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 June 30, 2026, the outstanding balance was $623,642 compared to $614,575 at December 31, 2025.

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, The Company has not made the required monthly payments and is currently in default under the terms of the agreement.

During the year 2024, 2025, and six months ended June 30, 2026, 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 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, $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 30, 2026, and December 31,2025, the balance on the loans was y  $0 and $0, respectively.

On June 30, 2025, the Company borrowed approximately $127,000, from Agile Capital Funding, LLC (“Agile”) pursuant to a short-term cash advance loan. Under the loan agreement, $190,373 was due to Agile, amortizing and to be repaid over approximately 32 weeks, and as of June 30, 2026, and December 31,2025, the principal balance was 0 and 21,874 and the interest balance was $0, and 21,784, respectively.

On or about November 6, 2025, and December 31, 2025, the Company borrowed approximately $210,000 from Reliance (“Reliance”) pursuant to short-term cash advance loans. Under the loan agreements, approximately $210,000 was due to Reliance, amortizing and to be repaid over approximately 32 weeks, as of June 30, 2026, and December 31, 2025 the principal balance on the loans were $0 and $112,500, respectively and the interest balance of the loan was $0, and $45,000, respectively.

On or about December 31, 2025, the Company borrowed approximately $105,000, from Reliance (“Reliance”) pursuant to short-term cash advance loans. Under the loan agreements, approximately $105,000, respectively, was due to Reliance, amortizing and to be repaid over approximately 32 weeks, as of June 30, 2026, and December 31, 2025 the principal balance on the loans were approximately $0 in principal and $75,000, respectively and the interest balance of the loan was $0, and $30,000, respectively.

On May 12, 2026, the Company borrowed approximately $104,000, from Agile Capital Funding, LLC (“Agile”) pursuant to a short-term cash advance loan. Under the loan agreement, approximately $155,896 was due to Agile, amortizing and to be repaid over approximately 32 weeks, and as of June 30, 2026, the principal balance was $97,500 and the interest balance was 48,652.

On May 28, 2026, the Company borrowed approximately $260,000, from Agile Capital Funding, LLC (“Agile”) pursuant to a short-term cash advance loan. Under the loan agreement, approximately $389,740 was due to Agile, amortizing and to be repaid over approximately 32 weeks, and as of June 30, 2026, the principal balance was $243,750 and the interest balance was 121,630.

On or about June 12, 2026, the Company borrowed approximately $140,000, from Reliance (“Reliance”) pursuant to short-term cash advance loans. Under the loan agreements, approximately $196,000, respectively, was due to Reliance, amortizing and to be repaid over approximately 32 weeks, as of June 30, 2026the principal balance on the loans were approximately $129,231 in principal, and $51,692, respectively.

Convertible Notes Payable, Net

On April 4, 2025, the Company entered into a securities purchase agreement with Pacific Pier Capital II, LLC, a Delaware limited liability company (“Pacific Pier”), pursuant to which the Company sold, and Pacific Pier purchased, (i) a convertible promissory note in the principal amount of $345,000, and (ii) 45,000 shares of Company common stock, for an aggregate purchase price of $310,500. The transaction was funded by Pacific Pier and closed on April 7, 2025, and on or about April 7, 2025, pursuant to the securities purchase agreement, Pacific Pier’s legal expenses of $10,000 were paid from the gross purchase price, the Company receiving net funding of $300,500, and the note and shares were issued to Pacific Pier. The note matures 12 months following the issue date, accrues interest of 10% per annum, and is convertible into shares of the Company’s common stock at the election of the holder, at or following nine months after the issue date, at a conversion price equal to 90% of the lowest daily volume-weighted average price (during regular trading hours) on any trading day during the 5 trading days prior to the conversion date; provided, however, that the holder may not convert the note to the extent that such conversion would result in the holder’s beneficial ownership of the Company’s common stock being in excess of 4.99% of the Company’s issued and outstanding common stock. Additionally, the holder of the note is entitled to deduct $1,750 from the conversion amount (or $500 if the conversion amount is $25,000 or less) in each note conversion to cover the holder’s fees associated with the conversion. The balance of the note as of June 30, 2026, and December 31, 2025, was $0, and $188,578 with accrued interest of $0, and 85,578, respectively.

During the twelve months ended December 31, 2025 and six months ended June 30, 2026, there was $470,028 conversion for the convertible note with principal, fees and accrued interest.

Effective April 23, 2025, the Company entered into a securities purchase agreement with Pacific Pier, pursuant to which the Company sold, and Pacific Pier purchased, (i) a convertible promissory note in the principal amount of $256,000, and (ii) 45,000 shares of Company common stock, for an aggregate purchase price of $230,400. The transaction was funded by Pacific Pier and closed on April 23, 2025, and on or about April 23, 2025, pursuant to the securities purchase agreement, Pacific Pier’s legal expenses of $7,000 were paid from the gross purchase price, the Company received net funding of $223,400, and the note and shares were issued to Pacific Pier. The note matures 12 months following the issue date, accrues interest of 10% per annum, and is convertible into shares of the Company’s common stock at the election of the holder, at or following nine months after the issue date, at a conversion price equal to 90% of the lowest daily volume-weighted average price (during regular trading hours) on any trading day during the 5 trading days prior to the conversion date; provided, however, that the holder may not convert the note to the extent that such conversion would result in the holder’s beneficial ownership of the Company’s common stock being in excess of 4.99% of the Company’s issued and outstanding common stock. Additionally, the holder of the note is entitled to deduct $1,750 from the conversion amount (or $500 if the conversion amount is $25,000 or less) in each note conversion to cover the holder’s fees associated with the conversion. The principal balance of the note as of June 30, 2026, and December 31, 2025 was $216,000 and $384,000 respectively with accrued interest of $42,003, and $23,566 respectively..

During the twelve months ending December 31, 2025 and six months ended June 30, 2026, there was 171,500 conversion for the convertible note with principal, fees and accrued interest. This note was transferred to Noblebear Investment as of February 19, 2026.

On May 8, 2025, the Company entered into a securities purchase agreement with 1800 Diagonal Lending LLC, a Virginia limited liability company (“1800 Diagonal”), pursuant to which the Company sold, and 1800 Diagonal purchased, a convertible promissory note in the principal amount of $131,610 for a purchase price of $107,000. The transaction was funded by 1800 Diagonal and closed on May 8, 2025, and on or about May 8, 2025, pursuant to the securities purchase agreement, as a due diligence fee, the Company received net funding of $100,000, and the note was issued to 1800 Diagonal. The note matures on February 15, 2026, accrues a one-time interest charge of 10% on the issuance date, shall be paid in 9 monthly payments in the amount of $16,085.67 beginning on June 15, 2025, and continuing on the 15th of each month thereafter, and is convertible following default into shares of the Company’s common stock at the election of the holder at a conversion price equal to $1.00 (before reverse stock split) (subject to adjustment as provided in the note); provided, however, that the holder may not convert the note (i) to the extent that such conversion would result in the holder’s beneficial ownership of the Company’s common stock being in excess of 4.99% of the Company’s issued and outstanding common stock, or (ii) when the shareholder approval required by Nasdaq Rule 5635(d) has not been obtained and conversion would result in more than 19.99% of the shares of Company common stock being issued after any required aggregation per Rule 5635(d). Additionally, the holder of the note is entitled to deduct $1,500 from the conversion amount in each note conversion to cover the holder’s fees associated with the conversion. The balance of the note as of June 30, 2026, and December 31, 2025 was $0, and $29,247, with accrued interest of $0 and $2,925, respectively.

Effective June 4, 2025, the Company entered into a securities purchase agreement with Mast Hill, pursuant to which the Company sold, and Mast Hill purchased, (i) a junior secured convertible promissory note in the principal amount of $335,000, and (ii) 3,333 shares of Company common stock, for an aggregate purchase price of $301,500. The transaction closed on June 4, 2025, and on such date pursuant to the securities purchase agreement, Mast Hill’s legal expenses of $5,000 were paid from the gross purchase price, the Company received net funding of $296,500, and the note and shares were issued to Mast Hill. The note matures 12 months following the issue date, accrues guaranteed interest of 10% per annum (with the first 12 months of interest guaranteed and earned in full as of issuance of the note), and is secured by a junior security interest (subordinate to the Company’s senior secured lender, Nations Interbanc) in all of the assets of the Company. The note is convertible into shares of the Company’s common stock at the election of the holder at a conversion price equal to the lesser of (i) $2.50/share(before reverse stock split) , or (ii) 90% of the lowest dollar volume-weighted average price (during the period from 9:30 a.m. to 4 pm ET) on any trading day during the 5 trading days prior to the conversion date; provided, however, that the holder may not convert the note to the extent that such conversion would result in the holder’s beneficial ownership of the Company’s common stock being in excess of 4.99% of the Company’s issued and outstanding common stock. The balance of the note as of June 30, 2026, and December 31, 2025, was $0 and $0, with the accrued interest of $0, amd $0 net with unamortized OID of $0 and $0 and unamortized discount from initial recognition of derivative liability of $0 and $0.

During the year ended December 31, 2025, there was $352,014 conversion for the convertible note with principal and accrued interest.

Effective July 18, 2025, the Company entered into a securities purchase agreement with Firstfire Global Opportunities Fund LLC (“Firstfire”), pursuant to which the Company sold, and Firstfire purchased, (i) a junior secured convertible promissory note in the principal amount of $201,250, and (ii) 8,333 shares of Company common stock, for an aggregate purchase price of $175,000. The transaction closed on July 18, 2025, and on such date pursuant to the securities purchase agreement, the Company received net funding of $169,500, and the note and shares were issued to Firstfire. The note matures 12 months following the issue date, accrues guaranteed interest of 10% per annum. The note is convertible into shares of the Company’s common stock at the election of the holder at a conversion price equal to the 85% of the lowest traded price on any trading date during 10 trading day period immediately preceding the conversion date. The balance of the note as of June 30, 2026, and December 31, 2025 was $0 and $87,412 with accrued interest of $0 and $12,075, net with unamortized OID of $0 and $33,258.

During the six months ended June 30, 2026, FirstFire converted $132,825 of principal and interest and interest on January 20, 2026. On June 30, 2026.

On July 30, 2025, the Company entered into a securities purchase agreement with 1800 Diagonal Lending LLC, a Virginia limited liability company (“1800 Diagonal”), pursuant to which the Company sold, and 1800 Diagonal purchased, a convertible promissory note in the principal amount of $151,800 for a purchase price of $132,000. The note matures on February 15, 2026, accrues a one-time interest charge of 13% on the issuance date, (subject to adjustment as provided in the note); provided. The note is convertible into shares of the Company’s common stock at the election of the holder at a conversion price equal to the 85% of the lowest traded price preceding the conversion date. however, that the holder may not convert the note (i) to the extent that such conversion would result in the holder’s beneficial ownership of the Company’s common stock being in excess of 4.99% of the Company’s issued and outstanding common stock, or (ii) when the shareholder approval required by Nasdaq Rule 5635(d) has not been obtained and conversion would result in more than 19.99% of the shares of Company common stock being issued after any required aggregation per Rule 5635(d). The balance of the note as of June 30, 2026, and December 31, 2025 was $0, and $61,598 with the accrued interest of $0, and $10,963, respectively, net with unamortized OID of $0 and $13,440.

Effective August 15, 2025, the Company entered into a securities purchase agreement with Mast Hill, pursuant to which the Company sold, and Mast Hill purchased, (i) a junior secured convertible promissory note in the principal amount of $388,888, and (ii) 150,000 shares of Company common stock, for an aggregate purchase price of $350,000. The Company received net funding of $341,500, and the note and shares were issued to Mast Hill. The note matures 12 months following the issue date, accrues guaranteed interest of 10% per annum (with the first 12 months of interest guaranteed and earned in full as of issuance of the note). The note is convertible into shares of the Company’s common stock at the election of the holder at a conversion price equal to the lesser of (i) $2.50/share (before reverse stock split) , or (ii) 90% of the lowest dollar volume-weighted average price (during the period from 9:30 a.m. to 4 pm ET) on any trading day during the 5 trading days prior to the conversion date; provided, however, that the holder may not convert the note to the extent that such conversion would result in the holder’s beneficial ownership of the Company’s common stock being in excess of 4.99% of the Company’s issued and outstanding common stock. Additionally, the holder of the note is entitled to deduct $1,750 from the conversion amount in each note conversion to cover the holder’s fees associated with the conversion. The balance of the note as June 30, 2026, and December 31, 2025, was $0 and $388,000 respectively with accrued interest of $0 and $19,604, respectively and net with unamortized OID of $40,914 and $52,151. This note was transferred to Noblebear as of February 19, 2026.

On or about March 4, 2026, the Company entered into a securities purchase agreement (the “1800 SPA”) with 1800 Diagonal Lending LLC, a Virginia limited liability company (“1800 Diagonal”), pursuant to which the Company sold, and 1800 Diagonal purchased, a convertible promissory note in the principal amount of $147,840 (the “1800 Note”) for a purchase price of $132,000 (the “Transaction”).

The Transaction was funded by 1800 Diagonal and closed on March 4, 2026, and pursuant to the 1800 SPA, The Company received net funding of $125,000, and the 1800 Note was issued to 1800 Diagonal.

The 1800 SPA includes customary representations, warranties and covenants by the Company and customary closing conditions. The 1800 SPA requires that the proceeds from the Transaction be used for general working capital purposes. The 1800 Note matures on December 15, 2026, accrues a one-time interest charge of 12% on the issuance date, shall be paid in 9 monthly payments in the amount of $18,397 beginning on April 15, 2026, and continuing on the 15th of each month thereafter, and is convertible following default into shares of the Company’s common stock at the election of the holder at a conversion price equal to 85% of the lowest closing bid price during the 10 trading days prior to the conversion date; provided, however, that the holder may not convert the 1800 Note (i) to the extent that such conversion would result in the holder’s beneficial ownership of the Company’s common stock being in excess of 4.99% of the Company’s issued and outstanding common stock, or (ii) if conversion would result in more than 19.99% of the shares of Company common stock being issued after any required aggregation per Rule 5635(d) when the shareholder approval required by Nasdaq Rule 5635(d) has not been obtained. Any amount of principal or interest not paid when due bears default interest at a rate of 22% per annum. The balance of this note as of June 30, 2026 was $98,560 in principal and $11,827 in interest.

On or about March 6, 2026, in consideration of (i) $604,469 in funding previously advanced to the Company by Mega Sincere Holdings Limited (“Mega”), a company organized under the laws of the British Virgin Islands, the Company entered into securities purchase agreements with Mega (the “Mega SPA’s”) and issued Mega convertible promissory note in the principal amounts of $664,916, (the “Mega Notes”). The maturity date shall be twelve (12) months from the Issue Date

The Mega SPAs include customary representations, warranties and covenants by the Company. The Mega Note accrues interest at 10% per annum, and is convertible into shares of the Company’s common stock at the election of the holder at a conversion price equal to $0.646 (subject to adjustment if the Company issues shares at a lower price), provided, however, that a holder may not convert Mega Note (i) to the extent that such conversion would result in the holder’s beneficial ownership of the Company’s common stock being in excess of 9.99% of the Company’s issued and outstanding common stock, or (ii) if conversion would result in more than 1,216,600 or 19.99% of the shares of Company common stock being issued per Rule 5635(d) when the shareholder approval required by Nasdaq Rule 5635(d) has not been obtained.

The balance to Mega Note as of June 30, 2026 respectively was $664,916 in principal and $31,424 in interest.

On or about March 6, 2026, in consideration of $600,000 in funding previously advanced to the Company by Noblebear Investment Holdings LLC (“Noblebear”), a company organized under the laws of the California and controlled by a Company shareholder and related party, the Company entered into securities purchase agreements with Mega and Noblebear (“ Noblebear SPA”) and issued Noblebear convertible promissory notes in the principal amounts of $660,000 (the “Noblebear Note”). The maturity date shall be twelve (6) months from the Issue Date.

The Noblebear SPA include customary representations, warranties and covenants by the Company. The Noblebear Notes accrues interest at 10% per annum, and is convertible into shares of the Company’s common stock at the election of the holder at a conversion price equal to $0.646 (subject to adjustment if the Company issues shares at a lower price), provided, however, that a holder may not convert Noblebear Note to the extent that such conversion would result in the holder’s beneficial ownership of the Company’s common stock being in excess of 9.99% of the Company’s issued and outstanding common stock, or (ii) if conversion would result in more than 1,216,600 or 19.99% of the shares of Company common stock being issued per Rule 5635(d) when the shareholder approval required by Nasdaq Rule 5635(d) has not been obtained.

The balance to Noblebear as of June 30, 2026 was $660,000 in principal and $36,888 in interest.

Effective April 20, 2026, Clean Energy Technologies, Inc. (the “Company”) entered into a securities purchase agreement (the “PPC SPA”) with Pacific Pier Capital II, LP, a Delaware limited partnership (“Pacific Pier”), pursuant to which the Company sold, and Pacific Pier purchased, a convertible promissory note in the principal amount of $406,000 (the “PPC Note”) for a purchase price of $357,280 (the “PPC Transaction”), and one time fee of $48,720.

The PPC Transaction was funded by Pacific Pier and closed on April 20, 2026, and pursuant to the SPA, Pacific Pier’s legal expenses of $7,000 were paid from the gross purchase price, the Company received net funding of $350,280, and the Note was issued to Pacific Pier. The PPC Note matures 12 months following the issue date set forth in the PPC Note (April 20, 2026), accrues interest of 12% per annum, and is convertible into shares of the Company’s common stock at the election of the holder, at or following six months after the issue date, at a conversion price equal to 85% of the lowest daily volume-weighted average price on any trading day during the 10 trading days prior to the conversion date; provided, however, that the holder may not convert the PPC Note to the extent that such conversion would result in the holder’s beneficial ownership of the Company’s common stock being in excess of 4.99% of the Company’s issued and outstanding common stock. Additionally, the holder of the PPC Note is entitled to deduct $1,750 from the conversion amount (or $500 if the conversion amount is $25,000 or less) in each note conversion to cover the holder’s fees associated with the conversion. In addition, pursuant to the Securities Purchase Agreement and applicable Nasdaq listing requirements, the issuance of shares upon conversion of the PPC Note is subject to an Exchange Cap of 2,000,000 common shares unless shareholder approval is obtained to permit issuances in excess of such limit. The balance to Pacific Pier as of June 30, 2026 was $406,000 in principal and $9,477 in interest.

The following is the change in derivative liability for the six Months ended June 30, 2026:

SCHEDULE OF CHANGES IN DERIVATIVE LIABILITY 

The following is the change in derivative liability for the twelve Months ended December 31, 2025:

Total due to Convertible Notes

SCHEDULE OF CONVERTIBLE NOTES

Fair Value Measurements

The Company’s financial instruments consist primarily of cash, accounts receivable, accounts payable, accrued liabilities, notes payable, and derivative liabilities. The carrying amounts of cash, accounts receivable, accounts payable, and accrued liabilities approximate fair value due to their short-term maturities. The Company measures certain financial assets and liabilities at fair value on a recurring basis. The Company’s convertible note receivable and derivative liabilities are measured at fair value using Level 3 inputs within the fair value hierarchy because the valuation models utilize significant unobservable inputs.

The following table presents the Company’s liabilities and assets measured at fair value on a recurring basis:

SCHEDULE OF LIABILITIES AND ASSETS MEASURED AT FAIR VALUE 

June 30, 2026

December 31, 2025

The following table presents the changes in the Company’s Level 3 convertible note receivable for the six months ended June 30, 2026:

SCHEDULE OF CONVERTIBLE NOTE RECEIVABLE

The following table presents the changes in the Company’s Level 3 derivative liabilities for the six months ended June 30, 2026:

SCHEDULE OF DERIVATIVE LIABILITIES 

Changes in the fair value of derivative liabilities are recognized in the condensed consolidated statements of operations as a component of other income (expense).