| Organization and Summary of Significant Accounting Policies | Note 1 - Organization and Summary of Significant Accounting
Policies 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. CTi has developed, patented, and commercialized proprietary
technology that may be used in liquid processing applications. Basis of Presentation The accompanying condensed consolidated financial
statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) as promulgated in the United
States of America (“U.S.”) and with instructions to Form 10-Q pursuant to the rules and regulations of Securities and Exchange
Act of 1934, as amended (the “Exchange Act”) and Article 8-03 of Regulation S-X under the Exchange Act. Accordingly, these
condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial
statements. In the opinion of management, we have included all adjustments considered necessary (consisting of normal recurring adjustments)
for a fair presentation. Operating results for the three and nine months ended March 31, 2024 are not indicative of the results that may
be expected for the fiscal year ending June 30, 2024. You should read these unaudited condensed consolidated financial statements in conjunction
with the audited financial statements and the notes thereto included in the Company's annual report on Form 10-K for the year ended June
30, 2023 filed on October 3, 2023. The condensed consolidated balance sheet as of June 30, 2023 has been derived from the audited financial
statements included in the Form 10-K for that year. Going Concern The accompanying 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 consolidated financial statements, as of March 31, 2024, the Company had
a working capital deficit of $ 781,000 855,000 As of March 31, 2024, the Company has cash in
the amount of $ 183,000 The Company 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 the Company’s needs, that the Company will be able
to achieve profitable operations or that the Company will be able to meet its future contractual obligations. Should management fail to
obtain such financing, the Company may curtail its operations. Use of Estimates 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 in impairment analysis for
fixed assets, accrual of potential liabilities, deferred tax assets and valuing our stock options, warrants, and common stock issued for
services, among other items. Actual results could differ from these estimates. Revenue Recognition The Company follows the guidance of Financial
Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with
Customers (“ASC 606”). ASC 606 creates a five-step model that requires entities to exercise judgment when considering the
terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations
in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance
obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to
contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers
to its clients. Revenue from sale of our Nano Reactors is recognized when products are shipped from our manufacturing facilities as this
is our sole performance obligation under these contracts and we have no continuing obligation to the customer. In addition, the Company
also recognizes revenues from usage fees of certain reactors. Usage fees are recognized based on actual usage by the customer. Equity Method Investment The Company accounts for investments in entities
in which the Company has significant influence over the entity’s financial and operating policies, but does not control, using the
equity method of accounting. The equity method investments are initially recorded at cost, and subsequently increased for capital contributions
and allocations of net income, and decreased for capital distributions and allocations of net loss. Equity in net income (loss) from the
equity method investment is allocated based on the Company’s economic interest. Equity method investments are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If it is determined that a loss
in value of the equity method investment is other than temporary, an impairment loss is measured based on the excess of the carrying amount
of an investment over its estimated fair value. Impairment analyses are based on current plans, intended holding periods, and available
information at the time the analysis is prepared. As of March 31, 2024 and June 30, 2023, the carrying value of its equity method investments
was $ 1,000 Net Income (Loss) Per Share The Company’s computation of net income
(loss) per share (“EPS”) includes basic and diluted EPS. Basic EPS is measured as the income available to common stockholders
divided by the weighted average common shares outstanding for the period. Diluted income per share reflects the potential dilution, using
the treasury stock method, that could occur if securities or other contracts to issue common stock were exercised or converted into common
stock or resulted in the issuance of common stock that then shared in the income of the Company as if they had been converted at the beginning
of the periods presented, or issuance date, if later. In computing diluted income per share, the treasury stock method assumes that outstanding
options and warrants were exercised and the proceeds are used to purchase common stock at the average market price during the period.
Options and warrants may have a dilutive effect under the treasury stock method only when the average market price of the common stock
during the period exceeds the exercise price of the options and warrants. Potential common shares that have an anti-dilutive effect (i.e.,
those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. There were no adjustments to net (loss) required
for purposes of computing diluted earnings per share. At March 31, 2024 and March 31, 2023, the Company excluded the outstanding securities
summarized below, which entitle the holders thereof to acquire shares of common stock, from its calculation of its diluted earnings per
share, as their effect would have been anti-dilutive.
Schedule of antidilutive shares
March 31, 2024 March 31, 2023
Options – 1,250,000
Warrants 30,260,574 53,927,834 Concentrations Cash – cash is deposited in one financial
institution. The balances held at this financial institution at times may be in excess of Federal Deposit Insurance Corporation (“FDIC”)
insurance limits of up to $250,000. Accounts Payable and Accrued Expenses
– three vendors accounted for 34 12 11 22 36 Revenues – during the three and nine
months ended March 31, 2024, all revenues were generated from Desmet Ballestra (Desmet; see Note 2) . During the three months and
nine months ended March 31, 2023, 95 Fair Value Measurement FASB Accounting Standards Codification (“ASC”)
820-10 requires entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized
on the balance sheet for which it is practicable to estimate fair value. ASC 820-10 defines the fair value of a financial instrument as
the amount at which the instrument could be exchanged in a current transaction between willing parties. The three levels of the fair value hierarchy are
as follows:
· Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.
· Level 2 - Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.
· Level 3 - Valuations based on inputs that are unobservable, supported by little or no market activity and that are significant to the fair value of the assets or liabilities. On March 31, 2024 and June 30, 2023, the fair
values of cash and cash equivalents, accounts payable and accrued expenses, and accrued payroll and payroll taxes approximate their carrying
values due to their short-term nature. Segments The Company has two entities or subsidiaries,
Cavitation Technologies, Inc. and its wholly owned subsidiary Hydrodynamic Technology, Inc. Operations of these two subsidiaries are integrated
since they have a similar customer base and the Company has a single sales team, marketing department, customer service department, operations
department, finance and accounting department to support its operations. In accordance with the “Segment Reporting” Topic
of the ASC, the Company’s chief operating decision maker (the Company’s Chief Executive Officer) determined that the Company
has only one reporting unit or segment. Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards
Board (the “FASB”) issued ASU No. 2016-13, Credit Losses – Measurement of Credit Losses on Financial Instruments (“ASU
2016-13”). ASU 2016-13 requires entities to use a forward-looking approach based on current expected credit losses (“CECL”)
to estimate credit losses on certain types of financial instruments, including trade receivables. This may result in the earlier recognition
of allowances for losses. ASU 2016-13 is effective for the Company beginning July 1, 2023. The Company does not believe the new guidance
and related codification improvements was material to its financial position, results of operations and cash flows. Other recent accounting pronouncements issued
by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and
Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated
financial statements. |
