Annual report pursuant to Section 13 and 15(d)

Accounting Policies, by Policy (Policies)

v3.21.1
Accounting Policies, by Policy (Policies)
12 Months Ended
Dec. 31, 2020
Accounting Policies [Abstract]  
Basis of Accounting, Policy [Policy Text Block]

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, Policy [Policy Text Block]

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 [Policy Text Block]

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.

Earnings Per Share, Policy [Policy Text Block]

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, Policy [Policy Text Block]

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.

Income Tax, Policy [Policy Text Block]

Federal Income Tax


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


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


Net deferred tax assets consist of the following components as of December 31, 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, Plant and Equipment, Policy [Policy Text Block]

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 or Disposal of Long-Lived Assets, Policy [Policy Text Block]

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 Expense, Policy [Policy Text Block]

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.

Share-based Payment Arrangement [Policy Text Block]

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.

Derivatives, Policy [Policy Text Block]

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

Reclassification, Comparability Adjustment [Policy Text Block]

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, Policy [Policy Text Block]

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.


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

  $ -     $ -     $ -     $ -  
Debt, Policy [Policy Text Block]

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.

New Accounting Pronouncements, Policy [Policy Text Block]

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.


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.