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CETY(CETY) - 2024 Q3 - Quarterly Report
CETYCETY(CETY)2024-11-19 22:18

Financial Performance - For the nine months ended September 30, 2024, total revenue was 1,944,333,adecreaseof63.21,944,333, a decrease of 63.2% compared to 5,278,203 for the same period in 2023, primarily due to the deconsolidation of China operations [309][317]. - Gross profit for the nine months ended September 30, 2024, was 641,575,downfrom641,575, down from 992,943 in the same period in 2023, reflecting lower revenue from China operations [309][321]. - Operating expenses increased to 3,193,447fortheninemonthsendedSeptember30,2024,comparedto3,193,447 for the nine months ended September 30, 2024, compared to 2,463,090 for the same period in 2023, driven by higher salaries and professional fees [310][326]. - The net loss for the nine months ended September 30, 2024, was 3,550,669,comparedtoanetlossof3,550,669, compared to a net loss of 2,460,489 for the same period in 2023, attributed to increased salaries and professional fees [311]. - Revenue from the waste-to-energy segment was 231,679fortheninemonthsendedSeptember30,2024,downfrom231,679 for the nine months ended September 30, 2024, down from 779,720 in the same period in 2023, with a large 12McontractpendingfortheVermontproject[314].−Revenuefromthenaturalgasbusinessamountedto12M contract pending for the Vermont project [314]. - Revenue from the natural gas business amounted to 1,185,178, a significant decrease from 10,462,385forthesameperiodin2023,duetothedeconsolidationofrevenuefromChinaoperations[320].−Netlossincreasedto10,462,385 for the same period in 2023, due to the deconsolidation of revenue from China operations [320]. - Net loss increased to 3,550,669 for the nine months ended September 30, 2024, compared to a loss of 2,460,489 in 2023, driven by lower revenues and higher SG&A expenses [336]. Equity and Cash Flow - Stockholder's equity decreased to 3,583,444 as of September 30, 2024, compared to 5,869,198asofSeptember30,2023,primarilyduetolossofrevenuefromChinaoperations[315].−Netcashusedinoperatingactivitieswas5,869,198 as of September 30, 2023, primarily due to loss of revenue from China operations [315]. - Net cash used in operating activities was (2,788,608) in 2024, an improvement from (3,842,232)in2023[338].−Netcashprovidedbyfinancingactivitiesdecreasedto(3,842,232) in 2023 [338]. - Net cash provided by financing activities decreased to 2,660,036 in 2024 from 3,906,498in2023[338].−Interestandfinancefeesdecreasedto3,906,498 in 2023 [338]. - Interest and finance fees decreased to 902,002 in 2024 from 1,707,690in2023,duetolowerborrowingamounts[335].−CustomerdepositsoutstandingasofSeptember30,2024,were1,707,690 in 2023, due to lower borrowing amounts [335]. - Customer deposits outstanding as of September 30, 2024, were 41,462, down from 210,310asofDecember31,2023[367].BusinessSegmentsandStrategy−Thecompanyhasestablishedfourbusinesssegmentstodiversifyrevenuestreams,includingCleanEnergyHRS,Waste−to−Energy,EngineeringandManufacturing,andCETYHK[312].−ThecompanyanticipateslargerrevenuecontributionsfromhighergrossmarginsegmentssuchasWaste−to−EnergyandHeatRecoveryintheupcomingyear[312].−ThecompanyaimstoleverageitspresenceinChinaforsynergisticpartnershipsandtechnologytransfers,particularlyinthegrowingEVchargingsector[325].ExpensesandCostManagement−Salariesexpenseincreasedto210,310 as of December 31, 2023 [367]. Business Segments and Strategy - The company has established four business segments to diversify revenue streams, including Clean Energy HRS, Waste-to-Energy, Engineering and Manufacturing, and CETY HK [312]. - The company anticipates larger revenue contributions from higher gross margin segments such as Waste-to-Energy and Heat Recovery in the upcoming year [312]. - The company aims to leverage its presence in China for synergistic partnerships and technology transfers, particularly in the growing EV charging sector [325]. Expenses and Cost Management - Salaries expense increased to 1,481,316 for the nine months ended September 30, 2024, up from 957,759in2023,duetohiringkeypersonnelandexpandingtheworkforce[327].−Travelexpensesdecreasedto957,759 in 2023, due to hiring key personnel and expanding the workforce [327]. - Travel expenses decreased to 135,964 in 2024 from 326,905in2023,attributedtoreducedbusinesstravelinChinasubsidiaries[328].−Professionalfeesroseto326,905 in 2023, attributed to reduced business travel in China subsidiaries [328]. - Professional fees rose to 484,990 in 2024 from 259,476in2023,duetoengaginganewauditfirm[329].−Facilityleaseandmaintenanceexpensesdecreasedto259,476 in 2023, due to engaging a new audit firm [329]. - Facility lease and maintenance expenses decreased to 230,798 in 2024 from $253,041 in 2023, resulting from relocating to a lower-cost facility [330]. Consolidation and Legal Matters - The Company concluded that Shuya is a variable interest entity (VIE) and will consolidate it into its financial statements effective January 1, 2023 [369]. - Following the Termination Agreement on January 1, 2024, the Company will no longer consolidate Shuya as it holds less than 50% of the voting rights [370]. - The Company plans to continue funding operations through equity sales, which may result in dilution for existing shareholders [373]. - There are no significant off-balance sheet arrangements that could materially affect the Company's financial condition [374]. - The Company is not currently involved in any legal proceedings that are likely to have a material adverse effect on its financial position [377]. Internal Controls and Compliance - The Company believes that the impact of recently issued accounting standards will not materially affect its financial position upon adoption [378]. - As of September 30, 2024, the Company's disclosure controls and procedures were deemed ineffective due to the lack of independent board members [380]. - There have been no significant changes in the Company's internal controls over financial reporting during the nine months ended September 30, 2024 [381].