----

----

| (Mark One)                                                                                                               |
|--------------------------------------------------------------------------------------------------------------------------|
| [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934                   |
|                                                                                                                     |   |
|                                                                                                                     | For the quarterly period ended February 28, 2010 |
|                                                                                                                     |   |
| [   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|                                                                                                                     |   |
|                                                                                                                     | For the transition period from __________ to ______________ |
|                                                                                                                     |
| 000-51716                                                                                                                |
| (Commission File Number)                                                                                                 |
|                                                                                                                     |
| CLEAN POWER TECHNOLOGIES INC.                                                                                            |
| (Exact name of registrant as specified in its charter)                                                                   |

| Nevada                                                                             | 98-0413062                           |
|------------------------------------------------------------------------------------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization)                     | (I.R.S. Employer Identification No.) |
|                                                                               |                                 |
| Unit 7(W) E-Plan Industrial Estate New Road, New Haven, East Sussex, UK            | BN90EX                               |
| (Address of principal executive offices)                                           | (Zip Code)                           |
|                                                                               |                                 |
| + 44 1273-516013                                                                   |
| (Registrant’s telephone number, including area code)                         |
|                                                                               |
| (Former name, former address and former fiscal year, if changed since last report) |

|   | Yes [X]  No [  ] |
|--------|--------------------------------------|
|   | Yes [X]  No [  ] |

|   | Yes [  ]  No [  ] |
|--------|-------------------------------------------------|

|    Large accelerated filer | [  ] | Accelerated filer         | [  ] |
|-------------------------------------------|----------------|---------------------------|----------------|
|    Non-accelerated filer   | [  ] | Smaller reporting company | [X]            |

----

|   | Yes [  ]  No [X] |
|--------|--------------------------------------|

|   | Yes [  ]  No [  ] |
|--------|-------------------------------------------------|

| 79,605,942 common shares outstanding as of April 19, 2010                                                                           |
|-------------------------------------------------------------------------------------------------------------------------------------|
| Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. |

----

|     |                                                                                        |  Page |
|----------|---------------------------------------------------------------------------------------------|------------|
|     | PART I – Financial Information                                                        |       |
|     |                                                                                        |       |
| Item 1.  | Financial Statements                                                                        |   3   |
|     |                                                                                        |       |
| Item 2.  | Management’s Discussion and Analysis of Financial Condition and Results of Operations |   4   |
|     |                                                                                        |       |
| Item 3.  | Quantitative and Qualitative Disclosures About Market Risk                                  |   6   |
|     |                                                                                        |       |
| Item 4T. | Controls and Procedures                                                                     |   7   |
|     |                                                                                        |       |
|     | PART II – Other Information                                                           |       |
|     |                                                                                        |       |
| Item 1.  | Legal Proceedings                                                                           |   7   |
|     |                                                                                        |       |
| Item 1A. | Risk Factors                                                                                |   7   |
|     |                                                                                        |       |
| Item 2.  | Unregistered Sales of Equity Securities and Use of Proceeds                                 |   7   |
|     |                                                                                        |       |
| Item 3.  | Defaults Upon Senior Securities                                                             |   8   |
|     |                                                                                        |       |
| Item 4.  | Removed and Reserved                                                                        |   8   |
|     |                                                                                        |       |
| Item 5.  | Other Information                                                                           |   8   |
|     |                                                                                        |       |
| Item 6.  | Exhibits                                                                                    |   9   |
|     |                                                                                        |       |
|     | Signatures                                                                                  |   13  |

----

|                                                         | Page               |
|--------------------------------------------------------------|--------------------|
| Unaudited Consolidated Financial Statements                  |               |
|                                                         |               |
| Consolidated Balance Sheets                                  |   F-2         |
|                                                         |               |
| Consolidated Statements of Operations and Comprehensive Loss |   F-3         |
|                                                         |               |
| Consolidated Statements of Cash Flows                        |   F-4 to F-5  |
|                                                         |               |
| Notes to Unaudited Consolidated Financial Statements         |   F-6 to F-33 |

----

----

| ASSETS                                                                                                                                                                                                                                                    |   | February 28,2010 |        |   | August 31,2009 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|-------------|--------|----------------|--------|
| Current                                                                                                                                                                                                                                                   |   |             |        |   |           |   |
| Cash                                                                                                                                                                                                                                                      |   | $                | 66,881      |   |           | $      | 29,346 |   |
| Amounts Receivable                                                                                                                                                                                                                                        |   |             | 55,506      |   |           |   | 38,637 |   |
| Prepaid expense                                                                                                                                                                                                                                           |   |             | 41,873      |   |           |   | 95,100 |   |
|                                                                                                                                                                                                                                                      |   |             | 164,260     |   |           |   | 163,083 |   |
|                                                                                                                                                                                                                                                      |   |             |        |   |           |   |   |   |
| Plant and equipment                                                                                                                                                                                                                                       |   |             | 921,914     |   |           |   | 831,168 |   |
| Deferred financing costs, net of accumulated amortization  of $153,575 and $107,705 as of  February 28, 2010 and August 31, 2009, respectively                                                                                        |   |             | 31,425      |   |           |   | 77,295 |   |
| Total Assets                                                                                                                                                                                                                                              |   | $                | 1,117,599   |   |           | $      | 1,071,546 |   |
|                                                                                                                                                                                                                                                      |   |             |        |   |           |   |   |   |
| Liabilities and Stockholders' Deficiency                                                                                                                                                                                                                  |   |             |        |   |           |   |   |   |
| Current                                                                                                                                                                                                                                                   |   |             |        |   |           |   |   |   |
| Accounts payable and accrued liabilities                                                                                                                                                                                                                  |   | $                | 321,867     |   |           | $      | 561,492 |   |
| Accounts payable – related party                                                                                                                                                                                                                    |   |             | 339,616     |   |           |   | 159,427 |   |
| Prepaid deposit                                                                                                                                                                                                                                           |   |             | 84,000      |   |           |   | 84,000 |   |
| Wages payable                                                                                                                                                                                                                                             |   |             | -           |   |           |   | 56,098 |   |
| Wages payable - related party                                                                                                                                                                                                                             |   |             | 799,582     |   |           |   | 499,582 |   |
| Loan payable                                                                                                                                                                                                                                              |   |             | -           |   |           |   | 84,000 |   |
| Stock option liability                                                                                                                                                                                                                                    |   |             | 512,051     |   |           |   | 718,836 |   |
| Total current liabilities                                                                                                                                                                                                                                 |   |             | 2,057,116   |   |           |   | 2,163,435 |   |
|                                                                                                                                                                                                                                                      |   |             |        |   |           |   |   |   |
| Due to related party                                                                                                                                                                                                                                      |   |             | 528,384     |   |           |   | 445,690 |   |
| Secured convertible notes payable - including $102,594 accrued interest                                                                                                                                                                                   |   |             | 868,828     |   |           |   | 264,898 |   |
| Embedded derivative liability                                                                                                                                                                                                                             |   |             | 333,870     |   |           |   | 779,193 |   |
| Warrant liability                                                                                                                                                                                                                                         |   |             | 593,036     |   |           |   | 1,667,173 |   |
| Total Liabilities                                                                                                                                                                                                                                         |   |             | 4,381,234   |   |           |   | 5,320,389 |   |
|                                                                                                                                                                                                                                                      |   |             |        |   |           |   |   |   |
| Stockholders' Deficiency                                                                                                                                                                                                                                  |   |             |        |   |           |   |   |   |
| Preferred stock:  100,000,000 Class "A"   preferred shares authorized with zero  shares outstanding;   100,000,000 Class "B"   preferred shares authorized with zero shares outstanding; |   |             | -           |   |           |   | - |   |
| Common Stock, $0.001 par value: 350,000,000 shares authorized;   79,580,942 and 72,220,695 shares issued and outstanding   at February 28, 2010 and August 31, 2009, respectively.                                          |   |             | 79,581      |   |           |   | 72,221 |   |
| Additional paid in capital                                                                                                                                                                                                                                |   |             | 13,943,288  |   |           |   | 12,255,573 |   |
| Accumulated other comprehensive loss                                                                                                                                                                                                                      |   |             | (78,173     | )      |           |   | (58,221 | ) |
| Accumulated deficit during the development stage                                                                                                                                                                                                          |   |             | (17,208,331 | )      |           |   | (16,518,416 | ) |
| Total Stockholders' Deficiency                                                                                                                                                                                                                            |   |             | (3,263,635  | )      |           |   | (4,248,843 | ) |
| Total Liabilities and Stockholders' Deficiency                                                                                                                                                                                                            |   | $                | 1,117,599   |   |           | $      | 1,071,546 |   |

----

|                                                |   | Three months endedFebruary 28, |       |   | Six months endedFebruary 28, |   |       | May 12, 2006 (Date of Inception) to February 28, |   |
|-----------------------------------------------------|--------|--------------------------------|------------|--------|------------------------------|--------|------------|-------------------------------------------------------|--------|
| Expense                                             |   | 2010                           |       |   | 2009                         |   |       | 2010                                                  |   |   | 2009 |   |   | 2010 |   |
| Depreciation                                        |   | $                              | 80,829     |   |                         | $      | 55,340     |                                                  |   | $ | 158,158 |   |   | $ | 109,013 |   |   | $ | 672,884 |   |
| Office and administration                           |   |                           | 212,331    |   |                         |   | 281,368    |                                                  |   |   | 485,573 |   |   |   | 450,958 |   |   |   | 2,571,542 |   |
| Organization costs                                  |   |                           | -          |   |                         |   | -          |                                                  |   |   | - |   |   |   | - |   |   |   | 2,500 |   |
| Research and development                            |   |                           | 131,377    |   |                         |   | 91,512     |                                                  |   |   | 214,700 |   |   |   | 152,635 |   |   |   | 1,510,440 |   |
| Foreign exchange loss (gain)                        |   |                           | -          |   |                         |   | 12,568     |                                                  |   |   | 13,018 |   |   |   | 11,830 |   |   |   | 25,261 |   |
| Change in Valuation of Stock Option Liability       |   |                           | (7,768     | )      |                         |   | 192,172    |                                                  |   |   | (206,784 | ) |   |   | 213,160 |   |   |   | 512,052 |   |
| Professional fees                                   |   |                           | 188,933    |   |                         |   | 78,840     |                                                  |   |   | 401,469 |   |   |   | 143,774 |   |   |   | 3,234,601 |   |
| Salaries and consulting fees                        |   |                           | 451,066    |   |                         |   | 411,746    |                                                  |   |   | 872,725 |   |   |   | 882,638 |   |   |   | 8,375,711 |   |
| Directors' fees                                     |   |                           | -          |   |                         |   | -          |                                                  |   |   | - |   |   |   | - |   |   |   | 430,000 |   |
| Administrator fees                                  |   |                           | -          |   |                         |   | -          |                                                  |   |   | - |   |   |   | - |   |   |   | 258,000 |   |
| (Loss) from operations                              |   |                           | (1,056,768 | )      |                         |   | (1,123,546 | )                                                     |   |   | (1,938,859 | ) |   |   | (1,964,008 | ) |   |   | (17,592,991 | ) |
|                                                |   |                           |       |   |                         |   |       |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Other income and expense:                           |   |                           |       |   |                         |   |       |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense                                    |   |                           | (399,946   | )      |                         |   | (133,184   | )                                                     |   |   | (657,432 | ) |   |   | (243,488 | ) |   |   | (1,470,898 | ) |
| Derivative income (expense)                         |   |                           | 1,019,558  |   |                         |   | 148,875    |                                                  |   |   | 1,952,246 |   |   |   | 2,125,162 |   |   |   | 2,007,428 |   |
| Deferred financing amortization costs               |   |                           | (22,808    | )      |                         |   | (22,808    | )                                                     |   |   | (45,870 | ) |   |   | (45,870 | ) |   |   | (151,870 | ) |
| Total other income (expense)                        |   |                           | 596,804    |   |                         |   | (7,117     | )                                                     |   |   | 1,248,944 |   |   |   | 1,835,804 |   |   |   | 384,660 |   |
|                                                |   |                           |       |   |                         |   |       |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) for the period                    |   |                           | (459,964   | )      |                         |   | (1,130,663 | )                                                     |   |   | (689,915 | ) |   |   | (128,204 | ) |   |   | (17,208,331 | ) |
|                                                |   |                           |       |   |                         |   |       |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive loss:                           |   |                           |       |   |                         |   |       |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized foreign exchange on transactions         |   |                           | (8,710     | )      |                         |   | (19,433    | )                                                     |   |   | (19,952 | ) |   |   | (29,113 | ) |   |   | (78,173 | ) |
|                                                |   |                           |       |   |                         |   |       |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive gain (loss) for the period            |   | $                              | (468,674   | )      |                         | $      | (1,150,096 | )                                                     |   | $ | (709,867 | ) |   | $ | (157,317 | ) |   | $ | (17,286,504 | ) |
|                                                |   |                           |       |   |                         |   |       |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted  (loss) per share       |   | $                              | (0.01      | )      |                         | $      | (0.02      | )                                                     |   | $ | (0.01 | ) |   | $ | (0.00 | ) |   |   |   |   |
|                                                |   |                           |       |   |                         |   |       |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted weighted average number of shares |   |                           | 79,506,737 |   |                         |   | 66,746,157 |                                                  |   |   | 78,146,229 |   |   |   | 66,378,950 |   |   |   |   |   |

----

|                                                                                  |   | Six months ended February 28, |       |   |   |   |
|---------------------------------------------------------------------------------------|--------|-------------------------------|------------|--------|--------|--------|
|                                                                                  |   | 2010                          |       |   | 2009   |   |   | May 12, 2006 (Date of Inception) to February 28, 2010 |   |
| Cash flows from operating activities:                                                 |   |                          |       |   |   |   |   |   |   |
| Net income (loss)                                                                     |   | $                             | (689,915   | )      |   | $      | (128,204 | ) |   | $ | (17,208,331 | ) |
| Adjustments to reconcile net income (loss) to cash used in operating activities: |   |                          |       |   |   |   |   |   |   |   |   |   |
| Depreciation                                                                          |   |                          | 158,158    |   |   |   | 109,013 |   |   |   | 672,884 |   |
| Change in valuation of stock option liability                                         |   |                          | (206,784   | )      |   |   | 213,160 |   |   |   | 512,052 |   |
| Amortization of debt discount                                                         |   |                          | 554,625    |   |   |   | 147,981 |   |   |   | 1,029,465 |   |
| Amortization of deferred financing costs                                              |   |                          | 45,870     |   |   |   | 45,870 |   |   |   | 153,575 |   |
| Interest accrued on debt                                                              |   |                          | 20,275     |   |   |   | 18,646 |   |   |   | 158,447 |   |
| Interest accrued on senior convertible notes                                          |   |                          | 80,000     |   |   |   | 80,000 |   |   |   | 263,111 |   |
| Derivative (income) expense                                                           |   |                          | (1,952,246 | )      |   |   | (2,125,162 | ) |   |   | (2,007,428 | ) |
| Issuance of common stock for professional services                                    |   |                          | -          |   |   |   | - |   |   |   | 1,809,609 |   |
| Issuance of common stock for director services                                        |   |                          | -          |   |   |   | 33,630 |   |   |   | 430,000 |   |
| Issuance of common stock for consulting services                                      |   |                          | -          |   |   |   | - |   |   |   | 1,171,880 |   |
| Issuance of common stock for prior period salary                                      |   |                          | -          |   |   |   | - |   |   |   | 2,600,000 |   |
| Issuance of common stock for administrative services                                  |   |                          | -          |   |   |   | - |   |   |   | 258,000 |   |
| Issuance of common stock for R&D                                                  |   |                          | 4,750      |   |   |   | - |   |   |   | 406,750 |   |
| Issuance of stock award for consulting services                                       |   |                          | -          |   |   |   | - |   |   |   | 13,750 |   |
| Stock-based compensation                                                              |   |                          | 143,564    |   |   |   | 293,000 |   |   |   | 1,013,951 |   |
| Changes in assets and liabilities:                                                    |   |                          |       |   |   |   |   |   |   |   |   |   |
| Amounts Receivable                                                                    |   |                          | (20,524    | )      |   |   | (52,123 | ) |   |   | (54,759 | ) |
| Prepaid expenses and other current assets                                             |   |                          | 50,139     |   |   |   | (94,381 | ) |   |   | (36,929 | ) |
| Prepaid deposit                                                                       |   |                          | -          |   |   |   | 83,990 |   |   |   | 84,000 |   |
| Accounts payable and accrued expense                                                  |   |                          | 215,480    |   |   |   | 48,044 |   |   |   | 1,489,462 |   |
| Net cash used in operating activities:                                                |   |                          | (1,596,608 | )      |   |   | (1,326,536 | ) |   |   | (7,240,511 | ) |
|                                                                                  |   |                          |       |   |   |   |   |   |   |   |   |   |
| Cash flows from investing activities:                                                 |   |                          |       |   |   |   |   |   |   |   |   |   |
| Acquisition of plant and equipment                                                    |   |                          | (248,904   | )      |   |   | (300,371 | ) |   |   | (1,571,368 | ) |
| Cash acquired from business combination                                               |   |                          | -          |   |   |   | - |   |   |   | 62,070 |   |
| Net cash used in investing activities:                                                |   |                          | (248,904   | )      |   |   | (300,371 | ) |   |   | (1,509,298 | ) |
|                                                                                  |   |                          |       |   |   |   |   |   |   |   |   |   |
| Cash flows from financing activities:                                                 |   |                          |       |   |   |   |   |   |   |   |   |   |
| Proceeds from issuance of senior convertible notes                                    |   |                          | -          |   |   |   | - |   |   |   | 1,815,000 |   |
| Proceeds from issuance of common stock                                                |   |                          | 2,000,000  |   |   |   | 1,000,000 |   |   |   | 4,743,766 |   |
| Proceeds from loan                                                                    |   |                          | -          |   |   |   | - |   |   |   | 84,000 |   |
| Repayment of loan                                                                     |   |                          | (84,000    | )      |   |   | - |   |   |   | (84,000 | ) |
| Due to related party                                                                  |   |                          | 11,272     |   |   |   | 116,060 |   |   |   | 2,349,349 |   |
| Net cash provided by financing activities:                                            |   |                          | 1,927,272  |   |   |   | 1,116,060 |   |   |   | 8,908,115 |   |
|                                                                                  |   |                          |       |   |   |   |   |   |   |   |   |   |
| Effect of foreign exchange on transactions                                            |   |                          | (44,225    | )      |   |   | (36,453 | ) |   |   | (91,425 | ) |
|                                                                                  |   |                          |       |   |   |   |   |   |   |   |   |   |
| Net increase (decrease) in cash                                                       |   |                          | 37,535     |   |   |   | (547,300 | ) |   |   | 66,881 |   |
| Cash at beginning of period                                                           |   |                          | 29,346     |   |   |   | 1,203,030 |   |   |   | - |   |
| Cash and cash equivalents at end of period                                            |   | $                             | 66,881     |   |   | $      | 655,730 |   |   | $ | 66,881 |   |

----

|                                                                       |   | Six months ended February 28, |   |   |   |   |
|----------------------------------------------------------------------------|--------|-------------------------------|--------|--------|--------|--------|
|                                                                       |   | 2010                          |   |   | 2009   |   |   | May 12, 2006 (Date of Inception) to February 28, 2010 |   |
| Supplemental schedule of cash flows:                                       |   |                          |   |   |   |   |   |   |   |
| Cash paid during the period for interest                                   |   | $                             | -      |   |   | $      | - |   |   | $ | - |   |
|                                                                       |   |                          |   |   |   |   |   |   |   |   |   |   |
| Supplemental schedule of non-cash financing and investing activities: |   |                          |   |   |   |   |   |   |   |
| Conversion of note payable to common stock                                 |   | $                             | -      |   |   | $      | - |   |   | $ | 1,530,756 |   |
| Total:                                                                     |   | $                             | -      |   |   | $      | - |   |   | $ | 1,530,756 |   |
|                                                                       |   |                          |   |   |   |   |   |   |   |   |   |   |

----

| (a)   | Organization |
|-----------------|--------------|

|   | Clean Power Technologies Inc. (the “Company”) was incorporated in the State of Nevada, United States of America on October 30, 2003 as Sphere of Language.  On June 13, 2006, the Company changed its name to Clean Power Technologies Inc. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company incorporated Clean Energy and Power Solutions Inc. (“CEPS”) on May 12, 2006 in the State of Nevada as a wholly-owned subsidiary. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | By agreement dated May 22, 2006, the Company agreed to issue 30,765,377 common shares for all the issued and outstanding common shares of Clean Power Technologies Inc. (“CPTI private”), a privately held company, incorporated on March 14, 2006 in the State of Nevada.  CPTI private is developing a project for a gas/steam or diesel/steam hybrid technology. CPTI private has incorporated a wholly-owned subsidiary, Clean Power Technologies Limited, (“CPTL-UK”) a company based in, and incorporated under the laws of the United Kingdom on May 10, 2006, to carry on all its research and development.  On April 24, 2006, CPTI private entered a research and development agreement to fund all future costs for research, development, patenting, licensing and marketing for an alternative hybrid fuel technology that combines diesel and steam and gas (petrol) and steam technologies for a 100% ownership of the technology and any associated intellectual rights (see Note 6).  CPTI private and CEPS merged on June 20, 2006 with CEPS being the surviving entity. On July 10, 2006 CEPS became a wholly-owned subsidiary of the Company when the stockholders of CPTI private tendered their remaining shares. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company’s fiscal year-end is August 31. |
|--------|---------------------------------------------------|

|   | (b) | Development Stage Activities |
|--------|-----|------------------------------|

|   | The Company is in the development stage and has not yet realized any revenues from its planned operations. |
|--------|------------------------------------------------------------------------------------------------------------|

|   | The primary operations of the Company are presently undertaken by CPTL-UK. Initially, the primary focus of the Company was to develop two vehicles in order to prove their concept.  The first vehicle was to be a prototype to demonstrate the technology and the second vehicle was to be an engineered vehicle to be unveiled to the auto industry.  In November 2007, the Company decided to re-prioritize its development program.  While development on the automobiles continued, it was decided that the fastest route to market was to focus on the development of refrigeration units for grocery trucks.  The Company has further identified other applications for its technology including its use on land fill sites and is primarily working on two initiatives for its technology at this time, refrigeration units and units to be utilized at land fill sites. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (a) | Principles of Consolidation |
|-----|-----------------------------|

|   | The consolidated financial statements include the accounts of the Company, and its wholly-owned subsidiaries CEPS and CPTL-UK.  All inter-company transactions have been eliminated. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | Development Stage Company |
|-----|---------------------------|

|   | The Company is a development stage company as defined in ASC 915.  The Company is devoting substantially all of its present efforts to establish a new business and none of its planned principal operations have commenced.  All losses accumulated since inception have been considered as part of the Company’s development stage activities. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | Continuance of Operations |
|-----|---------------------------|

|   | These interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for the next twelve months.  Realization values may be substantially different from carrying values as shown and these consolidated financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern.  At February 28, 2010, the Company had not yet achieved profitable operations, has accumulated losses of $17,208,331 since its inception, has negative working capital of $1,892,856 and expects to incur further losses in the development of its business. The Company is currently seeking additional financing opportunities. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d) | Financial Instruments |
|-----|-----------------------|

|   | Financial instruments, as defined in Accounting Standards Codification (“ASC”) 825-10-20 (pre-Codification Financial Accounting Standards (“FAS”) No. 107 Disclosures about Fair Value of Financial Instruments), consist of cash, evidence of ownership in an entity, and contracts that both (i) impose on one entity a contractual obligation to deliver cash or another financial instrument to a second entity, or to exchange other financial instruments on potentially unfavorable terms with the second entity, and (ii) conveys to that second entity a contractual right (a) to receive cash or another financial instrument from the first entity, or (b) to exchange other financial instruments on potentially favorable terms with the first entity. Accordingly, our financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, notes payable, derivative financial instruments, and convertible notes payable. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | We carry cash and cash equivalents, amounts receivable, accounts payable and accrued liabilities at historical costs; their respective estimated fair values approximate carrying values due to their current nature. We also carry notes payable and convertible debt at historical cost. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (d) | Financial Instruments (Cont’d) |
|-----|--------------------------------------|

|                                                                          |   | February 28, 2010 |     |   | August 31, 2009 |   |
|-------------------------------------------------------------------------------|--------|-------------------|----------|--------|-----------------|--------|
| Embedded derivative liability:                                                |   |              |     |   |            |   |
|   $2,000,000 face value secured convertible notes due July 10, 2010 |   | $                 | (333,870 | )      |            | $      | (779,193 | ) |
|                                                                          |   |              |     |   |            |   |   |   |
| Warrant liability:                                                            |   |              |     |   |            |   |   |   |
| $2,000,000 face value secured convertible notes due July 10, 2010             |   | $                 | (362,143 | )      |            | $      | (1,666,429 | ) |
|  $1,000,000 common stock purchase agreement dated February 10, 2009      |   |              | --       |   |            |   | (744 | ) |
|  $500,000 common stock purchase agreement dated October 2, 2009          |   |              | (130,063 | )      |            |   | -- |   |
|  $1,000,000 common stock purchase agreement dated October 16, 2009       |   |              | (100,830 | )      |            |   | -- |   |
|                                                                          |   | $                 | (593,036 | )      |            | $      | (1,667,173 | ) |

----

| (d)   | Financial Instruments (Cont’d) |
|-----------------|--------------------------------------|

|   | The following table summarizes the number of common shares indexed to the derivative financial instruments as of February 28, 2010: |
|--------|-------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                         |   | CompoundEmbeddedDerivatives |       |   | WarrantDerivatives |   |       | TotalDerivatives |   |
|----------------------------------------------------------------------------------------------|--------|-----------------------------|------------|--------|--------------------|--------|------------|------------------|--------|
| Our financing arrangement giving rise to derivativefinancial instruments and indexed shares: |   |                        |       |   |               |   |       |             |   |
| $2,000,000 face value secured convertible notes due July 10, 2010                            |   |                        | 5,714,286  |   |               |   | 7,142,858  |             |   |   | 12,857,144 |   |
| $1,000,000 common stock purchase agreement                                                   |   |                        | --         |   |               |   | 2,777,778  |             |   |   | 2,777,778 |   |
| Beginning balance, August 31, 2009                                                           |   |                        | 5,714,286  |   |               |   | 9,920,636  |             |   |   | 15,634,922 |   |
|                                                                                         |   |                        |       |   |               |   |       |             |   |   |   |   |
| Adjustment to indexed shares:                                                                |   |                        |       |   |               |   |       |             |   |   |   |   |
|      Increase due to anti-dilution adjustment (1)                   |   |                        | 5,396,825  |   |               |   | --         |             |   |   | 5,396,825 |   |
|                                                                                         |   |                        |       |   |               |   |       |             |   |   |   |   |
| Granted:                                                                                     |   |                        |       |   |               |   |       |             |   |   |   |   |
| $500,000 common stock purchase agreement dated October 2, 2009                               |   |                        | --         |   |               |   | 3,125,000  |             |   |   | 3,125,000 |   |
| $1,000,000 common stock purchase agreement dated October 16, 2009                            |   |                        | --         |   |               |   | 4,481,308  |             |   |   | 4,481,308 |   |
|                                                                                         |   |                        |       |   |               |   |       |             |   |   |   |   |
| Expired:                                                                                     |   |                        |       |   |               |   |       |             |   |   |   |   |
| $1,000,000 common stock purchase agreement February 10, 2009                                 |   |                        | --         |   |               |   | (2,777,778 | )                |   |   | (2,777,778 | ) |
|                                                                                         |   |                        |       |   |               |   |       |             |   |   |   |   |
| Ending balance, February 28, 2010                                                            |   |                        | 11,111,111 |   |               |   | 14,749,166 |             |   |   | 25,860,277 |   |

----

| (d)   | Financial Instruments (Cont’d) |
|-----------------|--------------------------------------|

|   | The following table summarizes the effects on our income (expense) associated with changes in the fair values of our derivative financial instruments by type of financing: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                          |   | Three months ended February 28, |      |   | Six months ended February 28, |   |    | May 12,2006 (Date of inception) to February 28, |   |
|-----------------------------------------------------------------------------------------------|--------|---------------------------------|-----------|--------|-------------------------------|--------|---------|-------------------------------------------------|--------|
|                                                                                          |   | 2010                            |      |   | 2009                          |   |    | 2010                                            |   |   | 2009 |   |   | 2010 |   |
| Financing arrangement: $2,000,000 face value secured convertible notes due July 10, 2010 |   |                            |      |   |                          |   |    |                                            |   |   |   |   |   |   |   |
| Compound Embedded derivative                                                                  |   | $                               | 738,579   |   |                          | $      | 183,988 |                                            |   | $ | 445,323 |   |   | $ | 1,124,087 |   |   | $ | 1,215,875 |   |
| Warrant derivatives                                                                           |   |                            | 242,857   |   |                          |   | (21,330 | )                                               |   |   | 1,304,286 |   |   |   | 1,014,858 |   |   |   | 2,407,714 |   |
| $1,000,000 common stock purchase agreement dated February 10, 2009                            |   |                            |      |   |                          |   |    |                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Warrant derivatives                                                                           |   |                            | 19,770    |   |                          |   | 7,319   |                                            |   |   | 744 |   |   |   | 7,319 |   |   |   | 744,240 |   |
| $500,000 common stock purchase agreement dated October 2, 2009                                |   |                            |      |   |                          |   |    |                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Warrant derivatives                                                                           |   |                            | (1,813    | )      |                          |   | --      |                                            |   |   | 140,500 |   |   |   | -- |   |   |   | 140,500 |   |
| $1,000,000 common stock purchase agreement dated October 16, 2009                             |   |                            |      |   |                          |   |    |                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Warrant derivatives                                                                           |   |                            | 20,165    |   |                          |   | --      |                                            |   |   | 61,393 |   |   |   | -- |   |   |   | 61,393 |   |
| Change in fair value of derivative                                                            |   |                            | 1,019,558 |   |                          |   | 169,977 |                                            |   |   | 1,952,246 |   |   |   | 2,146,264 |   |   |   | 4,569,722 |   |
|                                                                                          |   |                            |      |   |                          |   |    |                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Day-one derivative losses:                                                                    |   |                            |      |   |                          |   |    |                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Secured convertible notes dueJuly 10, 2010                                                    |   |                            | --        |   |                          |   | --      |                                            |   |   | -- |   |   |   | -- |   |   |   | (2,541,192 | ) |
| Common stock purchase agreement dated February 10, 2009                                       |   |                            | --        |   |                          |   | (21,102 | )                                               |   |   | -- |   |   |   | (21,102 | ) |   |   | (21,102 | ) |
| Total derivative income (expense)                                                             |   | $                               | 1,019,558 |   |                          | $      | 148,875 |                                            |   | $ | 1,952,246 |   |   | $ | 2,125,162 |   |   | $ | 2,007,428 |   |

| ·   | The market price of our common stock, which significantly affects the fair value of our derivative financial instruments, experienced material price fluctuations. To illustrate, the closing price of our common stock decreased from $0.55 on July 10, 2008 to $0.14 on February 28, 2010. The lower stock price on February 28, 2010 had the effect of significantly decreasing the fair value of our derivative liabilities and, accordingly, we were required to adjust the derivatives to these lower values with charges to derivative income. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (d)   | Financial Instruments (Cont’d) |
|-----------------|--------------------------------------|

| ·   | In connection with our accounting for the secured convertible note financing we encountered the unusual circumstance of a day-one derivative loss related to the recognition of derivative instruments arising from the arrangement. That means that the fair value of the bifurcated compound derivative and warrants exceeded the proceeds that we received from the arrangement and we were required to record a loss to record the derivative financial instruments at fair value. The loss that we recorded amounted to $2,541,192. We also encountered a day-one loss of $21,102 in connection with our accounting for the February 2009 Common Stock Purchase Agreement which represented the portion of the placement agent costs that were allocated to the warrants. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | Use of Estimates in the preparation of the financial statements |
|-----------------|-----------------------------------------------------------------|

----

|                          |   | February 28, 2010 |      |
|-------------------------------|--------|-------------------|-----------|
|                          |   | Cost              |      |   | AccumulatedAmortization |   |   | Net Book |   |
| Vehicles                      |   | $                 | 105,719   |   |   | $ | (64,088 | ) |   | $ | 41,631 |   |
| Machinery                     |   |              | 829,531   |   |   |   | (375,571 | ) |   |   | 453,960 |   |
| Computer and office equipment |   |              | 294,825   |   |   |   | (135,707 | ) |   |   | 159,118 |   |
| Leasehold improvements        |   |              | 360,865   |   |   |   | (93,660 | ) |   |   | 267,205 |   |
|                          |   | $                 | 1,590,940 |   |   | $ | (669,026 | ) |   | $ | 921,914 |   |

| (a)   | On April 24, 2006 CPTI entered a research and development agreement (the “Agreement”) to fund all future costs for research, development, patenting, licensing and marketing for an alternative hybrid fuel technology that combines diesel and steam and gas (petrol) and steam technologies for a 100% ownership of the technology and any associated intellectual rights with two directors and officers of CPTL-UK.  Under the terms of the Agreement, the Company agreed to retain one director as the Company’s project director at a fee of £3,000 (US$5,972) per month for a period of 36 months commencing May 2006 and the second director as the Company’s project manager at a fee of £6,000 (US$11,945) per month for a period of 36 months commencing May 2006.  During March 2008 the monthly fee for the project manager was increased to £10,000 (US$19,908).   On August 8, 2008 the project director and the project manager resigned as directors of CPTL-UK. Concurrently, the project manager entered into a new employment agreement (the “Employment Agreement”) with the Company for a term of four (4) years.  Under the terms of the Employment Agreement, from March 1, 2009 and on each subsequent anniversary during the term of the Employment Agreement, the project manager is entitled to an annual salary increase of 10%, as well as the following performance based compensation: |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 500,000 shares of common stock when the Refrigeration Compact Heat Exchanger (the “Refrigeration Unit”) for the grocery truck/trailer is successfully tested; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 1,000,000 shares of common stock when the first Refrigeration Unit is commercially sold; |
|--------------------|------------------------------------------------------------------------------------------|

| ·   ·   | 1,000,000 shares each time when the heat recovery system for the Marine application or An Auxiliary Steam Engine for Trucks or similar engines based on the Heat recovery and/or Steam technology is developed and commercially sold to the first customer; 1,000,000 shares of common stock when the first automobile which is developed on the heat recovery system is successfully tested and verified by the E.P.A; and |
|----------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 1,000,000 shares of common stock when the first automobile heat recovery system is commercially sold. |
|--------------------|-------------------------------------------------------------------------------------------------------|

----

| (b)   | On July 26, 2006, CPTL-UK entered into a three-year lease agreement with an officer of CPTL-UK to lease the office and laboratory premises. Upon expiration of the lease the officer agreed to continue to provide month to month use of the premises at a rate of £1,647.44 per month, plus certain taxes, until such time as a long-term lease can be negotiated. During the six months ended February 28, 2010, an expense of $18,236 (£11,263) was charged as rent. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | Pursuant to an employment agreement dated May 22, 2008, between the Company and its CEO, Mr. Abdul Mitha, Mr. Mitha invoiced the Company $300,000 with respect to his monthly salary obligation for the six month period ended February 28, 2010. During the six month period Mr. Mitha didn’t receive any cash payments from the Company, leaving $799,582 due and payable to Mr. Mitha in salary obligations as at February 28, 2010, which is included Wages Payable - Related Party on the Company's balance sheet. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On July 23, 2009, the Company determined it had successfully achieved the first benchmark in its development program whereby the Refrigeration Compact Heat Exchanger (the “Refrigeration Unit”) for the grocery truck/trailer was successfully tested.  Under the terms of Mr. Mitha’s employment contract, he is entitled to be issued 200,000 shares each time a formal test for an industry application is successful.  As a result, an expense totalling $110,000 to stock based compensation was recorded in the prior fiscal year, and the Company issued a total of 200,000 shares of the Company’s common stock on September 24, 2009. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | During the six month period ended February 28, 2010 Mr. Mitha advanced $191,938 (2009- $116,060) for operations under the terms of a convertible debenture approved September 28, 2006 (the "Mitha Convertible Debenture").  As at February 28, 2010, using the guidance provided in ASC 470-20-25, we evaluated the convertible debenture arrangement and concluded that the convertible debenture does not have an embedded beneficial conversion feature.  As such there was no discount applied to the convertible debt. During the six month ended February 28, 2010, the Company made cash payments to Mr. Mitha to retire $180,666 of the outstanding convertible debenture.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | At the close of the fiscal year ended August 31, 2009, Mr. Mitha had advanced a total amount of $550,110 for operations under the terms of the Mitha Convertible Debenture. From receipt of initial loan proceeds in May 2007 and up to and including the  period ended May 31, 2009, using the guidance provided in ASC 470-20-25, we evaluated the Mitha Convertible Debenture at each of the respective reporting periods, and in such periods we concluded that the convertible debenture did have an embedded beneficial conversion feature. For each of these reporting periods, these embedded beneficial conversion features were valued separately on the date of  issuance of each of the quarterly promissory notes, and have been recognized as additional paid-in-capital by allocating a portion of the proceeds equal to the intrinsic value of the feature. The intrinsic value is computed at the date of issuance of the promissory note by (1) calculating the difference between the conversion price and the fair value of the common stock (or other securities) into which the security is convertible and then  (2) multipying the number of shares into which the security is convertible. The resulting discount on the convertible debt is amortized to interest expense using the effective interest method, over the life of the debt instrument. During the quarterly period ended August 31, 2009, using the guidance provided in ASC 470-20-25, we evaluated the convertible debenture arrangement and concluded that the convertible debenture did not have an embedded beneficial conversion feature.  As such there was no discount applied to the convertible debt during the three months ended August 31, 2009. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | The carrying value and terms of the aforementioned convertible notes are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

|                                  |   | February 28, 2010 |     |
|---------------------------------------|--------|-------------------|----------|
| Face value due November 30, 2010      |   | $                 | 61,491   |   |
| Face value due February 28, 2011      |   |              | 47,771   |   |
| Face value due May 31, 2011           |   |              | 143,604  |   |
| Face value due August 31, 2011        |   |              | 116,578  |   |
| Face value due November 30, 2011      |   |              | 128,093  |   |
| Face value due February 28, 2012      |   |              | 63,844   |   |
| Total Convertible Debt, at face value |   |              | 561,.381 |   |
| Less: unamortized discount            |   |              | (61,894  | ) |
| Carrying value                        |   | $                 | 499,487  |   |

----

|                          |   | Three months ended February 28, |   |   | Six months ended February 28, |   |   | May 12,2006 (Date of inception) to February 28, |   |
|-------------------------------|--------|---------------------------------|--------|--------|-------------------------------|--------|--------|-------------------------------------------------|--------|
|                          |   | 2010                            |   |   | 2009                          |   |   | 2010                                            |   |   | 2009 |   |   | 2010 |   |
|                          |   |                            |   |   |                          |   |   |                                            |   |   |   |   |   |   |   |
| Amortization of debt discount |   | $                               | 14,436 |   |                          | $      | 49,821 |                                            |   | $ | 30,695 |   |   | $ | 95,588 |   |   | $ | 263,231 |   |
| Interest at contractual rate  |   | $                               | 10,218 |   |                          | $      | 9,949  |                                            |   | $ | 20,275 |   |   | $ | 18,646 |   |   | $ | 110,729 |   |

| (d)   | Commencing July 2008, the Company has entered into various stock purchase and secured financing agreements with the Quercus Trust, which entity became a related party to the Company effective February 2009, upon completion of a further stock purchase agreement. Mr. David Gelbaum, the trustee of the Quercus Trust, was appointed to the Board of Directors of the Company effective October 19, 2009.  Presently the Quercus trust owns a total of 8,773,194 shares of the Company’s common stock and has an option to acquire a further 14,749,166 shares of the Company’s common stock at various prices, under the terms of various stock purchase and secured financing agreements. Refer to Notes 8 and 9 for additional details of all stock purchase and financing agreements. On February 24, 2010, Mr. David Gelbaum resigned from his position as a member of the Board of Directors of the Company. The Company's Board currently consists of three members, one of which is currently an affiliate of the Quercus Trust. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | The Company entered into a collaboration agreement dated October 11, 2006 for the development of a steam accumulator and other related technologies in partnership for use with the Company’s petrol (gas)/steam and diesel/steam hybrid technologies project.  The agreement called for funding of approximately US$400,000 by the partner.  As consideration, the Company was required to issue 4,000,000 common shares of the Company. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The agreement further provides that within 18 months from the first vehicle being publicly unveiled, the partner will have the option of either seeking cash reimbursement of its development costs from the Company or retaining the previously issued shares of common stock of the Company.  Should the partner seek cash reimbursement then the partner shall return a total of 3,000,000 shares of common stock to the Company.  Should development costs exceed US$400,000 then the Partner has the option to either receive cash reimbursement of the amount in excess of US$400,000 or to receive additional shares of the Company at a price to be negotiated.  Should the Company be unable to reimburse the partner on any call for reimbursement as allowed under the collaboration agreement, the Company will transfer an equal share of the intellectual property to the Partner so that the Partner and the Company will own the intellectual property equally.  On June 13, 2007, the Company issued a total of 4,000,000 shares of restricted Common Stock to Doosan Babcock Energy Ltd. (“Doosan”) pursuant to the terms and conditions of a subscription agreement, received May 21, 2007 (the “Subscription Agreement”). The Subscription Agreement was executed pursuant to the terms and conditions of that Collaboration Agreement entered into between the parties on October 11, 2006. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company provided an additional 100,000 common shares to Doosan, which were to be used at their discretion to reward any of their employees who had helped in the development of the technologies project.  During the term of the collaboration agreement the Company determined to postpone indefinately further commercialization of the particular technology for which Doosan and the Company entered into the aforementioned collaboration agreement.  As a result Doosan would incur no further development costs,  and therefore, the Company has not recorded any further contingent liability in respect of the transaction.  The term of the agreement was three years and it expired on October 11, 2009. Upon expiry of the agreement, all rights and obligations of the parties thereto terminate without any liability of any party to any other party, provided that the confidentiality provisions contained in Section 10 and non-competition provisions contained in Section 11 survive termination.   Any rights Doosan may have had to seek reimbursement for its share of development costs, or the Company may have had to elect to reimburse the development costs and thereby effect a return of 3,000,000 shares of common stock, are of no further force and effect.  Due to the uncertainty surrounding probabley occurences which would trigger any one of the potential contingent events disclosed above, and the resulting inability to determine any loss contingency, the Company has not applied any further accounting treatment in respect of the above transaction.  The Company has relied on the guidance provided in ASC 450-20 in making the determination that any further loss is remote. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

----

| (b)   | During the year ended August 31, 2007, the Company entered into an agreement with Abchurch Communications Limited to provide certain integrated financial and corporate communications services.  Under the terms of the agreement, Abchurch will provide four (4) phases of services to assist the Company in securing a listing on the AIM Exchange in London.  Fees payable under the agreement include a project fee of £40,000 (approximately U.S. $80,000), of which, the Company has remitted a total of £35,000 (approximately U.S. $70,000).  The agreement also provided for quarterly consulting fees of £12,000 (approximately U.S. $24,400). The Company renegotiated the quarterly payments required under the contract effective April 1, 2008 whereby quarterly fees were reduced to £3,000 per month for the period January to March 2008, and thereafter to £2,000 per month for the remaining term of the contract.  The Company terminated the contract on July 1, 2009.  During the six months ended February 28, 2010 the Company has remitted a total of $3,895 in respect of the balance of fees outstanding up to the date of termination. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | On July 28, 2008, the Company entered into an agreement with Mr. George McLaine whereby Mr. McLaine agreed to serve as a consultant to assist the Company with introductions to transportation companies in the Province of Alberta, Canada, and abroad with a purpose of locating collaborative partners to test the Company’s heat recovery systems in trucks and trailers.  In consideration for this service, Mr. McLaine shall receive 32,000 shares of the Company’s common stock for each introduction that results in a collaboration agreement.  Further, Mr. McLaine shall receive 25,000 shares of the Company’s common stock per annum for serving as a consultant to the Company.  The contract is for a period of two (2) years and may be renewed by mutual consent.  Mr. McLaine is to also receive a 30% commission for any advance purchase orders received on the advance deposit required of 1% of the total purchase or $100 per unit ordered. 32,000 shares were issued under the Company’s 2007 Stock Option and Stock Award Plan as of September 8, 2008.  On July 28, 2009 under the terms of the agreement, Mr. McLaine reached his first service related benchmark and the Company expensed a total of $13,750 to stock based compensation in respect of an annual award of 25,000 shares of common stock.  The shares were issued on September 24, 2009. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | On June 1, 2008, the Company’s subsidiary CPTL-UK entered into an employment contract with an IT specialist whereunder the employee will receive 25,000 shares of the Company’s common stock after the initial three (3) months, and 25,000 shares of the Company’s common stock each year on the anniversary of the completion of certain work projects up to a maximum of 100,000 shares.  25,000 shares were issued under the Company’s 2007 Stock Option and Award Plan as of September 8, 2008. As to the remaining 75,000 shares of common stock available for issue under the above-noted contract, due to the fact that they are service based awards, the Company has recognized a stock-based compensation expense which is being amortized over the period of service. On June 30, 2009, the Company issued the second service related award of 25,000 common shares and expensed an additional amount of $1,750 as stock based compensation to record the discrepancy between the market value of the common shares on the date of the original expense, and the market value of the shares on the issuance date.  Refer to Note 10(ii) – Restricted Stock Awards for additional details. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | On October 27, 2008 the Company’s subsidiary CPTL-UK entered into an employment agreement with Marco Cucinotta whereby Mr. Cucinotta will receive an annual salary of $146,475 (£90,000) as well as the following performance based compensation: |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 200,000 shares of the Company’s common stock on commencement of employment; |
|--------------------|-----------------------------------------------------------------------------------|

| ·   | 100,000 shares of the Company’s common stock on completion of the first complete system in test cell; |
|--------------------|-------------------------------------------------------------------------------------------------------------|

| ·   | 100,000 shares of the Company’s common stock on completion of the first truck based system; |
|--------------------|---------------------------------------------------------------------------------------------------|

| ·   | 100,000 shares of the Company’s common stock on sale of the first system; and |
|--------------------|-------------------------------------------------------------------------------------|

| ·   | 100,000 shares of the Company’s common stock upon establishing a UK consultancy firm and generating £100,000 in gross revenue. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | The Company issued a total of 200,000 shares in respect of the above agreement under its 2007 Stock Option and Award Plan as to 100,000 shares on January 9, 2009 and 100,000 shares on March 3, 2009, respectively.  On July 23, 2009 the Company determined it had successfully achieved the first benchmark in its development program whereby the Refrigeration Compact Heat Exchanger (the “Refrigeration Unit”) for the grocery truck/trailer was successfully tested.  As a result, under the terms of Mr. Cucinotta’s employment agreement, whereby he is entitled to receive 100,000 shares of the Company’s common stock on completion of the first complete system in test cell, the Company reserved 100,000 shares of the Company’s common stock and recorded an expense totalling $55,000 to stock based compensation during the fourth quarter of the current fiscal year.  The shares were issued on September 24, 2009. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Using the guidance provided in ASC 718 the Company has not recorded compensation cost in respect of the unearned performance-based awards as at February 28, 2010 due to the uncertainty surrounding realization of the benefit of the awards. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f)   |  In August 2008, the Company entered into a collaboration agreement with Voith Turbo Gmbh & Co. KG (“VTG”) to develop steam and heat energy recovery engines for Clean Power's proprietary heat recovery technology for refrigeration trailers for the grocery market. Under the terms of the collaboration agreement, Clean Power and VTG will analyse data from the testing of an existing refrigeration engine, results from which will be used to build and test a new engine that incorporates Clean Power's proprietary heat recovery technology. VTG is a multi-national company with significant interest in the development of expanders in engine and braking systems. As part of its own drive systems and components development programme VTG has already developed hybrid systems, waste recovery systems and expansion engines based on the internal combustion engine which is used on the road, on rail, on water and in other industries. Under the collaboration agreement, the VTG invoiced the Company USD $255,398 (EUR 178,500). On October 27, 2009, the Company paid off the invoiced amount. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (g)   | During the six months ended February 28, 2010 and prior, the Company’s wholly-owned subsidiary CPTL-UK entered into various employment contracts which call for a total of 5,475,000 shares of the Company’s common stock to be issued as stock awards upon completion of certain technology development benchmarks.  On July 23, 2009, the first of these benchmarks was reached and the Company has recorded a stock based compensation expense totalling $330,000 as it relates to the issuance of 600,000 common shares. Using the guidance provided in ASC 718 the Company has not recorded compensation cost in respect of the remaining unearned performance-based awards as at February 28, 2010.  The Company has determined it is currently doubtful that employees will earn the right to benefit from the remaining awards. Additionally, under the above noted contracts the Company agreed to certain service based awards which shall be earned annually.  In total the Company granted 625,000 service-based awards, in respect of which the Company has recognized a stock-based compensation expense.  Refer to Note 10(ii) – Restricted Stock Awards for additional details. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (h)   | Effective November 13, 2008 the Company entered into a five (5) year lease for office and warehouse space in a property located in New Haven, East Sussex, U.K., adjacent to its current leased facilities at an annual rate of $22,863 (£15,000) payable quarterly commencing March 2009.  Concurrently the Company entered into an option to purchase the aforementioned property, exercisable March through August 2010, for a purchase price the greater of (i) the price stated in an Independent Valuation or (ii) £425,000 less any reductions previously specified and agreed in a former option agreement.  During the six months ended February 28, 2010, the Company paid total $12,143 (£7,500) plus applicable taxes. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| The lease payments for each of the five succeeding fiscal years are as follows: |
|---------------------------------------------------------------------------------|

| 2010                                             |   | $      | 11,432 |   |
|--------------------------------------------------|--------|--------|--------|--------|
| 2011                                             |   |   | 22,863 |   |
| 2012                                             |   |   | 22,863 |   |
| 2013                                             |   |   | 22,863 |   |
| 2014                                             |   |   | 3,810  |   |
|        Total: |   | $      | 83,831 |   |

| (i)   | On November 18, 2008 CPTL–UK entered into a six month renewable lease agreement for a corporate housing facility located in Surrey, United Kingdom for use by the Company’s CEO, Abdul Mitha.  The lease called for monthly rent in the amount of $1,905 (£1,250) plus applicable taxes and expired May 17, 2009.  The lease was renewed subsequent to the quarter for a term of 12 months, expiring in May, 2010.   During the six months ended February 28, 2010, the Company paid total $6,072 (£3,750) plus applicable taxes and utilities. The lease payments for each of the two succeeding fiscal years are as follows: |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2010   | $      5,716 |
|--------|--------------------------------------------|
| Total: | $      5,716 |

| (j)   | Effective February 1, 2009 the Company entered into a six (6) year lease for office and warehouse space in a property located in New Haven, East Sussex, U.K., adjacent to its current leased facilities at an annual rate of $24,387 (£16,000) plus taxes and expenses, payable monthly in advance, commencing January 30, 2009.  Concurrently the Company entered into an option to purchase the aforementioned property during the period April 30, 2014 through January 29, 2015, for a purchase price of £230,000. During the six months ended February 28, 2010, the Company paid total $12,953 (£8,000) plus applicable taxes. The lease payments for each of the five succeeding fiscal years are as follows: |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2010                                             |   | $      | 12,194  |   |
|--------------------------------------------------|--------|--------|---------|--------|
| 2011                                             |   |   | 24,387  |   |
| 2012                                             |   |   | 24,387  |   |
| 2013                                             |   |   | 24,387  |   |
| After 2013                                       |   |   | 34,549  |   |
|        Total: |   | $      | 119,904 |   |

----

| (k)   | On March 12, 2009 and May 5, 2009 the Company entered into two agreements with Gersten Savage LLP, the Company’s attorneys, in connection with the filing and prosecution of certain foreign patent applications with respect to the Unitary Engine and Reservoir Engine Inventions as well as additional refrigeration types; and, prosecution and filing of additional United States applications for the Reefer Control System, In-line Automotive Auxiliary Power System and Land-fill/Waste Heat Auxiliary Power Generation System.  Under the terms of the retainer agreements, the Company agreed to pay fixed fees as follows: |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | $810,000 worth of the Company’s restricted common shares with a deemed value of $0.375 per share. The Company issued a total of 2,160,000 shares in full and final settlement of this provision and a total of  $1,176,000, [$600,000 as to 1,200,000 common shares with a market value of $0.50 on the date of the agreement, and $576,000 as to 960,000 common shares with a market value of $0.60 on the date of the agreement], has been expensed in respect of the issuance of these shares on the Company’s income statement during the fiscal year 2009; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | $450,000 in cash payments due under the March 12, 2009 agreement and $240,000 in cash payments due under the May 5, 2009 retainer agreement for a total of $690,000 in cash payments, which amount is payable as follows: $35,000 and $10,000, respectively, due  upon signing of the individual retainer agreements; $15,000 per month commencing 120 days from March 12, 2009 and $7,500 per month commencing 120 days from May 5, 2009 until such time as the balance of the required cash amounts are settled in full.  During the three months ended February 28, 2010 the Company paid $45,000 in full in respect of the two retainer agreements; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | During the six months ended February 28, 2010, the Company accrued expense totaling $185,000 under the March 12, 2009 agreement and under the May 5, 2009 agreement. During the quarter, the Company didn’t make any cash payments. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | During the six months ended February 28, 2010, Gersten Savage LLP invoiced the Company legal services fee related to general corporate matters for a total of $115,995. Gersten Savage LLP received payments against its outstanding fees totaling $85,000, leaving $173,422 due and payable to Gersten Savage LLP as at February 28, 2010. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| §   | Under the terms of the retainer agreements the Company further agrees to grant piggyback registration  and/or S-8 rights and shall include the Designees’ shares of restricted common stock in its next registration statement. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (l)   | On June 29, 2009 the Company entered into a five (5) year lease for additional office and warehouse space in a property located in New Haven, East Sussex, U.K., adjacent to its current leased facilities at an annual rate of $22,863 (£15,000) payable quarterly commencing June 2009.   Concurrently the Company entered into an option to purchase the aforementioned property, exercisable June 2009 through December 2010, for a purchase price the greater of (i) the price stated in an Independent Valuation or (ii) £425,000 less any reductions previously specified and agreed in a former option agreement.  During the six months ended February 28, 2010, the Company paid total $12,143 (£7,500) plus applicable taxes. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| The lease payments for each of the five succeeding fiscal years are as follows: |
|---------------------------------------------------------------------------------|

| 2010                                             |   | $      | 11,432 |   |
|--------------------------------------------------|--------|--------|--------|--------|
| 2011                                             |   |   | 22,863 |   |
| 2012                                             |   |   | 22,863 |   |
| 2013                                             |   |   | 22,863 |   |
| 2014                                             |   |   | 19,052 |   |
|        Total: |   | $      | 99,073 |   |

| (m)   | On July 17, 2009, the Company entered into a four months loan agreement (the “Note”) with an unrelated third party for the amount $84,000. The loan had an interest rate of 1% per month, payable in advance for the duration of the Note and deducted from the proceeds of the Note on funding. The Note was paid in full on November 10, 2009. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (n)   | On December 15, 2009 the Company entered into amendments to various employment contracts with the employees of the Company’s wholly-owned subsidiary, CPTL-UK, whereunder the terms of certain performance-based award benchmarks denoted in the contracts were unanimously amended from being granted upon “the sale of the first refrigeration based system” to “when 20 landfill systems are field tested (and the system is proven and is ready for commercialization) and an additional 10 engines to be built for future projects” in order to properly reflect the Company’s current commercialization focus.  There were no changes to the amount of awards granted to any individual employee upon achieving this performance based benchmark. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                     |   | February 28, 2010 |       |
|------------------------------------------|--------|-------------------|------------|
| Secured Convertible Notes, at face value |   | $                 | 2,000,000  |   |
| Less: unamortized discount               |   |              | (1,233,766 | ) |
| Carrying value                           |   | $                 | 766,234    |   |

|                          |   | Three months ended February 28, |    |   | Six months ended February 28, |   |   | May 12,2006 (Date of inception) to February 28, |   |
|-------------------------------|--------|---------------------------------|---------|--------|-------------------------------|--------|--------|------------------------------------------------------|--------|
|                          |   | 2010                            |    |   | 2009                          |   |   | 2010                                                 |   |   | 2009 |   |   | 2010 |   |
|                          |   |                            |    |   |                          |   |   |                                                 |   |   |   |   |   |   |   |
| Amortization of debt discount |   | $                               | 146,768 |   |                          | $      | 14,677 |                                                 |   | $ | 229,303 |   |   | $ | 52,393 |   |   | $ | 766,234 |   |
| Interest at contractual rate  |   | $                               | 39,451  |   |                          | $      | 39,451 |                                                 |   | $ | 78,904 |   |   | $ | 78,904 |   |   | $ | 262,594 |   |

----

|                           |   | CompoundEmbeddedDerivatives |       |   | WarrantDerivative |   |       | TotalDerivatives |   |
|--------------------------------|--------|-----------------------------|------------|--------|-------------------|--------|------------|------------------|--------|
| Inception date (July 10, 2008) |   | $                           | (1,549,746 | )      |              | $      | (2,769,857 | )                |   | $ | (4,319,603 | ) |
| August 31, 2009                |   | $                           | (779,193   | )      |              | $      | (1,666,429 | )                |   | $ | (2,445,622 | ) |
| February 28, 2010              |   | $                           | (333,870   | )      |              | $      | (362,143   | )                |   | $ | (696,013 | ) |

|                                                               |   | Compound Embedded Derivative |           |
|--------------------------------------------------------------------|--------|------------------------------|----------------|
|                                                               |   | Inception                    |           |   | August 31, 2009 |   |   | February 28, 2010 |   |
| $2,000,000 face value secured convertible notes due July 10, 2010: |   |                         |           |   |   |   |   |   |   |
|   Conversion price (1)                                   |   | $                            | 0.35           |   |   | $ | 0.35 |   |   | $ | 0.20 |   |
|   Effective conversion price (2)                         |   | $                            | 0.35           |   |   | $ | 0.35 |   |   | $ | 0.18 |   |
|   Volatility                                             |   |                         | 72.14% - 87.52 | % |   |   | 24.56% - 94.29 | % |   |   | 123.17% - 139.82 | % |
|   Term (years)                                           |   |                         | 2.00           |   |   |   | .858 |   |   |   | .362 |   |
|   Credit-risk adjusted yield                             |   |                         | 7.13% - 10.39  | % |   |   | 9.28 | % |   |   | 7.42 | % |
|   Interest-risk adjusted rate                            |   |                         | 9.19% - 9.68   | % |   |   | 5.94% - 8.00 | % |   |   | 8.00 | % |
|   Dividends                                              |   |                         | --             |   |   |   | -- |   |   |   | -- |   |
|                                                               |   |                         |           |   |   |   |   |   |   |   |   |   |
|   Equivalent volatility (3)                              |   |                         | 78.96          | % |   |   | 63.88 | % |   |   | 130.42 | % |
|   Equivalent term (years) (3)                            |   |                         | 1.82           |   |   |   | 0.855 |   |   |   | .361 |   |
|   Equivalent credit-risk adjusted yield (3)              |   |                         | 8.50           | % |   |   | 9.28 | % |   |   | 7.42 | % |
|   Equivalent interest-risk adjusted rate (3)             |   |                         | 9.48           | % |   |   | 7.14 | % |   |   | 8.00 | % |
|                                                               |   |                         |           |   |   |   |   |   |   |   |   |   |

| (1)   | Due to full-ratchet anti-dilution provisions in the convertible note agreement, the conversion price decreased from $0.35 to $0.20 on October 2, 2009 when we entered into a financing with a price of $.20. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | The effective conversion price embodies the value of the anti-dilution provisions. |
|-----------------|------------------------------------------------------------------------------------|

| (3)   | The application of the Monte Carlo Simulation technique contemplates multiple inputs corresponding to estimated redemption intervals which allow the technique to simulate outcomes along specific paths.  The equivalent assumptions are an output of the valuation model which represents the average over the multiple paths calculated by the model when computing the fair value of the compound embedded derivative. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                               |   | Inception                |   |   | August 31, 2009           |   |   | February 28, 2010        |   |
|------------------------------------|--------|--------------------------|--------|--------|---------------------------|--------|--------|--------------------------|--------|
|                               |   | Class AWarrantDerivative |   |   | Class B WarrantDerivative |   |   | Class AWarrantDerivative |   |   | Class B WarrantDerivative |   |   | Class AWarrantDerivative |   |   | Class B WarrantDerivative |   |
| Warrants to purchase common stock: |   |                     |   |   |                      |   |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Strike price (1)       |   | $                        | 0.60   |   |                      | $      | 0.80   |                     |   | $ | 0.45 |   |   | $ | 0.45 |   |   | $ | 0.35 |   |   | $ | 0.35 |   |
|   Volatility             |   |                     | 98.83  | %      |                      |   | 98.83  | %                        |   |   | 88.39 | % |   |   | 88.39 | % |   |   | 102.26 | % |   |   | 102.26 | % |
|   Term (years)           |   |                     | 5.00   |   |                      |   | 5.00   |                     |   |   | 3.86 |   |   |   | 3.86 |   |   |   | 3.36 |   |   |   | 3.36 |   |
|   Risk-free rate         |   |                     | 3.10   | %      |                      |   | 3.10   | %                        |   |   | 2.39 | % |   |   | 2.39 | % |   |   | 1.36 | % |   |   | 1.36 | % |
|   Dividends              |   |                     | --     |   |                      |   | --     |                     |   |   | -- |   |   |   | -- |   |   |   | -- |   |   |   | -- |   |

|   | (1) The strikes price of the Class A and Class B Warrants were reduced from their contractual strike prices of $0.60 and $0.80, respectively, because the warrant agreements contain down-round protection features and we subsequently issued warrants with a lower strike price. In accordance with the terms of the warrant agreements, the adjustment to the strike price related to down-round protection features was limited to $.35 |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Classification                    |   | Allocation |      |
|-----------------------------------|--------|------------|-----------|
| Day-one derivative loss           |   | $          | (21,103   | ) |
| Common Stock (par value)          |   |       | 2,222     |   |
| Paid-in Capital (Common Stock)    |   |       | 274,641   |   |
| Derivative Liabilities (Warrants) |   |       | 744,240   |   |
| Proceeds                          |   | $          | 1,000,000 |   |

|                               |   | Inception                 |   |   | August 31, 2009           |   |
|------------------------------------|--------|---------------------------|--------|--------|---------------------------|--------|
|                               |   | Class A WarrantDerivative |   |   | Class B WarrantDerivative |   |   | Class A Warrant Derivative |   |   | Class B WarrantDerivative |   |
| Warrants to purchase common stock: |   |                      |   |   |                      |   |   |   |   |   |   |   |
|  Effective Strike price       |   | $                         | 0.60   |   |                      | $      | 0.85 |   |   | $ | 0.60 |   |   | $ | 0.85 |   |
|   Volatility             |   |                      | 161.85 | %      |                      |   | 161.85 | % |   |   | 38.45 | % |   |   | 38.45 | % |
|   Term (years)           |   |                      | 1.00   |   |                      |   | 1.00 |   |   |   | 0.45 |   |   |   | 0.45 |   |
|   Risk-free rate         |   |                      | 0.60   | %      |                      |   | 0.60 | % |   |   | 0.24 | % |   |   | 0.24 | % |
|   Dividends              |   |                      | --     |   |                      |   | -- |   |   |   | -- |   |   |   | -- |   |

----

| Classification                    |   | October 2, 2009 |    |   | October 16, 2009 |   |
|-----------------------------------|--------|-----------------|---------|--------|------------------|--------|
|                              |   | Allocation      |    |   | Allocation       |   |
| Common Stock (par value)          |   | $               | 229     |   |             | $      | 1,338 |   |
| Paid-in Capital (Common Stock)    |   |            | 229,208 |   |             |   | 1,336,439 |   |
| Derivative Liabilities (Warrants) |   |            | 270,563 |   |             |   | 162,223 |   |
| Proceeds                          |   | $               | 500,000 |   |             | $      | 1,500,000 |   |

----

|                                   |   | Inception |      |   | February 28, 2010 |   |
|----------------------------------------|--------|-----------|-----------|--------|-------------------|--------|
| Warrants to purchase common stock:     |   |      |      |   |              |   |   |   |   |   |   |   |
|   Common shares indexed      |   |      | 1,875,000 |   |              |   | 1,250,000 |   |   |   | 1,875,000 |   |   |   | 1,250,000 |   |
|   Effective strike price (1) |   | $         | 0.27      |   |              | $      | 0.38 |   |   | $ | 0.19 |   |   | $ | 0.27 |   |
|   Volatility                 |   |      | 108.06    | %      |              |   | 108.06 | % |   |   | 190.55 | % |   |   | 190.55 | % |
|   Term (years)               |   |      | 0.84      |   |              |   | 0.84 |   |   |   | 0.59 |   |   |   | 0.59 |   |
|   Risk-free rate             |   |      | 0.37      | %      |              |   | 0.37 | % |   |   | 0.19 | % |   |   | 0.19 | % |
|   Dividends                  |   |      | --        |   |              |   | -- |   |   |   | -- |   |   |   | -- |   |

|                                   |   | October 16 ,2009  |      |
|----------------------------------------|--------|-------------------|-----------|
| Warrants to purchase common stock:     |   |              |      |   |   |   |   |   |   |   |   |   |
|   Common shares indexed      |   |              | 1,857,852 |   |   |   | 833,333 |   |   |   | 1,234,568 |   |   |   | 555,555 |   |
|   Effective strike price (1) |   | $                 | 0.45      |   |   | $ | 0.45 |   |   | $ | 0.45 |   |   | $ | 0.46 |   |
|   Volatility                 |   |              | 123.54    | % |   |   | 123.54 | % |   |   | 123.54 | % |   |   | 123.54 | % |
|   Term (years)               |   |              | 1.00      |   |   |   | 1.00 |   |   |   | 1.00 |   |   |   | 1.00 |   |
|   Risk-free rate             |   |              | 0.36      | % |   |   | 0.36 | % |   |   | 0.36 | % |   |   | 0.36 | % |
|   Dividends                  |   |              | --        |   |   |   | -- |   |   |   | -- |   |   |   | -- |   |
|                                   |   |              |      |
|                                   |   | February 28, 2010 |      |
| Warrants to purchase common stock:     |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Common shares indexed      |   |              | 1,857,852 |   |   |   | 833,333 |   |   |   | 1,234,568 |   |   |   | 555,555 |   |
|   Effective strike price (1) |   | $                 | 0.45      |   |   | $ | 0.45 |   |   | $ | 0.45 |   |   | $ | 0.45 |   |
|   Volatility                 |   |              | 184.48    | % |   |   | 184.48 | % |   |   | 184.48 | % |   |   | 184.48 | % |
|   Term (years)               |   |              | .63       |   |   |   | .63 |   |   |   | .63 |   |   |   | .63 |   |
|   Risk-free rate             |   |              | 0.19      | % |   |   | 0.19 | % |   |   | 0.19 | % |   |   | 0.19 | % |
|   Dividends                  |   |              | --        |   |   |   | -- |   |   |   | -- |   |   |   | -- |   |

|   | (1) Due to down-round protection features in the warrant agreements, the exercise price adjustment floor of $0.45 was used to calculate the fair value of the warrants. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                            |   | Fair Value Measurements Using   |           |
|-------------------------------------------------------------------------------------------------|--------|---------------------------------|----------------|
|                                                                                            |   | Significant Unobservable Inputs |           |
|                                                                                            |   | (Level 3)                       |           |
|                                                                                            |   | CompoundEmbeddedDerivative      |           |   | Warrant Derivative |   |   | Total |   |
| Beginning balance, August 31, 2009                                                              |   | $                               | ( 779,193 | ) |   | $ | (1,667,173 | ) |   | $ | (2,446,366 | ) |
|       Total (gains) or losses included in earnings                |   |                            | ( 293,256 | ) |   |   | 1,225,944 |   |   |   | 932,688 |   |
|       Issuances:                                                  |   |                            |           |   |   |   |   |   |   |   |   |   |
| Warrants issued in conjunction with October 2, 2009 common stock purchase agreement             |   |                            |           |   |   |   | ( 270,563 | ) |   |   | ( 270,563 | ) |
| Warrants issued in conjunction with  October 16, 2009 common stock purchase agreement |   |                            |           |   |   |   | ( 162,223 | ) |   |   | ( 162,223 | ) |
| Ending balance, November 30, 2009                                                               |   |                            | (1,072,449     | ) |   |   | ( 874,015 | ) |   |   | (1,946,464 | ) |
|                                                                                            |   |                            |           |   |   |   |   |   |   |   |   |   |
|       Total (gains) or losses included in earnings                |   |                            | 738,579        |   |   |   | 280,979 |   |   |   | 1,019,558 |   |
|                                                                                            |   |                            |           |   |   |   |   |   |   |   |   |   |
| Ending balance, February 28, 2010                                                               |   | $                               | ( 333,870 | ) |   | $ | ( 593,036 | ) |   | $ | ( 926,906 | ) |

| (a)   | During the six months ended February 28, 2010, the Company issued shares of common stock as follows: |
|-----------------|------------------------------------------------------------------------------------------------------|

| (i)   | 410,000 shares to employees and consultant as compensation for services rendered. |
|-----------------|-----------------------------------------------------------------------------------|

| (ii)   | 45,000 shares to employees under a Stock Option and Award Plan as compensation for services rendered. |
|------------------|-------------------------------------------------------------------------------------------------------|

| (iii)   | 825,000 shares, which had been previously reserved for issuance, as described above in Note 6 (a) & (c) and Note 7 (c) & (e) to the consolidated notes to the financial statements, |
|-------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (iv)   | 6,080,247 shares in respect of a common stock purchase agreement. Refer to Note 9 – Stock Purchase Agreement, above. |
|------------------|----------------------------------------------------------------------------------------------------------------------------|

----

| (b)   | Stock-based compensation: |
|-----------------|---------------------------|

| (i)   | Executive stock options |
|-----------------|-------------------------|

|   |   |
|--------|--------|

| Date        |   | Number of options |      | Expiry date |
|-------------|--------|-------------------|-----------|-------------|
| May 1, 2009 |   |              | 1,000,000 |        | April 30, 2014 |
| May 1, 2010 |   |              | 1,000,000 |        | April 30, 2015 |
| May 1, 2011 |   |              | 1,000,000 |        | April 30, 2016 |
| May 1, 2012 |   |              | 1,000,000 |        | April 30, 2017 |
| May 1, 2013 |   |              | 1,000,000 |        | April 30, 2018 |
| May 1, 2014 |   |              | 1,000,000 |        | April 30, 2019 |
|        |   |              | 6,000,000 |        |   |

----

| (b)   | Stock-based compensation (continued): |
|-----------------|---------------------------------------|

| (i)   | Executive stock options (continued) |
|-----------------|-------------------------------------|

| Stock Price (Issue date) | Exercise price | Risk Free interest rate | Date of issue | Expiration date | Term (years) | Volatility | Value  |
|--------------------------|----------------|-------------------------|---------------|-----------------|--------------|------------|--------|
| $ 0.55                   | $ 0.548        | 2.34%                   | 5/1/2008      | 5/1/2014        | 2.4260       | 82.83%     | $ 0.27 |
| $ 0.14                   | $ 0.190        | 2.30%                   | 5/1/2008      | 5/1/2015        | 2.5493       | 102.74%    | $ 0.09 |
| $ 0.14                   | $ 0.190        | 2.30%                   | 5/1/2008      | 5/1/2016        | 3.0342       | 102.74%    | $ 0.09 |
| $ 0.14                   | $ 0.190        | 2.30%                   | 5/1/2008      | 5/1/2017        | 3.5356       | 102.74%    | $ 0.09 |
| $ 0.14                   | $ 0.190        | 2.30%                   | 5/1/2008      | 5/1/2018        | 4.0288       | 102.74%    | $ 0.10 |
| $ 0.14                   | $ 0.190        | 2.30%                   | 5/1/2008      | 5/1/2019        | 4.5219       | 102.74%    | $ 0.10 |

| OptionGrant date |   | Option Qty |      |   | Fair Market Value as at February 28, 2010 ($) |   |    | Amortization Term (months) |   |   | Amortized value as at February 28, 2010 ($) |   |
|------------------|--------|------------|-----------|--------|-----------------------------------------------|--------|---------|----------------------------|--------|--------|---------------------------------------------|--------|
| May 1, 2009      |   |       | 1,000,000 |   |                                          |   | 273,038 |                       |   |   | 12                                          |   |   |   | 273,038 |   |
| May 1, 2010      |   |       | 1,000,000 |   |                                          |   | 91,948  |                       |   |   | 24                                          |   |   |   | 80,454 |   |
| May 1, 2011      |   |       | 1,000,000 |   |                                          |   | 88,694  |                       |   |   | 36                                          |   |   |   | 51,738 |   |
| May 1, 2012      |   |       | 1,000,000 |   |                                          |   | 94,769  |                       |   |   | 48                                          |   |   |   | 41,462 |   |
| May 1, 2013      |   |       | 1,000,000 |   |                                          |   | 99,864  |                       |   |   | 60                                          |   |   |   | 34,952 |   |
| May 1, 2104      |   |       | 1,000,000 |   |                                          |   | 104,253 |                       |   |   | 72                                          |   |   |   | 30,407 |   |
|             |   |       | 6,000,000 |   |                                          |   | 752,566 |                       |   |   |                                        |   |   |   | 512,051 |   |

| (ii)   | Restricted stock awards |
|------------------|-------------------------|

|   | The Board of Directors approved a stock option and stock award plan on February 10, 2007 (the “2007 Plan”). Under the 2007 Plan, a maximum of 2,000,000 shares of the common stock, par value $0.001 per share, may be awarded to directors, officers, employees and consultants of the Company. The duration of the 2007 Plan has been set at 10 years from the time of adoption thereof by the Board of Directors.   The Board of Directors |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (b)   | Stock-based compensation (continued): |
|-----------------|---------------------------------------|

| (ii)   | Restricted stock awards (continued) |
|------------------|-------------------------------------|

|   | On September 24, 2009 the Company issued fully vested stock awards totaling 300,000 shares to employees and consultants under its available Stock Option and Award plans as compensation for services rendered.  The shares were valued at the closing price of the Company’s common stock on the respective issue dates for a total of $90,000. The amount has been expensed during the respective periods. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                               |   | Number |    |   | Weighted AverageGrant Date Fair Value |   |
|------------------------------------|--------|--------|---------|--------|---------------------------------------|--------|
|                               |   |   |    |   |                                  |   |
| Unvested, at August 31, 2009       |   |   | 275,000 |   |                                  | $      | 0.53 |   |
| Granted                            |   |   | 50,000  |   |                                  | $      | 0.20 |   |
| Vested                             |   |   | 45,000  |   |                                  |   |   |   |
| Forfeited                          |   |   | -       |   |                                  |   |   |   |
| Unvested, end of February 28, 2010 |   |   | 280,000 |   |                                  | $      | 0.47 |   |

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|                                                                  |   | Number |       |   | Weighted AverageExercise Price |   |
|-----------------------------------------------------------------------|--------|--------|------------|--------|--------------------------------|--------|
| Warrants outstanding, August 31, 2009                                 |   |   | 10,714,286 |   |                           | $      | 0.70 |   |
| Changes during the three month period ended February 28, 2010         |   |   |       |   |                           |   |   |   |
|           Granted   |   |   | 7,606,308  |   |                           | $      | 0.51 |   |
|           Exercised |   |   | -          |   |                           |   | - |   |
|           Expired   |   |   | 3,000,000  |   |                           |   | - |   |
| Warrants outstanding, February 28, 2010                               |   |   | 15,320,594 |   |                           | $      | 0.43 |   |

| Year |   | Number of Shares |      |
|------|--------|------------------|-----------|
| 2010 |   |             | 7,606,308 |   |
| 2013 |   |             | 7,714,286 |   |

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| Name & Address                                                                           | Number of Shares Issued        | Reason for Issuance                              |
|----------------------------------------------------------------------------------------------|--------------------------------|--------------------------------------------------|
| Ian Lloyd9 Arundel CloseBeachlands, Pevensey BayEast Sussex BN24 6SF                         | 15,000 shares of common stock  | Stock Award pursuant to an employment agreement. |
| Wayne SmithFlat 1 13 High StreetSeaford East Sussex BN 251PE                                 | 15,000 shares of common stock  | Stock Award pursuant to an employment agreement. |
| Maryam Saboohi102 Keepers LaneWeaverham CW8 3BN                                              | 10,000 shares of common stock  | Stock Award pursuant to a consulting agreement.  |
| Virtrius LimitedAttention: Winnie Guoping1301 Bank of America Tower12 Harcourt RoadHong Kong | 100,000 shares of common stock | Stock award pursuant to a consulting agreement   |

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| Exhibit | Identification of Exhibit                                                                                                                                                          |                                                                                                                                        |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1     | Articles of Incorporation                                                                                                                                                          | Incorporated by reference to our SB-2 registration statement filed  with the Securities and Exchange Commission on March 15, 2004 |
| 3.1(i)  | Amendment to Articles of Incorporation dated June 12, 2006                                                                                                                         | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on July 21, 2006                                |
| 3.1(ii) | Amendment to Articles of Incorporation dated June 13, 2006                                                                                                                         | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on July 21, 2006                                |
| 3.2     | Bylaws                                                                                                                                                                             | Incorporated by reference to our SB-2 registration statement filed with the Securities and Exchange Commission on March 15, 2004            |
| 3.2(i)  | Amended and Restated Bylaws                                                                                                                                                   | Incorporated by reference to our Form 10-QSB filed with the Securities and Exchange Commission on January 22, 2007                          |
| 10.1    | Agreement and Plan of Merger between the Company, Clean Energy and Power Solutions Inc. and the shareholders of Clean Power Technologies Inc. executed on May 22, 2006.            | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on July 21, 2006                           |
| 10.2    | Memorandum of Understanding between the Company and Mitsui Babcock Energy Limited dated September 11, 2006                                                                         | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on September 12, 2006                           |
| 10.3    | Collaboration Agreement between the Company and Mitsui Babcock Limited dated October 11, 2006                                                                                      | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on October 19, 2006                             |
| 10.4    |  2007 Stock Option and Stock Award Plan approved by the Board of Directors and the Shareholders                                                                               | Incorporated by reference to our Form SB-2 registration statement filed with the Securities and Exchange Commission on March 23, 2007       |
| 10.5    | Subscription Agreement from Doosan Babcock Energy Ltd., executed pursuant to the Collaboration Agreement between the Company and Doosan Babcock Energy Ltd. dated October 11, 2006 | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on June 20, 2007                                |
| 10.6    | 2008  Stock Option and Stock Award Plan approved by the Board of Directors and the Shareholders                                                                          | Incorporated by reference to our Definitive 14-C filed with the Securities and Exchange Commission on April 17, 2008                        |
| 10.7    | Employment Agreement between Abdul Mitha and the Company effective May 1, 2008, approved by the Board of Directors on May 22, 2008.                                                | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on May 28, 2008                                 |
| 10.8    | Stock Purchase Agreement dated July 10, 2008, by and between the Company and The Quercus Trust                                                                                     | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on July 16, 2008                                |
| 10.9    | Promissory Note issued by  the Company to The Quercus Trust                                                                                                              | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on July 16, 2008                                |

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| Exhibit | Identification of Exhibit                                                                                                                       |                                                                                                                    |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------|
| 10.10   | Registration Rights Agreement by and between the Company and The Quercus Trust                                                             | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on July 16, 2008            |
| 10.11   | Pledge Agreement by and between the Company and The Quercus Trust                                                                          | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on July 16, 2008            |
| 10.12   | Class A Warrant issued by the Company to the Quercus Trust pursuant to the Stock Purchase Agreement dated July 10, 2008                    | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on July 16, 2008            |
| 10.13   | Class B Warrant issued by the Company to the Quercus Trust pursuant to the Stock Purchase Agreement dated July 10, 2008                         | Incorporated by reference to our Form 8-K filed  with the Securities and Exchange Commission on July 16, 2008 |
| 10.14   | Cooperation Agreement between the Company and Voith Turbo GmbH & Co., KG dated August 5, 2008                                               | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on August 8, 2008           |
| 10.15   | Memorandum of Understanding between the Company and Farm Fresh Marketing Inc. dated December 12, 2008                                           | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on December 16, 2008        |
| 10.16   | Lease Agreement between Quentin King and Clean Power Technologies Limited effective November 13, 2008                                           | Incorporated by reference to our Form 10-Q filed with the Securities and Exchange Commission on April 10, 2009.         |
| 10.17   | Option Agreement between Quentin King  and Clean Power Technologies Limited effective November 13, 2008                               | Incorporated by reference to our Form 10-Q filed with the Securities and Exchange Commission on April 10, 2009.         |
| 10.18   | Lease Agreement between Mr. Andrew Leaver and Mrs. Hilary Leaver  and Clean Power Technologies Limited effective November 18, 2008    | Incorporated by reference to our Form 10-Q filed with the Securities and Exchange Commission on April 10, 2009.         |
| 10.19   | Stock Purchase Agreement dated February 10, 2009, by and between the Company and The Quercus Trust                                              | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on February 13, 2009        |
| 10.20   | Form of Registration Rights Agreement dated February 10, 2009, by and between the Company and The Quercus Trust                                 | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on February 13, 2009        |
| 10.21   | Form of Warrant issued by the Company to the Quercus Trust pursuant to the Stock Purchase Agreement dated February 10, 2009                     | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on February 13, 2009        |
| 10.22   | Form of Warrant issued by the Company to the Quecus Trust pursuant to the Stock Purchase Agreement dated February 10, 2009                      | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on February 13, 2009        |
| 10.23   | Binding Letter of Intent between the Company and  the University of Sussex dated March 13, 2009                                       | Incorporated by reference to our Form 10-Q filed with the Securities and Exchange Commission on April 10, 2009.         |
| 10.24   | Assignment of Patent between the Company and the University of Sussex, Richard Stobart and Mudalige Weerasinghe dated  March 13, 2009 | Incorporated by reference to our Form 10-Q filed with the Securities and Exchange Commission on April 10, 2009.         |

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| Exhibit     | Identification of Exhibit                                                                                                                                            |                                                                                                                        |
|-------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------|
| 10.25       | 2009 Stock Option and Stock Award Plan approved by the Board of Directors and the Shareholders                                                                       | Incorporated by reference to our Definitive 14-C filed with the Securities and Exchange Commission on May 19, 2008          |
| 10.26       | Amendment to the Articles of Incorporation and Bylaws of the Company.                                                                                                | Incorporated by reference to our Definitive Schedule 14C filed with the Securities and Exchange Commission on June 8, 2009. |
| 10.27       | Option Agreement between Quentin King and Clean Power Technologies Limited effective June 29, 2009                                                                   | Incorporated by reference to our Form 10-Q filed with the Securities and Exchange Commission on July 13, 2009.              |
|  10.28 |  Lease Agreement between Quentin King and Clean Power Technologies Limited effective June 29, 2009                                                              | Incorporated by reference to our Form 10-Q filed with the Securities and Exchange Commission on July 13, 2009.              |
|  10.29 | Memorandum of Understanding between NewEnco, Renewable Power Systems and the Company dated September 3, 2009.                                                        | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on September 9, 2009.           |
|  10.30 |  Form of Amended and Restated Stock Purchase Agreement dated October 2, 2009 between the Company and The Quercus Trust.                                         | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on October 7, 2009.             |
|  10.31 | Form of Registration Rights Agreement between the Company and The Quercus Trust dated October 2, 2009.                                                               | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on October 7, 2009.             |
|  10.32 | Form of $0.27 Warrant issued by the Company to the Quecus Trust pursuant to the Amended and Restated Stock Purchase Agreement dated October 2, 2009.                 | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on October 7, 2009.             |
|  10.33 | Form of $0.38 Warrant issued by the Company to the Quecus Trust pursuant to the Amended and Restated Stock Purchase Agreement dated October 2, 2009.                 | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on October 7, 2009.             |
|  10.34 | Amendment No.1 to Amended and Restated Stock Purchase Agreement dated October 16, 2009 between the Company and The Quercus Trust.                               | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on October 20, 2009.            |
| 10.35       | Form of Registration Rights Agreement dated October 16, 2009 between the Company and The Quercus Trust.                                                              | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on October 20, 2009             |
| 10.36       | Form of $0.54 Warrant issued by the Company to the Quecus Trust pursuant to Amendment No. 1 to Amended and Restated Stock Purchase Agreement dated October 16, 2009. | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on October 20, 2009             |
| 10.37       | Form of $0.60 Warrant issued by the Company to the Quecus Trust pursuant to Amendment No. 1 to Amended and Restated Stock Purchase Agreement dated October 16, 2009. | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on October 20, 2009             |
| 10.38       | Form of $0.77 Warrant issued by the Company to the Quecus Trust pursuant to Amendment No. 1 to Amended and Restated Stock Purchase Agreement dated October 16, 2009. | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on October 20, 2009             |

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| Exhibit | Identification of Exhibit                                                                                                                                            |                                                                                                            |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------|
| 10.39   | Form of $0.85 Warrant issued by the Company to the Quecus Trust pursuant to Amendment No. 1 to Amended and Restated Stock Purchase Agreement dated October 16, 2009. | Incorporated by reference to our Form 8-K filed with the Securities and Exchange Commission on October 20, 2009 |
| 22.1    | Notice of majority shareholder approval to increase authorized capital and establish two series of preferred shares.                                                 | Incorporated by reference to our Definitive Schedule 14C filed on July 2, 2008.                                 |
| 31.1    | Section 302 Certification- Principal Executive Officer                                                                                                               | Filed herewith                                                                                                  |
| 31.2    | Section 302 Certification Principal Financial Officer                                                                                                                | Filed herewith                                                                                                  |
| 32.1    | Certification Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                | Filed herewith                                                                                                  |
| 32.2    | Certification Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                | Filed herewith                                                                                                  |

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|   |           |                          |
|--------|----------------|-------------------------------|
|   |           | CLEAN POWER TECHNOLOGIES INC. |
|   |           |                          |   |
| Date:  | April 19, 2010 | By:                           | /s/ Abdul Mitha |
|   |           | Name:                         | Abdul Mitha |
|   |           | Title:                        | President, Principal Executive Officer |

| Date:  | April 19, 2010 | By:    | /s/ Diane Glatfelter                              |
|--------|----------------|--------|---------------------------------------------------|
|   |           | Name:  | Diane Glatfelter                                  |
|   |           | Title: | Secretary, Treasurer, Principal Financial Officer |

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