i

PART III

Audit committee standing members consisted of Igor Gorodnitdsky and James Fuller as of June 30, 2014. We anticipate forming compensation, governance, and other committees as necessary.

Igor Gorodnitsky. Mr. Gorodnitsky has been our President and member of the Board of Directors since September 26, 2008, and he became Company's Secretary and Principal Executive Officer in November of 2012. Mr. Gorodnitsky developed expertise in handling and processing hazardous waste material. As a Senior Haz-Mat Specialist, he coordinated and successfully completed more than 500 emergency response Haz-mat clean-ups over the past 20 years. He coordinated and supervised Haz Mat projects, emergency and routine spill clean-ups, and confined space entry tasks. He coordinated and scheduled manpower and purchased and scheduled equipment and materials for containment and treatment of spills. He successfully managed, coordinated and supervised projects including Hazscanning, sampling, lab-packing, manifesting, profiling, labeling, and other special procedures for a variety of commercial clients and municipalities. He is a chemist by training and holds numerous certifications and licenses including Hazwoper Training Program, Confined Space Entry and Gas Vapour HazCating, Certified Uniform Waste Manifest Training, Basic and Intermediate HazCating, On-Scene Incident Commander Emergency, Site Remediation Methods, Underground Storage Tank Removal, Health & Safety Supervisor Certification, Hazardous Certification, and Tosco Refinery Safety. Mr. Gorodnitsky was president of Express Environmental Corp. since its inception in 1980 until he sold his interest in January 2009.

James Fuller. Mr. Fuller is an independent director, and has been Chairman of our Audit Committee and Independent Financial Expert since February, 2010. He was formerly a Vice President of the New York Stock Exchange and director of the Securities Investor Protection Corporation. In addition to his over 30 years of experience in the securities markets, Mr. Fuller sat on the Board of Trustees of the University of California, Santa Cruz and previously served as Chairman of their Audit Committee and Independent Financial Expert. Jim is a partner at Baytree Capital Associates, LLC. He received his BS in Political Science from San Jose State University and his MBA from California State University - Fresno.

Roman Gordon. Mr. Gordon has been our Chief Technology Officer since 2011, and he served as Chief Executive Officer and Chairman of the Board since September 26, 2008 prior to that. He also became a permanent Director of the Company's Board during current fiscal year again. With more than 15 years of experience in energy risk management and business management, he is one of the inventors of our intellectual properties. From 2003 to 2005 Mr. Gordon was president of Bubble Bee Corp., a car wash development company. Mr. Gordon was in charge of engineering, construction and development of environmentally friendly car wash water recycling systems. From 1997 to 2002, he was Chairman of a publicly traded electric service provider company (ESP), PowerSource Corp., where he participated in the power marketing of renewable energy and in evaluation and environmental compliance. PowerSource Energy Service Provider Corporation was an active participant in the "PowerGreen - 100" and "PowerGreen - 25" programs. Mr. Gordon received his bachelor degree in 1974 from Polytechnical Institute in Civil Engineering.

Naum Voloshin. Mr. Voloshin is 51 years old. Mr. He has over 20 years of experience in investment banking, business operations and marketing. Prior to joining CTi, Mr. Voloshin has worked for several development stage companies in US, Europe and Asia. The scope of his duties was to provide management, supervision, business experience and marketing skills.

1

John Zotos. Mr. Zotos was appointed as a director in June of 2014. He currently serves as a director of Novas and Propell Technologies as well. Since July 2007, he has served as a principal and a managing partner of JC Holdings, LLC, a company engaged in the business of buying, selling and managing heavy equipment and commercial real estate.

Mr. Zotos brings to the Board significant business experience, which gives him a broad and extensive understanding of our operations and our industry. Due to his business background, he has a broad understanding of the operational, financial and strategic issues facing public companies.

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers, directors, persons who own more than 10% of our common stock, and immediate family members living in the same household to file an Initial Statement of Beneficial Ownership on Form 3 and changes in ownership on Form 4 with the Securities and Exchange Commission (the "SEC"). Such "insiders" are required by SEC rules to furnish us with copies of all Section 16(a) forms they file.

Based on a review of Forms 3, 4, and 5 and amendments thereto furnished to us during fiscal 2014 ended June 30, 2014, there were no delinquent forms filed during the year. Roman Gordon, CTO and Director, filed 10 form 4's involving 10 transactions.

We have adopted a Code of Business Conduct and Ethics that applies to all officers, directors and employees. A copy may also be obtained free of charge by mailing a request in writing to: Cavitation Technologies, Inc., 10019 Canoga Ave., Chatsworth, CA 91311 USA. If we make any substantive amendments to the Code of Business Conduct and Ethics or grant any waiver from a provision of the Code to any executive officer or director, we will promptly disclose the nature of the amendment or waiver in a current report on Form 8-K.

The following table summarizes the compensation earned by each named executive officer of the Company for the past two years determined on the basis of rules adopted by the SEC relating to smaller reporting companies.

2

*Messrs Gorodnitsky and Gordon also served as members of the Board of Directors during fiscal 2014 and part of their compensation was received for services provided as a board member.

The following table shows outstanding equity-based awards that were held by executive officers as of June 30, 2014.

We do not offer retirement benefit plans to our executive officers.

3

Compensation of Directors

The following table sets forth certain information with respect to the compensation paid to our directors for fiscal 2014 determined on the basis of rules adopted by the SEC relating to smaller reporting companies.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information concerning the number of shares of our common stock known by us to be owned beneficially as of June 30, 2014 and the date hereof by: (i) each person (including any group) that owns more than 5% of any class of the voting securities of our company; (ii) each director and officer of our company; and (iii) directors and officers as a group. Unless otherwise indicated, the stockholders listed possess sole voting and investment power with respect to the shares shown. The address for all directors and officers, unless otherwise indicated, is 10019 Canoga Avenue, Chatsworth, CA 91311.

4

For details regarding stock options, please refer to Notes to the Financial Statements - Note 10 Stockholder's Deficit.

Other than compensation agreements and other arrangements with our executive officers and directors and the transactions described below, during our last two fiscal years, there has not been, and there is not currently proposed, any transaction or series of similar transactions to which we were or will be a party in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years and in which any of our directors, executive officers, holders of more than five percent of any class of our voting securities or any member of the immediate family of the foregoing persons had or will have a direct or indirect material interest. In accordance with Regulation S-K 404(d) for Smaller Reporting Companies, we provide information for the last two fiscal years.

On December 27, 2011 the Company's CEO, Todd Zelek, extended to the Company a short term loan due on demand of $100,000 at an annual interest rate of 12%. At June 30, 2012, the outstanding balance remained $100,000 along with $6,000 in accrued interest. The Company paid off the $100,000 loan along with all accrued interest during fiscal 2013.

The Company provided an advance against future reimbursable company expenses of $15,000 to Roman Gordon, Chief Technology Officer, and owner of more than 5% of the outstanding common stock during fiscal 2012. This amount was used during 2013 to offset the balance of Accrued Salary to Mr. Gordon and the outstanding balance on June 30, 2013 was $0.

As of June 30, 2012, we had received $185,000 from West Point Partners, LLC, whose managing partner is the Company's Principal Accounting Officer. These funds were due on demand, and paid an annual interest rate of 12% which was accrued. During the year ended, the Company recognized interest expense of $16,650. As of June 30, 2014, the entire loan of $185,000 together with unpaid interest of $43,300 was converted into 7,610,000 shares of company's common stock and 7,610,000 warrants to purchase company's common stock with a fair market value of $683,823.

Refer to Footnote 8, Related Party Short-Term Loan and Payables, and Note 14, Commitments and Contingencies, Royalty Agreements, for a description of related party transactions with our executive officers during the fiscal year ended June 30, 2014.

5

Director Independence

As our common stock is currently traded on the OTC Bulletin Board, we are not subject to the rules of any national securities exchange which require that a majority of a listed company's directors and specified committees of the board of directors meet independence standards prescribed by such rules. For the purpose of preparing the disclosures in this Report on Form 10-K regarding director independence, we have used the definition of "independent director" set forth in the Marketplace Rules of The NASDAQ, which defines an "independent director" generally as a person other than an executive officer or employee of the Company or any other individual having a relationship which, in the opinion of the Company's board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Consistent with these standards, we believe that James Fuller is an Independent Financial Expert and independent director.

Our principal auditing firm during fiscal 2013 was Rose, Snyder, and Jacobs.  After fiscal 2013 ended, the Company replaced its former principal auditing firm Rose, Snyder and Jacobs with Weinberg & Co, Los Angeles. Rose, Snyder and Jacobs performed reviews of quarterly financial statements included on Forms 10-Q for the first three quarters of 2013 and received $35,500 for these services. Weinberg & Co is the principal auditing firm for the audit of our annual financial statements included with Form 10-K for fiscal 2013 and received approximately $60,951 for these services.

During fiscal 2014, we incurred expenses of $31,583 for professional services rendered for the audit of our annual financial statements and review of quarterly financial statements included on Form 10-Q and expect to pay about $30,000 more for 2014 services in 2015.

The aggregate fees billed in fiscal 2014 and fiscal 2013 for professional services rendered by the principal accountant for tax preparation amounted to $7,150 and $12,185 respectively.

The charter of the Audit Committee provides that the Audit Committee pre-approves all audit services and permitted non-audit services to be performed for CTi by its independent public accounting firm, subject to the de minimus exceptions for non-audit services described in Section 10A(i)(1)(B) of the Exchange Act.

6

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED

7