CETY.NASDAQClean Energy Technologies, INC
10-Q: Clean Energy Tech Reports Q2 Loss Reduction Amid Shift
Sentiment:
Quarterly Report
Clean Energy Technologies, Inc. reported a reduced net loss and increased gross profit for Q2 2025, driven by higher-margin segments, despite a significant revenue decline from its China natural gas business.
Delay expectedThe Vermont Waste-to-Energy facility is currently pending final approval from the Vermont Public Utility Commission.The lender for the VRG project, FPM Development LLC, is in default and has failed to disburse the first and second tranches of the $12 million loan as outlined in the Milestone Schedule of the Agreement.
Capital raiseProceeds from notes payable and lines of credit totaled $3,085,450 for the six months ended June 30, 2025.Stock issued for cash generated $4,399,999 for the six months ended June 30, 2025.Entered into an equity purchase agreement with Mast Hill for an equity line of up to $5,000,000 on December 5, 2024.Issued numerous convertible promissory notes to various investors (Mast Hill, Diagonal, Pacific Pier, Lucas Ventures) throughout late 2024 and H1 2025.Issued warrants to purchase common stock in connection with several financing agreements.The company's ability to continue as a going concern is dependent on obtaining sufficient debt and/or equity capital.
Summary
- Net loss for the six months ended June 30, 2025, improved to $1,420,021 from $2,251,278 in the same period of 2024.
- Total revenue decreased to $1,028,215 in H1 2025 from $1,709,151 in H1 2024, primarily due to minimal contributions from the China natural gas business.
- Gross profit significantly increased to $952,210 in H1 2025 from $429,035 in H1 2024, driven by higher-margin non-natural gas operations.
- Operating expenses decreased to $1,783,145 in H1 2025 from $2,221,990 in H1 2024, mainly due to lower salary costs in China and reduced legal/accounting fees.
- Cash and cash equivalents increased substantially to $4,408,887 as of June 30, 2025, from $62,101 as of December 31, 2024.
- Total stockholders' equity rose to $7,755,688 as of June 30, 2025, from $2,938,502 as of December 31, 2024.
- The company continues to operate with an accumulated deficit of $28,820,537 as of June 30, 2025, and negative cash flows from operating activities of $1,556,984 for H1 2025.
- Significant financing activities provided $5,903,311 in cash during H1 2025, primarily from notes payable, lines of credit, and stock issuance for cash.
Sentiment
Score: 5
Explanation: The filing presents a mixed financial picture. While there are clear improvements in net loss and gross profit, driven by a strategic shift to higher-margin segments, the overall revenue decline and the persistent 'going concern' warning due to accumulated deficit and negative operating cash flow are significant concerns. The heavy reliance on dilutive financing and the default on a key project loan also temper positive sentiment. The company is in a transitional phase with some promising operational shifts but still faces substantial financial hurdles.
Positives
- Net loss significantly decreased by approximately 37% to $1.42 million in H1 2025, compared to $2.25 million in H1 2024.
- Gross profit more than doubled to $952,210 in H1 2025 from $429,035 in H1 2024, indicating improved profitability from core operations.
- Gross profit margins improved due to increased contributions from higher-margin non-natural gas businesses.
- Operating expenses decreased by approximately 20% in H1 2025, reflecting cost management efforts, particularly in China operations and professional fees.
- Cash and cash equivalents saw a substantial increase to $4.41 million as of June 30, 2025, from $0.06 million at year-end 2024.
- Total stockholders' equity increased significantly to $7.76 million as of June 30, 2025, from $2.94 million at year-end 2024.
- The Heat Recovery Solutions (HRS) segment experienced significant revenue growth, reaching $689,488 in H1 2025 from $120,874 in H1 2024.
- The company successfully raised substantial capital through notes payable, lines of credit, and stock issuance for cash, totaling over $7.48 million in H1 2025.
Negatives
- Total revenue declined by approximately 40% to $1.03 million in H1 2025 from $1.71 million in H1 2024.
- The China natural gas (NG) trading business saw a drastic revenue decrease to $7,130 in H1 2025 from $1,219,629 in H1 2024, representing a strategic reduction in focus on lower-margin activities.
- The company continues to have an accumulated deficit of $28,820,537 as of June 30, 2025.
- Net cash used in operating activities remained negative at $1,556,984 for H1 2025.
- Interest and financing fees more than doubled to $843,859 in H1 2025 from $424,743 in H1 2024, indicating increased cost of capital.
- Disclosure controls and procedures were deemed not effective as of June 30, 2025.
- The Vermont Renewable Gas LLC (VRG) project's lender, FPM Development LLC, is in default on a $12 million loan agreement, which CETY has corporately guaranteed.
- The company received an extension until November 3, 2025, to regain compliance with Nasdaq's minimum $1.00 bid price per share requirement.
Risks
- Substantial doubt exists about the company's ability to continue as a going concern due to accumulated deficit and continued negative operating cash flows.
- Future operations are dependent on the ability to obtain sufficient debt and/or equity capital or generate positive cash flow from operations.
- The company's disclosure controls and procedures were not effective as of June 30, 2025, which could impact the reliability of financial reporting.
- The Vermont Renewable Gas LLC (VRG) project's $12 million loan agreement lender, FPM Development LLC, is in default, and CETY has provided a corporate guarantee for this loan.
- The company is subject to Nasdaq's minimum $1.00 bid price per share requirement, with an extension granted until November 3, 2025, to regain compliance.
- PRC laws and regulations restrict the ability of Chinese subsidiaries to transfer a portion of their net assets to the company as dividends.
- Revenue recognition for CETY Renewables projects (e.g., VRG) relies on the input method based on projected costs, which are estimates and subject to adjustments, potentially impacting recognized revenue and profitability.
- Valuations of Series E preferred shares and purchase price allocations for acquisitions (e.g., Shuya) are based on estimates and comparable data, which may differ from actual fair values.
Future Outlook
The company anticipates stronger revenue contributions from its Waste-to-Energy, Heat Recovery, and EPC segments in the latter half of 2025, which are expected to deliver higher gross margins. It plans to continue executing its corporate strategy to build sustained and profitable growth by providing end-to-end integrated solutions and technologies, expanding global sales and marketing, production, research & development, and searching for synergistic acquisition opportunities. The Vermont Waste-to-Energy facility is pending final approval from the Vermont Public Utility Commission.
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.
- The company anticipates stronger revenue contributions from its Waste-to-Energy, Heat Recovery, and EPC segments in the latter half of the year, segments which are expected to deliver higher gross margins.
- CETY believes that it will continue to deliver growth on these segments this year.
- The main macro factor benefiting us is the global commitment to push renewable energy to the forefront from governments across the world.
- Another catalyst that will potentially help our Company, is a continuously improving our global supply chain and lowering our cost.
- 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
The company's strategic shift away from lower-margin natural gas trading in China towards higher-margin Heat Recovery Solutions and Waste-to-Energy segments aligns with the broader global commitment to renewable energy and energy efficiency. The accelerating demand for Heat Recovery solutions in the U.S. and Europe indicates a favorable market trend for the company's core technologies. The focus on integrated solutions and EPC services positions the company to capitalize on the growing demand for comprehensive clean energy project development.
Comparison to Industry Standards
- NA
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Internal Control Deficiency | Disclosure controls and procedures were not effective as of June 30, 2025. | 2025-06-30 | This indicates a weakness in the company's ability to ensure that material information is made known to management and reported accurately, potentially affecting financial reporting reliability. |
Legal Proceedings
- The company is presently not involved in any legal proceedings which are likely to have a material adverse effect on its consolidated financial position or results of operations.
Related Party Transactions
- Accounts receivable of $2,278,728 from Vermont Renewable Gas LLC (VRG), a joint venture in which CETY Capital LLC (a wholly-owned subsidiary) holds a 49% equity interest.
- VRG entered into a $12 million loan agreement with FPM Development LLC and Evergreen Credit Facility I LLP, for which Clean Energy Technologies, Inc. provided a corporate guarantee. FPM Development is currently in default on this loan.
Stakeholder Impact
- Shareholders: Potential for dilution due to ongoing equity and convertible debt issuances; risk of delisting from Nasdaq if minimum bid price is not met; improved net loss and gross profit could be positive, but accumulated deficit and going concern warning remain concerns.
- Creditors/Lenders: Exposure to risk from the default of FPM Development LLC on the VRG loan, for which CETY has provided a corporate guarantee; continued reliance on new financing to sustain operations.
- Employees: Reduced salary costs in China operations, indicating potential workforce adjustments in that segment; overall stability in other areas.
- Customers: Continued provision of clean energy solutions, with anticipated stronger revenue contributions from Waste-to-Energy, Heat Recovery, and EPC segments.
- Suppliers: Potential for extended non-interest bearing repayments on projects due to supply chain challenges or installation difficulties.
Next Steps
- Achieve final approval for the Vermont Waste-to-Energy facility from the Vermont Public Utility Commission.
- Work diligently to complete engineering and design for the Heat Recovery Solutions segment to execute contractual agreements.
- Work with financial institutions to assist in financing projects for customers moving towards Independent Power Producer models.
- Expand Engineering and project management operations to deliver comprehensive self-generation energy solutions on a global scale.
- Continue to execute corporate strategy to build sustained and profitable growth by providing end-to-end fully integrated solutions and technologies.
- Expand global sales and marketing, production, research & development.
- Search for synergistic acquisition opportunities.
- Address the default by FPM Development LLC on the VRG loan agreement and work towards a cure or amendment.
- Regain compliance with Nasdaq's minimum $1.00 bid price per share requirement by November 3, 2025.
- Improve the effectiveness of disclosure controls and procedures.
Key Dates
| Date | Description |
|---|---|
| 1995-07-01 | Company incorporated in California as Probe Manufacturing Industries, Inc. |
| 2005-04-01 | Company redomiciled to Nevada as Probe Manufacturing, Inc. and increased authorized common shares. |
| 2005-04-21 | Board of Directors and shareholders approved re-domicile to Nevada. |
| 2006-05-25 | Board of Directors and shareholders approved amendment to authorize Series C preferred stock. |
| 2013-08-06 | 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, a wholly-owned subsidiary, acquired assets of Heat Recovery Solutions from General Electric International. |
| 2015-11-01 | Company changed its name to Clean Energy Technologies, Inc. |
| 2017-05-01 | Corporate headquarters relocated to 2990 Redhill Unit A, Costa Mesa, CA. |
| 2017-06-30 | Board of Directors and shareholders approved increase in authorized common and preferred shares. |
| 2018-02-13 | Entered into a Common Stock Purchase Agreement with MGW Investment I Limited and a Convertible Note Purchase Agreement with Confections Ventures Limited. |
| 2018-08-28 | Board of Directors and shareholders approved increase in authorized common shares to 800,000,000. |
| 2018-10-01 | Signed a sublease agreement for facility in Italy. |
| 2019-06-10 | Board of Directors and shareholders approved increase in authorized common shares to 2,000,000,000. |
| 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) joint venture. |
| 2021-06-24 | Formed CETY Renewables Ashfield LLC (CRA) joint venture. |
| 2021-11-08 | CETY HK acquired 100% ownership of Leading Wave Limited. |
| 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. |
| 2022-07-01 | JHJ and other three shareholders agreed to form Sichuan Hongzuo Shuya Energy Limited (Shuya). |
| 2022-08-01 | JHJ purchased 100% ownership of Sichuan Shunengwei Energy Technology Limited (SSET). |
| 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 | JHJ, SSET, and Chengdu Xiangyueheng Enterprise Management Co., Ltd. entered a Three-Parties Consistent Action Agreement, leading to consolidation of Shuya. |
| 2023-01-06 | Board of directors and majority shareholders approved a reverse stock split. |
| 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. |
| 2023-06-02 | CETY Renewables executed a turnkey agreement with VRG for the design, construction, and delivery of an organics-to-energy plant. |
| 2023-07-20 | Closed transactions contemplated by Securities Purchase Agreement 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. |
| 2023-10-27 | Mast Hill exercised the right to purchase 183,500 Warrant Shares. |
| 2023-10-31 | Filed certificate of designation for 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 conversion. |
| 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. |
| 2024-01-01 | Termination of the Concerted Action Agreement with Shuya, leading to deconsolidation. |
| 2024-01-03 | Entered into a securities purchase agreement with FirstFire for a promissory note of $143,750. |
| 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 promissory note of $92,000. |
| 2024-03-04 | Entered into a securities purchase agreement with FirstFire for a promissory note of $280,500. |
| 2024-06-18 | Entered into a subscription agreement to sell approximately 1,203,333 units for $1,083,000. |
| 2024-06-21 | Vermont Renewable Gas LLC (VRG) entered into a loan agreement with FPM Development LLC and Evergreen Credit Facility I LLP for $12 million. |
| 2024-08-15 | Promissory note with Diagonal from October 13, 2023, was paid off. |
| 2024-08-22 | Entered into a securities purchase agreement with 1800 Diagonal Lending LLC for a convertible promissory note of $180,960. |
| 2024-09-02 | Entered into a securities purchase agreement with Coventry for a convertible promissory note of $92,000. |
| 2024-09-10 | Entered into amendments with Mast Hill Fund, L.P. to extend maturity dates of two promissory notes to December 31, 2025. |
| 2024-09-30 | Entered into a securities purchase agreement with Diagonal for a convertible promissory note of $150,650. |
| 2024-10-15 | Entered into a securities purchase agreement with Diagonal for a convertible promissory note of $125,080. |
| 2024-11-08 | Entered into a securities purchase agreement with Coventry for a convertible promissory note of $101,000. |
| 2024-11-18 | Entered into an amendment with Mast Hill to increase principal balance of a promissory note by $160,000. |
| 2024-11-29 | Entered into a securities purchase agreement with Lucas Ventures, LLC for a convertible promissory note of $105,000. |
| 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 | Entered into an amendment with Mast Hill to increase principal balance of a promissory note by $60,000. |
| 2024-12-12 | Entered into a securities purchase agreement with Diagonal for a convertible promissory note of $93,725. |
| 2025-01-16 | Entered into a securities purchase agreement with Mast Hill for a junior secured convertible promissory note of $1,637,833. |
| 2025-01-20 | Entered into a consulting agreement with Hudson Global Ventures, LLC, issuing 25,000 shares of Common Stock. |
| 2025-02-28 | Entered into a securities purchase agreement with Mast Hill for a junior secured convertible promissory note of $620,000. |
| 2025-03-04 | Entered into a securities purchase agreement with FirstFire, accepting 56,100 shares as final loan payment. |
| 2025-04-04 | Entered into a securities purchase agreement with Pacific Pier Capital II, LLC for a convertible promissory note of $345,000. |
| 2025-04-23 | Entered into a securities purchase agreement with Pacific Pier for a convertible promissory note of $256,000. |
| 2025-05-06 | Entered into a Subscription Agreement with various investors, acquiring 10,731,704 shares for $4,400,000. |
| 2025-05-07 | Received letter from Nasdaq granting an additional 180-day period to regain minimum bid price compliance (until November 3, 2025). |
| 2025-05-08 | Entered into a securities purchase agreement with 1800 Diagonal Lending LLC for a convertible promissory note of $131,610. |
| 2025-05-19 | Entered into a securities purchase agreement with Lucas Ventures, LLC for a convertible promissory note of $109,500. |
| 2025-06-04 | Entered into a securities purchase agreement with Mast Hill for a junior secured convertible promissory note of $335,000. |
| 2025-06-18 | CETY HK acquired Herbert YF Global Holding Limited. |
| 2025-06-30 | End of the reporting period for this 10-Q filing. |
| 2025-07-08 | Issued 510,000 shares to Mast Hill from convertible note conversion. |
| 2025-07-11 | Issued 467,704 shares to Mast Hill from convertible note conversion. |
| 2025-07-18 | Issued 500,000 shares to Mast Hill from convertible note conversion. Also, entered into a securities purchase agreement with FirstFire Global Opportunities Fund, LLC for a convertible promissory note of $201,250. |
| 2025-07-21 | Issued 1,000,000 shares to Mast Hill from convertible note conversion. |
| 2025-07-30 | Entered into a securities purchase agreement with 1800 Diagonal Lending LLC for a convertible promissory note of $151,800. |
| 2025-08-01 | Issued 1,000,000 shares and 300,000 shares to Mast Hill from convertible note conversions. |
| 2025-08-06 | Issued 1,500,000 shares to Mast Hill from convertible note conversion. |
| 2025-08-14 | Date of common stock outstanding count for the filing. |
| 2025-08-19 | Date of CEO and CFO certifications for the 10-Q filing. |
| 2025-11-03 | Deadline to regain Nasdaq minimum bid price compliance. |
Recommendation
holdWhile Clean Energy Technologies, Inc. has shown notable improvements in reducing its net loss and significantly increasing gross profit by strategically shifting away from lower-margin businesses, the persistent 'going concern' warning, substantial accumulated deficit, and continued reliance on dilutive financing are major red flags. The default of a key project lender (FPM Development LLC) on a loan guaranteed by the company adds further financial uncertainty. The company's ability to execute its strategic shift and achieve sustained profitability remains highly dependent on future capital raises and successful project completions. Given the mixed signals and high inherent risks, a 'hold' recommendation is appropriate for investors who are already exposed and willing to monitor the company's progress closely, while new investors should exercise extreme caution.
Keywords
Clean Energy, Renewable Energy, Waste-to-Energy, Heat Recovery Systems, Natural Gas Trading, SEC Filing, 10-Q, Financial Report, Corporate Governance, Sustainability, Biochar, Pyrolysis, EPC Services
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