UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549   
 
 
FORM 10-Q
 

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

For the quarterly period ended: SeptemberJune 30, 20142015

o 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)

NEVADA26-1079442
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)

295 Madison Avenue (12th Floor), New York, NY10017
(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 x  and (2) has been subject to such filing requirements for the past 90 days.  No x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).   Yes  x    No  ¨

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

Large accelerated filer  ¨         Accelerated filer  ¨         Non-accelerated filer  ¨         Smaller reporting company  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes  ¨    No  x
 
The number of shares outstanding of Registrant’s Common Stock as of December 23, 2014:  40,773,536January 26, 2016: 60,410,229.
 
 
 
 
TATABLE BLE OF CONTENTS
 
PART I - FINANCIAL INFORMATIONPage
   
ITEM 1.
FINANCIAL STATEMENTS
 3
   
ITEM 2. 
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
1211
   
ITEM 3. 
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
15
   
ITEM 4. 
CONTROLS AND PROCEDURES
 1615
   
PART II - OTHER INFORMATION 
   
ITEM 1.
LEGAL PROCEEDINGS
 1716
   
ITEM 1A.  
RISK FACTORS
 1716
   
ITEM 2. 
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 1716
   
ITEM 3.  
DEFAULTS UPON SENIOR SECURITIES
18
   
ITEM 5.  
OTHER INFORMATION
18
   
ITEM 6.  
EXHIBITS
18
   
SIGNATURES
19
 
 
 
 
PART I - FINANCIAL INFORMATION

ITITEM EM 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)

 September 30, December 31,  June 30, December 31, 
 2014 2013  2015 2014 
ASSETS          
Current Assets          
Cash
 
$
1,237
 
$
35,642
  
$
34,667
 
$
1,130
 
Total Current Assets
 
1,237
 
35,642
  
      34,667
 
1,130
 
          
Construction in progress
  
3,212,944
  
3,200,473
   
4,161,304
  
3,212,944
 
Total Assets
 
$
3,214,181
 
$
3,236,115
  
$
4,195,971
 
$
3,214,074
 
          
LIABILITIES AND STOCKHOLDERS' DEFICIT
          
Current Liabilities
          
Accounts payable
 
$
937,101
 
$
791,939
  
$
1,247,029
 
$
1,020,470
 
Accounts payable to related parties
 
-
 
262,652
 
Accrued liabilities
 
1,382,928
 
2,275,718
  
2,839,791
 
2,400,145
 
Debt, net of unamortized discounts of $0 and $28,298
 
     413,185
 
404,890
 
Convertible debt, net of unamortized discounts of $458,409 and $374,091
 
904,463
 
1,084,382
 
Debt owed to related parties, net of unamortized discounts of $0 and $107
 
-
 
20,198
 
Debt
 
413,185
 
413,185
 
Current portion of convertible debt, net of unamortized discounts of $326,235 and
$246,615
 
1,358,999
 
1,500,765
 
Debt owed to related parties
 
2,800
 
-
 
Derivative liabilities
  
714,505
  
355,281
   
12,284,768
  
1,765,695
 
Total Current Liabilities
 
4,352,182
 
5,195,060
  
18,146,572
 
7,100,260
 
          
Convertible debt, net of unamortized discounts of $1,622,882 and $0
  
25,471
  
-
 
Total Liabilities
 
18,172,043
 
7,100,260
 
     
Stockholders’ Deficit:
          
Common stock, $0.00001 par value; 45,000,000 shares
authorized, 40,773,536 and 25,922,202 shares issued
and outstanding, respectively
 
408
 
259
 
Common stock, $0.00001 par value; 150,000,000 shares
authorized, 51,797,414 and 40,393,751 shares issued
and outstanding, respectively
 
        518
 
404
 
Additional paid-in capital
 
218,909,104
 
213,288,017
  
219,925,905
 
218,935,664
 
Accumulated deficit
  
(220,047,513
)
  
(215,247,221
)
  
(233,902,495
)
  
(222,822,254
)
Total Stockholders' Deficit
  
(1,138,001
)
  
(1,958,945
)
  
(13,976,072
)
  
(3,886,186
)
Total Liabilities and Stockholders' Deficit
 
$
3,214,181
 
$
3,236,115
  
$
4,195,971
 
$
3,214,074
 
 
The accompanying notes are an integral part of these unaudited financial statements.
 
 
3
 
Clean Coal Technologies, Inc.
Statements of Operations
(Unaudited)

 Three Months Ended  Nine Months Ended  Three Months Ended  Six Months Ended 
 September 30,  September 30,  June 30,  June 30, 
 2014 2013 2014 2013  2015 2014 2015 2014 
            
Operating Expenses:                    
General and administrative
 
$
453,987
 
$
353,637
  
$
1,166,239
 
$
1,069,287
  
$
417,068
 
$
382,614
  
$
742,874
 
$
712,252
 
Consulting services
  
172,038
  
394,875
   
1,387,521
  
2,477,244
   
238,375
  
223,102
   
1,008,445
  
1,215,483
 
                      
Loss from Operations
 
(626,025
)
 
 (748,512
)
  
(2,553,760
)
 
 (3,546,531
)
 
(655,443
)
 
 (605,716
)
  
(1,751,319
)
 
 (1,927,735
)
                      
Other Income (Expenses):
                      
Interest expense
 
(574,376
)
 
(34,750
)
  
(1,340,858
)
 
(132,951
)
Gain (Loss) on change in fair value of derivative liabilities
  
188,796
  
(9,578)
   
(905,674
)
  
(9,578)
 
Interest expense and standstill fee
 
(517,760
)
 
(472,574
)
  
(677,107
)
 
(766,482
)
Loss on change in fair value of derivative liabilities
  
(8,089,701
)
  
 (1,118,596
)
  
(8,651,815
)
  
(1,094,470
)
Total Other Income (Expenses)
  
(385,580
)
  
(44,328
)
  
(2,246,532
)
  
(142,529
)
  
(8,607,461
)
  
(1,591,170
)
  
(9,328,922
)
  
(1,860,952
)
                      
Net Loss
 
$
(1,011,605
)
 
$
(792,840
)
 
$
(4,800,292
)
 
$
(3,689,060
)
 
$
(9,262,904
)
 
$
(2,196,886
)
 
$
(11,080,241
)
 
$
(3,788,687
)
                      
Net loss per share - basic and diluted
 
$
(0.03
)
 
$
(0.03
)
 
$
(0.15
)
 
$
(0.15
)
 
$
(0.18
)
 
$
(0.12
)
 
$
(0.22
)
 
$
(0.08
)
                      
Weighted average shares outstanding - basic and diluted
  
38,245,155
  
25,472,215
   
31,627,505
  
24,938,031
   
50,905,930
  
30,459,796
   
49,708,073
  
28,263,837
 

The accompanying notes are an integral part of these unaudited financial statements.
 
 
4
 
Clean Coal Technologies, Inc.
Statement of Stockholders' Deficit
NineSix Months Ended SeptemberJune 30, 20142015
(Unaudited)
 
        Additional       
  Common Stock  Paid-In  Accumulated  Stockholders' 
  Shares  Amount  Capital  Deficit  Deficit 
                
Balances at December 31, 2013
  
25,922,202
  
$
259
  
$
213,288,017
  
$
(215,247,221
)
 
$
(1,958,945
)
                     
Common stock issued for services
  
1,851,428
   
19
   
766,423
   
-
   
766,442
 
                     
Common stock issued for conversion
of debt
  
8,362,339
   
84
   
1,430,455
   
-
   
1,430,539
 
                     
Common stock issued for accrued
liabilities
  
5,132,753
   
51
   
1,539,775
   
-
   
1,539,826
 
                     
Common stock issued with debt
  
21,429
   
-
   
8,319
   
-
   
8,319
 
                     
Common stock returned to the
Company and cancelled
  
(516,614
)
  
(5
)
  
  5
   
-
   
-
 
                     
Reclassification of warrants as
derivative liabilities
  
-
   
-
   
(6,026
)
  
-
   
(6,026
)
                     
Options expense
  
-
   
-
   
19,494
   
-
   
19,494
 
                     
Resolution of derivative liabilities
  
-
   
-
   
1,599,990
   
-
   
1,599,990
 
                     
Forgiveness of related party accounts
payable
  
-
   
-
   
262,652
   
-
   
262,652
 
                     
Net loss
  
-
   
-
   
-
   
(4,800,292
)
  
(4,800,292
)
                     
Balances at September 30, 2014
  
40,773,536
  
$
408
  
$
218,909,104
  
$
(220,047,513
)
 
$
(1,138,001
)
        Additional       
  Common Stock  Paid-In  Accumulated  Stockholders' 
  Shares  Amount  Capital  Deficit  Deficit 
                
Balances at December 31, 2014
  
40,393,751
  
$
404
  
$
218,935,664
  
$
(222,822,254
)
 
$
(3,886,186
)
                     
  Common stock issued for services
  
   9,583,338
   
96
   
842,884
   
-
   
842,980
 
                     
  Common stock issued for conversion of debt
  
1,270,325
   
12
   
49,988
   
-
   
50,000
 
                     
  Common stock issued with debt
  
550,000
   
6
   
97,369
   
-
   
97,375
 
                     
  Net loss
  
-
   
-
   
-
   
(11,080,241
)
  
(11,080,241
)
                     
Balances at June 30, 2015
  
51,797,414
  
$
518
  
$
219,925,905
  
$
(233,902,495
)
 
$
(13,976,072
)
 
The accompanying notes are an integral part of these unaudited financial statements.
 
 
5
 
Clean Coal Technologies, Inc.
Statements of Cash Flows
(Unaudited)

 Nine Months Ended  Six Months Ended 
 September 30,  June 30, 
 2014 2013  2015 2014 
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net loss
 
$
(4,800,292
)
 
$
(3,689,060
)
 
$
(11,080,241
)
 
$
(3,788,687
)
Adjustment to reconcile net loss to net cash used in operating activities:
          
Depreciation expense
 
-
 
128
 
Amortization of debt discounts
 
1,302,111
 
98,887
  
376,950
 
738,791
 
Loan default and standstill fees added to principal
 
300,157
 
-
 
Shares issued for services
 
766,442
 
737,955
  
842,980
 
        728,633
 
Option expense
 
19,494
 
798,923
  
-
 
        19,494
 
Loss on change in fair value of derivative liabilities
 
905,674
 
9,578
  
8,651,815
 
       1,094,470
 
Changes in operating assets and liabilities:
          
Prepaid expenses and other current assets
 
-
 
62,079
 
Accounts payable
 
145,161
 
239,003
  
226,559
 
          216,564
 
Accounts payable - related party
 
-
 
135,527
 
Accrued expenses
  
684,534
  
130,023
   
404,846
  
         681,229
 
Net Cash Used in Operating Activities
 
(976,876
)
 
(1,476,957
)
 
(276,934
)
 
    (309,506
)
          
CASH FLOWS FROM INVESTING ACTIVITIES:
          
Cash paid for construction in progress
  
(12,471
)
  
(2,349,500
)
  
(873,026
)
  
(12,471
)
Net Cash Used in Investing Activities
 
(12,471
)
 
(2,349,500
)
 
(873,026
)
 
(12,471
)
          
CASH FLOWS FROM FINANCING ACTIVITIES:
          
Proceeds from the sale of common stock
 
  -
 
842,500
 
Borrowings on debt
 
15,527
 
-
  
-
 
15,527
 
Borrowings on convertible debt
 
1,074,500
 
150,000
 
Borrowings on convertible debt, net of original issue discounts
 
1,886,000
 
292,000
 
Borrowings on related party debt
 
29,017
 
476,405
  
50,000
 
29,017
 
Payments on related party debt
 
(49,322
)
 
(14,500)
  
(47,200
)
 
(30,000
)
Payments on convertible debt
 
(79,250
)
 
-
 
Payments on debt
  
(35,530
)
  
(157,500)
 
Payments on debt and convertible debt
  
(705,302
)
  
(20,000
)
Net Cash Provided by Financing Activities
  
954,942
  
1,296,905
   
1,183,498
  
286,544
 
          
NET CHANGE IN CASH AND CASH EQUIVALENTS
 
(34,405
)
 
(2,529,552
)
 
35,537
 
(35,433
)
CASH AND CASH EQUIVALENTS - beginning of period
  
35,642
  
2,575,087
   
1,130
  
35,642
 
CASH AND CASH EQUIVALENTS - end of period
 
$
1,237
 
$
45,535
  
$
34,667
 
$
209
 
          
SUPPLEMENTAL DISCLOSURES:
          
Cash paid for interest
 
$
-
 
$
-
  
$
-
 
$
19,775
 
Cash paid for income taxes
 
-
 
-
  
-
 
-
 
          
NON-CASH INVESTING AND FINANCING ACTIVITIES:
          
Common stock issued with debt
 
$
8,319
 
$
182,192
  
$
97,375
 
$
8,319
 
Common stock issued for conversion of debt and interest
 
1,430,539
 
-
  
50,000
 
967,793
 
Common stock issued for conversion of accrued liabilities
 
1,539,826
 
5,780
  
-
 
1,539,826
 
Deferred financing cost accrued
 
-
 
12,000
 
Reclassification of warrants as derivative liabilities
 
6,026
 
-
  
-
 
6,026
 
Resolution of derivative liabilities
 
1,599,990
 
-
  
-
 
656,622
 
Debt discounts due to derivative liabilities
 
647,514
 
-
  
1,867,258
 
565,080
 
Debt discount due to warrants issued with debt
 
400,000
 
-
 
Return of common shares
 
5
 
-
 
Forgiveness of related party accounts payable
 
262,652
 
-
 
Capitalized interest
 
75,334
 
-
 

The accompanying notes are an integral part of these unaudited financial statements. 
 
 
6
 
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”) 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 20132014 as reported in the Form 10K have been omitted.

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 the Clean Coal is unable to continue as a going concern. Clean Coal has an accumulated deficit and a working capital deficit as of SeptemberJune 30, 20142015 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 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 may raise 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: CONSTRUCTION IN PROGRESS

Construction in progress of $3,212,944$4,161,304 as of SeptemberJune 30, 20142015 consists of costs incurred related to the construction of a 2-ton/hour test plant in Oklahoma. The total cost of the project, including testing to take place at a designatedthe AES site in Oklahoma, is estimated at $5,000,000.$6,400,000 plus an additional $750,000 to move the plant to its permanent location. Commissioning of the test plant commenced in November, 2015 with full testing expected in January, 2016. It is expected during the first quarter of 2015. The Company awaits the final round of funding in orderestimated to completecost an additional $2,200,000 to move the test facility to AES and complete testing. It is further expected to cost $750,000 to move the test facility to a permanent site at the end of quarter one 2016. During the six months ended June 30, 2015, $873,026 was paid towards the construction of the plant and interest of $75,334 was capitalized.

NOTE 4: RELATED PARTY TRANSACTIONS
 
During September 2014,As management has not received any consistent salary over several years all accruals for salary and bonuses to officers and directors are included in accrued liabilities in the previously unpaid services provided by a former Officerbalance sheet and Director of the Company totaling $262,652 was removed as a liability through mutual consenttotaled $2,427,906 and with no financial settlement required by Clean Coal Technologies Inc. The forgiveness of the accounts payable was recorded as a capital contribution. The outstanding balance or accounts payable to related parties was $0 and $262,652$1,998,337 as of SeptemberJune 30, 20142015 and December 31, 2013,2014, respectively.
 
During the ninesix months ended SeptemberJune 30, 2014,2015, the company borrowed an aggregate of $29,017$50,000 from Officersan Officer. This loan was made at zero percent interest and Directors and issued 21,429 common shares in connection with the borrowings. The relative fair value of the shares was determined to be $8,319 and was recorded as a discount to the associated note and was fully amortized to interest expense during the nine months ended September 30, 2014.repaid upon adequate funding being in place. As of SeptemberJune 30, 2014 and December 31, 2013,2015 the aggregate outstanding balance of this note payable to Officers and Directors was $0 and $20,198, respectively, net of unamortized discounts of $0 and $107, respectively. The Company made payments totaling $49,322 on related party debt during the nine months ended September 30, 2014. The notes are unsecured, bear interest between 0% and 10% per annum and are due on demand. Aggregate amortization of debt discounts on related party debt for the nine months ended September 30, 2014 was $8,426.
In September 2014, Mr. Aiden Neary and Mr. Robin Eves returned common shares back to the Company of 247,527 and 269,087 respectively. These shares were returned to the company to facilitate conversions by the convertible note holders and were returned at no cost to the Company.$2,800 with $47,200 having been repaid.
 
 
7

NOTE 5: DEBT

Convertible Debt

As of December 31, 2013,2014, the Company had outstanding convertible notes payable of $1,084,382,$1,500,765, net of unamortized discounts of $374,091. Through$246,615. During the ninesix months ended SeptemberJune 30, 2014,2015, the company borrowed an aggregate of $1,074,500,$1,886,000, net of original issue discounts, of $302,190, under convertible notes payable and issued an aggregate of 8,362,3391,270,325 common shares for the conversion of $1,430,539$50,000 in convertible debtdebt. In addition, 550,000 common shares were issued with $250,000 of the borrowings. The relative fair value of these shares was determined to be $97,375 and accrued interest. Throughwas recognized as a discount to the nine months to September, the company repaid two convertible notes totaling $79,250.note. As of SeptemberJune 30, 2014,2015, the Company had outstanding convertible notes payable of $904,463,$1,384,470, net of unamortized discounts of $458,409.The$1,949,117. Of the outstanding balance as of June 30, 2015, $1,358,999, net of unamortized discounts of $326,235, is due within one year and classified as a current liability. The outstanding convertible notes of the Company are unsecured, bear interest between 8% and 12% per annum, mature between October 2014 and MarchJuly 2015 and May 2018 and are convertible into common stock at fixed rates between $0.735$0.08 and $1.05$0.825 per share orand at variable rates between 58%55% and 75% of the quoted market price of the Company’s common stock. In addition, $1,648,353 of the notes issued during the six months ended June 30, 2015 are also convertible into 3 year common stock warrants at a conversion rate of  $0.08 per warrant. The warrants will be exercisable at $0.10 per share. All notes that were convertible during the ninesix months ended SeptemberJune 30, 20142015 were accounted for as derivative liabilities (see Note 6). Aggregate amortization of the debt discounts on non-related party convertible debt for the ninesix months ended SeptemberJune 30, 20142015 was $1,265,387.$417,484 of which $40,534 was capitalized as construction in progress.

Nonconvertible Debt

As of DecemberMarch 31, 2013,2015, the Company had outstanding notes payable to third partiesformer affiliates of $404,890, net of unamortized discounts of $28,298. During the nine months ended September 30, 2014, the Company borrowed an aggregate of $15,527 under notes payable to third parties and made aggregate cash payments of $35,530 on third party notes payable. As of September 30, 2014, the Company had outstanding notes payable to third parties of $413,185, net of unamortized discounts of $0.$413,185. The notes payable of the Company are unsecured, bear no interest and are due on demand. Aggregate amortization of the debt discounts on third party notes payable for the nine months ended September 30, 2014 was $28,298.

NOTE 6: DERIVATIVE LIABILITIES

During 2013,2014, notes issued by the Company became convertible and qualified as derivative liabilities under ASC 815. As a result ofIn addition, the convertible notes outstanding in 2013, an aggregate of 142,856 previously issued nonemployee common stock options and 310,863 previously issuedoutstanding common stock warrants became tainted and were required to be accounted for as derivative liabilities under ASC 815 and were reclassed from equity to derivative liabilities.815.

As of December 31, 2013, the aggregate fair value of the outstanding derivative liabilities was $355,281. During the nine months ended September 30, 2014, additional convertible notes with an aggregate principal amount of $1,074,500 became convertible. The fair value of the conversion options associated with these notes was determined to be $821,100 of which $647,514 was recorded as a discount to the notes and $173,586 was expensed as a loss on derivative liabilities. Also during the nine months ended September 30, 2014, an additional 38,571 previously issued common stock warrants became tainted under ASC 815. The fair value of these warrants was determined to be $6,026 and was reclassed from equity to derivative liabilities.  In addition, during the nine months ended September 30, 2014, the Company granted 4,180,000 warrants with convertible debt. These warrants are tainted under ASC 815. The fair value of these warrants associated with the notes was determined to be $855,440 of which $400,000 was recorded as a discount to the notes and $455,440 was expensed as a loss on derivative liabilities. Also during the nine months ended September 30, 2014, convertible notes with an aggregate principal amount of $1,393,041 and accrued interest of $37,498 were converted into common shares. The fair value of the derivative liabilities associated with these converted notes was determined to be $1,599,990 on the dates of conversion. This amount was reclassified from derivative liabilities to stockholder’s deficit as resolution of derivative liabilities. As of September 30, 2014, the aggregate fair value of the outstanding derivative liabilities was $714,505.$1,765,695. During the six months ended June 30, 2015, the Company borrowed an additional $1,886,000, net of original issuance discounts, under convertible notes. Also during the six months ended June 30, 2015, convertible notes with an aggregate principal amount of $50,000 were converted into common shares. As of June 30, 2015, the aggregate fair value of the outstanding derivative liabilities was $12,284,768. For the ninesix months ended SeptemberJune 30, 2014,2015, the net loss on the change in fair value of derivative liabilities was $905,674.$8,651,815

The Company estimated the fair value of the derivative liabilities using the Black-Scholes option pricing model and the following key assumptions during 2014 and 2013:

  2014  2013 
Expected dividends
  
-
%
  
-
%
Expected term (years)
  
0.04 - 4.42
   
0.17 - 5.01
 
Volatility
  
71% - 199
%
  
105% - 155
%
Risk-free rate
  
0.07% - 1.82
%
  
0.09% - 1.34
%
8
  2015  2014 
Expected dividends
  
-
%
  
-
%
Expected term (years)
  
0.04 – 4.17
   
0.01 – 4.67
 
Volatility
  
156% - 237
%
  
130% - 223
%
Risk-free rate
  
0.03% - 1.37
%
  
0.01% - 1.82
%
 
The Company determines the fair market values of its financial instruments based on the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The following three levels of inputs may be used to measure fair value:
 
Level 1Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company uses Level 3 inputs to estimate the fair value of its derivative liabilities.
 
The following table sets forth by level with the fair value hierarchy the Company’s assets and liabilities measured at fair value as of SeptemberJune 30, 20142015 and December 31, 2013:2014:
 
  Level 1  Level 2  Level 3  Total 
September 30, 2014:            
Derivative liabilities
 
$
-
  
$
-
  
$
714,505
  
$
714,505
 
                 
December 31, 2013:
                
Derivative liabilities
 
$
-
  
$
-
  
$
355,281
  
$
355,281
 

  Level 1  Level 2  Level 3  Total 
June 30, 2015:            
   Derivative liabilities – convertible debt
 
$
-
  
$
-
  
$
11,244,488
  
$
11,244,488
 
   Derivative liabilities – warrants
  
-
   
-
   
1,023,985
   
1,023,985
 
   Derivative liabilities – nonemployee options
  
-
   
-
   
16,295
   
16,295
 
                 
December 31, 2014:
                
   Derivative liabilities – convertible debt
 
$
-
  
$
-
  
$
1,550,703
  
$
1,550,703
 
   Derivative liabilities – warrants
  
-
   
-
   
214,565
   
214,565
 
   Derivative liabilities – nonemployee options
  
-
   
-
   
427
   
427
 
The below table presents the change in the fair value of the derivative liabilities during the ninesix months ended SeptemberJune 30, 2014:2015:

Fair value as of December 31, 2013
 
$
355,281
 
Fair value as of December 31, 2014
 
$
1,765,695
 
Fair value on the dates of issuance recorded as debt discounts
 
1,047,514
  
1,867,258
 
Fair value on the dates of issuance recognized as loss on derivatives
 
629,026
  
8,365,937
 
Fair value on the dates of issuance reclassified from equity
 
6,026
  
-
 
Resolution of derivative liabilities
 
(1,599,990
)
 
-
 
Loss on change in fair value of derivatives
  
276,648
   
285,878
 
Fair value as of September 30, 2014
 
$
714,505
 
Fair value as of June 30, 2014
 
$
12,284,768
 

NOTE 7: COMMITMENTS

In August 2013, the Company entered into a consulting agreement with Consultants Worldwide, LLC. The agreement has a term of 1 year and under the terms of the agreement; the Company will be required to pay the consultant a fee of 5% of the gross funding amount of all fundings brought to the Company by the consultant.

During October 2013, the Company entered into a consulting agreement for services related to business development in South Korea. The Company granted the consultant 1,000,000 fully vested common shares upon the signing of the agreement. Over the term of the agreement, the Company will pay a monthly cash retainer of $7,500. Upon any agreement brought by the consultant that results in future revenues, the Company will be required to issue the consultant 1,000,000 additional common shares. The Company will also be required to pay the consultant a fee of 5% and issue the consultant 1,000,000 or 2,000,000 common stock warrants for any funding transaction brought to the Company by the consultant in excess of $2,000,000 or $5,000,000, respectively.
NOTE 8:7: EQUITY TRANSACTIONS
 
Common Stock

In April 2014,January 2015, the Company effected a 35 to 1 reverse stock split. The Company also amendedincreased its authorized common shares on the same dayshare capital from 45,000,000 to be 45,000,000150,000,000 common shares. All share and per share amounts herein have been retroactively restated to reflect the split.

During the ninesix months ended SeptemberJune 30, 2014,2015, the Company issued an aggregate of 8,362,3391,270,325 common shares for the conversion of convertible debt and accrued interest of $1,430,539.

During the ninesix months ended SeptemberJune 30, 2014,2015, the Company issuedgranted an aggregate of 1,851,4289,583,338 common shares to various employees and directors for services valued at $766,442.rendered. The aggregate fair value of these awards was determined to be $842,980 and it was recognized as stock compensation during the six months ended June 30, 2015.

During the ninesix months ended SeptemberJune 30, 2014,2015, the Company issued an aggregatea total of 5,132,753550,000 common shares for the conversion of accrued liabilities of $1,539,826.

In September 2014, Mr. Aiden Neary and Mr. Robin Eves returned common shares back to the Company of 247,527 and 269,087 respectively. These shares were returned to the company to facilitate conversions by the convertible note holders and were returned at no cost to the Company. 

During the nine months ended September 30, 2014, the company borrowed an aggregate of $29,017 from Officers and Directors and issued 21,429 common shares in connection with the borrowings.borrowing of $250,000 under a convertible note. The relative fair value of thethese shares was determined to be $8,319$97,375 and was recordedrecognized as a discount to the associated note and was fully amortized to interest expense during the nine months ended September 30, 2014.

On November 26, 2013 the Company entered into a two year executive employment agreement with Aiden Neary under which Mr. Neary was granted an aggregate of 285,714 common shares. 142,857 of the shares vest on the date of grant and 142,857 of the shares vest on November 26, 2014. The issuance of the shares is contingent upon the Company completing a reverse split of the common stock of the Company which was effected in April 2014. The fair value of the award was determined to be $300,000 and is it being recognized over the vesting period. During the nine months ended September 30, 2014, the Company recognized $112,192 under this award. $23,424 will be recognized over the remaining vesting period through November 26, 2014. This amount recognized is included as common stock issued for services in the statement of stockholders’ deficit.note.

Options

Total stock option expense was $19,494 for the nine months ended September 30, 2014. As of September 30, 2014, there was no unamortized options expense.

A summary of stock option activity for the ninesix months ended SeptemberJune 30, 20142015 is as follows:

   Weighted    Weighted 
   Average    Average 
 Options Exercise Price  Options Exercise Price 
Outstanding - December 31, 2013
 
942,857
 
$
5.24
 
Outstanding - December 31, 2014
 
714,286
 
$
4.68
 
Granted
 
-
 
-
  
-
 
-
 
Forfeited/canceled
 
(228,571
)
 
7.00
    -
 
 
-
 
Exercised
  
-
  
-
   
-
  
-
 
Outstanding – September 30, 2014
 
714,286
 
$
4.68
 
Outstanding – June 30, 2015
 
714,286
 
$
4.68
 
          
Exercisable – September 30, 2014
 
714,286
 
$
4.68
 
Exercisable – June 30, 2015
 
714,286
 
$
4.68
 

The range of exercise prices and the weighted average remaining life of the outstanding options as of SeptemberJune 30, 20142015 was $1.05 to $12.25 per share and 4.743.99 years, respectively. The intrinsic value of the exercisable options as of SeptemberJune 30, 20142015 was $0.
 
 
109

Warrants

The following table presents the stock warrant activity during the threesix months ended SeptemberJune 30, 2014:2015:

   Weighted    Weighted 
   Average    Average 
 Warrants Exercise Price  Warrants Exercise Price 
Outstanding - December 31, 2013
 
349,434
 
$
1.75
 
Outstanding - December 31, 2014
 
4,529,434
 
$
0.60
 
Granted
 
4,180,000
 
0.50
  
-
 
-
 
Forfeited/canceled
 
-
 
-
  
-
 
-
 
Exercised
  
-
  
-
   
-
  
-
 
Outstanding – September 30, 2014
 
4,529,434
 
$
0.60
 
Outstanding – June 30, 2015
 
4,529,434
 
$
0.60
 
          
Exercisable – September 30, 2014
 
4,529,434
 
$
0.60
 
Exercisable – June 30, 2015
 
4,529,434
 
$
0.60
 

The range of exercise prices and the weighted average remaining life of the outstanding warrants as of SeptemberJune 30, 20142015 was $0.50 to $1.75 and 4.854.10 years, respectively. The intrinsic value of the exercisable warrants as of SeptemberJune 30, 20142015 was $0.
 
NOTE 9:8: SUBSEQUENT EVENTS

In October 2014,From July 2015, through to January 2016, the Company borrowed an additional $78,750 undercompany issued a convertible note. The note is unsecured, and has a termfurther 8,612,815 shares of twelve months, bears interest at 8% Per annum and is convertible to common stock at a 40% discount to the average quoted three lowest closing price of the Company’s common stock for the 10 days preceding the date of conversion.services rendered by both management and third parties.

The 12% convertible note from 802 Investments was bought back for a total cost of $278,000 in September and October 2015.

From July 2015, through to January 2016 the company bought back one additional convertible note for a total cost of $35,000

From July 2015, through to January 2016 the company engaged in a financing transaction with Black Diamond Financial Group for a total of $2,691,500 net of original issue discounts. The terms of the transaction is a 12% secured convertible notes, which enable Black diamond to convert into common stock shares at a fixed price of $0.08. The notes are also convertible into 3 year common stock warrants at a rate of $0.08 per warrant. The warrants will be exercisable at $0.10 per share.

The above securities were issued in reliance on the exemption from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended, and the regulations promulgated thereunder. The issuances were for investment received, the transactions were privately negotiated and none involved any kind of public solicitation.
 
1110
 
ITITEM EM 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 cheaply and stabilizing it using volatile matter released by the feed coal. Our pilotcoal testing plant currently under construction is designed to prove this process on a scale that can be expanded to a commercial facility.
 
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 idea is to produce a clean a 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 anticipated to be much 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, cheap coal is a potentially lucrative side benefit of our processes.
 
·  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. Construction of larger scale testing facility depends on receipt of additional funding.
 
 
1211

Pristine-M. Construction of pilotthe test plant in Oklahoma underway with completionis complete and testing currently anticipatedcommissioning commenced in the firstfourth quarter  of fiscal 2015. Through June 30, 2015 subject to receipt of adequate funding. Wewe have paid $3,212,944$4,161,304 towards the plant and preparation work for the testing and estimated completion will require an additional $1,300,000.and testing costs are $2,200,000. An additional estimated $700,000$750,000 is required to transport the test plant to AES and complete independent testing.a permanent location at end of quarter one, 2016.
 
Pristine-SA process. Pristine SA process analysis is at a very early stage. Further research and development is expected post completion of the pilotcoal testing plant.
 
Business Outlook
 
·  Jindal Steel & Power expected to contract first commercial plant in the first quarter 20152016 if pilotcoal testing plant testing is positive.  Jindal plans to inspect prototype plant once testing is complete.
 
·  Several multinational corporations have undertaken due diligence on our processes and have scheduled or are scheduling site visits to the pilotcoal testing plant in Oklahoma.
 
·  
ContinuedNumerous discussions continuing with various domestic and international coal producers, mine operators and power plant operators about our technology and its potential application. 
 
Factors Affecting Results of Operations
 
Our operating expenses include the following:
· Consulting expenses, which consist primarily of amounts paid for technology development and design and engineering services;
· General and administrative expenses, which consist primarily of salaries, commissions and related benefits paid to our employees, as well as office and travel expenses;
· Research and development expenses, which consist primarily of equipment and materials used in the development and testing of our technology; and
· Legal and professional expenses, which consist primarily of amounts paid for patent protections, audit, disclosure, and reporting services.

Results of Operations
 
The following information should be read in conjunction with the financial statements and notes appearing elsewhere in this Report. We have generated limited revenues from inception to date. We are also in preliminary discussions with companies, business groups, consortiums in the USA and Asia to license our technology, which, if successful, could realize limited short-term revenue opportunities from the signing of technology licensing agreements. Royalty revenue is not estimated until approximately 16 -18 months after the successful testing of the plant, currently anticipated in the fourthfirst quarter of fiscal 2014,2016, and an EPC contract has been signed to build a commercial scale facility.
 
For the Three and NineSix Months Ended SeptemberJune 30, 20142015 and SeptemberJune 30, 20132014
 
Revenues
 
We have generated no revenues for the ninesix months ended SeptemberJune 30, 20142015 and 2013.2014. In the third quarter of fiscal 2012, we received an initial license fee of $375,000 from Jindal paid pursuant to the signing of our pilotcoal testing plant construction contract. The balance of $375,000 will be due upon the successful testing of the pilotcoal testing plant, anticipated in the first quarter of fiscal 2015.2016. We do not anticipate additional license revenues until the pilotcoal testing plant has been successfully tested, and do not expect to receive any royalty fees for approximately 16 to 18 months after an EPC contract has been signed to build a commercial scale facility.
 
Operating Expenses
 
Our operating expenses for the three months ended SeptemberJune 30, 20142015 totaled $626,025$655,443 and for the three months ending SeptemberJune 30, 20132014 totaled $748,512.$605,716. Our operating expenses for the ninesix months ended SeptemberJune 30, 2015 totaled $1,751,319 and for the six months ending June 30, 2014 totaled $2,553,760  and for the nine months ending September 30, 2013 totaled $3,546,531.The$1,927,735.The primary component of the operating expenses in these periods was for shares issued for services, officers’ salaries, and consulting fees.
 
We recorded stock-based compensation consisting of options expense and common stock issued for services of $785,936$842,980 for the ninesix months ended SeptemberJune 30, 2014,2015, compared to $1,641,423$748,127 for the ninesix months ended SeptemberJune 30, 2013.2014.
  
 
1312
 
Employees
 
As of SeptemberJune 30, 2014,2015, we had three full-time executives, and one full-time administrative employee. President and CEO Robin Eves, Chief Operations Officer, Ignacio Ponce de Leon and Chief Financial Officer, Aiden Neary have written employment agreements..agreements. Messrs. Eves and Ponce de Leon received no compensation for their participation on the Board of Directors. In September 2014, we closed our accounting officeJune, 2015, Mr. Ponce de Leon retired from the company in Floridaboth his capacity as COO and we terminated our consulting agreement with Mr C.J Douglas and our administrative assistant. The accounting function has moved to our NY office under our CFO, Aiden Nearyalso as a member of the board of directors.

Net Income/Loss
  
For the ninesix months ended SeptemberJune 30, 2014,2015, we experienced net losses of $4,800,292$11,080,241 compared to $3,689,060$3,788,687 for the ninesix months ended SeptemberJune 30, 2013.2014. For the three months ended SeptemberJune 30, 2014,2015, we experienced net losses of $1,011,605$9,262,904 compared to $792,840$2,196,886 for the three months ended SeptemberJune 30, 2013.2014.
 
We anticipate losses from operations will increase during the next six months due to costs associated with the test plant completion and testing, 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 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 once the pilotcoal 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 and the receipt of $375,000 in license fees from Jindal as described above.
 
Net Cash Used in Operating Activities. Our primary source of operating cash during the ninesix months ended SeptemberJune 30, 2014,2015, was borrowings on related party debt, third party debt and convertible debt. Our primary uses of funds in operations were the payment of professional and consulting fees, and general operating expenses.expenses and the construction of the coal testing plant.
 
Net cash used in operating activities, was $976,876$276,934 for the ninesix months ended SeptemberJune 30, 20142015 compared to net cash used of $1,476,957$309,506 for the same period in 2013.2014. Non-cash items for the ninesix months ended SeptemberJune 30, 20142015 totaled $2,993,721$10,171,902 and consisted of amortization of debt discounts, loan default and standstill fees added to principal, stock-based compensation and options expense and a loss on the change in the fair value of derivative liabilities.

Net Cash Used In Investing Activities. Net cash used in investing activities for the ninesix months ended SeptemberJune 30, 2014 consisted of $12,471$873,026 paid for the construction of the testing plant. This compares to $2,349,500$12,471 paid for the construction of the testing plant during the ninesix months ended SeptemberJune 30, 2013.2014.

Net Cash Provided by Financing Activities. Net cash provided by financing activities during the ninesix months ended SeptemberJune 30, 20142015 totaled $954,942$1,183,498 consisting of borrowings on debt of $15,527, borrowings on convertible debt, $1,074,500net of original issue discounts, of $1,886,000 and borrowings on related party debt of $29,017$50,000 offset by payments on debt of $35,530, convertible debt of $79,250$705,302 and payments on related party debt of $49,322.$47,200.

Cash Position and Outstanding Indebtedness
 
Our total indebtedness at SeptemberJune 30, 20142015 was $4,352,182$18,172,044, which consists almost entirely of current liabilities. Current liabilities consist primarily of accounts payable, accounts payable to related parties, accrued liabilities, short-term debt, convertible debt, related party debt and derivative liabilities.liabilities totaling $18,148,572. At SeptemberJune 30, 2014,2015, we had current assets of $1,237$34,667 in cash. Our working capital deficit at SeptemberJune 30, 20142015 was $4,350,945.$18,111,905. We had construction in progress of $3,212,944$4,161,304 as of SeptemberJune 30, 2014.2015.
 
 
1413
 
Contractual Obligations and Commitments
 
The following table summarizes our contractual cash obligations and other commercial commitments at SeptemberJune 30, 2014.

 Payments due by period  Payments due by period 
 Total 
Less than
1 year
 1 to 3 years 3 to 5 years After 5 years  Total 
Less than
1 year
 1 to 3 years 3 to 5 years After 5 years 
Facility lease (1)
 
$
3,590
 
$
3,590
 
$
-
 
$
-
 
$
-
  
$
4,179
 
$
4,179
 
$
-
 
$
-
 
$
-
 
Total contractual cash obligations
 
$
3,590
 
$
3,590
 
$
-
 
$
-
 
$
-
  
$
4,179
 
$
4,179
 
$
-
 
$
-
 
$
-
 
 
(1)  Our New York office lease commencing February 1, 2014, is on a month to month basis, at a monthly rate of $3,590$4,179 per month.
 
SAIC Energy Environment & Infrastructure (SEE&I), our engineering consultant has tentatively estimated construction costs for each one million short ton coal complete cleaning facility of approximately $120 million (excluding land costs) or costs for a similar size Pristine-M-only facility of approximately $45-50 million (excluding land costs). Under the terms of our consulting agreement with SEE&I, we are obligated to pay to SEE&I a fee representing five percent of all gross revenues received by us from the sale of our technology, the operation of franchised plants utilizing the technology, or revenue received on any other basis that is related to the technology. This fee will remain in effect for a period of 15 years, commencing from the date that we receive our initial revenue stream from operations. All intellectual property rights associated with new art developed by SEE&I remain our property, however SEE&I would have a “right to use” the intellectual property provided it is deployed in non-competitive projects.
 
Construction of the test plant in Oklahoma is underway with completion and testing anticipated to be completed in the first quarter of fiscal 2015.2016. We have paid $3,212,944$4,161,304 towards the plant and initial setup for the testing facility and estimate completion and testing will require an additional $1,300,000. An additional estimated $700,000 is required to transport$2,200,000. In May, 2015, the test plant to AES and complete independent testing. We are currently awaiting the final fundingcompany secured adequate financing to complete the fabrication of the test plant.facility and moved it to the testing site at AES in Oklahoma in September, 2015. The test plant completed  commissioning and commenced testing in fourth quarter 2015. Testing is expected to continue through quarter one 2016 at what point the plant will be moved to a permanent location.
 
Based on our current operational costs and including the capital requirements for our project deployments, we estimate we will need a total of approximately $4,000,000$3,500,000 to fund the Company for the balance of fiscal year 20142015 and an additional $5,000,000 to continue for the following fiscal year (2015)(2016) or until an initial commercial plant is up and running. Assuming we succeed in testing our plant, we believe we will have sufficient funding to meet both the additional costs of the test plant construction and funding for our operations through fiscal 2015,2016, although we need some interim funding until the test plant is operational. 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.
 
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.

14
ITITEM EM 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.
 
15
ITEM4. CONTROLS AND PROCEDURES

As of SeptemberJune 30, 2014,2015, 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, there is no management oversight, no control documentation being produced, and no one to review control documentation if it was being produced. As of SeptemberJune 30, 2014,2015, we have three full time officers of the company. In June, 2015, Mr. Ponce de Leon retired from the company in both his capacity as COO and also as a member of the board of directors. In November, 2013, we employed a Chief Financial Officer who is in the process of implementing financial controls creating a segregation of duties within the Company.

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

We closed our Accounting office in Florida and have moved all accounting functions to New York. This was done to streamline our accounting process and reduce overall costs
 
 
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PART II - OTHER INFORMATION

ITEITEM M 1. LEGAL PROCEEDINGS

We were served with a Statement on or about January 23, 2013 in an international arbitration proceeding titled Beijing Deheng Law Firm v. Clean Coal Technologies, Inc., #x20230033, filed with the China International Economic and Trade Arbitration Commission (“CIETAC”). The Beijing Deheng Law Firm (“Deheng”) has filed a claim against the Company for alleged breach of a Settlement Agreement to pay legal fees and costs. As a result of the arbitration, in September 2013, CIETAC awarded the Deheng Law Firm approximately $146,000 representing legal fees, arbitration fees and costs, plus interest of $36,000 giving a total of $176,002$30,002. In July, 2014 the Company agreed a payment structure with Deheng Law Firm and has to datesettle the outstanding balance for $176,002 to be paid three installmentsover a scheduled period. As of $25,000 each totaling $75,000. TheJune 30, 2015 the outstanding balance was $33,502 due to Deheng Law Firm. As at December 31, 2015 Clean Coal Technologies paid the remaining balance and this claim is due under scheduled payments completing on December 31, 2014.now settled and closed. A release was obtained from Deheng.
 
We were named as a defendant in a lawsuit filed by a shareholder in the 15th Judicial Circuit Court in and for West Palm Beach County, Florida, Case No. 50 2010CA 028706XXXX MB on or about November 24, 2010. The Company has vigorously defended this action that the Company and its litigation counsel regard as absolutely frivolous, baseless and without merit. In August 2013, attorneys for the plaintiff filed a Fourth Amended Complaint. In December 2013, the Court dismissed one count of the amended complaint but plaintiff’s attorneys filed a request to file a fifth amendment. In January 2014, our attorneys filed a memorandum objecting to the motion to amend. We will continue to vigorously defend the action and we do not believe that the action will be materially adverse to the company. Our attorneys have put the plaintiff’s counsel on notice of our intent to seek sanctions against both the plaintiff, and the plaintiff’s counsel pursuant to Florida Statute Sec.57.105. Further, we have moved to dismiss the action on the basis that the Plaintiff has procedurally, factually, and legally failed to state a cause of action up which relief can be granted.
 
We were named as a defendant in a lawsuit filed on or about October 19, 2009, in the 17th Judicial Circuit in and for Broward County, Florida, Case No. 09-56739 (09).  The suit is a dispute for damages arising from a breach of contract involving an unrelated company, but naming Clean Coal. On February 9, 2010, Clean Coal was successful in filingTechnologies Inc. In March 2015, the company came to a motionsettlement of $40,000 to dismiss the Company and its then- President  & CEO, Douglas Hague frombe paid over an eight month period to settle this case. The case$40,000 was re-filed underaccrued in 2014 accounts. As at December 31, 2015 this claim was settled and a release was obtained and the same case number in November 2013 but dismissed without prejudice again in January 2014.We were named as a defendant in a lawsuit filed by a shareholder in December 2013 in the 17th Judicial Circuit in and for Broward County, Florida, Case No. 12-030351(05). The suit alleges misrepresentations regarding removal of restricted legends on stock certificates and misapplication by the Company of securities regulations and laws regarding legend removal. The Company is defending the claims but believe they are without merit.now closed.
 
We were named as a defendant in a lawsuit filed by a shareholder in December 2013 in the 17th Judicial Circuit in and for Broward County, Florida, Case No. 12-030351(05). The suit alleges misrepresentations regarding removal of restricted legends on stock certificates and misapplication by the Company of securities regulations and laws regarding legend removal. The Company is evaluating the claims but believes they are without merit. In July, 2015 the Circuit Court of the Seventeenth Judicial Circuit dismissed this case due to lack of prosecution and this action against Clean Coal Technologies is now closed.

ITEITEM M 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, 2013.2014.
 
ITEITEM M 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

In September 2014,January 2015, the company issued a total of 2,288,909 shares to Mr. Neary for services rendered and also in his efforts to support the financial situation of the company.

In January 2015, the company issued a total of 2,349,143 shares to Mr. Ponce de Leon for services rendered and also in his efforts to support the financial situation of the company.

In January 2015, the company issued a total of 3,556,286 shares to Mr. Eves for services rendered and Mr. Neary returnedalso in his efforts to support the financial situation of the company.

In January 2015, the company issued a total of 330,000 shares to the company which were previously awarded in exchangeMr. Younger for accrued salary totaling Mr. Eves 269,087 and Mr. Neary 247,527 at no cost to the Company.services rendered as a director.

DuringIn January 2015, the three months ended September 30, 2014, wecompany issued an aggregatea total of 5,629,839 common234,000 shares to note holdersMr. Lapomardo for services rendered for the conversioncompany.
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In February 2015, the company issued a total of 1,270,325 shares to extinguish a $50,000 outstanding note.

In May 2015, the company issued a total of 550,000 shares to Olive Tree Investments for IR services.

In May 2015, the company issued a total of 275,000 shares to One Equity Research for research.

In June 2015, the company issued a total of 550,000 shares to 802 Investments in connection with the issuance of a convertible debt and accrued interest totaling $462,696.note of $250,000.

The above shares were issued in reliance on the exemption from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended, and the regulations promulgated thereunder. The issuances were for services, interest on loans and investment, respectively. The transactions were privately negotiated and did not involve any kind of public solicitation.
 
 
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM5. OTHER INFORMATION

 
ITEITEM M 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.INSXBRL Instance Document
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
 
 
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SISIGNATURESGNATURES

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: December 23, 2014January 27, 2016By:/s/ Aiden Neary 
  Aiden Neary 
  Chief Financial Officer 
 
 
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