Clean Energy Technologies Inc

Previous wording

Clean Energy Technologies (H.K.) Limited (“CETY HK”) consists of two business ventures in mainland China:(i) our natural gas (“NG”) trading operations sourcing and suppling NG to industries and municipalities. Natural Gas is principally used for heavy truck refueling stations and urban or industrial users. We purchase large quantities of NG from large wholesale NG depots at fixed prices which are prepaid for in advance at a discount to the market. We sell the NG to our customers at fixed prices or prevailing daily spot prices for the duration of the contracts.

Current wording

Clean Energy Technologies (H.K.) Limited (“CETY HK”)– our natural gas (“NG”) trading operations source and supply NG to industries and municipalities in mainland China. NG is principally used for heavy truck refueling stations and urban or industrial users. We purchase large quantities of NG from large wholesale NG depots at fixed prices which are prepaid for in advance at a discount to the market. We sell the NG to our customers at fixed prices or prevailing daily spot prices for the duration of the contracts.

Previous wording

Summary of Operating Results the three months Ended March 31, 2024 Compared to the same period in 2023

Current wording

Summary of Operating Results for the Six Months Ended June 30, 2024 Compared to the Same Period in 2023

Previous wording

The financial statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets and liquidation of liabilities in the normal course of business. The Company had a total stockholder’s equity of $4,414,986 and a working capital of $324,893 as of March 31, 2024, The company also had an accumulated deficit of $24,473,587 as of March 31, 2024 and used $871,636 in net cash from operating activities for the three months ended March 31, 2024. Therefore, there is substantial doubt about the ability of the Company to continue as a going concern. There can be no assurance that the Company will achieve its goals and reach profitable operations and is still dependent upon its ability (1) to obtain sufficient debt and/or equity capital and/or (2) to generate positive cash flow from operations.

Current wording

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 working capital of $300,071 as of June 30, 2024, The company also had an accumulated deficit of $25,429,293 as of June 30, 2024 and used $1,612,034 in net cash from operating activities for the six months ended June 30, 2024. Therefore, there is substantial doubt about the ability of the Company to continue as a going concern. There can be no assurance that the Company will achieve its goals and reach profitable operations and is still dependent upon its ability (1) to obtain sufficient debt and/or equity capital and/or (2) to generate positive cash flow from operations.

Previous wording

For the quarter ended March 31, 2024, our total revenue was $1,513,026 compared to $551,869 for the same period in 2023. Our first quarter 2024 total revenue was higher than the same period in 2023 due to deconsolidation of our Shuya entity.

Current wording

For the six months ended June 30, 2024, our total revenue was$1,709,151 compared to $3,274,001 for the same period in 2023. Our first half of 2024’s total revenue was lower than the same period in 2023 due todeconsolidation of our Shuya entity and substantially lower revenue from our NG business in general due to slow down of economy in China.

Previous wording

For the three months ended March 31, 2024, our operating expense was $1,073,926 compared to $698,107 for the same period in 2023. The increase in expenses contributed to salaries expenses and professional fees for legal & accounting.

Current wording

For the six months ended June 30, 2024, our operating expense was$2,221,990 compared to $1,498,702 for the same period in 2023. The increase in expenses contributed tosalaries expenses and professional fees for legal & accounting.

Previous wording

For the quarter ended March 31, 2024, we had a net loss of $1,419,400 compared to $1,110,390 for the same period in 2023 due to increased in salaries expense contributed to CETY Renewables new engineers and operational and technology directors, fees and marketing campaign expenses attributed to CETY’s expansion plans and loss from deconsolidation of Shuya.

Current wording

For the six months ended June 30, 2024, we had a netloss of$2,251,278 compared to net loss of $1,868,163 for the same period in 2023 due toincreased in salaries expense contributed to CETY Renewables new engineers and operational and technology directors, fees and marketing campaign expenses attributed to CETY’s expansion plans and loss from deconsolidation of Shuya.

Previous wording

For the quarter ended March 31, 2024, stockholder’s equity was $4,414,986, compared to $5,869,198 as of December 31, 2023. This decrease of $1,454,212 in stockholder’s equity can be attributed to net loss for the quarter.

Current wording

For the quarter ended June 30, 2024, stockholder’sequity was$4,579,726, compared to $5,869,198 as of December 31, 2023. This decrease in stockholder’s equity can be attributed to net loss for the year-to-date results.

Previous wording

CETY has successfully repositioned itself and created 4 different business segments to create a larger, more stable, and more diversified revenue stream that could scale up. The 4 segments are Clean Energy HRS (Heat Recovery), Waste-to-Energy (Pyrolysis Plant), Engineering Procurement and Consulting (EPC), and CETY HK (NG trading and acquisitions). First quarter revenue was mainly contributed by NG trading. The revenue in this segment is expected to continue to stay stable which will help establish CETY as a player in the China market and allows cross-selling of CETY products and solutions and transfer of advanced clean energy with lower cost technologies. CETY expects larger revenue contribution from Waste-to-Energy, Heat Recovery, and EPC in the latter of this year which are higher gross margin segments. Our pilot Waste-to-Energy plant in Vermont which integrates all of CETY’s technologies and expertise into a single solution, is progressing steadily with updates coming soon. There is a growing market for Heat Recovery in the U.S. and Europe, and CETY HK has begun cross-selling Heat Recovery products in China. CETY is also gearing up for the EPC segment to implement holistic self-generation solutions globally.

Current wording

CETY has successfully repositioned itself and created 4 different business segments to create a larger, more stable, and more diversified revenue stream that could scale up. The 4 segments are Clean Energy HRS (Heat Recovery), Waste-to-Energy (Pyrolysis Plant), Engineering and manufacturing services, and CETY HK (NG trading and acquisitions). Revenue for the six months ended June 30, 2024 wasmainly contributed by NG trading and waste to energy project. The revenue in this segment is expected to continue to stay stable which will help establish CETY as a player in the China market and allows cross-selling of CETY products and solutions and transfer of advanced clean energy with lower cost technologies. CETY expects larger revenue contribution from Waste-to-Energy, Heat Recovery, and EPC in the latter of this year which are higher gross margin segments. Our pilot Waste-to-Energy plant in Vermont which integrates all of CETY’s technologies and expertise into a single solution, is progressing steadily with updates coming soon. There is a growing market for Heat Recovery in the U.S. and Europe, and CETY HK has begun cross-selling Heat Recovery products in China. CETY is also gearing up for the EPC segment to implement holistic self-generation solutions globally.

Previous wording

Management believes this 4-segment strategy has created many operational synergies and cross-selling opportunities across different markets. The growth in the year ended 2024 vs. 2023 was a result of this strategy. CETY believes that it will continue to deliver growth on all segments this year due to our belief that there is an optimistic industry macro backdrop. The main macro factor benefiting us is the global commitment to push renewable energy to the forefront from governments across the world. This is evidenced by the Paris Agreement and COP26. The Inflation Reduction Act passed by Congress in August 2022 had specific provisions that can take advantage of CETY’s products and solutions. Another catalyst that will potentially help our Company, is a continuously improving global supply chain. The European energy crisis has given rise to the opportunity for CETY to sell more of its products and solutions as customers are in search of self-generation capabilities in renewable energy.

Current wording

Management believes this 4-segment strategy has created many operational synergies and cross-selling opportunities across different markets. The growth in the year ended in 2023 was a result of this strategy. CETY believes that it will continue to deliver growth on all segments this year due to our belief that there is an optimistic industry macro backdrop. The main macro factor benefiting us is the global commitment to push renewable energy to the forefront from governments across the world. This is evidenced by the Paris Agreement and COP26. The Inflation Reduction Act passed by Congress in August 2022 had specific provisions that can take advantage of CETY’s products and solutions. Another catalyst that will potentially help our Company, is a continuously improving global supply chain. The European energy crisis has given rise to the opportunity for CETY to sell more of its products and solutions as customers are in search of self-generation capabilities in renewable energy.

Previous wording

Results of the three Ended March 31, 2024, Compared to the three ended March 31, 2023

Current wording

Results of the Six Months Ended June 30, 2024, Compared to the Six Months Ended June 30, 2023

Previous wording

The three months ended March 31, 2024, our revenue from Engineering and Manufacturing was $9,342 compared to zero for the same period in 2023. Our engineering team is in transition to establish the innovation center in Europe and has executed a master services agreement with RPG to support its fortune 500 customers with its sustainability goals. Additionally, our engineering team will be commencing work on the Vermont project starting in the second quarter of 2023.

Current wording

For the six months ended June 30, 2024, our revenue from Engineering and Manufacturing was$9,341 compared to$36,332 for the same period in 2023. Our engineering team is in transition to establish the innovation center in Europe and has executed a master services agreement with RPG to support its fortune 500 customers with its sustainability goals. Additionally, our engineering team will be commencing work on the Vermont project starting in the second quarter of 2023. Additionally, some of our engineering revenue is rolled up into our waste heat to power and waste to energy contracts.

Previous wording

For the three months ended March 31, 2024, our revenue from HRS was $72,488 compared to $10,942 for the same period in 2023. We have a large pipeline of opportunities in this segment and are working diligently to complete the engineering and design, enabling us to execute contractual agreements and close these opportunities. The sales cycle for these types of opportunities is long due to cost factors and the integration of the technology. We are also working with financial institutions to assist in financing the projects as we increasingly move towards Independent Power Producer models.

Current wording

For the six months ended June 30, 2024, our revenue from HRS was$120,874 compared to$28,338 for the same period in 2023. We have a large pipeline of opportunities in this segment and are working diligently to complete the engineering and design, enabling us to execute contractual agreements and close these opportunities. The sales cycle for these types of opportunities is long due to cost factors and the integration of the technology. We are also working with financial institutions to assist in financing the projects as we increasingly move towards Independent Power Producer models.

Previous wording

For the three months ending March 31, 2024, our revenue from our natural gas (NG) business amounted to $1,219,629, down from $540,927 for the corresponding period in 2023. This increase can be attributed to the deconsolidation of Shuya’s revenue and our strategic decision to prioritize non-Chinese markets over expansion into the ASEAN region.

Current wording

For the six months ended June 30, 2024, our revenue from our natural gas (NG) business amounted to$1,219,629, down from$2,796,649 for the corresponding period in 2023. This decrease can be attributed to the deconsolidation of Shuya’s revenue, overall substantial lower revenue from China operations due to slow down in economy and our strategic decision to prioritize non-Chinese markets over expansion into the ASEAN region.

Previous wording

For the three months ending March 31, 2024, our gross profit from Engineering and Manufacturing amounted to $7,806, compared for the same period in 2023. This segment is a recent addition to CETY’s portfolio, currently serving as a support for our ongoing internal projects. Nevertheless, it is anticipated to expand notably as CETY shifts its focus towards providing comprehensive end-to-end integrated solutions.

Current wording

For the six months ended June 30, 2024, our gross profit from Engineering and Manufacturing amounted to$7,806, compared to$18,355for the same period in 2023. This segment is a recent addition to CETY’s portfolio, currently serving as a support for our ongoing internal projects. Nevertheless, it is anticipated to expand notably as CETY shifts its focus towards providing comprehensive end-to-end integrated solutions.

Previous wording

For the three months ended March 31, 2024, our gross profit from HRS was $51,598, in compared to $5,128 for the corresponding period in 2023. This increase in margins primarily stemmed from increased service activities, which did not include equipment sales.

Current wording

For the six months ended June 30, 2024, our gross profit from HRS was$79,889, compared to$18,355 for the corresponding period in 2023. This increase in margins primarily stemmed from increased service activities, which did not include equipment sales.

Previous wording

During the three months ended March 31, 2024, our gross profit from our wholly owned subsidiary, JHJ, was $9,852, a decrease from $12,959 recorded for the corresponding period in 2023. This decline was primarily attributed to the deconsolidation of the Shuya business unit. It’s worth noting that our NG business typically operates on slim margins. Looking ahead, we intend to leverage our presence in China to foster synergistic partnerships and facilitate technology transfers, particularly in the growing EV charging sector. Additionally, we aim to explore cross-selling opportunities for our waste heat recovery and waste-to-energy products within the Chinese market.

Current wording

During the six months ended June 30, 2024, our gross profit from our wholly owned subsidiary, JHJ, was$9,853, adecrease from$385,404 recorded for the corresponding period in 2023. It’s worth noting that our NG business typically operates on slim margins. Looking ahead, we intend to leverage our presence in China to foster synergistic partnerships and facilitate technology transfers, particularly in the growing EV charging sector. Additionally, we aim to explore cross-selling opportunities for our waste heat recovery and waste-to-energy products within the Chinese market.

Previous wording

For the three-month period ending March 31, 2024, our SG&A expenses totaled $218,658, an increase from $88,891 for the same period in 2023. This increase can be attributed to increased spending in IT, insurance expenditures particularly the D&O policy, and increased spending on repairs and maintenance, largely driven by the recent relocation of our HRS operations.

Current wording

For the six months ended June 30, 2024, our SG&A expenses totaled$487,391, an increase from$267,062 for the same period in 2023. This increase can be attributed to increased spending in one-time JHJ misc. expense, IT, insurance expenditures particularly the D&O policy, and increased spending on repairs and maintenance, largely driven by the recent relocation of our HRS operations.

Previous wording

During the three months ended March 31, 2024, our Salaries expense totaled $511,111, marking a significant increase from $158,557 recorded during the same period in 2023. This surge in expenses for the quarter ending March 31, 2024, can be attributed to the inclusion of key personnel such as our CFO, director of operations, director of technology, and the recruitment of four additional engineers. Our strategy involves fortifying our team from the ground up to establish a robust foundation for scalable growth, reinforced by cutting-edge technology and streamlined systems. We hold strong conviction in the capabilities of our assembled team, envisioning their collective efforts leading us to a position of leadership within the clean energy sector.

Current wording

For the six months ended June 30, 2024, our Salaries expense totaled$966,843, marking a significant increase from$535,237 recorded during the same period in 2023. This surge in expenses can be attributed to the inclusion of key personnel such as our CFO, director of operations, director of technology, and the recruitment of four additional engineers, and increased in work force in our NG operations. Our strategy involves fortifying our team from the ground up to establish a robust foundation for scalable growth, reinforced by cutting-edge technology and streamlined systems. We hold strong conviction in the capabilities of our assembled team, envisioning their collective efforts leading us to a position of leadership within the clean energy sector.

Previous wording

The three months ended March 31, 2024; our travel expense was $29,652 compared to $71,662 for the same period in 2023. The decrease was due to lower travel expenses related to China NG business development.

Current wording

For the six months ended June 30, 2024, our travel expense was$81,224 compared to$200,139 for the same period in 2023. The decrease was due to lower travel expenses related to China NG business development.

Previous wording

For the quarterly period ended March 31, 2024, our Professional Fees expense totaled $126,105, marking an increase from $88,210 in the corresponding period of 2023. This rise in accounting fees can be attributed directly to engaging a new audit firm, which incurred higher costs.

Current wording

For the six months ended June 30, 2024, our Professional Fees expense totaled$353,065, marking an increase from$177,437 in the corresponding period of 2023. This rise in accounting fees can be attributed directly to engaging a new audit firm, which incurred higher costs.

Previous wording

For the three months ended March 31, 2024, our Facility Lease and maintenance expenses totaled $71,275, marking a significant decrease from the $122,779 incurred during the same period in 2023. This reduction in cost can be attributed to the strategic relocation and separation of our corporate offices from our HRS operations, resulting in a cost-saving measure.

Current wording

For the six months ended June 30, 2024, our Facility Lease and maintenance expenses totaled$150,883, marking a significant decrease from the$126,766 incurred during the same period in 2023. This increase in cost can be attributed to the NG operations increased in rent.

Previous wording

The three months ended March 31, 2024, our depreciation and amortization expense was 2,969 compared to $5,949 for the same period in 2023.

Current wording

For the six months ended June 30, 2024, our depreciation and amortization expense was$5,938 compared to$6,454 for the same period in 2023.

Previous wording

The three months ended March 31, 2024; we had no derivative liability compared to a gain of $326,539 for the same period in 2023. The gain in derivative liability was from a favorable derivative calculation from several convertible notes in the three months ended March 31, 2023.

Current wording

For the six months ended June 30, 2024, we had[no] derivative liability compared to a gain of$326,539 for the same period in 2023. The gain in derivative liability was from a favorable derivative calculation from several convertible notes in the three months ended March 31, 2023.

Previous wording

During the three months ending on March 31, 2024, interest and finance fees amounted to $295,193, as opposed to $837,391 for the corresponding period in 2023. The decrease in interest and fees for the March 31, 2024 period can be attributed to less number of notes and bridge financing aimed at facilitating the uplisting to Nasdaq. Despite the decrease in interest and fees for the March 31, 2024 period, we believe that the cost of capital for CETY remains elevated. The delay in securing affordable financing for our Vermont project resulted in our reliance on high-cost financing options. We are working diligently to finalize our financing in the second quarter of 2024.

Current wording

For the six months ended June 30, 2024, interest and finance fees amounted to$422,863, as opposed to$1,349,594 for the corresponding period in 2023. The decrease in interest and fees can be attributed to less number of notes and bridge financing aimed at facilitating the uplisting to Nasdaq. Despite the decrease in interest and fees for the June 30, 2024 period, we believe that the cost of capital for CETY remains elevated. The delay in securing affordable financing for our Vermont project resulted in our reliance on high-cost financing options. We are working diligently to finalize our financing in the third quarter of 2024.

Previous wording

For the three months ending March 31, 2024, our loss amounted to $1,419,400, representing an increase from the loss of $1,110,390 incurred during the corresponding period in 2023. This increase is attributed to expenditures in salaries, IT, relocation, and legal and professional fees.

Current wording

For the six months ended June 30, 2024, our loss amounted to$2,251,278, representing an increase from the loss of$1,868,163 incurred during the corresponding period in 2023. This increase is attributed to expenditures in salaries, IT, relocation, and legal and professional fees.

Previous wording

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, 2023 and 2022 we had $33,000 and 33,000 of deferred revenue, which is expected to be recognized in the second quarter of year 2024.

Current wording

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, 2024 and December 31, 2023, we had$33,000 and $33,000 of deferred revenue, which is expected to be recognized in the fourth quarter of year 2024.

Previous wording

Also from time to time we require upfront deposits from our customers based on the contract. As of December 31, 2023 and 2022, we had outstanding customer deposits of $210,310 and $80,475 respectively.

Current wording

Also from time to time we require upfront deposits from our customers based on the contract. As of June 30,2024, and December 31, 2023, we had outstanding customer deposits of$41,462 and $210,310 respectively.