ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(a)
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Documents filed as part of this report.
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(1)
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Financial Statements. The following consolidated financial statements are included in Part II, Item 8 of this Annual Report on Form 10-K:
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Report of Independent Registered Public Accounting Firm
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Consolidated Balance Sheet as of December 31, 2015 and 2014
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Consolidated Statements of Operations for the Years ended December 31, 2015 and 2014.
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Consolidated Statements of Changes in Stockholders’ Deficit for the two years ended December 31, 2015
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Consolidated Statements of Cash Flows for Years ended December 31, 2015 and 2014
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Notes to Consolidated Financial Statements
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(2)
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Financial Statement Schedules.
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Additional Schedules are omitted as the required information is inapplicable or the information is presented in the financial statements or related notes.
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(3)
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Exhibits required to be filed by Item 601 of Regulation S-K.
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Exhibits Index
Exhibit
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Description
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2.1
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Agreement and Plan of Merger, dated as of December 29, 2010, by and among Superior Silver Mines, Inc., Superior Silver Mines Acquisition Corp., and Clean Wind Energy, Inc. (1)
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2.2
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Plan of Domestication of Superior Silver Mines, Inc., dated December 21, 2010 (1)
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2.3
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Nevada Articles of Domestication of Superior Silver Mines, Inc., dated December 27, 2010 (1)
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2.4
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Idaho Statement of Domestication of Superior Silver Mines, Inc., dated December 22, 2010 (1)
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2.5
2.6
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Articles of Merger by and between Clean
Wind Energy Tower, Inc. and Superior Silver Mines, Inc. (2)
Articles of Merger by and between Solar
Wind Energy Tower Inc. and Clean Wind Energy Tower, Inc. (6)
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3.1
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Articles of Incorporation of Clean Wind Energy Tower, Inc. (1)
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3.2
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Amended Bylaws of Clean Wind Energy Tower, Inc. (3)
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4.1
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Form of Common Stock Certificate (4)
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4.2
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Form of Securities Purchase Agreement entered with the 2013 Investors (5)
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4.3
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Form of Convertible Debentures (5)
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10.1
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Letter Agreement between Clean Wind Energy, Inc. and Source Capital Group, Inc., dated November 22, 2010 (1)
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10.2
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Deed of Lease, dated December 1, 2010, by and between CKP One, LLC and Clean Wind Energy, Inc. (1)
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10.3
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Lease Agreement, dated October 20, 2010, and effective November 1, 2010, by and between Office Suites PLUS at Annapolis and Clean Wind Energy, Inc. (1)
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10.4
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Director and Executive Employment Agreement, dated September 22, 2010, by and between Clean Wind Energy, Inc. and Ronald Pickett, and Amendment dated November 22, 2010 (1)
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10.5
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Director and Executive Employment Agreement, dated September 22, 2010, by and between Clean Wind Energy, Inc. and Stephen Sadle, and Amendment dated November 22, 2010 (1)
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10.6
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Director and Executive Employment Agreement, dated September 22, 2010, by and between Clean Wind Energy, Inc. and Robert Crabb, and Amendment dated November 22, 2010 (1)
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10.7
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Executive Employment Agreement, dated September 22, 2010, by and between Clean Wind Energy, Inc. and John W. Hanback, and Amendment dated November 22, 2010 (1)
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10.8
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Executive Employment Agreement, dated September 22, 2010, by and between Clean Wind Energy, Inc. and Itzhak Tepper, PE, and Amendment dated November 22, 2010 (1)
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10.9
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Executive Employment Agreement, dated September 22, 2010, by and between Clean Wind Energy, Inc. and Ownkar Persaud, and Amendment dated November 22, 2010 (1)
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10.10
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Form of Director and Officer Indemnification Agreement (4)
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14.1
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Code of Business Conduct and Ethics
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21.1
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Subsidiaries of the Registrant (4)
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31.1
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Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Ronald W. Pickett
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31.2
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Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Ronald W. Pickett
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32.1
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Certification of Ronald W. Pickett pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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32.2
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Certification of Ronald W. Pickett pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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101.INS*
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XBRL Instance Document
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101.SCH*
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XBRL Schema Document
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101.CAL*
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XBRL Calculation Linkbase Document
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101.LAB*
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XBRL Label Linkbase Document
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101.PRE*
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XBRL Presentation Linkbase Document
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101.DEF*
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XBRL Definition Linkbase Document
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(1)
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Filed with the registrant's Form 8-K filed with the Securities and Exchange Commission on December 30, 2010 and incorporated herein by reference.
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(2)
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Filed with the registrant's Form 8-K filed with the Securities and Exchange Commission on January 21, 2011 and incorporated herein by reference.
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(3)
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Filed with the registrant's Form 8-K filed with the Securities and Exchange Commission on December 28, 2010 and incorporated herein by reference.
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(4)
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Filed with the registrant's Form 10-K for the year ended December 31, 2011 filed with the Securities and Exchange Commission on April 12, 2011 and incorporated herein by reference.
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(5)
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Filed with the registrant's Form 8-K filed with the Securities and Exchange Commission on February 13, 2013 and incorporated herein by reference.
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(6)
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Filed with the registrant's Form 8-K filed with the Securities and Exchange Commission on March 11, 2013 and incorporated herein by reference.
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*
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To be filed by amendment
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SIGNATURES
Pursuant to the requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
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SOLAR WIND ENERGY TOWER INC. (f/k/a CLEAN WIND ENERGY TOWER, INC.)
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Dated: March 2, 2017
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By:
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/s/ Ronald W. Pickett
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Name: Ronald W. Pickett
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President, Chief Executive Officer and Principal Accounting Officer
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Pursuant to the requirements
of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
Dated: March 2, 2017
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By:
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/s/ Ronald W. Pickett
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Name: Ronald W. Pickett
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President, Chief Executive Officer (PEO), Director
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Dated: March 2, 2017
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By:
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/s/ Robert P. Crabb
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Name: Robert P. Crabb
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Director
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Dated: March 2, 2017
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By:
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/s/ Stephen L. Sadle
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Name: Stephen L. Sadle
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Director
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Dated: March 2, 2017
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By:
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/s/ H. James Magnuson
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Name: H. James Magnuson
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Director
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Dated: March 2, 2017
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By:
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/s/ Arthur P. Dammarell
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Name: Arthur P. Dammarell
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Director
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Solar Wind Energy Tower Inc.
Index to Consolidated Financial Statements
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Page
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Report of Independent Registered Public Accounting Firm
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F-2
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Consolidated Balance Sheets as of December 31, 2015 and 2014
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F-3
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Consolidated Statements of Operations for the years ended December 31, 2015 and 2014
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F-4
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Consolidated Statements of Changes in Stockholders’ Deficit for the two years ended December 31, 2015
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F-5
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Consolidated Statements of Cash Flows for the years ended December 31, 2015 and 2014
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F-7
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Notes to Consolidated Financial Statements
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F-8 to F-29
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REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To the Board of Directors and Stockholders
of
Solar Wind Energy Tower, Inc.
We have audited the accompanying consolidated balance
sheets of Solar Wind Energy Tower, Inc. and subsidiaries (the “Company”) as of December 31, 2015 and 2014, and
the related consolidated statements of operations, equity and cash flows for each of the two years in the period ended
December 31, 2015. These consolidated financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial statements and based on our audits.
We conducted our audits in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The
Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our
audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the consolidated financial
statements referred to above present fairly, in all material respects, the consolidated financial position of Solar Wind Energy
Tower, Inc. and subsidiaries as of December 31, 2015 and 2014, and the consolidated results of their operations and their cash
flows for each of the two years in the period ended December 31, 2015, in conformity with U.S. generally accepted accounting principles.
The accompanying consolidated financial
statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the accompanying
consolidated financial statements, the Company has not yet generated any revenue and is incapable of generating sufficient cash
flow to sustain its current operations without securing additional financing, which raises substantial doubt about its ability
to continue as a going concern. Management’s plans in regard to this matter are described in Note 2. The consolidated financial
statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ RBSM LLP
New York, New York
March 2, 2017
SOLAR WIND ENERGY TOWER, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2015 AND 2014
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2015
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2014
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ASSETS
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Current assets:
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Cash
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$
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11,219
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$
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88,764
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Total current assets
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11,219
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88,764
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Property and equipment, net
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1,180
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1,888
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Other assets:
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Deposits
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204,209
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129,259
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Total assets
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$
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216,608
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$
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219,911
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LIABILITIES AND STOCKHOLDERS' DEFICIT
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Current liabilities:
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Accounts payable
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$
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354,918
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$
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200,391
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Accrued liabilities and expenses
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498,212
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369,897
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Advances from stockholders/officers
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170,000
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170,000
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Settlement payable
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90,000
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30,000
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Notes payable, net of unamortized debt discount of $407 and $-0-, respectively
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347,863
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268,270
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Convertible notes payable, net of unamortized debt discount of $351,690 and $650,053, respectively
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727,696
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599,457
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Convertible notes payable, related party
|
|
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280,000
|
|
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280,000
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Derivative liabilities
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3,492,119
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|
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1,384,528
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Total current liabilities
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|
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5,960,808
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|
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3,302,543
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Long term debt:
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|
|
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|
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Notes payable-related party, net of unamortized debt discount of $0
and $162,138, respectively
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–
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|
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222,862
|
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Notes payable, net of unamortized debt discount of $-0- and $1,945, respectively
|
|
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–
|
|
|
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78,055
|
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Total liabilities
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|
|
5,960,808
|
|
|
|
3,603,460
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|
|
|
|
|
|
|
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Stockholders' deficit:
|
|
|
|
|
|
|
|
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Preferred stock, par value $0.0001 per share; 10,000,000 shares authorized
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|
|
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Series A Convertible Preferred stock, par value $0.0001 per share, 500,000 shares designated, 393,429 and -0- issued and outstanding as of December 31, 2015 and 2014, respectively
|
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|
39
|
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–
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Common stock, par value $0.0001 per share; 20,000,000,000 and 900,000,000 shares authorized; 3,628,253,758 and 626,745,923 shares issued and outstanding as of December 31, 2015 and 2014, respectively
|
|
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362,825
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|
|
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62,675
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Common stock to be issued
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|
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420,000
|
|
|
|
420,000
|
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Additional paid in capital
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|
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12,601,800
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|
|
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10,119,764
|
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Accumulated deficit
|
|
|
(19,111,294
|
)
|
|
|
(13,984,186
|
)
|
Stockholders' deficit attributable to Solar Wind Energy Tower, Inc.
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|
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(5,726,630
|
)
|
|
|
(3,381,747
|
)
|
Non-controlling interest
|
|
|
(17,570
|
)
|
|
|
(1,802
|
)
|
Total stockholders' deficit
|
|
|
(5,744,200
|
)
|
|
|
(3,383,549
|
)
|
|
|
|
|
|
|
|
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|
Total liabilities and stockholders' deficit
|
|
$
|
216,608
|
|
|
$
|
219,911
|
|
See the accompanying notes to the consolidated financial statements
SOLAR WIND ENERGY TOWER, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
Year ended December 31,
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|
|
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2015
|
|
|
2014
|
|
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
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Research and development
|
|
$
|
113,653
|
|
|
$
|
156,251
|
|
Selling, general and administrative
|
|
|
1,056,712
|
|
|
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1,870,266
|
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Depreciation
|
|
|
708
|
|
|
|
2,520
|
|
Total operating expenses
|
|
|
1,171,073
|
|
|
|
2,029,037
|
|
|
|
|
|
|
|
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|
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Loss from operations
|
|
|
(1,171,073
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)
|
|
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(2,029,037
|
)
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|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
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Interest expense
|
|
|
(2,363,544
|
)
|
|
|
(4,212,671
|
)
|
(Loss) gain in settlement of debt
|
|
|
(90,000
|
)
|
|
|
32,985
|
|
Gain (loss) on change in fair value of derivative liabilities
|
|
|
(1,506,927
|
)
|
|
|
1,089,103
|
|
|
|
|
|
|
|
|
|
|
Loss before provision for income taxes
|
|
|
(5,131,544
|
)
|
|
|
(5,119,620
|
)
|
|
|
|
|
|
|
|
|
|
Provision for income taxes (benefit)
|
|
|
–
|
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(5,131,544
|
)
|
|
|
(5,119,620
|
)
|
|
|
|
|
|
|
|
|
|
Non-controlling interest
|
|
|
4,436
|
|
|
|
1,802
|
|
|
|
|
|
|
|
|
|
|
NET LOSS ATTRIBUTABLE TO SOLAR WIND ENERGY TOWER, INC.
|
|
$
|
(5,127,108
|
)
|
|
$
|
(5,117,818
|
)
|
|
|
|
|
|
|
|
|
|
Net loss per common share, basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding, basic and diluted
|
|
|
1,475,899,768
|
|
|
|
497,356,871
|
|
See the accompanying notes to the consolidated financial statements
SOLAR WIND ENERGY TOWER, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
TWO YEARS ENDED DECEMBER 31, 2015
|
|
Series A Preferred stock
|
|
|
Common stock
|
|
|
Common to be Issued
|
|
|
Additional Paid In
|
|
|
Accumulated
|
|
|
Non-controlling
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Interest
|
|
|
Total
|
|
Balance, January 1, 2014
|
|
|
–
|
|
|
$
|
–
|
|
|
|
370,728,168
|
|
|
$
|
37,073
|
|
|
|
6,000,000
|
|
|
$
|
420,000
|
|
|
$
|
5,896,890
|
|
|
$
|
(8,866,368
|
)
|
|
$
|
–
|
|
|
$
|
(2,512,405
|
)
|
Shares issued in settlement of debt
|
|
|
–
|
|
|
|
–
|
|
|
|
248,392,755
|
|
|
|
24,840
|
|
|
|
–
|
|
|
|
–
|
|
|
|
2,836,298
|
|
|
|
–
|
|
|
|
–
|
|
|
|
2,861,138
|
|
Shares issued for consulting services rendered
|
|
|
–
|
|
|
|
–
|
|
|
|
500,000
|
|
|
|
50
|
|
|
|
–
|
|
|
|
–
|
|
|
|
2,200
|
|
|
|
–
|
|
|
|
–
|
|
|
|
2,250
|
|
Sale of common stock
|
|
|
–
|
|
|
|
–
|
|
|
|
7,125,000
|
|
|
|
712
|
|
|
|
–
|
|
|
|
–
|
|
|
|
24,288
|
|
|
|
–
|
|
|
|
–
|
|
|
|
25,000
|
|
Reclassify fair value of warrants from equity to liability
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(13,202
|
)
|
|
|
–
|
|
|
|
–
|
|
|
|
(13,202
|
)
|
Fair value of warrants issued in connection with notes payable
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
310,969
|
|
|
|
–
|
|
|
|
–
|
|
|
|
310,969
|
|
Fair value of warrants issued as director compensation
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
34,567
|
|
|
|
–
|
|
|
|
–
|
|
|
|
34,567
|
|
Reclassify fair value of warrants from liability to equity
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
7,677
|
|
|
|
–
|
|
|
|
–
|
|
|
|
7,677
|
|
Reclassify fair value of debt derivative to equity upon note extinguishment
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
308,198
|
|
|
|
–
|
|
|
|
–
|
|
|
|
308,198
|
|
Fair value of warrants issued for services
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
72,076
|
|
|
|
–
|
|
|
|
–
|
|
|
|
72,076
|
|
Stock based compensation
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
639,803
|
|
|
|
–
|
|
|
|
–
|
|
|
|
639,803
|
|
Net loss
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(5,117,818
|
)
|
|
|
(1,802
|
)
|
|
|
(5,119,620
|
)
|
Balance, December 31, 2014
|
|
|
–
|
|
|
$
|
–
|
|
|
|
626,745,923
|
|
|
$
|
62,675
|
|
|
|
6,000,000
|
|
|
$
|
420,000
|
|
|
$
|
10,119,764
|
|
|
$
|
(13,984,186
|
)
|
|
$
|
(1,802
|
)
|
|
$
|
(3,383,549
|
)
|
See the accompanying notes to the consolidated financial statements
SOLAR WIND ENERGY TOWER, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
TWO YEARS ENDED DECEMBER 31, 2015
|
|
Series A Preferred stock
|
|
|
Common stock
|
|
|
Common to be Issued
|
|
|
Additional Paid In
|
|
|
Accumulated
|
|
|
Non-controlling
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Interest
|
|
|
Total
|
|
Balance, January 1, 2015
|
|
|
–
|
|
|
$
|
–
|
|
|
|
626,745,923
|
|
|
$
|
62,675
|
|
|
|
6,000,000
|
|
|
$
|
420,000
|
|
|
$
|
10,119,764
|
|
|
$
|
(13,984,186
|
)
|
|
$
|
(1,802
|
)
|
|
$
|
(3,383,549
|
)
|
Shares issued in settlement of debt
|
|
|
–
|
|
|
|
–
|
|
|
|
2,966,412,724
|
|
|
|
296,641
|
|
|
|
–
|
|
|
|
–
|
|
|
|
2,001,394
|
|
|
|
–
|
|
|
|
–
|
|
|
|
2,298,035
|
|
Shares issued for services rendered
|
|
|
–
|
|
|
|
–
|
|
|
|
1,761,111
|
|
|
|
176
|
|
|
|
–
|
|
|
|
–
|
|
|
|
2,113
|
|
|
|
–
|
|
|
|
–
|
|
|
|
2,289
|
|
Shares issued in settlement of related party salaries
|
|
|
–
|
|
|
|
–
|
|
|
|
33,334,000
|
|
|
|
3,333
|
|
|
|
–
|
|
|
|
–
|
|
|
|
16,667
|
|
|
|
–
|
|
|
|
–
|
|
|
|
20,000
|
|
Preferred shares issued in settlement of related party notes and
accrued interest
|
|
|
393,429
|
|
|
|
39
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
393,387
|
|
|
|
–
|
|
|
|
–
|
|
|
|
393,426
|
|
Equity contribution by non-controlling interest
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
61,332
|
|
|
|
–
|
|
|
|
(11,332
|
)
|
|
|
50,000
|
|
Stock based compensation
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
7,144
|
|
|
|
–
|
|
|
|
–
|
|
|
|
7,144
|
|
Net loss
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(5,127,108
|
)
|
|
|
(4,436
|
)
|
|
|
(5,131,544
|
)
|
Balance, December 31, 2015
|
|
|
393,429
|
|
|
$
|
39
|
|
|
|
3,628,253,758
|
|
|
$
|
362,825
|
|
|
|
6,000,000
|
|
|
$
|
420,000
|
|
|
$
|
12,601,800
|
|
|
$
|
(19,111,294
|
)
|
|
$
|
(17,570
|
)
|
|
$
|
(5,744,200
|
)
|
See the accompanying notes to the consolidated financial statements
SOLAR WIND ENERGY TOWER, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
Year ended December 31,
|
|
|
|
2015
|
|
|
2014
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(5,131,544
|
)
|
|
$
|
(5,119,620
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
708
|
|
|
|
2,520
|
|
Amortization of debt discounts
|
|
|
1,310,773
|
|
|
|
1,646,605
|
|
Amortization of financing costs
|
|
|
163,676
|
|
|
|
89,036
|
|
Non cash interest
|
|
|
752,003
|
|
|
|
2,272,821
|
|
Stock based compensation
|
|
|
9,433
|
|
|
|
642,053
|
|
Fair value of warrants issued in connection with services
|
|
|
–
|
|
|
|
106,643
|
|
Loss (gain) on settlement of debt
|
|
|
90,000
|
|
|
|
(32,985
|
)
|
Loss (gain) from change in fair value of derivative liabilities
|
|
|
1,506,927
|
|
|
|
(1,089,102
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
–
|
|
|
|
–
|
|
Settlement payable
|
|
|
(30,000
|
)
|
|
|
(60,000
|
)
|
Accounts payable and accrued expenses
|
|
|
341,429
|
|
|
|
196,293
|
|
Net cash used in operating activates
|
|
|
(986,595
|
)
|
|
|
(1,345,736
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
–
|
|
|
|
(2,124
|
)
|
Payment of long term deposit
|
|
|
–
|
|
|
|
(2,700
|
)
|
Payment of option to acquire property
|
|
|
(74,950
|
)
|
|
|
(125,000
|
)
|
Net cash used in investing activities
|
|
|
(74,950
|
)
|
|
|
(129,824
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Proceeds from sale of common stock
|
|
|
–
|
|
|
|
25,000
|
|
Proceeds from equity contribution by non-controlling interest
|
|
|
50,000
|
|
|
|
–
|
|
Proceeds from issuance of notes payable
|
|
|
–
|
|
|
|
80,000
|
|
Proceeds from issuance of convertible notes payable
|
|
|
934,000
|
|
|
|
1,684,000
|
|
Repayments of convertible notes payable
|
|
|
–
|
|
|
|
(286,434
|
)
|
Net cash provided by financing activities
|
|
|
984,000
|
|
|
|
1,502,566
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash
|
|
|
(77,545
|
)
|
|
|
27,006
|
|
Cash, beginning of period
|
|
|
88,764
|
|
|
|
61,758
|
|
|
|
|
|
|
|
|
|
|
Cash, end of period
|
|
$
|
11,219
|
|
|
$
|
88,764
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
–
|
|
|
$
|
–
|
|
Income taxes paid
|
|
$
|
–
|
|
|
$
|
–
|
|
|
|
|
|
|
|
|
|
|
Non cash investing and financing activities:
|
|
|
|
|
|
|
|
|
Fair value of warrants issued in connection with notes payable
|
|
$
|
–
|
|
|
$
|
310,969
|
|
Notes payable issued in settlement of accrued officer salaries
|
|
$
|
–
|
|
|
$
|
385,000
|
|
Common stock issued in settlement of related party accrued salaries
|
|
$
|
20,000
|
|
|
$
|
–
|
|
Common stock issued in settlement of debt
|
|
$
|
2,298,035
|
|
|
$
|
2,861,138
|
|
Series A preferred stock issued in settlement of related party notes payable and accrued interest
|
|
$
|
393,426
|
|
|
$
|
–
|
|
See the accompanying notes to the consolidated financial statements
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015 AND 2014
NOTE 1 – NATURE OF OPERATIONS
Solar Wind Energy Tower, Inc. (the “Company”,
“we”, “us”, “our”) (formerly known as Superior Silver Mines, Inc.) was incorporated in the
State of Idaho on January 22, 1962 as Superior Mines Company and then changed its name to Superior Silver Mines, Inc. The Company
reincorporated as a Nevada corporation on December 27, 2010. The Company has been dormant for a number of years, and has no known
mineral reserves.
On December 29, 2010, Solar Wind Energy
Tower, Inc., a Nevada corporation (the “Company” or "Solar Wind"), completed a reverse merger (the “Merger”)
with Solar Wind Energy, Inc., a corporation formed under the laws of the State of Delaware on July 26, 2010 (“Solar Wind
- Subsidiary”). In connection with the Merger, the Company issued to the stockholders of Solar Wind - Subsidiary
in exchange for their Solar Wind - Subsidiary Common Stock, the right to receive an aggregate of 300,000,000 shares of the Company’s
Common Stock. As a result of the reverse merger, Solar Wind - Subsidiary is now a wholly-owned subsidiary of the Company.
For accounting purposes, Solar Wind - Subsidiary
was the surviving entity. The transaction was accounted for as a recapitalization of Solar Wind - Subsidiary pursuant to which
Solar Wind - Subsidiary was treated as the surviving and continuing entity although the Company is the legal acquirer rather than
a reverse acquisition. Accordingly, the Company’s historical financial statements are those of Solar Wind - Subsidiary
immediately following the consummation of the reverse merger. Also, going forward the business operations of Solar Wind - Subsidiary
will become the Company’s principal business operations.
On January 21, 2011, the Company
changed its name to Clean Wind Energy Tower, Inc. and on March 11, 2013, changed its name to Solar Wind Energy Tower, Inc.
along with its wholly-owned subsidiary, a corporation formed under the laws of the State of Delaware, which changed its name
from Clean Wind Energy, Inc. to Solar Wind Energy, Inc. In addition, effective January 24, 2011, the Company’s
quotation symbol on the Over-the-Counter Bulletin Board was changed from SSVM.OB to CWET.OB and on March 11, 2013, in
conjunction with our name change, the Company’s quotation symbol on the Over-the-Counter Bulletin Board was changed
from CWET.OB to SWET.OB.
Until the consummation of the Merger, the
Company’s purpose was to seek, investigate and, if such investigation warranted, acquire an interest in business opportunities
presented to it by persons or firms who, or which, desire to seek the perceived advantages of a publicly registered corporation.
Because the Company had no operations and only nominal assets until the Merger, it was considered a shell company under rules promulgated
by the U.S. Securities and Exchange Commission.
In April 2014, the Company organized Arizona
Green Power, LLC (“AGP”), an Arizona limited liability company for the purpose to acquire development property from
the City of San Luis, Arizona. In connection with financing of the project, the Company reduced its ownership interest to 98.67%
in connection with the issuance of a note payable by Arizona Green Power, LLC on April 7, 2014. On November 17, 2015, in connection
with the Company land option agreement modification and equity financing, the Company reduced its ownership to 94.67%.
NOTE 2 – GOING CONCERN AND MANAGEMENT’S LIQUIDITY
PLANS
As of December
31, 2015, the Company had cash of $11,219 and working capital deficit of $5,949,589. During the year ended December 31,
2015, the Company used net cash in operating activities of $986,595. The Company has not yet generated any significant revenues,
and has incurred net losses since inception. These conditions raise substantial doubt about the Company’s ability to continue
as a going concern.
During the year
ended December 31, 2015, the Company raised $934,000 through the issuance of a convertible notes and $50,000 from sale of equity
interest in Arizona Green Power, LLC, the Company’s majority owned subsidiary. The Company believes that its current
cash on hand will not be sufficient to fund its projected operating requirements.
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015 AND 2014
The Company's
primary source of operating funds since inception has been cash proceeds from the private placements of common stock and proceeds
from private placements of convertible debt. The Company intends to raise additional capital through private placements of
debt and equity securities, but there can be no assurance that these funds will be available on terms acceptable to the Company,
or will be sufficient to enable the Company to fully complete its development activities or sustain operations. If the Company
is unable to raise sufficient additional funds, it will have to develop and implement a plan to further extend payables, reduce
overhead, or scale back its current business plan until sufficient additional capital is raised to support further operations.
There can be no assurance that such a plan will be successful.
Accordingly, the
accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in
the United States of America (“GAAP”), which contemplate continuation of the Company as a going concern and the realization
of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented
in the financial statements do not necessarily purport to represent realizable or settlement values. The consolidated financial
statements do not include any adjustment that might result from the outcome of this uncertainty.
NOTE 3 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated
financial statements include the accounts of the Company and its wholly-owned and majority- owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated in consolidation.
Fair Value of Financial Instruments
Our short-term financial instruments, including
cash, other assets and accounts payable and accrued expenses consist primarily of instruments without extended maturities, the
fair value of which, based on management’s estimates, reasonably approximate their book value. The fair value of our notes
and advances payable is based on management estimates and reasonably approximates their book value based on their current maturity.
Use of Estimates
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,
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Significant estimates include the recoverability and useful lives of long-lived assets, the
fair value of the Company’s stock, stock-based compensation, fair values relating to derivative liabilities, debt discounts
and the valuation allowance related to deferred tax assets. Actual results may differ from these estimates.
Long-Lived Assets
The Company reviews its long-lived assets
for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable
in accordance with Topic ASC 360, “Property, Plant and Equipment”. Recoverability is measured by comparison of the
carrying amount to the future net cash flows which the assets are expected to generate. If such assets are considered to be impaired,
the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted
future cash flows arising from the asset using a discount rate determined by management to be commensurate with the risk inherent
to our current business model.
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015 AND 2014
Net Loss per Common Share
The Company computes net loss per share
under Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC 260-10”). Basic net income (loss)
per common share is computed by dividing net loss by the weighted average number of shares of common stock. Diluted net loss per
share is computed using the weighted average number of common and common stock equivalent shares outstanding during the period.
There is no effect on diluted loss per share since the common stock equivalents are anti-dilutive. Dilutive common stock equivalents
consist of shares issuable upon conversion of convertible notes and the exercise of the Company's stock options and warrants. Fully
diluted shares as of December 31, 2015 and 2014 were 16,060,638,214 and 874,144,912, respectively.
Revenue Recognition
The Company has generated no revenues to
date. It is the Company’s policy that revenue from product sales or services will be recognized in accordance with ASC 605
“Revenue Recognition”. Four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of
an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably
assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling
prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated
returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company will
defer any revenue for which the product was not delivered or is subject to refund until such time that the Company and the customer
jointly determine that the product has been delivered or no refund will be required.
Stock Based Compensation
The Company account for its stock based
awards in accordance with Accounting Standards Codification subtopic 718-10, Compensation (“ASC 718-10”), which requires
a fair value measurement and recognition of compensation expense for all share-based payment awards made to our employees and directors,
including restricted stock awards. We estimate the fair value of stock using the stock price on date of the approval of the award.
The fair value is then expensed over the requisite service periods of the awards, which is generally the performance period and
the related amount recognized in our consolidated statements of operations.
Stock-based compensation expense in connection
with stock granted to consultants and employees in exchange for services rendered for the years ended December 31, 2015 and 2014
was $29,433 and $642,053, respectively.
Income Taxes
The Company recognizes deferred tax assets
and liabilities for the expected future tax consequences of items that have been included or excluded in the financial statements
or tax returns. Deferred tax assets and liabilities are determined on the basis of the difference between the tax basis of assets
and liabilities and their respective financial reporting amounts (“temporary differences”) at enacted tax rates in
effect for the years in which the temporary differences are expected to reverse.
The Company adopted the provisions of Accounting
Standards Codification (“ASC”) Topic 740-10, which prescribes a recognition threshold and measurement process for financial
statement recognition and measurement of a tax position taken or expected to be taken in a tax return.
Management has evaluated and concluded
that there were no material uncertain tax positions requiring recognition in the Company’s consolidated financial statements
as of December 31, 2015 and 2014. The Company does not expect any significant changes in its unrecognized tax benefits within twelve
months of the reporting date.
The Company’s policy is to classify
assessments, if any, for tax related interest as interest expense and penalties as general and administrative expenses in the consolidated
statements of operations.
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015 AND 2014
Research and development
In accordance with ASC 730, “Research
and Development”, the Company expenses all research and development costs as incurred. The Company had incurred $113,653
and $156,251 research and development costs for the years ended December 31, 2015 and 2014, respectively. The company expects the
research and development costs to increase in the future as it continues to invest in the infrastructure that is critical to achieve
our business goals and objectives.
Property, plant and equipment
Property, plant and equipment are carried
at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line method
over the estimated useful lives of the assets. Gains and losses from the retirement or disposition of property and equipment are
included in operations in the period incurred. Maintenance and repairs are expensed as incurred.
Cash and cash equivalents
For purposes of the statement of cash flows,
cash and cash equivalents includes demand deposits, saving accounts and money market accounts. The Company considers all highly
liquid debt instruments with maturities of three months or less when purchased to be cash and cash equivalents.
Derivative financial instruments
The Company classifies as equity any contracts
that (i) require physical settlement or net-share settlement or (ii) provide the Company with a choice of net-cash settlement or
settlement in its own shares (physical settlement or net-share settlement) providing that such contracts are indexed to the Company's
own stock. The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement (including a requirement
to net cash settle the contract if an event occurs and if that event is outside the Company’s control) or (ii) gives the
counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). The Company
assesses classification of its common stock purchase warrants and other free standing derivatives at each reporting date to determine
whether a change in classification between assets and liabilities is required.
The Company’s free standing derivatives
consists of embedded conversion options with convertible notes. The Company evaluated these derivatives to assess their proper
classification in the consolidated balance sheets as of December 31, 2015 using the applicable classification criteria enumerated
under ASC 815-Derivatives and Hedging. The Company determined that certain embedded conversion features do not contain fixed settlement
provisions. The convertible notes contains a conversion feature such that the Company could not ensure it would have adequate
authorized shares to meet all possible conversion demands.
As such, the Company was required to record
the debt derivatives which do not have fixed settlement provisions as liabilities and mark to market all such derivatives to fair
value at the end of each reporting period.
Recently Issued Accounting Pronouncements
In November 2015, the Financial Accounting
Standards Board (“FASB”) issued (ASU) 2015-17,
Balance Sheet Classification of Deferred Taxes.
Currently deferred
taxes for each tax jurisdiction are presented as a net current asset or liability and net noncurrent asset or liability on the
balance sheet. To simplify the presentation, the new guidance requires that deferred tax liabilities and assets for all jurisdictions
along with any related valuation allowances be classified as noncurrent in a classified statement of financial position. This guidance
is effective for interim and annual reporting periods beginning after December 15, 2016, and early adoption is permitted.
The Company has adopted this guidance in the fourth quarter of the year ended December 31, 2015 on a retrospective basis.
The adoption of this guidance did not have a material impact on the Company’s financial position, results of operations or
cash flows, and did not have any effect on prior periods due to the full valuation allowance against the Company’s net deferred
tax assets.
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015 AND 2014
In January 2016, the FASB issued Accounting
Standards Update (ASU) 2016-01, which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments.
Changes to the current guidance primarily affect the accounting for equity investments, financial liabilities under the fair value
option, and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarifies guidance related
to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale
debt securities. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017, and upon
adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning
of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record
fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other
comprehensive income. The Company is currently evaluating the impact of adopting this guidance.
The FASB issued ASU 2016-02,
Leases
(Topic 842)
. ASU 2016-02, which requires that a lessee recognize the assets and liabilities that arise from operating leases.
A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a
right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or
less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and
lease liabilities. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest
period presented using a modified retrospective approach. Public business entities should apply the amendments in ASU 2016-02 for
fiscal years beginning after December 15, 2018, including interim periods within those fiscal years (i.e., January 1, 2019, for
a calendar year entity). Early application is permitted for all public business entities and all nonpublic business entities upon
issuance. The Company has not yet determined the effect of the adoption of this standard on the Company’s consolidated financial
position and results of operations.
There are other various updates recently
issued, most of which represented technical corrections to the accounting literature or application to specific industries and
are not expected to a have a material impact on the Company's financial position, results of operations or cash flows.
Subsequent Events
The Company evaluates events that have
occurred after the balance sheet date but before the financial statements are issued. Based upon the evaluation, the Company
did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated
financial statements, except as disclosed below.
NOTE 4 – DEPOSITS
Long-term deposits are comprised of aggregate
of $204,259 of which $200,000 are deposits to acquire approximately 640 acres of land in Yuma County, Arizona at $46,500 per acre.
On November 17, 2015, the Company entered into a Fourth Amended Option Agreement (the “Amended Option Agreement”) to
the option agreement dated April 11, 2014 with several investors and current land owners.
Pursuant to the terms of the Amended Option
Agreement, the land owners agreed to invest $600,000 and defer until closing an additional $450,000 due on the option payment in
exchange for a 2.67% equity investment in AGP, Company’s majority owned subsidiary.
Moreover, pursuant to the terms of the
option agreement, the investor has also committed an additional $300,000 in exchange for a 1.33% equity investment, $50,000 which
has been paid and the additional $250,000 conditioned upon the Company and AGP successfully procuring $5,000,000 or more in additional
equity from investors, or such other additional amount as is necessary for the balance of the required pre-development and development
costs to be completed.
Further, if the Company and AGP close the
acquisition of the Property prior to (a) December 1, 2017, the delayed option payment shall be reduced by $200,000 or (b) July
1, 2016, the delayed option payment shall be reduced by $450,000.
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015 AND 2014
The land owners have the right to terminate
the Amended Option Agreement at any time after July 1, 2016 if the Company and AGP have not completed the equity raise prior to
July 1, 2016.
In addition, the Company has an aggregate
of $4,259 in long term lease deposits.
NOTE 5 – ACCRUED LIABILITIES AND
EXPENSES
Accrued liabilities and expenses as of
December 31, 2015 and 2014 consist of the following:
|
|
2015
|
|
|
2014
|
|
Accrued payroll
|
|
$
|
227,015
|
|
|
$
|
140,457
|
|
Accrued stock purchase warrants
|
|
|
29,400
|
|
|
|
29,400
|
|
Accrued interest and other
|
|
|
241,797
|
|
|
|
200,040
|
|
Total
|
|
$
|
498,212
|
|
|
$
|
369,897
|
|
NOTE 6 – ADVANCES FROM SHAREHOLDERS/OFFICERS
Advances from shareholders are comprised
of the fair value of common stock pledged as collateral by shareholder. As disclosed below, the Company issued a secured convertible
Promissory Note on February 29, 2012. In connection with the issuance, a shareholder pledged 10,000,000 shares of the Company’s
common stock. On March 8, 2012, upon default, the escrow agent transferred the pledged common shares to the note holder. The fair
value of the common shares pledged was recorded as a related party obligation as of March 31, 2012 with a corresponding reduction
in the carrying value of the Note Payable.
NOTE 7 – SETTLEMENT PAYABLE
In August 2014, the Company settled the
litigation with Hanover Holdings I, LLC for a cash of $90,000 payable in six equal monthly installments of $15,000 beginning September
5, 2014. In connection with the settlement, the Company recognized a gain on settlement of debt of $32,985 during the year ended
December 31, 2014. As of December 31, 2014, the outstanding balance was $30,000, which has been repaid during the year ended December
31, 2015.
On July 8, 2014, the Company paid $40,179
against a Typenex note in a scheduled monthly installment followed by a payment on August 11, 2014 of the balance due of $31,078
to pay the note in full. In as such, Typenex disputed the Company’s right to pay in cash, these final two installments were
placed in escrow account through the Company’s counsel. In 2016, subsequent to these financial statements, the Company settled
all outstanding claims with Typenex for $90,000. As of December 31, 2015, the Company has accrued the outstanding liability (See
Note 9 and 13).
NOTE 8 – NOTES PAYABLE
Notes payable as of December 31, 2015 and
2014 consist of the following:
|
|
2015
|
|
|
2014
|
|
Promissory notes issued June 20, 2012
|
|
$
|
268,270
|
|
|
$
|
268,270
|
|
Note payable issued April 7, 2014, net of unamortized debt discount of $407 and $1,945, respectively
|
|
|
79,593
|
|
|
|
78,055
|
|
Total
|
|
|
347,863
|
|
|
|
346,325
|
|
Less current portion
|
|
|
347,863
|
|
|
|
268,270
|
|
Long term portion
|
|
$
|
–
|
|
|
$
|
78,055
|
|
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015 AND 2014
On June 20, 2012, the Company issued three
promissory notes payable in the aggregate of $268,270 in settlement of outstanding accounts payable. The notes mature earlier of
(1) one year from the date of issuance, (2) completion of any major financing event or events in which the Company receives aggregate
proceeds of $2,000,000 or more, or (3) any liquidation or reorganization, merger or recapitalization of the Company, bear an interest
rate of 8% per annum due at maturity and are unsecured. The notes are currently in default.
On April 7, 2014, Arizona Green Power,
LLC, a majority owned subsidiary of the Company, issued a note payable for $80,000 with interest at 10% per annum, due at maturity
of April 6, 2016. In connection with the issuance of the note, the Company granted i) a 1.33% ownership interest in Arizona Green
Power, LLC and ii) a warrant to purchase 1,920,000 shares of the Company’s common stock exercisable at $0.05 per share expiring
on March 7, 2016. The warrants were valued using the Black Sholes option pricing method with the following assumptions: dividend
yield $-0-, volatility of 158.38% and risk free rate of 0.41%. The determined fair value of the warrant of $3,070 is amortized
as financing costs of the term of the related note (2 years).
NOTE 9 – CONVERTIBLE NOTES PAYABLE
Convertible notes payable as of December
31, 2015 and 2014 consist of the following:
|
|
2015
|
|
|
2014
|
|
Convertible promissory notes, due December 31, 2015
|
|
$
|
239,000
|
|
|
$
|
239,000
|
|
Convertible promissory note, due April 4, 2015, net of unamortized debt discount of $4,773
|
|
|
–
|
|
|
|
12,727
|
|
Convertible promissory note, due June 9, 2015, net of unamortized debt discount of $83,184
|
|
|
–
|
|
|
|
106,576
|
|
Convertible promissory note, due May 11, 2015, net of unamortized debt discount of $117,141
|
|
|
–
|
|
|
|
136,359
|
|
Convertible promissory note, due October 14, 2015, net of unamortized debt discount of $-0- and
$259,479, in default
|
|
|
27,164
|
|
|
|
70,521
|
|
Convertible promissory note, due July 10, 2015, net of unamortized debt discount of $37,158
|
|
|
–
|
|
|
|
16,342
|
|
Convertible promissory note, due October 10, 2015, net of unamortized debt discount of $61,058
|
|
|
–
|
|
|
|
17,692
|
|
Convertible promissory note, due December 30, 2015, net of unamortized debt discount of $87,260
|
|
|
–
|
|
|
|
240
|
|
Convertible promissory note, due January 5, 2016, net of unamortized debt discount of $323
|
|
|
23,177
|
|
|
|
–
|
|
Convertible promissory note, due March 16, 2016, net of unamortized debt discount of $12,066
|
|
|
63,269
|
|
|
|
–
|
|
Convertible promissory note, due December 27, 2015, net of unamortized debt discount of $-0-, in default
|
|
|
78,210
|
|
|
|
–
|
|
Convertible promissory note, due May 15, 2016, net of unamortized debt discount of $21,267
|
|
|
36,233
|
|
|
|
–
|
|
Convertible promissory note, due May 30, 2016, net of unamortized debt discount of $23,630
|
|
|
33,870
|
|
|
|
–
|
|
Convertible promissory note, due March 1, 2016, net of unamortized debt discount of $9,401
|
|
|
33,599
|
|
|
|
–
|
|
Convertible promissory note, due July 1, 2016, net of unamortized debt discount of $28,750
|
|
|
28,750
|
|
|
|
–
|
|
Convertible promissory note, due July 14, 2016, net of unamortized debt discount of $22,438
|
|
|
19,562
|
|
|
|
–
|
|
Convertible promissory note, due July 17, 2016, net of unamortized debt discount of $15,768
|
|
|
13,232
|
|
|
|
–
|
|
Convertible promissory note, due July 30, 2016, net of unamortized debt discount of $16,508
|
|
|
11,992
|
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015 AND 2014
|
|
2015
|
|
|
2014
|
|
Convertible promissory note, due February 4, 2016, net of unamortized debt discount of $4,562
|
|
|
24,438
|
|
|
|
–
|
|
Convertible promissory note, due May 6, 2016, net of unamortized debt discount of $13,406
|
|
|
15,094
|
|
|
|
–
|
|
Convertible promissory note, due March 4, 2016, net of unamortized debt discount of $10,198
|
|
|
18,802
|
|
|
|
–
|
|
Convertible promissory note, due June 9, 2016, net of unamortized debt discount of $16,703
|
|
|
11,797
|
|
|
|
–
|
|
Convertible promissory note, due March 1, 2016, net of unamortized debt discount of $9,148
|
|
|
11,548
|
|
|
|
–
|
|
Convertible promissory note, due October 7, 2016, net of unamortized debt discount of $76,186
|
|
|
23,045
|
|
|
|
–
|
|
Convertible promissory note, due May 6, 2016, net of unamortized debt discount of $20,236
|
|
|
8,764
|
|
|
|
–
|
|
Convertible promissory note, due November 9, 2016, net of unamortized debt discount of $23,164
|
|
|
3,836
|
|
|
|
–
|
|
Convertible promissory note, due December 3, 2016, net of unamortized debt discount of $27,936
|
|
|
2,314
|
|
|
|
–
|
|
Total
|
|
|
727,696
|
|
|
|
599,457
|
|
Less current portion
|
|
|
(727,696
|
)
|
|
|
(599,457
|
|
Long term portion
|
|
$
|
–
|
|
|
$
|
–
|
|
LG Capital Funding, LLC
On April 4, 2014, the Company entered into
a Securities Purchase Agreement with LG Capital Funding, LLC ("LG"), for the sale of an 8% convertible note in the principal
amount of $35,000 (the "Note"). The financing closed on April 4, 2014. The total net proceeds the Company received from
this Offering was $32,000.
The note is convertible into common stock,
at holder’s option, at the lower of i) 42% discount to the average of the two lowest closing bid prices of the common stock
during the 10 trading day period prior to conversion. The note is convertible into common stock, at holder’s option, at the
lower of i) 42% discount to the average of the two lowest closing bid prices of the common stock during the 10 trading day period
prior to conversion. As of December 31, 2015 and 2014, the aggregate principal amount outstanding was $-0- and $17,500.
On October 10, 2014, the Company entered
into a Securities Purchase Agreement with LG Capital Funding, LLC ("LG"), for the sale of an 8% convertible note in the
principal amount of $78,750 (the "Note"). The financing closed on October 10, 2014. The total net proceeds the Company
received from this Offering was $75,000.
The notes are convertible into common stock,
at holder’s option, at the lower of i) 42% discount to the average of the two lowest closing bid prices of the common stock
during the 10 trading day period prior to conversion. As of December 31, 2015 and 2014, the aggregate principal amount outstanding
was $-0- and $78,750.
In 2015, the Company entered into Securities
Purchase Agreements with LG Capital Funding, LLC (“LG”), for the sale of an 8% convertible notes in the principal amount
of $147,750 (the “Notes”). The total net proceeds the Company received from this Offering were $140,000. As of December
31, 2015, the aggregate principal amount outstanding was $147,750.
The Notes bear interest at the rate of
8% per annum. All interest and principal must be repaid one year from the date of issuance with the last note due November 9, 2016.
The Notes are convertible into common stock, at LG’s option, at a 42% discount to the average three lowest bid prices of
the common stock during the 15 trading day period prior to conversion.
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015 AND 2014
On October 7, 2016, the Company issued
a convertible promissory note to LG Capital Funding, LLC (“LG”), for $99,231.20, the proceeds of which were used to
pay-off a preexisting note to JSJ Investments, Inc., accrued interest and premium payment in aggregate of $99,231.20.(see below)
.
The Note bears interest at the rate of
8% per annum. All interest and principal must one year from the date of issuance On October 7, 2016. The Note is convertible into
common stock, at LG’s option, at a 42% discount to the average three lowest bid prices of the common stock during the 10
trading day period prior to conversion.
JDF Financial Capital, Inc.
On June 9, 2014, the Company entered a
financing transaction by entering into a Purchase agreement dated June 3, 2014 (the “Purchase Agreement”) with JDF
Capital Inc. (the “Purchaser”) for an aggregate principal amount of $885,000 (the “Purchase Price”). Pursuant
to the Purchase Agreement, the Company issued the following to the Purchaser: (i) a 10% Convertible Promissory Note (the “Note”),
(ii) a warrant to purchase an aggregate of 7,000,000 shares of the Company’s common stock, par value $0.0001 per share, for
an exercise price of $0.05 per share for a period of 150 days from the effective date of the registration statement (the “First
Warrant”), and (iii) a warrant to purchase an aggregate of 8,750,000 shares of the Company’s common stock, par value
$0.0001 per share, for an exercise price of $0.04 per share for a period of 90 days from the effective date of the registration
statement (the “Second Warrant” and collectively, the “Warrants”).
The exercise price and number of shares
of the Company’s common stock issuable under the Warrants are subject to adjustments for stock dividends, splits, combinations,
subsequent rights offerings, pro rata distributions and any issuance of securities below the exercise price of the Warrants. Any
adjustment to the exercise price shall similarly cause the number of warrant shares to be adjusted proportionately so that the
total value of the Warrants shall remain the same.
The Notes earn an interest rate of 10%
per annum and a maturity date of 12 months from the date of the principal amount advanced. The Notes are convertible any time after
the issuance date of the Note, and the Purchaser has the right to convert the Note into shares of the Company’s common stock
at a conversion price equal to 42% discount to the lowest closing price of the common stock for the 15 trading days immediately
prior the conversion date, subject to a maximum conversion price of $0.03 per share.
In the event of default, the Purchaser
has the right to require the Company to repay in cash all or a portion of the Note at a price equal to 120% of the aggregate principal
amount of the Note plus all accrued but unpaid interest. In addition, in the event of a Major Transaction (as defined in the Note),
the Purchaser has the right to require the Company to prepaid all or a portion of the Note at a price equal to 110% of the aggregate
principal amount plus all accrued but unpaid interest. In the event of a Triggering Event (as defined in the Note), the Purchaser
has the right to require the Company to prepaid all or a portion of the Note at a price equal to the sum of (i) the greater of
(a) 120% of the aggregate principal amount plus all accrued but unpaid interest and (ii) all other costs, expenses and liquidated
damages due in respect of the Note and other transaction documents under the Purchase Agreement.
The first tranche of the Note has been
funded to the Company by the Purchaser upon execution of the Purchase Agreement, in the principal amount of $555,000, consisting
of the aggregate principal sum of $500,000 advanced by the Holder, $5,000 in expenses incurred by the Purchaser and 10% prepaid
interest per annum over 12 months. The Purchaser also agreed to fund the Company the second tranche of the Note in the principal
amount of $330,000, consisting of a cash payment of $300,000 and 10% pre-paid interest, within 15 business days of effectiveness
of the registration statement.
The Second tranche of the Note has been
funded to the Company by the Purchaser upon execution of the Purchase Agreement, in the principal amount of $330,000, consisting
of the aggregate principal sum of $300,000 advanced by the Holder 10% prepaid interest per annum over 12 months.
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015 AND 2014
Pursuant to the Purchase Agreement, the
Company is obligated to file a registration statement with the Securities and Exchange Commission (the “SEC”), not
later than 60 days after the closing date, to cover the shares to be issued upon conversion of the Note and upon exercise of the
Warrants. In the event the Company did not (i) file the registration statement within the required timeframe, (ii) cause the registration
statement to be declared effective by the SEC within 120 days following the closing date, (iii) cause the registration statement
to be declared effective by the SEC within 5 trading days following the date on which the Company is notified by the SEC that the
registration statement will not be reviewed or is no longer subject to further review and comments, or (iv) the registration statement
ceases to be effective for over 20 trading days, then the Company shall pay to the Purchaser liquidated damages equal to 2% of
the purchase price per month, not to exceed a total of 6% of the purchase price paid by the Purchaser. On October 8, 2014, the
Company’s filed registration statement became effective.
In 2015, the Company entered into Securities
Purchase Agreements with JDF Capital, Inc. for the sale of 10% convertible notes in the aggregate principal amount of $288,500
(the “Notes”). The total net proceeds the Company received from these offerings was $250,000, net of fees and original
interest discount (“OID”) of $34,500. As of December 31, 2015, the aggregate principal amount outstanding was $288,500.
The Notes bear interest at the rate of
10% per annum, prepaid as OID. As of the nine months ended September 30, 2015, all interest and principal must be repaid in approximately
six months to one year from the issuance date, with the last note being due July 1, 2016. The Notes are convertible into common
stock, at JDF Capital, Inc.’s option, at a 42% discount to the lowest or the average of three lowest closing prices of the
common stock during the 25 trading day period prior to conversion.
On October 14, 2015, two notes previously
issued to Vis Vires Group, Inc. (see below) in an unpaid aggregate of $121,210 were assigned to JDF Capital, Inc. The notes bear
interest at the rate of 8% per annum and all interest and principal must be repaid in approximately nine months from the issuance
date, with the last note being due March 1, 2016. The Notes are convertible into common stock, at holder’s option, at a 42%
discount to the average of the three lowest closing bid prices of the common stock during the 15 trading day period prior to conversion.
On October 15, 2015, the Company issued
a convertible promissory note to JDF Capital, Inc. as payment for the assignment fee of the above described notes for $20,696.20.
The Note bears interest at the rate of 10% per annum and all interest and principal must be repaid by March 1, 2016. The Note are
convertible into common stock, at JDF Capital, Inc.’s option, at a 42% discount to the lowest or the average of three lowest
bid prices of the common stock during the 15 trading day period prior to conversion. As of December 31, 2015, the aggregate principal
amount outstanding was $20,696.20.
JMJ Financial
On July 11, 2012, the Company issued a
Convertible Promissory Note to JMJ Financial (“JMJ”) providing JMJ with the ability to invest up to $275,000 which
contains a 10% original issue discount (the “JMJ Note”). The transaction closed on July 25, 2012. During the year ended
December 31, 2014, the Company received two tranches of net proceeds in the amount of $70,000, of which $50,000 was repaid. As
of December 31, 2014, the aggregate principal amount outstanding under the July 11, 2012 issued convertible promissory note was
$-0- .
The maturity dates are one year from the
effective date of each payment by JMJ to the Company (the “Maturity Date”). The conversion price (the “Conversion
Price”) for each portion of consideration paid by JMJ to the Company is lesser of: (1) the closing price of the Company’s
stock on the day the portion of consideration is paid to the Company, or (2) 70% of the lowest trade price in the 25 trading days
previous to the conversion.
The JMJ Notes bear interest at 0% for the
first 60 days and a one-time interest charge of 10% will be applied to the Principal Sum thereafter.
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015 AND 2014
At any time after the Effective Date, the
Company will have the option, upon 20 days business notice to JMJ, to prepay the entire remaining outstanding principal amount
of the Note in cash, provided that (i) the Company will pay JMJ 150% of the principal amount outstanding in repayment, (ii) such
amount must be paid in cash on the next business day following the 20 day business day notice period, and (iii) JMJ may still convert
the Note pursuant to the terms herein during the 20 day business period until such repayment amount has been received in full.
On March 3, 2015, the Company entered into
a Securities Purchase Agreement with JMJ Financial, for the sale of an 12% convertible note in the aggregate principal amount of
$400,000 (the “Note”). The financing closed on a $75,000 tranche on March 3, 2015. The total net proceeds the Company
received from this Offering was $68,000, net of fees and original interest discount (“OID”) of $5,000.
The Note bears interest at the rate of
12% per annum after three months. All interest and principal must be repaid on March 3, 2017. The Note is convertible into common
stock, at JMJ Financial’s option, at a 40% discount to the lowest close price of the common stock during the 25 trading day
period prior to conversion. As of December 31, 2015, the outstanding balance due JMJ Financial Investments was $-0-.
Typenex Co-Investment, LLC
On May 13, 2013, the Company issued a Convertible
Promissory Note to Typenex Co-Investment, LLC (“Typenex”) providing Typenex with the ability to invest up to $555,000
which contains a 10% original issue discount (the “Typenex Note”). The transaction closed on May 13, 2013. All issued
tranches are due 20 months from the date of issuance.
On February 26, 2014, the Company
issued a $50,000 Convertible Promissory Note (the “Note”) to Typenex Co-Investment LLC under the May 13, 2013 described
transaction. The total proceeds the Company received from this offering was $50,000.
The Note is convertible into common stock,
at holder’s option, at the lower of i) 35% discount to the average of the two lowest closing bid prices of the common stock
during the 20 trading day period prior to conversion or 40% if average of the two lowest bid prices are less than $0.01 or ii)
$0.04.
On July 8, 2014, the Company paid $40,179
against the note in a scheduled monthly installment followed by a payment on August 11, 2014 of the balance due of $31,078 to pay
the note in full. In as such Typenex disputed the Company’s right to pay in cash, these final two installments were placed
in escrow account through the Company’s counsel. In 2016, the Company settled all outstanding claims for $90,000. (See Note
7)
KBM Worldwide, Inc.
On April 1, 2014, the Company entered into
a Securities Purchase Agreement with KBM Worldwide, Inc. ("KBM"), for the sale of an 8% convertible note in the principal
amount of $37,500 (the "Note"). The financing closed on April 1, 2014. The total net proceeds the Company received from
this Offering was $35,000.
The Note bears interest at the rate of
8% per annum. All interest and principal must be repaid on January 7, 2015. The Note is convertible into common stock, at KBM’s
option, at a 42% discount to the average of the three lowest closing bid prices of the common stock during the 10 trading day period
prior to conversion.
At December 31, 2014, the outstanding balance
due was $-0-.
On April 29, 2014, the Company entered
into a Securities Purchase Agreement with KBM Worldwide, Inc. ("KBM"), for the sale of an 8% convertible note in the
principal amount of $63,000 (the "Note"). The financing closed on April 29, 2014. The total net proceeds the Company
received from this Offering was $60,000.
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015 AND 2014
The Note bears interest at the rate of
8% per annum. All interest and principal must be repaid on February 2, 2015. The Note is convertible into common stock, at KBM’s
option, at a 42% discount to the average of the three lowest closing bid prices of the common stock during the 10 trading day period
prior to conversion.
At December 31, 2014, the balance was $-0-.
On August 7, 2014, the Company entered
into a Securities Purchase Agreement with KBM Worldwide, Inc. ("KBM"), for the sale of an 8% convertible note in the
principal amount of $253,500 (the "Note"). The financing closed on August 7, 2014. The total net proceeds the Company
received from this Offering was $250,000.
The Note bears interest at the rate of
8% per annum. All interest and principal must be repaid on May 11, 2015. The Note is convertible into common stock, at KBM’s
option, at a 42% discount to the average of the three lowest closing bid prices of the common stock during the 10 trading day period
prior to conversion. As of December 31, 2015 and 2014, the aggregate principal amount outstanding was $-0- and $253,500, respectively.
On October 8, 2014, the Company entered
into a Securities Purchase Agreement with KBM Worldwide, Inc. ("KBM"), for the sale of an 8% convertible note in the
principal amount of $53,500 (the "Note"). The financing closed on October 8, 2014. The total net proceeds the Company
received from this Offering was $50,000.
The Note bears interest at the rate of
8% per annum. All interest and principal must be repaid on July 10, 2015. The Note is convertible into common stock, at KBM’s
option, at a 42% discount to the average of the three lowest closing bid prices of the common stock during the 10 trading day period
prior to conversion. As of December 31, 2015 and 2014, the aggregate principal amount outstanding was $-0- and $53,500, respectively.
Union Capital LLC
On May 2, 2014, the Company entered into
a Securities Purchase Agreement with Union Capital LLC. ("Union"), for the sale of an 8% convertible note in the principal
amount of $40,000 (the "Note"). The financing closed on May 2, 2014. The total net proceeds the Company received from
this Offering was $35,000.
The Note bears interest at the rate of
8% per annum. All interest and principal must be repaid on May 2, 2015. The Note is convertible into common stock, at Unions option,
at a 42% discount to the lowest closing price of the common stock during the 10 trading day period prior to conversion.
At December 31, 2014, the aggregate principal
amount outstanding was $-0-.
Adar Bays, LLC
On May 2, 2014, the Company entered into
a Securities Purchase Agreement with Adar Bays, LLC. ("Adar"), for the sale of an 8% convertible note in the principal
amount of $40,000 (the "Note"). The financing closed on May 2, 2014. The total net proceeds the Company received from
this Offering was $35,000.
The Note bears interest at the rate of
8% per annum. All interest and principal must be repaid on May 2, 2015. The Note is convertible into common stock, at Adar’s
option, at a 42% discount to the lowest closing price of the common stock during the 10 trading day period prior to conversion.
At December 31, 2014, the aggregate principal
amount outstanding was $-0-.
WHC Capital, LLC
On December 30, 2014, the Company entered
into a Securities Purchase Agreement with WHC Capital LLC ("WHC"), for the sale of an 8% convertible note in the principal
amount of $87,500 (the "Note"). The financing closed on December 30, 2014. The total net proceeds the Company received
from this Offering was $82,000.
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015 AND 2014
The Note bears interest at the rate of
8% per annum. All interest and principal must be repaid on December 30, 2015. The Note is convertible into common stock, at Adar’s
option, at a 42% discount to the average three lowest closing prices of the common stock during the 10 trading day period prior
to conversion. As of December 31, 2015 and 2014, the aggregate principal amount outstanding was $-0- and $87,500, respectively.
Fourth Man, LLC.
In 2015, the Company entered into a Securities
Purchase Agreements with Fourth Man, LLC (“Fourth Man”), for the sale of an 8% convertible notes in the principal amount
of $135,500 (the “Notes”). The total net proceeds the Company received from this Offering was $129,000.
The Notes bear interest at the rate of
8% per annum. All interest and principal must be repaid approximately nine months from the date of issuance with the last note
due June 9, 2016. The Notes are convertible into common stock, at Fourth Man’s option, at a 42% discount to the average two
or three lowest close prices of the common stock during the 10 trading day period prior to conversion.
At December 31, 2015, the aggregate principal
amount outstanding was $57,000.
JSJ Investments, Inc.
On March 16, 2015, the Company entered
into a Securities Purchase Agreement with JSJ Investments, Inc (“JSJ”), for the sale of an 12% convertible note in
the principal amount of $80,000 (the “Note”). The financing closed on March 16, 2015. The total net proceeds the Company
received from this Offering was $75,000.
The Note bears interest at the rate of
8% per annum. All interest and principal must be repaid on March 16, 2016. The Note is convertible into common stock, at JSJ’s
option, at a 42% discount to the average three lowest close prices of the common stock during the 15 trading day period prior to
conversion.
As discussed above, on October 7, 2015, the remaining aggregate
principal of $75,332, was assumed by LG Capital and was outstanding as of December 31, 2015.
Vis Vires Group, Inc.
In 2015, the Company entered into Securities
Purchase Agreements with Vis Vira Group, Inc for the sale of 8% convertible notes in the aggregate principal amount of $127,000
(the “Notes”). The total net proceeds the Company received from these offerings was $120,000, net of fees of $7,000.
The Notes bear interest at the rate of
8% per annum. As of the nine months ended September 30, 2015, all interest and principal must be repaid in approximately months
from the issuance date, with the last note being due March 1, 2016. The Notes are convertible into common stock, at Vis Vira Group,
Inc.’s option, at a 42% discount to the average of the three lowest closing bid prices of the common stock during the 15
trading day period prior to conversion.
As discussed above, on October 14, 2015,
notes in aggregate principal amount of $127,000 with an unpaid aggregate of $121,210 were assigned to JDF Capital, Inc.
Service Trading Company, LLC.
On July 30, 2015, the Company entered into
a Securities Purchase Agreement with Service Trading Company, LLC (“Service”), for the sale of an 12% convertible note
in the principal amount of $28,500 (the “Note”). The financing closed on July 30, 2015. The total net proceeds the
Company received from this Offering was $27,000.
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015 AND 2014
The Note bears interest at the rate of
12% per annum. All interest and principal must be repaid on July 30, 2016. The Note is convertible into common stock, at Service’s
option, at a 42% discount to the lowest close price of the common stock during the 12 trading day period prior to conversion.
Vigere Capital LP.
On December 3, 2015, the Company entered
into a Securities Purchase Agreement with Vigere Capital LP (“Vigere”), for the sale of an 10% convertible note in
the principal amount of $30,250 (the “Note”). The financing closed on December 3, 2015. The total net proceeds the
Company received from this Offering was $25,000.
The Note bears interest at the rate of
10% per annum. All interest and principal must be repaid on December 3, 2016. The Note is convertible into common stock, at Vigere’s
option, at a 42% discount to the three lowest bid price of the common stock during the 25 trading day period prior to conversion.
Derivative summary:
The Company has identified the embedded
derivatives related to the above described Notes. These embedded derivatives included certain conversion features and reset provisions.
The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as
of the inception date of the Notes and to fair value as of each subsequent reporting date.
At the inception of the 2015 Notes, the
Company determined the aggregate fair value of $1,675,750 of embedded derivatives. The fair value of the embedded derivatives was
determined using the Black Scholes Option Pricing Model based on the following assumptions: (1) dividend yield of 0%; (2) expected
volatility of 141.48% to 256.93%, (3) weighted average risk-free interest rate of 0.17 % to 0.57%, (4) expected life of 0.50 to
2.00 years, and (5) estimated fair value of the Company’s common stock of $0.0002 to $0.0018 per share.
The determined fair value of the debt derivatives
of $1,675,750 was charged as a debt discount up to the net proceeds of the notes with the remainder of $734,355 charged to current
period operations as non-cash interest expense.
At December 31, 2015, the Company marked
to market the fair value of the debt derivatives and determined a fair value of $3,492,119. The Company recorded a (loss) gain
from change in fair value of debt derivatives of $(1,548,645) and $1,057,354 for the years ended December 31, 2015 and 2014, respectively.
The fair value of the embedded derivatives was determined using Black Scholes Option Pricing Model based on the following assumptions:
(1) dividend yield of 0%, (2) expected volatility of 288.90%, (3) weighted average risk-free interest rate of 0.16% to 0.65%, (4)
expected life of 0.10 to 093 years, and (5) estimated fair value of the Company’s common stock of $0.0003 per share.
The charge of the amortization of debt
discounts and costs for the year ended December 31, 2015 and 2014 was $1,310,773 and $1,515,558, respectively; which was accounted
for as interest expense. Also, the Company has accrued interest expense of $22,881 as of December 31, 2015.
During the year ended December 31, 2015,
the Company issued an aggregate of 2,966,412,724 shares of its common stock in settlement of the convertible note payable and related
interest.
NOTE 10 – NOTES PAYABLE, RELATED
PARTY
On April 18, 2014, the Company issued an
aggregate of $385,000 promissory notes to officers and key employees in settlement of accrued salaries. The promissory notes bear
interest at the rate of 2% per annum. All interest and principal must be repaid on April 18, 2016. In connection with the issuance
of the notes, the Company issued an aggregate of 59,413,581 warrants to purchase the Company’s common stock at $0.00648 per
share for two years.
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015 AND 2014
The warrants were valued using the Black
Sholes option pricing method with the following assumptions: dividend yield $-0-, volatility of 180.09% and risk free rate of
0.43%. The determined fair value of the warrants of $250,049 is amortized as financing costs of the term of the related notes
(2 years). The charge of the amortization of financing cost for the year ended December 31, 2015 and 2014 was $162,138 and $87,910,
respectively; which was accounted for as amortized financing costs and included as interest expense.
On June 2, 2015, the Company issued 393,429
shares of its Series A Convertible Preferred stock in settlement of the $385,000 above described notes, accrued interest and the
return and cancellation of the 59,413,581 previously issued warrants.
NOTE 11 – CONVERTIBLE
NOTES PAYABLE, RELATED PARTY
During 2012, the Company issued an aggregate
of $280,000 convertible promissory notes to officers and key employees in settlement of accrued salaries.
The convertible promissory notes bear interest
at the rate of 8% per annum. All interest and principal were to be repaid initially on December 31, 2014. The convertible promissory
notes are convertible into common stock, at the holders’ option at $0.015 per common share. In December 2014, the notes were
extended to December 31, 2015 with the interest rate increasing to 12% per annum.
Due to the nature of the notes described
in Note 9 above, the Company has identified the embedded derivatives related to the above described Notes. These embedded derivatives
included certain conversion features and the uncertainty of sufficient authorized shares to meet possible conversion demands. The
accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the
inception date of the notes and to fair value as of each subsequent reporting date.
The fair value of the embedded derivatives
was determined using Black Scholes Option Pricing Model based on the following assumptions: (1) dividend yield of 0%, (2) expected
volatility of 200.41% to 200.80%, (3) weighted average risk-free interest rate of 0.25%, (4) expected life of 2.0 years, and (5)
estimated fair value of the Company’s common stock of $0.0165 to $0.0167 per share.
At the inception of the notes, the determined
fair value of the debt derivatives of $262,285 was charged as a debt discount up to the net proceeds of the note.
At December 31, 2015, the Company marked
to market the fair value of the debt derivatives and determined a fair value of $-0-. The Company recorded a gain from change in
fair value of debt derivatives of $41,718 for the year ended December 31, 2015. The fair value of the embedded derivatives was
determined using Black Scholes Option Pricing Model based on the following assumptions: (1) dividend yield of 0%, (2) expected
volatility of 288.90%, (3) weighted average risk-free interest rate of 0.16%, (4) expected life of 0.25 years, and (5) estimated
fair value of the Company’s common stock of $0.0003 per share.
The charge of the amortization of debt
discounts and costs for the year ended December 31, 2015 and 2014 was $-0- and $131,047, respectively, which was accounted for
as interest expense. Also, the Company has accrued interest expense of $67,233 as of December 31, 2015.
NOTE 12 – DERIVATIVE
LIABILITIES
As described in Notes 9 and 11 above, the
Company issued convertible notes that contain conversion features and reset provision. The accounting treatment of derivative financial
instruments requires that the Company record fair value of the derivatives as of the inception date and to fair value as of each
subsequent reporting date. Refer to Notes 9 and 11 for assumptions used to determine fair values.
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015 AND 2014
NOTE 13 – COMMITMENTS AND CONTINGENCIES
Lease Obligations
The Company leases a suite of offices and
shared support services at 1997 Annapolis Exchange Parkway, Suite 300, Annapolis, Maryland 21401 annual lease. In addition, the
Company maintains living quarters in Annapolis on an annual lease expiring in 2016.
Rental expenses charged to operations for
the year ended December 31, 2015 and 2014 was $56,553 and $37,651, respectively.
Employment and Consulting Agreements
The Company has employment agreements with
certain of its key employees which include non-disclosure and confidentiality provisions for protection of the Company’s
proprietary information.
The Company has consulting agreements with
outside contractors to provide marketing and financial advisory services. The Agreements are generally for a term of 12 months
from inception and renewable automatically from year to year unless either the Company or Consultant terminates such engagement
by written notice.
On December 29, 2010, pursuant to the Merger,
Solar Wind Energy, Inc. became a wholly-owned subsidiary of the Company. Solar Wind has employment agreements with its executive
officers. Each of the employment agreements was entered into on September 22, 2010 and amended on November 22, 2010.
Name
|
|
Position(s)
|
|
Term
|
|
Salary
|
|
|
Bonus
|
|
Severance
|
Ronald W. Pickett
|
|
President, Chief Executive Officer
|
|
3 years; renewable for 1 year on mutual consent
|
|
$
|
200,000
|
|
|
Board Discretionary
|
|
Twelve (12) month salary and benefits for termination without cause.
|
Stephen Sadle
|
|
Chief Operating Officer
|
|
3 years; renewable for 1 year on mutual consent
|
|
$
|
175,000
|
|
|
Board Discretionary
|
|
Twelve (12) month salary and benefits for termination without cause.
|
Robert P. Crabb
|
|
Secretary, Chief Marketing Officer
|
|
|
|
$
|
60,000
|
|
|
|
|
|
Terms to modify the 1 year contract extension
by mutual consent have been agreed to by the Officers and Directors. Under the modification and extension, the contracts will be
extended 4 additional years with current salaries being unchanged. Provisions for automatic salary increases based on specific
events related to business development successes, rights for the officers to convert any accrued salary into Company notes, and
rights to receive warrants to purchase Company stock at market plus 20% premium at the time of the grant while notes are outstanding
will be incorporated in the new contracts. The parties have mutually agreed to a stock option plan, the specific terms to be negotiated
as part of the final contract.
Litigation
Typenex Co-Investment, LLC filed suit against
the Company on September 4, 2014 in the United States District Court, Northern District of Illinois, Eastern Division claiming
that the Company breached a contract it entered into with Typenex, and that Typenex was entitled to convert any portion of the
outstanding balance of their monies the Company allegedly owed to Typenex into validly issued, fully paid and non-assessable shares
of Solar Wind Energy Tower Inc. common shares. Typenex seeks money damages and court orders enjoining the Company from further
breaches. In a related suit filed September 9, 2014 in the United States District Court for the District of Idaho, Typenex claims
that the Company’s transfer agent violated certain transfer instructions issued by the Company.
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015 AND 2014
The Company has not been named as a defendant
in this suit and the parties have agreed that the transfer agent will be part of the Northern District litigation. (The Idaho litigation
has not yet been dismissed) The Company maintained that it provided cash to retire the debt owed to Typenex, and denies that Typenex
was entitled to the conversion into Company stock. In 2016, the Company settled all outstanding claims for $90,000.
From time to time, we may become involved
in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent
uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently
not party to any such legal proceedings that we believe will have, individually or in the aggregate, a material adverse effect
on our business, financial condition or operating results.
NOTE 14 – STOCKHOLDERS' EQUITY
Preferred stock
The Company has authorized 10,000,000 shares
of preferred stock, with a par value of $0.0001 per share. As of December 31, 2015 and 2014, the Company has 393,429 and -0- shares
of preferred stock issued and outstanding, respectively.
On June 2, 2015, the Company designated
500,000 as Series A Convertible Preferred Stock (“Series A preferred”) at $0.0001 par value.
Each Series A preferred share i) shall
rank senior in regard to dividend rights, rights of redemption and liquidation to all classes of common stock and any class or
series of capital stock of the Company hereafter creates, ii) receive dividends if and when declared by the Company’s board
of directors, iii) each share of Series A preferred convertible into 154.32 shares of common and iv) each share of Series A preferred
stock is entitled to 20 votes for each share of common stock into which Series A preferred could then be converted.
On June 2, 2015, the Company issued 393,429
shares of its Series A Convertible Preferred stock in settlement of related party notes payable of $385,000, accrued interest and
the return and cancellation of the 59,413,581 previously issued warrants.
Common stock
The Company has authorized 20,000,000,000
and 900,000,000 shares of common stock, with a par value of $0.0001 per share as of December 31, 2015 and 2014, respectively. As
of December 31, 2015 and 2014, the Company has 3,628,253,758 and 626,745,923, respectively, shares of common stock issued and outstanding.
On April 2, 2014, the Company’s majority
stockholders approved to amend the Articles of Incorporation to increase the number of authorized shares of common stock from 500,000,000
to 900,000,000 shares.
On January 15, 2015, the Company’s
majority stockholders approved to amend the Articles of Incorporation to increase of authorized shares of common stock from 900,000,000
to 1,300,000,000 and on June 5, 2015, the Company’s majority stockholders approved to amend the Articles of Incorporation
again to increase of authorized shares of common stock from 1,300,000 to 5,000,000,000.
On September 14, 2015, the Company’s
majority stockholders approved to amend the Articles of Incorporation to increase of authorized shares of common stock from 5,000,000,000
to 20,000,000,000.
During the year ended December 31, 2014,
the Company issued an aggregate of 500,000 shares of common stock for services rendered of $2,250.
During the year ended December 31, 2014,
the Company issued an aggregate of 248,392,755 shares of common stock in settlement of $1,125,194 of convertible notes payable
and related accrued interest.
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015 AND 2014
During the year ended December 31, 2014,
the Company issued 7,125,000 of common stock for net proceeds of $25,000.
On May 20, 2014, the Company issued 500,000
shares of its common stock for investor relations services valued at $2,250.
During the year ended December 31, 2015,
the Company issued an aggregate of 2,966,412,724 shares of common stock in settlement of $1,222,949 of convertible notes payable
and related accrued interest.
During the year ended December 31, 2015,
the Company issued an aggregate of 1,761,111 shares of common stock for services rendered of $2,289.
During the year ended December 31, 2015,
the Company issued an aggregate of 33,334,000 shares of common stock for unpaid officer’s salaries of $20,000.
NOTE 15 – WARRANTS
Warrants
The following table summarizes the changes
in warrants outstanding and related prices for the shares of the Company’s common stock at December 31, 2015:
Exercise Price
|
|
|
Number
Outstanding
|
|
|
Warrants
Outstanding
Weighted
Average
Remaining
Contractual Life
(years)
|
|
|
Weighted
Average
Exercise price
|
|
|
Number
Exercisable
|
|
|
Warrants
Exercisable
Weighted
Average
Exercise Price
|
|
$
|
0.00860
|
|
|
|
11,627,908
|
|
|
|
0.26
|
|
|
|
0.00860
|
|
|
|
11,627,908
|
|
|
$
|
0.00860
|
|
|
0.02000
|
|
|
|
5,000,000
|
|
|
|
1.47
|
|
|
|
0.02000
|
|
|
|
5,000,000
|
|
|
|
0.02000
|
|
|
0.05000
|
|
|
|
1,920,000
|
|
|
|
0.19
|
|
|
|
0.05000
|
|
|
|
1,920,000
|
|
|
|
0.05000
|
|
|
0.10000
|
|
|
|
2,187,101
|
|
|
|
2.40
|
|
|
|
0.10000
|
|
|
|
2,187,101
|
|
|
|
0.10000
|
|
|
|
|
|
|
20,735,009
|
|
|
|
1.07
|
|
|
|
|
|
|
|
20,735,009
|
|
|
$
|
0.02482
|
|
Transactions involving the Company’s
warrant issuance are summarized as follows:
|
|
Number of
Shares
|
|
|
Weighted
Average
Price Per
Share
|
|
Outstanding at December 31, 2013
|
|
|
2,187,101
|
|
|
$
|
0.10
|
|
Granted
|
|
|
93,711,489
|
|
|
|
0.01
|
|
Exercised
|
|
|
–
|
|
|
|
–
|
|
Canceled or expired
|
|
|
–
|
|
|
|
–
|
|
Outstanding at December 31, 2014
|
|
|
95,898,590
|
|
|
|
0.02
|
|
Granted
|
|
|
–
|
|
|
|
–
|
|
Canceled
|
|
|
(59,413,581
|
)
|
|
|
0.00648
|
|
Expired
|
|
|
(15,750,000
|
)
|
|
|
0.04
|
|
Outstanding at December 31, 2015
|
|
|
20,735,009
|
|
|
$
|
0.02482
|
|
On April 4, 2014, in recognition of past
services by the two (2) Directors, the Company approved for issuance of an aggregate of 2,500,000 and 5,813,954 warrants to purchase
the Company’s common stock at $0.02 and $0.0086 per share for the vesting period of two years.
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015 AND 2014
The warrants were valued using the Black
Sholes option pricing method with the following assumptions: dividend yield $-0-, volatility of 158.38% and risk free rate of 0.43%.
The determined fair value of the warrants of $33,181 was charged to current period operations.
As described in Note 8 on April 7, 2014,
the Company issued a warrant to purchase 1,920,000 shares of the Company’s common stock exercisable at $0.05 per share expiring
on March 7, 2016 in connection with the issuance of a note. The warrants were valued using the Black Sholes option pricing method
with the following assumptions: dividend yield $-0-, volatility of 158.38% and risk free rate of 0.41%. The determined fair value
of the warrant of $3,070 is amortized as financing costs of the term of the related note (2 years).
As described in Note 9, the Company issued
an aggregate of 59,413,581 warrants to purchase the Company’s common stock at $0.00648 per share for two years in connection
with the issuance of notes payable.
The warrants were valued using the Black
Sholes option pricing method with the following assumptions: dividend yield $-0-, volatility of 180.09% and risk free rate of 0.43%.
The determined fair value of the warrants of $250,049 is amortized as financing costs of the term of the related notes (2 years).
As described in Note 9, the Company (ii)
issued a warrant to purchase an aggregate of 7,000,000 shares of the Company’s common stock, par value $0.0001 per share,
for an exercise price of $0.05 per share for a period of 150 days from the effective date of the registration statement (the “First
Warrant”), and (iii) issued a warrant to purchase an aggregate of 8,750,000 shares of the Company’s common stock, par
value $0.0001 per share, for an exercise price of $0.04 per share for a period of 90 days from the effective date of the registration
statement. On October 8, 2014, upon effectiveness of the registration statement, the warrants were valued using the Black Sholes
option pricing method with the following assumptions: dividend yield $-0-, volatility of 189.33% and risk free rate of 0.01% to
0.05%. The determined fair value of the warrants of $57,850 was charged to current period operations.
On November 25, 2014, the Company issued
2,500,000 and 5,813,954 warrants to purchase the Company’s common stock for services, exercisable at $0.02 and $0.0086 per
share for five years, respectively.
The warrants were valued using the Black
Sholes option pricing method with the following assumptions: dividend yield $-0-, volatility of 190.27% and risk free rate of 0.94%.
The determined fair value of the warrants of $72,076 was charged to current period operations.
NOTE 16 – NON CONTROLLING
INTEREST
In April 2014, the Company organized Arizona
Green Power, LLC, an Arizona limited liability company for the purpose to acquire development property from the City of San Luis,
Arizona. At the time of formation, Arizona Green Power, LLC did not have any significant assets or liabilities. In connection with
financing of the project, the Company reduced its ownership interest to 98.67% in connection with the issuance of a note payable
by Arizona Green Power, LLC on April 7, 2014.
On November 17, 2015, the Company entered
into a Fourth Amended Option Agreement (the “Amended Option Agreement”) to the option agreement dated April 11, 2014
with several investors and current land owners. Pursuant to the terms of the Amended Option Agreement, the land owners agreed
to invest $600,000 and defer until closing an additional $450,000 due on the option payment in exchange for a 2.67% equity investment
in AGP, Company’s majority owned subsidiary.
Moreover, pursuant to the terms of the
option agreement, the investor has also committed an additional $300,000 in exchange for a 1.33% equity investment, $50,000 which
has been paid and the additional $250,000 conditioned upon the Company and AGP successfully procuring $5,000,000 or more in additional
equity from investors, or such other additional amount as is necessary for the balance of the required pre-development and development
costs to be completed.
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015 AND 2014
A reconciliation of the non-controlling
loss attributable to the Company:
Net loss attributable to non-controlling
interest for the year ended December 31, 2015:
Net loss
|
|
$
|
244,316
|
|
Average Non-controlling interest percentage
|
|
|
1.816%
|
|
Net loss attributable to the non-controlling interest
|
|
$
|
4,436
|
|
Net loss attributable to non-controlling
interest for the year ended December 31, 2014:
Net loss
|
|
$
|
135,117
|
|
Average Non-controlling interest percentage
|
|
|
1.33%
|
|
Net loss attributable to the non-controlling interest
|
|
$
|
1,802
|
|
The following table summarizes the changes
in non-controlling interest from December 31, 2013 to December 31, 2015:
Balance, December 31, 2013
|
|
$
|
–
|
|
Transfer (to) from the non-controlling interest as a result of change in ownership
|
|
|
–
|
|
Balance, December 31, 2014
|
|
|
(1,802
|
)
|
Transfer (to) from the non-controlling interest as a result of change in ownership
|
|
|
(11,332
|
)
|
Net loss attributable to the non-controlling interest
|
|
|
(4,436
|
)
|
Balance, December 31, 2015
|
|
$
|
(17,570
|
)
|
NOTE 17 – INCOME TAXES
The Company utilizes ASC 740 “Income
Taxes”, which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of
events that have been included in the consolidated financial statement or tax returns. Under this method, deferred tax liabilities
and assets are determined based on the difference between consolidated financial statements and tax bases of assets and liabilities
using enacted tax rates in effect for the year in which the differences are expected to reverse.
For the period from July 26, 2010 (date
of inception) through December 31, 2015, the Company had available for U.S federal income tax purposes net operating loss carryovers
of approximately $13,020,000, which expiring through the year of 2034. The net operating loss carryovers may be subject to limitations
under Internal Revenue Code “Section 382”, due to significant changes in the Company’s ownership. The Company
has provided a full valuation allowance against the full amount of the net operating loss carryforward, since, in the opinion of
management, based upon the earnings history of the Company it is more likely than not that the benefits will not be realized.
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015 AND 2014
The income tax provision (benefit) for
the years ended December 31, 2015 and 2014 consists of the following:
|
|
2014
|
|
|
2013
|
|
Federal:
|
|
|
|
|
|
|
|
|
Current
|
|
$
|
–
|
|
|
$
|
–
|
|
Deferred
|
|
|
2,230,000
|
|
|
|
1,481,000
|
|
|
|
|
2,230,000
|
|
|
|
1,481,000
|
|
State and local:
|
|
|
|
|
|
|
|
|
Current
|
|
|
–
|
|
|
|
–
|
|
Deferred
|
|
|
394,000
|
|
|
|
329,000
|
|
|
|
|
394,000
|
|
|
|
329,000
|
|
|
|
|
|
|
|
|
|
|
Change in valuation allowance
|
|
|
(2,624,000
|
)
|
|
|
(1,810,000
|
)
|
|
|
|
|
|
|
|
|
|
Income tax provision (benefit)
|
|
$
|
–
|
|
|
$
|
–
|
|
The provision for income taxes differ from
the amount of income tax determined by applying the applicable U.S statutory rate to losses before income tax expense for the year
ended December 31, 2015 and 2014 as follows:
|
|
December 31,
2015 and 2014
|
|
Statutory federal income tax rate
|
|
|
(35.0%
|
)
|
Statutory state and local income tax rate (8.25%), net of federal benefit
|
|
|
(5.4%
|
)
|
Change in valuation allowance
|
|
|
40.4%
|
|
Effective tax rate
|
|
|
0.00%
|
|
Deferred income taxes result from temporary
differences in the recognition of income and expenses for financial reporting purposes and for tax purposes. The tax effect of
these temporary differences representing deferred tax asset and liabilities result principally from the following:
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
Deferred tax assets (liabilities):
|
|
|
|
|
|
|
|
|
Stock based compensation issued and to be issued for services rendered
|
|
$
|
642,993
|
|
|
$
|
642,054
|
|
Net operating loss carry forward
|
|
|
1,981,007
|
|
|
|
838,946
|
|
Less: valuation allowance
|
|
|
(2,624,000
|
)
|
|
|
(1,481,000
|
)
|
Net deferred tax asset
|
|
$
|
–
|
|
|
$
|
–
|
|
The Company has filed its tax returns for
the period from July 26, 2010 (date of inception) through December 31, 2014.
The provisions of ASC 740 require companies
to recognize in their financial statements the impact of a tax position if that position is more likely than not to be sustained
upon audit, based upon the technical merits of the position. ASC 740 prescribes a recognition threshold and measurement attribute
for the financial statement recognition and measurement of a tax position taken or expected to be taken on a tax return. ASC 740
also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure.
Management does not believe that the Company
has any material uncertain tax positions requiring recognition or measurement in accordance with the provisions of ASC 740. Accordingly,
the adoption of these provisions of ASC 740 did not have a material effect on the Company’s consolidated financial statements.
The Company’s policy is to record interest and penalties on uncertain tax positions, if any, as income tax expense.
All tax years for the Company remain subject
to future examinations by the applicable taxing authorities.
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015 AND 2014
NOTE 18 – FAIR VALUE
MEASUREMENTS
ASC 825-10 defines fair value as the price
that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded
at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions
that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk
of nonperformance. ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs
and minimize the use of unobservable inputs when measuring fair value. ASC 825-10 establishes three levels of inputs that may be
used to measure fair value:
●
|
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
|
●
|
Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; or
|
●
|
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and are unobservable.
|
Items recorded or measured at fair value
on a recurring basis in the accompanying consolidated financial statements consisted of the following items as of December 31,
2015:
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Lont-term investments
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
Total
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
Derivative liabilities
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
3,492,119
|
|
|
$
|
3,492,119
|
|
Total
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
3,492,119
|
|
|
$
|
3,492,119
|
|
The table below sets forth a summary of
changes in the fair value of the Company’s Level 3 financial liabilities (derivative liability) for the year ended December
31, 2015.
|
|
Derivative Liabilities
|
|
|
Balance, December 31, 2013
|
$
|
689,093
|
|
|
|
|
|
Transfers in (out) at mark-market value on date of payoff or conversion
|
|
(2,042,407
|
)
|
|
|
|
|
Transfers in (out) upon reclassification from (to) equity
|
|
5,525
|
|
|
|
|
|
Transfers in upon initial fair value of derivative liabilities
|
|
3,821,420
|
|
|
|
|
|
Gain from change in fair value of derivative liabilities
|
|
(1,089,103
|
)
|
|
|
|
|
Balance, December 31, 2014
|
|
1,384,528
|
|
|
|
|
|
Transfers in (out) at mark-market value on date of payoff or conversion
|
|
(1,075,086
|
)
|
|
|
|
|
Transfers in upon initial fair value of derivative liabilities
|
|
1,675,750
|
|
|
|
|
|
Loss from change in fair value of derivative liabilities
|
|
1,506,927
|
|
|
|
|
|
Balance, December 31, 2015
|
$
|
3,492,119
|
|
|
|
|
|
Total loss for the year included in earnings relating to the liabilities held at December 31, 2015
|
$
|
(1,506,927
|
)
|
Level 3 Liabilities were comprised of our
bifurcated convertible debt features on our convertible notes.
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015 AND 2014
NOTE 19 – SUBSEQUENT EVENTS
Subsequent financing
On January 7, 2016, the Company entered
into a Securities Purchase Agreement with JDF Capital, Inc ("JDF"), for the sale of an 8% convertible note in the principal
amount of $73,920 (the "Note"). The financing closed on January 7, 2016. The total net proceeds the Company received
from this Offering were $66,000.
The Note bears interest at the rate of
8% per annum. All interest and principal must be repaid on January 7, 2017. The Note is convertible into common stock, at JDF’s
option, at a 50% discount to lowest bid price of the common stock during the 15 trading day period prior to conversion.
On January 11, 2016, the Company entered
into a Securities Purchase Agreement with LG Capital Funding, LLC ("LG"), for the sale of an 8% convertible note in the
principal amount of $73,920 (the "Note"). The financing closed on January 11, 2016. The total net proceeds the Company
received from this Offering were $66,000.
The Note bears interest at the rate of
8% per annum. All interest and principal must be repaid on January 11, 2017. The Note is convertible into common stock, at LG’s
option, at a 50% discount to lowest bid price of the common stock during the 15 trading day period prior to conversion.
Common stock issuances
:
In January 2016, the Company issued an
aggregate of 338,208,600 shares of its common stock in settlement of $26,957 outstanding notes payable and accrued interest and
690,525,858 shares of its common stock in payment of $82,863 accrued officer compensation.
In February 2016, the Company issued an
aggregate of 351,300,000 shares of its common stock in settlement of $23,630 outstanding notes payable.
In March 2016, the Company issued an aggregate
of 389,246,600 shares of its common stock in settlement of $38,925 outstanding notes payable and accrued interest and 200,000,000
as payment of $20,000 towards settlement payable.
In April 2016, the Company issued 195,520,800
shares of its common stock in settlement of $19,552 of outstanding notes payable and 300,000,000 as payment of $30,000 towards
settlement payable.
In May 2016, the Company issued 222,040,722
shares of its common stock in settlement of $39,967 of outstanding notes payable.
In July 2016, the Company issued 100,000,000
shares of its common stock as payment of $10,000 towards settlement payable.
In August 2016, the Company issued 100,000,000
shares of its common stock as payment of $10,000 towards settlement payable.
In September 2016, the Company issued 100,000,000
shares of its common stock as payment of $10,000 towards settlement payable.
In October 2016, the Company issued 200,000,000
shares of its common stock as payment of $20,000 towards settlement payable and 1,250,000,000 shares of its common stock in payment
of $150,000 accrued officer compensation.
In November 2016, the Company issued an
aggregate of 1,750,959,177 shares of its common stock in settlement of $315,134 outstanding notes payable and 111,111,111 shares
of its common stock in payment of $20,000 accrued compensation.
In December 2016, the Company issued 300,000,000
shares of its common stock in settlement of $170,000 due to shareholders, 1,193,750,000 shares of its common stock in payment of
$143,250 accrued officer compensation and 686,877,778 shares of its common stock in settlement of $131,759 outstanding notes payable.
In January 2017, the Company issued 125,000,000
shares of its common stock in payment of $30,000 accrued officer compensation.