Pacific Clean Water Tech, Inc. (fka PCWT)

[ofspring]

NOTE 4 – DERIVATIVE LIABILITIES

During 2012, the Company issued convertible notes that were classified as derivative liabilities. The following table summarized the changes in the derivative liabilities during the three months ended June 30, 2013:

Ending Balance as of December 31, 2012
$
15,618
Change in fair value

1,282
Ending balance as of June 30, 2013
$
16,900

NOTE 5 – DEBT

Vehicle Financing

The Company repaid $18,695 of vehicle financing debt for the six months ended June 30, 2013. Outstanding vehicle financing debt totals $88,954 and $105,395 as of June 30, 2013 and December 31, 2012, respectively.

Convertible Debt

Debt discount of $12,847 was amortized into interest expense for the six months ended June 30, 2013. For the six months ended June 30, 2013, the Company borrowed $19,980 of convertible debt. The note bears an interest of 8%, is convertible at $0.13 per share, and has a maturity date of July 1, 2013. Outstanding convertible debt totals $69,980 and $37,153, net of discount, as of June 30, 2013 and December 31, 2012, respectively.

Short Term Debt

Cancellation of common stock by a former shareholder have resulted in the reclassification of short and long term debt - related parties of $15,701 into third party debt.

NOTE 6 - LINE OF CREDIT

The Company has outstanding lines of credit with two banking institutions for totals of $250,000 and $85,000, interest rates of 5% and 6.63%, and payments on each on cash advances due at the end of every month. Outstanding lines of credit totals $327,262 and $221,262 as of June 30, 2013 and December 31, 2012, respectively.