OTC:CVAT
Cavitation Technologies, Inc.
A specialized developer of ultrasonic cavitation equipment targeting industrial cleaning and material processing niches with volatile but recovering revenue streams.
Key Metrics
Investment Thesis
Bull Case
Investors might consider CVAT due to its substantial paid-in capital of $26.7M providing a buffer against short-term operational volatility and a positive investing cash flow suggesting ongoing asset acquisition or R&D investment. The company's current assets of $286,000 relative to total liabilities of $228,000 indicates a conservative balance sheet structure that could support future market expansion once revenue stabilizes.
Bear Case
Potential investors should avoid this stock given the repeated net losses and a massive retained earnings deficit of -$27M which signals fundamental profitability challenges over the last three years. The sharp decline in revenue from 2024 to 2025 combined with negative operating cash flow of -$806k raises serious concerns about the sustainability of its business model without external financing.
About Cavitation Technologies, Inc.
Cavitation Technologies, Inc. specializes in high-frequency ultrasonic cavitation equipment designed for industrial cleaning and material processing applications. The company primarily serves markets requiring precision non-contact cleaning solutions, leveraging proprietary acoustic technology to remove contaminants from sensitive components. While recent annual revenue has fluctuated significantly between 2023 and 2025, the firm maintains a focus on developing next-generation cavitation systems for niche industrial sectors.
Analysis
Management Discussion
The company reported a net loss of -$113,000 for the latest period, which contrasts sharply with an operating profit of -$987,000 due to significant non-cash adjustments totaling -$679,000. Revenue has experienced extreme volatility, dropping from $1.4M in 2024 to just $0.2M in 2025, while the company continues to generate positive investing cash flow of $880,000. Despite a healthy ending cash balance of $249,000, the persistent operating losses and large deficit in retained earnings warrant close scrutiny regarding sustainable growth strategies.
Industry Overview
The industrial cleaning and ultrasonic processing sector is highly specialized, often dominated by established players with long-term customer contracts in manufacturing and automotive industries. Companies in this space must navigate rigorous certification requirements and rapidly evolving technology standards to maintain relevance in niche applications like semiconductor wafer cleaning or medical device sterilization.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Revenue | $413.0K | $1.4M | $203.0K |
| Cost of Revenue | $121.0K | $156.0K | $38.0K |
| Gross Profit | $312.0K | $1.2M | $165.0K |
| Operating Expenses | $1.2M | $769.0K | $1.2M |
| Operating Income | $-886.0K | $438.0K | $-987.0K |
| R&D | $3.0K | $61.0K | $95.0K |
| G&A | $1.2M | $708.0K | $1.1M |
| Depreciation | $3.0K | $1.0K | $0 |
| Other OpEx | $0 | $0 | $0 |
| Non-Operating Income | $-1.2M | $0 | $0 |
| Interest Expense | $6.0K | $-1.0K | $6.0K |
| Pre-Tax Income | $-2.0M | $438.0K | $-987.0K |
| Income Tax | $0 | $-1.0K | $-874.0K |
| Continuing Ops | $-2.0M | $439.0K | $-113.0K |
| Discontinued Ops | $0 | $0 | $0 |
| Net Income | $-2.0M | $439.0K | $-113.0K |
| Minority Interest | $0 | $0 | $0 |
| Net to Common | $-2.0M | $439.0K | $-113.0K |
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Current Assets | $18.0K | $195.0K | $286.0K |
| Cash & Equivalents | $18.0K | $179.0K | $249.0K |
| Accounts Receivable | $0 | — | $10.0K |
| Inventory | $0 | — | — |
| Other Current Assets | $0 | $16.0K | $27.0K |
| Long-Term Assets | $125.0K | $53.0K | $11.0K |
| PP&E (Net) | $1.0K | $0 | — |
| Operating Leases | $113.0K | $42.0K | $0 |
| Other LT Assets | $10.0K | $10.0K | $10.0K |
| Total Assets | $143.0K | $248.0K | $297.0K |
| Current Liabilities | $864.0K | $598.0K | $102.0K |
| Current Leases | $68.0K | $46.0K | $0 |
| Deferred Revenue | $391.0K | $0 | — |
| Other Current Liab | $405.0K | $552.0K | $102.0K |
| Long-Term Liabilities | $198.0K | $130.0K | $126.0K |
| Long-Term Debt | $145.0K | $130.0K | $126.0K |
| LT Operating Leases | $53.0K | $0 | $0 |
| Other LT Liab | $0 | $0 | $0 |
| Total Liabilities | $1.1M | $728.0K | $228.0K |
| Shareholders' Equity | $-919.0K | $-480.0K | $69.0K |
| Paid-In Capital | $26.1M | $26.1M | $26.7M |
| Retained Earnings | $-27.3M | $-26.8M | $-27.0M |
| Total L&E | $143.0K | $248.0K | $297.0K |
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Net Income (CFO) | $-2.0M | $439.0K | $-113.0K |
| Non-Cash Adjustments | $1.4M | $645.0K | $-679.0K |
| Working Capital Changes | $188.0K | $-912.0K | $-14.0K |
| Cash from Operations | $-423.0K | $172.0K | $-806.0K |
| Cash from Investing | $0 | $0 | $880.0K |
| Cash from Financing | $0 | $-11.0K | $-4.0K |
| FX Effect | $0 | $0 | $0 |
| Net Change in Cash | $-423.0K | $161.0K | $70.0K |
| Beginning Cash | $441.0K | $18.0K | $179.0K |
| Ending Cash | $18.0K | $179.0K | $249.0K |
Frequently Asked Questions
How does Cavitation Technologies, Inc. make money?
Industrial Cleaning Equipment Manufacturing", "Material Processing Solutions", "Custom Cavitation System Development", "After-Sales Service and Maintenance
What are the main risks for CVAT?
Severe profitability volatility indicated by net losses of $2.0M in 2023 and -$113k in the latest fiscal year", "Significant operating cash burn with negative operating cash flow of -$806k despite minimal depreciation needs", "Substantial retained earnings deficit of $27M suggesting potential capital structure fragility or historical loss accumulation", "High sensitivity to revenue fluctuations as seen in the drop from $1.4M in 2024 to $0.2M in 2025
What is CVAT's competitive advantage?
Proprietary high-frequency acoustic technology that offers superior cleaning efficiency compared to traditional methods", "Niche market positioning in specialized industrial sectors with lower direct competition", "Cost-efficient manufacturing model supported by significant paid-in capital relative to current assets
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.