Cavitation Technologies, Inc.

Previous wording

CTi has developed, patented, and commercialized proprietary technology that can be used for processing of industrial fluids. CTi’s patentedNano Reactor®is the critical components ofthe CTi Nano Neutralization® System which is commercially proven to reduce operating costs and increase yields in processing oils and fats. CTi has two issued patents relating to our NanoReactor® systems and has filed several national and international patents to employ its proprietary technology in applications including, vegetable oil refining, biodiesel production, waste water treatment, algae oil extraction, and alcoholic beverage enhancement.

Current wording

CTi has developed, patented, and commercialized proprietary technology that can be used for processing of industrial fluids. CTi’s patentedNano Reactor®is the critical components ofthe CTi Nano Neutralization® System which is commercially proven to reduce operating costs and increase yields in processing oils and fats. CTi has two issued patents relating to our NanoReactor® systems and has filed several national and international patents to employ its proprietary technology in applications including, vegetable oil refining, biodiesel production, wastewater treatment, algae oil extraction, and alcoholic beverage enhancement.

Previous wording

In prior years we have developed a number of new applications utilizing the core principal of our technology. Our low pressure non-reactors (LPN) can be utilized in multiple industries that process large volumes of fluids and we anticipate commercial sales in our fiscal 2026. Further, we have miniaturized our non-reactors to be utilized in various consumer oriented products, such as, processing and enhancing spirits and wines, drinking water with infusion of vitamins, minerals and cannabidiol (CBD) oil.

Current wording

In prior years we have developed a number of new applications utilizing the core principle of our technology. Our low pressure non-reactors (LPN) can be utilized in multiple industries that process large volumes of fluids and we anticipate commercial sales in our fiscal 2026. Further, we have miniaturized our non-reactors to be utilized in various consumer-oriented products, such as, processing and enhancing spirits and wines, drinking water with infusion of vitamins, minerals and cannabidiol (CBD) oil.

Previous wording

We had agreements to license our technology globally through our strategic partners, Desmet Belgium Group (Desmet) and Enviro Watertek, LLC (EW) and Alchemy Beverages, Inc (ABI).

Current wording

We had agreements to license our technology globally through our strategic partners, Desmet Belgium Group (Desmet) and Enviro Watertek, LLC (EW) and Alchemy Beverages, Inc (ABI) and recently through our wholly owned subsidiary, Xyra Corp.

Previous wording

In order to develop these markets we may need additional funding, and may attempt to raise additional debt and/or equity financing to fund operations and additional working capital. However, there is no assurance that we will be successful in obtaining such financing or obtain sufficient amounts necessary to meet our business needs, or that we will be able to meet our future contractual obligations.

Current wording

To develop these markets, we may need additional funding and may attempt to raise additional debt and/or equity financing to fund operations and additional working capital. However, there is no assurance that we will be successful in obtaining such financing or obtain sufficient amounts necessary to meet our business needs, or that we will be able to meet our future contractual obligations.

Previous wording

Global inflation remains a factor in fiscals 2026 and 2025, with interest rates in the US remaining at higher levels, although there have been some rate decreases, the current uncertainty in the global markets around the implementation of trade tariffs by the US government has resulted in a pause on rate reductions. In addition, the impact of tariffs on all imported goods into the U.S. is expected to have a significant inflationary impact on all imports. 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 2026 and 2025, with interest rates in the US remaining at higher levels, although there have been some rate decreases, the current uncertainty in the global markets around the implementation of trade tariffs by the US government has resulted in market fluctuations. In addition, the impact of tariffs on all imported goods into the U.S. is expected to have a significant inflationary impact on all imports. The Russia and Ukraine 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

No revenue was generated from sales ofNano Reactor® to customers/distributors . Additionally, the Company did not generate any 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

General and administrative expenses was $245,000 and $218,000 for the three months ended September 30, 2025 and 2024, respectively, an increase of $27,000 or 12.4%. The increase is primarily due to the following:

Current wording

General and administrative expenses was $470,000 and $346,000 for the three months ended December 31, 2025, and 2024, respectively, an increase of $124,000 or 35.8%. The increase is primarily due to the following:

Previous wording

Research and development expenses was $7,000 and $8,000 for the three months ended September 30, 2025 and 2024, respectively, a decrease of $1,000 or 12.5%. 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 $4,000 and $16,000 for the three months ended December 31, 2025 and 2024, respectively, a decrease of $12,000 or 75.0%. 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

Net loss was $258,000 and $227,000 for the three months ended September 30, 2025 and 2024, an increase in loss of $31,000. The increase in loss is primarily due to increase in general and administrative expenses and interest expense, discussed in detail above.

Current wording

Net loss was $476,000 and net income was $579,000 for the three months ended December 31, 2025 and 2024, respectively, an increase in loss of $1,055,000. The increase in net loss is primarily due to the prior year gain on the patent assignment, the increase in general and administrative expenses, offset by the decrease in revenue and the decrease in research and development expenses, as discussed above.

Previous wording

Interest expense was $9,000 and $1,000 for the three months ended September 30, 2025 and 2024, interest expense is related to the SBA loan. During the current period the SBA loan was reconciled and reinstated from delinquent to in good standing, resulting in additional interest expense of $8,000 due to us curing the delinquency with the SBA.

Current wording

Interest expense was $11,000 and $3,000 for the six months ended December 31, 2025 and 2024. During the current period the SBA loan was reconciled and reinstated from delinquent to good standing, resulting in additional interest expense of $8,000 due to curing the delinquency with the SBA.

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, 2025, the Company incurred a loss from operations of $258,000, used cash in operations of $219,000 and had accumulated deficit of $27,18,000 as of September 30, 2025. 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, 2025, 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.

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, 2025, the Company incurred loss from operations of $723,000 and used cash in operations of $401,000. In addition, we had an stockholders’ deficit of $248,000 as of December 31, 2025. 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, 2025, 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, 2025, the Company has cash in the amount of $30,000. 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 has 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 December 31, 2025.

Current wording

As of December 31, 2025, the Company has cash in the amount of $31,000. 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 December 31, 2025.

Previous wording

Net cash used in operating activities was $219,000 and $175,000 for the three months ended September 30, 2025 and 2024. The increase in cash used in operating activities is primarily due to cash used in operating expenses and an increase in the movement in cash used for working capital purposes.

Current wording

Net cash used in operating activities was $401,000 for the six months ended December 31, 2025 and net cash used in operating activities was $376,000 for the six months ended December 31, 2024. The increase in cash used in operating activities is primarily due to net loss incurred and changes in working capital.

Previous wording

The preparation of the unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the U.S requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. Significant estimates are used for allowance for impairment analysis for property and equipment, accrual of potential liabilities, valuation allowance for deferred tax assets, and assumption in valuing our stock options, warrants, and common stock issued for services, among other items. Actual results could differ from these estimates.

Current wording

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the U.S requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. Significant estimates are used for allowance for impairment analysis for property and equipment, accrual of potential liabilities, valuation allowance for deferred tax assets, and assumption in valuing our stock options, warrants, and common stock issued for services, among other items. Actual results could differ from these estimates.