What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-06-05 compared with 2026-06-05 · 163 added, 153 removed, 370 unchanged (46% of the section changed)

99 unchanged sentences

and biochar to the grid.

of Operating Results the Nine months Ended September 30, 2025 (Restated) Compared to the same period in 2024 (Restated)

of Operating Results the Six months Ended June 30, 2025 (Restated) Compared to the same period in 2024 (Restated)

financial statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets

1 unchanged sentence

The Company had a total stockholder’s equity of $6,472,957 and

a working capital of $959,825 as of September 30, 2025, The company also had an accumulated deficit of $32,187,587 as of September

30, 2025 and used 6,114,767 in net cash from operating activities for the nine months ended September 30, 2025.

Therefore, there is substantial

doubt about the ability of the Company to continue as a going concern.

There can be no assurance that the Company will achieve its goals

and reach profitable operations and is still dependent upon its ability (1) to obtain sufficient debt and/or equity capital and/or (2)

to generate positive cash flow from operations.

the nine months ended September 30, 2025, our total revenue was $1,451,769, compared to $1,944,333 for the same period in 2024.

was primarily due to minimal contributions (less than 3%) from our Vermont Renewable Gas project, as the project is currently undergoing

review for a Certificate of Public Good with the Public Utility Commission.

We currently have an estimated $10 million backlog associated

with this project.

the nine months ended September 30, 2025, our gross profit was $818,640, compared to $641,575 for the same period in 2024.

in gross profit and margin was primarily due to the sale of higher-margin refurbished systems, which contributed more favorably to overall

profitability compared to prior periods.

the nine months ended September 30, 2025, our operating expenses were $3,301,052, compared to $3,193,447 for the same period in 2024.

The increase in expenses was primarily due to costs associated with a consulting agreement related to a potential acquisition, partially

offset by lower reduction in general and administrative costs.

the nine months ended September 30, 2025, we recorded a net loss of $3,712,892, compared to $3,511,254 for the same period in 2024.

net loss remained relatively steady year-over-year, reflecting reduced salary expenses, lower general, legal and accounting costs, and

improved margins from our U.S.-based business activities.

the quarter ended September 30, 2025, stockholders’ equity increased to $5,770,932, compared to $1,897,145 as of December 31, 2024,

a working capital of 1,759,944 as of June 30, 2025, The company also had an accumulated deficit of $30,190,907 as of June 30, 2025 and

used 1,540,526 in net cash from operating activities for the six months ended June 30, 2025.

Therefore, there is substantial doubt about

the ability of the Company to continue as a going concern.

There can be no assurance that the Company will achieve its goals and reach

profitable operations and is still dependent upon its ability (1) to obtain sufficient debt and/or equity capital and/or (2) to generate

positive cash flow from operations.

the six months ended June 30, 2025, our total revenue was $678,215 compared to $1,709,151 for the same period in 2024.

Our total revenue

for the first half of 2025 was lower compared to the same period in 2024, primarily due to minimal contributions less than 3% from our

China natural gas business.

the six months ended June 30, 2025, our gross profit was $635,535 compared to $429,035 for the same period in 2024.

Gross profit margins

improved due to greater contributions from CETY’s non-NG business in China, where our operations and technologies yield substantially

higher margins compared to our NG segment.

the six months ended June 30, 2025, our operating expense was $1,766,687 compared to $2,221,990 for the same period in 2024.

in expenses was primarily driven by lower salary costs from our China operations and a reduction in for general and administration expenses,

which were elevated in the prior period due to costs associated with our S-3 registration.

the six months ended June 30, 2025, we had a net loss of $1,699,754 compared to $2,225,297 for the same period in 2024.

The improvement

was largely attributable to reduced salary expenses in our China operations, lower legal and accounting costs, and stronger margins generated

by our U.S.-based businesses.

the quarter ended June 30, 2025, stockholders’ equity increased to $6,472,957, compared to $1,897,145 as of December 31, 2024,

primarily due to higher increase from investments.

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These segments include:

Energy HRS (Heat Recovery Systems)

Waste-to-Energy

(via Pyrolysis Technology)

Procurement, and Consulting (EPC)

HK (Natural Gas Trading and Acquisitions)

Clean Energy HRS (Heat

Recovery Systems)

Waste-to-Energy (via Pyrolysis

Engineering, Procurement,

and Consulting (EPC)

CETY HK (Natural Gas Trading

and Acquisitions)

for the first quarter was primarily driven by the Clean Energy HRS and CETY Renewables segments.

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believes this 4-segment strategy has created many operational synergies and cross-selling opportunities across different markets.

growth in the non-China operations in the nine months ended of 2025 vs.

growth in the non-China operations in the six months ended of 2025 vs.

same period in 2024 was a result of this strategy.

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note 13 to the notes to the financial statements for a discussion on related party transaction

of the Nine Months Ended September 30, 2025 (Restated), Compared to the Nine Months Ended September 30, 2024 (Restated)

the nine months ended September 30, 2025, our total revenue was $1,451,769 compared to 1,944,333 for the same period in 2024.

revenue was contributed to primarily due to minimal contributions from our China natural gas business.

the nine months ended September 30, 2025 (Restated), our revenue from the Heat Recovery Solutions (HRS) segment was $455,975, compared to

of the Six Months Ended June 30, 2025 (Restated), Compared to the Six Months Ended June 30, 2024 (Restated)

the six months ended June 30, 2025, our total revenue was $678,215 compared to $1,709,151 for the same period in 2024.

The lower revenue

was contributed to primarily due to minimal contributions from our China natural gas business.

the six months ended June 30, 2025 (Restated), our revenue from HRS was $339,488 compared to $120,874 for the same period in 2024.

large pipeline of opportunities in this segment and are working diligently to complete the engineering and design, enabling us to

execute contractual agreements and close these opportunities.

The sales cycle for these types of opportunities is long due to cost

factors and the integration of the technology.

We are also working with financial institutions to assist in financing the projects

as customers are increasingly moving towards Independent Power Producer models.

There were also uncertainties surrounding the

economy and the new, one big beautiful bill, as well as its potential impact on clean energy technologies.

the six months ended June 30, 2025, our gross profit from CETY Renewables was For the six months ended June 30, 2025, revenue from the

CETY Renewables segment was $331,597, compared to $ 359,307 for the same period in 2024.

This segment is expected to remain relatively

stable until construction activities commence later this year.

the six months ended June 30, 2025, CETY reported nil revenue from its Engineering and Manufacturing segments, compared to $9,341

for the same period in 2024.

The increase was primarily driven by higher product sales and ongoing progress in our HRS

We continue to work diligently on completing engineering and design efforts, which will enable us to execute contractual

agreements and close additional opportunities.

sales cycle for these projects tends to be longer due to cost considerations and the integration complexity of our technology.

also engaging with financial institutions to support project financing, as customers increasingly adopt Independent Power Producer (IPP)

Additionally, general economic uncertainty and evolving federal clean-energy legislation have influenced the timing of certain

project commitments.

the nine months ended September 30, 2025, revenue from the CETY Renewables segment was $409,699, compared to $ 590,985 for the same

This segment is still in its early stages and much of the related activity is currently being

integrated into the HRS and CETY Renewables segments.

However, with a developing pipeline of opportunities, CETY expects to see

gradual revenue growth from this segment over the coming quarters.

the Six months ended June 30, 2025, revenue from our natural gas (NG) business was $7,130, a decrease from $1,219,629 for the same period

This decline is primarily due to macroeconomic factors and our strategic decision to reduce focus on lower-margin business activities.

the six months ended June 30, 2024 (Restated), our gross profits totaled $635,535 marking a favorable increase compared to $429,035 recorded

for the corresponding period in 2024.

Gross profit margins improved due to greater contributions from CETY’s non-NG business

in China, where our operations and technologies yield substantially higher margins compared to our NG segment.

the six months ended June 30, 2025, our gross profit from Engineering and Manufacturing amounted to nil, compared to $7,806 for the same

period in 2024.

This segment is expected to remain relatively stable until construction activities commence later this

the nine months ended September 30, 2025, CETY reported no revenue from its Engineering and Manufacturing segments, compared to $9,341

for the same period in 2024.

This segment is still in its early stages and much of the related activity is currently being integrated

into the HRS and CETY Renewables segments.

However, with a developing pipeline of opportunities, CETY expects to see gradual revenue

growth from this segment over the coming quarters.

the nine months ended September 30, 2025, revenue from our natural gas (NG) business was $586,095, a decrease from $1,185,178 for the

same period in 2024.

This decline is primarily due to macroeconomic factors and our strategic decision to reduce focus on lower-margin

business activities.

the nine months ended September 30, 2025 (Restated), our gross profit totaled $818,640, representing an increase from $641,575 for

the same period in 2024.

The improvement in gross profit and margin was primarily driven by the sale of higher-margin refurbished

systems and greater contributions from CETY’s non-natural gas business in China, where our operations and technologies

generate substantially higher margins compared to our NG segment.

the nine months ended September 30, 2025, our gross profit from Engineering and Manufacturing amounted to nil, compared to $7,806 for the

same period in 2024.

This segment is a recent addition to CETY’s portfolio, currently serving as a support for our ongoing internal

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generation and integrated solutions.

the nine months ended September 30, 2025 (Restated), our gross profit from the Heat Recovery Solutions (HRS) segment was $399,034, compared to

$83,822 for the same period in 2024.

This significant increase in gross profit was primarily driven by higher revenues, including

the sale of refurbished, higher-margin systems, as well as equipment and engineering service sales.

the nine months ended September 30, 2025, our gross profit from the CETY Renewables segment was $407,265, compared to $549,947 for the

same period in 2024.

The Company’s operations have remained steady as we progress through the Certificate of Public Good (CPG)

process and approach the final stages of permitting.

the nine months ended September 30, 2025, our gross profit from our wholly owned subsidiary, JHJ, was $12,341, down from nil for the same

the six months ended June 30, 2025 (Restated), our gross profit from the HRS segment was $303,699, compared to $79,889 for the same period in

This significant increase in gross profit was primarily driven by higher revenues, which included equipment sales and the sale

of products with lower costs, along with engineering services.

the six months ended June 30, 2025, our gross profit from the CETY Renewables segment was $331,597, compared to $331,487 for the same

period in 2024.

This decrease was primarily due to minimal business activity in China, which was partly a result of our strategic decision

to reduce focus on lower-margin businesses in the region.

The Company’s operations have remained steady as we progress toward the final stages of the permitting process.

the six months ended June 30, 2025, our gross profit from our wholly owned subsidiary, JHJ, was $239, down from $9,853 for the same period

This decrease was primarily due to minimal business activity in China, which was partly a result of our strategic decision to

reduce focus on lower-margin businesses in the region.

General and Administrative (SG&A) Expenses

the nine months ended September 30, 2025, our selling, general and administrative (SG&A) expenses totaled $3,301,052, compared to

$3,193,447 for the same period in 2024.

The increase was primarily due to costs associated with a consulting agreement related to a potential

acquisition, partially offset by lower operating and salary expenses from our China operations and a reduction in certain general and

administrative costs.

the nine months ended September 30, 2025, our salary expenses totaled $1,329,800, compared to $1,481,316 for the same period in 2024.

The decrease was primarily due to reduced activity within our CETY Renewables business, while salary levels across other segments remained

relatively stable.

the nine months ended September 30, 2025, our travel expenses were $127,312, compared to $135,964 for the same period in 2024.

decrease reflects stable activity levels within our service and marketing operations.

the six months ended June 30, 2025, our SG&A expenses totaled $1,766,687, compared to $2,221,990 for the same period in 2024.

decrease was as a result lower cost of China operations, lower salaries, and lower SG& expenses.

the six months ended June 30, 2025, our salaries expense totaled $873,268, compared to $966,843 for the same period in 2024.

was primarily due to reduced activity in our China natural gas business, while salary levels in other areas remained stable.

the six months ended June 30, 2025, our travel expenses were $79,737, compared to $81,224 for the same period in 2024.

This slight decrease

reflects stable activity levels within our service and marketing operations.

fees legal and accounting

the nine months ended September 30, 2025, our professional fees totaled $1,073,709, compared to $484,990 for the same period in 2024.

The increase was primarily due to costs associated with a consulting agreement related to a potential acquisition, partially offset by

lower legal and registration-related expenses compared to the prior year, which included higher costs associated with our S-3 registration

the six months ended June 30, 2025, our professional fees totalled $333,319, compared to $353,065 for the same period in 2024.

was primarily due to reduced legal and consulting activity, as the Six months ended 2024 included higher costs related to our S-3 registration

Lease and Maintenance Expense

the nine months ended September 30, 2025, our facility lease and maintenance expenses totalled $190,944, compared to $230,798 for the

same period in 2024.

the six months ended June 30, 2025, our facility lease and maintenance expenses totalled $133,399, compared to $150,883 for the same

period in 2024.

This slight decrease reflects normal fluctuations, with no significant changes in underlying operations.

and Amortization Expense

the nine months ended September 30, 2025, our depreciation and amortization expense was $8,907, compared to $8,907 for the same period

the six months ended June 30, 2025, our depreciation and amortization expense was $5,938, compared to $5,938 for the same period in 2024.

There were no significant changes, as the majority of our equipment has already been fully depreciated.

in Derivative Liability

the nine months ended September 30, 2025 and 2024, we recorded derivative liabilities of $924,589 and $0, respectively.

in derivative liability was primarily due to the issuance of new convertible instruments and mark-to-market adjustments resulting from

changes in our stock price and volatility.

These fair value remeasurements are required each reporting period in accordance with ASC

Six months ended June 30, 2025 and 2024;

we had a $112,672 and $0 derivative liability.

The increase in derivative liability is due to the issuance of new convertible instruments and the mark-to-market

adjustment based on changes in our stock price and volatility.

These fair value remeasurements are required each reporting period under

in FV of warrant liability

the nine months ended September 30, 2025 and 2024, we had $378 and nil loss on warrant liability related to Equity Line of Credit Agreement

the six months ended June 30, 2025 and 2024, we had $119,141 and nil gain on warrant liability related to Equity Line of Credit Agreement

entered December 5, 2024.

Interest Income

For the nine months ended September 30, 2025 (Restated), interest income from Florya associated with long-term financing

receivable totaled $43,112 compared to $39,415 for the same period in 2024 (Restated).

and Finance Fees

the nine months ended September 30, 2025 (Restated), interest and finance fees totaled $2,402,711, compared to $902,002 for the same

period in 2024.

The increase was primarily due to two larger interim financings obtained to bridge the Company through the

finalization of funding for the Vermont Renewable Gas Project, address approximately $1.7 million in accounts receivable, and

support the completion of the S-3 registration, as well as certain applied default amounts.

the nine months ended September 30, 2025 (Restated), our net loss was $3,712,941, compared to a net loss of $3,511,254 for the same period in

For the six months ended June 30, 2025 (Restated),

interest income from Florya associated with long-term financing receivable totaled $28,418 compared to $25,981 for the same period in

2024 (Restated).

The results remained relatively steady year-over-year, primarily reflecting higher-margin revenue from the Heat Recovery

Solutions (HRS) segment—driven by equipment and refurbished system sales—as well as stable contributions from CETY

Renewables supporting the Vermont Renewable Gas Project.

Additionally, reduced activity in the lower-margin China natural gas

business contributed to maintaining a stable overall financial performance.

and Finance Fees

the six months ended June 30, 2025 (Restated), interest and finance fees totaled $865,734, compared to $424,743 for the same period in 2024.

The increase was primarily due to two larger interim financings secured to bridge the company through the finalization of funding

for the Vermont Renewable Project, aimed at addressing approximately $1.7 million in accounts receivable, and to support the

completion of the S-3 registration.

the six months ended June 30, 2025 (Restated), our net loss was $1,699,803, compared to a net loss of $2,225,297 for the same period

in 2024 (Restated).

This significant decrease is primarily attributable to higher-margin revenue from the HRS segment—driven by

equipment and technical sales—as well as stable contributions from CETY Renewables in support of the Vermont Renewable Gas

Additionally, reduced activity in the lower-margin China NG business contributed to improved overall financial

and Capital Resources

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Consolidated Statements of Cash Flows

the nine months ended September 30,

cash (used in) operating activities

the six months ended June 30,

Net cash (used in) operating activities

$ (1,540,526 )

$ (1,612,034 )

cash provided by investing activities

cash provided by financing activities

Currency Transaction

increase in cash and cash equivalents

Net cash provided by investing activities

Net cash provided by financing activities

Foreign Currency Transaction

Net increase in cash and cash equivalents

Requirements for Long-Term Obligations

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following five steps are applied to achieve that core principle for our business:

the contract with the customer

the performance obligations in the contract

the transaction price

the transaction price to the performance obligations in the contract

revenue when the company satisfies a performance obligation

Identify the contract with

Identify the performance

obligations in the contract

Determine the transaction

Allocate the transaction

price to the performance obligations in the contract

Recognize revenue when

the company satisfies a performance obligation

Obligations Satisfied at a Point in Time

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following five steps are applied to achieve that core principle for our HRS and CETY Europe Divisions:

the contract with the customer

the performance obligations in the contract

the transaction price

the transaction price to the performance obligations in the contract

revenue when the company satisfies a performance obligation

Identify the contract with the customer

Identify the performance obligations in the contract

Determine the transaction price

Allocate the transaction price to the performance obligations

in the contract

Recognize revenue when the company satisfies a performance

following steps are applied to our legacy engineering and manufacturing division:

generate a quotation

receive Purchase orders from our customers.

build the product to their specification

invoice at the time of shipment

terms are typically Net 30 days

We generate a quotation

We receive Purchase orders from our customers.

We build the product to their specification

We invoice at the time of shipment

The terms are typically Net 30 days

following step is applied to our CETY HK business unit:

HK is primarily responsible for fulfilling the contract / promise to provide the specified good or service.

CETY HK is primarily responsible for fulfilling the

contract / promise to provide the specified good or service.

principal obtains control over any one of the following (ASC 606-10-55-37A):

good or another asset from the other party which the entity then transfers to the customer.

Note that momentary control before transfer

to the customer may not qualify.

right to a service to be performed by the other party, which gives the entity the ability to direct that party to provide the service

to the customer on the entity’s behalf.

good or service from the other party that it then combines with other goods or services in providing the specified good or service

to the customer.

A good or another asset

from the other party which the entity then transfers to the customer.

Note that momentary control before transfer to the customer

may not qualify.

A right to a service to

be performed by the other party, which gives the entity the ability to direct that party to provide the service to the customer on

the entity’s behalf.

A good or service from

the other party that it then combines with other goods or services in providing the specified good or service to the customer.

the entity obtains control over one of the above before the good or service is transferred to a customer, the entity could be considered

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recognizing this revenue, CETY Renewables first identifies the relevant contract with its customer according to 606-10-25-1.

entities, together known as the Parties, approved the contract in writing, through signatures and commitment to the performance of

permitting, design, procurement, construction, and commissioning.

work product includes permits, engineering designs, equipment, and full balance of plant specific to permitting, design, procurement,

construction, and commissioning.

and customer agree to a total EPC Contract price.

contract has commercial substance.

The entities, together

known as the Parties, approved the contract in writing, through signatures and commitment to the performance of permitting, design,

procurement, construction, and commissioning.

CETY’s work product

includes permits, engineering designs, equipment, and full balance of plant specific to permitting, design, procurement, construction,

and commissioning.

CETY and customer agree

to a total EPC Contract price.

The contract has commercial

The risk associated with this EPC Agreement is that payment of the EPC contract price.

the EPC Agreement, CETY expects to collect substantially all of the consideration for its goods and services.

Per the EPC Agreement,

CETY expects to collect substantially all of the consideration for its goods and services.

CETY identifies the performance obligations of the Parties in performance of the EPC Agreement in accordance with 606-10-25-14.

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a final payment of 10%.

As of September 30, 2025 and December 31, 2024 we had $33,000 and 33,000 of deferred revenue, which is expected

to be recognized in the fourth quarter of year 2025.

As of June 30, 2025 and December 31, 2024 we had $33,000 and 33,000 of deferred revenue, which is expected to

be recognized in the fourth quarter of year 2025.

from time to time we require upfront deposits from our customers based on the contract.

As of September 30, 2025 (Restated), and December 31,

As of June 30, 2025, (Restated) and December

31, 2024 (Restated), we had outstanding customer deposits of $224,510 and $172,061 respectively.

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fair value of assets acquired, and liabilities assumed on January 1, 2023, the acquisition date.

value of non-controlling interests

value of previously held equity investment

value of 100% of identifiable net assets

amounts of identifiable assets acquired and liabilities assumed (preliminary):

and cash equivalents

and other receivables

and other payables

and wages payables

identifiable net assets

Fair value of non-controlling interests

Fair value of previously held equity investment

Recognized value of 100% of identifiable net assets

Goodwill Recognized

Recognized amounts of identifiable assets acquired and liabilities assumed (preliminary):

Cash and cash equivalents

Trade and other receivables

Advanced deposit

Net fixed assets

Trade and other payables

Advanced payments

Salaries and wages payables

Other receivable

Total identifiable net assets

ASC-805-10-50-2, initial consolidation of an investee previously reported using fair value or the equity method should be accounted for

34 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q/A

Item 2. Management’s Discussion and Analysis