CVAT · 10-K

Cavitation Technologies, Inc. [[CVAT]] — Conditional $35 Million Tender Offer Amid $17,000 Year-End Cash

Filing Summary The October 6, 2026 10-K describes a conditional agreement for European Guarantee Services S.à r.l. to offer $35 million in cash for all outstanding shares, subject to deductions and multiple closing conditions; it was not consummated as of the filing. The potential sale comes as the business generated just $3,000 of FY2026 revenue, had $17,000 of cash at year-end, and disclosed substantial doubt about its ability to continue as a going concern.

Terms & Mechanics - The August 14, 2026 agreement calls for the purchaser to launch the offer within 10 business days after satisfying SEC requirements and keep it open for at least 60 business days. The $35 million aggregate price is subject to deductions for certain indebtedness and accrued liabilities; expected net proceeds to shareholders and the final per-share price are not disclosed. - The initial per-share price uses shares outstanding on the agreement date. The final price is to be recalculated using shares outstanding on a record date 45 business days after offer commencement. After circulation of the amended offer and final board recommendation, shareholders must receive at least 30 business days to review them. - Closing conditions include a separate tender offer for Cavitation’s approximately 17% stake in Alchemy Beverages and tenders sufficient to bring the purchaser and specified related parties to at least 90% ownership. The filing says shareholder approval is not required. It describes a CFIUS condition as requiring CFIUS to have “taken adverse action to block” the transactions—wording that appears anomalous and needs clarification. - FY2026 revenue was $3,000, versus $203,000 in FY2025; net loss was $1.404 million versus $113,000. The prior-year result included an $880,000 gain from the October 2024 patent assignment to Desmet. Cavitation retained royalty-free rights in specified water-treatment and alcoholic-beverage fields, but expected Desmet to manufacture Nano Reactors itself, reducing future reactor sales to Desmet; the former monthly advances also ended. - At June 30, 2026, cash was $17,000, operating cash use was $755,000, working-capital deficit was $554,000, and stockholders’ deficit was $693,000. Management said available cash and access to cash were insufficient to sustain operations through June 2027. The auditor separately highlighted substantial going-concern doubt. - The 10-K reports 317.2 million shares outstanding at year-end and 323.8 million as of September 26, 2026. It also discloses 31.6 million outstanding warrants and $60,000 of convertible notes with conversion features. After year-end, the company reported $140,000 gross proceeds from issuing 4.67 million shares at $0.03 and a September cashless exercise adding 1.93 million shares; the filing does not provide an updated runway assessment. - Management concluded disclosure controls and internal control over financial reporting were ineffective, citing three material weaknesses: limited expertise for complex transactions, inadequate segregation of duties, and no functioning independent audit committee. Remediation hiring is contingent on obtaining additional capital.

Strategic & Capital Implications The tender offer could provide an exit route, but it is not a fixed per-share value or a completed transaction: proceeds are subject to deductions, the final price depends on a later share count, and closing hinges on both the Alchemy offer and a 90% ownership threshold. The unusual CFIUS wording adds uncertainty until clarified. With minimal revenue, very limited cash, and management’s warning about funding through June 2027, delays or failure to close would leave the company needing additional financing or facing potential operating curtailment.

The operating case is also increasingly dependent on unproven alternatives to Desmet-related sales and advances. The patent assignment generated a one-time gain rather than recurring revenue, while the filing reports minimal FY2026 sales and ongoing development or testing across other initiatives. New share issuance and outstanding warrants and convertible notes create dilution risk; weak financial-reporting controls further raise execution and oversight concerns.

Next Catalysts - Whether the purchaser satisfies SEC requirements and launches the offer within the stated 10-business-day window; the actual commencement date is not disclosed in the filing. - Completion of the separate Alchemy Beverages tender offer, the record-date share count and final per-share price, and whether tenders reach the 90% threshold. - Clarification of the CFIUS condition and any regulatory action affecting the offer. - Additional financing or operating measures to address the disclosed cash shortfall and going-concern risk. - Commercial progress in the company’s retained technology fields, and whether it obtains capital to remediate the disclosed control weaknesses.

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