Ocean Thermal Energy Posts $168M Loss Amid Derivative Liability Surge

Ticker: CPWR · Form: 10-Q · Filed: Dec 19, 2025 · CIK: 827099

Sentiment: bearish

Topics: Ocean Thermal Energy, Going Concern, Derivative Liability, Net Loss, Renewable Energy, High Risk, Penny Stock

TL;DR

**CPWR is a burning dumpster fire, avoid at all costs; the $165M derivative liability is a death knell.**

AI Summary

Ocean Thermal Energy Corporation (CPWR) reported a significant net loss of $168,081,522 for the nine months ended September 30, 2025, a substantial increase from a net loss of $907,550 in the prior year period. This dramatic increase was primarily driven by a $165,340,795 change in the fair market value of derivative liability, compared to a gain of $2,091,934 in the same period of 2024. Revenue for the nine months ended September 30, 2025, was $1,432,986, up from $0 in the prior year, with a gross profit of $366,644. Operating expenses totaled $1,025,903, a decrease from $1,173,257 in 2024, mainly due to lower salaries and compensation. The company's total liabilities surged to $213,031,231 as of September 30, 2025, from $44,573,046 at December 31, 2024, largely due to the derivative liability. CPWR also reported a working capital deficiency and stockholders' deficiency of approximately $212 million each, raising substantial doubt about its ability to continue as a going concern. Cash at the end of the period increased to $56,111 from $16,142 at the beginning of the year, primarily from financing activities including $307,500 from common stock subscribed and $55,000 from convertible note sales.

Why It Matters

This filing reveals a company in deep financial distress, with a net loss ballooning to $168 million, primarily due to a massive derivative liability. For investors, this signals extreme risk and potential for significant capital loss, as the going concern warning is explicit. Employees face uncertainty given the company's precarious financial state and reliance on future funding. Customers and the broader market for renewable energy may see this as a cautionary tale for highly speculative ventures, potentially impacting confidence in emerging clean technologies, especially given the competitive landscape dominated by more established renewable energy players. The company's ability to secure grant funding or a contract from the U.S. Army is critical for its survival.

Risk Assessment

Risk Level: high — The company explicitly states 'These factors raise substantial doubt about our ability to continue as a going concern' due to a net loss of approximately $168 million, a working capital deficiency of approximately $212 million, and a stockholders' deficiency of approximately $212 million as of September 30, 2025. The derivative liability alone increased by over $165 million in nine months, indicating extreme financial volatility and risk.

Analyst Insight

Investors should immediately divest any holdings in CPWR due to the severe going concern risk, massive net losses, and overwhelming derivative liabilities. The company's reliance on future grant funding or a U.S. Army contract for survival makes it an extremely speculative and high-risk investment with a high probability of total loss.

Financial Highlights

debt To Equity
N/A
revenue
$1,432,986
operating Margin
N/A
total Assets
$705,305
total Debt
$213,031,231
net Income
-$168,081,522
eps
-$0.38
gross Margin
25.6%
cash Position
$56,111
revenue Growth
N/A

Revenue Breakdown

SegmentRevenueGrowth
Contracts$1,432,986N/A

Key Numbers

Key Players & Entities

FAQ

What caused Ocean Thermal Energy Corporation's significant net loss in Q3 2025?

Ocean Thermal Energy Corporation's net loss of $168,081,522 for the nine months ended September 30, 2025, was primarily caused by a $165,340,795 change in the fair market value of derivative liability. This contrasts sharply with a gain of $2,091,934 from the same item in the prior year period.

Does Ocean Thermal Energy Corporation have enough cash to continue operations?

As of September 30, 2025, Ocean Thermal Energy Corporation had only $56,111 in cash. The company also reported using approximately $322,000 of cash in operating activities for the nine months ended September 30, 2025, and explicitly stated 'These factors raise substantial doubt about our ability to continue as a going concern.'

What is the total amount of liabilities for Ocean Thermal Energy Corporation?

Ocean Thermal Energy Corporation's total liabilities surged to $213,031,231 as of September 30, 2025. This is a significant increase from $44,573,046 at December 31, 2024, largely driven by a derivative liability of $174,819,690.

How much revenue did Ocean Thermal Energy Corporation generate in the first nine months of 2025?

Ocean Thermal Energy Corporation generated $1,432,986 in revenue for the nine months ended September 30, 2025. This marks a significant increase from $0 revenue reported in the corresponding period of 2024.

What is Ocean Thermal Energy Corporation's plan to address its going concern issues?

Ocean Thermal Energy Corporation's ability to continue as a going concern is dependent on increasing sales and obtaining external funding for projects. The company plans to apply for grant funding from the U.S. Department of Energy, focusing on desalinated water, ammonia, and hydrogen production from OTEC facilities.

What is the risk level associated with investing in Ocean Thermal Energy Corporation?

The risk level associated with investing in Ocean Thermal Energy Corporation is high. The company has a net loss of $168 million, a working capital deficiency of $212 million, and a stockholders' deficiency of $212 million, leading management to express 'substantial doubt about our ability to continue as a going concern.'

How many common shares of Ocean Thermal Energy Corporation are outstanding?

As of December 17, 2025, Ocean Thermal Energy Corporation had 190,012,124 outstanding shares of common stock, with a par value of $0.001.

What is a derivative liability for Ocean Thermal Energy Corporation?

For Ocean Thermal Energy Corporation, the derivative liability primarily relates to conversion features embedded within convertible debt. The company accounts for these features at fair value using the Black-Scholes option valuation model, and changes in this fair value are reflected as a significant expense or gain.

What is Ocean Thermal Energy Corporation's primary business?

Ocean Thermal Energy Corporation designs ocean thermal energy conversion power plants and seawater/lake water air conditioning (SWAC/LSC) plants. These technologies aim to provide clean drinking water, food, and sustainable energy by extracting energy from temperature differentials in ocean water.

Has Ocean Thermal Energy Corporation secured any major contracts recently?

The filing mentions that if the United States Army issues a contract for sustainable power and water from the company's OTEC system prior to January 4, 2027, certain convertible notes will automatically convert. However, the filing does not indicate that such a contract has been secured as of September 30, 2025.

Risk Factors

Industry Context

Ocean Thermal Energy Corporation operates in the renewable energy sector, specifically focusing on ocean thermal energy conversion (OTEC). This is a niche but potentially significant area within the broader renewable energy market, which is experiencing growth driven by climate change concerns and government incentives. However, OTEC technology faces significant technical and economic hurdles compared to more established renewables like solar and wind.

Regulatory Implications

Companies in the energy sector, especially those developing novel technologies, are subject to various environmental, safety, and energy market regulations. Changes in government policy, subsidies, or permitting processes can significantly impact project viability and financial performance. Compliance with these regulations is crucial for operational continuity and market access.

What Investors Should Do

  1. Monitor derivative liability valuation and hedging strategies.
  2. Assess the viability of revenue generation and cost management.
  3. Evaluate the company's ability to secure further financing.
  4. Understand the technological and commercialization roadmap for OTEC.

Key Dates

Glossary

Derivative Liability
A financial instrument whose value is derived from an underlying asset, index, or rate. Changes in the fair market value of derivatives can significantly impact a company's financial results. (A substantial increase in the fair market value of the derivative liability was the primary driver of Ocean Thermal Energy Corp's large net loss for the nine months ended September 30, 2025.)
Stockholders' Deficit
Occurs when a company's total liabilities exceed its total assets, resulting in negative equity for its shareholders. (Ocean Thermal Energy Corp reported a significant stockholders' deficit of $212,325,926 as of September 30, 2025, indicating severe financial distress.)
Going Concern
An accounting assumption that a business will continue to operate for the foreseeable future. If there is substantial doubt about a company's ability to continue as a going concern, it must be disclosed. (The company's financial condition, including its large deficit and net loss, raises substantial doubt about its ability to continue as a going concern.)
Accumulated Deficit
The total cumulative net losses of a company since its inception, less any net income. It represents a negative balance in retained earnings. (The company's accumulated deficit has grown to $275,348,018, highlighting a prolonged period of unprofitability.)
Common Stock Subscribed
Represents shares of common stock that have been agreed to be purchased by investors but may not have been fully paid for or issued yet. (The company reported $307,500 in common stock subscribed, indicating recent equity financing activity.)

Year-Over-Year Comparison

Compared to the prior year period, Ocean Thermal Energy Corporation has seen a dramatic shift in its financial performance. Revenue has emerged at $1.43M for the nine months ended September 30, 2025, a significant improvement from $0 in the prior year. However, this is overshadowed by a massive increase in net loss to $168.08M, primarily due to a $165.34M adverse change in derivative liability, compared to a gain in the prior year. Total liabilities have ballooned to $213.03M from $44.57M, leading to a severe stockholders' deficit of $212.33M, raising substantial going concern doubts. Operating expenses have decreased slightly due to lower salaries, but the overall financial picture is considerably more precarious.

Filing Stats: 4,457 words · 18 min read · ~15 pages · Grade level 17.6 · Accepted 2025-12-19 14:03:17

Key Financial Figures

Filing Documents

-FINANCIAL INFORMATION

PART I-FINANCIAL INFORMATION Item 1

Financial Statements (unaudited)

Financial Statements (unaudited) 3 Condensed Consolidated Balance Sheets 3 Condensed Consolidated Statements of Operations 4 Condensed Consolidated Statements of Changes in Stockholders' Deficit 5 Condensed Consolidated Statements of Cash Flows 7 Notes to the Condensed Consolidated Financial Statements 8 Item 2

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 12 Item 3

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 14 Item 4

Controls and Procedures

Controls and Procedures 14

-OTHER INFORMATION

PART II-OTHER INFORMATION Item 1

Legal Proceedings

Legal Proceedings 15 Item 1A

Risk Factors

Risk Factors 15 Item 2 Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities 16 Item 3 Defaults upon Senior Securities 16 Item 6 Exhibits 18 Signature 19 2 Table of Contents

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS OCEAN THERMAL ENERGY CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) September 30, 2025 December 31, 2024 ASSETS Current Assets Cash $ 56,111 $ 16,142 Accounts receivable 395,695 - Costs in excess of billings 248,499 - Prepaid expenses 5,000 5,000 Total Current Assets 705,305 21,142 Total Assets $ 705,305 $ 21,142 LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities Accounts payable and accrued expense $ 29,505,547 $ 26,473,157 Notes payable - related party 2,304,170 2,304,170 Convertible notes payable - related party, net 117,500 117,500 Notes payable 3,623,131 3,638,131 Convertible note payable, net 2,544,665 2,539,665 Advances payable - related party, net 59,578 60,388 Derivative liability 174,819,690 9,423,915 Total Current Liabilities 212,974,281 44,556,926 Convertible notes payable due after one year, net 56,950 16,120 Total Liabilities 213,031,231 44,573,046 Commitments and contingencies (See Note 7) - - Stockholders' deficit Preferred Stock, Series B, $ 0.001 par value; 1,250,000 shares authorized, 518,750 shares issued and outstanding as of September 30, 2025 and December 31, 2024 519 519 Preferred Stock, Series C, $ 0.001 par value; 2,700,000 shares authorized, 2,300,000 shares issued and outstanding as of September 30, 2025 and December 31, 2024 2,300 2,300 Preferred Stock, Series D, $ 0.001 par value; 1,400 shares authorized, 1,400 shares issued and outstanding as of September 30, 2025 and December 31, 2024 1 1 Common stock, $ 0.001 par value; 200,000,000 shares authorized, 190,012,124 shares issued and outstanding as of September 30, 2025 and December 31, 2024 190,013 190,013 Common stock subscribed 307,500 - Additional paid-in capital 62,521,759 62,521,759 Accumulated deficit ( 275,348,018 ) ( 107,266,496 ) Total Stockholders' Deficit ( 212,325,

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