Clean Energy Technologies, Inc.
For the period ended Mar 31, 2025. Filed May 20, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 20, 2025
CETY$0.89+3.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-19.
0001493152-24-046866
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-20.
0001641172-25-011775
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 144 previous paragraphs and 154 current paragraphs.
106 unchanged; 14 reworded; 34 added; 24 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 7 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (34)
Current report
CETY HK
Current report
For the quarter ended March 31, 2025, our gross profit was $728,553 compared to $253,005 for the same period in 2024. Gross profit margins improved due to greater contributions from CETY’s non-NG business in China, where our operations and technologies yield substantially higher margins compared to our NG segment.
Current report
For the three months ended March 31, 2025, our operating expense was $824,656 compared to $1,073,926 for the same period in 2024. The decrease in expenses was primarily driven by lower salary costs from our China operations and a reduction in professional fees for legal and accounting services, which were elevated in the prior period due to costs associated with our S-3 registration.
Current report
For the quarter ended March 31, 2025, we had a net loss of $331,182 compared to $1,419,400 for the same period in 2024. The improvement was largely attributable to reduced salary expenses in our China operations, lower legal and accounting costs, and stronger margins generated by our U.S.-based businesses.
Current report
For the quarter ended March 31, 2025, stockholders’ equity increased by $12,657 to $2,951,159, compared to $2,938,502 as of December 31, 2024, primarily due to higher increase from net income
Current report
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. These segments include:
Current report
Revenue for the first quarter was primarily driven by the Clean Energy HRS and CETY Renewables segments. Looking ahead, 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.
Current report
CETY’s pilot Waste-to-Energy facility in Vermont, which integrates all of the company’s proprietary technologies and operational expertise into a unified, turnkey solution, is currently pending final approval from the Vermont Public Utility Commission.
Current report
Meanwhile, demand for Heat Recovery solutions is accelerating across both the U.S. and Europe. In parallel, CETY is actively scaling its Engineering and project management operations to deliver comprehensive self-generation energy solutions on a global scale.
Current report
For the three months ended March 31, 2025, revenue from the CETY Renewables segment was $176,105, compared to $211,568 for the same period in 2024. This segment is expected to remain relatively stable until construction activities commence later this year.
Current report
For the three months ended March 31, 2025, CETY reported no revenue from its Engineering and Manufacturing segments, compared to $9,342 for the same period in 2024. This segment is still in its early stages and much of the related activity is currently being integrated into the HRS and CETY Renewables segments. However, with a developing pipeline of opportunities, CETY expects to see gradual revenue growth from this segment over the coming quarters.
Current report
For the three months ended March 31, 2025, revenue from our natural gas (NG) business was $3,481, a decrease from $1,219,629 for the same period in 2024. This decline is primarily due to macroeconomic factors and our strategic decision to reduce focus on lower-margin business activities.
Current report
In the three months ending March 31, 2025, our gross profits totalled $728,553 marking a favorable increase compared to $253,005 recorded for the corresponding period in 2024. Gross profit margins improved due to greater contributions from CETY’s non-NG business in China, where our operations and technologies yield substantially higher margins compared to our NG segment.
Current report
For the three months ended March 31, 2025, our gross profit from the HRS segment was $552,331, compared to $51,597 for the same period in 2024. This significant increase in gross profit was primarily driven by higher revenues, which included equipment sales and the sale of products with lower costs, along with engineering services.
Current report
For the three months ended March 31, 2025, our gross profit from our wholly owned subsidiary, JHJ, was $115, down from $9,852 for the same period in 2024. This decrease was primarily due to minimal business activity in China, which was partly a result of our strategic decision to reduce focus on lower-margin businesses in the region.
Current report
For the three months ended March 31, 2025, our SG&A expenses totalled $222,557, compared to $218,658 for the same period in 2024. This slight increase reflects stable and consistent expense management.
Current report
For the three months ended March 31, 2025, our salaries expense totalled $433,799, compared to $511,111 for the same period in 2024. The decrease was primarily due to reduced activity in our China natural gas business, while salary levels in other areas remained stable.
Current report
For the three months ended March 31, 2025, our travel expenses were $32,377, compared to $29,652 for the same period in 2024. This slight increase reflects stable activity levels within our service and marketing operations.
Current report
For the quarter ended March 31, 2025, our professional fees totalled $66,213, compared to $199,053 for the same period in 2024. The decrease was primarily due to reduced legal and consulting activity, as the first quarter of 2024 included higher costs related to our S-3 registration process.
Current report
For the three months ended March 31, 2025, our facility lease and maintenance expenses totalled $66,741, compared to $71,275 for the same period in 2024. This slight decrease reflects normal fluctuations, with no significant changes in underlying operations.
Current report
For the three months ended March 31, 2025, our depreciation and amortization expense was $2,969, unchanged from the same period in 2024. There were no significant changes, as the majority of our equipment has already been fully depreciated.
Current report
The three months ended March 31, 2025 and 2024; we had no derivative liability.
Current report
For the three months ended March 31, 2025, interest and finance fees totalled $339,821, compared to $295,193 for the same period in 2024. The increase was primarily due to two larger interim financings secured to bridge the company through the finalization of funding for the Vermont Renewable Project, aimed at addressing approximately $1.7 million in accounts receivable, and to support the completion of the S-3 registration.
Current report
For the three months ended March 31, 2025, our net loss was $331,231, compared to a net loss of $1,419,400 for the same period in 2024. This significant decrease is primarily attributable to higher-margin revenue from the HRS segment—driven by equipment and technical sales—as well as stable contributions from CETY Renewables in support of the Vermont Renewable Gas Project. Additionally, reduced activity in the lower-margin China NG business contributed to improved overall financial performance.
Current report
for the three months ended March 31,
Current report
In July 2022, JHJ and other three shareholders agreed to form and make total capital contribution of RMB 20 million ($2.81 million) with latest contribution due date in February 2066 into Sichuan Hongzuo Shuya Energy Limited (“Shuya”), JHK owns 20% of Shuya. In August 2022, JHJ purchased 100% ownership of Sichuan Shunengwei Energy Technology Limited (“SSET”) for $0, who owns 29% of Shuya; Shunengwei is a holding company and did not have any operations nor made any capital contribution into Shuya as of the ownership purchase date by JHJ; right after the ownership purchase of SSET, JHJ ultimately owns 49% of Shuya.
Current report
Shuya was set up as the operating entity for pipeline natural gas (PNG) and compressed natural gas (CNG) trading business, while the other two shareholders of Shuaya have large supply relationships.
Current report
For the year ended December 31, 2022, the Company has determined that Shuya was not a VIE and has evaluated its consolidation analysis under the voting interest model. Because the Company does not own greater than 50% of the outstanding voting shares, either directly or indirectly, it has accounted for its investment in Shuya under the equity method of accounting. Under this method, the investor (“JHJ”) recognizes its share of the profits and losses of the investee (“Shuya”) in the periods when these profits and losses are also reflected in the accounts of the investee. Any profit or loss recognized by the investing entity appears in its income statement. Also, any recognized profit increases the investment recorded by the investing entity, while a recognized loss decreases the investment.
Current report
JHJ made a investment of RMB 3.91 million ($0.55 million) into Shuya during the 12 months ended December 31, 2022 recorded in accordance with ASC 323. Shuya had a net loss of approximately $10,750 during the year ending December 31, 2022, of which approximately $5,000 was allocated to the company, reducing the investment by that amount.
Current report
The change of control interest was accounted for using the acquisition method of accounting in accordance with Accounting Standards Codification, referred to as ASC, 805, Business Combinations. The management determined that the Company was the acquiror for financial accounting purposes. In identifying the Company as the accounting acquiror, the companies considered the structure of the transaction and other actions contemplated by the Three-Parties Consistent Action Agreement, relative outstanding share ownership and market values, the composition of the combined company’s board of directors, the relative size of Shuya, and the designation of certain senior management positions of the combined company.
Current report
In accordance with ASC 805, the Company recorded the acquisition based on the fair value of the consideration transferred and then allocated the purchase price to the identifiable assets acquired and liabilities assumed based on their respective fair values as of the Acquisition Date. The excess of the value of consideration transferred over the aggregate fair value of those net assets was recorded as goodwill. Any identified definite lived intangible assets will be amortized over their estimated useful lives and any identified intangible assets with indefinite useful lives and goodwill will not be amortized but will be tested for impairment at least annually. All intangible assets and goodwill will be tested for impairment when certain indicators are present. Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates including the selection of valuation methodologies, estimates of future revenues and cash flows, discount rates, and selection of comparable companies. The valuation of purchase considerations was based on preliminary estimates that management believes are reasonable under the circumstances.
Current report
As the Consistent Action Agreement did not quantify any considerations to gain the control, the deemed consideration paid is the fair value of 51% non-controlling interest as of January 1, 2023. The following table summarizes the fair value of the consideration paid and the fair value of assets acquired, and liabilities assumed on January 1, 2023, the acquisition date.
Current report
Under ASC-805-10-50-2, initial consolidation of an investee previously reported using fair value or the equity method should be accounted for prospectively as of the date the entity obtained a controlling financial interest. Therefore, the Company should provide pro forma information as if the consolidation had occurred as of the beginning of each of the current and prior comparative reporting period per
Current report
Under ASC-805-10-50-2, initial consolidation of an investee previously reported using fair value or the equity method should be accounted for prospectively as of the date the entity obtained a controlling financial interest. Therefore, the Company should provide pro forma information as if the consolidation had occurred as of the beginning of each of the current and prior comparative reporting period per
Removed paragraphs (24)
Previous report
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 report
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 report
For the nine months ended September 30, 2024, we had a net loss of $3,550,669 compared to net loss of $2,460,489 for the same period in 2023 due to increase in salaries fir the CETY Renewable engineering Team, professional fees for legal, accounting, IR, and stock compensation.
Previous report
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 report
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 report
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 report
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 report
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 report
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 report
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 report
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 report
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 report
For the nine months ended September 30, 2024, our SG&A expenses totaled $3,193,447, an increase from $2,463,090 for the same period in 2023. This increase can be attributed to higher expenses from higher salaries from our Newley formed CETY Renewables, professional fees legal & accounting, and stock compensation for loan inducement.
Previous report
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 report
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 report
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 report
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 report
Consulting
Previous report
For the nine months ended September 30, 2024, our consulting expense was $195,640 compared to $ 244,540 for the same period in 2023. The decrease was due to less market awareness and IR activities.
Previous report
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 report
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 report
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 report
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 report
For nine months ended September 30,
Reworded paragraphs (14)
Previous wording
Clean Energy Technologies (H.K.) Limited (“CETY HK”)– our natural gas (“NG”) trading operations source and supply NG to industries and municipalities in mainland China. NG is principally used for heavy truck refueling stations and urban or industrial users. We purchase large quantities of NG from large wholesale NG depots at fixed prices which are prepaid for in advance at a discount to the market. We sell the NG to our customers at fixed prices or prevailing daily spot prices for the duration of the contracts.
Current wording
Clean Energy Technologies (H.K.) Limited (“CETY HK”) consists of two business ventures in mainland China:(i) our natural gas (“NG”) trading operations sourcing and suppling NG to industries and municipalities. Natural Gas is principally used for heavy truck refueling stations and urban or industrial users. We purchase large quantities of NG from large wholesale NG depots at fixed prices which are prepaid for in advance at a discount to the market. We sell the NG to our customers at fixed prices or prevailing daily spot prices for the duration of the contracts.
Previous wording
Summary of Operating Results for the Nine Months Ended September 30, 2024 Compared to the Same Period in 2023
Current wording
Summary of Operating Results the three months Ended March 31, 2025 Compared to the same period in 2024
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 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.
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 total stockholder’s equity of $2,951,159 and a working capital deficit of 3,320,603 as of March 31, 2025, The company also had an accumulated deficit of $27,731,745 as of March 31, 2025 and used 776,047 in net cash from operating activities for the three months ended March 31, 2025. 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 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.
Current wording
For the quarter ended March 31, 2025, our total revenue was $791,940 compared to $1,513,026 for the same period in 2024. Our total revenue for the first quarter of 2025 was lower compared to the same period in 2024, primarily due to minimal contributions from our China natural gas business.
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 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 non-China operations in the first quarter of 2025 vs. same period in 2024 was a result of this strategy. 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.
Previous wording
Results of the Nine Months Ended September 30, 2024 compared to the Nine Months Ended September 30, 2023
Current wording
Results of the three Ended March 31, 2025, Compared to the three ended March 31, 2024
Previous 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. The decrease in revenue was primarily due to deconsolidation of our China subsidiary.
Current wording
For the quarter ended March 31, 2025, our total revenue was $791,940 compared to 1,513,026 for the same period in 2024. The lower revenue was contributed to primarily due to minimal contributions from our China natural gas business.
Previous 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.
Current wording
For the three months ended March 31, 2025, our revenue from HRS was $612,354 compared to $72,488 for the same period in 2024. 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 customers are increasingly moving towards Independent Power Producer models.
Previous 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.
Current wording
For the three months ending March 31, 2025, our gross profit from Engineering and Manufacturing amounted to $0, compared to 7,806 for the same period in 2024. 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 power generation and integrated solutions.
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 a principal.
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 aprincipal.
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 December 31, 2024 and 2023 we had $33,000 and 33,000 of deferred revenue, which is expected to be recognized in the second quarter of year 2025.
Previous 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.
Current wording
Also from time to time we require upfront deposits from our customers based on the contract. As of December 31, 2024 and 2023, we had outstanding customer deposits of $128,134 and $30,061 respectively.
Previous wording
Chengdu Xiangyueheng Enterprise Management Co., Ltd (the “Xiangyueheng”), which owns a 10% equity interest in Shuya, entered a three-party Concerted Action Agreement (the “CAA”), wherein the parties agreed to vote in unison at the shareholders’ meeting of Shuya to consolidate the controlling position of the three parties in Shuya. The three parties agreed that during the term of the CAA, before any of the three parties intends to propose motions to the shareholders’ meetings or the board of directors, or exercise their voting rights on any matter that shall be presented to and resolved through the shareholders’ meeting in accordance with the laws, regulations, Articles of Association of Shuya or any relevant shareholders’ agreements, the three parties will discuss, negotiate, and coordinate the motion topics for consistency; in the event of disagreement, the opinions of JHJ shall prevail.
Current wording
However, effective January 1, 2023, JHJ, SSET and Chengdu Xiangyueheng Enterprise Management Co., Ltd (“Xiangyueheng), who is the 10% shareholder of Shuya, entered a Three-Parties Consistent Action Agreement, wherein these three shareholders (or three parties) will guarantee that the voting rights will be expressed in the same way at the shareholders’ meeting of Shuya to consolidate the controlling position of the three parties in Shuya. The three parties agree that within the validity period of this agreement, before the party intends to propose the motions to the shareholders or the board of directors on the major matters related to the voting rights of the shareholders or the board of directors, the three parties internally will discuss, negotiate and coordinate the motion topics for consistency; in the event of disagreement, the opinions of JHJ shall prevail.
Previous wording
As a result of the CAA, the Company re-analyzed and determined that Shuya is the variable interest entity (the “VIE”) of JHJ because 1) the equity investors at risk, as a group, lack the characteristics of a controlling financial interest, and 2) Shuya is structured with disproportionate voting rights, and substantially all the activities are conducted on behalf of an investor with disproportionately few voting rights. Under ASC 810, a reporting entity has a controlling financial interest in a VIE, and must consolidate that VIE, if the reporting entity has both of the following characteristics: (a) the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance; and (b) the obligation to absorb losses, or the right to receive benefits, that could potentially be significant to the VIE. The Company concluded JHJ is deemed the primary beneficiary of the VIE. Accordingly, the Company consolidates Shuya into its consolidated financial statements effective on January 1, 2023.
Current wording
As a result of Consistent Action Agreement, the Company re-analyzed and determined that Shuya is the variable interest entity (“VIE”) of JHJ because 1) the equity investors at risk, as a group, lack the characteristics of a controlling financial interest, and 2) Shuya is structured with disproportionate voting rights, and substantially all of the activities are conducted on behalf of an investor with disproportionately few voting rights. Under ASC 810, a reporting entity has a controlling financial interest in a VIE, and must consolidate that VIE, if the reporting entity has both of the following characteristics: (a) the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance; and (b) the obligation to absorb losses, or the right to receive benefits, that could potentially be significant to the VIE. The Company concluded JHJ is deemed the primary beneficiary of the VIE. Accordingly, the Company consolidates Shuya effective on January 1, 2023.