UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 3031, ~~2025~~2026

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 033-19411-C

OCEAN THERMAL ENERGY CORPORATION

(Exact name of registrant as specified in its charter)

Nevada

20-5081381

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

3675 Market Street, Suite 200, Philadelphia, PA 19104

(Address of principal executive offices, including zip code)

(717) 299-1344

(Registrant’s telephone number, including area code)

n/a

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Exchange Act: None

Title of each class

Trading

Symbol(s)

Name of each exchange

on which registered

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐☒ No ☒☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated Filer ☐☒ Smaller reporting company ☒ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of ~~December~~May 1712, ~~2025~~2026, issuer had 190,012,124 outstanding shares of common stock, par value $0.001.

TABLE OF CONTENTS

	Description	Page
PART I-FINANCIAL INFORMATION
Item 1	Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Changes in Stockholders’ Deficit	5
	Condensed Consolidated Statements of Cash Flows	76
	Notes to the Condensed Consolidated Financial Statements	87
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3	Quantitative and Qualitative Disclosures about Market Risk	14
Item 4	Controls and Procedures	14
PART II-OTHER INFORMATION
Item 1	Legal Proceedings	15
Item 1A	Risk Factors	15
Item 2	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	1615
Item 3	Defaults upon Senior Securities	1615
Item 6	Exhibits	1819
	Signature	1920

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

OCEAN THERMAL ENERGY CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30,2025			December 31,2024
	March 31,2026			December 31,2025
ASSETS
Current Assets
Cash	$	56166,~~111~~220		$	16403,~~142~~667
Accounts receivable		~~395~~259,~~695~~196			-1,076,108
Costs in excess of billings		248,499			-
Prepaid expenses		5,000			5,000
Total Current Assets		~~705~~430,~~305~~416			211,~~142~~484,775
Total Assets	$	~~705~~430,~~305~~416		$	211,~~142~~484,775
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable and accrued expense	$	2923,~~505~~524,~~547~~128		$	2623,~~473~~470,~~157~~504
Accrued compensation		7,146,821			7,001,790
Contract liabilities		-			25,851
Notes payable - related party		2,304,170			2,304,170
Convertible notes payable - related party, net		117,500			117,500
Notes payable		3,~~623~~633,131			3,~~638~~633,131
Convertible note payable, net		2,~~544~~618,~~665~~835			2,~~539~~534,665
Advances payable - related party, net		5938,~~578~~538			6038,~~388~~808
Derivative liability		~~174~~12,~~819~~434,~~690~~498			975,~~423~~688,~~915~~923
Total Current Liabilities		~~212~~51,~~974~~817,~~281~~621			44114,~~556~~815,~~926~~342
Convertible notes payable due after one year, net		~~56,950~~-			1670,~~120~~560
Total Liabilities		~~213~~51,~~031~~817,~~231~~621			44114,~~573~~885,~~046~~902
Commitments and contingencies (See Note 7)		-			-
Stockholders' deficit
Preferred Stock, Series B, $0.001 par value; 1,250,000 shares authorized, 518,750 shares issued and outstanding as of September 30, 2025 and December 31, 2024		519			519
Preferred Stock, Series B, $0.001 par value; 1,250,000 shares authorized, 518,750 shares issued and outstanding as of March 31, 2026 and December 31, 2025		519			519
Preferred Stock, Series C, $0.001 par value; 2,700,000 shares authorized, 2,300,000 shares issued and outstanding as of September 30, 2025 and December 31, 2024		2,300			2,300
Preferred Stock, Series C, $0.001 par value; 2,700,000 shares authorized, 2,300,000 shares issued and outstanding as of March 31, 2026 and December 31, 2025		2,300			2,300
Preferred Stock, Series D, $0.001 par value; 1,400 shares authorized, 1,400 shares issued and outstanding as of September 30, 2025 and December 31, 2024		1			1
Preferred Stock, Series D, $0.001 par value; 1,400 shares authorized, 1,400 shares issued and outstanding as of March 31, 2026 and December 31, 2025		1			1
Common stock, $0.001 par value; 200,000,000 shares authorized, 190,012,124 shares issued and outstanding as of September 30, 2025 and December 31, 2024		190,013			190,013
Common stock, $0.001 par value; 200,000,000 shares authorized, 190,012,124 shares issued and outstanding as of March 31, 2026 and December 31, 2025		190,013			190,013
Common stock subscribed		~~307~~447,500			-447,500
Additional paid-in capital		62,521,759			62,521,759
Accumulated deficit		(~~275~~114,~~348~~549,~~018~~297	)		(~~107~~176,~~266~~563,~~496~~219	)
Total Stockholders' Deficit		(~~212~~51,~~325~~387,~~926~~205	)		(44113,~~551~~401,~~904~~127	)
Total Liabilities and Stockholders' Deficit	$	~~705~~430,~~305~~416		$	211,~~142~~484,775

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

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

	For the three months ended						For the nine months ended
	September 30,2025			September 30,2024			September 30,2025			September 30,2024
Revenue	$	413,567		$	-		$	1,432,986		$	-
Direct cost of contracts		307,752			-			1,066,342			-
Gross profit		105,815			-			366,644			-
Operating Expenses
Salaries and compensation		167,293			225,621			587,828			692,485
Professional fees		214,187			122,663			408,450			394,838
General and administrative		8,602			30,226			29,625			85,934
Total Operating Expenses		390,082			378,510			1,025,903			1,173,257
Loss from Operations		(284,267	)		(378,510	)		(659,259	)		(1,173,257	)
Other Income (Expenses)
Interest expense, net		(712,926	)		(628,141	)		(2,052,536	)		(1,856,530	)
Amortization of debt discount		(13,610	)		-			(40,830	)		-
Change in fair market value of derivative liability		(70,982,275	)		5,264,094			(165,340,795	)		2,091,934
Gain on conversion of debt		-			-			11,898			30,303
Total Other Income (Expense)		(71,708,811	)		4,635,953			(167,422,263	)		265,707
Income (Loss) Before Income Taxes		(71,993,078	)		4,257,443			(168,081,522	)		(907,550	)
Provision for Income Taxes		-			-			-			-
Net Income (Loss)	$	(71,993,078	)	$	4,257,443		$	(168,081,522	)	$	(907,550	)
Net Income (Loss) per Common Share – Basic	$	(0.38	)	$	0.02		$	(0.89	)	$	(0.01	)
Net Income (Loss) per Common Share – Diluted	$	(0.38	)	$	0.00		$	(0.89	)	$	(0.01	)
Weighted Average Number of Common Shares Outstanding – Basic		190,012,124			190,012,124			190,012,124			188,282,566
Weighted Average Number of Common Shares Outstanding – Diluted		190,012,124			1,602,305,775			190,012,124			188,282,566

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025

(Unaudited)

	2026			2025

Revenue	$	403,517		$	173,037
Direct costs of contracts		662,984			128,763
Gross Profit (Loss)		(259,467	)		44,274

Operating Expenses
Salaries and compensation		64,915			201,955
Professional fees		128,801			82,618
General and administrative		34,489			6,505
Total Operating Expenses		228,205			291,078

Loss from Operations		(487,672	)		(246,804	)

Other (Expenses) Income
Interest expense, net		(739,221	)		(655,809	)
Amortization of debt discount		(13,610	)		(13,610	)
Change in fair value of derivative liability		63,254,425			(498,404	)
Gain on conversion of debt		-			11,898
Total Other (Expense) Income		62,501,594			(1,155,925	)

Income (Loss) Before Income Taxes		62,013,922			(1,402,729	)

Provision for Income Taxes		-			-

Net Income (Loss)	$	62,013,922		$	(1,402,729	)

Net Income (Loss) per Common Share Basic	$	0.27		$	(0.01	)
Net Income (Loss) per Common Share Diluted	$	0.00		$	(0.01	)

Weighted Average Number of Common Shares Outstanding Basic		225,637,124			190,995,457
Weighted Average Number of Common Shares Outstanding Diluted		2,432,371,471			190,995,457

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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OCEAN THERMAL ENERGY CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ ~~DEFICIENCY~~DEFICIT

FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025

(Unaudited)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

	Preferred Stock				Common Stock				Common		Additional					Total
	Number of Shares		Par value		Number of Shares		Par value		Stock Subscribed		Paid- in capital		Accumulated Deficit			Stockholders’ Deficit

Balance December 31, 2024		2,820,150	$	2,820		190,012,124	$	190,013	$	-	$	62,521,759	$	(107,266,496	)	$	(44,551,904	)
Common stock Subscribed		-		-		-		-		95,500		-		-			95,500
Net Loss		-		-		-		-		-		-		(1,402,729	)		(1,402,729	)
Balance March 31, 2025		2,819,977	$	2,820		190,012,124	$	190,013	$	95,500	$	62,521,759	$	(108,669,225	)	$	(45,859,133	)
Balance December 31, 2025		2,820,150	$	2,820		190,012,124	$	190,013	$	447,500	$	62,521,759	$	(176,563,219	)	$	(113,401,127	)
Net Income		-		-		-		-		-		-		62,013,922			62,013,922
Balance March 31, 2026		2,820,150	$	2,820		190,012,124	$	190,013		447,500	$	62,521,759	$	(114,549,297	)	$	(51,387,205	)

	Preferred Stock				Common Stock				Additional					Total
	Number of		Par		Number of		Par		Paid-in		Accumulated			Stockholders’
	Shares		Value		Shares		Value		Capital		Deficit			Deficiency
Balance December 31, 2023		2,819,952	$	2,820		184,370,469	$	184,371	$	61,962,151	$	(106,081,333	)	$	(43,931,991	)
Common stock issued for conversion of note		-		-		5,641,655		5,642		163,608		-			169,250
Series D Preferred Stock issued for cash		198		-		-		-		396,000		-			396,000
Net Loss		-		-		-		-		-		(907,550	)		(907,550	)
Balance September 30, 2024 (Unaudited)		2,820,150	$	2,820		190,012,124	$	190,013	$	62,521,759	$	(106,988,883	)	$	(44,274,291	)

	Preferred Stock				Common Stock				Common		Additional					Total
	Number of		Par		Number of		Par		Stock		Paid-in		Accumulated			Stockholders’
	Shares		Value		Shares		Value		Subscribed		Capital		Deficit			Deficiency
Balance December 31, 2024		2,820,150	$	2,820		190,012,124	$	190,013	$	-	$	62,521,759	$	(107,266,496	)	$	(44,551,904	)
Common stock subscribed		-		-		-		-		307,500		-		-			307,500
Net Loss		-		-		-		-		-		-		(168,081,522	)		(168,081,522	)
Balance September 30, 2025 (Unaudited)		2,820,150	$	2,820		190,012,124	$	190,013	$	307,500	$	62,521,759	$	(275,348,018	)	$	(212,325,926	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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OCEAN THERMAL ENERGY CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF ~~CHANGES~~CASH ~~IN STOCKHOLDERS’ DEFICIENCY~~FLOW

FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025

(Unaudited)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

	2026			2025
Cash Flows From Operating Activities:
Net income (loss)	$	62,013,922		$	(1,402,729	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Change in fair value of derivative liability		(63,254,425	)		498,404
Gain on extinguishment of derivative liability		-			(11,898	)
Amortization of debt discount		13,610			13,610
Changes in assets and liabilities:
Accounts receivable		816,912			(539,200	)
Contract liabilities		(25,851	)		366,163
Accounts payable and accrued expenses		198,655			913,743
Net Cash Used In Operating Activities		(237,177	)		(161,907	)

Cash Flows From Financing Activities:
Advances from related parties		(270	)		(270	)
Common stock subscribed		-			95,500
Proceeds from issuance of convertible notes		-			55,000
Net Cash (Used In) Provided by Financing Activities		(270	)		150,230

Net decrease in cash		(237,447	)		(11,677	)
Cash at beginning of period		403,667			16,142
Cash at End of Period	$	166,220		$	4,465

Supplemental disclosure of cash flow information
Cash paid for interest expense	$	236,508		$	2,521
Cash paid for income taxes	$	-		$	-

Supplemental disclosure of non-cash investing and financing activities:
Initial value of derivative liability	$	-		$	67,895
Note payable converted to common stock	$	-		$	10,000
Accrued interest converted to common stock	$	-		$	2,047
Derivative liability extinguished upon conversion of note payable	$	-		$	20

	Preferred Stock				Common Stock				Additional					Total
	Number ofShares		Par Value		Number ofShares		Par Value		Paid-inCapital		AccumulatedDeficit			Stockholders’Deficiency
Balance June 30, 2024 (Unaudited)		2,820,110	$	2,820		190,012,124	$	190,013	$	62,441,759	$	(111,246,326	)	$	(48,611,734	)
Series D Preferred Stock issued for cash		40		-		-		-		80,000		-			80,000
Net Income		-		-		-		-		-		4,257,443			4,257,443
Balance September 30, 2024 (Unaudited)		2,820,150	$	2,820		190,012,124	$	190,013	$	62,521,759	$	(106,988,883	)	$	(44,274,291	)

	Preferred Stock				Common Stock				Common		Additional					Total
	Number ofShares		Par Value		Number ofShares		Par Value		Stock Subscribed		Paid-inCapital		AccumulatedDeficit			Stockholders’Deficiency
Balance June 30, 2025 (Unaudited)		2,820,150	$	2,820		190,012,124	$	190,013	$	135,000	$	62,521,759	$	(203,354,940	)	$	(140,505,348	)
Common stock subscribed		-		-		-		-		172,500		-		-			172,500
Net Loss		-		-		-		-		-		-		(71,993,078	)		(71,993,078	)
Balance September 30, 2025 (Unaudited)		2,820,150	$	2,820		190,012,124	$	190,013		307,500	$	62,521,759	$	(275,348,018	)	$	(212,325,926	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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OCEAN THERMAL ENERGY CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

(Unaudited)

	2025			2024
Cash Flows From Operating Activities:
Net loss	$	(168,081,522	)	$	(907,550	)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of derivative liability		165,340,795			(2,091,934	)
Amortization of debt discount		40,830			-
Gain on conversion of debt		(11,898	)		(30,303	)
Changes in assets and liabilities:
Accounts receivable		(395,695	)		-
Costs in excess of billings		(248,499	)		-
Accounts payable and accrued expenses		3,034,268			2,569,853
Net Cash Used In Operating Activities		(321,721	)		(459,934	)
Cash Flows From Financing Activities:
Advances from related parties		(810	)		(810	)
Repayment of notes payable		-			(1,300	)
Common stock subscribed		307,500			-
Proceeds from sale of convertible notes		55,000			-
Proceeds from sale of preferred stock		-			396,000
Net Cash Provided by Financing Activities		361,690			393,890
Net increase (decrease) in cash		39,969			(66,044	)
Cash at beginning of period		16,142			115,149
Cash at End of Period	$	56,111		$	49,105
Supplemental disclosure of cash flow information
Cash paid for interest expense	$	159,493		$	23,753
Cash paid for income taxes	$	-		$	-
Supplemental disclosure of non-cash investing and financing activities:
Initial value of derivative liability	$	67,895		$	-
Common stock issued upon conversion of note	$	-		$	169,250
Note payable converted to common stock	$	10,000		$	30,747
Accrued interest converted to common stock	$	2,047		$	-
Derivative liability extinguished upon conversion on note payable	$	-		$	168,807

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

7 Table of Contents

OCEAN THERMAL ENERGY CORPORATION AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~SEPTEMBER~~MARCH 3031, ~~2025~~2026 AND ~~2024~~2025

(UNAUDITED)

NOTE 1 – NATURE OF BUSINESS AND BASIS OF PRESENTATION

Ocean Thermal Energy Corporation (the “Company” “us” or “we”) is designing ocean thermal energy conversion power plants, seawater air conditioning and lake water air conditioning (“SWAC/LSC”) plants for large commercial properties, utilities, and municipalities. We believe these technologies provide practical solutions to mankind’s three oldest and most fundamental needs: clean drinking water, plentiful food, and sustainable, affordable energy without the use of fossil fuels. The Company plans to provide a clean technology that continuously extracts energy from the temperature differentials between warm surface ocean water and cold deep seawater. In addition to producing electricity, our technology can efficiently desalinate seawater producing thousands of cubic meters of fresh water every day for use in agriculture and human consumption. This cold, deep, nutrient-rich water can also be used to cool buildings and for fish farming or aquaculture.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements and related notes have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) and presented in accordance with U. S. generally accepted accounting principles (“GAAP”).

The accompanying condensed consolidated balance sheet at December 31, ~~2024,~~2025 has been derived from audited consolidated financial statements, but does not include all disclosures required by GAAP. The accompanying unaudited condensed consolidated financial statements as of ~~September~~March 3031, ~~2025~~2026, and for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2025~~2026 and ~~2024~~2025, have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial statements and related notes to the financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2024~~2025, as filed with the SEC. In the opinion of management, all material adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been made to the unaudited condensed consolidated financial statements. The unaudited condensed consolidated financial statements include all material adjustments (consisting of normal recurring accruals) necessary to make the unaudited condensed consolidated financial statements not misleading as required by Regulation S-X Rule 10-01. Operating results for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2025~~2026 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2025~~2026, or any future periods.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

Our unaudited condensed consolidated financial statements for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2025~~2026 and ~~2024~~2025 include the accounts of the Company and ~~the~~its ~~following~~wholly owned subsidiary: OCEES International Inc. (“OCEES”). Intercompany balances and transactions have been eliminated in consolidation.

Name		Place of Incorporation/ Establishment		Principal Activities		Date Formed
OCEES International Inc. (“OCEES”)		Hawaii, USA		Research and development for the Pacific Rim		01/21/1998

Use of Estimates

~~Intercompany~~In ~~balances~~preparing financial statements in conformity with GAAP, management is required to make estimates and ~~transactions~~assumptions ~~have~~that ~~been~~affect ~~eliminated~~the inreported ~~consolidation.~~amounts Weof ~~have~~assets anand ~~effective~~liabilities ~~interest~~and the disclosure of ~~100%~~contingent inassets ~~OCEES.~~and ~~Former~~liabilities ~~subsidiaries~~at ~~Ocean~~the ~~Thermal~~date ~~Energy~~of ~~Bahamas~~the ~~LTD~~financial statements and ~~OTE~~revenues BMand ~~Ltd~~expenses during the reported period. ~~were~~Actual ~~inactive~~results could differ from those estimates. Significant estimates include the assumptions used in the valuation of equity-based transactions, valuation of derivative liabilities, and ~~have~~valuation ~~been~~of ~~dissolved~~deferred tax assets.

Table of Contents

Accounts Receivable

Accounts receivable ~~consists~~consist of amounts invoiced to customers but not yet collected by the Company. The Company records an allowance for doubtful accounts to allow for any amounts that may not be recoverable, which is based on an analysis of the Company’s prior collection experience, customer creditworthiness, expected future losses and current economic trends. Accounts are considered delinquent when payments have not been received within the contractual payment terms and are written off when management determines that collection is not probable. There were no doubtful accounts as of ~~September~~March 3031, ~~2025~~2026 and December 31, ~~2024~~2025.

Revenue recognition

The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers. The Company’s primary source of revenue is a long-term fixed-price contract to provide engineering and technical development services related to the design and delivery of a renewable energy system.

The contract includes a series of activities such as site-specific modeling, mechanical and structural integration, and engineering validation that are delivered as part of a single, combined project outcome. These services are highly interrelated and not separately identifiable within the context of the contract. Accordingly, the Company determined that the arrangement contains a single performance obligation.

Revenue is recognized over time using the cost-to-cost input method. This method compares actual costs incurred to total estimated costs to determine the percentage of completion and is used to calculate revenue earned to date. The cost-to-cost method reflects the Company’s progress toward satisfying its performance obligation and is consistent with how the project is managed internally.

Contract assets are recorded when revenue recognized exceeds billings to date (~~referred~~contract ~~to as costs in excess of billings~~assets). Contract liabilities are recorded when billings exceed revenue recognized (~~billings~~contract ~~in excess of costs~~liabilities). These amounts are presented separately on the condensed consolidated balance sheets. There were no contract assets at March 31, 2026 or December 31, 2025.

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Use of Estimates

In preparing financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates include the assumptions used in the valuation of equity-based transactions, valuation of derivative liabilities, and valuation of deferred tax assets.

Business Segments

We operate in one segment and, therefore, segment information is not presented.

Income (Loss) per Share

~~Loss~~Basic income (loss) per ~~Share~~share is calculated by dividing our net loss available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted loss per share is calculated by dividing our net loss by the diluted weighted average number of shares outstanding during the period. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity.

~~Basic~~The ~~loss~~following ~~per~~potentially ~~share~~dilutive issecurities ~~calculated~~have bybeen ~~dividing~~excluded ~~our~~from ~~net loss available to common shareholders by~~ the ~~weighted~~computation ~~average number~~ of ~~common shares during the period. Diluted loss per share is calculated by dividing our net loss by the~~ diluted weighted average ~~number of~~ shares outstanding ~~during~~for the ~~period.~~three ~~The~~months ~~diluted~~ended ~~weighted~~March ~~average~~31, ~~number~~2026 ofand ~~shares~~2025 ~~outstanding~~as isthey ~~the~~would ~~basic~~be ~~weighted number of shares adjusted for any potentially~~ anti-dilutive ~~debt or equity.~~:

The following potentially dilutive securities have been excluded from the computation of diluted weighted average shares outstanding for the three months ended September 30, 2025 and the nine months ended September 30, 2025 and 2024, as they would be anti-dilutive:

	Three Months Ended March 31,
	2026		2025
Shares underlying options and warrants outstanding		625,000		625,000
Shares underlying convertible notes outstanding		2,206,734,347		33,387,171,013
Shares underlying convertible preferred stock outstanding		16,687,500		16,687,500
		2,224,046,847		33,404,483,513

	September 30,
	2025		2024
Shares underlying options and warrants outstanding		625,000		500,000
Shares underlying convertible notes outstanding		109,269,537,933		1,491,839,514
Shares underlying convertible preferred stock outstanding		16,687,500		16,687,500
		109,286,850,433		1,509,027,014

Diluted weighted average shares outstanding for the three months ended March 31, 2026 include the shares underlying convertible notes outstanding. A reconciliation of the numerator and denominator of the Company’s earnings per share calculation is not provided as after giving effect to the reversal of the gain from the change in fair value of derivative liabilities the Company would have a net loss.

Recent Accounting Pronouncements

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures. The ~~Company~~standard ~~currently~~requires ~~believes~~disclosure ~~there~~of ~~are~~certain noprescribed ~~issued~~costs and ~~not~~expenses ~~yet~~within the notes to consolidated financial statements. ASU No. 2024-03 becomes effective ~~accounting~~for ~~standards~~the ~~that~~Company’s ~~are~~2027 ~~materially~~Annual ~~relevant~~Report toon ~~our~~Form ~~condensed~~10-K. ~~consolidated~~The standard only impacts required disclosures and will not impact the Company’s financial ~~statements~~position, results of operations, or cash flows. The Company is currently evaluating the impact of ASU No. 2024-03 on its disclosures.

The Company currently believes there are no other issued and not yet effective accounting standards that are materially relevant to our condensed consolidated financial statements.

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NOTE 3 – GOING CONCERN

The accompanying unaudited condensed consolidated financial statements have been prepared on the assumption that we will continue as a going concern. As reflected in the accompanying unaudited condensed consolidated financial statements, we had a net loss offrom ~~approximately~~operations of $~~168~~487,672 ~~million~~ and used ~~approximately~~ $~~322~~237,~~000~~177 of cash in operating activities for the ~~nine~~three months ended ~~September~~March 3031, ~~2025~~2026. Although we had net income for the three months ended March 31, 2026, the income resulted from a non-cash gain on the change in fair value of our derivative liabilities. We had a working capital deficiency of approximately $~~212~~51 million and a stockholders’ deficiency of approximately $~~212~~51 million as of ~~September~~March 3031, ~~2025~~2026. These factors raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent on our ability to increase sales and obtain external funding for our projects under development. We continue to apply for grant funding from the U.S. Department of Energy. Our applications focus on desalinated water, ammonia, and hydrogen production from an ocean thermal energy conversion (“OTEC”) facility. We plan to apply for funding to support projects where our technology would apply. The condensed consolidated financial statements do not include any adjustments that may result from the outcome of this uncertainty.

NOTE 4 – CONVERTIBLE NOTES AND NOTES PAYABLE

During January and February 2025, we sold an aggregate of $55,000 of convertible note units. Each unit costs $5,000 and consists of one convertible promissory note in the amount of $5,000 and one warrant to purchase 5,000 shares of the Company’s common stock at an exercise price of $0.01 per share. The Notes bear interest at the rate of 10% per year, compounded annually, and are due on January 4, 2027 (the “Maturity Date”). The Notes will be converted into common stock of the Company automatically upon the Maturity Date at the lower of (a) $0.10 per share, or (b) 90% of the Market Price, which shall be the average closing price of the Company’s common stock on the ten trading days immediately preceding the date of conversion. However, if the United States Army has issued a contract for the supply of sustainable power and water from the Company-designed and built ~~ocean~~OTEC ~~thermal energy~~ system prior to the Maturity Date, within five business days the Notes will automatically be converted depending on the amount of Notes purchased by each holder.

During the nine months ended September 30, 2024, $30,747 of notes was converted into 5,641,655 shares of common stock.

NOTE 5 – DERIVATIVE LIABILITY

We measure the fair value of our assets and liabilities under the guidance of ASC 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosures about fair value measurements. ASC 820 does not require any new fair value measurements, but its provisions apply to all other accounting pronouncements that require or permit fair value measurement.

We identified conversion features embedded within convertible debt issued. We have determined that the features associated with the embedded conversion option should be accounted for at fair value as a derivative liability. We have elected to account for these instruments together with our warrants and other fixed conversion price instruments as derivative liabilities as we cannot determine if a sufficient number of shares would be available to settle all potential future conversion transactions. We value the derivative liabilities using ~~the~~a ~~Black-Scholes~~binomial option pricing-valuation model. The derivative liabilities are valued at each reporting date and the change in fair value is reflected as change in fair value of derivative liability.

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Following is a description of the valuation methodologies used to determine the fair value of our financial liabilities, including the general classification of such instruments pursuant to the valuation hierarchy:

	Fair Value		Quoted market pricesfor identicalassets/liabilities(Level 1)		Significant otherobservable inputs(Level 2)		Significantunobservable inputs(Level 3)
Derivative Liability, September 30, 2025	$	174,819,690	$	-	$	-	$	174,819,690
Derivative Liability, March 31, 2026	$	12,434,498	$	-	$	-	$	12,434,498
Derivative Liability, December 31, 2024	$	9,423,915	$	-	$	-	$	9,423,915
Derivative Liability, December 31, 2025	$	75,688,923	$	-	$	-	$	75,688,923

~~The~~9 ~~reconciliation~~Table of ~~the derivative liability for the nine months ended September 30, 2025 and 2024 is as follows:~~Contents

	For the Nine Months Ended September 30,
	2025			2024
Derivative liability as of January 1	$	9,423,915		$	12,404,707
Addition to derivative instruments		55,000			-
Derivative liability extinguished upon conversion of notes payable		(20	)		(168,806	)
Change in fair value of derivative liability		165,340,795			(2,091,934	)
Derivative liability as of September 30	$	174,819,690		$	10,143,967

The reconciliation of the derivative liability for the three months ended March 31, 2026 and 2025 is as follows:

The fair value of the derivative liability was estimated using a binomial option pricing model. The fair value at the commitment and remeasurement dates for our derivative liabilities were based upon the following significant inputs:

	For the Three Months Ended March 31,
	2026			2025
Derivative liability as of December 31	$	75,688,923		$	9,423,915
Addition to derivative instruments		-			55,000
Derivative liability extinguished upon conversion of notes payable		-			(20	)
Change in fair value of derivative liability		(63,254,425	)		498,404
Derivative liability as of March 31	$	12,434,498		$	9,977,299

	For the Nine Months Ended September 30,
	2025			2024
Expected dividends		0	%		0	%
Expected volatility	400%-877		%	118%-603		%
Risk free interest rate	3.68%-4.41		%	4.73%-5.48		%
Expected term (in years)	0.25– 4.76 years			0.25– 1 years

The fair value of the derivative liability was estimated using a Black-Sholes option valuation model. The fair value at the commitment and remeasurement dates for our derivative liabilities were based upon the following significant inputs:

	For the Three Months Ended March 31,
	2026			2025
Expected dividends		0	%		0	%
Expected volatility	377%-731		%	400%-599		%
Risk free interest rate	3.68%-3.92		%	3.89%-4.32		%
Expected term (in years)	0.25– 3.76 years			0.25– 4.76 years

NOTE 6 – STOCKHOLDERS’ EQUITY

Common Stock and Common Stock Subscribed

During the ~~nine~~three months ended ~~September~~March 3031, 2025, we entered into stock purchase agreements with a number of investors. The investors agreed to purchase 224,~~125~~775,000 shares of common stock, and we received aggregate proceeds of $~~307~~95,500. ~~To date, no shares of common stock have been issued pursuant to these agreements.~~

~~During~~As ~~the~~of ~~nine~~March ~~months ended September 30~~31, ~~2024~~2026, we ~~issued~~have 5entered into stock purchase agreements to purchase 35,~~641~~625,~~655~~000 shares ofand ~~common~~have ~~stock~~received ~~upon~~aggregate ~~conversion~~proceeds of $30447,~~747~~500. To date, no shares of ~~convertible~~common ~~notes~~stock ~~payable~~have been issued pursuant to these agreements.

Preferred Stock

During the nine months ended September 30, 2024, we issued 198 shares of Series D Preferred Stock for cash proceeds of $396,000.

NOTE 7 – COMMITMENTS AND CONTINGENCIES

From time to time, the Company may be involved in legal proceedings and regulatory proceedings arising from its operations. Management established reserves for specific liabilities in connection with legal actions that management deems to be probable and estimable. Certain lawsuits, claims and proceedings are described in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2024~~2025. While the outcome of litigation cannot be predicted with certainty, and some of these lawsuits, claims or proceedings may be determined adversely to the Company, management does not believe that the disposition of any such pending matters is likely to have a material adverse effect on the Company’s financial condition or operation, although the resolution in any reporting period of one or more of these matters could have a material adverse effect on the Company’s results of operations for that period.

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Accrued Salaries and Related Taxes

As of ~~September~~March 3031, ~~2025~~2026, the Company has $67,~~892~~146,~~509,~~821 in accrued payroll attributable to previous periods that has not been paid due to cash flow constraints. It is possible, at a future date, that some or all of this amount may be derecognized and result in a gain on the extinguishment of these liabilities in a future period.

Professional Services Agreement

On January 7, 2025 the Company entered into a Professional Services Agreement with Johnson Controls Government Systems, LLC, which provided for the design, engineering and pricing estimation for an Ocean Thermal Energy Conversion and Ocean Water Desalinization Potable Water solution on the island of Kwajalein. The contract includes a fixed fee of $3,504,796 and is expected to be completed by September 30, 2026.

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NOTE 8 – RELATED-PARTY TRANSACTIONS

In May 2023, we entered into a 36-month agreement with a company controlled by our chief executive officer for shared use of an office and facilities at $1,000 per month, increasing to $1,200 per month on May 1, 2024 and $1,400 per month on May 1, 2025. For the three months ended ~~September~~March 3031, ~~2025~~2026 and ~~2024~~2025, rent expense was $4,200 and $3,~~000~~600, respectively. ~~For the nine months ended September 30, 2025 and 2024, rent expense was $13,000 and $9,000, respectively~~

For the ~~nine~~three months ended ~~September~~March 3031, ~~2025~~2026 and ~~2024~~2025, we recorded charges incurred to a company controlled by our chief executive officer for reimbursement of accounting and administrative services provided to us by an employee of that company. For the three months ended ~~September~~March 3031, ~~2025~~2026 and ~~2024~~2025, we recorded expense of $3639,~~660~~411 and $34,~~342~~628, respectively, to this company. ~~For the nine months ended September 30, 2024 and 2023, we recorded expense of $106,099 and $102,207, respectively, to this company.~~ At ~~September~~March 3031, ~~2025~~2026 and December 31, ~~2024,~~2025 we had a payable to the entity of $0 and $241,~~200~~400, respectively.

Accrued interest on related-party notes was $1,~~308~~418,~~203~~646 and $1,~~142~~364,~~539~~032 at ~~September~~March 3031, ~~2025~~2026 and December 31, ~~2024~~2025, respectively.

During each of the ~~nine~~three months ended ~~September~~March 3031, ~~2025~~2026 and ~~2024~~2025, we repaid $~~810~~270 of net working capital advances from related parties.

During 2022, an aggregate of 847,262 shares of common stock were borrowed from our chief executive officer to enable conversions of $15,000 of notes and $1,946 of related accrued interest. We have accrued a liability for the shares to be reissued to our chief executive officer in the amount of $11,014, the fair value of the shares on the date of conversion. The replacement shares have not been issued at ~~September~~March 3031, ~~2025~~2026.

During March 2025, an aggregate of 563,611 shares of common stock were borrowed from our chief executive officer to enable settlements of $10,000 of notes and $2,047 of related accrued interest. We have accrued a liability for the shares to be reissued to our chief executive officer in the amount of $169, the fair value of the shares on the date of conversion. The replacement shares have not been issued at ~~September~~March 3031, ~~2025~~2026.

NOTE 9 – ~~SUBSEQUENT~~INCOME ~~EVENTS~~TAXES

~~Subsequent~~There tois ~~September~~no ~~30,~~provision ~~2025,~~for ~~the~~income ~~Company~~taxes ~~entered~~for ~~into~~the ~~stock~~three ~~purchase~~months ~~agreements~~ended ~~with~~March a31, ~~number~~2026 ofbecause ~~investors.~~the ~~The~~income ~~investors~~for ~~agreed~~the toperiod ~~purchase~~results ~~7,500,000~~solely ~~shares~~from ofthe ~~common~~change ~~stock,~~in ~~and~~fair wevalue ~~received aggregate proceeds~~ of ~~$80,000.~~derivative ~~To date~~liabilities, nowhich ~~shares~~is ofa ~~common~~permanent ~~stock~~difference ~~have~~and ~~been~~has ~~issued~~no ~~pursuant~~effect toon ~~these~~income ~~agreements~~tax expense.

NOTE 10 – SUBSEQUENT EVENTS

No events have occurred subsequent to March 31, 2026 that would require adjustments to, or disclosure in, the financial statements.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes to our financial statements included elsewhere in this report. This discussion contains forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors discussed elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 2025.

Certain information included herein contains statements that may be considered forward-looking statements such as statements relating to our anticipated revenues, gross margins and operating results, estimates used in the preparation of our financial statements, future performance and operations, plans for future expansion, capital spending, sources of liquidity, and financing sources. Forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future, and accordingly, such results may differ from those expressed in any forward-looking statements made herein. These risks and uncertainties include those relating to our liquidity requirements; the continued growth of our industry; the success of marketing and sales activity; the dependence on existing management; the availability and cost of substantial amounts of project capital; leverage and debt service (including sensitivity to fluctuations in interest rates); domestic and global economic conditions; the inherent uncertainty and costs of prolonged arbitration or litigation; and changes in federal or state tax laws or the administration of such laws.

Overview

Ocean Thermal Energy Corporation (“we,” “our”, and the “Company”) develops and commercializes renewable energy, desalinated water, and sustainable cooling solutions using its proprietary Ocean Thermal Energy Conversion (OTEC) and Seawater Air Conditioning (SWAC) technologies. These systems extract energy from the natural temperature differential between warm surface water and cold deep ocean water to deliver continuous baseload power and clean water without reliance on fossil fuels. Our solutions are particularly well suited for tropical island communities, coastal military installations, and developing nations where access to reliable energy and freshwater is limited.

Our OTEC systems are designed for scalability and rapid deployment, supporting a range of commercial, governmental, and humanitarian applications. In addition to providing 24/7 renewable energy and potable water, our platforms offer opportunities for sustainable agriculture, aquaculture, and mariculture, contributing to local food security and economic development. Recent system designs also integrate with SWAC technology to enable district-level air conditioning using deep ocean water, significantly reducing energy consumption and carbon emissions in urban and resort environments.

We are currently executing a $3.5 million U.S. Army engineering and design contract in partnership with Johnson Controls for the U.S. Army Garrison-Kwajalein Atoll and are actively seeking to expand into additional Indo-Pacific markets such as Guam, Diego Garcia, and the Northern Marianas. Our potential project pipeline also includes commercial engagements in the Caribbean and Southeast Asia, including India and Indonesia.

Although we have generated only limited revenue since inception, we are transitioning from research and development to contract execution and revenue-generating power purchase agreements. We continue to rely on external funding to support operations, project development, and corporate initiatives, including a planned NYSE uplisting. There can be no assurance that such ~~uplisting or~~ funding will be available or that it can be obtained on acceptable terms or that we will successfully uplist.

Results of Operations

Comparison of Three Months Ended ~~September~~March 3031, ~~2025~~2026 and ~~2024~~2025

During the three months ended ~~September~~March 3031, ~~2025~~2026, the Company recognized revenue of $~~413~~403,~~567~~517 compared to $0173,037 for the ~~third~~first quarter of ~~2024~~2025. The increase is solely due to the Company’s contract to provide services to the United States Department of Defense relative to the design and engineering of an OTEC unit on Kwajalein Atoll.

During the three months ending September 30, 2025, we had salaries and compensation of $167,293, compared to salaries and compensation of $225,621 during the third quarter of 2024, a decrease of 26% primarily due to the allocation of costs to cost of contracts and management’s continued cost cutting efforts for areas which are not specific to the fulfilment of the Kwajalein Atoll contract.

During the three months ending September 30, 2025, and 2024, we recorded professional fees of $214,187 and $122,663, respectively, an increase of 75%. The increase was primarily related to legal, audit and accounting fees incurred related to bringing our delinquent SEC filings current.

We incurred general and administrative expenses of $8,602 during the three months ending September 30, 2025, compared to $30,226 for the third quarter of 2024, a decrease of 72% due to the allocation of costs to cost of contracts and multiple factors associated with management cost reduction efforts for ancillary services not directly related to the fulfilment of the Kwajalein Atoll contract.

Our interest expense was $712,926 for the three months ended September 30, 2025, compared to $628,141 for the third quarter 2024, an increase of 14%. This change was due to increased debt and higher interest rates on defaulted notes payable.

There was $13,610 debt discount amortization for the three months ended September 30, 2025, compared to $0 for the third quarter of 2024. The increase is due to new notes payable entered into during the period.

There was an increase in the fair value of the derivative liability of approximately $71 million during the three months ended September 30, 2025, compared to a $5,264,094 decrease for the 2024 period, a 1,448% increase. This change resulting results primarily from the reduction in the market value of our common stock in 2025 compared to 2024.

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~~Comparison~~During the three months ended March 31, 2026, we had $662,984 of ~~Nine~~direct ~~Months~~cost ~~Ended~~of ~~September~~contracts 30compared to $128,763 for the 2025 period. The increase is solely due to costs incurred to service the Company’s contract to provide services to the United States Department of Defense relative to the design and ~~2024~~engineering of an OTEC unit on Kwajalein Atoll.

During the ~~nine~~three months ~~ended~~ending ~~September~~March 3031, ~~2025~~2026, ~~the~~we ~~Company~~had ~~recognized~~salaries ~~revenue~~and compensation of $164,~~432~~915,~~986~~ compared to salaries and compensation of $0201,955 for the ~~previous~~three ~~period.~~months ~~The~~ended ~~increase~~March is31, ~~solely~~2025, a decrease of 68%, primarily due to the ~~Company’s~~allocation ~~contract~~of costs to ~~provide~~cost ~~services~~of tocontracts ~~the~~and ~~United~~management’s ~~States~~continued ~~Department~~cost ofcutting ~~Defense~~efforts ~~relative~~for toareas ~~the~~which ~~design~~are ~~and~~not ~~engineering~~specific ofto anthe ~~OTEC~~fulfilment ~~unit~~of onthe Kwajalein Atoll. contract.

During the ~~nine~~three months ~~ended~~ending ~~September~~March 3031, 2026 and 2025, we ~~had~~recorded ~~salaries~~professional ~~and~~fees ~~compensation~~ of $~~587~~128,~~828,~~801 ~~compared to salaries~~ and ~~compensation of~~ $~~692~~82,~~485~~618, ~~during the same nine-month period for 2024~~respectively, aan ~~decrease~~increase of 1556%,. ~~primarily~~The ~~due~~increase towas ~~the~~primarily ~~allocation~~related ~~of costs~~ to ~~cost~~legal offees ~~contracts~~related ~~and management’s continued cost cutting efforts for areas which are not specific~~ to ~~the~~litigation ~~fulfilment~~and ofaudit ~~the~~and ~~Kwajalein~~accounting ~~Atoll contract~~fees.

~~During~~We ~~the~~incurred ~~nine~~general ~~months~~and ~~ended~~administrative ~~September~~expenses ~~30,~~of ~~2025~~$34,489 ~~and~~during ~~2024,~~the wethree ~~recorded~~months ~~professional~~ending ~~fees~~March of31, ~~$408~~2026,~~450~~ ~~and~~compared to $~~394~~6,~~838,~~505 ~~respectively,~~for anthe ~~increase~~first quarter of ~~3%.~~2025, Anan increase inof ~~legal~~430% ~~audit~~due ~~and accounting fees incurred related~~ to ~~bringing~~various ~~our~~increases ~~delinquent~~in ~~SEC~~insurance ~~filings~~and ~~current were partially offset by decreases in~~ other ~~areas,~~ancillary asservices ~~the~~not ~~Company~~directly ~~has~~related ~~had~~to ~~less activities requiring~~ the ~~use~~fulfilment of ~~professionals during~~ the ~~period which were not specific to fulfilling the~~ Kwajalein Atoll contract.

WeOur ~~incurred~~interest ~~general~~expense ~~and~~was ~~administrative expenses of~~ $29739,~~625~~221 ~~during~~for the ~~nine~~three months ended ~~September~~March 3031, ~~2025~~2026, compared to $85655,~~934~~809 for the ~~same~~first ~~nine-month~~quarter ~~period for 2024~~2025, aan ~~decrease~~increase of 6613%. ~~due~~This tochange ~~the~~was ~~allocation~~due ~~of costs~~ to ~~cost~~higher ofinterest ~~contracts~~rates ~~and~~on ~~multiple~~defaulted ~~factors~~notes ~~associated with management cost reduction efforts for ancillary services not directly related to the fulfilment of the Kwajalein Atoll contract~~payable.

~~Our~~There ~~interest expense~~ was $213,~~052,536~~610 debt discount amortization for the ~~nine~~three months ended ~~September~~March 3031, ~~2025,~~2026 ~~compared to $1,856,530 for the same period for 2024, an increase of 11%. This change was due to increased debt~~ and ~~higher~~2025 ~~interest rates on defaulted notes payable.~~

There was ~~$40,830~~a ~~debt~~decrease ~~discount~~in ~~amortization~~the ~~for~~fair value of the ~~nine~~derivative liability of approximately $63 million during the three months ended ~~September~~March 3031, ~~2025~~2026, compared to a $0498,404 increase for the ~~same~~2025 period, ofa ~~the~~12,740% ~~previous year~~decrease. ~~The~~This ~~increase~~change isresults ~~due~~primarily tofrom ~~new~~the ~~notes~~reduction ~~payable~~in ~~entered~~the ~~into~~market ~~during~~value ~~the~~of ~~period.~~our common stock in 2026 compared to 2025.

~~There~~We ~~was~~recognized angain ~~increase~~on inconversion ~~the fair value~~ of ~~the~~notes ~~derivative~~payable ~~liability~~ of ~~approximately~~ $~~165~~11,998 ~~million~~ during the ~~nine~~three months ended ~~September~~March 3031, 2025, ~~compared~~with tono asimilar ~~$2,091,934~~item ~~decrease~~in ~~for~~ the ~~2024~~2026 period~~, a 8,003% increase~~. ~~This change resulting results primarily from the reduction in the market value of our common stock in 2025 compared to 2024.~~

We recognized gain on conversion of notes payable of $11,998 during the nine months ended September 30, 2025, compared to a gain of $30,303 in the 2024 period. This change is primarily driven by changes in the market value of our common stock which was used to settle outstanding notes payable during the period.

Liquidity and Capital Resources

At ~~September~~March 3031, ~~2025~~2026, our principal source of liquidity consisted of $56166,~~111~~220 of cash, as compared to $16403,~~142~~667 of cash at December 31, ~~2024~~2025. At ~~September~~March 3031, ~~2025~~2026, we had negative working capital (current assets minus current liabilities) of approximately $~~212~~51 million. In addition, our stockholders’ deficit was approximately $~~212~~51 million at ~~September~~March 3031, ~~2025~~2026. We are focusing our efforts on promoting and marketing our technology by developing and executing contracts. We are exploring external funding alternatives, as our current cash is insufficient to fund operations for the next 12 months.

Our operations used net cash of $~~321~~237,~~721~~177 during the ~~nine~~three months ended ~~September~~March 3031, ~~2025~~2026, as compared to using net cash of $~~459~~161,~~934~~907 during the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025. The ~~decrease~~increase in net cash used in operations is primarily due to ~~our~~an ~~net~~increase in loss ~~partially~~(after ~~offset~~adjusting byfor ~~the~~non-cash ~~increase~~items insuch as the change in the fair value of derivative liability,) partially offset by a ~~gain~~net onincrease ~~debt~~attributable ~~conversion~~to ~~and~~working ancapital ~~increase~~items insuch as accounts ~~payable~~receivable and ~~accrued expenses~~payable.

Financing activities ~~provided~~used cash of $~~361,690~~270 during the ~~nine~~three months ended ~~September~~March 3031, ~~2025~~2026, as compared to providing $~~393~~150,~~890~~230 of cash for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025. During the ~~nine~~three months ending ~~September~~March 3031, 2025, ~~and 2024,~~ we received cash proceeds from the sale of common and preferred stock and issuance of notes payable which was the primary financing activity during the period.

The accompanying unaudited condensed consolidated financial statements have been prepared on the assumption that we will continue as a going concern. As reflected in the accompanying unaudited condensed consolidated financial statements, we had a net loss offrom ~~approximately~~operations of $~~168~~487,622 ~~million~~ and used approximately $~~322~~237,000 of cash in operating activities for the ~~nine~~three months ended ~~September~~March 3031, ~~2025~~2026. We had a working capital deficiency of approximately $~~212~~51 million and a stockholders’ deficiency of approximately $~~212~~51 million as of ~~September~~March 3031, ~~2025~~2026. These factors raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent on our ability to increase sales and obtain external funding for our projects under development. We continue to apply for grant funding from the U.S. Department of Energy. Our applications focus on desalinated water, ammonia, and hydrogen production from an OTEC facility. We plan to apply for funding to support projects where our technology would apply. The condensed consolidated financial statements do not include any adjustments that may result from the outcome of this uncertainty.

We have no significant contractual obligations or commercial commitments not reflected on our balance sheet as of the date of this report.

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We have no significant contractual obligations or commercial commitments not reflected on our balance sheet as of the date of this report.

Critical Accounting Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations are based upon our Condensed Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements in conformity with those accounting principles requires management to use judgment in making estimates and assumptions based on the relevant information available at the end of each period. These estimates and assumptions have a significant effect on reported amounts of assets and liabilities, revenue and expenses, as well as the disclosure of contingent assets and liabilities because they result primarily from the need to make estimates and assumptions on matters that are inherently uncertain. Actual results may differ from these estimates. If updated information or actual amounts are different from previous estimates, the revisions are included in our results for the period in which they become known.

Management believes there have been no significant changes during the ~~nine~~three months ended ~~September~~March 3031, ~~2025,~~2026 to the items that we disclosed as our critical accounting estimates in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, ~~2024~~2025.

Recent Accounting Pronouncements

Information concerning recently issued accounting pronouncements is set forth in Note 2 of our notes to unaudited condensed consolidated financial statements appearing elsewhere in this report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us, in the reports that we file or submit to the SEC under the Exchange Act, is recorded, processed, summarized, and reported within the periods specified by the SEC’s rules and forms and that information is accumulated and communicated to our management, including our principal executive and principal financial officer (whom we refer to in this periodic report as our Certifying Officer), as appropriate to allow timely decisions regarding required disclosure. Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our management evaluated, with the participation of our Certifying Officer, the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of ~~September~~March 3031, ~~2025~~2026, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officer concluded that, as of ~~September~~March 3031, ~~2025~~2026, our disclosure controls and procedures were not effective to provide reasonable assurance because certain deficiencies involving internal controls constituted material weaknesses.. Our controls were not effective due to the size of the ~~company~~Company and available resources. There are limited personnel to assist with the accounting and financial reporting function, which results in: (i) a lack of segregation of duties and (ii) controls that may not be adequately designed or operating effectively. The material weaknesses identified did not result in the restatement of any previously reported financial statements or any other related financial disclosure, and management does not believe that the material weaknesses had any effect on the accuracy of our financial statements for the current reporting period.

Limitations on Effectiveness of Controls

A system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the system will meet its objectives. The design of a control system is based, in part, upon the benefits of the control system relative to its costs. Control systems can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. In addition, over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Also, the design of any control system is based in part upon assumptions about the likelihood of future events.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended ~~September~~March 3031, ~~2025,~~2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. The Company is in the process of seeking additional skilled financial employees to improve its internal controls and financial reporting.

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PART II-OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are involved in legal proceedings and regulatory proceedings arising from operations. We establish reserves for specific liabilities in connection with legal actions that management deems to be probable and estimable. Certain of such lawsuits, claims and proceedings are described in our Annual Report on Form 10-K for the year ended December 31, ~~2024~~2025. There were no material changes during the first quarter of ~~2025~~2026 in the status of the legal matters disclosed in our ~~2024~~2025 Annual Report on Form 10-K. While the outcome of litigation cannot be predicted with certainty, and some of these lawsuits, claims or proceedings may be determined adversely to the Company, management does not believe that the disposition of any such pending matters is likely to have a material adverse effect on the Company’s financial condition or liquidity, although the resolution in any reporting period of one or more of these matters could have a material adverse effect on the Company’s results of operations for that period.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2024~~2025, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

We are in default under and have failed to pay timely numerous loans, totaling $2018.3 million in combined principal and interest, $32.5 million of which is owed to related parties. Several loans that are in default were automatically convertible into shares of our common stock when the loans came due. However, L2 Capital, one of our lenders, has instructed our transfer agent to reserve all of our remaining authorized shares for issuance to L2, effectively blocking us from paying our other defaulted loans in stock. We intend increase our authorized shares to complete the conversion of these defaulted loans, but cannot guarantee when or if we will be able to do that.

On December 1, 2007, we borrowed funds from the Eastern Idaho Development Corporation ~~(the EIDC loan)~~. The interest rate is 7%, and the maturity date was September 1, 2015. The loan principal is $85,821 and the accrued interest is $8083,~~549~~586 as of ~~September~~March 3031, ~~2025~~2026. This note is in default.

On15 ~~September~~Table 25, 2009, we borrowed funds from the Pocatello Development Authority. The interest rate is 5%, and the maturity date was October 25, 2011. The loan principal is $50,000 and the accrued interest is $37,858 as of ~~September 30, 2025. This note is in default.~~Contents

On ~~December~~September 2325, 2009, we borrowed funds from ~~SICOG~~the ~~(EDA-#273~~Pocatello ~~loan)~~Development Authority. The interest rate is 75%, and the maturity date was ~~December~~October 2325, ~~2014~~2011. The loan principal is $7750,~~030~~000 and the accrued interest is $4939,~~865~~122 as of ~~September~~March 3031, ~~2025~~2026. This note is in default.

On December 23, 2009, we borrowed funds from SICOG (~~MICRO I~~EDA-#~~274~~273 loan). The interest rate is 7%, and the maturity date was December 23, 2014. The loan principal is $2177,~~401~~030 and the accrued interest is $1252,~~227~~591 as of ~~September~~March 3031, ~~2025~~2026. This note is in default.

On December 23, 2009, we borrowed funds from SICOG (MICRO III-#~~275~~274 loan). The interest rate is 7%, and the maturity date was December 23, 2014. The loan principal is $21,~~391~~401 and the accrued interest is $1312,~~908~~985 as of ~~September~~March 3031, ~~2025~~2026. This note is in default.

~~During~~On ~~2012~~December 23, 2009, we ~~issued~~borrowed afunds ~~note~~from ~~payable~~SICOG ~~for~~(MICRO ~~$1,000,000~~II-#275 loan). The ~~note had an~~ interest rate ofis 107% ~~per annum~~, ~~was secured by a first lien in all of our assets,~~ and ~~was due on February 3, 2015. On March 6, 2018,~~ the ~~note was amended to extend the due date to December 31, 2018. On March 29, 2019, the~~ maturity date ~~of the note~~ was ~~extended to~~ December 3123, ~~2019~~2014. AsThe ofloan ~~September~~principal ~~30,~~is ~~2025~~$21,391 and the ~~outstanding~~accrued ~~note~~interest ~~balance~~is ~~was~~ $114,~~000,000,~~665 ~~plus~~as ~~accrued interest~~ of $1March 31,~~360,556~~ 2026. This note is in default.

During ~~2013~~2012, we issued a note payable for $~~290~~1,000,000. inThe ~~connection~~note ~~with~~had ~~the~~an ~~reverse~~interest ~~merger~~rate ~~transaction~~of ~~with~~10% ~~Broadband~~per ~~Network Affiliates~~annum, ~~Inc.~~was Wesecured ~~have~~by ~~determined~~a ~~that~~first nolien ~~further~~in ~~payment~~all of ~~principal~~our orassets, ~~interest~~and was due on ~~this~~February ~~note~~3, ~~should~~2015. beOn ~~made~~March ~~because~~6, 2018, the note ~~holder~~was ~~failed~~amended to ~~perform~~extend ~~his~~the ~~underlying~~due ~~obligations~~date ~~giving rise~~ to ~~this~~December ~~note. As described in Note 7~~31, ~~the~~2018. ~~note~~On ~~holder~~March ~~filed suit on May 21~~29, 2019, ~~and we remain confident that~~ the ~~court~~maturity ~~will~~date ~~decide~~of ~~in our favor by either voiding~~ the note orwas ~~awarding~~extended ~~damages sufficient~~ to ~~offset~~December ~~the~~31, ~~note value~~2019. As of ~~September~~March 3031, ~~2025~~2026, the outstanding note balance ~~outstanding~~ was $~~130~~1,000,000, ~~and~~plus ~~the~~ accrued interest as of ~~that date was~~ $~~122~~1,~~069~~411,111. This note is in default.

OnDuring ~~January 18~~2013, ~~2018,~~we ~~Jeremy~~issued P.a ~~Feakins~~note &payable ~~Associates,~~for ~~LLC~~$290,000 anin ~~investment~~connection ~~entity~~with ~~owned~~the byreverse ~~our~~merger ~~chief~~transaction ~~executive,~~with ~~chief~~Broadband ~~financial~~Network ~~officer~~Affiliates, ~~and~~Inc. aWe ~~director,~~have ~~agreed~~determined tothat ~~extend~~no ~~the~~further ~~due~~payment ~~date~~of ~~for~~principal ~~repayment~~or ofinterest aon ~~$2,265,000~~this note ~~issued~~should inbe ~~2014~~made tobecause the ~~earlier~~note ofholder ~~December~~failed ~~31,~~to ~~2018,~~perform orhis ~~the~~underlying ~~date~~obligations ofgiving ~~the~~rise ~~financial~~to ~~closings~~this ofnote. ~~our~~As ~~Baha~~described ~~Mar~~in ~~project~~Note ~~(or~~7, ~~any~~the ~~other~~note ~~project~~holder offiled ~~$25~~suit ~~million~~on orMay ~~more)~~21, ~~whichever~~2019, ~~occurs~~and ~~first.~~we Inremain ~~January~~confident ~~2023~~that wethe ~~issued~~court ~~500~~will ~~shares~~decide ofin ~~preferred~~our ~~stock~~favor ~~upon~~by ~~conversion~~either ofvoiding ~~$35,303~~the ofnote ~~principal~~or ~~and~~awarding ~~$964,697~~damages ofsufficient ~~accrued~~to ~~interest~~offset the note value. As of ~~September~~March 3031, ~~2025~~2026, the note balance outstanding was $1130,~~067~~000,~~197~~ and the accrued interest as of that date was $~~297~~127,~~629~~326. This note is in default.

~~During~~On ~~2013~~January 18, we2018, ~~issued~~Jeremy ~~notes~~P. ~~payable~~Feakins ~~aggregating~~& ~~$158~~Associates,~~334~~ ~~bearing~~LLC, ~~interest~~an atinvestment ~~13%~~entity ~~per~~owned ~~year~~by ~~with~~our chief executive, chief financial officer, and a ~~maturity~~director, agreed to extend the due date for repayment of ~~October~~a 31$2,265,000 ~~2023.~~note ~~Outstand~~issued ~~principal~~in is2014 ~~$158,334~~to atthe ~~September~~earlier 30of December 31, ~~2025~~2018, ~~and~~or ~~accrued~~the ~~interest~~date ~~totaled~~of ~~$202,598~~the asfinancial closings of ~~September~~our 30previous Baha Mar project (or any other project of $25 million or more), ~~2025~~whichever occurs first. AsIn January 2023 we issued 500 shares of ~~September~~preferred ~~30,~~stock ~~2025~~upon conversion of $35,303 ~~the~~of ~~notes~~principal ~~are~~and in$964,697 ~~default~~of accrued interest. WeAs ~~intend~~of toMarch ~~repay~~31, 2026, the ~~notes~~note balance was $1,067,197 and the accrued interest ~~upon~~was ~~the~~$351,582. ~~project’s~~This ~~financial~~note ~~closing~~is in default.

During ~~2014~~2013, we issued notes payable ofaggregating $~~300~~158,~~000~~334 in principal and bearing interest at 13% per year with a maturity date of October 31, 2023. ~~Accrued~~Outstand principal is $158,334 at March 31, 2026 and accrued interest totaled $~~698~~213,~~962~~004 as of ~~September~~March 3031, ~~2025~~2026. As of ~~September~~March 3031, ~~2025~~2026, the notes are in default. We intend to repay the notes and accrued interest upon the financial closings of our previous Baha Mar project’s ~~financial~~(or ~~closing~~any other project of $25 million or more).

WeDuring ~~have a $50~~2014,~~000~~ ~~promissory~~we ~~note~~issued ~~with~~notes ~~an unaffiliated investor that was~~ payable onof ~~April 7~~$300, ~~2018~~000. ~~The~~Accrued ~~note and accrued~~ interest ~~can~~totaled be$732,329 ~~converted~~as ~~into~~of ~~our~~March ~~common~~31, ~~stock~~2026. atAs ~~a conversion rate~~ of ~~$0.75~~March ~~per~~31, ~~share~~2026, atthe ~~any~~notes ~~time~~are ~~prior~~in ~~to the repayment~~default. ~~This~~We ~~conversion~~intend ~~price is not required~~ to ~~adjust~~repay ~~for~~ the ~~reverse~~notes ~~stock~~and ~~split~~accrued asinterest ~~per~~upon the ~~note~~financial ~~agreement.~~closings ~~Accrued~~of ~~interest~~our ~~totaled~~previous ~~$91,111~~Baha asMar ofproject ~~September~~(or ~~30,~~any ~~2025.~~other Asproject of ~~the~~$25 ~~date~~million ofor ~~this report, the note is in default~~more).

~~During~~We ~~the~~have ~~third quarter of 2017, we completed~~ a $250,000~~,000~~ ~~convertible~~ promissory note ~~private~~with ~~placement~~an ~~offering.~~unaffiliated ~~The~~investor ~~terms~~that ofwas ~~the note are as follows: (i) interest is~~ payable aton 6%April ~~per~~7, ~~annum;~~2018. ~~(ii)~~The ~~payable~~note ~~two years after purchase;~~ and ~~(iii)~~accrued ~~all principal and~~ interest oncan ~~each~~be ~~note~~converted ~~automatically converts on the conversion maturity date~~ into ~~shares of~~ our common stock at a conversion ~~price~~rate of $40.0075 per share, asat ~~long~~any astime ~~the~~prior ~~closing~~to ~~share price of our common stock on~~ the ~~trading~~repayment. ~~day~~This ~~immediately preceding the~~ conversion ~~maturity~~price ~~date~~ is atnot ~~least~~required ~~$4.00,~~to asadjust ~~adjusted~~ for ~~stock~~the ~~splits,~~reverse stock ~~dividends,~~split ~~reclassification,~~as ~~and the like. If the price of our shares on such date is less than $4.00~~ per ~~share,~~ the note ~~(principal~~agreement. ~~and~~Accrued interest) ~~will~~totalled be$96,167 ~~repaid~~as ~~in full. During the third quarter~~ of ~~2019,~~March ~~$15~~31,~~000~~ ~~of the note was repaid~~2026. As of ~~September 30, 2025,~~ the ~~outstanding~~date ~~balance~~ of ~~these~~this ~~notes was $65~~report,~~000,~~ ~~plus~~the ~~accrued~~note ~~interest~~is ~~of $32,038. The notes are~~ in default.

OnDuring ~~November~~the 6,third quarter of 2017, we ~~entered~~completed ~~into an agreement and promissory note with JPF Venture Group, Inc.., an investment entity owned by our chief executive, chief financial officer, and~~ a ~~director, to loan up to~~ $2,000,000 toconvertible uspromissory note private placement offering. The terms of the note are as follows: (i) interest is payable at 106% per annum; (ii) ~~all~~payable ~~unpaid~~two ~~principal~~years after purchase; and (iii) all ~~accrued~~principal and ~~unpaid~~ interest ison ~~due~~each ~~and~~note ~~payable~~automatically atconverts on the ~~earliest~~conversion maturity date into shares of our common stock at a ~~resolution~~conversion price of $4.00 per share, as long as the ~~Memphis~~closing ~~litigation~~share (price of our common stock on the trading day immediately preceding the conversion maturity date is at least $4.00, as ~~defined~~adjusted ~~therein)~~for stock splits, ~~December~~stock 31dividends, ~~2018~~reclassification, orand ~~when~~the welike. ~~are~~If ~~otherwise~~the ~~able~~price toof ~~pay~~our shares on such date is less than $4.00 per share, the note (principal and interest) will be repaid in full. During the third quarter of 2019, $15,000 of the note was repaid. As of ~~September~~March 3031, ~~2025~~2026, the outstanding ~~note~~ balance of these notes was $~~543~~65,~~093~~000, ~~and~~plus ~~the~~ accrued interest ~~was~~of $~~460~~33,~~888~~982. ~~This~~The ~~note~~notes isare in default.

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InOn ~~December~~November 6, 2017, we entered into aan ~~series~~agreement ofand ~~unsecured~~ promissory ~~notes~~note ~~and~~with ~~warrant~~JPF ~~purchase~~Venture ~~agreements~~Group, ~~with~~Inc., ~~accredited~~an ~~investors.~~investment ~~These~~entity ~~notes~~owned ~~accrue~~by ~~interest~~our atchief aexecutive ~~rate~~officer, to loan up to $2,000,000 to us. The terms of 20the note are as follows: (i) interest is payable at 10% per annum; ~~payable~~(ii) onall aunpaid ~~quarterly~~principal ~~basis~~and all accrued and ~~are~~unpaid ~~not~~interest ~~convertible~~is ~~into~~due ~~shares~~and ofpayable ~~our~~at ~~capital~~the ~~stock.~~earliest Asof a resolution of ~~September~~the 30Memphis litigation (as defined therein), ~~2025~~December 31, ~~the~~2018, ~~balance~~or when we are otherwise able to pay. As of ~~the~~March ~~notes~~31, 2026, the outstanding note balance was $~~859~~543,~~156~~093 and the accrued interest was $1488,~~140,432~~344. ~~These~~This ~~notes~~note ~~are~~is in default.

~~During~~In ~~the~~December ~~year~~2017, ~~ended~~we ~~December~~entered ~~31,~~into ~~2018,~~a weseries ~~borrowed~~of ~~$482,222~~unsecured ~~from~~promissory L2notes ~~Capital~~and inwarrant ~~five~~purchase ~~separate~~agreements ~~tranches~~with accredited investors. ~~The~~These notes accrue interest at a rate isof 820%, ~~and~~per ~~the~~annum ~~maturity~~payable ~~dates~~on ~~are~~a ~~three~~quarterly ~~months~~basis ~~from~~and ~~the~~are ~~date~~not convertible into shares of ~~issue.~~our ~~The~~capital ~~outstanding~~stock. ~~loan~~As ~~balance~~of ~~was~~March $131,~~161~~ 2026,~~136,~~ ~~which~~the ~~includes~~balance of the ~~default~~notes ~~penalty~~outstanding was $859,156 and the accrued interest was $21,~~800~~221,~~124 as of September 30, 2025~~071. These notes are in default.

OnDuring ~~December 14, 2018, L2 Capital LLC purchased our note payable from Collier Investments, LLC. The total consideration was $371,250, including~~ the ~~outstanding~~year ~~note~~ended ~~balance~~December ~~of $281~~31,~~250,~~ ~~the accrued interest of $33~~2018,~~750,~~ ~~and~~we ~~liquidated~~borrowed ~~damages of~~ $56482,~~250.~~222 ~~There~~from ~~was also a default penalty of $153,123. In addition, we issued 400,000 shares of common stock to~~ L2 Capital, ~~LLC as commitment shares with a fair value of $21,200~~ in ~~connection~~five ~~with~~separate ~~the purchase of the note~~tranches. WeThe ~~executed a convertible note with L2 Capital in the amount of $371,250 with an~~ interest rate ofis 128% ~~per annum. The maturity date of the note was December 22~~, ~~2018.~~and ~~The holder of~~ the ~~note~~maturity ~~can~~dates ~~convert~~are ~~the~~three ~~note,~~months orfrom ~~any portion of it, into shares of common stock at any time after~~ the ~~issuance~~ date. ~~The conversion price is 65%~~ of ~~the market price, which is defined as the lowest trading price for our common stock during the 20-trading-day period prior to the conversion date~~issue. AsThe ~~of September 30, 2025, the~~ outstanding ~~note~~loan balance was $~~547~~1,~~328~~161,136, which includes athe default penalty, and the accrued interest was $23,~~583~~218,~~048~~271 as of March 31, 2026. ~~This~~These ~~note~~notes isare in default.

On ~~September~~December 1914, 2018, weL2 ~~executed~~Capital aLLC purchased our note payable ~~for~~from Collier Investments, LLC. The total consideration was $10371,~~000~~250, ~~with~~including anthe ~~unrelated~~outstanding ~~party~~note ~~that~~balance ~~bears~~of $281,250, the accrued interest atof 6%$33,750, ~~per~~and ~~annum~~liquidated damages of $56,250. ~~which~~There iswas ~~due~~also ~~quarterly~~a ~~beginning~~default penalty of $153,123. In addition, we issued 400,000 shares of common stock to L2 Capital, LLC as commitment shares with a fair value of ~~September~~$21,200 30in connection with the purchase of the note. We executed a convertible note with L2 Capital in the amount of $371,250 ~~2018~~with an interest rate of 12% per annum. The maturity date ~~for~~of the note was ~~three~~December ~~years~~22, ~~after~~2018. ~~date~~The holder of ~~issuance.~~the Innote ~~addition,~~can convert the ~~lender~~note, ~~received~~or ~~warrants~~any toportion ~~purchase~~of 2it,~~000~~ into shares of common stock ~~upon~~at ~~signing~~any time after the ~~promissory~~issuance ~~note~~date. The ~~warrant~~conversion ~~can~~price beis ~~exercised~~65% atof athe market price, ~~per~~which ~~share~~is ~~equal~~defined toas athe ~~15%~~lowest ~~discount~~trading ~~from the~~ price offor our common stock onduring the ~~last~~ 20-trading -day ~~before~~period ~~such~~prior ~~purchase~~to the conversion date. As of ~~September~~March 3031, ~~2025~~2026, the ~~balance~~ outstanding note balance was $10547,~~000~~328, which includes a default penalty, and the accrued interest was $43,~~280~~003,183. WeThis ~~have~~note ~~defaulted~~is in ~~payment of the note principal and the quarterly interest payments~~default.

On ~~August~~September 1419, ~~2019~~2018, we executed a note payable for $2610,~~200~~000 with an unrelated party that bears interest at 86% per annum, ~~and~~which ~~has~~is adue ~~maturity~~quarterly ~~date~~beginning as of ~~October~~September 3130, ~~2021~~2018. The ~~note~~maturity ~~automatically~~date ~~converts~~for ~~into~~the ~~1,310,000~~note ~~shares~~was ofthree ~~our~~years ~~common~~after ~~stock~~date ~~either~~of atissuance. ~~the~~In ~~time~~addition, the ~~closing~~lender ~~sale~~received ~~price~~warrants ~~for~~to ~~our~~purchase ~~common~~2,000 ~~stock~~shares isof ~~equal~~common tostock orupon ~~greater~~signing ~~than~~the $1promissory note.00 ~~per~~The ~~share,~~warrant ascan ~~adjusted~~be ~~for~~exercised ~~stock~~at ~~splits,~~a ~~stock~~price ~~dividends,~~per ~~reclassification,~~share ~~and~~equal ~~the~~to ~~like,~~a or15% atdiscount from the ~~maturity~~price ~~date~~ of ~~October~~common ~~31,~~stock ~~2021,~~on ~~whichever~~the ~~occurs~~last ~~first~~trading day before such purchase. As of ~~September~~March 3031, ~~2025~~2026, the balance outstanding was $2610,~~200,~~000 and the accrued interest was $154,~~870~~583. ~~This~~We ~~note~~have isdefaulted in ~~default~~payment of the note principal and the quarterly interest payments.

InOn August 14, 2019, we ~~issued~~executed a ~~series~~note ofpayable ~~convertible~~for ~~promissory notes to accredited investors that totaled~~ $~~105~~26,~~000.~~200 Ofwith ~~the~~an ~~amount~~unrelated ~~received,~~party ~~$10,000~~that ~~was~~bears ~~from our chief executive officer and our independent director. The notes bear simple~~ interest ~~on outstanding principal~~ at ~~the rate of~~ 8% per annum, ~~computed based~~and ~~on the~~has ~~actual number of days elapsed in~~ a ~~year~~maturity date of ~~365~~October ~~days~~31, 2021. ~~Each~~The ~~$5,000~~note ~~loan~~ automatically converts into ~~250~~1,310,000 shares of our common stock, either at the time the closing sale price for our common stock is equal to or greater than $1.00 per share, as adjusted for stock splits, stock dividends, reclassification, and the like, or at the maturity date of October 31, 2021, whichever ~~comes~~occurs first. As of ~~September~~March 3031, ~~2025~~2026, the ~~total~~balance outstanding ~~balances~~was ~~of all these loans are~~ $4026,~~000~~200, and the accrued interest was $1917,~~028~~177. ~~These~~This ~~notes~~note ~~are~~is in default.

In ~~2020 and~~ 2019, we issued a series of convertible promissory notes to accredited investors ~~aggregating~~that totalled $~~306~~105,~~750~~000. Of the amount received, $2010,000 was from our chief executive officer and anour independent director. The notes bear simple interest on outstanding principal at the rate of 8% per annum, computed based on the actual number of days elapsed in a year of 365 days. Each $5,000 loan automatically converts into 250,000 shares of our common stock, either at the time the closing sale price for our common stock is equal to or greater than $1.00 per share, as adjusted for stock splits, stock dividends, reclassification, and the like, or at the maturity date of ~~January~~October 231, ~~2022~~2021, whichever comes first. As ~~September~~of 30March 31, ~~2025~~2026, the total outstanding ~~balance~~balances of all these loans ~~was~~are $~~225~~40,000 and accrued interest was $~~102~~20,~~116~~624. These notes are in default.

In 2020 and 2019, we issued a series of convertible promissory notes to accredited investors aggregating $306,750. ~~which~~Of ~~totaled~~the amount received, $1520,000 was from our chief executive officer and an independent director. The notes bear simple interest on outstanding principal at the rate of 8% per annum, computed based on the actual number of days elapsed in a year of 365 days. Each $5,000 loan automatically converts into 250,000 shares of our common stock, either at the time the closing sale price for our common stock is equal to or greater than $1.00 per share, as adjusted for stock splits, stock dividends, reclassification, and the like, or at the maturity date of ~~May~~January 122, 2022, whichever comes first. As ofMarch ~~September 30~~31, ~~2025~~2026, the total outstanding ~~value~~balance of these loans was $10225,000 and accrued interest was $6111,~~079~~092. These notes are in default.

In 2021 and 2020, we issued a series of convertible promissory notes to accredited investors aggregating $170,000. The notes bear simple interest on outstanding principal at the rate of 8% per annum, computed based on the actual number of days elapsed in a year of 365 days. Each $5,000 loan automatically converts into 250,000 shares of our common stock, either at the time the closing sale price for our common stock is equal to or greater than $1.00 per share, as adjusted for stock splits, stock dividends, reclassification, and the like, or at the maturity date of September 1, 2022, whichever comes first. At September 30, 2025, the total outstanding balance of these loans was $155,000 and accrued interest was $56,614. These notes are in default.

In 2021, we issued a series of convertible promissory notes to accredited investors aggregating $285,000. The notes bear simple interest on outstanding principal at the rate of 8% per annum, computed based on the actual number of days elapsed in a year of 365 days. Each $5,000 loan automatically converts into 250,000 shares of our common stock, either at the time the closing sale price for our common stock is equal to or greater than $1.00 per share, as adjusted for stock splits, stock dividends, reclassification, and the like, or at the maturity date of August 30, 2023, whichever comes first. At September 30, 2025, the total outstanding balance of these loans was $280,000 and accrued interest was $93,161. These notes are in default.

In 2021, we issued a $5,000 convertible promissory note to a related party. The note bears simple interest on outstanding principal at the rate of 8% per annum, computed based on the actual number of days elapsed in a year of 365 days. The $5,000 loan automatically converts into 250,000 shares of our common stock, either at the time the closing sale price for our common stock is equal to or greater than $1.00 per share, as adjusted for stock splits, stock dividends, reclassification, and the like, or at the maturity date of November 11, 2023, whichever comes first. At September 30, 2025, the total outstanding balance of this note was $5,000 and accrued interest was $1,556. This note is in default.

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In 2020, we issued a series of convertible promissory notes to accredited investors, which totalled $15,000. The notes bear simple interest on outstanding principal at the rate of 8% per annum, computed based on the actual number of days elapsed in a year of 365 days. Each $5,000 loan automatically converts into 250,000 shares of our common stock, either at the time the closing sale price for our common stock is equal to or greater than $1.00 per share, as adjusted for stock splits, stock dividends, reclassification, and the like, or at the maturity date of May 12, 2022, whichever comes first. As of March 31, 2026, the total outstanding value of these loans was $10,000 and accrued interest was $6,478. These notes are in default.

In 2021 and 2020, we issued a series of convertible promissory notes to accredited investors aggregating $170,000. The notes bear simple interest on outstanding principal at the rate of 8% per annum, computed based on the actual number of days elapsed in a year of 365 days. Each $5,000 loan automatically converts into 250,000 shares of our common stock, either at the time the closing sale price for our common stock is equal to or greater than $1.00 per share, as adjusted for stock splits, stock dividends, reclassification, and the like, or at the maturity date of September 1, 2022, whichever comes first. At March 31, 2026, the total outstanding balance of these loans was $155,000 and accrued interest was $62,797. These notes are in default.

In 2021, we issued a series of convertible promissory notes to accredited investors aggregating $285,000. The notes bear simple interest on outstanding principal at the rate of 8% per annum, computed based on the actual number of days elapsed in a year of 365 days. Each $5,000 loan automatically converts into 250,000 shares of our common stock, either at the time the closing sale price for our common stock is equal to or greater than $1.00 per share, as adjusted for stock splits, stock dividends, reclassification, and the like, or at the maturity date of August 30, 2023, whichever comes first. At March 31, 2026, the total outstanding balance of these loans was $280,000 and accrued interest was $104,330. These notes are in default.

In 2021, we issued a $5,000 convertible promissory note to a related party. The note bears simple interest on outstanding principal at the rate of 8% per annum, computed based on the actual number of days elapsed in a year of 365 days. The $5,000 loan automatically converts into 250,000 shares of our common stock, either at the time the closing sale price for our common stock is equal to or greater than $1.00 per share, as adjusted for stock splits, stock dividends, reclassification, and the like, or at the maturity date of November 11, 2023, whichever comes first. At March 31, 2026, the total outstanding balance of this note was $5,000 and accrued interest was $1,756. This note is in default.

ITEM 4. MINE SAFETY DISCLOSURES

No applicable.

ITEM 5. OTHER INFORMATION

~~We have disclosed on Form 8-K all reportable events that occurred in the quarter ended June 30, 2025~~None.

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ITEM 6. EXHIBITS

The following exhibits are filed as a part of this report:

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

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

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

All exhibits are numbered with the number preceding the decimal indicating the applicable SEC reference number in Item 601 and the number following the decimal indicating the sequence of the particular document.

The XBRL related information in Exhibit 101 will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and will not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as is expressly set forth by specific reference in such filing or document.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	OCEAN THERMAL ENERGY CORPORATION
Date: December 19, 2025	By:	/s/ Jeremy P. Feakins
Date: May 12, 2026	By:	/s/ Jeremy P. Feakins
		Jeremy P. Feakins
		Chief Executive Officer and Chief Financial Officer
		(Principal Executive and Financial Officer)

1920

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