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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _________ to _________
Commission
File Number:
(Exact name of registrant as specified in its charter)
|
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. ☒
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller
reporting company |
|
| Emerging
Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes
As of August 19, 2026, there were shares of the Registrant’s common stock, par value $ per share, issued and outstanding.
CLEAN ENERGY TECHNOLOGIES, INC.
(A Nevada Corporation)
TABLE OF CONTENTS
| Page | ||
| PART I. FINANCIAL INFORMATION | ||
| ITEM 1. | CONSOLIDATED FINANCIAL STATEMENTS | 3 |
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 33 |
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 39 |
| ITEM 4. | CONTROLS AND PROCEDURES | 39 |
| PART II. OTHER INFORMATION | ||
| ITEM 1. | LEGAL PROCEEDINGS | 40 |
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 40 |
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES | 40 |
| ITEM 4. | MINE SAFETY DISCLOSURES | 40 |
| ITEM 5. | OTHER INFORMATION | 40 |
| ITEM 6. | EXHIBITS | 41 |
| 2 |
Part I – Financial Information
Item 1. Financial Statements
Clean Energy Technologies, Inc.
Consolidated Financial Statements
(Expressed in US dollars)
June 30, 2026 (unaudited)
| 3 |
Clean Energy Technologies, Inc.
Consolidated Balance Sheets
June 30, 2026 (Unaudited) and December 31, 2025 (Audited)
| Unaudited | Audited | |||||||
| June 30, 2026 | December 31, 2025 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | ||||||||
| Accounts receivable - net | ||||||||
| Accounts receivable - Related Party | ||||||||
| Convertible Note Receivable | ||||||||
| Advance to supplier – Current | ||||||||
| Deferred Equity Issuance cost | ||||||||
| Long-term investment | ||||||||
| Due from related party | ||||||||
| Loan Receivables | ||||||||
| Inventory | ||||||||
| Total Current Assets | ||||||||
| Non-Current Assets | ||||||||
| Property & Equipment - Net | ||||||||
| Goodwill | ||||||||
| Investments in Heze Hongyuan Natural Gas Co. | ||||||||
| Contract Assets | ||||||||
| License | ||||||||
| Patents | ||||||||
| Right of use asset - long term | ||||||||
| Other Assets | ||||||||
| Total Non-Current Assets | ||||||||
| Total Assets | ||||||||
| Liabilities | ||||||||
| Current Liabilities | ||||||||
| Accounts Payable | ||||||||
| Accrued Expenses | ||||||||
| Customer Deposits | ||||||||
| Warranty Liability | ||||||||
| Warrant Liability | ||||||||
| Deferred Revenue | ||||||||
| Derivitive Liability | ||||||||
| Facility Lease Liability - Current | ||||||||
| Line of Credit | ||||||||
| Notes Payable - Related Party | ||||||||
| Convertible Notes Payable | ||||||||
| Short-Term Notes Payable | ||||||||
| Total Current Liabilities | ||||||||
| Long-Term Debt | ||||||||
| Facility Lease Liability - Long Term | ||||||||
| Total Long-Term Debt | ||||||||
| Total Liabilities | ||||||||
| Equity | ||||||||
| Common stock, $ par value; authorized shares; and shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively | ||||||||
| Additional Paid-In Capital | ||||||||
| Accumulated other comprehensible loss | ( |
) | ( |
) | ||||
| Accumulated Deficit | ( |
) | ( |
) | ||||
| Preferred stock, $ par value; shares authorized; shares issued and outstanding as of June 30, 2026 and December 31, 2025. | ||||||||
| Total Equity | ||||||||
| Total Liabilities & Equity | ||||||||
The
accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements
| 4 |
Clean Energy Technologies, Inc.
Consolidated Statements of Operations and comprehensive income (loss)
for the three and six months ended June 30, 2026 (Unaudited) and 2025 (Unaudited)
|
For the Three Months ended June 30, |
For the Six Months ended June 30, |
|||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Sales | ||||||||||||||||
| Sales - Related Party | ||||||||||||||||
| Total Income | ||||||||||||||||
| Cost of Goods Sold | ||||||||||||||||
| Gross Profit | ||||||||||||||||
| Expense | ||||||||||||||||
| General and Administrative Expense | ||||||||||||||||
| Salaries | ||||||||||||||||
| Travel | ||||||||||||||||
| Professional Fees Legal & Accounting | ||||||||||||||||
| Facility Lease and Maintenance | ||||||||||||||||
| Depreciation and Amortization | ||||||||||||||||
| Total Expense | ||||||||||||||||
| Net Profit / (Loss) From Operations | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Other Income & Expense | ||||||||||||||||
| Other Income | ( |
) | ||||||||||||||
| Change in Derivative Liability | ||||||||||||||||
| Change in FV of Warrant Liability | ||||||||||||||||
| Investment income (loss) from Shuya | ||||||||||||||||
| Gain / (Loss) on Debt Settlement and Write Down | ( |
) | ||||||||||||||
| Interest Income | ||||||||||||||||
| Interest and Financing fees | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Net Profit / (Loss) Before Income Taxes | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Income Tax Expense (benefit) | ( |
) | ( |
) | ||||||||||||
| Net Profit / (Loss) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Net Profit / (Loss) attributable to Clean Energy Technologies, Inc. | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Other Comprehensive Item | ||||||||||||||||
| Foreign Currency Translation (Loss) | ||||||||||||||||
| Total Comprehensible Income / (Loss) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Per Share Information: | ||||||||||||||||
| Basic and diluted weighted average number of common shares outstanding |
|
|
||||||||||||||
| Net Profit / (Loss) per common share basic and diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements
| 5 |
Clean Energy Technologies, Inc.
Consolidated Statements of Stockholders Equity
for the three and six months ended June 30, 2026 (Unaudited) and 2025 (Unaudited)
| Description | Common Stock Shares | Amount | Preferred Stock Shares | Amount | Additional Paid in Capital | Accumulated Other Comprehensive | Accumulated Deficit | Stock holders’ Equity Totals | ||||||||||||||||||||||||
| December 31, 2024 | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||||
| Shares issued for stock compensation | - | |||||||||||||||||||||||||||||||
| Shares issued for debt inducement | - | |||||||||||||||||||||||||||||||
| Shares issued for series E preferred conversion | ( |
) | ( |
) | ||||||||||||||||||||||||||||
| Value of the warrants issued for Mast Hill | - | - | ||||||||||||||||||||||||||||||
| Accumulated Comprehensive | - | - | ||||||||||||||||||||||||||||||
| Accrued Series E preferred dividend | - | - | ( |
) | ||||||||||||||||||||||||||||
| Net Loss | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| March 31, 2025 | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||||
| Shares issued for stock compensation | - | ( |
) | |||||||||||||||||||||||||||||
| Shares issued for debt conversion | - | |||||||||||||||||||||||||||||||
| Shares issued for debt inducement | - | |||||||||||||||||||||||||||||||
| Shares issued for subscription | - | |||||||||||||||||||||||||||||||
| Accumulated Comprehensive | - | - | ||||||||||||||||||||||||||||||
| Net Loss | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| June 30, 2025 | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||||
| Description | Common Stock Shares | Amount | Preferred Stock Shares | Amount | Additional Paid in Capital | Accumulated Other Comprehensive | Accumulated Deficit | Stock holders’ Equity Totals | ||||||||||||||||||||||||
| December 31, 2025 | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||||
| Shares issued for debt conversion | - | |||||||||||||||||||||||||||||||
| Shares issued for consideration | - | |||||||||||||||||||||||||||||||
| Accumulated Comprehensive | - | - | ||||||||||||||||||||||||||||||
| Net Loss | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| March 31, 2026 | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||||
| Accumulated Comprehensive | - | - | ||||||||||||||||||||||||||||||
| Net Loss | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| June 30, 2026 | - |
- |
$ | |||||||||||||||||||||||||||||
The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements
| 6 |
Clean Energy Technologies, Inc.
Consolidated Statements of Cash Flows
For the six months ended June 30, 2026 and 2025 (Unaudited)
| 2026 | 2025 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net Income / (Loss) | ( |
) | ( |
) | ||||
| Depreciation and amortization | ||||||||
| Stock compensation expense | ||||||||
| Amortization of debt discount | ||||||||
| Attributable income per equity method - Shuya | ( |
) | ||||||
| Change in fair value of derivative liabilities | ( |
) | ( |
) | ||||
| Change in fair value of warrant liabilities | ( |
) | ( |
) | ||||
| Change in fair value of Notes receivable | ( |
) | ||||||
| Reversal of inventory impairment reserve | ( |
) | ||||||
| Changes in assets and liabilities: | ||||||||
| Decrease in right of use asset | ||||||||
| Decrease in lease liability | ( |
) | ( |
) | ||||
| (Increase) decrease in accounts receivable | ( |
) | ||||||
| Increase in accounts receivable – related party | ( |
) | ||||||
| Decrease in prepaid expenses | ||||||||
| Increase in contract asset | ( |
) | ( |
) | ||||
| Increase in other assets | ( |
) | ( |
) | ||||
| Increase in interest receivable | ( |
) | ||||||
| Increase in prepayments | ( |
) | ||||||
| (Increase) decrease in inventory | ( |
) | ||||||
| Increase in accounts payable | ||||||||
| Other increase in accrued expenses | ||||||||
| Other increase in accrued interest | ||||||||
| Other decrease (increase) in customer deposits | ( |
) | ||||||
| Net Cash Used In Operating Activities | ( |
) | ( |
) | ||||
| Cash Flows from Investing Activities | ||||||||
| Note Convertible | ( |
) | ||||||
| Long term investment | ( |
) | ||||||
| Net Cash Used In Investing Activities | ( |
) | ||||||
| Cash Flows from Financing Activities | ||||||||
| Proceeds from notes payable and lines of credit | ||||||||
| Repayment from related party | ||||||||
| Borrowing from related party | ||||||||
| Other receivable | ( |
) | ||||||
| Payments on notes payable and line of credit | ( |
) | ( |
) | ||||
| Stock issued for cash | ||||||||
| Net Cash Provided By Financing Activities | ||||||||
| Foreign Currency Transaction | ( |
) | ||||||
| Net (Decrease) Increase in Cash and Cash Equivalents | ( |
) | ||||||
| Cash and Cash Equivalents at Beginning of Period | ||||||||
| Cash and Cash Equivalents at End of Period | $ | |||||||
| Supplemental Cashflow Information: | ||||||||
| Interest Paid | $ | |||||||
| Taxes Paid | $ | |||||||
| Supplemental Non-Cash Disclosure | ||||||||
| OID on new notes | $ | |||||||
| Discount on new notes | $ | $ | ||||||
| Shares issued for note conversion | $ | $ | ||||||
| Shares issued for acquisition consideration | ||||||||
| Promissory note issued for acquisition consideration | ||||||||
| Dividend accrued | $ | $ | ||||||
The accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements
| 7 |
Clean Energy Technologies, Inc.
Notes to Consolidated Financial Statements (Unaudited)
NOTE 1 – GENERAL
These unaudited interim consolidated financial statements as of and for the six months ended June 30, 2026, reflect all adjustments which, in the opinion of management, are necessary to fairly state the Company’s financial position and the results of its operations for the periods presented, in accordance with the accounting principles generally accepted in the United States of America. All adjustments are of a normal recurring nature.
These unaudited interim consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in the Company’s fiscal year end December 31, 2025 report. The Company assumes that the users of the interim financial information herein have read, or have access to, the audited consolidated financial statements for the preceding period, and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. The results of operations for the six months ended June 30, 2026 are not necessarily indicative of results for the entire year ending December 31, 2026.
The summary of significant accounting policies of Clean Energy Technologies, Inc. is presented to assist in the understanding of the Company’s consolidated financial statements. The consolidated financial statements and notes are representations of the Company’s management, who is responsible for their integrity and objectivity.
Corporate History
We were incorporated in California in July 1995 under the name Probe Manufacturing Industries, Inc. We redomiciled to Nevada in April 2005 under the name Probe Manufacturing, Inc. We manufactured electronics and provided services to original equipment manufacturers (OEMs) of industrial, automotive, semiconductor, medical, communication, military, and high technology products. On September 11, 2015 Clean Energy HRS, or “CE HRS”, our wholly owned subsidiary acquired the assets of Heat Recovery Solutions from General Electric International. In November 2015, we changed our name to Clean Energy Technologies, Inc.
Our principal executive offices are located at 1340 Reynolds Avenue, Irvine, CA 92614. Our common stock is listed on the Nasdaq Capital Market under the symbol “CETY.”
Our internet website address is www.cetyinc.com. The information contained on our website is not incorporated by reference into this document, and you should not consider any information contained on, or that can be accessed through, our website as part of this document.
The
Company has
Going Concern
The
financial statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets
and liquidation of liabilities in the normal course of business. The Company had a total stockholder’s equity of $
| 8 |
Plan of Operation
CETY is a clean energy technology company providing eco-friendly energy solutions, clean energy fuels, and alternative electric power for small to mid-sized projects across North America, Europe, and Asia. The company harnesses the power of heat and biomass to produce electricity with zero emissions and minimal cost. Additionally, the company offers Waste to Energy Solutions, converting waste materials from manufacturing, agriculture, and wastewater treatment plants into electricity and BioChar. Clean Energy Technologies also provides Engineering, Consulting, and Project Management Solutions, leveraging its expertise to develop clean energy projects for both municipal and industrial customers, as well as Engineering, Procurement, and Construction (EPC) companies.
Our principal businesses
Heat Recovery Solutions – Clean Energy Technologies patented Clean Cycle Generator (CCG) is a heat recovery system that captures waste heat from various sources and converts it into electricity. This system can be integrated into various industrial processes, helping to reduce energy costs and carbon emissions.
Waste to Energy Solutions - Clean Energy Technologies’ waste to energy solutions involve converting organic waste materials, such as agricultural waste and food waste, into clean energy through its proprietary pyrolysis technology that produce a range of products, including electricity, heat, and biochar.
Engineering, and Manufacturing Solutions – Clean Energy Technologies provides power generation, waste to energy, and heat recovery Engineering, Procurement and Construction (EPC) services to municipal and industrial customers and to design and incorporate clean energy solutions in their projects.
Natural Gas Trading Clean Energy Technologies (H.K.) Limited (“CETY HK”) consists of two business ventures in mainland China: (i) our natural gas (“NG”) trading operations sourcing and supplying NG to industries and municipalities, operated through our PRC Subsidiaries. The NG is principally used for heavy truck refueling stations and urban or industrial users. We purchase large quantities of NG from large wholesale NG depots at fixed prices which are prepaid for in advance at a discount to market. We sell the NG to our customers at prevailing daily spot prices for the duration of the contracts. The terms of the joint venture are subject to the execution of definitive agreements. CETY HK has not commenced business with Shenzhen Gas due to macro-economic factors such as falling NG prices and reduced industrial demand. CETY HK will wait until macro economic factors have improved before commencement of the Shenzhen Gas joint venture. On or about June 18, 2025, CETY HK acquired a holding company, Herbert YF Global Holding Limited, a limited company organized under the laws of Hong Kong.
On
September 26, 2025, the Company’s Board of Directors approved a reverse stock split of its authorized and issued and outstanding
shares of common stock, par value $ per share (the “Common Stock”), at a ratio of
On
or about July 1, 2025, Company subsidiary Herbert YF Global Holding Limited entered into a Consulting Agreement (the “Linkage Consulting
Agreement”) with Linkage International Limited (the “Consultant”), a Hong Kong company and one of the Company’s
investors from the Company’s May 6, 2025, private placement, pursuant to which the Company had sold in the aggregate shares
of Company common stock at a price of $ per share (on a split-adjusted basis), for aggregate gross proceeds of $
| 9 |
NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The summary of significant accounting policies of Clean Energy Technologies, Inc. is presented to assist in the understanding of the Company’s financial statements. The financial statements and notes are representations of the Company’s management, who is responsible for their integrity and objectivity.
The consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.
For a discussion of the Company’s significant accounting policies, refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes to the Company’s significant accounting policies since December 31, 2025.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Such estimates may be materially different from actual financial results. Significant estimates include the recoverability of long-lived assets, the collection of accounts receivable and valuation of inventory and reserves.
Cash and Cash Equivalents
We maintain the majority of our cash accounts at JPMorgan Chase Bank. The
total cash balance is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $
Accounts Receivable
Our
ability to collect receivables is affected by economic fluctuations in the geographic areas and industries served by us. Reserves for
un-collectable amounts are provided, based on past experience and a specific analysis of the accounts. Although we expect to collect
amounts due, actual collections may differ from the estimated amounts. As of June 30, 2026, and December 31, 2025, we had a reserve for
potentially un-collectable accounts receivable of $ and $. Our policy for reserves for our long-term financing receivables is determined
on a contract-by-contract basis and considers the length of the financing arrangement. As of June 30, 2026, and December 31, 2025, we
had a reserve for potentially uncollectable long-term financing receivables of $ and $
One
customer accounted for
| 10 |
Contract Assets
Contract
assets primarily represent amounts due from one customer for contractual rights to consideration that are conditioned on the achievement
of specified project milestones. Included in the contract asset balance is a long-term receivable that is recorded at its present value
using an appropriate discount rate. The carrying amount reflects a present value discount of approximately $
Inventory
Inventories
are valued at the lower of weighted average cost and net realizable value. Our industry experiences changes in technology, changes in market
value and availability of raw materials, as well as changing customer demand. We make provisions for estimated excess and obsolete
inventories based on regular audits and cycle counts of our on-hand inventory levels and forecasted customer demands and at times
additional provisions are made. Any inventory write offs are charged to the reserve account. As of June 30, 2026 we had a reserve of
$
Customer Deposit
Also
from time to time we require upfront deposits from our customers based on the contract. As of June 30, 2026 and December 31, 2025, we
had outstanding customer deposits of $
Derivative liability
A derivative is an instrument whose value is “derived” from an underlying instrument or index such as a future, forward, swap, option contract, or other financial instrument with similar characteristics, including certain derivative instruments embedded in other contracts and for hedging activities.
The Company does not invest in separable financial derivatives or engage in hedging transactions. However, the Company entered into certain debt financing transactions as disclosed in Note 10 containing certain conversion features that have resulted in the instruments being deemed derivatives. The Company evaluates such derivative instruments to properly classify such instruments within equity or as liabilities in the financial statements.
The classification of a derivative instrument is reassessed at each reporting date. If the classification changes as a result of events during a reporting period, the instrument is reclassified as of the date of the event that caused the reclassification. There is no limit on the number of times a contract may be reclassified.
Instruments
classified as derivative liability is remeasured using the Black-Scholes model at each reporting period (or upon reclassification) and
the change in fair value is recorded on the consolidated statement of operations. The Company had derivative liability of $
Fair Value of Financial Instruments
The Financial Accounting Standards Board issued ASC (Accounting Standards Codification) 820-10 (SFAS No. 157), “Fair Value Measurements and Disclosures” for financial assets and liabilities. ASC 820-10 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. FASB ASC 820-10 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. FASB ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value:
| ● | Level 1: Quoted prices in active markets for identical assets or liabilities. | |
| ● | Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities. |
| 11 |
| ● | Level
3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets
or liabilities. The Company’s derivative liabilities have been valued as Level 3 instruments. Significant assumptions used in the valuations included expected stock price volatility of approximately |
The Company’s financial instruments consist of cash, accounts payable, accrued expenses, and convertible notes payable. The estimated fair value of cash, investments, accounts payable, accrued expenses and convertible notes payable approximate their carrying amounts due to the short-term nature of these instruments.
Basic
(loss) per share is computed on the basis of the weighted average number of common shares outstanding. At June 30, 2026, we had
outstanding common shares of .
Basic Weighted average common shares and equivalents for the six months ended June 30, 2026, and June 30, 2025 were
and
respectively. As of June 30, 2026, we had convertible notes, convertible into approximately of
Segment Disclosure
FASB Codification Topic 280, Segment Reporting, establishes standards for reporting financial and descriptive information about an enterprise’s reportable segments. The Company has four reportable segments: Heat Recovery Solutions, Waste to Energy, NG Trading, and Engineering and Manufacturing division. The segments are determined based on several factors, including the nature of products and services, the nature of production processes, customer base, delivery channels and similar economic characteristics. Refer to note 1 for a description of the various product categories manufactured under each of these segments.
An operating segment’s performance is evaluated based on its pre-tax operating contribution, or segment income. Segment income is defined as net sales less cost of sales, and segment selling, general and administrative expenses, and does not include amortization of intangibles, stock-based compensation, other charges (income), net and interest and other, net.
Selected Financial Data:
| For the six months ended June 30, | ||||||||
| 2026 | 2025 (Restated) | |||||||
| Net Sales | ||||||||
| Heat Recovery Solutions | ||||||||
| NG Trading | ||||||||
| Waste to Energy | ||||||||
| Total Sales | $ | $ | ||||||
| Segment income and reconciliation before tax | ||||||||
| Heat Recovery Solutions | ( |
) | ||||||
| LNG Trading | ||||||||
| Waste to Energy | ||||||||
| Total Segment income | ||||||||
| Less: operating expense | ( |
) | ) | |||||
| Less: other income and expenses | ( |
) | ( |
) | ||||
| Net (loss) before income tax | $ | ( |
) | $ | ( |
) | ||
| 12 |
| June 30, 2026 | December 31, 2025 | |||||||
| Total Assets | ||||||||
| Engineering and Manufacturing | $ | $ | ||||||
| Heat Recovery Solutions | ||||||||
| Waste to Energy | ||||||||
| NG Trading | ||||||||
| Total Assets | $ | $ | ||||||
The following table represents revenue by geographic area based on the sales location of our products and solutions:
| For the six months ended June 30, | ||||||||
| 2026 | 2025 (Restated) | |||||||
| United States | $ | $ | ||||||
| China | ||||||||
| Other international | ||||||||
| Total Sales | $ | $ | ||||||
Leases
The Company’s leases primarily consist of facility leases which are classified as operating leases. The Company assesses whether an arrangement contains a lease at inception. The Company recognizes a lease liability to make contractual payments under all leases with terms greater than twelve months and a corresponding right-of-use asset, representing its right to use the underlying asset for the lease term. The lease liability is initially measured at the present value of the lease payments over the lease term using the collateralized incremental borrowing rate since the implicit rate is unknown. Options to extend or terminate a lease are included in the lease term when it is reasonably certain that the Company will exercise such an option. The right-of-use asset is initially measured as the contractual lease liability plus any initial direct costs and prepaid lease payments made, less any lease incentives. Lease expense is recognized on a straight-line basis over the lease term.
Leased right-of-use assets are subject to impairment testing as a long-lived asset at the asset-group level. The Company monitors its long-lived assets for indicators of impairment. As the Company’s leased right-of-use assets primarily relate to facility leases, early abandonment of all or part of facility as part of a restructuring plan is typically an indicator of impairment. If impairment indicators are present, the Company tests whether the carrying amount of the leased right-of-use asset is recoverable including consideration of sublease income, and if not recoverable, measures impairment loss for the right-of-use asset or asset group.
Income Taxes
Federal Income taxes are not currently due since we have had losses since inception of Clean Energy Technologies.
Income taxes are provided based upon the liability method of accounting pursuant to ASC 740-10-25 Income Taxes – Recognition. Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the “more likely than not” standard required by ASC 740-10-25-5.
Deferred income tax amounts reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting purposes.
As
of December 31, 2025, we had a net operating loss carry-forward of approximately $
| 13 |
On February 13, 2018, the Company completed a financing transaction that resulted in a change in ownership under Section 382 of the Internal Revenue Code. As a result, the Company’s ability to utilize its net operating loss carryforwards (“NOLs”) is subject to annual limitations. Management has considered these limitations in evaluating the realizability of the Company’s deferred tax assets.
Reclassification
Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported income, total assets, or stockholders’ equity as previously reported.
Recently Issued Accounting Standards
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The standard enhances income tax disclosures by requiring more detailed information regarding the effective tax rate reconciliation and income taxes paid. The Company adopted ASU 2023-09 effective January 1, 2025. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements or related disclosures.
Accounting Standards Not Yet Adopted
In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The standard requires public business entities to provide additional disaggregated information regarding certain expense captions presented in the income statement. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact that adoption of this standard will have on its consolidated financial statements and related disclosures.
In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which enhances interim financial reporting by clarifying the applicability of interim reporting guidance, improving the organization of interim disclosure requirements, and providing additional guidance regarding interim financial statement disclosures. The amendments are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting this standard on its interim financial statement disclosures.
In December 2025, the FASB issued ASU No. 2025-12, Accounting Standards Codification Improvements, which includes various amendments intended to clarify, simplify, and improve existing accounting guidance. The Company is currently evaluating the impact of adopting this standard and does not expect its adoption to have a material impact on its consolidated financial statements.
Deferred Stock Issuance Costs
Deferred
stock issuance costs represent amounts paid for legal, consulting, and other offering expenses in conjunction with the future raising
of additional capital to be performed within one year. These costs are netted against additional paid-in capital as a cost of the stock
issuance upon closing of the respective stock placement. During the six months ended June 30, 2026 and the year ended December 31, 2025,
the Company capitalized $
| 14 |
NOTE 3 – ACCOUNTS RECEIVABLE
| June 30, 2026 | December 31, 2025 | |||||||
| Accounts Receivable | $ | $ | ||||||
| Accounts Receivable Related Party | ||||||||
| Total | $ | $ | ||||||
Our Accounts Receivable is pledged to Nations Interbanc, our line of credit.
| June 30, 2026 | December 31, 2025 | |||||||
| Long-term financing receivables | $ | $ | ||||||
| Less Reserve for uncollectable accounts | ( |
) | ||||||
| Long-term financing receivables - net | $ | $ | ||||||
The Company is currently modifying the assets subject to lease to meet the provisions of the agreement, and as of June 30, 2026 any collection on the lease payments was not yet considered probable, resulting in no derecognition of the underlying asset and no net lease investments recognized on the sales-type lease pursuant to ASC 842-30-25-3.
On a contract by contract basis or projects that require extensive work from multiple contractors or supply chain challenges or in response to certain situations or installation difficulties, the Company may elect to allow non-interest bearing repayments in excess of 1 year.
NOTE 4 – INVENTORIES
Inventories by major classification were comprised of the following at:
| June 30, 2026 | December 31, 2025 | |||||||
| Inventory | $ | $ | ||||||
| Less reserve | ( |
) | ( |
) | ||||
| Total | $ | $ | ||||||
Our Inventory is pledged to Nations Interbanc, our line of credit.
NOTE 5 – PROPERTY AND EQUIPMENT
Property and equipment were comprised of the following at:
| June 30, 2026 | December 31, 2025 | |||||||
| Property and Equipment | $ | $ | ||||||
| Accumulated Depreciation | ( |
) | ( |
) | ||||
| Net Property and equipment | $ | $ | ||||||
Our
Depreciation Expense for the six months ended June 30, 2026, and 2025 was $
Our Property Plant and Equipment is pledged to Nations Interbanc, our line of credit.
| 15 |
NOTE 6 – INTANGIBLE ASSETS
Intangible assets were comprised of the following at:
| June 30, 2026 | December 31, 2025 | |||||||
| Goodwill | $ | $ | ||||||
| License | ||||||||
| Patents | ||||||||
| Accumulated Amortization | ( |
) | ( |
) | ||||
| Net Intangible Assets | $ | $ | ||||||
Our
Amortization Expense for the six months ended June 30, 2026 and 2025 was $
As
of both June 30, 2026, and December 31, 2025, goodwill amounted to $
The
LWL Investment, previously classified as an indefinite-lived asset, had a carrying value of $
As a result of this impairment, no value is reflected on the Company’s balance sheet as of December 31, 2025.
The
License balance remained unchanged at $
The
Patents balance, after amortization, was $
NOTE 7 – LOANS RECEIVABLE AND CONVERTIBLE NOTES RECEIVABLE
Effective
January 10, 2022, JHJ (the “Note Holder”) entered into a convertible loan agreement with Chengdu Rongjun Enterprise Consulting
Co., Ltd. (“Rongjun” or the “Borrower”), pursuant to which JHJ advanced RMB
In
October 2022, the Company amended the terms of the loan by reducing the stated interest rate from
| 16 |
The Company also evaluated the embedded conversion feature under ASC 815, Derivatives and Hedging, and concluded that bifurcation as a derivative is not required, as the underlying equity interests are not readily convertible to cash and the feature does not meet the criteria for derivative accounting.
On
January 12, 2026, the Company entered into a Note Purchase Agreement with Filled Converge Limited and Li Xiaoguang to acquire a
HK$
The
Company also holds a convertible note receivable from Filled Converge Limited January 12, 2026 with an aggregate principal balance of
approximately $
The
convertible note receivable is measured at fair value on a recurring basis. As of June 30, 2026, the estimated fair value of the convertible
note was $
The
outstanding balance of the convertible note as of June 30, 2026 is $
NOTE 8 – ACCRUED EXPENSES
| June 30, 2026 | December 31, 2025 | |||||||
| Accrued Wages | $ | $ | ||||||
| Accrued Taxes and other | ||||||||
| Total accrued expenses | $ | $ | ||||||
NOTE 9 – WARRANT LIABILITY
On
December 5, 2024, the Company entered into an Equity Line of Credit Agreement with Mast Hill Fund, L.P. (the “Investor”),
pursuant to which the Investor committed to provide up to $
In
connection with the agreement, the Company issued a purchase warrant to the Investor to purchase up to
The warrant contains a down-round provision whereby the exercise price will be reduced if the Company issues common stock, options, or convertible securities at a price below the then-current exercise price of the warrant.
| 17 |
The warrant was classified as a liability and initially recorded at fair
value of $
The following table presents a reconciliation of the credit line warrant liability measured and recorded at fair value on a recurring basis:
|
For the six months ended June 30, 2026 |
For the six months ended June 30, 2025 |
|||||||
| Fair value-beginning of period | $ | $ | ||||||
| Change in fair value | ( |
) | ( |
) | ||||
| Fair value-end of period | $ | $ | ||||||
NOTE 10 – LINE OF CREDIT AND NOTES PAYABLE
On
November 11, 2013, we entered into an accounts receivable financing agreement with American Interbanc (now Nations Interbanc). Amounts
outstanding under the agreement bear interest at the rate of
On
April 1, 2021, we entered into an amendment to the purchase order financing agreement with DHN Capital, LLC dba Nations Interbanc. Nations
Interbanc has lowered the accrued fees balance by $
During the year 2024, 2025, and six months ended June 30, 2026, the Company entered into several “sale of future receipts” / merchant cash-advance arrangements with Reliance Financial FL LLC, as well as a subordinated business loan with Agile Lending, LLC and a purchase order financing facility with Nations Interbanc. Although certain Reliance contracts are legally structured as non-recourse “sales” of future business receipts, management concluded that these arrangements do not involve the transfer of discrete existing financial assets that would qualify for derecognition under ASC 860. Instead, the Company continues to generate and collect its operating cash receipts and remits amounts to the lenders until the contractual repayment amounts have been satisfied.
Accordingly, the Reliance, Agile and Nations Interbanc arrangements are accounted for as interest-bearing financing liabilities within the scope of ASC 470 and ASC 835. The Company records the net proceeds received as short-term debt and recognizes the excess of the total contractual repayment amounts (including any origination fees, daily fees and make-whole or prepayment charges) over the net proceeds as debt discounts or financing costs, which are amortized to interest expense using the simple interest method over the expected repayment periods. Legal and other third-party costs that are directly attributable to obtaining these financings are capitalized as debt issuance costs and presented as a direct deduction from the related liabilities.
On or about July 15, 2024,
August 6, 2024, and October 10, 2024, the Company borrowed approximately $
On June 30, 2025, the Company
borrowed approximately $
| 18 |
On or about November 6, 2025, and December 31, 2025,
the Company borrowed approximately $
On
or about December 31, 2025, the Company borrowed approximately $
On
May 12, 2026, the Company borrowed approximately $
On
May 28, 2026, the Company borrowed approximately $
On
or about June 12, 2026, the Company borrowed approximately $
Convertible Notes Payable, Net
On
April 4, 2025, the Company entered into a securities purchase agreement with Pacific Pier Capital II, LLC, a Delaware limited liability
company (“Pacific Pier”), pursuant to which the Company sold, and Pacific Pier purchased, (i) a convertible promissory note
in the principal amount of $
During
the twelve months ended December 31, 2025 and six months ended June 30, 2026, there was $
| 19 |
Effective
April 23, 2025, the Company entered into a securities purchase agreement with Pacific Pier, pursuant to which the Company sold, and Pacific
Pier purchased, (i) a convertible promissory note in the principal amount of $
During
the twelve months ending December 31, 2025 and six months ended June 30, 2026, there was
On
May 8, 2025, the Company entered into a securities purchase agreement with 1800 Diagonal Lending LLC, a Virginia limited liability company
(“1800 Diagonal”), pursuant to which the Company sold, and 1800 Diagonal purchased, a convertible promissory note in the
principal amount of $
Effective
June 4, 2025, the Company entered into a securities purchase agreement with Mast Hill, pursuant to which the Company sold, and Mast Hill
purchased, (i) a junior secured convertible promissory note in the principal amount of $
During
the year ended December 31, 2025, there was $
| 20 |
Effective
July 18, 2025, the Company entered into a securities purchase agreement with Firstfire Global Opportunities Fund LLC (“Firstfire”),
pursuant to which the Company sold, and Firstfire purchased, (i) a junior secured convertible promissory note in the principal amount
of $
During
the six months ended June 30, 2026, FirstFire converted $
On
July 30, 2025, the Company entered into a securities purchase agreement with 1800 Diagonal Lending LLC, a Virginia limited liability
company (“1800 Diagonal”), pursuant to which the Company sold, and 1800 Diagonal purchased, a convertible promissory note
in the principal amount of $
Effective
August 15, 2025, the Company entered into a securities purchase agreement with Mast Hill, pursuant to which the Company sold, and Mast
Hill purchased, (i) a junior secured convertible promissory note in the principal amount of $
On
or about March 4, 2026, the Company entered into a securities purchase agreement (the “1800 SPA”) with 1800 Diagonal Lending
LLC, a Virginia limited liability company (“1800 Diagonal”), pursuant to which the Company sold, and 1800 Diagonal purchased,
a convertible promissory note in the principal amount of $
The
Transaction was funded by 1800 Diagonal and closed on March 4, 2026, and pursuant to the 1800 SPA, The Company received net funding of
$
| 21 |
The
1800 SPA includes customary representations, warranties and covenants by the Company and customary closing conditions. The 1800 SPA requires
that the proceeds from the Transaction be used for general working capital purposes. The 1800 Note matures on
On
or about March 6, 2026, in consideration of (i) $
The
Mega SPAs include customary representations, warranties and covenants by the Company. The Mega Note accrues interest at
The
balance to Mega Note as of June 30, 2026 respectively was $
On
or about March 6, 2026, in consideration of $
The
Noblebear SPA include customary representations, warranties and covenants by the Company. The Noblebear Notes accrues interest at
The
balance to Noblebear as of June 30, 2026 was $
Effective
April 20, 2026, Clean Energy Technologies, Inc. (the “Company”) entered into a securities purchase agreement (the “PPC
SPA”) with Pacific Pier Capital II, LP, a Delaware limited partnership (“Pacific Pier”), pursuant to which the Company
sold, and Pacific Pier purchased, a convertible promissory note in the principal amount of $
The
PPC Transaction was funded by Pacific Pier and closed on April 20, 2026, and pursuant to the SPA, Pacific Pier’s legal expenses
of $
| 22 |
The following is the change in derivative liability for the six Months ended June 30, 2026:
| Balance, January 1, 2026 | $ | |||
| Issuance of new Convertible notes | ||||
| Conversions | ( |
) | ||
| Change in fair market value of derivative liability | ( |
) | ||
| Balance, June 30, 2026 | $ |
The following is the change in derivative liability for the twelve Months ended December 31, 2025:
| Balance, January 1, 2025 | $ | |||
| Issuance of new derivative liability | ||||
| Conversions | ( |
) | ||
| Change in fair market value of derivative liability | ( |
) | ||
| Balance, December 31, 2025 | $ |
Total due to Convertible Notes
| June 30, 2026 | December 31, 2025 | |||||||
| Outstanding principal amount | $ | |||||||
| Accrued interest | ||||||||
| Debt discount | ( |
) | ( |
) | ||||
| Amortization of debt discount | ||||||||
| Total | $ | |||||||
Fair Value Measurements
The Company’s financial instruments consist primarily of cash, accounts receivable, accounts payable, accrued liabilities, notes payable, and derivative liabilities. The carrying amounts of cash, accounts receivable, accounts payable, and accrued liabilities approximate fair value due to their short-term maturities. The Company measures certain financial assets and liabilities at fair value on a recurring basis. The Company’s convertible note receivable and derivative liabilities are measured at fair value using Level 3 inputs within the fair value hierarchy because the valuation models utilize significant unobservable inputs.
| 23 |
The following table presents the Company’s liabilities and assets measured at fair value on a recurring basis:
June 30, 2026
| Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||
| Assets: | ||||||||||||||||
| Convertible note receivable | $ | $ | $ | $ | ||||||||||||
| Total assets | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Derivative liabilities | $ | $ | $ | $ | ||||||||||||
| Total liabilities | $ | $ | $ | $ | ||||||||||||
December 31, 2025
| Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||
| Derivative liabilities | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
The following table presents the changes in the Company’s Level 3 convertible note receivable for the six months ended June 30, 2026:
| Amount | ||||
| Balance, beginning of period | $ | |||
| Initial recognition / purchase of convertible note | $ | |||
| Change in fair value recognized in earnings | $ | |||
| Balance, end of period | $ | |||
The following table presents the changes in the Company’s Level 3 derivative liabilities for the six months ended June 30, 2026:
| Amount | ||||
| Balance, beginning of period | $ | |||
| Issuance of derivative liabilities | ||||
| Conversions | ( |
) | ||
| Change in fair value recognized in earnings | ( |
) | ||
| Balance, end of period | $ | |||
Changes in the fair value of derivative liabilities are recognized in the condensed consolidated statements of operations as a component of other income (expense).
NOTE 11 – COMMITMENTS AND CONTINGENCIES
Operating Rental Leases
We
have relocated our corporate office to 1340 Reynolds Avenue Unit 120, Irvine, CA 92614. On December 1, 2023, the Company signed a lease
agreement for a
On
April 9, 2025, we entered a lease for our HRS operations in City of Irvine, California, on June 4, 2025, we amended this lease for additional
area. The lease is for the period
| 24 |
On
January 30, 2024, JHJ entered into a lease for the office in Chengdu City (“Chengdu lease”), China from January 30, 2024
to
The components of lease costs, lease term and discount rate with respect of these three leases with an initial term of more than 12 months are as the following:
Balance sheet information related to the Company’s operating leases:
| June 30, 2026 | December 31, 2025 | |||||||
| Right-of-used assets | $ | $ | ||||||
| Lease liabilities – current | ||||||||
| Lease liabilities – non-current | ||||||||
| Total lease liabilities | $ | $ | ||||||
The weighted-average remaining lease term and the weighted-average discount rate of the above three leases are as follows:
|
Six Months Ended June 30, 2026 |
||||
| Weighted average remaining lease term (years) | ||||
| Weighted average discount rate |
|
% | ||
The following is a schedule, by year of lease payment for above three leases as of June 30, 2026:
| For the 12 months ending | Lease Payment | |||
| June 30, 2027 | $ | |||
| June 30, 2028 | ||||
| June 30, 2029 | ||||
| Total undiscounted cash flows | ||||
| Imputed Interest | ||||
| Present value of lease liabilities | $ | |||
Our
lease expense for the six months ended June 30, 2026, and 2025 was $
NOTE 12 – CAPITAL STOCK TRANSACTIONS
On
January 9, 2023, our board of directors and majority shareholders approved a reverse stock split. Effective upon the filing of our Certificate
of Amendment of Articles of Incorporation with the Secretary of State of the State of Nevada, the shares of the Corporation’s Common
Stock issued and outstanding immediately prior to the Effective Time of January 9, 2023, will be automatically reclassified as and combined
into shares of Common Stock such that
On
September 26, 2025, the Company filed a Certificate of Change Pursuant to Nevada Revised Statutes Section 78.209 with the Secretary of
State of the State of Nevada effecting a
| 25 |
Common Stock Transactions
As
of December 31, 2025, the Company has issued shares for the conversion of Series E Preferred shares, with a total value of $
On
May 6, 2025, the Company entered into a Subscription Agreement with various investors, pursuant to which the purchasers acquired in the
aggregate shares of Company common stock, at a price of $ per share, for aggregate gross proceeds of $
During 2025, the Company issued shares of
common stock to Mast Hill in connection with the conversion of an aggregate of $
During 2025, the Company issued shares of common
stock to Pacific Pier in connection with the conversion of an aggregate of $
On or about December 19, 2025, the Company issued True-up shares of common stock to Lucas Venturew, LLC pursuant to a security purchase agreement dated May 19, 2025,
On
or about December 24, 2025, the Company issued shares of Company common stock with an investor pursuant to a subscription agreement
for $
On
or about December 24, 2025, the Company issued shares of Company common stock with an investor pursuant to a subscription agreement
for $
On
or about December 29, 2025, the Company issued shares of Company common stock with an investor pursuant to a subscription agreement
for $
On
or about January 6, 2026, the Company issued shares of common stock to Pacific Pier Capital II LP pursuant to its notice of conversion
of $
On
or about January 16, 2026, the Company issued shares of common stock to Pacific Pier pursuant to its notice of conversion of $
| 26 |
On
January 12, 2026, the Company entered into a note purchase agreement (the “Filled Purchase Agreement”) with Filled Converge
Limited and Li Xiaoguang for a purchase price consisting of US$
On
or about January 20, 2026, pursuant to the securities purchase agreement with First Fire dated July 18, 2025, described above, the Company
issued shares of Company common stock to First Fire pursuant to its notice of conversion of $
On
or about January 29, 2026, the Company issued shares of common stock to Pacific Pier Capital II LP pursuant to its notice of
conversion of $
Warrants
A summary of warrant activity for the periods is as follows:
On
August 5, 2022, we issued
On
February 13, 2023 we issued
On
March 2023, the company issued Craft Capital Management, L.L.C. and R.F. Lafferty & Co. Inc. a
On
December 5, 2024, we issued
On
February 28, 2025, we issued
| Warrants - Common Share Equivalents |
Weighted Average Exercise price |
Weighted Average Contractual Life (years) |
Aggregate Intrinsic Value |
|||||||||||||
| Outstanding December 31, 2025 | $ | $ | ||||||||||||||
| Expired | - | - | ||||||||||||||
| Additions | - | - | ||||||||||||||
| Outstanding June 30, 2026 | $ | |||||||||||||||
Stock Options
We currently have outstanding stock options.
NOTE 13 – RELATED PARTY TRANSACTIONS
On
April 2, 2021, the Company formed CETY Capital LLC a wholly owned subsidiary of CETY. In addition, the company established VRG with our
partner, Synergy Bioproducts Corporation (“SBC”) The purpose of the joint venture is the development of a pyrolysis plant
established to convert wood feedstock into electricity and BioChar by using high temperature ablative fast pyrolysis reactor for which
Clean Energy Technology, Inc. holds the license for. The VRG is in Lyndon, Vermont. Based upon the terms of the members’ agreement,
CETY Capital LLC owns a
| 27 |
On
June 4, 2023, CETY Renewables executed a turnkey agreement with VRG for the design, construction, and delivery of an organics-to-energy
plant. As a result of this agreement, HRS and CETY Renewables invoiced VRG $
CETY
currently has $
On January 12, 2026, the Company entered into a
Note Purchase Agreement with Filled Converge Limited and Li Xiaoguang to acquire HK$
During 2026, the convertible notes originally issued to Mast Hill Fund, L.P. and Pacific Pier Capital, LLC were transferred to Noblebear Investment Holdings LLC (“Noblebear”). These obligations, together with the convertible promissory note issued directly to Noblebear in March 2026, were subsequently consolidated under Noblebear. As of June 30, 2026, the Company has classified and disclosed the amounts due to Noblebear as related-party obligations based on Noblebear’s relationship with the Company and its shareholders.
As
of June 30, 2026, amounts due from related parties totaled approximately $
As of June 30, 2026, the Company owed approximately $
On
June 21, 2024, VRG, a Vermont limited liability company in which the Company retains
On
or about July 1, 2025, Company’ subsidiary, Herbert YF Global Holding Limited (“Herbert”), entered into a Consulting
Agreement (the “Linkage Consulting Agreement”) with Linkage International Limited (the “Consultant”), a Hong
Kong company and one of the Company’s investors from the Company’s May 6, 2025, private placement (pursuant to which the
Company had sold in the aggregate shares of Company common stock at a price of $ per share (on a split-adjusted basis), for
aggregate gross proceeds of $
| 28 |
The
RMB
Note 14 - WARRANTY LIABILITY
For
the six months ended June 30, 2026 and 2025 there was
NOTE 15 – VARIABLE INTEREST ENTITY
On
April 2, 2023, the Company formed CETY Capital LLC (“CETY Capital”), a wholly owned subsidiary of the Company. In addition,
the Company, through CETY Capital, established Vermont Renewable Gas LLC (“VRG”) with its partner, Synergy Bioproducts Corporation
(“SBC”). The purpose of the joint venture is the development of a pyrolysis plant located in Lyndon, Vermont, designed to
convert wood feedstock into electricity and biochar using a high-temperature ablative fast pyrolysis reactor for which the Company holds
a license. Pursuant to the terms of the members’ agreement, CETY Capital owns a
The Company evaluated its interest in VRG under ASC 810, Consolidation, and determined that VRG is a variable interest entity (“VIE”) because VRG does not have sufficient equity at risk to finance its activities without additional financial support. The Company further evaluated whether it is the primary beneficiary of VRG. Under the VRG operating agreement, VRG is governed by a three-member Management Committee, of which two members are appointed by SBC and one member is appointed by CETY Capital. Based on the governance provisions of the operating agreement and the parties’ respective rights and obligations, the Company determined that it does not have the power to direct the activities of VRG that most significantly impact VRG’s economic performance and, therefore, is not the primary beneficiary of VRG. Accordingly, the Company does not consolidate VRG.
The
Company’s
As
of June 30, 2026, the Company had a receivable from VRG of approximately $
The
Company has not guaranteed any indebtedness or other obligations of VRG and, as of June 30, 2026, had no contractual commitments to provide
additional financial support to VRG. The Company’s maximum exposure to loss associated with its involvement with VRG as of June
30, 2026 was approximately $
NOTE 16 – DiSPOSAL OF SUBSIDIARY
Background
In
July 2022, the Company, through its wholly-owned subsidiary Jiangsu Huanya Jieneng New Energy Co., Ltd. (‘JHJ’), acquired
a
On January 1, 2023, JHJ entered into a Consistent Action Agreement with other shareholders of Shuya, which resulted in the Company obtaining control over Shuya. Accordingly, the Company began consolidating Shuya as a variable interest entity effective January 1, 2023 in accordance with ASC 810.
| 29 |
On
January 1, 2024, the Consistent Action Agreement was terminated. As a result, the Company lost control over Shuya and deconsolidated
the entity effective January 1, 2024. The Company recognized a loss on deconsolidation of $
Disposal Transaction
On
December 12, 2025, the Company completed the disposal of its entire
Gain on Disposal
The
Company recognized a gain on disposal of $
Fair value of consideration received:
| Cash | $ | |||
| [Non-cash consideration] | $ | |||
| Total consideration | $ | |||
| Less: Carrying value of investment at disposal: | ||||
| Beginning balance (January 1, 2025) | $ | |||
| Change in carrying value of equity method investment (2025) | ( |
) | ||
| Effect of foreign currency translation | ||||
| Carrying value at disposal | ||||
| Gain on disposal | $ |
The fair value of consideration received consisted primarily of cash proceeds and was measured based on the contractual cash amounts received at closing. Accordingly, no significant Level 3 valuation inputs were required under ASC 820.
Discontinued Operations Assessment
The
Company evaluated whether the disposal of Shuya met the criteria for presentation as a discontinued operation under ASC 205-20 and
concluded that it did not represent a strategic shift that has, or will have, a major effect on the Company’s operations or
financial results. Although the Company’s China operations generated approximately $
Results of Operations
For
the period from January 1, 2025 through December 12, 2025, the Company recognized equity in net income of Shuya totaling $
| 30 |
During 2025, the Company received a distribution of $
Cash Flow Impact
The disposal resulted in cash proceeds of $
Strategic Rationale
The Company disposed of its investment in Shuya as part of a strategic shift to focus on its core clean energy technology and distributed energy project development activities in North America and Europe, and to exit natural gas trading operations in China.
NOTE 17 – THE STATUTORY RESERVES
The Company’s ability to pay dividends primarily depends on it receiving funds from its subsidiaries. PRC laws and regulations permit payments of dividends by the Company’s PRC subsidiaries only out of the subsidiary’s retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. The results of operations reflected in the financial statements prepared in accordance with US GAAP differ from those reflected in the statutory financial statements of the Company’s PRC subsidiaries.
In
accordance with the PRC Regulations on Enterprises with Foreign Investment and their articles of association, a foreign-invested enterprise
(“FIE”) established in the PRC is required to provide statutory reserves, which are appropriated from net profit as reported
in the FIE’s PRC statutory accounts. An FIE is required to allocate at least
Additionally,
in accordance with the Company Laws of the PRC, a domestic enterprise is required to provide surplus reserve at least 10% of its annual
after-tax profit until such reserve has reached
As
a result of these PRC laws and regulations that require annual appropriations of
In
addition, according to Administrative Measures for the Collection and Utilization of Enterprise Work Safety Funds issued by the PRC Ministry
of Finance and the State Administration of Work Safety, for the companies with dangerous goods production or storage, the company is
required to make a special reserve for the use of enhancing and improving its safe production conditions. Under PRC GAAP, the reserve
is recorded as selling expense; however, under US GAAP, since the expense has not been incurred and the Company will record cost of sales
for safety related expenses when it is actually happened or incurred, this special reserve was recorded as an appropriation of its after-tax
income. The reserve is calculated at a rate of
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NOTE 18 – SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the date the financial statements were issued. The Company has determined that there are no other such events that disclosure or recognition in the financial statements, except as noted below.
Notes Payable
Effective
July 1, 2026, Clean Energy Technologies, Inc. (the “Company”) entered into a securities purchase agreement (the “SPA”)
with Coventry Enterprises LLC, a Delaware limited liability company (“Coventry”), pursuant to which the Company sold,
and Coventry purchased, a convertible promissory note in the principal amount of $
Effective
July 15, 2026, Clean Energy Technologies, Inc. (the “Company”) entered into a securities purchase agreement (the
“SPA”) with Du Jinxian (the “Investor”), pursuant to which the Company sold, and the Investor
purchased, a convertible promissory note in the principal amount of $
Effective
July 29, 2026, Clean Energy Technologies, Inc. (the “Company”) entered into a securities purchase agreement (the “1800
SPA”) with 1800 Diagonal Lending LLC, a Virginia limited liability company (“1800 Diagonal”), pursuant to
which the Company sold, and 1800 Diagonal purchased, a convertible promissory note in the principal amount of $
The
Transaction was funded by 1800 Diagonal and closed on July 29, 2026, and pursuant to the 1800 SPA, 1800 Diagonal’s legal expenses
of $
The 1800 SPA includes customary
representations, warranties and covenants by the Company and customary closing conditions. The 1800 SPA requires that the proceeds from
the Transaction be used for general working capital purposes. The 1800 Note matures on
Effective August 07, 2026, Clean Energy Technologies,
Inc. (the “Company”) entered into a securities purchase agreement (the “SPA”) with Pacific Pier
Capital II, LP, a Delaware limited partnership (“Pacific Pier”), pursuant to which the Company sold, and Pacific Pier
purchased, a convertible promissory note in the principal amount of $
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION
FORWARD-LOOKING STATEMENTS
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements using the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.
Description of the Company
We design, produce and market clean energy products and integrated solutions focused on energy efficiency and renewable energy. Our aim is to become a leading provider of renewable and energy efficiency products and solutions by helping commercial companies and municipalities reduce energy waste and emissions, lower energy costs and generate incremental revenue by providing electricity, renewable natural gas and biochar to the grid.
Our principal executive offices are located at 1340 Reynolds Avenue, Irvine, CA 92614. Our telephone number is (949) 273-4990. Our common stock is listed on the NASDAQ Markets under the symbol “CETY.”
Our internet website address is www.cetyinc.com the information contained on our websites are not incorporated by reference into this document, and you should not consider any information contained on, or that can be accessed through, our website as part of this document.
Segment Information
Our four segments for accounting purposes are:
Clean Energy HRS & CETY Europe – Our Waste Heat Recovery Solutions, converting thermal energy to zero emission electricity.
CETY Renewables Waste to Energy Solutions – Providing Waste to Energy technologies and solutions.
Engineering and Manufacturing Business – providing customers with comprehensive design, manufacturing, and project management solutions.
CETY HK – The parent company of our Natural Gas trading operations in China. Prior to the first quarter of 2022 the Company had three reportable segments but added the CETY HK segment to reflect its recent new businesses in China.
We specialize in renewable energy & energy efficiency systems design, manufacturing and project implementation. We were incorporated in California in July 1995 under the name Probe Manufacturing Industries, Inc. We redomiciled to Nevada in April 2005 under the name Probe Manufacturing, Inc. We provided engineering and manufacturing electronics services to original equipment manufacturers (OEMs) of clean energy, industrial, automotive, semiconductor, medical, communication, military, and high technology products.
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With the vision to combat climate change and creating a better, cleaner and environmentally sustainable future, we formed Clean Energy HRS, LLC a wholly owned subsidiary of Clean Energy Technologies, Inc. and acquired the assets of Heat Recovery Solutions from General Electric International on September 11, 2015. In November 2015, we changed our name to Clean Energy Technologies, Inc. We have 24 full-time employees.
Clean Energy Technologies, Inc. established a new company, CETY Europe, SRL (CETY Europe) as a wholly owned subsidiary. CETY Europe is a Sales and Service Center in Silea (Treviso), Italy established in 2017. The service center became operational in November 2018. Their offices are located at Alzaia Sul Sile, 26D, 31057 Silea (TV) and they have 1 full time employee.
Clean Energy Technologies, Inc. established a wholly owned subsidiary called CETY Capital, a financing arm of CETY to fund captive renewable energy projects producing low carbon energy. CETY Capital will add flexibility to the capacity CETY offers its customers and fund projects utilizing its products and clean energy solutions.
CETY Capital retains 49% ownership interest in Vermont Renewable Gas LLC established to develop a biomass plant in Vermont utilizing CETY’s High Temperature Ablative Pyrolysis system.
Clean Energy Technologies (H.K.) Limited., a wholly owned subsidiary of Clean Energy Technologies Inc. acquired 100% ownership of Leading Wave Limited a liquid natural gas trading company in China.
Business Overview
General
The Company’s business and operating results are directly affected by changes in overall customer demand, operational costs and performance and leverage of our fixed cost and selling, general and administrative (“SG&A”) infrastructure.
Product sales fluctuate in response to several factors including many that are beyond the Company’s control, such as general economic conditions, interest rates, government regulations, consumer spending, labor availability, and our customers’ production rates and inventory levels. Product sales consist of demand from customers in many different markets with different levels of cyclicality and seasonality.
Operating performance is dependent on the Company’s ability to manage changes in input costs for items such as raw materials, labor, and overhead operating costs. Performance is also affected by manufacturing efficiencies, including items such as on time delivery, quality, scrap, and productivity. Market factors of supply and demand can impact operating costs.
Who We Are
We develop renewable energy products and solutions and establish partnerships in renewable energy that make environmental and economic sense. Our mission is to be a segment leader in the Zero Emission Revolution by offering recyclable energy solutions, clean energy fuels and alternative electric power for small and mid-sized projects in North America, Europe, and Asia. We target sustainable energy solutions that are profitable for us, profitable for our customers and represent the future of global energy production.
Our principal businesses
Waste Heat Recovery Solutions – we recycle wasted heat produced in manufacturing, waste to energy and power generation facilities using our patented Clean CycleTM generator to create electricity which can be recycled or sold to the grid.
Waste to Energy Solutions - we convert waste products created in manufacturing, agriculture, wastewater treatment plants and other industries to electricity, renewable natural gas (“RNG”), hydrogen and biochar which are sold or used by our customers.
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Engineering, Consulting and Project Management Solutions – we bring a wealth of experience in developing clean energy projects for municipal and industrial customers and Engineering, Procurement and Construction (EPC) companies so they can identify, design and incorporate clean energy solutions in their projects.
CETY HK
Clean Energy Technologies (H.K.) Limited (“CETY HK”) consists of two business ventures in mainland China:(i) our natural gas (“NG”) trading operations sourcing and suppling NG to industries and municipalities. Natural Gas is principally used for heavy truck refueling stations and urban or industrial users. We purchase large quantities of NG from large wholesale NG depots at fixed prices which are prepaid for in advance at a discount to the market. We sell the NG to our customers at fixed prices or prevailing daily spot prices for the duration of the contracts.
Business and Segment Information
We design, produce and market clean energy products and integrated solutions focused on energy efficiency and renewable energy. Our aim is to become a leading provider of renewable and energy efficiency products and solutions by helping commercial companies and municipalities reduce energy waste and emissions, lower energy costs and generate incremental revenue by providing electricity, renewable natural gas and biochar to the grid.
Summary of Operating Results the six months ended June 30, 2026 Compared to the same period in June 30, 2025 (Restated)
Going Concern
The financial statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets and liquidation of liabilities in the normal course of business. The Company had a total stockholder’s equity of $5,990,022 and a working capital deficit of $37,355 as of June 30, 2026, The company also had an accumulated deficit of $37,035,080 as of June 30, 2026 and used $1,664,648 in net cash from operating activities for the six months ended June 30, 2026. 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.
For the six months ended June 30, 2026, total revenue was $1,155,641, compared to $678,215 for the same period in 2025. The increase was primarily attributable to higher revenue generated by our natural gas business in China.
For the six months ended June 30, 2026, our gross profit was $3,689, compared to $635,535 for the same period in 2025. The decrease in gross profit and gross margin was primarily attributable to a shift in our revenue mix, with a greater proportion of revenue generated by our lower-margin natural gas business, as well as the absence of higher-margin clean energy system sales during the period.
For the six months ended June 30, 2026, our operating expenses were $1,479,117, compared to $1,766,687 for the same period in 2025. The decrease in operating expenses was primarily attributable to lower salary and related personnel costs as fewer resources were required for our Vermont Renewable Gas (“VRG”) projects, which are progressing into the final phase of the permitting process.
For the six months ended June 30, 2026, we recorded a net loss of $ 1,735,079, compared to $1,699,754 for the same period in 2025. The net loss remained relatively steady year-over-year, reflecting reduced salary expenses, while professional fees increased from $333,318 to $449,420.
For the quarter ended June 30, 2026, stockholders’ equity decreased to $5,990,022 compared to $6,246,597 as of December 31, 2025, primarily due to higher interest and financing fees.
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CETY has successfully repositioned itself as a diversified clean energy solutions provider by establishing four distinct business segments designed to support scalable, stable, and diversified revenue growth. These segments include:
| ● | Clean Energy HRS (Heat Recovery Systems) | |
| ● | Waste-to-Energy (via Pyrolysis Technology) | |
| ● | Engineering, Procurement, and Consulting (EPC) | |
| ● | CETY HK (Natural Gas Trading and Acquisitions) |
Revenue for the first and second quarter was primarily driven by the CETY HK natural gas trading business. Looking ahead, the company anticipates stronger revenue contributions from its Waste-to-Energy, Heat Recovery, and EPC segments with higher margins.
CETY’s pilot Waste-to-Energy facility in Vermont, which integrates all of the company’s proprietary technologies and operational expertise into a unified, turnkey solution, is currently pending final approval from the Vermont Public Utility Commission.
Meanwhile, demand for Heat Recovery solutions is accelerating across both the U.S. and Europe. In parallel, CETY is actively scaling its Engineering and project management operations to deliver comprehensive self-generation energy solutions on a global scale.
Management believes this 4-segment strategy has created many operational synergies and cross-selling opportunities across different markets. The main macro factor benefiting us is the global commitment to push renewable energy to the forefront from governments across the world. Another catalyst that will potentially help our Company, is a continuously improving our global supply chain and lowering our cost.
CETY expects to and will continue to execute its corporate strategy to build sustained and profitable growth by providing end to end fully integrated solutions and technologies, expand our global sales and marketing, production, research & development, as well as search for synergistic acquisition opportunities.
See note 2 to the notes to the financial statements for a discussion on critical accounting policies
RELATED PARTY TRANSACTIONS
See note 13 to the notes to the financial statements for a discussion on related party transaction
Results of the Six Ended June 30, 2026, Compared to the six ended June 30, 2025 (Restated)
Net Sales
For the six months ended June 30, 2026, our total revenue was $1,155,641 compared to $678,215 for the same period in 2025. The higher revenue was contributed to primarily due to our China natural gas business.
Segment breakdown
For the six months ended June 30, 2026, our revenue from the Heat Recovery Solutions (HRS) segment was $16,977, compared to $339,488 for the same period in 2025. The decrease was primarily driven by no product sales from our HRS business unit. We continue to work diligently on current requirements and engineering and design, which will enable us to execute contractual agreements and close additional opportunities.
The sales cycle for these projects tends to be longer due to cost considerations and the integration complexity of our technology. We are also engaging with financial institutions to support project financing, as customers increasingly adopt Independent Power Producer (IPP) models. Additionally, general economic uncertainty and evolving federal clean-energy legislation, and investment tax credits have influenced the timing of certain project commitments.
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For the six months ended June 30, 2026, revenue from the Waste to Energy segment was $0, compared to $331,597 for the same period in 2025. The segment generated no revenue during the period as the related projects remain pending final review by the Vermont Public Utility Commission and issuance of the Certificate of Public Good. Revenue-generating construction activities are expected to commence following receipt of the required regulatory approvals.
For the six months ended June 30, 2026, CETY reported nil revenue from its Manufacturing and Engineering segments, compared to nil for the same period in 2025. 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.
For the six months ended June 30, 2026, revenue from our Natural Gas (NG) business was $1,138,664 an increase from $7,130 for the same period in 2025. The increase primarily reflects higher revenue from our China natural gas business, despite the impact of macroeconomic conditions and our strategic decision to reduce our focus on lower-margin business activities.
Gross Profit
For the six months ended June 30, 2026, gross profit was $3,689, compared to $635,535 for the same period in 2025. The decrease was primarily attributable to the absence of sales of our higher-margin clean energy systems during the period, combined with a greater proportion of revenue generated by our natural gas business in China, which operates at lower gross margins.
Segment breakdown
For the six months ended June 30, 2026, our gross profit from Engineering and Manufacturing amounted to $nil, compared to $ nil for the same period in 2025. This segment is a recent addition to CETY’s portfolio, currently serving as a support for our ongoing internal projects. Nevertheless, it is anticipated to expand as CETY shifts its focus towards providing comprehensive end-to-end power generation and integrated solutions.
For the six months ended June 30, 2026, we had a negative gross profit from our Heat Recovery Solutions (“HRS”) segment of $19, 620 compared to $303,699 for the same period in 2025. The decrease in gross profit was primarily attributable to the absence of product sales during the period, combined with higher freight costs.
For the six months ended June 30, 2026, our gross profit from the CETY Waste to Energy segment was $nil, compared to $331,597 for the same period in 2025. The Company is working through the Certificate of Public Good (CPG) process and approach the final stages of permitting.
For the six months ended June 30, 2026, our gross profit from our Natural Gas segment, was $23,308, up from $239 for the same period in 2025. This increase was primarily due to increase business activity in China.
Selling, General and Administrative (SG&A) Expenses
For the six months ended June 30, 2026, our selling, general and administrative (SG&A) expenses totaled $1,479,117 compared to $1,766,687 for the same period in 2025. The decrease was primarily due to lower costs associated with a consulting agreement related to IR activities and Nasdaq subscription.
Salaries Expense
For the six months ended June 30, 2026, our salary expenses totaled $571,175 compared to $873,268 for the same period in 2025. The decrease was primarily due to reduced activity within our CETY Renewables business, while salary levels across other segments remained relatively stable.
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Travel Expense
For the six months ended June 30, 2026, our travel expenses were $78,157, compared to $79,737 for the same period in 2025. This slight decrease reflects stable activity levels within our service and marketing operations.
Professional fees legal and accounting
For the six months ended June 30, 2026, our professional fees totaled $449,420 compared to $333,319 for the same period in 2025. The increase was primarily due to costs associated with a audit fees.
Facility Lease and Maintenance Expense
For the six months ended June 30, 2026, our facility lease and maintenance expenses totaled $130,181 compared to $133,399 for the same period in 2025. This slight decrease reflects normal fluctuations, with no significant changes in underlying operations.
Depreciation and Amortization Expense
For the six months ended June 30, 2026, our depreciation and amortization expense was $5,938, compared to $5,938 for the same period in 2025. There were no significant changes, as the majority of our equipment has already been fully depreciated.
Change in Derivative Liability
For the six months ended June 30, 2026 and 2025, we recorded gains from changes in fair value recognized in earnings of $283,640 and $112,672, respectively. The increase 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 815.
Change in FV of warrant liability
For the six months ended June 30, 2026 and 2025, we had $5,828 and $13,893 gain on warrant liability related to Equity Line of Credit Agreement entered December 5, 2024.
Interest Income
For the six months ended June 30, 2026, interest income from Florya associated with contract assets totaled $31,120 compared to $28,418 for the same period in 2025 (Restated).
Interest income included in other income consists primarily of interest earned on the Company’s convertible note receivable. During the six months ended June 30, 2026, the Company recognized $138,082 of interest income related to the accrual of interest under the terms of the convertible note agreement.
Other Income
Other income includes a gain of $406,197 resulting from the remeasurement of the Company’s investment in the Filled Converge convertible note to its estimated fair value of $1,910,489.
Interest and Finance Fees
For the six months ended June 30, 2026, interest and finance fees totaled $1,177,937, compared to $865,734 for the same period in 2025. 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 and monetizing HRS projects.
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Net Loss
For the six months ended June 30, 2026, our net loss was $1,735,079, compared to a net loss of $1,699,803 for the same period in 2025 (Restated). The increase in net loss was primarily attributable to the absence of higher-margin sales from our Heat Recovery Solutions (“HRS”) segment, a shift in revenue mix toward our lower-margin China natural gas business, changes in Fv convertible, and lower gross margins during the period, and interest and financing fee variations. Although operating expenses declined due to reduced personnel costs associated with our Vermont Renewable Gas (“VRG”) projects as they progressed through the final permitting phase, these savings were not sufficient to offset the decline in gross profit.
Liquidity and Capital Resources
Clean Energy Technologies, Inc.
Condensed Consolidated Statements of Cash Flows
for the six months ended June 30,
(unaudited)
| 2026 | 2025 | |||||||
| Net cash (used in) operating activities | $ | (1,664,648 |
) | $ | (1,540,526 | ) | ||
| Net cash (used in) investing activities | (702,769 |
) | - | |||||
| Net cash provided by financing activities | 1,783,373 |
5,903,311 | ||||||
| Foreign Currency Transaction | 1,319 |
(15,999 | ) | |||||
| Net decrease in cash and cash equivalents | $ | (582,725 |
) | $ | 4,346,786 | |||
Net cash used in operating activities was $(1,664,648) for the six months ended June 30, 2026, compared to $(1,540,526) for the same period in 2025. The increase in cash used in operating activities was primarily attributable to the Company’s operating loss and interest receivable, and other assets. These uses of cash were partially offset by non-cash items, including amortization of debt discount and the fair value gain recognized on the Company’s note receivable, as well as increases in accounts payable, accrued interest, customer deposits, and accrued expenses.
Net cash used in investing activities was $(702,769) for the six months ended June 30, 2026, compared to $nil for the same period in 2025. The increase in cash used in investing activities was primarily attributable to the Company’s $700,000 investment in a note receivable and a $2,768 investment in a long-term investment during the current period.
Net cash provided by financing activities was $1,783,373 for the six months ended June 30, 2026, compared to $5,903,311 for the same period in 2025. The decrease was primarily attributable to lower net proceeds from notes payable and lines of credit during the period.
Capital Requirements for Long-Term Obligations
None.
Item 3. Quantitative and Qualitative Disclosure about Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the six months ended June 30, 2026, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial officer have concluded that during the period covered by this report, our disclosure controls and procedures were not effective as of June 30, 2026.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the six months ended June 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, the Company is involved in litigation incidental to the conduct of its business. The Company is presently not involved in any legal proceedings which in the opinion of management are likely to have a material adverse effect on the Company’s consolidated financial position or results of operations.
Item 2. Unregistered Sales of Equity Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
On or about July 1, 2025, Company subsidiary Herbert YF Global Holding Limited entered into a Consulting Agreement (the “Linkage Consulting Agreement”) with Linkage International Limited (the “Consultant”), a Hong Kong company and one of the Company’s investors from the Company’s May 6, 2025, private placement, pursuant to which the Company had sold in the aggregate 715,447 shares of Company common stock at a price of $6.15 per share (on a split-adjusted basis), for aggregate gross proceeds of $4,400,000. Pursuant to the Consulting Agreement, the Consultant would provide services in connection with the potential acquisition of Ortus Climate Mitigation LLC’s Italian operations (the “Acquisition Target”), and the Company would pay the Consultant HKD 5,000,000 as a non-refundable consulting fee, and HKD 25,000,000 as a refundable deposit for the acquisition of the Acquisition Target. The Consultant has rendered such acquisition services to the Company, on July 8, 2025, paid the HKD 5,000,000 consulting fee to the Consultant ($640,902.52), and between July 10, 2025 and August 8, 2025, paid HKD 25,000,000 ($3,204,513) as a refundable deposit towards the acquisition of the Acquisition Target. On or about November 18, 2025, the Company and the Consultant entered into an amendment to the Consulting Agreement providing that if the deposit is not refunded as agreed, the Consultant would ensure that 715,447 shares of Company common stock would be returned to the Company for cancellation.
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Item 6. Exhibits
The following exhibits are filed or furnished as a part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
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| 42 |
| 43 |
| 44 |
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| 31.01 | Certification of Principal Executive Officer Pursuant to Rule 13a-14 | Filed herewith. | |
| 31.02 | Certification of Principal Financial Officer Pursuant to Rule 13a-14 | Filed herewith. | |
| 32.01 | Certification of CEO Pursuant to Section 906 of the Sarbanes-Oxley Act | Furnished herewith. | |
| 32.02 | Certification of CFO Pursuant to Section 906 of the Sarbanes-Oxley Act | Furnished herewith. | |
| 101.INS | Inline XBRL Instance Document | Furnished herewith. | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | Furnished herewith. | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | Furnished herewith. | |
| 101.LAB | Inline XBRL Taxonomy Extension Labels Linkbase Document | Furnished herewith. | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | Furnished herewith. | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | Furnished herewith. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Clean Energy Technologies, Inc. | ||
| REGISTRANT | ||
| /s/ Kambiz Mahdi | ||
| By: | Kambiz Mahdi | |
| Chief Executive Officer and Director | ||
| Date: | August 19, 2026 | |
| /s/ Calvin Pang | ||
| By: | Calvin Pang | |
| Chief Financial Officer and Director | ||
| Date: | August 19, 2026 | |
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Exhibit 10.87
CONSULTING AGREEMENT
This CONSULTING AGREEMENT (this “Agreement”) is made and entered into as of 1 July 2025 by and between Linkage International Limited, a Hong Kong registered company (The “Consultant”), and Herbert YF Global Holding Limited, a Hong Kong registered company (“The Company”).
Upon the following terms and conditions of this Agreement, the Company desires to retain the Consultant to perform the following:
| 1. | CONSULTING SERVICES. Commencing on 1 July 2025 (the “Effective Date”) until 1 July 2026 (the “Consulting Period”), the Consultant will provide exclusive access to the founders, shareholders, and management team of Ortus Climate Mitigation LLC (OCM) to the Company in relation to the potential investment and or acquisition of OCM, particularly OCM’s Italian operations. Additional services will include a due diligence report on OCM’s Italian operations, introduction to strategic and financing partners such as EPC companies and investors, advice on deal structuring, and other services as mutually agreed to between the Consultant and the Company. The expected transaction value is EUR 60 million. |
| 2. | COMPENSATION. As compensation for the performance of the Services, the Company will pay the Consultant a fixed amount of HKD 5,000,000, which is approximately 1% of the expected transaction value. This amount is non-refundable as the compensation covers costs on travel and due diligence of 96 project sites. |
| 3. | DEPOSIT. In order to hold exclusive access with OCM during the due diligence and negotiation process, The Company shall place a deposit in the amount of HKD 25,000,000, which is approximately 4.5% of the expected transaction value. This amount is fully refundable if The Company does not pursue the investment or acquisition transaction with OCM. |
| 4. | CONFIDENTIALITY. The existence and provisions of this Agreement will be held in strictest confidence by the Company and the Consultant and will not be publicized or disclosed in any manner whatsoever; provided, however, that each party may disclose this Agreement in confidence to its attorneys, accountants, auditors, tax preparers, and financial advisors and insofar as such disclosure may be necessary to enforce its terms or as otherwise required by law. |
| 5. | NO EXPLOITATION OF COMPANY’S CONFIDENTIAL INFORMATION. The Company retains the sole discretion to request for the destruction or return of the Confidential Information from The Company and upon such request. The Consultant will, subject to the requirements of law and regulations and to the extent practicable, promptly either destroy or redeliver to The Company the Confidential Information provided in relation to the Purpose and all copies thereof, without retaining any paper copy thereof or any electronic media containing such Confidential Information. Notwithstanding the foregoing, the Company’s legal department and the legal departments of the Company’s Representatives may maintain a copy of the Confidential Information in its restricted access files for actual or anticipated litigation, regulatory compliance or corporate record keeping purposes in accordance with applicable document retention policies. |
| 6. | NO EXPLOITATION OF CONSULTANTS’ CONFIDENTIAL INFORMATION. The Company agrees that it may make only such use of the Confidential Information from, or pertaining to, potential investors referred from The Consultant, either directly or indirectly, as is contemplated by this Agreement or as may otherwise be specifically authorized in writing by the Consultant. The Company agrees to use the Consultant as the exclusive intermediary for the Purpose. |
| 7. | LIMITATION OF LIABILITY. In no event shall either party be liable for any indirect, incidental, punitive, special or consequential damages, including loss of profits, revenue, data, or use, incurred by either party or any third party, whether in an action in contract or tort, even if the other party or any other person has been advised of the possibility of such damages. In no event shall either party’s liability exceed the amount due or payable under this agreement. |
| 8. | GOVERNING LAW. This Agreement shall be governed by and construed under the laws of the Hong Kong as applied to agreements among residents of Hong Kong entered into and to be performed entirely within Hong Kong. |
| 9. | SEVERABILITY. In the event any provision of this Agreement is held to be invalid or unenforceable, the remaining provisions of this Agreement will remain in full force and effect. |
| 10. | AMENDMENT AND WAIVER. This Agreement may be amended and the observance of any provision may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the mutual written consent of The Company and The Consultant. |
| 11. | BINDING AGREEMENT. This Agreement constitutes a valid and binding agreement of the parties hereto, enforceable against each party in accordance with Hong Kong law. Neither party may assign any of its rights under this Agreement without the prior written consent of the other party. |
| 12. | ENTIRE AGREEMENT. This Agreement constitutes the complete agreement between the parties and supersedes all previous agreements or representations, whether written or oral, with respect to the subject matter described herein. This Agreement may be executed in two (2) signed counterparts, each of which shall constitute an original, but all of which taken together shall constitute one and the same instrument. |
SIGNED by The Company
| Name: | Calvin Pang | |
| Title: | Director | |
| /s/ Calvin Pang | ||
SIGNED by The Consultant
| Name: | Lu Mo | |
| Title: | Director | |
| /s/ Lu Mo | ||
[END OF AGREEMENT]
Exhibit 10.88
AMENDMENT
NO. 1
TO
CONSULTING AGREEMENT
This AMENDMENT NO. 1 (this “Amendment”) to that certain Consulting Agreement dated on or about July 1, 2025 (the “Consulting Agreement”), entered into by and between Herbert YF Global Holding Limited (the “Company”) and Linkage International Limited (the “Consultant”), is entered into effective as November 17, 2025, by and between the Company and the Consultant.
RECITALS:
WHEREAS, pursuant to the Consulting Agreement, the Company was required to pay a refundable deposit in the amount of HKD 25,000,000 as a refundable deposit for the acquisition of Ortus Climate Mitigation LLC’s Italian operations.
WHEREAS, the Company is a subsidiary of Clean Energy Technologies, Inc., a Nevada corporation (“CETY”), and the Consultant and other Hong Kong investors purchased 715,447 shares of CETY common stock on or about May 6, 2025 (the “CETY Shares”).
WHEREAS, the Company and the Consultant now desire to amend the Consulting Agreement to agree that the refundability of the deposit shall be secured by the CETY Shares on the terms set forth herein.
WHEREAS, capitalized terms used in this Amendment but not otherwise defined herein shall have the meanings ascribed to such terms in the Consulting Agreement.
AGREEMENT:
NOW, THEREFORE, for good and valuable consideration, the recitals set forth above, and the covenants set forth herein, the parties agree that the Subscription Agreement is hereby amended as follows:
1. Amendment of Consulting Agreement. Paragraph 3 of the Consulting Agreement is amended as set forth below (with the language in italics added):
3. DEPOSIT. In order to hold exclusive access with OCM during the due diligence and negotiation process, The Company shall place a deposit in the amount of HKD 25,000,000, which is approximately 4.5% of the expected transaction value. This amount is fully refundable if The Company does not pursue the investment or acquisition transaction with OCM. Such deposit refundability shall be secured by 715,447 shares of common stock of the Company’s parent corporation, Clean Energy Technologies, Inc. (the “Shares”), and if the deposit is not refunded in the event the Company does not pursue the transaction with OCM, the Consultant shall ensure that the Shares are immediately returned to Clean Energy Technologies, Inc. for cancellation.
2. Continued Validity. Except as otherwise expressly stated in this Amendment, all other terms and provisions of the Consulting Agreement shall remain in full force and effect, without amendment or modification.
3. Entire Agreement. This Amendment, together with the Consulting Agreement and any other documents referenced therein, represents the entire agreement of the parties to the Amendment and shall supersede any and all previous contracts, arrangements or understandings between the parties with respect to the subject matter herein.
4. Governing Law. This Amendment shall be governed by and construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Amendment shall be governed by, the internal laws of Hong Kong, without giving effect to any choice of law or conflict of law provision or rule that would cause the application of the laws of any jurisdictions other than Hong Kong.
5. Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Amendment shall inure to the benefit of and be binding upon the respective successors and assigns of the parties.
6. Counterparts. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via electronic mail or other transmission method, and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
[The next page is the signature page]
| 1 |
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written.
COMPANY:
| Herbert YF Global Holding Limited | ||
| By: | /s/ Calvin Pang | |
| Calvin Pang, Director | ||
CONSULTANT:
| Linkage International Limited | ||
| By: | /s/ Lu Mo | |
| Lu Mo, Director | ||
| 2 |
Exhibit 21.1
List of Subsidiaries
Clean Energy HRS LLC
CETY Europe, SRL
CETY Capital LLC
Clean Energy Technologies (H.K.) Limited
Hainan Clean Energy Technologies, Inc.
Meishan Clean Energy Technologies, Inc.
Leading Wave Limited
Element Capital International Limited
Sichuan Hunya Jieneng New Energy Co. LTD
Jiangsu Huanya Jieneng New Energy Co., Ltd.
Herbert YF Global Holding Limited
Exhibit 31.01
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Kambiz Mahdi, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Clean Energy Technologies, Inc. for the quarterly period ended June 30, 2026;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: August 19, 2026 | By: | /s/ KAMBIZ MAHDI |
| Kambiz Mahdi, | ||
| Chief Executive Officer |
Exhibit 31.02
CERTIFICATION OF CHIEF FINANCIAL OFFICER
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Calvin Pang, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Clean Energy Technologies, Inc. for quarterly period ended June 30, 2026;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: August 19, 2026 | By: | /s/ Calvin Pang |
| Calvin Pang, | ||
| Chief Financial Officer |
Exhibit 32.01
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Clean Energy Technologies, Inc. (the “Company”) hereby certifies, to his knowledge, that:
(i) the accompanying Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 30, 2026 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: August 19, 2026 | By: | /s/ Kambiz Mahdi |
| Kambiz Mahdi | ||
| Chief Executive Officer |
Exhibit 32.02
CERTIFICATION OF CHIEF FINANCIAL OFFICER
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Clean Energy Technologies, Inc. (the “Company”) hereby certifies, to his knowledge, that:
(i) the accompanying Quarterly Report on Form 10-Q of the Company for the six months ended June 30, 2026 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: August 19, 2026 | By: | /s/ Calvin Pang |
| Calvin Pang | ||
| Chief Financial Officer |