##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
 þ
    
    ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2009
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 333-145939
 CleanTech Biofuels, Inc.
  Delaware
(State or other jurisdiction of incorporation or organization)
    
    33-0754902
(I.R.S. Employer Identification No.)7386 Pershing Ave., University City, Missouri
(Address of principal executive offices)
    
    63130
(Zip Code)
 (314) 802-8670
 Securities registered under Section 12(b) of the Exchange Act:  Securities registered under Section 12(g) of the Exchange Act:
 Yes o No þ
 Yes o No þ
 Yes þ No o
 Yes o No o
 Form 10-K. þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 Yes
o No þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



CLEANTECH BIOFUELS, INC.
TABLE OF CONTENTS
 PAGEPART IITEM 1. Business
    
    
    3ITEM 1A. Risk Factors
    
    
    11ITEM 1B. Unresolved Staff Comments
    
    
    18ITEM 2. Properties
    
    
    18ITEM 3. Legal Proceedings
    
    
    18ITEM 4. Submission of Matters to a Vote of Security Holders
    
    
    19PART IIITEM 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    20ITEM 6. Selected Financial Data
    
    
    22ITEM 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    23ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    31ITEM 8. Financial Statements and Supplemental Data
    
    
    32ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    53ITEM 9A. Controls and Procedures
    
    
    53ITEM 9B. Other Information
    
    
    54PART IIIITEM 10. Directors, Executive Officers and Corporate Governance
    
    
    54ITEM 11. Executive Compensation
    
    
    54ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    54ITEM 13. Certain Relationships and Related Transactions and Director Independence
    
    
    54ITEM 14. Principal Accountant Fees and Services
    
    
    55PART IV.ITEM 15. Exhibits and Financial Statement Schedules
    
    
    55Signatures
    
    
    57Index to Exhibits
    
    
    58Exhibit 21.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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Statement Regarding Forward-Looking Information
   
    
    the commercial viability of our technologies,
    
    our ability to maintain and enforce our exclusive rights to our technologies,
    
    our ability to raise additional capital on favorable terms to continue developing our technologies;
    
    the demand for and production costs of various energy products made from our biomass,
    
    competition from other alternative energy technologies, and
    
    other risks and uncertainties detailed from time to time in our filings with the SEC.
  
 PART I
 
 ITEM 1.
    
    Business
  Company Overview
    3




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Plan of Operation
    4




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Biomass Feedstock Production
       5




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Diesel Fuel Production
  Bio-Fuel and Bio-Chemical Joint Testing/Research
    New Technologies; Commercializing Existing Technologies
   
    
    license and/or construct and operate a commercial plant that processes MSW
into cellulosic biomass for conversion into energy or chemical products;
 
    
    identify and partner with landfill owners, waste haulers and municipalities to
identify locations suitable for our technology; and
 
    
    pursue additional opportunities to implement our technology in commercial
settings at transfer stations and landfills in the United States and elsewhere in the
world.
  Industry Overview
  
    
    Municipal Solid Waste Landfills (MSWLFs)  includes municipal solid waste, industrial
waste, construction and demolition debris, and bioreactors.
 
    
    Mass Burn/Incineration Plants
  6




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Municipal Solid Waste Landfills
    Mass Burn/Incineration Plants
 Mass Burn
  Waste-to-Energy (WTE) Plants
  Modular Incinerators
  Refuse-Derived Fuel (RDF) Plants
    7




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
    
    Dry Scrubbers  these wash the air emissions from the WTE process (called the gas
stream) and remove any acidic gases by passing the gas stream through a liquid.
 
    
    Electrostatic Precipitators (ESP)  these use high voltage electricity to remove up to
98% of all particles remaining in the gas stream after passing through the scrubbers,
including any heavy metal particles.
 
    
    Fabric Filters (baghouses)  these consist of a series of nearly two thousand fabric
bags made of heat-resistant material which filter remaining particles from the gas stream.
This includes any large concentrations of condensed toxic organic compounds (such as
dioxins) and heavy metal compounds.
  Environmental Matters
  
    
    The Clean Air Act, as well as state laws and regulations impacting air emissions,
including State Implementation Plans related to existing and new national ambient air
quality standards for ozone and particulate matter. Owners and/or operators of air emission
sources are responsible for obtaining permits and for annual compliance and reporting.
 
    
    The Clean Water Act which requires permits for facilities that discharge wastewaters
into the environment.
 
    
    The Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act,
which requires certain solid wastes, including hazardous wastes, to be managed pursuant to
a comprehensive regulatory regime.
 
    
    The National Environmental Policy Act, which requires federal agencies to consider
potential environmental impacts in their decisions, including siting approvals.
 Government Approvals
   8




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Our Technologies
  Biomass Recovery Process
   
    
    Cellulosic biomass, a decontaminated, homogeneous feedstock that we expect will
represent approximately 55 to 60 percent of the incoming MSW and will be suitable for
conversion to multiple energy or chemical products.
 
    
    Separated recyclables (steel cans and other ferrous materials, aluminum cans, plastics,
and glass), which we expect will represent about 25 percent of the MSW input and are sorted
and can be sold to recyclers.
   
    
    the relationship between agitation of the waste material, moisture, and the temperature
and pressure of steam in the vessel uses less energy while obtaining a cleaner biomass
resource;
 
    
    the method of introduction of steam into the autoclave vessel, the pressure range, along
with the method of full depressurization, and treatment of the steam being vented from the
process to prevent air pollution make our process more environmentally friendly than any
other means to handle MSW;
 
    
    the method of mixing the heat and steam with the waste uniformly throughout the vessel
create a homogenous feedstock for fuel production; and,
 
    
    the direct and critical correlation between the length and diameter of the vessel,
internal flighting and the total tonnage of waste to be processed for proper mixing and
product yield.
 Principal Products or Services and their Markets
   9




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Energy/Chemicals
  MSW Processing Services
   Recyclable Byproducts
  Sources and Availability of Raw Materials
   Intellectual Property License Terms
 Biomass North America Licensing, Inc.
    10




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Patent
  Employees
  Access to SEC Filings
 www.cleantechbiofuels.net
 
 ITEM 1A.
    
    Risk Factors
  Risks Related to Our Business
 We have no operating experience and may not be able to implement our business plan.
    11




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We need to obtain significant additional capital to complete the development of our technologies,
and the failure to secure additional capital will prevent us from commercializing our technology
and executing our plan of operation
  
    
    obtain additional debt or equity financing,
 
    
    secure significant government grants, and/or
 
    
    enter into a strategic alliance with a larger energy or chemical company to
provide funding.
  Our Biomass Recovery Process technology may have design and engineering issues that may increase
the costs of using the technology.
   We may not have sufficient legal protection of our technologies and other proprietary rights, which
could result in the loss of some or all of our rights or the use of our intellectual properties by
our competitors.
    12




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We will be dependent on our ability to negotiate favorable feedstock supply and biomass off-take
agreements.
  We may not be able to attract and retain management and other personnel we need to succeed.
  We incur significant costs as a result of being a public company.
  Our failure to adequately adhere to the established corporate governance practices or the failure
or circumvention of our controls and procedures could seriously harm our business.
   13




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Our senior managements lack of experience managing a publicly traded company diverts managements
attention from operations and could harm our business.
  Risks Related to our Industry
 As a new small company, we will be at a competitive disadvantage to most of our competitors, which
include larger, established companies that have substantially greater financial, technical,
manufacturing, marketing, distribution and other resources than us.
  Our success is dependent on continued high energy prices.
  Waste processing and energy production is subject to inherent operational accidents and disasters
from which we may not be able to recover, especially if we have only one or a very small number of
facilities.
  Alternative technologies could make our business obsolete.
  Risks Related to Government Regulation and Subsidization
 Enforcement of energy policy regulations could change.
   14




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Costs of compliance may increase with changing environmental and operational safety regulations.
     Risks related to our Common Stock and Stock Price Fluctuation
 Our stock is thinly traded, so you may be unable to sell at or near ask prices or at all.
  
    
    we only recently re-commenced operations;
 
    
    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.
  15




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Even if an active trading market develops, the market price for our common stock may be highly
volatile and could be subject to wide fluctuations.
  
    
    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.
 Trading in our common stock is subject to special sales practices and may be difficult to sell.
   
    
    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;
  16




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
    
    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.
  Substantial future sales of our common stock shares in the public market could cause our stock
price to fall.
  Potential issuance of additional common and preferred stock could dilute existing stockholders.
  
    
    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.
     17




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ITEM 1B.
    
    Unresolved Staff Comments
  
 ITEM 2.
    
    Properties
  
 ITEM 3.
    
    Legal Proceedings
 Duluth Venture Capital Partners, L.L.C. v. Cleantech Biofuels, Inc., et al.
    Selling Stockholder
    
    Shares SuspendedBrite Star Associates, Inc.
    
    
    1,777,867Fountain Consulting, Inc.
    
    
    1,482,000St Ives Consulting, Inc.
    
    
    1,368,000Trinity Enterprises, L.L.C.
    
    
    1,966,667Padstow Estates, Inc.
    
    
    1,966,667
   18




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Ram Resources, L.L.C. v. CleanTech Biofuels, Inc.
 Jordan Altabet v. Ed Hennessey and CleanTech Biofuels, Inc.
 
 ITEM 4.
    
    Submission of Matters to a Vote of Security Holders
   19




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PART II
 
 ITEM 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
  Price Range ofCommon Stock (1)Fiscal Year
    
    High
    
    
    LowYear Ended December 31, 2007First Quarter
    
    $
    2.00
    
    
    $
    0.65Second Quarter
    
    $
    1.01
    
    
    $
    0.65Third Quarter
    
    $
    1.00
    
    
    $
    0.15Fourth Quarter
    
    $
    0.55
    
    
    $
    0.25Year Ended December 31, 2008First Quarter
    
    $
    1.50
    
    
    $
    0.55Second Quarter
    
    $
    1.32
    
    
    $
    0.80Third Quarter
    
    $
    1.20
    
    
    $
    0.21Fourth Quarter
    
    $
    0.75
    
    
    $
    0.07Year Ended December 31, 2009First Quarter
    
    $
    0.28
    
    
    $
    0.02Second Quarter
    
    $
    0.45
    
    
    $
    0.05Third Quarter
    
    $
    0.15
    
    
    $
    0.10Fourth Quarter
    
    $
    0.16
    
    
    $
    0.06
 (1)
    
    all periods presented are adjusted for the 100 to 1 reverse stock split that occurred on February 21, 2007    Weighted-Avg
    
    
    Number of Securities RemainingNumber of securities to be
    
    
    Exercise Price of
    
    
    Available for Future Issuanceissued upon Exercise of
    
    
    Outstanding
    
    
    Under Equity Compensation PlansOutstanding Options,
    
    
    Options, Warrants
    
    
    (excluding securities reflected inPlan Category
    
    Warrants and Rights
    
    
    and Rights
    
    
    column (a))(a)
    
    
    (b)
    
    
    (c)Equity compensation plans approved by security holders: 2007 Stock Option Plan
    
    
    9,145,000
    
    
    $
    0.17
    
    
    
    4,855,000Equity compensation plans not approved by security holders
    
    
    
    
    
    
    
    
    
    
    Totals
    
    
    9,145,000
    
    
    
    
    
    
    
    4,855,000
  20




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Dividend Policy
  Recent Sales of Unregistered Securities 
    21




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ITEM 6.
    
    Selected Financial Data
  Years ended December 31,2009
    
    
    2008
    
    
    2007Statements of Operations Data:Costs and expenses:General and administrative
    
    $
    1,087,889
    
    
    $
    568,115
    
    
    $
    476,937Professional fees
    
    
    290,023
    
    
    
    430,798
    
    
    
    279,814Research and development
    
    
    693,146
    
    
    
    392,471
    
    
    
    118,2302,071,058
    
    
    
    1,391,384
    
    
    
    874,981Other expense (income):Interest
    
    
    906,535
    
    
    
    179,690
    
    
    
    64,029Amortization of technology license
    
    
    
    
    
    
    15,000
    
    
    
    20,000Other income
    
    
    (32,000
    )
    
    
    
    
    
    
    Interest income
    
    
    (11,771
    )
    
    
    (13,749
    )
    
    
    (21,405
    )862,764
    
    
    
    180,941
    
    
    
    62,624Income tax benefit
    
    
    
    
    
    
    
    
    
    
    Net loss applicable to common stockholders
    
    $
    2,933,822
    
    
    $
    1,572,325
    
    
    $
    937,605Basic net loss per common share (1)
    
    $
    0.05
    
    
    $
    0.03
    
    
    $
    0.02Weighted average common shares outstanding
    
    
    63,069,675
    
    
    
    56,857,870
    
    
    
    45,174,094Other Data:Depreciation and amortization
    
    $
    19,220
    
    
    $
    43,572
    
    
    $
    20,256Capital expenditures
    
    
    20,702
    
    
    
    30,180
    
    
    
    3,355Balance Sheet Data (end of period):Total Assets
    
    
    2,178,951
    
    
    
    2,805,570
    
    
    
    777,406Debt (2)
    
    
    1,548,029
    
    
    
    607,478
    
    
    
    1,400,000Stockholders equity (deficit)
    
    
    19,189
    
    
    
    1,866,257
    
    
    
    (811,615
    )
 (1)
    
    The Company does not present Diluted Net Loss per Common Share as the effect of
potential shares related to outstanding options, warrants and convertible notes
would be anti-dilutive.(2)
    
    amounts include both current and long-term portions of Notes Payable, Debentures and Capital Lease  22




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ITEM 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
  Plan of Operation
    Biomass Feedstock Production
     23




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Diesel Fuel Production
  Bio-fuel and Bio-Chemical Joint Testing/Research
    New Technologies; Commercializing Existing Technologies
   24




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
    
    license and/or construct and operate a commercial plant that processes MSW
into cellulosic biomass for conversion to energy and chemical products;
 
    
    identify and partner with landfill owners, waste haulers and municipalities to
identify locations suitable for our technology; and
 
    
    pursue additional opportunities to implement our technology in commercial
settings at transfer stations and landfills in the United States and elsewhere in the
world.
   Results of Operations
  General
   25




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Year ended December 31, 2009 compared to the year ended December 31, 2008
 Years ended December 31,2009
    
    
    2008
    
    
    Change
    
    
    % ChangeCosts and expenses:General and administrative
    
    $
    1,087,889
    
    
    $
    568,115
    
    
    $
    519,774
    
    
    
    91
    %Professional fees
    
    
    290,023
    
    
    
    430,798
    
    
    
    (140,775
    )
    
    
    -33
    %Research and development
    
    
    693,146
    
    
    
    392,471
    
    
    
    300,675
    
    
    
    77
    %2,071,058
    
    
    
    1,391,384
    
    
    
    679,674Other expense (income):Interest
    
    
    906,535
    
    
    
    179,690
    
    
    
    726,845
    
    
    
    404
    %Amortization of technology license
    
    
    
    
    
    
    15,000
    
    
    
    (15,000
    )
    
    
    -100
    %Other income
    
    
    (32,000
    )
    
    
    
    
    
    
    (32,000
    )
    
    
    N/MInterest income
    
    
    (11,771
    )
    
    
    (13,749
    )
    
    
    1,978
    
    
    
    -14
    %Net loss applicable to common stockholders
    
    $
    2,933,822
    
    
    $
    1,572,325
    
    
    $
    1,361,497
    
    
    
    87
    %
 Costs and expenses:
 General and administrative
 Professional Fees
 Research and Development
 Other expense (income):
 Interest expense
 Amortization
 Other income
  26




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Year ended December 31, 2008 compared to the year ended December 31, 2007
 Years ended December 31,2008
    
    
    2007
    
    
    Change
    
    
    % ChangeCosts and expenses:General and administrative
    
    $
    568,115
    
    
    $
    476,937
    
    
    $
    91,178
    
    
    
    19
    %Professional fees
    
    
    430,798
    
    
    
    279,814
    
    
    
    150,984
    
    
    
    54
    %Research and development
    
    
    392,471
    
    
    
    118,230
    
    
    
    274,241
    
    
    
    232
    %1,391,384
    
    
    
    874,981
    
    
    
    516,403Other expense (income):Interest
    
    
    179,690
    
    
    
    64,029
    
    
    
    115,661
    
    
    
    181
    %Amortization of technology license
    
    
    15,000
    
    
    
    20,000
    
    
    
    (5,000
    )
    
    
    -25
    %Interest income
    
    
    (13,749
    )
    
    
    (21,405
    )
    
    
    7,656
    
    
    
    -36
    %Net loss applicable to common stockholders
    
    $
    1,572,325
    
    
    $
    937,605
    
    
    $
    634,720
    
    
    
    68
    %
 Costs and expenses:
 General and administrative
 Professional Fees
 Research and Development
 Other expense (income):
 Interest expense
 Liquidity and Capital Resources
   27




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Debt
 Convertible Notes Payable
    Vertex (formerly WWT) Note Payable
   28




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Series A Convertible Debentures
   Summary of Cash Flow Activity
 For the Years Ended December 31,2009
    
    
    2008
    
    
    2007Net cash used by operating activities
    
    $
    (715,264
    )
    
    $
    (866,285
    )
    
    $
    (715,165
    )Net cash used by investing activities
    
    
    (20,702
    )
    
    
    (200,180
    )
    
    
    (3,355
    )Net cash provided by financing activities
    
    
    640,261
    
    
    
    1,042,726
    
    
    
    838,856
 Net cash used by operating activities
  Net cash used by investing activities
  Net cash provided by financing activities
   29




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Contractual Obligations and Commitments
  Payments due by PeriodLess than 1
    
    
    
    
    
    
    
    
    
    
    More than 5Total
    
    
    year
    
    
    1 to 3 years
    
    
    4 to 5 years
    
    
    yearsConvertible Notes (1)
    
    $
    1,454,650
    
    
    $
    1,454,650
    
    
    $
    
    
    
    $
    
    
    
    $
    Vertex Note (2)
    
    
    209,600
    
    
    
    209,600
    
    
    
    
    
    
    
    
    
    
    
    Series A Convertible Debentures (3)
    
    
    140,000
    
    
    
    140,000
    
    
    
    
    
    
    
    
    
    
    
    Capital Lease (4)
    
    
    6,750
    
    
    
    5,400
    
    
    
    1,350
    
    
    
    
    
    
    
    Operating Lease (5)
    
    
    21,600
    
    
    
    21,600
    
    
    
    
    
    
    
    
    
    
    
    Total contractual obligations
    
    $
    1,832,600
    
    
    $
    1,831,250
    
    
    $
    1,350
    
    
    $
    
    
    
    $
    
 (1)
    
    Amount represents value of principal amount of notes and estimates for interest. These
notes are with various individuals, carry one-year terms and are convertible into shares of
Common Stock at the noteholders option. Some of these notes matured in October, November and
December 2009. If the noteholders do not convert their notes into shares of Common Stock, the
notes will have to be repaid or refinanced.(2)
    
    Amount represents value of principal amount of note and interest through term of note.(3)
    
    Debentures are convertible at Companys option into shares of the Companys common stock.(4)
    
    Represents lease on office furniture.(5)
    
    Represents lease for office space. The lease is for three years from occupancy date of
January 2008. Off-Balance Sheet Arrangements
   
    
    a retained or contingent interest in assets transferred to the unconsolidated
entity or similar arrangement that serves as credit;
 
    
    liquidity or market risk support to such entity for such assets;
 
    
    an obligation, including a contingent obligation, arising out of a variable
interest in an unconsolidated entity that is held by, and material to, us where such entity
provides financing, liquidity, market risk or credit risk support to, or engages in
leasing, hedging, or research and development services with us.
 Critical Accounting Estimates
 Long-Lived
Assets 
 Deferred
Taxes 
  30




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Stock-Based Compensation
 Convertible Notes Payable and Warrants 
 Fair Value Measurement
 
    
    Level 1  Quoted prices in active markets that are unadjusted and accessible at the
measurement date for identical, unrestricted assets or liabilities;
 
    
    Level 2  Quoted prices for identical assets and liabilities in markets that are not
active, quoted prices for similar assets and liabilities in active markets, or financial
instruments for which significant inputs are observable, either directly or indirectly;
 
    
    Level 3  Prices or valuations that require inputs that are both significant to the fair
value measurement and unobservable.
  Contingent Liabilities
 
 ITEM 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
   31




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ITEM 8.
    
    Financial Statements and Supplemental Data
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     Larry ODonnell, CPA, PC
  32




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##### Table of Contents



CLEANTECH BIOFUELS, INC.
(formerly Alternative Ethanol Technologies, Inc.)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
 December 31,
    
    
    December 31,2009
    
    
    2008ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    912
    
    
    $
    96,617Prepaids and other current assets
    
    
    36,481
    
    
    
    68,34537,393
    
    
    
    164,962Property and equipment, net
    
    
    20,308
    
    
    
    18,826Non-Current Assets:Technology licenses, net
    
    
    1,521,250
    
    
    
    2,021,782Patents
    
    
    600,000
    
    
    
    600,000Total Assets
    
    $
    2,178,951
    
    
    $
    2,805,570LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)Current Liabilities:Accounts payable
    
    $
    302,898
    
    
    $
    238,925Accrued interest
    
    
    83,142
    
    
    
    26,660Accrued professional fees and other
    
    
    175,693
    
    
    
    66,250Notes payable, net
    
    
    1,401,925
    
    
    
    456,712Series A convertible debentures
    
    
    140,000
    
    
    
    Deferred revenue
    
    
    50,000
    
    
    
    Capital lease
    
    
    4,869
    
    
    
    4,649Total Current Liabilities
    
    
    2,158,527
    
    
    
    793,196Capital Lease
    
    
    1,235
    
    
    
    6,117Series A Convertible Debentures
    
    
    
    
    
    
    140,000STOCKHOLDERS EQUITY (DEFICIT)Preferred stock, $0.001 par value; 10,000,000 authorized shares; no shares
issued or outstanding
    
    
    
    
    
    
    Common stock, $0.001 par value; 240,000,000 authorized shares;
66,256,824 and 61,270,153 shares issued and outstanding at
December 31, 2009 and 2008, respectively
    
    
    66,257
    
    
    
    61,270Additional paid-in capital
    
    
    5,911,136
    
    
    
    4,675,098Notes receivable  restricted common stock
    
    
    (316,838
    )
    
    
    (162,567
    )Deficit accumulated during the development stage
    
    
    (5,641,366
    )
    
    
    (2,707,544
    )Total Stockholders Equity
    
    
    19,189
    
    
    
    1,866,257Total Liabilities and Stockholders Equity
    
    $
    2,178,951
    
    
    $
    2,805,570
 See accompanying notes to financial statements.
  33




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##### Table of Contents



CLEANTECH BIOFUELS, INC.
(formerly Alternative Ethanol Technologies, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
 July 14, 2004(inception) toYears ended December 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2007
    
    
    2009Costs and expenses:General and administrative
    
    $
    1,087,889
    
    
    $
    568,115
    
    
    $
    476,937
    
    
    $
    2,155,639Professional fees
    
    
    290,023
    
    
    
    430,798
    
    
    
    279,814
    
    
    
    1,049,464Research and development
    
    
    693,146
    
    
    
    392,471
    
    
    
    118,230
    
    
    
    1,217,8472,071,058
    
    
    
    1,391,384
    
    
    
    874,981
    
    
    
    4,422,950Other expense (income):Interest
    
    
    906,535
    
    
    
    179,690
    
    
    
    64,029
    
    
    
    1,152,993Amortization of technology license
    
    
    
    
    
    
    15,000
    
    
    
    20,000
    
    
    
    35,000Deposit forfeiture
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,000
    )Other income
    
    
    (32,000
    )
    
    
    
    
    
    
    
    
    
    
    (32,000
    )Interest income
    
    
    (11,771
    )
    
    
    (13,749
    )
    
    
    (21,405
    )
    
    
    (46,925
    )862,764
    
    
    
    180,941
    
    
    
    62,624
    
    
    
    1,084,068Income tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss applicable to common stockholders
    
    $
    2,933,822
    
    
    $
    1,572,325
    
    
    $
    937,605
    
    
    $
    5,507,018Basic and diluted net loss per common share
    
    $
    0.05
    
    
    $
    0.03
    
    
    $
    0.02
    
    
    $
    0.12Weighted average common shares outstanding
    
    
    63,069,675
    
    
    
    56,857,870
    
    
    
    45,174,094
    
    
    
    47,594,022
 See accompanying notes to financial statements.
  34




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##### Table of Contents



CLEANTECH BIOFUELS, INC.
(formerly Alternative Ethanol Technologies, Inc.)
(A Development Stage Company)
Consolidated Statements Changes in Stockholders Equity (Deficit)
 Additional
    
    
    Notes Rec -
    
    
    July 14, 2004Common Stock
    
    
    Paid-in
    
    
    restricted
    
    
    (inception) toShares
    
    
    Amount
    
    
    Capital
    
    
    common stock
    
    
    Dec 31, 2009Balances at December 31, 2006
    
    
    38,624,784
    
    
    $
    38,625
    
    
    $
    (13,525
    )
    
    $
    
    
    
    $
    (63,266
    )Shares effectively issued to former AETA
stockholders in recapitalization in May 2007
    
    
    752,096
    
    
    
    752
    
    
    
    
    
    
    
    
    
    
    
    (134,348
    )Conversion of promissory notes in May-07 at $.014/share
    
    
    9,366,800
    
    
    
    9,367
    
    
    
    124,229Issuance of restricted shares to Directors in Aug-07
at $.15 per share
    
    
    600,000
    
    
    
    600
    
    
    
    89,400
    
    
    
    (90,000
    )Fair value of RAM warrants issued in Aug-07 at $.13/share
    
    
    
    
    
    
    
    
    
    
    125,027Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    39,129Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (937,605
    )Balances at December 31, 2007
    
    
    49,343,680
    
    
    
    49,344
    
    
    
    364,260
    
    
    
    (90,000
    )
    
    
    (1,135,219
    )Conversion of promissory notes in March and April
2008 at $.15 per share
    
    
    8,888,911
    
    
    
    8,889
    
    
    
    1,324,448Shares released from escrow to HFTA in Sep-08 at $.52/share
    
    
    962,562
    
    
    
    962
    
    
    
    499,570Shares issued in accordance with Biomass North America
Licensing, Inc. merger in Sep-08 at $.75/share
    
    
    1,895,000
    
    
    
    1,895
    
    
    
    1,419,355Discounts on Notes Payable
    
    
    
    
    
    
    
    
    
    
    783,853Issuance of restricted shares to Employees in Dec-08
at $.36 per share
    
    
    180,000
    
    
    
    180
    
    
    
    64,620
    
    
    
    (64,800
    )Interest on Notes Receivable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,767
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    218,992Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,572,325
    )Balances at December 31, 2008
    
    
    61,270,153
    
    
    
    61,270
    
    
    
    4,675,098
    
    
    
    (162,567
    )
    
    
    (2,707,544
    )Conversions of convertible notes in 2009 at $.25 per share
    
    
    466,268
    
    
    
    466
    
    
    
    116,102Conversions of convertible notes in 2009 at $.08 per share
    
    
    687,500
    
    
    
    688
    
    
    
    35,967Discounts on Notes Payable
    
    
    
    
    
    
    
    
    
    
    391,069Issuances of shares in August 2009 at $.13 per share for
Net Issuance Elections for warrants
    
    
    357,778
    
    
    
    358
    
    
    
    (358
    )Issuance of restricted shares in June and December 2009
at $ .12 and $.06 per share, respectively
    
    
    1,250,000
    
    
    
    1,250
    
    
    
    111,250
    
    
    
    (112,500
    )Shares released from escrow to HFTA in Aug-09 at $.10/share
    
    
    1,925,125
    
    
    
    1,925
    
    
    
    190,587Issuance of restricted shares to Directors in Sep-09 at
$ .10 per share
    
    
    300,000
    
    
    
    300
    
    
    
    29,700
    
    
    
    (30,000
    )Interest on Notes Receivable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,771
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    361,721Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,933,822
    )Balances at December 31, 2009
    
    
    66,256,824
    
    
    $
    66,257
    
    
    $
    5,911,136
    
    
    $
    (316,838
    )
    
    $
    (5,641,366
    )
 See accompanying notes to financial statements.
  35




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##### Table of Contents



CLEANTECH BIOFUELS, INC.
(formerly Alternative Ethanol Technologies, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
 July 14, 2004(inception) toYear Ended December 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2007
    
    
    2009Operating ActivitiesNet loss applicable to common stockholders
    
    $
    (2,933,822
    )
    
    $
    (1,572,325
    )
    
    $
    (937,605
    )
    
    $
    (5,507,018
    )Adjustments to reconcile net loss applicable to common
stockholders to net cash used by operating activities:Items that did not use (provide) cash:Common stock issued for organizational costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100Depreciation
    
    
    19,220
    
    
    
    28,572
    
    
    
    256
    
    
    
    48,048Amortization
    
    
    
    
    
    
    15,000
    
    
    
    20,000
    
    
    
    35,000Interest income
    
    
    (11,771
    )
    
    
    (7,767
    )
    
    
    
    
    
    
    (19,538
    )Amortization of discounts (interest expense) and
other financing charges
    
    
    815,526
    
    
    
    138,952
    
    
    
    
    
    
    
    954,477Share-based compensation expense
    
    
    361,721
    
    
    
    218,992
    
    
    
    39,129
    
    
    
    619,842Write-off of technology license
    
    
    693,045
    
    
    
    97,500
    
    
    
    
    
    
    
    790,545Fair value of RAM warrant settlement
    
    
    
    
    
    
    
    
    
    
    125,027
    
    
    
    125,027Changes in operating assets and liabilities that provided
(used) cash, net:Prepaids and other current assets
    
    
    53,440
    
    
    
    3,681
    
    
    
    (72,026
    )
    
    
    (14,905
    )Technology license
    
    
    
    
    
    
    
    
    
    
    (15,000
    )
    
    
    (132,500
    )Accounts payable
    
    
    63,973
    
    
    
    146,937
    
    
    
    91,988
    
    
    
    302,898Other assets and other liabilities
    
    
    113,961
    
    
    
    34,523
    
    
    
    38,569
    
    
    
    189,492Accrued liabilities
    
    
    109,443
    
    
    
    29,650
    
    
    
    (5,503
    )
    
    
    175,693Net cash used by operating activities
    
    
    (715,264
    )
    
    
    (866,285
    )
    
    
    (715,165
    )
    
    
    (2,432,839
    )Cash Flows Provided (Used) by Investing ActivitiesAcquisition of patent, net
    
    
    
    
    
    
    (150,000
    )
    
    
    
    
    
    
    (150,000
    )Merger of Biomass North America Licensing, Inc., net
    
    
    
    
    
    
    (20,000
    )
    
    
    
    
    
    
    (20,000
    )Acquisition of HFTA technology, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expenditures for equipment
    
    
    (20,702
    )
    
    
    (30,180
    )
    
    
    (3,355
    )
    
    
    (54,237
    )Net cash used by investing activities
    
    
    (20,702
    )
    
    
    (200,180
    )
    
    
    (3,355
    )
    
    
    (224,237
    )Cash Flows Provided (Used) by Financing ActivitiesAdvances  related parties
    
    
    (21,576
    )
    
    
    
    
    
    
    (111,144
    )
    
    
    (21,576
    )Payments on capital lease, including interest
    
    
    (5,049
    )
    
    
    (3,787
    )
    
    
    
    
    
    
    (8,836
    )Series A Convertible Debentures, including interest
    
    
    
    
    
    
    474,900
    
    
    
    950,000
    
    
    
    1,424,900Issuance of Convertible Notes Payable
    
    
    958,500
    
    
    
    607,000
    
    
    
    
    
    
    
    1,565,500Payments on Note Payable
    
    
    (291,614
    )
    
    
    (35,387
    )
    
    
    
    
    
    
    (327,000
    )Sale of common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,000Net cash provided by financing activities
    
    
    640,261
    
    
    
    1,042,726
    
    
    
    838,856
    
    
    
    2,657,988Net increase (decrease) in cash and cash equivalents
    
    
    (95,705
    )
    
    
    (23,739
    )
    
    
    120,336
    
    
    
    912Cash and cash equivalents at beginning of period
    
    
    96,617
    
    
    
    120,356
    
    
    
    20
    
    
    
    Cash and cash equivalents at end of period
    
    $
    912
    
    
    $
    96,617
    
    
    $
    120,356
    
    
    $
    912
  36




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##### Table of Contents



CLEANTECH BIOFUELS, INC.
(formerly Alternative Ethanol Technologies, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS contd
 July 14, 2004(inception) toYear Ended December 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2007
    
    
    2009Supplemental disclosure of cash flow information:Cash paid for interest
    
    $
    3,036
    
    
    $
    1,174
    
    
    $
    6,036
    
    
    $
    10,246Supplemental disclosure of noncash investing and
financing activities:Promissory notes receivable related to Series A Convertible
Debentures
    
    $
    
    
    
    $
    
    
    
    $
    450,000
    
    
    $
    450,000Capital lease related to the purchase of equipment
    
    $
    
    
    
    $
    14,119
    
    
    $
    
    
    
    $
    14,119Common stock issued for organizational costs
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    100Common stock issued for promissory notes
    
    $
    
    
    
    $
    
    
    
    $
    133,596
    
    
    $
    133,596Common stock issued for Debentures converted
    
    $
    
    
    
    $
    1,333,337
    
    
    $
    
    
    
    $
    1,333,337Common stock issued for convertible notes converted
    
    $
    153,009
    
    
    $
    
    
    
    $
    
    
    
    $
    153,009Common stock and note payable issued for acquistion of Biomass
    
    $
    
    
    
    $
    1,501,250
    
    
    $
    
    
    
    $
    1,501,250Common stock issued for HFTA
    
    $
    192,513
    
    
    $
    500,532
    
    
    $
    
    
    
    $
    693,045
 See accompanying notes to financial statements.
  37




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##### Table of Contents



CLEANTECH BIOFUELS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note
1  Organization and Business
      Note
2  Summary of Significant Accounting Policies
 Use of Estimates
 Consolidation
 Research and Development Costs
  38




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##### Table of Contents



Impairment
of Long-Lived Assets 
 Intellectual Property
 Property, plant and equipment
 Income Taxes
 Accounting for
Uncertainty in Income Taxes,
 Convertible Notes Payable and Warrants 
 Stock-based compensation
  39




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##### Table of Contents



Fair Value Measurement
 
    
    Level 1  Quoted prices in active markets that are unadjusted and accessible at the
measurement date for identical, unrestricted assets or liabilities;
 
    
    Level 2  Quoted prices for identical assets and liabilities in markets that are not
active, quoted prices for similar assets and liabilities in active markets, or financial
instruments for which significant inputs are observable, either directly or indirectly;
 
    
    Level 3  Prices or valuations that require inputs that are both significant to the fair
value measurement and unobservable.
  Contingent Liabilities
 Dividends
 Net
Loss per Common Share
 Subsequent
Events
 Recent Accounting Pronouncements
   40




---



##### Table of Contents



Note
3  Mergers/Acquisitions
    41




---



##### Table of Contents



Note
4  Property and Equipment
  December 31,2009
    
    
    2008Computers
    
    $
    8,857
    
    
    $
    3,355Furniture and fixtures
    
    
    15,799
    
    
    
    15,799Plant and equipment
    
    
    18,700
    
    
    
    25,000Construction-in-progress
    
    
    
    
    
    
    3,50043,356
    
    
    
    47,654Accumulated Depreciation
    
    
    (23,048
    )
    
    
    (28,828
    )Total
    
    $
    20,308
    
    
    $
    18,826
   Note
5  Patent
  Note 6  Technology Licenses
 Biomass North America Licensing, Inc.
   42




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##### Table of Contents



HFTA, Inc.
   Bio-Products International, Inc.
   43




---



##### Table of Contents



Brelsford Engineering, Inc.
     44




---



##### Table of Contents



Note
7  Debt
 December 31,2009
    
    
    2008Convertible Notes Payable, net of discounts of $7,137 and $514,797
at December 31, 2009 and 2008, respectively, which are made up of
various individual notes with an aggregate face value of $502,000
and $607,000 at December 31, 2009 and 2008, respectively, due in
one year from date of note, interest at 6.0%
    
    $
    494,863
    
    
    $
    92,203Convertible Notes Payable, net of discounts of $187,880 and $-0- at
December 31, 2009 and 2008, respectively, which are made up of
various individual notes with an aggregate face value of $898,500
and $-0- at December 31, 2009 and 2008, respectively, due in one
year from date of note, interest at 6.0%
    
    
    710,620
    
    
    
    Vertex (formerly WWT) Note Payable, net of discount of $6,558 and
$130,105 at December 31, 2009 and 2008, respectively, with a face
value
of $203,000 and $450,000, respectively. Principal and interest due
1-22-10, interest at 6.0%
    
    
    196,442
    
    
    
    319,895Note Payable, repaid May 1, 2009, interest at 6.0%
    
    
    
    
    
    
    44,614Series A Convertible Debentures, due April 16, 2010, interest at 6.0%
    
    
    140,000
    
    
    
    140,000Total debt
    
    
    1,541,925
    
    
    
    596,712Current maturities
    
    
    (1,541,925
    )
    
    
    (456,712
    )Long-term portion, less current maturities
    
    $
    
    
    
    $
    140,000
 Convertible Notes Payable
    45




---



##### Table of Contents



Vertex (formerly WWT) Note Payable
  Series A Convertible Debentures
    Note 8  Stockholders Deficit
   46




---



##### Table of Contents



Note 9  Related Party Transactions
      47




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##### Table of Contents



Note
10  Share-based Payments
       48




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##### Table of Contents



For the years ended December 31,2009
    
    
    2008
    
    
    2007Risk-free interest rate
    
    
    2.44
    %
    
    
    1.57
    %
    
    
    4.25
    %Dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Volatility
    
    
    29.58
    %
    
    
    36.91
    %
    
    
    61.49
    %Expected term (years)
    
    
    5.0
    
    
    
    4.8
    
    
    
    5.0Weighted-average Fair Value
    
    $
    0.03
    
    
    $
    0.12
    
    
    $
    0.08
  For the Year EndedDec 31, 2009
    
    
    Dec 31, 2008
    
    
    Dec 31, 2007Pre-tax compensation expense:Stock options
    
    $
    361,721
    
    
    $
    218,992
    
    
    $
    39,129Warrants
    
    
    
    
    
    
    
    
    
    
    125,027Total expense
    
    
    361,721
    
    
    
    218,992
    
    
    
    164,156Tax benefit, net
    
    
    
    
    
    
    
    
    
    
    After-tax compensation expense
    
    $
    361,721
    
    
    $
    218,992
    
    
    $
    164,156
   49




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##### Table of Contents



WeightedShares Under
    
    
    Average
    
    
    AggregateOption
    
    
    Exercise Price
    
    
    intrinsic valueOptions outstanding at December 31, 2008
    
    
    6,510,000
    
    
    $
    0.20
    
    
    
    (1
    )Granted
    
    
    305,000
    
    
    
    0.10Exercised
    
    
    Forfeited
    
    
    Options outstanding at December 31, 2009
    
    
    6,815,000
    
    
    $
    0.18
    
    
    
    (1
    )Options exercisable at December 31, 2009
    
    
    3,751,668
    
    
    $
    0.19
    
    
    
    (1
    )
 (1)
    
    The weighted-average exercise price at December 31, 2009 and 2008 for all outstanding and
exercisable options was greater than the fair value of the Companys common stock on that
date, resulting in an aggregate intrinsic value of $-0-. Note
11  Income Taxes
     At December 31,2009
    
    
    2008Start-up costs
    
    $
    480,000
    
    
    $
    248,000Net operating loss carryforward
    
    
    701,000
    
    
    
    339,000Accrual to cash conversion
    
    
    516,000
    
    
    
    163,000Share-based compensation related to stock options
    
    
    241,000
    
    
    
    100,000Other
    
    
    8,000
    
    
    
    10,000Total
    
    
    1,946,000
    
    
    
    860,000Valuation allowance
    
    
    (1,946,000
    )
    
    
    (860,000
    )Net deferred tax asset
    
    $
    
    
    
    $
    
  50




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##### Table of Contents



Note
12  Commitments and Contingencies
 RAM Resources, L.L.C. litigation
 Jordan Altabet litigation
 Leases 
 Note
13  Subsequent Events
    51




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##### Table of Contents



Note
14  Quarterly Financial Data (Unaudited)
  For the quarters ended 2009:Mar 31
    
    
    June 30
    
    
    Sept 30
    
    
    Dec 31Costs and expenses:General and administrative
    
    $
    243,823
    
    
    $
    345,004
    
    
    $
    288,740
    
    
    $
    210,322Professional fees
    
    
    109,413
    
    
    
    83,161
    
    
    
    64,657
    
    
    
    32,792Research and development
    
    
    101
    
    
    
    
    
    
    
    
    
    
    
    693,045353,337
    
    
    
    428,165
    
    
    
    353,397
    
    
    
    936,159Other expense (income):Interest
    
    
    226,127
    
    
    
    246,165
    
    
    
    253,657
    
    
    
    180,586Other income
    
    
    (4,667
    )
    
    
    (27,333
    )
    
    
    
    
    
    
    Interest income
    
    
    (2,241
    )
    
    
    (2,266
    )
    
    
    (3,431
    )
    
    
    (3,833
    )Net loss applicable to common stockholders
    
    $
    572,556
    
    
    $
    644,731
    
    
    $
    603,623
    
    
    $
    1,112,912Basic net loss per common share
    
    $
    0.01
    
    
    $
    0.01
    
    
    $
    0.01
    
    
    $
    0.02
  52




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##### Table of Contents



For the quarters ended 2008:Mar 31
    
    
    June 30
    
    
    Sept 30
    
    
    Dec 31Costs and expenses:General and administrative
    
    $
    146,223
    
    
    $
    155,107
    
    
    $
    99,204
    
    
    $
    167,581Professional fees
    
    
    111,946
    
    
    
    78,946
    
    
    
    90,284
    
    
    
    149,622Research and development
    
    
    183,104
    
    
    
    53,812
    
    
    
    40,271
    
    
    
    115,284441,273
    
    
    
    287,865
    
    
    
    229,759
    
    
    
    432,487Other expense (income):Interest
    
    
    19,751
    
    
    
    4,136
    
    
    
    3,314
    
    
    
    152,489Amortization of technology license
    
    
    3,750
    
    
    
    3,750
    
    
    
    3,750
    
    
    
    3,750Interest income
    
    
    (5,727
    )
    
    
    (252
    )
    
    
    (3
    )
    
    
    (7,767
    )Net loss applicable to common stockholders
    
    $
    459,047
    
    
    $
    295,499
    
    
    $
    236,820
    
    
    $
    580,959Basic net loss per common share
    
    $
    0.01
    
    
    $
    0.01
    
    
    
    **
    
    
    $
    0.01
 **
    
    - less than $0.01 per share 
 ITEM 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 ITEM 9A.
    
    Controls and Procedures
  Effectiveness of Disclosure Controls and Procedures
  Managements Report on Internal Control Over Financial Reporting
  53




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##### Table of Contents



.
 Changes in Internal Control Over Financial Reporting
 Attestation
Report of Registered Public Accounting Firm
 
 ITEM 9B.
    
    Other Information
  
 PART III
 
 ITEM 10.
    
    Directors, Executive Officers and Corporate Governance
  
 ITEM 11.
    
    Executive Compensation
  
 ITEM 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
  
 ITEM 13.
    
    Certain Relationships and Related Transactions and Director Independence
   54




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##### Table of Contents



ITEM 14.
    
    Principal Accountant Fees and Services
  
 PART IV
 
 ITEM 15.
    
    Exhibits and Financial Statement Schedules
 (a)
    
    The following documents are filed as part of this report:
 1.
    
    Financial Statements:
 Report of Independent Registered Public Accounting Firm
 Consolidated Balance Sheets as of December 31, 2009 and 2008
 Consolidated Statements of Operations for the years ended December 31, 2009,
2008 and 2007 and Inception to December 31, 2009
 Consolidated Statements of Changes in Stockholders Equity for the years ended
December 31, 2009, 2008 and 2007
 Consolidated Statements of Cash Flows for the years ended December 31, 2009,
2008 and 2007 and Inception to December 31, 2009
 Notes to Consolidated Financial Statements
 2.
    
    Exhibits:
 ExhibitNumber
    
    Description2.1
    
    
    Agreement and Plan of Merger and Reorganization by and among
Cleantech Biofuels, Inc., Biomass NA Acquisition Subsidiary, Inc.
and Biomass North America Licensing, Inc. dated as of July 14, 2008
(incorporated herein by reference to Exhibit 2.1 of the Registrants
quarterly report on Form 10-Q for the period ended June 30, 2008).3.1
    
    
    Restated Certificate of Incorporation (incorporated herein by
reference to Exhibit 3.1 of the Registrants registration statement
on Form SB-2 filed on September 10, 2007, File No. 333-145939).3.2
    
    
    Restated By-Laws (incorporated herein by reference to Exhibit 3.2 of
the Registrants registration statement on Form SB-2 filed on
September 10, 2007, File No. 333-145939).4.1
    
    
    Form of Series A Convertible Debenture (incorporated herein by
reference to Exhibit 4.1 of the Registrants registration statement
on Form SB-2 filed on September 10, 2007, File No. 333-145939).4.2
    
    
    Investors Rights Agreement dated as of April 16, 2007 by and among
SRS Energy, Inc. and certain Investors (incorporated herein by
reference to Exhibit 4.2 of the Registrants registration statement
on Form SB-2 filed on September 10, 2007, File No. 333-145939).4.3
    
    
    Series A Debenture Purchase Agreement dated as of April 16, 2007 by
and among SRS Energy, Inc. and certain Investors (incorporated
herein by reference to Exhibit 4.3 of the Registrants registration
statement on Form SB-2 filed on September 10, 2007, File No.
333-145939).4.4
    
    
    Warrant dated August 31, 2007 by CleanTech Biofuels, Inc. in favor
of RAM Resources, L.L.C (incorporated herein by reference to Exhibit
4.4 of the Registrants registration statement on Form SB-2 filed on
September 10, 2007, File No. 333-145939).10.1
    
    
    Technology License Agreement between Bio Products International,
Inc. and SRS Energy, Inc. dated as of March 8, 2007 (incorporated
herein by reference to Exhibit 10.4 of the Registrants registration
statement on Form SB-2 filed on September 10, 2007, File No.
333-145939).10.2
    
    
    Engagement Agreement between Alternative Ethanol Technologies, Inc.
k/n/a CleanTech Biofuels, Inc. and Merrick & Company (incorporated
herein by reference to Exhibit 10.5 of the Registrants registration
statement on Form SB-2 filed on September 10, 2007, File No.
333-145939).10.3
    
    
    Consulting Fee Agreement between Alternative Ethanol Technologies
k/n/a CleanTech Biofuels, Inc. and Five Sigma Ltd. dated as of April
17, 2007 (incorporated herein by reference to Exhibit 10.6 of the
Registrants registration statement on Form SB-2 filed on September
10, 2007, File No. 333-145939).
  55




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##### Table of Contents



ExhibitNumber
    
    Description10.4
    *
    
    2007 Stock Option Plan (incorporated herein by reference to Exhibit
10.7 of the Registrants registration statement on Form SB-2 filed
on September 10, 2007, File No. 333-145939).10.5
    *
    
    Form of Director Stock Option Agreement (incorporated herein by
reference to Exhibit 10.8 of the Registrants registration statement
on Form SB-2 filed on September 10, 2007, File No. 333-145939).10.6
    *
    
    Director Stock Purchase Agreement (incorporated herein by reference
to Exhibit 10.9 of the Registrants registration statement on Form
SB-2 filed on September 10, 2007, File No. 333-145939).10.7
    *
    
    Employment Agreement  Edward P. Hennessey, Jr. (incorporated herein
by reference to Exhibit 10.10 of the Registrants registration
statement on Form SB-2 filed on September 10, 2007, File No.
333-145939).10.8
    *
    
    Form of Employee Agreement  Michael Kime and Tom Jennewein
(incorporated herein by reference to Exhibit 10.11 of the
Registrants registration statement on Form SB-2 filed on September
10, 2007, File No. 333-145939).10.9
    *
    
    Form of Employee Stock Option Agreement  Michael Kime and Tom
Jennewein (incorporated herein by reference to Exhibit 10.12 of the
Registrants registration statement on Form SB-2 filed on September
10, 2007, File No. 333-145939).10.10
    
    
    Commercial Lease with Pershing Properties, LLC dated October 12,
2007 (incorporated herein by reference to Exhibit 10.13 of the
Registrants registration statement on Form SB-2/A filed on November
30, 2007, File No. 333-145939).10.11
    
    
    Sublicense Agreement with HFTA dated March 20, 2008 (incorporated
herein by reference to Exhibit 10.1 of the Registrants current
report on Form 8-K filed March 25, 2008).10.12
    
    
    Sublicense Agreement among SRS Energy, Inc., Cleantech Biofuels,
Inc. and HFTA for Methods and Apparatus for Treating Biomass
Material (incorporated herein by reference to Exhibit 10.1 of the
Registrants current report on Form 8-K filed on March 25, 2008).10.13
    
    
    Patent Purchase Agreement dated October 22, 2008 by and between
Cleantech Biofuels, Inc. and World Waste Technologies, Inc.
(incorporated herein by reference to Exhibit 10.15 of the
Registrants current report on Form 8-K filed on October 27, 2008).10.14
    
    
    Note issued in favor of World Waste Technologies, Inc. dated October
22, 2008 (incorporated herein by reference to Exhibit 10.16 of the
Registrants current report on Form 8-K filed on October 27, 2008).10.15
    
    
    Security Agreement between Cleantech Biofuels, Inc. and World Waste
Technologies, Inc. dated October 22, 2008 (incorporated herein by
reference to Exhibit 10.17 of the Registrants current report on
Form 8-K filed on October 27, 2008).10.16
    
    
    Technology License and Joint Development Agreement among Biomass
North America Licensing, Inc., Biomass North America, LLC and
Anthony P. Noll (incorporated herein by reference to Exhibit 10.18
of the Registrants quarterly report on Form 10-Q for the period
ended September 30, 2008).10.17
    
    
    Form of employee stock purchase agreement entered into with Edward
P. Hennessey, Jr., Michael Kime and Tom Jennewein (incorporated
herein by reference to Exhibit 10.20 of the Registrants annual
report on Form 10-K for the period ended December 31, 2008).10.18
    
    
    Amendment to Note and Warrant Exchange Agreement between Vertex
Energy, Inc. and Cleantech Biofuels, Inc. dated July 23, 2009
(incorporated herein by reference to Exhibit 10.21 of the
Registrants quarterly report on Form 10-Q for the period ended
September 30, 2009).14
    
    
    Code of Ethics (incorporated herein by reference to Exhibit 14 of
the Registrants annual report on Form 10-KSB for the period ended
December 31, 2007).21.1
    
    
    List of Subsidiaries.31.1
    
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a)
and Rule 15d-14(a) of the Securities
Exchange Act, as amended31.2
    
    
    Certification of principal financial officer pursuant to Rule
13a-14(a) and Rule 15d-14(a) of the Securities
Exchange Act, as amended32.1
    
    
    Certificate (Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002) of Chief Executive
Officer32.2
    
    
    Certificate (Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002) of principal
financial officer
 
 *
    
    Management contract or compensatory plan or arrangement.  56




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##### Table of Contents



SIGNATURES
  CleanTech Biofuels, Inc.
(registrant)March 30, 2010
    By:
    /s/ Edward P. Hennessey, Jr.Edward P. Hennessey, Jr.Chief Executive OfficerMarch 30, 2010
    By:
    /s/ Thomas G. JenneweinThomas G. JenneweinChief Financial Officer  March 30, 2010
    /s/ Edward P. Hennessey, Jr.Edward P. Hennessey, Jr., Chairman of theBoard of Directors and Chief Executive Officer
(principal executive officer)March 30, 2010
    /s/ Thomas G. Jennewein.Thomas G. Jennewein, Chief Financial Officer(principal financial and accounting officer)March 30, 2010
    /s/ Dr. Jackson NickersonJackson Nickerson, DirectorMarch 30, 2010
    /s/ Dr. David BransbyDavid Bransby, DirectorMarch 30, 2010
    /s/ Paul Simon, Jr.Paul Simon, Jr., DirectorMarch 30, 2010
    /s/ Jose Bared, Sr.Jose Bared, Sr.., Director  57




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##### Table of Contents



INDEX TO EXHIBITS
 ExhibitNumber
    
    Description2.1
    
    
    Agreement and Plan of Merger and Reorganization by and among
Cleantech Biofuels, Inc., Biomass NA Acquisition Subsidiary, Inc.
and Biomass North America Licensing, Inc. dated as of July 14, 2008
(incorporated herein by reference to Exhibit 2.1 of the Registrants
quarterly report on Form 10-Q for the period ended June 30, 2008).3.1
    
    
    Restated Certificate of Incorporation (incorporated herein by
reference to Exhibit 3.1 of the Registrants registration statement
on Form SB-2 filed on September 10, 2007, File No. 333-145939).3.2
    
    
    Restated By-Laws (incorporated herein by reference to Exhibit 3.2 of
the Registrants registration statement on Form SB-2 filed on
September 10, 2007, File No. 333-145939).4.1
    
    
    Form of Series A Convertible Debenture (incorporated herein by
reference to Exhibit 4.1 of the Registrants registration statement
on Form SB-2 filed on September 10, 2007, File No. 333-145939).4.2
    
    
    Investors Rights Agreement dated as of April 16, 2007 by and among
SRS Energy, Inc. and certain Investors (incorporated herein by
reference to Exhibit 4.2 of the Registrants registration statement
on Form SB-2 filed on September 10, 2007, File No. 333-145939).4.3
    
    
    Series A Debenture Purchase Agreement dated as of April 16, 2007 by
and among SRS Energy, Inc. and certain Investors (incorporated
herein by reference to Exhibit 4.3 of the Registrants registration
statement on Form SB-2 filed on September 10, 2007, File No.
333-145939).4.4
    
    
    Warrant dated August 31, 2007 by CleanTech Biofuels, Inc. in favor
of RAM Resources, L.L.C (incorporated herein by reference to Exhibit
4.4 of the Registrants registration statement on Form SB-2 filed on
September 10, 2007, File No. 333-145939).10.1
    
    
    Technology License Agreement between Bio Products International,
Inc. and SRS Energy, Inc. dated as of March 8, 2007 (incorporated
herein by reference to Exhibit 10.4 of the Registrants registration
statement on Form SB-2 filed on September 10, 2007, File No.
333-145939).10.2
    
    
    Engagement Agreement between Alternative Ethanol Technologies, Inc.
k/n/a CleanTech Biofuels, Inc. and Merrick & Company (incorporated
herein by reference to Exhibit 10.5 of the Registrants registration
statement on Form SB-2 filed on September 10, 2007, File No.
333-145939).10.3
    
    
    Consulting Fee Agreement between Alternative Ethanol Technologies
k/n/a CleanTech Biofuels, Inc. and Five Sigma Ltd. dated as of April
17, 2007 (incorporated herein by reference to Exhibit 10.6 of the
Registrants registration statement on Form SB-2 filed on September
10, 2007, File No. 333-145939).10.4
    *
    
    2007 Stock Option Plan (incorporated herein by reference to Exhibit
10.7 of the Registrants registration statement on Form SB-2 filed
on September 10, 2007, File No. 333-145939).10.5
    *
    
    Form of Director Stock Option Agreement (incorporated herein by
reference to Exhibit 10.8 of the Registrants registration statement
on Form SB-2 filed on September 10, 2007, File No. 333-145939).10.6
    *
    
    Director Stock Purchase Agreement (incorporated herein by reference
to Exhibit 10.9 of the Registrants registration statement on Form
SB-2 filed on September 10, 2007, File No. 333-145939).10.7
    *
    
    Employment Agreement  Edward P. Hennessey, Jr. (incorporated herein
by reference to Exhibit 10.10 of the Registrants registration
statement on Form SB-2 filed on September 10, 2007, File No.
333-145939).10.8
    *
    
    Form of Employee Agreement  Michael Kime and Tom Jennewein
(incorporated herein by reference to Exhibit 10.11 of the
Registrants registration statement on Form SB-2 filed on September
10, 2007, File No. 333-145939).10.9
    *
    
    Form of Employee Stock Option Agreement  Michael Kime and Tom
Jennewein (incorporated herein by reference to Exhibit 10.12 of the
Registrants registration statement on Form SB-2 filed on September
10, 2007, File No. 333-145939).10.10
    
    
    Commercial Lease with Pershing Properties, LLC dated October 12,
2007 (incorporated herein by reference to Exhibit 10.13 of the
Registrants registration statement on Form SB-2/A filed on November
30, 2007, File No. 333-145939).10.11
    
    
    Sublicense Agreement with HFTA dated March 20, 2008 (incorporated
herein by reference to Exhibit 10.1 of the Registrants current
report on Form 8-K filed March 25, 2008).10.12
    
    
    Sublicense Agreement among SRS Energy, Inc., Cleantech Biofuels,
Inc. and HFTA for Methods and Apparatus for Treating Biomass
Material (incorporated herein by reference to Exhibit 10.1 of the
Registrants current report on Form 8-K filed on March 25, 2008).
  58




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##### Table of Contents



ExhibitNumber
    
    Description10.13
    
    
    Patent Purchase Agreement dated October 22, 2008 by and between
Cleantech Biofuels, Inc. and World Waste Technologies, Inc.
(incorporated herein by reference to Exhibit 10.15 of the
Registrants current report on Form 8-K filed on October 27, 2008).10.14
    
    
    Note issued in favor of World Waste Technologies, Inc. dated October
22, 2008 (incorporated herein by reference to Exhibit 10.16 of the
Registrants current report on Form 8-K filed on October 27, 2008).10.15
    
    
    Security Agreement between Cleantech Biofuels, Inc. and World Waste
Technologies, Inc. dated October 22, 2008 (incorporated herein by
reference to Exhibit 10.17 of the Registrants current report on
Form 8-K filed on October 27, 2008).10.16
    
    
    Technology License and Joint Development Agreement among Biomass
North America Licensing, Inc., Biomass North America, LLC and
Anthony P. Noll (incorporated herein by reference to Exhibit 10.18
of the Registrants quarterly report on Form 10-Q for the period
ended September 30, 2008).10.17
    
    
    Form of employee stock purchase agreement entered into with Edward
P. Hennessey, Jr., Michael Kime and Tom Jennewein (incorporated
herein by reference to Exhibit 10.20 of the Registrants annual
report on Form 10-K for the period ended December 31, 2008).10.18
    
    
    Amendment to Note and Warrant Exchange Agreement between Vertex
Energy, Inc. and Cleantech Biofuels, Inc. dated July 23, 2009
(incorporated herein by reference to Exhibit 10.21 of the
Registrants quarterly report on Form 10-Q for the period ended
September 30, 2009).14
    
    
    Code of Ethics (incorporated herein by reference to Exhibit 14 of
the Registrants annual report on Form 10-KSB for the period ended
December 31, 2007).21.1
    
    
    List of Subsidiaries.31.1
    
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a)
and Rule 15d-14(a) of the Securities
Exchange Act, as amended31.2
    
    
    Certification of principal financial officer pursuant to Rule
13a-14(a) and Rule 15d-14(a) of the Securities
Exchange Act, as amended32.1
    
    
    Certificate (Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002) of Chief Executive
Officer32.2
    
    
    Certificate (Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002) of principal
financial officer
 
 *
    
    Management contract or compensatory plan or arrangement.  59