CETY.NASDAQClean Energy Technologies, INC
10-Q: Clean Energy Technologies Reports Increased Revenue but Net Loss in Q1 2024
Sentiment:
Quarterly Report
Clean Energy Technologies saw a significant increase in revenue in the first quarter of 2024, but also experienced a net loss due to increased operating expenses and the deconsolidation of a subsidiary.
Capital raiseThe company will continue to rely on equity sales of its common shares to continue to fund its business operations.Issuance of additional shares will result in dilution to existing stockholders.There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned acquisitions and exploration activities.
Worse than expectedThe company's net loss increased compared to the same period last year, indicating worse than expected results.The company's operating expenses increased significantly, contributing to the increased net loss.The company's stockholders' equity decreased due to the net loss.
Summary
- Clean Energy Technologies reported a revenue of $1,513,026 for the first quarter of 2024, compared to $551,869 for the same period in 2023.
- The company's gross profit for Q1 2024 was $253,005, a significant increase from $19,487 in Q1 2023.
- Operating expenses for the quarter were $1,073,926, up from $698,107 in the same period last year, due to increased salaries and professional fees.
- The company experienced a net loss of $1,419,400 for the quarter, compared to a net loss of $1,110,390 in Q1 2023.
- Stockholders' equity decreased to $4,414,986 as of March 31, 2024, from $5,869,198 at the end of 2023, primarily due to the net loss.
- The company's cash used in operating activities was $871,636 for the quarter.
- The company deconsolidated its Shuya subsidiary, which impacted revenue and net loss.
Sentiment
Score: 4
Explanation: The document presents a mixed picture. While revenue growth is positive, the significant net loss, increased operating expenses, and going concern issues raise concerns. The company's strategic moves and future outlook are positive, but the current financial situation is weak.
Positives
- The company experienced a significant increase in revenue compared to the same period last year.
- Gross profit margins improved due to increased revenue from non-NG business in China.
- The company has successfully repositioned itself into four different business segments to create a larger, more stable, and diversified revenue stream.
- The company is progressing steadily with its pilot Waste-to-Energy plant in Vermont.
Negatives
- The company experienced a net loss of $1,419,400 for the quarter.
- Operating expenses increased significantly due to higher salaries and professional fees.
- Stockholders' equity decreased by $1,454,212 due to the net loss.
- The company used $871,636 in net cash from operating activities.
- The deconsolidation of the Shuya subsidiary negatively impacted revenue and net loss.
Risks
- The company has a substantial accumulated deficit of $24,473,587 as of March 31, 2024.
- There is substantial doubt about the company's ability to continue as a going concern.
- The company is dependent on its ability to obtain sufficient debt and/or equity capital or generate positive cash flow from operations.
- The company's reliance on high-cost financing options due to delays in securing affordable financing for the Vermont project.
- The company's disclosure controls and procedures were not effective as of March 31, 2024, due to material weaknesses.
Future Outlook
CETY expects larger revenue contribution from Waste-to-Energy, Heat Recovery, and EPC in the latter of this year which are higher gross margin segments. CETY believes that it will continue to deliver growth on all segments this year due to our belief that there is an optimistic industry macro backdrop. 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.
Management Comments
- Management believes this 4-segment strategy has created many operational synergies and cross-selling opportunities across different markets.
- The growth in the year ended 2024 vs. 2023 was a result of this strategy.
- Management believes that it will continue to deliver growth on all segments this year due to our belief that there is an optimistic industry macro backdrop.
Industry Context
The company operates in the renewable energy sector, which is experiencing growth due to global commitments to reduce emissions and increase renewable energy adoption. The Inflation Reduction Act in the US and the European energy crisis are creating opportunities for the company's products and solutions.
Comparison to Industry Standards
- The company's revenue growth is positive, but the net loss indicates that the company is still in a growth phase and not yet profitable.
- Compared to other companies in the renewable energy sector, CETY's focus on waste heat recovery and waste-to-energy solutions is a niche market with potential for growth.
- The company's reliance on debt financing and equity sales is common for companies in the early stages of growth, but the high cost of capital is a concern.
- The company's expansion into China through its NG trading business is a strategic move to tap into a large and growing market.
Related Party Transactions
- CETY has recognized revenue from VRG of $197,989 for the three months ended March 31, 2024 and recorded as related party revenue.
Stakeholder Impact
- Shareholders are impacted by the net loss and decrease in stockholders' equity.
- Employees are impacted by the company's financial performance and potential future changes.
- Customers may be impacted by the company's ability to deliver products and services.
- Creditors are impacted by the company's financial performance and ability to repay debts.
Next Steps
- The company expects larger revenue contribution from Waste-to-Energy, Heat Recovery, and EPC in the latter of this year.
- The company is working diligently to finalize its financing in the second quarter of 2024.
- The company will continue to execute its corporate strategy to build sustained and profitable growth.
Key Dates
| Date | Description |
|---|---|
| 2005-04-21 | Board of Directors and shareholders approved the re-domicile of the Company in the State of Nevada. |
| 2006-05-25 | Board of Directors and shareholders approved an amendment to our Articles of Incorporation to authorize a new series of preferred stock, designated as Series C. |
| 2013-08-06 | Board of Directors designated a series of our preferred stock as Series D Preferred Stock. |
| 2015-09-11 | Clean Energy HRS acquired the assets of Heat Recovery Solutions from General Electric International. |
| 2017-05-01 | Company signed a lease agreement for an 18,200 -square foot CTU Industrial Building. |
| 2017-06-30 | Board of Directors and shareholders approved an increase in the number of our authorized common shares to 400,000,000 and in the number of our authorized preferred shares to 10,000,000. |
| 2018-02-12 | Clean Energy Technologies, Inc. entered into a Common Stock Purchase Agreement with MGW Investment I Limited. |
| 2018-02-13 | The Corporation and Confections Ventures Limited entered into a Convertible Note Purchase Agreement. |
| 2018-08-28 | Board of Directors and shareholders approved an increase in the number of our authorized common shares to 800,000,000. |
| 2018-10-01 | Company signed a sublease agreement with our facility in Italy. |
| 2019-06-10 | Board of Directors and shareholders approved an increase in the number of our authorized common shares to 2,000,000,000. |
| 2021-04-01 | Company entered into an amendment to the purchase order financing agreement with DHN Capital, LLC dba Nations Interbanc. |
| 2021-05-13 | Company formed CETY Capital LLC and established Vermont Renewable Gas LLC. |
| 2021-06-24 | Company formed CETY Capital LLC and established CETY Renewables Ashfield LLC. |
| 2021-11-01 | Date of LWL acquisition. |
| 2021-12-27 | Company entered into a convertible note payable with Universal Scope Inc. |
| 2022-01-10 | JHJ entered a convertible note agreement with Chengdu Rongjun Enterprise Consulting Co., Ltd. |
| 2022-02-19 | Company issued 375,875 shares of our common stock under our Reg A offering. |
| 2022-03-10 | Company entered into a promissory note in the amount of $170,600. |
| 2022-05-06 | Company entered into a Securities Purchase Agreement with Mast Hill, L.P. |
| 2022-06-30 | Company entered into a promissory note in the amount of $252,928.44. |
| 2022-07-13 | Company entered into a promissory note in the amount of $159,450. |
| 2022-07-31 | JHJ and other three shareholders agreed to form and make total capital contribution into Sichuan Hongzuo Shuya Energy Limited. |
| 2022-08-05 | Company entered into a Securities Purchase Agreement with Jefferson Street Capital, LLC. |
| 2022-08-17 | Company entered into a Securities Purchase Agreement with Firstfire Global Opportunities Fund LLC. |
| 2022-08-31 | JHJ purchased 100% ownership of Sichuan Shunengwei Energy Technology Limited. |
| 2022-09-01 | Company entered into a Securities Purchase Agreement with Pacific Pier Capital, LLC. |
| 2022-09-16 | Company entered into a Securities Purchase Agreement with Mast Hill, L.P. |
| 2022-10-25 | Company entered into a promissory note in the amount of $114,850. |
| 2022-11-10 | Company entered into a Securities Purchase Agreement with Mast Hill, L.P. |
| 2022-11-21 | Company entered into a Securities Purchase Agreement with Mast Hill, L.P. |
| 2022-12-05 | Company entered into a promissory note in the amount of $191,526. |
| 2022-12-26 | Company entered into a Securities Purchase Agreement with Mast Hill, L.P. |
| 2023-01-01 | JHJ, SSEN and Chengdu Xiangyueheng Enterprise Management Co., Ltd entered a Three-Parties Consistent Action Agreement. |
| 2023-01-06 | Board of directors and majority shareholders approved a reverse stock split. |
| 2023-01-19 | Company entered into a Securities Purchase Agreement with Mast Hill, L.P. |
| 2023-02-10 | Company entered into a promissory note in the amount of $258,521. |
| 2023-03-06 | Company entered into a promissory note in the amount of $135,005. |
| 2023-03-08 | Company entered into a Securities Purchase Agreement with Mast Hill, L.P. |
| 2023-03-15 | Company sold 975,000 shares of our common stock in an underwritten offering to R.F. Lafferty & CO and Phillip US. |
| 2023-03-28 | This note and accrued interest equating to $666,250 was converted into 277,604 of our common shares. |
| 2023-04-02 | Company formed CETY Capital LLC and established Vermont Renewable Gas LLC. |
| 2023-07-20 | Clean Energy Technology, Inc. closed the transactions contemplated by the Securities Purchase Agreement with Mast Hill, L.P. |
| 2023-10-13 | Company entered into a promissory note in the amount of $197,196. |
| 2023-10-31 | Clean Energy Technologies, Inc. filed with the Nevada Secretary of State a certificate of designation designating 3,500,000 shares of the undesignated and authorized preferred stock of the Company, par value $ 0.001 per share, as the 15 % Series E Convertible Preferred Stock. |
| 2023-11-08 | Company entered into an exchange agreement with Mast Hill Fund, L.P. |
| 2023-11-17 | Company entered into a promissory note in the amount of $261,450. |
| 2023-11-30 | Company entered into a promissory note in the amount of $136,550. |
| 2023-12-01 | Company signed a lease agreement for a 3000-square foot of office space with Metro Creekside California, LLC. |
| 2023-12-19 | Company entered into a promissory note in the amount of $92,000. |
| 2024-01-01 | JHJ, SSET and Xiangyueheng entered into the Agreement on the Termination of the Concerted Action Agreement. |
| 2024-01-03 | Clean Energy Technologies, Inc. entered into a securities purchase agreement with FirstFire Global Opportunities Fund, LLC. |
| 2024-01-30 | JHJ entered into a lease for the office in Chengdu City. |
| 2024-02-02 | Clean Energy Technologies, Inc. entered into a securities purchase agreement with Coventry Enterprises LLC. |
| 2024-02-24 | Clean Energy Technologies, Inc. entered into a consulting agreement with Hudson Global Ventures, LLC. |
| 2024-03-04 | Clean Energy Technologies, Inc. entered into a securities purchase agreement with FirstFire Global Opportunities Fund, LLC. |
| 2024-03-15 | Clean Energy Technologies, Inc. entered into a subscription agreement with certain individual investors. |
| 2024-03-31 | End of the quarterly period. |
| 2024-05-20 | Date of report. |
Keywords
Clean Energy Technologies, renewable energy, waste heat recovery, waste to energy, natural gas trading, engineering services, financial results, net loss, revenue growth, operating expenses, going concern, deconsolidation, Shuya, CETY HK, Vermont
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