10-Q 1 cpwr_form10q.htm OCEAN THERMAL ENERGY CORP. FORM 10Q Blueprint
 

 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 2018
 
☐   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Commission File Number 033-19411-C
 
OCEAN THERMAL ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
 
Nevada
20-5081381
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
 
800 South Queen Street, Lancaster, PA  17603
(Address of principal executive offices, including zip code)
 
(717) 299-1344
(Registrant’s telephone number, including area code)
 
TetriDyn Solutions, Inc.
(Former name, former address and former fiscal year, if changed since last report)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes  
No  
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes  
No  
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)
 
 
Large accelerated filer  ☐
Accelerated filer  ☐
 
Non-accelerated filer  ☐
Smaller reporting company  ☒
 

Emerging growth company  ☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes  
No  
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of May 14, 2018, issuer had 122,764,904 outstanding shares of common stock, par value $0.001. 
 
 

 
 
 
TABLE OF CONTENTS
 
 
Description
Page
 
 
 
 
PART I—FINANCIAL INFORMATION
 
Item 1
Financial Statements
 
 
Condensed Consolidated Balance Sheets (Unaudited)
 
Condensed Consolidated Statements of Operations (Unaudited)
 
Condensed Consolidated Statements of Cash Flows (Unaudited)
 
Notes to the Condensed Consolidated Financial Statements (Unaudited)
Item 2
Management’s Discussion and Analysis of Financial Condition and Results of Operations
19
Item 3
Quantitative and Qualitative Disclosures about Market Risk
Item 4
Controls and Procedures
 
 
 
 
PART II—OTHER INFORMATION
 
Item 1
Legal Proceedings
Item 1A
Risk Factors
 23
Item 2
Unregistered Sales of Equity Securities and Use of Proceeds
Item 3
Defaults upon Senior Securities
Item 4
Mine Safety Disclosure
Item 5
Other Information
 24
Item 6
Exhibits
 
Signature
 
 
 
 
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OCEAN THERMAL ENERGY CORPORATION AND SUBSIDIARIES
(FORMERLY KNOWN AS TETRIDYN SOLUTIONS, INC)
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
 
March 31, 2018
 
 
December 31, 2017
 
 
 
(unaudited) 
 
 
 
 
ASSETS
 
 
 
 
 
 
Current Assets
 
 
 
 
 
 
Cash
 $141,940 
 $425,015 
Prepaid expenses
  25,000 
  25,000 
Total Current Assets
  166,940 
  450,015 
 
    
    
Property and Equipment
    
    
Property and equipment, net
  1,183 
  1,352 
Assets under construction
  915,139 
  892,639 
Property and Equipment, net
  916,322 
  893,991 
 
    
    
Total Assets
 $1,083,262 
 $1,344,006 
 
    
    
 LIABILITIES AND STOCKHOLDERS' DEFICIENCY
    
    
 
    
    
Current Liabilities
    
    
Accounts payables and accrued expense
 $6,912,814
 $6,846,010 
Notes payable - related party, net of debt discount
  3,555,448 
  3,592,948 
Notes payable, net of debt discount
  588,260 
  87,500 
Convertible notes payable -related party- net of debt discount
  87,500 
  589,812 
Convertible note payable, net of debt discount
  219,303 
  50,000 
Total Current Liabilities
  11,363,325
  11,166,270 
 
    
    
Notes payable, net of debt discount
  1,036,974 
  607,290 
Convertible note payable, net of debt discount
  80,000 
  80,000 
Total Liabilities
  12,480,299
  11,853,560 
 
    
    
Commitments and contingencies (See Note 10)
    
    
 
    
    
Stockholders' deficiency
    
    
Preferred Stock, $0.001 par value; 20,000,000 shares authorized, 
    
    
0 and 0 shares issued and outstanding, respectively
  - 
  - 
 

 
Common stock, $0.001 par value; 200,000,000 shares authorized, 
    
    
122,762,904 and 122,642,247 shares issued and outstanding, respectively
  122,763 
  122,642 
Additional paid-in capital
  57,135,228 
  57,071,022 
Accumulated deficit
  (68,655,028)
  (67,703,218)
Total Stockholders' Deficiency
  (11,397,037)
  (10,509,554)
 
    
    
Total Liabilities and Stockholders' Deficiency
 $1,083,262
 $1,344,006 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 

 
3
 
 
 
  OCEAN THERMAL ENERGY CORPORATION AND SUBSIDIARIES
 
 
  (FORMERLY KNOWN AS TETRIDYN SOLUTIONS, INC)
 
 
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
 
 
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND MARCH 31, 2017
 
 
(Unaudited)
 
 
 
 
 
 
2018
 
 
2017
 
Operating Expenses
 
 
 
 
 
 
Salaries and wages
 $329,989 
 $257,488 
Professional fees
  207,237 
  352,796 
General and administrative
  226,988 
  78,346 
Warrant Expense
  - 
  6,769,562 
Total Operating Expenses
  764,214 
  7,458,192 
 
    
    
Loss from Operations
  (764,214)
  (7,458,192)
 
    
    
Other Expenses
    
    
Interest Expense
  (161,315)
  (104,993)
Amortization of debt discount
  (26,281)
  (2,524)
Total Other expense
  (187,596)
  (107,517)
 
    
    
Loss Before Income Taxes
  (951,810)
  (7,565,709)
 
    
    
Provision for Income Taxes
  - 
  - 
 
    
    
Net Loss
 $(951,810)
 $(7,565,709)
 
    
    
Net Loss per Common Share
    
    
Basic and Diluted
 $(0.01)
 $(0.07)
 
    
    
Weighted Average Number of Common Shares Outstanding
    
    
Basic and Diluted
  122,678,291 
  104,848,986 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
 
4
 
 
 
  OCEAN THERMAL ENERGY CORPORATION AND SUBSIDIARIES      
 
 
(FORMERLY KNOWN AS TETRIDYN SOLUTIONS, INC)
 
 
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
 
 
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND MARCH 31, 2017
 
 
(Unaudited)  
 
 
   
 
 
 
2018
 
 
2017
 
Cash Flows From Operating Activities:
 
 
 
 
 
 
Net loss
 $(951,810)
 $(7,565,709)
Adjustments to reconcile net loss to net cash used in operating activities
    
    
Depreciation
  169 
  503 
Stock issued for services
  23,666 
  244,800 
Warrant Expense
  - 
  6,769,562 
Amortization of debt discount
  26,281 
  2,524 
Changes in assets and liabilities:
    
    
Prepaid expenses
  - 
  6,703 
Accounts payable & accrued expenses
  66,804 
  210,236 
Net Cash Used In Operating Activities
  (834,890)
  (331,381)
 
    
    
Cash Flow From Investing Activities:
    
    
Assets under construction
  (22,500)
  (22,853)
Due from related party
  - 
  (34,773)
Net Cash Used In Investing Activities
  (22,500)
  (57,626)
 
    
    
Cash Flows From Financing Activities:
    
    
Repayment of notes payable - related party
  (37,500)
  (25,000)
Repayment of notes payable
  (1,552)
  200,000 
Proceeds from exercise of warrants
  8,211 
  409,625 
Proceeds from note payable
  444,156 
  - 
Proceeds from convertible note payable
  161,000 
  - 
Repayment of amount due to related party
  - 
  (36,822)
Net Cash Provided by Financing Activities
  574,315 
  547,803 
 
    
    
Net increase (decrease) in cash and cash equivalents
  (283,075)
  158,796 
Cash and cash equivalents at beginning of year
  425,015 
  7,495 
Cash and Cash Equivalents at End of Period
 $141,940 
 $166,291 
 
    
    
Supplemental disclosure of cash flow information
    
    
Cash paid for interest expense
 $2,736 
 $2,640 
Cash paid for income taxes
 $- 
 $- 

    
    
Supplemental disclosure of non-cash investing and financing activities:  
    
    
Debt discount on note payable
 $32,450 
 $- 
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.

  

 
5
 
 
OCEAN THERMAL ENERGY CORPORATION
(FORMERLY KNOWN AS TETRIDYN SOLUTIONS, INC.)
AND SUBSIDIARIES
 
Notes to Condensed Consolidated March 31, 2018 Financial Statements
(Unaudited)
 
Note 1: Source of Business and Basis of Presentation
 
Ocean Thermal Energy Corporation (“Ocean Thermal,” the “Company,” “we,” and “us”) is currently in the businesses of:
 
OTEC and SWAC - Designing Ocean Thermal Energy Conversion (“OTEC”) power plants and Seawater Air Conditioning (“SWAC”) plants for large commercial properties, utilities and municipalities. These technologies provide practical solutions to mankind’s three oldest and most fundamental needs: clean drinking water, plentiful food, and sustainable, affordable energy without the use of fossil fuels. OTEC is a clean technology that continuously extracts energy from the temperature difference between warm surface ocean water and cold deep seawater. In addition to producing electricity, some of the seawater running through an OTEC plant can be efficiently desalinated using the power generated by the OTEC technology, producing thousands of cubic meters of fresh water every day for the communities served by its plants for use in agriculture and human consumption. This cold deep nutrient-rich water can also be used to cool buildings (SWAC) and for fish farming/ aquaculture. In short, it’s a technology with many benefits, and its versatility makes OTEC unique.
 
EcoVillages - Developing and commercializing our EcoVillages, as well as working to develop or acquire new complementary assets. EcoVillages are communities whose goal is to become more socially, economically and ecologically sustainable. EcoVillages are communities whose inhabitants seek to live according to ecological principles, causing as little impact on the environment as possible. We expect that our EcoVillage communities will range from a population of 50 to 150 individuals, although some may be smaller. We may also form larger EcoVillages of up to 2,000 individuals that will be formed as networks of smaller sub-communities. We expect that our EcoVillages will grow by the addition of individuals, families, or other small groups.
 
We expect to use OTE’s technology in the development of our EcoVillages, which we should add significant value to our existing line of business.
 
On May 25, 2017, the Company received approval from the Financial Industry Regulatory Authority (“FINRA”) to change the trading symbol for the Company’s common stock to “CPWR” from “TDYS.” The Company’s common stock began formally trading under the symbol “CPWR” on June 21, 2017.
  
For accounting purposes, this transaction was accounted for as a reverse merger and has been treated as a recapitalization of Tetridyn Solutions, Inc. with Ocean Thermal Energy Corporation. as the accounting acquirer. The historical financial statements of the accounting acquirer became the financial statements of the Company. The Company did not recognize goodwill or any intangible assets in connection with the transaction. The 110,273,767 shares issued to the shareholder of OTE in conjunction with the share exchange transaction has 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. The Company’s accounting year end is December 31, which was the year end of Ocean Thermal Energy Corporation.
 
The condensed consolidated financial statements include the accounts of the Company and our wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, our financial statements reflect all adjustments that are of a normal recurring nature necessary for presentation of financial statements for interim periods in accordance with U.S. generally accepted accounting principles (GAAP) and with the instructions to Form 10-Q in Article 10 of SEC Regulation S-X. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of our financial statements, and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.
 
We condensed or omitted certain information and footnote disclosures normally included in our annual audited financial statements, which we prepared in accordance with GAAP. The operating results for the three months ended March 31, 2018 are not necessarily indicative of the results to be expected for the year. Our interim financial statements should be read in conjunction with our Audit Report and the 10-K filing on April 2, 2018.
 
 
6
 
 
 Note 2: Going Concern
 
The accompanying unaudited condensed consolidated financial statements have been prepared on the assumption that we will continue as a going concern. As reflected in the accompanying condensed consolidated financial statements, we had a net loss of $951,810 and used $834,890 of cash in operating activities for the three months ended March 31, 2018. We had a working capital deficiency of $11,196,385 and a stockholders’ deficiency of $11,397,037 as of March 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 project development. The financial statements do not include any adjustments that may result from the outcome of this uncertainty.
 
Note 3: Income Taxes
 
On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act (the “TCJA”) that significantly reforms the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). The TCJA, among other things, contains significant changes to corporate taxation, including reduction of the corporate tax rate from a top marginal rate of 35% to a flat rate of 21%, effective as of January 1, 2018; limitation of the tax deduction for interest expense; limitation of the deduction for net operating losses to 80% of current year taxable income and elimination of net operating loss carrybacks, in each case, for losses arising in taxable years beginning after December 31, 2017 (though any such tax losses may be carried forward indefinitely); modifying or repealing many business deductions and credits, including reducing the business tax credit for certain clinical testing expenses incurred in the testing of certain drugs for rare diseases or conditions generally referred to as “orphan drugs”; and repeal of the federal Alternative Minimum Tax (“AMT”).
 
The staff of the Securities and Exchange Commission issued Staff Accounting Bulletin No. 118 to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the TCJA. In connection with the initial analysis of the impact of the TCJA, the Company remeasured its deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. The remeasurement of the Company's deferred tax assets and liabilities was offset by a change in the valuation allowance.
 
The Company is still in the process of analyzing the impact to the Company of the TCJA. Where the Company has been able to make reasonable estimates of the effects related to which its analysis is not yet complete, the Company has recorded provisional amounts. The ultimate impact to the Company’s consolidated financial statements of the TCJA may differ from the provisional amounts due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the TCJA. The accounting is expected to be complete when the Company’s 2017 U.S. corporate income tax return is filed in 2018.
 
No income tax expense was recognized for the three-month periods ended March 31, 2018 and 2017, due to net losses being incurred in these periods. We are subject to audit by the Internal Revenue Service, various states, and foreign jurisdictions for the prior three years. There has not been a change in our unrecognized tax positions since December 31, 2017, and we do not believe there will be any material changes in our unrecognized tax positions over the next 12 months. Our policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. We do not have any accrued interest or penalties associated with any unrecognized tax benefits, and no interest expense related to unrecognized tax benefits was recognized during the three months ended March 31, 2018.
 
The Company’s ability to use its NOL 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 NOL 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.
  
The Company has not completed a study to assess whether an ownership change has occurred or whether there have been multiple ownership changes since the Company became a “loss corporation” under the definition of Section 382. If the Company has experienced an ownership change, utilization of the NOL carryforwards would be subject to an annual limitation under Section 382 of the Code, which is determined by first multiplying the value of the Company’s 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 NOL 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 the results of operations or financial position of the Company.
 
 
7
 
 
 Note 4: Fair Value of Financial Instruments
 
ASC Topic 820, “Fair Value Measurements and Disclosures,” defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles in the United States, and enhances disclosures about fair value measurements. ASC 820 describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, which are the following:
 
Level 1–Pricing inputs are quoted prices available in active markets for identical assets or liabilities as of the reporting date.
 
Level 2–Pricing inputs are quoted for similar assets or inputs that are observable, either directly or indirectly, for substantially the full term through corroboration with observable market data. Level 2 includes assets or liabilities valued at quoted prices adjusted for legal or contractual restrictions specific to these investments.
 
Level 3–Pricing inputs are unobservable for the assets or liabilities; that is, the inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability.
 
Management believes the carrying amounts of the short-term financial instruments, including cash and cash equivalents, prepaid expense and other assets, accounts payable, accrued liabilities, notes payable, deferred compensation, and other liabilities reflected in the accompanying balance sheets approximate fair value at March 31, 2018 and December 31, 2017, due to the relatively short-term nature of these instruments.
 
Note 5: Net Loss per Common 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 220,500 and 303,320 shares issuable upon the exercise of warrants and options and 7,567,438 and 205,667 shares issuable upon the conversion of the green energy bonds and convertible notes that were not included in the computation of dilutive loss per share because their inclusion is antidilutive for the interim periods ended March 31, 2018 and 2017, respectively
  
Note 6: Recent Accounting Pronouncements
 
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.
 
Note 7: Business Segments
 
We conduct operations in various foreign jurisdictions that use our technology. Our segments are based on the location of their operations. The U.S. territories segment consists of operations in the U.S. Virgin Islands and Guam; the Bahamas segment consists of operations specific to the Bahamas; and the other segment currently consists of operations in the Cayman Islands. Direct revenues and costs, depreciation, depletion, and amortization costs, general and administrative costs (“G&A”), 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 for the years ended March 31, 2018, and March 31, 2017, is as follows:
 
 
 March 31, 2018
 
 
Headquarters
 
 
US Territories
 
 
Bahamas
 
 
Other
 
 
Total
 
Revenue
 $- 
 $- 
 $- 
 $- 
 $- 
Assets
 $168,123 
 $750,237 
 $- 
 $164,902 
 $1,083,262 
Net Loss
 $(951,810)
 $- 
 $- 
 $- 
 $(951,810)
Property and equipment
 $1,183 
 $- 
 $- 
 $- 
 $1,183 
Capitalized construction in process
 $- 
 $750,237 
 $- 
 $164,902 
 $915,139 
Depreciation
 $169 
 $- 
 $- 
 $- 
 $169 
Addtions to Property and equipment
 $- 
 $22,500 
 $- 
 $- 
 $22,500 
 
 
March 31, 2017
 
 
Headquarters
 
 
US Territories
 
 
Bahamas
 
 
Other
 
 
Total
 
Revenue
 $- 
 $- 
 $- 
 $- 
 $- 
Assets
 $226,773 
 $820,140 
 $- 
 $48,998 
 $1,095,911 
Net Loss
 $(7,565,709)
 $- 
 $- 
 $- 
 $(7,565,709)
Property and equipment
 $1,863 
 $- 
 $- 
 $- 
 $1,863 
Capitalized construction in process
 $- 
 $820,140 
 $- 
 $48,998 
 $869,138 
Depreciation
 $503 
 $- 
 $- 
 $- 
 $503 
Addtions to Property and equipment
 $- 
 $22,853 
 $- 
 $- 
 $22,853 
 
 
 
8
 
 
For the period ended March 31, 2018, the U.S. territories are comprised of the U.S. Virgin Islands project (approx. $750,000) and the Guam project (approx. $165,000). Other territories are comprised of the 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. There were no additions or write offs to assets under construction in the first quarter of 2018.
  
Note 8: Convertible notes and notes payable
 
On December 12, 2006, TetriDyn Solutions, Inc. (TDYS) borrowed funds from the Southeast Idaho Council of Governments (SICOG). This is referred as the “EDA -#180” loan. At the time of the merger between TDYS and Ocean Thermal Energy Corporation (OTE) on May 9, 2017, OTE assumed the liability for this loan. The remaining balance on the loan at the date of merger was $14,974. The interest rate is 6.25% and the maturity date was January 5, 2013. The loan principal was $10,720 with accrued interest of $0.00 as of March 31, 2018. This note is in default.
 
On December 23, 2009, TetriDyn Solutions, Inc. (TDYS) borrowed funds from the Southeast Idaho Council of Governments (SICOG). This is referred as the “EDA - #273” loan. At the time of the merger between TDYS and Ocean Thermal Energy Corporation (OTE) on May 9, 2017, OTE assumed the liability for this loan. The remaining balance on the loan at the date of merger was $94,480. The interest rate is 7% and the maturity date was December 23, 2014. The loan principal was $94,480 with accrued interest of $21,140 as of March 31, 2018. This note is in default.
 
On December 23, 2009, TetriDyn Solutions, Inc. (TDYS) borrowed funds from the Southeast Idaho Council of Governments (SICOG). This is referred as the “MICRO I - #274” loan. At the time of the merger between TDYS and Ocean Thermal Energy Corporation (OTE) on May 9, 2017, OTE assumed the liability for this loan. The remaining balance on the loan at the date of merger was $23,619. The interest rate is 7% and the maturity date was December 23, 2014. The loan principal was $23,620 with accrued interest of $4,953 as of March 31, 2018. This note is in default.
 
On December 23, 2009, TetriDyn Solutions, Inc. (TDYS) borrowed funds from the Southeast Idaho Council of Governments (SICOG). This is referred as the “MICRO II - #275” loan. At the time of the merger between TDYS and Ocean Thermal Energy Corporation (OTE) on May 9, 2017, OTE assumed the liability for this loan. The remaining balance on the loan at the date of merger was $23,619. The interest rate is 7% and the maturity date was December 23, 2014. The loan principal was $23,619 with accrued interest of $5,894 as of March 31, 2018. This note is in default.
 
 
9
 
 
On December 1, 2007, TetriDyn Solutions, Inc. (TDYS) borrowed funds from the Eastern Idaho Development Corporation, This is referred as the “EIDC ” loan. At the time of the merger between TDYS and Ocean Thermal Energy Corporation (OTE) on May 9, 2017, OTE assumed the liability for this loan. The remaining balance on the loan at the date of merger was $85,821. The interest rate is 7% and the maturity date was September 1, 2015. The loan principal was $85,821 with accrued interest of $34,825 as of March 31, 2018. This note is in default.
 
On September 25, 2009, TetriDyn Solutions, Inc. (TDYS) borrowed funds from the Pocatello Development Authority. At the time of the merger between TDYS and Ocean Thermal Energy Corporation (OTE) on May 9, 2017, OTE assumed the liability for this loan. The remaining balance on the loan at the date of merger was $50,000. The interest rate is 5% and the maturity date was October 25, 2011. The loan principal was $50,000 with accrued interest of $18,830 as of March 31, 2018. This note is in default.
 
On March 12, 2015, the Company exchanged convertible notes issued in 2010, 2011, and 2012, payable to its 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. (“JPF”), an investment entity that is majority-owned by Jeremy Feakins, the Company’s 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 the Company’s common stock as of the date of the issuance. On February 24, 2017 the Company completed an amendment with JPF to eliminate the conversion feature of the Consolidated Note. The Consolidated Note bears interest at 6% per annum and is due and payable within 90 days after demand. As of March 31, 2018, the outstanding loan balance was $394,380 and the accrued but unpaid interest on the Consolidated Note was $76,935.
 
On November 23, 2015, the Company borrowed $50,000 from JPF pursuant to a promissory note. The Company received $37,500 before December 31, 2015, and the remaining $12,500 was received after the year-end. 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) payee is authorized to convert part or all of the note balance and accrued interest, if any, into shares of the Company’s common stock at the rate of one share each for $0.03 of principal amount of the note. As of March 31, 2018, the outstanding balance was $50,000, plus accrued interest of $6,799.
 
On February 25, 2016, the Company borrowed $50,000 from JPF 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) 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 Company completed an amendment with JPF to eliminate the conversion feature of the note. As of March 31, 2018, the outstanding balance was $50,000, plus accrued interest of $6,386
 
On May 20, 2016, the Company borrowed $50,000 from JPF 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 price is not required to adjust for the reverse stock split as per the note agreement. On February 24, 2017 the Company completed an amendment with JPF to eliminate the conversion feature of the note. As of March 31, 2018, the outstanding balance was $50,000, plus accrued interest of $5,538.
 
On October 20, 2016, the Company borrowed $12,500 from JPF 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 price is not required to adjust for the reverse stock split as per the note agreement. On February 24, 2017 the Company completed an amendment with JPF to eliminate the conversion feature of the note. As of March 31, 2018, the outstanding balance was $12,500, plus accrued interest of $1,116.
  
On October 20, 2016, the Company 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 price is not required to adjust for the reverse stock split as per the note agreement. As of March 31, 2018, the outstanding balance was $12,500, plus accrued interest of $1,125.
 
On October 20, 2016, the Company 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 price is not required to adjust for the reverse stock split as per the note agreement. As of June 5, 2017 the note holder converted the note principal of $25,000 into 1,806,298 shares common stock. As of March 31, 2018, there was an outstanding balance of accrued interest of $904.
 
 
10
 
 
On December 21, 2016, the Company borrowed $25,000 from JPF 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 price is not required to adjust for the reverse stock split as per the note agreement. As of March 31, 2018,, the outstanding balance was $25,000, plus accrued interest of $1,937.
 
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 holder agreed to amend the note to extend the due date of the note to December 31, 2018. As of March 31, 2018, the outstanding balance was $1,000,000, plus accrued interest of $560,559.
 
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. During 2013, we issued $525,000 of 10% promissory notes and warrants to purchase 105,000 shares of common stock. The warrants have an expiration date of September 30, 2023. 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 the Memphis Investors, the Board repriced the warrants to $0.00 and exercised the warrants and issued shares of common stock. On December 31, 2016, the accrued interest was $168,934. During 2015, one of the original note holders transferred its ownership of the note in the amount of $50,000 to Jeremy P. Feakins & Associates LLC through the JPF Venture Fund 1, LP. On August 15, 2017, loans in the amount of $316,666 and accrued interest of $120,898 were converted to 437,564 shares at $1.00 per share, which was ratified by the Board of Directors. The shares were recorded at fair value of $1,165,892. The Company recorded a loss on settlement of debt of $728,328 on conversion date. As of March 31, 2018,, the loan balance was $158,334 and the accrued interest was $72,852.
 
During the third quarter of 2017, the Company commenced 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; (iii) and all principal and interest on each Note shall automatically convert on the Conversion Maturity Date into shares of the Company’s common stock at a conversion price of $4.00 per share, as long as the closing share price of the Company’s 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 the Company’s shares on such date is less than $4.00 per share, the Note (principal and interest) will be repaid in full. As of March 31, 2018, the outstanding balance for all four loans was $80,000, plus accrued interest of $3,370.
  
During 2013, we paid cash of $10,000 and issued a note payable for $290,000 in connection with the reverse merger transaction. We repurchased and retired 7,546,464 shares of common stock simultaneously with the closing of the merger with Broad Band Network Associates. The note is unsecured and due the earlier of December 31, 2015, or upon our receiving $50,000 of proceeds from the exercise of the Class A warrants, $50,000 from the exercise of the Class B warrants, $60,000 from the exercise of the Class C warrants, $60,000 from the exercise of Class D warrants, and $70,000 from the exercise of the Class E warrants. During 2014, we paid $100,000 and during 2015, we paid $60,000, leaving a balance of $130,000. Accrued interest totaled $42,913 at March 31, 2018. 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.
 
During 2014, we issued a note payable for $2,265,000 and warrants to purchase 12,912,500 shares of common stock, with an exercise price equal to the greater of a 50% discount of the stock price when our shares are listed on a public exchange or $0.425 per share, to an entity owned by our chief executive officer, together our principal stockholders. The warrants expire one year after our shares are listed on a recognized public exchange. The unsecured note has an interest rate of 10% per annum and the balance was due on January 31, 2015. We determined the warrants had a fair value of $2,265,000 based on the Black-Scholes option-pricing model. The fair value was recorded as a discount on the note payable and is being amortized over the life of the note. As part of our agreement with the Memphis Investors, the Board repriced the warrants to $0.00 and exercised the warrants and issued shares of common stock. As of December 31, 2015, principal of $152,500 has been repaid and principal of $351,500 has been converted into 468,667 shares of common stock, leaving a note balance of $1,761,000. During 2016, a principal payment of $5,000 was made leaving a note balance of $1,756,000 at December 31, 2016. On December 31, 2016, the accrued interest was $453,093. On January 18, 2018, the note holder agreed to extend the due date for the repayment of the loan and interest to the earlier of December 31, 2018, or the date of the financial closings of its Baha Mar Project (or any other project of $25 million or more), whichever occurs first. On August 15, 2017, loans in the amount of $618,500 and accrued interest of $207,731 were converted to 826,231 shares at $1.00 per share, which was ratified by the Board of Directors. The conversion was recorded at historical cost due to the related party nature of the transaction. For the three months ended March 31, 2018, we made a repayment of note payable in the amount of $35,000. As of March 31, 2018, the loan balance was $1,102,500 and the accrued interest was $427,599.
 
During 2014, we issued a note payable of $100,000 to a related party and $200,000 to a third party, for a total of $300,000, and warrants to purchase 300,000 shares of common stock with an exercise price of $1.00 per share. As part of our agreement with the Memphis Investors, the Board repriced the warrants to $0.00 and exercised the warrants and issued shares of common stock. These unsecured notes have an interest rate of 12% per annum. The $100,000 note with a related party is due the earlier of December 26, 2015; the completion by us of an equity financing resulting in our receipt of gross proceeds of at least $2,000,000; or the financial close of the Baha Mar project and release of funds by the bank. The balance on the $200,000 note is due the earlier of March 31, 2015; the completion by us of an equity financing resulting in our receipt of gross proceeds of at least $2,000,000; or the financial close of the Baha Mar project and release of project financing funds by the bank. As of December 31, 2016, the notes are in default. Due to the delay in opening of the Baha Mar Resort, our Baha Mar SWAC Project’s financial closing was delayed causing us to default on the notes. We have accrued the interest at a default rate of 22%. We intend to repay the notes and accrued interest upon the project’s financial closing. Accrued interest totaled $196,629 as of March 31, 2018.
 
 
11
 
  
On April 7, 2015, we issued an unsecured convertible promissory note in the principal amount of $50,000 to an unrelated party. The note bears interest of 10% and is due on April 17, 2017. On April 6, 2018, the note holder agreed to extend the maturity date 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. We recorded a debt discount of $6,667 for the fair value of the beneficial conversion feature. During the three months, we amortized $871 of debt discount. Accrued interest totaled $15,097 as of March 31, 2018.
 
On March 9, 2017, an entity owned by our chief executive officer is an officer and director, agreed to provide up to $200,000 in working capital. The note bears interest of 10% and is due and payable with 90 days of demand. On March 31, 2018, the balance of the loan outstanding was $177,000 and the accrued interest as of that date was $19,330.
 
During the third quarter of 2017, the Company commenced 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; (iii) and all principal and interest on each Note shall automatically convert on the Conversion Maturity Date into shares of the Company’s common stock at a conversion price of $4.00 per share, as long as the closing share price of the Company’s 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 the Company’s shares on such date is less than $4.00 per share, the Note (principal and interest) will be repaid in full. As of March 31, 2018, the outstanding balance for all four loans was $80,000, plus accrued interest of $3,370.
 
On November 6, 2017, the Company entered into an agreement with a promissory note with JPF Venture Group, Inc. (“JPF”), an investment entity that is majority-owned by Jeremy Feakins, the Company’s director, chief executive officer, and chief financial officer, to loan the Company up to $2,000,000. 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 shall be due and payable at the earliest of (a) resolution of the Memphis litigation; (b) June 30, 2018; or (c) when the company is otherwise able to pay. For the three months ended March 31, 2018, we made a repayment of note payable in the amount of $2,500. As of March 31, 2018, the outstanding balance was $639,068 and the accrued interest was $32,852.
 
 
12
 
 
 In December 2017, the Company entered into a Note and Warrant Purchase Agreement pursuant to which we issued a series of unsecured promissory notes (the “Notes”) to accredited investors, in the aggregate principal amount of $924,156 as of March 31, 2018. The Notes accrue interest at a rate of 10% per annum payable on a quarterly basis and are not convertible into shares of capital stock of the Company. The Notes are payable within five business days after receipt of funds from L2 Capital under the Equity Purchase Agreement equal to 20% of the total funds received by the Company from L2 Capital payable on a pro rata basis to all holders of the Notes. The Company 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 Noteholder will receive a warrant exercised 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 Eighty-Five Percent (85%) of the closing price of the Company’s 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. As of March 31, 2018 and December 31, 2017, the balance outstanding was $934,156 and $490,000 respectively. As of March 31, 2018 and December 31, 2017, the accrued interest was $20,340 and $613, respectively. As of March 31, 2018 and December 31, 2017, we had issued Warrants to purchase 116,500 and 134,000 shares of common stock, respectively. As of March 31, 2018 and December 31, 2017, we determined that the warrants had a fair value of $32,450 and $41,044, respectively based on the Black-Scholes option-pricing model. The fair value was recorded as a discount on the notes payable and is being amortized over the life of the notes payable. As of March 31, 2018, 30,000 warrants have been exercised (see Note 9) and the debt discount related to the exercised warrants have been fully expensed. For the three months ended March 31, 2018, we amortized $17,978 of debt discount.
 
On February 15, 2018, the Company entered into an agreement with L2 Capital, LLC, a Kansas limited liability company (“L2”), for a loan of up to $565,555, together with interest at the rate of eight percent (8%) per annum (with the understanding that the initial six months of such interest of each tranche funded shall be guaranteed), at maturity or upon acceleration or otherwise, as set forth herein (the “L2 Note”). The consideration to the Company for the L2 Note is up to $500,000.00 due to the prorated original issuance discount of up to $55,555 (the “OID”) and a $10,000.00 credit for L2’s transactional expenses. As of the March 31, 2018, we have received two tranches totaling $204,444, which were allocated as follows: Original Issuance Discount - $19,444; L2’s Transaction Fee - $10,000; Broker-Dealer’s Fee - $14,000; Net Proceeds to Company - $161,000. The debt discount is amortized over the life of the L2 Note. For the three months ended March 31, 2018, we amortized $8,303 of debt discount.
 
The following convertible note and notes payable were outstanding at March 31, 2018:
 
 
13
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Related Party
 
Non Related Party
 
Date of Issuance
Maturity Date
 
Interest Rate
 
In Default
 
Original Principal
 
 
Principal at March 31, 2018
 
 
Discount at March 31 2018
 
 
Carrying Amount at March 31, 2018
 
 
Current
 
 
Long-Term
 
 
Current
 
 
Long-Term
 
12/12/2006
1/5/2013
  6.25%
  Yes
  58,670 
  10,720 
  - 
  10,720 
  - 
  - 
  10,720 
  - 
12/1/2007
9/1/2015
  7.00%
  Yes
  125,000 
  85,821 
  - 
  85,821 
  - 
  - 
  85,821 
  - 
9/25/2009
10/25/2011
  5.00%
  Yes
  50,000 
  50,000 
  - 
  50,000 
  - 
  - 
  50,000 
  - 
12/23/2009
12/23/2014
  7.00%
  Yes
  100,000 
  94,480 
  - 
  94,480 
  - 
  - 
  94,480 
  - 
12/23/2009
12/23/2014
  7.00%
  Yes
  25,000 
  23,619 
  - 
  23,619 
  - 
  - 
  23,619 
  - 
12/23/2009
12/23/2014
  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 
  1,102,500 
  - 
  1,102,500 
  1,102,500 
  - 
  - 
  - 
12/22/14
03/31/15
  12.00%
  Yes
  200,000 
  200,000 
  - 
  200,000 
  - 
  - 
  200,000 
  - 
12/26/14
12/26/15
  12.00%
  Yes
  100,000 
  100,000 
  - 
  100,000 
  - 
  - 
  100,000 
  - 
3/12/2015
90 days after demand
  6.00%
No
  394,380 
  394,380 
  - 
  394,380 
  394,380 
  - 
  - 
  - 
4/7/15
04/17/18
  10.00%
No
  50,000 
  50,000 
  - 
  50,000 
  - 
  - 
  50,000 
    
11/23/2015
90 days after demand
  6.00%
No
  50,000 
  50,000 
  - 
  50,000 
  50,000 
  - 
  - 
  - 
2/25/2016
90 days after demand
  6.00%
No
  50,000 
  50,000 
  - 
  50,000 
  50,000 
  - 
  - 
  - 
5/20/2016
90 days after demand
  6.00%
No
  50,000 
  50,000 
  - 
  50,000 
  50,000 
  - 
  - 
  - 
10/20/2016
90 days after demand
  6.00%
No
  50,000 
  12,500 
  - 
  12,500 
  12,500 
  - 
  - 
  - 
10/20/2016
90 days after demand
  6.00%
No
  12,500 
  12,500 
  - 
  12,500 
  12,500 
  - 
  - 
  - 
12/21/2016
90 days after demand
  6.00%
No
  25,000 
  25,000 
  - 
  25,000 
  25,000 
  - 
  - 
  - 
3/9/2017
90 days after demand
  10.00%
No
  200,000 
  177,000 
  - 
  177,000 
  177,000 
  - 
  - 
  - 
7/13/2017
7/13/2019
  6.00%
No
  25,000 
  25,000 
  - 
  25,000 
  - 
  - 
  - 
  25,000 
7/18/2017
7/18/2019
  6.00%
No
  25,000 
  25,000 
  - 
  25,000 
  - 
  - 
  - 
  25,000 
7/26/2017
7/26/2019
  6.00%
No
  15,000 
  15,000 
  - 
  15,000 
  - 
  - 
  - 
  15,000 
7/27/2017
7/27/2019
  6.00%
No
  15,000 
  15,000 
  - 
  15,000 
  - 
  - 
  - 
  15,000 
12/20/2017
7/30/2019
  10.00%
No
  50,000 
  50,000 
  3,593 
  46,407 
  - 
  - 
  - 
  46,407 
12/20/2017
7/30/2019
  10.00%
No
  10,000 
  10,000 
  513 
  9,487 
  - 
  - 
  - 
  9,487 
12/21/2017
7/30/2019
  10.00%
No
  50,000 
  50,000 
  3,570 
  46,430 
  - 
  - 
  - 
  46,430 
12/27/2017
7/30/2019
  10.00%
No
  10,000 
  10,000 
  503 
  9,497 
  - 
  - 
  - 
  9,497 
12/27/2017
7/30/2019
  10.00%
No
  10,000 
  10,000 
  503 
  9,497 
  - 
  - 
  - 
  9,497 
12/28/2017
7/30/2019
  10.00%
No
  250,000 
  250,000 
  17,627 
  232,373 
  - 
  - 
  - 
  232,373 
12/29/2017
7/30/2019
  10.00%
No
  100,000 
  100,000 
  7,534 
  92,466 
  - 
  - 
  - 
  92,466 
12/29/2017
7/30/2019
  10.00%
No
  10,000 
  10,000 
  538 
  9,462 
  - 
  - 
  - 
  9,462 
11/6/2017
 * See note below
  10.00%
No
  646,568 
  639,068 
  - 
  639,068 
  639,068 
  - 
  - 
  - 
1/2/2018
7/30/2019
  10.00%
No
  25,000 
  25,000 
  1,490 
  23,510 
  - 
  - 
  - 
  23,510 
1/2/2018
7/30/2019
  10.00%
No
  20,000 
  20,000 
  1,143 
  18,857 
  - 
  - 
  - 
  18,857 
1/9/2018
7/30/2019
  10.00%
No
  50,000 
  50,000 
  - 
  50,000 
  - 
  - 
  - 
  50,000 
1/9/2018
7/30/2019
  10.00%
No
  50,000 
  50,000 
  - 
  50,000 
  - 
  - 
  - 
  50,000 
1/11/2018
7/30/2019
  10.00%
No
  10,000 
  10,000 
  464 
  9,536 
  - 
  - 
  - 
  9,536 
1/12/2018
7/30/2019
  10.00%
No
  10,000 
  10,000 
  465 
  9,535 
  - 
  - 
  - 
  9,535 
1/16/2018
7/30/2019
  10.00%
No
  50,000 
  50,000 
  3,283 
  46,717 
  - 
  - 
  - 
  46,717 
1/16/2018
7/30/2019
  10.00%
No
  10,000 
  10,000 
  464 
  9,536 
  - 
  - 
  - 
  9,536 
1/16/2018
7/30/2019
  10.00%
No
  20,000 
  20,000 
  1,389 
  18,611 
  - 
  - 
  - 
  18,611 
1/30/2018
7/30/2019
  10.00%
No
  25,000 
  25,000 
  3,000 
  22,000 
  - 
  - 
  - 
  22,000 
2/14/2018
7/30/2019
  10.00%
No
  50,000 
  50,000 
  3,286 
  46,714 
  - 
  - 
  - 
  46,714 
2/16/2018
7/30/2019
  10.00%
No
  19,156 
  19,156 
  1,213 
  17,943 
  - 
  - 
  - 
  17,943 
2/19/2018
8/19/2018
  8.00%
No
  121,111 
  121,111 
  22,678 
  98,433 
  - 
  - 
  98,433 
  - 
2/23/2018
7/30/2019
  10.00%
No
  10,000 
  10,000 
  428 
  9,572 
  - 
  - 
  - 
  9,572 
2/27/2018
7/30/2019
  10.00%
No
  10,000 
  10,000 
  - 
  10,000 
  - 
  - 
  - 
  10,000 
2/28/2018
7/30/2019
  10.00%
No
  50,000 
  50,000 
  2,924 
  47,076 
  - 
  - 
  - 
  47,076 
3/7/2018
9/7/2018
  8.00%
No
  83,333 
  83,333 
  12,463 
  70,870 
  - 
  - 
  70,870 
  - 
3/9/2018
7/30/2019
  10.00%
No
  25,000 
  25,000 
  1,167 
  23,833 
  - 
  - 
  - 
  23,833 
3/30/2018
7/30/2019
  10.00%
No
  10,000 
  10,000 
  419 
  9,581 
  - 
  - 
  - 
  9,581 
 
    
 
    
    
    
    
    
    
    
    
Totals
    
 
 $7,510,718 
 $5,658,142 
 $90,657 
 $5,567,485 
 $3,642,948 
 $- 
 $807,563 
 $1,116,974 
 
* Note - Principle and accrued interest will be due and payable at the earliest of A). resolution of Memphsis litigation; B). June 30, 2018, or C). when OTE is able to pay
 
 
14
 
 
The following convertible note 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
 
12/12/2006
1/5/2013
  6.25%
  Yes
  58,670 
  12,272 
  - 
  12,272 
  - 
  - 
  12,272 
  - 
12/1/2007
9/1/2015
  7.00%
  Yes
  125,000 
  85,821 
  - 
  85,821 
  - 
  - 
  85,821 
  - 
9/25/2009
10/25/2011
  5.00%
  Yes
  50,000 
  50,000 
  - 
  50,000 
  - 
  - 
  50,000 
  - 
12/23/2009
12/23/2014
  7.00%
  Yes
  100,000 
  94,480 
  - 
  94,480 
  - 
  - 
  94,480 
  - 
12/23/2009
12/23/2014
  7.00%
  Yes
  25,000 
  23,619 
  - 
  23,619 
  - 
  - 
  23,619 
  - 
12/23/2009
12/23/2014
  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
  12.00%
  Yes
  200,000 
  200,000 
  - 
  200,000 
  - 
  - 
  200,000 
  - 
12/26/14
12/26/15
  12.00%
  Yes
  100,000 
  100,000 
  - 
  100,000 
  - 
  - 
  100,000 
  - 
3/12/2015
90 days after demand
  6.00%
No
  394,380 
  394,380 
  - 
  394,380 
  394,380 
  - 
  - 
  - 
4/7/15
04/17/18
  10.00%
No
  50,000 
  50,000 
  - 
  50,000 
  - 
  - 
  50,000 
    
11/23/2015
90 days after demand
  6.00%
No
  50,000 
  50,000 
  - 
  50,000 
  50,000 
  - 
  - 
  - 
2/25/2016
90 days after demand
  6.00%
No
  50,000 
  50,000 
  - 
  50,000 
  50,000 
  - 
  - 
  - 
5/20/2016
90 days after demand
  6.00%
No
  50,000 
  50,000 
  - 
  50,000 
  50,000 
  - 
  - 
  - 
10/20/2016
90 days after demand
  6.00%
No
  50,000 
  12,500 
  - 
  12,500 
  12,500 
  - 
  - 
  - 
10/20/2016
90 days after demand
  6.00%
No
  12,500 
  12,500 
  - 
  12,500 
  12,500 
  - 
  - 
  - 
12/21/2016
90 days after demand
  6.00%
No
  25,000 
  25,000 
  - 
  25,000 
  25,000 
  - 
  - 
  - 
3/9/2017
90 days after demand
  10.00%
No
  200,000 
  177,000 
  - 
  177,000 
  177,000 
  - 
  - 
  - 
7/13/2017
7/13/2019
  6.00%
No
  25,000 
  25,000 
  - 
  25,000 
  - 
  - 
  - 
  25,000 
7/18/2017
7/18/2019
  6.00%
No
  25,000 
  25,000 
  - 
  25,000 
  - 
  - 
  - 
  25,000 
7/26/2017
7/26/2019
  6.00%
No
  15,000 
  15,000 
  - 
  15,000 
  - 
  - 
  - 
  15,000 
7/27/2017
7/27/2019
  6.00%
No
  15,000 
  15,000 
  - 
  15,000 
  - 
  - 
  - 
  15,000 
12/20/2017
7/30/2019
  10.00%
No
  50,000 
  50,000 
  4,340 
  45,660 
  - 
  - 
  - 
  45,660 
12/20/2017
7/30/2019
  10.00%
No
  10,000 
  10,000 
  620 
  9,380 
  - 
  - 
  - 
  9,380 
12/21/2017
7/30/2019
  10.00%
No
  50,000 
  50,000 
  4,284 
  45,716 
  - 
  - 
  - 
  45,716 
12/27/2017
7/30/2019
  10.00%
No
  10,000 
  10,000 
  600 
  9,400 
  - 
  - 
  - 
  9,400 
12/27/2017
7/30/2019
  10.00%
No
  10,000 
  10,000 
  600 
  9,400 
  - 
  - 
  - 
  9,400 
12/28/2017
7/30/2019
  10.00%
No
  250,000 
  250,000 
  21,000 
  229,000 
  - 
  - 
  - 
  229,000 
12/29/2017
7/30/2019
  10.00%
No
  100,000 
  100,000 
  8,960 
  91,040 
  - 
  - 
  - 
  91,040 
12/29/2017
7/30/2019
  10.00%
No
  10,000 
  10,000 
  640 
  9,360 
  - 
  - 
  - 
  9,360 
11/6/2017
 * See note below
  10.00%
No
  646,568