Umbra Companies, Inc. - Annual Report: 2014 (Form 10-K)

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Table of Contents

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PART I

Item 1.  Description of Business

Forward-looking Statements

This annual report contains forward-looking statements.  These statements relate to future events or our future financial performance.  In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology.  These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  Except as required by applicable laws, including the securities laws of the United States, we do not intend to update any of the forward-looking statements so as to conform these statements to actual results.

As used in this annual report, the terms “we,” “us,” “our,” “the Company,” and “Ocean” mean Ocean Electric Inc., unless otherwise indicated.

All dollar amounts refer to US dollars unless otherwise indicated.

Overview

We are a development stage company.  We plan to design, develop, manufacture, license, and service non-polluting, renewable electric power generating plants using innovative, patent protected wave energy and wind energy extraction technologies, for use in the shallow and deep water ocean environment.

The energy in the oceans throughout the world has yet to be tapped in any meaningful way for electricity generation.  Currently, there are many technology companies and project developers seeking to tap this potentially important source of hydrokinetic power. To date, there is no single dominant method or particular standards that define the market. There are currently five principal types of marine and hydrokinetic technologies: ocean wave, tidal stream, river hydrokinetic, ocean current and ocean thermal resources.  Because of the consistency of winds in the ocean environment and the proximity to urban centers, the ocean also offers a logical placement for wind farms. It is the Company’s view that the ocean environment energy is on the cusp of development and widening commercial development.  Although there are a number of different kinds of systems being used and a number of projects in place, the Company currently estimates that there are in excess of 300 various kinds of projects world-wide attempting to use the energy of the oceans, it is still a proof of concept industry.  The results of the current pilot projects and early technologies will largely determine whether wave technology, tidal energy and ocean wind will result in any meaningful energy production.  And, not only will it be the proving of the technology, but society’s acceptance of using the ocean as a source of energy will also be a factor in determining the viability of hydrokinetic energy as a source of power.

The most economical wave and wind electric generation results from “farms” of devices, where the machinery can be grouped for easy maintenance and aggregate use of electricity collection and transmission lines.  Wave and wind farms can co-exist together in the same location.  Wind turbines cannot be placed on a dense grid due to the rotor size and air turbulence caused by their operations.  Wave plants, however, can be placed in a dense pattern below and between wind turbines.  Both the wind and wave farms can share the same geographic footprint, the interconnection cabling, the power switch and transformer platform, and the undersea cable to the land based substation and grid connection.  The Company intends to capitalize on this potential efficiency.

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We believe that Ocean Electric is developing an efficient, innovative technology for a new generation of electric production using renewable marine energy at low cost. We believe that this constitutes a newer concept of an ecological system that draws energy from waves with a high degree of efficiency.  We plan to offer our clients the entire value chain of an energy project: advice and consultancy services, sale of devices, installation services, maintenance team training, sale of spare parts and remote monitoring.

We believe it is essential to highlight the fact that we are dealing with a sustainable source of electricity alternative that has limited environmental impact. As well as being advantageous for the environment in terms of green-house gas production, our designs for wave and wind farms will generate value for society in an environmentally friendly fashion, and where these projects are set up it will generate social and economic wealth through new employment opportunities.

We were incorporated in the State of Nevada on January 10, 2006.  We do not have any subsidiaries.  Our principal office is located at 112 North Curry Street, Carson City, Nevada 89703 and we have offices in Martorelles, Barcelona, Spain and we plan in the future to have a representative office in Portland Oregon.  Our telephone number is (775) 434 0409. Our fiscal year end is December 31.  Our common stock trades on the OTC Bulletin Board under the symbol “OCEL.OB”.

We acquired our current principal assets in 2011.  Prior to that, we did not have any meaningful operations and were a shell company.  We have incurred losses since our inception.  We currently rely upon convertible loans and the sale of our securities to fund our operations, and expect to continue to need to raise equity and other forms of capital to continue our business development and sustain our operations.  We have generated limited revenues of $4,000 from January 10, 2006 (date of inception) to December 31, 2014.  The audit report in connection with the financial statements for the fiscal year ended December 31, 2014, included in this annual report contain a going concern statement.

Current Technologies

Wave Power

In October 2011, we acquired certain wave energy technologies developed by Hidroflot, S.A. existing under the acquired patents, trade secrets and assets, pursuant to a merger and acquisition arrangement.  Hidroflot, S.A. was previously managed by our sole director, and principal executive officer, Mr. Ricardo Prats.  A portion of the technology is patented under the description of being a “half submerged power station for swell energy extraction,” registered in Spain, under number PCT/IB2009/000230.  This technology is designed to generate energy by the movement of waves.

The wave plant is a simple, lower cost solution to convert energy inherent in ocean waves into electricity.  The simplicity of the design is possible due to the ability to convert the vertical motions of floaters into a continuous circular motion capable of driving a rotary generator.

Our wave platform design has “floaters” that will move up and down with the passing of ocean waves. The floaters will be housed in a symmetrical cage or framework that can be configured for different numbers of floaters; our platform typically would use 16 floaters.  Vertical motion of the “floaters” will be converted to rotary motion to drive electric generators.  The floating platform will be anchored to the sea floor and can be totally submerged should waves exceed 6 meters, as a means to protect the platform in the event of storms and heavy seas.  Platforms can be grouped together to form 50 MW “farms”.  Typically, such farms would be configured in a star pattern to allow each platform to face the oncoming waves without disruption from other platforms. A star configuration of 8 platforms would have the capacity of 6.4MW.  Undersea cabling will be used to connect “farms” to the onshore power grid.  Due to its compact design, submersible protection, and high MW rating, the wave platform’s acquisition and operating costs per MW will be significantly less than competitive designs.  The platform will be designed for both shallow and deep water applications.

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A prototype of the above described platform is currently undergoing preliminary sea trials prior to commercialization.

In 2013, the Company signed an agreement to design and build a small wave plant with a limited number of floaters to produce approximately 200kW of electricity to power a fish farm, and replace or reduce the dependence on diesel energy sources, which would be the typical source of electric power in this work situation.  As an additional benefit, the proposed plant would be more “green,” eliminating the potential for oil and fuel spills in the farm environment and reducing green-house emissions. The agreement is with a Company located in South America. To date, however, as of the date of this report, we have not commenced construction of the plant due to a lack of funding for our working capital.

Wind power

The origin of offshore wind power began as land based wind turbines.  For greatest efficiency, wind farms should be placed as close to consumers as possible, to reduce the need for above ground transmission lines to deliver the energy to the grid and produce the most energy for consumers. Often, however, the land locations available for wind production that are near urban centers do not offer the most consistent winds. And those places where the land and wind conditions are best are often not near urban centers.  Additionally, wind turbines are not appreciated as neighbors to urban residents, as they are considered intrusive and noisy.

One result has been the introduction of the concept of offshore wind farms.  Ocean locations offer proximity to urban centers, as the greatest population centers tend to be along the ocean’s coasts.  Additionally, undersea cable is considerably less expensive than over land transmission lines.  Arguably, ocean locations will engender less controversy as they are not as intrusive on the urban landscape, especially if they are in deep water locations which tend to be many miles off shore.

One of the most fundamental issues of adapting off shore wind turbines is making them suitable for marine environments.  Additionally, the strongest winds exist at the outer reaches of the continental shelves, where the turbines must be anchored at depths of up to 200 meters.  Currently, the design for most ocean located wind turbines is for a monopole affixed to the ocean floor, but increasingly there are designs for floating turbine concepts.  The Company believes that the floating structure is the most logical solution for large off shore turbines, and can be economically competitive in the long run.  Therefore, one issue that presents itself is the design and stability of the turbine, especially for the floating turbine.

Conventional wind turbines can have more than 350 to 500 tons of equipment in the nacelle which sits on top of a supporting column (tower) that can exceed 200 meters in height.  As an example, the Brunsuttel Germany 5MW wind turbine has a rotor diameter of 126 meters and a tower height of 120 meters, resulting in a total height of approximately 200 meters.  Stabilizing 400 tons of equipment on top of a 200 meter offshore tower requires either a solid anchoring system or, if floating, a more balanced design.

In December 1, 2011, we acquired certain wind offshore wind energy technologies developed by Green & Blue Sustainable Technologies, a company owned by our sole director, and principal executive officer, Mr. Ricardo Prats.  Our wind platform design moves 115+ tons of machinery from the top of the rotor blade tower (located in a nacelle) to the base of a floating spur wind turbine.  A patented fiber sling transmission system connects the rotor shaft at the top to the generator at the base of the tower.  The Nacelle and tower yaw control uses our patented mechanism.  Our wind turbine is designed for deep water continental shelf installations (depths of 30 meters to more than 200 meters).  Multiple turbines can be interconnected to form offshore wind “farms” for larger MW capacity.  By moving the generating equipment to the base of the turbine tower, the turbine center of gravity is lowered which significantly increases stability particularly during inclement weather.  With sea level access, equipment installation, maintenance, and repair costs are reduced.  The transmission and yaw systems can be adapted to many wind turbine manufacturer’s nacelle and generating equipment, thereby increasing our market opportunity for licensing rights and project services.

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Patents and Applications

Currently, we hold the following registered patents and patent applications and licenses:

a)

PCT/IB2009/000230, with respect to the half-submerged power station for swell energy extraction, which is registered in Spain; and

b)

PCT EP2012/054552, with respect to an off-shore floating wind turbine for electrical power generation, which is registered with the European Patent Office.

c)

PCT/ES2013/070911 “Power Plant for the Generation of Electrical Energy from Waves,” in respect to a power plant that converts wave actions into electricity.  International patent registered by the Spanish Patent and Trademark Office.

The Company will seek additional patents and related protections from time to time as its research and development warrants, as we plan to undertake an active program to protect our current and any expansions of our intellectual property.  These registrations will be in the European Community and in other jurisdictions such as the US, where the Company technologies will be deployed.  No assurance can be given that it will be able to obtain additional registrations and fully protect its intellectual property through patent registration.

Business Opportunities

Project management/turn-key solution

We plan to commercialize our technology primarily through project management and consulting services to provide a turn-key solution. Turnkey projects will be designed, developed, and installed under a project management contract coordinating all aspects of the project. A project contract will vary in scope depending on the requirements of the contracting party; however, we will offer oversight and coordination of the entire wave and wind farm technologies to specific areas within a project when contracted under the direction of, or directly by, a prime contractor.  For a turnkey solution, the project contract would cover pre-project planning, development of a master plan, detailed engineering, pre-testing and training, procurement, installation and commissioning.  Additionally, we may offer services in the operational phase, including general operations and maintenance and repair services.

Licensing

We will also consider licensing our technologies and intellectual property.  We believe technology licenses and engineering support contracts will be marketed to equipment suppliers.  Partnerships, joint marketing, and other types of alliances may be formed for additional licensing opportunities.

Manufacturing

We plan to manufacture under our strict guidance only the patented, critical components that require stringent engineering tolerances and/or a high degree of quality control.  Third party manufacturers will be contracted by us for all remaining equipment and paid for directly by our clients.  We believe other components are available from various sources.  We do not manufacture any components at this time.

Sales Channels

We plan to create an internal direct sales force as our primary means of marketing.  Internal marketing will be supported by a network of international sales representative organizations capable of providing technical sales support, account management, and contract administration.

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Because our technology requires a substantial investment and its audience has a limited number of players, our principal marketing efforts will be towards identification of potential users of the technology and then directing sales data, effort and personnel to these targets.

We also will concentrate on building brand and technology recognition.

Market Demand

Global electricity demand is forecasted to increase by 87 percent from 18.8 trillion KWh in 2007 to 25.0 trillion KWh in 2020 and 35.2 trillion KWh by 2035.  Global renewable electricity generation is forecasted to grow by 3.0 percent per year increasing from an 18 percent share of electricity generation in 2007 to 23 percent in 2035.  In part, the increase will be driven by government incentives and higher fossil fuel prices, and in part, the increase will be driven by the overall need for additional sources of electricity production.

Wave Energy

Pike Research forecasts ocean energy could yield a global power generation capacity of 200 GW by 2025.  The National Renewable Energy Laboratory (NREL) forecasts wave power generation could meet 2% of current U.S. electricity demand, providing 80 TWh/yr of power production by 2025.  The U.S. market opportunity is forecasted at 46 GW by 2025.

Wind Power

Europe has installed more than 830 wind turbines serving nine countries.  Almost all of the 2,300 megawatts (MW) of installed capacity has been built in shallow waters (less than 30 meters deep).  Our current technologies can compete in the shallow water locations, but more importantly, we believe that our solutions can work in deep waters, opening a new market in renewable energy.

The United States leads the world in installed, land-based wind energy capacity but has no offshore wind projects currently in operation.  However, the Company believes that there are approximately 20 projects representing more than 2,000 MW of capacity that are in the planning and permitting process for offshore electricity production, indicating that the United States represents a substantial potential market for our technologies.

Competition

Wave Power Competition

To date, no single technology has emerged as the industry standard for either on-shore/near-shore or off-shore installations.  Most technologies remain in experimental development with a few in the prototype stage or initial implementation.

At-shore and near-shore technologies attempt to harness both the potential and kinetic energy of waves.  Although access is fairly easy, as waves approach the shore, a significant amount of energy has already been dissipated.  In addition, not all coast lines (e.g. shallow beachheads) are suitable for these types of technologies.  Another disadvantage is the environmental impact of an installation on or near the coastline.

Off-shore technologies are deployed in open sea deep water (>40m) where waves have not dissipated energy by approaching the coastline.  Off-shore technologies inherently also have a lower environmental impact.  There are two basic types of off-shore technologies; floating body and above sea level devices.  Floating body devices generate power based on movement of the device induced by waves.  Above sea level devices protrude 2m to 5m above the surface.  When waves move over the top of the device, water is then channeled back into the ocean through a low pressure turbine to generate electricity.

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Off-shore technologies can be more cost effective, efficient, and impose less of an impact on the environment than at- and near-shore technologies, because of the land costs, transmission costs and power boosting, visual and noise impact, among other things.  As a result, we believe that future commercialization will strongly consider off-shore alternatives over at-and near-shore wind and wave generation.  Globally there are a number of off-shore projects, most of which are small, localized projects, with many operating on an experimental basis.  Some of the more noteworthy projects include the following:

1.

Pelamis, by Ocean Power Delivery (Edinburgh, Scotland)

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Power Buoy, by Ocean Power Technologies (New Jersey, USA)

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GreenWave (near-shore) and BlueWave (off-shore) by OceanLinx (formerly Energetech, Australia)

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Archimedes Wave Swing by AWS Ocean Energy Ltd (Scotland)

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Waveplane by WavePlane Production A/S (Denmark)

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Wave dragon by Wave Dragon ApS (Denmark)

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The PIPO Buoy by Pipo Systems, S.L. (Vigo-Pontevedra, Spain)

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The Manchester Bobber by The University of Manchester Intellectual Property Limited (England)

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Anaconda Wave Energy Converter (Great Britain)

Each of the above listed projects deploys unique concepts and designs, somewhat different from one another.  The Company believes that to date, no one design has begun to dominate the market.  Because wave power is an emerging industry, there are no dominant standards yet in the market place.  Many early designs have proven to be inefficient, inoperable, uneconomical, or failed to obtain sufficient levels of funding.  Our technologies may suffer some or all of the same limitations.  Notwithstanding such risk, we believe that our technology is feasible and will prove efficacious. Research and development of our wave technology has been undertaken over the past decade, and it was supported by multiple governmental and institutional grants and partnerships.

We also believe our technology has the following advantages over the currently explored methods of harnessing the energy of the oceans:

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Small footprint/ low profile: Sixteen floaters can be placed within a 36 square meter area, which is significantly less than competitive configurations.  The wave plant, being semi-submerged, has a low profile which makes installation, access and maintenance easier and faster.

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Submersible: The power plant can be submerged during high seas to prevent wave damage and isolate the plant from severe weather.

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Power Rating: We believe our power plant will have a higher power megawatt rating than our competitors.

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Scalability: We believe that our wave farms can be scaled with increasing demand while remaining relatively compact.

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Cost: We believe that the cost per installed MW will be competitive with similar alternative energy sources, however, since our technologies are only just being subjected to trials, the actual costs and longevity of productive use have not been commercially proven.

Wind Power Competition

All wind turbines currently available have the same design configuration, namely the placement of the gear box, generator, braking, yaw control, and electronic controls in a nacelle platform mounted on top of an elevated tower.  Competitive pricing is driven more by implementation and cost of ownership than major design advantages.  We are the first company to offer what we believe to be a significantly improved configuration for offshore installations, with a new wind turbine concept.

Design, development and construction of wind turbines are both complex and capital intensive.  The leading companies are large, well-capitalized organizations that have entered the wind power market by leveraging other mainline businesses.  Using past experience and expertise in related industries, turbines, transformers, electronic control, and many other common components were adapted for the wind power market.  The most prominent companies are large international firms such as Vestas, General Electric, Siemens, Gamesa, Alstom, and Areva, all of which have not only provided equipment for land based wind farms but also offshore farms.

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General competitive conditions may be substantially affected by various forms of energy legislation and/or regulation introduced from time to time by the governments of the United States and other countries, as well as factors beyond our control, including international political conditions, overall levels of supply and demand for energy and alternative energy sources.

In the face of competition, we may not be successful in developing our technologies or interests.  Despite this, we hope to compete successfully in the wind and wave energy power industry by:

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Keeping our costs low;

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Relying on the strength of our management’s contacts; and

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Using our size and experience to our advantage by adapting quickly to changing market conditions or responding swiftly to potential opportunities.

Intellectual Property

We have not filed for any protection of our trademarks for our corporate name.  We own the copyright of our logo and all of the contents of our website, www.ocel.com.  In addition, we own the patents to the wave and wind energy technologies described above.

Research and Development Expenditures

We have not spent any amounts on research and development activities since our reverse merger transaction.

Government Regulations

Our current and future operations are or will be subject to various laws and regulations in US, Europe and other countries in which we do or will conduct our activities.  These laws and regulations govern the protection of the environment, conservation, development, energy production, taxes, labor standards, occupational health, work safety, toxic substances, chemical products and materials, waste management, and other matters relating to the energy industry.  As we further develop our business, we will likely experience an increase in government oversight and associated costs.

Permits, registrations or other authorizations will be required for the operation of our planned energy production facilities.  These permits, registrations or authorizations will be subject to revocation, modification and renewal.  Governmental authorities have the power to enforce compliance with these regulatory requirements, the provisions of required permits, registrations or other authorizations, and lease conditions, and violators are subject to civil and criminal penalties, including fines, injunctions or both.  Failure to obtain or maintain a required permit may also result in the imposition of civil and criminal penalties.  Third parties may have the right to sue to enforce compliance.

We expect to be able to comply with those laws and do not believe that compliance will have a material adverse effect on our competitive position.  We have obtained, and intend to obtain all licenses and permits required by all applicable regulatory agencies in connection with any of the operations we carry out and our future activities.  We intend to maintain standards of environmental compliance consistent with regulatory requirements.  We have obtained, and will obtain at the appropriate time, environmental permits, licenses or approvals required for our operations.  We are not aware of any material violations of environmental permits, licenses or approvals issued with respect to our operations.  At this time, we do not anticipate any material capital expenditures to comply with various environmental requirements.

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U.S. Regulations

If we commence operations for the installation of a wave and/or wind farm in the United States, we anticipate having to comply with a myriad of federal United States laws.  We would have to comply with the laws and regulations promulgated by the Minerals Management Service, which governs leasing rights and location of devices on the seabed and the production, transport and transmission of forms of energy other than oil and gas from an ocean location, under the Outer Continental Shelf Land Act, the Energy Policy Act of 2005, and the Submerged Lands Act.  Under the Federal Power Act, we would have to comply with the laws and regulations administered by FERC, which govern electric power generation and interconnections.  We would have to comply with Coast Guard regulation and US Army Corp of Engineers regulation, which govern locating plants, ocean traffic, marine safety and installation.  In respect of environmental regulation, plants would have to comply with a wide range of statutes and related regulation, administered by many different agencies, including the National Environmental Policy Act (quality of human environment), Migratory Bird Treaty Act (harming of birds), National Historic Preservation Act (protection of historic places, including places, properties and shipwrecks), Magnuson-Stevens Fishery Conservation & Management Act (fishery management), National Marine Sanctuary Act (marine life protection), Endangered Species Act (protection of species and habitat), Clean Water Act (discharge of pollutants in the waters of the United States), Clean Air Act (discharge of pollutants into the air), Marine Mammal Protection Act (mammal harassment and protection), and Estuary Protection Act (conservation of estuarine areas).

In some instances, state law may also be involved in connection with transmission lines and location of substations, and connection to the local electric grid, typically involving environmental regulation and law.  The Company will also have to comply with property rights and property law in connection with easements and access rights for its transmission line.

Employees and Consultants

As of December 31, 2014, we had one full time employees, our Chief Executive Officer, who also acts as our general manager.  We have also engaged an individual as our technical officer. We currently engage independent contractors in the areas of accounting, secretary, CAD designer, geologist services, legal, auditing services, investment banking and corporate development.  In the future, as our business and our financial resources warrant, we will engage other personnel and consultants as needed to implement our business plan.

Item 1A.  Risk Factors

You should carefully consider the following risk factors together with the other information contained in this Annual Report on Form 10-K, and in prior reports pursuant to the Securities Exchange Act of 1934, as amended and the Securities Act of 1933, as amended. If any of the following risks actually occur, they may materially harm our business and our financial condition and results of operations. In this event, the market price of our common stock could decline and your investment could be lost.

Risks Relating to Our Business

We have a history of operating losses and may never achieve or maintain profitability and positive cash flow.

We have incurred net losses since we began operations in 2006, including net comprehensive losses of $546,988 in fiscal year ended 2014 and $12,180 in fiscal year ended 2013.  As of December 31, 2014, we had an accumulated deficit of $7,195,163.  To continue the development of our business, we will have to raise significant amounts of capital.  We do not yet have any prediction on when we will commence the generation of any revenues.  As we continue to develop our proprietary technologies, we expect to have a net decrease in cash from operating activities.  We do not know whether or when we will become profitable because of the significant uncertainties with respect to our ability to successfully commercialize our wave and/or wind energy technologies in the emerging renewable energy market.

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We will need to sell additional equity and/or debt securities or obtain credit facilities to continue our business. The sale of additional equity or convertible securities will result in dilution to our stockholders. If additional funds are raised through the issuance of debt securities, these securities will have rights senior to those associated with our common stock and likely will contain covenants that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us. If we are unable to obtain required financing, we may be required to reduce the scope of our planned product development and commercialization efforts, which could adversely affect our financial condition, operating results and the market value of our common stock.

Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern.

The report of our independent auditor dated March 30, 2015, on our financial statements for the year ended December 31, 2014, included an explanatory paragraph indicating that there is substantial doubt about our ability to continue as a going concern.  Our auditor’s doubts are based on our deficit accumulated during development stage and our net loses and cash flow deficiencies. Our ability to continue as a going concern will be determined upon the continued financial support from our management and shareholders, our ability to identify future investment opportunities and our ability to obtain the necessary debt or equity financing and generate profitable operations from our future operations.

We may not be able to raise sufficient capital to grow our business.

We will need to raise additional funds to support development and commercialization of our products and services.  We will need substantial funds to continue our wave technology trials and proving our technologies, and to modify and develop additional aspects of our technologies to make them marketable.  If we are unable to raise additional funds when needed, our ability to operate and grow our business will be impaired. We do not know whether we will be able to secure additional funding or funding on terms favorable to us.  Our ability to obtain additional funding will be subject to a number of factors, including market conditions, our operating performance and investor sentiment.  These factors may make the timing, amount, terms and conditions of additional funding unattractive. If we issue additional equity securities, our existing stockholders would experience dilution or may be subordinated to any rights, preferences or privileges granted to the new equity holders.

Wave and/or wind energy technologies may not gain broad commercial acceptance, and therefore we might not be able to generate sufficient revenues in order to achieve and subsequently sustain profitability.

Both wave and wind energy technology is at an early stage of development, and the extent to which these renewable energy resources will be commercially viable is uncertain. Many factors may affect the commercial acceptance of wave and/or wind energy technology, including the following:

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Performance, reliability and cost-effectiveness of these renewable energy resources compared to conventional and other renewable energy sources and products;

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Developments relating to other renewable energy generation technologies;

·

Fluctuations in economic and market conditions that affect the cost or viability of conventional and renewable energy sources, such as increases or decreases in the prices of oil and other fossil fuels;

·

Overall growth in the renewable energy equipment market;

·

Availability and terms of government subsidies and incentives to support the development of renewable energy sources, including wave and wind energy; and

·

Fluctuations in capital expenditures by utilities and independent power producers, which tend to decrease when the economy slows and interest rates increase.

If neither wave nor wind energy technology gains broad commercial acceptance, our business will be materially harmed and we may need to curtail or cease operations.

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If demand for our renewable energy technologies does not develop or takes longer to develop than we anticipate, our revenues may decline, and we may be unable to achieve and then sustain profitability.

Even if wave and/or wind energy technologies achieve broad commercial acceptance, our particular technologies may not prove to be commercially viable for generating electricity from either ocean waves or offshore wind. If demand fails to develop for our products and services our renewable energy technologies, we may be unable to grow our business or generate sufficient revenues to achieve and then sustain profitability. If we are not successful in commercializing our renewable energy technologies, our business, financial condition and results of operations would be adversely affected.

The reduction or elimination of government subsidies and economic incentives for renewable energy sources could prevent demand for our wave and wind energy technologies from developing, which in turn would adversely affect our business, financial condition and results of operations.

Federal, state and local governmental bodies in many countries, have provided subsidies in the form of tariff subsidies, rebates, tax credits and other incentives to utilities, power generators and distributors using renewable energy.  However, these incentives and subsidies generally decline over time, and many incentive and subsidy programs have specific expiration dates.  Moreover, because the markets for electricity generated from wave and wind energy are at an early stage of development, some of the programs may not include wave energy as a renewable energy source eligible for the incentives and subsidies.

Currently, the cost of electricity generated from wave and wave energy, without the benefit of subsidies or other economic incentives, substantially exceeds the price of electricity in most significant markets in the world. As renewable energy becomes more of a competitive threat to conventional energy providers, companies active in the conventional energy business may increase their lobbying efforts in order to encourage governments to stop providing subsidies for renewable energy. We cannot predict the level or time frame of any such efforts, or how governments may react to such efforts. The reduction, elimination or expiration of government incentives and subsidies, or the exclusion of wave and/or wind energy technology from those incentives and subsidies, may result in the diminished competitiveness of wave and wind energy relative to conventional and non-wave/wind energy renewable sources of energy. Such diminished competitiveness could materially and adversely affect the growth of the wave and wind energy industries, which could in turn adversely affect our business, financial condition and results of operations.

Our inability to effectively manage our growth could adversely affect our business and operations.

The scope of our operations to date has been limited, and we do not have experience operating on the scale that we believe will be necessary to achieve profitable operations.  We have not yet carried out any project management contracts for any of our wave or wind products.  Our current personnel, facilities, systems and internal procedures and controls are not adequate to support our projected future growth.

To manage the expansion of our operations, we will be required to improve our operational and financial systems, procedures and controls, increase our manufacturing capacity and throughput and expand, train and manage our employee base, which must increase significantly if we are to be able to fulfill our current business plans. Our management will also be required to establish and maintain relationships with customers, suppliers and other third parties. If we do not meet these challenges, we may be unable to take advantage of market opportunities, execute our business strategies or respond to competitive pressures.

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The renewable energy industry is highly competitive. We compete with other renewable energy companies and projects and may have to compete with larger companies that enter into the renewable energy business. If we are unable to compete effectively, we may be unable to increase our revenues and achieve or maintain profitability.

The renewable energy industry is highly competitive and continually evolving as participants strive to distinguish themselves and compete with the larger electric power industry.  Competition in the renewable energy industry is likely to continue to increase with the advent of several renewable energy technologies.  Competition may arise from other companies manufacturing similar products, developing different products that produce energy more efficiently than our products, or making improvements to traditional energy-producing methods or technologies, any of which could make our technology less attractive or obsolete.  If we are not successful in manufacturing systems that generate competitively priced electricity, we will not be able to respond effectively to competitive pressures from other renewable energy technologies or improvements to existing technologies.

Moreover, the success of renewable energy generation technologies may cause larger electric utility and other energy companies with substantial financial resources to enter into the renewable energy industry.  These companies, due to their greater capital resources and substantial technical expertise, may be better positioned than we are to develop new or improve existing technologies.  Our inability to respond effectively to such competition could adversely affect our business, financial condition and results of operations.

We have no manufacturing experience. If we are unable to manufacturing our products in a cost-effective manner, our business will be materially harmed.

We plan to only manufacture the patented critical components of our wave and wind energy systems using contract manufacturers.  To date, we only manufactured these components for use in development and testing and have no commercial manufacturing experience.  Our future success depends will depend in part on our ability to develop our manufacturing capability in a cost-effective and efficient, quality manner.  In order to meet our growth objectives, we also will need to increase our engineering capabilities.  There is intense competition for hiring qualified technical and engineering personnel, and we may not be able to hire a sufficient number of qualified personnel to allow us to meet our growth objectives.

We may be unable to develop efficient, low-cost manufacturing capabilities and processes that will enable us to meet the quality, price, engineering, design and production standards or production volumes necessary to successfully commercialize our wave and wind energy systems.  If we cannot do so, we may be unable to expand our business, satisfy our contractual obligations or become profitable.  Even if we are successful in developing our manufacturing capabilities and processes, we may not be able to do so in time to meet our commercialization schedule or satisfy the requirements of our customers.

Failure by third parties to supply or manufacture components of our products or to deploy our systems timely or properly could adversely affect our business, financial condition and results of operations.

We will be highly dependent on third parties to supply or manufacture all other components of our wave and wind energy power systems.  If, for any reason, our third-party manufacturers or vendors are not willing or able to provide us with components or supplies in a timely fashion, or at all, our ability to manufacture and sell many of our products could be impaired.

There can be no assurance that these third parties will meet their obligations. Third-party manufacturers and suppliers may encounter problems during manufacturing due to a variety of reasons, including failure to procure their raw material on time, failure to follow specific protocols and procedures, failure to comply with applicable regulations, equipment malfunction and environmental factors, any of which could delay or impede their ability to meet our demand. Our reliance on these outside manufacturers and suppliers also subjects us to other risks that could harm our business, including:

·

Suppliers may make errors in manufacturing components that could negatively impact the effectiveness or safety of our products, or cause delays in shipment of our products;

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·

We may not be able to obtain adequate supply in a timely manner or on commercially reasonable terms;

·

Our suppliers may manufacture products for a range of customers, and fluctuations in demand for the products these suppliers manufacture for others may affect their ability to deliver components to us in a timely manner; and

·

Our suppliers may encounter financial hardships unrelated to our demand for components, which could inhibit their ability to fulfill our orders and meet our requirements.

Any interruption or delay in the supply of components or materials, or our inability to obtain components or materials from alternate sources at acceptable prices in a timely manner, could impair our ability to meet the demand of our customers and cause them to cancel orders, which would adversely affect our business, financial condition and results of operations

We plan to market our products in numerous international markets. If we are unable to manage our international operations effectively, our business, financial condition and results of operations could be adversely affected.

We plan to market our products in a number of foreign countries and we are therefore subject to risks associated with having international operations. Risks inherent in international operations include, but are not limited to, the following:

·

Changes in general economic and political conditions in the countries in which we operate;

·

Unexpected adverse changes in foreign laws or regulatory requirements, including those with respect to renewable energy, environmental protection, permitting, export duties and quotas;

·

Trade barriers such as export requirements, tariffs, taxes and other restrictions and expenses, which could increase the prices of our wave and wind energy power systems and make us less competitive in some countries;

·

Fluctuations in exchange rates may affect demand for our wave and wind energy power systems and may adversely affect our profitability in US dollars to the extent the price of our wave and wind energy power systems are denominated in a foreign currency;

·

Complexity of, and costs relating to compliance with, the different commercial and legal requirements of the overseas markets in which we will offer and sell our wave and wind energy power systems;

·

Inability to obtain, maintain or enforce intellectual property rights; and

·

Difficulty in enforcing agreements in foreign legal systems.

Existing regulations and policies and changes to these or new regulations and policies may present technical, regulatory and economic barriers to the use of wave and/or wind energy technology, which may significantly reduce demand for our wave and wind energy power systems.

The market for electricity generation equipment is heavily influenced by foreign, federal, state and local government regulations and policies concerning the electric utility industry, as well as policies promulgated by electric utilities.  These regulations and policies often relate to electricity pricing and connection to the power grid.  In the United States and in a number of other countries, these regulations and policies currently are being modified and may be modified again in the future.  Utility company and independent power producer purchases of, or further investment in the research and development of, alternative energy sources, including wave and wind energy technology, could be deterred by these regulations and policies, which could result in a significant reduction in the potential demand for our wave and wind energy power systems.

If the renewable energy industry continues to develop and if the generation of power from wave and wind energy in particular achieves commercial acceptance, we anticipate that wave and wind energy technology and their deployment will be subject to increased oversight and regulation.  We are unable to predict the nature or extent of regulations that may be imposed or adopted.  Any new government regulations or utility policies pertaining to wave or wind energy may result in significant additional expenses to us and our customers and, as a result, could adversely affect our business, financial condition and results of operations.

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If we are unable to obtain all necessary regulatory permits and approvals, we will not be able to implement our planned projects.

Development of electric power generating facilities is heavily regulated.  We will be dependent on state, federal and regional government agencies for permits and approvals.  If we are unable to obtain necessary permits and approvals in connection with any or all of our projects, those projects would not be implemented and our business, financial condition and results of operations would be adversely affected.  Further, we cannot assure you that we will be at all times in complete compliance with all such permits and approvals.  If we violate or fail to comply with these permits and approvals, we could be fined or otherwise sanctioned by regulators.

We may face hurricane- and storm-related risks and other risks typical of a marine environment which could adversely affect our business, financial condition and results of operations.

Our wave and wind energy power systems will be deployed in the ocean where they could be subject to many hazards including severe storms and hurricanes, which could damage them and result in service interruptions.  We cannot predict whether we will be able to recover from our insurance providers the additional costs that we may incur due to damage caused to our wave energy power systems, or whether we will continue to be able to obtain insurance for hurricane- and storm-related damages or, if obtainable and carried, whether this insurance will be adequate to cover our liabilities.  Any future hurricane-or storm-related costs could adversely affect our business, financial condition and results of operations.

Since our wave and wind energy power systems can only be deployed in certain geographic locations, our ability to grow our business could be adversely affected.

Not all areas worldwide have appropriate natural resources for our wave and wind energy power systems to harness energy.  Seasonal and local variations, and the effect of particular geographical features may limit our ability to deploy our wave and wind energy power systems in certain areas.  If we are unable to identify and deploy our wave and/or wind energy power systems at sufficient sites near major population centers, our ability to grow our business could be adversely affected.

We face numerous accident and safety risks and hazards that are inherent in energy operations.

Portions of our operations are subject to hazards and risks inherent in the building, testing, deploying and maintenance of our wave and wind energy systems. These hazards and risks could result in personal injuries, loss of life, and other damages, which may include damage to our properties and the properties of others and other consequential damages, and could lead to the suspension of certain of our operations, large damage claims, damage to our safety reputation and a loss of business.  Some of these risks may be uninsurable and some claims may exceed our insurance coverage.  Therefore, the occurrence of a significant accident or other risk event or hazard that is not fully covered by insurance could materially and adversely affect our business and financial results and, even if fully covered by insurance, could materially and adversely affect our business due to the impact on our reputation for safety. In addition, the risks inherent in our business are such that we cannot assure you that we will be able to maintain adequate insurance in the future at reasonable rates.

If we are unable to attract and retain qualified personnel, we may not be able to achieve our business objectives.

Currently, we have three direct employees. In order to achieve our anticipated growth, we will need to hire additional qualified technical, commercial and administrative personnel.  There is competition from other companies and research and academic institutions for qualified personnel in the areas of our activities.  If we are not able to attract and retain, on acceptable terms, the qualified personnel necessary for the future development of our business, we may not be able to grow our operations at a competitive pace.

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Any acquisitions that we make or joint venture agreements that we enter into could adversely affect our business, financial condition and results of operations.

From time to time, we may evaluate potential strategic acquisitions of complementary businesses, products or technologies, as well as consider joint ventures and other collaborative projects.  We do not have any experience with acquiring companies or products.  Any acquisition we pursue could diminish the capital resources otherwise available to us for other uses or be dilutive to our stockholders and could divert management's time and resources from our core operations.  Additionally, we expect an acquisition will require financing for which we have no current sources.

Strategic acquisitions, investments and alliances with third parties could subject us to a number of risks, including risks associated with sharing proprietary information and loss of control of operations that are material to our business.  In addition, strategic acquisitions, investments and alliances may be expensive to implement.  Moreover, strategic acquisitions, investments and alliances subject us to the risk of non-performance by a counterparty, which may in turn lead to monetary losses that materially and adversely affect our business, financial condition and results of operations.

In the event we are unable to satisfy regulatory requirements relating to internal control over financial reporting, or if our internal controls are not effective, our business and financial results may suffer.

Effective internal controls are necessary for us to provide reasonable assurance with respect to our financial reports and to effectively prevent fraud.  If we cannot provide reasonable assurance with respect to our financial reports and effectively prevent fraud, our business and operating results could be harmed.  Pursuant to the Sarbanes-Oxley Act of 2002, we are required to furnish a report by management on internal control over financial reporting, including management's assessment of the effectiveness of such control. Internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud.  Therefore, even effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements. In addition, projections of any evaluation of the effectiveness of internal control over financial reporting to future periods are subject to the risk that the control may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. If we fail to maintain the adequacy of our internal controls, including any failure to implement new or improved controls, or if we experience difficulties in their implementation, our business and operating results could be harmed, we could fail to meet our reporting obligations, and there could also be a material adverse effect on our stock price.

Risks Related to Intellectual Property

If we are unable to obtain or maintain intellectual property rights relating to our technology and products, the commercial value of our technology and products may be adversely affected, which could in turn adversely affect our business, financial condition and results of operations.

Our success and ability to compete depends in part upon our ability to obtain protection in the United States and other countries for our products by establishing and maintaining intellectual property rights relating to or incorporated into our technology and products. We do not know how successful we would be if we choose to assert our patents against suspected infringers. Our pending and future patent applications may not issue as patents or, if issued, may not issue in a form that will be advantageous to us. Even if issued, patents may be challenged, narrowed, invalidated or circumvented, which could limit our ability to stop competitors from marketing similar products or limit the length of term of patent protection we may have for our products. Changes in either patent laws or in interpretations of patent laws in the United States and other countries may diminish the value of our intellectual property or narrow the scope of our patent protection, which could in turn adversely affect our business, financial condition and results of operations.

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If we are unable to protect the confidentiality of our proprietary information and know-how, the value of our technology and products could be adversely affected, which could in turn adversely affect our business, financial condition and results of operations.

In addition to patented technology, we rely upon unpatented proprietary technology, processes and know-how. We generally seek to protect this information in part by confidentiality agreements with our consultants and other third parties. These agreements may be breached, and we may not have adequate remedies for any such breach. In addition, our trade secrets may otherwise become known or be independently developed by competitors.

If we infringe or are alleged to infringe intellectual property rights of third parties, our business, financial condition and results of operations could be adversely affected.

Our products may infringe, or be claimed to infringe, patents or patent applications under which we do not hold licenses or other rights. Third parties may own or control these patents and patent applications in the United States and abroad.  Third parties could bring claims against us that would cause us to incur substantial expenses and, if successfully asserted against us, could cause us to pay substantial damages.

As a result of patent infringement claims, or in order to avoid potential claims, we may choose or be required to seek a license from the third party and be required to pay license fees, royalties or both.  These licenses may not be available on acceptable terms, or at all.  Even if we were able to obtain a license, the rights may be nonexclusive, which could result in our competitors gaining access to the same intellectual property.  Ultimately, we could be forced to cease some aspect of our business operations if, as a result of actual or threatened patent infringement claims, we are unable to enter into licenses on acceptable terms.  This could significantly and adversely affect our business, financial condition and results of operations.

In addition to infringement claims against us, we may become a party to other types of patent litigation and other proceedings, including interference proceedings declared by the United States Patent and Trademark Office and opposition proceedings in the European Patent Office, regarding intellectual property rights with respect to our products and technology.  The cost to us of any patent litigation or other proceeding, even if resolved in our favor, could be substantial.  In addition, if we were to license our intellectual property to others, we may be required to indemnify our licensee if the licensed intellectual property is found to be infringing on a third party’s rights.  Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources.  Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace. Patent litigation and other proceedings may also absorb significant management time.

Our failure to comply with U.S. laws and regulations relating to the export and import of goods, technology, and software could subject us to penalties and other sanctions and restrict our ability to license and develop our circuit designs.

As a United States company, we are obligated by law to comply with all U.S. laws and regulations governing the export and import of goods, technology, and services, including the International Traffic in Arms Regulations, or ITAR, the Export Administration Regulations, or EAR, regulations administered by the Department of Treasury’s Office of Foreign Assets Control, and regulations administered by the Bureau of Alcohol Tobacco Firearms and Explosives governing the importation of items on the U.S. Munitions Import List.  Pursuant to these regulations, we are responsible for determining the proper licensing jurisdiction and export classification of our technology designs, and obtaining all necessary licenses or other approvals, if required, for exports and imports of technical data, and software, or for the provision of technical assistance or other defense services to or on behalf of foreign persons. We are also required to obtain export licenses, if required, before employing or otherwise utilizing foreign persons in the performance of our contracts if the foreign person will have access to export-controlled technical data or software. The violation of any of the applicable laws and regulations could subject us to administrative, civil, and criminal penalties.

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These regulations could restrict our ability to license existing designs and develop new designs.  Changes in our designs or changes in export and import regulations may create delays in the introduction of our designs in international markets, prevent our customers with international operations from deploying products incorporating our designs throughout their global systems or, in some cases, prevent the export or import of product including our designs to certain countries altogether.  Any change in export or import regulations or related legislation, shift in approach to the enforcement or scope of existing regulations, or change in the countries, persons, or technologies targeted by such regulations, could result in decreased use of our designs by, or our ability to export or license our designs to, existing or potential customers with international operations and decreased revenue.  Additionally, failure to comply with these laws could result in sanctions by the U.S. government, including substantial monetary penalties, denial of export privileges, and debarment from government contracts.

If we fail to comply with anti-bribery laws, including the U.S. Foreign Corrupt Practices Act, or FCPA, we could be subject to civil and/or criminal penalties.

As a result of our potential international operations, we may be subject to anti-bribery laws, including the FCPA, which prohibits companies from making improper payments to foreign officials for the purpose of obtaining or keeping business.  If we fail to comply with these laws, the U.S. Department of Justice, the Securities and Exchange Commission, or SEC, or other U.S. or foreign governmental authorities could seek civil and/or criminal sanctions, including monetary fines and penalties against us or our employees, as well as additional changes to our business practices and compliance programs, which could have a material adverse effect on our business, results of operations, or financial condition.

Risks Related to our Common Stock

Our common stock is subject to the “penny stock” rules of the SEC and the trading market in our securities is limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.

The SEC has adopted Rule 15g-9 which establishes the definition of a “penny stock,” as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions.  Currently, our common stock is trading below this threshold.  For any transaction involving a penny stock, unless exempt, the rules require that a broker or dealer approve a person’s account for transactions in penny stocks; and the broker or dealer receives from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.  In order to approve a person’s account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.  The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which sets forth the basis on which the broker or dealer made the suitability determination and that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules.  This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.

We have never paid cash dividends on our common stock, and we do not anticipate paying any cash dividends in the foreseeable future.

We have not paid any cash dividends on our common stock to date. We currently intend to retain our future earnings, if any, to fund the development and growth of our business. In addition, the terms of any future debt agreements may preclude us from paying dividends. As a result, capital appreciation, if any, of our common stock will be the sole source of gain for our stockholders for the foreseeable future.

19

Our stock price is likely to be volatile, and purchasers of our common stock could incur substantial losses.

The market price of our common stock may fluctuate significantly in response to factors that are beyond our control. The stock market in general has recently experienced extreme volatility that has often been unrelated or disproportionate to the operating performance of particular companies.  These broad market fluctuations could result in fluctuations in the price of our common stock, which could cause purchasers of our common stock to incur substantial losses.  The market price for our common stock may be influenced by many factors, including:

·

The success of competitive products or technologies;

·

Regulatory developments in the United States and foreign countries;

·

Developments or disputes concerning patents or other proprietary rights;

·

The recruitment or departure of key personnel;

·

Quarterly or annual variations in our financial results or those of companies that are perceived to be similar to us;

·

Market conditions in the conventional and renewable energy industries and issuance of new or changed securities analysts' reports or recommendations;

·

The failure of securities analysts to cover our common stock or changes in financial estimates by analysts;

·

The inability to meet the financial estimates of analysts who follow our common stock;

·

Investor perception of our Company and of the renewable energy industry; and

·

General economic, political and market conditions.

Item 1B.  Unresolved Staff Comments

None.

Item 2.  Properties

We have a leased executive office located at 112 North Curry Street, Carson City, Nevada 89703.  We also maintain a leased office in Martorelles, Barcelona, Spain.

Item 3.  Legal Proceedings

We know of no material pending or active legal proceedings to which we are a party or concerning any of our properties.  We are not aware of any legal proceedings contemplated by any governmental authority against us.

Item 4.  Mine Safety Disclosure

PART II

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

Market Information

There is a limited public market for our common shares.  Our common shares are quoted on the OTC Bulletin Board under the symbol “OCEL.OB”.  Trading in stocks quoted on the OTC Bulletin Board is often thin and is characterized by wide fluctuations in trading prices due to many factors that may be unrelated to a company’s operations or business prospects.  We cannot assure you that there will be a market in the future for our common stock.

20

OTC Bulletin Board securities are not listed or traded on the floor of an organized national or regional stock exchange.  Instead, OTC Bulletin Board securities transactions are conducted through a telephone and computer network connecting dealers in stocks.  OTC Bulletin Board issuers are traditionally smaller companies that do not meet the financial and other listing requirements of a regional or national stock exchange.

The following table shows the recorded high and low bid quotations of our common shares on the OTC Bulletin Board, however, the trading activity is minimal and therefore the prices may not be meaningful of market value or a represent price at which an investor will pay for or realize on the sale of a share.  The following quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions:

On March 27, 2015, the price of the common shares was a high of $0.08 and a low of $0.08.

Holders

As of March 27, 2015, there were approximately 15 holders of record of our common stock. Approximately 1.2% of our common stock is held in street name, for which we do not have an indication of the number of beneficial owners.

Dividends

We did not issue any stock dividends during our fiscal year ended December 31, 2014.

Equity Compensation Plans

We have not implemented any equity compensation plans.

Recent Sales of Unregistered Securities

None.

Item 6.  Selected Financial Data

Not applicable.

Safe Harbor

This Annual Report on Form 10-K contains forward-looking statements that involve risks and uncertainties.  These statements relate to future events or our future financial performance.  In some cases, you can identify forward-looking statements by terminology including, “could,” “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” and the negative of these terms or other comparable terminology.  These statements are only predictions.  Actual events or results may differ materially.

21

While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested in this Annual Report.

Overview

We design, develop, manufacture, license, and service non-polluting, renewable electric power generating plants using innovative, patent protected wave energy and wind energy extraction technologies.

We have only recently begun our current operations, have earned nominal revenues and have accumulated a net loss of $7,195,163 from January 10, 2006 (date of inception) to December 31, 2014.

We are a start-up corporation with limited operations and limited revenues from our business operations.  Our auditors have issued us with a going concern opinion.  This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to fund our operations.  Our only source of cash at this time is investments by others in our Company.  We must raise cash to continue in business and to implement our plan of operations.

Plan of Operations

Our projected categories of expenses for the fiscal year 2015 are generally the same as for fiscal year 2014.  These expenses are expected to include those for marketing, general administration and overhead, professional services and working capital.  As we progress with the South American project, we expect to have to expend sums on research and development and advances for equipment and services.

We are exploring different avenues of financing.  From time to time, we enter into loan arrangements and equity sales with different persons, some of which having been securities holder of the Company through loans and equity holdings and some of which being new investors.  We do not expect that the funds available currently or in our working capital will provide us with all the required working capital for our day to day expenses, including the general administration, overhead and professional services for 2015.  Additionally, for expanded development and implementation of our business plans we will need additional capital, for which we do not have any specific arrangements.

RESULTS OF OPERATIONS

Working Capital

Cash Flows

22

Fiscal Year Ended December 31, 2014 Compared To Fiscal Year Ended December 31, 2013

Operating Revenues

During the years ended December 31, 2014 and 2013, we did not earn any revenues from operations.

Operating Expenses and Net Loss

During the year ended December 31, 2014, we incurred operating expenses of $502,982 compared with operating expenses of $495,231 during the year ended December 31, 2013.  The increase in operating expenses was attributed to the increase in general and administrative expenses incurred during the year ended December 31, 2014.

For the year ended December 31, 2014, we incurred a comprehensive net loss of $546,988 compared with a net loss of $12,180 for the year ended December 31, 2013.

Cash-flow from Operating Activities

During the year ended December 31, 2014, we used cash of $285,944 for operating activities as compared to use of $287,359 during the year ended December 31, 2013.  The decrease in cash used for operating activities during the year was due to a decrease in management fees.

Cash-flow from Investing Activities

During the years ended December 31, 2014 we invested $0 as compared to $2,350 during the year ended December 31, 2013. The company did not spend any money on investing activities during the year ended December 31, 2014.

Cash-flow from Financing Activities

During the year ended December 31, 2014, we received proceeds of $286,564 in financing activities compared with $11,504 used during the year ended December 31, 2013.  The increase is attributed to the proceeds received from related party loans and long-term debts during the year ended December 31, 2014.

Liquidity and Capital Resources

As at December 31, 2014, we had a cash balance of $0 and total assets of $1,616,633 compared with a cash balance of $2,423 and total assets of $1,731,249 as at December 31, 2013.  The decrease in cash was due to operating cost expenditures. The decrease in total assets was due to amortization of such assets.

As at December 31, 2014, we had total liabilities of $466,212 compared with total liabilities of $788,972 at December 31, 2013.  The decrease in total liabilities was attributed to the cancellation of three promissory notes from Zenith Equity Group Ltd in exchange for 7,551,310 common shares issued on September 8, 2014.

As at December 31, 2014, we had a working capital deficit of $466,212 compared with a working capital deficit of $152,243 as at December 31, 2013.  The increase in working capital deficit was due to an increased in the current portion of long-term debt, accrued liabilities and a decrease of cash on hand.

There were no changes in the authorized capital of common shares during the year ended December 31, 2014.

Off-Balance Sheet Arrangements

23

Item 8.  Financial Statements and Supplementary Data

Ocean Electric Inc.

(A Development Stage Company)

December 31, 2014

(Expressed in US Dollars)

24

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

Ocean Electric Inc.

We have audited the accompanying balance sheet of Ocean Electric Inc. as of December 31, 2014, and the related statement of operations, stockholders’ deficiency, and cash flows for the year ended December 31, 2014.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audit.  The December 31, 2013 financial statements were audited by a predecessor independent registered public accounting firm that issued an unqualified opinion, with a going concern explanatory paragraph, on April 17, 2014.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Ocean Electric Inc. as of December 31, 2014, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As shown in the accompanying financial statements, the Company has significant net losses and cash flow deficiencies.  Those conditions raise substantial doubt about the Company’s ability to continue as a going concern.  Management’s plans regarding those matters are described in Note 1.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Green & Company, CPAs

Green & Company, CPAs

Temple Terrace, Florida

March 27, 2015

25

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

We have audited the accompanying balance sheet of  as of , and the related statement of operations, stockholders’ equity and cash flows for the year ended.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audit.  

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of  as of December 31, 2013, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As shown in the accompanying financial statements, the Company has significant net losses and cash flow deficiencies.  Those conditions raise substantial doubt about the Company’s ability to continue as a going concern.  Management’s plans regarding those matters are described in Note 1.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ DKM Certified Public Accountants

DKM Certified Public Accountants

Clearwater, Florida

April 17, 2014

26

OCEAN ELECTRIC INC.

Balance Sheets

(Expressed in US dollars)

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

27

OCEAN ELECTRIC INC.

STATEMENTS OF OPERATIONS

(Expressed in US Dollars)

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

28

OCEAN ELECTRIC INC.

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

From January 10, 2006 (date of inception) through December 31, 2014

(Expressed in US dollars)

The accompanying notes are an integral part of these financial statements

29

OCEAN ELECTRIC INC.

STATEMENTS OF CASH FLOWS

(Expressed in US Dollars)

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

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1. Nature of Operations and Continuance of Business

Ocean Electric Inc. (the “Company”) was incorporated in the State of Nevada on January 10, 2006. On October 27, 2009, the Company changed its name from Royal Equine Alliance Corp. to Gold Holding Corp., and on January 23, 2012, it changed its name from Gold Holding Corp. to Ocean Electric Inc. The Company focuses on alternative energy sources.

Going Concern

The financial statements below have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business.  As of December 31, 2014, the Company has negative working capital of $466,212 and an accumulated deficit of $7,195,163.  The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Company’s future operations.  These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.  These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Basis of Presentation

The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and are expressed in U.S. dollars.  The Company’s fiscal year end is December 31.

a.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  The Company regularly evaluates estimates and assumptions related to the deferred income tax asset valuation allowances.  The Company bases its estimates and assumptions on current facts, historical experience and various other factors 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 and the accrual of costs and expenses that are not readily apparent from other sources.  The actual results experienced by the Company may differ materially and adversely from the Company’s estimates.  To the extent, there are material differences between the estimates and the actual results, future results of operations will be affected.

b.

Cash and Cash Equivalents

The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.

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c.

Basic and Diluted Net Loss Per Share

The Company computes net loss per share in accordance with ASC 260, Earnings per Share.  ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement.  Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period.  Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method.  In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants.  Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.  Ocean Electric has no anti-dilutive shares as of December 31, 2014.

d.

Financial Instruments

Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value.  A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.  ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company’s financial instruments consist principally of cash, accounts payable, loan payable to related party and long-term debt.  Pursuant to ASC 820, the fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets.  We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

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e.

Comprehensive Loss

ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements.  For the twelve months ended December 31, 2014, the Company recorded $3,043 in other comprehensive loss due to mark to market adjustment of cash and liabilities.  Comprehensive loss for the twelve months ended December 31, 2013 was $1,965.

f.

Stock-Based Compensation

The Company accounts for stock options issued to employees in accordance with the provisions of FASB ASC 718, “Stock Compensation”.  As such, compensation cost is measured on the date of grant as the excess of current market price of the underlying stock over the exercise price.  Such compensation amounts are amortized over the respective vesting periods of the option grant.  The Company adopted the disclosure provisions of FASB ASC 718, “Accounting for Stock-Based Compensation,” and FASB ASC 718, which allows entities to provide pro forma net Income (loss) and pro forma earnings (loss) per share disclosures for employee stock option grants as if the fair-valued based method has been applied.

The Company accounts for stock options or warrants issued to non-employees for goods or services in accordance with the fair value method of FASB ASC 718.  Under this method, the Company records an expense equal to the fair value of the options or warrants issued.  The fair value is computed using an options pricing model.

g.

Prepaid Marketing Expenses

On April 16, 2012, the Company entered into an agreement with a production company, whereby the production company will produce an advertorial video. As of December 31, 2014, the project is still on hold until funding can be obtained. Management has determined that the video project should not be impaired at this time. Once the project is finished, the Company intends to recognize the marketing expenses in a period of two years.

h.

Intangible Assets

Intangible assets are comprised of patents and licenses relating to wave energy and wind energy technology.  The intangible assets are externally acquired and are amortized straight-line over a useful life of fifteen years with zero residual value.

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i.

Impairment of Long-Lived Assets

In accordance with ASC 360, Property Plant and Equipment, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable.  Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value, which is generally determined, based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances.  An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.

j.

Income Taxes

Income taxes are recognized in accordance with ASC 740, “Income Taxes”, whereby deferred Income tax liabilities or assets at the end of each period are determined using the tax rate expected to be in effect when the taxes are actually paid or recovered. A valuation allowance is recognized on deferred tax assets when it is more likely than not that some or all of these deferred tax assets will not be realized.

k.

Recent Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect, except for changes in reporting Development Stage Enterprises.  These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

On June 10, 2014, the FASB issued authoritative guidance which eliminates the concept of a development stage entity. The incremental reporting requirements for presenting the development stage operations and cash flows since inception will no longer apply to development stage entities. The amendments related to the elimination of inception-to-date information and the other remaining disclosure requirements of Topic 915 are to be applied retrospectively and are effective for fiscal years beginning after December 15, 2014. The Company previously had been considered a development stage entity as its operations had not begun and has elected early adoption of this guidance effective with the filing of this quarterly report.

3. Intangible Assets

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On October 3, 2011, the Company acquired all of the rights and patents to a wave energy technology developed by Hidroflot, S.A.  The purchase price is $1,400,000 for the technology, which is payable in thirty-three monthly installments, and has been recorded at the present value of $1,218,238, based on the present value of payments.

On December 13, 2011, the Company acquired all of the rights and patents to an off-shore wind energy technology developed by Green & Blue Sustainable Technologies.  The Company issued 25,000,000 common shares as full payment for the acquisition, with a market value of $457,600.

4. Fixed Assets

Fixed Assets as of December 31, 2014 consist of the following:

The depreciation for the twelve months ending December 31, 2014 and 2013 was $469 and $52, respectively.

5. Long-Term Debt

On June 26, 2012, the Company entered into a loan agreement with Zenith Equity Group, Ltd. providing for a loan of $450,000.  The loan accrued simple interest of 3.5% on the outstanding principal amount and was to be repaid in full on or before June 27, 2015.   On September 8, 2014, all Zenith Loan was converted into common stock of the company.

On November 1, 2013, the Company entered into a loan agreement with Tandem Growth, providing for a loan of $40,000. The loan accrued simple interest of 6% simple interest per year (calculated on the basis of a 365-day year) on the outstanding principal amount and was to be repaid in full on or before November 1, 2016. On September 8, 2014, the loan was acquired by Zenith Equity Group Ltd. (“Zenith”) and converted into 7,551,310 shares of common stock of the Company.

On January 29, 2014, the Company, entered into a Consolidated Loan Agreement (the “Loan Agreement”) with Zenith, to consolidate certain outstanding loans made by Zenith to the Company in 2012 and 2013 and to extend new loans to the Company.  Zenith is also a shareholder of the Company and owns more than 5% of the issued and outstanding shares of common stock of the Company.

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The Loan Agreement consolidated outstanding loans of approximately $450,000 made on June 26, 2012 and $40,000 made on September 18, 2013,  and accrued interest of $25,623.83 (collectively, the “Consolidated Debt”).  The prior two loan agreements were terminated. In addition to the Consolidated Debt, upon signing, Zenith lent $100,000 (the “New Credit Loan”) and made available from time to time, to the Company, an aggregate amount of $300,000 prior to December 31, 2014 (the “Drawdown”, together with the Consolidated Debt and the New Credit Loan, the “Loan”). The Loan has a maturity date of April 15, 2018. The interest rate on the Loan was 6% per year, simple interest, calculated on the basis of a 365-day year.  Prior to the Maturity Date, the Company has the right to prepay the principal and the interest due thereon, in whole and in part, in its sole discretion, by providing Zenith a prepayment notice. The minimum prepayment notice period was 45 days, during which Zenith could have converted the amount intended to be prepaid into shares of common stock under the conversion terms of the Loan Agreement.

Under the Drawdown, the Company borrowed $73,000 on March 20, 2014, resulting in a loan balance of $688,624.

On September 8, 2014, all of the principal and interest due under the Loan Agreement was converted into 7,551,310 shares of Common Stock of the Company.

Long-term notes payables to investors in the sum of $198,270 has become current as of December 31, 2014.  This amount is required to be repaid during the year ended December 31, 2015. The interest rate on these investors loans are 6% per year, simple interest, calculated on the basis of a 365-day year.

6. Related Party Transactions

a)

As at December 31, 2014 and December 31, 2013, the Company owed $14,394 and $1,985 to the former President of the Company.  The amounts were used to fund operations.  The amounts owing are unsecured, non-interest bearing, and due on demand.

b)

As at December 31, 2014 and December 31, 2013, the Company owed $6,268 and $6,268 to the President and CEO of the Company. The amounts were used to fund operations. The amounts owing are unsecured, non-interest bearing, and due on demand.

c)

On October 3, 2011, the Company purchased the rights to a wave energy technology from Hidroflot, S.A., a company solely owned by the President of the Company, for $1,400,000.

d)

On December 13, 2011, the Company purchased the rights to an off-shore wind energy technology from Green & Blue Sustainable Technologies, a company solely owned by the President of the Company, for 25,000,000 common shares with a fair value of $457,600.

e)

On April 27, 2012, the Company issued 20,000,000 shares with a fair value of $6,000,000 to the director for serviced provided and to be provided from January 1, 2012 to December 31, 2012.

f)

On September 8, 2014, the Company entered into a Note Conversion Agreement with Zenith Equity Group Ltd, a shareholder of the Company, to convert certain notes issued by the Company into 7,511,310 shares of common stock of the Company.

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7. Income Taxes

As of December 31, 2014, the Company had $7,200,171 of net operating losses carried forward to offset taxable income in future years which will start expiring commencing in fiscal 2027. The income tax benefit differs from the amount computed by applying the U.S. federal income tax rate of 34% is $2,448,058.  As at December 31, 2014 and 2013, the Company had no uncertain tax positions.

The valuation allowance will be evaluated at the end of each year, considering positive and negative evidence about whether the deferred tax asset will be realized.  At that time, the allowance will either be increased or reduced; reduction could result in the complete elimination of the allowance if positive evidence indicates that the value of the deferred tax assets was no longer impaired and the allowance was no longer required.

Should the Company undergo an ownership change as defined in Section 382 of the Internal Revenue Code, the Company’s tax net operating loss carry forwards generated prior to the ownership change will be subject to an annual limitation, which could reduce or defer the utilization of these losses.  The tax years for 2011 to 2014 are still open for inspection by the individual taxing authorities.

8. Accounts Payable:

a)

On April 3, 2013, the Company received an unsecured loan from Hidroflot, S.A. of $19,752. There is no interest rate associated with the outstanding principal and a repayment schedule was not established. This loan was cancelled on July 1, 2013, after the Company received a notice from Hidroflot S.A. informing it that Hidroflot, S.A. ceased its operations effective June 30, 2013. As of December 31, 2013 and 2014, the Company owed $0 to Hidroflot, S.A.

9. Share Capital

a)

On February 24, 2012, the Company increased the number of common shares authorized from 75,000,000 common shares to 250,000,000 common shares.

b)

On March 26, 2012, the Company issued 1,400,000 common shares for proceeds of $504,000.

c)

On April 27, 2012, the Company issued 20,000,000 common shares with a fair value of $6,000,000 to the President of the Company for management fees.

d)

On April 19, 2013, 285,500 common shares were cancelled and returned to treasury stock and the Company recorded an increase of paid-in-capital for $286.

e)

On November 15, 2013, 731,000 common shares were cancelled and returned to treasury stock and the Company recorded an increase of paid-in-capital for $731.

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f)

On September 8, 2014, 7,551,310 common shares were issued to Zenith Equity Group Ltd and three promissory notes in the aggregate principal amount of $703,000 and interest amount of $52,131 were cancelled.

On April 16, 2012, the Company entered into an agreement with a production company, whereby the production company will produce an advertorial video project at a cost of $395,152, to be paid according to the following schedule

50% ($197,576) upon signing of the agreement (paid);

25% ($98,788) prior to commencement of animation (paid); and

25% ($98,788) on delivery of the final video project.

As of December 31, 2014, the Company has paid $296,364 for the video project. The video production was scheduled to be completed in December 2013 but is still unfinished. Management has determined that the video project should not be impaired at this time. Once the project is finished, the Company intends to recognize the marketing expenses in a period of two years.

11. Subsequent Events

Stock Issuance for Arch Capital Ventures Ltd:

On January 30, 2015, the Company entered into a service agreement with Arch Capital Ventures Ltd (“Arch Capital”).  Pursuant to the service agreement, Arch Capital agrees to provide services in connection with helping the Company develop a business plan to deploy its energy production systems based on ocean wave motion and a corporate structure and public presence to aid in the funding and implementation of its business plan and brand development, including services in corporate reorganization, funding structures, business plan development and documentation, and branding.  This service agreement has been filed with the Securities and Exchange Commissions as an exhibit to the Current Report on Form 8-K, filed with the Securities and Exchange Commissions on January 19, 2015.

On January 30, 2015, the Company issued 5,500,000 shares of common stocks to Arch Capital as compensation for services under the service agreement. As of March 27, 2015, Arch Capital owned 5,500,000 shares of the Company’s Common Stock, representing approximately 8.1% of the shares of the 67,834,810 shares issued and outstanding.

Convertible Promissory Note Agreement.

On January 30, 2015, the Company issued 5,500,000 shares of common stocks to Arch Capital as compensation for services under the service agreement. As of March 27, 2015, Arch Capital owned 5,500,000 shares of the Company’s Common Stock, representing approximately 8.1% of the shares of the 67,834,810 shares issued and outstanding.  Convertible Promissory Note Agreement.

On February 20, 2015, the Company entered into a Convertible Promissory Note Agreement (“Note”) with Azuma Group Ltd (“Azuma”), pursuant to which Azuma lent USD $15,000 to the Company (referred to as the “Azuma Loan”).  The interest rate on the outstanding and unpaid principal amount of the Azuma Loan will be 8.0% per year, simple interest, calculated on a basis of 365-day year.  The interest will accrue on the outstanding principal and will be payable in full on February 20, 2016, unless converted or prepaid. The principal and interest may not be prepaid by the Company or converted by Azuma during prior to August 20, 2015.  After August 20, 2015, the Company will have the option to prepay the Azuma Loan and Azuma will have the option to convert the Azuma Loan to shares of Common Stock of the Company.

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

On December 26, 2014, DMK Certified Public Accountants (“DKM”) notified the Company of its resignation as the independent registered public accounting firm to the Company.

The reports of DKM on the Company’s balance sheets as of December 30, 2012 and 2013 and the related consolidated statements of operations, statement of stockholders’ equity (deficiency) and cash flows for the years ended December 30, 2012 and 2013 and for the period from inception until September 30, 2013, did not contain an adverse opinion or disclaimer of opinion, except that the reports stated that there is substantial doubt about the Company’s ability to continue as a going concern.

During the fiscal years ended December 31, 2012 and December 31, 2013, and the subsequently through December 26, 2014, there were no disagreements between the Company and DKM on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of DKM, would have caused it to make a reference to the subject matter of the disagreements in connection with their review on the Company’s financial statements for such periods.  There were no reportable events (as described under Item 304(a)(1)(v) of Regulation S-K) during the Company’s two most recent fiscal years and subsequently through December 26, 2014.

On December 26, 2014, the Company engaged Green & Company CPA’s (“Green”), as its new independent registered public accounting firm. The engagement of Green was approved by the Company’s board of directors on December 26, 2014.

During the fiscal years ended December 31, 2012 and December 31, 2013 and through December 26, 2014, neither the Company nor anyone acting on its behalf consulted with Green regarding either (i) the application of accounting principles to a specific transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company’s financial statements, and no written report was provided to the Company or oral advice was provided that Green concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was the subject of either a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K).

Item 9A.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports filed under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer. We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer, who also acted as our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2014 (the “Evaluation Date”). Based upon the evaluation of our disclosure controls and procedures as of the Evaluation Date, the Chief Executive Officer concluded that our disclosure controls and procedures were not effective because of the identification of a material weakness in our internal control over financial reporting which is identified below, which we view as an integral part of our disclosure controls and procedures.

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Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Rule 13a-15(f).  Our internal control over financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and our receipts and expenditures of are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention of overriding controls. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2014.  In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.  Based on its evaluation, our management concluded that there is a material weakness in our internal control over financial reporting and management has concluded that the Company’s internal controls over financial reporting are ineffective as of December 31, 2014.  A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

The material weakness relates to the lack of employees and lack of segregation of duties in our financial reporting process and our utilization of outside third party consultants.  We do not have a separately designated audit committee.  This weakness is due to our lack of sufficient working capital to hire additional staff.  To remedy this material weakness, we intend to engage an internal accountant to assist with financial reporting as soon as our finances will allow.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the fourth quarter of our fiscal year ended December 31, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Limitations on the Effectiveness of Controls

Our management, including our Chief Executive Officer who also acts as our Chief Financial Officer, does not expect that our disclosure controls and internal controls will prevent all errors and all fraud.  A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.  Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.  These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a 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 or board 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.

Item 9B.  Other Information.

None.

PART III

Item 10.  Directors, Executive Officers and Corporate Governance.

Our current director and officer is as follows:

The director will serve as director until our next shareholder meeting or until a successor is elected who accepts the position.  Officers hold their positions at the will of the Board of Directors.  There are no arrangements, agreements or understandings between non-management shareholders and management under which non-management shareholders may directly or indirectly participate in or influence the management of our affairs.

Ricardo Prats, President, Chief Executive Officer, Chief Financial Officer, Treasurer and Director

Ricardo Prats has been our President, Chief Executive Officer, Chief Financial Officer, Treasurer and sole Director since December 31, 2011, and was our Secretary until December 28, 2012.  From May 2005 to present, Mr. Prats has been the owner and Chief Executive Officer of Hidroflot, S.A., a private company involved in wave renewables energies.  Mr. Prats also created and funded Asturflot, S.A. in 2008 and Ocean Electric de Cantabria, S.L. in 2009.  Both of these companies are subsidiaries of Hidroflot devoted to marine renewables energy production in the north coast of Spain.  In 2010, Mr. Prats, founded and is the sole shareholder of Green & Blue Sustainable Technologies, a private company whose aim was to develop a new wind energy turbine concept.  In 2011, Mr. Prats founded and is the sole shareholder of Green & Drive Electric, a private company, that is devoted to the commercialization of electric vehicles for sustainable mobility.

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Mr. Prats has received numerous awards throughout his illustrious career.  Recently in May 2013, he was awarded with “Creating industry” for wave power isolated project organized by Catalonia Engineering College.  In 2008, Mr. Prats received the Excellence in Entrepreneurship Award in Energy in the Keiretsu Forum organized jointly with the Chamber of Commerce in Barcelona and American Chamber of Commerce in Spain.  In addition, Mr. Prats has received honorable mention in the VI International Congress of Engineering projects in Barcelona, Spain and a silver medal in Salon des Inventions de Genève in 2003.

There are no family relationships among our officers or directors, however, the Company has engaged Mr. Xavier Prats as its technical officer, which is a non-executive position, who is the brother of Mr. Ricardo Prats.

Gemma Badillo, Secretary

Ms. Gemma Badillo has been our Corporate Secretary since November 28, 2013.  Prior to joining the Company, Ms. Badillo worked in recent years as an assistant manager, with specific responsibilities in the customer service departments, of several companies.  From 2006 to 2009, Ms. Badillo was employed by several different companies in their customer service departments. From 2010 to 2012, Ms. Badillo was employed by Inditex Group, a leading international fashion retailer, as a manager in the customer service department. From 2012 to 2013, Ms. Badillo was employed by Green & Drive Electric, a motorcycle dealer, as an assistant manager and was responsible for customer care.  Starting in April 2013, Ms. Badillo commenced employment with the Company as the assistant manager of the Company.

Section 16(a) Beneficial Ownership Compliance Reporting

Section 16(a) of the Securities Exchange Act of 1934 requires a company’s directors and officers, and persons who own more than ten-percent (10%) of the company’s common stock, to file with the Securities and Exchange Commission reports of ownership on Form 3 and reports of change in ownership on Forms 4 and 5.  Such officers, directors and ten-percent stockholders are also required to furnish the company with copies of all Section 16(a) reports they file.  Based solely on our review of the copies of such forms received by us and on written representations from certain reporting persons, we believe that some transactions in shares owned by one of our ten-percent stockholders were not in compliance with Section 16(a).

Code of Ethics

We have not yet adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.  Companies whose equity securities are listed for trading on the OTC Bulletin Board are not currently required to implement a code of ethics.

Director Nominees

As of December 31, 2014, there have been no material changes to the procedures by which security holders may recommend nominees to our Board of Directors.

Audit Committee

We do not have a standing audit committee or an audit committee financial expert. The functions of an audit committee are currently carried out by our Board of Directors.  We currently have no operating revenues and have no independent directors. If we are able to grow our business and generate revenues from our operations in the future, then we will likely seek out and retain independent directors and form an audit committee.

We have no audit committee financial expert. Mr. Prats has financial statement preparation and interpretation ability obtained over the years from past business experience and education. We believe the cost related to retaining a financial expert at this time is not justified. Further, because of the nature of our current limited operations, we believe the services of a financial expert are not warranted, given the background of Mr. Prats.

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Compensation Committee

We currently do not have a compensation committee of the Board of Directors or a committee performing a similar function.  It is the view of the Board that it is appropriate for us not to have such a committee because of our size and because the Board as a whole determines executive compensation.  Our sole director is also an executive officer of the Company.

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Item 11. Executive Compensation.

Summary Compensation

Mr. Prats is our President, Chief Executive Officer, Chief Financial Officer, Treasurer and sole Director.

Mr. Prats spends all of his business time on our affairs.  In year 2014, the compensation amount recorded was $144,000.

Outstanding Equity Awards at Fiscal Year End

Pension, Retirement or Similar Benefit Plans

There are no arrangements or plans in which we provide pension, retirement or similar benefits to our directors or executive officers, other than payments in accordance with the laws of the employee’s residence.  We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the Board of Directors or a committee thereof.

Change of Control

Compensation of Directors

We do not pay our directors any fees for attendance at Board meetings or similar remuneration or reimburse them for any out-of-pocket expenses incurred by them in connection with our business.

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

The following table sets forth the ownership, as of March 31, 2015, of our common stock by each of our directors, and by all executive officers and directors as a group, and by each person known to us who is the beneficial owner of more than 5% of any class of our securities.  As of March 31, 2015, there were 67,834,810 common shares issued and outstanding.  All persons named have sole voting and investment power with respect to the shares, except as otherwise noted.  The number of shares described below includes shares which the beneficial owner described has the right to acquire within 60 days of the date of March 31, 2015.