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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended September 30, 2023

 

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______ to _______

 

Commission File Number: 024-11501

 

 

 

CLEAN VISION CORPORATION

(Exact name of registrant as specified in its charter)

 

Nevada   85-1449444
(State or other jurisdiction of
incorporation or organization)
  (IRS Employer
Identification No.)

 

2711 N. Sepulveda Blvd. #1051

Manhattan Beach, CA

  90266
(Address of principal executive offices)   (Zip Code)

 

(424) 835-1845
(Registrant’s telephone number, including area code)

 

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

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on
which registered
N/A   N/A   N/A

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer Accelerated filer
Non-accelerated filer  Smaller reporting company
    Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

 

As of November 14, 2023, there were 604,103,984 shares of the issuer’s common stock issued and outstanding.

 

 

 

CLEAN VISION CORPORATION

 

FORM 10-Q

 

For the Quarterly Period Ended September 30, 2023

 

INDEX

 

PART I Financial Information  
Item 1. Financial Statements (unaudited) 1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 24
Item 3. Quantitative and Qualitative Disclosures about Market Risk 28
Item 4. Controls and Procedures 29
     
PART II Other Information  
Item 1. Legal Proceedings 29
Item 1A. Risk Factors 30
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 30
Item 3. Defaults Upon Senior Securities 30
Item 4. Mine Safety Disclosures 30
Item 5. Other Information 30
Item 6. Exhibits 30
Signatures 31

 

 

 

 

 

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

INDEX TO FINANCIAL STATEMENTS

 

Consolidated Balance Sheets as of September 30, 2023 (unaudited) and December 31, 2022 F-2
   
Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2023 and 2022 (unaudited) F-3
   
Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2023, and 2022 (unaudited) F-4
   
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022 (unaudited)  F-6
   
Notes to the Consolidated Financial Statements (unaudited)  F-7

 

 

 1

 

CLEAN VISION CORPORATION

CONSOLIDATED BALANCE SHEETS

 

   September 30,
2023
  December 31, 2022
ASSETS   (Unaudited)       
Current Assets:          
Cash  $1,318,424   $10,777 
Prepaids and other assets   1,474,049    125,000 
Accounts receivable   553,348       
Total Current Assets   3,345,821    135,777 
Property and equipment   1,295,131    241,376 
Goodwill   5,896,096       
Total Assets  $10,537,048   $377,153 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)          
Current Liabilities:          
Accounts payable  $445,862   $377,746 
Accrued compensation   342,770    641,639 
Accrued expenses   994,775    250,355 
Lines of credit   329,277       
Convertible note payable, net of discount of $2,946,664 and $183,560, respectively   1,233,938    476,440 
Derivative liability   924,447       
Loans payable   767,218    114,500 
Loans payables – related party   4,500,000    27,017 
Liabilities of discontinued operations   67,093    67,093 
Total current liabilities   9,605,380    1,954,790 
Economic incentive (Note 12)   1,750,000       
Total Liabilities   11,355,380    1,954,790 
           
Commitments and contingencies            
           
Mezzanine Equity:          
Series B Preferred stock, $0.001 par value, 2,000,000 shares authorized; 2,000,000 and 0 shares issued and outstanding, respectively   1,800,000    1,800,000 
Total mezzanine equity   1,800,000    1,800,000 
           
Stockholders' Deficit:          
Preferred stock, $0.001 par value, 4,000,000 shares authorized; no shares issued and outstanding            
Series A Preferred stock, $0.001 par value, 2,000,000 shares
authorized; no shares issued and outstanding
            
Series C Preferred stock, $0.001 par value, 2,000,000 shares authorized; 2,000,000 shares issued and outstanding   2,000    2,000 
Common stock, $0.001 par value, 2,000,000,000 shares authorized, 603,603,984 and 402,196,273 shares issued and outstanding, respectively   603,605    402,197 
Common stock to be issued   302,552    76,911 
Additional paid-in capital   23,490,778    15,203,394 
Accumulated other comprehensive loss   (16,792)   16,670 
Accumulated deficit   (27,018,878)   (19,078,809)
Non-controlling interest   18,403       
Total stockholders' deficit   (2,618,332)   (3,377,637)
Total liabilities and stockholders' deficit  $10,537,048   $377,153 

 

 The accompanying notes are an integral part of these unaudited consolidated financial statements.

 F-2

 

 

  CLEAN VISION CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

 

             
   For the Three Months Ended
September 30,
  For the Nine Months Ended
September 30,
   2023  2022  2023  2022
Revenue  $26,908   $     $188,205   $   
Cost of revenue   (11,589)         22,273       
Gross margin  $38,497   $     $165,932   $   
Operating Expenses:                    
Consulting  $389,925   $311,808   $1,084,423   $1,094,768 
Professional fees   79,527    131,535    621,087    258,165 
Payroll expense   217,806    171,260    750,070    623,549 
Director fees   13,500    4,500    101,500    13,500 
General and administration expenses   401,845    227,374    1,162,648    824,344 
Total operating expense   1,102,603    846,477    3,719,728    2,814,326 
Loss from Operations   (1,064,106)   (846,477)   (3,553,796)   (2,814,326)
Other income (expense):                    
Interest expense   (1,590,647)   (22,791)   (3,299,800)   (46,256)
Change in fair value of derivative   1,038,342          2,174,421       
Loss on debt issuance               (2,676,526)   (195,483)
Gain on conversion of debt   620,778          881,660       
Gain on extinguishment of debt               17,500       
Total other expense   68,473    (22,791)   (2,902,745)   (241,739)
Net loss before provision for income tax   (995,633)   (869,268)   (6,456,541)   (3,056,065)
Provision for income tax expense                        
Net loss  $(995,633)  $(869,268)  $(6,456,541)  $(3,056,065)
Net loss (income) attributed to non-controlling interest   (51,697)         (18,403)      
Net loss attributed to Clean Vision Corporation   (1,047,330)   (869,268)   (6,474,944)   (3,056,065)
Other comprehensive income:                    
  Foreign currency translation adjustment   (16,404)   6,622    (33,462)   (4,095)
Comprehensive loss  $(1,063,734)  $(862,646)  $(6,508,406)  $(3,060,160)
Loss per share - basic and diluted  $(0.00)  $(0.00)  $(0.01)  $(0.01)
Weighted average shares outstanding - basic and diluted   495,274,326    353,868,192    466,596,880    337,327,607 

   

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 F-3

 

 

CLEAN VISION CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

For the Three and Nine Months Ended September 30, 2023

(Unaudited) 

                                     
   Series A
Preferred Stock
  Series C
Preferred Stock
  Common Stock  Additional paid  Common Stock to be  Accumulated
Other Comprehensive
  Accumulated  Minority  Total Stockholders'
   Shares  Amount  Shares  Amount  Shares  Amount  In Capital  Issued  Loss  Deficit  Interest  Deficit
Balance, December 31, 2022   —     $      2,000,000   $2,000    402,196,273   $402,197   $15,203,394   $76,911   $16,670   $(19,078,809)  $     $(3,377,637)
Stock dividend   —            —            21,816,590    21,817    1,461,711                (1,483,528)            
Stock issued for services – related party   —            —            500,000    500    60,500                            61,000 
Stock issued for services   —            —            4,950,000    4,950    350,425    39,334                      394,709 
Stock issued for
cash
   —            —            16,750,000    16,750    318,250                            335,000 
Stock issued for debt conversion   —            —            19,286,137    19,286    366,437                            385,723 
Debt issuance cost – warrants issued   —            —            —            1,321,698                            1,321,698 
Shares cancelled   —            —            (3,000,000)   (3,000)   3,000                               
Net loss   —            —            —                        (1,541)   (2,701,002)         (2,702,543)
Balance, March 31, 2023   —            2,000,000    2,000    462,499,000    462,500    19,085,415    116,245    15,129    (23,263,339)         (3,582,050)
Adjust stock dividend shares   —            —            (16)                                          
Stock issued for services   —            —            500,000    500    31,900    (27,474)                     4,926 
Stock issued for debt conversion   —            —            25,450,000    25,450    949,650                            975,100 
Debt issuance cost – warrants issued   —            —            —            1,348,364                            1,348,364 
Settlement of debt-related party   —            —            —            96,250                            96,250 
Net loss   —            —            —                        (15,517)   (2,759,906)   (33,294)   (2,808,717)
Balance, June 30, 2023   —            2,000,000    2,000    488,448,984    488,450    21,571,369    88,771    (388)   (26,023,245)   (33,294)   (3,906,337)
Stock sold for cash   —            —            —                  198,000                      198,000 
Stock issued for services   —            —            32,930,000    32,930    561,134    15,781                      609,845 
Stock issued for debt conversion   —            —            77,725,000    77,725    1,362,775                            1,440,500 
Shares issued for settlement   —            —            4,500,000    4,500    (4,500)                              
Net loss   —            —            —                        (16,404)   (995,633)   51,697    (960,340)
Balance, September 30, 2023   —     $      2,000,000   $2,000    603,603,984   $603,605   $23,490,778   $302,552   $(16,792)  $(27,018,878)  $18,403   $(2,618,332)

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 F-4

 

 

                                  
   Series A Preferred Stock  Series C Preferred Stock  Common Stock  Additional paid  Common Stock To be  Other Comprehensive  Accumulated  Total Stockholders'
   Shares  Amount  Shares  Amount  Shares  Amount  In Capital  Issued  Loss  Deficit  Deficit
Balance, December 31, 2021   1,850,000   $1,850    2,000,000   $2,000    312,860,376   $312,861   $12,576,049   $227,544   $     $(13,165,085)  $(44,781)
Cancellation of preferred   (1,850,000)   (1,850)   —            —            1,850                         
Stock issued for services   —            —            1,525,016    1,525    46,209    (6,119)               41,615 
Debt issuance cost   —            —            —            161,709                      161,709 
Net loss   —            —            —                        (10,040)   (1,064,930)   (1,074,970)
Balance, March 31, 2022   —            2,000,000    2,000    314,385,392    314,386    12,785,817    221,425    (10,040)   (14,230,015)   (916,427)
Stock issued for cash   —            —            30,000,000    30,000    570,000                      600,000 
Stock issued for services   —            —            5,000,000    5,000    143,001    11,246                159,247 
Debt issuance cost   —            —            —            33,773                      33,773 
Net loss   —            —            —                        (677)   (1,121,867)   (1,122,544)
Balance, June 30, 2022   —            2,000,000    2,000    349,385,392    349,386    13,532,591    232,671    (10,717)   (15,351,882)   (1,245,951)
Stock issued for services   —            —            5,000,000    5,000    77,500    46,632              129,132 
Net loss   —            —            —                        6,622    (869,268)   (862,646)
Balance, September 30, 2022   —     $      2,000,000   $2,000    354,385,392   $354,386   $13,610,091   $279,303   $(4,095)  $(16,221,150)  $(1,979,465)

 

 F-5

 

CLEAN VISION CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)  

 

              
   For the Nine Months Ended
September 30,
   2023  2022
       
Cash Flows from Operating Activities:          
Net loss  $(6,456,541)  $(3,060,160)
Adjustments to reconcile net loss to net cash used
by operating activities:
          
       Stock based compensation         486,166 
      Stock issued for services   1,009,480    329,994 
       Stock issued for services – related party   61,000       
Debt discount amortization   2,953,540    30,000 
Loss on issuance of debt   2,676,526    195,482 
Change in fair value of derivative   (2,174,421)      
Gain on conversion of debt   (881,660)      
Gain on extinguishment of debt   (17,500)      
Changes in operating assets and liabilities:          
       Prepaid   (230,754)   (92,033)
       Accounts receivable   (160,736)      
Accounts payable   (152,808)   11,248
Accruals   164,385    140,262 
Accrued compensation   (202,619)   112,230
Net cash used by operating activities   (3,412,108)   (1,846,811)
           
Cash Flows from Investing Activities:          
Purchase of 51% interest in Clean-Seas Morocco, LLC   (2,000,000)      
Purchase of property and equipment         (54,713))
Net cash used by investing activities   (2,000,000)   (54,713))
           
Cash Flows from Financing Activities:          
Cash overdraft acquired in acquisition   (11,093)      
Proceeds from convertible notes payable   4,809,500    300,000 
Payments-convertible notes payable   (270,000)      
Proceeds from the sale of common stock   533,000    600,000 
Proceeds from notes payable - related party   5,000    45,140 
Repayment of related party loans   (32,910)   (100)
Proceeds from notes payable   42,500    131,436 
Proceeds from long term note payable   1,750,000       
Payments - notes payable   (72,780)   (14,402)
Net cash provided by financing activities   6,753,217    1,062,074 
           
Net change in cash   1,341,109    (839,450)
Effects of currency translation   (33,462)   6,622 
Cash at beginning of period   10,777    835,657 
Cash at end of period  $1,318,424    2,829 
           
Supplemental schedule of cash flow information:          
Interest paid  $     $   
Income taxes  $     $   
Supplemental non-cash disclosure:          
Common stock issued for conversion of debt  $2,538,174   $   
Common stock issued for prepaid services  $     $111,000 
Note payable issued for acquisition  $4,500,000   $   

 


 

 The accompanying notes are an integral part of these unaudited consolidated financial statements.                

 F-6

 

 

CLEAN VISION CORPORATION

Notes to Unaudited Consolidated Financial Statements

September 30, 2023

 

NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS

 

Clean Vision Corporation (“Clean Vision,” “we,” “us,” or the “Company”) is a new entrant in the clean energy and waste-to-energy industries focused on clean technology and sustainability opportunities.  Currently, we are focused on providing a solution to the plastic and tire waste problem by recycling the waste and converting it into saleable byproducts, such as hydrogen and other clean-burning fuels that can be used to generate clean energy. Using a technology known as pyrolysis, which heats the feedstock (i.e., plastic) at high temperatures in the absence of oxygen so that the material does not burn, we are able to turn the feedstock into (i) low sulfur fuel, (ii) clean hydrogen and (iii) carbon black or char (char is created when plastic is used as feedstock). Our goal is to generate revenue from three sources: (i) service revenue from the recycling services we provide (ii) revenue generated from the sale of the byproducts; and (iii) revenue generated from the sale of fuel cell equipment.  Our mission is to aid in solving the problem of cost-effectively upcycling the vast amount of waste plastic generated on land before it flows into the world’s oceans.

 

We currently operate through our wholly-owned subsidiary, Clean-Seas, Inc. (“Clean-Seas”), which we acquired on May 19, 2020. Clean-Seas acquired its first pyrolysis unit in November 2021 for use in a pilot project in India, which began operations in early May 2022. On April 23, 2023, Clean-Seas completed its acquisition of a fifty-one percent (51%) interest in Eco Synergie S.A.R.L., a limited liability company organized under the laws of Morocco, which changed its name to Clean-Seas Morocco, LLC (“Clean-Seas Morocco”) on such date. Clean-Seas Morocco began operations at its pyrolysis facility in Agadir, Morocco, in April 2023, which currently has capacity to convert 20 tons per day (“TPD”) of waste plastic.

 

We believe that our projects in India and Morocco will showcase our ability to pyrolyze waste plastic (using pyrolysis), which will generate three byproducts: (i) low sulfur fuel, (ii) clean hydrogen, AquaHtm, and (iii) char. We intend to sell the majority of the byproducts, while retaining a small amount of the low sulfur fuels and/or hydrogen to power our facilities and equipment. To date, our operations in India have not generated any revenue. However, since commencing operations at our Morocco facility in April 2023, Clean-Seas Morocco has generated $161,297 in revenue, with a gross margin of $127,435 from the provision of pyrolysis services and its sale of byproducts.

 

Clean-Seas India Private Limited was incorporated on November 17, 2021 as a wholly owned subsidiary of Clean-Seas.

 

Clean-Seas, Abu Dhabi PVT. LTD was incorporated in Abu Dhabi on December 9, 2021 as a wholly owned subsidiary of the Company. On January 19, 2022, the Company changed the name of its wholly owned subsidiary, Clean-Seas, Abu Dhabi PVT. LTD, to Clean-Seas Group. As of July 4, 2022, the Clean-Seas Group ceased operations and is in the process of dissolving.

 

Endless Energy, Inc. (“Endless Energy”) was incorporated in Nevada on December 10, 2021 as a wholly owned subsidiary of the Company. EndlessEnergy does not currently have any operations, but it was incorporated for the purpose of investing in wind and solar energy projects.

 

EcoCell, Inc. ("EcoCell”) was incorporated on March 4, 2022 as a wholly owned subsidiary of the Company. EcoCell does not currently have any operations, but we intend to use EcoCell for the purpose of licensing fuel cell patented technology.

 

Clean-Seas Arizona, Inc. ("Clean-Seas Arizona”) was incorporated in Arizona on September 19, 2022 as a wholly owned subsidiary of Clean-Seas. Clean-Seas Arizona was formed pursuant to a Memorandum of Understanding (the “MOU”) signed on November 4, 2022 with Arizona State University and the Rob and Melani Walton Sustainability Solution Service. Pursuant to the MOU, the parties intend to establish a 100 ton per day waste plastic to clean hydrogen conversion facility in Arizona.

 

Clean-Seas West Virginia, Inc. (“Clean-Seas West Virginia”), established on April 1, 2023, is our first facility in the United States and is expected to be operational in the first quarter of 2024. The facility will be located outside of Charleston, the capital of West Virginia, and is expected to begin operations converting 100 TPD of waste plastic. The Company expects Clean-Seas West Virginia to expand to greater than 500 TPD over the course of the next three years.

 

 F-7

 

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The Company’s unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”), and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and reflect all adjustments, consisting of normal recurring adjustments, which management believes are necessary to fairly present the financial position, results of operations and cash flows of the Company as of and for the nine month period ending September 30, 2023 and not necessarily indicative of the results to be expected for the full year ending December 31, 2023. These unaudited consolidated financial statements should be read in conjunction with the financial statements and related notes included in the Company’s financial statements for the year ended December 31, 2022.

 

Use of Estimates

 

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

 

Concentrations of Credit Risk

 

We maintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. We continually monitor our banking relationships and consequently have not experienced any losses in our accounts. At times, such deposits may be in excess of the Federal Deposit Insurance Corporation insurable amount (“FDIC”).  As of September 30, 2023, the Company had $974,248 of cash in excess of the FDIC’s $250,000 coverage limit.

 

Cash equivalents

 

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents for the periods ended September 30, 2023 and December 31, 2022.

 

Principles of Consolidation

 

The accompanying consolidated financial statements for the quarter ended September 30, 2023, include the accounts of the Company and its wholly owned subsidiaries, Clean-Seas, Clean-Seas India Private Limited, Clean-Seas Group, Endless Energy, Inc. (“Endless Energy”), EcoCell, Inc., Clean-Seas Arizona, Clean-Seas West Virginia, and our 51% owned subsidiary, Clean-Seas Morocco. As of September 30, 2023, there was no activity in Clean-Seas Group, Endless Energy or Clean-Seas Arizona.

 

Translation Adjustment

 

The accounts of the Company’s subsidiary Clean-Seas India are maintained in Rupees and the accounts of Clean-Seas Morocco in Moroccan dirham. In accordance with the Codification, all assets and liabilities were translated at the current exchange rate at respective balance sheets dates, members’ capital are translated at the historical rates and income statement items are translated at the average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with the Comprehensive Income Topic of the Codification (ASC 220), as a component of members’ capital. Transaction gains and losses are reflected in the income statement.

 

Comprehensive Income

 

The Company uses SFAS 130 “Reporting Comprehensive Income” (ASC Topic 220).  Comprehensive income is comprised of net income and all changes to the statements of members’ capital, except those due to investments by members, changes in paid-in capital and distributions to members. Comprehensive income is included in net loss and foreign currency translation adjustments.

 F-8

 

 

Basic and Diluted Earnings Per Share

 

Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification.  Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.  Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented. As of September 30, 2023, there are warrants to purchase up to 116,944,802 shares of common stock and approximately 158,000,000 dilutive shares of common stock from a convertible notes payable. As of September 30, 2023 and 2022, there are 20,000,000 and 20,000,000 potentially dilutive shares of common stock, respectively, if the Series C preferred stock were to be converted. There are 2,000,000 shares of Series B preferred stock outstanding. The Series B Preferred Stock can automatically be converted on January 1, 2023, into shares of common stock at the rate of 10 shares of Common Stock for each share of Preferred Stock. As of September 30, 2023 and 2022, the Company’s diluted loss per share is the same as the basic loss per share, as the inclusion of any potential shares would have had an anti-dilutive effect due to the Company generating a loss.

 

Stock-based Compensation

 

In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 allows companies to account for nonemployee awards in the same manner as employee awards. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those annual periods. We adopted this ASU on January 1, 2019.

 

Goodwill

 

The Company accounts for business combinations under the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations, where the total purchase price is allocated to the tangible and identified intangible assets acquired and liabilities assumed based on their estimated fair values. The purchase price is allocated using the information currently available, and may be adjusted, up to one year from acquisition date, after obtaining more information regarding, among other things, asset valuations, liabilities assumed and revisions to preliminary estimates. The purchase price in excess of the fair value of the tangible and identified intangible assets acquired less liabilities assumed is recognized as goodwill.

 

In accordance with ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, the Company will test for indefinite-lived intangibles and goodwill impairment in the fourth quarter of each year and whenever events or circumstances indicate that the carrying amount of the asset exceeds its fair value and may not be recoverable.

 

Derivative Financial Instruments

 

The Company evaluates its convertible notes to determine if such instruments have derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a weighted-average Black-Scholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period.

 

Fair value of financial instruments

 

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP) and expands disclosures about fair value measurements.  To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels.  The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

 F-9

 

 

Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

 

Level 2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

 

Level 3: Pricing inputs that are generally unobservable inputs and not corroborated by market data.

 

The carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the short maturity of those instruments.  The Company’s notes payable represents the fair value of such instruments as the notes bear interest rates that are consistent with current market rates.

 

The following table classifies the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of September 30, 2023:

Description   Level 1     Level 2   Level 3  
Derivative    $         $      $ 924,447  
Total   $        $      $ 924,447  

 

Revenue Recognition

 

The Company recognizes revenue under ASC 606, “Revenue from Contracts with Customers” (“ASC 606”). The Company determines revenue recognition through the following steps:

 

  Identification of a contract with a customer;
     
  Identification of the performance obligations in the contract;
     
  Determination of the transaction price;
     
  Allocation of the transaction price to the performance obligations in the contract; and
     
  Recognition of revenue when or as the performance obligations are satisfied.

 

Revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Shipping and handling activities associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment activity and recognized as revenue at the point in time at which control of the goods transfers to the customer. As a practical expedient, the Company does not adjust the transaction price for the effects of a significant financing component if, at contract inception, the period between customer payment and the transfer of goods or services is expected to be one year or less.

 

Our business model is focused on generating revenue from the following sources:

 

(i) Service revenue from the recycling services we provide. We plan to establish plastic feedstock agreements with a number of feedstock suppliers for the delivery of plastic to our facilities. Much of this plastic is currently a cost center for such feedstock suppliers, who pay "tipping fees" to landfills or incinerators. We will accept this plastic feedstock at reduced price or for no tipping fees. In some cases, feedstock suppliers will also share in revenue on products produced from their feedstock.  This revenue will be realized and recognized upon receipt of feedstock at one of our facilities.

 F-10

 

 

(ii) Revenue generated from the sale of commodities. We will produce commodities including, but not limited to, pyrolysis oil, fuel oil, lubricants, synthetic gas, hydrogen, and carbon char. We are in negotiation with chemical and oil companies for purchasing, or off-taking, fuels and oils we produce, and exploring applications for carbon char. This revenue will be recognized upon shipment of products from one of our facilities and in some cases off-takers may pre-pay for a contractual obligation to buy our commodities.

 

(iii) Revenue generated from the sale of environmental credits. Our products are eligible for numerous environmental credits, including but not limited to carbon credits, plastic credits, and biodiversity credits. These credits may be monetized directly on the relevant markets or may be realized as value-add to off-takers, who will pay a premium for eligible products. Revenue from these credits will be recognized upon sale of applicable environmental credits on recognized markets, and/or upon sale of commodities to off-takers when that off-take includes an environmental credit premium.

 

(iv) Revenue generated from royalties and/or the sale of equipment. We expect to develop or acquire intellectual property which could generate revenue through royalties and/or sales of manufactured equipment.  Revenue may be recognized upon the terms of a contracted sale agreement. 

 

As of September 30, 2023, our operations in Morocco had generated approximately $188,000  in revenue, with a gross margin of approximately $166,000 from the sale of commodities (the provision of pyrolysis services and its sale of byproducts). As of September 30, 2023, we did not generate revenue from any other sources  .

  

Recently issued accounting pronouncements

 

The Company has implemented all new applicable accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and 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.

 

NOTE 3 - GOING CONCERN

 

The accompanying unaudited consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not yet established a source of revenue sufficient to cover its operating costs, had an accumulated deficit of $27,018,878 at September 30, 2023, and had a net loss of $6,456,541 for the nine months ended September 30, 2023. The Company’s ability to raise additional capital through the future issuances of common stock and/or debt financing is unknown. The obtainment of additional financing, the successful development of the Company’s contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. These conditions and the ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

 

Management plans to continue to implement its business plan and to fund operations by raising additional capital through the issuance of debt and equity securities. The Company’s existence is dependent upon management's ability to implement its business plan and/or obtain additional funding. There can be no assurance that the Company’s financing efforts will result in profitable operations or the resolution of the Company's liquidity problems. Even if the Company is able to obtain additional financing, it may include undue restrictions on our operations in the case of debt or cause substantial dilution for our stockholders in the case of equity financing.

 

 F-11

 

NOTE 4 — BUSINESS COMBINATIONS

 

On April 25, 2023 (the “Morocco Closing Date”), Clean-Seas, a wholly owned subsidiary of the Company, completed its acquisition of a fifty-one percent (51%) interest (the “Morocco Acquisition”) in Eco Synergie S.A.R.L., a limited liability company organized under the laws of Morocco (“Ecosynergie”), pursuant to that certain Notarial Deed (the “Morocco Purchase Agreement”) dated as of January 23, 2023 (the “Signing Date”) setting forth the terms and provisions applicable to the Morocco Acquisition (the “Purchase Agreement”). On the Morocco Closing Date, (i) Ecosynergie’s name was changed to Clean-Seas Morocco, LLC, (ii) Mrs. Halima Aboudeine and Mr. Daniel C. Harris, the Company’s CRO, were appointed as managers of Clean-Seas Morocco and (iii) Mr. Harris was appointed to serve as the Chief Executive Officer of Clean-Seas Morocco. Ecosynergie was not acquired from a related party and the Company did not have common control with Ecosynergie at the time of the Morocco Acquisition.

  

Pursuant to the Morocco Purchase Agreement, Clean-Seas paid an aggregate purchase price of $6,500,000 for the Morocco Acquisition, of which (i) $2,000,000 was paid on the Morocco Closing Date and (ii) the remaining $4,500,000 is to be paid to Ecosynergie Group over a period of ten (10) months from the Morocco Closing Date. Additionally, Clean-Seas committed to invest up to $50,000,000 in Clean-Seas Morocco over a period of ten (10) months from the Morocco Closing Date (the “Clean-Seas Morocco Investment”). The Clean-Seas Morocco Investment is currently contemplated to be funded in tranches based on a to be agreed to schedule tied to milestones related to the technology being deployed by Clean-Seas Morocco. The parties intend to complete the funding schedule applicable to the Clean-Seas Morocco investment in the first quarter 2024. To date, none of the Clean-Seas Morocco Investment has been funded 

 

The Company accounted for the transaction as a business combination under ASC 805 and as a result, allocated the fair value of the identifiable assets acquired and liabilities assumed as of the acquisition date as outlined in the table below. Although the accounting for operations is not yet complete, the results of operations of the business acquired by the Company have been included in the consolidated statements of operations since the date of acquisition. All amounts are considered provisional until a more thorough analysis of the books and records and the accounting for the acquisition can be completed. Per ASC 805-10-25-13, if the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the acquirer shall report in its financial statements provisional amounts for the items for which the accounting is incomplete.

 

The excess of the purchase price over the estimated fair values of the underlying identifiable assets acquired, liabilities assumed, and non-controlling interest was allocated to goodwill. The provisional estimated fair value of the noncontrolling interest was based on the price the Company paid for their 51% of their controlling interest. The goodwill represents expected synergies from the combined operations.

 

The allocation of the purchase price and the estimated fair market values of the assets acquired and liabilities assumed are shown below:

 

 

 

Consideration   
Consideration issued  $6,500,000 
Identified assets and liabilities     
Cash   11,093 
Prepaid and other assets   1,186,242 
Accounts receivable   392,611 
Property and equipment, net   1,146,445 
Accounts payable   (238,424)
Accrued Expenses   (767,288)
Loans payable   (789,827)
Lines of credit   (336,948)
Total identified assets and liabilities   603,904 
Excess purchase price allocated to goodwill  $5,896,096 

 

 F-12

 

 

NOTE 5 - PROPERTY & EQUIPMENT

 

Property and equipment are recorded at cost. The Company capitalizes purchases of property and equipment over $5,000. Depreciation is computed using the straight-line method over the estimated useful lives of the various classes of assets as follows between three and five years.

 

Long lived assets, including property and equipment, to be held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Impairment losses are recognized if expected future cash flows of the related assets are less than their carrying values. Measurement of an impairment loss is based on the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.

 

Maintenance and repair expenses, as incurred, are charged to expense. Betterments and renewals are capitalized in plant and equipment accounts. Cost and accumulated depreciation applicable to items replaced or retired are eliminated from the related accounts with any gain or loss on the disposition included as income.

 

Clean-Seas, Inc. has purchased a pyrolysis unit for piloting and demonstration purposes which has been commissioned in Hyderabad, India as of May 2022. The unit will be used to showcase the Company’s technology and services, turning waste plastic into environmentally friendly commodities, to potential customers. 

 

Property and equipment stated at cost, less accumulated depreciation consisted of the following:

 

  

   September 30,
2023
  December 31,
2022
Pyrolysis unit  $185,700   $185,700 
Equipment   55,676    55,676 
Clean-Seas Morocco   1,053,755       
Less: accumulated depreciation            
Property and equipment, net  $1,295,131   $241,376 

 

Depreciation expense

 

As of September 30, 2023, the Company’s fixed assets have not yet been placed into service. Depreciation will begin on the date the assets are placed into service.

 

NOTE 6 – LOANS PAYABLE

 

As of December 31, 2020, a third party loaned the Company a total of $114,500. The loan was used to cover general operating expenses, is non-interest bearing and due on demand. During the year ended December 31, 2021, the Company repaid $100,000 of the loan. During the year ended December 31, 2022, the same individual provided consulting/IR services to the Company valued at $100,000. The amount due was added to the note payable for a balance due of $114,500 as of December 31, 2022. During the nine months ended September 30, 2023, the note was fully converted into 5,725,000 shares of common stock.

 

Effective January 1, 2023, the Company acquired a financing loan for its Director and Officer Insurance for $42,500. The loan bears interest at 7.75%, requires monthly payments of $4,402.42 and is due within one year. As of September 30, 2023, the balance due is $8,540.

 

NOTE 7 – CONVERTIBLE NOTES

 

Silverback Capital Corporation

 

On March 31, 2022, the Company issued a Promissory Note to Silverback Capital Corporation (“Silverback”) in the amount of $360,000. The Company received $300,000, net of a $60,000 OID. The note bears interest at 8% per annum and matures in one year. The note may be converted to shares of common stock at $0.02 per share, provided, that if the Company effects a Qualified Offering (as defined in the note) the conversion price will be such price that represents a 20% discount to the offering price of the Company’s common Stock in the Offering. In the event of a default Silverback will have the option to convert at the lower of 1) .02 per share, or 2) a 20% discount to the five day trailing VWAP of the common stock. On February 21, 2023, Silverback fully converted the $360,000 note and $25,723 of interest into 19,286,137 shares of common stock.

 F-13

 

 

Coventry Enterprises, LLC

 

On December 9, 2022, the Company entered into the Purchase Agreement (the “Coventry Purchase Agreement”) with Coventry Enterprises, LLC (“Coventry”), pursuant to which the Company issued to Coventry a Promissory Note (the “Coventry Note”) in the principal amount of $300,000 in exchange for a purchase price of $255,000, net of a discount of $45,000. In addition, the Company issued to Coventry 15,500,000 shares of Common Stock (the “Commitment Stock”), of which 12,500,000 shares of Commitment Stock were returned to the Company pursuant to the terms of the Coventry Purchase Agreement in the first quarter of 2023.

 

The Coventry Note bears guaranteed interest at the rate of 5% per annum for the 12 months from and after the date of issuance (notwithstanding the 11-month term of the Coventry Note for aggregate guaranteed interest of fifteen thousand Dollars ($15,000), all of which Guaranteed Interest shall be deemed earned as of the date of the Coventry Note. The principal amount and the Guaranteed Interest are due and payable in seven equal monthly payments of $45,000, commencing on May 6, 2023, and continuing on the 6th day of each month thereafter until paid in full not later than November 6, 2023. During the nine months ended September 30, 2023, the Company repaid $270,000 of the principal amount.

 

February Convertible Notes

 

On February 17, 2023, the Company entered into a securities purchase agreement (the “February Purchase Agreement”) with certain institutional buyers. Pursuant to the February Purchase Agreement, the Company issued senior convertible notes in the aggregate principal amount of $4,080,000, which notes shall be convertible into shares of common stock at the lower of (a) 120% of the closing price of the common stock on the day prior to closing, or (b) a 10% discount to the lowest daily volume weighted average price (“VWAP”) reported by Bloomberg of the common stock during the 10 trading days prior to the conversion date.

 

On February 17, 2023, the initial investor under the February Purchase Agreement purchased a senior convertible promissory note (the “February Note”) in the original principal amount of $2,500,000 and a warrant to purchase 29,434,850 shares of the Company’s common stock. The maturity date of the February Note is February 21, 2024 (the “Maturity Date”). The February Note bears interest at a rate of 5% per annum. The February Note carries an original issue discount of 2%. The Company may not prepay any portion of the outstanding principal amount, accrued and unpaid interest or accrued and unpaid late charges on principal and interest, if any, except as specifically permitted by the terms of the February Note. The Company also issued a warrant to the initial investor that is exercisable for shares of the Company’s common stock at a price of $0.0389 per share and expires five years from the date of issuance.

 

April Convertible Note

 

Pursuant to the February Purchase Agreement, on April 10, 2023, an investor purchased a senior convertible promissory note (the “April Note”) in the original principal amount of $1,500,000 and the Company issued warrants for the purchase of up to 17,660,911 shares of the Company’s common stock to the investor. The April Note bears interest at a rate of 5% per annum. The April Note carries an original issue discount of 2%. The Company may not prepay any portion of the outstanding principal amount, accrued and unpaid interest or accrued and unpaid late charges on principal and interest, if any, except as specifically permitted by the terms of the April Note.

 

May Convertible Notes

 

On May 26, 2023, the Company entered into that certain Securities Purchase Agreement (the “May Purchase Agreement”) with certain institutional investors (the “May Investors”), pursuant to which the May Investor purchased a senior convertible promissory note in the aggregate original principal amount of $1,714,285.71 (the “May Note”) and warrants to purchase 44,069,041 shares of the Company’s common stock (the “May Warrants”).

 

 F-14

 

The May Note matures 12 months after issuance and bear interest at a rate of 5% per annum, as may be adjusted from time to time in accordance with Section 2 of the May Note. The May Note have an original issue discount of 30%. The Company may not prepay any portion of the outstanding principal amount, accrued and unpaid interest or accrued and unpaid late charges on principal and interest, if any, except as specifically permitted by the terms of the May Note.

 

At any time, the Company shall have the right to redeem all, but not less than all, of the amount then outstanding under the May Note (the “Company Optional Redemption Amount”) on the Company Optional Redemption Date (as defined in the Note) (a “Company Optional Redemption”). The portion of the May Note subject to a Company Optional Redemption shall be redeemed by the Company in cash at a price equal to the greater of (i) 10% premium to the amount then outstanding under the May Note to be redeemed, and (ii) the equity value of our common stock underlying the May Note. The equity value of our common stock underlying the May Note is calculated using the greatest closing sale price of our common stock on any trading day immediately preceding such redemption and the date we make the entire payment required. The Company may exercise its right to require redemption under the May Note by delivering a written notice thereof by electronic mail and overnight courier to all, but not less than all, of the holders of May Note.

 

The May Warrants are exercisable for shares of the Company’s common stock at a price equal to 120% of the closing sale price of the common stock on the trading day ended immediately prior to the closing date (the “May Warrant Exercise Price”) and expire five years from the date of issuance. The May Warrant Exercise Price is subject to customary adjustments for stock dividends, stock splits, recapitalizations and the like.

 

August 2023 Note

 

On July 31, 2023 (the “August Note Original Issue Date”), the Company entered into a securities purchase agreement (the “August Purchase Agreement”) with an accredited investor (the “August Investor”), pursuant to which the August Investor purchased a senior convertible promissory note in the original principal amount of $500,000 (the “August Note”). In addition, as an additional inducement to the August Investor for purchasing the August Note, the Company issued 21,000,000 shares of its common stock to the August Investor at the closing. These shares are being valued at the closing stock price on the date of grant with the relative fair value accounted for as a debt discount. The transactions contemplated under the August Purchase Agreement closed on August 4, 2023.

 

The August Note matures on July 31, 2024 and bears interest at a rate of 10% per annum (the “Guaranteed Interest”), carries an original issue discount of 15% and has a conversion price of 90% per share of the lowest VWAP during the 20 trading day period before the conversion. The Company may prepay any portion of the outstanding principal amount and the guaranteed interest at any time and from time to time, without penalty or premium, provided that any such prepayment will be applied first to any unpaid collection costs, then to any unpaid fees, then to any unpaid Default Rate interest (as defined in the August Note), and any remaining amount shall be applied first to any unpaid guaranteed interest, and then to any unpaid principal amount.

 F-15

 

 

The August Investor was granted a right of first refusal as the exclusive party with respect to any Equity Line of Credit transaction or financing (an “Additional Financing”) that the Company enters into during the 24-month period after the August Note Original Issue Date. In the event the Company enters into an Additional Financing, the Company must provide notice to the August Investor not less than 10 trading days in advance of the proposed entry. If the August Investor accepts all usual and customary terms set forth in the Additional Financing notice, the August Investor must, within 20 trading days of receipt of the notice, prepare all relevant documents in respect thereof for execution and delivery by the Company, provided, however, that the Company’s outside counsel must prepare the relevant registration statement to be filed with the United States Securities and Exchange Commission no later than 45 days after the Company receives the documents.

 

The August Note sets forth certain standard events of default (each such event, an “August Note Event of Default”), which, upon such August Note Event of Default, the principal amount and the guaranteed interest then outstanding under the August Note becomes convertible into shares of the Company’s common stock pursuant to a notice provided by the August Investor to the Company. At any time after the occurrence of an August Note Event of Default, the outstanding principal amount and the outstanding guaranteed interest then outstanding on the August Note, plus accrued but unpaid Default Rate (as defined in the August Note) interest, liquidated damages and other amounts owing in respect thereof through the date of acceleration, shall become immediately due and payable at the August Investor’s option, in cash or in shares of the Company’s common stock at 120% of the outstanding principal amount of the August Note and accrued and unpaid interest, plus other amounts, costs, expenses and liquidated damages due in respect of the August Note.

 

The Company accounted for the above Convertible Notes according to ASC 815. For the derivative financial instruments that are accounted for as liabilities, the derivative liability was initially recorded at its fair value and is being re-valued at each reporting date, with changes in the fair value reported in the statements of operations.

 

For the warrants that were issued with each tranche of funding, the Company uses a weighted-average Black-Scholes-Merton option pricing model to value the warrants at inception and then calculates the relative fair value for each loan.

 

The Company deducts the total value of all discounts (OID, value of warrants, discount for derivative) from the calculated derivative liability with any difference accounted for as a loss on debt issuance. For the nine months ended September 30, 2023, the Company recognized a total loss of the issuance of convertible debt of $2,676,526.

  

From April 2023 through September 30, 2023, Walleye Opportunities Master Fund Ltd., converted $2,063,684 of the principal amount of the February Note into 97,450,000 shares of our common stock. The Company accounted for the conversions per ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20), resulting in a gain from conversion of debt of $881,660.

 

The following table summarizes the convertible notes outstanding as of September 30, 2023:

 

Note Holder   Date   Maturity Date   Interest   Balance
December 31,
2022
    Additions     Conversions / Repayments     Balance
September 30, 2023
Silverback Capital Corporation   3/31/2022   3/31/2023     8%    $ 360,000     $     $ (360,000)     $
Coventry Enterprises, LLC   12/29/2022   11/6/2023     5%     300,000             (270,000)       30,000
Walleye Opportunities Fund   2/21/2023   2/21/2024     5%           2,500,000       (2,063,684)       436,316
Walleye Opportunities Fund   4/10/2023   4/10/2024     5%           1,500,000             1,500,000
Walleye Opportunities Fund   5/26/2023   5/26/2024     5%           1,714,286             1,714,286
Coventry Enterprises, LLC   7/31/2023   7/31/2024     10%           500,000             500,000
Total                 $ 660,000     $ 6,214,286     $ (2,693,674)     $ 4,180,602
Less debt discount                  $ (183,560)               (2,946,664)
Convertible note payable, net                 $ 476,440                     $ 1,233,938

 

 F-16

 

 

A summary of the activity of the derivative liability for the notes above is as follows:

 

     
Balance at December 31, 2022   $  
Increase to derivative due to new issuances     4,217,944  
Decrease to derivative due to conversions     (1,119,076 )
Decrease to derivative due to mark to market     (2,174,421 )
Balance at September 30, 2023   $ 924,447  

 

The Company uses the Black Scholes pricing model to estimate the fair value of its derivatives. A summary of quantitative information about significant unobservable inputs (Level 3 inputs) used in measuring the Company’s derivative liability that are categorized within Level 3 of the fair value hierarchy, as of September 30, 2023 is as follows:

 

Inputs   September 30, 2023   Initial
Valuation
Stock price   $ 0.045     $ 0.0566-0.1075  
Conversion price   $ 0.0358     $ 0.0534-0.0591  
Volatility (annual)     108.55 %     165.3%-170.53 %
Risk-free rate     5.56 %     4.7-5.07 %
Dividend rate              —    
Years to maturity     0.39       .87-1  

 

NOTE 8 – RELATED PARTY TRANSACTIONS

 

Dan Bates, CEO

 

On February 21, 2021, the Company amended the employment agreement with Daniel Bates, the Company’s Chief Executive Officer. The amendment extended the term of his agreement from three years commencing May 27, 2020, to expire on May 27, 2025.

 

As of September 30, 2023 and December 31, 2022, the Company owed Mr. Bates $189,000 and $220,000, respectively, for accrued compensation.

 

The Company issued to Mr. Bates three separate promissory notes, 1) on August 1, 2022, for $1,000, 2) on September 15, 2022, for $35,040, and 3) on October 6, 2022, for $1,000. The notes bear interest at 8% and are due on demand. As of December 31, 2022, the Company repaid $20,000, for a balance due of principal and interest of $26,040 and $977. During the nine months ended September 30, 2023, Mr. Bates loaned the Company an additional $5,000. AS of September 30, 2023, the loans and all accrued interest were repaid in full.

 

Rachel Boulds, CFO

 

The Company entered into a consulting agreement with Rachel Boulds, effective as of May 1, 2021, to serve as part-time Chief Financial Officer for compensation of $5,000 per month, which increased to $7,500 in June 2023. As of September 30, 2023 and December 31, 2022, the Company owes Ms. Boulds $7,500 and $25,000 for accrued compensation, respectively.

 F-17

 

 

Daniel Harris, Chief Revenue Officer

 

As of September 30, 2023 and December 31, 2022, the Company owed Mr. Harris, $12,500 and $37,500, respectively, for accrued compensation.

 

John Owen

 

Mr. Owen’s consulting agreement and his role as Chief Operating Officer were terminated effective as of November 21, 2022. Per the terms of the separation agreement with Mr. Owen, the Company acknowledges past due salary of $62,500. The Company made an initial payment of $2,500 and agreed to pay $5,000 a month beginning in January 2023. As of September 30, 2023, the Company owed Mr. Owen $15,000.

 

Erfran Ibrahim, former CTO

 

As of September 30, 2023 and December 31, 2022, the Company owed Mr. Ibrahim, $60,000 and $60,000, respectively, for accrued compensation.

 

Michael Dorsey, Director

 

As of September 30, 2023 and December 31, 2022, the Company owed Mr. Dorsey, $0 and $9,000, respectively, for accrued director fees.

 

Greg Boehmer, Director

 

As of September 30, 2023 and December 31, 2022, the Company owed Mr. Boehmer, $0 and $4,500, respectively, for accrued director fees. In addition, the Company owes Mr. Boehmer $0 and $7,000, for consulting services as of September 30, 2023 and December 31, 2022.

 

Bart Fisher, Director

 

On February 23, 2023. Mr. Fisher was granted 500,000 shares of common stock. The shares were valued at $0.122, the closing stock price on the date of grant, for total non-cash stock compensation of $61,000.

 

NOTE 9 – COMMON STOCK

 

The Company has entered into three consulting agreements that required the issuance of a total of 31,251 shares of common stock per month through December 2023. For the nine months ended September 30, 2023, the shares were valued at the closing stock price on the date of grant for total non-cash stock compensation of $13,000. As of September 30, 2023, the shares due have not been issued by the transfer agent and are included in common stock to be issued.

 

The Company has entered into a consulting agreement that requires the issuance of 5,000 shares of common stock per month beginning February 2022. For the nine months ended September 30, 2023, the shares were valued at the closing stock price on the date of grant for total non-cash stock compensation of $4,333. As of September 30, 2023, the shares due have not been issued by the transfer agent and are included in common stock to be issued.

 

In addition to the monthly shares granted the Company also granted the following:

 

On January 26, 2023, the Company issued a total of 10,500,000 shares of common stock and warrants to purchase up to 10,500,000 additional shares of common stock, to four individuals pursuant to the Signed Securities Purchase Agreements on January 26, 2023, for total cash proceeds of $210,000. The Warrants are exercisable for shares of the Company’s common stock at a price of $0.03 per share and expires three years from the date of issuance.

 

 F-18

 

On January 30, 2023, the Company granted 1,000,000 shares of common stock for services. The shares were valued at $0.063, the closing stock price on the date of grant, for total non-cash compensation expense of $62,800.

 

On February 16, 2023, the Board of Directors approved a special dividend of five shares of the Company's common stock for every one hundred shares of common stock issued and outstanding (the "Dividend"). The record date for the Dividend is February 27, 2023, and the payment date is March 13, 2023. The shares were valued at $0.068, for a total value of $1,483,528, which has been debited to the accumulated deficit.

 

On February 21, 2023, Silverback Capital Corporation, fully converted its note dated March 31, 2022, with principal and interest of $360,000 and $25,723, respectively, into 19,286,137 shares of common stock.

 

On February 22, 2023, the Company issued 6,250,000 shares of common stock and warrants to purchase up to 6,250,000 additional shares of common stock, to an individual pursuant to the Signed Securities Purchase Agreement, for total cash proceeds of $125,000. The Warrants are exercisable for shares of the Company’s common stock at a price of $0.03 per share and expires three years from the date of issuance.

 

On February 23, 2023, the Company granted 600,000 shares of common stock for services. The shares were valued at $0.122, the closing stock price on the date of grant, for total non-cash compensation expense of $73,200.

 

On March 7, 2023, the Company granted 850,000 shares of common stock for services. The shares were valued at $0.068, the closing stock price on the date of grant, for total non-cash compensation expense of $57,375.

 

On March 17, 2023, the Company granted 3,000,000 shares of common stock for services. The shares were valued at $0.065, the closing stock price on the date of grant, for total non-cash compensation expense of $194,400.

 

From April 2023 through September 30, 2023, Walleye Opportunities Master Fund Ltd., converted $2,063,684 of the principal amount of the February Note into 97,450,000 shares of our common stock.

 

On July 6, 2023, the Company issued Brad Listermann 430,000 shares of common stock. The shares were issued per the terms of a Settlement Agreement effective June 13, 2023.

 

On July 18, 2023, the Company issued 6,000,000 shares of common stock for services. The shares were valued at $0.03, the closing stock price on the date of grant, for total non-cash compensation expense of $181,800.

 

On July 24, 2023, the Company issued 5,725,000 shares of common stock for conversion of a loan payable in the amount $114,500.

 

On August 1, 2023, the Company granted 500,000 shares of common stock for services. The shares were valued at $0.025, the closing stock price on the date of grant, for total non-cash compensation expense of $12,650.

 

On August 29, 2023, the Company granted 500,000 shares of common stock for services. The shares were valued at $0.021, the closing stock price on the date of grant, for total non-cash compensation expense of $10,600.

 

On September 15, 2023, the Company granted 5,000,000 shares of common stock for services. The shares were valued at $0.026, the closing stock price on the date of grant, for total non-cash compensation expense of $130,000.

 

On September 26, 2023, the Company entered into the Dorado Purchase Agreement with Dorado. Pursuant to which the Company issued and sold to Dorado (i) 10,000,000 shares of Common Stock to the Dorado at a purchase price of $0.0198 per share, or $198,000 in the aggregate, and (ii) 5,000,000 shares of restricted Common Stock to Dorado.

 

Refer to Note 8 for shares issued to related parties.

 

NOTE 10 – PREFERRED STOCK

 

The Company is authorized to issue 10,000,000 shares of Preferred Stock at $0.001 par value per share with the following designations.

 F-19

 

 

Series A Redeemable Preferred Stock

 

On September 21, 2020, the Company created a series of Preferred Stock designating 2,000,000 shares as Series A Redeemable Preferred Stock ranks senior to the Company’s Common Stock upon the liquidation, dissolution or winding up of the Company. The Series A Preferred Stock does not bear a dividend or have voting rights and is not convertible into shares of our Common Stock.

 

Series B Preferred Stock

 

On December 14, 2020, the Company designated 2,000,000 shares of its authorized preferred stock as Series B Convertible Non-voting Preferred Stock (the “Series B Preferred Stock”). The Series B Preferred Stock does not bear a dividend or have voting rights. The Series B Preferred Stock automatically converted into shares of common stock on January 1, 2023, at the rate of 10 shares of common stock for each share of Series B Preferred Stock; however, due to an ongoing dispute with certain holders of the Series B Preferred Stock, which is expected to be resolved through binding arbitration in December 2023, such conversion has not been effectuated as of the date hereof. Holders of our Series B Preferred Stock have anti-dilution rights protecting their interests in the Company from the issuance of any additional shares of capital stock for a two year period following conversion of the Series B Preferred Stock calculated at the rate of 20% on a fully diluted basis.

 

On December 17, 2020, the Company entered into a three-year consulting agreement with Leonard Tucker LLC. Per the terms of the agreement, Leonard Tucker LLC received 2,000,000 shares of Series B Preferred Stock for services provided, which shares of Series B Preferred Stock is to be classified as mezzanine equity until they are fully issued.

 

Series C Preferred Stock

 

On February 19, 2021, the Company amended its Articles of Incorporation whereby 2,000,000 shares of preferred stock were designated Series C Convertible Preferred Stock. The holders of the Series C Convertible Preferred Stock are entitled to 100 votes and shall vote together with the holders of common stock. Each share of the Series C Convertible Preferred Stock automatically converted into ten shares of common stock on January 1, 2023; however, such conversion has not been effectuated as of the date hereof.

 

NOTE 11 – WARRANTS

 

On October 6, 2022, the Company issued warrants to purchase up to 40,000 shares of common stock in conjunction with the issuance of a note payable. The warrants are exercisable for 3 years with an exercise price of $0.01. The warrants were evaluated for purposes of classification between liability and equity. The warrants do not contain features that would require a liability classification and are therefore considered equity.

 

January 26, 2023, the Company issued a total of 10,500,000 shares of common stock and warrants to purchase up to 10,500,000 additional shares of common stock, to four individuals pursuant to a Securities Purchase Agreement signed on January 26, 2023, for total cash proceeds of $210,000. The warrants are exercisable for shares of the Company’s common stock at a price of $0.03 per share and expire three years from the date of issuance. Using the fair value calculation, the relative fair value for the warrants was calculated to determine the warrants recorded equity amount of $134,836, which has been accounted for in additional paid in capital.

 

On February 17, 2023, the investor under that certain Securities Purchase Agreement (the “February Purchase Agreement”) purchased a senior convertible promissory note in the original principal amount of $2,500,000 and a warrant to purchase 29,424,850 shares of the Company’s common stock (the “February Warrant”). The February Warrant is exercisable for shares of the Company’s common stock at a price of $0.0389 per share and expires five years from the date of issuance. Using the fair value calculation, the relative fair value for the warrants was calculated to determine the warrants recorded equity amount of $1,381,489 which has been accounted for in additional paid in capital.

 

On February 22, 2023, the Company entered into and closed on those certain Securities Purchase Agreements with five (5) investors (the “Reg. D Investors”), pursuant to which the Company issued 6,250,000 shares of common stock and warrants to purchase up to 6,250,000 additional shares of common stock (the “Reg. D Warrants”) for total cash proceeds of $125,000. The Reg. D Warrants are exercisable for shares of the Company’s common stock at a price of $0.03 per share and expires three years from the date of issuance. Using the fair value calculation, the relative fair value for the warrants was calculated to determine the warrants recorded equity amount of $193,063 which has been accounted for in additional paid in capital.

 F-20

 

 

Pursuant to the February Purchase Agreement, on April 10, 2023, the Company issued a senior convertible promissory note in the original principal amount of $1,500,000 and warrants to purchase 17,660,911 shares of the Company’s common stock (the “April Warrants”). The April Warrants are exercisable for shares of the Company’s common stock at a price of $0.0389 per share and expire five years from the date of issuance. Using the fair value calculation, the relative fair value for the warrants was calculated to determine the warrants recorded equity amount of $587,384 which has been accounted for in additional paid in capital.

 

On May 26, 2023, the Company entered into that certain Securities Purchase Agreement (the “May Purchase Agreement”) with certain institutional investors (the “May Investors”), pursuant to which the May Investors purchased senior convertible promissory notes in the aggregate original principal amount of $1,714,285.71 and warrants to purchase 44,069,041 shares of the Company’s common stock (the “May Warrants”). The May Warrants are exercisable for shares of the Company’s common stock at a price of $0.0389 per share and expire five years from the date of issuance. Using the fair value calculation, the relative fair value for the warrants was calculated to determine the warrants recorded equity amount of $760,980 which has been accounted for in additional paid in capital.

 

 

    Number of
Warrants
    Weighted
Average
Exercise
Price
    Weighted Average
Remaining Contract Term
  Intrinsic Value
Outstanding, December 31, 2021                      
Issued     9,040,000     $ 0.02       2.49      
Cancelled         $            
Exercised         $            
Outstanding, December 31, 2022     9,040,000     $ 0.02       2.25      
Issued     107,904,802     $ 0.04       4.46      
Cancelled         $            
Exercised         $            
Outstanding, September 30, 2023     116,944,802     $ 0.037       4.25   $ 988,694

 

NOTE 12 – COMMITMENTS AND CONTINGENCIES

 

Project Finance Arrangement

 

On November 4, 2022, the Company entered into a consulting agreement (the “Agreement”) with Edge Management, LLC (“Edge”), a services firm based in New York City. Under the Agreement, Edge will assist us to develop, structure and implement project finance strategies (“Project Finance”) for our clean energy installations around the world. Financing strategies will be in amounts and upon terms acceptable to us, and may include, without limitation, common and preferred equity financing, mezzanine and other junior debt financing, and/or senior debt financing, including but not limited to one or more bond offerings (“Project Financing(s)”). Under the Agreement, Edge is engaged as our exclusive representative for Project Financing matters. Edge is entitled to receive a cash payment for any Project Financing involving as follows: 5% of the gross amount of the funding facilities (up to $500 million) of all forms approved by the lender (“Lender”) introduced by Edge and or its affiliates and accepted by the Company on closing (“Closing”), 4% of the gross amount of the funding facilities (for the tranche of funding ranging from $500,000,001 to $1,000,000,000) approved by the Lender introduced by Edge and or its affiliates and accepted by the Company on Closing, and 3% of the subsequent gross amount ($1,000,000,001 and greater) of the funding facilities of all forms approved by the Lender introduced by Edge and/or its affiliates and accepted by the Company on Closing. In addition to the cash consulting fee, Edge shall be issued cashless, five-year warrants equal to: 2% (at a strike price to be mutually determined by the Parties for the first tranche of funding, up to $500 million), 1% (at a strike price to be mutually determined by the Parties for the tranche of funding ranging from $500,000,001 to $1,000,000,000), and 1% (at a strike price to be mutually determined by the Parties for any and all subsequent Debt Funding ($1,000,000,001 and greater)) of the outstanding common and preferred shares, warrants, options, and other forms of participation in the our Company on Closing.. The Agreement has an initial term of one (1) year and is cancellable by either party on ninety (90) days written notice. There is no guarantee that Edge will be successful in helping us obtain Project Financing.

 F-21

 

 

Legal Proceedings

 

Presently, except as described below, there are not any material pending legal proceedings to which the Company is a party or as to which any of its property is subject, and no such proceedings are known to the Company to be threatened or contemplated against it.