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
 
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 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)
 
n/a
(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  
[X]
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  
[X]
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 [X]
 
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  
[X]
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of August 13, 2018, issuer had 124,099,592 outstanding shares of common stock, par value $0.001.
 
 

 
 
TABLE OF CONTENTS
 
 
 
 
 
 
 
PART I - FINANCIAL INFORMATION
 
 
ITEM 1. FINANCIAL STATEMENTS
 
 
OCEAN THERMAL ENERGY CORPORATION AND SUBSIDIARIES
 
 
(FORMERLY KNOWN AS TETRIDYN SOLUTIONS, INC)
 
 
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
 
 
 
 
June 30, 2018
 
 
December 31, 2017
 
 
 
(unaudited)
 
 
 
 
ASSETS
 
 
 
 
 
 
Current Assets
 
 
 
 
 
 
Cash
 $75,270 
 $425,015 
Prepaid expenses
  26,197 
  25,000 
Total Current Assets
  101,467 
  450,015 
 
    
    
Property and Equipment
    
    
Property and equipment, net
  1,013 
  1,352 
Assets under construction
  922,639 
  892,639 
Property and Equipment, net
  923,652 
  893,991 
 
    
    
Total Assets
 $1,025,119 
 $1,344,006 
 
    
    
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
    
    
 
    
    
Current Liabilities
    
    
Accounts payables and accrued expense
 $7,533,934 
 $6,846,010 
Notes payable - related party, net
  3,539,448 
  3,592,948 
Convertible notes payable -related party- net
  87,500 
  87,500 
Notes payable, net
  587,096 
  589,812 
Convertible note payable, net
  725,189 
  50,000 
Total Current Liabilities
  12,473,167 
  11,166,270 
 
    
    
Notes payable, net
  1,090,909 
  607,290 
Notes payable, convertible
  80,000 
  80,000 
Total Liabilities
  13,644,076 
  11,853,560 
 
    
    
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,
    
    
123,306,904 and 122,642,247 shares issued and outstanding, respectively
  123,306 
  122,642 
Additional paid-in capital
  57,245,394 
  57,071,022 
Accumulated deficit
  (69,987,657)
  (67,703,218)
Total Stockholders' Deficiency
  (12,618,957)
  (10,509,554)
 
    
    
Total Liabilities and Stockholders' Deficiency
 $1,025,119 
 $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
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the three months ended
 
 
For the six months ended
 
 
 
 June 30, 2018
 
 
 June 30, 2017
 
 
 June 30, 2018
 
 
 June 30, 2017
 
Operating Expenses
 
 
 
 
 
 
 
 
 
 
 
 
Salaries and wages
 $288,958
 
 $296,339 
 $618,947 
 $553,827 
Professional fees
  663,731 
  150,977 
  870,968 
  503,773 
General and administrative
  192,071
 
  174,609 
  419,059 
  252,955 
Warrant Expense
  - 
  - 
  -
 
  6,769,562 
Total Operating Expenses
  1,144,760
 
  621,925 
  1,908,974 
  8,080,117 
 
    
    
    
    
Loss from Operations
  (1,144,760)
  (621,925)
  (1,908,974)
  (8,080,117)
 
    
    
    
    
Other Income & Expenses
    
    
    
    
Interest Expense, net
  (174,610)
  (133,107)
  (335,925)
  (238,100)
Amortization of debt discount
  (63,259)
  (42,436)
  (89,540)
  (44,960)
Income from legal settlement
  50,000 
  - 
  50,000 
  - 
Total Other Expense
  (187,869)
  (175,543)
  (375,465)
  (283,060)
 
    
    
    
    
Loss Before Income Taxes
  (1,332,629)
  (797,468)
  (2,284,439)
  (8,363,177)
 
    
    
    
    
Provision for Income Taxes
  - 
  - 
  - 
  - 
 
    
    
    
    
Net Loss
 $(1,332,629)
 $(797,468)
 $(2,284,439)
 $(8,363,177)
 
    
    
    
    
Net Loss per Common Share
    
    
    
    
Basic and Diluted
 $(0.01)
 $(0.01)
 $(0.02)
 $(0.08)
 
    
    
    
    
Weighted Average Number of Common Shares Outstanding
  123,014,772 
  111,149,698 
  122,863,872 
  107,689,883 
 
    
    
    
    
  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 SATEMENTS OF CASH FLOW
 
 
(Unaudited)
 
 
 
 
 
 
For six months ended
 
 
 
June 30, 2018
 
 
June 30, 2017
 
Cash Flows From Operating Activities:
 
 
 
 
 
 
Net loss
 $(2,284,439)
 $(8,363,177)
Adjustments to reconcile net loss to net cash used in operating activities
    
    
Depreciation
  339 
  673 
Stock issued for services
  130,966 
  244,800 
Warrant Expense
  - 
  6,769,562 
Amortization of debt discount
  89,540 
  44,960 
Changes in assets and liabilities:
    
    
Prepaid expenses
  (1,197)
  30,549 
Accounts payable & accrued expenses
  687,924 
  509,562 
Net Cash Used In Operating Activities
  (1,376,867)
  (763,071)
 
    
    
Cash Flow From Investing Activities:
    
    
Cash acquired from TetriDyn Solutions, Inc.
  - 
  4,512 
Assets under construction
  (30,000)
  (42,853)
Cash paid to TetriDyn Solutions, Inc.
  - 
  (49,773)
Net Cash Used In Investing Activities
  (30,000)
  (88,114)
 
    
    
Cash Flows From Financing Activities:
    
    
Repayment of due to related party
  - 
  (36,822)
Repayment of notes payable - related party
  (53,500)
  (25,000)
Repayment of notes payable
  (2,716)
  - 
Proceeds from notes payable
  489,156 
  - 
Proceeds from convertible notes payable
  615,087 
 
Proceeds from notes payable - related party
  - 
  200,000 
Proceeds from due to related party
  - 
  50,000 
Proceeds from issuance of common stock
  - 
  45,000 
Proceeds from exercise of warrants
  9,095 
  748,535 
Stock repurchased from related parties
  - 
  (111,440)
Net Cash Provided by Financing Activities
  1,057,122 
  870,273 
 
    
    
Net (decrease) increase in cash and cash equivalents
  (349,745)
  19,088 
Cash and cash equivalents at beginning of period
  425,015 
  7,495 
Cash and Cash Equivalents at End of Period
 $75,270 
 $26,583 
 
    
    
Supplemental disclosure of cash flow information
    
    
Cash paid for interest expense
 $25,812 
 $13,160 
Cash paid for income taxes
 $- 
 $- 
 
    
    
Supplemental disclosure of non-cash investing and financing activities:
    
    
Debt discount on note payable
 $34,975 
 $- 
Convertible note payable - related party converted to common stock
 $- 
 $25,000 
 
 
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 June 30, 2018 Financial Statements
(Unaudited)
 
Note 1: Source of Business and Basis of Presentation
 
Ocean Thermal Energy Corporation 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 is a technology with many benefits, and its versatility makes OTEC unique.
 
EcoVillagesDeveloping and commercializing our EcoVillages, as well as working to develop or acquire new complementary assets. EcoVillages are communities whose goal is to become more socially, economically, and ecologically sustainable. EcoVillages are communities whose inhabitants seek to live according to ecological principles, causing as little impact on the environment as possible. We expect that our EcoVillage communities will range from a population of 50 to 150 individuals, although some may be smaller. We may also form larger EcoVillages, of up to 2,000 individuals, as networks of smaller subcommunities. We expect that our EcoVillages will grow by the addition of individuals, families, or other small groups.
 
We expect to use our technology in the development of our EcoVillages, which should add significant value to our existing line of business.
 
On May 25, 2017, we received approval from the Financial Industry Regulatory Authority (“FINRA”) to change the trading symbol for our common stock to “CPWR” from “TDYS.” Our common stock began formally trading under the symbol “CPWR” on June 21, 2017.
  
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 shareholder 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 acquire 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.
 
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 six months ended June 30, 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 annual report on Form 10-K for the year ended December 31, 2017, including the financial statements and notes.
 
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 $2,284,439 and used $1,376,867 of cash in operating activities for the six months ended June 30, 2018. We had a working capital deficiency of $12,371,700 and a stockholders’ deficiency of $12,618,957 as of June 30, 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.
 
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 “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.
 
The staff of the U.S. Securities and Exchange Commission (“SEC”) 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, we remeasured our 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 our deferred tax assets and liabilities was offset by a change in the valuation allowance.
 
 
6
 
 
We are still in the process of analyzing the impact of the TCJA to us. Where we have been able to make reasonable estimates of the effects of the TCJA, we have recorded provisional amounts. However, our analysis is not yet complete. The ultimate impact of the TCJA to our consolidated financial statements may differ from the provisional amounts due to, among other things, additional analysis, changes in interpretations and assumptions we have made, additional regulatory guidance that may be issued, and actions we may take as a result of the TCJA. The accounting is expected to be complete when our 2017 U.S. corporate income tax return is filed in 2018.
 
No income tax expense was recognized for the six-month periods ended June 30, 2018 and 2017, due to the net losses 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 six months ended June 30, 2018.
 
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.
 
Note 4: Fair Value of Financial Instruments
 
Financial Accounting Standards Board Accounting Standard Codification (“ASC”) Topic 820, “Fair Value Measurements and Disclosures,” defines fair value, establishes a framework for measuring fair value under GAAP, and enhances disclosures about fair value measurements. ASC 820 describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, which are the following:
 
Level 1–Pricing inputs are quoted prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2–Pricing inputs are quoted for similar assets or inputs that are observable, either directly or indirectly, for substantially the full term through corroboration with observable market data. Level 2 includes assets or liabilities valued at quoted prices adjusted for legal or contractual restrictions specific to these investments.
Level 3–Pricing inputs are unobservable for the assets or liabilities; that is, the inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability.
 
Management believes the carrying amounts of the short-term financial instruments, including cash and cash equivalents, prepaid expense and other assets, accounts payable, accrued liabilities, notes payable, deferred compensation, and other liabilities reflected in the accompanying balance sheets approximate fair value at June 30, 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 284,073 and 0 shares issuable upon the exercise of warrants and options and 9,697,398 and 10,868,981 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 June 30, 2018 and 2017, respectively.
  
Note 6: Recent Accounting Pronouncements
 
The amendments in Accounting Standards Updates (“ASU”) 2017-11 change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. ASU 2017-11 defines Down Round Feature as: “A feature in a financial instrument that reduces the strike price of an issued financial instrument if the issuer sells shares of its stock for an amount less than the currently stated strike price of the issued financial instrument or issues an equity-linked financial instrument with a strike price below the currently stated strike price of the issued financial instrument. A down round feature may reduce the strike price of a financial instrument to the current issuance price, or the reduction may be limited by a floor or on the basis of a formula that results in a price that is at a discount to the original exercise price but above the new issuance price of the shares, or may reduce the strike price to below the current issuance price. A standard antidilution provision is not considered a down round feature.” For public business entities, the amendments in Part I of this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments in Part I of this update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period prior to ASU 2017-11. We have elected to early adopt this standard and have no other instruments from prior periods that are affected by this adoption.
 
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.
 
 
7
 
 
Note 7: Business Segments
 
We conduct operations in various foreign jurisdictions where we are developing projects to use our technology. Our segments are based on the location of these projects. The U.S. territories segment consists of projects in the U.S. Virgin Islands and Guam; the Bahamas segment consists of projects specific to the Bahamas; 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 (“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 is as follows:
 
 
June 30, 2018
 
 
 
Headquarters
 
 
US Territories
 
 
Bahamas
 
 
Other
 
 
Total
 
Revenue
 $- 
 $- 
 $- 
 $- 
 $- 
Assets
 $102,480 
 $757,738 
 $- 
 $164,901 
 $1,025,119 
Net Loss
 $(2,284,439)
 $- 
 $- 
 $- 
 $(2,284,439)
Property and equipment
 $1,013 
 $- 
 $- 
 $- 
 $1,013 
Capitalized construction in process
 $- 
 $757,738 
 $- 
 $164,901 
 $922,639 
Depreciation
 $339 
 $- 
 $- 
 $- 
 $339 
Addtions to Property and equipment
 $- 
 $30,000 
 $- 
 $- 
 $30,000 


 
June 30, 2017
 
 
 
Headquarters
 
 
US Territories
 
 
Bahamas
 
 
Other
 
 
Total
 
Revenue
 $- 
 $- 
 $- 
 $- 
 $- 
Assets
 $28,276
 $840,140
 $- 
 $48,998
 $917,414
Net Loss
 $(8,363,177)
 $- 
 $- 
 $- 
 $(8,363,177)
Property and equipment
 $1,693
 $- 
 $- 
 $- 
 $1,693
Capitalized construction in process
 $- 
 $840,140
 $- 
 $48,998
 $889,138
Depreciation
 $673
 $- 
 $- 
 $- 
 $673
Addtions to Property and equipment
 $- 
 $42,853
 $- 
 $- 
 $   42,853
 
    
    
    
    
    
For the period ended June 30, 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 were considered to be impaired due to the uncertainty of the project and were written off. There were $30,000 additions and no write offs to assets under construction in the first six months of 2018.
  
Note 8: 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 remaining balance on the loan at the date of the Merger was $14,974. The interest rate is 6.25%, and the maturity date was January 5, 2013. The loan principal was $9,556 with accrued interest of $0 as of June 30, 2018. This note is in default.
 
On December 23, 2009, we borrowed funds from SICOG (the “EDA-#273 loan”). The remaining balance on the loan at the date of the 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 $21,148 as of June 30, 2018. This note is in default.
 
On December 23, 2009, we borrowed funds from SICOG (the “MICRO I-#274 loan”). The remaining balance on the loan at the date of the 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 $4,955 as of June 30, 2018. This note is in default.
 
On December 23, 2009, we borrowed funds from SICOG (the “MICRO II-#275 loan”). The remaining balance on the loan at the date of the 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 $5,896 as of June 30, 2018. This note is in default.
 
On December 1, 2007, we borrowed funds from the Eastern Idaho Development Corporation (the “EIDC loan”). The remaining balance on the loan at the date of the 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 $36,344 as of June 30, 2018. This note is in default.
 
On September 25, 2009, we borrowed funds from the Pocatello Development Authority. The remaining balance on the loan at the date of the 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 $19,463 as of June 30, 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. (“JPF”), 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 June 30, 2018, the outstanding loan balance was $394,380 and the accrued but unpaid interest was $82,917 on the Consolidated Note.
 
 
8
 
 
On November 23, 2015, we borrowed $50,000 from JPF pursuant to a promissory note. We 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 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 June 30, 2018, the outstanding balance was $50,000, plus accrued interest of $7,557.
 
On February 25, 2016, we 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 note was amended to eliminate the conversion feature. As of June 30, 2018, the outstanding balance was $50,000, plus accrued interest of $7,145.
 
On May 20, 2016, we 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 note was amended to eliminate the conversion feature. As of June 30, 2018, the outstanding balance was $50,000, plus accrued interest of $6,297.
 
On October 20, 2016, we 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 note was amended to eliminate the conversion feature. As of June 30, 2018, the outstanding balance was $12,500, plus accrued interest of $1,305.
  
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 June 30, 2018, the outstanding balance was $12,500, plus accrued interest of $1,371.
 
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 June 5, 2017, the note holder converted the note principal of $25,000 into 1,806,298 shares common stock. As of June 30, 2018, there was an outstanding balance of accrued interest of $904.
 
On December 21, 2016, we 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 share price was adjusted to $0.01384 for the reverse stock splits. As of June 30, 2018, the outstanding balance was $25,000, plus accrued interest of $2,317.
 
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 June 30, 2018, the outstanding balance was $1,000,000, plus accrued interest of $585,837.
 
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 a proposed external financing source, the board repriced the warrants to $0.00, 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. We recorded a loss on settlement of debt of $728,328 on conversion date. As of June 30, 2018, the loan balance was $158,334 and the accrued interest was $76,845.
   
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 $45,542 at June 30, 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.
 
 
9
 
 
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, our principal stockholder. 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 a proposed external financing source, the board repriced the warrants to $0.00, 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 our 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 six months ended June 30, 2018, we made a repayment of note payable in the amount of $35,000. As of June 30, 2018, the loan balance was $1,102,500 and the accrued interest was $455,467.
 
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 a proposed external financing source, the board repriced the warrants to $0.00, 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 was 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 was 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 were 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 $213,312 as of June 30, 2018.
  
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 was 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. This conversion price is not required to adjust for the reverse stock split as per the note agreement. We recorded a debt discount of $6,667 for the fair value of the beneficial conversion feature. During the six months ended June 30, 2018, we amortized $871 of debt discount. Accrued interest totaled $16,361 as of June 30, 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 with 90 days of demand. On June 30, 2018, the balance of the loan outstanding was $177,000, and the accrued interest as of that date was $23,804.
 
During the third quarter of 2017, we 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; 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 June 30, 2018, the outstanding balance for all four notes was $80,000, plus accrued interest of $4,567.
 
On November 6, 2017, we entered into an agreement and promissory note with JPF 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; June 30, 2018; or when we are otherwise able to pay. For the six months ended June 30, 2018, we made a repayment of this note in the amount of $18,500. As of June 30, 2018, the outstanding balance was $623,067 and the accrued interest was $49,154. On June 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.
 
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 June 30, 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 funds from L2 Capital, LLC, an unaffiliated Kansas limited liability company (“L2 Capital”), under the equity purchase agreement equal to 20% of the total funds received by us from L2 Capital payable on a pro-rata basis to all holders of the notes. 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 noteholder 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 June 30, 2018, and December 31, 2017, the balance outstanding was $979,156 and $490,000, respectively. As of June 30, 2018, and December 31, 2017, the accrued interest was $24,291 and $613, respectively. On April 15, 2018, we paid $20,340, which was all of the interest accrued as of March 31, 2018, to the note holders. As of June 30, 2018, and December 31, 2017, we had issued warrants to purchase 262,000 and 134,000 shares of common stock, respectively. As of June 30, 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 June 30, 2018, warrants to purchase 34,000 shares have been exercised (see Note 9) and the debt discount related to the exercised warrants has been fully expensed. For the six months ended June 30, 2018, we amortized $29,438 of debt discount.
 
 
10
 
 
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 (with the understanding that the initial six months of such interest of each tranche funded would be guaranteed), at maturity or upon acceleration or otherwise, as set forth therein (the “L2 Note”). L2 Capital has the right at any time to convert all or any part of the L2 Note into fully paid and nonassessable shares of our common stock at the fixed conversion price, which is equal to $0.50 per share; provided, however, that at any time on or after the occurrence of any event of default under the L2 Note, the conversion price will mean the lesser of the fixed conversion price and 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. The consideration to us for the L2 Note is up to $500,000 due to the prorated original issuance discount of up to $55,555 and a $10,000 credit for L2 Capital’s transactional expenses. As of the June 30, 2018, we have received five tranches totaling $482,222, which were allocated as follows: original issuance discount-$47,222; L2 Capital’s transaction fee-$10,000; broker-dealer’s fee-$34,000; net proceeds to us-$391,000. The debt discount is amortized over the life of the L2 Note. In addition, we also issued warrants to purchase 56,073 shares of common stock in accordance with a nonexclusive finder’s fee arrangement (see Note 10). These warrants have a fair value of $13,280 based on the Black-Scholes option-pricing model. The fair value was recorded as a discount on the notes payable and is being amortized over the life of the notes payable. For the six months ended June 30, 2018, we amortized $50,218 of original issuance discount and transaction fees. The accrued interest as of June 30, 2018, was $10,412.
 
On May 22, 2018, we executed a convertible note with Collier Investments, LLC, an unaffiliated California company, for a loan 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 in the amount of $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 will have the option to prepay 145% of the outstanding balance. There was an original issue discount fee of $31,250 and a transaction fee of $5,000, yielding net proceeds of $245,000 to us. In addition, we paid a finder’s fee of $20,914. For the six months ended June 30, 2018, we amortized $9,883 of original issuance discount and transaction fees. The accrued interest as of June 30, 2018, was $3,469.
 
 
11
 
 
The following convertible notes and notes payable were outstanding at June 30, 2018:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Related Party
 
 
Non Related Party
 
Date of Issuance
Maturity Date
 
Interest Rate
 
In Default
 
Original Principal
 
 
Principal at June 30, 2018
 
 
Discount at June 30, 2018
 
 
Carrying Amount at June 30, 2018
 
 
Current
 
 
Long-Term
 
 
Current
 
 
Long-Term
 
12/12/2006
1/5/2013
  6.25%
Yes
  58,670 
  9,557 
  - 
  9,557 
  - 
  - 
  9,557 
  - 
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
* See note below
  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
* See note below
  6.00%
No
  50,000 
  50,000 
  - 
  50,000 
  50,000 
  - 
  - 
  - 
2/25/2016
* See note below
  6.00%
No
  50,000 
  50,000 
  - 
  50,000 
  50,000 
  - 
  - 
  - 
5/20/2016
* See note below
  6.00%
No
  50,000 
  50,000 
  - 
  50,000 
  50,000 
  - 
  - 
  - 
10/20/2016
* See note below
  6.00%
No
  50,000 
  12,500 
  - 
  12,500 
  12,500 
  - 
  - 
  - 
10/20/2016
* See note below
  6.00%
No
  12,500 
  12,500 
  - 
  12,500 
  12,500 
  - 
  - 
  - 
12/21/2016
* See note below
  6.00%
No
  25,000 
  25,000 
  - 
  25,000 
  25,000 
  - 
  - 
  - 
3/9/2017
* See note below
  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 
  2,919 
  47,081 
  - 
  - 
  - 
  47,081 
12/20/2017
7/30/2019
  10.00%
No
  10,000 
  10,000 
  417 
  9,583 
  - 
  - 
  - 
  9,583 
12/21/2017
7/30/2019
  10.00%
No
  50,000 
  50,000 
  2,901 
  47,099 
  - 
  - 
  - 
  47,099 
12/27/2017
7/30/2019
  10.00%
No
  10,000 
  10,000 
  409 
  9,591 
  - 
  - 
  - 
  9,591 
12/27/2017
7/30/2019
  10.00%
No
  10,000 
  10,000 
  - 
  10,000 
  - 
  - 
  - 
  10,000 
12/28/2017
7/30/2019
  10.00%
No
  250,000 
  250,000 
  14,325 
  235,675 
  - 
  - 
  - 
  235,675 
12/29/2017
7/30/2019
  10.00%
No
  100,000 
  100,000 
  6,123 
  93,877 
  - 
  - 
  - 
  93,877 
12/29/2017
7/30/2019
  10.00%
No
  10,000 
  10,000 
  437 
  9,563 
  - 
  - 
  - 
  9,563 
11/6/2017
 ** See note below
  10.00%
No
  646,568 
  623,068 
  - 
  623,068 
  623,068 
  - 
  - 
  - 
1/2/2018
7/30/2019
  10.00%
No
  25,000 
  25,000 
  1,211 
  23,789 
  - 
  - 
  - 
  23,789 
1/2/2018
7/30/2019
  10.00%
No
  20,000 
  20,000 
  929 
  19,071 
  - 
  - 
  - 
  19,071 
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 
  378 
  9,622 
  - 
  - 
  - 
  9,622 
1/12/2018
7/30/2019
  10.00%
No
  10,000 
  10,000 
  378 
  9,622 
  - 
  - 
  - 
  9,622 
1/16/2018
7/30/2019
  10.00%
No
  50,000 
  50,000 
  2,669 
  47,331 
  - 
  - 
  - 
  47,331 
1/16/2018
7/30/2019
  10.00%
No
  10,000 
  10,000 
  377 
  9,623 
  - 
  - 
  - 
  9,623 
1/16/2018
7/30/2019
  10.00%
No
  20,000 
  20,000 
  1,129 
  18,871 
  - 
  - 
  - 
  18,871 
1/30/2018
7/30/2019
  10.00%
No
  25,000 
  25,000 
  2,438 
  22,562 
  - 
  - 
  - 
  22,562 
2/14/2018
7/30/2019
  10.00%
No
  50,000 
  50,000 
  2,671 
  47,329 
  - 
  - 
  - 
  47,329 
2/16/2018
7/30/2019
  10.00%
No
  19,156 
  19,156 
  986 
  18,170 
  - 
  - 
  - 
  18,170 
2/19/2018
8/19/2018
  8.00%
No
  121,111 
  121,111 
  8,042 
  113,069 
  - 
  - 
  113,069 
  - 
2/23/2018
7/30/2019
  10.00%
No
  10,000 
  10,000 
  348 
  9,652 
  - 
  - 
  - 
  9,652 
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 
  2,376 
  47,624 
  - 
  - 
  - 
  47,624 
3/7/2018
9/7/2018
  8.00%
No
  83,333 
  83,333 
  5,375 
  77,958 
  - 
  - 
  77,958 
  - 
3/9/2018
7/30/2019
  10.00%
No
  25,000 
  25,000 
  949 
  24,051 
  - 
  - 
  - 
  24,051 
3/30/2018
7/30/2019
  10.00%
No
  10,000 
  10,000 
  - 
  10,000 
  - 
  - 
  - 
  10,000 
4/2/2018
10/2/2018
  8.00%
No
  111,111 
  111,111 
  9,817 
  101,294 
    
    
  101,294 
    
4/16/2018
10/16/2018
  8.00%
No
  111,111 
  111,111 
  11,279 
  99,832 
    
    
  99,832 
    
4/23/2018
7/30/2019
  10.00%
No
  25,000 
  25,000 
  1,386 
  23,614 
    
    
    
  23,614 
5/2/2018
11/2/2018
  8.00%
No
  55,556 
  55,556 
  6,492 
  49,064 
    
    
  49,064 
    
5/24/2018
7/30/2019
  10.00%
No
  20,000 
  20,000 
  823 
  19,177 
    
    
    
  19,177 
5/24/2018
12/24/2018
  12.00%
No
  281,250 
  281,250 
  47,280 
  233,970 
    
    
  233,970 
    
Totals
    
 
 $8,114,746 
 $6,245,006 
 $134,864 
 $6,110,142 
 $3,626,948 
 $- 
 $1,312,285 
 $1,170,909 
 
    
 
    
    
    
    
    
    
    
    
* Note - Maturity date - 90 days after demand
** Note - Principle and accrued interest will be due and payable at the earliest of A). resolution of Memphsis litigation; B). December 31, 2018, or C). when OTE is able to pay
 
12
 
 
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
 
12/12/2006
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
* See note below
  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
* See note below
  6.00%
No
  50,000 
  50,000 
  - 
  50,000 
  50,000 
  - 
  - 
  - 
2/25/2016
* See note below
  6.00%
No
  50,000 
  50,000 
  - 
  50,000 
  50,000 
  - 
  - 
  - 
5/20/2016
* See note below
  6.00%
No
  50,000 
  50,000 
  - 
  50,000 
  50,000 
  - 
  - 
  - 
10/20/2016
* See note below
  6.00%
No
  50,000 
  12,500 
  - 
  12,500 
  12,500 
  - 
  - 
  - 
10/20/2016
* See note below
  6.00%
No
  12,500 
  12,500 
  - 
  12,500 
  12,500 
  - 
  - 
  - 
12/21/2016
* See note below
  6.00%
No
  25,000 
  25,000 
  - 
  25,000 
  25,000 
  - 
  - 
  - 
3/9/2017
* See note below
  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 <