Clean Energy Technologies, Inc 10-Q for FY2022 Q1
Clean Energy Technologies, Inc. (CETY)
About this 10-Q
Clean Energy Technologies, Inc filed this 10-Q on May 16, 2022, covering the quarter ended March 31, 2022 (FY2022 Q1).
Headline figures
Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $775.27K
- up 473.1% from $135.27K a year earlier
- Net loss
- $112.59K
- compared with net income of $1.07M a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT DATED March 31, 2022 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the three months 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)
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 and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted 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 and post such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting 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 May 15, 2022, there were shares of the Registrant’s $0.001 par value common stock issued and outstanding.
Securities registered pursuant to Section 12(b) of the Act
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| OTCQB |
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 | 30 |
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 34 |
| ITEM 4. | CONTROLS AND PROCEDURES | 34 |
| PART II. OTHER INFORMATION | ||
| ITEM 1. | LEGAL PROCEEDINGS | 34 |
| ITEM 1A. | RISK FACTORS | 34 |
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 34 |
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES | 35 |
| ITEM 4. | MINE SAFETY DISCLOSURES | 35 |
| ITEM 5. | OTHER INFORMATION | 35 |
| ITEM 6. | EXHIBITS | 35 |
| 2 |
Part I – Financial Information
Item 1. Financial Statements
Clean Energy Technologies, Inc.
Consolidated Financial Statements
(Expressed in US dollars)
March 31, 2022 (unaudited)
| 3 |
Clean Energy Technologies, Inc.
Consolidated Balance Sheets
| Unaudited | Audited | |||||||
| March 31, 2022 | December 31, 2021 | |||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable - net | ||||||||
| Lease receivable asset | ||||||||
| Prepaid | ||||||||
| Inventory | ||||||||
| Total Current Assets | ||||||||
| Property and Equipment - Net | ||||||||
| Goodwill | ||||||||
| LWL Intangibles | ||||||||
| Convertible Note Receivable | ||||||||
| Long-term financing receivables - net | ||||||||
| License | ||||||||
| Patents | ||||||||
| Right of use asset - long term | ||||||||
| Other Assets | ||||||||
| Total Non Current assets | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ (Deficit) | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued Expenses | ||||||||
| Customer Deposits | ||||||||
| Warranty Liability | ||||||||
| Deferred Revenue | ||||||||
| Derivative Liability | ||||||||
| Facility Lease Liability - current | ||||||||
| Line of Credit | ||||||||
| Notes payable - GE | ||||||||
| Convertible Notes Payable
(net of discount of $ | ||||||||
| Related Party Notes Payable | ||||||||
| Total Current Liabilities | ||||||||
| Long-Term Debt: | ||||||||
| Related Party Notes Payable
(net of discount of $ | ||||||||
| Facility Lease Liability - long term | ||||||||
| Net Long-Term Debt | ||||||||
| Total Liabilities | ||||||||
| Commitments and contingencies | $ | - | ||||||
| Stockholders’ (Deficit) | ||||||||
| Common stock, $ par value; shares authorized; and shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Subscription Receivables | ( | ) | - | |||||
| Accumulated Other Comprehensible Income | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ (Deficit) | ( | ) | ( | ) | ||||
| Non-controlling interest | ( | ) | ( | ) | ||||
| Total Stockholders’ (Deficit) | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | $ | ||||||
The accompanying footnotes are an integral part of these consolidated financial statements
| 4 |
Clean Energy Technologies, Inc.
Consolidated Statements of Operations
for the three months ended March 31 (Unaudited)
| 2022 | 2021 | |||||||
| Sales | $ | $ | ||||||
| Cost of Goods Sold | ||||||||
| Gross Profit | ||||||||
| General and Administrative | ||||||||
| General and Administrative expense | ||||||||
| Salaries | ||||||||
| Travel | ||||||||
| Professional Fees Legal & Accounting | ||||||||
| Facility lease and Maintenance | ||||||||
| Consulting Engineering | - | |||||||
| Depreciation and Amortization | ||||||||
| Total Expenses | ||||||||
| Net Profit / (Loss) From Operations | ( | ) | ||||||
| Change in derivative liability | ||||||||
| Gain / (Loss) on debt settlement and write down | - | - | ||||||
| Other Income | ( | ) | ||||||
| Interest and Financing fees | ( | ) | ( | ) | ||||
| Net Profit / (Loss) Before Income Taxes | ( | ) | ||||||
| Income Tax Expense | ( | ) | - | |||||
| Net Profit / (Loss) | ( | ) | ||||||
| Non-controlling interest | - | - | ||||||
| Net Profit / (Loss) attributable to Clean Energy Technologies, Inc. | ( | ) | ||||||
| Other Comprehensive Item | ||||||||
| Foreign Currency Translation Gain | - | |||||||
| Total Comprehensible Income / (Loss) | $ | ( | ) | $ | ||||
| Per Share Information: | ||||||||
| Basic and diluted weighted average number | ||||||||
| of common shares outstanding | 952,293,421 | 853,322,779 | ||||||
| Net Profit / (Loss) per common share basic and diluted | $ | ( | ) | $ | ||||
The accompanying footnotes are an integral part of these Consolidated financial statements
| 5 |
Clean Energy Technologies, Inc.
Consolidated Statements of Stockholders Deficit
March 31, 2021 & 2022 (Unaudited)
| Description | Shares | Amount | Shares | Amount | Amount | Capital | Deficit | Totals | |||||||||||||||||||||||||
| Common
Stock .001 Par | Preferred Stock | Common
Stock to be issued | Additional Paid in | Accumulated | Stock holders’Deficit | ||||||||||||||||||||||||||||
| Description | Shares | Amount | Shares | Amount | Amount | Capital | Deficit | Totals | |||||||||||||||||||||||||
| December 31, 2020 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
| Shares issued for warrant conversion | - | - | - | ( | ) | - | ( | ) | |||||||||||||||||||||||||
| Shares issued for Reg A offering | |||||||||||||||||||||||||||||||||
| Shares issued for acccrued dividend | - | - | - | - | |||||||||||||||||||||||||||||
| Conversion of Preferred Series D | ( | ) | ( | ) | - | - | |||||||||||||||||||||||||||
| Inducement shares | ( | ) | - | ||||||||||||||||||||||||||||||
| Shares issued for cash | - | - | ( | ) | |||||||||||||||||||||||||||||
| - | |||||||||||||||||||||||||||||||||
| Net Loss | |||||||||||||||||||||||||||||||||
| March 31, 2021 | $ | $ | $ | $ | $ | ( | ) | - | $ | ( | ) | ||||||||||||||||||||||
| Description | Shares | Amount | Shares | Amount | Amount | Capital | Interest | Income | Deficit | interest | Totals | |||||||||||||||||||||||||||||||||
| Common
Stock .001 Par | Preferred Stock | Common
Stock to be issued | Additional Paid in | Subscription | Accumulated Comprehensive | Accumulated | Non Controlling | Stock holders’Deficit | ||||||||||||||||||||||||||||||||||||
| Description | Shares | Amount | Shares | Amount | Amount | Capital | Interest | Income | Deficit | interest | Totals | |||||||||||||||||||||||||||||||||
| December 31, 2021 | - | - | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Beginning balance | - | - | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Shares issued for Reg A offering | ||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for S1 | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| - | ||||||||||||||||||||||||||||||||||||||||||||
| Subscription Receivable | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Accumulated Comprehensive | ||||||||||||||||||||||||||||||||||||||||||||
| Net Loss | ( | ) | - | ( | ) | |||||||||||||||||||||||||||||||||||||||
| March 31, 2022 | - | - | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Ending balance | - | - | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
The accompanying footnotes are an integral part of these consolidated financial statements
| 6 |
Clean Energy Technologies, Inc.
Consolidated Statements of Cash Flows
for the three months ended March 31 (Unaudited)
| 2022 | 2021 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net Income / ( Loss ) | $ | ( | ) | $ | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Bad debt expense | - | - | ||||||
| Gain on debt settlement | - | - | ||||||
| Shares issued for commitment fee | - | - | ||||||
| Change in debt discount and Financing fees | ||||||||
| Change in derivative liability | ( | ) | ( | ) | ||||
| Changes in assets and liabilities: | ||||||||
| (Increase) decrease in right of use asset | ||||||||
| (Increase) decrease in lease liability | ( | ) | ( | ) | ||||
| (Increase) decrease in accounts receivable | ( | ) | ( | ) | ||||
| (Increase) decrease in inventory | ( | ) | ( | ) | ||||
| (Increase) decrease in prepaid expenses | - | |||||||
| (Decrease) increase in accounts payable | ( | ) | ||||||
| Other (Decrease) increase in accrued expenses | ( | ) | ( | ) | ||||
| Other (Decrease) increase in accrued expenses related party | ||||||||
| Other (Decrease) increase in deferred revenue | - | - | ||||||
| Other (Decrease) increase in customer deposits | - | |||||||
| Net Cash Provided by (Used In) Operating Activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities | ||||||||
| Convertible Note Receivable | - | - | ||||||
| (Increase) decrease in Convertible Note Receivable | ( | ) | - | |||||
| Purchase property plant and equipment | - | - | ||||||
| Cash Flows Used In Investing Activities | ( | ) | - | |||||
| Cash Flows from Financing Activities | ||||||||
| Bank Overdraft / (Repayment) | - | - | ||||||
| Payment on notes payable | ( | ) | ( | ) | ||||
| Payment on notes payable related party | - | - | ||||||
| Proceeds from notes payable and lines of credit | ||||||||
| Proceeds from notes payable related party | - | - | ||||||
| Stock issued for cash | ||||||||
| Cash Flows Provided By Financing Activities | ||||||||
| Effect of exchange rate changes on cash | ||||||||
| 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 | ||||||||
| Discount on derivatives | $ | $ | ||||||
| Shares issued for warrants exercised | $ | |||||||
| Shares issued for preferred conversions | $ | $ | ||||||
| Shares issued for debt conversion conversions | $ | $ | ||||||
The accompanying footnotes are an integral part of these 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 three months ended March 31, 2022, 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 financial statements and notes thereto included in the Company’s fiscal year end December 31, 2022 report. The Company assumes that the users of the interim financial information herein have read, or have access to, the audited 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 three months ended March 31, 2022 are not necessarily indicative of results for the entire year ending December 31, 2022.
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.
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 2990 Redhill Avenue, Costa Mesa, CA 92626. Our telephone number is (949) 273-4990. Our common stock is listed on the OTCQB Markets under the symbol “CETY.”
Our internet website address is www.cetyinc.com and our subsidiary’s web site is www.heatrecoverysolutions.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.
The Company has three reportable segments: Clean Energy HRS (HRS), CETY Europe, and the legacy electronic manufacturing services (Electronic Assembly) division.
| 8 |
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 deficit of $
Plan of Operation
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 bio char which are sold or used by our customers.
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.
LNG Trading Operations
Our LNG trading operations in China is to source and supply LNG to industries and municipalities located in the southern part of Sichuan Province and portions of Yunnan Province. The LNG is principally used for heavy truck refueling stations and urban or industrial users in areas that do not have a connection to local LNG pipeline systems. We purchase large quantities of LNG from large wholesale LNG depots at fixed prices which are prepaid for in advance at a discount to market. We sell the LNG to our customers at prevailing daily spot prices for the duration of the contracts.
NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The summary of significant accounting policies of Clean Energy Technologies, Inc. (formerly Probe Manufacturing, 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.
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.
| 9 |
Cash and Cash Equivalents
We maintain the majority of our cash accounts at JP Morgan Chase bank. The total cash balance is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000, (which we may exceed from time to time) per commercial bank. For purposes of the statement of cash flows we consider all cash and highly liquid investments with initial maturities of one year or less to be cash equivalents.
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 March 31, 2022, and December 31, 2021, we had a reserve
for potentially un-collectable accounts receivable of $
Four
(4) customers accounted for approximately
Lease asset
As
of March 31, 2022, and December 31, 2021 we had a lease asset that was purchased from General Electric with a value of $
Inventory
Inventories
are valued at the lower of weighted average cost or market 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 March 31, 2022, and December 31, 2021, we had a reserve
for potentially obsolete inventory of $
Property and Equipment
Property and equipment are recorded at cost. Assets held under capital leases are recorded at lease inception at the lower of the present value of the minimum lease payments or the fair market value of the related assets. The cost of ordinary maintenance and repairs is charged to operations. Depreciation and amortization are computed on the straight-line method over the following estimated useful lives of the related assets:
SCHEDULE OF PROPERTY AND EQUIPMENT ESTIMATED USEFUL LIVES
| Furniture and fixtures | ||
| Equipment | ||
| Leasehold Improvements |
| 10 |
Long –Lived Assets
Our management assesses the recoverability of its long-lived assets by determining whether the depreciation and amortization of long lived assets over their remaining lives can be recovered through projected undiscounted future cash flows. The amount of long-lived asset impairment if any, is measured based on fair value and is charged to operations in the period in which long-lived assets impairment is determined by management. There can be no assurance however, that market conditions will not change or demand for our services will continue, which could result in impairment of long-lived assets in the future.
Revenue Recognition
The Company recognizes revenue under ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” (“ASC 606”).
Performance Obligations Satisfied Over Time
FASB ASC 606-10-25-27 through 25-29, 25-36 through 25-37, 55-5 through 55-10
An entity transfers control of a good or service over time and satisfies a performance obligation and recognizes revenue over time if one of the following criteria is met:
a. The customer receives and consumes the benefits provided by the entity’s performance as the entity performs (as described in FASB ASC 606-10-55-5 through 55-6).
b. The entity’s performance creates or enhances an asset (for example, work in process) that the customer controls as the asset is created or enhanced (as described in FASB ASC 606-10-55-7).
c. The entity’s performance does not create an asset with an alternative use to the entity (see FASB ASC 606-10-25-28), and the entity has an enforceable right to payment for performance completed to date (as described in FASB ASC 606-10-25-29).
Performance Obligations Satisfied at a Point in Time
FASB ASC 606-10-25-30
If a performance obligation is not satisfied over time, the performance obligation is satisfied at a point in time. To determine the point in time at which a customer obtains control of a promised asset and the entity satisfies a performance obligation, the entity should consider the guidance on control in FASB ASC 606-10-25-23 through 25-26. In addition, it should consider indicators of the transfer of control, which include, but are not limited to, the following:
a. The entity has a present right to payment for the asset
b. The customer has legal title to the asset
c. The entity has transferred physical possession of the asset
d. The customer has the significant risks and rewards of ownership of the asset
e. The customer has accepted the asset
The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods and services transferred to the customer. In addition a) the company also does not have an alternative use for the asset if the customer were to cancel the contract, and b.) has a fully enforceable right to receive payment for work performed (i.e., customers are required to pay as various milestones and/or timeframes are met)
The following five steps are applied to achieve that core principle for our HRS and CETY Europe Divisions:
| ● | Identify the contract with the customer | |
| ● | Identify the performance obligations in the contract | |
| ● | Determine the transaction price | |
| ● | Allocate the transaction price to the performance obligations in the contract | |
| ● | Recognize revenue when the company satisfies a performance obligation |
The following steps are applied to our legacy engineering and manufacturing division:
| ● | We generate a quotation | |
| ● | We receive purchase orders from our customers. | |
| ● | We build the product to their specification | |
| ● | We invoice at the time of shipment | |
| ● | The terms are typically Net 30 days |
| 11 |
Also,
from time to time our contracts state that the customer is not obligated to pay a final payment until the units are commissioned, i.e.
a final payment of
Also,
from time to time we require upfront deposits from our customers based on the contract. As of March 31, 2022 and December 31, 2021, we
had outstanding customer deposits 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. | |
| ● | 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. We value the derivative liability
using a lattice model, with a volatility of |
The Company’s financial instruments consist of cash, prepaid expenses, inventory, accounts payable, convertible notes payable, advances from related parties, and derivative liabilities. The estimated fair value of cash, prepaid expenses, investments, accounts payable, convertible notes payable and advances from related parties approximate their carrying amounts due to the short-term nature of these instruments.
The carrying amounts of the Company’s financial instruments as of March 31, 2022 and December 31, 2021 reflect:
SCHEDULE OF FAIR VALUE OF CONVERTIBLE NOTES DERIVATIVE LIABILITY
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Fair value of convertible notes derivative liability – March 31, 2022 | $ | $ | $ | $ | ||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Fair value of convertible notes derivative liability – December 31, 2021 | $ | $ | $ | $ | ||||||||||||
The carrying amount of accounts payable and accrued expenses are considered to be representative of their respective fair values because of the short-term nature of these financial instruments.
Foreign Currency Translation and Comprehensive Income (Loss)
We have no material components of other comprehensive income (loss) and accordingly, net loss is equal to comprehensive loss in all periods. The accounts of the Company’s Chinese entities are maintained in RMB. The accounts of the Chinese entities were translated into USD in accordance with FASB ASC Topic 830 “Foreign Currency Matters.” All assets and liabilities were translated at the exchange rate on the balance sheet date; stockholders’ equity is translated at historical rates and the statements of operations and cash flows are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income (loss) in accordance with FASB ASC Topic 220, “Comprehensive Income.” Gains and losses resulting from foreign currency transactions are reflected in the statements of operations.
The Company follows FASB ASC Topic 220-10, “Comprehensive Income (loss).” Comprehensive income (loss) comprises net income (loss) and all changes to the statements of changes in stockholders’ equity, except those due to investments by stockholders, changes in additional paid-in capital and distributions to stockholders.
| 12 |
Basic profit / (loss) per share is computed on the basis of the weighted average number of common shares outstanding. At March 31, 2022, we had outstanding common shares of used in the calculation of basic earnings per share. Basic Weighted average common shares and equivalents for the three months ended March 31, 2022 and March 31, 2021 were and respectively. As of March 31, 2022, we had convertible notes, convertible into approximately of additional common shares, common stock warrants. Fully diluted weighted average common shares and equivalents were withheld from the calculation for the three months ended March 31, 2022 and March 31, 2021 as they were considered anti-dilutive.
Research and Development
We
had
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
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:
SCHEDULE OF SEGMENT REPORTING
| 2022 | 2021 | |||||||
| for the three months ended March, 31 | ||||||||
| 2022 | 2021 | |||||||
| Net Sales | ||||||||
| Manufacturing and Engineering | ||||||||
| Clean Energy HRS | ||||||||
| LNG Trading | - | |||||||
| Cety Europe | ||||||||
| Total Sales | ||||||||
| Segment income and reconciliation before tax | ||||||||
| Manufacturing and Engineering | ||||||||
| Clean Energy HRS | ||||||||
| LNG Trading | ||||||||
| Cety Europe | ||||||||
| Total Segment income | ||||||||
| Reconciling items | ||||||||
| General and Administrative expense | ( | ) | ( | ) | ||||
| Salaries | ( | ) | ( | ) | ||||
| Travel | ( | ) | ( | ) | ||||
| Professional Fees | ( | ) | ( | ) | ||||
| Facility lease and Maintenance | ( | ) | ( | ) | ||||
| Consulting | ( | ) | - | |||||
| Bad Debt Expense | - | - | ||||||
| Depreciation and Amortization | ( | ) | ( | ) | ||||
| Change in derivative liability | ||||||||
| Other Income | ( | ) | - | |||||
| Interest and Financing fees | ( | ) | ( | ) | ||||
| Net Loss before income tax | ( | ) | ||||||
| 13 |
Share-Based Compensation
The Company has adopted the use of Statement of Financial Accounting Standards No. 123R, “Share-Based Payment” (SFAS No. 123R) (now contained in FASB Codification Topic 718, Compensation-Stock Compensation), which supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and its related implementation guidance and eliminates the alternative to use Opinion 25’s intrinsic value method of accounting that was provided in Statement 123 as originally issued. This Statement requires an entity to measure the cost of employee services received in exchange for an award of an equity instruments, which includes grants of stock options and stock warrants, based on the fair value of the award, measured at the grant date (with limited exceptions). Under this standard, the fair value of each award is estimated on the grant date, using an option-pricing model that meets certain requirements. We use the Black-Scholes option-pricing model to estimate the fair value of our equity awards, including stock options and warrants. The Black-Scholes model meets the requirements of SFAS No. 123R; however, the fair values generated may not reflect their actual fair values, as it does not consider certain factors, such as vesting requirements, employee attrition and transferability limitations. The Black-Scholes model valuation is affected by our stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. We estimate the expected volatility and estimated life of our stock options at grant date based on historical volatility. For the “risk-free interest rate,” we use the Constant Maturity Treasury rate on 90-day government securities. The term is equal to the time until the option expires. The dividend yield is not applicable, as the Company has not paid any dividends, nor do we anticipate paying them in the foreseeable future. The fair value of our restricted stock is based on the market value of our free trading common stock, on the grant date calculated using a 20-trading-day average. At the time of grant, the share-based compensation expense is recognized in our financial statements based on awards that are ultimately expected to vest using historical employee attrition rates and the expense is reduced accordingly. It is also adjusted to account for the restricted and thinly traded nature of the shares. The expense is reviewed and adjusted in subsequent periods if actual attrition differs from those estimates.
We re-evaluate the assumptions used to value our share-based awards on a quarterly basis and, if changes warrant different assumptions, the share-based compensation expense could vary significantly from the amount expensed in the past. We may be required to adjust any remaining share-based compensation expense, based on any additions, cancellations or adjustments to the share-based awards. The expense is recognized over the period during which an employee is required to provide service in exchange for the award—the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service. For the three months ended March 31, 2022 and 2021 we had $ in share-based expense, due to the issuance of common stock. As of March 31, 2022, we had no further non-vested expense to be recognized.
| 14 |
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 March 31, 2022, we had a net operating loss carry-forward of approximately $(
SCHEDULE OF DEFERRED TAX ASSET
| March 31, 2022 | December 31, 2021 | |||||||
| Deferred Tax Asset | $ | $ | ||||||
| Valuation Allowance | ( | ) | ( | ) | ||||
| Deferred Tax Asset (Net) | $ | $ |
On
February 13, 2018, Clean Energy Technologies, Inc., a Nevada corporation (the “Registrant” or “Corporation”)
entered into a Common Stock Purchase Agreement (“Stock Purchase Agreement”) by and between MGW Investment I Limited (“MGWI”)
and the Corporation. The Corporation received $
On
February 13, 2018 the Corporation and Confections Ventures Limited. (“CVL”) entered into a Convertible Note Purchase Agreement
(the “Convertible Note Purchase Agreement,” together with the Stock Purchase Agreement and the transactions contemplated
thereunder, the “Financing”) pursuant to which the Corporation issued to CVL a convertible promissory Note (the “CVL
Note”) in the principal amount of $
This
resulted in a change in control, which limited the net operating to that date forward. We are subject to taxation in the U.S. and the
states of California. Further, the Company currently has no open tax years’ subject to audit prior to
| 15 |
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
The Company is reviewing the effects of following recent updates. The Company has no expectation that any of these items will have a material effect upon the financial statements.
Update 2021-03—Intangibles—Goodwill and Other (Topic 350): Accounting Alternative For Evaluating Triggering Events.
The amendments in this Update are effective on a prospective basis for fiscal years beginning after December 15, 2019. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance as of March 30, 2021.
Update 2021-01—Reference Rate Reform (Topic 848):
An entity may elect to apply the amendments in this Update on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020.
In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments—Credit Losses [codified as Accounting Standards Codification Topic (ASC) 326]. ASC 326 adds to US generally accepted accounting principles (US GAAP) the current expected credit loss (CECL) model, a measurement model based on expected losses rather than incurred losses. Under this new guidance, an entity recognizes its estimate of expected credit losses as an allowance, which the FASB believes will result in more timely recognition of such losses. This will become effective in January 2023 and will have minimal impact on the company.
Update 2020-06—Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. We do not expect any material impact on our financials because of the adoption of this update.
NOTE 3 – ACCOUNTS AND NOTES RECEIVABLE
SCHEDULE OF ACCOUNTS AND NOTES RECEIVABLE
| March 31,2022 | December 31, 2021 | |||||||
| Accounts Receivable | $ | $ | ||||||
| Less reserve for uncollectable accounts | ( | ) | ( | ) | ||||
| Total | $ | $ |
Our Accounts Receivable is pledged to Nations Interbanc, our line of credit.
SCHEDULE OF LEASE RECEIVABLE ASSET
| March 31, 2022 | December 31, 2021 | |||||||
| Lease asset | $ | $ |
The Company is currently modifying the assets subject to lease to meet the provisions of the agreement, and as of March 31, 2022 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.
SCHEDULE OF DERECOGNITION OF UNDERLYING ASSETS OF FINANCING RECEIVABLE
| March 31, 2022 | December 31, 2021 | |||||||
| Long-term financing receivables | $ | $ | ||||||
| Less Reserve for uncollectable accounts | ( | ) | ( | ) | ||||
| Long-term financing receivables - net | $ | $ |
On a contract by contract basis or in response to certain situations or installation difficulties, the Company may elect to allow non-interest bearing repayments in excess of 1 year.
Our long term financing Receivable are pledged to Nations Interbanc, our line of credit.
| 16 |
NOTE 4 – INVENTORY
Inventories by major classification were comprised of the following at:
SCHEDULE OF INVENTORIES
| March 31,2022 | December 31, 2021 | |||||||
| Inventory | $ | $ | ||||||
| Less reserve for uncollectable accounts | ( | ) | ( | ) | ||||
| 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:
SCHEDULE OF PROPERTY AND EQUIPMENT
| March 31,2022 | December 31, 2021 | |||||||
| Property and Equipment | $ | $ | ||||||
| Leasehold Improvements | ||||||||
| Accumulated Depreciation | ( | ) | ( | ) | ||||
| Net Fixed Assets | $ | $ | ||||||
Our
Depreciation Expense for the three months ended March 31, 2022 and 2021 was $
Our Property Plant and Equipment is pledged to Nations Interbanc, our line of credit.
NOTE 6 – INTANGIBLE ASSETS
Intangible assets were comprised of the following at:
SCHEDULE OF INTANGIBLE ASSETS
| March 31,2022 | December 31, 2021 | |||||||
| Goodwill | $ | $ | ||||||
| LWL Intangibles | $ | $ | ||||||
| License | ||||||||
| Patents | ||||||||
| Accumulated Amortization | ( | ) | ( | ) | ||||
| Net Fixed Assets | $ | $ |
Our
Amortization Expense for the three months ended March 31, 2022 and 2021 was $
| 17 |
Based on the foregoing analysis of the facts surrounding the Company’s acquisition of LWL, it is the Company’s position that the Company is the acquirer of LWL, under the acquisition method of accounting.
As such, as of November 8, 2021 (the acquisition date), the Company recognized, separately from goodwill, the identifiable assets acquired and the liabilities assumed in the Business combination.
The following table presents the purchase price allocation:
SCHEDULE OF BUSINESS ACQUISITION PURCHASE PRICE ALLOCATION
| Consideration: | ||||
| Cash and cash equivalents | $ | |||
| Total purchaser consideration | $ | |||
| Assets acquired: | ||||
| Cash and cash equivalents | $ | |||
| Prepayment | $ | |||
| Other receivable | $ | |||
| Trading Contracts | $ | |||
| Shenzhen Gas Relationship | $ | |||
| Total assets acquired | $ | |||
| Liabilities assumed: | ||||
| Advance Receipts | $ | ( | ||
| Taxes Payable | $ | |||
| Net Assets Acquired: | $ |
.
| 18 |
NOTE 7 – CONVERTIBLE NOTE RECEIVABLE
Effective
January 10, 2022, JHJ (“note holder”) entered a convertible note agreement with Chengdu Rongjun Enterprise Consulting Co.,
Ltd (“Rongjun” or “the borrower”) with maturity on
NOTE 8 – ACCRUED EXPENSES
SCHEDULE OF ACCRUED EXPENSES
| March 31,2022 | December 31, 2021 | |||||||
| Accrued Wages | $ | $ | ||||||
| Accrued Interest and other | ||||||||
| Accrued Interest and other | $ | $ |
NOTE 9 – NOTES PAYABLE
The
Company issued a short-term note payable to an individual, secured by the assets of the Company, dated September 6, 2013 in the amount
of $
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 $
On
September 11, 2015, our CE HRS subsidiary issued a promissory note in the initial principal amount $
Total Liability to GE
SCHEDULE OF NOTES PAYABLE
| March 31, 2022 | December 31, 2021 | |||||||
| Note payable GE | $ | $ | ||||||
| Accrued transition services | ||||||||
| Accrued Interest | ||||||||
| Total | $ | $ |
| 19 |
We are currently in default on the payment of the purchase price pursuant to our asset purchase agreement with General Electric due to our belief that we are entitled to a reduction in purchase price we paid due to the misunderstanding of the asset valuation.
On
May 4, 2020 the company entered in to a payroll protection loan, with Comerica bank, guaranteed by the SBA due May 4, 2022 for $
On
February 4 , 2021 the company entered in to a payroll protection loan, with Comerica bank, guaranteed by the SBA due February 4, 2023
for $
On
September 7, 2021 the company entered into a promissory note in the amount of $
On
September 28, 2021 the company entered into a promissory note in the amount of $
On
March 10, 2022 the company entered into a promissory note in the amount of $
Convertible notes
On
May 5, 2017 we entered into a nine-month convertible note payable for $
On
May 24, 2017 we entered into a nine-month convertible note payable for $
On
October 30, 2019 we entered into a convertible note payable for $
On
January 8, 2020 we entered into a convertible note payable for $
On
February 19, 2020 we entered into a convertible note payable for $
| 20 |
On
July 6, 2020, Clean Energy Technologies, Inc. (the “Company) entered into a securities purchase agreement (the “Securities
Purchase Agreement”) with LGH Investments, LLC (the “Investor”), pursuant to which the Company issued to the Investor
a convertible promissory note (the “Note”) in the original principal amount of $
On
July 15, 2020 we entered into a convertible note payable for $
On
August 17, 2020, Clean Energy Technologies, Inc. (the “Company) entered into a securities purchase agreement (the “Securities
Purchase Agreement”) with LGH Investments, LLC (the “Investor”), pursuant to which the Company issued to the Investor
a convertible promissory note (the “Note”) in the original principal amount of $
On
September 10, 2020 we entered into a convertible note payable for $
On
October 14, 2020 Clean Energy Technologies, Inc. (the “Company) entered into a securities purchase agreement (the “Securities
Purchase Agreement”) with Firstfire Global Opportunities Fund LLC, (the “Investor”), pursuant to which the Company
issued to the Investor a convertible promissory note (the “Note”) in the original principal amount of $
On
November 10, 2020 we entered into a convertible note payable for $
| 21 |
On
December 18, 2020 we entered into a convertible note payable for $
On
December 27, 2021, we entered into a convertible note payable with Universal Scope Inc. for $
Total due to Convertible Notes
SCHEDULE OF CONVERTIBLE NOTES
| March 31,2022 | December 31, 2021 | |||||||
| Total convertible notes | $ | $ | ||||||
| Accrued Interest | ||||||||
| Debt Discount | ||||||||
| Total | $ | $ |
Note 10 – Derivative Liabilities
As
a result of the convertible notes we recognized the embedded derivative liability on the date of note issuance. We also revalued the
remaining derivative liability on the outstanding note balance on the date of the balance sheet. We value the derivative liability using
a binomial lattice model with an expected volatility range of
SCHEDULE OF FAIR VALUE OF DERIVATIVE LIABILITY
| March 31, 2022 | December 31, 2021 | |||||||
| Derivative Liabilities on Convertible Loans: | ||||||||
| Outstanding Balance | $ | $ | ||||||
NOTE 11 – COMMITMENTS AND CONTINGENCIES
Operating Rental Leases
As
of May 1, 2017, our corporate headquarters are located at 2990 Redhill Unit A, Costa Mesa, CA. On March 10, 2017, the Company signed
a lease agreement for a
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS
| Year | Lease Payment | |||
| 2022 | ||||
| 2023 | ||||
| Imputed Interest | ( | ) | ||
| Net Lease Liability | $ | |||
As of March 31, 2022
| Year | Lease Payment | |||
| 2022 | ||||
| 2023 | ||||
| Imputed Interest | ( | ) | ||
| Net Lease Liability | $ | |||
Our
lease expense for the three months ended March 31, 2022 and 2021 was $
| 22 |
ASB
ASU 2016-02 “Leases (Topic 842)” – In February 2016, the FASB issued ASU 2016-02, which requires lessees to recognize
almost all leases on their balance sheet as a right-of-use asset and a lease liability. For income statement purposes, the FASB retained
a dual model, requiring leases to be classified as either operating or finance. Classification will be based on criteria that are largely
similar to those applied in current lease accounting, but without explicit bright lines. Lessor accounting is similar to the current
model, but has been updated to align with certain changes to the lessee model and the new revenue recognition standard. This ASU is effective
for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We have adopted the above ASU
as of January 1, 2019. The right of use asset and lease liability have been recorded at the present value of the future minimum lease
payments, utilizing a
Severance Benefits
Mr. Mahdi will receive a severance benefit consisting of a single lump sum cash payment equal the salary that Mr. Mahdi would have been entitled to receive through the remainder or the Employment Period or One (1) year, whichever is greater.
NOTE 12 – CAPITAL STOCK TRANSACTIONS
On April 21, 2005, our Board of Directors and shareholders approved the re-domicile of the Company in the State of Nevada, in connection with which we increased the number of our authorized common shares to and designated a par value of $ per share.
On May 25, 2006, our Board of Directors and shareholders approved an amendment to our Articles of Incorporation to authorize a new series of preferred stock, designated as Series C, and consisting of authorized shares.
On June 30, 2017, our Board of Directors and shareholders approved an increase in the number of our authorized common shares to and in the number of our authorized preferred shares to . The amendment effecting the increase in our authorized capital was filed and effective on July 5, 2017.
On August 28, 2018, our Board of Directors and shareholders approved an increase in the number of our authorized common shares to . The amendment effecting the increase in our authorized capital was filed and effective on August 23, 2018.
On June 10, 2019, our Board of Directors and shareholders approved an increase in the number of our authorized common shares to . The amendment effecting the increase in our authorized capital was effective on September 27, 2019
| 23 |
Common Stock Transactions
On
July 6, 2020, Clean Energy Technologies, Inc. (the “Company) entered into a securities purchase agreement (the “Securities
Purchase Agreement”) with LGH Investments, LLC (the “Investor”), pursuant to which the Company issued to the Investor
a convertible promissory note (the “Note”) in the original principal amount of $
On July 23, 2020 we issued shares of our common stock at a price of $ per share, in exchange for the conversion of shares of our Series D Preferred Stock.
On
August 17, 2020, Clean Energy Technologies, Inc. (the “Company) entered into a securities purchase agreement (the “Securities
Purchase Agreement”) with LGH Investments, LLC (the “Investor”), pursuant to which the Company issued to the Investor
a convertible promissory note (the “Note”) in the original principal amount of $
| 24 |
On
October 14, 2020 Clean Energy Technologies, Inc. (the “Company) entered into a securities purchase agreement (the “Securities
Purchase Agreement”) with Firstfire Global Opportunities Fund LLC, (the “Investor”), pursuant to which the Company
issued to the Investor a convertible promissory note (the “Note”) in the original principal amount of $
On February 5, 2021 we issued shares of our common stock at a price of $ per share, in exchange for the conversion of shares of our Series D Preferred Stock.
On
February 9, 2021 we issued shares of our common stock share, in exchange for the conversion of $
On February 9, 2021 we issued shares of our common stock at a price of $ per share, in exchange for the conversion of shares of our Series D Preferred Stock.
On
February 23, 2021 we issued
On
March 5, 2021 we issued of common stock at a purchase price of $ per share for an aggregate price of $
On March 10, 2021 we issued units of common stock at a purchase price of $ per share for an aggregate price of $ to an accredited investor in a private sale.
On March 12, 2021 we issued shares and of our common stock at a price of $ per share, in exchange for the conversion of shares of our Series D Preferred Stock and of accrued dividend for the series D preferred stock.
On
September 2, 2021, Clean Energy Technology, Inc., a Nevada corporation
On September 13, 2021 we issued shares of common stock for a correction of a previous issuance error.
During
the year ended December 31, 2021, we issued shares of common stock, under S-1 registration statement with GHS for a total of
$
On December 31, 2021 we issued shares of our common stock under our Reg A offering at $ per share. These shares are unrestricted and free trading.
During
the quarter ended March 31, 2022, we issued shares of common stock, under S-1 registration statement with GHS for a total of
$
On February 21, 2022, we issued shares of our common stock under our Reg A offering at $ per share. These shares are unrestricted and free trading.
Common Stock
Our Articles of Incorporation authorize us to issue shares of common stock, par value $ per share. As of March 31, 2022 there were shares of common stock outstanding. All outstanding shares of common stock are, and the common stock to be issued will be, fully paid and non-assessable. Each share of our common stock has identical rights and privileges in every respect. The holders of our common stock are entitled to vote upon all matters submitted to a vote of our shareholders and are entitled to one vote for each share of common stock held. There are no cumulative voting rights.
The holders of our common stock are entitled to share equally in dividends and other distributions that our Board of Directors may declare from time to time out of funds legally available for that purpose, if any, after the satisfaction of any prior rights and preferences of any outstanding preferred stock. If we liquidate, dissolve or wind up, the holders of common stock shares will be entitled to share ratably in the distribution of all of our assets remaining available for distribution after satisfaction of all our liabilities and our obligations to holders of our outstanding preferred stock.
Preferred Stock
Our Articles of Incorporation authorize us to issue shares of preferred stock, par value $ per share. Our Board of Directors has the authority to issue additional shares of preferred stock in one or more series, and fix for each series, the designation of and number of shares to be included in each such series. Our Board of Directors is also authorized to set the powers, privileges, preferences, and relative participating, optional or other rights, if any, of the shares of each such series and the qualifications, limitations or restrictions of the shares of each such series.
| 25 |
Unless our Board of Directors provides otherwise, the shares of all series of preferred stock will rank on parity with respect to the payment of dividends and to the distribution of assets upon liquidation. Any issuance by us of shares of our preferred stock may have the effect of delaying, deferring or preventing a change of our control or an unsolicited acquisition proposal. The issuance of preferred stock also could decrease the amount of earnings and assets available for distribution to the holders of common stock or could adversely affect the rights and powers, including voting rights, of the holders of common stock.
We previously authorized shares of Series A Convertible Preferred Stock, shares of Series B Convertible Preferred Stock, and shares Series C Convertible Preferred Stock. As of August 20, 2006, all series A, B, and C preferred had been converted into common stock.
Effective August 7, 2013, our .
The
following are primary terms of the Series D Preferred Stock.
In
connection with the subscriptions for the Series D Preferred, we issued series F warrants to purchase an aggregate of
On
August 21, 2014, a holder holding shares of Preferred Series D Preferred agreed to lower the dividend rate to
In
the first quarter of 2019, we signed agreements to issue shares of common stock valued at $ for a total value of $
We
also recorded a $
On February 4, 2020 we issued shares of our common stock at a price of $ per share, in exchange for the conversion of shares of our Series D Preferred Stock.
On July 23, 2020 we issued shares of our common stock at a price of $ per share, in exchange for the conversion of shares of our Series D Preferred Stock.
| 26 |
On February 5, 2021 we issued shares of our common stock at a price of $ per share, in exchange for the conversion of shares of our Series D Preferred Stock.
On
February 9, 2021 we issued shares of our common stock share, in exchange for the conversion of $
On February 9, 2021 we issued shares of our common stock at a price of $ per share, in exchange for the conversion of shares of our Series D Preferred Stock.
On March 12, 2021 we issued shares of our common stock together with accrued preferred dividend at a price of $ per share, in exchange for the conversion of shares of our Series D Preferred Stock and accrued preferred dividend.
Warrants
A summary of warrant activity for the periods is as follows:
On
July 6, 2020, Clean Energy Technologies, Inc. (the “Company) entered into a securities purchase agreement (the “Securities
Purchase Agreement”) with LGH Investments, LLC (the “Investor”), pursuant to which the Company issued to the Investor
a convertible promissory note (the “Note”) in the original principal amount of $
On
August 17, 2020, Clean Energy Technologies, Inc. (the “Company) entered into a securities purchase agreement (the “Securities
Purchase Agreement”) with LGH Investments, LLC (the “Investor”), pursuant to which the Company issued to the Investor
a convertible promissory note (the “Note”) in the original principal amount of $
| 27 |
On
February 23, 2021 we issued of common stock at a purchase price of $ per share and
SCHEDULE OF WARRANT ACTIVITY
| Warrants - Common Share Equivalents | Weighted Average Exercise price | Warrants exercisable - Common Share Equivalents | Weighted Average Exercise price | |||||||||||||
| Outstanding December 31, 2021 | $ | $ | ||||||||||||||
| Expired | ||||||||||||||||
| Exercised | ||||||||||||||||
| Outstanding March 31, 2022 | $ | $ | ||||||||||||||
Stock Options
We currently have no outstanding stock options.
NOTE 13 – RELATED PARTY TRANSACTIONS
Kambiz
Mahdi, our Chief Executive Officer, owns Billet Electronics, which is distributor of electronic components. From time to time, we purchase
parts from Billet Electronics. In addition, Billet was a supplier of parts and had dealings with current and former customers of the
Company prior to joining the company. The amount of parts purchases in the 1st quarter of 2022 was $
On
November 2, 2016, we effected the repayment of the convertible note dated March 15, 2016 for an aggregate amount of $
Concurrently with the foregoing note repayments, we entered into a Credit Agreement and Promissory Note (the “Credit Agreement”) with Megawell USA Technology Investment Fund I LLC, a Wyoming limited liability company in formation (“MW I”), pursuant to which MW I deposited funds into escrow to fund the repayment of the convertible notes and we assigned to MW I our right to acquire the convertible notes and otherwise agreed that MW I would be subrogated to the rights of each note holder to the extent a note was repaid with funds advanced by MW I. Concurrently, MW I acquired the Master Note and we agreed that all amounts advanced by MG I to or for our benefit would be governed by the terms of the Master Note, including the payment of a financing fees, interest, minimum interest, and convertibility. Reddot is MW I’s agent for purposes of administration of the Credit Agreement and the Master Note and advances thereunder.
On
February 13, 2018 the Corporation and Confections Ventures Limited. (“CVL”) entered into a Convertible Note Purchase Agreement
(the “Convertible Note Purchase Agreement,” together with the Stock Purchase Agreement and the transactions contemplated
thereunder, the “Financing”) pursuant to which the Corporation issued to CVL a convertible promissory Note (the “CVL
Note”) in the principal amount of $
On
February 8, 2018 the Corporation entered a Convertible Promissory Note in the principal amount of $
Subsequently
| 28 |
On
May 31, 2019, we entered into a subscription agreement pursuant to which the Company agreed to sell units (each a “Unit”
and together the “Units”) to MGW Investment I Limited MGWI for an aggregate purchase price of $
In
the fourth quarter of 2019 MGW Investment I Limited, advanced $
On
March 24, 2021, the Company transferred $
On
June 24, 2021 MGW I converted $
Note 14 - WARRANTY LIABILITY
For
the quarter ended March 31, 2022, and for the year ended December 31, 2021 there was
NOTE 15 – NON-CONTROLLING INTEREST
On
June 24, 2021 the Company formed CETY Capital LLC a wholly owned subsidiary of CETY. In addition, the company established CETY Renewables
Ashfield LLC (“CRA”) a wholly owned subsidiary of Ashfield Renewables Ag Development LLC(“ARA”) with our partner,
Ashfield AG (“AG”). The purpose of the joint venture is the development of a pyrolysis plant established to convert woody
feedstock into electricity and BioChar by using high temperature ablative fast pyrolysis reactor for which Clean Energy Technology, Inc.
holds the license for. The CRA is located in Ashfield, Massachusetts. Based upon the terms of the members’ agreement, the CETY
Capital LLC owns a
The consolidated financial statements reflect 100% of the assets and liabilities of CRA and report the current non-controlling interest of AG. The full results of CRA operations are reflected in the statement of income with the elimination of the non-controlling interest identified.
NOTE 16 – SUBSEQUENT EVENTS
During
the April of 2022, we issued shares of common stock, under S-1 registration statement with GHS for a total of $
On
May 6, 2022, we entered into a Securities Purchase Agreement with Mast Hill, L.P. (Mast Hill”) pursuant to which the Company issued
to Mast Hill a $
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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 by the use of 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 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.
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. Our principal executive offices are located at 2990 Redhill Avenue, Costa Mesa, CA 92626. We have 12 full time employees. All employees and overhead are shared between Clean Energy Technologies, Inc. (which still provides the contract electronic manufacturing services) and Clean Energy HRS, LLC.
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 the 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 75% ownership interest in Ashfield Renewables Ag Development LLC, which has established CETY Renewables Ashfield LLC a wholly owned low carbon energy company developing a biomass plant.
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.
The Company has four reportable segments: Clean Energy HRS (HRS), CETY Europe, CETY Renewables Ashfield, CETY HK and the legacy engineering and manufacturing services division.
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
In December 2019, a novel strain of coronavirus (COVID-19) was reported in Wuhan, China and has spread throughout the United States and the rest of the world. The World Health Organization has declared the outbreak to constitute a “Public Health Emergency of International Concern.” This contagious disease outbreak, which has not been contained, and is disrupting supply chains and affecting production and sales across a range of industries in United States and other companies as a result of quarantines, facility closures, and travel and logistics restrictions in connection with the outbreak, as well as the worldwide adverse effect to workforces, economies and financial markets, leading to a global economic downturn. Therefore, the Company expects this matter to negatively impact its operating results. However, the related financial impact and duration cannot be reasonably estimated at this time.
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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 bio char which are sold or used by our customers.
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.
LNG Trading Operations
Our LNG trading operations in China is to source and supply LNG to industries and municipalities located in the southern part of Sichuan Province and portions of Yunnan Province. The LNG is principally used for heavy truck refueling stations and urban or industrial users in areas that do not have a connection to local LNG pipeline systems. We purchase large quantities of LNG from large wholesale LNG depots at fixed prices which are prepaid for in advance at a discount to market. We sell the LNG to our customers at 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.
Segment Information
Our four segments for accounting purposes are:
Clean Energy Solutions - our Waste Heat Recovery Solutions, Waste to Energy Solutions, China LNG initiatives and Engineering and Consulting Services which are the core offerings of our business.
CETY Europe – our subsidiary established in Italy for the purposes of servicing our customers in the EU that we are required to report as a separate accounting entity.
Electronic Manufacturing Business - our legacy electronics manufacturing business that do not contribute significantly to our revenues or business plan that we are required to report as a separate accounting entity.
LNG Trading Operations
Our LNG trading operations in China is to source and supply LNG to industries and municipalities located in the southern part of Sichuan Province and portions of Yunnan Province. The LNG is principally used for heavy truck refueling stations and urban or industrial users in areas that do not have a connection to local LNG pipeline systems. We purchase large quantities of LNG from large wholesale LNG depots at fixed prices which are prepaid for in advance at a discount to market. We sell the LNG to our customers at prevailing daily spot prices for the duration of the contracts.
Summary of Operating Results the three months Ended March 31, 2022 Compared to the same period in 2021
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 deficit of $507,830 and a working capital deficit of $3,843,110 as of March 31, 2022 The company also had an accumulated deficit of $17,536,520 as of March 31, 2022 and used $538,065 in net cash from operating activities for the three months ended March 31, 2022. Therefore, there is substantial doubt about the ability of the Company to continue as a going concern. There can be no assurance that the Company will achieve its goals and reach profitable operations and is still dependent upon its ability (1) to obtain sufficient debt and/or equity capital and/or (2) to generate positive cash flow from operations.
The three months ended March 31, 2022; we had a net loss of $112,589 compared to a net profit of $1,068,584 for the same period in 2021. The increase in the net profit in 2021 was mainly due to the increase in gain on derivative in 2021, The three months ended March 31, 2022; our revenue was $775,266 compared to $135,275 for the same period in 2021. For the three months ended March 31, 2022, our gross margin was 66% compared to 83% for the same period in 2021. For the three months ended March 31, 2022, our operating expense was $499,023 compared to $479,066 for the same period in 2021. For the three months ended March 31, 2022; we had a profit from operations of $15,169 compared to a net loss from operations of 336,938 for the same period in 2021.
See note 1 to the notes to the financial statements for a discussion on critical accounting policies
RELATED PARTY TRANSACTIONS
See note 12 to the notes to the financial statements for a discussion on related party transaction
Results of the three Ended March 31, 2022, Compared to the three ended March 31, 2021
Net Sales
The Company has five reportable segments: Clean Energy HRS (HRS), Cety Europe srl, Cety Renewables Ashfield, CETY Waste to Energy division and engineering & manufacturing services division (Electronic Assembly).
Segment breakdown
The three months ended March 31, 2022, our revenue from Engineering and Manufacturing was $32,280 compared to $30,229 for the same period in 2021.
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The three months ended March 31, 2022, our revenue from HRS was $441,193 compared to $66,000 for the same period in 2021. This increase was mainly because of more interest in heat recovery projects.
The three months ended March 31, 2022, our revenue from CETY Europe was $33,827 compared to $39,045 for the same period in 2021.
The three months ended March 31, 2022, our revenue from our wholly owned subsidiary JHJ was $267,966 compared to $0 for the same period in 2021.
Gross Profit
The three months ended March 31, 2022; our gross profits were $514,193 compared to $112,128 for the same period in 2021. The increase in gross profit was due to higher revenues.
Segment breakdown
The three months ended March 31, 2022, our gross profit from Engineering and Manufacturing was $23,986 compared to $21,526 for the same period in 2021.
The three months ended March 31, 2022, our gross profit from HRS was $400,487 compared to $53,828, for the same period in 2021. The increase from the HRS segment was mainly due to higher revenue in the first quarter of 2022.
The three months ended March 31, 2022, our gross profit from CETY Europe was $28,986 compared to $36,774 for the same period in 2021.
The three months ended March 31, 2022, our gross profit from our wholly owned subsidiary JHJ was $60,733 compared to $0 for the same period in 2021.
Selling, General and Administrative (SG&A) Expenses
The three months ended March 31, 2022; our SG&A expense was $92,935 compared to $102,381 for the same period in 2021.
Salaries Expense
The three months ended March 31, 2022; our Salaries expense was $191,217 compared to $221,647 for the same period in 2021. The decrease in the quarter ending in March 31, 2022 was due to less number of employees.
Travel Expense
The three months ended March 31, 2022; our travel expense was $27,734 compared to $15,013 for the same period in 2021.
Professional fees Expense
The three months ended March 31, 2022; our Professional fees expense was $64,853 compared to $45,742 for the same period in 2021. The increase in legal fees was due to more contract and agreement related work.
Facility Lease and Maintenance Expense
The three months ended March 31, 2022; our Facility Lease and maintenance expense was $88,962 compared to $86,210 for the same period in 2021.
Depreciation and Amortization Expense
The three months ended March 31, 2022, our depreciation and amortization expense was $7,519 compared to $8,073 for the same period in 2021, which remained relatively unchanged.
Change in Derivative Liability
The three months ended March 31, 2022; we had a gain on derivative liability of $16,014 compared to a gain of $1,749,173 for the same period in 2021. The gain in derivative liability was due to paying off several convertible notes in the three months ended March 31, 2021.
Gain on debt settlement
The three months ended March 31, 2022 we recognized a gain on debt settlement in the amount of $0 compared to $0 for the three months ended March 31, 2021.
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Interest and Finance Fees
The three months ended March 31, 2022 interest and finance fees were $132,470 compared to $313,651 for the same period in 2021. The decrease was due to payoff of several notes in 2021.
Net Income / Loss
The three months ended March 31, 2022; our loss was $112,589 compared to net profit of $1,068,584 for the same period in 2021. This increase was primarily due to the gain on derivative liability in 2021.
Liquidity and Capital Resources
Clean Energy Technologies, Inc.
Condensed Consolidated Statements of Cash Flows
for the three months ended March 31, 2022
(unaudited)
| 2021 | 2020 | |||||||
| Net Cash provided / (Used) In Operating Activities | $ | (538,065 | ) | $ | (663,192 | ) | ||
| Cash Flows Used In Investing Activities | (805,751 | ) | - | |||||
| Cash Flows Provided / (used) By Financing Activities | 1,368,157 | 3,184,216 | ||||||
| Net (Decrease) Increase in Cash and Cash Equivalents | $ | 28,902 | $ | 2,521,024 | ||||
On February 21 the Company completed public and private financing of an aggregate of $1,202,800.
Capital Requirements for long-term Obligations
None.
Critical Accounting Policies
Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
Future Financing
We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned acquisitions and exploration activities.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
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Recently Issued Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by us as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our consolidated financial position or results of operations upon adoption.
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
Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective as of March 31, 2022, due to the material weaknesses resulting from the Board of Directors not currently having any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K, and controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Please refer to our Annual Report on Form 10-K as filed with the SEC on April 15, 2022, for a complete discussion relating to the foregoing evaluation of Disclosures and Procedures.
Changes in Internal Control over Financial Reporting
Our management has also evaluated our internal control over financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of our last evaluation.
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 1A. Risk Factors.
There have been no material changes in the Company’s risk factors from those previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021.
Item 2. Unregistered Sales of Equity Securities
On January 21, 2020, our Registration Statement on Form 1-A was qualified with the Securities and Exchange Commission, under which we may offer up to 300,000,000 shares of our common stock at a purchase price of $.03 per share. As of the date hereof, 4,523,333 shares of common stock have been issued thereunder.
On January 30, 2020 we issued 1,700,000 shares of our common stock at a purchase price of $.02 per share, as settlement in full of a note payable of in the amount of $36,500 with accrued interest of 19,721. As a result we recognized a gain in the amount of $22,221 in the 1st quarter of 2020.
On February 4, 2020 we issued 2,000,000 shares of our common stock at a price of $.04 per share, in exchange for the conversion of 800 shares of our Series D Preferred Stock.
On July 23, 2020 we issued 3,000,000 shares of our common stock at a price of $.04 per share, in exchange for the conversion of 1,200 shares of our Series D Preferred Stock.
On February 5, 2021 we issued 3,000,000 shares of our common stock at a price of $.08 per share, in exchange for the conversion of 1,200 shares of our Series D Preferred Stock.
On February 9, 2021 we issued 2,275,662 shares of our common stock share, in exchange for the conversion of $182,052 of accrued dividend for the series D Preferred Stock.
On March 12, 2021 we issued 1,625,000 shares and 2,068,588 of our common stock at a price of $.08 per share, in exchange for the conversion of 650 shares of our Series D Preferred Stock and 165,487 of accrued dividend for the series D preferred stock.
On June 28 , 2021 MGW I converted $75,000 from the outstanding balance of their convertible note into 25,000,000 shares of company’s common stock.
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On September 2, 2021 the company issued 1,142,459 as inducement shares. To GHS Investment for the equity line of credit at $0.0475 per share.
On September 13, 2021 the company issued 1,100,630 as issuance correction. To GHS Investment for the equity line of credit at $0.0475 per share.
On December 31,2021 the company issued 9,833,750 at a purchase price of $0.08 pre the 1A subscription agreement.
On February 21, 2022, we issued 15,035,000 shares of our common stock under our Reg A offering at $.08 per share. These shares are unrestricted and free trading.
These securities were issued pursuant to Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder. The holders represented their intention to acquire the securities for investment only and not with a view towards distribution. The investors were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising. We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted stock.
Item 3. Defaults upon Senior Securities
We are currently in default on the payment of $1,200,000, to the balance of the purchase price pursuant to our asset purchase agreement with General Electric International, due to a combination of our inability to raise sufficient capital as expected and our belief that we are entitled to a reduction in purchase price we paid.
We are also in default of $187,285 payments of principal and interest on our notes payable to Cybernaut Zfounder Ventures.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
None.
Item 6. Exhibits
The exhibit listed on the Exhibit Index (following the signatures section of this quarterly report dated March 31, 2022 on Form 10-Q are included, or incorporated by reference, in this three months ended March 31, 2022 Report on Form 10-Q.
EXHIBIT NUMBER |
DESCRIPTION | |||
| 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 | Filed herewith. | ||
| 32.02 | Certification of CFO Pursuant to Section 906 of the Sarbanes-Oxley Act | Filed 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) |
*Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
| 35 |
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, in the City of Costa Mesa, State of California on the 16 th day of May, 2022
| Clean Energy Technologies, Inc. | ||
| REGISTRANT | ||
| /s/ Kambiz Mahdi | ||
| By: | Kambiz Mahdi | |
| Chief Executive Officer | ||
| Date: May 16, 2022 Update all dates to signing to signing date | ||
| /s/ Calvin Pang | ||
| By: | Calvin Pang | |
| Chief Financial Officer | ||
| Date: May 16, 2022 | ||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
| Signature | Title | ||
| /s/ Kambiz Mahdi | Chief Executive Officer and Director | ||
| By: | Kambiz Mahdi | (Principal executive officer) | |
| Date: May 16, 2022 | |||
| 36 |
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.;
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: May 16, 2022 | By: | /s/ KAMBIZ MAHDI |
| Kambiz Mahdi, | ||
| Chief Executive Officer |
Exhibit 31.02
CERTIFICATION OF CHIEF EXECUTIVE 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.;
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: May 16, 2022 | 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 period ended March 31, 2022 (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: May 16, 2022 | By: | /s/ Kambiz Mahdi |
| Kambiz Mahdi | ||
| Chief Executive Officer |
EXHIBIT 32.02
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 period ended March 31, 2022 (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 : May 16, 2022 | By: | /s/ Calvin Pang |
| Calvin Pang | ||
| Chief Financial Officer |