Cavitation Technologies, Inc.

Cavitation Technologies, Inc. Annual Report - Plain Talk for Investors
Your no-nonsense guide to their year...

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1. What They Do

Cavitation Technologies builds machines that harness “cavitation” (tiny imploding bubbles in liquid) to clean and process materials like cooking oils, biofuels, and wastewater. This year, they targeted food producers and renewable energy plants. Key detail: A skeleton crew of 3 full-time employees (plus contractors) runs the show, specializing in this niche tech.

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2. Financial Snapshot

• Revenue: $5 million (down from $6.2 million last year).
• Profit: Lost $1.5 million, but improved from last year’s $2 million loss.
• Why the drop?: Supply chain delays and slower customer decisions hurt sales.
• Royalty Relief: Two ex-execs waived 10% total royalty fees through 2025. But… a 2008 patent deal still hangs over them—if those patents ever profit, 3-5% goes to an inventor.

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3. Wins vs. Struggles

✅ Highlights:

• Landed a major cooking oil client.
• Launched a budget-friendly machine for smaller companies.
• Secured a new wastewater patent and upped R&D spending by 56% ($95k this year).

🚨 Lowlights:

• A key client went bankrupt, leaving bills unpaid.
• Steel costs spiked, delaying deliveries by 3+ months.
• Reliance on just 3 full-time employees creates vulnerability.

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4. Cash Situation

• Cash on Hand: $2.8 million (down from $4.1 million last year).
• Monthly Burn: ~$200k. At this rate, they have ~14 months of runway left.
• Debt: Only $500k—manageable, but growth is critical to avoid fundraising.

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5. Risks to Watch

• Team Risk: Losing 1 of 3 key employees could derail operations.
• Cybersecurity: Weak data protections could expose trade secrets.
• Royalty Trap: Old patents could trigger surprise payouts.
• Supply Chains: Delays still threaten customer relationships.

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6. Competition Check

They’re a minnow in a big pond (3 employees vs. giants like Ecolab’s 47,000+). Their edge? More energy-efficient tech and aggressive R&D. Lost some market share this year but kept their “innovator” cred.

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7. Leadership & Strategy

• CEO: Roman Gordon (founder, 15+ years in charge).
• Pivot: Doubling down on renewable energy (biofuels) and stepping back from fossil fuel clients.

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8. The Road Ahead

• 2024 Outlook: More losses expected, but smaller if sales rebound.
• Big Bet: Wastewater tech could be a game-changer… if it gains traction.
• Cash Crunch?: May need loans or stock sales to stay afloat by late 2024.

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9. External Factors

• Opportunities: Green energy incentives could boost biofuel/wastewater demand.
• Threats: Tighter food safety rules might slow adoption by cautious clients.

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Key Takeaways for Investors

• Strengths: Innovative tech, royalty relief, and a lean operation.
• Weaknesses: Tiny team, cash burn, and reliance on shaky supply chains.
• Verdict: High-risk, high-reward. The 56% R&D boost and renewable pivot show ambition, but profitability remains distant. Only invest if you:
  1. Believe in their wastewater/biofuel bets
  2. Can stomach volatility
  3. Trust management to execute with limited resources

Think of it as a speculative tech stock with a niche twist—not for the faint of heart.

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Report clarity note: The company provided fewer operational details than typical public filings. Proceed with extra caution due to limited transparency.