Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 15, 2019 | Jun. 30, 2018 | |
Document And Entity Information | |||
Entity Registrant Name | Ocean Thermal Energy Corp | ||
Entity Central Index Key | 0000827099 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | No | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 11,359,319 | ||
Entity Common Stock, Shares Outstanding | 132,838,944 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2018 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Current Assets | ||
Cash | $ 8,398 | $ 425,015 |
Prepaid expenses | 0 | 25,000 |
Total Current Assets | 8,398 | 450,015 |
Property and Equipment | ||
Property and equipment, net | 672 | 1,352 |
Assets under construction | 0 | 892,639 |
Property and Equipment, net | 672 | 893,991 |
Total Assets | 9,070 | 1,344,006 |
Current Liabilities | ||
Accounts payables and accrued expense | 8,876,222 | 6,846,010 |
Notes payable - related party, net | 2,398,473 | 3,592,948 |
Convertible note payable to related party, current portion | 87,500 | 87,500 |
Notes payable, net | 2,671,640 | 589,812 |
Convertible notes payable, net | 1,283,824 | 50,000 |
Derivative liability | 2,292,254 | 0 |
Total Current Liabilities | 17,609,913 | 11,166,270 |
Notes payable, net | 168,334 | 607,290 |
Notes payable, convertible | 0 | 80,000 |
Total Liabilities | 17,778,247 | 11,853,560 |
Stockholders' Deficiency | ||
Preferred Stock, $0.001 par value; 5,000,000 shares authorized, 0 and 0 shares issued and outstanding, respectively | 0 | 0 |
Common stock, $0.001 par value; 200,000,000 shares authorized, 131,038,944 and 122,642,247 shares issued and outstanding, respectively | 131,039 | 122,642 |
Additional paid-in capital | 57,683,015 | 57,071,022 |
Accumulated deficit | (75,583,231) | (67,703,218) |
Total Stockholders' Deficiency | (17,769,177) | (10,509,554) |
Total Liabilities and Stockholders' Deficiency | $ 9,070 | $ 1,344,006 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ .001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ .001 | $ 0.001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 131,038,944 | 122,642,247 |
Common stock, shares outstanding | 131,038,944 | 122,642,247 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Operating Expenses | ||
Salaries and wages | $ 1,361,706 | $ 2,044,882 |
Professional fees | 1,201,956 | 1,669,202 |
General and administrative | 595,306 | 2,169,577 |
Warrant Expense | 0 | 6,769,562 |
Impairment of assets under construction | 892,639 | 48,998 |
Total Operating Expenses | 4,051,607 | 12,702,221 |
Loss from Operations | (4,051,607) | (12,702,221) |
Other Income & Expenses | ||
Interest expense, net | (1,281,134) | (614,749) |
Amortization of debt discount | (1,160,983) | (44,960) |
Loss on settlement of debt | (279,432) | (1,105,203) |
Change in fair value of liability | 0 | (124,542) |
Change in fair value of derivative liability | (1,206,857) | 0 |
Income from legal settlement | 100,000 | 0 |
Total Other Income & Expenses | (3,828,406) | (1,889,454) |
Loss Before Income Taxes | (7,880,013) | (14,591,675) |
Provision for income taxes | 0 | 0 |
Net Loss | $ (7,880,013) | $ (14,591,675) |
Net Loss per Common Share Basic and Diluted | $ (0.06) | $ (0.13) |
Weighted Average Number of Common Shares Outstanding | 124,725,638 | 111,735,383 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (Deficit) - USD ($) | Preferred Stock | Common Stock | Paid-In Capital | Accumulated Deficit | Total |
Balance, shares at Dec. 31, 2016 | 0 | 94,343,776 | |||
Balance, value at Dec. 31, 2016 | $ 0 | $ 94,344 | $ 44,352,962 | $ (53,111,543) | $ (8,664,237) |
Warrants and Options Exercised at $0.00: 1/1/17 to 5/8/17 (prior to merger), shares | 14,792,500 | ||||
Warrants and Options Exercised at $0.00: 1/1/17 to 5/8/17 (prior to merger), value | $ 14,793 | (14,793) | 0 | ||
D Warrants Exercised at $0.75: 1/1/17 to 5/8/17 (prior to merger), shares | 998,079 | ||||
D Warrants Exercised at $0.75: 1/1/17 to 5/8/17 (prior to merger), value | $ 998 | 747,537 | 748,535 | ||
Stock issued for services and commitment fee, shares | 3,887,802 | ||||
Stock issued for services and commitment fee, value | $ 3,888 | 2,898,876 | 2,902,764 | ||
Stock issued for cash, shares | 11,250 | ||||
Stock issued for cash, value | $ 11 | 44,989 | 45,000 | ||
Stock issued for conversion of note payable and accrued interest, shares | 7,386,872 | ||||
Stock issued for conversion of note payable and accrued interest, value | $ 7,387 | 2,348,008 | 2,355,395 | ||
Stock repurchased from related parties, shares | (148,588) | ||||
Stock repurchased from related parties, value | $ (149) | (111,291) | (111,440) | ||
Stock issued for conversion of accounts payable, shares | 425,000 | ||||
Stock issued for conversion of accounts payable, value | $ 425 | 702,700 | 703,125 | ||
Stock issued for employee bonuses, shares | 409,066 | ||||
Stock issued for employee bonuses, value | $ 409 | 919,990 | 920,399 | ||
Stock issued for TetriDyn Solutions, Inc., shares | 536,490 | ||||
Stock issued for TetriDyn Solutions, Inc., value | $ 536 | (1,628,562) | (1,628,026) | ||
FV of warrant modifications | 6,769,562 | 6,769,562 | |||
Beneficial conversion features | 41,044 | 41,044 | |||
Net loss | (14,591,675) | (14,591,675) | |||
Balance, shares at Dec. 31, 2017 | 0 | 122,642,247 | |||
Balance, value at Dec. 31, 2017 | $ 0 | $ 122,642 | 57,071,022 | (67,703,218) | (10,509,554) |
Stock issued for warrants, shares | 39,000 | ||||
Stock issued for warrants, value | $ 39 | 9,481 | 9,520 | ||
Stock issued for services, shares | 673,345 | ||||
Stock issued for services, value | $ 673 | 138,313 | 138,986 | ||
Stock issued for cash under equity agreement, net of offering costs, shares | 2,300,000 | ||||
Stock issued for cash under equity agreement, net of offering costs, values | $ 2,300 | 104,605 | 106,905 | ||
Stock issued for cash, shares | 743,512 | ||||
Stock issued for cash, value | $ 744 | 48,236 | 48,980 | ||
Stock issued for cash to related parties, shares | 240,840 | ||||
Stock issued for cash to related parties, value | $ 241 | 9,759 | 10,000 | ||
Stock issued for conversion of note payable and accrued interest, shares | 4,000,000 | ||||
Stock issued for conversion of note payable and accrued interest, value | $ 4,000 | 110,078 | 114,078 | ||
Shares issued as a commitment fee, shares | 400,000 | ||||
Shares issued as a commitment fee, value | $ 400 | 20,800 | 21,200 | ||
Stock repurchased from related parties, value | 0 | ||||
Stock issued for employee bonuses, value | 0 | ||||
FV of warrant modifications | 0 | ||||
Beneficial conversion features | 13,248 | 13,248 | |||
Reclassification of derivative liabilities | 157,473 | 157,473 | |||
Net loss | (7,880,013) | (7,880,013) | |||
Balance, shares at Dec. 31, 2018 | 0 | 131,038,944 | |||
Balance, value at Dec. 31, 2018 | $ 0 | $ 131,039 | $ 57,683,015 | $ (75,583,231) | $ (17,769,177) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cash Flows From Operating Activities: | ||
Net Loss | $ (7,880,013) | $ (14,591,675) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 680 | 1,014 |
Impairment of assets under construction | 892,639 | 48,998 |
Stock issued for services | 138,986 | 2,902,764 |
Stock issued for bonuses | 0 | 920,399 |
Penalties upon default | 470,679 | 0 |
Change in fair value of liability | 0 | 124,542 |
Change in derivative liability | 1,206,857 | 0 |
Loss on settlement of debt | 0 | 1,105,203 |
Warrant Expense | 0 | 6,769,562 |
Amortization of debt discounts | 1,160,983 | 44,960 |
Loss on extinguishment of debt | 279,432 | 0 |
Changes in operating assets and liabilities: | ||
Other current assets | 0 | 0 |
Prepaid expenses | 25,000 | 5,549 |
Accounts payable and accrued expenses | 2,066,175 | 1,199,515 |
Net Cash Used In Operating Activities | (1,638,582) | (1,469,169) |
Cash Flow From Investing Activities: | ||
Cash acquired in acquisition | 0 | 4,512 |
Assets under construction | 0 | (95,352) |
Payments for acquisition | 0 | (49,773) |
Net Cash Used In Investing Activities | 0 | (140,613) |
Cash Flows From Financing Activities: | ||
Repayment of notes payable - related party | (64,474) | (64,432) |
Repayment of government loans | (3,208) | (4,539) |
Proceeds from notes payable | 499,156 | 490,000 |
Proceeds from notes payable, convertible | 615,086 | 80,000 |
Proceeds from issuance of common stock for cash | 155,885 | 45,000 |
Proceeds from notes payable - related party | 0 | 844,178 |
Stock repurchased from related parties | 0 | (111,440) |
Stock issued for exercise of warants for cash | 9,520 | 748,535 |
Stock issued for cash - related party | 10,000 | 0 |
Net Cash provided by Financing Activities | 1,221,965 | 2,027,302 |
Net increase in cash and cash equivalents | (416,617) | 417,520 |
Cash and cash equivalents at beginning of year | 425,015 | 7,495 |
Cash and cash equivalents at end of period | 8,398 | 425,015 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid for interest expense | 26,342 | 17,162 |
Cash paid for income taxes | 0 | 0 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Convertible note payable and accrued interest - related party converted to common stock | 114,078 | 80,275 |
Note Payable and accrued interest - related party converted into common stock | 0 | 668,500 |
Note Payable and accrued interest converted into common stock | 878,292 | 0 |
Penalties upon default on notes payable | 470,679 | 0 |
Due to related party, converted into note payable - related party | 0 | 38,822 |
Accounts payable converted into common stock | 0 | 326,250 |
Stock issued for commitment fee on issuance of note payable | 21,200 | 0 |
Debt discount on notes payable | 13,248 | 41,044 |
Reclassification of derivative liability | $ 157,473 | $ 0 |
1. NATURE OF BUSINESS AND BASIS
1. NATURE OF BUSINESS AND BASIS OF PRESENTATION | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
NATURE OF BUSINESS AND BASIS OF PRESENTATION | Ocean Thermal Energy Corporation is currently in the businesses of: ● OTEC and SWAC/LWAC ● EcoVillages We expect to use our technology in the development of our EcoVillages, which should add significant value to our existing line of business. On May 9, 2017, TetriDyn Solutions, Inc. (“TDYS”) acquired Ocean Thermal Energy Corporation (“OTE”) in a merger (the “Merger”), in which outstanding securities of OTE were converted into securities of TDYS, which changed its name to Ocean Thermal Energy Corporation. For accounting purposes, this transaction was accounted for as a reverse merger and has been treated as a recapitalization of TDYS with OTE as the accounting acquirer. The historical financial statements of the accounting acquirer became the financial statements of the company. We did not recognize goodwill or any intangible assets in connection with the transaction. The 110,273,767 shares issued to the shareholders of the accounting acquirer in conjunction with the share exchange transaction have been presented as outstanding for all periods. The historical financial statements include the operations of the accounting acquirer for all periods presented and the accounting acquiree for the period from May 9, 2017, through December 31, 2017. Our accounting year end is December 31, which was the year-end of the accounting acquirer. On May 25, 2017, we received approval from the Financial Industry Regulatory Authority, Inc. (“FINRA”) to change the trading symbol for our common stock to “CPWR,” pronounced “sea power” to reflect our core technology, from “TDYS.” Our common stock began formally trading under the symbol “CPWR” on June 21, 2017. The 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). Principal Subsidiary Undertakings Our consolidated financial statements for the years ended December 31, 2018 and 2017, include the following subsidiaries: 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 Ocean Thermal Energy UK Limited England and Wales Dormant 07/22/2010 OTEC Innovation Group Inc. Delaware, USA Dormant 06/02/2011 OTE-BM Energy Partners LLC Delaware, USA Dormant 06/02/2011 OTE Bahamas O&M Ltd. Bahamas Dormant 09/07/2011 Ocean Thermal Energy Holdings Ltd. Bahamas Dormant 03/05/2012 Ocean Thermal Energy Cayman Ltd. Caymans Dormant 03/26/2013 OTE HC Ltd. Caymans Dormant 03/26/2013 Ocean Thermal Energy USVI, Inc. Virgin Islands Dormant 07/12/2016 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 December 31, 2018 and 2017, 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: December 31, 2018 Headquarters U.S. Territories Other Total Revenue $ — $ — $ — $ — Assets $ 9,070 $ — $ — $ 9,070 Net Loss $ (6,987,374 ) $ (892,639 ) $ — $ (7,880,013 ) Property and equipment $ 672 $ — $ — $ 672 Depreciation $ 680 $ — $ — $ 680 Additions to Property and equipment $ — $ — $ — $ — Impairment of assets under construction $ — $ 892,639 $ — $ 892,639 December 31, 2017 Headquarters U.S. Territories Other Total Revenue $ — $ — $ — $ — Assets $ 451,367 $ 892,639 $ — $ 1,344,006 Net loss $ (14,542,677 ) $ — $ (48,998 ) $ (14,591,675 ) Property and equipment $ 1,352 $ — $ — $ 1,352 Assets under construction $ — $ 892,639 $ — $ 892,639 Depreciation $ 1,014 $ — $ — $ 1,014 Additions to assets under construction $ — $ 95,352 $ — $ 95,352 Impairment of assets under construction $ — $ — $ 48,998 $ 48,998 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. For the year ended December 31, 2017, the U.S. territories are comprised of U.S. Virgin Islands project (approx. $728,000) and Guam project (approx. $165,000). Other territories are comprised of Cayman Islands project); however, during the year ended December 31, 2017, $48,998 of Cayman Islands assets under construction was considered to be impaired due to the uncertainty of the project and were written off. The additions to assets under construction in 2017 were primarily salaries and consulting services. 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 currently have several EcoVillage projects in the development stage. We capitalize direct interest costs associated with the projects. As of December 31, 2018 and 2017, 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: Years Computer Equipment 3 Software 5 Fair Value Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures ● 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 December 31, 2018, and December 31, 2017, 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 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. As of December 31, 2018, and 2017, $0 and $179,855, respectively, were deposited in excess of FDIC-insured limits. Management believes the risk in these situations to be minimal. 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 134,000 shares issuable upon the exercise of warrants and 47,046,431 and 7,056,721 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 years ended December 31, 2018 and 2017, respectively. Revenue Recognition In May 2014, the FASB issued Accounting Standard Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) Recent Accounting Pronouncements In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting Revenue from Contracts from Customers 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. GOING CONCERN
2. GOING CONCERN | 12 Months Ended |
Dec. 31, 2018 | |
Going Concern | |
GOING CONCERN | The accompanying consolidated financial statements have been prepared on the assumption that we will continue as a going concern. As reflected in the accompanying consolidated financial statements, we had a net loss of $7,880,013 and used cash of $1,638,582 in operating activities for the year ended December 31, 2018. We had a working capital deficiency of $17,601,515 and a stockholders’ deficiency of $17,769,177 as of December 31, 2018. 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. |
3. PROPERTY AND EQUIPMENT
3. PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | Property and equipment as of December 31, 2018, consist of the following: Accumulated Net Book Useful Life Cost Depreciation Value Life Computer & Office Equipment $ 13,751 $ 13,079 $ 672 3 Years Software (Video System) 19,061 19,061 — 5 Years $ 32,812 $ 32,140 $ 672 Property and equipment as of December 31, 2017, consist of the following: Accumulated Net Book Useful Life Cost Depreciation Value Life Computer & Office Equipment $ 13,751 $ 12,399 $ 1,352 3 Years Software (Video System) 19,061 19,061 — 5 Years Construction in Process 892,639 892,639 $ 925,451 $ 31,460 $ 893,991 Depreciation expense for the years ended December 31, 2018 and 2017, was $680 and $1,014, respectively. 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 projects and written-off. During the year ended December 31, 2017, $48,998 of Cayman Islands assets under construction was considered to be impaired due to the uncertainty of the project and were written off. |
4. CONVERTIBLE NOTES AND NOTES
4. CONVERTIBLE NOTES AND NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2018 | |
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 year ended December 31, 2018, we made a repayment of $3,208. The loan principal was $9,379 with accrued interest of $186 as of December 31, 2018. 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 $22,864 as of December 31, 2018. 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 $11,349 as of December 31, 2018. 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 $39,414 as of December 31, 2018. 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 $20,740 as of December 31, 2018. 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 December 31, 2018, the outstanding loan balance was $394,380 and the accrued but unpaid interest was $95,011 on the Consolidated Note. This note is in default. 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, the outstanding balance was $75,000, plus accrued interest of $12,173. 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. 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 December 31, 2018, the outstanding balance was $112,500, plus accrued interest of $18,197. 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, the outstanding balance was $12,500, plus accrued interest of $1,754. 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. On October 20, 2016, we borrowed $25,000 from a stockholder 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 September 5, 2017, the note holder converted the note principal of $25,000 into 1,806,298 shares common stock. As of December 31, 2018, there was an outstanding balance of accrued interest of $904. During 2012, we issued a note payable for $1,000,000 and three-year warrants to purchase 3,295,761 shares of common stock with an exercise price of $0.50 per share. 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. We determined the warrants had a fair value of $378,500 based on the Black-Scholes option-pricing model. The fair value was recorded as a discount on the note payable and was being amortized over the life of the note. We repriced the warrants during 2013 and took an additional charge to earnings of $1,269,380 related to the repricing. The warrants were exercised upon the repricing. On March 6, 2018, the note was amended to extend the due date to December 31, 2018. As of December 31, 2018, the outstanding balance was $1,000,000, plus accrued interest of $636,948. This note is in default. 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, a security agreement, and a warrant to purchase 10,000 shares of common stock at an exercise price to be determined pursuant to a specified formula and expires on September 30, 2023. During 2013, we issued $525,000 of 10% promissory notes and warrants to purchase 105,000 shares of common stock. We determined the warrants had a fair value of $60,068 based on the Black-Scholes option-pricing model. As part of our agreement with a proposed external financing source, the board repriced the warrants to $0.00, exercised the warrants, and issued shares of common stock. On August 15, 2017, loans of $316,666 and accrued interest of $120,898 were converted to 437,564 shares at $1.00 per share, which was ratified by a disinterested majority of the board of directors. The shares were recorded at fair value of $1,165,892, which resulted in a loss on settlement of debt of $728,328 on the conversion date. As of December 31, 2018, the loan balance was $158,334 and the accrued interest was $84,947. During 2013, we issued a note payable for $290,000 in connection with the reverse merger transaction with Broadband Network Affiliates, Inc., or BBNA. 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 December 31, 2018, the balance outstanding was $130,000, and the accrued interest as of that date was $50,857. 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. On August 15, 2017, principal of $618,500 and accrued interest of $207,731 were converted to 826,231 shares at $1.00 per share, which was ratified by a disinterested majority of the board of directors. The conversion was recorded at historical cost due to the related-party nature of the transaction. For the year ended December 31, 2018, we repaid $35,000. As of December 31, 2018, the note balance was $1,102,500 and the accrued interest was $511,818. 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 $247,045 as of December 31, 2018. The due date of April 17, 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 $18,917 as of December 31, 2018. 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 December 31, 2018, the balance outstanding was $177,000, plus accrued interest of $32,851. 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 December 31, 2018, the outstanding balance for all four notes was $80,000, plus accrued interest of $7,003. 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, September 30, 2018, or when we are otherwise able to pay. For the year ended December 31, 2018 and 2017, we repaid $29,474 and $39,432 respectively. As of December 31, 2018, the outstanding balance was $612,093 and the accrued interest was $80,568. On September 30, 2018, the note was amended to extend the maturity date to the earliest of a resolution of the Memphis litigation, December 31, 2018, or when we are otherwise able to pay. 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, in the aggregate principal amount of $979,156 as of December 31, 2018. 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 will receive 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 December 31, 2018, and December 31, 2017, the balance outstanding was $979,156 and $490,000, respectively. As of December 31, 2018, and December 31, 2017, the accrued interest was $71,542 and $613, respectively. As of December 31, 2018, and December 31, 2017, we had issued warrants to purchase 262,000 and 134,000 shares of common stock, respectively. As of December 31, 2018, and December 31, 2017, we determined that the warrants had a fair value of $34,975 and $41,044, respectively, based on the Black-Scholes 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 amortized $51,584 of debt discount. As of December 31, 2018, warrants to purchase 39,000 shares have been exercised (see Note 6), and the debt discount related to the exercised warrants has been fully expensed. As of December 31, 2018, $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 On May 22, 2018, we executed a convertible note with Collier Investments, LLC, an unaffiliated California company, in the amount of $281,250 with an interest rate of 12% per annum. The maturity date of the note is the earlier of: (i) seven months after the issuance date; or (ii) the date on which we consummate a capital-raising transaction for $6,000,000 or more primarily from the sale of equity in the company. The note, or any portion of it, can be convertible by the holder into shares of our common stock at any time after the issuance date. The conversion price is equal to the lesser of 80% multiplied by the price per share paid by the investors in a “qualified financing” (as defined in the note) or $0.20, subject to certain adjustments. At any time within a 90-day period following the issuance date, we have the option to prepay 145% of the outstanding balance. There were an original issue discount and transaction fees of $36,250, yielding net proceeds of $245,000 to us. In addition, we paid a finder’s fee of $20,914. The original issue discount and transaction finder fees are being amortized over the life of the note payable as debt issuance cost. As of December 31, 2018, we have fully amortized the debt issuance cost. As of December 31, 2018, we have recorded a debt discount of $5,267 for the fair value of derivative liability and fully amortized the debt discount. On December 14, 2018, L2 Capital LLC purchased this note payable from Collier Investments, LLC. The total consideration was $371,250, including the outstanding note balance, the accrued interest, and liquidated damages (see below for convertible note issued to L2 Capital on December 14, 2018). We recorded the loss on the extinguishment of debt of $279,432. 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 December 31, 2018, the balance outstanding was $10,000 and the accrued interest was $172. 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, LLC as commitment shares with a fair value of $21,200 in connection with the purchase of the note. We executed a 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 $371,250 for the fair value of derivative liability and fully amortized the debt discount. On December 31, 2018, the outstanding balance was $524,373, which includes a default penalty, and the accrued interest was $4,183. This note is in default. The following convertible note and notes payable were outstanding at December 31, 2018: 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 — 02/10/18 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 04/17/18 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 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 (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. ** Partially in default as of December 31, 2018 * Default interest rate The following convertible notes and notes payable were outstanding at December 31, 2017: Related Party Non Related Party Date of Issuance Maturity Date Interest Rate In Default Original Principal Principal at December 31, 2017 Discount at December 31 2017 Carrying Amount at December 31, 2017 Current Long-Term Current Long-Term 12/12/06 01/05/13 6.25 % Yes 58,670 12,272 — 12,272 — — 12,272 — 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 % 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 % No 2,265,000 1,137,500 — 1,137,500 1,137,500 — — — 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 04/17/18 10.00 % No 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 % No 490,000 490,000 41,044 448,956 — — — 448,956 11/06/17 (3 ) 10.00 % No 646,568 641,568 — 641,568 641,568 — — — Totals $ 5,048,594 $ 41,044 $ 5,007,550 $ 3,680,448 $ — $ 639,812 $ 687,290 (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) Principal and accrued interest will be due and payable at the earliest of A) resolution of Memphis litigation; B) December 31, 2018 , or C) when OTE is able to pay. * Default interest rate. Maturities of Long-Term Obligations for Five Years and Beyond The minimum principal payments of convertible notes and notes payable at December 31, 2018: 2019 $ 6,441,437 2020 — 2021 10,000 2022 and thereafter 158,334 Total $ 6,609,771 |
5. DERIVATIVE LIABILITY
5. DERIVATIVE LIABILITY | 12 Months Ended |
Dec. 31, 2018 | |
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 On August 19, 2018, the note issued to L2 Capital on February 19, 2018, went into default. In accordance with the terms of the note, at any time on or after the occurrence of any event of default, the conversion price per share would 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: Fair value at December 31, 2018 Quoted prices in active markets for identical assets/liabilities (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Derivative Liability $ 2,292,254 $ — $ — $ 2,292,254 The tables below set forth a summary of changes in fair value of our Level 3 financial liabilities for the year ended December 31, 2018. The tables reflect changes for all financial liabilities at fair value categorized as Level 3 as of December 31, 2018: Derivative Liability Derivative liability as of December 31, 2017 $ — Fair value at the commitment date for convertible instruments 1,690,124 Change in fair value of derivative liability 759,603 Reclassification to additional paid-in capital for financial instruments that ceased to be a derivative liability (157,473 ) Derivative liability as of December 31, 2018 $ 2,292,254 Change in Fair Value of Derivative Liability* Change in fair value of derivative liability at the beginning of year $ — Day one gains/(losses) on valuation 441,865 Gains/(losses) from the change in fair value of derivative liability 764,992 Change in fair value of derivative liability at the end of year $ 1,206,857 _______________ * Gains/(losses) related to the revaluation of Level 3 financial liabilities is included in “Change in fair value of derivative liability” in the accompanying consolidated audited 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: Commitment Date Remeasurement Date** Expected dividends 0% 0% Expected volatility 81% to 503% 87% to 515% Risk free interest rate 2.05% to 3.07% 2.19% to 2.60% Expected term (in years) 0.25 to 5.0 0.23 to 4.81 _______________ ** The fair value at the remeasurement date is equal to the carrying value on the balance sheet. |
6. STOCKHOLDERS' EQUITY
6. STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2018 | |
Stockholders' Equity Attributable to Parent [Abstract] | |
STOCKHOLDERS' EQUITY | Common Stock For the year ended December 31, 2017, individuals exercised Series D warrants to purchase 998,079 shares of common stock at a price of $0.75 per share for cash totaling $748,535. These warrants were related to the BBNA merger. For the year ended December 31, 2017, we issued 2,173,517 shares of common stock for services performed with a fair value of $2,388,478. For the year ended December 31, 2017, we issued 1,714,285 shares of common stock to L2 Capital, LLC with a fair value of $514,286 under the equity purchase agreement. For the year ended December 31, 2017, we issued 11,250 shares of common stock pursuant to our private placement memorandum with a fair value of $45,000 ($4.00 per share). As part of the Merger, 94,343,776 shares of common stock were issued to the shareholders of OTE in exchange for common stock in the merged company. As a part of our agreement with the Memphis Investors, the board repriced 14,792,500 warrants and 100,000 options to $0.00 per share, the Memphis Investors exercised the warrants and options, and we issued 14,792,500 shares of common stock. These warrants had a fair value of $6,769,562. Per ASC Topic 718, this exchange is treated as a modification. The incremental value of $6,769,562 measured as the excess of the fair value of the modified award over the fair value of the original award immediately before the modification using the Black-Scholes option pricing model was expensed fully when they were exercised. On May 8, 2017, JPF Venture Group, Inc., an investment entity that is majority-owned by our director, chief executive officer, and chief financial officer, transferred 148,588 shares of common stock for $111,440 to us to fulfill an overcommitment of Series D warrants. On May 9, 2017, we issued 536,490 shares of common stock to the former shareholders of TetriDyn Solutions, Inc. for the assumption of $617,032 of accrued expenses and $1,015,506 of convertible notes and notes payable from related and unrelated parties. We recorded a debit of $1,628,026 to additional paid-in capital as part of the recapitalization. On June 5, 2017, a note holder elected to convert a $25,000 convertible note payable for 1,806,298 shares of common stock ($0.014 per share). On June 29, 2017, the board of directors approved a stock bonus for our chief executive officer and and our senior financial advisor of 258,476 and 150,590 shares of common stock, respectively, at fair value of $920,399. These shares were issued on November 1, 2017. On August 3, 2017, we entered into a compensation agreement with our former legal counsel wherein we agreed to pay an outstanding legal bill in the amount of $197,950 by issuance of 65,000 shares covered by a registration statement on Form S-8, filed with the Securities and Exchange Commission on August 25, 2017. The former legal counsel may, at any time and from time to time following the filing of the Form S-8, elect to call for the issuance of shares as payment for the outstanding legal bill. As the shares are sold into the market, the outstanding balance will be reduced. On October 17, 2017, we issued 65,000 shares of common stock pursuant to the agreement with a fair value of $146,250. As of December 31, 2017, our former legal counsel had sold 704 shares with total proceeds of $1,133. As of December 31, 2017, the fair value of the 64,296 shares of common stock was $20,575 and $124,542 was recorded as a change in fair value of liability. As of December 31, 2018, our former legal counsel has sold the remaining 64,296 shares with total proceeds of $14,367. The legal fees balance of $182,450 remains outstanding as of December 31, 2018. On August 15, 2017, Series B note holders elected to convert $316,666 in notes payable for 316,666 shares of common stock at a conversion rate of $1.00. In addition, they converted accrued interest in the amount of $120,898 for 120,898 shares of common stock. The shares were recorded at fair value of $1,165,892. We recorded a loss on the settlement of debt of $728,328 on the conversion date. On August 15, 2017, Clean Energy note holders elected to convert $166,800 in notes payable for 139,000 shares of common stock at a conversion rate of $1.20. In addition, they converted accrued interest in the amount of $48,866 for 40,722 shares of common stock. On August 15, 2017, Jeremy P. Feakins & Associates, LLC, an investment entity that is majority-owned by our director, chief executive officer, and chief financial officer, elected to convert $618,500 in notes payable for 618,500 shares of common stock at a conversion rate of $1.00. In addition, it converted accrued interest in the amount of $207,731 for 207,731 shares of common stock. On September 8, 2017, JPF Venture Group, Inc., an investment entity that is majority-owned by our director, chief executive officer, and chief financial officer, elected to convert $50,000 in notes payable for 3,612,596 shares of common stock at a conversion rate of $0.014. In addition, it converted accrued interest in the amount of $6,342 for 458,198 shares of common stock. We entered into a settlement agreement to convert an outstanding payable balance totaling $180,000 into 360,000 shares of common stock. The shares were recorded at fair value of $556,875. We recorded a loss on settlement of debt of $376,875 on settlement date. On November 8, 2017, Jeremy P. Feakins & Associates LLC, an investment entity that is majority-owned by our director, chief executive officer, and chief financial officer, elected to convert $50,000 of Series B notes payable into 50,000 shares of common stock at a conversion rate of $1.00. In addition, accrued interest of $16,263 was converted into 16,263 shares of common stock. For the year ended December 31, 2018, we issued 673,345 shares of common stock for services performed with a fair value of $138,986. For the year ended December 31, 2018, we issued 2,300,000 shares of common stock for financing to L2 Capital with a fair value of $106,905 in cash, net of offering cost. For the year ended December 31, 2018, we issued 4,000,000 shares of common stock to L2 Capital for the conversion of a portion of our notes payable to L2 Capital in the amount of $114,078. For the year ended December 31, 2018, note holders elected to exercise warrants to purchase 39,000 shares of common stock for $9,520 in cash. For the year ended December 31, 2018, we sold 984,352 shares of common stock for $58,980 in cash. This includes 240,840 shares of common stock for $10,000 that were issued to our chief executive officer and an independent director. For the year ended December 31, 2018, we issued 400,000 shares to L2 Capital as a commitment fee for $21,200 to purchase our outstanding note payable from Collier Investments LLC. Warrants and Options We used the following assumptions for options during the year ended December 31, 2018: Expected volatility: 462% - 509% Expected lives: 3 years Risk-free interest rate: 2.01% - 2.85% Expected dividend yield: None We used the following assumptions for options during the year ended December 31, 2017: Expected volatility: 485% Expected lives: 3 Years Risk-free interest rate: 1.98% - 2.01% Expected dividend yield: None During 2012, we issued warrants to purchase 1,075,000 shares of common stock in conjunction with Series A notes payable that were exercisable at a price of $3.00 per share and expired on March 31, 2017. The warrants were fully exercised at $0.00 per share upon board of directors’ approval during the year ended December 31, 2017. During 2013, we issued warrants to purchase 105,000 shares of common stock in conjunction with Series B notes payable that were exercisable at a price to be determined pursuant to a specified formula. Effective July 21, 2014, our common stock was approved for listing on the GXG Markets First Quote platform with an $0.85 per share price, establishing a price of $0.68 per share for the warrants and making them all exercisable. The warrants were fully exercised at $0.00 per share upon board of directors’ approval during the year ended December 31, 2017. During 2013, we issued warrants to purchase 300,000 shares of common stock, with an exercise price equal to the greater of a 50% discount of the stock price at our initial public offering of shares or $0.425 per share (subject to adjustment), in conjunction with a note payable to Jeremy P. Feakins & Associates, LLC, an entity owned by our chief executive officer, in the amount of $100,000. Effective July 21, 2014, we were approved for listing on the GXG Markets First Quote platform with an $0.85 per share price, establishing a price of $0.425 per share for the warrants and making them all exercisable. The warrants were fully exercised at $0.00 upon board of directors’ approval during the year ended December 31, 2017. As part of the merger with BBNA, we assumed outstanding warrants to purchase 10,000,000 shares of common stock with an expiration date of December 31, 2018. These warrants are grouped into five tranches of 2,000,000 shares. The pricing for each tranche was as follows: Series A and Series B were $0.50 per share; Series C was $0.75 per share; Series D was $1.00 per share; and Series E was $1.25 per share. During 2014, 5,786,635 of these warrants were exercised and 1,157,989 were exercised during 2015. In addition, we repriced the Series D warrants to $0.75 per share and Series E warrants to $0.50 per share. During the year ended December 31, 2017, 998,079 were exercised. During 2014, we issued warrants to purchase 12,912,500 shares of common stock, with an exercise price of $0.425 per share (subject to adjustment) in conjunction with a note payable to Jeremy P. Feakins & Associates, LLC, an entity owned by our chief executive officer, in the amount of $2,265,000. On April 4, 2016, the note holder agreed to amend the note to extend the due date of the note to December 31, 2017. We did not modify the terms of the warrants. The warrants were fully exercised at $0.00 per share upon board of directors’ approval during the year ended December 31, 2017. During 2014, we issued warrants to purchase 300,000 shares of common stock, with an exercise price of $1.00 per share and an expiration date of December 31, 2018, in conjunction with notes payable to individuals, including a then-related party, in the amount of $300,000. The warrants were fully exercised at $0.00 per share upon board of directors’ approval during the year ended December 31, 2017. The following table summarizes all warrants outstanding and exercisable for the years ended December 31, 2018 and 2017: Warrants Number of Warrants Weighted Average Exercise Price Balance at December 31, 2016 15,912,210 $ 0.76 Granted 134,000 * Exercised (998,079 ) $ 0.31 Exercised (re-priced to $0.00) (14,692,500 ) $ 0.00 Forfeited (221,631 ) $ 0.00 Balance at December 31, 2017 134,000 $ 0.76 Granted 255,073 $ 0.21 Exercised (39,000 ) $ 0.24 Forfeited — $ 0.00 Balance at December 31, 2018 350,073 $ 0.18 Exercisable December 31, 2018 350,073 $ 0.18 __________ *Discount of 15% of CPWR closing price on OTCQB the day before the warrant is exercised. 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 $0.06 per share on December 31, 2018. The intrinsic value of warrants to purchase 350,073 shares on that date was $3,408. During the year ended December 31, 2018, we issued warrants to purchase 125,073 shares of our common stock, none of which has been exercised, to Craft Capital Management, LLC, as a finder’s fee for debt and equity transactions between L2 Capital and us. As of December 31, 2017, we issued warrants to purchase 134,000 shares of our common stock to note holders. During 2018, we issued additional warrants to purchase 128,000 shares of our common stock (see Note 4). During 2018, the note holders elected to exercise warrants and purchase 39,000 shares of common stock for $9,520 in cash (see Note 6). As of December 31, 2018, we have outstanding warrants to purchase 223,000 shares of our common stock. On, January 1, 2015, we issued to our independent director, who was then vice president shareholder relations, three-year options to purchase an aggregate of 100,000 shares of common stock at $0.75 per share, which would expire on January 1, 2018. The options vest in four segments of 25,000 shares per quarter commencing on: March 31, 2015; June 30, 2015; September 30, 2015, and December 31, 2015. We calculated the fair value of the options by using the Black-Scholes option-pricing model with the following weighted average assumptions: no dividend yield for all the years; expected volatility of 54%; risk-free interest rate of 0.25%; and an expected life of one year. The fair value of the options was $22,440 or $0.2244 per option. These options were fully exercised at $0.00 upon approval by our board of directors during the year ended December 31, 2017. The following table summarizes all options outstanding and exercisable for the years ended December 31, 2018 and 2017: Number of Weighted Average Exercise Options Price Balance at December 31, 2016 100,000 $ 0.75 Granted — — Exercised (100,000 ) $ 0.75 Forfeited — — Balance at December 31, 2017 — — Granted — — Exercised — — Forfeited — — Balance at December 31, 2018 — — Exercisable December 31, 2018 — — |
7. INCOME TAX
7. INCOME TAX | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAX | The Jobs Act significantly revised the U.S. corporate income tax law by lowering the corporate federal income tax rate from 35% to 21%. 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 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. A reconciliation of income tax expense and the amount computed by applying the statutory federal income tax rate of 18.9% to the income before provision for income taxes is as follows: For the Years Ended December 31 2018 2017 Statutory rate applied to loss before income taxes $ (2,276,031 ) $ (5,903,355 ) Increase (decrease) in income taxes results from: Nondeductible permanent differences 806,885 4,446,014 Change in tax rate estimates — 3,566,781 Change in valuation allowance 1,469,146 (2,109,440 ) Income tax expense (benefit) $ — $ — Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and liabilities are as follows: For the Years Ended December 31 2018 2017 Depreciation and impairment $ 2,358,860 $ 2,100,958 Operating loss carryforwards 7,917,151 6,705,907 Gross deferred tax assets 10,276,011 8,806,865 Valuation allowance (10,276,011 ) (8,806,865 ) Net deferred income tax asset $ — $ — We have net operating loss carryforwards for income tax purposes of approximately $27,400,000. This loss is allowed to be offset against future income. The tax benefits relating to all timing differences have been fully reserved for in the valuation allowance account due to the substantial losses incurred through December 31, 2018. The change in the valuation allowance for the years ended December 31, 2018 and 2017 was an increase (decrease) of $1,469,146 and $(2,109,440), respectively. |
8. COMMITMENTS AND CONTINGENCIE
8. COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2018 | |
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. During the year ended December 31, 2018, we executed 12 put options for L2 Capital to purchase 2,300,000 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 or equity transaction or to finance a merger/acquisition 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, grant any option to purchase or sell, 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 December 31, 2018, we have issued to Craft warrants to purchase 125,073 shares of common stock, none of which has been exercised, as a finder’s fee for debt and equity transactions between L2 Capital and us. On August 7, 2018, we signed a non-binding letter of intent proposing to acquire a heavy-duty commercial air conditioning company. We believe that the acquisition will help support our existing projects and enable us to enter new markets. Closing is subject to additional due diligence, the negotiation of definitive agreements, satisfaction of agreed conditions, and financing. We continue to focus our efforts on satisfying the above conditions. 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. |
9. CONSULTING AGREEMENTS
9. CONSULTING AGREEMENTS | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONSULTING AGREEMENTS | For the year ended December 31, 2018, we issued 673,345 shares of common stock for services performed with a fair value of $138,986. 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 December 31, 2018, we have accrued the share compensation at fair value totaling $1,600. On August 14, 2018, we entered into a consulting agreement to pay $40,000 by issuing shares of common stock. As of December 31, 2018, we have not issued the shares and have accrued the amount. |
10. EMPLOYMENT AGREEMENTS
10. EMPLOYMENT AGREEMENTS | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
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. |
11. RELATED-PARTY TRANSACTIONS
11. RELATED-PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
RELATED-PARTY TRANSACTIONS | For the years ended December 31, 2018 and 2017, we paid rent of $120,000 and $95,000, respectively, to a company controlled by our chief executive officer under an operating lease agreement. 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. On August 15, 2017, principal of $618,500 and accrued interest of $207,731 were converted to 826,231 shares at $1.00 per share, which was ratified by a disinterested majority of the board of directors. The conversion was recorded at historical cost due to the related-party nature of the transaction. For the year ended December 31, 2018, we repaid $35,000. As of December 31, 2018, the note balance was $1,102,500 and the accrued interest was $511,818. This note is in default. During the year ended December 31, 2017, we made a repayment of note payable to a related party in the amount of $64,432. 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. During the year ended December 31, 2017, we received an additional $2,000 and repaid $25,000. The outstanding balance was $177,000 and accrued interest was $32,851 as of December 31, 2018. On May 8, 2017, JPF Venture Group. Inc., an investment entity that is majority-owned by Jeremy Feakins, our director, chief executive officer, and chief financial officer transferred 148,558 shares of common stock for $111,440 to us to fulfill an over commitment of "D'" warrants. On June 5, 2017, a note holder and a shareholder elected to convert a $25,000 convertible note payable for 1,806,298 shares of common stock ($0.014 per share). On September 8, 2017, JPF Venture Group, Inc., an investment entity that is majority-owned by our director, chief executive officer, and chief financial officer elected to convert $50,000 in notes payable for 3,612,596 shares of common stock at a conversion rate of $0.014 per share. In addition, accrued interest in the amount of $6,342 was converted to 458,198 shares. 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 December 31, 2018, the outstanding balance was $612,093 and the accrued interest was $80,568. For the year ended December 31, 2018 and 2017, we repaid $29,474 and $39,432, respectively. On September 30, 2018, the note was amended to extend the maturity date to the earliest of a resolution of the Memphis litigation, December 31, 2018, or when we are otherwise able to pay. This note is in default. On November 8, 2017, Jeremy P. Feakins & Associates. LLC, an investment entity that is majority-owned by Jeremy Feakins, our director, chief executive officer and chief financial officer, a Series B note holder, elected to convert $50,000 in notes payable for 50,000 shares of common stock at a conversion rate of $1.00. In addition it converted accrued interest in the amount of $16,263 for 16,263 shares. We remain liable for the loans made to us by JPF Venture Group, Inc. before the 2017 Merger. As of December 31, 2018, the outstanding balance of these loans was $581,880 and the accrued interest was $125,381. All of these notes are in default. In December 2018, Jeremy P. Feakins, our chief executive officer, made two advances to us totaling $4,600. The total amount was repaid on January 23, 2019. For the year ended December 31, 2018, we sold 240,840 shares of common stock for $10,000 in cash to our chief executive officer and an independent director. 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, the outstanding balance was $12,500, plus accrued interest of $1,754. |
12. SUBSEQUENT EVENTS
12. SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 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., Subsequent to December 31, 2018, L2 Capital LLC exercised four loan conversions totaling $49,614 and was issued 1,800,000 shares. On January 23, 2019, we repaid advances totaling $4,600 to Jeremy P. Feakins, our chief executive officer. |
1. NATURE OF BUSINESS AND BAS_2
1. NATURE OF BUSINESS AND BASIS OF PRESENTATION (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Source of Business and Basis of Presentation | Ocean Thermal Energy Corporation is currently in the businesses of: ● OTEC and SWAC/LWAC ● EcoVillages We expect to use our technology in the development of our EcoVillages, which should add significant value to our existing line of business. On May 9, 2017, TetriDyn Solutions, Inc. (“TDYS”) acquired Ocean Thermal Energy Corporation (“OTE”) in a merger (the “Merger”), in which outstanding securities of OTE were converted into securities of TDYS, which changed its name to Ocean Thermal Energy Corporation. For accounting purposes, this transaction was accounted for as a reverse merger and has been treated as a recapitalization of TDYS with OTE as the accounting acquirer. The historical financial statements of the accounting acquirer became the financial statements of the company. We did not recognize goodwill or any intangible assets in connection with the transaction. The 110,273,767 shares issued to the shareholders of the accounting acquirer in conjunction with the share exchange transaction have been presented as outstanding for all periods. The historical financial statements include the operations of the accounting acquirer for all periods presented and the accounting acquiree for the period from May 9, 2017, through December 31, 2017. Our accounting year end is December 31, which was the year-end of the accounting acquirer. On May 25, 2017, we received approval from the Financial Industry Regulatory Authority, Inc. (“FINRA”) to change the trading symbol for our common stock to “CPWR,” pronounced “sea power” to reflect our core technology, from “TDYS.” Our common stock began formally trading under the symbol “CPWR” on June 21, 2017. The 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). |
Principal Subsidiary Undertakings | Our consolidated financial statements for the years ended December 31, 2018 and 2017, include the following subsidiaries: 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 Ocean Thermal Energy UK Limited England and Wales Dormant 07/22/2010 OTEC Innovation Group Inc. Delaware, USA Dormant 06/02/2011 OTE-BM Energy Partners LLC Delaware, USA Dormant 06/02/2011 OTE Bahamas O&M Ltd. Bahamas Dormant 09/07/2011 Ocean Thermal Energy Holdings Ltd. Bahamas Dormant 03/05/2012 Ocean Thermal Energy Cayman Ltd. Caymans Dormant 03/26/2013 OTE HC Ltd. Caymans Dormant 03/26/2013 Ocean Thermal Energy USVI, Inc. Virgin Islands Dormant 07/12/2016 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 December 31, 2018 and 2017, 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: December 31, 2018 Headquarters U.S. Territories Other Total Revenue $ — $ — $ — $ — Assets $ 9,070 $ — $ — $ 9,070 Net Loss $ (6,987,374 ) $ (892,639 ) $ — $ (7,880,013 ) Property and equipment $ 672 $ — $ — $ 672 Depreciation $ 680 $ — $ — $ 680 Additions to Property and equipment $ — $ — $ — $ — Impairment of assets under construction $ — $ 892,639 $ — $ 892,639 December 31, 2017 Headquarters U.S. Territories Other Total Revenue $ — $ — $ — $ — Assets $ 451,367 $ 892,639 $ — $ 1,344,006 Net loss $ (14,542,677 ) $ — $ (48,998 ) $ (14,591,675 ) Property and equipment $ 1,352 $ — $ — $ 1,352 Assets under construction $ — $ 892,639 $ — $ 892,639 Depreciation $ 1,014 $ — $ — $ 1,014 Additions to assets under construction $ — $ 95,352 $ — $ 95,352 Impairment of assets under construction $ — $ — $ 48,998 $ 48,998 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. For the year ended December 31, 2017, the U.S. territories are comprised of U.S. Virgin Islands project (approx. $728,000) and Guam project (approx. $165,000). Other territories are comprised of Cayman Islands project); however, during the year ended December 31, 2017, $48,998 of Cayman Islands assets under construction was considered to be impaired due to the uncertainty of the project and were written off. The additions to assets under construction in 2017 were primarily salaries and consulting services. |
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 currently have several EcoVillage projects in the development stage. We capitalize direct interest costs associated with the projects. As of December 31, 2018 and 2017, 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: Years Computer Equipment 3 Software 5 |
Fair Value | Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures ● 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 December 31, 2018, and December 31, 2017, 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 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. As of December 31, 2018, and 2017, $0 and $179,855, respectively, were deposited in excess of FDIC-insured limits. Management believes the risk in these situations to be minimal. |
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 134,000 shares issuable upon the exercise of warrants and 47,046,431 and 7,056,721 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 years ended December 31, 2018 and 2017, respectively. |
Revenue Recognition | In May 2014, the FASB issued Accounting Standard Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) |
Recent Accounting Pronouncements | In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting Revenue from Contracts from Customers 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. |
1. NATURE OF BUSINESS AND BAS_3
1. NATURE OF BUSINESS AND BASIS OF PRESENTATION (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Subsidiaries | 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 Ocean Thermal Energy UK Limited England and Wales Dormant 07/22/2010 OTEC Innovation Group Inc. Delaware, USA Dormant 06/02/2011 OTE-BM Energy Partners LLC Delaware, USA Dormant 06/02/2011 OTE Bahamas O&M Ltd. Bahamas Dormant 09/07/2011 Ocean Thermal Energy Holdings Ltd. Bahamas Dormant 03/05/2012 Ocean Thermal Energy Cayman Ltd. Caymans Dormant 03/26/2013 OTE HC Ltd. Caymans Dormant 03/26/2013 Ocean Thermal Energy USVI, Inc. Virgin Islands Dormant 07/12/2016 |
Business segments | December 31, 2018 Headquarters U.S. Territories Other Total Revenue $ — $ — $ — $ — Assets $ 9,070 $ — $ — $ 9,070 Net Loss $ (6,987,374 ) $ (892,639 ) $ — $ (7,880,013 ) Property and equipment $ 672 $ — $ — $ 672 Depreciation $ 680 $ — $ — $ 680 Additions to Property and equipment $ — $ — $ — $ — Impairment of assets under construction $ — $ 892,639 $ — $ 892,639 December 31, 2017 Headquarters U.S. Territories Other Total Revenue $ — $ — $ — $ — Assets $ 451,367 $ 892,639 $ — $ 1,344,006 Net loss $ (14,542,677 ) $ — $ (48,998 ) $ (14,591,675 ) Property and equipment $ 1,352 $ — $ — $ 1,352 Assets under construction $ — $ 892,639 $ — $ 892,639 Depreciation $ 1,014 $ — $ — $ 1,014 Additions to assets under construction $ — $ 95,352 $ — $ 95,352 Impairment of assets under construction $ — $ — $ 48,998 $ 48,998 |
Estimated useful lives | Years Computer Equipment 3 Software 5 |
3. PROPERTY AND EQUIPMENT (Tabl
3. PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property plant and equipment | Property and equipment as of December 31, 2018, consist of the following: Accumulated Net Book Useful Life Cost Depreciation Value Life Computer & Office Equipment $ 13,751 $ 13,079 $ 672 3 Years Software (Video System) 19,061 19,061 — 5 Years $ 32,812 $ 32,140 $ 672 Property and equipment as of December 31, 2017, consist of the following: Accumulated Net Book Useful Life Cost Depreciation Value Life Computer & Office Equipment $ 13,751 $ 12,399 $ 1,352 3 Years Software (Video System) 19,061 19,061 — 5 Years Construction in Process 892,639 892,639 $ 925,451 $ 31,460 $ 893,991 |
4. CONVERTIBLE NOTES AND NOTE_2
4. CONVERTIBLE NOTES AND NOTES PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of debt | 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 — 02/10/18 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 04/17/18 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 (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. ** Partially in default as of December 31, 2018 * Default interest rate Related Party Non Related Party Date of Issuance Maturity Date Interest Rate In Default Original Principal Principal at December 31, 2017 Discount at December 31 2017 Carrying Amount at December 31, 2017 Current Long-Term Current Long-Term 12/12/06 01/05/13 6.25 % Yes 58,670 12,272 — 12,272 — — 12,272 — 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 % 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 % No 2,265,000 1,137,500 — 1,137,500 1,137,500 — — — 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 04/17/18 10.00 % No 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 % No 490,000 490,000 41,044 448,956 — — — 448,956 11/06/17 (3 ) 10.00 % No 646,568 641,568 — 641,568 641,568 — — — Totals $ 5,048,594 $ 41,044 $ 5,007,550 $ 3,680,448 $ — $ 639,812 $ 687,290 (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) Principal and accrued interest will be due and payable at the earliest of A) resolution of Memphis litigation; B) December 31, 2018 , or C) when OTE is able to pay. * Default interest rate. |
Minimum principal payments of notes payable | 2019 $ 6,441,437 2020 — 2021 10,000 2022 and thereafter 158,334 Total $ 6,609,771 |
5. DERIVATIVE LIABILITY (Tables
5. DERIVATIVE LIABILITY (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Derivative Liability [Abstract] | |
Fair value hierarchy | Fair value at December 31, 2018 Quoted prices in active markets for identical assets/liabilities (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Derivative Liability $ 2,292,254 $ — $ — $ 2,292,254 |
Changes in fair value financial liabilities | Derivative Liability Derivative liability as of December 31, 2017 $ — Fair value at the commitment date for convertible instruments 1,690,124 Change in fair value of derivative liability 759,603 Reclassification to additional paid-in capital for financial instruments that ceased to be a derivative liability (157,473 ) Derivative liability as of December 31, 2018 $ 2,292,254 Change in Fair Value of Derivative Liability* Change in fair value of derivative liability at the beginning of year $ — Day one gains/(losses) on valuation 441,865 Gains/(losses) from the change in fair value of derivative liability 764,992 Change in fair value of derivative liability at the end of year $ 1,206,857 _______________ * Gains/(losses) related to the revaluation of Level 3 financial liabilities is included in “Change in fair value of derivative liability” in the accompanying consolidated audited statement of operations. |
Assumptions | Commitment Date Remeasurement Date** Expected dividends 0% 0% Expected volatility 81% to 503% 87% to 515% Risk free interest rate 2.05% to 3.07% 2.19% to 2.60% Expected term (in years) 0.25 to 5.0 0.23 to 4.81 _______________ ** The fair value at the remeasurement date is equal to the carrying value on the balance sheet. |
6. STOCKHOLDERS' EQUITY (Tables
6. STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Stockholders' Equity Attributable to Parent [Abstract] | |
Assumptions used | We used the following assumptions for options during the year ended December 31, 2018: Expected volatility: 462% - 509% Expected lives: 3 years Risk-free interest rate: 2.01% - 2.85% Expected dividend yield: None We used the following assumptions for options during the year ended December 31, 2017: Expected volatility: 485% Expected lives: 3 Years Risk-free interest rate: 1.98% - 2.01% Expected dividend yield: None |
Schedule of warrants | Warrants Number of Warrants Weighted Average Exercise Price Balance at December 31, 2016 15,912,210 $ 0.76 Granted 134,000 * Exercised (998,079 ) $ 0.31 Exercised (re-priced to $0.00) (14,692,500 ) $ 0.00 Forfeited (221,631 ) $ 0.00 Balance at December 31, 2017 134,000 $ 0.76 Granted 255,073 $ 0.21 Exercised (39,000 ) $ 0.24 Forfeited — $ 0.00 Balance at December 31, 2018 350,073 $ 0.18 Exercisable December 31, 2018 350,073 $ 0.18 __________ *Discount of 15% of CPWR closing price on OTCQB the day before the warrant is exercised. |
Schedule of stock options | Number of Weighted Average Exercise Options Price Balance at December 31, 2016 100,000 $ 0.75 Granted — — Exercised (100,000 ) $ 0.75 Forfeited — — Balance at December 31, 2017 — — Granted — — Exercised — — Forfeited — — Balance at December 31, 2018 — — Exercisable December 31, 2018 — — |
7. INCOME TAX (Tables)
7. INCOME TAX (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Reconciliation of income tax expense | For the Years Ended December 31 2018 2017 Statutory rate applied to loss before income taxes $ (2,276,031 ) $ (5,903,355 ) Increase (decrease) in income taxes results from: Nondeductible permanent differences 806,885 4,446,014 Change in tax rate estimates — 3,566,781 Change in valuation allowance 1,469,146 (2,109,440 ) Income tax expense (benefit) $ — $ — |
Schedule of deferred income taxes | For the Years Ended December 31 2018 2017 Depreciation and impairment $ 2,358,860 $ 2,100,958 Operating loss carryforwards 7,917,151 6,705,907 Gross deferred tax assets 10,276,011 8,806,865 Valuation allowance (10,276,011 ) (8,806,865 ) Net deferred income tax asset $ — $ — |
1. NATURE OF BUSINESS AND BAS_4
1. NATURE OF BUSINESS AND BASIS OF PRESENTATION (Details) | 12 Months Ended |
Dec. 31, 2018 | |
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. 4, 2011 |
OTE BM Ltd. | |
Place of incorporation/establishment | Bahamas |
Principal activities | OTEC/SDC development in the Bahamas |
Date formed | Sep. 7, 2011 |
OCEES International Inc. | |
Place of incorporation/establishment | Hawaii, USA |
Principal activities | Research and development for the Pacific Rim |
Date formed | Jan. 21, 1998 |
Ocean Thermal Energy UK Limited | |
Place of incorporation/establishment | England and Wales |
Principal activities | Dormant |
Date formed | Jul. 22, 2010 |
OTEC Innovation Group Inc. | |
Place of incorporation/establishment | Delaware, USA |
Principal activities | Dormant |
Date formed | Jun. 2, 2011 |
OTE-BM Energy Partners LLC | |
Place of incorporation/establishment | Delaware, USA |
Principal activities | Dormant |
Date formed | Jun. 2, 2011 |
OTE Bahamas O&M Ltd. | |
Place of incorporation/establishment | Bahamas |
Principal activities | Dormant |
Date formed | Sep. 7, 2011 |
Ocean Thermal Energy Holdings Ltd. | |
Place of incorporation/establishment | Bahamas |
Principal activities | Dormant |
Date formed | Mar. 5, 2012 |
Ocean Thermal Energy Cayman Ltd. | |
Place of incorporation/establishment | Caymans |
Principal activities | Dormant |
Date formed | Mar. 26, 2013 |
OTE HC Ltd. | |
Place of incorporation/establishment | Caymans |
Principal activities | Dormant |
Date formed | Mar. 26, 2013 |
Ocean Thermal Energy USVI, Inc. | |
Place of incorporation/establishment | Virgin Islands |
Principal activities | Dormant |
Date formed | Jul. 12, 2016 |
1. NATURE OF BUSINESS AND BAS_5
1. NATURE OF BUSINESS AND BASIS OF PRESENTATION (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue | $ 0 | $ 0 |
Assets | 9,070 | 1,344,006 |
Net loss | (7,880,013) | (14,591,675) |
Property and equipment | 672 | 893,991 |
Assets under construction | 892,639 | |
Depreciation | 680 | 1,014 |
Additions to assets under construction | 0 | 95,352 |
Impairment of assets under construction | 892,639 | 48,998 |
Headquarters [Member] | ||
Revenue | 0 | 0 |
Assets | 9,070 | 451,367 |
Net loss | (6,987,374) | (14,542,677) |
Property and equipment | 672 | 1,352 |
Assets under construction | 0 | |
Depreciation | 680 | 1,014 |
Additions to assets under construction | 0 | 0 |
Impairment of assets under construction | 0 | 0 |
US Territories [Member] | ||
Revenue | 0 | 0 |
Assets | 0 | 892,639 |
Net loss | (892,639) | 0 |
Property and equipment | 0 | 0 |
Assets under construction | 892,639 | |
Depreciation | 0 | 0 |
Additions to assets under construction | 0 | 95,352 |
Impairment of assets under construction | 892,639 | 0 |
Other [Member] | ||
Revenue | 0 | 0 |
Assets | 0 | 0 |
Net loss | 0 | (48,998) |
Property and equipment | 0 | 0 |
Assets under construction | 0 | |
Depreciation | 0 | 0 |
Additions to assets under construction | 0 | 0 |
Impairment of assets under construction | $ 0 | $ 48,998 |
1. NATURE OF BUSINESS AND BAS_6
1. NATURE OF BUSINESS AND BASIS OF PRESENTATION (Details 2) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Computer Equipment | ||
Estimated useful lives | 3 years | |
Software | ||
Estimated useful lives | 5 years | 5 years |
1. NATURE OF BUSINESS AND BAS_7
1. NATURE OF BUSINESS AND BASIS OF PRESENTATION (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cash in excess of FDIC | $ 0 | $ 179,855 |
Warrants | ||
Antidilutive shares excluded from EPS calculation | 350,073 | 134,000 |
Convertible Notes | ||
Antidilutive shares excluded from EPS calculation | 47,046,431 | 7,056,721 |
2. GOING CONCERN (Details Narra
2. GOING CONCERN (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Going Concern | |||
Net loss | $ (7,880,013) | $ (14,591,675) | |
Cash used in operating activities | (1,638,582) | (1,469,169) | |
Working capital deficiency | (17,601,515) | ||
Stockholders' deficiency | $ (17,769,177) | $ (10,509,554) | $ (8,664,237) |
3. PROPERTY AND EQUIPMENT (Deta
3. PROPERTY AND EQUIPMENT (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cost | $ 32,812 | $ 925,451 |
Accumulated depreciation | 32,140 | 31,460 |
Net book value | 672 | 893,991 |
Computer & Office Equipment | ||
Cost | 13,751 | 13,751 |
Accumulated depreciation | 13,079 | 12,399 |
Net book value | $ 672 | $ 1,352 |
Estimated useful life | 3 years | 3 years |
Software | ||
Cost | $ 19,061 | $ 19,061 |
Accumulated depreciation | 19,061 | 19,061 |
Net book value | $ 0 | $ 0 |
Estimated useful life | 5 years | 5 years |
Construction in Process | ||
Cost | $ 892,639 | |
Accumulated depreciation | 0 | |
Net book value | $ 892,639 |
3. PROPERTY AND EQUIPMENT (De_2
3. PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 680 | $ 1,014 |
4. CONVERTIBLE NOTES AND NOTE_3
4. CONVERTIBLE NOTES AND NOTES PAYABLE (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Original principal | $ 8,515,098 | |
Current principal | 6,634,206 | $ 5,048,594 |
Current discount | 24,435 | 41,044 |
Carrying Amount | 6,609,771 | 5,007,550 |
Notes payable related party, net current | 2,485,973 | 3,680,448 |
Notes payable related party, net | 0 | 0 |
Notes payable current | 3,955,464 | 639,812 |
Notes payable | $ 168,334 | $ 687,290 |
Note Payable 1 [Member] | ||
Date of Issuance | Dec. 12, 2006 | Dec. 12, 2006 |
Maturity date | Jan. 5, 2013 | Jan. 5, 2013 |
Interest rate | 6.25% | 6.25% |
Original principal | $ 58,670 | $ 58,670 |
Current principal | 9,379 | 12,272 |
Current discount | 0 | 0 |
Carrying Amount | 9,379 | 12,272 |
Notes payable related party, net current | 0 | 0 |
Notes payable related party, net | 0 | 0 |
Notes payable current | 9,379 | 12,272 |
Notes payable | $ 0 | $ 0 |
Note Payable 2 [Member] | ||
Date of Issuance | Dec. 1, 2007 | Dec. 1, 2007 |
Maturity date | Sep. 1, 2015 | Sep. 1, 2015 |
Interest rate | 7.00% | 7.00% |
Original principal | $ 125,000 | $ 125,000 |
Current principal | 85,821 | 85,821 |
Current discount | 0 | 0 |
Carrying Amount | 85,821 | 85,821 |
Notes payable related party, net current | 0 | 0 |
Notes payable related party, net | 0 | 0 |
Notes payable current | 85,821 | 85,821 |
Notes payable | $ 0 | $ 0 |
Note Payable 3 [Member] | ||
Date of Issuance | Sep. 25, 2009 | Sep. 25, 2009 |
Maturity date | Oct. 25, 2011 | Oct. 25, 2011 |
Interest rate | 5.00% | 5.00% |
Original principal | $ 50,000 | $ 50,000 |
Current principal | 50,000 | 50,000 |
Current discount | 0 | 0 |
Carrying Amount | 50,000 | 50,000 |
Notes payable related party, net current | 0 | 0 |
Notes payable related party, net | 0 | 0 |
Notes payable current | 50,000 | 50,000 |
Notes payable | $ 0 | $ 0 |
Note Payable 4 [Member] | ||
Date of Issuance | Dec. 23, 2009 | Dec. 23, 2009 |
Maturity date | Dec. 23, 2014 | Dec. 23, 2014 |
Interest rate | 7.00% | 7.00% |
Original principal | $ 100,000 | $ 100,000 |
Current principal | 94,480 | 94,480 |
Current discount | 0 | 0 |
Carrying Amount | 94,480 | 94,480 |
Notes payable related party, net current | 0 | 0 |
Notes payable related party, net | 0 | 0 |
Notes payable current | 94,480 | 94,480 |
Notes payable | $ 0 | $ 0 |
Note Payable 5 [Member] | ||
Date of Issuance | Dec. 23, 2009 | Dec. 23, 2009 |
Maturity date | Dec. 23, 2014 | Dec. 23, 2014 |
Interest rate | 7.00% | 7.00% |
Original principal | $ 25,000 | $ 25,000 |
Current principal | 23,619 | 23,619 |
Current discount | 0 | 0 |
Carrying Amount | 23,619 | 23,619 |
Notes payable related party, net current | 0 | 0 |
Notes payable related party, net | 0 | 0 |
Notes payable current | 23,619 | 23,619 |
Notes payable | $ 0 | $ 0 |
Note Payable 6 [Member] | ||
Date of Issuance | Dec. 23, 2009 | Dec. 23, 2009 |
Maturity date | Dec. 23, 2014 | Dec. 23, 2014 |
Interest rate | 7.00% | 7.00% |
Original principal | $ 25,000 | $ 25,000 |
Current principal | 23,620 | 23,620 |
Current discount | 0 | 0 |
Carrying Amount | 23,620 | 23,620 |
Notes payable related party, net current | 0 | 0 |
Notes payable related party, net | 0 | 0 |
Notes payable current | 23,620 | 23,620 |
Notes payable | $ 0 | $ 0 |
Note Payable 7 [Member] | ||
Date of Issuance | Feb. 3, 2012 | |
Maturity date | Dec. 31, 2018 | |
Interest rate | 10.00% | |
Original principal | $ 1,000,000 | |
Current principal | 1,000,000 | |
Current discount | 0 | |
Carrying Amount | 1,000,000 | |
Notes payable related party, net current | 1,000,000 | |
Notes payable related party, net | 0 | |
Notes payable current | 0 | |
Notes payable | $ 0 | |
Note Payable 8 [Member] | ||
Date of Issuance | Feb. 10, 2018 | |
Maturity date | Dec. 31, 2018 | |
Interest rate | 10.00% | |
Original principal | $ 1,000,000 | |
Current principal | 1,000,000 | |
Current discount | 0 | |
Carrying Amount | 1,000,000 | |
Notes payable related party, net | 0 | |
Notes payable current | 1,000,000 | |
Notes payable | $ 0 | |
Note Payable 9 [Member] | ||
Date of Issuance | Aug. 15, 2013 | Aug. 15, 2013 |
Maturity date | Oct. 31, 2023 | Oct. 31, 2023 |
Interest rate | 10.00% | 10.00% |
Original principal | $ 525,000 | $ 525,000 |
Current principal | 158,334 | 158,334 |
Current discount | 0 | 0 |
Carrying Amount | 158,334 | 158,334 |
Notes payable related party, net current | 0 | 0 |
Notes payable related party, net | 0 | |
Notes payable current | 0 | 0 |
Notes payable | $ 158,334 | $ 158,334 |
Note Payable 10 [Member] | ||
Date of Issuance | Dec. 31, 2013 | Dec. 31, 2013 |
Maturity date | Dec. 31, 2015 | Dec. 31, 2015 |
Interest rate | 8.00% | 8.00% |
Original principal | $ 290,000 | $ 290,000 |
Current principal | 130,000 | 130,000 |
Current discount | 0 | 0 |
Carrying Amount | 130,000 | 130,000 |
Notes payable related party, net current | 0 | 130,000 |
Notes payable related party, net | 0 | 0 |
Notes payable current | 130,000 | 0 |
Notes payable | $ 0 | $ 0 |
Note Payable 11 [Member] | ||
Date of Issuance | Apr. 1, 2014 | Apr. 1, 2014 |
Maturity date | Dec. 31, 2018 | Dec. 31, 2018 |
Interest rate | 10.00% | 10.00% |
Original principal | $ 2,265,000 | $ 2,265,000 |
Current principal | 1,102,500 | 1,137,500 |
Current discount | 0 | 0 |
Carrying Amount | 1,102,500 | 1,137,500 |
Notes payable related party, net current | 1,102,500 | 1,137,500 |
Notes payable related party, net | 0 | 0 |
Notes payable current | 0 | 0 |
Notes payable | $ 0 | $ 0 |
Note Payable 12 [Member] | ||
Date of Issuance | Dec. 22, 2014 | Dec. 22, 2014 |
Maturity date | Mar. 31, 2015 | Mar. 31, 2015 |
Interest rate | 22.00% | 22.00% |
Original principal | $ 200,000 | $ 200,000 |
Current principal | 200,000 | 200,000 |
Current discount | 0 | 0 |
Carrying Amount | 200,000 | 200,000 |
Notes payable related party, net current | 0 | 0 |
Notes payable related party, net | 0 | 0 |
Notes payable current | 200,000 | 200,000 |
Notes payable | $ 0 | $ 0 |
Note Payable 13 [Member] | ||
Date of Issuance | Dec. 26, 2014 | Dec. 26, 2014 |
Maturity date | Dec. 26, 2015 | Dec. 26, 2015 |
Interest rate | 22.00% | 22.00% |
Original principal | $ 100,000 | $ 100,000 |
Current principal | 100,000 | 100,000 |
Current discount | 0 | 0 |
Carrying Amount | 100,000 | 100,000 |
Notes payable related party, net current | 0 | 0 |
Notes payable related party, net | 0 | 0 |
Notes payable current | 100,000 | 100,000 |
Notes payable | $ 0 | $ 0 |
Note Payable 14 [Member] | ||
Date of Issuance | Mar. 12, 2015 | Mar. 12, 2015 |
Interest rate | 6.00% | 6.00% |
Original principal | $ 394,380 | $ 394,380 |
Current principal | 394,380 | 394,380 |
Current discount | 0 | 0 |
Carrying Amount | 394,380 | 394,380 |
Notes payable related party, net current | 394,380 | 394,380 |
Notes payable related party, net | 0 | 0 |
Notes payable current | 0 | 0 |
Notes payable | $ 0 | $ 0 |
Note Payable 15 [Member] | ||
Date of Issuance | Apr. 7, 2015 | Apr. 7, 2015 |
Maturity date | Apr. 7, 2019 | Apr. 7, 2018 |
Interest rate | 10.00% | 10.00% |
Original principal | $ 50,000 | $ 50,000 |
Current principal | 50,000 | 50,000 |
Current discount | 0 | 0 |
Carrying Amount | 50,000 | 50,000 |
Notes payable related party, net current | 0 | 0 |
Notes payable related party, net | 0 | 0 |
Notes payable current | 50,000 | $ 50,000 |
Notes payable | $ 0 | |
Note Payable 16 [Member] | ||
Date of Issuance | Nov. 23, 2015 | Nov. 23, 2015 |
Interest rate | 6.00% | 6.00% |
Original principal | $ 50,000 | $ 50,000 |
Current principal | 50,000 | 50,000 |
Current discount | 0 | 0 |
Carrying Amount | 50,000 | 50,000 |
Notes payable related party, net current | 50,000 | 50,000 |
Notes payable related party, net | 0 | 0 |
Notes payable current | 0 | 0 |
Notes payable | $ 0 | $ 0 |
Note Payable 17 [Member] | ||
Date of Issuance | Feb. 25, 2016 | Feb. 25, 2016 |
Interest rate | 6.00% | 6.00% |
Original principal | $ 50,000 | $ 50,000 |
Current principal | 50,000 | 50,000 |
Current discount | 0 | 0 |
Carrying Amount | 50,000 | 50,000 |
Notes payable related party, net current | 50,000 | 50,000 |
Notes payable related party, net | 0 | 0 |
Notes payable current | 0 | 0 |
Notes payable | $ 0 | $ 0 |
Note Payable 18 [Member] | ||
Date of Issuance | May 20, 2016 | May 20, 2016 |
Interest rate | 6.00% | 6.00% |
Original principal | $ 50,000 | $ 50,000 |
Current principal | 50,000 | 50,000 |
Current discount | 0 | 0 |
Carrying Amount | 50,000 | 50,000 |
Notes payable related party, net current | 50,000 | 50,000 |
Notes payable related party, net | 0 | 0 |
Notes payable current | 0 | 0 |
Notes payable | $ 0 | $ 0 |
Note Payable 19 [Member] | ||
Date of Issuance | Oct. 20, 2016 | Oct. 20, 2016 |
Interest rate | 6.00% | 6.00% |
Original principal | $ 50,000 | $ 50,000 |
Current principal | 12,500 | 12,500 |
Current discount | 0 | 0 |
Carrying Amount | 12,500 | 12,500 |
Notes payable related party, net current | 12,500 | 12,500 |
Notes payable related party, net | 0 | 0 |
Notes payable current | 0 | 0 |
Notes payable | $ 0 | $ 0 |
Note Payable 20 [Member] | ||
Date of Issuance | Oct. 20, 2016 | Oct. 20, 2016 |
Interest rate | 6.00% | 6.00% |
Original principal | $ 12,500 | $ 12,500 |
Current principal | 12,500 | 12,500 |
Current discount | 0 | 0 |
Carrying Amount | 12,500 | 12,500 |
Notes payable related party, net current | 12,500 | 12,500 |
Notes payable related party, net | 0 | 0 |
Notes payable current | 0 | 0 |
Notes payable | $ 0 | $ 0 |
Note Payable 21 [Member] | ||
Date of Issuance | Dec. 21, 2016 | Dec. 21, 2016 |
Interest rate | 6.00% | 6.00% |
Original principal | $ 25,000 | $ 25,000 |
Current principal | 25,000 | 25,000 |
Current discount | 0 | 0 |
Carrying Amount | 25,000 | 25,000 |
Notes payable related party, net current | 25,000 | 25,000 |
Notes payable related party, net | 0 | 0 |
Notes payable current | 0 | 0 |
Notes payable | $ 0 | $ 0 |
Note Payable 22 [Member] | ||
Date of Issuance | Mar. 9, 2017 | Mar. 9, 2017 |
Interest rate | 10.00% | 10.00% |
Original principal | $ 200,000 | $ 200,000 |
Current principal | 177,000 | 177,000 |
Current discount | 0 | 0 |
Carrying Amount | 177,000 | 177,000 |
Notes payable related party, net current | 177,000 | 177,000 |
Notes payable related party, net | 0 | 0 |
Notes payable current | 0 | 0 |
Notes payable | $ 0 | $ 0 |
Note Payable 23 [Member] | ||
Date of Issuance | Jul. 13, 2017 | Jul. 13, 2017 |
Maturity date | Jul. 13, 2019 | Jul. 13, 2019 |
Interest rate | 6.00% | 6.00% |
Original principal | $ 25,000 | $ 25,000 |
Current principal | 25,000 | 25,000 |
Current discount | 0 | 0 |
Carrying Amount | 25,000 | 25,000 |
Notes payable related party, net current | 0 | 0 |
Notes payable related party, net | 0 | 0 |
Notes payable current | 25,000 | 0 |
Notes payable | $ 0 | $ 25,000 |
Note Payable 24 [Member] | ||
Date of Issuance | Jul. 18, 2017 | Jul. 18, 2017 |
Maturity date | Jul. 18, 2019 | Jul. 18, 2019 |
Interest rate | 6.00% | 6.00% |
Original principal | $ 25,000 | $ 25,000 |
Current principal | 25,000 | 25,000 |
Current discount | 0 | 0 |
Carrying Amount | 25,000 | 25,000 |
Notes payable related party, net current | 0 | 0 |
Notes payable related party, net | 0 | 0 |
Notes payable current | 25,000 | 0 |
Notes payable | $ 0 | $ 25,000 |
Note Payable 25 [Member] | ||
Date of Issuance | Jul. 26, 2017 | Jul. 26, 2017 |
Maturity date | Jul. 26, 2019 | Jul. 26, 2019 |
Interest rate | 6.00% | 6.00% |
Original principal | $ 15,000 | $ 15,000 |
Current principal | 15,000 | 15,000 |
Current discount | 0 | 0 |
Carrying Amount | 15,000 | 15,000 |
Notes payable related party, net current | 0 | 0 |
Notes payable related party, net | 0 | 0 |
Notes payable current | 15,000 | 0 |
Notes payable | $ 0 | $ 15,000 |
Note Payable 26 [Member] | ||
Date of Issuance | Jul. 27, 2017 | Jul. 27, 2017 |
Maturity date | Jul. 27, 2019 | Jul. 27, 2019 |
Interest rate | 6.00% | 6.00% |
Original principal | $ 15,000 | $ 15,000 |
Current principal | 15,000 | 15,000 |
Current discount | 0 | 0 |
Carrying Amount | 15,000 | 15,000 |
Notes payable related party, net current | 0 | 0 |
Notes payable related party, net | 0 | 0 |
Notes payable current | 15,000 | 0 |
Notes payable | $ 0 | $ 15,000 |
Note Payable 27 [Member] | ||
Date of Issuance | Dec. 20, 2017 | Dec. 20, 2017 |
Interest rate | 10.00% | 10.00% |
Original principal | $ 979,156 | $ 490,000 |
Current principal | 979,156 | 490,000 |
Current discount | 24,435 | 41,044 |
Carrying Amount | 954,721 | 448,956 |
Notes payable related party, net current | 0 | 0 |
Notes payable related party, net | 0 | 0 |
Notes payable current | 954,721 | 0 |
Notes payable | $ 0 | $ 448,956 |
Note Payable 28 [Member] | ||
Date of Issuance | Nov. 6, 2017 | Nov. 6, 2017 |
Maturity date | Dec. 31, 2018 | |
Interest rate | 10.00% | 10.00% |
Original principal | $ 646,568 | $ 646,568 |
Current principal | 612,093 | 641,568 |
Current discount | 0 | 0 |
Carrying Amount | 612,093 | 641,568 |
Notes payable related party, net current | 612,093 | 641,568 |
Notes payable related party, net | 0 | 0 |
Notes payable current | 0 | 0 |
Notes payable | $ 0 | $ 0 |
Note Payable 29 [Member] | ||
Date of Issuance | Feb. 19, 2018 | |
Interest rate | 18.00% | |
Original principal | $ 629,451 | |
Current principal | 629,451 | |
Current discount | 0 | |
Carrying Amount | 629,451 | |
Notes payable related party, net current | 0 | |
Notes payable related party, net | 0 | |
Notes payable current | 629,451 | |
Notes payable | $ 0 | |
Note Payable 30 [Member] | ||
Date of Issuance | Sep. 19, 2018 | |
Maturity date | Sep. 28, 2021 | |
Interest rate | 6.00% | |
Original principal | $ 10,000 | |
Current principal | 10,000 | |
Current discount | 0 | |
Carrying Amount | 10,000 | |
Notes payable related party, net current | 0 | |
Notes payable related party, net | 0 | |
Notes payable current | 0 | |
Notes payable | $ 10,000 | |
Note Payable 31 [Member] | ||
Date of Issuance | Dec. 14, 2018 | |
Maturity date | Dec. 22, 2018 | |
Interest rate | 24.00% | |
Original principal | $ 524,373 | |
Current principal | 524,373 | |
Current discount | 0 | |
Carrying Amount | 524,373 | |
Notes payable related party, net current | 0 | |
Notes payable related party, net | 0 | |
Notes payable current | 524,373 | |
Notes payable | $ 0 |
4. CONVERTIBLE NOTES AND NOTE_4
4. CONVERTIBLE NOTES AND NOTES PAYABLE (Details 1) | Dec. 31, 2018USD ($) |
Debt Disclosure [Abstract] | |
2019 | $ 6,441,437 |
2020 | 0 |
2021 | 10,000 |
2022 and thereafter | 158,334 |
Total | $ 6,609,771 |
5. DERIVATIVE LIABILITY (Detail
5. DERIVATIVE LIABILITY (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Derivative liability | $ 2,292,254 | $ 0 |
Fair Value Inputs Level 1 [Member] | ||
Derivative liability | 0 | |
Fair Value Inputs Level 2 [Member] | ||
Derivative liability | 0 | |
Fair Value Inputs Level 3 [Member] | ||
Derivative liability | $ 2,292,254 |
5. DERIVATIVE LIABILITY (Deta_2
5. DERIVATIVE LIABILITY (Details 1) | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Derivative Liability [Abstract] | |
Derivative liability, beginning | $ 0 |
Fair value at the commitment date for convertible instruments | 1,690,124 |
Change in fair value of derivative liability | 759,603 |
Reclassification to additional paid-in capital for financial instruments that ceased to be a derivative liability | (157,473) |
Derivative liability, ending | 2,292,254 |
Change in fair value of derivative liability, beginning | 0 |
Day one gains/(losses) on valuation | 441,865 |
Gains/(losses) from the change in fair value of derivative liability | 764,992 |
Change in fair value of derivative liability, ending | $ 1,206,857 |
5. DERIVATIVE LIABILITY (Deta_3
5. DERIVATIVE LIABILITY (Details 2) | 12 Months Ended |
Dec. 31, 2018 | |
Commitment Date | |
Expected dividends | 0.00% |
Commitment Date | Minimum [Member] | |
Expected volatility | 81.00% |
Risk free interest rate | 2.05% |
Expected term (in years) | 3 months |
Commitment Date | Maximum [Member] | |
Expected volatility | 503.00% |
Risk free interest rate | 3.07% |
Expected term (in years) | 5 years |
Remeasurement Date | |
Expected dividends | 0.00% |
Remeasurement Date | Minimum [Member] | |
Expected volatility | 87.00% |
Risk free interest rate | 2.19% |
Expected term (in years) | 2 months 23 days |
Remeasurement Date | Maximum [Member] | |
Expected volatility | 515.00% |
Risk free interest rate | 2.60% |
Expected term (in years) | 4 years 9 months 22 days |
6. STOCKHOLDERS' EQUITY (Detail
6. STOCKHOLDERS' EQUITY (Details) - Warrants and Options | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Expected volatility | 485.00% | |
Expected lives | 3 years | 3 years |
Expected dividend yield | 0.00% | 0.00% |
Minimum [Member] | ||
Expected volatility | 462.00% | |
Risk free interest rate | 2.01% | 1.98% |
Maximum [Member] | ||
Expected volatility | 509.00% | |
Risk free interest rate | 2.85% | 2.01% |
6. STOCKHOLDERS' EQUITY (Deta_2
6. STOCKHOLDERS' EQUITY (Details 1) - $ / shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Number of Warrants | ||
Warrants outstanding, beginning balance | 134,000 | 15,912,210 |
Warrants granted | 255,073 | 134,000 |
Warrants exercised | (39,000) | (998,079) |
Warrants exercised, repriced | (14,692,500) | |
Warrants forfeited | 0 | (221,631) |
Warrants outstanding, ending balance | 350,073 | 134,000 |
Warrants exercisable | 350,073 | |
Weighted Average Exercise Price | ||
Warrants outstanding, beginning balance | $ .76 | $ 0.76 |
Warrants granted | .21 | |
Warrants exercised | .24 | .31 |
Warrants exercised, repriced | 0 | |
Warrants forfeited | 0 | 0 |
Warrants outstanding, ending balance | 0.18 | $ .76 |
Warrants exercisable | $ 0.18 |
6. STOCKHOLDERS' EQUITY (Deta_3
6. STOCKHOLDERS' EQUITY (Details 2) - $ / shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Number of Options | ||
Options outstanding, beginning balance | 0 | 100,000 |
Options granted | 0 | 0 |
Options exercised | 0 | (100,000) |
Options forfeited | 0 | 0 |
Options outstanding, ending balance | 0 | 0 |
Options exercisable | 0 | |
Weighted Average Exercise Price | ||
Options outstanding, beginning balance | $ .00 | $ 0.75 |
Options granted | .00 | .00 |
Options exercised | .00 | 0.75 |
Options forfeited | .00 | .00 |
Options outstanding, ending balance | .00 | $ .00 |
Options exercisable | $ .00 |
7. INCOME TAX (Details)
7. INCOME TAX (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Statutory rate applied to loss before income taxes | $ (2,276,031) | $ (5,903,355) |
Nondeductible permanent differences | 806,885 | 4,446,014 |
Change in tax rate estimates | 0 | 3,566,781 |
Change in valuation allowance | 1,469,146 | (2,109,440) |
Income tax expense (benefit) | $ 0 | $ 0 |
7. INCOME TAX (Details 1)
7. INCOME TAX (Details 1) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
Depreciation and impairment | $ 2,358,860 | $ 2,100,958 |
Operating loss carryforwards | 7,917,151 | 6,705,907 |
Gross deferred tax assets | 10,276,011 | 8,806,865 |
Valuation allowance | (10,276,011) | (8,806,865) |
Net deferred income tax asset | $ 0 | $ 0 |
7. INCOME TAX (Details Narrativ
7. INCOME TAX (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforwards | $ 27,400,000 | |
Change in the valuation allowance | $ 1,469,146 | $ (2,109,440) |