Cavitation Technologies, Inc. Form 10-K

 false 2024 FY 0001376793

 2023-12-31

 2024-09-26

 2024-04-17

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 2024-04-01

 UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 FORM 10-K

 (Mark One)

 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 TRANSITION
 REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934. FROM THE TRANSITION PERIOD FROM _____ TO
 _____.

 For the fiscal year ended June
30, 2024

 Commission file number 000-53239

 Cavitation Technologies, Inc.

 (Exact name of Registrant
as Specified in its Charter)

 Nevada

 20-4907818

 (State or Other Jurisdiction of Incorporation or Organization)

 (I.R.S. Employer Identification No.)

 10019 CANOGA AVENUE, CHATSWORTH, CA LIFORNIA 91311
 (Address, including Zip Code, of Principal Executive Offices)

 ( 818) 718-0905
 (Registrant's Telephone Number, Including Area Code)

 SECURITIES REGISTERED PURSUANT
TO SECTION 12(b) OF THE ACT:

 NONE

 SECURITIES REGISTERED PURSUANT
TO SECTION 12(g) OF THE ACT:

 Title of Each Class:

 Name of Each Exchange on Which Registered:

 Common Stock, $0.001 par value

 Over the Counter (Bulletin Board)

 Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

 Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No

 Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes No

 Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

 Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K, or any amendment to this Form 10-K.

 Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.
See definitions of "large accelerated filer," "accelerated filer", "smaller reporting company" and
"emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

 Large accelerated filer

 Accelerated filer

 Non-accelerated filer

 Smaller reporting company

 Emerging growth company

 If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.

 Indicate by check mark whether the registrant
has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. Yes No

 If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements.

 Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's
executive officers during the relevant recovery period pursuant to §240.10D-1(b).

 Indicate by check mark whether
the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No

 State the aggregate
market value of the voting and non-voting common equity held by non-affiliates of the registrant by reference to the price at which
the common equity was last sold, or of the average bid and asked price of such common equity, as of the last business day of the
registrant's most recently completed second fiscal quarter: $ 5,474,000
as of December 31, 2023 based on the closing price of $0.02 per share and 284,289,740 shares outstanding.

 The registrant had
 284,289,740 shares
of common stock outstanding on September 26, 2024.

 DOCUMENTS INCORPORATED
BY REFERENCE:

 None

INC.

 FORM 10-K ANNUAL REPORT

 FOR THE YEAR ENDED JUNE
30, 2023

 Page

 Item 1. Business

 Item 1A. Risk Factors

 Item 1B. Unresolved Staff Comments

 Item 1C. Cybersecurity

 Item 2. Properties

 Item 3. Legal Proceedings

 Item 4. Mine Safety Disclosures

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

 Item 6. Reserved

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

 Item 7A. Quantitative and Qualitative Disclosures About Market Risk

 Item 8. Financial Statements and Supplementary Data

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

 Item 9A. Controls and Procedures

 Item 9B. Other Information

 Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections

 Item 10. Directors, Executive Officers and Corporate Governance

 Item 11. Executive Compensation

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

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

 Item 14. Principal Accounting Fees and Services

 Item 15. Exhibits, Financial Statement Schedules

 Item 16. Form 10-K Summary

 Signatures

 i

 CAUTIONARY NOTE REGARDING
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
statements are subject to certain risks and uncertainties, both known and unknown, and assumptions.

 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

 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
are the critical components of our business and we have generated all of our 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 Reactor applications and managing the
intellectual property issues associated with new processes and applications.

 Desmet Ballestra Agreement

 On May 14, 2012, we signed
a global R&D, Marketing and Technology License Agreement with Desmet Ballestra Group s.a. (Desmet), a Belgian company
that is actively marketing the NANO Neutralization System, the key component of which is our Nano Reactor to
soybean and other vegetable oil refiners. The Agreement provided Desmet (licensee) a limited, exclusive license and right to develop,
design and supply our NANO Neutralization System which incorporates Nano Reactor devices on
a global basis tools and fats and oleo chemical applications. The agreement expired in May 2015.

 On January 22, 2016, Desmet
and the Company executed a new three year License Agreement with essentially the same terms with the May 2012 agreement that was effective
August 1, 2015. As part of the agreement, Desmet provided, under certain conditions, limited monthly advance payments of $50,000 to be
applied against gross profit share from future sales. The agreement expired in August 2018.

 On October 1, 2018,
Desmet and the Company executed a new three year License Agreement with essentially the same terms with the January 2016 agreement. As
part of the agreement, Desmet provided us under certain conditions, limited monthly advances of $50,000 through October 1, 2021, to be
applied against gross profit share from future sales. The agreement expired in October 2021.

 On October 1, 2021, Desmet
and the Company executed a new three-year License Agreement with essentially the same terms with the October 2018 agreement. As part of
the agreement, Desmet provided the Company monthly advances of $40,000 through November 1, 2024, that was applied as payment from reactor
sales, however, the Company was no longer entitled to gross profit share from future sales.

 On February 15, 2024,
Desmet and the Company terminated the October 2021 agreement and executed a new but similar three year agreement ("February 2024
agreement"). As part of the February 2024 Agreement, Desmet will provide the Company monthly advances of $25,000 through February
2027, subject to limitations, that will be applied as payment from future reactor sales. In addition, Desmet also waived reimbursement
right for the outstanding advances made pursuant to the October 2021 agreement in the aggregate and up to $554,000 except for $56,000,
which was accounted as a credit memo that Desmet used as payment in subsequent sale of reactors.

 Desmet, together with
its affiliates, is a global engineering and equipment supply firm engaged in the development, design and supply of process equipment for
oils and fats processing facilities including vegetable oil refining, biofuel, oleo chemical, seed crushing, surfactant and detergent
markets. Desmet supplies these markets with services based on the latest globally sourced technologies. Desmet has relationships with
major refiners globally. A significant portion of global vegetable oil refineries include major refiners such as Archer Daniels Midland
Company, Cargill, Inc. and Bunge Limited. Desmet has more than 40 sales representatives selling in North America, South America, Europe,
and Asia. Since its founding in 1946, Desmet reports that it has built a global network that includes 1,300 employees, 17 global and 8
representative offices, and more than 6,000 lines in a variety of applications. Desmet operates a separate division for each of the above
markets and the Desmet Oils & Fats division has supplied small and large plants to approximately 1,900 oil millers in 150 countries,
covering over 6,300 process sections.

 Along with Desmet, we
have been working together to accelerate appropriate sales goals and installation process. Our CTi Nano Neutralization Systems is
designed to be used as an add-on process to an existing neutralization system within soybean and other vegetable oil refineries. Desmet's
focus has been on marketing our CTi Nano Neutralization Systems to vegetable oil refiners to help them increase
profits through cost savings and improved oil yields. Desmet purchases our CTi Nano Neutralization Systems from
us and installs them at the refinery as part of an integrated neutralization system. Based on successful commercial implementations, Desmet
guarantees minimum economic benefits to a facility that installs our CTi Nano Neutralization Systems. We are therefore
substantially dependent on Desmet to identify prospects, complete sales contracts, install the system and manage relationships with end-users.

 Additionally, in fiscal
2017 Desmet installed our first Nano Reactor at a bio-diesel production plant in South America. Bio-diesel industry
has been under pricing pressure for a considerable period of time and slow to adopt to newer technologies. We are continuously working
with Desmet pursuing additional sales opportunities in Asia and South America, however, the acceptance of our technology has been slow
and there were no sales generated in our Fiscal 2024 and 2023.

 Enviro Watertek, LLC

 In April 2019, the Company
and Delaware Water Company, LLC (Delaware) formed a limited liability company called Enviro WaterTek LLC ("Enviro","EW").
Enviro is owned 50% by the Company and 50% by Delaware, and the Company accounts for its investment in Enviro under the equity method
of accounting. From 2019 to 2024, Enviro had insignificant operations. This agreement covers our first commercial entrance into industrial
treatment of produced and frac water. Fracking industry has seen a significant growth over the past ten years, reaching daily water consumption
volume of over 58 million barrels per day. Our newly designed Low Pressure Nano Reactor ( LPN) was specifically developed
to be integrated into produced water treatment system along with our proprietary chemical formulations, and has depicted measurable and
quantifiable advantages over industry standard processes and equipment. Our agreement with EW provides for sales on LPN
plus recurring revenue stream based on processing of produced and frac water volumes and utilization. Our agreement with EW has a fifteen-year
term.

 In March 2020, the global
pandemic of COVID-19 had a negative impact on the oil and gas industry worldwide, and has consequently impaired our ability to rapidly
accelerate LPN sales and recurring revenue stream. Our current operations are limited to system trials and have not
produced any meaningful revenue. The system has the capacity to treat approximately 17,000 barrels of produced water per day (BPD).

 In June 2023, the Company
determined that investment in EW was impaired, and as a result, the Company recorded an impairment charge of approximately $1.1 million.
In Fiscal 2024 and 2023, the Company received $0 and $20,000, respectively, from sale of reactors and usage fee.

 Alchemy Beverages, Inc

 In fiscal 2014, Roman
Gordon, one of our shareholders and a former officer, formed a company, Cameo USA LLC (Cameo). Since its formation, Cameo has had no revenue,
no operations, and has had no assets or liabilities. On June 4, 2018, Mr. Gordon contributed his 100% interest in Cameo to Cavitation
Technologies, Inc. As Mr. Gordon had no reasonable and objectively supportable basis in the valuation of his investment in Cameo, there
was no value assigned to the contribution of Cameo.

 On June 29, 2018, we agreed
to license Cameo to Alchemy Beverages Inc. ("ABI"). In addition, we have agreed to provide certain licensing rights related
to our miniature low pressure nano-reactor (MLPN) to be used in developing and manufacturing of small home appliances to enhance alcoholic
beverages. In consideration for these ABI has agreed to issue 19.9% of ABI's outstanding common shares to us (limited to 20 million
shares of ABI). ABI is a private company and in the business of producing and selling alcoholic beverages, equipment, and home appliances.
Prior to this agreement, ABI was independent of CTI and had no relation to us nor to our management.

 Pursuant to the licensing
agreements, ABI will have the exclusive global marketing and distribution rights of Cameo and our patented and patent pending technologies
for the processing of alcoholic beverages. We have agreed to assist in the installation and maintenance of the MLPN to ABI and will receive
royalty payments ranging from 1% to 3% on all net revenues, as defined in our license agreement for the life of the applicable patents.
In addition, we will receive leasing, consulting, and manufacturing fees as defined in the licensing agreement.

 As of June 30, 2024 and the
date of this report, ABI has not generated any sales under Cameo brand. Since June 2018, the Company and ABI have developed a small table
top home appliance unit, Barmuze, utilizing MLPN, allowing consumers to experience a new way of enjoying wines and spirits, utilizing
CTi's patented and patent pending technologies to molecularly restructure alcohol, convert harsh acids to pleasant tasting esters,
and reduce levels of certain impurities commonly present in alcohol.

 During fiscals 2024 and 2023,
there were no sales or royalties generated pertaining to our agreement with Alchemy Beverages, Inc. The investment in ABI has no value
assigned to it, which approximates its fair value.

 Customers Dependence

 We continue to sell our
industrial capacity Nano Reactor and Nano Neutralization System through our strategic partner
Desmet and most of our revenue for the fiscal years ended June 30, 2024 and 2023, was derived from sales of reactors to Desmet. We
have generated no revenue pertaining to our licensing agreement with EW in our fiscal 2024. We had no revenue of LPN
whereas oil production in US had negative impact on oil & gas industry. Oil and gas industry has seen a recovery, while price of
oil has been volatile trading between $69 to $90 per barrel for the last twelve months, and we foresee a great opportunity for our
technology providing a significant upside potential both at the point of sale and recurring revenue stream.

 Sources and availability
of raw materials and the names of principal suppliers

 We have historically sourced
reactor components from various domestic and international suppliers. We do not have any long-term contracts, agreements, or commitments
with any supplier. We believe it would take approximately 30 days to find a new supplier, if necessary.

 Competition

 Our competitors who sell
equipment and engineering services for the vegetable oil refining business are a myriad of companies both large and small that provide
equipment and technology to oil refiners. These include known companies that have longer operating histories, more experience, and stronger
financial capabilities. Competitors include Alfa Laval, and Crown Iron Works as well as many firms that provide advice and services to
small and regional firms. In addition, Arisdyne Systems, a designer of cavitation devices, is marketing a system using similar technology.
The vegetable oil refining business is a highly competitive commodity market in which the lowest-cost producer has the advantage. We intend
to compete by offering solutions that help our clients remain or become a low-cost producer. Because the industry in which we compete
has had limited new technology introduced in the last 50 years, we believe our CTi Nano Neutralization Systems provide
a unique opportunity for refiners to increase margins. We seek to differentiate ourselves by offering solutions based on our proprietary
and patented designs, processes, and applications to help our clients described in our issued and patent pending applications. We compete
by offering solutions that we believe can reduce operating expenses and increase oil yield vs currently applied technologies.

 In addition, our competitors
in produced and frac water treatment application range from local service providers to multi-national global corporations with considerable
financial resources, engineering expertise, established and proven technologies. We believe that LPN is a conceptually
new technology that has not been introduced in the field of water treatment applications. LPN has demonstrated exceptional
results in treating produced and frac water commercially, significantly reducing the usage of hazards chemicals during the process, meanwhile,
achieving desirable water quality for industrial re-use or disposal, although, the acceptance of the technology has been slow.

 Patents

 As of June 30, 2024,
our portfolio of patents included 16 issued patents in the United States and 11 issued patents internationally. Our patents cover
multiple process and applications of our technology in vegetable oil refining, production of biodiesel, treatment of process and
industrial water, upgrade of hydrocarbons and enhancing of alcoholic beverages. We continuously develop new technologies and
applications, as we have filed patent applications for Low Pressure Nano-Reactors LPN. LPN is a
highly efficient homogenizer and emulsifier that can be utilized in multiple fluids processing applications.

 We plan on continuing to
invest in research and development and file for new and improved patents.

 Royalty Agreements

 On July 1, 2008, our wholly
owned subsidiary entered into Patent Assignment Agreements with two parties, our former President as well as former Chief Executive Officer
(CEO) who currently serves as our Technology Senior Manager, where certain devices and methods involved in our hydrodynamic cavitation
processes invented by the former President and former CEO/current Technology Senior Manager have been assigned to the subsidiary. In exchange,
that subsidiary agreed to pay a royalty of 5% of gross revenues to each of the former President and former CEO/current Technology Senior
Manager for licensing of the technology and leasing of the related equipment embodying the technology. These agreements were subsequently
assumed by us on May 13, 2010, from our subsidiary. Our former CEO/current Technology Senior Manager and former President both waived
their rights to receive royalty payments that have accrued, or that may accrue, on any gross revenue generated through June 30, 2024.

 On April 30, 2008 and
as amended on November 22, 2010, our wholly owned subsidiary entered into an employment agreement with its former Director of Chemical
and Analytical Department (the "Inventor") to pay, in the first year, an amount equal to 5% of actual gross revenue received
by us on any patent for which the Inventor was a legally named inventor, and, in each subsequent year, 3% of actual gross revenue received
by us on any such patent. Since entering into that employment agreement, and during the term of this employment agreement, we have not
recognized any revenue on any patents for which the Inventor was a legally named inventor.

 Governmental Approval
and Regulations and Environmental Compliance

 Due to the nature of our
products, we have incurred no costs with respect to environmental compliance with federal, state, and local laws. To our knowledge, our
products do not require governmental approval, and we do not foresee that governmental regulations will have a material impact on our
business.

 Employees

 As of June 30, 2024, we had
two full-time employees and had engaged several consultants and independent contractors over the past year. Members of our technical team
are comprised of experienced professionals who are chemists, civil, chemical, and mechanical engineers with expertise in hydrodynamic
cavitation, nano technology and water treatment. These individuals hold degrees in Civil, Chemical, and Mechanical Engineering.

 Research and Development Expenditures

 During the fiscal years ended
June 30, 2024 and 2023, we spent $61,00 and $3,000, respectively, on research and development activities.

 ITEM 1A. RISK FACTORS

 Not applicable for smaller reporting companies.

 ITEM 1B. UNRESOLVED STAFF COMMENTS

 None.

 ITEM 1C. CYBERSECURITY

 The manner in which we store and/or transmit sensitive
data in connection with our research and development and our day-to-day operations. We recognize the importance of assessing, identifying,
and managing material risks associated with cybersecurity threats, as such term is defined in Item 106(a) of Regulation S-K. These risks
include, among other things: operational risks, intellectual property theft, fraud, extortion, harm to employees and violation of data
privacy or security laws.

 Identifying and assessing cybersecurity risk is integrated
into our overall risk management systems and processes. Cybersecurity risks related to our business, technical operations, privacy and
compliance issues are identified through review by our internal information technology governance, risk and compliance policies. To defend,
detect and respond to cybersecurity incidents, we, among other things: may conduct proactive privacy and cybersecurity reviews of systems
and applications, audit applicable data, conduct employee training, monitor emerging laws and regulations related to data protection and
information security and implement appropriate changes.

 Our risk management program also assesses third party
risks, and we perform third-party risk management to identify and mitigate risks from our vendors, suppliers, and other business partners
associated with our use of third-party service providers. Cybersecurity risks are evaluated when determining the selection and oversight
of applicable third-party service providers and potential fourth-party risks when handling and/or processing our employee, business or
customer data.

 ITEM 2. PROPERTIES

 Our corporate
headquarter is located in Chatsworth, California, with an area of approximately 5,000 square foot facility, which includes office
space and an area to conduct research and development. Our lease agreement for this space will end in February 2025. Our monthly
rent payments approximate $7,000. We do not anticipate any material difficulties with the renewal of our rental agreement when it
expires or in securing replacement facilities on commercially reasonable terms.

 ITEM 3. LEGAL PROCEEDINGS

 The Company may be involved
in certain legal proceedings that arise from time to time in the ordinary course of its business. The Company records accruals for contingencies
to the extent that management concludes that the occurrence is probable and that the related amounts of loss can be reasonably estimated.
Legal expenses associated with the contingency are expensed as incurred.

 The Company is not aware
of any pending litigations.

 ITEM 4. MINE
SAFETY DISCLOSURES

 Not applicable.

 ITEM 5. MARKET
FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 Common Stock

 Our Common Stock is traded
on the OTCQB Market under the symbol CVAT.

 Holders

 As of September 26, 2024,
there were 99 holders of record of our common stock. This does not reflect the number of persons or entities who hold stock in nominee
or "street" name through various brokerage firms.

 Dividend Policy

 We have neither declared
nor paid any dividends on our Common Stock in the preceding two fiscal years. We currently intend to retain future earnings, if any, to
fund ongoing operations and finance the growth and development of our business and, therefore, do not anticipate declaring or paying cash
dividends on our Common Stock for the foreseeable future. Any future decision to declare or pay dividends will be at the discretion of
the Board of Directors and will be dependent upon our financial condition, results of operations, capital requirements, and such other
factors as the Board of Directors deems relevant.

 Issuance of unregistered
Securities

 None.

 Issuer Purchase of Equity
Securities

 None.

 ITEM 6. [RESERVED]

 ITEM 7. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 The following discussion
and analysis should be read in conjunction with our financial statements and the related notes. This discussion contains forward-looking
statements based upon current expectations that involve risks and uncertainties, such as its plans, objectives, expectations and intentions.
Actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements.

 Overview of Our Business

 We are a Nevada corporation
originally incorporated under the name Bio Energy, Inc. On January 29, 2007, we incorporated a wholly owned subsidiary, Hydrodynamic Technology,
Inc. as a California corporation.

 We have developed, patented,
and commercialized proprietary technology that can be used for processing of various industrial and consumer-oriented fluids. Our patented Nano
Reactor is the critical components of the 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 that LPN 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 reactor MLPN has become an integral part of Barmuze, a small home
appliance device for enhancing taste and extracting unwanted impurities typically present in alcoholic beverages.

 During the year ended June
30, 2024, we recorded revenue of $1,363,000 and generated net income of $439,000.

 Inflation and potential
recession

 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.

 Management's Plan
of Operation

 We are continuously
engaged in manufacturing of our Nano Reactor and Nano Neutralization Systems which are designed
to help refine vegetable oils such as soybean, canola and rapeseed. Additionally, we have developed LPN 's that
provide commercial opportunity in industrial water treatment, enhancement of alcoholic beverages, and MLPN being utilized in
a consumer small home appliance.

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.

 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.

 In October 2018, we
signed a three-year global R and D, Marketing and Technology License Agreement ("TLA") with Desmet for
the sale and licensing of our Nano Reactor and Nano 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.

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.

 There was no revenue
produced from our agreements with Enviro Watertek, LLC and Alchemy Beverages, Inc.

 We anticipate that we
may need additional funding, and we may attempt to raise additional debt and/or equity financing to fund operations and to provide additional
working capital. However, there is no assurance that such financing will be consummated or obtained in sufficient amounts necessary to
meet our needs, or that we will be able to meet our future contractual obligations. Should management fail to obtain such financing, we
may curtail its operations.

 Critical Accounting Policies
and Revenue Recognition

 Our discussion and analysis
of our financial condition and results of operations are based upon our consolidated financial statements which have been prepared in
accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial
statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and
the reported amounts of revenues and expenses. The accounting policies and estimates described below are those we consider most critical
in preparing its consolidated financial statements. The following is a review of the accounting policies and estimates that include significant
judgments made by management using information available at the time the estimates are made. However, these estimates could change materially
if different information or assumptions were used instead.

 Note 1 of the accompanying
consolidated financial statements includes a summary of significant accounting policies, estimates, and methods used in the preparation
of our financial statements. Accounting estimates are an integral part of the preparation of financial statements and are based on judgments
by management using its knowledge and experience about the past and current events and assumptions regarding future events, all of which
we consider to be reasonable. These judgments and estimates reflect the effects of matters that are inherently uncertain and that affect
the carrying value of our assets and liabilities, the disclosure of contingent liabilities and reported amounts of expenses during the
reporting period.

 Revenue Recognition

 The Company follows the guidance
of Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers. 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
Reactor and LPN 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.

 For the license
fee revenue, revenue is recognized when the Company satisfies the performance obligation based on the related license agreement.

 In addition, the Company
also recognizes revenues from usage fees of certain reactors. Usage fees are recognized based on actual usage by the customer.

 Leases

 The Company accounts for
leases under guidance of Accounting Standards Codification ("ASC") 842, which requires an entity to recognize a right-of-use
asset and a lease liability for virtually all leases. Leases with an initial term of 12 months or less are not recorded on the balance
sheet. The Company accounts for the lease and non-lease components of its office lease as a single lease component. Lease expense is recognized
on a straight-line basis over the lease term.

 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. The Company
assesses its investment in equity method investments for recoverability, and if it is determined that a loss in value of the investment
is other than temporary, the Company writes down the investment to its fair value. Based on Management's assessment, the value of
its equity method investment was impaired as of June 30, 2023 and as such, recorded an impairment charge of $1,112,000. As of June 30,
2024 and 2023, the remaining value of its investments amounted to a de minimus amount of $1,000, respectively.

 Share-Based Compensation

 The Company periodically
issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs.
The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided
by the Financial Accounting Standards Board whereas the value of the award is measured on the date of grant and recognized over the vesting
period. The Company accounts for stock option and warrant grants issued and vesting to non- employees in accordance with the authoritative
guidance of the Financial Accounting Standards Board whereas the value of the stock compensation is based upon the measurement date as
determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to
earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period
on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants
are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.

 Recent Accounting
Pronouncements

 See Note 1 of the financial
statements for discussion of recent accounting pronouncements.

 Results of Operations

 Below is summary comparing
fiscal 2024 and fiscal 2023.

 For the Years Ended

 2024

 2023

 $ Change

 % Change

 Revenue

 $
 1,363,000

 $
 413,000

 $
 950,000

 230.0%

 Revenue-related party

 –

 (20,000
)

 (100.0)%

 Cost of revenue

 (156,000
)

 (121,000
)

 (35,000
)

 28.9%

 Gross profit

 1,207,000

 312,000

 895,000

 286.9%

 General and administrative expenses

 708,000

 1,195,000

 (487,000
)

 (40.8)%

 Research and development expenses

 61,000

 3,000

 58,000

 1933.3%

 Total operating expenses

 769,000

 1,198,000

 (429,000
)

 (35.8)%

 Income (loss) from operations

 438,000

 (886,000
)

 1,324,000

 149.4%

 Loss from equity method investment

 –

 (1,148,000
)

 1,148,000

 100%

 Interest income (expense), net

 1,000

 (6,000
)

 7,000

 116.7%

 Net income (loss)

 $

 $
 (2,040,000
)

 $
 2,479,000

 121.5%

 Revenue

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.

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.

 Cost of Sales

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.

 General and administrative
expenses

 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.

 Research and development
expenses

 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.

 Loss from equity method
investment

 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.

 Interest income (expense),
net

 Interest income (expense)
increased by $7,000, this is primarily due to an adjustment made to accrued interest by the noteholder.

 Net Loss

 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.

 Liquidity and Capital
Resources

 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.

 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.

 For the year ended June
30, 2023 cash used in operating activities was $423,000.

 We utilized cash in financing
activities of $11,000 for the year ended June 30, 2024, for the repayment of notes payable.

 Going concern

 As of June 30, 2024,
we had 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.

 Management's plan
is to generate income from operations by continuing to license its technology globally, including our agreements with EW and ABI.

 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.

 Off-balance Sheet Arrangements

 We have no off-balance sheet
arrangements that have or are reasonably likely to have a current or future effect on its financial condition, revenues or expenses, results
of operations, liquidity, capital expenditures or capital resources.

 ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 Not applicable for Smaller
Reporting Companies.

 ITEM 8. FINANCIAL STATEMENTS
AND SUPPLEMENTARY DATA

 Page

 Report of the Independent, Registered Public Accounting firm PCAOB # 572

 Consolidated Balance Sheets as of June 3 0, 202 4 and June 30, 202 3

 Consolidated Statements of Operations for the years ended June 30, 2024 and June 3 0, 202 3

 Consolidated Statements of Changes in Stockholders' Equity (Deficit) for the years ended June 30, 2024 and June 30, 2023

 Consolidated Statements of Cash Flows for the years ended June 30, 2024 and June 30, 2023

 Notes to the Consolidated Financial Statements

 REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

 To the Stockholders and Board of Directors

Cavitation Technologies, Inc.

 Chatsworth, CA

 Opinion on the Consolidated
Financial Statements

 We have audited the accompanying
consolidated balance sheets of Cavitation Technologies, Inc. (the "Company") as of June 30, 2024 and 2023, the related consolidated
statements of operations, changes in stockholders' equity (deficit), and cash flows for the years then ended, and the related notes
(collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements
present fairly, in all material respects, the financial position of the Company as of June 30, 2024 and 2023, and the results of their
operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States
of America.

 Going Concern

 The accompanying consolidated
financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1, the Company
has incurred recurring operating losses and used cash in operations since inception, and has a stockholders' deficit at June 30,
2024. These matters raise substantial doubt about the Company's ability to continue as a going concern. Management's plans
in regard to these matters are also described in Note 1 to the financial statements. These consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

 Basis for Opinion

 These consolidated financial
statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's
consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight
Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We conducted our audits in
accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not
required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we
are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion
on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

 Our audits included performing
procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures
in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for
our opinion.

 Critical Audit Matter

 Critical audit matters
are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to
the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our
especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.

 We have served as the Company's
auditor since 2013.

 /s/ Weinberg & Company, P.A.

 Los Angeles, California

INC.

CONSOLIDATED BALANCE SHEETS

 June 30, 2024

 June 30, 2023

 ASSETS

 Current assets:

 Cash and cash equivalents

 $
 179,000

 $
 18,000

 Prepaid expenses

 16,000

 –

 Total current assets

 195,000

 18,000

 Property and equipment, net

 –

 1,000

 Equity method investment

 1,000

 1,000

 Operating lease right-of-use asset

 42,000

 113,000

 Other assets

 10,000

 10,000

 Total assets

 $
 248,000

 $
 143,000

 LIABILITIES AND STOCKHOLDERS' DEFICIT

 Current liabilities:

 Accounts payable and accrued expenses

 $
 129,000

 $
 120,000

 Accrued payroll and payroll taxes – related parties

 414,000

 280,000

 Notes payable

 9,000

 5,000

 Advances from distributor

 –

 391,000

 Operating lease liability, current portion

 46,000

 68,000

 Total current liabilities

 598,000

 864,000

 Notes payable, non-current

 130,000

 145,000

 Operating lease liability, non-current portion

 –

 53,000

 Total liabilities

 728,000

 1,062,000

 Commitments and contingencies

 –

 –

 Stockholders' deficit:

 Preferred stock, $ 0.001 par
 value, 10,000,000
 shares authorized, no shares
 issued and outstanding as of June 30, 2024 and 2023.

 –

 –

 Common stock, $ 0.001
 par value, 1,000,000,000
 shares authorized, 284,289,740
 shares issued and outstanding as June 30, 2024 and 2023.

 284,000

 284,000

 Additional paid-in capital

 26,083,000

 26,083,000

 Accumulated deficit

 ( 26,847,000
)

 ( 27,286,000
)

 Total stockholders' deficit

 ( 480,000
)

 ( 919,000
)

 Total liabilities and stockholders' deficit

 $
 248,000

 $
 143,000

 See accompanying notes to
the consolidated financial statements

INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

 For the Years Ended

 2024

 2023

 Revenue – Nano reactors

 $
 865,000

 $
 413,000

 Revenue – license fee

 498,000

 –

 Revenue – related party

 –

 Total revenue

 1,363,000

 433,000

 Cost of revenue

 ( 156,000
)

 ( 121,000
)

 Gross profit

 1,207,000

 312,000

 General and administrative expenses

 708,000

 1,195,000

 Research and development expenses

 61,000

 3,000

 Total operating expenses

 769,000

 1,198,000

 Income (loss) from operations

 438,000

 ( 886,000
)

 Other Income (Expense)

 Loss from equity method investment

 –

 ( 1,148,000
)

 Interest income (expense), net

 1,000

 ( 6,000
)

 Net income (loss)

 $

 $
 ( 2,040,000
)

 Net income (loss) per share

 Basic and diluted

 $
 0.00

 $
 ( 0.01
)

 Weighted average shares outstanding,

 Basic and diluted

 284,289,740

 281,693,701

 See accompanying notes to
the consolidated financial statements

INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

 YEARS ENDED JUNE 30, 2024
AND 2023

 Common Stock

 Additional
 Paid-in

 Accumulated

 Shares

 Amount

 Capital

 Deficit

 Total

 Balance at June 30, 2022

 276,698,831

 $
 277,000

 $
 26,005,000

 $
 ( 25,246,000
)

 $
 1,036,000

 Cashless exercise of warrants

 4,090,909

 4,000

 ( 4,000
)

 –

 –

 Fair value of common stock issued for services

 3,500,000

 3,000

 82,000

 –

 85,000

 Net loss

 –

 –

 –

 ( 2,040,000
)

 ( 2,040,000
)

 Balance at June 30, 2023

 284,289,740

 284,000

 26,083,000

 ( 27,286,000
)

 ( 919,000
)

 Net income

 –

 –

 –

 Balance at June 30, 2024

 284,289,740

 $
 284,000

 $
 26,083,000

 $
 ( 26,847,000
)

 $
 ( 480,000
)

 See accompanying notes to
the consolidated financial statements

INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 Years Ended June 30,

 2024

 2023

 Operating activities:

 Net income (loss)

 $

 $
 ( 2,040,000
)

 Adjustments to reconcile net income (loss) to net cash generated by (used in) operating activities:

 Depreciation

 1,000

 3,000

 Fair value of common stock issued for services

 –

 85,000

 Inventory reserve

 –

 48,000

 Loss from equity method investment

 –

 1,148,000

 Effect of changes in:

 Accounts receivable

 –

 1,000

 Prepaid expenses

 ( 16,000
)

 38,000

 Operating lease right-of-use assets

 71,000

 67,000

 Accounts payable and accrued expenses

 9,000

 ( 15,000
)

 Accrued payroll and payroll taxes – related parties

 134,000

 –

 Customer advances

 ( 391,000
)

 311,000

 Operating lease liabilities

 ( 75,000
)

 ( 69,000
)

 Net cash generated by (used in) operating activities

 172,000

 ( 423,000
)

 Financing activities:

 Repayment of notes payable

 ( 11,000
)

 –

 Cash used in financing activities

 ( 11,000
)

 –

 Net increase (decrease) in cash and cash equivalents

 161,000

 ( 423,000
)

 Cash and cash equivalents, beginning of period

 18,000

 441,000

 Cash and cash equivalents, end of period

 $
 179,000

 $
 18,000

 Supplemental disclosures of cash flow information:

 Cash paid for interest

 $
 –

 $
 3,000

 Cash paid for income taxes

 $
 –

 $
 –

 See accompanying notes to
the consolidated financial statements

INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 2024 AND 2023

 Note 1 – Organization
and Summary of Significant Accounting Policies

 Cavitation
Technologies, Inc. ("the Company," "CTi," "we," "us," and "our") is a Nevada
corporation originally incorporated in January 2007 under the name Bio Energy, Inc. The Company has developed, patented, and commercialized
proprietary technology used in our Nano Reactor and LPN liquid processing applications.

 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
June 30, 2024, the Company had a stockholders' deficit of $ 480,000, a working capital deficiency of $ 403,000
 and accumulated deficit of $ 26,847,000.
In addition, the Company has had a history of operating losses. These factors, among others, raise substantial doubt about the Company's
ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that may result
from an inability of the Company to continue as a going concern.

 As of June
30, 2024, the Company has cash in the amount of $ 179,000.
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 December, 2024.

 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.

 During the year ended June 30, 2024, the COVID-19
pandemic did not have a material net impact on our operating results. The Company has not observed any impairments of its assets or a
significant change in the fair value of its assets due to the COVID-19 pandemic. At this time, it is not possible for the Company to predict
the duration or magnitude of the adverse results of the outbreak and its effects on the Company's business or results of operations,
financial condition, or liquidity.

 Principles of Consolidation

 The consolidated
financial statements include the accounts of Cavitation Technologies, Inc. and its wholly owned subsidiary Hydrodynamic Technology, Inc.
Intercompany transactions and balances have been eliminated in consolidation.

 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 include
estimates for reserves for inventory obsolescence, valuation of our equity method investments, assumptions used in valuing our stock options,
stock warrants and common stock issued for services and valuation allowance for our deferred tax asset, among other items. Actual results
could differ from these estimates.

 Advances from Distributor

 Advances from distributor are contract liabilities
and represent consideration received from Desmet, customer and distributor, under revenue contracts for which the Company has not yet
delivered or completed its performance obligation to the customer. Contract liabilities are recognized over the contract period.

 Revenue Recognition

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.

 For the license fee revenue, revenue is recognized
when the Company satisfies the performance obligation based on the related license agreement and
collectability is certain.

 In addition,
the Company also recognizes revenues from usage fees of certain reactors. Usage fees are recognized based on actual usage by the customer
and collectability is certain.

 Cash and
Cash Equivalents

 The
Company considers highly liquid investments with original maturities of three months or less to be cash equivalents. At June 30,
2024 and 2023, the Company had no
cash equivalents.

maintains its cash with one domestic financial institution. From time to time, cash balances in this domestic bank may exceed federally
insured limits provided by the Federal Deposit Insurance Corporation ("FDIC") of up to $250,000.

 As of June
30, 2024, Company had no deposits in excess of federally insured limit with one bank. The Company believes that no significant concentration
of credit risk exists with respect to this cash balances because of its assessment of the creditworthiness and financial viability of
this financial institution.

 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. Based on Management's assessment, the value of its equity method investment was impaired as of
June 30, 2023 and as such, recorded an impairment charge of $ 1,112,000.
As of June 30, 2024 and 2023, the remaining de minimus value of its investments was $ 1,000.

 Income Taxes

follows the asset and liability method of accounting for income taxes. The Company recognizes deferred tax assets and liabilities to reflect
the estimated future tax effects, calculated at anticipated future tax rates, of future deductible or taxable amounts attributable to
events that have been recognized on a cumulative basis in the financial statements. A valuation allowance related to a deferred tax asset
is recorded when it is more likely than not that some portion of the deferred tax asset will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment.

 Leases

accounts for its leases in accordance with the guidance of FASB ASC 842, Leases. The Company determines whether a contract is, or contains,
a lease at inception. Right-of-use assets represent the Company's right to use an underlying asset during the lease term, and lease
liabilities represent the Company's obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities
are recognized at lease commencement based upon the estimated present value of unpaid lease payments over the lease term. The Company
uses its incremental borrowing rate based on the information available at lease commencement in determining the present value of unpaid
lease payments (see Note 4).

 Fair Value Measurement

 FASB 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.

 In addition
to defining fair value, the standard expands the disclosure requirements around fair value and establishes a fair value hierarchy for
valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value
are observable in the market. Each fair value measurement is reported in one of the three levels which are determined by the lowest level
input that is significant to the fair value measurement in its entirety. These levels are:

 Level 1 - inputs
are based upon unadjusted quoted prices for identical instruments traded in active markets.

 Level 2 - inputs
are based upon significant observable inputs other than quoted prices included in Level 1, such as quoted prices for identical or similar
instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable
in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 Level 3 - inputs
are generally unobservable and typically reflect management's estimates of assumptions that market participants would use in pricing
the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted
cash flow models, and similar techniques.

 As of June
30, 2024, and 2023, the carrying value of certain accounts such as accounts payable, accrued expenses and accrued payroll approximates
their fair value due to the short-term nature of such instruments. The carrying value of our note payable approximate their fair value due to interest rate of the note.

 Share-Based
Compensation

 We periodically
issue stock options, warrants and common stock to employees and non-employees for services and capital raising transactions. We account
for share-based payments under the guidance of FASB ASC 718, which requires the measurement and recognition of compensation expense for
all share-based payment awards made to employees, officers, directors, and consultants, including employee stock options, based on estimated
fair values. We estimate the fair value of stock option and warrant awards to employees and directors on the date of grant using an option-pricing
model, and the value of the portion of the award that is ultimately expected to vest is recognized as expense over the required service
period in our Statements of Operations. We estimate the fair value of restricted stock awards to employees and directors using the market
price of our common stock on the date of grant, and the value of the portion of the award that is ultimately expected to vest is recognized
as expense over the required service period in our Statements of Operations. Recognition of compensation expense for non-employees is
in the same period and manner as if the Company had paid cash for the services.

 Under ASC 718,
the amount of cash or other assets transferred (or liabilities incurred) to repurchase an equity award shall be charged to equity, to
the extent that the amount paid does not exceed the fair value of the equity instruments repurchased at the repurchase date. Any excess
of the repurchase price over the fair value of the instruments repurchased shall be recognized as additional compensation cost.

 Advertising Costs

 Advertising costs, including marketing expense, incurred
in the normal course of operations are expensed as incurred. Advertising expenses amounted to $ 9,000
 and $ 44,000 for the years ended
June 30, 2024 and 2023 respectively and was reported as part of General and administrative expenses in the accompanying Consolidated
Statements of Operations.

 Research and Development Costs

 Research and
development expenses relate primarily to the development, design, testing of preproduction prototypes and models, compensation, and consulting
fees, and are expensed as incurred. Total research and development costs recorded during the years ended June 30, 2024 and 2023 amounted
to $ 61,000 and $ 3,000, respectively.

 Warranty Policy

 The Company provides a limited warranty
with every set of reactors sold, typically 2 to 5 years. The Company has not experienced significant claims under its warranty
policy, and management determined no
accrual for warranty reserve was necessary at June 30, 2024 and 2023.

 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 income (loss) required for purposes of computing diluted earnings per share. At June 30, 2024 and 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 as the exercise price of these warrants were greater
than the stock price of the Company common stock.

 Schedule of anti-dilutive shares

 June 30, 2024

 June 30, 2023

 Warrants

 28,841,323

 53,657,234

 Concentrations

 During the year ended June 30, 2024, we
recorded 100 %
of our revenue from Desmet Ballestra (Desmet). During the year ended June 30, 2023, we recorded 95 %
of our revenue from Desmet and 5 %
from Enviro Watertek, LLC (EW) (see Note 2).

 As of June 30, 2024, three vendors accounted
 19 %, 15 % and 11 % of the Company's accounts payable. As of June 30, 2023, one vendor accounted 38 % of the Company's accounts
payable.

 At June 30, 2024 and 2023, we had no
receivables from our customers.

 Segments

operates in one segment for the development and distribution of our products. In accordance with the "Segment Reporting"
Topic of the ASC, the Company's chief operating decision maker has been identified as the Chief Executive Officer, who reviews
operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which
is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and
to report annually entity-wide disclosures about products and services and major customers. All material operating units qualify for
aggregation under "Segment Reporting" due to their similar customer base, single sales team, marketing department, customer
service department, operations department, finance and accounting department to support its operations and similarities in: economic
characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates
in one segment, all financial information required by "Segment Reporting" can be found in the accompanying financial statements.

 Inflation

 The continuing impact of higher inflation, the actions by the Federal
Reserve to address inflation, create uncertainty about the future economic environment which will continue to evolve and, we believe,
has not materially impacted the Company's business in fiscal 2024. The implications of higher government deficits and debt, tighter
monetary policy, and potentially higher long-term interest rates may drive a higher cost of capital for the business and an increase in
the Company's operating expenses.

 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 became effective for the Company beginning July 1, 2023. The adoption of this guidance was not material
to its financial position, results of operations and cash flows of the Company.

 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.

 Note 2 – Contracts
with Desmet Ballestra

 In October 2021, the Company
signed a three-year global Research and Development, Marketing and Technology License Agreement ("TLA") with Desmet Ballestra
("Desmet") for the sale and licensing of the Company's nano reactors. This agreement was a continuation of the similar
TLA agreements the Company signed with Desmet in fiscals 2012, 2016 and 2018.

 As part of the agreement, Desmet provided the Company monthly advances, subject to certain
limitations, of $40,000 to be applied against future sales of reactors. As of June 30, 2022, outstanding advances from Desmet
amounted to $ 80,000.

 During the year ended June 30, 2023, pursuant to this October 2021 TLA agreement, the Company received
advances from Desmet totaling $ 724,000 and recognized revenues from sale of Nano Reactors totaling $ 413,000. As of June 30, 2023,
outstanding advances from Desmet amounted to $ 391,000.

 On
February 15, 2024, the Desmet and the Company terminated the October 2021 TLA agreement and entered into a new three-year Technology
License Agreement ("February 2024 TLA") with Desmet. The February 2024 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 February 2024 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 February 2024 TLA, Desmet also agreed to provide advances
of $25,000 per month, subject to limitations. The advances will then be applied as payment against future sales of reactors to
Desmet. In addition, Desmet also waived its right to collect certain outstanding advances of $498,000 that were then waived under
the October 2021 TLA agreement and as result, the Company recognized licensing revenue of $ 498,000
to account for the extinguishment of these advances. The TLA is the principal agreement between the Company and Desmet and the basis
for revenue recognition for the Company. As such, the Company has determined that the inherent characteristics of the waiver of the
$498,000 are revenue related.

 During the year ended June 30, 2024, pursuant
to these TLA agreements, the Company received advances from Desmet totaling $ 972,000 and recognized revenues from sale of Nano Reactors
totaling $ 865,000. As of June 30, 2024, there was no outstanding advances from Desmet.

 Note 3 - Investment in Equity
Method Investments

 In April 2019,
the Company and an unrelated entity, Delaware Water Company, LLC (Delaware) formed a limited liability company called Enviro WaterTek
LLC ("Enviro"). Enviro is owned 50% by the Company and 50% by Delaware, and the Company accounts for its investment in Enviro
under the equity method in accordance with ASC 323 as the Company's investments in Enviro, an unconsolidated entity and for which
it has the ability to exercise significant influence but not control. From inception up to June 30, 2024, Enviro had no operations.

 In September
2021, the Company and Delaware entered into a separate agreement under Enviro for a specific project (referred to as "Ameredev").
Delaware has certain contracts in place to provide recycled water to operators of certain active oil and gas wells. Under the agreement,
the Company contributed $1.2 million that was used by Ameredev to increase the capacity of certain pipelines and water treatment facilities
operated by Delaware. Pursuant to the agreement, for each barrel of recycled water that Ameredev sells, Delaware will receive $0.10 per
barrel, and the Company will receive $0.05 per barrel (referred to as usage fees), with the balance of net income (loss) from Ameredev
being allocated 70% to Delaware and 30% to the Company. The Ameredev agreement will terminate the earlier of three years (unless extended
by unanimous agreement of the Board and Members of Ameredev) from the date of the agreement or by unanimous agreement of the Board and
Members of Ameredev.

 During the
year ended June 30, 2023, the Company recorded total revenues from Ameredev of $ 20,000
from usage fees. In addition, the Company also recorded a loss from equity method investment of $ 36,000
to account for the Company's 30% share in the net loss of Ameredev.

 Based upon
the operations of Ameredev and the facts and circumstance of the industry it operates, due to a number of factors, Management has
concluded that it was no longer possible to determine reasonable and objectively supportable projections and estimates with regards
to the recoverability of the equity method investment. As such, at June 30, 2023, the Company determined the equity method
investment was impaired and recorded an additional $ 1,112,000
in loss to its investment. Total loss from equity method investment for the year ended June 30, 2023 was $ 1,148,000.

 During the
year ended June 30, 2024, Ameredev's operation was limited and Company had no revenues from Ameredev.

 The following
table summarizes the activity of the Company's equity method investment:

 Schedule of equity method investment

 Amount

 Balance at June 30, 2022

 $
 1,149,000

 Contributions to equity method investment

 –

 Loss from Company's 30% share in the net loss of Ameredev

 ( 36,000
)

 Impairment of equity method investment

 ( 1,112,000
)

 Distribution from equity method investment

 –

 Balance at June 30, 2023

 1,000

 Contributions to equity method investment

 –

 Loss from Company's 30% share in the net loss of Ameredev

 –

 Impairment of equity method investment

 –

 Distribution from equity method investment

 –

 Balance at June 30, 2024

 $
 1,000

 Note 4 – Operating
Lease

leases certain warehouse and corporate office space under an operating lease agreement. We determine if an arrangement is a lease at inception.
Lease assets are presented as operating lease right-of-use assets and the related liabilities are presented as lease liabilities in our
consolidated balance sheets.

 Operating lease
right-of-use ("ROU") assets and liabilities are recognized at commencement date based on the present value of lease payments
over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our
obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in lease arrangements is not readily
determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company's
incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU
asset includes any lease payments made and excludes lease incentives.

 The components
of lease expense and supplemental cash flow information related to leases for the period are as follows:

 Schedule of components
of lease expense and supplemental cash flow information related to leases

 2024

 2023

 Lease costs:

 Operating lease (included in general and administrative in the Company's consolidated statement of operations)

 $
 76,000

 $
 76,000

 Other information:

 Cash paid for amounts included in the measurement of lease liabilities

 $
 78,000

 $
 72,000

 Weighted average remaining lease term – operating leases (in years)

 0.6

 1.6

 Average discount rate – operating leases

 4 %

 4 %

 The supplemental balance sheet information
 related to leases for the period is as follows:

 Long-term right-of-use assets

 $
 42,000

 $
 113,000

 Short-term operating lease liabilities

 $
 46,000

 $
 68,000

 Long-term operating lease liabilities

 –

 53,000

 Total operating lease liabilities

 $
 46,000

 $
 121,000

 Supplemental cash flow information
related to the lease liabilities are as follows:

 Schedule of supplemental cash flow information
related to the lease liabilities

 Amount

 Year Ending June 30:

 2025

 $
 47,000

 Total lease payments

 47,000

 Less: Imputed interest/present value

 ( 1,000
)

 Present value of lease liabilities

 $
 46,000

 Note 5 - Property and Equipment

 Property and
equipment consist of the following:

 Schedule of property and
equipment

 2024

 2023

 Leasehold improvement

 $
 2,000

 $
 2,000

 Furniture

 27,000

 27,000

 Office equipment

 2,000

 2,000

 Equipment

 306,000

 306,000

 Systems

 187,000

 187,000

 524,000

 524,000

 Less: Accumulated depreciation and amortization

 ( 524,000
)

 ( 523,000
)

 Property and equipment, net

 $
 –

 $
 1,000

 Depreciation
expense for the years ended June 30, 2024 and 2023 amounted to $ 1,000
and $ 3,000,
respectively and was recorded as part of General and Administrative expenses in the accompanying Consolidated Statements of
Operations.

 Note 6 – Related Party
Transactions

 Accrued Payroll and Payroll Taxes

 In prior periods, the Company accrued salaries and
estimated payroll taxes due to a former officer of the Company. As of June 30, 2023, total accrued payroll and payroll taxes-related parties
amounted $ 280,000.

 During the year ended June 30, 2024, the Company accrued
the payroll of an officer of the Company amounting to $ 134,000.

 As of June 30, 2024, total accrued payroll and payroll
taxes-related parties amounted to $ 414,000.

 Consulting Fees

 The Company recognized consulting fees to a member
of the Company's Board of Directors amounting to $ 8,000 and $ 8,000 for the years ended June 30, 2024 and 2023, respectively.

 Note
7 – Note Payable

 Schedule of notes payable

 2024

 2023

 Note payable - EIDL

 $
 139,000

 $
 150,000

 Disclosed as:

 Short-term note payable

 9,000

 5,000

 Long-term note payable

 130,000

 145,000

 Total note payable

 $
 139,000

 $
 150,000

 In July 2020, the Company received a loan of $ 150,000
 from the SBA under its Economic Injury Disaster Loan (EIDL) assistance program. The EIDL loan is payable over 30 years, bears
interest at a rate of 3.75 %
per annum and secured by all tangible and intangible property of the Company. As of June 30, 2024 and 2023, the outstanding balance of
the note payable was $ 139,000
 and $ 150,000,
respectively.

 The expected future principal payment of note
payable June 30, 2024, is as follows:

 Future minimum payments on note payable

 Year Ending

 Amount

 June 30, 2025

 $
 9,000

 June 30, 2026

 9,000

 June 30, 2027

 9,000

 June 30, 2028

 9,000

 June 30, 2029 and thereafter

 103,000

 Total

 $
 139,000

 Note 8 - Stockholders'
Deficit

 Preferred Stock

 On March 17,
2009, the Company filed an Amended and Restated Articles of Incorporation and created two new series of preferred stock, the first of
which is designated Series A Preferred Stock and the second of which is designated as Series B Preferred Stock. The total number of shares
of Common Stock which this corporation has authority to issue is 1,000,000,000 shares of Common Stock and 10,000,000 shares of Preferred
Stock of which 5,000,000 shares are designated as Series A Preferred Stock, and 5,000,000 shares are designated as Series B Preferred
Stock, with the rights, preferences and privileges of the Series B Preferred Stock to be designated by the Board of Directors. Each share
of Common Stock and Preferred Stock has a par value of $0.001. As of June 30, 2024, and 2023, there are no shares of Series A or Series
B Preferred Stock issued and outstanding.

 Common Stock

 Year Ending June 30, 2024

 There was no
common stock issued for the year ended June 30, 2024.

 Year Ending June 30, 2023

 During the
year ended June 30, 2023, the Company issued 3,500,000
shares of common stock with a fair value of $ 85,000
for services provided to the Company. These shares of common stock were valued based on the closing price of the Company's
common stock on the date the Company entered into the agreement related to the issuance.

 During the
year ended June 30, 2023, the Company issued 4,090,909
 shares of common stock upon cashless exercise of 7,500,000
 warrants.

 Stock Options

 The Company has not adopted a formal
stock option plan and does no t have any stock options outstanding at June 30, 2024 and 2023.

 Warrants

 A summary of the Company's
warrant activity and related information from as of June 30, 2024 and 2023 is as follows.

 Schedule of warrant activity

 Warrants

 Weighted-
 Exercise
 Price

 Weighted-
 Remaining
 Contractual
 Life
 (Years)

 Outstanding at June 30, 2022

 61,427,834

 $
 0.09

 2.81

 - Granted

 –

 –

 –

 - Exercised

 ( 7,500,000
)

 –

 –

 - Expired

 ( 270,600
)

 –

 –

 Outstanding at June 30, 2023

 53,657,234

 $
 0.09

 2.18

 - Granted

 –

 –

 –

 - Exercised

 –

 –

 –

 - Expired

 ( 24,815,911
)

 –

 –

 Outstanding at June 30, 2024

 28,841,323

 $
 0.08

 2.61

 There was no intrinsic value of the
outstanding warrants as of June 30, 2024, as the exercise price of these warrants were greater than the market price.

 The following
table summarizes additional information concerning warrants outstanding and exercisable at June 30, 2024.

 Schedule of warrants outstanding and exercisable

 Warrants Outstanding

 Warrants Exercisable

 Weighted

 Weighted

 Weighted

 Exercise

 Number

 Remaining

 Exercise

 Number

 Remaining

 Price

 of Shares

 Life (Years)

 Price

 of Shares

 Life (Years)

 $
 0.03

 5,000,000

 5.51

 5,000,000

 5.51

 $
 0.09

 23,841,323

 2.00

 23,841,323

 2.00

 28,841,323

 2.61

 $
 0.08

 28,841,323

 2.61

 Note 9 - Income Taxes

 For the
year ended June 30, 2024 the Company recorded no provision for income taxes due to the application of the Company's available Federal
and State net operating loss (NOL) carryforwards that are available to reduce taxable income. For the year ended June 30, 2023 the Company
recorded no provision for income taxes due to the Company's taxable net loss position.

 A reconciliation
of the effective income tax to statutory US federal income tax is as follows:

 Schedule of reconciliation
of effective income tax

 2024

 2023

 Federal statutory rate

 21 %

 ( 21)%

 State income taxes, net of Federal benefit

 7 %

 ( 7)%

 Net operating loss utilized

 ( 28)%

 – %

 Prior year net operating loss true up

 ( 93)%

 – %

 Valuation allowance

 93 %

 28 %

 Income tax provision

 –

 –

 Deferred income
taxes result from temporary differences in the recognition of income and expenses for the financial reporting purposes and for tax purposes.
The components of deferred tax assets are presented below.

 At June 30,
2024, the Company had available Federal NOL carryforwards of approximately $ 10.6 million that
are available to reduce future taxable income. The
Federal NOL carry forward of approximately $8.5 million expires through 2037, the remaining NOL of $2.1 million has no expiry date. The NOLs are subject to statutory limitations under Internal Revenue Code Section 382 regarding
substantial changes in ownership of companies with loss carry forwards.

 At June 30, 2024 and 2023, significant
component of the Company's deferred tax assets and liabilities are as follows:

 Schedule of deferred tax assets and liabilities

 2024

 2023

 Net Operating loss carryforwards

 $
 2,971,000

 $
 3,505,000

 Stock compensation expense

 962,000

 962,000

 Total net deferred tax assets

 3,933,000

 4,467,000

 Less valuation discount

 ( 3,933,000
)

 ( 4,467,000
)

 Net deferred tax assets

 $
 –

 $
 –

 The provisions
of ASC Topic 740, Accounting for Income Taxes, require an assessment of both positive and negative evidence when determining whether it
is more likely than not that deferred tax assets are recoverable. For the years ended June 30, 2024 and 2023, based on all available objective
evidence, including the existence of cumulative losses, the Company determined that it was more likely than not that the net deferred
tax assets were not fully realizable. Accordingly, the Company established a full valuation allowance against its net deferred tax assets.
The Company intends to maintain a full valuation allowance on net deferred tax assets until sufficient positive evidence exists to support
reversal of the valuation allowance. During the year ended June 30, 2024 the valuation allowance decreased by $ 534,000 as compared to
an increase of $ 466,000 during the year ended June 30, 2023.

 Accounting rules
prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements and provides
guidance on recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition
issues. The Company classifies interest and penalties as a component of interest and other expenses. To date, there have been no interest
or penalties assessed or paid.

measures and records uncertain tax positions by establishing a threshold for the financial statement recognition and measurement of a
tax position taken or expected to be taken in a tax return. Only tax positions meeting the more-likely-than-not recognition threshold
at the effective date may be recognized or continue to be recognized.

 Our income tax filings are periodically examined
by various U.S. federal and state jurisdictions. There are no open examinations by federal and state income tax jurisdictions. The Company's
U.S. federal income tax return remains open to examination for the years ended June 30, 2021 through June 30, 2024.

 Note 10 – Commitments
and Contingencies

 Royalty Agreements

 On July 1, 2008,
the Company's wholly owned subsidiary entered into Patent Assignment Agreements with two parties, its President as well as its former
Chief Executive Officer (CEO) and current Technology Senior Manager, where certain devices and methods involved in the hydrodynamic cavitation
processes invented by the President and former CEO/ current Technology Senior Manager have been assigned to the Company. In exchange,
the Company agreed to pay a royalty of 5% of gross revenues to each of the President and former CEO/ current Technology Senior Manager
for licensing of the technology and leasing of the related equipment embodying the technology. These agreements were subsequently assigned
to Cavitation Technologies on May 13, 2010. The Company's former CEO/ current Technology Senior Manager and President both
waived their rights to receive royalty payments that have accrued, or that may accrue, on any gross revenue generated through June 30,
2024 and 2023.

 On April 30,
2008 (as amended November 22, 2010), the Company's wholly owned subsidiary entered into an employment agreement with the Director
of Chemical and Analytical Department (the "Inventor") providing that the Inventor shall receive an amount equal to 5% of
actual gross royalties received from the royalty stream in the first year in which the Company receives royalty payments from the patent
which the Inventor was the legally named inventor, and 3% of actual gross royalties received by the Company resulting from the patent
in each subsequent year. As of June 30, 2024, and 2023 no patents have been granted in which this person is the legally named inventor.

 Note 11 – Subsequent
events

 The Company has evaluated subsequent
events through the date the financial statements were issued and did not identify any subsequent events that would have required adjustment
or disclosure in the financial statements.

 ITEM 9. CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 None.

 ITEM 9A. CONTROLS
AND PROCEDURES

 Disclosure Controls and
Procedures

 In accordance with rule 13a-15(a),
our management must maintain disclosure controls and procedures as defined in Rule 13a-15(e) of the Securities and Exchange Act of 1934,
or the Exchange Act, to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit
under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange
Commission rules and forms, and accumulated and communicated to our management, including our principal executive officer and principal
financial officer, as appropriate to allow timely decisions regarding required disclosure.

 In accordance with Rule 13a-15(b)
and (c), management must also evaluate the effectiveness of these disclosure control and procedures at the end of each fiscal year. As
of June 30, 2024, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and
principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that
evaluation, our principal executive officer and principal financial officer concluded that these disclosure controls and procedures were
not effective as of June 30, 2024.

 Report of Management on Internal Control over
Financial Reporting

 Management is responsible
for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act.
Our internal control over financial reporting is designed under the supervision of our principal executive and principal financial officer,
and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles
and includes those policies and procedures that:

 (i) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

 (ii) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts
and expenditures are being made only in accordance with authorizations of our management and directors; and

 (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material
effect on the financial statements.

 Under the supervision and
with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, we conducted an evaluation
of the effectiveness of our internal controls and procedures, (as defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the
Securities Exchange Act of 1934, as amended (Exchange Act)) as of the year ended June 30, 2024. Management conducted as assessment of
our internal control over financial reporting based on the framework and criteria established by the Committee of Sponsoring Organizations
of the Treadway Commission ("COSO") in Internal Control-Integrated Framework (2013). Our management concluded that as of June
30, 2024, our internal control over financial reporting was not effective, and that material weaknesses existed in the following areas
as of June 30, 2024:

 1.

 We do not employ full time in-house personnel with the technical knowledge to identify and address some of the reporting issues surrounding certain complex or non-routine transactions. With respect to material, complex and non-routine transactions, management has and will continue to seek guidance from third-party experts and/or consultants to gain a thorough understanding of these transactions;

 2.

 We have ineffective controls over segregation of duties due to limited resources and number of
 employees; and

 3.

 The Company did not maintain a functioning independent audit committee.

 We are in the continuous
process of improving our internal control over financial reporting in an effort to eliminate these material weaknesses through improved
supervision and training of our staff, but additional effort is needed to fully remedy these deficiencies. We intend to hire the necessary
staff to address the weaknesses once additional capital is obtained which will allow full operations to commence. Because of its inherent
limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined
to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

 Changes in Internal Control
over Financial Reporting

 There have been no changes
in our internal control over financial reporting during the year ended June 30, 2024 that materially affected, or are reasonably likely
to materially affect, our internal control over financial reporting.

 Attestation

 Pursuant to Item 308(b) of
Regulation S-K, as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Wall Street Reform Act), this report does
not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting.
The Wall Street Reform Act permanently exempts small public companies from the requirement to obtain an external audit on the effectiveness
of internal financial reporting controls.

 ITEM
9B. OTHER INFORMATION

 During the quarter
ended June 30, 2024, no director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading
arrangement, as each term is defined in Item 408(a) of Regulation S-K.

 ITEM
9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTION

 Not applicable.

 ITEM 10. DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 Person

 Age

 Position

 Naum Voloshin

 President, PEO, Principal Accounting Officer Secretary and Director

 Peter N. Christos

 Director

 James Fuller

 Director

 Jerry Bailey PhD

 Director

 James Fuller. Mr.
Fuller is an independent director and has been Chairman of our Audit Committee and Independent Financial Expert since February 2010. He
was formerly a Vice President of the New York Stock Exchange and director of the Securities Investor Protection Corporation. In addition
to his over 30 years of experience in the securities markets, Mr. Fuller sat on the Board of Trustees of the University of California,
Santa Cruz and previously served as Chairman of their Audit Committee and Independent Financial Expert. Mr. Fuller is a partner at Baytree
Capital Associates, LLC. He received his BS in Political Science from San Jose State University and his MBA from California State University
- Fresno. Mr. Fuller also served as a Director of Propell Technologies Group, Inc (OTCQB: Propell), a public company engaged in oil and
gas exploration from October 14, 2011 until February 17, 2015. Based on Mr. Fuller's extensive experience in finance as well as
his prior public company experience it was determined that Mr. Fuller should serve on the Company's Board.

 Mr. Fuller resigned as
a director and as the chairman of our audit Committee with effect on August 22, 2024.

 Naum Voloshin. Mr.
Voloshin has over 30 years of experience in investment banking, business operations and marketing. Prior to joining CTi, Mr. Voloshin
has worked for several developmental stage companies in US, Europe and Asia. The scope of his duties was to provide management, financial
reporting, funding, and marketing expertise.

 Jerry Bailey PhD. Mr.
Bailey has over 50 years of experience in the international petroleum industry. He is a former President of Exxon - Arabian Gulf and prior
to that, served in various operating capacities for major oil producers throughout the Middle East and in the U.S. onshore and offshore
sectors. Dr. Bailey is currently the Chairman of Bailey Petroleum, LLC, a consulting firm for major oil and gas exploration and development
corporations. In addition, during his extensive career, Dr. Bailey has served in a variety of C-Suite and Board capacities for several
oil & gas enterprises. Dr. Bailey holds a BS Degree in Chemical Engineering from the University of Houston, an MS Degree in Chemical
Engineering from the New Jersey Institute of Technology, a PhD Degree from Columbia Pacific University and is a graduate of Engineering
Doctoral Studies from Lamar University.

 Peter N. Christos. Mr.
Christos has over 30 years of Wall Street experience in corporate finance, serving on the boards of numerous private and listed companies,
managing, and advising large scale enterprises as well as early-stage start-ups.

 Family Relationships

 Roman Gordon is a founder
and current Global Technology Manager of the Company. He was a former member of the Company's Board of Directors and Chief Technology
Officer up to July 15, 2016. He is also the brother of Mr. Igor Gorodnitsky, our former President, Principal Executive Officer and member
of the Company's Board of Directors.

 Section 16(a) Beneficial Ownership Reporting
Compliance

 Section 16(a) of the Securities
Exchange Act of 1934, as amended, requires our executive officers, directors, persons who own more than 10% of our common stock, and immediate
family members living in the same household to file an Initial Statement of Beneficial Ownership on Form 3 and changes in ownership on
Form 4 with the Securities and Exchange Commission (the "SEC"). Such "insiders" are required by SEC rules to furnish
us with copies of all Section 16(a) forms they file.

 Based on a review of Forms
3, 4, and 5 and amendments thereto furnished to us during fiscal 2020 updated forms were filed, ended June 30, 2024, there were no delinquent
forms filed during the year.

 Director Independence

 Although our common stock
is not listed on a national securities exchange, for purposes of independence we use the definition of independence applied by the NASDAQ
stock market. The Board has determined that Mr. Fuller, Mr. Bailey and Mr. Christos are all " independent" in accordance with
such definition. Mr. Voloshin is not independent due to his current positions with the Company.

 Code of Ethics

 We have adopted a Code of
Business Conduct and Ethics that applies to all officers, directors and employees. A copy may also be obtained free of charge by mailing
a request in writing to: Cavitation Technologies, Inc., 10019 Canoga Ave., Chatsworth, CA 91311 USA. If we make any substantive amendments
to the Code of Business Conduct and Ethics or grant any waiver from a provision of the Code to any executive officer or director, we will
promptly disclose the nature of the amendment or waiver in a current report on Form 8-K.

 ITEM 11. EXECUTIVE COMPENSATION

 Summary Compensation Table

 The following table sets
forth a summary of cash and non-cash compensation awarded, earned or paid for services rendered to us during the years ended June 30,
2024 and 2023 by our "named executive officers," consisting of (i) each individual serving as principal executive officer,
and (ii) our Chief Financial Officer/Chief Operating Officer, our other executive officer.

 Year

 Salary

 Bonus

 Stock Awards (1)

 Warrant Awards

 Non-Equity
 Incentive

 Plan

 Compensation

 Changes
 in

 Pension
 Value

 and

 Non-Qualified

 Deferred

 Compensation

 All

 Other
 Compensation

 Totals

 Naum Voloshin

 2024

 $

 166,305

 $

 –

 $

 –

 $

 –

 $

 –

 $

 –

 $

 –

 $

 166,305

 Principal Executive & Principal Accounting
 Officer

 2023

 $

 203,140

 $

 –

 $

 –

 $

 –

 $

 –

 $

 –

 $

 –

 $

 203,140

 James W. Creamer

 2024

 $

 $

 –

 $

 –

 $

 –

 $

 –

 $

 –

 $

 –

 $

 Chief Financial Officer (1)

 2023

 $

 32,645

 $

 –

 $

 –

 $

 –

 $

 –

 $

 –

 $

 –

 $

 32,645

 (1)

 Mr. Creamer was named the Company's Chief Financial Officer on October 21, 2022 and resigned from that position on September 14, 2023.

 Outstanding Equity Awards at Fiscal Year-End

 The table below reflects
all outstanding equity awards made to each of the named executive officers that are outstanding as of June 30, 2024.

 Restricted Stock Awards

 Name

 Restricted Stock grant date

 Number of securities Underlying Restricted Stock Awards # Exercisable

 Number of securities Underlying Restricted Stock Awards # Unexercisable

 Restricted Stock Awards Grant Price

 Naum Voloshin

 6/21/2022

 4,000,000

 –

 0.05

 Principal Accounting Officer

 The fair value of each restricted
stock grant is the market value of the stock on the grant date.

 Employment Agreements

 Our executive officers work
as at-will employees.

 Code Section 162(m)
Provisions

 Section 162(m) of the
U.S. Internal Revenue Code, or the Code, generally disallows a tax deduction to public companies for compensation in excess of $1 million
paid to the Chief Executive Officer or any of the four most highly compensated officers. Performance-based compensation arrangements may
qualify for an exemption from the deduction limit if they satisfy various requirements under Section 162(m). Although we consider
the impact of this rule when developing and implementing our executive compensation programs, we believe it is important to preserve flexibility
in designing compensation programs. Accordingly, we have not adopted a policy that all compensation must qualify as deductible under Section 162(m)
of the Code. While our stock options are intended to qualify as "performance-based compensation" (as defined by the Code),
amounts paid under our other compensation programs may not qualify as such.

 2023 Director Compensation

 The following table sets
forth information for the fiscal year ended June 30, 2024 regarding the compensation of our directors who at June 30, 2024 were not also
named executive officers.

 Fees

 Non-equity

 Earned

 inventive

 Non-qualified

 All

 or paid

 Stock

 Option

 plan

 deferred

 other

 in cash

 Awards

 Awards

 compensation

 compensation

 compensation

 Total

 Name

 ($)

 ($)

 ($)

 ($)

 Earnings

 ($)

 ($)

 James Fuller

 $

 –

 $

 –

 $

 –

 $

 –

 $

 –

 $

 –

 $

 –

 Jerry Bailey

 $

 –

 $

 –

 $

 –

 $

 –

 $

 –

 $

 –

 $

 –

 Peter Christos

 $

 –

 $

 –

 $

 –

 $

 –

 $

 –

 $

 –

 $

 –

 As of June 30, 2024, the
following table sets forth the number of aggregate outstanding option awards held by each of our directors who were not also named executive
officers:

 Aggregate

 Number of

 Name

 Option Awards

 –

 ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

 The following table provides
information regarding the beneficial ownership of our common stock as of September 26, 2024,
(the "Evaluation Date") by: (i) each of our current directors, (ii) each of our named executive officers, and (iii) all
such directors and executive officers as a group. We know of no other person or group of affiliated persons who beneficially own more
than five percent of our common stock. The table is based upon information supplied by our officers, directors and principal stockholders
and a review of Schedules 13D and 13G, if any, filed with the SEC. Unless otherwise indicated in the footnotes to the table and subject
to community property laws where applicable, we believe that each of the stockholders named in the table has sole voting and investment
power with respect to the shares indicated as beneficially owned.

 Applicable percentages are
based on 284,289,740 shares outstanding as of the Evaluation Date, adjusted as required by rules promulgated by the SEC. These rules generally
attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those
securities. In addition, the rules include shares of our common stock issuable pursuant to the exercise of stock options or warrants that
are either immediately exercisable or exercisable within 60 days of the Evaluation Date. These shares are deemed to be outstanding and
beneficially owned by the person holding those options for the purpose of computing the percentage ownership of that person, but they
are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

 Amount and

 Nature of

 Beneficial

 Percent of

 Name of Beneficial Owner

 Ownership

 Class (1)

 Naum Voloshin

 (2)

 10, 212,390

 3.6

 %

 President, Principal Executive Officer, Principal Accounting Officer and Director

 James Fuller

 (3)

 2,337,500

 *

 Chairman of Audit Committee, Director (Resigned effective August 22, 2024)

 Dr. Gerald Bailey

 (4)

 400,000

 *

 Director

 Directors and Officers

 12,949,890

 4.5

 %

 (as a group, four individuals)

 *

 Less than 1%

 (1)

 Unless otherwise set forth below, the mailing address of Executive Officers, Directors and 5% or greater holders is in care of the Company.

 (2)

 Consists of 10,212,390 shares of common stock, including 4,000,000 restricted shares granted to Mr. Voloshin on June 21, 2022.

 (3)

 Consists of 837,500 shares of common stock and warrants exercisable for 1,000,000 shares of common stock, all of which are vested.

 (4)

 Consists of warrants exercisable for 400,000 shares of common stock.

 ITEM 13. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS

 Certain Related Party Transactions

 Since the beginning of our
last fiscal year, there has not been, and there is not currently proposed, any transaction or series of similar transactions to which
we were or will be a party in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of
our total assets at year-end for the last two completed fiscal years and in which any of our directors, executive officers, holders of
more than five percent of any class of our voting securities or any member of the immediate family of the foregoing persons had or will
have a direct or indirect material interest.

 Accrued Payroll and Payroll Taxes

 As of June 30, 2024, and
2023, the Company had accrued unpaid salaries to officers and former officers amounting to $414,000 and $247,000, respectively.

 Cameo USA LLC

 In fiscal 2014, Roman Gordon,
one of the Company's shareholders and a former officer, formed a company called Cameo USA LLC (Cameo). Since its formation, Cameo
has had no revenue, no operations, and has had no assets or liabilities. On June 4, 2018, Mr. Gordon contributed his 100% interest in
Cameo to the Company. As Mr. Gordon had no basis in his investment in Cameo, there was no value assigned to the contribution of Cameo.
Subsequent to the contribution of Cameo to the Company, Cameo was sold to Alchemy Beverages Inc.

 Director Independence

 As our common stock is currently
traded on the OTC Bulletin Board, we are not subject to the rules of any national securities exchange which require that a majority of
a listed company's directors and specified committees of the board of directors meet independence standards prescribed by such rules.
For the purpose of preparing the disclosures in this Report on Form 10-K regarding director independence, we have used the definition
of "independent director" set forth in the Marketplace Rules of The NASDAQ, which defines an "independent director"
generally as a person other than an executive officer or employee of the Company or any other individual having a relationship which,
in the opinion of the Company's board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities
of a director. Consistent with these standards, we believe that James Fuller is an Independent Financial Expert.

 ITEM 14. PRINCIPAL ACCOUNTING
FEES AND SERVICES

 Independent Registered Public Accounting Firm's
Fee Summary

 The following table provides
information regarding the fees billed to us by Weinberg & Company, P.A. for the years ended June 30, 2024 and 2023. All fees described
below were approved by the Board:

 2024

 2023

 Audit Fees and Expenses (1)

 $
 86,000

 $
 87,000

 All Other Fees

 $
 9,000

 $

 (1)

 Audit fees and expenses were for professional services rendered for the audit and reviews of the consolidated financial statements of the Company, professional services rendered for issuance of consents and assistance with review of documents filed with the SEC.

 Pre-Approval Policies
and Procedures

 Consistent with SEC policies
regarding auditor independence, the Audit Committee has responsibility for appointing, setting compensation and overseeing the work of
the independent registered public accounting firm. In recognition of this responsibility, the Audit Committee has established a policy
to pre-approve all audit and permissible non-audit services provided by the independent registered public accounting firm.

 Prior to the engagement of
the independent registered public accounting firm for the next year's audit, management will submit a list of services and related
fees expected to be rendered during that year for audit services, audit-related services, tax services and other fees to the Audit Committee
for approval.

 ITEM 15. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES

 (a) The following documents are filed as part
of this annual report on Form 10-K:

 1. Financial Statements

 The financial statements
are filed as part of this report under Item 8 "Financial Statements and Supplementary Data".

 2. Financial Statement Schedules

 All other schedules are omitted
because they are not applicable or the required information is presented in the financial statements and notes thereto.

 3. Exhibits

 The exhibits required by Item 601 of Regulation
S-K are included in Item 15(b) below.

 (b) - Exhibits.

 Incorporated by Reference

 Exhibit

 Filed

 Period

 Filing

 Number

 Exhibit Description

 Herewith

 Form

 Ending

 Exhibit

 Date

 3(i)(a)

 of Incorporation - original name of Bioenergy, Inc.

 SB-2

 N/A

 3.1

 October 19, 2006

 3(i)(b)

 of Incorporation - Amended and Restated

 December 31, 2008

 3.1

 February 17, 2009

 3(i)(c)

 of Incorporation - Amended and Restated

 3.1

 May 14, 2009

 3(i)(d)

 of Incorporation - Amended; increase in authorized shares

 N/A

 N/A

 October 29, 2009

 3(i)(e)

 of Incorporation - Certificate of Amendment; forward split

 December 31, 2009

 3.1

 November 16, 2009

 10.1

 Patent
 Assignment Agreement between the Company and Roman Gordon dated July 1, 2008.

 10.1

 May 18, 2010

 10.2

 Patent
 Assignment Agreement between the Company and Igor Gorodnitsky dated July 1, 2008.

 10.2

 May 18, 2010

 10.3

 Assignment
 of Patent Assignment Agreement between the Company and Roman Gordon

 10.3

 May 18, 2010

 10.4

 Assignment
 of Patent Assignment Agreement between the Company and Igor Gorodnitsky

 10.4

 May 18, 2010

 10.5

 Employment
 Agreement between the Company and Roman Gordon date March 17, 2008

 10K/A

 10.3

 October 20, 2011

 10.6

 Employment
 Agreement between the Company and Igor Gorodnitsky dated March 17, 2008

 10K/A

 10.4

 October 20, 2011

 10.7

 Employment
 Agreement with R.L. Hartshorn dated Sept. 22, 2009

 December 31, 2011

 10.7

 February 10, 2012

 10.8

 Employment
 and Confidentiality and Invention Assignment Agreement between the Company and Varvara Grichko dated April 30, 2008

 December 31, 2010

 10.3

 February 11, 2011

 10.9

 Board
 of Director Agreement - James Fuller

 December 31, 2011

 10.12

 October 20, 2011

 Incorporated by Reference

 Exhibit

 Filed

 Period

 Filing

 Number

 Exhibit Description

 Herewith

 Form

 Ending

 Exhibit

 Date

 10.1

 Technology
 and License Agreement with Desmet Ballestra dated 14 May 2012

 June 30, 2012

 10.1

 October 15, 2012

 10.11

 Convertible
 Note Payable - Prolific Group LLC - $25,000

 December 31, 2011

 10.4

 February 10, 2012

 10.12

 Convertible
 Note Payable - Tripod Group LLC - $30,000

 December 31, 2011

 10.41

 February 10, 2012

 14.1

 Code
 of Business Conduct and Ethics*

 June 30, 2011

 14.1

 September 28, 2011

 31.1

 Certificate of Principal Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002

 X

 31.2

 Certificate of Principal Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002

 X

 32.1

 Certification of Principal Executive Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 X

 32.2

 Certification of Principal Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 X

 101.INS

 X

 101.SCH

 X

 101.CAL

 X

 101.DEF

 X

 101.LAB

 X

 101.PRE

 X

 X

 *

 In accordance with Regulation S-K 406 of the Securities Act of 1934, we undertake to provide to any person without charge, upon request, a copy of our "Code of Business Conduct and Ethics". A copy may be requested by sending an email to info@cavitationtechnologies.com.

 (c) - Financial Statement Schedules

 See Item (a) 2 above.

 ITEM 16. SUMMARY. FORM 10-K SUMMARY

 Not applicable

 SIGNATURES

 PURSUANT TO THE REQUIREMENTS
OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN
THE CAPACITIES AND ON THE DATES INDICATED

 SIGNATURE

 TITLE

 DATE

 /s/ N. Voloshin

 President; Member of Board of Directors

 N. Voloshin

 (Principal Executive Officer)

 /s/ N. Voloshin

 Chief Financial Officer

 N. Voloshin

 (Principal Financial Officer)

 /s/ James Fuller

 Audit Committee Chairman,

 James Fuller

 Independent Financial Expert

 /s/ Dr. Gerald Bailey

 Independent Director

 Dr. Gerald Bailey

 /s/ Peter N Christos

 Independent Director

 Peter N. Christos