Cavitation Technologies Reports 60% Revenue Decline but Net Income Improvement in Q2 Fiscal 2025

Cavitation Technologies, Inc. (CTi) reported its financial results for the second quarter of fiscal 2025, revealing a significant decline in revenue and a notable shift in profitability compared to the same period last year. For the three months ended December 31, 2024, the company generated revenue of $76,000, a decrease of 60.4% from $192,000 in the prior year. The cost of revenue also fell to $13,000 from $34,000, resulting in a gross profit of $63,000, down from $158,000. Despite the drop in revenue, CTi reported a net income of $579,000, a substantial improvement from a net loss of $16,000 in the same quarter of 2023, primarily due to an $880,000 gain from a patent assignment agreement with Desmet Ballestra.

In the first half of fiscal 2025, CTi's revenue mirrored the quarterly results, totaling $76,000, down from $192,000 in the same period last year. The company’s total operating expenses increased to $588,000 from $422,000, driven by higher general and administrative costs, which rose by 46.1% to $564,000. The increase in expenses was attributed to stock compensation, legal fees related to patent activities, and payroll expenses. The company reported a loss from operations of $525,000 for the six months ended December 31, 2024, compared to a loss of $264,000 in the prior year.

Strategically, CTi entered into a patent assignment and license back agreement with Desmet in October 2024, which allowed the company to monetize its patents for $880,000. This agreement is expected to reduce future sales of Nano reactors to Desmet, as the latter will begin manufacturing the reactors independently. However, CTi retained a worldwide, exclusive, transferable, and royalty-free license to use the assigned patents in water treatment and alcoholic beverage production, which the company plans to leverage for future revenue generation.

Operationally, CTi's cash position improved significantly, with cash and cash equivalents rising to $681,000 as of December 31, 2024, compared to $179,000 at the end of June 2024. The company has maintained a consistent employee headcount of 284,289,740 shares of common stock outstanding. Despite the challenges, CTi is focusing on expanding its technology applications in water treatment and remediation, as well as developing new products in collaboration with partners like Alchemy Beverages, Inc.

Looking ahead, CTi's management expressed cautious optimism about its ability to sustain operations through June 30, 2025, while acknowledging the need for additional financing to support its business plan. The company aims to increase revenues through its Reserved Grant Back License and is exploring opportunities in water and wastewater processing, as well as the alcoholic beverage market. However, management noted that there are no assurances regarding the success of these initiatives or the availability of necessary financing.