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,June 30, 2021

☐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)

(646) 727-4847

(Issuer’s telephone number)

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

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,August 16, 2021: 369,288,413394,597,687 

TABLE OF CONTENTS

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 from the date of issuance, with an original issuance discount of $12,500, accrues interest at the rate of 6% per annum, is unsecured and is convertible after 180 days into shares of the Company’s common stock at a discount of 65% of the lowest trading price for the Company’s common stock during the ten trading days immediately preceding the conversion. During April 2020, the note became convertible at the option of the holder and between May and July 2020 the Company issued a total of 16,355,821 shares of common stock for the conversion of $175,000 in note principal and accrued interest.

As of March 31,June 30, 2021 and December 31, 2020, the balance on the convertible note payable was $51,194$51,892 and $48,938, respectively. The fair value of the discount conversion feature on the remaining principal balance was $19,135$19,833 as of March 31,June 30, 2021 and is included in the note principal balance. During the threesix months ended March 31,June 30, 2021 and 2020, the Company recognized $0 and $3,116$4,863 in debt discount amortization expense, respectively.

During August 2019, the Company issued a convertible note payable in the amount of $157,500. The convertible note payable is due one year from the date of issuance, has an original issuance discount of $7,500, accrues interest at the rate of 6% per annum, is unsecured and is convertible after 180 days into shares of the Company’s common stock at a discount of 65% of the lowest trading price for the Company’s common stock during the ten trading days immediately preceding the conversion. During April 2020, the note became convertible at the option of the holder and during August and September 2020, the Company issued a total of 7,616,146 shares of common stock for the conversion of $50,000 in note principal.

As of March 31,June 30, 2021 and December 31, 2020, the balance on the convertible note payable was $182,360$184,751 and $174,168, respectively. The fair value of the discount conversion feature on the remaining principal balance was $71,022$73,414 as of March 31,June 30, 2021 and is included in the note principal balance. During the threesix months ended March 31,June 30, 2021 and 2020, the Company recognized $0 and $1,870$3,740 in debt discount amortization expense, respectively.

During November 2019, the Company issued a convertible note payable in the amount of $336,000. The convertible note payable was due one year from the date of issuance, had an original issuance discount of $45,000, accrued interest at the rate of 10% per annum, was unsecured and was convertible after 180 days into shares of the Company’s common stock at a discount of 65% of the lowest trading price for the Company’s common stock during the ten trading days immediately preceding the conversion. 

During May 2020, the note became convertible at the option of the holder and between July and November 2020, the note holder elected to convert $241,000 of principal and $18,379 in accrued interest for 41,696,169 shares of the Company’s common stock. During February 2021, the note holder elected to convert the remaining principal of $95,000 and accrued interest totaling $11,733 into 12,585,961 shares of the Company’s common stock. As of March 31,June 30, 2021 and December 31, 2020, the balance on the convertible note payable was $0 and $142,273, respectively. During the threesix months ended March 31,June 30, 2021 and 2020, the Company recognized $0 and $11,219 in debt discount amortization expense.

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

The fair value of the discount conversion feature on the remaining principal balance was $78,725$79,664 as of March 31,June 30, 2021. As of March 31,June 30, 2021 and December 31, 2020, the balance on the convertible note payable was $216,725$217,664 and $209,194, respectively. During the threesix months ended March 31,June 30, 2021 and 2020, the Company recognized $222 and $518$1,266 in debt discount amortization expense, respectively.

During February 2020, the Company issued a convertible note payable in the amount of $440,000. The convertible note payable is due one year from the date of issuance, has an original issuance discount of $40,000, accrues interest at the rate of 5% per annum, is unsecured and is convertible after 180 days into shares of the Company’s common stock at a discount of 65% of the lowest trading price for the Company’s common stock during the ten trading days immediately preceding the conversion. During August 2020, the note became convertible at the option of the holder. During March 2021, the note holder elected to convert principal of $75,000 into 11,895,321 shares of the Company’s common stock. During April 2021, the note holder elected to convert principal of $70,000 into 12,237,762 shares of the Company’s common stock. During June 2021, the note holder elected to convert principal of $80,000 into 13,828,868 shares of the Company’s common stock.

The fair value of the discount conversion feature on the remaining principal balance was $210,242$131,307 as of March 31,June 30, 2021. As of March 31,June 30, 2021 and December 31, 2020, the balance on the convertible note payable was $575,242$346,307 and $666,724, respectively. During the threesix months ended March 31,June 30, 2021 and 2020, the Company recognized $5,918 and $8,877$23,836 in debt discount amortization expense.expense, respectively.

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

The fair value of the discount conversion feature on the remaining principal balance was $139,766$141,450 as of March 31,June 30, 2021. As of March 31,June 30, 2021 and December 31, 2020, the balance on the convertible note payable was $387,266$388,950 and $371,018, respectively. During the threesix months ended March 31,June 30, 2021 and 2020, the Company recognized $5,548$6,411 and $475 in debt discount amortization expense.expense, respectively.

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

During June 2021, as discussed above, the Related Party Note Holder purchased the convertible promissory note and accrued interest for a total of $115,000 and agreed to replace it with a non-convertible promissory note. The principal and accrued interest at the time of conversion totaled $117,585, resulting in a gain of $2,585 on note conversion. As of March 31,June 30, 2021 and December 31, 2020, the balance on the convertible note payable was $112,000$0 and $112,000, respectively. During the threesix months ended March 31,June 30, 2021, the Company recognized $27,794$111,901 in debt discount amortization expense.

During the threesix months ended March 31,June 30, 2021 and 2020, the Company recognized $29,528$102,750 in fair value gains and $627,692 in fair value losses, respectively, as a result of the conversion options on the above mentioned convertible debt.

NOTE 5:6: STOCKHOLDERS’ EQUITY

Common Stock

During February and Marchthe six months ended June 30, 2021, the Company issued a total of 24,481,28250,547,912 shares of its common stock to holders of convertible notes payable for principal totaling $170,000,$320,000, accrued interest totaling $11,733 and conversion fees of $600.

During March 2021, an officer and director of the Company agreed to return and retire 4,516,310 shares of common stock previously issued for common stock compensation.

Common Stock Warrants

Warrants

There were no warrants issued during the threesix months ended March 31,June 30, 2021 and the year ended December 31, 2020. The following table presents the stock warrant activity during the threesix months ended March 31,June 30, 2021:

The intrinsic value of the exercisable warrants as of March 31,June 30, 2021 was $0.

NOTE 7: RIGHT OF USE ASSET

In April 2018, the company secured a permanent location in Wyoming for its test facility at the Fort Union Industrial Park. The term of the lease was three years. The Company elected to renew the lease for another three years in May 2021. The renewal calls for rent of $36,000, prepaid. The $36,000 covering three years rent was paid in May 2021 and is being amortized to lease expense using the straight-line method over the three-year term of the lease. During the six months ended June 30, 2021 and 2020, the Company recognized $6,000 and $6,000 in amortization of right of use assets, respectively.

NOTE 6:8: SUBSEQUENT EVENTS

In AprilJuly, 2021 the company signed and executed an additional three year lease on its location in Gillette, Wyoming. The new lease expires on April 30, 2024. The entire rent payment for the three years of $36,000 was paid in April, 2021.

In April, 2021 Wyoming New Power advancedobtained a total of $136,800$41,500 in the form of Promissory notes. The notes area 12% note payable on demand and attractfrom a 12% interest rate.related party.

In April,July, 2021 a convertible note holder converted 12,237,762 ordinary shares for $70,000$50,000 of outstanding debt.

principal of a February 2020 convertible note into 11,481,056 shares.

In August, 2021 the company obtained a total of $18,000 in the form of a 12% note payable on demand from a related party.

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 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 Q3Q4 2021.

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

Anticipated Benefits of the Technology:

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.

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..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 Q3Q4 2021. 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

Employees

As of March 31, 2020,June 30, 2021, 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:

Results of Operations

We had no direct revenues for the threesix months ended March 31,June 30, 2021 or March 31,June 30, 2020. 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,June 30, 2021 and March 31,June 30, 2020

Revenues

We have generated no revenues for the three months ended March 31,June 30, 2021 and 2020.

Operating Expenses

Our operating expenses for the three months ended March 31,June 30, 2021 totaled $301,517$321,772, compared to $287,634$297,342 for the three-monththree month period in 2020. The primary component of the operating expenses for the three months ended March 31,June 30, 2021 and 2020 was general and administrative expenses, recognizing $318,489, compared to $276,839 for the three months ended June 30, 2020, partially offset by a $17,220 decrease in research and development.

Other Income and Expenses

During the three months ended June 30, 2021, we recognized total other expense of $479,559 compared to total other expense of $1,463,935 for the three months ended June 30, 2020. The $984,376 decrease is mainly due to a $700,914 increase in the fair value of convertible note options, a $279,877 decrease in interest expense, a $1,000 decrease in debt standstill and extension expenses and a $2,585 increase in gain on settlement of convertible debt compared to the 2020 period.

Net Income/Loss

For the three months ended June 30, 2021, we had net loss of $801,331, compared to a net loss of $1,761,277 for the three months ended June 30, 2020. The $959,946 decrease in net loss is mainly due to the $984,376 decrease in other expense, offset by the $24,430 increase in operating expenses, as discussed above.

For the Six months Ended June 30, 2021 and June 30, 2020

Revenues

We have generated no revenues for the six months ended June 30, 2021 and 2020.

Operating Expenses

Our operating expenses for the six months ended June 30, 2021 totaled $623,289 compared to $584,976 for the six-month period in 2020. The primary component of the operating expenses for the six months ended June 30, 2021 was general and administrative expenses, recognizing $298,208,$616,697, compared to $349,628$625,469 for the threesix months ended March 31,June 30, 2020. We also recognized a $66,236an $84,454 decrease in research and development expenses from $69,545and $131,539 decrease in gains on forgiveness of accounts payable during the threesix months ended March 31, 2020June 30, 2021 compared to $3,309 during the threesix months ended March 31, 2021.June 30, 2020.

Other Income and Expenses

During the threesix months ended March 31,June 30, 2021, we recognized total other expense of $570,747$1,050,306 compared to $881,576$2,345,511 for the threesix months ended March 31,June 30, 2020. The majority of the $310,829$1,295,205 decrease is due to a $226,901 decrease in interest expense during the three months ended March 31, 2021 mainly due to lower amortization of debt discounts$730,442 on convertible notes payable compared to the three months ended March 31, 2020. The Company also recognized a total of $600 and $55,000 in debt conversion and extension fees during the three months ended March 31, 2021 and 2020, respectively, and a $29,528 gain onlosses from change in fair value of share-settled debt during the threesix months ended March 31, 2021.June 30, 2021 compared to the 2020 comparative period. Additionally, interest expense decrease by $506,778 during the six months ended June 30, 2021 compared to the 2020 comparative period. The Company also recognized $55,400 less in debt conversion and extension fees and a $2,585 gain on extinguishment of debt during the six months ended June 30, 2021 compared to the 2020 comparative period.

Net Income/Loss

For the threesix months ended March 31,June 30, 2021, we had net loss of $872,264,$1,673,595, compared to a net loss of $1,169,210$2,930,487 for the threesix months ended March 31,June 30, 2020. The $296,946$1,256,892 decrease in net loss is mainly due to the $310,829$1,295,205 decrease in other expenses, partially offset by a $13,883 decrease$38,313 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 threesix months ended March 31,June 30, 2021 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 $172,622$421,737 for the threesix months ended March 31,June 30, 2021, compared to $479,162$693,816 for the same period in 2020. The $306,540$272,079 decrease is mainly a result of the $296,946$1,256,892 decrease in net loss, a $131,539 decrease in gain on settlement of accounts payable, partially offset by a $239,114$1,079,967 decrease in non-cash expense adjustments such as debt discount amortization, lease asset amortization, debt conversion and extension fees and changes in fair value of share-settled debtdebt. We also prepaid $36,000 on a facility lease and $117,169 decreaserecognized a $131,154 net increase in increases to accounts payable and accrued expenses during the threesix months ended March 31,June 30, 2021 compared to the 2020 period.

Net Cash Used In Investing Activities. There were no investing activities during the threesix months ended March 31,June 30, 2021 orand 2020.

Net Cash Provided by Financing Activities. Net cash provided by financing activities during the threesix months ended March 31,June 30, 2021 totaled $168,600,$422,120, compared to $389,900$602,400 during the threesix months ended March 31,June 30, 2020. During the threesix months ended March 31,June 30, 2021 and 2020, we received $0$18,600 and $535,000$24,900 in borrowings on convertible notes payable from a related party and $18,600$403,520 and $24,900$0 from the issuance of convertible notes payable to a related party, respectively. During the threesix months ended March 31,June 30, 2020, we borrowed $760,000 from the issuance of convertible notes, repaid $150,000$162,500 in convertible note principal and paid $20,000 in debt issuance, we had no such proceeds, repayments or expenditures during the 2021 period.

Cash Position and Outstanding Indebtedness

At March 31, 2020,June 30, 2021, we had $1,181$38,586 in total assets, consisting of $181$4,586 in cash and $1,000$34,000 in right toof use ground lease, and $24,207,024$24,895,761 in liabilities, which consist of $23,950,249$24,654,851 in current liabilities and $256,775$240,910 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, 2020, we had total cash assets of $4,203 and $23,254,115$23,524,115 in liabilities, which consisted of $23,191,339 in current liabilities and $332,776 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,June 30, 2021 and December 31, 2020 was $23,950,430$24,650,265 and $23,195,542,$23,187,136, 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,June 30, 2021, we have paid $11,227,777$11,231,060 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 $4.5 million to acquire the additional parts for the second generation test facility and for its assembly.

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

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,June 30, 2021, 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,June 30, 2021, 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 2017June 30, 2021 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,June 30, 2021, the Company has accrued a total of $1,717,395$1,741,929 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, 2020.

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

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.