Cavitation (CVAT) 10-Q 21 May 18 2018 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Mar. 31, 2018	May 16, 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	Mar. 31, 2018
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		196,997,906
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2,018
Entity Small Business	true

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Mar. 31, 2018	Jun. 30, 2017
Current assets
Cash and cash equivalents	$ 880,000	$ 549,000
Accounts receivable	0	85,000
Inventory, net	117,000	143,000
Total current assets	997,000	777,000
Property and equipment, net	107,000	141,000
Other assets	10,000	12,000
Total assets	1,114,000	930,000
Current liabilities:
Accounts payable and accrued expenses	315,000	246,000
Accrued payroll and payroll taxes due to officers	863,000	994,000
Related party payable	1,000	1,000
Advances from distributor, net	362,000	0
Total current liabilities	1,541,000	1,241,000
Commitments and contingencies
Stockholders' deficit:
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued and outstanding as of March 31, 2018 and June 30, 2017, respectively	0	0
Common stock, $0.001 par value, 1,000,000,000 shares authorized, 196,997,906 and 196,797,906 shares issued and outstanding as of March 31, 2018 and June 30, 2017, respectively	196,998	196,798
Additional paid-in capital	22,641,002	22,625,088
Accumulated deficit	(23,265,000)	(23,133,000)
Total stockholders' deficit	(427,000)	(311,000)
Total liabilities and stockholders' deficit	$ 1,114,000	$ 930,000

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Mar. 31, 2018	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	196,997,906	196,797,906
Common Stock, shares outstanding	196,997,906	196,797,906

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Income Statement [Abstract]
Revenue	$ 300,000	$ 1,382,000	$ 977,000	$ 1,502,000
Cost of revenue	5,000	40,000	38,000	55,000
Gross profit	295,000	1,342,000	939,000	1,447,000
General and administrative expenses	356,000	765,000	1,160,000	1,373,000
Research and development expenses	4,000	7,000	13,000	15,000
Total operating expenses	360,000	772,000	1,173,000	1,388,000
Income (loss) from Operations	(65,000)	570,000	(234,000)	59,000
Gain on settlement of debt	0	0	101,000	0
Other income	0	0	1,000	0
Net income (loss)	$ (65,000)	$ 570,000	$ (132,000)	$ 59,000
Net income (loss) per share, Basic and Diluted	$ 0	$ 0	$ 0	$ 0
Weighted average shares outstanding - Basic and Diluted	196,997,906	194,197,906	196,996,446	194,197,906

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) (Unaudited) - USD ($)	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Total
Beginning balance, shares at May. 31, 2017	196,797,906
Beginning balance, value at May. 31, 2017	$ 196,798	$ 22,625,202	$ (23,967,000)	$ (1,145,000)
Adjustment upon adoption of ASC 606			834,000	834,000
Ending balance, shares at Jun. 30, 2017	196,797,906
Ending balance, value at Jun. 30, 2017	$ 196,798	22,625,202	(23,133,000)	(311,000)
Issuance of common stock for services, shares	400,000
Issuance of common stock for services, value	$ 400	15,600		16,000
Cancellation of common stock granted to Director, shares	(200,000)
Cancellation of common stock granted to Director, value	$ (200)	200
Net loss			(132,000)	(132,000)
Ending balance, shares at Mar. 31, 2018	196,997,906
Ending balance, value at Mar. 31, 2018	$ 196,998	$ 22,641,002	$ (23,265,000)	$ (427,000)

Condensed Consolidated Stateme6

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Operating activities:
Net income (loss)	$ (132,000)	$ 59,000
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	36,000	30,000
Stock compensation expense	16,000	394,000
Gain on settlement of debt	(101,000)	0
Changes in operating assets and liabilities:
Accounts receivable	85,000	0
Inventory	26,000	(76,000)
Accounts payable and accrued expenses	69,000	(21,000)
Accrued payroll and payroll taxes due to officers	(30,000)	0
Advances from distributor	362,000	(436,000)
Net cash provided by (used in) operating activities	331,000	(50,000)
Investing activities:
Purchase of property and equipment	0	(41,000)
Net cash used in investing activities	0	(41,000)
Change in cash	331,000	(91,000)
Cash, beginning of period	549,000	657,000
Cash, end of period	880,000	566,000
Supplemental disclosures of cash flow information:
Cash paid for interest	0	0
Cash paid for income taxes	$ 0	$ 2,000

1. Organization and Basis of Pr

1. Organization and Basis of Presentation	9 Months Ended
	Mar. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Basis of Presentation	Note 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 nine months ended March 31, 2018 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 On 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. Upon adoption of this new standard, there was a change in previously reported statement of operations for the three and nine months ended March 31, 2017 (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 nine months ended March 31, 2018, the Company recorded a net loss of $132,000 and as of March 31, 2018, had a working capital deficiency of $544,000 and a total stockholders’ deficit of $427,000. 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 the Company’s audited financial statements for the fiscal year ended June 30, 2017 expressed doubt about its 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 March 31, the Company had cash on hand of $880,000 and was not generating sufficient funds to cover operations. In addition to the funds on hand, management believes it may require additional funds to continue to operate its business. Management’s plan is to generate income from operations by continuing to license our technology globally through its 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. The Company 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	9 Months Ended
	Mar. 31, 2018
Accounting Policies [Abstract]
Significant Accounting Policies	Note 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. 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, realizability of deferred tax assets and fair value of stock options, warrants, and common stock issued for services, among other items. Actual results could differ from these estimates. Dependence on Major Customers Through June 30, 2017, the Company’s revenue was entirely dependent on Desmet Ballestra which is its exclusive distribution agent with regard to the CTi Nano Neutralization® System In January 2017, the Company executed a similar agreement with another distributor, GEA for its Nano Reactor™ technology. As a result of this agreement, during the period ended March 31, 2018, the Company recognized revenues of $13,000 from the sale of reactors and received advances totaling $327,000 as of March 31, 2018 which will be applied to future gross profit revenues. During the nine months ended March 31, 2018 and 2017, 98% and 100%, respectively, of the Company’s 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 March 31, 2018, the Company had 11,685,852 stock options and 75,926,509 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 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 March 31, 2018, and June 30, 2017, the Company had $880,000 and $549,000, 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 nine months ended March 31, 2018 and 2017 of $977,000 and $1,502,000, respectively, were attributable to two customers (see Note 4).

3. Adoption of ASC 606, Revenue

3. Adoption of ASC 606, Revenue from Contracts with Customers	9 Months Ended
	Mar. 31, 2018
Revenue from Contract with Customer [Abstract]
Adoption of ASC 606, Revenue from Contracts with Customers	Note 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, 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. Sales revenue from the sale of its Nano Reactors continues to be recognized when products are shipped from its 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 its distributor. In addition, the Company has no control with regards to the sale and installation of Nano Neutralization System, between its 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 its 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. The effect of the changes made to the Company’s previously reported consolidated June 30, 2017 balance sheet for the adoption of ASC 606, were as follows: Balance at Adjustments Due to Adjusted balance at Balance Sheet June 30, 2017 ASC 606 June 30, 2017 Assets Cash $ 549,000 $ 549,000 Accounts receivable - $ 85,000 (A) 85,000 Inventory, net 143,000 143,000 Property and equipment, net 141,000 141,000 Other assets 12,000 12,000 Liabilities Accounts payable and accrued expenses 245,000 245,000 Accrued payroll and payroll taxes due to officers 994,000 994,000 Related party payable 1,000 1,000 Advances from distributor, net 749,000 (749,000 )(A)(B) - Stockholders’ Deficit Preferred stock - - Common stock 196,798 196,798 Additional paid-in-capital 22,625,000 22,625,000 Accumulated deficit (23,967,000 ) 834,000 (B) (23,133,000 ) 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 $834,000 as of June 30, 2017, also received from the same distributor. B – To record gross profit revenues amounting to $834,000 in accordance with the new revenue standards, of which, $700,000 was also recorded during the three and nine-months ended March 31, 2017. The effect of the changes made to our previously reported consolidated statements of operations for the three and nine-months ended March 31, 2017 for the adoption of ASC 606, were as follows: I. Three Months Ended March 31, 2017 Balance at March 31, 2017 Adjustments Due to ASC 606 Adjusted balance at March 31, 2017 Revenue $ 682,000 $ 700,000 (C) $ 1,382,000 Gross Profit 642,000 700,000 (C) 1,342,000 Net income (loss) (130,000 ) 700,000 (C) 570,000 II. Nine Months Ended March 31, 2017 Balance at March 31, 2017 Adjustments Due to ASC 606 Adjusted balance at March 31, 2017 Revenue $ 802,000 $ 700,000 (C) $ 1,502,000 Gross Profit 747,000 700,000 (C) 1,447,000 Net income (loss) (641,000 ) 700,000 (C) 59,000 C - To record gross profit revenues amounting to $700,000 in accordance with the new revenue standards.

4. Agreements with Distributors

4. Agreements with Distributors	9 Months Ended
	Mar. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Agreement with Distributors	Note 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 its 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 period ended March 31, 2018, the Company recorded revenues of $504,000 from reactor sales and $460,000 from gross profit share for a total of $964,000 and received $550,000 of advance payments pursuant to the 2016 agreement. As of March 31, 2018, $55,000 of the recorded revenues was not yet collected, as such, for financial reporting purposes the Company deducted this amount from the advance payments received which resulted in a net balance of $35,000 in advances from Desmet. GEA Westfalia Agreement In January 2017 the Company entered into a global technology license, R&D and marketing agreement with respect to its 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 the Company 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 the Company. 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 technology of the company is based on over one hundred fifteen years of service providing 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 March 31, 2018, the Company recorded revenues of $13,000 from reactor sales and received $327,000 of advance payments pursuant to the 2017 agreement. There were no gross profit revenues attributable from the reactors sold. As of March 31, 2018, advances from the distributor amounted to $327,000.

5. Property and Equipment

5. Property and Equipment	9 Months Ended
	Mar. 31, 2018
Property, Plant and Equipment [Abstract]
Property and Equipment	Note 5 - Property and Equipment Property and equipment consisted of the following as of March 31, 2018 and June 30, 2017: March 31, June 30, 2018 2017 unaudited Leasehold improvement $ 2,000 $ 2,000 Furniture 27,000 27,000 Office equipment 2,000 2,000 Equipment 68,000 68,000 Systems 408,000 408,000 507,000 507,000 Less: accumulated depreciation and amortization (400,000 ) (366,000 ) Property and Equipment, net $ 107,000 $ 141,000 Depreciation expense for the nine months ended March 31, 2018 and 2017 amounted to $34,000 and $20,000, respectively.

6. Accrued Payroll and Payroll

6. Accrued Payroll and Payroll Taxes	9 Months Ended
	Mar. 31, 2018
Payables and Accruals [Abstract]
Accrued Payroll and Payroll Taxes	Note 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 $994,000. 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 $101,000 to extinguish the remaining accrual. As of March 31, 2018, the Company had accrued salaries to current and former officers of the Company amounting to $863,000.

7. Stockholders' Deficit

7. Stockholders' Deficit	9 Months Ended
	Mar. 31, 2018
Equity [Abstract]
Stockholders' Deficit	Note 7 - Stockholders’ Deficit Common Stock During the period ended March 31, 2018, the Company issued 400,000 shares of common stock with a fair value of $16,000 to consultants for services rendered. The shares were valued at their respective date of issuance. During the period ended March 31, 2018, the Company cancelled 200,000 shares of common stock that was previously granted to a member of the Board of Directors. 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 nine months ended March 31, 2018 is as follows: Options Weighted Average Weighted Outstanding – June 30, 2017 11,685,852 $ 0.07 4.27 Granted - Forfeited/cancelled - Exercised - Outstanding – March 31, 2018 11,685,852 $ 0.07 1.66 As of March 31, 2018, all options granted were vested and exercisable. Intrinsic value of the outstanding options as of March 31, 2018 amounted to $55,000. The following table summarizes additional information concerning options outstanding and exercisable at March 31, 2018. Options Outstanding Options Exercisable Exercise Price Number of Weighted Exercise Number of Weighted $ 0.03 11,000,000 4.61 $ 0.03 11,000,000 4.61 $ 0.33 174,022 0.42 $ 0.33 174,022 0.42 $ 0.67 511,830 0.22 $ 0.67 511,830 0.22 11,685,852 11,685,852 Warrants A summary of the Company’s warrant activity and related information for the nine months ended on March 31, 2018 is as follows. Warrants Weighted Average Weighted Outstanding – June 30, 2017 75,926,509 $ 0.06 4.81 Granted - Forfeited/cancelled - Exercised - Outstanding – March 31, 2018 75,926,509 $ 0.06 4.06 As of March 31, 2018, all warrants granted were vested and exercisable. Intrinsic value of the outstanding warrants as of March 31, 2018 amounted to $58,000. The following table summarizes additional information concerning warrants outstanding and exercisable at March 31, 2018. Options Outstanding Options Exercisable Exercise Price Number of Weighted Exercise Number of Weighted $0.03 - $0.08 55,599,851 6.46 $0.03 - $0.08 55,599,851 6.46 $0.12 20,326,658 1.28 $0.12 20,326,658 1.28 75,926,509 75,926,509

8. Commitments and Contingencie

8. Commitments and Contingencies	9 Months Ended
	Mar. 31, 2018
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Note 8 - 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 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 March 31, 2018. On April 30, 2008 and as amended on November 22, 2010, the Company’s 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 March 31, 2018, 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)	9 Months Ended
	Mar. 31, 2018
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.
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, realizability of deferred tax assets and fair value of stock options, warrants, and common stock issued for services, among other items. Actual results could differ from these estimates.
Dependence on Major Customers	Dependence on Major Customers Through June 30, 2017, the Company’s revenue was entirely dependent on Desmet Ballestra which is its exclusive distribution agent with regard to the CTi Nano Neutralization® System In January 2017, the Company executed a similar agreement with another distributor, GEA for its Nano Reactor™ technology. As a result of this agreement, during the period ended March 31, 2018, the Company recognized revenues of $13,000 from the sale of reactors and received advances totaling $327,000 as of March 31, 2018 which will be applied to future gross profit revenues. During the nine months ended March 31, 2018 and 2017, 98% and 100%, respectively, of the Company’s 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 March 31, 2018, the Company had 11,685,852 stock options and 75,926,509 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 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 March 31, 2018, and June 30, 2017, the Company had $880,000 and $549,000, 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 nine months ended March 31, 2018 and 2017 of $977,000 and $1,502,000, respectively, 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)	9 Months Ended
	Mar. 31, 2018
Revenue from Contract with Customer [Abstract]
Effect of changes due to accounting pronouncement	The effect of the changes made to the Company’s previously reported consolidated June 30, 2017 balance sheet for the adoption of ASC 606, were as follows: Balance at Adjustments Due to Adjusted balance at Balance Sheet June 30, 2017 ASC 606 June 30, 2017 Assets Cash $ 549,000 $ 549,000 Accounts receivable - $ 85,000 (A) 85,000 Inventory, net 143,000 143,000 Property and equipment, net 141,000 141,000 Other assets 12,000 12,000 Liabilities Accounts payable and accrued expenses 245,000 245,000 Accrued payroll and payroll taxes due to officers 994,000 994,000 Related party payable 1,000 1,000 Advances from distributor, net 749,000 (749,000 )(A)(B) - Stockholders’ Deficit Preferred stock - - Common stock 196,798 196,798 Additional paid-in-capital 22,625,000 22,625,000 Accumulated deficit (23,967,000 ) 834,000 (B) (23,133,000 ) 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 $834,000 as of June 30, 2017, also received from the same distributor. B – To record gross profit revenues amounting to $834,000 in accordance with the new revenue standards, of which, $700,000 was also recorded during the three and nine-months ended March 31, 2017. The effect of the changes made to our previously reported consolidated statements of operations for the three and nine-months ended March 31, 2017 for the adoption of ASC 606, were as follows: I. Three Months Ended March 31, 2017 Balance at March 31, 2017 Adjustments Due to ASC 606 Adjusted balance at March 31, 2017 Revenue $ 682,000 $ 700,000 (C) $ 1,382,000 Gross Profit 642,000 700,000 (C) 1,342,000 Net income (loss) (130,000 ) 700,000 (C) 570,000 II. Nine Months Ended March 31, 2017 Balance at March 31, 2017 Adjustments Due to ASC 606 Adjusted balance at March 31, 2017 Revenue $ 802,000 $ 700,000 (C) $ 1,502,000 Gross Profit 747,000 700,000 (C) 1,447,000 Net income (loss) (641,000 ) 700,000 (C) 59,000 C - To record gross profit revenues amounting to $700,000 in accordance with the new revenue standards.

5. Property and Equipment (Tabl

5. Property and Equipment (Tables)	9 Months Ended
	Mar. 31, 2018
Property, Plant and Equipment [Abstract]
Schedule of property and equipment	March 31, June 30, 2018 2017 unaudited Leasehold improvement $ 2,000 $ 2,000 Furniture 27,000 27,000 Office equipment 2,000 2,000 Equipment 68,000 68,000 Systems 408,000 408,000 507,000 507,000 Less: accumulated depreciation and amortization (400,000 ) (366,000 ) Property and Equipment, net $ 107,000 $ 141,000

7. Stockholders' Deficit (Table

7. Stockholders' Deficit (Tables)	9 Months Ended
	Mar. 31, 2018
Equity [Abstract]
Stock Option activity table	Options Weighted Average Weighted Outstanding – June 30, 2017 11,685,852 $ 0.07 4.27 Granted - Forfeited/cancelled - Exercised - Outstanding – March 31, 2018 11,685,852 $ 0.07 1.66
Schedule of options outstanding and exercisable	Options Outstanding Options Exercisable Exercise Price Number of Weighted Exercise Number of Weighted $ 0.03 11,000,000 4.61 $ 0.03 11,000,000 4.61 $ 0.33 174,022 0.42 $ 0.33 174,022 0.42 $ 0.67 511,830 0.22 $ 0.67 511,830 0.22 11,685,852 11,685,852
Schedule of warrant activity	Warrants Weighted Average Weighted Outstanding – June 30, 2017 75,926,509 $ 0.06 4.81 Granted - Forfeited/cancelled - Exercised - Outstanding – March 31, 2018 75,926,509 $ 0.06 4.06
Schedule of warrants outstanding and exercisable	Options Outstanding Options Exercisable Exercise Price Number of Weighted Exercise Number of Weighted $0.03 - $0.08 55,599,851 6.46 $0.03 - $0.08 55,599,851 6.46 $0.12 20,326,658 1.28 $0.12 20,326,658 1.28 75,926,509 75,926,509

1. Organization and Basis of 19

1. Organization and Basis of Presentation (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017	Jun. 30, 2017	May 31, 2017	Jun. 30, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Net loss	$ (65,000)	$ 570,000	$ (132,000)	$ 59,000
Working capital	(544,000)		(544,000)
Stockholders deficit	(427,000)		(427,000)		$ (311,000)	$ (1,145,000)
Cash and cash equivalents	$ 880,000	$ 566,000	$ 880,000	$ 566,000	$ 549,000		$ 657,000

2. Significant Accounting Pol20

2. Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Revenues	$ 300,000	$ 1,382,000	$ 977,000	$ 1,502,000
Reactor Sales [Member]
Revenues			13,000
Deferred revenues	$ 327,000		$ 327,000
Options [Member]
Antidiutive shares			11,685,852
Warrants [Member]
Antidiutive shares			75,926,509
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 - Balance Sheet) - USD ($)	Mar. 31, 2018	Jun. 30, 2017	Mar. 31, 2017	Jun. 30, 2016
Assets
Cash and cash equivalents	$ 880,000	$ 549,000	$ 566,000	$ 657,000
Accounts receivable	0	85,000
Inventory, net	117,000	143,000
Property and equipment, net	107,000	141,000
Other assets	10,000	12,000
Liabilities
Accounts payable and accrued expenses	315,000	246,000
Accrued payroll and payroll taxes due to officers	863,000	994,000
Related party payable	1,000	1,000
Advances from distributor, net		0
Stockholders’ Deficit
Preferred stock	0	0
Common stock	196,998	196,798
Additional paid-in-capital	22,641,002	22,625,088
Accumulated deficit	$ (23,265,000)	(23,133,000)
Adjustment due to ASC 606 [Member]
Assets
Accounts receivable		85,000
Liabilities
Advances from distributor, net		(749,000)
Stockholders’ Deficit
Accumulated deficit		834,000
Scenario, Previously Reported [Member]
Assets
Cash and cash equivalents		549,000
Accounts receivable		0
Inventory, net		143,000
Property and equipment, net		141,000
Other assets		12,000
Liabilities
Accounts payable and accrued expenses		245,000
Accrued payroll and payroll taxes due to officers		994,000
Related party payable		1,000
Advances from distributor, net		749,000
Stockholders’ Deficit
Preferred stock		0
Common stock		196,798
Additional paid-in-capital		22,625,000
Accumulated deficit		$ (23,967,000)

3. Adoption of ASC 606, Reven22

3. Adoption of ASC 606, Revenue from Contracts with Customers (Details - Income Statement) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
Revenues	$ 300,000	$ 1,382,000	$ 977,000	$ 1,502,000
Gross Profit	295,000	1,342,000	939,000	1,447,000
Net income (loss)	$ (65,000)	570,000	$ (132,000)	59,000
Adjustment due to ASC 606 [Member]
Revenues		700,000		700,000
Gross Profit		700,000		700,000
Net income (loss)		700,000		700,000
Scenario, Previously Reported [Member]
Revenues		682,000		802,000
Gross Profit		642,000		747,000
Net income (loss)		$ (130,000)		$ (641,000)

4. Agreement with Desmet Balles

4. Agreement with Desmet Ballestra (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017	Jun. 30, 2017
Revenues	$ 300,000	$ 1,382,000	$ 977,000	$ 1,502,000
Advances from distributor, net	362,000		362,000		$ 0
Reactor Sales [Member]
Revenues			13,000
Deferred revenue	327,000		327,000
Desmet Ballestra [Member]
Revenues				964,000
Deferred revenue	550,000		550,000
Advance payments received				$ 550,000
Advances from distributor, net	35,000		35,000
Desmet Ballestra [Member] | Reactor Sales [Member]
Revenues			504,000
Desmet Ballestra [Member] | Gross Profit Share [Member]
Revenues			460,000
GEA Westfalia [Member]
Deferred revenue	327,000		327,000
Advance payments received			327,000
Advances from distributor, net	$ 327,000		327,000
GEA Westfalia [Member] | Reactor Sales [Member]
Revenues			$ 13,000

5. Property and Equipment (Deta

5. Property and Equipment (Details) - USD ($)	Mar. 31, 2018	Jun. 30, 2017
Property, Plant and Equipment [Abstract]
Leasehold improvement	$ 2,000	$ 2,000
Furniture	27,000	27,000
Office equipment	2,000	2,000
Equipment	68,000	68,000
Systems	408,000	408,000
Property and equipment, gross	507,000	507,000
Less: accumulated depreciation and amortization	(400,000)	(366,000)
Property and equipment, net	$ 107,000	$ 141,000

5. Property and Equipment (De25

5. Property and Equipment (Details Narrative) - USD ($)	9 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 34,000	$ 20,000

6. Accrued Payroll and Payrol26

6. Accrued Payroll and Payroll Taxes to Officers and former officers (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017	Jun. 30, 2017
Accrued unpaid salaries	$ 863,000		$ 863,000		$ 994,000
Gain on extinguishment of debt	0	$ 0	101,000	$ 0
Former Officer [Member]
Accrued unpaid salaries	$ 0		0		$ 131,000
Payment to officer			30,000
Gain on extinguishment of debt			$ 101,000

7. Stockholders' Deficit (Detai

7. Stockholders' Deficit (Details - Option activity) - Options [Member] - $ / shares	9 Months Ended	12 Months Ended
	Mar. 31, 2018	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
Weighted Average Exercise Price
Weighted average exercise price, options outstanding, beginning price	$ 0.07
Weighted average exercise price, options outstanding, ending price	$ 0.07	$ 0.07
Weighted Average Remaining Contractual Life (Years)
Weighted average remaining contractual life, options outstanding	1 year 7 months 28 days	4 years 3 months 7 days

7. Stockholders' Deficit (Det28

7. Stockholders' Deficit (Details - Options by exercise price) - $ / shares	9 Months Ended	12 Months Ended
	Mar. 31, 2018	Jun. 30, 2017
Options [Member]
Number of shares outstanding	11,685,852	11,685,852
Weighted average remaining life options outstanding	1 year 7 months 28 days	4 years 3 months 7 days
Weighted average exercise price options outstanding	$ 0.07	$ 0.07
$0.03 Exercise Price [Member]
Number of shares outstanding	11,000,000
Weighted average remaining life options outstanding	4 years 7 months 10 days
Number of shares exercisable	11,000,000
Weighted average remaining life options exercisable	4 years 7 months 10 days
$0.33 Exercise Price [Member]
Number of shares outstanding	174,022
Weighted average remaining life options outstanding	5 months 1 day
Number of shares exercisable	174,022
Weighted average remaining life options exercisable	5 months 1 day
$0.67 Exercise Price [Member]
Number of shares outstanding	511,830
Weighted average remaining life options outstanding	2 months 19 days
Number of shares exercisable	511,830
Weighted average remaining life options exercisable	2 months 19 days

7. Stockholders' Deficit (Det29

7. Stockholders' Deficit (Details - Warrant activity) - Warrants [Member] - $ / shares	9 Months Ended	12 Months Ended
	Mar. 31, 2018	Jun. 30, 2017
Warrants
Warrants outstanding, beginning balance	75,926,509
Warrants granted	0
Warrants exercised	0
Warrants expired	0
Warrants outstanding, ending balance	75,926,509	75,926,509
Weighted Average Exercise Price
Weighted average exercise price, warrants outstanding, beginning price	$ 0.06
Weighted average exercise price, warrants outstanding, ending price	$ 0.06	$ 0.06
Weighted Average Remaining Contractual Life
Weighted average remaining contractual life, outstanding	4 years 22 days	4 years 9 months 22 days

7. Stockholders' Deficit (Det30

7. Stockholders' Deficit (Details - Warrants by exercise price) - $ / shares	9 Months Ended	12 Months Ended
	Mar. 31, 2018	Jun. 30, 2017
Warrants [Member]
Number of warrant shares outstanding	75,926,509	75,926,509
Weighted average remaining life warrants outstanding	4 years 22 days	4 years 9 months 22 days
Weighted average exercise price warrants outstanding	$ 0.06	$ 0.06
Number of warrant shares exercisable	75,926,509
$0.03-$0.08 [Member]
Number of warrant shares outstanding	55,599,851
Weighted average remaining life warrants outstanding	6 years 5 months 16 days
Weighted average exercise price warrants outstanding	$0.03 - $0.08
Number of warrant shares exercisable	55,599,851
$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	20,326,658

7. Stockholders' Deficit (Det31

7. Stockholders' Deficit (Details Narrative)	9 Months Ended
	Mar. 31, 2018USD ($)shares
Stock issued for services, value	$ 16,000
Options [Member]
Intrinsic value of outstanding options	55,000
Warrants [Member]
Intrinsic value of warrants	$ 58,000
Consultants [Member]
Stock issued for services, shares | shares	400,000
Stock issued for services, value	$ 16,000
Director [Member]
Cancellation of common stock granted to Director, shares | shares	200,000