UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-QSB

(Mark One)

[X]    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 29, 2008

OR

[  ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from __________ to ______________

Commission File Number 000-51716

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.)

436-35th Avenue N.W., Calgary, Alberta Canada T2K 0C1

(Address of principal executive offices)

(403) 277-2944

(Issuers telephone number)





(Former name, former address and former fiscal year, if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and 2) has been subject to such filing requirements for the past 90 days.

.                                                         Yes [x]        No [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



Yes [  ]        No [x]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.                      Yes £       No £



APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuers classes of common equity, as of the latest practicable date:

60,685,748 common shares outstanding as of April 1, 2008



Transitional Small Business Disclosure Format:

Yes £        No [  ]









TABLE OF CONTENTS





|                                                                                                                                                                                                                | Page       
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------
|PART I  FINANCIAL INFORMATION                                                                                                                                                                                  |            
|                                                                                                                                                                                                                |            
|Item 1.  Financial Statements:                                                                                                                                                                                  |            
|                                                                                                                                                                                                                |            
|Interim Consolidated Balance Sheets as of February 29, 2008 (unaudited)                                                                                                                                         | F-2        
|                                                                                                                                                                                                                |            
|Interim Consolidated Statements of Operations for the three and six months ended February 29, 2008, and February 28, 2007 and for the period May 12, 2006, (Date of Inception) to February 29, 2008 (unaudited) | F-3        
|                                                                                                                                                                                                                |            
|Consolidated Statements of Cash Flows for the six months ended February 29, 2008, and February 28, 2007 and for the period May 12, 2006, (Date of Inception) to February 29, 2008 (unaudited)                   | F-4        
|                                                                                                                                                                                                                |            
|Notes to the Interim Consolidated Financial Statements for the six months ended February 29, 2008                                                                                                               | F-5 to F-11
|                                                                                                                                                                                                                |            
|Item 2.  Managements Discussion and Analysis or Plan of Operation                                                                                                                                              | 2          
|                                                                                                                                                                                                                |            
|Item 3.  Controls and Procedures                                                                                                                                                                                | 5          
|                                                                                                                                                                                                                |            
|PART II  OTHER INFORMATION                                                                                                                                                                                     |            
|                                                                                                                                                                                                                |            
|Item 1.  Legal Proceedings                                                                                                                                                                                      | 6          
|                                                                                                                                                                                                                |            
|Item 2.  Unregistered Sale of Equity Securities and Use of Proceeds                                                                                                                                             | 6          
|                                                                                                                                                                                                                |            
|Item 3.  Defaults Upon Senior Securities                                                                                                                                                                        | 7          
|                                                                                                                                                                                                                |            
|Item 4.  Submission of Matters to a Vote of Security Holders                                                                                                                                                    | 7          
|                                                                                                                                                                                                                |            
|Item 5.  Other Information                                                                                                                                                                                      | 7          
|                                                                                                                                                                                                                |            
|Item 6.  Exhibits                                                                                                                                                                                               | 7          
|                                                                                                                                                                                                                |            
|Signatures                                                                                                                                                                                                      | 9          





i









PART I - FINANCIAL INFORMATION



ITEM 1.

FINANCIAL STATEMENTS



F-1



CLEAN POWER TECHNOLOGIES INC.

(A Development Stage Company)

INTERIM CONSOLIDATED BALANCE SHEETS

February 29, 2008

(Unaudited)

(Stated in U.S. Dollars)



|ASSETS                                                                          | (unaudited)
February 29, | (audited)
August 31,
|------------------------------------------------------------------------------- | ------------------------ | --------------------
|                                                                                | 2008                     | 2007                
|Current                                                                         |                          |                     
|Cash                                                                            | $    337,510             | $
331,279           
|Accounts receivable                                                             | 22,162                   | 32,360              
|Prepaid expenses  Note 3                                                       | 47,003                   | 111,800             
|                                                                                |                          |                     
|                                                                                | 406,675                  | 475,439             
|                                                                                |                          |                     
|Plant and equipment                                                             | 404,614                  | 382,928             
|                                                                                |                          |                     
|TOTAL ASSETS                                                                    | $    811,289             | $
858,367           
|                                                                                |                          |                     
|LIABILITIES                                                                    
|                                                                                |                          |                     
|Current                                                                         |                          |                     
|Accounts payable and accrued liabilities                                        | $    104,292             | $
54,809            
|                                                                                |                          |                     
|Long Term Debt - Note 3                                                         | 9,559                    | 1,269,723           
|                                                                                |                          |                     
|Total Liabilities                                                               | 113,851                  | 1,324,532           
|                                                                                |                          |                     
|STOCKHOLDERS EQUITY (DEFICIENCY)                                              
|                                                                                |                          |                     
|Capital Stock                                                                   |                          |                     
|Authorized:                                                                     |                          |                     
|75,000,000 common shares, par value $0.001 per share                           
|Issued and outstanding:                                                         |                          |                     
|60,685,748 common shares as at Feb. 29, 2008 and
53,954,162 as at Aug. 31, 2007 | 60,686                   | 53,954              
|Additional paid-in capital                                                      | 5,791,794                | 3,088,081           
|Accumulated other comprehensive loss                                            | (61,553)                 | (45,198)            
|Deficit accumulated during the development stage                                | (5,093,489)              | (3,563,002)         
|                                                                                |                          |                     
|Total Stockholders Equity (Deficiency)                                         | 697,438                  | (466,165)           
|                                                                                |                          |                     
|Total Liabilities and Stockholders Equity                                      | $    811,289             | $
858,367           



SEE ACCOMPANYING NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS



F-2







CLEAN POWER TECHNOLOGIES INC.

(A Development Stage Company)

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

For the three and six months ended February 29, 2008 and February 28, 2007 and

for the period May 12, 2006 (Date of Inception) to February 29, 2008

(Unaudited)

(Stated in U.S. Dollars)





|                                        |                           |                           |                     |                | May 12, 2006  
|--------------------------------------- | ------------------------- | ------------------------- | ------------------- | -------------- | --------------
|                                        | Three months ending       | Six months ending         | (Date of Inception)
|                                        | February 29 | February 28 | February 29 | February 28 | to February 29,    
|                                        | 2008                      | 2007                      | 2008                | 2007           | 2008          
|                                        |                           |                           |                     |                |               
|Expenses                                |                           |                           |                     |                |               
|Depreciation                            | $      47,044             | $
19,618                  | $       83,139      | $
36,207       | $      187,097
|Interest  Note 3                       | 1,324                     | 28,515                    | 23,560              | 41,970         | 147,537       
|Office and administration               | 181,397                   | 96,026                    | 500,556             | 169,232        | 976,683       
|Organizational costs                    | -                         | -                         | -                   | -              | 2,500         
|Professional fees                       | 76,753                    | -                         | 136,511             | -              | 388,176       
|Professional fees settled with shares   | -                         | 131,518                   | -                   | 156,615        | 633,609       
|Research and development                | 22,894                    | 22,009                    | 59,204              | 72,314         | 682,950       
|Directors fees settled with shares      | -                         | -                         | 250,000             | -              | 430,000       
|Salaries and consulting fees            | 131,152                   | 122,107                   | 277,517             | 206,561        | 801,104       
|Consulting fees settled with shares     | -                         | -                         | 200,000             | -              | 811,500       
|Compensation by stock                   | -                         | -                         | -                   | -              | 32,333        
|                                        |                           |                           |                     |                |               
|                                        |                           |                           |                     |                |               
|Net loss for the period                 | $   (460,564)             | $
(419,793)               | $ (1,530,487)       | $
(682,899)    | $  (5,093,489)
|                                        |                           |                           |                     |                |               
|Other comprehensive loss:               |                           |                           |                     |                |               
|Foreign currency translation adjustment | (28,713)                  | (1,668)                   | (16,355)            | (11,315)       | (61,553)      
|                                        |                           |                           |                     |                |               
|Comprehensive loss for the period       | $   (489,277)             | $    (421,461)            | $ (1,546,842)       | $    (694,214) | $  (5,155,042)
|                                        |                           |                           |                     |                |               
|Basic and diluted loss per share        | $         (0.01)          | $
(0.01)                  | $          (0.03)   | $
(0.02)       |               
|                                        |                           |                           |                     |                |               
|Weighted average shares outstanding     | 58,990,748                | 45,465,615                | 57,535,295          | 45,455,440     |               
|                                        |                           |                           |                     |                |               



SEE ACCOMPANYING NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS



F-3







CLEAN POWER TECHNOLOGIES INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the six months ended February 29, 2008 and February 28, 2007 and

for the period May 12, 2006 (Date of Inception) to February 29, 2008

(Unaudited)

(Stated in U.S. Dollars)



|                                                                   | February 29, 2008 | February 28, 2007 | May 12, 2006 (Date of Inception) to February 29, 2008
|------------------------------------------------------------------ | ----------------- | ----------------- | -----------------------------------------------------
|Cash Flows From Operating Activities                               |                   |                   |                                                      
|Net loss for the period                                            | $    (1,530,487)  | $
(682,899)       | $    (5,093,489)                                     
|Items not affecting cash:                                          |                   |                   |                                                      
|Depreciation                                                       | 83,139            | 36,207            | 187,097                                              
|Amortization of debt discount                                      | 8,246             | -                 | 32,940                                               
|Imputed  interest                                                  | -                 | 41,970            | 99,408                                               
|Professional fees paid by the issuance of shares                   | -                 | 101,999           | 633,610                                              
|Director fees paid by the issuance of shares                       | 250,000           | -                 | 430,000                                              
|Consulting fees paid by the issuance of shares                     | 200,000           | -                 | 811,500                                              
|Research and development                                           | -                 | -                 | 402,000                                              
|Stock-based compensation                                           | -                 | -                 | 32,333                                               
|Changes in non-cash working capital balance
related to operations: |                   |                   |                                                      
|Accounts receivable                                                | 11,744            | 31,535            | (13,797)                                             
|Prepaid expenses                                                   | 64,187            | 30,748            | (38,771)                                             
|Accounts payable and accrued liabilities                           | 49,918            | (54,484)          | 90,946                                               
|                                                                   |                   |                   |                                                      
|Cash flows used in operating activities                            | (863,253)         | (494,924)         | (2,426,223)                                          
|                                                                   |                   |                   |                                                      
|Cash Flows from Investing Activities                               |                   |                   |                                                      
|Acquisition of plant and equipment                                 | (101,179)         | (199,344)         | (572,307)                                            
|Cash acquired from business acquisition                            | -                 | -                 | 62,070                                               
|                                                                   |                   |                   |                                                      
|Cash flows used in investing activities                            | (101,179)         | (199,344)         | (510,237)                                            
|                                                                   |                   |                   |                                                      
|Cash Flows from Financing Activities                               |                   |                   |                                                      
|Issuance of common shares for cash                                 | 815,000           | -                 | 1,743,766                                            
|Due to related party                                               | 177,034           | 625,059           | 1,570,144                                            
|                                                                   |                   |                   |                                                      
|Cash flows provided by financing activities                        | 992,034           | 625,059           | 3,313,910                                            
|                                                                   |                   |                   |                                                      
|Foreign currency translation adjustment                            | (21,371)          | 2,508             | (39,940)                                             
|                                                                   |                   |                   |                                                      
|Increase (decrease) in cash during the period                      | 6,231             | (66,701)          | $       337,510                                      
|                                                                   |                   |                   |                                                      
|Cash at beginning of period                                        | 331,279           | 99,234            | -                                                    
|                                                                   |                   |                   |                                                      
|Cash at end of period                                              | $      337,510    | $
32,533          | $      337,510                                       

Non-cash Transaction  Note 5



SEE ACCOMPANYING NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

F-4



CLEAN POWER TECHNOLOGIES INC.

(A Development Stage Company)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months ended February 29, 2008

(Unaudited)

(Stated in U.S. Dollars)



Note 1

Nature and Continuance of Operations



(a)

Organization



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.



The Company is developing a project for a gas/steam or diesel/steam hybrid technology, and has incorporated a wholly-owned subsidiary, Clean Power Technologies Limited, (CPTL-UK) a company based in Great Britain and incorporated on May 10, 2006, to carry on all its research and development.



The Companys year-end is August 31.



(b)

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.



(c)

Development Stage Company



The Company is a development stage company as defined in Statement of Financial Accounting Standards No. 7.  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.



(d)

Continuance of Operations



These 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 29, 2008, the Company had not yet achieved profitable operations, has accumulated losses of $5,093,489 since its inception, has working capital of $302,383 and expects to incur further losses in the development of its business, all of which casts substantial doubt

F-5



CLEAN POWER TECHNOLOGIES INC.

(A Development Stage Company)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months ended February 29, 2008

(Unaudited)

(Stated in U.S. Dollars)



Note 1

Nature and Continuance of Operations  Contd



(a)

Continuance of Operations  Contd



about the Companys ability to continue as a going concern.  The Companys ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.  Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances, however there is no assurance of additional funding being available.



Note 2

Interim Financial Statements



While the information presented in the accompanying six months to February 29, 2008 interim consolidated financial statements is unaudited, it includes all adjustments which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the interim period presented in accordance with accounting principles generally accepted in the United States of America. It is suggested that these financial statements be read in conjunction with Clean Power Technologies Inc.s (the Company) audited consolidated financial statements for the fiscal year ended August 31, 2007.



Operating results for the six months ended February 29, 2008 are not necessarily indicative of the results that can be expected for the fiscal year ending August 31, 2008.



Note 3

Related Party Transactions



Included in prepaid expenses is $14,716 of prepaid rent paid to a director of Clean Power Technologies Ltd. (CPTL).  Rent expense of $18,122 was charged by the director for the six month period ended February 29, 2008.



During the six month period ended February 29, 2008, the Company issued 3,021,586 shares of common stock to retire debt, including accrued interest totalling $22,147 as at the date of settlement, at $0.50 per share.  The debt was due to Abdul Mitha, the Companys President.  During the six month period ended February 29, 2008, the Company received additional cash proceeds totalling $154,887, including $1,312 in accrued interest, which amount has been recorded as long-term debt on the Companys balance sheet.   The amount has been offset by $145,328 which has been applied to additional paid in capital with respect to the beneficial conversion feature associated with the provisions of the proceeds, which amount will be expensed over the term of the note(s) or until conversion.





F-6



CLEAN POWER TECHNOLOGIES INC.

(A Development Stage Company)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months ended February 29, 2008

(Unaudited)

(Stated in U.S. Dollars)



Note 3

Related Party Transactions - Contd



During the six months ended November 30, 2007, a company with a director in common advanced $815,000 for operations and this amount was converted to common shares under the terms of a pre-existing agreement at $0.25 per share for a total of 3,260,000 shares.



During the six months ended February 29, 2008 the Company issued a total of 250,000 common shares to David William Thursfield, a director of the Company, as directors fees.



Note 4

Commitments



i)

On July 26, 2006, CPTL entered into a three year lease agreement for an office and research facility located in Newhaven, United Kingdom.  The lease expires on July 25, 2009.  The CPTL lease calls for annual rent in the amount of $36,244 (£18,000) plus applicable taxes, and is payable quarterly.



CPTL is required to make minimum lease payments over the remaining term of the lease as follows:



|Lease Period                | Payment 
|--------------------------- | --------
|                            |         
|Year ending August 31, 2008 | $
18,122
|Year ending August 31, 2009 | $
33,233
|                            |         
|Total                       | $
51,355



ii)

On June 21, 2006, the Company entered into an investor relations agreement for a period of one year for consideration of $2,500 per month and granted 200,000 share purchase options exercisable at $1.30 per share until July 1, 2008.  The options vested over the fiscal year ended August 31, 2007.



iii)

The Company entered into a collaboration agreement with Doosan Babcock Energy Ltd. (Doosan or the Partner) 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 Doosan.  As consideration, the Company was required to issue 4,000,000 common shares of the Company.  The term of the agreement is three years.





F-7





CLEAN POWER TECHNOLOGIES INC.

(A Development Stage Company)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months ended February 29, 2008

(Unaudited)

(Stated in U.S. Dollars)



Note 4

Commitments  Contd



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 shares of the Company.  Should the Partner seek cash reimbursement then the partner shall return a total of 3,000,000 shares of common shares 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 shares to Doosan pursuant to the terms and conditions of a subscription agreement, dated 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 will provide an additional 100,000 common shares to Doosan, which shall be used at their discretion to reward any of their employees who have helped in the development of the technologies project.



iv)

On January 4, 2007, the Company executed an Investment Agreement and a Registration Rights Agreement with the Dutchess Private Equities Fund Ltd. (Dutchess).  Under the terms of these agreements, Dutchess has extended an equity line of credit of up to $10,000,000 to be taken down at the Companys election, either a) 200% of the average US daily volume of the common shares for the 10 trading days prior to the put notice date multiplied by the average of the three daily closing bid prices immediately preceding the put date or b) $250,000 upon the registration of the initial amount of 10,000,000 common shares by the Company which will be used for the draw down of funds.  The registration statement, which was declared effective by the U.S. Securities and Exchange Commission (SEC), provides for the offering of securities on a continuing basis.  The agreement further calls for the Company to pay a 1% fee to a registered broker dealer to a maximum of $10,000 on each draw down of funds under the Investment Agreement.  The Company retained legal counsel to prepare the registration statement on Form SB-2 which was filed during the quarter ending May 31, 2007.  The registration statement was declared effective by the U.S. Securities and Exchange Commission on April 11, 2007.  As at the date of this quarterly report, the Company has not drawn down any funds under the equity line.

F-8



CLEAN POWER TECHNOLOGIES INC.

(A Development Stage Company)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months ended February 29, 2008

(Unaudited)

(Stated in U.S. Dollars)



Note 4

Commitments  Contd



v)

During the year ended August 31, 2007, the Company entered into an agreement with Gersten Savage LLP in connection with the filing and prosecution of certain patent applications with respect to the Unitary Engine and Reservoir Engine Inventions.  Under the terms of the agreement, the Company has agreed to pay fixed fees as follows:



1.

$333,333 worth of the Companys restricted common shares with a deemed value of $1.16 per share.  The Company issued a total of 287,357 common shares in respect to this provision during the fiscal year ended August 31, 2007, and;



2.

$166,666 in cash upon the effectiveness of the Registration Statement to be paid as follows:  $15,000 upon signing of the agreement and $10,000 per month commencing 120 days from the date of effectiveness until such time as the cash amounts are settled in full.  Gersten Savage will invoice the Company monthly for the cash portion of the agreement.



vi)

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 amount £15,000 (approximately U.S. $31,000) is due upon signing the agreement.  The remaining £25,000 (approximately U.S. $51,000) is due in two payments, in July, 2007 and September 2007, respectively.  The agreement also calls for ongoing quarterly payments of £12,000 (approximately U.S. $24,400) for the term of the agreement.  The agreement may be terminated by either party with three (3) months written notice.  At the date of this report the Company has remitted a total of £35,000 (approximately U.S. $70,000) with respect to the costs related to the project fee, and a further £10,500 (approximately U.S. $21,000) with respect to quarterly payment requirements.



Note 5

Non-cash Transactions



Investing and financing activities that do not have a direct impact on current cash flows are excluded from the statement of cash flows.





F-9



CLEAN POWER TECHNOLOGIES INC.

(A Development Stage Company)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months ended February 29, 2008

(Unaudited)

(Stated in U.S. Dollars)



Note 6

Recently Issued Accounting Pronouncements



In February 2007, the FASB issued Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment to FASB Statement No. 115. This statement permits companies to choose to measure many financial instruments and other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is expected to expand the use of fair value measurement of accounting for financial instruments. This statement applies to all entities, including not for profit. The fair value option established by this statement permits all entities to measure eligible items at fair value at specified election dates. This statement is effective as of the beginning of an entitys first fiscal year that begins after November 15, 2007.  The Company is currently assessing the impact adoption of SFAS No. 159 will have on its consolidated financial statements.



In December 2006, the FASB issued SFAS No. 157 Fair Value Measurements which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosure about fair value measurements. The statement clarifies that the exchange price is the price in an orderly transaction between market participants to sell the asset or transfer the liability in the market in which the reporting entity would transact for the asset or liability, that is, the principal or most advantageous market for the asset or liability. It also emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and that market participant assumptions include assumptions about risk and effect of a restriction on the sale or use of an asset. The provisions are effective for fiscal years beginning after November 15, 2007. The Company is currently assessing the impact of the statement.



In December 2007, the Financial Accounting Standards Board (FASB) issued FASB Statements No.141 (revised 2007), Business Combinations (FAS 141(R)) and No. 160, Noncontrolling Interests in Consolidated Financial Statements (FAS 160). These standards aim to improve, simplify, and converge internationally the accounting for business combinations and the reporting of noncontrolling interests in consolidated financial statements. The provisions of FAS 141 (R) and FAS 160 are effective for the fiscal year beginning September 1, 2009. We are currently evaluating the provisions of FAS 141(R) and FAS 160.



None of the above new pronouncements has current application to the Company, but will be implemented in the Companys future financial reporting when applicable.





F-10



CLEAN POWER TECHNOLOGIES INC.

(A Development Stage Company)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months ended February 29, 2008

(Unaudited)

(Stated in U.S. Dollars)



Note 7

Subsequent events



On March 17, 2008, the Company entered into an agreement with steam technology specialist Dampflokomotiv-und Maschinenfabrik DLM AG ("DLM") to act as a consultant for the further development of the Company's Clean Energy Storage and Recovery ('CESAR') technology. Under the terms of the agreement DLM will provide a preliminary study to the Company at a cost of €34,375 (approximately U.S. $52,000) payable in 3 instalments as follows:



-

25% of the total sum upon signing of the engagement;

-

25% of the total sum upon presentation of the first results but not later than three (3) months after engagement date;

-

Balance upon completion of work scope payable within 30 days of delivery of final invoice.



The Company remitted a payment of €9,000 (approximately U.S. $13,600) concurrent with the execution of the engagement.





F-11



Item 2.   Management’s Discussion and Analysis or Plan of Operation



This current quarterly report contains forward-looking statements as that term is defined in section 27A of the United States Securities Act of 1933 and section 21E of the United States Securities Exchange Act of 1934.  These statements relate to future events or our future financial performance.  In some cases, you can identify forward-looking statements by terminology such as "may", "should", "intends", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential", or "continue" or the negative of these terms or other comparable terminology.  These statements are only predictions and involve known and unknown risks, uncertainties and other factors which may cause our or our industry's actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements.  The following discussion and analysis of our financial conditions and results of operations should be read in conjunction with our interim consolidated financial statements and notes thereto appearing elsewhere herein.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or performance.  Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.



(a) Plan of Operation



Unless the context otherwise requires, the terms the Company, we, us, and our as used throughout this report refer to Clean Power Technologies Inc., a Nevada corporation, and its wholly-owned subsidiary Clean Power Technologies Limited (CPTL), an entity formed under the laws of the United Kingdom.  We have not generated any revenues from products, services or operations since the inception of our Company. We are a development stage company which is presently undertaking research and development on a hybrid steam engine.



Our plan of operation is to complete the research and development on our technology over the next several months and if successful, to license the technology or form partnerships for the use of the technology with any customers we may identify.



At present we do not have sufficient funds available to execute our business plan for the development of the technology.   We have to date been funded by existing working capital and by shareholder loans from one of our directors and officers.  There can be no assurance that we will be able to continue to raise the funding required to continue operations.  During the next twelve (12) months, the Company will require approximately ThreeMillion ($3,000,000) dollars for development and operating costs, of which approximately Two Million Four Hundred Thousand($2,400,000)dollars will be applied to research and development of the project.   As of February 29, 2008, the Company had available cash of $337,510.   The Company will need to raise approximately Two Million Seven Hundred Thousand ($2,700,000)in additional funds to meet its planned operations for the next twelve months.  There can be no assurance that the Company will be able to raise these required funds.  If the Company cannot raise the required funds then operations may cease.

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At the end of July, 2006, CPTL took possession of Unit 7(W), E-Plan Industrial Estate, Newhaven, East Sussex, U.K. The remainder of that year was largely spent in renovating the infrastructure of the 2000 square feet building, including the electrical power and lighting provision and the office facilities. An air compressor was installed to provide a fluid flow for engine testing in advance of and, later, in parallel with, a supply of steam from the saturated liquid energy accumulator, as this was developed. A start was also made on the more direct development programme by stripping superfluous fittings from the Wankel engine compartments of the two identical Mazda RX8 vehicles earlier purchased. Using the compressed air supply the engine from one of these vehicles was motored, providing a useful early proof of the convenience with which the unit could produce power from an independent fluid source ( as with steam from the accumulator in the ultimate application). Similarly, its continuous restarting ability, independent of stopping position, because of its double cylinder-volume construction, was encouragingly demonstrated as well.



Early 2007 was committed to the design and building of a test cell within the main hall of the test facility to enclose engines and components on test at full operating conditions of pressure and temperature, with both hydrocarbon combustion and in anti-pollution mode using steam alone from the accumulator. The heavy steel construction of the test cell, which enclosed a substantial bed-plate as a foundation for components, was agreed by the insurance authorities to provide full protection from any conceivable otherwise catastrophic failure.



In May 2007 our partners Doosan - Babcock delivered the prototype energy accumulator, manufactured under contract by Poole Process Equipment Ltd. to full statutory pressure vessel licensing requirements. Since then and continuously, development of the programme has been involved with installation of the facilities for the test cell and the experimental programme. These include the liquid, gas and steam supply and exhaust ducting; the comprehensive instrumentation facilities with the associated electrical and electronic connections for the sophisticated control systems required for the complete CESAR (CleanEnergy Storage And Recovery) project. This comprises a main combustion engine, exhaust heat recovery components, energy accumulator and an auxiliary engine; plus the separate power absorbing dynamometers for the engines.



To augment the limited power output (170 kW) of the Wankel engines from the Mazda vehicles into the range with which the CESAR project will, initially at least, be primarily concerned, diesel engined trucks, delivery was taken in June 2007 of a Caterpillar C-15 diesel engine developing 600 kW which is now fully operational in the test cell. The main experimental programme began in September, 2007, its first phase for detailed determination of the performance of the Caterpillar engine over its full range of speed and load. This provides a data base for control system operation and detailed design of subsequent builds of the accumulator system with measurements of air and fuel rates of flow, fluid pressures, temperatures and power output all electronically logged.



The second phase of the test programme began in October 2007 in which the diesel engine exhaust is ducted through the accumulator vessel and rates of pressure and temperature rise and fall with time in the vessel are observed over a wide range of combustion engine operating conditions, with varying loads and exhaust gas temperatures, the latter tempered with closely controlled rates of atmospheric air ingression to the main engine exhaust stream. This series will yield full data on the fluid flow and heat transfer performance of the installed heat recovery components providing the data base for detailed design of CESAR systems subsequent to the prototype under test. Initial tests have provided confirmation of theoretical predictions of the rate at which pressure develops in the energy accumulator and of the predictions of heat transfer in the economiser and evaporator components which recover heat from the combustion engine exhaust into the energy storage system. Preliminary experiments have also begun on using the stored energy to drive a steam engine of conventional design which again has given encouraging early data upon the system performance.

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The third and overlapping phase of this stage of the tests, extending into mid-2008, is concentrating on the relation between the power output from the auxiliary vapour engine and rate of pressure change in and rate of vapour flow from the energy accumulator. This will be a crucial part of the research programme in indicating the efficacy of the complete CESAR system and in the design of systems successor to the prototype for the several potential applications. The existing steam engine will be replaced with a modern design capable of developing the power outputs and advanced vapour operating conditions for which the CESAR system is suited. Observations of the performance of the prototype equipment supplied through our partners, Doosan-Babcock, with their further collaboration will be used to produce a design improved in material, structural and thermodynamic performance. The test schedule will include joint continuous operation of the combustion and auxiliary engines to maximise thermal efficiency and to demonstrate the ultimate utilisation of the control system and will run continuously into the Spring of 2008.



Up to the present time the total programme of our Company has been almost wholly concerned with research directed to verifying the theoretical predictions that were the foundation of the CESAR system. A substantial development component of the programme will now commence and will require appropriate augmentation of the engineering team. This is essential for design studies of potential applications of the total system and will commence using the empirical data revealed by the research programme. These applications include using the CESAR system to provide refrigeration power for trucks when the main combustion engine is shut down, with a target of road testing an especially directed system in late 2008. Further applications include provision of auxiliary power derived at low recurrent cost from the exhaust heat of combustion engines for other transportation areas, including lighter vehicles than trucks and heavier in the form of railway locomotives. There is also a promising application in marine applications, not excluding commercial vessels but particularly attractive for pleasure craft with their heavy requirement for auxiliary electrical power when not under way.



For the lighter design of the CESAR system, for vans and passenger cars for example, a substantial repetition of all the phases of the test programme will be commenced in Spring 2008 using a smaller multi-cylinder reciprocating engine or a Wankel engine to replace the current Caterpillar C-15 engine. This will require appropriate and novel valve designs which are currently in hand to control the fuel and vapour flows. This second programme would provide design support for all components of the CESAR saturated liquid energy accumulator system with a target of road testing such a vehicle one year later, in late summer 2009.



This extended development testing and design programme will require augmented scientific and engineering manpower, estimated as a further ten professionally or technically qualified staff. To enable this necessary expansion in August 2007 arrangements were put in hand for the purchase of a neighbouring industrial unit to increase to 20,000 square feet the office and workshop space available for the programme. This was to include a large open area suited for the retrofitting of CESAR units to trucks, examples of which have already been offered by potential customers. The transaction for the acquisition of the larger facility did not complete and the Company is looking for further expansion facilities.  To date, a suitable site has not been located.  Our present location is limited in space and it may be required that the Company proceed with its development work in separate locations.  Additional space is required for simultaneous work on three (3) separate heat recovery CESAR process systems.  The first being the refrigeration system, the second being the auxiliary truck engines and the third being for auto vehicles and, specifically, for the Mazda RX 8 Project.  A larger space will be required for additional engineers and personnel for each of the aforementioned projects.  We estimate that we will require an additional seven thousand (7,000) square feet to complete our research and development work.  We intend to lease additional space and will evaluate our options when the project is in a more advanced stage.



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Test work started on our generic accumulator within our test cell. This is a closed circuit test and has produced baseline results that allow development of the Wankel and Truck engine accumulator leading to a production design solution initially for the refrigeration vehicles.



Test results have shown that we can recover 40% of the lost 36% of the energy normally wasted to atmosphere through the exhaust system. We can store this energy and expand it through a single cylinder steam engine. This is the Companys IP based on CESAR.



The Company has re-focused its development project and has made the development of the Refrigeration engines as its first Route to market product. The Company is engaged in discussions with a grocery chain in the U.S. with a view to establishing a collaborative relationship. It is expected that should the discussion prove successful, the Company will undertake the initial data gathering process from the Reefers and the existing refrigeration engines. The purpose of data collection is to develop a steam engine that will meet and it is anticipated exceed the existing performance levels of the current engines. Data collection is also needed to develop a new control system and the engine management programme.



In order to meet many challenges relating to the development of the steam technology, the Company has appointed a Swiss steam technology specialist company called Dampflokomotiv-und Maschinenfabrik DLM AG ("DLM") to act as its outside consultant for the further development of the Company's Clean Energy Storage and Recovery ('CESAR') technology. DLM will advice and use its in-house expertise to assist and facilitate the development of the next stage in our CESAR programme of the company.  DLM has professionally qualified engineers with specialist experience. DLM will provide knowledge and experience in such areas as the design of the process to predict and analyse the heat transfer performance and issues associated with pressure losses for a range of thermal operations involving liquids and gases with and without change of phase. DLM has experience of stress analysis including pressure vessel design to European and British standards. DLM will work with the engineers of the company on a routine basis.



The company employed a CAD engineer in mid-January and work has commenced on the development of the truck production and vehicle detail design and initial system configuration feasibility. The CAD Engineer is experienced in all aspects of design and development. The company has licensed UGS NX5 and S-IDEAS CAD software to achieve its design objectives.



The Company is expecting to acquire a Kenworth truck with a refrigeration unit during the forthcoming quarter. The truck and refrigeration unit will be fitted with the Companys first production solution for heat recovery and operation of a reefer unit.



Additional facility space is being sought to provide increased space for the test program and to accommodate an additional employment of engineers and support  staff.



The Company has an IT Specialist to manage all aspects of our data retrieval, storage and control.



(b)   Off-balance sheet arrangements



Not Applicable



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ITEM 3. CONTROLS AND PROCEDURES



We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities Exchange Act of 1934, as amended, (the Exchange Act) reports is recorded, processed, summarized and reported within the time periods specified in the United States Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our President and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.



We carried out an evaluation, under the supervision and with the participation of our management, including our President and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-14 as of the end of the period covered by this quarterly report.  Based upon the foregoing, our President and our Chief Financial Officer concluded that our disclosure controls and procedures are effective and adequate for the purposes set forth in the definition in the Exchange Act rules.



There were no changes in our internal control over financial reporting identified in connection with the evaluation referred to in the immediately preceding paragraph that occurred during our last fiscal quarter ended February 29, 2008, that has materially affected or is reasonably likely to materially affect, our internal control over financial reporting.



PART II  OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS



None.



ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS



During the quarter ended February 29, 2008, we issued the following securities which were sold without registration under the Securities Act of 1933, in reliance on Section 4(2), and the provisions of Regulation S.  There were no underwriting discounts or commissions paid in connection with the sale of these securities.



|Date of Issuance  | Issued To:                                                                                                                                 | Title and Number of Shares Issued | Consideration                             
|----------------- | ------------------------------------------------------------------------------------------------------------------------------------------ | --------------------------------- | ------------------------------------------
|January 2, 2008   | Unicus Corporation
436-35th Avenue N.W.,
Calgary, Alberta
T2K 0C1
Unicus Corporation has a director and officer in common with the Company | 1,420,000 Common Shares           | Private Placement @ $0.25 per Common Share
|February 15, 2008 | Unicus Corporation
436-35th Avenue N.W.,
Calgary, Alberta
T2K 0C1
Unicus Corporation has a director and officer in common with the Company | 840,000 Common Shares             | Private Placement @ $0.25 per Common Share

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All of the shares noted above were sold under the Regulation S exemption in compliance with the exemption from the registration requirements found in Regulation S promulgated by the Securities and Exchange Commission (the SEC) under the Securities Act of 1933.  The offer and sale to the purchasers was made in an offshore transaction as defined by Rule 902(h).

No directed selling efforts were made in the U.S. as defined in Rule 902(c).  The offer and sale to the purchasers was not made to a U.S. person or for the account or benefit of a U.S. person. The following conditions were present in the offer and sale:  a) The purchaser of the securities certified that it is not a U.S. person and did not acquire the shares for the account or benefit of any U.S. person; b) The purchaser has agreed to resell the securities only in compliance with Regulation S pursuant to a registration under the Securities Act, or pursuant to an applicable exemption from registration; and has agreed not to engage in hedging transactions with regard to the securities unless in compliance with the Securities Act; c) The purchaser has acknowledged and agreed with the Company that the Company shall refuse registration of any transfer of the securities unless made in accordance with Regulation S, pursuant to a registration statement under the Securities Act, or pursuant to an applicable exemption from registration; and d) The purchaser has represented that it is acquiring the shares for its own account, for investment purposes only and not with a view to any resale, distribution or other disposition of the shares in violation of the United States federal securities laws. Neither the Company nor any person acting on its behalf offered or sold these securities by any form of general solicitation or general advertising.  The shares sold are restricted securities and the certificates representing these shares have been affixed with a standard restrictive legend, which states that the securities cannot be sold without registration under the Securities Act of 1933 or an exemption there from.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS



None.

ITEM 5.

OTHER INFORMATION



Not Applicable

ITEM  6.

EXHIBITS



|EXHIBIT 
NO. | IDENTIFICATION OF EXHIBIT                                 
|------------ | ----------------------------------------------------------
|3.1          | Articles of Incorporation                                 
|3.2          | Bylaws                                                    
|3.3          | Amendment to Articles of Incorporation dated June 12, 2006
|3.4          | Amendment to Articles of Incorporation dated June 13, 2006

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|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 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 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 on October 19, 2006                      
|10.4 | Stock Option and Stock Award Plan approved by the Board of Directors                                                                                                               | Incorporated by reference to our Form SB-2 registration statement filed on March 23, 2007
|10.5 | Investment Agreement, dated as of January 18, 2007 by and between Clean Power Technologies, Inc. and Dutchess Private Equities Fund, L.P.                                          | Incorporated by reference to our Form 8-K filed on January 24, 2007                      
|10.6 | Registration Rights Agreement, dated as of January 18, 2007, by and between Clean Power Technologies, Inc. and Dutchess Private Equities Fund, L.P.                                | Incorporated by reference to our Form 8-K filed on January 24, 2007                      
|10.7 | 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 on June 20, 2007                         
|16.1 | Letter regarding Change in Certifying Accountant dated June 4, 2007                                                                                                                | Incorporated by reference to our Form 8-K filed on June 4, 2007                          
|22.1 | Notice of Proposal for approval of agreement and plan of merger, forward split and name change                                                                                     | Incorporated by reference to our Schedule 14C filed on May 18, 2006                      
|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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SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 17th day of April, 2008.



CLEAN POWER TECHNOLOGIES INC.





By:_/s/ Abdul Mitha_______________

Name: Abdul Mitha

Title: President/CEO, principal executive officer



By: /s/ Diane Glatfelter____________

Name: Diane Glatfelter

Title: Chief Financial Officer, principal financial officer



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