OCEAN THERMAL ENERGY CORPORATION
|
(Exact
name of registrant as specified in its charter)
|
Nevada
|
20-5081381
|
(State
or other jurisdiction of incorporation or
organization)
|
(I.R.S.
Employer Identification No.)
|
800 South Queen Street, Lancaster, PA 17603
|
(Address
of principal executive offices, including zip code)
|
|
(717) 299-1344
|
(Registrant’s
telephone number, including area code)
|
|
n/a
|
(Former
name, former address and former fiscal year, if changed since last
report)
|
Yes
|
[X]
|
No
|
[ ]
|
Yes
|
[X]
|
No
|
[ ]
|
|
Large
accelerated filer [ ]
|
Accelerated
filer [ ]
|
|
Non-accelerated
filer [ X]
|
Smaller
reporting company [X]
|
|
Emerging
growth company [ ]
|
|
Yes
|
[ ]
|
No
|
[X]
|
Title
of each class
|
Trading
Symbol(s)
|
Name of
each exchange on which registered
|
|
|
|
|
Description
|
Page
|
|
|
|
|
|
|
Financial
Statements
|
|
|
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
2
|
|
Condensed
Consolidated Statements of Operations (Unaudited)
|
3
|
|
Condensed
Consolidated Statement of Changes in Stockholders’ Deficiency
(Unaudited)
|
4
|
|
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
5
|
|
Notes
to the Condensed Consolidated Financial Statements
(Unaudited)
|
6
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
19
|
|
Quantitative
and Qualitative Disclosures about Market Risk
|
21
|
|
Controls
and Procedures
|
21
|
|
|
|
|
|
|
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
21
|
|
Defaults
upon Senior Securities
|
21
|
|
Exhibits
|
22
|
|
|
Signature
|
23
|
|
March
31,
2019
|
December
31,
2018
|
|
(unaudited)
|
|
ASSETS
|
|
|
Current
Assets
|
|
|
Cash
|
$77,044
|
$8,398
|
Prepaid
rent
|
10,000
|
-
|
Total
Current Assets
|
87,044
|
8,398
|
|
|
|
Property
and equipment, net
|
500
|
672
|
|
|
|
Total
Assets
|
$87,544
|
$9,070
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' DEFICIENCY
|
|
|
|
|
|
Current
Liabilities
|
|
|
Accounts
payables and accrued expense
|
$9,280,982
|
$8,876,222
|
Notes payable
- related party, net
|
2,393,473
|
2,398,473
|
Convertible
notes payable -related party- net
|
87,500
|
87,500
|
Notes
payable, net
|
2,994,317
|
2,671,640
|
Convertible
note payable, net
|
1,234,210
|
1,283,824
|
Derivative
liability
|
1,814,816
|
2,292,254
|
Total Current
Liabilities
|
17,805,298
|
17,609,913
|
|
|
|
Long-term
Liabilities
|
|
|
Notes
payable, net
|
168,334
|
168,334
|
Total
Liabilities
|
17,973,632
|
17,778,247
|
|
|
|
Stockholders'
deficiency
|
|
|
Preferred Stock,
$0.001 par value; 20,000,000 shares authorized, 0 and 0 shares
issued and outstanding, respectively
|
-
|
-
|
Common stock,
$0.001 par value; 200,000,000 shares authorized,132,838,944 and
131,038,944 shares issued and outstanding,
respectively
|
132,839
|
131,039
|
Additional paid-in
capital
|
57,796,595
|
57,683,015
|
Accumulated
deficit
|
(75,815,522)
|
(75,583,231)
|
Total
Stockholders' Deficiency
|
(17,886,088)
|
(17,769,177)
|
|
|
|
Total
Liabilities and Stockholders' Deficiency
|
$87,544
|
$9,070
|
|
2019
|
2018
|
Operating
Expenses
|
|
|
Salaries
and wages
|
$152,417
|
$329,989
|
Professional
fees
|
204,565
|
207,237
|
General
and administrative
|
60,437
|
226,988
|
Total
Operating Expenses
|
417,419
|
764,214
|
|
|
|
Loss
from Operations
|
(417,419)
|
(764,214)
|
|
|
|
Other
Income (Expenses)
|
|
|
Interest
expense, net
|
(212,703)
|
(161,315)
|
Amortization
of debt discount
|
(13,841)
|
(26,281)
|
Change
in FV of derivative liability
|
411,672
|
-
|
Total
Other income (expense)
|
185,128
|
(187,596)
|
|
|
|
Loss
Before Income Taxes
|
(232,291)
|
(951,810)
|
|
|
|
Provision
for Income Taxes
|
-
|
-
|
|
|
|
Net
Loss
|
$(232,291)
|
$(951,810)
|
|
|
|
Net
Loss per Common Share
Basic and Diluted
|
$(0.00)
|
$(0.01)
|
|
|
|
Weighted
average number of shares of common stock outstanding
and diluted
|
132,210,055
|
122,678,291
|
|
Preferred
Stock
|
Common
Stock
|
Paid
In
|
Accumulated
|
Stockholders'
|
||
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Deficiency
|
Balance, December
31, 2017
|
-
|
$-
|
122,642,247
|
$122,642
|
$57,071,022
|
$(67,703,218)
|
$(10,509,554)
|
Stock issued for
exercise of warrants
|
-
|
-
|
30,000
|
30
|
8,181
|
-
|
8,211
|
Stock
issued for services
|
-
|
-
|
90,657
|
91
|
23,575
|
-
|
23,666
|
Benefical
conversion feature
|
-
|
-
|
-
|
-
|
32,450
|
-
|
32,450
|
Net
Loss
|
-
|
-
|
-
|
-
|
-
|
(951,810)
|
(951,810)
|
Balance,
March 31, 2018 (unaudited)
|
-
|
$-
|
122,762,904
|
$122,763
|
$57,135,228
|
$(68,655,028)
|
$(11,397,037)
|
|
Preferred
Stock
|
Common
Stock
|
Paid-In
|
Accumulated
|
Stockholders'
|
||
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Deficiency
|
Balance, December
31, 2018
|
-
|
$-
|
131,038,944
|
$131,039
|
$57,683,015
|
$(75,583,231)
|
$(17,769,177)
|
Stock
issued for conversions of notes payable
|
-
|
-
|
1,800,000
|
1,800
|
47,814
|
-
|
49,614
|
Reclassification
of derivative liabilities
|
-
|
-
|
-
|
-
|
65,766
|
-
|
65,766
|
Net
Loss
|
-
|
-
|
-
|
-
|
-
|
(232,291)
|
(232,291)
|
Balance,
March 31, 2019 (unaudited)
|
-
|
$-
|
132,838,944
|
$132,839
|
$57,796,595
|
$(75,815,522)
|
$(17,886,088)
|
|
2019
|
2018
|
Cash
Flows From Operating Activities:
|
|
|
Net
loss
|
$(232,291)
|
$(951,810)
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
Depreciation
|
172
|
169
|
Change in
derivative liability
|
(411,672)
|
-
|
Stock issued for
services
|
-
|
23,666
|
Amortization of
debt discount
|
13,841
|
26,281
|
Changes in assets
and liabilities
|
|
|
Prepaid
expense
|
(10,000)
|
-
|
Accounts payable
and accrued expenses
|
404,760
|
66,804
|
Net
Cash Used In Operating Activities
|
(235,190)
|
(834,890)
|
|
|
|
Cash
Flow From Investing Activities:
|
|
|
Assets under
construction
|
-
|
(22,500)
|
Net
Cash Used In Investing Activities
|
-
|
(22,500)
|
|
|
|
Cash
Flows From Financing Activities:
|
|
|
Repayment of notes
payable - related party
|
(5,000)
|
(37,500)
|
Repayment of notes
payable
|
(1,164)
|
(1,552)
|
Proceeds from notes
payable
|
310,000
|
444,156
|
Proceeds from
convertible notes payable
|
-
|
161,000
|
Proceeds from
exercise of warrants
|
-
|
8,211
|
Net
Cash Provided by Financing Activities
|
303,836
|
574,315
|
|
|
|
Net increase
(decrease) in cash and cash equivalents
|
68,646
|
(283,075)
|
Cash and cash
equivalents at beginning of period
|
8,398
|
425,015
|
Cash
and Cash Equivalents at End of Period
|
$77,044
|
$141,940
|
|
|
|
Supplemental
disclosure of cash flow information
|
|
|
Cash paid for
interest expense
|
$4,014
|
$2,736
|
Cash paid for
income taxes
|
$-
|
$-
|
|
|
|
Supplemental
disclosure of non-cash investing and financing
activities:
|
|
|
Debt discount on
note payable
|
$-
|
$32,450
|
Reclassification of
derivative liability
|
$65,766
|
-
|
Convertible note
payable and accrued interest into common stock
|
$49,614
|
$-
|
Name
|
Place of Incorporation / Establishment
|
Principal Activities
|
Date Formed
|
Ocean
Thermal Energy Bahamas Ltd.
|
Bahamas
|
Intermediate
holding company of OTE BM Ltd. and OTE Bahamas O&M
Ltd.
|
07/04/2011
|
|
|
|
|
OTE BM
Ltd.
|
Bahamas
|
OTEC/SDC
development in the Bahamas
|
09/07/2011
|
|
|
|
|
OCEES
International Inc.
|
Hawaii,
USA
|
Research and
development for the Pacific Rim
|
01/21/1998
|
March 31,
2019
|
||||
|
Headquarters
|
US
Territories
|
Other
|
Total
|
Revenue
|
$-
|
$-
|
$-
|
$-
|
Assets
|
$87,544
|
$-
|
$-
|
$87,544
|
Net
loss
|
$(232,291)
|
$-
|
$-
|
$(232,291)
|
Property
and equipment
|
$500
|
$-
|
$-
|
$500
|
Assets
under construction
|
$-
|
$-
|
$-
|
$-
|
Depreciation
|
$172
|
$-
|
$-
|
$172
|
March
31, 2018
|
||||
|
Headquarters
|
US
Territories
|
Other
|
Total
|
Revenue
|
$-
|
$-
|
$-
|
$-
|
Assets
|
$168,123
|
$750,237
|
$164,902
|
$1,083,262
|
Net
loss
|
$(951,810)
|
$-
|
$-
|
$(951,810)
|
Property
and equipment
|
$1,183
|
$-
|
$-
|
$1,183
|
Assets
under construction
|
$-
|
$750,237
|
$164,902
|
$915,139
|
Depreciation
|
$169
|
$-
|
$-
|
$169
|
Additions to assets
under construction
|
$-
|
$22,500
|
$-
|
$22,500
|
|
Years
|
Computer
Equipment
|
3
|
Software
|
5
|
|
|
|
|
|
|
|
|
Related Party
|
Non Related Party
|
||
Date of Issuance
|
Maturity Date
|
Interest Rate
|
In Default
|
Original Principal
|
Principal at March 31, 2019
|
Discount at March 31, 2019
|
Carrying Amount at March 31, 2019
|
Current
|
Long-Term
|
Current
|
Long-Term
|
12/12/06
|
01/05/13
|
6.25%
|
Yes
|
58,670
|
8,215
|
-
|
8,215
|
-
|
-
|
8,215
|
-
|
12/01/07
|
09/01/15
|
7.00%
|
Yes
|
125,000
|
85,821
|
-
|
85,821
|
-
|
-
|
85,821
|
-
|
09/25/09
|
10/25/11
|
5.00%
|
Yes
|
50,000
|
50,000
|
-
|
50,000
|
-
|
-
|
50,000
|
-
|
12/23/09
|
12/23/14
|
7.00%
|
Yes
|
100,000
|
94,480
|
-
|
94,480
|
-
|
-
|
94,480
|
-
|
12/23/09
|
12/23/14
|
7.00%
|
Yes
|
25,000
|
23,619
|
-
|
23,619
|
-
|
-
|
23,619
|
-
|
12/23/09
|
12/23/14
|
7.00%
|
Yes
|
25,000
|
23,620
|
-
|
23,620
|
-
|
-
|
23,620
|
-
|
02/03/12
|
12/31/19
|
10.00%
|
No
|
1,000,000
|
1,000,000
|
-
|
1,000,000
|
|
-
|
1,000,000
|
-
|
08/15/13
|
10/31/23
|
10.00%
|
No
|
525,000
|
158,334
|
-
|
158,334
|
-
|
-
|
-
|
158,334
|
12/31/13
|
12/31/15
|
8.00%
|
Yes
|
290,000
|
130,000
|
-
|
130,000
|
-
|
-
|
130,000
|
-
|
04/01/14
|
12/31/18
|
10.00%
|
Yes
|
2,265,000
|
1,102,500
|
-
|
1,102,500
|
1,102,500
|
-
|
-
|
-
|
12/22/14
|
03/31/15
|
22.00%*
|
Yes
|
200,000
|
200,000
|
-
|
200,000
|
-
|
-
|
200,000
|
-
|
12/26/14
|
12/26/15
|
22.00%*
|
Yes
|
100,000
|
100,000
|
-
|
100,000
|
-
|
-
|
100,000
|
-
|
03/12/15
|
(1)
|
6.00%
|
No
|
394,380
|
394,380
|
-
|
394,380
|
394,380
|
-
|
-
|
-
|
04/07/15
|
04/07/18
|
10.00%
|
Yes
|
50,000
|
50,000
|
-
|
50,000
|
-
|
-
|
50,000
|
-
|
11/23/15
|
(1)
|
6.00%
|
No
|
50,000
|
50,000
|
-
|
50,000
|
50,000
|
-
|
-
|
-
|
02/25/16
|
(1)
|
6.00%
|
No
|
50,000
|
50,000
|
-
|
50,000
|
50,000
|
-
|
-
|
-
|
05/20/16
|
(1)
|
6.00%
|
No
|
50,000
|
50,000
|
-
|
50,000
|
50,000
|
-
|
-
|
-
|
10/20/16
|
(1)
|
6.00%
|
No
|
50,000
|
12,500
|
-
|
12,500
|
12,500
|
-
|
-
|
-
|
10/20/16
|
(1)
|
6.00%
|
No
|
12,500
|
12,500
|
-
|
12,500
|
12,500
|
-
|
-
|
-
|
12/21/16
|
(1)
|
6.00%
|
No
|
25,000
|
25,000
|
-
|
25,000
|
25,000
|
-
|
-
|
-
|
03/09/17
|
(1)
|
10.00%
|
No
|
200,000
|
177,000
|
-
|
177,000
|
177,000
|
-
|
-
|
-
|
07/13/17
|
07/13/19
|
6.00%
|
No
|
25,000
|
25,000
|
-
|
25,000
|
-
|
-
|
25,000
|
-
|
07/18/17
|
07/18/19
|
6.00%
|
No
|
25,000
|
25,000
|
-
|
25,000
|
-
|
-
|
25,000
|
-
|
07/26/17
|
07/26/19
|
6.00%
|
No
|
15,000
|
15,000
|
-
|
15,000
|
-
|
-
|
15,000
|
-
|
07/27/17
|
07/27/19
|
6.00%
|
No
|
15,000
|
15,000
|
-
|
15,000
|
-
|
-
|
15,000
|
-
|
12/20/17
|
(2)
|
10.00%
|
Yes**
|
979,156
|
979,156
|
10,594
|
968,562
|
-
|
-
|
968,562
|
-
|
11/06/17
|
12/31/18
|
10.00%
|
Yes
|
646,568
|
607,093
|
-
|
607,093
|
607,093
|
-
|
-
|
-
|
02/19/18
|
(3)
|
18.00%*
|
Yes
|
629,451
|
629,451
|
-
|
629,451
|
-
|
-
|
629,451
|
-
|
09/19/18
|
09/28/21
|
6.00%
|
No
|
10,000
|
10,000
|
-
|
10,000
|
-
|
-
|
-
|
10,000
|
12/14/18
|
12/22/18
|
24.00%*
|
Yes
|
474,759
|
474,759
|
-
|
474,759
|
-
|
-
|
474,759
|
-
|
01/02/19
|
(4)
|
17.00%
|
No
|
310,000
|
310,000
|
|
310,000
|
|
|
310,000
|
|
|
Totals
|
|
$8,775,484
|
$6,888,428
|
$10,594
|
$6,877,834
|
$2,480,973
|
$-
|
$4,228,527
|
$168,334
|
|
|
|
|
|
|
|
|
Related Party
|
Non Related Party
|
||
Date of Issuance
|
Maturity Date
|
Interest Rate
|
In Default
|
Original Principal
|
Principal at December 31, 2018
|
Discount at December 31, 2018
|
Carrying Amount at December 31, 2018
|
Current
|
Long-Term
|
Current
|
Long-Term
|
12/12/06
|
01/05/13
|
6.25%
|
Yes
|
58,670
|
9,379
|
-
|
9,379
|
-
|
-
|
9,379
|
-
|
12/01/07
|
09/01/15
|
7.00%
|
Yes
|
125,000
|
85,821
|
-
|
85,821
|
-
|
-
|
85,821
|
-
|
09/25/09
|
10/25/11
|
5.00%
|
Yes
|
50,000
|
50,000
|
-
|
50,000
|
-
|
-
|
50,000
|
-
|
12/23/09
|
12/23/14
|
7.00%
|
Yes
|
100,000
|
94,480
|
-
|
94,480
|
-
|
-
|
94,480
|
-
|
12/23/09
|
12/23/14
|
7.00%
|
Yes
|
25,000
|
23,619
|
-
|
23,619
|
-
|
-
|
23,619
|
-
|
12/23/09
|
12/23/14
|
7.00%
|
Yes
|
25,000
|
23,620
|
-
|
23,620
|
-
|
-
|
23,620
|
-
|
02/03/12
|
12/31/18
|
10.00%
|
Yes
|
1,000,000
|
1,000,000
|
-
|
1,000,000
|
|
-
|
1,000,000
|
-
|
08/15/13
|
10/31/23
|
10.00%
|
No
|
525,000
|
158,334
|
-
|
158,334
|
-
|
-
|
-
|
158,334
|
12/31/13
|
12/31/15
|
8.00%
|
Yes
|
290,000
|
130,000
|
-
|
130,000
|
-
|
-
|
130,000
|
-
|
04/01/14
|
12/31/18
|
10.00%
|
Yes
|
2,265,000
|
1,102,500
|
-
|
1,102,500
|
1,102,500
|
-
|
-
|
-
|
12/22/14
|
03/31/15
|
22.00%*
|
Yes
|
200,000
|
200,000
|
-
|
200,000
|
-
|
-
|
200,000
|
-
|
12/26/14
|
12/26/15
|
22.00%*
|
Yes
|
100,000
|
100,000
|
-
|
100,000
|
-
|
-
|
100,000
|
-
|
03/12/15
|
(1)
|
6.00%
|
No
|
394,380
|
394,380
|
-
|
394,380
|
394,380
|
-
|
-
|
-
|
04/07/15
|
04/07/18
|
10.00%
|
Yes
|
50,000
|
50,000
|
-
|
50,000
|
-
|
-
|
50,000
|
-
|
11/23/15
|
(1)
|
6.00%
|
No
|
50,000
|
50,000
|
-
|
50,000
|
50,000
|
-
|
-
|
-
|
02/25/16
|
(1)
|
6.00%
|
No
|
50,000
|
50,000
|
-
|
50,000
|
50,000
|
-
|
-
|
-
|
05/20/16
|
(1)
|
6.00%
|
No
|
50,000
|
50,000
|
-
|
50,000
|
50,000
|
-
|
-
|
-
|
10/20/16
|
(1)
|
6.00%
|
No
|
50,000
|
12,500
|
-
|
12,500
|
12,500
|
-
|
-
|
-
|
10/20/16
|
(1)
|
6.00%
|
No
|
12,500
|
12,500
|
-
|
12,500
|
12,500
|
-
|
-
|
-
|
12/21/16
|
(1)
|
6.00%
|
No
|
25,000
|
25,000
|
-
|
25,000
|
25,000
|
-
|
-
|
-
|
03/09/17
|
(1)
|
10.00%
|
No
|
200,000
|
177,000
|
-
|
177,000
|
177,000
|
-
|
-
|
-
|
07/13/17
|
07/13/19
|
6.00%
|
No
|
25,000
|
25,000
|
-
|
25,000
|
-
|
-
|
25,000
|
-
|
07/18/17
|
07/18/19
|
6.00%
|
No
|
25,000
|
25,000
|
-
|
25,000
|
-
|
-
|
25,000
|
-
|
07/26/17
|
07/26/19
|
6.00%
|
No
|
15,000
|
15,000
|
-
|
15,000
|
-
|
-
|
15,000
|
-
|
07/27/17
|
07/27/19
|
6.00%
|
No
|
15,000
|
15,000
|
-
|
15,000
|
-
|
-
|
15,000
|
-
|
12/20/17
|
(2)
|
10.00%**
|
Yes**
|
979,156
|
979,156
|
24,435
|
954,721
|
-
|
-
|
954,721
|
-
|
11/06/17
|
12/31/18
|
10.00%
|
Yes
|
646,568
|
612,093
|
-
|
612,093
|
612,093
|
-
|
-
|
-
|
02/19/18
|
(3)
|
18.00%*
|
Yes
|
629,451
|
629,451
|
-
|
629,451
|
-
|
-
|
629,451
|
-
|
09/19/18
|
09/28/21
|
6.00%
|
No
|
10,000
|
10,000
|
-
|
10,000
|
-
|
-
|
-
|
10,000
|
12/14/18
|
12/22/18
|
24.00%*
|
Yes
|
524,373
|
524,373
|
-
|
524,373
|
-
|
-
|
524,373
|
-
|
|
Totals
|
|
|
$ 8,515,098
|
$ 6,634,206
|
$ 24,435
|
$ 6,609,771
|
$ 2,485,973
|
$ -
|
$ 3,955,464
|
$ 168,334
|
|
Fair value
at
March 31,
2019
|
Quoted prices
markets for identical assets/liabilities
(Level
1)
|
Significant other
observable inputs
(Level
2)
|
Significant
unobservable inputs (Level 3)
|
Derivative
Liability
|
$1,814,816
|
$-
|
$-
|
$1,814,186
|
|
Derivative
Liability
|
Derivative
liability as of December 31, 2018
|
$2,292,254
|
Fair
value at the commitment date for convertible
instruments
|
-
|
Change
in fair value of derivative liability
|
(411,672)
|
Reclassification
to additional paid-in capital for financial
instruments
|
|
that
ceased to be a derivative liability
|
(65,766)
|
Derivative
liability as of March 31, 2019
|
$1,814,816
|
|
Change
in Fair Value
|
|
of
Derivative
|
|
Liability*
|
Change
in fair value of derivative liability at the beginning of
period
|
$1,206,857
|
Day
one gains/(losses) on valuation
|
-
|
Gains/(losses)
from the change in fair value of derivative liability
|
(1,618,529)
|
Change
in fair value of derivative liability at the end of
period
|
$(411,672)
|
|
Remeasurement
Date**
|
Expected
dividends
|
0%
|
Expected
volatility
|
38.7% to 496%
|
Risk
free interest rate
|
2.22% to 2.60%
|
Expected
term (in years)
|
0.08 to 4.56
|
|
Number
of
|
Weighted
Average
|
|
Warrants
|
Exercise
Price
|
Balance at December
31, 2018
|
350,073
|
$0.18
|
Granted
|
-
|
-
|
Exercised
|
-
|
-
|
Forfeited
|
-
|
-
|
Balance at March
31, 2019
|
350,073
|
$0.18
|
Exercisable at
March 31, 2019
|
350,073
|
$0.18
|
Exhibit
Number*
|
Title
of Document
|
Location
|
|
|
|
Item 31
|
Rule
13a-14(a)/15d-14(a) Certifications
|
|
Certification of
Principal Executive and Principal Financial Officer Pursuant to
Rule 13a-14
|
This
filing.
|
|
|
|
|
Item 32
|
Section
1350 Certifications
|
|
Certification of
Chief Executive Officer and Chief Financial Officer Pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
|
This
filing.
|
|
|
|
|
Item 101**
|
Interactive
Data File
|
|
101.INS
|
XBRL
Instance Document
|
This
filing.
|
101.SCH
|
XBRL
Taxonomy Extension Schema
|
This
filing.
|
101.CAL
|
XBRL
Taxonomy Extension Calculation Linkbase
|
This
filing.
|
101.DEF
|
XBRL
Taxonomy Extension Definition Linkbase
|
This
filing.
|
101.LAB
|
XBRL
Taxonomy Extension Label Linkbase
|
This
filing.
|
101.PRE
|
XBRL
Taxonomy Extension Presentation Linkbase
|
This
filing.
|
|
OCEAN
THERMAL ENERGY CORPORATION
|
|
|
|
|
|
|
|
Date:
May 13, 2019
|
By:
|
/s/
Jeremy P. Feakins
|
|
|
Jeremy
P. Feakins
|
|
|
Chief
Executive Officer and Chief Financial Officer
|
|
|
(Principal
Executive and Financial Officer)
|
|
(a)
|
Designed such
disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this report is being prepared;
|
|
(b)
|
Designed such
internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
|
|
(c)
|
Evaluated the
effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and
|
|
(d)
|
Disclosed in this
report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal
quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting;
and
|
|
(a)
|
All significant
deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to
record, process, summarize and report financial information;
and
|
|
|
|
|
(b)
|
Any fraud, whether or
not material, that involves management or other employees who have
a significant role in the registrant’s internal control over
financial reporting.
|
|
|
|
Dated: May 13,
2019
|
By:
|
/s/ Jeremy P.
Feakins
|
|
|
Jeremy P.
Feakins
|
|
|
Chief Executive Officer
and Chief Financial Officer
|
|
|
(Principal Executive
Office and Principal Financial Officer)
|
|
(1)
|
the Report fully
complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
|
|
(2)
|
the information
contained in the Report fairly presents, in all material respects,
the financial condition and results of operations of the
Company.
|
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
May 14, 2019 |
|
Document and Entity Information: | ||
Entity Registrant Name | Ocean Thermal Energy Corp | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Trading Symbol | cpwr | |
Amendment Flag | false | |
Entity Central Index Key | 0000827099 | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 133,838,944 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Current Reporting Status | Yes | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ .001 | $ .001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 132,838,944 | 131,038,944 |
Common stock, shares outstanding | 132,838,944 | 131,038,944 |
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Operating Expenses | ||
Salaries and wages | $ 152,417 | $ 329,989 |
Professional fees | 204,565 | 207,237 |
General and administrative | 60,437 | 226,988 |
Total Operating Expenses | 417,419 | 764,214 |
Loss from Operations | (417,419) | (764,214) |
Other Income (Expenses) | ||
Interest expense, net | (212,703) | (161,315) |
Amortization of debt discount | (13,841) | (26,281) |
Change in FV of derivative liability | 411,672 | 0 |
Total Other Income (Expense) | 185,128 | (187,596) |
Loss Before Income Taxes | (232,291) | (951,810) |
Provision for Income Taxes | 0 | 0 |
Net Loss | $ (232,291) | $ (951,810) |
Net Loss per Common Share Basic and Diluted | $ (0.00) | $ (0.01) |
Weighted Average Number of Common Shares Outstanding | 132,210,055 | 122,678,291 |
1. Nature of Business and Business Presentation |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business and Business Presentation | Ocean Thermal Energy Corporation is currently in the businesses of:
● OTEC and SWAC/LWAC —designing ocean thermal energy conversion (“OTEC”) power plants and seawater air conditioning and lake water air conditioning (“SWAC/LWAC”) plants for large commercial properties, utilities, and municipalities. These technologies provide practical solutions to mankind’s three oldest and most fundamental needs: clean drinking water, plentiful food, and sustainable, affordable energy without the use of fossil fuels. OTEC is a clean technology that continuously extracts energy from the temperature difference between warm surface ocean water and cold deep seawater. In addition to producing electricity, some of the seawater running through an OTEC plant can be efficiently desalinated using the power generated by the OTEC technology, producing thousands of cubic meters of fresh water every day for use in agriculture and human consumption in the communities served by its plants. This cold, deep, nutrient-rich water can also be used to cool buildings (SWAC/LWAC) and for fish farming/aquaculture. In short, it is a technology with many benefits, and its versatility makes OTEC unique.
● EcoVillages —developing and commercializing our EcoVillages, as well as working to develop or acquire new complementary assets. EcoVillages are communities whose goal is to become more socially, economically, and ecologically sustainable. EcoVillages are communities whose inhabitants seek to live according to ecological principles, causing as little impact on the environment as possible. We expect that our EcoVillage communities will range from a population of 50 to 150 individuals, although some may be smaller. We may also form larger EcoVillages, of up to 2,000 individuals, as networks of smaller subcommunities. We expect that our EcoVillages will grow by the addition of individuals, families, or other small groups.
We expect to use our technology in the development of our EcoVillages, which should add significant value to our existing line of business.
The condensed consolidated financial statements include the accounts of the company and our wholly owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, our financial statements reflect all adjustments that are of a normal recurring nature necessary for presentation of financial statements in accordance with U.S. generally accepted accounting principles (GAAP).
We condensed or omitted certain information and footnote disclosures normally included in our annual audited financial statements, which we prepared in accordance with GAAP. The operating results for the three months ended March 31, 2019, are not necessarily indicative of the results to be expected for the year. Our interim financial statements should be read in conjunction with our annual report on Form 10-K for the year ended December 31, 2018, including the financial statements and notes.
|
2. Summary of Significant Accounting Policies |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Principal Subsidiary Undertakings
Our condensed consolidated financial statements include the following subsidiaries:
We have an effective interest of 100% in each of our subsidiaries.
Use of Estimates
In preparing financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates include the assumptions used in valuing equity investments and issuances, valuation of deferred tax assets, and depreciable lives of property and equipment.
Cash and Cash Equivalents
We consider all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At March 31, 2019 and December 31, 2018, we had no cash equivalents.
Income Taxes
On December 22, 2017, the Tax Cuts and Jobs Act (the “Jobs Act”) was enacted. The Jobs Act significantly revised the U.S. corporate income tax law by lowering the corporate federal income tax rate from 35% to 21%.
We use the liability method of accounting for income taxes. Under the liability method, deferred tax assets and liabilities are determined based on temporary differences between financial reporting and tax bases of assets and liabilities and on the amount of operating loss carry-forwards and are measured using the enacted tax rates and laws that will be in effect when the temporary differences and carry-forwards are expected to reverse. An allowance against deferred tax assets is recorded when it is more likely than not that such tax benefits will not be realized.
Our ability to use our net operating loss carryforwards may be substantially limited due to ownership change limitations that may have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), as well as similar state provisions. These ownership changes may limit the amount of net operating loss that can be utilized annually to offset future taxable income and tax, respectively. In general, an “ownership change” as defined by Section 382 of the Code results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50.0% of the outstanding stock of a company by certain stockholders or public groups.
We have not completed a study to assess whether an ownership change has occurred or whether there have been multiple ownership changes since we became a “loss corporation” under the definition of Section 382. If we have experienced an ownership change, utilization of the net operating loss carryforwards would be subject to an annual limitation under Section 382 of the Code, which is determined by first multiplying the value of our stock at the time of the ownership change by the applicable long-term, tax-exempt rate, and then could be subject to additional adjustments, as required. Any limitation may result in expiration of a portion of the net operating loss carryforwards before utilization. Further, until a study is completed and any limitation known, no positions related to limitations are being considered as an uncertain tax position or disclosed as an unrecognized tax benefit. Any carryforwards that expire prior to utilization as a result of such limitations will be removed from deferred tax assets with a corresponding reduction of the valuation allowance. Due to the existence of the valuation allowance, it is not expected that any possible limitation will have an impact on our results of operations or financial position.
Business Segments
We conduct operations in various foreign jurisdictions where we are developing projects to use our technology. Our segments were based on the location of these projects. The U.S. territories segment consists of projects in the U.S. Virgin Islands and Guam; and the other segment currently consists of projects in the Cayman Islands. Direct revenues and costs, depreciation, depletion, and amortization costs, general and administrative costs, and other income directly associated with their respective segments are detailed within the following discussion. Identifiable net property and equipment are reported by business segment for management reporting and reportable business segment disclosure purposes. Current assets, other assets, current liabilities, and long-term debt are not allocated to business segments for management reporting or business segment disclosure purposes.
Reportable business segment information is as follows:
During the year ended December 31, 2018, $892,639 of Guam and U.S. Virgin Islands assets under construction were considered to be impaired due to the uncertainty of the project and were written off; consequently, there were no assets under construction as of March 31, 2019.
Property and Equipment
Furniture, equipment, and software are recorded at cost and include major expenditures that increase productivity or substantially increase useful lives.
Maintenance, repairs, and minor replacements are charged to expenses when incurred. When furniture, vehicles, or equipment is sold or otherwise disposed of, the asset and related accumulated depreciation are removed from this account, and any gain or loss is included in the statement of operations.
Assets under construction represent costs incurred by us for our renewable energy systems currently in process. Generally, all costs incurred during the development stage of our projects are capitalized and tracked on an individual project basis and are included in construction in progress until the project has been placed into service. If a project is abandoned, the associated costs that have been capitalized are charged to expense in the year of abandonment. Expenditures for repairs and maintenance are charged to expense as incurred. Interest costs incurred during the construction period of defined major projects from debt that is specifically incurred for those projects are capitalized.
Direct labor costs incurred for specific major projects expected to have long-term benefits are capitalized. Direct labor costs subject to capitalization include employee salaries, as well as related payroll taxes and benefits. With respect to the allocation of salaries to projects, salaries are allocated based on the percentage of hours that our key managers, engineers, and scientists work on each project. These individuals track their time worked at each project. Major projects are generally defined as projects expected to exceed $500,000. Direct labor includes all of the time incurred by employees directly involved with construction and development activities. Time spent in general and indirect management and in evaluating the feasibility of potential projects is expensed when incurred.
We capitalize costs incurred once the project has met the project feasibility stage. Costs include environmental engineering, permits, government approval, and site engineering costs. We capitalize direct interest costs associated with the projects. As of March 31, 2019 and 2018, we have no interest costs capitalized for any of these projects.
The cost of furniture, vehicles, equipment, and software is depreciated over the estimated useful lives of the related assets.
Depreciation is computed using the straight-line method for financial reporting purposes. The estimated useful lives and accumulated depreciation for land, buildings, furniture, vehicles, equipment, and software are as follows:
Fair Value
Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value under GAAP, and enhances disclosures about fair value measurements. ASC 820 describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, which are the following:
● Level 1–Pricing inputs are quoted prices available in active markets for identical assets or liabilities as of the reporting date.
● Level 2–Pricing inputs are quoted for similar assets or inputs that are observable, either directly or indirectly, for substantially the full term through corroboration with observable market data. Level 2 includes assets or liabilities valued at quoted prices adjusted for legal or contractual restrictions specific to these investments.
● Level 3–Pricing inputs are unobservable for the assets or liabilities; that is, the inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability.
Management believes the carrying amounts of the short-term financial instruments, including cash and cash equivalents, prepaid expense and other assets, accounts payable, accrued liabilities, notes payable, deferred compensation, and other liabilities reflected in the accompanying balance sheets approximate fair value at March 31, 2019 and December 31, 2018, due to the relatively short-term nature of these instruments.
We account for derivative liability at fair value on a recurring basis under level 3 at March 31, 2019 and December 31, 2018 (see Note 5).
Concentrations
Cash, cash equivalents, and restricted cash are deposited with major financial institutions, and at times, such balances with any one financial institution may be in excess of FDIC-insured limits. Management believes the risk in these situations to be minimal. As of March 31, 2019 and December 31, 2018, $0 and $0, respectively, were deposited in excess of FDIC-insured limits.
Loss per Share
The basic loss per share is calculated by dividing our net loss available to common shareholders by the weighted average number of common shares during the period. The diluted loss per share is calculated by dividing our net loss by the diluted weighted average number of shares outstanding during the period. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. We have 350,073 and 220,500 shares issuable upon the exercise of warrants and 51,353,422 and 7,567,438 shares issuable upon the conversion of convertible notes that were not included in the computation of dilutive loss per share because their inclusion is antidilutive for the three months ended March 31, 2019 and 2018, respectively.
Revenue Recognition
In May 2014, the FASB issued Accounting Standard Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. We adopted the ASU on January 1, 2018. The adoption of the ASU did not have an impact on our condensed consolidated financial statements during the three months ended March 31, 2018.
Recent Accounting Pronouncements
In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. This ASU relates to the accounting for non-employee share-based payments. The amendment in this update expands the scope of Topic 718 to include all share-based payment transactions in which a grantor acquired goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The ASU excludes share-based payment awards that relate to: (1) financing to the issuer; or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts from Customers. The share-based payments are to be measured at grant-date fair value of the equity instruments that the entity is obligated to issue when the goods or service has been delivered or rendered and all other conditions necessary to earn the right to benefit from the equity instruments have been satisfied. This standard will be effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. We adopted the provisions of this ASU on January 1, 2019. The adoption had no impact on our results of operations, cash flows, or financial condition.
We have reviewed all recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on our consolidated results of operations, financial position, and cash flows. Based on that review, we believe that none of these pronouncements will have a significant effect on current or future earnings or operations.
|
3. Going Concern |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | The accompanying unaudited condensed consolidated financial statements have been prepared on the assumption that we will continue as a going concern. As reflected in the accompanying condensed consolidated financial statements, we had a net loss of $232,291 and used $235,190 of cash in operating activities for the three months ended March 31, 2019. We had a working capital deficiency of $17,718,254 and a stockholders’ deficiency of $17,886,088 as of March 31, 2019. These factors raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent on our ability to increase sales and obtain external funding for our projects under development. The financial statements do not include any adjustments that may result from the outcome of this uncertainty.
|
4. Convertible Notes and Notes Payable |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Notes and Notes Payable | On December 12, 2006, we borrowed funds from the Southeast Idaho Council of Governments (SICOG), the EDA-#180 loan. The interest rate is 6.25%, and the maturity date was January 5, 2013. During the three months ended March 31, 2019, we made a repayment of $1,164. The loan principal was $8,215 with accrued interest of $0 as of March 31, 2019. This note is in default.
On December 23, 2009, we borrowed funds from SICOG, the EDA-#273 loan. The interest rate is 7%, and the maturity date was December 23, 2014. The loan principal was $94,480 with accrued interest of $21,164 as of March 31, 2019. This note is in default.
On December 23, 2009, we borrowed funds from SICOG, the MICRO I-#274 loan and MICRO II-#275 loan. The interest rate is 7%, and the maturity date was December 23, 2014. The loan principal was $47,239 with accrued interest of $10,498 as of March 31, 2019. These notes are in default.
On December 1, 2007, we borrowed funds from the Eastern Idaho Development Corporation and the Economic Development Corporation. The interest rate is 7%, and the maturity date was September 1, 2015. The loan principal was $85,821 with accrued interest of $40,916 as of March 31, 2019. This note is in default.
On September 25, 2009, we borrowed funds from the Pocatello Development Authority. The interest rate is 5%, and the maturity date was October 25, 2011. The loan principal was $50,000 with accrued interest of $21,365 as of March 31, 2019. This note is in default.
On March 12, 2015, we combined convertible notes issued in 2010, 2011, and 2012, payable to our officers and directors in the aggregate principal amount of $320,246, plus accrued but unpaid interest of $74,134, into a single, $394,380 consolidated convertible note (the “Consolidated Note”). The Consolidated Note was assigned to JPF Venture Group, Inc., an investment entity that is majority-owned by Jeremy Feakins, our director, chief executive officer, and chief financial officer. The Consolidated Note was convertible to common stock at $0.025 per share, the approximate market price of our common stock as of the date of the issuance. On February 24, 2017, the Consolidated Note was amended to eliminate the conversion feature. The Consolidated Note bears interest at 6% per annum and is due and payable within 90 days after demand. As of March 31, 2019, the outstanding loan balance was $394,380 and the accrued but unpaid interest was $100,927 on the Consolidated Note.
During 2016 and 2015, we borrowed $75,000 from JPF Venture Group, Inc. pursuant to promissory notes. The terms of the notes are as follows: (i) interest is payable at 6% per annum; (ii) the notes are payable 90 days after demand; and (iii) payee is authorized to convert part or all of the note balance and accrued interest, if any, into shares of our common stock at the rate of one share each for $0.03 of principal amount of the note. This conversion share price was adjusted to $0.01384 for the reverse stock splits. As of December 31, 2018, we have recorded a debt discount of $75,000 for the fair value derivative liability and fully amortized the debt discount. As of March 31, 2019, the outstanding balance was $75,000, plus accrued interest of $13,299.
During 2016, we borrowed $112,500 from JPF Venture Group, Inc. pursuant to promissory notes. The terms of the notes are as follows: (i) interest is payable at 6% per annum; (ii) the note are payable 90 days after demand; and (iii) payee is authorized to convert part or all of the note balance and accrued interest, if any, into shares of our common stock at the rate of one share for each $0.03 of principal amount of the note. This conversion price is not required to adjust for the reverse stock split as per the note agreement. On February 24, 2017, the notes were amended to eliminate the conversion features. As of March 31, 2019, the outstanding balance was $112,500, plus accrued interest of $20,071.
On October 20, 2016, we borrowed $12,500 from an independent director pursuant to a promissory note. The terms of the note are as follows: (i) interest is payable at 6% per annum; (ii) the note is payable 90 days after demand; and (iii) the payee is authorized to convert part or all of the note balance and accrued interest, if any, into shares of our common stock at the rate of one share for each $0.03 of principal amount of the note. This conversion share price was adjusted to $0.01384 for the reverse stock splits. As of December 31, 2018, we have recorded a debt discount of $12,500 for the fair value of derivative liability and fully amortized the debt discount. As of March 31, 2019, the outstanding balance was $12,500, plus accrued interest of $1,942.
During 2012, we issued a note payable for $1,000,000. The note had an interest rate of 10% per annum, was secured by a first lien in all of our assets, and was due on February 3, 2015. On March 6, 2018, the note was amended to extend the due date to December 31, 2018, On March 29, 2019, the maturity date of the note was extended to December 31, 2019. As of March 31, 2019, the outstanding balance was $1,000,000, plus accrued interest of $661,948.
During 2013, we issued Series B units. Each unit is comprised of a note agreement, a $50,000 promissory note that matures on September 30, 2023, and bears interest at 10% per annum payable annually in arrears and a security agreement. During 2013, we issued $525,000 of 10% promissory notes. As of March 31, 2019, the loan balance was $158,334 and the accrued interest was $88,905.
During 2013, we issued a note payable for $290,000 in connection with the reverse merger transaction with Broadband Network Affiliates, Inc. We have determined that no further payment of principal or interest on this note should be made because the note holder failed to perform his underlying obligations giving rise to this note. As such, we are confident that if the note holder were to seek legal redress, a court would decide in our favor by either voiding the note or awarding damages sufficient to offset the note value. As of March 31, 2019, the balance outstanding was $130,000, and the accrued interest as of that date was $53,457. This note is in default.
On January 18, 2018, Jeremy P. Feakins & Associates, LLC, an investment entity owned by our chief executive, chief financial officer, and a director, agreed to extend the due date for repayment of a $2,265,000 note issued in 2014 to the earlier of December 31, 2018, or the date of the financial closings of our Baha Mar project (or any other project of $25 million or more), whichever occurs first. As of March 31, 2019, the note balance was $1,102,500 and the accrued interest was $540,255. This note is in default.
We have $300,000 in principal amount of outstanding notes due to unrelated parties, issued in 2014, in default since 2015, accruing interest at a default rate of 22%. We intend to repay the notes and accrued interest upon the Baha Mar SWAC/LWAC project’s financial closing. Accrued interest totaled $263,545 as of March 31, 2019.
The due date of April 7, 2017, on a $50,000 promissory note with an unaffiliated investor, has been extended to April 7, 2019. The note and accrued interest can be converted into our common stock at a conversion rate of $0.75 per share at any time prior to the repayment. This conversion price is not required to adjust for the reverse stock split as per the note agreement. Accrued interest totaled $20,167 as of March 31, 2019. As of the date of this report, the note is in default.
On March 9, 2017, an entity owned and controlled by our chief executive officer agreed to provide up to $200,000 in working capital. The note bears interest of 10% and is due and payable within 90 days of demand. During the year ended December 31, 2017, we received an additional $2,000 and repaid $25,000. As of March 31, 2019, the balance outstanding was $177,000, plus accrued interest of $37,226.
During the third quarter of 2017, we completed a $2,000,000 convertible promissory note private placement offering. The terms of the note are as follows: (i) interest is payable at 6% per annum; (ii) the note is payable two years after purchase; and (iii) all principal and interest on each note automatically converts on the conversion maturity date into shares of our common stock at a conversion price of $4.00 per share, as long as the closing share price of our common stock on the trading day immediately preceding the conversion maturity date is at least $4.00, as adjusted for stock splits, stock dividends, reclassification, and the like. If the price of our shares on such date is less than $4.00 per share, the note (principal and interest) will be repaid in full. As of March 31, 2019, the outstanding balance for all four notes was $80,000, plus accrued interest of $8,186.
On November 6, 2017, we entered into an agreement and promissory note with JPF Venture Group, Inc. to loan up to $2,000,000 to us. The terms of the note are as follows: (i) interest is payable at 10% per annum; (ii) all unpaid principal and all accrued and unpaid interest is due and payable at the earliest of a resolution of the Memphis litigation (as defined herein), December 31, 2018, or when we are otherwise able to pay. During the first quarter of 2019, we repaid $5,000. As of March 31, 2019, the outstanding balance was $607,093 and the accrued interest was $95,862. This note is in default.
In December 2017, we entered into a note and warrant purchase agreement pursuant to which we issued a series of unsecured promissory notes to accredited investors. These notes accrue interest at a rate of 10% per annum payable on a quarterly basis and are not convertible into shares of our capital stock. The notes are payable within five business days after receipt of gross proceeds of at least $1,500,000 from L2 Capital, LLC, an unaffiliated Kansas limited liability company (“L2 Capital). We may prepay the notes in whole or in part, without penalty or premium, on or before the maturity date of July 30, 2019. In connection with the issuance of the notes, for each note purchased, the note holder received a warrant as follows:
● $10,000 note with a warrant to purchase 2,000 shares
● $20,000 note with a warrant to purchase 5,000 shares
● $25,000 note with a warrant to purchase 6,500 shares
● $30,000 note with a warrant to purchase 8,000 shares
● $40,000 note with a warrant to purchase 10,000 shares
● $50,000 note with a warrant to purchase 14,000 shares
The exercise price per share of the warrants is equal to 85% of the closing price of our common stock on the day immediately preceding the exercise of the relevant warrant, subject to adjustment as provided in the warrant. The warrant includes a cashless net exercise provision whereby the holder can elect to receive shares equal to the value of the warrant minus the fair market value of shares being surrendered to pay the exercise price. As of March 31, 2019, the balance outstanding was $979,156 and the accrued interest was $94,744. As of March 31, 2019, we have outstanding warrants to purchase 223,000 shares of common stock. As of March 31, 2019, $21,367 of the principal payments of two notes are due and in default.
On February 15, 2018, we entered into an agreement with L2 Capital for a loan of up to $565,555, together with interest at the rate of 8% per annum, which consists of up to $500,000 to us and a prorated original issuance discount of $55,555 and $10,000 for transactional expenses to L2 Capital. L2 Capital has the right at any time to convert all or any part of the note into fully paid and nonassessable shares of our common stock at the fixed conversion price, which is equal to $0.50 per share; however, at any time on or after the occurrence of any event of default under the note, the conversion price will adjust to the lesser of $0.50 or 65% multiplied by the lowest volume weighted average price of the common stock during the 20-trading-day period ending, in L2 Capital’s sole discretion on each conversion, on either the last complete trading day prior to the conversion date or the conversion date. During the year ended December 31, 2018, we received five tranches totaling $482,222. As of December 31, 2018, we have issued warrants to purchase 56,073 shares of common stock in accordance with a non-exclusive finder’s fee arrangement. These warrants have a fair value of $13,280 based on the Black-Scholes option-pricing model. The fair value was recorded as a discount on the notes payable and is being amortized over the life of the notes payable. As of December 31, 2018, we have fully amortized $91,222 of the debt issuance cost and have recorded a debt discount of $475,481 for the fair value of derivative liability and fully amortized the debt discount. As of March 31, 2019, we have outstanding warrants to purchase 56,073 shares of common stock. As of March 31, 2019, the outstanding balance of the original loan was $368,145, plus a default penalty of $261,306, for a total of $629,451, and accrued interest was $72,527. The note is in default.
On September 19, 2018, we executed a note payable for $10,000 with an unrelated party that bears interest at 6% per annum, which is due quarterly beginning as of September 30, 2018. The maturity date for the note is three years after date of issuance. In addition, the lender received warrants to purchase 2,000 shares of common stock upon signing the promissory note. The warrant can be exercised at a price per share equal to a 15% discount from the price of common stock on the last trading day before such purchase. As of March 31, 2019, we have outstanding warrants to purchase 2,000 shares of common stock. As of March 31, 2019, the balance outstanding was $10,000 and the accrued interest was $322.
On December 14, 2018, L2 Capital LLC purchased our note payable from Collier Investments, LLC. The total consideration was $371,250, including the outstanding note balance of $281,250, the accrued interest of $33,750, and liquidated damages of $56,250. There was also a default penalty of $153,123. In addition, we issued 400,000 shares of common stock to L2 Capital as commitment shares with a fair value of $21,200 in connection with the purchase of the note. We executed a replacement convertible note with L2 Capital in the amount of $371,250 with an interest rate of 12% per annum. The maturity date of the note is December 22, 2018. The holder of the note can convert the note, or any portion of it, into shares of common stock at any time after the issuance date. The conversion price is 65% of the market price, which is defined as the lowest trading price for our common stock during the 20-trading-day period prior to the conversion date. As of December 31, 2018, we have recorded a debt discount of $665,690 for the fair value of derivative liability and fully amortized the debt discount. During the three months ended March 31, 2019, we issued 1,800,000 shares of common stock to L2 Capital for the conversion of a portion of our notes payable in the amount of $49,614. As of March 31, 2019, the outstanding balance was $474,759, which includes a default penalty, and the accrued interest was $18,944. This note is in default.
On January 2, 2019, we initiated a promissory note agreement pursuant to which we issued a series of promissory notes in the amount of $10,000 to accredited investors. Proceeds from these notes will be used to support the administrative and legal expenses of our lawsuit before the United District Court for the Western District of Tennessee, Ocean Thermal Energy Corporation v. Robert Coe, el al., Case No. 2:17-cv-02343SHL-cgc, and any subsequent actions brought about as a result of or in connection with this litigation (the “Memphis Litigation”). These notes are secured against the proceeds from the litigation. The notes bear an interest rate of 17%, plus one quarter of one percent of the actual funds received from the litigation. The repayment of the principal, accrued interest, and the percentage of the litigation funds received will be paid immediately following the receipt of sufficient funds from this litigation. As of March 31, 2019, the outstanding balance of these loans is $310,000 and the accrued interest was $10,441.
The following convertible note and notes payable were outstanding at March 31, 2019:
(1) Maturity date is 90 days after demand. (2) Bridge loans were issued at dates between December 2017 and May 2018. Principal is due on the earlier of 18 months from the anniversary date or the completion of L2 financing with a gross proceeds of a minimum of $1.5 million. (3). L2 - Note was drawn down in five traunches between 02/16/18 and 05/02/18. (4). Loans were issued from January 2, 2019 to March 23, 2019. Principal and interest are due when funds are received from the litigation between Ocean Thermal Energy Corporation vs, Robert Coe el al. * Default interest rate ** Partially in default as of March 31, 2019
The following convertible notes and notes payable were outstanding at December 31, 2018:
(1) Maturity date is 90 days after demand. (2) Bridge loans were issued at dates between December 2017 and May 2018. Principal is due on the earlier of 18 months from the anniversary date or the completion of L2 financing with a gross proceeds of a minimum of $1.5 million. (3). L2 - Note was drawn down in five traunches between 02/16/18 and 05/02/18. * Default interest rate. ** Partially in default as of December 31, 2018
|
5. Derivative Liability |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Liability [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Liability | We measure the fair value of our assets and liabilities under the guidance of ASC 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. ASC 820 does not require any new fair value measurements, but its provisions apply to all other accounting pronouncements that require or permit fair value measurement.
On August 19, 2018, we defaulted in payment of the note issued to L2 Capital on February 19, 2018. In accordance with the terms of note, at any time on or after the occurrence of any event of default, the conversion price per share will adjust to the lesser of $0.50 or 65% multiplied by the lowest volume weighted average price of the common stock during the 20-trading-day period ending, in L2 Capital’s sole discretion on each conversion, on either the last complete trading day prior to the conversion date or the conversion date. We identified conversion features embedded within convertible debt issued. We have determined that the features associated with the embedded conversion option should be accounted for at fair value as a derivative liability. We have elected to account for these instruments together with fixed conversion price instruments as derivative liabilities as we cannot determine if a sufficient number of shares would be available to settle all potential future conversion transactions.
Following is a description of the valuation methodologies used to determine the fair value of our financial liabilities, including the general classification of such instruments pursuant to the valuation hierarchy:
The tables below set forth a summary of changes in fair value of our Level 3 financial liabilities for the three months ended March 31, 2019. The tables reflect changes for all financial liabilities at fair value categorized as Level 3 as of March 31, 2019:
* Gains/(losses) related to the revaluation of Level 3 financial liabilities is included in “Change in fair value of derivative liability” in the accompanying condensed consolidated unaudited statement of operations.
The fair value of the derivative liability was estimated using the income approach and the Black-Scholes option-pricing model. The fair values at the commitment and remeasurement dates for our derivative liabilities were based upon the following management assumptions:
** The fair value at the remeasurement date is equal to the carrying value on the balance sheet.
|
6. Stockholders' Equity |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' deficiency | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Common Stock
During the three months ended March 31, 2019, we issued 1,800,000 shares of common stock to L2 Capital LLC for the conversion of a portion of our notes payable in the amount of $49,614.
Warrants
The following table summarizes all warrants outstanding and exercisable for the three months ended March 31, 2019:
The aggregate intrinsic value represents the excess amount over the exercise price that optionees would have received if all options had been exercised on the last business day of the period indicated, based on our closing stock price of $0.0449 per share on March 31, 2019. The intrinsic value of warrants to purchaser 350,073 shares on that date was $2,538. |
7. Commitments and Contingencies |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments
On December 11, 2017, we entered into an equity purchase agreement with L2 Capital, LLC, for up to $15,000,000. As provided in the agreement, we may require L2 Capital to purchase shares of common stock from time to time by delivering a “put” notice to L2 Capital specifying the total number of shares to be purchased. L2 Capital will pay a purchase price equal to 85% of the “market price,” which is defined as the lowest traded price on the OTCQB marketplace during the five consecutive trading days following the “put date,” or the date on which the applicable shares are delivered to L2 Capital. The number of shares may not exceed 300% of the average daily trading volume for our common stock during the five trading days preceding the date on which we deliver the applicable put notice. Additionally, such amount may not be lower than $10,000 or higher than $1,000,000. L2 Capital has no obligation to purchase shares under this agreement to the extent that such purchase would cause L2 Capital to own more than 4.99% of our common stock. Upon the execution of this agreement, we issued 1,714,285 shares of common stock valued at $514,286 as a commitment fee in connection with the agreement. The shares to be issued pursuant to this agreement were covered by a Registration Statement on Form S-1 effective on January 29, 2018, with a post-effective amendment effective April 15, 2019. During the three months ended March 31, 2019, we did not execute any put options with L2 Capital to purchase any shares of common stock.
On June 26, 2017, we entered a nonexclusive finder’s arrangement with Craft Capital Management LLC (“Craft”) in the event that proceeds with a debt and/or equity transaction or to finance a merger/acquisition and/or another transaction are arranged by Craft. We have no obligation to consummate any transaction, and we can choose to accept or reject any transaction in our sole and absolute discretion. Upon the successful completion of a placement, we will pay to Craft 8% of the gross proceeds from an equity placement and 3% for a debt placement. In addition, we will issue to Craft, at the time of closing, warrants with an aggregate exercise price equal to 3% of the amount raised. These warrants have a fair value of $13,280 based on the Black-Scholes option-pricing model. The warrants have an exercise price ranging from $0.0425 to $0.25 per share and are exercisable for a period of five years after the closing of the placement. If we, at any time while these warrants are outstanding, sell or grant any option to purchase or sell or grant any right to reprice, or otherwise dispose of or issue any common stock or securities entitling any person or entity to acquire shares of common stock, at an effective price per share less than the then-exercise price, then the exercise price will be reduced to equal the lower share price, at the option of Craft. Such adjustment will be made whenever such common stock is issued. We will notify Craft in writing, no later than the trading day following the issuance of any common stock, of the applicable issuance price or applicable reset price, exchange price, conversion price, and other pricing terms. As of March 31, 2019, we have outstanding warrants to purchase 56,073 shares of common stock for L2 Capital equity transactions and 69,000 for L2 Capital debt transactions for a total outstanding of 125,073, none of which has been exercised.
Litigation
From time to time, we are involved in legal proceedings and regulatory proceedings arising from operations. We establish reserves for specific liabilities in connection with legal actions that management deems to be probable and estimable.
On May 4, 2018, we reached a settlement of the claims at issue in Ocean Thermal Energy Corp. v. Robert Coe, et al., Case No. 2:17-cv-02343SHL-cgc, before the United States District Court for the Western District of Tennessee. On August 8, 2018, an $8 million federal court judgment was entered against the defendants and in our favor. We believe the defendants have adequate assets to satisfy this judgment in full. During 2018, we received three payments totaling $100,000 from the defendants. We have not received any additional payments during the first quarter of 2019. The collection process is ongoing.
Consulting Agreements
On June 4, 2018, we entered into a consulting agreement to pay 20,000 shares of common stock when one of the conditions of the contract was satisfied. Although this condition was satisfied on August 31, 2018, we have not issued the shares. As of March 31, 2019 and December 31, 2018, we have accrued the share compensation at fair value totaling $1,600. Shares have not been issued as of March 31, 2019.
On August 14, 2018, we entered into a consulting agreement to pay $40,000 by issuing shares of common stock. As of March 31, 2019 and December 31, 2018, we have not issued the shares and have accrued the amount. Shares have not been issued as of March 31, 2019.
Employment Agreements
On January 1, 2011, we entered into a five-year employment agreement with our chief executive officer, which provides for successive one-year term renewals unless it is expressly cancelled by either party 100 days prior to the end of the term. Under the agreement, our chief executive officer will receive an annual salary of $350,000, a car allowance of $12,000, and company-paid health insurance. The agreement also provides for bonuses equal to one times his annual salary plus 500,000 shares of common stock for each additional project that generates $25 million or more in revenue to us. Our chief executive officer is entitled to receive severance pay in the lesser amount of three years’ salary or 100% of the remaining salary if the remaining term is less than three years.
On June 29, 2017, the board of directors approved extending the employment agreements for the chief executive officer and the senior financial advisor for an additional five years. The salary and other compensation were increased to account for inflation since the original employment agreements were executed and became effective June 30, 2017. These modifications were never reduced to writing.
|
8. Related-Party Transactions |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | For the three months ended March 31, 2019, we paid rent of $30,000 to a company controlled by our chief executive officer under an operating lease agreement.
On January 18, 2018, the due date of a 2015 related-party note payable was extended to the earlier of December 31, 2018, or the date of the financial closings of our Baha Mar Project (or any other project of $25 million or more), whichever occurs first. The balance on the note payable was $1,102,500 and accrued interest was $540,255 as of March 31, 2019.
On March 9, 2017, we issued a promissory note payable of $200,000 to a related party in which our chief executive officer is an officer and director. The note bears interest of 10% and is due and payable within 90 days after demand. The outstanding balance was $177,000 and accrued interest was $37,226 as of March 31, 2019.
On November 6, 2017, we entered into an agreement and promissory note with JPF Venture Group, Inc. to loan up to $2,000,000 to us. The terms of the note are as follows: (i) interest is payable at 10% per annum; (ii) all unpaid principal and all accrued and unpaid interest is due and payable at the earliest of resolution of the Memphis litigation (as defined therein), December 31, 2018, or when we are otherwise able to pay. As of March 31, 2019, the outstanding balance was $607,093 and the accrued interest was $95,862. For the three months ended March 31, 2019, we repaid $5,000. This note is in default.
We remain liable for the loans made to us by JPF Venture Group before JPF Venture Group was an affiliate. As of March 31, 2019, the outstanding balance of these loans was $581,880 and the accrued interest was $134,297.
|
2. Summary of Significant Accounting Policies (Policies) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principal Subsidiary Undertakings | Our condensed consolidated financial statements include the following subsidiaries:
We have an effective interest of 100% in each of our subsidiaries.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Use of Estimates | In preparing financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates include the assumptions used in valuing equity investments and issuances, valuation of deferred tax assets, and depreciable lives of property and equipment.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents | We consider all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At March 31, 2019 and December 31, 2018, we had no cash equivalents.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | On December 22, 2017, the Tax Cuts and Jobs Act (the “Jobs Act”) was enacted. The Jobs Act significantly revised the U.S. corporate income tax law by lowering the corporate federal income tax rate from 35% to 21%.
We use the liability method of accounting for income taxes. Under the liability method, deferred tax assets and liabilities are determined based on temporary differences between financial reporting and tax bases of assets and liabilities and on the amount of operating loss carry-forwards and are measured using the enacted tax rates and laws that will be in effect when the temporary differences and carry-forwards are expected to reverse. An allowance against deferred tax assets is recorded when it is more likely than not that such tax benefits will not be realized.
Our ability to use our net operating loss carryforwards may be substantially limited due to ownership change limitations that may have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), as well as similar state provisions. These ownership changes may limit the amount of net operating loss that can be utilized annually to offset future taxable income and tax, respectively. In general, an “ownership change” as defined by Section 382 of the Code results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50.0% of the outstanding stock of a company by certain stockholders or public groups.
We have not completed a study to assess whether an ownership change has occurred or whether there have been multiple ownership changes since we became a “loss corporation” under the definition of Section 382. If we have experienced an ownership change, utilization of the net operating loss carryforwards would be subject to an annual limitation under Section 382 of the Code, which is determined by first multiplying the value of our stock at the time of the ownership change by the applicable long-term, tax-exempt rate, and then could be subject to additional adjustments, as required. Any limitation may result in expiration of a portion of the net operating loss carryforwards before utilization. Further, until a study is completed and any limitation known, no positions related to limitations are being considered as an uncertain tax position or disclosed as an unrecognized tax benefit. Any carryforwards that expire prior to utilization as a result of such limitations will be removed from deferred tax assets with a corresponding reduction of the valuation allowance. Due to the existence of the valuation allowance, it is not expected that any possible limitation will have an impact on our results of operations or financial position.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segments | We conduct operations in various foreign jurisdictions where we are developing projects to use our technology. Our segments were based on the location of these projects. The U.S. territories segment consists of projects in the U.S. Virgin Islands and Guam; and the other segment currently consists of projects in the Cayman Islands. Direct revenues and costs, depreciation, depletion, and amortization costs, general and administrative costs, and other income directly associated with their respective segments are detailed within the following discussion. Identifiable net property and equipment are reported by business segment for management reporting and reportable business segment disclosure purposes. Current assets, other assets, current liabilities, and long-term debt are not allocated to business segments for management reporting or business segment disclosure purposes.
Reportable business segment information is as follows:
During the year ended December 31, 2018, $892,639 of Guam and U.S. Virgin Islands assets under construction were considered to be impaired due to the uncertainty of the project and were written off; consequently, there were no assets under construction as of March 31, 2019.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment | Furniture, equipment, and software are recorded at cost and include major expenditures that increase productivity or substantially increase useful lives.
Maintenance, repairs, and minor replacements are charged to expenses when incurred. When furniture, vehicles, or equipment is sold or otherwise disposed of, the asset and related accumulated depreciation are removed from this account, and any gain or loss is included in the statement of operations.
Assets under construction represent costs incurred by us for our renewable energy systems currently in process. Generally, all costs incurred during the development stage of our projects are capitalized and tracked on an individual project basis and are included in construction in progress until the project has been placed into service. If a project is abandoned, the associated costs that have been capitalized are charged to expense in the year of abandonment. Expenditures for repairs and maintenance are charged to expense as incurred. Interest costs incurred during the construction period of defined major projects from debt that is specifically incurred for those projects are capitalized.
Direct labor costs incurred for specific major projects expected to have long-term benefits are capitalized. Direct labor costs subject to capitalization include employee salaries, as well as related payroll taxes and benefits. With respect to the allocation of salaries to projects, salaries are allocated based on the percentage of hours that our key managers, engineers, and scientists work on each project. These individuals track their time worked at each project. Major projects are generally defined as projects expected to exceed $500,000. Direct labor includes all of the time incurred by employees directly involved with construction and development activities. Time spent in general and indirect management and in evaluating the feasibility of potential projects is expensed when incurred.
We capitalize costs incurred once the project has met the project feasibility stage. Costs include environmental engineering, permits, government approval, and site engineering costs. We capitalize direct interest costs associated with the projects. As of March 31, 2019 and 2018, we have no interest costs capitalized for any of these projects.
The cost of furniture, vehicles, equipment, and software is depreciated over the estimated useful lives of the related assets.
Depreciation is computed using the straight-line method for financial reporting purposes. The estimated useful lives and accumulated depreciation for land, buildings, furniture, vehicles, equipment, and software are as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value under GAAP, and enhances disclosures about fair value measurements. ASC 820 describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, which are the following:
● Level 1–Pricing inputs are quoted prices available in active markets for identical assets or liabilities as of the reporting date.
● Level 2–Pricing inputs are quoted for similar assets or inputs that are observable, either directly or indirectly, for substantially the full term through corroboration with observable market data. Level 2 includes assets or liabilities valued at quoted prices adjusted for legal or contractual restrictions specific to these investments.
● Level 3–Pricing inputs are unobservable for the assets or liabilities; that is, the inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability.
Management believes the carrying amounts of the short-term financial instruments, including cash and cash equivalents, prepaid expense and other assets, accounts payable, accrued liabilities, notes payable, deferred compensation, and other liabilities reflected in the accompanying balance sheets approximate fair value at March 31, 2019 and December 31, 2018, due to the relatively short-term nature of these instruments.
We account for derivative liability at fair value on a recurring basis under level 3 at March 31, 2019 and December 31, 2018 (see Note 5).
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Concentrations | Cash, cash equivalents, and restricted cash are deposited with major financial institutions, and at times, such balances with any one financial institution may be in excess of FDIC-insured limits. Management believes the risk in these situations to be minimal. As of March 31, 2019 and December 31, 2018, $0 and $0, respectively, were deposited in excess of FDIC-insured limits.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss per Share | The basic loss per share is calculated by dividing our net loss available to common shareholders by the weighted average number of common shares during the period. The diluted loss per share is calculated by dividing our net loss by the diluted weighted average number of shares outstanding during the period. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. We have 350,073 and 220,500 shares issuable upon the exercise of warrants and 51,353,422 and 7,567,438 shares issuable upon the conversion of convertible notes that were not included in the computation of dilutive loss per share because their inclusion is antidilutive for the three months ended March 31, 2019 and 2018, respectively.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | In May 2014, the FASB issued Accounting Standard Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. We adopted the ASU on January 1, 2018. The adoption of the ASU did not have an impact on our condensed consolidated financial statements during the three months ended March 31, 2018.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recent Accounting Pronouncements | In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. This ASU relates to the accounting for non-employee share-based payments. The amendment in this update expands the scope of Topic 718 to include all share-based payment transactions in which a grantor acquired goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The ASU excludes share-based payment awards that relate to: (1) financing to the issuer; or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts from Customers. The share-based payments are to be measured at grant-date fair value of the equity instruments that the entity is obligated to issue when the goods or service has been delivered or rendered and all other conditions necessary to earn the right to benefit from the equity instruments have been satisfied. This standard will be effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. We adopted the provisions of this ASU on January 1, 2019. The adoption had no impact on our results of operations, cash flows, or financial condition.
We have reviewed all recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on our consolidated results of operations, financial position, and cash flows. Based on that review, we believe that none of these pronouncements will have a significant effect on current or future earnings or operations.
|
2. Summary of Significant Accounting Policies (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Subsidiaries |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business segments |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated useful lives |
|
4. Convertible Notes and Notes Payable (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of convertible notes and notes payable |
(1) Maturity date is 90 days after demand. (2) Bridge loans were issued at dates between December 2017 and May 2018. Principal is due on the earlier of 18 months from the anniversary date or the completion of L2 financing with a gross proceeds of a minimum of $1.5 million. (3). L2 - Note was drawn down in five traunches between 02/16/18 and 05/02/18. (4). Loans were issued from January 2, 2019 to March 23, 2019. Principal and interest are due when funds are received from the litigation between Ocean Thermal Energy Corporation vs, Robert Coe el al. * Default interest rate ** Partially in default as of March 31, 2019
(1) Maturity date is 90 days after demand. (2) Bridge loans were issued at dates between December 2017 and May 2018. Principal is due on the earlier of 18 months from the anniversary date or the completion of L2 financing with a gross proceeds of a minimum of $1.5 million. (3). L2 - Note was drawn down in five traunches between 02/16/18 and 05/02/18. * Default interest rate. ** Partially in default as of December 31, 2018
|
5. Derivative Liability (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Liability [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value hierarchy |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in fair value financial liabilities |
* Gains/(losses) related to the revaluation of Level 3 financial liabilities is included in “Change in fair value of derivative liability” in the accompanying condensed consolidated unaudited statement of operations. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assumptions |
** The fair value at the remeasurement date is equal to the carrying value on the balance sheet. |
6. Stockholders' Equity (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' deficiency | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of warrants |
|
2. Summary of Significant Accounting Policies (Details) |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Ocean Thermal Energy Bahamas Ltd. | |
Place of incorporation/establishment | Bahamas |
Principal activities | Intermediate holding company of OTE BM Ltd. and OTE Bahamas O&M Ltd. |
Date formed | Jul. 04, 2011 |
OTE BM Ltd. | |
Place of incorporation/establishment | Bahamas |
Principal activities | OTEC/SDC development in the Bahamas |
Date formed | Sep. 07, 2011 |
OCEES International Inc. | |
Place of incorporation/establishment | Hawaii, USA |
Principal activities | Research and development for the Pacific Rim |
Date formed | Jan. 21, 1998 |
2. Summary of Significant Accounting Policies (Details 1) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Revenue | $ 0 | $ 0 | |
Assets | 87,544 | 1,083,262 | $ 9,070 |
Net loss | (232,291) | (951,810) | |
Property and equipment | 500 | 1,183 | $ 672 |
Assets under construction | 0 | 915,139 | |
Depreciation | 172 | 169 | |
Additions to assets under construction | 0 | 22,500 | |
Headquarters | |||
Revenue | 0 | 0 | |
Assets | 87,544 | 168,123 | |
Net loss | (232,291) | (951,810) | |
Property and equipment | 500 | 1,183 | |
Assets under construction | 0 | 0 | |
Depreciation | 172 | 169 | |
Additions to assets under construction | 0 | ||
US Territories | |||
Revenue | 0 | 0 | |
Assets | 0 | 750,237 | |
Net loss | 0 | 0 | |
Property and equipment | 0 | 0 | |
Assets under construction | 0 | 750,237 | |
Depreciation | 0 | 0 | |
Additions to assets under construction | 22,500 | ||
Other | |||
Revenue | 0 | 0 | |
Assets | 0 | 164,902 | |
Net loss | 0 | 0 | |
Property and equipment | 0 | 0 | |
Assets under construction | 0 | 164,902 | |
Depreciation | $ 0 | 0 | |
Additions to assets under construction | $ 0 |
2. Summary of Significant Accounting Policies (Details 2) |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Computer Equipment | |
Estimated useful lives | 3 years |
Software | |
Estimated useful lives | 5 years |
2. Summary of Significant Accounting Policies (Details Narrative) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Cash in excess of FDIC | $ 0 | $ 0 | |
Warrants | |||
Antidilutive shares excluded from EPS calculation | 350,073 | 220,500 | |
Convertible Notes | |||
Antidilutive shares excluded from EPS calculation | 51,353,422 | 7,567,438 |
3. Going Concern (Details Narrative) - USD ($) |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Net loss | $ (232,291) | $ (951,810) | ||
Net cash used in operating activities | (235,190) | (834,890) | ||
Working capital (deficiency) | (17,718,254) | |||
Total stockholders' deficiency | $ (17,886,088) | $ (11,397,037) | $ (17,769,177) | $ (10,509,554) |
5. Derivative Liability (Details) - USD ($) |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Derivative liability | $ 1,814,816 | $ 2,292,254 |
Level 1 | ||
Derivative liability | 0 | |
Level 2 | ||
Derivative liability | 0 | |
Level 3 | ||
Derivative liability | $ 1,814,816 |
5. Derivative Liability (Details 1) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Derivative Liability [Abstract] | ||
Derivative liability, beginning | $ 2,292,254 | |
Fair value at the commitment date for convertible instruments | 0 | |
Change in fair value of derivative liability | (411,672) | $ 0 |
Reclassification to additional paid-in capital for financial instruments that ceased to be a derivative liability | (65,766) | |
Derivative liability, ending | 1,814,816 | |
Change in fair value of derivative liability, beginning | 1,206,857 | |
Day one gains/(losses) on valuation | 0 | |
Gains/(losses) from the change in fair value of derivative liability | (1,618,529) | |
Change in fair value of derivative liability, ending | $ (411,672) |
5. Derivative Liability (Details 2) - Remeasurement Date |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Expected dividends | 0.00% |
Minimum [Member] | |
Expected volatility | 38.70% |
Risk free interest rate | 2.22% |
Expected term (in years) | 29 days |
Maximum [Member] | |
Expected volatility | 496.00% |
Risk free interest rate | 2.60% |
Expected term (in years) | 4 years 6 months 22 days |
6. Stockholders' Equity (Details) - Warrants |
3 Months Ended |
---|---|
Mar. 31, 2019
$ / shares
shares
| |
Number of Warrants | |
Warrants outstanding, beginning | shares | 350,073 |
Warrants granted | shares | 0 |
Warrants exercised | shares | 0 |
Warrants forfeited | shares | 0 |
Warrants outstanding, ending | shares | 350,073 |
Warrants exercisable | shares | 350,073 |
Weighted Average Exercise Price | |
Warrants outstanding, beginning | $ / shares | $ .18 |
Warrants granted | $ / shares | .00 |
Warrants exercised | $ / shares | .00 |
Warrants forfeited | $ / shares | .00 |
Warrants outstanding, ending | $ / shares | .18 |
Warrants exercisable | $ / shares | $ .18 |
6. Stockholders' Equity (Details Narrative) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Stockholders' deficiency | ||
Stock issued for conversions of notes payable, shares | 1,800,000 | |
Stock issued for conversions of notes payable, value | $ 49,614 | $ 0 |
8. Related-party Transactions (Details Narrative) |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Company Controlled by the CEO | |
Rent expense | $ 30,000 |
D-CB>S);ZJ= N;H%[T!BD.4
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MS,YO,.M^H!M?'6 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M1AO3@C@K3P@#V0NL/1S+)>A:0S"#W6+/W2Z<&9>**FAX8/T3V;\#',]MY3,Q7^%*T@,#THP1V6DBRNI!N>-FEE0BN(OTRYT
MW,?I9G\WP[8!Z0Q(%\ AYF%3HJC\D7M>YM:,Q$Z][WEXXMTQQ=Y4P1E;$>]0
MO$/OM=QEAYQ= ]$<"(99X"(I*I(B!(DG
M@F&6N$B&BF0(P7^B!"-A.B-$'](B$="_+\$-!*010B&VLUB/F")
MRX*SB\>'X]!C?>K "JGMJG30[([YIM93J.BYA'%4!&
% RRS,+] [FKF7T9#F;1_:%G3A^I+:[VS:@@R"R[/_3,ZR.UQ;M4&16*
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M+G4'&&09G\4>E@XA P7M@QG^[U8!#TX_<% BFP*6OP@@D"5P]0#FO >V #I@L0V#BRUG;\V!
M%%?5__.9N
MN]U\=WI:+^ZR=5KWRDU6P"\W9;5.M_"QNCVM-U66+NN[+-NN5Z=)OS\Y7:=Y
M\9L__+[.__#[[1]>EXO=.BNV45HLHXMBFV\?H[<%CY"71702U7=IE=6_/]W^
MX?>G^ Z_-XQ^+(OM70WO++-E\]5\UWQ>
M'OF0W>;UMDKAQ9_2==9\ZMTB2XOHZBZ#858P;%;=/D;G9;7IG/[J<=,:9= _
M^5/G"^^S*B]QR
8+%ZUP-)J_W(!V
MSEBU3@L $IN5<2FAO0!SN5GA*:!?(76EFCL@8REC60I7D3 #)!/ @"B*A@%
MBPSDB3JM'HFX;!IH'9P0I0S8:[4D"]E#O@7VVKOL1;=L8U@1*+(- E]@@H>V
M@5D7^0:MU\??GYV]?]%##+*'!K.7ZWR+;RV ?J0PBT-!%1&KLMP22;&DK9:-
MK1#?Z$Q93@-@I46Q0XL'RX_!K6CL>\APY\"=^>WF[G"Y/75%9Z,%&IAZMP)@
M(-3PU+9W599%:_9D9NC)1$D8QM:B<$QG .@1"]QH*2)Q=$
M7%7<6G8N><[&]EVC*,09'5E.JJXAI?2X_A0SF_9$>G;9(3=$?KR]J\K=[1U9
M6UN_4Q'B;4C;@OV6/[Q_9OH
MSX =R(:_QPR#F/)%8PY?T*9DL>0:ISF9N."+$ZX %F[.I,QP)&]]DUQ6RZB@9N>EYP14KG;J#3F)=
M\*!IE9"J7ET;OT:/E$4DV.?D&]HC9B^L)0.3C++XI\9NCI)5(.(OTT
2Y3H%H+:"L)@/(N'PU%+0?"U
M@MDLGO?'G4L*W9]D3C"54G%%YA3O
GKCI#.;EX6$SSX(SCPY[>= /OCT^\.V1^S9>
M$9-YP3S:*C-RQ#H; [D$:"=POV"\V=@4O-02RY.RRGX9Q4T 875GE=WCZF7^
M6'EU#G6 JZ3H