity issues or operator errors, result in product recalls, lower than expected return on investment for customers, cause harm to operators and significant safety concerns, each of which could adversely affect Nauticus’ results of operations, financial condition and its reputation.

The design, manufacture, and marketing of Nauticus’ products involve certain inherent risks. Manufacturing or design defects, glitches, malfunctions, connectivity issues between the central processing unit and peripheral vehicle subsystems, unanticipated use of Nauticus’ robotic systems, operator errors or inadequate disclosure of risks relating to the use of ocean robotic systems, among others, can lead to injury, property damage or other adverse events. Nauticus conducts extensive testing of its units, in some instances in collaboration with its customers, to ensure that any such issues can be identified and addressed in advance of commercial launch of the products. However, there can be no assurance that Nauticus will be able to identify all such issues or that, if identified, efforts to address them will be effective in all cases.

In addition, if the manufacturing of Nauticus’ products is outsourced, Nauticus may not be aware of manufacturing defects that could occur. Such adverse events could lead to unexpected failures in Nauticus’ products and could result, in certain cases, in the removal of its products from the market. A product recall could result in significant costs. To the extent any manufacturing defect occurs, Nauticus’ agreement with the third-party manufacturer may contain a limitation on the third-party manufacturer’s liability, and therefore Nauticus could be required to incur the majority of related costs. Product defects or recalls could also result in negative publicity, damage to Nauticus’ reputation or, in the event of regulatory developments, delays in new product acceptance.

Nauticus’ products incorporate sophisticated computer software. Complex software frequently contains errors, especially when first introduced. Nauticus’ software may experience errors or performance problems in the future. If any part of Nauticus’ products’ hardware or software were to fail, the service mission could be compromised. Additionally, users may not use Nauticus’ products in accordance with safety protocols and training, which could amplify the risk of failure. Customers and users also may fail to install updates and fixes to the software for several reasons including poor connectivity or inattention. Any such occurrence could cause delay in market acceptance of Nauticus’ products, damage to its reputation, product recalls, increased service and warranty costs, product liability claims and loss of revenue relating to such hardware or software defects.

Nauticus anticipates that as part of its ordinary course of business it may be subject to product liability claims alleging defects in the design or manufacture of its products. A product liability claim, regardless of its merit or eventual outcome, could result in significant legal defense costs and high punitive damage payments. Although Nauticus maintains product liability insurance, the coverage is subject to deductibles and limitations, and may not be adequate to cover future claims. Additionally, Nauticus may be unable to maintain its existing product liability insurance in the future at satisfactory rates or adequate amounts.

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Even if Nauticus’ products perform properly and are used as intended, if operators sustain any injuries while using Nauticus’ products, Nauticus could be exposed to liability and its results of operations, financial condition, and its reputation may be adversely affected.

Nauticus’ products contain complex technology and must be used as designed and intended in order to operate safely and effectively. While Nauticus expects to develop a training, customer service and maintenance and servicing infrastructure to ensure users are equipped to operate its products in a safe manner, it cannot be sure that the products will ultimately be used as designed and intended. In addition, Nauticus cannot be sure that it will be able to predict all the ways in which use or misuse of the products can lead to injury or damage to property, and its training resources may not be successful at preventing all incidents. If operators were to sustain any injuries or cause any damage to property while using Nauticus’ products, in a manner consistent with Nauticus’ training and instructions or otherwise, Nauticus could be exposed to liability and its results of operations, financial condition and its reputation may be adversely affected.

Nauticus has no experience maintaining or servicing its products at a large scale.

Under the RaaS subscription (planned for future commercial services but yet to be implemented) or conventional service contract model, Nauticus will be responsible for maintenance and servicing of the units. However, Nauticus has no experience providing maintenance and servicing on a global scale. Nauticus may elect to partner with one or more third parties to perform some or all of the servicing and maintenance on its products, but there can be no assurance that Nauticus will be able to enter into an acceptable arrangement with any such third-party provider. Although such servicing partners may have experience in servicing complex machinery, they will initially have limited experience in servicing Nauticus’ ocean vehicles. If Nauticus is unable or elects not to enter into a partnership with third parties to perform maintenance and servicing, it would be required to provide such services directly, which would significantly increase Nauticus’ capital expenditures and personnel costs. Nauticus would also be required to recruit and train employees to provide these services and it may not be able to attract persons with the necessary knowledge or experience to provide these services. Delays in implementing a maintenance and servicing infrastructure may significantly delay new RaaS subscriptions due to smaller than expected maintenance and servicing capacity.

In addition, there can be no assurance that Nauticus’ service and maintenance arrangements will adequately address the service and maintenance requirements of its customers to their satisfaction, or that Nauticus and its servicing partners will have sufficient resources, experience or inventory to meet these service requirements in a timely manner as the volume of robotic systems Nauticus delivers increases. Even if Nauticus and its servicing partners have the sufficient resources and experience needed, they still may not adequately service or maintain the units. If Nauticus is unable to, directly or through third party partners, roll out and establish a widespread service network, including on-site services, customer satisfaction could be adversely affected, which in turn could materially and adversely affect Nauticus’ reputation and thus its sales, results of operations and prospects.

Nauticus’ customers will also depend on Nauticus’ customer support team to resolve technical and operational issues relating to the integrated software underlying Nauticus’ ocean robotic systems. In addition, the RaaS subscription model will require Nauticus to cover costs relating to servicing and maintenance of the robotic systems. Customer behavior and usage may result in higher than expected maintenance and repair costs. Moreover, if RaaS customers do not pay the subscription fee while the units are out of service, there could be an adverse impact on Nauticus’ financial condition and operating results.

As Nauticus continues to grow, additional pressure may be placed on Nauticus’ customer support team or partners, and Nauticus may be unable to respond quickly enough to accommodate short-term increases in customer demand for technical support. Nauticus also may be unable to modify the future scope and delivery of its technical support to compete with changes in the technical support provided by its competitors. Increased customer demand for support, without corresponding revenue, could increase costs and negatively affect Nauticus’ operating results. If Nauticus is unable to successfully address the service requirements of its customers or establish a market perception that Nauticus does not maintain high-quality support, Nauticus may be subject to claims from its customers, including loss of revenue or damages, and Nauticus’ business, prospects, financial condition and operating results may be materially and adversely affected.

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Nauticus’ ability to manufacture products of sufficient quality on schedule is unproven, and delays in the design, production and launch of its products could harm its business, prospects, financial condition and operating results.

Nauticus’ future business depends in large part on its ability to execute its plans to design, develop, manufacture, market, deploy and service its products. Nauticus intends to outsource the manufacturing of its ocean robotic systems to a third-party manufacturing partner. While this arrangement may lower operating costs, it also reduces Nauticus’ direct control over production and manufacturing. Such diminished control may have an adverse effect on the quality or quantity of Nauticus’ units, or Nauticus’ flexibility to respond to changing conditions.

Nauticus also plans to retain third-party vendors and service providers to engineer, design and test some of the critical systems and components of Nauticus’ units. While this allows Nauticus to draw from such third parties’ industry knowledge and expertise, there can be no assurance such systems and components will be successfully developed to Nauticus’ specifications or delivered in a timely manner to meet Nauticus’ program timing requirements.

Nauticus’ continued development and manufacturing of its commercially available robotic system, Aquanaut, and its future models, including Argonaut, are and will be subject to risks, including with respect to:

        costs to be incurred by Nauticus and/or any third-party manufacturing partner or partners in meeting Nauticus specifications and design tolerances;

        the ongoing effects of the COVID-19 pandemic or other pandemics, epidemics or outbreaks;

        hiring and retaining a sufficient number of qualified employees. Nauticus has historically been understaffed due to these challenges;

        long- and short-term durability of Nauticus’ ocean robotic systems to withstand day-to-day wear and tear;

        delays in delivery of final systems and components by Nauticus’ suppliers;

        manufacturing of robotic systems units in excess of demand due to contractual requirements or unexpected changes in demand;

        shifts in demand for future models;

        quality controls, particularly as Nauticus’ plans to expand its production capabilities;

        delays or disruptions in Nauticus’ supply chain, or the need to order supplies in excess of demand due to batch number requirements or price thresholds;

        work stoppages, labor strikes and other labor disputes affecting Nauticus or its suppliers, third-party manufacturers and other partners; and

        other delays and cost overruns.

Nauticus is or may be subject to risks associated with strategic alliances or acquisitions and may not be able to identify adequate strategic relationship opportunities, or form strategic relationships, in the future.

Nauticus may seek to enter into strategic alliances, joint ventures, minority equity investments, acquisitions, collaborations and in-license arrangements. There is no guarantee that any of these partnerships or acquisitions would lead to any binding agreements or lasting or successful business relationships with third parties. If any of these relationships are established, they may subject Nauticus to a number of risks, including risks associated with sharing proprietary information, non-performance by the third-party and increased expenses in establishing new relationships, any of which may materially and adversely affect Nauticus’ business. Nauticus may have limited ability to monitor or control the actions of these third parties and, to the extent any of these strategic third parties suffers negative publicity or harm to their reputation from events relating to their business, Nauticus may also suffer negative publicity or harm to its reputation by virtue of its association with any such third-party.

Strategic business relationships will be an important factor in the growth and success of Nauticus’ business. However, there are no assurances that Nauticus will be able to identify or secure suitable business relationship opportunities in the future or Nauticus’ competitors may capitalize on such opportunities before Nauticus does. Moreover, identifying such opportunities could require substantial management time and resources, and negotiating

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and financing relationships involves significant costs and uncertainties. If Nauticus is unable to successfully source and execute on strategic relationship opportunities in the future, its overall growth could be impaired, and its business, prospects, financial condition and operating results could be materially adversely affected.

When appropriate opportunities arise, Nauticus has in the past, and may in the future acquire additional assets, products, technologies or businesses that are complementary to its existing business. From time to time, the sellers of these assets, products and technologies or business may retain limited rights to the technology that they sell to us, which in some circumstances could allow the sellers to compete with us in a limited fashion. In addition to possible stockholder approval, Nauticus may need approvals and licenses from relevant government authorities for the acquisitions and to comply with any applicable laws and regulations, which could result in increased delay and costs, and may disrupt Nauticus’ business strategy if it fails to do so. Furthermore, acquisitions and the subsequent integration of new assets and businesses into Nauticus’ own require significant attention from Nauticus’ management and could result in a diversion of resources from Nauticus’ existing business, which in turn could have an adverse effect on Nauticus’ operations and financial results. Acquired assets or businesses may not generate the financial results Nauticus expects. Acquisitions could result in the use of substantial amounts of cash, potentially dilutive issuances of equity securities, the occurrence of significant goodwill impairment charges, amortization expenses for other intangible assets and exposure to potential unknown liabilities of the acquired business. Moreover, the costs of identifying and consummating acquisitions may be significant.

Nauticus is highly dependent on the services of its senior management and other key employees and, if Nauticus is unable to attract and retain a sufficient number of qualified employees, its ability to design, manufacture and launch its products, operate its business and compete could be harmed.

Nauticus’ success depends, in part, on its ability to retain its key personnel. Nauticus expects that it will be required to increase compensation levels of senior management and key employees to remain competitive with its peers. The unexpected loss of or failure to retain one or more of Nauticus’ senior managers or other key employees could delay product development and require outsourcing to third parties, each of which in turn could adversely affect Nauticus’ business. Nauticus’ success also depends, in part, on its continuing ability to identify, hire, attract, train and develop other highly qualified personnel. Experienced and highly skilled employees are in high demand and competition for these employees can be intense, and Nauticus’ ability to hire, attract and retain them depends on its ability to provide competitive compensation. Nauticus may not be able to attract, assimilate, develop or retain qualified personnel in the future, and its failure to do so could adversely affect Nauticus’ business, including the execution of its strategy. Any failure by Nauticus’ management team and Nauticus’ employees to perform as expected may have a material adverse effect on Nauticus’ business, prospects, financial condition and operating results.

Nauticus’ management as a group has limited experience in operating a public company.

Nauticus’ management team may not successfully or effectively manage its transition to a public company that will be subject to significant regulatory oversight and reporting obligations under federal securities laws. Nauticus’ executive officers as a group have limited experience in the management of a publicly traded company. Their limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities which will result in less time being devoted to the management and growth of the post-combination company. Nauticus will need to recruit additional persons to join its management team in order to handle the increased demands of running a public company, but its efforts may not be successful. Nauticus may not have adequate personnel with the appropriate level of knowledge, experience and training in the accounting policies, practices or internal control over financial reporting required of public companies. Any failure by Nauticus’ management team to perform as expected may have a material adverse effect on Nauticus’ business, prospects, financial condition, and operating results.

Nauticus will incur significant increased expenses and administrative burdens as a public company, which could have a material adverse effect on its business, prospects, financial condition and operating results.

If Nauticus completes the Business Combination and becomes a public company, it will incur significant legal, accounting and other expenses that it did not incur as a private company, and these expenses may increase even more after Nauticus’ is no longer an emerging growth company, as defined in Section 2(a) of the Securities Act. As a public company, Nauticus will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules adopted, and to be adopted, by the

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SEC and Nasdaq. Nauticus’ management and other personnel will need to devote a substantial amount of time to these compliance initiatives. It is possible that Nauticus will be required to expand its employee base and hire additional employees to support its operations as a public company which will increase its operating costs in future periods. Moreover, Nauticus expects these rules and regulations to substantially increase its legal and financial compliance costs and to make some activities more time-consuming and costly. The increased costs will increase Nauticus’ net loss. For example, Nauticus expects it to become more difficult and more expensive for it to obtain director and officer liability insurance and it may be forced to incur substantially higher costs to obtain appropriate coverage. Nauticus cannot accurately predict or estimate the amount or timing of additional costs it may incur. The impact of being a public company could also make it more difficult for Nauticus to attract and retain qualified persons to serve on its board of directors, its board committees or as executive officers. Such increased expenses and administrative burdens involved in operating as a public company could have a material adverse effect on Nauticus’ business, prospects, financial condition, and operating results.

Ongoing impacts from COVID-19 or another pandemic, epidemic or outbreak of an infectious disease may materially and adversely impact Nauticus’ business, prospects, financial condition and operating results.

The ongoing COVID-19 pandemic as well as other possible health pandemics, epidemics or outbreaks may materially and adversely impact Nauticus’ business, prospects, financial condition, and operating results. Nauticus’ engineering and product development operations, among others, cannot all be conducted in a remote working structure and often require on-site access to materials and equipment. Nauticus has customers with international operations in varying industries. It also depends on suppliers and manufacturers worldwide.

Depending upon the duration of the ongoing COVID-19 pandemic and the associated business interruptions, its customers, suppliers, manufacturers and partners may suspend or delay their engagement with Nauticus, which could result in a material adverse effect on its financial condition and ability to meet current timelines. The COVID-19 pandemic has affected and may continue to affect Nauticus’ ability to recruit skilled employees to join its team. Nauticus’ response to the ongoing COVID-19 pandemic may prove to be inadequate and it may be unable to continue its operations in the manner it had prior to the outbreak, and may endure interruptions, reputational harm, delays in its product development and shipments, all of which could have an adverse effect on its business, prospects, financial condition and operating results. In addition, when the pandemic subsides, Nauticus cannot assure you as to the timing of any economic recovery, which could continue to have a material adverse effect on its target markets and its business.

The ongoing military action between Russia and Ukraine could adversely affect our business, financial condition and operating results.

On February 24, 2022, Russian military forces launched a military action in Ukraine, and sustained conflict and disruption in the region is likely. Although the length, impact and outcome of the ongoing military conflict in Ukraine is highly unpredictable, this conflict could lead to significant market and other disruptions, including significant volatility in commodity prices and supply of energy resources, instability in financial markets, supply chain interruptions, political and social instability, changes in consumer or purchaser preferences as well as increase in cyberattacks and espionage.

Russia’s recognition of two separatist republics in the Donetsk and Luhansk regions of Ukraine and subsequent military action against Ukraine have led to an unprecedented expansion of sanction programs imposed by the United States, the European Union, the United Kingdom, Canada, Switzerland, Japan and other countries against Russia, Belarus, the Crimea Region of Ukraine, the so-called Donetsk People’s Republic and the so-called Luhansk People’s Republic, including, among others:

        blocking sanctions against some of the largest state-owned and private Russian financial institutions (and their subsequent removal from the Society for Worldwide Interbank Financial Telecommunication (“SWIFT”) payment system) and certain Russian businesses, some of which have significant financial and trade ties to the European Union;

        blocking sanctions against Russian and Belarusian individuals, including the Russian President, other politicians and those with government connections or involved in Russian military activities; and

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        blocking of Russia’s foreign currency reserves as well as expansion of sectoral sanctions and export and trade restrictions, limitations on investments and access to capital markets and bans on various Russian imports.

While we do not currently have operations in Ukraine, Russia or Belarus, we are nevertheless actively monitoring the situation in Ukraine and assessing its impact on our business, including our business partners and customers. To date we have not experienced any material interruptions in our infrastructure, supplies, technology systems or networks needed to support our operations. We have no way to predict the progress or outcome of the conflict in Ukraine or its impacts in Ukraine, Russia or Belarus as the conflict, and any resulting government reactions, are rapidly developing and beyond our control. The extent and duration of the military action, sanctions and resulting market disruptions could be significant and could potentially have substantial impact on the global economy and our business for an unknown period of time. Any of the abovementioned factors could affect our business, financial condition and operating results. Any such disruptions may also magnify the impact of other risks described herein.

Nauticus may become subject to new or changing governmental regulations relating to the design, manufacturing, marketing, distribution, servicing, or use of its products, and a failure to comply with such regulations could lead to withdrawal or recall of Nauticus’ products from the market, delay Nauticus’ projected revenues, increase cost, or make Nauticus’ business unviable if it is unable to modify its products to comply.

Nauticus may become subject to new or changing international, federal, state and local regulations, including laws relating to the design, manufacturing, marketing, distribution, servicing or use of its products. Such laws and regulations may require Nauticus to pause sales and modify its products, which could result in a material adverse effect on its revenues and financial condition. Such laws and regulations can also give rise to liability such as fines and penalties, property damage, bodily injury and cleanup costs. Capital and operating expenses needed to comply with laws and regulations can be significant, and violations may result in substantial fines and penalties, third-party damages, suspension of production or a cessation of Nauticus’ operations. Any failure to comply with such laws or regulations could lead to withdrawal or recall of Nauticus’ products from the market.

Nauticus may experience significant delays in the design, development, production and launch of its ocean robotic systems, which could harm its business, prospects, financial condition and operating results.

Nauticus’ core products, including the Argonaut, Aquanaut, Olympic Arm and ToolKITT, are currently offered through direct sales and will be offered for lease through RaaS when available, Nauticus expects that the nature of these products will require continuous improvements and further testing throughout their product and generational lifecycle in order to innovate and develop these products fully. Manufacturing and deliveries of the Aquanaut, to public commercial clients, are not expected to begin until the end of 2022, and may occur later or not at all. Such timeline may be delayed, including due to challenges in recruiting skilled employees, difficulties in securing components and materials, development delays, difficulties relating to manufacturing of the units and other factors. Any delay in the design, development, production and release of Nauticus’ products could materially damage Nauticus’ brand, business, prospects, financial condition and operating results. Nauticus may experience delays in the design, development, production and release of new products, including due to integration, safety and performance issues. To the extent Nauticus delays the commercial launch of its ocean robotic systems, its growth prospects and operating results will likely be adversely affected.

Nauticus has no experience to date in high volume manufacture of its products, nor does it have the facility, employees or equipment needed to manufacture its products in high volume.

Nauticus intends to enter into contracts with one or more third-party manufacturers to produce Nauticus’ ocean vehicles. Nauticus does not know whether its future third-party manufacturers will be able to develop efficient, automated, low-cost production capabilities and processes and reliable sources of component supply, that will enable Nauticus to meet the quality, price, engineering, design and production standards, as well as the production volumes, required to successfully market Nauticus’ robotic systems. Even if Nauticus and its third-party manufacturers are successful in developing its production capability and processes and reliably source its components, Nauticus does not know whether it will be able to do so in a manner that avoids significant delays and cost overruns, including as a result of factors beyond its control such as problems with suppliers and vendors, or force majeure events, or in time to meet Nauticus’ unit commercialization schedules or to satisfy the requirements of customers and potential customers.

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If Nauticus is unable to enter into agreements with third-party manufacturers on acceptable terms, it will need to develop its own manufacturing and production capabilities, significantly increasing Nauticus’ capital expenditures and delaying production of Nauticus’ ocean robotic systems. If this were to occur, Nauticus would need raise or borrow additional money, which may not be successful, and possibly change the anticipated pricing of its RaaS subscription model, which would adversely affect Nauticus’ margins and cash flows.

Any failure to develop production processes and capabilities within Nauticus’ projected costs and timelines could have a material adverse effect on Nauticus’ business, prospects, financial condition and operating results.

The period of time from initial design of Nauticus’ products to obtaining binding purchase commitments from customers is long and Nauticus is subject to the risk that customers who initially expressed an interest in its products during the design phase will not enter into binding commitments.

Nauticus’ products contain complex technology that requires multiple years of engineering and design. Therefore, the period of time from initial design of Nauticus’ products to obtaining binding purchase commitments from customers is long and Nauticus is subject to the risk that customers who initially expressed an interest in its products during the design phase will not enter into binding commitments. Nauticus’ design of its products is significantly influenced by feedback from potential customers and reflect the needs they expressed. As a result, adapting Nauticus’ products to other industries or customers may require additional design, development, testing, work and expenses. Nauticus cannot be sure that it will be able to adapt its products to reflect such feedback successfully or at all. If customers who initially express an interest in Nauticus’ proposed products and influenced their design ultimately decide to not enter into binding commitments or to adopt a competitors’ technology, Nauticus’ business, prospects, financial condition and operating results would be adversely affected.

Nauticus’ ability to control costs and liability is dependent on developing sufficient screening criteria for its RaaS customers.

Nauticus’ ability to realize revenue and reduce liability related to its RaaS subscription model (planned for future commercial services but yet to be implemented) is heavily dependent on its ability to effectively screen customers for high risk activities or environments that could result in higher costs for Nauticus. Nauticus has limited experience with its RaaS subscription model, a service planned for future commercial use but yet to be implemented, and may not be able to effectively develop effective customer screening criteria. Nauticus may need to rely on third-party service providers to develop effective screening criteria, which will result in additional cost to Nauticus. Nauticus’ screening criteria may also need to be adjusted over time to satisfy requirements under applicable law, from its insurers, lenders or from other third-party service providers. Nauticus must balance the need to develop effective screening criteria with its need to attract new customers or market to different industry segments.

Nauticus’ business and prospects depend significantly on its ability to build the Nauticus brand. Nauticus may not succeed in continuing to establish, maintain and strengthen the Nauticus brand, and its brand and reputation could be harmed by negative publicity regarding Nauticus or its products.

Nauticus’ business and prospects are heavily dependent on its ability to develop, maintain and strengthen the Nauticus brand. If Nauticus does not continue to establish, maintain and strengthen its brand, it may lose the opportunity to build a critical mass of customers. Promoting and positioning its brand will likely depend significantly on Nauticus’ ability to provide high quality products and engage with its customers as intended. In addition, Nauticus’ ability to develop, maintain and strengthen the Nauticus brand may depend on the acceptance of its products by employees of its customers. To promote its brand, Nauticus may be required to change its customer development and branding practices, which could result in substantially increased expenses, including the need to use traditional media including print media. If Nauticus does not develop and maintain a strong brand, its business, prospects, financial condition and operating results will be materially and adversely impacted.

In addition, if incidents occur or are perceived to have occurred, whether or not such incidents are Nauticus’ fault, Nauticus could be subject to adverse publicity. In particular, given the popularity of social media, any negative publicity, whether true or not, could quickly proliferate and harm perceptions and confidence in the Nauticus brand. Furthermore, there is the risk of potential adverse publicity related to Nauticus’ manufacturing or other partners whether or not such publicity is related to their collaboration with Nauticus. Nauticus’ ability to successfully position its brand could also be adversely affected by perceptions about the quality of its competitors’ products.

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Nauticus is dependent on its suppliers, some of which are currently single or limited source suppliers, and the inability of these suppliers to deliver necessary components of Nauticus’ products at prices and volumes, performance and specifications acceptable to Nauticus, could have a material adverse effect on Nauticus’ business, prospects, financial condition and operating results. Nauticus has not yet identified all of the suppliers that it is likely to rely on to support any future commercialization of its core products.

Nauticus relies on third-party suppliers for the provision and development of many of the key components and materials used in its products. Nauticus has not yet identified all of the suppliers, contractors and other third parties that it is likely to rely on to support any future commercialization of its core products. While Nauticus plans to obtain components from multiple sources whenever possible, some of the components used in its products may have to be purchased by Nauticus from a single source. If Nauticus’ third-party suppliers are unable to supply key components and materials at the required volume, Nauticus’ sales, revenues and profitability will likely be adversely affected. Nauticus’ third-party suppliers may also not be able to meet the specifications and performance characteristics required by Nauticus, which would impact Nauticus’ ability to achieve its product specifications and performance characteristics as well. Additionally, Nauticus’ third-party suppliers may be unable to obtain required certifications for their products for which Nauticus plans to use or provide warranties that are necessary for Nauticus’ solutions. If Nauticus is unable to obtain components and materials used in its products from its suppliers, Nauticus’ business would be adversely affected.

Nauticus has less negotiating leverage with suppliers than larger and more established companies and may not be able to obtain favorable pricing and other terms. For example, agreements with suppliers may include terms that are unfavorable to Nauticus, such as requirements that Nauticus order components and manufacturing units in excess of Nauticus’ demand due to batch number requirements or price thresholds. While Nauticus believes that it may be able to establish alternate supply relationships and can obtain or engineer replacement components for its single source components, Nauticus may be unable to do so in the short term, or at all, at prices or quality levels that are favorable to Nauticus, which could have a material adverse effect on its business, prospects, financial condition and operating results.

Moreover, Nauticus and its suppliers are currently experiencing increases in the cost of, and an interruption in, the supply or shortage of materials. It is unclear how long these challenges will remain. Due to the complexity of Nauticus’ products, each unit is expected to contain several thousand components. Difficulty securing any components and materials could result in delays in the development of these core products, which delays could be compounded if components or units require redesign or reengineering. Any sustained increase, supply interruption or shortage could therefore prevent or delay the commercialization of Nauticus’ products and materially and negatively impact Nauticus’ business, prospects, financial condition and operating results. Nauticus and its suppliers use various materials in their businesses and products, including for example semiconductors, energy storage materials, commodity materials and specialty metal alloys, and the prices for these materials fluctuate. The available supply of some of these materials and components is currently and may continue to be unstable, depending on market conditions and global demand, and could adversely affect Nauticus’ business and operating results. Risks relating to Nauticus’ supply chain include:

        “Buy American” or other similar requirements that may be imposed on government contractors;

        an increase in the cost, or decrease in the available supply, of semiconductor chips, electrical components, commodity materials and specialty alloys;

        disruption in the supply of lithium ion batteries due to quality issues or recalls; and

        fluctuations in the value of any foreign currencies in which manufactured parts, commercial components and related raw material purchases are or may be denominated against the U.S. dollar.

Nauticus’ business is also dependent on the continued supply of lithium ion battery cells. While Nauticus believes several sources of cells are available, Nauticus has to date not finally sourced or validated a supplier for its commercial production and it may have limited flexibility in changing cell suppliers once contracted. Any disruption in the supply of battery cells from such suppliers could disrupt production of Nauticus’ products. Furthermore, fluctuations or shortages in raw materials or components and other economic conditions may cause Nauticus to experience significant increases in freight charges and material costs. Substantial increases in the prices for Nauticus’ materials or prices charged to it, such as those charged by battery cell suppliers, would increase Nauticus’ operating costs, and could reduce its margins if the increased costs cannot be recouped through increased RaaS subscription offering or unit sales prices. Any attempts to increase product prices in response to increased material costs could result in cancellations of orders and reservations and therefore materially and adversely affect Nauticus’ brand, image, business, prospects, financial condition and operating results.

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Nauticus’ potential transition to an outsourced manufacturing business model may not be successful, which could harm its ability to deliver products and recognize revenue.

Nauticus intends to transition from a manufacturing model in which it primarily manufactured and assembled its products at a smaller scale at its existing Webster, Texas location, to one where it relies on one or more third-party manufacturers. Nauticus is in negotiations with third parties to provide contract manufacturing of its products. Moreover, Nauticus may not be able to contract with potential counterparties on commercially reasonable terms or at all. Nauticus believes the use of third-party manufacturers will have benefits, but in the near term, while it is beginning manufacturing with one or more new partners, Nauticus may lose revenue and incur increased costs.

Reliance on third-party manufacturers reduces Nauticus’ control over the manufacturing process, including reduced control over quality, product costs and product supply and timing. Nauticus may experience delays in shipments or issues concerning product quality from its third-party manufacturers. If any of Nauticus’ third-party manufacturers experience interruptions, delays or disruptions in supplying its products, including by natural disasters, the global COVID-19 pandemic, other health epidemics and outbreaks, or work stoppages or capacity constraints, Nauticus’ ability to ship products to distributors and customers would be delayed. In addition, unfavorable economic conditions could result in financial distress among third-party manufacturers upon which Nauticus relies, thereby increasing the risk of disruption of supplies necessary to fulfil Nauticus production requirements and meet customer demands. While Nauticus takes measures to protect its trade secrets, the use of third-party manufacturers may also risk disclosure of its innovative and proprietary technologies, which could adversely affect Nauticus’ business.

Additionally, if any of Nauticus’ future third-party manufacturers experience quality control problems in their manufacturing operations and Nauticus’ products do not meet customer requirements, Nauticus could be required to recall the units or cover the cost of repair or replacement of any defective products. These delays or product quality issues could have an immediate and material adverse effect on Nauticus’ ability to fulfill orders and could have a negative effect on its operating results. In addition, such delays or issues with product quality could adversely affect Nauticus’ reputation and its relationship with its customers.

If any third-party manufacturers experience financial, operational, manufacturing capacity or other difficulties, or experience shortages in required components, or if they are otherwise unable or unwilling to continue to manufacture Nauticus’ products in required volumes or at all, Nauticus’ supply may be disrupted, it may be required to seek alternate manufacturers and it may be required to re-design its products. It would be time-consuming, and could be costly and impracticable, to begin to use new manufacturers and designs, and such changes could cause significant interruptions in supply and could have an adverse effect on Nauticus’ ability to meet its scheduled product deliveries and may subsequently lead to the loss of sales.

If Nauticus is unable to contract with a third-party manufacturing partner, Nauticus would need to develop its own manufacturing facilities, which may not be feasible and, if feasible, would significantly increase its capital expenditures and operating expenditures, and would significantly delay or inhibit production of its robotic systems.

Nauticus does not have a definitive agreement with a third-party manufacturing partner to commercially manufacture its robotic ocean vehicles and it may be unable to enter into such agreements with third-party manufacturing partners and other key suppliers for manufacturing on terms and conditions acceptable to Nauticus. Although negotiations are continuing with potential counterparties, Nauticus may not be able to contract with potential counterparties on commercially reasonable terms or at all. If Nauticus is unable to enter into such definitive agreements or is only able to do so on terms that are less commercially favorable to Nauticus, it may be unable to timely identify adequate strategic relationship opportunities, or form strategic relationships, and consequently, Nauticus may not be able to fully carry out its business plans. There can be no assurance that Nauticus would be able to partner with other third parties or establish its own production capacity to meet its needs on acceptable terms, or at all. The expense and time required to complete any transition and to assure that robotic systems manufactured at facilities of new third-party partners comply with Nauticus’ quality standards and regulatory requirements would likely be greater than currently anticipated. If Nauticus needs to develop its own manufacturing and production capabilities, which may not be feasible, it would significantly increase Nauticus’ capital and operating expenditures and would significantly delay production of Nauticus’ robotic systems. This may require Nauticus to attempt to raise or borrow additional money, which may not be successful. Also, it may require Nauticus to change the anticipated pricing of its RaaS subscription offering, which would adversely affect Nauticus’ margins and cash flows. Any of the foregoing could adversely affect Nauticus’ business, prospects, financial condition and operating results. Accordingly, investors should not place undue reliance on Nauticus’ statements about its production plans or their feasibility in the timeframe anticipated, or at all. Nauticus may not be able to implement its business strategy in the timeframe anticipated, or at all.

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Nauticus may be unable to adequately control the costs associated with its operations.

Nauticus will require significant capital to develop and grow its business, including developing and producing its commercial robotic systems and other products, establishing or expanding design, research and development, production, sales and maintenance and service facilities and building Nauticus’ brand. Nauticus has incurred and expects to continue incurring significant expenses which will impact its profitability, including research and development expenses, procurement costs, sales, marketing and distribution expenses as Nauticus builds its brand and markets its robotic systems, and general and administrative expenses as Nauticus scales its operations, identifies and commits resources to investigate new areas of demand and incurs costs as a public company. In addition, Nauticus may incur significant costs servicing, maintaining and refurbishing its robotic ocean vehicles, and it expects that the cost to repair and service its robotic systems will increase over time as its vehicles age. Nauticus’ ability to become profitable in the future will not only depend on its ability to complete the design and development of its robotic vehicles to meet projected performance metrics, identify and investigate new areas of demand and successfully market its robotic systems and RaaS subscription model, but also to sell, whether outright or through subscriptions, its ocean systems at prices needed to achieve its expected margins and control its costs, including the risks and costs associated with operating, maintaining and financing Nauticus’ robotic systems. If Nauticus is unable to efficiently design, develop, manufacture, market, deploy, distribute and service its robotic systems in a cost-effective manner, Nauticus’ margins, profitability and prospects would be materially and adversely affected.

Nauticus, any manufacturing partners, and suppliers may rely on complex machinery for production, which involves a significant degree of risk and uncertainty in terms of operational performance and costs.

Nauticus, any third-party manufacturing partners, and suppliers may rely on complex machinery for the production and assembly of Nauticus’ robotic systems, which will involve a significant degree of uncertainty and risk in terms of operational performance and costs. Nauticus’ facilities, and those of any third-party manufacturing partners and suppliers consist or are expected to consist of large-scale machinery combining many components. These components may suffer unexpected malfunctions from time to time and will depend on repairs and spare parts to resume operations, which may not be available when needed. Unexpected malfunctions of these components may significantly affect the intended operational efficiency. Operational performance and costs can be difficult to predict and are often influenced by factors outside of Nauticus’ or any third-party manufacturing partners’ and suppliers’ control, such as, but not limited to, scarcity of natural resources, environmental hazards and remediation, costs associated with decommissioning of machines, labor disputes and strikes, difficulty or delays in obtaining governmental permits, damages or defects in electronic systems, industrial accidents, fire, seismic activity and natural disasters. Should operational risks materialize, it may result in the personal injury to or death of workers, the loss of production equipment, damage to production facilities, monetary losses, delays and unanticipated fluctuations in production, environmental damage, administrative fines, increased insurance costs and potential legal liabilities, all which could have a material adverse effect on Nauticus’ business, prospects, financial condition and operating results.

Nauticus faces risks related to natural disasters, health epidemics and other outbreaks, which could significantly disrupt its operations.

Nauticus’ facilities or operations or those of any third-party manufacturers or suppliers could be adversely affected by events outside of its or their control, such as natural disasters, wars, health epidemics, and other calamities. Although Nauticus has servers that are hosted both onsite and at an offsite location, its backup system runs nightly, but does not capture data on a real-time basis and it may be unable to recover certain data in the event of a server failure. Nauticus cannot assure you that any backup systems will be adequate to protect it from the effects of fire, floods, typhoons, earthquakes, power loss, telecommunications failures, break-ins, war, riots, terrorist attacks or similar events. Any of the foregoing events may give rise to interruptions, breakdowns, system failures, technology platform failures or internet failures, which could cause the loss or corruption of data or malfunctions of software or hardware as well as adversely affect Nauticus’ ability to provide services.

Nauticus currently targets many customers that are large corporations with substantial negotiating power, exacting product standards and potentially competitive internal solutions. If Nauticus is unable to sell its products to these customers, its prospects and results of operations will be adversely affected.

Nauticus’ expects that many of its potential customers will be large, multinational corporations with substantial negotiating power relative to Nauticus and, in some instances, may have internal solutions that are competitive to Nauticus’ products. These large, multinational corporations also have significant development resources, which may allow them to acquire or develop independently, or in partnership with others, competitive technologies.

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Meeting the technical requirements and securing binding commitments from any of these companies will require a substantial investment of Nauticus’ time and resources. Nauticus cannot assure you that its products will secure binding commitments from these or other companies or that it will generate meaningful revenue from the sales of its products to these key potential customers. If Nauticus’ products are not selected by these large corporations or if these corporations develop or acquire competitive technology, it will have an adverse effect on Nauticus’ business.

Nauticus operates in a competitive industry that is subject to rapid technological change, and Nauticus expects competition to increase.

Nauticus’ product offerings compete in a broad competitive landscape that includes incumbent actors, and emerging players in the blue technology markets, particularly companies focused on deploying ocean services with large vessels, tethered hydraulic and hybrid-electric ROVs, survey and hovering AUVs, electric platforms, remote monitoring, and other autonomy and perception technologies applied to adjacent ocean markets including autonomous shipping and subsea mining.

A breakdown of the competitive landscape by Nauticus product area:

        Nauticus’ electric ocean robots and software platform compete with other tethered hydraulic and electric remotely operated vehicles (ROVs) and autonomous underwater vehicles (AUVs) for performing inspection, maintenance, repair, and physical interventions of ocean assets for sectors including offshore wind, oil & gas, aquaculture, port management, and defense & intel markets.

        Nauticus’ underlining autonomy software platform includes modern robotics and automation technologies for autonomous navigation, manipulation, data orchestration and compression, behavior and mission execution and could face additional competition from the automotive and aerospace sectors working to solve similar challenges in different markets. At the most basic level, these software platforms are similar in nature and Nauticus’ software could also be reciprocated in additional markets outside of the blue technologies and ocean services space.

        Nauticus’ RaaS model (a business model planned for future commercial services but yet to be implemented) faces a varied competitive landscape that not only includes long established and largely undifferentiated ocean services companies like Oceaneering International, Subsea7, and Saipem, but other emerging companies such as Ocean Infinity and Reach Subsea that are bringing new approaches to the markets targeted by Nauticus Robotics and may evolve to a competitive stature in these markets. Nauticus also faces competition from bluetech software companies like Seebyte, Greensea, and but as Nauticus expands markets could face more boarder competition from autonomy software automotive companies diversify into the ocean markets like Toyota, Tesla, or Uber.

        Nauticus’ robotic platforms also compete with other unmanned vehicles manufactures offered by companies such as Saab, Forum, and Mitsubishi and traditional automation and robotics companies like ABB and Fanuc. These companies have products that are commercially available and in development. Nauticus expects some products currently in development to become commercially available in the next few years and present a competitive threat to Nauticus’ products.

Nauticus’ competitor base may change or expand as Nauticus continues to develop and commercialize its robotic systems in the future. These or other competitors may develop new technologies or products that provide superior results to customers or are less expensive than Nauticus’ products. Nauticus’ technologies and products could have reduced competitiveness by such developments.

Nauticus’ competitors may respond more quickly to new or emerging technologies, undertake more extensive marketing campaigns, have greater financial, marketing, manufacturing and other resources than Nauticus does, or may be more successful in attracting potential customers, employees and strategic partners. In addition, potential customers could have long-standing or contractual relationships with competitors. Potential customers may be reluctant to adopt Nauticus’ products, particularly if they compete with or have the potential to compete with, or diminish the need/utilization of products or technologies supported through these existing relationships. If Nauticus is not able to compete effectively, its business, prospects, financial condition, and operating results will be negatively impacted.

In addition, because Nauticus operates in a new market, the actions of its competitors could adversely affect its business. Adverse events such as product defects or legal claims with respect to competing or similar products could cause reputational harm to the ocean robotics market on the whole and, accordingly, Nauticus’ business.

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Nauticus’ financial results may vary significantly from period to period due to fluctuations in its operating costs, product demand and other factors.

Nauticus expects its period-to-period financial results to vary based on its operating costs and product demand, which Nauticus anticipates will fluctuate as the pace at which it continues to design, develop and manufacture new robotic systems, increase production capacity and establish or expand design, research and development, production, sales and service facilities. Additionally, Nauticus’ revenues from period to period may fluctuate as it identifies and investigates areas of demand, adjusts volumes and adds new product derivatives based on market demand and margin opportunities, develops and introduces new robotic systems or introduces existing robotic systems to new markets for the first time, as well as the introduction of its RaaS subscription model (a business model planned for future commercial services that has yet to be implemented). As a result of these factors, Nauticus believes that quarter-to-quarter comparisons of its financial results, especially in the short term, are not necessarily meaningful and that these comparisons cannot be relied upon as indicators of future performance. Moreover, Nauticus’ financial results may not meet expectations of equity research analysts, ratings agencies or investors, who may be focused only on quarterly financial results. If any of this occurs, the trading price of our securities following the Business Combination could fall substantially, either suddenly or over time.

If Nauticus fails to maintain an effective system of internal controls, its ability to produce timely and accurate financial statements or comply with applicable regulations could be adversely affected.

Nauticus expects that the requirements of the Exchange Act, the Sarbanes-Oxley Act and the rules and regulations of Nasdaq will continue to increase its legal, accounting and financial compliance costs, make some activities more difficult, time-consuming and costly, and place significant strain on personnel, systems and resources.

The Sarbanes-Oxley Act requires, among other things, that Nauticus maintain effective disclosure controls and procedures and internal control over financial reporting. Nauticus is continuing to develop and refine its disclosure controls, internal control over financial reporting and other procedures that are designed to ensure that information required to be disclosed by it in the reports that it will file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to its principal executive and financial officers. Nauticus is in the process of upgrading its finance and accounting systems to an enterprise system suitable for a public company, and a delay could impact its ability or prevent it from timely reporting its operating results, timely filing required reports with the SEC and complying with Section 404 of the Sarbanes-Oxley Act. The development and implementation of the standards and controls necessary for Nauticus to achieve the level of accounting standards required of a public company may require costs greater than expected.

The current controls and any new controls that Nauticus develops may be inadequate because of changes in conditions of Nauticus’ business. Further, weaknesses in its internal controls have been identified in connection with the preparation of financial statements for the years ended December 31, 2021 and 2020 and may be discovered in the future. As of March 31, 2022, Nauticus has filled positions of Senior Accountant and Accounts Receivable to remediate this weakness in its internal controls. In addition, Nauticus has recently added a Chief Financial Officer to strengthen its internal controls and financial reporting. Nauticus plans to transition two current contracted personnel to accounting leadership and controller positions. Nauticus is also strengthening internal controls over financial reporting by implementing an ERP system containing workflows and business rules that ensure process is followed by approved policies, roles, and procedures. The Company expects to complete the ERP implementation within 6 months.

The resulting fully integrated system will enhance financial reporting and transactional interfaces. Nauticus will also add RaaS operations personnel as required when the production Aquanauts are completed, commissioned, and put into service. Nauticus’ management will make an assessment of these remediation steps and add additional staff, if necessary to remediate the weakness.

Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could adversely affect Nauticus’ operating results or cause it to fail to meet its reporting obligations and may result in a restatement of its financial statements for prior periods. Any failure to implement and maintain effective internal controls also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of Nauticus’ internal control over financial reporting that Nauticus is required to include in its periodic reports that it will file with the SEC under Section 404 of the Sarbanes-Oxley Act. Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in Nauticus’ reported financial and other information.

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In order to maintain and improve the effectiveness of its disclosure controls and procedures and internal control over financial reporting, Nauticus has expended and anticipates that after the closing of the Business Combination will continue to expend significant resources, including accounting-related costs, and provide significant management oversight. Any failure to maintain the adequacy of its internal controls, or consequent inability to produce accurate financial statements on a timely basis, could increase operating costs and could materially and adversely affect Nauticus’ ability to operate its business. If Nauticus’ internal controls are perceived as inadequate or if Nauticus is perceived to be unable to produce timely or accurate financial statements, investors may lose confidence in its operating results and the stock price of Nauticus’ securities following the Business Combination could decline.

Nauticus’ independent registered public accounting firm is not required to formally attest to the effectiveness of internal control over financial reporting until after Nauticus is no longer an emerging growth company. At such time, the independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which Nauticus’ controls are documented, designed or operating. Any failure to maintain effective disclosure controls and internal control over financial reporting could have a material and adverse effect on Nauticus’ business, prospects, financial condition and operating results.

Nauticus has yet to achieve positive operating cash flow and, given its projected funding needs, its ability to generate positive cash flow is uncertain.

Nauticus has had negative cash flow from operating activities of $4.2 million for the three months ended March 31, 2022, and $5.9 million and $4.5 million for the years ended December 31, 2021, and 2020, respectively. Nauticus expects to continue to have negative cash flow from operating and investing activities for the remainder of 2022 as it expects to incur research and development, sales and marketing, and general and administrative expenses and make capital expenditures in its efforts to increase sales, engage in development work and ramp up operations. Nauticus’ business also will at times require significant amounts of working capital to build inventory and support the growth of additional products. An inability to generate positive cash flow for the near term may adversely affect Nauticus’ ability to raise needed capital for its business on reasonable terms, diminish supplier or customer willingness to enter into transactions with Nauticus, and have other adverse effects that may decrease its long-term viability. There can be no assurance that Nauticus will achieve positive cash flow in the near future or at all.

Nauticus’ ability to use net operating loss carryforwards and other tax attributes may be limited in connection with the Business Combination or other ownership changes.

Nauticus has incurred losses during its history and does not expect to become profitable in the near future, and may never achieve profitability. To the extent that Nauticus continues to generate taxable losses, unused losses will carry forward to offset future taxable income, if any, until such unused losses expire.

Under the Tax Act, as modified by the CARES Act, U.S. federal net operating loss carryforwards generated in taxable periods beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility of such net operating loss carryforwards in taxable years beginning after December 31, 2020, is limited to 80% of taxable income. It is uncertain if and to what extent various states will conform to the Tax Act or the CARES Act. Suspensions or other restrictions on the use of net operating losses or tax credits, possibly with retroactive effect, may result in Nauticus’ existing net operating losses or tax credits expiring or otherwise being unavailable to offset future income tax liabilities.

In addition, the net operating loss carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), these federal net operating loss carryforwards and other tax attributes may become subject to an annual limitation in the event of certain cumulative changes in the ownership of Nauticus. An “ownership change” pursuant to Section 382 of the Code generally occurs if one or more stockholders or groups of stockholders who own at least 5% of a company’s stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. The ability of Nauticus to utilize net operating loss carryforwards and other tax attributes to offset future taxable income or tax liabilities may be limited as a result of ownership changes, including potential changes in connection with the Business Combination or other transactions. Similar rules may apply under state tax laws. Nauticus has not yet determined the amount of the cumulative change in its ownership resulting from the Business Combination or other transactions, or any resulting limitations on its ability to utilize its net operating loss carryforwards and other tax attributes. If Nauticus earns taxable income, such limitations could result

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in increased future income tax liability to Nauticus and its future cash flows could be adversely affected. Nauticus has recorded a full valuation allowance related to its net operating loss carryforwards and other deferred tax assets due to the uncertainty of the ultimate realization of the future benefits of those assets.

Nauticus expects to incur substantial R&D costs and devote significant resources to identifying and commercializing new products, which could significantly reduce its profitability and may never result in revenue to Nauticus.

Nauticus’ future growth depends on penetrating new markets, adapting existing products to new applications and customer requirements, and introducing new products that achieve market acceptance. Nauticus plans to incur substantial, and potentially increasing, R&D costs as part of its efforts to design, develop, manufacture, and commercialize new products and enhance existing products. Nauticus’ R&D expenses were $1.2 million for the three months ended March 31, 2022, and $3.5 million and $5.0 million for the years ended December 31, 2021 and 2020, respectively, and are likely to grow in the future. Because Nauticus accounts for R&D as an operating expense, these expenditures will adversely affect its results of operations in the future. Further, Nauticus’ R&D program may not produce successful results, and its new products may not achieve market acceptance, create additional revenue or become profitable.

Nauticus is subject to evolving laws, regulations, standards, policies, and contractual obligations related to data privacy and security laws and regulations, and its actual or perceived failure to comply with such obligations could harm Nauticus’ reputation, subject it to significant fines and liability, or otherwise adversely affect its business, prospects, financial condition and operating results.

Nauticus is subject to or affected by a number of federal, state and local laws and regulations, as well as contractual obligations and industry standards, that impose certain obligations and restrictions with respect to data privacy and security, and govern Nauticus’ collection, storage, retention, protection, use, processing, transmission, sharing and disclosure of personal information, including that of its employees, customers and others. Most jurisdictions have enacted laws requiring companies to notify individuals, regulatory authorities and others of security breaches involving certain types of data. Such laws may be inconsistent or may change or additional laws may be adopted. In addition, Nauticus’ agreements with certain customers may require Nauticus to notify them in the event of a security breach. Such mandatory disclosures are costly, could lead to negative publicity, result in penalties or fines, result in litigation, may cause Nauticus’ customers to lose confidence in the effectiveness of Nauticus’ security measures and require Nauticus to expend significant capital and other resources to respond to and/or alleviate problems caused by the actual or perceived security breach.

The global data protection landscape is rapidly evolving, and implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future. Nauticus may not be able to monitor and react to all developments in a timely manner. For example, California adopted the California Consumer Privacy Act (“CCPA”), which became effective in January 2020. The CCPA establishes a privacy framework for covered businesses, including an expansive definition of personal information and data privacy rights for California residents. The CCPA includes a framework with potentially severe statutory damages and private rights of action. The CCPA requires covered businesses to provide new disclosures to California residents, provide them new ways to opt-out of certain disclosures of personal information, and allow for a new cause of action for data breaches. Additionally, a new privacy law, the California Privacy Rights Act (“CPRA”), was approved by California voters in the November 3, 2020 election. The CPRA creates obligations relating to consumer data beginning on January 1, 2022, with implementing regulations expected on or before July 1, 2022, and enforcement beginning July 1, 2023. The CPRA significantly modifies the CCPA, potentially resulting in further uncertainty. Some observers have noted that the CCPA could mark the beginning of a trend toward more stringent privacy legislation in the United States. Other states have begun to propose and enact similar laws. For example, Virginia has enacted the Virginia Consumer Data Protection Act, which provides for obligations similar to the CCPA, and which will go into effect January 1, 2023. As Nauticus expands its operations, the CCPA, CPRA, and other laws and regulations relating to privacy and data security may increase Nauticus’ compliance costs and potential liability. Compliance with any applicable privacy and data security laws and regulations is a rigorous and time-intensive process, and Nauticus may be required to put in place additional mechanisms to comply with such laws and regulations.

Additionally, as Nauticus’ international presence expands, it may become subject to or face increasing obligations under laws and regulations in countries outside the United States, many of which, such as the European Union’s General Data Protection Regulation (“GDPR”) and national laws supplementing the GDPR, as well as legislation substantially implementing the GDPR in the United Kingdom, are significantly more stringent than those currently enforced in

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the United States. The GDPR requires companies to meet stringent requirements regarding the handling of personal data of individuals located in the European Economic Area (“EEA”). The GDPR also includes significant penalties for noncompliance, which may result in monetary penalties of up to the higher of €20 million or 4% of a group’s worldwide turnover for the preceding financial year for the most serious violations. The United Kingdom’s version of the GDPR, the UK GDPR, which it maintains along with its Data Protection Act (collectively, the “UK GDPR”), also provides for substantial penalties that, for the most serious violations, can go up to the greater of £17.5 million or 4% of a group’s worldwide turnover for the preceding financial year. Many other jurisdictions globally are considering or have enacted legislation providing for local storage of data or otherwise imposing privacy, data protection and data security obligations in connection with the collection, use and other processing of personal data.

Nauticus publishes privacy policies and other documentation regarding its collection, processing, use and disclosure of personal information and/or other confidential information. Although Nauticus endeavors to comply with its published policies and other documentation, Nauticus may at times fail to do so or may be perceived to have failed to do so. Moreover, despite its efforts, Nauticus may not be successful in achieving compliance, including if Nauticus’ employees, contractors, service providers or vendors fail to comply with its published policies and documentation. Such failures can subject Nauticus to potential action by governmental or regulatory authorities if they are found to be deceptive, unfair, or misrepresentative of its actual practices. Any actual or perceived inability of Nauticus to adequately address privacy and security concerns or comply with applicable laws, rules and regulations relating to privacy, data protection or data security, or applicable privacy notices, could lead to investigations, claims, and proceedings by governmental entities and private parties, damages for contract breach, and other significant costs, penalties, and other liabilities. Any such claims or other proceedings could be expensive and time-consuming to defend and could result in adverse publicity. Any of the foregoing may have an adverse effect on Nauticus’ business, prospects, results of operations, and financial condition.

Nauticus is subject to cybersecurity risks to its operational systems, security systems, infrastructure, integrated software in its products and data processed by Nauticus or third-party vendors.

Nauticus’ business and operations involve the collection, storage, processing, and transmission of personal data and certain other sensitive and proprietary data of collaborators, customers, and others. Additionally, Nauticus maintains sensitive and proprietary information relating to its business, such as its own proprietary information and personal data relating to its employees. An increasing number of organizations have disclosed breaches of their information security systems and other information security incidents, some of which have involved sophisticated and highly targeted attacks. Nauticus may be a target for attacks by state-sponsored actors and others designed to disrupt its operations or to attempt to gain access to its systems or data that is processed or maintained in its business. The ongoing COVID-19 pandemic has increased security risks due to personnel working remotely.

Nauticus is at risk for interruptions, outages and breaches of its: (a) operational systems, including business, financial, accounting, product development, data processing or production processes, owned by Nauticus or its third-party vendors or suppliers; (b) facility security systems, owned by Nauticus or its third-party vendors or suppliers; (c) transmission control modules or other in-product technology, owned by Nauticus or its third-party vendors or suppliers; (d) the integrated software in Nauticus units; or (e) customer data that Nauticus processes or its third-party vendors or suppliers process on its behalf. Because techniques used to obtain unauthorized access to or to sabotage information systems change frequently and may not be known until launched against a target, Nauticus may be unable to anticipate or prevent these attacks, react in a timely manner, or implement adequate preventive measures, and may face delays in its detection or remediation of, or other responses to, security breaches and other privacy-and security-related incidents. Such incidents could: materially disrupt Nauticus’ operational systems; result in loss of intellectual property, trade secrets or other proprietary or competitively sensitive information; compromise certain information of customers, employees, suppliers, or others; jeopardize the security of Nauticus’ facilities; or affect the performance of in-product technology and the integrated software in Nauticus’ units. Certain efforts may be state-sponsored or supported by significant financial and technological resources, making them even more difficult to detect, remediate, and otherwise respond to.

Nauticus plans to include product services and functionality that utilize data connectivity to monitor performance and timely capture opportunities to enhance performance and for safety and cost-saving preventative maintenance. The availability and effectiveness of Nauticus’ services depend on the continued operation of information technology and communications systems. Nauticus’ systems will be vulnerable to damage or interruption from, among others, physical theft, fire, terrorist attacks, natural disasters, power loss, war, telecommunications failures, viruses, denial or degradation of service attacks, ransomware, social engineering schemes, insider theft or misuse or other attempts to

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harm Nauticus’ systems. Nauticus intends to use its product services and functionality to log information about each unit’s use in order to aid Nauticus in diagnostics and servicing. Nauticus’ customers may object to the use of this data, which may require Nauticus to implement new or modified data handling policies and mechanisms, increase Nauticus’ unit maintenance costs and costs associated with data processing and handling, and harm its business prospects.

Although Nauticus is in the process of implementing certain systems and processes that are designed to protect its data and systems within its control, prevent data loss, and prevent other security breaches and security incidents, these security measures cannot guarantee security. The IT and infrastructure used in Nauticus’ business may be vulnerable to cyberattacks or security breaches, and third parties may be able to access data, including personal data and other sensitive and proprietary data of Nauticus and its customers, collaborators and partners, its employees’ personal data, or other sensitive and proprietary data, accessible through those systems. Employee error, malfeasance, or other errors in the storage, use, or transmission of any of these types of data could result in an actual or perceived privacy or security breach or other security incident.

Moreover, there are inherent risks associated with developing, improving, expanding and updating Nauticus’ current systems, such as the disruption of Nauticus’ data management, procurement, production execution, finance, supply chain and sales and service processes. These risks may affect Nauticus’ ability to manage its data and inventory, procure parts or supplies or manufacture, deploy, deliver and service its units, adequately protect its intellectual property or achieve and maintain compliance with, or realize available benefits under, applicable laws, regulations and contracts. Nauticus cannot be sure that these systems upon which it relies, including those of its third-party vendors or suppliers, will be effectively implemented, maintained or expanded as planned. If Nauticus does not successfully implement, maintain or expand these systems as planned, its operations may be disrupted, its ability to accurately and timely report its financial results could be impaired, and deficiencies may arise in its internal control over financial reporting, which may impact Nauticus’ ability to certify its financial results. Moreover, Nauticus’ proprietary information or intellectual property could be compromised or misappropriated and its reputation may be adversely affected. If these systems do not operate as Nauticus expects them to, Nauticus may be required to expend significant resources to make corrections or find alternative sources for performing these functions.

Any actual or perceived security breach or security incident, or any systems outages or other disruption to systems used in Nauticus’ business, could interrupt Nauticus’ operations, result in loss or improper access to, or acquisition or disclosure of, data or a loss of intellectual property protection, harm Nauticus’ reputation and competitive position, reduce demand for its products, damage Nauticus’ relationships with customers, partners, collaborators, or others, or result in claims, regulatory investigations, and proceedings and significant legal, regulatory, and financial exposure, and any such incidents or any perception that Nauticus’ security measures are inadequate could lead to loss of confidence in Nauticus and harm to its reputation, any of which could adversely affect Nauticus’ business, financial condition, and results of operations. Any actual or perceived breach of privacy or security, or other security incident, impacting any entities with which Nauticus shares or discloses data (including, for example, its third-party technology providers) could have similar effects. Nauticus expects to incur significant costs in an effort to detect and prevent privacy and security breaches and other privacy- and security-related incidents, and may face increased costs and requirements to expend substantial resources in the event of an actual or perceived privacy or security breach or other incident.

Nauticus is subject to U.S. and foreign anti-corruption and anti-money laundering laws and regulations. Nauticus can face criminal liability and other serious consequences for violations, which can harm its business, prospects, financial condition and operating results.

Nauticus is subject to the U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, and other anti-corruption, anti-bribery and anti-money laundering laws in countries in which Nauticus conducts activities. Anti-corruption laws are interpreted broadly and prohibit companies and their employees, business partners, third-party intermediaries, representatives, and agents from authorizing, promising, offering or providing, directly or indirectly, improper payments or anything else of value to government officials, political candidates, political parties, or commercial partners for the purpose of obtaining or retaining business or securing an improper business advantage.

Nauticus has direct and indirect interactions with foreign officials, including in furtherance of sales to governmental entities in non-U.S. countries. Nauticus sometimes leverages third parties to conduct its business abroad, and its third-party business partners, representatives, and agents may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities. Nauticus can be held liable for the corrupt or other illegal activities of its employees or these third-parties, even if Nauticus does not explicitly authorize or

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have actual knowledge of such activities. The FCPA and other applicable laws and regulations laws also require that Nauticus keep accurate books and records and maintain internal controls and compliance procedures designed to prevent any such actions. While Nauticus has policies and procedures to address compliance with such laws, there can be no assurance that all of Nauticus’ employees, business partners, third-party intermediaries, representatives, and agents will not take actions in violation of its policies and applicable law, for which Nauticus may be ultimately held responsible. Nauticus’ exposure for violating these laws increases as its international presence expands and as it increases sales and operations in foreign jurisdictions.

Any violations of the laws and regulations described above may result in whistleblower complaints, adverse media coverage, investigations, substantial civil and criminal fines and penalties, damages, settlements, prosecution, enforcement actions, imprisonment, the loss of export or import privileges, suspension or debarment from government contracts, tax reassessments, breach of contract and fraud litigation, reputational harm and other consequences, any of which could adversely affect Nauticus’ business, prospects, financial condition and operating results. In addition, responding to any investigation or action will likely result in a significant diversion of management’s attention and resources and significant defense costs and other professional fees.

Nauticus is subject to governmental export and import controls and laws that could subject Nauticus to liability if Nauticus is not in compliance with such laws.

Nauticus’ products are subject to export control, import and economic sanctions laws and regulations, including the U.S. Export Administration Regulations, U.S. Customs regulations and various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Control. Exports of Nauticus’ robotic systems and technology must be made in compliance with these laws and regulations. If Nauticus fails to comply with these laws and regulations, Nauticus and certain of its employees could be subject to substantial civil or criminal penalties, including the possible loss of export or import privileges; fines, which may be imposed on Nauticus and responsible employees or managers; and, in extreme cases, the incarceration of responsible employees or managers.

Moreover, international sales of certain of Nauticus’ products are subject to U.S. laws, regulations and policies like the International Traffic in Arms Regulations and other export laws and regulations and may be subject to first obtaining licenses, clearances or authorizations from various regulatory entities. If Nauticus is not allowed to export its products or the clearance process is burdensome and costly, Nauticus’ ability to generate revenue would be adversely affected.

In addition, changes to Nauticus’ ocean robotic systems, or changes in applicable export control, import, or economic sanctions laws and regulations may create delays in the introduction and sale of Nauticus’ robotic systems and solutions or, in some cases, prevent the export or import of Nauticus’ robotic systems to certain countries, governments, or persons altogether. Compliance with such laws and regulations may also be costly and require time and attention from Nauticus management. Any change in export, import, or economic sanctions laws and regulations, shift in the enforcement or scope of existing laws and regulations, or change in the countries, governments, persons, or technologies targeted by such laws and regulations, could also result in decreased use of Nauticus’ robotic systems, as well as Nauticus’ decreased ability to export or market its robotic systems to potential customers. Any decreased use of Nauticus’ robotic systems or limitation on Nauticus’ ability to export or market its robotic systems would likely adversely affect Nauticus’ business, prospects, financial condition and operating results.

Nauticus’ management team will have broad discretion in making strategic decisions to execute their growth plans, and there can be no assurance that Nauticus’ management’s decisions will result in successful achievement of Nauticus’ business objectives or will not have unintended consequences that negatively impact Nauticus’ growth prospects.

Nauticus’ management will have broad discretion in making strategic decisions to execute their growth plans and may devote time and company resources to new or expanded solution offerings, potential acquisitions, prospective customers or other initiatives that do not necessarily improve Nauticus’ operating results or contribute to its growth. Management’s failure to make strategic decisions that are ultimately accretive to Nauticus’ growth may result in unfavorable returns and uncertainty about Nauticus’ prospects, each of which could cause the price of the Common Stock to decline.

As part of growing our business, we have and may make acquisitions. If we fail to successfully select, execute, or integrate our acquisitions, then our business, results of operations and financial condition could be materially adversely affected, and our stock price could decline.

Failure to successfully identify, complete, manage and integrate acquisitions could materially and adversely affect our business, financial condition and results of operations and could cause Nauticus’ stock price to decline.

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From time to time, we may undertake acquisitions to add new products and technologies, acquire talent, gain new sales channels, or enter into new markets or sales territories. In addition to possible stockholder approval, we may need approvals and licenses from relevant government authorities for the acquisitions and to comply with any applicable laws and regulations, and a failure to obtain such approvals and licenses could result in delays and increased costs and may disrupt our business strategy. Furthermore, acquisitions and the subsequent integration of new assets, businesses, key personnel, customers, vendors, and suppliers require significant attention from our management and could result in a diversion of resources from our existing business, which in turn could have an adverse effect on our operations. Acquired assets or businesses may not generate the financial results we expect. Acquisitions could result in the use of substantial amounts of cash, potentially dilutive issuances of equity securities and exposure to potential unknown liabilities of the acquired business. Moreover, the costs of identifying and consummating acquisitions may be significant.

Any acquisitions, partnerships, or joint ventures that we enter into could disrupt our operations and have a material adverse effect on our business, financial condition and results of operations.

From time to time, we may evaluate potential strategic acquisitions of businesses, including partnerships or joint ventures with third parties. We may not be successful in identifying acquisition, partnership, and joint venture candidates. In addition, we may not be able to continue the operational success of such businesses or successfully finance or integrate any businesses that we acquire or with which we form a partnership or joint venture. We may have potential write-offs of acquired assets and/or an impairment of any goodwill recorded as a result of acquisitions. Furthermore, the integration of any acquisition may divert management’s time and resources from our core business and disrupt our operations or may result in conflicts with our business. Any acquisition, partnership or joint venture may not be successful, may reduce our cash reserves, may negatively affect our earnings and financial performance and, to the extent financed with the proceeds of debt, may increase our indebtedness. Further, depending on market conditions, investor perceptions of Nauticus and other factors, we might not be able to obtain financing on acceptable terms, or at all, to implement any such transaction. We cannot ensure that any acquisition, partnership, or joint venture we make will not have a material adverse effect on our business, financial condition, and results of operations.

If we are unable to adapt to and satisfy customer demands in a timely and cost-effective manner, our ability to grow our business may suffer.

The success of our business depends in part on effectively engineering and implementing technologies related to subsea and surface vessels, ROVs, subsea robotic manipulators, and AI-based, full-stack vehicle control and manipulation software. These technologies are packaged for commercial and defense customers in products that provide innovative solutions to challenges in all maritime markets including subsea energy, offshore wind, and defense applications. If for any reason we are unable to continue to manufacture, design and develop technologies as planned or provide the services and products that our customers expect from us, this could have a material adverse effect on our business, financial condition, and results of operations. If our current or future product and service offerings do not meet expected performance or quality standards, including with respect to customer satisfaction, this could cause operational delays. In addition, any delay in manufacturing new products as planned could increase costs and cause our products and services to be less attractive to potential new customers. Further, certain government bodies may have priority with respect to the use of our products and services for national defense reasons, which may impact our cadence of producing and selling products and services to other customers. Any production, operational or manufacturing delays or other unplanned changes to our ability to design, develop and manufacture our products or offer our services could have a material adverse effect on our business, financial condition, and results of operations.

If we fail to respond to commercial industry cycles in terms of our cost structure, manufacturing capacity, and/or personnel needs, our business could be seriously harmed.

The timing, length, and severity of the up-and-down cycles in the commercial subsea, ocean surface, and defense industries are difficult to predict. The cyclical nature of the industries in which we operate affects our ability to accurately predict future revenue, and in some cases, future expense levels. During down cycles in our industry, the financial results of our customers may be negatively impacted, which could result not only in a decrease in orders but also a weakening of their financial condition that could impair our ability to recognize revenue or to collect on outstanding receivables. When cyclical fluctuations result in lower-than-expected revenue levels, operating results may be adversely affected, and cost reduction measures may be necessary in order for us to remain competitive and financially sound. We must be in a position to adjust our cost and expense structure to reflect prevailing market

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conditions and to continue to motivate and retain our key employees. If we fail to respond, then our business could be seriously harmed. In addition, during periods of rapid growth, we must be able to increase engineering and manufacturing capacity and personnel to meet customer demand. We can provide no assurance that these objectives can be met in a timely manner in response to industry cycles. Each of these factors could adversely impact our operating results and financial condition.

Our systems, products, technologies and services and related equipment may have shorter useful lives than we anticipate.

Our growth strategy depends in part on developing systems, products, technologies, and services. These reusable systems, products, technologies and services and systems will have a limited useful life. While we intend to design our products and technologies for a certain lifespan, which corresponds to a number of cycles, there can be no assurance as to the actual operational life of a product or that the operational life of individual components will be consistent with its design life. A number of factors will impact the useful lives of our products and systems, including, among other things, the quality of their design and construction, the durability of their component parts and availability of any replacement components, and the occurrence of any anomaly or series of anomalies or other risks affecting the technology during launch and in orbit. In addition, any improvements in technology may make our existing products, designs, or any component of our products prior to the end of its life obsolete. If our systems, products, technologies and services and related equipment have shorter useful lives than we currently anticipate, this may lead to delays in increasing the rate of our follow on work and new business, which would have a material adverse effect on our business, financial condition, and results of operations. In addition, we are continually learning, and as our engineering and manufacturing expertise and efficiency increases, we aim to leverage this learning to be able to manufacture our products and equipment using less of our currently installed equipment, which could render our existing inventory obsolete.

Risks Related to Government Contracts

Many of our contracts contain performance obligations that require innovative design capabilities, are technologically complex, require state-of-the-art manufacturing expertise, or are dependent upon factors not wholly within our control. Failure to meet these obligations could adversely affect our profitability and future prospects. Early termination of client contracts or contract penalties could adversely affect our results of operations.

We design, develop, and manufacture technologically advanced and innovative products and services, which are applied by our customers in a variety of environments. Problems and delays in development or delivery as a result of issues with respect to design, technology, licensing and intellectual property rights, labor, inability to achieve learning curve assumptions, manufacturing materials or components could prevent us from meeting requirements. Either we or the customer may generally terminate a contract as a result of a material uncured breach by the other. If we breach a contract or fail to perform in accordance with contractual service levels, delivery schedules, performance specifications, or other contractual requirements set forth therein, the other party thereto may terminate such contract for default, and we may be required to refund money previously paid to us by the customer or to pay penalties or other damages. Even if we have not breached, we may deal with various situations from time to time that may result in the amendment or termination of a contract. These steps can result in significant current period charges and/or reductions in current or future revenue, and/or delays in collection of outstanding receivables and costs incurred on the contract. Other factors that may affect revenue and profitability include inaccurate cost estimates, design issues, unforeseen costs and expenses not covered by insurance or indemnification from the customer, diversion of management focus in responding to unforeseen problems, and loss of follow-on work.

We rely on a limited number of suppliers for certain raw materials and supplied components, which has caused and may continue to cause supply chain disruptions. We may not be able to obtain sufficient raw materials or supplied components to meet our manufacturing, design, and operating needs, or obtain such materials on favorable terms or at all, which could impair our ability to fulfill our orders in a timely manner or increase our costs of design and production.

Our ability to produce our current and future systems, products, technologies and services and other components of operation is dependent upon sufficient availability of raw materials and supplied components, which we secure from a limited number of suppliers. As disclosed herein, this has caused and may continue to cause supply chain disruptions. Global supply chains have recently experienced disruption as a result of industry capacity constraints,

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material availability and global logistics delays arising from transportation capacity of ocean shipping containers and a prolonged delay in resumption of operations by one or more key suppliers as a result of COVID-19. Our reliance on suppliers to secure raw materials and supplied components has exposed us and may continue to expose us to volatility in the prices and availability of these materials. We may not be able to obtain sufficient supplies of raw materials or supplied components on favorable terms or at all, which could result in delays in the manufacture of our systems, products, technologies and services or increased costs.

In addition, we may in the future experience delays in manufacturing or operation as we go through the requalification process with any replacement third-party supplier, as well as the limitations imposed by the International Traffic in Arms Regulations (“ITAR”), the Export Administration Regulations (“EAR”), or other restrictions on transfer of sensitive technologies. Moreover, the imposition of tariffs on such raw materials or supplied components could have a material adverse effect on our operations. Prolonged disruptions in the supply of any of our key raw materials or components, difficulty qualifying new sources of supply, implementing use of replacement materials or new sources of supply or any volatility in prices could have a material adverse effect on our ability to operate in a cost-efficient, timely manner and could cause us to experience cancellations or delays of scheduled missions, customer cancellations or reductions in our prices and margins, any of which could harm our business, financial condition and results of operations.

To date, Nauticus has experienced supply chain impacts, particularly in electronic components, that have delayed ongoing projects. In response, Nauticus has made efforts to expand its supplier base to locate and source project materials to mitigate procurement delays. In light of recent world events, we anticipate continued challenges in this area over the near term as we work to minimize impacts on projects and deliverable timelines.

We use estimates when accounting for certain contracts and changes in these estimates may have a significant impact on our financial results.

Our quarterly and annual sales are affected by a variety of factors that may lead to significant variability in our operating results. We evaluate the contract value and cost estimates for performance obligations at least quarterly, and more frequently when circumstances change significantly. Changes in estimates and assumptions related to the status of certain long-term contracts which could have a material adverse effect on our operating results, financial condition, and/or cash flows.

The U.S. government’s budget deficit and the national debt, as well as any inability of the U.S. government to complete its budget process for any government fiscal year and consequently having to shut down or operate on funding levels equivalent to its prior fiscal year pursuant to a “continuing resolution,” could have an adverse impact on our business, financial condition, results of operations and cash flows.

Considerable uncertainty exists regarding how future budget and program decisions will unfold, including the defense spending priorities of the U.S. government, what challenges budget reductions will present for the defense industry and whether annual appropriations bills for all agencies will be enacted for U.S. government fiscal 2022 and thereafter due to many factors, including but not limited to, changes in the political environment, including before or after a change to the leadership within the government administration, and any resulting uncertainty or changes in policy or priorities and resultant funding. The U.S. government’s budget deficit and the national debt could have an adverse impact on our business, financial condition, results of operations and cash flows in a number of ways, including the following:

        The U.S. government could reduce or delay its spending on, reprioritize its spending away from, or decline to provide funding for the government programs in which we participate;

        U.S. government spending could be impacted by alternate arrangements to sequestration, which increases the uncertainty as to, and the difficulty in predicting, U.S. government spending priorities and levels; and

        We may experience declines in revenue, profitability, and cash flows as a result of reduced or Delayed orders or payments or other factors caused by economic difficulties of our customers and prospective customers, including U.S. federal, state, and local governments.

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Furthermore, we believe continued budget pressures could have serious negative consequences for the security of the United States, the defense industrial base and the customers, employees, suppliers, investors and communities that rely on companies in the defense industrial base. Budget and program decisions made in this environment would have long-term implications for Nauticus and the entire defense industry.

We depend significantly on U.S. government contracts, which often are only partially funded, subject to immediate termination, and heavily regulated and audited. The termination or failure to fund, or negative audit findings for, one or more of these contracts could have an adverse impact on our business, financial condition, results of operations and cash flows.

Over its lifetime, a U.S. government program may be implemented by the award of many different individual contracts and subcontracts. The funding of U.S. government programs is subject to U.S. Congressional appropriations. In recent years, U.S. government appropriations have been affected by larger U.S. government budgetary issues and related legislation. Although multi-year contracts may be authorized and appropriated in connection with major procurements, the U.S. Congress generally appropriates funds on a government fiscal year basis. Procurement funds are typically made available for obligation over the course of one to three years. Consequently, programs often initially receive only partial funding, and additional funds are obligated only as the U.S. Congress authorizes further appropriations. We cannot predict the extent to which total funding and/or funding for individual programs will be included, increased, or reduced as part of the annual appropriations process ultimately approved by U.S. Congress and the President of the United States or in separate supplemental appropriations or continuing resolutions, as applicable. The termination of funding for a U.S. government program would result in a loss of anticipated future revenue attributable to that program, which could have an adverse impact on our operations. In addition, the termination of a program or the failure to commit additional funds to a program that already has been started could result in lost revenue and increase our overall costs of doing business.

Generally, U.S. government contracts are subject to oversight audits by U.S. government representatives. Such audits could result in adjustments to our contract costs. Any costs found to be improperly allocated to a specific contract will not be reimbursed, and such costs already reimbursed must be refunded. We have recorded contract revenue based on costs we expect to realize upon final audit. However, we do not know the outcome of any future audits and adjustments, and we may be required to materially reduce our revenue or profits upon completion and final negotiation of audits. Negative audit findings could also result in termination of a contract, forfeiture of profits, suspension of payments, fines or suspension or debarment from U.S. Government contracting or subcontracting for a period of time.

In addition, U.S. government contracts generally contain provisions permitting termination, in whole or in part, without prior notice at the U.S. government’s convenience upon payment only for work done and commitments made at the time of termination. For some contracts, we are a subcontractor and not the prime contractor, and in those arrangements, the U.S. Government could terminate the prime contractor for convenience without regard for our performance as a subcontractor. We can give no assurance that one or more of our U.S. government contracts will not be terminated under those circumstances. Also, we can give no assurance that we would be able to procure new contracts to offset the revenue or backlog lost as a result of any termination of our U.S. government contracts. Because a significant portion of our revenue is dependent on our performance and payment under our U.S. government contracts, the loss of one or more large contracts could have a material adverse impact on our business, financial condition, results of operations and cash flows.

Our U.S. government business also is subject to specific procurement regulations and a variety of socioeconomic and other requirements. These requirements, although customary in U.S. government contracts, increase our performance and compliance costs. These costs might increase in the future, thereby reducing our margins, which could have an adverse effect on our business, financial condition, results of operations and cash flows. In addition, the U.S. government has and may continue to implement initiatives focused on efficiencies, affordability and cost growth and other changes to its procurement practices. These initiatives and changes to procurement practices may change the way U.S. government contracts are solicited, negotiated, and managed, which may affect whether and how we pursue opportunities to provide our products and services to the U.S. government, including the terms and conditions under which we do so, which may have an adverse impact on our business, financial condition, results of operations and cash flows. For example, contracts awarded under the Department of Defense’s Other Transaction Authority for research and prototypes generally require cost-sharing and may not follow, or may follow only in part, standard U.S. government contracting practices and terms, such as the Federal Acquisition Regulation (“FAR”) and Cost Accounting Standards.

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Failure to comply with applicable regulations and requirements could lead to fines, penalties, repayments, or compensatory or treble damages, or suspension or debarment from U.S. government contracting or subcontracting for a period of time. Among the causes for debarment are violations of various laws and regulations, including those related to procurement integrity, export control (including ITAR), U.S. government security, employment practices, protection of the environment, accuracy of records, proper recording of costs and foreign corruption. The termination of a U.S. government contract or relationship as a result of any of these acts would have an adverse impact on our operations and could have an adverse effect on our standing and eligibility for future U.S. government contracts.

The terms of certain of our current and likely future contracts are highly sensitive and we are limited in our ability to disclose such terms.

Our success, in large part, depends on our ability to maintain protection over the terms of certain of our current and likely future contracts and agreements, each of which is a highly negotiated agreement with sensitive information that, if publicly disclosed, would be beneficial for our and our partners’ competitors to learn and harmful to our and our partners’ commercial interests. We are limited in our ability to disclose the terms of these agreements, including terms that may affect our expected cash flows or the value of any collateral, and have taken precautions to protect the disclosure of the sensitive information in such agreements. Therefore, we have not allowed third parties, except for CLAQ during due diligence pursuant to the Non-Disclosure Agreement dated August 11, 2021, to review the terms of these agreements. If the terms of these agreements were to be disclosed, our ability to compete could be hindered and our relationships with our partners could be damaged, both of which could have a material adverse effect on our business, financial condition, and results of operations. Furthermore, our relationships with our partners could also be damaged, and they may take legal action against us, if they believe that we have disclosed any terms of these agreements without their prior consent.

Thus the nature of current and future contracts with the U.S. government will limit our ability to disclose sensitive terms such as contract scope, schedules, and budgets, and, in some cases, the specific end user. Notwithstanding the above, our current government contracts, while sensitive, were disclosed under a non-disclosure agreement to CLAQ’s management and Board members for their review and evaluation.

Additionally, Nauticus is committed to complying with our disclosure obligations under federal securities laws. Any future material contracts that are of national security concern will be disclosed in redacted form (redacting only the information that is both not material and is of the type that Nauticus treats as private or confidential), and unredacted versions made available to the SEC’s staff for confidential, non-disclosable, review, in accordance with SEC regulations.

Disputes with our subcontractors or the inability of our subcontractors to perform, or our key suppliers to timely deliver our components, parts or services, has caused and could continue to cause our products, systems or services to be produced or delivered in an untimely or unsatisfactory manner.

We engage subcontractors on many of our contracts. We may have disputes with our subcontractors, including regarding the quality and timeliness of work performed by the subcontractor, customer concerns about the subcontract or subcontractor, our failure to extend existing task orders or issue new task orders under a subcontract, our hiring of the personnel of a subcontractor or vice versa or the subcontractor’s failure to comply with applicable law. In addition, there are certain parts, components, and services for many of our products, systems, technologies, and services that we source from other manufacturers or vendors. Some of our suppliers, from time to time, have experienced and may continue to experience financial and operational difficulties, which may impact their ability to supply the materials, components, subsystems, and services that we require. Tariffs recently imposed on certain materials and other trade issues may create or exacerbate existing materials shortages and may result in further supplier business closures. Our supply chain could also be disrupted by external events, such as natural disasters or other significant disruptions (including extreme weather conditions, medical epidemics, acts of terrorism, cyber-attacks and labor disputes), governmental actions and legislative or regulatory changes, including product certification or stewardship requirements, sourcing restrictions, product authenticity and climate change or greenhouse gas emission standards, or availability constraints from increased demand from customers. In addition, the ongoing COVID-19 pandemic has resulted in increased travel restrictions and extended shutdown of certain businesses across the globe. These or any further political or governmental developments or health concerns could result in social, economic, and labor instability. Any inability to develop alternative sources of supply on a cost-effective and timely basis could materially impair our ability to manufacture and deliver products, systems, and services to our customers. We can give no assurances that we will be free from disputes with our subcontractors; material supply constraints or problems; or

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component, subsystems, or services problems in the future. Also, our subcontractors and other suppliers may not be able to acquire or maintain the quality of the materials, components, subsystems, and services they supply, which may result in greater product returns, service problems and warranty claims and could harm our business, financial condition, results of operations and cash flows. In addition, in connection with our government contracts, we are required to procure certain materials, components and parts from supply sources approved by the U.S. government and we rely on our subcontractors and suppliers to comply with applicable laws, regulations and other requirements regarding procurement of counterfeit, unauthorized or otherwise non-compliant parts or materials, including parts or materials they supply to us, and in some circumstances, we rely on their certifications as to their compliance. From time to time, there are components for which there may be only one supplier, which may be unable to meet our needs. Each of these subcontractor and supplier risks could have a material adverse effect on our business, financial condition, results of operations and cash flows.

To date, Nauticus has encountered some supply chain disruptions stemming from limited availability of certain raw materials. Two such raw materials are aluminum and microchips. Aluminum is required for the vessel hulls of both the Aquanaut and Hydronaut. Recently supply chain disruptions have caused procurement delays of aluminum which has subsequently delayed our manufacturing of the Aquanaut and Hydronaut. While these supply chain disruptions have to date not resulted in contract modifications to adjust cost, as we work with our suppliers, we anticipate that some cost adjustments may be necessary.

Another crucial material we utilize, which remains in short supply, is microchip electronics. Microchips play a key role in the electronic subsystems of the Aquanaut and Argonaut. Due to the challenges we have encountered in sourcing this material/component, we have redesigned components of our subsystems in order to incorporate microchips that are more easily obtained.

These supply chain issues have affected some, but not all, of our subcontractors and their ability to procure raw materials in a cost effective and timely manner. This has been evidenced by schedule extensions in the expected delivery of the Aquanauts that are under contract for fabrication with International Submarine Engineering, Ltd. as well as the Hydronauts under contract for construction with Diverse Marine. Nauticus continues to monitor these contractor issues and works closely with the supply chain providers to adjust other elements of the project to minimize schedule impacts and ensure minimal to no disruption to its daily operations.

We have government customers, which subjects us to risks including early termination, audits, investigations, sanctions and penalties.

We derive a substantial portion of our revenue from contracts with U.S. Department of Defense agencies and may enter into additional contracts with the U.S. or foreign governments in the future. This subjects us to statutes and regulations applicable to companies doing business with the government, including the FAR. These government contracts customarily contain provisions that give the government substantial rights and remedies, many of which are not typically found in commercial contracts and which are unfavorable to contractors. For instance, most U.S. government agencies include provisions that allow the government to unilaterally terminate or modify contracts for convenience, and in that event, the counterparty to the contract may generally recover only its incurred or committed costs and settlement expenses and profit on work completed prior to the termination. If the government terminates a contract for default, the defaulting party may be liable for any extra costs incurred by the government in procuring undelivered items from another source.

Some of our federal government contracts are subject to the approval of appropriations being made by the U.S. Congress to fund the expenditures under these contracts. In addition, government contracts normally contain additional requirements that may increase our costs of doing business, reduce our profits, and expose us to liability for failure to comply with these terms and conditions. These requirements include, for example:

        specialized disclosure and accounting requirements unique to government contracts;

        financial and compliance audits that may result in potential liability for price adjustments, recoupment of government funds after such funds have been spent, civil and criminal penalties, or administrative sanctions such as suspension or debarment from doing business with the U.S. government;

        public disclosures of certain contract and company information; and

        mandatory socioeconomic compliance requirements, including labor requirements, non-discrimination and affirmative action programs and environmental compliance requirements.

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Government contracts are also generally subject to greater scrutiny by the government, which can initiate reviews, audits, and investigations regarding our compliance with government contract requirements. In addition, if we fail to comply with government contracting laws, regulations and contract requirements, our contracts may be subject to termination, and we may be subject to financial and/or other liability under our contracts, the Federal Civil False Claims Act (including treble damages and other penalties), or criminal law. In particular, the False Claims Act’s “whistleblower” provisions also allow private individuals, including present and former employees, to sue on behalf of the U.S. government. Any penalties, damages, fines, suspension, or damages could adversely affect our ability to operate our business and our financial results.

Our reputation and ability to do business may be impacted by the improper conduct of our employees, agents, or business partners.

We have implemented compliance controls, training, policies and procedures designed to prevent and detect reckless or criminal acts from being committed by our employees, agents or business partners that would violate the laws of the jurisdictions in which we operate, including laws governing payments to government officials, such as the U.S. Foreign Corrupt Practices Act (“FCPA”), the protection of export controlled or classified information, such as ITAR, false claims, procurement integrity, cost accounting and billing, competition, information security and data privacy and the terms of our contracts. This risk of improper conduct may increase as we continue to grow and expand our operations. We cannot ensure, however, that our controls, training, policies and procedures will prevent or detect all such reckless or criminal acts, and we have been adversely impacted by such acts in the past, which have been immaterial in nature. If not prevented, such reckless or criminal acts could subject us to civil or criminal investigations, monetary and non-monetary penalties and suspension and debarment by the U.S. government and could have a material adverse effect on our ability to conduct business, our results of operations and our reputation. In addition, misconduct involving data security lapses resulting in the compromise of personal information or the improper use of our customer’s sensitive or classified information could result in remediation costs, regulatory sanctions against us and serious harm to our reputation and could adversely impact our ability to continue to contract with the U.S. government.

Risks Related to CLAQ’s Business and the Business Combination

CLAQ’s independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about CLAQ’s ability to continue as a “going concern.”

As of March 31, 2022, CLAQ had $296,381 in cash held outside of the Trust Account and a working capital deficit of $220,239. Further, CLAQ has incurred and expects to continue to incur significant costs in pursuit of its initial business combination. CLAQ cannot assure you that its plans to raise capital or to consummate an initial business combination will be successful. These factors, among others, raise substantial doubt about CLAQ’s ability to continue as a going concern. CLAQ’s financial statements contained in this proxy statement/prospectus do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should CLAQ be unable to continue as a going concern.

Additional risk factors not presently known to CLAQ or that it currently deems immaterial may also impair CLAQ’s business or results of operations. CLAQ may disclose changes to such risk factors or disclose additional risk factors from time to time in CLAQ’s future filings with the SEC.

CLAQ will be forced to liquidate the Trust Account if it cannot consummate a business combination by August 19, 2022, or if extended by the full amount of time allowed under its Current Charter, January 19, 2023 (the date that is 18 months from the closing of the IPO). In the event of a liquidation, CLAQ’s public stockholders will receive $10.18 per share of Common Stock and the Warrants and Rights will expire worthless.

If CLAQ is unable to complete a business combination by August 19, 2022, or if extended by the full amount of time allowed under its Current Charter, January 19, 2023, CLAQ will be forced to liquidate, the per-share liquidation distribution will be $10.18. Warrants and Rights will expire worthless.

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In connection with the recent restatement of CLAQ’s financial statements, CLAQ’s management has concluded that its disclosure controls and procedures were not effective as of December 31, 2021 due to a material weakness in internal control over financial reporting solely related to its accounting for complex financial instruments. If CLAQ is unable to maintain an effective system of disclosure controls and procedures and internal control over financial reporting, it may not be able to accurately report its financial results in a timely manner, which may adversely affect investor confidence in CLAQ and materially and adversely affect its business and financial results.

As previously disclosed in CLAQ’s Current Report on Form 8-K filed with the SEC on March 29, 2022, after consultation with its independent registered public accounting firm, CLAQ’s management team and its audit committee concluded that it was appropriate to restate its previously issued audited balance sheet as of July 19, 2021 (the “Audited Balance Sheet”) included as Exhibit 99.1 to its Current Report on Form 8-K filed with the SEC on July 23, 2021 and CLAQ’s unaudited and interim financial statements as of and for the three months ended September 30, 2021 contained in CLAQ’s Quarterly Report on Form 10-Q filed with the SEC on November 12, 2021 (the “Q3 Form 10-Q”). Accordingly, on March 29, 2022, CLAQ filed Amendment No. 1 to the Q3 Form 10-Q and a restated Audited Balance Sheet, which is included as Exhibit 99.4 to the Annual Report on Form 10-K filed with the SEC on March 29, 2022. As part of such process, CLAQ identified a material weakness in its internal control over financial reporting, solely related to its accounting for complex financial instruments.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of CLAQ’s annual or interim consolidated financial statements will not be prevented or detected and corrected on a timely basis. Effective internal controls are necessary for CLAQ to provide reliable financial reports and prevent fraud. CLAQ expects to take steps to remediate the material weakness, but there is no assurance that any remediation efforts will ultimately have the intended effects.

If CLAQ identifies any new material weaknesses in the future, any such newly identified material weakness could limit its ability to prevent or detect a misstatement of CLAQ’s accounts or disclosures that could result in a material misstatement of CLAQ’s annual or interim consolidated financial statements. In such case, CLAQ may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in CLAQ’s financial reporting and its stock price may decline as a result. CLAQ cannot assure you that the measures it has taken to date, or any measures it may take in the future, will be sufficient to avoid potential future material weaknesses.

CLAQ may not be able to complete an initial business combination with a U.S. target company if such initial business combination is subject to U.S. foreign investment regulations and review by a U.S. government entity such as the Committee on Foreign Investment in the United States (CFIUS), or ultimately prohibited.

Neither CLAQ Co-Sponsors is, is controlled by, or has substantial ties with a non-U.S. person. However, certain investors involved in our pending business combination transaction with Nauticus are Canadian citizens. We do not expect CLAQ or the post-combination company to be considered a “foreign person” under the regulations administered by CFIUS. However, if our initial business combination with a U.S. business is subject to CFIUS review, the scope of which was expanded by the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”), to include certain non-passive, non-controlling investments in sensitive U.S. businesses and certain acquisitions of real estate even with no underlying U.S. business. FIRRMA, and subsequent implementing regulations that are now in force, also subjects certain categories of investments to mandatory filings. If our potential initial business combination with a U.S. business falls within CFIUS’s jurisdiction, we may determine that we are required to make a mandatory filing or that we will submit a voluntary notice to CFIUS, or to proceed with the initial business combination without notifying CFIUS and risk CFIUS intervention, before or after closing the initial business combination. CFIUS may decide to block or delay our initial business combination, impose conditions to mitigate national security concerns with respect to such initial business combination or order us to divest all or a portion of a U.S. business of the combined company without first obtaining CFIUS clearance, which may limit the attractiveness of or prevent us from pursuing certain initial business combination opportunities that we believe would otherwise be beneficial to us and our shareholders. As a result, the pool of potential targets with which we could complete an initial business combination may be limited and we may be adversely affected in terms of competing with other special purpose acquisition companies which do not have similar foreign ownership issues.

Moreover, the process of government review, whether by the CFIUS or otherwise, could be lengthy and we have limited time to complete our initial business combination. If we cannot complete our initial business combination by August 19, 2022 (or January 19, 2023 if extended by the full amount of time allowed under the Current Charter and Trust Agreement) because the review process drags on beyond such timeframe or because our initial business

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combination is ultimately prohibited by CFIUS or another U.S. government entity, we may be required to liquidate. If we liquidate, our public shareholders may only receive $10.21 per share, and our warrants and rights will expire worthless. This will also cause you to lose the investment opportunity in a target company and the chance of realizing future gains on your investment through any price appreciation in the combined company.

Because the market price of the Combined Company will fluctuate, Nauticus’ stockholders cannot be sure of the value of the Merger Consideration they will receive. In addition, there can be no assurance that any Earnout Shares will be issued.

Release of the Earnout Shares is tied to the volume-weighted average price of the Combined Company Common Stock during a 5-year period following the signing of the Merger Agreement. Accordingly, at the time of providing written consent to the Business Combination, Nauticus stockholders will not know or be able to calculate the market value of the shares of CLAQ Common Stock they would receive as Merger Consideration upon the completion of the Business Combination. Stock price changes may result from a variety of factors, including changes in the business, operations or prospects of Nauticus, regulatory considerations and general business, market, industry or economic conditions. Many of these factors are outside of the control of CLAQ and Nauticus.

The CLAQ Public Stockholders will experience dilution as a consequence of, among other transactions, the issuance of Common Stock as consideration in the Business Combination and the PIPE Investment.

CLAQ’s stockholders will experience immediate dilution as a consequence of the issuance of common stock as consideration in the Business Combination and the PIPE Investment. Having a minority share position may reduce the influence that CLAQ’s current stockholders have on the management of CLAQ.

It is anticipated that upon completion of the Business Combination and assuming minimum redemptions by CLAQ public stockholders, CLAQ’s public stockholders (other than the PIPE Investors) will retain an ownership interest of approximately 5.5% in the Combined Company the PIPE Investors will own approximately 7.4% of the Combined Company, the Co-Sponsors, officers, directors and other holders of founder shares will retain an ownership interest of approximately 9.0% of the Combined Company, and the Nauticus stockholders will own approximately 78.1% (including the 7,500,000 Earnout Shares) of the Combined Company.

The ownership percentage with respect to the Combined Company does not take into account (i) the redemption of any Public Common Stock by the CLAQ public stockholders or (ii) the issuance of any additional shares upon the closing of the Business Combination under the Incentive Award Plan. If the actual facts are different from these assumptions (which they are likely to be), the percentage ownership retained by the CLAQ stockholders will be different. See “Unaudited Pro Forma Condensed Combined and Consolidated Financial Information.”

The following table shows all possible sources and the extent of dilution, pursuant to the exercise and conversion of Public and Private Warrants, Rights, Nauticus Options, conversion of the Debentures and associated Warrants, that our shareholders who elect not to redeem their shares may experience in connection with the Business Combination, assuming minimum redemption, intermediate levels of redemption and maximum redemption scenarios:

 

Minimum
Redemptions
(1)

 

%

 

10%
Redemption
(2)

 

%

 

50%
Redemption
(3)

 

%

 

75%
Redemption
(4)

 

%

 

Maximum Redemption(5)

 

%

Nauticus stockholders(6)

 

41,501,545

 

56.1

%

 

41,501,545

 

56.3

%

 

41,501,545

 

56.9

%

 

41,501,545

 

57.3

%

 

41,501,545

 

57.6

%

CLAQ public stockholders(7)

 

11,270,789

 

15.3

%

 

11,092,460

 

15.1

%

 

10,379,145

 

14.2

%

 

9,933,322

 

13.7

%

 

9,487,500

 

13.2

%

Initial Stockholders(8)(9)

 

11,487,500

 

15.6

%

 

11,487,500

 

15.6

%

 

11,487,500

 

15.7

%

 

11,487,500

 

15.8

%

 

11,487,500

 

15.9

%

PIPE Investment investors(10)

 

9,603,470

 

13.0

%

 

9,603,470

 

13.0

%

 

9,603,470

 

13.2

%

 

9,603,470

 

13.2

%

 

9,603,470

 

13.3

%

Pro forma fully diluted Common Stock at March 31, 2022

 

73,863,304

 

100.0

%

 

73,684,975

 

100.0

%

 

72,971,660

 

100.0

%

 

72,525,837

 

100.0

%

 

72,080,015

 

100.0

%

____________

(1)      Assumes that no CLAQ public stockholders are redeemed.

(2)      Assumes that 178,329 Public Common Stock is redeemed for aggregate redemption payments of approximately $1,814,812, assuming a $10.18 per share redemption price and based on funds in the Trust Account as of July 19, 2022. The Merger Agreement includes a condition to the closing that at the closing having an amount of available cash from the Trust Account and the PIPE Investment (after giving effect to the redemption of any Public Common Stock in connection with the IPO and the payment of the transaction expenses), of no less than $50,000,000.

(3)      Assumes that 891,645 Public Common Stock is redeemed for aggregate redemption payments of approximately $9,074,061, assuming a $10.18 per share redemption price and based on funds in the Trust Account as of July 19, 2022. The Merger Agreement includes a condition to the closing that at the closing having an amount of available cash from the Trust Account and the Equity Financing (as defined in the Merger Agreement) (after giving effect to the redemption of any Public Common Stock in connection with the IPO and the payment of the transaction expenses), of no less than $50,000,000.

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(4)      Assumes that 1,337,467 Public Common Stock is redeemed for aggregate redemption payments of approximately $13,611,091, assuming a $10.18 per share redemption price and based on funds in the Trust Account as of July 19, 2022. The Merger Agreement includes a condition to the closing that at the closing having an amount of available cash from the Trust Account and the Equity Financing (as defined in the Merger Agreement) (after giving effect to the redemption of any Public Common Stock in connection with the IPO and the payment of the transaction expenses), of no less than $50,000,000.

(5)      Assumes that 1,783,289 Public Common Stock is redeemed for aggregate redemption payments of approximately $18,148,121, assuming a $10.18 per share redemption price and based on funds in the Trust Account as of July 19, 2022. The Merger Agreement includes a condition to the closing that at the closing having an amount of available cash from the Trust Account and the PIPE Investment (after giving effect to the redemption of any Public Common Stock in connection with the IPO and the payment of the transaction expenses), of no less than $50,000,000.

(6)      Includes 7,500,000 shares of Common Stock subject to the Earnout Terms and the exercise of 3,970,266 Nauticus Options. The Earnout Shares subject to the Triggering Events will be deposited into escrow in accordance with the terms of the Merger Agreement and will be subject to reduction or forfeiture in accordance with the terms of the Merger Agreement. However, registered holders will maintain voting rights related to such shares unless forfeited.

(7)      Includes 8,625,000 Public Warrants and the issuance of 862,500 shares of Common Stock pursuant to the Rights. Non-redeeming public stockholders could suffer additional dilution in their ownership and voting interest of the combined company upon exercise of the Public Warrants held by redeeming CLAQ public stockholder who continue to hold these warrants, which could have an aggregate value of $3,967,500, based on the closing trading price per Public Warrant as of May 16, 2022.

(8)      Includes 4,312,500 outstanding founder shares and 7,175,000 Private Warrants.

(9)      Total of 4,312,500 outstanding founder shares includes 1,437,500 founder shares held by the Sponsor, 2,595,000 founder shares held by CleanTech Investments, and 280,000 founder shares held by the officers and directors of CleanTech. Please see the section titled “Beneficial Ownership of Securities.”

(10)    Assumes the sale of an aggregate of 3,530,000 shares of CleanTech Common Stock, for a purchase price of $10.00 per share and an aggregate purchase price of $35,300,000, conversion of the Debentures at a conversion price of $15.00 and exercise and conversion of the Warrants income Common Stock.

You must tender your Common Stock in order to validly seek redemption at the Meeting of stockholders.

In connection with tendering your Common Stock for redemption, you must elect either to physically tender your share certificates to Continental or to deliver your Common Stock to Continental electronically using DTC’s DWAC (Deposit/Withdrawal At Custodian) System, in each case at least two business days before the Meeting. The requirement for physical or electronic delivery ensures that a redeeming holder’s election to redeem is irrevocable once the Business Combination is consummated. Any failure to observe these procedures will result in your loss of redemption rights in connection with the vote on the Business Combination.

If third parties bring claims against CLAQ, the proceeds held in trust could be reduced and the per share liquidation price received by CLAQ’s public stockholders may be less than $10.18.

CLAQ’s placing of funds in trust may not protect those funds from third party claims against CLAQ. Although CLAQ has received from many of the vendors, service providers (other than its independent accountants) and prospective target businesses with which it does business executed agreements waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of CLAQ’s public stockholders, they may still seek recourse against the Trust Account. Additionally, a court may not uphold the validity of such agreements. Accordingly, the proceeds held in trust could be subject to claims which could take priority over those of CLAQ’s public stockholders. If CLAQ liquidates the Trust Account before the completion of a business combination and distributes the proceeds held therein to its public stockholders, the Co-Sponsors have contractually agreed that they will be liable to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us, but only if such a vendor or prospective target business does not execute such a waiver. However, CLAQ cannot assure you that they will be able to meet such obligation. Therefore, the per-share distribution from the Trust Account for our public stockholders may be less than $10.18 per share due to such claims.

Additionally, if CLAQ is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it which is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included in CLAQ’s bankruptcy estate and subject to the claims of third parties with priority over the claims of its stockholders. To the extent any bankruptcy claims deplete the Trust Account, CLAQ may not be able to return $10.18 to our public stockholders.

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Any distributions received by CLAQ stockholders could be viewed as an unlawful payment if it was proved that immediately following the date on which the distribution was made, CLAQ was unable to pay its debts as they fell due in the ordinary course of business.

CLAQ’s Current Charter provides that it will continue in existence only until August 19, 2022, unless the time period to consummate an initial business combination has been extended to 18 months from the closing of the IPO, or January 19, 2023. If CLAQ is unable to consummate a transaction within the required time periods, upon notice from CLAQ, the trustee of the Trust Account will distribute the amount in its Trust Account to its public stockholders. Concurrently, CLAQ shall pay, or reserve for payment, from funds not held in trust, its liabilities and obligations, although CLAQ cannot assure you that there will be sufficient funds for such purpose.

We expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts remaining out of the approximately $1,500,000 of proceeds held outside the trust account, although we cannot assure you that there will be sufficient funds for such purpose. We will depend on sufficient interest being earned on the proceeds held in the Trust Account to pay any tax obligations we may owe or for working capital purposes.

However, we may not properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of the date of distribution. Accordingly, third parties may seek to recover from our stockholders amounts owed to them by us.

If, after we distribute the proceeds in the Trust Account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. In addition, our Board may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors.

If CLAQ’s due diligence investigation of Nauticus was inadequate, then stockholders of CLAQ following the Business Combination could lose some or all of their investment.

Even though CLAQ conducted a due diligence investigation of Nauticus, it cannot be sure that this diligence uncovered all material issues that may be present inside Nauticus or its business, or that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of Nauticus and its business and outside of its control will not later arise. At the time when the CLAQ Board approved the Business Combination in December 2021, the CLAQ Board considered that they were not obtaining an opinion from any independent investment banking or valuation firm that the consideration to be received by Nauticus is fair to CLAQ or its shareholders from a financial point of view.

Duff & Phelps’ opinion obtained by the CLAQ Board addresses only the fairness of the consideration of be paid by CLAQ to Nauticus security holders in the Business Combination, but there is no separate opinion rendered on the fairness of the Business Transaction to the public shareholders or shareholders unaffiliated with the Sponsors or their affiliates.

On January 28, 2022, in order to provide added transparency to the transactions contemplated by the Merger Agreement and greater certainty to close the Business Transaction in the current turbulent market, CLAQ retained Duff & Phelps to serve as an independent financial advisor to the Board of CLAQ, specifically to provide to the Board a fairness opinion in connection with the Business Combination. On March 24, 2022, the CLAQ Board (solely in their capacity as members of the CLAQ Board) obtained an opinion from Duff & Phelps that the consideration to be paid by CLAQ to the Nauticus securityholders in the Business Combination pursuant to the Merger Agreement is fair to CLAQ, from a financial point of view. However, there was no separate opinion rendered on the fairness of the Business Combination to the public shareholders or shareholders unaffiliated with the Co-Sponsors or their affiliates.

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Stockholder litigation and regulatory inquiries and investigations are expensive and could harm CLAQ’s business, financial condition and operating results and could divert management attention.

In the past, securities class action litigation and/or stockholder derivative litigation and inquiries or investigations by regulatory authorities have often followed certain significant business transactions, such as the sale of a company or announcement of any other strategic transaction, such as the Business Combination. Any stockholder litigation and/or regulatory investigations against CLAQ, whether or not resolved in CLAQ’s favor, could result in substantial costs and divert CLAQ’s management’s attention from other business concerns, which could adversely affect CLAQ’s business and cash resources and the ultimate value CLAQ’s stockholders receive as a result of the Business Combination.

The Initial Stockholders who own shares of common stock and Private Warrants will not participate in liquidation distributions and, therefore, they may have a conflict of interest in determining whether the Business Combination is appropriate.

As of the Record Date, the Initial Stockholders owned an aggregate of 4,125,000 shares of common stock and 7,175,000 Private Warrants. They have waived their right to redeem any Common Stock in connection with a stockholder vote to approve a proposed initial business combination or sell any Common Stock to CLAQ in a tender offer in connection with a proposed initial business combination, or to receive distributions with respect to any Common Stock upon the liquidation of the Trust Account if CLAQ is unable to consummate a business combination. Based on a market price of $10.18 per share of Common Stock on August 1, 2022, the total value of the Common Stock held by the Initial Stockholders was approximately $43.8 million. Based on a market price of $0.32 per Public Warrant on August 1, 2022, the total value of the Private Warrants held by the Initial Stockholders was approximately $2.3 million. The Private Warrants (including underlying securities) and founder shares acquired prior to the IPO will be worthless if CLAQ does not consummate a business combination. Consequently, our directors’ discretion in identifying and selecting Nauticus as a suitable target business may result in a conflict of interest when determining whether the terms, conditions and timing of the Business Combination are appropriate and in CLAQ’s public stockholders’ best interest.

CLAQ is requiring stockholders who wish to redeem their Common Stock in connection with a proposed business combination to comply with specific requirements for redemption that may make it more difficult for them to exercise their redemption rights prior to the deadline for exercising their rights.

CLAQ is requiring stockholders who wish to redeem their Common Stock to either tender their certificates to Continental or to deliver their Common Stock to Continental electronically using the DTC’s DWAC (Deposit/Withdrawal At Custodian) System at least two business days before the Meeting. In order to obtain a physical certificate, a stockholder’s broker and/or clearing broker, DTC and Continental will need to act to facilitate this request. It is CLAQ’s understanding that stockholders should generally allot at least two weeks to obtain physical certificates from Continental. However, because we do not have any control over this process or over the brokers or DTC, it may take significantly longer than two weeks to obtain a physical certificate. While we have been advised that it takes a short time to deliver Common Stock through the DWAC System, we cannot assure you of this fact. Accordingly, if it takes longer than CLAQ anticipates for stockholders to deliver their Common Stock, stockholders who wish to redeem may be unable to meet the deadline for exercising their redemption rights and thus may be unable to redeem their Common Stock. Based on a market price of $0.32 per Public Warrant on August 1, 2022, the total value of the Public Warrants that may be retained by redeeming stockholders assuming maximum redemptions was approximately $2.0 million.

CLAQ will require its public stockholders who wish to redeem their Common Stock in connection with the Business Combination to comply with specific requirements for redemption described above, such redeeming stockholders may be unable to sell their securities when they wish to in the event that the Business Combination is not consummated.

If CLAQ requires public stockholders who wish to redeem their Common Stock in connection with the proposed Business Combination to comply with specific requirements for redemption as described above and the Business Combination is not consummated, CLAQ will promptly return such certificates to its public stockholders. Accordingly,

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investors who attempted to redeem their Common Stock in such a circumstance will be unable to sell their securities after the failed acquisition until CLAQ has returned their securities to them. The market price of Common Stock may decline during this time and you may not be able to sell your securities when you wish to, even while other stockholders that did not seek redemption may be able to sell their securities.

Even if we consummate the Business Combination, the Public Warrants may never be in the money, and they may expire worthless.

The exercise price for Public Warrants is $11.50 per share. There can be no assurance that the Public Warrants will be in the money prior to their expiration and, as such, the warrants may expire worthless. The terms of Public Warrants may be amended in a manner that may be adverse to the holders. The warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us, dated July 14, 2021 (the “Warrant Agreement”) provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of a majority of the then-outstanding Public Warrants to make any change that adversely affects the interests of the registered holders. Accordingly, we may amend the terms of the warrants in a manner adverse to a holder if holders of at least a majority of the then-outstanding Public Warrants approve of such amendment. Our ability to amend the terms of the warrants with the consent of a majority of the then-outstanding Public Warrants is unlimited. Examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, shorten the exercise period or decrease the number of CLAQ Common Stock purchasable upon exercise of a warrant.

We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your Public Warrants worthless.

We have the ability to redeem outstanding Public Warrants at any time after they become exercisable and prior to their expiration, at $0.01 per warrant, provided that the last reported sales price (or the closing bid price of our common stock in the event the shares of our common stock are not traded on any specific trading day) of the common stock equals or exceeds $16.50 per share (as adjusted for stock splits, stock dividends, reorganizations and the like) on each of 20 trading days within the 30 trading-day period ending on the third business day prior to the date on which we send proper notice of such redemption, provided that on the date we give notice of redemption and during the entire period thereafter until the time we redeem the warrants, we have an effective registration statement under the Securities Act covering Common Stock issuable upon exercise of the warrants and a current prospectus relating to them is available. If and when the Public Warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding Public Warrants could force a warrant holder: (i) to exercise its warrants and pay the exercise price therefor at a time when it may be disadvantageous for it to do so, (ii) to sell its warrants at the then-current market price when it might otherwise wish to hold its Public Warrants or (iii) to accept the nominal redemption price which, at the time the outstanding Public Warrants are called for redemption, will be substantially less than the market value of its Public Warrants.

If CLAQ’s security holders exercise their registration rights with respect to their securities, it may have an adverse effect on the market price of CLAQ’s securities.

CLAQ’s Initial Stockholders are entitled to make a demand that it register the resale of their founder shares at any time commencing three months prior to the date on which their shares may be released from escrow. Additionally, the holders of the Private Warrants and any Units the Initial Stockholders, officers, directors, or their affiliates may be issued in payment of working capital loans made to CLAQ, are entitled to demand that CLAQ register the resale of the Private Warrants and any other Units CLAQ issues to them (and the underlying securities) commencing at any time after CLAQ consummates an initial business combination. If such persons exercise their registration rights with respect to all of their securities, then there will be an additional 4,312,500 shares of common stock and 7,175,000 Private Warrants (and underlying securities) eligible for trading in the public market. The presence of these additional shares of common stock and Units (and underlying securities) trading in the public market may have an adverse effect on the market price of CLAQ’s securities.

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If the Business Combination’s benefits do not meet the expectations of financial or industry analysts, the market price of CLAQ’s securities may decline. A market for our securities may not continue, which would adversely affect the liquidity and price of our securities.

The market price of CLAQ’s securities may decline as a result of the Business Combination if:

        CLAQ does not achieve the perceived benefits of the acquisition as rapidly as, or to the extent anticipated by, financial or industry analysts; or

        The effect of the Business Combination on the financial statements is not consistent with the expectations of financial or industry analysts.

Following the Business Combination, the price of CLAQ’s securities may fluctuate significantly due to the market’s reaction to the Business Combination and general market and economic conditions. An active trading market for CLAQ securities following the Business Combination may never develop or, if developed, it may not be sustained. In addition, following the Business Combination, fluctuations in the price of the Combined Company’s securities could contribute to the loss of all or part of your investment. Prior to the Business Combination, there has not been a public market for Nauticus’ capital stock. Accordingly, the valuation ascribed to Nauticus may not be indicative of the price that will prevail in the trading market following the Business Combination. If an active market for Nauticus’ securities develops and continues, the trading price of the Combined Company’s securities following the Business Combination could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control. Any of the factors listed below could have a material adverse effect on your investment in the Combined Company’s securities and Combined Company’s securities may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of Combined Company’s securities may not recover and may experience a further decline.

Factors affecting the trading price of the Combined Company’s securities may include:

        actual or anticipated fluctuations in the Combined Company’s quarterly financial results or the quarterly financial results of companies perceived to be similar to it;

        changes in the market’s expectations about the Combined Company’s operating results;

        the Combined Company’s operating results failing to meet the expectation of securities analysts or investors in a particular period;

        changes in financial estimates and recommendations by securities analysts concerning the Combined Company’s in general;

        failure to meet or exceed the financial projections of the Combined Company;

        commencement of, or involvement in, litigation involving the Combined Company, including litigation relating to the Business Combination, which may be more likely as a result of the earnout provisions in the Merger Agreement;

        changes in the Combined Company’s capital structure, such as future issuances of securities or the incurrence of additional debt; and

        operating and share price performance of other companies that investors deem comparable to the Combined Company.

CLAQ’s directors and officers have certain conflicts in determining to recommend the acquisition of Nauticus, since certain of their interests, and certain interests of their affiliates and associates, are different from, or in addition to, your interests as a shareholder.

CLAQ’s management and directors have interests in and arising from the Business Combination that are different from, or in addition to, your interests as a shareholder, which could result in a real or perceived conflict of interest. These interests include the fact that certain of the shares of common stock and Private Warrants (including the underlying securities) owned by CLAQ’s Co-Sponsors, management and directors, or their affiliates and associates, would become worthless if the Business Combination Proposal is not approved and CLAQ otherwise fails to consummate a business combination prior to August 19, 2022 (unless such date has been extended as described herein). When you consider

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the recommendation of the Board in favor of adoption of the Business Combination Proposal and other Proposals, you should keep in mind that CLAQ’s directors and officers and their affiliates have interests in the Business Combination that are different from, or in addition to, your interests as a shareholder, including:

        CLAQ’s Co-sponsors have a fiduciary obligation to each of their respective members and Eli Spiro, (CLAQ’s Chief Executive Officer and Director) and Jonas Grossman (a CLAQ Director) are the controlling members of our Co-sponsors. Because each of Mr. Spiro and Mr. Grossman have a fiduciary obligation to both CLAQ and the Co-sponsors, they had a conflict of interest when voting on the Business Combination.

        At the special meeting of stockholders held on July 18, 2022, CLAQ’s stockholders approved the Charter Amendment Proposal and the Trust Agreement Proposal, giving CLAQ the right to extend the Combination Period six (6) times for an additional one (1) month each time by depositing into the Trust Account $100,000 for each one-month extension, up to January 19, 2023 (the first extension to August 19, 2022 was already made). As a result of the July 18 Amendments, public stockholders forfeited their right to receive up to $1,725,000, and up to an aggregate of $3,450,000 under certain agreements entered into in connection with CLAQ’s IPO, if CLAQ seeks to extend the Combination Period for three or six months, respectively, but does not consummate a business combination;

        As a result of the July 18 Amendments, CLAQ’s Co-Sponsors are no longer be required to deposit into the Trust Account $1,725,000 prior to each three-month extension (up to $3,450,000 in the aggregate) and these amounts will not be repaid if a business combination is not consummated to the extent funds are not available outside of the Trust Account;

        As a result of the July 18 Amendments, CLAQ may extend the Combination Period up to January 19, 2023, by depositing into the Trust Account for the benefit of the public stockholders $100,000 for each one (1) month extension (or an aggregate of $600,000 if the Combination Period is extended six times). The additional redemption amount added to the Trust Account was reduced from what was included in CLAQ’s initial public offering prospectus, which was $0.10 per share for each three-month extension to approximately $0.06 per share for each one-month extension.

        As a result of the July 18 Amendments, the Co-Sponsors are expected to contribute to CLAQ up to $600,000 (if the full 6-month extension is sought) in an interest-free loan for the full extension of the Combination Period on an as-needed basis. If the July 18 Amendments were not adopted, the Co-Sponsors would be expected to deposit into the Trust Account an aggregate of $3,450,000 (if the full 6-month extension is sought) in an interest-free loan. Since both loans will become payable only after Closing of the Business Combination, CLAQ’s Co-Sponsors will lose repayment of $600,000 loan if the Business Combination is not completed after the full 6-month extension. As of the date of this proxy statement/prospectus, the Co-Sponsors have contributed $100,000 for the extension of the Combination Period for one (1) month until August 19, 2022. No funds from the Trust Account would be used to repay such loans in the event of CLAQ’s liquidation.

        If an initial business combination, such as the Business Combination, is not completed, CLAQ will be required to dissolve and liquidate. In such event, the 4,312,500 founder shares currently held by the Initial Stockholders, which were acquired prior to the IPO will be worthless because such holders have agreed to waive their rights to any liquidation distributions. The founder shares were purchased for an aggregate purchase price of $25,000, and had an aggregate market value of approximately $43.8 million based on the closing price of $10.18 per share of CLAQ common stock on the Nasdaq Stock Market as of August 1, 2022.

        If an initial business combination, such as the Business Combination, is not completed, an aggregate of 7,175,000 Private Warrants purchased by CLAQ’s Co-sponsors for a total purchase price of $7,175,000, will be worthless. The Private Warrants had an aggregate market value of approximately $2.3 million based on the closing price of $0.32 per Public Warrant on the Nasdaq Stock Market as of August 1, 2022.

        Because of these interests, CLAQ’s Initial Stockholders could benefit from the completion of a business combination that is not favorable to its public shareholders and may be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to public shareholders rather than

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liquidate. For example, if the share price of the CLAQ common stock declined to $5.00 per share after the close of the business combination, CLAQ’s public shareholder that purchased shares in the initial public offering, would have a loss of $5.00 per share, while CLAQ’s Sponsor would have a gain of $4.99 per share because it acquired the founder shares for a nominal amount. In other words, CLAQ’s Initial Stockholders can earn a positive rate of return on their investment even if public shareholders experience a negative rate of return in the post-combination company.

        One of CLAQ’s Co-sponsors is CleanTech Sponsor, and the managing member of CleanTech Sponsor is Eli Spiro, CLAQ’s Chief Executive Officer and Director. If an initial business combination, such as the Business Combination, is not completed, CleanTech Sponsor will lose an aggregate of approximately $28.5 million (not including any extension loan after July 18, 2022), comprised of the following:

        approximately $26.4 million (based on the closing price of $10.18 per share of CLAQ common stock on the Nasdaq Stock Market as of August 1, 2022) of the 2,595,000 founder shares CleanTech Sponsor holds;

        approximately $1.5 million (based on the closing price of $0.32 per Public Warrant on the Nasdaq Stock Market as of August 1, 2022) of the 4,783,333 Private Warrants CleanTech Sponsor holds; and

        repayment of an interest-free loan of $567,000 (as of July 18, 2022) by CleanTech Sponsor since the loan will become payable only after Closing of the Business Combination, or the date on which CLAQ determines that it is unable to effect a business combination.

        CLAQ’s other Co-sponsor, CleanTech Investments, is an affiliate of Chardan, and CLAQ’s director, Mr. Jonas Grossman, is the Managing Partner and President of Chardan. If an initial business combination, such as the Business Combination, is not completed, Chardan will lose an aggregate of approximately $23.9 million (not including any extension loan after July 18, 2022), comprised of the following:

        approximately $14.6 million (based on the closing price of $10.18 per share of CLAQ common stock on the Nasdaq Stock Market as of August 1, 2022) of the 1,437,500 founder shares CleanTech Investment holds;

        approximately $0.8 million (based on the closing price of $0.32 per Public Warrant on the Nasdaq Stock Market as of August 1, 2022) of the 2,391,667 Private Warrants CleanTech Investment holds;

        a marketing fee of $6,037,500 for certain services pursuant to a Business Combination Marketing Agreement;

        a placement fee of $2,118,000 (i.e., 6.0% of the PIPE Investment that is not sold to an affiliate of Chardan) for certain services pursuant to the Financial Advisory Agreement (pursuant to the Financial Advisory Agreement, Chardan also has a right of first refusal to act as a book-running manager with minimum economics of 15% for the first two public or private equity offerings by CLAQ or any successor or subsidiary of CLAQ);

        repayment of an interest-free loan of $283,000 (as of July 18, 2022) by CleanTech Investments since the loan will become payable only after Closing of the Business Combination, or the date on which CLAQ determines that it is unable to effect a business combination; and

        the $10,000 monthly administrative fee under the Administrative Support Agreement pursuant to which CLAQ may delay payment of the same until the consummation of a business combination. As of June 30, 2022, there is an accrued and unpaid balance of $113,333 owed to Chardan under the Administrative Support Agreement.

        If an initial business combination, such as the Business Combination, is not completed, the Initial Stockholders will lose a combined aggregate amount of approximately $47.0 million (including the Co-sponsors’ loans and securities held based on the closing price of $10.18 per share of CLAQ common stock and $0.32 per Public Warrant on August 1, 2022), and the Initial Stockholders together with their affiliates (including Chardan) will lose a combined aggregate amount of approximately $55.2 million (including Chardan’s fees contingent upon the Closing of the Business Combination.)

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        If the proposed Business Combination is not completed, CLAQ’s Initial Stockholders will not have the potential ownership interest of approximately 9.0% (assuming minimum redemptions) or 9.3% (assuming maximum redemption) in the combined company, assuming exercise and conversion of all securities.

        As of the date of this proxy statement/prospectus, ATW is the only purchaser for the Debentures and associated Warrants in the Debt Financing. ATW is managed by ATW Partners Opportunities Management, LLC, which is an affiliate of Chardan, and our director, Mr. Jonas Grossman, is the Managing Partner and President of Chardan.

        The exercise of CLAQ’s directors’ and officers’ discretion in agreeing to changes or waivers in the terms of the transaction may result in a conflict of interest when determining whether such changes or waivers are appropriate and in our stockholders’ best interest.

        If the Business Combination is completed, Nauticus will designate all members of the Combined Company’s Board of Directors, except for the Transocean Designee).

See “Proposal 1 — The Business Combination Proposal — Interests of Certain Persons in the Business Combination” beginning on page 128 for additional information.

CLAQ and Nauticus have incurred and expect to incur significant costs associated with the Business Combination. Whether or not the Business Combination is completed, the incurrence of these costs will reduce the amount of cash available to be used for other corporate purposes by the Combined Company if the Business Combination is completed or by CLAQ if the Business Combination is not completed.

CLAQ and Nauticus expect to incur significant costs associated with the Business Combination. Whether or not the Business Combination is completed, CLAQ expects to incur approximately $1,400,000 in expenses for legal and accounting services (including an anticipated amount of $100,000 of accrued and unpaid administrative fees owed to Chardan under the Administrative Support Agreement). These expenses will reduce the amount of cash available to be used for other corporate purposes by the Combined Company if the Business Combination is completed or by CLAQ if the Business Combination is not completed. Of the estimated transaction costs, $0.3 million has already been incurred and reflected in the historical financial statements of CLAQ. If the Business Combination is completed, CLAQ estimates the transaction costs for CLAQ to consist of (i) $6.0 million pursuant to a Business Combination Marketing Agreement with Chardan, (ii) $1.0 million in legal costs; (iii) $0.7 million pursuant to letter agreements with Roth and Lake Street, and (iv) approximately $0.6 million of miscellaneous and estimated printing and accounting services; and for Nauticus to consist of (a) $7.6 million pursuant to an amended and restated financial advisory agreement with Coastal, (b) $2.1 million pursuant to a Financial Advisory Agreement with Chardan, representing 6.0% of the gross proceeds received from the PIPE Investment, (c) $2.0 million in legal costs, and (d) $1.8 million pursuant to a letter agreement dated March 23, 2022 with Cowen, in which Nauticus has agreed to pay Cowen an advisory fee upon closing of the Business Combination.

CLAQ will incur significant transaction costs in connection with transactions contemplated by the Merger Agreement.

CLAQ will incur significant transaction costs in connection with the Business Combination. If the Business Combination is not consummated, CLAQ may not have sufficient funds to seek an alternative business combination and may be forced to liquidate and dissolve.

The unaudited pro forma condensed combined and consolidated financial information included in this proxy statement/prospectus may not be indicative of what the Combined Company’s actual financial position or results of operations would have been.

The unaudited pro forma condensed combined and consolidated financial information in this proxy statement/prospectus is presented for illustrative purposes only and is not necessarily indicative of what Combined Company’s actual financial position or results of operations would have been had the Business Combination been completed on the dates indicated. See the section titled “Unaudited Pro Forma Condensed Combined and Consolidated Financial Information” for more information.

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A significant number of shares of CLAQ Common Stock were redeemed in July 2022. The reduced liquidity and number of round-lot holders of our public shares may make it more difficult for us to meet Nasdaq’s listing requirements and to consummate the Business Combination, and as a result, our Common stock may not be very liquid following the Business Combination.

In connection with CLAQ’s Special Meeting of Stockholders on July 18, 2022 where the stockholders approved certain proposals giving CLAQ the right to extend the date by which it has to complete a business combination six (6) times for an additional one (1) month each time, from July 19, 2022 to January 19, 2023, a total of 15,466,711 shares were tendered for redemption. Approximately $156.5 million was withdrawn from CLAQ’s trust account (the “Trust Account”) to pay for the redemption, leaving approximately $18.1 million in the Trust Account as of August 1, 2022. As a result of the redemptions, we now have less liquidity and fewer round-lot holders of our public shares, which may make it more difficult to meet Nasdaq listing requirements. Since it is a condition to closing to receive the approval for listing by Nasdaq of the shares of CLAQ’s Common Stock to be issued in connection with the transactions contemplated by the Merger Agreement, CLAQ’s reduced public float may make it more difficult for us to meet the Nasdaq listing requirements, and to consummate the Business Combination.

Reduction in our available public float will likely also reduce the trading volume and liquidity of our securities and increase the volatility of our securities. With a significantly smaller number of stockholders, trading in the shares of the Combined Company may be limited and your ability to sell your shares in the market could be adversely affected. The Combined Company intends to apply to list its shares on the Nasdaq, and Nasdaq may not list the common stock on its exchange, which could limit investors’ ability to make transactions in CLAQ’s securities and subject CLAQ to additional trading restrictions.

Furthermore, additional shares may be redeemed in connection with the closing of the Business Combination, further reducing the Combined Company’s public float and number of shareholders, again increasing the likelihood that we are unable to meet Nasdaq listing requirements and close the Business Combination.

The Combined Company will be required to meet the initial listing requirements to be listed on the Nasdaq Stock Market. However, the Combined Company may be unable to maintain the listing of its securities in the future.

In connection with CLAQ’s Special Meeting of Stockholders on July 18, 2022 where the stockholders approved certain proposals giving CLAQ the right to extend the date by which it has to complete a business combination six (6) times for an additional one (1) month each time, from July 19, 2022 to January 19, 2023, a total of 15,466,711 shares were tendered for redemption. Approximately $156.5 million was withdrawn from the Trust Account to pay for the redemption, leaving approximately $18.1 million in the Trust Account as of August 1, 2022. As a result of the redemptions, we now have less liquidity and fewer round-lot holders of our public shares, which may make it more difficult to meet Nasdaq listing requirements. If the Combined Company fails to meet the continued listing requirements and Nasdaq delists its securities, CLAQ could face significant material adverse consequences, including:

        a limited availability of market quotations for its securities;

        a limited amount of news and analyst coverage for the Combined Company; and

        a decreased ability to issue additional securities or obtain additional financing in the future.

CLAQ may waive one or more of the conditions to the Business Combination without resoliciting shareholder approval for the Business Combination.

CLAQ may agree to waive, in whole or in part, some of the conditions to its obligations to complete the Business Combination, to the extent permitted by applicable laws. The Board will evaluate the materiality of any waiver to determine whether amendment of this proxy statement/prospectus and resolicitation of proxies is warranted. In some instances, if the Board determines that a waiver is not sufficiently material to warrant resolicitation of stockholders, CLAQ has the discretion to complete the Business Combination without seeking further shareholder approval. For example, it is a condition to CLAQ’s obligations to close the Business Combination that there be no applicable law and no injunction or other order restraining or imposing any condition on the consummation of the Business Combination, however, if the Board determines that any such order or injunction is not material to the business of Nauticus, then the Board may elect to waive that condition without shareholder approval and close the Business Combination.

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CLAQ’s stockholders will experience immediate dilution as a consequence of the issuance of common stock as consideration in the Business Combination (including the Earnout Shares), PIPE Investment and the Nauticus Convertible Notes Conversion. Having a minority share position may reduce the influence that CLAQ’s current stockholders have on the management of CLAQ.

It is anticipated that upon completion of the Business Combination and assuming minimum redemptions by CLAQ public stockholders, CLAQ’s public stockholders (other than the PIPE Investment investors) will retain an ownership interest of approximately 5.5% in the Combined Company, the PIPE Investment investors will own approximately 7.4% of the Combined Company, the Co-Sponsors, officers, directors and other holders of founder shares will retain an ownership interest of approximately 9.0% of the Combined Company, and the Nauticus stockholders will own approximately 78.1% (including the 7,500,000 Earnout Shares) of the Combined Company. As a result of the Merger, an aggregate of 5,299,543 shares of CLAQ Common Stock will be issued to the holders of Nauticus Convertible Notes.

The ownership percentage with respect to the Combined Company does not take into account (i) the redemption of any Public Common Stock by the CLAQ public stockholders or (ii) the issuance of any additional shares upon the closing of the Business Combination under the Incentive Award Plan. If the actual facts are different from these assumptions (which they are likely to be), the percentage ownership retained by the CLAQ stockholders will be different. See “Unaudited Pro Forma Condensed Combined and Consolidated Financial Information.”

Changes in applicable laws or regulations, or a failure to comply with any applicable laws and regulations, may adversely affect CLAQ’s business, including its ability to negotiate and complete its initial business combination and results of operations.

CLAQ is subject to the federal securities laws, the SEC rules and regulations and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly.

Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on CLAQ’s business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on CLAQ’s business, including its ability to negotiate and complete its initial business combination and results of operations.

On March 30, 2022, the SEC issued proposed rules relating to, among other items, enhancing disclosures in business combination transactions involving special purpose acquisition companies (“SPACs”) such as CLAQ, amending the scope of a safe harbor for financial projections, and increasing the potential liability of certain participants in proposed business combination transactions. These proposed rules, if adopted, whether in the form proposed or in revised form, may materially adversely affect CLAQ’s ability to negotiate and complete its initial business combination and may increase the costs and time related thereto.

Risks Related to Combined Company’s Common Stock

Because the Combined Company will become a public reporting company by means other than a traditional underwritten initial public offering, the Combined Company’s stockholders may face additional risks and uncertainties.

Because the Combined Company will become a public reporting company by means of consummating the Business Combination rather than by means of a traditional underwritten initial public offering, there is no independent third-party underwriter selling the shares of the Combined Company’s common stock, and, accordingly, the Combined Company’s stockholders will not have the benefit of an independent review and investigation of the type normally performed by an unaffiliated, independent underwriter in a public securities offering. Due diligence reviews typically include an independent investigation of the background of the company, any advisors and their respective affiliates, review of the offering documents and independent analysis of the plan of business and any underlying financial assumptions. Because there is no independent third-party underwriter selling the shares of the Combined Company’s common stock, you must rely on the information included in this proxy statement/prospectus. Although CLAQ performed a due diligence review and investigation of Nauticus in connection with the Business Combination, the lack of an independent due diligence review and investigation increases the risk of investment in the Combined Company because it may not have uncovered facts that would be important to a potential investor.

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In addition, because the Combined Company will not become a public reporting company by means of a traditional underwritten initial public offering, security or industry analysts may not provide, or be less likely to provide, coverage of the Combined Company. Investment banks may also be less likely to agree to underwrite secondary offerings on behalf of the Combined Company than they might if the Combined Company became a public reporting company by means of a traditional underwritten initial public offering, because they may be less familiar with the Combined Company as a result of more limited coverage by analysts and the media. The failure to receive research coverage or support in the market for the Combined Company’s common stock could have an adverse effect on the Combined Company’s ability to develop a liquid market for the Combined Company’s common stock. See “— Risks Related to the Combined Company’s Common Stock — If securities or industry analysts do not publish research or reports about the Combined Company, or publish negative reports, the Combined Company’s stock price and trading volume could decline.”

The market price of the Combined Company’s common stock is likely to be highly volatile, and you may lose some or all of your investment.

Following the Business Combination, the market price of Combined Company’s common stock is likely to be highly volatile and may be subject to wide fluctuations in response to a variety of factors, including the following:

        the impact of COVID-19 pandemic on Nauticus’ business;

        the inability to obtain or maintain the listing of the Combined Company’s shares of common stock on Nasdaq;

        the inability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition, Nauticus’ ability to grow and manage growth profitably, and retain its key employees;

        changes in applicable laws or regulations;

        risks relating to the uncertainty of Nauticus’ projected financial information;

        risks related to the organic and inorganic growth of Nauticus’ business and the timing of expected business milestones; and

        the amount of redemption requests made by CLAQ’s stockholders.

In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors, as well as general economic, political, regulatory and market conditions, may negatively affect the market price of the Combined Company’s common stock, regardless of the Combined Company’s actual operating performance.

Volatility in the Combined Company’s share price could subject the Combined Company to securities class action litigation.

In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. If the Combined Company faces such litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm its business.

If securities or industry analysts do not publish research or reports about the Combined Company, or publish negative reports, the Combined Company’s stock price and trading volume could decline.

The trading market for the Combined Company’s common stock will depend, in part, on the research and reports that securities or industry analysts publish about the Combined Company. The Combined Company does not have any control over these analysts. If the Combined Company’s financial performance fails to meet analyst estimates or one or more of the analysts who cover the Combined Company downgrade its common stock or change their opinion, the Combined Company’s stock price would likely decline. If one or more of these analysts cease coverage of the Combined Company or fail to regularly publish reports on the Combined Company, it could lose visibility in the financial markets, which could cause the Combined Company’s stock price or trading volume to decline.

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Because the Combined Company does not anticipate paying any cash dividends in the foreseeable future, capital appreciation, if any, would be your sole source of gain.

The Combined Company currently anticipates that it will retain future earnings for the development, operation and expansion of its business and do not anticipate declaring or paying any cash dividends for the foreseeable future. As a result, capital appreciation, if any, of the Combined Company’s shares of common stock would be your sole source of gain on an investment in such shares for the foreseeable future.

Future sales of shares of the Combined Company’s common stock may depress its stock price.

Sales of a substantial number of the Combined Company’s common stock in the public market after the closing of the Business Combination, or the perception that these sales might occur, could depress the market price of the Combined Company’s common stock and could impair its ability to raise capital through the sale of additional equity securities.

The Combined Company is an emerging growth company, and the Combined Company cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make its shares less attractive to investors.

After the completion of the Business Combination, the Combined Company will be an emerging growth company, as defined in the JOBS Act. For as long as the Combined Company continues to be an emerging growth company, it may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including exemption from compliance with the auditor attestation requirements of Section 404, reduced disclosure obligations regarding executive compensation and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. The Combined Company will remain an emerging growth company until the earlier of (1) the date (a) July 19, 2026, (b) in which the Combined Company has total annual gross revenue of at least $1.07 billion or (c) in which the Combined Company is deemed to be a large accelerated filer, which means the market value of shares of the Combined Company’s common stock that are held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which the Combined Company has issued more than $1.0 billion in non-convertible debt during the prior three-year period.

In addition, under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. The Combined Company has elected to use this extended transition period for complying with new or revised accounting standards and, therefore, the Combined Company will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

Even after the Combined Company no longer qualifies as an emerging growth company, it may still qualify as a “smaller reporting company,” which would allow it to take advantage of many of the same exemptions from disclosure requirements including exemption from compliance with the auditor attestation requirements of Section 404 and reduced disclosure obligations regarding executive compensation in this proxy statement/prospectus and the Combined Company’s periodic reports and proxy statements.

The Combined Company cannot predict if investors will find its common stock less attractive because the Combined Company may rely on these exemptions. If some investors find the Combined Company’s common stock less attractive as a result, there may be a less active trading market for the common stock and its market price may be more volatile.

Risks Related to the Combined Company Operating as a Public Company

Our management team has limited skills related to experience managing a public company.

Most members of our management team have limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws, rules and regulations that govern public companies. As a public company, we are subject to significant obligations relating to reporting, procedures and internal controls, and our management team may not successfully or efficiently manage such obligations. These obligations and scrutiny will require significant attention from our management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, financial condition, and results of operations.

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We will incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives and corporate governance practices.

As a public company, we will incur significant legal, accounting, and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and other personnel continue to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will continue to increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and could also make it more difficult for us to attract and retain qualified members of our board.

We continue to evaluate these rules and regulations and cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. These rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

We are required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which will require management to certify financial and other information in our annual reports and provide an annual management report on the effectiveness of control over financial reporting and will be required to disclose material changes in internal control over financial reporting on an annual basis.

We will not be required to make our first annual assessment of our internal control over financial reporting pursuant to Section 404 until our annual assessment for the fiscal year ending September 30, 2022.

To achieve compliance with Section 404 within the prescribed period, we will be engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting.

Despite our efforts, there is a risk that we will not be able to conclude, within the prescribed timeframe or at all, that our internal control over financial reporting is effective as required by Section 404. If we identify one or more material weaknesses, it could result in a material adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements. As a result, the market price of our common stock could be negatively affected, and we could become subject to investigations by the stock exchange on which our securities are listed, the SEC or other regulatory authorities, which could require additional financial and management resources.

Our stock price has fluctuated historically and may continue to fluctuate.

Our stock price can be volatile. Among the factors that may affect the volatility of our stock price are the following:

        Speculation in the investment community or the press about, or actual changes in, our competitive position, organizational structure, executive team, operations, financial condition, financial reporting and results, expense discipline, strategic transactions, or progress on achieving expected benefits;

        The announcement of new products, services, acquisitions, or dispositions by us or our competitors;

        Increases or decreases in revenue or earnings, changes in earnings estimates by the investment community, and variations between estimated financial results and actual financial results; and

        Sales of a substantial number of shares of our common stock by large shareholders.

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THE MEETING

General

CLAQ is furnishing this proxy statement/prospectus to the CLAQ stockholders as part of the solicitation of proxies by the Board for use at the Meeting of CLAQ stockholders to be held on            , 2022 and at any adjournment or postponement thereof. This proxy statement/prospectus is first being furnished to our stockholders on or about             , 2022 in connection with the vote on the Proposals. This proxy statement/prospectus provides you with the information you need to know to be able to vote or instruct your vote to be cast at the Meeting.

Date, Time and Place

The Meeting will be held virtually at                         .m., Eastern Time, on            and conducted exclusively via live audio cast at            , or such other date, time and place to which such meeting may be adjourned or postponed, for the purposes set forth in the accompanying notice. There will not be a physical location for the Meeting, and you will not be able to attend the meeting in person. We are pleased to utilize the virtual stockholder meeting technology to provide ready access and cost savings for our stockholders and CLAQ. The virtual meeting format allows attendance from any location in the world. You will be able to attend, vote your shares, view the list of stockholders entitled to vote at the Meeting and submit questions during the Meeting via a live audio cast available at            .

Virtual Meeting Registration

To register for the virtual meeting, please follow these instructions as applicable to the nature of your ownership of our common stock.

If your shares are registered in your name with Continental and you wish to attend the online-only virtual meeting, go to            , enter the control number you received on your proxy card and click on the “Click here” to preregister for the online meeting link at the top of the page. Just prior to the start of the meeting you will need to log back into the meeting site using your control number. Pre-registration is recommended but is not required in order to participate in the virtual Meeting.

Beneficial stockholders who wish to participate in the online-only virtual meeting must obtain a legal proxy by contacting their account representative at the bank, broker, or other nominee that holds their shares and email a copy (a legible photograph is sufficient) of their legal proxy to            . Beneficial stockholders who email a valid legal proxy will be issued a meeting control number that will allow them to register to attend and participate in the online-only meeting. After contacting Continental a beneficial holder will receive an email prior to the meeting with a link and instructions for entering the virtual Meeting. Beneficial stockholders should contact Continental at least five business days prior to the meeting date.

Accessing the Virtual Meeting Audio Cast

You will need your control number for access. If you do not have your control number, contact Continental at the phone number or email address below. Beneficial investors who hold shares through a bank, broker or other intermediary, will need to contact them and obtain a legal proxy. Once you have your legal proxy, contact Continental to have a control number generated. Continental contact information is as follows: 917-            -             or email proxy@continentalstock.com.

Record Date; Who is Entitled to Vote

CLAQ has fixed the close of business on            , 2022, as the record date for determining those CLAQ stockholders entitled to notice of and to vote at the Meeting. As of the close of business on            , 2022, there were 6,095,789 shares of common stock issued and outstanding and entitled to vote, of which 1,783,289 are Public Common Stock, 4,312,500 are founder shares held by the Initial Stockholders. Each holder of shares of common stock is entitled to one vote per share on each Proposal. If your shares are held in “street name,” you should contact your broker, bank or other nominee to ensure that shares held beneficially by you are voted in accordance with your instructions.

In connection with our IPO, we entered into certain letter agreements pursuant to which the Initial Stockholders agreed to vote any shares of common stock owned by them in favor of our initial business combination (the “Letter Agreement”). The Initial Stockholders also entered into a certain support agreement with Nauticus, pursuant to which they agreed to, among other things, vote in favor of the Business Combination Proposal and the other Proposals (the “Sponsor Support Agreement”). As of the date of this proxy statement/prospectus, the Initial Stockholders hold approximately 70.7% of the outstanding common stock.

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Quorum and Required Vote for Shareholder Proposals

A quorum of CLAQ stockholders is necessary to hold a valid meeting. A quorum will be present at the Meeting if a majority of the shares of common stock issued and outstanding is present in person by virtual attendance or represented by proxy and entitled to vote at the Meeting. Abstentions by virtual attendance and by proxy will count as present for the purposes of establishing a quorum but broker non-votes will not.

Approval of the Business Combination Proposal, the Bylaws Proposal, the Stock Plan Proposal, the Nasdaq Merger Proposal, the Nasdaq PIPE Proposal, and the Adjournment Proposal will each require the affirmative vote of the holders of a majority of the issued and outstanding shares of common stock present in person by virtual attendance or represented by proxy and entitled to vote at the Meeting or any adjournment thereof. Approval of the Charter Approval Proposal will require the approval of a majority of the issued and outstanding shares of common stock. Attending the Meeting either in person by virtual attendance or represented by proxy and abstaining from voting and a broker non-vote will have the same effect as voting against the Charter Approval Proposal. Approval of the Directors Proposal will require a plurality of the votes cast.

Along with the approval of the Charter Approval Proposal, the Bylaws Proposal, the Directors Proposal, the Stock Plan Proposal, the Nasdaq Merger Proposal, the Nasdaq PIPE Proposal and the approval of the Business Combination Proposal are conditions to the consummation of the Business Combination. If the Business Combination Proposal is not approved, the Business Combination will not take place. Approval of this Business Combination Proposal is also a condition to Proposal 2, Proposal 3, Proposals 4A-4E, Proposal 5, Proposal 6, Proposal 7 and Proposal 8. If the Charter Approval Proposal, the Bylaws Proposal, the Directors Proposal, the Stock Plan Proposal, the Nasdaq Merger Proposal or the Nasdaq PIPE Proposal are not approved, unless waived, this Business Combination Proposal will have no effect (even if approved by the requisite vote of our stockholders at the Meeting of any adjournment or postponement thereof) and the Business Combination will not occur.

Voting Your Shares

Each share of common stock that you own in your name entitles you to one vote on each Proposal for the Meeting. Your proxy card shows the number of shares of common stock that you own.

There are two ways to ensure that your shares of common stock are voted at the Meeting:

        You can vote your shares by signing, dating and returning the enclosed proxy card in the pre-paid postage envelope provided. If you submit your proxy card, your “proxy,” whose name is listed on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy card but do not give instructions on how to vote your shares, your shares will be voted, as recommended by our board. Our Board recommends voting “FOR” each of the Proposals. If you hold your shares of common stock in “street name,” which means your shares are held of record by a broker, bank or other nominee, you should follow the instructions provided to you by your broker, bank or nominee to ensure that the votes related to the shares you beneficially own are properly represented and voted at the Meeting.

        You can participate in the virtual Meeting and vote during the Meeting even if you have previously voted by submitting a proxy as described above. However, if your shares are held in the name of your broker, bank or another nominee, you must get a proxy from the broker, bank or other nominee. That is the only way CLAQ can be sure that the broker, bank or nominee has not already voted your shares.

IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF THE BUSINESS COMBINATION PROPOSAL (AS WELL AS THE OTHER PROPOSALS).

Revoking Your Proxy

If you give a proxy, you may revoke it at any time before it is exercised by doing any one of the following:

        you may send another proxy card with a later date;

        if you are a record holder, you may notify our proxy solicitor, Advantage Proxy, in writing before the Meeting that you have revoked your proxy; or

        you may participate in the virtual Meeting, revoke your proxy, and vote during the virtual Meeting, as indicated above.

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Who Can Answer Your Questions About Voting Your Shares

If you have any questions about how to vote or direct a vote in respect of your shares of common stock, you may contact Advantage Proxy, our proxy solicitor as follows:

ADVANTAGE PROXY
P.O. Box 13581
Des Moines, WA 98198
Toll Free: (877) 870-8565
Collect: (206) 870-8565
Email: ksmith@advantageproxy.com

No Additional Matters May Be Presented at the Meeting

This Meeting has been called only to consider the approval of the Business Combination Proposal, the Charter Approval Proposal, the Bylaws Proposal, the Governance Proposals, the Directors Proposal, the Stock Plan Proposal, the Nasdaq Merger Proposal, the Nasdaq PIPE Proposal, and the Adjournment Proposal. Under our Certificate of Incorporation, other than procedural matters incident to the conduct of the Meeting, no other matters may be considered at the Meeting if they are not included in the notice of the Meeting.

Approval of the Business Combination Proposal, the Bylaws Proposal, the Governance Proposals, the Directors Proposal, the Stock Plan Proposal, the Nasdaq Merger Proposal, the Nasdaq PIPE Proposal, and the Adjournment Proposal will each require the affirmative vote of the holders of a majority of the issued and outstanding shares of common stock present in person by virtual attendance or represented by proxy and entitled to vote at the Meeting or any adjournment thereof. Approval of the Charter Approval Proposal will require the approval of a majority of the issued and outstanding shares of common stock.

Redemption Rights

Pursuant to our Certificate of Incorporation, a holder of Common Stock may demand that CLAQ redeem such Common Stock for cash in connection with a business combination. You may not elect to redeem your Common Stock prior to the completion of a business combination.

If you are a public stockholder and you seek to have your shares redeemed, you must submit your request in writing that we redeem your Public Common Stock for cash no later than            a.m./p.m.., Eastern Time on            , 2022 (at least two business days before the Meeting). The request must be signed by the applicable stockholder in order to validly request redemption. A stockholder is not required to submit a proxy card or vote in order to validly exercise redemption rights. The request must identify the holder of the Common Stock to be redeemed and must be sent to Continental at the following address:

Continental Stock Transfer & Trust Company

1 State Street, 30th floor
New York, NY 10004
Attention:            
Email:            

You must tender the Common Stock for which you are electing redemption at least two business days before the Meeting by either:

        Delivering certificates representing the Common Stock to Continental, or

        Delivering the Common Stock electronically through the DWAC system.

Any corrected or changed written demand of redemption rights must be received by Continental at least two business days before the Meeting. No demand for redemption will be honored unless the holder’s shares have been delivered (either physically or electronically) to Continental at least two business days prior to the vote at the Meeting.

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Public stockholders may seek to have their Common Stock redeemed regardless of whether they vote for or against the Business Combination and whether or not they are holders of Common Stock as of the Record Date. Any public stockholder who holds Common Stock of CLAQ on or before            , 2022 (at least two business days before the Meeting) will have the right to demand that his, her or its Common Stock be redeemed for a pro rata share of the aggregate amount then on deposit in the Trust Account, less any taxes then due but not yet paid, at the consummation of the Business Combination.

In connection with tendering your shares for redemption, you must elect either to physically tender your certificates to Continental or deliver your Common Stock to Continental electronically using DTC’s DWAC (Deposit/Withdrawal At Custodian) System, in each case, at least two business days before the Meeting.

If you wish to tender through the DWAC system, please contact your broker and request delivery of your Common Stock through the DWAC system. Delivering Common Stock physically may take significantly longer. In order to obtain a physical certificate, a stockholder’s broker and/or clearing broker, DTC, and Continental will need to act together to facilitate this request. It is CLAQ’s understanding that stockholders should generally allot at least two weeks to obtain physical certificates from Continental. CLAQ does not have any control over this process or over the brokers or DTC, and it may take longer than two weeks to obtain a physical certificate. Stockholders who request physical certificates and wish to redeem may be unable to meet the deadline for tendering their Common Stock before exercising their redemption rights and thus will be unable to redeem their Common Stock.

In the event that a stockholder tenders its Common Stock and decides prior to the consummation of the Business Combination that it does not want to redeem its Common Stock, the stockholder may withdraw the tender. In the event that a stockholder tenders Common Stock and the Business Combination is not completed, these Common Stock will not be redeemed for cash and the physical certificates representing these Common Stock will be returned to the stockholder promptly following the determination that the Business Combination will not be consummated. CLAQ anticipates that a stockholder who tenders Common Stock for redemption in connection with the vote to approve the Business Combination would receive payment of the redemption price for such Common Stock soon after the completion of the Business Combination.

If properly demanded by CLAQ’s public stockholders, CLAQ will redeem each Common Stock into a pro rata portion of the funds available in the Trust Account, calculated as of two business days prior to the anticipated consummation of the Business Combination. As of            , 2022, this would amount to approximately $10.18 per share. If you exercise your redemption rights, you will be exchanging your Common Stock for cash and will no longer own the Common Stock.

Notwithstanding the foregoing, a holder of the Common Stock, together with any affiliate of his or her or any other person with whom he or she is acting in concert or as a “group” (as defined in Section 13(d)-(3) of the Exchange Act) will be restricted from seeking redemption rights with respect to more than 20% of the Common Stock.

If too many public stockholders exercise their redemption rights, we may not be able to meet certain closing conditions, and as a result, would not be able to proceed with the Business Combination.

Appraisal Rights

Appraisal rights are not available to security holders of CLAQ in connection with the proposed Business Combination.

Proxies and Proxy Solicitation Costs

CLAQ is soliciting proxies on behalf of the Board. This solicitation is being made by mail but also may be made by telephone or in person. CLAQ and its directors, officers and employees may also solicit proxies in person, by telephone or by other electronic means. Any solicitation made and information provided in such a solicitation will be consistent with the written proxy statement/prospectus and proxy card. CLAQ will bear the cost of solicitation. Advantage Proxy, a proxy solicitation firm that CLAQ has engaged to assist it in soliciting proxies, will be paid a fixed fee of approximately $10,000 and be reimbursed out-of-pocket expenses.

CLAQ will ask banks, brokers and other institutions, nominees and fiduciaries to forward its proxy materials to their principals and to obtain their authority to execute proxies and voting instructions. CLAQ will reimburse them for their reasonable expenses.

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PROPOSAL 1 — THE BUSINESS COMBINATION PROPOSAL

We are asking our stockholders to adopt the Merger Agreement and approve the Business Combination and the other transactions contemplated thereby. Our stockholders should read carefully this proxy statement/prospectus in its entirety, including the subsection below titled “The Merger Agreement,” for more detailed information concerning the Business Combination and the terms and conditions of the Merger Agreement. We also urge our stockholders to read carefully the Merger Agreement in its entirety before voting on this Proposal. A copy of the Merger Agreement is attached as Annex A to this proxy statement/prospectus.

General

On December 16, 2021, CleanTech Acquisition Corp., a Delaware corporation (“CleanTech” or “CLAQ”), entered into an Agreement and Plan of Merger (the “Merger Agreement,” and together with the other agreements and transactions contemplated by the Merger Agreement, the “Business Combination”) with CleanTech Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of CleanTech (“Merger Sub”), and Nauticus Robotics, Inc., a Texas corporation (“Nauticus” or “Nauticus Robotics”). Pursuant to the terms of the Merger Agreement, a business combination between CleanTech and Nauticus will be effected through the merger of Merger Sub with and into Nauticus, with Nauticus surviving the merger as a wholly owned subsidiary of CleanTech (the “Merger”). The Board of Directors of CleanTech (the “Board”) has unanimously (i) approved and declared advisable the Merger Agreement, the Merger and the other transactions contemplated thereby and (ii) resolved to recommend approval of the Merger Agreement and related matters by the stockholders of CleanTech. On January 30, 2022, the Merger Agreement was amended to, among other things, (i) correct certain defined terms in the Merger Agreement; and (ii) include the cash available from the Debt Financing in meeting the “Minimum Cash Condition” defined in the Merger Agreement. On June 6, 2022, the Merger Agreement was further amended to increase the aggregate number of shares of the Combined Company’s Common stock to be reserved for issuance pursuant to the Incentive Plan (defined below) from 5% to 10% of the fully diluted outstanding shares of its Common Stock after Closing, which share reserve shall be automatically increased on an annual basis by 3% of the total number of Common Stock outstanding as provided under the Incentive Plan.

The Merger Agreement

The following is a summary of the material terms of the Merger Agreement. The following summary does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, a copy of which is attached as Annex A to this proxy statement/prospectus.

The Merger Agreement contains representations and warranties that CLAQ and Merger Sub, on the one hand, and Nauticus, on the other hand, have made to one another as of specific dates. The assertions embodied in the representations and warranties are qualified by information in confidential disclosure schedules exchanged by the parties to the Merger Agreement. Some of these schedules contain information that modifies, qualifies and creates exceptions to the representations and warranties set forth in the Merger Agreement. You should not rely on the representations and warranties described below as current characterizations of factual information about CLAQ or Nauticus, because they were made as of specific dates, may be intended merely as a risk allocation mechanism between CLAQ and Merger Sub, and Nauticus and are modified by the disclosure schedules.

The Merger Consideration

The Business Combination implies a $561 million post-closing equity value and a current equity value of Nauticus at $300 million. Prior to the Closing, Nauticus will (i) effect the Nauticus Preferred Stock Conversion, (ii) effect the Nauticus Convertible Notes Conversion, and (iii) convert each share of Nauticus Common Stock (including shares of Nauticus Common Stock outstanding as a result of the Nauticus Preferred Stock Conversion and Nauticus Convertible Notes Conversion, but excluding shares of the holders who perfect rights of appraisal under Delaware law) into the right to receive (a) the Per Share Merger Consideration and (b) Earnout Shares. As a result of these transactions, each outstanding share of Nauticus Common Stock will have a value at the time of the Business Combination of $10.00 (based on the $300 million equity value of Nauticus).

In addition, in connection with the Closing, CLAQ will issue the Earn-Out Shares to the former holders of Nauticus Common Stock and such holders will deliver the Earnout-Out Shares to the Escrow Agent. The release of the Earn-Out Shares to the former holders of Nauticus Common Stock will be subject to restrictions linked to milestones (based on the achievement of certain target prices of CleanTech Common Stock following the Closing) as further described in the section entitled “Proposal 1 — The Business Combination Proposal — The Merger

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Agreement — Treatment of Nauticus Securities — Earn-Out Shares.” In the event such milestones are not met, all of the Earn-Out Shares will be automatically released to CleanTech for cancellation and the former holders of Nauticus Common Stock shall not have any right to receive such Earnout Shares or any benefit therefrom.

Treatment of Nauticus Securities

Preferred Stock.    Immediately prior to the Effective Time, each share of Nauticus Preferred Stock that is issued and outstanding immediately prior to such time shall automatically convert into shares of Nauticus Common stock, par value $0.01 per share (the “Nauticus Common Stock”), in accordance with its Certificate of Incorporation (collectively, the “Nauticus Preferred Stock Conversion”). As a result of the Merger, an aggregate of 15,062,524 shares of CLAQ Common Stock will be issued to the holders of Nauticus Preferred Stock.

Convertible Notes.    Immediately prior to the Effective Time, each of (i) that certain Unsecured Convertible Promissory Note, dated June 19, 2021, by and between Goradia Capital, LLC and Nauticus, as amended on December 16, 2021, (ii) that certain Unsecured Convertible Promissory Note, August 3, 2021, by and between Material Impact Fund II, L.P. and Nauticus, as amended on December 16, 2021, (iii) that certain Unsecured Convertible Promissory Note, dated October 22, 2021, by and between In-Q-Tel, Inc. and Nauticus, as amended on December 16, 2021, (iv) that certain Unsecured Convertible Promissory Note, dated July 28, 2020, by and between Schlumberger Technology Corporation and Nauticus, as amended on December 16, 2021 and (v) that certain Unsecured Convertible Promissory Note, dated December 7, 2020, by and between Transocean Inc. and Nauticus, as amended on December 16, 2021 (each, a “Nauticus Convertible Note” and collectively, the “Nauticus Convertible Notes”) shall automatically convert into shares of Nauticus Common Stock in accordance with the terms of each such Nauticus Convertible Note (collectively, the “Nauticus Convertible Notes Conversion”). As a result of the Merger, an aggregate of 5,299,543 shares of CLAQ Common Stock will be issued to the holders of Nauticus Convertible Notes. Please see “Risk Factors — CLAQ’s stockholders will experience immediate dilution as a consequence of the issuance of common stock as consideration in the Business Combination, PIPE Investment and the Nauticus Convertible Notes Conversion. Having a minority share position may reduce the influence that CLAQ’s current stockholders have on the management of CLAQ” for dilution considerations.

Common Stock.    At the Effective Time, following the Nauticus Preferred Stock Conversion and Nauticus Convertible Notes Conversion, each share of Nauticus Common Stock (including shares of Nauticus Common Stock outstanding as a result of the Nauticus Preferred Stock Conversion and Nauticus Convertible Notes Conversion, but excluding shares of the holders of which perfect rights of appraisal under Delaware law) will be converted into the right to receive the Per Share Merger Consideration and the Earnout Shares (as defined below). As a result of the Merger, an aggregate of 9,669,216 shares of CLAQ Common Stock will be issued to the holders of Nauticus Common Stock (not including the Earnout Shares).

Stock Options.    At the Effective Time, each outstanding option to purchase shares of Nauticus Common Stock (a “Nauticus Option”), whether or not then vested and exercisable, will be assumed by CLAQ and converted automatically (and without any required action on the part of such holder of outstanding option) into an option to purchase shares of the CLAQ’s Common Stock equal to the number of shares determined by multiplying the number of shares of the Nauticus Common Stock subject to such Nauticus Option immediately prior to the Effective Time by the Exchange Ratio, which product shall be rounded down to the nearest whole number of shares, at a per share exercise price determined by dividing the per share exercise price of such Nauticus Option immediately prior to the Effective Time by the Exchange Ratio. As a result of the Merger, an aggregate of 3,970,266 shares of CLAQ Common Stock will be issuable upon exercise of these options.

Earnout Shares.    Following the closing of the merger, former holders of shares of Nauticus Common Stock (including shares received as a result of the Nauticus Preferred Stock conversion and the Nauticus Convertible Notes conversion, the “Stockholder Earnout Group”) shall be entitled to receive their pro rata share of up to 7,500,000 additional shares of CleanTech Common Stock (the “Earnout Shares”). The Earnout Shares will be released and delivered to the Stockholder Earnout Group upon occurrence of the following (each, a “Triggering Event”):

(i)     one-half of the Escrow Shares will be released if, within a 5-year period following the signing date of the Merger Agreement, the volume-weighted average price of the Combined Company Common Stock equals or exceeds $15.00 per share, over any 20 trading days within a 30-day trading period;

(ii)    one-quarter of the Escrow Shares will be released if, within a 5-year period following the signing date of the Merger Agreement, the volume-weighted average price of the Combined Company Common Stock equals or exceeds $17.50 per share over any 20 trading days within a 30-day trading period; and

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(iii)   one-quarter of the Escrow Shares will be released if, within a 5-year period following the signing date of the Merger Agreement, the volume-weighted average price of the Combined Company Common Stock equals or exceeds $20.00 per share over any 20 trading days within a 30-day trading period.

Representations and Warranties

The Merger Agreement contains customary representations and warranties of the parties thereto with respect to, among other things, (a) entity organization, good standing and qualification, (b) capital structure, (c) authorization to enter into the Merger Agreement, (d) compliance with laws and permits, (e) taxes, (f) financial statements and internal controls, (g) real and personal property, (h) material contracts, (i) environmental matters, (j) absence of changes, (k) employee matters, (l) litigation, and (m) brokers and finders.

Covenants

The Merger Agreement includes customary covenants of the parties with respect to operation of their respective businesses prior to consummation of the Merger and efforts to satisfy conditions to consummation of the Merger. The Merger Agreement also contains additional covenants of the parties, including, among others, covenants providing for CleanTech and Nauticus to use reasonable best efforts to cooperate in the preparation of the Registration Statement and Proxy Statement (as each such term is defined in the Merger Agreement) required to be filed in connection with the Merger and to obtain all requisite approvals of their respective stockholders including, in the case of CleanTech, approvals of the restated certificate of incorporation, the share issuance under Nasdaq rules and the omnibus incentive plan. CleanTech has also agreed to include in this proxy statement/prospectus the recommendation of its board that stockholders approve all of the proposals to be presented at the special meeting.

Nauticus Robotics, Inc. Incentive Plan

CleanTech has agreed to approve and adopt a 2022 omnibus incentive plan (the “Incentive Plan”) to be effective as of the Closing and in a form mutually acceptable to CleanTech and Nauticus. The Incentive Plan shall provide for an initial aggregate share reserve equal to 10% of the number of shares of CleanTech Common Stock on a fully diluted basis at the Closing. Subject to approval of the Incentive Plan by the CleanTech’s stockholders, CleanTech has agreed to file a Form S-8 Registration Statement with the SEC following the Effective Time with respect to the shares of CleanTech Common Stock issuable under the Incentive Plan.

Non-Solicitation Restrictions

Each of CleanTech and Nauticus has agreed that from the date of the Merger Agreement to the Effective Time or, if earlier, the valid termination of the Merger Agreement in accordance with its terms, it will not initiate any negotiations with any party, or provide non-public information or data concerning it or its subsidiaries to any party relating to an Acquisition Proposal or Alternative Transaction (as such terms are defined in the Merger Agreement) or enter into any agreement relating to such a proposal. Each of CleanTech and Nauticus has also agreed to use its reasonable best efforts to prevent any of its representatives from doing the same.

Conditions to Closing

The consummation of the Merger is conditioned upon, among other things, (i) receipt of the CleanTech stockholder approval and Nauticus stockholder approval, (ii) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iii) the absence of any governmental order, statute, rule or regulation enjoining or prohibiting the consummation of the Transactions, (iv) the effectiveness of the Registration Statement under the Securities Act, (v) CleanTech having at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), (vi) solely with respect to CleanTech, (A) the representations and warranties of Nauticus being true and correct to applicable standards applicable and each of the covenants of Nauticus having been performed or complied with in all material respects and (B) the approval of the conversion of the convertible notes and (vii) solely with respect to Nauticus, (A) the representations and warranties of CleanTech being true and correct to applicable standards applicable and each of the covenants of CleanTech having been performed or complied with in all material respects (B) the receipt of the approval for listing by Nasdaq of the shares of CleanTech Common Stock to be issued in connection with the transactions contemplated by the Merger Agreement, (C) the effective resignations of certain directors and executive officers of CleanTech, (D) the amount of Minimum Cash Condition (as defined in the Merger Agreement) being equal to or exceeding $50,000,000.

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Termination

The Merger Agreement may be terminated at any time prior to the Effective Time as follows:

(i)     by mutual written consent of CleanTech and Nauticus;

(ii)    by either CleanTech or Nauticus if the other party has breached its representations, warranties, covenants or agreements in the Merger Agreement such that the conditions to closing cannot be satisfied and such breach cannot be cured within certain specified time periods, provided that the party seeking to breach is not itself in breach of the Merger Agreement;

(iii)   by either CleanTech or Nauticus if the transactions are not consummated on or before June 30, 2022, provided that the failure to consummate the transaction by that date is not due to a material breach by the party seeking to terminate and which such breach is the proximate cause for the conditions to close not being satisfied;

(iv)   by either CleanTech or Nauticus if a governmental entity shall have issued a law or final, non-appealable governmental order, rule or regulation permanently enjoining or prohibiting the consummation of the Merger, provided that, the party seeking to terminate cannot have breached its obligations under the Merger Agreement and such breach has proximately contributed to the governmental action;

(v)    by either CleanTech or Nauticus if the CleanTech stockholders do not approve the Merger Agreement at a meeting held for that purpose;

(vi)   by written notice from CleanTech to Nauticus if the Nauticus stockholders do not approve the Merger Agreement due to the failure of Nauticus to hold a stockholder vote; or

(vii)   by written notice from Nauticus to CleanTech if the CleanTech board shall have publicly withdrawn, modified or changed in an adverse manner its recommendation to vote in favor of the merger and other proposals.

The Merger Agreement and other agreements described below have been included to provide investors with information regarding their respective terms. They are not intended to provide any other factual information about CleanTech, Nauticus or the other parties thereto. In particular, the assertions embodied in the representations and warranties in the Merger Agreement were made as of a specified date, are modified or qualified by information in one or more confidential disclosure letters prepared in connection with the execution and delivery of the Merger Agreement, may be subject to a contractual standard of materiality different from what might be viewed as material to investors, or may have been used for the purpose of allocating risk between the parties. Accordingly, the representations and warranties in the Merger Agreement are not necessarily characterizations of the actual state of facts about CleanTech, Nauticus or the other parties thereto at the time they were made or otherwise and should only be read in conjunction with the other information that CleanTech makes publicly available in reports, statements and other documents filed with the SEC. CleanTech and Nauticus investors and securityholders are not third-party beneficiaries under the Merger Agreement.

Opinion of CLAQ’s Financial Advisor

On January 28, 2022, CLAQ retained Duff & Phelps to serve as an independent financial advisor to the Board of CLAQ, specifically to provide to the Board a fairness opinion in connection with the Business Combination. On March 24, 2022, Duff & Phelps delivered its opinion, dated March 24, 2022 (the “Opinion”), to the Board of CLAQ (solely in their capacity as members of the Board) that, as of the date of the Opinion and subject to and based on the assumptions made, procedures followed, matters considered, limitations of the review undertaken and qualifications contained in the Opinion, the consideration to be paid by CLAQ (in the form of CLAQ common stock, the “Consideration”) to the Nauticus securityholders in the Business Combination pursuant to the Merger Agreement is fair to CLAQ, from a financial point of view.

In selecting Duff & Phelps, the Board considered, among other things, the fact that Duff & Phelps is a global leader in providing fairness opinions to boards of directors. Duff & Phelps is regularly engaged in the valuation of businesses and their securities and the provision of fairness opinions in connection with various transactions.

The Opinion was approved by Duff & Phelps’ fairness opinions committee. The Opinion was provided for the information of, and directed to, the Board for its information and assistance in connection with the Business Combination.

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The full text of the Opinion is attached to this proxy statement/prospectus as Annex F and is incorporated into this document by reference. The summary of the Opinion set forth herein is qualified in its entirety by reference to the full text of the Opinion. CLAQ’s stockholders are urged to read the Opinion carefully and in its entirety for a discussion of the procedures followed, assumptions made, matters considered, limitations of the review undertaken by Duff & Phelps in connection with the Opinion, as well as other qualifications contained in the Opinion.

In connection with the Opinion, Duff & Phelps made such reviews, analyses and inquiries as it deemed necessary and appropriate under the circumstances to enable Duff & Phelps to render the Opinion. Duff & Phelps also took into account its assessment of general economic, market and financial conditions, as well as its experience in securities and business valuation in general, and with respect to similar transactions in particular. Duff & Phelps’ procedures, investigations and financial analyses with respect to the preparation of the Opinion included, but were not limited to, the items summarized below:

        reviewed the Merger Agreement and the initial filing of this proxy statement/prospectus filed on January 31, 2022;

        reviewed unaudited financial information for Nauticus for the year ended December 31, 2021 and December 31, 2020 and audited financial information for Nauticus for the year ended December 31, 2020;

        reviewed financial projections for the Combined Company for the calendar years 2022 through 2024, provided to us by management of Nauticus, approved for our use by management of CLAQ and included in the initial filing of this proxy statement/prospectus filed on January 31, 2022 (the “Financial Projections”), which are described in the section of this proxy statement/prospectus entitled “Certain Nauticus’ Projected Financial Information”;

        reviewed the Nauticus Investor Presentation dated December 2021;

        discussed the information referred to above and the background and other elements of the Business Combination with the management of CLAQ and certain members of the Board of CLAQ (in their capacity as members of the Board);

        discussed with CLAQ management the plans and intentions with respect to the management and operation of the Combined Company following the completion of the Business Combination;

        discussed with CLAQ management and certain members of the Board of CLAQ (in their capacity as members of the Board) their assessment of the strategic rationale for, and the potential benefits of, the Business Combination;

        performed certain valuation and comparative analyses using generally accepted valuation and analytical techniques, including a discounted cash flow analysis and an analysis of selected public companies that Duff & Phelps deemed relevant for comparison to Nauticus, as further described below in this section entitled “— Opinion of CLAQ’s Financial Advisor”; and

        conducted such other analyses and considered such other factors as Duff & Phelps deemed appropriate.

In performing its analyses and rendering the Opinion with respect to the Business Combination, Duff & Phelps, with CLAQ’s consent:

        relied upon the accuracy, completeness, and fair presentation of all information, data, advice, opinions and representations obtained from public sources or provided to it from private sources, including CLAQ and Nauticus and their respective management, including all financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by us, and did not independently verify such information;

        relied upon the fact that the Board and CLAQ have been advised by counsel as to all legal matters with respect to the Business Combination, including whether all procedures required by law to be taken in connection with the Business Combination have been duly, validly and timely taken;

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        assumed that any estimates, evaluations, forecasts and projections and other pro forma information, including the Financial Projections, furnished to Duff & Phelps were reasonably prepared and based upon the best currently available information and good faith judgment of the person(s) furnishing the same, and Duff & Phelps expressed no opinion with respect to such estimates, evaluations, forecasts and projections and other pro forma information or any underlying assumptions;

        assumed that information supplied by and representations made by CLAQ and Nauticus and their respective management are substantially accurate regarding CLAQ, Nauticus and the Business Combination;

        assumed that the representations and warranties made in the Merger Agreement are substantially accurate;

        assumed that the final versions of all documents reviewed by Duff & Phelps in draft form conform in all material respects to the drafts reviewed;

        assumed that the PIPE Investment will occur as contemplated by the draft documents reviewed by Duff & Phelps and as described by management of Nauticus and CLAQ;

        assumed that there has been no material change in the assets, liabilities, financial condition, results of operations, business, or prospects of CLAQ or Nauticus since the date of the most recent financial statements and other information made available to Duff & Phelps, and that there is no information or facts that would make the information reviewed by Duff & Phelps incomplete or misleading;

        assumed that all of the conditions required to implement the Business Combination will be satisfied and that the Business Combination will be completed in a timely manner in accordance with the Merger Agreement without any material amendments thereto or any waivers of any terms or conditions thereof; and

        assumed that the consummation of the Business Combination will comply in all respects with all applicable foreign, federal, state and local statutes, rules and regulations and that all governmental, regulatory or other consents and approvals necessary for the consummation of the Business Combination will be obtained without any adverse effect, that would be material to Duff & Phelps’ analysis, on CLAQ, Nauticus, the Combined Company or the contemplated benefits expected to be derived in the Business Combination.

Given CLAQ’s nature as a special purpose acquisition company, for purposes of the Opinion and its analysis and with CLAQ’s consent, Duff & Phelps assumed a value of $10.00 per share for CLAQ’s Common Stock, with such $10.00 value being based on CLAQ’s initial public offering and CLAQ’s approximate cash per outstanding share of CLAQ Common Stock (excluding, for the avoidance of doubt, the dilutive impact of founder shares or any Public Warrants, Private Warrants or Rights). Further, for purposes of the Opinion and its analysis and with CLAQ’s consent, Duff & Phelps assumed the accuracy and completeness of the capitalization information for the Combined Company prepared by CLAQ, pro forma for the Business Combination and the PIPE Investment.

To the extent that any of the foregoing assumptions, representations or any of the facts on which the Opinion is based prove to be untrue in any material respect, the Opinion cannot and should not be relied upon. Furthermore, in Duff & Phelps’ analysis and in connection with the preparation of the Opinion, Duff & Phelps has made numerous assumptions with respect to industry performance, general business, market and economic conditions and other matters, many of which are beyond the control of any party involved in the Business Combination.

Duff & Phelps prepared the Opinion effective as of the date thereof. The Opinion was necessarily based upon market, economic, financial and other conditions as they then existed and could be evaluated as of the date thereof, and Duff & Phelps disclaims any undertaking or obligation to advise any person of any change in any fact or matter affecting the Opinion which may come or be brought to the attention of Duff & Phelps after the date thereof.

Duff & Phelps did not evaluate the solvency of CLAQ or Nauticus or conduct an independent appraisal or physical inspection of any specific assets or liabilities (contingent, derivative, off-balance sheet or otherwise). Duff & Phelps was not requested to, and did not, (i) initiate any discussions with, or solicit any indications of interest from, third parties with respect to the Business Combination, the assets, businesses or operations of CLAQ or any alternatives to the Business Combination, (ii) negotiate the terms of the Business Combination, and therefore, Duff & Phelps assumed that such terms are the most beneficial terms, from CLAQ’s perspective, that could, under the circumstances, be negotiated among the parties to the Merger Agreement and the Business Combination, or (iii) advise the Board of CLAQ or any other party with respect to alternatives to the Business Combination.

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Duff & Phelps assumed that the Merger will qualify, for US federal income tax purposes, as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended. Duff & Phelps was not expressing any view or rendering any opinion regarding the tax consequences of the Merger to CLAQ, Nauticus, or their respective shareholders.

In rendering the Opinion, Duff & Phelps was not expressing any opinion as to the market price or value of CLAQ’s Common Stock or the equity of Nauticus (or anything else) either before or after the consummation of the Business Combination or how any such shares may trade at any time. The Opinion should not be construed as a valuation opinion, credit rating, solvency opinion, an analysis of CLAQ’s credit worthiness, as tax advice or as accounting advice. Duff & Phelps did not make, and assumed no responsibility to make, any representation, or render any opinion, as to any legal matter.

In rendering the Opinion, Duff & Phelps was not expressing any opinion with respect to the amount or nature of any compensation to any of CLAQ’s or Nauticus’ officers, directors or employees, or any class of such persons, relative to the Consideration, or with respect to the fairness of any such compensation.

Duff & Phelps’ Opinion was furnished for the use and benefit of the Board of CLAQ in connection with the Business Combination and was not intended to, and does not, confer any rights or remedies upon any other person, and is not intended to be used, and may not be used, by any other person or for any other purpose, without Duff & Phelps’ express consent. Duff & Phelps has consented to the inclusion of the Opinion in its entirety and the description hereof in this proxy statement/prospectus and any other filing CLAQ is required to make with the SEC in connection with the Business Combination if such inclusion is required by the applicable law. The Opinion (i) did not address the merits of the underlying business decision to enter into the Business Combination versus any alternative strategy or transaction; (ii) did not address or express any view on any transaction related to the Business Combination, including the PIPE investment; (iii) was not a recommendation as to how the Board of CLAQ or any stockholder of CLAQ or Nauticus should vote or act with respect to any matters relating to the Business Combination, or whether to proceed with the Business Combination or any related transaction; and (iv) did not indicate that the Consideration is the best possibly attainable by CLAQ under any circumstances; instead, it merely stated whether the Consideration is within or below a range suggested by certain financial analyses. The decision as to whether to proceed with the Business Combination or any related transaction may depend on an assessment of factors unrelated to the financial analysis on which the Opinion was based. The Opinion should not be construed as creating any fiduciary duty on the part of Duff & Phelps to any party.

Except for the Opinion, Duff & Phelps did not express any view or opinion as to (i) any other term, aspect or implication of (a) the Business Combination (including, without limitation, the form or structure of the Business Combination) or the Merger Agreement or (b) any other agreement, transaction document or instrument contemplated by the Merger Agreement or to be entered into or amended in connection with the Business Combination or (ii) the fairness, financial or otherwise, of the Business Combination to, or of any consideration to be paid to or received by, the holders of any class of securities of CLAQ or Nauticus (including, without limitation, the fairness or the potential dilutive or other effects of the Business Combination or the PIPE Investment). The Opinion did not in any way address proportionate allocation or relative fairness (including, without limitation, the allocation of any consideration among or within any classes or groups of security holders or other constituents of CLAQ or any other party). Duff & Phelps also did not address, or express a view with respect to, any acquisition of control or effective control of the Combined Company by any stockholder or group of stockholders of Nauticus (including, without limitation, any voting, control, consent rights or similar rights, preferences or privileges as among or in comparison to any classes or groups of security holders or other constituents of CLAQ, Nauticus, the Combined Company or any other party). The Opinion did not in any way address the appropriate capital structure of the Combined Company, whether the Combined Company should be issuing debt or equity securities or a combination of both in the Business Combination, or the form, structure or any aspect or terms of any debt or equity financing for the Business Combination (including, without limitation, the PIPE Investment) or the likelihood of obtaining such financing, or whether or not Nauticus, CLAQ, their respective security holders or any other party is receiving or paying reasonably equivalent value in the Business Combination.

Set forth below is a summary of the material analyses performed by Duff & Phelps in connection with the delivery of the Opinion to the Board of CLAQ. This summary is qualified in its entirety by reference to the full text of the Opinion, attached to this proxy statement/prospectus as Annex F. While this summary describes the analyses and factors that Duff & Phelps deemed material in its presentation to the Board of CLAQ, it is not a comprehensive description of all analyses and factors considered by Duff & Phelps. The preparation of a fairness opinion is a complex process that involves various determinations as to appropriate and relevant methods of financial analysis and the

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application of these methods to the particular circumstances. Therefore, a fairness opinion is not readily susceptible to partial analysis or summary description. In arriving at the Opinion, Duff & Phelps did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, Duff & Phelps believes that its analyses must be considered as a whole and that selecting portions of its analyses and of the factors considered by it in rendering the Opinion without considering all analyses and factors could create a misleading or incomplete view of the evaluation process underlying the Opinion. The conclusion reached by Duff & Phelps was based on all analyses and factors taken as a whole, and also on the application of Duff & Phelps’ own experience and judgment.

The financial analyses summarized below include information presented in tabular format. In order for Duff & Phelps’ financial analyses to be fully understood, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the data below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Duff & Phelps’ financial analyses.

Discounted Cash Flow Analysis

The Discounted Cash Flow (“DCF”) Analysis, approach is a valuation technique that provides an estimation of the value of a business based on the cash flows that a business can be expected to generate (the “DCF Analysis”). The DCF Analysis begins with an estimation of the annual cash flows the subject business is expected to generate over a discrete projection period. The estimated cash flows for each of the years in the discrete projection period are then converted to their present value equivalents using a rate of return appropriate for the risk of achieving the projected cash flows. The present value of the estimated cash flows are then added to the present value equivalent of the residual/terminal value of the business at the end of the discrete projection period to arrive at an estimate of value.

Duff & Phelps performed a DCF Analysis of the estimated future unlevered free cash flows attributable to the Combined Company for the years ending December 31, 2022 through December 31, 2024, with “unlevered free cash flow” defined as cash that is available either to reinvest or to distribute to security holders. In applying the DCF Analysis, Duff & Phelps relied on the Financial Projections. Duff & Phelps estimated the net present value of all unlevered free cash flows for the Combined Company after fiscal year 2024 (the “Terminal Values”) by applying an EBITDA multiple range to the Combined Company’s projected 2024 EBITDA in the Financial Projections. Duff & Phelps discounted the unlevered free cash flows in the discrete period and the Terminal Values in 2024 back to the present to obtain a range of the estimated current enterprise value of the Combined Company.

Market Approach

The “Market Approach” is a valuation technique that provides an estimation of value by applying a valuation multiple to a specific financial metric for the subject company. These valuation multiples are either observed or derived from (i) market prices of actively traded, public companies, publicly available historical financial information and consensus equity research analyst estimates of future financial performance or (ii) prices paid in actual mergers, acquisitions or other transactions. The valuation process includes, but is not limited to, a comparison of various quantitative and qualitative factors between the subject business and other similar businesses.

Duff & Phelps utilized the Market Approach to (i) select a range of last twelve month (“LTM”) EBITDA multiples to calculate the Terminal Values for the DCF Analysis and (ii) select a range of 2024 revenue multiples to estimate a range of current enterprise value-to-projected 2024 revenue for the Combined Company.

Duff & Phelps selected two groups of companies that it deemed relevant in its analysis:

        Selected Publicly Traded Robotics and Industrial Automation Companies. Duff & Phelps used this group of eleven publicly traded companies to select a range of LTM EBITDA multiples to apply to the Combined Company’s projected EBITDA in 2024. The resulting Terminal Values were used in Duff & Phelps’ DCF Analysis.

        Selected Publicly Traded De-SPAC Robotics-as-a-Service (“RaaS”) Companies. Duff & Phelps selected two companies with businesses involved in the RaaS sector that have recently become publicly traded through completion of a de-SPAC transaction. Duff & Phelps used this group of companies to select a range of 2024 revenue multiples to apply to the Combined Company’s projected revenue in 2024. The resulting values were an indication of the current enterprise value of the Combined Company.

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Duff & Phelps selected the public companies based on their relative similarity, primarily in terms of revenue growth history and outlook, capital requirements, profit margins and other characteristics, to that of the Combined Company. Duff & Phelps noted that the public companies that it selected for purpose of its analysis were not directly comparable to the Combined Company. Duff & Phelps does not have access to non-public information of any of the companies used for comparative purposes. Accordingly, a complete valuation analysis of the Combined Company cannot rely solely upon a quantitative review of the selected public companies but involves complex considerations and judgments concerning differences in financial and operating characteristics of such companies, as well as other factors that could affect their value relative to that of the Combined Company. Therefore, the selected public companies analysis is subject to certain limitations.

The tables below summarize certain observed historical and projected financial performance and trading multiples of the selected public companies. The estimates for 2022, 2023 and 2024 in the tables below with respect to the selected public companies were derived based on information for the 12-month periods ending closest to CLAQ’s fiscal year ends for which information was available.

Selected Publicly Traded Robotics and Industrial Automation Companies

 

LTM
Revenue
Growth

 

LTM
EBITDA
Growth

 

LTM
EBITDA
Margin

 

LTM
EBITDA – CapX
Margin

 

EV/LTM
EBITDA

ABB Ltd

 

10.8

%

 

53.3

%

 

17.1

%

 

14.3

%

 

13.7x

Accuray Incorporated

 

15.9

%

 

(38.6

)%

 

4.8

%

 

4.0

%

 

17.1x

AeroVironment, Inc.

 

5.2

%

 

NM

 

 

NM

 

 

NM

 

 

NM

AMETEK, Inc.

 

22.2

%

 

21.1

%

 

28.7

%

 

26.7

%

 

21.0x

Cognex Corporation

 

27.9

%

 

44.2

%

 

32.3

%

 

30.8

%

 

35.7x

Fanuc Corporation

 

44.1

%

 

77.4

%

 

32.4

%

 

29.4

%

 

14.4x

Hexagon AB (publ)

 

15.3

%

 

23.6

%

 

38.1

%

 

35.6

%

 

22.4x

Intuitive Surgical, Inc.

 

31.0

%

 

56.2

%

 

37.9

%

 

31.7

%

 

45.0x

Keyence Corporation

 

36.6

%

 

49.1

%

 

56.4

%

 

55.8

%

 

28.7x

Rockwell Automation, Inc.

 

17.4

%

 

18.2

%

 

20.3

%

 

18.5

%

 

23.4x

Teledyne Technologies Incorporated

 

49.5

%

 

64.3

%

 

22.4

%

 

20.2

%

 

24.5x

Selected Publicly Traded De-SPAC Robotics-as-a-Service (“RaaS”) Companies

 

2024
Revenue
Growth

 

2021 – 2024
Revenue
CAGR

 

EV/2024
Revenue

Berkshire Grey, Inc.

 

132.5

%

 

114.1

%

 

1.80x

Sarcos Technology and Robotics Corp.

 

266.6

%

 

194.3

%

 

6.44x

____________

LTM = Latest Twelve Months

EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization

EV: Enterprise Value = Market capitalization plus debt, net of cash and equivalents

CAGR: Compounded Annual Growth Rate

Sources: S&P Capital IQ, SEC Filings, Annual and Interim Reports, Investor Presentations

Summary Financial Analyses

Discounted Cash Flow Analysis

Based on the data shown in the tables above, Duff & Phelps selected a range of multiples to apply to the Combined Company’s projected 2024 EBITDA to obtain a range of Terminal Values to incorporate in to the DCF Analysis. In particular, Duff & Phelps analyzed LTM revenue growth, LTM EBITDA growth, LTM EBITDA margins, LTM EBITDA less capital expenditures margins, and multiples of enterprise value-to-LTM EBITDA for the Selected Publicly Traded Robotics and Industrial Automation Companies compared to projected 2024 revenue growth, projected 2024 EBITDA growth, projected 2024 EBITDA margin, and projected 2024 EBITDA less capital

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expenditures margin for the Combined Company, based on the Financial Projections. Such analysis informed the selection of terminal multiples of projected 2024 EBITDA for the Combined Company. Rather than applying the average or median multiple from these analyses, Duff & Phelps selected multiples that, in its judgement, reflected the Combined Company’s size, revenue growth outlook, capital requirements, profit margins, stage of product pipeline and other characteristics relative to the selected public companies. Based on these analyses, Duff & Phelps’ selected a terminal EBITDA multiple range of 14.0x to 16.0x the Combined Company’s projected 2024 EBITDA which resulting terminal value range was utilized in the DCF Analysis to estimate the current enterprise value range of the Combined Company.

Determination of an appropriate discount rate to use in the DCF Analysis requires a degree of judgment. Duff & Phelps considered a number of factors in determining the discount rate range, including the results of published studies on discount rates. Duff & Phelps also considered (i) the Combined Company’s stage in the cycle of management’s business plan, (ii) the Combined Company’s projected financial performance and growth and (iii) the risks facing the Combined Company in order to achieve the projected results, including execution risk and competitive risks, among others. Based on these factors and the published discount rate studies, Duff & Phelps used discount rates ranging from 35.0% to 40.0% to discount the projected unlevered free cash flows and the Terminal Values. Duff & Phelps believes that this range of discount rates is consistent with the rate of return that security holders could expect to realize on alternative investment opportunities with similar risk profiles.

Based on these assumptions, Duff & Phelps’ DCF Analysis resulted in an estimated enterprise value range for the Combined Company of $550 million to $710 million. Duff & Phelps further estimated the range of total equity value of the Combined Company following the Business Combination by adding pro forma cash and cash equivalents of $225 million (which assumes no redemptions), subtracting the face value of the convertible notes of $38 million, subtracting the Duff & Phelps’ estimated theoretical value range of the Earnout Shares of approximately $59 million to $82 million and subtracting Duff & Phelps’ estimated value range of CLAQ’s warrants of $47 million to $65 million. Duff & Phelps estimated the values ranges for the Earnout Shares and CLAQ’s warrants with a stock price simulation model using volatility inputs derived from public companies. This resulted in an estimated total equity value range for the combined company of $631 million to $751 million.

Market Approach

Based on the data shown in the tables above, Duff & Phelps also selected a range of valuation multiples to apply to the Combined Company’s projected 2024 revenue to obtain a range of current enterprise values for the Combined Company using the Market Approach. Duff & Phelps analyzed 2024 revenue growth and 2021 through 2024 compound annual revenue growth for the Selected Publicly Traded De-SPAC RaaS Companies and compared these metrics to projected 2024 revenue growth and 2021 through 2024 compound annual revenue growth for the Combined Company, based on the Financial Projections. Duff & Phelps used these comparisons and the implied multiples of enterprise value-to-2024 projected revenue for the Selected Publicly Traded De-SPAC RaaS Companies to select a 2024 revenue multiple range of 2.5x to 3.0x to apply to the Combined Company’s projected 2024 revenue, resulting in an estimated current enterprise value range for the Combined Company. Rather than applying the average or median multiple from these analyses, Duff & Phelps selected multiples that, in its judgement, reflected the Combined Company’s revenue growth outlook, capital requirements, profit margins, stage of product pipeline and other characteristics relative to the Selected Publicly Traded De-SPAC RaaS Companies.

Duff & Phelps’ Market Approach resulted in an estimated enterprise value range for the Combined Company of $505 million to $605 million. Duff & Phelps further estimated the range of total equity value of the Combined Company following the Business Combination by adding pro forma cash and cash equivalents of $225 million (which assumes no redemptions), subtracting the face value of the convertible notes of $38 million, subtracting the Duff & Phelps’ estimated theoretical value range of the Earnout Shares of approximately $53 million to $67 million and subtracting Duff & Phelps’ estimated value range of CLAQ’s warrants of $43 million to $53 million (using identical methodologies as described in the DCF Analysis summary above). This resulted in an estimated total equity value range for the Combined Company of $597 million to $673 million.

Conclusion

Based on Duff & Phelps’ analyses, Duff & Phelps noted that the equity value ranges for the Combined Company derived from each of the DCF Analysis and the Market Approach exceeds the equity value of $560 million for the Combined Company implied by using an assumed a value of $10.00 per share for CLAQ’s Common Stock, with such

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$10.00 value being based on CLAQ’s initial public offering and CLAQ’s approximate cash per outstanding share of CLAQ Common Stock (excluding, for the avoidance of doubt, the dilutive impact of founder shares or any Public Warrants, Private Warrants or Rights).

The Opinion was only one of the many factors considered by the Board of CLAQ in its evaluation of the Business Combination and should not be viewed as determinative of the views of the CLAQ Board.

Fees and Expenses

As compensation for Duff & Phelps’ services in connection with the rendering of the Opinion to the CLAQ Board, CLAQ agreed to pay Duff & Phelps a fee of $300,000. A portion of the fee was payable upon delivery of the Opinion and a portion is payable upon consummation of the Business Combination.

No portion of Duff & Phelps’ fee is refundable or contingent upon the conclusion reached in the Opinion.

Furthermore, Duff & Phelps is entitled to be paid additional fees at a percentage of Duff & Phelps’ standard hourly rates for any time incurred should Duff & Phelps be called upon to support its findings subsequent to the delivery of its opinion. CLAQ has also agreed to reimburse Duff & Phelps for its reasonable out-of-pocket expenses and reasonable fees and expenses of outside counsel retained by Duff & Phelps in connection with the engagement. CLAQ has also agreed to indemnify Duff & Phelps for certain liabilities arising out of its engagement.

The terms of the fee arrangements with Duff & Phelps, which CLAQ believes are customary in transactions of this nature, were negotiated at arm’s length, and the CLAQ Board is aware of these fee arrangements.

Disclosure of Prior Relationships

During the two years preceding the date of the Opinion, Duff & Phelps has not had any material relationship with any party to the Business Combination for which compensation has been received or is intended to be received, nor is any such material relationship or related compensation mutually understood to be contemplated.

Certain Related Agreements

Support Agreements.    In connection with the execution of the Merger Agreement, CleanTech Sponsor I LLC and CleanTech Investments, LLC (each, a “Sponsor,” and collectively, the “Co-Sponsors”) entered into a support agreement (the “Sponsor Support Agreement”) with Nauticus pursuant to which the Sponsors have agreed to vote all shares of CleanTech Common Stock beneficially owned by them in favor of the Merger.

In addition, in connection with the execution of the Merger Agreement, certain stockholders of Nauticus owning approximately 88.8% of the voting power of Nauticus entered into a support agreement (the “Nauticus Support Agreement”) with CleanTech and Nauticus pursuant to which the stockholders agreed to vote all shares of Nauticus beneficially owned by them in favor of the Merger.

Subscription Agreements.    In connection with the execution of the Merger Agreement, CleanTech entered into subscription agreements (collectively, the “Subscription Agreements”) with certain parties subscribing for shares of CleanTech Common Stock pursuant to which these investors have agreed to purchase, and CleanTech has agreed to sell to them, an aggregate of 3,530,000 shares of CleanTech Common Stock, for a purchase price of $10.00 per share and an aggregate purchase price of $35.3 million (the “Equity Financing”). The obligations to consummate the transactions contemplated by the Subscription Agreements are conditioned upon, among other things, customary closing conditions and the consummation of the transactions contemplated by the Merger Agreement.

Securities Purchase Agreement.    In connection with the execution of the Merger Agreement, CleanTech and Nauticus entered into Securities Purchase Agreement with certain investors purchasing up to an aggregate of $40.0 million in principal amount of the Debentures and warrants. The number of shares of common stock into which the Debentures are convertible is equal to 120% of the outstanding principal amount of the Debentures divided by the conversion price of $15.00, and the number of shares of common stock into which the associated warrants are exercisable is equal to 120% of the outstanding principal amount of the Debentures divided by the conversion price, with an exercise price equal to $20, subject to adjustment. The exercise price of the associated warrant will be subject to (i) customary anti-dilution adjustments; and (ii) in the case of a subsequent equity sale at a per share price below the exercise price, the exercise price of the associated warrant will be adjusted to such

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lower price, and the number of shares underlying the warrant will increase proportionately. In the event of a rights offering or dividend, the warrant holder will be treated as though the shares underlying the warrant he/she holds were outstanding. These warrants can be exercised on a cashless basis. There will be an original issue discount of 2% from the issued amount of the Debentures. Interest will accrue on all outstanding principal amount of the Debentures at 5% per annum, payable quarterly. The Debentures will be secured by first priority interests, and liens on, all present and after-acquired assets of the Combined Company, and will mature on the fourth anniversary of the date of issuance. As of the date of this proxy statement/prospectus, ATW is the only purchaser and has subscribed for Debentures in the aggregate principal amount of $37,959,184 (out of the aggregate $40.0 million) which is convertible into 3,036,735 shares of the Combined Company’s common stock and associated warrants for an additional 3,036,735 shares of the Combined Company. ATW is managed by ATW Partners Opportunities Management, LLC, which is an affiliate of Chardan, and our director, Mr. Jonas Grossman, is the Managing Partner and President of Chardan. Chardan will not receive any fees or compensation for ATW’s participation in the Debt Financing. The obligations to consummate the transactions contemplated by the Securities Purchase Agreement are conditioned upon, among other things, (i) raising $25,000,000 in equity financing from strategic investors, (ii) hiring a chief financial officer with public company experience, and (iii) all conditions precedent to the Merger set forth in the Merger Agreement having been satisfied or waived. The Equity Financing will satisfy the closing condition related to the equity financing requirement for the Debt Financing, and the PIPE Investment alone will satisfy the Minimum Cash Condition under the Merger Agreement. Mr. Rangan Padmanabhan, Nauticus’ current CFO will be the CFO of the Company effective as of the date of the merger, satisfying the closing condition related to the hiring of a CFO with public company experience requirement for the Debt Financing.

Amended and Restated Registration Rights Agreement.    In connection with the Closing, Nauticus, CleanTech and certain stockholders of each of Nauticus and CleanTech who will receive shares of CleanTech Common Stock pursuant to the Merger Agreement, will enter into an amended and restated registration rights agreement (“Registration Rights Agreement”) mutually agreeable to CleanTech and Nauticus, which will become effective upon the consummation of the Merger.

Lock-up Agreement and Arrangements.    In connection with the Closing, the Sponsors and certain Nauticus stockholders will enter into a lock-up agreement (the “Sponsor Lock-Up Agreement” and “Company Stockholder Lock-up Agreement) with Nauticus and CleanTech, pursuant to which each will agree, subject to certain customary exceptions, not to:

(i)     offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any shares of CleanTech Common Stock received as merger consideration and held by it immediately after the Effective Time (the “Lock-Up Shares”), or enter into a transaction that would have the same effect;

(ii)    enter into transaction that would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of any of such shares, whether any of these transactions are to be settled by delivery of such shares, in cash or otherwise; or

(iii)   publicly disclose the intention to make any offer, sale, pledge or disposition, or to enter into any transaction, swap, hedge or other arrangement, or engage in any “Short Sales” (as defined in the Sponsor Lock-Up Agreement and Company Stockholder Lock-up Agreement) with respect to any security of CleanTech;

during a “Lock-Up Period” under their respective agreements.

Under the Sponsor Lock-up Agreement, the Lock-Up period means the period commencing on the Closing Date and ending on the earlier of (x) the one year anniversary of the Closing Date; (y) the date on which the volume weighted average price of shares of common stock equals or exceeds $13.00 per share for twenty (20) of any thirty (30) consecutive trading days commencing after the Closing on Nasdaq, and (z) the date specified in a written waiver duly executed by Nauticus; provided that the restrictions set forth in the Sponsor Lock-up Agreement do not apply to (1) transfers or distributions to such stockholder’s current or former general or limited partners, managers or members, stockholders, other equity holders or direct or indirect affiliates (within the meaning of Rule 405 under the Securities Act of 1933, as amended) or to the estates of any of the foregoing; (2) transfers by bona fide gift to a member of the stockholder’s immediate family or to a trust, the beneficiary of which is the stockholder or a member of the stockholder’s immediate family for estate planning purposes; (3) by virtue of the laws of descent and distribution upon death of the stockholder; or (4) pursuant to a qualified domestic relations order, in each case where such transferee agrees to be bound by the terms of the Sponsor Lock-up Agreement.

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Under the Company Lock-up Agreement, the Lock-Up period means the period commencing on the Closing Date and ending on the earlier of (x) the date that is 180 calendar days after the consummation of the Business Combination, (y) the date on which the volume weighted average price of shares of common stock equals or exceeds $13.00 per share for twenty (20) of any thirty (30) consecutive trading days commencing after the Closing on Nasdaq, and (z) the date specified in a written waiver duly executed by the Sponsors and CleanTech; provided that the restrictions set forth in the Company Lock-up Agreement do not apply to (1) transfers or distributions to such stockholders current or former general or limited partners, managers or members, stockholders, other equityholders or other direct or indirect affiliates (within the meaning of Rule 405 under the Securities Act of 1933, as amended) or to the estates of any of the foregoing; (2) transfers by bona fide gift to a member of the stockholder’s immediate family or to a trust, the beneficiary of which is the stockholder or a member of the stockholder’s immediate family for estate planning purposes; (3) by virtue of the laws of descent and distribution upon death of the stockholder; (4) pursuant to a qualified domestic relations order, in each case where such transferee agrees to be bound by the terms of this Agreement; (5) transfers or distributions of, or other transactions involving, securities other than the Lock-up Shares (including, without limitation, securities acquired in the PIPE or in open market transactions); or (6) in the case of Angela Berka (or Reginald Berka with respect to any community, marital or similar interest he may have in the following shares), the transfer of up to 1,000,000 shares of Lock-up Shares in a privately negotiated sale to another company stockholder, who shall enter into a Lock-Up Agreement (or amend an existing Lock-Up Agreement) containing the same terms and conditions as this Agreement with respect to such shares, or the entry into any agreement with respect to such a sale entered into before, at or after the Effective Time.

Director Nomination Agreement.    In connection with the Closing, CleanTech, the Sponsors and Nauticus will enter into a Director Nomination Agreement (the “Director Nomination Agreement”) pursuant to which CleanTech will agree to nominate Eli Spiro, an individual designated by the Sponsors to the Board of Directors of the combined company, effective as of immediately prior to the Closing.

Director Designation Agreement.    In connection with the execution of the Merger Agreement, CleanTech, Nauticus and certain Nauticus stockholders entered into a director designation agreement with Transocean, Inc. (“Transocean”) to take all necessary action to cause a member designated by Transocean (the “Transocean Designee”) to remain on, or otherwise be appointed to, the Board, from and after the Effective Time, as a Class III member of the Board, for an initial term expiring at the third annual meeting following the date of the Second Amended and Restated Certificate of Incorporation to be adopted in connection with the Merger.

Indemnification Agreements.    In connection with the Closing, CleanTech has agreed to enter into customary indemnification agreements, in form and substance reasonably acceptable to CleanTech and Nauticus, with the individuals who will be nominated and, subject to stockholder approval, elected to CleanTech’s board of directors effective as of the Closing.

Management

Effective as of the closing of the Business Combination, all of the executive officers of CLAQ immediately prior to the closing of the Business Combination shall resign and the individuals serving as executive officers of the Combined Company immediately after the closing the Business Combination will be the same individuals (in the same offices) as those of Nauticus immediately prior to the closing of the Business Combination.

See “Directors and Executive Officers of the Combined Company after the Business Combination” for additional information.

Background of the Business Combination

The following is a brief description of the background of the Business Combination and related negotiations.

CLAQ is a blank check company incorporated in the State of Delaware on June 18, 2020 and formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities. In conducting a targeted search for a business combination target, as described in further detail below, CLAQ utilized its vast global network as well as the industry/sector knowledge and investing/transactional experience of its Sponsor, its management, and its board of directors. The terms of the Merger Agreement and the related ancillary documents are the result of extensive negotiations among CLAQ, Nauticus, and their respective representatives and advisors.

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In July 2020, prior to the closing of CLAQ’s IPO, CleanTech Sponsor was issued 5,000,000 shares of founder shares for an aggregate price of $25,000. On February 15, 2021, CLAQ effected a 1.4375-for-1 stock split of its issued and outstanding shares of common stock, resulting in an aggregate of 7,187,500 shares of common stock issued and outstanding.

On February 16, 2021, CleanTech Sponsor paid $16,667 to CLAQ, which amount was paid to CleanTech Investments, LLC to cancel 4,791,667 of its founder shares that it previously held and immediately thereafter CLAQ issued 4,791,667 founders shares to CleanTech Sponsor. As a result, CleanTech Sponsor owns 4,791,667 founder shares and CleanTech Investments owns 2,395,833 founder shares.

On June 23, 2021, CleanTech Sponsor and CleanTech Investments forfeited for no consideration 1,916,667 founder shares and 958,333 founder shares, respectively, which CLAQ cancelled, resulting in a decrease in the total number of founder shares outstanding from 7,187,500 shares to 4,312,500 shares. As a result, CleanTech Sponsor owns 2,875,000 founder shares and CleanTech Investments owns 1,437,500 founder shares. Subsequently, CleanTech Sponsor transferred an aggregate of 280,000 founder shares to CLAQ officers, directors and certain advisors, retaining only 2,595,000 founder shares. The founder shares included an aggregate of up to 562,500 shares that were subject to forfeiture in the event the underwriters’ over-allotment option was not exercised in full or in part.

On July 14, 2021, the Registration Statement on Form S-1 relating to CLAQ’s IPO was declared effective by the SEC. CLAQ’s units began trading on the NASDAQ Capital Market on July 15, 2021, and CLAQ filed the final prospectus for its IPO on July 16, 2021. On July 19, 2021, CLAQ completed its IPO of 15,000,000 units, at a price of $10.00 per unit, generating gross proceeds of $150,000,000, before underwriting discounts and expenses. On August 28, 2021, the underwriters exercised the over-allotment option to purchase an additional 2,250,000 units, generating additional gross proceeds of $22,500,000. Each unit consists of one share of CLAQ Common Stock, one-half of a warrant, and one right. Each whole public warrant entitles the holder thereof to purchase one share of CLAQ Common Stock at a price of $11.50 per share, subject to certain adjustments. Each right entitles the holder thereof to receive one-twentieth (1/20) of one share of common stock upon the consummation of an initial business combination.

Simultaneously with the closing of the IPO, CLAQ consummated in a private placement the sale of 4,333,333 Private Warrants at a price of $1.00 per warrant to the CleanTech Sponsor and 2,166,667 Private Warrants to CleanTech Investments, generating total gross proceeds of $6,500,000. In connection with the underwriters’ exercise of their over-allotment option, CLAQ also consummated the sale of an additional 450,000 Private Warrants to CleanTech Sponsor and 225,000 Private Warrants at $1.00 per Private Warrant to CleanTech Investments, generating additional gross proceeds of $675,000. Each Private Warrant is exercisable to purchase one share of Common Stock of CLAQ at $11.50 per share. Of the proceeds received from the consummation of the IPO and the private placement purchases by CleanTech Sponsor and CleanTech Investments, an aggregate of $152,000,000 was held in a trust account.

Except for a portion of the interest earned on the funds held in the trust account that may be released to CLAQ to pay income taxes, none of the funds held in the trust account will be released until the earlier of the completion of its initial business combination or its failure to effect a business combination within the allotted time.

CLAQ did not select any business combination target in advance of its IPO and did not, nor did anyone on its behalf, initiate any substantive discussions, directly or indirectly, with any business combination target in advance of its IPO. Until December 16, 2021, the date the Merger Agreement was signed, CLAQ and its representatives identified and initiated contact with management teams, board members, representatives, or investors of more than 65 potential acquisition targets. Throughout this process, CLAQ leveraged the investing, industry and transaction experience of its Sponsor, its management, and members of its board of directors to screen, prioritize and diligence potential acquisition candidates. As part of its review of potential targets for CLAQ’s initial business combination, CLAQ’s management team corresponded with representatives of venture capital firms and financial advisors to discuss their investment portfolios and potential business combination targets in which the venture capital firms held an investment. In addition to Nauticus, CLAQ entered into non-disclosure agreements and conducted additional due diligence with respect to fifteen potential targets (the “Potential Targets”).

CLAQ conducted due diligence to varying degrees on the Potential Targets, including review of the business’ management, balance sheet, valuation, business model, stockholders, and historical and projected financials, in each case to the extent made available, among other diligence reviews. Following such reviews, and at various points in time, CLAQ decided to discontinue discussions with the Potential Targets other than Nauticus, for one or several

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reasons, including preparedness for the public markets, growth potential, total addressable market, end market focus, capital requirements, market position, defensibility of business strategy, valuation, and industry trends among other reasons. Engagement with the Potential Targets included:

        Beginning in late July after the completion of the IPO through early August 2021, Mr. Eli Spiro, the Chief Executive Officer of CLAQ held a call with management of an agritech company, a Potential Target and conducted due diligence on the Potential Target.

        Beginning in late July through early September 2021, Mr. Spiro, and Mr. Richard Fitzgerald, the Chief Financial Officer of CLAQ held virtual meetings and teleconferences with management and the representatives of an energy efficiency company, another Potential Target, conducted due diligence on it, reviewed its financial analysis and discussed a potential business combination between CLAQ and the Potential Target.

        Beginning in late July through mid-August 2021, Mr. Spiro, and CLAQ Board member, Mr. Doug Cole held virtual meetings and phone calls with management and the representatives of a battery technology company, another Potential Target, conducted due diligence on it, analyzed its financials, and discussed a potential business combination between the Company and the Potential Target.

        Beginning in late July through mid-August 2021, Messrs. Spiro, Fitzgerald, Ankur Dhanuka (the Chief Technology Officer of CLAQ), and CLAQ Board members, Messrs. Cole and Brendan Riley held a virtual meeting with management and the representatives of a charging solutions company, another Potential Target, conducted due diligence on it and discussed a potential business combination between CLAQ and the Potential Target.

        Beginning in late July through late August 2021, Messrs. Spiro, Fitzgerald, Riley, and Cole corresponded with representatives of an energy storage company, another Potential Target, conducted due diligence on it and discussed a potential business combination between CLAQ and the Potential Target.

        Beginning in late July through mid-August 2021, Messrs. Spiro, Fitzgerald, Riley, Dan Reicher (the Senior Climate Advisor of CLAQ), and a CLAQ Board member, Ms. Britt Ide held virtual meetings with management and representatives of a renewable energy company, another Potential Target, conducted due diligence on it and discussed a potential business combination between CLAQ and the Potential Target.

        Beginning in late July through mid-August 2021, Messrs. Spiro and Fitzgerald held virtual meetings with representatives of a logistics company, another Potential Target, conducted due diligence on it and discussed a potential business combination between CLAQ and the Potential Target.

        Beginning in late July through late August 2021, Messrs. Spiro and Riley corresponded with representatives of a battery technology company, another Potential Target, conducted due diligence and discussed a potential business combination between CLAQ and the Potential Target.

        Beginning at the end of July through mid-September 2021, all members of CLAQ’s management team and Board held multiple virtual meetings with management, Board members and representatives of an energy solutions company, another Potential Target. Throughout this time, members of CLAQ’s management team, Board and representatives conducted due diligence regarding the Potential Target, its industry and competitive dynamics, reviewed the Potential Target’s financial information, met with management of the Potential Target, and discussed a potential business combination between CLAQ and the Potential Target.

        Beginning at the end of July through the end of September 2021, all members of CLAQ’s management team and Board members, Ms. Ide, Messrs. Reicher and Riley held multiple virtual meetings with management and representatives of a water and wastewater treatment company, another Potential Target, conducted due diligence regarding the Potential Target, its industry and competitive dynamics, reviewed the Potential Target’s financial information, and discussed a potential business combination between CLAQ and the Potential Target.

        Beginning early August through late September 2021, Messrs. Spiro, Fitzgerald, and Dhanuka held virtual meetings and corresponded with management and representatives of a clean energy technology company, another Potential Target, conducted due diligence on it, reviewed the Potential Target’s financial information, and discussed a potential business combination between CLAQ and the Potential Target.

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        Beginning early August through mid-August 2021, Messrs. Spiro and Buffalino held virtual meetings and corresponded with management and representatives of an alternative energy company, another Potential Target, conducted due diligence on it, and discussed a potential business combination between CLAQ and the Potential Target.

        Beginning mid-August through mid-October 2021, Messrs. Spiro and Cole held virtual meetings and corresponded with management and representatives of a sustainable resource technology company, another Potential Target, conducted due diligence on it and discussed a potential business combination between CLAQ and the Potential Target.

        Beginning late August through early September 2021, Mr. Spiro corresponded with representatives of a genomics technology company, another Potential Target, conducted due diligence on it, and reviewed the Potential Target’s financial information, and discussed a potential business combination between CLAQ and the Potential Target.

        Beginning late September through mid-October 2021, Mr. Spiro, and Board members, Messrs. Cole and Najarian corresponded and had a call with representatives of a renewable energy solutions company, another Potential Target, conducted due diligence on it and reviewed the Potential Target’s financial information.

Neither CleanTech Sponsor nor CleanTech Investments have other SPACs in the process of searching for a target company; however CleanTech Investments is an affiliate of Chardan, which is an affiliate of other SPAC sponsors that are currently searching for targets. Nauticus was an opportunity introduced by Mr. Rahul Jasuja, a representative of Nauticus, directly to Mr. Spiro in July 2021. Chardan did not present Nauticus to CLAQ or any other SPACs it sponsors or co-sponsors.

CleanTech Investments, a co-sponsor of CLAQ, is an affiliate of Chardan which has nearly two decades of experience in the SPAC market. Since 2003, Chardan has underwritten over 100 SPAC IPOs, advised on over 30 business combination transactions with SPACs, and has sponsored or co-sponsored 15 SPACs. Of the sponsored or co-sponsored SPACs that have closed business combination transactions over the past 10 years, including LifeSci Acquisition Corp.’s acquisition of Vincera Pharma, Inc., LifeSci Acquisition II Corp.’s business combination with Science 37, Inc., Chardan Healthcare Acquisition Corp.’s business combination with BiomX Ltd., and Chardan Healthcare Acquisition 2 Corp.’s business combination with Renovacor, Inc., the stock price of each of these post-combination companies increased 30% on average over the first 90 days after closing, but has subsequently declined. CLAQ’s other co-sponsor, CleanTech Sponsor, does not have any track record in the SPAC market.

Discussions and Negotiations with Nauticus

The following is a brief description of the background of the negotiations between CLAQ and Nauticus and summarizes the key meetings and events that led to the signing of the Merger Agreement. The following chronology does not purport to catalogue every conversation among the parties to the Merger Agreement or their representatives.

During the Summer of 2021, Nauticus management had introductory discussions with several SPACs, which did not include CLAQ. On June 14, 2021, Nauticus engaged Winston & Strawn LLP (“W&S”) as legal counsel to assist with evaluating various opportunities for a business combination with a SPAC. In July of 2021, Nauticus and its advisors held initial conversations with CLAQ as a potential counterparty to a transaction.

On July 19, 2021, Mr. Rahul Jasuja, a representative of Nauticus, reached out to Mr. Eli Spiro, the Chief Executive Officer of CLAQ, and introduced Nauticus. On July 26, 2021, Mr. Jasuja provided introductory materials to both Mr. Spiro and Mr. Ankur Dhanuka, the Chief Technology Officer of CLAQ.

On August 5, 2021, Mr. Nicolaus Radford, who is the Founder, Chairman, President and Chief Executive Officer of Nauticus, and a representative of Nauticus provided a virtual management presentation to Mr. Spiro, Mr. Dhanuka, and a representative of CLAQ.

On August 10, 2021, a representative of Nauticus held a call with Mr. Spiro and a representative of CLAQ to further discuss Nauticus’ service and product offerings, financial information and projections, capital needs and requirements, and more information regarding the business, its customers and competitive landscape.

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On August 11, 2021, a Non-Disclosure Agreement (the “NDA”) was executed between Nauticus and CLAQ. Following execution of the NDA, Nauticus provided CLAQ with detailed materials describing Nauticus’ business, customers, and financial projections. Later that day, Mr. Spiro provided all members of the management team and Board members, Messrs. Reicher, Cole, Riley, and Najarian, Ms. Ide, and Governor Richardson with materials describing Nauticus and its business.

On August 12, 2021, a representative of Nauticus and Mr. Radford provided a virtual management presentation to members of CLAQ’s Board and management team, including Mr. Spiro, Mr. Dhanuka, Mr. Louis Buffalino, the Chief Operating Officer of CLAQ, and Mr. Richard Fitzgerald, the Chief Financial Officer of CLAQ.

On August 13, 2021, a Board meeting was held via teleconference with members of CLAQ’s management team and the Board namely, Messrs. Spiro, Buffalino, Fitzgerald, Cole, Riley and Reicher, Ms. Ide, and Governor Richardson. The call included updates on discussions with Nauticus and other Potential Targets. Following discussions, the Board determined that it was interested in a few Potential Targets, including Nauticus.

On August 17, 2021, an in-person meeting was held with management of Nauticus and CLAQ including Mr. Radford, Mr. Fitzgerald and Mr. Spiro. Attendance also occurred virtually including, representatives of both Nauticus and CLAQ, members of CLAQ’s Board including Governor Richardson, Mr. Cole, and Mr. Najarian, and other members of CLAQ’s management team including Mr. Buffalino and Mr. Dhanuka. The meeting included a presentation by Mr. Radford discussing the competitive landscape, business operations, different product offerings and use cases, overview of the total addressable market, current and potential customer base, capital previously raised, future cash needs, and a deep dive into the revenue model of Nauticus. On the following day, a representative of Nauticus provided Mr. Spiro with a copy of the financial model from the presentation. On that same day, Mr. Spiro provided the financial model to all members of the management team of CLAQ and its representatives.

On August 26, 2021, a Board meeting was held virtually with representatives of CLAQ, members of the Board including Mr. Reicher, Mr. Cole, Governor Richardson, Ms. Ide, Mr. Grossman, Mr. Najarian, and Mr. Riley, and all members of CLAQ’s management team. The meeting included updates on Potential Targets, including Nauticus. All in attendance voiced opinions and thoughts on specific Potential Targets, and feedback was very positive regarding Nauticus.

On August 30, 2021, a virtual meeting was held with Mr. Radford and a representative of Nauticus, and a representative of CLAQ and members of CLAQ’s management team including Mr. Spiro and Mr. Fitzgerald. The meeting entailed an extensive review of the capabilities of different products, services, and software of Nauticus, as well as sales, contracts, pipeline, and key relationships associated with each product and service.

On September 1, 2021, Mr. Rahul Jasuja and management of Nauticus including Mr. Radford, Mr. Reg Berka, the Co-founder and Chief Operating Officer of Nauticus, and Ms. Angela Berka, Vice President of Finance of Nauticus, provided a virtual management presentation to representatives of CLAQ and members of the management team including Mr. Spiro, Mr. Fitzgerald, and Mr. Dhanuka. At this meeting, several topics were discussed, including but not limited to, industry trends, intellectual property, software, total addressable market, and current and potential customers.

On September 9, 2021, a virtual meeting was held with representatives of both Nauticus and CLAQ and members of both management teams including Mr. Radford, Mr. Berka, Ms. Berka, Mr. Spiro, Mr. Dhanuka, Mr. Fitzgerald and Mr. Buffalino. The meeting was held to begin discussions regarding the process for due diligence and a potential PIPE investment.

On September 15, 2021, Mr. Spiro notified all the members of CLAQ’s management team, representatives and counsel that CLAQ was close to signing a letter of intent with Nauticus (“LOI”), and that they would soon receive access to a virtual Data Room with due diligence materials. On the next day CLAQ received access to the Data Room.

On September 17, 2021, CLAQ and Nauticus signed a non-binding letter of intent, which included, among other terms, a pre-money valuation of $300 million, and earnout of 7,500,000 shares of Common Stock if certain performance milestones based on revenue and EBITDA are reached over the next three years. Nauticus also agreed to negotiate exclusively with CLAQ for a period of 37 days following the execution of the non-binding term sheet, and CLAQ agreed not to enter into any letter of intent, term sheet or definitive agreement regarding an initial business combination with a potential counterparty other than Nauticus during the 37-day period. Later that day, Mr. Spiro notified all members of CLAQ’s management team, and all Board members and representatives of the non-binding confidential letter of intent.

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Throughout the months of September, October and November 2021, CLAQ, Nauticus, and their respective advisors, representatives and counsel participated in a number of telephone calls, virtual meetings, in person meetings, on-site visits, and email correspondence to discuss the transaction process, transaction documents and Nauticus’ financial model and performance, and due diligence telephone calls, and also exchanged due diligence materials, including in the areas of legal, financial and accounting, market, information technology, software, tax, insurance, employee benefits, insurance and industry trends. In late September 2021, members of Nauticus, CLAQ management, including Messrs. Spiro and Buffalino and their respective advisors and representatives, participated in additional management meetings and telephone calls with certain of Nauticus’ existing and prospective customers.

On September 19, 2021, Nauticus was provided with an initial diligence request list by the Sponsor. Following that date, additional diligence requests were submitted to Nauticus by the Sponsor and its advisors.

From September 24, 2021, through October 1, 2021, virtual meetings were held with all members of the management team of CLAQ and its representatives, members of the management team of Nauticus and its representatives, Loeb & Loeb LLP (“Loeb”), counsel to CLAQ, and W&S, counsel to Nauticus. At those meetings several discussions were held regarding topics including, positive feedback from customer calls, diligence progress and outstanding diligence requests, preparation for a PIPE presentation, and discussions regarding what should be accomplished when management of CLAQ performs an on-site diligence visit at headquarters of Nauticus.

On October 2, 2021, Mr. Spiro notified all members of the management team, all Board members and representatives that CLAQ was progressing with diligence and that the management team would be conducting an on-site diligence visit at headquarters of Nauticus. On that same day, Mr. Spiro provided the entire management team of CLAQ with correspondence between counsel of Nauticus and counsel of CLAQ that included an updated legal due diligence checklist.

On October 5, and October 6, 2021, all members of the management team of CLAQ and its representatives conducted an on-site diligence visit at Nauticus’ headquarters.

On October 11, 2021, a virtual Board meeting was held, including all members of CLAQ’s management team, its Board members including Governor Richardson, Mr. Cole, Ms. Ide, Mr. Reicher, Mr. Riley, Mr. Grossman, and Mr. Najarian, and representatives. During this meeting, management of CLAQ provided a high-level overview of diligence, including but not limited to, technology, intellectual property, strategy, and financials. All members of the management team expressed an overwhelmingly positive experience during their on-site visit and how impressed they were with the capabilities and experience of the entire management team of Nauticus. At the end of the meeting a unanimous vote was taken in favor of pursuing a business combination with Nauticus.

On October 12, 2021, W&S sent Loeb an initial draft of the Merger Agreement. On October 19, 2021, Loeb sent W&S initial comments to the Merger Agreement. On October 25, 2021, W&S sent Loeb a second draft of the Merger Agreement. On October 27, 2021, W&S, Mr. Rahul Jasuja and Mr. Radford visited Loeb’s offices in New York, NY to meet with Loeb and Mr. Spiro to negotiate certain aspects of the Merger Agreement, including the earnout conditions. Mr. Radford proposed earnout to be tied to stock price performance instead of operating performance which can be hard to measure. He also proposed that the earnout shares be released within a shorter time period. Parties finally agreed to an earnout structure whereby 7,500,000 shares of Common Stock will be released from escrow upon achievement of certain stock price thresholds over a five-year period. On November 3, 2021, Loeb sent W&S further comments to the Merger Agreement. On November 11, 2021, W&S sent Loeb a third draft of the Merger Agreement. On November 29, 2021, Loeb sent W&S further comments to the Merger Agreement. On November 29, 2021, W&S sent Loeb a fourth draft of the Merger Agreement. On December 2, 2021, Loeb sent W&S further comments to the Merger Agreement. On December 11, 2021, W&S sent Loeb a fifth draft of the Merger Agreement. On December 14, 2021, W&S sent Loeb a sixth draft of the Merger Agreement. On December 15, 2021, Loeb sent W&S further comments to the Merger Agreement and W&S agreed that the Merger Agreement was in final form.

On October 14, 2021, a virtual meeting was held to discuss a PIPE presentation for potential investors. Attendance at this meeting included representatives of both Nauticus and CLAQ, Mr. Radford, and Mr. Spiro. On October 18, 2021, representatives of both Nauticus and CLAQ, Mr. Radford, and Mr. Spiro held a virtual meeting to present a dry run of the PIPE presentation.

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On October 15, 2021, a LOI extending the exclusivity period to November 17, 2021, was signed by both Nauticus and CLAQ. As part of the agreement, CLAQ and Nauticus agreed to not, directly or indirectly make or solicit offers, inquiries or proposals to, or consider proposals from, negotiate with or participate in discussions with, or disclose any information to, any other parties.

From October 19, 2021, through October 22, 2021, various virtual meetings were held with different investment banks to introduce the business of Nauticus and CLAQ, the proposed transaction, PIPE needs and timeline. Attendance at all these meetings included representatives of both Nauticus and CLAQ, Mr. Radford, and Mr. Spiro.

On October 20, 2021, Mr. Spiro notified all members of CLAQ’s management team, all Board members and representatives that Nauticus, known as “Houston Mechatronics Inc.” at the time was in the process of changing its name to “Nauticus Robotics, Inc.” In addition, Mr. Spiro provided those individuals with updates including the fact that CLAQ is almost finished with due diligence with no material issues at the moment, CLAQ recently sent back comments on Merger Agreement and will continue to negotiate over the next few weeks, and an exclusivity period under the LOI had been extended until November 17, 2021.

On October 26, 2021, an in-person meeting was held at the offices of ATW with Mr. Radford, Mr. Spiro, executives of ATW, and their respective representatives. ATW is managed by ATW Partners Opportunities Management, LLC, which is an affiliate of Chardan Capital Markets, LLC (“Chardan”). CleanTech Investments is an affiliate of Chardan, and CLAQ’s director, Mr. Jonas Grossman, is the Managing Partner and President of Chardan. At that meeting a potential convertible debt PIPE security was discussed. On November 2, 2021, a term sheet was received for the convertible debt PIPE security. From November 2 through November 9, 2021, negotiations were conducted in regard to the convertible debt PIPE security. On November 9, 2021, all parties agreed to the term sheet and it was signed. On November 17, 2021, in-person diligence was performed at the headquarters of Nauticus. Attendance for the in-person diligence included executives of Nauticus and ATW, and Mr. Spiro. From November 17, 2021 until the signing of the Securities Purchase Agreement on December 16, 2021 in connection with the Debt Financing, negotiations were held in regard to the potential convertible debt investment via multiple phone calls, virtual meetings, as well as follow up diligence. Participants included executives and representatives of Nauticus and ATW and Mr. Spiro. As part of its due diligence investigations, ATW also retained third party advisors with specialties in industrial manufacturing and business scalability assessment to validate and assess the business. Messrs. Spiro, Fitzgerald and Buffalino were given a summary of the results of ATW’s due diligence. While the due diligence results were generally very positive, they also revealed some potential production risks in that Nauticus lacks the necessary supplies and components in-house to manufacture the products in large quantities. Nauticus took this concern seriously and identified a third-party manufacturing firm who can help mitigate the production risk. CLAQ was both satisfied with, and impressed by, Nauticus’ prompt response to address the concern.

On October 27, 2021, members of the management team of both CLAQ and Nauticus including Mr. Spiro and Mr. Radford, and their respective representatives and counsel, all met in-person at the offices of Loeb in order to discuss remaining open business issues of a potential business combination transaction.

From late October through December 15, 2021, CLAQ, Nauticus, and their respective representatives began contacting a limited number of potential PIPE Investors, each of whom agreed to maintain the confidentiality of the information received pursuant to customary “wall cross” non-disclosure agreements, to discuss Nauticus, the proposed business combination and the PIPE Investment and to determine such investors’ potential interest in participating in the PIPE Investment. Beginning on October 29, 2021, and until the signing of the Merger Agreement on December 16, 2021, representatives and management of both Nauticus, and CLAQ including Messrs. Spiro, Fitzgerald and Buffalino, participated in various virtual meetings, phone calls, and correspondence with prospective participants in the PIPE Investment.

On November 14, 2021, both Nauticus and CLAQ agreed to extend the exclusivity period under the LOI to December 17, 2021.

On December 1, 2021, a virtual Board meeting was held, including all members of CLAQ’s management team and representatives, and Board members including Mr. Weiss, Ms. Ide, Mr. Riley, Governor Richardson, Mr. Reicher, and Mr. Grossman. During this meeting, management of CLAQ provided an update regarding several items including, Nauticus’ development of new units and contracts, the merger agreement and its terms, earn out structure, restricted shares and lockup period, targeted announcement date, and the expected process following a merger announcement. The management team also updated the Board regarding a potential PIPE with strategic partners and existing investors, as well

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as a potential convertible debt PIPE security which later became the Debt Financing. One of the Board members suggested an introduction to an individual that is highly regarded in the offshore wind market. The management team expressed interest in a “wall-cross” process with that individual in order to speak with him in detail to see how they could collaborate.

On December 10, 2021, a virtual Board meeting was held, including all members of CLAQ’s management team, Board members including Governor Richardson, Ms. Ide, Mr. Riley, Mr. Cole, and Mr. Grossman, representatives and counsel. At that meeting, the Board approved documentation for the business combination. The Board did not obtain a third-party valuation or fairness opinion in connection with its resolution to approve the Merger but determined that CLAQ’s management, CleanTech Sponsors and the members of the Board had substantial experience in evaluating the operating, financial and business merits of companies similar to Nauticus, sufficient to make its own determination of the merits of a business combination with Nauticus. On January 28, 2022, in order to provide added transparency to the transactions contemplated by the Merger Agreement and greater certainty to close the Business Transaction in the current turbulent market, CLAQ retained Duff & Phelps to serve as an independent financial advisor to the Board of CLAQ, specifically to provide to the Board a fairness opinion in connection with the Business Combination. The CLAQ Board obtained a fairness opinion from Duff & Phelps on March 24, 2022.

On December 14, 2021, CLAQ and Chardan entered into a Financial Advisory Agreement pursuant to which Chardan, acting as CLAQ’s exclusive financial advisor and exclusive placement agent of any private placement of securities in connection with the business combination, will be paid a placement fee of 6.0% of the aggregate gross proceeds received from the PIPE Investment that is not sold to an affiliate of Chardan, at Closing. As the sole placement agent for the PIPE Investment, Chardan performed customary PIPE due diligence on Nauticus including site visits, customer calls and financial analysis. Pursuant to the Financial Advisor Agreement, Chardan also has a right of first refusal to act as a book-running manager with minimum economics of 15% for the first two public or private equity offerings by CLAQ or any successor or subsidiary of CLAQ.

On or about December 14, 2021, Equity Financing investors executed and delivered the Subscription Agreements, which provided for binding subscriptions to purchase an aggregate of 3,530,000 shares of CLAQ Common Stock at $10.00 per share. On December 16, 2021, the transaction was finally approved and, the parties entered into the Merger Agreement and the related ancillary documents. On that same day, ATW entered into the Securities Purchase Agreement with CLAQ and Nauticus subscribing for Debentures in the aggregate principal amount of $37,959,184 (out of the aggregate $40.0 million) which is convertible into 3,036,735 shares of the Combined Company’s common stock and associated warrants for an additional 3,036,735 shares of the Combined Company. The following morning, CLAQ and Nauticus issued a joint press release announcing the execution and delivery of the Merger Agreement, and CLAQ filed a Current Report on Form 8-K, which included as exhibits (a) the joint press release, dated December 17, 2021, (b) an investor presentation providing information on Nauticus’ business and a summary of certain key terms of the business combination, (c) a transcript of a conference call with investors, (d) the Merger Agreement and certain related ancillary documents, and (e) certain other communications. After the Merger Agreement was signed on December 16, 2021 and before March 31, 2022, Nauticus asked if Mr. Spiro would be interested in joining the Combined Company’s board. On or about June 1, 2022, CLAQ Co-Sponsors named Mr. Spiro as their designated director nominee for the Combined Company under the Director Nomination Agreement, and Mr. Spiro accepted the nomination on that same day.

In order to broaden CLAQ and Nauticus’ reach to additional potential investors, parties interviewed a number of investment banks. After having considered the relative strengths and customer bases of different investment banks and advisory services providers, parties entered into letter agreements with four investment banks for their capital markets and financial advisory services between February and April 2022. None of these four investment banks are affiliated with CLAQ, its officers and directors or any of their affiliates. Pursuant to a letter agreement dated February 11, 2022 with Roth Capital Partners, LLC (“Roth”), CLAQ has agreed to pay Roth a cash advisory fee of $350,000 following the closing of the Business Combination during the term of the agreement or within six months following any termination of the agreement, in return for Roth’s capital markets advisory services which include, among other things, (i) providing advice and assistance to CLAQ regarding defining objectives and potential equity offerings (including with respect to structure, marketing strategy and execution); (ii) assisting the evaluation of CLAQ’s equity securities; and (iii) performing analyses of equity capital markets and shareholder engagement. The term of the agreement with Roth shall continue until terminated by either party. Pursuant to a letter agreement dated February 28, 2022 with Lake Street Capital Markets (“Lake Street”), CLAQ and Nauticus have agreed that the Combined Company will pay Lake Street a non-refundable retainer of $350,000 within ten days following the closing of the Business Combination in return for Lake Street’s capital markets advisory services which include, among other things, (i) providing advice and assistance to CLAQ in evaluating its capital raising strategies and alternatives; (ii)

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assisting CLAQ in refining and communicating its investor presentation; and (iii) working and coordinating with CLAQ’s investors relations resources to conduct a non-deal investor roadshow in the U.S. and solicit, and analyze investors’ feedback. The term of the agreement with Lake Street shall expire on the earlier of (a) February 28, 2023, or (b) the closing of the Business Combination. Pursuant to a letter agreement dated March 23, 2022 with Cowen and Company, LLC (“Cowen”), Nauticus has agreed to pay Cowen an advisory fee of $1,750,000 (the “Business Combination Fee”) upon closing of the Business Combination in return for Cowen’s capital market advisory services which include, among other things, (i) familiarizing itself with the business, properties and operation of each of CLAQ and Nauticus; (ii) advising Nauticus on investor outreach, assisting Nauticus in scheduling and arranging meetings with current and potential holders of its securities; and (iii) assisting Nauticus in formulating a marketing strategy for the Business Combination. If this agreement with Cowen is terminated, the Business Combination Fee will still be payable if a business combination is consummated within twelve months from the date of the termination of the agreement (the “Residual Period”). If during the term of this agreement with Cowen or the Residual Period, Nauticus proposes to effect any restructuring, acquisition or disposition, or certain sales of securities, Nauticus has agreed to engage Cowen and offer Cowen no less than 35% of the total economics for any such capital raising transaction. Pursuant to an amended and restated letter agreement dated April 25, 2022 with Coastal Equities, Inc. (“Coastal”), Nauticus has agreed to pay Coastal a cash fee of $7,600,000 (“Cash Fee”) upon closing of the Business Combination or any other transaction defined as a “Sale” of Nauticus pursuant to the letter agreement in return for Coastal’s financial advisory services which include, among other things, (i) facilitating potential purchasers’ or financing participants’ due diligence investigation; (ii) performing valuation analyses; (iii) identifying opportunities for the Sale of Nauticus; and (iv) as requested by Nauticus, participating on Nauticus’ behalf in negotiations concerning such Sale. If this letter agreement with Coastal is terminated, the Cash Fee will still be payable if the Sale of Nauticus occurs within 9 months from March 29, 2022, the effective date of the letter agreement.

In light of the current turbulent market, Mr. Spiro, in consultation with Mr. Louis Buffalino, CLAQ’s Chief Operating Officer, and Mr. Richard Fitzgerald, CLAQ’s Chief Financial Officer, considered it necessary and in the best interests of CLAQ and its shareholders to increase the aggregate number of shares of the Combined Company’s Common Stock to be reserved for issuance under the Incentive Plan. On June 6, 2022, the Merger Agreement was amended to increase the aggregate number of shares of the Combined Company’s Common stock to be reserved for issuance pursuant to the Incentive Plan from 5% to 10% of the fully diluted outstanding shares of its Common Stock after Closing, which share reserve shall be automatically increased on an annual basis by 3% of the total number of Common Stock outstanding as provided under the Incentive Plan.

CleanTech Acquisition Corp.’s Board of Directors’ Discussion of Valuation and Reasons for the Approval of the Business Combination

CLAQ was formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities. With respect to the proposed Business Combination, the CLAQ Board considered a number of factors as generally supporting its decision to enter into the Business Combination, including but not limited to the following factors, although not weighted or in any order of significance:

        Compelling Opportunity in the government, commercial and industrial technologies and robotics market.    The CLAQ Board believes that Nauticus’ advanced robotic technologies can disrupt the current ocean services and data markets, and if Nauticus executes its plan to hire and expand its engineering & development, sales, and marketing teams to achieve its growth strategy, it can successfully expand its core products and services offerings in the maritime robotic services space.

        Highly Disruptive Technology.    Nauticus develops revolutionary cloud-based autonomy and machine learning software to enable a smarter and more sustainable ocean industry using its growing fleet of autonomous robots from the surface to the seabed. These robots are enabled by the ToolKITT, the Nauticus software suite, a platform of AI/ML technologies designed to disrupt the legacy methods in the marine industry. Nauticus’ first product offering, Aquanaut, is the world’s first tetherless underwater robot capable of robust decision making for both long distance ocean data collection and close-in dexterous manipulation of the ocean environment, supporting government & defense and several commercial industry sectors. The CLAQ Board believes this disruptive technology provides a service that is significantly cheaper to customers than the legacy method and results in a meaningful reduction of carbon emissions.

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        Development of the new RaaS subscription model.    The CLAQ Board also believes in Nauticus’ ability to further develop its RaaS subscription model (a business model planned for future commercial services but not yet implemented), an equally disruptive offering, and derive revenue from this new model from its existing and new customers.

        Vast market opportunity for Nauticus’ advanced robotic technologies.    The CLAQ Board believes that the market for Nauticus’ advanced robotic technologies is vast since it covers a wide range of market segments including offshore renewables, government & defense, oil & gas, offshore data centers & telecommunications, aquaculture, subsea mining, port security & management, and oceanographic & science missions.

        Environmental Benefits.    Nauticus’ ToolKITT software, robots, and services provide customers the necessary data collection, analytics, and subsea manipulation capabilities to support and maintain assets, while significantly reducing their operational and carbon footprints to improve offshore health, safety, and environmental exposure. The legacy method can require an expensive and heavy topside infrastructure footprint, i.e. an offshore service vessel that can emit up to 70 metric tons of C02 per day. The CLAQ Board believes Nauticus’ products and services eliminates the need for the large vessel, which results in an approximate 97% reduction in carbon emissions.

        Backed by Strategic Partners.    Nauticus’ largest investors are Transocean Ltd. (NYSE: RIG) and Schlumberger Limited (NYSE: SLB), both of which the CLAQ Board believes provide additional validation to CLAQ’s assessment of Nauticus’ business opportunity and technologies. They are both large players in the ocean services space and may provide future business opportunities for Nauticus. In addition, both of them have committed to participating in the PIPE Investment.

        Experienced management team.    The CLAQ Board believes that Nauticus has a proven and experienced management team with deep operational expertise, led by Nicolaus A. Radford, its Chief Executive Officer and Reginald B. Berka, its Executive Vice President of Business Operations and former Chief Operations Officer. Mr. Radford has over 20 years of experience in the robotics industry and Mr. Berka has over 45 years of experience in engineering and management. In addition, the Nauticus team started with over twenty former NASA employees when the company started seven years ago and over fifteen of them are still at Nauticus today. The Nauticus team works exceptionally well together and their cohesiveness has fostered long term stability and may lead to tremendous growth and success over the long term. The CLAQ Board believes that Nauticus’ highly seasoned and experienced management team has the strong combination of a proven track record and technology expertise required to position the combined company for success.

        Terms of the Merger Agreement.    The CLAQ Board reviewed and considered the terms of the Merger Agreement and the other related agreements, including the parties’ conditions to their respective obligations to complete the transactions contemplated therein and their ability to terminate the Merger Agreement. See “— The Merger Agreement” and “— Certain Related Agreements” for detailed discussions of the terms and conditions of these agreements.

        Results of Due Diligence.    The CLAQ Board considered the scope of the due diligence investigation conducted by CLAQ and its outside advisors and evaluated the results thereof and information available to it related to Nauticus, including:

        diligence regarding Nauticus’ potential business opportunities in offshore renewables, government & defense, oil & gas and port security & management among others;

        commercial due diligence with Nauticus’ current customers and strategic partners which included twelve calls with existing and potential customers, market experts, partners, suppliers, and investors;

        extensive meetings and calls with Nauticus’ management team regarding its business, operations, projections and the proposed Business Combination;

        review of materials related to Nauticus made available, including with respect to financial statements, material contracts, key metrics and performance indicators, benefit plans, intellectual property matters, labor matters, information technology, privacy, litigation information, environmental matters, regulatory matters and other legal and business diligence matters.

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        a live viewing of the Aquanaut that performed varying tasks under water, which was used to prove its commercial viability and readiness;

        as part of the transaction, ATW committed to purchase convertible notes in the principal amount of $37,959,184 after extensive meetings with Nauticus’ management both on and off site. As part of its due diligence investigations, ATW also retained third party advisors with specialties in industrial manufacturing and business scalability assessment to validate and assess the business. ATW’s investment further validated CLAQ’s overall assessment of Nauticus’ business opportunity, technologies and services.

        Attractive Valuation and financial forecasts.    The CLAQ Board considered the non-public, internal financial forecasts regarding Nauticus’ anticipated future operations for fiscal years 2021 through 2024 that were prepared by Nauticus’ management and provided to CLAQ in connection with the CLAQ Board’s evaluation of the Business Combination. The Board reviewed the market capitalization, enterprise value and implied valuation multiples of its primary public company peer set, Pure-Play RaaS, and four secondary public company peer sets, Robotics & Automation, Disruptive Category Creators, All-Electric Autonomous Platforms and Energy Transition & Clean-Tech. CLAQ compared the same to the implied enterprise value of Nauticus determined in accordance with the internal valuation analysis of CLAQ management. CLAQ management found that Nauticus’ equity value of approximately $300 million implied a pro forma enterprise value of 1.9x estimated 2024 revenue and 3.4x estimated 2024 EBITDA, an attractive valuation relative to the peer set especially in light of Nauticus’ strong growth and projected margin profile.

The CLAQ Board also identified and considered the following factors and risks weighing negatively against pursuing the Business Combination, although not weighted or in any order of significance:

        Exclusivity.    The fact that the Merger Agreement includes an exclusivity provision that prohibits CLAQ from soliciting other business combination proposals, which restricts CLAQ’s ability, so long as the Merger Agreement is in effect, to consider other potential business combinations.

        New Product Risks.    The risks that Nauticus has limited experience in commercializing its core products and will be launching a new RaaS business model.

        Benefits Not Achieved.    The risk that the potential benefits of the Business Combination may not be fully achieved, or may not be achieved within the expected timeframe.

        Liquidation of CLAQ.    The risks and costs to CLAQ if the Business Combination is not completed, including the risk of diverting management focus and resources to other businesses combination opportunities, which could result in CLAQ being unable to effect a business combination by July 19, 2022 (unless extended) and force CLAQ to liquidate.

        Shareholder Vote.    The risk that CLAQ’s shareholders may fail to provide the respective votes necessary to effect the Business Combination.

        Limitations of Review.    The CLAQ Board considered that they were not obtaining an opinion from any independent investment banking or valuation firm that the consideration to be received by Nauticus is fair to CLAQ or its shareholders from a financial point of view.

        Closing Conditions.    The fact that completion of the Business Combination is conditioned on the satisfaction of certain closing conditions that are not within CLAQ’s control.

        Litigation.    The CLAQ Board considered the possibility of litigation challenging the Business Combination or that an adverse judgment granting permanent injunctive relief could enjoin consummation of the Business Combination.

        Fees and expenses.    The CLAQ Board considered the fees and expenses associated with completing the Business Combination.

        Production and Maintenance Risks.    Under the RaaS subscription model (a business model planned for future commercial services but not yet implemented), Nauticus will be responsible for maintenance and servicing of the units. The CLAQ Board considered that Nauticus has no experience providing maintenance and servicing at a large scale.

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        Conflicts of Interest.    The conflicts of interest highlighted in this document, including that CLAQ’s Co-Sponsors have a fiduciary obligation to each of their respective members and Eli Spiro (our Chief Executive Officer and Director) and Jonas Grossman (our Director) are the controlling members of our Co-Sponsors. Because each of Mr. Spiro and Mr. Grossman have a fiduciary obligation to both CLAQ and the Co-Sponsors, they had a conflict of interest when voting on the Business Combination. CLAQ’s Board considered the possibility that the conflicts could have resulted in CLAQ’s management team selecting a target that was not as beneficial to the public stockholders as to the Co-Sponsors or their affiliates.

        Other risks.    Various other risks associated with the Business Combination, the business of CLAQ and the business of Nauticus described in the section titled “Risk Factors.

Combination Period Extension

Prior to the stockholders’ approval of the Charter Amendment Proposal and the Trust Amendment Proposal at the special meeting of stockholders on July 18, 2022, CLAQ may extend its Combination Period two (2) times for three (3) months each time if CLAQ would deposit into the Trust Account for the benefit of the public stockholders $1,725,000 for each three-month extension. Since CLAQ believes that it will be able to consummate the Business Combination with Nauticus before October 19, 2022 (i.e., the end of the first three-month extension) and the Co-Sponsors wanted to pay an extension amount that is substantially less than the $1,725,000 provided under the investment management trust agreement entered into at the time of the IPO, CLAQ held a special meeting of stockholders seeking stockholders’ approval for the July 18 Amendments, giving it the right to extend the Combination Period up to six (6) times for one (1) month each time by depositing into the Trust Account only $100,000 for each one-month extension on an as-needed basis instead. Although the proposals were contrary to the interests of CLAQ’s remaining public stockholders, who now have substantially less fund in the Trust Account than if the Charter Amendment Proposal and the Trust Amendment Proposal were not adopted, stockholders approved the two proposals at the special meeting on July 18, 2022. On July 19, 2022, CLAQ filed the amendment to its Amended and Restated Certificate of Incorporation and entered into the Amendment to the Investment Management Trust Agreement with Continental. As a result of the July 18 Amendments, CLAQ’s Co-Sponsors are no longer be required to deposit into the Trust Account $1,725,000 prior to each three-month extension (up to $3,450,000 in the aggregate) and these amounts will not be repaid if a business combination is not consummated to the extent funds are not available outside of the Trust Account. CLAQ may extend the Combination Period up to January 19, 2023, by depositing into the Trust Account for the benefit of the public stockholders $100,000 for each one (1) month extension (or an aggregate of $600,000 if the Combination Period is extended six times). The additional redemption amount added to the Trust Account was reduced from what was included in CLAQ’s initial public offering prospectus, which was $0.10 per share for each three-month extension to approximately $0.06 per share for each one-month extension. The Co-Sponsors are expected to contribute to CLAQ up to $600,000 (if the full 6-month extension is sought) in an interest-free loan for the full extension of the Combination Period on an as-needed basis. If the July 18 Amendments were not adopted, the Co-Sponsors would be expected to deposit into the Trust Account an aggregate of $3,450,000 (if the full 6-month extension is sought) in an interest-free loan. Since both loans will become payable only after Closing of the Business Combination, CLAQ’s Co-Sponsors will lose repayment of $600,000 loan if the Business Combination is not completed after the full 6-month extension. As of the date of this proxy statement/prospectus, the Co-Sponsors have contributed $100,000 for the extension of the Combination Period for one (1) month until August 19, 2022. No funds from the Trust Account would be used to repay such loans in the event of CLAQ’s liquidation. The additional redemption amount added to the trust account were therefore reduced from $0.10 per share for each three-month extension to approximately $0.06 per share, assuming minimum redemptions for each one-month extension. 15,466,711 shares were redeemed at the special meeting. As of August 1, 2022, there was approximately $18.1 million held in the Trust Account (inclusive of the $100,000 deposit into the Trust Account on July 18, 2022 extending the Combination Period from July 19, 2022 to August 19, 2022). Below is a table showing the additional amount per share that would be added to the Trust Account and the aggregate redemption amount after each deposit (based on the Trust Account balance as of July 19, 2022):

 

First Deposit
(already Made)

 

Second
Deposit

 

Third
Deposit

 

Fourth
Deposit

 

Fifth
Deposit

 

Sixth
Deposit

Amount of Deposit per share

 

$

0.06

 

$

0.06

 

$

0.06

 

$

0.06

 

$

0.06

 

$

0.06

Cumulative per share amount deposited from extensions

 

$

0.06

 

$

0.12

 

$

0.18

 

$

0.24

 

$

0.30

 

$

0.36

Redemptions Amount per share

 

$

10.16

 

$

10.21

 

$

10.27

 

$

10.32

 

$

10.38

 

$

10.43

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Certain Nauticus’ Projected Financial Information

Prior to the approval by the CLAQ Board of the Business Combination and the execution of the Merger Agreement and related agreements, Nauticus provided CLAQ with internally prepared forecasts for each of the years ending December 31, 2021 through 2024. Nauticus does not as a matter of course make public forecasts as to future results. The management of Nauticus prepared the prospective financial and operating information set forth below to provide to CLAQ. The accompanying prospective financial and operating information was not prepared with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information or GAAP with respect to forward-looking financial information.

Due to the forward-looking nature of these projections, specific quantifications of the amounts that would be required to reconcile such projections to GAAP measures are not available and Nauticus’ management believes that it is not feasible to provide accurate forecasted non-GAAP reconciliations. In the view of Nauticus’ management, this financial and operating information was prepared on a reasonable basis, reflects the best currently available estimates and judgments, and presents, to the best of management’s knowledge and belief, the expected course of action and the expected future performance of Nauticus at the time. This information should not be relied upon as being necessarily indicative of future results, and readers of this proxy statement/prospectus are cautioned not to place undue reliance on the prospective information.

The inclusion of projections in this proxy statement/prospectus should not be regarded as an indication that CLAQ, the Board, or their respective affiliates, advisors or other representatives considered, or now considers, such projections necessarily to be predictive of actual future results or to support or fail to support your decision whether to vote for or against the Business Combination. The projections are not fact and should not be relied upon as being necessarily indicative of future results, and readers of this proxy statement/prospectus, including investors or shareholders, are cautioned not to place undue reliance on this information. You are cautioned not to rely on the projections in making a decision regarding the transaction, as the projections may be materially different than actual results. We will not refer back to the projections in our future periodic reports filed under the Exchange Act.

The projections reflect numerous estimates and assumptions with respect to general business, economic, regulatory, market and financial conditions and other future events, as well as matters specific to Nauticus’ business, all of which are difficult to predict and subject to change and many of which are beyond Nauticus’ and CLAQ’s control. The projections are forward-looking statements that are inherently subject to significant uncertainties and contingencies, many of which are beyond Nauticus’ control. See “Risk Factors,” Nauticus Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Cautionary Note Regarding Forward-Looking Statements.” As a result, there can be no assurance that the projected results will be realized or that actual results will not be significantly higher or lower than projected. Since the projections cover multiple years, such information by its nature becomes less reliable with each successive year. These financial projections are subjective in many respects and thus are subject to multiple interpretations and periodic revisions based on actual experience and business developments. We encourage you to review Nauticus’ financial statements included in this proxy statement/prospectus as well as the section entitled “Selected Historical Consolidated Financial and Data of Nauticus,” “Unaudited Pro Forma Condensed Combined and Consolidated Financial Information,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Nauticus” in this proxy statement/prospectus.

Neither CLAQ nor Nauticus’ independent auditors, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the prospective financial information. Nonetheless, a summary of the projections is provided in this proxy statement/prospectus because they were made available to the CLAQ Board in connection with their review of the proposed transaction.

EXCEPT TO THE EXTENT REQUIRED BY APPLICABLE FEDERAL SECURITIES LAWS, BY INCLUDING IN THIS PROXY STATEMENT/PROSPECTUS, A SUMMARY OF THE PROJECTIONS FOR NAUTICUS, NEITHER CLEANTECH NOR NAUTICUS UNDERTAKES ANY OBLIGATIONS, AND EACH EXPRESSLY DISCLAIMS ANY RESPONSIBILITY TO UPDATE OR REVISE, OR PUBLICLY DISCLOSE ANY UPDATE OR REVISION TO, THESE PROJECTIONS TO REFLECT CIRCUMSTANCES OR EVENTS, INCLUDING UNANTICIPATED EVENTS, THAT MAY HAVE OCCURRED OR THAT MAY OCCUR AFTER THE PREPARATION OF THESE PROJECTIONS.

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The key elements of the projections provided to and relied upon by the Company and the Board for purposes of its financial analyses and approval, are summarized in the table below:

Projected Revenue and EBITDA ($mm)(1)(2)(3)

 

2021A

 

2022E

 

2023E

 

2024E

Services

 

8.6

 

13.9

 

 

57.7

 

 

146.0

 

Direct Product Sales

 

0.0

 

9.5

 

 

36.8

 

 

56.1

 

Total Revenue

 

8.6

 

23.4

 

 

94.5

 

 

202.1

 

EBITDA

 

n/a

 

0.3

 

 

31.0

 

 

110.8

 

EBITDA Margin

 

n/a

 

1

%

 

33

%

 

55

%

____________

(1)      The projected revenue by Services and Direct Product Sales disclosed in the table above is the same that was presented and prepared as part of the projected financial information that Nauticus provided to CLAQ prior to its approval of the Business Combination and subject to the same qualifications and assumptions applied to the revenue projections disclosed under “Proposal 1 — The Business Combination Proposal — Certain Nauticus’ Projected Financial Information.”

(2)      The services reflected in the above table includes revenue from the RaaS model (as projected) applied to commercial services (primarily subsea energy/offshore wind), engineering services (primarily the Defense market), the lease of vehicles to commercial customers, and software licenses (SaaS). The Direct Product Sales category summarizes the sales of Aquanaut and Argonaut vehicles directly to commercial and defense customers.

(3)      The RaaS model is anticipated to commence in late 2022 with the currently available Hydronauts and Aquanauts in Nauticus’ inventory. The RaaS model will initially be offered through a preproduction Hydronaut and preproduction Aquanaut pair at a price point that is less than the anticipated $40,000 per day rate (disclosed herein). After delivery of additional vehicles to increase the fleet size and after their respective commissioning, the RaaS model is anticipated to continue in 2023 with the production Hydronaut and production Aquanaut at the expected market rate of $40,000 per day. Since the vehicles will have limited calendar space to generate revenue in 2022, the RaaS service model is expected to account for just a small portion, approximately $0.35 million of the $13.9 million, in the broader Services category (as defined above) revenue for 2022. These vehicles, along with the new builds projected in 2023, are expected to generate approximately $12.6 million of the $57.7 million Services revenue in 2023 with the balance of the revenue coming from the other services and product sales within government markets. In 2024, the service fleet is expected to expand and the revenue from the RaaS business is estimated to account for $117.4 million of the total projected revenue of $146.0 million from services.

The statements and disclosures in the table above, related to the RaaS service revenue, are subject to the same qualifications and assumptions described in Footnote (1) above. Nauticus’ financial projections primarily rely on two major revenue streams — the timely manufacturing and commissioning of the production of the Nauticus Fleet put into commercial service using the RaaS model, and the adoption of the defense variants (Argonauts) realized as product sales with long operation and maintenance revenue tails both in US and foreign markets. The Nauticus Fleet consists of an Aquanaut — Hydronaut pair working in tandem. The underlying component units, however, may be manufactured, delivered, and commissioned into service separately and operated independently. The Nauticus Fleet is expected to be commissioned and in the field by early 2023, with one of the underlying Aquanauts to be delivered in Q4 2022 and the remaining two (2) Aquanauts to be delivered in Q1 2023 and two (2) Hydronauts to be delivered in Q2 2023. Other ancillary revenue streams also include: limited commercial sales of Aquanaut and Hydronaut directly; Olympic arms; ToolKITT software licenses; and revenue from other sponsored programs (engineering services) sometimes performed for commercial customers, but primarily from government customers.

RaaS commercial services in Nauticus’ financial model relies on the staggered production output of the Nauticus Fleet assuming increasing days on hire ramping up to a full utilization modeled as 200 days per year per tandem pair at the $40,000 per day. Each tandem pair in predicted to drive $8 million per year of revenue at full utilization. As for direct sales, the overall revenue projection is supplemented by the increasing market adoption of government customers from modest quantities early on to higher vehicle targets once the full acceptance of the platform is realized.

Services Revenue(1)(2)

 

2021A

 

2022E

 

2023E

 

2024E

Commercial Services (RaaS)

 

0.0

 

0.3

 

12.6

 

117.4

Commercial Lease

 

0.0

 

0.0

 

1.5

 

3.7

Commercial Services Contracts

 

0.0

 

0.0

 

1.8

 

2.7

Sponsored Programs

 

8.6

 

9.0

 

34.4

 

13.5

Software Licenses

 

0.0

 

4.6

 

7.4

 

8.7

Total Services

 

8.6

 

13.9

 

57.7

 

146.0

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Directed Sales Revenue

 

2021A

 

2022E

 

2023E

 

2024E

Commercial Sales

 

0.0

 

9.5

 

28.0

 

29.8

Defense Sales

 

0.0

 

0.0

 

8.8

 

26.3

Total Direct Sales

 

0.0

 

9.5

 

36.8

 

56.1

Total Revenue

 

8.6

 

23.4

 

94.5

 

202.1

__________

(1)      The table above represents the breakdown of the service and direct product sales components. The Commercial Services captures projected revenue from the Nauticus fleet performing services in oil & gas, offshore renewables, and other related markets. The Commercial Lease section projects revenue from leasing Aquanauts directly to service companies or entities that desire to operate the platform themselves for their own usage, but do not desire to own it outright — so they lease it. The Service Contracts summarize opportunities for Nauticus personnel to perform the operations using the Nauticus Fleet where the Fleet assets have been purchased by commercial customers. For a point of understanding, Service Contracts are essentially the opposite of leases, i.e. companies that desire to own the assets outright, but do not have the expertise to operate them. The Sponsored Programs section provides an estimate for expected growth in government or other commercial engineering service contracts aimed at technology development. Revenue generated from licenses for the ToolKITT software are shown under Software Licenses.

(2)      The projected outyear growth in these revenue classes is driven by the current sales pipeline and contracted commitments. The Services and Direct Product Sales forecasts are derived from multiple components that are modeled based on market intelligence gained from direct customer interactions, upselling current commercial partners, letters of intent, memorandums of understanding, high confidence verbal indications, and further extrapolations from on-contract activities derived from current customers. Since this is a new type of high technology service for the ocean markets, Nauticus has bid on and has won commercial contracts engaged in studies and pilots with large, long term potential customers around the RaaS offering that when successfully completed, will result in the uptake of Nauticus service for those respective customers. These pilots are leading indicators and market microcosms that gives Nauticus reasonable confidence when projecting how the RaaS commercial service offering will scale as the market adopts it, as indicated by the growth evidenced in the chart titled “Annual Vehicle Build Schedule” on page 124 below. Concurrently, the government markets will mature at similar rates, although purchasing the subsea vehicles outright for their use cases.

In the second quarter of 2022, Nauticus has renegotiated the milestone payment terms with Triumph Subsea Services for their Purchase Order for the Aquanaut and Hydronaut and supporting equipment (see line item for 2022 Commercial Sales). The renegotiation has resulted in a shift of the first payment from Q2 of 2022 to Q3 of 2022. See “Risk Factors” for further information.

Revenue Pipeline ($mm)

 

2022E

 

2023E

 

2024E

Committed Orders

 

22.0

 

 

38.0

 

 

28.6

 

Committed LOIs/MOUs

 

9.0

 

 

7.5

 

 

12.9

 

Uncommitted Sales Pipeline

 

29.2

 

 

28.1

 

 

136.1

 

Uncommitted Commercial Services

 

0.0

 

 

2.0

 

 

22.1

 

% of Total Revenue Committed

 

132

%

 

48

%

 

21

%

% of Total Revenue Committed + in Sales Pipeline

 

257

%

 

78

%

 

88

%

Annual Vehicle Build Schedule

 

2022E

 

2023E

 

2024E

Commercial Services

 

2

 

5

 

18

Commercial Sales/Leases

 

1

 

2

 

4

Defense and Port Security

 

1

 

2

 

3

Total number of vehicles built during the year

 

4

 

9

 

25

Cumulative Commercial Services Fleet

 

2

 

7

 

25

CLAQ believes that Nauticus has sufficient engagement with customers in target markets to enable it to reasonably project demand through 2024. While Nauticus Robotics currently does not have any “hard commitments” (e.g., executed purchases orders for RaaS services), Nauticus has “soft commitments” and contractional expressions (e.g., letters of intent and memorandums of understanding from customers that express significant demand to use the devices once the initial fleet production is complete).

Nauticus also has purchase orders for limited direct sales with a 3rd party where Nauticus would operate the devices, although not “precisely” through our RaaS model (a business model planned for future commercial services but not yet implemented). One such example is an Aquanaut, which Nauticus currently operates under an 18-month lease arrangement for a U.S. governmental customer. This arrangement is not “precisely” through our RaaS model (a

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business model planned for future commercial services but not yet implemented) as the Aquanaut that is being leased is in support of another program and some of the labor costs associated with such operations is accounted for through another contract, as originally intended by the U.S. governmental customer.

The RaaS business model is based on a recurring services revenue approach, whereby customers may pay an all-inclusive rate for the completion of a desired service. Our RaaS business model charges a daily rate for the Hydronaut and Aquanaut pair to perform ocean services. The current 18-month lease contract (a copy of which is provided herein as Exhibit 10.25), which is not “precisely” through RaaS, between Nauticus and a Large Confidential Government Contractor, for the Aquanaut creates recurring monthly revenue, which is a key attribute of the RaaS business model. This contract has two components — an engineering services portion, which supports the software development and other direct costs of the program, and a lease portion that supports the use of Aquanaut for testing the software as it is developed. The use of the Aquanaut is included in the 18-month lease portion of the contract. This 18-month Aquanaut lease began at the commencement of the contract in June 2021. The Hydronaut, in contrast, is not included in the lease portion, but instead is chartered through the engineering services portion of the contract to support the Aquanaut’s testing as it progressed toward offshore trials, as a direct cost to the program, and is not operating under a separate lease agreement. The Hydronaut supports the offshore operations of the Aquanaut that is required to meet the mission goals of the contract. All support costs for the Aquanaut and Hydronaut are included in the lease and charter fees charged to the customer. The operation of the Aquanaut and Hydronaut includes crew labor, fuel cost, maintenance, and insurance and are all covered by the lease (Aquanaut) and charter (Hydronaut 1) fees for the vessels. Other labor costs for testing and engineering support are covered by the engineering services portion of the contract with a Large Confidential Government Contractor. The “charter fees” represent the fee we charge the Large Confidential Government Contractor under the engineering portion of the contract for use of this vessel. It is considered “Other Direct Costs” to the program. The “engineering services” include labor and other costs to the program of which, the Hydronaut charter ($6,000 per day) is an example. In January 2022, this approved cost to the Hydronaut of $6,000 per day was approved by contract management in support of the offshore testing phase of the program.

Additionally, there are some other features of the lease agreement that are similar to a RaaS contract, such as all-inclusive access. However, since a lease agreement more often secures the availability of an asset and not the specific performance of a service, this contract is not “precisely” a RaaS agreement. Nauticus provides all labor and other operating costs associated with the deployment of the Hydronaut and Aquanaut, unless otherwise prescribed by the secondary contract that the lease supports.

In contrast to this arrangement, the “pure” RaaS model (a business model planned for future commercial services but not yet implemented) that is deployed in a “pure” commercial sense has all costs covered in the rate billed out for the service. One such example is the Nauticus RaaS model which will bill out at a rate of $40,000 per day and will cover all costs associated with that operation. Additionally, the long term commercial RaaS model (a business model planned for future commercial services but not yet implemented) is envisioned to allow for shorter term ‘subscriptions’ to the Aquanaut/Hydronaut assets and not require long term master service agreement arrangements with end clients. This will permit for more opportunistic customer acquisitions and ‘call out’ workflow, which is analogous to the difference between renting a car for a work trip and leasing a car for 5 years.

After our lease expires this fiscal year with our U.S. governmental customer, a prospective customer could subscribe to the current Aquanaut through Nauticus’ RaaS arrangement, once it becomes available. Subsequently, once we complete the three (3) additional Aquanauts in Q4 of 2022, and as soon as the units are commissioned, they will be available for customer usage.

Additionally, Nauticus is deeply networked into the world energy sector through its long-time partnerships with Schlumberger and Transocean. This network of relationships has assisted Nauticus in contracting with a Super Major for a pilot of the RaaS engagement that will commence in Q3 2022. Nauticus has also met with representatives from several prospective global customers seeking an improved method for performing subsea maintenance activities. As the Nauticus fleet of robotic systems is commissioned in early 2023, and with the individual components expected to be delivered in Q4 2022 for one Aquanaut, Q1 2023 for the remaining two (2) Aquanauts, and Q2 2023 for the remaining two (2) Hydronauts, Nauticus anticipates elevated interest from subsea energy operators as they explore methods for lowering costs associated with maintaining their subsea assets.

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Nauticus’ revenue forecast is based on certain contractual arrangements, letters of intent, memoranda of understanding, sales pipeline developed through its business development efforts and expectation of launching its commercial services fleet under the RaaS business model, as presented in the tables above. CLAQ’s management analyzed these arrangements by volume, ability to manufacture such quantities with quality-controls in place, and timing of expected delivery, as presented in the tables above.

The forecast also assumes that Nauticus’ commercial RaaS model is priced at a discount to the next-best alternative given the disruptive nature of its technology, while maintaining strong margins. The cost of providing such services is expected to decline over the projection period due to the expected increasing in autonomy of the Hydronaut over the projection period.

Nauticus’ forecast also assumes Aquanaut build and assembly time per unit to decrease from six months in 2022 and 2023 to three months in 2024. Nauticus also expects its engineering, research, development, general and administrative costs to increase during the projection period based on a combination of bottom-up budgeting and as a percentage of revenue. General and administrative expenses also reflect costs associated with operating as a public company and complying with legal, accounting and other regulatory requirements.

Aquanaut will be under a long term RaaS contract (a business model planned for future commercial services but not yet implemented) to perform data gathering and intervention operations for a contract through a Large Confidential Government Contractor, for a government customer. Nauticus is currently performing as a subcontractor to a Large Confidential Government Contractor to complete the program objectives. For commercial markets, Nauticus expects the RaaS model (a business model planned for future commercial services but not yet implemented) to begin with the introduction of Aquanauts to the North Sea and/or Gulf of Mexico. Our financial projections reflect a modest 10 days on hire in the 4th quarter of 2022 as this vehicle completes commissioning and begins commercial service. As the fleet grows in 2023, the projections assume a reduced number of days on hire per vehicle to account for the market acceptance. In 2024, the commercial service fleet reaches full utilization with each available vehicle conducting 50 days of work per quarter. The overall commercial fleet size is projected to reach 78 vehicles by 2026 which will constitute approximately less than 5% of the current world-wide market of subsea vehicles in this class.

Staff increases are projected for the headquarters offices in Houston (Webster, TX), remote operations centers, and service fleet crew. Three remote operations centers were modeled in the financial projections — one in the UK for the North Sea, Singapore for Asia/Pacific, and Brazil. The Houston office will support operations in the Gulf of Mexico. The remote operations centers cover the primary markets for subsea robotics. Headquarters staffing projections utilize a ‘bottom up’ staffing projection for 2022 based on near-term staff requirements followed by a transition to a percentage of revenue for each department, estimated to be between 2.5-5%, in 2023 and subsequent years. The set up and operating costs for the remote centers were computed based on a detailed analysis of expected costs in both up front (“CapEx”) costs as well as the ongoing operational cost (“OpEx”) to support the commercial fleet services. Once established, the OpEx costs were increased 5% per year to account for inflation and growth. Service fleet crew labor cost is computed as a function of days on hire so this labor category increases as the days on hire increase. The crew cost is modeled to be reduced in the outyears to account for increased automation in the Hydronauts that will result in less crew overtime and eventually perform the entire mission without crew on the vessel.

Manufacturing (labor) cost per vehicle was estimated at $250K/vehicle by a detailed, bottom-up cost analysis. The financial projections assume a growth of 5% per year in this cost to account for labor cost. The component, or Bill of Materials, costs per vehicle were held constant across the multi-year projection with the assumption that reductions due to the economies of scale are offset by increases in component cost. The manufacturing schedule contained in the financial model is driven by the commercial service fleet size and the unit sales pipeline for Aquanaut and Argonaut vehicles. The manufacturing rate begins with a one vehicle produced in six months in an assembly bay and moves to one vehicle in three 3 months in the outyears to account for production efficiency gains. Outyear production costs increase to account for expected increases in production of vehicles for the commercial fleet, unit vehicle sales, and US Department of Defense.

Maintenance costs for fleet vehicles were derived from internal industry knowledge and reflected in the day rate costs. These costs for vehicle repair and maintenance are reflected in the day rate cost and increase at a rate of about 10% per year.

The revenue projections in the financial analysis are based on the established sales pipeline in the near term and market demand and expectations in the outyears. The associated cost estimates are based on historical business performance and bottom-up budget analyses for each business segment.

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The CLAQ Board compared Nauticus’ forecasts to the market capitalization, enterprise value and implied valuation multiples of its selected publicly traded company peer set.

The key selection criteria used to determine the comparable companies included, among others, the following factors: (i) the products or services offered, (ii) business model similarity in revenue recurrence, (iii) revenue growth profile, and (iv) gross margin. Companies were selected because they demonstrate (a) similar product or service offerings as Nauticus’, and (b) leading technology applied in their respective product or service offerings. The comparable companies were broken down into two distinct sets of public companies, which can be summarized as follows:

(A)    Primary Comparable Companies (Two Pure-Play RaaS companies — Sarcos Technology and Robotics Corporation, Berkshire Grey, Inc.): These selected companies operate in the Robotics sector and engage in a business model that aims to provide recurring revenue under a Robotics-as-a-Service business model. These companies are generally expected to have revenue growth and gross margin profile comparable to Nauticus. As of November 15, 2021, the “Pure-Play RaaS” peer group’s enterprise value/2024 estimated revenue median multiple was 5.0x, and enterprise value/2024 estimated EBITDA median multiple was 33.0x.

(B)    Secondary Comparable Companies:

a.      10 Robotics & Automation companies (Keyence Corporation, Intuitive Surgical, Inc., ABB Ltd, Fanuc Corporation, Hexagon AB, Rockwell Automation, Inc., AMETEK, Inc., Cognex Corporation, Teledyne Technologies Incorporated and Siasun Robot&Automation Co.,Ltd.): These selected companies operate in the broader Robotics and Automation industry but are larger and have a more mature growth profile than Nauticus. As of November 15, 2021, the “Robotics & Automation” peer group’s enterprise value/2024 estimated revenue median multiple was 5.8x, and enterprise value/2024 estimated EBITDA median multiple was 18.4x.

b.      Seven Disruptive Category Creator companies (Tesla, Inc., Uber Technologies, Inc., Autodesk, Inc., Palantir Technologies Inc., Sunrun Inc., C3.ai, Inc., Proto Labs, Inc.): These selected companies have brought technological disruption to their respective industries, thereby gaining a first-mover advantage over their competition. As of November 15, 2021, the “Disruptive Category Creator” peer group’s enterprise value/2024 estimated revenue median multiple was 8.2x, and enterprise value/2024 estimated EBITDA median multiple was 29.9x.

c.      Nine All-Electric Autonomous Platform companies (Faraday Future Intelligent Electric Inc., Canoo Inc., Velodyne Lidar, Inc., Ouster, Inc., Innoviz Technologies Ltd., Arrival, Lilium N.V., Luminar Technologies, Inc., Proterra Inc.): These selected companies operate in the expanding mobility industry driven by adoption of new technology, and are generally expected to exhibit revenue growth comparable to Nauticus. As of November 15, 2021, the “All-Electric Autonomous Platform” peer group’s enterprise value/2024 estimated revenue median multiple was 2.5x, and enterprise value/2024 estimated EBITDA median multiple was 28.5x.

d.      Four Energy Transition & Clean-Tech companies (EVgo, Inc., ESS Tech, Inc., ChargePoint Holdings, Inc., QuantumScape Corporation): These selected companies operate in the expanding Energy Transition & Clean-Tech industry driven by adoption of new technology, and are generally expected to exhibit revenue growth comparable to Nauticus. As of November 15, 2021, the “Energy Transition & Clean-Tech” peer group’s enterprise value/2024 estimated revenue median multiple was 9.9x, and enterprise value/2024 estimated EBITDA median multiple was 35.0x.

Although none of the above selected publicly traded companies are directly comparable to Nauticus, CLAQ reviewed these companies and considered them Nauticus’ peer set because, among other things, these companies have one or more similar operating and financial characteristics as Nauticus. In determining its valuation range based on the peer set, CLAQ relied primarily on Pure-Play RaaS companies, Sarcos Technology and Robotics Corporation and Berkshire Grey, Inc and secondarily on the remaining companies in the peer set.

CLAQ management found that Nauticus’ equity value of approximately $300 million implied a pro forma enterprise value of 1.9x estimated 2024 revenue and 3.4x estimated 2024 EBITDA, an attractive valuation relative to the peer set especially in light of Nauticus’ strong growth and projected margin profile. Using a range of enterprise

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value/revenue and enterprise value/EBITDA multiples of Nauticus’s primary and secondary public company peer sets, CLAQ management calculated the implied enterprise value of Nauticus to be in the range of $0.9 billion and $3.1 billion, a significant upside to the $377 million of pro forma enterprise value called for in the transaction with Nauticus.

Interests of Certain Persons in the Business Combination

When you consider the recommendation of the Board in favor of adoption of the Business Combination Proposal and other Proposals, you should keep in mind that CLAQ’s directors and officers and their affiliates have interests in the Business Combination that are different from, or in addition to, your interests as a shareholder, including:

        CLAQ’s Co-sponsors have a fiduciary obligation to each of their respective members and Eli Spiro, (CLAQ’s Chief Executive Officer and Director) and Jonas Grossman (a CLAQ Director) are the controlling members of our Co-sponsors. Because each of Mr. Spiro and Mr. Grossman have a fiduciary obligation to both CLAQ and the Co-sponsors, they had a conflict of interest when voting on the Business Combination.

        At the special meeting of stockholders held on July 18, 2022, CLAQ’s stockholders approved the Charter Amendment Proposal and the Trust Agreement Proposal, giving CLAQ the right to extend the Combination Period six (6) times for an additional one (1) month each time by depositing into the Trust Account $100,000 for each one-month extension, up to January 19, 2023 (the first extension to August 19, 2022 was already made). As a result of the July 18 Amendments, public stockholders forfeited their right to receive up to $1,725,000, and up to an aggregate of $3,450,000 under certain agreements entered into in connection with CLAQ’s IPO, if CLAQ seeks to extend the Combination Period for three or six months, respectively, but does not consummate a business combination;

        As a result of the July 18 Amendments, CLAQ’s Co-Sponsors are no longer be required to deposit into the Trust Account $1,725,000 prior to each three-month extension (up to $3,450,000 in the aggregate) and these amounts will not be repaid if a business combination is not consummated to the extent funds are not available outside of the Trust Account;

        As a result of the July 18 Amendments, CLAQ may extend the Combination Period up to January 19, 2023, by depositing into the Trust Account for the benefit of the public stockholders $100,000 for each one (1) month extension (or an aggregate of $600,000 if the Combination Period is extended six times). The additional redemption amount added to the Trust Account was reduced from what was included in CLAQ’s initial public offering prospectus, which was $0.10 per share for each three-month extension to approximately $0.06 per share for each one-month extension.

        As a result of the July 18 Amendments, the Co-Sponsors are expected to contribute to CLAQ up to $600,000 (if the full 6-month extension is sought) in an interest-free loan for the full extension of the Combination Period on an as-needed basis. If the July 18 Amendments were not adopted, the Co-Sponsors would be expected to deposit into the Trust Account an aggregate of $3,450,000 (if the full 6-month extension is sought) in an interest-free loan. Since both loans will become payable only after Closing of the Business Combination, CLAQ’s Co-Sponsors will lose repayment of $600,000 loan if the Business Combination is not completed after the full 6-month extension. As of the date of this proxy statement/prospectus, the Co-Sponsors have contributed $100,000 for the extension of the Combination Period for one (1) month until August 19, 2022. No funds from the Trust Account would be used to repay such loans in the event of CLAQ’s liquidation.

        If an initial business combination, such as the Business Combination, is not completed, CLAQ will be required to dissolve and liquidate. In such event, the 4,312,500 founder shares currently held by the Initial Stockholders, which were acquired prior to the IPO will be worthless because such holders have agreed to waive their rights to any liquidation distributions. The founder shares were purchased for an aggregate purchase price of $25,000, and had an aggregate market value of approximately $43.8 million based on the closing price of $10.18 per share of CLAQ common stock on the Nasdaq Stock Market as of August 1, 2022.

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        If an initial business combination, such as the Business Combination, is not completed, an aggregate of 7,175,000 Private Warrants purchased by CLAQ’s Co-sponsors for a total purchase price of $7,175,000, will be worthless. The Private Warrants had an aggregate market value of approximately $2.3 million based on the closing price of $0.32 per Public Warrant on the Nasdaq Stock Market as of August 1, 2022.

        Because of these interests, CLAQ’s Initial Stockholders could benefit from the completion of a business combination that is not favorable to its public shareholders and may be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to public shareholders rather than liquidate. For example, if the share price of the CLAQ common stock declined to $5.00 per share after the close of the business combination, CLAQ’s public shareholder that purchased shares in the initial public offering, would have a loss of $5.00 per share, while CLAQ’s Sponsor would have a gain of $4.99 per share because it acquired the founder shares for a nominal amount. In other words, CLAQ’s Initial Stockholders can earn a positive rate of return on their investment even if public shareholders experience a negative rate of return in the post-combination company.

        One of CLAQ’s Co-sponsors is CleanTech Sponsor, and the managing member of CleanTech Sponsor is Eli Spiro, CLAQ’s Chief Executive Officer and Director. If an initial business combination, such as the Business Combination, is not completed, CleanTech Sponsor will lose an aggregate of approximately $28.5 million (not including any extension loan after July 18, 2022), comprised of the following:

        approximately $26.4 million (based on the closing price of $10.18 per share of CLAQ common stock on the Nasdaq Stock Market as of August 1, 2022) of the 2,595,000 founder shares CleanTech Sponsor holds;

        approximately $1.5 million (based on the closing price of $0.32 per Public Warrant on the Nasdaq Stock Market as of August 1, 2022) of the 4,783,333 Private Warrants CleanTech Sponsor holds; and

        repayment of an interest-free loan of $567,000 (as of July 18, 2022) by CleanTech Sponsor since the loan will become payable only after Closing of the Business Combination, or the date on which CLAQ determines that it is unable to effect a business combination.

        CLAQ’s other Co-sponsor, CleanTech Investments, is an affiliate of Chardan, and CLAQ’s director, Mr. Jonas Grossman, is the Managing Partner and President of Chardan. If an initial business combination, such as the Business Combination, is not completed, Chardan will lose an aggregate of approximately $23.9 million (not including any extension loan after July 18, 2022), comprised of the following:

        approximately $14.6 million (based on the closing price of $10.18 per share of CLAQ common stock on the Nasdaq Stock Market as of August 1, 2022) of the 1,437,500 founder shares CleanTech Investment holds;

        approximately $0.8 million (based on the closing price of $0.32 per Public Warrant on the Nasdaq Stock Market as of August 1, 2022) of the 2,391,667 Private Warrants CleanTech Investment holds;

        a marketing fee of $6,037,500 for certain services pursuant to a Business Combination Marketing Agreement;

        a placement fee of $2,118,000 (i.e., 6.0% of the PIPE Investment that is not sold to an affiliate of Chardan) for certain services pursuant to the Financial Advisory Agreement (pursuant to the Financial Advisory Agreement, Chardan also has a right of first refusal to act as a book-running manager with minimum economics of 15% for the first two public or private equity offerings by CLAQ or any successor or subsidiary of CLAQ);

        repayment of an interest-free loan of $283,000 (as of July 18, 2022) by CleanTech Investments since the loan will become payable only after Closing of the Business Combination, or the date on which CLAQ determines that it is unable to effect a business combination; and

        the $10,000 monthly administrative fee under the Administrative Support Agreement pursuant to which CLAQ may delay payment of the same until the consummation of a business combination. As of June 30, 2022, there is an accrued and unpaid balance of $113,333 owed to Chardan under the Administrative Support Agreement.

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        If an initial business combination, such as the Business Combination, is not completed, the Initial Stockholders will lose a combined aggregate amount of approximately $47.0 million (including the Co-sponsors’ loans and securities held based on the closing price of $10.17 per share of CLAQ common stock and $0.32 per Public Warrant on August 1, 2022), and the Initial Stockholders together with their affiliates (including Chardan) will lose a combined aggregate amount of approximately $55.2 million (including Chardan’s fees contingent upon the Closing of the Business Combination.)

        If the proposed Business Combination is not completed, CLAQ’s Initial Stockholders will not have the potential ownership interest of approximately 9.0% (assuming minimum redemptions) or 9.3% (assuming maximum redemption) in the combined company, assuming exercise and conversion of all securities.

        As of the date of this proxy statement/prospectus, ATW is the only purchaser for the Debentures and associated Warrants in the Debt Financing. ATW is managed by ATW Partners Opportunities Management, LLC, which is an affiliate of Chardan, and our director, Mr. Jonas Grossman, is the Managing Partner and President of Chardan.

        The exercise of CLAQ’s directors’ and officers’ discretion in agreeing to changes or waivers in the terms of the transaction may result in a conflict of interest when determining whether such changes or waivers are appropriate and in our stockholders’ best interest.

        If the Business Combination is completed, Nauticus will designate all members of the Combined Company’s Board of Directors, except for the Transocean Designee).

Anticipated Accounting Treatment

The Business Combination is accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with GAAP. Under this method of accounting, CLAQ is treated as the “acquired” company for financial reporting purposes. Nauticus has been determined to be the accounting acquirer because Nauticus, as a group, will retain a majority of the outstanding shares of the combined company as of the closing of the Business Combination, they have nominated eight members of the board of directors as of the closing of the Business Combination, Nauticus’ management will continue to manage the combined company and Nauticus’ business will comprise the ongoing operations of the Combined Company.

Sources and Uses for the Business Combination

The following tables summarize the sources and uses for funding the Business Combination (i) assuming that none of CLAQ’s outstanding shares of Common Stock are redeemed in connection with the Business Combination and (ii) assuming that a portion of CLAQ’s outstanding shares of Common Stock are redeemed in connection with the Business Combination. For an illustration of the number of shares and percentage interests outstanding under each scenario see the section entitled “Unaudited Pro Forma Condensed Combined and Consolidated Financial Information.”

Minimum Redemption

Sources of Funds (in millions)

     

Uses (in millions)

   

Cash held in Trust Account(1)(2)

 

$

18.1

 

Common stock of combined company issued to Nauticus stockholders(3)

 

$

300.3

PIPE Investment

 

 

72.5

 

Transaction and other costs(4)

 

 

21.9

Common stock of combined company issued to Nauticus stockholders(3)

 

 

300.3

 

Cash to combined company Balance Sheet

 

 

68.7

Total Sources

 

$

390.9

 

Total Uses

 

$

390.9

____________

(1)      As of July 18, 2022.

(2)      Reflects the redemption payment totaling approximately $156,533,843 as a result of the redemption of 15,466,711 shares on CLAQ Common Stock in connection with the July 18 Amendments, inclusive of a $100,000 deposit to the Trust Account and approximately $333,992 of available interest at July 18, 2022.

(3)      Shares issued to Nauticus stockholders are at a deemed value of $10.00 per share. Assumes 30,031,279 shares of Common Stock issued. See the section entitled “Unaudited Pro Forma Condensed Combined and Consolidated Financial Information” for more details.

(4)      Represents an estimated amount, inclusive of fees related to the Business Combination, related transactions and CLAQ promissory note repayment.

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Maximum Redemption

Sources of Funds (in millions)

     

Uses (in millions)

   

Cash held in Trust Account(1)(2)

 

$

 

Common stock of combined company issued to Nauticus stockholders(3)

 

$

300.3

PIPE Investment

 

 

72.5

 

Transaction and other costs (4)

 

 

21.9

Common stock of combined company issued to Nauticus stockholders(3)

 

 

300.3

 

Cash to combined company Balance Sheet

 

 

50.6

Total Sources

 

$

372.8

 

Total Uses

 

$

372.8

____________

(1)      As of July 18, 2022 assumes that 1,783,289 Public Common Stock subject to redemption are redeemed for an aggregate payment of approximately $18.1 million (based on an estimated per share redemption price of approximately $10.18 that was calculated using the $18.1 million of cash in the Trust Account divided by 1,783,289 Public Common Stock subject to redemption assuming the pro forma maximum redemption scenario pursuant to the Merger Agreement). Under the terms of the Merger Agreement, the aggregate cash proceeds received from the Trust Account, together with the proceeds from the PIPE Investment and after the payment of transaction expenses, must equal no less than $50.0 million.

(2)      Reflects the redemption payment totaling approximately $156,533,843 as a result of the redemption of 15,466,711 shares on CLAQ Common Stock in connection with the July 18 Amendments, inclusive of a $100,000 deposit to the Trust Account and approximately $333,992 of available interest at July 18, 2022.

(3)      Shares issued to Nauticus stockholders are at a deemed value of $10.00 per share. Assumes 30,031,279 shares of Common Stock issued. See the section entitled “Unaudited Pro Forma Condensed Combined and Consolidated Financial Information” for more details.

(4)      Represents an estimated amount, inclusive of fees related to the Business Combination, related transactions and CLAQ promissory note repayment.

Appraisal Rights

There are no appraisal rights available to our stockholders in connection with the Business Combination.

Total Shares of Common Stock Outstanding Upon Consummation of the Business Combination

Ownership of the Post-Business Combination Company After the Closing

It is anticipated that upon completion of the Business Combination and assuming minimum redemptions by CLAQ public stockholders, CLAQ’s public stockholders (other than the Equity Financing investors) will retain an ownership interest of approximately 5.5% in the Combined Company the Equity Financing investors will own approximately 7.4% of the Combined Company, the Co-Sponsors, officers, directors and other holders of founder shares will retain an ownership interest of approximately 9.0% of the Combined Company, and the Nauticus stockholders will own approximately 78.1% (including the 7,500,000 Earnout Shares) of the Combined Company.

The following tables illustrate estimated ownership levels in the Company, immediately following the consummation of the Business Combination, based on the varying levels of redemptions by CLAQ public stockholders and the following additional assumption:

 

Minimum
Redemptions
(1)

 

%

 

10%
Redemption
(2)

 

%

 

50%
Redemption
(3)

 

%

 

75%
Redemption
(4)

 

%

 

Maximum
Redemption
(5)

 

%

Nauticus stockholders(6)

 

37,531,279

 

78.1

%

 

37,531,279

 

78.4

%

 

37,531,279

 

79.6

%

 

37,531,279

 

80.4

%

 

37,531,279

 

81.2

%

CLAQ public stockholders(7)

 

2,645,789

 

5.5

%

 

2,467,460

 

5.2

%

 

1,754,145

 

3.7

%

 

1,308,322

 

2.8

%

 

862,500

 

1.9

%

Initial Stockholders(8)(9)

 

4,312,500

 

9.0

%

 

4,312,500

 

9.0

%

 

4,312,500

 

9.2

%

 

4,312,500

 

9.2

%

 

4,312,500

 

9.3

%

PIPE Investment investors(10)

 

3,530,000

 

7.4

%

 

3,530,000

 

7.4

%

 

3,530,000

 

7.5

%

 

3,530,000

 

7.6

%

 

3,530,000

 

7.6

%

Pro forma common stock at March 31, 2022

 

48,019,568

 

100.0

%

 

47,841,239

 

100.0

%

 

47,127,924

 

100.0

%

 

46,682,101

 

100.0

%

 

46,236,279

 

100.0

%

Potential sources of dilution:

       

 

       

 

       

 

       

 

       

 

Public Warrants

 

8,625,000

 

18.0

%

 

8,625,000

 

18.0

%

 

8,625,000

 

18.3

%

 

8,625,000

 

18.5

%

 

8,625,000

 

18.7

%

Private Warrants

 

7,175,000

 

14.9

%

 

7,175,000

 

15.0

%

 

7,175,000

 

15.2

%

 

7,175,000

 

15.4

%

 

7,175,000

 

15.5

%

Nauticus Options

 

3,970,266

 

8.3

%

 

3,970,266

 

8.3

%

 

3,970,266

 

8.4

%

 

3,970,266

 

8.5

%

 

3,970,266

 

8.6

%

Debentures

 

3,036,735

 

6.3

%

 

3,036,735

 

6.3

%

 

3,036,735

 

6.4

%

 

3,036,735

 

6.5

%

 

3,036,735

 

6.6

%

Warrants

 

3,036,735

 

6.3

%

 

3,036,735

 

6.3

%

 

3,036,735

 

6.4

%

 

3,036,735

 

6.5

%

 

3,036,735

 

6.6

%

____________

(1)      Assumes that no CLAQ public stockholders are redeemed and excludes potential dilution from sources of dilution.

(2)      Assumes that 178,329 Public Common Stock is redeemed for aggregate redemption payments of approximately $1,814,812, assuming a $10.18 per share redemption price and based on funds in the Trust Account as of July 19, 2022. The Merger

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Agreement includes a condition to the closing that at the closing having an amount of available cash from the Trust Account and the PIPE Investment (after giving effect to the redemption of any Public Common Stock in connection with the IPO and the payment of the transaction expenses), of no less than $50,000,000.

(3)      Assumes that 891,645 Public Common Stock is redeemed for aggregate redemption payments of approximately $9,074,061, assuming a $10.18 per share redemption price and based on funds in the Trust Account as of July 19, 2022. The Merger Agreement includes a condition to the closing that at the closing having an amount of available cash from the Trust Account and the Equity Financing (as defined in the Merger Agreement) (after giving effect to the redemption of any Public Common Stock in connection with the IPO and the payment of the transaction expenses), of no less than $50,000,000.

(4)      Assumes that 1,337,467 Public Common Stock is redeemed for aggregate redemption payments of approximately $13,611,091, assuming a $10.18 per share redemption price and based on funds in the Trust Account as of July 19, 2022. The Merger Agreement includes a condition to the closing that at the closing having an amount of available cash from the Trust Account and the Equity Financing (as defined in the Merger Agreement) (after giving effect to the redemption of any Public Common Stock in connection with the IPO and the payment of the transaction expenses), of no less than $50,000,000.

(5)      Assumes that 1,783,289 Public Common Stock is redeemed for aggregate redemption payments of approximately $18,148,121, assuming a $10.18 per share redemption price and based on funds in the Trust Account as of July 19, 2022. The Merger Agreement includes a condition to the closing that at the closing having an amount of available cash from the Trust Account and the PIPE Investment (after giving effect to the redemption of any Public Common Stock in connection with the IPO and the payment of the transaction expenses), of no less than $50,000,000.

(6)      Includes 7,500,000 Earnout Shares subject to the Triggering Events. Such shares will be deposited into escrow in accordance with the terms of the Merger Agreement and will be subject to reduction or forfeiture in accordance with the terms of the Merger Agreement. However, registered holders will maintain voting rights related to such shares unless forfeited.

(7)      Excludes 8,625,000 Public Warrants and includes the issuance of 862,500 shares of Common Stock pursuant to the Rights. If all potential sources of dilution were exercised and converted into Common Stock the CLAQ public stockholders would hold approximately 3.6%, 3.3%, 2.4%, 1.8% and 1.2% under the Minimum Redemptions, 10% Redemption, 50% Redemption, 75% Redemption, and Maximum Redemption scenarios, respectively. See “Risk Factors — Risks Related to CLAQ’s Business and the Business Combination — The CLAQ Public Stockholders will experience dilution as a consequence of, among other transactions, the issuance of Common Stock as consideration in the Business Combination and the PIPE Investment” for additional information related to the risk of dilution to our public stockholders.

(8)      Excludes 7,175,000 Private Warrants. If all potential sources of dilution were exercised and converted into Common Stock the Initial Stockholders would hold approximately 5.8%, 5.9%, 5.9%, 5.9% and 6.0% under the Minimum Redemptions, 10% Redemption, 50% Redemption, 75% Redemption, and Maximum Redemption scenarios, respectively. See “Risk Factors — Risks Related to CLAQ’s Business and the Business Combination — The CLAQ Public Stockholders will experience dilution as a consequence of, among other transactions, the issuance of Common Stock as consideration in the Business Combination and the PIPE Investment” for additional information related to the risk of dilution to our public stockholders.

(9)      Total of 4,312,500 outstanding founder shares includes 1,437,500 founder shares held by the Sponsor, 2,595,000 founder shares held by CleanTech Investments, and 280,000 founder shares held by the officers and directors of CleanTech. Please see the section titled “Beneficial Ownership of Securities.”

(10)    Assumes the sale of an aggregate of 3,530,000 shares of CleanTech Common Stock, for a purchase price of $10.00 per share and an aggregate purchase price of $35,300,000. Excludes the dilution that could be caused by the conversion of the Debentures and Warrants issued pursuant to the Securities Purchase Agreement.

Redemption Rights

Pursuant to our Certificate of Incorporation, holders of Public Common Stock may elect to have their Common Stock redeemed for cash at the applicable redemption price per share equal to the quotient obtained by dividing (i) the aggregate amount on deposit in the Trust Account as of two business days prior to the consummation of the Business Combination, including interest (net of taxes payable), by (ii) the total number of then-outstanding Public Common Stock. As of            , 2022, this would have amounted to approximately $            per share.

You will be entitled to receive cash for any Public Common Stock to be redeemed only if you:

(i)     (a)     hold Public Common Stock, or

(b)    hold Public Common Stock through public Units and you elect to separate your public Units into the underlying Public Common Stock prior to exercising your redemption rights with respect to the Public Common Stock; and

(ii)    prior to            a.m./p.m., Eastern Time, on            , 2022, (a) submit a written request to Continental that CLAQ redeem your Public Common Stock for cash and (b) deliver your Public Common Stock to Continental, physically or electronically through DTC.

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Holders of outstanding Units must separate the underlying Common Stock prior to exercising redemption rights with respect to the Public Common Stock. If the Units are registered in a holder’s own name, the holder must deliver the certificate for its Units to Continental, with written instructions to separate the Units into their individual component parts. This must be completed far enough in advance to permit the mailing of the certificates back to the holder so that the holder may then exercise his, her or its redemption rights upon the separation of the Public Common Stock from the Units.

If a holder exercises its redemption rights, then such holder will be exchanging its Public Common Stock for cash and will no longer own securities of the Combined Company. Such a holder will be entitled to receive cash for its Public Common Stock only if it properly demands redemption and delivers its Common Stock (either physically or electronically) to Continental in accordance with the procedures described herein. Please see the section titled “The Meeting — Redemption Rights” for the procedures to be followed if you wish to redeem your Public Common Stock for cash.

Vote Required for Approval

Along with the approval of the Charter Approval Proposal, the Bylaws Proposal, the Directors Proposal, the Stock Plan Proposal, the Nasdaq Merger Proposal and the Nasdaq PIPE Proposal, approval of this Business Combination Proposal is a condition to the consummation of the Business Combination. If this Business Combination Proposal is not approved, the Business Combination will not take place. Approval of this Business Combination Proposal is also a condition to Proposal 2, Proposal 3, Proposals 4A-4E, Proposal 5, Proposal 6, Proposal 7, and Proposal 8. If the Charter Approval Proposal, the Bylaws Proposal, the Directors Proposal, the Stock Plan Proposal, the Nasdaq Merger Proposal and the Nasdaq PIPE Proposal are not approved, unless the condition is waived, this Business Combination Proposal will have no effect (even if approved by the requisite vote of our stockholders at the Meeting of any adjournment or postponement thereof) and the Business Combination will not occur.

This Business Combination Proposal (and consequently, the Merger Agreement and the transactions contemplated thereby, including the Business Combination) will be approved and adopted only if holders of at least a majority of the issued and outstanding shares of common stock present in person by virtual attendance or represented by proxy and entitled to vote at the Meeting vote “FOR” the Business Combination Proposal.

Pursuant to the Letter Agreement, the Initial Stockholders holding an aggregate of 4,312,500 shares (or 70.7% of the outstanding shares) of common stock have agreed to vote their respective shares of common stock in favor of the Combination Proposal. Pursuant to the Sponsor Support Agreement, the Co-Sponsors holding an aggregate of 4,032,500 shares of common stock (or approximately 66.2% of the outstanding shares of common stock) have agreed to vote their respective shares in favor of the Combination Proposal. As a result, no public stockholders will need to be present in person by virtual attendance or by proxy to satisfy the quorum requirement for the meeting. In addition, as the vote to approve the Business Combination Proposal is a majority of the votes cast at a meeting at which a quorum is present, no public stockholders’ vote is required for the Business Combination Proposal to be approved.

Board Recommendation

OUR BOARD RECOMMENDS THAT OUR STOCKHOLDERS VOTE “FOR” THE BUSINESS COMBINATION PROPOSAL 1.

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proposal 2 — THE CHARTER APPROVAL PROPOSAL

Overview

Our stockholders are being asked to adopt the Amended Charter in the form attached to this proxy statement/prospectus as Annex B, which, in the judgment of the CLAQ Board, is necessary to adequately address the needs of Combined Company.

The following is a summary of the key amendments effected by the Amended Charter, but this summary is qualified in its entirety by reference to the full text of the Amended Charter, a copy of which is attached to this proxy statement/prospectus as Annex B:

        Changes to Authorized Capital Stock — the Current Charter authorized the issuance of 31,000,000 total shares, consisting of (a) 30,000,000 shares of common stock and (b) 1,000,000 shares of preferred stock. The Amended Charter authorizes the issuance of            total shares, consisting of (a)            shares of common stock, and (b)            shares of preferred stock;

        Required Vote to Amend the Charter — require an affirmative vote of holders of at least two-thirds (66 and 2/3%) of the voting power of all the then outstanding shares of voting stock of the Combined Company entitled to vote generally in an election of directors to amend, alter, repeal or rescind, in whole or in part, certain provisions of the Amended Charter;

        Required Vote to Amend the Bylaws — require an affirmative vote of holders of at least two-thirds (66 and 2/3%) of the voting power of all the then outstanding shares of voting stock of the Combined Company entitled to vote generally in an election of directors to adopt, amend, alter, repeal or rescind the Combined Company’s bylaws;

        Classified Board — divide the Combined Company’s board of directors into three classes, designated as Class I, Class II, and Class III, with only one class of directors being elected each year and each class (except for those directors appointed prior to the first annual meeting of shareholders) serving a three-year term.

        Director Removal — provide for the removal of directors with cause only by stockholders voting at least two-thirds (66 and 2/3%) of the voting power of all of the then outstanding shares of voting stock of the Combined Company entitled to vote at an election of directors; and

        Removal of Blank Check Company Provisions — eliminate various provisions applicable only to blank check companies, including business combination requirements.

Reasons for the Amendments

Each of these amendments was negotiated as part of the Business Combination. The CLAQ Board’s reasons for proposing each of these amendments to the Current Charter is set forth below.

Changes to Authorized Capital Stock

Our Current Charter authorizes 31,000,000 shares, consisting of (a) 30,000,000 shares of common stock, including and (b) 1,000,000 shares of preferred stock. The Amended Charter provides that CLAQ will be authorized to issue            shares, consisting of            shares of common stock and            shares of preferred stock.

This amendment also increases the authorized number of shares because our board of directors believes that it is important for us to have available for issuance a number of authorized shares of common stock and preferred stock sufficient to support our growth and to provide flexibility for future corporate needs (including, if needed, as part of financing for future growth acquisitions). The shares would be issuable as consideration for the merger and the other transactions contemplated by in this proxy statement/prospectus, and for any proper corporate purpose, including future acquisitions, capital raising transactions consisting of equity or convertible debt, stock dividends or issuances under current and any future stock incentive plans.

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The CLAQ board of directors believes that these additional shares will provide us with needed flexibility to issue shares in the future in a timely manner and under circumstances we consider favorable without incurring the risk, delay, and potential expense incident to obtaining stockholder approval for a particular issuance.

Required Vote to Amend the Charter

At present, our Current Charter may only be amended with the approval of a majority of the CLAQ Board and the holders of a majority of our outstanding shares. This amendment requires an affirmative vote of holders of at least two-thirds (66 and 2/3%) of the voting power of all the then-outstanding shares of voting stock of the Combined Company entitled to vote generally in an election of directors to amend, alter, repeal or rescind certain provisions of the Amended Charter. We believe that supermajority voting requirements are appropriate at this time to protect all stockholders against the potential self-interested actions by one or a few large stockholders. In reaching this conclusion, the CLAQ Board was cognizant of the potential for certain stockholders to hold a substantial beneficial ownership of our common stock following the Business Combination. We further believe that going forward, a supermajority voting requirement encourages the person seeking control of the Combined Company to negotiate with the board of directors to reach terms that are appropriate for all stockholders.

Required Vote to Amend the Bylaws

At present, our Current Charter provides that our bylaws may be amended by the affirmative vote of the holders of a majority of the voting power of all then outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class. This amendment requires an affirmative vote of holders of at least two-thirds (66 and 2/3%) of the voting power of all the then outstanding shares of voting stock of the Combined Company entitled to vote generally in an election of directors to adopt, amend, alter, repeal or rescind the Combined Company’s bylaws. The ability of the majority of the Board to amend the bylaws remains unchanged. We believe that supermajority voting requirements are appropriate at this time to protect all stockholders against the potential self-interested actions by one or a few large stockholders. In reaching this conclusion, the CLAQ Board was cognizant of the potential for certain stockholders to hold a substantial beneficial ownership of our common stock following the Business Combination. We further believe that going forward, a supermajority voting requirement encourages the person seeking control of the Combined Company to negotiate with the board of directors to reach terms that are appropriate for all stockholders.

Classified Board

At present, our Current Charter provides that all directors are elected annually. This amendment will provide that the Combined Company’s board be divided into three classes with only one class of directors being elected each year and each class (except for those directors appointed prior to the first annual meeting of stockholders) serving a three-year term.

Director Removal

At present, our Current Charter provides that, directors may be removed from office at any time, but only for cause and only by the affirmative vote of holders of a majority of the voting power of all then outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class. This amendment provides for the removal of directors with cause only by stockholders voting at least two-thirds (66 and 2/3%) of the voting power of all of the then outstanding shares of voting stock of CLAQ entitled to vote at an election of directors. We believe that supermajority voting requirements are appropriate at this time to protect all stockholders against the potential self-interested actions by one or a few large stockholders. In reaching this conclusion, the CLAQ Board was cognizant of the potential for certain stockholders to hold a substantial beneficial ownership of our common stock following the Business Combination. We further believe that going forward, a supermajority voting requirement encourages the person seeking control of the Combined Company to negotiate with the board of directors to reach terms that are appropriate for all stockholders.

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Removal of Blank Check Company Provisions

Our Current Charter contains various provisions applicable only to blank check companies. This amendment eliminates certain provisions related to our status as a blank check company, which is desirable because these provisions will serve no purpose following the Business Combination. For example, these proposed amendments remove the requirement to dissolve the Combined Company and allow it to continue as a corporate entity with perpetual existence following consummation of the Business Combination. Perpetual existence is the usual period of existence for corporations and we believe it is the most appropriate period for the Combined Company following the Business Combination. In addition, certain other provisions in our Current Charter require that proceeds from the CLAQ IPO be held in the Trust Account until a business combination or liquidation of merger has occurred. These provisions cease to apply once the Business Combination is consummated.

Vote Required for Approval

Assuming that a quorum is present at the Meeting, the affirmative vote of holders of a majority of the issued and outstanding shares of common stock on this Proposal 2 is required to approve the Charter Approval Proposal. Accordingly, a stockholder’s failure to vote online during the Meeting or by proxy, a broker non-vote or an abstention will be considered a vote “AGAINST” Proposal 2.

This proposal is conditioned on the approval of the Business Combination Proposal and the Nasdaq Proposal. If either of the Business Combination Proposal or the Nasdaq Proposal is not approved, Proposal 2 will have no effect even if approved by our stockholders. Because stockholder approval of this Proposal 2 is a condition to completion of the Merger under the Merger Agreement, if this Proposal 2 is not approved by our stockholders, the Merger will not occur unless we and Nauticus waive the applicable closing conditions.

Board Recommendation

THE BOARD RECOMMENDS A VOTE “FOR” ADOPTION OF THE CHARTER APPROVAL PROPOSAL UNDER PROPOSAL 2.

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proposal 3 — THE BYLAWS PROPOSAL

Overview

Our stockholders are being asked to adopt the Proposed Bylaws in the form attached to this proxy statement/prospectus as Annex C, which, in the judgment of the CLAQ Board, is necessary to adequately address the needs of Combined Company.

The following is a summary of the key amendments effected by the Proposed Bylaws, but this summary is qualified in its entirety by reference to the full text of the Proposed Bylaws, a copy of which is attached to this proxy statement/prospectus as Annex C:

        Required Vote to Amend the Bylaws — require an affirmative vote of holders of at least at least two-thirds (66 and 2/3%) of the voting power of all the then outstanding shares of voting stock of the Combined Company entitled to vote generally in an election of directors to adopt, amend, alter, repeal or rescind the Combined Company’s bylaws;

Reasons for the Amendments

Each of these amendments was negotiated as part of the Business Combination. The CLAQ Board’s reasons for proposing each of these amendments to the current Bylaws is set forth below.

Required Vote to Amend the Bylaws

At present, our current Bylaws provides that our Bylaws may be amended (a) at any regular or special meeting of stockholders at which a quorum is present or represented, by the affirmative vote of the holders of a majority of the shares of capital stock entitled to vote, provided that notice of the proposed alteration, amendment, or repeal be contained in the notice of such meeting, or (b) by a resolution adopted by a majority of the board of directors at any regular or special meetings of the Board.

This amendment requires an affirmative vote of holders of at least two-thirds (66 and 2/3%) of the voting power of all the then outstanding shares of voting stock of the Combined Company entitled to vote generally in an election of directors to adopt, amend, alter, repeal or rescind the Combined Company’s bylaws. The ability of the majority of the Board to amend the bylaws remains unchanged. We believe that supermajority voting requirements are appropriate at this time to protect all stockholders against the potential self-interested actions by one or a few large stockholders. In reaching this conclusion, the CLAQ Board was cognizant of the potential for certain stockholders to hold a substantial beneficial ownership of our common stock following the Business Combination. We further believe that going forward, a supermajority voting requirement encourages the person seeking control of the Combined Company to negotiate with the board of directors to reach terms that are appropriate for all stockholders.

Vote Required for Approval

This Proposed Bylaws will be approved and adopted only if holders of at least a majority of the issued and outstanding shares of common stock present in person by virtual attendance or represented by proxy and entitled to vote at the Meeting vote “FOR” the Proposed Bylaws. This Bylaws Proposal is conditioned upon the approval and completion of the Business Combination Proposal, the Charter Approval Proposal, the Stock Plan Proposal, and the Nasdaq Proposal. If any of the Business Combination Proposal, the Charter Approval Proposal, the Stock Plan Proposal, or the Nasdaq Proposal are not approved, this Proposal will have no effect even if approved by our stockholders.

Board Recommendation

THE BOARD RECOMMENDS A VOTE “FOR” ADOPTION OF THE CHARTER APPROVAL PROPOSAL UNDER PROPOSAL 3.

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PROPOSALS 4A-4E THE GOVERNANCE PROPOSALS

Overview

Our stockholders are also being asked to vote on five separate Proposals with respect to certain governance provisions in the Amended Charter, which are separately being presented in order to give CLAQ stockholders the opportunity to present their separate views on important corporate governance procedures and which will be voted upon on a non-binding advisory basis. Accordingly, regardless of the outcome of the non-binding advisory vote on these Proposals, CLAQ and Nauticus intend that the Amended Charter in the form attached to this proxy statement/prospectus as Annex B will take effect at the Closing of the Business Combination, assuming approval of the Charter Approval Proposal (Proposal 2). In the judgment of the Board, these provisions are necessary to adequately address the needs of the Combined Company.

Proposal 4A: Change in Authorized Shares

Description of Amendment

The amendment would provide that CLAQ will be authorized to issue        shares, consisting of        shares of common stock and        shares of preferred stock.

Reasons for the Amendment

The amendment increases the authorized number of shares because our board of directors believes that it is important for us to have available for issuance a number of authorized shares of common stock and preferred stock sufficient to support our growth and to provide flexibility for future corporate needs (including, if needed, as part of financing for future growth acquisitions). The shares would be issuable as consideration for the merger and the other transactions contemplated by in this proxy statement/prospectus, and for any proper corporate purpose, including future acquisitions, capital raising transactions consisting of equity or convertible debt, stock dividends or issuances under current and any future stock incentive plans.

The CLAQ board of directors believes that these additional shares will provide us with needed flexibility to issue shares in the future in a timely manner and under circumstances we consider favorable without incurring the risk, delay and potential expense incident to obtaining stockholder approval for a particular issuance.

Proposal 4B: Classified Board

Description of Amendment

This amendment will provide that the Combined Company’s board be divided into three classes with only one class of directors being elected each year and each class (except for those directors appointed prior to the first annual meeting of stockholders) serving a three-year term.

Reasons for the Amendment

The amendment is intended to secure continuity and stability by ensuring that at any given time a majority of the directors will have prior experience with the Combined Company and, therefore, be familiar with its business and operations. The board of directors also believes that this classification will assist the Combined Company’s board of directors in protecting the interests of the Combined Company’s stockholders in the event of an unsolicited offer for the Combined Company by encouraging any potential acquirer to negotiate directly with the Combined Company’s board of directors.

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Proposal 4C: Removal of Directors

Description of Amendment

The amendment provides that the Board or any director of the Board may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of at least two-thirds (66 and 2/3%) of the voting power of all of the then outstanding shares of voting stock of the Combined Company entitled to vote at an election of directors.

Reasons for the Amendment

The amendment is intended to protect all stockholders against the potential self-interested actions by one or a few large stockholders by changing the standard for removal of a director to solely for cause.

Proposal 4D: Required Stockholder Vote to Amend Certain Sections of the Amended Charter

Description of Amendment

This amendment provides that in addition to any vote required by applicable law, the approval by affirmative vote of the holders of at least two-thirds (66 and 2/3%) in voting power of the then outstanding shares of the Combined Company generally entitled to vote thereon, voting together as a single class, is required to make any amendment to Part B of Article IV, Article V, Article VI, Article VII, Article VIII, and this Article IX of the Amended Charter.

Reasons for the Amendment

The CLAQ Board believes this amendment protects key provisions of the Amended Charter from arbitrary amendment and prevents a simple majority of stockholders from taking actions that may be harmful to other stockholders or making changes to provisions that are intended to protect all stockholders.

Proposal 4E: Required Stockholder Vote to Amend the Amended and Restated Bylaws

Description of Amendment

This amendment provides that the Amended and Restated Bylaws may be amended by either (i) the directors of the Board, who are expressly authorized to adopt, amend, or repeal the Amended and Restated Bylaws, or (ii) the stockholders of the Combined Company, who may vote for the adoption, amendment or repeal of the Amended and Restated Bylaws of the Combined Company with the affirmative vote of the holders of at least two-thirds (66 and 2/3%) of the voting power of all of the then outstanding shares of voting stock of the Corporation entitled to vote generally in an election of directors.

Reasons for the Amendment

The amendment is intended to protect all stockholders against the potential self-interested actions by one or more large stockholders. In addition, the CLAQ Board believes that a supermajority voting requirement encourages any person seeking control of the Combined Company to negotiate directly with the Board to reach terms that are appropriate for all stockholders.

Vote Required for Approval

The Governance Proposals will be approved and adopted only if holders of at least a majority of the issued and outstanding shares of common stock present in person by teleconference or represented by proxy and entitled to vote at the Meeting vote “FOR” the Governance Proposals.

The Business Combination is not conditioned upon the approval of the Governance Proposals.

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As discussed above, a vote to approve each of the Governance Proposals is an advisory vote, and therefore, is not binding on CLAQ, Nauticus or their respective boards of directors. Accordingly, regardless of the outcome of the non-binding advisory vote, CLAQ and Nauticus intend that the Amended Charter, in the form attached to this proxy statement/prospectus as Annex B and containing the provisions noted above, will take effect at the Closing of the Business Combination, assuming approval of the Charter Amendment Proposal (Proposal 2).

Board Recommendation

THE BOARD RECOMMENDS A VOTE “FOR” ADOPTION OF EACH OF THE GOVERNANCE PROPOSALS.

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PROPOSAL 5 THE DIRECTORS PROPOSAL

Election of Directors

Pursuant to the Merger Agreement, CLAQ has agreed to take all necessary action, including causing the directors of CLAQ to resign, so that effective at the Closing, the entire Board will consist of eight individuals, a majority of whom will be independent directors in accordance with the requirements of Nasdaq.

At the Meeting, it is proposed that eight directors will be elected to be the directors of the Combined Company upon consummation of the Business Combination. The Combined Company’s board of directors will be reclassified following the Closing. The term of office of the Class I directors will expire at the first annual meeting of stockholders following the initial reclassification of the board of directors and Class I directors will be elected for a full term of three years. At the second annual meeting of stockholders following such initial reclassification, the term of office of the Class II directors will expire and Class II directors will be elected for a full term of three years. At the third annual meeting of stockholders following such initial reclassification, the term of office of the Class III directors will expire and Class III directors will be elected for a full term of three years. At each succeeding annual meeting of stockholders, directors will be elected for a full term of three years to succeed the directors of the class whose terms expire at such annual meeting. Subject to any limitations imposed by applicable law and subject to the special rights of the holders of any series of preferred stock to elect directors, any vacancy occurring in the Combined Company for any reason, and any newly created directorship resulting from any increase in the authorized number of directors, will, unless (a) the Combined Company’s board of directors determines by resolution that any such vacancies or newly created directorships will be filled by the stockholders or (b) as otherwise provided by law, be filled only by the affirmative vote of a majority of the directors then in office, even if less than a quorum, or by a sole remaining director, and not by the stockholders.

It is proposed that the Combined Company’s board of directors consist of the following directors:

        Class I directors: Jim Bellingham and Adam Sharkawy;

        Class II directors: Lisa Porter, John W. Gibson, Jr., Joseph Dyer, and Eli Spiro;

        Class III directors: Nicolaus Radford and Mark Mey.

Information regarding each nominee is set forth in the section titled “Directors and Executive Officers of the Combined Company after the Business Combination.”

Under Delaware law and our Bylaws, the election of directors requires a plurality vote of the common stock present in person (which would include presence at a virtual meeting) or represented by proxy and entitled to vote at the Meeting. “Plurality” means that the individuals who receive the largest number of votes cast “FOR” are elected as directors. Consequently, any shares not voted “FOR” a particular nominee (whether as a result of a direction to withhold authority or a broker non-vote) will not be counted in the nominee’s favor.

Unless authority is withheld or the shares are subject to a broker non-vote, the proxies solicited by the Board will be voted “FOR” the election of these nominees. In case any of the nominees becomes unavailable for election to the Board, an event that is not anticipated, the persons named as proxies, or their substitutes, will have full discretion and authority to vote or refrain from voting for any other candidate in accordance with their judgment.

If the Business Combination Proposal is not approved, the Director Election Proposal will not be presented at the meeting.

Following consummation of the Business Combination, the election of directors of the Combined Company will be governed by the Amended Charter and bylaws and the laws of the State of Delaware.

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Required Vote With Respect to the Directors Proposal

Election of each director will require the affirmative vote by a plurality of the shares of the common stock present by virtual attendance or represented by proxy and entitled to vote at the Meeting.

If the Business Combination Proposal is not approved, the Directors Proposal will not be presented at the Stockholders Meeting. The Directors Proposal will only become effective if the Business Combination is completed. Election of each of the director nominees is a condition to Closing under the Merger Agreement. If each of the directors is not elected, CLAQ is not required to close the Business Combination.

Board Recommendation

THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” EACH OF THE NOMINEES SET FORTH IN THE DIRECTORS PROPOSAL.

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PROPOSAL 6 — THE STOCK PLAN PROPOSAL

We are asking our stockholders to approve and adopt the Nauticus Robotics, Inc. 2022 Incentive Award Plan (the “Incentive Award Plan”) and the material terms thereunder.

The Incentive Award Plan is described in more detail below. A copy of the Incentive Award Plan is included in this proxy statement/prospectus as Annex D.

The Incentive Award Plan

The purpose of the Incentive Award Plan is to encourage the profitability and growth of the Company through short-term and long-term incentives that are consistent with the Company’s objectives, give participants an incentive for excellence in individual performance, promote teamwork among participants, and give the Combined Company a significant advantage in attracting and retaining key employees, non-employee directors and consultants.

If approved by our stockholders, and assuming that the Business Combination Proposal is approved, the Incentive Award Plan will become effective and will be administered by our board of directors or by a committee that our board of directors designates for this purpose (referred to below as the plan administrator), which will have the authority to make awards under the Incentive Award Plan.

After careful consideration, the CLAQ Board believes that approving the Incentive Plan is in the best interests of the Combined Company. The Incentive Award Plan promotes ownership in the Combined Company by its employees, non-employee directors and consultants, and aligns incentives between these service providers and stockholders by permitting these service providers to receive compensation in the form of awards denominated in, or based on the value of, our common stock. Therefore, the CLAQ Board recommends that our stockholders approve the Incentive Award Plan.

Summary of the Incentive Award Plan

This section summarizes certain principal features of the Incentive Award Plan. The summary is qualified in its entirety by reference to the complete text of the Incentive Award Plan to be included as Annex D to this Proxy Statement.

Types of Awards

To accomplish its purpose, the Incentive Award Plan permits the granting of awards in the form of incentive stock options within the meaning of Section 422 of the Code, nonqualified stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units, performance-based awards (including performance shares, performance units and performance bonus awards), and other stock-based or cash-based awards (“Awards”).

Shares Subject to the Incentive Award Plan

A total of            shares of common stock of the Combined Company will be reserved and available for issuance under the Incentive Award Plan. The maximum number of shares that may be issued pursuant to options intended to be incentive stock options is            shares, and such limit will not be subject to any annual adjustment under the Incentive Award Plan (as described below). Non-employee directors may only be granted and paid up to            (when taken together with any fees paid to such non-employee director) in compensation per fiscal year.

The total number of shares of common stock of the Combined Company that will be reserved and that may be issued under the Incentive Award Plan will automatically increase on the first trading day of each calendar year, beginning with calendar year 2023, by a number of shares equal to three percent (3%) of the total number of shares of common stock of the Combined Company outstanding on the last day of the prior calendar year. The plan administrator may act prior to January 1 of a given year to provide that there will be no increase in the share reserve for that year, or that the increase in the share reserve will be smaller than as provided in the Incentive Award Plan.

If an award granted under the Incentive Award Plan is forfeited, canceled, settled, or otherwise terminated the shares underlying that award will again become available for issuance under the Incentive Award Plan. However, none of the following shares will be available for issuance under the Incentive Award Plan: (i) shares delivered to or

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withheld to pay withholding taxes or any applicable exercise price, or (ii) shares subject to any exercised stock-settled SAR or options. In addition, any shares tendered to exercise outstanding options or other awards or repurchased on the open market using exercise price proceeds will not be available for issuance under the Incentive Award Plan. Any substitute awards shall not reduce the shares authorized for grant under the Incentive Award Plan. Shares underlying awards that are subject to the achievement of performance goals will be counted against the share reserve based on the target value of the awards unless and until the awards become vested and settled in shares of common stock. In addition, awards that may be settled only in cash will not count against the share reserve.

Administration of the Incentive Plan

The Incentive Award Plan will be administered by the plan administrator, who is the Combined Company Board or a committee that the Combined Company Board designates (“Committee”). The plan administrator has the power to determine, among other items, the terms of the awards granted under the Incentive Award Plan, including the exercise price, the number of shares subject to each award (and the class of shares), and the exercisability and vesting terms of the awards. The plan administrator also has the power to determine the persons to whom and the time or times at which awards will be made and to make all other determinations and take all other actions advisable for the administration of the Incentive Award Plan. All decisions made by the administrator pursuant to the provisions of the Incentive Award Plan will be final, conclusive and binding.

Participation

Participation in the Incentive Award Plan will be open to employees, non-employee directors, or consultants, who have been selected as an eligible recipient under the Incentive Award Plan by the plan administrator. Awards of incentive stock options, however, will be limited to employees of the Combined Company or its affiliates.

Types of Awards

The types of awards that may be made under the Incentive Award Plan are described below. All of the awards described below are subject to the conditions, limitations, restrictions, vesting and forfeiture provisions determined by the plan administrator, subject to the Incentive Award Plan.

Stock Options

The Incentive Award Plan provides for grants of both nonqualified and incentive stock options. A nonqualified stock option entitles the recipient to purchase our shares at a fixed exercise price. The exercise price per share will be determined by the committee but such price will never be less than 100% of the fair market value of a share of common stock on the date of grant. Fair market value will generally be the closing price of a share of common stock on NYSE on the date of grant. Nonqualified stock options under the Incentive Plan generally must be exercised within ten years from the date of grant. A nonqualified stock option is an option that does not meet the qualifications of an incentive stock option as described below.

An incentive stock option is a stock option that meets the requirements of Section 422 of the Code. Incentive stock options may be granted only to employees of the Combined Company or its affiliates and the aggregate fair market value of a share of common stock determined at the time of grant with respect to incentive stock options that are exercisable for the first time by a participant during any calendar year may not exceed $100,000. No incentive stock option may be granted to any person who, at the time of the grant, owns or is deemed to own stock possessing more than 10% of our total combined voting power or that of any of our affiliates unless (i) the option exercise price is at least 110% of the fair market value of the stock subject to the option on the date of grant and (ii) the term of the incentive stock option does not exceed five years from the date of grant.

Unless otherwise determined by the plan administrator, each vested and outstanding option granted under the Incentive Award Plan will automatically be exercised on the last business day of the applicable option term, to the extent that, as of such date, (i) the exercise price of such option is less than the fair market value of a share, and (ii) the holder of such option remains actively in service.

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Stock Appreciation Rights

A SAR entitles the holder to receive an amount equal to the difference between the fair market value of a share of common stock on the exercise date and the exercise price of the SAR (which may not be less than 100% of the fair market value of a share of our common stock on the grant date), multiplied by the number of shares of common stock subject to the SAR (as determined by the plan administrator). Unless otherwise determined by the plan administrator, each vested and outstanding SAR granted under the Incentive Award Plan will automatically be exercised on the last business day of the applicable SAR term, to the extent that, as of such date, (i) the exercise price of such SAR is less than the fair market value of a share, and (ii) the holder of such SAR remains actively in service.

Restricted Stock

A restricted stock award is an award of shares of common stock that vest in accordance with the terms and conditions established by the plan administrator. The plan administrator will determine in the award agreement whether the participant will be entitled to receive dividends on such shares of restricted stock.

Restricted Stock Units

A restricted stock unit is a right to receive shares or the cash equivalent of common stock at a specified date in the future, subject to forfeiture of such right. If the restricted stock unit has not been forfeited, then on the date specified in the restricted stock unit grant, the Combined Company must deliver to the holder of the restricted stock unit unrestricted shares of common stock (or, in the plan administrator’s sole discretion, in cash equal to the shares that would otherwise be delivered, or partly in cash and partly in shares).

Other Stock-Based Awards

We may grant or sell to any participant a right or other interest that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, shares of common stock, including unrestricted common stock or a dividend equivalent. A dividend equivalent is a right to receive payments, based on dividends with respect to shares of our common stock. To the extent that an Award contains a right to receive dividends or dividend equivalents while the award remains unvested, the dividends or dividend equivalents will be accumulated and paid once and to the extent that the underlying award vests.

Other Cash-Based Awards

We may grant cash awards under the Incentive Award Plan, including cash awards as a bonus or upon the attainment of certain performance goals.

Performance-Based Awards

We may grant an Award conditioned on satisfaction of certain performance criteria. Such performance-based awards also include performance-based restricted shares and restricted stock units. Any dividends or dividend equivalents payable or credited to a participant with respect to any unvested performance-based award will be subject to the same performance goals as the shares or units underlying the performance-based award.

Performance Goals

If the plan administrator determines that an award under the Incentive Award Plan will be earned subject to the achievement of performance goals, the plan administrator may select one or more performance criteria upon which to grant such award, which may include, but are not limited to, any one or more of the following: earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; net operating profit after tax; cash flow; revenue; sales; days sales outstanding; income; net income; operating income; net operating income, operating margin; earnings; earnings per share; return on equity; return on investment; return on capital; return on assets; return on net assets; total stockholder return; economic profit; market share; appreciation in the fair market value, book value or other measure of value of a share of common stock; expense/cost control; working capital; customer satisfaction; employee retention or employee turnover; employee satisfaction or engagement; environmental, health, or other safety goals; individual performance; strategic objective milestones; any other criteria specified by the plan administrator in its sole discretion; or, as applicable, any combination of, or a specified increase or decrease in, any of the foregoing.

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Equitable Adjustments

In the event of a merger, consolidation, reclassification, recapitalization, spin-off, spin-out, repurchase or other reorganization or corporate transaction or event, extraordinary dividend, stock split or reverse stock split, combination or exchange of shares, or other change in corporate structure or payment of any other distribution, an equitable substitution or proportionate adjustment will be made, in each case, as may be determined by the plan administrator, in its sole discretion, in (i) the maximum number shares of common stock reserved for issuance, (ii) the kind, number and exercise price subject to outstanding options and SARs granted under the Incentive Plan; provided, however, that any such substitution or adjustment with respect to options and SARs will occur in accordance with the requirements of Code Section 409A (and with respect to incentive stock options, in compliance with the rules of Code Section 424(a)), and (iii) the kind, number and purchase price of shares subject to outstanding restricted shares or other share based Awards, in each case as may be determined by the plan administrator, in its sole discretion; provided, however, that any fractional shares resulting from the adjustment will be eliminated. in addition, the plan administrator may provide, in its sole discretion, for the cancellation of any outstanding award (i) in exchange for payment in cash or other property having an aggregate fair market value of the shares of common stock covered by the award, reduced by the aggregate exercise price or purchase price per share, if any, and (ii) with respect to any awards for which the exercise price or purchase price per share is greater than or equal to the then current fair market value per share, for no consideration.

Change in Control

The plan administrator may provide in the applicable award agreement that an award will vest on an accelerated basis upon the participant’s termination of employment or service in connection with a change in control (as defined in the Incentive Award Plan) or upon the occurrence of any other event that the plan administrator may set forth in the award agreement. If the Combined Company is a party to an agreement that is reasonably likely to result in a change in control, the agreement may provide for: (i) the continuation of any award by the Combined Company, if the Combined Company is the surviving corporation; (ii) the assumption of any award by the surviving corporation or its parent or subsidiary; (iii) the substitution by the surviving corporation or its parent or subsidiary of equivalent awards for any Award, provided, however, that any such substitution with respect to options and SARs will occur in accordance with the requirements of Code Section 409A; or (iv) settlement of any award for the change in control price (less, to the extent applicable, the per share exercise or grant price), or, if the per share exercise or grant price equals or exceeds the change in control price or if the plan administrator determines that award cannot reasonably become vested pursuant to its terms, the award will terminate and be canceled without consideration.

Amendment and Termination

The plan administrator may alter, amend, or terminate the Incentive Award Plan at any time, but no amendment, alteration, or termination will be made that would adversely alter or impair the rights of a participant under any award without his or her prior written consent. Notwithstanding the foregoing, (i) approval of the Combined Company’s stockholders will be obtained for any amendment that would require such approval in order to satisfy the requirements of Code Section 422, if applicable, any rules of the stock exchange on which the shares are traded or other applicable law, and (ii) without stockholder approval to the extent required by the rules of any applicable national securities exchange or inter-dealer quotation system on which the shares are listed or quoted, except as otherwise permitted under the Incentive Award Plan, (A) no amendment or modification may reduce the exercise price of any option or SAR, (B) the plan administrator may not cancel any outstanding option or SAR and replace it with a new option or SAR, another award or cash and (C) the plan administrator may not take any other action that is considered a “repricing” for purposes of the stockholder approval rules of the applicable securities exchange or inter-dealer quotation system. In addition, no modification of an award will, without the prior written consent of the participant, adversely alter or impair any rights or obligations under any award already granted under the Incentive Award Plan.

Material U.S. Federal Income Tax Consequences

The following discussion of certain relevant United States federal income tax effects applicable to certain awards granted under the Incentive Award Plan is only a summary of certain of the United States federal income tax consequences applicable to United States residents under the Incentive Award Plan, and reference is made to the Code for a complete statement of all relevant federal tax provisions. No consideration has been given to the effects of foreign, state, local and other laws (tax or other) on the Incentive Plan or on a participant, which laws will vary depending upon the particular jurisdiction or jurisdictions involved. In particular, participants who are stationed outside the United States may be subject to foreign taxes as a result of the Incentive Award Plan.

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Nonqualified Stock Options

An optionee subject to United States federal income tax will generally not recognize taxable income for United States federal income tax purposes upon the grant of a nonqualified stock option. Rather, at the time of exercise of the nonqualified stock option, the optionee will recognize ordinary income, subject to wage and employment tax withholding, and the Combined Company will be entitled to a deduction, in an amount equal to the excess of the fair market value of the shares on the date of exercise over the exercise price. If the shares acquired upon the exercise of a nonqualified stock option are later sold or exchanged, then the difference between the amount received upon such sale or exchange and the fair market value of such shares on the date of such exercise will generally be taxable as long-term or short-term capital gain or loss (if the shares are a capital asset of the optionee), depending upon the length of time such shares were held by the optionee.

Incentive Stock Options

An optionee subject to United States federal income tax will generally not recognize taxable income for United States federal income tax purposes upon the grant of an incentive stock option (within the meaning of Section 422 of the Code) and the Combined Company will not be entitled to a deduction at that time. If the incentive stock option is exercised during employment or within 90 days following the termination thereof (or within one year following termination, in the case of a termination of employment due to death or disability, as such terms are defined in the Incentive Award Plan), the optionee will not recognize any income and the Combined Company will not be entitled to a deduction. The excess of the fair market value of the shares on the exercise date over the exercise price, however, is includible in computing the optionee’s alternative minimum taxable income.

Generally, if an optionee disposes of shares acquired by exercising an incentive stock option either within two years after the date of grant or one year after the date of exercise, the optionee will recognize ordinary income, and the Combined Company will be entitled to a deduction, in an amount equal to the excess of the fair market value of the shares on the date of exercise (or the sale price, if lower) over the exercise price. The balance of any gain or loss will generally be treated as a capital gain or loss to the optionee. If the shares are disposed of after the two-year and one-year periods described above, the Combined Company will not be entitled to any deduction, and the entire gain or loss for the optionee will be treated as a capital gain or loss.

SARs

A participant subject to United States federal income tax who is granted a SAR will not recognize ordinary income for United States federal income tax purposes upon receipt of the SAR. At the time of exercise, however, the participant will recognize ordinary income, subject to wage and employment tax withholding, equal to the value of any cash received and the fair market value on the date of exercise of any shares received. The Combined Company will not be entitled to a deduction upon the grant of a SAR, but generally will be entitled to a deduction for the amount of income the participant recognizes upon the participant’s exercise of the SAR. The participant’s tax basis in any shares received will be the fair market value on the date of exercise and, if the shares are later sold or exchanged, then the difference between the amount received upon such sale or exchange and the fair market value of the shares on the date of exercise will generally be taxable as long-term or short-term capital gain or loss (if the stock is a capital asset of the participant) depending upon the length of time such shares were held by the participant.

Restricted Stock

A participant subject to United States federal income tax generally will not be taxed upon the grant of a restricted stock award, but rather will recognize ordinary income for United States federal income tax purposes in an amount equal to the fair market value of the shares at the time the restricted stock is no longer subject to a substantial risk of forfeiture (within the meaning of the Code), subject to wage and employment tax withholding. The Combined Company generally will be entitled to a deduction at the time when, and in the amount that, the participant recognizes ordinary income on account of the lapse of the restrictions. A participant’s tax basis in the shares will equal his or her fair market value at the time the restrictions lapse, and the participant’s holding period for capital gains purposes will begin at that time. Any cash dividends paid on the shares before the restrictions lapse will be taxable to the participant as additional compensation (and not as dividend income). Under Section 83(b) of the Code, a participant may elect to recognize ordinary income at the time the restricted shares are awarded in an amount equal to their fair market value on such grant date, subject to wage and employment tax withholding, notwithstanding the fact that such shares are

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subject to restrictions and a substantial risk of forfeiture. If such an election is made, no additional taxable income will be recognized by such participant at the time the restrictions lapse, the participant will have a tax basis in the restricted shares equal to their fair market value on the date of grant of their award, and the participant’s holding period for capital gains purposes will begin at that time. The Combined Company generally will be entitled to a tax deduction at the time when, and to the extent that, ordinary income is recognized by such participant.

Restricted Stock Units

A participant subject to United States federal income tax who is granted a restricted stock unit will not recognize ordinary income for United States federal income tax purposes upon the receipt of the restricted stock unit, but rather will recognize ordinary income in an amount equal to the fair market value of the shares at the time the award is settled into shares, subject to wage and employment tax withholding, and the Combined Company will have a corresponding deduction at that time.

Other Stock-Based and Other Cash-Based Awards

In the case of other stock-based and other cash-based awards, depending on the form of the award, a participant subject to United States federal income tax will not be taxed upon the grant of such an award, but, rather, will recognize ordinary income for United States federal income tax purposes when such an award vests or otherwise is free of restrictions, subject to wage and employment tax withholding. In any event, the Combined Company will be entitled to a deduction at the time when, and in the amount that, a participant recognizes ordinary income.

New Plan Benefits

As of the date hereof, no awards have been granted under the Incentive Award Plan.

Future grants under the Incentive Award Plan will be made at the discretion of the plan administrator and are not yet determinable.

Equity Compensation Plan Information

The Combined Company did not maintain, or have any securities authorized for issuance under, any equity compensation plans as of December 31, 2020.

Required Vote

This Stock Plan Proposal will be approved and adopted only if holders of at least a majority of the issued and outstanding shares of common stock present in person by virtual attendance or represented by proxy and entitled to vote at the Meeting vote “FOR” the Stock Plan Proposal. This Stock Plan Proposal is conditioned upon the approval and completion of the Business Combination Proposal, the Charter Approval Proposal, the Bylaws Proposal, and the Nasdaq Proposal. If any of the Business Combination Proposal, the Charter Approval Proposal, the Bylaws Proposal, or the Nasdaq Proposal are not approved, unless the condition is waived, this Proposal will have no effect even if approved by our stockholders.

Board Recommendation

OUR BOARD RECOMMENDS THAT OUR STOCKHOLDERS VOTE “FOR” THE STOCK PLAN UNDER PROPOSAL 6.

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PROPOSAL 7THE NASDAQ MERGER PROPOSAL

Overview

We are proposing the Nasdaq Merger Proposal in order to comply with Nasdaq Listing Rules 5635(a) and (b). Under Nasdaq Listing Rule 5635(a), stockholder approval is required prior to the issuance of securities in connection with the acquisition of another company if such securities are not issued in a public offering and (A) have, or will have upon issuance, voting power equal to or in excess of 20% of the voting power outstanding before the issuance of common stock (or securities convertible into or exercisable for common stock); or (B) the number of shares of common stock to be issued is or will be equal to or in excess of 20% of the number of shares of common stock outstanding before the issuance of the stock or securities. Under Nasdaq Listing Rule 5635(b), stockholder approval is required prior to the issuance of securities when the issuance or potential issuance will result in a change of control.

Pursuant to the Merger Agreement, based on Nauticus’ current capitalization, we anticipate that we will issue to the Nauticus stockholders as consideration in the Business Combination, 37,531,279 shares of Common Stock (including 7,500,000 Earnout Shares). See the section entitled “Proposal 1: The Business Combination Proposal — The Merger Agreement — Merger Consideration.” Because the number of shares of common stock we anticipate issuing as consideration in the Business Combination (1) will constitute more than 20% of our outstanding common stock and more than 20% of outstanding voting power prior to such issuance and (2) will result in a change of control of CLAQ, we are required to obtain stockholder approval of such issuance pursuant to Nasdaq Listing Rules 5635(a) and (b).

Effect of Proposal on Current Stockholders

If the Nasdaq Merger Proposal is adopted, CLAQ would issue shares representing more than 20% of the outstanding shares of our common stock in connection with the Business Combination and the PIPE Investment. The issuance of such shares would result in significant dilution to the CLAQ stockholders and would afford such stockholders a smaller percentage interest in the voting power, liquidation value and aggregate book value of CLAQ. If the Nasdaq Merger Proposal is adopted, assuming that 37,531,279 shares of common stock are issued to the Nauticus stockholders as consideration in the Business Combination, we anticipate that the Nauticus stockholders will hold 78.1% (including the 7,500,000 Earnout Shares) of our outstanding shares of common stock, the PIPE Investors will hold 7.4% of our outstanding common stock, the current CLAQ public stockholders will hold 5.5% of our outstanding common stock and the Co-Sponsors, officers, directors and other holders of founder shares of CLAQ will hold 9.0% of our outstanding common stock immediately following completion of the Business Combination. These percentages assume that no shares of our common stock are redeemed in connection with the Business Combination, do not take into account any warrants or options to purchase our common stock that will be outstanding following the Business Combination or any equity awards that may be issued under our proposed Incentive Award Plan following the Business Combination.

If the Nasdaq Merger Proposal is not approved and we consummate the Business Combination on its current terms, CLAQ would be in violation of Nasdaq Listing Rule 5635(a) and (b) which could result in the delisting of our securities from the Nasdaq Capital Market. If Nasdaq delists our securities from trading on its exchange, we could face significant material adverse consequences, including:

        a limited availability of market quotations for our securities;

        reduced liquidity with respect to our securities;

        determination that our shares are a “penny stock,” which will require brokers trading in our securities to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our securities;

        a limited amount of news and analyst coverage for the post-transaction company; and

        a decreased ability to issue additional securities or obtain additional financing in the future.

It is a condition to the obligations of CLAQ and Nauticus to close the Business Combination that our common stock remain listed on the Nasdaq Capital Market. As a result, if the Nasdaq Merger Proposal is not adopted, the Business Combination may not be completed unless this condition is waived.

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Vote Required for Approval

Assuming that a quorum is present at the Meeting, the affirmative vote of holders of at least a majority of the issued and outstanding shares of common stock present in person by virtual attendance or represented by proxy and entitled to vote at the Meeting vote “FOR” the Nasdaq Merger Proposal.

This Proposal is conditioned on the approval of the Business Combination Proposal, the Charter Approval Proposal, the Bylaws Proposal, the Directors Proposal, the Stock Plan Proposal, and the Nasdaq PIPE Proposal. If any of the Business Combination Proposal, the Charter Approval Proposal, the Bylaws Proposal, the Directors Proposal, the Stock Plan Proposal or the Nasdaq PIPE Proposal is not approved, unless the condition is waived, Proposal 7 will have no effect even if approved by our stockholders. Because stockholder approval of this Proposal 7 is a condition to completion of the Business Combination under the Merger Agreement, if this Proposal 7 is not approved by our stockholders, the Business Combination will not occur unless we and Nauticus waive the applicable closing condition.

Board Recommendation

OUR BOARD RECOMMENDS THAT OUR STOCKHOLDERS VOTE “FOR” THE NASDAQ MERGER PROPOSAL UNDER PROPOSAL 7.

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PROPOSAL 8 — THE NASDAQ PIPE PROPOSAL

Overview

We are proposing the Nasdaq PIPE Proposal in order to comply with Nasdaq Listing Rules 5635(d). Under Nasdaq Listing Rule 5635(d), stockholder approval is required for a transaction other than a public offering involving the sale, issuance or potential issuance by an issuer of common stock (or securities convertible into or exercisable for common stock) at a price that is less than the lower of (i) the closing price immediately preceding the signing of the binding agreement or (ii) the average closing price of the common stock for the five trading days immediately preceding the signing of the binding agreement, if the number of shares of common stock (or securities convertible into or exercisable for common stock) to be issued equals to 20% or more of the common stock, or 20% or more of the voting power, outstanding before the issuance.

In connection with the Business Combination, there will be a PIPE Investment consisting of the Equity Financing of $35.3 million sale of common stock and Debt Financing of up to $40.0 million of Debentures and associated warrants. The Equity Financing will result in the sale and issuance of 3,530,000 shares of common stock at $10.00 per share. The number of shares of common stock into which the Debentures are convertible equals to 120% of the outstanding principal amount of the Debentures divided by the conversion price of $15.00, and the number of shares of common stock into which the associated warrants are exercisable is equal to 120% of the outstanding principal amount of the Debentures divided by the conversion price, with an exercise price equal to $20, subject to adjustment. The exercise price of the associated warrant will be subject to (i) customary anti-dilution adjustments; and (ii) in the case of a subsequent equity sale at a per share price below the exercise price, the exercise price of the associated warrant will be adjusted to such lower price, and the number of shares underlying the warrant will increase proportionately. In the event of a rights offering or dividend, the warrant holder will be treated as though the shares underlying the warrant he/she holds were outstanding. These warrants can be exercised on a cashless basis. Assuming that the full amount of $40.0 million of Debentures are sold, 3,200,000 shares of common stock will be issuable upon conversion of the Debentures, and an additional 3,200,000 shares of common stock will be issuable upon exercise of the associated warrants sold in the Debt Financing. The obligations to close the Debt Financing are conditioned upon, among other things, (i) raising $25,000,000 in equity financing from strategic investors, (ii) hiring a chief financial officer with public company experience, and (iii) the consummation of the transactions contemplated by the Merger Agreement. The Equity Financing will satisfy the closing condition related to the equity financing requirement for the Debt Financing, and the PIPE Investment alone will satisfy the Minimum Cash Condition under the Merger Agreement.

Because the shares of common stock to be issued or issuable, as applicable, in connection with the PIPE Investment (1) was at a price that is less than the lower of (i) the closing price immediately preceding the signing of the binding agreement or (ii) the average closing price of the common stock for the five trading days immediately preceding the signing of the binding agreement, and (2) will constitute more than 20% of CLAQ’s outstanding common stock and more than 20% of outstanding voting power prior to such issuance, CLAQ is required to obtain stockholder approval of such issuance pursuant to Nasdaq Listing Rule 5635(d).

Effect of Proposal on Current Stockholders

If the Nasdaq PIPE Proposal is adopted, CLAQ would issue securities convertible into more than 20% of the outstanding shares of our common stock in connection with the PIPE Investment. The issuance of such shares would result in significant dilution to the CLAQ stockholders and would afford such stockholders a smaller percentage interest in the voting power, liquidation value and aggregate book value of CLAQ. If the Nasdaq PIPE Proposal is adopted, 3,530,000 shares of common stock will be issued in connection with the Equity Financing, and up to a total of 6,400,000 shares of common stock will be issuable upon conversion of up to the $40.0 million of Debentures and exercise of associated warrants sold in connection with the Debt Financing. As of the date of this proxy statement/prospectus, ATW is the lead purchaser and has subscribed for Debentures in the aggregate principal amount of $37,959,184 which is convertible into 3,036,735 shares of the Combined Company’s common stock and associated warrants for an additional 3,036,735 shares of the common stock. Immediately following the completion of the Business Combination and the PIPE Investment, we anticipate that the Nauticus stockholders will hold 78.1% (including the 7,500,000 Earnout Shares) of our outstanding shares of common stock, the PIPE Investors will hold 7.4% of our outstanding common stock, the current CLAQ public stockholders will hold 5.5% of our outstanding common stock and the Co-Sponsors, officers, directors and other holders of founder shares of CLAQ will hold 9.0% of our outstanding common stock. These percentages assume that no shares of our common stock

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are redeemed in connection with the Business Combination, do not take into account any warrants or options to purchase our common stock that will be outstanding following the Business Combination or any equity awards that may be issued under our proposed Incentive Award Plan following the Business Combination.

If the Nasdaq PIPE Proposal is not approved and we consummate the Business Combination on its current terms, CLAQ would be in violation of Nasdaq Listing Rule 5635(d) which could result in the delisting of our securities from the Nasdaq Capital Market. If Nasdaq delists our securities from trading on its exchange, we could face significant material adverse consequences, including:

        a limited availability of market quotations for our securities;

        reduced liquidity with respect to our securities;

        determination that our shares are a “penny stock,” which will require brokers trading in our securities to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our securities;

        a limited amount of news and analyst coverage for the post-transaction company; and

        a decreased ability to issue additional securities or obtain additional financing in the future.

It is a condition to the obligations of CLAQ and Nauticus to close the Business Combination that our common stock remain listed on the Nasdaq Capital Market. As a result, if the Nasdaq PIPE Proposal is not adopted, the Business Combination may not be completed unless this condition is waived.

Vote Required for Approval

Assuming that a quorum is present at the Meeting, the affirmative vote of holders of at least a majority of the issued and outstanding shares of common stock present in person by virtual attendance or represented by proxy and entitled to vote at the Meeting vote “FOR” the Nasdaq PIPE Proposal.

This Proposal is conditioned on the approval of the Business Combination Proposal, the Charter Approval Proposal, the Bylaws Proposal, the Directors Proposal, the Stock Plan Proposal and the Nasdaq Merger Proposal. If any of the Business Combination Proposal, the Charter Approval Proposal, the Bylaws Proposal, the Directors Proposal, the Stock Plan Proposal or the Nasdaq Merger Proposal is not approved, unless the condition is waived, Proposal 8 will have no effect even if approved by our stockholders. Because stockholder approval of this Proposal 8 is a condition to completion of the Business Combination under the Merger Agreement, if this Proposal 8 is not approved by our stockholders, the Business Combination will not occur unless we and Nauticus waive the applicable closing condition.

Board Recommendation

OUR BOARD RECOMMENDS THAT OUR STOCKHOLDERS VOTE “FOR” THE NASDAQ PIPE PROPOSAL UNDER PROPOSAL 8.

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PROPOSAL 9 — THE ADJOURNMENT PROPOSAL

The Adjournment Proposal, if adopted, will approve the chairman’s adjournment of the Meeting to a later date to permit further solicitation of proxies. The Adjournment Proposal will only be presented to our stockholders in the event, based on the tabulated votes, there are not sufficient votes received at the time of the Meeting to approve the other Proposals.

Consequences if the Adjournment Proposal is Not Approved

If the Adjournment Proposal is not approved by our stockholders, the chairman will not adjourn the Meeting to a later date in the event, based on the tabulated votes, there are not sufficient votes received at the time of the Meeting to approve the Business Combination Proposal, the Charter Approval Proposal, the Bylaws Proposal, the Directors Proposal, the Stock Plan Proposal, the Nasdaq Merger Proposal or the Nasdaq PIPE Proposal.

Required Vote

This Adjournment Proposal will be approved and adopted only if holders of at least a majority of the issued and outstanding shares of common stock present in person by virtual attendance or represented by proxy and entitled to vote at the Meeting vote “FOR” the Adjournment Proposal. The Adjournment Proposal is not conditioned on the approval of any other Proposal set forth in this proxy statement.

Board Recommendation

THE BOARD RECOMMENDS A VOTE “FOR” ADOPTION OF THE ADJOURNMENT PROPOSAL UNDER PROPOSAL 9.

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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR HOLDERS OF COMMON STOCK

It is the opinion of Winston & Strawn LLP, special tax counsel to Nauticus, that the Merger will qualify as a “reorganization” for U.S. federal income tax purposes within the meaning of Section 368(a) of the Code. This opinion is based on facts and representations contained in representation letters provided by CLAQ, Merger Sub and Nauticus and on customary factual assumptions, and further assumes that any consideration paid in respect of Dissenting Shares (as such term is defined in the Merger Agreement) will not exceed 10% of the total value of all consideration paid to holders of Nauticus Common Stock and the Merger is completed in the manner set forth in the Merger Agreement and the Registration Statement on Form S-4 of which this proxy statement/prospectus forms a part. If any assumption or representation is or becomes inaccurate, the U.S. federal income tax consequences of the Merger could be adversely affected. In addition, neither the obligation of CLAQ nor the obligation of Nauticus to complete the merger is conditioned upon the receipt of an opinion from counsel confirming whether the Merger will so qualify.

While the parties intend for the transaction to qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code, there is no assurance that will indeed be the case. In the event that the transaction fails to qualify as such, there would be no adverse tax consequences to CLAQ or Merger Sub.

The following is a general discussion of the material U.S. federal income tax consequences of the exercise of redemption rights by U.S. Holders and Non-U.S. Holders (defined below) of common stock.

This discussion is based on provisions of the Code, the Treasury Regulations promulgated thereunder (whether final, temporary, or proposed), administrative rulings of the IRS, and judicial decisions, all as in effect on the date hereof, and all of which are subject to differing interpretations or change, possibly with retroactive effect. This discussion does not purport to be a complete analysis or listing of all potential U.S. federal income tax consequences that may apply to a holder as a result of an exercise of redemption rights. In addition, this discussion does not address all aspects of U.S. federal income taxation that may be relevant to particular holders nor does it take into account the individual facts and circumstances of any particular holder that may affect the U.S. federal income tax consequences to such holder, and accordingly, is not intended to be, and should not be construed as, tax advice. This discussion does not address the U.S. federal 3.8% Medicare tax imposed on certain net investment income or any aspects of U.S. federal taxation other than those pertaining to the income tax, nor does it address any tax consequences arising under any U.S. state and local, or non-U.S. tax laws. Holders should consult their own tax advisors regarding such tax consequences in light of their particular circumstances.

No ruling has been requested or will be obtained from the IRS regarding the U.S. federal income tax consequences of an exercise of redemption rights, the Business Combination or any other related matter; thus, there can be no assurance that the IRS will not challenge the U.S. federal income tax treatment described below or that, if challenged, such treatment will be sustained by a court.

This summary is limited to considerations relevant to holders that hold common stock as “capital assets” within the meaning of section 1221 of the Code (generally, property held for investment). This discussion does not address all aspects of U.S. federal income taxation that may be important to holders in light of their individual circumstances, including holders subject to special treatment under the U.S. tax laws, such as, for example:

        banks or other financial institutions, underwriters, or insurance companies;

        traders in securities who elect to apply a mark-to-market method of accounting;

        real estate investment trusts and regulated investment companies;

        tax-exempt organizations, qualified retirement plans, individual retirement accounts, or other tax-deferred accounts;

        expatriates or former long-term residents of the United States;

        subchapter S corporations, partnerships or other pass-through entities or investors in such entities;

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        dealers or traders in securities, commodities or currencies;

        grantor trusts;

        persons subject to the alternative minimum tax;

        U.S. persons whose “functional currency” is not the U.S. dollar;

        persons who received shares of common stock through the issuance of restricted stock under an equity incentive plan or through a tax-qualified retirement plan or otherwise as compensation;

        persons who own (directly or through attribution) 5% or more (by vote or value) of the outstanding shares of common stock (excluding treasury shares);

        holders holding common stock as a position in a “straddle,” as part of a “synthetic security” or “hedge,” as part of a “conversion transaction,” or other integrated investment or risk reduction transaction;

        controlled foreign corporations, passive foreign investment companies, or foreign corporations with respect to which there are one or more United States shareholders within the meaning of Treasury Regulation Section 1.367(b)-3(b)(1)(ii); or

        the Sponsor or its affiliates.

As used in this proxy statement/prospectus, the term “U.S. Holder” means a beneficial owner of common stock that is, for U.S. federal income tax purposes:

        an individual who is a citizen or resident of the United States;

        a corporation (or other entity that is classified as a corporation for U.S. federal income tax purposes) that is created or organized in or under the laws of the United States or any State thereof or the District of Columbia;

        an estate the income of which is subject to U.S. federal income tax regardless of its source; or

        a trust (i) if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (ii) that has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person for U.S. federal income tax purposes.

A “Non-U.S. Holder” means a beneficial owner of common stock that is neither a U.S. Holder nor a partnership (or an entity or arrangement treated as a partnership) for U.S. federal income tax purposes.

If a partnership, including for this purpose any entity or arrangement that is treated as a partnership for U.S. federal income tax purposes, holds common stock, the U.S. federal income tax treatment of a partner in such partnership will generally depend on the status of the partner and the activities of the partnership. A holder that is a partnership and the partners in such partnership should consult their own tax advisors with regard to the U.S. federal income tax consequences of an exercise of redemption rights.

THIS SUMMARY DOES NOT PURPORT TO BE A COMPREHENSIVE ANALYSIS OR DESCRIPTION OF ALL POTENTIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF AN EXERCISE OF REDEMPTION RIGHTS. IN ADDITION, THE U.S. FEDERAL INCOME TAX TREATMENT OF THE BENEFICIAL OWNERS OF COMMON STOCK MAY BE AFFECTED BY MATTERS NOT DISCUSSED HEREIN AND DEPENDS IN SOME INSTANCES ON DETERMINATIONS OF FACT AND INTERPRETATIONS OF COMPLEX PROVISIONS OF U.S. FEDERAL INCOME TAX LAW FOR WHICH NO CLEAR PRECEDENT OR AUTHORITY MAY BE AVAILABLE. HOLDERS OF NAUTICUS COMMON STOCK SHOULD CONSULT WITH THEIR TAX ADVISORS REGARDING THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE BUSINESS COMBINATION, INCLUDING THE APPLICABILITY AND EFFECTS OF U.S. FEDERAL, STATE, LOCAL, AND OTHER TAX LAWS.

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Certain Material U.S. Federal Income Tax Consequences of Exercising Redemption Rights

U.S. Federal Income Tax Consequences to U.S. Holders

In the event that a U.S. Holder elects to redeem its common stock for cash, the treatment of the transaction for U.S. federal income tax purposes will depend on whether the redemption qualifies as a sale or exchange of the common stock under Section 302 of the Code or is treated as a corporate distribution under Section 301 of the Code with respect to the U.S. Holder. If the redemption qualifies as a sale or exchange of the common stock, the U.S. Holder will be treated as recognizing capital gain or loss equal to the difference between the amount realized on the redemption and such U.S. Holder’s adjusted tax basis in common stock surrendered in such redemption transaction. Any such capital gain or loss generally will be long-term capital gain or loss if the U.S. Holder’s holding period for the common stock redeemed exceeds one year. It is unclear, however, whether the redemption rights with respect to the common stock may suspend the running of the applicable holding period for this purpose. Long term capital gain realized by a non-corporate U.S. Holder is currently taxed at a reduced rate. The deductibility of capital losses is subject to limitations.

If the redemption does not qualify as a sale or exchange of common stock, the U.S. Holder will be treated as receiving a corporate distribution. Such distributions generally will constitute dividends for U.S. federal income tax purposes to the extent paid from CLAQ’s current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of current and accumulated earnings and profits will constitute a return of capital that will be applied against and reduce (but not below zero) the U.S. Holder’s adjusted tax basis in the common stock. Any remaining excess will be treated as gain realized on the sale or other disposition of the common stock. Dividends paid to a U.S. Holder that is a taxable corporation generally will qualify for the dividends received deduction if the requisite holding period is satisfied. With certain exceptions (including, but not limited to, dividends treated as investment income for purposes of investment interest deduction limitations) and provided certain holding period requirements are met, dividends paid to a non-corporate U.S. Holder generally will constitute “qualified dividends” that will be subject to tax at the maximum tax rate accorded to long-term capital gains. However, it is unclear whether the redemption rights with respect to the common stock may prevent a U.S. Holder from satisfying the applicable holding period requirements with respect to the dividends received deduction or the preferential tax rate on qualified dividend income, as the case may be.

Whether a redemption qualifies for sale or exchange treatment will depend largely on the total number of shares of common stock treated as held by the U.S. Holder (including any common stock constructively owned by the U.S. Holder as a result of owning CLAQ Warrants) relative to all of the shares of common stock outstanding both before and after the redemption. The redemption of common stock generally will be treated as a sale or exchange of the common stock (rather than as a corporate distribution) if the redemption (i) is “substantially disproportionate” with respect to the U.S. Holder, (ii) results in a “complete termination” of the U.S. Holder’s interest in CLAQ or (iii) is “not essentially equivalent to a dividend” with respect to the U.S. Holder. These tests are explained more fully below.

In determining whether any of the foregoing tests are satisfied, a U.S. Holder takes into account not only common stock actually owned by the U.S. Holder, but also shares of common stock that are constructively owned by it. A U.S. Holder may constructively own, in addition to stock owned directly, stock owned by certain related individuals and entities in which the U.S. Holder has an interest or that have an interest in such U.S. Holder, as well as any stock the U.S. Holder has a right to acquire by exercise of an option, which would generally include common stock which could be acquired pursuant to the exercise of CLAQ Warrants. In order to meet the substantially disproportionate test, (i) the percentage of our outstanding voting stock actually and constructively owned by the U.S. Holder immediately following the redemption of common stock must be less than 80% of the percentage of our outstanding voting stock actually and constructively owned by the U.S. Holder immediately before the redemption, (ii) the U.S. Holder’s percentage ownership (including constructive ownership) of our outstanding stock (both voting and nonvoting) immediately after the redemption must be less than 80% of such percentage ownership (including constructive ownership) immediately before the redemption; and (iii) the U.S. Holder must own (including constructive ownership), immediately after the redemption, less than 50% of the total combined voting power of all classes of our stock entitled to vote. There will be a complete termination of a U.S. Holder’s interest if either (i) all of the shares of the common stock actually and constructively owned by the U.S. Holder are redeemed or (ii) all of the shares of the common stock actually owned by the U.S. Holder are redeemed and the U.S. Holder is eligible to waive, and effectively waives in accordance with specific rules, the attribution of stock owned by certain family members and the U.S. Holder does not constructively own any other common stock. The redemption of the common stock will not be essentially equivalent to a dividend

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if a U.S. Holder’s redemption results in a “meaningful reduction” of the U.S. Holder’s proportionate interest in CLAQ. Whether the redemption will result in a meaningful reduction in a U.S. Holder’s proportionate interest in CLAQ will depend on the particular facts and circumstances. However, the IRS has indicated in a published ruling that even a small reduction in the proportionate interest of a small minority stockholder in a publicly held corporation who exercises no control over corporate affairs may constitute such a “meaningful reduction.” A U.S. Holder should consult with its own tax advisors as to the tax consequences of a redemption.

If none of the foregoing tests is satisfied, then the redemption will be treated as a corporate distribution. After the application of those rules regarding corporate distributions, any remaining tax basis of the U.S. Holder in the redeemed common stock will be added to the U.S. Holder’s adjusted tax basis in its remaining common stock, or, if it has none, to the U.S. Holder’s adjusted tax basis in its CLAQ Warrants or possibly in other common stock constructively owned by it.

U.S. Federal Income Tax Consequences to Non-U.S. Holders

The characterization for U.S. federal income tax purposes of the redemption of a Non-U.S. Holder’s common stock as a sale or exchange under Section 302 of the Code or as a corporate distribution under Section 301 of the Code generally will correspond to the U.S. federal income tax characterization of such a redemption of a U.S. Holder’s common stock, as described above, and the corresponding consequences will be as described below.

Redemption Treated as Sale or Exchange

Any gain realized by a Non-U.S. Holder on the redemption of common stock that is treated as a sale or exchange under Section 302 of the Code generally will not be subject to U.S. federal income tax unless:

        the gain is effectively connected with a trade or business of the Non-U.S. Holder in the United States (and, if required by an applicable income tax treaty, is attributable to a United States permanent establishment or fixed base of the Non-U.S. Holder);

        the Non-U.S. Holder is an individual who is present in the United States for a period or periods aggregating 183 days or more in the taxable year of the disposition, and certain other conditions are met; or

        we are or have been a “United States real property holding corporation” for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of disposition or the Non-U.S. Holder’s holding period for such common stock redeemed, and either (A) shares of common stock are not considered to be regularly traded on an established securities market or (B) such Non-U.S. Holder has owned or is deemed to have owned, at any time during the shorter of the five-year period preceding such disposition and such Non-U.S. Holder’s holding period more than 5% of the outstanding shares of common stock. There can be no assurance that shares of common stock will be treated as regularly traded on an established securities market for this purpose.

A non-corporate Non-U.S. Holder described in the first bullet point immediately above will be subject to tax on the net gain derived from the sale under regular graduated U.S. federal income tax rates. An individual Non-U.S. Holder described in the second bullet point immediately above will be subject to a flat 30% tax on the gain derived from the sale, which may be offset by certain United States source capital losses, even though the individual is not considered a resident of the United States, provided that the individual has timely filed U.S. federal income tax returns with respect to such losses. If a Non-U.S. Holder that is a corporation falls under the first bullet point immediately above, it will be subject to tax on its net gain in the same manner as if it were a United States person as defined under the Code and, in addition, may be subject to the branch profits tax equal to 30% (or such lower rate as may be specified by an applicable income tax treaty) of its effectively connected earnings and profits, subject to adjustments.

If the last bullet point immediately above applies to a Non-U.S. Holder, gain recognized by such Non-U.S. Holder on the redemption of common stock generally will be subject to tax at generally applicable U.S. federal income tax rates. In addition, we may be required to withhold U.S. income tax at a rate of 15% of the amount realized upon such redemption. We would generally be classified as a “U.S. real property holding corporation” if the fair market value of our “United States real property interests” equals or exceeds 50% of the sum of the fair market value of our worldwide real property interests and our other assets used or held for use in a trade or business, as determined for U.S. federal

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income tax purposes. However, we believe that we are not and have not been at any time since our formation a U.S. real property holding corporation and we do not expect to be a U.S. real property holding corporation immediately after the Business Combination is completed.

Redemption Treated as Corporate Distribution

With respect to any redemption treated as a corporate distribution under Section 301 of the Code, provided such dividends are not effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States, CLAQ will be required to withhold U.S. tax from the gross amount of the dividend at a rate of 30%, unless such Non-U.S. Holder is eligible for a reduced rate of withholding tax under an applicable income tax treaty and provides proper certification of its eligibility for such reduced rate (usually on an IRS Form W-8BEN or W-8BEN-E). Any distribution not constituting a dividend will be treated first as reducing (but not below zero) the Non-U.S. Holder’s adjusted tax basis in its shares of the common stock and, to the extent such distribution exceeds the Non-U.S. Holder’s adjusted tax basis, as gain realized from the sale or other disposition of the Common Stock, which will be treated as described above.

This withholding tax does not apply to dividends paid to a Non-U.S. Holder who provides a Form W-8ECI, certifying that the dividends are effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States. Instead, the effectively connected dividends will be subject to regular U.S. income tax as if the Non-U.S. Holder were a U.S. resident, subject to an applicable income tax treaty providing otherwise. A Non-U.S. corporation receiving effectively connected dividends may also be subject to an additional “branch profits tax” imposed at a rate of 30% (or a lower treaty rate).

Information Reporting and Backup Withholding

Payments of cash to a holder pursuant to a redemption of common stock may be subject to information reporting to the IRS and possible U.S. backup withholding. Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes other required certifications, or who is otherwise exempt from backup withholding and establishes such exempt status. A Non-U.S. Holder generally will eliminate the requirement for information reporting and backup withholding by providing certification of its foreign status, under penalties of perjury, on a duly executed applicable IRS Form W-8 or by otherwise establishing an exemption.

Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against a holder’s U.S. federal income tax liability, and a holder generally may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate claim for refund with the IRS and furnishing any required information.

FATCA Withholding Taxes

Provisions under the Foreign Account Tax Compliance Act, commonly referred to as “FATCA,” impose withholding of thirty percent (30%) on payments of dividends (including amounts treated as dividends received pursuant to a redemption of stock) on common stock. Thirty percent (30%) withholding under FATCA was scheduled to apply to the gross proceeds of a disposition of any stock, debt instrument, or other property that can produce U.S.-source dividends or interest beginning on January 1, 2019, but on December 13, 2018, the IRS released proposed regulations that, if finalized in their proposed form, would eliminate the obligation to withhold on gross proceeds. Although these proposed Treasury Regulations are not final, taxpayers generally may rely on them until final Treasury Regulations are issued.

In general, no such withholding will be required with respect to a U.S. Holder or an individual Non-U.S. Holder that timely provides certifications required on a valid IRS Form W-9 or a valid IRS Form W-8, respectively. Holders potentially subject to withholding include “foreign financial institutions” (which is broadly defined for this purpose and in general includes investment vehicles) and certain other non-U.S. entities unless various U.S. information reporting and due diligence requirements (generally relating to ownership by U.S. persons of interests in or accounts with those entities) have been satisfied, or an exemption applies (typically certified as to by the delivery of a properly completed IRS Form. If FATCA withholding is imposed, a beneficial owner that is not a foreign financial institution generally will be entitled to a refund of any amounts withheld by filing a U.S. federal income tax return. Foreign financial

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institutions located in jurisdictions that have an intergovernmental agreement with the United States governing FATCA may be subject to different rules. All holders should consult their tax advisors regarding the effects of FATCA on a redemption of common stock.

U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR HOLDERS OF NAUTICUS COMMON STOCK

In the opinion of Winston & Strawn LLP, special tax counsel to Nauticus, the tax consequences set forth below in this section titled “U.S. Federal Income Tax Consequences for Holders of Nauticus Common Stock” are the material U.S. federal income tax consequences for Nauticus U.S. Holders and Nauticus Non-U.S. Holders (each as defined below) that exchange, pursuant to the Merger, their Nauticus Common Stock for CLAQ Common Stock (including for purposes of this discussion the Earnout Shares). This section applies only to Holders that hold their Nauticus Common Stock as “capital assets” for U.S. federal income tax purposes (generally, property held for investment) and does not apply to any Holders of Nauticus Common Stock that elect to exercise appraisal rights in connection with the Merger. This discussion is limited to U.S. federal income tax considerations and does not address estate or any gift tax considerations or considerations arising under the tax laws of any state, local or non-U.S. jurisdiction. This discussion does not describe all of the U.S. federal income tax consequences that may be relevant to you in light of your particular circumstances, including the alternative minimum tax, the Medicare tax on certain investment income and the different consequences that may apply if you are subject to special rules under U.S. federal income tax law that apply to certain types of investors, such as:

        financial institutions or financial services entities;

        broker-dealers;

        insurance companies;

        dealers or traders subject to a mark-to-market method of tax accounting;

        persons holding Nauticus Common Stock as part of a “straddle,” hedge, integrated transaction or similar transaction;

        Nauticus U.S. Holders whose functional currency is not the U.S. dollar;

        “specified foreign corporations” (including “controlled foreign corporations”), passive foreign investment companies and corporations that accumulate earnings to avoid U.S. federal income tax;

        the Sponsor or its affiliates, officers or directors;

        U.S. expatriates or former long-term residents of the United States;

        governments or agencies or instrumentalities thereof;

        regulated investment companies (RICs) or real estate investment trusts (REITs);

        persons that directly, indirectly or constructively own five percent or more (by vote or value) of Nauticus Common Stock;

        persons who received their shares of Nauticus Common Stock pursuant to an exercise of employee share options, in connection with employee share incentive plans or otherwise as compensation;

        entities or arrangements treated as partnerships for U.S. federal income tax purposes; and

        tax-exempt entities.

As used herein, the term “Nauticus U.S. Holder” means a beneficial owner of Nauticus Common Stock who or that is, for U.S. federal income tax purposes: (i) an individual who is a citizen or resident of the United States, (ii) a corporation (or other entity that is treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the U.S. or any state thereof (including the District of Columbia), (iii) an estate or trust the income of which is subject to U.S. federal income tax regardless of its source.

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As used herein, the term “Nauticus Non-U.S. Holder” means a beneficial owner of Nauticus Common Stock who is or that is, for U.S. federal income tax purposes: (i) a non-resident alien individual (other than certain former citizens and residents of the United States subject to U.S. tax as expatriates), (ii) a foreign corporation or (iii) an estate or trust that is not a U.S. Holder. The term Nauticus Non-U.S. Holder generally does not include an individual who is present in the United States for 183 days or more in the taxable year of disposition. If you are such an individual, you should consult your tax advisor regarding the U.S. federal income tax consequences of the Merger.

If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds Nauticus Common Stock, the U.S. federal income tax treatment of the partners in the partnership will generally depend on the status of the partners and the activities of the partnership. Partnerships and their partners should consult their tax advisors with respect to the tax consequences to them of the Business Combination.

This discussion is based on the Code and administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations as of the date hereof, which are subject to change, possibly on a retroactive basis, and changes to any of which subsequent to the date of this proxy statement/prospectus may affect the tax consequences described herein. This discussion does not address any aspect of state, local or non-U.S. taxation, or any U.S. federal taxes other than income taxes (such as gift and estate taxes).

We have not sought, and do not expect to seek, a ruling from the IRS as to any U.S. federal income tax consequence described herein. The IRS may disagree with the discussion herein, and its determination may be upheld by a court. Moreover, there can be no assurance that future legislation, regulations, administrative rulings or court decisions will not adversely affect the accuracy of the statements in this discussion.

You are urged to consult your tax advisor with respect to the application of U.S. federal tax laws to your particular situation, as well as any tax consequences arising under the laws of any state, local or non-U.S. jurisdiction.

General Tax Treatment of the Merger

Winston & Strawn LLP has delivered an opinion to Nauticus to the effect that, under the U.S. federal income tax laws in effect as of the date of such opinion, the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code (the “Merger Tax Opinion”). The obligations of each of Nauticus and CLAQ to complete the Merger are not conditioned, however, on the receipt of any opinion from W&S or any other counsel as of Closing. The Merger Tax Opinion is based on customary assumptions and certain representations, warranties and covenants of Nauticus, CLAQ and Merger Sub. If any of these assumptions, representations, warranties or covenants is or becomes incorrect, incomplete, or inaccurate, or is violated, or if there is a change in U.S. federal income tax law after the date hereof, the validity of the Merger Tax Opinion may be adversely affected and the U.S. federal income tax consequences of the Merger could differ materially from those described below. An opinion of counsel represents counsel’s legal judgment but is not binding on the IRS or any court. Neither Nauticus nor CLAQ will request a ruling from the IRS with respect to the tax treatment of the Merger, and as a result, no assurance can be given that the IRS will not challenge the treatment of the Merger described below or that a court would not sustain such a challenge. If the IRS were to successfully challenge the “reorganization” status of the Merger, holders of Nauticus Common Stock could be required to fully recognize gain with respect to such Nauticus Common Stock as a result of the Merger.

A Holder of Nauticus Common Stock who acquired different blocks of Nauticus Common Stock at different times and at different prices generally must apply the rules described in the following sections separately to each identifiable block of shares of Nauticus Common Stock.

Except as otherwise specified, the following discussion assumes that the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code.

Tax Consequences of the Merger to Nauticus U.S. Holders

If, consistent with the Merger Tax Opinion, the Merger qualifies as a “reorganization” within the meaning of Section 368(a) of the Code, a Nauticus U.S. Holder who exchanges Nauticus Common Stock for CLAQ Common Stock (including Earnout Shares) in the Merger will not recognize gain or loss for U.S. federal income tax purposes as a result of such exchange. A Nauticus U.S. Holder’s aggregate tax basis in the CLAQ Common Stock received in exchange for the Nauticus Common Stock surrendered (other than shares of CLAQ Common Stock treated as imputed interest, as described below) will equal the Nauticus U.S. Holder’s aggregate adjusted tax basis in the shares

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of Nauticus Common Stock exchanged therefor. For this purpose, IRS guidance indicates that the maximum number of shares of CLAQ Common Stock issuable under the contingent right to receive the Earnout Shares generally should be treated as having been received by the Nauticus U.S. Holders at the time of the Merger and that adjustments to the Nauticus U.S. Holder’s tax basis in shares of CLAQ Common Stock actually received should be made if the maximum number of shares of CLAQ Common Stock issuable under the contingent right to receive the Earnout Shares ultimately are not issued. Except to the extent of CLAQ Common Stock received under the contingent right to receive the Earnout Shares and treated as imputed interest (as described below), a Nauticus U.S. Holder’s holding period in the CLAQ Common Stock received will include the holding period for the Holder’s shares of Nauticus Common Stock surrendered in exchange therefor. A portion of the Earnout Shares (if any) actually received by a Nauticus U.S. Holder will be characterized as ordinary interest income for U.S. federal income tax purposes. A Nauticus U.S. Holder’s tax basis in that portion of the Earnout Shares would be equal to the fair market value thereof on the date of receipt, and the Nauticus U.S. Holder’s holding period for those Earnout Shares would begin on the day following the date of receipt.

Tax Consequences of the Merger to Nauticus Non-U.S. Holders

The U.S. federal income tax consequences of the Merger to a Nauticus Non-U.S. Holder of Nauticus Common Stock will generally be the same as those described above for Nauticus U.S. Holders of Nauticus Common Stock. A Nauticus Non-U.S. Holder may be subject to U.S. federal withholding tax for any Earnout Shares treated as imputed interest.

Reporting Requirements

Each holder of Nauticus Common Stock who receives shares of CLAQ Common Stock in the Merger is required to retain permanent records pertaining to the Merger and make such records available to any authorized IRS officers and employees. Such records should specifically include information regarding the number, basis and fair market value of the Nauticus Common Stock exchanged and the number of shares of CLAQ Common Stock received in exchange therefor. Additionally, holders of Nauticus Common Stock who owned immediately before the Merger at least one percent (by vote or value) of the total outstanding stock of Nauticus Common Stock are required to attach a statement to their U.S. federal income tax returns for the year in which the Merger is consummated that contains the information listed in Treasury Regulation Section 1.368-3(b). Such statement must include the holder’s tax basis in such holder’s Nauticus Common Stock surrendered in the Merger, the fair market value of such stock, the date of the Merger and the name and employer identification number of each of CLAQ and Nauticus. Holders of shares of Nauticus Common Stock are urged to consult with their tax advisors regarding the application of these rules.

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CLAQ’S BUSINESS

Overview

CLAQ was incorporated in Delaware on June 18, 2020 and was formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar Business Combination with one or more businesses or entities. CLAQ has until July 19, 2022 to consummate a Business Combination. If CLAQ is unable to complete its initial business combination within such 12-month period, it will (i) cease all operations except for the purpose of winding up (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. At the special meeting of stockholders held on July 18, 2022, CLAQ’s stockholders approved an amendment to CLAQ’s certificate of incorporation (the “Charter Amendment Proposal”) and an amendment to the Investment Management Trust Agreement with Continental Stock Transfer & Trust Company, dated July 14, 2021 (the “Trust Agreement Proposal”), giving CLAQ the right to extend the Combination Period six (6) times for an additional one (1) month each time, by depositing into the Trust Account $100,000 for each one-month extension, up to January 19, 2023 (the first extension to August 19, 2022 was already made). If we anticipate that we may not be able to consummate our initial business combination by August 19, 2022, CLAQ will be required to dissolve and liquidate, unless we extend the Combination Period for an additional one (1) month each time up to five (5) additional times until January 19, 2023. As a result of the July 18 Amendments, the only way to extend the time available for us to consummate our initial business combination without the need for a separate stockholder vote is for our initial stockholders or their affiliates or designees, upon five days’ advance notice prior to the applicable deadline, to deposit into the trust account $100,000 for each one-month extension. Pursuant to our Current Charter and Trust Amendment, if such funds are not deposited, the time to complete an initial business combination cannot be extended unless our stockholders otherwise approve an extension on different terms. In the event that they elected to extend the time to complete our initial business combination and deposited the applicable amount of money into trust, the initial stockholders would receive a non-interest bearing, unsecured promissory note equal to the amount of any such deposit that will not be repaid in the event that we are unable to close a business combination unless there are funds available outside the trust account to do so. Such note would be paid upon consummation of our initial business combination. There will be no redemption rights or liquidating distributions with respect to our rights or warrants, which will expire worthless if we fail to complete our business combination within the time period.

If we are unable to consummate an initial business combination and are forced to redeem 100% of our outstanding public shares for a portion of the funds held in the trust account, we anticipate notifying the trustee of the trust account to begin liquidating such assets promptly after such date, and anticipate it will take no more than 10 business days to effectuate the redemption of our public shares. Our insiders have waived their rights to participate in any redemption with respect to their founder shares. We will pay the costs of any subsequent liquidation from our remaining assets outside of the trust account. If such funds are insufficient, our insiders have agreed to pay the funds necessary to complete such liquidation (currently anticipated to be no more than approximately $50,000), and have agreed not to seek repayment of such expenses. Each holder of public shares will receive a pro rata portion of the amount then in the trust account, plus any pro rata interest earned on the funds held in the trust account and not previously released to us or necessary to pay our taxes. The proceeds deposited in the trust account could, however, become subject to claims of our creditors that are in preference to the claims of public stockholders.

Trust Account

Following the closing of the IPO on July 19, 2021 and the underwriters’ full exercise of over-allotment option on July 28, 2021, $174,500,000 from the net proceeds of the sale of the Public Units in the IPO and the sale of the Private Warrants was placed in a trust account maintained by Continental Stock Transfer & Trust Company, acting as trustee (the “Trust Account”). The funds held in the Trust Account is and will be invested only in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations, so that CLAQ is not deemed to be an investment company under the Investment Company Act, except with respect to interest earned on the funds held in the Trust Account that may be released to CLAQ to pay its income or other tax obligations, the proceeds will not be released from the Trust Account until the earlier of the completion of a Business Combination or the redemption of

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100% of the outstanding Public Common Stock if CLAQ has not completed a Business Combination in the required time period. The proceeds held in the Trust Account may be used as consideration to pay the sellers of a target business with which CLAQ completes a Business Combination. Any amounts not paid as consideration to the sellers of the target business may be used to finance operations of the target business. At the special meeting of stockholders held on July 18, 2022, 15,466,711 shares of common stock were redeemed by the stockholders. As of August 1, 2022 (after the deposit of $100,000 for the extension of time to complete a business combination to August 19, 2022), there was approximately $18.1 million in the Trust Account.

Business Combination Activities

On December 16, 2021, we entered into the Merger Agreement. As a result of the transaction, Nauticus will become our wholly owned subsidiary, and we will change our name to “Nauticus Robotics, Inc.” In the event that the Business Combination is not consummated by August 19, 2022 (unless further extended), our corporate existence will cease and we will distribute the proceeds held in the Trust Account to our public stockholders.

Redemption Rights

Our stockholders (except the Initial Stockholders) will be entitled to redeem their Public Common Stock for a pro rata share of the Trust Account (currently anticipated to be no less than approximately $10.18 per share) net of taxes payable. The Initial Stockholders do not have redemption rights with respect to any Common Stock owned by them, directly or indirectly.

Automatic Dissolution and Subsequent Liquidation of Trust Account if No Business Combination

If CLAQ does not complete a business combination before August 19, 2022, (unless such time period has been further extended as described herein), it will trigger the automatic winding up, dissolution and liquidation pursuant to the terms of our Certificate of Incorporation. As a result, this has the same effect as if CLAQ had formally gone through a voluntary liquidation procedure under Delaware law. Accordingly, no vote would be required from CLAQ’s stockholders to commence such a voluntary winding up, dissolution and liquidation. If CLAQ is unable to consummate its initial business combination within such time period, it will, as promptly as possible but not more than ten business days thereafter, redeem 100% of CLAQ’s outstanding Public Common Stock for a pro rata portion of the funds held in the Trust Account, including a pro rata portion of any interest earned on the funds held in the Trust Account and not necessary to pay its taxes, and then seek to liquidate and dissolve. Public stockholders will also forfeit the one-quarter of one Warrant included in the Public Common Stock being redeemed.

The proceeds deposited in the Trust Account could, however, become subject to claims of our creditors that are in preference to the claims of our public stockholders. Although CLAQ will seek to have all vendors, service providers (excluding our independent registered public accounting firm), prospective target businesses and other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of our public stockholders, there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against the Trust Account including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds held in the Trust Account. If any third party refuses to execute an agreement waiving such claims to the monies held in the Trust Account, CLAQ will perform an analysis of the alternatives available to it and will only enter into an agreement with a third-party that has not executed a waiver if management believes that such third-party’s engagement would be significantly more beneficial to us than any alternative. Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third-party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver.

If we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, the per share redemption or conversion amount received by public stockholders may be less than $10.18.

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If, after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. In addition, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. Claims may be brought against us for these reasons.

Each of the Co-Sponsors has agreed to waive its rights to participate in any liquidation of the Trust Account or other assets with respect to the Private Warrants they hold.

Facilities

CLAQ pays Chardan, an affiliate of CleanTech Investments, a fee of $10,000 per month for use of office space and certain office and secretarial services. CLAQ maintains its principal executive offices at 207 West 25th Street, 9th Floor, New York, NY 10001.

Employees

CLAQ has four executive officers. These individuals are not obligated to devote any specific number of hours to its matters and intend to devote only as much time as they deem necessary to its affairs until we have completed our initial business combination. CLAQ presently expects its executive officers to devote such amount of time as they reasonably believe is necessary to our business (which could range from only a few hours a week while CLAQ is trying to locate a potential target business to significantly more time as it moves into serious negotiations with a target business for a business combination). CLAQ does not intend to have any full-time employees prior to the consummation of a business combination.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF CLAQ

The following discussion and analysis of the CLAQ’s financial condition and results of operations should be read in conjunction with our audited financial statements and the notes related thereto which are included elsewhere in this proxy statement/prospectus. Certain information contained in the discussion and analysis set forth below includes forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under “Cautionary Note Regarding Forward-Looking Statements.

CLAQ is a blank check company incorporated on June 18, 2020 as a Delaware corporation and formed for the purpose of effectuating a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. CLAQ intends to effectuate its initial business combination using cash from the proceeds of its IPO and the private placement of its Private Warrants, the proceeds of the sale of its shares in connection with its initial business combination (pursuant to forward purchase agreements or backstop agreements it may enter into following the consummation of the IPO or otherwise), shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a combination of the foregoing.

Business Combination Agreement

On December 16, 2021, CLAQ entered into an Agreement and Plan of Merger, as amended on January 30 and June 6, 2022 with Merger Sub, and Nauticus. Pursuant to the terms of the Merger Agreement, a business combination between CLAQ and Nauticus will be effected through the merger of Merger Sub with and into Nauticus, with Nauticus surviving the merger as a wholly owned subsidiary of CLAQ. The Board has unanimously (i) approved and declared advisable the Merger Agreement, the Merger and the other transactions contemplated thereby and (ii) resolved to recommend approval of the Merger Agreement and related matters by the stockholders of CLAQ. On January 30, 2022, the Merger Agreement was amended to, among other things, (i) correct certain defined terms in the Merger Agreement; and (ii) include the cash available from the Debt Financing in meeting the “Minimum Cash Condition” defined in the Merger Agreement. On June 6, 2022, the Merger Agreement was further amended to increase the aggregate number of shares of the Combined Company’s Common stock to be reserved for issuance pursuant to the Incentive Plan (defined below) from 5% to 10% of the fully diluted outstanding shares of its Common Stock after Closing, which share reserve shall be automatically increased on an annual basis by 3% of the total number of Common Stock outstanding as provided under the Incentive Plan.

Results of Operations

We have neither engaged in any operations nor generated any operating revenues to date. Our only activities for the three months ended March 31, 2022 and March 31, 2021 were organizational activities, those necessary to prepare for the Initial Public Offering, described below, and, after the Initial Public Offering, identifying a target company for a business combination. We do not expect to generate any operating revenues until after the completion of our initial business combination. We generate non-operating income in the form of interest income on cash and cash equivalents held after the Initial Public Offering. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.

For the three months ended March 31, 2022, we had net income of $1,951,670, which resulted from by the change in fair value of warrant liabilities of $2,413,500, a net gain on investments held in Trust Account in the amount of $17,545, which was partially offset by operating costs of $458,647, franchise tax expense of $20,728.

For the three months ended March 31, 2021, we had no revenue or expenses.

For the year ended December 31, 2021, CLAQ had net loss of $595,442, which resulted from the warrant issuance costs of $155,037 associated with the IPO, operating and formation costs of $1,201,383, the change in fair value of the over-allotment option liability of $225,000, and franchise tax expense of $97,200, which was partially offset by the change in fair value of warrant liabilities of $1,077,750, and a net gain on investments held in Trust Account in the amount of $5,428.

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Liquidity and Capital Resources

As of March 31, 2022 and December 31, 2021, the Company had $296,381 and $518,905 in cash held outside of the Trust Account, respectively, a working capital deficit of $220,239 and surplus of $259,136, respectively.

The Company’s liquidity needs prior to the consummation of the Initial Public Offering were satisfied through the proceeds of $25,000 from the sale of the Founder Shares, and a loan of up to $250,000 under an unsecured and non-interest bearing promissory note. Subsequent to the consummation of the Initial Public Offering, the Company’s liquidity will be satisfied through the net proceeds from the private placement held outside of the Trust Account.

In addition, in order to finance transaction costs in connection with a Business Combination, our Sponsor or an affiliate of the Sponsor, or certain of our officers and directors may, but are not obligated to, loan us funds as may be required (“Working Capital Loans”). As of March 31, 2022 and December 31, 2021, there were no amounts outstanding under any Working Capital Loan.

For the three months ended March 31, 2021, net cash used in operating activities was $489,524, which was due to a net gain on investments in the Trust Account of $17,545, the change in the fair value of warrant liabilities of $2,413,500, and changes in operating assets and liabilities of $10,149, offset in part by our net income of $1,951,670.

For the three months ended March 31, 2021, net cash provided by financing activities was $267,000, which was fully comprised of proceeds from the related party promissory note.

For the three months ended March 31, 2021, there was no cash provided or used in operations.

For the year ended December 31, 2021, net cash used in operating activities was $1,039,814, which was due to the change in fair value of warrants of $1,077,750, and net gain on investments in the Trust Account of $5,428 and our net loss of $595,442, partially offset by changes in operating assets and liabilities of $258,769, the change in fair value of the over-allotment option liability of $225,000, and transaction costs of $155,037.

For the year ended December 31, 2021, net cash used in investing activities was $174,225,000, which was due to the amount of net proceeds from the initial public offering and private placement being deposited to the Trust Account.

For the year ended December 31, 2021, net cash provided by financing activities was $175,758,719, which was comprised of $169,050,000 in proceeds from the issuance of units in the initial public offering net of underwriter’s discount paid, $7,175,000 in proceeds from the issuance of warrants in a private placement to CLAQ sponsor, $16,667 in proceeds from the sale of founder shares, and proceeds from issuance of Sponsor Note of $188,302, offset in part by payment of $466,281 for offering costs associated with the IPO, $16,667 for the payment to a related party for the cancellation of founder shares, and repayment of the outstanding balance on the promissory note to CLAQ sponsor of $188,302.

Going Concern Consideration

As of March 31, 2022, the Company had $296,381 in cash held outside of the Trust Account and working capital deficit of $220,239. As a result of the above, in connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard Board’s (“FASB”) Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that the liquidity condition and date for mandatory liquidation and dissolution raise substantial doubt about the Company’s ability to continue as a going concern through July 19, 2022, the scheduled liquidation date of the Company if it does not complete a Business Combination prior to such date. These condensed consolidated financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of March 31, 2022 or December 31, 2021.

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Contractual Obligations

Promissory Note — Related Party

On March 1, 2021, the Company issued an unsecured promissory note to the Sponsor (the “Promissory Note”), pursuant to which the Company could borrow an aggregate of up to $250,000 to cover expenses related to the Initial Public Offering. The Promissory Note was non-interest bearing and is payable on the earlier of Promptly after the date on which the Company consummates an Initial Public Offering of its securities or (ii) the completion of the Initial Public Offering. The outstanding balance under the Promissory Note of $188,302 was repaid on July 23, 2021. The promissory note is no longer available to the Company.

On March 23, 2022, the Company entered into a Promissory Note with the Sponsor (the “Second Promissory Note”) to which the Company could borrow up to an aggregate of $267,000. The Second Promissory Note is non-interest bearing and payable upon the earlier of (i) completion of the initial Business Combination or (ii) the date on which the Company determines that it is unable to effect a Business Combination. As March 31, 2022, the outstanding balance under the Second Promissory Note was $267,000.

Underwriter’s Agreement

The Company granted the underwriter a 45-day option to purchase up to 2,250,000 additional Units to cover over-allotments at the Initial Public Offering price, less the underwriting discounts and commissions. On July 28, 2021, the Underwriters exercised the over-allotment option in full and purchased an additional 2,250,000 Units for an aggregate purchase price of $22,500,000.

In connection with the closing of the Initial Public Offering and subsequent exercise of the over-allotment option, the underwriter was paid a cash underwriting fee of $0.20 per Unit, or $3,450,000 in the aggregate.

Related Party Extension Loans

The Company may extend the period of time to consummate a Business Combination up to five (5) additional times, each by an additional one month (for a total of 18 months to complete a Business Combination). If we anticipate that we may not be able to consummate our initial business combination by August 19, 2022, our initial stockholders or their affiliates may, but are not obligated to, extend the Combination Period. Under the Current Charter and Trust Agreement, the only way to extend the Combination Period without the need for a separate stockholder vote, is for the Company’s initial stockholders or their affiliates or designees, to contribute $100,000 to CLAQ as an interest-free loan (the “Extension Loan(s)”) for each one-month extension up to an aggregate of $600,000, for CLAQ to deposit the fund into the Trust Account within two business days prior to the beginning of the additional extension period, other than the first deposit which was made on July 19, 2022, the day July 18 Amendments were approved by CLAQ’s stockholders. The Extension Loans will be repaid only upon consummation of CLAQ’s initial business combination and will not be repaid in the event that the Company is unable to close a business combination unless there are funds available outside the trust account to do so. As of the date of this proxy statement/prospectus, the outstanding balance of the Extension Loan owed to the Co-Sponsors is $100,000 (which was used to extend the time to complete a business combination to August 19, 2022).

Critical Accounting Policies

The preparation of condensed consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:

Derivative Warrant Liabilities

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”), and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815,

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including whether the warrants are indexed to the Company’s own Common Stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, Derivatives and Hedging. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. For the initial valuation, the Company utilized a Monte Carlo simulation model for the initial valuation of the Public Warrants, and the publicly-traded value for the subsequent valuation of the Public Warrants. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the consolidated statements of operations. The fair value of the Private Placement Warrants was estimated using a Black-Scholes Option Pricing Model (see Note 9). The subsequent measurement of the Public Warrants as of March 31, 2021 and December 31, 2021 is classified as Level 1, as such, an observable market quote in an active market under the ticker CLAQW was used.

Common stock subject to possible redemption

The Company accounts for its Common Stock subject to possible redemption in accordance with the guidance in ASC Topic 480, Distinguishing Liabilities from Equity. Common Stock subject to mandatory redemption (if any) is classified as liability instruments and are measured at fair value. Conditionally redeemable Common Stock (including Common Stock that feature redemption rights that are either within the control of the holder or subject to redemption upon occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, Common Stock are classified as stockholders’ equity. The Company’s Common Stock feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, as of March 31, 2022 and December 31, 2021, 17,250,000 Common Stock subject to possible redemption are presented as temporary equity, outside of the stockholders’ deficit section of the Company’s balance sheet. Effective with the closing of the Initial Public Offering, the Company recognized the accretion from the initial book value to redemption amount, which resulted in charges against additional paid-in capital (to the extent available) and accumulated deficit.

The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable Common Stock to equal the redemption value at the end of each reporting period. This method would view the end of the reporting period as if it were also the redemption date for the security. Increases or decreases in the carrying amount of redeemable Common Stock are affected by charges against additional paid in capital and accumulated deficit.

Net income Per Share of Common Stock

Net income per share of common stock is computed by dividing net earnings by the weighted-average number of shares of common stock outstanding during the period (for all periods during which these shares were subject to forfeiture, the calculation of weighted average shares outstanding excludes an aggregate of 562,500 shares of common stock held by the Sponsor that were subject to forfeiture). The Company has not considered the effect of the Warrants sold in the Initial Public Offering and private placement to purchase an aggregate of 15,800,000 shares in the calculation of diluted income per share, since the exercise of the Warrants are contingent upon the occurrence of future events and the inclusion of such Warrants would be anti-dilutive.

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INFORMATION ABOUT NAUTICUS ROBOTICS, INC.

The following discussion should be read in conjunction with the information about Nauticus contained elsewhere in this proxy statement/prospectus, including the information set forth in Nauticus’ consolidated financial statements and the related notes. Some of the information contained in this section or set forth elsewhere in this proxy statement/prospectus, including information with respect to Nauticus’ plans and strategy for its business, includes forward-looking statements that involve risks and uncertainties. You should read the sections titled “Risk Factors” and “Special Note Regarding Forward-Looking Statements” for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion. Unless the context otherwise requires, all references in this subsection to the “Company,” “we,” “us” or “our” refer to the business of Nauticus Robotics, Inc., a Texas corporation, and its subsidiaries prior to the consummation of the Business Combination, which will be the business of the post-combination company and its subsidiaries following the consummation of the Business Combination.

Overview

Nauticus Robotics provides 21st century ocean robotic solutions to combat the global impacts on the world’s marine environment. The interconnected, purpose-built product ecosystem of both surface and subsea robots is powered by Nauticus’ autonomous software platform that affords our robots real machine intelligence, not just automation. This approach will transform the industry to an economically efficient and environmentally sustainable model. Nauticus Robotics, Inc. was initially incorporated as Houston Mechatronics, Inc. on March 27, 2014, in the State of Texas. Nauticus’ principal corporate offices are located in Webster, Texas. The Company is developing an ecosystem of ocean robots that are controlled through an AI-driven cloud software platform which enables a sliding scale spectrum of autonomous operations — from direct operator control to complete hands-off, robot self-sufficient control. Instead of the conventional tethered connection between the operator and the subsea robot, Nauticus has developed an acoustic communication networking, compression, and protocols that allows the robot to perform its tasks without a direct, cabled connection. This offering permits significant operational flexibility and cost savings over the methods currently deployed in the marketplace.

The full range of Nauticus ocean robot technologies combine to provide unique capabilities heretofore not seen in the commercial ocean market and delivered to the market at substantially reduced cost and reduced environmental footprint. Under the current subsea service paradigm, large vessels are deployed with ROVs/AUVs and supporting equipment to the work area. A large surface presence is required to control the robot through direct teleoperation of the vehicle and through robotic manipulators; including the launch, recovery, and transport of the asset to and from the worksite. Direct contact must be maintained with the ROV to provide the teleoperators with sufficient video feedback and transmit control signals. The direct communication requires a tether that is spooled on the deck and reaches depths in excess of 3,000m. The size of this equipment dictates the size of the surface vessel. A larger surface vessel results in a complex infrastructure that creates additional excessive costs. For example, a larger vessel requires more crew members to manage and operate the vessel while on station at a worksite (including transit to and from the work location. Additionally, from an environmental perspective, the GHG emissions from this style of operation can be as high as 70MT of CO2 per day.

Unlike the current subsea service paradigm, Nauticus’ approach features a system without the need for a high-capacity network (fiber) with a traditional ROV. This allows software and autonomy control most of the actions of the machines through a supervised autonomous acoustic network given that in communication is limited to low bandwidth signaling between our small surface ship (Hydronaut) and Aquanaut. These signals are transmitted through satellite communication or other mobile networks (e.g., 4G/LTE/5G) to a shore-based control center where operators “supervise” the actions of the Aquanaut. However, they are not in real time control as in the current paradigm. With no tether required, the ship only carries the Aquanaut and can, therefore, be much smaller. Smaller ships burn far less fuel and thereby (i) incur significantly less expenses, and (ii) reduce greenhouse gas emissions by a significant margin.

Products and Services

Nauticus’ ocean robotic ecosystem is headlined by the Company’s flagship product, Aquanaut, a vehicle that begins its mission in a hydrodynamically efficient configuration which enables efficient transit to the worksite (i.e. operating as an autonomous underwater vehicle, or AUV). During transit (operating in survey mode), Aquanaut’s sensor suite provides capability to observe and inspect subsea assets or other subsea features. Once it arrives at the worksite, Aquanaut transforms its hull configuration to expose two work-class capable, electric manipulators that can perform dexterous tasks with (supervised), or without (autonomous), direct human involvement. In this intervention

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mode, the vehicle has capabilities similar to a conventional Remotely Operated Vehicles (ROV). The ability to operate in both AUV and ROV modes is a quality unique to Nauticus’ subsea robot and is protected under a US Patent. To take advantage of these special configuration qualities, Nauticus has developed underwater acoustic communication technology, called Wavelink, Nauticus’ over-the-horizon remote connectivity solution, that removes the need for long umbilicals to connect the robot with topside vessels. Eliminating these umbilicals and communicating with the robot through acoustic or other latent, laser, or RF methods reduces much of the system infrastructure that is currently required for ROV servicing operations and is at the heart of Nauticus’ value proposition.

The Argonaut, a derivative product of the Aquanaut, is aligned at non-industrial, government applications. This vehicle embodies many of the Aquanaut’s core technologies but varies in form and function necessary to perform specialized missions.

The component technologies that comprise the Aquanaut are also marketable to the existing worldwide ROV fleet. Aquanaut’s perception and control software technologies, combined with its sensor platform and electric manipulators, can be retrofitted on existing ROV platforms to improve their ability to perform subsea maintenance activities.

Nauticus’ robotic systems will be delivered to commercial and government customers primarily through a Robotics as a Service (“RaaS”) subscription business model (a business model planned for future commercial services but not yet implemented), but also as direct product sales, where required — such as to the defense industries.

Nauticus’ mission is to disrupt the current ocean service paradigm through the introduction and integration of advanced robotic technologies. These key technologies are autonomous platforms, acoustic communications networks, electric manipulators, AI-based perception and control software, and high-definition workspace sensors. Implementation of these technologies enables substantially improved operations at significantly reduced costs over conventional methods.

Nauticus’ portfolio of robotics systems include:

        Aquanaut.    The Aquanaut is designed to be launched from shore or off the back of an autonomous surface vessel to operate as a free-swimming subsea vehicle that is controlled through an acoustic communication system and capable of performing a wide range of inspection and manipulation tasks. The defining capability of Aquanaut is to operate in two separate modes — Inspection and Intervention. The Inspection mode involves the use of sensors during vehicle transit and the Intervention mode uses work class manipulators (Nauticus’ Olympic Arms) to perform work in the subsea environment.

The Aquanaut will be offered through RaaS (a business model planned for future commercial services but not yet implemented) and through direct sales to strategic clients. Nauticus has produced two units, one developmental and one is under contract in service with a Department of Defense customer. Three units are in production and were expected to be completed by the end of the third quarter of 2022. However, due to supply chain disruptions the three Aquanauts are expected to be completed by the end of the fourth quarter 2022 and commissioned in early 2023. The current production timeline for a single Aquanaut is six months, but Nauticus expects that timeline to decrease to three months in coming years, with production efficiency gains and economies of scale. Nauticus expects that it will be able to sell, lease, or add to its commercial service fleet each Aquanaut within a maximum of 90 days of completed production.

        Argonaut.    A derivative of the Aquanaut vehicle is the Argonaut which has enhanced capabilities for transit and autonomous operations. This vehicle has been orchestrated to provide Nauticus’ government-facing customers with the capabilities to perform their specialized mission scenarios. The Argonaut is completing final assembly in our facility. Upon completion, expected in the third quarter of 2022, the first Argonaut vehicle will undergo commissioning in the Gulf of Mexico leading to its acceptance by the customer, a Large Confidential Government Contractor, for further use in US government applications. Specifically, this vehicle will be used by a Large Confidential Government Contractor, in conjunction with Nauticus, to perform under a current contract. This product and other variants are already available for direct sales to U.S. Department of Defense entities, contractors, and is planned for future commercial services through a RaaS contract for ongoing services.

Since there is very little difference between Argonaut and Aquanaut except for the outer mold line (“OML”), and minor navigational and other sensors, the current production timeline for a single Argonaut is also six months. But Nauticus expects that timeline to similarly decrease to three months in coming years. Nauticus expects that it will be able to sell or lease an Argonaut within 90 days of completed production.

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        Olympic Arm.    An all-electric, work-class manipulator built to serve ROV and hovering and resident AUV markets, providing an electric advantage that allows for more perception-driven decision making for semi-autonomous tasking. The current existing hydraulic solutions are undesirous for both operating costs and environmental concerns. Fully electric systems that make use of advanced sensing and control techniques will increase reliability and reduce time-on-task (vessel days saved). Further the all-electric architecture helps prevent hydraulic oil spills for the current offering for more environmentally sensitive areas. (e.g., North Sea, Canada, etc.).

The Olympic Arm is currently offered as both a standalone product and as a component to both the Aquanaut and in future models of the Argonaut. As such, the Olympic Arm is offered both through direct sales and is planned for future commercial services through RaaS. As a standalone product, Nauticus is preparing to deliver the first unit to the first customer, IKM Subsea, followed by a second unit to an additional customer by the end of the third quarter of 2022. The current production timeline for a single Olympic Arm is two months, but Nauticus expects that timeline to decrease to one month in coming years, with production efficiency gains. Nauticus expects that it will be able to sell or lease an Olympic Arm, or incorporate it into an existing product order, within 90 days of completed production.

        ToolKITT.    This software suite is a multi-layered, multi-tool, software platform that can operate the Aquanaut, Argonaut, Olympic Arm, or other 3rd party ocean robotic vehicles through all mission phases. Its capabilities include navigational guidance, vehicle, and manipulator control as well as perception and planning and execution of tasks. ToolKITT is currently generating revenue through a Defense Innovation Unit contract. Under this contract, the ToolKITT operates and controls a 3rd party ROV called a VideoRay Defender (a “Defender ROV”) to perform a set of tasks in support of subsea defense operations. Upon the successful completion of this contract, Nauticus will have the opportunity to license ToolKITT to the U.S. Department of Defense for use on their existing fleet of Defender ROVs.

        Hydronaut.    A small, optionally crewed autonomous surface vessel that will support the real-time operations of Aquanaut in long range and deep water commercial applications. Hydronaut will ferry Aquanaut to and from the worksite and support battery recharging and the over-the-horizons communications link to shore.

The first Hydronaut is currently fulfilling charter days for a Large Confidential Government Contractor, related to a Department of Defense customer. The lease agreement for Hydronaut 1 was based on a usage rate of $6,000 per day, with no fixed number of operational days, beginning on January 31, 2022. Through the four months ended April 30, 2022, the vessel had only been utilized three (3) days for a total revenue of $18,000. Hydronaut will support the RaaS model, when implemented, for Aquanaut. Nauticus will also independently offer Hydronaut through RaaS, when available, and currently offers Hydronaut through direct sales. Nauticus currently has one Hydronaut in service. It also has two more Hydronauts in production with Diverse Marine, in the UK, which were expected to be completed by the end of the first quarter of 2023. However, due to supply chain disruptions the two Hydronauts are expected to be completed and commissioned in Q2 2023. Nauticus expects that it will be able to sell, lease, or add to its commercial service fleet, a Hydronaut within 90 days of completed production.

Nauticus has an experienced team with deep operational expertise in bringing emerging technologies to market. Nauticus’ engineering and design efforts are led by a highly experienced robotics team with over 200 years of cumulative robotics experience. Nauticus’ core engineering team has been working together for over 10-15 years and has designed and deployed advanced robotics systems for both public and private market applications.

Nauticus’ engineering process is a blend of Agile principles and a traditional phase-gate development workflows. The nature of robotics is highly intra- and multidisciplinary, containing both hardware and software components and requires a blend of both design methodologies. On the hardware side, Nauticus has created two design workflows (Standard Design and Simplified Design) that allow for quick-turn development as well as rigorous and detailed engineering work. Nauticus has also implemented a modified Agile Scrum workflow that allows for continual delivery of value, ability to change priorities, and resolve problems quickly.

Nauticus’ principal executive offices are located at 17146 Feathercraft Lane, Suite 450, Webster, TX 77598. Our telephone number in the USA is (281) 942-9069. Additional company and product information is available at www.nauticusrobotics.com.

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Current Operations and Transitions

Nauticus Robotics is transforming from a business where revenue was primarily generated through engineering service contracts, with both government and commercial customers, to a company that performs subsea robotic services through various technology-based products. Aquanaut is currently under a services contract with the government, through a Large Confidential Government Contractor, as a robotic platform for a government customer. In addition, Hydronaut 1 is also chartered under a Large Confidential Government Contractor, for program operations as a surface support vessel during Aquanaut subsea testing. The Olympic Arm product is being commissioned for its first delivery to IKM Subsea for acceptance testing under a purchase order agreement. The ToolKITT software is currently undergoing testing and trials with the Defense Innovation Unit on the VideoRay Defender ROV platform. The successful outcome of this testing will lead to the deployment of ToolKITT on the existing Defender ROV fleet (possibly resulting in 99 licenses) used by the U.S. Navy. These initial orders substantiate our belief that these products are emerging into a revenue generating status, although it is recognized by Nauticus that further commercial maturity will be required as these products are introduced and scaled into the market. The status of these products is “early stage” since the development of commercial success is concomitant with further improvements to these products based on additional market feedback.

Nauticus Robotics has successfully performed under previous projects and continues to advance subsea vehicles, manipulation, and autonomy technology space. Nauticus leverages its relationship with advanced technology areas of the U.S. Department of Defense to improve the capabilities of its products and advance their state-of-the-art.

Nauticus currently uses its surface vessel, the Hydronaut, for transport and communications node for the Aquanaut as it performs subsea tasks. This paradigm substantially reduces the size of the surface expression of the support infrastructure and thereby significantly reduces burning of hydrocarbon fuels during the work campaigns. Using these substantially smaller support vessels, with far fewer crew members (and eventually zero crew members), dramatically reduces costs. The autonomous/semi-autonomous operating modes of vehicles like the Aquanaut improve robot performance and reduce the time for task completion. Each of these key operational characteristics improves the efficiency of the service delivery and makes for a more environmentally sustainable operation.

Industry Background

Evolution of Aquatic Robotics

The modern ocean robotic vehicles known as unmanned underwater vehicles (UUVs) can be traced to work performed by the US Navy in the 1960’s. As this technology developed through the 1970’s and 80’s, the oil and gas industry began to utilize this technology to support exploration projects in water depths that exceeded the capability of human divers. Since these beginnings, remotely operated vehicles (ROVs) and autonomous underwater vehicles (AUVs) have expanded their reach into many fields beyond the ocean energy marketplace. These robotic vehicles have played a key role in exploration and discovery as well as ocean rescue missions. Today, these vehicles are routinely used to perform a wide variety of tasks in support of many fields of use including offshore wind energy and aquaculture.

UUVs generally have two missions: data gathering or manipulation. They are operated in two distinct classifications — remotely operated or autonomous. The current vehicle designs are optimized and limited to performing one mission or the other. The long-range observation and data gathering missions are often oceanographic data, communication cable inspections, or subsea topographical surveys. These vehicles are usually AUVs and are non-hovering, tetherless ‘submarine shaped’ hulls optimized for long range cruising. Not only do these platforms neglect any manipulation, it also makes them less than ideally suited for tasks requiring high maneuverability. There are some hovering AUVs and even some that offer limited manipulation. However, these hydraulic arms are very rudimentary add-on features incapable of complex coordination or more advanced concepts like goal directed, impedance-force control.

On the other hand, most manipulation missions are performed by ROV designs. These tethered robots are specifically aimed at subsea manipulation which are attached to topside support vessels for power and communication. As such, they take advantage of high data rates and the power rich environment afforded by the tether. Although operator fatigue is a notorious problem, most ROV operators are paid ‘by the hour’ and that has unfortunately held down advancing the state of the art in operational efficiency, control, or manipulation sophistication. And it is these exact technology advancements that are required in a communication poor, power limited environment.

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There is an emerging need for the hybrid operation: a highly maneuverable platform that can perform manipulation work and also travel efficiently for tens of kilometers. This might include deployment from shore or from some other vehicle and then traveling large distances to then perform manipulation or observation work or both.

Market Opportunity

Although AUV and ROV technology has progressed over the years, the fundamental solution architecture has not changed from its beginning. Servicing missions at depth requires a large surface ship and for intervention tasks, tether spooling systems to be mounted and controlled from the vessel. Beyond the obvious mobilization/demobilization and operating costs of the ship, the tether system introduces its own set of operational challenges and constraints to account for entanglement and sea current-induced disturbances. The size and complexity of the tether system contributes to the size requirements of the vessel. The current paradigm typically includes onboard crew to operate the ROV, further increasing the vessel requirements. The current architecture drives the high cost of this service through the large size of the surface vessel combined with the encumbrance of the connecting cable between the surface vessel and the ROV.

The Nauticus Robotics solution addresses the primary factors that drive the cost of the current servicing paradigm. Eliminating the need for the several thousand meters of cable and therefore the onsite vessel and people using acoustic communications substantially reduces the cost of operations. In addition to removing the cost and maintenance of the cable, the surface vessel does not need to accommodate the size and complexity of this system, reducing its size and associated cost. Reducing the size of the surface vessel yields cost savings through reduced crew and vessel operating cost. Importantly, reducing the size of the surface vessel also substantially reduces the carbon expression during servicing operations.

Removing the cable, which provides high bandwidth communications between the surface and the ROV, while still performing dexterous manipulation tasks has been a central technical achievement of Nauticus Robotics. Increasing the autonomy of the ROV through artificial intelligence enables the full set of capabilities required by the market but achieved through low bandwidth data links. In this new control paradigm, high-bandwidth teleoperation gives way to low-bandwidth supervised autonomy. Taking the responsibility for robotic interventions from a real-time operator and placing it with the robot itself also improves performance of the system by reducing task completion times. This benefit results when the robot, not the operator, compensates for local disturbances while completing tasks in the workspace.

Another key benefit provided by Nauticus Robotics’ Aquanaut is its unique ability to transform its hull to optimize performance during different phases of the mission. The AUV-style, hydrodynamically efficient hull configuration enables the robot to traverse long distances when performing subsea pipe or cable inspections. After this transit, the vehicle can transform its shape to expose workclass-capable manipulators to interact with its environment. This ability to transit long distances and then perform manipulation tasks is enabled by both the vehicle design as well as the freedom from a cabled surface connection. This unique capability of the Aquanaut brings new capacity to subsea robotic interventions and further disrupts the status quo.

Nauticus Robotics believes that these new technical advances will redefine how ocean intervention services are performed. However, it is possible that these beliefs will prove incorrect. For additional discussion of risks relating to operational and financial projections, please see “Risk Factors — Nauticus’ operating and financial projections rely on management assumptions and analyses. If these assumptions or analyses prove to be incorrect, Nauticus’ actual operating results may be materially different from its forecasted results.”

The new and unique capabilities of the Aquanaut represent a significant market opportunity for Nauticus Robotics to disrupt the ocean services marketplace, especially given the lack of comparable systems.

The market for this technology is vast and covers several independent market segments including offshore renewables, oil & gas, telecommunications, aquaculture, mining, defense, ports, and shipping just to name a few. The worldwide energy (O&G & Wind) IMR services market is projected to grow based on aging assets with O&G, and asset growth with Offshore Windfarms.1 Over the next 4 years, there will be tremendous growth of wind farm infrastructure installed into the global offshore market.2 Currently, 25GW of offshore renewables are installed off the coast of Europe with expectations to double by 2030. The Biden Administration announced the installation of 30GW of offshore

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1        Source: https://www.westwoodenergy.com/reports/world-rov-operations-market-forecast-2019-2023.

2        Source: https://gwec.net/global-offshore-wind-report-2021/.

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renewables by 2030 to be installed off American shores. In total, that would include around 15,000 more wind turbines to be installed in just the United States and Europe. Today these markets are served by service companies offering Vessel based services with the cost of these services being split substantially on the cost to operate the vessel over the ROV.

Overall, the Defense market is expected to perform strongly in the next 5 years as geopolitical tensions continue to indicate that peer competitor and near-peer competitor engagements are likely in the ocean domain. The U.S. Department of Defense periodically issues Offset Strategy reports that summarize strategic planning and analysis as guidance for future technology investments. As highlighted in the 3rd Offset Strategy, unmanned systems especially in the maritime domain will be front and center and see heavy investment. Highlighted by the inherent stealth of the undersea domain presents, this will see sharp increase in development spending and acquisitions. In general, the geo-political tension drives defense spending for reconnaissance and covert littoral battlefield, and deepwater assets such as Aquanaut and our customers have affirmed this belief. COVID-19 has had a minimal effect on defense spending on our products. We have seen some increase in discretionary spending even while COVID-19 has caused a decrease in government spending in other areas. We do not expect a reduction in spending from supporting agencies.

The use of technology like Aquanaut is a significant topic in port security and management but is difficult to properly assess through industry reports alone. Due to this, our findings through target customer interactions is the size of the port and security market and expected adoption in the next 3 – 5 years will be substantial. As a point of reference, there are over 800 major ports worldwide and Aquanaut can address the work required to assess port seabed conditions, vessel hull anomalies, sensor placements and retrievals, change detection monitoring and unauthorized vessel detection. We plan to have multiple service offerings for the Port and Harbor Security Market through vehicle sales and leases to the customer, including all equipment necessary to conduct Aquanaut missions. This will lead to Autonomy as a Service, using the ToolKITT and a behavior development license agreements for our customer base. Aquanaut is an excellent multi-tool, but many of the ‘tools’ required for the vehicle are software based. Due to the specific nature of security requests, we believe that custom development will be a requirement. We plan to provide over the air updates from our Houston based engineering team will ensure that vehicles are equipped and qualified with the latest behaviors in our autonomy framework. We believe we will have a residual revenue opportunity through a long term license for the autonomy updates.

Aquaculture is expected to increase significantly. With the world’s population on course to reach 9.7 billion by 2050, the global demand for protein is expected to grow by 40%.3 One way to meet our protein needs is to sustainably maintain both wild fish reserves and farmed fish. Furthermore, the rising trend of smart fishing and the increase in seafood trade is also propelling the demand for aquaculture products. Major factors driving the growth of the market include rising demand for protein rich aqua food across the world, rapid adoption of advanced technologies — IoT, artificial intelligence (AI), feeding robots, and underwater remotely operated vehicles (ROVs) on aquaculture farms; increasing investment and rising R&D expenditure in aquaculture technology worldwide; and the growing popularity of land-based recirculating aquaculture systems.

The most addressable portion of this market today is associated with how Salmon is farmed in both Norway and Chile, South America. Regular net cleaning is important to maintaining the health of the fish and the current man in the loop semi-automated cleaners damage the netting over time and nets break. When the nets break the fish are lost, but the farmers are also fined for allowing farm fish to escape into the wild population of fish. Aquanaut-type and Aquanaut technologies could reside within the farm, clean the net more regularly, in a less aggressive manner that reduces net wear. This robot could also use its machine vision technology to measure and classify the net wear characteristics over time which would trigger preventative maintenance in order to avoid nets break, and by doing so avoid the fine.

The Nauticus Robotics Solution

We are developing a portfolio of ocean robotic vehicles and manipulators controlled by our multi-layered software suite. This software provides sensed perception of the environment combined with guidance, navigation, and control of the vehicle. Additionally, the software suite provides cutting-edge intelligence to control the dual arm manipulators to perform dexterous tasks. Complex task execution without a high-bandwidth tether to the robot necessitates a command-and-control architecture that permits local command authority as well as a level of self-sufficiency to execute high-level, human-directed tasks. Many studies have demonstrated that naive implementation of autonomy can

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3        Source: Henchion M, Hayes M, Mullen AM, Fenelon M, Tiwari B. Future Protein Supply and Demand: Strategies and Factors Influencing a Sustainable Equilibrium. Foods. 2017;6(7):53. Published 2017 Jul 20. doi:10.3390/foods6070053.

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result in opaque systems unless a focus of the system architecture is the interdependence between human and robotic system. Besides basing our success metrics on operator mental burden, advances in three key areas will differentiate this architecture. Those areas are automatic task planning, probabilistic-based perception, and novel data compression.

Our technological innovations also include:

        A subsea vehicle that can transform its hull shape from a hydrodynamic transit vehicle to a working ROV mode that exposes two workclass manipulators

        A multi-layered software subsystem that handles vehicle control, perception, and manipulation that are supported through machine learning paradigms

        An acoustic-based mesh network communication system that provides multi-point communication capabilities between multiple subsea vehicles and the sea surface

We believe the primary drivers towards the adoption of Nauticus Robotics’ products include:

        Substantial reduction in the cost to deliver subsea inspection, maintenance, and repair services will yield disruptive cost savings to customers

        Reduced carbon footprint provided by the reduction in size of the surface vessels required to perform work

        Reduced number of crew exposed to offshore work hazards

        Additional cost savings through fewer vessel days due to improved operational efficiencies

        Reduction of hydraulic fluid leaks

We believe the benefits of our robotic systems will have clear implications across many industries including offshore wind, port security, aquaculture, traditional energy, subsea mining, and telecommunications.

Competitive Strengths

Differentiated and Proprietary Technology

Several key technical advances underpin the Nauticus Robotics ocean technology and service offering. Namely, an acoustic communication protocol and capability to control ocean robots and perform complex tasks without the need for a high-bandwidth, cabled connection between the operator and robot. The freedom from constraining tethers enables a freedom of movement that is unprecedented in previous ocean robotic archetypes. Taking advantage of a tetherless control paradigm motivates a vehicle that can transit long distances and then interact with objects in the workspace. This new type of subsea robotic archetype, which we call an Autonomous Underwater Robotic Vehicle (AURV) is capable of a changeable hull configuration that is efficient for transit and then transforms to expose manipulators used to perform tasks at a designated worksite. This new robotic vehicle archetype is protected for Nauticus Robotics by US patent.

Early Mover Across Key Markets

Nauticus Robotics has market tested its product portfolio through demonstrations to potential customers and discussions with industry leaders in the target markets. Prospective customer response has been positive and this has been reflected in the numerous paid studies under contract with major energy customers to detail the Nauticus solution to their use cases. Nauticus Robotics has organized an Advisory Panel with high-level representatives from commercial and defense markets that also serves as a focus group to test and guide Nauticus product development activities. Each of these members have offered their positive feedback regarding product features and capabilities.

Visionary and Experienced Management

We have an experienced team with deep operational expertise in bringing emerging technologies to market. Our team is led by Nicolaus A. Radford, our Chief Executive Officer who has over 20 years of experience with robotics and technical leadership. Our engineering and design efforts are led by a highly experienced robotics team with over 200 years of cumulative robotics experience, with our core engineering team trained in high-tech robotics at NASA and working together for over 15 years.

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The nominees for the board of directors of the post-combination company have extensive experience across a wide array of disciplines including the industries that Nauticus intends to serve. This technical and commercial expertise will guide the production and delivery of complex hardware and software solutions to the market. For more information about the expected composition of the board of directors following the consummation of the Business Combination, see the section entitled “Management After the Business Combination.”

Strategic Collaborators

We collaborate with market leaders in complementary technologies such as energy storage and sensors while nurturing market relationships with key customers. Our collaborations with high profile industry leaders provide valuable feedback that we believe will enhance our early mover advantage. We also expect that these relationships will provide us enhanced credibility and better lead generation and conversion of additional potential customers.

Growth Strategy

The key elements of our growth strategy include:

Accelerate the Development of our Robotic Systems

Nauticus Robotics is committed to the development of a complete ocean eco-system of robotic technologies. Each product is developed from an advanced automation perspective with focus on increased performance, lower cost, and environmentally friendly operations. The Nauticus product portfolio includes a new archetype of subsea vehicle, the AURV we call Aquanaut, that can change its configuration to optimize performance during various transit and manipulation phases of the mission. Our expertise in dexterous manipulation supports the deployment of electric, subsea manipulators that will be used by Nauticus for its own vehicles, but that also address a market need to retrofit existing ROV’s with manipulators that have both workclass strength and reach envelopes. ToolKITT integrates total robot and vehicle functions that simplify operational control through ‘mouse clicks’, not joysticks. This superior approach to operational control of robots reduces both task times and mission cost. The Nauticus acoustic communication technology serves as a many-to-many data connection between multiple mobile assets in the marine environment. This technology enables multiple robotic actors to participate in complex servicing activities with over-the-horizon control by remote operators. These products combine to minimize mission execution cost, enhance safety, and enable the application of state-of-the-art robotic technologies to the needs of the ocean customer.

Continued Investment in Innovation

We will continue to invest significant resources in developing proprietary technologies across hardware, firmware, software, and controls to commercialize our robotic systems. We expect our research and development activities to focus on various sizes of vehicles and manipulators to meet different market needs. Improving network data communication to include both acoustic and optical modalities that optimize bandwidth over the near and far range is also a part of the development roadmap.

Our Product Platforms

We expect to offer a range of robotic systems that draw on our intellectual property, years of expertise, and innovative core technologies.

Aquanaut

The Aquanaut represents a new type of subsea vehicle that takes advantage of new subsystem technologies to bring best-in-class performance to the ocean realm.

We believe the following to be the key capabilities of the Aquanaut:

        Transformable hull design that enables efficient operations in transit (AUV mode) and at the worksite (ROV mode)

        All-electric design for both propulsion and manipulation

        Capable of operating under supervised autonomy and fully autonomous vehicle control modes

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        Multi-modal sensor suite capable of creating a high resolution 3-D map of the near-space environment to support manipulation

        Onboard navigation that enables extended transit to a worksite

Hydronaut

An 18m long, optionally crewed vessel that will support the real-time operations of Aquanaut in commercial applications. Hydronaut will ferry Aquanaut to and from the worksite and support battery recharging and the over-the-horizons communications link to shore.

ToolKITT

ToolKITT is a cloud software platform consisting of interrelated products for ocean sensing, manipulation, autonomous behaviors, survey, search & recovery, and manual intervention. This functionality encompasses robotic controls, user interfaces, sensor integration, simulation, data analysis, and communication frameworks purposely built to enable work subsea. This software unifies all of Nauticus’ products into a single control architecture. This system includes a communications middleware that orchestrates vehicle activities, performs updates, and enables multi-agent interaction and mission planning. However, the software platform can also be used across other robotic platforms in the ocean space and, theoretically, outside of the ocean domain as well.

This product embodies a complete command and control suite of software components that provide the intelligence necessary to transit and perform work with minimal interventions. Although the entire suite is comprised of the following components, each one is capable of existing independently, being seamlessly integrated into existing customer platforms and systems:

        Helmsman — Safe, efficient, reactive, on-board control system for maritime robotic platforms

        Commander — Mission planning, autonomy, and direct commanding of maritime robotic platforms

        Wayfinder — Perception-based mapping and world modelling

        Wavelink — Disruption-tolerant, secure, communication network for maritime robotic platforms

        Loggerhead — Data collection and analysis for customer data products and diagnostics

Olympic Arm

The Olympic Arm is an all-electric, work-class manipulator built to serve the remotely operated vehicle (ROV) as well as the hovering and resident AUV markets. These manipulators provide an electric advantage that allows for more perception-driven decision making for semi-autonomous tasking. The existing hydraulic solutions cannot achieve this and therefore will be replaced in the pending recapitalization of the market. In other words, fully electric systems make use of advanced sensing and control techniques that will increase reliability and reduce time-on-task (vessel days saved). Further the all-electric architecture helps prevent hydraulic oil spills for the current offering for more environmentally sensitive areas. (e.g. North Sea, Canada, etc). This arm has similar kinematic characteristics to workclass ROV hydraulic arms currently used in the market and can be retrofitted into existing ROV designs.

        6-7 actuated degrees of freedom

        All-electric design

        Force sensing and control

        Autonomous tasking and tool change capability

HaloGuard

The HaloGuard system is a restricted access monitoring and control system powered by deep Learning algorithms that are deployed into hazardous operational areas. HaloGuard is currently deployed for redzone management in offshore platforms.

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Competition

Current Solutions:

Ocean Services utilizing AUVs/ROVs are based on vessel companies contracting two ways with clients — Long Term Annual Contracts and Spot Market Contracts. ROV Vessels — the price ranges from $40k/day to $100k/day depending upon specification of vessel with ROVs at $8k/day to $10k/day. These vessel companies either own their own fleet of AUV/ROVs or they subcontract with an AUV/ROV services providers. The mobilization and demobilization costs of the equipment is an additional service fee, the majority of the time. AUVs are utilized within the market differently than ROVs with smaller survey vessels used that do not have crane systems or DP2 position control classification. These types of vessels will cost up to $60k/day with the AUV related costs being between $10-20k/day.

Sample of Traditional Energy Market Service Providers:

        Oceaneering*

        Subsea 7*

        Fugro*

        DOF

        C-Innovations

        Helix

        Saipem*

(*build their own ROVs and buy Hugin AUVs from Kongsberg).

Sample of Platform Manufacturers (Product Sales):

        Forum

        TechnipFMC (now moving into services)

        SMD

        SAAB

(Products are sold to service providers with a margin rate ranging from 30-50%.)

Sample of Autonomous Surface Vessel coupled to Subsea Platform Assets:

        Ocean Infinity

        Reach Subsea

        Fugro

Drawbacks to the current business model:

Contracting is based on discrete services being rendered, and value gets converted into a day rate. There is an emphasis on how the job is done and not what job is done, and it is billable accordingly. For example, the entire work process is broken down into steps and phases and the service contactor bills for each step. There are mobilization costs, trip costs, stand by costs, actual onsite costs, costs for tooling, demobilization costs, etc.

Customers and Partners

Nauticus Robotics is actively engaged in the development of specialized ocean vehicles for the U.S. Government interests. In this work, we are teaming with a Large Confidential Government Contractor to deliver ocean vehicles that meet the challenging objectives of the US Services. At times, we are a direct performer for the Defense Advanced Research Projects Agency for the development of advanced ocean capabilities.

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For go to market in commercial ocean services, Nauticus Robotics has teamed with local service providers in the North Sea to leverage their relationships with customers operating in this active region for ocean energy services. Through our investment relationship with both Transocean, Inc. and Schlumberger, we have in place a global footprint of opportunities to pursue and infrastructure that can be leveraged to expedite service deployments.

Customers

Nauticus Robotics currently has developed two models of subsea robots — Aquanaut and Argonaut. The vehicles both exhibit the ability to traverse long distances, transform its hull to expose dual robotic manipulators, perform robotic tasks, and then return to the launch site or other predetermined location. The Aquanaut is designed to meet commercial requirements related to performing inspection, maintenance, and repair work in subsea oil and offshore wind energy applications. Its capabilities also satisfy the requirements established for port security and maintenance, aquaculture, and telecommunications or subsea mining markets. In this setting, the vehicle performs a variety of tasks, including inspection, maintenance, and repair of customer assets. The Argonaut is designed for a different mission set that is driven by the needs of the U.S. Department of Defense. The Argonaut is distinguished from the Aquanaut in several ways, but most importantly, this vehicle is capable of extended range during transit. Other distinguishing features include a different sensor complement and improved autonomous behaviors. Nauticus has created two separate vehicles for two important markets in order to allow each vehicle to evolve to meet the requirements of their respective market. But more importantly, the Argonaut contains technology that makes it ITAR restricted whereas the Aquanaut does not contain such technology.

The Aquanaut is currently under contract, through Nauticus’ subcontract with a Large Confidential Government Contractor, for a government customer. The initial Aquanaut commercial fleet is planned to begin deliveries to the United Kingdom in the fourth quarter of 2022, where it will be tested and qualified in the North Sea. The two (2) remaining Aquanauts are to be delivered in the first quarter of 2023. Initial opportunities for commercial work will be through Ramfjord Technologies and/or Stinger Technology. Nauticus Robotics has executed a Memorandum of Understanding (MOU) with both of these companies to pursue opportunities in the North Sea.

In addition, Transocean, Inc., the world leader in offshore drilling for oil exploration and production, has been an invested partner with Nauticus since 2018. Opportunities to deploy Aquanauts off Transocean drilling rigs has already been extensively discussed between Nauticus and Transocean.

The first Argonaut is in testing and is scheduled for acceptance in late 2022 by a Large Confidential Government Contractor. The Argonaut is outfitted with special sensors and equipment to support its deployment on specialized missions for various U.S. defense and intelligence agencies.

Nauticus also plans to leverage its Collaboration Agreement with a Large Confidential Government Contractor to pursue business opportunities in these markets. The Collaboration Agreement was entered into on December 4, 2020, for a term of two years. The Collaboration Agreement covers the design, integration, and assembly of a modified vehicle and integrated systems.

The Collaboration Agreement serves to give Nauticus Robotics access to classified markets within the government and defense industries. This access to the classified markets is greatly simplified by the Collaboration Agreement as at present Nauticus does not easily possess access to this particular customer base, which includes U.S. government intelligence agencies. The Collaboration Agreement subsequently will foster and provide Nauticus with greater access to contracts with U.S. government agencies and entities (among other opportunities within the classified defense/governmental arena). The Collaboration Agreement establishes a mutually beneficial arrangement that provides an administrative buffer between Nauticus Robotics and the eventual end customer requiring special security oversight and data controls. This agreement is also competition sensitive. A copy of the Collaboration Agreement is included as Exhibit 10.31 hereto.

In addition to the subsea vehicles, Nauticus has signed a Purchase Agreement with IKM Group in Norway for an Olympic Arm — Nauticus’ all-electric, work-class, subsea manipulators. This robotic arm is set to be delivered to the IKM Group by the end of the third quarter of 2022 and undergo work in Norway. These manipulators are targeted for the existing ROV fleet of commercial subsea service providers, such as Oceaneering International, SMD, and Fugro.

Nauticus has also developed a full featured software stack, called ToolKITT, that provides autonomous and semi-autonomous control modes covering all aspects of subsea vehicle missions. This software, although indigenous

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to Nauticus’ own subsea vehicles, can also be deployed in existing ROV’s to enhance and expand their operational capabilities. This software is currently showcased in the Defense Innovative Unit contract as the intelligent machine driving the VideoRay Defender ROV. At the conclusion of this contract, Nauticus will have the opportunity to deploy this software system under license to the U.S. Navy for use on their existing Defender ROVs.

Material Contracts

Nauticus has derived significant revenue from its U.S. Department of Defense related contracts and customers. Recently, due to security clearance implications, these contracts have primarily functioned as a subcontractor to a traditional U.S. government contracting company, whereby that Large Confidential Government Contractor administers the contract and handles any sensitive and classified access to the information and mission sets. Most recently, a particular phase of the U.S. Department of Defense program that we have been involved with for a couple of years was subcontracted to a Large Confidential Government Contractor, which began in June 2021 and will run through December 2022. Subsequent phases of this contract will run to mid-2024. This contract is to develop highly advanced autonomous subsea vehicles that provide autonomous navigation and manipulation capabilities for use on Nauticus’ Aquanaut and Argonaut vehicles. In this contracted program, the U.S. Department of Defense has also signalled its intent to purchase an additional Argonaut vehicle from Nauticus for $10.69mm. Additionally, the contract leases the Aquanaut subsea vehicle for data collection, manipulation autonomy, and operational use in support of this program.

Nauticus is also a prime contractor for the Defense Innovation Unit and has a contract to integrate the Nauticus ToolKITT software platform with the VideoRay Defender ROV platform. This software will substantially improve the VideoRay Defender’s autonomy and capability to perform specialized missions for the U.S. Navy.

These contracts mentioned herein are included as Exhibits 10.24 and 10.25 to this prospectus.

In addition to these material contracts, Nauticus is also the counterparty of various manufacturing and supply agreements that are included herein as Exhibits 10.20, 10.21, 10.22, 10.23, and 10.24. A summary of their key terms are included in the chart below.

Exhibit

 

Agreement

 

Key Terms

10.20

 

Battery Supplier Agreement, dated as of January 18, 2021

 

Purpose: Li-ion subsea battery supply

Term: Approximately 1 year from quote to delivery

Termination: Contract delivery complete

10.21

 

Fabrication Agreement, dated as of January 17, 2022

 

Purpose: Outsourced Manufacture of Aquanauts

Term: 9 months (Time and Materials)

Termination: 7 days notice

10.22

 

Construction Agreement, dated February 14, 2022

 

Purpose: Fabrication of two Hydronaut vessels

Term: Approximately 1 year

Termination: By written notice, subject to breach of fundamental terms, insolvency, and other requirements therein.

10.23

 

Commercial Proposal, dated December 6, 2021

 

Purpose: Purchase of Drix vehicle for use with Aquanaut

Term: Approximately 7 months

Termination: Upon breach (without remedy within 30 calendar days), termination of order, and other requirements therein.

10.24

 

Defense Innovation Unit Agreement, dated August 10, 2021

 

Purpose: Purchase order of supplies/services

Term: Approximately 24 months

Termination: By government with written notice and other requirements therein.

Research and Development

The Nauticus Robotics engineering team includes multi-disciplinary skills in mechanical engineering, electrical engineering, artificial intelligence, systems engineering, and computer science. The technical team is composed of research engineers from NASA’s Johnson Space Center robotics lab and balanced by roboticists from the subsea energy

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and commercial robotics sectors. Key technical elements of solutions for space robotics are migrated by this engineering team to the ocean realm and applied to the Aquanaut platform. The focus of this team is the development of ocean vehicles that can perform dexterous manipulation with limited and latent communication between the robot and operator.

Our Agile-based research and development processes emphasize rapid prototyping, testing, and design iterations to meet market-driven requirements.

Sales and Marketing

Our commercial sales and marketing efforts will be direct to customers as well as through teaming agreements with complementary service providers. The North Sea, Gulf of Mexico, Southeast Asia, and offshore Brazil are all areas where near term business is anticipated through commitments from customers and service providers. The sales of Argonaut will take advantage of our existing relationships within the defense industry, both direct to government officials as well as through our ability to subcontract through other government contractor organizations.

We intend to operate on a RaaS business model (a business model planned for future commercial services but not yet implemented) for commercial services supported by the Aquanaut platform. This approach emphasizes the recurring revenue model for extended service contracts and transfers customer expenditures from capital to operating expenses.

Manufacturing and Suppliers

As part of the original development of engineering prototypes, Nauticus Robotics has established supplier relationships with key COTS and custom part manufacturers. Consideration is given within our international supply chain for redundancy, where possible. In cases of limited supplier options, Nauticus Robotics initiates procurement early in the manufacturing schedule to mitigate risk of supply interruption.

Currently, Nauticus manages a supply chain with many suppliers that specialize in parts aimed toward subsea vehicles. A shared and key component of Aquanaut and Argonaut subsea vehicles is the energy storage system — a Li-ion battery. There are a variety of suppliers available to provide this battery subsystem. One battery, in particular, that Nauticus uses is from SubCTech, a German company. The batteries are a long lead time item and are ordered well in advance of the time they are required to be integrated into the vehicle. A copy of the most recent SubCTech battery contract is included as Exhibit 10.20. However, there are suitable replacement battery systems, and Nauticus is not dependent on SubCTech necessarily (e.g. Kracken). In the most extreme event that battery suppliers are unable to produce battery packs for Nauticus, Nauticus might and could resort to pulling that subsystem vertical and producing batteries for the subsea vehicles in house. Nauticus has tremendous battery design, manufacturing, and assembly expertise and former NASA energy systems division experts are on staff.

For parts and fabricated components, Nauticus is using an outsourced manufacturing strategy to fabricate Aquanauts (subsea vehicle) and Hydronauts (optionally crewed surface vessel). This strategy reduces in-house manufacturing and allows Nauticus to perform the final integration and functional acceptance test of the Aquanaut prior to shipping. Nauticus has three (3) Aquanauts that are under a fabrication contract with International Submarine Engineering (ISE) a British Columbia, Canadian company. Two (2) Hydronauts are under contract with Diverse Marine in the United Kingdom. The contracts for the ISE Aquanaut fabrication and the Diverse Marine Hydronaut vessel builds are included as Exhibits 10.21 and 10.22.

Nauticus also has a purchase contract with iXBlue (France) to purchase a Drix unmanned surface vessel. This vessel also pairs with the subsea Aquanaut as a communications node in place of the Hydronaut. A copy of the contract is included here as Exhibit 10.23.

As we progress toward production of our ocean vehicles, trade studies will be conducted to identify subassembly outsourcing options that will reduce the number of parts required in-house for final assembly at our facility. We recognize that the outsourcing trades may have advantages in limiting required lease space, tooling, and manpower requirements, but these benefits may be offset by quality control or other issues leading to full in-house assembly of the vehicles. Nauticus Robotics is committed to exploring the options that will lead to the most capital efficient manufacturing process and support our sales driven build schedule.

Government Regulation

In addition to our compliance regarding federal regulations affecting businesses of this type, Nauticus Robotics also maintains compliance with the International Traffic in Arms Regulations (ITAR) and Export Administration

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Regulations (EAR) governing the sale of our technology products. In addition to these commercial regulations, compliance with the U.S. Department of Defense requirements for safeguarding data and other sensitive information is a main focus of the organization.

Intellectual Property

The ability to obtain and maintain intellectual property protection through patent and trademark filings is important to our business. Nauticus Robotics utilizes a combination of the protections afforded to the owners of patents, copyrights, trade secrets, and trademarks to secure its intellectual property. In addition, Nauticus Robotics requires employment agreements which stipulate IP protections for the company. For external relationships, non-disclosure agreements and other contractual restrictions are used to establish and protect our intellectual property.

Nauticus Robotics will file for patent protection if the invention is believed to be patentable and the resulting patent will be beneficial in protecting the invention in the marketplaces. Consideration is also given, particularly with respect to software, as to the benefits of seeking a patent against the associated market risks of providing public exposure of the invention. In many cases with our software, Nauticus Robotics holds this code and algorithms as trade secrets.

Nauticus Robotics has patented its reconfigurable hull design for subsea vehicles. This approach protects the company’s vehicle configuration that enables it to transit long distances and then transform into a working robot once at the worksite. This capability is key to exploiting the vehicle architecture and its tetherless operational modes. Similarly, Nauticus Robotics has applied for patent protection for its all-electric, workclass robotic manipulators. These manipulators are the first in their market class and utilize specialized actuation systems to achieve the strength performance necessary for workclass systems. Since this application is still in process, there is no assurance that the patent application will be accepted in its present form and may require adjustments to the present claims.

Nauticus Robotics has also filed for protection of our Company name and brand under trademark registration in the United States.

Legal Proceedings

Nauticus Robotics is not engaged in any legal proceedings and there is no legal action anticipated by the company.

Human Capital

Currently, Nauticus employs 90 personnel. These employees can be categorized into the following groups:

 

   Management:

 

13

   
   

   Business Administration:

 

10

   
   

   Business Development:

 

3

   
   

   Mechanical Engineering:

 

10

   
   

   Electrical Engineering:

 

6

   
   

   Software Engineering:

 

25

   
   

   Technicians:

 

17

   
   

   Interns:

 

6

   

Facilities

We operate in a corporate and manufacturing facility in Webster, Texas, USA. We currently occupy a facility that is has approximately 30,000 square feet of office, development, and manufacturing space pursuant to a lease that, under options to extend, we expect to expire in April, 2024. Should we need additional space, we believe we will be able to obtain additional space on commercially reasonable terms.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS OF NAUTICUS

The following discussion and analysis provide information that Nauticus’ management believes is relevant to an assessment and understanding of Nauticus’ results of operations and financial condition. The discussion should be read together with “Selected Historical Financial and Operating Data of Nauticus,” the historical audited annual financial statements as of and for the years ended December 31, 2021 and 2020, the unaudited interim condensed financial statements as of March 31, 2022 and 2021 and for the three months ended March 31, 2022 and 2021, and the related respective notes thereto, included elsewhere in this proxy statement/prospectus. The discussion and analysis should also be read together with Nauticus’ unaudited pro forma financial information for the year ended December 31, 2021 and the three months ended March 31, 2022. See “Unaudited Pro Forma Condensed Financial Information.” This discussion may contain forward-looking statements based upon Nauticus’ current expectations, estimates and projections that involve risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements due to, among other considerations, the matters discussed under “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.” Unless the context otherwise requires, all references in this section to “we,” “our,” “us” or “Nauticus” refer to the business of Nauticus Robotics, Inc., a Texas corporation, prior to the consummation of the Business Combination, which will be the business of the Post-Combination Company and its subsidiaries following the consummation of the Business Combination.

Overview

Nauticus Robotics provides 21st century ocean robotic solutions to combat the global impacts on the world’s marine environment. The interconnected, purpose-built product ecosystem of both surface and subsea robots is powered by Nauticus’ autonomous software platform that affords our robots real machine intelligence, not just automation. This approach will transform the industry to an economically efficient and environmentally sustainable model.

Nauticus Robotics, Inc. (Nauticus) was initially incorporated as Houston Mechatronics, Inc. on March 27, 2014 in the State of Texas. Nauticus’s principal corporate offices are located in Webster, Texas. The Company is developing an ecosystem of subsea robots that are controlled through an AI-driven cloud software platform which enables a sliding scale spectrum of autonomous operations — from direct operator control to complete hands-off, robot self-sufficient control. Instead of the conventional tethered connection between the operator and the subsea robot, Nauticus has developed an acoustic communication networking, compression, and protocols that allows the robot to perform its tasks without a direct, cabled connection, this offering permits significant operational flexibility and cost savings over the methods currently deployed in the marketplace. The full range of Nauticus subsea robot technologies combine to provide unique capabilities heretofore not seen in the commercial subsea market and delivered to the market at substantially reduced cost and environmental footprint.

The array of products and services provided by Nauticus and vigorous company’s strategy will disrupt the current subsea service paradigm through the introduction and integration of advanced robotic technologies. These key technologies are autonomous platforms, acoustic communications networks, electric manipulators, AI-based perception and control software, and high-definition workspace sensors. Implementation of these technologies enables substantially improved operations at significantly reduced costs over conventional methods.

Our business is organized into one single operating segment in providing technical and engineering services and products for use offshore. Nauticus provides robotic systems as part of product and services and delivered to primarily commercial and government customers.

Business Combination and Public Company Costs

On December 16, 2021, Nauticus entered into a Merger Agreement with CleanTech and Merger Sub pursuant to which, among other things, Merger Sub will merge with and into Nauticus, with Nauticus surviving the merger and becoming a wholly owned direct subsidiary of CleanTech. Thereafter, Merger Sub will cease to exist and CleanTech will be renamed Nauticus Robotics, Inc.. Nauticus will be deemed the accounting predecessor and the Post-Combination Company will be the successor SEC registrant, which means that Nauticus’ financial statements for previous periods will be disclosed in the Post-Combination Company’s future periodic reports filed with the SEC.

The Business Combination is anticipated to be accounted for as a reverse recapitalization. Under this method of accounting, CleanTech will be treated as the acquired company for financial statement reporting purposes. The most significant change in the Post-Combination Company’s future reported financial position and results are expected to be

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an estimated increase in cash (as compared to Nauticus’ balance sheet at December 31, 2021) of between approximately $50.2 million, assuming maximum stockholder conversions permitted under the Business Combination Agreement, and $224.5 million, assuming no stockholder redemptions. Total non-recurring transaction costs are estimated to be approximately $21.7 million, of which Nauticus expects approximately $1.4 million to be expensed as part of the Business Combination and recorded in accumulated deficit, and the remaining approximately $20.2 million was determined to be equity issuance costs and offset to additional-paid-in-capital. See “Unaudited Pro Forma Condensed Combined and consolidated Financial Information.”

Upon closing of the Business Combination, it is expected that the Post-Combination Company will continue to be listed on the NASDAQ and trade under the ticker symbol “KITT.” As a majority of Nauticus’ current management team and business operations will comprise the Post-Combination Company’s management and operations, the Post-Combination Company will need to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices. Nauticus expects the Post-Combination Company will incur additional annual expenses as a public company for, among other things, directors’ and officers’ liability insurance, director fees and additional internal and external accounting, legal and administrative resources, including increased audit and legal fees.

Key Factors Affecting Nauticus’ Operating Results

Nauticus believes that its future performance and success depends to a substantial extent on its ability to capitalize on the following opportunities, which in turn is subject to significant risks and challenges, including those discussed below and in the section of this proxy statement/prospectus entitled “Risk Factors.”

Pricing, Product Cost and Margins.    Our pricing and margins will depend on market response to Nauticus’ innovative approach to subsea Inspection, Maintenance, and Repair (“IMR”) operations. This new and disruptive approach utilizes a substantially reduced infrastructure that is afforded by the implementation of AI technologies and acoustic, non-cabled communications system between the surface vessel and the subsea robotic vehicle. Nauticus will leverage its significantly reduced cost posture to provide reduced services pricing to the market while retaining current market margins. The technologies employed by Nauticus enable pricing flexibility across our various markets that improve competitive stature and enhance market acceptance.

Nauticus believes it has the opportunity to establish high margin unit economics while scaling the business to a global enterprise. Nauticus’ future performance will depend on our ability to deliver on the cost savings brought by advanced automation applied to subsea robotics. The reductions in manned labor cost in maritime operations combined with substantially reduced carbon footprint from smaller surface vessels yields lower operational costs that will enable widespread industry adoption. The Nauticus business model is well-positioned for scalability due to the ability to leverage the same product platform across multiple markets where enhancements developed for one market can be applied across the service fleet to other markets.

Nauticus expects to achieve and maintain high margins on its IMR services and vehicle sales offerings, however, macroeconomics conditions within the target industries as well as the emergence of competition with similar technical approaches may place downward pressure on pricing, margins, and market share. Reduced pricing and lower margins are typically associated with commodity products and services, Nauticus believes its unique technology complement provides a compelling value proposition for favorable margins and unit economics in the target markets. Should Nauticus fail to deliver market-ready autonomous and semi-autonomous capability in its subsea and surface vehicles in the planned market opportunity window, Nauticus may be required to raise additional debt or equity capital, which may not be available or may only be available on terms that are onerous to Nauticus’ Stockholders.

Commercialization of autonomous/semi-autonomous subsea robotic service vehicles.    We believe that the market for subsea services can be disrupted through new technical approaches that offer cost savings to the customer and reducing the impact on the environment. However, the pace of market adoption of these technologies may not be linear and may fluctuate on a quarterly basis, at least over the near term. As market acceptance matures, these fluctuations will reduce and the recurring nature of Nauticus’ business model will stabilize revenue growth.

Nauticus expects to commercially launch its RaaS business model to the public at large by the end of 2022. To date, our product sales have been for HaloGuard, a red zone monitoring solution we developed. As of the date of this proxy statement/prospectus, Nauticus Robotics intends to quickly phase out the HaloGuard product, which process is underway. This shift in our revenue sources causes our reported financial information not to be indicative of future operating results or financial condition. A delay in the delivery and readiness of our core products or reduced commercial interest in the RaaS subscription model could delay or limit the generation of revenue.

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Sales Volume.    Each of the products that Nauticus will sell to its customers in the target markets has a projected sales volume, pricing, and cost which factors in our view of the market acceptance and the delivery capacity of Nauticus. These projections depend on several factors, including market adoption of new technology-based approaches, Nauticus product capabilities, and the ability of Nauticus to meet market demand. In addition to end market demand, sales volumes will also depend on macroeconomic factors affecting our target industries. In certain cases, we may provide discounts or strategic customer pricing on sales of our products which in turn could adversely impact our gross margins. Nauticus’ ability to achieve profitability is dependent upon market acceptance, penetration, and increasing market share. Delays in market acceptance of the new Nauticus service paradigm could result in Nauticus being unable to achieve its revenue targets and profitability over the course of these projections.

Our operating results are impacted by our ability to manage costs and expenses while achieving a balance between making appropriate investments to grow revenue while driving increased profitability.    Cost and expense management will have a direct impact on our financial performance. We look to drive revenue growth through investments in marketing, technology, collaboration agreements with key partners, product and service offerings and ultimately market share. These efforts will need to be weighed against creating a more cost-efficient business to reduce operating expenses as a percentage of revenue.

Impact of COVID-19 Pandemic on Business — The global spread of COVID-19 has created significant market volatility and economic uncertainty and disruption during 2020. The Company was adversely affected by the deterioration and increased uncertainty in the macroeconomic outlook as a result of the impact of COVID-19. We continue to actively monitor the situation and may take further actions altering our business operations that we determine are in the best interests of our employees, customers, suppliers, and stakeholders, or as required by federal, state, or local authorities.

Impact of supply chain disruptions on business operations.    Nauticus continues to work with our suppliers (i) to mitigate the effects of recent procurement shortages, (ii) to negate the impacts on costs, and (iii) to schedule for key product developments. Mitigation steps undertaken by Nauticus include design modifications that utilize parts and materials that are more readily available and expansion of Nauticus’ supply chain to form a wider procurement network to source products in short supply. To date, these mitigation steps have been successful at reducing the impact of supply chain disruptions while also maintaining Nauticus’ commitment to product quality and performance reliability. To date no new material risks have emerged as a result of these mitigation steps. Nauticus anticipates these supply chain challenges will continue to exist over the near term and plans to continually employ mitigation strategies to reduce the impact on future product deliveries.

Impact of Raw Material Shortages on Nauticus Fleet.    On April 26, 2022, Nauticus announced the initial production run of the Nauticus Fleet, a robotic navy of 20 Hydronaut — Aquanaut pairs. The first sets of robots were to be delivered in Q3 2022, with the remainder being fulfilled by the end of 2024. Nauticus has encountered some supply chain disruptions stemming from the limited availability of certain raw materials, which has caused the initial delivery of one Aquanaut to the Nauticus Fleet to be delayed to Q4 2022, two Aquanauts delayed to Q1 2023, and two Hydronauts to be delayed to Q2 2023. Nauticus will provide updates to investors as further information becomes available.

Inflation.    Nauticus continually monitors various global economic factors, including inflation, that affect its business and associated operational risks. In this period of high inflation, Nauticus has seen increases in labor and material costs caused by inflation that could potentially reduce margins. Notwithstanding these increases, the Nauticus pricing model reserves a large upside potential due to the significant reduction in service delivery costs over the status quo. Nauticus anticipates that the services it offers will be priced at a level that is accepted by the market and offsets the increases seen in the labor and material markets.

Components of Results of Operations

Revenue

The Company’s primary sources of revenue are from providing technology and engineering services and products to the offshore industry and governmental entities. Revenue is generated pursuant to contractual arrangements to design and develop subsea robots and software and to provide related engineering, technical, and other services according to the specifications of the customers. These contracts can be service sales (cost plus fixed fee and firm fixed fee) or product sales.

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Costs and Expenses

Cost of revenue

Cost of revenue principally includes direct material, direct labor and allocation of overhead associated with product development operations. Cost of revenue also includes the direct cost and appropriate allocation of overhead involved in execution of non-recurring engineering and technology services. Nauticus’ cost of revenue is expected to increase as its revenue continues to grow as customers reach commercialization.

Depreciation

Depreciation costs are related to the depreciation of the Company’s property and equipment which consists of leasehold improvements, equipment, and technology.

Research and development

Nauticus’ research and development efforts are focused on enhancing and developing additional functionality for its existing products and on new product development. Research and development expenses consist primarily of:

        Personnel-related expenses, including salaries, benefits, and stock-based compensation expense, for personnel in Nauticus’ research and engineering functions; and

        Expenses related to materials, software licenses, supplies and third-party services.

Nauticus expenses research and development costs as incurred. Nauticus expects its research and development costs to increase for the near future as it continues to invest in research and development activities to achieve its product roadmap.

General and administrative expenses

General and administrative expenses consist of personnel and personnel-related expenses, including stock-based compensation of Nauticus’ executive, finance, and information systems functions, as well as legal and accounting fees for professional and contract services. Nauticus expects its general and administrative expenses to increase for the near future as it scales headcount with the growth of its business, and as a result of operating as a public company, including compliance with the rules and regulations of the SEC, legal, audit, additional insurance expenses, investor relations activities, and other administrative and professional services.

General and administrative expenses also include selling and marketing expenses which consists of personnel and personnel-related expenses, including stock-based compensation of Nauticus business development team as well as advertising and marketing expenses. These include the cost of trade shows, promotional materials, and public relations. Nauticus expects to increase its sales and marketing activities, expand customer relationships, and increase market share. Nauticus also expects that its sales and marketing expenses will increase over time as it continues to hire additional personnel to scale its business.

Other income and expense

Other income and expense consist primarily of gain/(loss) on disposition of assets, miscellaneous non-operating income, miscellaneous receipts and reimbursements, and the forgiveness of loans pursuant to the SBA Paycheck Protection Program.

Interest expense (income), net

Interest expense (income), net consists primarily of income earned on Nauticus’ cash equivalents, investments in marketable securities, and interest incurred on the Company’s indebtedness. These amounts will vary based on Nauticus’ cash, cash equivalents and short-term investment balances as well as any changes in market rates.

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Results of Operations

Comparison of the Three Months Ended March 31, 2022 and 2021

The results of operations presented below should be reviewed in conjunction with the financial statements and notes included elsewhere in this prospectus. The following table sets forth summarized consolidated financial information for the three months ended March 31, 2022 and 2021:

 

Three Months Ended
March 31,

 

Change
$

 

Change
%

   

2022

 

2021

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

   

 

Service

 

$

2,235,965

 

 

$

161,478

 

 

$

2,074,487

 

 

1285

%

Service – related party

 

 

 

 

 

141,265

 

 

 

(141,265

)

 

(100

)%

Total revenue

 

 

2,235,965

 

 

 

302,743

 

 

 

1,933,222

 

 

639

%

   

 

 

 

 

 

 

 

 

 

 

 

   

 

Costs and Expenses

 

 

 

 

 

 

 

 

 

 

 

 

   

 

Cost of revenue (exclusive of items shown separately below)

 

 

1,899,161

 

 

 

698,888

 

 

 

1,200,273

 

 

172

%

Depreciation

 

 

111,319

 

 

 

87,716

 

 

 

23,603

 

 

27

%

Research and development

 

 

1,267,412

 

 

 

1,202,718

 

 

 

64,694

 

 

5

%

General and administrative

 

 

1,646,041

 

 

 

659,706

 

 

 

986,335

 

 

150

%

Total costs and expenses

 

 

4,923,933

 

 

 

2,649,028

 

 

 

2,274,905

 

 

86

%

   

 

 

 

 

 

 

 

 

 

 

 

   

 

Operating loss

 

 

(2,687,968

)

 

 

(2,346,285

)

 

 

(341,683

)

 

15

%

   

 

 

 

 

 

 

 

 

 

 

 

   

 

Other income

 

 

14,060

 

 

 

(888,153

)

 

 

(902,213

)

 

102

%

Interest expense, net

 

 

801,974

 

 

 

61,550

 

 

 

740,424

 

 

1203

%

Net loss

 

$

(3,504,002

)

 

$

(1,519,682

)

 

$

(1,984,320

)

 

131

%

Revenue

Revenue increased by $1.9 million, or 639%, to $2.2 million for the three months ended March 31, 2022, from $0.3 million for the same period of 2021. The increase in revenue is attributed to the addition of revenue from three service contracts, including the continued lease of an Aquanaut vehicle during 2022.

Costs and expenses

Cost of revenue

Cost of revenue increased by $1.2 million, or 172%, to $1.9 million in the first quarter of 2022, from $0.7 million for the comparable period of 2021. The increase in cost of revenue is attributed to the addition of three service contracts.

Depreciation

Depreciation increased by $24 thousand, or 27%, to $111 thousand for the three months ended March 31, 2022, from $88 thousand for the same period of 2021 primarily due to facility upgrades during first quarter 2022.

Research and development

Total research and development expenses increased by $0.1 million, or 5%, to $1.3 million for the three months ended March 31, 2022, from $1.2 million for the same period of 2021. The increase was due primarily to product and software research and development activities.

General and administrative

Total general and administrative expenses increased by $1.0 million, or 150%, to $1.7 million for the three months ended March 31, 2022, from $0.7 million for the same period of 2021. General and administrative expenses increased primarily due to an increase in company headcount, professional fees and other costs incurred in preparation for the business combination transaction with CleanTech.

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Other income expense, net

Other income decreased by $902,000 to an expense of $14,000 for the three months ended March 31, 2022 from $888,000 of income in the same period of 2021. The decrease was due primarily to the recognition of the Paycheck Protection Program or (PPP) loan during the first quarter of 2021.

Interest expense, net

Interest expense, net increased by $740 thousand to $802 thousand for the three months ended March 31, 2022 from $62,000 in the same period of 2021. Interest expense, net increased due to an increase in indebtedness during the fourth quarter of 2021.

Comparison of the Years Ended December 31, 2021 and 2020

The results of operations presented below should be reviewed in conjunction with the financial statements and notes included elsewhere in this prospectus. The following table sets forth Nauticus’ results of operations data for the periods presented:

 

Year ended
December 31,

 

Change
$

   

2021

 

2020

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Service

 

$

7,854,068

 

 

$

3,184,629

 

 

$

4,669,439

 

Product

 

 

242,637

 

 

 

 

 

 

242,637

 

Service – related party

 

 

332,767

 

 

 

619,883

 

 

 

(287,116

)

Product – related party

 

 

162,068

 

 

 

189,928

 

 

 

(27,860

)

Total revenue

 

 

8,591,540

 

 

 

3,994,440

 

 

 

4,597,100

 

   

 

 

 

 

 

 

 

 

 

 

 

Costs and Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue (exclusive of items shown separately below)

 

 

6,850,248

 

 

 

4,059,991

 

 

 

2,790,257

 

Depreciation

 

 

365,097

 

 

 

400,432

 

 

 

(35,335

)

Research and development

 

 

3,533,713

 

 

 

4,951,619

 

 

 

(1,417,906

)

General and administrative

 

 

4,362,400

 

 

 

3,319,455

 

 

 

1,042,945

 

Total costs and expenses

 

 

15,111,458

 

 

 

12,731,497

 

 

 

2,379,961

 

   

 

 

 

 

 

 

 

 

 

 

 

Operating loss

 

 

(6,519,918

)

 

 

(8,737,057

)

 

 

2,217,139

 

Other income

 

 

(1,601,568

)

 

 

(1,609,962

)

 

 

(8,394

)

Loss on extinguishment of debt

 

 

9,484,113

 

 

 

 

 

 

(9,484,113

)

Interest expense, net

 

 

725,166

 

 

 

66,943

 

 

 

658,223

 

Net loss

 

$

(15,127,629

)

 

$

(7,194,038

)

 

$

(7,933,591

)

Revenue

Revenue increased by $4.6 million, or 115%, to $8.6 million for 2021, from $4.0 million for 2020. The increase in revenue is attributed to the addition of revenue from three service contracts, including the lease of an Aquanaut vehicle, during 2021. Revenue decreased by $1.8 million, or 31%, to $4.0 million for 2020, from $5.8 million for 2019. The decrease in revenue is attributed to the completion of various projects during 2019 which accounts for $2.7 million of the decrease and a reduction in sales from 2019 to 2020 of $1.2 million to a related party, Transocean Inc., due to lower demand of HaloGuard product and related services. These decreases are offset by an increase in revenue from 2019 to 2020 related to a new sales agreement executed at the end of 2019 resulting in $2.0 million of revenue in 2020.

Cost of Revenue

In fiscal year 2020, the Cost of Revenue exceeded Revenue, a trend which was subsequently reversed in fiscal year 2021 (as shown in the chart above). The causes related to the Cost of Revenue exceeding the total Revenue for fiscal year 2020 is directly related to the reduction in revenue associated with the COVID-19 pandemic and the retention of overhead staffing levels during this fiscal period. Nauticus Robotics was the recipient of the Paycheck Protection Program loan and used these funds to maintain staffing levels. The downturn in the commercial energy

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markets combined with the completion of and subsequent delays in the continuation of a defense related program resulted in a reduction in Revenue. The Cost of Revenue reflects the higher costs incurred by Nauticus Robotics by maintaining staffing levels in comparison to the reduced income experienced during fiscal year 2020.

In fiscal year 2021, follow-on defense contracts were awarded and the energy markets recovered leading to an increase in Revenue. Overhead staffing levels were maintained at 2020 levels but provided a better match to the improved revenue. These market trends are the reason why 2020 Cost of Revenue exceeds total Revenue and why it recovered as the pandemic effects were mitigated.

Products and Services

Historically, Nauticus has generated revenue through engineering service contracts while concomitantly investing internal resources toward the product development of its subsea robotics portfolio. These previously developed products are now, in 2022, emerging into a revenue generating status. The revenue chronology for Nauticus’ contract history is shown in the table below.

The Jacobi Motors service contract began in 2018 to assist in the development of an electric motor targeted for the electric motor market. This contract was completed in 2020. The beginning of the U.S. Department of Defense programs that Nauticus is currently participating in, each supporting the advancement in autonomy in subsea vehicles, was started in 2018 and continued to 2019. This effort gave rise to the larger program in 2019, with contractual milestones completed in 2020 and continuing to this day. The Office of Naval Research funded an effort with Aquanaut for more dexterous subsea manipulation activities and hardware in 2019 and 2020. Transocean, the lead investor for the Series B investment round, co-funded some product development activities for automated drill pipe handling (Spiral) and for a zone monitoring safety system (THEIA/HaloGuard). Although the Sprial project was completed in 2019, the HaloGuard system has been deployed to four (4) offshore drilling ships to enhance drill floor safety.

Current contracts support Nauticus’ core subsea vehicle products — Aquanaut and Argonaut. Nauticus has work ongoing with a Large Confidential Government Contractor for the manufacturing and commissioning of Argonaut, an Aquanaut-variant aimed specifically for U.S. defense and intelligence missions. The project was awarded to the joint team of a Large Confidential Government Contractor and Nauticus team in 2021 with the initial phase milestone running through December 2022. As part of the effort, the Aquanaut is leased to the program to support data collection and autonomous subsea manipulation operations; therefore generating revenue. In 2022, Nauticus’ Hydronaut surface vessel also generates revenue in support of the Aquanaut. Other Nauticus products currently generating revenue in 2022 also include the Olympic Arm (electric subsea manipulators), with the delivery of the first article to IKM Subsea expected in the third quarter of 2022, and ToolKITT, which is licensed as software to IKM Subsea and used in with the Defense Innovation Unit.

Nauticus’ project backlog includes continued work on a project under a subcontract to our partner, a Large Confidential Government Contractor, through 2022. Phase 2 of this project begins in January 2023 and will run for approximately 18 months. This next phase of the project includes an option to purchase an Argonaut vehicle. The Defense Innovation Unit contract will continue through 2022 and into 2023. Other items in the sales pipeline include Olympic Arm sales, commercial subsea service opportunities in the North Sea in late 2022 or early 2023, and a contract opportunity for maritime environmental surveillance using an Aquanaut with the Singaporean government.

Among the other items in the pipeline, Nauticus has also tendered a bid, in partnership with Schlumberger in Brazil, for work with Petrobras. Possible award for that multiyear/multimillion dollar contract is imminent. Nauticus is also under contract with Shell and progressing toward a service contract pilot in the Gulf of Mexico for fall 2022. Additionally, in April 2022, Nauticus signed a Memorandum of Understanding with Wood, Plc, an engineering and consulting firm in the United Kingdom for the purpose of jointly pursuing subsea inspection services for oil & gas and wind markets. Pursuant to the Memorandum of Understanding agreement, each party will utilize its expertise and capabilities to deliver subsea inspection services to specific targeted markets.

Lastly, Nauticus recently announced its intention to launch a “robotic navy” comprised of Hydronaut and Aquanaut pairs, which publicized Nauticus’ strategic plans to grow its commercial services fleet to markets in the North Sea, offshore Brazil, and the Asian-Pacific region. This initiative is part of an overall financial plan, which includes the production of these units in order to perform subsea services in strategically important regions around world. Nauticus is currently working with legal and financial firms in the United Kingdom to assist in the development of a regional operations center in Aberdeen, Scotland, United Kingdom as well as in Norway. In 2023, Nauticus plans to expand operations in Brazil as part of an opportunity presented through Petrobras. In 2024, the opening of an operations center in Singapore is planned to provide a logistics and operations hub for the Asia-Pacific market. The Houston office plans to support Gulf of Mexico operations as they develop over the near term.

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HaloGuard

The HaloGuard product is a red-zone safety monitoring system that utilizes methods derived from robotic perception to locate and identify individuals that have crossed into a designated safety zone. If the individual that has entered a designated safety zone is not authorized for that entry, an alarm will alert the operator. The system is capable of not only warning the operator through audible alarms and computer displays but is also capable of shutting down equipment moving in the safety zone. The HaloGuard is comprised of a network of perception sensors (cameras and time of flight sensors that measure distance to objects), an electronics rack for housing the computer system, and the HaloGuard software that includes the user displays and integrates the elements together to form the functioning safety system. The purpose of this system is to improve the safety of human workers in and around hazardous equipment.

In terms of process and performance obligation, after the HaloGuard components are assembled, the equipment is set up in a test area at Nauticus Robotics. The customer inspects the components, and a functional checkout of the system is performed. The customer then accepts the product and takes ownership of the HaloGuard system. It is at this point that the “title and risk of loss” passes onto our customers. Nauticus Robotics stores the equipment until arrangements for installation of the HaloGuard on the drilling rig have been put in place. Nauticus Robotics dispatches trained personnel to go to the drilling rig and install the HaloGuard. Installation services are billed to the customer when performed and accepted by the customer.

At Nauticus, the HaloGuard product was initially developed under funding from Transocean and shown in the table below as “THEIA” in 2019. After this initial funding, Nauticus Robotics assumed the cost of further development. After completion of the first system, Transocean ordered 7 separate installations on their drilling rigs and this revenue is shown in the table below as “Transocean — HaloGuard”. In 2020, the HaloGuard was installed on the first Transocean drilling rig for testing and final acceptance. Subsequently, the HaloGuard was installed on 3 additional drilling rigs. The installation schedule was delayed due to the downturn in the energy market during the first year of the pandemic. As these systems have been installed, various purchase orders were negotiated with Transocean to improve the HaloGuard system, effect repairs, perform maintenance, etc. These revenues are shown in the table below as “Transocean NRE and Other”. Work under these contracts funded ongoing product support and maintenance at Nauticus Robotics. Recently, Nauticus Robotics delivered a computer rack, alarm tower, and provided five (5) perception sensors for Salunda for installation (by Salunda) at a customer site. That revenue is shown in the table below as “HaloGuard — Salunda”.

Contract terms for sales of this product to Transocean has been structured as a purchase of the various hardware and software elements of the system. Costs for installation and support are billed to Transocean separately.

As of the date of this prospectus, Nauticus Robotics intends to quickly phase out this product, which process is underway. As HaloGuard is a small market adjacency that was primarily executed as directed by Transocean, we are in the process of discontinuing our support relationship with this product and any further development. Nauticus has ceased all new operations with the product HaloGuard as of the beginning of the fiscal year 2022, and Nauticus will not have any legacy obligation to support this product after it is phased out.

Nauticus Revenue Generation by Service and Product Contract

Product/Contract

 

2021

 

2020

 

2019

 

Reason for Change

Jacobi Motors

 

 

69,029

 

1,276,758

 

Completed in 2020

DARPA

 

 

 

204,561

 

Completed in 2019

Exxon

 

 

 

140,000

 

Completed in 2019

Large Confidential Government
Contractor

 

 

2,440,600

 

418,805

 

Completed in 2020 – Transition to project in 2021

Office of Naval Research

 

 

675,000

 

847,693

 

Completed in 2020

Transocean – HaloGuard

 

162,068

 

619,883

 

1,647,910

 

Fewer Orders Placed

Spiral

 

 

 

733,726

 

Completed in 2019

Transocean NRE and Other

 

332,767

 

189,928

 

122,963

 

Performed On As Needed Basis

Other

 

 

 

10,000

 

Performed On As Needed Basis

THEIA

 

 

 

420,377

 

Completed in 2019

Defense Innovation Unit

 

182,811

 

 

 

New Client in 2021

HaloGuard – Salunda

 

242,637

 

 

 

New Client in 2021

Large Confidential Government Contractor

 

2,614,221

 

 

 

Started in 2021

Large Confidential Government Contractor – Aquanaut Charter

 

756,666

 

 

 

Part of government contract

Large Confidential Government Contractor – Argonaut

 

4,300,370

 

 

 

Began Work in 2021

Total

 

8,591,540

 

3,994,440

 

5,822,793

   

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Costs and expenses

Cost of revenue

Cost of revenue increased by $2.8 million, or 69%, to $6.9 million for 2021, from $4.1 million for 2020. The increase in cost of revenue is attributed to the addition of three service contracts for 2021.

Depreciation

Depreciation decreased by $35 thousand, or 9%, to $365 thousand for 2021, from $400 thousand for 2020 due to the aging of selected categories of fixed assets during 2021.

Research and development

Total research and development expenses decreased by $1.4 million, or 29%, to $3.5 million for 2021, from $5.0 million for 2020. The decline was due primarily to a reduction in overall research and development activity.

General and administrative

Total general and administrative expenses increased by $1.0 million, or 31%, to $4.4 million for 2021, from $3.3 million for 2020. General and administrative expenses increased primarily due to an increase in Company activity and professional and other costs related to the filing of Form S-4.

Other income

Other income decreased by $8 thousand to $1.6 million for 2021 from $1.6 million in 2020. The decrease was due primarily to the reduction in other miscellaneous receipts and refunds.

Loss on Extinguishment of Debt

The Company recognized a loss on extinguishment of debt of $9.5 million for 2021 due to an amendment of outstanding contingently convertible notes to allow the notes to be converted into Nauticus common stock as of the closing date of the Business Combination between CleanTech and Nauticus. The amendment was treated as an accounting extinguishment of debt. A loss was recognized for the difference between the carrying amounts of the notes and their fair values as of the date the notes were modified.

Interest expense, net

Interest expense, net increased by $0.6 million to $0.7 million for 2021 from $0.1 million in 2020. Interest expense, net increased due to an increase in indebtedness during 2021.

Liquidity and Capital Resources

Sources of Liquidity

Nauticus’ capital requirements will depend on many factors, including sales volume, the timing and extent of spending to support R&D efforts, investments in technology, the expansion of sales and marketing activities, and market adoption of new and enhanced products and features. As of March 31, 2022, Nauticus had cash and cash equivalents totaling $15.1 million. The cash equivalents consist of money market funds. To date, Nauticus’ principal sources of liquidity have been proceeds received from the issuance of debt, equity funding from its principal owners and cash flow from operations.

Until Nauticus can generate sufficient revenue from its sales of subsea robots, services, and software to cover operating expenses, working capital and capital expenditures, Nauticus expects funds raised in a Business Combination from a merger agreement with CleanTech Acquisition Corporation, a special purpose acquisition company, including

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the PIPE private placement, to fund cash needs. Any equity securities issued may provide for rights, preferences, or privileges senior to those of holders of the Post-Combination Company’s common stock subsequent to the Business Combination. If Nauticus raises funds by issuing debt securities, these debt securities would have rights, preferences, and privileges senior to those of holders of Nauticus Common Stock. The terms of debt securities or borrowings could impose significant restrictions on Nauticus’ operations. The credit market and financial services industry have in the past, and may in the future, experience periods of uncertainty that could impact the availability and cost of equity and debt financing.

Nauticus incurred negative cash flows from operating activities and losses from operations in the past as reflected in its accumulated deficit of $43.3 million as of March 31, 2022. Nauticus had total current assets of $18.4 million and total current liabilities of $16.7 million as of March 31, 2022. Management believes cash on-hand, including the funds raised in the Business Combination, together with revenue from the Company’s existing and new contracts will be sufficient to meet its obligations for at least one year from the filing date of this document.

Cash Flow Summary

The following table summarizes our cash flows for the periods presented:

 

Year ended
December 31,

 

Three months ended
March 31,

   

2021

 

2020

 

2022

 

2021

Net cash provided by (used in):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating activities

 

$

(5,923,190

)

 

$

(4,499,775

)

 

$

(4,200,250

)

 

$

(2,314,957

)

Investing activities

 

$

(922,487

)

 

$

996,482

 

 

$

(1,675,238

)

 

 

 

Financing activities

 

$

24,500,364

 

 

$

2,539,909

 

 

 

 

 

$

1,459,661

 

Operating Activities

For the year ended December 31, 2020, net cash used in operating activities was $4.5 million. The primary factors affecting Nauticus’ operating cash flows during this period were Nauticus’ net loss of $7.2 million, offset by a customer advance of $1.8 million, non-cash expenses of depreciation and amortization of $0.4 million and stock-based compensation of $0.4 million, the non-cash impact of lease accounting implementation of $0.2 million, and net cash outflows of $0.2 million from changes in operating assets and liabilities.

For the year ended December 31, 2021, net cash used in operating activities was $5.9 million. The primary factors affecting Nauticus’ operating cash flows during this period were its net loss of $15.1 million offset by the noncash loss of $9.5 million related to extinguishment of debt, non-cash expenses of stock-based compensation of $0.4 million, depreciation expense of $0.4 million, a $2.3 million increase in accounts payable and accrued liabilities and a $1.4 million reduction in contract liabilities.

For the three months ended March 31, 2022, net cash used in operating activities was $4.2 million. The primary factors affecting Nauticus’ operating cash flows during this period were its net loss of $3.5 million offset by non-cash expenses for stock-based compensation of $0.2 million, depreciation expense of $0.1 million, amortization of debt discount of $0.2, a $0.4 million increase in accounts payable and accrued liabilities and a $0.4 million reduction in contract liabilities.

Investing Activities

For the year ended December 31, 2020, net cash provided by investing activities was $1.0 million primarily due to the proceeds from short-term investments.

For the year ended December 31, 2021, net cash used in investing activities was $0.9 million due to the purchase of equipment.

For the three months ended March 31, 2022, net cash used in investing activities was $1.7 million due to the purchase of property and equipment.

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Financing Activities

For the year ended December 31, 2020, net cash provided by financing activities was $2.5 million. The primary factor affecting Nauticus’ financing cash flows during this period were proceeds from a notes payable of $3.0 million offset by payments of notes payable of $0.5 million.

For the year ended December 31, 2021, net cash provided by financing activities was $24.5 million. The primary factor affecting Nauticus’ financing cash flows during this period were proceeds from a notes payables of $25.0 million offset by payments on notes payable of $0.5 million.

For the three months ended March 31, 2022, the Company had no net cash provided by or used for financing activities.

Contractual Obligations

Contingently Convertible Promissory Note

The following promissory notes were amended as of December 16, 2021 to allow the note to be converted into Nauticus common stock as of the closing date of the Business Combination between CleanTech and Nauticus. The notes also include an option permitting the notes to be converted into shares of preferred stock in the event of an additional financing by Nauticus. More information about each of these notes is included in Note 4 to Nauticus’ financial statements for the years ended December 31, 2021 and 2020 included elsewhere in this filing.

Schlumberger Technology Corp. Contingently Convertible Promissory Note — In July 2020, the Company issued an unsecured convertible promissory note to Schlumberger Technology Corp. in the amount of $1,500,000, bearing interest at 4.25%, and was amended to extend the maturity date to December 31, 2022.

Transocean Inc. Contingently Convertible Promissory Note — In December 2020, the Company issued an unsecured convertible promissory note to Transocean Inc. in the amount of $1,500,000, bearing interest at 10%, and was amended to extend the maturity date to December 31, 2022.

Goradia Capital, LLC Contingently Convertible Promissory Note — On June 19, 2021, the Company issued an unsecured convertible promissory note to Goradia Capital, LLC in the amount of $5,000,000, bearing interest at 10%, and maturing on December 31, 2022.

Material Impact Fund II, L.P. Contingently Convertible Promissory Note — On August 3, 2021, the Company issued an unsecured convertible promissory note to Material Impact Fund II, L.P. in the amount of $5,000,000, bearing interest at 5%, and maturing on December 31, 2022.

In-Q-Tel, Inc. Contingently Convertible Promissory Note — On October 22, 2021, the Company issued an unsecured convertible promissory note to In-Q-Tel, Inc. in the amount of $250,000, bearing interest at 5%, and maturing on December 31, 2022.

Term Loan Credit Agreement

RCB Equities #1, LLC Term Loan Credit Agreement — On December 16, 2021, the Company entered into a Term Loan Credit Agreement with RCB Equities #1, LLC (“RCB”) in the amount of $15,000,000 to provide funds for the Company’s working capital and general corporate purposes. The note bears interest at 13% per annum and is payable in 18 monthly installments of interest only through its maturity date of June 16, 2023. A 2% commitment fee totaling $300,000 was paid upon loan inception and is presented as a debt discount. There is also a 5% exit fee totaling $750,000 is payable at the maturity date and is being accrued over the note term. The effective interest rate on the loan is approximately 17.7%.

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Leases

The Company leases its office and manufacturing facility under a 64-month operating lease expiring April 30, 2024. The lease includes rent escalations and chargebacks to the Company for build-out costs. The right-of-use asset and lease liability amounts were determined using an 8% discount rate which was the interest rate related to the leasehold improvement obligation. More information about each of this lease is included in Note 6 to Nauticus’ financial statements for the years ended December 31, 2021 and 2020 included elsewhere in this filing.

Off-Balance Sheet Arrangements

As of March 31, 2022, Nauticus has not engaged in any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Related Party Transactions

As of March 31, 2022, Schlumberger owns 30% and Transocean owns 31% of the stock of Nauticus. See section above related to Contingently Convertible Promissory Notes above for more detail. In 2020, HMI issued convertible promissory notes to Schlumberger and Transocean, each with an amount of $1,500,000.

There are revenues, accounts receivable balances, and contract asset amounts from Transocean. Refer to Note 11 — Related Party Transactions in Nauticus’ financial statements for the years ended December 31, 2021 and 2020 and Note 9 in Nauticus’ financial statements for the three months ended March 31, 2022 and 2021 included elsewhere in this filing for more details.

Critical Accounting Policies and Estimates

Nauticus prepares its financial statements in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates, assumptions and judgments that can significantly impact the amounts Nauticus reports as assets, liabilities, revenue, costs and expenses and the related disclosures. Nauticus bases its estimates on historical experience and other assumptions that it believes are reasonable under the circumstances. Nauticus’ actual results could differ significantly from these estimates under different assumptions and conditions. Nauticus believes that the accounting policies discussed below are critical to understanding its historical and future performance as these policies involve a greater degree of judgment and complexity.

Stock-Based Compensation

Nauticus recognizes the cost of stock-based awards granted to its employees and directors based on the estimated grant-date fair value of the awards. Cost is recognized on a straight-line basis over the service period, which is the vesting period of the award. Nauticus elected to recognize the effect of forfeitures in the period they occur. Nauticus determines the fair value of stock options using the Black-Scholes option pricing model, which is impacted by the following assumptions:

        Expected Term — Nauticus uses the option’s expected term

        Expected Volatility — As Nauticus’ stock is not currently publicly traded, the volatility is based on a benchmark of comparable companies within the robotics and ROV technology industries.

        Expected Dividend Yield — The dividend rate used is zero as Nauticus has never paid any cash dividends on its common stock and does not anticipate doing so in the foreseeable future.

        Risk-Free Interest Rate — The interest rates used are based on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term equal to the expected life of the award.

The grant date fair value of Nauticus Common Stock was determined using valuation methodologies which utilizes certain assumptions, including probability weighting of events, volatility, time to liquidation, a risk-free interest rate, and an assumption for a discount for lack of marketability (Level 3 inputs).

Based on Nauticus’ early stage of development and other relevant factors, it was determined that an Option Pricing Model (“OPM”), specifically the Black-Scholes OPM, was the most appropriate method for allocating our enterprise value to determine the estimated fair value of Nauticus Common Stock. Application of the OPM involves

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the use of estimates, judgment, and assumptions that are highly complex and subjective, such as those regarding its expected future revenue, expenses, and cash flows, discount rates, market multiples, the selection of comparable companies, and the probability of future events.

Accounting Extinguishments of Debt

The December 16, 2021 modifications of the five contingently convertible notes discussed above were treated as extinguishments of debt for accounting purposes because the conversion options were considered substantive. A loss on the extinguishment of debt totaling $9.5 million was recognized for the difference between the carrying amounts of the notes and their fair values as of the modification date. Because the fair values of the notes included a substantial premium above their face values and the contingently convertible options did not require bifurcation, the premium was recorded to additional paid-in capital.

The fair values of the contingently convertible notes were determined by an independent valuation specialist whose model considered the stated terms of the notes, the Company’s effective borrowing rate for debt having similar terms and valuation of each of the convertible options. The conversion options were valued using the Black-Scholes option pricing model which is impacted by the following assumptions:

        Expected Term — Nauticus used the expected term of the Notes

        Expected Volatility — Since there is no public market for the Company’s common stock, the expected volatility for options was determined based on a peer group of publicly traded companies. In evaluating similarity of this peer group, the Company considered factors such as stage of development, risk profile, enterprise value and position within the industry.

        Expected Dividend Yield — The dividend rate used is zero as Nauticus has never paid any cash dividends on its common stock and at the modification date had no plans to do so.

        Risk-Free Interest Rate — The risk-free rate was based on the U.S. Treasury yield curve in effect at the modification date for the time until maturity of the notes.

        CleanTech Stock Price — Nauticus used the publicly traded price of Cleantech’s common stock at the modification date in valuing the conversion option in the event the merger is consummated.

        Nauticus Stock Price — Nauticus used the estimated fair value of the Company’s common stock as of the modification date.

The Company referenced its recent term loan borrowing with RCB to estimate its effective borrowing rate for debt having similar terms. The effective rate used was 17.7%.

The fair values of each component of the contingently convertible notes were probabilistically weighted to determine the overall fair value of each note. This probability weighting considered the likelihood that the planned merger of Nauticus and Cleantech will be completed, the probability of additional financing as well as the probability of a cash repayment of the notes at maturity if the conversion options are not exercised.

Revenue Recognition

The Company’s primary sources of revenue are from providing technology and engineering services and products to the offshore industry and governmental entities. Revenue is generated pursuant to contractual arrangements to design and develop subsea robots and software and to provide related engineering, technical, and other services according to the specifications of the customers. These contracts can be service sales (cost plus fixed fee or firm fixed fee) or product sales and typically have terms of up to 18 months. The Company has limited product sales as its core products are still under development. Product sales to date have been for HaloGuard, a red zone monitoring solution we developed.

A performance obligation is a promise in a contract to transfer distinct goods or services to a customer. The products and services in our contracts are typically not distinct from one another. Accordingly, our contracts are typically accounted for as one performance obligation.

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The Company’s performance obligations under service agreements generally are satisfied over time as the service is provided. Revenue under these contracts is recognized over time using an input measure of progress (typically costs incurred to date relative to total estimated costs at completion). This requires management to make significant estimates and assumptions to estimate contract sales and costs associated with its contracts with customers. At the outset of a long-term contract, the Company identifies risks to the achievement of the technical, schedule and cost aspects of the contract. Throughout the contract term, on at least a quarterly basis, we monitor and assess the effects of those risks on its estimates of sales and total costs to complete the contract. Changes in these estimates could have a material effect on the Company’s results of operations.

Cost plus fixed fee contracts are largely used for development projects.

Firm-fixed price contracts provide products or services generally over an agreed upon time frame for a predetermined amount. Firm-fixed price contracts present the risk of unreimbursed cost overruns, potentially resulting in lower-than-expected contract profits and margins. This risk is generally lower for cost plus fixed fee contracts which, as a result, generally have a lower margin.

Service revenue included equipment operating lease income in 2021 recognized based on the contractual cash lease payments for the period.

Performance obligations for product sales typically are satisfied at a point in time. This occurs when control of the products is transferred to the customer, which generally is when title and risk of loss have passed to the customer.

Contract assets include unbilled amounts typically resulting from sales under contracts when the cost-to-cost method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer. Contract assets are recorded at the net amount expected to be billed and collected. Contract liabilities include billings in excess of revenue recognized and accrual of certain unsatisfied performance obligations.

Emerging Growth Company Status

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can choose not to take advantage of the extended transition period and comply with the requirements that apply to non-emerging growth companies, and any such election to not take advantage of the extended transition period is irrevocable.

CleanTech is an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933, as amended, and has elected to take advantage of the benefits of the extended transition period for new or revised financial accounting standards. Following the consummation of the Business Combination, the Post-Combination Company will remain an emerging growth company until the earliest of (i) the last day of the fiscal year in which the market value of CleanTech Common Stock that is held by non-affiliates exceeds $700 million as of the end of that year’s second fiscal quarter, (ii) the last day of the fiscal year in which the Post-Combination Company has total annual gross revenue of $1.07 billion or more during such fiscal year (as indexed for inflation), (iii) the date on which the Post-Combination Company has issued more than $1 billion in non-convertible debt in the prior three-year period or (iv) the last day of the fiscal year following the fifth anniversary of the IPO closing date, and the Post-Combination Company expects to continue to take advantage of the benefits of the extended transition period, although it may decide to early adopt such new or revised accounting standards to the extent permitted by such standards. This may make it difficult or impossible to compare the Post-Combination Company’s financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions because of the potential differences in accounting standards used.

Recent Accounting Pronouncements

See Note 2 to Nauticus’ financial statements for the three months ended March 31, 2022 and 2021 included elsewhere in this proxy statement/prospectus for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of the date of this proxy statement/prospectus.

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Internal Control Over Financial Reporting

Nauticus has identified a material weakness in its internal control over financial reporting. This material weakness could continue to adversely affect Nauticus’ ability to report its results of operations and financial condition accurately and in a timely manner.

Nauticus management is responsible for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with GAAP. Nauticus’ management is likewise required, on a quarterly basis, to evaluate the effectiveness of its internal controls. Nauticus has identified a material weakness in its internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of Nauticus’ annual or interim financial statements will not be prevented or detected on a timely basis.

Nauticus identified certain deficiencies in internal control over financial reporting including a lack of segregation of duties within the accounting function and systems, and inadequate procedures for the accounting close process including obtaining information supporting significant accounting estimates and judgments affecting the financial statements on a timely basis. As a result, Nauticus management concluded that a material weakness existed in its internal control over financial reporting. As a result of this material weakness, Nauticus’ management concluded that its internal control over financial reporting was not effective as of December 31, 2021.

To address this material weakness, Nauticus has engaged a technical accounting and financial reporting consulting firm to assist the company with (i) its financial accounting close, (ii) the application of technical accounting literature, (iii) the preparation of its financial statements, and (iv) the independent audit of its financial statements. Nauticus’ plan is to employ additional financial and accounting personnel in key finance and accounting positions. The company has identified some new personnel and expects to secure their full-time employment by the end of third quarter 2022. As of March 31, 2022, Nauticus has filled positions of Senior Accountant and Accounts Receivable to remediate this weakness in its internal controls. In addition, Nauticus has recently added a Chief Financial Officer to strengthen its internal controls and financial reporting. Nauticus plans to transition two current contracted personnel to accounting leadership and controller positions. Nauticus is also strengthening internal controls over financial reporting by implementing an ERP system containing workflows and business rules that ensure process is followed by approved policies, roles, and procedures. The Company expects to complete the ERP implementation within 6 months.

The resulting fully integrated system will enhance financial reporting and transactional interfaces. Nauticus will also add RaaS operations personnel as required when the production Aquanauts are completed, commissioned, and put into service. Nauticus’ management will make an assessment of these remediation steps and add additional staff, if necessary to remediate the weakness. In 2022, we expect to complete implementation of a new enterprise resource planning system supporting day-to-day business activities including accounting, procurement, project management, supply chain and operations. Finally, we have taken steps to strengthen our financial close process and ensure information is obtained timelier to support preparation of our financial statements in accordance with U.S. GAAP.

We expect to incur on-going significant costs to meet the corporate governance provisions of the Sarbanes-Oxley Act of 2002, related regulations of the SEC and the requirements of the NASDAQ, with which we are not required to comply presently as a private company. Complying with these statutes, regulations and requirements will occupy a significant amount of time for our board of directors and management and will significantly increase our costs and expenses.

While we believe these actions will address the reported material weakness, we can give no assurance that these will remediate this deficiency in internal control or that additional material weaknesses or significant deficiencies in our internal control over financial reporting will not be identified in the future. Our failure to implement and maintain effective internal control over financial reporting could result in errors in our financial statements that could result in a restatement of our financial statements and cause us to fail to meet our reporting obligations.

Any failure to maintain such internal control could adversely impact Nauticus’ ability to report its financial position and results from operations on a timely and accurate basis. If Nauticus’ financial statements are not accurate, investors may not have a complete understanding of its operations. Likewise, if after the Business Combination, Nauticus’ financial statements are not filed on a timely basis, Nauticus could be subject to sanctions or investigations

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by the stock exchange on which its common stock is listed, the SEC or other regulatory authorities. In either case, it could result in a material adverse effect on Nauticus’ business. Ineffective internal controls could also cause investors to lose confidence in Nauticus’ reported financial information which could have a negative effect on the trading of Nauticus stock.

Nauticus can give no assurances that the measures it has taken and plans to take in the future will remediate the material weakness identified or that any additional material weaknesses or restatements of financial results will not arise in the future due to failure to implement and maintain adequate control over financial reporting or circumvention of these controls. In addition, even if Nauticus is successful in strengthening its controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair preparation and presentation of our consolidated financial statements.

Quantitative and Qualitative Disclosures About Market Risk

Nauticus has not, to date, been exposed to material market risks given its early stage of operations. Upon the significant increase in commercial operations, Nauticus expects to be exposed to foreign currency translation and transaction risks and potentially other market risks, including those related to interest rates or valuation of financial instruments, among others.

Foreign Currency Exchange Risk

There was no material foreign currency risk for the three months ended March 31, 2022 and 2021, or years ended December 31, 2021 and 2020.

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UNAUDITED PRO FORMA CONDENSED COMBINED AND CONSOLIDATED FINANCIAL INFORMATION

CLAQ is providing the following unaudited pro forma condensed combined and consolidated financial information to aid you in your analysis of the financial aspects of the Business Combination and related transactions. The following unaudited pro forma condensed combined and consolidated financial information presents the combination of the financial information of CLAQ and Nauticus adjusted to give effect to the Business Combination and related transactions. The following unaudited pro forma condensed combined and consolidated financial information has been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses.” Defined terms included below have the same meaning as terms defined and included elsewhere in this proxy statement/prospectus.

The historical financial information of CLAQ was derived from the unaudited condensed consolidated financial statements of CLAQ as of March 31, 2022 and for the three months ended March 31, 2022 and the audited consolidated financial statements of CLAQ as of December 31, 2021, included elsewhere in this proxy statement/prospectus. The historical financial information of Nauticus was derived from the unaudited condensed financial statements of Nauticus as of March 31, 2022 and for the three months ended March 31, 2022 and the audited consolidated financial statements of Nauticus as of December 31, 2021, included elsewhere in this proxy statement/prospectus. Such unaudited pro forma financial information has been prepared on a basis consistent with the audited financial statements of CLAQ and Nauticus, respectively, and should be read in conjunction with the audited historical financial statements and related notes, each of which is included elsewhere in this proxy statement/prospectus. This information should be read together with CLAQ’s and Nauticus’ audited financial statements and related notes, the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of CLAQ” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Nauticus” and other financial information included elsewhere in this proxy statement/prospectus.

The Business Combination is accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with GAAP. Under this method of accounting, CLAQ is treated as the “acquired” company for financial reporting purposes. Nauticus has been determined to be the accounting acquirer because Nauticus, as a group, will retain a majority of the outstanding shares of the combined company as of the closing of the Business Combination, they have nominated eight members of the board of directors as of the closing of the Business Combination, Nauticus’ management will continue to manage the combined company and Nauticus’ business will comprise the ongoing operations of the combined company.

The unaudited pro forma condensed combined balance sheet as of March 31, 2022 assumes that the Business Combination and related transactions occurred on March 31, 2022. The unaudited pro forma condensed combined and consolidated statement of operations for the three months ended March 31, 2022 gives pro forma effect to the Business Combination and related transactions as if they had occurred on January 1, 2021. CLAQ and Nauticus have not had any historical relationship prior to the Business Combination. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.

These unaudited pro forma condensed combined and consolidated financial statements are for informational purposes only. They do not purport to indicate the results that would have been obtained had the Business Combination and related transactions actually been completed on the assumed date or for the periods presented, or which may be realized in the future. The pro forma adjustments are based on the information currently available and the assumptions and estimates underlying the pro forma adjustments are described in the accompanying notes. Actual results may differ materially from the assumptions within the accompanying unaudited pro forma condensed combined financial information

Description of the Business Combination

On December 16, 2021, CleanTech Acquisition Corp., a Delaware corporation (“CleanTech” or “CLAQ”), entered into an Agreement and Plan of Merger (the “Merger Agreement,” and together with the other agreements and transactions contemplated by the Merger Agreement, the “Business Combination”) with CleanTech Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of CleanTech (“Merger Sub”), and Nauticus Robotics, Inc., a Texas corporation (“Nauticus” or “Nauticus Robotics”). Pursuant to the terms of the Merger Agreement, a business combination between CLAQ and Nauticus will be effected through the merger of Merger Sub with and into Nauticus, with Nauticus surviving the merger as a wholly owned subsidiary of CLAQ (the “Merger”).

At the closing of the Business Combination, the total consideration received by Nauticus Equity Holders from CLAQ will have an aggregate value equal to $300,000,000, payable, in the case of Nauticus Equity Holders, solely in new shares of Common Stock. The new shares of Common Stock will be deliverable to Nauticus Equity Holders and will be allocated

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pro rata after giving effect to the required conversion of all of the Nauticus securities into shares of Nauticus common stock immediately prior to, and contingent upon, the Closing. Based on the number of shares of Nauticus outstanding as of September 30, 2021 (together, solely for the purposes of this calculation, with additional Nauticus shares issued upon exercise of Nauticus Convertible Notes) on a fully-diluted and as-converted basis, taking into account the assumptions further described below, Nauticus Stockholders will receive an estimated 30,031,279 shares of Common Stock.

Following the closing of the Business Combination, former holders of shares of Nauticus Common Stock (including shares received as a result of the Nauticus Preferred Stock Conversion and the Nauticus Contingently Convertible Notes Conversion) shall each be entitled to receive their pro rata share of up to 7,500,000 additional shares of CLAQ Common Stock (the “Earnout Shares”) if, within a 5-year period following the signing date of the Merger Agreement, the closing share price of the CLAQ Common Stock equals or exceeds any of three thresholds over any 20 trading days within a 30-day trading period (each, a “Triggering Event”).

(i)     one-half of the Escrow Shares will be released if, within a 5-year period following the signing date of the Merger Agreement, the volume-weighted average price of the Combined Company Common Stock equals or exceeds $15.00 per share over any 20 trading days within a 30-day trading period;

(ii)    one-quarter of the Escrow Shares will be released if, within a 5-year period following the signing date of the Merger Agreement, the volume-weighted average price of the Combined Company Common Stock equals or exceeds $17.50 per share over any 20 trading days within a 30-day trading period; and

(iii)   one-quarter of the Escrow Shares will be released if, within a 5-year period following the signing date of the Merger Agreement, the volume-weighted average price of the Combined Company Common Stock equals or exceeds $20.00 per share over any 20 trading days within a 30-day trading period.

The accounting treatment of the Earnout Shares is expected to be recognized at fair value upon the closing of the Business Combination and classified in stockholders’ equity. Because the Business Combination is accounted for as a reverse recapitalization, the issuance of the Earnout Shares will be treated as a deemed dividend and since CLAQ will not have retained earnings, the issuance will be recorded within additional-paid-in-capital. The unaudited pro forma condensed combined financial information does not reflect pro forma adjustments related to the recognition of these shares because there is no net impact on additional paid-in capital on a pro forma combined basis. We expect to finalize our assessment of the accounting treatment prior to the Closing.

Subscription Agreements

In connection with the execution of the Merger Agreement, CLAQ entered into subscription agreements (collectively, the “Subscription Agreements”) with certain parties subscribing for shares of CLAQ Common Stock (the “Subscribers”) pursuant to which the Subscribers have agreed to purchase, and CLAQ has agreed to sell to the Subscribers, an aggregate of 3,530,000 shares of CLAQ Common Stock, for a purchase price of $10.00 per share and an aggregate purchase price of $35.3 million. The obligations to consummate the transactions contemplated by the Subscription Agreements are conditioned upon, among other things, customary closing conditions and the consummation of the transactions contemplated by the Merger Agreement.

Securities Purchase Agreement

Also, in connection with the execution of the Merger Agreement, CLAQ and Nauticus entered into Securities Purchase Agreement with certain investors purchasing up to an aggregate of $40.0 million in principal amount of secured Debentures and warrants. The number of shares of common stock into which the Debentures are convertible is equal to 120% of the outstanding principal amount of the Debentures divided by the conversion price of $15.00, and the number of shares of common stock into which the associated warrants are exercisable is equal to 120% of the outstanding principal amount of the Debentures divided by the conversion price, with an exercise price equal to $20, subject to adjustment. The exercise price of the associated warrant will be subject to (i) customary anti-dilution adjustments; and (ii) in the case of a subsequent equity sale at a per share price below the exercise price, the exercise price of the associated warrant will be adjusted to such lower price, and the number of shares underlying the warrant will increase proportionately. In the event of a rights offering or dividend, the warrant holder will be treated as though the shares underlying the warrant he/she holds were outstanding. These warrants can be exercised on a cashless basis. There will be an original issue discount of 2% from the issued amount of the Debentures. Interest will accrue on all outstanding principal amount of the Debentures at 5% per annum, payable quarterly. The obligations to consummate the transactions contemplated by the Securities Purchase Agreement are conditioned upon, among other things, customary closing conditions and the consummation of the transactions contemplated by the Merger Agreement.

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The pro forma adjustments giving effect to the Business Combination and related transactions are summarized below, and are discussed further in the footnotes to these unaudited pro forma condensed combined and consolidated financial statements:

        the consummation of the Business Combination and reclassification of cash held in CLAQ’ Trust Account to cash and cash equivalents, net of redemptions (see below);

        issuance of Common Stock pursuant to the Rights;

        the consummation of the Subscription Agreements;

        the consummation of the Debt Financing;

        the Bridge Loan (as defined in the Merger Agreement); and

        the accounting for certain offering costs and transaction costs incurred by both CLAQ and Nauticus; and

        the redemption of 15,466,711 shares of CLAQ common stock

Charter Amendment and Trust Amendment

As approved by CLAQ stockholders at a Special Meeting of Stockholders (the “Meeting”) on July 18, 2022, CLAQ entered into an amendment (the “Trust Amendment”) to the investment management trust agreement, dated as of July 14th, 2021, with Continental Stock Transfer & Company on July 19, 2022. Pursuant to the Trust Amendment, the Company has the right to extend the time to complete a business combination six (6) times for an additional one (1) month each time from July 19, 2022, to January 19, 2023, by depositing $100,000 to the trust account for each one-month extension.

As approved by CLAQ stockholders at the Meeting on July 18, 2022, the Company filed an amendment to its Amended and Restated Certificate of Incorporation with the Delaware Secretary of State on July 19, 2022 (the “Charter Amendment”), giving the Company the right to extend the date by which it has to complete a business combination up to six (6) times for an additional one (1) month each time, from July 19, 2022 to January 19, 2023.

In connection with the stockholders’ vote at the Meeting, 15,466,711 shares were tendered for redemption.

The unaudited pro forma condensed combined and consolidated financial information has been prepared using the assumptions below with respect to the potential redemption into cash of shares of CLAQ ordinary shares:

        Assuming Minimum Redemptions:    This scenario, which we refer to as the “Minimum Redemption Scenario”, assumes that the only shares of common stock redeemed by the Public Stockholders are those that have already been redeemed prior to July 20, 2022.

        Assuming Maximum Redemptions:    This scenario assumes that 1,783,289 CLAQ Common Stock subject to redemption are redeemed for an aggregate payment of approximately $18.1 million (based on an estimated per share redemption price of approximately $10.18 that was calculated using the $18.1 million of cash in the Trust Account divided by 1,783,289 CLAQ shares of Common Stock subject to redemption assuming the pro forma maximum redemption scenario pursuant to the Merger Agreement). Under the terms of the Merger Agreement, the aggregate cash proceeds received from the Trust Account, together with the proceeds from the PIPE Investment and after the payment of transaction expenses, must equal no less than $50.0 million. The Equity Financing will satisfy the closing condition related to the equity financing requirement for the Debt Financing and that the PIPE Investment alone will satisfy the Minimum Cash Condition under the Merger Agreement.

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The following summarizes the pro forma ownership of common stock of CLAQ following the Business Combination and the PIPE Investment under both the minimum redemption and maximum redemption scenarios:

 

Assuming Minimum Redemptions (Shares)

 

%

 

Assuming Maximum Redemptions (Shares)

 

%

Nauticus stockholders(1)

 

30,031,279

 

74.2

%

 

30,031,279

 

77.6

%

CLAQ public stockholders(2)(3)

 

2,645,789

 

6.5

%

 

862,500

 

2.2

%

Initial Stockholders(4)

 

4,312,500

 

10.6

%

 

4,312,500

 

11.1

%

PIPE Investment investors

 

3,530,000

 

8.7

%

 

3,530,000

 

9.1

%

Pro forma Common Stock at March 31, 2022

 

40,519,568

 

100.0

%

 

38,736,279

 

100.0

%

____________

(1)      Excludes 7,500,000 Earnout Shares of Common Stock as the earnout contingency has not yet been met. Such shares will be deposited into escrow and will be subject to reduction or forfeiture in accordance with the terms of the Merger Agreement. The Nauticus stockholders in whose names the Earnout Shares are issued at Closing will maintain voting rights related to such shares unless forfeited.

(2)      Excludes 8,625,000 Public Warrants and includes the issuance of 862,500 shares of Common Stock pursuant to the Rights.

(3)      Reflects the redemption of 15,466,711 CLAQ Public Shares in connection with the July Amendments.

(4)      Excludes 7,175,000 Private Warrants. The founder shares were placed into an escrow account maintained in New York, New York by Continental Stock Transfer & Trust Company, acting as escrow agent. Subject to certain limited exceptions, (i) 50% of the 4,312,500 founder shares will not be released from escrow until the earlier of (A) six (6) months after the closing of the Business Combination, or (B) the date on which the closing price of shares of common stock equals or exceeds $12.50 per share for any 20 trading days within any 30-trading day period commencing after the Business Combination; and (ii) the remaining 50% of the founder shares will not be released from escrow until six (6) months after the closing of the Business Combination, or earlier, in either case, if, subsequent to the Business Combination, consummate a subsequent liquidation, merger, stock exchange or other similar transaction which results in all stockholders having the right to exchange their shares of common stock for cash, securities or other property.

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UNAUDITED PRO FORMA CONDENSED COMBINED AND CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2022

 

Cleantech
(Historical)

 

Nauticus
(Historical)

 

Transaction
Accounting
Adjustments
(Assuming 
Minimum
Redemptions)

     

Pro Forma
Combined
(Assuming 
Minimum
Redemptions)

 

Transaction
Accounting
Adjustments
(Assuming
Maximum
Redemptions)

     

Pro Forma
Combined
(Assuming
Maximum
Redemptions)

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

     

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

     

 

 

 

Cash and cash equivalents

 

$

296,381

 

 

$

15,077,379

 

 

$

18,148,121

 

 

B

 

$

68,326,418

 

 

$

(18,148,121

)

 

K

 

$

50,178,297

 

   

 

 

 

 

 

 

 

 

 

72,500,000

 

 

C

 

 

 

 

 

 

 

 

     

 

 

 

   

 

 

 

 

 

 

 

 

 

(21,945,463

)

 

D

 

 

 

 

 

 

 

 

     

 

 

 

   

 

 

 

 

 

 

 

 

 

(15,750,000

)

 

J

 

 

 

 

 

 

 

 

     

 

 

 

Restricted certificate of deposit

 

 

 

 

 

251,236

 

 

 

 

     

 

251,236

 

 

 

 

     

 

251,236

 

Accounts receivable, net of allowance

 

 

 

 

 

1,005,915

 

 

 

 

     

 

1,005,915

 

 

 

 

     

 

1,005,915

 

Inventory

 

 

 

 

 

721,042

 

 

 

 

     

 

721,042

 

 

 

 

     

 

721,042

 

Contract assets

 

 

 

 

 

592,759

 

 

 

 

     

 

592,759

 

 

 

 

     

 

592,759

 

Other current assets

 

 

44,991

 

 

 

729,880

 

 

 

 

     

 

774,871

 

 

 

 

     

 

774,871

 

Total current assets

 

 

341,372

 

 

 

18,378,211

 

 

 

52,952,658

 

     

 

71,672,241

 

 

 

(18,148,121

)

     

 

53,524,120

 

Investments held in Trust Account

 

 

174,247,973

 

 

 

 

 

 

(156,099,852

)

 

A

 

 

 

 

 

 

     

 

 

   

 

 

 

 

 

 

 

 

 

(18,148,121

)

 

B

 

 

 

 

 

 

 

 

     

 

 

 

Property and equipment, net

 

 

 

 

 

3,001,230

 

 

 

 

     

 

3,001,230

 

 

 

 

     

 

3,001,230

 

Right-of-use asset – operating lease

 

 

 

 

 

481,438

 

 

 

 

     

 

481,438

 

 

 

 

     

 

481,438

 

Other assets

 

 

 

 

 

172,705

 

 

 

 

     

 

172,705

 

 

 

 

     

 

172,705

 

Total assets

 

$

174,589,345

 

 

$

22,033,584

 

 

$

(121,295,315

)

     

$

75,327,614

 

 

$

(18,148,121

)

     

$

57,179,493

 

   

 

 

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

     

 

 

 

LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

     

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

     

 

 

 

Accounts payable

 

$

178,311

 

 

$

1,657,452

 

 

$

(50,000

)

 

D

 

$

1,785,763

 

 

$