CleanTech Biofuels (CLTH) Risk Analysis
Risk Overview Q3, 2019
Source: the company's latest filing for the period ended Sep 30, 2019, filed Nov 13, 2019
Risk Change Over Time
No filing history is available.
- Accounting & Financial Operations - Risk 1Our consolidated financial statements reflect a "going concern" qualification.
Because of our lack of revenues, lack of working capital, and lack of any assured financing sources, our consolidated financial statements raise doubt about our ability to continue as a going concern because of our financial condition, and substantial losses. The opinion of our auditors for the year ended December 31, 2017 expressed a qualification about our ability to continue as a going concern. This condition has continued since those consolidated financial statements, and we expect that these conditions will continue for the foreseeable future unless we are able to raise a substantial amount of additional financing. In view of the matters described, our ability to continue to pursue our plan of operations as described herein is dependent upon our ability to raise the capital necessary to meet our financial requirements on a continuing basis.
Risk Highlights Q3, 2019
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 22
- Share Price & Shareholder Rights - Risk 1Our stock is thinly traded, so you may be unable to sell at or near ask prices or at all.
Our common stock trades on the OTCQB. Shares of our common stock are thinly-traded, meaning that the number of persons interested in purchasing our common shares at or near ask prices at any given time may be relatively small or non-existent. This situation is attributable to a number of factors, including: - we are a small company that is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume; and - stock analysts, stock brokers and institutional investors may be risk-averse and be reluctant to follow an unproven, early stage company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable. Consequently, our stock price may not reflect an actual or perceived value. Also, there are periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer that has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. A broader or more active public trading market for our common shares may not develop or if developed, may not be sustained. Due to these conditions, you may not be able to sell your shares at or near ask prices or at all if you need money or otherwise desire to liquidate your shares.
- Share Price & Shareholder Rights - Risk 2Even if an active trading market develops, the market price for our common stock may be highly volatile and could be subject to wide fluctuations.
We believe that newer alternative energy companies and companies that effect reverse mergers, such as our company, are particularly susceptible to speculative trading that may not be based on the actual performance of the company, which increases the risk of price volatility in a common stock. In addition, the price of the shares of our common stock could decline significantly if our future operating results fail to meet or exceed the expectations of market analysts and investors. Some of the factors that could affect the volatility of our share price include: - significant sales of our common stock or other securities in the open market;- speculation in the press or investment community;- actual or anticipated variations in quarterly operating results;- changes in earnings estimates;- publication (or lack of publication) of research reports about us;- increases in market interest rates, which may increase our cost of capital;- changes in applicable laws or regulations, court rulings and other legal actions;- changes in market valuations of similar companies;- additions or departures of key personnel;- actions by our stockholders; and - general market and economic conditions.
- Share Price & Shareholder Rights - Risk 3Trading in our common stock is subject to special sales practices and may be difficult to sell.
Our common stock is subject to the SEC's "penny stock" rule, which imposes special sales practice requirements upon broker-dealers who sell such securities to persons other than established customers or accredited investors. Penny stocks are generally defined to be an equity security that has a market price of less than $5.00 per share. For purposes of the rule, the phrase "accredited investors" means, in general terms, institutions with assets in excess of $5,000,000, or individuals having a net worth or a joint net worth with the person's spouse, in excess of $1,000,000 or having an annual income that exceeds $200,000 (or that, when combined with a spouse's income, exceeds $300,000). For transactions covered by the rule, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser's written agreement to the transaction prior to the sale. Consequently, the rule may affect the ability of broker-dealers to sell our securities and also may affect the ability of our shareholders in this offering to sell their securities in any market that might develop. Stockholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered from patterns of fraud and abuse. Such patterns include: - control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;- manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;- "boiler room" practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons;- excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and - the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our common stock.
- Share Price & Shareholder Rights - Risk 4Substantial future sales of our common stock shares in the public market could cause our stock price to fall.
If our stockholders sell substantial amounts of our common stock, or the public market perceives that stockholders might sell substantial amounts of our common stock, the market price of our common stock could decline significantly. Such sales also might make it more difficult for us to sell equity or equity-related securities in the future at a time and price that our management deems appropriate. As of December 31, 2018, we had: (i) 99,333,409 shares of our common stock outstanding, and (ii) outstanding convertible notes (including accrued interest) with warrants convertible into approximately 68.0 million shares of our common stock, and warrants, immediately exercisable and representing the right to purchase approximately 8.8 million shares of our common stock. An additional 14,000,000 shares of our common stock have been reserved for issuance pursuant to our 2007 Stock Option Plan.
- Share Price & Shareholder Rights - Risk 5Potential issuance of additional common and preferred stock could dilute existing stockholders.
We are authorized to issue up to 240,000,000 shares of common stock. To the extent of such authorization, our board of directors has the ability, without seeking stockholder approval, to issue additional shares of common stock in the future for such consideration as the board of directors may consider sufficient. We are also authorized to issue up to ten million shares of preferred stock, the rights and preferences of which may be designated in series by the board of directors. Such designation of new series of preferred stock may be made without stockholder approval, and could create additional securities which would have dividend and liquidation preferences over the common stock offered hereby. Preferred stockholders could adversely affect the rights of holders of common stock by: - exercising voting, redemption and conversion rights to the detriment of the holders of common stock;- receiving preferences over the holders of common stock regarding a surplus of funds in the event of our dissolution or liquidation;- delaying, deferring or preventing a change in control of our company; and - discouraging bids for our common stock. In all the situations described above, the issuance of additional common stock in the future will reduce the proportionate ownership and voting power of our current stockholders.
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