See accompanying notes, which are an integral part
of these condensed consolidated financial statements
See accompanying notes, which are an integral part
of these condensed consolidated financial statements
See accompanying notes, which are an integral part of these condensed
consolidated financial statements
See accompanying notes, which are an integral part
of these condensed consolidated financial statements
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
As of and for the nine months ended March 31, 2021 and 2020
Note 1 - Organization and Summary of Significant Accounting Policies
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.
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, 2021 are not indicative of the results that may be expected for
the fiscal year ending June 30, 2020. 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,
2020 filed on October 13, 2020. The condensed consolidated balance sheet as of June 30, 2020 has been derived from the audited financial
statements included in the Form 10-K for that year.
Going Concern
The accompanying condensed consolidated financial
statements have been prepared in conformity with generally accepted accounting principles which contemplates continuation of the Company
as a going concern. During the nine months ended March 31, 2021, the Company incurred a loss of $270,000, the Company had a stockholders’
deficit of $760,000 and a working capital deficit of $644,000. These factors, among others, raise substantial doubt about the Company's
ability to continue as a going concern. In addition, our independent registered public accounting firm, in their report on our audited
financial statements for the fiscal year ended June 30, 2020, raised substantial doubt about the Company’s ability to continue as
a going concern. The accompanying condensed consolidated financial statements do not include adjustments that might be necessary if the
Company is unable to continue as a going concern.
As of March, 31 2021 we had cash and cash equivalents
on hand of $838,000 and are not generating sufficient funds to cover operations. In addition to the cash 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, including the extension or renewal of our existing global R and D,
Marketing and Technology License Agreement with Desmet Ballestra Group (Desmet), agreement with Alchemy Beverages, Inc (ABI), and agreement
with Enviro Watertek, LLC (EWT).
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.
Covid-19
In March 2020, the World Health Organization declared
coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, has adversely affected workforces,
customers, economies, and financial markets globally. It has also disrupted the normal operations of many businesses. This outbreak could
decrease spending, adversely affect demand for the Company’s products, and harm the Company’s business and results of operations.
During the nine months ended March 31, 2021, the Company believes the COVID-19 pandemic did not materially impact its operating results
due to the nature of the Company’s business and its operations. The Company has not observed any impairments of its assets or a
significant change in the fair value of its assets due to the COVID-19 pandemic. At this time, it is not possible for the Company to predict
the duration or magnitude of the adverse results of the outbreak and its effects on the Company’s business or results of operations,
financial condition, or liquidity.
As of March 31, 2021, the Company has been following
the recommendations of local health authorities to minimize exposure risk for its employees, including the temporary closure of its corporate
office and having employees work remotely. Most vendors have transitioned to electronic submission of invoices and payments.
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 allowance for bad debts,
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.
Revenue Recognition
The Company follows the guidance of Accounting
Standards Codification (ASC) 606, Revenue from Contracts with Customers. ASC 606 creates a five-step model that requires entities
to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer,
(2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction
price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only
applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange
for the services it transfers to its clients.
Revenue from sale of our Nano Reactors is recognized
when products are shipped from our manufacturing facilities as this is our sole performance obligation under these contracts and we have
no continuing obligation to the customer.
The Company also recognizes revenue from its share
of gross profit to be earned from distributors, as defined, which we treat as variable consideration and recognize using the most likely
amount method. 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 amount of gross profit revenue
recognized is limited to the actual amount of cash received under the contract which the Company has determined is not refundable and
that a significant future reversal of cumulative revenue under the contract will not occur.
In addition, the Company also recognizes revenues
from usage fees of certain reactors. Usage fees are recognized based on actual usage by the customer.
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, 2021 and 2020, the Company had
11,000,000 stock options and 87,696,511 stock warrants outstanding to purchase shares of common stock, respectively, that were not included
in the diluted net loss per common share because their effect would be anti-dilutive.
Concentrations
Cash - cash is deposited in one financial institution.
The balances held at this financial institution at times may be in excess of Federal Deposit Insurance Corporation (“FDIC”)
insurance limits of up to $250,000.
Accounts Receivable – accounts receivable
at March 31, 2021 and June 30, 2020, were all due from Desmet.
Accounts Payable and Accrued Expenses –
two vendors accounted 61%, and 10% of accounts payable and accrued expenses as of March 31, 2021. Two vendors accounted 64% and 14% of
accounts payable and accrued expenses as of June 30, 2020 .
Revenues – revenues during the nine months
period ended March 31, 2021 were 97% from Desmet and 3% EWT (see Note 2). During the nine months ended March 31, 2020, 94% of recorded
revenues were derived from Desmet and 6% from EWT. Revenues during the three months period ended March 31, 2021 were 93% from Desmet and
7% EWT (see Note 2). During the three months ended March 31, 2020, 92% of recorded revenues were derived from Desmet and 8% from EWT.
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.
|
On March 31, 2021 and June 30, 2020, the fair
values of cash and cash equivalents, accounts receivable, inventory and accounts payable and accrued expenses approximate their carrying
values due to their short-term nature.
Segments
The Company operates in one segment, its nano
reactor technology business. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief
operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions
about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach
to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures
about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material
operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in:
economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company
operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying consolidated
financial statements.
Recent Accounting Pronouncements
In June 2016, the FASB issued ASU No. 2016-13, Credit
Losses - Measurement of Credit Losses on Financial Instruments (“ASC 326”). ASU 2016-13 requires entities to use
a forward-looking approach based on current expected credit losses (“CECL”) to estimate credit losses on certain types of
financial instruments, including trade receivables. This may result in the earlier recognition of allowances for losses. ASU 2016-13 is
effective for the Company beginning January 1, 2023, and early adoption is permitted. The Company does not believe the potential impact
of the new guidance and related codification improvements will be material to its financial position, results of operations and cash flows.
In August 2020, the FASB issued ASU No. 2020-06
(“ASU 2020-06”) “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts
in Entity’s Own Equity (Subtopic 815-40).” ASU 2020-06 reduces the number of accounting models for convertible debt instruments
by eliminating the cash conversion and beneficial conversion models. As a result, a convertible debt instrument will be accounted for
as a single liability measured at its amortized cost as long as no other features require bifurcation and recognition as derivatives.
By removing those separation models, the effective interest rate of convertible debt instruments will be closer to the coupon interest
rate. Further, the diluted net income per share calculation for convertible instruments will require the Company to use the if-converted
method. ASU 2020-06 will be effective July 1, 2024, for the Company and is to be adopted through a cumulative-effect adjustment to the
opening balance of retained earnings. Early adoption is permitted, but no earlier than July 1, 2021, including interim periods within
that year. Management is currently evaluating the effect of the adoption of ASU 2020-06 on the consolidated financial statements.
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.
Note 2 - Contracts with Distributors
Desmet Ballestra Agreement
In October 2018, we signed a three-year global
R and D, Marketing and Technology License Agreement with Desmet for the sale and licensing of our reactors. This agreement is a continuation
of an original agreement we signed with Desmet in fiscal 2012 and amended in fiscal 2016. As part of the October 2018 agreement, Desmet
agreed to provide us monthly advances of $50,000 through October 1, 2021 to be applied against our gross profit share from future sales.
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 accordance with ASC 606, the Company recognizes the revenue from the sale of reactors at the time of shipment of the Nano
reactor hardware as such shipment is deemed to be the Company’s only performance obligation and the Company has no more continuing
obligation. 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 profit,
as defined, from the sale of Desmet’s integrated neutralization system to its customers of which the reactors are an integral component.
Such amount is subject to adjustment based on certain factors including cost overruns. The Company has no control with regards to the
sale and installation of Nano Reactor® and CTi Nano Neutralization® System, between Desmet and the
end customer. In accordance with ASC 606, the Company has determined that the gross profit to be earned from Desmet is variable consideration,
and evaluates the amount of the potential payments and the likelihood that the payments will be received 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 variable revenue constraints, and as such, the amount of gross profit share revenue recognized
is limited to the actual amount of cash received under the contract which the Company has determined is not refundable and probable that
a significant revenue reversal would not occur. Further, the Company has not been able to develop an expectation of the actual collection
based on its historical experience.
During the three months ended March 31, 2021,
the Company recorded sales of $69,000 and share in gross profit was $68,000, for total revenues of $137,000.
During the nine months ended March 31, 2021, we
recorded sales of $346,000, and share in gross profit was $280,000, for a total revenue of $626,000.
As of March 31, 2021 and June 30, 2020, accounts
receivable from Desmet related to the sale of Nano Reactor® amounted
to $114,000 and $104,000, respectively.
As of March 31, 2021 and June 30, 2020, advances
received from Desmet related to the Company’s share in gross profit amounted to $638,000 and $368,000, respectively. These advances
will only be recognized as revenues once the condition for revenue recognition have been met.
Enviro Watertek, LLC
In April 2019, we entered into a licensing and
service contract agreement with Enviro Watertek, LLC (“EWT”). This agreement covers our industrial treatment of produced and
frack water. Our agreement with EWT provides for sales of Nano Reactors® plus recurring revenue stream based on processing frack water
volumes and utilization (usage fee) over a 15 year term but can be terminated by either party every anniversary.
During the three and nine months ended March 31,
2021, the Company recorded revenues of $11,000 from usage fees.
During the three and nine months ended March 31,
2020, the Company recorded revenues of $31,000 from the usage of reactors previously sold to EWT in fiscal 2020.
Note 3 – Operating Lease
The Company leases certain warehouse and corporate
office space under operating lease agreement. We determine if an arrangement is a lease at inception. Lease assets are presented as operating
lease right-of-use assets and the related liabilities are presented as lease liabilities in our consolidated balance sheets.
Operating lease right-of-use (“ROU”)
assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets
represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments
arising from the lease. Generally, the implicit rate of interest in lease arrangements is not readily determinable and the Company utilizes
its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a
hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments
made and excludes lease incentives.
The components of lease expense and supplemental
cash flow information related to leases for the period are as follows:
|
|
|
Nine Months Ended
March 31, 2021
|
|
|
|
|
|
|
|
Lease cost
|
|
|
|
|
|
Operating lease cost (included in general and administrative in the Company’s unaudited condensed statement of operations)
|
|
$
|
55,000
|
|
|
|
|
|
|
|
|
Other information
|
|
|
|
|
|
Cash paid for amounts included in the measurement of lease liabilities
|
|
$
|
53,000
|
|
|
Weighted average remaining lease term – operating leases (in years)
|
|
|
2.8
|
|
|
Average discount rate – operating leases
|
|
|
4%
|
|
The supplemental balance sheet information related
to leases for the period is as follows:
|
|
|
At March 31, 2021
|
|
|
|
|
|
|
|
Operating leases
|
|
|
|
|
|
Long-term right-of-use assets
|
|
$
|
261,000
|
|
|
|
|
|
|
|
|
Short-term operating lease liabilities
|
|
$
|
55,000
|
|
|
Long-term operating lease liabilities
|
|
|
213,000
|
|
|
Total operating lease liabilities
|
|
$
|
268,000
|
|
|
Year ending June 30
|
|
Operating Lease
|
|
|
|
|
|
|
|
2021 (remaining 3 months)
|
|
$
|
18,000
|
|
|
2022
|
|
|
72,000
|
|
|
2023
|
|
|
75,000
|
|
|
2024
|
|
|
78,000
|
|
|
2025 and thereafter
|
|
|
47,000
|
|
|
Total lease payments
|
|
|
290,000
|
|
|
Less: Imputed interest/present value discount
|
|
|
(22,000
|
)
|
|
Present value of lease liabilities
|
|
$
|
268,000
|
|
Note 4 – Related Party Transactions
Accrued Payroll and Payroll Taxes
In prior periods, the Company accrued salaries
and estimated payroll taxes due to current and former officers of the Company.
As of March 31, 2021 and June 30, 2020, total
accrued payroll and payroll taxes-related parties amounted to $667,000 and $693,000, respectively.
Note 5 – Notes Payable
|
|
|
March 31, 2021
|
|
|
June 30, 2020
|
|
|
Note Payable – PPP (A)
|
|
$
|
208,000
|
|
|
$
|
104,000
|
|
|
Note Payable – EIDL (B)
|
|
|
150,000
|
|
|
|
–
|
|
|
Total
|
|
$
|
358,000
|
|
|
$
|
104,000
|
|
|
|
A.
|
On April 16, 2020, the Company received loan proceeds in the amount of $104,000 pursuant to the Paycheck Protection Program (“PPP”) under the Coronavirus Aid, Relief and Economic Security Act (the “Cares Act”), which was enacted on March 27, 2020. The note is scheduled to mature in April 2022 and has a 1% interest rate and is subject to the terms and conditions applicable to loans administered by the Small Business Administration (SBA) under the CARES Act. On March 26, 2021, the Company received a similar loan of $104,000 pursuant to the PPP that is scheduled to mature in March 2026.
|
|
|
|
|
|
|
|
The Company applied ASC 470, Debt, to account for the PPP loans. The loans and accrued interest are forgivable as long as the Company uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. Forgiveness of the notes is only available for principal that is used for the limited purposes that qualify for forgiveness under SBA requirements, and that to obtain forgiveness, the Company must request it and must provide documentation in accordance with the SBA requirements, and certify that the amounts the Company is requesting to be forgiven qualify under those requirements. The Company also understands that it shall remain responsible under the notes for any amounts not forgiven, and that interest payable under the note will not be forgiven but that the SBA may pay the loan interest on forgiven amounts. As of March 31, 2021 and June 30, 2020, outstanding notes payable for the PPP loans totaled $208,000 and $104,000, respectively.
|
|
|
|
|
|
|
|
The Company is currently in the process of applying for forgiveness of the entire PPP loan with respect to these qualifying expenses, however, the Company cannot assure that such forgiveness of any portion of the PPP loan will occur. As for the potential loan forgiveness, once the PPP loan is, in part or wholly, forgiven and a legal release is received, the liability would be reduced by the amount forgiven and a gain on extinguishment would be recorded.
|
|
|
|
|
|
|
B.
|
In July 2020, the Company received a loan of $150,000 from the Small Business Association under its Economic Injury Disaster Loan (EIDL) assistance program. The EIDL loan is payable over 30 years, bears interest at a rate of 3.75% per annum and secured by all tangible and intangible property of the Company. As of March 31, 2021, the outstanding balance of the note payable amounted to $150,000.
|
Note 6 - Stockholders' Deficit
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, 2021 is as follows:
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
Weighted-
|
|
|
Remaining
|
|
|
|
|
|
|
|
Average
|
|
|
Contractual
|
|
|
|
|
|
|
|
Exercise
|
|
|
Life
|
|
|
|
|
Options
|
|
|
Price
|
|
|
(Years)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at June 30, 2020
|
|
|
11,000,000
|
|
|
$
|
0.03
|
|
|
|
6.07
|
|
|
- Granted
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
- Forfeited
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
- Exercised
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
- Expired
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
Outstanding at March 31, 2021 - vested and exercisable
|
|
|
11,000,000
|
|
|
$
|
0.03
|
|
|
|
5.32
|
|
As of March 31, 2021, the intrinsic value of these
outstanding options was $220,000. The following table summarizes additional information concerning options outstanding and exercisable
at March 31, 2021.
|
|
|
|
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
|
|
|
|
5.32
|
|
|
$
|
0.03
|
|
|
|
11,000,000
|
|
|
|
5.32
|
|
Warrants
A summary of the Company's warrant activity and
related information for the nine months ended on March 31, 2021 is as follows:
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
Weighted-
|
|
|
Remaining
|
|
|
|
|
|
|
|
Average
|
|
|
Contractual
|
|
|
|
|
|
|
|
Exercise
|
|
|
Life
|
|
|
|
|
Warrants
|
|
|
Price
|
|
|
(Years)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at June 30, 2020
|
|
|
87,696,511
|
|
|
$
|
0.07
|
|
|
|
5.64
|
|
|
Granted
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
Exercised
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Expired
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Outstanding at March 31, 2021 vested and exercisable
|
|
|
87,696,511
|
|
|
$
|
0.07
|
|
|
|
4.89
|
|
As of March 31, 2021, all outstanding warrants
are fully vested and the intrinsic value of these warrants was $795,000. The following table summarizes additional information concerning
warrants outstanding and exercisable at March 31, 2021.
|
|
|
|
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 - 0.05
|
|
|
|
68,736,518
|
|
|
|
7.05
|
|
|
$
|
0.03 – 0.05
|
|
|
|
68,736,518
|
|
|
$
|
7.05
|
|
|
$
|
0.12
|
|
|
|
18,959,993
|
|
|
|
2.74
|
|
|
$
|
0.12
|
|
|
|
18,959,993
|
|
|
$
|
2.74
|
|
|
|
|
|
|
|
87,696,511
|
|
|
|
|
|
|
|
|
|
|
|
87,696,511
|
|
|
|
|
|
Note 7 - Commitments and Contingencies
Royalty Agreements
On July 1, 2008, the Company 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 March 31, 2021.
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 March 31, 2021 no patents have been granted
in which this person is the legally named inventor.