CETY(CETY) - 2025 Q1 - Quarterly Report

Financial Performance - For the quarter ended March 31, 2025, total revenue was $791,940, a decrease of 47.7$1,513,026 for the same period in 2024, primarily due to minimal contributions from the China natural gas business[253]. - Gross profit for the quarter was $728,553, significantly up from$253,005 in the same period in 2024, reflecting improved margins from non-natural gas operations[254]. - The net loss for the quarter was $331,182, an improvement from a loss of$1,419,400 in the same period in 2024, attributed to reduced expenses and stronger margins[256]. - Revenue from the Clean Energy HRS segment was $612,354, a substantial increase from$72,488 in the same period in 2024, indicating a strong pipeline of opportunities[263]. - Revenue from the CETY Renewables segment was $176,105, slightly down from$211,568 in the same period in 2024, expected to stabilize until construction activities commence later this year[264]. - The natural gas business reported revenue of $3,481, a significant decline from$1,219,629 in the same period in 2024, due to macroeconomic factors and a strategic shift away from lower-margin activities[266]. - The net loss for the quarter was $331,231, significantly reduced by 76.7$1,419,400 in the same period in 2024, attributed to higher-margin revenue from the HRS segment[279]. Operating Expenses - Operating expenses decreased to $824,656 from$1,073,926 year-over-year, driven by lower salary costs and reduced professional fees[255]. - For the quarter ended March 31, 2025, professional fees totaled $66,213, a decrease of 66.7$199,053 for the same period in 2024[274]. - Facility lease and maintenance expenses were $66,741, down 6.9$71,275 in the same period in 2024[275]. - Interest and finance fees increased to $339,821, up 15.1$295,193 in the same period in 2024, primarily due to interim financings for the Vermont Renewable Project[278]. Cash Flow and Financing - Net cash used in operating activities was $(776,047), an improvement of 11$(871,636) in the same period in 2024[281]. - Net cash provided by financing activities was $759,002, down 23.2$987,871 in the same period in 2024[281]. - Stockholders' equity increased by $12,657 to$2,951,159 compared to $2,938,502 as of December 31, 2024, primarily due to higher net income[256]. - The company plans to continue funding operations through equity sales, which may dilute existing stockholders[324]. Deferred Revenue and Customer Deposits - As of December 31, 2024, the company had$33,000 of deferred revenue expected to be recognized in Q2 2025[308]. - Outstanding customer deposits as of December 31, 2024, were $128,134, significantly up from$30,061 in 2023[309]. Accounting and Consolidation - The company recognized revenue over time for its biomass power plant construction projects, consistent with ASC 606 criteria[306]. - JHJ made an investment of RMB 3.91 million ($0.55 million) into Shuya during the year ended December 31, 2022, with a net loss of approximately$10,750 allocated to the company[314]. - Effective January 1, 2023, JHJ, SSET, and Xiangyueheng entered a Consistent Action Agreement to consolidate control over Shuya[315]. - Shuya is classified as a variable interest entity (VIE) of JHJ, leading to its consolidation in the financial statements effective January 1, 2023[317]. - The acquisition was accounted for using the acquisition method, with JHJ identified as the acquirer based on the Three-Parties Consistent Action Agreement[318]. - The fair value of non-controlling interests at the acquisition date was $650,951, and the total identifiable net assets recognized were$1,207,047[321]. - No goodwill was recognized in the acquisition, as the fair value of the consideration paid equaled the fair value of identifiable net assets[321]. - On January 1, 2024, the Termination Agreement was executed, resulting in the company holding less than 50% of voting rights in Shuya, thus ceasing its consolidation[322]. Market and Risk Disclosures - There are no significant off-balance sheet arrangements that could materially affect the company's financial condition[325]. - The company believes that recently issued accounting standards will not have a material impact on its consolidated financial position upon adoption[326]. - The company is classified as a smaller reporting company and is not required to provide certain market risk disclosures[327]. Future Outlook - CETY anticipates stronger revenue contributions from its Waste-to-Energy, Heat Recovery, and EPC segments in the latter half of the year, which are expected to deliver higher gross margins[256]. - The company is actively scaling its Engineering and project management operations to deliver comprehensive self-generation energy solutions globally[257].