Cavitation Technologies, Inc.
For the period ended Jun 30, 2025. Filed Sep 29, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Sep 29, 2025
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-06-30; filed 2024-09-30.
0001683168-24-006768
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-06-30; filed 2025-09-29.
0001683168-25-007298
Item 7. 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 60 previous paragraphs and 61 current paragraphs.
35 unchanged; 12 reworded; 14 added; 13 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 1 previous and 3 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 (14)
Current report
During the year ended June 30, 2025, we recorded revenue of $203,000 and a gain on the sale of our patents of $880,000 and incurred a net loss of $113,000.
Current report
In October 2024, we assigned our patents relating to vegetable oil refining to Desmet Belgium for gross proceeds of $880,000, however, we retained a worldwide, exclusive, transferable, and royalty-free license to practice and use the Assigned Patents in the fields of water and wastewater processing, recovery, recycling, and purification (including oilfield wastewater), as well as the manufacture, distillation, brewing, enhancement, sale, and marketing of alcoholic beverages (the “Licensed Fields”), we also received a worldwide, exclusive, transferable, and royalty-free license to practice and use the Assigned Patents and associated technical information, consistent with the scope of the Reserved License, and additionally we retained exclusive rights to use the “Nano Reactor®” mark for our businesses, systems, and products related to the Licensed Fields.
Current report
Under both the Reserved License and the Grant-Back License, 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, as well as Nano Reactor® systems and products that incorporate or utilize Nano Reactor® devices, limited to uses and applications within one or more of the Licensed Fields.
Current report
As a result of this agreement, the Company expects that Desmet will start to manufacture the Nano reactors by itself and sale of Nano reactors to Desmet by the Company will significantly be reduced in future periods. We will continue to own and operate a large portfolio of patents and intellectual property rights in applications not related to vegetable oil refining. The following are Management’s plans going forward to generate revenues and sustain the operations of the Company and its current status:
Current report
Management plans to generate revenues in future from the commercial applications of the new technologies discussed above.
Current report
Previously we generated revenues from licensing fees and from the sale of reactors from our previous agreements with Desmet Belgium (previously Desmet Ballestra).
Current report
During the year ended June 30, 2025, revenues recognized from sale of reactors amounted to $203,000. These funds are not sufficient to fund operational expenses on monthly basis. We generated an additional $880,000 in the assignment of our patents to Desmet and anticipate that we will generate revenues from the new technologies and additional markets identified above.
Current report
General and administrative expenses increased by $349,000 or 49.0%. The Increase is primarily attributable to the following:
Current report
Gain on patent assignment
Current report
Gain on patent assignment was $880,000 for the year ended June 30, 2025 as a result of sale and assignment of certain patents to Desmet in October 2024. There was no similar transaction during the prior period.
Current report
Interest and other income (expense), net
Current report
We utilized cash of $806,000 to fund operating activities, due to a reduction in revenues and the increase in operating expenses discussed above.
Current report
We generated cash of $880,000 from the assignment of our patents to Desmet.
Current report
Management’s plan is to generate income from the application of new technologies as discussed above.
Removed paragraphs (13)
Previous report
During the year ended June 30, 2024, we recorded revenue of $1,363,000 and generated net income of $439,000.
Previous report
We are continuously engaged in manufacturing of ourNano Reactor®andNano Neutralization® Systems which are designed to help refine vegetable oils such as soybean, canola and rapeseed. Additionally, we have developedLPN™’s that provide commercial opportunity in industrial water treatment, enhancement of alcoholic beverages, andMLPN being utilized in a consumer small home appliance.
Previous report
Management’s plan is to generate income from operations by licensing our technology globally through Desmet Ballestra Group (Desmet), agreements with Enviro WaterTek and Alchemy Beverages, Inc.
Previous report
In October 2018, we signed a three-year globalR and D, Marketing and Technology License Agreement (“TLA”)with Desmet for the sale and licensing of ourNano Reactor®andNano Neutralization® Systems. This agreement was a continuation of the original agreement we signed with Desmet in May 2012. On October 1, 2021, we executed a new three-year License Agreement with essentially the same terms of the October 2018 agreement. This agreement was terminated early and on February 15, 2024, we entered into a new three-year TLA with Desmet. The TLA provides for a worldwide limited exclusive license to market, sell, supply and assistance to customers of Nano reactor systems and nano reactor devices for the treatment of certain oil and fats, oleochemicals, biodiesels, fatty acids and fatty alcohols. The TLA may be terminated by Desmet on March 15 each year on at least one month’s written notice if the licensee and its affiliates failed to sell a minimum of 6 nano reactor systems during the preceding 12 month period. As part of the TLA, Desmet agreed to provide advances of $25,000 per month, subject to limitations. The advances will then be applied as payment from future sales of reactors to Desmet.
Previous report
During the year ended June 30, 2024, advances received from Desmet amounted to $972,000 and revenues recognized from sale of reactors and licensing fee amounted to $1,363,000. These funds service operational expenses on monthly basis.
Previous report
During the year ended June 30, 2024, revenue- related party decreased by $20,000. In the prior year we recorded an aggregate revenue of $20,000 from water processing usage fees to Enviro Watertek, LLC. There was no similar water processing usage fees recognized in fiscal 2024.
Previous report
General and administrative expenses decreased by $487,000 or 40.8%. The decrease is primarily related to a decrease in headcount and payroll expenses of $272,000 in a concerted effort to reduce operating expenses. In addition stock based compensation reduced by $85,000, since there were no equity awards granted during the current year. Advertising expenditure was reduced by $35,000, audit fees were reduced by $32,000 and consulting fees were reduced by $32,000, all reductions in line with our concerted effort to reduce operating expenses. The balance of the decrease of $31,000 is made up of several individually insignificant expense reductions.
Previous report
Loss from equity method investment
Previous report
The loss from equity method investment decreased by $1,148,000, in the prior year, we determined that the value of the Ameredev joint venture that we had entered into in September 2021 no longer supported the investment that we had made due to unfavorable result of operations of Ameredev and the oil and gas industry in which it operates in. As such, we recorded an equity method investment loss of $1,148,000 in fiscal 2023. There was no similar loss in fiscal 2024.
Previous report
Interest income (expense), net
Previous report
We generated cash from operating activities of $172,000 for the year ended June 30, 2024 due to the increase in revenues and reduced operating expenses.
Previous report
For the year ended June 30, 2023 cash used in operating activities was $423,000.
Previous report
Management’s plan is to generate income from operations by continuing to license its technology globally, including our agreements with EW and ABI.
Reworded paragraphs (12)
Previous wording
We have developed, patented, and commercialized proprietary technology that can be used for processing of various industrial and consumer-oriented fluids. Our patentedNano Reactor®is the critical components ofthe CTi Nano Neutralization® System which has been shown to reduce operating costs and increase yields in processing oils and fats. CTi holds and applied for numerous patents covering technology and various processes in US and Internationally, covering vegetable and crude oil refining, processed and frac water treatment, algae oil extraction, and alcoholic beverage enhancement. During our Fiscal 2022, we had continuously worked on developing additional technologies and products related to low pressure nano reactor (LPN™).LPN™ is designed to become a highly efficient mixer and homogenizer. We believe thatLPN™ has a great commercial utilization opportunity by providing efficient and cost-effective solution in multiple fluid processing industries.LPN™ has a number of advantages over current mechanically operated mixers and homogenizers. Industrial application of our technology in produced and frac water treatment system,LPN™ along with our proprietary chemical formulations have depicted measurable and quantifiable advantages over industry standard processes and equipment. Additionally, our miniature low pressure nano reactorMLPN has become an integral part of Barmuze®, a small home appliance device for enhancing taste and extracting unwanted impurities typically present in alcoholic beverages.
Current wording
We have developed, patented, and commercialized proprietary technology that can be used for processing of various industrial and consumer-oriented fluids, as discussed in detail above.
Previous wording
We are, and our suppliers have experienced significant broad-based inflation of manufacturing and distribution costs as well as transportation challenges, partially as a result of the pandemic. Although we do not believe that inflation has had a material effect on our business, financial condition or results of operations, it may in the future. We are monitoring cost structures and evaluating to what extent any such costs can be passed on to customers, taking into account the overall impact of increasing inflation and interest rate pressures on consumers. We expect input cost inflation to continue at least throughout 2024. If we are unable to successfully manage the effects of inflation, our business, operating results, cash flows and financial condition may be adversely affected. Additionally, there have been various economic indicators that the United States economy may be entering a recession in upcoming quarters. An economic recession could potentially impact the general business environment and the capital markets, which may have a material negative impact on our financial results.
Current wording
We are, and our suppliers have experienced significant broad-based inflation of manufacturing and distribution costs as well as transportation challenges, partially as a result of the pandemic and there is uncertainty over the impact that recently implemented tariffs on various countries will have on the cost of our products or components used in our products. Although we do not believe that inflation has had a material effect on our business, financial condition or results of operations, it may in the future. We are monitoring cost structures and evaluating to what extent any such costs can be passed on to customers, taking into account the overall impact of increasing inflation and interest rate pressures on consumers. We expect input cost inflation to continue at least throughout 2026. If we are unable to successfully manage the effects of inflation, our business, operating results, cash flows and financial condition may be adversely affected. Additionally, there have been various economic indicators that the United States economy may be entering a recession in upcoming quarters. An economic recession could potentially impact the general business environment and the capital markets, which may have a material negative impact on our financial results.
Previous wording
During the year ended June 30, 2024, we generated net income of $439,000, including license fee from Desmet of $498,000 and generated cash from operations of $170,000. As of June 30, 2024, we have a working capital deficiency of $403,000 and a stockholders’ deficit of $480,000.
Current wording
During the year ended June 30, 2025, we generated a net loss of $113,000 after a gain from the assignment of our patents to Desmet of $880,000 and utilized cash in our operations of $806,000. As of June 30, 2025, we have a working capital balance of $199,000 and a stockholders’ equity of $69,000.
Previous wording
During the year ended June 30, 2024, revenue increased by $950,000, as a result of the increase in reactors purchased by Desmet which resulted in an increase in revenues from reactor sales from $413,000 to $865,000. In addition, the Company also recognized $498,000 of license fee pursuant to the termination of the October 2021 agreement with Desmet. There was no similar license fee revenue in fiscal 2023.
Current wording
During the year ended June 30, 2025, revenue decreased by $1,160,000, as a result of the decrease in reactors purchased by Desmet, prior to the assignment of the patents to Desmet, which resulted in a decrease in revenues from reactor sales from $865,000 to $198,000 and a fee of $5,000 from the use of a reactor by a new customer. In addition, the Company also recognized $498,000 of license fee in 2024 pursuant to the termination of the October 2021 agreement with Desmet. There was no similar license fee revenue in fiscal 2025.
Previous wording
During the year ended June 30, 2024 and 2023, cost of sales was $156,000 and $121,000, respectively, an overall increase of $35,000 or 28.9%. Cost of sales from the production of reactors increased from $73,000 to $156,000, which corresponds to the increase in reactors revenues. Costs of sales in fiscal 2023 also included inventory write off of $48,000, with no similar transaction in fiscal 2024. In addition, during the current year, the Company recognized license fee revenue of $498,000, with no associated cost of sales. After taking these items into account the cost of sales movement is in line with normal margins earned.
Current wording
During the year ended June 30, 2025 and 2024, cost of sales was $38,000 and $156,000, respectively, a decrease of $118,000 or 76.0%. The decrease is directly attributable to the cost of the production of reactors which corresponds to the decrease in reactors revenues. In addition, in the prior year, the Company recognized license fee revenue of $498,000, with no associated cost of sales. After taking these items into account the cost of sales movement is in line with normal margins earned.
Previous wording
Research and development expenses increased by $58,000. During the current year management invested in research into a new cold plasma technology to applied to new markets.
Current wording
Research and development expenses increased by $34,000. During the current year, as in the prior year, management continued investing in research into cold plasma technology to be applied to new markets.
Previous wording
Interest income (expense) increased by $7,000, this is primarily due to an adjustment made to accrued interest by the noteholder.
Current wording
Interest and other income (expense) increased by $7,000, this is primarily due to interest on the SBA loan. In the prior year an adjustment was made to the accrued interest on the SBA loan after reconciling to the balance reflected by the SBA noteholder.
Previous wording
Our reporting net income in fiscal 2024 was $439,000 and our net loss in fiscal 2023 was $2,040,000, an increase in income of $2,479,000 due to an increase in revenue, a decrease in general and administrative expenses and a decrease in the loss of equity method investment, offset by an increase in research and development expenditure, discussed above.
Current wording
Our net loss in fiscal 2025 was $113,000 and our net income in fiscal 2024 was $439,000, an increase in loss of $552,000 due primarily to a decrease in revenue, an increase in general and administrative expenses and research and development costs, offset by the gain realized on the patent assignment, discussed above.
Previous wording
Our cash balance at June 30, 2024 and 2023 was $179,000 and $18,000, respectively, an increase of $161,000, primarily due to the increase in revenue and the reduction in operating expenses during the current year.
Current wording
Our cash balance at June 30, 2025 and 2024 was $249,000 and $179,000, respectively, an increase of $70,000, primarily due to the proceeds realized on the assignment of patents to Desmet during October 2024.
Previous wording
We utilized cash in financing activities of $11,000 for the year ended June 30, 2024, for the repayment of notes payable.
Current wording
We utilized cash in financing activities of $4,000 for the year ended June 30, 2025, for the installment payment of notes payable.
Previous wording
As of June 30, 2024, wehad a working capital deficit of $403,000, an accumulated deficit of $26,847,000 and stockholders’ deficit of $480,000 and the Company has had a history of operating losses. These factors, among others, raise substantial doubt about our ability to continue as a going concern within one year of the date that the financial statements are issued. In addition, the Company’s independent registered public accounting firm, in its report on our June 30, 2024 financial statements, has raised substantial doubt about the Company’s ability to continue as a going concern. The Company’s financial statements do not include any adjustments that might result from the outcome of this uncertainty be necessary should we be unable to continue as a going concern.
Current wording
During the year ended June 30, 2025, the Company incurred net loss of $113,000 and used cash in operations of $806,000 and as of June 30, 2025, wehad an accumulated deficit of $26,960,000. The Company has had a history of operating losses. These factors, among others, raise substantial doubt about our ability to continue as a going concern within one year of the date that the financial statements are issued. In addition, the Company’s independent registered public accounting firm, in its report on our June 30, 2025 financial statements, has raised substantial doubt about the Company’s ability to continue as a going concern. The Company’s financial statements do not include any adjustments that might result from the outcome of this uncertainty be necessary should we be unable to continue as a going concern.
Previous wording
We may also attempt to raise additional debt and/or equity financing to fund operations and to provide additional working capital. There is no assurance that such financing will be available in the future or obtained in sufficient amounts necessary to meet our needs, that we will be able to achieve profitable operations or that we will be able to meet our future contractual obligations. Should management fail to obtain such financing, we may curtail its operations.
Current wording
We may also attempt to raise additional debt and/or equity financing to fund operations and to provide additional working capital. There is no assurance that such financing will be available in the future or obtained in sufficient amounts necessary to meet our needs, that we will be able to achieve profitable operations or that we will be able to meet our future contractual obligations. Should management fail to obtain such financing, the Company may curtail its operations.