Ocean Thermal Energy Corp 10-Q for FY2023 Q2

Ocean Thermal Energy Corp (CPWR)

10-Q 2023-09-15 For: 2023-06-30

Added on April 06, 2026

About this 10-Q

Ocean Thermal Energy Corp filed this 10-Q on September 15, 2023, covering the quarter ended June 30, 2023 (FY2023 Q2).

Headline figures

Quarter ended June 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Net loss: $2.59M; compared with a net loss of $920.11K a year earlier

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	Description	Page

PART I-FINANCIAL INFORMATION

Item 1	Financial Statements	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Changes in Stockholders’ Deficiency	5
	Condensed Consolidated Statements of Cash Flows	7
	Notes to the Condensed Consolidated Financial Statements	8
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3	Quantitative and Qualitative Disclosures about Market Risk	20
Item 4	Controls and Procedures	21

PART II-OTHER INFORMATION

Item 2	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	22
Item 3	Defaults upon Senior Securities	22
Item 6	Exhibits	24
	Signature	25

	June 30, 2023			December 31, 2022
ASSETS
Current Assets
Cash	$	55,097		$	1,404
Prepaid expenses		5,000			5,000
Total Current Assets		60,097			6,404

Total Assets	$	60,097		$	6,404

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current Liabilities
Accounts payable and accrued expense	$	21,008,110		$	20,517,881
Notes payable - related party		2,294,170			2,329,473
Convertible notes payable - related party, net		116,530			114,721
Notes payable		3,653,331			3,655,932
Convertible note payable, net		2,548,811			2,531,401
Advances payable – related party, net		62,008			57,760
Derivative liability		8,384,880			6,998,262
Total Current Liabilities		38,067,840			36,205,430

Long-term Liabilities
Convertible note payable, net		-			-
Convertible notes payable - related party, net		-			-
Notes payable		-			-
Total Liabilities		38,067,840			36,205,430

Commitments and contingencies (See Note 8)		-			-

Stockholders' deficiency
Preferred Stock, Series B, $0.001par value; 1,250,000 shares authorized, 518,750 and 518,750 shares issued and outstanding, respectively		519			519
Preferred Stock, Series C, $0.001 par value; 2,700,000 shares authorized, 2,300,000 and 2,300,000 shares issued and outstanding, respectively		2,300			2,300
Preferred Stock, Series D, $0.001 par value; 1,400 shares authorized, 984 and 278 shares issued and outstanding, respectively		1			-
Common stock, $0.001 par value; 200,000,000 shares authorized, 184,370,469 and 184,370,469 shares issued and outstanding, respectively		184,371			184,371
Additional paid-in capital		61,522,401			60,110,402
Accumulated deficit		(99,717,335	)		(96,496,618	)
Total Stockholders' Deficiency		(38,007,743	)		(36,199,026	)

Total Liabilities and Stockholders' Deficiency	$	60,097		$	6,404

OCEAN THERMAL ENERGY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)

	For the three months ended						For the six months ended
	June 30, 2023			June 30, 2022			June 30, 2023			June 30, 2022
Operating Expenses
Salaries and compensation	$	217,149		$	207,485		$	444,077		$	410,263
Professional fees		105,340			143,639			196,677			274,428
General and administrative		40,113			38,639			85,673			91,652
Total Operating Expenses		362,602			389,763			726,427			776,343

Loss from Operations		(362,602	)		(389,763	)		(726,427	)		(776,343	)

Other Income (Expenses)
Service income		7,000			-			12,000			-
Interest expense, net		(536,416	)		(448,069	)		(1,051,123	)		(882,322	)
Amortization of debt discount		(33,174	)		(61,517	)		(65,969	)		(124,316	)
Change in FV of derivative liability		(1,662,631	)		(54,089	)		(1,389,220	)		(1,822,743	)
Gain on conversion of debt		22			33,332			22			35,599
Total Other Income (Expense)		(2,225,199	)		(530,343	)		(2,494,290	)		(2,793,782	)

Loss Before Income Taxes		(2,587,801	)		(920,106	)		(3,226,764	)		(3,570,125	)

Provision for Income Taxes		-			-			-			-

Net Loss	$	(2,587,801	)	$	(920,106	)	$	(3,220,717	)	$	(3,570,125	)

Net Loss per Common Share – Basic and diluted	$	(0.01	)	$	(0.01	)	$	(0.02	)	$	(0.02	)

Weighted Average Number of Common Shares Outstanding – Basic and diluted		184,370,469			157,502,337			184,370,469			150,912,815

	Preferred Stock				Common Stock				Additional					Total
	Number of		Par		Number of		Par		Paid-in		Accumulated			Stockholders’
	Shares		Value		Shares		Value		Capital		Deficit			Deficiency
Balance December 31, 2021		2,818,750	$	2,819		174,370,469	$	174,371	$	59,379,402	$	(89,584,516	)	$	(30,027,924	)
Series D Preferred Stock issued for cash		135		-		-		-		270,000		-			270,000
Series D Preferred Stock issued for conversion of notes and interest		143		-		-		-		286,000		-			286,000
Common Stock issued for conversions of notes payable		-		-		5,000,000		5,000		105,000		-			110,000
Net Loss		-		-		-		-		-		(3,570,125	)		(3,570,125	)
Balance June 30, 2022 (Unaudited)		2,819,028	$	2,819		179,370,469	$	179,371	$	60,040,402	$	(93,154,641	)	$	(32,932,049	)

	2023			2022
Cash Flows From Operating Activities:
Net loss	$	(3,220,717	)	$	(3,570,125	)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of derivative liability		1,389,220			1,822,743
Amortization of debt discount		65,969			124,316
Gain on conversion of debt		(22	)		(35,599	)
Stock issued for second commitment fee		-			-
Changes in assets and liabilities:
Prepaid expense		-			-
Accounts payable and accrued expenses		1,467,595			1,388,564
Net Cash Used In Operating Activities		(297,955	)		(270,101	)

Cash Flows From Financing Activities:
Advances from related parties		4,248			-
Repayment of notes payable		(2,600	)		-
Proceeds from sale of preferred stock		350,000			270,000
Net Cash Provided by Financing Activities		351,648			270,000

Net increase (decrease) in cash		53,693			(101	)
Cash at beginning of period		1,404			957
Cash at End of Period	$	55,097		$	856

Supplemental disclosure of cash flow information
Cash paid for interest expense	$	2,493		$	10,293
Cash paid for income taxes	$	-		$	-

Supplemental disclosure of non-cash investing and financing activities:
Preferred stock issued for conversion of notes and accrued interest	$	1,062,000		$	286,000
Common stock issued for conversion of notes payable	$	-		$	110,000
Convertible notes payable and accrued interest converted into common stock	$	-		$	20,075
Convertible notes payable and accrued interest converted into preferred stock	$	59,420		$	100,945
Related party convertible notes payable and accrued interest converted into preferred stock	$	-		$	12,043
Related party note payable and accrued interest converted into preferred stock	$	1,000,000			-
Notes payable and accrued interest converted into preferred stock	$	-		$	168,138
Derivative liability extinguished upon conversion of note payable	$	2,602		$	130,398

	·	*OTEC and SWAC/LSC*-designing ocean thermal energy conversion (“OTEC”) power plants and seawater air conditioning and lake water air conditioning (“SWAC/LSC”) plants for large commercial properties, utilities, and municipalities. These technologies provide practical solutions to mankind’s three oldest and most fundamental needs: clean drinking water, plentiful food, and sustainable, affordable energy without the use of fossil fuels. OTEC is a clean technology that continuously extracts energy from the temperature difference between warm surface ocean water and cold deep seawater. In addition to producing electricity, some of the seawater running through an OTEC plant can be efficiently desalinated using the power generated by the OTEC technology, producing thousands of cubic meters of fresh water every day for use in agriculture and human consumption in the communities served by its plants. This cold, deep, nutrient-rich water can also be used to cool buildings (SWAC/LSC) and for fish farming/aquaculture. In short, it is a technology with many benefits, and its versatility makes OTEC unique.

	·	*EcoVillages*-developing and commercializing our EcoVillages, as well as working to develop or acquire new complementary assets. EcoVillages are communities whose goal is to become more socially, economically, and ecologically sustainable and 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 this line of business.

	•	$1,000,000 in the form of canceled amounts owed by us to certain individuals, including Mr. Feakins, who have assigned their right to receive those payments to Epaphus;
	•	$75,000 in cash per month for 12 months following the date of the purchase agreement; and
	•	70% of the net profit of any currently contemplated project to build an ocean thermal energy conversion power plant entered into by OCEES.

	·	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.

	Six Months Ended June 30,
	2023		2022
Shares underlying warrants outstanding		69,000		125,073
Shares underlying convertible notes outstanding		1,041,523,839		686,697,434
Shares underlying convertible preferred stock outstanding		16,687,500		16,687,500
		1,058,280,339		703,510,007

Date of		Maturity	Interest			In	Original		Principal at June 30,		Discount at June 30,		Carrying Amount at June 30,		Related Party				Non Related Party
Issuance		Date	Rate			Default	Principal		2023		2023		2023		Current		Long-Term		Current		Long-Term
12/01/07		09/01/15		7.00	%	Yes		125,000		85,821		-		85,821		-		-		85,821		-
09/25/09		10/25/11		5.00	%	Yes		50,000		50,000		-		50,000		-		-		50,000		-
12/23/09		12/23/14		7.00	%	Yes		100,000		81,121		-		81,121		-		-		81,121		-
12/23/09		12/23/14		7.00	%	Yes		25,000		21,955		-		21,955		-		-		21,955		-
12/23/09		12/23/14		7.00	%	Yes		25,000		21,945		-		21,945		-		-		21,945		-
02/03/12		12/31/19		10.00	%	Yes		1,000,000		1,000,000		-		1,000,000		-		-		1,000,000		-
08/15/13		10/31/23		10.00	%	No		158,334		158,334		-		158,334		-		-		158,334		-
12/31/13		12/31/15		8.00	%	Yes		290,000		130,000		-		130,000		-		-		130,000		-
04/01/14		12/31/18		10.00	%	Yes		2,265,000		1,067,197		-		1,067,197		1,067,197		-		-		-
12/22/14		03/31/15		22.00	%*	Yes		200,000		200,000		-		200,000		-		-		200,000		-
12/26/14		12/26/15		22.00	%*	Yes		100,000		100,000		-		100,000		-		-		100,000		-
03/12/15		(1)		6.00	%	No		394,380		394,380		-		394,380		394,380		-		-		-
04/07/15		04/07/18		10.00	%	Yes		50,000		50,000		-		50,000		-		-		50,000		-
11/23/15		(1)		6.00	%	No		50,000		50,000		-		50,000		50,000		-		-		-
02/25/16		(1)		6.00	%	No		50,000		50,000		-		50,000		50,000		-		-		-
05/20/16		(1)		6.00	%	No		50,000		50,000		-		50,000		50,000		-		-		-
10/20/16		(1)		6.00	%	No		37,500		12,500		-		12,500		12,500		-		-		-
10/20/16		(1)		6.00	%	No		12,500		12,500		-		12,500		12,500		-		-		-
12/21/16		(1)		6.00	%	No		25,000		25,000		-		25,000		25,000		-		-		-
03/09/17		(1)		10.00	%	No		200,000		177,000		-		177,000		177,000		-		-		-
07/13/17		07/13/19		6.00	%	Yes		25,000		25,000		-		25,000		-		-		25,000		-
07/18/17		07/18/19		6.00	%	Yes		25,000		25,000		-		25,000		-		-		25,000		-
07/26/17		07/26/19		6.00	%	Yes		15,000		15,000		-		15,000		-		-		15,000		-
12/20/17		(2)		10.00	%	Yes		979,156		859,156		-		859,156		-		-		859,156		-
11/06/17		12/31/18		10.00	%	Yes		646,568		543,093		-		543,093		543,093		-		-		-
02/19/18		(3)		18.00	%*	Yes		629,451		1,161,136		-		1,161,136		-		-		1,161,136		-
09/19/18		09/28/21		6.00	%	Yes		10,000		10,000		-		10,000		-		-		10,000		-
12/14/18		12/22/18		24.00	%*	Yes		474,759		578,075		-		578,075		-		-		578,075		-
01/02/19		(4)		17.00	%	No		310,000		310,000		-		310,000		-		-		310,000		-
08/14/19		10/31/2021		8.00	%	Yes		26,200		26,200		-		26,200		-		-		26,200		-
	(5)	10/31/2021		8.00	%	Yes		105,000		40,000		-		40,000		5,000		-		35,000		-
	(6)	01/02/22		8.00	%	Yes		296,750		225,000		-		225,000		15,000		-		210,000		-
	(8)	05/12/22		8.00	%	Yes		15,000		15,000		-		15,000		-		-		15,000		-
	(9)	09/01/22		8.00	%	Yes		170,000		155,000		-		155,000		-		-		155,000		-
	(10)	08/30/23		8.00	%	No		285,000		280,000		21,972		258,028		4,629		-		253,399		-
	(11)	11/30/23		8.00	%	No		5,000		5,000		599		4,401		4,401		-		-		-
	(7)	(7)		10.00	%	No		625,000		625,000		-		625,000		-		-		625,000		-
							$	9,850,598	$	8,635,413	$	22,571	$	8,612,842	$	2,410,700	$	-	$	6,202,142	$	-

(1)	Maturity date is 90 days after demand.
(2)	Bridge loans were issued at dates between December 2017 and May 2018. Principal is due on the earlier of 18 months from the anniversary date or the completion of L2 Capital financing with gross proceeds of a minimum of $1.5 million.
(3)	L2 Capital note was drawn down in five tranches between 02/16/18 and 05/02/18.
(4)	Loans were issued from 01/02/19 to 03/23/19. Principal and interest are due when funds are received from the litigation between Ocean Thermal Energy Corporation vs. Robert Coe, et al.
(5)	Notes were issued between 10/14/19 and 11/05/19. The notes bear an interest rate of 8% and mature 10/31/21. They can be converted into 250,000 shares of common stock. They can be converted when the stock closing price reaches $1 or on the maturity, whichever occurs first.
(6)	Notes were issued between 12/09/19 and 11/25/20. The notes bear an interest rate of 8% and mature 01/02/22. They can be converted into 250,000 shares of common stock. They can be converted when the stock closing price reaches $1 or on the maturity, whichever occurs first.
(7)	Notes were issued between 11/02/20 and 03/18/21. The notes bear an interest rate of 10%. Repayment will be made as follows: (i) the principal and interest within five business days following our receipt of $25.5 million from the Robert Coe, et al Phase One Litigation; and (ii) the additional payment within five business days following our actual receipt of any funds from the Robert Coe, et al., Phase Two Litigation, less legal fees accrued up to that date. Payment will be made as such funds are actually received by us and after deductions of accrued legal fees up to that date.
(8)	Notes were issued between 05/14/20 and 08/11/20. The notes bear an interest rate of 8% and mature 05/12/22. They can be converted into 250,000 shares of common stock. They can be converted when the stock closing price reaches $1 or on the maturity, whichever occurs first.
(9)	Notes were issued in November 2020 and during the first two quarters of 2021. The notes bear an interest rate of 8% and mature 09/01/22. They can be converted into 250,000 shares of common stock. They can be converted when the stock closing price reaches $1 or on the maturity, whichever occurs first.
(10)	Notes were issued during the third quarter of 2021. The notes bear an interest rate of 8% and mature 08/30/23. They can be converted into 250,000 shares of common stock. They can be converted when the stock closing price reaches $1 or on the maturity, whichever occurs first.
(11)	Note was issued during November of 2021. The note bears an interest rate of 8% and matures 11/30/23. It can be converted into 250,000 shares of common stock. It can be converted when the stock closing price reaches $1 or on the maturity, whichever occurs first.
*	Default interest rate.

	For the Six Months Ended June 30,
	2023			2022
Derivative liability as of January 1	$	6,998,262		$	3,769,211
Addition to derivative instruments		-			-
Derivative liability extinguished upon conversion of notes payable		(2,602	)		(130,398	)
Change in fair value of derivative liability*		1,389,220			1,822,743
Derivative liability, as of June 30	$	8,384,880		$	5,461,556

Exhibit Number*	Title of Document	Location

Item 3	Articles of Incorporation and Bylaws
3.08	Certificate of Amendment to Designation (Series D Convertible Preferred Stock) filed June 12, 2023.	Incorporated by reference from the Current Report on Form 8-K filed June 15, 2023.

Item 31	Rule 13a-14(a)/15d-14(a) Certifications
31.1	Certification of Principal Executive Officer Pursuant to Rule 13a-14	This filing.
31.2	Certification of Principal Financial Officer Pursuant to Rule 13a-14	This filing.

Item 32	Section 1350 Certifications
32.1	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	This filing.
32.2	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	This filing.

Item 101**	Interactive Data File
101.INS	XBRL Instance Document	This filing.
101.SCH	XBRL Taxonomy Extension Schema	This filing.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase	This filing.
101.DEF	XBRL Taxonomy Extension Definition Linkbase	This filing.
101.LAB	XBRL Taxonomy Extension Label Linkbase	This filing.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase	This filing.

	OCEAN THERMAL ENERGY CORPORATION

Date: September 15, 2023	By:	/s/ Jeremy P. Feakins
		Jeremy P. Feakins
		Chief Executive Officer and Chief Financial Officer
		(Principal Executive and Financial Officer)

(1)	I have reviewed this Quarterly Report on Form 10-Q of Ocean Thermal Energy Corporation;

(2)	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3)	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4)	The registrant’s other certifying officer(s) and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15I and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its unconsolidated investments, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 15, 2023	By:	/s/ Jeremy Feakins
		Jeremy Feakins, Chief Executive Officer (Principal Executive Officer)

Date: September 15, 2023	By:	/s/ Jeremy Feakins
		Jeremy Feakins, Chief Financial Officer (Principal Financial Officer)

Date: September 15, 2023	/s/ Jeremy Feakins
	Chief Executive Officer (Principal Executive Officer)

Date: September 15, 2023	/s/ Jeremy Feakins
	Chief Financial Officer
	(Principal Financial and Principal Accounting Officer)
	Ocean Thermal Energy Corporation