Clean Energy Technologies, Inc. (CETY) - 10-Q Summary
Business Context and Reporting Period
This summary covers the quarterly report (Form 10-Q) for Clean Energy Technologies, Inc. for the period ended September 30, 2025. The Company operates in four segments: Clean Energy HRS (Heat Recovery Solutions), CETY Renewables (Waste-to-Energy), Engineering/Manufacturing, and CETY HK (Natural Gas Trading). The Company is classified as a smaller reporting company and a non-accelerated filer. As of November 18, 2025, there were 5,183,021 shares of common stock outstanding (post 1-for-15 reverse stock split effective October 6, 2025).
Key Financial Metrics
| Metric | Q3 2025 (3 Months) | YTD 2025 (9 Months) | YTD 2024 (9 Months) |
|---|---|---|---|
| Total Revenue | $773,554 | $1,801,769 | $1,944,333 |
| Gross Profit | $183,105 | $1,135,315 | $641,575 |
| Net Loss | $(2,102,321) | $(3,522,342) | $(3,550,669) |
| EPS (Basic & Diluted) | $(0.47) | $(0.93) | $(1.25) |
| Cash & Equivalents | $826,786 | $826,786 | $44,149 |
| Working Capital | $(1,523,862) | $(1,523,862) | N/A |
| Total Debt (Current + Long Term) | $3,329,413 | $3,329,413 | $3,223,456 |
Note: Total Debt includes Convertible Notes Payable ($2,390,564), Line of Credit ($602,306), Notes Payable ($335,979), Related Party Notes ($26,602), and Facility Lease Liabilities ($348,791).
Material Changes vs. Prior Period
- Revenue: YTD revenue decreased 7.3% to $1.80 million, primarily due to a 50.5% decline in the Natural Gas (NG) trading segment ($586k vs $1.19M) driven by macroeconomic factors and strategic reduction of lower-margin activities. This was partially offset by a 407% increase in Heat Recovery Solutions revenue ($806k vs $159k).
- Profitability: Gross profit increased 77% to $1.14 million, driven by higher-margin refurbished system sales in the HRS segment. However, operating expenses rose to $3.30 million (up 3.4%) due to consulting fees for a potential acquisition.
- Liquidity: Cash and cash equivalents increased significantly to $826,786 from $62,101 at year-end 2024, driven by $4.4 million in equity proceeds from a May 2025 private placement and $6.99 million in net financing cash flows.
- Derivative Liability: A new derivative liability of $825,307 was recorded due to the issuance of convertible notes with embedded conversion features, resulting in a $924,589 gain from changes in fair value for the nine-month period.
Guidance, Outlook, and Risks
- Going Concern: The Company has disclosed substantial doubt about its ability to continue as a going concern due to an accumulated deficit of $30.9 million and negative operating cash flows of $6.22 million for the nine months ended September 30, 2025. Continued operations depend on securing additional debt/equity capital.
- Outlook: Management anticipates stronger revenue contributions from Waste-to-Energy and Heat Recovery segments in the latter half of 2025. The Vermont Renewable Gas (VRG) project has an estimated $10 million backlog pending regulatory approval.
- Key Risks:
- Financing Dependency: Heavy reliance on convertible notes with high interest rates and dilutive conversion features.
- Related Party Transactions: Significant receivables from related parties ($2.36 million from Vermont Renewable Gas) and a $3.2 million refundable deposit paid to a consultant (Linkage International) for a potential acquisition, which may be returned as shares if the deposit is not refunded.
- Regulatory: The VRG project is awaiting a Certificate of Public Good from the Vermont Public Utility Commission.
Investor Verification Checklist
- Cash Burn Rate: Verify the sustainability of operations given the $6.22 million operating cash outflow and the reliance on financing activities to maintain liquidity.
- Convertible Note Terms: Review the specific conversion prices and dilution impact of the numerous convertible notes issued in 2025 (Mast Hill, Pacific Pier, Diagonal, etc.), which carry embedded derivative liabilities.
- Related Party Receivables: Assess the collectability of the $2.36 million receivable from Vermont Renewable Gas (VRG), a 49% owned joint venture.
- Acquisition Deposit: Confirm the status of the $3.2 million refundable deposit paid to Linkage International for the Ortus Climate Mitigation acquisition and the conditions for its return.
- VRG Project Status: Monitor the regulatory approval timeline for the Vermont Renewable Gas project, which represents a significant portion of the backlog.