Nauticus Robotics, Inc. Liquidation Value

Nauticus Robotics, Inc. (KITT) presents a deeply negative liquidation posture as of March 31, 2026, consistent with MFFAIS-computed CLV/LLV/OLV values of approximately negative $29.2M / negative $28.8M / negative $28.8M. The company carries a going-concern qualification from management, citing recurring operating losses, negative operating cash flow of $7.0M for Q1 2026, and cash of $5.3M against a liability stack that includes multiple layers of senior secured debt, convertible preferred equity with liquidation preference seniority, and fair-value-measured contingent liabilities.

Asset recovery is structurally constrained. The balance sheet is dominated by intangible assets ($1.23M net carrying value at March 31, 2026, down from $1.28M prior quarter via amortization), PP&E acquired primarily through the March 2025 SeaTrepid acquisition, and minimal liquid assets. Under liquidation lens, intangibles receive zero recovery; PP&E (ROVs, AUVs, and related equipment) receives a 50-70% haircut and represents the principal tangible asset pool. Cash at $5.3M recovers at par. Filing does not separately XBRL-tag cash, AR, PP&E, or total debt balances in the TAG_CONTEXT provided, so balance-sheet line values must be sourced from the MD&A and footnote narrative.

Liability stack at face value is substantial. The Senior Secured Convertible Term Loan (held by ATW II, ATW III, MIF) and November 2024 Debentures (held by ATW II, face value approximately $1.3M remaining after $2.0M was exchanged into 2,023 shares of Series C Preferred Stock and $0.1M converted to common in Q1 2026, with $2.96M of new debentures issued) sit senior. The Series A, B, and C Convertible Preferred Stock ranks senior to common equity in liquidation, with stated value of $1,000/share subject to accreting PIK dividends; 5,546 Series A shares, 2,263 Series B shares, and 3,777 Series C shares outstanding as of March 31, 2026. Aggregate preferred liquidation preference, including accrued dividends, approximates $11.6M at face ($5.8M Series A at $1,050.95/share + $2.35M Series B at $1,040.66/share + $3.80M Series C at $1,007.78/share, pre-conversion of post-period shares). Warrant liabilities ($8,262 aggregate fair value, de minimis) and EPFA derivative liability ($515,827, recognized this quarter from zero prior quarter) add incrementally to the liability stack at fair value but are carried as marked-to-market liabilities.

New this period: (1) $2.0M of November 2024 Debentures exchanged into Series C Preferred Stock, generating a $929,508 loss on extinguishment, adding to the preferred liquidation preference stack; (2) $2.96M of new November 2024 Debentures issued intra-quarter, partially converted ($0.1M principal) to common, leaving $1.30M outstanding at March 31; (3) EPFA derivative liability of $515,827 recognized for the first time, reflecting increased probability of utilization per management's PWERM model; (4) Series D Preferred Stock Securities Purchase Agreement executed February 6, 2026 for up to $50M total, but zero shares issued as of filing date. Post-period, a Second Amendment to the 2023 Term Loan reduced conversion price to $2.20 through May 21, 2026, and an additional $1.56M of November 2024 Debentures was issued May 12, 2026.

Material weakness in internal controls over significant complex transactions, disclosed since 2024 and unremediated as of March 31, 2026, increases reliability risk on fair value estimates for Level 3 instruments. Filing discusses going-concern doubt, Nasdaq panel monitor requirement (minimum $3.5M stockholders' equity each quarter through December 19, 2026), and continued ATM dilution ($2.34M net proceeds Q1 2026, further $1.24M post-period through May 14, 2026) as the primary liquidity mechanism. TAG_CONTEXT contains no XBRL tags, so all quantitative references are sourced from the filing narrative and inline XBRL embedded in the filing body.