As filed with the
Securities and Exchange Commission on January 23,
2023
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CLEAN VISION CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Nevada |
|
7389 |
|
85–1449444 |
(State or Other Jurisdiction of
Incorporation or Organization)
|
|
(Primary Standard Industrial
Classification Code Number)
|
|
(I.R.S. Employer
Identification Number)
|
2711 N. Sepulveda Blvd. #1051
Manhattan Beach, CA 90266
(424) 835-1845
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant’s Principal Executive Offices)
Mr. Daniel Bates
Chief Executive Officer
2711 N. Sepulveda Blvd. #1051
Manhattan Beach, CA 90266
(424) 835-1845
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code,
of Agent For Service)
Copies to:
Joseph M. Lucosky, Esq.
Lucosky Brookman LLP
101 Wood Avenue South, 5th Floor
Woodbridge, NJ 08830
Tel: (732) 395-4400
|
Approximate date of commencement of proposed sale to the
public:
As soon as practicable after the effective date of this
Registration Statement.
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, check the following box. [X]
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check
the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
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 7(a)(2)(B) of the Securities
Act. [ ]
The registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until
the registrant shall file a further amendment which specifically
states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act or
until the Registration Statement shall become effective on such
date as the SEC, acting pursuant to said Section 8(a), may
determine.
The information in this preliminary prospectus is not complete
and may be changed. These securities may not be sold until the
registration statement filed with the Securities and Exchange
Commission is effective. This preliminary prospectus is not an
offer to sell these securities and we are not soliciting an offer
to buy these securities in any jurisdiction where the offer or sale
is not permitted.
SUBJECT TO COMPLETION, DATED JANUARY 23, 2023
PRELIMINARY PROSPECTUS
CLEAN VISION CORPORATION
Up to 23,000,000 Shares of Common Stock
Pursuant to this prospectus, Coventry Enterprises, LLC (“Coventry”
or the “Selling Shareholder”) may offer up to 318,000,000 shares of
common stock, par value $0.001 (the “Common Stock”), of Clean
Vision Corporation, a Nevada corporation (the “Company”, “we”, “us”
or “our”) issued to Coventry in connection with the Securities
Purchase Agreement by and between Coventry and the Company dated
December 9, 2023 (the “Purchase Agreement”) as follows (a) up to
3,000,000 shares of Common Stock issued pursuant to the Purchase
Agreement (the “Commitment Stock”) and (b) up to 20,000,000 shares
of Common Stock issuable to Coventry solely upon an event of a
default (the “Conversion Stock”) under that certain Promissory Note
issued to Coventry on December 9, 2023 (the “Note”) in the
principal amount of $300,000.
Per the terms of the Purchase Agreement, the Company issued
15,500,000 shares of its Common Stock to Coventry. If the Company
files an initial Registration Statement within forty-five calendar
days from the date of the Note, then Coventy, pursuant to its
mandatory obligations thereunder, shall, within ten (10) calendar
days thereafter, return to the Company’s treasury for cancellation
twelve million five hundred thousand (12,500,000) shares of Common
Stock. The 3,000,000 shares of Common Stock owned by Coventry
represents approximately 0.73% of our issued and outstanding shares
of Common Stock of as of January 18, 2023.
Upon an event of default under the Note, the outstanding principal
and interest thereon may be converted, at the option of Coventry,
into shares of Common Stock at a conversion price equal to 90% per
share of the lowest per-share trading price during the 20 trading
day period before the conversion.
Coventry is the Selling Shareholder and is deemed to be an
“underwriter” within the meaning of the Securities Act of 1933, as
amended (the “Act”) and any broker-dealers or agents that are
involved in selling the shares may be deemed to be “underwriters”
within the meaning of the Act in connection with such sales. In
such event, any commissions received by such broker-dealers or
agents and any profit on the resale of the shares purchased by them
may be deemed to be underwriting commissions or equivalent expenses
and expenses of legal counsel applicable to the sale of the
shares.
Coventry may sell the shares of Common Stock described in this
prospectus in a number of different ways and at varying prices. See
“Plan of Distribution” for more information about how Coventry may
sell the shares of Common Stock being registered pursuant to this
prospectus.
The prices at which the Selling Shareholder may sell the shares of
Common Shares in this offering will be determined by the prevailing
market prices for the shares of Common Shares or in negotiated
transactions
The Common Stock is quoted on the OTCQB Market maintained by OTC
Markets Group, Inc. (“OTC Markets”), under the symbol “CLNV”. On
January 18, 2023, the last reported sale price of the Common Stock
on the OTCQB was $0.074 per share.
There has been a very limited market for our securities. While our
Common Stock is quoted on the OTC Markets, there has been
negligible trading volume. There is no guarantee that an active
trading market will develop in our securities.
Following the effectiveness of the registration statement of which
this prospectus forms a part, the sale and distribution of
securities offered hereby may be effected from time to time in one
or more transactions that may take place on the OTC Markets (or
such other market or quotation system on which our common stock is
then listed or quoted), including ordinary brokers’ transactions,
privately negotiated transactions or through sales to one or more
dealers for resale of such securities as principals, at market
prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. Usual and
customary or specifically negotiated brokerage fees or commissions
may be paid by the selling stockholders. The selling stockholders
and intermediaries through whom such securities are sold may be
deemed “underwriters” within the meaning of the Securities Act of
1933, as amended (the “Securities Act”), with respect to the
securities offered hereby, and any profits realized or commissions
received may be deemed underwriting compensation.
This prospectus describes the general manner in which shares of
common stock may be offered and sold by any selling stockholders.
When the selling stockholders sell shares of common stock under
this prospectus, we may, if necessary and required by law, provide
a prospectus supplement that will contain specific information
about the terms of that offering. Any prospectus supplement may
also add to, update, modify or replace information contained in
this prospectus. We urge you to read carefully this prospectus, any
accompanying prospectus supplement and any documents we incorporate
by reference into this prospectus and any accompanying prospectus
supplement before you make your investment decision.
Investing in our securities involves risks. See “Risk Factors”
beginning on page 13 of this prospectus. We and our board of
directors are not making any recommendation regarding the exercise
of your rights.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the accuracy or adequacy of this
prospectus. Any representation to the contrary is a criminal
offense.
We are an “emerging growth company” under applicable U.S.
Securities and Exchange Commission (“SEC”) rules and will be
subject to reduced public company reporting requirements.
The date of this prospectus is , 2023
TABLE OF CONTENTS
Unless the context requires otherwise, references in this
prospectus to “Clean Vision,” “CLNV,” the “Company,” “we,” “our”
“us” and similar terms refer to Clean Vision Corporation, a Nevada
corporation, together with its consolidated subsidiaries, unless
the context otherwise requires.
Prospectus
Summary
This summary highlights selected information contained elsewhere
in this prospectus. This summary does not contain all the
information that you should consider before investing in our
securities. You should carefully read the entire prospectus
including “Risk Factors,” “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” and our Financial
Statements and the related notes included elsewhere in this
prospectus, before making an investment decision.
Overview
We are 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 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 in the pyrolysis of plastic). We have not
generated revenue to date and intend to generate revenue from three
sources: service revenue from the recycling services we provide,
revenue generated from the sale of the byproducts, and 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. We believe that this pilot project 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, we have not generated any revenue from the provision of
pyrolysis services nor have we generated any revenue from the sale
of byproducts from our operations in India or fuel cell equipment
and we do not currently have any contracts in place to sell these
byproducts or fuel cell equipment. However, we believe that there
is a strong market for low sulfur fuel and clean hydrogen, upon
which we intend to focus our byproduct sales.
According to analysis and projections reported by the U.S. Energy
Information Administration (“EIA”) on April 7, 2022, it is
estimated that 98.3 million barrels per day of petroleum and liquid
fuels were consumed globally in March 2022, an increase of 2.4
million barrels per day from March 2021. The EIA estimates that
global consumption of petroleum and liquid fuels will rise by 1.9
million barrels per day in 2023 to average 101.7 million barrels
per day.
In a report published by Markets and Markets Research in February
2021 entitled “Hydrogen Generation Market by Application (Petroleum
Refinery, Ammonia & Methanol production, Transportation, Power
Generation), Generation & Delivery Mode (Captive, Merchant),
Source (Blue, Green & Grey Hydrogen), Technology, and
Region-Forecast to 2025,” the global hydrogen generation market is
projected to reach $201 billion by 2025 from an estimated $130
billion in 2020, at a compound annual growth rate (CAGR) of 9.2%
during the forecast period. While the global green hydrogen market
was valued at approximately $0.8 billion in 2021, it is predicted
to grow to about $10.2 billion by 2028, with a CAGR of
approximately 55.2% over the projection period, according to
research and analysis published by Facts and Factors in March 2022
entitled “Green Hydrogen Market By Type (Solid Oxide Electrolyzer,
Alkaline Electrolyzer, and Proton Exchange Membrane Electrolyzer),
By Use (Transport, Power Generation, and Others) By Customer
(Petrochemicals, Glass, Food & Beverages, Chemical, Medical,
and Others), and By Region – Global and Regional Industry Overview,
Market Intelligence, Comprehensive Analysis, Historical Data, and
Forecast 2022–2028.”
We believe that in the near future, a significant growth sector of
the economy will be in clean energy and sustainable products and
services. This belief was a key factor in our shift in our business
focus in May 2020 and our acquisition of Clean-Seas, which became
our wholly-owned subsidiary on May 19, 2020. Clean-Seas believes
that it has made significant progress in identifying and developing
a new business model around the clean energy and waste-to-energy
sectors.
Clean Vision’s Purpose
Global plastic waste recycling is facing unprecedented challenges.
Inadequate processing infrastructure, fewer processing locales,
changing laws and conventions, and political circumstances imperil
what is already a deficient response to a global problem. Developed
nations, including the United States, the world’s largest generator
of plastic waste, are finding disposal of this waste increasingly
difficult, due to expensive and inefficient processing
capabilities; global conventions responding to environmental
implications of international plastic export; and political
constraints. In January 2018, the People’s Republic of China, which
had been accepting plastic waste from countries including the U.S.,
implemented its National Sword policy limiting recyclable waste
imports. As a result, the worldwide recyclables market experienced
drastic limits, fewer options for disposal, resulting in a global
backlog of plastic waste. Some of the recyclable material has been
rerouted to Southeast Asian countries but the market remains in
upheaval, with, at best, plastic waste floating in waiting ships
and at worst, illegal dumping into international waters or
incinerated.
According to an article published by the United Nations Environment
Programme (“UNEP”) on March 2, 2022, entitled “What you need to
know about the plastic pollution resolution,” the world currently
produces approximately 400 million tons of plastic waste per year,
with the rate of plastic production forecasted to double by 2040.
It also estimated that by 2050, there will be more plastic in the
ocean by weight than fish. According to an article published by
National Geographic entitled “A Whopping 91 Percent of Plastic
Isn’t Recycled,” plastic takes more than 400 years to degrade, so
most of it still exists in some form. It is estimated that only 9%
of plastic waste has been recycled to date, while the vast majority
(approximately 79%) is accumulating in landfills or ending up as
litter in the natural environment, including the oceans.
The waste plastics recycling industry was valued at $55.1 billion
in 2020 and is poised to become an $88 billion industry by 2030, as
reported in a March 2022 report entitled “Market value of waste
recycling services worldwide 2020-2030” published by Statista.
Pyrolysis is an invaluable technology that can be used to transform
certain materials, which traditional mechanical recycling
technologies currently cannot handle, into clean energy and other
valuable byproducts. Pyrolysis is also an important alternative
solution to handling materials that have exhausted their potential
for further traditional mechanical recycling.
The emerging markets of the world are especially critical to the
plastic pollution problem, where waste handling and collection are
not supported with the same infrastructure as in developed nations.
We believe this market condition presents a unique opportunity for
us. Clean-Seas intends to leverage its management’s experience of
working in the developing nations of the world for the past decade,
providing renewable energy products and services to this sector and
now will provide recycling solutions and energy generation. As
stated by the Organization for Economic Co-operation and
Development (OECD) in 2021, “The path to net zero requires that
emerging markets transform their energy systems, yet reliance on
hydrocarbons alongside existing policy barriers pose challenges to
the green transition.”
Clean Vision plans to help provide a solution to the plastic waste
problem that the world is facing, while simultaneously creating
hydrogen and other clean-burning fuels that can be used to generate
clean energy.
Our Strengths
We believe that the following are the critical investment
attributes of our company:
|
● |
Pilot Project Commenced. We
have acquired our first pyrolysis unit for use in our pilot project
in Hyderabad, India, which began operations in May 2022. |
|
● |
Large market opportunity for
effective solution. Renewable energy is a large market with an
unmet need. Plastic waste disposal affects all countries, including
developing nations. With a more recent focus of governments on
environmentally friendly waste removal solutions, we believe there
is a large opportunity for us. |
|
● |
Unique technology. Pyrolysis
technology reduces organic waste while creating valuable
byproducts. |
|
● |
Public support for clean
technologies to protect the environment. In recent years
shareholders have been focusing on environmental sustainability and
more investors have been directing their investments towards
companies based on ESG factors. |
|
● |
Experienced management team.
Members of our management team have years of experience in the
renewable energy sector and have begun to develop relationships
with several providers of pyrolysis technologies, with whom we
expect to seek a strategic partnership or business relationship as
we move forward. |
|
● |
New
Approach to Vertical Supply Chain. The Plastic Conversion
Network (“PCN”) is a patent-pending software network connecting
sources of waste plastic (feedstock) with conversion facilities,
which will produce environmentally friendly commodities. We intend
to strategically locate the conversion facilities around the world
in locations that are easily accessible and in close proximity to
countries that produce a large amount of plastic waste. Currently,
we have entered into letters of intent and/or joint venture
agreements for the development of facilities in: Morocco, France,
Turkey, Sri Lanka, Puerto Rico, Arizona, Massachusetts and
Michigan. |
Our Growth Strategy
We plan to provide tailored solutions to our customers to produce
clean energy primarily out of the treatment of waste. We are
currently focused on waste-to-energy projects in Morocco, India,
France, Turkey, Sri Lanka, Puerto Rico, Arizona, Massachusetts and
Michigan due to their proximity to plastic waste, as well as
business relationships that have been developed by the management
team of Clean Vision with entities and/or municipalities in such
countries. We believe there is a virtually endless supply of waste
for such projects and the demand for energy (particularly from such
projects) is growing consistently.
Another component of the clean energy and waste-to-energy industry
in the United States is environmental credits. Recycling of waste
plastic mitigates the need for fossil fuels for energy generation
and the production of clean-burning diesel. We plan to aggregate
these off-sets and sell them to users of fossil fuels in the form
of carbon credits or renewable energy credits depending on the
location of the facilities and local market conditions. These can
be used as off-set as more governments impose a “Carbon-tax” on the
end users of fossil fuels. In addition, we expect that in the
coming years, there will be new exchanges coming online
specifically focused on plastic waste, and credits will be sought
after, allowing producers of plastic waste to off-set their plastic
footprint, much like what has happened in the carbon markets.
We currently expect our projects to generate revenue in several
ways:
|
● |
Gate Fees or Tipping
Fees. It is anticipated that these fees will be paid to us
to accept waste from a government, municipality, or corporate
entity that must dispose of its waste. Fees are paid to accept this
feedstock (which will be waste plastic for our Company) on a per
ton basis. Gate fees are expected to vary in range from
approximately $35 to $105 per ton, depending on the jurisdiction,
land availability, and daily volumes of waste. |
|
● |
Sale of Hydrogen and Other
Fuels. Once functional, our anticipated pyrolysis recycling
facility will convert waste into hydrogen and other clean-burning
fuels. This hydrogen and other fuels can be sold to off-takers as
an alternative cleaner fuel for marine use, electrical generators,
or refined into a clean-burning road grade fuel. Depending on the
installation, this fuel output product can be sold to a local fuel
distributor or used in the generator sets for the generation of
electricity as above. |
|
● |
Commodity Sales. An
additional output product of the technologies is char or carbon
black, which is used for the manufacturing of tires, bonding
agents, roadway surfaces, and more. We intend to enter into
agreements with consumers of carbon black to which we will sell
this output product . |
|
● |
Environmental
Credits. Recycling of waste plastic mitigates the need for
fossil fuels for energy generation and the production of
clean-burning diesel. These off-sets can be aggregated and sold to
users of fossil fuels in the form of carbon credits or renewable
energy credits depending on the location of the facilities and
local market conditions. These can be used as off-set as more
governments impose a “Carbon-tax” on the end users of fossil
fuels. |
|
● |
Equipment Sales. We have entered into a licensing agreement
with Kingsberry Fuel Cell, Inc. (“Kingsbury”) whereby we have
obtained the exclusive, worldwide rights (exclusive of the United
States and Canada) to Kingsberry’s fuel cell intellectual property
for a term of five years, which we intend to sell to third-parties
throughout the world. These sales will provide a revenue stream to
us, as well as recurring revenue through a royalty model and
ongoing service. |
Summary of Risks
Before you invest in our securities, you should carefully consider
all the information in this prospectus, including matters set forth
in the section of this prospectus entitled “Risk Factors”. We
believe that the following are some of the major risks and
uncertainties that may affect us:
|
● |
We have a history of operating
losses and will likely continue to generate operating losses. |
|
● |
We may not be able to achieve or
sustain profitability, and we have not generated revenue from
operations to date. |
|
● |
We recently shifted to a new
business line, are at an early stage of development of our current
business line and we have a limited operating history, which makes
it difficult to evaluate our business and prospects. |
|
● |
The equipment that is required for
our operations is expensive and to date we have only acquired three
pyrolysis units. |
|
● |
We require additional financing,
and we may not be able to raise funds on favorable terms or at
all. |
|
● |
Our independent registered public
accounting firm has expressed substantial doubt about our ability
to continue as a going concern. |
|
● |
We are a holding company without
any operations of our own and depend on our subsidiaries for cash
to meet our obligations. |
|
● |
We
have not generated sufficient revenue or cash flow to pay our
convertible debt, in the amount of $660,000 as of January 18,
2023. |
|
● |
Servicing our debt requires a
significant amount of cash. |
|
● |
Covenant restrictions under our
indebtedness may limit our ability to operate our business. |
|
● |
Our success depends on the
acceptance of our products and services and that our products and
services will develop and grow. |
|
● |
As public awareness of the benefits
of fuel converted from waste plastic grows, we expect competition
to increase. |
|
● |
We face risks with obtaining raw
materials. |
|
● |
We do not believe that we will be
able to negotiate worldwide exclusive rights to the technology we
will need to acquire. |
|
● |
Project construction and
development requires significant outlays of capital and is subject
to numerous risks. |
|
● |
Our business model will depend on
performance by third parties under contractual arrangements. |
|
● |
The COVID-19 global health crisis
may impact our planned operations and adversely impact our
business. |
|
● |
Our operations in foreign markets
could cause us to incur additional costs and risks associated with
doing business internationally. |
|
● |
Volatility in foreign exchange
currency rates could adversely affect our financial condition and
results of operations. |
|
● |
Operations in the developing world
could cause us to incur additional costs and risks associated with
doing business in developing markets. |
|
● |
Our business and reputation could
be adversely affected if we or third parties with whom we have a
relationship fail to comply with United States or foreign
anti-corruption laws or regulations. |
|
● |
If we are unable to maintain our
corporate reputation, our business may suffer. |
|
● |
Our operations could be impacted by
natural disaster. |
|
● |
Delays in collection, or
non-collection, of our accounts receivable could adversely affect
our business, financial position, results of operations and
liquidity. |
|
● |
Our patent application may not
issue as a patent, which may have a material adverse effect on our
ability to prevent others from commercially exploiting products
similar to ours. |
|
● |
We may not be able to prevent
others from unauthorized use of our intellectual property, which
could harm our business and competitive position. |
|
● |
We
currently have no issued patents and one patent
pending. If
any issued patent expires or is not maintained, our patent
applications are not granted or our patent rights are contested,
circumvented, invalidated or limited in scope, we may not be able
to prevent others from selling, developing or exploiting competing
technologies or products, which could have a material adverse
effect on our business, prospects, financial condition, results of
operations, and cash flows. |
|
● |
We may become subject to claims
that we or our employees have wrongfully used or disclosed alleged
trade secrets. |
|
● |
A significant portion of our
intellectual property is not protected through patents or formal
copyright registration. |
|
● |
Confidentiality agreements may not
adequately prevent disclosure of trade secrets and other
proprietary information. |
|
● |
We may need to defend ourselves
against patent, copyright or trademark infringement claims. |
|
● |
We are subject to extensive
government regulation and changes thereto could have a material
adverse effect on our business and financial condition, results of
operations and cash flows. |
|
● |
We may be unable to obtain, modify,
or maintain the required regulatory permits, approvals and consents
for our projects. |
|
● |
We are subject to environmental
laws and potential exposure to environmental liabilities. |
|
● |
Changes in applicable laws and
regulations can adversely affect our business, financial condition
and results of operations. |
|
● |
We do not yet have adequate
internal controls and our failure to achieve and maintain effective
internal control over financial reporting could have a material
adverse effect on our business and share price. |
|
● |
We will incur significant increased
costs as a result of operating as a public company and our
management will be required to devote substantial time to new
compliance initiatives. |
|
● |
Our ability to utilize our net
operating loss carryforwards and certain other tax attributes may
be limited. |
|
● |
Our stock price has been volatile
and may continue to be volatile. |
|
● |
The price of our Common Stock may
have little or no relationship to the historical bid prices of our
Common Stock on the OTCQB. |
|
● |
We have a substantial number of
authorized common shares available for future issuance that could
cause dilution of our stockholders’ interest and adversely impact
the rights of holders of our Common Stock. |
|
● |
The holders of our Series B
Convertible Non-Voting Preferred Stock and our Series C Convertible
Preferred Stock are protected from dilution upon future issuances
of our Common Stock. |
|
● |
Dan Bates, our CEO and Chairman,
owns 2,000,000 shares of Series C Convertible Preferred Stock of
the Company, which shares of Series C Convertible Preferred Stock,
vote together with our Common Stock on all stockholder matters, and
vote one hundred Common Stock votes per share. If securities or
industry analysts do not publish research or reports about our
business, or if they downgrade their recommendations regarding our
Common Stock, its trading price and volume could decline. |
|
● |
Stockholders may face significant
restrictions on the resale of our Common Stock due to federal
regulations of penny stocks. |
|
● |
Stockholders who hold unregistered
shares of our Common Stock will be subject to resale restrictions
pursuant to Rule 144. |
|
● |
You will suffer immediate and
substantial dilution in the net tangible book value of the Common
Stock you purchase. |
|
● |
Daniel Bates, our Chief Executive
Officer, exercises majority voting control of the Company, which
will limit your ability to influence corporate matters and could
delay or prevent a change in corporate control. |
|
● |
We rely on our management and if
they were to leave our Company or not devote sufficient time to our
company, our business plan could be adversely affected. |
|
● |
Our Bylaws provide for
indemnification of officers and directors at our expense. |
|
● |
Anti-takeover provisions in our
Bylaws, as well as provisions of Nevada law, might discourage,
delay or prevent a change in control of our company or changes in
our management. |
|
● |
The JOBS Act allows us to postpone
the date by which we must comply with certain laws and regulations
and to reduce the amount of information provided in reports filed
with the SEC. |
|
● |
Our election not to opt out of the
JOBS Act’s extended accounting transition period may not make our
financial statements easily comparable to other companies. |
|
● |
Global, regional and U.S. economic
and geopolitical conditions may have adverse effects on our
business and financial condition. |
|
● |
Many of our competitors and
potential competitors may have substantially greater financial
resources, customer support, technical and marketing resources,
larger customer bases, longer operating histories, greater name
recognition and more established relationships than we do. |
|
● |
We may not maintain sufficient
insurance coverage for the risks associated with our business
operations. |
|
● |
We do not anticipate paying any
cash dividends. |
|
● |
Any failure to protect our
intellectual property rights could impair our ability to protect
our technology and our brand. |
|
● |
Failure to adequately manage our
planned aggressive growth strategy may harm our business. |
|
● |
If we make any acquisitions, they
may disrupt or have a negative impact on our business. |
|
● |
We rely on network and information
systems and other technologies for our business activities and
certain events, such as computer hackings, viruses or other
destructive or disruptive software or activities may disrupt our
operations. |
|
● |
We may apply working capital and
future funding to uses that ultimately do not improve our operating
results or increase the value of our securities. |
|
● |
Claims, litigation, government
investigations, and other proceedings may adversely affect our
business and results of operations. |
|
● |
We may incur indebtedness in the
future which could reduce our financial flexibility, increase
interest expense and adversely impact our operations and our
costs. |
Implications of Being an Emerging Growth Company and a
Smaller Reporting Company
As a company with less than $1.237 billion in revenue during our
last fiscal year, we qualify as an “emerging growth company”
under the Jumpstart Our Business Startups Act of 2012, or the JOBS
Act. As an emerging growth company, we have elected to take
advantage of reduced reporting requirements and are relieved of
certain other significant requirements that are otherwise generally
applicable to public companies. As an emerging growth company:
|
● |
we may present only two years of
audited financial statements and only t0wo years of related
Management’s Discussion and Analysis of Financial Condition and
Results of Operations; |
|
● |
we are exempt from the requirement
to obtain an attestation and report from our auditors on whether we
maintained effective internal control over financial reporting
under the Sarbanes-Oxley Act; |
|
● |
we are permitted to provide less
extensive disclosure about our executive compensation arrangements;
and |
|
● |
we are not required to give our
stockholders non-binding advisory votes on executive compensation
or golden parachute arrangements. |
If we successfully consummate an offering of our common stock on
the Nasdaq Stock Market LLC (“Nasdaq”), we may take advantage of
these provisions until the last day of the fiscal year following
the fifth anniversary of such initial public offering) if we
continue to be an emerging growth company thereafter. We will
continue to remain an “emerging growth company” until the earliest
of the following: (i) the last day of the fiscal year following the
fifth anniversary of the date of the completion of our listing on
Nasdaq; (ii) the last day of the fiscal year in which our total
annual gross revenue is equal to or more than $1.07 billion; (iii)
the date on which we have issued more than $1 billion in
nonconvertible debt during the previous three years; or (iv) the
date on which we are deemed to be a large accelerated filer under
the rules of the United States Securities and Exchange Commission
(the “SEC”).
We are also a “smaller reporting company” as defined in the
Securities Exchange Act of 1934, as amended, or the Exchange Act,
and have elected to take advantage of certain of the scaled
disclosures available to smaller reporting companies. To the extent
that we continue to qualify as a “smaller reporting company” as
such term is defined in Rule 12b-2 under the Exchange Act, after we
cease to qualify as an emerging growth company, certain of the
exemptions available to us as an “emerging growth company” may
continue to be available to us as a “smaller reporting company,”
including exemption from compliance with the auditor attestation
requirements pursuant to Sarbanes-Oxley Act and reduced disclosure
about our executive compensation arrangements. We will continue to
be a “smaller reporting company” until we have $250 million or more
in public float (based on our Common Stock) measured as of the last
business day of our most recently completed second fiscal quarter
or, in the event we have no public float (based on our Common
Stock) or a public float (based on our Common Stock) that is less
than $700 million, annual revenues of $100 million or more during
the most recently completed fiscal year.
We may choose to take advantage of some but not all of these
reduced burdens. We have taken advantage of reduced reporting
requirements in this prospectus. Accordingly, the information
contained herein may be different from the information you receive
from other public companies in which you hold stock. In addition,
the JOBS Act provides that an emerging growth company may take
advantage of an extended transition period for complying with new
or revised accounting standards, delaying the adoption of these
accounting standards until they would apply to private companies.
We have elected to avail ourselves of the extended transition
period for complying with new or revised financial accounting
standards. As a result of the accounting standards election, we
will not be subject to the same implementation timing for new or
revised accounting standards as other public companies that are not
emerging growth companies which may make comparison of our
financials to those of other public companies more difficult.
Recent Developments
Securities Purchase Agreement and Promissory Note
On December 9, 2022, the Company entered into the Purchase
Agreement with Coventry, pursuant to which the Company issued to
Coventry on that date a Promissory Note (the “Note”) in the
principal amount of $300,000 (the “Principal Amount”) in exchange
for a purchase price of $255,000. The proceeds of the Note will be
used by the Company for general working capital purposes. 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 are to be returned to the Company upon the
Company’s filing of the registration statement of which this
prospectus forms a part on or before 45 calendar days after the
date of the Purchase Agreement.
Per the terms of the Purchase Agreement the Company issued
15,500,000 shares of its Common Stock to Coventry. If the Company
files an initial Registration Statement within forty-five calendar
days from the date of the Note, then Coventy, pursuant to its
mandatory obligations thereunder, shall, within ten (10) calendar
days thereafter, return to the Company’s treasury for cancellation
twelve million five hundred thousand (12,500,000) shares of Common
Stock.
The 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 Note for an aggregate
Guaranteed Interest of fifteen thousand Dollars ($15,000.00), all
of which Guaranteed Interest shall be deemed earned as of the date
of the Note. The Principal Amount and the Guaranteed Interest are
due and payable in seven equal monthly payments (each, a “Monthly
Payment”) of forty-five thousand and 00/100ths Dollars
($45,000.00), commencing on May 6, 2023 and continuing on the
6th day of each month thereafter (each, a “Monthly
Payment Date”) until paid in full not later than November 6, 2023
(the “Maturity Date”), or such earlier date as the Note is required
or permitted to be repaid as provided therein, and to pay such
other interest to Coventry on the aggregate unconverted and then
outstanding Principal Amount of the Note in accordance with the
provisions thereof.
Project Finance Arrangement
On November 4, 2022, we 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.
Corporate Information
Our principal executive offices are located at 2711 N. Sepulveda
Blvd., Suite #1051, Manhattan Beach, CA 90266. Our telephone number
is (424) 835-1845. Our website address is
https://www.cleanvisioncorp.com. The reference to our website is an
inactive textual reference only. The information on, or that can be
accessed through, our website is not part of this prospectus.
Investors should not rely on any such information in deciding
whether to purchase our Common Stock.
Clean Vision was initially incorporated in Nevada as China Vitup
Health Care Holdings, Inc. on September 15, 2006. Pursuant to an
Agreement and Plan of Merger and Reorganization dated September 29,
2006, Tubac Holdings, Inc., a Wyoming corporation and a parent of
the Company, was merged with and into the Company on October 2,
2006, with the Company as the surviving entity. On May 5, 2015, the
Company changed its name to Emergency Pest Services, Inc. Pursuant
to a Plan of Exchange dated August 3, 2015, the Company acquired
Emergency Pest Services, Inc., a Florida corporation. Pursuant to a
Plan of Exchange dated September 21, 2017, Byzen Digital Inc., a
Seychelles corporation, was merged with and into the Company on
November 4, 2017, with the Company as the surviving entity. On May
30, 2018, the Company changed its name to Byzen Digital Inc. On May
19, 2020, we changed our focus to clean energy and sustainability
when we acquired Clean-Seas. On March 12, 2021, the Company’s
corporate name was changed to Clean Vision Corporation to be
aligned with our focus on clean energy and sustainability.
SUMMARY OF
The Offering
Issuer |
|
Clean Vision
Corporation |
|
|
|
Shares of Common
Stock offered by us |
|
None |
|
|
|
Shares of Common
Stock offered by the Selling Shareholder |
|
23,000,000 aggregate shares of Common Stock, comprised of (a)
3,000,000 shares of Common Stock issued to Coventry in connection
with the Purchase Agreement and (b) up to 20,000,000 shares of
Common Stock issuable to Coventry upon a default under the
Note. |
|
|
|
Shares of Common
Stock outstanding before the Offering |
|
414,696,273 shares
(1) |
|
|
|
Shares of Common
Stock outstanding after completion of this offering, assuming the
sale of all shares offered hereby |
|
414,696,273 shares (1) |
|
|
|
Offering
Price |
|
The
Selling Shareholder may sell all or a portion of the shares being
offered pursuant to this prospectus at fixed prices, at prevailing
market prices at the time of sale, at varying prices, or at
negotiated prices. |
|
|
|
Use of
proceeds |
|
We
will not receive any proceeds from the resale of the common stock
by the Selling Shareholder. |
|
|
|
Market for Common
Stock |
|
Our
common stock is quoted on OTCQB under the symbol “CLNV” |
|
|
|
Risk Factors |
|
The purchase of our securities involves a high degree of risk. The
securities offered in this prospectus are for investment purposes
only. Please refer to the section entitled “Risk Factors“ before
making an investment in our Common Stock. |
You should carefully read the “Risk Factors” section of this
prospectus for a discussion of factors that you should consider
before deciding to invest in our Common Stock.
(1) The number of shares of our Common Stock to be outstanding
after this offering is based on the 414,696,273 shares of our
Common Stock outstanding as of January 18, 2023, and excludes the
following:
|
● |
18,000,000
shares of Common Stock issuable upon the automatic conversion of
notes in the principal amount of $360,000. |
|
● |
20,000,000
shares of Common Stock upon conversion of the 2,000,000 issued and
outstanding Series B Convertible Non-Voting Preferred Stock, which
shares automatically converted into 20,000,000 shares of Common
Stock on January 1, 2023; however, the Company and holders of the
Series B Convertible Non-Voting Preferred Stock are currently in a
dispute and the Company’s Transfer Agent has been instructed to not
issue the shares of Common Stock until such dispute has been
resolved. Accordingly, although the shares of Common
Stock thereunder have not been formally issued as of January 23,
2023, the shares of Series B Non-Voting Convertible Preferred Stock
are no longer outstanding. |
|
● |
20,000,000
shares of Common Stock upon conversion of the 2,000,000 issued and
outstanding Series C Convertible Preferred Stock, which shares
automatically converted on January 1, 2023, but such conversion has
not been effectuated as of January 23, 2023. |
|
|
|
|
● |
Up to
20,000,000 shares of Common Stock issuable to Coventry upon a
default under the Note. |
SUMMARY FINANCIAL DATA
The following table presents our summary historical financial data
for the periods indicated. The summary historical financial data
for the years ended December 31, 2021 and 2020 and the balance
sheet data as of December 31, 2021 are derived from the audited
financial statements included herein.
Historical results are included for illustrative and informational
purposes only and are not necessarily indicative of results we
expect in future periods, and results of interim periods are not
necessarily indicative of results for the entire year. You should
read the following summary financial data in conjunction with
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” and our financial statements and related
notes appearing elsewhere in this prospectus.
Summary Statements of Operations Data |
|
Year ended
December 31, 2021 |
|
Year ended
December 31, 2020 |
|
Nine Months Ended September 30, 2022 |
|
Nine Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
Revenue, net |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Cost of revenue |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Gross profit |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
|
373,095 |
|
|
|
132,368 |
|
|
|
824,344 |
|
|
|
139,783 |
|
Payroll expense |
|
|
1,360,518 |
|
|
|
400,000 |
|
|
|
623,549 |
|
|
|
1,071,527 |
|
Director fees |
|
|
18,500 |
|
|
|
— |
|
|
|
13,500 |
|
|
|
— |
|
Professional fees |
|
|
413,479 |
|
|
|
79,827 |
|
|
|
258,165 |
|
|
|
344,697 |
|
Consulting |
|
|
1,955,213 |
|
|
|
191,500 |
|
|
|
1,094,768 |
|
|
|
1,285,319 |
|
Interest expense |
|
|
1,187,033 |
|
|
|
522,981 |
|
|
|
46,256 |
|
|
|
1,187,033 |
|
Loss on issuance of convertible debt |
|
|
— |
|
|
|
2,006,944 |
|
|
|
— |
|
|
|
— |
|
Debt issuance expense - warrants |
|
|
— |
|
|
|
— |
|
|
|
195,483 |
|
|
|
— |
|
Loss on investment |
|
|
150,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Change in derivative liabilities |
|
|
576,573 |
|
|
|
(1,292,687 |
) |
|
|
— |
|
|
|
46,350 |
|
Net loss from continuing operations |
|
$ |
(6,034,411 |
) |
|
$ |
(2,040,933 |
) |
|
$ |
(3,056,065 |
) |
|
$ |
(4,074,709 |
) |
(1) See Note 2 to our audited financial statements appearing at the
end of this prospectus for details on the calculation of basic and
diluted net loss per share attributable to common stockholders for
the years ended December 31, 2021 and 2020 and Note 2 to our
unaudited condensed financial statements for details on the
calculation of basic and diluted net loss per share attributable to
common stockholders for the nine months ended September 30, 2022
and 2021.
|
|
As of September 30, 2022 |
|
|
|
|
|
|
Pro Forma |
|
|
|
|
Pro |
|
As |
Balance Sheet Data |
|
Actual |
|
Forma(1) |
|
Adjusted(2) |
|
|
|
|
|
|
|
Cash |
|
$ |
2,829 |
|
|
|
255,000 |
|
|
$ |
257,829 |
|
Total assets |
|
|
1,136,292 |
|
|
|
255,000 |
|
|
|
1,391,292 |
|
Total liabilities |
|
|
1,315,757 |
|
|
|
(60,000 |
) |
|
|
1,255,757 |
|
Working capital (deficit) |
|
|
(384,684 |
) |
|
|
315,000 |
|
|
|
(69,684 |
) |
Accumulated deficit |
|
|
(16,221,150 |
) |
|
|
(45,000 |
) |
|
|
(16,266,150 |
) |
Total stockholders’ equity (deficit) |
|
|
(1,979,465 |
) |
|
|
360,000 |
|
|
|
(1,619,465 |
) |
(1) The pro forma balance sheet data reflects our receipt of
$255,000 of net proceeds from the issuance of convertible notes in
the principal amount of $300,000.
(2)The pro forma as adjusted balance sheet data in the table above
reflects the adjustment described in footnote (1) above plus the
conversion of the notes into 18,000,000 shares of Common Stock.
RISK
FACTORS
Any investment in our securities involves a high degree of risk.
Investors should carefully consider the risks described below and
all of the information contained in this prospectus before deciding
whether to purchase our securities. Our business, financial
condition or results of operations could be materially adversely
affected by these risks if any of them actually occur. Our Common
Stock is quoted on the OTCQB under the symbol CLNV. This market is
extremely limited, and the prices quoted are not a reliable
indication of the value of our Common Stock. As of the date of this
prospectus, there has been very limited trading of shares of our
Common Stock. If and when our Common Stock is traded, the trading
price could decline due to any of these risks, and an investor may
lose all or part of his or her investment. Some of these factors
have affected our financial condition and operating results in the
past or are currently affecting us. This prospectus also contains
forward-looking statements that involve risks and uncertainties.
Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of certain factors,
including the risks described below and elsewhere in this
prospectus.
Risks Relating to Our Business and Industry
Our independent registered public accounting firm has
expressed substantial doubt about our ability to continue as a
going concern.
We have insufficient cash on hand, a working capital deficit of
$384,684 and incurred net losses from operations resulting in an
accumulated deficit of $16,221,150, as of September 30, 2022. For
the nine months ended September 30, 2022, we had a net loss of
$3,056,065, while we had a net loss of $6,034,411 for the year
ended December 31, 2021. As of the date of this prospectus, we
anticipate that we will only be able to fund our current operations
through March 31, 2023, based upon our current financial standing.
As a result, our independent registered public accounting firm has
issued a report on our financial statements for the period ended
December 31, 2021, that includes an explanatory paragraph referring
to our recurring operating losses and expressing substantial doubt
in our ability to continue as a going concern. Our ability to
continue as a going concern is dependent upon our ability to obtain
additional equity financing or other capital, attain further
operating efficiencies, reduce expenditures, and, ultimately,
generate revenue. Our financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
However, if adequate funds are not available to us when we need it,
we will be required to curtail our operations which would, in turn,
further raise substantial doubt about our ability to continue as a
going concern. The doubt regarding our potential ability to
continue as a going concern may adversely affect our ability to
obtain new financing on reasonable terms or at all. Additionally,
if we are unable to continue as a going concern, our stockholders
may lose some or all of their investment in the Company.
We have a history of operating losses; will likely continue
to generate operating losses and we may not be able to achieve or
sustain profitability.
We are not profitable and have incurred an accumulated deficit of
$16,221,150 as of September 30, 2022. For the nine months ended
September 30, 2022, we had a net loss of $3,060,160, while we had a
net loss of $6,034,411 for the year ended December 31, 2021. We
expect to continue to incur losses for the foreseeable future, and
these losses could increase as we continue to work to develop our
business. We were previously engaged in the digital currency
industries. In May 2020 we identified a new direction for the
Company when we acquired Clean-Seas and we adopted a new business
strategy focused on clean energy and converting waste to energy. We
have yet to commence profitable operations in either of those
businesses, therefore, the Company is continuing to incur operating
losses. There can be no assurance that we will ever generate
significant sales or achieve profitability. Accordingly, the extent
of future losses and the time required to achieve profitability, if
ever, cannot be predicted.
Even if we achieve profitability in the future by adopting these
new business strategies, we may not be able to sustain
profitability in subsequent periods.
We also expect to experience negative cash flows for the
foreseeable future as we fund our operating losses. We may not be
able to generate these revenues or achieve profitability in the
future. Our failure to achieve or maintain profitability would
likely negatively impact the value of our securities and financing
activities.
To date, we have not generated revenue from operations and we
may not generate revenue from operations or that sources of revenue
from financing will be available in the future.
To date, we have not generated any revenue from operations and have
financed our operations through the sale of Common Stock in our
Regulation A offering and the proceeds from the sale of convertible
notes. There can be no assurance that we will generate revenue from
operations or that sources of revenue from financing will be
available or if available will be available upon favorable terms.
If we raise additional funds
by issuing equity securities, our stockholders may experience
dilution. Debt financing, if available, may involve agreements that
include covenants limiting or restricting our ability to take
specific actions, such as incurring additional debt, making capital
expenditures or declaring dividends. Any debt financing or
additional equity that we may raise may contain terms, such as
liquidation and other preferences, that are not favorable to us or
our stockholders.
We recently shifted to a new business line, are at an early
stage of development of our current business line and we have a
limited operating history, which makes it difficult to evaluate our
business and prospects.
In May 2020, we shifted our business focus from the digital
currency industry to the clean energy and waste to energy
industries. We have a limited operating history in our current
business line, which can make it difficult for investors to
evaluate our operations and prospects and may increase the risks
associated with investment into our company. We have insufficient results for
investors to use to identify historical trends. Investors should
consider our prospects considering the risk, expenses and
difficulties we will encounter as an early-stage company.
We have yet to demonstrate
our ability to overcome the risks frequently encountered in
the clean energy and waste to energy industries and are still subject to many of the
risks common to early stage companies, including the uncertainty as
to our ability to implement our business plan, market acceptance of
our proposed business and services, under-capitalization, cash
shortages, limitations with respect to personnel, financing and
other resources and uncertainty of our ability to generate
revenues. There is no assurance that our activities will be
successful or will result in any revenues or profit, and the
likelihood of our success must be considered in light of the stage
of our development. There can be no assurance that we will be able
to consummate our business strategy and plans, or that financial,
technological, market, or other limitations may force us to modify,
alter, significantly delay, or significantly impede the
implementation of such plans. Our business plan is subject
to all business risks associated with new business enterprises,
including the absence of any significant operating history upon
which to evaluate an investment. The likelihood of our success must
be considered in light of the problems, expenses, difficulties,
complications and delays frequently encountered in connection with
the formation of a new business, the development of new strategy
and the competitive environment in which we will operate. It is
possible that we will incur losses in the future. Our revenue and income potential is
unproven and our business model is continually evolving. We are
subject to the risks inherent to the operation of a new business
enterprise and cannot assure you that we will be able to
successfully address these risks. There is no guarantee that
we will be profitable, that our business will generate sufficient
revenue or that we will have adequate working capital to meet its
obligations as they become due.
Additionally, our industry segments are relatively new, and are
constantly evolving. As a result, there is a lack of available
information with which to forecast industry trends or patterns.
There is no assurance that sustainable industry trends or
preferences will develop that will lead to predictable growth or
earnings forecasts for individual companies or the industry segment
as a whole. We are also unable to determine what impact future
governmental regulation may have on trends and preferences or
patterns within our industry segment.
The equipment that is required for our operations is
expensive and to date we have only acquired three pyrolysis
units
To date, we have acquired three pyrolysis units. In order to
implement our business plan, we estimate that we will need to
acquire several additional units. We estimate that each unit we
will acquire will cost approximately $16 million and will take
approximately 12-24 months to receive from time of order,
therefore, we will be required to outlay significant funds prior to
receipt of units. Pyrolysis equipment could cost as much as $100
million, but we intend to use our efforts to purchase such
equipment at the best available prices..
We require additional financing, and we may not be able to
raise funds on favorable terms or at all.
We anticipate requiring further funds in the future to grow our
operations and complete our business plan. The sources of
additional capital are expected to be from the sale of securities.
Any future sale of share capital will result in dilution to
existing stockholders. Furthermore, we may incur debt in the
future, and may not have sufficient funds to repay our future
indebtedness or may default on our future debts, jeopardizing our
business viability.
We may not be able to borrow or raise additional capital in the
future to meet our needs or to otherwise provide the capital
necessary to expand our operations and business, which might result
in the value of our securities decreasing in value or becoming
worthless. Additional financing may not be available to us on terms
that are acceptable, or at all. Consequently, we may not be able to
proceed with our intended business plans. Obtaining additional
financing contains risks, including:
|
● |
additional equity financing may not
be available to us on satisfactory terms, or at all, and any equity
we are able to issue could lead to dilution for current
stockholders; |
|
● |
loans or other debt instruments may
have terms and/or conditions, such as interest rate, restrictive
covenants and control or revocation provisions, which are not
acceptable to management or our directors; |
|
● |
the current environment in capital
markets combined with our capital constraints may prevent us from
being able to obtain adequate debt financing; and |
|
● |
if we fail to obtain required
additional financing to grow our business, we would need to delay
or scale back our business plan, reduce our operating costs, or
reduce our hea0dcount, each of which would have a material adverse
effect on our business, future prospects, and financial
condition. |
Additionally, we may have difficulty obtaining additional funding,
and we may have to accept terms that would adversely affect our
stockholders. For example, the terms of any future financings may
impose restrictions on our right to declare dividends or on the
manner in which we conduct our business. Additionally, lending
institutions or private investors may impose restrictions on a
future decision by us to make capital expenditures, acquisitions or
significant asset sales. If we are unable to raise additional
funds, we may be forced to curtail or even abandon our business
plan.
Failure to adequately manage our planned aggressive growth
strategy may harm our business or increase our risk of
failure.
For the foreseeable future, we intend to pursue an aggressive
growth strategy for the expansion of our operations. Our ability to
rapidly expand our operations will depend upon many factors,
including our ability to work in a regulated environment, establish
and maintain strategic relationships, and obtain adequate capital
resources on acceptable terms. Any restrictions on our ability to
expand may have a materially adverse effect on our business,
results of operations, and financial condition. Accordingly, we may
be unable to achieve our targets for growth, and our operations may
not be successful or achieve anticipated operating results.
Additionally, our growth may place a significant strain on our
managerial, administrative, operational, and financial resources
and our infrastructure. Our future success will depend, in part,
upon the ability of our senior management to manage growth
effectively. This will require us to, among other things:
|
● |
implement additional management information systems; |
|
|
|
|
● |
further develop our operating, administrative, legal, financial,
and accounting systems and controls; |
|
|
|
|
● |
hire additional personnel; |
|
|
|
|
● |
develop additional levels of management within our company;
and |
|
|
|
|
● |
maintain close coordination among our operations, legal, finance,
sales and marketing, and client service and support personnel. |
Failure to accomplish any of these requirements could impair our
ability to grow and expand our operations.
We are a holding company without any operations of our own
and depend on our subsidiaries for cash to meet our
obligations.
We are a holding company and conduct all of our operations through
our subsidiaries. Accordingly, repayment of our indebtedness,
including the senior notes, in part, is dependent on the generation
of cash flow by our subsidiaries and their ability to make such
cash available to us, by debt repayment or otherwise. Unless they
are guarantors of the senior notes or other indebtedness, our
subsidiaries do not have any obligation to pay amounts due on our
indebtedness or to make funds available for that purpose. Our
subsidiaries may not be able to, or may not be permitted to, make
distributions to enable us to make payments in respect of our
indebtedness. Each of our subsidiaries is a distinct legal entity,
and, under certain circumstances, legal and contractual
restrictions may limit our ability to obtain cash from our
subsidiaries. In the event that we do not receive distributions
from our subsidiaries, we may be unable to make required principal
and interest payments on our indebtedness, including the senior
notes.
We have not generated sufficient revenue or cash flow to pay
our convertible debt, and conversion of such debt into shares of
Common Stock, which could cause significant dilution.
As of January 18, 2023, we had outstanding convertible debt in the
principal amount of $660,000. To date, we have not generated
sufficient revenue or cash flows to pay the balances owed under
these notes and provide sufficient working capital to run our
business. The outstanding principal amount of the notes is
convertible at any time and from time to time at the election of
the holder after certain periods of time into shares of our Common
Stock at discounts to the market price of our Common Stock. In
addition, upon the occurrence and during the continuation of an
Event of Default (as defined in the notes), the notes each will
become immediately due and payable and we have agreed to pay
additional default interest rates. We may not have sufficient cash
resources or access to funding to repay such notes. Moreover, upon
conversion of these notes, our current shareholders will suffer
dilution, which could be significant.
Servicing our debt requires a significant amount of cash. Our
ability to generate sufficient cash to service our debt depends on
many factors beyond our control.
Our ability to make payments on and to refinance our debt, to fund
planned capital expenditures and to maintain sufficient working
capital depends on our ability to generate cash in the future.
This, to a certain extent, is subject to general economic,
financial, competitive, legislative, regulatory and other factors
that are beyond our control. We cannot assure you that our business
will generate sufficient cash flow from operations or from other
sources in an amount sufficient to enable us to service our debt or
to fund our other liquidity needs. If our cash flow and capital
resources are insufficient to allow us to make scheduled payments
on our debt, we may need to seek additional capital or restructure
or refinance all or a portion of our debt on or before the maturity
thereof, any of which could have a material adverse effect on our
business, financial condition or results of operations. We cannot
assure you that we will be able to refinance any of our debt on
commercially reasonable terms or at all, or that the terms of that
debt will allow any of the above alternative measures or that these
measures would satisfy our scheduled debt service obligations. If
we are unable to generate sufficient cash flow to repay or
refinance our debt on favorable terms, it could significantly
adversely affect our financial condition and the value of our
outstanding debt. Our ability to restructure or refinance our debt
will depend on the condition of the capital markets and our
financial condition. Any refinancing of our debt could be at higher
interest rates and may require us to comply with more onerous
covenants, which could further restrict our business operations.
There can be no assurance that we will be able to obtain any
financing when needed.
Covenant restrictions under our indebtedness may limit our
ability to operate our business.
Our outstanding convertible notes contain, and our future
indebtedness agreements may, contain covenants that restrict our
ability to finance future operations or capital needs or to engage
in other business activities. The notes restrict our ability
to:
|
● |
incur,
assume or guarantee or suffer to exist any indebtedness for
borrowed money of any kind, including, but not limited to, a
guarantee,
on or with respect to any of its property or assets now owned or
hereafter acquired or any interest therein or any
income
or profits therefrom other than Permitted Indebtedness (as defined
in the notes); |
|
|
|
|
● |
repurchase
capital stock; |
|
|
|
|
● |
repay
any Indebtedness (as defined in the notes) other than certain
secured notes which are no longer outstanding or Permitted
Indebtedness
or make other restricted payments including, without limitation,
paying dividends and making investments; |
|
|
|
|
● |
create
liens; |
|
|
|
|
● |
sell
or otherwise dispose of assets; and |
|
|
|
|
● |
enter
into transactions with affiliates. |
In addition, the notes contain price protection anti-dilution
provisions that will discourage financing at prices below the
conversion price of the notes and will result in a decrease in the
conversion price of the notes if we should issue securities below
such price.
Our future success depends on the acceptance of our products
and services, which may not happen, and that our products and
services will develop and grow.
Our entire business is based on the assumption that the demand for
our products and services will develop and grow. We cannot assure
you that this assumption is or will be correct. Although the market
for clean energy and waste-to-energy is large, the market for fuel
converted from waste through pyrolysis is new and currently quite
small. As is typical of a new and rapidly evolving industry, the
demand for, and market acceptance of, “green-based” products and
services is highly uncertain. In order to be successful, we must be
able to keep our understandings in place with the suppliers of our
products and educate consumers that our products perform as well as
the products they currently use. We can provide no assurances that
these efforts will be successful. Similarly, we cannot assure you
that the demand for our products and services will develop as
anticipated. If the market for our products fails to develop or
develops more slowly than we anticipate, our business could be
adversely affected.
As public awareness of the benefits of fuel converted from
waste grows, we expect competition to increase, which could make it
more difficult for us to grow and achieve
profitability.
We expect competition to increase as awareness of the environmental
advantages of converting waste into fuel increases. A rapid
increase in competition could negatively affect our ability to
develop a profitable client base. Many of our competitors and
potential competitors may have substantially greater financial
resources, customer support, technical and marketing resources,
larger customer bases, longer operating histories, greater name
recognition and more established relationships than we do. We
cannot be sure that we will have the resources or expertise to
compete successfully. Compared to us, our competitors may be able
to:
|
● |
develop and expand
their products and services more quickly; |
|
|
|
|
● |
adapt faster to new
or emerging technologies and changing customer needs and
preferences; |
|
|
|
|
● |
take advantage of
acquisitions and other opportunities more readily; |
|
|
|
|
● |
negotiate more
favorable agreements with vendors and customers; and |
|
|
|
|
● |
devote greater
resources to marketing and selling their products or services. |
Some of our competitors may also be able to increase their market
share by providing customers with additional benefits or by
reducing their prices. We cannot be sure that we will be able to
match price reductions by our competitors. In addition, our
competitors may form strategic relationships to better compete with
us. These relationships may take the form of strategic investments,
joint-marketing agreements, licenses or other contractual
arrangements that could increase our competitors’ ability to serve
customers. If our competitors are successful in entering our
market, our ability to grow or even sustain our current business
could be adversely impacted.
Disruptions in the political, regulatory, economic, and social
conditions of the countries in which we conduct business could
adversely affect our business or results of operations.
Our business model envisions us operating in various countries
across the world. Instability and unforeseen changes in any of the
markets in which we conduct business, including economically and
politically volatile areas or conflict or rumor of conflict could
have an adverse effect on the demand for our services and products,
our financial condition, or our results of operations. These
factors include, but are not limited to, the following:
|
● |
nationalization and expropriation; |
|
● |
potentially burdensome taxation; |
|
● |
inflationary and recessionary markets, including capital and
equity markets; |
|
● |
civil unrest, labor issues, political instability, disease
outbreaks, terrorist attacks, cyber terrorism, military activity,
and wars; |
|
● |
increasing attention to global climate change resulting in
pressure from shareholders, financial institutions and/or financial
markets; |
|
● |
supply disruptions in key oil producing countries; |
|
● |
the ability of OPEC+ to set and maintain production levels and
pricing; |
|
● |
trade restrictions, trade protection measures, price controls,
or trade disputes; |
|
● |
sanctions, such as prohibitions or restrictions by the United
States against countries that are the targets of economic
sanctions, or are designated as state sponsors of terrorism; |
|
● |
foreign ownership restrictions; |
|
● |
import or export licensing requirements; |
|
● |
restrictions on operations, trade practices, trade partners,
and investment decisions resulting from domestic and foreign laws,
and regulations; |
|
● |
changes in, and the administration of, treaties, laws, and
regulations including in response to public health issues; |
|
● |
inability to repatriate income or capital; |
|
● |
reductions in the availability of qualified personnel; |
|
● |
foreign currency fluctuations or currency restrictions;
and |
|
● |
fluctuations in the interest rate component of forward foreign
currency rates. |
We may apply working capital and future funding to uses that
ultimately do not improve our operating results or increase the
value of our securities.
In general, we have complete discretion over the use of our working
capital and any new investment capital we may obtain in the future.
Because of the number and variety of factors that could determine
our use of funds, our ultimate expenditure of funds (and their
uses) may vary substantially from our current intended operating
plan for such funds. Our management has broad discretion to use any
or all of our available capital reserves. Our capital could be
applied in ways that do not improve our operating results or
otherwise increase the value of a stockholder’s investment.
We may incur indebtedness in the future which could reduce
our financial flexibility, increase interest expense and adversely
impact our operations and our costs.
We may incur significant amounts of indebtedness in the future. Our
level of indebtedness could affect our operations in several ways,
including the following:
|
● |
a
significant portion of our cash flows is required to be used to
service our indebtedness; |
|
|
|
|
● |
a
high level of debt increases our vulnerability to general adverse
economic and industry conditions; |
|
|
|
|
● |
covenants contained in the agreements governing our outstanding
indebtedness limit our ability to borrow additional funds and
provide additional security interests, dispose of assets, pay
dividends and make certain investments; |
|
|
|
|
● |
a
high level of debt may place us at a competitive disadvantage
compared to our competitors that are less leveraged and, therefore,
may be able to take advantage of opportunities that our
indebtedness may prevent us from pursuing; and |
|
|
|
|
● |
debt covenants may affect our flexibility in planning for, and
reacting to, changes in the economy and in our industry. |
A high level of indebtedness increases the risk that we may default
on our debt obligations. We may not be able to generate sufficient
cash flows to pay the principal or interest on our debt, and future
working capital, borrowings or equity financing may not be
available to pay or refinance such debt. If we do not have
sufficient funds and are otherwise unable to arrange financing, we
may have to sell significant assets or have a portion of our assets
foreclosed upon which could have a material adverse effect on our
business, financial condition and results of operations.
We face risks relating to our reliance on subcontractors,
suppliers, and our joint venture partners.
We generally rely on subcontractors, suppliers, and our joint
venture partners for the performance of our contracts. Although we
are not dependent upon any single supplier, certain geographic
areas of our business or a project or group of projects may depend
heavily on certain suppliers for raw materials or semi-finished
goods.
|
● |
Any difficulty in engaging suitable
subcontractors or acquiring equipment and materials could
compromise our ability to generate a significant margin on a
project or to complete such project within the allocated time
frame. If subcontractors, suppliers or joint venture partners
refuse to adhere to their contractual obligations with us, or are
unable to do so due to a deterioration of their financial
condition, we may be unable to find a suitable replacement at a
comparable price, or at all. Moreover, the failure of one of our
joint venture partners to perform their obligations in a timely and
satisfactory manner could lead to additional obligations and costs
being imposed on us as we may be obligated to assume our defaulting
partner’s obligations or compensate our customers. Additionally,
our supply chain, subcontractors, suppliers, and our joint venture
partners may be adversely affected by the COVID-19 pandemic, which
has created global shipping and logistics challenges such as
extended shipping lead times and pricing pressures on
transportation and logistics. |
|
● |
Any delay, failure to meet
contractual obligations, or other event beyond our control or not
foreseeable by us, that is attributable to a subcontractor,
supplier or joint venture partner, could lead to delays in the
overall progress of the project and/or generate significant extra
costs. Even if we are entitled to make a claim for these extra
costs against the defaulting supplier, subcontractor or joint
venture partner, we may be unable to recover the entirety of these
costs and this could materially adversely affect our business,
financial condition or results of operations. |
New capital asset construction projects are subject to risks,
including delays and cost overruns, which could have a material
adverse effect on our financial condition, or results of
operations.
From time to time, we may be required to carry out capital asset
construction projects to maintain, upgrade, and develop our asset
base, and such projects are subject to risks of delay and cost
overruns that are inherent in any large construction project,
resulting from numerous factors including, but not limited to, the
following:
|
● |
shortages of key equipment,
materials or skilled labor; |
|
● |
delays in the delivery of ordered
materials and equipment; |
|
● |
and engineering issues; |
|
● |
shipyard delays and performance
issues; and |
|
● |
failure to complete construction in
time, or the inability to complete construction in accordance with
design specifications, may result in the loss of revenue. |
Additionally, capital expenditures for construction projects could
materially exceed the initially planned investments, or there could
be delays in putting such assets into operation.
We face risks associated with obtaining raw
materials.
With regard to our Clean-Seas subsidiary, even though we believe
there to be an abundant supply of waste plastic, it is expected
that there will be increased competition for these plastic
resources, with the result that it could have an effect on our
profitability that we do not foresee at this time.
We do not believe that we will be able to negotiate worldwide
exclusive rights to the technology we will need to
acquire.
Our intent is to use existing pyrolysis technologies and to
implement equipment that is available in the industrial
marketplace. While we do not believe we will acquire worldwide
rights, we expect that we will be able to obtain exclusive rights
for specific territories. Accordingly, other competitors may
license or otherwise obtain the use of the same technology for
different locations.
Project construction and development requires significant
outlays of capital and is subject to numerous risks.
The construction and development of our projects involves numerous
risks. We are required to outlay significant capital for
preliminary engineering, permitting, legal, and other expenses
before we can determine whether a project is feasible or
economically attractive. In order to successfully construct and
develop our projects, we need to negotiate satisfactory
engineering, procurement and construction agreements and feedstock
supply agreements, receive all required governmental permits and
approvals, obtain financing, and timely implement construction and
development. Successful completion of a particular project may be
adversely affected by numerous factors, including: (i) failure or
delay in obtaining required government permits and approvals with
acceptable conditions; (ii) unavailability of financing; (iii)
uncertainties relating to land costs for projects; (iv) engineering
problems; (v) construction delays and contractor performance
shortfalls; (vi) work stoppages; (vii) cost overruns; (viii)
failure of equipment and materials supply; (ix) adverse weather
conditions; and (x) environmental and geological conditions. Our
ability to become profitable in the future will not only depend on
our ability to complete the construction and development of our
projects but also to control our capital expenditures and costs. If
we are unable to cost efficiently construct, develop and deploy our
projects and provide our products and services, our business,
prospects, financial condition, results of operations, and cash
flows would be materially and adversely affected.
Our business model will depend on performance by third
parties under contractual arrangements.
Our businesses will depend on third parties to, among other things,
own and/or operate our projects, obtain necessary permits, purchase
energy produced by our projects, and supply and deliver the goods
and services necessary for the construction and operation of our
projects. Further, the design, development and delivery of fuel
cells is dependent upon performance by Kingsberry Fuel Cell
Corporation pursuant to a Licensing Agreement.
The viability of our projects depends significantly upon the
performance of these third parties, and others that we hope to
enter into agreements within the near future, in accordance with
long-term contracts. If these third parties cannot or will not
perform their contractual obligations, whether due to their
financial condition, force majeure events, changes in laws or
regulations, or otherwise, we may not be able to secure alternate
arrangements on substantially the same terms or at all for the
goods and services provided under such contracts. In addition, some
of the owners and operators of our projects may be smaller
companies that are more likely to experience financial and
operational difficulties than relatively larger, well-established
companies, which could result in interruptions or delays in the
operation of our projects. Any of the foregoing could have a
material adverse effect on our business, financial condition and
results of operations.
Our operations in foreign markets could cause us to incur
additional costs and risks associated with doing business
internationally.
We currently are conducting our pilot program in India and have
current plans to commence operations in Morocco, France, Turkey,
Sri Lanka, Puerto Rico. Our operations in markets outside the
United States subject us to additional costs and risks,
including:
|
● |
compliance with foreign
requirements regulating the environment and the waste-to-energy
market; |
|
● |
difficulties in establishing,
staffing and managing international operations; |
|
● |
U.S. laws and regulations related to foreign operations, including
tax and anti-corruption laws and regulations;
|
|
|
|
|
● |
differing intellectual property
laws; |
|
● |
differing contract laws that impact
the enforceability of agreements among energy suppliers and energy
consumers; |
|
● |
imposition of special taxes; |
|
● |
strong national and international
competitors; |
|
● |
currency exchange rate
fluctuations; and |
|
● |
political and economic instability
in the countries in which we operate. |
Our failure to manage the risks associated with international
operations could limit the future growth of our business and
adversely affect our business, financial condition and results of
operations. We may be required to make a substantial financial
investment and expend significant management efforts in connection
with our international operations.
Volatility in foreign exchange currency rates could adversely
affect our financial condition and results of
operations.
We may have significant exposure to revenues, expenses and certain
asset and liability balances denominated in currencies other than
the U.S. Dollar. In addition, we conduct transactions in various
currencies, which increases our exposure to fluctuations in foreign
currency exchange rates relative to the U.S. Dollar. Fluctuations
in the exchange rates of currencies relative to the U.S. Dollar may
significantly affect our operating results and equity earnings. Our
operating and equity earnings are adversely affected when the U.S.
Dollar strengthens relative to other currencies and are positively
affected when the U.S. Dollar weakens. In the future, a larger
portion of our international revenue may be denominated in foreign
currencies, which will subject us to additional risks associated
with fluctuations in those foreign currencies. In addition, we may
be unable to successfully hedge against any such fluctuations.
Operations in the developing world could cause us to incur
additional costs and risks associated with doing business in
developing markets.
We may seek to operate in the developing world, which would make us
vulnerable to political, economic and social instability in such
areas. Many areas of the developing world have experienced
political, economic and social uncertainty in recent years,
including an economic crisis characterized in some cases by
increased inflation, high domestic interest rates, negative
economic growth, reduced consumer purchasing power and high
unemployment. Currently, many of the countries in the developing
world where we have been or may be pursuing projects have been
pursuing economic stabilization policies, including the
encouragement of foreign trade and investment and other reforms,
but there is no guarantee these policies will be successful or stay
in place. Political, economic and social instability in these
countries may have an adverse effect on our business, financial
condition and results of operations.
Our business and reputation could be adversely affected if we
or third parties with whom we have a relationship fail to comply
with United States or foreign anti-corruption laws or
regulations.
Our business and operations may be conducted in countries where
corruption has historically penetrated the economy to a greater
extent than in the United States. It is our policy to comply, and
to require our local partners and those with whom we do business to
comply, with all applicable anti-corruption laws, such as the U.S.
Foreign Corrupt Practices Act, and with applicable local laws of
the foreign countries in which we operate. Our business and
reputation may be adversely affected if we or our local partners
fail to comply with such laws.
If we are unable to maintain our corporate reputation, our
business may suffer.
Our success depends on our ability to maintain our corporate
reputation. Adverse publicity surrounding any aspect of our
business, or due to any failure on our part to comply with laws to
which we are subject, could negatively affect our Company’s overall
reputation.
Our operations could be impacted by natural
disaster.
The occurrence of natural disasters in the markets in which we
operate could disrupt our business operations and personnel located
in the affected areas and, in the case of our corporate office, our
ability to provide administrative support services, including
billing and collection services.
For example, our operations could be rendered inoperable,
temporarily or permanently, as a result of a fire or other natural
disaster or by a terrorist or other attack on one of our
facilities. The security and other measures we, and the property
owners, take to protect against these risks may not be sufficient.
Our insurance may not be adequate to cover the losses we suffer as
a result of any of these events. In the event of an uninsured loss,
including a loss in excess of insured limits, at any of the
facilities in our network, such facilities may not be adequately
repaired in a timely manner or at all and we may lose some or all
of the future revenues anticipated to be derived from such
facilities.
Delays in collection, or non-collection, of our accounts
receivable could adversely affect our business, financial position,
results of operations and liquidity.
Prompt billing and collection are important factors in our
liquidity. Billing and collection of our accounts receivable are
subject to the complex regulations. Our inability to bill and
collect on a timely basis pursuant to these regulations and rules
could subject us to payment delays that could have a material
adverse effect on our business, financial position, results of
operations and liquidity. It is possible that documentation
support, system problems, or other payor issues may materially
adversely affect our working capital, and our working capital
management procedures may not successfully mitigate this risk.
Intellectual Property Risks
Our patent application may not issue as a patent, which may
have a material adverse effect on our ability to prevent others
from commercially exploiting products similar to ours.
We currently have one patent application pending, with number
63/371,838, that defines a system and method for securing, storing
and converting the plastic waste of developed nations to produce
environmentally friendly commodities and clean-fuels; reduce waste
deposited into landfills; reduce incineration; mitigate the use of
fossil fuel products; and assist developing nations in establishing
waste recycling and development of collection infrastructure
There is no guarantee that our pending patent application will be
approved. We cannot be certain that we are the first inventor of
the subject matter to which we have filed a particular patent
application, or that we are the first party to file such a patent
application. If another party has filed a patent application for
the same subject matter as we have, we may not be entitled to the
protection sought by the patent application. Further, the scope of
protection of issued patent claims is often difficult to determine.
As a result, we cannot be certain that the patent application that
we have file for our Plastic Conversion Network will issue, or that
our issued patents will afford protection against competitors with
similar technology. In addition, our competitors may design around
our issued patents, which may adversely affect our business,
prospects, financial condition, results of operations, and cash
flows.
We may not be able to prevent others from unauthorized use of
our intellectual property, which could harm our business and
competitive position.
We may not be able to prevent others from unauthorized use of our
intellectual property, which could harm our business and
competitive position. We rely on a combination of patent, trade
secret (including those in our know-how), and other intellectual
property laws, as well as employee and third-party nondisclosure
agreements, intellectual property licenses, and other contractual
rights to establish and protect our rights in our technology and
intellectual property. Our patent or trademark applications may not
be granted, any patents or trademark registrations that may be
issued to us may not sufficiently protect our intellectual property
and any of our issued patents, trademark registrations or other
intellectual property rights may be challenged by third parties.
Any of these scenarios may result in limitations in the scope of
our intellectual property or restrictions on our use of our
intellectual property or may adversely affect the conduct of our
business. Despite our efforts to protect our intellectual property
rights, third parties may attempt to copy or otherwise obtain and
use our intellectual property or seek court declarations that they
do not infringe upon our intellectual property rights. Monitoring
unauthorized use of our intellectual property is difficult and
costly, and the steps we have taken or will take to prevent
misappropriation may not be successful. From time to time, we may
have to resort to litigation to enforce our intellectual property
rights, which could result in substantial costs and diversion of
our resources.
Patent, trademark, and trade secret laws vary significantly
throughout the world. A number of foreign countries do not protect
intellectual property rights to the same extent as do the laws of
the United States. Therefore, our intellectual property rights may
not be as strong or as easily enforced outside of the United
States. Failure to adequately protect our intellectual property
rights could result in our competitors offering similar products,
potentially resulting in the loss of some of our competitive
advantage and a decrease in our revenue which would adversely
affect our business, prospects, financial condition, results of
operations, and cash flows.
If any issued patent expires or is not maintained, our patent
applications are not granted or our patent rights are contested,
circumvented, invalidated or limited in scope, we may not be able
to prevent others from selling, developing or exploiting competing
technologies or products, which could have a material adverse
effect on our business, prospects, financial condition, results of
operations, and cash flows.
We cannot assure you that our pending application will issue as a
patent. Even if our patent application issues into a patent, the
patents may be contested, circumvented or invalidated in the
future. In addition, the rights granted under any issued patent may
not provide us with adequate protection or competitive advantages.
The claims under any patent that issues from our patent application
may not be broad enough to prevent others from developing
technologies that are similar or that achieve results similar to
ours. The intellectual property rights of others could also bar us
from licensing and exploiting any patents that issue from our
pending applications. Numerous patents and pending patent
applications owned by others exist in the fields in which we have
developed and are developing our technology. Many of these existing
patents and patent applications might have priority over our patent
applications and could subject our patents to invalidation or our
patent applications to rejection. Finally, in addition to patents
and patent applications that were filed before our patents and
patent applications, any of our existing or future patents may also
be challenged by others on the basis that they are invalid or
unenforceable.
We may in the future become, subject to claims that we or our
employees have wrongfully used or disclosed alleged trade secrets
of our employees’ former employers.
In the event we hire employees that were previously employed by
other companies with similar or related technology, products or
services, we may in the future become subject to claims that we or
these employees have inadvertently or otherwise used or disclosed
trade secrets or other proprietary information of former employers.
Litigation may be necessary to defend against these claims. If we
fail in defending such claims, we may be forced to pay monetary
damages or be enjoined from using certain technology, products,
services or knowledge. Even if we are successful in defending
against these claims, litigation could result in substantial costs
and demand on management resources.
A significant portion of our intellectual property is not
protected through patents or formal copyright registration. As a
result, we do not have the full benefit of patent or copyright laws
to prevent others from replicating our products, product candidates
and brands.
We have not protected certain of our intellectual property rights
through patents or formal copyright registration, and we do not
currently have any issued patents. There can be no assurance that
any patent will issue or if issued that the patent will protect our
intellectual property. As a result, we may not be able to protect
our intellectual property and trade secrets or prevent others from
independently developing substantially equivalent proprietary
information and techniques or from otherwise gaining access to our
intellectual property or trade secrets. In such an instance, our
competitors could produce products that are nearly identical to
ours resulting in us selling less products or generating less
revenue from our sales.
Confidentiality agreements with employees and others may not
adequately prevent disclosure of trade secrets and other
proprietary information.
We rely on trade secrets, know-how and technology, which are not
protected by patents, to protect certain of the intellectual
property behind our Plastic Conversion Network. We have recently
begun to use confidentiality agreements with our collaborators,
employees, consultants, outside collaborators and other advisors to
protect our proprietary technology and processes. We intend to use
such agreements in the future, but these agreements may not
effectively prevent disclosure of confidential information and may
not provide an adequate remedy in the event of unauthorized
disclosure of confidential information. In addition, others may
independently discover trade secrets and proprietary information,
and in such cases, we could not assert any trade secret rights
against such party. Costly and time-consuming litigation could be
necessary to enforce and determine the scope of our proprietary
rights, and failure to obtain or maintain trade secret protection
could adversely affect our competitive business position.
We may need to defend ourselves against patent, copyright or
trademark infringement claims, which may be time-consuming and
would cause us to incur substantial costs.
The status of the protection of our intellectual property is
unsettled as we do not have any issued patents, registered
trademarks or registered copyrights and other than the pending
patent application for PCN, we have not applied for the same.
Companies, organizations or individuals, including our competitors,
may hold or obtain patents, trademarks or other proprietary rights
that would prevent, limit or interfere with our ability to make,
use, develop, sell or market our projects, products and services,
which could make it more difficult for us to operate our business.
In the future, we may receive communications from third parties
that allege our products or components thereof are covered by their
patents or trademarks or other intellectual property rights, we
have not received any communication of this kind to date. Companies
holding patents or other intellectual property rights may bring
suits alleging infringement of such rights or otherwise assert
their rights. If we are determined to have infringed upon a
third-party’s intellectual property rights, we may be required to
do one or more of the following:
|
● |
cease making,
using, selling or offering to sell processes, goods or services
that incorporate or use the third-party intellectual property; |
|
● |
pay
substantial damages; |
|
● |
seek a
license from the holder of the infringed intellectual property
right, which license may not be available on reasonable terms or at
all; |
|
● |
redesign our
projects or other goods or services to avoid infringing the
third-party intellectual property; |
|
● |
establish and
maintain alternative branding for our products and services;
or |
|
● |
find-third
providers of any part or service that is the subject of the
intellectual property claim. |
In the event of a successful claim of infringement against us and
our failure or inability to obtain a license to the infringed
technology or other intellectual property right, our business,
prospects, operating results and financial condition could be
materially adversely affected. In addition, any litigation or
claims, whether or not valid, could result in substantial costs,
negative publicity and diversion of resources and management
attention.
Risks Relating to Governmental Regulation
We are subject to extensive governmental regulation. Any
changes to the laws and regulations governing our business, or to
the interpretation and enforcement of those laws or regulations,
could have a material adverse effect on our business and financial
condition, results of operations and cash flows.
Currently there are no federal laws restricting or regulating
pyrolysis, however the Environmental Protection Agency has released
advance notice of proposed rulemaking on pyrolysis and gasification
units
(https://www.epa.gov/stationary-sources-air-pollution/advance-notice-proposed-rulemaking-pyrolysis-and-gasification).
As of January 2022, twenty-one states have passed Advanced
Recycling Legislation, which will regulate advanced recycling
technologies such as pyrolysis as manufacturing operations rather
than waste. Waste handling requirements are much stricter than
manufacturing requirements. Michigan and Arizona, where Clean-Seas
is establishing facilities have passed Advanced Recycling
Legislation.
Federal and state laws and regulations also impact how we conduct
our business, the services we offer and our interactions with
customers, our employees and the public and impose certain
requirements on us such as:
|
● |
licensure and certification; |
|
● |
operating policies and
procedures; |
|
● |
emergency preparedness risk
assessments and policies and procedures; |
|
● |
policies and procedures regarding
employee relations; |
|
● |
addition of facilities and
services; |
|
● |
requirements for utilization of
services; |
|
● |
reporting and maintaining records
regarding adverse events |
These laws and regulations, and their interpretations, are subject
to change. Changes in existing laws and regulations, or their
interpretations, or the enactment of new laws or regulations could
have a material adverse effect on our business and financial
condition, results of operations and cash flows by:
|
● |
increasing our administrative and
other costs; |
|
● |
increasing or decreasing mandated
services; |
|
● |
causing us to abandon business
opportunities we might have otherwise pursued; or |
|
● |
requiring us to implement
additional or different programs and systems. |
Due to the associated quantities of hazardous substances and waste,
our industry is highly regulated and monitored by various
environmental regulatory authorities such as the Environmental
Protection Agency (“EPA”), federal or state analogs in other
countries and the European Union, which promulgated the Industrial
Emission Directive (“IED”). We intend to rely upon our local
partners in each jurisdiction in which we operate, including India
and Morocco and other jurisdictions to be established in the
future, to ensure compliance with the local regulatory authorities.
As such, we are subject to extensive international, national, state
and local laws, regulations and directives pertaining to pollution
and protection of the environment, health and safety, which govern,
among other things, emissions to the air, discharges onto land or
waters, the maintenance of safe conditions in the workplace, and
the generation, handling, storage, transportation, treatment and
disposal of waste materials. Some of these laws, regulations and
directives are subject to varying and conflicting interpretations.
Many of these laws, regulations and directives provide for
substantial fines and potential criminal sanctions for violations
and require the installation of costly pollution control equipment
or operational changes to limit pollution emissions or reduce the
likelihood or impact of hazardous substance releases, whether
permitted or not. New laws, rules and regulations as well as
changes to laws, rules and regulations may also affect us.
Local, state, federal and foreign governments have increasingly
proposed or implemented restrictions on certain plastic-based
products, including single-use plastics and plastic food packaging.
Plastics have also faced increased public scrutiny due to negative
coverage of plastic waste in the environment. Increased regulation
on the use of plastics could cause reduced demand for our
polyethylene products, which could adversely affect our business,
operating results and financial condition.
We may be unable to obtain, modify, or maintain the
regulatory permits, approvals and consents required to construct
and operate our projects.
In order to construct and operate our projects, we must obtain and
modify numerous environmental and other regulatory permits and
certifications from federal, state and local agencies and
authorities, including air permits and wastewater discharge
permits. A number of these permits and certifications must be
obtained prior to the start of a project, while other permits are
required to be obtained at or prior to the time of first commercial
operation or within prescribed time frames following commencement
of commercial operations. Any failure to obtain or modify the
necessary environmental and other regulatory permits and
certifications on a timely basis could delay the commercial
operation of our projects. In addition, once a permit or
certification has been issued for a project, we must take steps to
comply with each permit’s or certification’s conditions, which can
include conditions as to timely commencement of the project.
Failure to comply with these conditions could result in revocation
or suspension of the permit or certification and/or the imposition
of penalties or other consequences. We also may need to modify
existing permits to reflect changes in project design or
requirements, which could trigger a legal or regulatory review
under a standard that may be more stringent than when the permits
were originally granted.
Obtaining and modifying necessary permits and certifications is a
time-consuming and expensive process, and we may not be able to
obtain or modify them on a timely basis or at all. In the event
that we fail to obtain or modify all necessary permits and
certifications, we may be forced to delay construction or operation
of a project or abandon the project altogether, which could have a
material adverse effect on our business, financial condition and
results of operations. In addition, we may be required to make
capital expenditures on an ongoing basis to comply with
increasingly stringent federal, state, provincial and local
environmental, health and safety laws, regulations and permits.
We are subject to environmental laws and potential exposure
to environmental liabilities.
Because of the nature of our projects, we are subject to various
federal, state and local environmental laws and regulations that
govern our operations, including the import, handling and disposal
of non-hazardous and hazardous wastes, and emissions and discharges
into the environment. Failure to comply with these laws and
regulations could result in costs for corrective action, penalties
or the imposition of other liabilities. We also are subject to laws
and regulations that impose liability and clean-up responsibility
for releases of hazardous substances into the environment. Under
certain of these laws and regulations, a current or previous owner
or operator of property may be liable for the costs of remediating
the release or spill of hazardous substances or petroleum products
on or from its property, without regard to whether the owner or
operator knew of, or caused, the contamination, and such owner or
operator may incur liability to third parties impacted by such
contamination. Failure to comply with applicable environmental laws
and regulations and the imposition of environmental liability could
have a material adverse effect on our business, financial condition
and results of operations.
Changes in applicable laws and regulations can adversely
affect our business, financial condition and results of
operations.
There has been substantial debate recently in the United States and
abroad in the context of environmental and energy policies
affecting climate change, the outcome of which could have a
positive or negative influence on our existing business and our
prospects for growing our business. Governmental entities that
regulate our operations or projects may adopt new laws, regulations
or policies, or amend or change the interpretation of existing
laws, regulations or policies, at any time. We have no control over
these changes, which could potentially have an adverse effect on
our business, prospects, financial condition and results of
operations.
Risks Relating to Tax and Accounting
We do not yet have adequate internal controls, and we cannot
provide assurances that these weaknesses will be effectively
remediated or that additional material weaknesses will not occur in
the future.
As a public company, we will be subject to the reporting
requirements of the Exchange Act, and the Sarbanes-Oxley Act. We
expect that the requirements of these rules and regulations will
increase our legal, accounting and financial compliance costs, make
some activities more difficult, time consuming and costly, and
place significant strain on our personnel, systems and
resources.
The Sarbanes-Oxley Act requires, among other things, that we
maintain effective disclosure controls and procedures, and internal
control over financial reporting.
We do not yet have effective disclosure controls and procedures, or
internal controls over all aspects of our financial reporting. We
are continuing to develop and refine our disclosure controls and
other procedures that are designed to ensure that information
required to be disclosed by us in the reports that we will file
with the SEC is recorded, processed, summarized and reported within
the time periods specified in SEC rules and in accordance with
GAAP. Our management is responsible for establishing and
maintaining adequate internal control over our financial reporting,
as defined in Rule 13a-15(f) under the Exchange Act.
We will be required to expend time and resources to further improve
our internal controls over financial reporting, including by
expanding our staff. However, we cannot assure you that our
internal control over financial reporting, as modified, will enable
us to identify or avoid material weaknesses in the future.
We have not yet retained sufficient staff or engaged sufficient
outside consultants with appropriate experience in GAAP
presentation, especially of complex instruments, to devise and
implement effective disclosure controls and procedures, or internal
controls. We will be required to expend time and resources hiring
and engaging additional staff and outside consultants with the
appropriate experience to remedy these weaknesses. We cannot assure
you that management will be successful in locating and retaining
appropriate candidates; that newly engaged staff or outside
consultants will be successful in remedying material weaknesses
thus far identified or identifying material weaknesses in the
future; or that appropriate candidates will be located and retained
prior to these deficiencies resulting in material and adverse
effects on our business.
Our current controls and any new controls that we develop may
become inadequate because of changes in conditions in our business,
including increased complexity resulting from our international
expansion. Further, weaknesses in our disclosure controls or our
internal control over financial reporting may be discovered in the
future. Any failure to develop or maintain effective controls, or
any difficulties encountered in their implementation or
improvement, could harm our operating results or cause us to fail
to meet our reporting obligations and may result in a restatement
of our financial statements for prior periods. Any failure to
implement and maintain effective internal control over financial
reporting could also adversely affect the results of management
reports and independent registered public accounting firm audits of
our internal control over financial reporting that we will
eventually be required to include in our periodic reports that we
file with the SEC. Ineffective disclosure controls and procedures,
and internal control over financial reporting could also cause
investors to lose confidence in our reported financial and other
information, which would likely have a negative effect on the
market price of our Common Stock.
Our independent registered public accounting firm is not required
to audit the effectiveness of our internal control over financial
reporting until after we are no longer an “emerging growth company”
as defined in the JOBS Act. At such time, our independent
registered public accounting firm may issue a report that is
adverse in the event it is not satisfied with the level at which
our internal control over financial reporting is documented,
designed or operating. Any failure to maintain effective disclosure
controls and internal control over financial reporting could have a
material and adverse effect on our business and operating results
and cause a decline in the market price of our Common Stock.
Our failure to achieve and maintain effective internal
control over financial reporting in accordance with Section 404 of
the Sarbanes-Oxley Act as a public company could have a material
adverse effect on our business and share price.
Prior to the completion of this offering, we have not had to
independently comply with Section 404(a) of the Sarbanes-Oxley Act.
Section 404(a) of the Sarbanes-Oxley Act requires annual management
assessments of the effectiveness of our internal control over
financial reporting, starting with the second annual report that we
would expect to file with the SEC. Additionally, once we are no
longer an emerging growth company, as defined by the JOBS Act, our
independent registered public accounting firm will be required
pursuant to Section 404(b) of the Sarbanes-Oxley Act to attest to
the effectiveness of our internal control over financial reporting
on an annual basis. The rules governing the standards that must be
met for our management to assess our internal control over
financial reporting are complex and require significant
documentation, testing, and possible remediation.
Internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements in accordance
with generally accepted accounting principles. We are in the
process of reviewing, documenting, and testing our internal control
over financial reporting, but we are not currently in compliance
with, and we cannot be certain when we will be able to implement,
the requirements of Section 404(a). We may encounter problems or
delays in implementing any changes necessary to make a favorable
assessment of our internal control over financial reporting. In
addition, we may encounter problems or delays in completing the
implementation of any public accounting firm after we cease to be
an emerging growth company. If we cannot favorably assess the
effectiveness of our internal control over financial reporting, or
if our independent registered public accounting firm is unable to
provide an unqualified attestation report on our internal controls
after we cease to be an emerging growth company, investors could
lose confidence in our financial information and the price of our
Common Stock could decline.
Additionally, the existence of any material weakness or significant
deficiency requires management to devote significant time and incur
significant expense to remediate any such material weaknesses or
significant deficiencies and management may not be able to
remediate any such material weaknesses or significant deficiencies
in a timely manner. The existence of any material weakness in our
internal control over financial reporting could also result in
errors in our financial statements that could require us to restate
our financial statements, cause us to fail to meet our reporting
obligations, and cause stockholders to lose confidence in our
reported financial information, all of which could materially and
adversely affect our business and share price.
We incur significant increased costs as a result of operating
as a public company and our management will be required to devote
substantial time to new compliance initiatives.
As a public company, we incur significant legal, accounting and
other expenses that we did not incur as a private company. The
Sarbanes-Oxley Act, as well as rules subsequently implemented by
the SEC and Nasdaq, has imposed various requirements on public
companies. Our management and other personnel will need to devote a
substantial amount of time to these compliance initiatives.
Moreover, we anticipate that compliance with these rules and
regulations will increase our legal, accounting and financial
compliance costs substantially. A number of those requirements will
require us to carry out activities we have not done previously. For
example, we will create new board committees and adopt new internal
controls and disclosure controls and procedures. In addition, these
rules and regulations may make our activities related to legal,
accounting and financial compliance more difficult, time-consuming
and costly and may also place undue strain on our personnel,
systems and resources. Furthermore, if we identify any issues in
complying with those requirements (for example, if we or our
auditors identify a material weakness or significant deficiency in
our internal control over financial reporting), we could incur
additional costs rectifying those issues, and the existence of
those issues could adversely affect us, our reputation or investor
perceptions of us. If these requirements divert the attention of
our management and personnel from other business concerns, they
could have a material adverse effect on our business, financial
condition and results of operations. For example, we expect these
rules and regulations to make it more difficult and more expensive
for us to obtain director and officer liability insurance, and we
may be required to incur substantial costs to maintain our current
levels of such coverage. These increased costs will require us to
divert a significant amount of money that we could otherwise use to
expand our business and achieve our strategic objectives. Advocacy
efforts by stockholders and third parties may also prompt
additional changes in governance and reporting requirements, which
could further increase our costs.
Our ability to utilize our net operating loss carryforwards
and certain other tax attributes may be limited.
Under Section 382 of the Internal Revenue Code of 1986, as amended,
if a corporation undergoes an “ownership change,“ the
corporation’s ability to use its pre-change net operating loss
carryforwards and other pre-change tax attributes to offset its
post-change income may be limited. In general, an “ownership
change“ occurs if the aggregate stock ownership of one or more
stockholders or groups of stockholders who own at least 5% of a
corporation’s stock increase their ownership by more than 50
percentage points over their lowest ownership percentage within a
rolling three-year period. Similar rules may apply under state tax
laws. If it is determined that we have in the past experienced any
ownership changes, or if we experience ownership changes as a
result of future transactions in our stock, our ability to use our
net operating loss carryforwards and other tax attributes to offset
U.S. federal taxable income may be subject to limitations, which
could potentially result in increased future tax liability to
us.
Risks Relating to our Common Stock and Other Securities
Our stock price has been volatile and may continue to be
volatile and your investment in our Common Stock could suffer a
decline in value.
The dollar volume trading in our stock is low and we cannot assure
you that any significant market will develop. As a result, any
reported prices may not reflect the price at which you would be
able to sell shares if you want to sell any shares you own or buy
shares if you wish to buy shares. Further, stocks with a low
trading volume may be more subject to manipulation than a stock
that has a significant public float. The price of our stock may
fluctuate significantly in response to a number of factors, many of
which are beyond our control. These factors include, but are not
limited to, the following, in addition to the risks described above
and general market and economic conditions:
|
● |
our
low stock price, which may result in a modest dollar purchase or
sale of our Common Stock having a disproportionately large effect
on the stock price; |
|
|
|
|
● |
the
market’s perception as to our ability to generate positive cash
flow or earnings; |
|
|
|
|
● |
changes
in our or securities analysts’ estimate of our financial
performance; |
|
|
|
|
● |
our
ability or perceived ability to obtain necessary financing for our
operations; |
|
|
|
|
● |
the
anticipated or actual results of our operations; |
|
|
|
|
● |
concern
about our lack of internal controls; |
|
|
|
|
● |
any
discrepancy between anticipated or projected results and actual
results of our operations; |
|
|
|
|
● |
actions
by third parties to either sell or purchase stock in quantities
which would have a significant effect on our stock
price; |
|
|
|
|
● |
other
factors not within our control; |
|
|
|
|
● |
general
economic, industry and market conditions; and |
|
|
|
|
● |
other
events or factors, including those resulting from such events, or
the prospect of such events, including war, terrorism and other
international conflicts, such as the recent Russian invasion of
Ukraine as well as continued and any new sanctions against
Russia by, among others, the E.U., the U.S., and the U.K, which
restrict a wide range of trade and financial dealings with Russia
and Russian persons, public health issues including health
epidemics or pandemics, such as the outbreak of the novel
coronavirus (COVID-19), and natural disasters such as fire,
hurricanes, earthquakes, tornados or other adverse weather and
climate conditions, whether occurring in the United States or
elsewhere, could disrupt our operations, disrupt the operations of
our suppliers or result in political or economic
instability. |
In addition, the securities markets have from time-to-time
experienced significant price and volume fluctuations that are
unrelated to the actual or expected operating performance and
financial condition of particular companies. These market
fluctuations may also materially and adversely affect the market
price of our Common Stock. As a result, you may be unable to resell
your shares of our Common Stock at a desired price and any
volatility in our market price, including any stock run-up, may be
unrelated to our actual or expected operating performance and
financial condition or prospects, making it difficult for
prospective investors to assess the rapidly changing value of our
Common Stock.
The price of our Common Stock may have little or no
relationship to the historical bid prices of our Common Stock on
the OTCQB.
There has been no public market for our capital stock other than
the OTCQB. Given the limited history of sales, among other factors,
this information may have little or no relation to broader market
demand for our Common Stock and thus the price of our Common Stock.
As a result, you should not rely on these historical sales prices
as they may differ materially from the subsequent prices of our
Common Stock.
We have a substantial number of authorized shares of Common
Stock available for future issuance that could cause dilution of
our stockholders’ interest and adversely impact the rights of
holders of our Common Stock.
We have a total of 2,000,000,000 shares of Common Stock authorized
for issuance and up to 10,000,000 shares of preferred stock with
the rights, preferences and privileges that our Board may determine
from time to time. As of September 30, 2022, we had 354,385,392
shares of Common Stock issued and outstanding. Of the 10,000,000
shares of authorized preferred stock of the Company, 1,000,000
shares are designated as Series A Convertible Preferred Stock, of
which none is outstanding; 2,000,000 shares are designated as
Series A Redeemable Preferred Stock, of which none is outstanding;
2,000,000 shares are designated as Series B Convertible Non-Voting
Preferred Stock, of which 2,000,000 were outstanding, which convert
to 20,000,000 shares of Common Stock in certain circumstances; and
2,000,000 shares are designated as Series C Convertible Preferred
Stock, of which 2,000,000 shares were outstanding, which convert to
20,000,000 shares of Common Stock in certain circumstances, each as
of January 18, 2023.
The shares of Series B Convertible Non-Voting Preferred Stock
automatically converted into 20,000,000 shares of Common Stock on
January 1, 2023; however, the Company and holders of the Series B
Convertible Non-Voting Preferred Stock are currently in a dispute
and the Company’s Transfer Agent has been instructed not to issue
the shares of Common Stock until the dispute has been resolved.
Accordingly, although as of January 23, 2023, the shares of Series
B Convertible Non-Voting Preferred Stock are no longer outstanding,
the shares of Common Stock thereunder have not been issued as of
January 23, 2023.
The shares of Series C Convertible Preferred Stock, held by our CEO
Daniel Bates, automatically converted into 20,000,000 shares of
Common Stock on January 1, 2023; however as of January 23, 2023
such conversion has not been effectuated.
We may seek financing that could result in the issuance of
additional shares of our capital stock and/or rights to acquire
additional shares of our capital stock. We may also make
acquisitions that result in issuances of additional shares of our
capital stock. Those additional issuances of capital stock would
result in a significant reduction of your percentage interest in
us. Furthermore, the book value per share of our Common Stock may
be reduced. This reduction would occur if the exercise price of any
issued warrants, the conversion price of any convertible notes is
lower than the book value per share of our Common Stock at the time
of such exercise or conversion.
The addition of a substantial number of shares of our Common Stock
into the market or by the registration of any of our other
securities under the Securities Act, may significantly and
negatively affect the prevailing market price for our Common Stock.
The future sales of shares of our Common Stock issuable upon the
exercise of outstanding warrants or convertible securities may have
a depressive effect on the market price of our Common Stock, as
such warrants would be more likely to be exercised at a time when
the price of our Common Stock is greater than the exercise
price.
The holders of our Series B Convertible Non-Voting Preferred
Stock and our Series C Convertible Preferred Stock are protected
from dilution upon future issuances of our Common
Stock.
The Certificate of Designations for our Series B Convertible
Non-Voting Preferred Stock and our Series C Convertible Preferred
Stock contain provisions protecting the holders of such shares from
dilution upon future issuances of our Common Stock such that for a
period of two years after such shares of preferred stock convert to
Common Stock they will maintain a twenty percent ownership interest
in the common and preferred stock on a fully diluted basis.
Accordingly, any future issuances of stock during such two- year
period will result in dilution to all stockholders other than the
holders of our Series B Convertible Non-Voting Preferred Stock and
our Series C Convertible Preferred Stock. Such provisions may
prevent future changes of control that the Board believes are in
our best interest and allow the holders of our Series B Convertible
Non-Voting Preferred Stock and our Series C Convertible Preferred
Stock to influence our management and affairs and control the
outcome of matters submitted to our stockholders for approval,
including the election of directors and any sale, merger,
consolidation, or sale of all or substantially all of our
assets.
If securities or industry analysts do not publish research or
reports about our business, or if they downgrade their
recommendations regarding our Common Stock, its trading price and
volume could decline.
We expect the trading market for our Common Stock to be influenced
by the research and reports that industry or securities analysts
publish about us, our business or our industry. We do not currently
have and may never obtain research coverage by securities and
industry analysts. If no securities or industry analysts commence
coverage of our company, the trading price for our stock may be
negatively impacted. If we obtain securities or industry analyst
coverage and if one or more of these analysts cease coverage of our
company or fail to publish reports on us regularly, we could lose
visibility in the financial markets, which in turn could cause our
stock price or trading volume to decline and our Common Stock to be
less liquid. Moreover, if one or more of the analysts who cover us
downgrades our stock or publishes inaccurate or unfavorable
research about our business, or if our results of operations do not
meet their expectations, our stock price could decline.
We do not anticipate paying any cash dividends.
We presently do not anticipate that we will pay any dividends on
any of our capital stock in the foreseeable future. The payment of
dividends, if any, would be contingent upon our revenues and
earnings, if any, capital requirements, and general financial
condition. The payment of any dividends will be within the
discretion of our Board of Directors. We presently intend to retain
all earnings, if any, to implement our business plan; accordingly,
we do not anticipate the declaration of any dividends in the
foreseeable future.
Stockholders may face significant restrictions on the resale
of our Common Stock due to federal regulations of penny
stocks.
Our Common Stock is subject to the provisions of Section 15(g) and
Rule 15g-9 of the Securities Exchange Act, commonly referred to as
the “penny stock rule.” Section 15(g) sets forth certain
requirements for transactions in penny stock, and Rule 15g-9(d)
incorporates the definition of “penny stock” that is found in Rule
3a51-1 of the Exchange Act. The SEC generally defines a penny stock
to be any equity security that has a market price less than $5.00
per share, subject to certain exceptions. We are subject to the
SEC’s penny stock rules.
Since our Common Stock is deemed to be penny stock, trading in the
shares of our Common Stock is subject to additional sales practice
requirements on broker-dealers who sell penny stock to persons
other than established customers and accredited investors.
“Accredited investors” are persons with assets in excess of
$1,000,000 (excluding the value of such person’s primary residence)
or annual income exceeding $200,000 or $300,000 together with their
spouse. For transactions covered by these rules, broker-dealers
must make a special suitability determination for the purchase of
such security and must have the purchaser’s written consent to the
transaction prior to the purchase. Additionally, for any
transaction involving a penny stock, unless exempt, the rules
require the delivery, prior to the first transaction of a risk
disclosure document, prepared by the SEC, relating to the penny
stock market. A broker-dealer also must disclose the commissions
payable to both the broker-dealer and the registered representative
and current quotations for the securities. Finally, monthly
statements must be sent disclosing recent price information for the
penny stocks held in an account and information to the limited
market in penny stocks.
Consequently, these rules may restrict the ability of broker-dealer
to trade and/or maintain a market in our Common Stock and may
affect the ability of our stockholders to sell their shares of
Common Stock.
There can be no assurance that our shares of Common Stock will
qualify for exemption from the Penny Stock Rule. In any event, even
if our Common Stock was exempt from the Penny Stock Rule, we would
remain subject to Section 15(b)(6) of the Exchange Act, which gives
the SEC the authority to restrict any person from participating in
a distribution of penny stock if the SEC finds that such a
restriction would be in the public interest.
Stockholders who hold unregistered shares of our Common Stock
will be subject to resale restrictions pursuant to Rule 144, if and
when available, due to the fact that we are deemed to be a former
“shell company”.
Pursuant to Rule 144 (“Rule 144”) of the Securities Act, a “shell
company” is defined as a company that has no or nominal operations;
and, either no or nominal assets; assets consisting solely of cash
and cash equivalents; or assets consisting of any amount of cash
and cash equivalents and nominal other assets. While we do not
believe that we are currently a “shell company”, we were previously
a “shell company” and as such are deemed to be a former “shell
company” pursuant to Rule 144, and as such, sales of our securities
pursuant to Rule 144 may not be able to be made if we are not
subject to Section 13 or 15(d) of the Exchange Act, and have filed
all of our required periodic reports for at least the previous one
year period prior to any sale pursuant to Rule 144; and a period of
at least twelve months has elapsed from the date “Form 10
information” has been filed with the Commission reflecting our
status that we are not currently a shell company”. Our Form 10 that
was originally filed on December 21, 2021 was withdrawn by the
Company on February 14, 2022 before becoming effective. Our status
as a former “shell company” could prevent us from raising
additional funds, engaging consultants, and using our securities to
pay for any acquisitions in the future (although none are currently
planned).
Risks Relating to Management and Directors
Dan Bates, our Chief Executive Officer, exercises majority
voting control of the Company, which will limit your ability to
influence corporate matters and could delay or prevent a change in
corporate control.
Dan Bates, our Chief Executive Officer, holds 2,000,000 shares of
Series C Convertible Preferred Stock of the Company, which shares
of Series C Convertible Preferred Stock vote together with our
Common Stock on all stockholder matters, and have one hundred
Common Stock votes per share. As a result, Mr. Bates will be able
to influence our management and affairs and control the outcome of
matters submitted to our stockholders for approval, including the
election of directors and any sale, merger, consolidation, or sale
of all or substantially all of our assets.
Mr. Bates may have interests that are different from those of
investors in this offering and the concentration of voting power
among Mr. Bates may have an adverse effect on the price of our
Common Stock.
In addition, this concentration of ownership might adversely affect
the market price of our Common Stock by: (1) delaying, deferring or
preventing a change of control of our Company; (2) impeding a
merger, consolidation, takeover or other business combination
involving our Company; or (3) discouraging a potential acquirer
from making a tender offer or otherwise attempting to obtain
control of our Company. Due to the ownership of the 2,000,000
shares of Series C Convertible Preferred Stock by Mr. Bates,
investors may find it difficult to replace Mr. Bates (and such
persons as he may appoint from time to time) as a member of our
management if they disagree with the way our business is being
operated. Additionally, the interests of Mr. Bates may differ from
the interests of the other stockholders and thus result in
corporate decisions that are adverse to other stockholders.
We rely on our management and if they were to leave our
company or not devote sufficient time to our company, our business
plan could be adversely affected.
Our success is heavily dependent upon the continued active
participation of Dan Bates, our current Chief Executive Officer, as
well as other key personnel and consultants which we plan to hire.
Loss of the services of our top management could have a material
adverse effect upon the Company’s business, financial condition or
results of operations. Further, our success and achievement of our
growth plans depend on our ability to recruit, hire, train and
retain other highly qualified scientific, technical, and managerial
personnel. Competition for qualified employees and consultants
among companies in the applicable industries is intense, and the
loss of any of such persons, or an inability to attract, retain and
motivate any additional highly skilled employees and consultants
required for the initiation and expansion of our activities, could
have a materially adverse effect on it. Subject to available
capital, we intend to compensate its management with industry
standard compensation packages including the granting of stock
options. The inability to attract and retain the necessary
personnel, consultants and advisors could have a material adverse
effect on our business, financial condition or results of
operations. We do not maintain key person life insurance policies
on our executive officers.
Christopher Percy, our former President, Treasurer and Chief
Commercial Officer, does not reside in the United States, which may
pose difficulties in effecting service of process, enforcing
judgments, or commencing litigation to enforce
liabilities.
On September 16, 2022, the Company commenced a lawsuit in the
District Court of Clark County, Nevada (the “Court”) against a
former officer and current director of the Company, Mr. Christopher
Percy, alleging, among other things, breach of fiduciary duty,
conversion, and business disparagement in connection with a control
dispute instigated by Mr. Percy following his termination from the
Company. On November 2, 2022, the Court granted the Company’s
request for a preliminary injunction against Mr. Percy, which
ordered, among other things, that Mr. Percy shall not take any
action on behalf of the Company unless expressly authorized by the
Company’s Board of Directors. The Company’s lawsuit against Mr.
Percy is ongoing and the Company continues to operate normally. Mr.
Percy is currently serving as a member of the Company’s Board of
Directors.
Mr. Percy, resides in the United Kingdom. As a result, shareholders
in the United States may face difficulties in effecting service of
process against Mr. Percy, enforcing judgments obtained in United
States courts or foreign courts based on the civil liability
provisions of the United States federal securities laws against
him, and bringing an original action in a foreign court to enforce
liabilities based on the United States federal securities laws
against him.
Risks Associated with Our Governing Documents and Nevada
Law
Our Bylaws provide for indemnification of officers and
directors at our expense, which may result in a major cost to us
and hurt the interests of our stockholders because corporate
resources may be expended for the benefit of officers or
directors.
Our Bylaws provide that any person who was or is a party or was or
is threatened to be made a party to any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative (whether or not by or in the right
of the Company) by reason of the fact that he is or was a director,
officer, employee, or agent of the Company, or is or was serving at
the request of the Company as a director, officer, employee, or
agent of another corporation, partnership, joint venture, trust, or
other enterprise (including an employee benefit plan), shall be
entitled to be indemnified by the Company to the full extent then
permitted by the laws of the State of Nevada against expenses of
suit, litigation or other proceedings which is specifically
permissible under applicable law, and amounts paid in settlement
incurred by him in connection with such action, suit, or proceeding
and, if so requested, the Company shall advance any and all such
expenses to the person indemnified. These indemnification
obligations may result in a major cost to us and hurt the interests
of our stockholders because corporate resources may be expended for
the benefit of officers or directors.
We have been advised that, in the opinion of the SEC,
indemnification for liabilities arising under federal securities
laws is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification for liabilities arising under federal securities
laws, other than the payment by us of expenses incurred or paid by
a director, officer or controlling person in the successful defense
of any action, suit or proceeding, is asserted by a director,
officer or controlling person in connection with our activities, we
will (unless in the opinion of our counsel, the matter has been
settled by controlling precedent) submit to a court of appropriate
jurisdiction, the question whether indemnification by us is against
public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue. The legal process
relating to this matter if it were to occur is likely to be very
costly and may result in us receiving negative publicity, either of
which factors is likely to materially reduce the market and price
for our shares.
Anti-takeover provisions in our Bylaws, as well as provisions
of Nevada law, might discourage, delay or prevent a change in
control of our company or changes in our management and, therefore,
depress the trading price of our Common Stock.
Our Bylaws and Nevada law contain provisions that may discourage,
delay or prevent a merger, acquisition or other change in control
that stockholders may consider favorable, including transactions in
which you might otherwise receive a premium for your shares of our
Common Stock. These provisions may also prevent or delay attempts
by our stockholders to replace or remove our management. Our
corporate governance documents include provisions:
|
● |
authorizing
blank check preferred stock, which could be issued with voting,
liquidation, dividend and other rights superior to our Common
Stock; and |
|
|
|
|
● |
limiting
the liability of, and providing indemnification to, our directors
and officers. |
The existence of the foregoing provisions and anti-takeover
measures could limit the price that investors might be willing to
pay in the future for shares of our Common Stock. They could also
deter potential acquirers of our company, thereby reducing the
likelihood that you could receive a premium for your Common Stock
in an acquisition.
Risks Relating to The JOBS Act
The JOBS Act allows us to postpone the date by which we must
comply with certain laws and regulations and to reduce the amount
of information provided in reports filed with the SEC. We cannot be
certain if the reduced disclosure requirements applicable to
“emerging growth companies” will make our Common Stock less
attractive to investors.
We are and we will remain an “emerging growth company” until the
earliest to occur of (i) the last day of the fiscal year during
which our total annual revenues equal or exceed $1.07 billion
(subject to adjustment for inflation), (ii) the last day of the end
of our 2027 fiscal year (five years from our first public
offering), (iii) the date on which we have, during the previous
three-year period, issued more than $1 billion in non-convertible
debt, or (iv) the date on which we are deemed a “large accelerated
filer” (with at least $700 million in public float) under the
Exchange Act. For so long as we remain an “emerging growth company”
as defined in the JOBS Act, we may take advantage of certain
exemptions from various reporting requirements that are applicable
to other public companies that are not “emerging growth companies”
as described in further detail in the risk factors below. We cannot
predict if investors will find our Common Stock less attractive
because we will rely on some or all of these exemptions. If some
investors find our Common Stock less attractive as a result, there
may be a less active trading market for our Common Stock and our
stock price may be more volatile. If we avail ourselves of certain
exemptions from various reporting requirements, as is currently our
plan, our reduced disclosure may make it more difficult for
investors and securities analysts to evaluate us and may result in
less investor confidence.
Our election not to opt out of the JOBS Act extended
accounting transition period may not make our financial statements
easily comparable to other companies.
Pursuant to the JOBS Act, as an “emerging growth company”, we can
elect to opt out of the extended transition period for any new or
revised accounting standards that may be issued by the Public
Company Accounting Oversight Board (PCAOB) or the SEC. Which means
that when a standard is issued or revised and it has different
application dates for public or private companies, we, as an
“emerging growth company”, can adopt the standard for the private
company. This may make a comparison of our financial statements
with any other public company which is not either an “emerging
growth company” nor an “emerging growth company” which has opted
out of using the extended transition period, more difficult or
impossible as possible different or revised standards may be
used.
General Risk Factors
Our operations and performance are dependent on U.S.,
regional and global economic and geopolitical
conditions.
Our operations and performance depend on global, regional and U.S.
economic and geopolitical conditions. While we do not have
operations in Russia or China, Russia’s invasion and military
attacks on Ukraine have triggered significant sanctions from U.S.
and European leaders. These events are currently escalating and
creating increasingly volatile global economic conditions.
Resulting changes in U.S. trade policy and European policies could
trigger retaliatory actions by Russia, its allies and other
affected countries, including China, resulting in a “trade war.”
Furthermore, if the conflict between Russia and Ukraine continues
for a long period of time, or if other countries, including the
U.S., become further involved in the conflict, we could face
significant adverse effects to our business and financial
condition.
The above factors, including a number of other economic and
geopolitical factors both in the U.S. and abroad, could ultimately
have material adverse effects on our business, financial condition,
results of operations or cash flows, including the following:
|
● |
effects of significant
changes in economic, monetary and fiscal policies in the U.S. and
abroad including currency fluctuations, inflationary pressures and
significant income tax changes; |
|
● |
a global or regional
economic slowdown in any of our market segments; |
|
● |
changes in government
policies and regulations affecting the Company or its significant
customers; |
|
● |
industrial policies in
various countries that favor domestic industries over
multinationals or that restrict foreign companies
altogether; |
|
● |
new or stricter trade
policies and tariffs enacted by countries, such as China, in
response to changes in U.S. trade policies and tariffs; |
|
● |
postponement of
spending, in response to tighter credit, financial market
volatility and other factors; |
|
● |
rapid material
escalation of the cost of regulatory compliance and
litigation; |
|
● |
difficulties protecting
intellectual property; |
|
● |
credit risks and other
challenges in collecting accounts receivable; and |
|
● |
the impact of each of
the foregoing on outsourcing and procurement
arrangements. |
We may not maintain sufficient insurance coverage for the
risks associated with our business operations.
Risks associated with our business and operations include, but are
not limited to, claims for wrongful acts committed by our officers,
directors, and other representatives, the loss of intellectual
property rights, the loss of key personnel, and risks posed by
natural disasters. Any of these risks may result in significant
losses. We cannot provide any assurance that our insurance coverage
is sufficient to cover any losses that we may sustain, or that we
will be able to successfully claim our losses under our insurance
policies on a timely basis or at all. If we incur any loss not
covered by our insurance policies, or the compensated amount is
significantly less than our actual loss or is not timely paid, our
business, financial condition and results of operations could be
materially and adversely affected.
Any failure to protect our intellectual property rights could
impair our ability to protect our technology and our
brand.
Our success depends in part on our ability to enforce our
intellectual property and other proprietary rights. We rely upon a
combination of trademark and trade secret laws, as well as license
and other contractual provisions, to protect our intellectual
property and other proprietary rights. These laws, procedures and
restrictions provide only limited protection and any of our
intellectual property rights may be challenged, invalidated,
circumvented, infringed or misappropriated. To the extent that our
intellectual property and other proprietary rights are not
adequately protected, third parties may gain access to our
proprietary information, develop and market solutions similar to
ours or use trademarks similar to ours, each of which could
materially harm our business. The failure to adequately protect our
intellectual property and other proprietary rights could have a
material adverse effect on our business, financial condition and
results of operations.
If we make any acquisitions, they may disrupt or have a
negative impact on our business.
If we make acquisitions in the future, we could have difficulty
integrating the acquired company’s assets, personnel and operations
with our own. We do not anticipate that any acquisitions or mergers
we may enter into in the future would result in a change of control
of the Company. In addition, the key personnel of the acquired
business may not be willing to work for us. We cannot predict the
effect expansion may have on our core business. Regardless of
whether we are successful in making an acquisition, the
negotiations could disrupt our ongoing business, distract our
management and employees and increase our expenses. In addition to
the risks described above, acquisitions are accompanied by a number
of inherent risks, including, without limitation, the
following:
|
● |
the
difficulty of integrating acquired products, services or
operations; |
|
|
|
|
● |
the
potential disruption of the ongoing businesses and distraction of
our management and the management of acquired
companies; |
|
|
|
|
● |
difficulties
in maintaining uniform standards, controls, procedures and
policies; |
|
● |
the
potential impairment of relationships with employees and members
and customers as a result of any integration of new management
personnel; |
|
|
|
|
● |
the
potential inability or failure to achieve additional sales and
enhance our customer base through cross-marketing of the products
to new and existing members and customers; |
|
|
|
|
● |
the effect
of any government regulations which relate to the business
acquired; |
|
|
|
|
● |
potential
unknown liabilities associated with acquired businesses or product
lines, or the need to spend significant amounts to retool,
reposition or modify the marketing and sales of acquired products
or operations, or the defense of any litigation, whether or not
successful, resulting from actions of the acquired company prior to
our acquisition; and |
|
|
|
|
● |
potential
expenses under the labor, environmental and other laws of various
jurisdictions. |
Our business could be severely impaired if and to the extent that
we are unable to succeed in addressing any of these risks or other
problems encountered in connection with an acquisition, many of
which cannot be presently identified. These risks and problems
could disrupt our ongoing business, distract our management and
employees, increase our expenses and adversely affect our results
of operations.
We rely on network and information systems and other
technologies for our business activities and certain events, such
as computer hackings, viruses or other destructive or disruptive
software or activities may disrupt our operations, which could have
a material adverse effect on our business, financial condition and
results of operations.
Network and information systems and other technologies are
important to our business activities and operations. Network and
information systems-related events, such as computer hackings,
cyber threats, security breaches, viruses, or other destructive or
disruptive software, process breakdowns or malicious or other
activities could result in a disruption of our services and
operations or improper disclosure of personal data or confidential
information, which could damage our reputation and require us to
expend resources to remedy any such breaches. Moreover, the amount
and scope of insurance we maintain against losses resulting from
any such events or security breaches may not be sufficient to cover
our losses or otherwise adequately compensate us for any
disruptions to our businesses that may result, and the occurrence
of any such events or security breaches could have a material
adverse effect on our business and results of operations. The
risk of these systems-related events and security breaches
occurring has intensified, in part because we maintain certain
information necessary to conduct our businesses in digital form
stored on cloud servers. While we intend to develop and maintain
systems seeking to prevent systems-related events and security
breaches from occurring, the development and maintenance of these
systems is costly and requires ongoing monitoring and updating as
technologies change and efforts to overcome security measures
become more sophisticated. Despite these efforts, there can be no
assurance that disruptions and security breaches will not occur in
the future. Moreover, we may provide certain confidential,
proprietary and personal information to third parties in connection
with our businesses, and while we obtain assurances that these
third parties will protect this information, there is a risk that
this information may be compromised.
Likewise, data privacy breaches by employees or others with
permitted access to our systems may pose a risk that sensitive data
may be exposed to unauthorized persons or to the public. While we
have invested in protection of data and information technology,
there can be no assurance that our efforts will prevent breakdowns
or breaches in our systems that could adversely affect our
business. The occurrence of any of such network or information
systems-related events or security breaches could have a material
adverse effect on our business, financial condition and results of
operations.
Claims, litigation, government investigations, and other
proceedings may adversely affect our business and results of
operations.
We may be subject to actual and threatened claims, litigation,
reviews, investigations, and other proceedings, including
proceedings relating to products offered by us and by third
parties, and other matters. Any of these types of proceedings, may
have an adverse effect on us because of legal costs, disruption of
our operations, diversion of management resources, negative
publicity, and other factors. The outcomes of these matters are
inherently unpredictable and subject to significant uncertainties.
Determining legal reserves and possible losses from such matters
involves judgment and may not reflect the full range of
uncertainties and unpredictable outcomes. Until the final
resolution of such matters, we may be exposed to losses in excess
of the amount recorded, and such amounts could be material. Should
any of our estimates and assumptions change or prove to have been
incorrect, it could have a material effect on our business,
consolidated financial position, results of operations, or cash
flows. In addition, it is possible that a resolution of one or more
such proceedings, including as a result of a settlement, could
require us to make substantial future payments, prevent us from
offering certain products or services, require us to change our
business practices in a manner materially adverse to our business,
requiring development of non-infringing or otherwise altered
products or technologies, damaging our reputation, or otherwise
having a material effect on our operations.
* * * * *
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This prospectus contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 or the
Securities Act, Section 21E of the Securities Exchange Act of 1934
or the Exchange Act, and the Private Securities Litigation Reform
Act of 1995. Forward-looking statements are those that reflect our
current views with respect to future events and financial
performance, and all statements other than statements of historical
fact are statements that are, or could be, deemed forward-looking
statements. In some cases, you can identify forward-looking
statements by terms such as “may,” “might,” “will,” “intend,”
“should,” “could,” “can,” “would,” “believe,” “expect,” “seek,”
“anticipate,” “intend,” “estimate,” “plan,” “target,” “project,”
“forecast,” “envision” or the negative of these terms, and other
similar phrases. All statements contained in this prospectus and
any prospectus supplement regarding future financial position,
sales, costs, earnings, losses, cash flows, other measures of
results of operations, capital expenditures or debt levels and
plans, objectives, outlook, targets, guidance or goals are
forward-looking statements.
You should not place undue reliance on our forward-looking
statements because they are not guarantees of future performance or
expectations, and involve risks and uncertainties. Our
forward-looking statements are based on the information currently
available to us and speak only as of the date on the cover of this
prospectus, the date of any prospectus supplement, or, in the case
of forward-looking statements incorporated by reference, the date
of the filing that includes the statement. Although we believe that
the expectations reflected in these forward-looking statements are
reasonable, these statements relate to future events or our future
operational or financial performance, and involve known and unknown
risks, uncertainties and other factors that may cause our actual
results, performance or achievements to be materially different
from any future results, performance or achievements expressed or
implied by these forward-looking statements. Except as required by
applicable law, we assume no obligation, and disclaim any
obligation, to update forward-looking statements whether as a
result of new information, events or otherwise.
The forward-looking statements
contained in this prospectus are set forth principally in “Risk
Factors” above, and in “Risk Factors,” “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations,” “Business” and other sections in our
quarterly and annual filings with the OTC Markets GROUP, Inc.
and in “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations,” “Risk Factors” and other sections in our
Latest Form 10-Q. In addition, there may be events in the future
that we are not able to predict accurately or control which may
cause actual results to differ materially from expectations
expressed or implied by forward-looking statements. Please consider
our forward-looking statements in light of these risks as you read
this prospectus
Use of
Proceeds
All proceeds from the resale of the shares of our Common Stock
offered by this prospectus will belong to the Selling Shareholder.
We will not receive any proceeds from the resale of the shares of
our Common Stock by the Selling Shareholder.
MARKET FOR COMMON STOCK AND DIVIDEND POLICY
Our Common Stock is quoted on the OTCQB under the symbol “CLNV”. As
of January 18, 2023, the last reported sale price of the Common
Stock as reported on OTCQB was $0.074 per share. As of January 18,
2023, there were approximately 160 holders of record of Common
Stock. The actual number of shareholders is greater than this
number of record holders and includes shareholders who are
beneficial owners but whose shares are held in street name by
brokers and other nominees (including any mobile investment
platform).
To date, we have never declared or paid any cash dividends on our
capital stock. We currently intend to retain all available funds
and any future earnings for use in the operation of our business
and do not expect to pay any dividends on our capital stock in the
foreseeable future. Any future determination to declare dividends
will be made at the discretion of our Board, subject to applicable
laws, and will depend on a number of factors, including our
financial condition, results of operations, capital requirements,
contractual restrictions, general business conditions, and other
factors that our Board may deem relevant.
Management’s Discussion and Analysis
of
Financial Condition and Results of Operations
The following discussion should be read in conjunction with our
financial statements and accompanying notes included elsewhere in
this prospectus. The following discussion contains forward-looking
statements regarding future events and the future results of the
Company that are based on current expectations, estimates,
forecasts, and projections about the industry in which the Company
operates and the beliefs and assumptions of the management of the
Company. Words such as “expects,” “anticipates,”
“targets,” “goals,” “projects,”
“intends,” “plans,” “believes,”
“seeks,” “estimates,” variations of such words, and
similar expressions are intended to identify such forward-looking
statements. These forward-looking statements are only predictions
and are subject to risks, uncertainties and assumptions that are
difficult to predict. Therefore, actual results may differ
materially and adversely from those expressed in any
forward-looking statements. Factors that might cause or contribute
to such differences include, but are not limited to, those
discussed elsewhere in this prospectus, particularly under “Risk
Factors,“ and in other reports we file with the SEC. See also
“Cautionary Note Regarding Forward-Looking Statements“. The Company
undertakes no obligation to revise or update publicly any
forward-looking statements for any reason. Factors that could cause
or contribute to these differences include those discussed below
and elsewhere in this prospectus.
The following discussion is based upon our financial statements
included elsewhere in this prospectus, which have been prepared in
accordance with U.S. generally accepted accounting principles. The
preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of
contingencies. Each of these decisions has some impact on the
financial results for any given period.
Overview
Clean Vision Corporation’s (“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. By leveraging innovating technology and market
forces, we aim to responsibly resolve environmental challenges by
producing valuable products. Through our initiatives, we strive to
be recognized as an environmental, social and governance company
(“ESG”). Currently, we are focused on providing a solution to the
plastic 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 in the pyrolysis of plastic). We intend to
generate revenue from three sources: service revenue from the
recycling services we provide, revenue generated from the sale of
the byproducts, and 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. We believe that this pilot project 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 fuel and/or hydrogen to power our facilities and
equipment. To date we have not generated any revenue from the
provision or pyrolysis services nor have we generated any revenue
from the sale of byproducts from our operations in India or fuel
cell equipment and we do not currently have any contracts in place
to sell these byproducts or fuel cell equipment. However, we
believe that there is a strong market for low-sulfur fuel and clean
hydrogen, upon which we intend to focus our byproduct sales.
According to analysis and projections reported by the U.S. Energy
Information Administration (“EIA”) on April 7, 2022, it is
estimated that 98.3 million barrels per day of petroleum and liquid
fuels was consumed globally in March 2022, an increase of 2.4
million barrels per day from March 2021. They estimate that global
consumption of petroleum and liquid fuels will rise by 1.9 million
barrels per day in 2023 to average 101.7 million barrels per
day.
In a report published by Markets and Markets Research in February
2021 entitled “Hydrogen Generation Market by Application (Petroleum
Refinery, Ammonia & Methanol production, Transportation, Power
Generation), Generation & Delivery Mode (Captive, Merchant),
Source (Blue, Green & Grey Hydrogen), Technology, and
Region-Forecast to 2025,” the global hydrogen generation market is
projected to reach $201 billion by 2025 from an estimated $130
billion in 2020, at a compound annual growth rate (CAGR) of 9.2%
during the forecast period. While the global green hydrogen market
was valued at approximately $0.8 billion in 2021, it is predicted
to grow to about $10.2 billion by 2028, with a CAGR of
approximately 55.2% over the projection period, according to
research and analysis published by Facts and Factors in March 2022
entitled “Green Hydrogen Market By Type (Solid Oxide Electrolyzer,
Alkaline Electrolyzer, and Proton Exchange Membrane Electrolyzer),
By Use (Transport, Power Generation, and Others) By Customer
(Petrochemicals, Glass, Food & Beverages, Chemical, Medical,
and Others), and By Region - Global and Regional Industry Overview,
Market Intelligence, Comprehensive Analysis, Historical Data, and
Forecast 2022–2028.”
We believe that in the near future, a significant growth sector of
the economy will be in clean energy and sustainable products and
services. This belief was a key factor in our shift in our business
focus in May 2020 and our acquisition of Clean-Seas, which became
our wholly-owned subsidiary on May 19, 2020. Clean-Seas believes
that it has made significant progress in identifying and developing
a new business model around the clean energy and waste-to-energy
sectors.
Clean Vision was established in 2017 as a company focused on the
acquisition of disruptive technologies that will impact the digital
economy. The Company, which was formerly known as Byzen Digital
Inc., changed its corporate name to Clean Vision on March 12, 2021.
We are now a holding company, with all operations currently being
conducted through Clean-Seas. Dan Bates, our Chief Executive
Officer, holds 2,000,000 shares of Series C Convertible Preferred
Stock of the Company, which shares of Series C Convertible
Preferred Stock vote together with our Common Stock on all
stockholder matters, and vote one hundred Common Stock votes per
share.
Our Business Model
Clean-Seas, Inc.
Clean-Seas was incorporated in Delaware on March 20, 2020.
Clean-Seas became a wholly-owned subsidiary of Clean Vision on May
19, 2020. Clean-Seas was Clean Vision’s first investment within its
newly expanded business strategy of clean energy space. It is
management’s belief that Clean-Seas has made significant progress
in identifying and developing a new business model around the clean
energy and waste-to-energy sectors.
Clean-Seas was established to solve the problem of cost-effectively
upcycling the vast amount of waste plastic generated on-land before
it flows into the world’s oceans. As a “solutions provider,”
Clean-Seas has identified technologies that are uniquely suited to
convert plastic waste into valuable commodities and intends to
provide these technologies to its customers. The Clean-Seas team of
business development professionals and engineers will use its
experience in the sustainable energy space to deliver conversion
technologies to its customers and strategic partners. Depending on
customer requirements, recycling facilities will be designed to
convert waste plastic into clean-burning hydrogen, synthetic liquid
fuels and/or generate electricity from synthesis gas (syngas). The
solutions provided will utilize technologies uniquely designed to
the specific waste feedstock available and the customer’s
requirements.
System design includes conversion of all types of mixed plastics
with a minimal sorting and cleaning requirement. Each solution will
be designed to a customer’s requirement. Each engagement will begin
with a thorough analysis of a customers’ needs and specific
situation.
Technology Overview
Plastics are a group of materials, either synthetic or naturally
occurring, that may be shaped when soft and then hardened to retain
the given shape. Plastics are polymers. A polymer is a substance
made of many repeating units. A polymer can be thought of as a
chain in which each link is a single unit, or monomer. The chain is
made by joining, or polymerizing, at least 1,000 links together.
Polymerization can be demonstrated by making a chain using paper
clips or by linking many strips of paper together to form a paper
garland.
Recycled plastic waste has the highest calorific value of any waste
stream, meaning that it has the greatest amount of heat released
per unit of waste during complete combustion. This energy-rich
waste material is therefore a good material for energy recovery,
which we believe makes it extremely suitable for upcycling, through
pyrolysis (described below) or other methods, to recapture the
benefit of its stored chemical energy.
For plastics to continue to be accepted in the marketplace, we
believe it is essential that appropriate technologies are developed
and deployed that can effectively manage the waste plastic at the
end of its useful life. We believe that these technologies should
maintain as much value in the material as possible, in line with
the principles of the circular carbon economy. Pyrolysis provides a
solution that fits within these principles and can alleviate global
environmental concerns regarding plastic usage and waste
disposal.
Pyrolysis: The Solution for Waste Reduction, Hydrogen
Production, and Cleaner Fuels
Pyrolysis is the chemical decomposition of organic (carbon-based)
materials through the application of heat. Pyrolysis, which is also
the first step in gasification and combustion, occurs in the absence
or near absence of oxygen, and it is thus distinct from combustion
(burning) which can take place only if sufficient oxygen is present
and burns materials. The rate of pyrolysis increases with
temperature. In industrial applications the temperatures used are
often 430 °C (about 800 °F) or higher, whereas in smaller-scale
operations the temperature may be much lower.
The pyrolysis of wood is believed to be human’s first chemical
process. It is known to have been practiced by the ancient Chinese.
As many as 1,500 years ago, tribes from the central Amazon used
char derived from animal bone and tree bark to fertilize their
soil, which according to scientists remains some of the richest and
most fertile soil in the world. Still, we believe there have been
relatively few large-scale implementations of this technology to
date, which we attribute to the availability of less expensive
alternatives and lax environmental regulations in waste management.
Recently, with the attention being given to plastic usage and its
negative impact on climate change, we anticipate an increase in
demand for pyrolysis to remediate plastic waste.
Pyrolysis Process
During the primary pyrolysis step, the feedstock is pyrolyzed in a
cylindrical chamber at 370ºC – 420ºC, the pyrolysis gasses are then
condensed and the resulting liquid is separated, using a
distillation process to produce the liquid fuel products, which
yields a mixture which is essentially equivalent to petroleum
distillate (a petroleum derivative). The essential steps in the
pyrolysis process involve:
|
● |
evenly heating the
feedstock to a narrow temperature range without excessive
temperature variations |
|
● |
purging oxygen from
pyrolysis chamber, |
|
● |
managing the carbon
black or char by-product before it acts as a thermal insulator and
lowers the heat transfer to the plastic |
|
● |
careful condensation and
fractionation of the pyrolysis vapors to produce distillate of good
quality and consistency. |
In addition to liquid fuel, pyrolysis can also produce hydrogen and
other syngases (primarily carbon monoxide, methane, nitrogen,
carbon dioxide, ethane and ethene) along with solid carbon black or
char, of which the relative proportions depend upon the method of
pyrolysis and the operating conditions of the pyrolysis reactor.
This is a function of the rate of heating, the operating
temperature, and the amount of time the material stays within the
pyrolysis reactor (residence time).
The Hydrogen Economy
Hydrogen is the most abundant element in the universe, but it
occurs naturally on earth only in compound form with other elements
in liquids, gases or solids (such as water, which is comprised of
hydrogen and oxygen). Traditionally, it would take more energy to
produce hydrogen (by separating it from other elements in
molecules) than hydrogen provides when it is converted to useful
energy. Humans are therefore just beginning to take advantage of
the many uses of hydrogen in daily life by leveraging technologies
such as pyrolysis and gasification. With recent advances in
sustainable technologies, we believe that people today can have
better access to carbon-neutral sources of hydrogen to meet their
energy needs.
Hydrogen is a versatile and flexible energy carrier. Many
industries are looking to hydrogen as the fuel to power their
energy transitions in the decarbonization of the global economy
since it does not produce carbon dioxide or other greenhouse gasses
when it is heated. It is our belief that there will be massive
potential for end use applications of hydrogen such as
transportation, replacement for fossil fuels used in industrial
processes, energy generation and residential heating/cooling.
Overview of the Hydrogen Market
In a report published by Markets and Markets Research in February
2021 entitled “Hydrogen Generation Market by Application (Petroleum
Refinery, Ammonia & Methanol production, Transportation, Power
Generation), Generation & Delivery Mode (Captive, Merchant),
Source (Blue, Green & Grey Hydrogen), Technology, and
Region-Forecast to 2025,” the global hydrogen generation market is
projected to reach $201 billion by 2025 from an estimated $130
billion in 2020, at a compound annual growth rate (CAGR) of 9.2%
during the forecast period. The global green hydrogen market was
valued at approximately $0.8 billion in 2021. It is predicted to
grow to about $10.2 billion by 2028, with a CAGR of approximately
55.2% over the projection period, according to research and
analysis published by Facts and Factors in March 2022 entitled
“Green Hydrogen Market By Type (Solid Oxide Electrolyzer, Alkaline
Electrolyzer, and Proton Exchange Membrane Electrolyzer), By Use
(Transport, Power Generation, and Others) By Customer
(Petrochemicals, Glass, Food & Beverages, Chemical, Medical,
and Others), and By Region - Global and Regional Industry Overview,
Market Intelligence, Comprehensive Analysis, Historical Data, and
Forecast 2022–2028.”
The movement towards the reduction in greenhouse gas emissions has
been a global goal over the past decade and was memorialized in the
Paris Climate Accord in 2016, and again in Glasgow in 2021.
Hydrogen may be a key component in this transition, as a source of
clean and economical energy. Increasing government regulation
regarding emissions has created a financial incentive for firms to
seek more alternatives to fossil fuel usage. We believe that
hydrogen will be a major part of all levels of this decarbonization
of the economy by providing an alternative to natural gas. Scaling
up existing hydrogen technologies will deliver competitive
low-carbon solutions across a wide range of applications by 2030
and may even offer competitive low-carbon alternatives to
conventional fuels in some segments. This includes the enabling of
distributed power generation, passenger and cargo transportation as
well as forklifts and heavy machinery.
Renewable energy, such as solar and wind power, is clean and
increasingly affordable We believe that storage of energy from
intermittent renewable energy sources is an essential component or
our current and future energy systems. Hydrogen storage is a key
enabling technology for the advancement of hydrogen and fuel cell
technologies in applications including stationary power, portable
power, and transportation. Fuel cells, which we intend to
distribute pursuant to the Licensing Agreement with Kingsberry Fuel
Cell Corporation, are one way in which this excess hydrogen can be
stored.
Currently, industrial applications constitute the main usage of
hydrogen. Much of this hydrogen is derived from natural gas as the
feedstock, so we believe that there is significant potential for
reducing greenhouse gas emissions by producing “clean” hydrogen
from carbon neutral renewable energy sources.
Hydrogen also may play a significant role for energy use in
commercial and multifamily residential buildings. In the near-term
hydrogen may be blended into existing natural gas networks, taking
advantage of existing infrastructure. We believe that the long-term
outlook for hydrogen usage in heating applications is especially
promising, due to the potential for hydrogen boilers or fuel cells
to be built into commercial and multifamily units.
It is our belief that hydrogen-powered vehicles will make up a
significant percentage of zero-emission vehicles over the next
decade. In the Stated Policies Scenario released by the
International Energy Agency in 2021 as the baseline scenario
reflecting all existing policies, policy ambitions and targets that
have been legislated for or announced by governments around the
world, the global electric vehicle stock across all transport modes
(excluding two/three-wheelers) expands from over 11 million in 2020
to almost 145 million vehicles by 2030, an annual average growth
rate of nearly 30%.
As the number of hydrogen-powered vehicles increases, we predict
that the market for consumer hydrogen will likewise increase.
Domestically, most infrastructure for consumer hydrogen is within
California, with over 40 hydrogen fueling stations. The foreign
market has examples of more advanced development of infrastructure
for hydrogen vehicles. Japan has been one of the largest public
investors in hydrogen technology and has a publicly stated goal of
placing over 200,000 hydrogen-powered vehicles on the road by
2025.
Other By-products of Pyrolysis
Liquid oils from pyrolysis of different plastic waste types contain
large numbers of carbon chains with different percentages that can
be used as an energy source. Pyrolysis liquid oil utilization as
transport fuel may be blended with conventional diesel fuel to
improve its quality, as the pyrolysis oils contain a high
percentage of aromatic hydrocarbons (like benzene).
Pyrolysis liquid oil has proven usable as a substitute transport
fuel in conventional diesel engines. It has also been used
successfully when blended with conventional diesel fuel, at ratios
up to 30%, without complications. Energy can also be generated by
diesel engines, gas turbines, steam turbines and boilers using
pyrolysis liquid oil. According to a report published in June 2021
by Grand View Research, the global plastic to fuel market size was
valued at USD 231.0 million in 2020 and is expected to grow at a
compound annual growth rate (CAGR) of 29.5% from 2021 to 2028.
Growing demand for the generation of energy from waste on account
of a clean environment has triggered the growth of the market.
In addition, the pyrolysis liquid oil shows the presence of
compounds, which can be a source of precursor chemicals in
industries for the polymerization (the process by which relatively
small molecules, called monomers, combine chemically to produce a
large chainlike molecule, called a polymer) of new plastic
monomers. These compounds create the circular carbon economy of
recycling waste into new forms of hydrocarbons to power engines,
generate electricity, or create new types of plastic products.
Char and carbon black are also highly reusable byproducts of the
pyrolysis process that have numerous existing applications.
Depending on its quality, the solid char can be gasified, used for
the production of activated carbons, for the production of
graphene, or for soil remediation. Char is highly absorbent and
therefore increases the soil’s ability to retain water, nutrients
and agricultural chemicals, preventing water contamination and soil
erosion. Soil application of char may enhance both soil quality and
be an effective means of sequestering large amounts of carbon,
thereby helping to mitigate global climate change through carbon
sequestration.
Carbon black is used in manufacturing tires, plastics, mechanical
rubber goods, printing inks, and toners. It can absorb UV light and
converts it into heat, hence, it is also used in insulating wires
and cables. Moreover, it is used in the production of a wide range
of rubber products and pigments. It serves as a cost-effective
rubber reinforcing agent used in tires. The global carbon black
market was valued at $15 billion in 2021, and is projected to reach
$22 billion by 2027, growing at a CAGR of 5.7% from 2022 to 2027,
as reported by Research and Markets entitled “Global Carbon Black
Market Report and Forecast 2022-2027” released on April 22,
2022.
Clean Vision’s Purpose
Global plastic waste recycling is facing unprecedented challenges.
We believe that inadequate processing infrastructure, fewer
processing locales, changing laws and conventions, and political
circumstances imperil what is already a deficient response to a
global problem. Developed nations, including the United States, the
world’s largest generator of plastic waste, are finding disposal of
this waste increasingly difficult, due to expensive and inefficient
processing capabilities; global conventions responding to
environmental implications of international plastic export; and
political constraints. In January 2018, the People’s Republic of
China, which had been accepting plastic waste from countries
including the U.S., implemented its National Sword Policy limiting
recyclable waste imports. As a result, the worldwide recyclables
market experienced drastic limits, fewer options for disposal,
resulting in a global backlog of plastic waste. Some of the
recyclable material has been rerouted to Southeast Asian countries
but the market remains in upheaval, with, at best, plastic waste
floating in waiting ships and at worst, illegal dumping into
international waters or incinerated.
According to an article published by the United Nations Environment
Programme (“UNEP”), on March 2, 2022 entitled “What you need to
know about the plastic pollution resolution,” the world currently
produces approximately 400 million tons of plastic waste per year,
with the rate of plastic production forecasted to double by 2040.
It also estimated that by 2050, there will be more plastic in the
ocean by weight than fish. According to an article published by
National Geographic entitled “A Whopping 91 Percent of Plastic
Isn’t Recycled,” plastic takes more than 400 years to degrade, so
most of it still exists in some form. It is estimated that only 9%
of plastic waste has been recycled to date, while the vast majority
(approximately 79%) is accumulating in landfills or ending up as
litter in the natural environment, including the oceans.
The waste plastics recycling industry was valued at $55.1 billion
in 2020 and is poised to become an $88 billion industry by 2030, as
reported in a March 2022 report entitled “Market value of waste
recycling services worldwide 2020-2030” published by Statista.
Pyrolysis is an invaluable technology that can be used to transform
certain materials, which traditional mechanical recycling
technologies currently cannot handle, into clean energy and other
valuable byproducts. Pyrolysis is also an important alternative
solution to handling materials that have exhausted their potential
for further traditional mechanical recycling.
The emerging markets of the world are especially critical to the
plastic pollution problem, where waste handling and collection are
not supported with the same infrastructure as in developed nations.
We believe this market condition presents a unique opportunity for
us. Clean-Seas intends to leverage its management’s experience of
working in the developing nations of the world for the past decade,
providing renewable energy products and services to this sector and
now will provide recycling solutions and energy generation. As
stated by the Organization for Economic Co-operation and
Development (OECD), “The path to net zero requires that emerging
markets transform their energy systems, yet reliance on
hydrocarbons alongside existing policy barriers pose challenges to
the green transition.”
Clean Vision plans to help provide a solution to the plastic waste
problem that the world is facing, while simultaneously creating
hydrogen and other clean-burning fuels that can be used to generate
clean energy.
Our Growth Strategy
We plan to provide tailored solutions to our customers to produce
clean energy primarily out of the treatment of waste. We are
currently focused on waste-to-energy projects in Morocco, Puerto
Rico, France, India, Sri Lanka, and in the United States in
Arizona, Michigan and Massachusetts due to their proximity to
plastic waste as well as business relationships that have been
developed by the management team of Clean Vision with entities
and/or municipalities in such countries and are in the process of
developing a pipeline of similar projects, in the United States and
abroad. We believe there is a virtually endless supply of waste for
such projects and the demand for energy (particularly from such
projects) is growing consistently.
Another component of the clean energy and waste-to-energy industry
in the United States is environmental credits. Recycling of waste
plastic mitigates the need for fossil fuels for energy generation
and the production of clean-burning diesel. We plan to aggregate
these off-sets and sell them to users of fossil fuels in the form
of carbon credits or renewable energy credits depending on the
location of the facilities and local market conditions. These can
be used as off-set as more governments impose a “Carbon-tax” on the
end users of fossil fuels. In addition, we expect that in the
coming years, there will be new exchanges coming online
specifically focused on plastic waste, and credits will be sought
after, allowing producers of plastic waste to off-set their plastic
footprint, much like what has happened in the carbon markets.
We expect our projects, through our subsidiaries, including
Clean-Seas, to generate revenue in several ways:
|
● |
Gate Fees or
Tipping Fees. These fees will be paid to us to accept waste
from a government, municipality, or corporate entity, that must
dispose of its waste. Fees are paid to accept this feedstock (which
will be waste plastic for our Company) on a per ton basis. Gate
fees are expected to vary in range from approximately $35 to $105
per ton, depending on the jurisdiction, land availability, and
daily volumes of waste. In some cases, the Company will accept
waste plastic delivered to our facility at no charge, depending on
the location and if gate fees are not available. The current
business model assumes that feedstock will not be a cost
center. |
|
● |
Sale of Hydrogen
and Other Fuels. A pyrolysis recycling facility converts
waste into hydrogen and other clean-burning fuels. This hydrogen
and other fuels can be sold to off-takers as an alternative cleaner
fuel for marine use, electrical generators, or refined into a
clean-burning road grade fuel. Depending on the installation, this
fuel output product can be sold to a local fuel distributor or used
in the generator sets for the generation of electricity as
above. |
|
● |
Commodity
Sales. An additional output product of the technologies is
char or carbon black, which is used for the manufacturing of tires,
bonding agents, roadway surfaces, and more. We intend to enter into
agreements with consumers of carbon black, which will serve as an
additional revenue stream to us. |
|
● |
Environmental
Credits. Recycling of waste plastic mitigates the need for
fossil fuels for energy generation and the production of
clean-burning diesel. These off-sets can be aggregated and sold to
users of fossil fuels in the form of carbon credits or renewable
energy credits depending on the location of the facilities and
local market conditions. These can be used as off-set as more
governments impose a “Carbon-tax” on the end users of fossil
fuels. |
|
● |
Equipment
Sales. Clean-Seas has entered into a Licensing Agreement
whereby Clean-Seas has obtained the exclusive, worldwide rights
(exclusive of the United States and Canada) to Kingsberry Fuel Cell
Corporation’s fuel cell intellectual property for a term of five
years, which Clean-Seas intends to distribute to third-parties
throughout the world. These sales will provide a revenue stream to
us, as well as recurring revenue through a royalty model and
ongoing service. |
Technology Development
Plastic Conversion Network (PCN)
Clean-Seas has developed a technology solution to address the
global crisis of plastic waste pollution. The Plastic Conversion
Network is a patent-pending software network connecting sources of
waste plastic (feedstock) with conversion facilities, which will
produce environmentally friendly commodities. We intend to
strategically locate the conversion facilities around the world in
locations that are easily accessible and in close proximity to
countries that produce a large amount of plastic waste. PCN was
created in response to the problem created when the People’s
Republic of China ceased purchasing the developed world’s
recyclable waste streams in 2018. Currently, we have entered into
Letters of Intent and/or Joint Venture Agreements for development
of facilities in numerous host countries/territories, including
Morocco, Sri Lanka and Puerto Rico.
Background
Global plastic waste recycling is facing unprecedented challenges.
We believe that inadequate processing infrastructure, fewer
processing locales, changing laws and conventions, and political
circumstances imperil what is already a deficient response to a
global problem. According to an article published by National
Geographic entitled “A Whopping 91 Percent of Plastic Isn’t
Recycled,” it is estimated that since 1950 only 9% of all of the
planet’s plastic waste has been recycled. By the same estimates,
79% of plastic waste remains in the world’s landfills and or as
litter, meaning that much of it ultimately ends up in the oceans.
Discarded plastics are estimated to comprise 12.2% of all
landfilled waste and 16% of combusted waste according to the
EPA.
Developed nations, including the United States, the world’s largest
generator of plastic waste, are finding disposal of this waste
increasingly difficult, due to expensive and inefficient processing
capabilities; global conventions responding to environmental
implications of international plastic export; and political
constraints. In January 2018, the People’s Republic of China, which
had been accepting plastic waste from countries including the U.S.,
implemented its National Sword policy limiting recyclable waste
imports. As a result, the worldwide recyclables market experienced
drastic limits, fewer options for disposal, resulting in a global
backlog of plastic waste. Some of the recyclable material has been
rerouted to Southeast Asian countries but the market remains in
upheaval, with, at best, plastic waste floating in waiting ships
and at worst, illegal dumping into international waters or
incinerated.
The Basel Convention on the Control of Transboundary Movements of
Hazardous Wastes (“Basel Convention”) is an international treaty
aimed at reducing the movement of hazardous waste between nations.
In 2019, the Basel Convention amended its treaty to regulate
plastic waste exports. As a result, effective January 1, 2021,
international shipment of plastic waste became subject to prior
written consent between countries party to the convention. The
U.S., as a non-party to this convention, is now subject to new
liability because most countries will not accept its waste plastic.
In order to ship its waste plastic, the U.S. must enter prior
written agreements with accepting Basel Convention party countries
which meet certain Basel Convention criteria.
Using pyrolysis technologies described above, the PCN is designed
to scale, efficiently and cost effectively convert waste plastic
into environmentally friendly commodities, including low sulfur
diesel fuel, hydrogen, carbon black and others. The transporting of
all plastic waste will be fully compliant with the Basel Convention
and the facilities will be strategically located to reduce its
carbon footprint. The PCN can connect the developed nations of the
world that have robust recycling programs for plastic waste but
lack a proper method of disposal, with facilities that will convert
their plastic waste into environmentally friendly commodities. The
current disposal options are either environmentally hazardous
(landfills), environmentally destructive (incineration), or
illegal.
AquaHtm
Clean-Seas has developed and is branding its own, unique, type of
hydrogen called AquaHTM Typically, the various types of
hydrogen are given a color that differentiates the types and where
it was derived from.
There are nine types of hydrogen:
|
● |
Green hydrogen is
produced through water electrolysis process by employing renewable
electricity. The reason it is called green is that there is no CO2
emission during the production process. Water electrolysis is a
process which uses electricity to decompose water into hydrogen gas
and oxygen. |
|
● |
Blue hydrogen is sourced
from fossil fuel. However, the CO2 is captured and stored
underground (carbon sequestration). Companies are also trying to
utilize the captured carbon called carbon capture, storage and
utilization (CCSU). Utilization is not essential to qualify for
blue hydrogen. As no CO2 is emitted, the blue hydrogen production
process is categorized as carbon neutral. |
|
● |
Gray hydrogen is
produced from fossil fuel and commonly uses steam methane reforming
(SMR) method. During this process, CO2 is produced and eventually
released to the atmosphere. |
|
● |
Black or brown hydrogen
is produced from coal. The black and brown colors refer to the type
bituminous (black) and lignite (brown) coal. The gasification of
coal is a method used to produce hydrogen. However, it is a very
polluting process, and CO2 and carbon monoxide are produced as
by-products and released to the atmosphere. |
|
● |
Turquoise hydrogen can
be extracted by using the thermal splitting of methane via methane
pyrolysis. The process, though at the experimental stage, removes
the carbon in a solid form instead of CO2 gas. |
|
● |
Purple hydrogen is made
using nuclear power and heat through combined chemo thermal
electrolysis splitting of water. |
|
● |
Pink hydrogen is
generated through electrolysis of water by using electricity from a
nuclear power plant. |
|
● |
Red hydrogen is produced
through the high-temperature catalytic splitting of water using
nuclear power thermal as an energy source. |
|
● |
White hydrogen refers to
naturally occurring hydrogen. |
Clean-Seas is seeking to establish a tenth type of hydrogen derived
from a plastic waste stream, which we believe falls between Green
and Blue hydrogen. We have categorized the hydrogen derived from
plastic waste in this manner because while the process does not
emit CO2, it is not derived from a naturally occurring material
like water, but rather a man-made material (plastic), which caused
the emission of CO2 when it was produced. The Company currently
expects to launch the new product in the second quarter of 2023,
beginning in India.
Clean-Seas Business Development
CEO Dan Bates and his team have identified domestic and
international technology partnership targets focused on converting
plastic waste to clean fuels, hybrid wind and solar power
generation and hydrogen fuel cells. The Company is in active
negotiations to conclude these transactions.
Within the United States, Clean-Seas has developed relationships
within environmental and economic development agencies in several
states for the remediation and conversion of waste plastic. The
Company is working on securing letters of intent or definitive
agreements for these United States projects. Once the letters of
intent are in place, we expect the process of permitting will begin
with each state and each location having specific permitting
requirements, Clean-Seas intends to engage with state specific
legal representation and environmental consultants to streamline
the process.
The Company’s wholly owned subsidiary, Clean-Seas, Inc. has signed
letters of intent with prospective joint venture partners in:
India, Morocco, France, Puerto Rico, Sri Lanka, Turkey and in the
United States, in Arizona, Michigan and Massachusetts. Each of
these localities are able to service waste streams from
geographically proximate States or developed nations and have rail
access or deep water ports for offloading.
Morocco:
On April 4, 2022, we announced the signing of a binding terms sheet
with ECOSYNERGIE, a Moroccan based company (“Ecosynergie”), in the
waste plastic-to-energy pyrolysis conversion business to develop a
commercial scale waste plastic-to-energy pyrolysis plant in
Morocco. Ecosynergie owns two pyrolysis units that it agreed to
sell to us and we will contribute to the project as well as capital
to scale the operations and Ecosynergie will contribute land for
the facility, all required permits, and all existing feedstock and
off-take agreements. The term sheet provides for the companies to
establish a new U.S. company through which they will operate.
The United States:
Clean-Seas first facility in the United States is slated to be in
Phoenix, Arizona. Clean-Seas, Inc. has
established Clean-Seas Arizona, Inc. as a joint venture 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. The facility is currently
envisioned to source and convert plastic from the Phoenix area and
begin importing plastic from California. It is expected that the
facility will begin processing waste plastic at 100 tons per day
and scale up to a maximum of 500 tons per day at full capacity.
Additionally, the facility may be powered by renewable energy
creating the first completely off grid pyrolysis conversion
facility in the world.
Clean-Seas is actively engaged with local partners in Massachusetts
and Michigan to secure Mixed Plastic Waste feedstock from Material
Recovery Facilities and industrial suppliers, and to develop
in-market facilities with local offtake for products, property
leases and permits. These projects are all in various stages of
development..
France:
Clean-Seas Brittany is being established with its partner, Jalaber
Diffusion, to establish a 100 ton per day facility in the region of
Brittany, France. The facility will service waste plastic from the
northern part of France and expects to extend its reach throughout
the European Union. Land has been identified and permits are in the
process of being secured. We currently expect this facility to open
in the latter part of 2023.
Sri Lanka:
On March 16, 2022, we initially announced the signing of a binding
term sheet with Arinma Holdings, a company based in Columbo, Sri
Lanka, to develop a commercial scale waste plastic-to-energy
pyrolysis plant to serve as a south-Asia host facility within the
PCN network. Focused on prosperity, social justice and
sustainability, Arinma Holdings has completed over 350 large
multifaceted projects throughout Sri Lanka. The agreement provides
for the parties to establish a new U.S. company through which they
will operate.
Puerto Rico:
On April 6, 2022, we announced the formation of a joint venture
with a San Juan based company, Main Line Ventures LLC (“MLV”) to
develop a commercial scale waste plastic-to-energy pyrolysis plant
in Puerto Rico to serve as a host facility for our PCN. Pursuant to
the terms of the joint venture, we agreed to provide lead project
funding, the pyrolysis tech sub-contractor and the expertise to
develop and manage the project and MLV is responsible for securing
legal representation, permitting and government /community
relations. The facility is planned to process local waste plastic
and waste plastic of neighboring islands as well as the southern
United States. Output is expected to include low sulfur diesel
fuel, electricity, char and clean hydrogen.
Turkey:
Clean-Seas Turkey is being established with its partner, PAX
PETROKIMYA SANAYI VE DIS TICARET LIMITED SIRKETI, to establish a
100 ton per day facility in Istanbul, Turkey. The facility will
convert waste plastic from the European Union and Turkey. PAX
PETROKIMYA is in the process of securing the required land and
government permits in order to establish operations and scale the
facility.
Subsidiaries of Clean-Seas
In order to execute its business model, Clean-Seas has established
a wholly-owned subsidiary in India and intends to establish
majority-owned subsidiaries in Morocco, France, Turkey, Puerto
Rico, Sri Lanka, Arizona and Massachusetts. We chose these
locations due to the proximity to an abundant supply of plastic
waste as well as because of prior business relationships that had
been established by Dan Bates, throughout his career in the
renewable energy industry. Clean-Seas India Private Limited was
incorporated in India on November 17, 2021. We expect that these
subsidiaries will be establishing joint ventures in the various
regions that Clean-Seas plans to be conducting business.
Clean-Seas India Private Limited
Clean-Seas India Private Limited (“Clean-Seas India”) has entered
into a development agreement with the Council of Scientific and
Industrial Research (“CSIR”), acting through CSIR-Indian Institute
of Chemical Technology (IICT) in Hyderabad. This agreement provides
that the IICT development team will evaluate the performance of the
Clean-Seas pyrolysis technology, which has already been installed
at the Hyderabad location, to improve, productize and scale the
technologies for the benefit of sales directly to the third
parties, which we anticipate will include the Indian Government as
well as the private sector. Our pilot project in India is designed
to showcase our ability to pyrolyze waste plastic and generate
saleable byproducts, including clean hydrogen, AquaHTM,
which can then be used in fuel cells to generate clean energy. This
completes the value chain from an unused waste stream through to
clean usable electricity.
Clean-Seas India’s pilot project began operations in May 2022.
We expect to sign contracts for our technologies with cities and
states in India including Goa, Kerala and Telangana. Clean-Seas
India has secured Research and Development space near the IICT
campus in Hyderabad for ongoing technology development.
EcoCell
EcoCell, Inc. (“EcoCell”) is our wholly-owned subsidiary that was
incorporated in Nevada on March 4, 2022. EcoCell does not currently
have any operations, but we intend to use EcoCell for the purpose
of licensing fuel cell patented technology developed and
manufactured by Kingsberry Fuel Cell Corporation pursuant to the
Licensing Agreement described below, which we intend to sell and
install in India through Clean-Seas India, as well as other regions
as yet to be determined.
EcoCell has recently commissioned the construction of a
five-kilowatt hydrogen fuel cell to be demonstrated to potential
customers in June 2022. The commissioning of the fuel cell
triggered the option within the Kingsberry Licensing Agreement,
described below.
Endless Energy
Endless Energy, Inc. (“Endless Energy”) is our wholly-owned
subsidiary, incorporated in Nevada on December 10, 2021. Endless
Energy was originally formed by the Company with the intent of
Endless Energy acquiring the assets of WindStream Technologies,
Inc. (“WS USA”). WS USA was delisted from Nasdaq on March 6, 2019
and currently has no operations. WS USA also owns approximately 26%
of the issued and outstanding equity of WindStream Energy
Technology, an Indian company (“WS India”).
Dan Bates, the Company’s CEO, is an equity owner of WS USA and has
served as its President and CEO. Dan Bates is also a member of the
board of directors of WS India. On August 18, 2021, the United
States filed a lawsuit against Windstream and Daniel Bates over
Windstream’s default on a $2,000,000 loan that Windstream had with
GBC International Bank and which loan Mr. Bates personally
guaranteed as Windstream’s President and CEO (United State of
America v. Windstream Technologies, Inc. and Daniel Bates, Case
No. 1:2021cv2269). On October 13, 2022, a judgment was entered in
this matter that ordered defendants to pay the plaintiff the
principal sum of $1,982,570.22, plus $842,536.13 ordinary interest
accrued through May 31, 2022, and $1,735,299.76 late interest
accrued through May 31, 2022.
Endless Energy’s potential acquisition WS USA’s assets has not
occurred as of January 23, 2023, but such transaction is still
currently being explored.
Intellectual Property
Clean-Seas filed for intellectual property protection of its
technology entitled “Method and Apparatus for Plastic Waste
Recycling” with the United States Patent and Trademark Office
covering its global Plastic Conversion Network (“PCN”). PCN is a
patent-pending software network connecting sources of waste plastic
with “conversion” facilities strategically located around the
world. PCN was created to solve the problem created when China
closed its borders to the importation of the developed world’s
recyclable waste streams. There can be no assurance that the patent
will issue or if issued that the patent will protect our
intellectual property.
Material Agreements
Exchange Agreement with Clean-Seas
On May 19, 2020, we entered into an Exchange Agreement with
Clean-Seas and Clean-Seas’ sole shareholder, Dan Bates, the
Company’s CEO (the “Exchange Agreement”). Pursuant to the Exchange
Agreement, 100% of the shares of Clean-Seas were exchanged for
2,500,000 shares of our Common Stock (the “Exchange”). Upon the
closing of the Exchange, Clean-Seas became our wholly-owned
subsidiary.
Licensing Agreement with Kingsberry Fuel Cell
Corporation
On December 6, 2021, we entered into a Licensing Agreement (the
“Licensing Agreement”) with Kingsberry Fuel Cell Corporation and
Dr. K. Joel Berry (collectively, “Kingsberry”). Pursuant to the
terms of the Licensing Agreement, Kingsberry has granted us a six
month option, through June 6, 2022, for an exclusive, worldwide
right (exclusive of the United States and Canada) to Kingsberry’s
fuel cell intellectual property (the “Option”) for a term of five
years, with the right to renew the License Agreement for additional
five-year periods. In consideration for the Option, we paid
Kingsberry $10,000.00. On April 8, 2022, we exercised the option.
The Licensing Agreement also provides that Kingsberry will provide
consulting services to the Company. In consideration for the
Licensing Agreement, the Company has agreed to pay Kingsberry 5% of
net operating profit from sales (as defined in the Licensing
Agreement) of all products related to the license, as well as
100,000 shares of restricted Common Stock of the Company per year,
with stock grants to be capped at five years. The Initial Project
contemplated to be completed pursuant to the Licensing Agreement is
in India.
In April 2022, we commissioned Kingsberry to build and deliver a
five-kilowatt fuel cell prototype in India. We intend to sell this
fuel cell developed by Kingsberry, and others that we anticipate
commissioning Kingsberry to build in the future, to third-parties
as a source of revenue. The fuel cell technology will be
demonstrated to India’s Ministry of Defense, Ministry of Railways,
and executives of an electric vehicle charging station project,
among others, as potential clients for this fuel cell technology.
The fuel cells can be used by potential purchasers to produce clean
power using hydrogen from independent sources or from hydrogen
produced by Clean-Seas India’s pilot waste plastic-to-energy
pyrolysis plant in Hyderabad, India, if such purchasers also
purchase our hydrogen.
Development Agreement in India
Clean-Seas India has entered into a development agreement with the
Council of Scientific and Industrial Research (“CSIR”), acting
through CSIR-Indian Institute of Chemical Technology (IICT) in
Hyderabad. This agreement provides that the IICT development team
will evaluate the performance of the Clean-Seas pyrolysis
technology, which has already been installed at the Hyderabad
location, to improve, productize and scale the technologies for the
benefit of sales directly to the third parties, which we anticipate
will include the Indian Government as well as the private
sector.
Competition
The clean energy and waste-to-energy industries are very
competitive. We will compete with other companies offering
pyrolysis solutions in addition to many other clean energy
solutions. We expect competition to increase as awareness of the
environmental advantages of converting waste plastic into fuel
increases. A rapid increase in competition could negatively affect
our ability to develop a profitable client base. Many of our
competitors and potential competitors may have substantially
greater financial resources, customer support, technical and
marketing resources, larger customer bases, longer operating
histories, greater name recognition and more established
relationships than we do. We cannot be sure that we will have the
resources or expertise to compete successfully. Our failure to
compete effectively with our current and future competitors would
adversely affect our business, financial condition, and results of
operations.
Although there seems to be an abundant supply of waste plastic, it
is expected that there will be increased competition for these
plastic resources, with the result that it could have an effect on
our profitability that we do not foresee at this time.
We also face competition for qualified employees and consultants
among companies in the applicable industries. Competition for
individuals with experience in the clean energy and waste-to-energy
industries is intense. The loss of any of such persons, or an
inability to attract, retain and motivate any additional highly
skilled employees and consultants required for the initiation and
expansion of our activities, could have a materially adverse effect
on our business.
Our Strengths
We believe that the following are the critical investment
attributes of our company:
|
● |
Pilot Project
Commenced. We have acquired our first pyrolysis unit for use in
our pilot project in Hyderabad, India, which began operations in
May 2022. |
|
● |
Large market
opportunity for effective solution. Renewable energy is a large
market with an unmet need. Plastic waste disposal affects all
countries of the world, including those of developing nations. With
a more recent focus of governments on environmentally friendly
waste removal solutions, we believe there is a large opportunity
for us. |
|
● |
Unique
technology. Pyrolysis technology reduces organic waste while
creating valuable byproducts. |
|
● |
Public support for
clean technologies to protect the environment. In recent years
shareholders have been focusing on environmental sustainability and
investors have been directing their investments towards companies
based on ESG factors. |
|
● |
Experienced
management team. Members of the management team have years of
experience in the renewable energy sector. The management of
Clean-Seas has begun to develop relationships with several
providers of pyrolysis technologies, with whom we expect to seek a
strategic partnership or business relationship as we move
forward. |
|
● |
New Approach to
Vertical Supply Chain. The Plastic Conversion Network (“PCN”)
is a patent-pending software network connecting sources of waste
plastic (feedstock) with conversion facilities, which will produce
environmentally friendly commodities. We intend to strategically
locate the conversion facilities around the world in locations that
are easily accessible and in close proximity to countries that
produce a large amount of plastic waste. Currently, we have entered
into Letters of Intent and/or Joint Venture Agreements for
development of facilities in the following host
countries/territories: Morocco, Sri Lanka, and Puerto
Rico. |
Government Regulation
Our industry is subject to extensive federal and state laws and
regulations in the United States as well as each country in which
we perform services. Federal and state laws and regulations impact
how we conduct our business and the services we offer and impose
certain requirements on us such as:
|
● |
licensure
and certification; |
|
|
|
|
● |
operating
policies and procedures; |
|
|
|
|
● |
emergency
preparedness risk assessments and policies and
procedures; |
|
|
|
|
● |
policies
and procedures regarding employee relations; |
|
|
|
|
● |
addition
of facilities and services; |
|
|
|
|
● |
billing
for services; |
|
|
|
|
● |
requirements
for utilization of services; and |
|
|
|
|
● |
reporting
and maintaining records regarding adverse events. |
Permitting
Each of our projects in development requires certain government
approvals. In the United States, the standard required
environmental permits relate to solid waste composting and air
quality. The Clean Air Act establishes a number of permitting
programs designed to carry out the goals of the Act. Some of these
programs are directly implemented by EPA through its Regional
Offices but most are carried out by states, local agencies and
approved tribes.
Regulatory Changes and Compliance
Many aspects of our operations and facilities are affected by
political developments and are subject to both domestic and foreign
governmental regulations, including those relating to:
|
● |
constructing
and equipping facilities; |
|
|
|
|
● |
workplace
health and safety; |
|
|
|
|
● |
currency
conversions and repatriation; |
|
|
|
|
● |
taxation
of foreign earnings and earnings of expatriate personnel;
and |
|
|
|
|
● |
protecting
the environment. |
We cannot determine the extent to which new legislation, new
regulations or changes in existing laws or regulations may affect
our future operations.
Environmental
Our operations and properties upon which we perform our pyrolysis
services are subject to a wide variety of increasingly complex and
stringent foreign, federal, state and local environmental laws and
regulations, including those governing discharges into the air and
water, the handling and disposal of solid and hazardous wastes, the
remediation of soil and groundwater contaminated by hazardous
substances and the health and safety of employees. Sanctions for
noncompliance may include revocation of permits, corrective action
orders, administrative or civil penalties and criminal prosecution.
Some environmental laws provide for strict, joint and several
liability for remediation of spills and other releases of hazardous
substances, as well as damage to natural resources. In addition,
companies may be subject to claims alleging personal injury or
property damage as a result of alleged exposure to hazardous
substances. Such laws and regulations may also expose us to
liability for the conduct of or conditions caused by others or for
our acts that were in compliance with all applicable laws at the
time such acts were performed.
In the United States, these laws and regulations include the
Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended, the Clean Air Act, the Clean Water Act,
the Resource Conservation and Recovery Act, The Toxic Substances
Control Act administered by the U.S. Environmental Protection
Agency, and similar laws that provide for responses to, and
liability for, releases of hazardous substances into the
environment. These laws and regulations also include similar
foreign, state or local counterparts to these federal laws, which
regulate air emissions, water discharges, hazardous substances and
waste and require public disclosure related to the use of various
hazardous substances. Our operations are also governed by laws and
regulations relating to workplace safety and worker health,
including the U.S. Occupational Safety and Health Act and
regulations promulgated thereunder.
Effect of Existing or Probable Government Regulations on Our
Business
Our business is affected by numerous laws and regulations on the
international, federal, state and local levels, including energy,
environmental, conservation, tax and other laws and regulations
relating to our industry. Failure to comply with any laws and
regulations may result in the assessment of administrative, civil
and criminal penalties, the imposition of injunctive relief or
both. Moreover, changes in any of these laws and regulations could
have a material adverse effect on our business. In view of the many
uncertainties with respect to current and future laws and
regulations, including their applicability to us, we cannot predict
the overall effect of such laws and regulations on our future
operations.
We believe that our operations comply in all material respects with
applicable laws and regulations and that the existence and
enforcement of such laws and regulations have no more restrictive
an effect on our operations than on other similar companies in our
industry. We do not anticipate any material capital expenditures to
comply with international, federal and state environmental
requirements. However, we can provide no assurance that we will not
incur significant environmental compliance costs in the future.
Government Regulation Outside the United States
In Morocco, India and other projects conducted outside of the
United States, we intend to rely upon our partners within those
jurisdictions to ensure compliance with local government
regulation, permitting requirements, and environmental laws.
Employees and Human Capital
We believe that our success depends upon our ability to attract,
develop and retain key personnel. As of January 18, 2023, we
employed fifteen individuals, of which four are part time. Four of
our employees reside in India. A significant number of our
management and professional employees have had prior experience in
the clean energy and sustainable energy sector. None of our
employees are covered by collective bargaining agreements, and
management considers relations with our employees to be in good
standing. Although we continually seek to add additional talent to
our work force, management believes that it has sufficient human
capital to operate its business successfully.
Corporate Information
Our principal executive offices are located at 2711 N. Sepulveda
Blvd., Suite #1051, Manhattan Beach, CA 90266. Our telephone number
is (424) 835-1845. Our website address is
https://www.cleanvisioncorp.com. The reference to our website is an
inactive textual reference only. The information on, or that can be
accessed through, our website is not part of this prospectus.
Investors should not rely on any such information in deciding
whether to purchase our Common Stock.
Clean Vision was initially incorporated in Nevada as China Vitup
Health Care Holdings, Inc. on September 15, 2006. Pursuant to an
Agreement and Plan of Merger and Reorganization dated September 29,
2006, Tubac Holdings, Inc., a Wyoming corporation and a parent of
the Company, was merged with and into the Company on October 2,
2006, with the Company as the surviving entity. On May 5, 2015, the
Company changed its name to Emergency Pest Services, Inc. Pursuant
to a Plan of Exchange dated August 3, 2015, the Company acquired
Emergency Pest Services, Inc., a Florida corporation. Pursuant to a
Plan of Exchange dated September 21, 2017, Byzen Digital Inc., a
Seychelles corporation, was merged with and into the Company on
November 4, 2017, with the Company as the surviving entity. On May
30, 2018, the Company changed its name to Byzen Digital Inc. On May
19, 2020, we changed our focus to clean energy and sustainability
when we acquired Clean-Seas, which became our wholly-owned
subsidiary. On March 12, 2021, the Company’s corporate name was
changed to Clean Vision Corporation.
Facilities
Our corporate headquarters located at 2711 N. Sepulveda Blvd.,
Suite #1051, Manhattan Beach, CA 90266, which is a virtual office
that is used solely as a mailing address. All of our operations are
conducted by our officers, directors, consultants, employees and
otherwise are conducted remotely. We believe that this arrangement
is adequate for our current operations and needs, but we will
secure a physical location for our operations if and when we
believe that it becomes necessary.
Legal Proceedings
Presently, 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.
On September 16, 2022, the Company commenced a lawsuit in the
District Court of Clark County, Nevada (the “Court”) against a
former officer and current director of the Company, Mr. Christopher
Percy, alleging, among other things, breach of fiduciary duty,
conversion, and business disparagement in connection with a control
dispute instigated by Mr. Percy following his termination from the
Company. On November 2, 2022, the Court granted the Company’s
request for a preliminary injunction against Mr. Percy, which
ordered, among other things, that Mr. Percy shall not take any
action on behalf of the Company unless expressly authorized by the
Company’s Board of Directors. The Company’s lawsuit against Mr.
Percy is ongoing and the Company continues to operate normally. Mr.
Percy is currently serving as a member of the Company’s Board of
Directors.
RESULTS OF OPERATIONS
For the nine months ended September 30, 2022 and
2021
Revenue
The Company had no revenue for the nine months ended September 30,
2022 and 2021.
Operating Expenses
|
|
Nine months
ended September 30, 2022 |
|
Nine months
ended September 30, 2021 |
|
Change
($) |
|
Change
(%) |
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting |
|
$ |
1,094,768 |
|
|
$ |
1,285,319 |
|
|
$ |
(190,551 |
) |
|
|
(14.8 |
)% |
Professional
fees |
|
|
258,165 |
|
|
|
344,697 |
|
|
|
(86,532 |
) |
|
|
(25.1 |
)% |
Payroll
expense |
|
|
623,549 |
|
|
|
1,071,527 |
|
|
|
(447,978 |
) |
|
|
(41.8 |
)% |
Director
fees |
|
|
13,500 |
|
|
|
— |
|
|
|
13,500 |
|
|
|
100 |
% |
General and
administration expenses |
|
|
824,344 |
|
|
|
139,783 |
|
|
|
684,561 |
|
|
|
489.7 |
% |
Total
operating expenses |
|
$ |
2,814,326 |
|
|
$ |
2,841,326 |
|
|
$ |
(27,000 |
) |
|
|
(1.0 |
)% |
Consulting Expense
For
the nine months ended September 30, 2022 and 2021, we had
consulting expenses of $1,094,768 and
$1,285,319, respectively, a decrease of $190,551 or 14.8%. In the
current period we had approximately $485,000 of stock compensation
expense and $171,000 and $157,000 of consulting expense incurred by
our Clean Seas India and Clean Seas subsidiaries. In the prior
period we had $816,500 of stock compensation expense. The decrease
in stock compensation expense from the prior period was the primary
reason for the decrease in consulting expense.
Professional Fees
For the nine months ended September 30, 2022 and 2021, we incurred
professional fees of $258,165 and $344,697, respectively, a
decrease of $86,532 or 25.1%. In the prior period we incurred
additional legal and audit expense related to the filing of our
Regulation A Offering Statement.
Payroll Expense
For the nine months ended September 30, 2022 and 2021, we had
payroll expense of $623,549 and $1,071,527, respectively, a
decrease of $447,978 or 41.8%. In the prior year we issued
preferred stock for services to our CEO for total non-cash
compensation expense of $359,800.
Director Fees
For the nine months ended September 30, 2022 and 2021, we had
director fees of $13,500 and $0, respectively, an increase of
$13,500. In the fourth quarter of 2021 we added a new member to our
Board of Directors. He is compensated $4,500 per quarter.
General and Administrative Expense
For the nine months ended September 30, 2022 and 2021, we had
G&A expense of $824,344 and $139,783, respectively, an increase
of $684,561. Some of our larger G&A expenses, and the increases
over prior period are investor relations (~$306,000), licensing
fees (~$25,000), development expense (~$35,500) and travel
(~$58,500). Our Clean Seas India subsidiary also incurred $82,000
of G&A expense during the period.
Other Income and Expenses
For the nine months ended September 30, 2022, we had total other
expense of $241,739 compared to $1,233,383 for the nine months
ended September 30, 2021. In the current year we recognized
$195,783 for debt issuance costs for the fair value of the warrants
issued with convertible debt. We also had $46,256 of interest
expense, of which $30,000 was amortization of debt discount. In the
prior period we recognized $1,187,033 of interest expense,
$1,162,996 of which was amortization of debt discounts, and a loss
in the change of the fair value of derivative of $46,350.
Net Loss
Net loss for the nine months ended September 30, 2022 and 2021, was
$3,056,065 and $4,074,709, respectively. Our net loss decreased
mainly due to the decrease in other expense.
Year ended December 31, 2021 compared to the year ended
December 31, 2020
Revenue
The
Company had no revenue for the years ended December 31, 2021 and
2020.
Operating Expenses
|
|
Year ended
December 31, 2021 |
|
Year ended
December 31, 2020 |
|
Change
($) |
|
Change
(%) |
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer
Compensation |
|
$ |
1,315,152 |
|
|
$ |
400,000 |
|
|
$ |
915,152 |
|
|
|
229 |
% |
Consulting
Fees |
|
|
1,955,213 |
|
|
|
191,500 |
|
|
|
1,763,713 |
|
|
|
921 |
% |
Professional
Fees |
|
|
413,479 |
|
|
|
79,827 |
|
|
|
333,652 |
|
|
|
418 |
% |
Payroll
Expense |
|
|
45,366 |
|
|
|
— |
|
|
|
45,366 |
|
|
|
— |
|
Director’s
Fees |
|
|
18,500 |
|
|
|
— |
|
|
|
18,500 |
|
|
|
— |
|
General and
Administrative Expenses |
|
|
373,095 |
|
|
|
132,368 |
|
|
|
240,727 |
|
|
|
182 |
% |
Total
operating expenses |
|
$ |
4,120,805 |
|
|
$ |
803,695 |
|
|
$ |
3,317,110 |
|
|
|
413 |
% |
Our operating expenses include officer compensation, consulting
fees, professional fees, payroll expense, director’s fees and
general and administrative expenses. Our operating expenses
increased by $3,317,110 or 413% for the year ended December 31,
2021, compared to the year ended December 31, 2020, mainly due to
an increase of $1,763,713 in consulting fees to $1,955,213 and an
$915,152 increase in officer compensation to $1,315,152, for the
year ended December 31, 2021, compared to $191,500 and $400,000,
respectively, for the year ended December 31, 2020, mainly due to
an increase in stock-based compensation of $1,388,995, for services
provided by management and consultants.
Professional fees, payroll expense, director’s fee and general and
administrative expenses also increased by $638,245 for the year
ended December 31, 2021, compared to the year ended December 31,
2020, as described in the table above, due primarily to legal fees
and travel expenses associated with the acquisition and
establishment of new subsidiaries.
Officer Compensation
For the years ended December 31, 2021 and 2020, we incurred officer
compensation expenses of $1,315,152 and $400,000, respectively, an
increase of $915,152 or 229%. The increase is mainly stock
compensation expense. In the current year we issued stock for
services to officers for total non-cash compensation expense of
$553,855. In addition, we incurred compensation expense for our new
CEO and COO.
Consulting Expense
For the years ended December 31, 2021 and 2020, we had consulting
expenses of $1,955,213 and $191,500, respectively, an increase of
$1,763,713 or 921%. The increase is mainly stock compensation
expense. In the current year we issued stock for services for
non-cash compensation expense of approximately $1,600,000. We also
incurred additional consulting expense through our Clean-Seas
subsidiary. In the prior year, $125,000 of the $191,500, was
non-cash stock compensation.
Professional Fees
For the years ended December 31, 2021 and 2020, we incurred
professional fees of $413,479 and $79,827, respectively, an
increase of $333,652 or 418%. The increase in the current year is
due to an increase in both legal and audit expense, including
non-cash stock based compensation of $150,000.
Payroll Expense
For the years ended December 31, 2021 and 2020, we had payroll
expense of $45,366 and $0, respectively, an increase of $45,366. In
the current year we started processing payroll for newly hired
employees.
Director Fees
For the years ended December 31, 2021 and 2020, we had director
fees of $18,500 and $0, respectively, an increase of $18,500. In
the fourth quarter we added a new member to our Board of Directors.
He was compensated $4,500 and 50,000 shares of Common Stock for
non-cash expense of $14,000.
General and Administrative Expense
For the years ended December 31, 2021 and 2020, we had General and
Administrative expenses (“G&A”) of $373,095 and $132,368,
respectively, an increase of $240,727 or 182%. Some of our larger
G&A expenses, and reason for the increase are marketing and
promotion (~$112,500), transfer agent fees (~$21,500), travel
(~$44,100) and corporate fees (~$13,600). Our G&A expense has
increased with increased operations related to our subsidiary,
Clean-Seas, and other efforts to begin revenue generating
operations.
Other Income (Expense)
We had total other expense of $1,913,606 for the year ended
December 31, 2021, compared to total other expense of $1,237,238,
for the year ended December 31, 2020, an increase of $676,368 or
55% from the prior period. The change was mainly due an increase of
$664,052 in interest expense, from $522,981 in the year ended
December 31, 2020 to $1,187,033 for the year ended December 31,
2021 and a decrease of $1,869,260 in the year over year change in
value of the fair value of the derivative liabilities in connection
with convertible notes payable and changes in the Company’s stock
price, for the year ended December 31, 2021. The aforementioned
increase in other expense was mostly offset by a decrease in the
loss on convertible debt of $2,006,944.
Net Operating Loss
We had a net operating loss of $6,034,411 for the year ended
December 31, 2021, compared to a net operating loss of $2,040,933
for the year ended December 31, 2020, an increase in net operating
loss of $3,993,478 or 196% from the prior period. The increase in
net operating loss was mainly due to the $2,678,865 or 453%
increase in officer compensation and consulting fees, primarily due
to a $1,388,995 increase in stock compensation, as discussed above,
an increase of $664,052 increase in interest expense, the
$1,869,260 non-cash change in derivative liabilities discussed
above, partially offset by a reduction in the loss on convertible
debt of $2,006,944.
LIQUIDITY AND CAPITAL RESOURCES
To date, we have funded our operations through the issuance of
equity securities and debt securities. We are not profitable, have
not generated any revenue and have incurred an accumulated deficit
of $16,221,150 as of September 30, 2022. For the nine months ended
September 30, 2022, we had a net loss of $3,056,065, and we had a
net loss of $6,034,411 for the year ended December 31, 2021. At
September 30, 2022, we had cash of $2,829 and cash of $835,657 at
December 31, 2021. We expect to continue to incur losses for the
foreseeable future, and these losses could increase as we continue
to work to develop our business. We also expect our capital needs
to increase as we purchase additional pyrolysis equipment. Our
future capital needs will be dependent upon our ability to generate
significant revenue from operations. Our 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 our contemplated plan of
operations, and its transition, ultimately, to the attainment of
profitable operations are necessary for us to continue operations.
These conditions and the ability to successfully resolve these
factors raise substantial doubt about our ability to continue as a
going concern and our ability to further implement our business
plan and generate sufficient revenues and our ability to raise
additional funds by way of a public or private offering.
Working Capital
|
|
Nine Months
Ended September 30, 2022 |
|
Year Ended
December 31, 2021 |
Cash |
|
$ |
2,829 |
|
|
$ |
835,657 |
|
Other
Current Assets |
|
|
928,244 |
|
|
|
54,000 |
|
Total
Current Assets |
|
|
931,073 |
|
|
|
889,657 |
|
Total
Current Liabilities |
|
|
1,315,757 |
|
|
|
459,943 |
|
Working
Capital / (Deficit) |
|
$ |
(384,684 |
) |
|
$ |
429,714 |
|
As of September 30, 2022, our cash balance was $2,829 and total
current assets were $931,073. As of December 31, 2021, our cash
balance was $835,657 and total current assets were $889,657.
As of September 30, 2022, we had total current liabilities of
$1,315,757. As of December 31, 2021, we had total current
liabilities of $459,943.
As of September 30, 2022, we had a working capital deficit of
$384,684, compared with a working capital of $429,714 as of
December 31, 2021. The decrease in working capital was primarily
attributed to our increase in accrued compensation, a convertible
note payable and other loans payable.
Cash Flows
The following table sets forth the significant sources and uses of
cash for the three months ended September 30, 2022 and 2021 and the
year ended December 31, 2021 and 2020.
|
|
Nine Months Ended September 30, 2022 |
|
Nine Months Ended September 30, 2021 |
|
Year Ended December 31, 2021 |
|
Year
Ended December 31, 2020 |
|
|
|
|
|
|
|
|
|
Cash Flows Used in
Operating Activities |
|
$ |
(1,846,811 |
) |
|
$ |
(1,396,135 |
) |
|
$ |
(1,801,078 |
) |
|
$ |
(203,860 |
) |
Cash Flows Used in Investing
Activities |
|
$ |
(54,713 |
) |
|
$ |
— |
|
|
$ |
(300,505 |
) |
|
$ |
— |
|
Cash Flows Provided by Financing
Activities |
|
$ |
1,062,074 |
|
|
$ |
3,000,000 |
|
|
$ |
2,936,500 |
|
|
$ |
204,600 |
|
Net Change in Cash During the period
end |
|
$ |
(839,450 |
) |
|
$ |
1,603,865 |
|
|
$ |
834,917 |
|
|
$ |
740 |
|
Cash Flow from Operating Activities
During
the nine months ended September 30, 2022, we had a net loss of
$3,056,065, adjusted by $1,041,642 for non-cash expenses and
$171,707 in adjustments from operating activities, assets and
liabilities for a net of $1,842,716 used
in operating activities. During the nine months ended September 30,
2021, we incurred a net loss of $4,074,709, adjusted by $2,759,425
for non-cash expenses and $80,851 in adjustments for a net of
$1,396,135 used in operating expenses. During the year ended
December 31, 2021, we had a net loss of $6,034,411 and used a total
of $4,233,333 in adjustments from operating activities, assets and
liabilities for a net of $1,801,078 used in operating activities.
During the year ended December 31, 2020, we incurred a net loss of
$2,420,933 and we used $2,217,073 in adjustments for a total use of
$203,860 in operating activities.
Cash Flow from Investing Activities
During the nine months ended September 30, 2022, we purchased
equipment in the amount of $54,713. During the year ended December
31, 2021, we purchased manufacturing equipment in the amount of
$150,505 and used $150,000 to repurchase shares sold to 100Bio.
Cash Flow from Financing Activities
During the nine months ended September 30, 2022, we received
$300,000 proceeds from convertible notes, $600,000 proceeds from
the sale of common stock, $131,436 from other notes payable and
$45,140 from a related party loan. Cash received was offset by
repayment of $14,502 of notes. For nine months ended September 30,
2021, we received $1,469,000 of proceeds from the sale of notes,
$3,000,000 proceeds from the sale of common stock and we repaid
$1,469,000 of notes payable. During the year ended December 31,
2021, we received $3,244,000 from proceeds from the sale of Common
Stock, $300,000 proceeds from the sale of notes payable, $686,500
from the proceeds of the sale of convertible notes, which was
offset by repayment of $594,000 of convertible notes and $700,000
for notes. During year ended December 31, 2020, we received $90,000
of proceeds from the sale of convertible notes and $114,500 from
the sale of notes.
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in
conformity with U.S. generally accepted accounting principles and
the Company’s discussion and analysis of its financial condition
and operating results require the Company’s management to make
judgments, assumptions and estimates that affect the amounts
reported. Management bases its estimates on historical experience
and on various other assumptions it believes to be reasonable under
the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities.
Actual results may differ from these estimates, and such
differences may be material.
“Note 2– Summary of Significant Accounting Policies” in the audited
financial statements and included in this prospectus under “Index
to Financial Statements“ describe the significant accounting
policies and methods used in the preparation of the Company’s
financial statements.
Controls and Procedures
We are not currently required to maintain an effective system of
internal controls as defined by Section 404 of the Sarbanes-Oxley
Act. We will be required to comply with the internal control over
financial reporting requirements of the Sarbanes-Oxley Act for the
twelve-month period ending December 31, 2022. Only in the event
that we are deemed to be a large accelerated filer or an
accelerated filer, and no longer qualify as an emerging growth
company, would we be required to comply with the independent
registered public accounting firm attestation requirement. Further,
for as long as we remain an emerging growth company as defined in
the JOBS Act, we intend to take advantage of certain exemptions
from various reporting requirements that are applicable to other
public companies that are not emerging growth companies including,
but not limited to, not being required to comply with the
independent registered public accounting firm attestation
requirement.
JOBS Act and Recent Accounting
Pronouncements
The JOBS Act provides that an “emerging growth company” can
take advantage of the extended transition period provided in
Section 7(a)(2)(B) of the Securities Act, for complying with new or
revised accounting standards. In other words, an “emerging
growth company” can delay the adoption of certain accounting
standards until those standards would otherwise apply to private
companies. We have irrevocably elected not to avail ourselves of
this extended transition period and, as a result, we will adopt new
or revised accounting standards on the relevant dates on which
adoption of such standards is required for other public
companies.
We have implemented all new accounting pronouncements that are in
effect and may impact our financial statements and we do not
believe that there are any other new accounting pronouncements that
have been issued that might have a material impact on our financial
position or results of operations.
Management
The
following sets forth information regarding individuals who are
currently serving as directors and/or executive officers as of
January 23, 2023.
Name |
|
Age |
|
Position |
Dan
Bates |
|
65 |
|
Chairman,
Chief Executive Officer, President and Director |
Rachel
Boulds |
|
52 |
|
Chief
Financial Officer |
Dr.
Michael Dorsey |
|
51 |
|
Independent
Director |
Gregg
Michael Boehmer |
|
55 |
|
Independent
Director |
Christopher
Percy |
|
42 |
|
Director |
Bart
Fisher |
|
79 |
|
Independent
Director |
Daniel
Harris |
|
60 |
|
Chief
Revenue Officer |
Our directors are elected annually and will hold office until our
next annual meeting of the stockholders and until their successors
are elected and qualified. Officers hold their positions at the
pleasure of the Board of Directors. Our officers and directors may
receive compensation as determined by us from time to time by vote
of the Board of Directors. Such compensation might be in the form
of stock options. Directors may be reimbursed by the Company for
expenses incurred in attending meetings of the Board of Directors.
Vacancies in the Board of Directors are filled by majority vote of
the remaining directors.
Executive Officers and Directors
The
following is a brief description of the education and business
experience of our directors and executive officers.
Dan Bates
Mr.
Bates has been our Chief Executive Officer and has served on our
Board of Directors since May 27, 2020. Mr. Bates was appointed as
our President, Secretary and Treasurer on July 20, 2022.
Previously, from June 2014 to August 2019, Mr. Bates served as the
CEO and President of ImpactPPA, an innovative renewable energy
company providing blockchain technologies to solve the challenging
problems commonly seen in the environment of distributed energy
solutions globally. Mr. Bates has spent more than a decade in the
renewable energy industry serving as the CEO of WindStream
Technologies, Inc. (“WindStream”).
Prior
to starting WindStream, Mr. Bates spent 15 years in the technology
sector and has launched successful technology ventures in both
hardware and software. Mr. Bates’ first technology venture, Extreme
Audio Reality (EAR), which was formed in 1990, developed and
patented the first interactive audio API for game developers,
designed for the PC, and set-top box gaming arena. EAR successfully
licensed its products to all major game publishers including
Electronic Arts, Activision, Id Software, Ubisoft and many others.
After EAR, Mr. Bates founded Avant Interactive (“Avant”) in 1997,
which developed a neural net and AI based technology for object
recognition, creating a patented interactive video solution for
content owners, publishers, and advertisers. Avant was the market
leader in this emerging sector, holding licenses and/or contracts
with many of the Fortune 100 companies, television and cable
networks, ad agencies as well as developing proprietary
applications for the U.S. Army.
We
believe that Mr. Bates is highly qualified to serve as a member of
the Board of Directors and our management team due to his
significant experience in the renewable energy industry and
understanding of emerging markets and finance.
Christopher Percy
Mr.
Percy has served as a Director since June 30, 2022. On June 11,
2018, Mr. Percy was appointed as the Chief Commercial Officer of
the Company, and on June 30, 2022. Mr. Percy was also appointed to
serve as our Treasurer. On July 30, 2022, Mr. Percy was terminated
as the Company’s Chief Commercial Officer, Treasurer and Secretary.
Mr. Percy began his career at First Ace Security from 1995 to 1999,
where he quickly progressed from engineer to a challenging business
development role. From 1999 to 2003, he was a project manager for
CCTV UK Ltd London. In 2003, he used the broad skills acquired over
years in the industry to found Direct CCTV & Security Systems
(“Direct CCTV”), where he was managing director, servicing a broad
international clientele, including Bank of America, Amazon and
Geopost. In 2009, he became CEO and President of Direct Security
Integration, which acquired Direct CCTV. When Direct Security
Integration completed its initial public offering in 2014, Mr.
Percy stepped down as CEO and President to consult for technology
companies on structure and sales.
On
September 16, 2022, the Company commenced a lawsuit in the District
Court of Clark County, Nevada (the “Court”) against Mr. Percy,
alleging, among other things, breach of fiduciary duty, conversion,
and business disparagement in connection with a control dispute
instigated by Mr. Percy following his termination from the Company.
Mr. Percy remains as a member of the Company’s Board of Directors.
On November 2, 2022, the Court granted the Company’s request for a
preliminary injunction against Mr. Percy, which ordered, among
other things, that Mr. Percy shall not take any action on behalf of
the Company unless expressly authorized by the Company’s Board of
Directors. The Company’s lawsuit against Mr. Percy is ongoing and
the Company continues to operate normally.
Rachel Boulds
Ms.
Boulds has served as the Company’s Chief Financial Officer since
May 1, 2022. Ms. Boulds currently works for the Company on a
part-time basis (spending approximately 80% of her time working for
the Company) while also operating her sole accounting practice
which she has led since 2009 and which provides all aspects of
consulting and accounting services to clients, including the
preparation of full disclosure financial statements for public
companies to comply with GAAP and SEC requirements. Ms. Boulds also
currently provides outsourced chief financial officer services for
two other companies. From August 2004 through July 2009, she was
employed as a Senior Auditor for HJ & Associates, LLC, where
she performed audits and reviews of public and private companies,
including the preparation of financial statements to comply with
GAAP and SEC requirements. From 2003 through 2004, Ms. Boulds was
employed as a Senior Auditor at Mohler, Nixon and Williams. From
September 2001 through July 2003, Ms. Boulds worked as an ABAS
Associate for PriceWaterhouseCoopers. From April 2000 through
February 2001, Ms. Boulds was employed as an e-commerce Accountant
for the Walt Disney Group’s GO.com. Ms. Boulds earned a B.S. in
Accounting from San Jose University in 2001 and is licensed as a
CPA in the state of Utah.
Daniel C. Harris
Mr.
Harris has served as the Company’s Chief Revenue Officer since June
2022 and has served as the VP of Business Development of the
Company’s subsidiary, Clean-Seas, since October 2021. Mr. Harris is
currently dedicated to the global expansion efforts of Clean-Seas’
Plastic Conversion Network by focusing on establishing new
locations and partnerships for its pyrolysis facilities. Mr. Harris
has over 20 years of experience in the competitive energy space.
Prior to his roles with the Company, Mr. Harris served as Executive
Vice President of Global Sales at WindStream Technologies, Inc.
(“WindStream”), focusing on large commercial installations of
renewable energy systems (integrated wind and solar). Preceding his
tenure at WindStream, Mr. Harris served as Executive Vice President
of Sales at Glacial Energy, a nationwide provider of retail
electricity and natural gas for commercial, industrial, and
institutional customers. In addition to his experience in the
energy field, he had a successful 20 year career in the
telecommunications industry, holding numerous high level positions
in General Management and Sales and Operations Management with
telecommunications service providers such as Winstar
Communications, Telseon, and Teleport Communications. Mr. Harris
holds a Bachelor of Arts degree in both Telecommunications
Management and Marketing from Syracuse University.
Dr. Michael K. Dorsey
Dr.
Dorsey has served as a member of our Board of Directors since
September 2021. He is a recognized expert on global energy,
environment, finance and sustainability matters, having worked with
governments and heads of state around the world. Dr. Dorsey was
appointed to the EPA’s National Advisory Committee (NAC) in 2010,
2012 and 2014. Further, in 2014, a specialized unit of the United
Nations Conference on Trade and Development (UNCTAD) designated Dr.
Dorsey advisor on “climate, energy sustainability and SIDS (Small
Island Developing States).”
Dr.
Dorsey has published dozens of scholarly and lay articles on a
variety of environment, development, pollution prevention and
sustainability matters, and has appeared in multiple TV and radio
shows and print publications. Dr. Dorsey is a member of several
non-profit boards and was a faculty member in various universities
around the world.
Dr.
Dorsey presently serves as a director at Michigan Environmental
Council, where he has served since 2019, as well as at Univergy
Solar since 2017, where he is also a partner. Dr. Dorsey’s
employment history also includes: a limited partner at Ibursun,
2019 to present; co-founder and treasurer at Sunrise Movement, 2017
to present; partner at Pahal Solar, 2019 to present; advisor at
ImpactPPA 2018 to 2020; full member at Club of Rome, 2013 to
present; member at Progress with Friends, 2006 to present; and
co-founder at DetroitxPAC, 2013 to present. Dr. Dorsey holds a
Master of Forest Science from Yale University.
We
believe that Dr. Dorsey is highly qualified to serve as a member of
the Board of Directors due to his significant experience in global
renewable energy markets and government policy sectors.
Gregg Boehmer
Mr.
Boehmer has served as a member of the Board of Directors since
October 3, 2022. Mr. Boehmer has been a
fixture for over a dozen years helping public companies with their
fiscal, compliance and regulatory needs. He has a B.S. degree from
the University of Dayton (OH) and a Master’s Degree in Human
Resource Management from Towson University (MD).
After
achieving success with a few OTC Pink Sheet companies in 2009-10,
Mr. Boehmer opened his consulting firm, Layne Michael Consulting,
LLC, in 2011 in an effort to provide general public company
management, investor relations, corporate communications and
compliance services to companies struggling with compliance and or
public relations issues at rates far more affordable than larger
firms were able to offer.
While
he believes these services are integral, Mr. Boehmer also believes
that providing education to those individuals, who have found
themselves running a public company for the first time or still
learning the dynamics of the public markets, is extremely valuable
in assisting these executives in getting their company financial
reporting and disclosures in order.
Mr.
Boehmer began to shift his company’s focus to compliance and
management consulting midway through the last decade. While he
enjoyed the challenge of finding new and creative ways to write and
disseminate public company corporate updates, his passion clearly
resides in successfully navigating compliance and regulatory issues
with a focus green and renewable energy companies.
Mr. Boehmer had been supporting the Clean Vision Corp. as a
consultant since 2021.
We
believe that Mr. Boehmer is highly qualified to serve as a member
of our Board of Directors due to his years of experience and
expertise in working with publicly traded companies and building
development stage companies.
Bart Fisher
Mr. Fisher has served as a member of our Board of Directors since
January 18, 2023. Mr. Fisher brings 50 years' experience as
an attorney and investment banker specializing in high profile
international corporate litigation and complex transnational
financial transactions. As an attorney, Mr. Fisher serves as
Managing Partner of the Law Office of Bart S. Fisher and
is a member of the District of Columbia Bar. In his dual career as
an investment banker, he serves as Managing Partner
of JJ&B, LLC, a boutique investment bank located in
Washington, D.C., Chairman of Omni Advisors LLC, a D.C. and
NY-based investment bank, and Chairman of Capital Commodities,
LLC.
Mr.
Fisher graduated from Harvard Law School, and earned a Ph.D. in
International Studies from Johns Hopkins School of Advanced
International Studies in Washington, D.C. He has been nominated
twice for the Nobel Prizes in Peace (2019) and Medicine (2020).
Throughout his career, Mr. Fisher has been a prolific published
author, frequent teacher and university lecturer, and a force for
successfully advancing health care and philanthropy.
We
believe that Mr. Fisher is highly qualified to serve as a member of
the Board of Directors due to his significant experience in the
legal and investment banking industries.
Corporate Governance
Family Relationships amongst Directors and
Officers
There
are no family relationships among our director and executive
officers.
Arrangements between Officers and Directors
To
our knowledge, there is no arrangement or understanding between any
of our officers or directors and any other person, including
directors, pursuant to which the officer or director was selected
to serve as an officer or director.
Involvement in Certain Legal Proceedings
None
of our executive officers or directors has been involved in any of
the following events during the past ten years, except as described
under “Business Experience”, above: (1) any bankruptcy petition
filed by or against any business of which such person was a general
partner or executive officer either at the time of the bankruptcy
or within two years prior to that time; (2) any conviction in a
criminal proceeding or being a named subject to a pending criminal
proceeding (excluding traffic violations and minor offenses); (3)
being subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type of
business, securities or banking activities; (4) being found by a
court of competent jurisdiction (in a civil action), the SEC or the
Commodities Futures Trading Commission to have violated a federal
or state securities or commodities law; (5) being the subject of,
or a party to, any Federal or State judicial or administrative
order, judgment, decree, or finding, not subsequently reversed,
suspended or vacated, relating to an alleged violation of (i) any
Federal or State securities or commodities law or regulation; (ii)
any law or regulation respecting financial institutions or
insurance companies, including, but not limited to, a temporary or
permanent injunction, order of disgorgement or restitution, civil
money penalty or temporary or permanent cease-and-desist order, or
removal or prohibition order, or (iii) any law or regulation
prohibiting mail or wire fraud or fraud in connection with any
business entity; or (6) being the subject of, or a party to, any
sanction or order, not subsequently reversed, suspended or vacated,
of any self-regulatory organization (as defined in Section 3(a)(26)
of the Exchange Act), any registered entity (as defined in Section
(1a)(40) of the Commodity Exchange Act), or any equivalent
exchange, association, entity, or organization that has
disciplinary authority over its members or persons associated with
a member.
Board Leadership Structure
Our
Board of Directors has the responsibility for selecting our
appropriate leadership structure. In making leadership structure
determinations, the Board of Directors considers many factors,
including the specific needs of our business and what is in the
best interests of our stockholders. Mr. Dan Bates serves as
Chairman and CEO. The Board of Directors does not have a policy as
to whether the Chairman should be an independent director, an
affiliated director, or a member of management. The Board of
Directors believes that its programs for overseeing risk, as
described below, would be effective under a variety of leadership
frameworks and therefore do not materially affect its choice of
structure.
Risk Oversight
Effective
risk oversight is an important priority of the Board of Directors.
Because risks are considered in virtually every business decision,
the Board of Directors discusses risk throughout the year generally
or in connection with specific proposed actions. The Board of
Directors’ approach to risk oversight includes understanding the
critical risks in the Company’s business and strategy, evaluating
the Company’s risk management processes, allocating
responsibilities for risk oversight, and fostering an appropriate
culture of integrity and compliance with legal responsibilities.
The directors exercise direct oversight of strategic risks to the
Company.
Other Directorships
No
director of the Company is also a director of an issuer with a
class of securities registered under Section 12 of the Exchange Act
(or which otherwise are required to file periodic reports under the
Exchange Act).
Committees of the Board
The
Company’s Board of Directors does not currently have any committees
established. If the Company completes its currently contemplated
uplist to The Nasdaq Stock Market LLC (“Nasdaq”), which there can
be no assurance such uplisting will occur, the Nasdaq listing rules
require that independent
directors must comprise a majority of a listed company’s board of
directors. In addition, the rules of Nasdaq require that, subject
to specified exceptions, each member of a listed company’s audit,
compensation, and nominating and governance committees be
independent. Audit committee members must also satisfy the
independence criteria set forth in Rule 10A-3 under the Exchange
Act. Under the rules of Nasdaq, a director will only qualify as an
“independent director” if, in the opinion of that company’s board
of directors, that person does not have a relationship that would
interfere with the exercise of independent judgment in carrying out
the responsibilities of a director.
Controlled Company
Dan
Bates, our CEO and Chairman, owns 2,000,000 shares of Series C
Convertible Preferred Stock of the Company, which shares of Series
C Convertible Preferred Stock, vote together with our Common Stock
on all stockholder matters, and vote one hundred Common Stock votes
per share. Such shares of Series C Convertible Preferred Stock
automatically converted into 20,000,000 shares of Common Stock on
January 1, 2023; however as of January 23, 2023 such conversion has
not been effectuated.
Executive OFFICER and Director
Compensation
Executive Compensation Table
The
following table sets forth information concerning the compensation
of (i) all individuals serving as our principal executive officer
or acting in a similar capacity for the years ended December 30,
2022 and 2021 (“PEO”), regardless of compensation level;
(ii) our two most highly compensated executive officers other than
the PEO who were serving as executive officers for the periods
ended December 30, 2022 and 2021, if any (subject to the
limitations below); and (iii) up to two additional individuals for
whom disclosure would have been provided pursuant to paragraph (ii)
but for the fact that the individual was not serving as an
executive officer at December 31, 2022 (collectively, the “Named
Executive Officers”).
Our
Board of Directors does not have a Compensation Committee. In its
absence, compensation was determined by the majority of the Board
Members.
Summary
Compensation Table
Name
and Principal Position |
|
Year |
|
Salary
($) |
|
Bonus
($) |
|
Stock
Awards
($) (2) |
|
Option
Awards
($) |
|
Non-Equity
Incentive Plan Compensation
($) |
|
Nonqualified
Deferred
Compensation
Earnings
($) |
|
All
Other Compensation
($) (3) |
|
Total |
Dan
Bates |
|
|
2022 |
|
|
$ |
240,000 |
|
|
$ |
0 |
|
|
$ |
350,000 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
590,000 |
CEO |
|
|
2021 |
|
|
$ |
240,000 |
|
|
$ |
0 |
|
|
$ |
359,800 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
599,800 |
Chris
Percy(1) |
|
|
2022 |
|
|
$ |
57,750 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
57,750 |
|
|
|
2021 |
|
|
$ |
231,000 |
|
|
$ |
0 |
|
|
$ |
59,375 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
290,375 |
John
Owen (4) |
|
|
2022 |
|
|
$ |
131,250 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
131,250 |
COO |
|
|
2021 |
|
|
$ |
80,000 |
|
|
$ |
0 |
|
|
$ |
14,000 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
94,000 |
Rachel
Boulds |
|
|
2022 |
|
|
$ |
60,000 |
|
|
$ |
0 |
|
|
$ |
70,000 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
130,000 |
CFO |
|
|
2021 |
|
|
$ |
47,000 |
|
|
$ |
0 |
|
|
$ |
102,950 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
149,950 |
Daniel
Harris |
|
|
2022 |
|
|
$ |
90,000 |
|
|
$ |
0 |
|
|
$ |
94,792 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
184,792 |
CRO |
|
|
2021 |
|
|
$ |
22,500 |
|
|
$ |
0 |
|
|
$ |
17,750 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
40,250 |
(1)
Effective as of July 30, 2022, Mr. Percy was terminated as the
Company’s Chief Commercial Officer, President, Treasurer and
Secretary. Mr. Percy still remains as a director.
(2)
In accordance with SEC rules,
this column reflects the aggregate fair value of the stock awards
granted during the respective fiscal year computed as of their
respective grant dates in accordance with Financial Accounting
Standard Board Accounting Standards Codification Topic 718 for
stock-based compensation transactions (ASC 718). The valuation
assumptions used in determining such amounts are described in
Note 8 to our
consolidated financial statements included elsewhere in this
prospectus.
(3)
Does not include perquisites and other personal benefits, or
property, unless the aggregate amount of such compensation is more
than $10,000. No executive officer earned any non-equity incentive
plan compensation, nonqualified deferred compensation, or other
compensation, during the periods reported above.
(4)
Mr. Owen resigned from the Company effective November 21,
2022.
Outstanding Equity Awards at Fiscal
Year-End
The
Company: (i) did not grant any stock options to its executive
officers or directors during the years ended December 31, 2021 and
December 31, 2020; (ii) did not have any outstanding equity awards
as of December 31, 2020; and (iii) had no options exercised by its
Named Executive Officers in the fiscal years ending December 31,
2021 and December 31, 2020.
Compensation of Directors
The
following table sets forth summary information concerning the
compensation we paid to non-executive directors during the years
ended December 31, 2021 and December 31, 2020.
Name and
Principal Position |
|
Fees Earned
or Paid in Cash
($) |
|
Stock
Awards
($) |
|
Option
Awards
($) |
|
Non-Equity
Incentive Plan Compensation
($) |
|
Nonqualified
Deferred
Compensation
Earnings
($) |
|
All Other
Compensation
($) |
|
Total |
Dan
Bates |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Christopher
Percy |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Dr. Michael
Dorsey |
|
$ |
4,500 |
|
|
$ |
14,000 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
18,500 |
|
* The
table above does not include the amount of any expense
reimbursements paid to the above directors. No directors received
any Stock Awards, Non-Equity Incentive Plan Compensation, Change in
Pension Value and Nonqualified Deferred Compensation Earnings
during the period presented. Does not include perquisites and other
personal benefits, or property, unless the aggregate amount of such
compensation is more than $10,000.
Employment Agreements
Dan Bates
We
entered into an employment agreement with Dan Bates (the “Bates
Employment Agreement”) on May 27, 2020 for a term of three years.
Under the Bates Employment Agreement, Mr. Bates serves as our Chief
Executive Officer and President. He receives a monthly base salary
of $20,000, provided that $7,500 per month is deferred until we
raise a minimum of $250,000 in a financing, which financing was
raised in February 2021. Mr. Bates is also eligible to receive a
quarterly revenue bonus of 10% of our consolidated gross revenue
for such quarter, which shall be paid in cash or Common Stock, as
determined by the Board (“Revenue Bonus”).
The
Bates Employment Agreement provides that Mr. Bates is eligible to
participate in our employee stock option plan, life, health,
accident, disability insurance plans, pension plans and retirement
plans, in effect from time to time, to the extent and on such terms
and conditions as we customarily make such plans available to our
senior executives. In addition, he is entitled to three weeks of
paid vacation per year.
The
Bates Employment Agreement provides that it shall continue until
terminated (i) upon the death of Mr. Bates; (ii) upon the delivery
to Mr. Bates of written notice of termination by us if Mr. Bates
suffers a physical or mental disability rendering, in the Board’s
reasonable judgment, Mr. Bates unable to perform his duties and
obligations under the Bates Employment Agreement for either 90
consecutive days or 190 days in any 12-month period; (iii) upon
delivery to Mr. Bates of written notice of termination by us for
Cause, as such term is defined in the Bates Employment Agreement;
or (iv) upon delivery of written notice from Mr. Bates to us for
Good Reason, as such term is defined in the Bates Employment
Agreement. The Bates Employment Agreement also provided that until
we have obtained $2,000,000 in gross proceeds from a financing or
series of financings the Bates Employment Agreement may be
terminated by either party on thirty (30) days’ notice, which
financing was obtained and therefore the Bates Employment Agreement
can no longer be terminated on thirty (30) days’ notice.
Mr.
Bates is bound by certain confidentiality provisions pursuant to
the Bates Employment Agreement.
If
Mr. Bates’ employment is terminated for Good Reason, in addition to
paying Mr. Bates all outstanding sums due and owing to him at the
time of separation, we are also required to pay Mr. Bates an amount
equal to six (6) months of his then-current Base Salary in the form
of salary continuation (the “Severance Payments”), plus
payment of the medical insurance premium for Mr. Bates and his
family.
Notwithstanding
the reason for Mr. Bates’ termination he is entitled to: (i) all
benefits payable under the applicable benefit plans through the
date of termination, (ii) any accrued but unused vacation earned by
Mr. Bates through the date of termination; (iii) reimbursement for
any business expenses incurred by Mr. Bates prior to the date of
termination; and (iv) the prorated portion of any Revenue Bonus to
which he is entitled.
The
receipt of any termination benefits described above is subject to
Mr. Bates’ execution of a release of claims in favor of
us.
In
the event of Mr. Bates’ termination due to death or disability, Mr.
Bates or his estate shall be entitled to all severance benefits
(including, without limitation, the Severance Payments) as well as
retaining any options vested as of the date of
termination.
Effective
as of February 9, 2021, the Bates Employment Agreement was amended
for purposes of extending the term to five years, expiring on May
27, 2025, and issuing Mr. Bates 2,000,000 shares of our Series C
Convertible Preferred Stock.
Christopher Percy
Effective
as of July 30, 2022, Mr. Percy was terminated as the Company’s
Chief Commercial Officer, President, Treasurer and Secretary We
entered into an employment agreement with Christopher Percy (the
“Percy Employment Agreement”) effective as of June 1, 2020 for a
term of two years, which was terminated by the Company effective as
of July 30, 2022.
Pursuant
to the Percy Employment Agreement, Mr. Percy is subject to a
one-year post-termination non-compete and non-solicit of employees
and clients. He is also bound by confidentiality
provisions.
Pursuant
to the Percy Employment Agreement, Mr. Percy shall be entitled to
receive severance equal to one month’s salary if he is terminated
by the Company for any reason other than disability or death. The
severance payment in the amount of $19,250 has not yet been made
pending the current litigation involving the Company and Mr.
Percy.
John Owen
We
entered into a consulting agreement with John Owen, effective as of
July 1, 2021, (“Owen Consulting Agreement”) to serve as our Chief
Operating Officer. Mr. Owen’s compensation is $12,500 per month. On
December 16, 2021, we granted 500,000 shares of Common Stock to Mr.
Owen for his services. 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.
Rachel Boulds
The
Company entered into a consulting agreement with Rachel Boulds,
effective as of May 1, 2021, (“Boulds Consulting Agreement”) to
serve as part-time Chief Financial Officer for compensation of
$5,000 per month. On February 22, 2021, Ms. Boulds was granted
500,000 shares of Common Stock for her services. On December 14,
2022, Ms. Boulds was granted 2,000,000 shares of Common Stock for
her services.
Certain Relationships and Related Party
Transactions
Except
as discussed below or otherwise disclosed above under “Executive
and Director Compensation“, which information is incorporated by
reference where applicable in this “Certain Relationships and
Related Transactions, and Director Independence” section, the
following sets forth a summary of all transactions since January 1,
2020, or any currently proposed transaction, in which the Company
was to be a participant and the amount involved exceeded or exceeds
the lesser of $120,000 or one percent of the average of the
Company’s total assets at the fiscal year-end for December 31, 2021
and December 31, 2020, and in which any officer, director, or any
stockholder owning greater than five percent (5%) of our
outstanding voting shares, nor any member of the above referenced
individual’s immediate family, had or will have a direct or
indirect material interest (other than compensation described above
under “Executive and Director Compensation“). We believe the terms
obtained or consideration that we paid or received, as applicable,
in connection with the transactions described below were comparable
to terms available or the amounts that would be paid or received,
as applicable, in arm’s-length transactions.
On
May 19, 2020, we entered into an Exchange Agreement with Clean-Seas
and Dan Bates, the sole shareholder of Clean-Seas and our Chief
Executive Officer. Pursuant to the terms of the Exchange Agreement,
we issued 2,500,000 shares of Common Stock, at $0.01 per share, the
agreed upon purchase price, to Clean-Seas in exchange for 100% of
the outstanding stock of Clean-Seas. Clean-Seas became our
wholly-owned subsidiary on May 19, 2020.
On
September 17, 2020, the Company granted Jea So, our former Vice
President and Director, 500,000 shares of Common Stock for
services. The shares were valued at the closing stock price on the
date of grant of $0.11, for total non-cash compensation of
$55,000.
On
February 1, 2021, we granted 20,000 shares of Common Stock to Mr.
Ibrahim for services. The shares were valued at $0.14, the closing
stock price on the date of grant, for total non-cash expense of
$2,800. On September 30, 2021, the Company granted 160,000 shares
of Common Stock to Mr. Ibrahim for services. The shares were valued
at $0.10, the closing stock price on the date of grant, for total
non-cash expense of $14,930. As of December 31, 2022, the shares
have not yet been issued by the transfer agent and are disclosed as
Common Stock to be issued.
On
December 16, 2021, we granted Michael Dorsey, Director, 500,000
shares of Common Stock. The shares were valued at $0.028, the
closing stock price on the date of grant, for total non-cash
expense of $14,000.
As of
March 31, 2022, December 31, 2021 and December 31, 2020, we owed
Erfran Ibrahim, former CTO, $60,000, $60,000 and $0, respectively,
for accrued compensation.
As of
March 31, 2022, December 31, 2021 and December 31, 2020, we owed
Christopher Percy, President, Treasurer and Chief Commercial
Officer, $156,250, $158,500 and $87,500, respectively, for accrued
compensation.
As of
March 31, 2022, December 31, 2021 and December 31, 2020, the
Company owed Dan Bates, CEO, $90,000, $70,000 and $45,0000,
respectively, for accrued compensation. In addition, Mr. Bates,
loaned the Company $100 to be used to open the Company’s bank
account and such amount was repaid on May 26, 2022.
On
December 14, 2022, we granted Michael Dorsey, Director, 2,000,000
shares of Common Stock. The shares were valued at $0.035, the
closing stock price on the date of grant, for total non-cash
expense of $70,000.
On
December 14, 2022, we granted Greg Boehmer, Director, 2,000,000
shares of Common Stock. The shares were valued at $0.035, the
closing stock price on the date of grant, for total non-cash
expense of $70,000.
On
December 14, 2022, we granted Rachel Boulds, CFO, 2,000,000 shares
of Common Stock. The shares were valued at $0.035, the closing
stock price on the date of grant, for total non-cash expense of
$70,000.
Review, Approval and Ratification of Related Party
Transactions
Our
board of directors recognizes the fact that transactions with
related persons present a heightened risk of conflicts of interest
and/or improper valuation (or the perception thereof). Our board of
directors is in the process of adopting a written policy on
transactions with related persons that is in conformity with the
requirements for issuers having publicly held common stock that is
listed on Nasdaq. We anticipate that under the new
policy:
|
● |
any
related person transaction, and any material amendment or
modification to a related person transaction, must be reviewed and
approved or ratified by the Board; and |
|
|
|
|
● |
any employment
relationship or transaction involving an executive officer and any
related compensation must be approved by the compensation committee
of the board of directors or recommended by the compensation
committee to the board of directors for its approval. |
In
connection with the review and approval or ratification of a
related person transaction:
|
● |
management must disclose
to the committee or disinterested directors, as applicable, the
name of the related person and the basis on which the person is a
related person, the material terms of the related person
transaction, including the approximate dollar value of the amount
involved in the transaction, and all the material facts as to the
related person’s direct or indirect interest in, or relationship
to, the related person transaction; |
|
|
|
|
● |
management must advise
the committee or disinterested directors, as applicable, as to
whether the related person transaction complies with the terms of
our agreements governing our material outstanding indebtedness that
limit or restrict our ability to enter into a related person
transaction; |
|
|
|
|
● |
management must advise
the committee or disinterested directors, as applicable, as to
whether the related person transaction will be required to be
disclosed in our applicable filings under the Securities Act or the
Exchange Act, and related rules, and, to the extent required to be
disclosed, management must ensure that the related person
transaction is disclosed in accordance with the Securities Act and
the Exchange Act and related rules; and |
|
|
|
|
● |
management must advise
the committee or disinterested directors, as applicable, as to
whether the related person transaction constitutes a “personal
loan” for purposes of Section 402 of the Sarbanes-Oxley
Act. |
In
addition, the related person transaction policy provides that the
committee or disinterested directors, as applicable, in connection
with any approval or ratification of a related person transaction
involving a non-employee director, should consider whether such
transaction would compromise the director’s status as an
“independent,” “outside,” or “non-employee” director, as
applicable, under the rules and regulations of the SEC, the Nasdaq
Stock Market, and the Code.
In
addition, our Code of Business Conduct and Ethics (described above
under “Management—Code of Ethics“), which is applicable to all of
our employees, officers and directors, requires that all employees,
officers and directors avoid any conflict, or the appearance of a
conflict, between an individual’s personal interests and our
interests.
Conflicts Related to Other Business
Activities
The
persons serving as our officers and directors have existing
responsibilities and, in the future, may have additional
responsibilities, to provide management and services to other
entities in addition to us. As a result, conflicts of interest
between us and the other activities of those persons may occur from
time to time.
We
will attempt to resolve any such conflicts of interest in our
favor. Our officers and directors are accountable to us and our
stockholders as fiduciaries, which requires that such officers and
directors exercise good faith and integrity in handling our
affairs. A stockholder may be able to institute legal action on our
behalf or on behalf of that stockholder and all other similarly
situated stockholders to recover damages or for other relief in
cases of the resolution of conflicts in any manner prejudicial to
us.
Director Independence
We
may, in the future, apply for our Common Stock to be listed on the
Nasdaq Capital Market, or Nasdaq. Under the rules of Nasdaq,
independent directors must comprise a majority of a listed
company’s board of directors within one year of the completion of
its initial public offering. In addition, the rules of Nasdaq
require that, subject to specified exceptions, each member of a
listed company’s audit, compensation and corporate governance and
nominating committees be independent. Audit committee members and
compensation committee members must also satisfy the independence
criteria set forth in Rule 10A-3 and Rule 10C-1, respectively,
under the Exchange Act. Under the rules of Nasdaq, a director will
only qualify as an “independent director” if, in the opinion of
that company’s board of directors, that person does not have a
relationship that would interfere with the exercise of independent
judgment in carrying out the responsibilities of a
director.
To be
considered to be independent for purposes of Rule 10A-3 and under
the rules of Nasdaq, a member of an audit committee of a listed
company may not, other than in his or her capacity as a member of
the audit committee, the board of directors, or any other board of
directors committee: (1) accept, directly or indirectly, any
consulting, advisory, or other compensatory fee from the listed
company or any of its subsidiaries; or (2) be an affiliated person
of the listed company or any of its subsidiaries.
To be
considered independent for purposes of Rule 10C-1 and under the
rules of Nasdaq, the board of directors must affirmatively
determine that each member of the compensation committee is
independent, including a consideration of all factors specifically
relevant to determining whether the director has a relationship to
the company which is material to that director’s ability to be
independent from management in connection with the duties of a
compensation committee member, including, but not limited to: (i)
the source of compensation of such director, including any
consulting, advisory or other compensatory fee paid by the company
to such director; and (ii) whether such director is affiliated with
the company, a subsidiary of the company or an affiliate of a
subsidiary of the company.
Our
board of directors undertook a review of its composition, the
composition of its committees and the independence of our directors
and considered whether any director has a material relationship
with us that could compromise his or her ability to exercise
independent judgment in carrying out his or her responsibilities.
Based upon information requested from and provided by each
non-employee director concerning his or her background, employment
and affiliations, including family relationships, our board of
directors has determined that none of Messrs. Ross, Melvin, and
Shallcross have relationships that would interfere with the
exercise of independent judgment in carrying out the
responsibilities of a director and that each of these directors is
“independent” as that term is defined under the rules of Nasdaq and
Rule 10A-3 and Rule 10C-1under the Exchange Act.
In
making these determinations, our board of directors considered the
current and prior relationships that each non-employee director has
with our company and all other facts and circumstances our board of
directors deemed relevant in determining their independence,
including the beneficial ownership of our capital stock by each
non-employee director, and the transactions involving them
described in the section titled “Certain Relationships and Related
Party Transactions.”
We
have determined that Dr. Michael Dorsey, Gregg Boehmer and Bart
Fisher are independent members of our Board, as that term is
defined in Rule 5605(a)(2) of the Nasdaq Listing Rules.
Principal
Stockholders
The
following table sets forth certain information, as of January 23,
2023, with respect to the beneficial ownership of the outstanding
common stock by (i) any holder of more than five (5%) percent; (ii)
each of the Company’s executive officers and directors; and (iii)
the Company’s directors and executive officers as a group. 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, each of the stockholders
listed below has sole voting and investment power over the shares
beneficially owned. .
Beneficial
ownership is determined in accordance with the rules of the SEC and
includes voting and/or investing power with respect to securities.
These rules generally provide that shares of Common Stock subject
to options, warrants or other convertible securities that are
currently exercisable or convertible, or exercisable or convertible
within 60 days of the Date of Determination, are deemed to be
outstanding and to be beneficially owned by the person or group
holding such options, warrants or other convertible securities for
the purpose of computing the percentage ownership of such person or
group, but are not treated as outstanding for the purpose of
computing the percentage ownership of any other person or
group.
To
our knowledge, except as indicated in the footnotes to this table
and pursuant to applicable community property laws, as of the Date
of Determination, (a) the persons named in the table have sole
voting and investment power with respect to all shares of Common
Stock shown as beneficially owned by them, subject to applicable
community property laws; and (b) no person owns more than 5% of our
Common Stock. Unless otherwise indicated, the address for each of
the officers or directors listed in the table below is 2711 N.
Sepulveda Blvd., Suite #1051, Manhattan Beach, California
90266.
We
have determined beneficial ownership in accordance with the rules
of the SEC, and thus it represents sole or shared voting or
investment power with respect to our securities. Unless otherwise
indicated below, to our knowledge, the persons and entities named
in the table have sole voting and sole investment power with
respect to all shares that they beneficially owned, subject to
community property laws where applicable. The information does not
necessarily indicate beneficial ownership for any other purpose,
including for purposes of Sections 13(d) and 13(g) of the
Exchange Act.
|
|
Shares
Beneficially Owned |
|
Percentage
Ownership |
5%
Beneficial Owners |
|
|
|
|
|
|
|
|
Series
B Convertible Non-Voting Preferred Stock
Holders(1) |
|
|
20,000,000 |
|
|
|
4.8 |
% |
|
|
|
|
|
|
|
|
|
Executive
Officers and Directors |
|
|
|
|
|
|
|
|
Dan
Bates(2) |
|
|
24,500,000 |
|
|
|
5.9 |
% |
Christopher
Percy |
|
|
7,200,000 |
|
|
|
1.7 |
% |
Rachel
Boulds |
|
|
2,500,000 |
|
|
|
* |
% |
Dr.
Michael Dorsey |
|
|
2,500,000 |
|
|
|
* |
% |
Greg
Boehmer |
|
|
3,000,000 |
|
|
|
* |
% |
Daniel
Harris |
|
|
3,208,340 |
|
|
|
* |
% |
Bart
Fisher |
|
|
0 |
|
|
|
0 |
% |
All
current directors and officers as a group (5
persons) |
|
|
62,908,340 |
|
|
|
15.16 |
% |
*less
than one percent
|
(1) |
Includes
20,000,000 shares of Common Stock that would be issued upon
conversion of the Series B Convertible Non-Voting Preferred Stock,
which conversion automatically occurred on January 1, 2023;
however, the Company and holders of the Series B Convertible
Non-Voting Preferred Stock are currently in a dispute and the
Company’s Transfer Agent has been instructed to not issue the
shares of Common Stock until such dispute has been
resolved. Accordingly, although the shares of Common
Stock thereunder have not been formally issued as of January 23,
2023, the shares of Series B Non-Voting Convertible Preferred Stock
are no longer outstanding. |
|
(2) |
Includes
20,000,000 shares of Common Stock to be issued upon conversion of
the Series C Preferred Stock owned by Mr. Bates, which conversion
automatically occurred on January 1, 2023, but has not been
effectuated as of January 23, 2023. |
Change of Control
The
Company is not aware of any arrangements which may at a subsequent
date result in a change of control of the Company.
Description of Capital Stock
The
following summary is a description of the material terms of our
capital stock and is not complete.
The
following description of our capital stock and provisions of our
certificate of incorporation and by-laws are summaries and are
qualified by reference to the certificate of incorporation and
by-laws. We urge you to read our certificate and our by-laws, as in
effect immediately following the closing of this offering, which
are included as exhibits to the registration statement of which
this prospectus forms a part.
Certain
provisions of our certificate and our by-laws summarized below may
be deemed to have an anti-takeover effect and may delay or prevent
a tender offer or takeover attempt that a stockholder might
consider in its best interest, including those attempts that might
result in a premium over the market price for the shares of Common
Stock.
Authorized Capitalization
The
total number of authorized shares of our Common Stock is
2,010,000,000 shares, $0.01 par value per share, of which
2,000,000,000 shares are Common Stock, and 10,000,000 shares are
preferred stock.
Common Stock
Shares
of our Common Stock have the following rights, preferences, and
privileges:
Voting
Each
holder of Common Stock is entitled to one vote for each share of
Common Stock held on all matters submitted to a vote of
stockholders. Any action at a meeting at which a quorum is present
will be decided by a majority of the voting power present in person
or represented by proxy, except in the case of any election of
directors, which will be decided by a plurality of votes cast.
There is no cumulative voting.
Dividends
Holders
of our Common Stock are entitled to receive dividends when, as and
if declared by our board of directors out of funds legally
available for payment, subject to the rights of holders, if any, of
any class of stock having preference over the Common Stock. Any
decision to pay dividends on our Common Stock will be at the
discretion of our board of directors. Our board of directors may or
may not determine to declare dividends in the future. See “Dividend
Policy.” The board’s determination to issue dividends will depend
upon our profitability and financial condition, any contractual
restrictions, restrictions imposed by applicable law and the SEC,
and other factors that our board of directors deems
relevant.
Liquidation
Rights
In
the event of a voluntary or involuntary liquidation, dissolution or
winding up of the company, the holders of our Common Stock will be
entitled to share ratably on the basis of the number of shares held
in any of the assets available for distribution after we have paid
in full, or provided for payment of, all of our debts and after the
holders of all outstanding series of any class of stock have
preference over the Common Stock, if any, have received their
liquidation preferences in full.
Other
Our
issued and outstanding shares of Common Stock are fully paid and
nonassessable. Holders of shares of our Common Stock are not
entitled to preemptive rights. Shares of our Common Stock are not
convertible into shares of any other class of capital stock, nor
are they subject to any redemption or sinking fund
provisions.
Preferred Stock
Series A Convertible Preferred Stock
On
May 5, 2015, the Company created a series of preferred stock,
designating 1,000,000 shares as Series A Convertible Preferred
Stock, which ranks senior to the Company’s Common Stock upon the
liquidation, dissolution or winding up of the Company. The Series A
Convertible Preferred Stock does not bear a dividend. The holders
of the Series A Convertible Preferred Stock are entitled to 100
votes and shall vote together with the holders of Common Stock.
Each share of the Convertible Preferred Series A Stock is
convertible into one hundred shares of Common Stock. Common Stock
subject to adjustment for stock splits and stock combinations. No
shares of Series A Convertible Preferred Stock are
outstanding.
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, which ranks senior to the Company’s Common Stock
upon the liquidation, dissolution or winding up of the Company. The
Series A Redeemable Preferred Stock does not bear a dividend or
have voting rights and is not convertible into shares of our Common
Stock. No shares of Series A Redeemable Preferred Stock are
outstanding.
Series B Convertible Non-Voting 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 (“Series B Preferred Stock”). The Series B
Preferred Stock does not bear a dividend or have voting rights.
Each share of Series B Preferred Stock initially converts into 10
shares of Common Stock, subject to adjustment for stock splits and
stock combinations. The Series B Preferred Stock automatically
converted on January 1, 2023 into shares of Common Stock; however,
the Company and holders of the Series B Convertible Non-Voting
Preferred Stock are currently in a dispute and the Company’s
Transfer Agent has been instructed to not issue the shares of
Common Stock until such dispute has been resolved. Accordingly,
although the shares of Common Stock thereunder have not been
formally issued as of January 23, 2023, the shares of Series B
Non-Voting Convertible Preferred Stock are no longer
outstanding.
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 Preferred Stock calculated at the rate of 20% on
a fully diluted basis.
Series C Convertible 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 (“Series C
Preferred Stock”). The Series C Preferred Stock does not bear a
dividend. The holders of the Series C Preferred Stock are entitled
to 100 votes per share of Common Stock and shall vote together with
the holders of Common Stock. Each share of the Series C Preferred
Stock is convertible into ten shares of Common Stock. Common Stock
subject to adjustment for stock splits and stock combinations. The
Series C Preferred Stock automatically converted on January 1, 2023
into shares of Common Stock; however, although the shares of Common
Stock thereunder have not been formally issued as of January 23,
2023, the shares of Series C Preferred Stock are no longer
outstanding.
The
holders of the Series C Preferred Stock shall have anti-dilution
rights the “Anti-Dilution Rights”) during the two-year period after
the Series C Preferred has
been converted into shares of Common Stock at its then
effective Conversion Rate such that they maintain in Series C
Preferred Stockholders, a 20% interest in the Common Stock and
preferred stock of the Company, calculated on a fully-diluted
basis.
Dan
Bates owned all of the outstanding shares of Series C Preferred
Stock.
Convertible Notes and Outstanding Warrants
On
March 31, 2022, we issued units consisting of a promissory note in
the principal amount of $360,000 and warrant to purchase up to
900,000 shares of Common Stock (the “March 2022 Warrant”) for gross
proceeds of $300,000. The note was issued at an original issue
discount of 20% and bears interest at a rate of 8% per annum. The
note is convertible into shares of Common Stock at a conversion
price of $0.02 provided that if we effect a Qualified Offering then
the conversion price is a 20% discount to the offering price of the
Common Stock in the Qualified Offering. The note may be prepaid at
any time after the six- month anniversary of issuance at a price
equal to 120% of the principal amount. The warrant has an exercise
period that expires on March 31, 2025 and has an exercise price
equal to a 25% premium of a Qualified Public Offering of in the
event of the sale of our company prior to a Qualified Public
Offering at a 125% premium to the per share sale price. A Qualified
Public Offering is defined as a public offering pursuant to a
registration statement declared effective by the SEC with minimum
gross proceeds of $10 million pursuant to which our Common Stock is
listed for trading on the Nasdaq or a similar nationally recognized
exchange. The warrant is exercisable on a cashless basis if after
the six-month anniversary of the issue date there is no effective
registration statement for the resale of the shares underlying the
warrant. The warrant provides for adjustment upon subdivisions and
combinations.
On
December 9, 2022, the Company entered into the Purchase Agreement
with Coventry, pursuant to which the Company issued to Coventry on
that date a Promissory Note (the “Note”) in the principal amount of
$300,000 (the “Principal Amount”) in exchange for a purchase price
of $255,000. The proceeds of the Note will be used by the Company
for general working capital purposes. 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
are to be returned to the Company upon the Company’s filing of the
registration statement of which this prospectus forms a part on or
before 45 calendar days after the date of the Purchase
Agreement.
Per
the terms of the Purchase Agreement the Company issued 15,500,000
shares of its Common Stock to Coventry. If the Company files an
initial Registration Statement within forty-five calendar days from
the date of the Note, then Coventy, pursuant to its mandatory
obligations thereunder, shall, within ten (10) calendar days
thereafter, return to the Company’s treasury for cancellation
twelve million five hundred thousand (12,500,000) shares of Common
Stock.
The
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 Note for an aggregate Guaranteed Interest
of fifteen thousand Dollars ($15,000.00), all of which Guaranteed
Interest shall be deemed earned as of the date of the Note. The
Principal Amount and the Guaranteed Interest are due and payable in
seven equal monthly payments (each, a “Monthly Payment”) of
forty-five thousand and 00/100ths Dollars ($45,000.00), commencing
on May 6, 2023 and continuing on the 6th day of each
month thereafter (each, a “Monthly Payment Date”) until paid in
full not later than November 6, 2023 (the “Maturity Date”), or such
earlier date as the Note is required or permitted to be repaid as
provided therein, and to pay such other interest to Coventry on the
aggregate unconverted and then outstanding Principal Amount of the
Note in accordance with the provisions thereof.
Upon
an event of default under the Note, the outstanding principal and
interest thereon may be converted, at the option of Coventry, into
shares of Common Stock at a conversion price equal to 90% per share
of the lowest per-share trading price during the 20 trading day
period before the conversion.
Common Stock
Anti-Takeover Provisions
Some
of the provisions of Nevada law, our Articles of Incorporation and
our Bylaws may have the effect of delaying, deferring or
discouraging another person from acquiring control of our company
or removing our incumbent officers and directors. These provisions,
summarized below, are expected to discourage certain types of
coercive takeover practices and inadequate takeover bids. These
provisions are also designed to encourage persons seeking to
acquire control of us to first negotiate with our board of
directors. We believe that the benefits of increased protection
against an unfriendly or unsolicited proposal to acquire or
restructure us outweigh the disadvantages of discouraging such
proposals. Among other things, negotiation of such proposals could
result in an improvement of their terms.
Nevada
Revised Statutes (“NRS”) Sections 78.411 to 78.444 inclusive apply
to combinations between resident domestic corporations (defined as
a Nevada domestic corporation that has 200 or more stockholders of
record) and certain affiliated stockholders (collectively, the
“Interested Shareholder Combination Statutes”). We have elected not
to be governed by the Interested Shareholder Combination Statutes
in the future. We do not anticipate this election to have any
immediate effect on the rights of existing stockholders. To the
extent that we qualify as a resident domestic corporation in the
future, the Board will be able to enter into acquisitions and
combinations with entities affiliated with its executive officer,
directors and control shareholders with greater ease, including
without limitation, without the requirement of obtaining the
approval of the stockholders in certain instances.
The
Nevada Interested Shareholder Combination Statutes generally
prohibit a Nevada corporation, with shares registered under section
12 of the Exchange Act and with 200 or more stockholders of record,
from engaging in a combination (defined in the statute to include a
variety of transactions, including mergers, asset sales, issuance
of stock and other actions resulting in a financial benefit to the
Interested Stockholder) with an Interested Stockholder (defined in
the statute generally as a person that is the beneficial owner of
10% or more of the voting power of the outstanding voting shares),
for a period of three years following the date that such person
became an Interested Stockholder unless the board of directors of
the corporation first approved either the combination or the
transaction that resulted in the stockholder’s becoming an
Interested Stockholder. If this approval is not obtained, the
combination may be consummated after the three year period expires
if either (a) (1) the board of directors of the corporation
approved the combination or the purchase of the shares by the
Interested Stockholder before the date that the person became an
Interested Stockholder, (2) the transaction by which the person
became an Interested Stockholder was approved by the board of
directors of the corporation before the person became an interested
stockholder, or (3) the combination is approved by the affirmative
vote of holders of a majority of voting power not beneficially
owned by the Interested Stockholder at a meeting called no earlier
than three years after the date the Interested Stockholder became
such; or (b) the aggregate amount of cash and the market value of
consideration other than cash to be received by all holders of
Common Stock and holders of any other class or series of shares not
beneficially owned by an Interested Stockholder meets the minimum
requirements set forth in NRS Sections 78.441 through
78.444.
The
NRS also limits the acquisition of a controlling interest in a
Nevada corporation with 200 or more stockholders of record, at
least 100 of whom have Nevada addresses appearing on the stock
ledger of the corporation, and that does business in Nevada
directly or through an affiliated corporation. According to the
NRS, an acquiring person who acquires a controlling interest in an
issuing corporation may not exercise voting rights on any control
shares unless such voting rights are conferred by a majority vote
of the disinterested stockholders of the issuing corporation at a
special or annual meeting of the stockholders. In the event that
the control shares are accorded full voting rights and the
acquiring person acquires control shares with a majority or more of
all the voting power, any stockholder, other than the acquiring
person, who does not vote in favor of authorizing voting rights for
the control shares is entitled to demand payment for the fair value
of such person’s shares.
Under
the NRS, a controlling interest means the ownership of outstanding
voting shares of an issuing corporation sufficient to enable the
acquiring person, individually or in association with others,
directly or indirectly, to exercise (1) one-fifth or more but less
than one-third, (2) one-third or more but less than a majority, or
(3) a majority or more of the voting power of the issuing
corporation in the election of directors. Outstanding voting shares
of an issuing corporation that an acquiring person acquires or
offers to acquire in an acquisition and acquires within 90 days
immediately preceding the date when the acquiring person became an
acquiring person are referred to as control shares.
Board
of Directors. Our by-laws provide for the election of directors
to one-year terms at each annual meeting of the stockholders. All
directors elected to our board of directors will serve until the
election and qualification of their respective successors or their
earlier resignation or removal. The board of directors is
authorized to create new directorships, and to fill such positions
so created by a majority vote of the directors or a majority of the
shareholders.
Special
Meetings of Stockholders. Special meetings of the stockholders
may be called only by our president or the board of directors
pursuant to the requirements of our by-laws or by the president if
holders representing 10% of all votes entitled to eb cast on any
issue proposed to be considered at the meeting.
Blank-Check
Preferred Stock. Our board of directors will be authorized to
issue, without stockholder approval, preferred stock, the rights of
which will be determined at the discretion of the board of
directors and that, if issued, could operate as a “poison pill” to
dilute the stock ownership of a potential hostile acquirer to
prevent an acquisition that our board of directors does not
approve.
Limitations on Liability and Indemnification of Officers and
Directors
Our
bylaws provide that we may indemnify our directors, officers and
employees to the fullest extent permitted by the laws of the State
of Nevada. As authorized by Section 78.751 of the Nevada
Revised Statutes, we may indemnify our officers and directors
against expenses incurred by such persons in connection with any
threatened, pending or completed action, suit or proceedings,
whether civil, criminal, administrative or investigative, involving
such persons in their capacities as officers and directors, so long
as such persons acted in good faith and in a manner which they
reasonably believed to be in our best interests. If the legal
proceeding, however, is by or in our right, the director or officer
may not be indemnified in respect of any claim, issue or matter as
to which he is adjudged to be liable for negligence or misconduct
in the performance of his duty to us unless a court determines
otherwise.
Under
Nevada law, corporations may also purchase and maintain insurance
or make other financial arrangements on behalf of any person who is
or was a director or officer (or is serving at our request as a
director or officer of another corporation) for any liability
asserted against such person and any expenses incurred by him in
his capacity as a director or officer. These financial arrangements
may include trust funds, self-insurance programs, guarantees and
insurance policies.
Additionally,
our Articles of Incorporation provide that any person who was or is
a party or was or is threatened to be made a party to any
threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative (whether
or not by or in the right of the Company) by reason of the fact
that he is or was a director, officer, incorporator, employee, or
agent of the Corporation, or is or was serving at the request of
the Company as a director, officer, incorporator, employee,
partner, trustee, or agent of another corporation, partnership,
joint venture, trust, or other enterprise (including an employee
benefit plan), is entitled to be indemnified by the Company to the
full extent then permitted by law against expenses (including
counsel fees and disbursements), judgments, fines (including excise
taxes assessed on a person with respect to an employee benefit
plan), and amounts paid in settlement incurred by him in connection
with such action, suit, or proceeding and, if so requested, the
Company is required to advance (within two business days of such
request) any and all such expenses to the person indemnified;
provided, however, that (i) the foregoing obligation of the Company
does not apply to a claim that was commenced by the person
indemnified without the prior approval of the Board of
Directors.
Such
right of indemnification continues as to a person who has ceased to
be a director, officer, incorporator, employee, partner, trustee,
or agent and inures to the benefit of the heirs and personal
representatives of such a person. The indemnification provided by
the Articles of Incorporation is not exclusive of any other rights
which may be provided now or in the future under any provision of
the bylaws, by any agreement, by vote of stockholders, by
resolution of disinterested directors, by provisions of law, or
otherwise.
Neither
our Bylaws nor our Articles of Incorporation, as amended, include
any specific indemnification provisions for our officers or
directors against liability under the Securities Act. Additionally,
insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company has been advised that in the
opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is, therefore,
unenforceable.
Trading Symbol
Our
Common Stock is traded on the OTCQB maintained by OTC Markets
Group, Inc. under the symbol “CLNV”.
Transfer Agent
The
transfer agent and registrar for our Common Stock is EQ by
Equiniti, 1110 Centre Point Curve, Suite 101, Mendota Heights,
Minnesota 55120.
Equity Awards
In
general, under Rule 701, any of our employees, directors, officers,
consultants or advisors who purchased shares from us in connection
with a compensatory stock or option plan or other written agreement
before the effective date of this offering is entitled to resell
such shares 90 days after the effective date of this offering in
reliance on Rule 144, without having to comply with the holding
period requirement or other restrictions contained in Rule
144.
The
SEC has indicated that Rule 701 will apply to typical stock options
granted by an issuer before it becomes subject to the reporting
requirements of the Exchange Act, along with the shares acquired
upon exercise of such options, including exercises after the date
of this prospectus.
None
of our outstanding shares of Common Stock were issued in
consideration for compensation.
SELLING
SHAREHOLDER
The
Selling Shareholder identified in this prospectus may offer and
sell up to (a) 3,000,000 shares of our Common Stock purchased by
the Selling Shareholder pursuant to the Purchase Agreement and (b)
20,000,000 shares of our Common Stock issuable to Coventry in the
event of a default under the Note, registered for sale herein. The
3,000,000 shares of Common Stock currently owned by Coventry
represent approximately 0.73% of our issued and outstanding shares
of as January 18, 2023.
The
Selling Shareholder may from time to time offer and sell under this
prospectus any or all of the shares of Common Stock described under
the column “Shares to be Offered” in the table below.
Coventry
will be deemed to be an underwriter within the meaning of the
Securities Act. Any profits realized by the Selling Shareholder may
be deemed to be underwriting commissions.
We
cannot give an estimate as to the number of shares of common stock
that will actually be held by the Selling Shareholder upon
termination of this offering, because the selling security holder
may offer some or all of the common stock being registered on its
behalf under the offering contemplated by this prospectus or
acquire additional shares of common stock. The total number of
shares that may be sold hereunder will not exceed the number of
shares offered hereby. Please read the section entitled “Plan of
Distribution” in this prospectus.
The
following table sets forth the name of the Selling Shareholder, the
number of shares of our common stock beneficially owned by such
stockholder before this offering, the number of shares to be
offered for such stockholders’ account and the number and (if one
percent or more) the percentage of the class to be beneficially
owned by such stockholders after completion of the offering. The
number of shares owned are those beneficially owned, as determined
under the rules of the SEC, and such information is not necessarily
indicative of beneficial ownership for any other purpose. Under
such rules, beneficial ownership includes any shares of our common
stock as to which a person has sole or shared voting power or
investment power and any shares of common stock which the person
has the right to acquire within 60 days of the date as of which the
information is provided, through the exercise of any option,
warrant or right, through conversion of any security or pursuant to
the automatic termination of a power of attorney or revocation of a
trust, discretionary account or similar arrangement, and such
shares are deemed to be beneficially owned and outstanding for
computing the share ownership and percentage of the person holding
such options, warrants or other rights, but are not deemed
outstanding for computing the percentage of any other person.
Beneficial ownership percentages are calculated based on
414,696,273 shares of our Common Stock outstanding as of January
18, 2023 and including the issuance of such shares to be
issued.
Unless
otherwise set forth below, (a) the persons and entities named in
the table have sole voting and sole investment power with respect
to the shares set forth opposite the Selling Shareholder’s name,
subject to community property laws, where applicable, and (b) no
Selling Shareholder had any position, office or other material
relationship within the past three years, with us or with any of
our predecessors or affiliates. The number of shares of common
stock shown as beneficially owned before the offering is based on
information furnished to us or otherwise based on information
available to us at the timing of the filing of the registration
statement of which this prospectus forms a part.
Name
of Selling Shareholder |
|
Shares
Beneficially
Owned
Prior to Offering |
|
Shares
to be
Offered |
|
|
Amount
Beneficially
Owned After
Offering % |
Coventry
Enterprises, LLC |
|
|
23,000,000 |
|
|
|
23,000,000 |
|
(1)(2)(3)(4) |
|
|
0 |
(2) |
Notes:
|
(1) |
Beneficial
ownership is determined in accordance with Securities and Exchange
Commission rules and generally includes voting or investment power
with respect to shares of common stock. Shares of common stock
subject to options, warrants and convertible debentures currently
exercisable or convertible, or exercisable or convertible within 60
days, are counted as outstanding. The actual number of shares of
common stock issuable upon the conversion of the convertible
debentures is subject to adjustment depending on, among other
factors, the future market price of our common stock, and could be
materially less or more than the number estimated in the
table. |
|
(2) |
Because
the selling security holder may offer and sell all or only some
portion of the 3,000,000 shares of our common stock being offered
pursuant to this prospectus and may acquire additional shares of
our common stock in the future, we can only estimate the number and
percentage of shares of our common stock that the Selling
Shareholder will hold upon termination of the offering. The column
titled “Amount Beneficially Owned After Offering” assumes that the
Selling Shareholder will sell all of its Shares. |
|
(3) |
Includes
3,000,000 shares of Commitment Stock issued to Coventry on December
9, 2022, but excludes 12,500,000 shares of Common Stock that are to
be returned to the Company upon the Company’s filing of this
prospectus on or before 45 calendar days after the date of the
Purchase Agreement. |
|
(4) |
Includes 20,000,000 shares of Common Stock issuable to Coventry
upon an event of default under the Note. Upon an event of default
under the Note, the outstanding principal and interest thereon may
be converted, at the option of Coventry, into shares of Common
Stock at a conversion price equal to 90% per share of the lowest
per-share trading price during the 20 trading day period before the
conversion.
|
PLAN OF DISTRIBUTION
We
are registering the shares of Common Stock to permit the resale of
those shares of Common Stock under the Securities Act from time to
time after the date of this Prospectus at the discretion of the
holders of such shares of Common Stock. We will not receive any of
the proceeds from the sale by the Selling Shareholder of the Common
Stock. We will bear all fees and expenses incident to our
obligation to register the Common Stock.
The
Selling Shareholder and any of its pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of
its Common Stock on the OTCQB, or any other stock exchange, market,
quotation service or trading facility on which the shares are
traded or in private transactions, provided that all applicable
laws are satisfied. The Selling Shareholder may also sell its
Common Stock directly or through one or more underwriters,
broker-dealers, or agents. If the shares of Common Stock are sold
through underwriters or broker-dealers, the Selling Shareholder
will be responsible for underwriting discounts or commissions or
agent’s commissions. The Common Stock may be sold in one or more
transactions at fixed prices, at prevailing market prices at the
time of the sale, at varying prices determined at the time of sale,
or at negotiated prices. A Selling Shareholder may use any one or
more of the following methods when selling shares:
|
● |
ordinary brokerage
transactions and transactions in which the broker-dealer solicits
purchasers; |
|
|
|
|
● |
block trades in which
the broker-dealer will attempt to sell the shares as agent but may
position and resell a portion of the block as principal to
facilitate the transaction; |
|
|
|
|
● |
purchases by a
broker-dealer as principal and resale by the broker-dealer for its
account; |
|
|
|
|
● |
an exchange distribution
in accordance with the rules of the applicable
exchange; |
|
|
|
|
● |
privately negotiated
transactions; |
|
|
|
|
● |
settlement of short
sales entered into after the effective date of the registration
statement of which this Prospectus is a part; |
|
|
|
|
● |
broker-dealers may agree
with the Selling Shareholder to sell a specified number of such
shares at a stipulated price per share; |
|
|
|
|
● |
through the writing or
settlement of options or other hedging transactions, whether
through an options exchange or otherwise; |
|
|
|
|
● |
a combination of any
such methods of sale; and |
|
|
|
|
● |
any other method
permitted pursuant to applicable law. |
The
Selling Shareholder may also sell shares pursuant to Rule 144 under
the Securities Act, if available, rather than under this
Prospectus.
If
the Selling Shareholder effect such transactions by selling Common
Stock to or through underwriters, broker-dealers, or agents, such
underwriters, broker-dealers, or agents may receive commissions in
the form of discounts, concessions, or commissions from the Selling
Shareholder or commissions from purchasers of the Common Stock for
whom they may act as agent or to whom they may sell as principal
(which discounts, concessions, or commissions as to particular
underwriters, broker-dealers, or agents may be in excess of those
customary in the types of transactions involved). Broker-dealers
engaged by any Selling Shareholder may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the Selling Shareholder (or, if any
broker-dealer acts as agent for the purchaser of shares, from the
purchaser) in amounts to be negotiated, but, except as set forth in
a supplement to this Prospectus, in the case of an agency
transaction not in excess of a customary brokerage commission in
compliance with FINRA Rule 2440; and in the case of a principal
transaction a markup or markdown in compliance with FINRA
IM-2440.
In
connection with sales of Common Stock or interests therein, the
Selling Shareholder may enter into hedging transactions with
broker-dealers or other financial institutions, which may in turn
engage in short sales of the Common Stock in the course of hedging
in positions they assume. The Selling Shareholder may also sell
Common Stock short and deliver Common Stock covered by this
Prospectus to close out its short positions and to return borrowed
shares in connection with such short sales. The Selling Shareholder
may also loan or pledge Common Stock to broker-dealers that in turn
may sell such Common Stock. The Selling Shareholder may also enter
into option or other transactions with broker-dealers or other
financial institutions or the creation of one or more derivative
securities which require the delivery to such broker-dealer or
other financial institution of Common Stock offered by this
Prospectus, which Common Stock such broker-dealer or other
financial institution may resell pursuant to this Prospectus (as
supplemented or amended to reflect such transaction).
The
Selling Shareholder and any broker-dealers or agents that are
involved in selling the Common Stock may be deemed to be
“underwriters” within the meaning of the Securities Act, in
connection with such sales. In such event, any commissions received
by, or any discounts or concessions allowed to, any such
broker-dealer or agent and any profit on the resale of any Shares
purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. At the time a particular
offering of the Common Stock is made, a prospectus supplement, if
required, will be distributed that will set forth the aggregate
amount of Common Stock being offered and the terms of the offering,
including the name or names of any broker-dealers or agents, any
discounts, commissions, and other terms constituting compensation
from the Selling Shareholder and any discounts, commissions, or
concessions allowed or re-allowed or paid to
broker-dealers.
Coventry
has informed us that it does not have any written or oral agreement
or understanding, directly or indirectly, with any person to
distribute the Common Stock.
Because
the Selling Shareholder may be deemed to be an “underwriter” within
the meaning of the Securities Act, it will be subject to the
prospectus delivery requirements of the Securities Act, including
Rule 172 thereunder. Once this registration statement becomes
effective, we intend to file the final prospectus with the SEC in
accordance with SEC Rules 172 and 424. Provided we are not the
subject of any SEC stop orders and we are not subject to any cease
and desist proceedings, the obligation to deliver a final
prospectus to a purchaser will be deemed to have been
met.
There
is no underwriter or coordinating broker acting in connection with
the proposed sale of the resale shares by the Selling
Shareholder.
Under
the securities laws of some states, the Common Stock may be sold in
such states only through registered or licensed brokers or dealers.
In addition, in some states the Common Stock may not be sold unless
such shares have been registered or qualified for sale in such
state, or an exemption from registration or qualification is
available and is complied with.
There
can be no assurance that any Selling Shareholder will sell any or
all of the Common Stock registered pursuant to the registration
statement of which this Prospectus forms a part.
Under
applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the Common Stock may not
simultaneously engage in market making activities with respect to
the Common Stock for the applicable restricted period, as defined
in Regulation M, prior to the commencement of the distribution. In
addition, the Selling Shareholder will be subject to applicable
provisions of the Exchange Act, and the rules and regulations
thereunder, including Regulation M, which may limit the timing of
purchases and sales of Common Stock by the Selling Shareholder or
any other person. All of the foregoing provisions may affect the
marketability of the Common Stock and the ability of any person or
entity to engage in market-making activities with respect to the
Common Stock.
We
will pay all expenses of the registration of the Common Stock,
estimated to be approximately $ in total, including, without
limitation, SEC filing fees, expenses of compliance with state
securities or “blue sky” laws, and legal and accounting fees;
provided, however, that a Selling Shareholder will pay all
underwriting discounts and selling commissions, if any. We will
indemnify the Selling Shareholder against liabilities, including
some liabilities under the Securities Act, in accordance with
applicable registration rights agreements, if any, or the Selling
Shareholder will be entitled to contribution. We may be indemnified
by the Selling Shareholder against civil liabilities, including
liabilities under the Securities Act, that may arise from any
written information furnished to us by the Selling Shareholder
specifically for use in this Prospectus, in accordance with the
related registration rights agreement, or we may be entitled to
contribution.
We
agreed to keep this prospectus effective until the earlier of (i)
the date on which the Common Stock may be resold by the Selling
Shareholder without registration and without the requirement to be
in compliance with Rule 144(c)(1) and otherwise without restriction
or limitation pursuant to Rule 144 or (ii) all of the Common Stock
have been sold pursuant to this Prospectus or Rule 144 under the
Securities Act or any other rule of similar effect.
Once
sold under the registration statement of which this prospectus
forms a part, the Common Stock will be freely tradable in the hands
of persons other than our affiliates.
Market for Common Equity and Related
Stockholder Matters
Market Information
Our
Common Stock is quoted on the OTCQB maintained by OTC Markets
Group, Inc. under the symbol “CLNV.” The OTCQB is a network of
security dealers who buy and sell stock. The dealers are connected
by a computer network that provides information on current “bids”
and “asks”, as well as volume information. There can be infrequent
trading volume, which precipitates wide spreads in the quotes for
our Common Stock, on any given day. On January 18, 2023, the last
reported sale price of our Common Stock on the OTC Market was
$0.074 per share.
The
following table sets forth the range of high and low sales prices
for our Common Stock for each of the periods indicated as reported
by OTC Markets Group, Inc. These quotations reflect inter-dealer
prices, without retail mark-up, mark-down or commission and may not
necessarily represent actual transactions.
|
|
HIGH |
|
LOW |
Year
Ended December 31, 2020 |
First Quarter |
|
$ |
0.11 |
|
|
$ |
0.03 |
|
Second Quarter |
|
$ |
0.36 |
|
|
$ |
0.05 |
|
Third Quarter |
|
$ |
0.29 |
|
|
$ |
0.09 |
|
Fourth Quarter |
|
$ |
0.11 |
|
|
$ |
0.07 |
|
|
|
|
|
|
|
|
|
|
Year Ending December 31, 2021 |
|
|
|
|
|
|
|
|
First Quarter |
|
$ |
0.21 |
|
|
$ |
0.09 |
|
Second Quarter |
|
$ |
0.17 |
|
|
$ |
0.06 |
|
Third Quarter |
|
$ |
0.07 |
|
|
$ |
0.02 |
|
Fourth Quarter |
|
$ |
0.05 |
|
|
$ |
0.02 |
|
|
|
|
|
|
|
|
|
|
Third Quarter Ending September 30, 2022 |
|
|
|
|
|
|
|
|
First Quarter |
|
$ |
0.10 |
|
|
$ |
0.02 |
|
Second Quarter |
|
$ |
0.07 |
|
|
$ |
0.02 |
|
Third Quarter |
|
$ |
0.02 |
|
|
$ |
0.02 |
|
Shareholders
As of
January 18, 2023, we had 160 shareholders of record of our Common
Stock. The number of stockholders of record does not include
beneficial owners of our Common Stock, whose shares are held in the
names of various dealers, clearing agencies, banks, brokers and
other fiduciaries.
Dividends
We
have never declared or paid a cash dividend on our Common Stock. We
do not expect to pay cash dividends on our Common Stock in the
foreseeable future. We currently intend to retain our earnings, if
any, for use in our business. Any dividends declared in the future
will be at the discretion of our Board and subject to any
restrictions that may be imposed by our lenders.
Penny Stock Regulation
Shares
of our Common Stock will probably be subject to rules adopted by
the SEC that regulate broker-dealer practices in connection with
transactions in “penny stocks.” Penny stocks are generally equity
securities with a price of less than $5.00 (other than securities
registered on certain national securities exchanges or quoted on
the Nasdaq, provided that current price and volume information with
respect to transactions in those securities is provided by the
exchange or system). The penny stock rules require a broker-dealer,
prior to a transaction in a penny stock not otherwise exempt from
those rules, deliver a standardized risk disclosure document
prepared by the SEC, which contains the following:
|
● |
a description of the
nature and level of risk in the market for penny stocks in both
public offerings and secondary trading; |
|
● |
a description of the
broker’s or dealer’s duties to the customer and of the rights and
remedies; |
|
● |
a brief, clear,
narrative description of a dealer market, including “bid” and “ask”
prices for penny stocks and the significance of the spread between
the “bid” and “ask” price; |
|
● |
a toll-free telephone
number for inquiries on disciplinary actions; |
|
● |
definitions of
significant terms in the disclosure document or in the conduct of
trading in penny stocks; and |
|
● |
such other information
and is in such form (including language, type, size and format), as
the SEC shall require by rule or regulation. |
Prior
to effecting any transaction in penny stock, the broker-dealer also
must provide the customer the following:
|
1. |
the bid and offer
quotations for the penny stock; |
|
2. |
the compensation of the
broker-dealer and its salesperson in the transaction; |
|
3. |
the number of shares to
which such bid and ask prices apply, or other comparable
information relating to the depth and liquidity of the market for
such stock; and |
|
4. |
monthly account
statements showing the market value of each penny stock held in the
customer’s account. |
In
addition, the penny stock rules require that prior to a transaction
in a penny stock not otherwise exempt from those rules, the
broker-dealer must make a special written determination that the
penny stock is a suitable investment for the purchaser and receive
the purchaser’s written acknowledgment of the receipt of a risk
disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability
statement. These disclosure requirements may have the effect of
reducing the trading activity in the secondary market for a stock
that becomes subject to the penny stock rules. Holders of shares of
our Common Stock may have difficulty selling those shares because
our Common Stock will probably be subject to the penny stock
rules.
Legal Matters
The
validity of the securities offered by this prospectus will be
passed upon for us by Lucosky Brookman LLP.
Experts
The
audited financial statements of Clean Vision Corporation as of
December 31, 2021 and 2020 and for the years then ended, included
in this prospectus and the registration statement have been audited
by Fruci & Associates II, PLLC, Spokane, Washington,
independent registered public accounting firm, as stated in their
as stated in their reports. Such financial statements have been so
included in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
Where You Can Find More
Information
We
have filed with the SEC a registration statement on Form S-1 under
the Securities Act, with respect to the securities offered by this
prospectus. This prospectus, which is part of the registration
statement, omits certain information, exhibits, schedules and
undertakings set forth in the registration statement. For further
information pertaining to us and our Common Stock, reference is
made to the registration statement and the exhibits and schedules
to the registration statement. Statements contained in this
prospectus as to the contents or provisions of any documents
referred to in this prospectus are not necessarily complete, and in
each instance where a copy of the document has been filed as an
exhibit to the registration statement, reference is made to the
exhibit for a more complete description of the matters
involved.
You
may read registration statements and certain other filings made
with the SEC electronically are publicly available through the
SEC’s website at https://www.sec.gov. The registration statement,
including all exhibits and amendments to the registration
statement, has been filed electronically with the SEC. If you do
not have internet access, requests for copies of such documents
should be directed to Dan Bates, the Company’s Chief Executive
Officer, at Clean Vision Corporation, 2711 N Sepulveda Blvd #1051,
Manhattan Beach, CA 90266.
As a
result of this offering, we will become subject to the information
and reporting requirements of the Exchange Act, as amended, and, in
accordance with this law, will file periodic reports, proxy
statements and other information with the SEC. These periodic
reports, proxy statements and other information will be available
at the SEC’s website, www.sec.gov. We also maintain a
website www.cleanvisioncorp.com. Upon the completion of this
offering, you may access these materials free of charge as soon as
reasonably practicable after they are electronically filed with, or
furnished to, the SEC. Information contained on our website is not
a part of this prospectus, and the inclusion of our website address
in this prospectus is an inactive textual reference
only.
Index to Financial
Statements
Audited
Financial Statements

REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Shareholders of Clean Vision
Corp.
Opinion
on the Financial Statements
We
have audited the accompanying consolidated balance sheets of Clean
Vision Corp. and Subsidiaries (“the Company”) as of December 31,
2021 and 2020, and the related consolidated statements of
operations, stockholders’ deficit, and cash flows for each of the
years in the two-year period ended December 31, 2021 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, 2021 and 2020, and the results of its
operations and its cash flows for each of the years in the two-year
period ended December 31, 2021, in conformity with accounting
principles generally accepted in the United States of
America.
Going
Concern
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 an accumulated
deficit and recurring losses from operations. These factors raise
substantial doubt about the Company’s 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.
Critical
Audit Matters
The
critical audit matters communicated below are matters arising from
the current period audit of the financial statements that were
communicated or required to be communicated to the audit committee
and that: (1) relate to accounts or disclosures that are material
to the financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The communication of
critical audit matters does not alter in any way our opinion on the
financial statements, taken as a whole, and we are not, by
communicating the critical audit matters below, providing separate
opinions on the critical audit matters or on the accounts or
disclosures to which they relate.
Disclosure of Related-Party Transactions — Refer to Note 8 to the
financial statements
Critical
Audit Matter Description
The
Company experienced a significant increase in consulting expenses
and transactions during 2021, including those to related parties
and stock issuances. There is judgment regarding valuation of stock
compensation and accuracy of accounts and disclosures in relation
to written terms and verbal adjustments.
How
the Critical Audit Matter Was Addressed in the Audit
Our
audit procedures related to evaluating the Company’s accounting for
related-party transactions included the following, among
others:
|
● |
Confirmation of
consulting contracts, including verbal adjustments to related
agreements. |
|
● |
Independent calculation
of stock compensation to consultants (including related parties)
and comparison to amounts per the Company. |
|
● |
Prepared a summary of
related party transactions based on our audit and compared to
financial statement disclosures to verify accuracy and
completeness. |

We have served as the Company’s auditor since
2020.
Spokane, Washington
March 28, 2022
CLEAN VISION CORPORATION
CONSOLIDATED
BALANCE SHEETS
|
|
December 31,
2021 |
|
December 31,
2020 |
ASSETS |
|
|
|
(Restated) |
Current
Assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
835,657 |
|
|
$ |
740 |
|
Prepaid |
|
|
54,000 |
|
|
|
20,000 |
|
Total
Current Assets |
|
|
889,657 |
|
|
|
20,740 |
|
Property and
equipment |
|
|
150,505 |
|
|
|
— |
|
Total
Assets |
|
$ |
1,040,162 |
|
|
$ |
20,740 |
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY (DEFICIT) |
|
|
|
|
|
|
|
|
Current
Liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
60,248 |
|
|
$ |
21,258 |
|
Accrued
compensation |
|
|
308,500 |
|
|
|
147,500 |
|
Accrued
expenses |
|
|
9,502 |
|
|
|
1,266 |
|
Convertible
notes payable, net of discount of $0 and $535,746,
respectively |
|
|
— |
|
|
|
271,715 |
|
Loan
payable |
|
|
14,500 |
|
|
|
114,500 |
|
Derivative
liability |
|
|
— |
|
|
|
1,075,794 |
|
Advance from
an officer |
|
|
100 |
|
|
|
100 |
|
Liabilities
of discontinued operations |
|
|
67,093 |
|
|
|
67,093 |
|
Total
current liabilities |
|
|
459,943 |
|
|
|
1,699,226 |
|
Total
Liabilities |
|
|
459,943 |
|
|
|
1,699,226 |
|
|
|
|
|
|
|
|
|
|
Commitments
and contingencies |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
Mezzanine
Equity: |
|
|
|
|
|
|
|
|
Series B
preferred stock to be issued |
|
|
625,000 |
|
|
|
25,000 |
|
Total
mezzanine equity |
|
|
625,000 |
|
|
|
25,000 |
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity
(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;
1,850,000 and 2,000,000 shares issued and outstanding,
respectively |
|
|
1,850 |
|
|
|
2,000 |
|
Series B
Preferred stock, $0.001 par value, 2,000,000 shares authorized; no
shares issued and outstanding, respectively |
|
|
— |
|
|
|
— |
|
Series C
Preferred stock, $0.001 par value, 2,000,000 shares authorized;
2,000,000 and no shares issued and outstanding,
respectively |
|
|
2,000 |
|
|
|
— |
|
Common
stock, $0.001 par value, 2,000,000,000 shares authorized,
312,860,376 and 97,208,516 shares issued and outstanding,
respectively |
|
|
312,861 |
|
|
|
97,208 |
|
Common stock
to be issued |
|
|
227,544 |
|
|
|
266,299 |
|
Additional
paid-in capital |
|
|
12,576,049 |
|
|
|
5,061,681 |
|
Accumulated
deficit |
|
|
(13,165,085 |
) |
|
|
(7,130,674 |
) |
Total
stockholders’ equity (deficit) |
|
|
(44,781 |
) |
|
|
(1,703,486 |
) |
Total
liabilities and stockholders’ equity |
|
$ |
1,040,162 |
|
|
$ |
20,740 |
|
The
accompanying notes are an integral part of these consolidated
financial statements.
CLEAN VISION CORPORATION
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
For the Years Ended
December 31, |
|
|
2021 |
|
2020 |
|
|
|
|
(Restated) |
Operating
Expenses: |
|
|
|
|
|
|
|
|
Officer
compensation |
|
$ |
1,315,152 |
|
|
$ |
400,000 |
|
Consulting |
|
|
1,955,213 |
|
|
|
191,500 |
|
Professional
fees |
|
|
413,479 |
|
|
|
79,827 |
|
Payroll
expense |
|
|
45,366 |
|
|
|
— |
|
Director
fees |
|
|
18,500 |
|
|
|
— |
|
General and
administration expenses |
|
|
373,095 |
|
|
|
132,368 |
|
Total
operating expense |
|
|
4,120,805 |
|
|
|
803,695 |
|
|
|
|
|
|
|
|
|
|
Loss from
Operations |
|
|
(4,120,805 |
) |
|
|
(803,695 |
) |
|
|
|
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
|
|
|
|
Interest
expense |
|
|
(1,187,033 |
) |
|
|
(522,981 |
) |
Change in
fair value of derivative |
|
|
(576,573 |
) |
|
|
1,292,687 |
|
Loss on
investment |
|
|
(150,000 |
) |
|
|
|
|
Loss on
issuance of convertible debt |
|
|
— |
|
|
|
(2,006,944 |
) |
Total other
expense |
|
|
(1,913,606 |
) |
|
|
(1,237,238 |
) |
|
|
|
|
|
|
|
|
|
Net loss
before provision for income tax |
|
|
(6,034,411 |
) |
|
|
(2,040,933 |
) |
Provision
for income tax expense |
|
|
— |
|
|
|
— |
|
Net loss
from continuing operations |
|
|
(6,034,411 |
) |
|
|
(2,040,933 |
) |
Net loss
from discontinued operations
before provision for income tax |
|
|
— |
|
|
|
(380,000 |
) |
Provision
for income tax expense from discontinued operations |
|
|
— |
|
|
|
— |
|
Net loss
from discontinued operations |
|
|
— |
|
|
|
(380,000 |
) |
|
|
|
|
|
|
|
|
|