Company Quick10K Filing
Quick10K
Clean Coal Technologies
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2018-09-21 Officers
TXN Texas Instruments 105,220
ROST Ross Stores 35,650
SE SEA 10,230
NVT Nvent Electric 4,590
PBI Pitney Bowes 974
HSGX Histogenics 20
AMDA Amedica 0
MTGE MTGE Investment 0
CAPS Capstone Therapeutics 0
AEI26 AEI Income & Growth Fund 26 0
CCTC 2019-03-31
Part I - Financial Information
Item 1. Financial Statements
Note 1: Basis of Presentation
Note 2: Going Concern
Note 3: Research and Development
Note 4: Related Party Transactions
Note 5: Debt
Note 6: Stockholders' Equity
Note 7: Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 5. Other Information
Item 6. Exhibits
EX-31 ex_143792.htm
EX-32 ex_143793.htm

Clean Coal Technologies Earnings 2019-03-31

CCTC 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 cleancoal20190331_10q.htm FORM 10-Q cleancoal20190331_10q.htm

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, 2019

 

☐ 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)

 

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), Yes ☒  and (2) has been subject to such filing requirements for the past 90 days.  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 10, 2019: 174,427,854  

 

 

 

 

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

15

 

 

 

ITEM 4. 

CONTROLS AND PROCEDURES

15

 

 

 

PART II - OTHER INFORMATION

 

 

 

 

ITEM 1.

LEGAL PROCEEDINGS

16

 

 

 

ITEM 1A.

RISK FACTORS

16

 

 

 

ITEM 2. 

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

16

 

 

 

ITEM 3. 

DEFAULTS UPON SENIOR SECURITIES

16

 

 

 

ITEM 5. 

OTHER INFORMATION

16

 

 

 

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’ equity 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,

 
   

2019

   

2018

 

ASSETS

               

Current Assets

               

Cash

  $ 24,888     $ 25,745  

Total Current Assets

    24,888       25,745  
                 

 Right to use ground lease, net of accumulated amortization of $11,000 and $8,000, respectively

    25,000       28,000  
                 

Total Assets

  $ 49,888     $ 53,745  
                 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

               

Current Liabilities

               

Accounts payable

  $ 1,064,165     $ 1,149,467  

Accrued liabilities

    6,376,058       6,071,160  

Convertible debt, net of unamortized discounts – related party

    4,759,728       4,520,404  

Notes payable – related party

    378,600       86,600  

Customer deposit – related party

    100,000       100,000  
Convertible notes payable, net of unamortized discount     301,356       -  

Notes payable, net of unamortized discounts

    813,185       903,025  

Total Current Liabilities

    13,793,092       12,830,656  
                 

Long-Term Liabilities

               

Convertible debt, net of unamortized discounts – related party

    1,997,404       1,872,788  
                 

Total Liabilities

    15,790,496       14,703,444  
                 

Stockholders’ Deficit:

               

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

authorized, 174,427,854 and 174,427,854 shares issued

and outstanding, respectively

    1,745       1,745  

Additional paid-in capital

    259,371,212       259,320,220  

Accumulated deficit

    (275,113,565

)

    (273,971,664

)

Total Stockholders’ Deficit

    (15,740,608

)

    (14,649,699

)

Total Liabilities and Stockholders’ Deficit

  $ 49,888     $ 53,745  

 

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,

 
   

2019

   

2018

 
                 

Operating Expenses:

               

General and administrative

  $ 377,494     $ 397,574  

Research and development

    3,000       50,201  

Consulting services

    4,498       10,025  

Gain on sale of assets

    -       (18,300

)

 Loss from Operations

    (384,992

)

    (439,500

)

                 

Other Expenses:

               

Interest expense

    637,909       941,701  

Debt prepayment and default expense

    119,000       -  

Total Other Expenses

    (756,909

)

    (941,701

)

                 

Net Loss

  $ (1,141,901

)

  $ (1,381,201

)

                 

Weighted average shares outstanding – basic and diluted

    174,427,854       148,972,419  
                 

Net loss per share basic and diluted

  $ (0.01

)

  $ (0.01

)

 

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, 2018 and 2019

 

                   

Additional

           

Total

 
   

Common Stock

   

Paid-In

   

Accumulated

   

Stockholders’

 
   

Shares

   

Amount

   

Capital

   

Deficit

   

Deficit

 

Balance, December 31, 2017

    148,972,419     $ 1,489     $ 255,321,698     $ (268,411,964

)

  $ (13,088,777

)

Beneficial conversion feature on convertible debt

    -       -       1,175,584       -       1,175,584  

Net loss for the three months ended March 31, 2018

                            (1,381,201

)

    (1,381,201

)

Balance, March 31, 2018

    148,972,419     $ 1,489     $ 256,497,282     $ (269,793,165

)

  $ (13,294,394

)

                                         

Balance, December 31, 2018

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

)

  $ (14,649,699

)

Beneficial conversion feature on convertible debt

    -       -       50,992       -       50,992  

Net loss for the three months ended March 31, 2019

    -       -       -       (1,141,901

)

    (1,141,901

)

Balance, March 31, 2019

    174,427,854     $ 1,745     $ 259,371,212     $ (275,113,565

)

  $ (15,740,608

)

 

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,

 
   

2019

   

2018

 

CASH FLOWS FROM OPERATING ACTIVITIES:

               

Net loss

  $ (1,141,901

)

  $ (1,381,201

)

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

               

Amortization of debt discounts

    306,448       487,044  

Gain on sale of assets

    -       (18,300

)

Amortization of lease asset

    3,000       -  

Debt extension expense

    55,000       -  

Changes in operating assets and liabilities:

               

Decrease in accounts payable

    (85,302

)

    (696,646

)

Increase in accrued expenses

    304,898       404,094  

Net Cash Used in Operating Activities

    (557,857

)

    (1,205,009

)

                 

CASH FLOWS FROM INVESTING ACTIVITIES:

               

Proceeds from the sale of fixed assets

    -       18,300  

Net Cash Provided by Operating Activities

    -       18,300  
                 

CASH FLOWS FROM FINANCING ACTIVITIES:

               

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

    125,000       1,242,500  

Borrowings on notes payable – related party

    292,000       -  

Borrowings on notes payable

    300,000       -  

Payments on notes payable

    (160,000

)

    -  

Net Cash Provided by Financing Activities

    557,000       1,242,500  
                 

NET CHANGE IN CASH AND CASH EQUIVALENTS

    (857

)

    55,791  

CASH AND CASH EQUIVALENTS - beginning of period

    25,745       11,773  

CASH AND CASH EQUIVALENTS - end of period

  $ 24,888     $ 67,564  
                 

SUPPLEMENTAL DISCLOSURES:

               

Cash paid for interest

  $ -     $ -  

Cash paid for income taxes

  $ -     $ -  
                 

NON-CASH INVESTING AND FINANCING ACTIVITIES:

               

Beneficial conversion feature on convertible debt – related party

  $ 50,992     $ 1,175,584  

 

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 2018 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, 2019 and 2018, 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, 2019 and 2018 as such shares would have had an anti-dilutive effect:

 

   

March 31,

 
   

2019

   

2018

 

Common stock warrants

    4,180,000       6,193,233  

Convertible notes payable

    145,088,981       125,633,981  

Total

    149,268,981       131,827,214  

 

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 an accumulated deficit and a working capital deficit as of March 31, 2019 with no significant revenues anticipated for the near term. 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 either raise capital or 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, 2019 and 2018, the Company recognized $3,000 and $50,201 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 $2,544,542 and $2,719,653 as of March 31, 2019 and December 31, 2018, 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, 2019 has still not earned revenue, the obligation to Mr. Ponce de Leon of $1,521,123 is currently in default and the amount includes $294,423 in accrued interest. It is the Company’s intention to pay Mr. Ponce de Leon immediately upon receiving revenue.

 

Convertible Debt

 

During the three months ended March 31, 2019, the Company borrowed an aggregate of $125,000, net of beneficial conversion features of $50,992, 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 March 31, 2019 and December 31, 2018, the Company had outstanding short-term convertible notes payable of $4,882,384 and $4,660,381, net of unamortized discounts of $122,656 and $139,977, respectively and outstanding long-term convertible notes payable of $4,929,800 and $5,026,800, net of unamortized discounts of $2,932,396 and $3,154,012, respectively. The convertible notes payable 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 three months ended March 31, 2019 and 2018 was $289,932 and $487,044, respectively.

 

IP collateral

 

Nonconvertible Debt

 

During the three months ended March 31, 2019, the Company received $285,000 from the issuance of related party notes payable. The notes are due on demand and do not accrue interest. As of March 31, 2019 and December 31, 2018, the Company had outstanding notes payable of $370,000 and $85,000, respectively. These notes payable of the Company are unsecured, bear no interest and are due on demand.

 

During the three months ended March 31, 2019, the Company received $7,000 from an officer. The advance is due on demand and does not accrue interest. As of March 31, 2019 and December 31, 2018, the Company had outstanding advances payable to an officer of the Company of $8,600 and $1,600, respectively. The advances payable are unsecured, bear no interest and are due on demand.

 

Customer Deposit

 

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 2 million ton per annum agreement. The remainder of the license fee will be due upon the signing of a definitive license agreement expected in the second half of 2019. 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

 

Notes Payable

 

During October 2018, the Company borrowed $345,000, net of original debt discount of $45,000 under a note payable. The note payable bears interest at 7% per annum, was due January 18, 2019 and is unsecured. The notes was extended until April 19, 2019 in exchange for a $55,000 debt extension fee added to the principal of the note. As of March 31, 2019 and December 31, 2018, the balance on the note payable was $400,000 and $345,000, respectively. During the three months ended March 31, 2019, the Company recognized the remaining $8,804 in amortization of the debt discount.

 

As of March 31, 2019 and December 31, 2018, 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

 

During August 2018, the Company issued a convertible note payable in the amount of $160,000. The convertible note payable is due one year from the date of issuance, has an original issuance discount of $10,000, 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 twenty trading days immediately preceding the conversion.

 

During the three months ended March 31, 2019, the entire balance of the note was repaid and the Company recognized the remaining $6,356 in debt discount amortization expense.

 

During February 2019, the Company issued a convertible note payable in the amount of $315,000. The convertible note payable is 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 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 the three months ended March 31, 2019, the Company recognized $1,356 in debt discount amortization expense related to the issuance of the convertible note payable.

 

NOTE 6: STOCKHOLDERS’ EQUITY

 

Common Stock Options

 

A summary of common stock option activity for the three months ended March 31, 2019 is as follows:

 

           

Weighted

   

Weighted

 
           

Average

   

Average

 
   

Options

   

Exercise Price

   

Remaining Term

 

Outstanding - December 31, 2018

    114,285     $ 9.63       0.75  

Granted

    -       -       -  

Expired

    -       -       -  

Exercised

    -       -       -  

Outstanding – March 31, 2019

    114,285     $ 9.63       0.50  
                         

Exercisable – March 31, 2019

    114,285     $ 9.63       0.50  

 

The intrinsic value of the exercisable options as of March 31, 2019 was $0.

 

 

Common Stock Warrants

 

The following table presents the common stock warrant activity during the three months ended March 31, 2019:

 

           

Weighted

   

Weighted

 
           

Average

   

Average

 
   

Warrants

   

Exercise Price

   

Remaining Term

 

Outstanding - December 31, 2018

    7,032,329     $ 0.08       1.21  

Granted

    -       -       -  

Forfeited/expired

    -       -       -  

Exercised

    -       -       -  

Outstanding – March 31, 2019

    7,032,329     $ 0.08       0.96  
                         

Exercisable – March 31, 2019

    7,032,329     $ 0.08       0.96  

 

The intrinsic value of the exercisable warrants as of March 31, 2019 was $83,600.

 

NOTE 7: SUBSEQUENT EVENTS

 

 In April, 2019 the Company received a loan of $50,000 from a related party. It is at 0% interest and payable upon demand.

 

In April, 2019, the company repaid $15,000 off the $345,000 Promissory Note dated October 18, 2018. They also agreed to pay $10,000 to extend the maturity of the note to May 31, 2019.

 

 

 

 

 

 

ITEM 2. MANAGEMENT’S 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 management’s 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 will commence and testing of international coal is expected in the second and third quarter of 2019. 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.

 

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.

 

 

 

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.

 

Development Status: 

 

Pristine process. Pristine process successfully lab tested on small scale and through advanced computer modeling. As at November, 2018, various aspects of the Pristine process has been tested at our test facility at the AES coal Power plant in Oklahoma as part of the overall testing of Pristine M.

 

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 will commence and testing of international coal is expected in Q2 – Q3 2019.

 

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 contract a commercial plant in Q3 2019. Jindal is expected to send coal to be processed through our test facility immediately following its reassembly. The bespoke commercial facility design is expected after the testing. 

 

 

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 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.

 

 

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 through 2019.

 

 

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 Q2 –Q3, 2019. 

 

 

Discussions continue with the US DOE and Capitol Hill to further our technology to benefit US coal.

 

 

 

Employees

 

As of March 31, 2019, 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, 2019 or the year ended December 31, 2018. 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 the first quarter of 2019.  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 review and assessment of the testing completed in December 2017 at AES, currently anticipated in the third quarter of fiscal 2019. We do not anticipate any significant royalty fees for approximately 12 months thereafter.

 

For the Three Months Ended March 31, 2019 and March 31, 2018

 

Revenues

 

We have generated no revenues for the three months ended March 31, 2019 and 2018. During the third quarter of 2017, we received a customer deposit of $100,000 towards license revenues from Wyoming New Energy. At March 31, 2019, the $100,000 is recorded as a customer deposit payable until license acceptance and delivery.

 

Operating Expenses

 

Our operating expenses for the three months ended March 31, 2019 totaled $384,992 compared to $439,500 for the three-month period in 2018. The primary component of the operating expenses for the three months ended March 31, 2019 was general and administrative expenses, recognizing $377,494, compared to $397,574 for the three months ended March 31, 2018. We recognized a $47,201 decrease in research and development expenses from $50,201 during the three months ended March 31, 2018 compared to $3,000 during the three months ended March 31, 2019 due to decreasing research and development activities. Consulting services decreased slightly to $4,498 during the three months ended March 31, 2019, from $10,025 during the three months ended March 31, 2018. The Company also recognized $18,300 from the one-time sale of assets during the three months ended March 31, 2018 and had no such gain in the current period.

  

Other Income and Expenses

 

During the three months ended March 31, 2019, we recognized total other expense of $756,909 compared to 941,701 for the three months ended March 31, 2018. The majority of the decrease is due to a $303,792 decrease in interest expense during the three months ended March 31, 2019 from interest accruals and amortization of debt discounts on convertible notes payable compared to the three months ended March 31, 2018. The Company also recognized a total of $119,000 in debt extension and repayment penalties during the three months ended March 31, 2019, and had no such charges in the prior period.

 

 

Net Income/Loss

  

For the three months ended March 31, 2019, we had net loss of $1,141,901, compared to a net loss of $1,381,201 for the three months ended March 31, 2018. The decrease in net loss is mainly due to the $184,792 net reduction in interest and other expenses as well as the $54,508 decrease in loss from operations as discussed above.

 

We anticipate losses from operations will increase during the next three months due to costs associated with moving the test plant to a permanent location, as well as 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 until revenues from operating facilities become sufficient to offset operating expenses, unless we are successful in the sale of licenses for our technology once the coal testing plant testing is complete.

 

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, 2019, 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 $557,857 for the three months ended March 31, 2019 compared to $1,205,009 for the same period in 2018. The decrease is mainly a result of the $239,300 decrease in net loss during the three months ended March 31, 2019 compared to the 2018 period. Adjustment items to reconcile net income to net cash used in operating activities for the three months ended March 31, 2019 consisted of amortization of debt discounts of $306,448, amortization of lease assets of $3,000 and debt extension fees of $55,000.

 

Net Cash Used In Investing Activities. Net cash provided by investing activities for the three months ended March 31, 2019 and 2018 was $0 and $18,300, respectively. Cash provided by investing activities in 2018 is from $18,300 in proceeds from the sale of assets.

 

Net Cash Provided by Financing Activities. Net cash provided by financing activities during the three months ended March 31, 2019 totaled $557,000, compared to $1,242,500 during the three months ended March 31, 2018. We received $125,000 and $1,242,500 from the issuance of convertible notes payable to a related party during the three months ended March 31, 2019 and 2018, respectively. During the three months ended March 31, 2019, borrowings on related party notes was $292,000, we had no related party borrowings in the 2018 comparable period. During the three months ended March 31, 2019, cash from borrowings on convertible notes payable was $300,000, we had no convertible note borrowings in the 2018 comparable period. During the three months ended March 31, 2019, we repaid $160,000 in note principal, we had no note repayments in the 2018 comparable period.

 

Cash Position and Outstanding Indebtedness

 

At March 31, 2019, we had $24,888 in current assets consisting of cash and $15,790,496 in liabilities which consist of $13,793,092 in current liabilities and $1,997,404 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.

 

At December 31, 2018, we had current assets of $25,745 consisting of cash and $14,703,444 in liabilities, which consisted of $12,830,656 in current liabilities and $1,872,788 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, 2019 and December 31, 2018 was $13,768,204 and $12,804,911, respectively.

 

Contractual Obligations and Commitments

 

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 $35-40 million (excluding land costs). This number is expected to be reduced given proposed changes to the process design. 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. The test facility was moved to Wyoming in Q1 2018.

 

Based on our current operational costs and including the capital requirements for our project deployments, we estimate we will need a total of approximately $3,000,000 to fund the Company for the fiscal year 2019 and an additional $4,500,000 to continue for the following fiscal year (2020) or until we start to receive license fees.

 

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, 2019, 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, 2019, 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, 2019, the Company has accrued a total of $1,521,123 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, 2018.

 

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

 

 

 

 

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 10, 2019

By:

/s/ Aiden Neary

 

 

 

Aiden Neary

 

 

 

Chief Financial Officer

 

 

 

 

 

 

 

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