PROSPECTUS
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Filed
Pursuant to Rule 424(b)3
Registration No. 333-239859
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CLEAN
ENERGY TECHNOLOGIES, INC.
90,898,054
Shares of Common Stock
The
selling stockholder identified in this prospectus may offer an indeterminate number of shares of its common stock, which will consist
of up to 90,898,054 shares of common stock to be sold by GHS Investments LLC (“GHS”) pursuant to an Equity Financing Agreement
(the “Financing Agreement”) dated September 1, 2021. If issued presently, the 90,898,054 shares of common stock registered
for resale by GHS would represent approximately 10% of our issued and outstanding shares of common stock as of September 7, 2021.
Additionally, the 90,898,054 shares of our common stock registered for resale herein would represent approximately 30% of the Company’s
public float which would not include 842,460 shares of our common stock currently held by GHS.
The
selling stockholder may sell all or a portion of the shares being offered pursuant to this prospectus at fixed prices and prevailing
market prices at the time of sale, at varying prices, or at negotiated prices. See the section of this prospectus entitled “Plan
of Distribution” for additional information.
We
will not receive any proceeds from the sale of the shares of our common stock by GHS. We will sell shares to GHS at a price equal to
80% of the average of the two lowest closing prices of our common stock during the ten (10) consecutive trading day period beginning
on the date on which we deliver a put notice to GHS (the “Market Price”) subject to a trading price floor equaling the lowest
daily volume weighted average price for the Company’s common stock during the twenty (20) Trading Days preceding the filing of
the Registration Statement (the “Floor”). There will be a minimum of ten (10) trading days between purchases.
GHS
is an underwriter within the meaning of the Securities Act of 1933, and any broker-dealers or agents that are involved in selling the
shares may be deemed to be “underwriters” within the meaning of the Securities Act of 1933 in connection with such sales.
In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them
may be deemed to be underwriting commissions or discounts under the Securities Act of 1933.
Our
common stock is traded on OTCQB Markets under the symbol “CETY”. On September 7, 2021, the reported closing price for our
common stock was $.05 per share.
This
offering is highly speculative, and these securities involve a high degree of risk and should be considered only by persons who can afford
the loss of their entire investment. See “Risk Factors” beginning on page 10. Neither the Securities and Exchange
Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy
of this prospectus. Any representation to the contrary is a criminal offense.
The
date of this prospectus is October 13, 2021.
TABLE
OF CONTENTS
You
may only rely on the information contained in this prospectus or that we have referred you to. We have not authorized any person to give
you any supplemental information or to make any representations for us. This prospectus does not constitute an offer to sell or a solicitation
of an offer to buy any securities other than the Common Stock offered by this prospectus. This prospectus does not constitute an offer
to sell or a solicitation of an offer to buy any Common Stock in any circumstances in which such offer or solicitation is unlawful. Neither
the delivery of this prospectus nor any sale made in connection with this prospectus shall, under any circumstances, create any implication
that there has been no change in our affairs since the date of this prospectus is correct as of any time after its date. You should not
rely upon any information about our company that is not contained in this prospectus. Information contained in this prospectus may become
stale. You should not assume the information contained in this prospectus or any prospectus supplement is accurate as of any date other
than their respective dates, regardless of the time of delivery of this prospectus, any prospectus supplement or of any sale of the shares.
Our business, financial condition, results of operations, and prospects may have changed since those dates. The selling stockholders
are offering to sell and seeking offers to buy shares of our common stock only in jurisdictions where offers and sales are permitted.
PROSPECTUS
SUMMARY
This
summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider
in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including
our financial statements and the related notes and the information set forth under the headings “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” in each case included elsewhere in this prospectus.
Unless
the context otherwise requires, references to “we,” “our,” “us,” or the “Company” in
this prospectus mean Clean Energy Technologies, Inc. on a consolidated basis with its wholly-owned subsidiaries.
We
design, produce and market clean energy products and integrated solutions focused on energy efficiency and renewables. Our initial principal
product is the Clean CycleTM heat generator, offered through our wholly owned subsidiary Heat Recovery Solutions, (HRS). The
Clean CycleTM generator captures waste heat from a variety of sources and turns it into electricity. By using our Clean CycleTM
generator commercial and industrial heat generators boost their overall energy efficiency and the savings created provide our customers
with a fast return on their investment. The Clean CycleTM generator saves fuel, reduces pollution and requires little maintenance.
We also use our Clean CycleTM generator to manufacture Biomass Power Plants and Co-generation Distribution Power Plants that
produce clean energy.
We
plan to use the proceeds from this offering to expand and enhance our existing business, improve our balance sheet and to expand into
new energy-based businesses in the U.S. and China with higher profit margins.
We
entered into a manufacturing and sales agreement to design, build and operate renewable energy and waste recovery facilities. We use
an ablative pyrolysis system for processing of industrial and municipal organic waste in high temperature producing renewable high heating
value fuel gas and value-added chemical. The key benefits of this system are better waste sourcing and mixing flexibility, near-zero
emissions, modular design, zero liquid discharge, and zero solid waste residue waste. We are focusing on applications for industrial
and municipality solid waste, landfill waste, agriculture waste, and forestry waste.
We
plan to build a captive financial arm that combines the customer demand for low carbon energy which we believe will compliment recent
ECG investor trends for funding low carbon energy projects. Low carbon energy is becoming ever more important for sustainable development
and we believe is becoming recognized as a critical path to achieve economic growth globally and sustaining living standards. We believe
our efforts will improve our sales and profitability across low carbon energy projects.
We
plan to continue our expansion into global markets and have already established inroads into the Asian markets, especially China, where
the market for renewable energy is the largest in the region. CETY plans to replicate various aspects of the U.S. renewable energy and
waste recovery business model in China through joint ventures and minority investments with local partners. We have also identified potential
vertical integration opportunities in China and plan to synergistically co-invest with local partners in midstream and downstream natural
gas pipeline companies as the natural gas sector presents a huge opportunity for waste heat recovery.
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Clean
Cycle II Heat Generator
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Containerized
Clean Cycle II Heat Generator
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We
compete based on efficiency, maintenance and our customer’s return on investment. We have an exclusive license from Calnetix to
use their magnetic turbine for heat waste recovery applications. We believe that the magnetic turbine technology is more efficient than
our competitor’s turbines which allows our systems to generate more electricity at lower heat ranges. Because our generator is
magnetic, it requires far less maintenance than our competitors who use oil, gearbox and rubber seals in their turbines. We have the
advantage of selling a system that was originally manufactured and sold by General Electric International so our Clean CycleTM
generator has a substantial market base and we believe has a reputation as one of the defacto standards in the market.
Our
greatest advantage is that the Clean CycleTM generator is a product that can be delivered on a turnkey basis, not a major
project that needs to be designed, manufactured and installed. We believe that this is one of the most distinguishing features of our
Clean Cycle™ generator, as it significantly reduces the time our customers spend on installation, improves the speed with which
we can deliver our product and reduces startup costs.
We
compete based on efficiency, maintenance and our customer’s return on investment. We have a proprietary magnetic bearing technology
with several global patents that we acquired from General Electric International. We believe that the magnetic turbine technology is
more efficient than our competitor’s turbines which allows our systems to generate more electricity at lower heat ranges. Because
our generator is magnetic, it requires less maintenance than our competitors who use oil, gearbox and rubber seals in their turbines.
We have the advantage of selling a system that was originally manufactured and sold by General Electric International, so our Clean CycleTM
generator has a substantial market base and we believe has a reputation as one of the de facto standards in the market.
Over
123 Clean CycleTM generators are installed to date with 88 units used in biomass/landfill projects, 4 with diesel electric
generators, 3 with turbine electric generators and 26 in industrial electric production applications.
A
Complete ORC System
We
estimate that one clean system using our Clean CycleTM generator can generate 1 GWh of electricity per year from waste heat
and avoid more than 350 metric tons of CO2 per year which we estimate is the annual equivalent of the CO2 emissions of approximately
200 cars.
We
have recently established a wholly owned subsidiary called CETY Capital, to finance captive renewable energy projects producing low carbon
energy. CETY Capital will add flexibility to the capacity CETY offers its customers and fund projects utilizing its products and clean
energy solutions. The in-house financing arm is expected to support our sales and build new renewable energy facilities. In addition,
Our initial project is with Ashfield Ag Resources to co-develop its initial biomass renewable energy processing facility using the revolutionary
high temperature ablative fast pyrolysis reactor (HTAP Biomass Reactor). The project is located in Massachusetts and will convert forest
biomass waste products to renewably generated electricity and BioChar fertilizer. We expect to annually deliver up to 14,600 MWh of renewable
electricity and 1,500 tons of BioChar. The Ashfiled project is one of four renewable energy processing facilities we plan to commission
over the next 2 years.
We
have a global license (except Russia and CIS countries) to the HTAP technology which ultilizes a higher temperature that uses a cleaner
gas more efficient biogas turbine that produces electricity from industrial and municipality solid waste, landfill waste, agriculture
waste, and forestry waste. We believe that the key benefits of the HTAP Biomass Reactor are:
Better
waste sourcing and mixing flexibility,
Near-zero
emissions,
Modular
design,
Zero
liquid discharge,
Zero
solid waste residue waste.
Our
goal is to become a leading provider of renewable and energy efficiency products and solutions by helping commercial companies and municipalities
eliminate energy waste, reduce emissions, lower cost and generate incremental revenue.
Company
Information and History
We
were incorporated in California in July 1995 under the name Probe Manufacturing Industries, Inc. We redomiciled to Nevada in April 2005
under the name Probe Manufacturing, Inc. We manufactured electronics and provided services to original equipment manufacturers (OEMs)
of industrial, automotive, semiconductor, medical, communication, military, and high technology products. On September 11, 2015 Clean
Energy HRS, or “CE HRS”, our wholly owned subsidiary acquired the assets of Heat Recovery Solutions from General Electric
International. In November 2015, we changed our name to Clean Energy Technologies, Inc.
Our
principal executive offices are located at 2990 Redhill Avenue, Costa Mesa, CA 92626. Our telephone number is (949) 273-4990. Our common
stock is listed on the OTCQB Markets under the symbol “CETY.”
Our
internet website address is www.cetyinc.com and our subsidiary’s web site is www.heatrecoverysolutions.com.
The
Company has three reportable segments: Clean Energy HRS (HRS), CETY Europe and the legacy electronic contract manufacturing services
(Electronic Assembly) division.
Employees
We
presently have 12 employees, including production, program management, materials management, engineering, sales, quality, and administrative
and management personnel. We have never experienced work stoppages and we are not a party to any collective bargaining agreement. We
have one employee that works full time in CETY Europe and 1 full time employee in our Electronics Assembly segment.
GHS
Equity Financing Agreement and Registration Rights Agreement
On
September 1, 2021, we entered into an Equity Financing Agreement (“Equity Financing Agreement”) and Registration Rights Agreement
(“Registration Rights Agreement”) with GHS Investments LLC, a Nevada limited liability company (“GHS”). Under
the terms of the Equity Financing Agreement, GHS agreed to provide the Company with up to $4,000,000 upon effectiveness of a registration
statement on Form S-1 (the “Registration Statement”) filed with the U.S. Securities and Exchange Commission (the “Commission”)
Following
effectiveness of the Registration Statement, the Company shall have the discretion to deliver puts (each, a “Put”) to GHS
and GHS will be obligated to purchase shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”)
based on the investment amount specified in each Put notice. The maximum amount that the Company shall be entitled to put to GHS in each
Put notice shall not be less than $10,000 nor exceed two hundred percent (200%) of the average daily trading dollar volume of the Company’s
Common Stock during the ten (10) trading days preceding the put, or $1,000,000. Pursuant to the Equity Financing Agreement, GHS and its
affiliates will not be permitted to purchase shares, and the Company may not request Puts from GHS, that would result in GHS’s
beneficial ownership equaling more than 4.99% of the Company’s outstanding Common Stock. The price of each share in a Put shall
be equal to eighty percent (80%) of the average of the lowest two closing prices for the 10 days prior to the Put notice from the Company,
subject to a trading price floor equaling the lowest daily volume weighted average price for the Company’s common stock during
the twenty (20) Trading Days preceding the filing of the Registration Statement (the “Purchase Price”). Puts may be delivered
by the Company to GHS until (i) the earlier of twelve (12) months after the date of the Equity Financing Agreement, (ii) the date on
which GHS has purchased an aggregate of $4,000,000 worth of Common Stock under the terms of the Equity Financing Agreement or (iii) such
time the Registration Statement is no longer in effect. The Company may not submit a Put Notice if the Purchase Price is equal to or
less than the Floor. In accordance with the Equity Financing Agreement, the Company issued GHS 842,460 shares of its Common Stock which
was equal to lowest volume weighted average price for the trading day preceding the execution of definitive agreements the purchase price
as of the execution date of the Equity Financing Agreement.
The
Registration Rights Agreement provides that the Company shall (i) use its best efforts to file with the Commission the Registration Statement
within 30 days of the date of the Registration Rights Agreement; and (ii) use reasonable commercial efforts to have the Registration
Statement declared effective by the Commission within 30 days after the date the Registration Statement is filed with the Commission,
but in no event more than 90 days after the Registration Statement is filed.
Summary
of the Offering
Shares
currently outstanding (1):
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922,792,698
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Shares
being offered:
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90,898,054
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Offering
Price per share:
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The
selling stockholders may sell all or a portion of the shares being offered pursuant to this prospectus at fixed prices and prevailing
market prices at the time of sale, at varying prices or at negotiated prices.
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Use
of Proceeds:
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We
will not receive any proceeds from the sale of the shares of our common stock by the selling stockholder.
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Trading
Symbol:
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CETY
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Risk
Factors:
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See
“Risk Factors” beginning on page 10 herein and the other information in this prospectus for a discussion of the
factors you should consider before deciding to invest in shares of our common stock.
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(1)
The number of shares of our Common Stock outstanding prior to and to be outstanding immediately after this offering, as set forth in
the table above, is based on 922,792,698 shares outstanding as of September 7, 2021, and excluding 90,898,054 shares of Common Stock
issuable in this offering
Clean Energy Technologies, Inc.
Consolidated Statement of Operations
for the six months ended June 30,
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2021
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2020
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Sales
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$
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291,158
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1,014,812
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Cost
of Goods Sold
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72,619
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436,607
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Gross
Profit
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218,539
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578,205
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General
and Administrative
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General
and Administrative expense
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340,521
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251,296
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Salaries
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433,069
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385,762
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Travel
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40,354
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40,816
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Professional
Fees
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82,209
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77,351
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Facility
lease and Maintenance
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168,910
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193,636
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Depreciation
and Amortization
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16,146
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18,886
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Total
Expenses
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1,081,209
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967,747
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Net
Profit / (Loss) From Operations
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(862,670
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(389,542
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)
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Change
in derivative liability
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1,745,369
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119,359
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Gain
/ (Loss) on debt settlement’
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368,098
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|
|
|
239,865
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Interest
and Financing fees
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(414,069
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|
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(512,759
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)
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Net
Profit / (Loss) Before Income Taxes
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836,728
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(543,077
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)
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Income
Tax Expense
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|
-
|
|
|
|
-
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Net
Profit / (Loss)
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|
$
|
836,728
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|
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(543,077
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)
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|
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|
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Per Share Information:
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Basic
and diluted weighted average number of common shares outstanding
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853,322,779
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760,217,962
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Net
Profit / (Loss) per common share basic and diluted
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$
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(0.00
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)
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(0.00
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)
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The
accompanying footnotes are in integral part of these condensed consolidated financial statements.
Clean
Energy Technologies, Inc.
Consolidated
Statement of Operations
For
the years ended December 31,
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2020
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2019
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Sales
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$
|
1,406,005
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|
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1,610,008
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Cost
of Goods Sold
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654,937
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|
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952,782
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|
Gross
Profit
|
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|
751,068
|
|
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657,226
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|
|
|
|
|
|
|
|
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General
and Administrative
|
|
|
|
|
|
|
|
|
General
and Administrative expense
|
|
|
480,812
|
|
|
|
382,871
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|
Salaries
|
|
|
495,269
|
|
|
|
802,951
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|
Professional
fees
|
|
|
86,292
|
|
|
|
246,078
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|
Travel
|
|
|
111,318
|
|
|
|
130,709
|
|
Consulting
|
|
|
157,149
|
|
|
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73,443
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|
Bad
Debt Expense
|
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259,289
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|
|
|
128,463
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|
Facility
lease
|
|
|
363,643
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|
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305,883
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|
Depreciation
and Amortization
|
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32,912
|
|
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41,437
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Share
Based Expense
|
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|
1,986,684
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|
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2,111,835
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Total
Expenses
|
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|
(1,235,616
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)
|
|
|
(1,454,609
|
|
Net
Profit / (Loss) From Operations
|
|
|
|
|
|
|
|
|
|
|
|
(1,270,099
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)
|
|
|
216,269
|
|
Change
in derivative liability
|
|
|
399,181
|
|
|
|
-
|
|
Gain
/ (Loss) on disposition of assets
|
|
|
(1,329,230
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)
|
|
|
(1,317,643
|
|
Interest
and Financing fees
|
|
|
(3,435,764
|
)
|
|
|
(2,555,983
|
|
Net
Profit / (Loss) Before Income Taxes
|
|
|
-
|
|
|
|
-
|
|
Income
Tax Expense
|
|
|
(3,435,764
|
)
|
|
|
(2,555,983
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|
Net
Profit / (Loss)
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Per
Share Information:
|
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767,861,170
|
|
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|
641,349,437
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|
Basic
and diluted weighted average number of common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
(0.00
|
)
|
|
|
(0.00
|
|
Net
Profit / (Loss) per common share basic and diluted
|
|
$
|
|
|
|
|
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|
The
accompanying notes are an integral part of these consolidated financial statements.
RISK
FACTORS
Risks
About Our Business
OUR
INDEPENDENT ACCOUNTANTS HAVE ISSUED A GOING CONCERN OPINION AND IF WE CANNOT OBTAIN ADDITIONAL FINANCING AND/OR REDUCE OUR OPERATING
COSTS SUFFICIENTLY, WE MAY HAVE TO CURTAIL OPERATIONS AND MAY ULTIMATELY CEASE TO EXIST.
Going
Concern
The
financial statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets
and liquidation of liabilities in the normal course of business. The Company had a total stockholder’s deficit of $7,238,572 and
a working capital deficit of $8,329,782 and a net loss of $3,435,764 for the year ended December 31, 2020. $1,270,099 of this loss was
due to the adjustment to the derivative liability, and $1,329,230 was due to interest and finance fees. The company also had an accumulated
deficit of $17,651,482 as of December 31, 2020 and used $1,392,812 in net cash from operating activities for the year ended December
31, 2020. Therefore, there is doubt about the ability of the Company to continue as a going concern. There can be no assurance that the
Company will achieve its goals and reach profitable operations and is still dependent upon its ability (1) to obtain sufficient debt
and/or equity capital and/or (2) to generate positive cash flow from operations.
WE
HAVE AN ACCUMULATED DEFICIT AND MAY INCUR ADDITIONAL LOSSES; THEREFORE, WE MAY NOT BE ABLE TO OBTAIN THE ADDITIONAL FINANCING NEEDED
FOR WORKING CAPITAL, CAPITAL EXPENDITURES AND TO MEET OUR DEBT SERVICE OBLIGATIONS.
As
of December 31, 2020, we had current liabilities of $10,878,431. Subsequently the company has been able to raise additional capital of
approximately $3,557,000 and repaid approximately $700,000 of debt. Our debt could limit our ability to obtain additional financing for
working capital, capital expenditures, debt service requirements, or other purposes in the future, as needed; to plan for, or react to,
changes in technology and in our business and competition; and to react in the event of an economic downturn.
We
may not be able to meet our debt service obligations. If we are unable to generate sufficient cash flow or obtain funds for required
payments, or if we fail to comply with covenants in our revolving lines of credit, we will be in default.
WE
ARE IN DEFAULT IN OUR OBLIGATIONS TO A CREDITOR
We
are in default of $291,100 payments of principal and interest on our notes payable to Cybernaut Zfounder Ventures. We are in discussions
with Cybernaut Zfounder Ventures.
WE
HAVE NOT MADE A PAYMENT UNDER A MATERIAL CONTRACT
We
have not made a payment of $1,200,000 which is the balance of the purchase price pursuant to our asset purchase agreement with General
Electric International. In addition, we have not paid an amount of $972,233 in accrued transitional fees. We believe that the outstanding
amounts should have been an offset to purchase price we paid due to a misrepresentation of the values of the disclosed assets as reflected
in the principal amount of the outstanding note and in the transition agreements.
Our
business, results of operations and financial condition may be adversely affected by public health epidemics, including the coronavirus
or COVID-19.
Our
business, results of operations and financial condition may be adversely affected if a public health epidemic, including the coronavirus
or COVID-19 interferes with the ability of us, our employees, workers, contractors, suppliers, customers and other business partners
to perform our and their respective responsibilities and obligations relative to the conduct of our business. We maintain offices in
HaiXi with employees and workers upon whom we rely to, among other things, identify sources of supply in China, conduct factory inspections,
place orders for merchandise, perform factory monitoring with respect to production, quality control and other requirements, and arrange
shipping. A public health epidemic, including the coronavirus, poses the risk that we or our employees, workers, contractors, suppliers,
customers and other business partners may be prevented from conducting business activities for an indefinite period of time, including
due to shutdowns that may be requested or mandated by governmental authorities. We face similar risks if a public health epidemic, including
the coronavirus, affects other geographic areas where our employees, workers, contractors, suppliers, customers and other business partners
are located.
IF
DEMAND FOR THE PRODUCTS AND SERVICES THAT THE COMPANY OFFERS SLOWS, OUR BUSINESS WOULD BE MATERIALLY AFFECTED.
Demand
for products which it intends to sell depends on many factors, including:
●
|
the
economy, and in periods of rapidly declining economic conditions, customers may defer purchases or may choose alternate products;
|
●
|
the
cost of oil, gas and solar energy;
|
●
|
the
competitive environment in the heat to power sectors may force us to reduce prices below our desired pricing level or increase promotional
spending;
|
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|
our
ability to maintain efficient, timely and cost-effective production and delivery of the products and services; and,
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●
|
All
of these factors could result in immediate and longer term declines in the demand for the products and services that we offer, which
could adversely affect our sales, cash flows and overall financial condition.
|
WE
OPERATE IN A HIGHLY COMPETITIVE MARKET. IF WE DO NOT COMPETE EFFECTIVELY, OUR PROSPECTS, OPERATING RESULTS, AND FINANCIAL CONDITION COULD
BE ADVERSELY AFFECTED.
The
markets for our products and services are highly competitive, with companies offering a variety of competitive products and services.
We expect competition in our markets to intensify in the future as new and existing competitors introduce new or enhanced products and
services that are potentially more competitive than our products and services. We believe many of our competitors and potential competitors
have significant competitive advantages, including longer operating histories, ability to leverage their sales efforts and marketing
expenditures across a broader portfolio of products and services, larger and broader customer bases, more established relationships with
a larger number of suppliers, contract manufacturers, and channel partners, greater brand recognition, and greater financial, research
and development, marketing, distribution, and other resources than we do and the ability to offer financing for projects. Our competitors
and potential competitors may also be able to develop products or services that are equal or superior to ours, achieve greater market
acceptance of their products and services, and increase sales by utilizing different distribution channels than we do. Some of our competitors
may aggressively discount their products and services in order to gain market share, which could result in pricing pressures, reduced
profit margins, lost market share, or a failure to grow market share for us. If we are not able to compete effectively against our current
or potential competitors, our prospects, operating results, and financial condition could be adversely affected.
WE
MAY LOSE OUT TO LARGER AND BETTER-ESTABLISHED COMPETITORS.
The
alternative power industry is intensely competitive. Most of our competitors have significantly greater financial, technical, marketing
and distribution resources as well as greater experience in the industry than we have. Our products may not be competitive with other
technologies, both existing at the current time and in the future. If this happens, our sales and revenues will decline, or fail to develop
at all. In addition, our current and potential competitors may establish cooperative relationships with larger companies to gain access
to greater development or marketing resources. Competition may result in price reductions, reduced gross margins and loss of market share.
OUR
INTERNATIONAL OPERATIONS SUBJECT US TO RISKS, WHICH COULD ADVERSELY AFFECT OUR OPERATING RESULTS.
Our
international operations are exposed to the following risks, several of which are out of our control:
political
and economic instability, international terrorism and anti-American sentiment, particularly in emerging markets;
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preference
for locally branded products, and laws and business practices favoring local competition;
|
|
●
|
unusual
or burdensome foreign laws or regulations, and unexpected changes to those laws or regulations;
|
|
●
|
|import
and export license requirements, tariffs, taxes and other barriers;
|
|
●
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costs
of customizing products for foreign countries;
|
|
●
|
increased
difficulty in managing inventory;
|
|
●
|
less
effective protection of intellectual property; and
|
|
●
|
difficulties
and costs of staffing and managing foreign operations.
|
Any
or all of these factors could adversely affect our ability to execute any geographic expansion strategies or have a material adverse
effect on our business and results of operations.
OUR
PRODUCTS MAY BE DISPLACED BY NEWER TECHNOLOGY.
The
alternative power industry is undergoing rapid and significant technological change. Third parties may succeed in developing or marketing
technologies and products that are more effective than those developed or marketed by us, or that would make our technology obsolete
or non-competitive. Accordingly, our success will depend, in part, on our ability to respond quickly to technological changes. We may
not have the resources to do this.
WE
MUST HIRE QUALIFIED ENGINEERING, DEVELOPMENT AND PROFESSIONAL SERVICES PERSONNEL.
We
cannot be certain that we can attract or retain a sufficient number of highly qualified mechanical engineers, industrial technology and
manufacturing process developers and professional services personnel. To deploy our products quickly and efficiently, and effectively
maintain and enhance them, we will require an increasing number of technology developers. We expect customers that license our technology
will typically engage our professional engineering staff to assist with support, training, consulting and implementation. We believe
that growth in sales depends on our ability to provide our customers with these services and to attract and educate third-party consultants
to provide similar services. As a result, we plan to hire professional services personnel to meet these needs. New technical and professional
services personnel will require training and education and it will take time for them to reach full productivity. To meet our needs for
engineers and professional services personnel, we also may use costlier third-party contractors and consultants to supplement our own
staff. Competition for qualified personnel is intense, particularly because our technology is specialized and only a limited number of
individuals have acquired the needed skills. Additionally, we will rely on third-party implementation providers for these services. Our
business may be harmed if we are unable to establish and maintain relationships with third-party implementation providers.
WE
MAY BE ADVERSELY AFFECTED BY SHORTAGES OF REQUIRED COMPONENTS. IN ADDITION, WE DEPEND ON A LIMITED NUMBER OF SUPPLIERS TO PROCURE OUR
PARTS FOR PRODUCTION WHICH IF AVAILABILITY OF PRODUCTS BECOMES COMPROMISED IT COULD ADD TO OUR COST OF GOODS SOLD AND AFFECT OUR REVENUE
GROWTH.
At
various times, there have been shortages of some of the components that we use, as a result of strong demand for those components or
problems experienced by suppliers. These unanticipated component shortages have resulted in curtailed production or delays in production,
which prevented us from making scheduled shipments to customers in the past and may do so in the future. Our inability to make scheduled
shipments could cause us to experience a reduction in our sales and an increase in our costs and could adversely affect our relationship
with existing customers as well as prospective customers. Component shortages may also increase our cost of goods sold because we may
be required to pay higher prices for components in short supply and redesign or reconfigure products to accommodate substitute components.
OUR
PRINCIPAL SHAREHOLDERS, DIRECTORS AND EXECUTIVE OFFICERS, IN THE AGGREGATE, BENEFICIALLY OWN MORE THAN 50% OF OUR OUTSTANDING COMMON
STOCK AND THESE SHAREHOLDERS, IF ACTING TOGETHER, WILL BE ABLE TO EXERT SUBSTANTIAL INFLUENCE OVER ALL MATTERS REQUIRING APPROVAL OF
OUR SHAREHOLDERS.
Our
principal shareholders, directors and executive officers in the aggregate, beneficially own more than 50% our outstanding common stock
on a fully diluted basis. These shareholders, if acting together, will be able to exert substantial influence over all matters requiring
approval of our shareholders, including amendments to our Articles of Incorporation, fundamental corporate transactions such as mergers,
acquisitions, the sale of the company, and other matters involving the direction of our business and affairs and specifically the ability
to determine the members of our board of directors. (See “Security Ownership of Certain Beneficial Owners and Managements”).
IF
WE LOSE KEY SENIOR MANAGEMENT PERSONNEL OUR BUSINESS COULD BE NEGATIVELY AFFECTED. FURTHER, WE WILL NEED TO RECRUIT AND RETAIN ADDITIONAL
SKILLED MANAGEMENT PERSONNEL AND IF WE ARE NOT ABLE TO DO SO, OUR BUSINESS AND OUR ABILITY TO CONTINUE TO GROW COULD BE HARMED.
Our
success depends to a large extent upon the continued services of our executive officers. We could be seriously harmed by the loss of
any of our executive officers. In order to manage our growth, we will need to recruit and retain additional skilled management personnel
and if we are not able to do so, our business and our ability to continue to grow could be harmed. We are presently dependent to a great
extent upon the experience, abilities and continued services of Kambiz Mahdi, our Chief Executive Officer. The loss of his services would
delay our business operations substantially. Although a number of companies in our industry have implemented workforce reductions, there
remains substantial competition for highly skilled employees.
WE
ARE SUBJECT TO ENVIRONMENTAL COMPLIANCE RISKS AND UNEXPECTED COSTS THAT WE MAY INCUR WITH RESPECT TO ENVIRONMENTAL MATTERS MAY RESULT
IN ADDITIONAL LOSS CONTINGENCIES, THE QUANTIFICATION OF WHICH CANNOT BE DETERMINED AT THIS TIME.
We
are subject to various federal, state, local and foreign environmental laws and regulations, including those governing the use, storage,
discharge and disposal of hazardous substances in the ordinary course of our manufacturing process. If more stringent compliance or cleanup
standards under environmental laws or regulations are imposed, or the results of future testing and analyses at our current or former
operating facilities indicate that we are responsible for the release of hazardous substances, we may be subject to additional remediation
liability. Further, additional environmental matters may arise in the future at sites where no problem is currently known or at sites
that we may acquire in the future. Currently unexpected costs that we may incur with respect to environmental matters may result in additional
loss contingencies, the quantification of which cannot be determined at this time.
OUR
SALES AND CONTRACT FULFILLMENT CYCLES CAN BE LONG, UNPREDICTABLE AND VARY SEASONALLY, WHICH CAN CAUSE SIGNIFICANT VARIATION IN REVENUES
AND PROFITABILITY IN A PARTICULAR QUARTER.
The
timing of our sales and related customer contract fulfillment is difficult to predict. Many of our customers are large enterprises, whose
purchasing decisions, budget cycles and constraints and evaluation processes are unpredictable and out of our control. Further, the timing
of our sales is difficult to predict. The length of our sales cycle, from initial evaluation to payment for our products and services,
can range from several months to well over a year and can vary substantially from customer to customer. Our sales efforts involve significant
investment in resources in field sales, marketing and educating our customers about the use, technical capabilities and benefits of our
products and services. Customers often undertake a prolonged evaluation process. As a result, it is difficult to predict exactly when,
or even if, we will make a sale to a potential customer or if we can increase sales to our existing customers. Large individual sales
have, in some cases, occurred in quarters subsequent to those we anticipated, or have not occurred at all. In addition, the fulfillment
of our customer contracts is partially dependent on other factors related to our customers’ businesses that are not in our control.
as with the sales cycle, this can also cause revenues and earnings to fluctuate from quarter to quarter. If our sales and/or contract
fulfillment cycles lengthen or our substantial upfront investments do not result in sufficient revenue to justify our investments, our
operating results could be adversely affected.
We
have experienced seasonal and end-of-quarter concentration of our transactions and variations in the number and size of transactions
that close in a particular quarter, which impacts our ability to grow revenue over the long term and plan and manage cash flows and other
aspects of our business and cost structure. Our transactions vary by quarter, with the fourth quarter typically being our largest. If
expectations for our business turn out to be inaccurate, our revenue growth may be adversely affected over time and we may not be able
to adjust our cost structure on a timely basis and our cash flows may suffer.
OUR
OPERATING MARGINS MAY DECLINE AS A RESULT OF INCREASING PRODUCT COSTS.
Our
business is subject to significant pressure on pricing and costs caused by many factors, including competition, the cost of components
used in our products, labor costs, constrained sourcing capacity, inflationary pressure, pressure from customers to reduce the prices
we charge for our products and services, and changes in consumer demand. Costs for the raw materials used in the manufacture of our products
are affected by, among other things, energy prices, consumer demand, fluctuations in commodity prices and currency, and other factors
that are generally unpredictable and beyond our control. Increases in the cost of raw materials used to manufacture our products or in
the cost of labor and other costs of doing business in the United States and internationally could have an adverse effect on, among other
things, the cost of our products, gross margins, operating results, financial condition, and cash flows.
WE
MAY NEED TO RAISE ADDITIONAL CAPITAL REQUIRED TO GROW OUR BUSINESS, AND WE MAY NOT BE ABLE TO RAISE CAPITAL ON TERMS ACCEPTABLE TO US
OR AT ALL.
Growing
and operating our business will require significant cash outlays and capital expenditures and commitments. We have utilized cash on hand
and cash generated from operations as sources of liquidity. If cash on hand and cash generated from operations are not sufficient to
meet our cash requirements, we will need to seek additional capital, potentially through equity or debt financing, to fund our growth.
Our ability to access the credit and capital markets in the future as a source of liquidity, and the borrowing costs associated with
such financing, are dependent upon market conditions.
In
addition, any equity securities we issue, including any preferred stock, may be on terms that are dilutive or potentially dilutive to
our stockholders, and the prices at which new investors would be willing to purchase our securities may be lower than the offering price
per share of our Common Stock. The holders of any equity securities we issue, including any preferred stock, may also have rights, preferences
or privileges which are senior to those of existing holders of Common Stock. If new sources of financing are required, but are insufficient
or unavailable, we will be required to modify our growth and operating plans based on available funding, if any, which would harm our
ability to grow our business.
NATURAL
DISASTERS AND OTHER CATASTROPHIC EVENTS BEYOND OUR CONTROL COULD ADVERSELY AFFECT OUR BUSINESS OPERATIONS AND FINANCIAL PERFORMANCE.
The
occurrence of one or more natural disasters, such as fires, hurricanes, tornados, tsunamis, floods and earthquakes; geo-political events,
such as civil unrest in a country in which our suppliers are located or terrorist or military activities disrupting transportation, communication
or utility systems; or other highly disruptive events, such as nuclear accidents, pandemics, unusual weather conditions or cyber-attacks,
could adversely affect our operations and financial performance. Such events could result, among other things, in operational disruptions,
physical damage to or destruction or disruption of one or more of our properties or properties used by third parties in connection with
the supply of products or services to us, the lack of an adequate workforce in parts or all of our operations and communications and
transportation disruptions. These factors could also cause consumer confidence and spending to decrease or result in increased volatility
in the United States and global financial markets and economy. Such occurrences could have a material adverse effect on us and could
also have indirect consequences such as increases in the costs of insurance if they result in significant loss of property or other insurable
damage.
WE
HAVE ISSUED A SUBSTANTIAL AMOUNT OF CONVERTIBLE SECURITIES WHICH IF CONVERTED WILL SUBSTANTIALLY DILUTE ALL OF OUR STOCKHOLDERS.
We
have issued a substantial amount of convertible securities which, if converted, would result in substantial dilution to our stockholders:
Convertible
Notes - and Approximate common share equivalents
|
|
|
489,551,656
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|
Convertible
Preferred series D and approximate common share equivalents
|
|
|
0
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|
Warrants
and Common Stock equivalent’s
|
|
|
8,754,720
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|
Total
Convertible Common Stock equivalents
|
|
|
498,306,376
|
|
MGW
Investments I Limited (“MGWI”) holds two notes, the interest and principal of which may be converted into shares of our common
stock at a fixed conversion price of $.003 per share which, as of September 7, 2021, equal approximately 48,638,003 shares and 430,604,833
shares respectively, or an aggregate of 479,242,837 shares. We have also issued warrants to purchase 8,754,720 shares of our common stock
to other investors and convertible notes to other investors convertible into an additional 8,754,720 shares.
OUR
ISSUANCE OF ADDITIONAL CAPITAL STOCK IN CONNECTION WITH FINANCINGS, ACQUISITIONS, INVESTMENTS, OUR EQUITY INCENTIVE PLANS, OR OTHERWISE
WILL DILUTE ALL OTHER STOCKHOLDERS.
We
expect to issue additional capital stock in the future that will result in dilution to all other stockholders. We expect to grant equity
awards to employees, directors, and consultants under our equity incentive plans. We may also raise capital through equity financings
in the future. As part of our business strategy, we may acquire or make investments in complementary companies, products, or technologies,
and issue equity securities to pay for any such acquisition or investment. Any such issuances of additional capital stock may cause stockholders
to experience significant dilution of their ownership interests and the per share value of our common stock to decline.
WE
MAY MAKE ACQUISITIONS THAT ARE DILUTIVE TO EXISTING STOCKHOLDERS. IN ADDITION, OUR LIMITED EXPERIENCE IN ACQUIRING OTHER BUSINESSES,
PRODUCT LINES AND TECHNOLOGIES MAY MAKE IT DIFFICULT FOR US TO OVERCOME PROBLEMS ENCOUNTERED IN CONNECTION WITH ANY ACQUISITIONS WE MAY
UNDERTAKE.
We
intend to evaluate and explore strategic opportunities as they arise, including business combinations, strategic partnerships, and the
purchase, licensing or sale of assets. In connection with any such future transaction, we could issue dilutive equity securities, incur
substantial debt, reduce our cash reserves or assume contingent liabilities.
Our
experience in acquiring other businesses, product lines and technologies is limited. Our inability to overcome problems encountered in
connection with any acquisitions could divert the attention of management, utilize scarce corporate resources and otherwise harm our
business. Any potential future acquisitions also involve numerous risks, including:
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problems
assimilating the purchased operations, technologies or products;
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●
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costs
associated with the acquisition;
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●
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adverse
effects on existing business relationships with suppliers and customers;
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●
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risks
associated with entering markets in which we have no or limited prior experience;
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●
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potential
loss of key employees of purchased organizations; and
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●
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potential
litigation arising from the acquired company’s operations before the acquisition.
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Furthermore,
acquisitions may require material charges and could result in adverse tax consequences, substantial depreciation, deferred compensation
charges, in-process research and development charges, the amortization of amounts related to deferred compensation and identifiable purchased
intangible assets or impairment of goodwill, any of which could negatively affect our results of operations.
WE
MAY BE SUBJECT TO GOVERNMENT LAWS AND REGULATIONS PARTICULAR TO OUR OPERATIONS WITH WHICH WE MAY BE UNABLE TO COMPLY.
We
may not be able to comply with all current and future government regulations which are applicable to our business. Our business operations
are subject to all government regulations normally incident to conducting business (e.g., occupational safety and health acts, workmen’s
compensation statutes, unemployment insurance legislation, income tax, and social security laws and regulations, environmental laws and
regulations, consumer safety laws and regulations, etc.) as well as to governmental laws and regulations applicable to small public companies
and their capital formation efforts. Although we will make every effort to comply with applicable laws and regulations, we can provide
no assurance of our ability to do so, nor can we predict the effect of those regulations on our proposed business activities. Our failure
to comply with material regulatory requirements would likely have an adverse effect on our ability to conduct our business and could
result in our cessation of active business operations.
COMPLIANCE
WITH CHANGING REGULATION OF CORPORATE GOVERNANCE AND PUBLIC DISCLOSURE WILL RESULT IN ADDITIONAL EXPENSES.
Changing
laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 and
related SEC regulations, have created uncertainty for public companies and significantly increased the costs and risks associated with
accessing the public markets and public reporting. Our management team will need to invest significant management time and financial
resources to comply with both existing and evolving standards for public companies, which will lead to increased general and administrative
expenses and a diversion of management time and attention from revenue generating activities to compliance activities.
OUR
REVENUE GROWTH RATE DEPENDS PRIMARILY ON OUR ABILITY TO EXECUTE OUR BUSINESS PLAN.
We
may not be able to identify and maintain the necessary relationships within our industry. Our ability to execute our business plan also
depends on other factors, including the ability to:
1.
Negotiate and maintain contracts and agreements with acceptable terms;
2.
Hire and train qualified personnel;
3.
Maintain marketing and development costs at affordable rates; and,
4.
Maintain an affordable labor force.
Risks
About Our Stock
OUR
COMMON STOCK MAY BE DEEMED A “PENNY STOCK,” WHICH WOULD MAKE IT MORE DIFFICULT FOR OUR INVESTORS TO SELL THEIR SHARES.
Our
common stock is currently subject to the “penny stock” rules adopted under Section 15(g) of the Exchange Act. The penny stock
rules generally apply to companies whose common stock is not listed on The Nasdaq Stock Market or another national securities exchange
and trades at less than $4.00 per share, other than companies that have had average revenues of at least $6,000,000 for the last three
years or that have tangible net worth of at least $5,000,000 ($2,000,000 if the company has been operating for three or more years).
These rules require, among other things, that brokers who trade penny stock to persons other than “established customers”
complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading
in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not
to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to
act as market makers in these securities is limited. If we remain subject to the penny stock rules for any significant period, it could
have an adverse effect on the market, if any, for our securities. If our securities are subject to the penny stock rules, investors will
find it more difficult to dispose of our securities.
WE
MAY IN THE FUTURE ISSUE ADDITIONAL SHARES OF OUR COMMON STOCK, WHICH MAY HAVE A DILUTIVE EFFECT ON OUR STOCKHOLDERS.
Our
Certificate of Incorporation authorizes the issuance of 2,000,000,000 shares of common stock of which 922,792,698 are issued and outstanding
and 20,000,000 shares of preferred stock, of which no shares are issued are outstanding as of June 30, 2021. The future issuance of our
common stock may result in substantial dilution in the percentage of our common shares held by our then existing stockholders. We may
value any Common Stock issued in the future on an arbitrary basis. The issuance of common stock for future services or acquisitions or
other corporate actions may have the effect of diluting the value of the shares held by our investors and might have an adverse effect
on any trading market for our common stock.
OUR
BOARD OF DIRECTORS HAS AUTHORIZED A REVERSE STOCK SPLIT OF UP TO 50 SHARES OF OUR COMMON STOCK INTO ONE SHARE OF OUR COMMON STOCK WHICH
MAY HAVE A DILUTIVE EFFECT ON OUR STOCKHOLDERS.
If
implemented by our Board of Directors, a reverse stock split will reduce the number of outstanding shares of our Common Stock without
reducing the number of shares of available but unissued Common Stock, which will also have the effect of increasing the number of authorized
but unissued shares. The issuance of additional shares of our Common Stock may have a dilutive effect on the ownership of existing shareholders.
The liquidity of the shares of our common stock may be adversely affected by a reverse stock split given the reduced number of shares
that will be outstanding following a reverse stock split, especially if the market price of our common stock does not increase as a result
of the reverse stock split. Although we believe that a higher market price of our common stock may help generate greater or broader investor
interest, we cannot assure you that a reverse stock split will result in a share price that will attract new investors.
OUR
SECURITIES ARE THINLY TRADED WHICH DOES NOT PROVIDE LIQUIDITY FOR OUR INVESTORS.
Our
securities are quoted on the OTCQB Market. The OTCQB Market is an inter-dealer, over-the-counter market that provides significantly less
liquidity than the NASDAQ Stock Market or national or regional exchanges. Securities traded on the OTCQB Market are usually thinly traded,
highly volatile, have fewer market makers and are not followed by analysts. The Securities and Exchange Commission’s order handling
rules, which apply to NASDAQ-listed securities, do not apply to securities quoted on the OTCQB Market. Quotes for stocks included on
the OTCQB Market are not listed in newspapers. Therefore, prices for securities traded solely on the OTCQB Market may be difficult to
obtain and holders of our securities may be unable to resell their securities at or near their original acquisition price, or at any
price.
Investors
must contact a broker-dealer to trade on the OTCQB Market. As a result, you may not be able to buy or sell our securities at the times
that you may wish. Furthermore, when investors place market orders to buy or sell a specific number of shares at the current market price
it is possible for the price of a stock to go up or down significantly during the lapse of time between placing a market order and its
execution.
THE
MARKET PRICE AND TRADING VOLUME OF SHARES OF OUR COMMON STOCK MAY BE VOLATILE.
The
market price of our common stock could fluctuate significantly for many reasons, including for reasons unrelated to our specific performance,
such as reports by industry analysts, investor perceptions, or negative announcements by customers, or competitors regarding their own
performance, as well as general economic and industry conditions. In addition, when the market price of a company’s shares drops
significantly, stockholders could institute securities class action lawsuits against the company. A lawsuit against us could cause us
to incur substantial costs and could divert the time and attention of our management and other resources.
IF
WE FAIL TO MAINTAIN EFFECTIVE INTERNAL CONTROLS OVER FINANCIAL REPORTING, THE PRICE OF OUR COMMON STOCK MAY BE ADVERSELY AFFECTED.
As
a public reporting company, we are required to establish and maintain appropriate internal controls over financial reporting. Failure
to establish those controls, or any failure of those controls once established, could adversely impact our public disclosures regarding
our business, financial condition or results of operations. Any failure of these controls could also prevent us from maintaining accurate
accounting records and discovering accounting errors and financial frauds. Rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley
Act of 2002 require annual assessment of our internal control over financial reporting and may require attestation of this assessment
by our independent registered public accountants. The standards that must be met for management to assess the internal control over financial
reporting as effective are complex, and require significant documentation, testing and possible remediation to meet the detailed standards.
We may encounter problems or delays in completing activities necessary to make an assessment of our internal control over financial reporting.
In addition, the attestation process by our independent registered public accountants is new and we may encounter problems or delays
in completing the implementation of any requested improvements and receiving an attestation of our assessment by our independent registered
public accountants.
COMPLIANCE
WITH CHANGING REGULATION OF CORPORATE GOVERNANCE AND PUBLIC DISCLOSURE WILL RESULT IN ADDITIONAL EXPENSES.
Changing
laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 and
related SEC regulations, have significantly increased the costs and risks associated with accessing the public markets and public reporting.
Our management team will need to invest significant management time and financial resources to comply with both existing and evolving
standards for public companies, which will lead to increased general and administrative expenses and a diversion of management time and
attention from revenue generating activities to compliance activities.
WE
DO NOT INTEND TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE; THEREFORE, YOU MAY NEVER SEE A RETURN ON YOUR INVESTMENT.
We
do not anticipate the payment of cash dividends on our common stock in the foreseeable future. We anticipate that any profits from our
operations will be devoted to our future operations. Any decision to pay dividends will depend upon our profitability at the time, cash
available and other factors
OUR
OPERATING RESULTS AND SHARE PRICE MAY BE VOLATILE AND THE MARKET PRICE OF OUR COMMON STOCK AFTER THIS OFFERING MAY DROP BELOW THE PRICE
YOU PAY.
Our
quarterly operating results have in the past fluctuated and are likely to do so in the future. As a result, the trading price of the
shares of our common stock following this offering is likely to be highly volatile and could be subject to wide fluctuations in response
to various factors, some of which are beyond our control. In addition to the factors discussed in this “Risk Factors” section
and elsewhere in this Prospectus, these factors include:
●
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the
success of competitive products or technologies;
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actual
or anticipated changes in our growth rate relative to our competitors;
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announcements
by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, collaborations or capital commitments;
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regulatory
or legal developments in the United States and other countries;
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the
recruitment or departure of key personnel;
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the
level of expenses;
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changes
in our backlog in a given period;
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actual
or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts;
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variations
in our financial results or those of companies that are perceived to be similar to us;
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fluctuations
in the valuation of companies perceived by investors to be comparable to us;
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inconsistent
trading volume levels of our shares;
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announcement
or expectation of additional financing efforts;
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sales
of our common stock by us, our insiders or our other stockholders;
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market
conditions in the clean energy sector; and
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general
economic, industry and market conditions.
|
These
and other factors, many of which are beyond our control, may cause our operating results and the market price and demand for our shares
to fluctuate substantially. While we believe that operating results for any particular quarter are not necessarily a meaningful indication
of future results, fluctuations in our quarterly operating results could limit or prevent investors from readily selling their shares
and may otherwise negatively affect the market price and liquidity of our shares. In addition, the stock market in general, and companies
in our markets in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate
to the operating performance of these companies. Broad market and industry factors may negatively affect the market price of our common
stock, regardless of our actual operating performance. The realization of any of these risks or any of a broad range of other risks,
including those described in these “Risk Factors,” could have a dramatic and material adverse impact on the market price
of the shares of our common stock.
WE
MAY BE SUBJECT TO SECURITIES LITIGATION, WHICH IS EXPENSIVE AND COULD DIVERT MANAGEMENT ATTENTION.
The
market price of the shares of our common stock may be volatile, and in the past companies that have experienced volatility in the market
price of their securities have been subject to securities class action litigation. We may be the target of this type of litigation in
the future. Securities litigation against us could result in substantial costs and divert our management’s attention from other
business concerns, which could seriously harm our business.
WE
HAVE BROAD DISCRETION IN THE USE OF THE NET PROCEEDS FROM THIS OFFERING AND MAY NOT USE THEM EFFECTIVELY.
Our
management will have broad discretion in the application of the net proceeds from this offering and could spend the proceeds in ways
that do not improve our results of operations or enhance the value of our common stock. The failure by our management to apply these
funds effectively could result in financial losses that could have a material adverse effect on our business and cause the market price
of our shares of common stock to decline. Pending their use, we may invest the net proceeds from this offering in a manner that does
not produce income or that loses value. If we do not invest the net proceeds from this offering in ways that enhance stockholder value,
we may fail to achieve expected financial results, which could cause the price of our shares of common stock to decline.
Risks
Related to the Offering
Our
existing stockholders may experience significant dilution from the sale of our common stock pursuant to the GHS financing agreement.
The
sale of our common stock to GHS Investments LLC in accordance with the Financing Agreement may have a dilutive impact on our shareholders.
As a result, the market price of our common stock could decline. In addition, the lower our stock price is at the time we exercise our
put options, the more shares of our common stock we will have to issue to GHS in order to exercise a put under the Financing Agreement.
If our stock price decreases, then our existing shareholders would experience greater dilution for any given dollar amount raised through
the offering.
The
perceived risk of dilution may cause our stockholders to sell their shares, which may cause a decline in the price of our common stock.
Moreover, the perceived risk of dilution and the resulting downward pressure on our stock price could encourage investors to engage in
short sales of our common stock. By increasing the number of shares offered for sale, material amounts of short selling could further
contribute to progressive price declines in our common stock.
The
issuance of shares pursuant to the GHS financing agreement may have a significant dilutive effect.
Depending
on the number of shares we issue pursuant to the GHS Financing Agreement, it could have a significant dilutive effect upon our existing
shareholders. Although the number of shares that we may issue pursuant to the Financing Agreement will vary based on our stock price
(the higher our stock price, the less shares we have to issue), there may be a potential dilutive effect to our shareholders, based on
different potential future stock prices, if the full amount of the Financing Agreement is realized. Dilution is based upon common stock
put to GHS and the stock price discounted to GHS’s purchase price of 80% the average of the two (2) lowest closing prices for the
Common Stock during the 10 consecutive trading days preceding the receipt of a put notice by the Company, subject to the Floor.
GHS
Investments LLC will pay less than the then-prevailing market price of our common stock which could cause the price of our common stock
to decline.
Our
common stock to be issued under the GHS Financing Agreement will be purchased at a twenty percent (20%) discount, or eighty percent (80%)
of the average of the two lowest closing price for the Company’s common stock during the ten (10) consecutive trading days immediately
preceding the receipt of the put notice from the Company. The amount that we are entitled to put to GHS in each Put notice cannot be
less than $10,000 nor exceed two hundred percent (200%) of the average daily trading dollar volume of the Company’s Common Stock
during the ten (10) trading days preceding the put, so long as such amount does not exceed $1,000,000.
GHS
has a financial incentive to sell our shares immediately upon receiving them to realize the profit between the discounted price and the
market price. If GHS sells our shares, the price of our common stock may decrease. If our stock price decreases, GHS may have further
incentive to sell such shares. Accordingly, the discounted sales price in the Financing Agreement may cause the price of our common stock
to decline.
We
may not have access to the full amount under the financing agreement.
If
the closing prices of our common stock remains the same and does not materially increase, we will not be able to place puts for the full
commitment amount under the Financing Agreement. The average of lowest two closing prices for the 10 days ended September 7, 2021 was
approximately $0.04. At that price we would be able to sell shares to GHS under the Financing Agreement at the discounted price of $03248.
At that discounted price, the 90,898,054 shares would only represent approximately $2,952,370, which is far below the full amount of
the Financing Agreement. Notwithstanding the forgoing, the discounted purchase price many not be lower than the lowest daily volume weighted
average price for the Company’s common stock during the twenty (20) trading days preceding the filing of the Registration Statement. Any single drawdown may not exceed two hundred percent (200%) of the average daily trading dollar
volume of the Company’s Common Stock during the ten (10) trading days preceding the put, which is approximately $86,700 on September
7, 2021, and cannot exceed $1,000,000.
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Some
of the statements under “Summary”, “Risk Factors”, “Management’s Discussion and Analysis of Financial
Condition and Results of Operations”, “Description of Our Business” and elsewhere in this Prospectus constitute forward-looking
statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events
or trends and similar matters that are not historical facts. In some cases, you can identify forward-looking statements by terms such
as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”,
“may”, “plan”, “potential”, “should”, “will” and “would” or the
negatives of these terms or other comparable terminology.
You
should not place undue reliance on forward looking statements. The cautionary statements set forth in this Prospectus, including in “Risk
Factors” and elsewhere, identify important factors which you should consider in evaluating our forward-looking statements. These
factors include, among other things:
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Our
independent accountants have issued a going concern opinion,
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Intense
competition, which may reduce our sales, operating profits, or both,
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Our
ability to obtain future financing,
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Our
ability to execute our strategic plan,
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Dilution
due to exercise of Convertible notes
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We
are in default of our agreements with General Electric and Cybernaut Zfounder Ventures ,
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Our
products may be displaced by newer technology,
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Majority
ownership by our principal shareholders, directors and executive officers,
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Concentration
of customers,
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We
are a Penny Stock and lack of liquidity in trading our common stock,
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Failure
to maintain effective internal controls,
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Our
highly competitive market,
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Limited
human resources and ability manage our growth, and
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Dependence
on our management, senior professionals and other key personnel.
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Although
the forward-looking statements in this Prospectus are based on our beliefs, assumptions and expectations, taking into account all information
currently available to us, we cannot guarantee future transactions, results, performance, achievements or outcomes. No assurance can
be made to any investor by anyone that the expectations reflected in our forward-looking statements will be attained, or that deviations
from them will not be material and adverse. We undertake no obligation, other than as maybe be required by law, to re-issue this Prospectus
or otherwise make public statements updating our forward-looking statements.
THE
SELLING STOCKHOLDER
The
selling stockholder identified in this prospectus, GHS, may offer and sell up to 90,898,054 shares of our common stock, which consists
of shares of common stock to be initially purchased by GHS pursuant to the Financing Agreement. If issued presently, the shares of common
stock registered for resale by GHS would represent approximately 10% of our issued and outstanding shares of common stock, based on the
922,792,698 shares of our issued and outstanding shares as of September 7, 2021. Additionally, the 90,898,054 shares of our common stock
registered for resale herein would represent approximately 30% of the Company’s public float which would not include 842,460 shares
of our common stock currently held by GHS.
We
may require the selling stockholder to suspend the sales of the shares of our common stock being offered pursuant to this prospectus
upon the occurrence of any event that makes any statement in this prospectus or the related registration statement untrue in any material
respect or that requires the changing of statements in those documents in order to make statements in those documents not misleading.
The
selling stockholder identified in the table below may from time to time offer and sell under this prospectus any or all of the shares
of common stock described under the column “Shares of Common Stock Being Offered” in the table below.
GHS
will be deemed to be an underwriter within the meaning of the Securities Act. Any profits realized by the selling stockholder may be
deemed to be underwriting commissions.
We
cannot give an estimate as to the number of shares of common stock that will actually be held by the selling stockholder upon termination
of this offering, because the selling stockholder may offer some or all of the common stock under the offering contemplated by this prospectus
or acquire additional shares of common stock. The total number of shares that may be sold hereunder will not exceed the number of shares
offered hereby. Please read the section entitled “Plan of Distribution” in this prospectus.
The
manner in which the selling stockholder acquired or will acquire shares of our common stock is discussed below under “The Offering.”
The
following table sets forth the name of the selling stockholder, the number of shares of our common stock beneficially owned by such stockholder
before this offering, the number of shares to be offered for such stockholder’s account and the number and (if one percent or more)
the percentage of the class to be beneficially owned by such stockholder after completion of the offering. The number of shares owned
are those beneficially owned, as determined under the rules of the SEC, and such information is not necessarily indicative of beneficial
ownership for any other purpose. Under such rules, beneficial ownership includes any shares of our common stock as to which a person
has sole or shared voting power or investment power and any shares of common stock which the person has the right to acquire within 60
days of September 7, 2021, through the exercise of any option, warrant or right, through conversion of any security or pursuant to the
automatic termination of a power of attorney or revocation of a trust, discretionary account or similar arrangement, and such shares
are deemed to be beneficially owned and outstanding for computing the share ownership and percentage of the person holding such options,
warrants or other rights, but are not deemed outstanding for computing the percentage of any other person. Beneficial ownership percentages
are calculated based on 922,792,698 shares of our common stock outstanding as of September 7, 2021.
Unless
otherwise set forth below, (a) the persons and entities named in the table below have sole voting and sole investment power with respect
to the shares set forth opposite the selling stockholder’s name, subject to community property laws, where applicable, and (b)
no selling stockholder had any position, office or other material relationship within the past three years, with us or with any of our
predecessors or affiliates. The number of shares of common stock shown as beneficially owned before the offering is based on information
furnished to us or otherwise based on information available to us at the timing of the filing of the registration statement of which
this prospectus forms a part.
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Shares
Owned by the Selling Stockholder before the
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Shares
of
Common
Stock Being
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Number
of Shares to be
Owned by Selling
Stockholder After the
Offering and Percent of Total
Issued and Outstanding Shares
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Name
of Selling Stockholder
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Offering
(1)
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Offered
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#
of Shares(2)
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%
of Class (2)
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GHS
Investments LLC (3)
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842,460
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(4)
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90,898,054
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0.01
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%
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Notes:
(1)
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The
shares currently owned by GHS consist entirely of shares received upon shares issued by the Company to GHS upon execution of the
Equity Financing Agreement.
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(2)
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Because
the selling stockholder may offer and sell all or only some portion of the 90,898,054 shares of our common stock being offered pursuant
to this prospectus and may acquire additional shares of our common stock in the future, we can only estimate the number and percentage
of shares of our common stock that the selling stockholder will hold upon termination of the offering based on the shares currently
held.
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(3)
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Mark
Grober exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by GHS.
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(4)
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Consists
of up to 90,898,054 shares of common stock to be sold by GHS pursuant to the Financing Agreement.
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PLAN
OF DISTRIBUTION
The
selling stockholder may, from time to time, sell any or all of its shares of Company common stock through the OTC Link or any other stock
exchange, quotation board, market or trading facility on which the shares of our common stock are quoted or traded, or in private transactions.
These sales may be at fixed prices, prevailing market prices at the time of sale, at varying prices, or at negotiated prices. The selling
stockholder may use any one or more of the following methods when selling shares:
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ordinary
brokerage transactions and transactions in which the broker-dealer solicits purchasers;
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block
trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
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purchases
by a broker-dealer as principal and resale by the broker-dealer for its account;
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privately
negotiated transactions;
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broker-dealers
may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share; or
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a
combination of any such methods of sale.
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Additionally,
broker-dealers engaged by the selling stockholder may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the selling stockholder (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser)
in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not in
excess of a customary brokerage commissions in compliance with FINRA Rule 2440; and in the case of a principal transaction, a markup
or markdown in compliance with FINRA IM-2440.
GHS
is an underwriter within the meaning of the Securities Act of 1933, and any broker-dealers or agents that are involved in selling the
shares may be deemed to be “underwriters” within the meaning of the Securities Act of 1933 in connection with such sales.
Any commissions received by such broker-dealers or agents, and any profit on the resale of the shares purchased by them, may be deemed
to be underwriting commissions or discounts under the Securities Act of 1933. GHS has informed us that it does not have any written or
oral agreement or understanding, directly or indirectly, with any person to distribute the Company’s common stock. Pursuant to
a requirement by FINRA, the maximum commission or discount to be received by any FINRA member or independent broker-dealer may not be
greater than 8% of the gross proceeds received by us for the sale of any securities being registered pursuant to Rule 415 promulgated
under the Securities Act of 1933.
Discounts,
concessions, commissions and similar selling expenses, if any, attributable to the sale of shares will be borne by the selling stockholder.
The selling stockholder may agree to indemnify any agent, dealer, or broker-dealer that participates in transactions involving sales
of the shares if liabilities are imposed on that person under the Securities Act of 1933.
We
have entered into an agreement with GHS to keep this prospectus effective until GHS (i) has sold all of the common shares purchased by
it under the Financing Agreement and (ii) has no further right to acquire any additional shares of common stock under the Financing Agreement.
The
resale shares will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws.
In addition, in certain states, the resale shares may not be sold unless they have been registered or qualified for sale in the applicable
state or an exemption from the registration or qualification requirement is available and is complied with.
Under
applicable rules and regulations under the Securities Exchange Act of 1934, any person engaged in the distribution of the resale shares
may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined
in Regulation M, prior to the commencement of the distribution. In addition, the selling stockholders will be subject to applicable provisions
of the Securities Exchange Act of 1934 and the rules and regulations thereunder, including Regulation M, which may limit the timing of
purchases and sales of shares of the common stock by the selling stockholder or any other person. We will make copies of this prospectus
available to the selling stockholder.
USE
OF PROCEEDS
We
are required to pay certain fees and expenses incurred by us incident to the registration of the shares covered by this prospectus. We
have agreed to indemnify the selling stockholder against certain losses, claims, damages and liabilities, including liabilities under
the Securities Act of 1933. We will not receive any proceeds from the resale of any of the shares of our common stock by the selling
stockholder. We will receive proceeds from the sale of our common stock to GHS under the Financing Agreement. Neither the Financing Agreement
with GHS nor any rights of the parties under the Financing Agreement with GHS may be assigned or delegated to any other person.
PRICE
RANGE OF COMMON STOCK AND RELATED MATTERS
Our
common stock is quoted on the OTCQB tier of the OTC Markets Group quotation system (www.otcmarkets.com) under the trading ticker
“CETY.” The following tables set forth the range of high and low prices for our common stock for the two years ended June
30, 2021 as reported on the OTC Market Group’s quotation system. These quotations reflect inter-dealer prices, without retail markup,
markdown, or commission and may not necessarily represent actual transactions.
Fiscal
2021
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High
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Low
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First
Quarter (January 1 – March 31)
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$
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0.1389
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$
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0.0595
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Second
Quarter (April 1 – June 30)
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$
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0.0797
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$
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0.0638
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Fiscal
2020
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High
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Low
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First
Quarter (January 1 – March 31)
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$
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0.314
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$
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0.014
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Second
Quarter (April 1 – June 30)
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$
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0.
0213
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$
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0.019
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Third
Quarter (July 1 – September 30)
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$
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0.0242
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$
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0.014
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Fourth
Quarter (October 1 – December 31)
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$
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0.0220
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$
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0.0177
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Fiscal
2019
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High
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Low
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Third
Quarter (July 1 – September 30)
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$
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0.39
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$
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0.14
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Fourth
Quarter (October 1 – December 31)
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$
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0.60
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$
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0.16
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On
September 7, 2021, the last sales price per share of our common stock was $.05.
Holders
of Common Equity
As
of September 7, 2021, there were approximately 119 stockholders of record. An additional number of stockholders are beneficial holders
of our Common Stock in “street name” through banks, brokers and other financial institutions that are the record holders.
Dividend
Information
We
have not paid any cash dividends to our shareholders. The declaration of any future cash dividends is at the discretion of our board
of directors and depends upon our earnings, if any, our capital requirements and financial position, our general economic conditions,
and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest
earnings, if any, in our business operations.
Rule
10B-18 Transactions
During
the year ended December 31, 2020, there were no repurchases of the Company’s common stock by the Company.
The
Company will use the proceeds from the sale of the shares of common stock sold to GHS, for general corporate and working capital purposes,
and continued business operations, or for other purposes that the Board of Directors, in good faith, deems to be in the best interest
of the Company.
DETERMINATION
OF OFFERING PRICE
We
have not set an offering price for the shares registered hereunder, as the only shares being registered are those sold pursuant to the
Financing Agreement with GHS. GHS may sell all or a portion of the shares being offered pursuant to this prospectus at fixed prices,
at prevailing market prices at the time of sale, at varying prices, or at negotiated prices.
DILUTION
The
sale of our common stock to GHS in accordance with the Equity Financing Agreement may have a dilutive impact on our shareholders. As
a result, our net income per share could decrease in future periods and the market price of our common stock could decline. In addition,
the lower our stock price is at the time we exercise our put option, the more shares of our common stock we will have to issue to GHS.
If our stock price decreases, then our existing shareholders would experience greater dilution for any given dollar amount raised through
the offering.
The
perceived risk of dilution may cause our stockholders to sell their shares, which would contribute to a decline in the price of our common
stock. Moreover, the perceived risk of dilution and the resulting downward pressure on our stock price could encourage investors to engage
in short sales of our common stock. By increasing the number of shares offered for sale, material amounts of short selling could further
contribute to progressive price declines in our common stock.
Dilution
represents the difference between the offering price (market price) and the net tangible book value per share immediately after completion
of this Offering. Net tangible book value is the amount that results from subtracting total liabilities and intangible assets (product
development costs) from total assets. Dilution arises mainly as a result of our arbitrary determination of the Offering price of the
shares being offered. Dilution of the value of the shares you purchase is also a result of the lower book value of shares of our common
stock held by our existing shareholders.
As
of June 30, 2020, the net tangible book value of our shares of common stock was ($3,618,799), or approximately ($0.0039) per share based
upon 921,650,238 shares then outstanding. Upon completion of this Offering, if 100% of the shares are sold (90,898,054 shares)
at a discounted market price of $0.036 (80% of $.045 market price) per share, the net tangible book value of the 1,012,548,292 shares
to be outstanding will be approximately $(346,469) or approximately ($.00034) per share. Based on these figures, current shareholders
will not experience a dilution in terms of net tangible book value per share as a result of this offering.
THE
OFFERING
On
September 1, 2021, we entered into an Equity Financing Agreement (the “Financing Agreement”) with GHS Investments LLC (“GHS”)
for an equity line. Although we are not required to sell shares under the Financing Agreement, the Financing Agreement gives us the option
to sell to GHS up to $4,000,000 worth of our common stock, in increments, beginning on the first trading day after the effective date
of this Registration Statement and ending on the earlier of (i) the date GHS has purchased an aggregate of $4,000,000 of our common stock
pursuant to the Financing Agreement, (ii) September 1, 2022, twelve (12) months from the date of execution of the Financing Agreement,
or (iii) the date that this registration statement is no longer in effect (the “Open Period”). $4,000,000 was stated to be
the total amount of available funding in the Financing Agreement, because this was the maximum amount that GHS and we agreed to for the
funding. There is no assurance the market price of our common stock will increase in the future, or that we will ever sell (i) $4,000,000
of our common stock to GHS, or (ii) all 90,898,054 shares being registered hereunder. The number of common shares that remain issuable
may not be sufficient, dependent upon the share price, to allow us to access the full amount contemplated under the Financing Agreement.
If the closing prices of our common stock remains the same and does not materially increase, we will not be able to place puts for the
full commitment amount under the Financing Agreement. The average of lowest two closing prices for the 10 days ended September 7, 2021
was approximately $0.04. At that price we would be able to sell shares to GHS under the Financing Agreement at the discounted price of
$03248. At that discounted price, the 90,898,054 shares would only represent approximately $2,952,370, which is far below the full amount
of the Financing Agreement. Notwithstanding the forgoing, the discounted purchase price many not be lower than the lowest daily volume
weighted average price for the Company’s common stock during the twenty (20) trading days preceding the filing of the Registration
Statement. Any single drawdown may not exceed two hundred percent (200%) of the average daily
trading dollar volume of the Company’s Common Stock during the ten (10) trading days preceding the put, which is approximately
$86,700 on September 7, 2021, and cannot exceed $1,000,000. We paid GHS 842,460 shares of our common stock upon the signing of the Financing
Agreement.
During
the Open Period, the Company may, in its sole discretion, deliver a put notice (“Put Notice”) to GHS which shall state the
dollar amount requested by the Company (the “Put Amount”) and number of shares intends to sell to GHS on a designated closing
date. The purchase price (the “Purchase Price”) of the common stock sold pursuant to a Put Notice will be set at eighty percent
(80%) of the average of the two lowest closing prices of the common stock during the ten consecutive trading day period immediately preceding
the date on which the Company delivers the Put Notice to GHS. We are obligated to deliver a number of shares to GHS equal to Put Amount
divided by the Purchase Price in consideration of the payment of the Put Amount less $1,000 for transaction costs incurred by GHS. For
example, if we delivered a put notice to GHS for $20,000, and the average of the lowest two trading days for the past 10 consecutive
trading days is $.02, we would be obligated to issue GHS 1,250,000 shares of our common stock at a purchase price of $.016 per share.
The 20% price per share discount GHS will receive with each put sale means that GHS will effectively be paying us $20,000, less $1,000
in transaction costs as a Put Amount for $25,000 in our stock that is issued. Notwithstanding the foregoing, the discounted price per
share may not drop below subject to a trading price floor equaling the lowest daily volume weighted average price for the Company’s
common stock during the twenty (20) Trading Days preceding the filing of the Registration Statement.
In
addition, the Financing Agreement (i) imposes an ownership limitation on GHS of 4.99% (i.e., GHS has no obligation to purchase shares
if it beneficially owns more than 4.99% of our common stock), (ii) requires a minimum of ten (10) trading days between put notices, (iii)
prohibits any single Put Amount from under $10,000 or exceeding $1,000,000 or exceeding two times the average daily trading dollar volume
for the Company’s common stock during the 10 days preceding the Put Notice or (iv) delivering a Put Notice within 10 days prior
to the closing of a prior Put Amount.
In
order for the Company to be eligible to deliver put notices to GHS, the following conditions must be met: (i) a registration statement
shall be declared effective and remain effective; (ii) at all times during the period beginning on the related put notice date and ending
on and including the related closing date of the put, the Company’s common stock shall have been listed or quoted for trading on
OTCQB or its equivalent and shall not have been suspended from trading thereon for a period of two (2) consecutive trading days during
the open period; (iii) the Company has not defaulted or be in breach of the Financing Agreement or Registration Rights Agreement; (iv)
no injunction shall be issued or remain in force in connection with the purchase of the Company’s shares; and (v) the issuance
of the shares will not violate any shareholder approval requirements of OTCQB. If any of the events described above occurs during a pricing
period, then GHS shall have not obligation to purchase the shares delivered in the Put Notice. Further the terms of the Financing Agreement
require that the Company take all commercially reasonable steps necessary to have this registration statement be declared effective no
more than 90 days following the date this registration statement was originally filed.
GHS
is not permitted to engage in short sales involving our common stock, or to engage in other activities that could manipulate the market
for our common stock, during the period commencing September 1, 2021, and continuing through the termination of the Financing Agreement.
In accordance with Regulation SHO, however, sales of our common stock by GHS after delivery of a put notice of such number of shares
reasonably expected to be purchased by GHS under a put will not be deemed short sales.
In
order for the Company’s exercise of a put to be effective, we must deliver the documents, instruments and writings required under
the Financing Agreement. GHS is not required to purchase the put shares unless:
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●
|
Our
registration statement with respect to the resale of the shares of common stock delivered in connection with the applicable put shall
have been declared effective;
|
|
|
|
|
●
|
we
shall have obtained all material permits and qualifications required by any applicable state for the offer and sale of the registrable
securities; and
|
|
|
|
|
●
|
we
shall have filed all requisite reports, notices, and other documents with the SEC in a timely manner.
|
As
we draw down on the equity line of credit reflected in the Financing Agreement, shares of our common stock will be sold into the market
by GHS. The sale of these shares could cause our stock price to decline. In turn, if our stock price declines and we issue more puts,
more shares will come into the market, which could cause a further drop in our stock price. The Company determines when and whether to
issue a put to GHS, so the Company will know precisely both the stock price used as the reference point, and the number of shares issuable
to GHS upon such exercise. You should be aware that there is an inverse relationship between the market price of our common stock and
the number of shares to be issued under the equity line of credit. We have no obligation to utilize the full amount available under the
equity line of credit.
Neither
the Financing Agreement nor any of our rights or GHS’s rights thereunder may be assigned to any other person.
There
is no assurance the market price of our common stock will increase in the future. The number of common shares that remain issuable may
not be sufficient, dependent upon the share price, to allow us to access the full amount contemplated under the Financing Agreement.
If the bid/ask spread remains the same we will not be able to place a put for the full commitment under the Financing Agreement. Based
on the lowest two day average closing price of our common stock during the ten (10) consecutive trading day period preceding the filing
date of this registration statement was approximately $0.0166, the registration statement covers the offer and possible sale of $$992,282
worth of our shares.
DESCRIPTION
OF SECURITIES
We
have authorized capital stock consisting of the following. The total number of shares of capital stock which the Corporation shall have
authority to issue is: 2,020,000,000. These shares shall be divided into two classes with one billion two hundred million (2,000,000,000)
shares designated as common stock at $.001 par value (the “Common Stock”) and twenty million (20,000,000) shares designated
as preferred stock at $.001 par value (the “Preferred Stock”).The Preferred Stock of the Corporation shall be issuable by
authority of the Board of Director(s) of the Corporation in one or more classes or one or more series within any class and such classes
or series shall have such voting powers, full or limited, or no voting powers, and such designations, preferences, limitations or restrictions
as the Board of Directors of the Corporation may determine, from time to time. We have 922,792,698 common shares outstanding as of September
7, 2020.
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 September 7,
2021, there were 922,792,698 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 divided 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 to 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 a 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 $0.08 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 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.
In
connection with the subscriptions for the Series D Preferred, we issued series F warrants to purchase an aggregate of 375,000 shares
of our common stock at $.10 per share and series G warrants to purchase an aggregate of 375,000 shares of our common stock at $.20 per
share.
On
August 21, 2014, a holder holding 5,000 shares of Preferred Series D Preferred agreed to lower the dividend rate to 13% on its Series
D Preferred. In September 2015, all holders of Series D Preferred signed and delivered estoppel agreements, whereby the holders agreed,
among other things, that the Series D Preferred was not in default and to reduce (effective as of December 31, 2015) the dividend rate
on the Series D Preferred Stock to six percent per annum and to terminate the 3.5% penalty in respect of unpaid dividends accruing on
or after such date.
In
the first quarter of 2019, we signed agreements to issue 4,000,000 shares of common stock valued at $.015 for a total value of $60,000
for the conversion of 800 preferred series D shares, which were subsequently issued. We also recorded a $60,000 inducement fee to account
for the difference in the fair value which we offset to retained earnings.
We
also reclassed 200 preferred valued at $20,000, which were previously recorded as converted preferred dividends.
We
also recorded a $60,000 commitment fee in exchange for the “stand off” and estoppel agreement and discounted conversion terms
to account for the difference in the fair value which we offset to retained earnings.
On
February 4, 2020 we issued 2,000,000 shares of our common stock at a price of $.04 per share, in exchange for the conversion of 800 shares
of our Series D Preferred Stock.
On
July 23, 2020 we issued 3,000,000 shares of our common stock at a price of $.04 per share, in exchange for the conversion of 1,200 shares
of our Series D Preferred Stock.
On
February 5, 2021 we issued 3,000,000 shares of our common stock at a price of $.08 per share, in exchange for the conversion of 1,200
shares of our Series D Preferred Stock.
On
February 9, 2021 we issued 2,275,662 shares of our common stock share, in exchange for the conversion of $182,052 of accrued dividend
for the series D Preferred Stock.
On
February 9, 2021 we issued 2,000,000 shares of our common stock at a price of $.04 per share, in exchange for the conversion of 800 shares
of our Series D Preferred Stock.
On
March 12, 2021 we issued 3,693,588 shares of our series D preferred stock together with accrued preferred dividend at a price of $.08
per share, in exchange for the conversion of 1300 shares of our Series D Preferred Stock and accrued preferred dividend.
As
of June 3, 2021, there are no series D preferred stock outstanding.
Warrants
A
summary of warrant activity for the periods is as follows:
On
May 31, 2019, we entered into a subscription agreement pursuant to which the Company agreed to sell 168,000,000 units (each a “Unit”
and together the “Units”) to MGW Investment I Limited MGWI for an aggregate purchase price of $1,999,200, or $.0119 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 $.04 per share of Common Stock and, which expired
on May 31, 2020.
On
June 10, 2019 we issued 500,000 shares of common stock at $.02 per share to an accredited investor for an aggregate price of $10,000
in a private sale. We also issued 500,000 warrants as part of the transaction. Each Warrant is exercisable at $.04 per share of Common
Stock and which expired on June 10, 2020.
On
July 18, 2019 we issued 500,000 shares of common stock at $.02 per share to an accredited investor for an aggregate price of $10,000
in a private sale. We also issued 500,000 warrants as part of the transaction. Each Warrant is exercisable at $.04 per share of Common
Stock and expired as of July 18, 2020.
On
September 19, 2019 we entered into a stock purchase agreement for 250,000 units to an accredited investor a private sale. Each unit consist
of one share of common stock and one warrant to purchase one share of common stock exercisable at $.04 per share of Common Stock and
expired on September 19, 2020.
On
December 5, 2019 we issued 5,000,000 units to an accredited investor a private sale. Each unit consist of one share of common stock and
one warrant to purchase one share of common stock exercisable at $.04 per share. These warrants expire on
December
5, 2020.
On
July 6, 2020, Clean Energy Technologies, Inc. (the “Company) entered into a securities purchase agreement (the “Securities
Purchase Agreement”) with LGH Investments, LLC (the “Investor”), pursuant to which the Company issued to the Investor
a convertible promissory note (the “Note”) in the original principal amount of $164,800, a Warrant (the “Warrant”)
to purchase 1,500,000 shares of the Company’s common stock, par value $.001 per share (the “Common Stock”) and one
million (1,000,000) restricted shares of Common Stock (“Commitment fee Shares”). The Note carried an original issue discount
of $4,800 with interest of 8% per annum payable at maturity. The Note matures 8 months from the issue date and is convertible at any
time into the Common Stock at a conversion price equal to $0.02 per share, subject to adjustment. On January 8, 2021, the cashless warrants
were converted into 697,861 shares of our common stock.
On
August 17, 2020, Clean Energy Technologies, Inc. (the “Company) entered into a securities purchase agreement (the “Securities
Purchase Agreement”) with LGH Investments, LLC (the “Investor”), pursuant to which the Company issued to the Investor
a convertible promissory note (the “Note”) in the original principal amount of $103,000, a Warrant (the “Warrant”)
to purchase 1,500,000 shares of the Company’s common stock, par value $.001 per share (the “Common Stock”) and one
million (1,000,000) restricted shares of Common Stock (“Commitment fee Shares”). The Note carried an original issue discount
of $3,000 with interest of 8% per annum payable at maturity. The Note matures 8 months from the issue date and is convertible at any
time into the Common Stock at a conversion price equal to $0.02 per share, subject to adjustment. On February 1, 2021 the cashless warrants
were converted into 1,100,000 shares of our common stock.
|
|
Warrants
- Common Share Equivalents
|
|
|
Weighted
Average Exercise price
|
|
|
Warrants
exercisable - Common Share Equivalents
|
|
|
Weighted
Average Exercise price
|
|
Outstanding
December 31, 2020
|
|
|
9,500,000
|
|
|
$
|
0.04
|
|
|
|
9,500,000
|
|
|
$
|
0.04
|
|
Additions
|
|
|
3,754,720
|
|
|
|
|
|
|
|
3,754,720.00
|
|
|
|
0.04
|
|
Expired
|
|
|
1,500,000
|
|
|
|
|
|
|
|
1,500,000
|
|
|
|
|
|
Exercised
|
|
|
3,000,000
|
|
|
|
|
|
|
|
3,000,000
|
|
|
|
|
|
Outstanding June
30, 2021
|
|
|
8,754,720
|
|
|
$
|
0.04
|
|
|
|
8,754,720
|
|
|
$
|
0.04
|
|
Securities
Authorized for Issuance under Equity Compensation Plans
Below
is a description of the Company’s compensation plan adopted in 2011.
2011
Plan
The
purpose of awards under the 2011 Plan is to attract and retain talented employees and the services of select non-employees, further align
employee and stockholder interests and closely link employee compensation with Company performance. Eligible participants under the 2011
Plan will be such full or part-time officers and other employees, directors, consultants and key persons of the Company and any Company
subsidiary who are selected from time to time by the Board or committee of the Board authorized to administer the 2011 Plan, as applicable,
in its sole discretion.
The
Plan provides for the issuance of up to 15,000,000 shares of common stock of the Company through the grant of non-qualified options (the
“Non-qualified Options”), incentive options (the “Incentive Options” and together with the Non-qualified Options,
the “Options”) and restricted stock (the “Restricted Stock”), unrestricted stock (the “Unrestricted Stock”)
and Stock Appreciation Rights (“SARs”) to directors, officers, consultants, attorneys, advisors and employees. The 15,000,000
shares available under the 2011 Plan represent approximately 2% of the Company’s issued and outstanding common stock as of September
7, 2021. There are no outstanding grants under the 2011 Plan.
The
2011 Plan shall be administered by a committee consisting of two or more independent, non-employee and outside directors (the “Committee”).
In the absence of such a Committee, the Board shall administer the 2011 Plan. The 2011 Plan is currently being administered by the Board
but it is intended for the Compensation Committee to administer the 2011 Plan as soon as practicable.
Options
are subject to the following conditions:
(i)
The Committee determines the strike price of Incentive Options at the time the Incentive Options are granted. The assigned strike price
must be no less than 100% of the Fair Market Value (as defined in the Plan) of the Company’s Common Stock. In the event that the
recipient is a Ten Percent Owner (as defined in the Plan), the strike price must be no less than 110% of the Fair Market Value of the
Company.
(ii)
The strike price of each Non-qualified Option will be at least 100% of the Fair Market Value of such share of the Company’s Common
Stock on the date the Non-qualified Option is granted.
(iii)
The Committee fixes the term of Options, provided that Options may not be exercisable more than ten years from the date the Option is
granted and provided further that Incentive Options granted to a Ten Percent Owner may not be exercisable more than five years from the
date the Incentive Option is granted.
(iv)
The Committee may designate the vesting period of Options. In the event that the Committee does not designate a vesting period for Options,
the Options will vest in equal amounts on each fiscal quarter of the Company through the five (5) year anniversary of the date on which
the Options were granted. The vesting period accelerates upon the consummation of a Sale Event (as defined in the Plan).
(v)
Options are not transferable, and Options are exercisable only by the Options’ recipient, except upon the recipient’s death.
(vi)
Incentive Options may not be issued in an amount or manner where the amount of Incentive Options exercisable in one year entitles the
holder to Common Stock of the Company with an aggregate Fair Market value of greater than $100,000.
Awards
of Restricted Stock are subject to the following conditions:
(i)
The Committee grants Restricted Stock Options and determines the restrictions on each Restricted Stock Award (as defined in the Plan).
Upon the grant of a Restricted Stock Award and the payment of any applicable purchase price, grantee is considered the record owner of
the Restricted Stock and entitled to vote the Restricted Stock if such Restricted Stock is entitled to voting rights.
(ii)
Restricted Stock may not be delivered to the grantee until the Restricted Stock has vested.
(iii)
Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as provided in the Plan
or in the Award Agreement (as defined in the Plan).
Stock
Options
We
currently have no outstanding stock options
Dividend
Policy
We
have never declared a cash dividend on our common stock and our Board of Directors does not anticipate that we will pay cash dividends
in the foreseeable future. Any future determination to pay cash dividends will be at the discretion of our board of directors and will
depend upon our financial condition, operating results, capital requirements, restrictions contained in our agreements and other factors
which our Board of Directors deems relevant.
We
are obligated to pay dividends to certain holders of our preferred stock which we pay out of legally available funds from time to time
or reach arrangements with our holders of preferred stock to convert limited quantities of preferred stock at favorable conversion prices
in lieu of dividend payments.
Transfer
Agent
The
transfer agent for our Common Stock is Colonial Stock Transfer, Inc., 66 Exchange Place, 1st floor, Salt Lake City, UT 84111, (801) 355-5704.
Anti-Takeover
Effects of Various Provisions of Nevada Law
Provisions
of the Nevada Revised Statutes could make it more difficult to acquire us by means of a tender offer, a proxy contest or otherwise, or
to remove incumbent officers and directors. These provisions, summarized below, would be expected to discourage certain types of takeover
practices and takeover bids our Board may consider inadequate and to encourage persons seeking to acquire control of us to first negotiate
with us. We believe that the benefits of increased protection of our ability to negotiate with the proponent of an unfriendly or unsolicited
proposal to acquire or restructure us will outweigh the disadvantages of discouraging takeover or acquisition proposals because, among
other things, negotiation of these proposals could result in an improvement of their terms.
Blank
Check Preferred
Our
articles of incorporation permit our Board to issue preferred stock with voting, conversion and exchange rights that could negatively
affect the voting power or other rights of our common stockholders. The issuance of our preferred stock could delay or prevent a change
of control of our Company.
Amendments
to our Articles of Incorporation and Bylaws
Under
the Nevada Revised Statutes, our articles of incorporation may not be amended by stockholder action alone.
Nevada
Anti-Takeover Statute
We
may be subject to Nevada’s Combination with Interested Stockholders Statute (Nevada Corporation Law Sections 78.411-78.444) which
prohibits an “interested stockholder” from entering into a “combination” with the corporation, unless certain
conditions are met. An “interested stockholder” is a person who, together with affiliates and associates, beneficially owns
(or within the prior two years, did beneficially own) 10% or more of the corporation’s capital stock entitled to vote.
Limitations
on Liability and Indemnification of Officers and Directors
The
Nevada Revised Statutes limits or eliminates the personal liability of directors to corporations and their stockholders for monetary
damages for breaches of directors’ fiduciary duties as directors.
The
limitation of liability and indemnification provisions under the Nevada Revised Statues and in our articles of incorporation and bylaws
may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duties. These provisions may also
have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful,
might otherwise benefit us and our stockholders. However, these provisions do not limit or eliminate our rights, or those of any stockholder,
to seek non-monetary relief such as injunction or rescission in the event of a breach of a director’s fiduciary duties. Moreover,
the provisions do not alter the liability of directors under the federal securities laws. In addition, your investment may be adversely
affected to the extent that, in a class action or direct suit, we pay the costs of settlement and damage awards against directors and
officers pursuant to these indemnification provisions.
Authorized
but Unissued Shares
Our
authorized but unissued shares of Common Stock and preferred stock will be available for future issuance without stockholder approval,
except as may be required under the listing rules of any stock exchange on which our Common Stock is then listed. We may use additional
shares for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and
employee benefit plans. The existence of authorized but unissued shares of Common Stock and preferred stock could render more difficult
or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.
Penny
Stock Regulation
The
SEC has adopted regulations which generally define “penny stock” to be any equity security that has a market price (as defined)
of less than $5.00 per share or an exercise price of less than $5.00 per share. Such securities are subject to rules that impose additional
sales practice requirements on broker-dealers who sell them. For transactions covered by these rules, the broker-dealer must make a special
suitability determination for the purchaser of such securities and have received the purchaser’s written consent to the transaction
prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior
to the transaction, of a disclosure schedule prepared by the SEC relating to the penny stock market. The broker-dealer also must disclose
the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the
broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over
the market. Finally, among other requirements, monthly statements must be sent disclosing recent price information for the penny stock
held in the account and information on the limited market in penny stocks. As the Shares immediately following this Offering will likely
be subject to such penny stock rules, purchasers in this Offering will in all likelihood find it more difficult to sell their Shares
in the secondary market.
LEGAL
MATTERS
The
legality of the issuance of the shares of Common Stock offered by this Prospectus will be passed upon for us by The Newman Law Firm,
PLLC, Briarcliff Manor, New York.
EXPERTS
The
financial statements of Clean Energy Technologies, Inc. as of December 31, 2020, and 2019, which includes an explanatory paragraph relating
to its ability to continue as a going concern, included in this Prospectus have been audited by Fruci & Associates II, PLLC, an independent
auditor, as stated in their reports appearing herein. Such financial statements have been so included in reliance upon the reports of
such firm given its authority as experts in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We
have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of Common Stock offered
by this prospectus. This prospectus does not contain all of the information included in the registration statement. For further information
pertaining to us and our Common Stock, you should refer to the registration statement and our exhibits. Statements contained in this
prospectus concerning any of our contracts, agreements or other documents are not necessarily complete. If a contract or document has
been filed as an exhibit to the registration statement, we refer you to the copy of the contract or document that has been filed. Each
statement in this prospectus relating to a contract or document filed as an exhibit is qualified in all respects by the filed exhibit.
We
are subject to the informational requirements of the Exchange Act and file annual, quarterly and current reports and other information
with the SEC. Our filings with the SEC are available to the public on the SEC’s website at http://www.sec.gov. Those filings are
also available to the public on, or accessible through, our website at http://investors.uphealthinc.com. The information we file with
the SEC or contained on or accessible through our corporate website or any other website that we may maintain is not part of this prospectus
or the registration statement of which this prospectus is a part.
INFORMATION
WITH RESPECT TO THE REGISTRANT
BUSINESS
Company
Information
We
were incorporated in California in July 1995 under the name Probe Manufacturing Industries, Inc. We redomiciled to Nevada in April 2005
under the name Probe Manufacturing, Inc. We manufactured electronics and provided services to original equipment manufacturers (OEMs)
of industrial, automotive, semiconductor, medical, communication, military, and high technology products. On September 11, 2015 Clean
Energy HRS, or “CE HRS”, our wholly owned subsidiary acquired the assets of Heat Recovery Solutions from General Electric
International. In November 2015, we changed our name to Clean Energy Technologies, Inc.
Our
principal executive offices are located at 2990 Redhill Avenue, Costa Mesa, CA 92626. Our telephone number is (949) 273-4990. Our common
stock is listed on the OTCQB Markets under the symbol “CETY.”
Our
internet website address is www.cetyinc.com and our subsidiary’s web site is www.heatrecoverysolutions.com The information
contained on our websites are not incorporated by reference into this document, and you should not consider any information contained
on, or that can be accessed through, our website as part of this document.
The
Company has three reportable segments: Clean Energy HRS (HRS), Cety Europe and the legacy electronic contract manufacturing services
(Electronic Assembly) division.
Segments
Clean
Energy HRS (HRS)
We
design, build and deliver power from industrial heating systems and biomass sources to produce environmentally friendly energy at competitive
prices using our Clean CycleTM heat generators acquired from General Electric International. Our initial principal product
is the Clean CycleTM heat generator, offered through our wholly owned subsidiary Heat Recovery Solutions, (HRS). The Clean
CycleTM generator captures waste heat from a variety of sources and turns it into electricity. By using our Clean CycleTM
generator commercial and industrial heat generators boost their overall energy efficiency and the savings created provide our customers
with a fast return on their investment. The Clean CycleTM saves fuel, reduces pollution and requires very little maintenance.
Cety
Europe
CETY
Europe Sales and Service Center is the Sales, warranty and service company for CETY’s Clean Cycle™ Heat Recovery Solutions
(HRS) and includes a 24/7 Call Center, support Field Service Personnel, including remote access to the Waste Heat Generators and inventory
spare parts to support the currently commissioned 65 Clean CycleTM installations in Europe. The service center also provides support
services for new European sales. CETY has identified substantial unmet market needs in many European countries including the United Kingdom,
Germany, Italy, Ukraine, Croatia, Slovakia, Slovenia, Austria, Belarus and the Czech Republic. Cety Europe will sell and distribute the
Clean CycleTM Waste Heat Generators and replacement parts from the Clean Energy HRS line of products. The CETY Europe Sales and Service
Center will be well suited to handle any warranty and/or service issues, as well as sell and distribute the Clean energy HRS line of
products. Cety Europe has 1 employee.
Electronic
Assembly
The
Electronic assembly business was our core legacy business until we acquired the Heat Recovery Solutions technology and business assets
from GE. We consolidated the Probe Manufacturing (Electronic Assembly), now named Clean Energy Technologies, Inc with the Clean Energy
HRS, LLC. in order to support a few legacy electronics assembly customers and support the electronics manufacturing portion of our newly
acquired technology from General Electric by Clean Energy HRS, LLC. Although this is not our core focus nor do we intend to grow this
segment, we still derive a revenue stream to help offset a portion of the overhead. This segment provides contract manufacturing services
of electronic printed circuit board assemblies to customers in the medical and aerospace industries. The services provided are contract
in nature and are built the customers specification. They supply the design and component specifications. We purchase the components
and solder the components to the bare printed circuit boards.
Our
customers are legacy customers of Probe Manufacturing and we do not conduct any additional sales or marketing activities in this segment.
We have many larger and better funded competitors in the United States and Asia that specialize in circuit board manufacturing and our
customers may migrate to these competitors since we do not focus on developing any new products or services for this segment. We do not
view this segment as being material to the long term growth of the Company.
General
Business Overview
We
design, produce and market clean energy products and integrated solutions focused on energy efficiency and renewables. Our initial principal
product is the Clean CycleTM heat generator, offered through our wholly owned subsidiary Heat Recovery Solutions, (HRS). The
Clean CycleTM generator captures waste heat from a variety of sources and turns it into electricity. By using our Clean CycleTM
generator commercial and industrial heat generators boost their overall energy efficiency and the savings created provide our customers
with a fast return on their investment. The Clean CycleTM generator saves fuel, reduces pollution and requires little maintenance.
We also use our Clean CycleTM generator to manufacture Biomass Power Plants and Co-generation Distribution Power Plants that
produce clean energy.
|
|
|
Clean
Cycle II Heat Generator
|
|
Containerized
Clean Cycle II Heat Generator
|
We
compete based on efficiency, maintenance and our customer’s return on investment. We have an exclusive license from Calnetix to
use their magnetic turbine for heat waste recovery applications. We believe that the magnetic turbine technology is more efficient than
our competitor’s turbines which allows our systems to generate more electricity at lower heat ranges. Because our generator is
magnetic, it requires far less maintenance than our competitors who use oil, gearbox and rubber seals in their turbines. We have the
advantage of selling a system that was originally manufactured and sold by General Electric International so our Clean CycleTM
generator has a substantial market base and we believe has a reputation as one of the defacto standards in the market.
Our
greatest advantage is that the Clean CycleTM generator is a product that can be delivered on a turnkey basis, not a major
project that needs to be designed, manufactured and installed. We believe that this is one of the most distinguishing features of our
Clean Cycle™ generator, as it significantly reduces the time our customers spend on installation, improves the speed with which
we can deliver our product and reduces startup costs.
Over
123 Clean CycleTM generators are installed to date with 88 units used in biomass/landfill projects, 4 with diesel electric
generators, 3 with turbine electric generators and 26 in industrial electric production applications.
The
Clean CycleTM generator is delivered on a turnkey basis and does not require major planning for design, manufacturing and
installation. In addition to attractive returns on capital investment, we believe that the ease of installation distinguishes our Clean
Cycle™ generators by significantly reducing installation time, improving delivery times and lowering costs.
A
Complete ORC System
We
estimate that one clean system using our Clean CycleTM generator can generate 1 GWh of electricity per year from waste heat
and avoid more than 350 metric tons of CO2 per year which we estimate is the annual equivalent of the CO2 emissions of approximately
200 cars.
Our
Products
Our
Clean CycleTM generator:
|
●
|
Requires
no fuel,
|
|
●
|
produces
no emissions, and
|
|
●
|
is
closed loop, meaning it has feedback control within the system.
|
|
●
|
Meticulously
engineered and improved by General Electric International and
|
|
●
|
is
available in a complete package for indoor, outdoor and remote sites.
|
The
major components are delivered as a complete turnkey package and include, the Integrated Power Module (“IPM”), our patented
the magnetic bearing turbine, the electronics controls with the ancillary mechanical parts, packaged inside a container when used outdoors.
The condenser comes as a separate piece which is purchased by either us or our customer through third party manufactures and attaches
to the top of the container. Once the condenser is attached to the container all that is left to do is attach the container to the heat
source, and it is ready to produce energy.
Due
to the low amount of moving parts the IPM is a minimal maintenance solution, that requires no oils, no lubricants, no external rotating
seals, and does not require manned operation. The whole package (except condenser) is mounted inside a 20ft shipping container. The Condenser
comes as a separate piece and attaches to the top of the container. Once the condenser is attached to the container all that is left
to do is attach the container to the heat source, and it is ready to produce energy.
Our
Core technology a magnetic bearing turbine called Integrated Power Module (IPM).
|
✓
|
Mag
lev bearing generator
|
|
✓
|
Lower
maintenance: no oils, no lubricants
|
|
✓
|
Efficient
at any output: no gearbox
|
|
✓
|
Power
electronics – power factor of 1
|
There
are also different types of turbines utilized in the ORC systems. The Clean Cycle utilizes an integrated power module which runs on magnetic
bearings and its hermetically sealed into a single unit, eliminating the need for gear box, lubrication systems and rotating seals and
it’s more efficient than screw expanders.
Packaging
|
✓
|
Single
part number (85% OF BOP)
|
|
✓
|
Product,
not a project
|
|
✓
|
Same
unit used on all heat sources
|
|
✓
|
Re-deployable
and movable
|
|
✓
|
Small
footprint
|
20ft
ISO Containerized Stackable Solution
The
Clean Cycle containerized has been meticulously engineered to reliably produce power.
Clean
CycleTM generator and the Organic Rankine Cycle
The
Organic Rankine Cycle is a thermodynamic process where heat is transferred to a fluid at a constant pressure. The fluid inside the generator
is vaporized and then expanded in a vapor turbine that drives a turbine generator, producing electricity. The spent vapor is condensed
to liquid and recycled back through the cycle.
Its
applications include power generation from solar, geothermal and waste heat sources. According to an article in Distributed Energy, a
leading industry magazine, Organic Rankine Cycle systems are most useful for waste heat recovery. Waste heat recovery can be applied
to a variety of low- to medium temperature heat streams
CETY
Capital.
We
have recently established a wholly owned subsidiary called CETY Capital, to finance captive renewable energy projects producing low carbon
energy. CETY Capital will add flexibility to the capacity CETY offers its customers and fund projects utilizing its products and clean
energy solutions. The in-house financing arm is expected to support our sales and build new renewable energy facilities. In addition,
Our initial project is with Ashfield Ag Resources to co-develop its initial biomass renewable energy processing facility using the revolutionary
high temperature ablative fast pyrolysis reactor (HTAP Biomass Reactor). The project is located in Massachusetts and will convert forest
biomass waste products to renewably generated electricity and BioChar fertilizer. We expect to annually deliver up to 14,600 MWh of renewable
electricity and 1,500 tons of BioChar. The Ashfiled project is one of four renewable energy processing facilities we plan to commission
over the next 2 years.
We
have a global license (except Russia and CIS countries) to the HTAP technology which utilizes a higher temperature that uses a cleaner
gas more efficient biogas turbine that produces electricity from industrial and municipality solid waste, landfill waste, agriculture
waste, and forestry waste. We believe that the key benefits of the HTAP Biomass Reactor are:
Better
waste sourcing and mixing flexibility,
Near-zero
emissions,
Modular
design,
Zero
liquid discharge,
Zero
solid waste residue waste.
Raw
Materials/Suppliers
Our
products are manufactured primarily from components available from multiple suppliers and to a lesser extend from custom fabricated components
available from various sources. We purchase our components from suppliers based on price and availability. Our significant suppliers
include Power House, Concise Instrument, and Grainger.
Patents
We
currently hold 16 patents in 6 countries and 28 pending applications in 8 countries, which were acquired from General Electric International
relating to our magnetic turbine technology.
Intellectual
Property
As
part of our asset acquisition from General Electric International we acquired an exclusive, irrevocable, sublicensable, limited transferable,
royalty free, fully paid, worldwide perpetual license to develop, improve and commercialize Calnetix’s magnetic turbine in any
Organic Rankine Cycle based application where heat is sourced from a reciprocating combustion engine of any type, except marine vessels,
any gas or steam turbine systems for electrical power generation applications or any type of biomass boiler system.
We
also have a global license (except Russia and CIS countries) to the HTAP technology.
Our
Services
Engineering.
Our global engineering team supports the installation and maintenance of our Clean CycleTM generators, supports our technology customers
and innovative start-ups with a broad range of electrical, mechanical and software engineering services. CETY has assembled a team of
experts from around the globe to assist customers at any point in the design cycle. These services include design processes from electrical,
software, mechanical and Industrial design. Utilization of CETY’s design services will enable rapid market entry for our customers
and potential equity partners. Our systems have been designed to be more of a product than a project and provide the solution providers
greater flexibility.
Supply
Chain Management. CETY’s supply chain solution provides maximum flexibility and responsiveness through a collaborative
and strategic approach with our customers. CETY can assume supply chain responsibility from component sourcing through delivery of finished
product. CETY’s focus on the supply chain allows us to build internal and external systems and better our relationships with our
customers, which allows us to capitalize on our expertise to align with our partners and customer’s objectives and integrate with
their respective processes.
Sales
and Marketing
We
utilize both a direct sales force and global distribution group with expertise in heat recovery solutions and clean energy markets.
CETY
maintains an online presence through our web portal and social media. Our application engineers assist in converting the opportunities
into projects. We provide technical support to our Clean Cycle TM generator clients through providing maintenance and product
support.
Our
market focus is segmented by the engine heat recovery, biomass & Biogas plants, Landfills, Wastewater treatment plants and boiler
applications with excess heat.
Organic
Rankine Cycle systems are commonly used to generate power in geothermal, biomass, waste to energy plants, engine heat recovery and more
recently, in pipeline compressor heat recovery applications. In these, and other, ORC applications, electric generation efficiencies
range from around 8 percent with waste heat sources at 300 ºF, to around 15 percent with waste heat sources near 800 ºF. There
are also different types of turbines utilized in the ORC systems. The Clean Cycle utilizes an integrated power module which runs on magnetic
bearings and its hermetically sealed into a single unit, eliminating the need for gear box, lubrication systems and rotating seals and
it’s more efficient than screw expanders.
Power
generation from geothermal brines is the main field of application with 74.8% of all ORC installed capacity in the world, however the
total number of plant is relatively low with 337 installations as these applications require large investment and multi-MW plants. As
a result, only a few companies (ORMAT, Exergy, TAS and Turboden) have been active in this capital-intensive sector. ORMAT is the indisputable
leader in this field with more than 75% of installed capacity and plants, Exergy and TAS are following with around 13% and 6% of the
market respectively while Turboden has recently penetrated the geothermal market with about 2% of the installed capacity.
Waste
heat recovery is an emerging field for ORC with an interesting potential for all unit sizes. All the big players are active on the markets
with medium – large size plants recovering heat from gas turbines, internal combustion engines or industrial processes. Most of
the other manufacturers are focused on small waste heat recovery applications with products ranging from 10 to 150 kWel. Waste Heat recovery
applications cover 13.9% of the total market.
Biomass
applications represent a similar share at 11% and a considerable number of plants, Turboden is the main player on this market.
A
total of approximately 800 ORC units have been installed since 2000. Overall the combined ORC systems are estimated to grow at a CAGR
of 10% from 2019 to 2023 and the market is expected to grow to approximately $500M, based on a CAGR of 12% from 2019 to 2023.
Our
ORC Clean CycleTM II was designed by General Electric International and maintains its history and association with a major brand. Our
product is distinguished from its competitors by its magnetic bearing turbine technology offering lower maintenance and higher efficiency
of 14% for under 500kW applications with low to medium temperature requirements. We have more than 1,000,000 fleet operating hours and
8 years of history in the field.
Employees
We
presently have approximately 12 employees, including production, program management, materials management, engineering, sales, quality,
and administrative and management personnel. We have never experienced work stoppages and we are not a party to any collective bargaining
agreement. We have one employee that works full time in CETY Europe and 1 full time employee in our Electronics Assembly segment.
Government
Regulation
Our
operations are subject to certain foreign, federal, state and local regulatory requirements relating to environmental, waste management,
and health and safety matters. We believe we operate in substantial compliance with all applicable requirements. However, material costs
and liabilities may arise from these requirements or from new, modified or more stringent requirements. Material cost may rise due to
additional manufacturing cost of raw or made parts with the application of new regulations. Our liabilities may also increase due to
additional regulations imposed by foreign, federal, state and local regulatory requirements relating to environmental, waste management,
and health and safety matters. In addition, our past, current and future operations and those of businesses we acquire, may give rise
to claims of exposure by employees or the public or to other claims or liabilities relating to environmental, waste management or health
and safety concerns.
Our
markets can be positively or negatively impacted by the effects of governmental and regulatory matters. We are affected not only by energy
policy, laws, regulations and incentives of governments in the markets into which we sell, but also by rules, regulations and costs imposed
by utilities. Utility companies or governmental entities could place barriers on the installation of our product or the interconnection
of the product with the electric grid. Further, utility companies may charge additional fees to customers who install on-site power generation,
thereby reducing the electricity they take from the utility, or for having the capacity to use power from the grid for back-up or standby
purposes. These types of restrictions, fees or charges could hamper the ability to install or effectively use our products or increase
the cost to our potential customers for using our systems in the future. This could make our systems less desirable, thereby adversely
affecting our revenue and profitability potential. In addition, utility rate reductions can make our products less competitive which
would have a material adverse effect on our future operations. These costs, incentives and rules are not always the same as those faced
by technologies with which we compete. However, rules, regulations, laws and incentives could also provide an advantage to our Heat Recovery
Solutions as compared with competing technologies if we are able to achieve required compliance at a lower cost when our Clean Cycle
TM generators are commercialized. Additionally, reduced emissions and higher fuel efficiency could help our future customers
combat the effects of global warming. Accordingly, we may benefit from increased government regulations that impose tighter emission
and fuel efficiency standards.
Research
and Development
We
had no expenses in Research and Development costs during the years ended December 31, 2019 and 2020.
Description
of Property
We
operate from a 20,000 sq-ft state of the art facility in Costa Mesa, California USA. We have in-house electro-mechanical assembly and
testing capabilities. Our products are compliant with American Society of Mechanical Engineers and are UL and CE approved.
Legal
Proceedings.
From
time to time we may be party to litigation matters occurring in the ordinary course of our business. As of the date hereof, however,
there are no material pending legal or governmental proceedings relating to our Company to which we are a party, and to our knowledge
there are no material proceedings to which any of our directors, executive officers or affiliates are a party adverse to us or which
have a material interest adverse to us.
Directors,
Executive Officers, Promoters and Control Persons
Our
officers and directors are the individuals listed below as of December 31, 2019:
Name
|
|
Age
|
|
Position
|
Kambiz
Mahdi
|
|
56
|
|
President,
CEO, Director
|
Wang
Jun
|
|
54
|
|
Director
|
Lyu
Yongsheng
|
|
68
|
|
Director
|
Calvin
Pang
|
|
36
|
|
Director
|
There
are no family relationships among any of the directors or the executive officer.
Biographical
Information.
Mr.
Kambiz Mahdi, age 56, served as President and Chief Executive Officer of the Company from 1996 until December of 2005 and again
from July 2009 until present. Mr. Mahdi also started Billet Electronics a global supply chain provider of products, services and solutions
in the technology sector in 2007. Mr. Mahdi has a BS degree in Electrical Engineering from California State University of Northridge.
Mr. Mahdi has not served on any other boards of public companies in the past five years.
Our
Board of Directors selected Mr. Mahdi to serve as a director because he is our Chief Executive Officer and has served in various executive
roles with our company for 14 years, with a focus on electrical design & manufacturing, sales and operations and his insight into
the development, marketing, finance, and operations aspects of our company. He has expansive knowledge of engineering and manufacturing
industry and relationships with chief executives and other senior management at technology companies. Our Board of Directors believes
that Mr. Mahdi brings a unique and valuable perspective to our Board of Directors.
Mr.
Jun Wang, age: 54. Mr. Wang, is the current Chairman and Chief Executive Officer of Taiyu (Shenyang) Energy Technology Co., Ltd.
and has held those positions since 2002. From 2008 -2012 Mr. Wang served as Chief Executive Officer and director of SmartHeat, Inc. Prior
to that, he served as an executive at Beijing HTN Pipeline Equipment Co., Ltd. from 2000 to 2002 and Honeywell from 1996 to 1999. Mr.
Wang graduated from Tsinghua University and obtained a master’s degree in engineering. We believe that Mr. Wang is well qualified
to serve as a member of our Board of Directors due to his extensive experience in the clean energy business in China and his ability
to open potential markets to the company in Asia.
Mr.
Yongsheng Lyu. age: 68. Mr. Lyu has acted as an independent project consultant for Taiyu (Shenyang) Energy Technology Co., Ltd.
since 2009. From 2003 to 2009, he served as the Executive Director of the Mianyang City Civil Aviation Administration Greening Company.
From 1996 to 2003, he was the General Manager of Mianyang Township Enterprise Supply and Marketing Corporation. Mr. Lyu graduated from
Jilin University with a bachelor’s degree in engineering. We believe that Mr. Lyu is well qualified to serve as a member of our
Board of Directors due to his extensive experience in engineering, sales and marketing and his ability to assist the company in expanding
its markets into Asia.
Mr.
Calvin Pang. age: 36. Since 2015 Mr. Pang has been the Managing Director of Megawell Capital Limited. From 2007 to 2015, he was
a banker at UBS AG managing portfolios of Hong Kong and China based investors. Mr. Pang graduated from the Olin School of Business at
Washington University in St. Louis with a bachelor’s degree in business and finance. We believe that Mr. Pang is well qualified
to serve as a member of our Board of Directors due to his extensive experience in U.S. and Asian corporate finance and may assist us
in developing relationships with financial institutions.
Each
director holds office until the earlier of his or her death, resignation, removal from office by the stockholders, or his or her respective
successor is duly elected and qualified. There are no arrangements or understandings between any of our nominees or directors and any
other person pursuant to which any of our nominees or directors have been selected for their respective positions. No nominee or director
is related to any executive officer or any other nominee or director.
Corporate
Governance
Director
Attendance at Meetings of the Board of Directors
Our
Board of Directors held 4 meetings during the fiscal year ended December 31, 2020. Each of our incumbent directors attended at least
75.0% of the aggregate total number of meetings of our Board of Directors held during the period for which he served as a director.
Director
Attendance at Annual Meetings of the Shareholders
Although
we have no policy with regard to attendance by the members of our Board of Directors at our annual meetings, we invite and encourage
the members of our Board of Directors to attend our annual meetings to foster communication between Shareholders and our Board of Directors.
We did not hold an annual meeting in 2020.
Stockholder
Communication with the Board of Directors
Any
stockholder who desires to contact members of our Board of Directors, or a specified committee of our Board of Directors, may do so by
writing to: Clean Energy Technologies, Inc., Board of Directors, 2990. Redhill Ave, Costa Mesa, California 92626, Attention: Secretary.
Communications received will be distributed by our Secretary to such member or members of our Board of Directors as deemed appropriate
by our Secretary, depending on the facts and circumstances outlined in the communication received.
Director
Independence
We
had a four-member Board of Directors in 2020 of which two members are independent directors.
Committees
of our Board of Directors
We
have no standing committees of our Board of Directors at the current time, which is due to the size of our operations. From time to time,
our Board of Directors may establish committees it deems appropriate to address specific areas in more depth than may be possible at
a full Board of Directors meeting. As our Company grows, we plan to establish an audit committee, compensation committee and nominating
and corporate governance committee. The functions that these committees will perform are currently being performed by our Board of Directors.
Director
Nomination Procedures and Diversity
As
outlined above, in selecting a qualified nominee, our Board of Directors considers such factors as it deems appropriate, which may include:
the current composition of our Board of Directors; the range of talents of a nominee that would best complement those already represented
on our Board of Directors; the extent to which a nominee would diversify our Board of Directors; a nominee’s standards of integrity,
commitment and independence of thought and judgment; a nominee’s ability to represent the long-term interests of our shareholders
as a whole; a nominee’s relevant expertise and experience upon which to be able to offer advice and guidance to management; a nominee
who is accomplished in his or her respective field, with superior credentials and recognition; and the need for specialized expertise.
While we do not have a formal diversity policy, we believe that the backgrounds and qualifications of our directors, considered as a
group, should provide a significant composite mix of experience, knowledge and abilities that will allow our Board of Directors to fulfill
its responsibilities. Applying these criteria, our Board of Directors considers candidates for membership on our Board of Directors suggested
by its members, as well as by our Shareholders. Members of our Board of Directors annually review our Board of Directors’ composition
by evaluating whether our Board of Directors has the right mix of skills, experience and backgrounds.
Our
Board of Directors may also consider an assessment of its diversity, in its broadest sense, reflecting, but not limited to, age, geography,
gender and ethnicity.
Our
Board of Directors identifies nominees by first evaluating the current members of our Board of Directors willing to continue in service.
Current members of our Board of Directors with skills and experience relevant to our business and who are willing to continue in service
are considered for re-nomination. If any member of our Board of Directors does not wish to continue in service or if our Board of Directors
decides not to nominate a member for re-election, our Board of Directors will review the desired skills and experience of a new nominee
in light of the criteria set forth above.
Our
Board of Directors also considers nominees for our Board of Directors recommended by Shareholders. Notice of proposed stockholder nominations
for our Board of Directors must be delivered in accordance with the requirements set forth in our bylaws and SEC Rule 14a-8 promulgated
under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Nominations must include the full name of the proposed nominee,
a brief description of the proposed nominee’s business experience for at least the previous five years and a representation that
the nominating stockholder is a beneficial or record owner of our common stock. Any such submission must be accompanied by the written
consent of the proposed nominee to be named as a nominee and to serve as a director if elected. Nominations should be delivered to: Clean
Energy Technologies, Inc., Board of Directors, 2990. Redhill Ave, Costa Mesa, California 92626, Attention: Chief Executive Officer.
Our
Board of Directors will recommend the slate of directors to be nominated for election at the annual meeting of shareholders. We have
not and do not currently employ or pay a fee to any third party to identify or evaluate, or assist in identifying or evaluating, potential
director nominees.
Board
of Directors Role in Risk Oversight
Our
Board of Directors oversees our shareholders’ interest in the long-term success of our business strategy and our overall financial
strength.
Our
Board of Directors is actively involved in overseeing risks associated with our business strategies and decisions. It does so, in part,
through its approval of all acquisitions and business-related investments and all assumptions of debt, as well as its oversight of our
executive officers pursuant to annual reviews. Our Board of Directors is also responsible for overseeing risks related to corporate governance
and the selection of nominees to our Board of Directors.
In
addition, the Board reviews the potential risks related to our financial reporting. The Board meets with our Chief Financial Officer
and communicates with representatives of our independent registered public accounting firm on a quarterly basis to discuss and assess
the risks related to our internal controls. Additionally, material violations of our Code of Ethics and related corporate policies are
reported to our Board of Directors.
Code
of Business Conduct and Ethics
We
have adopted our Code of Ethics, which contains general guidelines for conducting our business and is designed to help our directors,
employees and independent consultants resolve ethical issues in an increasingly complex business environment. Our Code of Ethics applies
to our Principal Executive Officer, Principal Financial Officer, and persons performing similar functions and all members of our Board
of Directors. Our Code of Ethics covers topics including, but not limited to, conflicts of interest, confidentiality of information,
and compliance with laws and regulations. Shareholders may request a copy of our Code of Ethics, which will be provided without charge,
by writing to: Clean Energy Technologies, Inc., Board of Directors, 2990. Redhill Ave, Costa Mesa, California 92626; Attention: Chief
Executive Officer.
Compensation
of Directors
The
key objective of our non-employee directors’ compensation program is to attract and retain highly qualified directors with the
necessary skills, experience and character to oversee our management. We currently use equity-based compensation to compensate our directors
due to our restricted cash flow position; however, we may in the future provide cash compensation to our directors. The use of equity-based
compensation is designed to recognize the time commitment, expertise and potential liability relating to active Board service, while
aligning the interests of our Board of Directors with the long-term interests of our shareholders.
In
addition to the compensation provided to our non-employee director, which is detailed below, each non-employee director is reimbursed
for any reasonable out-of-pocket expenses incurred in connection with attending in-person meetings of the Board of Directors and Board
committees, as well for any fees incurred in attending continuing education courses for directors.
Fiscal
Years 2020 and 2019 Annual Cash Compensation
We
currently do not provide cash compensation to our directors and as such did not provide any cash compensation during the years ended
December 31, 2020 and 2019.
Fiscal
Years 2020 and 2019 Equity Compensation
Yearly
Restricted Share Awards
Under
the terms of the discretionary restricted share unit grant provisions of our 2006 Incentive Stock Plan and our 2011 Omnibus Incentive
Plan, which we refer to as the 2006 Plan and 2011 Plan, respectively, each non-employee director is eligible to receive grants of restricted
common stock share awards at the discretion of our Board of Directors. These yearly restricted share unit awards vest in full on the
grant date.
For
the year ended December 31, 2020 there were no stock options granted.
Discretionary
Grants
Under
the terms of the discretionary option grant provisions of the 2006 Plan and the 2011 Plan, non-employee directors are eligible to receive
stock options or other stock awards granted at the discretion of the Board of Directors. No director received stock awards pursuant to
the discretionary grant program during fiscal year 2020 or 2019.
Director
Summary Compensation in Fiscal Years 2020 and 2019
The
following table sets forth the fiscal years 2020, and 2019 compensation for our non-employee directors.
Name
|
|
|
Fees
Earned or Paid in
Cash ($) (1)
|
|
|
|
Stock
Awards ($) (2)
|
|
|
|
Total
($)
|
|
Calvin Pang 2020
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Calvin Pang 2019
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jun Wang 2020
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Jun Wang 2019
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yongsheng Lyu 2020
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Yongsheng Lyu 2019
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Change
of Control and Termination Provisions
None.
Family
Relationship
We
currently do not have any officers or directors of our Company who are related to each other.
Involvement
in Certain Legal Proceedings
During
the past ten years no director, executive officer, promoter or control person of the Company has been involved in the following:
|
(1)
|
A
petition under the Federal bankruptcy laws or any state insolvency law which was filed by or against, or a receiver, fiscal agent
or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general
partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive
officer at or within two years before the time of such filing;
|
|
(2)
|
Such
person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations
and other minor offenses);
|
|
(3)
|
Such
person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:
|
|
i.
|
Acting
as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage
transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the
foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee
of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice
in connection with such activity;
|
|
ii.
|
Engaging
in any type of business practice; or
|
|
iii.
|
Engaging
in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal
or State securities laws or Federal commodities laws;
|
|
(4)
|
Such
person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State
authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described
in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity;
|
|
(5)
|
Such
person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State
securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended,
or vacated;
|
|
(6)
|
Such
person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated
any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not
been subsequently reversed, suspended or vacated;
|
|
(7)
|
Such
person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not
subsequently reversed, suspended or vacated, relating to an alleged violation of:
|
|
i.
|
Any
Federal or State securities or commodities law or regulation; or
|
|
ii.
|
Any
law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent
injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal
or prohibition order; or
|
|
iii.
|
Any
law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
|
|
(8)
|
Such
person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory
organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26), any registered entity (as defined in Section
1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29), or any equivalent exchange, association, entity or organization that
has disciplinary authority over its members or persons associated with a member.
|
Executive
Compensation.
The
following table sets forth the fiscal year 2020 and 2019 compensation for:
|
●
|
Kambiz
Mahdi, our Chief Executive Officer;
|
|
|
|
|
●
|
Calvin
Pang our Chief Financial Officer and
|
|
|
|
|
●
|
John
Bennett, our Former Chief Financial Officer
|
The
executive officers included in the Summary Compensation Table are referred to in this Form 10K as our named executive officers. A detailed
description of the plans and programs under which our named executive officers received the following compensation can be found in the
section entitled “Compensation Discussion and Analysis.”
Summary
Compensation Table
Name
and Principal
|
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
Stock Awards
|
|
|
Option Awards
|
|
|
Non-equity Incentive Plan Compensation
|
|
|
Change in Pension Value and Nonqualified
Deferred Compensation Earnings
|
|
|
All Other Compensation
|
|
|
Total
|
|
Position
|
|
Year
|
|
|
($)
|
|
|
($)(3)
|
|
|
($)(4)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
Kambiz Mahdi (1)
|
|
|
2020
|
|
|
$
|
275,000
|
|
|
$
|
-
|
|
|
|
310,760
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
585,760
|
|
Chief Executive Officer
|
|
|
2019
|
|
|
$
|
275,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
275,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Bennett (2)
|
|
|
2020
|
|
|
$
|
43,750
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
43,750
|
|
Chief Financial Officer
|
|
|
2019
|
|
|
$
|
171,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
171,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calvin Pang
|
|
|
2020
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1)
|
On
October 18, 2018 we entered into an at will employment agreement with Mr. Mahdi, with an annual salary of $275,000. This agreement
may be terminated at any time. In addition as part of the agreement Mr. Mahdi was to be issued 20,000,000 shares of our common stock,
as additional compensation. As a result; for the year ended December 31, 2018 we accrued for and subsequently on February 13, 2019,
issued 20,000,000 shares at a purchase price of $.0131 per share to Mr. Mahdi in the amount of $262,000.
|
|
2)
|
On
May 1, 2019 we entered into an employment agreement with Mr. Bennett, with an annual salary of $175,000. Subsequently on March 9,
2020, John Bennett notified us of his resignation from his position as the Company’s Chief Financial Officer, effective March
9, 2020. Mr. Bennett will remain as a consultant to the Company and assist with maintaining the financial books and records of the
Company.
|
|
3)
|
There
were no bonuses paid or accrued for any executives for fiscal years 2020 and 2019.
|
Outstanding
Equity Awards at 2020 Fiscal Year-End
There
are no outstanding options or stock awards held by our named executive officers as of December 31, 2020.
Executive
Employment Agreements
On
October 1, 2015 we entered into a new employment agreement with Mr. Mahdi for 2 years with an annual salary of $275,000. In addition,
Mr. Mahdi will receive a severance benefit consisting of a single lump sum cash payment equal the salary that Mr. Mahdi would have been
entitled to receive through the remainder or the Employment Period or (1) year, whichever is greater. Mr. Mahdi employment contract expired
on October 1, 2018.
On
October 18, 2018 we entered into an at-will employment agreement with Mr. Mahdi, with an annual salary of $275,000. This agreement may
be terminated at any time. In addition as part of the agreement Mr. Mahdi was to be issued 20,000,000 shares of our common stock, as
additional compensation.
Mr.
Bennett will receive an annual compensation of $140,000 per year, subject to annual increases based on the greater of the consumer price
index or 5.0% to take into account annual cost of living increases and also subject to such increases as may from time to time be determined
by the Board of the Directors of the Company. Mr. Bennett will also receive a severance benefit consisting of a single lump sum cash
payment equal the salary that Mr. Bennett would have been entitled to receive through the remainder or the Employment Period or two (2)
years, whichever is greater. On September 1, 2017 Mr. Bennett’s employment agreement automatically renewed for an additional five
years. On May 1, 2019 we entered into an employment agreement with Mr. Bennett, with an annual salary of $175,000. Subsequently on March
9, 2020, John Bennett notified us of his resignation from his position as the Company’s Chief Financial Officer, effective March
9, 2020. Mr. Bennett will remain as a consultant to the Company and assist with maintaining the financial books and records of the Company.
Mr.
Pang has no employment agreement and does not receive a salary for his work as Chief Financial Officer.
Potential
Payments upon Termination or Change of Control
Severance
Benefits
Mr.
Mahdi will receive a severance benefit consisting of a single lump sum cash payment equal the salary that Mr. Mahdi would have been entitled
to receive through the remainder or the Employment Period or One (1) year, whichever is greater.
Security Ownership of Certain Beneficial Owners and Management
The
following table shows, as of September 7, 2021 the number of shares of our common stock beneficially owned by (1) any person who is known
by us to be the beneficial owner of more than 5.0% of the outstanding shares of our common stock; (2) our directors and former directors;
(3) our named executive officers; and (4) all of our directors and executive officers as a group. The percentage of common stock beneficially
owned is based on 922,792,698 shares of our common stock outstanding. Beneficial ownership is determined in accordance with the rules
of the SEC and generally includes securities over which a person has voting or investment power and securities that a person has the
right to acquire within 60 days. Unless otherwise provided, the address of each beneficial owner listed is c/o Clean Energy Technologies,
Inc., Board of Directors, 2990. Redhill Ave, Costa Mesa, California 92626. We need to footnote how the voting rights are allocated and
add them to the number of shares.
Name
of Beneficial Owners (1)
|
|
Number
of Shares
of Common Stock Beneficially Owned
|
|
|
Percentage
|
|
|
|
|
|
|
|
|
5%
Holders
|
|
|
|
|
|
|
|
|
MGW
Investments I Limited
|
|
|
949,705,504
|
|
|
|
66.83
|
%
|
ETI
Partners IV LLC
|
|
|
57,380,323
|
|
|
|
6.22
|
%
|
|
|
|
|
|
|
|
|
|
Officers
and Directors
|
|
|
|
|
|
|
|
|
Calvin
Pang(2)
|
|
|
949,705,504
|
|
|
|
66.83
|
%
|
Kambiz
Mahdi – Director and CEO (3)
|
|
|
67,701,618
|
|
|
|
7.34
|
%
|
All
directors and officers as a group
|
|
|
1,017,407,122
|
|
|
|
74.17
|
%
|
1)
Conversion to shares of Common Stock is calculated based on 58% of the lowest closing bid price of our common stock for the 15 days ended
on September 7, 2021, or $.0475 per share.
2)
Calvin Pang has voting and investment power over all of our common stock held by MGW Investment I Limited (“MGWI”). MGWI
holds 470,462,668 shares of common stock, convertible promissory notes which can be converted into 479,242,837 shares of Common Stock.
3)
The shares of common stock are held directly by the Kambiz and Bahareh Mahdi Living Trust and indirectly by Kambiz Mahdi and Bahareh
Mahdi as Trustees.
Certain
Relationships and Related Transactions, and Director Independence.
Director
Independence
The
common stock of the Company is currently quoted on the OTCQB, quotation system which currently do not have director independence requirements.
On an annual basis, each director and executive officer will be obligated to disclose any transactions with the Company in which a director
or executive officer, or any member of his or her immediate family, have a direct or indirect material interest in accordance with Item
407(a) of Regulation S-K. Following completion of these disclosures, the Board will make an annual determination as to the independence
of each director using the current standards for “independence” that satisfy the criteria as that term is defined in Rule
5605(a)(2) of the NASDAQ listing standards.
As
of March 31, 2020, the Board determined that the following directors are independent under these standards:
Jun
Wang
Yongsheng
Lyu
Review
of Related Person Transactions
Our
Code of Business Conduct and Ethics provides guidance for addressing actual or potential conflicts of interests, including those that
may arise from transactions and relationships between us and our executive officers or directors, such as:
|
●
|
Business
transaction between the company and any executive are prohibited, unless otherwise approved by the Board;
|
|
●
|
Activities
that may interfere with an executive’s performance in carrying out company responsibilities;
|
|
●
|
Activities
that call for the use of the company’s influence, resources or facilities; and
|
|
●
|
Activities
that may discredit the name or reputation of the company.
|
We
have various procedures in place to identify potential related person transactions, and the Board of Directors and a separate compliance
committee work together in reviewing and considering whether any identified transactions or relationships are covered by the Code of
Business Conduct and Ethics.
Transactions
with Related Persons
Except
as set forth in note 12 in the Notes to the Financial Statements which discusses transactions with related parties and is incorporated
by reference herein, none of the Company’s directors or officers, nor any person who beneficially owns, directly or indirectly,
shares carrying more than 10% of the voting rights attached to the Company’s shares, nor any relative or spouse of any of the foregoing
persons, has had any material interest, direct or indirect, in any transaction to which the Company was a party, and in which the amount
involved exceeds the lesser of (i) $120,000 or (ii) one percent of the average of the Company’s total assets at year-end for the
last two completed fiscal years.
Management’s
Discussion and Analysis of Financial Condition and Results of Operations
This
Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements
that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity,
performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed,
or implied, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should,
could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those
terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our
actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results
may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update
publicly any forward-looking statements for any reason.
Summary
of Operating Results the three and six months Ended June 30, 2021 Compared to the same period in 2020
Going
Concern
The
financial statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets
and liquidation of liabilities in the normal course of business. The Company had a total stockholder’s deficit of $2,394,794 and
a working capital deficit of $3,378,663 as of June 30, 2021. The company also had an accumulated deficit of $16,814,754 as of June 30,
2021. Therefore, there is doubt about the ability of the Company to continue as a going concern. There can be no assurance that the Company
will achieve its goals and reach profitable operations and is still dependent upon its ability (1) to obtain sufficient debt and/or equity
capital and/or (2) to generate positive cash flow from operations.
The
three months ended June 30, 2021; we had a net loss of $231,856 compared to a net loss of $229,502 for the same period in 2020. For the
three months ended June 30, 2021; our revenue was $155,884 compared to $155,997 for the same period in 2020. For the three months ended
June 30, 2021, our gross margin was 68% compared to 40% for the same period in 2020. For the three months ended June 30, 2021, our operating
expense was $602,261 compared to $491,537 for the same period in 2020. For the three months ended June 30, 2021; we had a loss from operations
of $495,733 compared to a net loss from operations of 428,870 for the same period in 2020.
The
Six months ended June 30, 2021; we had a net profit of $836,728 compared to a net loss of $543,077 for the same period in 2020. The increase
in the net profit in 2021 was mainly due to the increase in gain on derivative in 2021, for the six months ended June 30, 2021; our revenue
was $291,158 compared to $1014,812 for the same period in 2020. For the six months ended June 30, 2021, our gross margin was 75% compared
to 57% for the same period in 2020. For the six months ended June 30, 2021, our operating expense was $1,081,209 compared to $967,747
for the same period in 2020. For the six months ended June 30, 2021; we had a loss from operations of $862,670 compared to a net loss
from operations of 389,542 for the same period in 2020.
See
note 1 to the notes to the financial statements for a discussion on critical accounting policies
RELATED
PARTY TRANSACTIONS
See
note 12 to the notes to the financial statements for a discussion on related party transaction
Results
the three and six months Ended June 30, 2021, Compared to the three and six months ended June 30, 2020
Net
Sales
The
Company has three reportable segments: Clean Energy HRS (HRS), Cety Europe and the legacy engineering and manufacturing services division
(Electronic Assembly).
Segment
breakdown
The
six months ended June 30, 2021, our revenue from Engineering and Manufacturing was $41,223 compared to $250,854 for the same period in
2020. The decrease was due to shift of focus on the heat recovery solution business and manufacturing.
The
six months ended June 30, 2021, our revenue from HRS was $88,807 compared to $749,034 for the same period in 2020. This decrease was
mainly caused by delays in execution of orders and contracts as a result of the pandemic.
The
six months ended June 30, 2021, our revenue from CETY Europe was $161,128 compared to $14,924 for the same period in 2020. This increase
was mainly due to the overall increase in the service revenue and equipment sale.
Gross
Profit
The
three months ended June 30, 2021; our gross profits were $106,528 compared to $62,667 for the same period in 2020. Our gross profits
could vary from period to period and is affected by several factors, including, production and supply change efficiencies, material costs,
and logistics.
Segment
breakdown
The
six months ended June 30, 2021, our gross profit from Engineering and Manufacturing was $29,683 compared to $83,723 for the same period
in 2020.
The
six months ended June 30, 2021, our gross profit from HRS was $62,802 compared to $486,585, for the same period in 2020. The decrease
from the HRS segment was mainly due to no revenue in the first quarter of 2021.
The
six months ended June 30, 2021, our gross profit from CETY Europe was $126,054 compared to $7,898 for the same period in 2020. This increase
was mainly due to the overall increase in the service revenue and additional customers.
Selling,
General and Administrative (SG&A) Expenses
The
three months ended June 30, 2021; our SG&A expense was $211,673 compared to $155,576 for the same period in 2020.
Salaries
Expense
The
three months ended June 30, 2021; our Salaries expense was $225,104 compared to $176,215 for the same period in 2020.
Travel
Expense
The
three months ended June 30, 2021; our travel expense was $25,339 compared to $11,658 for the same period in 2020.
Professional
fees Expense
The
three months ended June 30, 2021; our Professional fees expense was $49,373 compared to $55,476 for the same period in 2020.
Facility
Lease and Maintenance Expense
The
three months ended June 30, 2021; our Facility Lease and maintenance expense was $82,699 compared to $83,181 for the same period in 2020.
Depreciation
and Amortization Expense
The
three months ended June 30, 2021, our depreciation and amortization expense was $8073 compared to $9,443 for the same period in 2020,
which remained relatively unchanged.
Change
in Derivative Liability
The
three months ended June 30, 2021; we had a loss on derivative liability of $3,804 compared to a gain of $250,353 for the same period
in 2020.
Gain
on debt settlement
The
three months ended June 30, 2021 we recognized a gain on debt settlement in the amount of $368,098 compared to $217,644 for the three
months ended June 30, 2020.
Interest
and Finance Fees
The
three months ended June 30, 2021 interest and finance fees were $100,417 compared to $268,629 for the same period in 2020.
Net
Income / Loss
The
three months ended June 30, 2021; our net loss was $231,856 compared to net loss of $229,502 for the same period in 2020. This increase
was primarily due to the gain on derivative liability in 2021.
Selling,
General and Administrative (SG&A) Expenses
The
six months ended June 30, 2021; our SG&A expense was $340,521 compared to $251,296 for the same period in 2020.
Salaries
Expense
The
six months ended June 30, 2021; our Salaries expense was $433,069 compared to $385,762 for the same period in 2020.
Travel
Expense
The
six months ended June 30, 2021; our travel expense was $40,354 compared to $40,816 for the same period in 2020.
Professional
fees Expense
The
six months ended June 30, 2021; our Professional fees expense was $82,209 compared to $77,351 for the same period in 2020.
Facility
Lease and Maintenance Expense
The
six months ended June 30, 2021; our Facility Lease and maintenance expense was $168,910 compared to $193,636 for the same period in 2020.
Depreciation
and Amortization Expense
The
six months ended June 30, 2021, our depreciation and amortization expense was $16,146 compared to $18,886 for the same period in 2020.
Change
in Derivative Liability
The
six months ended June 30, 2021; we had a gain on derivative liability of $1,745,369 compared to a gain of $119,359 for the same period
in 2020.
Gain
on debt settlement
The
six months ended June 30, 2021 we recognized a gain on debt settlement in the amount of $368,098 compared to $239,865 for the same period
in 2020.
Interest
and Finance Fees
The
six months ended June 30, 2021 interest and finance fees were $414,069 compared to $512,759 for the same period in 2020.
Net
Income / Loss
The
six months ended June 30, 2021; our net profit was $836,728 compared to net loss of $543,077 for the same period in 2020. This increase
was primarily due to the gain on derivative liability in 2021.
Liquidity
and Capital Resources
Clean
Energy Technologies, Inc.
Condensed
Consolidated Statements of Cash Flows
The
six months ended June 30, 2021
|
|
2021
|
|
|
2020
|
|
Net Cash provided / (Used) In Operating
Activities
|
|
$
|
(1,598,764
|
)
|
|
$
|
(414,393
|
)
|
Cash Flows Used In Investing Activities
|
|
|
-
|
|
|
|
-
|
|
Cash Flows Provided / (used) By Financing Activities
|
|
|
3,226,717
|
|
|
|
413,894
|
|
Net (Decrease) Increase in Cash and Cash Equivalents
|
|
$
|
1,627,953
|
|
|
$
|
(499
|
)
|
On
February 25 and 26, 2021, and March 2, 2021, the Company completed public and private financing of an aggregate of $2,570,000. The Company
plans to utilize up to $2,000,000 for two joint ventures or direct investments, to enter the China market. One joint venture is to establish
an engineering company based in Chengdu to promote distributed power and clean energy design and the other is a natural gas company joint
venture based in Shenzhen. On March 24, 2021, April 30, 2021, and May 5, 2021, the Company transferred $1,500,000, in connection with
its obligations to these ventures pending execution of definitive documents.
Capital
Requirements for long-term Obligations
None.
Summary
of Operating Results for the Year Ended December 31, 2020 Compared to the Year Ended December 31, 2019
Going
Concern
The
financial statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets
and liquidation of liabilities in the normal course of business. The Company had a total stockholder’s deficit of $7,238,572 and
a working capital deficit of $8,329,782 and a net loss of $3,435,764 for the year ended December 31, 2020. $1,270,099 of this loss was
due to the adjustment to the derivative liability, and $1,329,230 was due to interest and finance fees. The company also had an accumulated
deficit of $17,651,482 as of December 31, 2020 and used $1,392,812 in net cash from operating activities for the year ended December
31, 2020. Therefore, there is doubt about the ability of the Company to continue as a going concern. There can be no assurance that the
Company will achieve its goals and reach profitable operations and is still dependent upon its ability (1) to obtain sufficient debt
and/or equity capital and/or (2) to generate positive cash flow from operations.
For
the year ended December 31, 2020, we had a net loss of $3,435,764 compared to a net loss of $2,555,983 for the same period in 2019. The
increase in the net loss in 2020 was mainly due to the increase change in derivative liability associated with the convertible debt.
$1,270,099 of this loss was due to the adjustment to the derivative liability, the increase in the bad debt expense, due to the reserve
allowance booked of $247,500 for the long-term financing receivables and $1,329,230 was due to interest and finance fees. For the year
ended December 31, 2020, our revenue was $1,406,005 compared to $1,610,008 for the same period in 2019. This decrease was due to the
global pandemic. For the year ended December 31, 2020, our cost of goods sold was 47% compared to 59% for the same period in 2019, mainly
due to the decrease in material cost and efficiencies in operational activities. For the twelve months ended December 31, 2020, our gross
margin was 53% compared to 41% for the same period in 2019. For the twelve months ended December 31, 2020, our operating expense was
$1,986,684 compared to $2,111,835 for the same period in 2019. For the year ended December 31, 2020, we had a net loss from operations
of $1,235,616 compared to $1,454,609 for the same period in 2019. Our total stockholder’s equity decreased by $1,986,094 resulting
in shareholder deficit of $7,238,572 as of December 31, 2020. As of December 31, 2020, we had a working capital deficit of $9,422,404
compared to working capital deficit of 6,785,689 as of December 31,2019.
See
note 2 to the notes to the financial statements for a discussion on critical accounting policies
RELATED
PARTY TRANSACTIONS
See
note 12 to the notes to the financial statements for a discussion on related party transaction
Results
for the Year Ended December 31, 2020 Compared to the Year Ended December 31, 2019
Net
Sales
For
the year ended December 31, 2020, our total revenue was $1,406,005 compared to $1,610,008 for the same period in 2018. The Company has
three reportable segments: Clean Energy HRS (HRS), Cety Europe and the legacy electronic manufacturing services division.
Segment
breakdown
For
the year ended December 31, 2020, our revenue from Engineering and Manufacturing was $422,630 compared to $513,919 for the same period
in 2019. The decrease was mainly due to the COVID 19 pandemic.
For
the year ended December 31, 2020, our revenue from HRS was $930,882 compared to $1,012,895 for the same period in 2019. The decrease
was mainly due to the COVID 19 pandemic.
For
the year ended December 31, 2020, our revenue from Cety Europe was $52,492 compared to $83,194 for the same period in 2019. The decrease
was mainly due to the COVID 19 pandemic.
Gross
Profit
For
the year ended December 31, 2020, our gross profits increased to $751,068 (53%) from $657,226 (41%) for the same period in 2019. Our
gross profits could vary from period to period and is affected by a number of factors, including, production and supply change efficiencies,
material costs, and logistics.
Segment
breakdown
For
the year ended December 31, 2020, our gross profit from Engineering and Manufacturing was $118,412 compared to $150,741 for the same
period in 2019. This decrease from the Electronic Assembly Segment was mainly due decrease in volume.
For
the year ended December 31, 2020, our gross profit from HRS was $581,903 compared to $428,445 for the same period in 2019. The increase
from the HRS segment was mainly due to lower cost of materials in 2020 and operational efficiencies.
For
the year ended December 31, 2020, our gross profit from CETY Europe was $50,753 compared to $78,040 for the same period in 2018. The
decrease was due to the decrease in revenue in 2020.
Selling,
General and Administrative (SG&A) Expenses
For
the year ended December 31, 2020, our SG&A expense was $480,812 compared to $382,871 for the same period in 2019.
Salaries
Expense
For
the year ended December 31, 2020, our Salaries expense was $495,269 compared to $802,951 for the same period in 2019. This decrease was
due to the reduction in a couple of key personnel and related payroll taxes.
Travel
Expense
For
the year ended December 31, 2020, our travel expense was $86,292 compared to $246,078 for the same period in 2019. The decrease was mainly
due to the COVID 19 pandemic.
Facility
Lease Expense
For
the year ended December 31, 2020, our Facility Lease expense was $363,643 compared to $305,883 for the same period in 2019. This increase
was due to the increase in our Costa Mesa facility Lease.
Depreciation
and Amortization Expense
For
the year ended December 31, 2020, our depreciation and amortization expense was $32,912 compared to $41,437 for the same period in 2019,
due to assets being fully depreciated.
Professional
fees Expense
For
the year ended December 31, 2020, our Professional fees expense was $111,318 compared to $130,709 for the same period in 2019. The decrease
was mainly due to the decrease in legal fees associated with our 1A registration in 2019.
Consulting
Expense
For
the year ended December 31, 2020, our Consulting expense was $157,149 compared to $73,443 for the same period in 2019, the increase was
due to the increased use of outside consultants due to the reduction of payroll personnel.
Bad
Debt Expense
For
the year ended December 31, 2020, our bad debt expense was $259,289 compared to $128,463 for the same period in 2018. This increase was
mainly due to the increase in our allowance account related to our long-term financing receivables.
Net
(Loss) from operations
For
the year ended December 31, 2020, our net loss from operations was $1,235,616 compared to net loss from operations of $1,454,609 for
the same period in 2019. This decrease was primarily due to the overall reduction in expenses and increased efficiency in 2020.
Change
in Derivative Liability
For
the year ended December 31, 2020, we had a loss on derivative liability of $1,270,099 compared to a gain of $216,269 for the same period
in 2019.
Gain
on debt settlement and write off
For
the year ended December 31, 2020 we recognized a gain on debt settlement of $399,181 compared to $0 for the year ended December 31, 2019.
Interest
and Finance Fees
For
the year ended December 31, 2020 interest and finance fees were $1,329,230 compared to $1,317,643 for the same period in 2019. The decrease
was mainly due to the decrease in the amortization of the debt discount derived from the beneficial conversion features.
Net
Income / Loss
For
the year ended December 31, 2020, our net loss was $3,435,764 compared to net loss of $2,555,983 for the same period in 2019. This decrease
was primarily due to the change in derivative liability in 2020.
Liquidity
and Capital Resources
Clean
Energy Technologies, Inc.
Condensed
Consolidated Statements of Cash Flows
For
the years ended December 31,
|
|
2020
|
|
|
2019
|
|
Net
Cash provided / (Used) In Operating Activities
|
|
$
|
(1,430,395
|
)
|
|
$
|
(2,224,168
|
)
|
Cash
Flows Used In Investing Activities
|
|
|
-
|
|
|
|
(8,000
|
)
|
Cash
Flows Provided / (used) By Financing Activities
|
|
|
1,837,784
|
|
|
|
2,233,118
|
|
Net
(Decrease) Increase in Cash and Cash Equivalents
|
|
$
|
407,479
|
|
|
$
|
950
|
|
Capital
Requirements for long-term Obligations
None.
INDEX
TO FINANCIAL STATEMENTS
Audited
Financial Statements:
Clean
Energy Technologies, Inc.
Consolidated
Balance Sheet
|
|
Unaudited
June 30, 2021
|
|
|
December 31, 2020
|
|
Assets
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
2,042,838
|
|
|
$
|
414,885
|
|
Accounts receivable - net
|
|
|
298,758
|
|
|
|
265,738
|
|
Lease receivable asset
|
|
|
217,584
|
|
|
|
217,584
|
|
Inventory
|
|
|
727,905
|
|
|
|
557,820
|
|
Total Current Assets
|
|
|
3,287,085
|
|
|
|
1,456,027
|
|
Property and Equipment - Net
|
|
|
43,224
|
|
|
|
53,432
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
747,976
|
|
|
|
747,976
|
|
Long term financing receivables - (net)
|
|
|
752,500
|
|
|
|
752,500
|
|
License
|
|
|
354,322
|
|
|
|
354,322
|
|
Patents
|
|
|
121,507
|
|
|
|
127,445
|
|
Right of use asset - long term
|
|
|
506,025
|
|
|
|
606,569
|
|
Other Assets
|
|
|
25,401
|
|
|
|
25,400
|
|
Total Non Current assets
|
|
|
2,550,955
|
|
|
|
2,667,644
|
|
Total Assets
|
|
$
|
5,838,040
|
|
|
$
|
4,123,671
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ (Deficit)
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
Bank Overdraft
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
1,222,027
|
|
|
|
1,544,544
|
|
Accrued Expenses
|
|
|
138,877
|
|
|
|
503,595
|
|
Customer Deposits
|
|
|
112,730
|
|
|
|
82,730
|
|
Warranty Liability
|
|
|
100,000
|
|
|
|
100,000
|
|
Deferred Revenue
|
|
|
33,000
|
|
|
|
33,000
|
|
Derivative Liability
|
|
|
263,433
|
|
|
|
2,008,802
|
|
Facility Lease Liability - current
|
|
|
208,652
|
|
|
|
249,132
|
|
Line of Credit
|
|
|
1,232,293
|
|
|
|
1,680,350
|
|
Notes payable - GE
|
|
|
2,470,116
|
|
|
|
2,442,154
|
|
Convertible Notes Payable (net of discount of $0 and $170,438 respectively)
|
|
|
284,545
|
|
|
|
541,426
|
|
Related Party Notes Payable
|
|
|
600,075
|
|
|
|
600,075
|
|
Total Current Liabilities
|
|
|
6,665,748
|
|
|
|
9,785,809
|
|
Long-Term Debt:
|
|
|
|
|
|
|
|
|
Notes Payable PPL
|
|
|
201,471
|
|
|
|
110,700
|
|
Related Party Notes Payable
|
|
|
1,049,987
|
|
|
|
1,092,622
|
|
Facility Lease Liability - long term
|
|
|
315,628
|
|
|
|
373,112
|
|
Net Long-Term Debt
|
|
|
1,567,086
|
|
|
|
1,576,434
|
|
Total Liabilities
|
|
|
8,232,834
|
|
|
|
11,362,243
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ (Deficit)
|
|
|
|
|
|
|
|
|
Preferred D stock, stated value $100 per share; 20,000 shares authorized; 7,500 shares and 7,500 shares issued and 0 and 4,500 outstanding as of June 30, 2021 and December 31, 2020, respectively
|
|
|
-
|
|
|
|
450,000
|
|
Common stock, $.001 par value; 2,000,000,000 shares authorized; 921,650,238 and 821,169,656 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively
|
|
|
921,650
|
|
|
|
821,171
|
|
Shares to be issued
|
|
|
-
|
|
|
|
61,179
|
|
Additional paid-in capital
|
|
|
13,498,310
|
|
|
|
9,080,560
|
|
Accumulated deficit
|
|
|
(16,814,754
|
)
|
|
|
(17,651,482
|
)
|
Total Stockholders’ (Deficit)
|
|
|
(2,394,794
|
)
|
|
|
(7,238,572
|
)
|
Total Liabilities and Stockholders’ Deficit
|
|
$
|
5,838,040
|
|
|
$
|
4,123,671
|
|
The
accompanying footnotes are an integral part of these consolidated financial statements
Clean
Energy Technologies, Inc.
Consolidated
Statement of Operations
for
the three and six months ended June 30, 2021 and 2020
Unaudited
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
|
three months
|
|
|
six months
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Sales
|
|
$
|
155,884
|
|
|
$
|
155,997
|
|
|
$
|
291,158
|
|
|
$
|
1,014,812
|
|
Cost of Goods Sold
|
|
|
49,356
|
|
|
|
93,330
|
|
|
|
72,619
|
|
|
|
436,607
|
|
Gross Profit
|
|
|
106,528
|
|
|
|
62,667
|
|
|
|
218,539
|
|
|
|
578,205
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and Administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and Administrative expense
|
|
|
211,673
|
|
|
|
155,576
|
|
|
|
340,521
|
|
|
|
251,296
|
|
Salaries
|
|
|
225,104
|
|
|
|
176,215
|
|
|
|
433,069
|
|
|
|
385,762
|
|
Travel
|
|
|
25,339
|
|
|
|
11,658
|
|
|
|
40,354
|
|
|
|
40,816
|
|
Professional Fees
|
|
|
49,373
|
|
|
|
55,464
|
|
|
|
82,209
|
|
|
|
77,351
|
|
Consulting
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bad Debt Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Facility lease and Maintenance
|
|
|
82,699
|
|
|
|
83,181
|
|
|
|
168,910
|
|
|
|
193,636
|
|
Depreciation and Amortization
|
|
|
8,073
|
|
|
|
9,443
|
|
|
|
16,146
|
|
|
|
18,886
|
|
Total Expenses
|
|
|
602,261
|
|
|
|
491,537
|
|
|
|
1,081,209
|
|
|
|
967,747
|
|
Net Profit / (Loss) From Operations
|
|
|
(495,733
|
)
|
|
|
(428,870
|
)
|
|
|
(862,670
|
)
|
|
|
(389,542
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in derivative liability
|
|
|
(3,804
|
)
|
|
|
250,353
|
|
|
|
1,745,369
|
|
|
|
119,359
|
|
Gain / (Loss) on debt settlement and write down
|
|
|
368,098
|
|
|
|
217,644
|
|
|
|
368,098
|
|
|
|
239,865
|
|
Interest and Financing fees
|
|
|
(100,417
|
)
|
|
|
(268,629
|
)
|
|
|
(414,069
|
)
|
|
|
(512,759
|
)
|
Net Profit / (Loss) Before Income Taxes
|
|
|
(231,856
|
)
|
|
|
(229,502
|
)
|
|
|
836,728
|
|
|
|
(543,077
|
)
|
Income Tax Expense
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net Profit / (Loss)
|
|
$
|
(231,856
|
)
|
|
$
|
(229,502
|
)
|
|
$
|
836,728
|
|
|
$
|
(543,077
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average number
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of common shares outstanding
|
|
|
895,498,243
|
|
|
|
762,265,411
|
|
|
|
853,322,779
|
|
|
|
760,217,962
|
|
Basic weighted average number of common shares outstanding
|
|
|
895,498,243
|
|
|
|
762,265,411
|
|
|
|
853,322,779
|
|
|
|
760,217,962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Profit / (Loss) per common share basic
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
0.00
|
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share Information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average number
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of common shares outstanding
|
|
|
895,498,243
|
|
|
|
762,265,411
|
|
|
|
1,339,978,304
|
|
|
|
760,217,962
|
|
Diluted weighted average number of common shares outstanding
|
|
|
895,498,243
|
|
|
|
762,265,411
|
|
|
|
1,339,978,304
|
|
|
|
760,217,962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Profit / (Loss) per common share diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
0.00
|
|
|
$
|
(0.00
|
)
|
The
accompanying footnotes are an integral part of these Consolidated financial statements
Clean
Energy Technologies, Inc.
Consolidated
Statement of Stockholders Equity
June
30, 2020 and December 31, 2019
Description
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Totals
|
|
|
|
Common Stock .001 Par
|
|
|
Preferred Stock
|
|
|
Common Stock to be issued
|
|
|
Additional Paid in
|
|
|
Accumulated
|
|
|
Stock holders’ Deficit
|
|
Description
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Totals
|
|
December 31, 2019
|
|
|
753,907,656
|
|
|
|
753,909
|
|
|
|
6,500
|
|
|
|
650,000
|
|
|
|
-
|
|
|
|
7,559,331
|
|
|
|
(14,215,718
|
)
|
|
|
(5,252,478
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for debt conversion
|
|
|
1,700,000
|
|
|
|
1,700
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
32,300
|
|
|
|
|
|
|
|
34,000
|
|
Shares issued for cash
|
|
|
4,523,333
|
|
|
|
4,522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,478
|
|
|
|
|
|
|
|
125,000
|
|
Preferred conversions
|
|
|
2,000,000
|
|
|
|
2,000
|
|
|
|
(800
|
)
|
|
|
(80,000
|
)
|
|
|
|
|
|
|
78,000
|
|
|
|
|
|
|
|
-
|
|
Shares to be issued for compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares to be issued for compensation, shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares returned from admin. hold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares returned from admin. hold, shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred shares reclassed
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred shares reclassed, shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitment fee shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitment fee shares, shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common share subscriptions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for S1 commitment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for S1 commitment, shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for warrant conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for warrant conversion, shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for Reg A offering
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for Reg A offering, shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for acccrued dividend
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for acccrued dividend, shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of Preferred Series D
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of Preferred Series D, shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for Inducement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for Inducement, shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares for Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares for Conversion, shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(313,574
|
)
|
|
|
(313,574
|
)
|
March 31, 2020
|
|
|
762,130,989
|
|
|
$
|
762,131
|
|
|
|
5,700
|
|
|
$
|
570,000
|
|
|
$
|
-
|
|
|
$
|
7,790,110
|
|
|
$
|
(14,529,293
|
)
|
|
$
|
(5,407,052
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for S1 commitment
|
|
|
764,526
|
|
|
|
765
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,235
|
|
|
|
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
Net Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(229,502
|
)
|
|
|
(229,502
|
)
|
June 30, 2020
|
|
|
762,895,515
|
|
|
$
|
762,896
|
|
|
|
5,700
|
|
|
$
|
570,000
|
|
|
$
|
-
|
|
|
$
|
7,799,345
|
|
|
$
|
(14,758,795
|
|
|
$
|
(5,626,554
|
)
|
Clean
Energy Technologies, Inc.
Consolidated
Statement of Stockholders Equity
June
30, 2021 and December 31. 2020
Description
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Totals
|
|
|
|
Common Stock .001 Par
|
|
|
Preferred Stock
|
|
|
Common Stock to be issued
|
|
|
Additional Paid in
|
|
|
Accumulated
|
|
|
Stock holders’ Deficit
|
|
Description
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Totals
|
|
December 31, 2020
|
|
|
821,169,656
|
|
|
$
|
821,171
|
|
|
|
4,500
|
|
|
$
|
450,000
|
|
|
$
|
61,179
|
|
|
$
|
9,080,560
|
|
|
$
|
(17,651,482
|
)
|
|
$
|
(7,238,572
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for warrant conversion
|
|
|
1,797,861
|
|
|
|
1,798
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,798
|
)
|
|
|
-
|
|
|
|
(0
|
)
|
Shares issued for Reg A offering
|
|
|
16,666,667
|
|
|
|
16,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
483,333
|
|
|
|
|
|
|
|
500,000
|
|
Shares issued for acccrued dividend
|
|
|
4,344,250
|
|
|
|
4,344
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
343,194
|
|
|
|
-
|
|
|
|
347,538
|
|
Conversion of Preferred Series D
|
|
|
6,625,000
|
|
|
|
6,625
|
|
|
|
(4,500
|
)
|
|
|
(450,000
|
)
|
|
|
-
|
|
|
|
443,375
|
|
|
|
|
|
|
|
-
|
|
Inducement shares
|
|
|
1,250,000
|
|
|
|
1,250
|
|
|
|
|
|
|
|
|
|
|
|
(25,000
|
)
|
|
|
23,750
|
|
|
|
|
|
|
|
-
|
|
Shares issued for cash
|
|
|
44,213,053
|
|
|
|
44,213
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(36,179
|
)
|
|
|
3,075,969
|
|
|
|
|
|
|
|
3,084,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
Net Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,068,584
|
|
|
|
1,068,584
|
|
March 31, 2021
|
|
|
896,066,487
|
|
|
$
|
896,068
|
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
13,448,384
|
|
|
$
|
(16,582,898
|
)
|
|
$
|
(2,238,447
|
)
|
Beginning balance
|
|
|
896,066,487
|
|
|
$
|
896,068
|
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
13,448,384
|
|
|
$
|
(16,582,898
|
)
|
|
$
|
(2,238,447
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for warrant conversion
|
|
|
547,468
|
|
|
|
547
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(547
|
)
|
|
|
-
|
|
|
|
-
|
|
Shares issued for cash
|
|
|
36,283
|
|
|
|
36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36
|
|
Shares for Conversion
|
|
|
25,000,000
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,473
|
|
|
|
|
|
|
|
75,473
|
|
Shares issued for Induement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for Induement, shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(231,856.00
|
)
|
|
|
(231,856
|
)
|
June 30, 2021
|
|
|
921,650,238
|
|
|
$
|
921,651
|
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
13,498,310
|
|
|
$
|
(16,814,754
|
)
|
|
$
|
(2,394,794
|
)
|
Ending balance
|
|
|
921,650,238
|
|
|
$
|
921,651
|
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
13,498,310
|
|
|
$
|
(16,814,754
|
)
|
|
$
|
(2,394,794
|
)
|
The
accompanying footnotes are an integral part of these consolidated financial statements
Clean
Energy Technologies, Inc.
Consolidated
Statements of Cash Flows
for
the six months ended June 30, 2021 and 2020
Unaudited
|
|
2021
|
|
|
2020
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
Net Income / ( Loss )
|
|
$
|
836,728
|
|
|
$
|
(543,077
|
)
|
Adjustments to reconcile net loss to net cash
|
|
|
|
|
|
|
|
|
used in operating activities:
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
16,146
|
|
|
|
18,886
|
|
Bad debt expense
|
|
|
|
|
|
|
|
|
Gain on debt settlement
|
|
|
(368,098
|
)
|
|
|
(239,865
|
)
|
Shares issued for commitment fee
|
|
|
|
|
|
|
|
|
Shares issued for S1
|
|
|
|
|
|
|
10,000
|
|
Change in debt discount and Financing fees
|
|
|
412,407
|
|
|
|
298,462
|
|
Change in derivative liability
|
|
|
(1,745,369
|
)
|
|
|
(119,359
|
)
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
(Increase) decrease in right of use asset
|
|
|
100,544
|
|
|
|
103,632
|
|
(Increase) decrease in lease liability
|
|
|
(97,965
|
)
|
|
|
(101,011
|
)
|
(Increase) decrease in accounts receivable
|
|
|
(33,020
|
)
|
|
|
86,104
|
|
(Increase) decrease in inventory
|
|
|
(168,421
|
)
|
|
|
63,926
|
|
(Decrease) increase in accounts payable
|
|
|
(322,518
|
)
|
|
|
(68,572
|
)
|
Other (Decrease) increase in accrued expenses
|
|
|
(364,718
|
)
|
|
|
293,842
|
|
Other (Decrease) increase in accrued expenses related party
|
|
|
255,082
|
|
|
|
23,889
|
|
Other (Decrease) increase in deferred revenue
|
|
|
-
|
|
|
|
(14,750
|
)
|
Other (Decrease) increase in customer deposits
|
|
|
30,000
|
|
|
|
(226,500
|
)
|
Net Cash Provided by (Used In) Operating Activities
|
|
|
(1,449,202
|
)
|
|
|
(414,393
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities
|
|
|
|
|
|
|
|
|
Purchase property plant and equipment
|
|
|
-
|
|
|
|
-
|
|
Cash Flows Used In Investing Activities
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities
|
|
|
|
|
|
|
|
|
Bank Overdraft / (Repayment)
|
|
|
-
|
|
|
|
(1,480
|
)
|
Payment on notes payable
|
|
|
|
|
|
|
|
|
Payment on notes payable related party
|
|
|
|
|
|
|
|
|
Payment on notes payable and lines of credit
|
|
|
(598,127
|
)
|
|
|
(103,000
|
)
|
Proceeds from notes payable
|
|
|
90,771
|
|
|
|
368,374
|
|
Proceeds from notes payable and lines of credit
|
|
|
|
|
|
|
|
|
Proceeds from notes payable related party
|
|
|
-
|
|
|
|
25,000
|
|
Stock issued for cash
|
|
|
3,584,511
|
|
|
|
125,000
|
|
Cash Flows Provided By Financing Activities
|
|
|
3,077,155
|
|
|
|
413,894
|
|
|
|
|
|
|
|
|
|
|
Net (Decrease) Increase in Cash and Cash Equivalents
|
|
|
1,627,953
|
|
|
|
(499
|
)
|
Cash and Cash Equivalents at Beginning of Period
|
|
|
414,885
|
|
|
|
7,406
|
|
Cash and Cash Equivalents at End of Period
|
|
$
|
2,042,838
|
|
|
$
|
6,907
|
|
|
|
|
|
|
|
|
|
|
Supplemental Cashflow Information:
|
|
|
|
|
|
|
|
|
Interest Paid
|
|
$
|
101,027
|
|
|
$
|
142,184
|
|
Taxes Paid
|
|
$
|
-
|
|
|
$
|
-
|
|
The
accompanying footnotes are an integral part of these consolidated financial statements
Clean
Energy Technologies, Inc.
Notes
to Consolidated Financial Statements (Unaudited)
NOTE
1 – General
GENERAL
These
unaudited interim consolidated financial statements as of and for the six months ended June 30, 2021, 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, 2020 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, 2021, are not necessarily indicative of results for the entire year ending December 31, 2021.
The
summary of significant accounting policies of Clean Energy Technologies, Inc. is presented to assist in the understanding of the Company’s
financial statements. The financial statements and notes are representations of the Company’s management, who is responsible for
their integrity and objectivity.
Corporate
History
With
the vision to combat climate change and create a better, cleaner and environmentally sustainable future Clean Energy HRS LLC a wholly
owned subsidiary of Clean Energy Technologies, Inc. acquired the assets of Heat Recovery Solutions from General Electric International
on September 11, 2015. The asset acquisition and related financing transactions resulted in a change of control of the Company according
to FASB No. 2014-17 Business Combinations (Topic 805). As a result, the transactions qualify as a business combination. In accordance
with Topic 805, the Company elected to apply pushdown accounting, using the valuation date of December 31, 2015. As a result, we recognized
$747,976 in goodwill.
General
Electric acquired the rights and 16 global patents to the magnetic bearing technology from Calnetix in October of 2010 and further developed
the next generation of the waste heat generators, which was ultimately acquired by Clean Energy Technologies from GE. We completed our
production facility post the acquisition in October of 2016. We consolidated our legacy and HRS operations and began our production in
early 2017. In early 2018 we engaged with a large institutional equity partner and closed our first round of funding. We are executing
our business strategy by increasing our market presence and broadening our product portfolio in the heat to power markets. We are continuing
to design, build and ship products to Europe, US, Canada, South East Pacific regions and plan expansion into Asia. We are continuing
to build a strong back log and pipeline of opportunities while developing the next disruptive heat to power generators with the support
of our new equity partners.
We
recently raised $4.0 million in a Regulation A equity offering and plan to continue to raise and additional $6.0 million subject to market
conditions. We plan to use the proceeds from this offering to expand and enhance our existing business, improve our balance sheet and
to expand into new energy-based businesses in the U.S. and China with higher profit margins.
We
entered into a manufacturing and sales agreement to design, build and operate renewable energy and waste recovery facilities. We use
an ablative pyrolysis system for processing of industrial and municipal organic waste in high temperature producing renewable high heating
value fuel gas and value-added chemical. The key benefits of this system are better waste sourcing and mixing flexibility, near-zero
emissions, modular design, zero liquid discharge, and zero solid waste residue waste. We are focusing on applications for industrial
and municipality solid waste, landfill waste, agriculture waste, and forestry waste.
We
plan to build a financial division that combines the customer demand for low carbon energy which we believe will compliment recent investor
trends for funding low carbon energy projects. Low carbon energy is becoming ever more important for sustainable development and we believe
is becoming recognized as a critical path to achieve economic growth globally and sustaining living standards. We believe our efforts
will improve our sales and profitability across low carbon energy projects.”
Going
Concern
The
financial statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets
and liquidation of liabilities in the normal course of business. The Company had a total stockholder’s deficit of $2,394,794 and
a working capital deficit of $3,378,663 as of June 30, 2021. The company also had an accumulated deficit of $16,814,754 as of June 30,
2021. Therefore, there is doubt about the ability of the Company to continue as a going concern. There can be no assurance that the Company
will achieve its goals and reach profitable operations and is still dependent upon its ability (1) to obtain sufficient debt and/or equity
capital and/or (2) to generate positive cash flow from operations.
Plan
of Operation
Our
goal is to position CETY as a worldwide leader in the heat to power & energy efficiency markets by targeting industries that have
wasted heat which could potentially turn into electricity.
We
plan to leverage our proprietary magnetic bearing turbine technology with over 100 installations and 1 million fleet operating hours
to increase our market share in low to medium temperature waste heat recovery markets.
We
utilize both a direct sales force and global distribution group with expertise in heat recovery solutions and clean energy markets. We
have also established relationships with integrators, consultant and project developers and integrated solution providers.
We
plan to expand our core expertise to identify, acquire and develop leading clean energy and clean technology solutions and products.
We expect to continue to utilize our relationships and expertise to expand in clean and renewable energy sector through new in-house
development of disruptive heat to power technologies, acquisitions, cogeneration, and licensing agreements.
CETY
maintains an online presence through our web portal and social media. Our application engineers assist in converting the opportunities
into projects. We provide technical support to our Clean Cycle TM generator clients through providing maintenance and product
support.
The
sales of our products are related to the global prices for oil, gas, coal and solar energy. As prices increase our products produce a
better return on investment for our customers. They are also dependent on regulatory drivers and financial incentives. In the US a new
waste energy recovery property investment tax credit has been introduced for generating power from heat, which should support additional
sales in the US.
CETY
has implemented a new Enterprise Resource planning software by Microsoft providing accurate and timely information to support a more
robust and efficient supply chain. The operational leadership is continually working on lowering the cost of manufacturing and identifying
lower cost regions to support higher margins of our products.
We
plan to build a financial division to provide funding to customers who use our products and services.
NOTE
2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The
summary of significant accounting policies of Clean Energy Technologies, Inc. (formerly Probe Manufacturing, Inc.) is presented to assist
in the understanding of the Company’s financial statements. The financial statements and notes are representations of the Company’s
management, who is responsible for their integrity and objectivity.
The
consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in
the United States of America (“US GAAP”) and include the accounts of the Company and its wholly-owned subsidiaries. All material
intercompany balances and transactions have been eliminated in consolidation.
Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Such
estimates may be materially different from actual financial results. Significant estimates include the recoverability of long-lived assets,
the collection of accounts receivable and valuation of inventory and reserves.
Cash
and Cash Equivalents
We
maintain the majority of our cash accounts at JP Morgan Chase bank. The total cash balance is insured by the Federal Deposit Insurance
Corporation (“FDIC”) up to $250,000, (which we may exceed from time to time) per commercial bank. For purposes of the statement
of cash flows we consider all cash and highly liquid investments with initial maturities of one year or less to be cash equivalents.
Accounts
Receivable
Our
ability to collect receivables is affected by economic fluctuations in the geographic areas and industries served by us. Reserves for
un-collectable amounts are provided, based on past experience and a specific analysis of the accounts. Although we expect to collect
amounts due, actual collections may differ from the estimated amounts. As of June 30, 2021, and December 31, 2020, we had a reserve for
potentially un-collectable accounts receivable of $75,000 and $75,000. Our policy for reserves for our long-term financing receivables
is determined on a contract by contract basis and takes into account the length of the financing arrangement. As of June 30, 2021, and
December 31, 2020, we had a reserve for potentially un-collectable long-term financing receivables of $247,500 and $247,500 respectively.
Five
(5) customers accounted for approximately 98% of accounts receivable at June 30, 2021. Our trade accounts primarily represent unsecured
receivables. Historically, our bad debt write-offs related to these trade accounts have been insignificant.
Lease
asset
As
of June 30, 2021, and 2020 we had a lease asset that was purchased from General Electric with a value of $1,309,527, however due the
purchase price allocation, we recognized a value of $217,584. The lease is due to be commissioned in the second quarter of 2021 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 market value. Our industry experiences changes in technology, changes in market value
and availability of raw materials, as well as changing customer demand. We make provisions for estimated excess and obsolete inventories
based on regular audits and cycle counts of our on-hand inventory levels and forecasted customer demands and at times additional provisions
are made. Any inventory write offs are charged to the reserve account. As of June 30, 2021 and December 31, 2020, we had a reserve for
potentially obsolete inventory of $250,000.
Property
and Equipment
Property
and equipment are recorded at cost. Assets held under capital leases are recorded at lease inception at the lower of the present value
of the minimum lease payments or the fair market value of the related assets. The cost of ordinary maintenance and repairs is charged
to operations. Depreciation and amortization are computed on the straight-line method over the following estimated useful lives of the
related assets:
SCHEDULE OF PROPERTY AND EQUIPMENT ESTIMATED USEFUL LIVES
Furniture and fixtures
|
|
|
3 to 7 years
|
|
Equipment
|
|
|
7 to 10 years
|
|
Leasehold Improvements
|
|
|
7 years
|
|
Long
–Lived Assets
Our
management assesses the recoverability of its long-lived assets by determining whether the depreciation and amortization of long lived
assets over their remaining lives can be recovered through projected undiscounted future cash flows. The amount of long-lived asset impairment
if any, is measured based on fair value and is charged to operations in the period in which long-lived assets impairment is determined
by management. There can be no assurance however, that market conditions will not change or demand for our services will continue, which
could result in impairment of long-lived assets in the future.
Revenue
Recognition
The
Company recognizes revenue under ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” (“ASC
606”).
Performance
Obligations Satisfied Over Time
FASB
ASC 606-10-25-27 through 25-29, 25-36 through 25-37, 55-5 through 55-10
An
entity transfers control of a good or service over time and satisfies a performance obligation and recognizes revenue over time if one
of the following criteria is met:
a.
The customer receives and consumes the benefits provided by the entity’s performance as the entity performs (as described in FASB
ASC 606-10-55-5 through 55-6).
b.
The entity’s performance creates or enhances an asset (for example, work in process) that the customer controls as the asset is
created or enhanced (as described in FASB ASC 606-10-55-7).
c.
The entity’s performance does not create an asset with an alternative use to the entity (see FASB ASC 606-10-25-28), and the entity
has an enforceable right to payment for performance completed to date (as described in FASB ASC 606-10-25-29).
Performance
Obligations Satisfied at a Point in Time
FASB
ASC 606-10-25-30
If
a performance obligation is not satisfied over time, the performance obligation is satisfied at a point in time. To determine the point
in time at which a customer obtains control of a promised asset and the entity satisfies a performance obligation, the entity should
consider the guidance on control in FASB ASC 606-10-25-23 through 25-26. In addition, it should consider indicators of the transfer of
control, which include, but are not limited to, the following:
a.
The entity has a present right to payment for the asset
b.
The customer has legal title to the asset
c.
The entity has transferred physical possession of the asset
d.
The customer has the significant risks and rewards of ownership of the asset
e.
The customer has accepted the asset
The
core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services
to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or
services. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration
it is entitled to in exchange for the goods and services transferred to the customer. In addition a) the company also does not have an
alternative use for the asset if the customer were to cancel the contract, and b.) has a fully enforceable right to receive payment for
work performed (i.e., customers are required to pay as various milestones and/or timeframes are met)
The
following five steps are applied to achieve that core principle for our HRS and Cety Europe Divisions:
|
●
|
Identify
the contract with the customer
|
|
●
|
Identify
the performance obligations in the contract
|
|
●
|
Determine
the transaction price
|
|
●
|
Allocate
the transaction price to the performance obligations in the contract
|
|
●
|
Recognize
revenue when the company satisfies a performance obligation
|
The
following steps are applied to our legacy engineering and manufacturing division:
|
●
|
We
generate a quotation
|
|
●
|
We
receive purchase orders from our customers.
|
|
●
|
We
build the product to their specification
|
|
●
|
We
invoice at the time of shipment
|
|
●
|
The
terms are typically Net 30 days
|
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, 2021 and 2020 we had $33,000 and 33,000 of deferred revenue, which is expected to be recognized
in the third quarter of year 2021.
Also
from time to time we require upfront deposits from our customers based on the contract. As of June 30, 2021 and December 31, 2020, we
had outstanding customer deposits of $112,730 and $82,730 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 112% and using a risk free interest rate of 2.54%
|
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, 2021 and December 31, 2020 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, 2021
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
263,433
|
|
|
$
|
263,433
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of convertible notes derivative liability – December 31, 2020
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
2,008,802
|
|
|
$
|
2,008,802
|
|
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.
Other
Comprehensive Income
We
have no material components of other comprehensive income (loss) and accordingly, net loss is equal to comprehensive loss in all periods.
Net
Profit (Loss) per Common Share
Basic
profit / (loss) per share is computed on the basis of the weighted average number of common shares outstanding. At June 30, 2021, we
had outstanding common shares of 921,650,238 used in the calculation of basic earnings per share. Basic Weighted average common shares
and equivalents for the three months ended June 30, 2021 and 2020 were 895,498,243 and 762,265,411 respectively. Basic Weighted average
common shares and equivalents for the six months ended June 30, 2021 and 2020 were 853,322,779 and 760,217,962 respectively. As of June
30, 2021, we had convertible notes, convertible into approximately 480,751,127 of additional common shares, 8,754,720 common stock warrants.
Fully diluted weighted average common shares and equivalents were withheld from the calculation for the three months ended June 30, 2021
and 2020, as they were considered anti-dilutive. Fully diluted weighted average common shares and equivalents for the six months ended
June 30, 2021, were 1,339,978,304. Fully diluted weighted average common shares and equivalents were withheld from the calculation for
the six months ended June 30, 2020,
Research
and Development
We
had no amounts of research and development R&D expense during the three months ended June 30, 2021 and 2020.
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 three reportable segments: Clean Energy HRS (HRS), Cety Europe and the legacy
electronic manufacturing services division. The segments are determined based on several factors, including the nature of products and
services, the nature of production processes, customer base, delivery channels and similar economic characteristics. Refer to note 1
for a description of the various product categories manufactured under each of these segments.
An
operating segment’s performance is evaluated based on its pre-tax operating contribution, or segment income. Segment income is
defined as net sales less cost of sales, and segment selling, general and administrative expenses, and does not include amortization
of intangibles, stock-based compensation, other charges (income), net and interest and other, net.
SCHEDULE
OF SEGMENT REPORTING
Selected
Financial Data:
|
|
2021
|
|
|
2020
|
|
|
|
For the Six months ended
|
|
|
|
2021
|
|
|
2020
|
|
Net Sales
|
|
|
|
|
|
|
|
|
Manufacturing and Engineering
|
|
|
41,223
|
|
|
|
250,854
|
|
Clean Energy HRS
|
|
|
88,807
|
|
|
|
749,034
|
|
Cety Europe
|
|
|
161,128
|
|
|
|
14,924
|
|
Total Sales
|
|
|
291,158
|
|
|
|
1,014,812
|
|
|
|
|
|
|
|
|
|
|
Segment income and reconciliation before tax
|
|
|
|
|
|
|
|
|
Manufacturing and Engineering
|
|
|
29,683
|
|
|
|
83,723
|
|
Clean Energy HRS
|
|
|
62,802
|
|
|
|
486,585
|
|
Cety Europe
|
|
|
126,054
|
|
|
|
7,898
|
|
Total Segment income
|
|
|
218,539
|
|
|
|
578,206
|
|
|
|
|
|
|
|
|
|
|
Reconciling items
|
|
|
|
|
|
|
|
|
General and Administrative expense
|
|
|
(340,521
|
)
|
|
|
(251,296
|
)
|
Salaries
|
|
|
(433,069
|
)
|
|
|
(385,762
|
)
|
Travel
|
|
|
(40,354
|
)
|
|
|
(40,816
|
)
|
Professional Fees
|
|
|
(82,209
|
)
|
|
|
(77,351
|
)
|
Facility lease and Maintenance
|
|
|
(168,910
|
)
|
|
|
(193,636
|
)
|
Depreciation and Amortization
|
|
|
(16,146
|
)
|
|
|
(18,886
|
)
|
Change in derivative liability
|
|
|
1,745,369
|
|
|
|
119,359
|
|
Gain debt settlement
|
|
|
368,098
|
|
|
|
239,865
|
|
Interest Expense
|
|
|
(414,069
|
)
|
|
|
(512,759
|
)
|
Net Loss before income tax
|
|
|
836,728
|
|
|
|
(543,076
|
)
|
|
|
June 30, 2021
|
|
|
December 31, 2020
|
|
Total Assets
|
|
|
|
|
|
|
|
|
Electronics Assembly
|
|
|
3,276,121
|
|
|
|
1,922,648
|
|
Clean Energy HRS
|
|
|
2,438,011
|
|
|
|
2,166,478
|
|
Cety Europe
|
|
|
123,908
|
|
|
|
34,545
|
|
Total Assets
|
|
|
5,838,040
|
|
|
|
4,123,681
|
|
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 six months ended June 30, 2021 and 2020 we had $0 in share-based expense, due to the issuance of common stock.
As of June 30, 2021, we had no further non-vested expense to be recognized.
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, 2020 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.
As
of June 30, 2021, we had a net operating loss carry-forward of approximately $(7,965,036) and a deferred tax asset of $2,389,511 using
the statutory rate of 30%. The deferred tax asset may be recognized in future periods, not to exceed 20 years. However, due to the uncertainty
of future events we have booked valuation allowance of $(2,389,511). FASB ASC 740 prescribes recognition threshold and measurement attributes
for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FASB ASC 740
also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.
At June 30, 2021 the Company had not taken any tax positions that would require disclosure under FASB ASC 740.
SCHEDULE
OF DEFERRED TAX ASSET
|
|
June 30, 2021
|
|
|
December 31, 2020
|
|
Deferred Tax Asset
|
|
$
|
2,389,511
|
|
|
$
|
2,640,529
|
|
Valuation Allowance
|
|
|
(2,389,511
|
)
|
|
|
(2,640,529
|
)
|
Deferred Tax Asset (Net)
|
|
$
|
-
|
|
|
$
|
-
|
|
On
February 13, 2018, Clean Energy Technologies, Inc., a Nevada corporation (the “Registrant” or “Corporation”)
entered into a Common Stock Purchase Agreement (“Stock Purchase Agreement”) by and between MGW Investment I Limited (“MGWI”)
and the Corporation. The Corporation received $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 $0.003 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.
Reclassification
Certain
amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications
had no effect on reported income, total assets, or stockholders’ equity as previously reported.
Recently
Issued Accounting Standards
The
Company is reviewing the effects of following recent updates. The Company has no expectation that any of these items will have a material
effect upon the financial statements.
Update
2021-03—Intangibles—Goodwill And Other (Topic 350): Accounting Alternative For Evaluating Triggering Events.
The
amendments in this Update are effective on a prospective basis for fiscal years beginning after December 15, 2019. Early adoption is
permitted for both interim and annual financial statements that have not yet been issued or made available for issuance as of March 30,
2021.
Update
2021-01—Reference Rate Reform (Topic 848):
An
entity may elect to apply the amendments in this Update on a full retrospective basis as of any date from the beginning of an interim
period that includes or is subsequent to March 12, 2020.
In
June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments—Credit
Losses [codified as Accounting Standards Codification Topic (ASC) 326]. ASC 326 adds to US generally accepted accounting principles (US
GAAP) the current expected credit loss (CECL) model, a measurement model based on expected losses rather than incurred losses. Under
this new guidance, an entity recognizes its estimate of expected credit losses as an allowance, which the FASB believes will result in
more timely recognition of such losses. This will become effective in January 2023 and will have minimal impact on the company.
Update 2020-06—Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts
in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.
We do not expect any material impact on our financials because of the adoption of this update.
NOTE
3 – ACCOUNTS AND NOTES RECEIVABLE
SCHEDULE OF ACCOUNTS AND NOTES RECEIVABLE
|
|
June 30, 2021
|
|
|
December 31, 2020
|
|
Accounts Receivable
|
|
$
|
373,758
|
|
|
$
|
340,378
|
|
Less Reserve for uncollectable accounts
|
|
|
(75,000
|
)
|
|
|
(75,000
|
)
|
Accounts Receivable (Net)
|
|
$
|
298,758
|
|
|
$
|
265,738
|
|
Our
Accounts Receivable is pledged to Nations Interbanc, our line of credit.
SCHEDULE OF LEASE RECEIVABLE ASSET
|
|
June 30, 2021
|
|
|
December 31, 2020
|
|
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, 2021 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, 2021
|
|
|
December 31, 2020
|
|
Long-term financing receivables
|
|
$
|
1,000,000
|
|
|
$
|
1,000,000
|
|
Less Reserve for uncollectable accounts
|
|
|
(247,500
|
)
|
|
|
(247,500
|
)
|
Long-term financing receivables - net
|
|
$
|
752,500
|
|
|
$
|
752,500
|
|
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.
NOTE
4 – INVENTORY
Inventories
by major classification were comprised of the following at:
SCHEDULE
OF INVENTORIES
|
|
June 30, 2021
|
|
|
December 31, 2020
|
|
Raw Material
|
|
$
|
977,905
|
|
|
$
|
805,574
|
|
Work in Process
|
|
|
-
|
|
|
|
2,242
|
|
Total
|
|
|
977,905
|
|
|
|
807,820
|
|
Less reserve for excess or obsolete inventory
|
|
|
(250,000
|
)
|
|
|
(250,000
|
)
|
Inventory
|
|
$
|
727,905
|
|
|
$
|
557,820
|
|
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, 2021
|
|
|
December 31, 2020
|
|
Capital Equipment
|
|
$
|
1,354,824
|
|
|
$
|
1,350,794
|
|
Leasehold improvements
|
|
|
75,436
|
|
|
|
75,436
|
|
Accumulated Depreciation
|
|
|
(1,387,035
|
)
|
|
|
(1,372,798
|
)
|
Net Fixed Assets
|
|
$
|
43224
|
|
|
$
|
53,432
|
|
Our
Depreciation Expense for the three months ended June 30, 2021 and 2020 was $5,104 and $6,474 respectively.
Our
Depreciation Expense for the six months ended June 30, 2021 and 2020 was $10,208 and $12,948 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, 2021
|
|
|
December 31, 2020
|
|
Goodwill
|
|
$
|
747,976
|
|
|
$
|
747,976
|
|
License
|
|
|
354,322
|
|
|
|
354,322
|
|
Patents
|
|
|
190,789
|
|
|
|
190,789
|
|
Accumulated Amortization
|
|
|
(69,282
|
)
|
|
|
(63,344
|
)
|
Net Intangible Assets
|
|
$
|
1,223,805
|
|
|
$
|
1,229,743
|
|
Our
Amortization Expense for three months ended June 30, 2021 and 2020 was $2,969 and $2,969 respectively.
Our
Amortization Expense for six months ended June 30, 2021 and 2020 was $5,938 and $5,938 respectively.
NOTE
7 – ACCRUED EXPENSES
SCHEDULE
OF ACCRUED EXPENSES
|
|
June 30, 2021
|
|
|
December 31, 2020
|
|
|
|
|
|
|
|
|
Accrued Wages
|
|
$
|
64,588
|
|
|
$
|
25,654
|
|
Accrued Expenses
|
|
|
74,289
|
|
|
|
477,941
|
|
Total accrued expenses
|
|
$
|
138,877
|
|
|
$
|
503,595
|
|
NOTE
8 – NOTES PAYABLE
The
Company issued a short-term note payable to an individual, secured by the assets of the Company, dated September 6, 2013 in the amount
of $50,000 and fixed fee amount of $3,500. As of December 31, 2019, the outstanding balance was $36,500. On January 30, 2020 we issued
1,700,000 shares of our common stock at a purchase price of $.02 per share, as settlement in full of a note payable of in the amount
of $36,500 with accrued interest of $19,721. As a result, we recognized a gain in the amount of $22,221 in the 1st quarter
of 2020.
On
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% per month. 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, 2021, the outstanding balance was $1,232,293
compared to $1,680,350 at December 31, 2020.
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 $275,000.00 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 $50,000 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.
SCHEDULE
OF NOTES PAYABLE
Total
Liability to GE
|
|
June 30, 2021
|
|
|
December 31, 2020
|
|
Note payable GE
|
|
$
|
1,200,000
|
|
|
$
|
1,200,000
|
|
Accrued transition services
|
|
|
972,233
|
|
|
|
972,233
|
|
Accrued Interest
|
|
|
297,885
|
|
|
|
269,921
|
|
Total
|
|
$
|
2,470,118
|
|
|
$
|
2,442,154
|
|
We
are currently in default on the payment of the purchase price pursuant to our asset purchase agreement with General Electric due to our
belief that we are entitled to a reduction in purchase price we paid due to the misunderstanding of the asset valuation.
On
May 4, 2020 the company entered in to a payroll protection loan, with Comerica bank, guaranteed by the SBA due May 4, 2022 for $110,700,
with an interest rate of 1%. This note payment is due in full on May 4, 2022 and also has the possibility of forgiveness. As of the date
of this filing this note has been forgiven.
On
February 4 , 2021 the company entered in to a payroll protection loan, with Comerica bank, guaranteed by the SBA due February 4, 2023
for $89,200, with an interest rate of 1%. This note payment is due in full on February 4, 2023 and also has the possibility of forgiveness.
As of the date of this filing this note has been forgiven.
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 nine 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
were added to the original note with the interest rate of 14%.
This note matured on February
21st of 2018 and is currently in default.
As of June 30, 2021, the outstanding balance due was $91,600.
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 nine 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
26th, 2018 and is currently in default.
As of June 30, 2021, the outstanding balance due was $95,685
On
October 30, 2019 we entered into a convertible note payable for $103,000, with a maturity date of October 30, 2020, which accrues interest
at the rate of 12% per annum. It is convertible six months after its issuance and has a conversion rate of sixty-five percent (65%) of
the average of the two lowest closing prices (as reported by Bloomberg LP) of our common stock for the fifteen (15) Trading Days immediately
preceding the date of conversion. We also entered into a stock purchase agreement for the potential conversion into common stock. This
note was paid in full on May 1, 2020.
On
January 8, 2020 we entered into a convertible note payable for $103,000, with a maturity date of January 8, 2021, which accrues interest
at the rate of 12% per annum. It is convertible six months after its issuance and has a conversion rate of sixty-five percent (65%) of
the average of the two lowest closing prices (as reported by Bloomberg LP) of our common stock for the fifteen (15) Trading Days immediately
preceding the date of conversion. We also entered into a stock purchase agreement for the potential conversion into common stock. Subsequently
The fair value of the convertible feature was $87,560, we recorded a debt discount of $87,560. On July 7, 2020 this note was paid in
full.
On
February 19, 2020 we entered into a convertible note payable for $53,000, with a maturity date of February 19, 2021, which accrues interest
at the rate of 12% per annum. It is convertible six months after its issuance and has a conversion rate of sixty-five percent (65%) of
the average of the two lowest closing prices (as reported by Bloomberg LP) of our common stock for the fifteen (15) Trading Days immediately
preceding the date of conversion. We also entered into a stock purchase agreement for the potential conversion into common stock. On
August 18, 2020 this note was paid in full.
On
July 6, 2020, Clean Energy Technologies, Inc. (the “Company) entered into a securities purchase agreement (the “Securities
Purchase Agreement”) with LGH Investments, LLC (the “Investor”), pursuant to which the Company issued to the Investor
a convertible promissory note (the “Note”) in the original principal amount of $164,800, a Warrant (the “Warrant”)
to purchase 1,500,000 shares of the Company’s common stock, par value $.001 per share (the “Common Stock”) and one
million (1,000,000) restricted shares of Common Stock (“Commitment fee Shares”). The Note carried an original issue discount
of $4,800 with interest of 8% per annum payable at maturity. The Note matures 8 months from the issue date and is convertible at any
time into the Common Stock at a conversion price equal to $0.02 per share, subject to adjustment. The shares were valued on the date
of issuance using the stock price on that day for a total value of $19,211. We also recognized a debt discount of $17,861. We amortized
$3,234 of the debt discount during the three months ended September 30, 2020. The unamortized debt discount as of September 30, 2020
was $14,267. This note was fully converted as of December 31, 2020. This note was converted into 14,035,202 shares of common stock, for
a total of $171,229 including principal of 164,800 plus a accrued interest of $6,429. Also on January 12, 2021 the company issued 697,861shares
of its common stock as redemptions of $27,914 in cashless warrants.
On
July 15, 2020 we entered into a convertible note payable for $128,000, with a maturity date of July 15, 2021, which accrues interest
at the rate of 12% per annum. It is convertible six months after its issuance and has a conversion rate of sixty-five percent (65%) of
the average of the two lowest closing prices (as reported by Bloomberg LP) of our common stock for the fifteen (15) Trading Days immediately
preceding the date of conversion. We also entered into a stock purchase agreement for the potential conversion into common stock. This
note was paid in full on October 16, 2020.
On
August 17, 2020, Clean Energy Technologies, Inc. (the “Company) entered into a securities purchase agreement (the “Securities
Purchase Agreement”) with LGH Investments, LLC (the “Investor”), pursuant to which the Company issued to the Investor
a convertible promissory note (the “Note”) in the original principal amount of $103,000, a Warrant (the “Warrant”)
to purchase 1,500,000 shares of the Company’s common stock, par value $.001 per share (the “Common Stock”) and one
million (1,000,000) restricted shares of Common Stock (“Commitment fee Shares”). The Note carried an original issue discount
of $3,000 with interest of 8% per annum payable at maturity. The Note matures 8 months from the issue date and is convertible at any
time into the Common Stock at a conversion price equal to $0.02 per share, subject to adjustment. The shares were valued on the date
of issuance using the stock price on that day for a total value of $19,211. We also recognized a debt discount of $17,861. We amortized
$14,627 of the debt discount during the six months ended June 30, 2021. The unamortized debt discount as of June 30, 2021 was $0. This
note was paid in full on January 8, 2021.
On
September 10, 2020 we entered into a convertible note payable for $63,000, with a maturity date of July 15, 2021, which accrues interest
at the rate of 11% per annum. It is convertible six months after its issuance and has a conversion rate of sixty-five percent (65%) of
the average of the two lowest closing prices (as reported by Bloomberg LP) of our common stock for the fifteen (15) Trading Days immediately
preceding the date of conversion. We also entered into a stock purchase agreement for the potential conversion into common stock. This
note was paid in full on January 15, 2021.
On
October 14, 2020 Clean Energy Technologies, Inc. (the “Company) entered into a securities purchase agreement (the “Securities
Purchase Agreement”) with Firstfire Global Opportunities Fund LLC, (the “Investor”), pursuant to which the Company
issued to the Investor a convertible promissory note (the “Note”) in the original principal amount of $168,000, a Warrant
(the “Warrant”) to purchase 1,500,000 shares of the Company’s common stock, par value $.001 per share (the “Common
Stock”) and 1,250,000 restricted shares of Common Stock (“Commitment fee Shares”). The Note carried an original issue
discount of $8,000 with interest of 8% per annum payable at maturity. The Note matures 8 months from the issue date and is convertible
at any time into the Common Stock at a conversion price equal to $0.02 per share, subject to adjustment. The shares were valued on the
date of issuance using the stock price on that day for a total value of $24,282. We also recognized a debt discount of $24,282. We amortized
$19,093 of the debt discount during the three months ended March 31, 2021. The unamortized debt discount as of June 30, 2021 was $0.
On January 29, 2021 this note was paid in full. Also on January 12, 2021 the company issued 697,861shares of its common stock as redemptions
of $27,914 in cashless warrants.
On
November 10, 2020 we entered into a convertible note payable for $53,000, with a maturity date of November 10, 2021, which accrues interest
at the rate of 11% per annum. It is convertible six months after its issuance and has a conversion rate of sixty-five percent (65%) of
the average of the two lowest closing prices (as reported by Bloomberg LP) of our common stock for the fifteen (15) Trading Days immediately
preceding the date of conversion. We also entered into a stock purchase agreement for the potential conversion into common stock. On
February 11, 2021 this note was paid in full.
On
December 18, 2020 we entered into a convertible note payable for $83,500, with a maturity date of December 18, 2021, which accrues interest
at the rate of 11% per annum. It is convertible six months after its issuance and has a conversion rate of sixty-five percent (65%) of
the average of the two lowest closing prices (as reported by Bloomberg LP) of our common stock for the fifteen (15) Trading Days immediately
preceding the date of conversion. We also entered into a stock purchase agreement for the potential conversion into common stock. On
March 11, 2021 this note was paid in full.
On
June 24, 2021 MGW I converted $75,000 from the outstanding balance of their convertible note into 25,000,000 shares of company’s
common stock.
SCHEDULE
OF CONVERTIBLE NOTES
Total
due to Convertible Notes
|
|
June 30, 2021
|
|
|
December 31, 2020
|
|
Total convertible notes
|
|
$
|
187,285
|
|
|
$
|
612,355
|
|
Accrued Interest
|
|
|
97,260
|
|
|
|
99,509
|
|
Debt Discount
|
|
|
-
|
|
|
|
(170,438
|
)
|
Total
|
|
$
|
284,545
|
|
|
$
|
541,426
|
|
Note
9 – Derivative Liabilities
As
a result of the convertible notes we recognized the embedded derivative liability on the date of note issuance. We also revalued the
remaining derivative liability on the outstanding note balance on the date of the balance sheet. We value the derivative liability using
a binomial lattice model with an expected volatility range of 120% to 130% and a risk-free interest rate range of .05% to 0.1% The remaining
derivative liabilities were:
SCHEDULE OF FAIR VALUE OF DERIVATIVE LIABILITY
|
|
June 30, 2021
|
|
|
December 31, 2020
|
|
Derivative Liabilities on Convertible Loans:
|
|
|
|
|
|
|
|
|
Outstanding Balance
|
|
$
|
263,433
|
|
|
$
|
2,008,802
|
|
NOTE
10 – COMMITMENTS AND CONTINGENCIES
The
company has received an invoice from Oberon Securities for $291,767 which is in dispute. The company believes it has defences to the
claim for compensation and plans to assert appropriate counterclaims and actions as permitted by law. No liability has been recorded
for this claim as the Company believes there is a greater than not probability that our Company will prevail in defending against the
claim.
Operating
Rental Leases
As
of May 1, 2017, our corporate headquarters are located at 2990 Redhill Unit A, Costa Mesa, CA. On March 10, 2017, the Company signed
a lease agreement for a 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
Year
|
|
Lease Payment
|
|
2021
|
|
|
122,754
|
|
2022
|
|
|
253,608
|
|
2023
|
|
|
172,208
|
|
Imputed Interest
|
|
|
(24,291
|
)
|
Net Lease Liability
|
|
$
|
524,279
|
|
Our
lease expense for the six months ended June 30, 2021 and 2020 was $168,910 and $193,636 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 and the company is utilizing the transition relief and “running off” on current
leases.
Severance
Benefits
Mr.
Mahdi will receive a severance benefit consisting of a single lump sum cash payment equal the salary that Mr. Mahdi would have been entitled
to receive through the remainder or the Employment Period or One (1) year, whichever is greater.
NOTE
11 – 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
Common
Stock Transactions
In
the first quarter of 2019, we signed agreements to issue 4,000,000 shares of common stock valued at $.015 for a total value of $60,000
for the conversion of 800 preferred series D shares, which were subsequently issued.
We
also recorded a $60,000 commitment fee (relating to the Preferred series D estoppel agreement and discounted conversion terms) to account
for the difference in the fair value which was offset to retained earnings.
On
June 10, 2019 we issued 500,000 shares of common stock at $.02 per share to an accredited investor for an aggregate price of $10,000
in a private sale. We also issued 500,000 warrants as part of the transaction. Each Warrant is exercisable at $.04 per share of Common
Stock and expires one year from the date of the Agreement.
On
July 19, 2019 we issued 500,000 shares of common stock at $.02 per share to an accredited investor for an aggregate price of $10,000
in a private sale. We also issued 500,000 warrants as part of the transaction. Each Warrant is exercisable at $.04 per share of Common
Stock and expires one year from the date of the Agreement.
On
September 19, 2019 we entered into a stock purchase agreement for 250,000 units at a purchase price of $.02 a unit for an aggregate price
of $5,000 to an accredited investor a private sale. Each unit consist of one share of common stock and one warrant to purchase one share
of common stock exercisable at $.04 per share of Common Stock and expires one year from the date of the Agreement. The shares were included
in the shares to be issued as of September 30, 2019 and were subsequently issued on October 15, 2019.
On
December 5, 2019 we issued 5,000,000 units at a purchase price of $.015 per unit for an aggregate price of $75,000 to an accredited investor
in a private sale. Each unit consist of one share of common stock and one warrant to purchase one share of common stock exercisable at
$.04 per share.
On
January 21, 2020 our Registration Statement on Form 1-A was qualified with the Securities and Exchange Commission, under which we may
offer up to 300,000,000 shares of our common stock at a purchase price of $.03 per share. As of the date hereof, 4,523,333 shares of
common stock have been issued thereunder.
On
January 30, 2020 we issued 1,700,000 shares of our common stock at a purchase price of $.02 per share, as settlement in full of a note
payable of in the amount of $36,500 with accrued interest of 19,721. As a result we recognized a gain in the amount of $22,221 in the
1st quarter of 2020.
On
February 3, 2020 we issued 3,690,000 shares of our common stock under our Reg A offering at $.03 per share. These shares are unrestricted
and free trading.
On
February 4, 2020 we issued 2,000,000 shares of our common stock at a price of $.04 per share, in exchange for the conversion of 800 shares
of our Series D Preferred Stock.
On
March 17, 2020 we issued 833,333 shares of our common stock under our Reg A offering at $.03 per share. These shares are unrestricted
and free trading.
On
June 8, 2020, Clean Energy Technology, Inc., a Nevada corporation (the “Company”), entered into an Equity Financing Agreement
(“Equity Financing Agreement”) and Registration Rights Agreement (“Registration Rights Agreement”) with GHS Investments
LLC, a Nevada limited liability company (“GHS”). Under the terms of the Equity Financing Agreement, GHS agreed to provide
the Company with up to $2,000,000 upon effectiveness of a registration statement on Form S-1 (the “Registration Statement”)
filed with the U.S. Securities and Exchange Commission (the “Commission”) As a result we issued 764,526 Shares of common
stock as an commitment fee, which was valued and expense in the amount of $10,000. On July 23, 2020, this Form S-1 became effective.
During
the year ended June 30, 2021 we issued 22,572,272 shares of common stock, under S-1 registration statement with GHS for a total of $321,951
in net proceeds and expensed $171,794 in legal and financing fees as a result.
On
July 6, 2020, Clean Energy Technologies, Inc. (the “Company) entered into a securities purchase agreement (the “Securities
Purchase Agreement”) with LGH Investments, LLC (the “Investor”), pursuant to which the Company issued to the Investor
a convertible promissory note (the “Note”) in the original principal amount of $164,800, a Warrant (the “Warrant”)
to purchase 1,500,000 shares of the Company’s common stock, par value $.001 per share (the “Common Stock”) and one
million (1,000,000) restricted shares of Common Stock (“Commitment fee Shares”). On December 31, 2020 this note was converted
into 14,035,202 shares of common stock, for a total of $171,229 including principal of 164,800 plus a accrued interest of $6,429 as a
result this note was paid in full. Also on January 12, 2021 the company issued 697,861shares of its common stock as redemptions of $27,914
in cashless warrants.
On
July 23, 2020 we issued 3,000,000 shares of our common stock at a price of $.04 per share, in exchange for the conversion of 1,200 shares
of our Series D Preferred Stock.
On
August 17, 2020, Clean Energy Technologies, Inc. (the “Company) entered into a securities purchase agreement (the “Securities
Purchase Agreement”) with LGH Investments, LLC (the “Investor”), pursuant to which the Company issued to the Investor
a convertible promissory note (the “Note”) in the original principal amount of $103,000, a Warrant (the “Warrant”)
to purchase 1,500,000 shares of the Company’s common stock, par value $.001 per share (the “Common Stock”) and one
million (1,000,000) restricted shares of Common Stock (“Commitment fee Shares”). The Note carried an original issue discount
of $3,000 with interest of 8% per annum payable at maturity. The Note matures 8 months from the issue date and is convertible at any
time into the Common Stock at a conversion price equal to $0.02 per share, subject to adjustment. The shares were valued on the date
of issuance using the stock price on that day for a total value of $19,211. We also recognized a debt discount of $17,861. We amortized
$14,627 of the debt discount during the six months ended June 30, 2021. The unamortized debt discount as of June 30, 2021 was $0. This
note was paid in full on January 8, 2021. Also on February 5, 2021 the company issued 1,100,000 shares of its common stock as redemptions
of $44,000 in cashless warrants.
On October 14, 2020 Clean Energy Technologies, Inc.
(the “Company) entered into a securities purchase agreement (the “Securities Purchase Agreement”) with Firstfire Global
Opportunities Fund LLC, (the “Investor”), pursuant to which the Company issued to the Investor a convertible promissory note
(the “Note”) in the original principal amount of $168,000, a Warrant (the “Warrant”) to purchase 1,500,000 shares
of the Company’s common stock, par value $.001 per share (the “Common Stock”) and 1,250,000 restricted shares of Common
Stock (“Commitment fee Shares”). These shares were issued on February 1, 2021 and 547,468.00 shares were issued as a result
of exercise of the warrants on May 28, 2021. This note was paid in full as of January 29, 2021.
On February 5, 2021 we issued 3,000,000 shares of
our common stock at a price of $.08 per share, in exchange for the conversion of 1,200 shares of our Series D Preferred Stock.
On February 9, 2021 we issued 2,275,662 shares of
our common stock share, in exchange for the conversion of $182,052 of accrued dividend for the series D Preferred Stock.
On February 9, 2021 we issued 2,000,000 shares of
our common stock at a price of $.04 per share, in exchange for the conversion of 800 shares of our Series D Preferred Stock.
On February 23, 2021 we issued 3,754,720 of common
stock at a purchase price of $.014 per share and 3,754,720 of warrant at purchase price of 0.04 for an aggregate price of $52,566 to an
accredited investor in a private sale. An additional 36,283 shares were issued as a result of a correction made to the original transaction.
On March 5, 2021 we issued 8,333,333 of common stock
at a purchase price of $.06 per share for an aggregate price of $500,000 to an accredited investor in a private sale.
On March 10, 2021 we issued 32,125,000 units of common
stock at a purchase price of $.08 per share for an aggregate price of $2,570,000 to an accredited investor in a private sale.
On March 12, 2021 we issued 1,625,000 shares and 2,068,588
of our common stock at a price of $.08 per share, in exchange for the conversion of 650 shares of our Series D Preferred Stock and 165,487
of accrued dividend for the series D preferred stock.
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, 2021 there were 921,650,238 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 divided 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 to 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 a 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 $0.08 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
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.
In connection with the subscriptions for the Series
D Preferred, we issued series F warrants to purchase an aggregate of 375,000 shares of our common stock at $.10 per share and series G
warrants to purchase an aggregate of 375,000 shares of our common stock at $.20 per share.
On August 21, 2014, a holder holding 5,000 shares
of Preferred Series D Preferred agreed to lower the dividend rate to 13% on its Series D Preferred. In September 2015, all holders of
Series D Preferred signed and delivered estoppel agreements, whereby the holders agreed, among other things, that the Series D Preferred
was not in default and to reduce (effective as of December 31, 2015) the dividend rate on the Series D Preferred Stock to six percent
per annum and to terminate the 3.5% penalty in respect of unpaid dividends accruing on or after such date.
In the first quarter of 2019, we signed agreements
to issue 4,000,000 shares of common stock valued at $.015 for a total value of $60,000 for the conversion of 800 preferred series D shares
, which were subsequently issued.
We also recorded a $60,000 commitment fee in exchange
for the “stand off” and estoppel agreement and discounted conversion terms to account for the difference in the fair value
which we offset to retained earnings.
On February 4, 2020 we issued 2,000,000 shares of
our common stock at a price of $.04 per share, in exchange for the conversion of 800 shares of our Series D Preferred Stock.
On July 23, 2020 we issued 3,000,000 shares of our
common stock at a price of $.04 per share, in exchange for the conversion of 1,200 shares of our Series D Preferred Stock.
On February 5, 2021 we issued 3,000,000 shares of
our common stock at a price of $.08 per share, in exchange for the conversion of 1,200 shares of our Series D Preferred Stock.
On February 9, 2021 we issued 2,275,662 shares of
our common stock share, in exchange for the conversion of $182,052 of accrued dividend for the series D Preferred Stock.
On February 9, 2021 we issued 2,000,000 shares of
our common stock at a price of $.04 per share, in exchange for the conversion of 800 shares of our Series D Preferred Stock.
On March 12, 2021 we issued 3,693,588 shares of our
common stock together with accrued preferred dividend at a price of $.08 per share, in exchange for the conversion of 1300 shares of our
Series D Preferred Stock and accrued preferred dividend.
Warrants
A summary of warrant activity for the periods is
as follows:
On May 31, 2019, we entered into a subscription agreement
pursuant to which the Company agreed to sell 168,000,000 units (each a “Unit” and together the “Units”) to MGW
Investment I Limited MGWI for an aggregate purchase price of $1,999,200, or $.0119 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 $.04 per share of Common Stock and, which expired on May 31, 2020.
On June 10, 2019 we issued 500,000 shares of common
stock at $.02 per share to an accredited investor for an aggregate price of $10,000 in a private sale. We also issued 500,000 warrants
as part of the transaction. Each Warrant is exercisable at $.04 per share of Common Stock and which expired on June 10, 2020.
On July 18, 2019 we issued 500,000 shares of common
stock at $.02 per share to an accredited investor for an aggregate price of $10,000 in a private sale. We also issued 500,000 warrants
as part of the transaction. Each Warrant is exercisable at $.04 per share of Common Stock and expired as of July 18, 2020.
On September 19, 2019 we entered into a stock purchase
agreement for 250,000 units to an accredited investor a private sale. Each unit consist of one share of common stock and one warrant to
purchase one share of common stock exercisable at $.04 per share of Common Stock and expired on September 19, 2020.
On December 5, 2019 we issued 5,000,000 units to an
accredited investor a private sale. Each unit consist of one share of common stock and one warrant to purchase one share of common stock
exercisable at $.04 per share. These warrants expire on December 5, 2020.
On July 6, 2020, Clean Energy Technologies, Inc. (the
“Company) entered into a securities purchase agreement (the “Securities Purchase Agreement”) with LGH Investments, LLC
(the “Investor”), pursuant to which the Company issued to the Investor a convertible promissory note (the “Note”)
in the original principal amount of $164,800, a Warrant (the “Warrant”) to purchase 1,500,000 shares of the Company’s
common stock, par value $.001 per share (the “Common Stock”) and one million (1,000,000) restricted shares of Common Stock
(“Commitment fee Shares”). The Note carried an original issue discount of $4,800 with interest of 8% per annum payable at
maturity. The Note matures 8 months from the issue date and is convertible at any time into the Common Stock at a conversion price equal
to $0.02 per share, subject to adjustment. On January 8, 2021, the cashless warrants were converted into 697,861 shares of our common
stock.
On August 17, 2020, Clean Energy Technologies, Inc.
(the “Company) entered into a securities purchase agreement (the “Securities Purchase Agreement”) with LGH Investments,
LLC (the “Investor”), pursuant to which the Company issued to the Investor a convertible promissory note (the “Note”)
in the original principal amount of $103,000, a Warrant (the “Warrant”) to purchase 1,500,000 shares of the Company’s
common stock, par value $.001 per share (the “Common Stock”) and one million (1,000,000) restricted shares of Common Stock
(“Commitment fee Shares”). The Note carried an original issue discount of $3,000 with interest of 8% per annum payable at
maturity. The Note matures 8 months from the issue date and is convertible at any time into the Common Stock at a conversion price equal
to $0.02 per share, subject to adjustment. On February 1, 2021 the cashless warrants were converted into 1,100,000 shares of our common
stock.
SCHEDULE OF WARRANT ACTIVITY
|
|
Warrants - Common Share Equivalents
|
|
|
Weighted Average Exercise price
|
|
|
Warrants exercisable - Common Share Equivalents
|
|
|
Weighted Average Exercise price
|
|
Outstanding December 31, 2020
|
|
|
9,500,000
|
|
|
$
|
0.04
|
|
|
|
9,500,000
|
|
|
$
|
0.04
|
|
Additions
|
|
|
3,754,720
|
|
|
|
-
|
|
|
|
3,754,720.00
|
|
|
|
0.04
|
|
Expired
|
|
|
1,500,000
|
|
|
|
-
|
|
|
|
1,500,000
|
|
|
|
-
|
|
Exercised
|
|
|
3,000,000
|
|
|
|
-
|
|
|
|
3,000,000
|
|
|
|
-
|
|
Outstanding June 30, 2021
|
|
|
8,754,720
|
|
|
$
|
0.04
|
|
|
|
8,754,720
|
|
|
$
|
0.04
|
|
Stock Options
We currently have no outstanding stock options.
NOTE 12 – RELATED PARTY TRANSACTIONS
Kambiz Mahdi, our Chief Executive Officer, owns Billet
Electronics, which is distributor of electronic components. From time to time, we purchase parts from Billet Electronics. In addition,
Billet was a supplier of parts and had dealings with current and former customers of the Company prior to joining the company. Our Board
of Directors has approved the transactions between Billet Electronics and the Company.
Pursuant to our 2017 Stock Compensation Program, effective
July 1, 2017, we made the following stock option grants to members of our Board of Directors: (a) we issued to each of our non-employee
members of our Board of Directors first joining the Board in October 2015 and who had not received any compensation for serving as directors
of the Company (five persons) options to purchase 150,000 shares of our common stock with an exercise price of $.03 per share, the last
sale price of our common stock on June 29, 2017 and (b) we issued to each of our non-employee members of our Board of Directors currently
serving on the Board (six persons) options to purchase 300,000 shares of our common stock with an exercise price of $.03 per share. On
the non-employee board members resigned, as disclosed in our 8K filed on February 15, 2018. As a result, all remaining stock options were
cancelled.
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 $.005 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
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 $0.003 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 in to shares in excess of the 800,000,000 Authorized limit until we have increased the Authorized shares
to the Board approved limit of 2 billion shares.
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) 0.003. 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.
Subsequently on
May 11th 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 25,000,000 shares of company’s common stock
On June 21, 2018 the corporation entered into a promissory
note with MGW Investment I Limited, for the principal amount of $250,000, with an interest rate of Eight Percent (8%) per annum and a
maturity date of June 21, 2019. On May 28, 2019 this note was paid in full.
On September 21, 2018 the corporation entered into
a promissory note with MGW Investment I Limited, for the principal amount of $100,000, with an interest rate of Eight Percent (8%) per
annum and a maturity date of September 21, 2019. On May 28, 2019 this note was paid in full.
On February 15, 2018 we issued 9,200,000 at a purchase
price of .0053 per share as additional compensation in the amount of $48,760.
On October 18, 2018 we entered into an at will employment
agreement with Kambiz Mahdi our CEO. This agreement may be terminated at any time. As part of the agreement Mr. Mahdi was to be issued
20,000,000 shares of our common stock, as additional compensation. As a result; for the year ended December 31, 2019 we accrued for and
subsequently on February 13, 2019, issued 20,000,000 shares at a purchase price of $.0131 per share to Mr. Mahdi in the amount of $262,000.
On January 10, 2019 the corporation entered into a
promissory note with MGW Investment I Limited, for the principal amount of $25,000, with an interest rate of Eight Percent (8%) per annum
and a maturity date of January 10, 2020. On May 28, 2019 this note was paid in full.
On May 1, 2019 we entered into an employment
agreement with Mr. Bennett, with an annual salary of $175,000.
Subsequently on March 9, 2020, John Bennett notified Clean Energy Technologies, Inc. (the
“Company”) of his resignation from his position as the Company’s Chief Financial Officer, effective March 9, 2020.
Mr. Bennett will remain as a consultant to the Company and assist with maintaining the financial books and records of the
Company.
On May 31, 2019, we entered into a subscription agreement
pursuant to which the Company agreed to sell 168,000,000 units (each a “Unit” and together the “Units”) to MGW
Investment I Limited MGWI for an aggregate purchase price of $1,999,200, or $.0119 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 $.04 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. The outstanding balance on this advance on June 30, 2021 is $167,975
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 two potential investments are still pending.
Note 13 - Warranty Liability
For the quarter ended June 30, 2021, and for the
year ended December 31, 2020 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.
NOTE 14 – SUBSEQUENT EVENTS
In accordance with ASC 855, the Company has analysed
its operations subsequent to June 30, 2021 through the date these financial statements were issued, and has determined that it does not
have any other material subsequent events to disclose in these financial statements.
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Shareholders of Clean Energy Technologies Inc.
Costa Mesa, CA
Opinion
on the Financial Statements
We
have audited the accompanying consolidated balance sheets of Clean Energy Technologies Inc. and subsidiaries (“the Company”)
as of December 31, 2020 and 2019, and the related consolidated statements of operations, changes in stockholders’ equity, and cash
flows for each of the years in the two-year period ended December 31, 2020, and the related notes (collectively referred to as the financial
statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company
as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the two-year period ended
December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.
Going
Concern
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note
1 to the financial statements, the Company has an accumulated deficit, net losses, negative working capital, and has utilized significant
net cash in operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s
plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
Basis
for Opinion
These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits,
we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion
on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error
or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.
Critical Audit Matters
The
critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated
or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial
statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters
does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit
matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Valuation
for Allowance on Receivables – Refer to Note 1 and Note 3 to the financial statements
Description
of the Critical Audit Matter
As
discussed in Note 3 to the consolidated financial statements, the Company has recognized an aggregate $322.5 thousand for allowance on
accounts receivable and long-term financing receivables, respectively. The Company recognizes reserves or valuation allowances based
on historical collection experience and specific account analysis for its receivables. Significant judgment is needed in determining
the appropriate allowance against receivables.
Auditing
management’s valuation for allowance was highly judgmental due to significant estimation required to determine likely future collections
on accounts and financing receivables.
How
the Critical Audit Matter Was Addressed in the Audit
Our
principal audit procedures to evaluate management’s valuation of allowance on receivables consisted of the following, among others:
|
●
|
We
evaluated management’s policies for reviewing and assessing allowances.
|
|
●
|
We
selected a sample of significant outstanding balances for confirmation and further testing of collectability.
|
|
●
|
We
evaluated management’s significant accounting estimates related to its financing receivables and tested those estimates.
|
Revenue
Recognition – Refer to Note 1 to the financial statements
Description
of the Critical Audit Matter
As
discussed in Note 1, the Company recognizes revenue upon transfer of control of promised products or services to customers in an amount
that reflects the consideration the Company expects to receive in exchange for those products or services.
Significant
judgment is exercised by the Company in determining revenue recognition for its customer agreements, and includes the following:
|
●
|
Determination
of whether products and installation/commissioning services are considered distinct performance obligations that should be accounted
for separately.
|
|
●
|
Identification
and treatment of contract terms that may impact the timing and amount of revenue recognized.
|
|
●
|
Determination
of stand-alone selling prices for each distinct performance obligation and for products and services that are not sold separately.
|
Auditing
management’s revenue recognition was highly judgmental due to the significant estimation required for the recognition of revenue.
How
the Critical Audit Matter Was Addressed in the Audit
Our
principal audit procedures related to the Company’s revenue recognition for these customer agreements included the following, among
others:
|
●
|
We
evaluated management’s significant accounting policies related to revenue recognition and reviewed underlying customer agreements
for reasonableness of the application of ASC 606.
|
|
●
|
We
obtained and read contract source documents for selected revenue contracts and tested management’s treatment of those terms.
|
|
●
|
We
tested the mathematical accuracy of management’s calculations of revenue and the associated timing of revenue recognized in
the financial statements.
|
|
|
|
|
We
have served as the Company’s auditor since 2015.
|
|
Spokane,
Washington
|
|
April
15, 2021
|
|
Clean Energy Technologies, Inc.
Consolidated Balance Sheet
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
Assets
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
414,885
|
|
|
$
|
7,406
|
|
Accounts receivable - net
|
|
|
265,738
|
|
|
|
1,288,258
|
|
Lease receivable asset
|
|
|
217,584
|
|
|
|
217,584
|
|
Inventory
|
|
|
557,820
|
|
|
|
630,204
|
|
Total Current Assets
|
|
|
1,456,027
|
|
|
|
2,143,452
|
|
Property and Equipment - Net
|
|
|
53,432
|
|
|
|
74,467
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
747,976
|
|
|
|
747,976
|
|
Long-term financing receivables - net
|
|
|
752,500
|
|
|
|
-
|
|
License
|
|
|
354,322
|
|
|
|
354,322
|
|
Patents
|
|
|
127,445
|
|
|
|
139,322
|
|
Right of use asset - long term
|
|
|
606,569
|
|
|
|
822,284
|
|
Other Assets
|
|
|
25,400
|
|
|
|
25,400
|
|
Total Non Current assets
|
|
|
2,667,644
|
|
|
|
2,163,771
|
|
Total Assets
|
|
$
|
4,123,671
|
|
|
$
|
4,307,223
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ (Deficit)
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
Bank Overdraft
|
|
$
|
-
|
|
|
$
|
1,480
|
|
Accounts payable
|
|
|
1,544,544
|
|
|
|
1,587,989
|
|
Accrued Expenses
|
|
|
503,595
|
|
|
|
503,849
|
|
Customer Deposits
|
|
|
82,730
|
|
|
|
309,230
|
|
Warranty Liability
|
|
|
100,000
|
|
|
|
100,000
|
|
Deferred Revenue
|
|
|
33,000
|
|
|
|
47,750
|
|
Derivative Liability
|
|
|
2,008,802
|
|
|
|
320,794
|
|
Facility Lease Liability - current
|
|
|
249,132
|
|
|
|
201,297
|
|
Line of Credit
|
|
|
1,680,350
|
|
|
|
1,617,086
|
|
Notes payable - GE
|
|
|
2,442,154
|
|
|
|
2,386,234
|
|
Convertible Notes Payable (net of discount of $170,438 and $80,647 respectively)
|
|
|
541,426
|
|
|
|
373,249
|
|
Related Party Notes Payable
|
|
|
600,075
|
|
|
|
1,480,183
|
|
Total Current Liabilities
|
|
|
9,785,809
|
|
|
|
8,929,141
|
|
Long-Term Debt:
|
|
|
|
|
|
|
|
|
Notes payable - PPL
|
|
|
110,700
|
|
|
|
-
|
|
Related Party Notes Payable (net of discount of $0 and $29,227 Respectively
|
|
|
1,092,622
|
|
|
|
|
|
Facility Lease Liability - long term
|
|
|
373,112
|
|
|
|
630,560
|
|
Net Long-Term Debt
|
|
|
1,576,434
|
|
|
|
630,560
|
|
Total Liabilities
|
|
|
11,362,243
|
|
|
|
9,559,701
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ (Deficit)
|
|
|
|
|
|
|
|
|
Preferred D stock, stated value $100 per share; 20,000 shares authorized; 7,500 shares and 7,500 shares issued and 4,500 and 6,500 outstanding as of December 31, 2020 and December 31, 2019, respectively
|
|
|
450,000
|
|
|
|
650,000
|
|
Common stock, $.001 par value; 2,000,000,000 shares authorized; 821,169,656 and 753,907,656 shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively
|
|
|
821,171
|
|
|
|
753,909
|
|
Shares to be issued
|
|
|
61,179
|
|
|
|
-
|
|
Additional paid-in capital
|
|
|
9,080,560
|
|
|
|
7,559,331
|
|
Accumulated deficit
|
|
|
(17,651,482
|
)
|
|
|
(14,215,718
|
)
|
Total Stockholders’ (Deficit)
|
|
|
(7,238,572
|
)
|
|
|
(5,252,478
|
)
|
Total Liabilities and Stockholders’ Deficit
|
|
$
|
4,123,671
|
|
|
$
|
4,307,223
|
|
The
accompanying footnotes are an integral part of these financial statements
Clean Energy Technologies, Inc.
Consolidated Statement of Operations
for the years ended December 31,
|
|
2020
|
|
|
2019
|
|
Sales
|
|
$
|
1,406,004
|
|
|
$
|
1,610,008
|
|
Cost of Goods Sold
|
|
|
654,937
|
|
|
|
952,782
|
|
Gross Profit
|
|
|
751,068
|
|
|
|
657,226
|
|
|
|
|
|
|
|
|
|
|
General and Administrative
|
|
|
|
|
|
|
|
|
General and Administrative expense
|
|
|
480,812
|
|
|
|
382,871
|
|
Salaries
|
|
|
495,269
|
|
|
|
802,951
|
|
Travel
|
|
|
86,292
|
|
|
|
246,078
|
|
Professional Fees
|
|
|
111,318
|
|
|
|
130,709
|
|
Consulting
|
|
|
157,149
|
|
|
|
73,443
|
|
Bad Debt Expense
|
|
|
259,289
|
|
|
|
128,463
|
|
Facility lease and Maintenance
|
|
|
363,643
|
|
|
|
305,883
|
|
Depreciation and Amortization
|
|
|
32,912
|
|
|
|
41,437
|
|
Total Expenses
|
|
|
1,986,684
|
|
|
|
2,111,835
|
|
Net Profit / (Loss) From Operations
|
|
|
(1,235,616
|
)
|
|
|
(1,454,609
|
)
|
|
|
|
|
|
|
|
|
|
Change in derivative liability
|
|
|
(1,270,099
|
)
|
|
|
216,269
|
|
Gain / (Loss) on debt settlement and write down
|
|
|
399,181
|
|
|
|
-
|
|
Interest and Financing fees
|
|
|
(1,329,230
|
)
|
|
|
(1,317,643
|
)
|
Net Profit / (Loss) Before Income Taxes
|
|
|
(3,435,764
|
)
|
|
|
(2,555,983
|
)
|
Income Tax Expense
|
|
|
-
|
|
|
|
-
|
|
Net Profit / (Loss)
|
|
$
|
(3,435,764
|
)
|
|
$
|
(2,555,983
|
)
|
|
|
|
|
|
|
|
|
|
Per Share Information:
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average number of common shares outstanding
|
|
|
767,861,170
|
|
|
|
641,349,437
|
|
|
|
|
|
|
|
|
|
|
Net Profit / (Loss) per common share basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
Per Share Information:
|
|
|
|
|
|
|
|
|
Diluted weighted average number of common shares outstanding
|
|
|
767,861,170
|
|
|
|
641,349,437
|
|
|
|
|
|
|
|
|
|
|
Net Profit / (Loss) per common share diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
The
accompanying footnotes are an integral part of these financial statements
Clean Energy Technologies, Inc.
Consolidated Statement of Stockholders Equity
December 31, 2020
Description
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Totals
|
|
|
|
Common
Stock
.001
Par
|
|
|
Preferred Stock
|
|
|
Common
Stock
to
be issued
|
|
|
Additional Paid in
|
|
|
Accumulated
|
|
|
Stock holders’ Deficit
|
|
Description
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Totals
|
|
December 31, 2018
|
|
|
555,582,656
|
|
|
$
|
555,585
|
|
|
$
|
7,500
|
|
|
$
|
750,000
|
|
|
$
|
262,000
|
|
|
$
|
5,236,456
|
|
|
$
|
(11,599,735
|
)
|
|
$
|
(4,795,694
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for compensation
|
|
|
20,000,000
|
|
|
|
20,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(262,000
|
)
|
|
|
242,000
|
|
|
|
-
|
|
|
|
-
|
|
Shares returned from admin. hold
|
|
|
75,000
|
|
|
|
75
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(75
|
)
|
|
|
-
|
|
|
|
-
|
|
Preferred shares reclassed
|
|
|
-
|
|
|
|
-
|
|
|
|
(200
|
)
|
|
|
(20,000
|
)
|
|
|
-
|
|
|
|
20,000
|
|
|
|
-
|
|
|
|
-
|
|
Shares issued for Preferred stock conversion
|
|
|
4,000,000
|
|
|
|
4,000
|
|
|
|
(800
|
)
|
|
|
(80,000
|
)
|
|
|
-
|
|
|
|
136,000
|
|
|
|
(60,000
|
)
|
|
|
-
|
|
Shares issued for cash
|
|
|
174,250,000
|
|
|
|
174,249
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
1,924,950
|
|
|
|
-
|
|
|
|
2,099,199
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,555,983
|
)
|
|
|
(2,555,983
|
)
|
December 31, 2019
|
|
|
753,907,656
|
|
|
|
753,909
|
|
|
|
6,500
|
|
|
|
650,000
|
|
|
|
-
|
|
|
|
7,559,331
|
|
|
|
(14,215,718
|
)
|
|
|
(5,252,478
|
)
|
Beginning balance
|
|
|
753,907,656
|
|
|
|
753,909
|
|
|
|
6,500
|
|
|
|
650,000
|
|
|
|
-
|
|
|
|
7,559,331
|
|
|
|
(14,215,718
|
)
|
|
|
(5,252,478
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for debt conversion
|
|
|
15,735,202
|
|
|
|
15,735
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
189,494
|
|
|
|
-
|
|
|
|
205,229
|
|
Shares issued for cash
|
|
|
43,762,272
|
|
|
|
43,762
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,089,081
|
|
|
|
-
|
|
|
|
1,132,843
|
|
Preferred conversions
|
|
|
5,000,000
|
|
|
|
5,000
|
|
|
|
(2,000
|
)
|
|
|
(200,000
|
)
|
|
|
|
|
|
|
195,000
|
|
|
|
-
|
|
|
|
-
|
|
Commitment fee shares
|
|
|
2,764,526
|
|
|
|
2,765
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
47,654
|
|
|
|
-
|
|
|
|
75,419
|
|
Common share subscriptions
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
36,179
|
|
|
|
|
|
|
|
-
|
|
|
|
36,179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,435,764
|
)
|
|
|
(3,435,764
|
)
|
December 31, 2020
|
|
|
821,169,656
|
|
|
$
|
821,171
|
|
|
|
4,500
|
|
|
$
|
450,000
|
|
|
$
|
61,179
|
|
|
$
|
9,080,560
|
|
|
$
|
(17,651,482
|
)
|
|
$
|
(7,238,572
|
)
|
Ending balance
|
|
|
821,169,656
|
|
|
$
|
821,171
|
|
|
|
4,500
|
|
|
$
|
450,000
|
|
|
$
|
61,179
|
|
|
$
|
9,080,560
|
|
|
$
|
(17,651,482
|
)
|
|
$
|
(7,238,572
|
)
|
The
accompanying footnotes are an integral part of these financial statements
Clean Energy Technologies, Inc.
Consolidated Statements of Cash Flows
for the years ended December 31,
|
|
2020
|
|
|
2019
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
Net Income / ( Loss )
|
|
$
|
(3,435,764
|
)
|
|
$
|
(2,555,983
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
32,912
|
|
|
|
41,437
|
|
Bad debt expense
|
|
|
259,289
|
|
|
|
128,463
|
|
Gain on debt settlement
|
|
|
(399,181
|
)
|
|
|
-
|
|
Shares issued for commitment fee
|
|
|
73,421
|
|
|
|
-
|
|
Change in debt discount and Financing fees
|
|
|
516,710
|
|
|
|
86,756
|
|
Change in derivative liability
|
|
|
1,270,099
|
|
|
|
269,732
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
(Increase) decrease in right of use asset
|
|
|
215,715
|
|
|
|
(822,284
|
)
|
(Increase) decrease in lease liability
|
|
|
(209,613
|
)
|
|
|
831,857
|
|
(Increase) decrease in accounts receivable
|
|
|
10,731
|
|
|
|
(909,460
|
)
|
(Increase) decrease in inventory
|
|
|
72,384
|
|
|
|
81,690
|
|
(Decrease) increase in accounts payable
|
|
|
230,200
|
|
|
|
430,988
|
|
Other (Decrease) increase in accrued expenses
|
|
|
55,666
|
|
|
|
35,320
|
|
Other (Decrease) increase in accrued expenses related party
|
|
|
118,286
|
|
|
|
199,151
|
|
Other (Decrease) increase in deferred revenue
|
|
|
(14,750
|
)
|
|
|
14,750
|
|
Other (Decrease) increase in customer deposits
|
|
|
(226,500
|
)
|
|
|
(56,585
|
)
|
Net Cash Provided by (Used In) Operating Activities
|
|
|
(1,430,395
|
)
|
|
|
(2,224,168
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities
|
|
|
|
|
|
|
|
|
Purchase property plant and equipment
|
|
|
-
|
|
|
|
(8,000
|
)
|
Cash Flows Used In Investing Activities
|
|
|
-
|
|
|
|
(8,000
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities
|
|
|
|
|
|
|
|
|
Bank Overdraft / (Repayment)
|
|
|
(1,480
|
)
|
|
|
(4,370
|
)
|
Payment on notes payable
|
|
|
(507,168
|
)
|
|
|
(277,685
|
)
|
Payment on notes payable related party
|
|
|
(35,000
|
)
|
|
|
(375,000
|
)
|
Proceeds from notes payable and lines of credit
|
|
|
1,150,502
|
|
|
|
598,024
|
|
Proceeds from notes payable related party
|
|
|
60,000
|
|
|
|
192,950
|
|
Stock issued for cash
|
|
|
1,171,020
|
|
|
|
2,099,199
|
|
Cash Flows Provided By Financing Activities
|
|
|
1,837,874
|
|
|
|
2,233,118
|
|
|
|
|
|
|
|
|
|
|
Net (Decrease) Increase in Cash and Cash Equivalents
|
|
|
407,479
|
|
|
|
950
|
|
Cash and Cash Equivalents at Beginning of Period
|
|
|
7,406
|
|
|
|
6,456
|
|
Cash and Cash Equivalents at End of Period
|
|
$
|
414,885
|
|
|
$
|
7,406
|
|
|
|
|
|
|
|
|
|
|
Supplemental Cashflow Information:
|
|
|
|
|
|
|
|
|
Interest Paid
|
|
$
|
200,671
|
|
|
$
|
543,220
|
|
Taxes Paid
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Supplemental Non-Cash Disclosure
|
|
|
|
|
|
|
|
|
Discount on derivatives
|
|
$
|
413,113
|
|
|
$
|
-
|
|
Shares issued for services
|
|
|
|
|
|
|
|
|
Shares issued for preferred conversions
|
|
$
|
200,000
|
|
|
$
|
80,000
|
|
Shares issued for debt conversion conversions
|
|
$
|
198,800
|
|
|
$
|
-
|
|
The
accompanying footnotes are an integral part of these financial statements
Clean
Energy Technologies, Inc.
Notes
to Consolidated Financial Statements
Notes
1- GENERAL
Corporate
History
With
the vision to combat climate change and creating a better, cleaner and environmentally sustainable future Clean Energy HRS LLC a wholly
owned subsidiary of Clean Energy Technologies, Inc. acquired the assets of Heat Recovery Solutions from General Electric International
on September 11, 2015. The GE HRS asset acquisition and related financing transactions resulted in a change of control of the Company
according to FASB No. 2014-17 Business Combinations (Topic 805). As a result, the transactions qualify as a business combination. In
accordance with Topic 805, the Company elected to apply pushdown accounting, using the valuation date of December 31, 2015. As a result
we recognized $747,976 in goodwill.
General
Electric acquired the rights and 16 global patents to the magnetic bearing technology from Calnetix in October of 2010 and further developed
the next generation of the waste heat generators, which was ultimately acquired by Clean Energy Technologies from GE. We completed our
production facility post the acquisition in October of 2016. We consolidated our legacy and HRS operations and began our production in
early 2017. In early 2018 we engaged with a large institutional equity partner and closed our first round of funding. We are successfully
executing on our business strategy by increasing our market presence and broadening our product portfolio in the heat to power markets.
We’re continuing to design, build and ship products to Europe, US, Canada, South East Pacific regions and planned expansion into
Asia. We are continuing to build a strong back log and pipeline of opportunities while developing the next disruptive heat to power generators
with the support of our new equity partners.
Going
Concern
The
financial statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets
and liquidation of liabilities in the normal course of business. The Company had a total stockholder’s deficit of $7,238,572 and
a working capital deficit of $8,329,782 and a net loss of $3,435,764 for the year ended December 31, 2020. $1,270,099 of this loss was
due to the adjustment to the derivative liability, and $1,329,230 was due to interest and finance fees. The company also had an accumulated
deficit of $17,651,482 as of December 31, 2020 and used $1,392,812 in net cash from operating activities for the year ended December
31, 2020. Therefore, there is doubt about the ability of the Company to continue as a going concern. There can be no assurance that the
Company will achieve its goals and reach profitable operations and is still dependent upon its ability (1) to obtain sufficient debt
and/or equity capital and/or (2) to generate positive cash flow from operations.
Plan
of Operation
Our
marketing approach is to position CETY as a worldwide leader in the heat to power & energy efficiency markets by targeting industries
that have wasted heat which could potentially turn into electricity.
We
are leveraging our proprietary magnetic bearing turbine technology and over 100 installation with 1 million fleet operating to increase
our market share in low to medium temperature waste heat recovery markets.
We
utilize both a direct sales force and global distribution group with expertise in heat recovery solutions and clean energy markets. We
have also established relationships with integrators, consultant and project developers and integrated solution providers.
We
plan to leverage our core expertise to identify, acquire and develop leading clean energy and clean technology solutions and products.
We will continue to utilize our relationships and expertise to expand in clean and renewable energy sector through new in-house development
of disruptive heat to power technologies, acquisitions, cogeneration, and licensing agreements.
CETY
maintains an online presence through our web portal and social media. Our application engineers assist in converting the opportunities
into projects. We provide technical support to our Clean Cycle TM generator clients through providing maintenance and product
support.
The
sales of our products are related to the global prices for oil, gas, coal and solar energy. As prices increase our products produce a
better return on investment for our customers. They are also dependent on regulatory drivers and financial incentives.
CETY
has implemented a new Enterprise Resource planning software by Microsoft providing accurate and timely information to support a more
robust and efficient supply chain. The operational leadership is continually working on lowering the cost of manufacturing and identifying
lower cost regions to support higher margins of our products.
NOTE
2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The
summary of significant accounting policies of Clean Energy Technologies, Inc. (formerly Probe Manufacturing, Inc.) is presented to assist
in the understanding of the Company’s financial statements. The financial statements and notes are representations of the Company’s
management, who is responsible for their integrity and objectivity.
The
consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in
the United States of America (“US GAAP”) and include the accounts of the Company and its wholly-owned subsidiaries. All material
intercompany balances and transactions have been eliminated in consolidation.
Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Such
estimates may be materially different from actual financial results. Significant estimates include the recoverability of long-lived assets,
the collection of accounts receivable and valuation of inventory and reserves.
Cash
and Cash Equivalents
We
maintain the majority of our cash accounts at a commercial bank. The total cash balance is insured by the Federal Deposit Insurance Corporation
(“FDIC”) up to $250,000, (which we may exceed from time to time) per commercial bank. For purposes of the statement of cash
flows we consider all cash and highly liquid investments with initial maturities of one year or less to be cash equivalents.
Accounts
Receivable
Our
ability to collect receivables is affected by economic fluctuations in the geographic areas and industries served by us. Reserves for
un-collectable amounts are provided, based on past experience and a specific analysis of the accounts. Although we expect to collect
amounts due, actual collections may differ from the estimated amounts. As of December 31, 2020, and December 31, 2019, we had a reserve
for potentially un-collectable accounts receivable of $75,000
and $82,000.
Our policy for reserves for our long-term financing receivables is determined on a contract by contract basis and takes into account
the length of the financing arrangement. As of December 31, 2020, and December 31, 2019, we had a reserve for potentially un-collectable
long-term financing receivables of $247,500
and $0 respectively.
Five
(5) customers accounted for approximately 98% of accounts receivable at December 31, 2020. Our trade accounts primarily represent unsecured
receivables. Historically, our bad debt write-offs related to these trade accounts have been insignificant.
Lease
asset
As
of December 31, 2020, and 2019 we had a lease asset that was purchased from General electric with a value of $1,309,527, however
due the the purchase price allocation, we recognized a value of $217,584. The lease is due to be commissioned in the second quarter
of 2021 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 market value. Our industry experiences changes in technology, changes in market
value and availability of raw materials, as well as changing customer demand. We make provisions for estimated excess and obsolete
inventories based on regular audits and cycle counts of our on-hand inventory levels and forecasted customer demands and at times
additional provisions are made. Any inventory write offs are charged to the reserve account. As of December 31, 2020 and December
31, 2019, we had a reserve for potentially obsolete inventory of $250,000.
Property
and Equipment
Property
and equipment are recorded at cost. Assets held under capital leases are recorded at lease inception at the lower of the present
value of the minimum lease payments or the fair market value of the related assets. The cost of ordinary maintenance and repairs
is charged to operations. Depreciation and amortization are computed on the straight-line method over the following estimated
useful lives of the related assets:
SCHEDULE OF PROPERTY AND EQUIPMENT ESTIMATED USEFUL LIVES
Furniture and fixtures
|
|
3 to 7 years
|
Equipment
|
|
7 to 10 years
|
Leasehold Improvements
|
|
7 years
|
Long
–Lived Assets
Our
management assesses the recoverability of its long-lived assets by determining whether the depreciation and amortization of long
lived assets over their remaining lives can be recovered through projected undiscounted future cash flows. The amount of long-lived
asset impairment if any, is measured based on fair value and is charged to operations in the period in which long-lived assets
impairment is determined by management. There can be no assurance however, that market conditions will not change or demand for
our services will continue, which could result in impairment of long-lived assets in the future.
Revenue
Recognition
The
Company recognizes revenue under ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” (“ASC
606”).
Performance
Obligations Satisfied Over Time
FASB
ASC 606-10-25-27 through 25-29, 25-36 through 25-37, 55-5 through 55-10
An
entity transfers control of a good or service over time and satisfies a performance obligation and recognizes revenue over time
if one of the following criteria is met:
a.
The customer receives and consumes the benefits provided by the entity’s performance as the entity performs (as described
in FASB ASC 606-10-55-5 through 55-6).
b.
The entity’s performance creates or enhances an asset (for example, work in process) that the customer controls as the asset
is created or enhanced (as described in FASB ASC 606-10-55-7).
c.
The entity’s performance does not create an asset with an alternative use to the entity (see FASB ASC 606-10-25-28), and
the entity has an enforceable right to payment for performance completed to date (as described in FASB ASC 606-10-25-29).
Performance
Obligations Satisfied at a Point in Time
FASB
ASC 606-10-25-30
If
a performance obligation is not satisfied over time, the performance obligation is satisfied at a point in time. To determine
the point in time at which a customer obtains control of a promised asset and the entity satisfies a performance obligation, the
entity should consider the guidance on control in FASB ASC 606-10-25-23 through 25-26. In addition, it should consider indicators
of the transfer of control, which include, but are not limited to, the following:
a.
The entity has a present right to payment for the asset
b.
The customer has legal title to the asset
c.
The entity has transferred physical possession of the asset
d.
The customer has the significant risks and rewards of ownership of the asset
e.
The customer has accepted the asset
The
core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or
services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for
those goods or services. The Company only applies the five-step model to contracts when it is probable that the Company will collect
the consideration it is entitled to in exchange for the goods and services transferred to the customer. In Addition a) the company
also does not have an alternative use for the asset if the customer were to cancel the contract, and b.) has a fully enforceable
right to receive payment for work performed (i.e., customers are required to pay as various milestones and/or timeframes are met)
The
following five steps are applied to achieve that core principle for our HRS and Cety Europe Divisions:
|
●
|
Identify
the contract with the customer
|
|
●
|
Identify
the performance obligations in the contract
|
|
●
|
Determine
the transaction price
|
|
●
|
Allocate
the transaction price to the performance obligations in the contract
|
|
●
|
Recognize
revenue when the company satisfies a performance obligation
|
The
following steps are applied to our legacy engineering and manufacturing division:
|
●
|
We
generate a quotation
|
|
●
|
We
receive Purchase orders from our customers.
|
|
●
|
We
build the product to their specification
|
|
●
|
We
invoice at the time of shipment
|
|
●
|
The
terms are typically Net 30 days
|
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 December 31, 2020 and 2019 we had $33,000 and 33,000 of deferred revenue, which is expected
to be recognized in the third quarter of year 2021.
Also
from time to time we require upfront deposits from our customers based on the contract . As of December 31, 2020 and 2019,
we had outstanding customer deposits of $82,730 and $309,230 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 112% and using a risk free interest rate of 2.54%
|
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 December 31 2018 and 2019, reflect:
SCHEDULE OF FAIR VALUE OF CONVERTIBLE NOTES DERIVATIVE LIABILITY
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of convertible notes derivative liability – December 31, 2020
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
2,008,802
|
|
|
$
|
2,008,802
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of convertible notes derivative liability – December 31, 2019
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
320,794
|
|
|
$
|
320,794
|
|
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.
Other
Comprehensive Income
We
have no material components of other comprehensive income (loss) and accordingly, net loss is equal to comprehensive loss in all
periods.
Net
Profit (Loss) per Common Share
Basic
profit / (loss) per share is computed on the basis of the weighted average number of common shares outstanding. At December 31,
2020, we had outstanding common shares of 821,169,656 used in the calculation of basic earnings per share. Basic Weighted average
common shares and equivalents at December 31, 2020 and 2019 were 767,861,170 and 641,349,437, respectively. As of December 31,
2020, we had convertible notes, convertible into approximately 482,870,234 of additional common shares, outstanding preferred
shares convertible into 3,701,463, calculated @ $.08 of additional common shares and 9,500,000 common stock warrants. Fully diluted
weighted average common shares and equivalents were withheld from the calculation as they were considered anti-dilutive. Subsequent
to December 31, 2020 approximately $700,000 of the convertible debt has been paid.
Research
and Development
We
had no amounts of research and development R&D expense during the year ended December 31, 2020 and 2019.
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 three reportable segments: Clean Energy HRS (HRS), Cety Europe and
the legacy electronic manufacturing services division. The segments are determined based on several factors, including the nature
of products and services, the nature of production processes, customer base, delivery channels and similar economic characteristics.
Refer to note 1 for a description of the various product categories manufactured under each of these segments.
An
operating segment’s performance is evaluated based on its pre-tax operating contribution, or segment income. Segment income
is defined as net sales less cost of sales, and segment selling, general and administrative expenses, and does not include amortization
of intangibles, stock-based compensation, other charges (income), net and interest and other, net.
Selected
Financial Data:
SCHEDULE OF SEGMENT REPORTING
|
|
2020
|
|
|
2019
|
|
|
|
For the years ended December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Net Sales
|
|
|
|
|
|
|
|
|
Manufacturing and Engineering
|
|
$
|
422,630
|
|
|
$
|
513,919
|
|
Clean Energy HRS
|
|
|
930,882
|
|
|
|
1,012,895
|
|
Cety Europe
|
|
|
52,492
|
|
|
|
83,194
|
|
Total Sales
|
|
$
|
1,406,004
|
|
|
$
|
1,610,008
|
|
|
|
|
|
|
|
|
|
|
Segment income and reconciliation before tax
|
|
|
|
|
|
|
|
|
Manufacturing and Engineering
|
|
|
118,412
|
|
|
|
150,741
|
|
Clean Energy HRS
|
|
|
581,903
|
|
|
|
428,445
|
|
Cety Europe
|
|
|
50,753
|
|
|
|
78,040
|
|
Total Segment income
|
|
|
751,068
|
|
|
|
657,226
|
|
|
|
|
|
|
|
|
|
|
Reconciling items
|
|
|
|
|
|
|
|
|
General and Administrative expense
|
|
|
(480,812
|
)
|
|
|
(382,871
|
)
|
Salaries
|
|
|
(495,269
|
)
|
|
|
(802,951
|
)
|
Travel
|
|
|
(86,292
|
)
|
|
|
(246,078
|
)
|
Professional Fees
|
|
|
(111,318
|
)
|
|
|
(130,709
|
)
|
Bad debt Expense
|
|
|
(259,289
|
)
|
|
|
(128,463
|
)
|
Consulting
|
|
|
(157,149
|
)
|
|
|
(73,443
|
)
|
Facility lease and Maintenance
|
|
|
(363,643
|
)
|
|
|
(305,883
|
)
|
Depreciation and Amortization
|
|
|
(32,912
|
)
|
|
|
(41,437
|
)
|
Change in derivative liability
|
|
|
(1,270,099
|
)
|
|
|
216,269
|
|
Gain debt settlement
|
|
|
399,181
|
|
|
|
-
|
|
Interest Expense
|
|
$
|
(1,329,230
|
)
|
|
$
|
(1,317,643
|
)
|
Net Loss before income tax
|
|
$
|
(3,435,764
|
)
|
|
$
|
(2,555,983
|
)
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
Total Assets
|
|
|
|
|
|
|
|
|
Electronics Assembly
|
|
$
|
1,922,648
|
|
|
$
|
1,877,916
|
|
Clean Energy HRS
|
|
|
2,166,478
|
|
|
|
2,405,628
|
|
Cety Europe
|
|
|
34,545
|
|
|
|
23,679
|
|
Total Assets
|
|
$
|
4,123,671
|
|
|
$
|
4,307,223
|
|
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 year ended December 31, 2020 and 2019 we had $0 in share-based expense, due to the
issuance of common stock. As of December 31, 2020, we had no further non-vested expense to be recognized.
Income
Taxes
Federal
Income taxes are not currently due since we have had losses since inception.
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, 2019
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.
As
of December 31, 2020, we had a net operating loss carry-forward of approximately $(8,801,764) and a deferred tax asset of $2,640,529
using the statutory rate of 30%. The deferred tax asset may be recognized in future periods, not to exceed 20 years. However,
due to the uncertainty of future events we have booked valuation allowance of $(2,640,529). FASB ASC 740 prescribes recognition
threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected
to be taken in a tax return. FASB ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting
in interim periods, disclosure and transition. At December 31, 2020 the Company had not taken any tax positions that would require
disclosure under FASB ASC 740.
SCHEDULE OF DEFERRED TAX ASSET
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
Deferred Tax Asset
|
|
$
|
2,640,529
|
|
|
$
|
1,609,800
|
|
Valuation Allowance
|
|
|
(2,640,529
|
)
|
|
|
(1,609,800
|
)
|
Deferred Tax Asset (Net)
|
|
$
|
-
|
|
|
$
|
-
|
|
On
February 13, 2018 , Clean Energy Technologies, Inc., a Nevada corporation (the “Registrant” or “Corporation”)
entered into a Common Stock Purchase Agreement (“Stock Purchase Agreement”) by and between MGW Investment I Limited
(“MGWI”) and the Corporation. The Corporation received $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 $0.003 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.
Reclassification
Certain
amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications
had no effect on reported income, total assets, or stockholders’ equity as previously reported.
Recently
Issued Accounting Standards
The
Company is reviewing the effects of following recent updates. The Company has no expectation that any of these items will have
a material effect upon the financial statements.
In
June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments—Credit
Losses [codified as Accounting Standards Codification Topic (ASC) 326]. ASC 326 adds to US generally accepted accounting principles
(US GAAP) the current expected credit loss (CECL) model, a measurement model based on expected losses rather than incurred losses.
Under this new guidance, an entity recognizes its estimate of expected credit losses as an allowance, which the FASB believes
will result in more timely recognition of such losses. This will become effective in January 2023 and will have minimal impact
on the company.
|
●
|
Update
2020-06—Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts
in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s
Own Equity.
|
NOTE
3 – ACCOUNTS AND NOTES RECEIVABLE
SCHEDULE OF ACCOUNTS AND NOTES RECEIVABLE
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
Accounts Receivable
|
|
$
|
340,738
|
|
|
$
|
1,370,258
|
|
Less Reserve for uncollectable accounts
|
|
|
(75,000
|
)
|
|
|
(82,000.00
|
)
|
Accounts Receivable (Net)
|
|
$
|
265,738
|
|
|
$
|
1,288,258
|
|
Our
Accounts Receivable is pledged to Nations Interbanc, our line of credit.
SCHEDULE OF LEASE RECEIVABLE ASSET
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
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 December 31, 2020
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
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
Long-term financing receivables
|
|
$
|
1,000,000
|
|
|
$
|
-
|
|
Less Reserve for uncollectable accounts
|
|
|
(247,500
|
)
|
|
|
-
|
|
Long-term financing receivables - net
|
|
$
|
752,500
|
|
|
$
|
-
|
|
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.
NOTE
4 – INVENTORY
Inventories
by major classification were comprised of the following at:
SCHEDULE OF INVENTORIES
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
Raw Material
|
|
$
|
805,574
|
|
|
$
|
848,464
|
|
Work in Process
|
|
|
2,246
|
|
|
|
31,740
|
|
Total
|
|
|
807,820
|
|
|
|
880,204
|
|
Less reserve for excess or obsolete inventory
|
|
|
(250,000
|
)
|
|
|
(250,000
|
)
|
Inventory
|
|
$
|
557,820
|
|
|
$
|
630,204
|
|
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
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
Capital Equipment
|
|
$
|
1,350,794
|
|
|
$
|
1,350,794
|
|
Leasehold improvements
|
|
|
75,436
|
|
|
|
75,436
|
|
Accumulated Depreciation
|
|
|
(1,372,798
|
)
|
|
|
(1,351,763
|
)
|
Net Fixed Assets
|
|
$
|
53,432
|
|
|
$
|
74,467
|
|
Our
Depreciation Expense for the years ended December 31, 2020 and 2019 was $21,035 and $29,560 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
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
Goodwill
|
|
$
|
747,976
|
|
|
$
|
747,976
|
|
License
|
|
|
354,322
|
|
|
|
354,322
|
|
Patents
|
|
|
190,789
|
|
|
|
190,789
|
|
Accumulated Amortization
|
|
|
(63,344
|
)
|
|
|
(51,467
|
)
|
Net Intangible Assets
|
|
$
|
1,229,743
|
|
|
$
|
1,241,620
|
|
Our
Amortization Expense for the years ended December 31, 2020 and 2019 was $11,877 and 11,877 respectively.
NOTE
7 – ACCRUED EXPENSES
SCHEDULE OF ACCRUED EXPENSES
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
|
|
|
|
|
|
|
Accrued Wages
|
|
$
|
25,654
|
|
|
$
|
192,227
|
|
Accrued Interest and other
|
|
|
477,941
|
|
|
|
311,622
|
|
Total accrued expenses
|
|
$
|
503,595
|
|
|
$
|
503,849
|
|
NOTE
8 – NOTES PAYABLE
The
Company issued a short-term note payable to an individual, secured by the assets of the Company, dated September 6, 2013 in the
amount of $50,000 and fixed fee amount of $3,500. As of December 31, 2019, the outstanding balance was $36,500. On January 30,
2020 we issued 1,700,000 shares of our common stock at a purchase price of $.02 per share, as settlement in full of a note payable
of in the amount of $36,500 with accrued interest of $19,721. As a result, we recognized a gain in the amount of $22,221 in the
1st quarter of 2020.
On
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% per month. It is secured by the assets of the Company.
In addition, it is personally guaranteed by Kambiz Mahdi, our Chief Executive Officer. As of December 31, 2020, the outstanding
balance was $1,680,350 compared to $1,718,760 at December 31, 2019.
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.
Total
Liability to GE
SCHEDULE OF NOTES PAYABLE
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
Note payable GE
|
|
$
|
1,200,000
|
|
|
$
|
1,200,000
|
|
Accrued transition services
|
|
|
972,233
|
|
|
|
972,233
|
|
Accrued Interest
|
|
|
269,921
|
|
|
|
214,001
|
|
Total
|
|
$
|
2,442,154
|
|
|
$
|
2,386,234
|
|
We
are currently in default on the payment of the purchase price pursuant to our asset purchase agreement with General Electric due
to our belief that we are entitled to a reduction in purchase price we paid due to the misunderstanding of the asset valuation.
On
May 4, 2020 the company entered in to a payroll protection loan, with Comerica bank, guaranteed by the SBA due May
4, 2022 for $110,700, with an interest rate of 1%. This note payment is due in full on May 4, 2022 and also has the possibility
of forgiveness. As of the date of this filing this note has not been forgiven nor has it been applied for.
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 nine months after its issuance and has a conversion rate of ninety 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 were added to the original note with the interest rate of 14%. This note matured on February
21st of 2018 and is currently in default. As of December 31, 2020, the outstanding balance due was $91,600.
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 nine 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 26th, 2018 and is currently in default. As of December 31, 2020, the outstanding balance due was $95,685
On
February 13, 2019 we entered into a convertible note payable for $138,000, with a maturity date of February 13, 2020, which accrues
interest at the rate of 12% per annum. It is not convertible nine months after its issuance and has a conversion rate of fifty-eight
percent (65%) of the average of the two lowest trading prices (as reported by Bloomberg LP) of our common stock for the fifteen
(15) Trading Days immediately preceding the date of conversion. On August 12, 2019 this note was paid in full.
On
April 9, 2019 we entered into a convertible note payable for $53,000, with a maturity date of April 9, 2020, which accrues interest
at the rate of 12% per annum. It is convertible nine months after its issuance and has a conversion rate of sixty-five percent
(65%) of the average of the two lowest closing prices (as reported by Bloomberg LP) of our common stock for the fifteen (15) Trading
Days immediately preceding the date of conversion. This note was paid in full on October 10, 2019.
On
October 30, 2019 we entered into a convertible note payable for $103,000, with a maturity date of October 30, 2020, which accrues
interest at the rate of 12% per annum. It is convertible nine months after its issuance and has a conversion rate of sixty-five
percent (65%) of the average of the two lowest closing prices (as reported by Bloomberg LP) of our common stock for the fifteen
(15) Trading Days immediately preceding the date of conversion. We also entered into a stock purchase agreement for the potential
conversion into common stock. This note was paid in full on May 1, 2020.
On
January 8, 2020 we entered into a convertible note payable for $103,000, with a maturity date of January 8, 2021, which accrues
interest at the rate of 12% per annum. It is convertible nine months after its issuance and has a conversion rate of sixty-five
percent (65%) of the average of the two lowest closing prices (as reported by Bloomberg LP) of our common stock for the fifteen
(15) Trading Days immediately preceding the date of conversion. We also entered into a stock purchase agreement for the potential
conversion into common stock. Subsequently The fair value of the convertible feature was $87,560, we recorded a debt discount
of $87,560. On July 7, 2020 this note was paid in full.
On
February 19, 2020 we entered into a convertible note payable for $53,000, with a maturity date of February 19, 2021, which accrues
interest at the rate of 12% per annum. It is convertible nine months after its issuance and has a conversion rate of sixty-five
percent (65%) of the average of the two lowest closing prices (as reported by Bloomberg LP) of our common stock for the fifteen
(15) Trading Days immediately preceding the date of conversion. We also entered into a stock purchase agreement for the potential
conversion into common stock. On August 18, 2020 this note was paid in full.
On
July 6, 2020, Clean Energy Technologies, Inc. (the “Company) entered into a securities purchase agreement (the “Securities
Purchase Agreement”) with LGH Investments, LLC (the “Investor”), pursuant to which the Company issued to the
Investor a convertible promissory note (the “Note”) in the original principal amount of $164,800, a Warrant (the “Warrant”)
to purchase 1,500,000 shares of the Company’s common stock, par value $.001 per share (the “Common Stock”) and
one million (1,000,000) restricted shares of Common Stock (“Commitment fee Shares”). The Note carried an original
issue discount of $4,800 with interest of 8% per annum payable at maturity. The Note matures 8 months from the issue date and
is convertible at any time into the Common Stock at a conversion price equal to $0.02 per share, subject to adjustment. The shares
were valued on the date of issuance using the stock price on that day for a total value of $19,211. We also recognized a debt
discount of $17,861. We amortized $3,234 of the debt discount during the three months ended September 30, 2020. The unamortized
debt discount as of September 30, 2020 was $14,267. This note was fully converted as of December 31, 2021. On December 31, 2020
this note was converted into 14,035,202 shares of common stock, for a total of $171,229 including principal of 164,800 plus a
accrued interest of $6,429. Also on January 12, 2021 the company issued 697,861shares of its common stock as redemptions of $27,914
in cashless warrants.
On
July 15, 2020 we entered into a convertible note payable for $128,000, with a maturity date of July 15, 2021, which accrues interest
at the rate of 12% per annum. It is convertible nine months after its issuance and has a conversion rate of sixty-five percent
(65%) of the average of the two lowest closing prices (as reported by Bloomberg LP) of our common stock for the fifteen (15) Trading
Days immediately preceding the date of conversion. We also entered into a stock purchase agreement for the potential conversion
into common stock. This note was paid in full on October 16, 2020.
On
August 17, 2020, Clean Energy Technologies, Inc. (the “Company) entered into a securities purchase agreement (the “Securities
Purchase Agreement”) with LGH Investments, LLC (the “Investor”), pursuant to which the Company issued to the
Investor a convertible promissory note (the “Note”) in the original principal amount of $103,000, a Warrant (the “Warrant”)
to purchase 1,500,000 shares of the Company’s common stock, par value $.001 per share (the “Common Stock”) and
one million (1,000,000) restricted shares of Common Stock (“Commitment fee Shares”). The Note carried an original
issue discount of $3,000 with interest of 8% per annum payable at maturity. The Note matures 8 months from the issue date and
is convertible at any time into the Common Stock at a conversion price equal to $0.02 per share, subject to adjustment. The shares
were valued on the date of issuance using the stock price on that day for a total value of $19,211. We also recognized a debt
discount of $17,861. We amortized $3,234 of the debt discount during the three months ended September 30, 2020. The unamortized
debt discount as of December 31, 2020 was $14,267. Subsequently this note was paid in full on January 8, 2021.
On
September 10, 2020 we entered into a convertible note payable for $63,000, with a maturity date of July 15, 2021, which accrues
interest at the rate of 11% per annum. It is convertible nine months after its issuance and has a conversion rate of sixty-five
percent (65%) of the average of the two lowest closing prices (as reported by Bloomberg LP) of our common stock for the fifteen
(15) Trading Days immediately preceding the date of conversion. We also entered into a stock purchase agreement for the potential
conversion into common stock. Subsequently this note was paid in full on January 15, 2021.
On
October 14, 2020 Clean Energy Technologies, Inc. (the “Company) entered into a securities purchase agreement (the “Securities
Purchase Agreement”) with Firstfire Global Opportunities Fund LLC, (the “Investor”), pursuant to which the Company
issued to the Investor a convertible promissory note (the “Note”) in the original principal amount of $168,000, a
Warrant (the “Warrant”) to purchase 1,500,000 shares of the Company’s common stock, par value $.001 per share
(the “Common Stock”) and 1,250,000 restricted shares of Common Stock (“Commitment fee Shares”). The Note
carried an original issue discount of $8,000 with interest of 8% per annum payable at maturity. The Note matures 8 months from
the issue date and is convertible at any time into the Common Stock at a conversion price equal to $0.02 per share, subject to
adjustment. The shares were valued on the date of issuance using the stock price on that day for a total value of $24,282. We
also recognized a debt discount of $24,282. We amortized $5,189 of the debt discount during the three months ended December 31,
2020. The unamortized debt discount as of December 31, 2020 was $19,093. Subsequently on January 29, 2021 this note was paid in
full. Also on January 12, 2021 the company issued 697,861shares of its common stock as redemptions of $27,914 in cashless warrants.
On
November 10, 2020 we entered into a convertible note payable for $53,000, with a maturity date of November 10, 2021, which accrues
interest at the rate of 11% per annum. It is convertible nine months after its issuance and has a conversion rate of sixty-five
percent (65%) of the average of the two lowest closing prices (as reported by Bloomberg LP) of our common stock for the fifteen
(15) Trading Days immediately preceding the date of conversion. We also entered into a stock purchase agreement for the potential
conversion into common stock. Subsequently on February 11, 2021 this note was paid in full.
On
December 18, 2020 we entered into a convertible note payable for $83,500, with a maturity date of December 18, 2021, which accrues
interest at the rate of 11% per annum. It is convertible nine months after its issuance and has a conversion rate of sixty-five
percent (65%) of the average of the two lowest closing prices (as reported by Bloomberg LP) of our common stock for the fifteen
(15) Trading Days immediately preceding the date of conversion. We also entered into a stock purchase agreement for the potential
conversion into common stock. As of March 11, 2020, the un-amortized debt discount was $56,000. The total amortized debt discount
expense was $7,000 for the nine months ended September 30, 2020. Subsequently on March 11, 202, this note was paid in full.
Total
due to Convertible Notes
SCHEDULE OF CONVERTIBLE NOTES
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
Total convertible notes
|
|
$
|
612,355
|
|
|
$
|
371,785
|
|
Accrued Interest
|
|
|
99,509
|
|
|
|
82,111
|
|
Debt Discount
|
|
|
(170,438
|
)
|
|
|
(80,647
|
)
|
Total
|
|
$
|
541,426
|
|
|
$
|
373,249
|
|
Note
9 – Derivative Liabilities
As
a result of the convertible notes we recognized the embedded derivative liability on the date of note issuance. We also revalued
the remaining derivative liability on the outstanding note balance on the date of the balance sheet. We value the derivative liability
using a binomial lattice model with an expected volatility range of 85% to 92% and a risk-free interest rate range of 1.60% to
1.64% The remaining derivative liabilities were:
SCHEDULE OF FAIR VALUE OF DERIVATIVE LIABILITY
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
Derivative Liabilities on Convertible Loans:
|
|
|
|
|
|
|
|
|
Outstanding Balance
|
|
$
|
2,008,802
|
|
|
$
|
320,794
|
|
NOTE
10 – COMMITMENTS AND CONTINGENCIES
The
company has received an invoice from Oberon Securities for $291,767 which is in dispute. The company believes it has defenses
to the claim for compensation and plans to assert appropriate counterclaims and actions as permitted by law. No liability has
been recorded for this claim as the Company believes there is a greater than not probability that our Company will prevail in
defending against the claim.
Operating
Rental Leases
As
of May 1, 2017, our corporate headquarters are located at 2990 Redhill Unit A, Costa Mesa, CA. On March 10, 2017, the Company
signed a lease agreement for a 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
Year
|
|
Lease Payment
|
|
2021
|
|
|
245,508
|
|
2022
|
|
|
253,608
|
|
2023
|
|
|
172,208
|
|
Imputed Interest
|
|
|
(49,080
|
)
|
Net Lease Liability
|
|
$
|
622,244
|
|
Our
lease expense for the years ended December 31, 2020 and 2019 was $363,643 and $305,883 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 and the company is utilizing the transition
relief and “running off” on current leases.
Severance
Benefits
Mr.
Mahdi will receive a severance benefit consisting of a single lump sum cash payment equal the salary that Mr. Mahdi would have
been entitled to receive through the remainder or the Employment Period or One (1) year, whichever is greater.
Mr.
Bennett will receive a severance benefit consisting of a single lump sum cash payment equal the salary that Mr. Bennett would
have been entitled to receive through the remainder or the Employment Period or One (1) year, whichever is greater. Subsequently
on March 9, 2020, John Bennett notified Clean Energy Technologies, Inc. (the “Company”)
of his resignation from his position as the Company’s Chief Financial Officer, effective March 9, 2020. Mr. Bennett will
remain as a consultant to the Company and assist with maintaining the financial books and records of the Company. As a result,
Mr. Bennett is no longer entitled to any severance benefits.
NOTE
11 – 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
Common
Stock Transactions
In
the first quarter of 2019, we signed agreements to issue 4,000,000 shares of common stock valued at $.015 for a total value of
$60,000 for the conversion of 800 preferred series D shares, which were subsequently issued.
We
also recorded a $60,000 commitment fee (relating to the Preferred series D estoppel agreement and discounted conversion terms)
to account for the difference in the fair value which was offset to retained earnings.
On
June 10, 2019 we issued 500,000 shares of common stock at $.02 per share to an accredited investor for an aggregate price of $10,000
in a private sale. We also issued 500,000 warrants as part of the transaction. Each Warrant is exercisable at $.04 per share of
Common Stock and expires one year from the date of the Agreement.
On
July 19, 2019 we issued 500,000 shares of common stock at $.02 per share to an accredited investor for an aggregate price of $10,000
in a private sale. We also issued 500,000 warrants as part of the transaction. Each Warrant is exercisable at $.04 per share of
Common Stock and expires one year from the date of the Agreement.
On
September 19, 2019 we entered into a stock purchase agreement for 250,000 units at a purchase price of $.02 a unit for an aggregate
price of $5,000 to an accredited investor a private sale. Each unit consist of one share of common stock and one warrant to purchase
one share of common stock exercisable at $.04 per share of Common Stock and expires one year from the date of the Agreement. The
shares were included in the shares to be issued as of September 30, 2019 and were subsequently issued on October 15, 2019.
On
December 5, 2019 we issued 5,000,000 units at a purchase price of $.015 per unit for an aggregate price of $75,000 to an accredited
investor in a private sale. Each unit consist of one share of common stock and one warrant to purchase one share of common stock
exercisable at $.04 per share.
On
January 21, 2020 our Registration Statement on Form 1-A was qualified with the Securities and Exchange Commission, under which
we may offer up to 300,000,000 shares of our common stock at a purchase price of $.03 per share. As of the date hereof, 4,523,333
shares of common stock have been issued thereunder.
On
January 30, 2020 we issued 1,700,000 shares of our common stock at a purchase price of $.02 per share, as settlement in full of
a note payable of in the amount of $36,500 with accrued interest of 19,721. As a result we recognized a gain in the amount of
$22,221 in the 1st quarter of 2020.
On
February 3, 2020 we issued 3,690,000 shares of our common stock under our Reg A offering at $.03 per share. These shares are unrestricted
and free trading.
On
February 4, 2020 we issued 2,000,000 shares of our common stock at a price of $.04 per share, in exchange for the conversion of
800 shares of our Series D Preferred Stock.
On
March 17, 2020 we issued 833,333 shares of our common stock under our Reg A offering at $.03 per share. These shares are unrestricted
and free trading.
On
June 8, 2020, Clean Energy Technology, Inc., a Nevada corporation (the “Company”), entered into an Equity Financing
Agreement (“Equity Financing Agreement”) and Registration Rights Agreement (“Registration Rights Agreement”)
with GHS Investments LLC, a Nevada limited liability company (“GHS”). Under the terms of the Equity Financing Agreement,
GHS agreed to provide the Company with up to $2,000,000 upon effectiveness of a registration statement on Form S-1 (the “Registration
Statement”) filed with the U.S. Securities and Exchange Commission (the “Commission”) As a result we issued
764,526 Shares of common stock as an commitment fee, which was valued and expense in the amount of $10,000. On July 23, 2020,
this Form S-1 became effective.
During
the year ended December 31, 2020 we issued 22,572,272 shares of common stock, under S-1 registration statement with GHS for a
total of $321,951 in net proceeds and expensed $171,794 in legal and financing fees as a result.
On
July 6, 2020, Clean Energy Technologies, Inc. (the “Company) entered into a securities purchase agreement (the “Securities
Purchase Agreement”) with LGH Investments, LLC (the “Investor”), pursuant to which the Company issued to the
Investor a convertible promissory note (the “Note”) in the original principal amount of $164,800, a Warrant (the “Warrant”)
to purchase 1,500,000 shares of the Company’s common stock, par value $.001 per share (the “Common Stock”) and
one million (1,000,000) restricted shares of Common Stock (“Commitment fee Shares”). On December 31, 2020 this note
was converted into 14,035,202 shares of common stock, for a total of $171,229 including principal of 164,800 plus a accrued interest
of $6,429. Also on January 12, 2021 the company issued 697,861shares of its common stock as redemptions of $27,914 in cashless
warrants.
On
July 23, 2020 we issued 3,000,000 shares of our common stock at a price of $.04 per share, in exchange for the conversion of 1,200
shares of our Series D Preferred Stock.
On
August 17, 2020, Clean Energy Technologies, Inc. (the “Company) entered into a securities purchase agreement (the “Securities
Purchase Agreement”) with LGH Investments, LLC (the “Investor”), pursuant to which the Company issued to the
Investor a convertible promissory note (the “Note”) in the original principal amount of $103,000, a Warrant (the “Warrant”)
to purchase 1,500,000 shares of the Company’s common stock, par value $.001 per share (the “Common Stock”) and
one million (1,000,000) restricted shares of Common Stock (“Commitment fee Shares”). The Note carried an original
issue discount of $3,000 with interest of 8% per annum payable at maturity. The Note matures 8 months from the issue date and
is convertible at any time into the Common Stock at a conversion price equal to $0.02 per share, subject to adjustment. The shares
were valued on the date of issuance using the stock price on that day for a total value of $19,211. We also recognized a debt
discount of $17,861. We amortized $3,234 of the debt discount during the three months ended September 30, 2020. The unamortized
debt discount as of December 31, 2020 was $14,267. Subsequently this note was paid in full on January 8, 2021.
On
October 14, 2020 Clean Energy Technologies, Inc. (the “Company) entered into a securities purchase agreement (the “Securities
Purchase Agreement”) with Firstfire Global Opportunities Fund LLC, (the “Investor”), pursuant to which the Company
issued to the Investor a convertible promissory note (the “Note”) in the original principal amount of $168,000, a
Warrant (the “Warrant”) to purchase 1,500,000 shares of the Company’s common stock, par value $.001 per share
(the “Common Stock”) and 1,250,000 restricted shares of Common Stock (“Commitment fee Shares”). These
are classified as “To be issued at December 31, 2020.
On
February 5, 2021 we issued 3,000,000 shares of our common stock at a price of $.08 per share, in exchange for the conversion of
1,200 shares of our Series D Preferred Stock.
On
February 9, 2021 we issued 2,275,662 shares of our common stock share, in exchange for the conversion of $182,052 of accrued dividend
for the series D Preferred Stock.
On
February 9, 2021 we issued 2,000,000 shares of our common stock at a price of $.04 per share, in exchange for the conversion of
800 shares of our Series D Preferred Stock.
On
February 23, 2021 we issued 3,754,720 units at a purchase price of $.014 per unit for an aggregate price of $52,566 to an accredited
investor in a private sale.
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 December
31, 2020 there were 821,169,656 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 divided 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 to 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 a 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 $0.08 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 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.
In
connection with the subscriptions for the Series D Preferred, we issued series F warrants to purchase an aggregate of 375,000
shares of our common stock at $.10 per share and series G warrants to purchase an aggregate of 375,000 shares of our common stock
at $.20 per share.
On
August 21, 2014, a holder holding 5,000 shares of Preferred Series D Preferred agreed to lower the dividend rate to 13% on its
Series D Preferred. In September 2015, all holders of Series D Preferred signed and delivered estoppel agreements, whereby the
holders agreed, among other things, that the Series D Preferred was not in default and to reduce (effective as of December 31,
2015) the dividend rate on the Series D Preferred Stock to six percent per annum and to terminate the 3.5% penalty in respect
of unpaid dividends accruing on or after such date.
In
the first quarter of 2019, we signed agreements to issue 4,000,000 shares of common stock valued at $.015 for a total value of
$60,000 for the conversion of 800 preferred series D shares , which were subsequently issued.
We
also recorded a $60,000 commitment fee fee in exchange for the “stand off” and estoppel agreement and discounted conversion
terms to account for the difference in the fair value which we offset to retained earnings.
On
February 4, 2020 we issued 2,000,000 shares of our common stock at a price of $.04 per share, in exchange for the conversion of
800 shares of our Series D Preferred Stock.
On
July 23, 2020 we issued 3,000,000 shares of our common stock at a price of $.04 per share, in exchange for the conversion of 1,200
shares of our Series D Preferred Stock.
On
February 5, 2021 we issued 3,000,000 shares of our common stock at a price of $.08 per share, in exchange for the conversion of
1,200 shares of our Series D Preferred Stock.
On
February 9, 2021 we issued 2,275,662 shares of our common stock share, in exchange for the conversion of $182,052 of accrued dividend
for the series D Preferred Stock.
On
February 9, 2021 we issued 2,000,000 shares of our common stock at a price of $.04 per share, in exchange for the conversion of
800 shares of our Series D Preferred Stock.
On
March 12, 2021 we issued 3,693,588 shares of our series D preferred stock together with accrued preferred dividend at a price
of $.08 per share, in exchange for the conversion of 1300 shares of our Series D Preferred Stock and accrued preferred dividend.
Warrants
A
summary of warrant activity for the periods is as follows:
On
May 31, 2019, we entered into a subscription agreement pursuant to which the Company agreed to sell 168,000,000 units (each a
“Unit” and together the “Units”) to MGW Investment I Limited MGWI for an aggregate purchase price of $1,999,200,
or $.0119 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 $.04 per share
of Common Stock and, which expired on May 31, 2020.
On
June 10, 2019 we issued 500,000 shares of common stock at $.02 per share to an accredited investor for an aggregate price of $10,000
in a private sale. We also issued 500,000 warrants as part of the transaction. Each Warrant is exercisable at $.04 per share of
Common Stock and which expired on June 10, 2020.
On
July 18, 2019 we issued 500,000 shares of common stock at $.02 per share to an accredited investor for an aggregate price of $10,000
in a private sale. We also issued 500,000 warrants as part of the transaction. Each Warrant is exercisable at $.04 per share of
Common Stock and expired as of July 18, 2020.
On
September 19, 2019 we entered into a stock purchase agreement for 250,000 units to an accredited investor a private sale. Each
unit consist of one share of common stock and one warrant to purchase one share of common stock exercisable at $.04 per share
of Common Stock and expired on September 19, 2020.
On
December 5, 2019 we issued 5,000,000 units to an accredited investor a private sale. Each unit consist of one share of common
stock and one warrant to purchase one share of common stock exercisable at $.04 per share. These warrants expire on December 5,
2020.
On
July 6, 2020, Clean Energy Technologies, Inc. (the “Company) entered into a securities purchase agreement (the “Securities
Purchase Agreement”) with LGH Investments, LLC (the “Investor”), pursuant to which the Company issued to the
Investor a convertible promissory note (the “Note”) in the original principal amount of $164,800, a Warrant (the “Warrant”)
to purchase 1,500,000 shares of the Company’s common stock, par value $.001 per share (the “Common Stock”) and
one million (1,000,000) restricted shares of Common Stock (“Commitment fee Shares”). The Note carried an original
issue discount of $4,800 with interest of 8% per annum payable at maturity. The Note matures 8 months from the issue date and
is convertible at any time into the Common Stock at a conversion price equal to $0.02 per share, subject to adjustment. On January
8, 2021, the cashless warrants were converted into 697,861 shares of our common stock.
On
August 17, 2020, Clean Energy Technologies, Inc. (the “Company) entered into a securities purchase agreement (the “Securities
Purchase Agreement”) with LGH Investments, LLC (the “Investor”), pursuant to which the Company issued to the
Investor a convertible promissory note (the “Note”) in the original principal amount of $103,000, a Warrant (the “Warrant”)
to purchase 1,500,000 shares of the Company’s common stock, par value $.001 per share (the “Common Stock”) and
one million (1,000,000) restricted shares of Common Stock (“Commitment fee Shares”). The Note carried an original
issue discount of $3,000 with interest of 8% per annum payable at maturity. The Note matures 8 months from the issue date and
is convertible at any time into the Common Stock at a conversion price equal to $0.02 per share, subject to adjustment. On February
1, 2021 the cashless warrants were converted into 1,100,000 shares of our common stock.
SCHEDULE OF WARRANT ACTIVITY
|
|
Warrants -
Common Share
Equivalents
|
|
|
Weighted
Average
Exercise price
|
|
|
Warrants
exercisable -
Common Share
Equivalents
|
|
|
Weighted
Average
Exercise price
|
|
Outstanding December 31, 2019
|
|
|
174,250,000
|
|
|
$
|
0.04
|
|
|
|
174,250,000
|
|
|
$
|
0.04
|
|
Additions
|
|
|
4,500,000
|
|
|
|
-
|
|
|
|
4,500,000.00
|
|
|
|
0.04
|
|
Expired
|
|
|
169,250,000
|
|
|
|
-
|
|
|
|
169,250,000
|
|
|
|
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Outstanding December 31, 2020
|
|
|
9,500,000
|
|
|
$
|
0.04
|
|
|
|
9,500,000
|
|
|
$
|
0.04
|
|
Stock
Options
We
currently have no outstanding stock options
NOTE
12 – RELATED PARTY TRANSACTIONS
Kambiz
Mahdi, our Chief Executive Officer, owns Billet Electronics, which is distributor of electronic components. From time to time,
we purchase parts from Billet Electronics. In addition, Billet was a supplier of parts and had dealings with current and former
customers of the Company prior to joining the company. Our Board of Directors has approved the transactions between Billet Electronics
and the Company.
Pursuant
to our 2017 Stock Compensation Program, effective July 1, 2017, we made the following stock option grants to members of our Board
of Directors: (a) we issued to each of our non-employee members of our Board of Directors first joining the Board in October 2015
and who had not received any compensation for serving as directors of the Company (five persons) options to purchase 150,000 shares
of our common stock with an exercise price of $.03 per share, the last sale price of our common stock on June 29, 2017 and (b)
we issued to each of our non-employee members of our Board of Directors currently serving on the Board (six persons) options to
purchase 300,000 shares of our common stock with an exercise price of $.03 per share. On the non-employee board members resigned,
as disclosed in our 8K filed on February 15, 2018. As a result, all remaining stock options were cancelled.
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 $.005 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 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 $0.003 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 in to shares in excess of the 800,000,000 Authorized limit until we have increased the Authorized shares to the Board approved
limit of 2 billion shares.
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) 0.003. 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.
On
June 21, 2018 the corporation entered into a promissory note with MGW Investment I Limited, for the principal amount of $250,000,
with an interest rate of Eight Percent (8%) per annum and a maturity date of June 21, 2019. On May 28, 2019 this note was paid
in full.
On
September 21, 2018 the corporation entered into a promissory note with MGW Investment I Limited, for the principal amount of $100,000,
with an interest rate of Eight Percent (8%) per annum and a maturity date of September 21, 2019. On May 28, 2019 this note was
paid in full.
On
February 15, 2018 we issued 9,200,000 at a purchase price of .0053 per share as additional compensation in the amount of $48,760.
On
October 18, 2018 we entered into an at will employment agreement with Kambiz Mahdi our CEO. This agreement may be terminated at
any time. As part of the agreement Mr. Mahdi was to be issued 20,000,000 shares of our common stock, as additional compensation.
As a result; for the year ended December 31, 2019 we accrued for and subsequently on February 13, 2019, issued 20,000,000 shares
at a purchase price of $.0131 per share to Mr. Mahdi in the amount of $262,000.
On
January 10, 2019 the corporation entered into a promissory note with MGW Investment I Limited, for the principal amount of $25,000,
with an interest rate of Eight Percent (8%) per annum and a maturity date of January 10, 2020. On May 28, 2019 this note was paid
in full.
On
May 1, 2019 we entered into an employment agreement with Mr. Bennett, with an annual salary of $175,000. Subsequently on March
9, 2020, John Bennett notified Clean Energy Technologies, Inc. (the “Company”) of his resignation from his
position as the Company’s Chief Financial Officer, effective March 9, 2020. Mr. Bennett will remain as a consultant to
the Company and assist with maintaining the financial books and records of the Company.
On
May 31, 2019, we entered into a subscription agreement pursuant to which the Company agreed to sell 168,000,000 units (each a
“Unit” and together the “Units”) to MGW Investment I Limited MGWI for an aggregate purchase price of $1,999,200,
or $.0119 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 $.04 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. The outstanding balance
on this advance on December 31, 2020 is $167,975
Note
13 - Warranty Liability
For
the year ended December 31, 2020 and 2019 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.
NOTE
14 – SUBSEQUENT EVENTS
On
August 17, 2020, Clean Energy Technologies, Inc. (the “Company) entered into a securities purchase agreement (the “Securities
Purchase Agreement”) with LGH Investments, LLC (the “Investor”), pursuant to which the Company issued to the
Investor a convertible promissory note (the “Note”) in the original principal amount of $103,000, a Warrant (the “Warrant”)
to purchase 1,500,000 shares of the Company’s common stock, par value $.001 per share (the “Common Stock”) and
one million (1,000,000) restricted shares of Common Stock (“Commitment fee Shares”). Also on January 12, 2021 the
company issued 697,861shares of its common stock as redemptions of $27,914 in cashless warrants.
On
October 14, 2020 Clean Energy Technologies, Inc. (the “Company) entered into a securities purchase agreement (the “Securities
Purchase Agreement”) with Firstfire Global Opportunities Fund LLC, (the “Investor”), pursuant to which the Company
issued to the Investor a convertible promissory note (the “Note”) in the original principal amount of $168,000, a
Warrant (the “Warrant”) to purchase 1,500,000 shares of the Company’s common stock, par value $.001 per share
(the “Common Stock”) and 1,250,000 restricted shares of Common Stock (“Commitment fee Shares”). This note
was paid on January 29, 2021.
On
February 5, 2021 we issued 3,000,000 shares of our common stock at a price of $.08 per share, in exchange for the conversion of
1,200 shares of our Series D Preferred Stock.
On
February 9, 2021 we issued 2,275,662 shares of our common stock share, in exchange for the conversion of $182,052 of accrued dividend
for the series D Preferred Stock.
On
February 9, 2021 we issued 2,000,000 shares of our common stock at a price of $.04 per share, in exchange for the conversion of
800 shares of our Series D Preferred Stock.
On
February 23, 2021 we issued 3,754,720 units at a purchase price of $.014 per unit for an aggregate price of $52,566 to an accredited
investor in a private sale.
On
March 12, 2021 we issued 3,693,588 shares of our series D preferred stock together with accrued preferred dividend at a price
of $.08 per share, in exchange for the conversion of 1300 shares of our Series D Preferred Stock and accrued preferred dividend.
In
accordance with ASC 855, the Company has analyzed its operations subsequent to December 31, 2020 through the date these financial
statements were issued, and has determined that it does not have any other material subsequent events to disclose in these financial
statements.
Clean Energy Technologies (QB) (USOTC:CETY)
過去 株価チャート
から 6 2024 まで 7 2024
Clean Energy Technologies (QB) (USOTC:CETY)
過去 株価チャート
から 7 2023 まで 7 2024