Cavitation Technologies, Inc. (CVAT) is a near-insolvent micro-cap with a reported stockholders' deficit of $248,000 at December 31, 2025. Under a liquidation lens, the recovery posture is deeply negative. Total assets are $55,000 against total liabilities of $303,000, producing a GAAP deficit of ($248,000). Applying liquidation haircuts makes this worse: cash of $31,000 recovers at 100%; prepaid expenses of $13,000 are functionally zero in liquidation; accounts receivable is $0; other assets of $11,000 (likely deposits or prepaid insurance) recover negligibly. Total asset recovery under liquidation is effectively $31,000 to $35,000. Against this, liabilities stand at face value: accounts payable and accrued liabilities of $143,000 (current), a convertible note net carrying value of $3,000 (face $10,000 with $7,000 debt discount), a derivative liability of $7,000, and the SBA EIDL note of $150,000 classified as long-term — a $150,000 obligation that does not extinguish on windup and has first priority via its blanket lien on all tangible and intangible property. The EIDL loan is secured by all company assets, meaning the $31,000 cash is effectively encumbered. Estimated liquidation recovery to equity is approximately negative $268,000 to negative $272,000, consistent with the MFFAIS-reported CLV/LLV/OLV of ($272,000). Versus the prior quarter (September 30, 2025), the deterioration is driven by: (1) cash declined from $249,000 (June 30, 2025) to $31,000 — an $218,000 drawdown over six months from operating cash burn of ($401,000) partially offset by $183,000 in financing inflows ($173,000 equity unit offering plus $10,000 convertible note proceeds); (2) a new derivative liability of $7,000 and a $3,000 net convertible note were added to the liability stack; (3) accounts payable and accrued liabilities increased from approximately $77,000 (implied from prior filing) to $143,000. The company has formal going concern qualification from its auditor on the June 30, 2025 annual statements and self-identifies the same doubt in this filing. Management states cash is sufficient only through March 2026. No tangible intangible assets remain after the October 2024 patent assignment to Desmet for $880,000 — the filing explicitly states patents were sold. The retained license-back rights are not separately capitalized and carry zero liquidation value. Revenue for the six-month period was $3,000 against $726,000 in operating expenses, yielding an operating loss of $723,000. The filing discusses inventory in cash flow adjustments with a zero balance this period but does not separately tag or disclose an inventory balance sheet line for December 31, 2025.
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