Executive Summary / Key Takeaways

• Clean Energy Technologies, Inc. (CETY) is strategically pivoting towards higher-margin clean energy solutions, particularly in waste heat recovery and waste-to-energy, moving away from its lower-margin natural gas trading business.
• The company's proprietary Clean Cycle Generator and pyrolysis technologies offer differentiated, eco-friendly solutions, driving significant growth in its Heat Recovery Solutions (HRS) segment, which saw revenue surge by 470.4% in the first half of 2025.
• Despite a decline in overall revenue due to the contraction of its China natural gas business, CETY achieved a substantial 122.0% increase in gross profit for H1 2025, reflecting improved segment mix and operational efficiency.
• CETY faces significant liquidity challenges, including an accumulated deficit and negative operating cash flow, leading to substantial doubt about its ability to continue as a going concern and a reliance on dilutive equity financing.
• The company's future hinges on the successful execution of its diversified clean energy strategy, securing project financing for initiatives like the Vermont Renewable Gas (VRG) plant, and maintaining Nasdaq compliance, all while leveraging federal clean energy incentives.

The Dawn of a Diversified Clean Energy Future

Clean Energy Technologies, Inc. (CETY) is undergoing a profound transformation, evolving from its origins in electronics manufacturing to a focused provider of eco-friendly energy solutions. With a mission to deliver affordable, scalable, and zero-emission electricity from heat and biomass, CETY is strategically positioning itself within the burgeoning global clean energy market. This pivot is critical in an industry driven by a worldwide commitment to decarbonization and energy efficiency, a trend further bolstered by supportive legislation like the recently passed "One Big Beautiful Bill Act" (OBBBA), which ensures continued federal clean energy tax incentives for CETY's technologies.

CETY's core strategy revolves around four distinct segments: Heat Recovery Solutions (HRS) and CETY Europe, Waste to Energy Solutions (CETY Renewables), Engineering and Manufacturing Business, and CETY HK (Natural Gas Trading). This diversified approach aims to create operational synergies and cross-selling opportunities across North America, Europe, and Asia. The company's foundational strength lies in its differentiated technology, particularly its patented Clean Cycle Generator and proprietary pyrolysis systems, which are central to its higher-margin growth ambitions.

Technological Edge: The Heart of CETY's Value Proposition

At the core of CETY's strategic repositioning are its innovative technologies designed to convert waste into valuable energy. The Clean Cycle Generator (CCG) is a patented heat recovery system that captures waste heat from various industrial processes, manufacturing, and power generation facilities, converting it into zero-emission electricity. This technology directly addresses the critical need for energy efficiency, enabling customers to reduce energy costs and significantly lower their carbon footprint. The company is actively enhancing its 350 kW ORC (Organic Rankine Cycle) system to support larger-scale applications, expanding its market reach and potential impact.

CETY's proprietary pyrolysis technology forms the backbone of its Waste to Energy Solutions. This advanced system converts organic waste materials, such as agricultural and food waste, into clean energy products including electricity, heat, and biochar. The tangible benefits of this technology are multifaceted: it provides a sustainable waste management solution, generates renewable energy, and produces biochar, a valuable soil amendment that sequesters carbon. This dual benefit of waste reduction and resource generation offers a compelling value proposition in an increasingly circular economy.

The "so what" for investors is clear: these technologies provide CETY with a competitive moat. They enable the company to offer solutions that are not only environmentally beneficial but also economically attractive through reduced operating costs and potential revenue generation from recycled energy and biochar sales. This technological differentiation is a key driver for CETY's pursuit of higher gross margins and its long-term growth strategy in a competitive landscape.

Strategic Repositioning and Operational Momentum

CETY's strategic pivot is evident in its operational focus. The company is actively scaling its Engineering and project management operations to deliver comprehensive self-generation energy solutions globally. This includes providing Engineering, Procurement, and Construction (EPC) services for biomass power facilities, waste-to-energy projects, and heat recovery systems.

A prime example of this strategy is the Vermont Renewable Gas (VRG) project, a joint venture with Synergy Bioproducts Corporation. This pilot waste-to-energy facility, located in Lyndon, Vermont, integrates CETY's proprietary pyrolysis technology to convert wood feedstock into electricity and biochar. The VRG project serves as a model for CETY's future engagement in clean energy infrastructure, providing engineering, procurement, proprietary technology, and long-term operations and maintenance services. While final approval from the Vermont Public Utility Commission is pending, other necessary permits have been secured, indicating progress toward project execution.

Recent operational achievements underscore this momentum. In Q1 2025, CETY secured a $500K Qymera project for heat-to-power, with shipment preparation underway. The company also announced a strategic agreement with Sagacity, a new company focused on advanced design, manufacturing, and system integration in clean energy. Furthermore, CETY is expanding its market reach through strategic partnerships with Metis Power and Exergy, positioning itself as a full-scope eco-friendly energy and microgrid solutions provider. These collaborations offer integrated systems encompassing power generation, large-scale heat recovery, energy storage, and advanced energy management, particularly targeting capital-intensive data center and large-scale heat-to-power project bids.

Financial Performance: A High-Margin Shift

CETY's financial results for the six months ended June 30, 2025, reflect its strategic repositioning. Total revenue decreased to $1.03 million from $1.71 million in the same period of 2024. This decline was primarily due to minimal contributions from the lower-margin China natural gas business, which saw revenue plummet from $1.22 million to just $7,130.

However, the strategic shift towards higher-margin segments is clearly visible in the gross profit. CETY reported a significant increase in gross profit to $952,210 for H1 2025, a 122.0% jump from $429,035 in H1 2024. This improvement was largely driven by the robust performance of the Heat Recovery Solutions (HRS) segment, which saw its revenue surge by 470.4% to $689,488 from $120,874 in the prior year. The HRS segment's gross profit also dramatically increased to $620,374 from $79,889, reflecting higher-margin equipment sales and engineering services. The Waste to Energy segment also contributed steadily, with revenue of $331,597 and gross profit of $331,597, remaining stable as the Vermont project progresses through permitting.

Despite the improved gross profit, CETY reported a net loss of $1.42 million for H1 2025, an improvement from the $2.25 million net loss in H1 2024. This reduction in net loss was attributable to lower operating expenses, which decreased to $830,935 from $1.79 million, driven by reduced salary costs in China and lower legal and accounting fees. However, interest and finance fees nearly doubled to $843,859 from $424,743, primarily due to interim financings secured to support the Vermont Renewable Project and S-3 registration.

Liquidity and Capital Resources: A Critical Juncture

CETY's liquidity remains a significant concern. As of June 30, 2025, the company reported an accumulated deficit of $28.82 million and continued negative cash flows from operating activities of $1.56 million for the six months ended June 30, 2025. These factors raise substantial doubt about CETY's ability to continue as a going concern.

The company's operations are heavily dependent on its ability to secure sufficient debt and/or equity capital and generate positive cash flow. Financing activities provided $5.90 million in cash during H1 2025, primarily from proceeds from notes payable and lines of credit ($3.09 million) and stock issued for cash ($4.40 million). This reliance on equity sales will lead to dilution for existing stockholders. Furthermore, CETY's accounts receivable, inventory, and property, plant, and equipment are pledged to Nations Interbanc, its senior secured lender.

The company also faces a Nasdaq bid price compliance deadline of November 3, 2025, requiring its stock to trade above $1.00 per share. This adds pressure to its capital-raising efforts and overall market perception.

Competitive Landscape and Strategic Positioning

CETY operates in a competitive clean energy market, facing both large, diversified industrial conglomerates and specialized technology firms. Key direct competitors include Siemens Energy (SMNEY), General Electric (GE), Bloom Energy (BE), and Plug Power (PLUG).

CETY distinguishes itself through its specialized focus on waste heat recovery and waste-to-energy solutions, leveraging its proprietary Clean Cycle Generator and pyrolysis technologies. While larger players like Siemens Energy and GE offer broad portfolios and benefit from immense scale, R&D budgets, and global reach, CETY aims for superior efficiency and lower operating costs in its niche applications. For instance, CETY's Clean Cycle technology may offer greater efficiency in converting waste heat to electricity for specific industrial processes compared to the broader offerings of its larger rivals.

Compared to fuel cell specialists like Bloom Energy and Plug Power, CETY's waste-to-energy approach provides a different value proposition, converting diverse waste streams into multiple outputs like electricity and biochar, which can offer more comprehensive sustainability benefits. CETY's integrated service model, encompassing engineering, procurement, and long-term operations and maintenance, also provides a competitive edge by offering end-to-end solutions tailored to specific customer needs.

However, CETY's smaller scale presents competitive disadvantages, including potential supply chain dependencies and higher operating costs compared to its larger rivals. This can impact its profitability and market share in competitive bidding scenarios. The high capital requirements and complex regulatory approvals in the clean energy sector act as significant barriers to entry, protecting CETY's niche but also favoring larger, more financially robust competitors. CETY's strategy to form partnerships for financing and asset ownership (e.g., PPA structures) is a direct response to these capital-intensive industry dynamics, allowing it to provide technology and execution while partners manage the heavy financial lifting.

Outlook and Risks

CETY anticipates stronger revenue contributions from its Waste-to-Energy, Heat Recovery, and EPC segments in the latter half of 2025, which are expected to deliver higher gross margins. The company is actively pursuing international manufacturing partnerships to mitigate the impact of tariffs on its heat-to-power products and optimize production costs.

However, the macroeconomic headwinds, particularly declining natural gas prices and reduced industrial demand, have led to the deferral of the planned Shenzhen Gas joint venture in China until market conditions improve. The default of the lender for the Vermont Renewable Gas project's $12 million loan also poses a risk, although CETY retains the right to amend the agreement. The ongoing need for external capital and the potential for further shareholder dilution remain critical risks.

Conclusion

Clean Energy Technologies, Inc. is at a pivotal stage, executing a strategic pivot towards high-margin clean energy solutions driven by its proprietary waste heat recovery and waste-to-energy technologies. The significant growth in its Heat Recovery Solutions segment and the notable improvement in gross profit margins in the first half of 2025 underscore the potential of this strategy in a globally decarbonizing economy. The company's unique technological offerings and integrated service model provide a distinct competitive position in niche markets.

Despite these promising operational shifts, CETY faces substantial financial challenges, including a going concern warning, a reliance on dilutive financing, and the need to secure significant capital for its ambitious projects. The ability to successfully navigate these liquidity hurdles, finalize key project funding, and maintain Nasdaq compliance will be paramount. For discerning investors, CETY represents a high-risk, high-reward opportunity, where the long-term potential of its green technologies must be weighed against its immediate financial fragility and the execution risks inherent in a capital-intensive, rapidly evolving industry.