Clean Energy Technologies : Amendment to Quarterly Report (Form 10-Q/A)

About this update from Clean Energy Technologies, Inc.

Clean Energy Technologies, Inc. (the "Company") is filing this Amendment No. 1 on Form 10-Q/A for the quarterly period ended March 31, 2025 ("Amendment No. 1") to its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025, originally filed on May 20, 2025, amended on May XX, 2025, to restate the Company's consolidated financial statements for the quarterly period ended March 31, 2025. During the preparation of the Company's financial statements for the fiscal year ended December 31, 2025, the Company determined that historical accounting errors existed related primarily to the classification, valuation, and collectability assessment of long-term receivables and contract assets, as well as warrant issuance, and the timing of revenue recognition and related interest income under U.S. GAAP. Accordingly, the Company determined (i) that the impact of the errors was material for the fiscal years ended December 31, 2024 and 2023, (ii) to amend the Annual Report and restate the financial statements for the fiscal years ended December 31, 2024 and 2023 therein to correct those errors, and (iii) to amend the Company's Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2025, June 30, 2025, and September 30, 2025, and restate the financial statements in those Quarterly Reports. The restatement adjustments in this Amendment No. 1 include reclassifications of receivables, recognition of write-offs, adjustments to allowance for credit losses, and present value adjustments related to long-term financing receivables, and warrant issuance and change in fair value of the warrants. as more fully described in Note 17 to the consolidated financial statements. Certain portions of the cumulative effect of these adjustments relate to periods prior to January 1, 2023, and have been reflected as prior period adjustments in the accompanying financial statements. See Note 17 to the consolidated financial statements included in Item 8 for additional information and a reconciliation of the previously reported amounts to the restated amounts. This Amendment No. 1 reflects only the correction of the errors described above and does not otherwise update or modify disclosures contained in the Annual Report, except as required to reflect the restated financial statements and related disclosures. Accordingly, this Amendment No. 1 speaks as of the date of the Quarterly Report and should be read in conjunction with the Quarterly Report and the Company's other filings with the Securities and Exchange Commission. CLEAN ENERGY TECHNOLOGIES, INC. (A Nevada Corporation) TABLE OF CONTENTS Page PART I. FINANCIAL INFORMATION ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS 3 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 45 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 57 ITEM 4. CONTROLS AND PROCEDURES 57 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS 58 ITEM 1A. RISK FACTORS 58 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 58 ITEM 3. DEFAULTS UPON SENIOR SECURITIES 60 ITEM 4. MINE SAFETY DISCLOSURES 60 ITEM 5. OTHER INFORMATION 60 ITEM 6. EXHIBITS 60 Part I - Financial Information Item 1. Financial Statements Clean Energy Technologies, Inc. Consolidated Financial Statements (Expressed in US dollars) March 31, 2025 (unaudited) Financial Statement Index Consolidated Balance Sheets March 31, 2025 (unaudited) (Restated) and December 31, 2024 (Restated) 4 Consolidated Statements of Operations (unaudited) (Restated) 5 Consolidated Statements of Stockholders Deficit (unaudited) (Restated) 6 Consolidated Statements of Cash Flows (unaudited) (Restated) 7 Notes to the Consolidated Financial Statements (unaudited) 8 Clean Energy Technologies, Inc. Consolidated Balance Sheets March 31, 2025 December 31, 2024 (Unaudited) Restated Restated Assets Current Assets: Cash $ 42,311 $ 62,101 Accounts receivable, net 7,290 8,389 Accounts receivable - related party 2,123,236 1,947,131 Advance to Supplier 219,035 195,575 Deferred Offering Costs 127,494 127,494 Due from related party 112,000 112,000 Loan Receivables 233,402 230,464 Inventory, net 537,567 497,003 Total Current Assets 3,402,335 3,180,157 Property and Equipment - Net 2,555 2,913 Goodwill 747,976 747,976 LWL Intangibles 1,468,709 1,468,709 Investment Heze Hongyuan Natural Gas co. 746,031 741,700 Investment to Shuya 570,481 485,889 Investment to Guangyuan Shuxin New Energy Co. 230,402 229,064 Contract assets 633,829 619,779 Advance to Supplier - prepayment 548,000 548,000 License 354,322 354,322 Patents 79,941 82,910 Right of use asset - long term 125,188 166,727 Other Assets 55,922 56,125 Total Non Current assets 5,563,356 5,504,114 Total Assets $ 8,965,691 $ 8,684,271 Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $ 1,557,057 $ 1,509,782 Accounts payable - related party - - Accrued Expenses 375,607 465,199 Customer Deposits 270,134 172,061 Warranty Liability 100,000 100,000 Warrant Liability 95,986 78,148 Deferred Revenue 33,000 33,000 Facility Lease Liability - current 92,671 130,483 Line of Credit 621,870 662,804 Convertible Notes Payable (net of discount of $ 530,949 and $ 117,917 respectively) 3,680,507 3,094,577 Notes payables 399,749 403,943 Related Party Notes Payable 22,450 8,250 Total Current Liabilities 7,249,031 6,658,247 Long-Term Debt: Facility Lease Liability - long term 32,779 38,125 Accrued Dividend 48,039 90,754 Total Long-Term Debt 80,818 128,879 Total Liabilities $ 7,329,849 $ 6,787,126 Stockholders' Equity Common stock, $ .001 par value; 133,333,333 shares authorized; 3,165,229 and 3,022,103 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively (retroactively adjusted to reflect the 1-for-15 reverse stock split effective October 6, 2025 - see Note 1) 3,166 3,022 15% Series E Convertible preferred stock, $ .001 par value; 3,500,000 shares authorized; 0 shares issued and outstanding as of March 31, 2025 and 756,139 outstanding as of December 31, 2024 - 756 Additional paid-in capital 31,028,993 30,631,493 Accumulated Other Comprehensible Income (245,155 ) (257,396 ) Accumulated deficit (29,151,162 ) (28,480,730 ) 1,635,842 1,897,145 TOTAL STOCKHOLDERS' EQUITY 1,635,842 1,897,145 Total Liabilities and Stockholders' Equity $ 8,965,691 $ 8,684,271 The accompanying footnotes are an integral part of these unaudited consolidated financial statements Clean Energy Technologies, Inc. Consolidated Statements of Operations for the three months ended March 31, 2025 2024 (Unaudited) Restated (Unaudited) Restated Sales $ 265,835 $ 1,315,037 Sales - related party 176,105 197,989 Total revenue 441,940 1,513,026 Cost of Goods Sold 30,062 1,260,021 Gross Profit 411,878 253,005 General and Administrative General and Administrative expense 222,557 218,658 Salaries 433,799 511,111 Travel 32,377 29,652 Professional Fees legal & accounting 66,213 199,053 Facility lease and Maintenance 66,741 71,275 Consulting engineering - 41,208 Depreciation and Amortization 2,969 2,969 Total Expenses 824,656 1,073,926 Net Loss from Operations (412,778 ) (820,921 ) Other Income 23,104 - Investment income from Shuya 81,638 - Change in FV of warrant liability (17,837 ) - Loss from deconsolidation of Shuya - (303,286 ) Interest Income 14,050 12,845 Interest and Financing fees (348,186 ) (295,193 ) Net Loss before income taxes (660,009 ) (1,406,555 ) Income Tax Expense - - Net loss before non-controlling interest from continuing operations (660,009 ) (1,406,555 ) Net income before non-controlling interest from discontinued operation - - Net loss before non-controlling interest from continuing operations (660,009 ) (1,406,555 ) Income Tax Expense (49 ) Net Loss (660,058 ) (1,406,555 ) Net income attributable to non-controlling interest - - Net loss attributable to Clean Energy Technologies, Inc. (660,058 ) (1,406,555 ) Accumulative other comprehensive income Foreign Currency Translation (Loss) 12,241 (44,050 ) Total Comprehensible Loss $ (647,817 ) $ (1,450,605 ) Per Share Information: Basic and diluted weighted average number of common shares outstanding 3,107,559 2,676,260 Net Loss per common share basic and diluted $ (0.21 ) $ (0.54 ) Reflected the 1-for-15 reverse split effective on October 06, 2025. See Note 01. The accompanying footnotes are an integral part of these unaudited consolidated financial statements Clean Energy Technologies, Inc. Consolidated Statements of Stockholders Equity March 31, 2025 (Restated) and 2024 (Restated) Common Stock .001 Par Preferred Stock Common Stock to be issued Additional Paid in Accumulated Other Comprehensive Accumulated Non - Controlling Stock holders' Equity Description Shares Amount Shares Amount Amount Capital Loss Deficit Interest Totals December 31, 2023 2,610,164 $ 2,610 2,199,387 $ 2,199 $ - $ 28,288,163 $ (196,827 ) $ (23,887,685 ) $ 757,216 $ 4,965,676 Shares issued for stock compensation 1,000 1 - - - 9,449 - - - 9,450 Shares issued for debt inducement 333 3 - - - 45,494 - - - 45,497 Shares issued for subscription 133,333 133 - - - 899,867 - - - 900,000 Shares issued for series E preferred conversion 88,899 89 (565,178 ) (565 ) - 476 - - - - Accumulated Comprehensive - - - - - - (44,050 ) - - (44,050 ) Deconsolidation of Shuya - - - - - - - - (757,216 ) (757,216 ) Accrued Series E preferred dividend - - - - - - - (70,024 ) - (70,024 ) Subscription receivable - - - - - (118,470 ) - - - (118,470 ) Net Loss - - - - - - - (1,406,555 ) - (1,406,555 ) March 31, 2024 2,833,729 $ 2,836 1,634,209 $ 1,634 $ - $ 29,124,979 $ (240,877 ) $ (25,364,264 ) $ - $ 3,524,308 Common Stock .001 Par Preferred Stock Common Stock to be issued Additional Paid in Accumulated Other Comprehensive Accumulated Non - Controlling Stock holders' Equity Description Shares Amount Shares Amount Amount Capital Loss Deficit Interest Totals December 31, 2024 3,022,103 $ 3,022 756,139 $ 756 $ - $ 30,631,493 $ (257,396 ) $ (28,480,730 ) $ - $ 1,897,145 Shares issued for stock compensation 1,667 2 - - - 11,998 - - - 12,000 Shares issued for debt inducement 3,740 4 - - - 28,047 - - - 28,051 Shares issued for series E preferred conversion 137,720 138 (756,139 ) (756 ) - 618 - - - - Value of the warrants issued for Mast Hill - - - - - 303,747 - - - 303,747 Accumulated Comprehensive - - - - - - 12,241 - - 12,241 Accrued Series E preferred dividend - - - - - 53,090 - (10,374 ) - 42,716 Net Loss - - - - - - - (660,058 ) - (660,058 ) March 31, 2025 3,165,230 $ 3,166 - $ - $ - $ 31,028,993 $ (245,155 ) $ (29,151,162 ) $ - $ 1,635,842 Reflected the 1-for-15 reverse split effective on October 06, 2025. See Note 01 The accompanying footnotes are an integral part of these unaudited consolidated financial statements Clean Energy Technologies, Inc. Consolidated Statements of Cash Flows for the three months ended March 31, 2025 2024 (Unaudited) Restated (Unaudited) Restated Cash Flows from Operating Activities: Net Income / (Loss) (660,058 ) (1,406,555 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 3,344 3,222 Stock compensation expense 12,000 9,450 Stock issued for stock inducement - 45,497 Loss on deconsolidation of Shuya - 303,286 Amortization of debt discount 116,498 23,352 Attributable income per equity method - Shuya (81,638 ) (38,378 ) Reversal of inventory impairment reserve (357,639 ) - Change in FV of warrant liability 17,837 - (Increase) decrease in right of use asset 41,799 (49,324 ) (Increase) decrease in lease liability (43,387 ) 51,585 (Increase) decrease in accounts receivable (32,226 ) (24,142 ) (Increase) decrease in accounts receivable - related party (176,105 ) (168,691 ) (Increase) decrease in prepaid expenses (12,322 ) 212,296 (Increase) decrease in contract asset (14,050 ) (12,845 ) (Increase) decrease in other assets 965 32,933 (Increase) decrease in inventory 344,230 (109,028 ) (Decrease) increase in accounts payable 47,272 346,348 (Decrease) increase in accrued interest 11,300 64,638 Other (Decrease) increase in accrued expenses (119,048 ) (85,262 ) Other (Decrease) increase in customer deposits 125,181 (70,018 ) Net Cash Used In Operating Activities (776,047 ) (871,636 ) Cash Flows from Investing Activities Loan receivables (2,932 ) 83,460 Cash Flows Used In Investing Activities (2,932 ) 83,460 Cash Flows from Financing Activities Proceeds from notes payable and lines of credit 2,032,050 556,250 Payments on notes payable and line of credit (1,273,048 ) (349,908 ) Stock issued for cash - 781,529 Cash Flows Provided By Financing Activities 759,002 987,871 Foreign Currency Transaction 187 161 Net (Decrease) Increase in Cash and Cash Equivalents (19,790 ) 199,856 Cash and Cash Equivalents at Beginning of Period 62,101 89,625 Cash and Cash Equivalents at End of Period 42,311 289,481 Supplemental Cashflow Information: Interest Paid $ 116,812 Supplemental Non-Cash Disclosure Discount on new notes $ 474,663 $ - Shares issued for preferred conversions $ 1,333 Dividend accrued $ 42,751 $ 70,023 The accompanying footnotes are an integral part of these unaudited consolidated financial statements Clean Energy Technologies, Inc. Notes to Consolidated Financial Statements (Unaudited) NOTE 1 - GENERAL These unaudited interim consolidated financial statements as of and for the three months ended March 31, 2025 (Restated), 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, 2024 report (Restated). 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 months ended March 31, 2025 (Restated) are not necessarily indicative of results for the entire year ending December 31, 2025. The summary of significant accounting policies of Clean Energy Technologies, Inc. is presented to assist in the understanding of the Company's financial statements. The financial statements and notes are representations of the Company's management, who is responsible for their integrity and objectivity. Reverse Stock Split and Retroactive Adjustment All share and per-share amounts in these consolidated financial statements have been retroactively adjusted to reflect the 1-for-15 reverse stock split effective October 6, 2025. The retroactive adjustment has been applied to: (i) common shares issued and outstanding, (ii) weighted-average common shares outstanding used in computing basic and diluted (loss) per share, (iii) (loss) per share amounts, and (iv) the par value of common stock. Corporate History We were incorporated in California in July 1995 under the name Probe Manufacturing Industries, Inc. We redomiciled to Nevada in April 2005 under the name Probe Manufacturing, Inc. We manufactured electronics and provided services to original equipment manufacturers (OEMs) of industrial, automotive, semiconductor, medical, communication, military, and high technology products. On September 11, 2015 Clean Energy HRS, or "CE HRS", our wholly owned subsidiary acquired the assets of Heat Recovery Solutions from General Electric International. In November 2015, we changed our name to Clean Energy Technologies, Inc. Our principal executive offices are located at 1340 Reynolds Avenue, Irvine, CA 92614. Our common stock is listed on the Nasdaq Capital Market under the symbol "CETY." Our internet website address is www.cetyinc.com. The information contained on our website is not incorporated by reference into this document, and you should not consider any information contained on, or that can be accessed through, our website as part of this document. The Company has four reportable segments: Clean Energy HRS (HRS) & CETY Europe, CETY Renewables waste to energy, and engineering, consulting & management services, and CETY HK NG trading. Going Concern The financial statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets and liquidation of liabilities in the normal course of business. The Company had a total stockholder's equity of $ 1,635,842 and a working capital deficit of 3,846,696 as of March 31, 2025 (Restated). The company also had an accumulated deficit of $ 29,151,162 as of March 31, 2025 (Restated). In addition, the Company has had continued negative cash flows used in operating activities. 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. Plan of Operation CETY is a clean energy technology company providing eco-friendly energy solutions, clean energy fuels, and alternative electric power for small to mid-sized projects across North America, Europe, and Asia. The company harnesses the power of heat and biomass to produce electricity with zero emissions and minimal cost. Additionally, the company offers Waste to Energy Solutions, converting waste materials from manufacturing, agriculture, and wastewater treatment plants into electricity and BioChar. Clean Energy Technologies also provides Engineering, Consulting, and Project Management Solutions, leveraging its expertise to develop clean energy projects for both municipal and industrial customers, as well as Engineering, Procurement, and Construction (EPC) companies. Our principal businesses Heat Recovery Solutions - Clean Energy Technologies patented Clean Cycle Generator (CCG) is a heat recovery system that captures waste heat from various sources and converts it into electricity. This system can be integrated into various industrial processes, helping to reduce energy costs and carbon emissions. Waste to Energy Solutions - Clean Energy Technologies' waste to energy solutions involve converting organic waste materials, such as agricultural waste and food waste, into clean energy through its proprietary pyrolysis technology that produce a range of products, including electricity, heat, and biochar. Engineering, Consulting and Project Management Solutions - Clean Energy Technologies provides power generation, waste to energy, and heat recovery Engineering, Procurement and Construction (EPC) services to municipal and industrial customers and to design and incorporate clean energy solutions in their projects. Clean Energy Technologies (H.K.) Limited ("CETY HK") Clean Energy Technologies (H.K.) Limited ("CETY HK") consists of two business ventures in mainland China: (i) our natural gas ("NG") trading operations sourcing and suppling NG to industries and municipalities, operated through our PRC Subsidiaries and Shuya. The NG is principally used for heavy truck refueling stations and urban or industrial users. We purchase large quantities of NG from large wholesale NG depots at fixed prices which are prepaid for in advance at a discount to market. We sell the NG to our customers at prevailing daily spot prices for the duration of the contracts; and (ii) our planned joint venture with a large state-owned gas enterprise in China called Shenzhen Gas (Hong Kong) International Co. Ltd. ("Shenzhen Gas"), acquiring natural gas pipeline operator facilities, primarily located in the southwestern part of China. Our planned joint venture with Shenzhen Gas plans to acquire, with financing from Shenzhen Gas, natural gas pipeline operator facilities with the goal of aggregating and selling the facilities to Shenzhen Gas in the future. According to our Framework Agreement with Shenzhen Gas, we will be required to contribute $ 8 million to the joint venture which plans to raise in future rounds of financing. The terms of the joint venture are subject to the execution of definitive agreements. CETY HK has not commenced business with Shenzhen Gas due to macro-economic factors such as falling NG prices and reduced industrial demand. CETY HK will wait until macro economic factors have improved before commencement of the Shenzhen Gas joint venture. NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES : The summary of significant accounting policies of Clean Energy Technologies, Inc. (formerly Probe Manufacturing, Inc.) is presented to assist in the understanding of the Company's financial statements. The financial statements and notes are representations of the Company's management, who is responsible for their integrity and objectivity. The consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP") and include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Such estimates may be materially different from actual financial results. Significant estimates include the recoverability of long-lived assets, the collection of accounts receivable and valuation of inventory and reserves. Cash and Cash Equivalents We maintain the majority of our cash accounts at JP Morgan Chase bank. The total cash balance is insured by the Federal Deposit Insurance Corporation ("FDIC") up to $ 250,000 , (which we may exceed from time to time) per commercial bank. For the purpose 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 March 31, 2025 (Restated), and December 31, 2024 (Restated), we had a reserve for potentially un-collectable accounts receivable of nil . Our policy for reserves for our long-term financing receivables is determined on a contract-by-contract basis and considers the length of the financing arrangement. As of March 31, 2025 (Restated), and December 31, 2024 (Restated), we had a reserve for potentially un-collectable long-term financing receivables of $ 217,584 . Eight customers accounted for approximately 98 % of accounts receivable on March 31, 2025. Our trade accounts primarily represent unsecured receivables. Historically, our bad debt write-offs related to these trade accounts have been insignificant. 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, 2025 we had a reserve of $ 576,704 as compared to a reserve of $ 934,344 as of December 31, 2024. 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 5 years Equipment 5 to 10 years Long - Lived Assets Long-lived assets, which include property, plant and equipment and intangible assets with finite lives, and operating lease right-of-use assets, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets to be held and used is measured by comparing the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the assets. Fair value is generally determined using the asset's expected future discounted cash flows or market value, if readily determinable. The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the asset's carrying amount may not be recoverable. The Company conducts its long-lived asset impairment analyses in accordance with ASC 360-10-15, "Impairment or Disposal of Long-Lived Assets." ASC 360-10-15 requires the Company to group assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset group against the sum of the undiscounted future cash flows. If the undiscounted cash flows do not indicate the carrying amount of the asset is recoverable, an impairment charge is measured as the amount by which the carrying amount of the asset group asset group exceeds its fair value based on discounted cash flow analysis or appraisals. There was no impairment of long-lived assets for the periods ended March 31, 2025 and 2024. 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 The following step is applied to our CETY HK business unit: ● CETY HK is primarily responsible for fulfilling the contract / promise to provide the specified good or service. A principal obtains control over any one of the following (ASC 606-10-55-37A): a. A good or another asset from the other party which the entity then transfers to the customer. Note that momentary control before transfer to the customer may not qualify. b. A right to a service to be performed by the other party, which gives the entity the ability to direct that party to provide the service to the customer on the entity's behalf. c. A good or service from the other party that it then combines with other goods or services in providing the specified good or service to the customer. If the entity obtains control over one of the above before the good or service is transferred to a customer, the entity could be considered a principal. Additionally, the above five steps are applied to achieve core principle for our CETY Renewables Division: Because the CETY Renewables division is presently engaged in the Engineering, Procurement, and Construction (EPC) of biomass power facilities, CETY Renewables has developed a process of executing EPC Agreements with customers for this work. In contracting these engagements, CETY Renewables recognizes revenue according to accounting standards in accordance with ASC 606. In recognizing this revenue, CETY Renewables first identifies the relevant contract with its customer according to 606-10-25-1. ● The entities, together known as the Parties, approved the contract in writing, through signatures and commitment to the performance of permitting, design, procurement, construction, and commissioning. ● CETY's work product includes permits, engineering designs, equipment, and full balance of plant specific to permitting, design, procurement, construction, and commissioning. ● CETY and customer agree to a total EPC contract price. ● The contract has commercial substance. The risk associated with this EPC Agreement is that payment of the EPC contract price. ● Per the EPC Agreement, CETY expects to collect substantially all of the consideration for its goods and services. Secondly, CETY identifies the performance obligations of the Parties in performance of the EPC Agreement in accordance with 606-10-25-14. At contract inception, CETY assesses the goods and services necessary to deliver the facility in accordance with its agreement with clients. The agreement specifically laid out all deliverables necessary to achieve the permitting, design, procurement, construction, and commissioning. CETY also looks at 606-10-25-14(A). A bundle of goods or services is also present, in that CETY is delivering all work products associated with permitting, design, procurement, construction and commissioning of a commercially operable biomass power plant. A biomass power plant is a distinct bundle of goods or services, so the individual goods or services on their own do not lend themselves to a fully integrated or functional system. CETY in accordance with 606-10-32-1, CETY reviews measurement of the performance obligations. There is no exclusion of any amount of the Contract Price due to constraints associated with 606-10-31-11 through 606-10-32-13. In review of 606-10-32-2A, CETY did not exclude measurement from the measurement of the transaction price any taxes assessed by a government authority as no such taxes will be due. In reviewing 606-10-32-3, CETY evaluated the nature, timing, and amount of consideration promised, and whether it impacts the estimate of the transaction price. Finally, in identifying a single method of measuring progress for each performance obligation satisfied over time, in accordance with 606-10-25-32, CETY applies the methodology of 606-10-25-36. CETY adopted and implemented the input method for revenue recognition in accordance with ASC 606-10-25-33. The company adopts the input method for implementation. CETY recognizes revenue for performance obligations on the basis of the entity's efforts or inputs to the satisfaction of a performance obligation per 606-10-55-20. For CETY, the contracts with clients for the construction of biomass power plants are the basis for revenue recognition. In each separate EPC Agreement, the performance obligations include permitting, design, procurement, construction, and commissioning of the plant. All of these work products satisfy Section 606-10-25-27(b) as these work products create or enhance an asset under customer's control. Upon delivery of the work product, the customer takes control of the work products and has full right and ability to direct the use of and obtain substantially all of the remaining benefits of the assets. We recognize revenue over time, using timeline and milestone methods to measure progress towards complete satisfaction of the performance obligation. During the complexity and duration of the biomass power plant construction projects, CETY will recognize revenue over time, consistent with the criteria for over-time recognition under ASC 606. This approach reflects the continuous transfer of documents, permits, and the equipment over to the customer, which is characteristic of long-term construction contracts. We have a list of appropriate measures of progress: This is based on milestones achieved, among other measures. Given the long-term nature of the projects, CETY regularly reviews and, if necessary, updates its estimates of progress towards completion, transaction price, and the allocation of the transaction price to performance obligations. Also, from time to time our contracts state that the customer is not obligated to pay a final payment until the units are commissioned, i.e. a final payment of 10 %. As of December 31, 2024 and March 31,2025 we had $ 33,000 and 33,000 of deferred revenue, which is expected to be recognized in the second quarter of year 2025. Also from time to time we require upfront deposits from our customers based on the contract. As of March 31,2025 (Restated), and December 31, 2024 (Restated), we had outstanding customer deposits of $ 270,134 and $ 172,061 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 56 % and using a risk free interest rate of 0.15 % The Company's financial instruments consist of cash, prepaid expenses, inventory, accounts payable, accrued expenses, and convertible notes payable. The estimated fair value of cash, prepaid expenses, investments, accounts payable, accrued expenses and convertible notes payable approximate their carrying amounts due to the short-term nature of these instruments. Foreign Currency Translation and Comprehensive Income (Loss) We have no material components of other comprehensive income (loss) and accordingly, net loss is equal to comprehensive loss in all periods. The accounts of the Company's Chinese entities are maintained in RMB. The accounts of the Chinese entities were translated into USD in accordance with FASB ASC Topic 830 "Foreign Currency Matters." All assets and liabilities were translated at the exchange rate on the balance sheet date; stockholders' equity is translated at historical rates and the statements of operations and cash flows are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income (loss) in accordance with FASB ASC Topic 220, "Comprehensive Income." Gains and losses resulting from foreign currency transactions are reflected in the statements of operations. The Company follows FASB ASC Topic 220-10, "Comprehensive Income (loss)." Comprehensive income (loss) comprises net income (loss) and all changes to the statements of changes in stockholders' equity, except those due to investments by stockholders, changes in additional paid-in capital and distributions to stockholders. Change from fair value or equity method to consolidation In July 2022, JHJ and other three shareholders agreed to form and make total capital contribution of RMB 20 million ($ 2.81 million) with latest contribution due date in February 2066 into Sichuan Hongzuo Shuya Energy Limited ("Shuya"), JHK owns 20 % of Shuya. In August 2022, JHJ purchased 100 % ownership of Sichuan Shunengwei Energy Technology Limited ("SSET") for $ 0 , who owns 29 % of Shuya; Shunengwei is a holding company and did not have any operations nor made any capital contribution into Shuya as of the ownership purchase date by JHJ; right after the ownership purchase of SSET, JHJ ultimately owns 49 % of Shuya. Shuya was set up as the operating entity for pipeline natural gas (PNG) and compressed natural gas (CNG) trading business, while the other two shareholders of Shuaya have large supply relationships. For the year ended December 31, 2022, the Company has determined that Shuya was not a VIE and has evaluated its consolidation analysis under the voting interest model. Because the Company does not own greater than 50 % of the outstanding voting shares, either directly or indirectly, it has accounted for its investment in Shuya under the equity method of accounting. Under this method, the investor ("JHJ") recognizes its share of the profits and losses of the investee ("Shuya") in the periods when these profits and losses are also reflected in the accounts of the investee. Any profit or loss recognized by the investing entity appears in its income statement. Also, any recognized profit increases the investment recorded by the investing entity, while a recognized loss decreases the investment. JHJ made a investment of RMB 3.91 million ($ 0.55 million) into Shuya during the 12 months ended December 31, 2022 recorded in accordance with ASC 323. Shuya had a net loss of approximately $ 10,750 during the year ending December 31, 2022, of which approximately $ 5,000 was allocated to the company, reducing the investment by that amount. However, effective January 1, 2023, JHJ, SSEN and Chengdu Xiangyueheng Enterprise Management Co., Ltd ("Xiangyueheng), who is the 10 % shareholder of Shuya, entered a Three-Parties Consistent Action Agreement, wherein these three shareholders (or three parties) will guarantee that the voting rights will be expressed in the same way at the shareholders' meeting of Shuya to consolidate the controlling position of the three parties in Shuya. The three parties agree that within the validity period of this agreement, before the party intends to propose the motions to the shareholders or the board of directors on the major matters related to the voting rights of the shareholders or the board of directors, the three parties internally will discuss, negotiate and coordinate the motion topics for consistency; in the event of disagreement, the opinions of JHJ shall prevail. As a result of Consistent Action Agreement, the Company re-analyzed and determined that Shuya is the variable interest entity ("VIE") of JHJ because 1) the equity investors at risk, as a group, lack the characteristics of a controlling financial interest, and 2) Shuya is structured with disproportionate voting rights, and substantially all of the activities are conducted on behalf of an investor with disproportionately few voting rights. Under ASC 810, a reporting entity has a controlling financial interest in a VIE, and must consolidate that VIE, if the reporting entity has both of the following characteristics: (a) the power to direct the activities of the VIE that most significantly affect the VIE's economic performance; and (b) the obligation to absorb losses, or the right to receive benefits, that could potentially be significant to the VIE. The Company concluded JHJ is deemed the primary beneficiary of the VIE. Accordingly, the Company consolidates Shuya effective on January 1, 2023. The change of control interest was accounted for using the acquisition method of accounting in accordance with Accounting Standards Codification, referred to as ASC, 805, Business Combinations. The management determined that the Company was the acquiror for financial accounting purposes. In identifying the Company as the accounting acquiror, the companies considered the structure of the transaction and other actions contemplated by the Three-Parties Consistent Action Agreement, relative outstanding share ownership and market values, the composition of the combined company's board of directors, the relative size of Shuya, and the designation of certain senior management positions of the combined company. In accordance with ASC 805, the Company recorded the acquisition based on the fair value of the consideration transferred and then allocated the purchase price to the identifiable assets acquired and liabilities assumed based on their respective fair values as of the Acquisition Date. The excess of the value of consideration transferred over the aggregate fair value of those net assets was recorded as goodwill. Any identified definite lived intangible assets will be amortized over their estimated useful lives and any identified intangible assets with indefinite useful lives and goodwill will not be amortized but will be tested for impairment at least annually. All intangible assets and goodwill will be tested for impairment when certain indicators are present. Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates including the selection of valuation methodologies, estimates of future revenues and cash flows, discount rates, and selection of comparable companies. The valuation of purchase considerations was based on preliminary estimates that management believes are reasonable under the circumstances. As the Consistent Action Agreement did not quantify any considerations to gain the control, the deemed consideration paid is the fair value of 51 % non-controlling interest as of January 1, 2023. The following table summarizes the fair value of the consideration paid and the fair value of assets acquired and liabilities assumed on January 1, 2023, the acquisition date. Fair value of non-controlling interests $ 650,951 Fair value of previously held equity investment 556,096 Subtotal $ 1,207,047 Recognized value of 100% of identifiable net assets ( 1,207,047 ) Goodwill Recognized $ - Recognized amounts of identifiable assets acquired and liabilities assumed (preliminary): Inventories $ 516,131 Cash and cash equivalents 50,346 Trade and other receivables 952,384 Advanced deposit 672,597 Net fixed assets 6,704 Trade and other payables (1,021,897 ) Advanced payments (5,317 ) Salaries and wages payables (4,692 ) Other receivable 40,791 Total identifiable net assets $ 1,207,047 Under ASC-805-10-50-2, initial consolidation of an investee previously reported using fair value or the equity method should be accounted for prospectively as of the date the entity obtained a controlling financial interest. Therefore, the Company should provide pro forma information as if the consolidation had occurred as of the beginning of each of the current and prior comparative reporting period per On January 1, 2024, and effective on the same date, JHJ, SSET and Xiangyueheng entered into the Agreement on the Termination of the Concerted Action Agreement (the "Termination Agreement"), pursuant to which the parties released each other from any and all obligations under the CAA. Due to the Termination Agreement, the Company now holds less than 50 % of the voting rights in Shuya. The Company analyzed whether Shuya should be consolidated under ASC 810 and determined Shuya is no longer required to be consolidated on January 1, 2024 after the execution of the Termination Agreement. Accordingly, the Company will not consolidate Shuya into its consolidated financial statements on or after January 1, 2024. Net (Loss) per Common Share Basic (loss) per share is computed on the basis of the weighted average number of common shares outstanding. At March 31, 2025, we had outstanding common shares of 3,165,229 . Basic Weighted average common shares and equivalents for the three months ended March 31, 2025, and March 31, 2024 were 3,107,559 and 2,676,260 respectively. As of March 31, 2025, we had convertible notes, convertible into approximately 248,467 of additional common shares and outstanding warrants of 195,440 shares. Fully diluted weighted average common shares and equivalents were withheld from the calculation for the three months ended March 31, 2025, and March 31, 2024 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, 2025, and 2024. Segment Disclosure FASB Codification Topic 280, Segment Reporting , establishes standards for reporting financial and descriptive information about an enterprise's reportable segments. The Company has four reportable segments: Clean Energy HRS (HRS), CETY Europe, CETY HK and engineering & 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 : For the three months ended March 31, 2025 (Restated) 2024 (Restated) Net Sales Manufacturing and Engineering $ - $ 9,341 Heat Recovery Solutions 262,354 72,488 NG Trading 3,481 1,219,629 Waste to Energy 176,105 211,568 Total Sales $ 441,940 $ 1,513,026 Segment income and reconciliation before tax Manufacturing and Engineering - 7,806 Heat Recovery Solutions 235,658 51,599 LNG Trading 115 9,852 Waste to Energy 176,105 183,748 Total Segment income 411,878 253,005 Less: operating expense (824,656 ) (1,073,926 ) Less: other income and expenses (247,231 ) (585,634 ) Net (loss) before income tax $ (660,009 ) $ (1,406,555 ) March 31, 2025 (Restated) December 31, 2024 (Restated) Total Assets Manufacturing and Engineering $ 2,518,708 $ 2,568,869 Heat Recovery Solutions 2,136,851 2,041,013 Waste to Energy 1,824,320 1,648,324 NG Trading 2,485,811 2,426,065 Total Assets $ 8,965,690 $ 8,684,271 For the three months ended March 31, 2025 (Restated) 2024 United States 438,459 286,311 China 3,481 1,219,629 Other international - 7,086 Total Sales 441,940 1,513,026 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. Leases The Company adopted ASC Topic 842, Leases, or ASC 842, using the modified retrospective transition method with a cumulative effect adjustment to be accumulated deficit as of January 1, 2019, and accordingly, modified its policy on accounting for leases as stated below. As described under "Recently Adopted Accounting Pronouncements," below, the primary impact of adopting ASC 842 for the Company was the recognition in the consolidated balance sheet of certain lease-related assets and liabilities for operating leases with terms longer than 12 months. The Company's leases primarily consist of facility leases which are classified as operating leases. The Company assesses whether an arrangement contains a lease at inception. The Company recognizes a lease liability to make contractual payments under all leases with terms greater than twelve months and a corresponding right-of-use asset, representing its right to use the underlying asset for the lease term. The lease liability is initially measured at the present value of the lease payments over the lease term using the collateralized incremental borrowing rate since the implicit rate is unknown. Options to extend or terminate a lease are included in the lease term when it is reasonably certain that the Company will exercise such an option. The right-of-use asset is initially measured as the contractual lease liability plus any initial direct costs and prepaid lease payments made, less any lease incentives. Lease expense is recognized on a straight-line basis over the lease term. Leased right-of-use assets are subject to impairment testing as a long-lived asset at the asset-group level. The Company monitors its long-lived assets for indicators of impairment. As the Company's leased right-of-use assets primarily relate to facility leases, early abandonment of all or part of facility as part of a restructuring plan is typically an indicator of impairment. If impairment indicators are present, the Company tests whether the carrying amount of the leased right-of-use asset is recoverable including consideration of sublease income, and if not recoverable, measures impairment loss for the right-of-use asset or asset group. Income Taxes Federal Income taxes are not currently due since we have had losses since inception of Clean Energy Technologies. On December 22, 2018 H.R. 1, originally known as the Tax Cuts and Jobs Act, (the "Tax Act") was enacted. Among the significant changes to the U.S. Internal Revenue Code, the Tax Act lowers the U.S. federal corporate income tax rate ("Federal Tax Rate") from 35% to 21% effective January 1, 2018. The Company will compute its income tax expense for the year ended December 31, 2023 using a Federal Tax Rate of 21% and an estimated state of California rate of 9%. Income taxes are provided based upon the liability method of accounting pursuant to ASC 740-10-25 Income Taxes - Recognition. Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the "more likely than not" standard required by ASC 740-10-25-5. Deferred income tax amounts reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting purposes. As of December 31, 2024 (Restated), we had a net operating loss carry-forward of approximately $ 35,105,018 and a deferred tax asset of $ 8,288,051 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 $( 8,254,056 ). 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, 2024 the Company did not take any tax positions that would require disclosure under FASB ASC 740. On February 13, 2018, Clean Energy Technologies, Inc., a Nevada corporation (the "Registrant" or "Corporation") entered into a Common Stock Purchase Agreement ("Stock Purchase Agreement") by and between MGW Investment I Limited ("MGWI") and the Corporation. The Corporation received $ 907,388 in exchange for the issuance of 302,462,667 restricted shares of the Corporation's common stock, par value $ .001 per share (the "Common Stock"). On February 13, 2018, the Corporation and Confections Ventures Limited. ("CVL") entered into a Convertible Note Purchase Agreement (the "Convertible Note Purchase Agreement," together with the Stock Purchase Agreement and the transactions contemplated thereunder, the "Financing") pursuant to which the Corporation issued to CVL a convertible promissory Note (the "CVL Note") in the principal amount of $ 939,500 with an interest rate of 10 % per annum interest rate and a maturity date of February 13, 2020 . The CVL Note is convertible into shares of Common Stock at $ 0.12 per share, as adjusted as provided therein. This note was assigned to MGW Investments. This resulted in a change in control, which limited the net operating to that date forward. We are subject to taxation in the U.S. and the states of California. Further, the Company currently has no open tax years' subject to audit prior to December 31, 2015. The Company is current on its federal and state tax returns. 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 Deferred Stock Issuance Costs Deferred stock issuance costs represent amounts paid for legal, consulting, and other offering expenses in conjunction with the future raising of additional capital to be performed within one year. These costs are netted against additional paid-in capital as a cost of the stock issuance upon closing of the respective stock placement. During the quarter ended March 31, 2024 no stock issuance costs were capitalized. NOTE 3 - ACCOUNTS AND NOTES RECEIVABLE March 31, 2025 (Restated) December 31, 2024 (Restated) Accounts Receivable $ 7,290 8,389 Accounts Receivable Related Party 2,123,236 1,947,131 Less reserve for uncollectable accounts - - Total $ 2,130,526 1,955,520 Our Accounts Receivable is pledged to Nations Interbanc, our line of credit. March 31, 2025 (Restated) December 31, 2024 (Restated) Long-term financing receivables $ 217,584 $ 217,584 Less Reserve for uncollectable accounts (217,584 ) (217,584 ) Long-term financing receivables - net $ - $ - Our long - term financing Receivable are pledged to Nations Interbanc, our line of credit. NOTE 4 - INVENTORIES, NET Inventories by major classification were comprised of the following at: March 31, 2025 (Restated) December 31, 2024 Inventory $ 1,114,271 1,431,347 Less reserve for uncollectable accounts (576,704) (934,344 ) Total $ 537,567 497,003 Our Inventory is pledged to Nations Interbanc, our line of credit. NOTE 5 - PROPERTY AND EQUIPMENT Property and equipment were comprised of the following at: March 31, 2025 December 31, 2024 Property and Equipment $ 125,141 1,434,743 Accumulated Depreciation (122,586) (1,431,830 ) Net Fixed Assets $ 2,555 2,913 Our Depreciation Expense for the three months ended March 31, 2025, and 2024 was zero and $375 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: March 31, 2025 December 31, 2024 Goodwill $ 747,976 747,976 LWL Intangibles 1,468,709 1,468,709 License 354,322 354,322 Patents 190,789 190,789 Accumulated Amortization (110,848 ) (107,879 ) Net Intangible Assets $ 2,650,948 2,653,917 Our Amortization Expense for the three months ended March 31, 2025 and 2024 was $ 2,969 and 2,969 respectively. As of both March 31, 2025, and December 31, 2024, goodwill amounted to $ 747,976 . The Company classifies goodwill as having an indefinite life, and as such, it is not amortized but is subject to annual impairment testing. The Company evaluates goodwill for impairment at least annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The useful life of goodwill is considered indefinite due to the continued potential to generate economic benefits from the business acquired. The Company conducts impairment testing based on projected future cash flows of the acquired business and other relevant factors. The LWL Investment balance of $ 1,468,709 as of both March 31, 2025, and December 31, 2024, is classified as having an indefinite life. This classification is based on the nature of the investment, which is expected to provide continued economic benefits without a foreseeable end date. The Company conducts an annual review to assess whether this classification remains appropriate, including evaluating the investment's ability to generate cash flows and the continued support of the investment's carrying value. The License balance remained unchanged at $ 354,322 for both 2025 and 2024. The License is considered to have a finite life, and as such, it is subject to amortization over its estimated useful life. The Company estimates the useful life of the License based on the legal term and any other relevant factors, such as the expected technological obsolescence or the duration of the agreement. The amortization of this asset is reflected in the Company's financial statements. The Patents balance, after amortization, was $ 79,941 as of March 31, 2025, and $ 82,910 as of December 31, 2024. Patents are classified as having a finite life and are amortized over their expected useful life, typically based on the legal protection period, which is generally 20 years from the filing date, or the expected period of the patent's utility. The Company evaluates the carrying value of patents regularly to ensure that their estimated useful life and amortization period remain appropriate. Amortization expense for the period pertains to the systematic allocation of the cost of patents over their estimated useful lives. Based on the foregoing analysis of the facts surrounding the Company's acquisition of LWL, it is the Company's position that the Company is the acquirer of LWL, under the acquisition method of accounting. As such, as of November 8, 2021 (the acquisition date), the Company recognized, separately from goodwill, the identifiable assets acquired and the liabilities assumed in the Business combination. The following table presents the purchase price allocation: Consideration: Cash and cash equivalents $ 1,500,000 Total purchaser consideration $ 1,500,000 Assets acquired: Cash and cash equivalents $ 6,156 Prepayment $ 13,496 Other receivable $ 28,718 Trading Contracts $ 146,035 Shenzhen Gas Relationship $ 1,314,313 Total assets acquired $ 1,508,718 Liabilities assumed: Advance Receipts $ (8,539 ) Taxes Payable $ (179 ) Net Assets Acquired: $ 1,500,000 If LWL had reached USD 5 million in revenue or net profit of USD 1 million by December 31, 2023, then based on the performance contingency there will be issuance of 500,000 shares of CETY to the Seller. The performance contingencies were not met. Since the performance metrics were clearly defined and objectively not met, the contingency is considered extinguished and no accrual is warranted. NOTE 7 - CONVERTIBLE NOTE RECEIVABLE Effective January 10, 2022, JHJ ("note holder") entered a convertible note agreement with Chengdu Rongjun Enterprise Consulting Co., Ltd ("Rongjun" or "the borrower") with maturity on January 10, 2025 . Under this convertible note, JHJ lent RMB 5,000,000 ($ 0.78 million) to Rongjun with annual interest rate of 12 %, calculated from the Issuance Date until all outstanding interest and principal is paid in full. The Borrower may pre-pay principal or interest on this Note at any time prior to the maturity date, without penalty. JHJ has the right to convert this note directly or indirectly into shares or equity interest of Heze Hongyuan Natural Gas Co., Ltd ("Heze") equal to 15 % of Heze's outstanding Equity Interest. Rongjun owns 90 % of Heze. During the year end December 31, 2024, JHJ recorded $ 56,700 interest income accrued from 2022 from this note, the accrual of interest income ceased in October 2022. The bondholders also have the option to convert accrued but unpaid interest into the principal amount of the convertible note. NOTE 8 - ACCRUED EXPENSES March 31, 2025 December 31, 2024 Accrued Wages $ 78,255 $ 78,255 Sales tax payable 14,658 15,014 Accrued Taxes and other 282,694 371,930 Total accrued expenses $ 375,607 $ 465,199 NOTE 9 - WARRANT LIABILITY On December 5, 2024, the Company entered into an Equity Line of Credit Agreement with Mast Hill Fund, L.P. (the "Investor"), pursuant to which the Investor committed to provide up to $ 5.0 million to the Company. In connection with the agreement, the Company issued a purchase warrant to the Investor to purchase up to 33,333 shares of common stock at an initial exercise price of $ 30.00 per share, subject to customary anti-dilution adjustments and a 4.99 % beneficial ownership limitation. The warrant is exercising upon issuance and expires on the second anniversary of the issuance date. The warrant contains a down-round provision whereby the exercise price will be reduced if the Company issues common stock, options, or convertible securities at a price below the then-current exercise price of the warrant. The warrant was classified as a liability and initially recorded at fair value of $ 104,744 upon issuance. As of March 31, 2025, the fair value of the warrant liability was remeasured to $ 95,986 . The Company recognized a loss from the change in fair value of warrant liability of $ 17,837 for the three months ended March 31, 2025. The following table presents a reconciliation of the credit line warrant liability measured and recorded at fair value on a recurring basis: For the three months ended March 31, 2025 For the three months ended March 31, 2024 Fair value-beginning of period $ 78,148 $ - Change in fair value 17,838 - Fair value-end of period $ 95,986 $ - NOTE 10 - LINE OF CREDIT AND NOTES PAYABLE On November 11, 2013, we entered into an accounts receivable financing agreement with American Interbanc (now Nations Interbanc). Amounts outstanding under the agreement bear interest at the rate of 2.5 % annually. It is secured by the assets of the Company. In addition, it is personally guaranteed by Kambiz Mahdi, our Chief Executive Officer. As of March 31, 2025, the outstanding balance was $ 621,870 compared to $ 662,804 at December 31, 2024. On April 1, 2021, we entered into an amendment to the purchase order financing agreement with DHN Capital, LLC dba Nations Interbanc. Nations Interbanc has lowered the accrued fees balance by $ 275,000 as well as the accrual rate to 2.25 % per 30 days. As a result, CETY has agreed to remit a minimum monthly payment of $ 25,000 by the final calendar day of each month. During the year, the Company entered into several "sale of future receipts" / merchant cash-advance arrangements with Reliance Financial FL LLC, as well as a subordinated business loan with Agile Lending, LLC and a purchase order financing facility with Nations Interbanc. Although certain Reliance contracts are legally structured as non-recourse "sales" of future business receipts, management concluded that these arrangements do not involve the transfer of discrete existing financial assets that would qualify for derecognition under ASC 860. Instead, the Company continues to generate and collect its operating cash receipts and remits amounts to the lenders until the contractual repayment amounts have been satisfied. Accordingly, the Reliance, Agile and Nations Interbanc arrangements are accounted for as interest-bearing financing liabilities within the scope of ASC 470 and ASC 835. The Company records the net proceeds received as short-term debt and recognizes the excess of the total contractual repayment amounts (including any origination fees, daily fees and make-whole or prepayment charges) over the net proceeds as debt discounts or financing costs, which are amortized to interest expense using the simple interest method over the expected repayment periods. Legal and other third-party costs that are directly attributable to obtaining these financings are capitalized as debt issuance costs and presented as a direct deduction from the related liabilities. On or about October 31, 2024, and December 24, 2024, the Company borrowed approximately $ 104,500 , and $ 75,000 , respectively, from Reliance ("Reliance") pursuant to short-term cash advance loans. Under the loan agreements, approximately $ 156,646 and $ 112,425 , respectively, was due to Reliance, amortizing and to be repaid over approximately 32 weeks, and as of June, 1 2026, the balance on the loans was approximately $ 0 and $ 0 , respective On or about July 15, 2024, August 6, 2024, and October 10, 2024, the Company borrowed approximately $ 131,750 , and $ 68,500 , and $ 66,000 respectively, from Agile pursuant to short-term cash advance loans. Under the loan agreements, approximately $ 141,409 and $ 69,677 , and 43,345 respectively, was due to Agile, amortizing and to be repaid over approximately 32 weeks, and as of June 1, 2026, the balance on the loans was approximately $ 0 and $ 0 , respectively. Convertible Notes Payable, Net On May 6, 2022, we entered into a Securities Purchase Agreement with Mast Hill, L.P. ("Mast Hill") pursuant to which the Company issued to Mast Hill a $ 750,000 Convertible Promissory Note, due May 6, 2023 for a purchase price of $ 675,000.00 plus an original issue discount in the amount of $ 75,000 , and an interest rate of fifteen percent ( 15 %) per annum. Mast Hill Fund is entitled to purchase 15,625 shares of common stock per the warrant agreement at the exercise price of $ 24.00 . The Securities Purchase Agreement provides customary representations, warranties and covenants of the Company and Mast Hill as well as providing Mast Hill with registration rights. This note has been amended on September 10, 2024 and the principal balance and accrued interest of this as of March 31, 2024 was $ 1,074,863 . On September 16, 2022, we entered into a Securities Purchase Agreement with Mast Hill pursuant to which the Company issued to Mast Hill a $ 300,000 Convertible Promissory Note, due September 16, 2023 for a purchase price of $ 270,000 plus an original issue discount in the amount of $ 30,000 , and an interest rate of fifteen percent ( 15 %) per annum. Mast Hill Fund is entitled to purchase 6,250 shares of common stock per the warrant agreement at the exercise price of $ 24.00 . The Securities Purchase Agreement provides customary representations, warranties and covenants of the Company and Mast Hill as well as providing Mast Hill with registration rights. Mast Hill converted their warrant on April 18, 2023. This note has been amended on September 10, 2024, and the principal balance and accrued interest of this as of March 31, 2024, was $ 413,548 . On December 26, 2022, we entered into a Securities Purchase Agreement with Mast Hill pursuant to which the Company issued to Mast Hill a $ 123,000 Convertible Promissory Note, due December 26, 2023 for a purchase price of $ 110,700 plus an original issue discount in the amount of $ 12,300 and an interest rate of fifteen percent ( 15 %) per annum. Mast Hill Fund is entitled to purchase 2,562 shares of common stock per the warrant agreement at the exercise price of $ 24.00 . The Securities Purchase Agreement provides customary representations, warranties and covenants of the Company and Mast Hill as well as providing Mast Hill with registration rights. The principal balance and accrued interest of this as of November 8, 2023 was $ 138,923 . This note was converted into Series E preferred shares of CETY. On January 19, 2023, we entered into a Securities Purchase Agreement with Mast Hill pursuant to which the Company issued to Mast Hill a $ 187,000 Convertible Promissory Note, due January 19, 2024 for a purchase price of $ 168,300 plus an original issue discount in the amount of $ 18,700 and an interest rate of fifteen percent ( 15 %) per annum. Mast Hill Fund is entitled to purchase 3,899 shares of common stock per the warrant agreement at the exercise price of $ 24.00 . The Securities Purchase Agreement provides customary representations, warranties and covenants of the Company and Mast Hill as well as providing Mast Hill with registration rights. The principal balance and accrued interest of this as of November 8, 2023 was $ 209,517 . This note was converted into Series E preferred shares of CETY. On March 8, 2023, we entered into a Securities Purchase Agreement with Mast Hill pursuant to which the Company issued to Mast Hill a $ 734,000 Convertible Promissory Note, due March 8, 2024 , for a purchase price of $ 660,600 plus an original issue discount in the amount of $ 73,400 and an interest rate of fifteen percent ( 15 %) per annum. Mast Hill Fund is entitled to purchase 24,467 shares of common stock per the warrant agreement at the exercise price of $ 24.00 . The Securities Purchase Agreement provides customary representations, warranties and covenants of the Company and Mast Hill as well as providing Mast Hill with registration rights. The principal balance and accrued interest balance of this as of November 8, 2023 was $ 807,601 . This note was converted into Series E preferred shares of CETY. On July 20, 2023, the Company closed the transactions contemplated by the Securities Purchase Agreement with Mast Hill, dated July 18, 2023, pursuant to which the Company issued to Mast Hill a $ 556,000 Convertible Promissory Note, due July 18, 2024 for a purchase price of $ 500,400 plus an original issue discount in the amount of $ 55,600 , and an interest rate of fifteen percent ( 15 %) per annum. The principal and interest of the Note may be converted in whole or in part at any time on or following the issue date, into common stock of the Company, par value $ .001 share ("Common Stock"), subject to anti-dilution adjustments and for certain other corporate actions subject to a beneficial ownership limitation of 4.99 % of Mast Hill and its affiliates. The per share conversion price into which principal amount and accrued interest may be converted into shares of Common Stock equals $ 90.00 , subject to adjustment as provided in the Note. Upon an event of default, the Note will become immediately payable and the Company shall be required to pay a default rate of interest of 15 % per annum. At anytime prior to an event of default, the Note may be prepaid by the Company at a 150 % premium. The Note contains customary representations, warranties and covenants of the Company. The principal balance and accrued interest balance of this as of November 8, 2023 was $ 581,363 . This note was converted into Series E preferred shares of CETY. On October 13, 2023, the company entered into a promissory note with Diagonal in the amount of $ 197,196 with an interest rate of 10 % per annum and a default interest rate of 22% per annum . This note is due in full on August 15, 2024 and has mandatory monthly payments of $ 21,692 . The note had an OID of $ 21,128 and was recorded as finance fee expense. In the event of the default, at the option of the Investor, the note may be converted into shares of common stock of the company. This note is convertible, but not until a contingent event of default has taken place, none of which has occurred as of the date of this filing. This note was paid off on August 15, 2024 and the balance on this note as of December 31, 2024, was zero . On November 17, 2023, the Company entered into a promissory note with Diagonal in the amount of $ 261,450 with an interest rate of 10 % per annum and a default interest rate of 22% per annum . This note is due in full on September 30, 2024 and has mandatory monthly payments of $ 28,760 . The note had an OID of $ 28,013 and was recorded as finance fee expense. In the event of the default, at the option of the Investor, the note may be converted into shares of common stock of the company. This note is convertible, but not until a contingent event of default has taken place, none of which has occurred as of the date of this filing. The balance on this note was paid off as of December 31, 2024. On November 30, 2023, the Company entered into a promissory note with Diagonal in the amount of $ 136,550 with an interest rate of 10 % per annum and a default interest rate of 22% per annum . This note is due in full on September 30, 2024 and has mandatory monthly payments of $ 15,021 . The note had an OID of $ 16,700 and was recorded as finance fee expense. In the event of the default, at the option of the Investor, the note may be converted into shares of common stock of the company. This note is convertible, but not until a contingent event of default has taken place, none of which has occurred as of the date of this filing. The balance on this note as of November 30, 2024 was zero . On December 19, 2023, the Company entered into a promissory note in the amount of $ 92,000 with an interest rate of 10 % per annum and a default interest rate of 22% per annum . This note is due in full on October 30, 2024 and has mandatory monthly payments of $ 10,120 . The note had an OID of $ 12,000 and was recorded as finance fee expense. In the event of the default, at the option of the Investor, the note may be converted into shares of common stock of the company. This note is convertible, but not until a contingent event of default has taken place, none of which has occurred as of the date of this filing. The balance on this note as of December 31, 2024 was zero . On January 3, 2024, the Company entered into a securities purchase agreement with FirstFire, pursuant to which the Company agreed to issue and sell to FirsFire the promissory note of the Company in the principal amount of $ 143,750 , which amount is the $ 125,000 actual amount of the purchase price plus an original issue discount in the amount of $ 18,750 . The Note is convertible into shares of common stock of the Company at a fixed price of $ 1.60 , par value $ 0.001 per share upon the terms and subject to the limitations and conditions set forth in such Note. This principal and the interest balance of this note was paid off on March 5, 2024. As a condition to the sale of the Note, the Company issued to the FirstFire 667 shares of Common Stock. On the closing date, the Buyer shall further withhold from the Purchase Price (i) a non-accountable sum of $ 5,000 to cover the FirstFire's legal fees and (ii) a sum of $ 7,188 to cover the Company's fees owed to Revere Securities LLC, a registered broker-dealer, in connection with this transaction. The balance on this note as of December 31, 2024 was $ 0 . On February 2, 2024, the Company entered into a securities purchase agreement with Coventry Enterprises LLC, a Delaware limited liability company Coventry pursuant to which the Company agreed to issue and sell to the Buyer the promissory note of the Company in the principal amount of $ 92,000 , which amount is the $ 80,000 actual amount of the purchase price plus an original issue discount in the amount of $ 10,120 . This note is due in full on November 30, 2024. As a condition to the sale of the Note, the Company issued to the Coventry 20,000 shares of Common Stock. The Note is convertible into shares of common stock at a fixed price of $ 24.00 of the Company, par value $ 0.001 per share, upon the terms and subject to the limitations and conditions set forth in such Note. The note was paid off as of December 1, 2024 and balance on this note as of December 31, 2024 was $ 0 . On March 4, 2024, the Company entered into a securities purchase agreement with FirstFire, pursuant to which the Company agreed to issue and sell to the FirstFire the promissory note of the Company in the principal amount of $ 280,500 , which amount is the $ 255,000 actual amount of the purchase price plus an original issue discount in the amount of $ 25,500 . This note is due in full on February 28, 2025. The Note is convertible into shares of common stock at a fixed price of $ 24.00 of the Company, par value $ 0.001 per share, upon the terms and subject to the limitations and conditions set forth in such Note. As a condition to the sale of the Note, the Company issued to the Buyer 1,333 shares of Common Stock. On the closing date, the FirstFire shall further withhold from the Purchase Price (i) a non-accountable sum of $ 6,000 to cover the Buyer's legal fees and (ii) a sum of $ 5,563 to cover the Company's fees owed to Revere Securities LLC, a registered broker-dealer, in connection with this transaction. The balance on this note as of December 31, 2024 was $ 84,150 . The note was paid off as of January 27, 2025 and balance on this note as of March 31, 2025 was $ 0 . On June 21, 2024, Vermont Renewable Gas LLC ("VRG"), a Vermont limited liability company in which the Company retains 49 % equity interest, entered into a loan agreement with FPM Development LLC, a Nevada limited liability company, and Evergreen Credit Facility I LLP, a Nevada limited liability partnership (collectively, the "Lenders"), pursuant to which the Lenders agreed to loan to VRG the principal amount of $ 12 million, to be disbursed in tranches based on agreed-upon milestones, for the construction of a waste-to-biogas generation facility. The term of the loan is two (2) years from the date of the first disbursement and shall mature at the end of the said two (2) years. The Loan shall bear interest on the amount outstanding at a rate equal to the 12-month Secured Overnight Financing Rate (SOFR) as published by the Federal Reserve Bank of New York plus 4.75 % per annum. Under the Loan Agreement, the $ 12 million loan shall be secured by (i) two contracts of VRG and (ii) a corporate guarantee provided by the Company pursuant to which the Company agreed to absolutely and unconditionally guarantees, on a continuing basis, to the Lenders the prompt payment to the Lenders when due at maturity all of VRG's liabilities and obligations under the Loan Agreement. Under the Loan Agreement, the Lenders may also convert up to 30% of the amount of the loan disbursed into shares of common stock of the Company, at the exercise price of 15% discounted value of the then-current share price of the common stock of the Company. AMEC Business Advisory Pte. Ltd., a company incorporated in Singapore (the "AMEC") may assume or acquire up to 50% of the total loan amount under the Loan Agreement, and seeks the option to convert an extra 10% of the amount of loan disbursed, in addition to a pro-rata portion of the 30% conversion right. FPM Development is in default and there was no balance owed as of March 31, 2025. On August 22, 2024, the Company entered into a securities purchase agreement with Diagonal Lending LLC, a Virginia limited liability company ("Diagonal"), pursuant to which the Company agreed to issue and sell to Diagonal a convertible promissory note of the Company in the principal amount of $ 180,960 for a purchase price of $ 156,000 plus an original issue discount in the amount of $ 24,960 . The Note provides for a one-time interest charge of thirteen percent ( 13 %) of the principal amount equal to $ 23,524 . The Company shall make nine (9) payments, each in the amount of $ 22,720 to Diagonal. The first payment shall be due on September 30, 2024 with eight (8) subsequent payments due on the 30th day of each month thereafter, the note is due in full on May 31, 2025. Any amount of principal or interest on this Note which is not paid when due shall bear a default interest at the rate of twenty two percent (22%) per annum from the due date thereof until the same is paid. All or any part of the outstanding and unpaid amount under the Note may be converted at any time following an event of default (the "Event of Default") into common stock of the Company, par value $ 0.001 per share, at the conversion price of $ 1.00 per share, subject to anti-dilution adjustments and a beneficial ownership limitation of 4.99 % of Diagonal and its affiliates. Events of Default include failure to pay principal or interest, bankruptcy of the Company, delisting of the Common Stocks, and other events as set forth in the Note. The balance on this note as of March 31, 2025, was $ 68,161 . On September 2, 2024, the Company entered into a securities purchase agreement with Coventry pursuant to which the Company agreed to issue and sell to Coventry a convertible promissory note of the Company in the principal amount of $ 92,000 for a purchase price of $ 80,000 plus an original issue discount in the amount of $ 12,000 . The Note provides for a one-time interest charge of ten percent (10%) of the principal amount equal to $9,200. The Company shall make ten (10) payments, each in the amount of $10,120 to Coventry. The first payment shall be due on October 1, 2024 with nine (9) subsequent payments due on the 1st day of each month thereafter, this note is due in full on July 30, 2025. Any amount of principal or interest on this Note which is not paid when due shall bear a default interest at the rate of twenty two percent (22%) per annum from the due date thereof until the same is paid . The Company will issue 15,000 commitment shares of its Common Stock to Coventry in connection with this transaction. All or any part of the outstanding and unpaid amount under the Note may be converted at any time following an event of default into common stock of the Company, par value $ 0.001 per share at the conversion price of $ 24.00 per share or the per share price of any issuance of the Company's stock within the 30 days before or after the conversion, subject to anti-dilution adjustments and a beneficial ownership limitation of 4.99 % of Coventry and its affiliates. Events of Default include failure to pay principal or interest, bankruptcy of the Company, delisting of the Common Stocks, and other events as set forth in the Note. The balance on this note as of March 31, 2025, was $ 40,480 . On September 10, 2024, the Company, and Mast Hill Fund, L.P., a Delaware limited partnership ("Mast"), entered into (i) an amendment to the promissory note that was issued by the Company to Mast on May 6, 2022, in the original principal amount of $ 750,000 ; and (ii) an amendment to the promissory note that was issued by the Company to Mast on September 16, 2022, in the original principal amount of $ 300,000 (collectively, the "Amendments"). Pursuant to the Amendments, the maturity date of both of the original promissory notes shall be extended to December 31, 2025, and the Company shall pay an extension fee of $ 300,000 in total to Mast at closing. This amount was recorded in the statements of operations as interest expenses, as it was calculated using the applicable default interest rate. On September 10, 2024, the Company entered into a securities purchase agreement with Mast pursuant to which the Company agreed to issue and sell to Mast a convertible promissory note of the Company in the principal amount of $ 612,000 for a purchase price of $ 612,000 . The balance of this note as of December 31, 2024 was $ 835,464 . The Note provides for an interest rate of eight percent (8%) per annum and the maturity date shall be December 31, 2025. Any amount of principal or interest on this Note which is not paid when due shall bear a default interest at the rate of sixteen percent (16%) per annum from the due date thereof until the same is paid. On the closing, Mast shall withhold a non-accountable sum of $12,000 from the purchase price to cover Mast's legal fees in connection with the transaction. All or any part of the outstanding and unpaid amount under the Note may be converted at any time following the issue date of the Note (the "Issue Date") into common stock of the Company, par value $ 0.001 per share, at the conversion price of $ 37.50 per share, subject to anti-dilution adjustments and a beneficial ownership limitation of 4.99 % of Mast and its affiliates. If, at any time prior to the full repayment or full conversion of all amounts owed under the Note, the Company and the Company's majority-owned non-PRC subsidiaries have collectively received cash proceeds of more than $ 1,000,000 (the "Minimum Threshold") in the aggregate from any source after the Issue Date, including, but not limited to, from payments from customers and the issuance of equity or debt, Mast shall have the right in its sole discretion to require the Company to immediately apply up to 25% (the "Repayment Percentage") of such proceeds after the Minimum Threshold to repay all or any portion of the outstanding amounts then due under this Note; provided, however, that the Repayment Percentage shall increase to 50% once the Company and the Company's majority-owned non-PRC subsidiaries have collectively received cash proceeds of more than $ 3,000,000 in the aggregate. On September 30, 2024, the Company entered into a securities purchase agreement with Diagonal, pursuant to which the Company agreed to issue and sell to Diagonal a convertible promissory note of the Company in the principal amount of $ 150,650 for a purchase price of $ 131,000 plus an original issue discount in the amount of $ 19,650 . The Note provides for a one-time interest charge of thirteen percent (13%) of the principal amount equal to $19,584. The Company shall make nine (9) payments, each in the amount of $18,915 to Diagonal. The first payment shall be due on October 30, 2024 with eight (8) subsequent payments due on the 30th day of each month thereafter. Any amount of principal or interest on this Note which is not paid when due shall bear a default interest at the rate of twenty two percent (22%) per annum from the due date thereof until the same is paid. All or any part of the outstanding and unpaid amount under the Note may be converted at any time following an event of default into common stock of the Company, par value $ 0.001 per share at the conversion price of $ 1.00 per share, subject to anti-dilution adjustments and a beneficial ownership limitation of 4.99 % of Diagonal and its affiliates. Events of Default include failure to pay principal or interest, bankruptcy of the Company, delisting of the Common Stocks, and other events as set forth in the Note. The balance on this note as of March 31, 2025, was $ 75,660 . On October 15, 2024, the Company entered into a securities purchase agreement with Diagonal, pursuant to which the Company agreed to issue and sell to Diagonal a convertible promissory note of the Company in the principal amount of $ 125,080 for a purchase price of $ 106,000 plus an original issue discount in the amount of $ 19,080 . The Note provides for a one-time interest charge of fifteen percent (15%) of the principal amount equal to $18,762. The Company shall make nine (9) payments, each in the amount of $15,982 to Diagonal. The first payment shall be due on November 15, 2024 with eight (8) subsequent payments due on the 15th day of each month thereafter. Any amount of principal or interest on this Note which is not paid when due shall bear a default interest at the rate of twenty two percent (22%) per annum from the due date thereof until the same is paid. All or any part of the outstanding and unpaid amount under the Note may be converted at any time following an event of default into common stock of the Company, par value $ 0.001 per share, at the conversion price of $ 15.00 per share, subject to anti-dilution adjustments and a beneficial ownership limitation of 4.99 % of Diagonal and its affiliates. Events of Default include failure to pay principal or interest, bankruptcy of the Company, delisting of the Common Stocks, and other events as set forth in the Note. The balance on this note as of March 31, 2025, was $ 63,930 . On November 8, 2024, the Company entered into a securities purchase agreement with Coventry, pursuant to which the Company agreed to issue and sell to Coventry a convertible promissory note of the Company in the principal amount of $ 101,000 for a purchase price of $ 96,000 plus an original issue discount in the amount of $ 5,000 . The Note is due and payable on December 24, 2024 and provides for a interest rate of 3.94 %, compounded monthly. The Company shall also issue to Coventry 40,000 unregistered shares of its common stock, par value $ 0.001 per share as loan commitment shares in connection with this transaction. All or any part of the outstanding and unpaid amount under the Note may be converted at any time following an event of default into Common Stock of the Company, subject to a beneficial ownership limitation of 4.99 % of Coventry and its affiliates. The conversion price is the lower of $ 15.00 per share or the per share price of any issuance of the Company's stock within the 30 days before or after the conversion, subject to anti-dilution adjustments. Events of Default include failure to pay principal or interest, bankruptcy of the Company, delisting of the Common Stocks, and other events as set forth in the Note. The balance on this note as of March 31, 2025, was $ 0 . On November 18, 2024, as stated in the 3 rd quarter of 2024 10Q filed on November 19, 2024, the Company and Mast, entered into an amendment to that certain promissory note originally issued by the Company to Mast on September 9, 2024, in the original principal amount of $ 612,000 . Pursuant to the Amendment, Mast shall pay the purchase price of an additional $ 160,000 on or before November 20, 2024, and the principal balance of the Note shall be increased by $ 160,000 on the date that the Company received the funding from Mast. The balance of this note as of March 31, 2025 was $ 0 . On November 29, 2024, the Company entered into a securities purchase agreement with Lucas Ventures, LLC, a Arizona limited liability company, pursuant to which the Company agreed to issue and sell to Lender (i) a convertible promissory note of the Company in the principal amount of $ 105,000 and (ii) 2,667 shares of common stock of the Company, par value $ 0.001 per share, as inducement shares for this transaction, for an aggregate purchase price of $ 100,000 . The Note becomes due and payable on February 28, 2025 and provides for a one-time interest charge of twelve percent ( 12 %) of the principal amount payable on the Maturity Date. The Lender is entitled to convert at any time all or any part of the outstanding and unpaid amount under the Note into Common Stock of the Company, at the conversion price of $ 15.00 per share, subject to anti-dilution adjustments and a beneficial ownership limitation of 4.99 % of Lender and its affiliates. The balance on this note as of March 31, 2025, was $ 0 . On December 5, 2024, the Company, entered into an equity purchase agreement (the "Equity Line of Credit Agreement") with Mast, pursuant to which the Investor agreed to provide an equity line of up to Five Million Dollars ($ 5,000,000 ) (the "Maximum Commitment Amount") to the Company, whereby the Company has the right, but not the obligation, at any time and from time to time during the 24 months from the date of the Equity Line of Credit Agreement (the "Commitment Period"), to issue a notice to the Investor (each a "Put Notice") which shall specify the amount of registered and freely tradable shares of Common Stock of the Company, par value $ 0.001 per share (the "Put Shares"), that the Company elects to sell to the Investor (each a "Put"), up to an aggregate amount equal to the Maximum Commitment Amount. The purchase price per Put Share shall mean 95% of the lowest traded price of the Company's Common Stock on any trading day during the pricing period, and the pricing period for each Put will be the 3 trading days immediately after receipt of the Put Shares by the Investor. Each Put Notice shall direct the Investor to purchase Put Shares (i) in a minimum amount not less than $5,000 and (ii) in a maximum amount up to $250,000, provide further that the number of Put Shares in each respective Put shall not exceed 20% of the average trading volume of the Company's Common Stock during the 5 trading days immediately preceding the date of the Put Notice. There shall be a 1 trading day period between the receipt of the Put Shares and the next Put Notice, subject to acceleration upon a "Volume Event" where the trading volume of the Company's Common Stock on a trading day exceeds 300% of the total Put Shares of the immediately prior Put Notice. The Company agreed to issue 3,333 shares of Common Stock to the Investor as the "commitment fee" for the Equity Line of Credit Agreement. In addition, the Company issued a purchase warrant to the Investor on December 5, 2024, pursuant to which the Investor is entitled to purchase from the Company 33,333 Warrant Shares during the period commencing on the issuance date of the Warrant and ending on 5:00 p.m. eastern standard time on the two-year anniversary thereof, at an initial exercise price of $ 30.00 per share, subject to customary anti-dilution adjustments and a beneficial ownership limitation of 4.99 % of the Investor and its affiliates. The Company further agreed that if it issues shares of Common Stock for a consideration per share (or grants options with an exercise price or issues convertible securities with a conversion price) less than a price equal to the exercise price in effect immediately prior to such issuance, then the exercise price of the Warrant shall be reduced to an amount equal to that consideration per share (or exercise price or conversion price). On December 11, 2024, the Company and Mast Hill entered into an amendment to that certain promissory note o...

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