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NewStream Energy Technologies Group Inc - Quarter Report: 2023 March (Form 10-Q)



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 10-Q

 


(Mark One)

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

 

For the quarterly period ended: March 31, 2023

 

☐ 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: 000-50053

 

CLEAN COAL TECHNOLOGIES, INC.

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

 

Nevada

26-1079442

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

 

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

10017

(Address of principal executive offices)

(Zip Code)

 

(646) 727-4847

(Issuer’s telephone number)

 

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

Title of Class

Trading Symbol

Name of Exchange on Which Registered

Common

CCTC

OTCQB

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

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

 

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

 

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

 

If an emerging growth company, indicate by check mark if the registrant has elected 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. ☐

 

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

 

The number of shares outstanding of Registrant’s Common Stock as of date: May 15, 2023: 81,937,325

 

 

 

 

TABLE OF CONTENTS

 

PART I - FINANCIAL INFORMATION

Page

 

 

 

ITEM 1.

FINANCIAL STATEMENTS

3

 

 

 

ITEM 2.

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

11

 

 

 

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

16

 

 

 

ITEM 4.

CONTROLS AND PROCEDURES

16

 

 

 

PART II - OTHER INFORMATION

 

 

 

 

ITEM 1.

LEGAL PROCEEDINGS

17

 

 

 

ITEM 1A.

RISK FACTORS

17

 

 

 

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

17

 

 

 

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

17

 

 

 

ITEM 5.

OTHER INFORMATION

17

 

 

 

ITEM 6.

EXHIBITS

17

 

 

 

SIGNATURES

18

 

 

 

 

 

PART I - FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission and, therefore, do not include all information and footnotes necessary for a complete presentation of our financial position, results of operations, cash flows, and stockholders’ deficit in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature.

 

Clean Coal Technologies, Inc.

Balance Sheets

(Unaudited)

 

   

March 31,

   

December 31,

 
   

2023

   

2022

 

ASSETS

               

Current Assets

               

Cash

  $ 2,237     $ -  

Total Current Assets

    2,237       -  
                 

Right to use ground lease, net of accumulated amortization of $23,000 and $20,000 respectively

    13,000       16,000  
                 

Total Assets

  $ 15,237     $ 16,000  
                 

LIABILITIES AND STOCKHOLDERS DEFICIT

               

Current Liabilities

               

Accounts payable

  $ 2,051,287     $ 2,055,144  

Accrued liabilities

    8,316,091       15,853,992  

Customer deposit – related party

    100,000       100,000  

Convertible debt, net of unamortized discounts – related party

    -       9,856,124  

Notes payable – related party

    976,090       1,635,986  

Convertible notes payable

    450,011       1,549,707  

Notes payable, net of unamortized discount

    563,185       413,185  

Total Current Liabilities

    12,456,664       31,464,138  
                 

Long-Term Liabilities

               

Convertible debt, net of unamortized discounts – related party

    -       18,600  

Total Liabilities

    12,456,664       31,482,738  
                 

Stockholders’ Deficit:

               

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

80,287,325 and 5,002,325 shares issued and outstanding, respectively

    803       50  

Additional paid-in capital

    287,991,990       262,607,277  

Accumulated deficit

    (300,434,220

)

    (294,074,065

)

Total Stockholders’ Deficit

    (12,441,427

)

    (31,466,738

)

Total Liabilities and Stockholders’ Deficit

  $ 15,237     $ 16,000  

 

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

 

 

Clean Coal Technologies, Inc.

Statements of Operations

(Unaudited)

 

   

Three Months Ended

 
   

March 31,

 
   

2023

   

2022

 
                 

Operating Expenses:

               

General and administrative

  $ 309,147     $ 295,445  

Research and development

    3,000       3,293  

Loss from Operations

    (312,147

)

    (298,738

)

                 

Other Expenses:

               

Interest expense

    (59,308

)

    (375,870

)

Gain on debt conversion

    75,383       -  

Loss on debt conversion, related party

    (6,316,221

)

    -  

Change in fair value of share-settled debt

    252,138       (103,892

)

Total Other Expenses

    (6,048,008

)

    (479,762

)

                 

Net Loss

  $ (6,360,155

)

  $ (778,500

)

                 

Weighted average shares outstanding – basic and diluted

    34,876,214       4,142,796  
                 

Net loss per share basic and diluted

  $ (0.18

)

  $ (0.19

)

 

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

 

 

Clean Coal Technologies, Inc.

Unaudited Statements of Changes in Stockholders Deficit

For the Three Months Ended March 31, 2023 and 2022

 

                   

Additional

           

Total

 
   

Common Stock

   

Paid-In

   

Accumulated

   

Stockholders’

 
   

Shares

   

Amount

   

Capital

   

Deficit

   

Deficit

 

Balance December 31, 2021

    4,142,796     $ 42     $ 262,264,404     $ (290,811,712

)

  $ (28,547,266

)

Net loss for the three months ended March 31, 2022

    -       -       -       (778,500

)

    (778,500

)

Balance, March 31, 2022

    4,142,796     $ 42     $ 262,264,404     $ (291,590,212

)

  $ (29,325,766

)

                                         

Balance December 31, 2022

    5,002,325     $ 50     $ 262,607,277     $ (294,074,065

)

  $ (31,466,738

)

Common stock issued for conversion of related party convertible debt

    72,100,000       721       24,513,279       -       24,514,000  

Common stock issued for conversion of convertible debt

    3,185,000       32       871,434       -       871,466  

Net loss for the three months ended March 31, 2023

                            (6,360,155

)

    (6,360,155

)

Balance, March 31, 2023

    80,287,325     $ 803     $ 287,991,990     $ (300,434,220

)

  $ (12,441,427

)

 

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

 

 

Clean Coal Technologies, Inc.

Statements of Cash Flows

(Unaudited)

 

   

Three Months Ended

 
   

March 31,

 
   

2023

   

2022

 

CASH FLOWS FROM OPERATING ACTIVITIES:

               

Net loss

  $ (6,360,155

)

  $ (778,500 )

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

               

Amortization of debt discounts

    -       25,033  

Change in fair value of share-settled debt

    (252,138

)

    103,892  

Amortization of lease asset

    3,000       3,000  

Gain on debt conversion

    (75,383

)

    -  

Loss on debt conversion, related party

    6,316,221       -  

Changes in operating assets and liabilities:

               

Increase (decrease) in accounts payable

    (3,855

)

    4,005  

Increase in accrued expenses

    293,159       483,535  

Net Cash Used in Operating Activities

    (79,151

)

    (159,035 )
                 

CASH FLOWS FROM FINANCING ACTIVITIES:

               

Change in cash overdraft

    (2

)

    -  

Borrowings on debt, net of original issue discount

    150,000       -  

Borrowings on related party debt

    15,390       157,400  

Payments on related party debt

    (84,000

)

    -  

Net Cash Provided by Financing Activities

    81,388       157,400  
                 

NET CHANGE IN CASH AND CASH EQUIVALENTS

    2,237       (1,635 )

CASH AND CASH EQUIVALENTS - beginning of period

    -       1,762  

CASH AND CASH EQUIVALENTS - end of period

  $ 2,237     $ 127  
                 

SUPPLEMENTAL DISCLOSURES:

               

Cash paid for interest

  $ -     $ -  

Cash paid for income taxes

  $ -     $ -  
                 

NON-CASH INVESTING AND FINANCING ACTIVITIES:

               

Conversion of convertible notes payable and accrued interest, related party

  $ 17,461,358     $ -  

Conversion of notes payable and accrued interest, related party

  $ 736,421     $ -  

Conversion of convertible notes payable and accrued interest

  $ 946,849     $ -  

 

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

 

 

Clean Coal Technologies, Inc.

Notes to Financial Statements

(Unaudited)

 

NOTE 1: BASIS OF PRESENTATION

 

The accompanying unaudited interim financial statements of Clean Coal Technologies, Inc. (“Clean Coal”, the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in Clean Coal’s Annual Report on Form 10-K filed with the SEC. In the opinion of management, the accompanying unaudited interim financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary to present fairly the financial position and the results of operations for the interim period presented herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year or for any future period. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for fiscal 2022 as reported in the Form 10K have been omitted.

 

Net Income (Loss) per Common Share

 

Basic net income (loss) per share is computed on the basis of the weighted average number of common shares outstanding during each year. Diluted net income (loss) per share is computed similar to basic net income (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. 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.

 

For the three months ended March 31, 2023 and 2022, the Company realized net losses, resulting in outstanding warrants and convertible debt having an antidilutive effect. All potentially dilutive instruments were excluded from the calculation of diluted net loss per share as their inclusion would have been anti-dilutive.

 

The following table summarizes the potential shares of common stock that were excluded from the computation of diluted net loss per share for the three months ended March 31, 2023 and 2022 as such shares would have had an anti-dilutive effect:

 

   

March 31,

 
   

2023

   

2022

 

Convertible notes payable

    1,728,040       3,773,682  

Total

    1,728,040       3,773,682  

 

Recent 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.

 

NOTE 2: 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 March 31, 2023 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 3: RESEARCH AND DEVELOPMENT

 

Research and development expenses include salaries, related employee expenses, facility lease expense, research expenses and consulting fees. All costs for research and development activities are expensed as incurred. In addition, the Company 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 three months ended March 31, 2023 and 2022, the Company recognized $3,000 and $3,293 of research and development costs, respectively.

 

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 $7,801,639 and $7,543,255 as of March 31, 2023 and December 31, 2022, 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 March 31, 2023 has still not earned revenue, the obligation to Mr. Ponce de Leon of $1,913,667 is currently in default and the amount includes $686,953 in accrued interest. It is the Company’s intention to pay Mr. Ponce de Leon immediately upon receiving revenue.

 

Convertible Debt

 

As of December 31, 2022, the Company had outstanding convertible notes payable and accrued interest to a related party totaling $9,874,724 and $7,586,634, respectively. The convertible notes were secured by assets and the common stock of the Company, incurred interest at 12% per annum, were convertible into shares of the Company’s common stock at $0.06 per share and were past due. During February 2023, the Company entered into a settlement agreement, whereby, with the holder of the convertible notes agreed to convert all of the outstanding debt and accrued interest into 69,300,000 shares of the Company’s common stock valued at $23,562,000, or the market price of the common stock on the date of issuance of $0.34 per share. As a result, the Company recognized a loss on debt conversion of $6,100,642 during the three months ended March 31, 2023.

 

Amortization expense related to debt discounts on convertible debt for the three months ended March 31, 2023 and 2022 was $0 and $25,033, respectively.

 

Nonconvertible Debt

 

As of December 31, 2022, the Company had outstanding nonconvertible notes payable and accrued interest to a related party totaling $847,786 and $145,135, respectively. The borrowings are unsecured, bear no interest and are due on demand. During February 2023, the Company entered into a settlement agreement, whereby, the holder of the nonconvertible notes agreed to convert all of the outstanding debt and accrued interest into 3,700,000 shares of the Company’s common stock. However, only 2,800,000 shares were issued during the three months ended March 31, 2023, the remaining 900,000 shares were issued subsequently, leaving an unsettled balance of $256,500 at March 31, 2023. As such, the 2,800,000 shares were valued at $952,000, or the market price of the common stock on the date of issuance of $0.34 per share. As a result, the Company recognized a loss on debt conversion of $215,579 during the three months ended March 31, 2023.

 

During the three months ended March 31, 2023, the Company borrowed a total of $15,390 in cash and repaid $84,000 from an entity controlled and owned by a significant shareholder of the Company. As of March 31, 2023 and December 31, 2022, the balance on the borrowings was $187,890 and $847,786, respectively.

 

As of March 31, 2023 and December 31, 2022, the Company had outstanding advances payable to an officer of the Company of $83,200 and $83,200, respectively. The advances payable are unsecured, bear no interest and are due on demand.

 

As of March 31, 2023 and December 31, 2022, the Company had outstanding notes payable of $705,000 and $705,000, respectively, to an individual that is a significant shareholder.

 

 

NOTE 5: DEBT

 

Notes Payable

 

During March 2023, the Company entered into two notes payable, both with principal balances of $93,500 and original issuance discounts of $18,500. The notes payable are unsecured, due in one year, accrue interest at the rate of 10% per annum and if there is an event of default, such as not repaying the note when due, the notes become convertible into shares of the Company’s common stock at a the lesser of $0.10 per share, or 90% of the average of the two lowest volume weighted average market prices for the five consecutive trading days prior to the conversion date. As of March 31, 2023, the outstanding principal balance and debt discount of the notes payable was $187,000 and $37,000, respectively.

 

As of March 31, 2023 and December 31, 2022, 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 May 2019, the Company issued a convertible note payable in the amount of $262,500, due in one-year, original issuance discount of $12,500, accrues interest at the default rate of 16% per annum, unsecured and convertible 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. As of March 31, 2023 and December 31, 2022, the balance on the convertible note payable was $98,024 and $85,302, respectively. The fair value of the discount conversion feature on the remaining principal balance was $65,965 as of March 31, 2023 and is included in the note principal balance.

 

During August 2019, the Company issued a convertible note payable in the amount of $157,500, due in one-year, original issuance discount of $7,500, accrues interest at the default rate of 16% per annum, unsecured and convertible 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. As of March 31, 2023 and December 31, 2022, the balance on the convertible note payable was $351,987 and $305,844, respectively. The fair value of the discount conversion feature on the remaining principal balance was $240,650 as of March 31, 2023 and is included in the note principal balance.

 

During January 2020, the Company issued a convertible note payable in the amount of $138,000, due in one-year, original issuance discount of $3,000, accrued interest at 8% per annum unsecured and convertible 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 January 2023, the Company entered into a settlement agreement with the note holder, whereby the Company agreed to issue 685,000 shares of common stock valued at the market price on the date of issuance of $266,466, or $0.39 per share, in exchange for the outstanding convertible note balance with a fair market value of $338,857 and accrued interest of $22,770, recognizing a gain on debt conversion of $95,161 during the three months ended March 31, 2023.

 

During February 2020 and April 2020, the Company issued two convertible notes payable in the amounts of $440,000 and $247,500, respectively. The convertible notes were due in one-year, had original issuance discounts of $40,000 and $22,500, respectively, accrued interest at 5% per annum, were unsecured and convertible 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 January 2023, the Company entered into a settlement agreement with the holder of the convertible notes, whereby the Company agreed to issue 2,500,000 shares of common stock valued at the market price on the date of issuance of $605,000, or $0.24 per share, in exchange for the outstanding convertible note balances with a combined fair market value of $508,700 and accrued interest of $76,522, recognizing a loss on debt conversion of $19,778 during the three months ended March 31, 2023.

 

During the three months ended March 31, 2023 and 2022, the Company recognized $252,138 in fair value gains and $103,892 in fair value losses as a result of the conversion options on the above-mentioned convertible debt, respectively.

 

 

NOTE 6: STOCKHOLDERS EQUITY

 

Common Stock

 

During February 2023, as a result of convertible debt settlement agreements with two related party companies, who were under common control, the Company issued 72,100,000 shares of common stock valued at $24,514,000, or the market price on the date of issuance or $0.34 per share (see Note 4). This transaction results in a change of control.

 

During March 2023, as a result of a convertible debt settlement agreement, the Company issued 685,000 shares of common stock valued at $266,466, or the market price on the date of issuance or $0.39 per share (see Note 5).

 

During March 2023, as a result of a convertible debt settlement agreement, the Company issued 2,500,000 shares of common stock valued at $605,000, or the market price on the date of issuance or $0.24 per share (see Note 5).

 

NOTE 7: SUBSEQUENT EVENTS

 

Related Party Transactions

 

During April 2023, the Company completed a settlement agreement with the related party holder of nonconvertible notes payable, whereby, the Company owed the holder the remaining 900,000 shares of the Company’s common stock valued at $256,500, or the market price of the common stock on the date of issuance of $0.29 per share.

 

Convertible Notes Payable

 

During April 2023, the Company completed a settlement agreement with the holder of two convertible notes, whereby the Company agreed to issue 750,000 shares of common stock valued at the market price on the date of issuance of $210,000, or $0.28 per share, in exchange for the outstanding convertible note balances with a combined fair market value of $450,011 and accrued interest of $70,129, recognizing a gain on debt conversion of $310,140 during April 2023.

 

During April 2023, the Company entered into a note payable with a principal balances of $176,470 and an original issuance discount of 15%, or $26,470. The note payable is unsecured, due in one year, accrues interest at the rate of 10% per annum and if there is an event of default, such as not repaying the note when due, the notes become convertible into shares of the Company’s common stock at $0.20 per share. The Company has the right to purchase the note back without penalty or premium upon at least five days notice.

 

During April 2023, the Company entered into a note payable with a principal balances of $397,727 and an original issuance discount of 15%, or $47,727. The note payable is unsecured, due in one year, accrues interest at the rate of 10% per annum and if there is an event of default, such as not repaying the note when due, the notes become convertible into shares of the Company’s common stock at a the lesser of $0.40 per share, or 90% of the average of the two lowest volume weighted average market prices for the five consecutive trading days prior to the conversion date. The Company has the right to purchase the note back without penalty or premium upon at least five days notice.

 

 

ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

FORWARD-LOOKING STATEMENTS AND FACTORS THAT MAY AFFECT FUTURE RESULTS

 

This Quarterly Report on Form 10-Q contains forward-looking statements 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 Quarterly Report on Form 10-Q 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 was delayed due to the pandemic but is expected to be completed in Q3 2023.

 

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.

 

 

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 the United States and other 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 November, 2020, various aspects of the Pristine process were successfully tested at our test facility at the AES coal Power plant in Oklahoma as part of the overall testing of Pristine M. The second-generation facility in Wyoming is expected to perform a more detailed testing of the Pristine process. The build out and delivery of the Rotary Kiln will enable the test facility to reach significantly higher temperatures to test with more accuracy the Pristine process.

 

Pristine-M. Testing of the Pristine M process on Powder River Basin coal at the AES facility in Oklahoma was completed in December 2017. The Pristine M process was successfully tested and the process, engineering and science were independently proven. The test facility was moved from the AES location to Wyoming where reassembly commenced in Q4 2019 and testing of international coal is expected upon completion of reassembly. The reassembly was delayed due to the pandemic but it is expected to be completed in Q3 2023. Over several months in 2018 and early 2019 the University of Wyoming independently validated the Pristine M process in their laboratory. By coating the exterior of the coal during the stabilization period with heavy hydrocarbons the process produces dust free stabilized coal for transportation.

 

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. The introduction of the Rotary Kiln and the higher temperatures it can achieve will enable a more accurate testing protocol for this process.

 

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 and in Q1, 2023 signed a non binding MOU with President University in Indonesia in a combined effort to assess the impact of our technology on Indonesian Coal both from a coal beneficiation perspective and also coal by-products.

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

 

 

The Company entered into a partnership with the University of Wyoming with the sole focus of using our suite of technologies to increase the use of and value of Wyoming Powder River Basin coal. Primary focus is on utilizing our technology to extract valuable derivative products from coal. Changes to the process have been identified by the University and the company EPC engineers and will be incorporated in the reassembly of the facility in Wyoming. The University confirmed in Q2, 2019 that they had successfully validated the Pristine M process in their laboratory and as a result entered into an agreement with the Company. The agreement between the University and the Company is for the reassembly of the second generation test facility. The University will advance to the EPC contractor on a two to one basis. 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. The company has recognized in its accounts a payable due to the University of Wyoming of $1,000,000 which will be part of a co-share use of the kiln. The kiln and all its relevant control panels was delivered to our site at Gillette, Wyoming in June 2020. The Company is currently negotiating an operational agreement with the University regarding the testing and ongoing shared use of the kiln

 

 

 

The Company has been engaged with AusTrade (The Australian Trade and Investment Commission) and through that relationship has partnered with three separate universities in Australia. Like the University of Wyoming these Universities have a focus on their local coal both from a beneficiation perspective and also 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, 2023 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, 2023 but subject to potential delays due to the current pandemic.

 

 

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 May 2023 in light of coal mining bankruptcies in Wyoming.

 

Employees

 

As of March 31, 2023, 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

 

We had no direct revenues for the three months ended March 31, 2023 or March 31, 2022. In 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 2021 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.

 

For the Three Months Ended March 31, 2023 and March 31, 2022

 

Revenues

 

We have generated no revenues for the three months ended March 31, 2023 and 2022.

 

Operating Expenses

 

Our operating expenses for the three months ended March 31, 2023 totaled $312,147 compared to $298,738 for the three-month period in 2022. The primary component of the operating expenses for the three months ended March 31, 2023 was general and administrative expenses, recognizing $309,147, compared to $295,445 for the three months ended March 31, 2022. Research and development expenses decreased $293 during the three months ended March 31, 2023 to $3,000, compared to $3,293 during the three months ended March 31, 2022.

 

 

Other Income and Expenses

 

During the three months ended March 31, 2023, we recognized total other expense of $6,048,008, compared to $479,762 for the three months ended March 31, 2022. The majority of the $5,568,246 increase is due to a $6,240,838 loss on conversion of convertible and nonconvertible notes payable and related party notes payable and accrued interest during the three months ended March 31, 2023, there were no such losses during the three months ended March 31, 2022. The increase was partially offset by a $315,562 decrease in interest expense due to the conversion of significant interest bearing debt during the three months ended March 31, 2023. Additionally, we recognized a $252,138 gain on change in fair value of share settled debt during the three months ended March 31, 2023, compared to a $103,892 loss during the three months ended March 31, 2022.

 

Net Income/Loss

 

For the three months ended March 31, 2023, we had net loss of $6,360,155, compared to a net loss of $778,500 for the three months ended March 31, 2022. The $5,581,655 increase in net loss is due to the $5,568,246 increase in other expenses as well as a $13,409 increase in loss from operations, as discussed above.

 

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

 

Liquidity and Capital Resources

 

We have generated minimal revenues since inception. We have obtained cash for operating expenses through advances and/or loans from affiliates and stockholders, the sale of common stock, the issuance of loans and convertible debentures

 

Net Cash Used in Operating Activities. Our primary source of operating cash during the three months ended March 31, 2023 was borrowings on related party debt, third party debt and convertible debt. Our primary uses of funds in operations were the completion of the construction of the test facility including the testing of the plant, the payment of professional and consulting fees and general operating expenses.

 

Net cash used in operating activities was $79,151 for the three months ended March 31, 2023, compared to $159,035 for the same period in 2022. The $79,884 decrease is mainly a result of a $5,859,775 increase in non-cash expense adjustments from net gains and losses on debt conversions, debt discount amortization, lease asset amortization and changes in fair value of share-settled debt. The increases in non-cash expense adjustments are offset by an increase in net loss of $5,581,655 and a $198,236 decrease in the net change in accounts payable and accrued expenses during the three months ended March 31, 2023 compared to the 2022 period.

 

Net Cash Used In Investing Activities. There were no investing activities during the three months ended March 31, 2023 or 2022.

 

Net Cash Provided by Financing Activities. Net cash provided by financing activities during the three months ended March 31, 2023 totaled $81,388, compared to $157,400 during the three months ended March 31, 2022. During the three months ended March 31, 2023, we received $150,000 from the issuance of notes payable, $15,390 from related party advances and repaid $84,000 in related party advances as well as recognized a $2 reduction in the cash overdraft from December 31, 2022.

 

Cash Position and Outstanding Indebtedness

 

At March 31, 2023, we had $15,237 in total assets, consisting of $2,237 in cash and $13,000 in right-to-use assets, and $12,456,664 in current liabilities. Current liabilities consist primarily of accounts payable, accrued liabilities, short-term convertible and non-convertible debt and related party debt.

 

At December 31, 2022, we had total assets of $16,000 and $31,482,738 in liabilities, which consisted of $31,464,138 in current liabilities and $18,600 in long-term liabilities. Current liabilities consist primarily of accounts payable, accrued liabilities, short-term convertible and non-convertible debt and related party convertible and non-convertible debt.

 

Our working capital deficit at March 31, 2023 and December 31, 2022 was $12,454,427 and $31,464,138, respectively.

 

 

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. In April, 2021 the company signed and executed an extension to the lease for the site at Fort Union, Wyoming for an additional three years to April 30, 2024. The rent of $36,000 was paid in advance by the company in April, 2021.

 

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 March 31, 2023, we have paid $11,253,224 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 $5,000,000 to fund the Company for the fiscal year 2023 for plant re-assembly and operating costs and an additional $4,000,000 to continue for the following fiscal year (2024) or until an initial commercial plant is up and running.

 

Off-Balance Sheet Arrangements

 

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

 

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

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

 

ITEM 4. CONTROLS AND PROCEDURES

 

As of March 31, 2023, 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, management 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. There is a lack of appropriate segregation of duties within the Company, no control documentation being produced, and no one to review control documentation if it was being produced. As of March 31, 2023, we had two full time officers of the company.

 

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

 

 

 

PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

As part of the separation agreement with Mr. Ponce de Leon, the ex COO 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 2017 has still not earned revenue, the obligation to Mr. Ponce de Leon is currently in default. It is the Company’s intention to pay Mr. Ponce de Leon immediately upon receiving revenue including any interest that has been accrued. As of March 31, 2023, the Company has accrued a total of $1,913,667 in accrued salary and interest.

 

ITEM 1A. RISK FACTORS

 

For information regarding risk factors, see “Part I. Item 1A. Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2022.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 5. OTHER INFORMATION

 

None.

 

ITEM 6. EXHIBITS

 

EXHIBIT NO.

 

DESCRIPTION

 

 

 

31

 

CERTIFICATION OF PRINCIPAL EXECUTIVE AND FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002.

32

 

CERTIFICATION OF PRINCIPAL EXECUTIVE AND FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002.

 

 

 

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

104   Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

 

 

SIGNATURES

 

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

Clean Coal Technologies

 

 

 

 

 

Date: May 15, 2023

By:

/s/ Aiden Neary

 

 

 

Aiden Neary

 

 

 

Chief Financial Officer

 

 

 

 

 

 

 

18