CETY 10-Q
Clean Energy Technologies, Inc. (CETY)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _________ to _________
Commission
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(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. ☒
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller
reporting company | |
| Emerging
Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes
As of July 24, 2026, there were shares of the Registrant’s common stock, par value $ per share, issued and outstanding.
CLEAN ENERGY TECHNOLOGIES, INC.
(A Nevada Corporation)
TABLE OF CONTENTS
| Page | ||
| PART I. FINANCIAL INFORMATION | ||
| ITEM 1. | CONSOLIDATED FINANCIAL STATEMENTS | 3 |
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 39 |
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 48 |
| ITEM 4. | CONTROLS AND PROCEDURES | 48 |
| PART II. OTHER INFORMATION | ||
| ITEM 1. | LEGAL PROCEEDINGS | 49 |
| ITEM 1A. | RISK FACTORS | 49 |
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 50 |
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES | 52 |
| ITEM 4. | MINE SAFETY DISCLOSURES | 52 |
| ITEM 5. | OTHER INFORMATION | 52 |
| ITEM 6. | EXHIBITS | 53 |
| 2 |
Part I – Financial Information
Item 1. Financial Statements
Clean Energy Technologies, Inc.
Consolidated Financial Statements
(Expressed in US dollars)
March 31, 2026 (unaudited)
| 3 |
Clean Energy Technologies, Inc.
Consolidated Balance Sheets
March 31, 2026 (Unaudited) and December 31, 2025 (Audited)
| Unaudited | Audited | |||||||
| March 31, 2026 | December 31, 2025 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | ||||||||
| Accounts receivable | ||||||||
| Accounts receivable - Related Party | ||||||||
| Convertible Note Receivable | ||||||||
| Advance to supplier – Current | ||||||||
| Deferred Equity Issuance cost | ||||||||
| Investment - Jiangsu Gaozheng | ||||||||
| Due from related party | ||||||||
| Loan Receivable – Current | ||||||||
| Inventory | ||||||||
| Total Current Assets | ||||||||
| Non-Current Assets | ||||||||
| Property & Equipment - Net | ||||||||
| Goodwill | ||||||||
| Loans receivable – Non Current | ||||||||
| Contract Assets | ||||||||
| License | ||||||||
| Patents | ||||||||
| Right of use asset - long term | ||||||||
| Other Assets – Related party | ||||||||
| Total Non-Current Assets | ||||||||
| Total Assets | ||||||||
| Liabilities | ||||||||
| Current Liabilities | ||||||||
| Accounts Payable | ||||||||
| Accrued Expenses | ||||||||
| Customer Deposits | ||||||||
| Warranty Liability | ||||||||
| Warrant Liability | ||||||||
| Deferred Revenue | ||||||||
| Derivative Liability | ||||||||
| Facility Lease Liability - Current | ||||||||
| Line of Credit | ||||||||
| Due to Related Party | ||||||||
| Convertible Notes Payable | ||||||||
| Short-Term Notes Payable | ||||||||
| Total Current Liabilities | ||||||||
| Non current liabilities | ||||||||
| Facility Lease Liability - Long Term | ||||||||
| Total Non current liabilities | ||||||||
| Total Liabilities | ||||||||
| Equity | ||||||||
| Common stock, $ par value; authorized shares; and shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively | ||||||||
| Additional Paid-In Capital | ||||||||
| Accumulated other comprehensible loss | ( | ) | ( | ) | ||||
| Accumulated Deficit | ( | ) | ( | ) | ||||
| Total Equity | ||||||||
| Total Liabilities & Equity | ||||||||
The accompanying footnotes are an integral part of these unaudited consolidated financial statements
| 4 |
Clean Energy Technologies, Inc.
Consolidated Statements of Operations and comprehensive income (loss)
for the three months ended March 31, 2026 (Unaudited) and 2025 (Unaudited) (Restated)
| Three Months | ||||||||
| 2026 | 2025 | |||||||
| Sales | ||||||||
| Sales - Related Party | ||||||||
| Total Income | ||||||||
| Cost of Goods Sold | ||||||||
| Gross Profit | ( | ) | ||||||
| Expense | ||||||||
| General and Administrative Expense | ||||||||
| Salaries | ||||||||
| Travel | ||||||||
| Professional Fees Legal & Accounting | ||||||||
| Facility Lease and Maintenance | ||||||||
| Depreciation and Amortization | ||||||||
| Total Expense | ||||||||
| Net Profit / (Loss) From Operations | ( | ) | ( | ) | ||||
| Other Income & Expense | ||||||||
| Other Income | ||||||||
| Change in FV of Warrant Liability | ( | ) | ( | ) | ||||
| Change in FV of Derivative Liability | ( | ) | ||||||
| Interest Income | $ | |||||||
| Investment income (loss) from Shuya | ||||||||
| Interest and Financing fees | ( | ) | ( | ) | ||||
| Net Profit / (Loss) Before Income Taxes | ( | ) | ( | ) | ||||
| Income Tax Expense | ( | ) | ( | ) | ||||
| Net Profit / (Loss) | ( | ) | ( | ) | ||||
| 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 | ||||||||
| Net Profit / (Loss) per common share basic and diluted | ) | ) | ||||||
The accompanying footnotes are an integral part of these unaudited consolidated financial statements
| 5 |
Clean Energy Technologies, Inc.
Consolidated Statements of Stockholders Equity
for the three months ended March 31, 2026 (Unaudited) and 2025 (Unaudited) (Restated)
| Description | Common Stock Shares | Amount | Preferred Stock Shares | Amount | Common Stock to be issued Amount | Additional Paid in Capital | Accumulated Other Comprehensive | Accumulated Deficit | Non Controlling | Stock holders’ Equity Totals | ||||||||||||||||||||||||||||||
| December 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||
| Shares issued for stock compensation | - | |||||||||||||||||||||||||||||||||||||||
| Shares issued for debt inducement | - | |||||||||||||||||||||||||||||||||||||||
| Shares issued for series E preferred conversion | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Value of the warrants issued for Mast Hill | - | - | ||||||||||||||||||||||||||||||||||||||
| Accumulated Comprehensive | - | - | ||||||||||||||||||||||||||||||||||||||
| Accrued Series E preferred dividend | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Net Loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| March 31, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||
| Description | Common Stock Shares | Amount | Preferred Stock Shares | Amount | Common Stock to be issued Amount | Additional Paid in Capital | Accumulated Other Comprehensive | Accumulated Deficit | Non Controlling | Stock holders’ Equity Totals | ||||||||||||||||||||||||||||||
| December 31, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||||||
| Shares issued for stock compensation | - | - | ||||||||||||||||||||||||||||||||||||||
| Shares issued for debt conversion | - | |||||||||||||||||||||||||||||||||||||||
| Shares issued for debt inducement | - | - | ||||||||||||||||||||||||||||||||||||||
| Shares issued for subscription | - | |||||||||||||||||||||||||||||||||||||||
| Shares issued for series E preferred conversion | - | - | ||||||||||||||||||||||||||||||||||||||
| Value of the warrants issued for Mast Hill | - | - | ||||||||||||||||||||||||||||||||||||||
| Accumulated Comprehensive | - | - | ||||||||||||||||||||||||||||||||||||||
| Accrued Series E preferred dividend | - | - | ||||||||||||||||||||||||||||||||||||||
| Deferred offering cost | - | - | ||||||||||||||||||||||||||||||||||||||
| Net Loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| March 31, 2026 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||||
The accompanying footnotes are an integral part of these unaudited consolidated financial statements
| 6 |
Clean Energy Technologies, Inc.
Consolidated Statements of Cash Flows
for the three months ended March 31, 2026 (Unaudited) and 2025 (Unaudited) (Restated)
| 2026 | 2025 | |||||||
| (Unaudited) | (Unaudited) Restated | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net Income / (Loss) | ( | ) | ( | ) | ||||
| Depreciation and amortization | ||||||||
| Forgiveness of convertible note balance | ( | ) | ||||||
| Stock compensation expense | ||||||||
| Amortization of debt discount | ||||||||
| Attributable income per equity method - Shuya | ( | ) | ||||||
| Change in fair value of derivative liabilities | ( | ) | ||||||
| Change in fair value of warrant liabilities | ||||||||
| Change in fair value of convertible note receivable (Other income) | ( | ) | ||||||
| Reversal of inventory impairment reserve | ( | ) | ||||||
| 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 accounts receivable – related party | ( | ) | ||||||
| (Increase) decrease in prepaid expenses | ( | ) | ||||||
| (Increase) decrease in contract asset | ( | ) | ||||||
| (Increase) decrease in other assets | ( | ) | ||||||
| (Increase) decrease in interest receivable | ( | ) | ||||||
| (Increase) decrease in inventory | ( | ) | ||||||
| (Decrease) increase in accounts payable | ||||||||
| (Decrease) increase in accrued interest | ||||||||
| (Decrease) increase in accrued expenses | ( | ) | ||||||
| (Decrease) increase in customer deposits | ||||||||
| Net Cash Used In Operating Activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities | ||||||||
| Convertible note receivable | ( | ) | ||||||
| Long term investment | ( | ) | ||||||
| Loan receivables | ( | ) | ||||||
| Cash Flows Provided by (Used In) Investing Activities | ( | ) | ( | ) | ||||
| Cash Flows from Financing Activities | ||||||||
| Proceeds from notes payable and lines of credit | ||||||||
| Payments on notes payable and line of credit | ( | ) | ( | ) | ||||
| Stock issued for cash | ||||||||
| Cash Flows Provided By Financing Activities | ||||||||
| Foreign Currency Transaction | ||||||||
| Net (Decrease) Increase in Cash and Cash Equivalents | ( | ) | ( | ) | ||||
| Cash and Cash Equivalents at Beginning of Period | ||||||||
| Cash and Cash Equivalents at End of Period | ||||||||
| Supplemental Cashflow Information: | ||||||||
| Interest Paid | $ | |||||||
| Supplemental Non-Cash Disclosure | ||||||||
| Discount on new notes | $ | $ | ||||||
| Shares issued for note conversions | $ | |||||||
| Shares issued for note receivable | ||||||||
| Dividend accrued | $ | $ | ||||||
The accompanying footnotes are an integral part of these unaudited 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, 2026, reflect all adjustments which, in the opinion of management, are necessary to fairly state the Company’s financial position and the results of its operations for the periods presented, in accordance with the accounting principles generally accepted in the United States of America. All adjustments are of a normal recurring nature.
These unaudited interim consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in the Company’s fiscal year end December 31, 2025 report. The Company assumes that the users of the interim financial information herein have read, or have access to, the audited consolidated financial statements for the preceding period, and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. The results of operations for the three months ended March 31, 2026 are not necessarily indicative of results for the entire year ending December 31, 2025.
The summary of significant accounting policies of Clean Energy Technologies, Inc. is presented to assist in the understanding of the Company’s consolidated financial statements. The consolidated financial statements and notes are representations of the Company’s management, who is responsible for their integrity and objectivity.
Corporate History
We were incorporated in California in July 1995 under the name Probe Manufacturing Industries, Inc. We redomiciled to Nevada in April 2005 under the name Probe Manufacturing, Inc. We manufactured electronics and provided services to original equipment manufacturers (OEMs) of industrial, automotive, semiconductor, medical, communication, military, and high technology products. On September 11, 2015 Clean Energy HRS, or “CE HRS”, our wholly owned subsidiary acquired the assets of Heat Recovery Solutions from General Electric International. In November 2015, we changed our name to Clean Energy Technologies, Inc.
Our principal executive offices are located at 1340 Reynolds Avenue, Irvine, CA 92614. Our common stock is listed on the Nasdaq Capital Market under the symbol “CETY.”
Our internet website address is www.cetyinc.com. The information contained on our website is not incorporated by reference into this document, and you should not consider any information contained on, or that can be accessed through, our website as part of this document.
The
Company has
Going Concern
The
financial statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets
and liquidation of liabilities in the normal course of business. The Company had a total stockholder’s equity of $
| 8 |
Plan of Operation
CETY is a clean energy technology company providing eco-friendly energy solutions, clean energy fuels, and alternative electric power for small to mid-sized projects across North America, Europe, and Asia. The company harnesses the power of heat and biomass to produce electricity with zero emissions and minimal cost. Additionally, the company offers Waste to Energy Solutions, converting waste materials from manufacturing, agriculture, and wastewater treatment plants into electricity and BioChar. Clean Energy Technologies also provides Engineering, Consulting, and Project Management Solutions, leveraging its expertise to develop clean energy projects for both municipal and industrial customers, as well as Engineering, Procurement, and Construction (EPC) companies.
Our principal businesses
Heat Recovery Solutions – Clean Energy Technologies patented Clean Cycle Generator (CCG) is a heat recovery system that captures waste heat from various sources and converts it into electricity. This system can be integrated into various industrial processes, helping to reduce energy costs and carbon emissions.
Waste to Energy Solutions - Clean Energy Technologies’ waste to energy solutions involve converting organic waste materials, such as agricultural waste and food waste, into clean energy through its proprietary pyrolysis technology that produce a range of products, including electricity, heat, and biochar.
Engineering, Consulting and Project Management Solutions – Clean Energy Technologies provides power generation, waste to energy, and heat recovery Engineering, Procurement and Construction (EPC) services to municipal and industrial customers and to design and incorporate clean energy solutions in their projects.
Clean Energy Technologies (H.K.) Limited (“CETY HK”) Clean Energy Technologies (H.K.) Limited (“CETY HK”) consists of two business ventures in mainland China: (i) our natural gas (“NG”) trading operations sourcing and suppling NG to industries and municipalities, operated through our PRC Subsidiaries and Shuya. The NG is principally used for heavy truck refueling stations and urban or industrial users. We purchase large quantities of NG from large wholesale NG depots at fixed prices which are prepaid for in advance at a discount to market. We sell the NG to our customers at prevailing daily spot prices for the duration of the contracts; and (ii) our planned joint venture with a large state-owned gas enterprise in China called Shenzhen Gas (Hong Kong) International Co. Ltd. (“Shenzhen Gas”), acquiring natural gas pipeline operator facilities, primarily located in the southwestern part of China. Our planned joint venture with Shenzhen Gas plans to acquire, with financing from Shenzhen Gas, natural gas pipeline operator facilities with the goal of aggregating and selling the facilities to Shenzhen Gas in the future. The terms of the joint venture are subject to the execution of definitive agreements. CETY HK has not commenced business with Shenzhen Gas due to macro-economic factors such as falling NG prices and reduced industrial demand. CETY HK will wait until macro economic factors have improved before commencement of the Shenzhen Gas joint venture. On or about June 18, 2025, CETY HK acquired a holding company, Herbert YF Global Holding Limited, a limited company organized under the laws of Hong Kong.
On
September 26, 2025, the Company’s Board of Directors approved a reverse stock split of its authorized and issued and outstanding
shares of common stock, par value $ per share (the “Common Stock”), at a ratio of
On
or about July 1, 2025, Company subsidiary Herbert YF Global Holding Limited entered into a Consulting Agreement (the “Linkage Consulting
Agreement”) with Linkage International Limited (the “Consultant”), a Hong Kong company and one of the Company’s
investors from the Company’s May 6, 2025, private placement, pursuant to which the Company had sold in the aggregate shares
of Company common stock at a price of $ per share (on a split-adjusted basis), for aggregate gross proceeds of $
| 9 |
NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The summary of significant accounting policies of Clean Energy Technologies, Inc. (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.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Such estimates may be materially different from actual financial results. Significant estimates include the recoverability of long-lived assets, the collection of accounts receivable and valuation of inventory and reserves.
Cash and Cash Equivalents
We
maintain the majority of our cash accounts at JP Morgan Chase bank. The total cash balance is insured by the Federal Deposit Insurance
Corporation (“FDIC”) up to $
Credit losses
On January 1, 2023, the Company adopted Accounting Standards Update 2016-13 “Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,” which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The adoption of the credit loss accounting standard has no material impact on the Company’s consolidated financial statements as of January 1, 2023.
The Company’s account receivables, prepayments, other receivables and other current assets in the balance sheet are within the scope of ASC Topic 326. As the Company has limited customers and debtors, the Company uses the loss-rate method to evaluates the expected credit losses on an individual basis. When establishing the loss rate, the Company makes the assessment on various factors, including historical experience, creditworthiness of customers and debtors, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from the customers and debtors. The Company also provides specific provisions for allowance when facts and circumstances indicate that the receivable is unlikely to be collected.
Expected credit losses are recorded as allowance for credit losses on the consolidated statements of operations. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. In the event the Company recovers amount that is previously reserved for, the Company will reduce the specific allowance for credit losses.
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, 2026, and December 31, 2025, we had a reserve for potentially un-collectable accounts receivable of $ and $. Our policy for reserves for our long-term financing receivables is determined on a contract-by-contract basis and considers the length of the financing arrangement. As of March 31, 2026, and December 31, 2025, we had a reserve for potentially un-collectable long-term financing receivables of $ and $.
One
customer accounted for
| 10 |
Contract Assets
Contract
assets primarily represent amounts due from one customer for contractual rights to consideration that are conditioned on the achievement
of specified project milestones. Included in the contract asset balance is a long-term receivable that is recorded at its present value
using an appropriate discount rate. The carrying amount reflects a present value discount of approximately $
Inventory
Inventories
are valued at the lower of weighted average cost 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, 2026 we had a reserve 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 are computed on the straight-line method over the following estimated useful lives of the related assets:
Furniture
and fixtures
Equipment
Long – Lived Assets
Long-lived assets, which include property, plant and equipment and intangible assets with finite lives, and operating lease right-of-use assets, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.
Recoverability of long-lived assets to be held and used is measured by comparing the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable.
The
Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the asset’s carrying
amount may not be recoverable. The Company conducts its long-lived asset impairment analyses in accordance with ASC 360-10-15, “Impairment
or Disposal of Long-Lived Assets.” ASC 360-10-15 requires the Company to group assets and liabilities at the lowest level for which
identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset group against
the sum of the undiscounted future cash flows. If the undiscounted cash flows do not indicate the carrying amount of the asset is recoverable,
an impairment charge is measured as the amount by which the carrying amount of the asset group asset group exceeds its fair value based
on discounted cash flow analysis or appraisals. There is
Revenue Recognition
The Company recognizes revenue under ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” (“ASC 606”).
| 11 |
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 |
The following step is applied to our CETY HK business unit:
| ● | CETY HK is primarily responsible for fulfilling the contract / promise to provide the specified good or service. |
| 12 |
A principal obtains control over any one of the following (ASC 606-10-55-37A):
| a. | A good or another asset from the other party which the entity then transfers to the customer. Note that momentary control before transfer to the customer may not qualify. | |
| b. | A right to a service to be performed by the other party, which gives the entity the ability to direct that party to provide the service to the customer on the entity’s behalf. | |
| c. | A good or service from the other party that it then combines with other goods or services in providing the specified good or service to the customer. |
If the entity obtains control over one of the above before the good or service is transferred to a customer, the entity could be considered a principal.
Additionally, the above five steps are applied to achieve core principle for our CETY Renewables Division:
Because the CETY Renewables division is presently engaged in the Engineering, Procurement, and Construction (EPC) of biomass power facilities, CETY Renewables has developed a process of executing EPC Agreements with customers for this work. In contracting these engagements, CETY Renewables recognizes revenue according to accounting standards in accordance with ASC 606.
In recognizing this revenue, CETY Renewables first identifies the relevant contract with its customer according to 606-10-25-1.
| ● | The entities, together known as the Parties, approved the contract in writing, through signatures and commitment to the performance of permitting, design, procurement, construction, and commissioning. | |
| ● | CETY’s work product includes permits, engineering designs, equipment, and full balance of plant specific to permitting, design, procurement, construction, and commissioning. | |
| ● | CETY and customer agree to a total EPC contract price. | |
| ● | The contract has commercial substance. The risk associated with this EPC Agreement is that payment of the EPC contract price. | |
| ● | Per the EPC Agreement, CETY expects to collect substantially all of the consideration for its goods and services. |
Secondly, CETY identifies the performance obligations of the Parties in performance of the EPC Agreement in accordance with 606-10-25-14. At contract inception, CETY assesses the goods and services necessary to deliver the facility in accordance with its agreement with clients. The agreement specifically laid out all deliverables necessary to achieve the permitting, design, procurement, construction, and commissioning.
CETY also looks at 606-10-25-14(A). A bundle of goods or services is also present, in that CETY is delivering all work products associated with permitting, design, procurement, construction and commissioning of a commercially operable biomass power plant. A biomass power plant is a distinct bundle of goods or services, so the individual goods or services on their own do not lend themselves to a fully integrated or functional system.
CETY in accordance with 606-10-32-1, CETY reviews measurement of the performance obligations. There is no exclusion of any amount of the Contract Price due to constraints associated with 606-10-31-11 through 606-10-32-13.
In review of 606-10-32-2A, CETY did not exclude measurement from the measurement of the transaction price any taxes assessed by a government authority as no such taxes will be due.
In reviewing 606-10-32-3, CETY evaluated the nature, timing, and amount of consideration promised, and whether it impacts the estimate of the transaction price.
Finally, in identifying a single method of measuring progress for each performance obligation satisfied over time, in accordance with 606-10-25-32, CETY applies the methodology of 606-10-25-36. CETY adopted and implemented the input method for revenue recognition in accordance with ASC 606-10-25-33. The company adopts the input method for implementation. CETY recognizes revenue for performance obligations on the basis of the entity’s efforts or inputs to the satisfaction of a performance obligation per 606-10-55-20.
| 13 |
For CETY, the contracts with clients for the construction of biomass power plants are the basis for revenue recognition. In each separate EPC Agreement, the performance obligations include permitting, design, procurement, construction, and commissioning of the plant. All of these work products satisfy Section 606-10-25-27(b) as these work products create or enhance an asset under customer’s control. Upon delivery of the work product, the customer takes control of the work products and has full right and ability to direct the use of and obtain substantially all of the remaining benefits of the assets. We recognize revenue over time, using timeline and milestone methods to measure progress towards complete satisfaction of the performance obligation.
During the complexity and duration of the biomass power plant construction projects, CETY will recognize revenue over time, consistent with the criteria for over-time recognition under ASC 606. This approach reflects the continuous transfer of documents, permits, and the equipment over to the customer, which is characteristic of long-term construction contracts.
We have a list of appropriate measures of progress: This is based on milestones achieved, among other measures.
Given the long-term nature of the projects, CETY regularly reviews and, if necessary, updates its estimates of progress towards completion, transaction price, and the allocation of the transaction price to performance obligations.
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, 2026 and December 31, 2025, we
had outstanding customer deposits of $
Derivative liability
A derivative is an instrument whose value is “derived” from an underlying instrument or index such as a future, forward, swap, option contract, or other financial instrument with similar characteristics, including certain derivative instruments embedded in other contracts and for hedging activities.
The Company does not invest in separable financial derivatives or engage in hedging transactions. However, the Company entered into certain debt financing transactions as disclosed in Note 9 containing certain conversion features that have resulted in the instruments being deemed derivatives. The Company evaluates such derivative instruments to properly classify such instruments within equity or as liabilities in the financial statements.
The classification of a derivative instrument is reassessed at each reporting date. If the classification changes as a result of events during a reporting period, the instrument is reclassified as of the date of the event that caused the reclassification. There is no limit on the number of times a contract may be reclassified.
Instruments
classified as derivative liability is remeasured using the Black-Scholes model at each reporting period (or upon reclassification) and
the change in fair value is recorded on the consolidated statement of operations. The Company had derivative liability of $
Fair Value of Financial Instruments
The Financial Accounting Standards Board issued ASC (Accounting Standards Codification) 820-10 (SFAS No. 157), “Fair Value Measurements and Disclosures” for financial assets and liabilities. ASC 820-10 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. FASB ASC 820-10 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. FASB ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value:
| ● | Level 1: Quoted prices in active markets for identical assets or liabilities. | |
| ● | Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities. | |
| ● | 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, accrued expenses, and convertible notes payable. The estimated fair value of cash, prepaid expenses, investments, accounts payable, accrued expenses and convertible notes payable approximate their carrying amounts due to the short-term nature of these instruments.
| 14 |
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.
Basic (loss) per share is computed on the basis of the weighted average number of common shares outstanding. At March 31, 2026, we had outstanding common shares of . Basic Weighted average common shares and equivalents for the three months ended March 31, 2026, and March 31, 2025 were and respectively. As of March 31, 2026, we had convertible notes, convertible into approximately of additional common shares and outstanding warrants of shares. Fully diluted weighted average common shares and equivalents were withheld from the calculation for the three months ended March 31, 2026, and March 31, 2025 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.
| 15 |
Selected Financial Data:
| For the three months ended March 31, | ||||||||
| 2026 | 2025 (Restated) | |||||||
| Net Sales | ||||||||
| Manufacturing and Engineering | $ | $ | ||||||
| Heat Recovery Solutions | ||||||||
| NG Trading | ||||||||
| Waste to Energy | ||||||||
| Total Sales | $ | $ | ||||||
| Segment income and reconciliation before tax | ||||||||
| Manufacturing and Engineering | $ | $ | ||||||
| Heat Recovery Solutions | ( | ) | ||||||
| LNG Trading | ||||||||
| Waste to Energy | ||||||||
| Total Segment income | ( | ) | ||||||
| Less: operating expense | ( | ) | ( | ) | ||||
| Less: other income and expenses | ( | ) | ||||||
| Net (loss) before income tax | $ | ( | ) | $ | ( | ) | ||
| March 31, 2026 | December 31, 2025 | |||||||
| Total Assets | ||||||||
| Manufacturing and Engineering | $ | $ | ||||||
| Heat Recovery Solutions | ||||||||
| Waste to Energy | ||||||||
| NG Trading | ||||||||
| Total Assets | $ | $ | ||||||
The following table represents revenue by geographic area based on the sales location of our products and solutions:
| For the three months ended March 31, | ||||||||
| 2026 (Restated) | 2025 | |||||||
| United States | $ | $ | ||||||
| China | ||||||||
| Other international | ||||||||
| Total Sales | $ | $ | ||||||
Leases
The Company adopted ASC Topic 842, Leases, or ASC 842, using the modified retrospective transition method with a cumulative effect adjustment to be accumulated deficit as of January 1, 2019, and accordingly, modified its policy on accounting for leases as stated below. As described under “Recently Adopted Accounting Pronouncements,” below, the primary impact of adopting ASC 842 for the Company was the recognition in the consolidated balance sheet of certain lease-related assets and liabilities for operating leases with terms longer than 12 months.
The Company’s leases primarily consist of facility leases which are classified as operating leases. The Company assesses whether an arrangement contains a lease at inception. The Company recognizes a lease liability to make contractual payments under all leases with terms greater than twelve months and a corresponding right-of-use asset, representing its right to use the underlying asset for the lease term. The lease liability is initially measured at the present value of the lease payments over the lease term using the collateralized incremental borrowing rate since the implicit rate is unknown. Options to extend or terminate a lease are included in the lease term when it is reasonably certain that the Company will exercise such an option. The right-of-use asset is initially measured as the contractual lease liability plus any initial direct costs and prepaid lease payments made, less any lease incentives. Lease expense is recognized on a straight-line basis over the lease term.
| 16 |
Leased right-of-use assets are subject to impairment testing as a long-lived asset at the asset-group level. The Company monitors its long-lived assets for indicators of impairment. As the Company’s leased right-of-use assets primarily relate to facility leases, early abandonment of all or part of facility as part of a restructuring plan is typically an indicator of impairment. If impairment indicators are present, the Company tests whether the carrying amount of the leased right-of-use asset is recoverable including consideration of sublease income, and if not recoverable, measures impairment loss for the right-of-use asset or asset group.
Income Taxes
Federal Income taxes are not currently due since we have had losses since inception of Clean Energy Technologies.
Income taxes are provided based upon the liability method of accounting pursuant to ASC 740-10-25 Income Taxes – Recognition. Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the “more likely than not” standard required by ASC 740-10-25-5.
Deferred income tax amounts reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting purposes.
As
of December 31, 2025, we had a net operating loss carry-forward of approximately $
On February 13, 2018, the Company completed a financing transaction that resulted in a change in ownership under Section 382 of the Internal Revenue Code. As a result, the Company’s ability to utilize its net operating loss carryforwards (“NOLs”) is subject to annual limitations. Management has considered these limitations in evaluating the realizability of the Company’s deferred tax assets.
Reclassification
Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported income, total assets, or stockholders’ equity as previously reported.
| 17 |
Recently Issued Accounting Standards
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The standard enhances income tax disclosures by requiring more detailed information regarding the effective tax rate reconciliation and income taxes paid. The Company adopted ASU 2023-09 effective January 1, 2025. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements or related disclosures.
Accounting Standards Not Yet Adopted
In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The standard requires public business entities to provide additional disaggregated information regarding certain expense captions presented in the income statement. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact that adoption of this standard will have on its consolidated financial statements and related disclosures.
In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270), which enhances interim financial reporting disclosures by improving the consistency and transparency of information provided in interim financial statements. The amendments are effective for interim reporting periods beginning after December 15, 2025. The Company is currently evaluating the impact of adopting this standard on its interim financial statement disclosures.
In December 2025, the FASB issued ASU No. 2025-12, Accounting Standards Codification Improvements, which includes various amendments intended to clarify, simplify, and improve existing accounting guidance. The Company is currently evaluating the impact of adopting this standard and does not expect its adoption to have a material impact on its consolidated financial statements.
Deferred Stock Issuance Costs
Deferred
stock issuance costs represent amounts paid for legal, consulting, and other offering expenses in conjunction with the future raising
of additional capital to be performed within one year. These costs are netted against additional paid-in capital as a cost of the stock
issuance upon closing of the respective stock placement. During the three months ended March 31, 2026 and the year ended December 31,
2025, the Company capitalized $
NOTE 3 – ACCOUNTS RECEIVABLE
| March 31, 2026 | December 31, 2025 | |||||||
| Accounts Receivable | $ | $ | ||||||
| Accounts Receivable Related Party | ||||||||
| Total | $ | $ | ||||||
Our Accounts Receivable is pledged to Nations Interbanc, our line of credit.
| March 31, 2026 | December 31, 2025 | |||||||
| Long-term financing receivables | $ | $ | ||||||
| Less Reserve for uncollectable accounts | ( | ) | ||||||
| Long-term financing receivables - net | $ | $ | ||||||
The Company is currently modifying the assets subject to lease to meet the provisions of the agreement, and as of March 31, 2026 any collection on the lease payments was not yet considered probable, resulting in no derecognition of the underlying asset and no net lease investments recognized on the sales-type lease pursuant to ASC 842-30-25-3.
On a contract by contract basis or projects that require extensive work from multiple contractors or supply chain challenges or in response to certain situations or installation difficulties, the Company may elect to allow non-interest bearing repayments in excess of 1 year.
Our long - term financing Receivable are pledged to Nations Interbanc, our line of credit.
| 18 |
NOTE 4 – INVENTORIES
Inventories by major classification were comprised of the following at:
| March 31, 2026 | December 31, 2025 | |||||||
| Inventory | $ | $ | ||||||
| Less reserve | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
Our Inventory is pledged to Nations Interbanc, our line of credit.
NOTE 5 – PROPERTY AND EQUIPMENT
Property and equipment were comprised of the following at:
| March 31, 2026 | December 31, 2025 | |||||||
| Property and Equipment | $ | $ | ||||||
| Accumulated Depreciation | ( | ) | ( | ) | ||||
| Net Property and equipment | $ | $ | ||||||
Our
Depreciation Expense for the three months ended March 31, 2026, and 2025 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:
| March 31, 2026 | December 31, 2025 | |||||||
| Goodwill | $ | $ | ||||||
| License | ||||||||
| Patents | ||||||||
| Accumulated Amortization | ( | ) | ( | ) | ||||
| Net Intangible Assets | $ | $ | ||||||
Our
Amortization Expense for the three months ended March 31, 2026, and 2025 was $
As
of both March 31, 2026, and December 31, 2025, goodwill amounted to $
The
LWL Investment, previously classified as an indefinite-lived asset, had a carrying value of $
As a result of this impairment, no value is reflected on the Company’s balance sheet as of December 31, 2025.
The
License balance remained unchanged at $
The
Patents balance, after amortization, was $
| 19 |
NOTE 7 – LOANS RECEIVABLE AND CONVERTIBLE NOTES RECEIVABLE
Effective
January 10, 2022, JHJ (the “Note Holder”) entered into a convertible loan agreement with Chengdu Rongjun Enterprise Consulting
Co., Ltd. (“Rongjun” or the “Borrower”), pursuant to which JHJ advanced RMB
In
October 2022, the Company amended the terms of the loan by reducing the stated interest rate from
Following the modification, the loan is accounted for at amortized cost using the effective interest method. Although the modified loan bears no stated interest, interest income is recognized through the accretion of the initial discount, representing the difference between the fair value at recognition and the contractual principal amount, over the remaining term of the loan. As a result, the carrying value of the loan increases over time and is expected to accrete to its contractual principal amount at maturity.
The
Company evaluated the collectability of the loan receivable in accordance with ASC 326, Financial Instruments – Credit Losses (CECL).
Based on the Borrower’s financial condition, the underlying project economics, and forward-looking information, The Company evaluated
the collectability of the loan receivable in accordance with ASC 326, Financial Instruments—Credit Losses (CECL). In estimating
expected credit losses, management considered the borrower’s financial condition, the related-party nature of the investment, the
status and expected economics of the underlying pipeline project, the remaining contractual term through January 2027, and other forward-looking
information available as of December 31, 2025. Based on this assessment, the Company recorded an allowance for expected credit losses
equal to approximately
The Company also evaluated the embedded conversion feature under ASC 815, Derivatives and Hedging, and concluded that bifurcation as a derivative is not required, as the underlying equity interests are not readily convertible to cash and the feature does not meet the criteria for derivative accounting.
On
January 12, 2026, the Company entered into a Note Purchase Agreement with Filled Converge Limited and Li Xiaoguang to acquire a HK$
The
Company also holds a convertible note receivable from Filled Converge Limited with an aggregate principal balance of approximately $
The
convertible note receivable is measured at fair value on a recurring basis. As of March 31, 2026, the estimated fair value of the convertible
note was approximately $
The
outstanding balance of the convertible note as of March 31, 2026 is $
| 20 |
NOTE 8 – ACCRUED EXPENSES
| March 31, 2026 | December 31, 2025 | |||||||
| Accrued Wages | $ | $ | ||||||
| Sales tax payable | ||||||||
| Accrued Taxes and other | ||||||||
| Total accrued expenses | $ | $ | ||||||
NOTE 9 – WARRANT LIABILITY
On
December 5, 2024, the Company entered into an Equity Line of Credit Agreement with Mast Hill Fund, L.P. (the “Investor”),
pursuant to which the Investor committed to provide up to $
In
connection with the agreement, the Company issued a purchase warrant to the Investor to purchase up to
The warrant contains a down-round provision whereby the exercise price will be reduced if the Company issues common stock, options, or convertible securities at a price below the then-current exercise price of the warrant.
The
warrant was classified as a liability and initially recorded at fair value of $
The following table presents a reconciliation of the credit line warrant liability measured and recorded at fair value on a recurring basis:
For the three months ended March 31, 2026 | For the three months ended March 31, 2025 | |||||||
| Fair value-beginning of period | $ | $ | ||||||
| Change in fair value | ||||||||
| Fair value-end of period | $ | $ | ||||||
NOTE 10 – LINE OF CREDIT AND NOTES PAYABLE
On
November 11, 2013, we entered into an accounts receivable financing agreement with American Interbanc (now Nations Interbanc). Amounts
outstanding under the agreement bear interest at the rate of
On
April 1, 2021, we entered into an amendment to the purchase order financing agreement with DHN Capital, LLC dba Nations Interbanc. Nations
Interbanc has lowered the accrued fees balance by $
During the year 2024, 2025, and quarter ended March 31, 2026, the Company entered into several “sale of future receipts” / merchant cash-advance arrangements with Reliance Financial FL LLC, as well as a subordinated business loan with Agile Lending, LLC and a purchase order financing facility with Nations Interbanc. Although certain Reliance contracts are legally structured as non-recourse “sales” of future business receipts, management concluded that these arrangements do not involve the transfer of discrete existing financial assets that would qualify for derecognition under ASC 860. Instead, the Company continues to generate and collect its operating cash receipts and remits amounts to the lenders until the contractual repayment amounts have been satisfied.
| 21 |
Accordingly, the Reliance, Agile and Nations Interbanc arrangements are accounted for as interest-bearing financing liabilities within the scope of ASC 470 and ASC 835. The Company records the net proceeds received as short-term debt and recognizes the excess of the total contractual repayment amounts (including any origination fees, daily fees and make-whole or prepayment charges) over the net proceeds as debt discounts or financing costs, which are amortized to interest expense using the simple interest method over the expected repayment periods. Legal and other third-party costs that are directly attributable to obtaining these financings are capitalized as debt issuance costs and presented as a direct deduction from the related liabilities.
On
or about October 31, 2024, and December 24, 2024, the Company borrowed approximately $
On
or about July 15, 2024, August 6, 2024, and October 10, 2024, the Company borrowed approximately $
On
January 10, 2025, May 22, 2025 the Company borrowed approximately $
On
June 30, 2025, the Company borrowed approximately $
On
or about November 6, 2025, and December 31, 2025, the Company borrowed approximately $
On
or about December 31, 2025, the Company borrowed approximately $
Convertible Notes Payable, Net
On
January 3, 2024, the Company entered into a securities purchase agreement with FirstFire, pursuant to which the Company agreed to issue
and sell to FirstFire the promissory note of the Company in the principal amount of $
On
February 2, 2024, the Company entered into a securities purchase agreement with Coventry Enterprises LLC, a Delaware limited liability
company Coventry pursuant to which the Company agreed to issue and sell to the Buyer the promissory note of the Company in the principal
amount of $
| 22 |
On
March 4, 2024, the Company entered into a securities purchase agreement with FirstFire, pursuant to which the Company agreed to issue
and sell to the FirstFire the promissory note of the Company in the principal amount of $
On
April 4, 2025, the Company entered into a securities purchase agreement with Pacific Pier Capital II, LLC, a Delaware limited liability
company (“Pacific Pier”), pursuant to which the Company sold, and Pacific Pier purchased, (i) a convertible promissory note
in the principal amount of $
During
the twelve months ended December 31, 2025 and quarter ended March 31, 2026 , there was $
Effective
April 23, 2025, the Company entered into a securities purchase agreement with Pacific Pier, pursuant to which the Company sold, and Pacific
Pier purchased, (i) a convertible promissory note in the principal amount of $
During
the twelve months ended December 31, 2025 and quarter ended March 31, 2026, there was
On
May 8, 2025, the Company entered into a securities purchase agreement with 1800 Diagonal Lending LLC, a Virginia limited liability company
(“1800 Diagonal”), pursuant to which the Company sold, and 1800 Diagonal purchased, a convertible promissory note in the
principal amount of $
| 23 |
Effective
June 4, 2025, the Company entered into a securities purchase agreement with Mast Hill, pursuant to which the Company sold, and Mast Hill
purchased, (i) a junior secured convertible promissory note in the principal amount of $
During
the year ended December 31, 2025, there was $
Effective
July 18, 2025, the Company entered into a securities purchase agreement with Firstfire Global Opportunities Fund LLC (“Firstfire”),
pursuant to which the Company sold, and Firstfire purchased, (i) a junior secured convertible promissory note in the principal amount
of $
During the quarter ended March 31, 2026, FirstFire converted of principal and interest and interest on January 20, 2026. On March 31, 2026.
On
July 30, 2025, the Company entered into a securities purchase agreement with 1800 Diagonal Lending LLC, a Virginia limited liability
company (“1800 Diagonal”), pursuant to which the Company sold, and 1800 Diagonal purchased, a convertible promissory note
in the principal amount of $
| 24 |
Effective
August 15, 2025, the Company entered into a securities purchase agreement with Mast Hill, pursuant to which the Company sold, and Mast
Hill purchased, (i) a junior secured convertible promissory note in the principal amount of $
On
or about March 4, 2026, the Company entered into a securities purchase agreement (the “1800 SPA”) with 1800 Diagonal Lending
LLC, a Virginia limited liability company (“1800 Diagonal”), pursuant to which the Company sold, and 1800 Diagonal purchased,
a convertible promissory note in the principal amount of $
The
Transaction was funded by 1800 Diagonal and closed on March 4, 2026, and pursuant to the 1800 SPA, 1800 Diagonal’s legal expenses
of $
The
1800 SPA includes customary representations, warranties and covenants by the Company and customary closing conditions. The 1800 SPA requires
that the proceeds from the Transaction be used for general working capital purposes. The 1800 Note matures on
On
or about March 6, 2026, in consideration of (i) $
The
Mega SPAs include customary representations, warranties and covenants by the Company. The Mega Note accrues interest at
The
balance to Mega Note as of March 31, 2026 respectively was $
| 25 |
On
or about March 6, 2026, in consideration of $
The
Noblebear SPA include customary representations, warranties and covenants by the Company. The Noblebear Notes accrues interest at
The
balance to Noblebear as of March 31, 2026 was $
The following is the change in derivative liability for the three Months ended March 31, 2026:
| Balance, January 1, 2026 | $ | |||
| Issuance of new Convertible notes | ||||
| Conversions | ( | ) | ||
| Change in fair market value of derivative liability | ||||
| Balance, March 31, 2026 | $ |
The following is the change in derivative liability for the twelve Months ended December 31, 2025:
| Balance, January 1, 2025 | $ | |||
| Issuance of new derivative liability | ||||
| Conversions | ( | ) | ||
| Change in fair market value of derivative liability | ( | ) | ||
| Balance, December 31, 2025 | $ |
Total due to Convertible Notes
| March 31, 2026 | December 31, 2025 | |||||||
| Outstanding principal amount | $ | |||||||
| Accrued interest | ||||||||
| Debt discount | ( | ) | ( | ) | ||||
| Amortization of debt discount | ||||||||
| Total | $ | |||||||
Fair Value Measurements
The Company’s financial instruments consist primarily of cash, accounts receivable, accounts payable, accrued liabilities, notes payable, and derivative liabilities. The carrying amounts of cash, accounts receivable, accounts payable, and accrued liabilities approximate fair value due to their short-term maturities. The Company measures certain financial liabilities at fair value on a recurring basis. Derivative liabilities associated with certain convertible debt are measured at fair value using Level 3 inputs within the fair value hierarchy because the valuation models utilize significant unobservable inputs.
| 26 |
The following table presents the Company’s liabilities measured at fair value on a recurring basis:
March 31, 2026
| Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||
| Derivative liabilities | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
December 31, 2025
| Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||
| Derivative liabilities | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
The following table presents the changes in the Company’s Level 3 derivative liabilities for the three months ended March 31, 2026:
| Amount | ||||
| Balance, beginning of period | $ | |||
| Issuance of derivative liabilities | ||||
| Conversions | ( | ) | ||
| Change in fair value recognized in earnings | ||||
| Balance, end of period | $ | |||
The fair values of the derivative liabilities were determined using Monte Carlo simulation and Black-Scholes option pricing models, as applicable. Significant unobservable inputs used in the valuation models included the following:
| Significant Unobservable Inputs | March 31, 2026 | |
| Valuation methodology | ||
| Stock price | $ – $ | |
| Expected dividend yield | ||
| Expected stock price volatility | ||
| Risk-free interest rate | ||
| Expected term |
Changes in the fair value of derivative liabilities are recognized in the condensed consolidated statements of operations as a component of other income (expense).
NOTE 11 – COMMITMENTS AND CONTINGENCIES
Operating Rental Leases
We
have relocated our corporate office to 1340 Reynolds Avenue Unit 120, Irvine, CA 92614. On December 1, 2023, the Company signed a lease
agreement for a
On
April 9, 2025, we entered a lease for our office in City of Irvine, California, on June 4, 2025, we amended this lease for additional
area. The lease is for the period
| 27 |
The components of lease costs, lease term and discount rate with respect of these two leases with an initial term of more than 12 months are as the following:
Balance sheet information related to the Company’s operating leases:
| March 31, 2026 | December 31, 2025 | |||||||
| Right-of-used assets | $ | $ | ||||||
| Lease liabilities – current | ||||||||
| Lease liabilities – non-current | ||||||||
| Total lease liabilities | $ | $ | ||||||
The weighted-average remaining lease term and the weighted-average discount rate of the above three leases are as follows:
three Months Ended March 31, 2026 | ||||
| Weighted average remaining lease term (years) | ||||
| Weighted average discount rate | % | |||
The following is a schedule, by year of lease payment for above three leases as of March 31, 2026:
| For the 12 months ending | Lease Payment | |||
| March 31, 2027 | $ | |||
| March 31, 2028 | ||||
| March 31,2029 | ||||
| Total undiscounted cash flows | ||||
| Imputed Interest | ||||
| Present value of lease liabilities | $ | |||
Our
lease expense for the three months ended March 31, 2026, and 2025 was $
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
January 6, 2023, our board of directors and majority shareholders approved a reverse stock split. Effective upon the filing of our Certificate
of Amendment of Articles of Incorporation with the Secretary of State of the State of Nevada, the shares of the Corporation’s Common
Stock issued and outstanding immediately prior to the Effective Time of January 6, 2023, will be automatically reclassified as and combined
into
On
September 26, 2025, the Company filed a Certificate of Change Pursuant to Nevada Revised Statutes Section 78.209 with the Secretary of
State of the State of Nevada effecting a
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Common Stock Transactions
On January 20, 2025, the Company entered into a consulting agreement with Hudson Global Ventures, LLC. As a condition to the agreement, the Company issued shares of Common Stock to the consultant.
On March 4, 2025, the Company entered into a securities purchase agreement with FirstFire. Pursuant to the agreement, FirstFire accepted shares of the Company’s common stock as final payment on the loan.
As
of December 31, 2025, the Company has issued shares for the conversion of Series E Preferred shares, with a total value of $
On or about April 7, 2025, pursuant to the securities purchase agreement with Pacific Pier dated April 4, 2025, described above, the Company issued shares of Company common stock to Pacific Pier.
On or about April 23, 2025, pursuant to the securities purchase agreement with Pacific Pier dated April 23, 2025, described above, the Company issued shares of Company common stock to Pacific Pier.
On
May 6, 2025, the Company entered into a Subscription Agreement with various investors, pursuant to which the purchasers acquired in the
aggregate
On
or about May 9, 2025, the Company issued shares of common stock to Mast Hill pursuant to its conversion of $
On or about May 19, 2025, pursuant to the securities purchase agreement with Lucas Ventures dated May 19, 2025, described above, the Company issued shares of Company common stock to Lucas Ventures.
On
or about May 23, 2025, the Company issued shares of common stock to Mast Hill pursuant to its conversion of $
On
or about May 23, 2025, the Company issued shares of common stock to Mast Hill pursuant to its conversion of $
On
or about May 23, 2025, the Company issued shares of common stock to Mast Hill pursuant to its conversion of $
On
or about May 23, 2025, the Company issued shares of common stock to Mast Hill pursuant to its conversion of the remaining $
On or about June 4, 2025, pursuant to the securities purchase agreement with Mast Hill dated June 3, 2025, described above, the Company issued shares of Company common stock to Mast Hill.
On
or about June 10, 2025, the Company issued shares of common stock to Mast Hill pursuant to its conversion of $
On
or about June 17, 2025, the Company issued shares of common stock to Mast Hill pursuant to its conversion of $
On
or about June 20, 2025, the Company issued shares of common stock to 1800 Diagonal pursuant to its conversion of $
On
or about June 23, 2025, the Company issued shares of common stock to 1800 Diagonal pursuant to its conversion of $
On or about June 23, 2025, the Company issued shares of common stock to Lucas Ventures as true-up shares under the securities purchase agreement with Lucas Ventures dated November 29, 2024.
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On
or about July 8, 2025, the Company issued shares of common stock to Mast Hill pursuant to its conversion of $
On
or about July 11, 2025, the Company issued shares of common stock to Mast Hill pursuant to its conversion of $
On
or about July 18, 2025, the Company issued shares of common stock to Mast Hill pursuant to its conversion of $
On or about July 18, 2025, pursuant to the securities purchase agreement with First Fire dated July 18, 2025, described above, the Company issued shares of Company common stock to First Fire.
On
or about July 21, 2025, the Company issued shares of common stock to Mast Hill pursuant to its conversion of $
On
or about August 1, 2025, the Company issued shares of common stock to Mast Hill pursuant to its conversion of $
On
or about August 1, 2025, the Company issued shares of common stock to Mast Hill pursuant to its conversion of $
On
or about August 6, 2025, the Company issued shares of common stock to Mast Hill pursuant to its conversion of $
On or about August 18, 2025, pursuant to the securities purchase agreement with Mast Hill dated August 15, 2025, described above, the Company issued shares of Company common stock to Mast Hill.
On
or about September 12, 2025, the Company issued shares of common stock to Mast Hill pursuant to its conversion of $
On
or about October 06, 2025, the Company issued shares of common stock to Mast Hill pursuant to its conversion of $
On
or about October 08, 2025, the Company issued shares of common stock to Mast Hill pursuant to its conversion of $
On
or about October 10, 2025, the Company issued shares of common stock to Mast Hill pursuant to its conversion of $
On
or about October 13, 2025, the Company issued shares of common stock to Pacific Pier pursuant to its conversion of $
On
or about October 14, 2025, the Company issued shares of common stock to Mast Hill pursuant to its conversion of $
On
or about October 16, 2025, the Company issued shares of common stock to Mast Hill pursuant to its conversion of $
On
or about October 23, 2025, the Company issued shares of common stock to Pacific Pier pursuant to its notice of conversion of $
On
or about November 3, 2025, the Company issued shares of common stock to Mast Hill pursuant to its conversion of $
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On
or about November 10, 2025, the Company issued shares of common stock to Pacific Pier pursuant to its notice of conversion of
$
On
or about November 21, 2025, the Company issued shares of common stock to Mast Hill pursuant to its notice of conversion of $
On
or about November 25, 2025, the Company issued shares of common stock to Mast Hill pursuant to its notice of conversion of $
On
or about November 25, 2025, the Company issued shares of common stock to Mast Hill pursuant to its conversion of $
On
or about November 25, 2025, the Company issued shares of common stock to Mast Hill pursuant to its conversion of $
On
or about November 26, 2025, the Company issued shares of common stock to Mast Hill pursuant to its notice of conversion of
$
On
or about December 1, 2025, the Company issued shares of common stock to Mast Hill pursuant to its notice of conversion of $
On
or about December 1, 2025, the Company issued shares of common stock to Mast Hill pursuant to its notice of conversion of $
On
or about December 1, 2025, the Company issued shares of common stock to Pacific Pier pursuant to its notice of conversion of
$
On
or about December 5, 2025, the Company issued shares of common stock to Mast Hill pursuant to its notice of conversion of $
On
or about December 11, 2025, the Company issued shares of common stock to Mast Hill pursuant to its notice of conversion of $
On or about December 19, 2025, the Company issued True-up shares of common stock to Lucas Venturew, LLC pursuant to a security purchase agreement dated May 19, 2025,
On
or about December 24, 2025, the Company issued shares of Company common stock with an investor pursuant to a subscription agreement
for $
On
or about December 24, 2025, the Company issued shares of Company common stock with an investor pursuant to a subscription agreement
for $
On
or about December 29, 2025, the Company issued shares of Company common stock with an investor pursuant to a subscription agreement
for $
On
or about January 6, 2026, the Company issued shares of common stock to Pacific Pier Capital II LP pursuant to its notice of conversion
of $
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On
or about January 16, 2026, the Company issued shares of common stock to Mast Hill pursuant to its notice of conversion of $
On
January 2, 2026, the Company entered into a note purchase agreement (the “Filled Purchase Agreement”) with Filled Converge
Limited and Li Xiaoguang for a purchase price consisting of US$
On
or about January 20, 2026, pursuant to the securities purchase agreement with First Fire dated July 18, 2025, described above, the Company
issued shares of Company common stock to First Fire pursuant to its notice of conversion of $
On
or about January 29, 2026, the Company issued shares of common stock to Pacific Pier Capital II LP pursuant to its notice of
conversion of $
Common Stock
Our Articles of Incorporation authorize us to issue shares of common stock, par value $ per share. As of March 31, 2026 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.
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,
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The
following are primary terms of the Series D Preferred Stock.
On
October 31, 2023, Clean Energy Technologies, Inc. (the “Company”) filed with the Nevada Secretary of State a certificate
of designation designating shares of the undesignated and authorized preferred stock of the Company, par value $ per share,
as the
The
Series E Preferred Stock has a stated value of $ (the “Stated Value”) per share. Each holder of the Series E Preferred
Stock is entitled to receive dividends payable on the Stated Value of the Series E Preferred Stock at a rate of 15% per annum.
On
November 8, 2023, Clean Energy Technologies, Inc. (the “Company”) entered into an exchange agreement (the “Agreement”)
with Mast Hill Fund, L.P., a Delaware limited partnership (the “Holder”), pursuant to which the Company agreed to issue to
the Holder shares of the newly designated
The Company has designated the rights of the Holder with respect to its shares of Series E Preferred Stocks pursuant to that certain Certificate of Designations, Preferences, and Rights of Series E Convertible Preferred Stock (the “Certificate of Designation”).
Warrants
A summary of warrant activity for the periods is as follows:
On
August 5, 2022, we issued
On
February 13, 2023 we issued
On
March 2023, the company issued Craft Capital Management, L.L.C. and R.F. Lafferty & Co. Inc. a
On
December 5, 2024, we issued
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On
February 28, 2025, we issued
| Warrants - Common Share Equivalents | Weighted Average Exercise price | Weighted Average Contractual Life (years) | Aggregate Intrinsic Value | |||||||||||||
| Outstanding December 31, 2025 | $ | $ | ||||||||||||||
| Expired | - | - | ||||||||||||||
| Additions | - | - | ||||||||||||||
| Outstanding March 31, 2026 | $ | |||||||||||||||
Stock Options
We currently have outstanding stock options.
NOTE 13 – RELATED PARTY TRANSACTIONS
On
May 13, 2021, the Company formed CETY Capital LLC a wholly owned subsidiary of CETY. In addition, the company established VRG with our
partner, Synergy Bioproducts Corporation (“SBC”) The purpose of the joint venture is the development of a pyrolysis plant
established to convert wood feedstock into electricity and BioChar by using high temperature ablative fast pyrolysis reactor for which
Clean Energy Technology, Inc. holds the license for. The VRG is in Lyndon, Vermont. Based upon the terms of the members’ agreement,
CETY Capital LLC owns a
On
June 4, 2023, CETY Renewables executed a turnkey agreement with VRG for the design, construction, and delivery of an organics-to-energy
plant. As a result of this agreement, HRS and CETY Renewables invoiced VRG $
CETY
currently has $
As
of March 31, 2026, amounts due from related parties totaled approximately $
As
of March 31, 2026, the Company owed approximately $
On
June 21, 2024, VRG, a Vermont limited liability company in which the Company retains
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The Lender is currently in default and has been served notice of default. The Lender has failed to disburse the first and second Tranche as outlined in the Milestone Schedule of the Agreement. While the Lender has communicated that they are working to cure this default, the company retains the right to amend the agreement once the cure is completed.
On
or about July 1, 2025, Company’ subsidiary, Herbert YF Global Holding Limited (“Herbert”), entered into a Consulting
Agreement (the “Linkage Consulting Agreement”) with Linkage International Limited (the “Consultant”), a Hong
Kong company and one of the Company’s investors from the Company’s May 6, 2025, private placement (pursuant to which the
Company had sold in the aggregate shares of Company common stock at a price of $ per share (on a split-adjusted basis), for
aggregate gross proceeds of $
The
RMB
Note 14 - WARRANTY LIABILITY
For
the three ended March 31, 2026 and 2025 there was no change in our warranty liability. We estimate our warranty liability based on past
experiences and estimated replacement cost of material and labor to replace the critical turbine in the units that are still under warranty.
The outstanding balance as of March 31, 2026, and as of December 31, 2025 was $
NOTE 15 – NON-CONTROLLING INTEREST
On
June 24, 2021 the Company formed CETY Capital LLC a wholly owned subsidiary of CETY. In addition, on or about the same time 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 was 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 was located in Ashfield, Massachusetts. Based upon the terms of the members’ agreement,
the CETY Capital LLC owned
The
consolidated financial statements have deconsolidated the CRA business unit. The Liabilities of CRA has been transferred to VRG, a newly
formed entity. CETY retains
On
April 2, 2023 the Company formed CETY Capital LLC a wholly owned subsidiary of CETY. In addition, the company established VRG with our
partner, SBC. The purpose of the joint venture is the development of a pyrolysis plant established to convert wood feedstock into electricity
and BioChar by using high temperature ablative fast pyrolysis reactor for which Clean Energy Technology, Inc. holds the license for.
The VRG is in Lyndon, Vermont. Based upon the terms of the members’ agreement, CETY Capital LLC owns a
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The Company analyzed the transaction under ASC 810 Consolidation, to determine if the joint venture classifies as a Variable Interest Entity (“VIE”). The Company analyzed the transaction under ASC 810 Consolidation, to determine if the joint venture classifies as a VIE. The Joint Venture qualifies as a VIE based on the fact the JV does not have sufficient equity to operate without financial support from both parties. According to ASC 810-25-38, a reporting entity shall consolidate a VIE when that reporting entity has a variable interest (or combination of variable interests) that provides the reporting entity with a controlling financial interest on the basis of the provisions in paragraphs 810-10-25-38A through 25-38J. The reporting entity that consolidates a VIE is called the primary beneficiary of that VIE. According to the JV operating agreement, the ownership interests are 49/51 and the agreement provides for a Management Committee of 3 members. Two of the three members are from Synergy Bioproducts Corporation, and one is from CETY. Both parties do not have substantial capital at risk and CETY does not have voting interest. However, SBC has controlling interest and more board votes therefore SBC is the beneficiary of the VIE and as a result we record it as an equity investment. Accordingly, the Company has elected to account for the joint venture as an equity method investment in accordance with ASC 323 Investments – Equity Method and Joint Ventures. This decision is a result of the company’s evaluation of its involvement with potential variable interest entities and their respective risk and reward scenarios, which collectively affirm that the conditions necessitating the application of the variable interest model are not present.
NOTE 16 – DiSPOSAL OF SUBSIDIARY
Background
In
July 2022, the Company, through its wholly-owned subsidiary Jiangsu Huanya Jieneng New Energy Co., Ltd. (‘JHJ’), acquired
a
On January 1, 2023, JHJ entered into a Consistent Action Agreement with other shareholders of Shuya, which resulted in the Company obtaining control over Shuya. Accordingly, the Company began consolidating Shuya as a variable interest entity effective January 1, 2023 in accordance with ASC 810.
On
January 1, 2024, the Consistent Action Agreement was terminated. As a result, the Company lost control over Shuya and deconsolidated
the entity effective January 1, 2024. The Company recognized a loss on deconsolidation of $
Disposal Transaction
On
December 12, 2025, the Company completed the disposal of its entire
Cash
consideration of approximately $
Gain on Disposal
The
Company recognized a gain on disposal of $
Fair value of consideration received:
| Cash | $ | |||
| [Non-cash consideration] | $ | |||
| Total consideration | $ | |||
| Less: Carrying value of investment at disposal: | ||||
| Beginning balance (January 1, 2025) | $ | |||
| Equity method loss (2025) | ( | ) | ||
| Effect of foreign currency translation | ||||
| Carrying value at disposal | ||||
| Gain on disposal | $ |
| 36 |
The fair value of consideration received consisted primarily of cash proceeds and was measured based on the contractual cash amounts received at closing. Accordingly, no significant Level 3 valuation inputs were required under ASC 820.
Discontinued Operations Assessment
The
Company evaluated whether the disposal of Shuya met the criteria for presentation as a discontinued operation under ASC 205-20 and concluded
that it did not represent a strategic shift that has, or will have, a major effect on the Company’s operations or financial results.
Although the Company’s China operations generated approximately $
Results of Operations
For
the period from January 1, 2025 through December 12, 2025, the Company recognized equity in net income of Shuya totaling $
Additionally,
the Company received actual payment of $
Cash Flow Impact
The
disposal resulted in cash proceeds of $
Strategic Rationale
The Company disposed of its investment in Shuya as part of a strategic shift to focus on its core clean energy technology and distributed energy project development activities in North America and Europe, and to exit natural gas trading operations in China.
NOTE 17 – THE STATUTORY RESERVES
The Company’s ability to pay dividends primarily depends on it receiving funds from its subsidiaries. PRC laws and regulations permit payments of dividends by the Company’s PRC subsidiaries only out of the subsidiary’s retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. The results of operations reflected in the financial statements prepared in accordance with US GAAP differ from those reflected in the statutory financial statements of the Company’s PRC subsidiaries.
In
accordance with the PRC Regulations on Enterprises with Foreign Investment and their articles of association, a foreign-invested enterprise
(“FIE”) established in the PRC is required to provide statutory reserves, which are appropriated from net profit as reported
in the FIE’s PRC statutory accounts. An FIE is required to allocate at least
Additionally,
in accordance with the Company Laws of the PRC, a domestic enterprise is required to provide surplus reserve at least 10% of its annual
after-tax profit until such reserve has reached
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As
a result of these PRC laws and regulations that require annual appropriations of
In
addition, according to Administrative Measures for the Collection and Utilization of Enterprise Work Safety Funds issued by the PRC Ministry
of Finance and the State Administration of Work Safety, for the companies with dangerous goods production or storage, the company is
required to make a special reserve for the use of enhancing and improving its safe production conditions. Under PRC GAAP, the reserve
is recorded as selling expense; however, under US GAAP, since the expense has not been incurred and the Company will record cost of sales
for safety related expenses when it is actually happened or incurred, this special reserve was recorded as an appropriation of its after-tax
income. The reserve is calculated at a rate of
NOTE 18 – SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the date the financial statements were issued. The Company has determined that there are no other such events that disclosure or recognition in the financial statements, except as noted below.
Notes Payable
Effective
April 20, 2026, Clean Energy Technologies, Inc. (the “Company”) entered into a securities purchase agreement (the “PPC
SPA”) with Pacific Pier Capital II, LP, a Delaware limited partnership (“Pacific Pier”), pursuant to which the Company
sold, and Pacific Pier purchased, a convertible promissory note in the principal amount of $
The
PPC Transaction was funded by Pacific Pier and closed on April 20, 2026, and pursuant to the SPA, Pacific Pier’s legal expenses
of $
On
May 12, 2026, and May 27, 2026, the Company borrowed approximately $
On
June 12, 2026, the Company borrowed approximately $
Effective
July 1, 2026, Clean Energy Technologies, Inc. (the “Company”) entered into a securities purchase agreement (the “SPA”)
with Coventry Enterprises LLC, a Delaware limited liability company (“Coventry”), pursuant to which the Company sold,
and Coventry purchased, a convertible promissory note in the principal amount of $
Effective
July 15, 2026, Clean Energy Technologies, Inc. (the “Company”) entered into a securities purchase agreement (the “SPA”)
with Du Jinxian (the “Investor”), pursuant to which the Company sold, and the Investor purchased, a convertible promissory
note in the principal amount of $
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION
FORWARD-LOOKING STATEMENTS
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements using the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.
Description of the Company
We design, produce and market clean energy products and integrated solutions focused on energy efficiency and renewable energy. Our aim is to become a leading provider of renewable and energy efficiency products and solutions by helping commercial companies and municipalities reduce energy waste and emissions, lower energy costs and generate incremental revenue by providing electricity, renewable natural gas and biochar to the grid.
Our principal executive offices are located at 1340 Reynolds Avenue, Irvine, CA 92614. Our telephone number is (949) 273-4990. Our common stock is listed on the NASDAQ Markets under the symbol “CETY.”
Our internet website address is www.cetyinc.com the information contained on our websites are not incorporated by reference into this document, and you should not consider any information contained on, or that can be accessed through, our website as part of this document.
Segment Information
Our four segments for accounting purposes are:
Clean Energy HRS & CETY Europe – Our Waste Heat Recovery Solutions, converting thermal energy to zero emission electricity.
CETY Renewables Waste to Energy Solutions – Providing Waste to Energy technologies and solutions.
Engineering and Manufacturing Business – providing customers with comprehensive design, manufacturing, and project management solutions.
CETY HK – The parent company of our NG trading operations in China. Prior to the first quarter of 2022 the Company had three reportable segments but added the CETY HK segment to reflect its recent new businesses in China.
We specialize in renewable energy & energy efficiency systems design, manufacturing and project implementation. We were incorporated in California in July 1995 under the name Probe Manufacturing Industries, Inc. We redomiciled to Nevada in April 2005 under the name Probe Manufacturing, Inc. We provided engineering and manufacturing electronics services to original equipment manufacturers (OEMs) of clean energy, industrial, automotive, semiconductor, medical, communication, military, and high technology products.
With the vision to combat climate change and creating a better, cleaner and environmentally sustainable future, we formed Clean Energy HRS, LLC a wholly owned subsidiary of Clean Energy Technologies, Inc. and acquired the assets of Heat Recovery Solutions from General Electric International on September 11, 2015. In November 2015, we changed our name to Clean Energy Technologies, Inc. We have 24 full-time employees.
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Clean Energy Technologies, Inc. established a new company, CETY Europe, SRL (CETY Europe) as a wholly owned subsidiary. CETY Europe is a Sales and Service Center in Silea (Treviso), Italy established in 2017. The service center became operational in November 2018. Their offices are located at Alzaia Sul Sile, 26D, 31057 Silea (TV) and they have 1 full time employee.
Clean Energy Technologies, Inc. established a wholly owned subsidiary called CETY Capital, a financing arm of CETY to fund captive renewable energy projects producing low carbon energy. CETY Capital will add flexibility to the capacity CETY offers its customers and fund projects utilizing its products and clean energy solutions.
CETY Capital retains 49% ownership interest in Vermont Renewable Gas LLC established to develop a biomass plant in Vermont utilizing CETY’s High Temperature Ablative Pyrolysis system.
Clean Energy Technologies (H.K.) Limited., a wholly owned subsidiary of Clean Energy Technologies Inc. acquired 100% ownership of Leading Wave Limited a liquid natural gas trading company in China.
Business Overview
General
The Company’s business and operating results are directly affected by changes in overall customer demand, operational costs and performance and leverage of our fixed cost and selling, general and administrative (“SG&A”) infrastructure.
Product sales fluctuate in response to several factors including many that are beyond the Company’s control, such as general economic conditions, interest rates, government regulations, consumer spending, labor availability, and our customers’ production rates and inventory levels. Product sales consist of demand from customers in many different markets with different levels of cyclicality and seasonality.
Operating performance is dependent on the Company’s ability to manage changes in input costs for items such as raw materials, labor, and overhead operating costs. Performance is also affected by manufacturing efficiencies, including items such as on time delivery, quality, scrap, and productivity. Market factors of supply and demand can impact operating costs.
Who We Are
We develop renewable energy products and solutions and establish partnerships in renewable energy that make environmental and economic sense. Our mission is to be a segment leader in the Zero Emission Revolution by offering recyclable energy solutions, clean energy fuels and alternative electric power for small and mid-sized projects in North America, Europe, and Asia. We target sustainable energy solutions that are profitable for us, profitable for our customers and represent the future of global energy production.
Our principal businesses
Waste Heat Recovery Solutions – we recycle wasted heat produced in manufacturing, waste to energy and power generation facilities using our patented Clean CycleTM generator to create electricity which can be recycled or sold to the grid.
Waste to Energy Solutions - we convert waste products created in manufacturing, agriculture, wastewater treatment plants and other industries to electricity, renewable natural gas (“RNG”), hydrogen and biochar which are sold or used by our customers.
Engineering, Consulting and Project Management Solutions – we bring a wealth of experience in developing clean energy projects for municipal and industrial customers and Engineering, Procurement and Construction (EPC) companies so they can identify, design and incorporate clean energy solutions in their projects.
CETY HK
Clean Energy Technologies (H.K.) Limited (“CETY HK”) consists of two business ventures in mainland China:(i) our natural gas (“NG”) trading operations sourcing and suppling NG to industries and municipalities. Natural Gas is principally used for heavy truck refueling stations and urban or industrial users. We purchase large quantities of NG from large wholesale NG depots at fixed prices which are prepaid for in advance at a discount to the market. We sell the NG to our customers at fixed prices or prevailing daily spot prices for the duration of the contracts.
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Business and Segment Information
We design, produce and market clean energy products and integrated solutions focused on energy efficiency and renewable energy. Our aim is to become a leading provider of renewable and energy efficiency products and solutions by helping commercial companies and municipalities reduce energy waste and emissions, lower energy costs and generate incremental revenue by providing electricity, renewable natural gas and biochar to the grid.
Summary of Operating Results the three months Ended March 31, 2026 Compared to the same period in March 31, 2025 (Restated)
Going Concern
The financial statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets and liquidation of liabilities in the normal course of business. The Company had a total stockholder’s equity of $7,030,646 and a working capital of $1,036,272 as of March 31, 2026, The company also had an accumulated deficit of $35,962,199 as of March 31, 2026 and used $836,618 in net cash from operating activities for the three months ended March 31, 2026. Therefore, there is substantial doubt about the ability of the Company to continue as a going concern. There can be no assurance that the Company will achieve its goals and reach profitable operations and is still dependent upon its ability (1) to obtain sufficient debt and/or equity capital and/or (2) to generate positive cash flow from operations.
For the three months ended March 31, 2026, total revenue was $783,705, compared to $441,940 for the same period in 2025. The increase was primarily attributable to higher revenue generated by our natural gas business in China.
For the three months ended March 31, 2026, our gross profit was $(13,930), compared to $411,878 for the same period in 2025. The decrease in gross profit and gross margin was primarily attributable to a shift in our revenue mix, with a greater proportion of revenue generated by our lower-margin natural gas business, as well as the absence of higher-margin clean energy system sales during the period.
For the three months ended March 31, 2026, our operating expenses were $705,354, compared to $824,656 for the same period in 2025. The decrease in operating expenses was primarily attributable to lower salary and related personnel costs as fewer resources were required for our Vermont Renewable Gas (“VRG”) projects, which are progressing into the final phase of the permitting process.
For the three months ended March 31, 2026, we recorded a net loss of $662,200, compared to $660,007 for the same period in 2025. The net loss remained relatively steady year-over-year, reflecting reduced salary expenses, lower general, legal and accounting costs, the impact of financial results, the change in FV of the note receivable, and improved margins from our U.S.-based business activities.
For the quarter ended March 31, 2026, stockholders’ equity increased to $7,030,646 compared to $6,246,597 as of December 31, 2025, primarily due to higher increase from investments and interest income.
CETY has successfully repositioned itself as a diversified clean energy solutions provider by establishing four distinct business segments designed to support scalable, stable, and diversified revenue growth. These segments include:
| ● | Clean Energy HRS (Heat Recovery Systems) | |
| ● | Waste-to-Energy (via Pyrolysis Technology) | |
| ● | Engineering, Procurement, and Consulting (EPC) | |
| ● | CETY HK (Natural Gas Trading and Acquisitions) |
Revenue for the first quarter was primarily driven by the CETY HK natural gas trading business. Looking ahead, the company anticipates stronger revenue contributions from its Waste-to-Energy, Heat Recovery, and EPC segments with higher margins.
CETY’s pilot Waste-to-Energy facility in Vermont, which integrates all of the company’s proprietary technologies and operational expertise into a unified, turnkey solution, is currently pending final approval from the Vermont Public Utility Commission.
Meanwhile, demand for Heat Recovery solutions is accelerating across both the U.S. and Europe. In parallel, CETY is actively scaling its Engineering and project management operations to deliver comprehensive self-generation energy solutions on a global scale.
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Management believes this 4-segment strategy has created many operational synergies and cross-selling opportunities across different markets. The main macro factor benefiting us is the global commitment to push renewable energy to the forefront from governments across the world. Another catalyst that will potentially help our Company, is a continuously improving our global supply chain and lowering our cost.
CETY expects to and will continue to execute its corporate strategy to build sustained and profitable growth by providing end to end fully integrated solutions and technologies, expand our global sales and marketing, production, research & development, as well as search for synergistic acquisition opportunities.
See note 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, 2026, Compared to the three ended March 31, 2025 (Restated)
Net Sales
For the three months ended March 31, 2026, our total revenue was $783,705 compared to $441,940 for the same period in 2025. The higher revenue was contributed to primarily due to our China natural gas business.
Segment breakdown
For the three months ended March 31, 2026, our revenue from the Heat Recovery Solutions (HRS) segment was $7,538, compared to $262,354 for the same period in 2025. The decrease was primarily driven by no product sales from our HRS business unit. We continue to work diligently on current requirements and engineering and design, which will enable us to execute contractual agreements and close additional opportunities.
The sales cycle for these projects tends to be longer due to cost considerations and the integration complexity of our technology. We are also engaging with financial institutions to support project financing, as customers increasingly adopt Independent Power Producer (IPP) models. Additionally, general economic uncertainty and evolving federal clean-energy legislation, and investment tax credits have influenced the timing of certain project commitments.
For the three months ended March 31, 2026, revenue from the CETY Renewables segment was $0, compared to $176,105 for the same period in 2025. The segment generated no revenue during the period as the related projects remain pending final review by the Vermont Public Utility Commission and issuance of the Certificate of Public Good. Revenue-generating construction activities are expected to commence following receipt of the required regulatory approvals.
For the three months ended March 31, 2026, CETY reported 0 revenue from its Engineering and Manufacturing segments, compared to no for the same period in 2025. This segment is still in its early stages and much of the related activity is currently being integrated into the HRS and CETY Renewables segments. However, with a developing pipeline of opportunities, CETY expects to see gradual revenue growth from this segment.
For the three months ended March 31, 2026, revenue from our natural gas (NG) business was $776,167 an increase from $3,481 for the same period in 2025. The increase primarily reflects higher revenue from our China natural gas business, despite the impact of macroeconomic conditions and our strategic decision to reduce our focus on lower-margin business activities.
Gross Profit
For the three months ended March 31, 2026, gross profit was $(13,930), compared to $411,878 for the same period in 2025. The decrease was primarily attributable to the absence of sales of our higher-margin clean energy systems during the period, combined with a greater proportion of revenue generated by our natural gas business in China, which operates at lower gross margins.
Segment breakdown
For the three months ended March 31, 2026, our gross profit from Engineering and Manufacturing amounted to $0, compared to $0 for the same period in 2025. This segment is a recent addition to CETY’s portfolio, currently serving as a support for our ongoing internal projects. Nevertheless, it is anticipated to expand as CETY shifts its focus towards providing comprehensive end-to-end power generation and integrated solutions.
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For the three months ended March 31, 2026, gross profit from our Heat Recovery Solutions (“HRS”) segment was $(25,223), compared to $235,658 for the same period in 2025. The decrease in gross profit was primarily attributable to the absence of product sales during the period, combined with higher freight costs.
For the three months ended March 31, 2026, our gross profit from the CETY Renewables segment was $0, compared to $57,159 for the same period in 2025. The Company is working through the Certificate of Public Good (CPG) process and approach the final stages of permitting.
For the three months ended March 31, 2026, our gross profit from our wholly owned subsidiary, JHJ, was $11,293, up from $115 for the same period in 2025. This increase was primarily due to increase business activity in China.
Selling, General and Administrative (SG&A) Expenses
For the three months ended March 31, 2026, our selling, general and administrative (SG&A) expenses totaled $147,729 compared to $222,557 for the same period in 2025. The decrease was primarily due to lower costs associated with a consulting agreement related to IR activities and Nasdaq subscription.
Salaries Expense
For the three months ended March 31, 2026, our salary expenses totaled $294,433 compared to $433,799 for the same period in 2025. The decrease was primarily due to reduced activity within our CETY Renewables business, while salary levels across other segments remained relatively stable.
Travel Expense
For the three months ended March 31, 2026, our travel expenses were $28,062, compared to $32,377 for the same period in 2025. This slight decrease reflects stable activity levels within our service and marketing operations.
Professional fees legal and accounting
For the three months ended March 31, 2026, our professional fees totaled $167,021, compared to $66,213 for the same period in 2025. The increase was primarily due to costs associated with a audit fees.
Facility Lease and Maintenance Expense
For the three months ended March 31, 2026, our facility lease and maintenance expenses totaled $65,140, compared to $66,741 for the same period in 2025. This slight decrease reflects normal fluctuations, with no significant changes in underlying operations.
Depreciation and Amortization Expense
For the three months ended March 31, 2026, our depreciation and amortization expense was $2,969, compared to $2,969 for the same period in 2025. There were no significant changes, as the majority of our equipment has already been fully depreciated.
Change in Derivative Liability
For the three months ended March 31, 2026 and 2025, we recorded derivative liabilities of $721,678 and $493,308, respectively. The increase in derivative liability was primarily due to the issuance of new convertible instruments and mark-to-market adjustments resulting from changes in our stock price and volatility. These fair value remeasurements are required each reporting period in accordance with ASC 815.
Change in FV of warrant liability
For the three months ended March 31, 2026 and 2025, we had $3,100 and $17,837 loss on warrant liability related to Equity Line of Credit Agreement entered December 5, 2024.
Interest Income
For the three months ended March 31, 2026, interest income from Florya associated with long-term financing receivable totaled $0 compared to $14,050 for the same period in 2025 (Restated).
Interest income included in other income consists primarily of interest earned on the Company’s convertible note receivable. During the three months ended March 31, 2026, the Company recognized $64,110 of interest income related to the accrual of interest under the terms of the convertible note agreement.
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Other Income
Other income includes a gain of $584,613 resulting from the remeasurement of the Company’s investment in the Filled Converge convertible note to its estimated fair value of $435,053, recognition of forgiveness of debt of $85,558 and interest income of convertible note as of March 31, 2026, compared to 21,413 as of March 31, 2025.
Interest and Finance Fees
For the three months ended March 31, 2026, interest and finance fees totaled $515,128, compared to $348,186 for the same period in 2025. The increase was primarily due to two larger interim financings obtained to bridge the Company through the finalization of funding for the Vermont Renewable Gas Project and monetizing HRS projects.
Net Loss
For the three months ended March 31, 2026, our net loss was $662,200, compared to a net loss of $660,056 for the same period in 2025 (Restated). The increase in net loss was primarily attributable to the absence of higher-margin sales from our Heat Recovery Solutions (“HRS”) segment, a shift in revenue mix toward our lower-margin China natural gas business, changes in Fv convertible, and lower gross margins during the period, and interest and financing fee variations. Although operating expenses declined due to reduced personnel costs associated with our Vermont Renewable Gas (“VRG”) projects as they progressed through the final permitting phase, these savings were not sufficient to offset the decline in gross profit.
Liquidity and Capital Resources
Clean Energy Technologies, Inc.
Condensed Consolidated Statements of Cash Flows
for the three months ended March 31,
(unaudited)
| 2026 | 2025 | |||||||
| Net cash (used in) operating activities | $ | (833,538 | ) | $ | (776,047 | ) | ||
| Net cash (used in) investing activities | (702,746 | ) | (2,932 | ) | ||||
| Net cash provided by financing activities | 975,557 | 759,002 | ||||||
| Foreign Currency Transaction | 424 | 187 | ||||||
| Net increase in cash and cash equivalents | $ | (560,303 | ) | $ | (19,790 | ) | ||
Net cash used in operating activities was $833,538 for the three months ended March 31, 2026, compared to $776,047 for the same period in 2025. The increase in cash used in operating activities was primarily attributable to the Company’s operating loss and increases in inventory, interest receivable, and other assets. These uses of cash were partially offset by non-cash items, including amortization of debt discount and the fair value gain recognized on the Company’s note receivable, as well as increases in accounts payable, accrued interest, customer deposits, and accrued expenses.
Net cash used in investing activities was $702,746 for the three months ended March 31, 2026, compared to $2,932 for the same period in 2025. The increase in cash used in investing activities was primarily attributable to the Company’s $700,000 investment in a note receivable and a $2,746 investment in a long-term investment during the current period.
Net cash provided by financing activities was $975,557 for the three months ended March 31, 2026, compared to $759,002 for the same period in 2025. The increase was primarily attributable to higher net proceeds from notes payable and lines of credit, partially offset by repayments of outstanding borrowings during the period.
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.
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Critical accounting estimates include the valuation of the Company’s convertible note receivable and derivative liabilities, both of which are measured at fair value using valuation techniques that incorporate significant unobservable inputs. Management, with the assistance of independent valuation specialists, exercises significant judgment in selecting key assumptions, including expected stock price volatility, risk-free interest rates, expected terms, stock prices, discount rates, and probability-weighted outcomes. Changes in these assumptions could materially affect the reported fair values of these instruments and the corresponding gains or losses recognized in the Company’s condensed consolidated financial statements.
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.
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).
The following five steps are applied to achieve that core principle for our business:
| ● | 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 |
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
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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 |
The following step is applied to our CETY HK business unit:
| ● | CETY HK is primarily responsible for fulfilling the contract / promise to provide the specified good or service. |
A principal obtains control over any one of the following (ASC 606-10-55-37A):
| a. | A good or another asset from the other party which the entity then transfers to the customer. Note that momentary control before transfer to the customer may not qualify. | |
| b. | A right to a service to be performed by the other party, which gives the entity the ability to direct that party to provide the service to the customer on the entity’s behalf. | |
| c. | A good or service from the other party that it then combines with other goods or services in providing the specified good or service to the customer. |
If the entity obtains control over one of the above before the good or service is transferred to a customer, the entity could be considered a principal.
During the project development and engineering phase of our CETY Renewable projects such as VRG, we employ the input method of revenue recognition to estimate revenue based on projected costs. This approach involves forecasting future costs and revenues to determine the amount of revenue we recognize in the current period. It’s important to understand, however, that these recognized revenue figures are not final and are subject to adjustments. Changes may occur as we gain more clarity on actual costs compared to our initial projections, affecting the revenue recognized accordingly.
The projected costs of the VRG project is based on estimates and profitability will be impacted depending on actual costs. Using the input method for revenue recognition, the amount of recorded revenue is also affected depending on the estimated total costs. The purchase price allocation for Shuya was also based on estimates and comparable data selected by the Company. The inputs for the valuation of the Series E preferred shares were also based on estimates and comparable data selected by the Company.
Additionally, the above five steps are applied to achieve core principle for our CETY Renewables Division:
Because the CETY Renewables division is presently engaged in the Engineering, Procurement, and Construction (EPC) of biomass power facilities, CETY Renewables has developed a process of executing EPC Agreements with customers for this work. In contracting these engagements, CETY Renewables recognizes revenue according to accounting standards in accordance with ASC 606.
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In recognizing this revenue, CETY Renewables first identifies the relevant contract with its customer according to 606-10-25-1.
| ● | The entities, together known as the Parties, approved the contract in writing, through signatures and commitment to the performance of permitting, design, procurement, construction, and commissioning. | |
| ● | CETY’s work product includes permits, engineering designs, equipment, and full balance of plant specific to permitting, design, procurement, construction, and commissioning. | |
| ● | CETY and customer agree to a total EPC Contract price. | |
| ● | The contract has commercial substance. The risk associated with this EPC Agreement is that payment of the EPC contract price. | |
| ● | Per the EPC Agreement, CETY expects to collect substantially all of the consideration for its goods and services. |
Secondly, CETY identifies the performance obligations of the Parties in performance of the EPC Agreement in accordance with 606-10-25-14. At contract inception, CETY assesses the goods and services necessary to deliver the facility in accordance with the its agreement with its clients. The agreement specifically laid out all deliverables necessary to achieve the permitting, design, procurement, construction, and commissioning.
CETY also looks at 606-10-25-14(A). A bundle of goods or services is also present, in that CETY is delivering all work products associated with permitting, design, procurement, construction and commissioning of a commercially operable biomass power plant. A biomass power plant is a distinct bundle of goods or services, so the individual goods or services on their own do not lend themselves to a fully integrated or functional system.
CETY in accordance with 606-10-32-1, CETY reviews measurement of the performance obligations. There are no exclusion of any amount of the Contract Price due to constraints associated with 606-10-31-11 through 606-10-32-13.
In review of 606-10-32-2A, CETY did not exclude measurement from the measurement of the transaction price any taxes assessed by a government authority as no such taxes will be due.
In reviewing 606-10-32-3, CETY evaluated the nature, timing, and amount of consideration promised, and whether it impacts the estimate of the transaction price.
Finally, in identifying a single method of measuring progress for each performance obligation satisfied over time, in accordance with 606-10-25-32, CETY applies the methodology of 606-10-25-36. CETY adopted and implemented the input method for revenue recognition in accordance with ASC 606-10-25-33. The company adopts the input method for implementation. CETY recognizes revenue for performance obligations on the basis of the entity’s efforts or inputs to the satisfaction of a performance obligation per 606-10-55-20.
For CETY, the contracts with clients for the construction of biomass power plants are the basis for revenue recognition. In each separate EPC Agreement, the performance obligations include permitting, design, procurement, construction, and commissioning of the plant. All of these work products satisfy Section 606-10-25-27(b) as these work products create or enhance an asset under customer’s control. Upon delivery of the work product, the customer takes control of the work products and has full right and ability to direct the use of and obtain substantially all of the remaining benefits of the assets. We recognize revenue over time, using timeline and milestone methods to measure progress towards complete satisfaction of the performance obligation.
During the complexity and duration of the biomass power plant construction projects, CETY will recognize revenue over time, consistent with the criteria for over-time recognition under ASC 606. This approach reflects the continuous transfer of documents, permits, and the equipment over to the customer, which is characteristic of long-term construction contracts.
We have a list of appropriate measures of progress: This is based on milestones achieved, among other measures.
Given the long-term nature of the projects, CETY regularly reviews and, if necessary, updates its estimates of progress towards completion, transaction price, and the allocation of the transaction price to performance obligations.
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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 10%.
Series E Valuation
Additionally, the inputs for the valuation of the Series E preferred shares were also based on estimates and comparable data selected by the Company and fair value measurements, furthermore, the purchase price allocation was based on estimates of fair market values.
Future Financing
We will continue to rely on equity sales of our common shares to continue to fund our business operations. Issuance 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.
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.
The Company adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, effective January 1, 2026. The adoption did not have a material impact on the Company’s condensed consolidated financial statements.
The Company is currently evaluating the impact of recently issued accounting standards that have not yet been adopted, including ASU 2024-03, Disaggregation of Income Statement Expenses, ASU 2025-11, Accounting for Environmental Credit Programs, and ASU 2025-12, Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity. The Company does not currently expect the adoption of these standards to have a material impact on its condensed consolidated financial statements.
Item 3. Quantitative and Qualitative Disclosure about Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the three months ended March 31, 2026, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial officer have concluded that during the period covered by this report, our disclosure controls and procedures were not effective as of March 31, 2026.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the three months ended March 31, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, the Company is involved in litigation incidental to the conduct of its business. The Company is presently not involved in any legal proceedings which in the opinion of management are likely to have a material adverse effect on the Company’s consolidated financial position or results of operations.
Item 1A. Risk Factors.
Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in our Annual Report on Form 10-K filed with the SEC on April 14, 2025, and our registration statement on Form S-3 filed with the SEC on March 13, 2025. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.
WE ARE NOT CURRENTLY IN COMPLIANCE WITH NASDAQ’S LISTING REQUIREMENTS; IF WE ARE NOT ABLE TO REGAIN COMPLIANCE WITH THOSE REQUIREMENTS WITHIN THE TIME PERIODS PERMITTED BY NASDAQ, OUR COMMON STOCK MAY BE DELISTED, WHICH WOULD LIKELY IMPAIR OUR ABILITY TO RAISE CAPITAL AND COULD CONSTITUTE AN EVENT OF DEFAULT UNDER OUR OUTSTANDING PROMISSORY NOTES.
On November 5, 2024, the Company received a written notice from the Listing Qualifications Department of The Nasdaq Stock Market (“Nasdaq”) indicating that the Company was not in compliance with the $1.00 minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on The Nasdaq Capital Market (the “Minimum Bid Price Requirement”). The Nasdaq listing rules require listed securities to maintain a minimum bid price of $1.00 per share, and, based upon the closing bid price of the Company’s common stock for the prior 30 consecutive business days, the Company no longer met that requirement. The Nasdaq rules initially provided the Company a compliance period of 180 calendar days from the date of the notice (or until May 5, 2025) in which to regain compliance with the Minimum Bid Price Requirement. On May 7, 2025, Nasdaq granted the Company an additional 180-day extension (or until November 3, 2025) to regain compliance with the Minimum Bid Price Requirement. On October 20, 2025, Nasdaq notified the Company that the Company had regained compliance with the Minimum Bid Price Requirement, and the matter was closed.
On January 8, 2025, the Company received a written notice from Nasdaq indicating that the Company was not in compliance with Nasdaq’s annual shareholder meeting requirement as set forth in Listing Rules 5620(a) and 5810(c)(2)(G) (the “Annual Shareholder Meeting Requirement”). The Nasdaq listing rules require the Company to have an annual meeting of shareholders within twelve months of the end of the Company’s fiscal year end, and the Company has not had an annual meeting within twelve months of the Company’s 2023 fiscal year end as required. The Nasdaq rules provided the Company 45 calendar days to submit a plan to regain compliance with the Annual Shareholder Meeting Requirement. The Company submitted such plan as required, and on February 27, 2025, Nasdaq provided the Company an extension of until June 3, 2025, to regain compliance with the Annual Shareholder Meeting Requirement. On April 30, 2025, the Company held its annual meeting of shareholders, and the Company regained compliance with the Annual Shareholder Meeting Requirement.
On April 17, 2026, the Company received a written notice Nasdaq indicating that the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1) because the Company had not yet filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2025. That rule requires listed companies to timely file all required periodic reports with the Securities and Exchange Commission. Under Nasdaq rules, the Company has 60 calendar days from receipt of the notice to submit a plan to regain compliance. If Nasdaq accepts the Company’s plan, then Nasdaq may grant an exception of up to 180 calendar days from the due date of the Form 10-K, or until October 12, 2026, to regain compliance.
On May 26, 2026, the Company received a written notice Nasdaq indicating that the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1) because the Company had not yet filed its Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2026. That rule requires listed companies to timely file all required periodic reports with the Securities and Exchange Commission. Under Nasdaq rules, the Company has 60 calendar days from receipt of the notice to submit a plan to regain compliance. If Nasdaq accepts the Company’s plan, then Nasdaq may grant an exception of up to 180 calendar days from the due date of the Form 10-Q, or until November 16, 2026, to regain compliance.
The Company intends to submit a plan to Nasdaq regarding regaining compliance with Nasdaq’s rules. However, there can be no assurance that Nasdaq will accept the Company’s plan to regain compliance or that the Company will be able to regain compliance within any extension period granted by Nasdaq. If Nasdaq does not accept the Company’s plan, then the Company will have the opportunity to appeal that decision to a Nasdaq hearings panel.
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If the Company’s common stock ultimately were to be delisted for any reason, it could negatively impact the Company by (i) reducing the liquidity and market price of the Company’s common stock; (ii) reducing the number of investors willing to hold or acquire the Company’s common stock, which could negatively impact the Company’s ability to raise equity financing; (iii) limiting the Company’s ability to use a registration statement to offer and sell freely tradable securities, thereby preventing the Company from accessing the public capital markets; and (iv) impairing the Company’s ability to provide equity incentives to its employees. Additionally, delisting of the Company’s common stock from the Nasdaq Capital Market could constitute an event of default under its outstanding convertible promissory notes, resulting in those notes becoming immediately due and payable, and resulting in default penalties being applied to those notes.
Item 2. Unregistered Sales of Equity Securities
On or about July 8, 2025, the Company issued 34,000 shares of common stock to Mast Hill pursuant to its conversion of $97,629.30 in principal, interest and fees owed under the convertible promissory note issued to Mast Hill dated September 16, 2022.
On or about July 11, 2025, the Company issued 31,180 shares of common stock to Mast Hill pursuant to its conversion of $86,544 in principal, interest and fees owed under the convertible promissory note issued to Mast Hill dated September 16, 2022.
On or about July 18, 2025, the Company issued 33,333 shares of common stock to Mast Hill pursuant to its conversion of $97,695 in principal, interest and fees owed under the convertible promissory note issued to Mast Hill dated January 16, 2025.
On or about July 18, 2025, pursuant to the securities purchase agreement with First Fire dated July 18, 2025, described above, the Company issued 8,333 shares of Company common stock to First Fire.
On or about July 21, 2025, the Company issued 66,667 shares of common stock to Mast Hill pursuant to its conversion of $195,390 in principal, interest and fees owed under the convertible promissory note issued to Mast Hill dated January 16, 2025.
On or about August 1, 2025, the Company issued 66,667 shares of common stock to Mast Hill pursuant to its conversion of $192,150 in principal, interest and fees owed under the convertible promissory note issued to Mast Hill dated January 16, 2025.
On or about August 1, 2025, the Company issued 20,000 shares of common stock to Mast Hill pursuant to its conversion of $55,895 in principal, interest and fees owed under the convertible promissory note issued to Mast Hill dated January 16, 2025.
On or about August 6, 2025, the Company issued 100,000 shares of common stock to Mast Hill pursuant to its conversion of $286,475 in principal, interest and fees owed under the convertible promissory note issued to Mast Hill dated January 16, 2025.
On or about August 18, 2025, pursuant to the securities purchase agreement with Mast Hill dated August 15, 2025, described above, the Company issued 10,000 shares of Company common stock to Mast Hill.
On or about September 12, 2025, the Company issued 66,667 shares of common stock to Mast Hill pursuant to its conversion of $212,760 in principal, interest and fees owed under the convertible promissory note issued to Mast Hill dated January 16, 2025.
On or about October 06, 2025, the Company issued 19,100 shares of common stock to Mast Hill pursuant to its conversion of $50,032 in principal, interest and fees owed under the convertible promissory note issued to Mast Hill dated January 16, 2025.
On or about October 08, 2025, the Company issued 44,500 shares of common stock to Mast Hill pursuant to its conversion of $100,249 in principal, interest and fees owed under the convertible promissory note issued to Mast Hill dated January 16, 2025.
On or about October 10, 2025, the Company issued 45,000 shares of common stock to Mast Hill pursuant to its conversion of $101,376 in principal, interest and fees owed under the convertible promissory note issued to Mast Hill dated January 16, 2025.
On or about October 13, 2025, the Company issued 33,258 shares of common stock to Pacific Pier pursuant to its conversion of $74,461.47 in principal, interest and fees owed under the convertible promissory note issued to Pacific Pier dated April 04, 2025.
On or about October 14, 2025, the Company issued 46,000 shares of common stock to Mast Hill pursuant to its conversion of $102,987 in principal, interest and fees owed under the convertible promissory note issued to Mast Hill dated January 16, 2025.
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On or about October 16, 2025, the Company issued 161,994 shares of common stock to Mast Hill pursuant to its conversion of $362,679 in principal, interest and fees owed under the convertible promissory note issued to Mast Hill dated January 16, 2025.
On or about October 23, 2025, the Company issued 34,619 shares of common stock to Pacific Pier pursuant to its notice of conversion of $73,032.40 in principal, interest and fees owed under the convertible promissory note issued to Pacific Pier dated April 04, 2025.
On or about November 3, 2025, the Company issued 100,000 shares of common stock to Mast Hill pursuant to its conversion of $190,790 in principal, interest and fees owed under the convertible promissory note issued to Mast Hill dated January 16, 2025.
On or about November 10, 2025, the Company issued 34,861 shares of common stock to Pacific Pier pursuant to its notice of conversion of $43,715 in principal, interest and fees owed under the convertible promissory note issued to Pacific Pier dated April 04, 2025.
On or about November 21, 2025, the Company issued 152,000 shares of common stock to Mast Hill pursuant to its notice of conversion of $150,951 in principal, interest and fees owed under the convertible promissory note issued to Mast Hill dated February 27, 2025.
On or about November 25, 2025, the Company issued 75,132 shares of common stock to Mast Hill pursuant to its notice of conversion of $72,164 in principal, interest and fees owed under the convertible promissory note issued to Mast Hill dated February 27, 2025.
On or about November 25, 2025, the Company issued 252,884 shares of common stock to Mast Hill pursuant to its conversion of $242,890.02 in principal, interest and fees owed under the convertible promissory note issued to Mast Hill dated February 27, 2025.
On or about November 25, 2025, the Company issued 90,773 shares of common stock to Mast Hill pursuant to its conversion of $87,185.92 in principal, interest and fees owed under the convertible promissory note issued to Mast Hill dated February 27, 2025.
On or about November 26, 2025, the Company issued 1,264,420 shares of common stock to Mast Hill pursuant to its notice of conversion of $1,214,450 in principal, interest and fees owed under the Common Stock Purchase Warrant issued on January 17, 2025.
On or about December 1, 2025, the Company issued 195,867 shares of common stock to Mast Hill pursuant to its notice of conversion of $188,126 in principal, interest and fees owed under the Common Stock Purchase Warrant issued on January 17, 2025.
On or about December 1, 2025, the Company issued 141,009 shares of common stock to Mast Hill pursuant to its notice of conversion of $135,436 in principal, interest and fees owed under the Common Stock Purchase Warrant issued on February 17, 2025.
On or about December 1, 2025, the Company issued 106,097 shares of common stock to Pacific Pier pursuant to its notice of conversion of $101,904 in principal, interest and fees owed under the convertible promissory note issued to Pacific Pier dated April 04, 2025.
On or about December 5, 2025, the Company issued 272,532 shares of common stock to Mast Hill pursuant to its notice of conversion of $261,762 in principal, interest and fees owed under the convertible promissory note issued to Mast Hill dated June 3, 2025.
On or about December 11, 2025, the Company issued 105,647 shares of common stock to Mast Hill pursuant to its notice of conversion of $93,751 in principal, interest and fees owed under the convertible promissory note issued to Mast Hill dated June 3, 2025.
On or about December 19, 2025, the Company issued 11,665 True-up shares of common stock to Lucas Venturew, LLC pursuant to a security purchase agreement dated May 19, 2025,
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On or about December 24, 2025, the Company issued 913,842 shares of Company common stock with an investor pursuant to a subscription agreement for $395,328.
On or about December 24, 2025, the Company issued 461,631 shares of Company common stock with an investor pursuant to a subscription agreement for $199,702.
On or about December 29, 2025, the Company issued 194,527 shares of Company common stock with an investor pursuant to a subscription agreement for $84,152.
On or about January 6, 2026, the Company issued 242,140 shares of common stock to Pacific Pier Capital II LP pursuant to its notice of conversion of $104,750 in principal, interest and fees owed under the convertible promissory note issued to April 04, 2025.
On or about January 16, 2025, the Company issued 131,187 shares of common stock to Mast Hill pursuant to its notice of conversion of $84,747 in principal, interest and fees owed under the convertible promissory note issued to Pacific Pier dated April 22, 2025.
On January 2, 2026, the Company entered into a note purchase agreement (the “Filled Purchase Agreement”) with Filled Converge Limited and Li Xiaoguang for a purchase price consisting of US$700,000 (the “Cash Purchase Price”) and 1,932,000 shares of Company common stock.
On or about January 20, 2026, pursuant to the securities purchase agreement with First Fire dated July 18, 2025, described above, the Company issued 307,038 shares of Company common stock to First Fire pursuant to its notice of conversion of $132,824 in principal and interest.
On or about January 29, 2026, the Company issued 132,694 shares of common stock to Pacific Pier Capital II LP pursuant to its notice of conversion of $86,750 in principal, interest and fees owed under the convertible promissory note issued to April 04, 2025.
As to the shares of common stock issued for conversion of convertible promissory notes described above, the share were issued pursuant to the exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) provided by Section 3(a)(9) of the Securities Act, as the shares of common stock were issued in exchange for and conversion of convertible promissory notes issued by the Company, there was no additional consideration for the exchanges, and there was no remuneration for the solicitation of the exchanges. As to the other issuances of common stock described above, such shares were issued pursuant to the exemption from the registration requirements of the Securities Act provided by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D promulgated thereunder, as the shareholders were accredited and/or financially sophisticated and had adequate access, through business or other relationships, to information about the Company, and the sales did not involve a public offering of securities or any general solicitation.
Item 3. Defaults upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
On or about July 1, 2025, Company subsidiary Herbert YF Global Holding Limited entered into a Consulting Agreement (the “Linkage Consulting Agreement”) with Linkage International Limited (the “Consultant”), a Hong Kong company and one of the Company’s investors from the Company’s May 6, 2025, private placement, pursuant to which the Company had sold in the aggregate 715,447 shares of Company common stock at a price of $6.15 per share (on a split-adjusted basis), for aggregate gross proceeds of $4,400,000. Pursuant to the Consulting Agreement, the Consultant would provide services in connection with the potential acquisition of Ortus Climate Mitigation LLC’s Italian operations (the “Acquisition Target”), and the Company would pay the Consultant HKD 5,000,000 as a non-refundable consulting fee, and HKD 25,000,000 as a refundable deposit for the acquisition of the Acquisition Target. The Consultant has rendered such acquisition services to the Company, on July 8, 2025, paid the HKD 5,000,000 consulting fee to the Consultant ($640,902.52), and between July 10, 2025 and August 8, 2025, paid HKD 25,000,000 ($3,204,513) as a refundable deposit towards the acquisition of the Acquisition Target. On or about November 18, 2025, the Company and the Consultant entered into an amendment to the Consulting Agreement providing that if the deposit is not refunded as agreed, the Consultant would ensure that 715,447 shares of Company common stock would be returned to the Company for cancellation.
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Item 6. Exhibits
The following exhibits are filed or furnished as a part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
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| 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.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Clean Energy Technologies, Inc. | ||
| REGISTRANT | ||
| /s/ Kambiz Mahdi | ||
| By: | Kambiz Mahdi | |
| Chief Executive Officer and Director | ||
| Date: | July 27, 2026 | |
| /s/ Calvin Pang | ||
| By: | Calvin Pang | |
| Chief Financial Officer and Director | ||
| Date: | July 27, 2026 | |
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