Cavitation (CVAT) 10-Q 15 Feb 18 2018 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Dec. 31, 2017	Feb. 12, 2018
Document And Entity Information
Entity Registrant Name	Cavitation Technologies, Inc.
Entity Central Index Key	1,376,793
Document Type	10-Q
Document Period End Date	Dec. 31, 2017
Amendment Flag	false
Current Fiscal Year End Date	--06-30
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		197,197,906
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2,018

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Dec. 31, 2017	Jun. 30, 2017
Current assets
Cash and cash equivalents	$ 860,522	$ 548,585
Accounts receivable	0	85,000
Inventory, net	118,725	143,136
Total current assets	979,247	776,721
Property and equipment, net	123,374	140,606
Other assets	9,500	12,404
Total assets	1,112,121	929,731
Current liabilities:
Accounts payable and accrued expenses	344,317	245,452
Accrued payroll and payroll taxes due to officers	887,577	994,033
Related party payable	1,147	1,147
Deferred revenue	239,824	0
Total current liabilities	1,472,865	1,240,632
Commitments and contingencies
Stockholders' deficit:
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued and outstanding as of December 31, 2017 and June 30, 2017, respectively	0	0
Common stock, $0.001 par value, 1,000,000,000 shares authorized, 197,197,906 and 196,797,906 shares issued and outstanding as of December 31, 2017 and June 30, 2017, respectively	197,198	196,798
Additional paid-in capital	22,640,688	22,625,088
Accumulated deficit	(23,198,630)	(23,132,787)
Total stockholders' deficit	(360,744)	(310,901)
Total liabilities and stockholders' deficit	$ 1,112,121	$ 929,731

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Dec. 31, 2017	Jun. 30, 2017
Statement of Financial Position [Abstract]
Preferred Stock, par value	$ 0.001	$ .001
Preferred Stock, shares authorized	10,000,000	10,000,000
Preferred Stock, shares issued	0	0
Preferred Stock, shares outstanding	0	0
Common Stock, par value	$ 0.001	$ .001
Common Stock, shares authorized	1,000,000,000	1,000,000,000
Common Stock, shares issued	197,197,906	196,797,906
Common Stock, shares outstanding	197,197,906	196,797,906

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017	Dec. 31, 2016
Income Statement [Abstract]
Revenue	$ 337,855	$ 35,000	$ 677,855	$ 120,000
Cost of revenue	14,466	7,912	33,206	15,824
Gross profit	323,389	27,088	644,649	104,176
General and administrative expenses	342,885	287,493	803,363	606,974
Research and development expenses	5,245	1,351	8,101	7,680
Total operating expenses	348,130	288,844	811,464	614,654
Gain on settlement of debt	100,972	0	100,972	0
Net income (loss)	$ 76,231	$ (261,756)	$ (65,843)	$ (510,478)
Net income (loss) per share, Basic and Diluted	$ 0	$ 0	$ 0	$ 0
Weighted average shares outstanding - Basic and Diluted	197,197,906	193,997,906	197,195,732	193,997,906

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) (Unaudited) - 6 months ended Dec. 31, 2017 - USD ($)	Preferred Stock	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Total
Beginning balance, shares at Jun. 30, 2017	0	196,797,906
Beginning balance, value at Jun. 30, 2017	$ 0	$ 196,798	$ 22,625,088	$ (23,966,606)	$ (310,901)
Adjustment upon adoption of ASC 606				$ 833,819	$ 833,819
Issuance of common stock, shares	5	5	5	5	5
Issuance of common stock for services, shares		400,000
Issuance of common stock for services, value		$ 400	$ 15,600		$ 16,000
Net loss				$ (65,843)	(65,843)
Ending balance, shares at Dec. 31, 2017	0	197,197,906
Ending balance, value at Dec. 31, 2017	$ 0	$ 197,198	$ 22,640,688	$ (23,198,630)	$ (360,744)

Condensed Consolidated Stateme6

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Operating activities:
Net loss	$ (65,843)	$ (510,478)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	20,136	21,518
Common stock issued to consultants	16,000	0
Gain on settlement of debt	(100,972)	0
Changes in operating assets and liabilities:
Accounts receivable	85,000	0
Inventory	24,411	(8,318)
Accounts payable and accrued expenses	98,865	(12,561)
Accrued payroll and payroll taxes due to officers	(5,484)	0
Advances from distributor	239,824	251,873
Net cash provided by (used in) operating activities	311,937	(257,966)
Investing activities:
Cash, beginning of period	548,585	657,396
Cash, end of period	860,522	399,430
Supplemental disclosures of cash flow information:
Cash paid for interest	0	0
Cash paid for income taxes	$ 0	$ 1,600

1. Organization and Basis of Pr

1. Organization and Basis of Presentation	6 Months Ended
	Dec. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
1. Organization and Basis of Presentation	Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") as promulgated in the United States of America ("U.S.") and with instructions to Form 10-Q pursuant to the rules and regulations of Securities and Exchange Act of 1934, as amended (the "Exchange Act") and Article 8-03 of Regulation S-X under the Exchange Act. Accordingly, these condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, we have included all adjustments considered necessary (consisting of normal recurring adjustments) for a fair presentation. Operating results for the six months ended December 31, 2017 are not indicative of the results that may be expected for the fiscal year ending June 30, 2018. You should read these unaudited condensed consolidated financial statements in conjunction with the audited financial statements and the notes thereto included in the Company's annual report on Form 10-K for the year ended June 30, 2017 filed on November 3, 2017. The condensed consolidated balance sheet as of June 30, 2017 has been derived from the audited financial statements included in the Form 10-K for that year. Cavitation Technologies, Inc. (referred to herein, unless otherwise indicated, as "the Company," "CTi," "we," "us," and "our") is a Nevada corporation originally incorporated under the name Bio Energy, Inc. CTi has developed, patented, and commercialized proprietary technology that may be used in liquid processing applications. CTi's patented Nano Reactor® Nano Neutralization® System In July 1, 2017, the Company adopted the new accounting standard ASC 606, Revenue from Contracts with Customers and all the related amendments (“new revenue standard”) to all contracts using the full retrospective method resulting in a change to previously reported balance sheet and statement of stockholders’ deficit. There was no change in previously reported statement of operations for the three and six months ended December 31, 2016 (see further discussion in Note 3). Management Plan Regarding on Going Concerns The accompanying condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles which contemplate continuation of the Company as a going concern. During the six months ended December 31, 2017, the Company posted a net loss of $65,843 and as had a working capital deficiency of $493,618 and a stockholders' deficit of $360,744. These factors, among others, raise doubts about the Company's ability to continue as a going concern. In addition, our independent auditors, in their report on our audited financial statements for the fiscal year ended June 30, 2017 expressed doubt about our ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from an inability of the Company to continue as a going concern. As of December 31, we had cash and cash equivalents on hand of $860,522 and are not generating sufficient funds to cover operations. In addition to the funds on hand, management believes we may require additional funds to continue to operate our business. Management's plan is to generate income from operations by continuing to license our technology globally through our strategic partners, Desmet Ballestra Group (Desmet) and GEA Westfalia, AG (GEA). Desmet has agreed to provide us monthly advances of $50,000 through August 2018 to be applied against gross profit share from future sales pursuant to a January 2016 agreement. GEA has agreed to provide us monthly advances of $25,000 less applicable taxes through January 2020, to be applied against gross profit share from future sales pursuant to January 2017 agreement. We may also attempt to raise additional debt and/or equity financing to fund operations and provide additional working capital. However, there is no assurance that such financing will be consummated 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.

2. Significant Accounting Polic

2. Significant Accounting Policies	6 Months Ended
	Dec. 31, 2017
Accounting Policies [Abstract]
2. Significant Accounting Policies	Principles of Consolidation The consolidated financial statements include the accounts of Cavitation Technologies, Inc. and its wholly owned subsidiary Hydrodynamic Technology, Inc. Inter-company transactions and balances have been eliminated in consolidation. Fair Value Measurement FASB Accounting Standards Codification ("ASC") 820-10 requires entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet for which it is practicable to estimate fair value. ASC 820-10 defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. The three levels of the fair value hierarchy are as follows: · Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access. · Level 2 - Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. · Level 3 - Valuations based on inputs that are unobservable, supported by little or no market activity and that are significant to the fair value of the assets or liabilities. At December 31, 2017 and June 30, 2017, the fair values of cash and cash equivalents, inventory and accounts payable and accrued expenses approximate their carrying values due to their short-term nature. Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the U.S requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. Significant estimates are used in reserve for inventory obsolescence, impairment analysis for fixed assets, accrual of potential liabilities, deferred tax assets and valuing our stock options, warrants, and common stock issued for services, among other items. Actual results could differ from these estimates. 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. The fair value of the Company's common stock options and warrants grant is estimated using the Black-Scholes option pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the common stock options, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes option pricing model and based on actual experience. The assumptions used in the Black-Scholes option pricing model could materially affect compensation expense recorded in future periods. Dependence on Desmet Ballestra Our revenue is almost entirely dependent on Desmet Ballestra who is our exclusive distribution agent with regard to the CTi Nano Neutralization® System During the six months ended December 31, 2017 and 2016, 98% and 100%, respectively, of our revenues were derived from Desmet sales efforts (see Note 4). Earnings( Loss) Per Share The Company’s computation of earnings (loss) per share (EPS) includes basic and diluted EPS. Basic EPS is calculated by dividing the Company’s net income (loss) available to common stockholders by the weighted average number of common shares during the period. Shares of restricted stock subject to vesting are included in basic weighted average common shares outstanding from the time they vest. Diluted EPS 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 net income (loss) of the Company. In computing diluted EPS, the treasury stock method assumes that outstanding options and warrants are exercised, and the proceeds are used to purchase common stock at the average market price and there were no instruments that would result in issuance of additional shares during the period. As of December 31, 2017, the Company had 11,685,852 stock options and 75,926,510 stock warrants outstanding to purchase shares of common stock that were not included in the diluted net loss per common share because their effect would be anti-dilutive. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers. ASU 2014-09 eliminated transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle-based approach for determining revenue recognition. ASU 2014-09 required that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also required additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 201-09 became part of Accounting Standards Codification (ASC) as Topic 606: Revenue from Contracts with Customers or ASC 606. We have adopted these changes using the full retrospective method by presenting as if the new revenue standard had been applied to all prior period financial statements presented herein (see Note 3). In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases 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. Business and Credit Concentrations The Company’s cash balances in a financial institution at times may exceed federally insured limits. As of December 31, 2017, and June 30, 2017, before adjustments for outstanding checks and deposits in transit, the Company had $860,522 and $548,585, respectively, deposited in one financial institution. The deposits are federally insured up to $250,000. The Company believes that no significant concentration of credit risk exists with respect to these cash balances because of its assessment of the creditworthiness and financial viability of this financial institution. Recorded revenues during the six months ended December 31, 2017 of $677,855 were attributable to two customers (see Note 4).

3. Adoption of ASC 606, Revenue

3. Adoption of ASC 606, Revenue from Contracts with Customers	6 Months Ended
	Dec. 31, 2017
Revenue from Contract with Customer [Abstract]
3. Adoption of ASC 606, Revenue from Contracts with Customers	The Company has developed, patented, and commercialized proprietary technology called Nano Reactor® Nano Reactor® Through June 30, 2017, revenue from the sale of our Nano Reactor® systems On July 1, 2017, we adopted the new accounting standard ASC 606, Revenue from Contracts with Customers and all the related amendments (“new revenue standard”) to all contracts. Sales revenue from the sale of our Nano Reactors continues to be recognized when products are shipped from our manufacturing facilities. The Company now recognizes the corresponding gross profit at the time of shipment of the Nano reactor hardware in accordance to ASC 606 as such shipment is deemed to be the only performance obligation and the Company has no more continuing obligation to our distributor. In addition, the Company has no control with regards to the sale and installation of Nano Neutralization System, between our distributor and the end customer. The Company has determined that the gross profit to be earned from its distributor as a variable consideration that requires estimation in determining the transaction price, and as such all or a portion can be recognized using the most likely amount approach (subject to the variable consideration constraint). Estimates are available from our distributor which are considered in the determination of the most likely amount. However, given the lack of control over the sale to the end customer and the lack of history of prior sales, the Company considered these as a variable revenue constraint that required consideration. Thus, the amount of revenue recognized is being limited to the actual amount of cash received under the contract which the Company has determined as not refundable and preclude any probable of future revenue reversal. Further, Company has been able to develop an expectation of the actual collection based on its historical experience. Pursuant to the transition requirements of ASC 606, the Company adopted the full retrospective method. Under the full retrospective method, the Company is required to retrospectively apply the new revenue standard to all period presented as if the new revenue standards had been applied to all prior period. There were no changes to the previously reported statement of operations for the three and six months ended December 31, 2016 as the gross profit share of $833,819 was incurred during the third quarter of fiscal 2017. The effect of the changes made to our previously reported consolidated June 30, 2017 balance sheet for the adoption of ASC 606, were as follows: Balance as Adjusted reported June Adjustments Due to balance at Balance Sheet 30, 2017 adoption of ASC 606 June 30, 2017 Assets Cash and cash equivalents $ 548,585 $ 548,585 Accounts receivable - $ 85,000 (A) 85,000 Inventory, net 143,136 143,136 Property and equipment, net 140,606 140,606 Other assets 12,404 12,404 Liabilities Accounts payable and accrued expenses 245,452 245,452 Accrued payroll and payroll taxes due to officers 994,033 994,033 Related party payable 1,147 1,147 Advances from distributor, net 748,819 (748,819 )(A)(B) - Stockholders' Deficit Preferred stock - - Common stock 196,798 196,798 Additional paid-in-capital 22,625,088 22,625,088 Accumulated deficit (23,966,606 ) 833,819 (B) (23,132,787 ) A – To record accounts receivable as of June 30, 2017 from the sale of nano reactors to a distributor. For financial reporting purposes, this amount was deducted from the outstanding advances totaling $833,819 as of June 30, 2017, also received from the same distributor. B – To record gross profit revenues amounting to $833,819 in accordance with the new revenue standards.

4. Agreements with Distributors

4. Agreements with Distributors	6 Months Ended
	Dec. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
4. Agreement with Distributors	Desmet Ballestra Agreement On January 22, 2016, the Company signed a three-year agreement with Desmet effective August 1, 2015 for the sale and marketing of the Company’s Nano reactor system. As part of the agreement, Desmet will provide, under certain conditions, limited monthly advance payments of $50,000 against future gross profit share to CTi through August 2018. The agreement may be terminated in case the Company loses ownership of patents and patent applications being used in the NANO Neutralization System. The Company recognizes revenue from sale of reactors upon shipment and acceptance by Desmet, as the Company has no further obligations to Desmet other than the reactor’s two-year standard warranty. In addition, Desmet pays for such reactors on credit terms and the amount of the sale is recorded as a receivable upon acceptance by Desmet. The Company also receives a share in gross margin or profit from the sale of Desmet’s integrated neutralization system to its customer of which the reactors are an integral component, however, such amount is subject to adjustment based on certain factors including costs over run. The Company recognizes the gross profit at the time of shipment of the Nano reactor hardware in accordance to ASC 606 as such shipment is deemed to be the only performance obligation and the Company has no more continuing obligation to Desmet. In addition, the Company has no control with regards to the sale and installation of Nano Neutralization System, between our distributor and the end customer. The Company has determined that the gross profit to be earned from Desmet as a variable consideration that requires estimation in determining the transaction price, and as such all or a portion can be recognized using the most likely amount approach (subject to the variable consideration constraint). Estimates are available from Desmet which are considered in the determination of the most likely amount. However, given the lack of control over the sale to the end customer and the lack of history of prior sales, the Company considered these as a variable revenue constraint that required consideration. Thus, the amount of revenue recognized is being limited to the actual amount of cash received under the contract which the Company has determined as not refundable and preclude any probable of future revenue reversal. Further, Company has been able to develop an expectation of the actual collection based on its historical experience. During the six months ended December 31, 2017 and 2016, the Company recognized revenue of $450,130 and $120,000, respectively, related to the shipment and acceptance of reactors to Desmet. In addition, during the six months ended December 31, 2017, we recognized revenues of $215,000 from our share in gross margin or profit. There were no gross margin or profit revenues recognized during the six months ended December 31, 2016. GEA Westfalia Agreement In January 2017 we entered into a global technology license, R&D and marketing agreement with respect to our patented Nano Reactor™ technology, processes and applications. Under the agreement, GEA has been granted a worldwide exclusive license to integrate our patented technology into water treatment application, milk and juice pasteurization, and certain food related processes. The license agreement between us and GEA has a three-year term and provides for the payment of $300,000 per year in advanced license fees or share in gross margin or profit to us. GEA Westfalia Separator manufactures filtration and equipment such as separators, clarifiers, decanters and membrane filtration systems. This equipment is used for the purification of suspensions, the separation of fluid mixtures with simultaneous removal of solids, extraction and concentration or removal of liquids from solids. The technological dominance of the company is based on over one hundred fifteen years of innovation, first-class engineering solutions and comprehensive processing capabilities. The company was founded in 1893 in Oelde, Germany, and since 1994 has been a part of the GEA Group AG During the period ended December 31, 2017, we received advances totaling $252,549 from GEA, recognized revenue of $12,725 related to the shipment and acceptance of reactors to GEA and recorded $239,824 in advances from GEA as deferred revenue as the reactors have not been delivered.

5. Property and Equipment

5. Property and Equipment	6 Months Ended
	Dec. 31, 2017
Property, Plant and Equipment [Abstract]
5. Property and Equipment	Property and equipment consisted of the following as of December 31, 2017 and June 30, 2017: December 31, June 30, 2017 2017 Leasehold improvement $ 2,475 $ 2,475 Furniture 26,837 26,837 Office equipment 1,499 1,499 Equipment 68,380 68,380 Systems 408,155 408,155 507,346 507,346 Less: accumulated depreciation and amortization (383,972 ) (366,740 ) Property and Equipment, net $ 123,374 $ 140,606 Depreciation expense for the six months ended December 31, 2017 amounted to $17,232.

6. Accrued Payroll and Payroll

6. Accrued Payroll and Payroll Taxes	6 Months Ended
	Dec. 31, 2017
Payables and Accruals [Abstract]
6. Accrued Payroll and Payroll Taxes	As of June 30, 2017, the Company had accrued salaries to current and former officers of the Company amounting to $994,033. Included in this accrual was approximately $131,000 due to a former officer of the Company. In October 2017, the Company paid $30,000 to the former officer as settlement of the unpaid salary of $131,000. As a result, the Company recorded a gain of $100,972 to extinguish the remaining accrual. As of December 31, 2017, the Company had accrued salaries to current and former officers of the Company amounting to $887,577.

7. Stockholders' Deficit

7. Stockholders' Deficit	6 Months Ended
	Dec. 31, 2017
Equity [Abstract]
7. Stockholders' Deficit	Common Stock During the period ended December 31, 2017, the Company granted a total of 400,000 shares of common stock with a fair value of $16,000 to consultants for services rendered. The shares of common stock were deemed earned upon issuance and valued at the respective date of the agreement. Stock Options The Company has not adopted a formal stock option plan. However, it has assumed outstanding stock options resulting from the acquisition of its wholly-owned subsidiary, Hydrodynamic Technology, Inc. In addition, the Company has made periodic non- plan grants. A summary of the stock option activity during the three months ended December 31, 2017 is as follows: Weighted- Average Weighted- Remaining Average Contractual Exercise Life Options Price (Years) Outstanding June 30, 2017 11,685,852 $ 0.37 2.41 - Granted - - Forfeited - - - - Exercised - - - - Expired - - - Outstanding December 31, 2017 11,685,852 $ 0.37 1.91 Exercisable and vested at December 31, 2017 11,685,852 $ 0.37 1.91 There was no intrinsic value of the outstanding options as of December 31, 2017 as the exercise price of these options were greater than the market price at December 31, 2017. The following table summarizes additional information concerning options outstanding and exercisable at December 31, 2017. Options Outstanding Options Exercisable Weighted Weighted Weighted Average Average Average Exercise Number Remaining Exercise Number Remaining Price of Shares Life (Years) Price of Shares Life (Years) 0.03 11,000,000 4.71 0.03 11,000,000 4.71 0.33 174,022 0.39 0.33 174,022 0.39 0.67 511,830 0.47 0.67 511,830 0.47 11,685,852 11,685,852 Warrants A summary of the Company's warrant activity and related information for the six months ended on December 31, 2017 is as follows. Weighted- Average Weighted- Remaining Average Contractual Exercise Life Warrants Price (Years) Outstanding at June 30, 2017 75,926,510 $ 0.08 4.81 Granted - - - Exercised - - - Expired - - - Outstanding at December 31, 2017 75,926,510 $ 0.08 4.31 Vested and exercisable at December 31, 2017 75,926,510 $ 0.08 4.31 As of December 31, 2017, all warrants granted were vested. There was no intrinsic value of the outstanding warrants as of December 31, 2017 as the exercise price of these warrants were greater than the market price at December 31, 2017. The following table summarizes additional information concerning warrants outstanding and exercisable at December 31, 2017. Warrants Outstanding Warrants Exercisable Weighted Weighted Weighted Average Average Average Exercise Number Remaining Exercise Number Exercise Price of Shares Life (Years) Price of Shares Price 0.03 - 0.08 55,599,851 6.50 $ 0.05 55,599,851 $ 0.05 0.12 20,326,659 1.50 $ 0.12 20,326,659 $ 0.12 75,926,510 75,926,510

8. Commitments and Contingencie

8. Commitments and Contingencies	6 Months Ended
	Dec. 31, 2017
Commitments and Contingencies Disclosure [Abstract]
8. Commitments and Contingencies	Royalty Agreements On July 1, 2008, our wholly owned subsidiary entered into Patent Assignment Agreements with two parties, our President and Technology Development Supervisor, where certain devices and methods involved in the hydrodynamic cavitation processes invented by the President and the Technology Development Supervisor have been assigned to the Subsidiary. In exchange, the Subsidiary agreed to pay a royalty of 5% of gross revenues to each of the President and Technology Development Supervisor for licensing of the technology and leasing of the related equipment embodying the technology. These agreements were subsequently assumed by Cavitation Technologies on May 13, 2010 from its subsidiary. The Company's President and Technology Development Supervisor both waived their rights to receive royalty payments that have accrued, or that may accrue, on any gross revenue generated through December 31, 2017. On April 30, 2008 and as amended on November 22, 2010, our wholly owned subsidiary entered into an employment agreement with our former Director of Chemical and Analytical Department (the "Inventor") to 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 December 31, 2017, no patents have been granted in which this person is the legally named inventor. Litigation The Company may be involved in certain legal proceedings that arise from time to time in the ordinary course of its business. Except for income tax contingencies (commencing April 1, 2009), 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.

2. Significant Accounting Pol15

2. Significant Accounting Policies (Policies)	6 Months Ended
	Dec. 31, 2017
Accounting Policies [Abstract]
Principles of Consolidation	Principles of Consolidation The consolidated financial statements include the accounts of Cavitation Technologies, Inc. and its wholly owned subsidiary Hydrodynamic Technology, Inc. Inter-company transactions and balances have been eliminated in consolidation.
Fair Value Measurement	Fair Value Measurement FASB Accounting Standards Codification ("ASC") 820-10 requires entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet for which it is practicable to estimate fair value. ASC 820-10 defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. The three levels of the fair value hierarchy are as follows: · Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access. · Level 2 - Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. · Level 3 - Valuations based on inputs that are unobservable, supported by little or no market activity and that are significant to the fair value of the assets or liabilities. At December 31, 2017 and June 30, 2017, the fair values of cash and cash equivalents, inventory and accounts payable and accrued expenses approximate their carrying values due to their short-term nature.
Use of Estimates	Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the U.S requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. Significant estimates are used in reserve for inventory obsolescence, impairment analysis for fixed assets, accrual of potential liabilities, deferred tax assets and valuing our stock options, warrants, and common stock issued for services, among other items. Actual results could differ from these estimates.
Share-Based Compensation	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. The fair value of the Company's common stock options and warrants grant is estimated using the Black-Scholes option pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the common stock options, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes option pricing model and based on actual experience. The assumptions used in the Black-Scholes option pricing model could materially affect compensation expense recorded in future periods.
Dependence on Desmet Ballestra	Dependence on Desmet Ballestra Our revenue is almost entirely dependent on Desmet Ballestra who is our exclusive distribution agent with regard to the CTi Nano Neutralization® System During the six months ended December 31, 2017 and 2016, 98% and 100%, respectively, of our revenues were derived from Desmet sales efforts (see Note 4).
Earnings (Loss) Loss Per Share	Earnings( Loss) Per Share The Company’s computation of earnings (loss) per share (EPS) includes basic and diluted EPS. Basic EPS is calculated by dividing the Company’s net income (loss) available to common stockholders by the weighted average number of common shares during the period. Shares of restricted stock subject to vesting are included in basic weighted average common shares outstanding from the time they vest. Diluted EPS 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 net income (loss) of the Company. In computing diluted EPS, the treasury stock method assumes that outstanding options and warrants are exercised, and the proceeds are used to purchase common stock at the average market price and there were no instruments that would result in issuance of additional shares during the period. As of December 31, 2017, the Company had 11,685,852 stock options and 75,926,510 stock warrants outstanding to purchase shares of common stock that were not included in the diluted net loss per common share because their effect would be anti-dilutive.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers. ASU 2014-09 eliminated transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle-based approach for determining revenue recognition. ASU 2014-09 required that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also required additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 201-09 became part of Accounting Standards Codification (ASC) as Topic 606: Revenue from Contracts with Customers or ASC 606. We have adopted these changes using the full retrospective method by presenting as if the new revenue standard had been applied to all prior period financial statements presented herein (see Note 3). In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases 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.
Business and Credit Concentrations	Business and Credit Concentrations The Company’s cash balances in a financial institution at times may exceed federally insured limits. As of December 31, 2017, and June 30, 2017, before adjustments for outstanding checks and deposits in transit, the Company had $860,522 and $548,585, respectively, deposited in one financial institution. The deposits are federally insured up to $250,000. The Company believes that no significant concentration of credit risk exists with respect to these cash balances because of its assessment of the creditworthiness and financial viability of this financial institution. Recorded revenues during the six months ended December 31, 2017 of $677,855 were attributable to two customers (see Note 4).

3. Adoption of ASC 606, Reven16

3. Adoption of ASC 606, Revenue from Contracts with Customers (Tables)	6 Months Ended
	Dec. 31, 2017
Revenue from Contract with Customer [Abstract]
Effect of changes due to accounting pronouncement	Balance as Adjusted reported June Adjustments Due to balance at Balance Sheet 30, 2017 adoption of ASC 606 June 30, 2017 Assets Cash and cash equivalents $ 548,585 $ 548,585 Accounts receivable - $ 85,000 (A) 85,000 Inventory, net 143,136 143,136 Property and equipment, net 140,606 140,606 Other assets 12,404 12,404 Liabilities Accounts payable and accrued expenses 245,452 245,452 Accrued payroll and payroll taxes due to officers 994,033 994,033 Related party payable 1,147 1,147 Advances from distributor, net 748,819 (748,819 )(A)(B) - Stockholders' Deficit Preferred stock - - Common stock 196,798 196,798 Additional paid-in-capital 22,625,088 22,625,088 Accumulated deficit (23,966,606 ) 833,819 (B) (23,132,787 )

5. Property and Equipment (Tabl

5. Property and Equipment (Tables)	6 Months Ended
	Dec. 31, 2017
Property, Plant and Equipment [Abstract]
Schedule of property and equipment	December 31, June 30, 2017 2017 Leasehold improvement $ 2,475 $ 2,475 Furniture 26,837 26,837 Office equipment 1,499 1,499 Equipment 68,380 68,380 Systems 408,155 408,155 507,346 507,346 Less: accumulated depreciation and amortization (383,972 ) (366,740 ) Property and Equipment, net $ 123,374 $ 140,606

7. Stockholders' Deficit (Table

7. Stockholders' Deficit (Tables)	6 Months Ended
	Dec. 31, 2017
Equity [Abstract]
Stock Option activity table	Weighted- Average Weighted- Remaining Average Contractual Exercise Life Options Price (Years) Outstanding June 30, 2017 11,685,852 $ 0.37 2.41 - Granted - - Forfeited - - - - Exercised - - - - Expired - - - Outstanding December 31, 2017 11,685,852 $ 0.37 1.91 Exercisable and vested at December 31, 2017 11,685,852 $ 0.37 1.91
Schedule of options outstanding and exercisable	Options Outstanding Options Exercisable Weighted Weighted Weighted Average Average Average Exercise Number Remaining Exercise Number Remaining Price of Shares Life (Years) Price of Shares Life (Years) 0.03 11,000,000 4.71 0.03 11,000,000 4.71 0.33 174,022 0.39 0.33 174,022 0.39 0.67 511,830 0.47 0.67 511,830 0.47 11,685,852 11,685,852
Schedule of warrant activity	Weighted- Average Weighted- Remaining Average Contractual Exercise Life Warrants Price (Years) Outstanding at June 30, 2017 75,926,510 $ 0.08 4.81 Granted - - - Exercised - - - Expired - - - Outstanding at December 31, 2017 75,926,510 $ 0.08 4.31 Vested and exercisable at December 31, 2017 75,926,510 $ 0.08 4.31
Schedule of warrants outstanding and exercisable	Warrants Outstanding Warrants Exercisable Weighted Weighted Weighted Average Average Average Exercise Number Remaining Exercise Number Exercise Price of Shares Life (Years) Price of Shares Price 0.03 - 0.08 55,599,851 6.50 $ 0.05 55,599,851 $ 0.05 0.12 20,326,659 1.50 $ 0.12 20,326,659 $ 0.12 75,926,510 75,926,510

1. Organization and Basis of 19

1. Organization and Basis of Presentation (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Jun. 30, 2017	Jun. 30, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Net loss	$ 76,231	$ (261,756)	$ (65,843)	$ (510,478)
Working capital	(493,618)		(493,618)
Stockholders deficit	(360,744)		(360,744)		$ (310,901)
Cash and cash equivalents	$ 860,522	$ 399,430	$ 860,522	$ 399,430	$ 548,585	$ 657,396

2. Significant Accounting Pol20

2. Significant Accounting Policies (Details Narrative) - shares	6 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Options [Member]
Antidiutive shares	11,685,852
Warrants [Member]
Antidiutive shares	75,926,510
Sales Revenue, Net [Member] | Desmet Ballestra [Member]
Concentration risk	98.00%	100.00%

3. Adoption of ASC 606, Reven21

3. Adoption of ASC 606, Revenue from Contracts with Customers (Details) - USD ($)	Dec. 31, 2017	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016
Assets
Cash and cash equivalents	$ 860,522	$ 548,585	$ 399,430	$ 657,396
Accounts receivable	0	85,000
Inventory, net	118,725	143,136
Property and equipment, net	123,374	140,606
Other assets	9,500	12,404
Liabilities
Accounts payable and accrued expenses	344,317	245,452
Accrued payroll and payroll taxes due to officers	887,577	994,033
Related party payable	1,147	1,147
Advances from distributor, net		0
Stockholders’ Deficit
Preferred stock	0	0
Common stock	197,198	196,798
Additional paid-in-capital	22,640,688	22,625,088
Accumulated deficit	$ (23,198,630)	(23,132,787)
Adjustment due to ASC 606 [Member]
Assets
Accounts receivable		85,000
Liabilities
Advances from distributor, net		(748,819)
Stockholders’ Deficit
Accumulated deficit		833,819
Scenario, Previously Reported [Member]
Assets
Cash and cash equivalents		548,585
Accounts receivable		0
Inventory, net		143,136
Property and equipment, net		140,606
Other assets		12,404
Liabilities
Accounts payable and accrued expenses		245,452
Accrued payroll and payroll taxes due to officers		994,033
Related party payable		1,147
Advances from distributor, net		748,819
Stockholders’ Deficit
Preferred stock		0
Common stock		196,798
Additional paid-in-capital		22,625,088
Accumulated deficit		$ (23,966,606)

4. Agreement with Desmet Balles

4. Agreement with Desmet Ballestra (Details Narrative) - USD ($)	6 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Desmet Ballestra [Member]
Reactor sales	$ 450,130	$ 120,000
Gross profit share	215,000
GEA Westfalia [Member]
Reactor sales	12,725
Deferred revenue	239,824
Advance payments received	$ 252,549

5. Property and Equipment (Deta

5. Property and Equipment (Details) - USD ($)	Dec. 31, 2017	Jun. 30, 2017
Property, Plant and Equipment [Abstract]
Leasehold improvement	$ 2,475	$ 2,475
Furniture	26,837	26,837
Office equipment	1,499	1,499
Equipment	68,380	68,380
Systems	408,155	408,155
Property and equipment, gross	507,346	507,346
Less: accumulated depreciation and amortization	(383,972)	(366,740)
Property and equipment, net	$ 123,374	$ 140,606

5. Property and Equipment (De24

5. Property and Equipment (Details Narrative)	6 Months Ended
	Dec. 31, 2017USD ($)
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 17,232

6. Accrued Payroll and Payrol25

6. Accrued Payroll and Payroll Taxes to Officers and former officers (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Jun. 30, 2017
Accrued unpaid salaries	$ 887,577		$ 887,577		$ 994,033
Gain on extinguishment of debt	$ 100,972	$ 0	100,972	$ 0
Former Officer [Member]
Accrued unpaid salaries					$ 131,000
Payment to officer			30,000
Gain on extinguishment of debt			$ 100,972

7. Stockholders' Deficit (Detai

7. Stockholders' Deficit (Details - Option activity) - Options [Member] - $ / shares	6 Months Ended	12 Months Ended
	Dec. 31, 2017	Jun. 30, 2017
Options
Options outstanding, beginning balance	11,685,852
Options granted	0
Options forfeited	0
Options exercised	0
Options expired	0
Options outstanding, ending balance	11,685,852	11,685,852
Options exercisable and vested	11,685,852
Weighted Average Exercise Price
Weighted average exercise price, options outstanding, beginning price	$ 0.37
Weighted average exercise price, options outstanding, ending price	0.37	$ 0.37
Weighted average exercise price, exercisable and vested	$ 0.37
Weighted Average Remaining Contractual Life (Years)
Weighted average remaining contractual life, options outstanding	1 year 10 months 28 days	2 years 4 months 28 days
Weighted average remaining contractual life, options exercisable and vested	1 year 10 months 28 days

7. Stockholders' Deficit (Det27

7. Stockholders' Deficit (Details - Options by exercise price) - $ / shares	6 Months Ended	12 Months Ended
	Dec. 31, 2017	Jun. 30, 2017
Options [Member]
Number of shares outstanding	11,685,852	11,685,852
Weighted average remaining life options outstanding	1 year 10 months 28 days	2 years 4 months 28 days
Weighted average exercise price options outstanding	$ 0.37	$ 0.37
$0.03 Exercise Price [Member]
Number of shares outstanding	11,000,000
Weighted average remaining life options outstanding	4 years 8 months 16 days
Number of shares exercisable	11,000,000
Weighted average remaining life options exercisable	4 years 8 months 16 days
$0.33 Exercise Price [Member]
Number of shares outstanding	174,022
Weighted average remaining life options outstanding	4 months 20 days
Number of shares exercisable	174,022
Weighted average remaining life options exercisable	4 months 20 days
$0.67 Exercise Price [Member]
Number of shares outstanding	511,830
Weighted average remaining life options outstanding	5 months 19 days
Number of shares exercisable	511,830
Weighted average remaining life options exercisable	5 months 19 days

7. Stockholders' Deficit (Det28

7. Stockholders' Deficit (Details - Warrant activity) - Warrants [Member] - $ / shares	6 Months Ended	12 Months Ended
	Dec. 31, 2017	Jun. 30, 2017
Warrants
Warrants outstanding, beginning balance	75,926,510
Warrants granted	0
Warrants exercised	0
Warrants expired	0
Warrants outstanding, ending balance	75,926,510	75,926,510
Warrants vested and exercisable	75,926,510
Weighted Average Exercise Price
Weighted average exercise price, warrants outstanding, beginning price	$ 0.08
Weighted average exercise price, warrants outstanding, ending price	0.08	$ 0.08
Weighted average exercise price, warrants vested and exercisable	$ 0.08
Weighted Average Remaining Contractual Life
Weighted average remaining contractual life, outstanding	4 years 3 months 22 days	4 years 9 months 22 days
Weighted average remaining contractual life, warrants vested and exercisable	4 years 3 months 22 days

7. Stockholders' Deficit (Det29

7. Stockholders' Deficit (Details - Warrants by exercise price) - $ / shares	6 Months Ended	12 Months Ended
	Dec. 31, 2017	Jun. 30, 2017
Warrants [Member]
Number of warrant shares outstanding	75,926,510	75,926,510
Weighted average remaining life warrants outstanding	4 years 3 months 22 days	4 years 9 months 22 days
Weighted average exercise price warrants outstanding	$ 0.08	$ 0.08
$0.03-$0.07 [Member]
Number of warrant shares outstanding	55,599,851
Weighted average remaining life warrants outstanding	6 years 6 months
Weighted average exercise price warrants outstanding	$ .05
Number of warrant shares exercisable	55,599,851
Weighted average exercise price warrants exercisable	$ .05
$0.12 [Member]
Number of warrant shares outstanding	20,326,659
Weighted average remaining life warrants outstanding	1 year 6 months
Weighted average exercise price warrants outstanding	$ .12
Number of warrant shares exercisable	20,326,659
Weighted average exercise price warrants exercisable	$ .12

7. Stockholders' Deficit (Det30

7. Stockholders' Deficit (Details Narrative)	6 Months Ended
	Dec. 31, 2017USD ($)shares
Stock issued for services, value	$ 16,000
Options [Member]
Intrinsic value of outstanding options	0
Intrinsic value of warrants	$ 0
Consultants [Member]
Stock issued for services, shares | shares	400,000
Stock issued for services, value	$ 16,000