The information in this quarterly report is current as of the date of this quarterly report (November 14, 2003), unless an earlier date is specified. We conduct our transactions in the currency of both the United States and Canada, although we consider the United States dollar to be our functional and reporting currency. All references to "dollars" in this quarterly report refer to United States or U.S. dollars unless specific reference is made to Canadian or CDN dollars. For information relative to rates of exchange and currency conversion, see that section contained in explanatory note 2 to our interim consolidated financial statements included in this quarterly report captioned "Foreign Currency Translation".

We prepare our interim consolidated financial statements in accordance with United States generally accepted accounting principles. Our consolidated financial condition and results of operations for the nine-month interim period ended September 30, 2003 are not necessarily indicative of our prospective consolidated financial condition and results of operations for the full fiscal year ended December 31, 2003. The interim consolidated financial statements presented in this quarterly report as well as other information relating to our company contained in this quarterly report should be read in conjunction with the annual consolidated financial statements and more detailed background information relating to our company and our business contained in our annual report on form 10-K for our fiscal year ended December 31, 2002.

In this quarterly report we make a number of statements, referred to as "forward-looking statements", which are intended to convey our expectations or predictions regarding the occurrence of possible future events or the existence of trends and factors that may impact our future plans and operating results. These forward-looking statements are derived, in part, from various assumptions and analyses we have made in the context of our current business plan and information currently available to us and in light of our experience and perceptions of historical trends, current conditions and expected future developments and other factors we believe to be appropriate in the circumstances. You can generally identify forward-looking statements through words and phrases such as "seek", "anticipate", "believe", "estimate", "expect", "intend", "plan", "budget", "project", "will be", "will continue", "will likely result", and similar expressions. Forward-looking statements contained in this quarterly report would, for example, include statements relating to the timing and completion of pending or prospective projects and contracts and receipt of revenues.

When reading any forward looking statement you should remain mindful that actual results or developments may vary substantially from those expected as expressed in or implied by that statement for a number of reasons or factors including, by way of example and not limitation, (1) the various risks and uncertainties described in this special note or elsewhere in this quarterly report, and (2) our current and prospective financial requirements and current and prospective lack of capital; our inability to satisfactorily complete pending or new project proposals (including with prospective licensees or joint venture partners) and enter into binding revenue-producing contracts based upon those proposals; our overall inability or that of our licensees or joint venture partners, if any, to design, test, manufacture and sell pulse combustors on a profitable basis, including as a result of insufficient consumer acceptance of and demand for pulse combustors; regulatory constraints, and changes in our business plan and corporate strategies or those of our joint venture partners. Each forward-looking statement should be read in context with, and with an understanding of, the various other disclosures concerning our company and our business made elsewhere in this quarterly report as well as other pubic reports filed with the United States Securities and Exchange Commission (the "SEC"). You should not place undue reliance on any forward-looking statement as a prediction of actual results or developments.

We are not obligated to update or revise any forward-looking statement contained in this quarterly report to reflect new events or circumstances unless and to the extent required by applicable law. All forward-looking statements contained in this quarterly report constitute "forward-looking statements" within the meaning Section 21E of the United States Securities Exchange Act of 1934 and, to the extent it may be applicable by way of the incorporation of statements contained in this quarterly report by reference or otherwise, Section 27A of the United States Securities Act of 1933, each of which establishes a safe-harbor from private actions for forward-looking statements as defined in those statutes.

			Nine Months Ended September 30,			Nine Months Ended September 30,		Jan. 1, 1999  to  Sept. 30, 2003 (Cumulative)
			2003	2002		2003	2002
			(ß -----------------------------------------unaudited---------------------------------------------à )
ADMINISTRATION AND MARKETING EXPENSES
	Accounting		$               1,035	$                900		$            17,180	$              9,387	$               96,331
	Administrative wages, benefits and contract fees		26,400	27,197		82,647	94,306	682,873
	Amortization		-	-		-	-	45,027
	Communications		4,866	2,295		8,670	5,144	45,629
	Foreign exchange (gain) loss		3,413	(36)		3,342	(152)	(24,157)
	Interest		250	7,247		2,068	34,945	92,058
	Legal and patent maintenance		10,132	11,466		27,045	18,284	382,485
	Marketing		10,551	14,948		49,393	41,227	396,759
	Occupancy		2,605	-		7,930	-	107,759
	Office and miscellaneous		431	2,742		1,859	7,192	104,796
	Write-down of patents		-	-		9,199	-	9,199
	Professional fees		-	-		-	520	15,972
	Transfer agent fees		255	900		3,210	9,387	38,521
		Total administration and marketing	59,938	66,759		212,543	210,853	1,993,252
RESEARCH AND DEVELOPMENT EXPENSES (note 3)
	Wages and other direct costs		41,361	79,090		157,809	-	1,291,017
	Overhead		8,568	18,594		34,770	353,340	375,001
		Total research and development	49,929	97,684		192,579	353,340	1,666,018
TOTAL EXPENSES AND NET LOSS FOR THE PERIOD			$       (109,867)	$        (164,443)		$       (405,122)	$       (564,193)	$     (3,659,270)
BASIC AND DILUTED NET LOSS PER SHARE OF COMMON STOCK (note 2)			$ (0.01)	$              (0.02)		$              (0.03)	$             (0.04)
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING			13,024,008	10,382,695		11,954,107	10,382,695

The accompanying notes to consolidated financial statements are an integral part of these consolidated statements of operations

-2-

Consolidation

We have consolidated the accounts of our wholly-owned subsidiary, Clean Energy USA Inc. ("Clean Energy USA") with those of Clean Energy. All significant intercompany balances and transactions between Clean Energy and Clean Energy USA were eliminated as a consequence of the consolidation process.

Reclassifications

Certain items in our prior year's consolidated financial statements have been reclassified to conform to our current year's consolidated financial statement presentation.

Foreign Currency Translation

Clean Energy is a Delaware corporation and considers the United States dollar to be the appropriate functional currency for our operations and these financial statements, notwithstanding that we do business in Canada in transactions denominated in Canadian dollars. It is anticipated that the majority of our business will be conducted in United States dollars and our anticipated customer base will be within the United States. For purposes of preparing these financial statements, foreign currency monetary assets and liabilities are translated into U.S. dollars at the exchange rates in effect at the balance sheet date. Other balance sheet items and revenues and expenses are translated at the rates prevailing on the respective transaction dates. Translation gains and losses are included in operations.

Estimates And Assumptions

The preparation of these consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of these consolidated financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results may differ from those estimates.

Cash And Cash Equivalents

Cash and cash equivalents consist of cash on hand, funds on deposit and short-term investments with an original maturity of ninety days or less. Clean Energy holds no cash or cash equivalents at the date of these financial statements.

Short-Term Investments

Short-term investments consist of term deposits with a one-year maturity. These investments are cashable and can be drawn on at any time. Clean Energy holds no short-term investments at the date of these financial statements.

Research And Development

Research and development costs are expensed as incurred.

Marketing Costs

Marketing costs, including advertising costs, are expensed as incurred.

Costs related to the acquisition of patents are capitalized and, upon production of revenues, are amortized on a straight-line basis, commencing upon the production of revenues from the patent, over the shorter of the duration of the patent, which is twenty years, or the estimated life of the associated technology. As we have not commenced production of revenues to date, no amortization has been recorded to date in these consolidated financial statements. The costs of servicing our patents are expensed as incurred. Clean Energy assesses potential impairment of patents by measuring the expected net recovery based on cash flows from products based on these rights on an annual basis. These capitalized costs are valued at the lower of amortized cost and net recoverable amount.

Property And Equipment

We have historically stated property and equipment at cost, and then recorded amortization on these assets on a straight-line basis over their respective estimated service lives. As a consequence of the divestiture of our research and development subsidiary on December 31, 2001, Clean Energy holds no property or equipment at the date of these financials statements. All p