10-K/A: Clean Vision Corporation Amends 2023 Annual Report Following Audit Issues

Clean Vision Corporation has amended its 2023 annual report due to accounting errors identified by its former auditor, Fruci & Associates II, PLLC.

Summary

• Clean Vision Corporation has filed an amendment to its 2023 annual report on Form 10-K/A due to a notification from its former auditor, Fruci & Associates II, PLLC, that the previously issued financial statements and audit opinion could no longer be relied upon.
• The company identified material misstatements in certain account balances after conducting additional audit procedures.
• The amendment includes restated financial statements for the year ended December 31, 2023.
• Clean Vision is focused on clean energy and waste-to-energy industries, particularly converting plastic waste into saleable byproducts like hydrogen and clean fuels using pyrolysis technology.
• The company's revenue for 2023 was $257,414, with a gross margin of $162,789, primarily from its Morocco operations.
• The company reported a net loss of $14,269,566 for the year ended December 31, 2023.
• The company has a number of subsidiaries and joint ventures in various locations including Morocco, India, West Virginia, Arizona, Massachusetts, Michigan, Puerto Rico, France, Turkey and Sri Lanka.
• The company has secured $12 million in state incentives in West Virginia, including $1.75 million in cash.
• The company has a pilot project in India that began operations in May 2022.
• The company has a 51% interest in Clean-Seas Morocco, which began operations in April 2023 and has a capacity to convert 20 tons per day of plastic feedstock.
• The company is planning to expand its operations in West Virginia to 100 TPD initially and then to 500 TPD within three years.
• The company is developing a Plastic Conversion Network (PCN) to connect sources of waste plastic with conversion facilities.
• The company has secured a trademark for AquaH, a unique type of clean hydrogen produced from plastic waste.

Sentiment

Score: 4

Explanation: The document reveals significant financial losses, accounting errors, and internal control weaknesses, which are major concerns for investors. While there are some positive developments, such as the revenue stream from Morocco and state incentives, the overall sentiment is negative due to the financial and operational challenges.

Positives

• The company has established a revenue stream through its Morocco operations, generating $257,414 in revenue with a gross margin of $162,789.
• The company has secured $12 million in state incentives in West Virginia, including $1.75 million in cash, to establish a PCN facility.
• The company has a pilot project in India that began operations in May 2022.
• The company has a 51% interest in Clean-Seas Morocco, which began operations in April 2023 and has a capacity to convert 20 tons per day of plastic feedstock.
• The company has secured a trademark for AquaH, a unique type of clean hydrogen produced from plastic waste.
• The company is developing a Plastic Conversion Network (PCN) to connect sources of waste plastic with conversion facilities.

Negatives

• The company's 2023 annual report was amended due to accounting errors identified by its former auditor.
• The company reported a significant net loss of $14,269,566 for the year ended December 31, 2023.
• The company has identified material weaknesses in its internal control over financial reporting.
• The company has a significant accumulated deficit of $34,831,900 as of December 31, 2023.
• The company has not yet established a source of revenue sufficient to cover its operating costs.
• The company is dependent on raising additional capital through the issuance of debt and equity securities.

Risks

• The company's financial statements for 2023 were restated due to material misstatements.
• The company has identified material weaknesses in its internal control over financial reporting.
• The company is not profitable and has a significant accumulated deficit.
• The company is dependent on raising additional capital to fund its operations.
• The company faces competition in the clean energy and waste-to-value industries.
• The company's projects require government approvals and permits, which may be delayed or not granted.
• The company is subject to extensive environmental laws and regulations.
• The company is involved in ongoing litigation with Leonard Tucker, LLC.
• The company's Morocco project is on hold until equipment and funding are secured.

Future Outlook

The company plans to expand its operations, particularly in West Virginia, and continue developing its PCN. The company also intends to launch its AquaH product in the second quarter of 2025.

Management Comments

• Management believes that Clean-Seas has made significant progress in identifying and developing its business model around the clean energy and waste-to-value sectors.
• Management will use its best judgment on how to deploy capital in the most efficient manner in building out each project and the priority each project is given.

Industry Context

The document highlights the growing global demand for oil and hydrogen, as well as the increasing production of plastics and the need for sustainable solutions. The company is positioning itself to capitalize on these trends by converting plastic waste into valuable commodities.

Comparison to Industry Standards

• The document references the U.S. Energy Information Administration (EIA) projections for global oil demand, which is expected to rise by 6% from 2022 to 2028, reaching 105.7 mb/d.
• The document also cites Allied Market Research's report on the global hydrogen generation market, which was valued at $136.3 billion in 2021 and is expected to reach $262 billion by 2031, growing at a CAGR of 6.8% from 2022 to 2031.
• The document mentions Argonne National Laboratory's research on plastic production, which reached 367 and 56 million tons in the world and North America, respectively, in 2022, and the fact that only 9% of post-use plastic is mechanically recycled in the United States.
• The document also notes that the Organization for Economic Cooperation and Development has suggested that global plastics use is projected to almost triple between 2019 and 2060, with estimates of an increase from 460 million tons to 1,231 million tons yearly.
• These figures indicate that Clean Vision is operating in a market with significant growth potential and a pressing need for sustainable solutions.

Legal Proceedings

• The company is involved in ongoing litigation with Leonard Tucker, LLC, related to a consulting agreement and shares of Series B Preferred Stock.

Related Party Transactions

• The company has engaged in various transactions with related parties, including loans, consulting agreements, and stock issuances to officers and directors.
• The company owes $549,946 to management of Clean-Seas Morocco for funds provided for general operations.

Stakeholder Impact

• Shareholders are impacted by the restatement of financial statements and the company's net losses.
• Employees are impacted by the company's financial instability and potential changes in operations.
• Customers and suppliers are impacted by the company's ability to deliver on its contracts and commitments.
• Creditors are impacted by the company's debt obligations and ability to repay loans.

Next Steps

• The company plans to complete construction and emissions permitting for each location prior to seeking funding.
• The company plans to commence its deployment strategy beginning with the Morocco expansion and West Virginia project as phase one.
• Phase two is currently planned to include; Arizona, Michigan and Massachusetts.
• The company expects to launch the new AquaH product in the second quarter of 2025.
• The parties intend to complete the funding schedule applicable to the Clean-Seas Morocco Investment in the first quarter 2025.

Key Dates

Keywords

pyrolysis, plastic recycling, clean energy, waste-to-energy, hydrogen, AquaH, carbon char, environmental credits, PCN, Clean-Seas, Morocco, West Virginia, financial restatement, internal control, audit