OCEAN THERMAL ENERGY CORPORATION The following discussion and analysis of our financial condition and operating
results should be read together with our financial statements and related notes
included elsewhere in this report. This discussion and analysis and other parts
of this report contain forward-looking statements based upon current beliefs,
plans, and expectations that involve risks, uncertainties, and assumptions. Our
actual results may differ materially from those anticipated in these
forward-looking statements as a result of various factors, including those set
forth under "Risk Factors" or in other parts of this report. Our fiscal quarters
end on
Overview
We develop projects for renewable power generation, desalinated water production, and air conditioning using our proprietary technologies designed to extract energy from the temperature differences between warm surface water and cold deep water. In addition, our projects provide ancillary products such as potable/bottle water and high-profit aquaculture, mariculture, and agriculture opportunities.
We currently have no source of revenue, so as we continue to incur costs we are dependent on external funding for operations. We cannot assure that such funding will be available or, if available, can be obtained on acceptable or favorable terms.
Our operating expenses consist principally of expenses associated with the development of our projects until we determine that a particular project is feasible. Salaries and wages consist primarily of employee salaries and wages, payroll taxes, and health insurance. Our professional fees are related to consulting, engineering, legal, investor relations, outside accounting, and auditing expenses. General and administrative expenses include travel, insurance, rent, marketing, and miscellaneous office expenses. The interest expense includes interest and discounts related to our loans and notes payable.
Results of Operations
Comparison of Years Ended
We had no revenue in the years ended
During the year ended
During the years ended
General and administrative expenses were
For the year ended
Our interest expense was
In addition to interest on our notes payable of
Our amortization of debt discount and loan fee expenses was
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Our operations used net cash of
Investing activities for the years ended
Financing activities provided cash of
Liquidity and Capital Resources
At
Our consolidated financial statements have been prepared assuming we will continue as a going concern. We have experienced recurring losses from operations and have an accumulated deficit. Our ability to continue our operations as a going concern is dependent on the success of management's plans, which include the raising of capital through debt and/or equity markets until such time that revenue provided by operations is sufficient to fund working capital requirements. We will require additional funding to finance the growth of our current and expected future operations as well as to achieve our strategic objectives The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
We have no significant contractual obligations or commercial commitments not reflected on our balance sheet as of this date.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as "special purpose entities.
Critical Accounting Policies and Estimates
We have identified the policies outlined below as critical to our business
operations and an understanding of our results of operations. The list is not
intended to be a comprehensive list of all of our accounting policies. In many
cases, the accounting treatment of a particular transaction is specifically
dictated by accounting principles generally accepted in
Income Taxes
We use the liability method of accounting for income taxes. Under the liability method, deferred tax assets and liabilities are determined based on temporary differences between financial reporting and tax bases of assets and liabilities and on the amount of operating loss carry-forwards and are measured using the enacted tax rates and laws that will be in effect when the temporary differences and carry-forwards are expected to reverse. An allowance against deferred tax assets is recorded when it is more likely than not that such tax benefits will not be realized.
Fair Value of Derivative LIability
We identified conversion features embedded within convertible debt issued. We have determined that the features associated with the embedded conversion option should be accounted for at fair value as a derivative liability. We have elected to account for these instruments together with fixed conversion price instruments as derivative liabilities as we cannot determine if a sufficient number of shares would be available to settle all potential future conversion transactions. We value the derivative liabilities using the Black-Scholes option valuation model. The derivative liabilities are valued at each reporting date and the change in fair value is reflected as change in fair value of derivative liablity.
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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 (see Note 1 of the notes to our consolidated
financial statements for the year ended
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