UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

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

For the fiscal year ended December 31, 2015

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

For the transition period from ______________ to ______________

Commission file number 000-53035

SOLAR WIND ENERGY TOWER INC.

(Exact name of registrant as specified in its charter)

Nevada	82-6008752
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

1997 Annapolis Exchange Parkway, Annapolis, MD	21401
(Address of Principal Executive Offices)	(Zip Code)

(410) 972-4713

(Registrant’s Telephone Number, Including Area Code)

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

Securities registered pursuant to Section 12(g) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, $0.0001 par value	Over the Counter Bulletin Board

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. o Yes x No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(b) of the Act. o Yes x No

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 and 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. x Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes o No

Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained in this form, and no disclosure will be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

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

Large accelerated filer o		Accelerated filer o

Non-accelerated filer o		Smaller reporting company x
(Do not check if a smaller reporting company)

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

The aggregate market value of the voting Common Stock held by non-affiliates (based upon the closing sale price of $0.0018 per share on the (Over the Counter Bulletin Board) of the registrant as of June 30, 2015: $1,459,340.

Number of issued and outstanding shares of the registrant’s par value $0.0001 common stock as of February 28, 2017: 12,132,794,404

SOLAR WIND ENERGY TOWER INC.

FORM 10-K

INDEX

		Page
Part I

Item 1.	Description of Business	4

Item 1A.	Risk Factors	13

Item 1B.	Unresolved Staff Comments	24

Item 2.	Properties	24

Item 3.	Legal Proceedings	25

Item 4.	Mine Safety Disclosures	25

Part II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	25

Item 6.	Selected Financial Data	26

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	33

Item 8.	Financial Statements and Supplementary Data	33

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	33

Item 9A.	Controls and Procedures	34

Item 9B.	Other Information	36

Part III

Item 10.	Directors, Executive Officers and Corporate Governance	37

Item 11.	Executive Compensation	39

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	40

Item 13.	Certain Relationships and Related Transactions, and Director Independence	41

Item 14.	Principal Accounting Fees and Services	42

Part IV

Item 15.	Exhibits, Financial Statement Schedules	43

PART I

Cautionary Note Regarding Forward-Looking Statements

This Annual Report on Form 10-K (this "Annual Report") contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements in this Annual Report other than statements of historical fact are “forward-looking statements” for purposes of these provisions, including any statements of the plan and objectives for future operations and any statement of assumptions underlying any of the foregoing.

In light of the significant uncertainties inherent in the forward-looking statements made in this Annual Report, particularly in view of the Company’s early stage of operations, the inclusion of this information should not be regarded as a representation by the Company or any other person that its objectives, future results, levels of activity, performance or plans will be achieved. These statements are further qualified by important factors that could cause actual results to differ materially from those contemplated in the forward-looking statements, including, without limitation, the following:

the Company’s ability to raise sufficient capital;

the passage of adverse or burdensome government regulation;

litigation and legal liability;

the Company’s ability to attract and retain qualified personnel;

reliance on third-party product providers;

the Company’s ability to attract and retain new customers and increase revenues;

the Company’s ability to market, commercialize and achieve market acceptance of its products;

the Company’s ability to protect its intellectual property;

changes in the competitive environment;

the impact of, and potential challenges in complying with, legislation and regulation in the jurisdictions in which the Company plans to operate, particularly given the global scope of the Company’s proposed businesses and the possibility of conflicting regulatory requirements across jurisdictions in which it proposes to do business;

environmental impacts of the Company’s planned operations and possible adverse publicity; and

political, social and economic conditions in the United States in general.

Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” or words of similar meaning. They may also use words such as “would,” “should,” “could” or “may.” Factors that may cause the Company’s actual results to differ materially from those described in forward-looking statements include the risks discussed elsewhere in this Annual Report under the caption “Risk Factors” and risk factors discussed in the documents filed by the Company with the SEC.

This Annual Report may contain forward-looking statements that involve risks and uncertainties, including but not limited to the Company's ability to produce a cost-effective wind energy conversion device. Among the important factors that could cause actual events to differ materially from those indicated by forward-looking statements in this Annual Report are the failure of the Company to achieve or maintain necessary zoning approvals with respect to the location of its proposed projects; to successfully complete its proposed projects on time and remain competitive; the inability of the Company to sell its planned products and/or services in the future, if needed, to finance the marketing and sales of its planned products and/or services, general economic conditions, and those risk factors detailed in this Annual Report.

All references in this Form 10-K that refer to the “Company,” “Solar Wind Energy Tower” , “Solar Wind,” “we,” “us” or “our” are to Solar Wind Energy Tower Inc. and unless otherwise differentiated, its subsidiary, Solar Wind Energy, Inc. All references to “Solar Wind Energy (f/k/a Clean Wind Energy, Inc.)” are to our subsidiary, Solar Wind Energy, Inc.

ITEM 1. DESCRIPTION OF BUSINESS

Corporate History

On December 29, 2010, the Company 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.

The Company was incorporated under the laws of the State of Idaho on January 22, 1962, as Superior Mines Company. In 1964, the Company’s name was changed to Superior Silver Mines, Inc. On December 27, 2010, the Company reincorporated as a Nevada corporation. Prior to the Merger, the Company had been dormant for a number of years and had no known mineral reserves. On January 21, 2011, the Company changed its name from Superior Silver Mines, Inc. 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.

The Company’s executive offices are located at 1997 Annapolis Exchange Parkway, Suite 300, Annapolis, Maryland 21401.

Overview

Our Company’s core objective and focus is to become a leading provider of clean efficient green energy to the world communities at a reasonable cost without the destructive residuals of fossil fuel, while continuing to generate innovative technological solutions for today and tomorrow’s electrical power needs.

Solar Wind has assembled a team of experienced business professionals, engineering and scientific consultants with the proven ability to bring the idea to market. Solar Wind has filed and been issued patents that the Company believes will further enhance this potentially revolutionary technology. Solar Wind is based in Annapolis, MD, and is traded on the OTCBB under the symbol ‘SWET’.

Solar Wind has, designed, engineered, developed and is preparing to construct large “Solar Wind Downdraft Towers” that use benevolent, non-toxic natural elements to generate electricity economically by integrating and synthesizing numerous proven as well as emerging technologies. In addition to constructing Solar Wind Downdraft Towers in the United States and abroad, the Company intends to establish partnerships at home and abroad to propagate these systems and meet increasing global demand for electricity.

A Bold New Energy Solution

The United States and other nations are aggressively pursuing energy independence with clean, sustainable energy solutions. Solar Wind offers a bold new approach to overcome the current limitations of other known alternative energy sources. The Solar Wind Downdraft Tower combines dry air heated by the solar rays of the sun with water added as a catalyst to create a powerful natural downdraft.

Hybrid Solar/Wind Technology

We view ourselves as a hybrid solar/wind technology because the simplicity of our solution is the harnessing of the natural power of a downdraft created when water is introduced to hot dry air within the confines of our tower structure.

The Solar Wind Downdraft Tower

	·	Avoids the adverse effects associated with fossil and nuclear fuels.
	·	Is capable of Operating 24/7 and can outperform solar collectors that produce only when the sun shines in the daytime and wind turbines that produce only when the wind blows
	·	Has the capability of being operated with virtually no carbon footprint, fuel consumption or waste production.
	·	Has the potential to generate clean, cost effective and efficient electrical power without the damaging effects caused by using fossil or nuclear fuels, and other know alternative power sources.
	·	Uses benevolent non-toxic natural elements to generate electricity.

Technology

Innovative Renewable Energy Technology

The Solar Wind Downdraft Tower is a hollow cylinder reaching skyward into the hot dry atmosphere heated by the solar rays of the sun. The water introduced by the injection system evaporates and is absorbed by the hot dry air which has been heated by the solar rays of the sun. The air becomes cooler, denser and heavier than the outside warmer air and falls through the cylinder at speeds up to and in excess of 50 mph and is diverted into wind tunnels surrounding the base of the Tower where turbines inside the tunnels power generators to produce electricity.

In geographic areas where atmospheric conditions are conducive, the exterior of the Solar Wind Downdraft Tower may be constructed with vertical “wind vanes” that capture the prevailing wind and channel it to produce supplemental electrical power. This dual renewable energy resource enhances the capability and productivity of the Solar Wind Energy system.

Physical Principles

Evaporating water to create or diminish energy (for cooling) is a well-understood physical principle. Evaporative coolers are used not just throughout the United States Southwest region (hot & arid), but widely in the power industry to cool gas, coal and nuclear power plants.

Similarly, cooling towers adorn the roofs of countless buildings in large cities, providing affordable energy. Airline pilots are very familiar with downdrafts and diligently avoid downdrafts associated with thunderstorms, especially when near the ground, where downdrafts can force a 200 ton airplane dangerously downward.

Solar Wind’s Energy Tower uses the same fundamental physical principle of evaporative cooling which creates a downdraft. Cool, moist, dense air always falls through hot dry air. What most people are unaware of is that the wind speed in an energy tower can exceed 50mph.

In summary, it is clear that Solar Wind’s Energy Tower creates and harnesses the downdraft, using widely applied and well-understood physical principles, to produce abundant electricity.

Abundant, Clean, Affordable Electricity Production

The Company has successfully managed to downsize the Tower, reducing capital costs and improving projected financial performance. The Company recently announced the completion of weather data models that confirm that the first Tower height can be lowered from 3,000 feet down to 2,250 feet. This development was made possible by utilizing our proprietary software which can calculate and predict energy production by our Solar Wind Downdraft Towers given local weather data. By feeding the weather data for southwestern Arizona / northern Mexico into the program, the Tower’s height and diameter can be adjusted along with the amount of water added as fuel to create a desired amount of energy. The outcome dictates the optimum size of the Tower’s height and width.

Under the most recent design specifications, the first San Luis Tower has a design capacity on an hourly basis, of up to 1250 megawatt hours, gross. Using a 60% capacity factor, the Tower’s potential hourly yield would be 600 megawatt hours from which approximately 18. 5% will be used to power its operations, yielding approximately 500 megawatt hours available for sale to the power grid. Due to lower capacities during winter days, the average daily output for sale to the grid for the entire year is approximately 435 megawatt hours. Currently in California avoided costs are running approximately $0.11 per kilowatt hour. As an independent power producer of clean renewable energy the Company will not be selling power directly to consumers, but rather to the grid.

Intellectual Property

The Company has filed numerous patent applications with the U.S. Patent and Trademark Office to protect its intellectual property. The Company has been awarded four patents. The Company has judiciously pursued the patent applications that we feel are instrumental to the core development of our technology and project:

Patent #8120191 issued 2/21/2012 “Efficient Energy Conversion Devices & Methods

The patent covers a novel hydraulic system capable of maintaining high efficiency hydraulic to electric conversion under a wide variance of wind speeds, as coupled to a plurality of wind turbines in wind tunnels.

Patent #8,517,662 B2 issued 8/27/2013 “Atmospheric Energy Extraction Devices & Methods

The patent covers a structure for producing electricity, specifically a Tower capable of adding moisture at the top of the structure to hot-dry air so as to generate a downdraft of wind within the interior of the Tower, vanes coupled to the exterior of the Tower that at least partially define a plurality of elongated pockets to the exterior of the Tower, and flaps located to redirect the incident wind downwards into tunnels to convert wind to electricity.

Patent #8,643,204 B2 issued 2/4/2014 “Efficient Energy Conversion Devices and Methods”

This application enhances and broadens previously issued Patent #8120191

Patent #8,727,698 B1 issued 5/20/2014 “Atmospheric Energy Extraction Devices & Methods”

The patent claims are targeted to represent the advantages of the new Tower structural shape, the configuration of the Tower walls, their composition as well as the wall thicknesses for a given height, along with more efficient construction methodology and enhanced wind force resistance over prior Tower designs.

Site Requirements

The Company’s planned Downdraft Tower requires very specific site conditions. The location must provide appropriate climate and atmospheric conditions. The site must have access to reliable water sources, either fresh or salt water, in which case desalinization may be required. Additionally, the site should have access to rail service and other logistical ease of access.

Considerations

The Downdraft Tower works best in hot, dry climates, , and near a reliable water source. Prime production periods are daytime during spring, summer and fall, which closely aligns with electricity demand patterns.

The External Wind Capture keeps working 24/7 including cold winter months and at night whenever a wind is blowing - from the surface up to 4,000 feet - where much stronger winds blow far more constantly (at least twice as often as on the surface and at much higher speeds).

There are a number of appropriate sites around the globe that are hot, dry, and near water adequate to support numerous Energy Towers that efficiently turn the sun’s energy into electricity.

The Distinct Advantages

The Company enjoys one major advantage over all other wind energy producers: a constant, high speed downdraft that blows for more than half the year. While ordinary wind turbine farms struggle with 20% to 30% capacity factors and wind speeds that are often useless or marginal (too low or too high), the Company’s Energy Tower can continuously channel 50 mph winds (or higher) into a controlled environment where the vast majority the wind’s energy can be captured to generate electricity.

Power industry experts know that when computing wind power, the velocity is tripled. Thus a 60 mph wind contains 3 times as much kinetic energy as a 30 mph wind striking a conventional turbine.

Global Energy Generation Calculator

The Company has developed a software based analytical program to determine the energy generation capabilities of its Solar Wind Downdraft Towers based on the climate in geographic locations around the world, and has taken the appropriate steps to protect its intellectual property invention.

This essential tool has been under development by the Company for over one year and applies “known” scientific meteorology data of a specific area to the Solar Wind Downdraft Tower’s variables in order to determine and project energy outputs on a daily basis. Advancements in the scientific community over the last decade that predict and pin-point specific weather conditions provided significant insights to the development of this innovative tool.

This analytical tool, combined with our proprietary operating systems technology and existing core patents, clearly provides the Company with a unique opportunity to allow global positioning of this alternative solution to the world’s energy needs. The Company can now rapidly respond to a request from virtually any country reasonably suitable to host a project and determine specifically where the Solar Wind Downdraft Tower should be located, the size of the Tower and the amount of electricity it can produce.

Development

The master development plan for a site requires a series of steps:

	·	explore, select, and qualify site;
	·	negotiate and execute land lease sale (site) and suitability for rights of way (water pipeline, transmission line, highway and railway access);
	·	survey and identify any artifacts and cultural resources that may be impacted by site exploration, project construction or operation;
	·	acquire water rights;
	·	determine and design access to and availability of electrical grid, roads, rail transportation, sewer, water, and power for construction and operation;
	·	create project site plan for offices, storage buildings for construction equipment, etc.;
	·	coordinate and provide, to the extent possible, resource carry-over (i.e., buildings and facilities) to the locale after construction;
	·	determine the type and number of jobs created during study, construction and operational phases;
	·	determine the cost of the project (currently estimated at $1.5 billion); and
	·	determine the electricity produced (currently estimated at 3.7 Million MWH’s).

Business Model

The business model of our Company is to create an Energy Compound of Towers to be developed individually with a common water supply and rail/water port for supplies and equipment delivery, and common component assembly plant and labor force. Energy Compounds could actually be developed simultaneously in North America, North Africa (to serve the European grid by piping direct current across the Mediterrean), India and the Middle East. The world market can support all the materials needed and can certainly use the electricity. The cost per kilowatt is similar to that of a typical coal or gas-fired facility. SWET has positioned itself to take advantage of this solution and bring the first project to market, thereby setting the stage for a global “game changing” opportunity.

Project Partnering

The Company’s business plan involves “partnering” with various entities such as utilities, sovereign nations and independent power producers, to provide the ability to bring this solution to the market as rapidly as possible.

Each Solar Wind Downdraft Tower is its own independent project. The Company’s involvement in each project is to facilitate the Tower’s development with its expertise, intellectual property and project management team. The Company will receive development fees, licensing fees, and royalties on power sales from each project and/or ownership interests.

Coordinated World Class Expertise

The Company is evaluating potential sites for a possible first Tower here in the United States and received key patents to protect its techniques to extract the energy from the Solar Wind Downdraft Tower. Some of the best consultants in the world have been and continue to support the Company’s efforts to bring this first Downdraft Tower to market.

The first site is near San Luis, AZ and the Mexico/US border. The weather data has been updated for the first site and final reports accurately calculate the Tower's output capacity 24/7. Those reports now support and validate SWET’s goal to develop its first Tower at the minimum size and design output possible, which preserves cash flow for adequate debt service coverage.

First Energy Tower Site in United States

The Company made a final site selection within the City of San Luis, Arizona for the potential development of its first tower. After a substantial evaluation of multiple sites in the southwestern part of the country over a two and a half year period, including various locations in proximity to San Luis, Arizona, the Company chose the site location that best met all of its required attributes including climate, geography, zoning, as well as a welcoming environment.

It executed an option agreement to purchase a site encompassing over 640acres of land within the City of San Luis, Arizona, which was later was recorded in Yuma County, Arizona. Wednesday, April 23, 2014, the city unanimously approved a “Development and Protected Development Rights Agreement” with Solar Wind Energy Tower Inc. providing assurance of the necessary local entitlements for development of the first tower in the City of San Luis. The agreement covers a number of items including, but not limited to, land zoning, rights-of-way, utilities and provides that the City of San Luis will guarantee the supply the water to fuel the Tower Project for a minimum of 50 years.

Recently, the government of San Luis Mexico, coordinated arranging for the Company to option ( a site complete with all of the entitlements including the necessary water allocation in San Luis Rio Colorado, Sonora, Mexico. The Company and the government are investigating the access, and timing required to connect to the Mexican electrical grid. We are also investigating other privately owned sites in the same area with comparable attributes.

Customers

Energy produced by the Downdraft Tower could provide low cost electricity to the power grid. The Company plans to ultimately build and operate wind energy plants and sell the electricity either through contracts with utilities, which is the traditional method for independent power plants, or directly into the open market or electricity commodities market like a merchant plant similar to many natural gas fired power plants. The Company may also sell the power plants themselves to large customers or utilities and/or operate such plants for customers or utilities.

The sale of electricity to power brokers is more profitable than selling directly to the electricity commodities market. If the cost of the marketing infrastructure of selling green energy at a $0.02 per kWh premium is justified as opposed to the wholesale contracting of electricity at a lower price, then the Company plans to market the electricity to green energy brokers. The green power is energy from clean energy production sources like wind energy in which consumers are willing to pay a premium in order to promote clean energy. If the Company chooses to work through power brokers, it believes the potential exists to sell the environmental correct “green” power at a premium price being higher than conventional fuel sources. Power brokers usually receive a premium of $0.015 per kWh above the wholesale price paid on the open market. However, the market is new and subject to uncertainty including price fluctuations.

Markets

Wind energy experienced a 39% annual growth for the past five years according to the American Wind Energy Association, the industry’s trade organization based in Washington, D.C. Recent national surveys show that approximately 40-70% of the population surveyed indicate a willingness to pay a premium for renewable energy. Although 10% of the respondents say they will participate in such a program, actual participation is estimated at 1%. Currently, more than a dozen utilities have green marketing programs. Public Service Company of Colorado, Central and South West Services Corporation of Texas, and Fort Collins Light and Power Company are leading the effort in wind related green electricity marketing.

The Company is investigating the feasibility of locating a Downdraft Tower in California. California has three major regulated investor-owned utilities and many municipal utilities, all of which are required by state law to have renewable sources of generation in their resource portfolios, whether generated or purchased. Arizona utilities have similar requirements. Due to federal regulations requiring that transmission owners provide service on the same terms to all generators requesting service, known as “open access”, independent power producers (which the Company would be under its business model), are able to develop wind energy projects in areas where such resources are most prevalent and sell power to anyone interconnected with the transmission grid in California. California’s transmission grid is operated by a regional transmission organization (“RTO”), the California Independent System Operator (“CAISO”). Other states belong to other RTOs.

Competition

The Downdraft Tower project requires specific site and appropriate weather conditions. Given these constraints and the increasing focus on renewable energy to offset the environmental problems caused by fossil fuels, the renewable energy industry is highly competitive.

In the markets where the Company plans to conduct its business, it will compete with many energy producers including electric utilities and large independent power producers. There is also competition from fossil fuel sources such as natural gas and coal, and other renewable energy sources such as solar, traditional wind, hydro and geothermal. The competition depends on the resources available within the specific markets.

Although the cost to produce clean, reliable, renewable energy is becoming more competitive with traditional fossil fuel sources, it generally remains more expensive to produce, and the reliability of its supply is less consistent than traditional fossil fuel. Deregulation and consumer preference are becoming important factors in increasing the development of alternative energy projects.

The Company believes that governments and consumers recognize the importance of renewable energy resources in the energy mix, and are facilitating the implementation of wind and other renewable technologies through renewable portfolio standards and revenue and tax incentives.

Arizona and California are primarily served by large utilities, such as Southern California Edison Company, Pacific Gas & Electric Company, San Diego Gas & Electric Company, Arizona Public Service Company (“Arizona Public Service”) and UNS. All of these companies have non-regulated subsidiaries or sister companies that develop generating facilities. In addition, utilities from other states and countries have established large wind energy generating companies, such as Florida Power & Light Company, enXco, Inc. and PPM Energy, Inc. (now part of a large Spanish renewable company, Iberdrola Renovables, S.A.).

According to the Electric Power Research Institute, the past ten years have seen traditional energy costs increase while wind energy costs have declined. The advances in technology, larger-scale and more efficient manufacturing processes, and increased experience in wind turbine operations has contributed substantially to this trend. This cost decline is paralleled with a several hundred fold increase in installed wind energy capacity. As a result, maintenance costs have fallen significantly. Wind energy sources comprise less than 1% of the current electricity generating industry.

An assessment released by the National Renewable Energy Laboratory in 2010 shows that U.S. wind resources are even larger than previously estimated and potential capacity of the land-based wind resource is more than 10,000 GW, far exceeding the 300 GW required to meet 20% of the nation’s electrical demand with wind in 2030.This figure does not factor the potential of Downdraft Towers. The estimated levelized cost of new generation resources by the Energy Information Administration shows the cost of wind energy is competitive to other conventional means of energy generation. The cumulative capacity-weighted average price of wind power, including the production tax credit, was about 4.4 cents per kilowatt hour in 2009 — a price that competes with fossil fuel-generated electricity.

Environmental

Various parties in the United States and other nations are pursuing clean energy solutions that use efficient and cost- effective renewable resources to serve society while avoiding the adverse effects associated with fossil and nuclear fuels, and also the obvious limitations of solar collectors that work only when the sun shines or wind turbines that work only when the wind blows.

The Solar Wind Downdraft Tower has the capability of being operated with virtually no carbon footprint, fuel consumption, or waste production. The technology has the potential to generate clean, cost effective and efficient electrical power without the damaging effects caused by using fossil or nuclear fuels, and other conventional power sources. The Company also believes that increasing emphasis on green technologies and governmental incentives in the energy industry should have a positive long-term effect on the Company's planned business and the wind energy industry in general.

Numerous federal and state environmental laws can affect the development of renewable energy, such as the California Environmental Quality Act. These laws require that certain studies be conducted to ensure that there are no significant adverse impacts on wildlife, humans and the environment generally. The significant impacts of wind energy projects are on visibility, noise, birds, wildlife habitat and soil erosion. Changes in environmental laws can pose significant expenses on renewable energy development.

International treaties and protocols, such as the Kyoto Protocol, have significantly impacted the development and implementation of renewable energy technologies. Certain countries and regions also have established emission trading programs. Under emission trading programs, utilities and factories are permitted to produce a certain level of emissions. If such an entity produces fewer emissions than its allotment, the entity may sell its excess allotment to parties exceeding their emissions allotments. To date, these mechanisms are at an early stage of development within the United States. Credit trading provides the potential for creating additional income for renewable energy producers, rationalizing of electricity prices for utilities and reducing the overall retail price for green power.

The Company believes that increasing emphasis on green technologies and governmental incentives in the energy industry should have a positive long-term effect on the Company’s planned business and the wind energy industry in general.

Industry Analysis

According to the American Wind Energy Association (“AWEA”), wind energy was the world’s fastest growing energy source during most of the 1990s, expanding at annual rates ranging from 25% to 35%. The AWEA estimates the global industry growth rate has averaged 32% over the five years from 2004 through 2008, with a growth rate of 39% in 2009. The U.S. wind industry broke all previous records by installing over 10,000 MW of new wind capacity in 2009. Current installed capacity worldwide at the end of 2009 was 35,086 MW, compared to 25,076 MW at the end of 2008. The major contributing growth factor is the federal stimulus package passed in 2009 that extended a tax credit and provided other investment incentives for alternative energy sources. The U.S. Energy Information Administration attributes 1.9% of total electric generation in the nation to wind power.

Not factoring the Company’s planned Downdraft Tower product, World Energy Council expects new wind capacity worldwide to continue to grow. The continued evolution of this technology is evident with the existence of varying wind turbine designs. However, there is division in the wind industry between those who want to capitalize on the emerging respect the business community has for established, mature wind technology, and those who seek new technologies designed to bring about significant cost reductions. The Company chooses to seek new horizons beyond current perception and knowledge by developing new technologies that it believes will be capable of significantly reducing wind energy costs.

As wind energy technology gains wider acceptance, competition may increase as large, well-capitalized companies enter the business. Although one or more may be successful, the Company believes that its technological expertise and early entry will provide a degree of competitive protection.

Licensing and Regulation

In the United States, many state governments have amended their utility regulations and significantly changed certain competition and marketing rules with respect to generation, transmission and distribution of electric energy. Among other things, deregulation allows consumers to purchase electricity from a source of their choice, and requires utilities to purchase electricity from independent power producers and to offer transmission to independent power producers at reasonable prices.

In California, deregulation legislation, such as the Assembly Bill 1890 and the Renewable Energy Program, were implemented in the mid-1990s to encourage the development of renewable power generation projects through various incentives. In addition, Assembly Bill 995 and Senate Bill 1038 were passed to further facilitate the development of renewable resources. In November 2008, the governor of the State of California signed Executive Order S-14-08 requiring that California utilities reach a 33% renewable energy goal by 2020, exceeding the previous legislative mandate that electric utilities supply 20% of their total retail power sales from renewable resources by 2010. In September 2009, the Governor signed Executive Order S-21-09, requiring the Air Resources Board under the California Environmental Protection Agency to adopt a regulation by July 1, 2010 requiring California’s load-serving entities to meet the 33% renewable energy goal through the creation and use of renewable energy sources to ensure reduction of greenhouse gas emissions.

In Arizona, access to the electricity market has been established through Arizona’s Retail Electric Competition Rules, which, in the Company’s opinion, provide a favorable environment for renewable energy generators. Electricity producers are subject to the Federal Public Utilities Regulatory Policies Act (“PURPA”) and state regulations. In addition, power producers must also meet standards set by the Arizona Corporations Commission (the “ACC”).

The Federal Energy Policy Act of 2005 provided further benefits to independent power producers by requiring transmission companies to provide access to third parties at a reasonable price. On October 3, 2008, the President of the United States signed the Emergency Economic Stabilization Act of 2008 into law. This legislation contains a number of tax incentives designed to encourage both individuals and businesses to make investments in renewable energy, including an eight-year extension of the business solar investment tax credit (“ITC”). The ITC is a 30% tax credit on solar property effective through December 31, 2016. The American Recovery and Reinvestment Act of 2009 further extended the U.S. $0.021/kWh Production Tax Credit (“PTC”) through December 31, 2012, and provide an option to elect a 30% ITC or an equivalent cash grant from the U.S. Department of Energy.

Employees

As of February 28, 2017, the Company had a total of 3 full time employees. The Company anticipates that it may need to hire additional staff in the areas of engineering, marketing and administration in the future.

ITEM 1A. RISK FACTORS

The Company’s results of operations, financial condition and cash flows can be adversely affected by various risks. These risks include, but are not limited to, the principal factors listed below and the other matters set forth in this annual report on Form 10-K. You should carefully consider all of these risks before making an investment decision.

Risks Related to Our Business and the Industry in Which We Compete

Our independent auditors have expressed substantial doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing.

The report of our independent auditors dated March 2, 2017 on our consolidated financial statements for the year ended December 31, 2015 included an explanatory paragraph indicating that there is substantial doubt about our ability to continue as a going concern.

Our auditors’ doubts are based on our inability to generate sufficient cash flow to sustain our operations without securing additional financing, accumulated deficit, negative cash flows from operations and our limited cash balances and working capital deficit position. Our ability to continue as a going concern will be determined by our ability to obtain additional funding in the short term to enable us to realize the commercialization of our planned business operations. Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertain.

We are an early development stage company. We have not yet commenced with the construction of our Downdraft Towers or the production of electricity.

The Company has a limited operating history and has primarily engaged in operations relating to the development of its business plan. As an early-stage entity, the Company is subject to many of the risks common to such enterprises, including the ability of the Company to implement its business plan, market acceptance of its proposed business, under-capitalization, cash shortages, limitations with respect to personnel, financing and other resources, and uncertainty of the Company’s ability to generate revenues. There can be no assurance that the Company’s activities will be successful or result in any revenues or profit for the Company, and the likelihood of the Company’s success must be considered in light of the stage in its development. To date, the Company has generated no revenue and has generated losses.

The Company believes it has engaged professionals and consultants experienced in the type of business contemplated by the Company; however, there can be no assurance that the predictions, opinions, analyses, or conclusions of such professionals will prove to be accurate. In addition, no assurance can be given that the Company will be able to consummate its business strategy and plans or those financial or other limitations may force the Company to modify, alter, significantly delay, or significantly impede the implementation of such plans or the Company’s ability to continue operations. If the Company is unable to successfully implement its business strategy and plans, investors may lose their entire investment in the Company.

Potential investors should also be aware of the difficulties normally encountered by new renewable energy companies. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the inception of the enterprise that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to construction, operation and distribution, and additional costs and expenses that may exceed current estimates.

Future financings will involve a dilution of the interests of the stockholders of the Company upon the issuance of additional shares of Common Stock or other securities.

We will need to engage in additional financings in the future. There can be no assurances that such financings will ever be completed, but any such financings will involve a dilution of the interests of our stockholders upon the issuance of additional shares of Common Stock or other securities. Attaining such additional financing may not be possible, or if additional capital may be otherwise available, the terms on which such capital may be available may not be commercially feasible or advantageous to existing shareholders. We expect to issue shares of our Common Stock and/or other securities in exchange for additional financing.

We anticipate significant future capital needs and the availability of future capital is uncertain.

The Company has experienced negative cash flows from operations since its inception. The Company will be required to spend substantial funds to continue research and development. The Company will need to raise additional capital. The Company’s capital requirements will depend on many factors, primarily relating to the problems, delays, expenses and complications frequently encountered by development stage companies; the progress of the Company’s research and development programs; the costs and timing of seeking regulatory approvals of the Company’s products under development; the Company’s ability to obtain such regulatory approvals; costs in filing, prosecuting, defending, and enforcing any patent claims and other intellectual property rights; the extent and terms of any collaborative research, manufacturing, marketing, or other arrangements; and changes in economic, regulatory, or competitive conditions or the Company’s planned business.

To satisfy its capital requirements, the Company may seek to raise funds in the public or private capital markets. The Company may seek additional funding through corporate collaborations and other financing vehicles. There can be no assurance that any such funding will be available to the Company, or if available, that it will be available on acceptable terms. If adequate funds are not available, the Company may be required to curtail significantly one or more of its research or development programs or it may be required to obtain funds through arrangements with future collaborative partners or others that may require the Company to relinquish rights to some or all of its technologies or products under development. If the Company is successful in obtaining additional financing, the terms of the financing may have the effect of diluting or adversely affecting the holdings or the rights of the holders of Common Stock.

We have a history of losses.

We expect to incur non-capitalized development costs and general and administrative expenses prior to the completion of construction and commencement of operation of our proposed projects. We cannot predict if we will ever achieve profitability and, if we do, we may not be able to sustain or increase our profitability. If we cannot achieve or maintain profitability, we may not be able to continue to absorb the resulting financial losses. If we continue to suffer financial losses, our business may be jeopardized and our shareholders may lose all of their investment in our shares.

The Company’s strategies for development of the business might not be successful.

The Company is currently evaluating potential development strategies for its business. It may take several years, if ever, for the Company to achieve cumulative positive cash flow. The Company could experience significant difficulties in executing its business plan, including: inability to successfully implement the Company’s business plan; changes in market conditions; inability to obtain necessary financing; delays in completion of the Company’s projects or their underlying technologies; inaccurate cost estimates; changes in government or political reform; or the Company may not benefit from the proposed projects as the Company expected. The Company’s inability to develop and market the Company’s business successfully and to generate positive cash flows from these operations in a timely manner would have a material adverse effect on the Company’s ability to meet the Company’s working capital requirements.

We expect to rely upon strategic relationships in order to execute our business plan and the Company may not be able to consummate the strategic relationships necessary to execute its business plan.

The Company plans to enter into and rely on strategic relationships with other parties, in particular to acquire rights necessary to develop and build proposed projects and to develop and build such projects. These strategic relationships could include licensing agreements, partnerships, joint ventures, or even business combinations. The Company believes that these relationships will be particularly important to the Company’s future growth and success due to the size and resources of the Company and the resources necessary to complete the Company’s proposed projects. The Company may, however, not be able to successfully identify potential strategic relationships.

Even if the Company does identify one or more potentially beneficial strategic relationships, it may not be able to consummate these relationships on favorable terms or at all, obtain the benefits it anticipates from such relationships or maintain such relationships. In addition, the dynamics of the Company’s relationships with possible strategic partners may require the Company to incur expenses or undertake activities it would not otherwise be inclined to undertake in order to fulfill the Company’s obligations to these partners or maintain the Company’s relationships.

To the extent the Company consummates strategic relationships; it may become reliant on the performance of independent third parties under such relationships. Moreover, certain potentially critical strategic relationships are only in the early stages of discussion and have not been officially agreed to and formalized. If strategic relationships are not identified, established or maintained, or are established or maintained on terms that become unfavorable, the Company’s business prospects may be limited, which could have a negative impact on the Company’s ability to execute the Company’s business plan, diminish the Company’s ability to conduct the Company’s operations and/or materially and adversely affect the Company’s business and financial results.

Project development or construction activities may not be successful and proposed projects may not receive required permits or construction may not proceed as planned.

The development and construction of our proposed projects will involve numerous risks. We may be required to spend significant sums for preliminary engineering, permitting, legal, and other expenses before we can determine whether a project is feasible, economically attractive or capable of being built. Success in developing a particular project is contingent upon, among other things: (i) negotiation of satisfactory engineering, procurement and construction agreements; (ii) receipt of required governmental permits and approvals, including the right to interconnect to the electric grid on economically acceptable terms; (iii) payment of interconnection and other deposits (some of which may be non-refundable); (iv) obtaining construction financing; and (v) timely implementation and satisfactory completion of construction.

Successful completion of a particular project may be adversely affected by numerous factors, including: (i) delays in obtaining required governmental permits and approvals with acceptable conditions; (ii) uncertainties relating to land costs for projects on land subject to Bureau of Land Management procedures; (iii) unforeseen engineering problems; (iv) construction delays and contractor performance shortfalls; (v) work stoppages; (vi) cost over-runs; (vii) equipment and materials supply; (viii) adverse weather conditions; and (ix) environmental and geological conditions.

The estimates and projections contained in this Annual Report may not be realized.

Any estimates or projections in this Annual Report have been prepared on the basis of assumptions and hypotheses, which the Company believes to be reasonable. However, no assurance can be given that the potential benefits described in this Annual Report will prove to be available. Such assumptions are highly speculative and, while based on management’s best estimates of projected sales levels, operational costs, consumer preferences, and the Company’s general economic and competitive conditions in the industry, there can be no assurance that the Company will operate profitably or remain solvent. To date, the Company has not operated profitably and has a history of losses. If the Company’s plans prove unsuccessful, investors could lose all or part of their investment. There can be no assurance that the Company will be able to generate any revenue or profits.

Our business is subject to significant government regulation and, as a result, changes to such regulations may adversely affect our business.

Although independent and small power producers may generate electricity and engage in wholesale sales of energy without being subject to the full panoply of state and/or provincial and federal regulation to the same extent as a public utility company, our planned operations will nonetheless be subject to changes in government regulatory requirements, such as regulations related to the environment, zoning and permitting, financial incentives, taxation, competition, pricing, and FERC and state PUC regulations on competition. The operation of our proposed projects will be subject to regulation by various U.S. government agencies at the federal, state and municipal level.

There is always the risk of change in government policies and laws, including but not limited to laws and regulations relating to income, capital, sales, corporate or local taxes, and the removal of tax incentives. Changes in these regulations could have a negative impact on our potential profitability. Laws and tax policies may change and such changes may be favorable or unfavorable to the Company, which may result in the cancellation of proposed projects or reduce anticipated revenues and cash flow.

We may be unable to acquire or lease land and/or obtain the approvals, licenses and permits necessary to build and operate our proposed projects in a timely and cost effective manner, and regulatory agencies, local communities or labor unions may delay, prevent or increase the cost of construction and operation of our proposed projects.

In order to construct and operate our proposed projects, we need to acquire or lease land and obtain all necessary local, county, state and federal approvals, licenses and permits. We may be unable to acquire the land or lease interests needed, may not receive or retain the requisite approvals, permits and licenses or may encounter other problems which could delay or prevent us from successfully constructing and operating proposed projects.

Proposed projects may be located on or require access through public lands administered by federal and state agencies pursuant to competitive public leasing and right-of-way procedures and processes. The authorization for the use, construction and operation of our proposed projects and associated transmission facilities on federal, state and private lands will also require the assessment and evaluation of mineral rights, private rights-of-way and other easements; environmental, agricultural, cultural, recreational and aesthetic impacts; and the likely mitigation of adverse impacts to these and other resources and uses. The inability to obtain the required permits and, potentially, excessive delay in obtaining such permits due, for example, to litigation, could prevent us from successfully constructing and operating our proposed projects. Moreover, project approvals subject to project modifications and conditions, including mitigation requirements and costs, could affect the financial success of our proposed projects.

Our ability to manage our growth successfully is crucial to our future.

We are subject to a variety of risks associated with a growing business. Our ability to operate successfully in the future depends upon our ability to finance, develop, and construct future renewable energy projects, implement and improve the administration of financial and operating systems and controls, expand our technical capabilities and manage our relationships with landowners and contractors. Our failure to manage growth effectively could have a material adverse effect on our business or results of operations.

Notwithstanding the Recovery Act and other regulatory incentives, we may not be able to finance the development or the construction costs of building our planned projects.

We do not have sufficient funds from the cash flow of our operations to fully finance the development or the construction costs of building our proposed projects. Additional funds will be required to complete the development and construction of our proposed projects, to find and carry out the development of properties, and to pay the general and administrative costs of operating our business. Additional financing may not be available on acceptable terms, if at all. If we are unable to raise additional funds when needed, we may be required to delay development and construction of our proposed projects, reduce the scope of our proposed projects, and/or eliminate or sell some or all of our development projects, if any.

We may not be able to obtain access to the transmission lines necessary to deliver the power we plan to produce and sell.

We will depend on access to transmission facilities so that we may deliver power to purchasers. If existing transmission facilities do not have available transmission capacity, we would be required to pay for the upgrade of existing transmission facilities or to construct new ones. There can be no assurance that we will be able to secure access to transmission facilities at a reasonable cost, or at all. As a result, expected profitability on a proposed project may be lower than anticipated or, if we have no access to electricity transmission facilities, we may not be able to fulfill our obligations to deliver power or to construct the project or we may be required to pay liquidated damages.

Changes in interest rates and debt covenants and increases in turbine and generator prices and construction costs may result in our proposed projects not being economically feasible.

Increases in interest rates and changes in debt covenants may reduce the amounts that we can borrow, reduce the cash flow, if any, generated by our proposed projects, and increase the equity required to complete the construction of our proposed projects. The cost of wind turbines, generators and construction costs have increased significantly over the last four years. Further increases may increase the cost of our proposed projects to the point that such projects are not feasible given the prices utilities are willing to pay. There can be no assurance that we will be able to negotiate power purchase agreements with sufficiently profitable electricity prices in the future.

We may not be able to secure power purchase agreements.

We may not be able to secure power purchase agreements for our proposed projects. In the event that we do secure power purchase agreements, if we fail to construct our proposed projects in a timely manner, we may be in breach of our power purchase agreements and such agreements may be terminated.

The operation of our proposed projects may be subject to equipment failure.

After the construction of our proposed projects, the electricity produced may be lower than anticipated because of equipment malfunction. Unscheduled maintenance can result in lower electricity production for several months or possibly longer depending on the nature of the outage, and correspondingly, in lower revenues.

Changes in weather patterns may affect our ability to operate our proposed projects.

Meteorological data we collect during the development phase of a proposed project may differ from actual results achieved after the project is erected. While long-term precipitation patterns have not varied significantly, short-term patterns, either on a seasonal or on a year-to-year basis may vary substantially. These variations may result in lower revenues and higher operating losses.

Environmental damage on our properties may cause us to incur significant financial expenses.

Environmental damage may result from the development and operation of our proposed projects. The construction of our proposed initial Downdraft Tower involves, among other things, land excavation and the installation of concrete foundations. Equipment can be a source of environmental concern, including noise pollution, damage to the soil as a result of oil spillage, and peril to certain migratory birds and animals that live, feed on, fly over, or cross the property. In addition, environmental regulators may impose restrictions on our operations, which would limit our ability to obtain the appropriate zoning or conditional use permits for our project. We may also be assessed significant financial penalties for any environmental damage caused on properties that are leased, and we may be unable to sell properties that are owned. Financial losses and liabilities that may result from environmental damage could affect our ability to continue to do business.

Larger developers have greater resources and expertise in developing and constructing renewable energy projects.

We face significant competition from large power project developers, including electric utilities and large independent power producers that have greater project development, construction, financial, human resources, marketing and management capabilities than the Company. They have a track record of completing projects and may be able to acquire funding more easily to develop and construct projects. They have also established relationships with energy utilities, transmission companies, turbine suppliers, and plant contractors that may make our access to such parties more difficult.

Renewable energy must compete with traditional fossil fuel sources.

In addition to competition from other industry participants, we face competition from fossil fuel sources such as natural gas and coal, and other renewable energy sources such as solar, traditional wind, hydro and geothermal. The competition depends on the resources available within the specific markets. Although the cost to produce clean, reliable, renewable energy is becoming more competitive with traditional fossil fuel sources, it generally remains more expensive to produce, and the reliability of its supply is less consistent than traditional fossil fuel. However, deregulation, legislative mandates for renewable energy, and consumer preference for environmentally more benign energy sources are becoming important factors in increasing the development of alternative energy projects.

The wind energy industry in California is highly competitive since wind plays an integral role in the electricity portfolio in California.

The Company is investigating the feasibility of locating a Downdraft Tower in California. Since wind plays an integral role in the electricity portfolio in California and wind energy requires a significant amount of land resource, the wind energy industry in California is highly competitive. Wind developers compete for leased and owned land with favorable wind characteristics, limited supply of turbines and contractors, and for purchasers and available transmission capacity. There is no guarantee that we will be able to acquire the significant land resources needed to develop projects in California.

Our ability to hire and retain qualified personnel and contractors will be an important factor in the success of our business. Our failure to hire and retain qualified personnel may result in our inability to manage and implement our plans for expansion and growth.

Competition for qualified personnel in the renewable energy industry is significant. To manage growth effectively, we must continue to implement and improve our management systems and to recruit and train new personnel. We may not be able to continue to attract and retain the qualified personnel necessary to carry on our business. If we are unable to retain or hire additional qualified personnel as required, we may not be able to adequately manage and implement our plans for expansion and growth.

The market in which we operate is rapidly evolving and we may not be able to maintain our profitability.

As a result of the emerging nature of the markets in which we plan to compete and the rapidly evolving nature of our industry, it is particularly difficult for us to forecast our revenues or earnings accurately. Our current and future expense levels are based largely on our investment plans and estimates of future revenues and are, to a large extent, fixed. We may not be able to adjust spending in a timely manner to compensate for any unexpected revenue shortfall. Accordingly, any significant shortfall in revenues relative to our planned expenditures would have an immediate adverse effect on our business, results of operations and financial condition.

We depend on key personnel, the loss of which could have a material adverse effect on us.

Our performance depends substantially on the continued services and on the performance of our senior management and other key personnel. Our ability to retain and motivate these and other officers and employees is fundamental to our performance. The unexpected loss of services of one or more of these individuals could have a material adverse effect on us. We are not protected by a material amount of key-person or similar life insurance covering our executive officers and other directors. We have entered into employment agreements with our executive officers, but the non-compete period with respect to certain executive officers could, in some circumstances in the event of their termination of employment with the Company, end prior to the employment term set forth in their employment agreements.

Certain legal proceedings and regulatory matters could adversely impact our results of operations.

We may be subject from time to time to various claims involving alleged breach of contract claims, intellectual property and other related claims, and other litigations. Certain of these lawsuits and claims, if decided adversely to us or settled by us, could result in material liability to the Company or have a negative impact on the Company’s reputation or relations with its employees, customers, licensees or other third parties. In addition, regardless of the outcome of any litigation or regulatory proceedings, such proceedings could result in substantial costs and may require that the Company devotes substantial time and resources to defend itself. Further, changes in governmental regulations in the U.S. could have an adverse impact on our results of operations.

Our results may be adversely affected by the impact that disruptions in the credit and financial markets have on our customers and the energy industry.

Beginning in late 2008 and continuing throughout 2009, energy and utility companies faced difficult conditions as a result of significant disruptions in the global economy, the repricing of credit risk and the deterioration of the financial markets. Continued volatility and further deterioration in the credit markets may reduce our access to financing. These events could negatively impact our operations and financial condition and our ability to raise the additional capital necessary to finance our operations.

The effects of the recent global economic crisis may impact the Company’s business, operating results, or financial condition.

The recent global economic crisis has caused disruptions and extreme volatility in global financial markets and increased rates of default and bankruptcy, and has impacted levels of spending. These macroeconomic developments could negatively affect the Company’s business, operating results, or financial condition in a number of ways. For example, potential clients may delay or decrease spending with the Company or may not pay the Company.

The Company’s insurance coverage may not be adequate.

If the Company was held liable for amounts exceeding the limits of its insurance coverage in place at any given time or for claims outside the scope of that coverage, its business, results of operations and financial conditions could be materially and adversely affected.

Our business is subject to extensive governmental regulation that could reduce our profitability, limit our growth, or increase competition.

Our planned businesses are subject to extensive federal, state and foreign governmental regulation and supervision, which could reduce our potential profitability or limit our potential growth by increasing the costs of regulatory compliance, limiting or restricting the products or services we plan to sell or the methods by which we plan to sell our products and services, or subjecting our businesses to the possibility of regulatory actions or proceedings.

In all jurisdictions the applicable laws and regulations are subject to amendment or interpretation by regulatory authorities. Generally, such authorities are vested with relatively broad discretion to grant, renew and revoke licenses and approvals and to implement regulations. Accordingly, we may be precluded or temporarily suspended from carrying on some or all of our planned activities or otherwise fined or penalized in a given jurisdiction. No assurances can be given that our business will be allowed to be, or continue to be, conducted in any given jurisdiction as we plan.

Competition resulting from these developments could cause the supply of, and demand for, our planned products and services to change, which could adversely affect our results of operations and financial condition.

Our planned operations will expose us to various international risks that could adversely affect our business.

We are seeking to reach agreements for the provision of key aspects of our business with foreign operators, specifically in Mexico. Accordingly, we may become subject to legal, economic and market risks associated with operating in foreign countries, including:

	·	the general economic and political conditions existing in those countries;
	·	devaluations and fluctuations in currency exchange rates;
	·	imposition of limitations on conversion of foreign currencies or remittance of dividends and other payments by foreign subsidiaries;
	·	imposition or increase of withholding and other taxes on remittances and other payments by subsidiaries;
	·	hyperinflation in certain foreign countries;
	·	imposition or increase of investment and other restrictions by foreign governments;
	·	longer payment cycles;
	·	greater difficulties in accounts receivable collection; and
	·	the requirement of complying with a wide variety of foreign laws.

Our ability to conduct business in foreign countries may be affected by legal, regulatory, political and economic risks.

Our ability to conduct business in foreign countries is subject to risks associated with international operations. These include:

	·	the burdens of complying with a variety of foreign laws and regulations;
	·	unexpected changes in regulatory requirements; and
	·	new tariffs or other barriers in some international markets.

We are also subject to general political and economic risks in connection with our international operations, including:

	·	political instability and terrorist attacks;
	·	changes in diplomatic and trade relationships; and
	·	general economic fluctuations in specific countries or markets.

We cannot predict whether quotas, duties, taxes, or other similar restrictions will be imposed by the U.S. or foreign countries upon our business in the future, or what effect any of these actions would have on our business, financial condition or results of operations. Changes in regulatory, geopolitical, social or economic policies and other factors may have a material adverse effect on our business in the future or may require us to significantly modify our current business practices.

The occurrence of natural or man-made disasters could adversely affect our financial condition and results of operations.

We are exposed to various risks arising out of natural disasters, including earthquakes, hurricanes, fires, floods and tornadoes, and pandemic health events such as H1N1 influenza, as well as man-made disasters, including acts of terrorism and military actions. The continued threat of terrorism and ongoing military actions may cause significant volatility in global financial markets, and a natural or man-made disaster could trigger an economic downturn in the areas directly or indirectly affected by the disaster. These consequences could, among other things, result in a decline in business and increased claims from those areas. Disasters also could disrupt public and private infrastructure, including communications and financial services, which could disrupt our normal business operations.

Our inability to successfully recover should we experience a disaster or other business continuity problem could cause material financial loss, loss of human capital, regulatory actions, reputational harm or legal liability.

Should we experience a local or regional disaster or other business continuity problem, such as an earthquake, hurricane, terrorist attack, pandemic, security breach, power loss, telecommunications failure or other natural or man-made disaster, our continued success will depend, in part, on the availability of our personnel, our office facilities, and the proper functioning of our computer, telecommunication and other related systems and operations.

Our operations are dependent upon our ability to protect our technology infrastructure against damage from business continuity events that could have a significant disruptive effect on our operations. We could potentially lose operation of our projects or experience material adverse interruptions to our operations or delivery of services to our clients in a disaster recovery scenario.

We plan to regularly assess and take steps to improve upon our existing business continuity plans and key management succession. However, a disaster on a significant scale or affecting certain of our key operating areas within or across regions, or our inability to successfully recover should we experience a disaster or other business continuity problem, could materially interrupt our business operations and cause material financial loss, loss of human capital, regulatory actions, reputational harm, damaged client relationships or legal liability.

Assertions by a third party that the Company infringes its intellectual property could result in costly and time-consuming litigation, expensive licenses or the inability to operate as planned.

The energy and technology industries are characterized by the existence of a large number of patents, copyrights, trademarks and trade secrets and by frequent litigation based on allegations of infringement or other violations of intellectual property rights. There is a possibility of intellectual property rights claims against the Company. The Company’s technologies may not be able to withstand third-party claims or rights restricting their use. Companies, organizations or individuals, including the Company’s competitors, may hold or obtain patents or other proprietary rights that would prevent, limit or interfere with the Company’s ability to provide the Company’s services or develop new products or services, which could make it more difficult for the Company to operate the Company’s business. Any litigation or claims, whether or not valid, could be time-consuming, expensive to litigate or settle and could divert the Company’s managements’ attention and financial resources. If the Company is determined to have infringed upon a third party’s intellectual property rights, the Company may be required to pay substantial damages, stop using technology found to be in violation of a third party’s rights or seek to obtain a license from the holder of the infringed intellectual property right, which license may not be available on reasonable terms, or at all, and may significantly increase the Company’s operating expenses or may require the Company to restrict the Company’s business activities in one or more respects.

The Company may also be required to develop alternative non-infringing technology that could require significant effort and expense or may not be feasible. In the event of a successful claim of infringement against the Company and the Company’s failure or inability to obtain a license to the infringed technology, the Company’s business and results of operations could be harmed.

The Company’s business will be adversely affected if the Company is unable to protect its intellectual property rights from unauthorized use or infringement by third-parties.

The Company intends to rely on a combination of trademark, patent, trade secret and copyright law, license agreements and contractual restrictions, including confidentiality agreements, invention assignment agreements and non-disclosure agreements with employees, contractors and suppliers, to protect the Company’s proprietary rights, all of which provide only limited protection. The Company believes its intellectual property rights are valuable, and any inability to protect them could reduce the value of the Company’s products, services and brand. Various events outside of the Company’s control pose a threat to the Company’s intellectual property rights as well as to the Company’s products and services. The efforts the Company has taken to protect its proprietary rights may not be sufficient or effective, may not be enforceable or may be capable of being effectively circumvented.

Any significant impairment of the Company’s intellectual property rights could harm the Company’s business or the Company’s ability to compete. Also, protecting the Company’s intellectual property rights is costly and time consuming. The Company also seeks to maintain certain intellectual property as trade secrets. The secrecy could be compromised by outside parties, or by the Company’s employees, which would cause the Company to lose the competitive advantage resulting from these trade secrets.

Risks Related to Our Securities

Our shares of Common Stock are quoted on the OTCBB and our stock price is likely to be highly volatile.

Our shares of Common Stock are quoted on the OTCBB. The OTCBB is generally regarded as a less efficient and less prestigious trading market than other national markets. There is no assurance if or when our Common Stock will be quoted on another more prestigious exchange or market. The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following:

	·	changes in the communications technology industry and markets;
	·	volume and timing of subscriptions from major customers;
	·	competitive pricing pressures;
	·	our ability to obtain working capital financing;
	·	technological innovations or new competitors in our market;
	·	additions or departures of key personnel;
	·	our ability to execute our business plan;
	·	operating results that fall below expectations;
	·	loss of any strategic relationship;
	·	industry or regulatory developments;
	·	economic and other external factors; and
	·	period-to-period fluctuations in our financial results.

In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock and for some time there will likely be a thin trading market for the stock, which causes trades of small blocks of stock to have a significant impact on the stock price.

Because our Common Stock is likely to be considered a “penny stock,” our trading will be subject to regulatory restrictions.

Our Common Stock is currently, and in the near future will likely continue to be, considered a “penny stock.” The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in “penny stocks.” Penny stocks generally are equity securities with a price of less than $5. 00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the SEC, which specifies information about penny stocks and the nature and significance of risks of the penny stock market. The broker-dealer also must provide the customer with bid and offer quotations for the penny stock, the compensation of the broker-dealer and any salesperson in the transaction, and monthly account statements indicating the market value of each penny stock held in the customer’s account. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure and other requirements may adversely affect the trading activity in the secondary market for our Common Stock.

We have not paid dividends in the past and do not expect to pay dividends for the foreseeable future, and any return on investment may be limited to potential future appreciation on the value of our Common Stock.

We currently intend to retain any future earnings to support the development and expansion of our business and do not anticipate paying cash dividends in the foreseeable future. Our payment of any future dividends will be at the discretion of our Board of Directors after taking into account various factors, including without limitation, our financial condition, operating results, cash needs, growth plans and the terms of any credit agreements that we may be a party to at the time. To the extent we do not pay dividends, our stock may be less valuable because a return on investment will only occur if and to the extent our stock price appreciates, which may never occur. In addition, shareholders must rely on sales of their Common Stock after price appreciation as the only way to realize their investment, and if the price of our stock does not appreciate, then there will be no return on investment. Shareholders seeking cash dividends should not purchase our Common Stock.

Our officers, directors and principal stockholders can exert significant influence over us and may make decisions that are not in the best interests of all stockholders.

Our officers, directors and principal stockholders (greater than 5% stockholders) collectively own a majority of our outstanding Common Stock. As a result of such ownership, these stockholders will be able to affect the outcome of, or exert significant influence over, all matters requiring stockholder approval, including the election and removal of directors and any change in control. In particular, this concentration of ownership of our Common Stock could have the effect of delaying or preventing a change of control of us or otherwise discouraging or preventing a potential acquirer from attempting to obtain control of us. This, in turn, could have a negative effect on the market price of our Common Stock. It could also prevent our stockholders from realizing a premium over the market prices for their shares of Common Stock.

Moreover, the interests of this concentration of ownership may not always coincide with our interests or the interests of other stockholders, and accordingly, they could cause us to enter into transactions or agreements that we would not otherwise consider.

Anti-takeover provisions may limit the ability of another party to acquire us, which could cause our stock price to decline.

Our Articles of Incorporation, as amended, our Bylaws and Nevada law contain provisions that could discourage, delay or prevent a third party from acquiring us, even if doing so may be beneficial to our stockholders. In addition, these provisions could limit the price investors would be willing to pay in the future for shares of our Common Stock.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

The Company leases a suite of offices and shared support services at 1997 Annapolis Exchange Parkway, Suite 300, Annapolis, Maryland 21401 on an annual lease. In addition, the Company maintains living quarters in Annapolis on an annual lease expiring in 2016.

ITEM 3. LEGAL PROCEEDINGS

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. 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.

ITEM 4. MINE SAFETY DISCLOSURE.

Not applicable.

PART II

Market information

The Company’s Common Stock is quoted on the OTC Bulletin Board under the symbol “SWET”. Historical high and low bid information for the Company’s Common Stock is not available to the Company. The following table reflects the high and low sales prices for the Company’s Common Stock for each fiscal quarter during the fiscal years ended December 31, 2015 and 2014. The sales prices were obtained from the OTC Bulletin Board.

Quarterly period	Low		High
Fiscal year ended December 31, 2015:
First Quarter	$	0.0029	$	0.0100
Second Quarter	$	0.0013	$	0.0060
Third Quarter	$	0.0001	$	0.0022
Fourth Quarter	$	0.0001	$	0.0004

Fiscal year ended December 31, 2014:
First Quarter	$	0.0040	$	0.0099
Second Quarter	$	0.0045	$	0.0410
Third Quarter	$	0.0230	$	0.0320
Fourth Quarter	$	0.0052	$	0.0205

Record Holders

As of February 28, 2017, there were approximately 1,420 registered holders of record of the Company’s Common Stock.

Dividends

The Company has not paid any cash dividends to date, and has no intention of paying any cash dividends on the Common Stock in the foreseeable future. The declaration and payment of dividends is subject to the discretion of the Company’s Board of Directors and to certain limitations imposed under Nevada law. The timing, amount and form of dividends, if any, will depend upon, among other things, the Company’s results of operations, financial condition, cash requirements, and other factors deemed relevant by the Board of Directors. The Company intends to retain any future earnings for use in its business. The Company has never paid dividends on its Common Stock.

Securities Authorized for Issuance under Equity Compensation Plans

The Company does not maintain any equity compensation plans.

Unregistered Sales of Equity Securities and Use of Proceeds

None

ITEM 6. SELECTED FINANCIAL DATA

This item is not applicable to smaller reporting companies.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Some of the statements contained in this Annual Report that are not historical facts are “forward-looking statements” which can be identified by the use of terminology such as “estimates,” “projects,” “plans,” “believes,” “expects,” “anticipates,” “intends,” or the negative or other variations, or by discussions of strategy that involve risks and uncertainties. We urge you to be cautious of the forward-looking statements, that such statements, which are contained in this Annual Report, reflect our current beliefs with respect to future events and involve known and unknown risks, uncertainties and other factors affecting our operations, market growth, services, products and licenses.

No assurances can be given regarding the achievement of future results, as actual results may differ materially as a result of the risks we face, and actual events may differ from the assumptions underlying the statements that have been made regarding anticipated events. Factors that may cause actual results, our performance or achievements, or industry results, to differ materially from those contemplated by such forward-looking statements include without limitation:

	·	our ability to raise capital when needed and on acceptable terms and conditions;
	·	our ability to attract and retain management, and to integrate and maintain technical information and management information systems;
	·	the intensity of competition;
	·	general economic conditions; and
	·	other factors discussed in “Risk Factors.”

All written and oral forward-looking statements made in connection with this Annual Report on Form 10-K that are attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Given the uncertainties that surround such statements, you are cautioned not to place undue reliance on such forward-looking statements.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying consolidated financial statements and related notes thereto.

Overview

Solar Wind Energy Tower Inc. (the “Company” 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.

The Company was incorporated under the laws of the State of Idaho on January 22, 1962, as Superior Mines Company. In 1964, the Company’s name was changed to Superior Silver Mines, Inc. On December 27, 2010, the Company reincorporated as a Nevada corporation. Prior to the Merger, the Company had been dormant for a number of years and had no known mineral reserves. On January 21, 2011, the Company changed its name from Superior Silver Mines, Inc. to Clean Wind Energy Tower, Inc. On March 11, 2013, the Company changed its name to Solar Wind Energy Tower Inc. On the same day, Company’s wholly-owned subsidiary, a corporation formed under the laws of the State of Delaware, Clean Wind Energy, Inc. changed its name 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.

The Company plans to design, develop, and construct large downdraft towers that use benevolent, non-toxic natural elements to generate electricity and clean water economically (“Downdraft Towers”) by integrating and synthesizing numerous proven as well as emerging technologies. In addition to constructing Downdraft Towers in the United States and abroad, the Company intends to be prepared to establish partnerships at home and abroad to propagate these systems and meet increasing global demand for clean water and electricity.

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” to” CWET” and in conjunction with the March 11, 2013 name change the Company’s quotation symbol on the Over-the-Counter Bulletin Board was changed from “CWET” to “SWET.”

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.

Plan of Operation

As a development stage company, Solar Wind has yet to earn revenues from its operations. Solar Wind is developing plans to design and construct large Downdraft Towers that use benevolent, non-toxic natural elements to generate electricity and clean water economically by integrating and synthesizing numerous proven as well as emerging technologies. In addition to constructing Downdraft Towers in the United States and abroad, the Company intends to be prepared to establish partnerships at home and abroad to propagate these systems and meet increasing global demand for clean water and electricity. From our inception in July 2010, we have completed the following milestones, among others

The Company has filed numerous patent applications with the U.S. Patent and Trademark Office to protect its intellectual property. The Company has been awarded four patents.

Patent #8120191 issued 2/21/2012 “Efficient Energy Conversion Devices & Methods”

Patent #8,517,662B2 issued 8/27/2013 “Atmospheric Energy Extraction Devices & Methods”

Patent # 8,643,204 B2 issued 2/4/2014 “Efficient Energy Conversion Devices and Methods”

This application enhances and broadens previously issued Patent #8120191

Patent #8,727,698 B1 issued 5/20/2014 “Atmospheric Energy Extraction Devices & Methods”

Executed agreements with three strategic world class companies with industry experience to assist in developing our Downdraft Tower.

Identified and executed agreements with key industry consultants.

The Company completed a comprehensive meteorological assessment and selected an area located in San Luis, Arizona to pursue the construction of their innovative green renewable energy Downdraft Tower Facility.

Critical Accounting Policies and Estimates

Financial Reporting Release No. 60, published by the SEC, recommends that all companies include a discussion of critical accounting policies used in the preparation of their financial statements. While all these significant accounting policies impact our consolidated financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our consolidated financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates.

We believe that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause a material effect on our consolidated results of operations, financial position or liquidity for the periods presented in this report.

General

The Company’s Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles, which require management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, net revenue, if any, and expenses, and the disclosure of contingent assets and liabilities.

Management bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Senior management has discussed the development, selection and disclosure of these estimates with the Board of Directors. Management believes that the accounting estimates employed and the resulting balances are reasonable; however, actual results may differ from these estimates under different assumptions or conditions. An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably possible could materially impact the consolidated financial statements. Management believes the following critical accounting policies reflect the significant estimates and assumptions used in the preparation of the Consolidated Financial Statements.

Basic and diluted net loss per share

We utilize ASC 260, “Earnings Per Share” for calculating the basic and diluted loss per share. In accordance with ASC 260, the basic and diluted loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted net loss per share is computed similar to basic net loss per share except that the denominator is adjusted for the potential dilution that could occur if stock options, warrants, and other convertible securities were exercised or converted into common stock. Potentially dilutive securities were not included in the calculation of the diluted net loss per share as their effect would be anti-dilutive.

Income taxes

The Company utilizes ASC 740 “Income Taxes” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Temporary difference between taxable income reported for financial reporting purposes primarily relate to the recognition of debt costs and stock based compensation expenses. The adoption of ASC 740 “Income Taxes” did not have a material impact on the Company’s consolidated results of operations or financial condition.

Revenue Recognition

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. The Company has not yet generated any revenue as of to date.

Fair Value of Financial Instruments

The Company adopted the provisions under FASB for Fair Value Measurements, which define fair value for accounting purposes, establishes a framework for measuring fair value and expands disclosure requirements regarding fair value measurements. The Company’s adoption of these provisions did not have a material impact on its consolidated financial statements. Fair value is defined as an exit price, which is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date. The degree of judgment utilized in measuring the fair value of assets and liabilities generally correlates to the level of pricing observability. Financial assets and liabilities with readily available, actively quoted prices or for which fair value can be measured from actively quoted prices in active markets generally have more pricing observability and require less judgment in measuring fair value. Conversely, financial assets and liabilities that are rarely traded or not quoted have less price observability and are generally measured at fair value using valuation models that require more judgment. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency of the asset, liability or market and the nature of the asset or liability. The Company has categorized its financial assets and liabilities measured at fair value into a three-level hierarchy in accordance with these provisions.

In January 2010 the FASB issued Update No. 2010-05 “Compensation—Stock Compensation—Escrowed Share Arrangements and Presumption of Compensation” (“2010-05”). 2010-05 re-asserts that the Staff of the Securities Exchange Commission (the “SEC Staff”) has stated the presumption that for certain shareholders escrowed share represent a compensatory arrangement. 2010-05 further clarifies the criteria required to be met to establish a position different from the SEC Staff’s position. The Company does not believe this pronouncement to have any material impact on its financial position, results of operations or cash flows.

Accounting for Derivatives

In 2014 and 2015, we issued convertible notes payable that contained certain conversion features which we identified as embedded derivatives. Therefore, in accordance with ASC 815-40, we reclassified the fair value of the conversion feature from equity to a liability at the date of issuance. Subsequent to the initial issuance date, we are required to adjust to fair value the derivative as an adjustment to current period operations.

New Accounting Pronouncements

There are 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 consolidated financial position, results of operations or cash flows.

RESULTS OF OPERATIONS

COMPARISON OF THE YEAR ENDED DECEMBER 31, 2015 TO THE YEAR ENDED DECEMBER 31, 2014

Revenue

The Company has not generated revenue since inception.

Operating Expenses

Research and Development

During the year ended December 31, 2015, we incurred $113,653 of research and development expenses as compared to $156,251 for the year ended December 31, 2014; a decrease of $42,598, or 27%. The Company anticipates continued research and development as products are developed dependent on funding availability.

Selling and Administrative

During the year ended December 31, 2015, we incurred $1,056,712 of selling and administrative expenses as compared to $1,870,266 for the year ended December 31, 2014; a decrease of $813,554, or 43.5%. The primary reason for the decrease was a reduction of the Company’s stock based compensation from $642,053 to $9,433 from 2014 to 2015.

Depreciation

Depreciation for the year ended December 31, 2015 was $708 as compared to $2,520 for the year ended December 31, 2014. The reduced deprecation is due to aging of our office equipment.

Other Income/Expense

Interest expense

For year ended December 31, 2015, we incurred $2,363,544 as interest expense relating to our issued notes payable as compared to $4,212,671 for the same period last year. In connection with the issuances, we incurred noncash charge to interest of $752,003 during the year ended December 31, 2015 due to the excess of fair value of the conversion feature over the note proceeds compared to $2,272,821 for the prior year. In addition, we amortized a debt discount associated with the notes of $1,310,773 for the year ended December 31, 2015 compared to $1,646,605 for the year ended December 31, 2014.

(Loss) gain on settlement of debt

In 2015, we accrued an outstanding 2016 litigation settlement due to Typenex for $90,000, subsequently paid in 2016. During the year ended December 31, 2014, we settled an outstanding debt obligation for less than our carrying value. Accordingly, we recorded a $32,985 gain on settlement of debt during the 2014 year as compared with none in the current year.

(Loss) gain from change in fair value of derivative liabilities

Each reporting period, we are required to adjust to fair value the conversion features of our convertible notes. For the years ended December 31, 2015 and 2014, we reported a (loss) gain from change in fair value of ($1,506,927) and $1,089,103, respectively.

Net Loss

As a result of the activities described above, we incurred a net loss of $5,127,108 for the year ended December 31, 2015 as compared to a net loss of $5,117,818 for the year ended December 31, 2014.

Liquidity and Capital Resources

We have financed our operations since inception primarily through private offerings of our equity securities and debt financing.

Working Capital

Our working capital deficit increased by ($2,735,810) during the year ended December 31, 2015 from a working capital deficit (current liabilities in excess of current assets) of $3,213,779 at December 31, 2014 to a working capital deficit of $5,949,589 at December 31, 2015. The increase in working capital deficit for the year ended December 31, 2015 is due to a combination of reasons, of which the significant factors include:

Cash had a net decrease from working capital by $77,545 for the year ended December 31, 2015. The most significant uses and proceeds of cash were:

Approximately $987,000 of cash consumed in operating activities;

Proceeds of $50,000 from sale of an interest in our Arizona Green Power LLC majority owned subsidiary

Proceeds of $934,000 from issuance of Convertible Promissory Notes

Of the total current assets of $11,219 as of December 31, 2015, represented by cash. Of the total current assets of $88,764 as of December 31, 2014, represented by cash.

Proceeds from the sale of an interest in our Arizona Green Power LLC subsidiary

On November 17, 2015, we 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.

Proceeds from the issuance of convertible promissory notes

During the year ended December 31, 2015, the Company received net amount of $934,000 from the issuance of Convertible Promissory Notes after paying original interest discounts (“OID”) and processing fees to the attorneys.

Cash flow analysis

Cash used in operations was $986,595 during the year ended December 31, 2015. During the year ended December 31, 2015, our primary capital needs were for operating expenses, including funds to support our business strategy, which primarily includes working capital necessary to fund operations and reducing our trade payables.

Cash used in investing activities as $74,950 comprised of payments for an option to acquire property.

Cash provided from financing activities was $984,000 comprised of sale in interest in our majority owned subsidiary of $50,000 and issuance of convertible notes payable of $934,000.

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has reported a net loss of ($5,127,108) for the year ended December 31, 2015, accumulated deficit of ($19,111,294) and total current liabilities in excess of current assets of ($5,949,589) as of December 31, 2015.

The Company is in a pre-development and does not have any revenues from operations and will be dependent on funds raise to satisfy its ongoing capital requirements for at least the next 12 months. The Company will require additional financing in order to execute its operating plan and continue as a going concern. The Company cannot predict whether this additional financing will be in the form of equity or debt, or be in another form. The Company may not be able to obtain the necessary additional capital on a timely basis, on acceptable terms, or at all. In any of these events, the Company may be unable to implement its current plans for expansion or respond to competitive pressures, any of these circumstances would have a material adverse effect on its business, prospects, financial condition and results of operations.

Management expects that global economic conditions will continue to present a challenging operating environment through 2016. To the extent permitted by working capital resources, management intends to continue making targeted investments in strategic operating and growth initiatives. Working capital management will continue to be a high priority for 2016.

While we have been able to manage our working capital needs with the current credit facilities, additional financing is required in order to meet our current and projected cash flow requirements from operations. We cannot predict whether this new financing will be in the form of equity or debt. We may not be able to obtain the necessary additional capital on a timely basis, on acceptable terms, or at all. Additional investments are being sought, but we cannot guarantee that we will be able to obtain such investments.

Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of our common stock and the downturn in the U.S. stock and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Further, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. If additional financing is not available or is not available on acceptable terms, we will have to curtail our operations.

Our independent registered public accounting firm’s report dated March 2, 2017 on our December 31, 2015 consolidated financial statements included in this Form 10-K states that our difficulty in generating sufficient cash flow to meet our obligations and sustain operations raise substantial doubts about the our ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result should the Company be unable to continue as a going concern.

Inflation

We do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could adversely affect our business, financial condition and results of operations.

Off-Balance sheet Arrangements

We do not maintain off-balance sheet arrangements nor do we participate in any non-exchange traded contracts requiring fair value accounting treatment other than the operating leases as disclosed in Item 2, Properties and Notes to Consolidated Financial Statements (Note 13).

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

This item is not applicable to smaller reporting companies.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

See the Financial Statements and Notes thereto commencing on Page F-1.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company has carried out an evaluation under the supervision and with the participation of management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this report. The Company’s disclosure controls and procedures are designed so that information required to be disclosed in the Company’s reports filed under the Exchange Act, such as this Annual Report on Form 10-K, is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. The Company’s disclosure controls and procedures are also intended to ensure that such information is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives, and management necessarily is required to use its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2015, the Company’s disclosure controls and procedures were not effective to provide reasonable assurance that information required to be disclosed in the reports that the Corporation files and submits under the Exchange Act is recorded, processed, summarized and reported as and when required. This determination was due to the lack of segregation of duties and the Company’s failure to implement the necessary internal controls.

Notwithstanding the existence of material weaknesses, management concluded that the financial statements in this Annual Report on Form 10-K fairly present in all material respects the Company’s financial position, results of operations and statement of cash flows for the periods and dates presented.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act as a process designed by, or under the supervision of, a company’s principal executive and principal financial officers and effected by a company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Our internal control over financial reporting includes those policies and procedures that:

	·	pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
	·	provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that our receipts and expenditures are being made only in accordance with authorization of management and directors; and
	·	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2014. This assessment was based on criteria established in the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our assessment, management concluded that our internal control over financial reporting was not effective as of December 31, 2015.

These control deficiencies could result in a misstatement of account balances that would result in a reasonable possibility that a material misstatement to our financial statements may not be prevented or detected on a timely basis. Accordingly, we have determined that these control deficiencies as described above together constitute a material weakness.

In light of this material weakness, we performed additional analyses and procedures in order to conclude that our financial statements for the year ended December 31, 2015 included in this Annual Report on Form 10-K were fairly stated in accordance with GAAP. Accordingly, management believes that despite our material weaknesses, our consolidated financial statements for the year ended December 31, 2015 are fairly stated, in all material respects, in accordance with GAAP.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management’s report in this Annual Report on Form 10-K.

Plan for Remediation of Material Weaknesses

To mitigate the current limited resources and limited employees, we rely heavily on direct management oversight of transactions, along with the use of legal and accounting professionals. As we grow, we expect to increase our number of employees and engage outsourced accounting professionals, which will enable us to implement adequate segregation of duties within the internal control framework.

Limitations on Effectiveness of Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Group have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or 15d-15 under the Exchange Act that occurred during the quarter ended December 31, 2015 that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

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.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The following table sets forth the names of the Company’s directors, executive officers, and key employees, and their positions with the Company, as of December 31, 2015:

Name	Age	Position(s)	Term of Office (Directors)
Ronald W. Pickett*	68	President, Chief Executive Officer, Chairman and Principal Accounting Officer	Annual meeting
Stephen Sadle*	70	Chief Operating Officer and Director	Annual Meeting
Robert P. Crabb*	68	Secretary, Chief Marketing Officer and Director	Annual meeting
H. James Magnuson	62	Director	Annual meeting
Arthur P. Dammarell	71	Director	Annual meeting

______________

Appointed pursuant to the terms of the Merger Agreement.

None of the events listed in Item 401(f) of Regulation S-K has occurred during the past ten years and that is material to the evaluation of the ability or integrity of any of the Company’s directors, director nominees or executive officers.

The following is a brief account of the business experience during the past five years (and, in some instances, for prior years) of each director and executive officer.

Ronald W. Pickett, President and Chief Executive Officer, Chairman and Principal Accounting Officer

Mr. Pickett joined the Company on December 29, 2010 in connection with the Merger. Mr. Pickett brings over 40 years of construction, development and innovative technology skills and expertise to the team. He has founded numerous companies from startup and including three from inception through the public ownership process.

Mr. Pickett also has an understanding of government, legislative, and permitting practices. Since December, 2007, Mr. Pickett has been an independent real estate development consultant. Until March, 2008, Mr. Pickett was a director of, and until December, 2007, Mr. Pickett was President and CEO of, Telkonet, Inc. (“Telkonet”) (OTCBB: TKOI.OB), a company that develops, manufactures and sells energy efficiency and smart grid networking technology. Until January, 2009, Mr. Pickett was President and a director of Microwave Systems Technology Inc. (“Microwave Systems”), a company that provided Internet/phone/video/wifi services in the New York City area.

Until February, 2010, Mr. Pickett was Vice Chairman of Geeks on Call Holdings, Inc. (“Geeks on Call”) (PINK: GOCH.PK), a company that provided quick-response, on-site computer solutions and remote/telephone technical support. We took into account his prior experience in operating public and private enterprises in the development and construction of alternative energy projects and believe Mr. Pickett’s past experience in these fields gives him the qualifications and skill to serve as a director.

Stephen Sadle, Chief Operating Officer, Director

Mr. Sadle joined the Company on December 29, 2010 in connection with the Merger. Mr. Sadle is an entrepreneur with over 40 years of diversified experience in management, contracting and heavy infrastructure development, interfacing with both the government and private sectors. He is experienced in Web-based vertical extranet applications and has developed operating extranets in the construction and transportation industries. Mr. Sadle served as co-founder, Chief Operating Officer and Director of Telkonet. He was also founder and president of a successful local construction company and was awarded the Small Businessman of the Year Award for the Washington Metropolitan Area. Since July, 2007, Mr. Sadle has been an independent real estate consultant. From 2000 until July, 2007, Mr. Sadle was Senior Vice President and a director of Telkonet. We took into account his prior work with infrastructure construction and development and believe Mr. Sadle’s past experience in these fields gives him the qualifications and skill to serve as a Chief Operating Officer.

Robert P. Crabb, Secretary and Chief Marketing Officer, Director

Mr. Crabb joined the Company on December 29, 2010 in connection with the Merger. Mr. Crabb has over 40 years of public and private sector experience including 15years in the insurance industry including, sales and sales management with MetLife and independent property and casualty brokerage. His entrepreneurial expertise includes marketing consulting, corporate management and commercial/residential real estate development. He has served in a corporate governance capacity as secretary to a number of start-up companies. Since September, 2007, Mr. Crabb has been an independent real estate development consultant. Until September, 2007, Mr. Crabb was Secretary of Telkonet, until February, 2009, Mr. Crabb was Secretary of Microwave Systems, and until October, 2009, Mr. Crabb was Secretary of Geeks on Call. The Company believes Mr. Crabb’s past experience in corporate compliance gives him the qualifications and skill to serve as a director.

H. James Magnuson, Director

Mr. Magnuson has served as a member of the Company’s Board of Directors since 2007. Mr. Magnuson resigned as the Company’s Vice President effective December 29, 2010 pursuant to the terms of the Merger Agreement. Since 1979, Mr. Magnuson has been an attorney engaged in the private practice of law in Coeur d’Alene, Idaho, and received his BS degree from the University of Idaho and his Juris Doctorate from Boston College. The Company believes Mr. Magnuson’s background in providing legal services gives him the qualifications and skill to serve as a director.

Arthur P. Dammarell, Director

Mr. Dammarell has served as a member of the Company’s Board of Directors since 2006. From 2000 through March 2006, Mr. Dammarell was the principal financial officer, treasurer and a director of Nova Oil, Inc. (now Nova Biosource Fuels, Inc.). He received his BA degree in Urban and Regional Planning from Eastern Washington University. The Company took into account his prior work in both public and private organizations providing consulting on development project financing and believes Mr. Dammarell’s past experience in these fields gives him the qualifications and skill to serve as a director.

Section16(a) Beneficial Ownership Reporting

Based solely upon a review of the copies of the forms furnished to the Company and written representations from officers and directors of the Company that no other reports were required, during the year ended December 31, 2015, all filing requirements under Section 16(a) of the Exchange Act applicable to its officers, directors and greater than 10% beneficial owners were complied with on a timely basis.

Code of Ethics

The Company has adopted a Code of Conduct and Ethics that applies to all directors, officers and employees of the Company, including its principal executive officer, principal financial officer and principal accounting officer. The Company does not have a separately-designated standing audit committee or a committee performing similar functions. Because the Company does not have an audit committee, the company has not yet determined whether any of its directors qualifies as an audit committee financial expert. Currently, the Company Board of Directors review the Company’s 10-K and financial statements.

ITEM 11. EXECUTIVE COMPENSATION

The following table and related footnotes show the compensation incurred and or paid during the fiscal years ended December 31, 2015 and 2014, to all individuals serving as the Company’s principal executive officer or acting in a similar capacity during the last completed fiscal year. No other executive officers received compensation in excess of $100,000 for such fiscal years.

Summary Compensation Table

Name and principal position

Year

Salary
($)

Bonus
($)

Stock awards
($)

Non-equity incentive plan compensation

Nonqualified deferred compensation earnings ($)

All other Compensation
($)

Total ($)

Ronald W. Pickett,

2015

200,000

⁽²⁾

–

200,000

President, Chief Executive Officer, Chairman and Principal Accounting officer ⁽¹⁾

2014

200,000

⁽²⁾

–

200,000

Stephen L. Sadle

2015

175,000

⁽⁴⁾

–

175,000

Chief Operating Officer ⁽³⁾

2014

175,000

⁽⁴⁾

–

175,000

______________

	(1)	Appointed as President, Chief Executive Officer and Chairman effective December 29, 2010 pursuant to the terms of the Merger Agreement.

	(2)	Included in the amount is $71,085 and $29,153 of accrued salaries for Mr. Pickett for the years ended December 31, 2015 and 2014, respectively. In addition, the amount paid during the years ended December 31, 2015 and 2014 amounted to $140,769 and $192,300, respectively; of which $10,000 was paid in 16,667,000 shares of the Company’s common stock.

	(3)	Appointed as Chief Operating Officer effective December 29, 2010 pursuant to the terms of the Merger Agreement.

	(4)	Included in the amount is $41,380 and $27,098 of accrued salaries for Mr. Sadle for the years ended December 31, 2015 and 2014, respectively. In addition, the amount paid during the years ended December 31, 2014 and 2013 amounted to $131,154 and $168,300, respectively; of which $10,000 was paid in 16,667,000 shares of the Company’s common stock.

Director Compensation Table

The following table and related footnotes show the compensation incurred and or paid during the fiscal year ended December 31, 2015 to the Company’s directors for their service as directors.

Name	Fees earned or paid in cash ($)			Stock awards ($)		Option awards ($)		Non-equity incentive plan compensation ($)		Nonqualified deferred compensation earnings ($)		All other compensation ($)		Total ($)
Robert P. Crabb ⁽¹⁾	$	60,000	(2)	$	0	$	0	$	0	$	0	$	0	$	60,000
H. James Magnuson	$	0		$	0	$	0	$	0	$	0	$	0	$	0
Arthur P. Dammarell	$	0		$	0	$	0	$	0	$	0	$	0	$	0

______________

	(1)	Appointed as director effective December 29, 2010 pursuant to the terms of the Merger Agreement.
	(2)	The Company has accrued salary for Mr. Crabb for his services as an executive officer of the Company for the year ended December 31, 2015 and 2014 in the amount of $46,699 and $60,000, respectively

Narrative to Summary Compensation Table and Director Compensation Table

During the year ended December 31, 2015, the Company provided no stock options, warrants, or stock appreciation rights. On December 29, 2010, pursuant to the Merger, Solar Wind Energy, Inc. became a wholly-owned subsidiary of the Company. The Company has employment agreements with its officers as described below. The Company has accrued salaries for all its executives from inception through December 31, 2015 and the balance amounted to $227,015 at December 31, 2015.

No officer or director has outstanding unexercised options, stock that has not vested, or equity incentive plan awards. The Company maintains no employee benefits plans.

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) months’ 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) months’ 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.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Security ownership of certain beneficial owners

The following table sets forth, as of February 24, 2017, the beneficial ownership of our common stock by:

(1)

each person or entity who is known by us to beneficially own more than five percent (5%) of our common stock;

(2)

each of our directors;

(3)

each Named Executive Officer; and

(4)

all of our directors and executive officers as a group.

Set forth below is certain information, as of February 24, 2017, with respect to each person (including any group as that term is used in Section 13(d)(3) of the Exchange Act) who is known to the Company to be the beneficial owner of more than five percent of the Company’s Common Stock. Unless otherwise indicated, the address of each beneficial owner is c/o Solar Wind Energy Tower Inc., 1997 Annapolis Exchange Parkway, Suite 300, Annapolis, Maryland 21401 and the nature of beneficial ownership is direct.

Name of Beneficial Owner	Title of Beneficial Owner	Amount and Nature of Beneficial Ownership			Percent of Class ⁽¹⁾
Ronald W. Pickett	President, Chief Executive Officer and Chairman		2,972,057,580			24	%
Stephen Sadle	Chief Operating Officer and Director		2,101,123,944			17	%
Robert P. Crabb	Secretary, Chief Marketing Officer and Director		339,216,111			3	%
H. James Magnuson	Director		1,811,114	⁽²⁾⁾		*
Arthur P. Dammarell	Director		625,500			*
Directors and executive officers as a group (5 persons)	---		5,414,834,249			45	%

______________

* Less than 1%.

	(1)	Based upon 12,132,794,404 shares of Common Stock outstanding as of February 24, 2017.

	(2)	Includes 1,368,891 shares held in trust for the benefit of Mr. Magnuson’s relatives. As trustee, Mr. Magnuson has the power to vote such shares, but disclaims any beneficial ownership in the shares.

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.

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.

On January 31, 2013, the Company entered into Securities Purchase Agreements with six accredited investors (the “2013 Investors”) providing for the sale by the Company to the 2013 Investors of Convertible Debentures (the "2013 Notes") in the aggregate amount of $239,000. In addition, as previously disclosed in the Form 8-K Current Report filed on January 3, 2013, Ronald W. Pickett, Stephen L. Sadle and Robert P. Crabb, officers and directors of the Company, converted accrued salary in the aggregate amount of $280,000 into the 2013 Notes resulting in a total offering of $519,000. The financing closed on January 31, 2013.

The 2013 Notes matured December 31, 2014 (the "Maturity Date") and interest associated with the 2013 Notes is 8% per annum, which is payable on the Maturity Date. The 2013 Notes are convertible into shares of common stock of the Company, at the 2013 Investors’ option, at a conversion price of $0.015.

As of the date of the 2013 Notes, the Company is obligated on the 2013 Notes issued to the holders in connection with the offering. The 2013 Notes are debt obligations arising other than in the ordinary course of business, which constitute direct financial obligations of the Company.

The Company has accrued interest expense of $67,233 as of December 31, 2015.

Transactions with Related Persons

Except as set forth below, since January 1, 2010, there has not been, nor is there currently proposed, any transaction or series of similar transactions to which the Company was or will be a party in which the amount involved exceeds the lesser of $120,000 or one percent of the average of the Company’s total assets at year end for the last two completed fiscal years; and in which any director, executive officer, other stockholders of more than 5% of the Company’s Common Stock or any member of their immediate family had or will have a direct or indirect material interest.

Indemnification Agreements

On March 30, 2011, the Company entered into Indemnification Agreements with directors Thomas Smith, H. James Magnuson and Arthur P. Dammarell, and executive Ronald Pickett, President and Chief Executive Officer and Chief Financial Officer.

Employment Contracts and Termination of Employment and Change-In-Control Arrangements

On December 29, 2010, pursuant to the Merger, Solar Wind Energy (f/k/a Clean Wind Energy) became a wholly-owned subsidiary of the Company. Solar Wind Energy (f/k/a Clean Wind Energy) 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.

The Indemnification Agreements provide that the Company will indemnify the Company's officers and directors, to the fullest extent permitted by law, relating to, resulting from or arising out of any threatened, pending or completed action, suit or proceeding, or any inquiry or investigation by reason of the fact that such officer or director (i) is or was a director, officer, employee or agent of the Company or (ii) is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful.

In addition, the Indemnification Agreements provide that the Company will make an advance payment of expenses to any officer or director who has entered into an Indemnification Agreement, in order to cover a claim relating to any fact or occurrence arising from or relating to events or occurrences specified in this paragraph, subject to receipt of an undertaking by or on behalf of such officer or director to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Company as authorized under this Agreement.

Director Independence

We believe that director Arthur P. Dammarell is “independent” as that term is defined in Rule 303A.02 of the NYSE Listed Company Manual. For such director there were no transactions, relationships or arrangements not disclosed in Item 13 above, that were considered by the Board of Directors under the applicable independence definitions in determining that the director is independent.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

The aggregate fees billed to us by RBSM LLP, our independent registered public accounting firm for professional services rendered during the fiscal years ended December 31, 2015 and 2014 are set forth below.

(1) Audit Fees

RBSM LLP (“RBSM”) has billed us audit fees of $54,104 and $50,000 during 2015 and 2014, respectively. These fees would relate to the audit of our annual consolidated financial statements and the review of the interim consolidated financial statements and services in connection with statutory and regulatory filings or engagements.

(2) Audit-Related Fees

RBSM billed us audit-related fees in the aggregate amount of $4,500 and $13,000 during 2015 and 2014, respectively. These fees relate to the review of the Form 8-K and review of the Company’s registration statements filed with the SEC.

(3) Tax Fees

RBSM billed us for professional services relating to tax compliance, tax planning, and tax advice in the amount of $5,000 and $12,500 during 2015 and 2014, respectively.

(4) All Other Fees

No fees of this sort were billed by RBSM during 2015 and 2014.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a)	Documents filed as part of this report.

	(1)	Financial Statements. The following consolidated financial statements are included in Part II, Item 8 of this Annual Report on Form 10-K:

		Report of Independent Registered Public Accounting Firm

		Consolidated Balance Sheet as of December 31, 2015 and 2014

		Consolidated Statements of Operations for the Years ended December 31, 2015 and 2014.

		Consolidated Statements of Changes in Stockholders’ Deficit for the two years ended December 31, 2015

		Consolidated Statements of Cash Flows for Years ended December 31, 2015 and 2014

		Notes to Consolidated Financial Statements

	(2)	Financial Statement Schedules.

		Additional Schedules are omitted as the required information is inapplicable or the information is presented in the financial statements or related notes.

	(3)	Exhibits required to be filed by Item 601 of Regulation S-K.

Exhibits Index

Exhibit		Description

2.1		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)
2.2		Plan of Domestication of Superior Silver Mines, Inc., dated December 21, 2010 (1)
2.3		Nevada Articles of Domestication of Superior Silver Mines, Inc., dated December 27, 2010 (1)
2.4		Idaho Statement of Domestication of Superior Silver Mines, Inc., dated December 22, 2010 (1)
2.5 2.6		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)
3.1		Articles of Incorporation of Clean Wind Energy Tower, Inc. (1)
3.2		Amended Bylaws of Clean Wind Energy Tower, Inc. (3)
4.1		Form of Common Stock Certificate (4)
4.2		Form of Securities Purchase Agreement entered with the 2013 Investors (5)
4.3		Form of Convertible Debentures (5)
10.1		Letter Agreement between Clean Wind Energy, Inc. and Source Capital Group, Inc., dated November 22, 2010 (1)
10.2		Deed of Lease, dated December 1, 2010, by and between CKP One, LLC and Clean Wind Energy, Inc. (1)
10.3		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)
10.4		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)
10.5		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)
10.6		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)
10.7		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)
10.8		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)
10.9		Executive Employment Agreement, dated September 22, 2010, by and between Clean Wind Energy, Inc. and Ownkar Persaud, and Amendment dated November 22, 2010 (1)
10.10		Form of Director and Officer Indemnification Agreement (4)
14.1		Code of Business Conduct and Ethics
21.1		Subsidiaries of the Registrant (4)
31.1		Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Ronald W. Pickett
31.2		Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Ronald W. Pickett
32.1		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
32.2		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

101.INS*		XBRL Instance Document
101.SCH*		XBRL Schema Document
101.CAL*		XBRL Calculation Linkbase Document
101.LAB*		XBRL Label Linkbase Document
101.PRE*		XBRL Presentation Linkbase Document
101.DEF*		XBRL Definition Linkbase Document

	(1)	Filed with the registrant's Form 8-K filed with the Securities and Exchange Commission on December 30, 2010 and incorporated herein by reference.
	(2)	Filed with the registrant's Form 8-K filed with the Securities and Exchange Commission on January 21, 2011 and incorporated herein by reference.
	(3)	Filed with the registrant's Form 8-K filed with the Securities and Exchange Commission on December 28, 2010 and incorporated herein by reference.
	(4)	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.
	(5)	Filed with the registrant's Form 8-K filed with the Securities and Exchange Commission on February 13, 2013 and incorporated herein by reference.
	(6)	Filed with the registrant's Form 8-K filed with the Securities and Exchange Commission on March 11, 2013 and incorporated herein by reference.
	*	To be filed by amendment

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.

	SOLAR WIND ENERGY TOWER INC. (f/k/a CLEAN WIND ENERGY TOWER, INC.)

Dated: March 2, 2017	By:	/s/ Ronald W. Pickett
		Name: Ronald W. Pickett
		President, Chief Executive Officer and Principal Accounting Officer

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	By:	/s/ Ronald W. Pickett
		Name: Ronald W. Pickett
		President, Chief Executive Officer (PEO), Director

Dated: March 2, 2017	By:	/s/ Robert P. Crabb
		Name: Robert P. Crabb
		Director

Dated: March 2, 2017	By:	/s/ Stephen L. Sadle
		Name: Stephen L. Sadle
		Director

Dated: March 2, 2017	By:	/s/ H. James Magnuson
		Name: H. James Magnuson
		Director

Dated: March 2, 2017	By:	/s/ Arthur P. Dammarell
		Name: Arthur P. Dammarell
		Director

Solar Wind Energy Tower Inc.

Index to Consolidated Financial Statements

		Page

Report of Independent Registered Public Accounting Firm		F-2

Consolidated Balance Sheets as of December 31, 2015 and 2014		F-3

Consolidated Statements of Operations for the years ended December 31, 2015 and 2014		F-4

Consolidated Statements of Changes in Stockholders’ Deficit for the two years ended December 31, 2015		F-5

Consolidated Statements of Cash Flows for the years ended December 31, 2015 and 2014		F-7

Notes to Consolidated Financial Statements		F-8 to F-29

F-1

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

F-2

SOLAR WIND ENERGY TOWER, INC.

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2015 AND 2014

	2015			2014
ASSETS
Current assets:
Cash	$	11,219		$	88,764
Total current assets		11,219			88,764

Property and equipment, net		1,180			1,888

Other assets:
Deposits		204,209			129,259

Total assets	$	216,608		$	219,911

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	354,918		$	200,391
Accrued liabilities and expenses		498,212			369,897
Advances from stockholders/officers		170,000			170,000
Settlement payable		90,000			30,000
Notes payable, net of unamortized debt discount of $407 and $-0-, respectively		347,863			268,270
Convertible notes payable, net of unamortized debt discount of $351,690 and $650,053, respectively		727,696			599,457
Convertible notes payable, related party		280,000			280,000
Derivative liabilities		3,492,119			1,384,528
Total current liabilities		5,960,808			3,302,543

Long term debt:
Notes payable-related party, net of unamortized debt discount of $0 and $162,138, respectively		–			222,862
Notes payable, net of unamortized debt discount of $-0- and $1,945, respectively		–			78,055
Total liabilities		5,960,808			3,603,460

Stockholders' deficit:
Preferred stock, par value $0.0001 per share; 10,000,000 shares authorized
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		39			–
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		362,825			62,675
Common stock to be issued		420,000			420,000
Additional paid in capital		12,601,800			10,119,764
Accumulated deficit		(19,111,294	)		(13,984,186	)
Stockholders' deficit attributable to Solar Wind Energy Tower, Inc.		(5,726,630	)		(3,381,747	)
Non-controlling interest		(17,570	)		(1,802	)
Total stockholders' deficit		(5,744,200	)		(3,383,549	)

Total liabilities and stockholders' deficit	$	216,608		$	219,911

See the accompanying notes to the consolidated financial statements

F-3

SOLAR WIND ENERGY TOWER, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year ended December 31,
	2015			2014
OPERATING EXPENSES:
Research and development	$	113,653		$	156,251
Selling, general and administrative		1,056,712			1,870,266
Depreciation		708			2,520
Total operating expenses		1,171,073			2,029,037

Loss from operations		(1,171,073	)		(2,029,037	)

Other income (expense):
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

F-4

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

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

–

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

F-5

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

F-6

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

F-7

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.

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.

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.

F-8

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.

F-9

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.

F-10

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.

F-11

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.

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.

F-12

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

F-13

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		–

F-14

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.

F-15

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.

F-16

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.

F-17

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.

F-18

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.

F-19

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.

F-20

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

F-21

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.

F-22

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

Litigation

F-23

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.

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.

F-24

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.

F-25

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.

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.

F-26

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.

F-27

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.

F-28

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.

F-29

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 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 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 January 2017, the Company issued 125,000,000 shares of its common stock in payment of $30,000 accrued officer compensation.

F-30

SOLAR WIND ENERGY TOWER, INC. 10-K