Clean Energy Technologies Inc

Previous wording

Summary of Operating Results for the Six Months Ended June 30, 2024 Compared to the Same Period in 2023

Current wording

Summary of Operating Results for the Nine Months Ended September 30, 2024 Compared to the Same Period in 2023

Previous wording

The financial statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets and liquidation of liabilities in the normal course of business. The Company had a working capital of $300,071 as of June 30, 2024, The company also had an accumulated deficit of $25,429,293 as of June 30, 2024 and used $1,612,034 in net cash from operating activities for the six months ended June 30, 2024. Therefore, there is substantial doubt about the ability of the Company to continue as a going concern. There can be no assurance that the Company will achieve its goals and reach profitable operations and is still dependent upon its ability (1) to obtain sufficient debt and/or equity capital and/or (2) to generate positive cash flow from operations.

Current wording

The financial statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets and liquidation of liabilities in the normal course of business. The Company had a negative working capital of $778,464 as of September 30, 2024, The company also had an accumulated deficit of $26,643,673 as of September 30, 2024 and used $2,788,608 in net cash from operating activities for the nine months ended September 30, 2024. Therefore, there is substantial doubt about the ability of the Company to continue as a going concern. There can be no assurance that the Company will achieve its goals and reach profitable operations and is still dependent upon its ability (1) to obtain sufficient debt and/or equity capital and/or (2) to generate positive cash flow from operations.

Previous wording

For the six months ended June 30, 2024, our total revenue was$1,709,151 compared to $3,274,001 for the same period in 2023. Our first half of 2024’s total revenue was lower than the same period in 2023 due todeconsolidation of our Shuya entity and substantially lower revenue from our NG business in general due to slow down of economy in China.

Current wording

For the nine months ended September 30, 2024, our total revenue was $1,944,333 compared to $5,278,203 for the same period in 2023. Our revenue for the nine months ended September 30, 2024 was lower than the same period in 2023 due to deconsolidation of the China operations.

Previous wording

For the six months ended June 30, 2024, our gross profit was$429,035 compared to $444,018 for the same period in 2023. The increase in gross profit margin was due to higher-margin business from non-NG operations.

Current wording

For the nine months ended September 30, 2024, our gross profit was $641,575 compared to $992,943 for the same period in 2023. The decrease in gross profit margin was due to lower revenue from China operations.

Previous wording

For the six months ended June 30, 2024, our operating expense was$2,221,990 compared to $1,498,702 for the same period in 2023. The increase in expenses contributed tosalaries expenses and professional fees for legal & accounting.

Current wording

For the nine months ended September 30, 2024, our operating expense was $3,193,447 compared to $2,463,090 for the same period in 2023. The increase in expenses was due to higher salaries expenses, professional fees for legal & accounting, for stock compensation for loan inducements.

Previous wording

For the quarter ended June 30, 2024, stockholder’sequity was$4,579,726, compared to $5,869,198 as of December 31, 2023. This decrease in stockholder’s equity can be attributed to net loss for the year-to-date results.

Current wording

For the quarter ended September 30, 2024, stockholder’s equity was $3,583,444, compared to $5,869,198 as of September 30, 2023. This decrease in stockholder’s equity can be attributed to loss of revenue from China operations and lower profits,

Previous wording

CETY has successfully repositioned itself and created 4 different business segments to create a larger, more stable, and more diversified revenue stream that could scale up. The 4 segments are Clean Energy HRS (Heat Recovery), Waste-to-Energy (Pyrolysis Plant), Engineering and manufacturing services, and CETY HK (NG trading and acquisitions). Revenue for the six months ended June 30, 2024 wasmainly contributed by NG trading and waste to energy project. The revenue in this segment is expected to continue to stay stable which will help establish CETY as a player in the China market and allows cross-selling of CETY products and solutions and transfer of advanced clean energy with lower cost technologies. 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. Our pilot Waste-to-Energy plant in Vermont which integrates all of CETY’s technologies and expertise into a single solution, is progressing steadily with updates coming soon. There is a growing market for Heat Recovery in the U.S. and Europe, and CETY HK has begun cross-selling Heat Recovery products in China. CETY is also gearing up for the EPC segment to implement holistic self-generation solutions globally.

Current wording

CETY has successfully repositioned itself and created 4 different business segments to create a larger, more stable, and more diversified revenue stream that could scale up. The 4 segments are Clean Energy HRS (Heat Recovery), Waste-to-Energy (Pyrolysis Plant), Engineering and manufacturing services, and CETY HK (NG trading and acquisitions). Revenue for the nine months ended September 30, 2024 was mainly contributed by NG trading and waste to energy project. CETY expects larger revenue contribution from Waste-to-Energy, Heat Recovery, and EPC next year which are higher gross margin segments. Our pilot Waste-to-Energy plant in Vermont which integrates all of CETY’s technologies and expertise into a single solution, is progressing steadily with delays related to permitting. There is a growing market for Heat Recovery in the U.S. and Europe, and CETY HK has begun cross-selling Heat Recovery products in China. CETY is also gearing up for the EPC segment to implement holistic self-generation solutions globally.

Previous wording

Management believes this 4-segment strategy has created many operational synergies and cross-selling opportunities across different markets. The growth in the year ended in 2023 was a result of this strategy. 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. The main macro factor benefiting us is the global commitment to push renewable energy to the forefront from governments across the world. This is evidenced by the Paris Agreement and COP26. The Inflation Reduction Act passed by Congress in August 2022 had specific provisions that can take advantage of CETY’s products and solutions. Another catalyst that will potentially help our Company, is a continuously improving global supply chain. The European energy crisis has given rise to the opportunity for CETY to sell more of its products and solutions as customers are in search of self-generation capabilities in renewable energy.

Current wording

Management believes this 4-segment strategy has created many operational synergies and cross-selling opportunities across different markets. The growth in the year ended in 2023 was a result of this strategy. CETY believes that it will continue to deliver growth on all segments due to our belief that there is an optimistic industry macro backdrop. The main macro factor benefiting us is the global commitment to push renewable energy to the forefront from governments across the world. This is evidenced by the Paris Agreement and COP26. The Inflation Reduction Act passed by Congress in August 2022 had specific provisions that can take advantage of CETY’s products and solutions. Another catalyst that will potentially help our Company, is a continuously improving global supply chain. The European energy crisis has given rise to the opportunity for CETY to sell more of its products and solutions as customers are in search of self-generation capabilities in renewable energy.

Previous wording

Results of the Six Months Ended June 30, 2024, Compared to the Six Months Ended June 30, 2023

Current wording

Results of the Nine Months Ended September 30, 2024 compared to the Nine Months Ended September 30, 2023

Previous wording

For the six months ended June 30, 2024, our revenue from Engineering and Manufacturing was$9,341 compared to$36,332 for the same period in 2023. Our engineering team is in transition to establish the innovation center in Europe and has executed a master services agreement with RPG to support its fortune 500 customers with its sustainability goals. Additionally, our engineering team will be commencing work on the Vermont project starting in the second quarter of 2023. Additionally, some of our engineering revenue is rolled up into our waste heat to power and waste to energy contracts.

Current wording

For the nine months ended September 30, 2024, our revenue from Engineering and Manufacturing was $0 compared to $59,877 for the same period in 2023. Our engineering team has been working on the Vermont project, additionally, some of our engineering revenue is rolled up into our waste heat to power.

Previous wording

For the six months ended June 30, 2024, our revenue from HRS was$120,874 compared to$28,338 for the same period in 2023. We have a large pipeline of opportunities in this segment and are working diligently to complete the engineering and design, enabling us to execute contractual agreements and close these opportunities. The sales cycle for these types of opportunities is long due to cost factors and the integration of the technology. We are also working with financial institutions to assist in financing the projects as we increasingly move towards Independent Power Producer models.

Current wording

For the nine months ended September 30, 2024, our revenue from HRS was $158,830 compared to $399,136 for the same period in 2023. We have a large pipeline of opportunities in this segment and are working diligently to complete the engineering and design, enabling us to execute contractual agreements and close these opportunities. The sales cycle for these types of opportunities is long due to cost factors and the integration of the technology. We are also working with financial institutions to assist in financing the projects as we increasingly move towards Independent Power Producer models.

Previous wording

For the six months ended June 30, 2024, our revenue from our waste to energy segment was$331,487 compared to$385,404 for the same period in 2023. We have a large $12M contract with Vermont Renewable Gas in this segment and are currently finalizing the engineering and design, and permitting to start the construction. We anticipate exponentially higher revenue driven from this segment.

Current wording

For the nine months ended September 30, 2024, our revenue from our waste to energy segment was $231,679 compared to $779,720 for the same period in 2023. We have a large $12M contract with Vermont Renewable Gas in this segment and are currently finalizing the certificate of public good permitting to start the construction. We anticipate exponentially higher revenue driven from this segment.

Previous wording

For the six months ended June 30, 2024, our revenue from our natural gas (NG) business amounted to$1,219,629, down from$2,796,649 for the corresponding period in 2023. This decrease can be attributed to the deconsolidation of Shuya’s revenue, overall substantial lower revenue from China operations due to slow down in economy and our strategic decision to prioritize non-Chinese markets over expansion into the ASEAN region.

Current wording

For the nine months ended September 30, 2024, our revenue from our natural gas (NG) business amounted to $1,185,178, down from $10,462,385 for the corresponding period in 2023. This decrease can be attributed to the deconsolidation of Shuya’s revenue, overall substantial lower revenue from China operations due to slow down in economy and our strategic decision to prioritize non-Chinese markets over expansion into the ASEAN region.

Previous wording

For the six months ended June 30, 2024, our gross profits totaled$429,035, marking higher margins compared to$444,018 recorded for the corresponding period in 2023. This higher gross profit can be attributed to higher revenue and margins from none Chinese NG business.

Current wording

For the nine months ended September 30, 2024, our gross profits totaled $641,575, marking higher margins compared to $992,943 recorded for the corresponding period in 2023. This lower gross profit can be attributed to higher revenue and margins from non-Chinese NG business.

Previous wording

For the six months ended June 30, 2024, our gross profit from Engineering and Manufacturing amounted to$7,806, compared to$18,355for the same period in 2023. This segment is a recent addition to CETY’s portfolio, currently serving as a support for our ongoing internal projects. Nevertheless, it is anticipated to expand notably as CETY shifts its focus towards providing comprehensive end-to-end integrated solutions.

Current wording

For the nine months ended September 30, 2024, our gross profit from Engineering and Manufacturing amounted to $0, compared to $16,528 for the same period in 2023. This segment is a recent addition to CETY’s portfolio, currently serving as a support for our ongoing internal projects. Nevertheless, it is anticipated to expand notably as CETY shifts its focus towards providing comprehensive end-to-end integrated solutions.

Previous wording

For the six months ended June 30, 2024, our gross profit from HRS was$79,889, compared to$18,355 for the corresponding period in 2023. This increase in margins primarily stemmed from increased service activities, which did not include equipment sales.

Current wording

For the nine months ended September 30, 2024, our gross profit from HRS was $96,961 compared to $148,706 for the corresponding period in 2023. This increase in margins primarily stemmed from increased service activities, which did not include equipment sales.

Previous wording

For the six months ended June 30, 2024, our gross profit from waste to energyt was$331,487, compared to$385,404 for the corresponding period in 2023. Our waste to energy segment will be driving higher margins that our other segments.

Current wording

For the nine months ended September 30, 2024, our gross profit from waste to energy was $549,947, compared to $738,243 for the corresponding period in 2023. Our waste to energy segment will be driving higher margins than our other segments.

Previous wording

During the six months ended June 30, 2024, our gross profit from our wholly owned subsidiary, JHJ, was$9,853, adecrease from$385,404 recorded for the corresponding period in 2023. It’s worth noting that our NG business typically operates on slim margins. Looking ahead, we intend to leverage our presence in China to foster synergistic partnerships and facilitate technology transfers, particularly in the growing EV charging sector. Additionally, we aim to explore cross-selling opportunities for our waste heat recovery and waste-to-energy products within the Chinese market.

Current wording

For the nine months ended September 30, 2024, our gross profit from our wholly owned subsidiary, JHJ, was $0, a decrease from $524,152 recorded for the corresponding period in 2023. It’s worth noting that our NG business typically operates on slim margins. Looking ahead, we intend to leverage our presence in China to foster synergistic partnerships and facilitate technology transfers, particularly in the growing EV charging sector. Additionally, we aim to explore cross-selling opportunities for our waste heat recovery and waste-to-energy products within the Chinese market.

Previous wording

For the six months ended June 30, 2024, our Salaries expense totaled$966,843, marking a significant increase from$535,237 recorded during the same period in 2023. This surge in expenses can be attributed to the inclusion of key personnel such as our CFO, director of operations, director of technology, and the recruitment of four additional engineers, and increased in work force in our NG operations. Our strategy involves fortifying our team from the ground up to establish a robust foundation for scalable growth, reinforced by cutting-edge technology and streamlined systems. We hold strong conviction in the capabilities of our assembled team, envisioning their collective efforts leading us to a position of leadership within the clean energy sector.

Current wording

For the nine months ended September 30, 2024, our Salaries expense totaled $1,481,316, marking an increase from $957,759 recorded during the same period in 2023. This increase in expenses can be attributed to the inclusion of key personnel such as our CFO, director of operations, director of technology, and the recruitment of four additional engineers for CETY Renewables, and increased in work force in our NG operations. Our strategy involves fortifying our team from the ground up to establish a robust foundation for scalable growth, reinforced by cutting-edge technology and streamlined systems. We hold strong conviction in the capabilities of our assembled team, envisioning their collective efforts leading us to a position of leadership within the clean energy sector.

Previous wording

For the six months ended June 30, 2024, our travel expense was$81,224 compared to$200,139 for the same period in 2023. The decrease was due to lower travel expenses related to China NG business development.

Current wording

For the nine months ended September 30, 2024, our travel expense was $135,964 compared to $326,905 for the same period in 2023. The decrease was due to less business travels in our China subsidiaries.

Previous wording

For the six months ended June 30, 2024, our Professional Fees expense totaled$353,065, marking an increase from$177,437 in the corresponding period of 2023. This rise in accounting fees can be attributed directly to engaging a new audit firm, which incurred higher costs.

Current wording

For the nine months ended September 30, 2024, our Professional Fees expense totaled $484,990, marking an increase from $259,476 in the corresponding period of 2023. This rise in accounting fees can be attributed directly to engaging a new audit firm, which incurred higher costs.

Previous wording

For the six months ended June 30, 2024, our Facility Lease and maintenance expenses totaled$150,883, marking a significant decrease from the$126,766 incurred during the same period in 2023. This increase in cost can be attributed to the NG operations increased in rent.

Current wording

For the nine months ended September 30, 2024, our facility lease and maintenance expenses totaled $230,798, marking a significant decrease from the $253,041 incurred during the same period in 2023. This decrease in cost can be attributed to relocating our Heat Recovery Solutions and headquarters to a lower cost facility.

Previous wording

For the six months ended June 30, 2024, our depreciation and amortization expense was$5,938 compared to$6,454 for the same period in 2023.

Current wording

For the nine months ended September 30, 2024, our depreciation and amortization expense was $8,907 compared to $9,436 for the same period in 2023.

Previous wording

For the six months ended June 30, 2024, we had[no] derivative liability compared to a gain of$326,539 for the same period in 2023. The gain in derivative liability was from a favorable derivative calculation from several convertible notes in the three months ended March 31, 2023.

Current wording

For the nine months ended September 30, 2024, we had 0 derivative liability compared to a gain of $326,539 for the same period in 2023. The gain in derivative liability was from a favorable derivative calculation from several convertible notes in the three months ended March 31, 2023.

Previous wording

For the six months ended June 30, 2024, interest and finance fees amounted to$422,863, as opposed to$1,349,594 for the corresponding period in 2023. The decrease in interest and fees can be attributed to less number of notes and bridge financing aimed at facilitating the uplisting to Nasdaq. Despite the decrease in interest and fees for the June 30, 2024 period, we believe that the cost of capital for CETY remains elevated. The delay in securing affordable financing for our Vermont project resulted in our reliance on high-cost financing options. We are working diligently to finalize our financing in the third quarter of 2024.

Current wording

For the nine months ended September 30, 2024, interest and finance fees amounted to $902,002, as opposed to $1,707,690 for the corresponding period in 2023. The decrease in interest and fees can be attributed to lower amount of borrowing. Despite the decrease in interest and fees for the nine months ended September 30, 2024, we believe that the cost of capital for CETY remains elevated. The delay in securing affordable financing for our Vermont project resulted in our reliance on high-cost financing options. We are working diligently to finalize our financing in the fourth quarter of 2024.

Previous wording

For the six months ended June 30, 2024, our loss amounted to$2,251,278, representing an increase from the loss of$1,868,163 incurred during the corresponding period in 2023. This increase is attributed to expenditures in salaries, IT, relocation, and legal and professional fees.

Current wording

For the nine months ended September 30, 2024, our loss amounted to $3,550,669, representing an increase from the loss of $2,460,489 incurred during the corresponding period in 2023. This increase is attributed to lower revenues and higher SG&A expenses.

Previous wording

If the entity obtains control over one of the above before the good or service is transferred to a customer, the entity could be considered aprincipal.

Current wording

If the entity obtains control over one of the above before the good or service is transferred to a customer, the entity could be considered a principal.

Previous wording

Also, from time to time our contracts state that the customer is not obligated to pay a final payment until the units are commissioned, i.e. a final payment of 10%. As of June 30, 2024 and December 31, 2023, we had$33,000 and $33,000 of deferred revenue, which is expected to be recognized in the fourth quarter of year 2024.

Current wording

Also, from time to time our contracts state that the customer is not obligated to pay a final payment until the units are commissioned, i.e. a final payment of 10%. As of June 30, 2024 and December 31, 2023, we had $33,000 and $33,000 of deferred revenue, which is expected to be recognized in the fourth quarter of year 2024.

Previous wording

Also from time to time we require upfront deposits from our customers based on the contract. As of June 30,2024, and December 31, 2023, we had outstanding customer deposits of$41,462 and $210,310 respectively.

Current wording

Also from time to time we require upfront deposits from our customers based on the contract. As of September 30,2024, and December 31, 2023, we had outstanding customer deposits of $41,462 and $210,310 respectively.