##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2009
 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 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
 þ o
 Yes o No o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller reporting company þ
 o þ




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##### 



CLEANTECH BIOFUELS, INC.
TABLE OF CONTENTS
 PAGEPART I Financial InformationItem 1 Financial Statements (Unaudited)
    
    
    3Balance Sheets  September 30, 2009 and December 31, 2008
    
    
    3Statements of Operations  Three and nine months ended September 30, 2009 and 2008 and Inception to September 30, 2009
    
    
    4Statements of Stockholders Equity (Deficit)  September 30, 2009
    
    
    5Statements of Cash Flows  Nine months ended September 30, 2009 and 2008 and Inception to September 30, 2009
    
    
    6Notes to Financial Statements
    
    
    8Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17Item 3 Quantitative and Qualitative Disclosures About Market Risk
    
    
    26Item 4T Controls and Procedures
    
    
    27PART II Other InformationItem 1 Legal Proceedings
    
    
    27Item 1A Risk Factors
    
    
    28Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    28Item 3 Defaults upon Senior Securities
    
    
    29Item 4 Submission of Matters to a Vote of Security Holders
    
    
    29Item 5 Other Information
    
    
    30Item 6 Exhibits
    
    
    30Signatures
    
    
    31Index to Exhibits
    
    
    32Exhibit 10.21Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements (Unaudited)
 CLEANTECH BIOFUELS, INC.  (formerly Alternative Ethanol Technologies, Inc.)
(A Development Stage Company)
 
 BALANCE SHEETS
 September 30,
    
    
    December 31,2009
    
    
    2008(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    20,034
    
    
    $
    96,617Prepaids and other current assets
    
    
    17,388
    
    
    
    68,34537,422
    
    
    
    164,962Property and equipment, net
    
    
    26,511
    
    
    
    18,826Non-current assets:Technology licenses, net
    
    
    2,214,295
    
    
    
    2,021,782Patents
    
    
    600,000
    
    
    
    600,000Total Assets
    
    $
    2,878,228
    
    
    $
    2,805,570LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)Current liabilities:Accounts payable
    
    $
    260,155
    
    
    $
    238,925Accrued interest
    
    
    67,549
    
    
    
    26,660Accrued professional fees and other
    
    
    148,239
    
    
    
    66,250Notes Payable, net
    
    
    1,339,579
    
    
    
    456,712Series A Convertible Debentures
    
    
    140,000
    
    
    
    Deferred revenue
    
    
    50,000
    
    
    
    Capital lease
    
    
    4,813
    
    
    
    4,649Total current liabilities
    
    
    2,010,335
    
    
    
    793,196Capital Lease
    
    
    2,477
    
    
    
    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;
64,912,656 and 61,270,153 shares issued and outstanding at
September 30, 2009 and December 31, 2008, respectively
    
    
    64,913
    
    
    
    61,270Additional paid-in capital
    
    
    5,604,462
    
    
    
    4,675,098Notes receivable  restricted common shares
    
    
    (275,505
    )
    
    
    (162,567
    )Deficit accumulated during the development stage
    
    
    (4,528,454
    )
    
    
    (2,707,544
    )Total Stockholders Equity
    
    
    865,416
    
    
    
    1,866,257Total Liabilities and Stockholders Equity
    
    $
    2,878,228
    
    
    $
    2,805,570
 See accompanying notes to financial statements.
  3




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CLEANTECH BIOFUELS, INC.
(formerly Alternative Ethanol Technologies, Inc.)
(A Development Stage Company)
 
 STATEMENTS OF OPERATIONS (unaudited)
 July 14, 2004Three months ended
    
    
    Nine months ended
    
    
    (inception) toSeptember 30,
    
    
    September 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009General and administrative
    
    $
    288,740
    
    
    $
    99,204
    
    
    $
    877,567
    
    
    $
    400,534
    
    
    $
    1,945,317Professional fees
    
    
    64,657
    
    
    
    90,284
    
    
    
    257,231
    
    
    
    281,176
    
    
    
    1,016,672Research and development
    
    
    
    
    
    
    40,271
    
    
    
    101
    
    
    
    277,187
    
    
    
    524,802Operating Loss
    
    
    353,397
    
    
    
    229,759
    
    
    
    1,134,899
    
    
    
    958,897
    
    
    
    3,486,791Other expense (income):Interest expense
    
    
    253,657
    
    
    
    3,314
    
    
    
    725,949
    
    
    
    27,201
    
    
    
    972,407Amortization of
technology license
    
    
    
    
    
    
    3,750
    
    
    
    
    
    
    
    11,250
    
    
    
    35,000Deposit forfeiture
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,000
    )Other income
    
    
    
    
    
    
    
    
    
    
    (32,000
    )
    
    
    
    
    
    
    (32,000
    )Interest income
    
    
    (3,431
    )
    
    
    (3
    )
    
    
    (7,938
    )
    
    
    (5,982
    )
    
    
    (43,092
    )250,226
    
    
    
    7,061
    
    
    
    686,011
    
    
    
    32,469
    
    
    
    907,315Net loss applicable to
common stockholders
    
    $
    603,623
    
    
    $
    236,820
    
    
    $
    1,820,910
    
    
    $
    991,366
    
    
    $
    4,394,106Basic and diluted net
loss per common share
    
    $
    0.01
    
    
    
    **
    
    
    $
    0.03
    
    
    $
    0.02
    
    
    $
    0.09Weighted average common
shares outstanding
    
    
    63,571,205
    
    
    
    58,708,851
    
    
    
    62,174,488
    
    
    
    55,427,109
    
    
    
    46,733,784
 **
    
    - less than $.01 per share. See accompanying notes to financial statements.
  4




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CLEANTECH BIOFUELS, INC.
(formerly Alternative Ethanol Technologies, Inc.)
(A Development Stage Company)
 
 STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (DEFICIT) (unuaudited)
 Notes Rec -
    
    
    July 14, 2004Additional
    
    
    restricted
    
    
    (inception) toCommon Stock
    
    
    Paid-in
    
    
    common
    
    
    September 30,Shares
    
    
    Amount
    
    
    Capital
    
    
    shares
    
    
    2009Balances at
December 31, 2008
    
    
    61,270,153
    
    
    $
    61,270
    
    
    $
    4,675,098
    
    
    $
    (162,567
    )
    
    $
    (2,707,544
    )Conversion of
convertible note
in February
2009 at
$.25 per
share
    
    
    122,100
    
    
    
    122
    
    
    
    11,533Conversion of
convertible note
in May 2009
at $.08
per share
    
    
    312,500
    
    
    
    313
    
    
    
    24,687Discounts on
Notes Payable
    
    
    
    
    
    
    
    
    
    
    280,100Issuances of
shares in August
2009 at
at $.13 per
share for
Net Issuance
Elections
for warrants
    
    
    357,778
    
    
    
    358
    
    
    
    (358
    )Issuance of
restricted
shares in June
2009 at $.12
per share
    
    
    625,000
    
    
    
    625
    
    
    
    74,375
    
    
    
    (75,000
    )Shares released
from escrow to
HFTA
in August
2009 at $.10
per share
    
    
    1,925,125
    
    
    
    1,925
    
    
    
    190,587Issuance of
restricted
shares to
Directors
in September
2009 at $.10
per share
    
    
    300,000
    
    
    
    300
    
    
    
    29,700
    
    
    
    (30,000
    )Interest on
Notes Receivable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,938
    )Stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    318,740Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,820,910
    )Balances at
September 30, 2009
    
    
    64,912,656
    
    
    $
    64,913
    
    
    $
    5,604,462
    
    
    $
    (275,505
    )
    
    $
    (4,528,454
    )
 See accompanying notes to financial statements.
  5




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##### Table of Contents



CLEANTECH BIOFUELS, INC.
(formerly Alternative Ethanol Technologies, Inc.)
(A Development Stage Company)
 
 STATEMENTS OF CASH FLOWS (Unaudited)
 July 14, 2004Nine months ended
    
    
    (inception) toSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009Operating ActivitiesNet loss applicable to common stockholders
    
    $
    (1,820,910
    )
    
    $
    (991,366
    )
    
    $
    (4,394,106
    )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
    
    
    13,017
    
    
    
    20,684
    
    
    
    41,845Amortization
    
    
    
    
    
    
    11,250
    
    
    
    35,000Interest income
    
    
    (7,938
    )
    
    
    
    
    
    
    (15,705
    )Amortization of discounts (interest expense) and
other financing charges
    
    
    661,211
    
    
    
    575
    
    
    
    800,162Share-based compensation expense
    
    
    318,740
    
    
    
    176,726
    
    
    
    576,861Write-off of technology license
    
    
    
    
    
    
    
    
    
    
    97,500Fair value of RAM warrant settlement
    
    
    
    
    
    
    
    
    
    
    125,027Changes in operating assets and liabilities that provided
(used) cash, net:Prepaids and other current assets
    
    
    50,957
    
    
    
    14,132
    
    
    
    (17,388
    )Technology license
    
    
    
    
    
    
    
    
    
    
    (132,500
    )Accounts payable
    
    
    21,230
    
    
    
    138,298
    
    
    
    260,155Other assets and other liabilities
    
    
    91,726
    
    
    
    20,146
    
    
    
    167,257Accrued liabilities
    
    
    81,989
    
    
    
    
    
    
    
    148,239Net cash used by operating activities
    
    
    (589,978
    )
    
    
    (609,555
    )
    
    
    (2,307,553
    )Cash Flows Used by Investing ActivitiesAcquisition of patent, net
    
    
    
    
    
    
    
    
    
    
    (150,000
    )Merger of Biomass North America Licensing, Inc., net
    
    
    
    
    
    
    (20,000
    )
    
    
    (20,000
    )Acquisition of HFTA technology, net
    
    
    
    
    
    
    
    
    
    
    Expenditures for equipment
    
    
    (20,702
    )
    
    
    (26,679
    )
    
    
    (54,237
    )Net cash used by investing activities
    
    
    (20,702
    )
    
    
    (46,679
    )
    
    
    (224,237
    )Cash Flows Provided (Used) by Financing ActivitiesPayments on capital lease, including interest
    
    
    (3,788
    )
    
    
    (2,219
    )
    
    
    (7,575
    )Series A Convertible Debentures, including interest
    
    
    
    
    
    
    474,900
    
    
    
    1,424,900Issuance of Convertible Notes Payable
    
    
    627,499
    
    
    
    77,000
    
    
    
    1,234,499Payments on Note Payable
    
    
    (89,614
    )
    
    
    
    
    
    
    (125,000
    )Sale of common stock
    
    
    
    
    
    
    
    
    
    
    25,000Net cash provided by financing activities
    
    
    534,097
    
    
    
    549,681
    
    
    
    2,551,824Net increase (decrease) in cash and cash equivalents
    
    
    (76,583
    )
    
    
    (106,553
    )
    
    
    20,034Cash and cash equivalents at beginning of period
    
    
    96,617
    
    
    
    120,356
    
    
    
    Cash and cash equivalents at end of period
    
    $
    20,034
    
    
    $
    13,803
    
    
    $
    20,034
  6




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CLEANTECH BIOFUELS, INC.
(formerly Alternative Ethanol Technologies, Inc.)
(A Development Stage Company)
STATEMENTS OF CASH FLOWS contd (unaudited)
 July 14, 2004Nine months ended
    
    
    (inception) toSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009Supplemental disclosure of cash flow information:Cash paid for interest
    
    $
    2,925
    
    
    $
    1,000
    
    
    $
    10,135Supplemental disclosure of noncash investing and
financing activities:Promissory notes receivable related to Series A Convertible
Debentures
    
    $
    
    
    
    $
    
    
    
    $
    450,000Capital lease related to the purchase of equipment
    
    $
    
    
    
    $
    14,119
    
    
    $
    14,119Common stock issued for organizational costs
    
    $
    
    
    
    $
    
    
    
    $
    100Common stock issued for promissory notes
    
    $
    
    
    
    $
    
    
    
    $
    133,596Common stock issued for Convertible notes converted
    
    $
    36,655
    
    
    $
    
    
    
    $
    36,655Common stock issued for Debentures converted
    
    $
    
    
    
    $
    1,333,337
    
    
    $
    1,333,337Common 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.
  7




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Note 1  Organization and Business
      Note 2  Interim Financial Statements
  Note 3  Mergers/Acquisitions
   8




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Note 4  Patent
  Note 5  Technology Licenses
 Biomass North America Licensing, Inc.
    9




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##### Table of Contents



HFTA, Inc.
    Bio-Products International, Inc.
    10




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##### Table of Contents



Brelsford Engineering, Inc.
   Note 6  Debt
 September 30,
    
    
    December 31,2009
    
    
    2008Convertible Notes Payable, net of
discounts of
$74,370 and $514,797
at September 30, 2009 and December 31,
2008, respectively, which are
made up of various individual notes with
an aggregate face value of
$612,000 and $607,000 at
September 30, 2009
and December 31,
2008,
respectively, due in one year from date of
note, interest at 6.0%
    
    $
    537,630
    
    
    $
    92,203Convertible Notes
Payable, net of
discounts of
$136,571 and $-0- at
September 30, 2009 and December 31, 2008,
respectively, which are
made up of various individual notes with
an aggregate face value of
$567,500 and $-0- at September
30, 2009 and
December 31, 2008,
respectively, due in one year from date of
note, interest at 6.0%
    
    
    430,929
    
    
    
    Vertex (formerly WWT) Note Payable, net of
discount of $33,980 and
$130,105 at September 30, 2009 and
December 31, 2008, respectively, with
a face value of $405,000 and $450,000,
respectively. 50% principal and
interest due 10-22-09 and 1-22-10,
respectively, interest at 6.0%
    
    
    371,020
    
    
    
    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
    
    
    1,479,579
    
    
    
    596,712Current maturities
    
    
    (1,479,579
    )
    
    
    (456,712
    )Long-term
portion, less
current
maturities
    
    $
    
    
    
    $
    140,000
 Convertible Notes Payable
   11




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Vertex (formerly WWT) Note Payable
  Series A Convertible Debentures
     12




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Note 7  Stockholders Equity (Deficit)
       Net Loss per Common Share
 Note 8  Related Party Transactions
    13




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Note 9  Share-based Payments
       14




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For the years ended December 31,2008
    
    
    2007Risk-free interest rate
    
    
    1.57
    %
    
    
    4.25
    %Dividend yield
    
    
    0
    %
    
    
    0
    %Volatility
    
    
    36.91
    %
    
    
    61.49
    %Expected term
    
    
    4.8
    
    
    
    5.0Fair market value
    
    $
    0.12
    
    
    $
    0.08
  Three months ended
    
    
    Nine months endedSept 30, 2009
    
    
    Sept 30, 2008
    
    
    Sept 30, 2009
    
    
    Sept 30, 2008Pre-tax compensation expense:Stock options
    
    $
    89,429
    
    
    $
    42,365
    
    
    $
    318,740
    
    
    $
    176,726Warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total expense
    
    
    89,429
    
    
    
    42,365
    
    
    
    318,740
    
    
    
    176,726Tax benefit, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    After-tax compensation expense
    
    $
    89,429
    
    
    $
    42,365
    
    
    $
    318,740
    
    
    $
    176,726
   15




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WeightedShares Under
    
    
    Average
    
    
    AggregateOption
    
    
    Exercise Price
    
    
    intrinsic valueOptions outstanding at December 31, 2008
    
    
    6,510,000
    
    
    $
    0.20
    
    
    
    
    (1)Granted
    
    
    105,000
    
    
    
    0.10Exercised
    
    
    Forfeited
    
    
    Options outstanding at September 30, 2009
    
    
    6,615,000
    
    
    $
    0.20
    
    
    
    
    (1)Options exercisable at September 30, 2009
    
    
    3,634,998
    
    
    $
    0.19
    
    
    
    
    (1)
 (1)
    
    The weighted-average exercise price at December 31, 2008 and September 30, 2009 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 10  Commitments and Contingencies
 Project management
 Duluth Litigation
 Leases 
 Note 11  Subsequent Events
     16




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 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.
  Company Overview
   17




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
    
    a pressurized steam classification technology, which we refer to as the PSC
technology, invented at the University of Alabama, Huntsville that used a pressurized steam
classification vessel to convert MSW into cellulosic material while simultaneously
segregating and eliminating any inorganic materials in the solid waste and cleaning
recyclable materials in the MSW;
 
    
    a sulfuric acid hydrolysis process, which we refer to as the Brelsford technology,
developed by Brelsford Engineering, Inc. that employs an acid hydrolysis process to convert
cellulosic material into fermentable sugars, which can then be fermented into ethanol, and;
 
    
    a nitric acid hydrolysis process, which we refer to as our HFTA technology, developed
by scientists working at the University of California, Berkeley, that incorporates
anticipated improvements in chemical reaction by which acid hydrolysis occurs.
       18




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Recent Developments
       19




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Plan of Operation
    Biomass Feedstock Production
     20




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##### Table of Contents



Diesel Fuel Production
  New Technologies; Commercializing Existing Technologies
   
    
    construct and operate a commercial plant that processes MSW into cellulosic
biomass for combustion in existing co-fired boilers for power;
 
    
    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.
   21




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##### Table of Contents



Results of Operations
  Three months endedSept 30, 2009
    
    
    Sept 30, 2008
    
    
    ChangeGeneral and administrative
    
    $
    288,740
    
    
    $
    99,204
    
    
    $
    189,536Professional fees
    
    
    64,657
    
    
    
    90,284
    
    
    
    (25,627
    )Research and development
    
    
    
    
    
    
    40,271
    
    
    
    (40,271
    )Operating loss
    
    
    353,397
    
    
    
    229,759
    
    
    
    123,638Other expense (income):Interest expense
    
    
    253,657
    
    
    
    3,314
    
    
    
    250,343Amortization of technology license
    
    
    
    
    
    
    3,750
    
    
    
    (3,750
    )Other income
    
    
    
    
    
    
    
    
    
    
    Interest income
    
    
    (3,431
    )
    
    
    (3
    )
    
    
    (3,428
    )Net loss applicable to common stockholders
    
    $
    603,623
    
    
    $
    236,820
    
    
    $
    366,803
 General and administrative
 Professional Fees
 Research and Development
 Interest expense
 Amortization
 Interest income
  22




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##### Table of Contents



Nine months endedSept 30, 2009
    
    
    Sept 30, 2008
    
    
    ChangeGeneral and administrative
    
    $
    877,567
    
    
    $
    400,534
    
    
    $
    477,033Professional fees
    
    
    257,231
    
    
    
    281,176
    
    
    
    (23,945
    )Research and development
    
    
    101
    
    
    
    277,187
    
    
    
    (277,086
    )Operating loss
    
    
    1,134,899
    
    
    
    958,897
    
    
    
    176,002Other expense (income):Interest expense
    
    
    725,949
    
    
    
    27,201
    
    
    
    698,748Amortization of technology license
    
    
    
    
    
    
    11,250
    
    
    
    (11,250
    )Other income
    
    
    (32,000
    )
    
    
    
    
    
    
    (32,000
    )Interest income
    
    
    (7,938
    )
    
    
    (5,982
    )
    
    
    (1,956
    )Net loss applicable to common stockholders
    
    $
    1,820,910
    
    
    $
    991,366
    
    
    $
    829,544
 General and administrative
 Professional Fees
 Research and Development
 Interest expense
 Amortization
 Other income
 Interest income
 Liquidity and Capital Resources
    23




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##### Table of Contents



Debt
 Convertible Notes Payable
   Vertex (formerly WWT) Note Payable
   24




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##### Table of Contents



Series A Convertible Debentures
   Summary of Cash Flow Activity
 Nine Months Ended September 30,2009
    
    
    2008Net cash used by operating activities
    
    $
    (589,978
    )
    
    $
    (609,555
    )Net cash used by investing activities
    
    
    (20,702
    )
    
    
    (46,679
    )Net cash provided by financing activities
    
    
    534,097
    
    
    
    549,681
 Net cash used by operating activities
  Net cash used by investing activities
  Net cash provided by financing activities
   25




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##### Table of Contents



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)
    
    $
    1,250,270
    
    
    $
    1,250,270
    
    
    $
    
    
    
    $
    
    
    
    $
    Vertex Note (2)
    
    
    417,150
    
    
    
    417,150
    
    
    
    
    
    
    
    
    
    
    
    Series A Convertible Debentures (3)
    
    
    140,000
    
    
    
    140,000
    
    
    
    
    
    
    
    
    
    
    
    Capital Lease (4)
    
    
    8,100
    
    
    
    5,400
    
    
    
    2,700
    
    
    
    
    
    
    
    Operating Lease (5)
    
    
    27,000
    
    
    
    21,600
    
    
    
    5,400
    
    
    
    
    
    
    
    Total contractual obligations
    
    $
    1,842,520
    
    
    $
    1,834,420
    
    
    $
    8,100
    
    
    $
    
    
    
    $
    
 (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 and November 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.  Merrick & Company.
 Off-Balance Sheet Arrangements
  Critical Accounting Policies
   
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
   26




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##### Table of Contents



Item 4T. Controls and Procedures
 Effectiveness of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
 
 PART II. OTHER INFORMATION
 
 Item 1. 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
  27




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##### Table of Contents



Ram Resources, L.L.C. v. CleanTech Biofuels, Inc.
 
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
     28




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##### Table of Contents



Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
   Votes For
    
    
    Votes Against
    
    
    Votes WithheldDavid Bransby, Phd.
    
    
    41,689,177
    
    
    
    
    
    
    
    4,124,700Jackson Nickerson, Phd.
    
    
    41,689,177
    
    
    
    
    
    
    
    4,124,700
   Votes For
    
    
    41,689,177Votes Against
    
    
    4,124,700Votes Abstained
    
    
    
  Votes For
    
    
    45,813,877Votes Against
    
    
    Votes Abstained
    
    
    
  29




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##### Table of Contents



Item 5. Other Information
  
 Item 6. Exhibits
  EXHIBIT NO.
    
    DESCRIPTION10.21
    
    

Amendment
to Note and Warrant Exchange Agreement between Vertex Energy, Inc. and Cleantech
Biofuels, Inc. dated July 23, 200931.1
    
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the
Securities Exchange Act, as amended.31.2
    
    
    Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of
the Securities Exchange Act, as amended.32.1
    
    
    Certification (Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002) of Chief Executive Officer.32.2
    
    
    Certification (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.
  30




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##### Table of Contents



SIGNATURES
  CLEANTECH BIOFUELS, INC.Date: November 13, 2009
    /s/ Edward P. Hennessey, Jr.Edward P. Hennessey, Jr.Chief Executive OfficerDate: November 13, 2009
    /s/ Thomas JenneweinThomas JenneweinChief Financial Officer and
Principal Accounting Officer  31




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##### Table of Contents



INDEX TO EXHIBITS
 EXHIBIT NO.
    
    DESCRIPTION10.21
    
    

Amendment
to Note and Warrant Exchange Agreement between Vertex Energy, Inc. and Cleantech
Biofuels, Inc. dated July 23, 200931.1
    
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the
Securities Exchange Act, as amended.31.2
    
    
    Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of
the Securities Exchange Act, as amended.32.1
    
    
    Certification (Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002) of Chief Executive Officer.32.2
    
    
    Certification (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.
  32