CETY(US:CETY)2025-11-19 20:43Revenue Performance - For the nine months ended September 30, 2025, total revenue was $1,801,769, a decrease from $1,944,333 for the same period in 2024, primarily due to minimal contributions from the Vermont Renewable Gas project [307]. - Revenue from the Heat Recovery Solutions (HRS) segment was $805,975 for the nine months ended September 30, 2025, compared to $158,829 for the same period in 2024, reflecting higher product sales [317]. - Revenue from the CETY Renewables segment was $409,699 for the nine months ended September 30, 2025, down from $590,985 for the same period in 2024, expected to stabilize until construction activities commence [319]. - Revenue from the natural gas business was $586,095 for the nine months ended September 30, 2025, a decrease from $1,185,178 for the same period in 2024, due to macroeconomic factors and a strategic focus shift [321]. - CETY anticipates stronger revenue contributions from its Waste-to-Energy, Heat Recovery, and EPC segments in the latter half of the year, expected to deliver higher gross margins [311]. Profitability and Loss - Gross profit for the nine months ended September 30, 2025, was $1,135,315, an increase from $641,575 for the same period in 2024, driven by higher-margin refurbished systems sales [308]. - The net loss for the nine months ended September 30, 2025, was $3,522,342, slightly improved from a net loss of $3,550,669 for the same period in 2024 [310]. - The net loss for the nine months ended September 30, 2025, was $3,522,342, a slight improvement from a net loss of $3,550,669 in 2024 [335]. Operating Expenses - Operating expenses for the nine months ended September 30, 2025, were $3,301,052, compared to $3,193,447 for the same period in 2024, with increases attributed to consulting costs related to a potential acquisition [309]. - Selling, General and Administrative (SG&A) expenses for the nine months ended September 30, 2025, totaled $3,301,052, an increase of 3.4% from $3,193,447 in 2024 [327]. - Salary expenses decreased by 10.2% to $1,329,800 for the nine months ended September 30, 2025, compared to $1,481,316 in 2024 [328]. - Professional fees rose significantly to $1,073,709 for the nine months ended September 30, 2025, compared to $484,990 in 2024, primarily due to consulting costs related to a potential acquisition [330]. - Interest and finance fees increased to $2,399,193 for the nine months ended September 30, 2025, from $902,002 in 2024, attributed to larger interim financings [334]. Cash Flow and Financial Position - Net cash used in operating activities was $(6,218,085) for the nine months ended September 30, 2025, compared to $(2,788,608) in 2024, indicating increased cash outflow [337]. - The company recorded derivative liabilities of $924,588 for the nine months ended September 30, 2025, compared to $0 in 2024, due to new convertible instruments [333]. - As of September 30, 2025, the company had outstanding customer deposits of $197,220, up from $30,061 in 2024, reflecting increased customer commitments [365]. - The company expects to recognize $33,000 of deferred revenue in the fourth quarter of 2025, consistent with contract terms [364]. Strategic Initiatives - The company has an estimated backlog of $10 million associated with the Vermont Renewable Gas project, currently under review for a Certificate of Public Good [307]. - CETY's four-segment strategy is believed to create operational synergies and cross-selling opportunities, contributing to growth in non-China operations [314]. - The company plans to continue funding operations through equity sales, which may result in dilution for existing shareholders [379]. Accounting and Compliance - The company is engaged in the Engineering, Procurement, and Construction (EPC) of biomass power facilities, recognizing revenue according to ASC 606 standards [352]. - There are no significant off-balance sheet arrangements that could materially affect the company's financial condition or results of operations [380]. - The company believes that the impact of recently issued accounting standards will not materially affect its consolidated financial position or results of operations upon adoption [381]. Investment and Consolidation - JHJ made an investment of RMB 3.91 million ($0.55 million) into Shuya during the year ended December 31, 2022, with Shuya reporting a net loss of approximately $10,750, of which about $5,000 was allocated to JHJ [369]. - Effective January 1, 2023, JHJ, SSET, and Xiangyueheng entered a Consistent Action Agreement to consolidate their voting rights in Shuya, allowing JHJ to consolidate Shuya as a variable interest entity (VIE) [370][371]. - The acquisition of Shuya was accounted for using the acquisition method, with the fair value of non-controlling interests recorded at $650,951 and the fair value of previously held equity investment at $556,096, totaling $1,207,047 [375]. - The total identifiable net assets recognized at the acquisition date were valued at $1,207,047, with no goodwill recognized [375]. - On January 1, 2024, the Termination Agreement was executed, resulting in JHJ holding less than 50% of the voting rights in Shuya, leading to the decision not to consolidate Shuya in future financial statements [377].