U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September
30, 2014
OR
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 Issuer 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 Pkwy., Suite 300, Annapolis, MD |
21401 |
(Address of Principal Executive Offices) |
(Zip Code) |
(410) 972 - 4713
(Registrant’s Telephone Number, Including
Area Code)
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes x No o
Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files). Yes x
No o
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. (Check one):
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. Yes o No x
Indicate the number of shares outstanding
of each of the issuer's classes of common equity, as of the latest practicable date: 533,326,466 shares of Common Stock ($0.0001
par value) as of October 28, 2014.
Solar Wind Energy Tower, Inc.
FORM 10-Q for the Quarter Ended September
30, 2014
Index
|
Page |
|
|
PART I. FINANCIAL INFORMATION |
3 |
|
|
Item 1. Financial Statements (Unaudited) |
3 |
|
|
Condensed Consolidated Balance Sheets:
September 30, 2014 (unaudited) and December 31, 2013 |
3 |
|
|
Condensed Consolidated Statements of Operations:
For the three and nine months ended September 30, 2014 and 2013
(unaudited) |
4 |
|
|
Condensed Consolidated Statement of Stockholders’ Deficit
For the nine months ended September 30, 2014 (unaudited) |
5 |
|
|
Condensed Consolidated Statements of Cash Flows:
For the nine months ended September 30, 2014 and 2013 (unaudited) |
6 |
|
|
Notes to Condensed Consolidated Financial Statements:
September 30, 2014 (Unaudited) |
7 |
|
|
Item 2. Management’s Discussion and Analysis |
23 |
|
|
Item 3. Quantitative and Qualitative Disclosures About Material Risk |
30 |
|
|
Item 4. Controls and Procedures |
30 |
|
|
PART II. OTHER INFORMATION |
31 |
|
|
Item 1. Legal Proceedings |
31 |
|
|
Item 1A. Risk Factors |
32 |
|
|
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
32 |
|
|
Item 3. Defaults Upon Senior Securities |
32 |
|
|
Item 4. Mine Safety Disclosures |
32 |
|
|
Item 5. Other Information. |
32 |
|
|
Item 6. Exhibits |
32 |
|
|
Signatures |
34 |
PART I. FINANCIAL INFORMATION
Item 1. Financial
Statements.
SOLAR WIND ENERGY TOWER, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| |
September 30, | | |
December 31, | |
| |
2014 | | |
2013 | |
| |
| (unaudited) | | |
| | |
ASSETS | |
| | | |
| | |
Current assets: | |
| | | |
| | |
Cash | |
$ | 57,385 | | |
$ | 61,758 | |
Prepaid expenses | |
| 17,116 | | |
| – | |
Capitalized financing costs, net | |
| 126,386 | | |
| – | |
Total current assets | |
| 200,887 | | |
| 61,758 | |
| |
| | | |
| | |
Property and equipment, net | |
| 2,065 | | |
| 2,284 | |
| |
| | | |
| | |
Other assets: | |
| | | |
| | |
Capitalized financing costs, net | |
| 69,553 | | |
| – | |
Deposits | |
| 4,259 | | |
| 2,300 | |
| |
| | | |
| | |
Total assets | |
$ | 276,764 | | |
$ | 66,342 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS' DEFICIT | |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accounts payable | |
$ | 150,801 | | |
$ | 171,245 | |
Accrued liabilities and expenses | |
| 334,361 | | |
| 737,964 | |
Advances from stockholders/officers | |
| 170,000 | | |
| 170,000 | |
Settlement payable | |
| 75,000 | | |
| – | |
Notes payable | |
| 268,270 | | |
| 358,770 | |
Convertible notes payable, net of unamortized debt discount of $702,700 and $353,129, respectively | |
| 560,300 | | |
| 278,266 | |
Convertible notes payable, related party, net of unamortized debt discount of $33,031 and $131,047, respectively | |
| 246,969 | | |
| 148,953 | |
Derivative liabilities | |
| 1,647,090 | | |
| 689,093 | |
Total current liabilities | |
| 3,452,791 | | |
| 2,554,291 | |
| |
| | | |
| | |
Long term debt: | |
| | | |
| | |
Notes payable, related party | |
| 385,000 | | |
| – | |
Notes payable | |
| 80,000 | | |
| – | |
Convertible notes payable, net of unamortized debt discount of $103,315 | |
| – | | |
| 24,456 | |
Total liabilities | |
| 3,917,791 | | |
| 2,578,747 | |
| |
| | | |
| | |
Stockholders' deficit: | |
| | | |
| | |
Preferred stock, par value $0.0001 per share; 10,000,000 shares authorized; none issued and outstanding as of September 30, 2014 and December 31, 2013 | |
| – | | |
| – | |
Common stock, par value $0.0001 per share; 900,000,000 and 500,000,000 shares authorized as of September 30, 2014 and December 31, 2013, respectively; 524,147,555 and 370,728,168 shares issued and outstanding as of September 30, 2014 and December 31, 2013, respectively | |
| 52,415 | | |
| 37,073 | |
Common stock to be issued | |
| 420,000 | | |
| 420,000 | |
Additional paid in capital | |
| 8,807,574 | | |
| 5,896,890 | |
Accumulated deficit | |
| (12,919,876 | ) | |
| (8,866,368 | ) |
Stockholders' deficit attributable to Solar Wind Energy Tower, Inc. | |
| (3,639,887 | ) | |
| (2,512,405 | ) |
Non-controlling interest | |
| (1,140 | ) | |
| – | |
Total stockholders' deficit | |
| (3,641,027 | ) | |
| (2,512,405 | ) |
| |
| | | |
| | |
Total liabilities and stockholders' deficit | |
$ | 276,764 | | |
$ | 66,342 | |
See the accompanying notes to the unaudited condensed consolidated financial statements
SOLAR WIND ENERGY TOWER, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| |
Three months ended September 30, | | |
Nine months ended September 30, | |
| |
2014 | | |
2013 | | |
2014 | | |
2013 | |
OPERATING EXPENSES: | |
| | | |
| | | |
| | | |
| | |
Research and development | |
$ | 82,482 | | |
$ | 15,589 | | |
$ | 92,705 | | |
$ | 37,873 | |
Selling, general and administrative | |
| 434,818 | | |
| 409,069 | | |
| 1,367,878 | | |
| 1,288,101 | |
Depreciation | |
| 367 | | |
| 1,120 | | |
| 2,343 | | |
| 3,360 | |
Total operating expenses | |
| 517,667 | | |
| 425,778 | | |
| 1,462,926 | | |
| 1,329,334 | |
| |
| | | |
| | | |
| | | |
| | |
Loss from operations | |
| (517,667 | ) | |
| (425,778 | ) | |
| (1,462,926 | ) | |
| (1,329,334 | ) |
| |
| | | |
| | | |
| | | |
| | |
Other income (expense): | |
| | | |
| | | |
| | | |
| | |
Interest expense | |
| (555,300 | ) | |
| (287,938 | ) | |
| (3,161,325 | ) | |
| (862,927 | ) |
Gain on settlement of debt | |
| 32,985 | | |
| – | | |
| 32,985 | | |
| – | |
Gain on change in fair value of derivative liabilities | |
| 1,013,068 | | |
| 277,568 | | |
| 536,618 | | |
| 359,285 | |
| |
| | | |
| | | |
| | | |
| | |
Loss before provision for income taxes | |
| (26,914 | ) | |
| (436,148 | ) | |
| (4,054,648 | ) | |
| (1,832,976 | ) |
| |
| | | |
| | | |
| | | |
| | |
Provision for income taxes (benefit) | |
| – | | |
| – | | |
| – | | |
| – | |
| |
| | | |
| | | |
| | | |
| | |
Net loss | |
| (26,914 | ) | |
| (436,148 | ) | |
| (4,054,648 | ) | |
| (1,832,976 | ) |
| |
| | | |
| | | |
| | | |
| | |
Non-controlling interest | |
| 1,111 | | |
| – | | |
| 1,140 | | |
| – | |
| |
| | | |
| | | |
| | | |
| | |
NET LOSS ATTRIBUTABLE TO SOLAR WIND ENERGY TOWER, INC. | |
$ | (25,803 | ) | |
$ | (436,148 | ) | |
$ | (4,053,508 | ) | |
$ | (1,832,976 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net loss per common share, basic and diluted | |
$ | (0.00 | ) | |
$ | (0.00 | ) | |
$ | (0.01 | ) | |
$ | (0.01 | ) |
| |
| | | |
| | | |
| | | |
| | |
Weighted average number of common shares outstanding, basic and diluted | |
| 522,749,813 | | |
| 306,914,244 | | |
| 475,426,105 | | |
| 296,829,526 | |
See the accompanying notes to the unaudited condensed consolidated financial statements
SOLAR WIND ENERGY TOWER, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
NINE MONTHS ENDED SEPTEMBER 30, 2014
(unaudited)
| |
Preferred stock | | |
Common stock | | |
Common to be Issued | | |
Additional Paid In | | |
Accumulated | | |
Non controlling | | |
| |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Interest | | |
Total | |
Balance, January 1, 2014 | |
| – | | |
$ | – | | |
| 370,728,168 | | |
$ | 37,073 | | |
| 6,000,000 | | |
$ | 420,000 | | |
$ | 5,896,890 | | |
$ | (8,866,368 | ) | |
$ | – | | |
$ | (2,512,405 | ) |
Shares issued in settlement of debt | |
| – | | |
| – | | |
| 145,794,387 | | |
| 14,580 | | |
| – | | |
| – | | |
| 1,764,964 | | |
| – | | |
| – | | |
| 1,779,544 | |
Shares issued for consulting services rendered | |
| – | | |
| – | | |
| 500,000 | | |
| 50 | | |
| – | | |
| – | | |
| 2,200 | | |
| – | | |
| – | | |
| 2,250 | |
Sale of common stock | |
| – | | |
| – | | |
| 7,125,000 | | |
| 712 | | |
| – | | |
| – | | |
| 24,288 | | |
| – | | |
| – | | |
| 25,000 | |
Reclassify fair value of warrants from equity to liability | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| (13,202 | ) | |
| – | | |
| – | | |
| (13,202 | ) |
Fair value of warrants issued in connection with notes payable | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 253,119 | | |
| – | | |
| – | | |
| 253,119 | |
Fair value of warrants issued as director compensation | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 33,181 | | |
| – | | |
| – | | |
| 33,181 | |
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 | |
Stock based compensation | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 530,259 | | |
| – | | |
| – | | |
| 530,259 | |
Net loss | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| (4,053,508 | ) | |
| (1,140 | ) | |
| (4,054,648 | ) |
Balance, September 30, 2014 | |
| – | | |
$ | – | | |
| 524,147,555 | | |
$ | 52,415 | | |
| 6,000,000 | | |
$ | 420,000 | | |
$ | 8,807,574 | | |
$ | (12,919,876 | ) | |
$ | (1,140 | ) | |
$ | (3,641,027 | ) |
See the accompanying notes to the unaudited condensed consolidated financial statements
SOLAR WIND ENERGY TOWER, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| |
For the nine months ended September 30, | |
| |
2014 | | |
2013 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |
| | | |
| | |
Net loss | |
$ | (4,054,648 | ) | |
$ | (1,832,976 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | |
| | | |
| | |
Depreciation | |
| 2,343 | | |
| 3,360 | |
Amortization of debt discounts | |
| 1,053,063 | | |
| 493,437 | |
Amortization of financing costs | |
| 57,180 | | |
| 26,000 | |
Non-cash interest | |
| 1,895,183 | | |
| 232,489 | |
Stock based compensation | |
| 532,510 | | |
| 435,546 | |
Fair value of warrants issued in connection with services and notes
payable, respectively | |
| 33,181 | | |
| 43,568 | |
Gain on settlement of debt | |
| (32,985 | ) | |
| – | |
Gain from change in fair value of derivative liabilities | |
| (536,618 | ) | |
| (359,285 | ) |
Changes in operating assets and liabilities: | |
| | | |
| | |
Advances from stockholders/officers | |
| – | | |
| (15,000 | ) |
Prepaid expenses | |
| (17,116 | ) | |
| – | |
Settlement payable | |
| (15,000 | ) | |
| – | |
Accounts payable and accrued expenses | |
| 91,792 | | |
| 171,106 | |
Net cash used in operating activates | |
| (991,115 | ) | |
| (801,755 | ) |
| |
| | | |
| | |
CASH FLOWS FROM INVESTING ACTIVITIES: | |
| | | |
| | |
Purchase of property and equipment | |
| (2,124 | ) | |
| – | |
Payment of long term deposit | |
| (2,700 | ) | |
| – | |
Net cash used in investing activities | |
| (4,824 | ) | |
| – | |
| |
| | | |
| | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |
| | | |
| | |
Proceeds from sale of common stock | |
| 25,000 | | |
| 30,500 | |
Proceeds from issuance of note payable | |
| 80,000 | | |
| 75,000 | |
Proceeds from issuance of convertible notes payable | |
| 1,173,000 | | |
| 694,000 | |
Repayments of convertible notes payable | |
| (286,434 | ) | |
| – | |
Net cash provided by financing activities | |
| 991,566 | | |
| 799,500 | |
| |
| | | |
| | |
Net decrease in cash | |
| (4,373 | ) | |
| (2,255 | ) |
Cash, beginning of period | |
| 61,758 | | |
| 13,761 | |
| |
| | | |
| | |
Cash, end of period | |
$ | 57,385 | | |
$ | 11,506 | |
| |
| | | |
| | |
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 | |
$ | 253,119 | | |
$ | – | |
Notes payable issued in settlement of accrued officer salaries | |
$ | 385,000 | | |
$ | – | |
Common stock issued in settlement of debt | |
$ | 1,779,544 | | |
$ | 444,259 | |
See the accompanying notes to the unaudited condensed consolidated financial statements
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
SEPTEMBER 30, 2014
(unaudited)
NOTE 1 – SUMMARY OF ACCOUNTING
POLICIES
A summary of the significant accounting
policies applied in the preparation of the accompanying unaudited condensed consolidated financial statements follows.
Business and Basis of Presentation
Solar Wind Energy Tower, Inc. (the “Company,”
“we,” “our,” “us”), formerly known as Superior Silver Mines, Inc., was incorporated in the
State of Idaho on January 22, 1962 as Superior Mines Company and then changed its name to Superior Silver Mines, Inc. The Company
reincorporated as a Nevada corporation on December 27, 2010. The Company has been dormant for a number of years, and
has no known mineral reserves.
On December 29, 2010, Solar Wind Energy
Tower Inc., a Nevada corporation (the “Company” or "Solar Wind"), completed a reverse merger (the “Merger”)
with Solar Wind Energy, Inc., a corporation formed under the laws of the State of Delaware on July 26, 2010 (“Solar Wind
- Subsidiary”). In connection with the Merger, the Company issued to the stockholders of Solar Wind - Subsidiary in exchange
for their Solar Wind - Subsidiary Common Stock, the right to receive an aggregate of 300,000,000 shares of the Company’s
Common Stock. As a result of the reverse merger, Solar Wind - Subsidiary is now a wholly-owned subsidiary of the Company.
For accounting purposes, Solar Wind - Subsidiary
was the surviving entity. The transaction was accounted for as a recapitalization of Solar Wind - Subsidiary pursuant to which
Solar Wind - Subsidiary was treated as the surviving and continuing entity although the Company is the legal acquirer rather than
a reverse acquisition. Accordingly, the Company’s historical financial statements are those of Solar Wind - Subsidiary
immediately following the consummation of the reverse merger. Also, going forward the business operations of Solar Wind - Subsidiary
will become the Company’s principal business operations.
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.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, 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.
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
SEPTEMBER 30, 2014
(unaudited)
Interim Financial Statements
The following (a) condensed consolidated
balance sheet as of December 31, 2013, which has been derived from audited financial statements, and (b) the unaudited condensed
consolidated interim financial statements of the Company have been prepared in accordance with accounting principles generally
accepted in the United States (“GAAP”) for interim financial information and the instructions to Form 10-Q and Rule
8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial
statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included.
Operating results for the three and nine
months ended September 30, 2014 are not necessarily indicative of results that may be expected for the year ending December 31,
2014. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements
and notes thereto for the year ended December 31, 2013 included in the Company’s Annual Report on Form 10-K, filed with the
Securities and Exchange Commission (“SEC”) on March 28, 2014.
Going Concern
The accompanying unaudited condensed 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. However, the Company has reported net losses of $4,054,648 and
$1,832,976 for the nine month periods ended September 30, 2014 and 2013, respectively, accumulated deficit of $12,919,876 and total
current liabilities in excess of current assets of $3,251,904 as of September 30, 2014.
The Company 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.
The unaudited condensed consolidated financial
statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities
that might be necessary should the Company be unable to continue as a going concern.
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.
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 $82,482 and
$92,705 for the three and nine months ended September 30, 2014, respectively; and $15,589 and $37,873 for the three and nine months
ended September 30, 2013 respectively, in research and development costs. 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.
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
SEPTEMBER 30, 2014
(unaudited)
Net loss per Common Share
The Company computes net income (loss)
per share under Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC 260-10”). Basic net 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 for the three and nine months
ended September 30, 2014 and 2013, respectively. Dilutive common stock equivalents consist of shares issuable upon conversion of
convertible notes and exercise of warrants. Fully diluted shares for the three and nine months ended September 30, 2014 were 701,477,717
and 651,659,009, respectively; and 396,519,404 and 386,434,686 shares for the three and nine months ended September 30, 2013, respectively.
Common stock equivalents excluded from the net loss per share for the three and nine month periods ended September 30, 2014 were
178,727,904 and 176,232,904 shares, respectively, and for the three and nine month periods ended September 30, 2013 were 89,605,160
shares.
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 grants issued to consultants in exchange for services rendered for the three and nine months ended September 30, 2014
was $151,844 and $532,510, respectively; $174,537 and $435,546 for the three and nine months ended September 30, 2013, respectively.
Derivative financial instruments
Accounting Standards Codification subtopic
815-40, Derivatives and Hedging, Contracts in Entity’s own Equity (“ASC 815-40”) became effective for the Company
on October 1, 2009. The Company’s convertible debt has reset provisions to the exercise price if the Company issues equity
or a right to receive equity, at a price less than the exercise prices. In addition, the Company has the possibility of exceeding
their common shares authorized when considering the number of possible shares that may be issuable to satisfy settlement provisions
of convertible notes after consideration of all existing instruments that could be settled in shares.
Capitalized Financing Costs
Capitalized financing costs represent costs
incurred in connection with obtaining the debt financing. These costs are amortized ratably and charged to financing
expenses over the term of the related debt. The amortization for the three and nine months ended September 30, 2014 was $28,856
and $57,180, respectively. Accumulated amortization of deferred financing costs was $57,180 and $-0- at September 30,
2014 and December 31, 2013, respectively.
Recently Issued Accounting Pronouncements
The Company has adopted Accounting Standards
Update (ASU) No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including
an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendments in this ASU remove all incremental
financial reporting requirements from U.S. GAAP for development stage entities, including the removal of Topic 915, Development
Stage Entities, from the FASB Accounting Standards Codification™.
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
SEPTEMBER 30, 2014
(unaudited)
A development stage entity is one that
devotes substantially all of its efforts to establishing a new business and for which: (a) planned principal operations
have not commenced; or (b) planned principal operations have commenced, but have produced no significant revenue. For example,
many start-ups or even long-lived organizations that have not yet begun their principal operations or do not have significant revenue
would be identified as development stage entities.
For public business entities, the presentation
and disclosure requirements in Topic 915 will no longer be required for the first annual period beginning after December 15, 2014.
The revised consolidation standards are effective one year later, in annual periods beginning after December 15, 2015. Early adoption
is permitted.
The FASB has issued ASU No. 2014-12, Compensation
– Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance
Target Could Be Achieved after the Requisite Service Period. This ASU requires that a performance target that affects vesting,
and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance
target should not be reflected in estimating the grant date fair value of the award. This update further clarifies that compensation
cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent
the compensation cost attributable to the period(s) for which the requisite service has already been rendered.. The amendments
in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015.
Earlier adoption is permitted. The Company has not yet determined the effect of the adoption of this standard and it is expected
to have a material impact on the Company’s condensed consolidated financial position and results of operations.
The FASB has issued ASU No. 2014-09, Revenue
from Contracts with Customers. This ASU supersedes the revenue recognition requirements in Accounting Standards Codification
605 - Revenue Recognition and most industry-specific guidance throughout the Codification. The standard requires that an entity
recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration
to which the company expects to be entitled in exchange for those goods or services. This ASU is effective on January 1, 2017 and
should be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially
applying the ASU recognized at the date of initial application. The Company has not yet determined the effect of the adoption of
this standard and it is expected to have no material impact on the Company’s condensed consolidated financial position and
results of operations.
There are various other 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.
NOTE 2 – ACCRUED LIABILITIES AND EXPENSES
Accrued liabilities and expenses as of
September 30, 2014 and December 31, 2013 consist of the following:
| |
September 30, 2014 | | |
December 31, 2013 | |
Accrued payroll | |
$ | 160,503 | | |
$ | 505,118 | |
Accrued stock purchase warrants | |
| 29,400 | | |
| 29,400 | |
Accrued lawsuit (Note 4 and 13 below) | |
| – | | |
| 122,985 | |
Accrued interest and other | |
| 144,458 | | |
| 80,461 | |
Total | |
$ | 334,361 | | |
$ | 737,964 | |
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
SEPTEMBER 30, 2014
(unaudited)
NOTE 3 – ADVANCES FROM SHAREHOLDERS/OFFICERS
Advances from shareholders are comprised of the fair value of
common stock pledged as collateral by shareholder.
NOTE 4 – SETTLEMENT PAYABLE
In August 2014, the Company settled the
litigation with Hanover Holdings I, LLC, described in Note 13 below, 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 three and nine months ended September 30, 2014. As of September 30, 2014, the outstanding balance was $75,000.
NOTE 5 – NOTES PAYABLE
| |
September 30, 2014 | | |
December 31, 2013 | |
Promissory notes issued June 20, 2012 | |
$ | 268,270 | | |
$ | 268,270 | |
Promissory note issued June 6, 2013 | |
| – | | |
| 90,500 | |
Note payable issued April 7, 2014 | |
| 80,000 | | |
| – | |
Total | |
| 348,270 | | |
| 358,770 | |
Less current portion | |
| 268,270 | | |
| 358,770 | |
Long term portion | |
$ | 80,000 | | |
$ | – | |
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 June 6, 2013, the Company issued a secured
promissory note payable with a face amount of $97,500 with an original interest discount (“OID”) of $22,500. The note
was originally due in full on October 3, 2013, subsequently extended to November 15, 2013, and is secured by a Company issued note
to the Company’s CEO for $150,000 (See note 8). The Company is obligated to file by July 5, 2013 a registration statement
on Form S-1 registering an equity line of credit to the benefit of the note holder and to become effective by September 18, 2013.
The Company filed Form S-1 on June 24, 2013 and on October 16, 2013 became effective. Effective November 16, 2013, the remaining
unpaid balance was $90,500. On July 11, 2014, the Company issued 7,066,131 shares of its common stock in fully settlement of the
outstanding obligation.
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).
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
SEPTEMBER 30, 2014
(unaudited)
NOTE 6 – CONVERTIBLE NOTES PAYABLE
Convertible notes payable are comprised of the following:
| |
September 30, 2014 | | |
December 31, 2013 | |
Convertible promissory notes, due December 31, 2014, net of unamortized debt discount of $30,063 and $119,274, respectively | |
$ | 208,937 | | |
$ | 119,726 | |
Convertible note payable, due January 24, 2015, net of unamortized debt discount and OID of $17,712 | |
| – | | |
| 10,059 | |
Convertible note payable, due December 19, 2013 | |
| – | | |
| 32,500 | |
Convertible note payable, due July 1, 2014, net of unamortized debt discount and OID of $12,478 | |
| – | | |
| 15,492 | |
Convertible note payable, due April 15, 2014, net of unamortized debt discount of $12,231 | |
| – | | |
| 20,269 | |
Convertible note payable, due May 15, 2014, net of unamortized debt discount of $13,500 | |
| – | | |
| 14,000 | |
Convertible note payable, due January 24, 2015, net of unamortized debt discount of $36,977 | |
| – | | |
| 13,023 | |
Convertible note payable, due August 21, 2014, net of unamortized debt discount and OID of $19,925 | |
| – | | |
| 11,287 | |
Convertible promissory notes, due June 18, 2014, net of unamortized debt discount of $19,973 | |
| – | | |
| 12,527 | |
Convertible promissory note, due July 14, 2014, net with unamortized debt discount and OID of $20,569 | |
| – | | |
| 17,931 | |
Convertible promissory note, due August 16, 2014, net of unamortized debt discount and OID of $24,049 | |
| – | | |
| 14,451 | |
Convertible promissory note, due October 22, 2014, net of unamortized debt discount and OID of $25,226 | |
| – | | |
| 5,986 | |
Convertible promissory note, due November 1, 2014, net of unamortized debt discount and OID of $47,226 | |
| – | | |
| 10,274 | |
Convertible promissory note, due September 10, 2014, net of unamortized debt discount of $38,678 | |
| – | | |
| 3,822 | |
Convertible promissory note, due
January 24, 2015, net of unamortized
debt discount of $48,625 | |
| – | | |
| 1,375 | |
Convertible promissory note, due January 7, 2015, net of unamortized debt discount of $13,212 | |
| 24,288 | | |
| – | |
Convertible promissory note, due April 4, 2015, net of unamortized debt discount of $18,890 | |
| 16,110 | | |
| – | |
Convertible promissory note, due February 2, 2015, net of unamortized debt discount of $28,226 | |
| 34,774 | | |
| – | |
Convertible promissory notes, due May 2, 2015, net of unamortized debt discount of $46,904 | |
| 33,096 | | |
| – | |
Convertible promissory note, due May 9, 2015, net of unamortized debt discount of $136,233 | |
| 88,767 | | |
| – | |
Convertible promissory note, due June 9, 2015, net of unamortized debt discount of $227,836 | |
| 102,164 | | |
| – | |
Convertible promissory note, due May 11, 2015, net of unamortized debt discount of $201,336 | |
| 52,164 | | |
| – | |
Total | |
| 560,300 | | |
| 302,722 | |
Less current portion | |
| (560,300 | ) | |
| (278,266 | ) |
Long term portion | |
$ | – | | |
$ | 24,456 | |
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
SEPTEMBER 30, 2014
(unaudited)
Asher notes:
On January 8, 2014, the Company entered
into a Securities Purchase Agreement with Asher Enterprises, Inc. ("Asher"), for the sale of an 8% convertible note in
the principal amount of $32,500 (the "Note"). The financing closed on January 8, 2014. The total net proceeds the Company
received from this Offering was $30,000.
The Note bears interest at the rate of
8% per annum. All interest and principal must be repaid on October 10, 2014. The Note is convertible into common stock, at Asher’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.
During the three months ended September
30, 2014, the Company paid off the above described note in full.
On February 12, 2014, the Company entered
into a Securities Purchase Agreement with Asher Enterprises, Inc. ("Asher"), for the sale of an 8% convertible note in
the principal amount of $27,500 (the "Note"). The financing closed on February 12, 2014. The total net proceeds the Company
received from this Offering was $25,000.
The Note bears interest at the rate of
8% per annum. All interest and principal must be repaid on November 14, 2014. The Note is convertible into common stock, at Asher’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.
During the three months ended September
30, 2014, the Company paid off the above described note in full.
In the event the Company prepays the Notes
in full, the Company is required to pay off all principal, interest and any other amounts owing multiplied by (i) 120% if prepaid
during the period commencing on the closing date through 30 days thereafter, (ii) 125% if prepaid 31 days following the closing
through 60 days following the closing, (iii) 130% if prepaid 61 days following the closing through 90 days following the closing
and (iv) 135% if prepaid 91 days following the closing through 120 days following the closing. (v) 140% if prepaid 121 days following
the closing through 150 days following the closing, (vi) 150% if prepaid 121 days following the closing through 180 days following
the closing. After the expiration of 180 days following the date of the Note, the Company has no right of prepayment.
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 nine months
ended September 30, 2014, the Company received two tranches of net proceeds in the amount of $70,000, of which $50,000 was repaid.
As of September 30, 2014 and December 31, 2013, the aggregate principal amount outstanding under the July 11, 2012 issued convertible
promissory note was $-0- and $90,395, respectively. On July 11, 2014, the Company issued 4,624,074 shares of its common stock in
full settlement.
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
SEPTEMBER 30, 2014
(unaudited)
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.
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.
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 $40,178.82
against the note in a scheduled monthly installment followed by a payment on August 11, 2014 of the balance due of $31,078.45 to
pay the note in full. In as such as Typenex was disputing the Company’s right to pay in cash, these final two installments
were placed in escrow account through the Company’s counsel.
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.
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.
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.
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.
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
SEPTEMBER 30, 2014
(unaudited)
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.
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.
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.
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
SEPTEMBER 30, 2014
(unaudited)
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.
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.
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 2014 Notes, the
Company determined the aggregate fair value of $3,021,713 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 157.33% to 197.24%, (3) weighted average risk-free interest rate of 0.11 % to 0.23%, (4) expected life of 0.75 to
1.00 years, and (5) estimated fair value of the Company’s common stock of $0.0025 to $0.0271 per share.
The determined fair value of the debt derivatives
of $3,021,713 was charged as a debt discount up to the net proceeds of the note with the remainder of $1,895,183 charged to current
period operations as non-cash interest expense.
At September 30, 2014, the Company marked
to market the fair value of the debt derivatives and determined a fair value of $1,416,684. The Company recorded a gain from change
in fair value of debt derivatives of $858,661 and $707,801 for the three and nine months ended September 30, 2014. 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 192.41%, (3) weighted average risk-free interest rate of 0.02% to 0.03%, (4) expected life
of 0.25 to 0.69 years, and (5) estimated fair value of the Company’s common stock of $0.0239 per share.
The charge of the amortization of debt
discounts and costs for the three and nine months ended September 30, 2014 was $343,332 and $914,628, respectively, and $168,322
and $395,421 for the three and nine months ended September 30, 2013, respectively. which was accounted for as interest expense.
Also, the Company has accrued interest expense of $46,885 as of September 30, 2013.
During the nine months ended September
30, 2014, the Company issued an aggregate of 138,728,256 shares of its common stock in settlement of the convertible note payable
and related interest.
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
SEPTEMBER 30, 2014
(unaudited)
NOTE 7 – NOTES PAYABLE, RELATED PARTY
On April 18, 2014, the Company issued an
aggregate of $385,000 promissory notes to officers and key employees in settlement of accrued salaries. The promissory notes bear
interest at the rate of 2% per annum. All interest and principal must be repaid on April 18, 2016. In connection with the issuance
of the notes, the Company issued an aggregate of 59,413,581 warrants to purchase the Company’s common stock at $0.00648 per
share for two years.
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 Company has accrued interest expense
of $3,481 as of September 30, 2014.
NOTE 8 – 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 must be repaid on December 31, 2014. The convertible promissory notes are
convertible into common stock, at the holders’ option at $0.015 per common share.
Due to the nature of the notes described
in Note 6 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.
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 September 30, 2014, the Company marked
to market the fair value of the debt derivatives and determined a fair value of $230,406. The Company recorded a gain (loss) from
change in fair value of debt derivatives of $154,407 and $(176,707) for the three and nine months ended September 30, 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 192.41%, (3) weighted average risk-free interest rate of 0.03%, (4) expected
life of 0.25 years, and (5) estimated fair value of the Company’s common stock of $0.0239 per share.
The charge of the amortization of debt
discounts and costs for the three and nine months ended September 30, 2014 was $33,031 and $98,016, respectively, and $33,031 and
$98,016 for the three and nine months ended September 30, 2013, respectively; which was accounted for as interest expense. Also,
the Company has accrued interest expense of $39,187 as of September 30, 2014.
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
SEPTEMBER 30, 2014
(unaudited)
NOTE 9 – DERIVATIVE LIABILITIES
As described in Notes 6 and 8 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 6 and 8 for assumptions used to determine fair values.
During the nine months ended September
30, 2014, the Company has the possibility of exceeding their common shares authorized when considering the number of possible shares
that may be issuable to satisfy settlement provisions of convertible notes after consideration of all existing instruments that
could be settled in shares. The accounting treatment of derivative financial instruments required that the Company reclassify
the derivative from equity to a liability at their fair values as of the date possible issuable shares exceeded the authorized
level and at fair value as of each subsequent balance sheet date. Any change in fair value was recorded as non-operating,
non-cash income or expense at each reporting date. If the fair value of the derivatives was higher at the subsequent balance
sheet date, the Company recorded a non-operating, non-cash charge. If the fair value of the derivatives was lower at the
subsequent balance sheet date, the Company recorded non-operating, non-cash income.
The Company determined the previously issued
warrants required reclassification from equity as of January 2014. Accordingly, the Company reclassified the determined fair value
of $13,202 from additional paid in capital to derivative liabilities. On April 2, 2014, the Company increased its authorized shares
to 900,000,000. Accordingly, the fair value of the warrants at April 2, 2014 of $7,677 was reclassified from derivative liabilities
to additional paid in capital.
The fair value of the derivative in January
2014 was determined using the Black Sholes Option Pricing model with the following assumptions: dividend yield: 0%; volatility:
157.27%; risk free rate: 1.75%; and expected life: 4.37 years.
At April 2, 2014, the Company marked to
market the fair value of the warrant derivative and determined a fair value of $7,677. The Company recorded a gain from change
in fair value of derivative of $557 and $5,524 for the three and nine months ended September 30, 2014. 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 159.32%, (3) weighted average risk-free interest rate of 1.62%, (4) expected life of 4.10 years, and
(5) estimated fair value of the Company’s common stock of $0.0045 per share.
NOTE 10 – 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 September 30, 2014 and December 31, 2013, the Company did not
have any preferred stock issued and outstanding.
Common stock
The Company has authorized 900,000,000
and 500,000,000 shares of common stock, with a par value of $0.0001 per share as of September 30, 2014 and December 31, 2013, respectively.
As of September 30, 2014 and December 31, 2013, the Company has 524,147,555 and 370,728,168, 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 May 20, 2014, the Company issued 500,000
shares of its common stock for investor relations services valued at $2,250.
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
SEPTEMBER 30, 2014
(unaudited)
In 2013 and 2012, the Company issued an
aggregate of 15,000,000 and 21,500,000 shares of common stock for future services of $328,500 and $1,305,000, respectively. The
Company accretes the fair value of the shares issued as stock based compensation during the requisite service period to operations.
During the three and nine months ended September 30, 2014, the Company recorded $151,844 and $530,259, respectively, and $150,044
and $368,625 for the three and nine months ended September 30, 2013, respectively, as stock based compensation.
NOTE 11 – WARRANTS
Warrants
The following table summarizes the changes
in warrants outstanding and related prices for the shares of the Company’s common stock at September 30, 2014:
Exercise Price |
|
|
Number
Outstanding |
|
|
Warrants
Outstanding
Weighted
Average
Remaining
Contractual Life
(years) |
|
|
Weighted
Average
Exercise price |
|
|
Number
Exercisable |
|
|
Warrants
Exercisable
Weighted
Average
Exercise Price |
|
$ |
0.00648 |
|
|
|
59,413,581 |
|
|
|
1.55 |
|
|
$ |
0.00648 |
|
|
|
59,413,581 |
|
|
$ |
0.00648 |
|
|
0.00860 |
|
|
|
5,787,037 |
|
|
|
1.51 |
|
|
|
0.00860 |
|
|
|
5,787,037 |
|
|
|
0.00860 |
|
|
0.02000 |
|
|
|
2,495,000 |
|
|
|
1.51 |
|
|
|
0.02000 |
|
|
|
2,495,000 |
|
|
|
0.02000 |
|
|
0.04000 |
|
|
|
8,750,000 |
|
|
|
Contingent |
|
|
|
0.04000 |
|
|
|
– |
|
|
|
– |
|
|
0.05000 |
|
|
|
1,920,000 |
|
|
|
1.44 |
|
|
|
0.05000 |
|
|
|
1,920,000 |
|
|
|
0.05000 |
|
|
0.05000 |
|
|
|
7,000,000 |
|
|
|
Contingent |
|
|
|
0.05000 |
|
|
|
– |
|
|
|
– |
|
|
0.10000 |
|
|
|
2,187,101 |
|
|
|
3.65 |
|
|
|
0.10000 |
|
|
|
2,187,101 |
|
|
|
0.10000 |
|
|
|
|
|
|
87,552,719 |
|
|
|
1.65 |
|
|
|
|
|
|
|
71,802,719 |
|
|
$ |
0.01113 |
|
Transactions involving the Company’s warrant issuance
are summarized as follows:
| |
Number of Shares | | |
Weighted Average Price Per Share | |
Outstanding at December 31, 2012 | |
| – | | |
| – | |
Granted | |
| 2,187,101 | | |
$ | 0.10 | |
Exercised | |
| – | | |
| – | |
Canceled or expired | |
| – | | |
| – | |
Outstanding at December 31, 2013 | |
| 2,187,101 | | |
| 0.10 | |
Granted | |
| 85,365,618 | | |
| 0.01 | |
Exercised | |
| – | | |
| – | |
Canceled or expired | |
| – | | |
| – | |
Outstanding at September 30, 2014 | |
| 87,552,719 | | |
$ | 0.01 | |
On April 4, 2014, in recognition of past
services by the two (2) Directors, the Company approved for issuance of an aggregate of 2,495,000 and 5,787,037 warrants to purchase
the Company’s common stock at $0.02 and $0.0086 per share for the vesting period of two years.
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
SEPTEMBER 30, 2014
(unaudited)
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 5, 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 7, the Company issued
an aggregate of 59,413,581 warrants to purchase the Company’s common stock at $0.00648 per share for two years in connection
with the issuance of notes payable.
The warrants were valued using the Black
Sholes option pricing method with the following assumptions: dividend yield $-0-, volatility of 180.09% and risk free rate of 0.43%.
The determined fair value of the warrants of $250,049 is amortized as financing costs of the term of the related notes (2 years).
As described in Note 6, 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. Due to the contingency nature of these warrants, the Company will determine the fair value at the date of the effectiveness
of the registration statement.
NOTE 12- 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.
A reconciliation of the non-controlling
loss attributable to the Company:
Net loss attributable to non-controlling
interest for the nine months ended September 30, 2014:
|
|
September 30,
2014 |
|
Net loss |
|
$ |
85,530 |
|
Average Non-controlling interest percentage |
|
|
1.33 |
% |
Net loss attributable to the non-controlling interest |
|
$ |
1,140 |
|
The following table summarizes the changes in non-controlling
interest from December 31, 2013 to September 30, 2014:
Balance, December 31, 2013 |
|
$ |
– |
|
Transfer (to) from the non-controlling interest as a result of change in ownership |
|
|
– |
|
Net loss attributable to the non-controlling interest |
|
|
(1,140 |
) |
Balance, September 30, 2014 |
|
$ |
(1,140 |
) |
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
SEPTEMBER 30, 2014
(unaudited)
NOTE 13 – CONTINGENCIES
Litigation
Hanover Holdings I, LLC vs Solar Wind Energy Tower Inc.(f/k/a
Clean Wind Energy Tower, Inc.)
On December 27, 2012, we were served with
a Complaint in the matter of Hanover Holdings I, LLC filed with the Supreme Court of the State of New York, stipulating that Solar
Wind Energy Tower Inc. (f/k/a Clean Wind Energy Tower, Inc.) has yet to pay the remaining outstanding balance, related interest
and penalties, as described in a convertible promissory note issued by Solar Wind Energy Tower Inc. (f/k/a Clean Wind Energy Tower,
Inc.) to the benefit of Hanover Holdings I, LLC on February 29, 2012 and has failed to honor a notice of conversion issued by Hanover
Holdings I, LLC on or about September 7, 2012. Total claim amount is for $122,985.
As described in Note 4 above, in
August 2014, the Company settled the litigation with Hanover Holdings I, LLC for 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 three and nine months ended September 30, 2014. As of September 30, 2014, the
outstanding balance was $75,000.
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 – 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 unaudited condensed consolidated financial statements consisted of the following items
as of September 30, 2014:
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
Long-term investments |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
– |
|
Total |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
– |
|
Derivative liabilities |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
1,647,090 |
|
|
$ |
1,647,090 |
|
Total |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
1,647,090 |
|
|
$ |
1,647,090 |
|
SOLAR WIND ENERGY TOWER, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
SEPTEMBER 30, 2014
(unaudited)
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 six months ended
September 30, 2014.
Nine months ended September 30, 2014:
|
|
Derivative Liabilities |
|
Balance, December 31, 2013 |
|
$ |
689,093 |
|
|
|
|
|
|
Transfers in (out) at mark-market value on date of payoff or conversion |
|
|
(1,532,624 |
) |
|
|
|
|
|
Transfers in (out) upon reclassification from (to) equity |
|
|
5,525 |
|
|
|
|
|
|
Transfers in upon initial fair value of derivative liabilities |
|
|
3,021,714 |
|
|
|
|
|
|
Gain from change in fair value of derivative liabilities |
|
|
(536,618 |
) |
|
|
|
|
|
Balance, September 30, 2014 |
|
$ |
1,647,090 |
|
|
|
|
|
|
Total gain for the nine month period included in earnings relating to the liabilities held at September 30, 2014 |
|
$ |
536,618 |
|
Level 3 Liabilities were comprised of our
bifurcated convertible debt features on our convertible notes.
NOTE 15 – SUBSEQUENT EVENTS
Subsequent issuances of common stock
In October, the Company issued an aggregate
of 9,178,911 shares of its common stock in settlement of convertible notes payable and accrued interest of $93,392.
Subsequent financing
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 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 15 trading day period prior to conversion.
Legal Matters
In
October 2014 the Company's resident agent received a notice that a creditor had filed a law suit against the Company. The Company
asserts that it has satisfied its obligations and has hired legal counsel to defend the Company. The Company plans to vigorously
defend this claim.
Item 2. Management’s
Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of
the Company’s financial condition and results of operations should be read in conjunction with the accompanying financial
statements and related notes thereto for the quarter ended September 30, 2014, as well as the Company’s consolidated financial
statements and related notes thereto and management’s discussion and analysis of financial condition and results of operations
in the Company’s Form 10-K for the year ended December 31, 2013 filed on March 28, 2014.
Solar Wind Energy Tower, Inc. (the “Company,”
“we,” “our,” “us”), formerly known as Superior Silver Mines, Inc., was incorporated in the
State of Idaho on January 22, 1962 as Superior Mines Company and then changed its name to Superior Silver Mines, Inc. The
Company reincorporated as a Nevada corporation on December 27, 2010. The Company has been dormant for a number of years,
and has no known mineral reserves.
On December 29, 2010, Solar Wind Energy
Tower Inc., a Nevada corporation (the “Company” or "Solar Wind"), completed a reverse merger (the “Merger”)
with Solar Wind Energy, Inc., a corporation formed under the laws of the State of Delaware on July 26, 2010 (“Solar Wind
- Subsidiary”). In connection with the Merger, the Company issued to the stockholders of Solar Wind - Subsidiary
in exchange for their Solar Wind - Subsidiary Common Stock, the right to receive an aggregate of 300,000,000 shares of the Company’s
Common Stock. As a result of the reverse merger, Solar Wind - Subsidiary is now a wholly-owned subsidiary of the Company.
For accounting purposes, Solar Wind - Subsidiary
was the surviving entity. The transaction was accounted for as a recapitalization of Solar Wind - Subsidiary pursuant to which
Solar Wind - Subsidiary was treated as the surviving and continuing entity although the Company is the legal acquirer rather than
a reverse acquisition. Accordingly, the Company’s historical financial statements are those of Solar Wind - Subsidiary
immediately following the consummation of the reverse merger. Also, going forward the business operations of Solar Wind - Subsidiary
will become the Company’s principal business operations.
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.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.
Forward Looking Statements
This report may contain “forward-looking
statements,” which represent the Company’s expectations or beliefs, including, but not limited to, statements concerning
industry performance and the Company’s results, operations, performance, financial condition, plans, growth and strategies,
which include, without limitation, statements preceded or followed by or that include the words “may,” “will,”
“expect,” “anticipate,” “intend,” “could,” “estimate,” or “continue”
or the negative or other variations thereof or comparable terminology. Any statements contained in this report or the information
incorporated by reference that are not statements of historical fact may be deemed to be forward-looking statements.
These statements by their nature involve
substantial risks and uncertainties, some of which are beyond the Company’s control, and actual results may differ materially
depending on a variety of important factors, including those risk factors discussed under “Trends, Risks and Uncertainties”,
many of which are also beyond the Company’s control. You should not place undue reliance on these forward-looking statements,
which speak only as of the date of this report. The Company does not undertake any obligation to update or release any revisions
to these forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence
of unanticipated events, except to the extent such updates and/or revisions are required by applicable law.
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.
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. The Company did not have any revenue during the period ended September
30, 2014.
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 2013 and 2014, we issued convertible
notes payable that contained certain conversion features which we identified as embedded derivatives. In addition, the Company
has the possibility of exceeding their common shares authorized when considering the number of possible shares that may be issuable
to satisfy settlement provisions of convertible notes after consideration of all existing instruments that could be settled in
shares. 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
The Company has adopted Accounting Standards
Update (ASU) No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including
an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendments in this ASU remove all incremental
financial reporting requirements from U.S. GAAP for development stage entities, including the removal of Topic 915, Development
Stage Entities, from the FASB Accounting Standards Codification™.
A development stage entity is one that
devotes substantially all of its efforts to establishing a new business and for which: (a) planned principal operations
have not commenced; or (b) planned principal operations have commenced, but have produced no significant revenue. For example,
many start-ups or even long-lived organizations that have not yet begun their principal operations or do not have significant revenue
would be identified as development stage entities.
For public business entities, the presentation
and disclosure requirements in Topic 915 will no longer be required for the first annual period beginning after December 15, 2014.
The revised consolidation standards are effective one year later, in annual periods beginning after December 15, 2015. Early adoption
is permitted.
The FASB has issued ASU No. 2014-12, Compensation
– Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance
Target Could Be Achieved after the Requisite Service Period. This ASU requires that a performance target that affects vesting,
and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance
target should not be reflected in estimating the grant date fair value of the award. This update further clarifies that compensation
cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent
the compensation cost attributable to the period(s) for which the requisite service has already been rendered. The amendments
in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015.
Earlier adoption is permitted. The Company has not yet determined the effect of the adoption of this standard and it is expected
to have no material impact on the Company’s condensed consolidated financial position and results of operations.
The FASB has issued ASU No. 2014-09, Revenue
from Contracts with Customers. This ASU supersedes the revenue recognition requirements in Accounting Standards Codification
605 - Revenue Recognition and most industry-specific guidance throughout the Codification. The standard requires that an entity
recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration
to which the company expects to be entitled in exchange for those goods or services. This ASU is effective on January 1, 2017 and
should be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially
applying the ASU recognized at the date of initial application. The Company has not yet determined the effect of the adoption of
this standard and it is expected to have no material impact on the Company’s condensed consolidated financial position and
results of operations.
There are various other 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.
RESULTS OF OPERATIONS
Three months ended September 30, 2014 as compared to three
months ended September 30, 2013
Revenue
The Company has not generated revenue since inception.
Operating Expenses
Research and development
During the three months ended September
30, 2014, research and development costs were $82,482 compared to $15,589 for the same period last year. The Company's expenditures
for research and development is dependent on available resources and future expenditures are expected to increase with additional
financing.
Selling, general and administrative
During the three months ended September
30, 2014, selling, general and administrative expenses were $434,818 as compared to $409,069 for the same period last year, a 6%
increase. The primary increase is due to increase professional and consulting fees incurred in the current period as compared to
same period last year.
Depreciation
Depreciation expense for the three months
ended September 30, 2014 was $367 as compared to $1,120 for the same period last year due to the aging of our equipment.
Other income (expense)
Interest expense
Interest expense for the three months ended
September 30, 2014 was $555,300 compared to $287,938 for the same period last year. In the current period, we incurred $392,167
non-cash debt discount and OID amortization and $73,946 in non-cash interest expense on issued convertible debt as compared to
$201,353 and $68,564, respectively for the same period last year.
Gain (loss) on change in fair value
of derivative liabilities
During 2013 and 2014, we issued convertible
promissory notes with an embedded derivative, all requiring us to fair value the derivatives each reporting period and mark to
market as a non-cash adjustment to our current period operations. This resulted in a gain of $1,013,068 and $277,568
on change in fair value of derivative liabilities for the three months ended September 30, 2014 and 2013, respectively.
Gain on settlement of debt
During the three months ended September
30, 2014, we settled an outstanding litigation resulting in a gain of settlement of debt of $32,985.
Nine months ended September 30, 2014 as compared to nine
months ended September 30, 2013
Revenue
The Company has not generated revenue since inception.
Operating Expenses
Research and development
During the nine months ended September
30, 2014, research and development costs were $92,705 compared to $37,873 for the same period last year. The Company's expenditures
for research and development is dependent on available resources and future expenditures are expected to increase with additional
financing.
Selling, general and administrative
During the nine months ended September
30, 2014, selling, general and administrative expenses were $1,367,878 as compared to $1,288,101 for the same period last year,
a 6% increase. The primary increase is due to increase professional and consulting fees incurred in the current period as compared
to same period last year.
Depreciation
Depreciation expense for the nine months
ended September 30, 2014 was $2,343 as compared to $3,360 for the same period last year due to the aging of our equipment.
Other income (expense)
Interest expense
Interest expense for the nine months ended
September 30, 2014 was $3,161,325 compared to $862,927 for the same period last year. In the current period, we incurred $1,053,063
non-cash debt discount and OID amortization and $1,895,183 in non-cash interest expense on issued convertible debt as compared
to $493,437 and $232,489, respectively for the same period last year.
Gain (loss) on change in fair value
of derivative liabilities
During 2013 and 2014, we issued convertible
promissory notes with an embedded derivative, all requiring us to fair value the derivatives each reporting period and mark to
market as a non-cash adjustment to our current period operations. This resulted in a gain of $536,618 and $359,285 on
change in fair value of derivative liabilities for the nine months ended September 30, 2014 and 2013, respectively.
Gain on settlement of debt
During the nine months ended September
30, 2014, we settled an outstanding litigation resulting in a gain of settlement of debt of $32,985.
Liquidity and Capital Resources
We have financed our operations since inception
primarily through private offerings of our equity securities and issuance of convertible notes.
Working Capital
Our working capital deficit increased by
$759,371 during the nine months ended September 30, 2014 from a working capital deficit (current liabilities in excess of current
assets) of $2,492,533 at December 31, 2013 to a working capital deficit of $3,251,904 at September 30, 2014. The increase in working
capital deficit for the nine months ended September 30, 2014 is due to a combination of reasons, of which the significant factors
include:
|
· |
Cash had a net decrease from working capital by $4,373 for the nine months ended September 30, 2014. The most significant uses and proceeds of cash were: |
|
o |
Approximately $991,000 of cash consumed in operating activities; |
|
|
|
|
o |
Proceeds of $1,173,000 from issuance of convertible notes payable, net of repayments of $286,434 |
|
|
|
|
o |
Proceeds of $80,000 from issuance of note payable |
|
|
|
|
o |
Proceeds of $25,000 from the sale of our common stock |
Total current assets of $200,887 and $61,758
as of September 30, 2014 and December 31, 2013, respectively, cash representing 29% and 100% as of September 30, 2014 and December
31, 2013, respectively.
Proceeds from the issuance of convertible promissory notes
During the nine months ended September
30, 2014, the Company received proceeds of $1,173,000 from the issuance of Convertible Promissory Notes.
Proceeds from the issuance of note payable
During the nine months ended September
30, 2014, the Company received proceeds of $80,000 from the issuance of note payable.
Proceeds from the sale of our common stock
During the nine months ended September
30, 2014, the Company received proceeds of $25,000 from the sale of the Company’s common stock.
Cash flow analysis
Cash used in operations was $991,115 during
the nine month period ended September 30, 2014. During the nine month period ended September 30, 2014, 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 account payables.
During the nine months ended September
30, 2014, we utilized $4,824 cash for investing activities comprised of purchase of equipment of $2,124 and payment of long term
deposit of $2,700.
Cash provided by financing activities
was a total net proceeds of $991,566 from the sale of our common stock and issuance of Convertible and Non-Convertible
Promissory Notes.
The accompanying unaudited condensed 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 $4,054,648 for the nine
month period ended September 30, 2014, accumulated deficit of $12,919,876 and total current liabilities in excess of current assets
of $3,251,904 as of September 30, 2014.
The Company 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 2014. 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 2014.
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.
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.
Number of Employees
As of September 30, 2014, the Company had
3 full time employees.
Disclosure of Contractual Obligations
The Company does not have any significant
contractual obligations which could negatively impact our results of operations and financial condition.
Item 3. Quantitative
and Qualitative Disclosures About Material Risk.
As a smaller reporting company, we are
not required to include disclosure under this item.
Item 4. Controls
and Procedures.
As of September 30, 2014, the Company performed
an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer (Principal
Executive Officer) and Chief Financial Officer (Principal Accounting Officer), of the effectiveness of the design and operation
of its disclosure controls and procedures as defined in Rules 13a - 15(e) or 15d - 15(e) promulgated under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”). Based on that evaluation and due to the lack of segregation of duties
and failure to implement accounting controls, our principal executive officer and principal financial officer concluded that our
disclosure controls and procedures were not effective as of the end of the period covered by this report.
The reason for the ineffectiveness of our
disclosure controls and procedures was the result of having a limited number of employees and not having proper segregation of
duties based on the cost benefit of hiring additional employees solely to address the segregation of duties issue. We compensate
for the lack of segregation of duties by employing close involvement of management in day-to-day operations.
Limitations on Effectiveness of Controls
and Procedures
Our management, including our Chief Executive
Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), does not expect that our disclosure
controls and procedures 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 Company 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.
Remediation of Material Weaknesses in
Internal Control over Financial Reporting
As a small business, without a viable business
and revenues, the Company does not have the resources to install a dedicated staff with deep expertise in all facets of SEC disclosure
and GAAP compliance. As is the case with many small businesses, the Company will continue to work with its external consultants
and attorneys as it relates to new accounting principles and changes to SEC disclosure requirements. The Company has found that
this approach worked well in the past and believes it to be the most cost effective solution available for the foreseeable future.
The Company will conduct a review of existing
sign-off and review procedures as well as document control protocols for critical accounting spreadsheets. The Company will also
increase management's review of key financial documents and records.
As a small business, the Company does not
have the resources to fund sufficient staff to ensure a complete segregation of responsibilities within the accounting function.
However, Company management does review, and will increase the review of, financial statements on a monthly basis. These
actions, in addition to the improvements identified above, will minimize any risk of a potential material misstatement occurring.
Changes in Internal Controls
During the fiscal quarter ended September
30, 2014, there have been no changes in our internal control over financial reporting that have materially affected or are reasonably
likely to materially affect our internal controls over financial reporting.
Item 1. Legal
Proceedings.
Hanover Holdings I, LLC vs Solar Wind Energy Tower Inc.(f/k/a
Clean Wind Energy Tower, Inc.)
On December 27, 2012, we were served with
a Complaint in the matter of Hanover Holdings I, LLC filed with the Supreme Court of the State of New York, stipulating that Solar
Wind Energy Tower Inc. (f/k/a Clean Wind Energy Tower, Inc.) has yet to pay the remaining outstanding balance, related interest
and penalties, as described in a convertible promissory note issued by Solar Wind Energy Tower Inc. (f/k/a Clean Wind Energy Tower,
Inc.) to the benefit of Hanover Holdings I, LLC on February 29, 2012 and has failed to honor a notice of conversion issued by Hanover
Holdings I, LLC on or about September 7, 2012. Total claim amount is for $122,985.
The Company settled the litigation with Hanover holdings I,
LLC for cash of $90,000 payable in six equal monthly installments of $15,000 beginning September 5, 2014.
In October 2014 the Company's resident agent received a notice
that a creditor had filed a law suit against the Company. The Company asserts that it has satisfied its obligations and has hired
legal counsel to defend the Company. The Company plans to vigorously defend this claim.
The Company is subject to legal proceedings and claims from
time to time, which arise in the ordinary course of its business. Although occasional adverse decisions or settlements may occur,
the Company believes that the final disposition of such matters should not have a material adverse effect on its financial position,
results of operations or liquidity.
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 quarterly report on Form 10-Q. You should carefully consider
all of these risks.
The Company has a history of operating
losses and an accumulated deficit and expects to continue to incur losses for the foreseeable future.
Since inception through September 30, 2014,
the Company has incurred cumulative losses of $12,919,876 and has never generated enough funds through operations to support its
business. The Company has a limited operating history and has primarily engaged in operations relating to the development of its
business plan. Additional capital may be required in order to provide working capital requirements for the next twelve
months.
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.
In their report dated March 28, 2014, our
independent auditors stated that our financial statements for the year ended December 31, 2013 were prepared assuming that we would
continue as a going concern, and that they have substantial doubt about our ability to continue as a going concern. Our auditors’
doubts are based on our net losses and deficits in cash flows. We continue to experience net operating losses since the Company
is still in a development stage. Our ability to continue as a going concern is subject to our ability to generate a profit and/or
obtain necessary funding from outside sources, including by the sale of our securities, or obtaining loans from financial institutions,
where possible. Our continued net operating losses and our auditors’ doubts increase the difficulty of our meeting such goals.
If we are not successful in raising sufficient additional capital, we may not be able to continue as a going concern and our stockholders
may lose their entire investment.
Item 2. Unregistered
Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults
Upon Senior Securities.
None.
Item 4. Mine Safety
Disclosures
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits.
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 |
|
Articles of Merger by and between Clean Wind Energy Tower, Inc. and Superior Silver Mines, Inc. (2) |
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) |
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 (5) |
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 (President/Chief Executive Officer) |
31.2 |
|
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Ronald W. Pickett (Chief Financial Officer) |
32.1 |
|
Certification of Ronald W. Pickett (President/Chief Executive Officer) 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 (Chief Financial Officer) 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* |
|
|
|
|
|
|
___
* |
|
Pursuant to Rule 406T of Regulation S-T, these interactive data files are not deemed filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act or Section 18 of the Securities Exchange Act and otherwise not subject to liability. |
(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, 2010 filed with the Securities and Exchange Commission on April 12, 2011 and incorporated herein by reference. |
(5) |
|
Filed with the registrant's Form 10-K for the year ended December 31, 2011 filed with the Securities and Exchange Commission on April 2, 2012 and incorporated herein by reference. |
SIGNATURES
In accordance with the requirements of
the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
Solar Wind Energy Tower, Inc.
Registrant |
|
|
|
|
|
Date: October 31, 2014 |
By: |
/s/ Ronald Pickett |
|
|
|
Ronald Pickett |
|
|
|
Chief Executive Officer (Principal Executive Officer) and Principal Accounting and Financial Officer |
|
EXHIBIT 31.1
CERTIFICATION
I, Ronald W. Pickett, certify that:
1. I
have reviewed this quarterly report on Form 10-Q of Solar Wind Energy Tower, Inc.;
2. Based
on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to
the period covered by this report;
3. Based
on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented
in this report;
4. The
registrant other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being prepared;
(b) Designed
such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated
the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
and
(d) Disclosed
in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal
control over financial reporting; and
5. The
registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):
(a) All
significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;
and
(b) Any
fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: October 31, 2014
By: /s/ Ronald W. Pickett
Ronald W. Pickett
President/Chief Executive Officer
EXHIBIT 31.2
CERTIFICATION
I, Ronald W. Pickett, certify that:
1. I
have reviewed this quarterly report on Form 10-Q of Solar Wind Energy Tower, Inc.;
2. Based
on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to
the period covered by this report;
3. Based
on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented
in this report;
4. The
registrant other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being prepared;
(b) Designed
such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated
the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
and
(d) Disclosed
in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal
control over financial reporting; and
5. The
registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):
(a) All
significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;
and
(b) Any
fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: October 31, 2014
By: /s/ Ronald W. Pickett
Ronald W. Pickett
Chief Financial Officer
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT
OF 2002
In connection with the Quarter Report of
Solar Wind Energy Tower, Inc. (the "Company") on Form 10-Q for the quarter ended September 30, 2014 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Ronald W. Pickett, President/Chief Executive
Officer of Solar Wind Energy Tower, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) The Report fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report
fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Ronald W. Pickett
Ronald W. Pickett
President/Chief Executive Officer
Date: October 31, 2014
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT
OF 2002
In connection with the Quarter Report of
Solar Wind Energy Tower Inc. (the "Company") on Form 10-Q for the period ended September 30, 2014 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, Ronald W. Pickett, Chief Financial Officer of Solar Wind
Energy Tower, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that:
(1) The Report fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report
fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Ronald W. Pickett
Ronald W. Pickett
Chief Financial Officer
Date: October 31, 2014