UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 10-K 

 


 

(Mark One)

 

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the year ended: December 31, 2020

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ____________________ to ____________________

 

Commission file number: 000-53557

 

CLEAN COAL TECHNOLOGIES, INC.

(Exact name of small business issuer as specified in its charter)

 

NEVADA

26-1079442

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

 

295 Madison Avenue (12th Floor), New York, NY

10017

(Address of principal executive offices)

(Zip Code)

(646) 710-3549

(Issuer’s telephone number)

 

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

 

Title of each class

Trading Symbol

Name of each exchange on which registered

None

 

N/A

 

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

 

Title of class

Common Stock

 

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES  ☐  NO  ☒

 

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. YES  ☐  NO  ☒

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES  ☒  NO  ☐

 

 

 

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   YES  ☒   NO  ☐

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

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 to not use the extended transition period for complying with any new or revisited financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. YES  ☐  NO  ☒

 

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  ☐

 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES  ☐  NO  ☒

 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second quarter.

 

The market value of the voting and non-voting common stock is $3,832,779 based on 136,884,975 shares held by non-affiliates. The shares were valued at $0.028 per share, that being the closing price on June 30, 2020, the last business day of the registrant’s most recently completed second quarter.

 

As of December 31, 2020 the total number of outstanding common shares was 337,085,679 and as of March 30, 2021 the total number was 356,880,414.

 

Documents Incorporated by Reference

 

None.

 

 

 

 

CLEAN COAL TECHNOLOGIES, INC.

2020 ANNUAL REPORT ON FORM 10-K

 

TABLE OF CONTENTS

 

   

Page

PART I

   

ITEM 1.

BUSINESS

1

ITEM 1A.

RISK FACTORS

11

ITEM 1B.

UNRESOLVED STAFF COMMENTS

14

ITEM 2.

PROPERTIES

14

ITEM 3.

LEGAL PROCEEDINGS

14

   

PART II

   

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

15

ITEM 6.

SELECTED FINANCIAL DATA

16

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

16

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

21

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

22

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

41

ITEM 9A.

CONTROLS AND PROCEDURES

41

   

PART III

   

ITEM 10.

DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

43

ITEM 11.

EXECUTIVE COMPENSATION

46

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

49

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

49

ITEM 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES

51

   

PART IV

   

ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

52

 

 

 

 

 

PART I

 

ITEM 1. BUSINESS

 

Forward-Looking and Cautionary Statements

 

Except for statements of historical fact, certain information in this document contains “forward-looking statements” that involve substantial risks and uncertainties. You can identify these statements by forward-looking words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” “would,” or similar words. The statements that contain these or similar words should be read carefully because these statements discuss our future expectations, contain projections of our future results of operations, or of our financial position, or state other “forward-looking” information. Clean Coal believes that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are not able to accurately predict or control. Further, we urge you to be cautious of the forward-looking statements that are contained in this Annual Report because they involve risks, uncertainties and other factors affecting our technology, planned operations, market growth, products and licenses. These factors may cause our actual results and achievements, whether expressed or implied, to differ materially from the expectations we describe in our forward-looking statements. The occurrence of any of these events could have a material adverse effect on our business, results of operations and financial position.

 

Overview 

 

Over the past decade, Clean Coal Technologies, Inc. has developed processes that address what we believe are the key technology priorities of the global coal industry. We currently have three processes in our intellectual property portfolio:

 

The original process, called Pristine, is designed to remove moisture and volatile matter, rendering a high-efficiency, cleaner thermal coal.  The process has been tested successfully on bituminous and subbituminous coals, and lignite from various parts of the United States and from numerous countries around the world.

 

Our second process, called Pristine-M, is a low-cost coal dehydration technology. In tests, this process has succeeded in drying coal economically and stabilizing it using volatile matter released by the feed coal. Construction of our coal testing plant was completed in December 2015 and was successfully tested through April 2016 at AES Coal Power Utility in Oklahoma. Additional tests commenced and were completed in the fourth quarter of 2017. This test facility has been moved from AES to Wyoming. Working in partnership with the University of Wyoming and our engineers a number of enhancements to the existing test facility were identified. These additional changes are being built and we expect the assembly of the second generation facility to be completed no later than the third quarter of 2021 and to commence testing of international coal in the third and fourth quarter of 2021. These additional changes are expected to further increase the Btu of the processed coal in excess of what the company obtained from the first generation facility and reduce the cost of a commercial unit. It will also enable the automated extraction of by-products from the coal for research and testing.

 

Our third process, called Pristine-SA, is designed to eliminate 100% of the volatile matter in the feed coal and to achieve stable combustion by co-firing it with biomass or natural gas.  The process is expected to produce a cleaner fuel that eliminates the need for emissions scrubbers and the corollary production of toxic coal ash.  We anticipate that treated coal that is co-fired with other energy resources will burn as clean as natural gas.

 

Anticipated Benefits of the Technology:

 

•    Reduction of undesired emissions and greenhouse gases through the removal of compounds that are not required for combustion in conventional boilers.

 

•    Cost savings and environmental impact reduction. Our pre-combustion solution is expected to be significantly less expensive than post-combustion solutions such as emissions scrubbers.  Not only are the latter prohibitively expensive, they produce coal ash containing the “scrubbed” compounds, which is dumped in toxic waste disposal sites where it may pose continuing environmental risk.  Coal treated using our processes may eliminate the need for post-combustion emissions scrubbers and the resulting toxic ash.

 

•    Potential use of compounds removed from treated coal. Volatile matter captured in the Pristine process is removed in the form of hydrocarbon liquids that we believe will be easily blended with crude oil or used as feedstock for various products.  For example, sulfur, which can be removed using the Pristine process, is a basic feedstock for fertilizer.  The harvesting of hydrocarbon liquids from abundant, cheaper coal is a potentially lucrative side benefit of our processes.

 

1

 

Successful testing of the Pristine M process resulted in an increase in BTU of the processed coal and a reduction in moisture content making it less expensive to transport (as moisture has been removed) with the end product being a dust free stabilized enhanced coal which we believe will address the issue of coal dust pollution during transportation.

 

•    Energy Independence.  To the extent that volatile matter is removed from coal, coal’s use as an energy resource is greatly improved, enabling coal-rich countries to move towards energy independence owing to coal’s greater abundance.

 

Development Status: 

 

Pristine process. Pristine process successfully lab tested on small scale and through advanced computer modeling. As at February, 2021, various aspects of the Pristine process has been successfully tested at our test facility at the AES coal Power plant in Oklahoma as part of the overall testing of Pristine M. More detailed testing is expected from the second generation test facility following assembly in Wyoming expected no later than quarter three 2021.

 

Pristine-M. Testing of the Pristine M process on Powder River Basin coal at the AES facility in Oklahoma was completed in December 2017. The Pristine M process was successfully tested and the process, engineering and science were independently proven. The test facility was moved from the AES location to Wyoming where assembly of the second generation test facility has commenced and is expected to be completed no later than Q3 2021 with testing of international coal expected in third and fourth quarter of 2021.

 

Pristine-SA process. Pristine SA process analysis is at a very early stage. Further research and development is expected using the test facility at its permanent location in Wyoming upon assembly of the second generation facility in the fourth quarter of 2021.

 

Business Outlook

 

•    Wyoming New Power, a related party company, has agreed to sign a two million ton per annum license agreement to use Pristine M at a location in Wyoming. They have paid a non-refundable $100,000 deposit on the license agreement. The definitive license agreement is expected to be signed within 30 days of their receipt of a commercial design that they are working on with their EPC contractor. The agreement is expected to be completed in the third quarter of 2021. Wyoming New Power is a Related Party because it is controlled by a party that also controls the entity, which is the major lender and significant stockholder of the Company.

 

•    Jindal Steel & Power is expected to begin discussions with the Company to contract a commercial plant in in the second or third quarter of 2021, subject to a favorable outcome of the testing of its coal at our test facility which is expected to occur immediately following its reassembly in Wyoming. A bespoke commercial facility design will be undertaken after Jindal’s coal has been tested.

 

•    The Company entered into a partnership with the University of Wyoming with the objective of using our suite of technologies to increase the use of and value of Wyoming Powder River Basin coal. The primary focus is on utilizing our technology to extract valuable derivative products from coal. The university spent most of 2018 working with our engineers to streamline our original test facility design in order to optimize the processed coal. The second generation test facility will enable the automatic extraction of byproducts including the first step towards rare earth minerals extraction from coal, which will underpin further research on byproduct extraction. In 2019, the University independently validated the Pristine M technology. As of February 2021, the University has paid a total of approx. $1,300,000 directly to the manufacturer of the Rotary Kiln that was delivered to the company site in Wyoming in June 2020.

 

•    The Company has been engaged with AusTrade (The Australian Trade and Investment Commission) and through that relationship has partnered with three separate universities in Australia. Like the University of Wyoming these Universities have a focus on their local coal both from a beneficiation perspective and also to extract derivative byproducts from coal using our technology.

 

•    The Company met with and has engaged in discussions with the Minister for Coal in India and Coal India Limited, a government-owned coal mining company. As at March 2021, they are awaiting the assembly of the second generation test facility so they can send coal to Wyoming for testing.

 

2

 

•    The company continues negotiations with a number of the senior management of some of the largest Energy companies in India, Russia and Indonesia. As at March 2021, we continue to advance commercial terms with these parties. Upon completion of the reassembly of the test facility in Wyoming arrangements are being made for these companies to send samples of their coal to the facility for testing. This is expected in the third or fourth quarter of 2021.

 

•    Discussions continue with the US DOE and DOD to further our technology to benefit US coal with site visit being scheduled upon test facility assembly.

 

Technology

 

Our original Pristine coal treating process extracts the volatile matter (solidified gases or pollutant material) from a wide variety of coal types by heating the mineral as it transitions through several disparate heat chambers, causing the volatile matter to turn to gas and escape the coal, leaving behind a cleaner-burning fuel source. Historically, the primary technological challenge of extracting this volatile matter has been maintaining the structural and chemical integrity of the carbon, while achieving enough heat to turn the volatile matter into a gaseous state. Heating coal to temperatures well in excess of 700° Fahrenheit is necessary to quickly turn volatile matter gaseous. However, heating coal to these temperatures has generally caused the carbon in the coal to disintegrate into an unusable fine powder (coal dusting). Our patented flow process transitions the coal through several atmospherically independent heat chambers controlled at increasingly higher temperatures. These heat chambers are infused with inert gases, primarily carbon dioxide (CO2), preventing the carbon from combusting. We have identified the optimum combination of atmospheres, levels of inert gases, transport speed, and temperatures necessary to quickly extract and capture volatile matter, while maintaining the structural and chemical integrity of the coal. Using our technology, we are able to capture the volatile gases that escape the coal, and to utilize some of these gases to fuel the process, while others are captured in the form of usable byproducts, to potentially provide an ancillary revenue stream. Depending on the characteristics of the coal being cleaned, the flow processing time is expected to be in the range of 6 to 8 minutes. 

 

Our process derivatives are broadly characterized by the following three elements which vary according to the   characteristics of the feed coal: 

 

A first stream is predominantly water that is extracted from the coal. Although expected to be 100% pure (water removed from coal is condensed from its vapor state), it may contain some contaminants.

 

A second stream, produced in the de-volatizing stage of the process, is the condensed light hydrocarbons gases that we call “coal-derived liquids”, or CDLs. These could prove to be the most valuable component of the process. It is anticipated that the CDLs will resemble a crude oil (probably sweet crude if the sulfur content of the feed coal is low) resulting in a readily-marketable product. In the Pristine-M process, de-volatization is controlled and optimized to meet the needs of drying and stabilizing the coal, minimizing the production of gas or liquid byproducts. 

 

The third stream is the heavy tar-like liquid potentially marketable to the asphalt and coal tar industry.  This stream is entirely absent in the Pristine-M process which is focused only on the task of drying and stabilizing.

 

The Pristine technology has three distinct primary applications: the cleaning of coal for direct use as fuel for power stations and other industrial and commercial applications; the extraction of potentially valuable chemical by-products for commercial sale; and the use of processed coal as a feed stock for gasification and liquefaction (CTG & CTL) projects.

 

Pristine-M De-Watering Process. During the fourth quarter of 2011, the Company filed a provisional patent application for a new technology focused on the de-watering of coal.  The new process, Pristine-M, is unique in that it retains elements of the original process but has discovered a technology that stabilizes the dried coal, rendering it impermeable and easy to transport with low to no risk of spontaneous combustion.  The latter results have proved elusive for the majority of companies that have entered the market with coal de-watering technologies.

 

The Pristine-M process, sharing some of the scientific principles and engineering components that underpin the Pristine process, is also a modular design that includes a section where the coal is partially de-volatized and then coupled to as many drying and stabilization modules as may be required to achieve a client’s desired level of production. Each of the modules is designed to handle 30-tons/hr and, similar to the Pristine process, relies on components that are primarily available off-the-shelf and have already stood the test of time as to their reliability and durability.

 

3

 

Pristine-SA Process. In June 2013, we filed a provisional patent application for a new process to be called Pristine-SA. The new process is designed to produce a coal product that is devoid of all volatiles and comes together with a solution for ensuring efficient and clean combustion on a level with natural gas. Now that the application on the basic concept has been filed, we expect to continue further research and development to address Pristine-SA’s potential application in various fuel and non-fuel product areas.

 

Our technology has been tested and proven under laboratory and pilot scale conditions in Pittsburg, PA, and the results studied by LEIDOS (previously SAIC) as well as certain potential strategic partners as part of their due diligence on CCTI and the CCTI technology.   To date, testing of about 40 coal types from all over the world has been completed.  We have also benchmarked our technology against the Carnegie Mellon simulation model with excellent results. Testing has shown no evidence of coal dusting, self-combustion, moisture re-absorption, or other technical concerns that might hinder commercialization. We have successfully tested Powder River Basin coal at out testing facility at AES Oklahoma. The test facility was moved to Wyoming where assembly completion of the second generation test facility is expected not later than the third quarter of 2021.

 

While we believe that all of our Pristine technologies offer vast potential for commercialization, our market entry strategy right now is focused on the Pristine -M technology that we believe offers an immediate opportunity to monetize our intellectual property. The specific opportunity is in Asia that, at the moment, is focused almost entirely on the need to produce a dry and stable coal to meet the growing need of coal-fired power plants.  Indonesia is currently one of the largest suppliers of thermal coal to India and China, but Indonesian coal suffers from its high moisture content and low calorific content. Since January 2017 we have engaged in advanced discussions with the representatives from the US DOE and also key representatives from Wyoming. As we successfully tested PRB at our test facility at AES it has led to a unique opportunity to upgrade PRB coal and export it through several ports in the US and also from Canadian and Mexican ports.  Since our successful tests at AES coal power utility we believe that the issues currently facing the upgrading of coal and its stabilization have been effectively addressed by the Pristine-M technology and we continue to work with both US government bodies and US producers along with key international energy providers. 

 

Initial designs have been completed for both the Pristine and the Pristine-M processes.  The Pristine design provides for the deployment of standard operational modules, each with annual capacity of 166,000 metric tons, providing the flexibility to be configured in accordance with customers’ individual production capacity requirements. The coal cleaning process will typically be energy self-sufficient, relying upon captured methane and other byproducts to fuel the coal cleaning process. Since 2018 our EPC contractor in conjunction with the University of Wyoming have been working to further enhance the process and update the commercial designs that were previously produced. Following nine months of work with the University of Wyoming and our engineers we have identified changes to the original test facility that is expected to further increase the beneficiated processed coal. These changes have been incorporated in the reassembly of the second generation test facility in Wyoming.

 

Business Activities and Strategy 

 

The Company’s business model at this stage is simple: to license our technology to third parties and exact a license fee, as well as a royalty fee, based on plant production. Over time, as the company builds up equity capital and cash reserves, opportunities to penetrate the coal business at different points of the value chain will be considered.  Among these, direct investments in low-cost reserves, partnerships in mining or industrial projects, or trading may be contemplated.

 

Research and development will be a key focus going forward.  The highest priority will be on the commercialization of our Pristine M process, but there are various other product areas including biomass where our technology may prove relevant.

 

Competitive Strengths 

 

We believe our technology and designs represent the only process that can effectively separate and capture undesired chemical compounds prior to carbon combustion in a commercially viable manner. Our process differs from competing processes through its ability to maintain the structural integrity of coal during the heating process. This is achieved through a unique design that inserts inert gas into the heating chambers, and maintains the inert atmosphere in each chamber. By inserting an inert gas into the chambers, the process allows for rapid heating of the coal and prevents coal combustion and significant coal dusting. Competing technologies have used differing methods of preventing coal combustion and dusting, albeit with limited success. Some of the particular strengths of our process include: 

 

Pollution reduction: By heating coal prior to combustion, we are able to extract volatile matter (pollutants in the form of solidified gases) from the coal in a controlled environment, transforming coal with high levels of impurities, contaminants and other polluting elements into a more efficient, cleaner source of high energy, lower polluting fuel. Testing has demonstrated that our process removes a substantial percentage of harmful pollutants, including mercury. The processed end product is dust free so concerns about coal dust loss during transportation is eliminated.

 

4

 

Lower cost of operation: We believe that our process will be a relatively low-cost solution to the reduction of pollution at coal-fired power facilities. Our engineering consulting firm, believes that our coal cleaning process will typically not require any external energy and can be fully fueled by the methane and other byproducts that the process captures from raw coal. This effective use of byproducts contrasts markedly with emissions scrubbers that generally use a portion of the generated power and have high initial capital and maintenance costs. In addition, our process may have certain advantages in terms of the pollutants removed that can be utilized in a complementary manner with other processes including scrubbers.

 

Increased flexibility in feedstock: Our process eliminates both the moisture and volatile matter in raw coal, increasing the heat capacity of standard sub-bituminous low-rank raw coal from approximately 8,800 BTUs to between 11,000-12,000 BTUs. We believe the process can increase heat capacity of lignite raw coal ranging from 4,000-7,000 BTUs to a range of 9,000-10,000 BTUs. As the worldwide supply of high-BTU bituminous coal dwindles, our technology may enable coal-fired plants to effectively utilize the abundance of low-rank coal. Results will differ depending on the coal being processed.

 

Favorable price arbitrage: Low-rank coal in Asia with a heat content of 7,000 – 9,000 BTUs currently sells for at a significant discount to high-BTU bituminous coal with a heat capacity of 10,000+ BTUs, as can be observed in various international price indices, among them, the Baltic Dry Bulk Index. Our process essentially transforms low-grade coal into bituminous coal at a direct operating cost of an estimated $3.50 per ton, capturing the value of higher-grade coal prices.

 

Potential tax benefits: This will be clearer under the new US Administration and the new laws being passed

 

Competition

 

At this filing, the coal upgrade industry globally, excluding coking processes, remains in its infancy.  The penetration rate of technologies focused on de-watering coal is well under 1% based on annual production of thermal coals measured in the billions of tons.  There are numerous competitors in the pre-combustion, upgrade segment but many of these have failed, are inactive, or in pilot mode.  The Company believes that given its successful testing of its Pristine M process it will be able to enjoy early-mover advantage in 2021.

 

The difficulties experienced by the Company’s competitors fall into three categories: the technologies have failed to scale up; they are expensive and, therefore, challenge the economics of the process; or they have failed to produce a stable end product, that is, a product that does not reabsorb moisture and is safe to transport with minimal risk of spontaneous combustion. From a scale-up perspective, CCTI’s Pristine M technology faces a much smaller challenge as it is a modular system built around well-known and proven components. From our 2-ton per hour prototype to our 30-ton per hour standard commercial module, initial scale-up is a 1:15 proposition that is considered very modest from an engineering perspective.  Scalability issues are mitigated by the modular nature of the industrial design that, once the basic module is operational, further scale up is achieved by adding identical modules. We consider it a major competitive advantage that our clients who build large capacity, single-unit plants based on what are likely to be new and untested components.

 

From a plant reliability and maintenance perspective, our modular design brings many advantages that the Company believes enhance the competitiveness of its offering.  The major benefits are the ability to carry on maintenance on one module while the other modules continue to operate. Down-time can be minimized. Similarly, if a component breaks down, it does not incapacitate the entire plant. It is localized to a single module.

 

From a planning perspective, mine operators would be able to expand their capacity piecemeal rather than in step-wise fashion by large-scale increments.  This mitigates much of the financial risk normally attendant on large-scale plant expansions and, over time, our modular design may prove to be one of the most significant competitive advantages of our process.

 

Another significant competitive advantage of either of the Company’s processes is that these do not require crushing of the coal, thereby minimizing if not entirely eliminating the need for costly briquetting.  CCTI’s plant economics are compelling as they derive much of the process heat from the feed coal itself, rendering the processes very energy efficient.  The processes require a modest amount of electric power and a small number of operatives.  Consequently, our operating costs are very competitive.

 

5

 

The Pristine process not only removes the moisture, but also removes undesired volatiles which we capture as a chemical “soup” that may be further refined by us, or sold directly to chemical manufacturers, or refineries as a complementary revenue source. The Pristine process addresses a very different market need than the Pristine M Technology and therefore enables CCTI to offer a more diverse product slate to our potential customers than most, if not all, our existing competitor base.

 

We consider our most direct competition in the reduction of coal emissions comes from companies offering pre-combustion cleaning designed to remove impurities.  However, post-combustion filtering or “scrubbers” designed to filter released gases are a clear alternative for coal-fired power producers.  We are not in competition with suppliers of emissions scrubbers, except to the extent that that burning a cleaner fuel is more economical than post-combustion solutions.

 

The best known present and past competitors in the pre-combustion area include Evergreen Energy, Inc. (“Evergreen”), Kobe Steel (“Kobe”), GTL Energy (“GTL”) and White Energy (“White Energy”), both the latter of which are Australian companies. Neither Encoal or SynCoal are currently operational having experienced serious problem in the area of product stability. There are operators that utilize older, less efficient technologies such as the Fleissner process, but these are not as effective the newer technologies.  Evergreen, based in Denver, Colorado, developed a technology primarily focused on reducing the moisture in raw coal to increase its heating capacity. The company declared bankruptcy in 2012 after suffering problems having to do with the stability of the end product. CoalTek, based in Tucker, Georgia, claims its patent-pending process uses electromagnetic energy to reduce contaminants and moisture in coal prior to combustion. While public information is limited, we believe the amount of energy necessary to run the electromagnetic process may offset any economic benefits of the upgraded coal. The Australian processes use a combination of heat and compaction to remove moisture from coal. The company is not in commercial mode.  White Energy claims that compaction generates close bonding between the dried coal particles to form a high density, higher energy content briquette. Energy requirements for heating coal an operating a pelletizer are typically large but no basis or explanation is provided for the favorable cost numbers published by White Energy. During 2012, White Energy was forced to abandon further investment in its flagship 1 million ton facility in Indonesia that suffered serious operational problems. The Kobe process is proven.  However, the plant is complex and, consequently, very expensive.  This was indicated by the fact a one significant plant in Indonesia shuttered a Kobe plant during 2012 owing to unfavorable process economics.

 

Indirect competition comes from alternative low-pollution energy sources, including: wind, bio-fuels and solar; all of which need additional technological advancements, cost reduction and universal acceptance to be able to produce power at the scale of coal-fueled plants, which today produce over 40% of world’s electricity according to U.S. Department of Energy.

 

Patents

 

Our technology is the subject of U.S. patent #6,447,559, “Treatment of Coal” which was filed on November 3, 2000 based on provisional application 60/163,566 filed November 5, 1999, and issued in 2002. The patent expires in 2020. We also filed PCT international patent application PCT/US00/41772 based on this U.S. patent on November 2, 2000, and, in accordance with this, patents have been applied for in all countries where we believe our technology has application. On February 1, 2011 CCTI was awarded a continuation patent US #7,879,117.

 

On April 15, 2008, the Company filed a PCT International application PCT/US2008/060364based on our revised design, and national patent applications based on this PCT International application have been filed in India, China, Indonesia, Australia, South Africa, Colombia, Brazil, Chile, and the Republic of Mongolia. These were filed by our patent attorneys Nixon &Vanderhye P.C. at a cost of $33,000. On October 15, 2010, the Company filed the PCT US national phase application for its revised design as contained in PCT/US2008/060364.

 

The April 15, 2008 application details the process of using byproducts to power the process, and details a simpler, vertical factory design with proprietary seals that help preserve the atmosphere of each chamber, compared to a horizontal design in the original filing. This application goes into great detail regarding the byproducts of the coal and their capture.

 

The patent details a process wherein coal is heated to different temperatures in various chambers with controlled low-oxygen atmospheres. There are seals between these chambers, serving to maintain the heat and gas content in each chamber. The invention notes the controlled de-volatilization and removal of moisture and organic volatiles, while maintaining the structural integrity of the coal and reducing the level of disintegration into powder form. The invention also notes the significantly decreased time in treating coal as compared to alternative approaches, most of which focus on moisture removal as a means of increasing calorific or BTU value.

 

6

 

In September, 2011, the Company filed provisional patent application Serial No. 61/531,791 that seeks to protect a new invention for the reduction of moisture inherent in coal, and stabilization of the final product.  A corresponding PCT International application PCT/US2012/054160 was filed in September, 2012 and counterpart national patent applications have been filed in US, EP, Eurasia, Australia, Canada, India, Philippines, South Africa, Colombia, Mexico, Panama, Japan, South Korea, Indonesia Mongolia, Malaysia, Sri Lanka. Testing to date indicates that our stabilized product will be resistant to moisture re-absorption and safe to handle, even over long distances.  The new invention draws from the scientific knowledge embedded in our existing patent, but it is an entirely new concept that is easily differentiated from the offerings of our competitors.  The most novel aspect relates to the stabilization of the end product and to the ability to enhance the heat content of the coal beyond what would be normally achieved by moisture removal alone.  The product is banded Pristine–M.

 

From a commercial perspective, Pristine-M is proving to be attractive to clients not only because of its characteristics, but because the industrial design is simple, elegant and inexpensive.  We estimate that operating costs based on US labor rates is $3.50 per to which includes $2.00 per ton on-going maintenance.  The cost of the commercial plant is expected to be highly competitive, based on preliminary estimates. Changes being incorporated to the second generation test facility is expected to reduce the capital cost of a commercial unit.

 

A new provisional patent application Serial No. 61/829,006 was filed by the Company in May, 2013 directed to the treatment of coal. Counterpart foreign patents has been filed based on that technology. In the second quarter of 2013, we filed a provisional patent application for a new process to be called Pristine-SA. The new process is designed to produce a coal product that is devoid of all volatiles and comes together with a solution for ensuring efficient and clean combustion on a level with natural gas. Now that the application on the basic concept has been filed, we expect to continue further research and development to address Pristine-SA’s potential application in various fuel and non-fuel product areas.

 

We expect to file for additional patents as we continue the commercialization of our technology and factory design. We intend to continue to seek worldwide protection for all our technology. The following table provides a summary of our technology to date.

 

In 2019, the company was successfully awarded full patents for the following countries; Indonesia, Philippines, Republic of Korea, United States, New Zealand and Hong Kong. The duration of most patents is 20 years from date of application.

 

COUNTRY

APPLN NO

APPLN DATE

GRANT DATE

STATUS

CHIN - (China P.R.)

00818174.8

11/02/2000

02/03/2016

G - (Granted)

USA - (United States)

09/704,738

11/03/2000

09/10/2002

G - (Granted)

CANA - (Canada)

2,389,970

11/02/2000

03/27/2012

G - (Granted)

EPC - (European Patent Convention)

00992027.3

11/02/2000

10/02/2013

G - (Granted)

INDO - (Indonesia)

W-00200201274

11/02/2000

 

F - (Pending)

USA - (United States)

11/344,179

02/01/2006

02/01/2011

G - (Granted)

INDI - (India)

7426/DELNP/2010

04/15/2008

02/15/2016

G - (Granted)

CHIN - (China P.R.)

200880129212.2

04/15/2008

12/25/2013

G - (Granted)

INDO - (Indonesia)

W00201003932

04/15/2008

 

F - (Pending)

SAFR - (South Africa)

2010/07455

04/15/2008

04/25/2012

G - (Granted)

COLO - (Colombia)

10-142509

04/15/2008

11/24/2017

G - (Granted)

BRAZ - (Brazil)

PI0822577-0

04/15/2008

08/15/2017

G - (Granted)

CHIL - (Chile)

01145-2010

10/19/2010

01/05/2017

G - (Granted)

MONG - (Mongolia)

4510

04/15/2008

10/25/2010

G - (Granted)

CHIN - (China P.R.)

201110142494.3

11/02/2000

10/14/2015

G - (Granted)

HONG - (Hong Kong)

11110274.3

09/29/2011

08/15/2014

G - (Granted)

 

7

 

HONG - (Hong Kong)

12102379.3

03/08/2012

10/21/2016

G - (Granted)

EPC - (European Patent Convention)

13153292.1

01/30/2013

 

F - (Pending)

ALBA - (Albania)

AL//P/2013/0342

11/02/2000

10/02/2013

G - (Granted)

ATRA - (Austria)

00992027.3

11/02/2000

10/02/2013

G - (Granted)

CYPR - (Cyprus)

CY20131101169

11/02/2000

10/02/2013

G - (Granted)

GERM - (Germany)

00992027.3

11/02/2000

10/02/2013

G - (Granted)

SPAI - (Spain)

00992027.3

11/02/2000

10/02/2013

G - (Granted)

GBRI - (Great Britain)

00992027.3

11/02/2000

10/02/2013

G - (Granted)

GREC - (Greece)

00992027.3

11/02/2000

10/02/2013

G - (Granted)

IREL - (Ireland)

00992027.3

11/02/2000

10/02/2013

G - (Granted)

ITAL - (Italy)

502013902221416

11/02/2000

10/02/2013

G - (Granted)

LATV - (Latvia)

00992027.3

11/02/2000

10/02/2013

G - (Granted)

MACE - (Macedonia)

00992027.3

11/02/2000

10/02/2013

G - (Granted)

PORT - (Portugal)

00992027.3

11/02/2000

10/02/2013

G - (Granted)

ROMA - (Romania)

00992027.3

11/02/2000

10/02/2013

G - (Granted)

SWED - (Sweden)

00992027.3

11/02/2000

10/02/2013

G - (Granted)

SLOV - (Slovenia)

00992027.3

11/02/2000

10/02/2013

G - (Granted)

TURK - (Turkey)

00992027.3

11/02/2000

10/02/2013

G - (Granted)

USA - (United States)

14/282,558

05/20/2014

10/25/2016

G - (Granted)

EPC - (European Patent Convention)

12845210.9

09/07/2012

 

F - (Pending)

EURA - (Eurasian Patent Convention)

201490565

09/07/2012

07/31/2017

G - (Granted)

ASTL - (Australia)

2012333101

09/07/2012

10/27/2016

G - (Granted)

CANA - (Canada)

2,848,068

09/07/2012

 

F - (Pending)

INDI - (India)

1722/DELNP/2014

09/07/2012

 

F - (Pending)

PHIL - (Philippines)

1-2014-500512

09/07/2012

09/16/2019

G - (Granted)

USA - (United States)

14/343,568

09/07/2011

12/31/2019

G - (Granted)

SAFR - (South Africa)

2014/02154

09/07/2012

06/28/2017

G - (Granted)

COLO - (Colombia)

14068729

09/07/2012

11/23/2015

G - (Granted)

MEXI - (Mexico)

MX/a/2014/002717

09/07/2012

10/18/2018

G - (Granted)

PANA - (Panama)

90134-01

09/07/2012

 

F - (Pending)

JAPA - (Japan)

2014-529896

09/07/2012

12/05/2017

G - (Granted)

KORS - (Republic of Korea)

10-2014-7008281

09/07/2012

4/05/2019

G - (Granted)

INDO - (Indonesia)

P00201401962

09/07/2012

10/30/2019

G - (Granted)

MONG - (Mongolia)

5304

03/25/2014

04/09/2015

G - (Granted)

MAYS - (Malaysia)

PI2014000646

09/07/2012

 

F - (Pending)

SRIL - (Sri Lanka)

17613

09/07/2012

02/26/2015

G - (Granted)

AU – (Australia)

2018282423

12/20/2018

 

F - (Pending)

HONG - (Hong Kong)

15100135.9

01/07/2015

08/15/2019

G - (Granted)

ASTL - (Australia)

2015202493

05/08/2015

09/14/2017

G - (Granted)

USA - (United States)

14/891,893

05/30/2014

 

F - (Pending)

ASTL - (Australia)

2014273996

05/30/2014

02/14/2019

G - (Granted)

CANA - (Canada)

2,912,824

05/30/2014

 

F - (Pending)

CHIN - (China P.R.)

201480030985.0

05/30/2014

 

F - (Pending)

 

8

 

COLO - (Colombia)

15-304594

05/30/2014

 

F - (Pending)

EPC - (European Patent Convention)

14803703.9

05/30/2014

 

F - (Pending)

HONG - (Hong Kong)

16112584.9

11/02/2016

 

F - (Pending)

INDI - (India)

11109/DELNP/2015

05/30/2014

 

F - (Pending)

INDO - (Indonesia)

P00201508659

05/30/2014

10/30/2019

G - (Granted)

JAPA - (Japan)

2016-517043

05/30/2014

11/30/2018

G - (Granted)

NEWZ - (New Zealand)

714208

05/30/2014

10/01/2019

G - (Granted)

RUSS - (Russian Federation)

2015155730

05/30/2014

04/10/2018

G - (Granted)

SAFR - (South Africa)

2015/08515

05/30/2014

 

F - (Pending)

KORS - (Republic of Korea)

10-2015-7037018

05/30/2014

 

G - (Granted)

CHIN - (China P.R.)

201610015312.9

01/11/2016

04/10/2018

G - (Granted)

INDI - (India)

201618002729

01/25/2016

 

F - (Pending)

USA - (United States)

15/297,210

10/19/2016

 

F - (Pending)

HONG - (Hong Kong)

16113567.8

11/29/2016

 

F - (Pending)

 

Governmental Regulations

 

Environmental Regulation Affecting our Potential Market

 

We believe that under the Biden administration legislation and regulations will have a negative impact on fossil fuel-fired, and specifically coal-fired, power generating facilities nationally and internationally. According to the U.S. Environmental Protection Agency, or EPA, power generation emits substantial levels of sulfur dioxide, nitrogen oxides, mercury and carbon dioxide into the environment. Regulation of these emissions affected the potential market for coal processed using our technology by imposing limits and caps on fossil fuel emissions. The most significant, existing national legislation and regulations affecting our potential market include the Clean Air Act, the Clean Air Interstate Rule and the Clean Air Mercury Rule, which are described further below.

 

Environmental Regulation Affecting the Construction and Operation of Plants Using our Technology 

 

In the United States, future production plants using our technology will require numerous permits, approvals and certificates from appropriate federal, state and local governmental agencies before construction of each facility can begin and will be required to comply with applicable environmental laws and regulations (including obtaining operating permits) once facilities begin production. The most significant types of permits that are typically required for commercial production facilities include an operating and construction permit under the Clean Air Act, a wastewater discharge permit under the Clean Water Act, and a treatment, storage and disposal permit under the Resource Conservation and Recovery Act. Some federal programs have delegated regulatory authority to the states and, as a result, facilities may be required to secure state permits. Finally, the construction of new facilities may require review under the National Environmental Policy Act, or a state equivalent, which requires analysis of environmental impacts and, potentially, the implementation of measures to avoid or minimize these environmental impacts. We are working closely with Wyoming to assess all permitting requirements.

 

Any international plants will also be subject to various permitting and operational regulations specific to each country. International initiatives, such as the Kyoto Protocol/Copenhagen Accord, are expected to create increasing pressures on the electric power generation industry on a world-wide basis to reduce emissions of various pollutants, which management expects will create additional demand for our technology. 

 

Research and Development

 

In association with our engineering consultants and the University of Wyoming we have identified a number of changes to the original test facility.  While our budget does not currently allow us to allocate a specific funding for Research and Development (“R&D”), we will incorporate these changes to the assembly of the second generation test facility in Wyoming in the third quarter of 2021. During 2011 we invented the new Pristine M technology which following its successful testing in 2016 and 2017 we believe has already put us at the forefront of the global moisture removal technologies. The second generation test facility is expected to enable the extraction of coal by-products and potentially Rare Earth Minerals for testing and research in partnership with the University of Wyoming.

 

9

 

In the future, we anticipate a growing R&D budget that seeks to fully develop the potential of our three main processes. We will continue to evaluate our progress in new and existing technologies and will seek to fund additional needs as they arise.

 

Employees

 

As of December 31, 2020, we had two full-time executives, President and CEO Robin Eves, Chief Operations Officer and Chief Financial Officer, Aiden Neary, who both have written employment agreements. Messrs. Eves and Neary received no compensation for their participation on the Board of Directors.

 

The terms of the agreements described above were negotiated by and between the individuals and our Board of Directors based on the qualifications and requirements of each individual and the needs of the Company; however, the negotiations may not be deemed to have been at arm’s length.

 

 

 

10

 

ITEM 1A. RISK FACTORS

 

We have limited licensing revenues to date and we have made no provision for any contingency, unexpected expenses or increases in costs that may arise.

 

We have received only limited licensing revenues from operations to date. We have generated operational funding in fiscal 2020 from private debt and equity offerings to use for operating expenses or research and development. Since inception, we have been able to cover our operating losses from debt and equity financing. These sources of funds may not be available to cover future operating losses. If we are not able to obtain adequate sources of funds to operate our business we may not be able to continue as a going concern.

 

Our business strategy and plans could be adversely affected in the event we need additional financing and are unable to obtain such funding when needed. It is possible that our available funds may not be sufficient to meet our operating expenses, development plans, and capital expenditures for the next twelve months. Insufficient funds may prevent us from implementing our business strategy or may require us to delay, scale back or eliminate certain opportunities for the commercialization of our technology. If we cannot obtain necessary funding, then we may be forced to cease operations.

 

We may experience delays in resolving unexpected technical issues arising from the design of commercial units that will increase development costs and make the economics unattractive.

 

As we develop, refine and implement our technology on a commercial basis, we may have to solve technical, manufacturing and/or equipment-related issues. Some of these issues are ones that we cannot anticipate because the technology we are developing is new. If we must revise existing manufacturing processes or order specialized equipment to address a particular issue, we may not meet our projected timetable for bringing commercial operations on line. Such delays may interfere with our projected operating schedules, delay our receipt of licensing and royalty revenues from operations and decrease royalties from operations. Enhanced commercial designs are underway.

 

The market in which we are attempting to sell our technology is highly competitive and may attract significant additional research and development in coming years.

 

The market for our technology may become highly competitive on a global basis, with a number of competitors gaining significantly greater resources and greater market share than us. Because of greater resources and more widely accepted brand names, many of our competitors may be able to adapt more quickly to changes in the markets we have targeted or devote greater resources to the development and sale of new technology products. Our ability to compete is dependent on our emerging technology that may take some time to develop market acceptance. To improve our competitive position, we may need to make significant ongoing investments in service and support, marketing, sales, research and development and intellectual property protection. We may not have sufficient resources to continue to make such investments or to secure a competitive position within the market we target.

 

Our business depends on the protection of our patents and other intellectual property and may suffer if we are unable to adequately protect such intellectual property.

 

Our success and ability to compete are substantially dependent upon our intellectual property. We rely on patent laws, trade secret protection and confidentiality or license agreements with our employees, consultants, strategic partners and others to protect our intellectual property rights. However, the steps we take to protect our intellectual property rights may be inadequate. There are events that are outside of our control that pose a threat to our intellectual property rights as well as to our products and services. For example, effective intellectual property protection may not be available in every country in which we license our technology. Also, the efforts we have taken to protect our proprietary rights may not be sufficient or effective. Any impairment of our intellectual property rights could harm our business and our ability to compete. Also, protecting our intellectual property rights is costly and time consuming. Any increase in the unauthorized use of our intellectual property could make it more expensive to do business and harm our operating results. In addition, other parties may independently develop similar or competing technologies designed around any patents that may be issued to us. 

 

11

 

We have been granted several global patents in 2018 and have several patents applications pending as noted in the table above. Our ability to license our technology is substantially dependent on the validity and enforcement of these patents and patents pending. We cannot assure you that our patents will not be invalidated, circumvented or challenged, that patents will be issued for our patents pending, that the rights granted under the patents will provide us competitive advantages or that our current and future patent applications will be granted.

 

Third parties may invalidate our patents.

 

Third parties may seek to challenge, invalidate, circumvent or render unenforceable any patents or proprietary rights owned by or licensed to us based on, among other things:

 

•    subsequently discovered prior art;

 

•    lack of entitlement to the priority of an earlier, related application; or

 

•    failure to comply with the written description, best mode, enablement or other applicable requirements.

 

United States patent law requires that a patent must disclose the “best mode” of creating and using the invention covered by a patent. If the inventor of a patent knows of a better way, or “best mode,” to create the invention and fails to disclose it, that failure could result in the loss of patent rights. Our decision to protect certain elements of our proprietary technologies as trade secrets and to not disclose such technologies in patent applications, may serve as a basis for third parties to challenge and ultimately invalidate certain of our related patents based on a failure to disclose the best mode of creating and using the invention claimed in the applicable patent. If a third party is successful in challenging the validity of our patents, our inability to enforce our intellectual property rights could seriously harm our business.

 

We may be liable for infringing the intellectual property rights of others.

 

Our technology may be the subject of claims of intellectual property infringement in the future. Our technology may not be able to withstand any third-party claims or rights against their use. Any intellectual property claims, with or without merit, could be time-consuming, expensive to litigate or settle, could divert resources and attention and could require us to obtain a license to use the intellectual property of third parties. We may be unable to obtain licenses from these third parties on favorable terms, if at all. Even if a license is available, we may have to pay substantial royalties to obtain it. If we cannot defend such claims or obtain necessary licenses on reasonable terms, we may be precluded from offering most or all of technology and our business and results of operations will be adversely affected.

 

Our ability to execute our business plan would be harmed if we are unable to retain or attract key personnel.

 

Our technology is being marketed by a small number of the members of our management. Our technology is being developed and refined by a small number of technical consultants. Our future success depends, to a significant extent, upon our ability to retain and attract the services of these and other key personnel. The loss of the services of one or more members of our management team or our technical consultants could hinder our ability to effectively manage our business and implement our growth strategies. Finding suitable replacements could be difficult, and competition for such personnel of similar experience is intense. We do not carry key person insurance for our officers.

 

Overseas development of our business is subject to international risks, which could adversely affect our ability to license profitable overseas plants.

 

We believe a significant portion of the growth opportunity for our business lies outside the United States. Doing business in foreign countries may expose us to many risks that are not present domestically. We lack significant experience in dealing with such risks, including political, military, privatization, technology piracy, currency exchange and repatriation risks, and higher credit risks associated with customers. In addition, it may be more difficult for us to enforce legal obligations in foreign countries, and we may be at a disadvantage in any legal proceeding within the local jurisdiction. Local laws may also limit our ability to hold a majority interest in the projects that we develop. The Company has yet to establish any representation offices outside the United States.

 

12

 

We do not know if coal processed using our technology is commercially viable.

 

We do not yet know whether coal processed using our technology can be produced and sold on a commercial basis in a cost effective manner after taking into account the cost of the feedstock, processing costs, license and royalty fees and the costs of transportation. Because we have not experienced any full scale commercial operations, we have not yet developed a guaranteed efficient cost structure. Initial indications show commercial viability. We are currently using the estimates for anticipated pricing and costs, as well as the qualities of the coal processed in the laboratory and our test facility at AES setting to make such estimates. We may experience technical problems that could make the processed coal more expensive than anticipated. Failure to address both known and unforeseen technical challenges may materially and adversely affect our business, results of operations and financial condition. Initial indications based on actual test results show a positive impact on the quality of the processed coal and based on current prices appear economically attractive.

 

We have experienced large net losses, have little liquidity and need to obtain funds for operations or we may not be able to continue.

 

We have incurred net losses since inception. The net losses to date include large non-cash expenses recorded for share-based compensation for consultants and officer compensation. However, in addition to the non-cash expenses, we had other operating expenses, funded in large part through loans from existing shareholders. In order to meet our current operating budget and anticipated contractual obligations, we estimate that we will need an additional $6,000,000 for 2021 based on our current contractual obligations. At December 31, 2020, we had total liabilities of $23,524,115 and cash of $4,203. If we cannot obtain adequate financing from new funding sources, we will be unable to continue operations or meet our contractual obligations.

 

Our use of equity as an alternative to cash compensation may cause excessive dilution for our current shareholders.

 

Due to shortage of operating funds and low liquidity, we have issued shares as compensation for services, including board and officer compensation as well as compensation for outside consultants and other services. This form of compensation has enabled us to obtain services that would not otherwise have been available to us but it has resulted in dilution to our shareholders. Unless we are able to obtain adequate financing in the immediate future, we may be forced to continue to obtain services through the issuance of shares and warrants, resulting in additional dilution to shareholders and potentially adversely affecting any return on investment.

 

Due to the uncertain commercial acceptance of coal processed using our technology we may not be able to realize significant licensing revenues.

 

While we strongly believe that a commercial market is developing both domestically and internationally for cleaner coal products such as coal processed using our technology, we may face the following risks due to the developing market for cleaner coal technology:

 

-     limited pricing information;

-     changes in the price differential between low- and high-BTU coal;

-     unknown costs and methods of transportation to bring processed coal to market;

-     alternative fuel supplies available at a lower price;

-     the cost and availability of emissions-reducing equipment or competing technologies; failure of governments to implement and enforce new environmental standards; and

-     a decline in energy prices which could make processed coal less price competitive.

 

If we are unable to develop markets for our processed coal, our ability to generate revenues and profits will be negatively impacted.

 

If we are unable to successfully construct and commercialize production plants, our ability to generate profits from our technology will be impaired.

 

Our future success depends on our ability to secure partners to locate, develop and construct future commercial production plants and operate them at a profit. A number of different variables, risks and uncertainties affect such commercialization including:

 

-     the complex, lengthy and costly regulatory permit and approval process;

-     potential local opposition to development of projects, which can increase cost and delay timelines;

 

13

 

-     increases in construction costs such as for contractors, workers and raw materials;

-     transportation costs and availability of transportation;

-     the inability to acquire adequate amounts of low rank feedstock coal at forecasted prices to meet projected goals;

-     availability of suitable consumers of chemical by-product produced by our process;

-     engineering, operational and technical difficulties; and

-     possible price fluctuations of low-Btu coal which could impact profitability.

 

If we are unable to successfully address these risks, our results from operations, financial condition and cash flows may be adversely affected.

 

Future changes in the law may adversely affect our ability to sell our products and services.

 

A significant factor in expanding the potential U.S. market for coal processed using our technology is the numerous federal, state and local environmental regulations, which provide various air emission requirements for power generating facilities and industrial coal users. The Trump Administration revoked a number of regulations and restrictions which had an adverse impact on the market for our products and services, however, under the current Biden Administration it remains unclear what regulations will be re-imposed.

 

Covid-19 had a negative impact on our funding ability through 2020 . There is no assurance that future funding requirements will not be impacted by the continuation of this pandemic.

 

ITEM 1B. UNRESOLVED STAFF COMMENTS

 

None.

 

ITEM 2. PROPERTIES

 

We have a leased satellite office at 295 Madison Avenue, New York, NY 10017 with a monthly cost of $200 per month. We lease the land at our test facility in Gillette, Wyoming. It is a three year lease at $1,000 per month. The Company paid the three year lease payment of $36,000 in advance. The lease expires in April 2021. The company is expected to renew the lease for three years under the same terms and conditions.

 

ITEM 3. LEGAL PROCEEDINGS

 

None.

 

14

 

PART II

 

ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES

 

Market Information

 

Our common stock is quoted on the OTC Markets Group website under the symbol CCTC since October 12, 2007. The following table sets forth the high and low bid prices for the Company’s common stock for the periods indicated. The prices below reflect inter-dealer quotations, without retail mark-up, mark-down or commissions and may not represent actual transactions.

 

Quarter Ended

 

Low

   

High

 

31-Dec-20

  $ 0.01     $ 0.02  

30-Sep-20

  $ 0.01     $ 0.05  

30-Jun-20

  $ 0.03     $ 0.07  

31-Mar-20

  $ 0.06     $ 0.07  

31-Dec-19

  $ 0.06     $ 0.08  

30-Sep-19

  $ 0.07     $ 0.12  

30-Jun-19

  $ 0.07     $ 0.13  

31-Mar-19

  $ 0.08     $ 0.10  

 

The closing price of our common stock as quoted on the OTC Markets on March 01, 2021 was $0.013 per share. As of March 09, 2021, there were approximately 2,205 holders of record of our common stock and 356,880,414 shares of common stock outstanding based on information provided by our transfer agent, Worldwide Stock Transfer, LLC.

 

Dividends

 

We have not paid any dividends on our common stock since our inception and do not anticipate paying any dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of our Board of Directors and will be dependent upon then-existing conditions, including our financial condition, results of operations, contractual restrictions, capital requirements, business prospects and other factors our Board of Directors deems relevant.

 

Issuer Purchases of Equity Securities

 

During the year ended December 31, 2020, we did not purchase any of our own equity securities.

 

Recent Issues and Sales of Unregistered Securities

 

The total number of common shares issued and outstanding as of December 31, 2020 was 356,880,414.

 

The above securities were issued in reliance on the exemption from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended, and the regulations promulgated thereunder. The issuances were for investment received, the transactions were privately negotiated and none involved any kind of public solicitation.

 

Issued for Services

 

During the year ended December 31, 2020, Clean Coal issued an aggregate of 13,754,276 common shares for services rendered valued at $180,408 to consultants and employees.

 

The above shares were issued in reliance on the exemption from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended, and the regulations promulgated there under. The transactions were issuances for services performed, the transactions were all privately negotiated and none involved any kind of public solicitation.

 

Issued for Convertible Debt

 

During the year ended December 31, 2020, Clean Coal issued 141,984,185 common shares for convertible notes payable and accrued interest and convertible notes payable, related party, valued at $1,398,548.

 

15

 

ITEM 6. SELECTED FINANCIAL DATA

 

We are a “Smaller Reporting Company” as defined under §229.10(f)(1) of Regulation S-K and are not required to provide the information required by this Item.

 

ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

FORWARD-LOOKING STATEMENTS AND FACTORS THAT MAY AFFECT FUTURE RESULTS

 

This Annual Report on Form 10-K contains forward-looking statements (as referenced in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934) that involve risks and uncertainties, as well as assumptions that, if they do not materialize or prove correct, could cause our results to differ materially from those expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including, but not limited to, statements concerning: our plans, strategies and objectives for future operations; new products or developments; future economic conditions, performance or outlook; the outcome of contingencies; expected cash flows or capital expenditures; our beliefs or expectations; activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future; and assumptions underlying any of the foregoing. Forward-looking statements may be identified by their use of forward-looking terminology, such as believes, expects, may, should, would, will, intends, plans, estimates, anticipates, projects and similar words or expressions. You should not place undue reliance on these forward-looking statements, which reflect our managements opinions only as of the date of the filing of this Annual Report on Form 10-K and are not guarantees of future performance or actual results.

 

Overview 

Over the past decade, Clean Coal Technologies, Inc. has developed processes that address what we believe are the key technology priorities of the global coal industry. We currently have three processes in our intellectual property portfolio:

 

The original process, called Pristine, is designed to remove moisture and volatile matter, rendering a high-efficiency, cleaner thermal coal.  The process has been tested successfully on bituminous and subbituminous coals, and lignite from various parts of the United States and from numerous countries around the world.

 

Our second process, called Pristine-M, is a low-cost coal dehydration technology. In tests, this process has succeeded in drying coal economically and stabilizing it using volatile matter released by the feed coal. Construction of our coal testing plant was completed in December 2015 and was successfully tested through April 2016 at AES Coal Power Utility in Oklahoma. Additional tests commenced and were completed in the fourth quarter of 2017. This test facility has been moved from AES to Wyoming where reassembly has commenced and testing of international coal is expected upon completion of the reassembly. Changes identified to the process by the University of Wyoming and our EPC contractors will be included in the reassembly and it is expected to provide a higher quality end product with a lower capital cost for a commercial unit. The reassembly is expected to be completed no later than Q3 2021.

 

Our third process, called Pristine-SA, is designed to eliminate 100% of the volatile matter in the feed coal and to achieve stable combustion by co-firing it with biomass or natural gas.  The process is expected to produce a cleaner fuel that eliminates the need for emissions scrubbers and the corollary production of toxic coal ash.  We anticipate that treated coal that is co-fired with other energy resources will burn as clean as natural gas.

 

Anticipated Benefits of the Technology:

 

 

Reduction of undesired emissions and greenhouse gases through the removal of compounds that are not required for combustion in conventional boilers.

 

 

Cost savings and environmental impact reduction. Our pre-combustion solution is expected to be significantly less expensive than post-combustion solutions such as emissions scrubbers.  Not only are the latter prohibitively expensive, they produce coal ash containing the “scrubbed” compounds, which is dumped in toxic waste disposal sites where it may pose continuing environmental risk.  Coal treated using our processes may eliminate the need for post-combustion emissions scrubbers and the resulting toxic ash. By beneficiating the coal it requires less coal to be consumed to achieve the same energy output. This will save on transportation and handling costs.

 

16

 

 

Potential use of compounds removed from treated coal. Volatile matter captured in the Pristine process is removed in the form of hydrocarbon liquids that we believe will be easily blended with crude oil or used as feedstock for various products.  For example, sulfur, which can be removed using the Pristine process, is a basic feedstock for fertilizer.  The harvesting of hydrocarbon liquids from abundant, cheaper coal is a potentially lucrative side benefit of our processes. All coal by-products including Rare Earth Minerals extraction will be tested in the second-generation facility.

 

Successful testing of the Pristine M process resulted in an increase in BTU of the processed coal and a reduction in moisture content making it less expensive to transport (as moisture has been removed) with the end product being a dust free stabilized enhanced coal which we believe will address the issue of coal dust pollution during transportation.

 

 

Energy Independence.  To the extent that volatile matter is removed from coal, coal’s use as an energy resource is greatly improved, enabling coal-rich countries to move towards energy independence owing to coal’s greater abundance. Extraction of by-products including Rare Earth Minerals is also expected to provide coal derivative product independence.

 

Development Status: 

 

Pristine process. Pristine process successfully lab tested on small scale and through advanced computer modeling. As at March, 2021, various aspects of the Pristine process were successfully tested at our test facility at the AES coal Power plant in Oklahoma as part of the overall testing of Pristine M. The second-generation facility in Wyoming is expected to perform a more detailed testing of the Pristine process.

 

Pristine-M. Testing of the Pristine M process on Powder River Basin coal at the AES facility in Oklahoma was completed in December 2017. The Pristine M process was successfully tested and the process, engineering and science were independently proven. The test facility was moved from the AES location to Wyoming where reassembly commenced in Q4 2019 and testing of international coal is expected upon completion of reassembly. Unfortunately, the reassembly was delayed due to the pandemic. Despite the delay, the reassembly is expected to be completed no later than Q3, 2021. Over several months in 2018 and early 2019 the University of Wyoming independently validated the Pristine M process in their laboratory.  In 2020, in conjunction with the University a Rotary Kiln was manufactured and delivered to our site in Wyoming. We await its integration into our test facility during re-assembly expected in Q3 2021.

 

Pristine-SA process. Pristine SA process analysis is at a very early stage. Further research and development is expected using the test facility at its permanent location in Wyoming.

 

Business Outlook

 

 

Wyoming New Power, a related party company, has agreed to sign a two million ton per annum license agreement to use Pristine M at a location in Wyoming. They have paid a non-refundable $100,000 deposit on the license agreement. The definitive license agreement is expected to be signed following the receipt of commercial design which will incorporate the suggested changes proposed by the University of Wyoming and our EPC contractor. Wyoming New Power is a Related Party because it is controlled by a party that also controls the entity, which is the major lender and significant stockholder of the Company.

 

 

Jindal Steel & Power is expected to send though their coal for sampling immediately following the plants re-assembly. The bespoke commercial facility design is expected after the testing.

In Q2, 2019 the Company signed a non binding MOU with Universitas Indonesia in a combined effort to assess the impact of our technology on Indonesian Coal both from a coal beneficiation perspective and also coal by-products. 

The second-generation test facility will have the capability of producing Char. There is local Wyoming demand for this product that the company expects to sell.  

 

17

 

 

The Company entered into a partnership with the University of Wyoming with the sole focus of using our suite of technologies to increase the use of and value of Wyoming Powder River Basin coal. Primary focus is on utilizing our technology to extract valuable derivative products from coal. Changes to the process have been identified by the University and the company EPC engineers and will be incorporated in the reassembly of the facility in Wyoming. The University confirmed in Q2, 2019 that they had successfully validated the Pristine M process in their laboratory and as a result entered into an agreement with the Company. The agreement between the University and the Company is for the reassembly of the second generation test facility. As of the date of this filing the University has advanced a total of approx. $1,300,000 directly to the manufacturer of the Rotary Kiln that was delivered to our site in Wyoming in June 2020.

 

 

The Company has been engaged with AusTrade (The Australian Trade and Investment Commission) and through that relationship has partnered with three separate universities in Australia. Like the University of Wyoming these Universities have a focus on their local coal both from a beneficiation perspective and also extracting derivative by products from coal using our technology. The Company received full Australian patents in Q2, 2019 so the company plans to move forward with this relationship in Q3 2021 following the assembly of the second-generation test facility. 

 

 

The Company continues in discussions with the Minister for Coal in India and a number of the Energy governmental bodies in India. Coal samples are expected to be sent for testing once the Second Generation Test Facility is assembled which is expected in Q3, 2021.  

 

 

Meetings occurred in Q2, 2019 with the US DOE, DOD and Wyoming State Representatives to further our technology to benefit US coal. These discussions continue through March, 2021 in light of the recent coal mining bankruptcies in Wyoming.

 

Employees

 

As of December 31, 2020, we had two full-time executives. President and CEO Robin Eves, Chief Operations Officer and Aiden Neary, Chief Financial Officer have written employment agreements. Messrs. Eves and Neary received no compensation for their participation on the Board of Directors.

 

Factors Affecting Results of Operations

 

Our operating expenses include the following:

 

Consulting expenses, which consist primarily of amounts paid for technology development and design and engineering services;

 

General and administrative expenses, which consist primarily of salaries, commissions and related benefits paid to our employees, as well as office and travel expenses;

 

Research and development expenses, which consist primarily of equipment and materials used in the development and testing of our technology; and

 

Legal and professional expenses, which consist primarily of amounts paid for patent protections, audit, disclosure, and reporting services.

 

Results of Operations

 

The following information should be read in conjunction with the financial statements and notes appearing elsewhere in this Report. We have generated limited revenues from inception to date. We anticipate that we may not receive any significant revenues from operations until we begin to receive royalty revenues from our coal testing plant which we estimate will be approximately 12 months after the successful signing of a commercial agreement anticipated in quarter three of fiscal 2021. We are also in preliminary discussions with companies, business groups, consortiums in the USA and Asia to license our technology, which, if successful, could realize limited short-term revenue opportunities from the signing of technology licensing agreements.

 

18

 

For the Years Ended December 31, 2020 and 2019.

 

We had no direct revenues for the years ended December 31, 2020 and 2019. In the fourth quarter of 2017 we received $100,000 as a non- refundable deposit on a two million ton license agreement from Wyoming New Power, a related party. The definitive license agreement is expected to be completed in 2020 following the assembly of the second generation test facility.  In the year ended December 31, 2012, we have received an initial license fee of $375,000 from Jindal paid pursuant to the signing of our coal testing plant construction contract. The balance of $375,000 will be due upon the successful testing of Jindal coal in our second generation test facility in Wyoming. We do not anticipate any significant royalty fees for approximately 12-18 months thereafter.

 

Operating Expenses

 

Our operating expenses for the year ended December 31, 2020 totaled $2,497,967 compared to $2,061,978 for the prior year. The $435,989 increase is mainly due to a $969,158 increase in research and development expenses, partially offset by a $396,666 decrease in general and administrative expenses and $4,964 decrease in consulting services and a $131,539 increase in gains on forgiveness of accounts payable.

 

Other Income and Expenses

 

Total other expenses for the year ended December 31, 2020 were $3,826,304, compared to $2,968,470 for the year ended December 31, 2019. Other expenses consists of $3,152,623 in interest expense on convertible debt and related amortization of debt discounts, $125,262 in debt default and standstill expenses related to convertible notes payable and $548,419 in fair value losses as a result of conversion options on convertible debt. During the year ended December 31, 2019, we recognized $2,669,079 in interest expense and $299,391 in debt default and standstill expenses related to convertible notes payable.

 

Net Income/Loss

 

For the year ended December 31, 2020, we recognized a net loss of $6,324,271, compared to a net loss of $5,030,448 for the year ended December 31, 2019. The net losses for 2020 and 2019 are due to the $3,826,304 and $2,968,470 in other expenses and $2,497,967 and $2,061,978 in operating expenses as discussed above, respectively.

 

We anticipate losses from operations will increase during the next twelve months due to anticipated increased payroll expenses as we add necessary staff and increases in legal and accounting expenses associated with maintaining a reporting company. We expect that we will continue to have net losses from operations for several years until revenues from operating facilities become sufficient to offset operating expenses, unless we are successful in the sale of licenses for our technology.

 

Liquidity and Capital Resources

 

We have generated minimal revenues since inception. We have obtained cash for operating expenses through advances and/or loans from affiliates and stockholders, the sale of common stock, the issuance of loans and convertible debentures converted or convertible to common stock and the receipt of $375,000 in license fees from Jindal as described above.

 

Net Cash Used in Operating Activities.

 

During the years ended December 31, 2020 and 2019, we used $874,119 and $1,605,781 in cash from operations, mainly due to the net losses discussed above, net of non-cash operating expenses of $2,527,355 and $1,921,582 in 2020 and 2019, respectively. Our primary uses of funds in operations were payments made to our consultants and employees, legal and professional costs as well as travel and office expenses.

 

Net Cash Provided By Investing Activities.

 

We had no cash flows from investing activities in 2020 and 2019.

 

19

 

Net Cash Provided by Financing Activities.

 

Net cash provided by financing activities during the years ended December 31, 2020 and 2019 totaled $786,040 and $1,672,318, respectively. We received $76,990 and $354,880 in cash from the issuance of convertible debt from related parties, $45,050 and $641,000 in cash from the issuance of notes payable to related parties and $858,000 and $1,432,000 in cash from the issuance of convertible notes payable during the years ended December 31, 2020 and 2019, respectively. We repaid $162,500 and $565,562 on convertible notes, $11,500 and $165,000 on notes payable to related parties and $0 and $25,000 on convertible notes payable to related parties in cash during the years ended December 31, 2020 and 2019, respectively. We paid $20,000 in debt issue costs during the year ended December 31, 2020, we had no such costs during the prior year.

 

Cash Position and Outstanding Indebtedness.

 

Our total indebtedness at December 31, 2020 and 2019 was $23,254,115 and $19,020,248, respectively, which consists of $23,191,339 and $17,951,784 of current liabilities and $332,776 and $1,068,464 of long-term debt, respectively. Current liabilities consist primarily of accounts payable, accounts payable to related parties, short-term debt, related party convertible debt and accrued liabilities. At December 31, 2020, our current assets were cash totaling $4,203. At December 31, 2019 we had current assets of $131,501, consisting of $92,282 of cash and $39,219 of prepaid assets. Our working capital deficit at December 31, 2020 and 2019 was $23,187,136 and $17,840,050 and $12,804,911, respectively.

 

Employees

 

As of December 31, 2020, we have two full-time executives, President and CEO Robin Eves and Chief Operations Officer and Chief Financial Officer Aiden Neary, who have written employment agreements. Mr. Eves and Neary received no compensation for their participation on the Board of Directors.

 

On July 1, 2020, we entered into two year employment agreements with Robin Eves as President and Chief Executive Officer and Aiden Neary as Chief Operating Officer, Chief Financial Officer and director. Mr. Eves receives an annual salary of $525,000. Mr. Neary receives an annual salary of $500,000. Each officer was also granted 750,000 common shares upon signing the contract.

 

The terms of the agreements described above were negotiated by and between the individuals and our Board of Directors based on the qualifications and requirements of each individual and the needs of the company.

 

Contractual Obligations and Commitments

 

We secured a permanent location in Gillette, Wyoming for our test facility. The term of the lease is three years and calls for rent of $36,000, prepaid. We are currently negotiating an additional three year lease under the same terms and conditions.

 

We lease office space in New York, NY on a month to month basis, at a monthly rate of $200 per month.

 

Our engineering consultants has tentatively estimated construction costs for each one million short ton coal complete cleaning facility of approximately $250 million (excluding land costs) or costs and for a similar size Pristine-M-only facility of approximately $30-35 million (excluding land costs). All intellectual property rights associated with new art developed by our engineering consultants remain our property.

 

We are also actively pursuing technology license and royalty agreements in order to begin construction of other facilities without incurring the capital costs associated with the construction of future plants.

 

In November 2015, we entered into a month to month agreement with South of the Rose communication to manage our Investor Relations needs and manage social media requirements.

 

Construction of the coal testing plant was completed in 2015 and testing commenced in December 2015 at the AES Coal Power Utility in Oklahoma. As of December 31, 2020, we have paid $11,224,468 in development costs. The facility was moved to Wyoming in the first quarter of 2019. We anticipate that there will be an additional cost of approximately $4 million to acquire the additional parts for the second generation test facility and for its assembly.

 

Based on our current operational costs and including the capital requirements for our project deployments, we estimate we will need a total of approximately $5,500,000 to fund the Company for the fiscal year 2021 for plant re-assembly and operating costs and an additional $4,000,000 to continue for the following fiscal year (2022) or until an initial commercial plant is up and running.

 

20

 

Off-Balance Sheet Arrangements

 

We have not and do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of establishing off-balance sheet arrangements or other contractually narrow or limited purposes. Therefore, we do not believe we are exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

 

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are exposed to changes in prevailing market interest rates affecting the return on our investments but do not consider this interest rate market risk exposure to be material to our financial condition or results of operations. We invest primarily in United States Treasury instruments with short-term (less than one year) maturities. The carrying amount of these investments approximates fair value due to the short-term maturities. Under our current policies, we do not use derivative financial instruments, derivative commodity instruments or other financial instruments to manage our exposure to changes in interest rates or commodity prices.

 

 

 

 

21

 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

Our financial statements required by this item are included on the pages immediately following the Index to Financial Statements appearing below.

 

FINANCIAL STATEMENTS INDEX

 

 

PAGE

Report of Independent Registered Public Accounting Firm

23

Balance Sheets at December 31, 2020 and 2019

24

Statements of Operations for the years ended December 31, 2020 and 2019

25

Statements of Changes in Stockholders’ Deficit for the years ended December 31, 2020 and 2019

26

Statements of Cash Flows for the years ended December 31, 2020 and 2019

27

Notes to Financial Statements for the years ended December 31, 2020 and 2019

29

 

 

 

 

 

22

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Stockholders and Board of Directors of

Clean Coal Technologies, Inc.

 

Opinion on the Financial Statements

 

We have audited the accompanying balance sheets of Clean Coal Technologies, Inc. (the “Company”) as of December 31, 2020 and 2019, and the related statements of operations, changes in stockholders’ deficit, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

 

Going Concern Matter

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has a working capital deficit, has generated net losses since its inception and further losses are anticipated. The Company requires additional funds to meet its obligations and the costs of its operations. These factors raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. 

 

Critical Audit Matters

 

Critical audit matters 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. We determined that there are no critical audit matters.

 

/s/MaloneBailey, LLP

www.malonebailey.com

We have served as the Company’s auditor since 2008.

Houston, Texas

March 30, 2021

 

23

 

Clean Coal Technologies, Inc.

Balance Sheets

 

   

December 31,

 
   

2020

   

2019

 

ASSETS

         
                 

Current Assets

               

Cash

  $ 4,203     $ 92,282  

Prepaid assets

    -       39,219  

Total Current Assets

    4,203       131,501  
                 

Property, plant and equipment, net of accumulated depreciation of $1,019 and $1,019, respectively

    -       -  

Right to use ground lease, net of accumulated amortization of $20,000 and $8,000, respectively

    4,000       16,000  
                 

Total Assets

  $ 8,203     $ 147,501  
                 

LIABILITIES AND STOCKHOLDERS DEFICIT

         

Current Liabilities

               

Accounts payable

  $ 1,900,639     $ 1,022,110  

Accrued liabilities

    9,438,354       7,671,748  

Customer deposit – related party

    100,000       100,000  

Notes payable – related parties

    788,150       754,600  

Notes payable

    413,185       413,185  

Convertible debt, net of unamortized discounts

    1,600,686       1,396,682  

Convertible debt, net of unamortized discounts – related party

    8,950,325       6,593,459  

Total Current Liabilities

    23,191,339       17,951,784  
                 

Long-Term Liabilities

               

Convertible debt, net of unamortized discounts – related party

    332,776       1,068,464  

Total Liabilities

    23,524,115       19,020,248  
                 

Stockholders’ Deficit

               

Common stock, $0.00001 par value 500,000,000 shares

authorized, 337,085,679 and 181,347,218 shares

issued and outstanding, respectively

    3,371       1,815  

Additional paid-in capital

    261,807,100       260,127,550  

Accumulated deficit

    (285,326,383

)

    (279,002,112

)

Total Stockholders’ Deficit

    (23,515,912

)

    (18,872,747

)

Total Liabilities and Stockholders’ Deficit

  $ 8,203     $ 147,501  

 

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

 

24

 

Clean Coal Technologies, Inc.

Statements of Operations

 

   

Years Ended

 
   

December 31,

 
   

2020

   

2019

 
                 

Operating Expenses:

               

General and administrative

  $ 1,517,507     $ 1,914,173  

Consulting services

    22,659       27,623  

Gain on settlement of accounts payable

    (131,539

)

    -  

Research and development

    1,089,340       120,182  
                 

Loss from Operations

    (2,497,967

)

    (2,061,978

)

                 

Other Income (Expenses):

               
                 

Interest expense

    (3,152,623

)

    (2,669,079

)

Change in fair value of share-settled debt

    (548,419 )     -  

Debt default, standstill, settlement and transfer expenses

    (125,262

)

    (299,391

)

Total Other Income (Expenses)

    (3,826,304

)

    (2,968,470

)

                 

Net (loss)

  $ (6,324,271

)

  $ (5,030,448 )
                 

Net (loss) per share basic and diluted

  $ (0.03

)

  $ (0.03

)

                 

Weighted average common shares outstanding basic and diluted

    238,576,740       176,957,325  

 

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

 

25

 

Clean Coal Technologies, Inc.

Statements of Changes in Stockholders Deficit

Years Ended December 31, 2020 and 2019

 

                   

Additional

           

Stockholders

 
   

Common Stock

   

Paid-In

   

Accumulated

   

Equity

 
   

Shares

   

Amount

   

Capital

   

Deficit

   

(Deficit)

 

Balances at December 31, 2018

    174,427,854       1,745       259,320,220       (273,971,664

)

    (14,649,699

)

Common stock issued for convertible debt – related party

    1,875,000       19       149,981               150,000  

Common stock issued for officer bonus

    4,408,000       44       440,756       -       440,800  

Common stock issued for services

    636,364       7       63,630       -       63,637  

Beneficial conversion feature on convertible debt

    -       -       152,963       -       152,963  

Net loss

    -       -       -       (5,030,448

)

    (5,030,448

)

Balances at December 31, 2019

    181,347,218       1,815       260,127,550       (279,002,112

)

    (18,872,747

)

Common stock issued for officer bonus 

    13,275,153       132       172,418       -       172,550  

Common stock issued for services

    479,123       4       7,854               7,858  

Common stock issued for conversion of notes payable and accrued interest

    140,734,185       1,407       1,297,141       -       1,298,548  

Common stock issued for conversion of notes payable – related party

    1,250,000       13       99,987       -       100,000  

Beneficial conversion feature on convertible debt

    -       -       102,150       -       102,150  

Net loss

                            (6,324,271

)

    (6,324,271

)

Balances at December 31, 2020

    337,085,679     $ 3,371     $ 261,807,100     $ (285,326,383

)

  $ (23,515,912

)

 

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

 

26

 

Clean Coal Technologies, Inc.

Statements of Cash Flows

 

   

Years Ended

 
   

December 31,

 
   

2020

   

2019

 

CASH FLOWS FROM OPERATING ACTIVITIES:

               

Net loss

  $ (6,324,271

)

  $ (5,030,448

)

Adjustment to reconcile net loss to net cash used in operating activities:

               

Amortization of debt discounts

    1,822,355       1,273,753  

Amortization of lease asset

    12,000       12,000  

Common stock issued for officer bonus

    172,550       440,800  

Common stock issued for consulting expense

    7,858       63,637  

Change in fair value of share-settled debt

    548,419       -  

Loan extension, default and standstill fees

    95,712       188,391  

Gain on settlement of accounts payable

    (131,539

)

    -  

Changes in operating assets and liabilities:

               

(Decrease) increase in prepaid expenses

    39,219       (39,219

)

Increase (decrease) in accounts payable

    1,010,068       (115,283

)

Increase in accrued expenses

    1,873,510       1,600,588  

Net Cash Used in Operating Activities

    (874,119

)

    (1,605,781

)

                 

CASH FLOWS FROM FINANCING ACTIVITIES:

               

Borrowings on convertible debt, net of original issue discounts

    858,000       1,432,000  

Payments on convertible debt

    (162,500

)

    (565,562

)

Borrowings on convertible debt, net of original issue discounts – related party

    76,990       354,880  

Payments on related party convertible debt

    -       (25,000

)

Borrowings on related party debt

    45,050       641,000  

Payments on related party debt

    (11,500

)

    (165,000

)

Payments of debt issue costs

    (20,000

)

    -  

Net Cash Provided by Financing Activities

    786,040       1,672,318  
                 

NET CHANGE IN CASH

    (88,079

)

    66,537  

CASH - beginning of period

    92,282       25,745  

CASH - end of period

  $ 4,203     $ 92,282  

 

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

 

27

 

Clean Coal Technologies, Inc.

Statements of Cash Flows

(continued)

 

   

Years Ended

 
   

December 31,

 
   

2020

   

2019

 
                 

SUPPLEMENTAL DISCLOSURES:

               

Cash paid for interest

  $ -     $ -  

Cash paid for income taxes

  $ -     $ -  
                 

NON-CASH INVESTING AND FINANCING ACTIVITIES:

               

Common stock issued for conversion of debt and accrued interest

  $ 1,298,548     $ -  

Common stock issued for conversion of debt and accrued interest– related party

  $ 100,000     $ 150,000  

Beneficial conversion feature on convertible debt

  $ 98,000       -  

Beneficial conversion feature on convertible debt, related party

  $ 4,150     $ 152,963  

Notes payable – related party issued for convertible note principal in extension fees payable

  $ -       135,000  

Convertible debt, related party, issued for payment of Company expenses

  $ -     $ 12,073  

 

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

 

28

 

Clean Coal Technologies, Inc.

Notes to Financial Statements

 

NOTE 1: NATURE OF BUSINESS 

 

Clean Coal Technologies, Inc. (“CCTI”, the “Company”, “Clean Coal”, “we”, “our”), a Nevada corporation, is developing a patented multi-stage process that transforms coal with high levels of impurities, contaminants and other polluting elements into an exceptionally efficient, clean and inexpensive source of high energy, low polluting fuel.

 

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

 

Accounting Methods

 

The Company’s financial statements are prepared using the accrual method in accordance with Generally Accepted Accounting Principles in the United State of America (“GAAP”). Certain amounts have been reclassified to conform to the current period’s presentation including Notes payable; Notes payable – related parties; short and long term Convertible debt, net of unamortized discounts; short and long term Convertible debt, net of unamortized discounts – related party.

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure on contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Revenue Recognition

 

On January 1, 2018, the Company adopted Financial Accounting Standards Board (FASB) Accounting Series Update (ASU) 2014-09 Revenue from Contracts with Customers (“ASU 2014-09”) and all subsequent amendments to the ASU, which (i) creates a single framework for recognizing revenue from contracts with customers that fall within its scope and (ii) revises when it is appropriate to recognize a gain (loss) from the transfer of nonfinancial assets. The core principle of ASU 2014-09 is that revenue is recognized when the transfer of goods or services to customers occurs in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. ASU 2014-09 requires the disclosure of sufficient information to enable readers of the Company’s financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. ASU 2014-09 also requires disclosure of information regarding significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 provides two methods of retrospective application, full and modified retrospective. Full retrospective requires companies to apply ASU 2014-09 to each prior reporting period presented while modified retrospective requires companies to retrospectively apply ASU 2014-09 with the cumulative effect recognized at the date of initial application. The Company elected to adopt ASU 2014-09 using the modified retrospective application effective for the quarter ending March 31, 2018, with no impact the Company’s financial statements as it has no current contracts for revenue generating activities and a limited history of generating revenue from operations as discussed below. 

 

The Company generated revenue in 2012 related to license fees received for the use of its technology. The license fee revenue requires no continuing performance on the Company’s part and is recognized upon receipt of the licensing fee and grant of the license.

 

During 2012, the Company granted a 25-year technology license agreement for a one-time license fee of $750,000. The first installment of the license fee of $375,000 has been collected pursuant to the signing of a coal testing plant construction contract and the balance of $375,000 will be due upon the successful testing of the coal testing plant, estimated sometime in fiscal 2020. In addition, under the technology license agreement, the Company will receive an on-going royalty fee of $1 per metric ton on all coal processed using the technology, up to $4,000,000 per annum. No revenue has been earned in 2020 or 2019.

 

29

 

Net Loss per Common Share

 

Basic net loss per share is computed on the basis of the weighted average number of common shares outstanding during each year. Diluted net loss per share is computed similar to basic net loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. The Company uses the “if-converted” method for calculating the earnings per share impact of outstanding convertible debentures, whereby the securities are assumed converted and an earnings per incremental share is computed. Options, warrants and their equivalents are included in EPS calculations through the treasury stock method. In periods where losses are reported, the weighted-average number of common stock outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive.

 

The calculation of basic and diluted net loss per share for the years ended December 31, 2020 and 2019 are as follows:

 

   

2020

   

2019

 

Basic Net Loss Per Share:

               

Numerator:

               

Net loss

  $ (6,324,271

)

  $ (5,030,448

)

Denominator:

               

Weighted-average common shares outstanding

    238,576,740       176,957,325  
                 

Basic net loss per share

  $ (0.03

)

  $ (0.03

)

                 

Diluted Net Loss Per Share:

               

Numerator:

               

Net loss

  $ (6,324,271

)

  $ (5,030,448

)

Diluted net loss

  $ (6,324,271

)

  $ (5,030,448

)

Denominator:

               

Weighted-average common shares outstanding

    238,576,740       176,957,325  

Common stock warrants

    -       -  

Convertible debt

    -       -  

Weighted average shares used in computing diluted net loss per share

    238,576,740       176,957,325  
                 

Diluted net loss per share

  $ (0.03

)

  $ (0.03

)

 

The following table summarizes the potential shares of common stock that were excluded from the computation of diluted net loss per share for the years ended December 31, 2020 and 2019 as such shares would have had an anti-dilutive effect:

 

   

2020

   

2019

 

Common stock warrants

    491,875       2,852,329  

Convertible notes payable

    323,859,717       148,704,866  

Total

    324,351,592       151,557,195  

 

Cash and Cash Equivalents

 

Clean Coal considers all highly liquid investments with an original maturity of three months or less to be cash equivalents for purposes of preparing its Statements of Cash Flows. There are no cash equivalents at December 31 2020 and 2019.

 

Federal Income Tax

 

Clean Coal files income tax returns in the U.S. federal jurisdiction, and the state of Nevada. Clean Coal’s policy is to recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. 

 

30

 

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.  

 

Net deferred tax assets consist of the following components as of December 31, 2020 and 2019:

 

   

2020

   

2019

 

Deferred tax assets:

               

Net operating loss carryforward

  $ 8,959,019     $ 8,167,076  

Valuation allowance

    (8,959,019

)

    (8,167,076

)

    $ -     $ -  

 

The federal income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate of 21% to pretax income from continuing operations for the years ended December 31, 2020 and 2019 due to the following:

 

   

2020

   

2019

 

Pre-tax book loss

  $ (1,328,097

)

  $ (1,056,394

)

Meals

    406       902  

Common stock issued for services

    37,886       105,932  

Change in fair value of shares settled debt                                                                                           

    115,168       -  

Debt discount amortization

    382,695       267,488  

Valuation allowance

    791,942       682,072  
    $ -     $ -  

 

The Company had net operating losses of approximately $42,661,996 that begin to expire in 2028.  Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carryforwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carryforwards may be limited as to use in future years. In accordance with the statute of limitations for federal tax returns, the Company’s federal tax returns for the years 2016 through 2019 are subject to examination.

 

Property and Equipment 

 

Property and equipment consists of furniture and fixtures and computer equipment, recorded at cost, depreciated upon placement in service over estimated useful lives ranging from three to five years on a straight-line basis. As of December 31, 2020 and 2019, Clean Coal had property and equipment with no net book value. Expenditures for normal repairs and maintenance are charged to expense as incurred.

 

Impairment of Long Lived Assets 

 

In the event facts and circumstances indicate the carrying value of a long-lived asset, including associated intangibles, may be impaired, an evaluation of recoverability is performed by comparing the estimated future undiscounted cash flows associated with the asset to the asset’s carrying amount to determine if a write-down to market value or discounted cash flow is required.

 

Research and Development Costs

 

Research and development expenses include salaries, related employee expenses, research expenses and consulting fees. All costs for research and development activities are expensed as incurred. Clean Coal expenses the costs of licenses of patents and the prosecution of patents until the issuance of such patents and the commercialization of related products is reasonably assured. During the years ended December 31, 2020 and 2019, the Company recognized $1,089,340 and $120,182 of research and development costs, respectively.

 

31

 

Stock-based Compensation

 

FASB ASC 718, CompensationStock Compensation, (ASC 718) established financial accounting and reporting standards for stock-based employee compensation plans. It defines a fair value based method of accounting for an employee stock option or similar equity instrument. Clean Coal accounts for stock-based compensation to employees in accordance with FASB ASC 718.

 

Derivative Financial Instruments

 

Clean Coal evaluates its convertible instruments to determine if those contracts or embedded components of those contracts qualify as derivative financial instruments to be separately accounted for in accordance with ASC 815 Derivatives and Hedging (“ASC 815”). The accounting treatment of derivative financial instruments requires that the Company record embedded conversion options and any related freestanding instruments at their fair values as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense for each reporting period at each balance sheet date. Conversion options are recorded as a discount to the host instrument and are amortized as amortization of debt discount on the statements of operations over the life of the underlying instrument. The Company reassesses the classification of its derivative instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification.

 

Sequencing Policy

 

Under ASC 815-40-35, Clean Coal follows a sequencing policy, whereby, in the event that reclassification of contracts from equity to assets or liabilities is necessary pursuant to ASC 815 due to the Company’s inability to demonstrate it has sufficient authorized shares as a result of certain securities with a potentially indeterminable number of shares, shares will be allocated on the basis of the earliest issuance date of potentially dilutive instruments, with the earliest grants receiving the first allocation of shares. Pursuant to ASC 815, issuance of securities to the Company’s employees or directors are not subject to the sequencing policy.

 

Fair Value of Financial Instruments  

 

ASC 820, Fair Value Measurements (“ASC 820”) and ASC 825, Financial Instruments (“ASC 825”), requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. It establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. It prioritizes the inputs into three levels that may be used to measure fair value:

 

Level 1 - Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

 

Level 2 - Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

 

Level 3 - Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

 

The carrying value of accounts payable and accrued expenses, notes payable and notes and convertible notes payable related parties approximate their fair value due to the short-term maturity of those items.

 

Certain convertible notes of the Company are required to be recorded at fair value on a recurring basis. Fair value is determined based on the price that would be received for an asset or paid to transfer a liability in an orderly transaction based on market participants. Factors that the Company considered when estimating the fair value of its convertible notes payable included quoted market prices of the Company’s common stock. The level of the convertible notes payable is considered as Level 1.

 

32

 

The following table presents the Company’s liabilities that are measured at fair value on a recurring basis, consistent with the fair value hierarchy provisions.

 

December 31, 2020

 
   

Quoted Prices in Active Markets for Identical Liabilities

   

Significant Other Observable Inputs

   

Significant Unobservable Inputs

         
   

(Level 1)

   

(Level 2)

   

(Level 3)

   

Total

 

Liabilities:

                               

Convertible notes

  $ 548,419     $ -     $ -     $ 548,419  

Total

  $ 548,419     $ -     $ -     $ 548,419  

 

December 31, 2019

 
   

Quoted Prices in Active Markets for Identical Liabilities

   

Significant Other Observable Inputs

   

Significant Unobservable Inputs

         
   

(Level 1)

   

(Level 2)

   

(Level 3)

   

Total

 

Liabilities:

                               

Convertible notes

  $ -     $ -     $ -     $ -  

Total

  $ -     $ -     $ -     $ -  

 

Convertible Debt Instruments

 

The Company follows ASC 480-10, Distinguishing Liabilities from Equity in its evaluation of the accounting for a hybrid instrument. A financial instrument that embodies an unconditional obligation, or a financial instrument other than an outstanding share that embodies a conditional obligation, that the issuer must or may settle by issuing a variable number of its equity shares shall be classified as a liability (or an asset in some circumstances) if, at inception, the monetary value of the obligation is based solely or predominantly on any one of the following: (a) a fixed monetary amount known at inception; (b) variations in something other than the fair value of the issuer’s equity shares; or (c) variations inversely related to changes in the fair value of the issuer’s equity shares. Hybrid instruments meeting these criteria are not further evaluated for any embedded derivatives and are carried as a liability at fair value at each balance sheet date with remeasurements reported in change on fair value expense in the accompanying Statements of Operations.

 

Recently Issued Accounting Pronouncements

 

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements. The Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 

In August 2020, the FASB issued ASU 2020-06, DebtDebt with Conversion and Other Options (Subtopic 470-20) and Derivatives and HedgingContracts in Entitys Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entitys Own Equity” (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity by removing the separation models for convertible debt with cash conversion and beneficial conversion features by requiring entities not to separately present in equity an embedded conversion feature in such debt and instead will account for a convertible debt instrument and convertible preferred stock as a single unit of account unless a convertible instrument contains features that require bifurcation as a derivative under ASC 815 or was issued at a substantial premium. The ASU is effect for the Company for fiscal years beginning after December 15, 2023, but may be early adopted for fiscal years beginning after December 15, 2020. The Company is evaluating the effect that this update will have on its financial statements and related disclosures.

 

33

 

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (ASC 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). ASU 2018-13 removes certain disclosures, modifies certain disclosures and adds additional disclosures. ASU 2018-13 was effective for annual periods beginning after December 15, 2019. The Company’s adoption of ASU 2018-13 did not have a material effect on the Company’s financial statements and related disclosures.

 

In June 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, as part of its ongoing Simplification Initiative (“ASU 2018-07”). ASU 2018-07 expands the scope of FASB Topic 718, Stock Compensation, to include nonemployee awards and generally aligning the accounting for nonemployee awards with the accounting for employee awards. ASU 2018-07 was effective for annual periods beginning after December 15, 2019. The Company’s adoption of ASU 2018-13 did not have a material effect on the Company’s financial statements and related disclosures.

 

NOTE 3: GOING CONCERN 

 

The accompanying financial statements have been prepared on a going concern basis of accounting which contemplates continuity of operations, realization of assets, liabilities, and commitments in the normal course of business. The accompanying financial statements do not reflect any adjustments that might result if Clean Coal is unable to continue as a going concern. Clean Coal has a working capital deficit as of December 31, 2020 and has generated recurring net losses since inception. Management believes Clean Coal will need to raise capital in order to operate over the next 12 months.

 

As shown in the accompanying financial statements, Clean Coal has also incurred significant losses from operations since inception. Clean Coal’s continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis and ultimately to attain profitability. Clean Coal has limited capital with which to pursue its business plan. There can be no assurance that Clean Coal’s future operations will be significant and profitable, or that Clean Coal will have sufficient resources to meet its objectives. These conditions raise substantial doubt as to Clean Coal’s ability to continue as a going concern. Management may pursue either debt or equity financing or a combination of both, in order to raise sufficient capital to meet Clean Coal’s financial requirements over the next twelve months and to fund its business plan. There is no assurance that management will be successful in raising additional funds.

 

NOTE 4: RELATED PARTY TRANSACTIONS

 

Wages and bonus payable to related parties

 

Accruals for salary and bonuses to officers and directors are included in accrued liabilities in the balance sheets and totaled $3,726,943 and $3,090,116 as of December 31, 2020 and 2019, respectively. As part of the separation agreement with Mr. Ponce de Leon, the Company agreed to pay him all his accrued salary within two years but agreed to pay him $200,000 by November 2015 out of revenues earned. As the Company did not earn revenue in 2015 and as at December 2019 has still not earned revenue, the obligation to Mr. Ponce de Leon of $1,692,861 is currently in default and the amount includes $466,147 in accrued interest. It is the Company’s intention to pay Mr. Ponce de Leon immediately upon receiving revenue.

 

Nonconvertible Debt

 

During the years ended December 31, 2020 and 2019, the Company received $30,000 and $590,000 from the issuance of related party notes payable to an affiliate. The notes are due on demand and do not accrue interest. As of December 31, 2020 and 2019, the Company had outstanding notes payable to affiliates of the Company of $705,000 and $675,000, respectively. These notes payable of the Company are unsecured, bear no interest and are due on demand.

 

During the years ended December 31, 2020 and 2019, the Company received $15,050 and $243,000 from related party advances, respectively. The Company repaid $11,500 and $165,000 on these advances during the years ended December 31, 2020 and 2019, respectively. The advances are due on demand and do not accrue interest. As of December 31, 2020 and 2019, the Company had outstanding advances payable to an officer of the Company of $83,150 and $79,600, respectively. The advances payable are unsecured, bear no interest and are due on demand.

 

34

 

Convertible Debt

 

During the years ended December 31, 2020 and 2019, the Company borrowed an aggregate of $76,990 and $366,653, net of beneficial conversion features of $4,150 and $152,962, respectively, under convertible notes payable. During the years ended December 31, 2020 and 2019, the Company repaid $0 and $25,000 of principal in cash and issued 1,250,000 and 1,875,000 shares of common stock for the conversion of $100,000 and $150,000 of principal on the convertible notes payable, respectively. The convertible notes are secured by assets and the common stock of the Company, bear interest at 12% per annum, are convertible into shares of the Company’s common stock at $0.06 per share and are due three years from the dates of issuance.

 

As of December 31, 2020 and 2019, the Company had outstanding short-term convertible notes payable of $9,437,192 and $6,593,469, net of unamortized discounts of $486,867 and $658,922, respectively; and, outstanding long-term convertible notes payable of $418,943 and $2,626,753, net of unamortized discounts of $86,167 and $1,558,289, respectively. The convertible notes payable mature(d) between November 2018 and November 2022 and are convertible at $0.06 per share, which, occasionally has been a discount to the market price on the dates of issuance. Amortization expense related to debt discounts on convertible debt for the years ended December 31, 2020 and 2019 was $1,648,339 and $1,229,740, respectively. As of December 31, 2020 and 2019, $7,152,383 and $4,510,384 in convertible notes are past due.

 

Outstanding notes payable and convertible notes payable to related parties consisted of the following as of December 31, 2020 and 2019:

 

   

December 31,

 

Name

 

2020

   

2019

 

Convertible Debt:

               

Convertible notes payable, interest at 12%, convertible at $0.08 per share, unsecured, due May 25, 2019

  $ 1,202,566     $ 1,302,566  

Convertible note payable, interest at 12%, convertible at $0.12 per share, unsecured, due between May 25, 2019 and August 1, 2019

    1,630,073       1,630,073  

Convertible notes payable, interest at 12%, convertible at $0.15 per share, unsecured, due between May 25, 2019 and March 31, 2020

    1,799,742       1,799,742  

Convertible notes payable, interest at 12%, convertible at $0.06 per share, unsecured, due between April 20, 2020 and December 24, 2023

    5,223,754       5,146,753  

Total

    9,856,135       9,879,134  

Less: short-term debt

    (9,437,192

)

    (6,593,459

)

Total long-term debt

    418,943       3,285,675  

Less: unamortized discounts

    (86,167

)

    (2,217,211

)

Net long-term debt

  $ 332,776     $ 1,068,464  
                 

Nonconvertible Debt:

               

Notes payable, no interest, unsecured, due upon demand

  $ 788,150     $ 754,600  

Total

  $ 788,150     $ 754,600  

 

Principal payments on convertible debt to related parties for each of the following five years is as follows:

 

2021

  $ 9,437,192  

2022

    341,953  

2023

    76,990  

2024

    -  

2025

    -  

Thereafter

    -  

Total

  $ 9,856,135  

 

 

35

 

Common Stock Issued to Related Parties

 

During April 2020, the Company issued 1,250,000 shares of common stock for the conversion of $100,000 related party convertible notes payable, or the stated conversion price $0.08 per share.

 

During July and August 2020, the Company issued two of its officers a total of 13,275,153 shares of common stock for services valued at $172,550. The shares are not forfeitable and considered to be earned as of the date of issuance.

 

During May 2019, the Company issued two of its officers a total of 4,408,000 shares of common stock for services valued at $440,800. The shares are not forfeitable and considered to be earned as of the date of issuance.

 

During August 2019, the Company issued 1,875,000 shares of common stock for the conversion of $150,000 related party convertible notes payable, or the stated conversion price $0.08 per share.

 

Non-Binding License Agreement related party

 

During July 2017, the Company entered into a non-binding agreement to explore the opportunity of engaging in a license of Clean Coal Pristine M technology. As part of the non-binding agreement, in September 2017, the Company received a non-refundable deposit of $100,000, subject to application to any future license agreement, from Wyoming New Power. The license agreement is for two million tons per annum. The remainder of the license fee will be due upon the signing of a definitive license agreement expected in 2021 . Wyoming New Power is a related party because it is controlled by an entity that has a significant interest in Clean Coal Technologies, Inc.

 

NOTE 5: DEBT

 

Accounts Payable

 

In January 2020, following mediation with a vendor of an outstanding balance, the Company successfully won the case and the balance of $131,539 was waived. The company had previously recognized the $131,539 balance in accounts payable, which was reversed in 2020 and recognized as a gain on debt settlement.

 

Notes Payable

 

As of December 31, 2020 and 2019, the Company had outstanding notes payable to former affiliates of the Company of $413,185 and $413,185, respectively. The notes payable are unsecured, bear no interest and are due on demand.

 

Convertible Debt

 

In accordance with ASC 480, Distinguishing Liabilities from Equity, the Company evaluates its hybrid convertible debt instruments with unconditional obligations allowing settlement by issuing a variable number of its equity shares to determine proper classification and accounting. The Company classifies the following hybrid convertible debt instruments as a liability upon being convertible at the option of the holders due to the conversion terms being based on fixed monetary amounts known at inception, in this case, settlement with a variable number of the Company’s equity shares. As such, conversion option and are carried as a liability at fair value at each balance sheet date with a re-measurement reported as a change in fair value of share-settled debt in other (income) expense in the accompanying condensed statements of operations.

 

During October 2018, the Company borrowed $345,000, net of original debt discount of $45,000 under a note payable bearing interest at 7% per annum, unsecured and was originally due January 18, 2019. Between January 2019 and March 2020, the due date on the note was extended multiple times in exchange for a total of $85,000 debt extension fee added to the principal of the note, the addition of a conversion feature and $20,000 in extension fees. The conversion feature allowed the holder to convert the principal and accrued interest into shares of the Company’s common stock at a discount of 70% of the lowest trading price for the Company’s common stock during the twenty trading days immediately preceding the conversion. During May 2020, the remaining note principal of $135,000 note and accrued interest totaling $32,881 were converted into 6,432,216 shares of common stock. During the years ended December 31, 2020 and 2019, the Company recognized $0 and $8,804 in in debt discount amortization expense, respectively.

 

36

 

During February 2019, the Company issued a convertible note payable in the amount of $315,000. The convertible note payable was due one year from the date of issuance, has an original issuance discount of $15,000, accrues interest at the rate of 6% per annum, is unsecured and was convertible at any time into shares of the Company’s common stock at a discount of 65% of the lowest trading price for the Company’s common stock during the ten trading days immediately preceding the conversion. Between February 2019 and June 2020, the Company extended the note conversion feature multiple times through April 15, 2020, paying two payments of $25,000 each, with a total of $30,000 applied to principal, $20,000 to debt extension fees, and incurring prepayment penalties added to principal of $7,500. During April 2020, the note became convertible at the option of the holder. Between July and October 2020, the Company issued a total of 18,731,446 shares of common stock for the conversion of the remaining $123,329 in note principal. During the years ended December 31, 2020 and 2019, the Company recognized $8,671 and $2,548 in debt discount amortization expense, respectively.

 

During May 2019, the Company issued a convertible note payable in the amount of $262,500. The convertible note payable is due one year from the date of issuance, has an original issuance discount of $12,500, accrues interest at the rate of 6% per annum, is unsecured and is convertible after 180 days into shares of the Company’s common stock at a discount of 65% of the lowest trading price for the Company’s common stock during the ten trading days immediately preceding the conversion. Between May 2019 and June 2020, the Company extended the note conversion feature multiple times through April 15, 2020, paying payments totaling $187,500, with a total of $140,000 applied to principal, $10,000 to interest, $37,500 to debt extension fees and incurring prepayment penalties added to principal of $35,000. On May 27, 2020, the Company incurred a 25% late fee of $39,375, which was added to the principal balance. During April 2020, the note became convertible at the option of the holder. Between May and July 2020, the Company issued a total of 16,355,821 shares of common stock for the conversion of $175,000 in note principal. The fair value of the discount conversion feature on the remaining principal balance was $16,879 as of December 31, 2020.

 

As of December 31, 2020 and 2019, the balance on the convertible note payable was $48,938 and $202,500, respectively. During the years ended December 31, 2020 and 2019, the Company recognized $4,863 and $7,637 in debt discount amortization expense, respectively.

 

During August 2019, the Company issued a convertible note payable in the amount of $157,500. The convertible note payable is due one year from the date of issuance, has an original issuance discount of $7,500, accrues interest at the rate of 6% per annum, is unsecured and is convertible after 180 days into shares of the Company’s common stock at a discount of 65% of the lowest trading price for the Company’s common stock during the ten trading days immediately preceding the conversion.

 

Between January and March 2020, the Company extended the note conversion feature through April 15, 2020, paying $37,500, with $30,000 applied to principal, $7,500 to debt extension fees and incurring prepayment penalties added to principal of $7,500. During April 2020, the note became convertible at the option of the holder. On August 10, 2020, the Company incurred a 25% late fee of $33,837, which was added to the principal balance. During August and September 2020, the Company issued a total of 7,616,146 shares of common stock for the conversion of $50,000 in note principal. The fair value of the discount conversion feature on the remaining principal balance was $62,831 as of December 31, 2020.

 

As of December 31, 2020 and 2019, the balance on the convertible note payable was $174,168 and $135,000, respectively. During the years ended December 31, 2020 and 2019, the Company recognized $4,459 and $3,041 in debt discount amortization expense, respectively.

 

During September 2019, the Company issued two convertible notes payable totaling $270,000, or $135,000 each. The convertible notes payable were due one year from the date of issuance, each had an original issuance discount of $11,500, accrued interest at the rate of 6% per annum, unsecured and were convertible after 180 days into shares of the Company’s common stock at a discount of 65% of the lowest trading price for the Company’s common stock during the ten trading days immediately preceding the conversion.

 

During April 2020, the notes became convertible at the option of the holder. Between May and June 2020, the Company repaid $12,500 in principal in cash and the holders elected to convert the remaining principal of $257,000 and $12,050 in accrued interest for 18,002,387 shares of the Company’s common stock. As of December 31, 2020 and 2019, the balance on the convertible notes payable was $0 and $270,000, respectively. During the years ended December 31, 2020 and 2019, the Company recognized $16,888 and $6,112 in debt discount amortization expense, respectively.

 

37

 

During November 2019, the Company issued a convertible note payable in the amount of $336,000. The convertible note payable was due one year from the date of issuance, had an original issuance discount of $45,000, accrues interest at the rate of 10% per annum, is unsecured and is convertible after 180 days into shares of the Company’s common stock at a discount of 65% of the lowest trading price for the Company’s common stock during the ten trading days immediately preceding the conversion. During May 2020, the note became convertible at the option of the holder. Between July and November 2020, the note holder elected to convert $241,000 of principal and $18,379 in accrued interest for 41,696,169 shares of the Company’s common stock.

 

The fair value of the discount conversion feature on the remaining principal balance was $47,273 as of December 31, 2020. As of December 31, 2020 and 2019, the balance on the convertible note payable was $142,273 and $336,000, respectively. During the nine months ended September 30, 2020, the Company recognized $33,781 in debt discount amortization expense.

 

During December 2019, the Company issued a convertible note payable in the amount of $220,000. The convertible note payable is due one year from the date of issuance, has an original issuance discount of $26,000, accrues interest at the rate of 7% per annum, is unsecured and is convertible after 180 days into shares of the Company’s common stock at a discount of 65% of the lowest trading price for the Company’s common stock during the ten trading days immediately preceding the conversion. During June 2020, the note became convertible at the option of the holder. Between July and December 2020, the note holder elected to convert the remaining $220,000 of principal and $11,489 in accrued interest for 31,900,000 shares of the Company’s common stock.

 

As of December 31, 2020 and 2019, the balance on the convertible note payable was $0 and $220,000, respectively. During the years ended December 31, 2020 and 2019, the Company recognized $25,047 and $926 in debt discount amortization expense.

 

During January 2020, the Company issued a convertible note payable in the amount of $138,000. The convertible note payable is due one year from the date of issuance, has an original issuance discount of $3,000, accrues interest at the rate of 8% per annum, is unsecured and is convertible after 180 days into shares of the Company’s common stock at a discount of 65% of the lowest trading price for the Company’s common stock during the ten trading days immediately preceding the conversion. During July 2020, the note became convertible at the option of the holder.

 

The fair value of the discount conversion feature on the remaining principal balance was $71,193 as of December 31, 2020. As of December 31, 2020, the balance on the convertible note payable was $209,194. During the year ended December 31, 2020, the Company recognized $2,778 in debt discount amortization expense.

 

During February 2020, the Company issued a convertible note payable in the amount of $440,000. The convertible note payable is due one year from the date of issuance, has an original issuance discount of $40,000, accrues interest at the rate of 5% per annum, is unsecured and is convertible after 180 days into shares of the Company’s common stock at a discount of 65% of the lowest trading price for the Company’s common stock during the ten trading days immediately preceding the conversion. During August 2020, the note became convertible at the option of the holder.

 

The fair value of the discount conversion feature on the remaining principal balance was $226,724 as of December 31, 2020. As of December 31, 2020, the balance on the convertible note payable was $666,724. During the year ended December 31, 2020, the Company recognized $54,082 in debt discount amortization expense.

 

During April 2020, the Company issued a convertible note payable in the amount of $247,500. The convertible note payable is due one year from the date of issuance, has an original issuance discount of $22,500, accrues interest at the rate of 5% per annum, is unsecured and is convertible after 180 days into shares of the Company’s common stock at a discount of 65% of the lowest trading price for the Company’s common stock during the ten trading days immediately preceding the conversion. During October 2020, the note became convertible at the option of the holder.

 

The fair value of the discount conversion feature on the remaining principal balance was $123,518 as of December 31, 2020. As of December 31, 2020, the balance on the convertible note payable was $371,018. During the year ended December 31, 2020, the Company recognized $16,089 in debt discount amortization expense.

 

During December 2020, the Company issued a convertible note payable in the amount of $112,000. The convertible note payable is due one year from the date of issuance, has an original issuance discount of $12,000, incurred debt issuance costs of $2,000, accrues interest at the rate of 5% per annum, is unsecured and is convertible immediately into shares of the Company’s common stock at $0.005 per share. As a result of the conversion price being lower than the market price of the Company’s common stock on the date of issuance, the Company recognized a beneficial conversion feature of $98,000 upon issuance. During the year ended December 31, 2020, the Company recognized $99 in debt discount amortization expense.

 

38

 

During the year ended December 31, 2020, the Company paid $20,000 as a debt financing fee on the above financings.

 

During the year ended December 31, 2020 the Company recognized $548,419 in fair value losses as a result of the conversion options on the above mentioned convertible debt.

 

Nonconvertible Debt

 

Outstanding notes payable and convertible notes payable to third parties consisted of the following as of December 31, 2020 and 2019:

 

   

December 31,

 

Name

 

2020

   

2019

 

Convertible Debt:

               

Convertible note payable, interest at 10%, unsecured, due April 18, 2019

  $ -     $ 165,000  

Convertible note payable, interest at 7%, unsecured, due February 26, 2021

    -       145,829  

Convertible note payable, interest at 6%, unsecured, due May 22, 2020

    48,938       202,500  

Convertible note payable, interest at 6%, unsecured, due August 5, 2020

    174,168       157,500  

Convertible note payable, interest at 6%, unsecured, due September 25, 2020

    -       135,000  

Convertible note payable, interest at 6%, unsecured, due September 25, 2020

    -       135,000  

Convertible note payable, interest at 10%, unsecured, due November 22, 2020

    142,273       336,000  

Convertible note payable, interest at 10%, unsecured, due December 18, 2020

    -       220,000  

Convertible note payable, interest at 10%, unsecured, due January 28, 2021

    209,194       -  

Convertible note payable, interest at 10%, unsecured, due February 6, 2021

    666,724       -  

Convertible note payable, interest at 10%, unsecured, due April 14, 2021

    371,018       -  

Convertible note payable, interest at 10%, unsecured, due December 28, 2020

    112,000       -  

Total current debt

    1,724,315       505,000  

Less: Unamortized discount

    (123,629

)

    (15,160

)

Net, current debt

  $ 1,600,686     $ 489,840  

Nonconvertible Debt:

               

Notes payable, no interest, unsecured, past due

  $ 35,000     $ 35,000  

Notes payable, no interest, unsecured, past due

    378,185       378,185  

Total notes payable

    413,185       413,185  

 

NOTE 6: EQUITY TRANSACTIONS

 

Common Stock 

 

2020

 

During January 2020, in conjunction with the issuance of a convertible note payable to a related party, the Company recognized a $4,150 debt discount to additional paid-in capital.

 

During April 2020, the Company issued 1,250,000 shares of common stock for the conversion of $100,000 in principal of a convertible note payable due to a related party.

 

Between May and December 2020, the Company issued a total of 140,734,185 shares of common stock for the conversion of $1,191,144 in principal, $102,354 in accrued interest and $5,050 in conversion fees on eight convertible notes payable.

 

During July and August 2020, the Company issued 479,123 shares of common stock for services valued at $7,859 and 13,275,153 shares of common stock to officers and directors for bonuses valued at $172,550. Common stock issued for services was valued at the market prices of the Company’s common stock on the date of grant.

 

39

 

During December 2020, in conjunction with the issuance of a convertible note payable to a related party, the Company recognized a $98,000 debt discount to additional paid-in capital.

 

2019

 

During the year ended December 31, 2019, the Company issued 636,364 shares of its common stock to consultants for services valued at $0.10 per share, or $63,637.

 

During the year ended December 31, 2019, the Company issued 4,408,000 shares of its common stock to officers for bonuses at $0.10 per share, or $440,800.

 

During the year ended December 31, 2019, the Company issued 1,875,000 shares of its common stock for the conversion of $150,000 of related party convertible debt at the stated conversion price of $0.08 per share.

 

Options

 

There were no common stock options issued and no unamortized options expense during the years ended and as of December 31, 2020 and 2019.

 

The following table presents the stock option activity during the years ended December 31, 2020 and 2019:

 

           

Weighted

   

Weighted

 
           

Average

   

Average

 
   

Options

   

Exercise Price

   

Remaining Term

 

Outstanding - December 31, 2018

    114,285     $ 9.63       0.75  

Granted

    -       -       -  

Expired

    (114,285

)

    9.63       -  

Exercised

    -       -       -  

Outstanding - December 31, 2019

    -     $ -       -  

Granted

    -       -       -  

Expired

    -       -       -  

Exercised

    -       -       -  

Outstanding – December 31, 2020

    -     $ -       -  

 

Warrants

 

In November 2013, the Company issued a lender an aggregate of 310,863 common stock warrants in connection with a note payable. The warrants were exercisable immediately at $1.75 per share and expire on November 30, 2018. These warrants contain a subsequent equity sale reset “down round”, which provides that if the Company sells or grants any option to purchase any common stock of the Company at any effective price per share less than the exercise price of the warrants, the exercise price shall be reduced to equal that lower exercise price. During 2017, the exercise price of these warrants was reset to $0.055 per share.  As the warrants were accounted for as derivative liabilities (due to being tainted by the outstanding convertible debt) at the time the reset was triggered, the change in fair value resulting from the reset of $26,060 was recognized as change in fair value of derivative liabilities.

 

In August 2014, the Company issued a lender an aggregate of 4,180,000 common stock warrants in connection with a note payable. The warrants were exercisable immediately at $0.50 per share and expire on August 31, 2019. These warrants contain a subsequent equity sale reset “down round”, which provides that if the Company sells or grants any option to purchase any common stock of the Company at any effective price per share less than the exercise price of the warrants, the exercise price shall be reduced to equal that lower exercise price. During 2017, the exercise price of these warrants was reset to $0.055 per share. As the warrants were accounted for as derivative liabilities (due to being tainted by the outstanding convertible debt) at the time the reset was triggered, the change in fair value resulting from the reset of $177,959 was recognized as change in fair value of derivative liabilities.

 

There were no warrants issued during 2020 and 2019.

 

40

 

The following table presents the stock warrant activity during the years ended December 31, 2020 and 2019:

 

           

Weighted

   

Weighted

 
           

Average

   

Average

 
   

Warrants

   

Exercise Price

   

Remaining Term

 

Outstanding - December 31, 2018

    7,032,329     $ 0.08       1.21  

Granted

    -       -       -  

Forfeited/expired

    (4,180,000

)

    0.06       -  

Exercised

    -       -       -  

Outstanding - December 31, 2019

    2,852,329     $ 0.11       1.00  

Granted

    -       -       -  

Forfeited/expired

    (2,360,457

)

    0.11       -  

Exercised

    -       -       -  

Outstanding – December 31, 2020

    491,872     $ 0.14       0.43  
                         

Exercisable – December 31, 2020

    491,872     $ 0.14       0.43  

 

The intrinsic value of the exercisable warrants as of December 31, 2020 and 2019 was $0 and $0, respectively.

 

NOTE 7: COMMITMENTS AND CONTINGENCIES

 

Separation Agreement

 

As part of the separation agreement with Mr. Ponce de Leon, the ex–Chief Operating Officer of the Company, the Company agreed to pay him his accrued salary of $1,226,711 within two years but agreed to pay him $200,000 by November 2015 out of revenues earned.

 

As the Company did not earn revenue in 2015 and as at December 2020 has still not earned revenue, the obligation to Mr. Ponce de Leon of $1,692,861 is currently in default and the amount includes $466,147 in accrued interest. It is the Company’s intention to pay Mr. Ponce de Leon upon the company receiving revenue.

 

Operating Leases

 

Clean Coal has an operating lease for its executive offices in Manhattan, New York. Effective February 1, 2014, the lease is month to month, at a monthly rate of $200 per month.

 

In April 2018, the Company secured a permanent location in Wyoming for its test facility at the Fort Union Industrial Park. The term of the lease is three years and calls for rent of $36,000, prepaid. The $36,000 covering three years rent was paid in April 2018 and is being amortized to lease expense using the straight-line method over the three-year term of the lease. During the years ended December 31, 2020 and 2019, the Company recognized $12,000 and $12,000 in amortization of right to use assets, respectively. The lease is scheduled to be renewed for an additional 3 years under the same terms and conditions.

 

NOTE 8: SUBSEQUENT EVENTS

 

In January 2021, the company entered into three year convertible notes with Black Diamond Financial Group for a total of $17,600. The notes carry 12% interest.

 

In February 2021, the company entered into three year convertible notes with Wyoming New Power for a total of $150,000. The notes carry 12% interest.

 

In February 2021, a total of 14,585,961 shares were issued to extinguish $95,000 in principal, $11,732.88 in interest and $600 in legal fees.

 

In February 2021, Mr. Neary returned 4,516,310 voluntarily shares to the company that was previous awarded to him.

 

 

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

There have been no changes in our independent accountants, MaloneBailey, LLP, or disagreements with them on matters of accounting or financial disclosure.

 

ITEM 9A. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

As of December 31, 2020, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our financial disclosure controls and procedures were not effective due to our limited internal resources and lack of ability to have multiple levels of transaction review.

 

Managements Report on Internal Control over Financial Reporting

 

Management is responsible for the preparation and integrity of our published financial statements. The financial statements have been prepared in accordance with GAAP and, accordingly, include amounts based on judgments and estimates made by management. Management also prepared the other information included in the annual report and is responsible for its accuracy and consistency with the financial statements.

 

Management is responsible for establishing and maintaining a system of internal control over financial reporting, which is intended to provide reasonable assurance to our management and Board of Directors regarding the reliability of our financial statements. The system includes but is not limited to:

 

-      a documented organizational structure and division of responsibility;

-      established policies and procedures to foster a strong ethical climate which is communicated throughout the Company;

-      regular reviews of our financial statements by qualified individuals; and

-      the careful selection, training and development of our employees and personnel.

 

There are inherent limitations in the effectiveness of any system of internal control, including the possibility of human error and the circumvention or overriding of controls. Also, the effectiveness of an internal control system may change over time. We have implemented a system of internal control that was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP.

 

Management has assessed our internal control system in relation to criteria for effective internal control over financial reporting described in “Internal Control-Integrated Framework” issued in 2013 by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission. Based upon these criteria, we believe that, as of December 31, 2020, our system of internal control over financial reporting was not effective due to material weaknesses that were identified. The material weaknesses are caused by our limited internal resources and limited personnel.  We presently have only two officers. The material weaknesses include 1.) no segregation of duties within the Company, 2.) there is no management oversight or multiple levels of supervision and review, no control documentation being produced, no one to review control documentation if it was being produced, 3.) a lack of expertise in the application of generally accepted accounting principles in regard to the accounting and reporting of our derivative transactions.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in disclosure controls and procedures that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially effect, our disclosure controls and procedures. We do not expect to implement any changes to our disclosure controls and procedures until there is a significant change in our operations or capital resources.

 

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to the rules of the Securities and Exchange Commission for smaller reporting companies that permit the Company to provide only management’s report in this annual report.

 

42

 

PART III

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

The executive officers and directors of the Company are as follows:

 

Name

 

Age

 

Position

 

Held Since

Robin T. Eves

 

70

 

CEO, President, Director

 

August 2010

Thomas Shreve

 

69

 

Director

 

November 2015

Aiden Neary

 

49

 

COO, CFO, Director

 

February 2016

 

Certain biographical information with respect to our current officers and directors is set forth below.

 

Robin Eves has been our Chief Executive Officer, President and a member of the Board of Directors since August 2010. Prior to his appointment with the Company, from February 2009 through August 2010, he served as the CEO of Atlantic Energy Group Ltd., a global energy company developing a major storage and pipeline initiative in South Carolina and the build-out of a global trading business in London, Singapore and the rest of Asia. From the period March 2005 to January 2009 he worked with Oil Trade and Transport LLC, working closely with Sempra Energy Trading. He was responsible for business development in Russia, India and the Middle East. Also during the period, from March 2003 to February 2005, Mr. Eves served as Managing Director and global head of crude and refined products for United Bank of Switzerland From October 2002 to February 2003, Mr. Eves acted as a consultant for Barclays Capital in London, hired to do an extensive due diligence on the Russian/former Soviet Union markets in preparation for Barclays’ possible re-entry into those markets. From February 1990 to September 2002, Mr. Eves served as Managing Director for Synergy International SA/Magna Oil and Gas LLC/CCL Oil, where he was responsible for all trading and structured transactions. Prior to that time, from 1987 to 1990, Mr. Eves served as Vice-President and global head of products trading, and from 1976 to 1987, worked in various positions with Cargill.

 

We believe that Mr. Eves’ qualifications to serve on the Board of Directors include his extensive background in all aspects of the global energy business, including experience in crude and refined products for power production, including gas and coal, as well as related emissions controls.

 

Aiden Neary was appointed as Chief Financial Officer of the Company on November 26, 2013 and Chief Operating Officer in July 2015. In January 2016 Mr. Neary was appointed to the Board of Directors. Since October 2010, Mr. Neary has been exploring opportunities across the investment banking landscape and has also pursued private interests including charitable work.  From February 2010 to October 2010, he served as Managing Director and Chief of Staff for Global Equity at UBS in Stamford, Connecticut. From November 2006 to February 2010, Mr. Neary was Executive Director and Chief of Staff for Global Equity at UBS. From June 2003 to November 2006, he served as Executive Director and COO for the Global Commodity Business at UBS. Prior to that position, from February 2002 to June 2003, he was Director and Business Manager for Global Government Bond and Derivative business at UBS in London, and from August 2000 to February 2002, as Associate Director and Business Manager for Global Government Bond and Derivative Business at UBS in London. Prior to joining UBS, from January 2000 to July 2000, Mr. Neary was Manager and Head of Product Control for Fixed Income Derivatives at Schroders Investment Bank in London. From January 1995 to January 2000, he was Manager and Head of Product Control for Government Bonds and Derivatives at ING Barings.  Mr. Neary earned a degree in Accounting and Law from Kingston University in London (1990 – 1993), and is a Chartered Management Accountant since 1998.

 

We believe that Mr. Neary’s qualifications to serve on the Board of Directors include his over 15 years of professional experience working in Investment Banking and his over two years of working with Clean Coal Technologies Inc.

 

43

 

Mr. Thomas W. Shreve was appointed to the Board of Directors in November, 2015. Mr. Shreve moved from California to Indonesia in 1991 to serve as country representative for New York-based law firm Milbank, Tweed, Hadley & McCloy, and over the succeeding 24 years has been a leading transaction execution specialist and business executive in Indonesia. Tom has managed some of the more significant transactions recently undertaken by Indonesian companies, including the permanent acquisition financing and subsequent sale of Berau Coal Energy, and the acquisition of Inter Milan Football Club by a group of Indonesian businessmen. He served as an officer of Berau Coal Energy and as a non-executive director of Inter Milan Football Club. As a lawyer in Jakarta affiliated with Milbank in the early 1990s, Mr. Shreve advised the issuers in the first New York Stock Exchange listing by a private sector Indonesian company, as well as the first U.S. public bond issue by a private sector Indonesian company. As an investment banker, he advised the Indonesian Government in the sale of distressed assets in the aftermath of the Asian Financial Crisis of 1997-98. He served as Chief Executive Officer of Recapital Investment Group from 2009-14 and of Acuatico Pte. Ltd., a water infrastructure company, in 2014-15. A member of the California Bar, Mr. Shreve earned his J.D. degree at Northwestern University School of Law in Chicago.

 

We believe that Mr. Shreve’s qualifications to serve on the Board of Directors include his strong legal and business connections across Asia and in particular in Indonesia where he currently resides.

 

All directors will hold office until the next annual meeting of stockholders (currently expected to be held in the second quarter of 2021) and until their successors have been duly elected and qualified. There are no agreements with respect to the election of directors. Vacancies on the Board of Directors during the year may be filled by the majority vote of the directors in office at the time of the vacancy without action by the stockholders.

 

Board Committees

 

At this filing date, we have an audit committee, but no compensation committee or nominating committee. Our full Board currently performs the duties and responsibilities of such committees. Due to the size of the Company and due to the small number of directors that we had for 2020, we believed it was appropriate for the full Board to handle the responsibilities of these committees. It is our intention through 2021, as our Board increases in size, to introduce a number of committees.

 

Audit Committee Financial Expert

 

We created an Audit Committee in December 2017 currently comprising of one independent board of director member, Thomas Shreve, and two internal board of director members Aiden Neary and Robin Eves.

 

Code of Conduct

 

On February 11, 2013, the board of directors approved a code of business conduct and ethics, filed as an exhibit to the Company’s Current Report on Form 8-K on February 14, 2013.

 

Board Leadership Structure and Role in Risk Oversight

 

The Board of Directors has risk oversight responsibility for the Company and administers this responsibility directly. The Board of Directors oversees our risk management process through regular discussions of our risks with senior management both during and outside of regularly scheduled Board of Directors meetings. In addition, the Board of Directors administers our risk management process with respect to risks relating to our accounting and financial controls.

 

Our Board of Directors has no policy with regard to the separation of the offices of Chairman of the Board and Chief Executive Officer, and believes, given the size of our company, no such formal policy is necessary at this time.

 

Director Independence 

 

Our Board is not subject to any independence requirements. However, our Board has reviewed the independence of its directors under the requirements set forth by the NASDAQ Stock Market. Messrs. Eves and Neary are officers of the Company and therefore not deemed independent directors.  Mr. Shreve is deemed to be an independent director.

 

44

 

Meetings of our Board of Directors 

 

Our Board of Directors held 4 meetings during the fiscal year ended December 31, 2020 (including meetings conducted by telephone conferencing).  No director attended less than 75% of all board meetings during the fiscal year ended December 31, 2020. All current Board members and all nominees for election to the Board of Directors are encouraged to attend our annual meetings of stockholders, either in person or by teleconference.

 

Nomination of Director Candidates

 

We receive suggestions for potential director nominees from many sources, including members of the Board, advisors, and stockholders. Any such nominations, together with appropriate biographical information, should be submitted to the Chairperson of the Board in the manner discussed below. Any candidates submitted by a stockholder or stockholder group are reviewed and considered in the same manner as all other candidates.

 

Qualifications for consideration as a Board nominee may vary according to the particular areas of expertise being sought as a complement to the existing board composition. However, minimum qualifications include high level leadership experience in business activities, breadth of knowledge about issues affecting the Company, experience on other boards of directors, preferably public company boards, and time available for meetings and consultation on Company matters. Our Board does not have a formal policy with regard to the consideration of diversity in identifying director candidates, but seeks a diverse group of candidates who possess the background, skills and expertise to make a significant contribution to the Board, to the Company and our stockholders. Candidates whose evaluations are favorable are then chosen by the full Board. The full Board selects and recommends candidates for nomination as directors for stockholders to consider and vote upon at the annual meeting.

 

Stockholder Communications 

 

Stockholders wishing to communicate with the Board of Directors or with a specific director may send a letter to our corporate secretary at Clean Coal Technologies, Inc., 295 Madison Avenue (12th Floor), New York, NY 10017, and should be marked to the attention of the appropriate director or directors.  Our secretary will circulate the communications (other than commercial solicitations) to the appropriate director or directors.  Communications marked “Confidential” will be forwarded unopened.

 

Directors Compensation 

 

In 2020, all meetings were via telephone conference. The Board plans one regularly scheduled meeting each fiscal quarter and may schedule additional meetings as necessary. For fiscal 2019 and 2020, Mr. Shreve will receive annual compensation as a director of $25,000 which will be paid only upon available cash flow.

 

All of our present non-employee directors, have other employment or sources of income and will routinely devote only such time to the Company necessary to maintain its viability. It is estimated that each non-employee director will devote at least 2 days per month to the Company’s corporate activities. We incurred $25,000 in director fees for the outside director during the years 2019 and 2020.

 

Stock Ownership Requirements 

 

The Board of Directors has encouraged its members to acquire and maintain stock in the Company to link the interests of such persons to the stockholders. However, the Board of Directors has not established stock ownership guidelines for members of the Board of Directors or the executive officers.

 

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ITEM 11. EXECUTIVE COMPENSATION

 

Compensation Discussion and Analysis 

 

At this time, we do not have a compensation committee or a fully developed compensation policy. We have only two executive officers, our CEO and president, our Chief Operations Officer and Chief Financial Officer. Their employment agreements were negotiated by the board of directors with the terms based on the board’s assessment of their qualifications and requirements.

 

We anticipate establishing a compensation committee sometime in the next 12 months. The following Compensation Discussion and Analysis describes prospectively the expected duties, responsibilities and role of our future Compensation Committee as well as the material elements of our planned compensation for our future executive officers. The information below provides the description of compensation policies that we intend to make applicable to executive officers and other highly compensated individuals under employment and/or consulting arrangements in the future.

 

Planned Objectives of Our Compensation Program

 

The primary objective of our compensation program, including our executive compensation program, will be to maintain a compensation program that will fairly compensate our executives and employees, attract and retain qualified executives and employees who are able to contribute to our long term success, encourage performance consistent with clearly defined corporate goals and align our executives’ long term interests with those of our stockholders. To that end, our future compensation practices will be intended to:

 

1. Tie total compensation to the Company’s performance and individual performance in achieving financial and non-financial objectives; and

 

2. Align senior management’s interests with stockholders’ interests through long term equity incentive compensation.

 

Expected Role of the Compensation Committee 

 

The Compensation Committee, once formed, will determine the compensation of our Chief Executive Officer and, in consultation with the Chief Executive Officer, and our other executive officers. In addition, the Compensation Committee will be responsible for adopting, reviewing and administering our compensation policies and programs, including any cash bonus incentive plan or equity incentive plan that we may adopt. We anticipate that our Compensation Committee will adhere to a compensation philosophy that (i) seeks to attract and retain qualified executives who will add to the long term success of the Company, (ii) promotes the achievement of operational and strategic objectives, and (iii) compensates executives commensurate with each executive’s level of performance, level of responsibility and overall contribution to the success of the Company.

 

In determining the compensation of our Chief Executive Officer and our other executive officers, the Compensation Committee expects to consider the financial condition and operational performance of the Company during the prior year. In determining the compensation for executive officers other than the Chief Executive Officer, the Compensation Committee plans to consider the recommendations of the Chief Executive Officer.

 

The Compensation Committee will review the compensation practices of other companies, based in part on market survey data and other statistical data relating to executive compensation obtained through industry publications and other sources. The Compensation Committee does not intend to benchmark the Company’s compensation program directly with other publicly traded companies or other companies with which we may compete for potential executives since some of these competitors are privately held companies for which executive compensation information may not be available. However, the Compensation Committee intends to compare our executive compensation program as a whole with the programs of other companies for which survey data is available, and will also compare the pay of individual executives if the jobs are sufficiently similar to make the comparison meaningful. The Compensation Committee plans to use such survey data primarily to ensure that our executive compensation program as a whole will be competitive.

 

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Components of Future Executive Compensation 

 

We anticipate that our future executive employment agreements will provide that employees will be compensated by salary and bonus, with bonuses potentially including cash and equity components. The specific elements of the future compensation program are not determined but will most likely include base salary, an annual cash performance bonus and long-term equity incentives. Our compensation program will be designed to provide our executives with incentives to achieve our short and long-term performance goals and to pay competitive base salaries. Each executive officer’s current and prior compensation will be considered in setting future compensation.

 

In addition, we expect employment agreements with our executive officers to provide for other benefits, including potential payments upon termination of employment. Once established, the compensation committee will consider all of the above components in determining the exact makeup of the total executive compensation package as well as the factors to be applied in establishing each component.

 

Perquisites and Other Benefits

 

At this time, we do not expect to provide perquisites or personal benefits to future executive officers, other than the payment of health insurance premiums and payment of life insurance premiums.

 

Employment Agreements

 

We signed two year employment agreements effective July 1, 2020, with Robin Eves, as Chief Executive Officer and President, and Mr. Neary as COO/CFO. Mr. Eves will receive an annual salary of $519,750 and Mr. Neary $500,000. Each officer was granted a signing bonus of 750,000 shares of the Company’s restricted common stock upon execution of the agreements. In addition, each officer will be granted an additional 750,000 common shares payable following the one year completion of the contract due July 1, 2021.

 

The above employment agreements include provisions for participation in employee benefit programs if the Company adopts such programs during the term of the agreements. The agreements also include certain anti-takeover provisions that would require payment of annual salary as well as immediate vesting of all equity compensation if an entity acquiring the Company did not offer comparable positions to each officer.

 

Neither Mr. Eves, nor Mr. Neary is compensated for their contributions to the Board of Directors.

 

We have not entered into employment agreements with any other officers, directors, or any other persons but may do so during the current fiscal year as we expand operations. 

 

Other Key Employees and Consultants

 

As at December 31, 2020 we have no other employees in the company.

 

Employee Benefits

 

When we have adequate financing, we intend to offer employee health insurance benefits coverage to provide our workforce with a reasonable level of financial support in the event of illness or injury. It is our intention to offer health insurance benefits to all full time employees, including executive officers.

 

Accounting Matters

 

We have adopted the provisions of ACS 718 Compensation – Stock Compensation which requires the fair value of options to be recorded as compensation cost in the consolidated financial statements. Options in our compensation packages result in additional compensation costs being recognized.

 

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Stock Ownership Requirements

 

The Board of Directors has encouraged its members to acquire and maintain stock in the Company to link the interests of such persons to the stockholders. However, the Board of Directors has not established stock ownership guidelines for members of the Board of Directors or the executive officers.

 

The Company has not adopted any other bonus, profit sharing, or deferred compensation plan.

 

The following table sets forth, for the last two years, the dollar value of all cash and non-cash compensation earned by the Company’s named executive officers.

 

SUMMARY COMPENSATION TABLE

 

Officers Name &

Principal Position

 

Year

 

Salary

($)

   

Bonus

($)

   

Stock

($)

   

Option Awards

($)

   

All Other

Compensation ($)

   

Total

($)

 

Robin Eves, Pres and CEO (1)

 

2020

    519,750       -       86,275       -       -       606,025  
   

2019

    519,750       -       220,400       -       -       740,150  
                                                     

Aiden Neary, COO/CFO (2)

 

2020

    450,000       -       86,275                       536,275  
   

2019

    450,000       -       220,400                       670,400  

 

(1) On July 8, 2013, Robin Eves was issued 28,571 common shares in lieu of interest on loans made to the company. The value for these shares was $19,747. As a bonus for forbearance on payment of monthly fees, Mr. Eves was approved to receive 57,143 common shares on October 7, 2013. These shares had a value of $80,000 based upon $1.40 on the day that the shares were approved. Mr. Eves also received an approval for bonus shares for the year 2013 on December 4, 2013. The amount of shares approved was 142,857 shares with a value of $165,000 based upon $1.15 per share on the date of the approval. Through December 31, 2014, Robin eves returned 1,273,360 common shares back to the Company. Mr. Eves also returned 457,143 options back to the company that were previously awarded. Mr. Eves signed a two year contract on July 1, 2017 at an annual salary of $519,750. He was also awarded 750,000 common shares upon signing and received an additional 750,000 shares, valued at $67,500 on July 1, 2018. Mr. Eves was issued 2,300,797 common shares as a bonus on May 1, 2018, valued at $203,621. Mr. Eves was issued 2,204,000 common shares as a bonus on May 28, 2019, valued at $220,400. Mr. Eves was issued 2,121,267 common shares as a bonus on July 16, 2020, valued at $34,789. Mr. Eves was issued 4,516,310 common shares as a bonus on August 31, 2020, valued at $51,486.

 

(2) On November 26, 2013 Aiden Neary signed a two year Executive Employment Agreement which called for 142,857 shares to be issued at the time of signing his agreement and 142,857 that vest 1 year after the date of grant. These shares were approved to be issued and the issuance was deferred until after the Company completes its planned common stock reverse.  The fair value of this award was determined to be $300,000 based upon $1.05 on the date of grant. Mr. Neary was approved to receive 28,571 shares of stock as a bonus for 2013 on December 4, 2013. These shares had a value of $33,000 based upon $1.15 per shares on the date of the approval. Through year ended December 31, 2015 Mr. Neary returned 497,527 common shares back to the company. Mr. Neary also forfeited his right of the second tranche of 142,857 shares before vested. Mr. Neary signed a two year contract on July 1, 2017 at an annual salary of $450,000. He was also awarded 750,000 common shares upon signing and received an additional 750,000 shares, valued at $67,500 on July 1, 2018. Mr. Neary was issued 1,992,032 common shares as a bonus on May 1, 2018, valued at $176,295. Mr. Neary was issued 2,204,000 common shares as a bonus on May 28, 2019, valued at $220,400. Mr. Neary was issued 2,121,267 common shares as a bonus on July 16, 2020, valued at $34,789. Mr. Neary was issued 4,516,310 common shares as a bonus on August 31, 2020, valued at $51,486.

 

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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

 

There were no outstanding grants of stock options or unvested stock awards outstanding on the last day of the fiscal year ended December 31, 2020 to any of the executive officers named in the Summary Compensation Table.

 

The following table sets forth, for the current year, the dollar value of all cash and non-cash compensation for the Company’s directors.

 

DIRECTOR COMPENSATION

 

Name

 

Year

 

Fees Earned or

Paid in Cash

($)

   

Stock Awards

($)

   

Option Awards

($)

   

Non-Equity

Incentive Plan

Compensation

($)

   

Non Qualified

Deferred

Compensation

Earnings

   

All Other

Compensation

($)

   

Total

($)

 

Robin Eves

 

2020

    -       -       -       -       -       -       -  

Aiden Neary

 

2020

    -       -       -       -       -       -       -  

Thomas Shreve(1)

 

2020

    25,000                                               25,000  

 

(1) Mr. Shreve directors fees have been accrued

 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

The following table sets forth information, as of December 31, 2020, with respect to each person known by the Company to own beneficially more than 5% of the shares of our 344,625,196 issued and outstanding common stock, as well as the beneficial ownership of each director and officer and all directors and officers as a group. We are not aware of any present arrangements that could result in a change of control of the Company.  Except as otherwise indicated, each of the stockholders listed below has sole voting and investment power over the shares beneficially owned. Except as otherwise indicated, addresses are c/o Clean Coal Technologies, Inc., 295 Madison Avenue (12th Floor) New York, NY 10017.

 

Officers and Directors

 

Amount and Nature of Beneficial Ownership(1)

   

Percent of Class

 
                 

Robin Eves, President, CEO, Director

    24,156,817       7

%

Aiden Neary, COO/CFO

    29,777,789       8.6

%

Thomas Shreve, Director

    100,000       0

%

All directors and officers as a group (5 persons)

    54,034,606       15.6

%

                 

Independent holders of more than 5%

               

Tacho Sandoval

    18,780,675       5.5

%

 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 

Wages and bonus payable to related parties

 

Accruals for salary and bonuses to officers and directors are included in accrued liabilities in the balance sheets and totaled $3,726,880 and $3,090,052 as of December 31, 2020 and 2019, respectively. As part of the separation agreement with Mr. Ponce de Leon, the Company agreed to pay him all his accrued salary within two years but agreed to pay him $200,000 by November 2015 out of revenues earned. As the Company did not earn revenue in 2015 and as at December 2019 has still not earned revenue, the obligation to Mr. Ponce de Leon of $1,594,725 is currently in default and the amount includes $368,011 in accrued interest. It is the Company’s intention to pay Mr. Ponce de Leon immediately upon receiving revenue.

 

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Nonconvertible Debt

 

During the year ended December 31, 2020 and 2019, the Company received $30,000 and $615,000 from the issuance of related party notes payable to an affiliate. The notes are due on demand and do not accrue interest. As of December 31, 2020 and 2019, the Company had outstanding notes payable to affiliates of the Company of $705,000 and $675,000, respectively. These notes payable of the Company are unsecured, bear no interest and are due on demand.

 

During the years ended December 31, 2020 and 2019, the Company received $15,050 and $243,000 from related party advances, respectively. The Company repaid $11,500 and $165,000 on these advances during the years ended December 31, 2020 and 2019, respectively. The advances are due on demand and do not accrue interest. As of December 31, 2020 and 2019, the Company had outstanding advances payable to an officer of the Company of $83,150 and $79,600, respectively. The advances payable are unsecured, bear no interest and are due on demand.

 

Convertible Debt

 

2020

 

During the years ended December 31, 2020, the Company borrowed an aggregate of $76,990, net of beneficial conversion features of $4,150, under convertible notes payable. The convertible notes are secured by assets and the common stock of the Company, bear interest at 12% per annum and are due three years from the dates of issuance and are due three years from the dates of issuance. During the year ended December 31, 2020, the Company issued 1,250,000 shares of common stock for the conversion of $100,000 of principal on the convertible notes payable. As of December 31, 2020, the Company had outstanding short-term convertible notes payable of $9,437,192, net of unamortized discounts of $486,867; and, outstanding long-term convertible notes payable of $418,943, net of unamortized discounts of $86,167. The convertible notes payable mature(d) between November 2018 and November 2022 and are convertible at $0.06 per share, which, occasionally has been a discount to the market price on the dates of issuance. Amortization expense related to debt discounts on convertible debt for the year ended December 31, 2020 was $1,648,339. As of December 31, 2020, $7,152,383 in convertible notes are past due.

 

2019

 

During the year ended December 31, 2019, the Company borrowed an aggregate of $341,653, net of beneficial conversion features of $141,338, under convertible notes payable from a Company with an interest owned by a significant stockholder. The convertible notes are secured by assets and the common stock of the Company, bear interest at 12% per annum and are due three years from the dates of issuance. As of December 31, 2019, the Company had outstanding short-term convertible notes payable of $6,593,469, net of unamortized discounts of $658,922 and outstanding long-term convertible notes payable of $2,601,753, net of unamortized discounts of $1,548,257. The convertible notes payable are mature between November 2018 and November 2022 and are convertible at $0.06 per share, which was a discount to the market price on the date of issuance. Amortization expense related to debt discounts on convertible debt for the year ended December 31, 2019 was $1,224,928. As of December 31, 2019, $4,510,384 in convertible notes are past due.

 

Common Stock Issued to Related Parties

 

During January 2020, in conjunction with the issuance of a convertible note payable to a related party, the Company recognized a $4,150 debt discount to additional paid-in capital.

 

During April 2020, the Company issued 1,250,000 shares of common stock for the conversion of $100,000 in principal of a convertible note payable due to a related party.

 

During August 2020, the Company issued 13,275,153 shares of common stock to officers and directors for bonuses valued at $172,549.

 

During December 2020, in conjunction with the issuance of a convertible note payable to a related party, the Company recognized a $98,000 debt discount to additional paid-in capital.

 

During May 2019, the Company issued two of its officers a total of 4,408,000 shares of common stock for services valued at $440,800. The shares are not forfeitable and considered to be earned as of the date of issuance.

 

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During August 2019, the Company issued 1,875,000 shares of common stock for the conversion of $150,000 related party convertible notes payable, or the stated conversion price $0.08 per share.

 

Non-Binding License Agreement related party

 

During July 2017, the Company entered into a non-binding agreement to explore the opportunity of engaging in a license of Clean Coal Pristine M technology. As part of the non-binding agreement, in September 2017, the Company received a non-refundable deposit of $100,000, subject to application to any future license agreement, from Wyoming New Power. The license agreement is for two million tons per annum. The remainder of the license fee will be due upon the signing of a definitive license agreement expected in 2021. Wyoming New Power is a related party because it is controlled by an entity that has a significant interest in Clean Coal Technologies, Inc.

 

Director Independence

 

Our Board is not subject to any independence requirements. However, our Board has reviewed the independence of its directors under the requirements set forth by the NASDAQ Stock Market. Messrs. Eves and Neary are officers of the Company and therefore not deemed independent directors.  Mr. Shreve is deemed to be an independent director.

 

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

 

Fees billed to the Company by MaloneBailey, LLP

 

   

2020

   

2019

 

(1) Audit Fees

  $ 48,000     $ 48,000  

(2) Tax Fees

  $ -     $ -  

(3) Other Fees

  $ -     $ -  

 

All audit and non-audit services and fees are approved by the Board of Directors.

 

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PART IV

 

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 

(a) Documents filed with this report.

 

1. Financial Statements:

 

See Index to Financial Statements on page 22.

 

2. Financial Statement Schedules:

 

Financial statement schedules are omitted because they are not required or are not applicable or the required information is shown in the financial statements or notes thereto.

 

3. Exhibits:

 

The exhibits to this report are listed on the Exhibit Index below.

 

(b) Description of exhibits

 

3.1(1)

Articles of Incorporation

3.2(2)

Amended and Restated Bylaws

4.1(3)

Specimen stock certificate

14(4)

Code of Business Conduct and Ethics

31.1

Certification of Chief Executive Officer in accordance with 18 U.S.C. Section 1350

31.2

Certification of Chief Financial Officer in accordance with 18 U.S.C. Section 1350

32.1

Certification of Chief Executive Officer in accordance with 18 U.S.C. Section 1350

32.2

Certification of Chief Financial Officer in accordance with 18 U.S.C. Section 1350

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

 

(1) Filed with Registrant’s Form 10, January 14, 2009, Certificate of Amendment, June 27, 2012, filed with this Report.

(2) Filed with Registrant’s Form 8-K, December 6, 2012.

(3) Filed with Registrant’s Form 10, January 14, 2009.

(4) Filed with Registrant’s Form 8-K, February 14, 2013.

 

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SIGNATURES

 

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

 

   

/s/Robin Eves

 

Dated: March 30, 2021

 

Robin Eves

CEO, President, Principal Executive Officer

     
     

Dated: March 30, 2021

 

/s/Aiden Neary

 
   

Aiden Neary

CFO, Principal Financial Officer

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on the 30th day of March 2021.

 

/s/Robin Eves

 

/s/Thomas Shreve

 

Robin Eves, CEO, President and Director

 

Thomas Shreve, Director

 
       

/s/Aiden Neary

     

Aiden Neary, COO, CFO and Director

 

 

 
       

 

 

 

 

 

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