How will the reverse split impact existing shareholders' cost basis, potential tax consequences, and overall ownership percentages?

Cost‑basis and tax impact

When a 1‑for‑9 reverse split is executed, every nine pre‑split shares a shareholder holds are converted into one post‑split share. The number of shares in the shareholder’s account is therefore reduced to roughly 11 % of the original count, but the dollar amount of the original cost base does not change. For example, a shareholder who owned 9,000 shares at a $1.00 average cost will end up with 1,000 shares at a $9.00 cost basis per share (9 × $1.00). The split itself is a nontaxable corporate‑reorganization event, so there is no immediate tax liability. However, the new higher per‑share basis will be used to calculate capital gains or losses when the shares are eventually sold, potentially magnifying the tax effect of any future price moves.

Ownership percentage

A reverse split is a purely mathematical consolidation; each pre‑split share is still worth the same proportion of the company as before. Consequently, a shareholder’s percentage of total equity remains unchanged, apart from rounding adjustments for fractional shares that are typically cashed out. In practice, any small cash‑in‑lieu for fractions will slightly dilute the holder’s percentage, but the effect is minimal and does not alter voting or economic rights in any material way.

Trading implications

Nauticus Robotics is likely using the reverse split to lift its stock price above the “penny‑stock” threshold, improve market perception, and stay compliant with NASDAQ’s listing standards. Anticipate a short‑term volatility spike as the market digests the new price level and the reduced float; technical charts will show a steep upward step rather than a genuine breakout. If fundamentals (e.g., robotics contracts, cash‑flow outlook) remain intact, the price‑gain narrative can translate into a higher‑priced, lower‑liquidity environment—meaning wider bid‑ask spreads and potentially higher execution costs. For investors comfortable with the company’s long‑term story, holding through the split is sensible; traders seeking quick moves might consider a modest position‑sizing reduction to mitigate the widened spread and possible temporary downward pressure as low‑‑float investors unwind.