CETY.NASDAQClean Energy Technologies, INC
10-Q: Clean Energy Tech Faces Going Concern Amid Cash Burn
Sentiment:
Quarterly Report
Clean Energy Technologies, Inc. reported a substantial net loss and increased cash burn, triggering a 'going concern' warning despite improved gross profit and strategic shifts.
Delay expectedThe Vermont Renewable Gas project is currently pending final approval for a Certificate of Public Good with the Public Utility Commission, causing minimal revenue contributions.The lender for the Vermont Renewable Gas project, FPM Development LLC, is in default on a $12 million loan, failing to disburse tranches as outlined in the milestone schedule.CETY HK has not commenced its planned joint venture with Shenzhen Gas due to macro-economic factors such as falling natural gas prices and reduced industrial demand.
Capital raiseThe company explicitly states it will continue to rely on equity sales of its common shares to fund business operations.An Equity Purchase Agreement with Mast Hill provides an equity line of up to $5,000,000, allowing the company to sell shares to the investor periodically.The company issued various convertible promissory notes and warrants throughout the period, which can lead to future equity conversions.
Worse than expectedThe company reported a substantial net loss of $3,522,342, indicating continued unprofitability.Cash used in operating activities more than doubled to $6,218,085, signaling a significant increase in cash burn.The company explicitly issued a 'going concern' warning, highlighting severe financial instability.A key project, Vermont Renewable Gas, is facing delays due to pending regulatory approval and a default by its $12 million loan lender.
Summary
- Clean Energy Technologies, Inc. (CETY) reported a net loss of $3,522,342 for the nine months ended September 30, 2025, a slight improvement from $3,550,669 in the prior year.
- Total revenue decreased to $1,801,769 for the nine months ended September 30, 2025, down from $1,944,333 in the same period of 2024, primarily due to minimal contributions from the China natural gas business.
- Gross profit significantly increased to $1,135,315 from $641,575 year-over-year, driven by higher-margin refurbished systems and non-natural gas business activities.
- Cash used in operating activities more than doubled, reaching $6,218,085 for the nine months ended September 30, 2025, compared to $2,788,608 in the prior year.
- The company's total stockholders' equity increased to $7,095,133 as of September 30, 2025, from $2,938,502 at December 31, 2024, mainly due to financing activities.
- A 'going concern' warning was issued due to an accumulated deficit of $30,922,858, a negative working capital of $1,523,862, and continued negative cash flows from operations.
- A 1-for-15 reverse stock split was approved by the Board of Directors on September 26, 2025, and became legally effective on October 6, 2025.
- The Vermont Renewable Gas project, a key initiative, is pending final approval from the Public Utility Commission and its $12 million loan lender is in default.
- Professional fees, including costs for a consulting agreement related to a potential acquisition, significantly increased to $1,073,709 from $484,990.
Sentiment
Score: 3
Explanation: The company faces severe financial instability, evidenced by a 'going concern' warning, substantial and increasing cash burn from operations, persistent net losses, and a critical lender default on a major project. While there are some positive operational shifts and an increase in equity from financing, these are overshadowed by the fundamental financial challenges and high operational risks.
Positives
- Gross profit for the nine months ended September 30, 2025, increased significantly to $1,135,315 from $641,575 in the prior year, driven by higher-margin sales.
- Revenue from the Heat Recovery Solutions (HRS) segment saw a substantial increase to $805,975 from $158,829 for the nine months ended September 30, 2025.
- Stockholders' equity rose to $7,095,133 as of September 30, 2025, from $2,938,502 at December 31, 2024, indicating successful capital raising efforts.
- Salary expenses decreased to $1,329,800 from $1,481,316, primarily due to reduced activity in the CETY Renewables business.
- The company is strategically reducing focus on lower-margin natural gas trading activities in China.
- An estimated $10 million backlog is associated with the Vermont Renewable Gas project.
Negatives
- The company has a 'going concern' warning due to an accumulated deficit of $30,922,858, a negative working capital of $1,523,862, and continued negative cash flows from operations of $6,218,085.
- Total revenue decreased to $1,801,769 for the nine months ended September 30, 2025, from $1,944,333 in the prior year, mainly due to reduced contributions from the China natural gas business.
- Cash used in operating activities more than doubled to $6,218,085 for the nine months ended September 30, 2025, compared to $2,788,608 in the same period of 2024.
- Operating expenses increased to $3,301,052 from $3,193,447, primarily due to higher professional fees related to a potential acquisition.
- Interest and financing fees significantly increased to $2,399,193 from $902,002, largely due to interim financings and applied default amounts.
- The Vermont Renewable Gas project's $12 million loan lender (FPM Development LLC) is in default, failing to disburse tranches, and the project is pending final regulatory approval.
- The company's disclosure controls and procedures were deemed not effective as of September 30, 2025.
Risks
- Substantial doubt about the ability to continue as a going concern due to an accumulated deficit of $30,922,858, negative working capital of $1,523,862, and negative cash flows from operating activities of $6,218,085.
- Dependence on obtaining sufficient debt and/or equity capital and generating positive cash flow from operations to sustain the business.
- The Vermont Renewable Gas project faces delays due to pending final approval from the Public Utility Commission and the default of its $12 million loan lender.
- Macroeconomic factors, such as falling natural gas prices and reduced industrial demand, have negatively impacted the CETY HK natural gas trading operations.
- Potential for significant dilution to existing stockholders from future equity sales, as the company will continue to rely on such sales for funding.
- The company's disclosure controls and procedures were not effective as of September 30, 2025, indicating potential weaknesses in financial reporting oversight.
- The company is subject to Nasdaq's minimum $1.00 bid price requirement, with an extension granted until November 3, 2025, to regain compliance.
Future Outlook
The company anticipates stronger revenue contributions from its Waste-to-Energy, Heat Recovery, and EPC segments in the latter half of the year, which are expected to deliver higher gross margins. Management believes the 4-segment strategy will continue to drive growth, supported by the global commitment to renewable energy and continuous improvements in the global supply chain and cost reduction. The company plans to execute its corporate strategy to build sustained and profitable growth by providing end-to-end integrated solutions, expanding global sales and marketing, production, research & development, and seeking synergistic acquisition opportunities.
Management Comments
- "CETY has successfully repositioned itself as a diversified clean energy solutions provider by establishing four distinct business segments designed to support scalable, stable, and diversified revenue growth."
- "Management believes this 4-segment strategy has created many operational synergies and cross-selling opportunities across different markets."
- "CETY believes that it will continue to deliver growth on these segments this year."
- "CETY expects to and will continue to execute its corporate strategy to build sustained and profitable growth by providing end to end fully integrated solutions and technologies, expand our global sales and marketing, production, research & development, as well as search for synergistic acquisition opportunities."
Industry Context
Clean Energy Technologies operates within the growing global clean energy sector, focusing on heat recovery, waste-to-energy, and engineering services. The company aims to capitalize on the worldwide commitment to renewable energy, which is a significant macro factor benefiting its business. Its strategic repositioning into four distinct segments (HRS, Waste-to-Energy, EPC, and CETY HK) reflects an effort to diversify revenue streams and leverage operational synergies in a competitive and evolving market.
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Reverse Stock Split | The Board of Directors approved a 1-for-15 reverse stock split of common stock, effective October 6, 2025, reducing authorized shares from 2,000,000,000 to 133,333,333. | 2025-10-06 | Aims to increase the per-share price to meet Nasdaq's minimum bid price requirement, but also results in fewer outstanding shares for existing shareholders. |
| Internal Control Deficiency | Disclosure controls and procedures were concluded to be not effective as of September 30, 2025. | 2025-09-30 | Indicates a material weakness in the company's ability to ensure material information is known and reported, posing risks to financial reporting reliability. |
Legal Proceedings
- The company is not currently involved in any legal proceedings deemed to have a material adverse effect on its consolidated financial position or results of operations.
- FPM Development LLC, a lender for the Vermont Renewable Gas LLC project, is in default on a $12 million loan and has been served notice of default.
Related Party Transactions
- CETY Capital LLC, a wholly-owned subsidiary, owns a 49% interest in Vermont Renewable Gas LLC (VRG). CETY Renewables invoiced VRG $409,698 in 2025, with $2,356,829 in accounts receivable from VRG.
- The company provided a corporate guarantee for VRG's $12 million loan agreement with FPM Development LLC and Evergreen Credit Facility I LLP.
- Herbert YF Global Holding Limited (a CETY subsidiary) entered a Consulting Agreement with Linkage International Limited (a CETY investor) for a potential acquisition, involving a HKD 5,000,000 non-refundable fee and a HKD 25,000,000 refundable deposit. The deposit refundability is secured by 715,447 shares of CETY common stock.
- JHJ (a CETY subsidiary) received a RMB 5 million ($702,500) non-interest-bearing loan from Shuya (an entity previously consolidated by CETY) with a one-year term from September 26, 2025, to September 26, 2026.
Stakeholder Impact
- Shareholders face significant dilution risk from ongoing equity sales and convertible note conversions, compounded by the 1-for-15 reverse stock split.
- Shareholders are exposed to the risk of delisting if the company fails to regain Nasdaq's minimum bid price compliance by November 3, 2025.
- Employees in the CETY Renewables business experienced reduced salary expenses due to decreased activity.
- Creditors, particularly those holding convertible notes, face elevated risk due to the company's 'going concern' status, high interest expenses, and increased cash burn.
- Lenders to the Vermont Renewable Gas project are directly impacted by FPM Development LLC's default on the $12 million loan, which CETY has guaranteed.
- Customers of the Vermont Renewable Gas project may experience delays in facility construction and operation due to regulatory hurdles and funding issues.
Next Steps
- Obtain final approval for the Vermont Renewable Gas Project from the Public Utility Commission.
- Finalize funding for the Vermont Renewable Gas Project.
- Complete the S-3 registration process.
- Continue to execute the corporate strategy to build sustained and profitable growth by providing end-to-end fully integrated solutions and technologies.
- Expand global sales and marketing, production, and research & development.
- Search for synergistic acquisition opportunities.
- Wait for improved macro-economic factors before commencing the Shenzhen Gas joint venture in CETY HK.
- Ensure 715,447 shares of company common stock are returned for cancellation if the HKD 25,000,000 deposit for the Ortus Climate Mitigation LLC acquisition is not refunded.
Key Dates
| Date | Description |
|---|---|
| 1995-07-01 | Incorporated in California under the name Probe Manufacturing Industries, Inc. |
| 2005-04-21 | Board of Directors and shareholders approved re-domicile to Nevada as Probe Manufacturing, Inc. and increased authorized common shares. |
| 2006-05-25 | Board of Directors and shareholders approved an amendment to authorize Series C preferred stock. |
| 2013-08-07 | Board of Directors designated Series D Preferred Stock. |
| 2013-11-11 | Entered into an accounts receivable financing agreement with American Interbanc (now Nations Interbanc). |
| 2015-09-11 | Clean Energy HRS acquired the assets of Heat Recovery Solutions from General Electric International. |
| 2015-11-01 | Changed name to Clean Energy Technologies, Inc. |
| 2017-07-01 | Lease term began for an 18,200-square foot CTU Industrial Building. |
| 2018-08-28 | Board of Directors and shareholders approved an increase in authorized common shares to 13,333,333. |
| 2018-10-01 | Signed a sublease agreement for the facility in Italy. |
| 2018-11-01 | CETY Europe service center became operational. |
| 2019-06-10 | Board of Directors and shareholders approved an increase in authorized common shares to 133,333,333. |
| 2021-04-01 | Entered into an amendment to the purchase order financing agreement with DHN Capital, LLC dba Nations Interbanc. |
| 2021-05-13 | Formed CETY Capital LLC and established Vermont Renewable Gas LLC (VRG). |
| 2021-06-24 | Formed CETY Capital LLC and established CETY Renewables Ashfield LLC (CRA). |
| 2021-11-08 | Acquisition date of LWL. |
| 2022-01-10 | JHJ entered a convertible note agreement with Chengdu Rongjun Enterprise Consulting Co., Ltd. |
| 2022-05-06 | Entered into a Securities Purchase Agreement with Mast Hill, L.P. for a $750,000 Convertible Promissory Note. |
| 2022-08-29 | Agreement with CETY Renewables Ashfield terminated and CRA dissolved. |
| 2022-09-16 | Entered into a Securities Purchase Agreement with Mast Hill for a $300,000 Convertible Promissory Note. |
| 2022-12-26 | Entered into a Securities Purchase Agreement with Mast Hill for a $123,000 Convertible Promissory Note. |
| 2023-01-01 | Shuya was consolidated as a variable interest entity (VIE) of JHJ. |
| 2023-01-06 | Board of directors and majority shareholders approved a reverse stock split (1-for-40, retroactively represented). |
| 2023-01-19 | Entered into a Securities Purchase Agreement with Mast Hill for a $187,000 Convertible Promissory Note. |
| 2023-03-08 | Entered into a Securities Purchase Agreement with Mast Hill for a $734,000 Convertible Promissory Note. |
| 2023-04-02 | Formed CETY Capital LLC and established VRG with SBC. |
| 2023-06-02 | CETY Renewables executed a turnkey agreement with VRG for an organics-to-energy plant. |
| 2023-07-20 | Closed transactions with Mast Hill for a $556,000 Convertible Promissory Note. |
| 2023-10-13 | Entered into a promissory note with Diagonal in the amount of $197,196. |
| 2023-10-16 | Signed a sublease agreement to relocate HRS operations from Costa Mesa to Irvine, California. |
| 2023-10-31 | Filed a certificate of designation for the 15% Series E Convertible Preferred Stock. |
| 2023-11-08 | Entered into an exchange agreement with Mast Hill Fund, L.P. for Series E Preferred Stock. |
| 2023-11-17 | Entered into a promissory note with Diagonal in the amount of $261,450. |
| 2023-11-30 | Entered into a promissory note with Diagonal in the amount of $136,550. |
| 2023-12-01 | Signed a lease agreement for a 3000-square foot office space in Irvine, CA. |
| 2023-12-19 | Entered into a promissory note in the amount of $92,000. |
| 2023-12-31 | Lease for CTU Industrial Building ended. Italy facility sublease ended. |
| 2024-01-01 | Termination Agreement for Shuya, resulting in Shuya no longer being consolidated. |
| 2024-01-03 | Entered into a securities purchase agreement with FirstFire for a $143,750 promissory note. |
| 2024-01-30 | JHJ entered into a lease for an office in Chengdu City, China. |
| 2024-02-02 | Entered into a securities purchase agreement with Coventry Enterprises LLC for a $92,000 promissory note. |
| 2024-03-04 | Entered into a securities purchase agreement with FirstFire for a $280,500 promissory note. |
| 2024-03-15 | Entered into a subscription agreement for 133,333 units for $900,000. |
| 2024-06-18 | Entered into a subscription agreement for 80,222 units for $1,083,000. |
| 2024-06-21 | Vermont Renewable Gas LLC entered into a loan agreement for $12 million. |
| 2024-08-15 | Promissory note with Diagonal ($197,196) was paid off. |
| 2024-08-22 | Entered into a securities purchase agreement with 1800 Diagonal Lending LLC for a $180,960 convertible promissory note. |
| 2024-09-02 | Entered into a securities purchase agreement with Coventry for a $92,000 convertible promissory note. |
| 2024-09-10 | Amended promissory notes with Mast Hill and entered into a new securities purchase agreement for a $612,000 convertible promissory note. |
| 2024-09-30 | Entered into a securities purchase agreement with Diagonal for a $150,650 convertible promissory note. |
| 2024-10-15 | Entered into a securities purchase agreement with Diagonal for a $125,080 convertible promissory note. |
| 2024-10-20 | Entered into a subscription agreement for 10,677 units for $160,156. |
| 2024-11-08 | Entered into a securities purchase agreement with Coventry for a $101,000 convertible promissory note. |
| 2024-11-18 | Amended promissory note with Mast Hill for an additional $160,000. |
| 2024-11-29 | Entered into a securities purchase agreement with Lucas Ventures, LLC for a $105,000 convertible promissory note. |
| 2024-12-05 | Entered into an equity purchase agreement with Mast Hill for an equity line of up to $5,000,000. |
| 2024-12-11 | Amended promissory note with Mast Hill for an additional $50,000. |
| 2024-12-12 | Entered into a securities purchase agreement with Diagonal for a $93,725 convertible promissory note. |
| 2025-01-16 | Entered into a securities purchase agreement with Mast Hill for a $1,637,833 convertible promissory note and warrants. |
| 2025-01-20 | Entered into a consulting agreement with Hudson Global Ventures, LLC. |
| 2025-02-28 | Entered into a securities purchase agreement with Mast Hill for a $620,000 convertible promissory note and warrants. |
| 2025-03-04 | Entered into a securities purchase agreement with FirstFire, issuing 3,740 shares as final payment on a loan. |
| 2025-04-04 | Entered into a securities purchase agreement with Pacific Pier Capital II, LLC for a $345,000 convertible promissory note and shares. |
| 2025-04-09 | Entered into a lease for an office in Irvine, California. |
| 2025-04-23 | Entered into a securities purchase agreement with Pacific Pier for a $256,000 convertible promissory note and shares. |
| 2025-05-06 | Entered into a Subscription Agreement with various investors for 715,447 shares for $4,400,000. |
| 2025-05-07 | Received a letter from Nasdaq granting an additional 180-day period (until November 3, 2025) to regain compliance with the minimum $1.00 bid price requirement. |
| 2025-05-08 | Entered into a securities purchase agreement with 1800 Diagonal Lending LLC for a $131,610 convertible promissory note. |
| 2025-05-19 | Entered into a securities purchase agreement with Lucas Ventures, LLC for a $109,500 convertible promissory note and shares. |
| 2025-06-04 | Entered into a securities purchase agreement with Mast Hill for a $335,000 convertible promissory note and shares. Amended Irvine office lease for additional area. |
| 2025-06-18 | CETY HK acquired Herbert YF Global Holding Limited. |
| 2025-07-01 | Company subsidiary Herbert YF Global Holding Limited entered into a Consulting Agreement with Linkage International Limited. Irvine office lease began. |
| 2025-07-08 | Paid HKD 5,000,000 consulting fee to Linkage International Limited. |
| 2025-07-10 | Began paying HKD 25,000,000 refundable deposit towards the acquisition of Ortus Climate Mitigation LLC's Italian operations. |
| 2025-07-18 | Entered into a securities purchase agreement with Firstfire Global Opportunities Fund LLC for a $201,250 convertible promissory note and shares. |
| 2025-07-30 | Entered into a securities purchase agreement with 1800 Diagonal Lending LLC for a $151,800 convertible promissory note. |
| 2025-08-15 | Entered into a securities purchase agreement with Mast Hill for a $388,888 convertible promissory note and shares. Lucas Ventures note ($109,500) matured. |
| 2025-08-22 | Completed payment of HKD 25,000,000 refundable deposit to Linkage International Limited. |
| 2025-09-26 | Board of Directors approved a 1-for-15 reverse stock split. JHJ received a RMB 5 million loan from Shuya. |
| 2025-09-30 | End of the quarterly reporting period. |
| 2025-10-06 | The 1-for-15 reverse stock split became legally effective. |
| 2025-11-03 | Nasdaq's extended deadline for minimum $1.00 bid price compliance. |
| 2025-11-18 | Entered into an amendment to the Consulting Agreement with Linkage International Limited regarding the deposit refundability. Filing date of the 10-Q. |
| 2025-12-31 | Maturity date for amended Mast Hill notes ($750k, $300k, $612k original principal). |
| 2026-02-15 | Maturity date for 1800 Diagonal notes ($131,610, $151,800). |
| 2026-02-28 | Chengdu City office lease ends. |
| 2026-09-26 | Maturity date for JHJ loan from Shuya. |
| 2027-01-10 | Maturity date for Chengdu Rongjun convertible note. |
| 2027-01-31 | Irvine office lease ends. |
| 2028-06-30 | Irvine office lease ends. |
| 2066-02-01 | Latest capital contribution due date for Shuya. |
Recommendation
strong sellThe company's explicit 'going concern' warning, coupled with a substantial and increasing cash burn from operations, persistent net losses, and a critical lender default on a major project (Vermont Renewable Gas), indicates severe financial distress and high investment risk. While there are some positive operational shifts in gross profit and strategic repositioning, these are insufficient to offset the fundamental financial instability. The reliance on continuous equity sales for funding, potential for significant dilution, and Nasdaq compliance issues further exacerbate the negative outlook, making the stock a strong sell.
Keywords
Clean Energy Technologies, CETY, SEC Filing, 10-Q, Quarterly Report, Clean Energy, Renewable Energy, Waste-to-Energy, Heat Recovery, Natural Gas Trading, Going Concern, Financial Performance, Stockholders Equity, Cash Flow, Convertible Notes, Reverse Stock Split, Vermont Renewable Gas, Ortus Climate Mitigation
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