UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the year ended: December 31,
2019
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________ to
____________________
Commission file number: 000-53557
CLEAN COAL TECHNOLOGIES, INC.
(Exact name of small business issuer as specified in its
charter)
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NEVADA
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26-1079442
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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295 Madison Avenue (12th Floor), New York, NY
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10017
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(Address of principal executive offices)
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(Zip Code)
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(646) 710-3549
(Issuer’s telephone number)
Securities registered pursuant to Section 12(b) of the Exchange
Act:
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Title of each class
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Trading Symbol |
Name of each exchange on which registered
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None
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N/A
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Securities registered pursuant to Section 12(g) of the Exchange
Act:
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Title of class
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Common Stock
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Indicate by check mark if the Registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act. YES
☐ NO ☒
Indicate by check mark if the Registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Exchange
Act. YES ☐ NO ☒
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Exchange
Act during the preceding 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 ☒ NO ☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files).
YES ☒ NO ☐
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of the Registrant’s knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer,
or a smaller reporting company. See the definitions of “large
accelerated filer,” “accelerated filer” and “smaller reporting
company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☒
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Smaller reporting company ☒
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Emerging growth company ☐
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If an emerging growth company, indicate by check mark if the
registrant has elected to not use the extended transition period
for complying with any new or revisited financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
YES ☐ NO ☒
Indicate by check mark whether the Registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). YES ☐
NO ☒
State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the
price at which the common equity was last sold, or the average bid
and asked price of such common equity, as of the last business day
of the registrant’s most recently completed second quarter.
The market value of the voting and non-voting common stock is
$14,318,695 based on 119,322,458 shares held by non-affiliates. The
shares were valued at $0.12 per share, that being the closing price
on June 28, 2019, the last business day of the registrant’s most
recently completed second quarter.
As of December 31, 2019 the total number of outstanding common
shares was 181,347,218 and as of March 09, 2020 the total
number was 181,347,218.
Documents Incorporated by Reference
None.
CLEAN COAL TECHNOLOGIES, INC.
2019 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
PART I
ITEM 1. BUSINESS
Forward-Looking and Cautionary Statements
Except for statements of historical fact, certain information in
this document contains “forward-looking statements” that involve
substantial risks and uncertainties. You can identify these
statements by forward-looking words such as “anticipate,”
“believe,” “could,” “estimate,” “expect,” “intend,” “may,”
“should,” “would,” or similar words. The statements that contain
these or similar words should be read carefully because these
statements discuss our future expectations, contain projections of
our future results of operations, or of our financial position, or
state other “forward-looking” information. Clean Coal believes that
it is important to communicate our future expectations to our
investors. However, there may be events in the future that we are
not able to accurately predict or control. Further, we urge you to
be cautious of the forward-looking statements that are contained in
this Annual Report because they involve risks, uncertainties and
other factors affecting our technology, planned operations, market
growth, products and licenses. These factors may cause our actual
results and achievements, whether expressed or implied, to differ
materially from the expectations we describe in our forward-looking
statements. The occurrence of any of these events could have a
material adverse effect on our business, results of operations and
financial position.
Overview
Over the past decade, Clean Coal Technologies, Inc. has developed
processes that address what we believe are the key technology
priorities of the global coal industry. We currently have three
processes in our intellectual property portfolio:
The original process, called Pristine, is designed to remove
moisture and volatile matter, rendering a high-efficiency, cleaner
thermal coal. The process has been tested successfully
on bituminous and subbituminous coals, and lignite from various
parts of the United States and from numerous countries around the
world.
Our second process, called Pristine-M, is a low-cost coal
dehydration technology. In tests, this process has succeeded in
drying coal economically and stabilizing it using volatile matter
released by the feed coal. Construction of our coal testing plant
was completed in December 2015 and was successfully tested through
April 2016 at AES Coal Power Utility in Oklahoma. Additional tests
commenced and were completed in the fourth quarter of 2017. This
test facility has been moved from AES to Wyoming. Working in
partnership with the University of Wyoming and our engineers a
number of enhancements to the existing test facility were
identified. These additional changes are being built and we expect
the assembly of the second generation facility to be completed no
later than the second quarter of 2020 and to commence testing of
international coal in the second and third quarter of 2020. These
additional changes are expected to further increase the Btu of the
processed coal in excess of what the company obtained from the
first generation facility and reduce the cost of a commercial unit.
It will also enable the automated extraction of by-products from
the coal for research and testing.
Our third process, called Pristine-SA, is designed to eliminate
100% of the volatile matter in the feed coal and to achieve stable
combustion by co-firing it with biomass or natural
gas. The process is expected to produce a cleaner fuel
that eliminates the need for emissions scrubbers and the corollary
production of toxic coal ash. We anticipate that treated
coal that is co-fired with other energy resources will burn as
clean as natural gas.
Anticipated Benefits of the Technology:
• Reduction of undesired emissions and
greenhouse gases through the removal of compounds that are not
required for combustion in conventional boilers.
• Cost savings and environmental impact
reduction. Our pre-combustion solution is expected to be
significantly less expensive than post-combustion solutions such as
emissions scrubbers. Not only are the latter
prohibitively expensive, they produce coal ash containing the
“scrubbed” compounds, which is dumped in toxic waste disposal sites
where it may pose continuing environmental risk. Coal
treated using our processes may eliminate the need for
post-combustion emissions scrubbers and the resulting toxic
ash.
• Potential use of compounds removed from
treated coal. Volatile matter captured in the Pristine process is
removed in the form of hydrocarbon liquids that we believe will be
easily blended with crude oil or used as feedstock for various
products. For example, sulfur, which can be removed
using the Pristine process, is a basic feedstock for
fertilizer. The harvesting of hydrocarbon liquids from
abundant, cheaper coal is a potentially lucrative side benefit of
our processes.
Successful testing of the Pristine M process resulted in an
increase in BTU of the processed coal and a reduction in moisture
content making it less expensive to transport (as moisture has been
removed) with the end product being a dust free stabilized enhanced
coal which we believe will address the issue of coal dust pollution
during transportation.
• Energy Independence. To the extent
that volatile matter is removed from coal, coal’s use as an energy
resource is greatly improved, enabling coal-rich countries to move
towards energy independence owing to coal’s greater abundance.
Development Status:
Pristine process. Pristine process successfully lab tested on small
scale and through advanced computer modeling. As at February, 2020,
various aspects of the Pristine process has been successfully
tested at our test facility at the AES coal Power plant in Oklahoma
as part of the overall testing of Pristine M. More detailed testing
is expected from the second generation test facility following
assembly in Wyoming expected no later than quarter two 2020.
Pristine-M. Testing of the Pristine M process on Powder River Basin
coal at the AES facility in Oklahoma was completed in December
2017. The Pristine M process was successfully tested and the
process, engineering and science were independently proven. The
test facility was moved from the AES location to Wyoming where
assembly of the second generation test facility has commenced and
is expected to be completed no later than Q2 2020 with testing of
international coal expected in third quarter of 2020.
Pristine-SA process. Pristine SA process analysis is at a very
early stage. Further research and development is expected using the
test facility at its permanent location in Wyoming upon assembly of
the second generation facility in the third quarter of 2020.
Business Outlook
• Wyoming New Power, a related party company,
has agreed to sign a two million ton per annum license agreement to
use Pristine M at a location in Wyoming. They have paid a
non-refundable $100,000 deposit on the license agreement. The
definitive license agreement is expected to be signed within 30
days of their receipt of a commercial design that they are working
on with their EPC contractor. The agreement is expected to be
completed in the third quarter of 2020. Wyoming New Power is a
Related Party because it is controlled by a party that also
controls the entity, which is the major lender and significant
stockholder of the Company.
• Jindal Steel & Power is expected to begin
discussions with the Company to contract a commercial plant in in
the second or third quarter of 2020, subject to a favorable outcome
of the testing of its coal at our test facility which is expected
to occur immediately following its reassembly in Wyoming. A bespoke
commercial facility design will be undertaken after Jindal’s coal
has been tested.
• The Company entered into a partnership with
the University of Wyoming with the objective of using our suite of
technologies to increase the use of and value of Wyoming Powder
River Basin coal. The primary focus is on utilizing our technology
to extract valuable derivative products from coal. The university
spent most of 2018 working with our engineers to streamline our
original test facility design in order to optimize the processed
coal. The second generation test facility will enable the automatic
extraction of byproducts including rare earth minerals, which will
underpin further research on byproduct extraction. In 2019, the
University independently validated the Pristine M technology and
committed to advancing up to $1 million on a matching basis towards
the reassembly of second generation test facility. As of February
2020 the University has already advanced a total of $411,640 that
was paid directly to the manufacturer of the Rotary Kiln.
• The Company has been engaged with AusTrade
(The Australian Trade and Investment Commission) and through that
relationship has partnered with three separate universities in
Australia. Like the University of Wyoming these Universities have a
focus on their local coal both from a beneficiation perspective and
also to extract derivative byproducts from coal using our
technology.
• The Company met with and has engaged in
discussions with the Minister for Coal in India and Coal India
Limited, a government-owned coal mining company. As at February
2020 they are awaiting the assembly of the second generation test
facility so they can send coal to Wyoming for testing.
• The company continues negotiations with a
number of the senior management of some of the largest Energy
companies in India, Russia and Indonesia. As at February 2020 we
continue to advance commercial terms with these parties. Upon
completion of the reassembly of the test facility in Wyoming
arrangements are being made for these companies to send up to 500
tons of their coal each to the facility for testing. This is
expected in the second or third quarter of 2020.
• Discussions continue with the US DOE and DOD
to further our technology to benefit US coal with site visit being
scheduled upon test facility assembly.
Technology
Our original Pristine coal treating process extracts the volatile
matter (solidified gases or pollutant material) from a wide variety
of coal types by heating the mineral as it transitions through
several disparate heat chambers, causing the volatile matter to
turn to gas and escape the coal, leaving behind a cleaner-burning
fuel source. Historically, the primary technological challenge of
extracting this volatile matter has been maintaining the structural
and chemical integrity of the carbon, while achieving enough heat
to turn the volatile matter into a gaseous state. Heating coal to
temperatures well in excess of 700° Fahrenheit is necessary to
quickly turn volatile matter gaseous. However, heating coal to
these temperatures has generally caused the carbon in the coal to
disintegrate into an unusable fine powder (coal dusting). Our
patented flow process transitions the coal through several
atmospherically independent heat chambers controlled at
increasingly higher temperatures. These heat chambers are infused
with inert gases, primarily carbon dioxide (CO2), preventing the
carbon from combusting. We have identified the optimum combination
of atmospheres, levels of inert gases, transport speed, and
temperatures necessary to quickly extract and capture volatile
matter, while maintaining the structural and chemical integrity of
the coal. Using our technology, we are able to capture the volatile
gases that escape the coal, and to utilize some of these gases to
fuel the process, while others are captured in the form of usable
byproducts, to potentially provide an ancillary revenue stream.
Depending on the characteristics of the coal being cleaned, the
flow processing time is expected to be in the range of 6 to 8
minutes.
Our process derivatives are broadly characterized by the following
three elements which vary according to
the characteristics of the feed coal:
A first stream is predominantly water that is extracted from the
coal. Although expected to be 100% pure (water removed from coal is
condensed from its vapor state), it may contain some
contaminants.
A second stream, produced in the de-volatizing stage of the
process, is the condensed light hydrocarbons gases that we call
“coal-derived liquids”, or CDLs. These could prove to be the most
valuable component of the process. It is anticipated that the CDLs
will resemble a crude oil (probably sweet crude if the sulfur
content of the feed coal is low) resulting in a readily-marketable
product. In the Pristine-M process, de-volatization is controlled
and optimized to meet the needs of drying and stabilizing the coal,
minimizing the production of gas or liquid byproducts.
The third stream is the heavy tar-like liquid potentially
marketable to the asphalt and coal tar industry. This
stream is entirely absent in the Pristine-M process which is
focused only on the task of drying and stabilizing.
The Pristine technology has three distinct primary applications:
the cleaning of coal for direct use as fuel for power stations and
other industrial and commercial applications; the extraction of
potentially valuable chemical by-products for commercial sale; and
the use of processed coal as a feed stock for gasification and
liquefaction (CTG & CTL) projects.
Pristine-M De-Watering Process. During the fourth quarter of
2011, the Company filed a provisional patent application for a new
technology focused on the de-watering of coal. The new
process, Pristine-M, is unique in that it retains elements of the
original process but has discovered a technology that stabilizes
the dried coal, rendering it impermeable and easy to transport with
low to no risk of spontaneous combustion. The latter
results have proved elusive for the majority of companies that have
entered the market with coal de-watering technologies.
The Pristine-M process, sharing some of the scientific principles
and engineering components that underpin the Pristine process, is
also a modular design that includes a section where the coal is
partially de-volatized and then coupled to as many drying and
stabilization modules as may be required to achieve a client’s
desired level of production. Each of the modules is designed to
handle 30-tons/hr and, similar to the Pristine process, relies on
components that are primarily available off-the-shelf and have
already stood the test of time as to their reliability and
durability.
Pristine-SA Process. In June 2013, we filed a provisional patent
application for a new process to be called Pristine-SA. The
new process is designed to produce a coal product that is devoid of
all volatiles and comes together with a solution for ensuring
efficient and clean combustion on a level with natural gas. Now
that the application on the basic concept has been filed, we expect
to continue further research and development to address
Pristine-SA’s potential application in various fuel and non-fuel
product areas.
Our technology has been tested and proven under laboratory and
pilot scale conditions in Pittsburg, PA, and the results studied by
LEIDOS (previously SAIC) as well as certain potential strategic
partners as part of their due diligence on CCTI and the CCTI
technology. To date, testing of about 40 coal
types from all over the world has been completed. We
have also benchmarked our technology against the Carnegie Mellon
simulation model with excellent results. Testing has shown no
evidence of coal dusting, self-combustion, moisture re-absorption,
or other technical concerns that might hinder commercialization. As
at December 2017 we have successfully tested Powder River Basin
coal at out testing facility at AES Oklahoma. The test facility was
moved to Wyoming where assembly completion of the second generation
test facility is expected not later than the second quarter of
2020.
While we believe that all of our Pristine technologies offer vast
potential for commercialization, our market entry strategy right
now is focused on the Pristine -M technology that we believe offers
an immediate opportunity to monetize our intellectual property. The
specific opportunity is in Asia that, at the moment, is focused
almost entirely on the need to produce a dry and stable coal to
meet the growing need of coal-fired power
plants. Indonesia is currently one of the largest
suppliers of thermal coal to India and China, but Indonesian coal
suffers from its high moisture content and low calorific
content. Since January 2017 we have engaged in advanced
discussions with the representatives from the US DOE and also key
representatives from Wyoming. As we successfully tested PRB at our
test facility at AES it has led to a unique opportunity to upgrade
PRB coal and export it through several ports in the US and also
from Canadian and Mexican ports. Since our successful tests
at AES coal power utility we believe that the issues currently
facing the upgrading of coal and its stabilization have been
effectively addressed by the Pristine-M technology and we continue
to work with both US government bodies and US producers along with
key international energy providers.
Initial designs have been completed for both the Pristine and the
Pristine-M processes. The Pristine design provides for
the deployment of standard operational modules, each with annual
capacity of 166,000 metric tons, providing the flexibility to be
configured in accordance with customers’ individual production
capacity requirements. The coal cleaning process will typically be
energy self-sufficient, relying upon captured methane and other
byproducts to fuel the coal cleaning process. Since the first
quarter of 2018 our EPC contractor in conjunction with the
University of Wyoming have been working to further enhance the
process and update the commercial designs that were previously
produced. Following nine months of work with the University of
Wyoming and our engineers we have identified changes to the
original test facility that is expected to further increase the
beneficiated processed coal. These changes have been incorporated
in the reassembly of the second generation test facility in
Wyoming.
Business Activities and Strategy
The Company’s business model at this stage is simple: to license
our technology to third parties and exact a license fee, as well as
a royalty fee, based on plant production. Over time, as the
company builds up equity capital and cash reserves, opportunities
to penetrate the coal business at different points of the value
chain will be considered. Among these, direct
investments in low-cost reserves, partnerships in mining or
industrial projects, or trading may be contemplated.
Research and development will be a key focus going
forward. The highest priority will be on the
commercialization of our Pristine M process, but there are various
other product areas including biomass where our technology may
prove relevant.
Competitive Strengths
We believe our technology and designs represent the only process
that can effectively separate and capture undesired chemical
compounds prior to carbon combustion in a commercially viable
manner. Our process differs from competing processes through its
ability to maintain the structural integrity of coal during the
heating process. This is achieved through a unique design that
inserts inert gas into the heating chambers, and maintains the
inert atmosphere in each chamber. By inserting an inert gas into
the chambers, the process allows for rapid heating of the coal and
prevents coal combustion and significant coal dusting. Competing
technologies have used differing methods of preventing coal
combustion and dusting, albeit with limited success. Some of the
particular strengths of our process include:
Pollution reduction: By heating coal prior to combustion, we
are able to extract volatile matter (pollutants in the form of
solidified gases) from the coal in a controlled environment,
transforming coal with high levels of impurities, contaminants and
other polluting elements into a more efficient, cleaner source of
high energy, lower polluting fuel. Testing has demonstrated that
our process removes a substantial percentage of harmful pollutants,
including mercury.
Lower cost of operation: We believe that our process will be
a relatively low-cost solution to the reduction of pollution at
coal-fired power facilities. Our engineering consulting firm,
believes that our coal cleaning process will typically not require
any external energy and can be fully fueled by the methane and
other byproducts that the process captures from raw coal. This
effective use of byproducts contrasts markedly with emissions
scrubbers that generally use a portion of the generated power and
have high initial capital and maintenance costs. In addition, our
process may have certain advantages in terms of the pollutants
removed that can be utilized in a complementary manner with other
processes including scrubbers.
Increased flexibility in feedstock: Our process eliminates
both the moisture and volatile matter in raw coal, increasing the
heat capacity of standard sub-bituminous low-rank raw coal from
approximately 8,800 BTUs to between 11,000-12,000 BTUs. We believe
the process can increase heat capacity of lignite raw coal ranging
from 4,000-7,000 BTUs to a range of 9,000-10,000 BTUs. As the
worldwide supply of high-BTU bituminous coal dwindles, our
technology may enable coal-fired plants to effectively utilize the
abundance of low-rank coal. Results will differ depending on the
coal being processed.
Favorable price arbitrage: Low-rank coal in Asia with a heat
content of 7,000 – 9,000 BTUs currently sells for at a
significant discount to high-BTU bituminous coal with a heat
capacity of 10,000+ BTUs, as can be observed in various
international price indices, among them, the Baltic Dry Bulk Index.
Our process essentially transforms low-grade coal into bituminous
coal at a direct operating cost of an estimated $3.50 per ton,
capturing the value of higher-grade coal prices.
Potential tax benefits: This will be clearer under the new
US Administration and the new laws being passed
Competition
At this filing, the coal upgrade industry globally, excluding
coking processes, remains in its infancy. The
penetration rate of technologies focused on de-watering coal is
well under 1% based on annual production of thermal coals measured
in the billions of tons. There are numerous competitors
in the pre-combustion, upgrade segment but many of these have
failed, are inactive, or in pilot mode. The Company
believes that given its successful testing of its Pristine M
process it will be able to enjoy early-mover advantage in 2020.
The difficulties experienced by the Company’s competitors fall into
three categories: the technologies have failed to scale up; they
are expensive and, therefore, challenge the economics of the
process; or they have failed to produce a stable end product, that
is, a product that does not reabsorb moisture and is safe to
transport with minimal risk of spontaneous combustion. From a
scale-up perspective, CCTI’s Pristine M technology faces a much
smaller challenge as it is a modular system built around well-known
and proven components. From our 2-ton per hour prototype to
our 30-ton per hour standard commercial module, initial scale-up is
a 1:15 proposition that is considered very modest from an
engineering perspective. Scalability issues are
mitigated by the modular nature of the industrial design that, once
the basic module is operational, further scale up is achieved by
adding identical modules. We consider it a major competitive
advantage that our clients who build large capacity, single-unit
plants based on what are likely to be new and untested
components.
From a plant reliability and maintenance perspective, our modular
design brings many advantages that the Company believes enhance the
competitiveness of its offering. The major benefits are
the ability to carry on maintenance on one module while the other
modules continue to operate. Down-time can be minimized. Similarly,
if a component breaks down, it does not incapacitate the entire
plant. It is localized to a single module.
From a planning perspective, mine operators would be able to expand
their capacity piecemeal rather than in step-wise fashion by
large-scale increments. This mitigates much of the
financial risk normally attendant on large-scale plant expansions
and, over time, our modular design may prove to be one of the most
significant competitive advantages of our process.
Another significant competitive advantage of either of the
Company’s processes is that these do not require crushing of the
coal, thereby minimizing if not entirely eliminating the need for
costly briquetting. CCTI’s plant economics are
compelling as they derive much of the process heat from the feed
coal itself, rendering the processes very energy
efficient. The processes require a modest amount of
electric power and a small number of
operatives. Consequently, our operating costs are very
competitive.
The Pristine process not only removes the moisture, but also
removes undesired volatiles which we capture as a chemical “soup”
that may be further refined by us, or sold directly to chemical
manufacturers, or refineries as a complementary revenue source. The
Pristine process addresses a very different market need than the
Pristine M Technology and therefore enables CCTI to offer a more
diverse product slate to our potential customers than most, if not
all, our existing competitor base.
We consider our most direct competition in the reduction of coal
emissions comes from companies offering pre-combustion cleaning
designed to remove impurities. However, post-combustion
filtering or “scrubbers” designed to filter released gases are a
clear alternative for coal-fired power producers. We are
not in competition with suppliers of emissions scrubbers, except to
the extent that that burning a cleaner fuel is more economical than
post-combustion solutions.
The best known present and past competitors in the pre-combustion
area include Evergreen Energy, Inc. (“Evergreen”), Kobe Steel
(“Kobe”), GTL Energy (“GTL”) and White Energy (“White Energy”),
both the latter of which are Australian companies. Neither Encoal
or SynCoal are currently operational having experienced serious
problem in the area of product stability. There are operators that
utilize older, less efficient technologies such as the Fleissner
process, but these are not as effective the newer
technologies. Evergreen, based in Denver, Colorado,
developed a technology primarily focused on reducing the moisture
in raw coal to increase its heating capacity. The company declared
bankruptcy in 2012 after suffering problems having to do with the
stability of the end product. CoalTek, based in Tucker, Georgia,
claims its patent-pending process uses electromagnetic energy to
reduce contaminants and moisture in coal prior to combustion. While
public information is limited, we believe the amount of energy
necessary to run the electromagnetic process may offset any
economic benefits of the upgraded coal. The Australian processes
use a combination of heat and compaction to remove moisture from
coal. The company is not in commercial mode. White
Energy claims that compaction generates close bonding between the
dried coal particles to form a high density, higher energy content
briquette. Energy requirements for heating coal an operating a
pelletizer are typically large but no basis or explanation is
provided for the favorable cost numbers published by White Energy.
During 2012, White Energy was forced to abandon further investment
in its flagship 1 million ton facility in Indonesia that suffered
serious operational problems. The Kobe process is
proven. However, the plant is complex and, consequently,
very expensive. This was indicated by the fact a one
significant plant in Indonesia shuttered a Kobe plant during 2012
owing to unfavorable process economics.
Indirect competition comes from alternative low-pollution energy
sources, including: wind, bio-fuels and solar; all of which need
additional technological advancements, cost reduction and universal
acceptance to be able to produce power at the scale of coal-fueled
plants, which today produce over 40% of world’s electricity
according to U.S. Department of Energy.
Patents
Our technology is the subject of U.S. patent #6,447,559, “Treatment
of Coal” which was filed on November 3, 2000 based on provisional
application 60/163,566 filed November 5, 1999, and issued in 2002.
The patent expires in 2020. We also filed PCT international patent
application PCT/US00/41772 based on this U.S. patent on November 2,
2000, and, in accordance with this, patents have been applied for
in all countries where we believe our technology has application.
On February 1, 2011 CCTI was awarded a continuation patent US
#7,879,117.
On April 15, 2008, the Company filed a PCT International
application PCT/US2008/060364based on our revised design, and
national patent applications based on this PCT International
application have been filed in India, China, Indonesia, Australia,
South Africa, Colombia, Brazil, Chile, and the Republic of
Mongolia. These were filed by our patent attorneys Nixon
&Vanderhye P.C. at a cost of $33,000. On October 15, 2010, the
Company filed the PCT US national phase application for its revised
design as contained in PCT/US2008/060364.
The April 15, 2008 application details the process of using
byproducts to power the process, and details a simpler, vertical
factory design with proprietary seals that help preserve the
atmosphere of each chamber, compared to a horizontal design in the
original filing. This application goes into great detail regarding
the byproducts of the coal and their capture.
The patent details a process wherein coal is heated to different
temperatures in various chambers with controlled low-oxygen
atmospheres. There are seals between these chambers, serving to
maintain the heat and gas content in each chamber. The invention
notes the controlled de-volatilization and removal of moisture and
organic volatiles, while maintaining the structural integrity of
the coal and reducing the level of disintegration into powder form.
The invention also notes the significantly decreased time in
treating coal as compared to alternative approaches, most of which
focus on moisture removal as a means of increasing calorific or BTU
value.
In September, 2011, the Company filed provisional patent
application Serial No. 61/531,791 that seeks to protect a new
invention for the reduction of moisture inherent in coal, and
stabilization of the final product. A corresponding PCT
International application PCT/US2012/054160 was filed in September,
2012 and counterpart national patent applications have been filed
in US, EP, Eurasia, Australia, Canada, India, Philippines, South
Africa, Colombia, Mexico, Panama, Japan, South Korea, Indonesia
Mongolia, Malaysia, Sri Lanka. Testing to date indicates that our
stabilized product will be resistant to moisture re-absorption and
safe to handle, even over long distances. The new
invention draws from the scientific knowledge embedded in our
existing patent, but it is an entirely new concept that is easily
differentiated from the offerings of our
competitors. The most novel aspect relates to the
stabilization of the end product and to the ability to enhance the
heat content of the coal beyond what would be normally achieved by
moisture removal alone. The product is banded
Pristine–M.
From a commercial perspective, Pristine-M is proving to be
attractive to clients not only because of its characteristics, but
because the industrial design is simple, elegant and
inexpensive. We estimate that operating costs based on
US labor rates is $3.50 per to which includes $2.00 per ton
on-going maintenance. The cost of the commercial plant
is expected to be highly competitive, based on preliminary
estimates. Changes being incorporated to the second generation test
facility is expected to reduce the capital cost of a commercial
unit.
A new provisional patent application Serial No. 61/829,006 was
filed by the Company in May, 2013 directed to the treatment of
coal. Counterpart foreign patents has been filed based on that
technology. In the second quarter of 2013, we filed a provisional
patent application for a new process to be called
Pristine-SA. The new process is designed to produce a coal
product that is devoid of all volatiles and comes together with a
solution for ensuring efficient and clean combustion on a level
with natural gas. Now that the application on the basic concept has
been filed, we expect to continue further research and development
to address Pristine-SA’s potential application in various fuel and
non-fuel product areas.
We expect to file for additional patents as we continue the
commercialization of our technology and factory design. We intend
to continue to seek worldwide protection for all our technology.
The following table provides a summary of our technology to
date.
In 2019, the company was successfully awarded full patents for the
following countries; Indonesia, Philippines, Republic of Korea,
United States, New Zealand and Hong Kong. The duration of most
patents is 20 years from date of application.
|
COUNTRY
|
APPLN NO
|
APPLN DATE
|
GRANT DATE
|
STATUS
|
|
CHIN - (China P.R.)
|
00818174.8
|
11/02/2000
|
02/03/2016
|
G - (Granted)
|
|
USA - (United States)
|
09/704,738
|
11/03/2000
|
09/10/2002
|
G - (Granted)
|
|
CANA - (Canada)
|
2,389,970
|
11/02/2000
|
03/27/2012
|
G - (Granted)
|
|
EPC - (European Patent Convention)
|
00992027.3
|
11/02/2000
|
10/02/2013
|
G - (Granted)
|
|
INDO - (Indonesia)
|
W-00200201274
|
11/02/2000
|
|
F - (Pending)
|
|
USA - (United States)
|
11/344,179
|
02/01/2006
|
02/01/2011
|
G - (Granted)
|
|
INDI - (India)
|
7426/DELNP/2010
|
04/15/2008
|
02/15/2016
|
G - (Granted)
|
|
CHIN - (China P.R.)
|
200880129212.2
|
04/15/2008
|
12/25/2013
|
G - (Granted)
|
|
INDO - (Indonesia)
|
W00201003932
|
04/15/2008
|
|
F - (Pending)
|
|
SAFR - (South Africa)
|
2010/07455
|
04/15/2008
|
04/25/2012
|
G - (Granted)
|
|
COLO - (Colombia)
|
10-142509
|
04/15/2008
|
11/24/2017
|
G - (Granted)
|
|
BRAZ - (Brazil)
|
PI0822577-0
|
04/15/2008
|
08/15/2017
|
G - (Granted)
|
|
CHIL - (Chile)
|
01145-2010
|
10/19/2010
|
01/05/2017
|
G - (Granted)
|
|
MONG - (Mongolia)
|
4510
|
04/15/2008
|
10/25/2010
|
G - (Granted)
|
|
CHIN - (China P.R.)
|
201110142494.3
|
11/02/2000
|
10/14/2015
|
G - (Granted)
|
|
HONG - (Hong Kong)
|
11110274.3
|
09/29/2011
|
08/15/2014
|
G - (Granted)
|
|
HONG - (Hong Kong)
|
12102379.3
|
03/08/2012
|
10/21/2016
|
G - (Granted)
|
|
EPC - (European Patent Convention)
|
13153292.1
|
01/30/2013
|
|
F - (Pending)
|
|
ALBA - (Albania)
|
AL//P/2013/0342
|
11/02/2000
|
10/02/2013
|
G - (Granted)
|
|
ATRA - (Austria)
|
00992027.3
|
11/02/2000
|
10/02/2013
|
G - (Granted)
|
|
CYPR - (Cyprus)
|
CY20131101169
|
11/02/2000
|
10/02/2013
|
G - (Granted)
|
|
GERM - (Germany)
|
00992027.3
|
11/02/2000
|
10/02/2013
|
G - (Granted)
|
|
SPAI - (Spain)
|
00992027.3
|
11/02/2000
|
10/02/2013
|
G - (Granted)
|
|
GBRI - (Great Britain)
|
00992027.3
|
11/02/2000
|
10/02/2013
|
G - (Granted)
|
|
GREC - (Greece)
|
00992027.3
|
11/02/2000
|
10/02/2013
|
G - (Granted)
|
|
IREL - (Ireland)
|
00992027.3
|
11/02/2000
|
10/02/2013
|
G - (Granted)
|
|
ITAL - (Italy)
|
502013902221416
|
11/02/2000
|
10/02/2013
|
G - (Granted)
|
|
LATV - (Latvia)
|
00992027.3
|
11/02/2000
|
10/02/2013
|
G - (Granted)
|
|
MACE - (Macedonia)
|
00992027.3
|
11/02/2000
|
10/02/2013
|
G - (Granted)
|
|
PORT - (Portugal)
|
00992027.3
|
11/02/2000
|
10/02/2013
|
G - (Granted)
|
|
ROMA - (Romania)
|
00992027.3
|
11/02/2000
|
10/02/2013
|
G - (Granted)
|
|
SWED - (Sweden)
|
00992027.3
|
11/02/2000
|
10/02/2013
|
G - (Granted)
|
|
SLOV - (Slovenia)
|
00992027.3
|
11/02/2000
|
10/02/2013
|
G - (Granted)
|
|
TURK - (Turkey)
|
00992027.3
|
11/02/2000
|
10/02/2013
|
G - (Granted)
|
|
USA - (United States)
|
14/282,558
|
05/20/2014
|
10/25/2016
|
G - (Granted)
|
|
EPC - (European Patent Convention)
|
12845210.9
|
09/07/2012
|
|
F - (Pending)
|
|
EURA - (Eurasian Patent Convention)
|
201490565
|
09/07/2012
|
07/31/2017
|
G - (Granted)
|
|
ASTL - (Australia)
|
2012333101
|
09/07/2012
|
10/27/2016
|
G - (Granted)
|
|
CANA - (Canada)
|
2,848,068
|
09/07/2012
|
|
F - (Pending)
|
|
INDI - (India)
|
1722/DELNP/2014
|
09/07/2012
|
|
F - (Pending)
|
|
PHIL - (Philippines)
|
1-2014-500512
|
09/07/2012
|
09/16/2019
|
G - (Granted)
|
|
USA - (United States)
|
14/343,568
|
09/07/2011
|
12/31/2019
|
G - (Granted)
|
|
SAFR - (South Africa)
|
2014/02154
|
09/07/2012
|
06/28/2017
|
G - (Granted)
|
|
COLO - (Colombia)
|
14068729
|
09/07/2012
|
11/23/2015
|
G - (Granted)
|
|
MEXI - (Mexico)
|
MX/a/2014/002717
|
09/07/2012
|
10/18/2018
|
G - (Granted)
|
|
PANA - (Panama)
|
90134-01
|
09/07/2012
|
|
F - (Pending)
|
|
JAPA - (Japan)
|
2014-529896
|
09/07/2012
|
12/05/2017
|
G - (Granted)
|
|
KORS - (Republic of Korea)
|
10-2014-7008281
|
09/07/2012
|
4/05/2019
|
G - (Granted)
|
|
INDO - (Indonesia)
|
P00201401962
|
09/07/2012
|
10/30/2019
|
G - (Granted)
|
|
MONG - (Mongolia)
|
5304
|
03/25/2014
|
04/09/2015
|
G - (Granted)
|
|
MAYS - (Malaysia)
|
PI2014000646
|
09/07/2012
|
|
F - (Pending)
|
|
SRIL - (Sri Lanka)
|
17613
|
09/07/2012
|
02/26/2015
|
G - (Granted)
|
|
AU – (Australia)
|
2018282423
|
12/20/2018
|
|
F - (Pending)
|
|
HONG - (Hong Kong)
|
15100135.9
|
01/07/2015
|
08/15/2019
|
G - (Granted)
|
|
ASTL - (Australia)
|
2015202493
|
05/08/2015
|
09/14/2017
|
G - (Granted)
|
|
USA - (United States)
|
14/891,893
|
05/30/2014
|
|
F - (Pending)
|
|
ASTL - (Australia)
|
2014273996
|
05/30/2014
|
02/14/2019
|
G - (Granted)
|
|
CANA - (Canada)
|
2,912,824
|
05/30/2014
|
|
F - (Pending)
|
|
CHIN - (China P.R.)
|
201480030985.0
|
05/30/2014
|
|
F - (Pending)
|
|
COLO - (Colombia)
|
15-304594
|
05/30/2014
|
|
F - (Pending)
|
|
EPC - (European Patent Convention)
|
14803703.9
|
05/30/2014
|
|
F - (Pending)
|
|
HONG - (Hong Kong)
|
16112584.9
|
11/02/2016
|
|
F - (Pending)
|
|
INDI - (India)
|
11109/DELNP/2015
|
05/30/2014
|
|
F - (Pending)
|
|
INDO - (Indonesia)
|
P00201508659
|
05/30/2014
|
10/30/2019
|
G - (Granted)
|
|
JAPA - (Japan)
|
2016-517043
|
05/30/2014
|
11/30/2018
|
G - (Granted)
|
|
NEWZ - (New Zealand)
|
714208
|
05/30/2014
|
10/01/2019
|
G - (Granted)
|
|
RUSS - (Russian Federation)
|
2015155730
|
05/30/2014
|
04/10/2018
|
G - (Granted)
|
|
SAFR - (South Africa)
|
2015/08515
|
05/30/2014
|
|
F - (Pending)
|
|
KORS - (Republic of Korea)
|
10-2015-7037018
|
05/30/2014
|
|
G - (Granted)
|
|
CHIN - (China P.R.)
|
201610015312.9
|
01/11/2016
|
04/10/2018
|
G - (Granted)
|
|
INDI - (India)
|
201618002729
|
01/25/2016
|
|
F - (Pending)
|
|
USA - (United States)
|
15/297,210
|
10/19/2016
|
|
F - (Pending)
|
|
HONG - (Hong Kong)
|
16113567.8
|
11/29/2016
|
|
F - (Pending)
|
Governmental Regulations
Environmental Regulation Affecting our Potential Market
We believe that under the Obama administration legislation and
regulations had a negative impact on fossil fuel-fired, and
specifically coal-fired, power generating facilities nationally and
internationally. According to the U.S. Environmental Protection
Agency, or EPA, power generation emits substantial levels of sulfur
dioxide, nitrogen oxides, mercury and carbon dioxide into the
environment. Regulation of these emissions affected the potential
market for coal processed using our technology by imposing limits
and caps on fossil fuel emissions. The most significant, existing
national legislation and regulations affecting our potential market
include the Clean Air Act, the Clean Air Interstate Rule and the
Clean Air Mercury Rule, which are described further below. However,
since the start of the Trump Administration all Obama era
regulations implemented by the EPA are under review and it is
widely expected that most of them will be repealed.
Environmental Regulation Affecting the Construction and
Operation of Plants Using our Technology
In the United States, future production plants using our technology
will require numerous permits, approvals and certificates from
appropriate federal, state and local governmental agencies before
construction of each facility can begin and will be required to
comply with applicable environmental laws and regulations
(including obtaining operating permits) once facilities begin
production. The most significant types of permits that are
typically required for commercial production facilities include an
operating and construction permit under the Clean Air Act, a
wastewater discharge permit under the Clean Water Act, and a
treatment, storage and disposal permit under the Resource
Conservation and Recovery Act. Some federal programs have delegated
regulatory authority to the states and, as a result, facilities may
be required to secure state permits. Finally, the construction of
new facilities may require review under the National Environmental
Policy Act, or a state equivalent, which requires analysis of
environmental impacts and, potentially, the implementation of
measures to avoid or minimize these environmental impacts. We are
working closely with Wyoming to assess all permitting
requirements.
Any international plants will also be subject to various permitting
and operational regulations specific to each country. International
initiatives, such as the Kyoto Protocol/Copenhagen Accord, are
expected to create increasing pressures on the electric power
generation industry on a world-wide basis to reduce emissions of
various pollutants, which management expects will create additional
demand for our technology.
Research and Development
In association with our engineering consultants and the University
of Wyoming we have identified a number of changes to the original
test facility. While our budget does not currently allow
us to allocate a specific funding for Research and Development
(“R&D”), we will incorporate these changes to the assembly of
the second generation test facility in Wyoming in the second
quarter of 2019. During 2011 we invented the new Pristine M
technology which following its successful testing in 2016 and 2017
we believe has already put us at the forefront of the global
moisture removal technologies. The second generation test facility
is expected to enable the extraction of coal by-products and
potentially Rare Earth Minerals for testing and research in
partnership with the University of Wyoming.
In the future, we anticipate a growing R&D budget that seeks to
fully develop the potential of our three main processes. We will
continue to evaluate our progress in new and existing technologies
and will seek to fund additional needs as they arise.
Employees
As of December 31, 2019, we had two full-time executives, President
and CEO Robin Eves, Chief Operations Officer and Chief Financial
Officer, Aiden Neary, who both have written employment agreements.
Messrs. Eves and Neary received no compensation for their
participation on the Board of Directors.
The terms of the agreements described above were negotiated by and
between the individuals and our Board of Directors based on the
qualifications and requirements of each individual and the needs of
the Company; however, the negotiations may not be deemed to have
been at arm’s length.
ITEM 1A. RISK FACTORS
We have limited licensing revenues to date and we have made
no provision for any contingency, unexpected expenses or increases
in costs that may arise.
We have received only limited licensing revenues from operations to
date. We have generated operational funding in fiscal 2019 from
private debt and equity offerings to use for operating expenses or
research and development. Since inception, we have been able to
cover our operating losses from debt and equity financing. These
sources of funds may not be available to cover future operating
losses. If we are not able to obtain adequate sources of funds to
operate our business we may not be able to continue as a going
concern.
Our business strategy and plans could be adversely affected in the
event we need additional financing and are unable to obtain such
funding when needed. It is possible that our available funds may
not be sufficient to meet our operating expenses, development
plans, and capital expenditures for the next twelve months.
Insufficient funds may prevent us from implementing our business
strategy or may require us to delay, scale back or eliminate
certain opportunities for the commercialization of our technology.
If we cannot obtain necessary funding, then we may be forced to
cease operations.
We may experience delays in resolving unexpected technical
issues arising from the design of commercial units that will
increase development costs and make the economics
unattractive.
As we develop, refine and implement our technology on a commercial
basis, we may have to solve technical, manufacturing and/or
equipment-related issues. Some of these issues are ones that we
cannot anticipate because the technology we are developing is new.
If we must revise existing manufacturing processes or order
specialized equipment to address a particular issue, we may not
meet our projected timetable for bringing commercial operations on
line. Such delays may interfere with our projected operating
schedules, delay our receipt of licensing and royalty revenues from
operations and decrease royalties from operations. Enhanced
commercial designs are underway.
The market in which we are attempting to sell our technology
is highly competitive and may attract significant additional
research and development in coming years.
The market for our technology may become highly competitive on a
global basis, with a number of competitors gaining significantly
greater resources and greater market share than us. Because of
greater resources and more widely accepted brand names, many of our
competitors may be able to adapt more quickly to changes in the
markets we have targeted or devote greater resources to the
development and sale of new technology products. Our ability to
compete is dependent on our emerging technology that may take some
time to develop market acceptance. To improve our competitive
position, we may need to make significant ongoing investments in
service and support, marketing, sales, research and development and
intellectual property protection. We may not have sufficient
resources to continue to make such investments or to secure a
competitive position within the market we target.
Our business depends on the protection of our patents and
other intellectual property and may suffer if we are unable to
adequately protect such intellectual property.
Our success and ability to compete are substantially dependent upon
our intellectual property. We rely on patent laws, trade secret
protection and confidentiality or license agreements with our
employees, consultants, strategic partners and others to protect
our intellectual property rights. However, the steps we take to
protect our intellectual property rights may be inadequate. There
are events that are outside of our control that pose a threat to
our intellectual property rights as well as to our products and
services. For example, effective intellectual property protection
may not be available in every country in which we license our
technology. Also, the efforts we have taken to protect our
proprietary rights may not be sufficient or effective. Any
impairment of our intellectual property rights could harm our
business and our ability to compete. Also, protecting our
intellectual property rights is costly and time consuming. Any
increase in the unauthorized use of our intellectual property could
make it more expensive to do business and harm our operating
results. In addition, other parties may independently develop
similar or competing technologies designed around any patents that
may be issued to us.
We have been granted several global patents in 2018 and have
several patents applications pending as noted in the table above.
Our ability to license our technology is substantially dependent on
the validity and enforcement of these patents and patents pending.
We cannot assure you that our patents will not be invalidated,
circumvented or challenged, that patents will be issued for our
patents pending, that the rights granted under the patents will
provide us competitive advantages or that our current and future
patent applications will be granted.
Third parties may invalidate our patents.
Third parties may seek to challenge, invalidate, circumvent or
render unenforceable any patents or proprietary rights owned by or
licensed to us based on, among other things:
• subsequently discovered prior art;
• lack of entitlement to the priority of an
earlier, related application; or
• failure to comply with the written
description, best mode, enablement or other applicable
requirements.
United States patent law requires that a patent must disclose the
“best mode” of creating and using the invention covered by a
patent. If the inventor of a patent knows of a better way, or “best
mode,” to create the invention and fails to disclose it, that
failure could result in the loss of patent rights. Our decision to
protect certain elements of our proprietary technologies as trade
secrets and to not disclose such technologies in patent
applications, may serve as a basis for third parties to challenge
and ultimately invalidate certain of our related patents based on a
failure to disclose the best mode of creating and using the
invention claimed in the applicable patent. If a third party is
successful in challenging the validity of our patents, our
inability to enforce our intellectual property rights could
seriously harm our business.
We may be liable for infringing the intellectual property
rights of others.
Our technology may be the subject of claims of intellectual
property infringement in the future. Our technology may not be able
to withstand any third-party claims or rights against their use.
Any intellectual property claims, with or without merit, could be
time-consuming, expensive to litigate or settle, could divert
resources and attention and could require us to obtain a license to
use the intellectual property of third parties. We may be unable to
obtain licenses from these third parties on favorable terms, if at
all. Even if a license is available, we may have to pay substantial
royalties to obtain it. If we cannot defend such claims or obtain
necessary licenses on reasonable terms, we may be precluded from
offering most or all of technology and our business and results of
operations will be adversely affected.
Our ability to execute our business plan would be harmed if
we are unable to retain or attract key personnel.
Our technology is being marketed by a small number of the members
of our management. Our technology is being developed and refined by
a small number of technical consultants. Our future success
depends, to a significant extent, upon our ability to retain and
attract the services of these and other key personnel. The loss of
the services of one or more members of our management team or our
technical consultants could hinder our ability to effectively
manage our business and implement our growth strategies. Finding
suitable replacements could be difficult, and competition for such
personnel of similar experience is intense. We do not carry key
person insurance for our officers.
Overseas development of our business is subject to
international risks, which could adversely affect our ability to
license profitable overseas plants.
We believe a significant portion of the growth opportunity for our
business lies outside the United States. Doing business in foreign
countries may expose us to many risks that are not present
domestically. We lack significant experience in dealing with such
risks, including political, military, privatization, technology
piracy, currency exchange and repatriation risks, and higher credit
risks associated with customers. In addition, it may be more
difficult for us to enforce legal obligations in foreign countries,
and we may be at a disadvantage in any legal proceeding within the
local jurisdiction. Local laws may also limit our ability to hold a
majority interest in the projects that we develop. The Company has
yet to establish any representation offices outside the United
States.
We do not know if coal processed using our technology is
commercially viable.
We do not yet know whether coal processed using our technology can
be produced and sold on a commercial basis in a cost effective
manner after taking into account the cost of the feedstock,
processing costs, license and royalty fees and the costs of
transportation. Because we have not experienced any full scale
commercial operations, we have not yet developed a guaranteed
efficient cost structure. Initial indications show commercial
viability. We are currently using the estimates for anticipated
pricing and costs, as well as the qualities of the coal processed
in the laboratory and our test facility at AES setting to make such
estimates. We may experience technical problems that could make the
processed coal more expensive than anticipated. Failure to address
both known and unforeseen technical challenges may materially and
adversely affect our business, results of operations and financial
condition. Initial indications based on actual test results show a
positive impact on the quality of the processed coal and based on
current prices appear economically attractive.
We have experienced large net losses, have little liquidity
and need to obtain funds for operations or we may not be able to
continue.
We have incurred net losses since inception. The net losses to date
include large non-cash expenses recorded for share-based
compensation for consultants and officer compensation. However, in
addition to the non-cash expenses, we had other operating expenses,
funded in large part through loans from existing shareholders. In
order to meet our current operating budget and anticipated
contractual obligations, we estimate that we will need an
additional $6,000,000 for 2020 based on our current contractual
obligations. At December 31, 2019, we had total liabilities of
$19,020,248 and cash of $92,282. If we cannot obtain adequate
financing from new funding sources, we will be unable to continue
operations or meet our contractual obligations.
Our use of equity as an alternative to cash compensation may
cause excessive dilution for our current shareholders.
Due to shortage of operating funds and low liquidity, we have
issued shares as compensation for services, including board and
officer compensation as well as compensation for outside
consultants and other services. This form of compensation has
enabled us to obtain services that would not otherwise have been
available to us but it has resulted in dilution to our
shareholders. Unless we are able to obtain adequate financing in
the immediate future, we may be forced to continue to obtain
services through the issuance of shares and warrants, resulting in
additional dilution to shareholders and potentially adversely
affecting any return on investment.
Due to the uncertain commercial acceptance of coal processed
using our technology we may not be able to realize significant
licensing revenues.
While we strongly believe that a commercial market is developing
both domestically and internationally for cleaner coal products
such as coal processed using our technology, we may face the
following risks due to the developing market for cleaner coal
technology:
- limited pricing information;
- changes in the price differential between low-
and high-BTU coal;
- unknown costs and methods of transportation to
bring processed coal to market;
- alternative fuel supplies available at a lower
price;
- the cost and availability of
emissions-reducing equipment or competing technologies; failure of
governments to implement and enforce new environmental standards;
and
- a decline in energy prices which could make
processed coal less price competitive.
If we are unable to develop markets for our processed coal, our
ability to generate revenues and profits will be negatively
impacted.
If we are unable to successfully construct and commercialize
production plants, our ability to generate profits from our
technology will be impaired.
Our future success depends on our ability to secure partners to
locate, develop and construct future commercial production plants
and operate them at a profit. A number of different variables,
risks and uncertainties affect such commercialization
including:
- the complex, lengthy and costly regulatory
permit and approval process;
- potential local opposition to development of
projects, which can increase cost and delay timelines;
- increases in construction costs such as for
contractors, workers and raw materials;
- transportation costs and availability of
transportation;
- the inability to acquire adequate amounts of
low rank feedstock coal at forecasted prices to meet projected
goals;
- availability of suitable consumers of chemical
by-product produced by our process;
- engineering, operational and technical
difficulties; and
- possible price fluctuations of low-Btu coal
which could impact profitability.
If we are unable to successfully address these risks, our results
from operations, financial condition and cash flows may be
adversely affected.
Future changes in the law may adversely affect our ability to
sell our products and services.
A significant factor in expanding the potential U.S. market for
coal processed using our technology is the numerous federal, state
and local environmental regulations, which provide various air
emission requirements for power generating facilities and
industrial coal users. The Trump Administration has revoked a
number of regulations and restrictions which had an adverse impact
on the market for our products and services, and the revocation of
such regulations and restrictions is expected to continue. However,
the Trump Administration could change its supportive stance toward
coal processing technology, and no assurance can be given as to the
stance of any future US Government administrations.
ITEM 1B. UNRESOLVED STAFF
COMMENTS
None.
ITEM 2. PROPERTIES
We have a leased satellite office at 295 Madison Avenue, New York,
NY 10017 with a monthly cost of $200 per month. We lease the land
at our test facility in Gillette, Wyoming. It is a three year lease
at $1,000 per month. The Company paid the three year lease payment
of $36,000 in advance.
ITEM 3. LEGAL PROCEEDINGS
In the matter entitled Soffin v Clean Coal Technologies, Inc Case
No. 4D17-2751, the Fourth District Court of Appeal of the State of
Florida issued a Non-final Opinion on July 12, 2018
unanimously affirming the Order Granting Defendants Motion for
Judgment Notwithstanding the Verdict and Order Denying Plaintiff’s
Motion for Additur entered by the Circuit Court for the Fifteenth
Judicial Circuit, Palm Beach County, Florida Case No.
502010CA028706XXXXMB in favor of Clean Coal Technologies, Inc on
August 1 2017. The fifteen day remedy period for the plaintiff to
appeal expired on July 27, 2018 with no motion made. This case is
now closed.
In April 2018, following mediation with a vendor of an outstanding
balance, the Company successfully won the case and the balance of
$320,669 was waived. The company had previously recognized the
$320,669 balance in accounts payable, which was reversed in April
2018 and recognized as a gain on debt settlement.
As part of the separation agreement with Mr. Ponce de Leon, the
ex-Chief Operating Officer of the Company, the Company agreed to
pay him his accrued salary of $1,226,711 within two years but
agreed to pay him $200,000 by November 2015 out of revenues earned.
As the Company did not earn revenue in 2015 and as at December 2019
has still not earned revenue, the obligation to Mr. Ponce de
Leon is currently in default and as at December 31, 2019 has
accrued interest of $269,878 and totals $1,496,589 at December 31,
2019. It is the Company’s intention to pay Mr. Ponce de Leon these
amounts as soon as possible after receiving revenue sufficient to
cover such a payment.
PART II
ITEM 5. MARKET FOR REGISTRANT’S
COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASE OF
EQUITY SECURITIES
Market Information
Our common stock is quoted on the OTC Markets Group website under
the symbol CCTC since October 12, 2007. The following table sets
forth the high and low bid prices for the Company’s common stock
for the periods indicated. The prices below reflect inter-dealer
quotations, without retail mark-up, mark-down or commissions and
may not represent actual transactions.
|
Quarter Ended
|
|
Low
|
|
|
High
|
|
|
31-Dec-19
|
|
$ |
0.06 |
|
|
$ |
0.08 |
|
|
30-Sep-19
|
|
$ |
0.07 |
|
|
$ |
0.12 |
|
|
30-Jun-19
|
|
$ |
0.07 |
|
|
$ |
0.13 |
|
|
31-Mar-19
|
|
$ |
0.08 |
|
|
$ |
0.10 |
|
|
31-Dec-18
|
|
$ |
0.08 |
|
|
$ |
0.29 |
|
|
30-Sep-18
|
|
$ |
0.07 |
|
|
$ |
0.10 |
|
|
30-Jun-18
|
|
$ |
0.07 |
|
|
$ |
0.10 |
|
|
31-Mar-18
|
|
$ |
0.09 |
|
|
$ |
0.12 |
|
The closing price of our common stock as quoted on the OTC Markets
on March 01, 2020 was $0.07 per share. As of March 07, 2020, there
were approximately 2,205 holders of record of our common stock and
181,347,218 shares of common stock outstanding based on information
provided by our transfer agent, Worldwide Stock Transfer, LLC.
Dividends
We have not paid any dividends on our common stock since our
inception and do not anticipate paying any dividends in the
foreseeable future. Any future determination to pay dividends will
be at the discretion of our Board of Directors and will be
dependent upon then-existing conditions, including our financial
condition, results of operations, contractual restrictions, capital
requirements, business prospects and other factors our Board of
Directors deems relevant.
Issuer Purchases of Equity Securities
During the year ended December 31, 2019, we did not purchase any of
our own equity securities.
Recent Issues and Sales of Unregistered Securities
The total number of common shares issued and outstanding as of
December 31, 2019 was 181,347,218.
The above securities were issued in reliance on the exemption from
registration pursuant to Section 4(2) of the Securities Act of
1933, as amended, and the regulations promulgated thereunder. The
issuances were for investment received, the transactions were
privately negotiated and none involved any kind of public
solicitation.
Issued for Services
During the year ended December 31, 2019, Clean Coal issued an
aggregate of 5,044,364 common shares for services rendered valued
at $504,437 to consultants and employees.
The above shares were issued in reliance on the exemption from
registration pursuant to Section 4(2) of the Securities Act of
1933, as amended, and the regulations promulgated there under. The
transactions were issuances for services performed, the
transactions were all privately negotiated and none involved any
kind of public solicitation.
Issued for Convertible Debt
During the year ended December 31, 2019, Clean Coal issued
1,875,000 common shares for convertible notes payable valued at
$150,000.
ITEM 6. SELECTED FINANCIAL
DATA
We are a “Smaller Reporting Company” as defined under §229.10(f)(1)
of Regulation S-K and are not required to provide the information
required by this Item.
ITEM 7. MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
FORWARD-LOOKING STATEMENTS AND FACTORS THAT MAY AFFECT FUTURE
RESULTS
This Annual Report on Form 10-K contains forward-looking
statements (as referenced in Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934) that
involve risks and uncertainties, as well as assumptions that, if
they do not materialize or prove correct, could cause our results
to differ materially from those expressed or implied by such
forward-looking statements. All statements other than statements of
historical fact are statements that could be deemed forward-looking
statements, including, but not limited to, statements concerning:
our plans, strategies and objectives for future operations; new
products or developments; future economic conditions, performance
or outlook; the outcome of contingencies; expected cash flows or
capital expenditures; our beliefs or expectations; activities,
events or developments that we intend, expect, project, believe or
anticipate will or may occur in the future; and assumptions
underlying any of the foregoing. Forward-looking statements may be
identified by their use of forward-looking terminology, such as
“believes,” “expects,” “may,” “should,” “would,” “will,” “intends,”
“plans,” “estimates,” “anticipates,” “projects” and similar words
or expressions. You should not place undue reliance on these
forward-looking statements, which reflect our management’s opinions
only as of the date of the filing of this Annual Report on Form
10-K and are not guarantees of future performance or actual
results.
Overview
Over the past decade, Clean Coal Technologies, Inc. has developed
processes that address what we believe are the key technology
priorities of the global coal industry. We currently have three
processes in our intellectual property portfolio:
The original process, called Pristine, is designed to remove
moisture and volatile matter, rendering a high-efficiency, cleaner
thermal coal. The process has been tested successfully
on bituminous and subbituminous coals, and lignite from various
parts of the United States and from numerous countries around the
world.
Our second process, called Pristine-M, is a low-cost coal
dehydration technology. In tests, this process has succeeded in
drying coal economically and stabilizing it using volatile matter
released by the feed coal. Construction of our coal testing plant
was completed in December 2015 and was successfully tested through
April 2016 at AES Coal Power Utility in Oklahoma. Additional tests
commenced and were completed in the fourth quarter of 2017. This
test facility has been moved from AES to Wyoming where reassembly
has commenced and testing of international coal is expected upon
completion of the reassembly. Changes identified to the process by
the University of Wyoming and our EPC contractors will be included
in the reassembly and it is expected to provide a higher quality
end product with a lower capital cost for a commercial unit. The
reassembly is expected to be completed no later than Q2 2020.
Our third process, called Pristine-SA, is designed to eliminate
100% of the volatile matter in the feed coal and to achieve stable
combustion by co-firing it with biomass or natural
gas. The process is expected to produce a cleaner fuel
that eliminates the need for emissions scrubbers and the corollary
production of toxic coal ash. We anticipate that treated
coal that is co-fired with other energy resources will burn as
clean as natural gas.
Anticipated Benefits of the Technology:
|
|
•
|
Reduction of undesired emissions and greenhouse gases through the
removal of compounds that are not required for combustion in
conventional boilers.
|
|
|
•
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Cost savings and environmental impact reduction. Our pre-combustion
solution is expected to be significantly less expensive than
post-combustion solutions such as emissions
scrubbers. Not only are the latter prohibitively
expensive, they produce coal ash containing the “scrubbed”
compounds, which is dumped in toxic waste disposal sites where it
may pose continuing environmental risk. Coal treated
using our processes may eliminate the need for post-combustion
emissions scrubbers and the resulting toxic ash. By beneficiating
the coal it requires less coal to be consumed to achieve the same
energy output. This will save on transportation and handling
costs.
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|
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•
|
Potential use of compounds removed from treated coal. Volatile
matter captured in the Pristine process is removed in the form of
hydrocarbon liquids that we believe will be easily blended with
crude oil or used as feedstock for various products. For
example, sulfur, which can be removed using the Pristine process,
is a basic feedstock for fertilizer. The harvesting of
hydrocarbon liquids from abundant, cheaper coal is a potentially
lucrative side benefit of our processes. All coal by-products
including Rare Earth Minerals extraction will be tested in the
second-generation facility.
|
Successful testing of the Pristine M process resulted in an
increase in BTU of the processed coal and a reduction in moisture
content making it less expensive to transport (as moisture has been
removed) with the end product being a dust free stabilized enhanced
coal which we believe will address the issue of coal dust pollution
during transportation.
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|
•
|
Energy Independence. To the extent that volatile matter
is removed from coal, coal’s use as an energy resource is greatly
improved, enabling coal-rich countries to move towards energy
independence owing to coal’s greater abundance. Extraction of
by-products including Rare Earth Minerals is also expected to
provide coal derivative product independence.
|
Development Status:
Pristine process. Pristine process successfully lab tested on small
scale and through advanced computer modeling. As at February, 2020,
various aspects of the Pristine process were successfully tested at
our test facility at the AES coal Power plant in Oklahoma as part
of the overall testing of Pristine M. The second-generation
facility in Wyoming is expected to perform a more detailed testing
of the Pristine process.
Pristine-M. Testing of the Pristine M process on Powder River Basin
coal at the AES facility in Oklahoma was completed in December
2017. The Pristine M process was successfully tested and the
process, engineering and science were independently proven. The
test facility was moved from the AES location to Wyoming where
reassembly commenced in Q4 2019 and testing of international coal
is expected upon completion of reassembly. The reassembly is
expected to be completed no later than Q2 2020. Over several months
in 2018 and early 2019 the University of Wyoming independently
validated the Pristine M process in their
laboratory.
Pristine-SA process. Pristine SA process analysis is at a very
early stage. Further research and development is expected using the
test facility at its permanent location in Wyoming.
Business Outlook
|
|
•
|
Wyoming New Power, a related party company, has agreed to sign a
two million ton per annum license agreement to use Pristine M at a
location in Wyoming. They have paid a non-refundable $100,000
deposit on the license agreement. The definitive license agreement
is expected to be signed following the receipt of commercial design
which will incorporate the suggested changes proposed by the
University of Wyoming and our EPC contractor. Wyoming New Power is
a Related Party because it is controlled by a party that also
controls the entity, which is the major lender and significant
stockholder of the Company.
|
|
|
•
|
Jindal Steel & Power is expected to send though their coal for
sampling immediately following the plants re-assembly. The bespoke
commercial facility design is expected after the testing.
In Q2, 2019 the Company signed a non binding MOU with Universitas
Indonesia in a combined effort to assess the impact of our
technology on Indonesian Coal both from a coal beneficiation
perspective and also coal by-products.
The second-generation test facility will have the capability of
producing Char. There is local Wyoming demand for this product that
the company expects to sell.
|
|
|
•
|
The Company entered into a partnership with the University of
Wyoming with the sole focus of using our suite of technologies to
increase the use of and value of Wyoming Powder River Basin coal.
Primary focus is on utilizing our technology to extract valuable
derivative products from coal. Changes to the process have been
identified by the University and the company EPC engineers and will
be incorporated in the reassembly of the facility in Wyoming. The
University confirmed in Q2, 2019 that they had successfully
validated the Pristine M process in their laboratory and as a
result entered into an agreement with the Company. The agreement
between the University and the Company is for the reassembly of the
second generation test facility. The University will advance to the
EPC contractor on a two to one basis up to $500,000 in 2019 and
additional $500,000 in 2020. The company will need to first pay
$1,000,000 per year for 2019 and 2020, in order for the University
to advance their portion of the funds. As of the date of this
filing the University has advanced a total of $411,640 directly to
the manufacturer of the Rotary Kiln. An additional $500,000 will be
paid to the manufacturer in 2020 by the University. These payments
are part of the $500,000 grant that was awarded to the company in
2019.
|
|
|
•
|
The Company has been engaged with AusTrade (The Australian Trade
and Investment Commission) and through that relationship has
partnered with three separate universities in Australia. Like the
University of Wyoming these Universities have a focus on their
local coal both from a beneficiation perspective and also
extracting derivative by products from coal using our technology.
The Company received full Australian patents in Q2, 2019 so the
company plans to move forward with this relationship in Q2 2020
following the assembly of the second-generation test
facility.
|
|
|
•
|
The Company continues in discussions with the Minister for Coal in
India and a number of the Energy governmental bodies in India. Coal
samples are expected to be sent for testing once the Second
Generation Test Facility is assembled which is expected in Q2,
2020.
|
|
|
•
|
Meetings occurred in Q2, 2019 with the US DOE, DOD and Wyoming
State Representatives to further our technology to benefit US coal.
These discussions continue through February, 2020 in light of the
recent coal mining bankruptcies in Wyoming.
|
Employees
As of December 31, 2019, we had two full-time executives. President
and CEO Robin Eves, Chief Operations Officer and Aiden Neary, Chief
Financial Officer have written employment agreements. Messrs. Eves
and Neary received no compensation for their participation on the
Board of Directors.
Factors Affecting Results of Operations
Our operating expenses include the following:
|
●
|
Consulting expenses, which consist primarily of amounts paid for
technology development and design and engineering services;
|
|
●
|
General and administrative expenses, which consist primarily of
salaries, commissions and related benefits paid to our employees,
as well as office and travel expenses;
|
|
●
|
Research and development expenses, which consist primarily of
equipment and materials used in the development and testing of our
technology; and
|
|
●
|
Legal and professional expenses, which consist primarily of amounts
paid for patent protections, audit, disclosure, and reporting
services.
|
Results of Operations
The following information should be read in conjunction with the
financial statements and notes appearing elsewhere in this Report.
We have generated limited revenues from inception to date. We
anticipate that we may not receive any significant revenues from
operations until we begin to receive royalty revenues from our coal
testing plant which we estimate will be approximately 12 months
after the successful signing of a commercial agreement anticipated
in quarter three of fiscal 2020 We are also in preliminary
discussions with companies, business groups, consortiums in the USA
and Asia to license our technology, which, if successful, could
realize limited short-term revenue opportunities from the signing
of technology licensing agreements.
For the Years Ended December 31, 2019, and
2018.
We had no direct revenues for the years ended December 31, 2019 and
2018. In the fourth quarter of 2017 we received $100,000 as a non-
refundable deposit on a two million ton license agreement from
Wyoming New Power, a related party. The definitive license
agreement is expected to be completed in 2020 following the
assembly of the second generation test facility. In the year
ended December 31, 2012, we have received an initial license fee of
$375,000 from Jindal paid pursuant to the signing of our coal
testing plant construction contract. The balance of $375,000 will
be due upon the successful testing of Jindal coal in our second
generation test facility in Wyoming. We do not anticipate any
significant royalty fees for approximately 12-18 months
thereafter.
Operating Expenses
Our operating expenses for the year ended December 31, 2019 totaled
$2,061,978 compared to $2,745,129 for the prior year. The $683,151
decrease is mainly due to a $775,889 decrease in general and
administrative expenses, $186,969 decrease in research and
development expenses and $60,726 decrease in consulting services
during 2019 as a result of winding down the administrative support
and development of our Pristine M technology in late 2018 and early
2019. The decreases are partially offset by a $322,133 decrease in
gains on forgiveness of accounts payable and a $18,300 decrease in
gain on sale of assets.
Other Income and Expenses
Total other expenses for the year ended December 31, 2019 were
$2,968,470, compared to $2,814,571 for the year ended December 31,
2018. Other expenses consists of $2,669,079 in interest expense on
convertible debt and related amortization of debt discounts and
$299,391 in debt standstill and settlement expenses related to
convertible notes payable. During the year ended December 31, 2018,
we recognized $2,814,571 in interest expense.
Net Income/Loss
For the year ended December 31, 2019, we recognized a net loss of
$5,030,448, compared to a net loss of $5,559,700 for the year ended
December 31, 2018. The net loss for 2019 is due to $2,968,470 in
other expenses and $2,061,978 in operating expenses as discussed
above. The net loss for 2018 is due to $2,814,571 in interest
expense and operating expenses of $2,745,129 as discussed
above.
We anticipate losses from operations will increase during the next
twelve months due to anticipated increased payroll expenses as we
add necessary staff and increases in legal and accounting expenses
associated with maintaining a reporting company. We expect that we
will continue to have net losses from operations for several years
until revenues from operating facilities become sufficient to
offset operating expenses, unless we are successful in the sale of
licenses for our technology.
Liquidity and Capital Resources
We have generated minimal revenues since inception. We have
obtained cash for operating expenses through advances and/or loans
from affiliates and stockholders, the sale of common stock, the
issuance of loans and convertible debentures converted or
convertible to common stock and the receipt of $375,000 in license
fees from Jindal as described above.
Net Cash Used in Operating Activities.
During the years ended December 31, 2019 and 2018, we used
$1,605,781 and $2,775,728 in cash from operations, mainly due to
the net losses discussed above, net of non-cash operating expenses
of $1,921,582 and $1,769,793 in 2019 and 2018, respectively. Our
primary uses of funds in operations were payments made to our
consultants and employees, legal and professional costs as well as
travel and office expenses.
Net Cash Provided By Investing Activities.
During the year ended December 31, 2018, we received $18,300 in
proceeds from the sale of fixed assets. We had no cash flows from
investing activities in 2019.
Net Cash Provided by Financing Activities.
Net cash provided by financing activities during the years ended
December 31, 2019 and 2018 totaled $1,672,318 and $2,771,400,
respectively. We received $354,880 and $2,284,800 in cash from the
issuance of convertible debt from related parties, $641,000 and
$36,600 in cash from the issuance of notes payable to related
parties and $1,432,000 and $482,500 in cash from the issuance of
convertible notes payable during the years ended December 31, 2019
and 2018, respectively. We repaid $565,562 on convertible notes,
$165,000 on notes payable to related parties and $25,000 on
convertible notes payable to related parties in cash during the
year ended December 31, 2019 and repaid $32,500 in cash on notes
payable during the year ended December 31, 2018.
Cash Position and Outstanding Indebtedness.
Our total indebtedness at December 31, 2019 and 2018 was
$19,020,248 and $14,703,444, respectively, which consists of
$17,951,784 and $12,830,656 of current liabilities and $1,068,464
and $1,872,788 of long-term debt, respectively. Current liabilities
consist primarily of accounts payable, accounts payable to related
parties, short-term debt, related party convertible debt and
accrued liabilities. At December 31, 2019, we had current assets of
$131,501, consisting of $92,282 of cash and $39,219 of prepaid
assets. At December 31, 2018 we had current assets of $25,745 of
cash. Our working capital deficit at December 31, 2019 and 2018 was
$17,840,050 and $12,804,911, respectively.
Employees
As of December 31, 2019, we have two full-time executives,
President and CEO Robin Eves and Chief Operations Officer and Chief
Financial Officer Aiden Neary, who have written employment
agreements. Mr. Eves and Neary received no compensation for their
participation on the Board of Directors.
On July 1, 2019, we entered into two year employment agreements
with Robin Eves as President and Chief Executive Officer and Aiden
Neary as Chief Operating Officer, Chief Financial Officer and
director. Mr. Eves receives an annual salary of $519,750. Mr.
Neary receives an annual salary of $450,000. Each officer was also
granted 750,000 common shares upon signing the contract.
The terms of the agreements described above were negotiated by and
between the individuals and our Board of Directors based on the
qualifications and requirements of each individual and the needs of
the company.
Contractual Obligations and Commitments
We secured a permanent location in Gillette, Wyoming for our test
facility. The term of the lease is three years and calls for rent
of $36,000, prepaid.
We lease office space in New York, NY on a month to month basis, at
a monthly rate of $200 per month.
Our engineering consultants has tentatively estimated construction
costs for each one million short ton coal complete cleaning
facility of approximately $250 million (excluding land costs) or
costs and for a similar size Pristine-M-only facility of
approximately $30-35 million (excluding land costs). All
intellectual property rights associated with new art developed by
our engineering consultants remain our property.
We are also actively pursuing technology license and royalty
agreements in order to begin construction of other facilities
without incurring the capital costs associated with the
construction of future plants.
In November 2015, we entered into a month to month agreement with
South of the Rose communication to manage our Investor Relations
needs and manage social media requirements.
Construction of the coal testing plant was completed in 2015 and
testing commenced in December 2015 at the AES Coal Power Utility in
Oklahoma. As of December 31, 2019, we have paid $10,135,128 in
development costs. The facility was moved to Wyoming in the first
quarter of 2019. We anticipate that there will be an additional
cost of approximately $4 million to build the additional parts
required for the second generation test facility and for its
assembly.
Based on our current operational costs and including the capital
requirements for our project deployments, we estimate we will need
a total of approximately $6,000,000 to fund the Company for the
fiscal year 2020 and an additional $4,000,000 to continue for the
following fiscal year (2021) or until an initial commercial plant
is up and running.
Off-Balance Sheet Arrangements
We have not and do not have any relationships with unconsolidated
entities or financial partnerships, such as entities often referred
to as structured finance or special purpose entities, which would
have been established for the purpose of establishing off-balance
sheet arrangements or other contractually narrow or limited
purposes. Therefore, we do not believe we are exposed to any
financing, liquidity, market or credit risk that could arise if we
had engaged in such relationships.
ITEM 7A. QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to changes in prevailing market interest rates
affecting the return on our investments but do not consider this
interest rate market risk exposure to be material to our financial
condition or results of operations. We invest primarily in United
States Treasury instruments with short-term (less than one year)
maturities. The carrying amount of these investments approximates
fair value due to the short-term maturities. Under our current
policies, we do not use derivative financial instruments,
derivative commodity instruments or other financial instruments to
manage our exposure to changes in interest rates or commodity
prices.
ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA
Our financial statements required by this item are included on the
pages immediately following the Index to Financial Statements
appearing below.
FINANCIAL STATEMENTS INDEX
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of
Clean Coal Technologies, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Clean Coal
Technologies, Inc. (the “Company”) as of December 31, 2019 and
2018, and the related statements of operations, changes in
stockholders’ deficit, and cash flows for the years then ended, and
the related notes (collectively referred to as the “financial
statements”). In our opinion, the financial statements present
fairly, in all material respects, the financial position of the
Company as of December 31, 2019 and 2018, and the results of its
operations and its cash flows for the years then ended, in
conformity with accounting principles generally accepted in the
United States of America.
Going Concern Matter
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in
Note 3 to the financial statements, the Company has a working
capital deficit, has generated net losses since its inception and
further losses are anticipated. The Company requires additional
funds to meet its obligations and the costs of its operations.
These factors raise substantial doubt about its ability to continue
as a going concern. Management’s plans in regard to these matters
are also described in Note 3. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting
Oversight Board (United States) (“PCAOB”) and are required to be
independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error
or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial
reporting. As part of our audits we are required to obtain an
understanding of internal control over financial reporting but not
for the purpose of expressing an opinion on the effectiveness of
the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis
for our opinion.
/s/MaloneBailey, LLP
www.malonebailey.com
We have served as the Company’s auditor since 2008.
Houston, Texas
March 10, 2020
Clean Coal Technologies, Inc.
Balance Sheets
|
|
|
December 31,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
ASSETS
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$ |
92,282 |
|
|
$ |
25,745 |
|
|
Prepaid assets
|
|
|
39,219 |
|
|
|
- |
|
|
Total Current Assets
|
|
|
131,501 |
|
|
|
25,745 |
|
| |
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net of accumulated
depreciation of $1,019 and $1,019,
respectively
|
|
|
|
|
|
|
- |
|
|
Right to use ground lease, net of accumulated amortization of
$20,000 and $8,000, respectively
|
|
|
16,000 |
|
|
|
28,000 |
|
| |
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$ |
147,501 |
|
|
$ |
53,745 |
|
| |
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$ |
1,022,110 |
|
|
$ |
1,149,467 |
|
|
Accrued liabilities
|
|
|
7,671,748 |
|
|
|
6,071,160 |
|
|
Customer deposit – related party
|
|
|
100,000 |
|
|
|
100,000 |
|
|
Notes payable – related parties
|
|
|
754,600 |
|
|
|
86,600 |
|
|
Notes payable
|
|
|
413,185 |
|
|
|
413,185 |
|
|
Convertible debt, net of unamortized discounts
|
|
|
1,396,682 |
|
|
|
489,840 |
|
|
Convertible debt, net of unamortized discounts – related party
|
|
|
6,593,459 |
|
|
|
4,520,404 |
|
|
Total Current Liabilities
|
|
|
17,951,784 |
|
|
|
12,830,656 |
|
| |
|
|
|
|
|
|
|
|
|
Long-Term Liabilities
|
|
|
|
|
|
|
|
|
|
Convertible debt, net of unamortized discounts – related party
|
|
|
1,068,464 |
|
|
|
1,872,788 |
|
|
Total Liabilities
|
|
|
19,020,248 |
|
|
|
14,703,444 |
|
| |
|
|
|
|
|
|
|
|
|
Stockholders’ Deficit
|
|
|
|
|
|
|
|
|
|
Common stock, $0.00001 par value 500,000,000 shares
authorized, 181,347,218 and 174,427,854 shares
issued and outstanding, respectively
|
|
|
1,815 |
|
|
|
1,745 |
|
|
Additional paid-in capital
|
|
|
260,127,550 |
|
|
|
259,320,220 |
|
|
Accumulated deficit
|
|
|
(279,002,112 |
)
|
|
|
(273,971,664 |
)
|
|
Total Stockholders’ Deficit
|
|
|
(18,872,747 |
)
|
|
|
(14,649,699 |
)
|
|
Total Liabilities and Stockholders’ Deficit
|
|
$ |
147,501 |
|
|
$ |
53,745 |
|
The accompanying notes are an integral part of these financial
statements.
Clean Coal Technologies, Inc.
Statements of
Operations
|
|
|
Years Ended
|
|
|
|
|
December 31,
|
|
|
|
|
2019
|
|
|
2018
|
|
| |
|
|
|
|
|
|
|
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
$ |
1,914,173 |
|
|
$ |
2,690,062 |
|
|
Consulting services
|
|
|
27,623 |
|
|
|
88,349 |
|
|
Gain on sale of assets
|
|
|
- |
|
|
|
(18,300 |
) |
|
Gain on settlement of accounts payable
|
|
|
- |
|
|
|
(322,133 |
)
|
|
Research and development
|
|
|
120,182 |
|
|
|
307,151 |
|
| |
|
|
|
|
|
|
|
|
|
Loss from Operations
|
|
|
(2,061,978 |
)
|
|
|
(2,745,129 |
)
|
| |
|
|
|
|
|
|
|
|
|
Other Income (Expenses):
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(2,669,079 |
)
|
|
|
(2,814,571 |
)
|
|
Debt default, standstill, settlement and transfer expenses
|
|
|
(299,391 |
)
|
|
|
- |
|
|
Total Other Income (Expenses)
|
|
|
(2,968,470 |
)
|
|
|
(2,814,571 |
)
|
| |
|
|
|
|
|
|
|
|
|
Net (loss)
|
|
$ |
(5,030,448 |
)
|
|
$ |
(5,559,700 |
)
|
| |
|
|
|
|
|
|
|
|
|
Net (loss) per share - basic
|
|
$ |
(0.03 |
)
|
|
$ |
(0.04 |
)
|
| |
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - basic
|
|
|
176,957,325 |
|
|
|
156,878,353 |
|
| |
|
|
|
|
|
|
|
|
|
Net (loss) per share – diluted
|
|
$ |
(0.03 |
)
|
|
$ |
(0.04 |
)
|
| |
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding – diluted
|
|
|
176,957,325 |
|
|
|
156,878,353 |
|
The accompanying notes are an integral part of these financial
statements.
Clean Coal Technologies, Inc.
Statements of Changes in
Stockholders’ Deficit
Years Ended December 31, 2019 and
2018
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
Stockholders’
|
|
|
|
|
Common Stock
|
|
|
Paid-In
|
|
|
Accumulated
|
|
|
Equity
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
(Deficit)
|
|
|
Balances at December 31, 2017
|
|
|
148,972,419 |
|
|
|
1,489 |
|
|
|
255,321,698 |
|
|
|
(268,411,964 |
)
|
|
|
(13,088,777 |
)
|
|
Common stock issued for conversion of debt and interest
|
|
|
19,186,333 |
|
|
|
192 |
|
|
|
1,534,715 |
|
|
|
- |
|
|
|
1,534,907 |
|
|
Common stock issued for officer bonus
|
|
|
5,792,829 |
|
|
|
59 |
|
|
|
514,857 |
|
|
|
|
|
|
|
514,916 |
|
|
Common stock issued for services
|
|
|
376,273 |
|
|
|
4 |
|
|
|
33,296 |
|
|
|
- |
|
|
|
33,300 |
|
|
Common stock issued for board of director services
|
|
|
100,000 |
|
|
|
1 |
|
|
|
7,999 |
|
|
|
- |
|
|
|
8,000 |
|
|
Beneficial conversion feature on convertible debt
|
|
|
- |
|
|
|
- |
|
|
|
1,907,655 |
|
|
|
- |
|
|
|
1,907,655 |
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,559,700 |
)
|
|
|
(5,559,700 |
)
|
|
Balances at December 31, 2018
|
|
|
174,427,854 |
|
|
|
1,745 |
|
|
|
259,320,220 |
|
|
|
(273,971,664 |
)
|
|
|
(14,649,699 |
)
|
|
Common stock issued for convertible debt – related party
|
|
|
1,875,000 |
|
|
|
19 |
|
|
|
149,981 |
|
|
|
|
|
|
|
150,000 |
|
|
Common stock issued for officer bonus
|
|
|
4,408,000 |
|
|
|
44 |
|
|
|
440,756 |
|
|
|
- |
|
|
|
440,800 |
|
|
Common stock issued for services
|
|
|
636,364 |
|
|
|
7 |
|
|
|
63,630 |
|
|
|
- |
|
|
|
63,637 |
|
|
Beneficial conversion feature on convertible debt
|
|
|
- |
|
|
|
- |
|
|
|
152,963 |
|
|
|
- |
|
|
|
152,963 |
|
|
Net loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(5,030,448 |
)
|
|
|
(5,030,448 |
)
|
|
Balances at December 31, 2019
|
|
|
181,347,218 |
|
|
$ |
1,815 |
|
|
$ |
260,127,550 |
|
|
$ |
(279,002,112 |
)
|
|
$ |
(18,872,747 |
)
|
The accompanying notes are an integral part of these financial
statements.
Clean Coal Technologies, Inc.
Statements of Cash Flows
|
|
|
Years Ended
|
|
|
|
|
December 31,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$ |
(5,030,448 |
)
|
|
$ |
(5,559,700 |
)
|
|
Adjustment to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
|
Amortization of debt discounts
|
|
|
1,273,753 |
|
|
|
1,546,009 |
|
|
Amortization of lease asset
|
|
|
12,000 |
|
|
|
8,000 |
|
|
Common stock issued for officer bonus
|
|
|
440,800 |
|
|
|
514,916 |
|
|
Common stock issued for consulting expense
|
|
|
63,637 |
|
|
|
33,300 |
|
|
Common stock issued for board of director services
|
|
|
- |
|
|
|
8,000 |
|
|
Loan default and standstill fees
|
|
|
188,391 |
|
|
|
- |
|
|
Gain on settlement of accounts payable
|
|
|
- |
|
|
|
(322,133 |
)
|
|
Gain on sale of assets
|
|
|
- |
|
|
|
(18,300 |
) |
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Increase in prepaid expenses
|
|
|
(39,219 |
)
|
|
|
- |
|
|
Increase in right to use assets
|
|
|
- |
|
|
|
(36,000 |
)
|
|
Increase in accounts payable
|
|
|
(115,284 |
)
|
|
|
(796,908 |
) |
|
Increase in accrued expenses
|
|
|
1,600,588 |
|
|
|
1,847,087 |
|
|
Net Cash Used in Operating Activities
|
|
|
(1,605,781 |
)
|
|
|
(2,775,728 |
)
|
| |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Proceeds from the sale of fixed assets
|
|
|
- |
|
|
|
18,300 |
|
|
Net Cash Provided by Investing Activities
|
|
|
- |
|
|
|
18,300 |
|
| |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Borrowings on notes payable
|
|
|
1,432,000 |
|
|
|
482,500 |
|
|
Payments on notes payable
|
|
|
(565,562 |
)
|
|
|
- |
|
|
Borrowings on related party convertible debt, net of face discounts
and lender fees
|
|
|
354,880 |
|
|
|
2,284,800 |
|
|
Payments on related party convertible debt
|
|
|
(25,000 |
)
|
|
|
- |
|
|
Borrowings on related party debt
|
|
|
641,000 |
|
|
|
36,600 |
|
|
Payments on related party debt
|
|
|
(165,000 |
)
|
|
|
(32,500 |
)
|
|
Net Cash Provided by Financing Activities
|
|
|
1,672,318 |
|
|
|
2,771,400 |
|
| |
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH
|
|
|
66,537 |
|
|
|
13,972 |
|
|
CASH - beginning of period
|
|
|
25,745 |
|
|
|
11,773 |
|
|
CASH - end of period
|
|
$ |
92,282 |
|
|
$ |
25,745 |
|
The accompanying notes are an integral part of these unaudited
financial statements.
Clean Coal Technologies, Inc.
Statements of Cash Flows
(continued)
|
|
|
Years Ended
|
|
|
|
|
December 31,
|
|
|
|
|
2019
|
|
|
2018
|
|
| |
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES:
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$ |
- |
|
|
$ |
- |
|
|
Cash paid for income taxes
|
|
$ |
- |
|
|
$ |
- |
|
| |
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Beneficial conversion feature on convertible debt, related
party
|
|
$ |
152,963 |
|
|
$ |
1,907,655 |
|
|
Common stock issued for conversion of debt and accrued interest–
related party
|
|
$ |
150,000 |
|
|
$ |
1,534,907 |
|
|
Convertible debt, related party, issued for payment of Company
expenses
|
|
$ |
12,073 |
|
|
$ |
- |
|
|
Notes payable – related party issued for convertible note principal
in extension fees payable
|
|
$ |
135,000 |
|
|
|
|
|
The accompanying notes are an integral part of these financial
statements.
Clean Coal Technologies, Inc.
Notes to Financial
Statements
NOTE 1: NATURE OF BUSINESS
Clean Coal Technologies, Inc. (“CCTI”, the “Company”, “Clean Coal”,
“we”, “our”), a Nevada corporation, is developing a patented
multi-stage process that transforms coal with high levels of
impurities, contaminants and other polluting elements into an
exceptionally efficient, clean and inexpensive source of high
energy, low polluting fuel.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
The Company’s financial statements are prepared using the accrual
method in accordance with Generally Accepted Accounting Principles
in the United State of America (“GAAP”). Certain amounts have been
reclassified to conform to the current period’s presentation
including Notes payable; Notes payable – related parties; short and
long term Convertible debt, net of unamortized discounts; short and
long term Convertible debt, net of unamortized discounts – related
party.
Use of Estimates
The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure on
contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Revenue Recognition
On January 1, 2018, the Company adopted ASU 2014-09 Revenue from
Contracts with Customers (ASU 2014-09) and all subsequent
amendments to the ASU, which (i) creates a single framework for
recognizing revenue from contracts with customers that fall within
its scope and (ii) revises when it is appropriate to recognize a
gain (loss) from the transfer of nonfinancial assets. The core
principle of ASU 2014-09 is that revenue is recognized when the
transfer of goods or services to customers occurs in an amount that
reflects the consideration to which the Company expects to be
entitled in exchange for those goods or services. ASU 2014-09
requires the disclosure of sufficient information to enable readers
of the Company’s financial statements to understand the nature,
amount, timing and uncertainty of revenue and cash flows arising
from customer contracts. ASU 2014-09 also requires disclosure of
information regarding significant judgments and changes in
judgments, and assets recognized from costs incurred to obtain or
fulfill a contract. ASU 2014-09 provides two methods of
retrospective application, full and modified retrospective. Full
retrospective requires companies to apply ASU 2014-09 to each prior
reporting period presented while modified retrospective requires
companies to retrospectively apply ASU 2014-09 with the cumulative
effect recognized at the date of initial application. The Company
elected to adopt ASU 2014-09 using the modified retrospective
application effective for the quarter ending March 31, 2018, with
no impact the Company’s financial statements as it has no current
contracts for revenue generating activities and a limited history
of generating revenue from operations as discussed below.
The Company generated revenue in 2012 related to license fees
received for the use of its technology. The license fee revenue
requires no continuing performance on the Company’s part and is
recognized upon receipt of the licensing fee and grant of the
license.
During 2012, the Company granted a 25-year technology license
agreement for a one-time license fee of $750,000. The first
installment of the license fee of $375,000 has been collected
pursuant to the signing of a coal testing plant construction
contract and the balance of $375,000 will be due upon the
successful testing of the coal testing plant, estimated sometime in
fiscal 2020. In addition, under the technology license agreement,
the Company will receive an on-going royalty fee of $1 per metric
ton on all coal processed using the technology, up to $4,000,000
per annum. No revenue has been earned in 2019 or 2018.
Net Loss per Common Share
Basic net loss per share is computed on the basis of the weighted
average number of common shares outstanding during each year.
Diluted net loss per share is computed similar to basic net loss
per share except that the denominator is increased to include the
number of additional common shares that would have been outstanding
if the potential common shares had been issued and if the
additional common shares were dilutive. The Company uses the
“if-converted” method for calculating the earnings per share impact
of outstanding convertible debentures, whereby the securities are
assumed converted and an earnings per incremental share is
computed. Options, warrants and their equivalents are included in
EPS calculations through the treasury stock method. In periods
where losses are reported, the weighted-average number of common
stock outstanding excludes common stock equivalents, because their
inclusion would be anti-dilutive.
The calculation of basic and diluted net loss per share for the
years ended December 31, 2019 and 2018 are as follows:
|
|
|
2019
|
|
|
2018
|
|
|
Basic Net Loss Per Share:
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$ |
(5,030,448 |
)
|
|
$ |
(5,559,700 |
)
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding
|
|
|
176,957,325 |
|
|
|
156,878,353 |
|
| |
|
|
|
|
|
|
|
|
|
Basic net loss per share
|
|
$ |
(0.03 |
)
|
|
$ |
(0.04 |
)
|
| |
|
|
|
|
|
|
|
|
|
Diluted Net Loss Per Share:
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$ |
(5,030,448 |
)
|
|
$ |
(5,559,700 |
)
|
|
Diluted net loss
|
|
$ |
(5,030,448 |
)
|
|
$ |
(5,559,700 |
)
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding
|
|
|
176,957,325 |
|
|
|
156,878,353 |
|
|
Common stock warrants
|
|
|
- |
|
|
|
- |
|
|
Convertible debt
|
|
|
- |
|
|
|
- |
|
|
Weighted average shares used in computing diluted net loss per
share
|
|
|
176,957,325 |
|
|
|
156,878,353 |
|
| |
|
|
|
|
|
|
|
|
|
Diluted net loss per share
|
|
$ |
(0.03 |
)
|
|
$ |
(0.04 |
)
|
The following table summarizes the potential shares of common stock
that were excluded from the computation of diluted net loss per
share for the years ended December 31, 2019 and 2018 as such shares
would have had an anti-dilutive effect:
|
|
|
2019
|
|
|
2018
|
|
|
Common stock warrants
|
|
|
2,852,329 |
|
|
|
7,146,616 |
|
|
Convertible notes payable
|
|
|
148,704,866 |
|
|
|
120,187,899 |
|
|
Total
|
|
|
151,557,195 |
|
|
|
127,334,515 |
|
Cash and Cash Equivalents
Clean Coal considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents for
purposes of preparing its Statements of Cash Flows. There are no
cash equivalents at December 31 2019 and 2018.
Federal Income Tax
Clean Coal files income tax returns in the U.S. federal
jurisdiction, and the state of Nevada. Clean Coal’s policy is to
recognize interest accrued related to unrecognized tax benefits in
interest expense and penalties in operating expenses.
Deferred taxes are provided on a liability method whereby deferred
tax assets are recognized for deductible temporary differences and
operating loss and tax credit carry forwards and deferred tax
liabilities are recognized for taxable temporary differences.
Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax bases. Deferred tax
assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of
the deferred tax assets will not be realized. Deferred tax assets
and liabilities are adjusted for the effects of changes in tax laws
and rates on the date of enactment.
Net deferred tax assets consist of the following components as of
December 31, 2019 and 2018:
|
|
|
2019
|
|
|
2018
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
|
Net operating loss carryforward
|
|
$ |
8,167,076 |
|
|
$ |
7,485,004 |
|
|
Valuation allowance
|
|
|
(8,167,076 |
)
|
|
|
(7,485,004 |
)
|
|
|
|
$ |
- |
|
|
$ |
- |
|
The federal income tax provision differs from the amount of income
tax determined by applying the U.S. federal income tax rate of 21%
to pretax income from continuing operations for the years ended
December 31, 2019 and 2018 due to the following:
|
|
|
2019
|
|
|
2018
|
|
|
Pre-tax book loss
|
|
$ |
(1,056,394 |
)
|
|
$ |
(1,167,537 |
)
|
|
Meals
|
|
|
902 |
|
|
|
830 |
|
|
Common stock issued for services
|
|
|
105,932 |
|
|
|
116,805 |
|
|
Debt discount amortization
|
|
|
267,488 |
|
|
|
324,662 |
|
|
Gain on debt settlement
|
|
|
- |
|
|
|
(67,647 |
)
|
|
Valuation allowance
|
|
|
682,072 |
|
|
|
792,887 |
|
|
|
|
$ |
- |
|
|
$ |
- |
|
The Company had net operating losses of approximately $38,890,841
that begin to expire in 2029. Due to the change in ownership
provisions of the Tax Reform Act of 1986, net operating loss
carryforwards for Federal income tax reporting purposes are subject
to annual limitations. Should a change in ownership occur, net
operating loss carryforwards may be limited as to use in future
years. In accordance with the statute of limitations for federal
tax returns, the Company’s federal tax returns for the years 2015
through 2018 are subject to examination.
Property and Equipment
Property and equipment consists of furniture and fixtures and
computer equipment, recorded at cost, depreciated upon placement in
service over estimated useful lives ranging from three to five
years on a straight-line basis. As of December 31, 2019 and 2018,
Clean Coal had property and equipment with no net book value.
Expenditures for normal repairs and maintenance are charged to
expense as incurred.
Impairment of Long Lived Assets
In the event facts and circumstances indicate the carrying value of
a long-lived asset, including associated intangibles, may be
impaired, an evaluation of recoverability is performed by comparing
the estimated future undiscounted cash flows associated with the
asset to the asset’s carrying amount to determine if a write-down
to market value or discounted cash flow is required.
Research and Development Costs
Research and development expenses include salaries, related
employee expenses, research expenses and consulting fees. All costs
for research and development activities are expensed as incurred.
Clean Coal expenses the costs of licenses of patents and the
prosecution of patents until the issuance of such patents and the
commercialization of related products is reasonably assured. During
the years ended December 31, 2019 and 2018, the Company recognized
$120,182 and $307,151 of research and development costs,
respectively.
Stock-based Compensation
FASB ASC 718 established financial accounting and reporting
standards for stock-based employee compensation plans. It defines a
fair value based method of accounting for an employee stock option
or similar equity instrument. Clean Coal accounts for stock-based
compensation to employees in accordance with FASB ASC 718.
Fair Value of Financial Instruments
ASC 820, Fair Value Measurements (ASC 820) and ASC 825,
Financial Instruments (ASC 825), requires an entity
to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value. It establishes a
fair value hierarchy based on the level of independent, objective
evidence surrounding the inputs used to measure fair value. A
financial instrument’s categorization within the fair value
hierarchy is based upon the lowest level of input that is
significant to the fair value measurement. It prioritizes the
inputs into three levels that may be used to measure fair
value:
Level 1 - Level 1 applies to assets or liabilities for which
there are quoted prices in active markets for identical assets or
liabilities.
Level 2 - Level 2 applies to assets or liabilities for which
there are inputs other than quoted prices that are observable for
the asset or liability such as quoted prices for similar assets or
liabilities in active markets; quoted prices for identical assets
or liabilities in markets with insufficient volume or infrequent
transactions (less active markets); or model-derived valuations in
which significant inputs are observable or can be derived
principally from, or corroborated by, observable market data.
Level 3 - Level 3 applies to assets or liabilities for which
there are unobservable inputs to the valuation methodology that are
significant to the measurement of the fair value of the assets or
liabilities.
The carrying values of cash, accounts payable, and accrued
liabilities approximate fair value. Pursuant to ASC 820 and 825,
the fair value of cash is determined based on “Level 1” inputs,
which consist of quoted prices in active markets for identical
assets. As of December 31, 2019 and 2018, the fair value of
long-term convertible debt and the recorded values of all other
financial instruments approximate their current fair values because
of their net amounts, nature and, or, respective maturity dates or
durations.
Derivative Instruments
The Company accounts for derivative instruments in accordance with
ASC Topic 815, Derivatives and Hedging (ASC 815) and all
derivative instruments are reflected as either assets or
liabilities at fair value in the balance sheet.
The Company uses estimates of fair value to value its derivative
instruments. Fair value is defined as the price to sell an asset or
transfer a liability in an orderly transaction between willing and
able market participants. In general, The Company’s policy in
estimating fair values is to first look at observable market prices
for identical assets and liabilities in active markets, where
available. When these are not available, other inputs are used to
model fair value such as prices of similar instruments, yield
curves, volatilities, prepayment speeds, default rates and credit
spreads (including for The Company’s liabilities), relying first on
observable data from active markets. Additional adjustments may be
made for factors including liquidity, credit, bid/offer spreads,
etc., depending on current market conditions. Transaction costs are
not included in the determination of fair value. When possible, The
Company seeks to validate the model’s output to market
transactions. Depending on the availability of observable inputs
and prices, different valuation models could produce materially
different fair value estimates. The values presented may not
represent future fair values and may not be realizable. The Company
categorizes its fair value estimates in accordance with ASC 820
based on the hierarchical framework associated with the three
levels of price transparency utilized in measuring financial
instruments at fair value as discussed above. As of December 31,
2019 and 2018, the Company did not have any derivative
instruments.
Recently Issued Accounting Pronouncements
The Company has implemented all new accounting pronouncements that
are in effect and that may impact its financial statements. The
Company does not believe that there are any other new accounting
pronouncements that have been issued that might have a material
impact on its financial position or results of operations.
In June 2018, the Financial Accounting Standards Board (FASB)
issued ASU 2018-07, Compensation—Stock Compensation (Topic
718): Improvements to Nonemployee Share-Based Payment
Accounting. ASU 2018-07 simplifies the accounting for
share-based payments to nonemployees by aligning it with the
accounting for share-based payments to employees, with certain
exceptions. ASU 2018-07 is effective for fiscal years beginning
after December 15, 2018. The Company adopted the new standard on
January 1, 2019 without a material impact on our financial
statements.
In July 2017, the FASB issued ASU 2017-11, Earnings Per
Share (Topic 260) Distinguishing Liabilities from Equity
(Topic 480) Derivatives and Hedging (Topic 815): I. Accounting for
Certain Financial Instruments with Down Round Features, II.
Replacement of the Indefinite Deferral for Mandatorily Redeemable
Financial Instruments of Certain Nonpublic Entities and Certain
Mandatorily Redeemable Noncontrolling Interests with a Scope
Exception. Part I of Topic 260 eliminates the requirement to
consider “down round” features when determining whether certain
equity-linked financial instruments or embedded features are
indexed to an entity’s own stock. The ASU 2017-11 amendments in
Part I are effective for fiscal years, and interim periods within
those fiscal years, beginning after December 15, 2018. The Company
adopted the new standard on January 1, 2019 without a material
impact on our financial statements.
NOTE 3: GOING CONCERN
The accompanying financial statements have been prepared on a going
concern basis of accounting which contemplates continuity of
operations, realization of assets, liabilities, and commitments in
the normal course of business. The accompanying financial
statements do not reflect any adjustments that might result if
Clean Coal is unable to continue as a going concern. Clean Coal has
a working capital deficit as of December 31, 2019 and has generated
recurring net losses since inception. Management believes Clean
Coal will need to raise capital in order to operate over the next
12 months. Clean Coal’s continuation as a going concern is
dependent upon its ability to generate sufficient cash flow to meet
its obligations on a timely basis and ultimately to attain
profitability. Clean Coal has limited capital with which to pursue
its business plan. There can be no assurance that Clean Coal’s
future operations will be significant and profitable, or that Clean
Coal will have sufficient resources to meet its objectives. These
conditions raise substantial doubt as to Clean Coal’s ability to
continue as a going concern. Management may pursue either debt or
equity financing or a combination of both, in order to raise
sufficient capital to meet Clean Coal’s financial requirements over
the next twelve months and to fund its business plan. There is no
assurance that management will be successful in raising additional
funds.
NOTE 4: RELATED PARTY TRANSACTIONS
Wages and bonus payable to related parties
Accruals for salary and bonuses to officers and directors are
included in accrued liabilities in the balance sheets and totaled
$3,090,052 and $2,719,653 as of December 31, 2019 and 2018,
respectively. As part of the separation agreement with Mr. Ponce de
Leon, the Company agreed to pay him all his accrued salary within
two years but agreed to pay him $200,000 by November 2015 out of
revenues earned. As the Company did not earn revenue in 2015 and as
at December 2019 has still not earned revenue, the obligation
to Mr. Ponce de Leon of $1,594,725 is currently in default and the
amount includes $368,011 in accrued interest. It is the Company’s
intention to pay Mr. Ponce de Leon immediately upon receiving
revenue.
Nonconvertible Debt
During the years ended December 31, 2019 and 2018, the Company
received $590,000 and $35,000 from the issuance of related party
notes payable to an affiliate. The notes are due on demand and do
not accrue interest. As of December 31, 2019 and 2018, the Company
had outstanding notes payable to affiliates of the Company of
$675,000 and 85,000, respectively. These notes payable of the
Company are unsecured, bear no interest and are due on demand.
During the years ended December 31, 2019 and 2018, the Company
received $243,000 and $1,600 from related party advances,
respectively. The Company repaid $165,000 and $0 on these advances
during the years ended December 31, 2019 and 2018, respectively.
The advances are due on demand and do not accrue interest. As of
December 31, 2019 and 2018, the Company had outstanding advances
payable to an officer of the Company of $79,600 and $1,600,
respectively. The advances payable are unsecured, bear no interest
and are due on demand.
Convertible Debt
2019
During the year ended December 31, 2019, the Company borrowed
an aggregate of $366,653, net of beneficial conversion features of
$152,962, under convertible notes payable from a Company with an
interest owned by a significant stockholder. The convertible notes
are secured by assets and the common stock of the Company, bear
interest at 12% per annum, are convertible into shares of the
Company’s common stock at $0.06 per share and are due three years
from the dates of issuance. As of December 31, 2019, the Company
had outstanding short-term convertible notes payable of $6,593,469,
net of unamortized discounts of $658,922 and outstanding long-term
convertible notes payable of $2,626,753, net of unamortized
discounts of $1,558,289. The convertible notes payable matured
between November 2018 and November 2022 and are convertible at
$0.06 per share, which was a discount to the market price on the
date of issuance. Amortization expense related to debt discounts on
convertible debt for the year ended December 31, 2019 was
$1,229,740. As of December 31, 2019, $4,510,384 in convertible
notes are past due.
2018
During the year ended December 31, 2018, the Company borrowed
an aggregate of $2,284,800, net of beneficial conversion feature of
$1,907,655, under convertible notes payable from a Company with an
interest owned by a significant stockholder. The convertible notes
are secured by assets and the common stock of the Company, bear
interest at 12% per annum, are convertible into shares of the
Company’s common stock at $0.06 per share and are due three years
from the dates of issuance. As of December 31, 2018, the Company
had outstanding short-term convertible notes payable of $4,660,381,
net of unamortized discounts of $139,977 and outstanding long term
convertible notes payable of $5,026,800, net of unamortized
discounts of $3,154,012. The convertible notes payable mature
between November 2018 and December 2021 and are convertible at
$0.06 per share, which was a discount to the market price on the
date of issuance. Amortization expense related to debt discounts on
convertible debt for the year ended December 31, 2018 was
$1,506,170.
During the year ended December 31, 2018, the holder of convertible
debt elected to convert a total of $1,534,907 in principal into
19,186,333 shares of common stock, or $0.08 per share.
Outstanding notes payable and convertible notes payable to related
parties consisted of the following as of December 31, 2019 and
2018:
|
|
|
December 31,
|
|
|
Name
|
|
2019
|
|
|
2018
|
|
|
Convertible Debt:
|
|
|
|
|
|
|
|
|
|
Convertible notes payable, interest at 12%, convertible at $0.08
per share, unsecured, due May 25, 2019
|
|
$ |
1,302,566 |
|
|
$ |
1,452,566 |
|
|
Convertible note payable, interest at 12%, convertible at $0.12 per
share, unsecured, due between May 25, 2019 and August 1, 2019
|
|
|
1,630,073 |
|
|
|
1,630,073 |
|
|
Convertible notes payable, interest at 12%, convertible at $0.15
per share, unsecured, due between May 25, 2019 and March 31,
2020
|
|
|
1,799,742 |
|
|
|
1,799,742 |
|
|
Convertible notes payable, interest at 12%, convertible at $0.06
per share, unsecured, due between April 20, 2020 and November 22,
2022
|
|
|
5,146,753 |
|
|
|
4,804,800 |
|
|
Total
|
|
|
9,879,134 |
|
|
|
9,687,181 |
|
|
Less: short-term debt
|
|
|
(6,593,459 |
)
|
|
|
(4,520,404 |
)
|
|
Total long-term debt
|
|
|
3,285,675 |
|
|
|
5,166,777 |
|
|
Less: unamortized discounts
|
|
|
(2,217,211 |
)
|
|
|
(3,293,989 |
)
|
|
Net long-term debt
|
|
$ |
1,068,464 |
|
|
$ |
1,872,788 |
|
| |
|
|
|
|
|
|
|
|
|
Nonconvertible Debt:
|
|
|
|
|
|
|
|
|
|
Notes payable, no interest, unsecured, due upon demand
|
|
$ |
754,600 |
|
|
$ |
86,600 |
|
|
Total
|
|
$ |
754,600 |
|
|
$ |
86,600 |
|
Principal payments on convertible debt to related parties for each
of the following five years is as follows:
|
2020
|
|
$ |
7,252,381 |
|
|
2021
|
|
|
2,284,800 |
|
|
2022
|
|
|
341,953 |
|
|
2023
|
|
|
- |
|
|
2024
|
|
|
- |
|
|
Thereafter
|
|
|
- |
|
|
Total
|
|
$ |
9,879,134 |
|
Common Stock Issued to Related Parties
During May 2019, the Company issued two of its officers a total of
4,408,000 shares of common stock for services valued at $440,800.
The shares are not forfeitable and considered to be earned as of
the date of issuance.
During August 2019, the Company issued 1,875,000 shares of common
stock for the conversion of $150,000 related party convertible
notes payable, or the stated conversion price $0.08 per share.
During the year ended December 31, 2018, the Company issued a total
of 5,792,829 common shares for compensation to two officers, fair
value of $514,916 is recognized as expense during 2019.
During the year ended December 31, 2018, the Company issued 100,000
common shares for compensation to a member of the board of
directors, fair value of $8,000 is recognized as expense during
2019.
During the year ended December 31, 2018, the Company issued an
aggregate of 19,186,333 common shares to a related party
convertible note holder for conversion of $1,534,907 in
principal.
Non-Binding License Agreement – related party
During July 2017, the Company entered into a non-binding agreement
to explore the opportunity of engaging in a license of Clean Coal
Pristine M technology. As part of the non-binding agreement, in
September 2017, the Company received a non-refundable deposit of
$100,000, subject to application to any future license agreement,
from Wyoming New Power. The license agreement is for two million
tons per annum. The remainder of the license fee will be due upon
the signing of a definitive license agreement expected in 2020.
Wyoming New Power is a related party because it is controlled by an
entity that has a significant interest in Clean Coal Technologies,
Inc.
NOTE 5: DEBT
Notes Payable
As of December 31, 2019 and 2018, the Company had outstanding notes
payable to former affiliates of the Company of $413,185 and
$413,185, respectively. The notes payable are unsecured, bear no
interest and are due on demand.
Convertible Debt
During August 2018, the Company borrowed an aggregate of $160,000,
net of an original issue discount of $10,000, under a convertible
note payable. The Company recognized $3,644 in amortization of
related debt discount. The convertible note payable bears interest
at 10% per annum, matured on August 20, 2019 and was convertible
after 180 days, or February 16, 2019, at a 65% discount of the
quoted market price of the Company’s common stock. This note was
repaid in full in February 2019.
During the year ended December 31, 2019, the Company incurred
$64,000 in debt extension fees, the entire balance of the note was
repaid and the Company recognized the remaining $6,356 in debt
discount amortization expense.
During October 2018, the Company borrowed $345,000, net of
original debt discount of $45,000 under a note payable bearing
interest at 7% per annum, unsecured and due January 18, 2019.
During January 2019, the due date on the note was extended to April
18, 2019 in exchange for a $55,000 debt extension fee added to the
principal of the note and the addition of a conversion feature. The
conversion feature allowed the holder to convert the principal and
accrued interest into shares of the Company’s common stock at a
discount of 70% of the lowest trading price for the Company’s
common stock during the twenty trading days immediately preceding
the conversion. During April 2019, the note and conversion right
were extended until May 31, 2019 in exchange for a $10,000
extension fee and a $15,000 principal payment. During May 2019, the
note and conversion right were extended until June 30, 2019 in
exchange for a $10,000 extension fee and a $40,000 principal
payment. During July 2019, the note and conversion rights were
extended until July 30, 2019 in exchange for a $10,000 extension
fee and a $40,000 principal payment. During August 2019, the note
and conversion rights were extended until August 30, 2019 in
exchange for a $10,000 extension fee and a $40,000 principal
payment. During September 2019, the note and conversion rights were
extended until October 30, 2019 in exchange for a $20,000 extension
fee and a $60,000 principal payment. During October, the note and
conversion rights were extended until November 30, 2019 in exchange
for a $10,000 extension fee and a $40,000 principal payment. During
November 2019, the note and conversion rights were extended until
December 10, 2019 in exchange for a $10,000 conversion forbearance
fee and a $40,000 principal payment. During December, the note and
conversion rights were extended until January 1, 2020 in exchange
for a $17,000 extension fee.
As of December 31, 2019 and 2018, the balance on the convertible
note payable was $165,000 and $265,000, respectively. During the
years ended December 31, 2019 and 2018, the Company recognized
$8,804 and $36,196 in amortization expense of the debt discount,
respectively.
During February 2019, the Company issued a convertible note payable
in the amount of $315,000. The convertible note payable is due one
year from the date of issuance, has an original issuance discount
of $15,000, accrues interest at the rate of 6% per annum, is
unsecured and was convertible at any time into shares of the
Company’s common stock at a discount of 65% of the lowest trading
price for the Company’s common stock during the ten trading days
immediately preceding the conversion. During March 2019, the
convertible note was amended to defer the conversion option until
August 1, 2019. During August 2019, the note and conversion rights
were extended until September 2019 in exchange for a payment of
$105,562. During September 2019, the note and conversion rights
were extended until October 11, 2019 in exchange for two payments:
1) On or before September 13, 2019, a $10,000 conversion
forbearance fee and a $40,000 principal payment; and, 2) On or
before October 11, 2019, a $10,000 conversion forbearance fee and a
$40,000 principal payment. During November 2019, the note and
conversion rights were extended until December 10, 2019 in exchange
for a $10,000 conversion forbearance fee and a $40,000 principal
payment. Each of the above referenced cash payments included 25%
prepayment penalties totaling $56,391 that were added to the
principal of the note upon payment. During December, the note and
conversion rights were extended until January 6, 2020 in exchange
for a $17,000 extension fee.
During the year ended December 31, 2019, the Company recognized
$6,329 in debt discount amortization expense related to the
issuance of the convertible note payable.
During May 2019, the Company issued a convertible note payable in
the amount of $262,500. The convertible note payable is due one
year from the date of issuance, has an original issuance discount
of $12,500, accrues interest at the rate of 6% per annum, is
unsecured and is convertible after 180 days into shares of the
Company’s common stock at a discount of 65% of the lowest trading
price for the Company’s common stock during the ten trading days
immediately preceding the conversion. During July 2019, the
convertible note payable was amended to fix the convertible date at
November 21, 2019. During December 2019, the note and conversion
rights were extended until December 22, 2019 in exchange for a
$10,000 conversion forbearance fee and a $40,000 principal payment.
During December 2019, the note and conversion rights were extended
until January 22, 2020 in exchange for a $10,000 conversion
forbearance fee and a $40,000 principal payment. Each of the above
referenced cash payments included 25% prepayment penalties totaling
$20,000 that were added to the principal of the note upon
payment.
During the year ended December 31, 2019, the Company recognized
$7,637 in debt discount amortization expense related to the
issuance of the convertible note payable.
During August 2019, the Company issued a convertible note payable
in the amount of $157,500. The convertible note payable is due one
year from the date of issuance, has an original issuance discount
of $7,500, accrues interest at the rate of 7% per annum, is
unsecured and is convertible after 180 days into shares of the
Company’s common stock at a discount of 65% of the lowest trading
price for the Company’s common stock during the ten trading days
immediately preceding the conversion.
During the year ended December 31, 2019, the Company recognized
$3,041 in debt discount amortization expense related to the
issuance of the convertible note payable.
During September 2019, the Company issued two convertible notes
payable totaling $270,000, or $135,000 each. The convertible notes
payable are due one year from the date of issuance, each have an
original issuance discount of $11,500, accrue interest at the rate
of 6% per annum, are unsecured and are convertible after 180 days
into shares of the Company’s common stock at a discount of 65% of
the lowest trading price for the Company’s common stock during the
ten trading days immediately preceding the conversion.
During the year ended December 31, 2019, the Company recognized
$6,112 in debt discount amortization expense related to the
issuance of the convertible note payable.
During November 2019, the Company issued a convertible note payable
in the amount of $336,000. The convertible note payable is due one
year from the date of issuance, has an original issuance discount
of $45,000, accrues interest at the rate of 10% per annum, is
unsecured and is convertible after 180 days into shares of the
Company’s common stock at a discount of 65% of the lowest trading
price for the Company’s common stock during the ten trading days
immediately preceding the conversion.
During the year ended December 31, 2019, the Company recognized
$4,808 in debt discount amortization expense related to the
issuance of the convertible note payable.
During December 2019, the Company issued a convertible note payable
in the amount of $220,000. The convertible note payable is due one
year from the date of issuance, has an original issuance discount
of $26,000, accrues interest at the rate of 7% per annum, is
unsecured and is convertible after 180 days into shares of the
Company’s common stock at a discount of 65% of the lowest trading
price for the Company’s common stock during the ten trading days
immediately preceding the conversion.
During the year ended December 31, 2019, the Company recognized
$926 in debt discount amortization expense related to the issuance
of the convertible note payable.
Nonconvertible Debt
Outstanding notes payable and convertible notes payable to third
parties consisted of the following as of December 31, 2019 and
2018:
|
|
|
December 31,
|
|
|
Name
|
|
2019
|
|
|
2018
|
|
|
Convertible Debt:
|
|
|
|
|
|
|
|
|
|
Convertible note payable, interest at 10%, unsecured, due August
20, 2019
|
|
$ |
- |
|
|
$ |
160,000 |
|
|
Convertible note payable, interest at 7%, unsecured, due January 1,
2020
|
|
|
165,000 |
|
|
|
345,000 |
|
|
Convertible note payable, interest at 6%, unsecured, due January 6,
2020
|
|
|
145,829 |
|
|
|
- |
|
|
Convertible note payable, interest at 6%, unsecured, due May 22,
2020
|
|
|
202,500 |
|
|
|
- |
|
|
Convertible note payable, interest at 6%, unsecured, due August 5,
2020
|
|
|
157,500 |
|
|
|
- |
|
|
Convertible note payable, interest at 6%, unsecured, due September
25, 2020
|
|
|
135,000 |
|
|
|
- |
|
|
Convertible note payable, interest at 6%, unsecured, due September
25, 2020
|
|
|
135,000 |
|
|
|
- |
|
|
Convertible note payable, interest at 10%, unsecured, due November
22, 2020
|
|
|
336,000 |
|
|
|
- |
|
|
Convertible note payable, interest at 7%, unsecured, due December
18, 2020
|
|
|
220,000 |
|
|
|
- |
|
|
Total current debt
|
|
|
1,496,829 |
|
|
|
505,000 |
|
|
Less: Unamortized discount
|
|
|
(100,147 |
)
|
|
|
(15,160 |
)
|
|
Net, current debt
|
|
$ |
1,396,682 |
|
|
$ |
489,840 |
|
|
Nonconvertible Debt:
|
|
|
|
|
|
|
|
|
|
Notes payable, no interest, unsecured, past due
|
|
$ |
35,000 |
|
|
$ |
35,000 |
|
|
Notes payable, no interest, unsecured, past due
|
|
|
378,185 |
|
|
|
378,185 |
|
|
Total notes payable
|
|
|
413,185 |
|
|
|
413,185 |
|
NOTE 6: EQUITY TRANSACTIONS
Common Stock
2019
During the year ended December 31, 2019, the Company issued 636,364
shares of its common stock to consultants for services valued at
$0.10 per share, or $63,637.
During the year ended December 31, 2019, the Company issued
4,408,000 shares of its common stock to officers for bonuses at
$0.10 per share, or $440,800.
During the year ended December 31, 2019, the Company issued
1,875,000 shares of its common stock for the conversion of $150,000
of related party convertible debt at the stated conversion price of
$0.08 per share.
2018
During the year ended December 31, 2018, the Company issued a total
of 5,792,829 common shares for compensation to two officers, fair
value of $514,916 is recognized as expense during 2019.
During the year ended December 31, 2018, the Company issued an
aggregate of 19,186,333 common shares to a related party
convertible note holder for conversion of $1,534,907 in
principal.
During the year ended December 31, 2018, the Company issued 100,000
common shares for services to a member of the board of directors,
fair value of $8,000 is recognized as expense during 2019.
During the year ended December 31, 2018, the Company issued a total
of 376,273 common shares for services to consultants, fair value of
$33,300 is recognized as expense during 2019.
Options
There were no common stock options issued and no unamortized
options expense during the years ended and as of December 31, 2019
and 2018.
The following table presents the stock option activity during the
years ended December 31, 2019 and 2018:
|
|
|
|
|
|
|
Weighted
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
Average
|
|
|
Average
|
|
|
|
|
Options
|
|
|
Exercise Price
|
|
|
Remaining Term
|
|
|
Outstanding - December 31, 2017
|
|
|
685,713 |
|
|
$ |
4.52 |
|
|
|
0.78 |
|
|
Granted
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Expired
|
|
|
(571,428 |
)
|
|
|
3.50 |
|
|
|
- |
|
|
Exercised
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Outstanding - December 31, 2018
|
|
|
114,285 |
|
|
$ |
9.63 |
|
|
|
0.75 |
|
|
Granted
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Expired
|
|
|
(114,285 |
)
|
|
|
9.63 |
|
|
|
- |
|
|
Exercised
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Outstanding – December 31, 2019
|
|
|
- |
|
|
$ |
- |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable – December 31, 2019
|
|
|
- |
|
|
$ |
- |
|
|
|
- |
|
The intrinsic value of the exercisable options as of December 31,
2019 and 2018 was $0 and $0, respectively.
Warrants
In November 2013, the Company issued a lender an aggregate of
310,863 common stock warrants in connection with a note payable.
The warrants were exercisable immediately at $1.75 per share and
expire on November 30, 2018. These warrants contain a subsequent
equity sale reset “down round”, which provides that if the Company
sells or grants any option to purchase any common stock of the
Company at any effective price per share less than the exercise
price of the warrants, the exercise price shall be reduced to equal
that lower exercise price. During 2017, the exercise price of these
warrants was reset to $0.055 per share. As the warrants were
accounted for as derivative liabilities (due to being tainted by
the outstanding convertible debt) at the time the reset was
triggered, the change in fair value resulting from the reset of
$26,060 was recognized as change in fair value of derivative
liabilities.
In August 2014, the Company issued a lender an aggregate of
4,180,000 common stock warrants in connection with a note payable.
The warrants were exercisable immediately at $0.50 per share and
expire on August 31, 2019. These warrants contain a subsequent
equity sale reset “down round”, which provides that if the Company
sells or grants any option to purchase any common stock of the
Company at any effective price per share less than the exercise
price of the warrants, the exercise price shall be reduced to equal
that lower exercise price. During 2017, the exercise price of these
warrants was reset to $0.055 per share. As the warrants were
accounted for as derivative liabilities (due to being tainted by
the outstanding convertible debt) at the time the reset was
triggered, the change in fair value resulting from the reset of
$177,959 was recognized as change in fair value of derivative
liabilities.
There were no warrants issued during 2019 and 2018.
The following table presents the stock warrant activity during the
years ended December 31, 2019 and 2018:
|
|
|
|
|
|
|
Weighted
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
Average
|
|
|
Average
|
|
|
|
|
Warrants
|
|
|
Exercise Price
|
|
|
Remaining Term
|
|
|
Outstanding - December 31, 2017
|
|
|
6,964,992 |
|
|
$ |
0.41 |
|
|
|
2.62 |
|
|
Granted
|
|
|
67,340 |
|
|
|
0.15 |
|
|
|
3.00 |
|
|
Forfeited/expired
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Exercised
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Outstanding - December 31, 2018
|
|
|
7,032,329 |
|
|
$ |
0.08 |
|
|
|
1.21 |
|
|
Granted
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Forfeited/expired
|
|
|
(4,180,000 |
)
|
|
|
0.06 |
|
|
|
- |
|
|
Exercised
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Outstanding – December 31, 2019
|
|
|
2,852,329 |
|
|
$ |
0.11 |
|
|
|
1.00 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable – December 31, 2019
|
|
|
2,852,329 |
|
|
$ |
0.08 |
|
|
|
1.21 |
|
The intrinsic value of the exercisable warrants as of December 31,
2019 and 2018 was $0 and 264,021, respectively.
NOTE 7: COMMITMENTS AND CONTINGENCIES
Litigation
In the matter entitled Soffin v Clean Coal Technologies, Inc Case
No. 4D17-2751, the Fourth District Court of Appeal of the State of
Florida issued a Non-final Opinion on July 12, 2018
unanimously affirming the Order Granting Defendants Motion for
Judgment Notwithstanding the Verdict and Order Denying Plaintiff’s
Motion for Additur entered by the Circuit Court for the Fifteenth
Judicial Circuit, Palm Beach County, Florida Case No.
502010CA028706XXXXMB in favor of Clean Coal Technologies, Inc on
August 1 2017. The fifteen day remedy period for the plaintiff to
appeal expired on July 27, 2018 with no motion made. This case is
now closed.
In April 2018, following mediation with a vendor of an outstanding
balance, the Company successfully won the case and the balance of
$322,133 was waived. The company had previously recognized the
$320,669 balance in accounts payable, which was reversed in April
2018 and recognized as a gain on debt settlement.
Separation Agreement
As part of the separation agreement with Mr. Ponce de Leon, the
ex–Chief Operating Officer of the Company, the Company agreed to
pay him his accrued salary of $1,226,711 within two years but
agreed to pay him $200,000 by November 2015 out of revenues earned.
As the Company did not earn revenue in 2015 and as at December 2019
has still not earned revenue, the obligation to Mr. Ponce de
Leon is currently in default and has accrued interest of $368,011
and the balance is $1,594,725 at December 31, 2019. It is the
Company’s intention to pay Mr. Ponce de Leon immediately upon
receiving revenue including any interest that has been accrued.
Operating Leases
Clean Coal has an operating lease for its executive offices in
Manhattan, New York. Effective February 1, 2014, the lease is month
to month, at a monthly rate of $200 per month.
In April 2018, the Company secured a permanent location in Wyoming
for its test facility at the Fort Union Industrial Park. The term
of the lease is three years and calls for rent of $36,000, prepaid.
The $36,000 covering three years rent was paid in April 2018 and is
being amortized to lease expense using the straight-line method
over the three-year term of the lease. During the years ended
December 31, 2019 and 2018, the Company recognized $12,000 and
$8,000 in amortization of right to use assets, respectively.
NOTE 8: SUBSEQUENT EVENTS
In January the company entered into $24,900 three year convertible
note with Black Diamond Financial Group, a related party. The note
is part of the umbrella financing agreement with Black Diamond
Financial Group entered into in May 2015.
In January, following lengthy negotiations a third party vendor
agreed to withdraw their claim for $135k previously booked as an
expense in our books and records. This charge will be reversed in
Q1 2020 accounts.
In February the Company entered into a six month 8% convertible
note for $138,000. The note included $3,000 in legal and
professional fees. It has no OID. After 6 months the note can be
converted into equity at a 35% discount to Market price being the
average of the three lowest traded price for 10 days prior to the
conversion. Prepayment rights remain with the company for the first
6 months of the note.
In February, the Company entered into a six month 5% convertible
note for a total of $440,000 of which $40,000 was OID. After 6
months the note can be converted into equity at a 35% discount to
Market price being the lowest traded price for 10 days prior to the
conversion. Prepayment rights remain with the company for the first
6 months of the note.
All four convertible notes that have extended.The details of the
extensions are as follows:
Note 1: Payment of $25,000 of which $10,000 was the extension fee
extending the note to April 06, 2020
Note 2: Payment of $25,000 of which $10,000 was the extension fee
extending the note to March 31, 2020
Note 3 and 4: Payment of $75,000 of which $15,000 was the extension
fee extending the notes to March 22, 2020
ITEM 9. CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
There have been no changes in our independent accountants,
MaloneBailey, LLP, or disagreements with them on matters of
accounting or financial disclosure.
ITEM 9A. CONTROLS AND
PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of December 31, 2019, we carried out an evaluation, under the
supervision and with the participation of our management, including
our Chief Executive Officer and Chief Financial Officer of the
effectiveness of the design and operation of our disclosure
controls and procedures pursuant to Exchange Act Rules 13a-15(e)
and 15d-15(e) under the Securities Exchange Act of 1934, as
amended. Based on this evaluation, our Chief Executive Officer and
Chief Financial Officer concluded that our financial disclosure
controls and procedures were not effective due to our limited
internal resources and lack of ability to have multiple levels of
transaction review.
Management’s Report on Internal Control over Financial
Reporting
Management is responsible for the preparation and integrity of our
published financial statements. The financial statements have been
prepared in accordance with GAAP and, accordingly, include amounts
based on judgments and estimates made by management. Management
also prepared the other information included in the annual report
and is responsible for its accuracy and consistency with the
financial statements.
Management is responsible for establishing and maintaining a system
of internal control over financial reporting, which is intended to
provide reasonable assurance to our management and Board of
Directors regarding the reliability of our financial statements.
The system includes but is not limited to:
- a documented organizational structure and
division of responsibility;
- established policies and procedures to foster
a strong ethical climate which is communicated throughout the
Company;
- regular reviews of our financial statements
by qualified individuals; and
- the careful selection, training and
development of our employees and personnel.
There are inherent limitations in the effectiveness of any system
of internal control, including the possibility of human error and
the circumvention or overriding of controls. Also, the
effectiveness of an internal control system may change over time.
We have implemented a system of internal control that was designed
to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements in
accordance with GAAP.
Management has assessed our internal control system in relation to
criteria for effective internal control over financial reporting
described in “Internal Control-Integrated Framework” issued in 2013
by the Committee of Sponsoring Organizations (“COSO”) of the
Treadway Commission. Based upon these criteria, we believe that, as
of December 31, 2019, our system of internal control over financial
reporting was not effective due to material weaknesses that were
identified. The material weaknesses are caused by our limited
internal resources and limited personnel. We presently
have only two officers. The material weaknesses include 1.) no
segregation of duties within the Company, 2.) there is no
management oversight or multiple levels of supervision and review,
no control documentation being produced, no one to review
control documentation if it was being produced, 3.) a lack of
expertise in the application of generally accepted accounting
principles in regard to the accounting and reporting of our
derivative transactions.
Changes in Internal Control over Financial Reporting
There were no changes in disclosure controls and procedures that
occurred during the period covered by this report that have
materially affected, or are reasonably likely to materially effect,
our disclosure controls and procedures. We do not expect to
implement any changes to our disclosure controls and procedures
until there is a significant change in our operations or capital
resources.
This annual report does not include an attestation report of the
Company’s registered public accounting firm regarding internal
control over financial reporting. Management’s report was not
subject to attestation by the Company’s registered public
accounting firm pursuant to the rules of the Securities and
Exchange Commission for smaller reporting companies that permit the
Company to provide only management’s report in this annual
report.
PART III
ITEM 10. DIRECTORS, EXECUTIVE
OFFICERS AND CORPORATE GOVERNANCE
The executive officers and directors of the Company are as
follows:
|
Name
|
|
Age
|
|
Position
|
|
Held Since
|
|
Robin T. Eves
|
|
69
|
|
CEO, President, Director
|
|
August 2010
|
|
Thomas Shreve
|
|
68
|
|
Director
|
|
November 2015
|
|
Robert Liscouski
|
|
65
|
|
Director
|
|
September 2018
|
|
Scott Younger
|
|
77
|
|
Director
|
|
November 2013
|
|
Aiden Neary
|
|
48
|
|
COO, CFO, Director
|
|
February 2016
|
Certain biographical information with respect to our current
officers and directors is set forth below.
Robin Eves has been our Chief Executive Officer, President and a
member of the Board of Directors since August 2010. Prior to
his appointment with the Company, from February 2009 through August
2010, he served as the CEO of Atlantic Energy Group Ltd., a global
energy company developing a major storage and pipeline initiative
in South Carolina and the build-out of a global trading business in
London, Singapore and the rest of Asia. From the period March 2005
to January 2009 he worked with Oil Trade and Transport LLC, working
closely with Sempra Energy Trading. He was responsible for business
development in Russia, India and the Middle East. Also during the
period, from March 2003 to February 2005, Mr. Eves served as
Managing Director and global head of crude and refined products for
United Bank of Switzerland From October 2002 to February 2003, Mr.
Eves acted as a consultant for Barclays Capital in London, hired to
do an extensive due diligence on the Russian/former Soviet Union
markets in preparation for Barclays’ possible re-entry into those
markets. From February 1990 to September 2002, Mr. Eves served as
Managing Director for Synergy International SA/Magna Oil and Gas
LLC/CCL Oil, where he was responsible for all trading and
structured transactions. Prior to that time, from 1987 to 1990, Mr.
Eves served as Vice-President and global head of products trading,
and from 1976 to 1987, worked in various positions with
Cargill.
We believe that Mr. Eves’ qualifications to serve on the Board of
Directors include his extensive background in all aspects of the
global energy business, including experience in crude and refined
products for power production, including gas and coal, as well as
related emissions controls.
Mr. Liscouski was appointed to the board in September, 2018. He is
recognized as a security industry leader, thought leader and
subject matter expert in Enterprise Risk Management; assessing,
mitigating and managing physical and cyber security risk. Superior
track record of developing critical and sensitive programs to
protect national security interests and critical infrastructure.
Extensive leadership and operational experience in working
enterprise wide, to include Internal and External Stakeholders to
formulate and implement Risk Management strategies, programs and
metrics to successfully mitigate and manage physical, cyber and
converged risk. Innovator and thought leader in identifying
emerging security technologies and providing guidance in areas such
as crisis management, best practices, organizational development
and strategic planning.
Mr. Liscouski was appointed by President George W. Bush as the
first Assistant Secretary for Infrastructure Protection when the
U.S. Department of Homeland Security was founded in 2003. During
his tenure as Assistant Secretary for Infrastructure Protection,
Mr. Liscouski was responsible for the design, development,
implementation and oversight of the Office of Infrastructure,
including:
● The National Cyber Security Division – The
nation’s first coordinated civilian effort to work coordinate the
US Government and private sector cyber security efforts.
● Expansion of the Information Sharing Analysis
Centers (ISACs) and the Creation the National Infrastructure
Coordination Center a Public-Private Partnership to protect
critical infrastructure
● The design, development and implementation of
the National Infrastructure Protection Plan (NIPP) and the
development of DHS’ Risk Management Framework for Infrastructure
Protection
● Chemical Security Legislation – The Chemical
Facility Anti-Terrorism Standards (CFATS)
● Committee of Foreign Investment in the US (CFIUS)
Matters
Mr. Liscouski served as President and Director of Implant
Sciences Corporation, a leading manufacturer of Explosive Trace
Detection equipment and was Director of Information Assurance at
the Coca-Cola Company and Vice President of the Law Enforcement
Division of Orion Scientific Systems, a developer of advanced
analytic software tools.
Earlier in his career, he served as a Diplomatic Security Service
Special Agent with the U.S. Department of State and a Homicide and
Undercover Investigator for the Bergen County (New Jersey)
Prosecutors Office.
Mr. Liscouski is also currently a visiting fellow at the Center for
Strategic and International Studies as Washington DC based think
tank and served as a board member of the Intelligence Science Board
supporting the Director of the Central Intelligence Agency and the
Director of National Intelligence. Mr. Liscouski is a frequent
contributor to business and security media on Homeland Security and
Cyber Security issues. Mr. Liscouski received his BS degree from
John Jay College of Criminal Justice and his Master of Public
Administration from the John F. Kennedy School of Government,
Harvard University.
We believe that Mr. Liscouski’s qualifications to serve on the
Board of Directors include his extensive business investment
experience.
Dr. Scott Younger was appointed to the Board of Directors in
November 2013. Dr. Younger is a recognized leader in
infrastructure development across Asia, having held a range of
senior academic, consulting and business development roles in Hong
Kong, Thailand and Indonesia over the past 35 years. He has
served as project manager and consultant in many World Bank and ADB
funded road and water sector programs, with projects in 10 Asian
countries. He was Team Leader for the UK and World Bank funded,
award winning Master’s Degree program in Highway and Transport
Engineering at the Institute of Technology Bandung, 1986-93.
He currently serves as a Director of PT Nusantara Infrastructure
Tbk, a public listed company, investing in infrastructure in
Indonesia and for whom he chairs their joint venture (Louis Dreyfus
Int’l) port operation in Lampung; and as Commissioner for the East
Bali Poverty Project, a model in sustainable development. In 2003
he was awarded the OBE for services to civil engineering and
British business interests in Indonesia. Dr. Younger is also
President Commissioner of Glendale Partners, a leading
infrastructure, natural resources, renewable energy and consulting
firm based in Jakarta, Indonesia, and Chairman of the EuroCham
Working Group on Infrastructure, and Senior Vice-Chairman of the
International Business Chamber, with a particular remit to report
on infrastructure. He is a current member of the Eurocham Board
and former Member of the Board of the British Chamber of
Commerce (1996-2004 and 2010-2012), and responsible for preparing
annual reports for government infrastructure. He is also a director
of Prime Pacific Coal and Prime Pacific Gold (Singapore). Dr.
Younger holds degrees in Engineering from Glasgow, UC Berkeley and
Hong Kong.
We believe that Dr. Younger’s qualifications to serve on the Board
of Directors include his over 35 years of professional experience
working throughout Asia, including work as academic, consulting and
business development as well as his engineering background.
Aiden Neary was appointed as Chief Financial Officer of the Company
on November 26, 2013 and Chief Operating Officer in July 2015. In
January 2016 Mr. Neary was appointed to the Board of Directors.
Since October 2010, Mr. Neary has been exploring opportunities
across the investment banking landscape and has also pursued
private interests including charitable work. From
February 2010 to October 2010, he served as Managing Director and
Chief of Staff for Global Equity at UBS in Stamford, Connecticut.
From November 2006 to February 2010, Mr. Neary was Executive
Director and Chief of Staff for Global Equity at UBS. From June
2003 to November 2006, he served as Executive Director and COO for
the Global Commodity Business at UBS. Prior to that position, from
February 2002 to June 2003, he was Director and Business Manager
for Global Government Bond and Derivative business at UBS in
London, and from August 2000 to February 2002, as Associate
Director and Business Manager for Global Government Bond and
Derivative Business at UBS in London. Prior to joining UBS, from
January 2000 to July 2000, Mr. Neary was Manager and Head of
Product Control for Fixed Income Derivatives at Schroders
Investment Bank in London. From January 1995 to January 2000, he
was Manager and Head of Product Control for Government Bonds and
Derivatives at ING Barings. Mr. Neary earned a degree in
Accounting and Law from Kingston University in London (1990 –
1993), and is a Chartered Management Accountant since 1998.
We believe that Mr. Neary’s qualifications to serve on the Board of
Directors include his over 15 years of professional experience
working in Investment Banking and his over two years of working
with Clean Coal Technologies Inc.
Mr. Thomas W. Shreve was appointed to the Board of Directors in
November, 2015. Mr. Shreve moved from California to Indonesia in
1991 to serve as country representative for New York-based law firm
Milbank, Tweed, Hadley & McCloy, and over the succeeding 24
years has been a leading transaction execution specialist and
business executive in Indonesia. Tom has managed some of the more
significant transactions recently undertaken by Indonesian
companies, including the permanent acquisition financing and
subsequent sale of Berau Coal Energy, and the acquisition of Inter
Milan Football Club by a group of Indonesian businessmen. He served
as an officer of Berau Coal Energy and as a non-executive director
of Inter Milan Football Club. As a lawyer in Jakarta affiliated
with Milbank in the early 1990s, Mr. Shreve advised the issuers in
the first New York Stock Exchange listing by a private sector
Indonesian company, as well as the first U.S. public bond issue by
a private sector Indonesian company. As an investment banker, he
advised the Indonesian Government in the sale of distressed assets
in the aftermath of the Asian Financial Crisis of 1997-98. He
served as Chief Executive Officer of Recapital Investment Group
from 2009-14 and of Acuatico Pte. Ltd., a water infrastructure
company, in 2014-15. A member of the California Bar, Mr. Shreve
earned his J.D. degree at Northwestern University School of Law in
Chicago.
We believe that Mr. Shreve’s qualifications to serve on the Board
of Directors include his strong legal and business connections
across Asia and in particular in Indonesia where he currently
resides.
All directors will hold office until the next annual meeting of
stockholders (currently expected to be held in the second quarter
of 2020) and until their successors have been duly elected and
qualified. There are no agreements with respect to the election of
directors. Vacancies on the Board of Directors during the year may
be filled by the majority vote of the directors in office at the
time of the vacancy without action by the stockholders.
Board Committees
At this filing date, we have an audit committee, but no
compensation committee or nominating committee. Our full Board
currently performs the duties and responsibilities of such
committees. Due to the size of the Company and due to the small
number of directors that we had for 2019, we believed it was
appropriate for the full Board to handle the responsibilities of
these committees. It is our intention through 2020, as our Board
increases in size, to introduce a number of committees.
Audit Committee Financial Expert
We created an Audit Committee in December 2017 comprising of three
independent board of director members, Thomas Shreve, Scott Younger
and Robert Liscouski and two internal board of director members
Aiden Neary and Robin Eves.
Code of Conduct
On February 11, 2013, the board of directors approved a code of
business conduct and ethics, filed as an exhibit to the Company’s
Current Report on Form 8-K on February 14, 2013.
Board Leadership Structure and Role in Risk Oversight
The Board of Directors has risk oversight responsibility for the
Company and administers this responsibility directly. The Board of
Directors oversees our risk management process through regular
discussions of our risks with senior management both during and
outside of regularly scheduled Board of Directors meetings. In
addition, the Board of Directors administers our risk management
process with respect to risks relating to our accounting and
financial controls.
Our Board of Directors has no policy with regard to the separation
of the offices of Chairman of the Board and Chief Executive
Officer, and believes, given the size of our company, no such
formal policy is necessary at this time.
Director Independence
Our Board is not subject to any independence requirements. However,
our Board has reviewed the independence of its directors under the
requirements set forth by the NASDAQ Stock Market. Messrs. Eves and
Ponce de Leon are officers of the Company and therefore not deemed
independent directors. Dr. Jennings and Dr. Younger are
deemed to be independent directors.
Meetings of our Board of Directors
Our Board of Directors held 4 meetings during the fiscal year ended
December 31, 2019 (including meetings conducted by telephone
conferencing). No director attended less than 75% of all
board meetings during the fiscal year ended December 31, 2019. All
current Board members and all nominees for election to the Board of
Directors are encouraged to attend our annual meetings of
stockholders, either in person or by teleconference.
Nomination of Director Candidates
We receive suggestions for potential director nominees from many
sources, including members of the Board, advisors, and
stockholders. Any such nominations, together with appropriate
biographical information, should be submitted to the Chairperson of
the Board in the manner discussed below. Any candidates submitted
by a stockholder or stockholder group are reviewed and considered
in the same manner as all other candidates.
Qualifications for consideration as a Board nominee may vary
according to the particular areas of expertise being sought as a
complement to the existing board composition. However, minimum
qualifications include high level leadership experience in business
activities, breadth of knowledge about issues affecting the
Company, experience on other boards of directors, preferably public
company boards, and time available for meetings and consultation on
Company matters. Our Board does not have a formal policy with
regard to the consideration of diversity in identifying director
candidates, but seeks a diverse group of candidates who possess the
background, skills and expertise to make a significant contribution
to the Board, to the Company and our stockholders. Candidates whose
evaluations are favorable are then chosen by the full Board. The
full Board selects and recommends candidates for nomination as
directors for stockholders to consider and vote upon at the annual
meeting.
Stockholder Communications
Stockholders wishing to communicate with the Board of Directors or
with a specific director may send a letter to our corporate
secretary at Clean Coal Technologies, Inc., 295 Madison Avenue
(12th Floor), New York, NY 10017, and should be marked to the
attention of the appropriate director or directors. Our
secretary will circulate the communications (other than commercial
solicitations) to the appropriate director or
directors. Communications marked “Confidential” will be
forwarded unopened.
Directors’ Compensation
In 2019, all meetings were via telephone conference. The Board
plans one regularly scheduled meeting each fiscal quarter and may
schedule additional meetings as necessary. For fiscal 2018 and
2019, Dr. Younger, Mr. Shreve and Mr. Liscouski will each receive
annual compensation as a director of $25,000 which will be paid
only upon available cash flow. In addition, Dr. Younger received
28,572 common shares upon his appointment as a director and Mr.
Shreve and Mr. Liscouski received 100,000 common shares.
All of our present non-employee directors, have other employment or
sources of income and will routinely devote only such time to the
Company necessary to maintain its viability. It is estimated that
each non-employee director will devote at least 2 days per month to
the Company’s corporate activities. We incurred $75,000, $25,000 in
director fees for each of the outside directors during the years
2018 and 2019.
Stock Ownership Requirements
The Board of Directors has encouraged its members to acquire and
maintain stock in the Company to link the interests of such persons
to the stockholders. However, the Board of Directors has not
established stock ownership guidelines for members of the Board of
Directors or the executive officers.
ITEM 11. EXECUTIVE
COMPENSATION
Compensation Discussion and Analysis
At this time, we do not have a compensation committee or a fully
developed compensation policy. We have only two executive officers,
our CEO and president, our Chief Operations Officer and Chief
Financial Officer. Their employment agreements were negotiated by
the board of directors with the terms based on the board’s
assessment of their qualifications and requirements.
We anticipate establishing a compensation committee sometime in the
next 12 months. The following Compensation Discussion and Analysis
describes prospectively the expected duties, responsibilities and
role of our future Compensation Committee as well as the material
elements of our planned compensation for our future executive
officers. The information below provides the description of
compensation policies that we intend to make applicable to
executive officers and other highly compensated individuals under
employment and/or consulting arrangements in the future.
Planned Objectives of Our Compensation Program
The primary objective of our compensation program, including our
executive compensation program, will be to maintain a compensation
program that will fairly compensate our executives and employees,
attract and retain qualified executives and employees who are able
to contribute to our long term success, encourage performance
consistent with clearly defined corporate goals and align our
executives’ long term interests with those of our stockholders. To
that end, our future compensation practices will be intended
to:
1. Tie total compensation to the Company’s performance and
individual performance in achieving financial and non-financial
objectives; and
2. Align senior management’s interests with stockholders’ interests
through long term equity incentive compensation.
Expected Role of the Compensation Committee
The Compensation Committee, once formed, will determine the
compensation of our Chief Executive Officer and, in consultation
with the Chief Executive Officer, and our other executive officers.
In addition, the Compensation Committee will be responsible for
adopting, reviewing and administering our compensation policies and
programs, including any cash bonus incentive plan or equity
incentive plan that we may adopt. We anticipate that our
Compensation Committee will adhere to a compensation philosophy
that (i) seeks to attract and retain qualified executives who will
add to the long term success of the Company, (ii) promotes the
achievement of operational and strategic objectives, and (iii)
compensates executives commensurate with each executive’s level of
performance, level of responsibility and overall contribution to
the success of the Company.
In determining the compensation of our Chief Executive Officer and
our other executive officers, the Compensation Committee expects to
consider the financial condition and operational performance of the
Company during the prior year. In determining the compensation for
executive officers other than the Chief Executive Officer, the
Compensation Committee plans to consider the recommendations of the
Chief Executive Officer.
The Compensation Committee will review the compensation practices
of other companies, based in part on market survey data and other
statistical data relating to executive compensation obtained
through industry publications and other sources. The Compensation
Committee does not intend to benchmark the Company’s compensation
program directly with other publicly traded companies or other
companies with which we may compete for potential executives since
some of these competitors are privately held companies for which
executive compensation information may not be available. However,
the Compensation Committee intends to compare our executive
compensation program as a whole with the programs of other
companies for which survey data is available, and will also compare
the pay of individual executives if the jobs are sufficiently
similar to make the comparison meaningful. The Compensation
Committee plans to use such survey data primarily to ensure that
our executive compensation program as a whole will be
competitive.
Components of Future Executive Compensation
We anticipate that our future executive employment agreements will
provide that employees will be compensated by salary and bonus,
with bonuses potentially including cash and equity components. The
specific elements of the future compensation program are not
determined but will most likely include base salary, an annual cash
performance bonus and long-term equity incentives. Our compensation
program will be designed to provide our executives with incentives
to achieve our short and long-term performance goals and to pay
competitive base salaries. Each executive officer’s current and
prior compensation will be considered in setting future
compensation.
In addition, we expect employment agreements with our executive
officers to provide for other benefits, including potential
payments upon termination of employment. Once established, the
compensation committee will consider all of the above components in
determining the exact makeup of the total executive compensation
package as well as the factors to be applied in establishing each
component.
Perquisites and Other Benefits
At this time, we do not expect to provide perquisites or personal
benefits to future executive officers, other than the payment of
health insurance premiums and payment of life insurance
premiums.
Employment Agreements
We signed two year employment agreements effective July 1, 2019,
with Robin Eves, as Chief Executive Officer and President, and Mr.
Neary as COO/CFO. Mr. Eves will receive an annual salary of
$519,750 and Mr. Neary $450,000. Each officer was granted a signing
bonus of 750,000 shares of the Company’s restricted common
stock upon execution of the agreements. In addition, each officer
will be granted an additional 750,000 common shares payable
following the one year completion of the contract due July 1,
2020.
The above employment agreements include provisions for
participation in employee benefit programs if the Company adopts
such programs during the term of the agreements. The agreements
also include certain anti-takeover provisions that would require
payment of annual salary as well as immediate vesting of all equity
compensation if an entity acquiring the Company did not offer
comparable positions to each officer.
Neither Mr. Eves, nor Mr. Neary is compensated for their
contributions to the Board of Directors.
We have not entered into employment agreements with any other
officers, directors, or any other persons but may do so during the
current fiscal year as we expand operations.
Other Key Employees and Consultants
As at December 31, 2019 we have no other employees in the
company.
Employee Benefits
When we have adequate financing, we intend to offer employee health
insurance benefits coverage to provide our workforce with a
reasonable level of financial support in the event of illness or
injury. It is our intention to offer health insurance benefits to
all full time employees, including executive officers.
Accounting Matters
We have adopted the provisions of ACS 718 Compensation – Stock
Compensation which requires the fair value of options to be
recorded as compensation cost in the consolidated financial
statements. Options in our compensation packages result in
additional compensation costs being recognized.
Stock Ownership Requirements
The Board of Directors has encouraged its members to acquire and
maintain stock in the Company to link the interests of such persons
to the stockholders. However, the Board of Directors has not
established stock ownership guidelines for members of the Board of
Directors or the executive officers.
The Company has not adopted any other bonus, profit sharing, or
deferred compensation plan.
The following table sets forth, for the last two years, the dollar
value of all cash and non-cash compensation earned by the Company’s
named executive officers.
SUMMARY COMPENSATION TABLE
|
Officers Name &
Principal Position
|
|
Year
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
($)
|
|
|
Option Awards
($)
|
|
|
All Other
Compensation ($)
|
|
|
Total
($)
|
|
|
Robin Eves, Pres and CEO (1)
|
|
2019
|
|
|
519,750 |
|
|
|
- |
|
|
|
220,400 |
|
|
|
- |
|
|
|
- |
|
|
|
740,150 |
|
|
|
|
2018
|
|
|
519,750 |
|
|
|
259,875 |
|
|
|
271,121 |
|
|
|
- |
|
|
|
- |
|
|
|
1,050,746 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aiden Neary, COO/CFO (2)
|
|
2019
|
|
|
450,000 |
|
|
|
- |
|
|
|
220,400 |
|
|
|
|
|
|
|
|
|
|
|
670,400 |
|
|
|
|
2018
|
|
|
450,000 |
|
|
|
237,500 |
|
|
|
243,795 |
|
|
|
|
|
|
|
|
|
|
|
931,295 |
|
(1) On July 8, 2013, Robin Eves was issued 28,571 common shares in
lieu of interest on loans made to the company. The value for these
shares was $19,747. As a bonus for forbearance on payment of
monthly fees, Mr. Eves was approved to receive 57,143 common shares
on October 7, 2013. These shares had a value of $80,000 based upon
$1.40 on the day that the shares were approved. Mr. Eves also
received an approval for bonus shares for the year 2013 on December
4, 2013. The amount of shares approved was 142,857 shares with a
value of $165,000 based upon $1.15 per share on the date of the
approval. Through December 31, 2014, Robin eves returned 1,273,360
common shares back to the Company. Mr. Eves also returned 457,143
options back to the company that were previously awarded. Mr. Eves
signed a two year contract on July 1, 2017 at an annual salary of
$519,750. He was also awarded 750,000 common shares upon signing
and received an additional 750,000 shares, valued at $67,500 on
July 1, 2018. Mr. Eves was issued 2,300,797 common shares as a
bonus on May 1, 2018, valued at $203,621. Mr. Eves was issued
2,204,000 common shares as a bonus on May 28, 2019, valued at
$220,400.
(2) On November 26, 2013 Aiden Neary signed a two year Executive
Employment Agreement which called for 142,857 shares to be issued
at the time of signing his agreement and 142,857 that vest 1 year
after the date of grant. These shares were approved to be issued
and the issuance was deferred until after the Company completes its
planned common stock reverse. The fair value of this
award was determined to be $300,000 based upon $1.05 on the date of
grant. Mr. Neary was approved to receive 28,571 shares of stock as
a bonus for 2013 on December 4, 2013. These shares had a value of
$33,000 based upon $1.15 per shares on the date of the approval.
Through year ended December 31, 2015 Mr. Neary returned 497,527
common shares back to the company. Mr. Neary also forfeited his
right of the second tranche of 142,857 shares before vested. Mr.
Neary signed a two year contract on July 1, 2017 at an annual
salary of $450,000. He was also awarded 750,000 common shares upon
signing and received an additional 750,000 shares, valued at
$67,500 on July 1, 2018. Mr. Neary was issued 1,992,032 common
shares as a bonus on May 1, 2018, valued at $176,295. Mr. Neary was
issued 2,204,000 common shares as a bonus on May 28, 2019, valued
at $220,400.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
There were no outstanding grants of stock options or unvested stock
awards outstanding on the last day of the fiscal year ended
December 31, 2019 to any of the executive officers named in the
Summary Compensation Table.
The following table sets forth, for the current year, the dollar
value of all cash and non-cash compensation for the Company’s
directors.
DIRECTOR COMPENSATION
|
Name
|
|
Year
|
|
Fees Earned or
Paid in Cash
($)
|
|
|
Stock Awards
($)
|
|
|
Option Awards
($)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
|
Non Qualified
Deferred
Compensation
Earnings
|
|
|
All Other
Compensation
($)
|
|
|
Total
($)
|
|
|
Robin Eves
|
|
2019
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Aiden Neary
|
|
2019
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Rob Liscouski (1)
|
|
2019
|
|
|
25,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
25,000 |
|
|
Scott Younger(2)
|
|
2019
|
|
|
25,000 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
25,000 |
|
|
Thomas Shreve(3)
|
|
2019
|
|
|
25,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
(1) Mr. Liscouski’s directors fees have been accrued
(2) Mr. Younger’s directors fees have been accrued
(3) Mr. Shreve directors fees have been accrued
ITEM 12. SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
The following table sets forth information, as of December 31,
2019, with respect to each person known by the Company to own
beneficially more than 5% of the 181,347,218 shares of our issued
and outstanding common stock, as well as the beneficial ownership
of each director and officer and all directors and officers as a
group. We are not aware of any present arrangements that could
result in a change of control of the Company. Except as
otherwise indicated, each of the stockholders listed below has sole
voting and investment power over the shares beneficially owned.
Except as otherwise indicated, addresses are c/o Clean Coal
Technologies, Inc., 295 Madison Avenue (12th Floor) New York, NY
10017.
|
Officers and Directors
|
|
Amount and Nature of Beneficial Ownership(1)
|
|
|
Percent of Class
|
|
| |
|
|
|
|
|
|
|
|
|
Robin Eves, President, CEO, Director
|
|
|
17,485,777 |
|
|
|
9.6 |
%
|
|
Aiden Neary, COO/CFO
|
|
|
23,140,213 |
|
|
|
12.8 |
%
|
|
Thomas Shreve, Director
|
|
|
100,000 |
|
|
|
0 |
%
|
|
Robert Liscouski, Director
|
|
|
100,000 |
|
|
|
0 |
%
|
|
Scott Younger, Director
|
|
|
372,858 |
|
|
|
0 |
%
|
|
All directors and officers as a group (5 persons)
|
|
|
41,198,848 |
|
|
|
23.2 |
%
|
| |
|
|
|
|
|
|
|
|
|
Independent holders of more than 5%
|
|
|
|
|
|
|
|
|
|
Tacho Sandoval
|
|
|
18,780,675 |
|
|
|
10.3 |
%
|
ITEM 13. CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Wages and bonus payable to related parties
Accruals for salary and bonuses to officers and directors are
included in accrued liabilities in the balance sheets and totaled
$3,090,052 and $2,719,653 as of December 31, 2019 and 2018,
respectively. As part of the separation agreement with Mr. Ponce de
Leon, the Company agreed to pay him all his accrued salary within
two years but agreed to pay him $200,000 by November 2015 out of
revenues earned. As the Company did not earn revenue in 2015 and as
at December 2019 has still not earned revenue, the obligation
to Mr. Ponce de Leon of $1,594,725 is currently in default and the
amount includes $368,011 in accrued interest. It is the Company’s
intention to pay Mr. Ponce de Leon immediately upon receiving
revenue.
Nonconvertible Debt
During the year ended December 31, 2019 and 2018, the Company
received $615,000 and $35,000 from the issuance of related party
notes payable to an affiliate. The notes are due on demand and do
not accrue interest. As of December 31, 2019 and 2018, the Company
had outstanding notes payable to affiliates of the Company of
$700,000 and 85,000, respectively. These notes payable of the
Company are unsecured, bear no interest and are due on demand.
During the years ended December 31, 2019 and 2018, the Company
received $243,000 and $1,600 from related party advances,
respectively. The Company repaid $165,000 and $0 on these advances
during the years ended December 31, 2019 and 2018, respectively.
The advances are due on demand and do not accrue interest. As of
December 31, 2019 and 2018, the Company had outstanding advances
payable to an officer of the Company of $79,600 and $1,600,
respectively. The advances payable are unsecured, bear no interest
and are due on demand.
Convertible Debt
2019
During the year ended December 31, 2019, the Company borrowed
an aggregate of $341,653, net of beneficial conversion features of
$141,338, under convertible notes payable from a Company with an
interest owned by a significant stockholder. The convertible notes
are secured by assets and the common stock of the Company, bear
interest at 12% per annum and are due three years from the dates of
issuance. As of December 31, 2019, the Company had outstanding
short-term convertible notes payable of $6,593,469, net of
unamortized discounts of $658,922 and outstanding long-term
convertible notes payable of $2,601,753, net of unamortized
discounts of $1,548,257. The convertible notes payable are mature
between November 2018 and November 2022 and are convertible at
$0.06 per share, which was a discount to the market price on the
date of issuance. Amortization expense related to debt discounts on
convertible debt for the year ended December 31, 2019 was
$1,224,928. As of December 31, 2019, $4,510,384 in convertible
notes are past due.
2018
During the year ended December 31, 2018, the Company borrowed
an aggregate of $2,284,800, net of beneficial conversion feature of
$1,907,655, under convertible notes payable from a Company with an
interest owned by a significant stockholder. As of December 31,
2018, the Company had outstanding short-term convertible notes
payable of $4,660,381, net of unamortized discounts of $139,977 and
outstanding long term convertible notes payable of $5,026,800, net
of unamortized discounts of $3,154,012. The convertible notes
payable mature between November 2018 and December 2021 and are
convertible at $0.06 per share, which was a discount to the market
price on the date of issuance. Amortization expense related to debt
discounts on convertible debt for the year ended December 31, 2018
was $1,506,170.
During the year ended December 31, 2018, the holder of convertible
debt elected to convert a total of $1,534,907 in principal into
19,186,333 shares of common stock, or $0.08 per share.
Common Stock Issued to Related Parties
During May 2019, the Company issued two of its officers a total of
4,408,000 shares of common stock for services valued at $440,800.
The shares are not forfeitable and considered to be earned as of
the date of issuance.
During August 2019, the Company issued 1,875,000 shares of common
stock for the conversion of $150,000 related party convertible
notes payable, or the stated conversion price $0.08 per share.
During the year ended December 31, 2018, the Company issued a total
of 5,792,829 common shares for compensation to two officers, fair
value of $514,916 is recognized as expense during 2019.
During the year ended December 31, 2018, the Company issued 100,000
common shares for compensation to a member of the board of
directors, fair value of $8,000 is recognized as expense during
2019.
During the year ended December 31, 2018, the Company issued an
aggregate of 19,186,333 common shares to a related party
convertible note holder for conversion of $1,534,907 in
principal.
Non-Binding License Agreement – related party
During July 2017, the Company entered into a non-binding agreement
to explore the opportunity of engaging in a license of Clean Coal
Pristine M technology. As part of the non-binding agreement, in
September 2017, the Company received a non-refundable deposit of
$100,000, subject to application to any future license agreement,
from Wyoming New Power. The license agreement is for two million
tons per annum. The remainder of the license fee will be due upon
the signing of a definitive license agreement expected in 2020.
Wyoming New Power is a related party because it is controlled by an
entity that has a significant interest in Clean Coal Technologies,
Inc.
Director Independence
Our Board is not subject to any independence requirements. However,
our Board has reviewed the independence of its directors under the
requirements set forth by the NASDAQ Stock Market. Messrs. Eves and
Neary are officers of the Company and therefore not deemed
independent directors. Mr. Liscouski, Dr. Younger and
Mr. Shreve are deemed to be independent directors.
ITEM 14. PRINCIPAL ACCOUNTING
FEES AND SERVICES
Fees billed to the Company by MaloneBailey, LLP
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|
|
2019
|
|
|
2018
|
|
|
(1) Audit Fees
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|
$ |
48,000 |
|
|
$ |
48,000 |
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|
(2) Tax Fees
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|
$ |
- |
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|
$ |
- |
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|
(3) Other Fees
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|
$ |
- |
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|
$ |
- |
|
All audit and non-audit services and fees are approved by the Board
of Directors.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL
STATEMENT SCHEDULES
(a) Documents filed with this report.
1. Financial Statements:
See Index to Financial Statements on page 22.
2. Financial Statement Schedules:
Financial statement schedules are omitted because they are not
required or are not applicable or the required information is shown
in the financial statements or notes thereto.
3. Exhibits:
The exhibits to this report are listed on the Exhibit Index
below.
(b) Description of exhibits
(1) Filed with Registrant’s Form 10, January 14, 2009, Certificate
of Amendment, June 27, 2012, filed with this Report.
(2) Filed with Registrant’s Form 8-K, December 6, 2012.
(3) Filed with Registrant’s Form 10, January 14, 2009.
(4) Filed with Registrant’s Form 8-K, February 14, 2013.
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.
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/s/Robin Eves
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Dated: March 10, 2020
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Robin Eves
CEO, President, Principal Executive Officer
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Dated: March 10, 2020
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