SecProbe.io

CORRESP
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August 22, 2023

VIA EDGAR

United States Securities and Exchange Commission

Division of Corporation Finance

Office of Technology

100 F Street, NE

Washington, D.C. 20549

    Re:
    Nauticus Robotics, Inc.

    Item 4.02 Form 8-K

    Filed August 16, 2023

    File No. 001-40611

Ladies and Gentlemen:

On behalf of our client,
Nauticus Robotics, Inc. (the “Company”), we are writing to submit the Company’s response to the comments of the staff
(the “Staff”) of the Division of Corporation Finance of the United States Securities and Exchange Commission (the “SEC”)
set forth in its letter, dated August 16, 2023, relating to the Company’s Current Report on Form 8-K filed via EDGAR on August
16, 2023.

We have set forth below the
comment in the Staff’s letter, in bold, and the Company’s responses thereto.

Item 4.02 Form 8-K Filed August 16, 2023

Non-Reliance on Previously Issued Financial
Statements or a Related Audit Report or

Completed Interim Review, page 1

1. Please explain to us why the restatement
related to the untimely recognition of the accrued liability and expense arising from liquidated damages due pursuant to the Registration
Rights Agreement (RRA) only impacted the March 31, 2023 financial statements. In your response, clarify whether the company was in compliance
with the terms of the September 9, 2022 RRA at year-end. If not, tell us why you believe the liability for liquidated damages was not
probable and estimable in fiscal 2022. Please provide the specific terms of the RRA that support your conclusions.

Response: While the Initial Registration
Statement (as defined in the RRA) was timely filed within 15 business days of the closing of the Company’s business combination,
the Initial Registration Statement was not declared effective until April 2023. Under the RRA, the date by which the Initial Registration
Statement was required to be declared effective was December 8, 2022 (such date, the “Applicable Effectiveness Date,” and
such requirement, the “Effectiveness Date Requirement”). During the second quarter of 2023, after internal and external discussions
which prompted an in-depth evaluation of all RRA requirements, management ultimately determined that beginning in December 2022, following
the Applicable Effectiveness Date, the Company was not in compliance with the terms of the RRA. Notwithstanding the timing of such determination,
the Company does believe that beginning after the Applicable Effectiveness Date in December 2022 and continuing during the period of the
Company’s noncompliance in relation to the Effectiveness Date Requirement and the payment of related liquidated damages and related
interest amounts under the RRA (the “Amounts”), such Amounts were accruing, probable and estimable as of the 2022 year-end
balance sheet date. Therefore, the Company’s consolidated balance sheet as of December 31, 2022 should have included a liability
in the amount of approximately $0.72 million for the Amounts. As previously disclosed in the Company’s filings with the SEC, the
satisfaction of the Company’s payment obligations with respect to the Amounts involved in-kind consideration only, as finally agreed
to in writing between the Company and other RRA parties in the second quarter of 2023.

In the second quarter of 2023, management evaluated
the magnitude of the error in accordance with  Staff Accounting Bulletin No. 99, Materiality (SAB 99), and Staff Accounting
Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements
(SAB 108), and concluded that the impact of the error (1) was material as of and for the period ended March 31, 2023, which resulted
in the Company’s restatement of its interim financial statements for such quarterly period, as reflected in the Form 10-Q/A filed
with the SEC on August 10, 2023 (which includes the RRA as Exhibit 10.1 thereto); but (2) was not material as of and for the year ended
December 31, 2022. The Company’s analysis of the error as of and for the year ended December 31, 2022, conducted in accordance with SAB 99
and SAB 108, is included below.

Evaluation of Misstatement in the Financial
Statements

When errors in previously issued financial statements
are identified, they must be assessed to determine whether the affected financial statements are materially misstated. SAB 99 and SAB
108 provide relevant guidance in applying materiality thresholds to the preparation of financial statements filed with the SEC. This guidance
is relevant to our judgment about whether the misstatement contained in the prior period consolidated financial statements of the Company
is material, so as to require a restatement pursuant to ASC 250-10, Accounting Changes and Error Corrections, and SEC regulations
and guidance. The omission or misstatement of an item in a financial report is material if, in the light of surrounding circumstances,
the magnitude of the item is such that it is probable that the judgment of a reasonable person relying upon the report would have been
changed or influenced by the inclusion or correction of the item. An assessment of materiality requires that we view the facts in the
context of the surrounding circumstances or the total mix of information. In the context of a misstatement of a financial statement item,
the total mix includes both quantitative and qualitative factors in assessing an item’s materiality.

Quantitative Analysis

SAB 99 Topic 1.M expresses the views of the Staff that exclusive reliance on certain quantitative benchmarks to assess materiality in preparing financial
statements and performing audits of those financial statements is inappropriate.

Companies and auditors often have measured
materiality quantitatively as 5% of net income. However, in SAB 99, the Staff states that the use of a percentage ceiling test alone
in making materiality determinations with respect to an item is not acceptable. The Staff stresses that evaluations of materiality
require registrants and auditors to consider all of the relevant circumstances, and that exclusive reliance on a percentage or
numerical threshold has no basis in the accounting literature of the law.

The following tables reflect the impact of the
error affecting significant financial statement line items as of and for the period indicated.

    December 31, 2022

    As Reported
    Adjustment
    As Adjusted
    % Change

    Balance Sheet data

    Accrued liabilities
      3,142,977
      721,728
      3,864,705
      23 %

    Total current liabilities
      3,877,619
      721,728
      4,599,347
      19 %

    Total liabilities
      52,575,293
      721,728
      53,297,021
      1 %

    Total stockholders’ equity (deficit)
      27,819
      (721,728 )
      (693,909 )
      -2594 %

    Year Ended December 31, 2022

    As Reported
    Adjustment
    As Adjusted
    % Change

    Statement of Operations data

    Interest expense, net
      3,714,017
      721,728
      4,435,745
      19 %

    Net loss
      (28,260,571 )
      (721,728 )
      (28,982,299 )
      3 %

    Basic and diluted loss per share
    $ (1.75 )
    $ (0.04 )
    $ (1.79 )
      2 %

    Basic and diluted weighted average shares outstanding
      18,982,139
      18,982,139
      18,982,139

    Year Ended December 31, 2022

    As Reported
    Adjustment
    As Adjusted
    % Change

    Statement of Cash Flows data

    Net loss
      (28,260,571 )
      (721,728 )
      (28,982,299 )
      3 %

    Accounts payable and accrued liabilities
      (7,731,279 )
      721,728
      (7,009,551 )
      -9 %

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Although we recognize the correction of the error
appears to be quantitatively significant in comparison to the Company’s reported liabilities, interest expense, net and basic and
diluted loss per share, we do not believe the differences would be material to the reasonable investor. The Company’s financial
statements are reflective of our historical focus on research and development efforts, as well as on the achievement of technological
feasibility with respect to both hardware and software developments, in preparation for bringing our commercial product and service offerings
to market. Given the Company’s nascent commercial operations during fiscal 2022, we believe that the reasonable investor is focused
on our product development and acceptance, liquidity and financing needs and reported revenues and operating income, in addition to other
considerations discussed in the qualitative analysis below, as the most useful and indicative factors with respect to the performance
of our business and in making an investment decision in the Company. Accordingly, based on a diligent review and objective assessment,
conducted in accordance with Staff guidance, we do not believe there is a substantial likelihood that the reasonable investor would view
the impact of the error as having significantly altered the total mix of information made available with respect to our financial position
as of and for the year ended December 31, 2022.

Qualitative Analysis

SAB 99 states, “A matter is ‘material’
if there is a substantial likelihood that a reasonable person would consider it important.” In its Statement of Financial Accounting
Concepts No. 2, the FASB described the essence of the concept of materiality as follows: “The omission or misstatement of an item
in a financial report is material if, in the light of surrounding circumstances, the magnitude of the item is such that it is probable
that the judgment of a reasonable person relying upon the report would have been changed or influenced by the inclusion or correction
of the item.” For the reasons described below, management does not believe that the misstatement has a significant qualitative impact
on the subject year-end financial statements.

We evaluated the qualitative factors listed in
SAB 99 and considered other Company- and industry-specific factors that would bear upon the judgment of a reasonable person relying upon
the financial statements. The identified error as of and for the year ended December 31, 2022 does not, among other things:

 ● mask a change in earnings or other trends;

 ● relate to a part of our business that is significant
to the Company’s operations or earnings;

 ● affect our compliance with laws or regulatory
requirements; or

 ● impact the amount of management compensation.

Further, while the Amounts arose from the Company’s
noncompliance with contractual obligations, the impact of the misstatement with respect to the Amounts as of the end of fiscal 2022 does
not affect the Company’s compliance with loan covenants or other contractual requirements. Importantly, the subject noncompliance
did not affect the maturity date or other terms of the Company’s outstanding securities (including, without limitation, the debentures
or warrants issued to those investors party to the RRA), nor does it affect any other indebtedness of the Company.

To date, the Company’s principal focus has
been on the development and commercial deployment of its products. We believe that a reasonable person relying on the Company’s
financial statements at our present stage of operations is more likely to be focusing on the following:

 ● our product development and acceptance of our
products and services in both government and commercial markets;

 ● the Company’s liquidity and financing needs
to support its business strategy; and

 ● the reported amounts of revenues and operating
income.

Critically, the identified error does not
affect any of these principal focus areas. As noted above, the Amounts were ultimately settled in-kind. Consequently, the error has
no impact on our liquidity or otherwise on the reported amount of cash available to finance our commercial rollout and other
business operations. Although the impact of the error may appear quantitatively large compared to certain financial statement line
items, management has concluded that there is not a substantial likelihood that such error would  be considered material to a
reasonable investor for the reasons discussed above. Accordingly, the Company has determined that the impact of the error is not
material to the previously issued financial statements as of and for the year ended December 31, 2022.

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If you have any questions,
please feel free to contact me at (713) 651-2678. Thank you for your cooperation and prompt attention to this matter.

    Sincerely,

      

    /s/ Michael J. Blankenship

    Michael J. Blankenship

    cc:
    Nicolaus Radford, Chief Executive Officer, Nauticus Robotics, Inc.

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