| Basis of Presentation and Summary of Significant Accounting Policies | NOTE 1 – BASIS OF PRESENTATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: These unaudited interim consolidated financial
statements as of and for the three months ended March 31, 2020, 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, 2019, report. The Company assumes that the users of the interim financial information herein have
read, or have access to, the audited financial statements for the preceding period, and that the adequacy of additional disclosure
needed for a fair presentation may be determined in that context. The results of operations for the three and three months ended
March 31, 2020, are not necessarily indicative of results for the entire year ending December 31, 2020. 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. 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 $5,407,051 and a working capital deficit
of $6,932,492 and a net loss of $313,574 for the three months ended March 31, 2020. The company also had an accumulated deficit
of $14,529,292 as of March 31, 2020. 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. 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 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 We grant credit to our customers and do not
require collateral. Our ability to collect receivables is affected by economic fluctuations in the geographic areas and industries
served by us. Reserves for un-collectable amounts are provided, based on past experience and a specific analysis of the accounts.
Although we expect to collect amounts due, actual collections may differ from the estimated amounts. As of March 31, 2020, and
December 31, 2019, we had a reserve for potentially un-collectable accounts of $82,000 and $82,000 respectively. Historically,
our bad debt write-offs related to these trade accounts have been insignificant. The three months ended March
31, 2020; Lease asset As of March 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 purchase price allocation, we recognized
a value of $217,584. The lease is due to be commissioned in the third quarter of 2020 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 March 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:
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),” 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
March 31, 2020 and December 31, 2019 we had $33,000 and $47,750 of deferred revenue, which is expected to be recognized in the
third quarter of year 2020. There is an additional ~$150,000 to be billed for labor/installation/commissioning services per the
customer contracts outstanding as of 12/31/19. 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 range of 90% to 112% and using a risk free interest rate of .15% The Company’s financial instruments consist
of cash, prepaid expenses, inventory, accounts payable, convertible notes payable, advances from related parties, and derivative
liabilities. The estimated fair value of cash, prepaid expenses, investments, accounts payable, convertible notes payable and advances
from related parties approximate their carrying amounts due to the short-term nature of these instruments. The carrying amounts of the Company’s
financial instruments as of March 31, 2020 and December 31, 2019, reflect:
Level 1 Level 2 Level 3 Total
Fair value of convertible notes derivative liability – December 31, 2019 $ – $ – $ 320,794 $ 320,794
Level 1 Level 2 Level 3 Total
Fair value of convertible notes derivative liability – March 31, 2020 $ – $ – $ 586,749 $ 586,749 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 March 31, 2020, we had outstanding common shares of
762,130,989 used in the calculation of basic earnings per share. Basic Weighted average common shares and equivalents at March
31, 2020 and 2019 were 758,170,513 and 566,027,100, respectively. As of March 31, 2020, we had convertible notes and related party
convertible notes, convertible into approximately 498,211,169 of additional common shares, outstanding preferred shares convertible
into 8,125,000, calculated $.08 of additional common shares and 174,250,000 common stock warrants convertible into an additional.
Fully diluted weighted average common shares and equivalents were withheld from the calculation as they were considered anti-dilutive. Research and Development We had no amounts of research and development
R&D expense during the three months ended March 31, 2020 and 2019. Segment Disclosure FASB Codification Topic 280, Segment Reporting 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
For the three months ended March 31,
2020 2019
Net Sales
Engineering and Manufacturing 107,567 151,633
Clean Energy HRS 748,750 25,448
Cety Europe 2,499 47,282
Total Sales 858,816 224,363
Segment income and reconciliation before tax
Engineering and Manufacturing 26,606 25,141
Clean Energy HRS 486,434 17,835
Cety Europe 2,499 32,210
Total Segment income 515,539 75,186
Reconciling items
General and administrative expense (95,720 ) (60,642 )
Salaries (209,547 ) (203,303 )
Travel (29,158 ) (40,117 )
Professional fees (21,887 ) (4,019 )
Facility lease (110,455 ) (82,034 )
Depreciation (9,443 ) (11,763 )
Change in derivative liability (130,994 ) (159,733 )
Gain debt settlement 22,221 -
Interest Expense (244,130 ) (240,352 )
Net Loss before income tax (313,574 ) (726,777 )
March 31, 2020 December 31, 2019
Total Assets
Electronics Assembly 1,851,175 1,877,916
Clean Energy HRS 2,696,079 2,405,628
Cety Europe 19,002 23,679
Total Assets 4,566,256 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 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.
The three months ended March 31, 2020 and 2019 we had $0 and $0 respectively, in share-based expense, due to the issuance of common
stock. As of March 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 the three months ended March 31, 2020
using a Federal Tax Rate of 21%. Income taxes are provided based upon the liability
method of accounting pursuant to ASC 740-10-25 Income Taxes – Recognition. Deferred income tax amounts reflect the net
tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for income tax reporting purposes. As of March 31, 2020, we had a net operating
loss carry-forward of approximately $(5,679,574) and a deferred tax asset of $1,192,711 using the statutory rate of 21%. 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 $(1,192,711). 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
March 31, 2020 the Company had not taken any tax positions that would require disclosure under FASB ASC 740.
March 31, 2020 December 31, 2019
Deferred Tax Asset $ 1,192,711 $ 1,126,860
Valuation Allowance (1,192,711 ) (1,126,860 )
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, total liabilities or stockholders’ equity as previously reported. We reclassified accrued interest
and other accrued expenses to the respective note’s payable accounts. See Note 8 for the GE liability, convertible notes
payable and note 12 regarding the related party disclosure 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 the impact on the company is under evaluation. | 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 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 We grant credit to our customers located within
the United States of America; and do not require collateral. 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, 2019, and December 31, 2018, we had a reserve for potentially un-collectable accounts of $82,000 and
$57,000. Five (5) customers accounted for approximately 98% of accounts receivable at December 31, 2019. Our trade accounts primarily
represent unsecured receivables. Historically, our bad debt write-offs related to these trade accounts have been insignificant.
For the year ended December 31, 2019, Lease asset As of December 31, 2019, and 2018 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 third quarter of 2020 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, 2019 and December 31, 2018, 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:
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),” 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, 2019 and 2018 we had $47,750 and 33,000 of deferred revenue, which is expected to be recognized in the third quarter
of year 2020. There is an additional ~$150,000 to be billed for labor/installation/commissioning services per the customer contracts
outstanding as of 12/31/19. 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:
Level 1 Level 2 Level 3 Total
Fair value of convertible notes derivative liability – December 31, 2018 $ – $ – $ 245,988 $ 245,988
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, 2019, we had outstanding common shares
of 753,907,656 used in the calculation of basic earnings per share. Basic Weighted average common shares and equivalents at December
31, 2019 and 2018 were 641,349,437 and 553,354,983, respectively. As of December 31, 2019, we had convertible notes, convertible
into approximately 411,446,077 of additional common shares, outstanding preferred shares convertible into 8,125,000, calculated
$.08 of additional common shares and 174,250,000 common stock warrants convertible into an additional. Fully diluted weighted
average common shares and equivalents were withheld from the calculation as they were considered anti-dilutive. Research and Development We had no amounts of research and development
R&D expense during the year ended December 31, 2019 and 2018. Segment Disclosure FASB Codification Topic 280, Segment Reporting 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
Years ended December 31,
2019 2018
Net Sales
Engineering and Manufacturing 513,919 567,417
Clean Energy HRS 1,012,895 752,783
CETY Europe 83,194 10,971
Total Sales 1,610,008 1,331,171
Segment income and reconciliation before tax
Engineering and Manufacturing 150,741 56,231
Clean Energy HRS 428,445 457,978
CCETY Europe 78,040 6,473
Total Segment income 657,226 520,682
Reconciling items
General and Administrative expense (382,871 ) (232,571 )
Salaries (802,951 ) (740,146 )
Professional fees (130,709 ) (142,234 )
Travel (246,078 ) (114,534 )
Consulting (73,443 ) (79,084 )
Bad debt expense (128,463 (50,000 )
Facility lease (305,883 ) (280,239 )
Depreciation (41,437 ) (52,444 )
Share Based Expense - (353,140 )
Change in derivative liability 216,269 116,259
Gain / (Loss) on disposition of assets - 2,389
Interest Expense (1,317,643 ) (1,404,955 )
Net Loss before income tax (2,555,983 ) (2,810,017 )
December 31, 2019 December 31, 2018
Total Assets
Electronics Assembly 1,877,916 1,029,129
Clean Energy HRS 2,405,628 1,777,354
Cety Europe 23,679 11,636
Total Assets 4,307,223 2,818,119 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 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, 2019 and 2018 we had $0 and $353,140 respectively, in share-based expense, due to the issuance
of common stock. As of December 31, 2019, 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%. Income taxes are provided based upon the liability
method of accounting pursuant to ASC 740-10-25 Income Taxes – Recognition. 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, 2019, we had a net operating
loss carry-forward of approximately $(5,366,000) and a deferred tax asset of $1,126,860 using the statutory rate of 21%. 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 $(1,126,860). 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, 2019 the Company had not taken any tax positions that would require disclosure under FASB ASC 740.
December 31, 2019 December 31, 2018
Deferred Tax Asset $ 1,126,860 $ 515,944
Valuation Allowance (1,126,860 ) (515,944 )
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. |
