Filing summary
Identity and period: The supplied filing is Probe Manufacturing, Inc.’s Form 10-K for the fiscal year ended December 31, 2013—not a filing identifying Clean Energy Technologies, Inc. It reports full-year results, not a standalone fourth quarter.
Business context and reporting period
Probe provides electronics manufacturing services, engineering, and supply-chain support to OEMs in sectors including aerospace/defense, industrial, medical, instrumentation, telecommunications, and alternative fuels. It acquired Trident Manufacturing on March 20, 2013, adding a Salt Lake City facility; consideration included 1.6 million Probe shares, and the company recorded $420,673 of goodwill.
Financial performance and liquidity
| Metric | 2013 | 2012 |
|---|---|---|
| Revenue | $3,547,961 | $4,961,612 |
| Gross profit / margin | $967,104 / 27% | $1,469,973 / 30% |
| Operating income (loss) | $(398,874) | $71,510 |
| Net income (loss) | $(650,652) | $(116,373) |
| Interest expense | $293,472 | $187,883 |
| Operating cash flow | $(266,038) in audited cash-flow statement | $(314,334) |
- Revenue fell about 28% year over year. Gross margin declined three percentage points; SG&A was reported at 38% of revenue, versus 28% in 2012.
- At year-end, cash was $6,749; current assets were $1,124,448 and current liabilities $1,000,731, yielding reported working capital of about $123,717. Total assets were $1,729,623 and stockholders’ equity $728,892.
- There was no long-term debt reported at year-end. Current liabilities included $183,567 of current notes payable, $654,127 of trade payables, and a $16,098 bank overdraft. The Far West Capital receivables-financing line was paid off on November 4, 2013.
- Financing cash flow included $750,000 raised through Series D preferred stock and $220,000 from common-stock issuance. Series D preferred shares carry a 17.5% annual special dividend and conversion and redemption rights.
- Backlog was $1,429,555 at December 31, 2013, compared with $913,427 a year earlier; the filing states backlog reached $2,895,588 by April 7, 2014.
Material changes versus the prior comparable period
- Management attributed lower sales to broad-based order slowdown and weaker economic conditions, while stating it had not lost customers.
- Gross margin fell from 30% to 27%, which management linked chiefly to higher direct labor as a share of sales. SG&A rose as a share of revenue amid infrastructure spending, personnel, equipment, and medical/aerospace certifications.
- Net loss widened to $650,652 from $116,373. Management cited reduced revenue, higher interest and financing fees—including early-termination costs—and increased operating investment.
- Five customers generated about 60% of 2013 sales, down from 69% in 2012. Five customers also represented about 80% of year-end receivables.
Outlook, risks, and unusual items
- Going concern: The filing states continued operations depend on obtaining sufficient debt or equity capital and/or generating positive operating cash flow. It cites the 2013 loss, $1,286,907 accumulated deficit, and operating cash use. The financial statements contain no adjustments that could be required if the company cannot continue as a going concern.
- Management’s stated priorities include organic sales growth, expanding supply-chain services, investing in start-ups in exchange for manufacturing rights or equity, and pursuing acquisitions. The filing provides no quantified earnings or revenue guidance and gives no assurance these plans will succeed.
- Key risks include customer and supplier concentration, cancellable short-term purchase orders, component shortages, competitive pressure, regional exposure, and integration of Trident. The filing also describes environmental compliance and thinly traded OTC stock risks.
- The $750,000 Series D financing came from related parties and includes a high stated dividend rate, potential redemption after one year, and conversion terms that could dilute common shareholders.
- Management reported disclosure controls and internal control over financial reporting as effective at December 31, 2013. The filing reports no legal proceedings and no off-balance-sheet arrangements.
Important facts for investors to verify
- Confirm issuer identity: the document names Probe Manufacturing, Inc., whereas the request identifies Clean Energy Technologies, Inc.
- Reconcile cash-flow figures: the audited statement reports operating cash use of $266,038, financing cash flow of $301,978, and a $12,511 cash decrease; an earlier condensed presentation gives $270,060, $306,978, and an $11,533 decrease.
- Review the independent auditor’s report and going-concern language directly; the supplied filing text states that accountants issued a going-concern opinion but does not reproduce the opinion itself clearly.
- Confirm the Series D preferred stock’s dividend, redemption, conversion, and any accrued-dividend obligations, along with the related-party financing terms.
- Assess the sustainability and collectability of backlog and receivables, given customer concentration, unsecured credit, and the reported $6,749 cash balance.
- Verify the filing’s shell-company checkbox, which is marked “Yes” despite the described operating EMS business, and resolve other inconsistent share and accounting disclosures against the filed statements.