10-Q 1 e606992_10q-global.htm Unassociated Document
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
(Mark One)
 
   
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
 
For the quarter ended March 31, 2010
 
or
   
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: 0-30303
 
GLOBAL CLEAN ENERGY, INC.
(Exact name of Registrant as specified in its charter)
      
Maryland
 
84-1522846
(State or other jurisdiction
of incorporation or organization)
 
(I.R.S. Employer Identification No.)
     
 6040 Upshaw Suite 105, Humble, Texas 77396
 (Address of principal executive offices)
 
 (281) 441-2538
 (Registrant’s telephone number, including area code)
 
          Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
 
          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 o No þ
 
          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 definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

     Large accelerated filer o
 
Accelerated filer o
 
Non-accelerated file o
 
Smaller reporting company þ
       
(Do not check if a smaller reporting company)
   
 
          Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
 
The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant on March 31, 2010 was $1,513,345 (based on the closing price of the registrant’s common stock on that date).  Shares of the registrant’s common stock held by each officer and director and each person who owns more than 5% of the outstanding common stock of the Registrant have been excluded in that such  persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

The number of shares of the registrant’s common stock outstanding as of May 13, 2010 : 38,803,721. 
 
 
GLOBAL CLEAN ENERGY, INC.
REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2010

CONTENTS

PART I – FINANCIAL INFORMATION
3
Item 1. Financial Statements
3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
7
Item 3. Quantitative and Qualitative Disclosures About Market Risk
8
Item 4T.  Controls and Procedures
8
PART II – OTHER INFORMATION
8
Item 1. Legal Proceedings
8
Item 1A. Risk Factors
8
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
8
Item 3. Defaults Upon Senior Securities
8
Item 5. Other Information
9
Item 6. Exhibits
9
 
 
FORWARD-LOOKING STATEMENTS
 
This report contains forward-looking statements and information relating to us that is based on the beliefs of our management as well as assumptions made by, and information currently available to, our management. When used in this report, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan” and similar expressions, as they relate to us or our management, are intended to identify forward-looking statements. These statements reflect management’s current view of us concerning future events and are subject to certain risks, uncertainties and assumptions, including among many others:
 
 
·
the availability and adequacy of our cash flow to meet our requirements;

 
·
economic, competitive, demographic, business and other conditions in our local and regional markets;

 
·
changes or developments in laws, regulations or taxes in the renewable energy industries;

 
·
actions taken or not taken by third-parties, including our competitors, as well as legislative, regulatory, judicial and other governmental authorities;

 
·
competition in the renewable energy industry;

 
·
the failure to obtain or loss of any license or permit;

 
·
the cyclical nature of the energy industry, and therefore any downturns in this cyclical industry could adversely affect operations;

 
·
the energy-related industry that we service is heavily regulated and the costs associated with such regulated industries increases the costs of doing business;

 
·
the ability to carry out our business plan and to manage our growth effectively and efficiently;

 
·
the failure to manage any foreign exchange risk adequately;

 
·
a general economic downturn or a downturn in the securities markets; and

 
·
risks and uncertainties described in the “Risk Factors” section or elsewhere in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009.
 
Should any of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this report as anticipated, estimated or expected. All written and oral forward-looking statements attributable to us or persons acting on our behalf subsequent to the date of this Quarterly Report are expressly qualified in their entirety by the foregoing risks and those set forth in the “Risk Factors” section in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009.

When used in this report, the terms “GLOBAL CLEAN ENERGY,” “Company,” “GCE,” “we,” “our” and “us” refer to Global Clean Energy, Inc. , unless the context suggests otherwise.
 
 
PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

GLOBAL CLEAN ENERGY, INC.
Balance Sheet (Unaudited)

   
March 31, 2010
   
Dec. 31, 2009
 
             
ASSETS
           
             
Current assets:
           
Cash
  $ 4,780     $ 3,280  
Accounts Receivable – Valleyfield
    281,736       101,094  
                 
Sub-Total
    286,516       104,374  
                 
Other Assets:
               
Cyclonic Dredging Pump Rights and Patent
    450,000       450,000  
Hybrid Gasification Rights and Patent
    1,000,000       1,000,000  
                 
Total assets
  $ 1,736,516     $ 1,554,374  
                 
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
                 
Current liabilities:
               
Accrued compensation - officers, directors and consultants
    336,786       219,786  
Accounts Payable
    376,963       317,979  
Promissory Notes
    535,150       535,150  
    $ 1,248,899     $ 1,072,915  
                 
Stockholders’ equity:
               
                 
Preferred stock; $.001 par value; authorized - 15,000,000 shares; issued – none
    --       --  
Common stock; $.001 par value; authorized - 300,000,000 shares; issued and outstanding – 38,803,721 shares
    38,803       36,628  
Additional paid-in capital
    2,738,281       2,734,305  
Accumulated deficit
    (2,289,667 )     (2,289,474 )
Total liabilities and stockholders’ equity
  $ 1,736,516     $ 1,554,374  
 
See notes to financial statements.

 
GLOBAL CLEAN ENERGY, INC.
Statements of Operations (Unaudited)
 
   
Three Months Ended
 
   
March 31,
 
   
2010
   
2009
 
 Revenue
  $ 46,784        
Costs and expenses:
             
Compensation - officers, directors and consultants
  $ 23,059        
Professional fees
    12,738       33,288  
                 
General and administrative
    11,180       8,758  
Repayment of Advances
               
Depreciation
               
Interest
               
                 
                 
                 
Net loss applicable to common shareholders
  $ (193 )   $ (42,046 )
                 
Basic and diluted net loss per common share
    **       (.01 )**
                 
Weighted average number of common shares outstanding
    38,803,721       25,378,721  
 
** Less than $(.01) per share
 
See notes to financial statements.
 
 
GLOBAL CLEAN ENERGY, INC.
Statements of Cash Flows (Unaudited)
 
   
Three Months Ended
 
   
March 31,
 
   
2010
   
2009
 
             
Cash flows from operating activities:
  $ 46,784        
Net loss
  $ (193 )     (42,046 )
Adjustments to reconcile net loss to net cash used in operating activities:
               
Depreciation
               
Changes in operating assets and liabilities:
    182,142          
                 
Accrued compensation - officers, directors and consultants
    336,786          
Other accrued expenses
               
Net cash used in operating activities
            (42,046 )
                 
Cash flows from investing activities:
               
Purchases of equipment
               
Net cash used in investing activities
               
                 
Cash flows from financing activities:
               
Proceeds from promissory note
               
Repayment of promissory note
               
Net cash provided by financing activities
               
                 
Net increase in cash
    1500       (42,046
Cash at beginning of year
    3280       45,858  
Cash at end of period
    4780       3,812  
                 
Supplemental disclosure of cash flow information:
               
Cash paid for interest
               
 
See notes to financial statements.
 
 
GLOBAL CLEAN ENERGY, INC.
Notes to Financial Statements (Unaudited)
 
1.  Basis of Presentation
 
The accompanying unaudited condensed financial statements of the Company should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 filed with the Securities and Exchange Commission (the “SEC ”). The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“ GAAP ”) for interim financial information, the instructions to Form 10-Q and the rules and regulations of the SEC. Accordingly, since they are interim statements, the accompanying financial statements do not include all of the information and notes required by GAAP for annual financial statements, but reflect all adjustments consisting of normal, recurring adjustments, that are necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. Interim results are not necessarily indicative of results for a full year. The December 31, 2009 consolidated balance sheet information was derived from the audited consolidated financial statements as of that date.
 
 
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

BUSINESS OVERVIEW

Global Clean Energy, Inc. is a cleantech corporation developing and marketing proprietary technology in waste to energy management.  Our focus is organic waste recovery.  We have developed two complementary technologies to salvage and reform waste from a variety of sources to produce a variety of clean energy byproducts.  We believe that we are well-positioned to exploit fully the opportunities presented by the government policies and programs that are setting the agenda for the alternative energy industry.  We are at the forefront of global initiatives to reduce greenhouse gas emissions and lower the dependency in the USA and Europe on imported oil and natural gas, with proprietary and innovative technologies for clean coal and renewable energy and international partners in business, university, consulting and engineering.

Our Mission
 
R.E.S.C.U.E™ -- Reforming Environmental Salvage into Clean Usable Energy

Global Clean Energy Inc., in collaboration with Concordia University and Cascades Engineering, a division of Cascades Canada Inc., one of Canada’s largest paper manufacturers, have spent two years researching and developing technology to recover and reform synthetic fuel from waste containing a wide variety of carbon byproducts.   The result was the filing of two proprietary patents:

 
·
the AirPump™ that utilizes Vortex technology to efficiently separate waste and recover carbon from extracted material; and
 
·
a hybrid steam gasifier, the G2G Steam Reformer, a world’s first in gasification technology.

Both technologies, with accomplished proof-of-concept, constitute the foundation of GCE’s mission: to produce clean energy by clean, sustainable methods and lead an industrial revolution in waste management and disposal.

We are focused on global markets, energy and environmental concerns.  To accomplish our projects, we are supported by engineering, procurement, construction and research partners. These business relationships form the core of our ability to design, develop and supply technology for a wide-range of applications. In this regard, GCE is engaged in and currently accepting orders for projects: which can benefit from mid-range (5 to 100 megawatt equivalent) converted energy production; and which can benefit from the use of our proprietary AirPump™.
What begin as a search for best of breed technologies to convert waste and biomass into clean renewable energy, has evolved and expanded into five areas of active business development:

 
·
research and development of new technologies;
 
·
international joint-ventures to develop waste-to-energy projects;
 
·
offering technology and services for environmental ash cleanup operations;
 
·
expanding into renewable energy production; and
 
·
seeking public financing for projects in the green energy sector.

Current Projects

Salaberry-de-Valleyfield, Québec –

On December 9, 2009, the City of Salaberry-de-Valleyfield announced field testing of our gasification technology to convert MSW and industrial waste to synthetic gas and biodiesel.  The funding from this initiative came from the Canadian government through the Green Municipal Fund of the Federation of Canadian Municipalities.

This project is designed to significantly reduce the amount of waste the city sends to landfill and to generate substantial savings on transportation and disposal of waste.  We expect that ongoing collaboration between us and the city will also result in a new source of biodiesel to fuel some City installations and municipal vehicles at a reduced energy cost.

Phase Two of the project will gasify 5,000 metric tons of MSW per year.
 
 
Phase Three will establish a regional MSW sorting centre including construction of a gasification plant capable of processing 30,000 metric tons of waste per year, or more depending on the feedstock.

This venture affords us a unique opportunity to advance our research and development in an industrial park with an endless supply and variety of feedstock.  And it functions as a prototype for the future of MSW management which is still being defined by an evolution of government policy.
 
Salaberry-de-Valleyfield’s need for small-scale, local energy production accurately mirrors the needs of other municipalities and offers a valuable opportunity to demonstrate how gasification works and how local biofuel production can be incorporated into future public works and urban planning projects.

We believe that a functional 125 mtpd gasification plant has enormous commercial potential.  Beyond managing MSW, generated on average in developed countries of 1 ton per person per year, the same gasifier can be commissioned for uses in any energy reformation application involving carbon-rich feedstock, including turning coal into natural gas.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2010 Compared to the Three Months Ended March 31, 2009

During the quarter ended March 31, 2010, we incurred a net loss of $193 compared to a net loss of $42,046 during the quarter ended March 31, 2009.  The decrease in net loss of $41,853 is due to the fact that we streamlined operations during the quarter and we are receiving revenue from our ongoing Valleyfield project.   During the quarter ended March 31, 2010, we paid compensation and professional fees of $35,797.  Also during the quarter ended March 31, 2010, we paid general and administrative expenses of $11,180.

Liquidity and Capital Resources

As of March 31, 2010, we had $4,780 in cash and $1,248,899 in current liabilities. For the three months ended March 31, 2010, we used $46,977 of cash in operating activities.  Total assets were $1,736,516 at March 31, 2010.  The Company in the quarter received  $46,784 in revenue in its’ Valleyfield project and has a receivable from such project in the amount of  $286,736.

Off-Balance Sheet Arrangements

We have no off-balance sheet financing arrangements and have not formed any special purpose entities. We have not guaranteed any debt or commitments of other entities or entered into any options on non-financial assets.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 4T.  Controls and Procedures

(a) Disclosure Controls and Procedures
 
Management’s Report on Internal Control Over Financial Reporting. Under the supervision and with the participation of our senior management, consisting of our chief executive officer and our chief financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 as of the end of the period covered by this report (the “Evaluation Date”). Based upon that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective as of the Evaluation Date.
 
 
Our management is responsible for establishing and maintaining an adequate system of internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Specifically, our internal control over financial reporting includes those policies and procedures that:

 
·
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
 
 
·
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations by our management and/or directors; and
 
 
·
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
 
Under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO Framework”). Based on this evaluation under the COSO Framework, management concluded that our internal control over financial reporting was effective.

(b) Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting that occurred during the last fiscal quarter of the period covered by this report that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
 
PART II – OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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

 
 
Exhibits:
 
 
31.1+   
Chief Executive Officer's Certificate, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 
31.2+   
Chief Financial Officer's Certificate, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 
32.1+ 
Chief Executive Officer's Certificate, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 
32.2+ 
Chief Financial Officer's Certificate, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
________________
+ Filed Herewith
 

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
GLOBAL CLEAN ENERGY, INC.
 
     
       
Date:  May 17, 2010 
By:
/s/ Earl Azimov      
 
 
Earl Azimov, President & Chief Executive Officer
 
       
       
Date:  May 17, 2010 
By:
/s/ Kenneth S. Adessky   
 
 
Kenneth S. Adessky, Chief Financial Officer
 
     


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