Clean Energy Technologies, Inc. 10-Q

Item 1. Financial Statements Clean Energy Technologies, Inc. Consolidated Financial Statements (Expressed in US dollars) June 30, 2023 (unaudited) Financial Statement Index Consolidated Balance Sheets June 30, 2023 (unaudited) and December 31, 2022 4 Consolidated Statements of Operations (unaudited) 5 Consolidated Statements of Stockholders Deficit (unaudited) 6 Consolidated Statements of Cash Flows (unaudited) 7 Notes to the Consolidated Financial Statements (unaudited) 8 3 Clean Energy Technologies, Inc. Consolidated Balance Sheets June 30, 2023 December 31, 2022 (Unaudited) Assets Current assets: Cash $ 733,171 $ 149,272 Accounts receivable - net 750,144 1,368,567 Accounts receivable related party 830,570 - Lease receivable asset 217,584 217,584 Advance to supplier - prepayment 1,801,895 597,816 Advance to supplier – related party 392,725 - Deferred offering costs - 204,556 Investment Heze Hongyuan Natural Gas Co. 863,731 835,756 Due from related party 578,143 - Loan receivables - 116,000 Inventory, net 876,164 500,586 Total current assets 7,044,127 3,990,137 Property and equipment- net 46,587 14,816 Goodwill 747,976 747,976 LWL intangibles 1,482,061 1,468,709 Long term investment - Shuya - 561,656 Long-term financing receivables - net 684,770 684,770 License 354,322 354,322 Patents 97,755 103,693 Right of use asset - long term 306,234 157,359 Other assets 33,794 30,891 Total non current assets 3,753,499 4,124,192 Total Assets $ 10,797,626 8,114,329 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 572,156 860,435 Accounts payable – Related Party 1,322 - Accounts payable 1,322 - Accrued expenses 121,250 119,030 Customer deposits 597,751 80,475 Warranty liability 100,000 100,000 Deferred revenue 33,000 33,000 Derivative liability - 588,178 Facility lease liability - current 187,802 186,436 Line of Credit 712,966 998,820 Convertible notes payable (net of discount of 355,473 and $ 326,805 respectively) 2,560,725 3,092,055 Related party notes payable 33,142 177,704 Total current liabilities 4,920,114 6,236,133 Long-term Liability: Facility lease liability - long term 142,113 Total liabilities 5,062,227 6,236,132 Commitments and contingencies $ - - Stockholders’ equity Common stock, $ .001 par value; 2,000,000,000 shares authorized; 38,755,767 and 37,174,879 issued and outstanding as of June 30, 2023 and December 31, 2022 respectively 38,755 37,175 Addition paid-in capital 24,409,310 19,278,230 Accumulated other comprehensible loss ( 257,734 ) ( 160,673 ) Accumulated deficit ( 19,108,027 ) ( 17,276,536 ) Total stockholders equity attributable to CETY 5,082,304 1,878,196 Non-controlling interest 653,095 Total stockholders’ equity 5,735,399 1,878,196 Total liabilities and stockholders’ equity $ 10,797,626 8,114,329 The accompanying footnotes are an integral part of these unaudited consolidated financial statements. 4 Clean Energy Technologies, Inc. Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022 (Unaudited) 2023 Three Months 2022 Three Months 2023 Six Months 2022 Six Months Sales $ 4,386,712 1,747,701 $ 7,283,719 $ 2,522,968 Sales from related party 412,682 - 412,682 - Total Sales, net 4,799,394 1,747,701 7,696,401 2,522,968 Cost of goods sold 4,285,717 1,135,904 7,022,155 1,396,978 Gross profit 513,677 611,797 674,246 1,125,990 Operating expenses: General and administrative expense 210,509 108,368 299,430 201,304 Salaries 366,288 199,675 584,526 390,892 Travel 129,501 59,664 201,165 87,398 Professional fees legal & accounting 89,227 159,342 177,437 224,195 Facility lease and maintenance 73,595 84,519 196,373 173,480 Consulting engineering 17,924 36,248 185,607 62,051 Depreciation and amortization 3,254 7,519 9,203 15,038 Total operating expenses 890,298 655,335 1,653,741 1,154,358 Net loss from operations ( 376,621 ) ( 43,538 ) ( 979,495 ) ( 28,368 ) Other income (expenses) 2,320 23,594 81,475 14,258 Change in derivative liability - ( 29,414 ) 326,539 ( 13,399 ) Gain on debt settlement and write down 130,430 2,920 130,430 2,920 Interest and financing fees ( 512,203 ) ( 283,804 ) ( 1,349,594 ) ( 416,275 ) Total other income (expenses): ( 379,453 ) ( 286,705 ) ( 811,150 ) ( 412,496 ) Net loss before income taxes ( 756,074 ) ( 330,242 ) ( 1,790,645 ) ( 440,864 ) Income tax expense ( 1,444 ) ( 16,701 ) ( 2,739 ) ( 18,667 ) Net loss ( 757,518 ) ( 346,943 ) ( 1,793,384 ) ( 459,531 ) Non-controlling interest ( 114 ) - ( 38,137 ) - Net loss attributable to Clean Energy Technologies, Inc. ( 757,632 ) ( 346,943 ) ( 1,831,521 ) ( 459,531 ) Other comprehensive item Foreign currency translation loss ( 106,674 ) ( 113,666 ) ( 97,061 ) ( 109,104 ) Total comprehensible income loss $ ( 864,306 ) ( 460,609 ) $ ( 1,928,582 ) $ ( 568,635 ) Per Share Information: Basic and diluted weighted average number of common shares outstanding 38,616,144 24,148,230 37,939,667 23,978,725 Net loss per common share basic and diluted $ ( 0.02 ) ( 0.02 ) $ ( 0.05 ) $ ( 0.02 ) The accompanying footnotes are an integral part of these unaudited consolidated financial statements. 5 Clean Energy Technologies, Inc. Consolidated Statements of Stockholders Deficit June 30, 2022 & 2023 (Unaudited) Description Shares Amount Shares Amount Amount Capital Interest Income Deficit interest Totals Common Stock .001 Par Preferred Stock Common Stock to be issued Additional Paid in Subscription Accumulated Comprehensive Accumulated Non Controlling Stock holders’ Deficit/equity Description Shares Amount Shares Amount Amount Capital Interest Income Deficit interest Totals December 31, 2021 23,589,229 23,589 - - - 15,697,688 - - ( 17,423,931 ) ( 19,059 ) ( 1,721,712 ) Shares issued for Reg A offering 375,875 376 1,202,424 1,202,800 Shares issued for S1 78,897 79 137,831 137,910 - Subscription Receivable ( 18,800 ) ( 18,800 ) Accumulated Comprehensive 4,562 4,562 Net Loss - - ( 112,589 ) - ( 112,588 ) March 31, 2022 24,044,000 24,044 - - - 17,037,943 ( 18,800 ) 4,562 ( 17,536,520 ) ( 19,059 ) ( 507,830 ) Balance 24,044,000 24,044 - - - 17,037,943 ( 18,800 ) 4,562 ( 17,536,520 ) ( 19,059 ) ( 507,830 ) Shares issued for S1 122,898 123 - - - 153,112 - - - - 153,235 Warrants Issued Mast Hill Fund 168,296 168,296 Subscription Receivable 0 0 Accumulated Comprehensive ( 113,666 ) ( 113,666 ) Net Loss - - ( 346,943 ) - ( 346,943 ) June 30, 2022 24,166,899 24,167 - - - 17,359,351 ( 18,800 ) ( 109,104 ) ( 17,883,464 ) ( 19,059 ) ( 646,909 ) Balance 24,166,899 24,167 - - - 17,359,351 ( 18,800 ) ( 109,104 ) ( 17,883,464 ) ( 19,059 ) ( 646,909 ) Description Shares Amount Shares Amount Amount Capital Income Deficit interest Totals Common Stock .001 Par Preferred Stock Common Stock to be issued Additional Paid in Accumulated Comprehensive Accumulated Non Controlling Stock holders’ Deficit/equity Description Shares Amount Shares Amount Amount Capital Income Deficit interest Totals December 31, 2022 37,174,879 37,175 - - - 19,278,229 ( 160,673 ) ( 17,276,536 ) - 1,878,196 Warrants issued in conjunction for debt - - - - 609,718 - - - 609,718 Warrants issued for services - - - - 76,100 - - 76,100 Shares issued for S-1 Registration 975,000 975 - - - 3,899,025 - - 3,900,000 Offering cost ( 753,781 ) ( 753,781 ) Shares issued for Reg A offering ( 753,781 ) ( 753,781 ) Shares issued for rounding 3,745 4 - - - ( 4 ) - - - Shares for Pacific Pier and Firstfire conversion 64,225 64 - - - ( 68 ) - - ( 4 ) Shares issued for Debt Conversion 277,604 278 - - - 665,972 - - 666,250 Accumulated Comprehensive - - - - 9,613 - - 9,613 Noncontrolling interest ownership 650,951 650,951 Net loss - - - - ( 1,073,858 ) 38,023 ( 1,035,835 ) March 31, 2023 38,495,453 38,495 - - - 23,775,096 ( 151,060 ) ( 18,350,395 ) 688,974 6,001,109 Balance 38,495,453 38,495 - - - 23,775,096 ( 151,060 ) ( 18,350,395 ) 688,974 6,001,109 Warrants issued in Conjunction For cash 220,314 220 352,282 352,503 Reclassification of derivative liabilities due to note repayment 261,639 261,639 Offering costs ( 51,667 ) ( 51,667 ) Shares issued for Reg A offering ( 51,667 ) ( 51,667 ) Shares based compensation 40,000 40 71,960 72,000 Accumulated Comprehensive ( 106,674 ) ( 35,993 ) ( 142,667 ) Net loss - - ( 757,632 ) 114 ( 757,518 ) June 30, 2023 38,755,767 38,755 - - - 24,409,310 ( 257,734 ) ( 19,108,027 ) 653,095 5,735,399 Balance 38,755,767 38,755 - - - 24,409,310 ( 257,734 ) ( 19,108,027 ) 653,095 5,735,399 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 six months ended June 30 (Unaudited) 2023 2022 Cash Flows from Operating Activities: Net loss $ ( 1,793,384 ) $ ( 459,531 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 9,203 15,038 Stock compensation expense 148,100 - Financing fee - 82,850 Gain on debt settlement ( 130,430 ) ( 2,920 ) Amortization of debt discount 765,149 52,279 Change in derivative liability ( 326,539 ) 13,399 Changes in operating assets and liabilities: (Increase) decrease in right of use asset ( 159,767 ) 118,876 (Increase) decrease in lease liability 153,844 ( 117,161 ) (Increase) decrease in accounts receivable ( 198,262 ) ( 1,090,501 ) (Increase) decrease in prepayments ( 872,936 ) 25,959 (Increase) decrease in other assets 878,903 - (Increase) decrease in inventory 215,376 ( 25,683 ) (Decrease) increase in accounts payable ( 925,820 ) 54,697 Other (Decrease) increase in accrued expenses ( 296,886 ) 25,676 Other (Decrease) increase in accrued interest ( 22,487 ) - Other (Decrease) increase in other payables - related party ( 604,975 ) 97,143 Other (Decrease) increase in customer deposits 540,102 ( 24,040 ) Net cash provided by (used In) operating activities ( 2,620,809 ) ( 1,233,919 ) Cash Flows from Investing Activities Cash acquired from consolidation of Shuya 50,226 - Payment to Heze Hongyuan Natural Gas Co - ( 785,828 ) Purchase of intangible assets ( 3,859 ) - Purchase of property and equipment ( 32,048 ) - Net Cash provided by / (used In) investing activities 14,319 ( 785,828 ) Cash Flows from Financing Activities Proceeds from notes payable 1,118,382 762,750 Proceeds from warrant exercise 352,503 Payments on notes payables ( 1,332,988 ) ( 332,441 ) Loan to Rongjun ( 72,150 ) - Stock issued for cash 3,093,577 1,475,145 Net Cash provided by financing activities 3,159,324 1,905,454 Foreign Currency Translation 31,065 ( 109,104 ) Net (decrease) increase in Cash 583,899 ( 223,397 ) Cash at Beginning of Period 149,272 1,192,316 Cash at End of Period $ 733,171 $ 968,919 Supplemental Cashflow Information: Interest Paid $ 194,955 $ 36,048 Taxes Paid $ - $ - Supplemental Non-Cash Disclosure in Investing and Financing activities Discounts on new notes $ 184,200 $ 75,000 Universal convertible note principal and accrued interest conversion $ 666,250 $ - Warrants issued in conjunction for convertible notes payable $ 609,617 $ - Reclass of derivative liability to additional paid in capital $ 261,639 $ - Shares issued for warrants $ - $ 168,296 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 six months ended June 30, 2023 reflect all adjustments which, in the opinion of management, are necessary to fairly state the Company’s financial position and the results of its operations for the periods presented, in accordance with the accounting principles generally accepted in the United States of America. All adjustments are of a normal recurring nature. These unaudited interim consolidated financial statements should be read in conjunction with the Company’s financial statements and notes thereto included in the Company’s fiscal year end December 31, 2022 report. The Company assumes that the users of the interim financial information herein have read, or have access to, the audited financial statements for the preceding period, and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. The results of operations for the six months ended June 30, 2023 are not necessarily indicative of results for the entire year ending December 31, 2023. A summary of significant accounting policies of Clean Energy Technologies, Inc. is presented to assist in the understanding of the Company’s financial statements. The financial statements and notes are representations of the Company’s management, who are 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 internet website address is www.cetyinc.com and our subsidiary’s web site is www.heatrecoverysolutions.com The information contained on our websites are not incorporated by reference into this document, and you should not consider any information contained on, or that can be accessed through, our website as part of this document. The Company has four reportable segments: Clean Energy HRS (HRS), CETY Renewables waste to energy solutions, engineering and manufacturing services, and CETY HK natural gas trading business. 8 Going Concern The financial statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets and liquidation of liabilities in the normal course of business. The Company had a total stockholder’s equity of $ 5,735,399 and a working capital of $ 2,124,013 as of June 30, 2023. The company also had an accumulated deficit of $ 19,108,028 as of June 30, 2023. Therefore, there is substantial doubt about the ability of the Company to continue as a going concern. CETY has a clear strategy in place and has the capability to successfully restructure its existing debt and secure additional financing. With its current strategic approach and diversification of its products and solutions, the management has created a favorable environment for the company to transition towards profitability. Plan of Operation Our mission is to be a leader in the zero-emission revolution by 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 frictionless, lubricant and maintenance free magnetic bearing turbine 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 decomposing organic waste materials, such as agricultural waste and food waste at high temperatures into clean energy through its proprietary gasification technology that produce a range of products, including electricity, heat, and biochar. Engineering, Consulting and Project Management Solutions – Clean Energy Technologies offers engineering and manufacturing services to help clients bring their sustainable energy products to market. This includes design, prototyping, testing, and production services. Clean Energy Technologies’ expertise in engineering and manufacturing enables it to provide customized solutions to meet clients’ specific needs. 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. 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 the market. We sell the NG to our customers at fixed prices or 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. According to our Framework Agreement with Shenzhen Gas, we will be required to contribute $ 8 million to the joint venture which plans to raise those funds in future rounds of financing. The terms of the joint venture are subject to the execution of definitive agreements. NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: A summary of significant accounting policies of Clean Energy Technologies, Inc. (formerly Probe Manufacturing, Inc.) is presented to assist in the understanding of the Company’s financial statements. The financial statements and notes are representations of the Company’s management, who is responsible for their integrity and objectivity. The consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and include the accounts of the Company and its wholly owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Such estimates may be materially different from actual financial results. Significant estimates include the recoverability of long-lived assets, the collection of accounts receivable and valuation of inventory and reserves. 9 Cash and Cash Equivalents We maintain most of our cash accounts at JP Morgan Chase bank. The total cash balance is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $ 250,000 , (which we may exceed from time to time) per commercial bank. For the purposes of the statement of cash flows we consider all cash and highly liquid investments with initial maturities of one year or less to be cash equivalents. Accounts Receivable Our ability to collect receivables is affected by economic fluctuations in the geographic areas and industries served by us. Reserves for uncollectable amounts are provided, based on past experience and a specific analysis of the accounts. Although we expect to collect amounts due, actual collections may differ from the estimated amounts. As of June 30, 2023 and December 31, 2022 we had a reserve for potentially un-collectable accounts receivable of $ 75,000 . Our policy for reserves for our long-term financing receivables is determined on a contract-by-contract basis and considers the length of the financing arrangement. As of June 30, 2023 and December 31, 2022 we had a reserve for potentially un-collectable long-term financing receivables of $ 247,500 and $ 247,500 respectively. Seven (7) customers accounted for approximately 98 % of accounts receivable on June 30, 2023. Our trade accounts primarily represent unsecured receivables. Historically, our bad debt write-offs related to these trade accounts have been insignificant. Four (4) customers accounted for approximately 98 % of accounts receivable on December 31, 2022. Our trade accounts primarily represent unsecured receivables. Lease asset As of June 30, 2023 and December 31, 2022 we had a lease asset that was purchased from General Electric with a value of $ 1,309,527 , however due to the purchase price allocation, we recognized a value of $ 217,584 . The lease is due to be commissioned in the third quarter of 2023 and will generate approximately $ 20,000 per month for 120 months . See note 3 for additional information. Inventory Inventories are valued at the lower of weighted average cost or net realizable value. Our industry experiences changes in technology, changes in market value and availability of raw materials, as well as changing customer demand. We make provisions for estimated excess and obsolete inventories based on regular audits and cycle counts of our on-hand inventory levels and forecasted customer demands and at times additional provisions are made. Any inventory write offs are charged to the reserve account. As of June 30, 2023 and December 31, 2022 we had a reserve for potentially obsolete inventory of $ 897,808 . Property and Equipment Property and equipment are recorded at cost. Assets held under capital leases are recorded at lease inception at the lower of the present value of the minimum lease payments or the fair market value of the related assets. The cost of ordinary maintenance and repairs is charged to operations. Depreciation and amortization are computed on the straight-line method over the following estimated useful lives of the related assets: Property and Equipment Estimated Useful Lives of the Related Assets Furniture and fixtures 3 to 7 years Equipment 7 to 10 years Leasehold Improvements 7 years 10 Goodwill The Company accounts for goodwill and intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other . Under ASC 350, goodwill is not amortized; rather, it is tested for impairment on at least an annual basis. Goodwill represents the excess of consideration paid over the fair value of underlying identifiable net assets of business acquired. The Company tests goodwill during the fourth quarter of each fiscal year or more frequently if events arise or circumstances change that indicate that goodwill may be impaired. The Company assesses whether goodwill impairment exists using both qualitative and quantitative assessments. The qualitative assessment involves determining whether events or circumstances exist that indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If based on this qualitative assessment the Company determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, or if the Company elects not to perform a qualitative assessment, a quantitative assessment is performed, as required by ASC 350, to determine whether a goodwill impairment exists. The quantitative test is used to compare the carrying amount of the reporting unit’s assets to the fair value of the reporting unit. If the fair value exceeds the carrying value, no further evaluation is required, and no impairment loss is recognized. An impairment loss occurs if the amount of the recorded goodwill exceeds the implied goodwill. The determination of the fair value of the Company’s reporting units is based, among other things, on estimates of the future operating performance of the reporting unit being valued. A goodwill impairment test is required to be completed, at minimum, once annually, and any resulting impairment loss recorded upon completion of the assessment. Changes in market conditions, among other factors, may have an impact on these estimates and require interim impairment assessments. When performing the two-step quantitative impairment test, the Company’s methodology includes the use of an income approach which discounts future net cash flows to their present value at a rate that reflects the Company’s cost of capital, otherwise known as the discounted cash flow method (“DCF”). These estimated fair values are based on estimates of future cash flows of the businesses. Factors affecting these future cash flows include the continued market acceptance of the products and services offered by the businesses, the development of new products and services by the businesses and the underlying cost of development, the future cost structure of the businesses, and future technological changes. The Company also incorporates market multiples for comparable companies in determining the fair value of our reporting units. Any such impairment would be recognized in full in the reporting period in which it has been identified. Intangible Assets The Company’s intangible assets consist of customer relationship intangibles, licenses and patents. Upon acquisition, estimates are made in valuing acquired intangible assets, which include but are not limited to, future expected cash flows from customer contracts, customer lists, and estimating cash flows from projects when completed; tradename and market position, as well as assumptions about the period of time that customer relationships will continue; and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from the assumptions used in determining the fair values. All intangible assets are capitalized at their original cost and amortized over their estimated useful lives. 11 Impairment of 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 was no impairment of long-lived assets for the periods ended June 30, 2023 and 2022. Revenue Recognition The Company recognizes revenue under ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” (“ASC 606”). Performance Obligations Satisfied Over Time FASB ASC 606-10-25-27 through 25-29, 25-36 through 25-37, 55-5 through 55-10 An entity transfers control of a good or service over time and satisfies a performance obligation and recognizes revenue over time if one of the following criteria is met: a. The customer receives and consumes the benefits provided by the entity’s performance as the entity performs (as described in FASB ASC 606-10-55-5 through 55-6). b. The entity’s performance creates or enhances an asset (for example, work in process) that the customer controls as the asset is created or enhanced (as described in FASB ASC 606-10-55-7). c. The entity’s performance does not create an asset with an alternative use to the entity (see FASB ASC 606-10-25-28), and the entity has an enforceable right to payment for performance completed to date (as described in FASB ASC 606-10-25-29). Performance Obligations Satisfied at a Point in Time FASB ASC 606-10-25-30 If a performance obligation is not satisfied over time, the performance obligation is satisfied at a point in time. To determine the point in time at which a customer obtains control of a promised asset and the entity satisfies a performance obligation, the entity should consider the guidance on control in FASB ASC 606-10-25-23 through 25-26. In addition, it should consider indicators of the transfer of control, which include, but are not limited to, the following: a. The entity has a present right to payment for the asset. b. The customer has legal title to the asset. c. The entity has transferred physical possession of the asset. d. The customer has the significant risks and rewards of ownership of the asset. e. The customer has accepted the asset. 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. 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 12 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. 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 %. As of June 30, 2023 and December 31, 2022 we had $ 33,000 and 33,000 of deferred revenue, which is expected to be recognized in the fourth quarter of year 2023. Also, from time to time we require upfront deposits from our customers based on the contract. As of June 30, 2023 and December 31, 2022 we had outstanding customer deposits of $ 597,751 and $ 80,475 respectively. 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 91.5 % and using a risk free interest rate of 4.5 % The Company’s financial instruments consist of cash, prepaid expenses, inventory, accounts payable, convertible notes payable, advances from related parties, and derivative liabilities. The estimated fair value of cash, prepaid expenses, investments, accounts payable, convertible notes payable and advances from related parties approximate their carrying amounts due to the short-term nature of these instruments. The carrying amounts of the Company’s financial instruments as of June 30, 2023 and December 31, 2022 reflect: SCHEDULE OF FAIR VALUE OF CONVERTIBLE NOTES DERIVATIVE LIABILITY Level 1 Level 2 Level 3 Total Fair value of convertible notes derivative liability – June 30, 2023 $ – $ – $ – $ – Level 1 Level 2 Level 3 Total Fair value of convertible notes derivative liability – December 31, 2022 $ – $ – $ 588,178 $ 588,178 Fair value of convertible notes derivative liability $ – $ – $ 588,178 $ 588,178 The carrying amount of accounts payable and accrued expenses are considered to be representative of their respective fair values because of the short-term nature of these financial instruments. Foreign Currency Translation and Comprehensive Income (Loss) We have no material components of other comprehensive income (loss) and accordingly, net loss is equal to comprehensive loss in all periods. The accounts of the Company’s Chinese entities are maintained in RMB. The accounts of the Chinese entities were translated into USD in accordance with FASB ASC Topic 830 “Foreign Currency Matters.” All assets and liabilities were translated at the exchange rate on the balance sheet date; stockholders’ equity is translated at historical rates and the statements of operations and cash flows are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income (loss) in accordance with FASB ASC Topic 220, “Comprehensive Income.” Gains and losses resulting from foreign currency transactions are reflected in the statements of operations. The Company follows FASB ASC Topic 220-10, “Comprehensive Income (loss).” Comprehensive income (loss) comprises net income (loss) and all changes to the statements of changes in stockholders’ equity, except those due to investments by stockholders, changes in additional paid-in capital and distributions to stockholders. 13 Change from fair value or equity method to consolidation. In July 2022 JHJ, a wholly owned subsidiary of CETY HK and other three shareholders agreed to form and make total capital contribution of RMB 20 million ($ 2.81 million) with latest contribution due date in February 2066 into Sichuan Hongzuo Shuya Energy Limited (“Shuya”), JHJ owns 20 % of Shuya. In August 2022 JHJ purchased 100 % ownership of Sichuan Shunengwei Energy Technology Limited (“SSET”) for $ 0 , who owns 29 % of Shuya; Shunengwei is a holding company and did not have any operations nor made any capital contribution into Shuya as of the ownership purchase date by JHJ; right after the ownership purchase of SSET, JHJ ultimately owns 49 % of Shuya. Shuya was set up as the operating entity for pipeline natural gas (PNG) and compressed natural gas (CNG) trading business, while the other two shareholders of Shuya have large supply relationships. For the year ended December 31, 2022 the Company has determined that Shuya was not a VIE and has evaluated its consolidation analysis under the voting interest model. Because the Company does not own greater than 50% of the outstanding voting shares, either directly or indirectly, it has accounted for its investment in Shuya under the equity method of accounting. Under this method, the investor (“JHJ”) recognizes its share of the profits and losses of the investee (“Shuya”) in the periods when these profits and losses are also reflected in the accounts of the investee. Any profit or loss recognized by the investing entity appears in its income statement. Also, any recognized profit increases the investment recorded by the investing entity, while a recognized loss decreases the investment. JHJ made an investment of RMB 3.91 million ($ 0.55 million) into Shuya during the 12 months ended December 31, 2022 recorded in accordance with ASC 323. Shuya had a net loss of approximately $ 10,750 during the year ending December 31, 2022 of which approximately $ 5,000 was allocated to the company, reducing the investment by that amount. However, effective January 1, 2023 JHJ, SSET and Chengdu Xiangyueheng Enterprise Management Co., Ltd (“Xiangyueheng”), who is the 10% shareholder of Shuya, entered a Three-Parties Consistent Action Agreement, wherein these three shareholders (or three parties) will guarantee that the voting rights will be expressed in the same way at the shareholders’ meeting of Shuya to consolidate the controlling position of the three parties in Shuya. The three parties agree that within the validity period of this agreement, before the party intends to propose the motions to the shareholders or the board of directors on the major matters related to the voting rights of the shareholders or the board of directors, the three parties internally will discuss, negotiate, and coordinate the motion topics for consistency; in the event of disagreement, the opinions of JHJ shall prevail. As a result of Consistent Action Agreement, the Company re-analyzed and determined that Shuya is the variable interest entity (“VIE”) of JHJ because 1) the equity investors at risk, as a group, lack the characteristics of a controlling financial interest, and 2) Shuya is structured with disproportionate voting rights, and substantially all the activities are conducted on behalf of an investor with disproportionately few voting rights. Under ASC 810, a reporting entity has a controlling financial interest in a VIE, and must consolidate that VIE, if the reporting entity has both of the following characteristics: (a) the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance; and (b) the obligation to absorb losses, or the right to receive benefits, that could potentially be significant to the VIE. The Company concluded JHJ is deemed the primary beneficiary of the VIE. Accordingly, the Company consolidates Shuya effective on January 1, 2023. The change of control interest was accounted for using the acquisition method of accounting in accordance with Accounting Standards Codification, referred to as ASC, 805, Business Combinations. The management determined that the Company was the acquiror for financial accounting purposes. In identifying the Company as the accounting acquiror, the companies considered the structure of the transaction and other actions contemplated by the Three-Parties Consistent Action Agreement, relative outstanding share ownership and market values, the composition of the combined company’s board of directors, the relative size of Shuya, and the designation of certain senior management positions of the combined company. In accordance with ASC 805, the Company recorded the acquisition based on the fair value of the consideration transferred and then allocated the purchase price to the identifiable assets acquired and liabilities assumed based on their respective fair values as of the Acquisition Date. The excess of the value of consideration transferred over the aggregate fair value of those net assets was recorded as goodwill. Any identified definite lived intangible assets will be amortized over their estimated useful lives and any identified intangible assets with indefinite useful lives and goodwill will not be amortized but will be tested for impairment at least annually. All intangible assets and goodwill will be tested for impairment when certain indicators are present. Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates including the selection of valuation methodologies, estimates of future revenues and cash flows, discount rates, and selection of comparable companies. The valuation of purchase considerations was based on preliminary estimates that management believes are reasonable under the circumstances. Basing on preliminary independent valuation, the management decides the difference in the fair value of the consideration paid and book records was immaterial. As Shuya has been operated for less than a year after effective date of control in effective. The management decides that the final purchase price allocation shall be re-valuated subject to change pending to additional operation results and forecast assumptions. As the Consistent Action Agreement did not quantify any considerations to gain the control, the deemed consideration paid is the fair value of 51% non-controlling interest as of January 1, 2023. The following table summarizes the fair value of the consideration paid and the fair value of assets acquired and liabilities assumed on January 1, 2023, the acquisition date. SCHEDULE OF FAIR VALUE OF ASSETS AND LIABILITIES ACQUIRED Fair value of non-controlling interests $ 602,729 Fair value of previously held equity investment 604,318 Subtotal $ 1,207,047 Recognized value of 100% of identifiable net assets ( 1,207,047 ) Goodwill Recognized $ - Recognized amounts of identifiable assets acquired and liabilities assumed (preliminary): Inventories $ 505,226 Cash and cash equivalents 50,346 Trade and other receivables 952,384 Advanced deposit 672,597 Net fixed assets 6,704 Intangible asset and Goodwill 10,905 Trade and other payables ( 1,021,897 ) Advanced payments ( 5,317 ) Salaries and wages payables ( 4,692 ) Other receivable 40,791 Total identifiable net assets $ 1,207,047 Under ASC-805-10-50-2, initial consolidation of an investee previously reported using fair value or the equity method should be accounted for prospectively as of the date the entity obtained a controlling financial interest. And the public business entities should provide pro forma information as if the consolidation had occurred as of the beginning of each of the current and prior comparative reporting period. However, Shuya was incorporated in July 2022 and the actual consolidation was effective on January 1, 2023 therefore, no comparative period adjustments are presented for the three months ended June 30, 2022 as they do not exist. 14 Net Loss per Common Share Basic loss per share is computed on the basis of the weighted average number of common shares outstanding. On June 30, 2023 we had outstanding common shares of 38,775,767 used in the calculation of basic earnings per share. Basic weighted average common shares and equivalents for the six months ended June 30, 2023 and June 30, 2022 were 37,939,667 and 23,978,725 respectively. As of June 30, 2023 we had convertible notes, convertible into approximately 2,916,198 of additional common shares, 466,790 common stock warrants. Fully diluted weighted average common shares and equivalents were withheld from the calculation for the three months ended June 30, 2023 and June 30, 2022 as they were considered anti-dilutive. Research and Development We had no amounts of research and development R&D expense during the three and six months ended June 30, 2023 and 2022. Segment Disclosure FASB Codification Topic 280, Segment Reporting , establishes standards for reporting financial and descriptive information about an enterprise’s reportable segments. The Company has four reportable segments: Manufacturing & Engineering services, Clean Energy HRS (HRS), CETY HK LNG Trading, and CETY Renewables Waste to Energy. The segments are determined based on several factors, including the nature of products and services, the nature of production processes, customer base, delivery channels and similar economic characteristics. Refer to note 1 for a description of the various product categories manufactured under each of these segments. An operating segment’s performance is evaluated based on its pre-tax operating contribution, or segment income. Segment income is defined as net sales less cost of sales, and segment selling, general and administrative expenses, and does not include amortization of intangibles, stock-based compensation, other charges (income), net and interest and other, net. Selected Financial Data : SCHEDULE OF SEGMENT REPORTING 2023 2022 for the six months ended June 30 2023 2022 Net Sales Manufacturing and Engineering 36,332 61,018 Clean Energy HRS 28,338 460,885 CETY HK LNG Trading 7,219,049 1,963,053 CETY Renewables Waste to Energy 412,682 38,012 Total Sales 7,696,401 2,522,968 Segment income and reconciliation before tax Manufacturing and Engineering 18,355 38,475 Clean Energy HRS 30 413,646 CETY HK LNG Trading 270,457 643,239 CETY Renewables Waste to Energy 385,404 30,630 Total Segment income 674,246 1,125,990 The following table represents revenue by geographic area based on the sales location of our products and solutions: Schedule of Revenue by Geographic Areas based on the Sales Location of our Products and Solutions 2023 2022 for the six months ended June 30 2023 2022 United States 449,014 460,885 China 7,219,049 1,963,053 Other international 28,338 99,030 Total Sales 7,696,401 2,522,968 15 Share-Based Compensation The Company has adopted the use of Statement of Financial Accounting Standards No. 123R, “Share-Based Payment” (SFAS No. 123R) (now contained in FASB Codification Topic 718, Compensation-Stock Compensation ), which supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and its related implementation guidance and eliminates the alternative to use Opinion 25’s intrinsic value method of accounting that was provided in Statement 123 as originally issued. This Statement requires an entity to measure the cost of employee services received in exchange for an award of an equity instruments, which includes grants of stock options and stock warrants, based on the fair value of the award, measured at the grant date (with limited exceptions). Under this standard, the fair value of each award is estimated on the grant date, using an option-pricing model that meets certain requirements. We use the Black-Scholes option-pricing model to estimate the fair value of our equity awards, including stock options and warrants. The Black-Scholes model meets the requirements of SFAS No. 123R; however, the fair values generated may not reflect their actual fair values, as it does not consider certain factors, such as vesting requirements, employee attrition and transferability limitations. The Black-Scholes model valuation is affected by our stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. We estimate the expected volatility and estimated life of our stock options at grant date based on historical volatility. For the “risk-free interest rate,” we use the Constant Maturity Treasury rate on 90-day government securities. The term is equal to the time until the option expires. The dividend yield is not applicable, as the Company has not paid any dividends, nor do we anticipate paying them in the foreseeable future. The fair value of our restricted stock is based on the market value of our free trading common stock, on the grant date calculated using a 20-trading-day average. At the time of grant, the share-based compensation expense is recognized in our financial statements based on awards that are ultimately expected to vest using historical employee attrition rates and the expense is reduced accordingly. It is also adjusted to account for the restricted and thinly traded nature of the shares. The expense is reviewed and adjusted in subsequent periods if actual attrition differs from those estimates. We re-evaluate the assumptions used to value our share-based awards on a quarterly basis and, if changes warrant different assumptions, the share-based compensation expense could vary significantly from the amount expensed in the past. We may be required to adjust any remaining share-based compensation expense, based on any additions, cancellations, or adjustments to the share-based awards. The expense is recognized over the period during which an employee is required to provide service in exchange for the award—the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service. For the three and six months ended June 30, 2023 and 2022 we had $ 82,100 in share-based expense. As of June 30, 2023 we had no further non-vested expense to be recognized. 16 Leases On January 2, 2020, 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. 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. On December 22, 2018, H.R. 1, originally known as the Tax Cuts and Jobs Act, (the “Tax Act”) was enacted. Among the significant changes to the U.S. Internal Revenue Code, the Tax Act lowers the U.S. federal corporate income tax rate (“Federal Tax Rate”) from 35% to 21% effective January 1, 2018. The Company will compute its income tax expense for the year ended December 31, 2023 using a Federal Tax Rate of 21% and an estimated state of California rate of 9%. 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. On February 13, 2018, Clean Energy Technologies, Inc., a Nevada corporation (the “Registrant” or “Corporation”) entered into a Common Stock Purchase Agreement (“Stock Purchase Agreement”) by and between MGW Investment I Limited (“MGWI”) and the Corporation. The Corporation received $ 907,388 in exchange for the issuance of 302,462,667 restricted shares of the Corporation’s common stock, par value $ .001 per share (the “Common Stock”). On February 13, 2018, the Corporation and Confections Ventures Limited. (“CVL”) entered into a Convertible Note Purchase Agreement (the “Convertible Note Purchase Agreement,” together with the Stock Purchase Agreement and the transactions contemplated thereunder, the “Financing”) pursuant to which the Corporation issued to CVL a convertible promissory Note (the “CVL Note”) in the principal amount of $ 939,500 with an interest rate of 10 % per annum interest rate and a maturity date of February 13, 2020. The CVL Note is convertible into shares of Common Stock at $ 0.12 per share, as adjusted as provided therein. This note was assigned to MGW Investments. This resulted in a change in control, which limited the net operating to that date forward. We are subject to taxation in the U.S. and the states of California. Further, the Company currently has no open tax years’ subject to audit prior to December 31, 2015 . The Company is current on its federal and state tax returns. 17 Recently Issued Accounting Standards The Company’s management reviewed all recently issued ASU’s not yet adopted by the Company and does not believe the future adoptions of any such ASU’s may be expected to cause a material impact on the Company’s consolidated financial condition or the results of its operations. 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. NOTE 3 – ACCOUNTS AND NOTES RECEIVABLE SCHEDULE OF ACCOUNTS AND NOTES RECEIVABLE June 30, 2023 December 31, 2022 Accounts Receivable $ 845,144 1,443,567 Accounts Receivable Related Party 830,570 - Less reserve for uncollectable accounts ( 95,000 ) ( 75,000 ) Total $ 1,580,714 1,368,567 Our Accounts Receivable is pledged to Nations Interbanc, our line of credit. SCHEDULE OF LEASE RECEIVABLE ASSET June 30, 2023 December 31, 2022 Lease asset $ 217,584 $ 217,584 The Company is currently modifying the assets subject to lease to meet the provisions of the agreement, and as of June 30, 2023 any collection on the lease payments was not yet considered probable, resulting in no derecognition of the underlying asset and no net lease investments recognized on the sales-type lease pursuant to ASC 842-30-25-3. SCHEDULE OF DERECOGNITION OF UNDERLYING ASSETS OF FINANCING RECEIVABLE June 30, 2023 December 31, 2022 Long-term financing receivables $ 932,270 $ 932,270 Less Reserve for uncollectable accounts ( 247,500 ) ( 247,500 ) Long-term financing receivables - net $ 684,770 $ 684,770 On a contract-by-contract basis or in response to certain situations or installation difficulties, the Company may elect to allow non-interest-bearing repayments in excess of 1 year. Our long-term financing Receivable are pledged to Nations Interbanc, our line of credit. 18 NOTE 4 – INVENTORY Inventories by major classification were comprised of the following at: SCHEDULE OF INVENTORIES June 30, 2023 December 31, 2022 Inventory $ 1,773,972 1,398,394 Less reserve ( 897,808 ) ( 897,808 ) Total $ 876,164 500,586 Our Inventory is pledged to Nations Interbanc, our line of credit. NOTE 5 – PROPERTY AND EQUIPMENT Property and equipment were comprised of the following at: SCHEDULE OF PROPERTY AND EQUIPMENT June 30, 2023 December 31, 2022 Property and Equipment $ 1,389,860 1,354,824 Leasehold Improvements 75,436 75,436 Accumulated Depreciation ( 1,418,709 ) ( 1,415,444 ) Net Fixed Assets $ 46,587 14,816 Our Depreciation Expense for the three and six months ended June 30, 2023 and 2022 was $ 3,254 and $ 7,519 respectively. Our Property Plant and Equipment is pledged to Nations Interbanc, our line of credit. NOTE 6 – INTANGIBLE ASSETS Intangible assets were comprised of the following at: SCHEDULE OF INTANGIBLE ASSETS June 30, 2023 December 31, 2022 Goodwill $ 747,976 747,976 LWL Intangibles $ 1,482,061 1,468,709 License 354,322 354,322 Patents 190,789 190,789 Accumulated Amortization ( 93,034 ) ( 87,096 ) Net Fixed Assets $ 2,682,114 2,674,700 Our Amortization Expense for the three and six months ended June 30, 2023 and 2022 was $ 2,969 and 5,938 respectively. 19 Based on the foregoing analysis of the facts surrounding the Company’s acquisition of LWL, it is the Company’s position that the Company is the acquirer of LWL, under the acquisition method of accounting. As such, as of November 8, 2021 (the acquisition date), the Company recognized, separately from goodwill, the identifiable assets acquired, and the liabilities assumed in the Business combination. The following table presents the purchase price allocation: SCHEDULE OF BUSINESS ACQUISITION PURCHASE PRICE ALLOCATION Consideration: Cash and cash equivalents $ 1,500,000 Total purchaser consideration $ 1,500,000 Assets acquired: Cash and cash equivalents $ 6,156 Prepayment $ 22,035 Other receivable $ 20,000 Trading Contracts $ 146,035 Shenzhen Gas Relationship $ 1,314,313 Total assets acquired $ 1,508,539 Liabilities assumed: Advance Receipts $ 8,539 Net Assets Acquired: $ 1,500,000 If LWL reaches USD 5 million in revenue or net profit of USD 1 million by December 31, 2023 then based on the performance contingency there will be issuance of 20,000,000 shares of CETY to the Seller. As of the date of the filing the performance contingencies have not been met. 20 NOTE 7 – CONVERTIBLE NOTE RECEIVABLE Effective January 10, 2022 JHJ (“note holder”) entered a convertible note agreement with Chengdu Rongjun Enterprise Consulting Co., Ltd (“Rongjun” or “the borrower”) with maturity on January 10, 2025 . Under this convertible note, JHJ lent RMB 5,000,000 ($ 0.78 million) to Rongjun with an annual interest rate of 12 %, calculated from the Issuance Date until all outstanding interest and principal is paid in full. The Borrower may pre-pay principal or interest on this Note at any time prior to the maturity date, without penalty. JHJ has the right to convert this note directly or indirectly into shares or equity interest of Heze Hongyuan Natural Gas Co., Ltd (“Heze”) equal to 15 % of Heze’s outstanding Equity Interest. Rongjun owns 90 % of Heze. NOTE 8 – ACCRUED EXPENSES SCHEDULE OF ACCRUED EXPENSES June 30, 2023 December 31, 2022 Accrued Wages $ 97,439 $ 102,370 Accrued Taxes and other 23,811 16,660 Accrued Wages and Taxes $ 121,250 $ 119,030 NOTE 9 – 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 2.5 % annually. It is secured by the assets of the Company. In addition, it is personally guaranteed by Kambiz Mahdi, our Chief Executive Officer. As of June 30, 2023 the outstanding balance was $ 712,966 compared to $ 998,820 at December 31, 2022. 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 $ 275,000 as well as the accrual rate to 2.25 % per 30 days. As a result, CETY has agreed to remit a minimum monthly payment of $ 25,000 by the final calendar day of each month. On September 11, 2015, our CE HRS subsidiary issued a promissory note in the initial principal amount $ 1,400,000 and assumed a pension liability of $ 100,000 , for a total liability of $ 1,500,000 , in connection with our acquisition of the heat recovery solutions, or HRS, assets of General Electric International, Inc., a Delaware corporation (“GEII”), including intellectual property, patents, trademarks, machinery, equipment, tooling and fixtures. The note bears interest at the rate of 2.66 % per annum. The note is payable on the following schedule: (a) $ 200,000 in principal on December 31, 2015 and (b) thereafter, the remaining principal amount of $1,200,000, together with interest thereon, payable in equal quarterly instalments of principal and interest of $157,609, commencing on December 31, 2016 and continuing until December 31, 2019, at which time the remaining unpaid principal amount of this note and all accrued and unpaid interest thereon shall be due and payable in full . CETY stopped making payments and informed GE that it had encountered difficulties because of the valuations of the assets that were acquired from GE. Given that the values of the assets were different than GE’s internal reports and as we discussed at the time of the transaction with GE’s management, we proposed a change in the amount the Company owes GE under the purchase agreement, but GE was non-responsive, and GE’s entire distributed power vertical has been divested. Based on the California Statute of Limitations, the Nevada Statute of Limitations, and the New York Statute of Limitations it is the view of our legal counsel that the above referenced debt is no longer an enforceable obligation. under California law, Nevada law, and New York law, as it became past due no later than November 3, 2016, more than Six (6) years ago and last payment made on the debt was on November 3, 2016, which is more than Six (6) years ago. The total gain recognized from this write off was $ 2,556,916 . 21 On September 7, 2021, the company entered into a promissory note in the amount of $ 226,345 , with an interest rate of 10 % per annum and a default interest rate of 22% per annum . This note is due in full on September 7, 2022 and has mandatory monthly payments of $ 23,828 . The note had an OID of $ 23,345 and recorded as finance fee expense. In the event of the default, at the option of the Investor, the note may be converted into shares of common stock of the company. This note is convertible, but not until a contingent event of default has taken place, none of which has occurred as of the date of this filing. The balance on this note as of March 31, 2022 was $ 119,142 . This note was paid off on June 29, 2022. On September 28, 2021, the company entered into a promissory note in the amount of $ 142,720 , with an interest rate of 10 % per annum and a default interest rate of 22% per annum . This note is due in full on September 28, 2022 and has mandatory monthly payments of $ 15,003 . The note had an OID of $ 14,720 and was recorded as a finance fee expense. In the event of the default, at the option of the Investor, the note may be converted into shares of common stock of the company. This note is convertible, but not until a contingent event of default has taken place, none of which has occurred as of the date of this filing. This note was paid off as of July 13, 2022. On March 10, 2022 the company entered into a promissory note in the amount of $ 170,600 with an interest rate of 10 % per annum and a default interest rate of 22% per annum . This note is due in full on March 10, 2023 and has mandatory monthly payments of $ 18,766 . The note had an OID of $ 17,060 and was recorded as finance fee expense. In the event of the default, at the option of the Investor, the note may be converted into shares of common stock of the company. This note is convertible, but not until a contingent event of default has taken place, none of which have occurred as of the date of this filing. This note was paid off as of Dec 6, 2022. On June 30, 2022 the company entered into a promissory note in the amount of $ 252,928 with an interest rate of 10 % per annum and a default interest rate of 22% per annum . This note is due in full on June 30, 2023 and has mandatory monthly payments of $ 27,822 . The note had an OID of $ 25,293 and recorded as finance fee expense. In the event of the default, at the option of the Investor, the note may be converted into shares of common stock of the company. This note is convertible, but not until a contingent event of default has taken place, none of which has occurred as of the date of this filing. The balance on this note as of December 31, 2022 was $ 139,111 . This note was paid off as of Feb 13, 2023. On July 13, 2022 the company entered into a promissory note in the amount of $ 159,450 with an interest rate of 10 % per annum and a default interest rate of 22% per annum . This note is due in full on July 13, 2023 and has mandatory monthly payments of $ 17,539 . The note had an OID of $ 16,447 and recorded as finance fee expense. In the event of the default, at the option of the Investor, the note may be converted into shares of common stock of the company. This note is convertible, but not until a contingent event of default has taken place, none of which has occurred as of the date of this filing. The balance on this note as of December 31,2022 was $ 87,697 . This note was paid off as of March 7, 2023. On October 25, 2022 the company entered into a promissory note in the amount of $ 114,850 with an interest rate of 10 % per annum and a default interest rate of 22% per annum . This note is due in full on October 25, 2023 and has mandatory monthly payments of $ 12,634 . The note had an OID of $ 11,850 and recorded as finance fee expense. In the event of the default, at the option of the Investor, the note may be converted into shares of common stock of the company. This note is convertible, but not until a contingent event of default has taken place, none of which has occurred as of the date of this filing. The balance on this note as of June 30,2023 was $ 25,267 . On Dec 5,2022 the company entered into a promissory note in the amount of $ 191,526 with an interest rate of 10 % per annum and a default interest rate of 22% per annum . This note is due in full on December 5,2023 and has mandatory monthly payments of $ 21,068 . The note had an OID of $ 19,760 and recorded as finance fee expense. In the event of the default, at the option of the Investor, the note may be converted into shares of common stock of the company. This note is convertible, but not until a contingent event of default has taken place, none of which has occurred as of the date of this filing. The balance on this note as of June 30, 2023 was $ 63,203 . On Feb 10,2023 the company entered into a promissory note in the amount of $ 258,521 with an interest rate of 10 % per annum and a default interest rate of 22% per annum . This note is due in full on Feb 10, 2024 , and has mandatory monthly payments of $ 28,437 . The note had an OID of $ 27,698 and recorded as finance fee expense. In the event of the default, at the option of the Investor, the note may be converted into shares of common stock of the company. This note is convertible, but not until a contingent event of default has taken place, none of which has occurred as of the date of this filing. The balance on this note as of June 30,2023 was $ 200,982 . On March 6,2023 the company entered into a promissory note in the amount of $ 135,005 with an interest rate of 10 % per annum and a default interest rate of 22% per annum . This note is due in full on March 6, 2024 , and has mandatory monthly payments of $ 13,500 . The note had an OID of $ 14,465.50 and was recorded as a finance fee expense. In the event of the default, at the option of the Investor, the note may be converted into shares of common stock of the company. This note is convertible, but not until a contingent event of default has taken place, none of which has occurred as of the date of this filing. The balance on this note as of June 30, 2023 was $ 103,954 . 22 Convertible notes On May 5, 2017, we entered into a nine-month convertible note payable for $ 78,000 , which accrues interest at the rate of 12 % per annum. It is not convertible until three months after its issuance and has a conversion rate of sixty one percent ( 61 %) of the lowest closing bid price (as reported by Bloomberg LP) of our common stock for the fifteen ( 15 ) Trading Days immediately preceding the date of conversion. On November 6, 2017, this note was assumed and paid in full at a premium for a total of $ 116,600 by Cybernaut Zfounder Ventures. An amended term was added to the original note with the interest rate of 14 %. This note matured on February 21 st of 2018 and is currently in default. As of March 31, 2023 the outstanding balance due was $ 159,895 . As of April 3, 2023 this note was settled and paid off, please see comment below. On May 24, 2017, we entered into a nine-month convertible note payable for $ 32,000 , which accrues interest at the rate of 12 % per annum. It is not convertible until three months after its issuance and has a conversion rate of fifty-five eight percent ( 58 %) of the lowest closing bid price (as reported by Bloomberg LP) of our common stock for the fifteen ( 15 ) Trading Days immediately preceding the date of conversion. On November 6, 2017, this note was assumed and paid in full at a premium for a total of $ 95,685 , by Cybernaut Zfounder Ventures. An amended term was added to the original note with the interest rate of 14 %. This note matured on February 26, 2018, and is currently in default. As of March 31, 2023 the outstanding balance due was $ 163,980 . As of April 3, 2023 this note was settled and paid off. On April 3, 2023 Clean Energy Technologies, Inc. reached an agreement with Cybernaut Zfounder Ventures, LLC to pay off the outstanding convertible notes dated May 5, 2017 and May 24, 2017 in amount equal to $ 330,555 that were in default for a settlement amount of $ 200,000 . On December 27, 2021, we entered into a convertible note payable with Universal Scope Inc. for $ 650,000 with a maturity date of June 21, 2022 which accrues interest at the rate of 2 % per annum. It is convertible at any time after its issuance and has a fixed conversion rate of $ 0.06 of our common stock. This note was converted into 277,604 of our common shares on March 28, 2023. On May 6, 2022 we entered into a Securities Purchase Agreement with Mast Hill, L.P. (Mast Hill”) pursuant to which the Company issued to Mast Hill a $ 750,000 Convertible Promissory Note, due May 6, 2023 (the “Note”) for a purchase price of $ 675,000 plus an original issue discount in the amount of $ 75,000 , and an interest rate of fifteen percent ( 15 %) per annum. Mast Hill Fund is entitled to purchase 234,375 shares of common stock per the warrant agreement at the exercise price of $ 1.60 . The Securities Purchase Agreement provides customary representations, warranties and covenants of the Company and Mast Hill as well as providing Mast Hill with registration rights. The principal balance and accrued interest of this as of June 30, 2023 was $ 879,452 . On August 5, 2022 we entered into a Securities Purchase Agreement with Jefferson Street Capital, LLC (Jefferson) pursuant to which the Company issued to Jefferson a $ 138,888 Convertible Promissory Note, due August 5, 2023 (the “Note”) for a purchase price of $ 125,000 plus an original issue discount in the amount of $ 13,888 , and an interest rate of fifteen percent ( 15 %) per annum. Jefferson is entitled to purchase 43,403 shares of common stock per the warrant agreement at the exercise price of $ 1.60 . The Securities Purchase Agreement provides customary representations, warranties and covenants of the Company and Jefferson as well as providing Jefferson with registration rights. This note was paid off as of March 9, 2023 for the payoff amount of $ 187,451 . On August 17, 2022 we entered into a Securities Purchase Agreement with Firstfire Global Opportunities Fund LLC (“Firstfire”) pursuant to which the Company issued to Mast Hill a $ 150,000 Convertible Promissory Note, due August 17, 2023 (the “Note”) for a purchase price of $ 135,000 plus an original issue discount in the amount of $ 15,000 , and an interest rate of fifteen percent ( 15 %) per annum. Firstfire is entitled to purchase 46,875 shares of common stock per the warrant agreement at the exercise price of $ 1.60 . The Securities Purchase Agreement provides customary representations, warranties, and covenants of the Company and Firstfire as well as providing Firstfire with registration rights. This note was paid off as of March 9, 2023 for the payoff amount of $ 215,000 . On September 1, 2022 we entered into a Securities Purchase Agreement with Pacific Pier Capital, LLC (Pacific) pursuant to which the Company issued to Pacific a $ 138,888 Convertible Promissory Note, due August 5, 2023 (the “Note”) for a purchase price of $ 125,000.00 plus an original issue discount in the amount of $ 13,888.88 , and an interest rate of fifteen percent ( 15 %) per annum. Pacific is entitled to purchase 43,403 shares of common stock per the warrant agreement at the exercise price of $ 1.60 . The Securities Purchase Agreement provides customary representations, warranties and covenants of the Company and Pacific as well as providing Pacific with registration rights. This note was paid off as of March 9, 2023 for the payoff amount of $ 190,606 . 23 On September 16, 2022 we entered into a Securities Purchase Agreement with Mast Hill, L.P. (Mast Hill”) pursuant to which the Company issued to Mast Hill a $ 300,000 Convertible Promissory Note, due September 16, 2023 (the “Note”) for a purchase price of $ 270,000 plus an original issue discount in the amount of $ 30,000 , and an interest rate of fifteen percent ( 15 %) per annum. Mast Hill Fund is entitled to purchase 93,750 shares of common stock per the warrant agreement at the exercise price of $ 1.60 . The Securities Purchase Agreement provides customary representations, warranties and covenants of the Company and Mast Hill as well as providing Mast Hill with registration rights. Mast Hill converted their warrant on April 18, 2023. The principal balance and accrued interest of this as of June 30, 2023 was $ 335,384 . On November 10, 2022 we entered into a Securities Purchase Agreement with Mast Hill, L.P. (Mast Hill”) pursuant to which the Company issued to Mast Hill a $ 95,000 Convertible Promissory Note, due November 10, 2023 (the “Note”) for a purchase price of $ 85,500 plus an original issue discount in the amount of $ 9,500 and an interest rate of fifteen percent ( 15 %) per annum. Mast Hill Fund is entitled to purchase 29,686 shares of common stock per the warrant agreement at the exercise price of $ 1.60 . The Securities Purchase Agreement provides customary representations, warranties and covenants of the Company and Mast Hill as well as providing Mast Hill with registration rights. The principal balance and accrued interest of this as of June 30, 2023 was $ 103,901 . On November 21, 2022 we entered into a Securities Purchase Agreement with Mast Hill, L.P. (Mast Hill”) pursuant to which the Company issued to Mast Hill a $ 95,000 Convertible Promissory Note, due November 21, 2023 (the “Note”) for a purchase price of $ 85,500 plus an original issue discount in the amount of $ 9,500 , and an interest rate of fifteen percent ( 15 %) per annum. Mast Hill Fund is entitled to purchase 29,686 shares of common stock per the warrant agreement at the exercise price of $ 1.60 . The Securities Purchase Agreement provides customary representations, warranties and covenants of the Company and Mast Hill as well as providing Mast Hill with registration rights. The principal balance and accrued interest of this as of June 30, 2023 was $ 103,628 . On December 26, 2022 we entered into a Securities Purchase Agreement with Mast Hill, L.P. (Mast Hill”) pursuant to which the Company issued to Mast Hill a $ 123,000 Convertible Promissory Note, due December 26, 2023 (the “Note”) for a purchase price of $ 110,700 plus an original issue discount in the amount of $ 12,300 and an interest rate of fifteen percent ( 15 %) per annum. Mast Hill Fund is entitled to purchase 38,437 shares of common stock per the warrant agreement at the exercise price of $ 1.60 . The Securities Purchase Agreement provides customary representations, warranties and covenants of the Company and Mast Hill as well as providing Mast Hill with registration rights. The principal balance and accrued interest of this as of June 30, 2023 was $ 132,402 . On January 19, 2023 we entered into a Securities Purchase Agreement with Mast Hill, L.P. (Mast Hill”) pursuant to which the Company issued to Mast Hill a $ 187,000 Convertible Promissory Note, due January 19, 2024 (the “Note”) for a purchase price of $ 168,300 plus an original issue discount in the amount of $ 18,700 and an interest rate of fifteen percent ( 15 %) per annum. Mast Hill Fund is entitled to purchase 58,438 shares of common stock per the warrant agreement at the exercise price of $ 1.60 . The Securities Purchase Agreement provides customary representations, warranties and covenants of the Company and Mast Hill as well as providing Mast Hill with registration rights. The principal balance and accrued interest of this as of June 30, 2023 was $ 199,450 . On March 8, 2023 we entered into a Securities Purchase Agreement with Mast Hill, L.P. (Mast Hill”) pursuant to which the Company issued to Mast Hill a $ 734,000 Convertible Promissory Note, due March 8, 2024 (the “Note”) for a purchase price of $ 660,600 plus an original issue discount in the amount of $ 73,400 and an interest rate of fifteen percent ( 15 %) per annum. Mast Hill Fund is entitled to purchase 367,000 shares of common stock per the warrant agreement at the exercise price of $ 1.60 . The Securities Purchase Agreement provides customary representations, warranties and covenants of the Company and Mast Hill as well as providing Mast Hill with registration rights. The principal balance and accrued interest balance of this as of June 30, 2023 was $ 768,572 . Total due to Convertible Notes SCHEDULE OF CONVERTIBLE NOTES June 30, 2023 December 31, 2022 Total convertible notes $ 2,677,407 3,156,528 Accrued Interest 238,791 262,331 Debt Discount ( 355,473 ) ( 326,804 ) Total $ 2,560,725 3,092,055 Note 10 – Derivative Liabilities As a result of the convertible notes, we recognized the embedded derivative liability on the date of note issuance. We also revalued the remaining derivative liability on the outstanding note balance on the date of the balance sheet. We value the derivative liability using a binomial lattice model with an expected volatility of 91.5 %, a risk-free interest rate range of 4.5 %, and an exercise price of $ 1.00 . The derivative liability as of June 30, 2023 was $ 0 after the Company paid off the two convertible notes payable in the second quarter of 2023. The remaining derivative liabilities were: SCHEDULE OF FAIR VALUE OF DERIVATIVE LIABILITY June 30, 2023 December 31, 2022 Derivative Liabilities on Convertible Loans: Outstanding Balance $ - $ 588,178 24 NOTE 11 – COMMITMENTS AND CONTINGENCIES Operating Rental Leases As of May 1, 2017, our corporate headquarters are located at 2990 Redhill Unit A, Costa Mesa, CA. On March 10, 2017, the Company signed a lease agreement for an 18,200 -square foot CTU Industrial Building. Lease term is seven years and two months beginning July 1, 2017. Future minimum lease payments for the years ending December 31, are: In October of 2018 we signed a sublease agreement with our facility in Italy with an indefinite term that may be terminated by either party with a 60-day notice for 1,000 Euro per month. Due to the short termination clause, we are treating this as a month-to-month lease . SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS As of June 30, 2023 Year Lease Payment 2023 (6 months) 109,575 June 30, 2024 June 30, 2025 June 30, 2026 June 30, 2027 Total undiscounted cash flows Imputed Interest ( 2,984 ) Net Lease Liability $ 106,591 Our lease expenses for the six months ended June 30,2023 and 2022 were $ 196,373 and $ 173,480 respectively. Effective August 5, 2022 Shuya entered a 48 months lease for a natural gas recycle station from Leishen (the 41% shareholder of Shuya), including the operating right and use right of all the assets and equipment in the station. The annual rent is approximately $76,100, to be paid each year in advance. Effective August 5, 2022 Shuya entered another 48 months lease for leasing sewage treatment land from Leishen for the purpose of operating the natural gas recycling station. The annual rent is approximately $19,540, to be paid each year in advance. The following is a schedule, by year of lease payment for Shuya as of June 30, 2023. For the 12 months ending Lease Payment 2023 (6 months) 41,093 2024 82,185 2025 82,185 2026 41,093 2027 - Total undiscounted cash flows 246,556 Imputed Interest ( 23,232 ) Present value of lease liabilities $ 223,324 Our lease expense of Shuya for the three months ended June 30, 2023 and 2022 was $ 82,185 and $ 0 respectively. ASB ASU 2016-02 “Leases (Topic 842)” – In February 2016, the FASB issued ASU 2016-02, which requires lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. Lessor accounting is similar to the current model but has been updated to align with certain changes to the lessee model and the new revenue recognition standard. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We have adopted the above ASU as of January 1, 2019. The right of use asset and lease liability have been recorded at the present value of the future minimum lease payments, utilizing a 5 % average borrowing rate based on the major banks borrowing rate in China.. Severance Benefits Mr. Mahdi will receive a severance benefit consisting of a single lump sum cash payment equal to the salary that Mr. Mahdi would have been entitled to receive through the remainder or the Employment Period or One (1) year, whichever is greater. NOTE 12 – CAPITAL STOCK TRANSACTIONS On April 21, 2005, our Board of Directors and shareholders approved the re-domicile of the Company in the State of Nevada, in connection with which we increased the number of our authorized common shares to 200,000,000 and designated a par value of $ .001 per share. On May 25, 2006, our Board of Directors and shareholders approved an amendment to our Articles of Incorporation to authorize a new series of preferred stock, designated as Series C, and consisting of 15,000 authorized shares. On June 30, 2017, our Board of Directors and shareholders approved an increase in the number of our authorized common shares to 400,000,000 and in the number of our authorized preferred shares to 10,000,000 . The amendment effecting the increase in our authorized capital was filed and effective on July 5, 2017. On August 28, 2018, our Board of Directors and shareholders approved an increase in the number of our authorized common shares to 800,000,000 . The amendment effecting the increase in our authorized capital was filed and effective on August 23, 2018. On June 10, 2019, our Board of Directors and shareholders approved an increase in the number of our authorized common shares to 2,000,000,000 . The amendment effecting the increase in our authorized capital was effective on September 27, 2019. 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 shares of Common Stock such that each (40) shares of Old Common Stock shall be reclassified as and combined into one (1) share of New Common Stock. All per share references to common stock have been retroactively represented throughout the financials. 25 Common Stock Transactions On December 27, 2021, we entered into a convertible note payable with Universal Scope Inc. for $ 650,000 with a maturity date of June 21, 2022 which accrues interest at the rate of 2 % per annum. It is convertible at any time after its issuance and has a fixed conversion rate of $ 2.40 of our common stock. This note and accrued interest was converted into 277,604 of our common shares on March 28, 2023. On February 21, 2022 we issued 375,875 shares of our common stock under our Reg A offering at $ .08 per share. These shares are unrestricted and free trading. During the quarter ended March 31, 2022 we issued 78,897 shares of common stock, under S-1 registration statement with GHS for a total of $ 134,755 in net proceeds and expensed $ 45,498 in legal and financing fees as a result. During April of 2022 we issued 122,898 shares of common stock, under S-1 registration statement with GHS for a total of $ 156,188 in net proceeds and expensed $ 34,500 in legal and financing fees as a result. On December 28, 2022 Mast Hill exercised their warrant in full on a cashless basis to purchase 100,446 shares of Common Stock. On August 17, 2022 we issued 46,875 warrant shares in connection with the issuance of the promissory note in the principal amount of $ 150,000 to First Fire at the exercise price per share of $ 1.60 . However, that if the Company consummates an Uplist Offering on or before the date that is one hundred eighty (180) calendar days after the Issuance Date, then the Exercise Price shall equal 120 % of the offering price per share of Common Stock. On March 1, 2023 First Fire exercised the warrant in full on a cashless basis to purchase 33,114 shares of common stock. On September 1, 2022 we issued 43,403 warrant shares in connection with the issuance of the promissory note in the principal amount of $ 138,889 to Pacific Pier at the exercise price per share of $ 1.60 . However, that if the Company consummates an Uplist Offering on or before the date that is one hundred eighty (180) calendar days after the Issuance Date, then the Exercise Price shall equal 120 % of the offering price per share of Common Stock. On March 1, 2023 Pacific Pier exercised the warrant in full on a cashless basis to purchase 31,111 shares of common stock. On January 19, 2023, the Company entered into a Securities Purchase Agreement and a warrant agreement with Mast Hill, L.P. (Mast Hill”) pursuant to which the Company issued to Mast Hill the Company issued Mast Hill a five-year warrant to purchase 58,438 shares of common stock in connections with the transactions. On January 27, 2023 we issued 3,745 shares of our common stock due to rounding post the reverse stock split. On March 23, 2023 we sold 975,000 shares of our common stock in an underwritten offering to R.F. Lafferty & CO and Phillip US. The initial public offering price per share is $ 4.00 per share. Net proceeds from this offering was $ 3,093,577 . In the second quarter of 2023, the Company issued 40,000 shares to a consultant at fair value of $ 72,000 . On March 8, 2023 the Company entered into a Securities Purchase Agreement and a warrant agreement with Mast Hill, L.P. (Mast Hill”) pursuant to which the Company issued to Mast Hill the Company issued Mast Hill a five-year warrant to purchase 367,000 shares of common stock in connections with the transactions. On April 18, 2023 Mast Hill exercised the right to purchase 93,750 of the shares of Common Stock (“Warrant Shares”) of Clean Energy Technologies, Inc., because of the Common Stock Purchase Warrant (the “Warrant”) issued on September 16, 2022. The exercise price is $ 1.60 per share. The total purchase price was $ 150,000 . On May 10, 2023 Mast Hill exercised the right to purchase 58,438 of the shares of Common Stock (“Warrant Shares”) of Clean Energy Technologies, Inc., because of the Common Stock Purchase Warrant (the “Warrant”) issued on Jamuary 19, 2023. The exercise price is $ 1.60 per share. The total purchase price was $ 93,501 . On June 14, 2023 Mast Hill exercised the right to purchase 38,438 of the shares of Common Stock (“Warrant Shares”) of Clean Energy Technologies, Inc., because of the Common Stock Purchase Warrant (the “Warrant”) issued on December 26, 2022. The exercise price is $ 1.60 per share. The total purchase price was $ 61,501 . On June 23, 2023 Mast Hill exercised the right to purchase 29,688 of the shares of Common Stock (“Warrant Shares”) of Clean Energy Technologies, Inc., because of the Common Stock Purchase Warrant (the “Warrant”) issued on November 21, 2022. The exercise price is $ 1.60 per share. The total purchase price was $ 47,501 . 26 Common Stock Our Articles of Incorporation authorize us to issue 2,000,000,000 shares of common stock, par value $ 0.001 per share. As of June 30, 2023 there were 38,755,767 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 20,000,000 shares of preferred stock, par value $ 0.001 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 440 shares of Series A Convertible Preferred Stock, 20,000 shares of Series B Convertible Preferred Stock, and 15,000 shares Series C Convertible Preferred Stock. As of August 20, 2006, all series A, B, and C preferred had been converted into common stock. Effective August 7, 2013, our Board of Directors designated a series of our preferred stock as Series D Preferred Stock, authorizing 15,000 shares. Our Series D Preferred Stock offering terms authorized us to raise up to $1,000,000 with an over-allotment of $500,000 in multiple closings over the course of six months. We received an aggregate of $750,000 in financing in subscription for Series D Preferred Stock, or 7,500 shares. The following are primary terms of the Series D Preferred Stock. The Series D Preferred holders were initially entitled to be paid a special monthly divide at the rate of 17.5 % per annum. Initially, the Series D Preferred Stock was also entitled to be paid special dividends in the event cash dividends were not paid when scheduled. If the Company does not pay the dividend within five (5) business days from the end of the calendar month for which the payment of such dividend is owed, the Company will pay the investor a special dividend of an additional 3.5%. Any unpaid or accrued special dividends will be paid upon liquidation or redemption. For any other dividends or distributions, the Series D Preferred Stock participates with common stock on an as-converted basis. The Series D Preferred holders may elect to convert the Series D Preferred Stock, in their sole discretion, at any time after a one-year (1) year holding period, by sending the Company a notice to convert. The conversion rate is equal to the greater of $3.20 or a 20% discount to the average of the three (3) lowest closing market prices of the common stock during the ten (10) trading day period prior to conversion. The Series D Preferred Stock is redeemable from funds legally available for distribution at the option of the individual holders of the Series D Preferred Stock commencing any time after the one (1) year period from the offering closing at a price equal to the initial purchase price plus all accrued but unpaid dividends, provided, that if the Company gave notice to the investors that it was not in a financial position to redeem the Series D Preferred, the Company and the Series D Preferred holders are obligated to negotiate in good faith for an extension of the redemption period. The Company timely notified the investors that it was not in a financial position to redeem the Series D Preferred and the Company and the investors have engaged in ongoing negotiations to determine an appropriate extension period. The Company may elect to redeem the Series D Preferred Stock any time at a price equal to the initial purchase price plus all accrued but unpaid dividends, subject to the investors’ right to convert, by providing written notice about its intent to redeem. Each investor has the right to convert the Series D Preferred Stock at least ten (10) days prior to such redemption by the Company. 27 Warrants A summary of warrant activity for the periods is as follows: On May 6, 2022 we issued 234,375 warrant shares in connection with the issuance of the promissory note in the principal amount of $ 750,000 to Mast Hill Fund at the exercise price per share of $ 1.60 . However, that if the Company consummates an Uplist Offering on or before the date that is one hundred eighty (180) calendar days after the Issuance Date, then the Exercise Price shall equal 120 % of the offering price per share of Common Stock. On December 28, 2022 Mast Hill exercised the warrant in full on a cashless basis to purchase 100,446 shares of Common Stock. On August 5, 2022 we issued 43,403 warrant shares in connection with the issuance of the promissory note in the principal amount of $ 138,889 to Jefferson Street at the exercise price per share of $ 1.60 . However, that if the Company consummates an Uplist Offering on or before the date that is one hundred eighty (180) calendar days after the Issuance Date, then the Exercise Price shall equal 120 % of the offering price per share of Common Stock. On August 17, 2022 we issued 46,875 warrant shares in connection with the issuance of the promissory note in the principal amount of $ 150,000 to First Fire at the exercise price per share of $ 1.60 . However, that if the Company consummates an Uplist Offering on or before the date that is one hundred eighty (180) calendar days after the Issuance Date, then the Exercise Price shall equal 120 % of the offering price per share of Common Stock. On March 1, 2023 First Fire exercised the warrant in full on a cashless basis to purchase 33,114 shares of common stock. On September 1, 2022 we issued 43,403 warrant shares in connection with the issuance of the promissory note in the principal amount of $ 138,889 to Pacific Pier at the exercise price per share of $ 1.60 . However, that if the Company consummates an Uplist Offering on or before the date that is one hundred eighty (180) calendar days after the Issuance Date, then the Exercise Price shall equal 120 % of the offering price per share of Common Stock. On March 1, 2023 Pacific Pier exercised the warrant in full on a cashless basis to purchase 31,111 shares of common stock. On September 16, 2022 we issued 93,750 warrant shares in connection with the issuance of the promissory note in the principal amount of $ 300,000 to Mast Hill Fund at the exercise price per share of $ 1.60 . However, that if the Company consummates an Uplist Offering on or before the date that is one hundred eighty (180) calendar days after the Issuance Date, then the Exercise Price shall equal 120 % of the offering price per share of Common Stock. On April 18, 2023 Mast Hill exercised the warrant in full at the exercise price per share of $ 1.60 . On November 10, 2022 we issued 29,687 warrant shares in connection with the issuance of the promissory note in the principal amount of $ 300,000 to Mast Hill Fund at the exercise price per share of $ 1.60 . However, that if the Company consummates an Uplist Offering on or before the date that is one hundred eighty (180) calendar days after the Issuance Date, then the Exercise Price shall equal 120 % of the offering price per share of Common Stock. On June 23, 2023 Mast Hill exercised the warrant in full at the exercise price per share of $ 1.60 . On November 21, 2022 we issued 29,687 warrant shares in connection with the issuance of the promissory note in the principal amount of $ 95,000 to Mast Hill Fund at the exercise price per share of $ 1.60 . However, that if the Company consummates an Uplist Offering on or before the date that is one hundred eighty (180) calendar days after the Issuance Date, then the Exercise Price shall equal 120 % of the offering price per share of Common Stock. On December 26, 2022 we issued 38,437 warrant shares in connection with the issuance of the promissory note in the principal amount of $ 123,000 to Mast Hill Fund at the exercise price per share of $ 1.60 . However, that if the Company consummates an Uplist Offering on or before the date that is one hundred eighty (180) calendar days after the Issuance Date, then the Exercise Price shall equal 120 % of the offering price per share of Common Stock. On June 14, 2023 Mast Hill exercised the warrant in full at the exercise price per share of $ 1.60 . On January 19, 2023 we issued 58,438 warrant shares in connection with the issuance of the promissory note in the principal amount of $ 187,000 to Mast Hill Fund at the exercise price per share of $ 1.60 . However, that if the Company consummates an Uplist Offering on or before the date that is one hundred eighty (180) calendar days after the Issuance Date, then the Exercise Price shall equal 120 % of the offering price per share of Common Stock. On May 19, 2023 Mast Hill exercised the warrant in full at the exercise price per share of $ 1.60 . On February 13, 2023 we issued 26,701 warrant shares to J.H. Darbie & Co., Inc. according to finder agreement we entered into date April 2022 at the exercise price of $ 5.00 . On March 8, 2023 we issued 367,000 warrant shares in connection with the issuance of the promissory note in the principal amount of $ 734,000 to Mast Hill Fund at the exercise price per share of $ 1.60 . However, that if the Company consummates an Uplist Offering on or before the date that is one hundred eighty (180) calendar days after the Issuance Date, then the Exercise Price shall equal 120 % of the offering price per share of Common Stock. SCHEDULE OF WARRANT ACTIVITY Warrants Warrants - Weighted exercisable - Weighted Common Average Common Average Share Exercise Share Remaining Intrinsic Equivalents price Equivalents Life Value Outstanding December 31, 2022 325,243 $ 1.60 325,243 4.00 - Expired - - - - - Additions 425,438 1.60 425,438 4.7 - Additions 26,701 5.00 26,701 4.8 - Exercised ( 310,592 ) 1.60 ( 310,592 ) Outstanding June 30, 2023 466,790 $ 2.86 466,790 $ - - 28 Stock Options We currently have no outstanding stock options. NOTE 13 – RELATED PARTY TRANSACTIONS From August 2022 through October 2022 Hongzhuo Shuya (Shuya) a 49% owned subsidiary (also is our consolidated VIE) of CETY HK limited engaged in the trading of pipeline gas and CNG processing and sales provided Sichuan Leishen Hongzhuo Energy Development Co., Ltd (Leishen) with approximately total of $ 740,000 loan with a 4-year term to facilitate building of a natural gas recycling station to provide Shuya with CNG sales. Leishen owns 41% of Shuya and as an entity can obtain the permits and licenses to build and operate the NG Recycling Station to produce CNG. At the end of the 4-year term of the loan, Leishen has the option to either move the NG Recycling Station and all permits to Shuya or repay the loan. Additionally, Leishen has relationships with the supply side of the NG business and is able to obtain large amounts of NG. As a result, Shuya also has a supplier relationship with Leishen. The price obtained from Leishen will be better than any unrelated party as their markup is below market. Our Board of Directors has approved the transactions between Leishen and the Company. During the quarter ended March 31, 2023 Shuya made a $ 1.03 million purchase from Leishen. As of March 31, 2023 we had account receivable from Leishen $ 4,883 , advance to supplier of Leishen of $ 458,014 , accounts payable to Leishen of $ 138,347 . In addition, we lent $ 736,736 to Leishen as of March 31, 2023 for Leishen to construct a CNG refueling station on behalf of Shuya, the loan term is four years. When the CNG refueling station is ready for operation, Shuya will lease the CNG refueling station from Leishen at a favorabvle price equivalent to the depreciation amount of the station; when the assets are eligible for transfer, Leishen will transfer the assets of CNG refueling station to Shuya at the net asset value. Effective August 5, 2022 Shuya entered a 48 months lease for a natural gas recycle station from Leishen, including the operating right and use right of all the assets and equipment in the station. The annual rent is approximately $ 76,100 , to be paid each year in advance. Effective August 5, 2022 Shuya entered another 48 months lease for leasing sewage treatment land from Leishen for the purpose of operating the natural gas recycling station. The annual rent is approximately $ 19,540 , to be paid each year in advance. On May 13, 2021 the Company formed CETY Capital LLC a wholly owned subsidiary of CETY. In addition, the company established Vermont Renewable Gas LLC (“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 49 % interest and SBC owns a 51 % interest in Vermont Renewable Gas LLC. On June 2, 2023 CETY executed a turnkey agreement for the design, construction, and delivery of organics to energy plant with Vermont Renewable Gas, LLC. As a result, CETY has invoiced VRG $ 412,682 in the second quarter of 2023 and recorded as related party revenue. On November 2, 2016, we effected the repayment of the convertible note dated March 15, 2016, for an aggregate amount of $ 84,000 . Concurrently, we entered into an Escrow Funding Agreement with Red Dot Investment, Inc., a California corporation (“Reddot”), pursuant to which Reddot deposited funds into escrow to fund the repayment and we assigned to Reddot our right to acquire the convertible note and Reddot acquired the convertible note. Concurrently, we and Reddot amended the convertible note (a) to have a fixed conversion price of $ .20 per share, subject to potential further adjustment in the event of certain Common Stock issuances, (b) to have a fixed interest rate of ten percent ( 10 %) per annum with respect to both the redemption amount and including a financing fee and any costs, expenses, or other fees relating to the convertible note or its enforcement and collection, and any other expense for or on our account (in each case with a minimum 10% yield in the event of payoff or conversion within the first year), such amounts to constitute additional principal under the convertible note, as amended, and (c) as otherwise provided in the Escrow Funding Agreement. The March 2016 convertible note, as so amended, is referred to as the “Master Note.” Concurrently with the foregoing note repayments, we entered into a Credit Agreement and Promissory Note (the “Credit Agreement”) with Megawell USA Technology Investment Fund I LLC, a Wyoming limited liability company in formation (“MW I”), pursuant to which MW I deposited funds into escrow to fund the repayment of the convertible notes and we assigned to MW I our right to acquire the convertible notes and otherwise agreed that MW I would be subrogated to the rights of each note holder to the extent a note was repaid with funds advanced by MW I. Concurrently, MW I acquired the Master Note and we agreed that all amounts advanced by MG I to or for our benefit would be governed by the terms of the Master Note, including the payment of a financing fees, interest, minimum interest, and convertibility. Reddot is MW I’s agent for the purposes of administration of the Credit Agreement and the Master Note and advances thereunder. On February 13, 2018, the Corporation and Confections Ventures Limited. (“CVL”) entered into a Convertible Note Purchase Agreement (the “Convertible Note Purchase Agreement,” together with the Stock Purchase Agreement and the transactions contemplated thereunder, the “Financing”) pursuant to which the Corporation issued to CVL a convertible promissory Note (the “CVL Note”) in the principal amount of $ 939,500 with an interest rate of 10 % per annum interest rate and a maturity date of February 13, 2020. The CVL Note is convertible into shares of Common Stock at $ 0.12 per share, as adjusted as provided therein. As a result, we recognized a beneficial conversion feature of $ 532,383 , which is amortized over the life of the note. This note was assigned to MGW Investments, and they agreed not to convert the $ 939,500 note into shares in excess of the 20,000,000 Authorized limit until we have increased the Authorized shares to the Board approved limit of 50,000,000 shares. This note converted into 34,644 of company’s common stock on September 21, 2022. On February 8, 2018, the Corporation entered a Convertible Promissory Note in the principal amount of $ 153,123 , due October 8, 2018, with an interest rate of 12 % per annum payable to MGWI (the “MGWI Note”). The MGWI Note is convertible into shares of the Corporation’s common stock at the lower of: (i) a 40% discount to the lowest trading price during the previous twenty (20) trading days to the date of a Conversion Notice; or (ii) 0.12. As a result of the closing of the transactions contemplated by the Stock Purchase Agreement and Convertible Note Purchase Agreement, the MGWI Note must be redeemed by the Corporation in an amount that will permit CVL and MGWI and their affiliates to hold 65% of the issued and outstanding Common Stock of the Corporation on a fully diluted basis. The proceeds from the MGWI Note were used to redeem the convertible note of the Corporation to JSJ Investments, Inc. in the principal amount of $ 103,000 with an interest rate of 12 % per annum, due April 25, 2018. At December 31, 2019 the holder of this note beneficially owned 70% of the company and this note is not convertible if the holder holds more than 9.99%, as a result, we did not recognize a derivative liability or a beneficial conversion feature. This note was converted into 33,987 of company’s common stock on September 21, 2022. Subsequently on May 11 this note was amended, and the maturity date was extended to October 8, 2023 and the restriction on the conversion of the note was removed if the holder of this note holds over 9.9% of the Company’s common stock. On June 24, 2021, MGW I converted $75,000 of the outstanding balance of this note into 625,000 shares of company’s common stock. 29 On May 31, 2019, we entered into a subscription agreement pursuant to which the Company agreed to sell 4,200,000 units (each a “Unit” and together the “Units”) to MGW Investment I Limited MGWI for an aggregate purchase price of $ 1,999,200 , or $ .476 per Unit, with each unit consisting of one share of common stock, par value $ .001 per share (the “Common Stock”) and a warrant (the “Warrant”) to purchase one share of common stock. The Common Stock will be issued to MGWI at such time as the Company increases the number of shares of its authorized Common Stock. The Warrant is exercisable at $1.60 per share of Common Stock and expires one year from the date of the Agreement. In the fourth quarter of 2019 MGW Investment I Limited, advanced $ 167,975 , with no terms or interest rate. MGW Investment limited forgave $ 80,000 of this amount in the 4 th quarter of 2022. The outstanding balance on this advance on June 30, 2022 is $ 33,142 . On March 24, 2021, the Company transferred $ 500,000 to MGWI, an affiliate of the majority stockholder of the Company to hold in trust for our investment in two planned ventures in China. The investment was used for the acquisition of LWL. On September 21, 2022 MGW I converted $ 1,548,904 from the outstanding balance of their convertible note into 12,907,534 shares of company’s common stock. Kambiz Mahdi, our Chief Executive Officer, owns Billet Electronics, which is a distributor of electronic components. From time to time, we purchase parts from Billet Electronics. In addition, Billet was a supplier of parts and had dealings with current and former customers of the Company prior to joining the company. The number of parts purchases in the 1st and 2nd quarter of 2023 was $ 6,187.00 . Our Board of Directors has approved the transactions between Billet Electronics and the Company. The outstanding balance as of June 30, 2023 was $ 1,187 . Note 14 - WARRANTY LIABILITY For the quarter ended June 30, 2023 and for the year ended December 31, 2022 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 June 30, 2023 was 100,000 . NOTE 15 – NON-CONTROLLING INTEREST On April 2, 2023 the Company formed CETY Capital LLC a wholly owned subsidiary of CETY. In addition, the company established Vermont Renewable Gas LLC (“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 49 % interest and SBC owns a 51 % interest in Vermont Renewable Gas LLC. 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 Variable Interest Entity (“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. In July 2022 JHJ and other three shareholders agreed to form and make total capital contribution of RMB 20 million ($ 2.81 million) with latest contribution due date in February 2066 into Sichuan Hongzuo Shuya Energy Limited (“Shuya”), JHJ owns 20 % of Shuya. In August 2022 JHJ purchased 100 % ownership of Sichuan Shunengwei Energy Technology Limited (“SSET”) for $ 0 , who owns 29 % of Shuya; Shunengwei is a holding company and did not have any operations nor made any capital contribution into Shuya as of the ownership purchase date by JHJ; right after the ownership purchase of SSET, JHJ ultimately owns 49 % of Shuya. As a result of Consistent Action Agreement entered on December 31, 2022 the Company re-analyzed and determined that Shuya is the variable interest entity (“VIE”) of JHJ, and the Company consolidates Shuya into its consolidated financial statements effective on January 1, 2023. The non-controlling interest of Shuya represents the 41 % equity ownership that is owned by Leishen, and 10 % equity ownership owned by another shareholder. 30 NOTE 16 – 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 10 % of its annual after-tax profit to the surplus reserve until such reserve reaches 50 % of its respective registered capital based on the FIE’s PRC statutory accounts. Appropriations to other funds are at the discretion of the BOD for all FIEs. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends. Additionally, shareholders of an FIE are required to contribute capital to satisfy the registered capital requirement of the FIE. Until such a contribution of capital is satisfied, the FIE is not allowed to repatriate profits to its shareholders, unless otherwise approved by the State Administration of Foreign Exchange. 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 50 % of its respective registered capital based on the enterprise’s PRC statutory accounts. A domestic enterprise is also required to have a discretionary surplus reserve, at the discretion of the BOD, from the profits determined in accordance with the enterprise’s PRC statutory accounts. Appropriation to such reserve by the Company is based on profit arrived at under PRC accounting standards for business enterprises for each year. The profit arrived at must be set off against any accumulated losses sustained by the Company in prior years before allocation is made to the statutory reserve. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends. Technology was established as domestic enterprises and therefore is subject to the above-mentioned restrictions on distributable profits. As a result of these PRC laws and regulations that require annual appropriations of 10 % of after-tax income to be set aside prior to payment of dividends as general reserve fund, the Company’s PRC subsidiaries are restricted in their ability to transfer a portion of their net assets to the Company as a dividend. 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 15 % of total sales. NOTE 17 – SUBSEQUENT EVENTS On July 20, 2023 Clean Energy Technology, Inc., a Nevada corporation (the “Company”) closed the transactions contemplated by the Securities Purchase Agreement with Mast Hill, L.P. (Mast Hill”) dated July 18, 2023 (the “Securities Purchase Agreement”) pursuant to which the Company issued to Mast Hill a $ 556,000 Convertible Promissory Note, due July 18, 2024 (the “Note”) for a purchase price of $ 500,400 plus an original issue discount in the amount of $ 55,600 , and an interest rate of fifteen percent ( 15 %) per annum. The principal and interest of the Note may be converted in whole or in part at any time on or following the issue date, into common stock of the Company, par value $ .001 share (“Common Stock”), subject to anti-dilution adjustments and for certain other corporate actions subject to a beneficial ownership limitation of 4.99 % of Mast Hill and its affiliates. The per share conversion price into which principal amount and accrued interest may be converted into shares of Common Stock equals $ 6.00 , subject to adjustment as provided in the Note. Upon an event of default, the Note will become immediately payable and the Company shall be required to pay a default rate of interest of 15 % per annum. At anytime prior to an event of default, the Note may be prepaid by the Company at a 150 % premium. The Note contains customary representations, warranties and covenants of the Company. 31