CVAT Pivots to Water, Alcohol Tech After Patent Sale

TL;DR

**CVAT is selling off its core business and betting big on unproven water and alcohol tech, making it a high-risk, speculative play.**

AI Summary

Cavitation Technologies, Inc. (CVAT) reported a significant strategic shift in its fiscal year ended June 30, 2025, marked by the assignment of key vegetable oil refining patents to Desmet for $880,000 in cash in October 2024. This transaction provided crucial capital for continuous operations but is expected to significantly reduce future Nano Reactor sales to Desmet. The company is now pivoting its focus to water treatment and remediation in the Permian Basin, agriculture, and a business venture with Alchemy Beverages, Inc. (ABI), along with developing new Hydro-Plasma technology. Despite these strategic moves, CVAT generated no sales or royalties from its agreement with ABI in fiscal 2025 and 2024, and its investment in Enviro WaterTek LLC was impaired by approximately $1.1 million in June 2023 due to insignificant operations. The company anticipates sales from water treatment in the Permian Basin in the first half of fiscal 2026 and from ABI's Barmuze product in the second half of 2026, indicating a period of transition and delayed revenue generation.

Why It Matters

This 10-K reveals a critical strategic pivot for Cavitation Technologies, Inc., moving away from its primary revenue driver in vegetable oil refining. The $880,000 patent sale to Desmet provides a short-term capital injection but signals a significant shift in future revenue streams, impacting investors who relied on the Desmet partnership. Employees and customers in the vegetable oil sector will see Desmet take over manufacturing, while new opportunities arise in water treatment and alcoholic beverage enhancement, potentially altering the company's competitive landscape against established players in these new markets. The success of these new ventures, particularly in the competitive Permian Basin water treatment market and the consumer-facing Barmuze product, will determine CVAT's long-term viability and market position.

Risk Assessment

Risk Level: high — The company's risk level is high due to its significant strategic pivot away from its primary revenue source, the vegetable oil refining technology, which generated all previous revenue. The 10-K explicitly states that the sale of Nano reactors to Desmet will 'significantly be reduced in future periods.' Furthermore, the company recorded an impairment charge of approximately $1.1 million on its investment in Enviro WaterTek LLC in June 2023, and reported 'no sales or royalties generated' from its agreement with Alchemy Beverages, Inc. during fiscals 2025 and 2024, indicating a lack of current revenue from its new focus areas.

Analyst Insight

Investors should exercise extreme caution and consider this a highly speculative investment. Monitor closely for concrete revenue generation from the new water treatment and Alchemy Beverages ventures, as the company is currently in a transitional phase with no clear, immediate revenue streams from its new strategic focus.

Financial Highlights

debt To Equity

N/A

revenue

N/A

operating Margin

N/A

total Assets

N/A

total Debt

N/A

net Income

N/A

eps

N/A

gross Margin

N/A

cash Position

$880,000

revenue Growth

N/A

Revenue Breakdown

Key Numbers

• $880,000 — Cash received from patent assignment to Desmet (Provided capital for continuous operations in October 2024)
• $1.1 million — Impairment charge on investment in Enviro WaterTek LLC (Recorded in June 2023 due to insignificant operations)
• 289,156,340 — Shares of common stock outstanding (As of September 26, 2025)
• $5,192,000 — Aggregate market value of common equity held by non-affiliates (As of December 31, 2024, based on $0.019 per share)
• $25,000 — Monthly advances from Desmet (Under February 2024 agreement, terminated in October 2024)
• $498,000 — Outstanding advances waived by Desmet (Under October 2021 agreement, waived in February 2024)
• 17,000 — Barrels of produced water per day (BPD) (Capacity of LPN system for Permian Basin water treatment)
• $2.51 billion — Canadian water treatment market value (Overall market for water treatment in Canada)
• 19.9% — Percentage of ABI's outstanding common shares (To be issued to CVAT, limited to 20 million shares)
• $3.1 billion — Projected global cold plasma market by 2027 (Growth from $1.5 billion in 2021, relevant to Hydro-Plasma technology)

Key Players & Entities

• Cavitation Technologies, Inc. (company) — Registrant
• Desmet Belgium Group (company) — Global engineering and equipment supply firm, patent assignee
• Alchemy Beverages, Inc. (company) — Partner for alcoholic beverage enhancement
• Enviro WaterTek LLC (company) — Joint venture for Permian Basin water treatment
• Roman Gordon (person) — Shareholder and former officer, formed Cameo USA LLC
• New Mexico State University (company) — Partner for Hydro-Plasma technology development
• University of Guadalajara (company) — Partner for Hydro-Plasma technology development
• Brackish Groundwater National Desalination Research Facility (company) — Partner for Hydro-Plasma technology development
• Hacienda Farms (company) — First system installation for agricultural water remediation
• SEC (regulator) — Securities and Exchange Commission

FAQ

Risk Factors

• Dependence on Patent Assignment for Capital [high — financial]: The company received $880,000 in cash from assigning key vegetable oil refining patents to Desmet in October 2024. While this provided crucial capital for operations, it significantly reduces future revenue streams from this core technology.
• Delayed Revenue from New Ventures [high — operational]: CVAT anticipates sales from water treatment in the Permian Basin in the first half of fiscal 2026 and from ABI's Barmuze product in the second half of 2026. This indicates a prolonged period of transition with no current sales from these new strategic directions.
• Impairment of Investment [medium — financial]: An impairment charge of approximately $1.1 million was recorded in June 2023 on the investment in Enviro WaterTek LLC due to insignificant operations, highlighting challenges in new business development.
• Reduced Future Sales to Desmet [medium — market]: The assignment of patents to Desmet for $880,000 is expected to significantly reduce future Nano Reactor sales to Desmet, impacting a historically significant customer relationship.
• Lack of Sales from Alchemy Beverages Venture [medium — operational]: Despite a business venture with Alchemy Beverages, Inc. (ABI), CVAT generated no sales or royalties from this agreement in fiscal 2025 and 2024, raising concerns about the commercial viability of this partnership.
• Competition in Water Treatment Market [medium — market]: While the Canadian water treatment market is valued at $2.51 billion, CVAT's entry into the Permian Basin water treatment sector faces a competitive landscape, and the capacity of its LPN system is 17,000 BPD.
• Low Market Capitalization [low — financial]: The aggregate market value of common equity held by non-affiliates was $5,192,000 as of December 31, 2024, based on a share price of $0.019, indicating a very low market valuation.

Industry Context

Cavitation Technologies operates in diverse markets including vegetable oil refining, water treatment, and potentially new applications for its Hydro-Plasma technology. The vegetable oil refining sector is dominated by large players like Archer Daniels Midland, Cargill, and Bunge, where CVAT historically provided specialized processing technology. The water treatment market, particularly in regions like the Permian Basin, is significant, with the Canadian market alone valued at $2.51 billion. The global cold plasma market is also experiencing substantial growth, projected to reach $3.1 billion by 2027.

Regulatory Implications

The company's operations in water treatment may be subject to environmental regulations concerning water quality, discharge, and hazardous materials handling. Compliance with these regulations is crucial for its new ventures in the Permian Basin. Furthermore, any new technologies or products, such as those related to Hydro-Plasma, may require regulatory approval or adherence to industry standards before commercialization.

What Investors Should Do

1. Monitor revenue generation from new ventures
2. Evaluate the commercialization of Hydro-Plasma technology
3. Assess the impact of patent assignment on future cash flows
4. Analyze the financial health and cash burn rate

Key Dates

• 2024-10-01: Assignment of key vegetable oil refining patents to Desmet — Provided $880,000 in cash for operations but significantly reduced future revenue from this segment.
• 2023-06-30: Impairment of investment in Enviro WaterTek LLC — A $1.1 million charge due to insignificant operations highlights challenges in new business ventures.
• 2026-01-01: Anticipated sales from water treatment in Permian Basin — Marks the expected start of revenue generation from a new strategic focus area.
• 2026-07-01: Anticipated sales from ABI's Barmuze product — Indicates the expected start of revenue generation from the Alchemy Beverages venture.

Glossary

Nano Reactor

A proprietary technology developed by Cavitation Technologies, Inc. used in various industrial liquid processing applications. (This was a critical component for generating all previous revenue and is central to the company's historical business model.)

LPN system

A system developed by Cavitation Technologies, Inc. for water treatment, with a capacity of 17,000 barrels per day for the Permian Basin. (Represents a key technology for the company's new strategic focus on water treatment.)

Hydro-Plasma technology

A new technology being developed by Cavitation Technologies, Inc., relevant to the growing global cold plasma market projected to reach $3.1 billion by 2027. (Represents a future growth area and diversification strategy for the company.)

Impairment charge

A reduction in the carrying value of an asset when its fair value is less than its book value, often due to poor performance or diminished utility. (A $1.1 million impairment charge on an investment highlights financial challenges and poor performance of certain ventures.)

Cold plasma

A partially ionized gas that contains ions, electrons, and neutral atoms or molecules, used in various industrial and medical applications. (The market for cold plasma is growing, and CVAT's development of Hydro-Plasma technology aligns with this trend.)

Year-Over-Year Comparison

The company has undergone a significant strategic shift, evidenced by the assignment of key vegetable oil refining patents to Desmet for $880,000 in cash, a move that provided immediate capital but curtailed future revenue from this segment. This contrasts with previous filings where vegetable oil refining was the primary revenue driver. The company is now heavily reliant on new ventures in water treatment and its partnership with Alchemy Beverages, Inc., neither of which generated sales in the current or prior fiscal years, indicating a substantial change in the revenue outlook and increased operational risk.

Key Financial Figures

• $0.001 — ge on Which Registered: Common Stock, $0.001 par value Over the Counter (Bulletin B
• $0.019 — 31, 2024 based on the closing price of $0.019 per share and 284,289,740 shares outsta
• $50,000 — ns, limited monthly advance payments of $50,000 to be applied against gross profit shar
• $40,000 — rovided the Company monthly advances of $40,000 through November 1, 2024, that was appl
• $25,000 — provide the Company monthly advances of $25,000 through February 2027, subject to limit
• $498,000 — 21 agreement in the aggregate and up to $498,000. In October 2024, we entered into a Pa
• $880,000 — nt assignments, Desmet paid the Company $880,000 in cash. This transaction provided capi
• $1.1 million — d an impairment charge of approximately $1.1 million. There were no transactions during fisc
• $2.51 b — nt in Canada is valued at approximately $2.51 billion, with continuous expansion due to
• $1.5 billion — plasma market is projected to grow from $1.5 billion in 2021 to $3.1 billion by 2027, fueled
• $3.1 billion — ed to grow from $1.5 billion in 2021 to $3.1 billion by 2027, fueled by increasing demand fo

Filing Documents

• cavitation_i10k-063025.htm (10-K) — 697KB
• cavitation_ex3101.htm (EX-31.1) — 7KB
• cavitation_ex3102.htm (EX-31.2) — 7KB
• cavitation_ex3201.htm (EX-32.1) — 3KB
• cavitation_ex3202.htm (EX-32.2) — 3KB
• cavitationlogo.jpg (GRAPHIC) — 17KB
• 0001683168-25-007298.txt ( ) — 4149KB
• cvat-20250630.xsd (EX-101.SCH) — 31KB
• cvat-20250630_cal.xml (EX-101.CAL) — 42KB
• cvat-20250630_def.xml (EX-101.DEF) — 117KB
• cvat-20250630_lab.xml (EX-101.LAB) — 311KB
• cvat-20250630_pre.xml (EX-101.PRE) — 255KB
• cavitation_i10k-063025_htm.xml (XML) — 456KB

Risk Factors

Item 1A. Risk Factors 7

Unresolved Staff Comments

Item 1B. Unresolved Staff Comments 7

Cybersecurity

Item 1C. Cybersecurity 7

Properties

Item 2. Properties 7

Legal Proceedings

Item 3. Legal Proceedings 7

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 7 PART II

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 8

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 8

Quantitative and Qualitative Disclosures About Market Risk

Item 7A. Quantitative and Qualitative Disclosures About Market Risk 13

Financial Statements and Supplementary Data

Item 8. Financial Statements and Supplementary Data 13

Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure 33

Controls and Procedures

Item 9A. Controls and Procedures 33

Other Information

Item 9B. Other Information 34

Disclosure Regarding Foreign Jurisdictions That Prevent Inspections

Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections 34 PART III

Directors, Executive Officers and Corporate Governance

Item 10. Directors, Executive Officers and Corporate Governance 35

Executive Compensation

Item 11. Executive Compensation 36

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 38

Certain Relationships and Related Transactions, and Director Independence

Item 13. Certain Relationships and Related Transactions, and Director Independence 39

Principal Accounting Fees and Services

Item 14. Principal Accounting Fees and Services 39 PART IV

Exhibits, Financial Statement Schedules

Item 15. Exhibits, Financial Statement Schedules 41

Form 10-K Summary

Item 16. Form 10-K Summary 42

Signatures

Signatures 43 i CAUTIONARY NOTE REGARDING

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS This annual report on Form 10-K and the exhibits attached hereto contain "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements concern our anticipated results and developments in our operations in future periods, planned exploration and development of our properties, plans related to our business and matters that may occur in the future. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. We use words like "expects," "believes," "intends," "anticipates," "plans," "targets," "projects" or "estimates" in this annual report. When used, these words and other, similar words and phrases or statements that an event, action or result "will," "may," "could," or "should" result, occur, be taken or be achieved, identify "forward-looking" statements. Such forward-looking Management has included projections and estimates in this annual report, which are based primarily on management's experience in the industry, assessments of our results of operations, discussions and negotiations with third parties and a review of information filed by our competitors with the Securities and Exchange Commission or otherwise publicly available. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as required by law. We qualify all of the forward-looking statements contained in this annual report by the foregoing cautionary statements. ii PART I

BUSINESS

ITEM 1. BUSINESS Cavitation Technologies, Inc. (referred to herein, unless otherwise indicated, as "the Company," "CTi," "we," "us," and "our") is a Nevada corporation originally incorporated under the name Bio Energy, Inc. We are a process and product development firm that has developed, patented, and commercialized environmentally friendly technology-based systems that are designed to serve large, growing, global markets such as vegetable oil refining, renewable fuels, water treatment, wines and spirits enhancement, algae oil extraction, water-oil emulsions and crude oil yield improvement. Our systems are designed to process industrial liquids at a reduced processing time, lower operating cost, improved yield while operating in environmentally friendly manner. Our patented Nano Reactor and LPN were the critical components of our business and we have generated all of our previous revenue while utilizing these components. Vegetable Oil Refining Our first commercial application for our technology has been the CTi Nano Neutralization System which has been utilized to improve edible vegetable oil refining process. Our environment friendly process has been shown to reduce refining costs, increase oil yield, and limit the number of chemical additives used in chemical refining of vegetables oils. This patented process (US Patent # 7,762,715 and # 8,042,989) is designed to be incorporated into new and existing soybean, rapeseed, canola and palm vegetable oil refineries. Our first pilot test of our CTi NANO Neutralization System was conducted in 2010 at Carolina Soya, a 200-metric ton/day crude soy oil refining plant in Estill, South Carolina. Our second system, which became operational in fiscal 2011, has been continuously utilized since 2011 at the plant that processes approximately 450 metric tons per day of soy oil. Further, we have successfully shipped over 200 systems domestically and internationally. We also continuously focus on developing additional Nano Rea

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