Cavitation Technologies Inc
For the period ended Dec 31, 2024. Filed Feb 14, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Dec 31, 2024 · Filed Feb 14, 2025
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-14.
0001683168-24-008046
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-12-31; filed 2025-02-14.
0001683168-25-001021
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 61 previous paragraphs and 83 current paragraphs.
45 unchanged; 11 reworded; 24 added; 5 removed; 0 previous and 3 current paragraphs rearranged.
Tables are not compared: 8 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (24)
Current report
Revenue was $76,000 and $192,000 for the three months ended December 31, 2024, and 2023, respectively, a decrease of $116,000 or 60.4%. The Company delivered one purchase order placed prior to the assignment of our vegetable oil refining patents to Desmet. In the prior year we delivered on two purchase orders.
Current report
Cost of revenue was $13,000 and $34,000 for the three months ended December 31, 2024 and 2023, respectively, a decrease of $21,000 or 61.8%. The decrease is directly related to the decrease in revenue, as discussed above.
Current report
General and administrative expenses
Current report
General and administrative expenses was $346,000 and $172,000 for the three months ended December 31, 2024, and 2023, respectively, an increase of $174,000 or 101.2%. The increase is primarily due to the following:
Current report
Gain on patent assignment
Current report
Gain on patent assignment was $880,000 for the three months ended December 31, 2024 as a result of sale and assignment of certain patents to Desmet. There was no similar transaction during the prior period.
Current report
Net income (loss)
Current report
Net income was $579,000 for the three months ended December 31, 2024 and net loss was $16,000 for the three months ended December 31, 2023, an increase in income of $595,000. The increase in net income is primarily due to the gain on the patent assignment offset by the decrease in revenue and the increase in general and administrative expenses, as discussed above.
Current report
Results of Operations for the Six Months Ended December 31, 2024 compared to the Six Months Ended December 31, 2023
Current report
Revenue
Current report
Revenue was $76,000 and $192,000 for the six months ended December 31, 2024, and 2023, respectively, a decrease of $116,000 or 60.4%. The Company delivered one purchase order placed prior to the assignment of our vegetable oil refining patents to Desmet. In the prior year we delivered on two purchase orders.
Current report
Cost of revenue
Current report
Cost of revenue was $13,000 and $34,000 for the six months ended December 31, 2024 and 2023, respectively, a decrease of $21,000 or 61.8%. The decrease is directly related to the decrease in revenue, as discussed above.
Current report
General and administrative expenses
Current report
General and administrative expenses was $564,000 and $386,000 for the six months ended December 31, 2024, and 2023, respectively, an increase of $178,000 or 46.1%. The increase is primarily due to the following:
Current report
Research and development expenses
Current report
Gain on patent assignment
Current report
Gain on patent assignment was $880,000 for the six months ended December 31, 2024 as a result of sale and assignment of certain patents to Desmet. There was no similar transaction during the prior period.
Current report
Interest expense
Current report
Interest expense was $3,000 and $3,000 for the six months ended December 31, 2024 and 2023, interest expense is primarily related to the SBA loan.
Current report
Net income (loss)
Current report
Net income was $352,000 for the six months ended December 31, 2024 and net loss was $267,000 for the six months ended December 31, 2023, an increase in income of $619,000. The increase in net income is primarily due to the gain on the patent assignment offset by the decrease in revenue and the increase in general and administrative expenses, as discussed above.
Current report
Net cash used in operating activities was $376,000 for the six months ended December 31, 2024 and net cash used in operating activities was $11,000 for the six months ended December 31, 2023. The increase in cash used in operating activities is primarily due operating expenses and changes in working capital. In the prior year we also received net advances from Desmet amounting to $164,000 with no similar advances received in the current period.
Current report
Net cash provided by investing activities amounted to $880,000 as a result of the proceeds received from the assignment of patents to Desmet. There were no similar transactions in the prior period.
Removed paragraphs (5)
Previous report
During the three months ended September 30, 2024 and 2023, we recorded no revenues. Although the Company has orders for nano reactors from Desmet, none were shipped during the current period. No usage fees were recognized during the current period.
Previous report
During the three months ended September 30, 2024 and 2023, we recorded no cost of sales as no orders were shipped during the periods considered.
Previous report
Operating Expenses
Previous report
Operating expenses were $218,000 and $214,000 for the three months ended September 30, 2024 and 2023, respectively, an increase of $4,000 or 1.9%.the increase in general and administrative expense are as follows:
Previous report
Net cash used in operating activities was $179,000 for the three months ended September 30, 2024 and net cash generated by operating activities was $122,000 for the three months ended September 30, 2023. Changes in our cash flows was due to changes in operating assets and liabilities as well as advances from Desmet. During the period ended September 30, 2023, the Company received advances from Desmet of $304,000 compared to none during the period ended September 30, 2024.
Reworded paragraphs (11)
Previous wording
In October 2024, we entered into a Patent Assignment and License Back Agreement with Desmet to assign certain patents, intellectual property rights and trademarks related to vegetable oil refining to Desmet, as consideration for the patent assignments, Desmet agreed to pay the Company $880,000 in cash. This transaction will provide the necessary capital for continuous operations and business development of our company.
Current wording
In October 2024, we entered into a Patent Assignment and License Back Agreement with Desmet to assign certain patents, intellectual property rights and trademarks related to vegetable oil refining to Desmet, as consideration for the patent assignments, Desmet paid the Company $880,000 in cash. This transaction provided capital for continuous operations and business development of our company.
Previous wording
ABI is in the final stages of completing its financial audit, which is estimated to be completed on or before December 31, 2024, engaging focus groups for Barmuze acceptance, refining marketing and distribution strategies, and securing additional capital for production. The Company also plans on obtaining additional financing in early 2025.
Current wording
ABI is in the final stages of completing its financial audit, which is estimated to be completed before the end of the first quarter of 2025, engaging focus groups for Barmuze acceptance, refining marketing and distribution strategies, and securing additional capital for production. The Company also plans on obtaining additional financing in early 2025.
Previous wording
Along with improving our existing technologies, we have developed Hydoplasma, an innovative process combining cavitation and cold plasma technology to enhance our water treatment efficiency, which:
Current wording
Along with improving our existing technologies, we have developed Hydroplasma, an innovative process combining cavitation and cold plasma technology to enhance our water treatment efficiency, which:
Previous wording
Testing of the technology is currently underway. Upon a completion of multiple trials, if successful, sales and revenue are anticipated in the first half of 2025.
Current wording
Testing of the technology is currently underway. Upon completion of multiple trials, if successful, sales and revenue are anticipated in the first half of 2025.
Previous wording
Global inflation remains a factor in 2024/5, with interest rates in the US remaining at higher levels, although there have been some indication from the federal reserve that these rates may decrease, inflationary indicators remain above expectations, delaying any interest rate decreases. The Russia and Ukraine and now the Israeli and Hamas conflict and other geopolitical conflicts, as well as related international response, have exacerbated inflationary pressures, including causing increases in the price for goods and services and global supply chain disruptions, which have resulted and may continue to result in shortages in food products, materials and services. Such shortages have resulted and may continue to result in inflationary cost increases for labor, fuel, food products, materials and services, and could continue to cause costs to increase as well as result in the scarcity of certain materials. We cannot predict any future trends in the rate of inflation or other negative economic factors or associated increases in our operating costs and how that may impact our business. To the extent we and our customers we service are unable to recover higher operating costs resulting from inflation or otherwise mitigate the impact of such costs on our and their business, our revenues and gross profit could decrease, and our financial condition and results of operations could be adversely affected.
Current wording
Global inflation remains a factor in fiscals 2024 and 2025, with interest rates in the US remaining at higher levels, although there have been some indication from the federal reserve that these rates may decrease, inflationary indicators remain above expectations, delaying any interest rate decreases. The recent indications by the current U.S government to implement tariffs on significant trading partners may result in increased costs for consumers, resulting in inflationary pressure. The Russia and Ukraine and now the Israeli and Hamas conflict and other geopolitical conflicts, as well as related international response, have exacerbated inflationary pressures, including causing increases in the price for goods and services and global supply chain disruptions, which have resulted and may continue to result in shortages in food products, materials and services. Such shortages have resulted and may continue to result in inflationary cost increases for labor, fuel, food products, materials and services, and could continue to cause costs to increase as well as result in the scarcity of certain materials. We cannot predict any future trends in the rate of inflation or other negative economic factors or associated increases in our operating costs and how that may impact our business. To the extent we and our customers we service are unable to recover higher operating costs resulting from inflation or otherwise mitigate the impact of such costs on our and their business, our revenues and gross profit could decrease, and our financial condition and results of operations could be adversely affected.
Previous wording
The following is a comparison of our operation results for the three months ended September 30, 2024 and 2023.
Current wording
The following is a comparison of our results of operations for the three months ended December 31, 2024 and 2023.
Previous wording
The Company generates revenues from the sale of theNano Reactor® to customers/distributor. Additionally, the Company generates revenues from its equity method investment, specifically fees from usage of reactors or usage fees.
Current wording
The Company generated revenues from the sale of theNano Reactor® to customers/distributor. Additionally, the Company generates revenues from its equity method investment, specifically fees from usage of reactors or usage fees.
Previous wording
Research and development (R&D) expenses was $8,000 and $36,000 for the three months ended September 30, 2024 and 2023, respectively, a decrease of $28,000 or 77.8%. During the prior year, the Company began another R&D project consisting of the design and manufacture of an experimental installation for plasma activation of water by generating a plasma discharge in a water stream. The research and development expenditure is dependent on progress made on the development.
Current wording
Research and development expenses was $16,000 and $0 for the three months ended December 31, 2024 and 2023, respectively, an increase of $16,000 or 100.0%. During the prior year, the Company began another R&D project consisting of the design and manufacture of an experimental installation for plasma activation of water by generating a plasma discharge in a water stream. The research and development expenditure is dependent on progress made on the development.
Previous wording
Interest expense was $1,000 and $1,000 for the three months ended September 30, 2024 and 2023, respectively. Interest expense relates to interest incurred on the SBA loan.
Current wording
Interest expense was $2,000 and $2,000 for the three months ended December 31, 2024 and 2023, interest expense is primarily related to the SBA loan.
Previous wording
The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in accompanying condensed consolidated financial statements, during the three months ended September 30, 2024, the Company incurred a net loss of $227,000 and had a stockholders’ deficit of $27,074,000 as of September 30, 2024. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. In addition, the Company’s independent registered public accounting firm, in its report on the Company’s June 30, 2024, financial statements, raised substantial doubt about the Company’s ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments that may result from an inability of the Company to continue as a going concern.
Current wording
The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in accompanying condensed consolidated financial statements, during the six months ended December 31, 2024, the Company incurred loss from operations of $525,000. In addition, we had an stockholders’ deficit of $23,000 as of December 31, 2024. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. In addition, the Company’s independent registered public accounting firm, in its report on the Company’s June 30, 2024, financial statements, raised substantial doubt about the Company’s ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments that may result from the inability of the Company to continue as a going concern.
Previous wording
As of September 30, 2024, the Company has cash in the amount of $2,000. The Company’s ability to continue as a going concern is dependent upon its ability to continue to implement its business plan. Currently, management’s plan is to increase revenues by continuing to license its technology globally. While the Company believes in the viability of its strategy to increase revenues, there can be no assurances to that effect. The Company believes it has enough cash to sustain operations through March 2025.
Current wording
As of December 31, 2024, the Company has cash in the amount of $681,000. The Company’s ability to continue as a going concern is dependent upon its ability to continue to implement its business plan. Currently, management’s plan is to increase revenues by using its Reserved Grant Back License to apply the technology to; (i)water and wastewater processing, recovery, recycling and purification (including oilfield wastewater) and; (ii) manufacture, distillation, brewing, enhancements, sale and marketing of alcoholic beverages, together the Licensed Fields. The Company will have a worldwide, exclusive, transferable and royalty-free license and right to design, build, use, export, improve, sell and market Nano Reactor® devices and Nano Reactor® devices and systems (and products) that incorporate or utilize Nano Reactor® devices, in each case within the Licensed Fields, and to continue to use the Nano Reactor® trademark in connection with its business, systems and products within the Licensed Fields. While the Company believes in the viability of its strategy to increase revenues, there can be no assurances to that effect. The Company believes it has enough cash to sustain operations through June 30, 2025.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
The following is a comparison of our results of operations for the six months ended December 31, 2024 and 2023.
Current report — wording carried from elsewhere
The Company generated revenues from the sale of theNano Reactor® to customers/distributor. Additionally, the Company generates revenues from its equity method investment, specifically fees from usage of reactors or usage fees.
Current report — wording carried from elsewhere
Research and development expenses was $24,000 and $36,000 for the six months ended December 31, 2024 and 2023, respectively, an increase of $12,000 or 33.3%. During the prior year, the Company began another R&D project consisting of the design and manufacture of an experimental installation for plasma activation of water by generating a plasma discharge in a water stream. The research and development expenditure is dependent on progress made on the development.