POWERDYNE INTERNATIONAL, INC.
FORM 10-K
TABLE OF CONTENTS
Special Note Regarding Forward-Looking Statements
This Annual Report on Form 10-K (this “Annual Report”) contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve substantial risks and uncertainties. The forward-looking statements are contained principally in Part I, Item 1. “Business,” and Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” but are also contained elsewhere in this Annual Report. In some cases you can identify forward-looking statements by terminology such as “may,” “should,” “potential,” “continue,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” and similar expressions. These statements are based on our current beliefs, expectations, and assumptions and are subject to a number of risks and uncertainties, many of which are difficult to predict and generally beyond our control, that could cause actual results to differ materially from those expressed, projected or implied in or by the forward-looking statements. There are other factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Annual Report will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. We do not undertake any obligation to update any forward-looking statements.
Unless the context requires otherwise, references to “we,” “us,” “our,” and “Powerdyne,” refer to Powerdyne International, Inc.
Overview
We are a company which provides independent, cost-effective, green electrical power through the leasing of electrical generation equipment under the trade name “PDI Power Solutions”. On March 11 2015, we entered into one agreement for the leasing of our equipment that has generated $1,240 in revenue to date. Our PDI Power Solution is a development stage companycustomized green power solution which allows a client to operate either independent of the grid (forming his own micro-grid) with the option for cogeneration (CHPC) or to operate while allowing the grid to act as a UPS System (uninterruptable power supply) if he chooses. Each PDI Power Solution is customized to meet our individual client’s unique power requirements. This is accomplished by using a modular design approach for the integration of all the components which make up each system. A typical PDI Power Solution is made up of a generator (gaseous), system controller (which allows for remote diagnostics, monitoring and has no operatingcontrol of a parallel generator system), a modified cooling system, an optional heat exchanger or chiller all packaged in either a weather proof/sound attenuated enclosure. Cogeneration capability CHPC (combination heat/power/cooling) is achieved by adding a closed loop cooling system to the generatorswith the addition of a heat exchanger and/or chiller. The heat exchanger produces hot water which can be used for heating and/or for preheating water. The chillers provide cooling to support air conditioning or refrigeration needs. PDI Power Solutions are intended to be either stationary or portable power systems ready for rapid global deployment taking only a few hours for installation. These systems can be packaged into modules which will provide as much as 100 megawatts of power.
We intend to acquire all the components needed to make a PDI Power Solution and either have them installed at the generator manufacturer’s facility to our specifications or integrated at the client’s site. We have developed strategic alliances with both our generator manufacturer and installation contractor to allow assembly of the system’s component parts either at the manufacturer’s or client’s facility.
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Our potential customers include a variety of small to medium size manufacturing companies, hotels and commercial enterprises worldwide. In addition our power solutions are ideal for large end users such as seaports, commercial laundries, airports and the like. However, we initially intend to focus our marketing and sales efforts in the Caribbean and California markets, where we believe there is a great need for independent cost effective reliable power. The equipment lease that we recently entered into is for the leasing of a PDI Power Solutions in Puerto Rico. Once established in the Caribbean and California, we intend to expand our marketing throughout North America and as we move into other regions in North America we plan to increase the power ratings of the PDI Power Solutions to include multi-megawatt power generating systems.
On March 11, 2015, we entered into our first equipment lease with Farmacia Brisas del Mar, a Puerto Rican corporation (the “Lessee”); the agreement is for a term of five years. The custom designed system will also be able to provide cogeneration capabilities with the addition of chillers to support the customer’s air conditioning needs. The agreement provides for a payment to us of a monthly fee equal to the greater of a set monthly base rate or a monthly base rate plus an additional amount based on kilowatt wattage. The agreement provides for termination only in the event of nonperformance by us unless Lessee pays all payments due for the remainder of the term. The agreement contains representation and warranties, default provisions and indemnification provisions typical for agreements of this type. In 2016 the terms on the Farmacia Del Mar lease was modified to a monthly payment, based on actual power consumption.
We have a brief history in our current line of business and hashave experienced losses since itsour inception. As shown in the financial statements, the Company haswe have incurred an accumulated deficit of $1,581,924$3,374,003 from inception to December 31, 2013. The Company’s2016 and our independent registered public accounting firm has issued language in their audit report raising substantial doubt about the Company’sour ability to continue as a going concern.
Products
Our product (PDI Power Solution) is a development stageself-contained generator powered by a gaseous fueled engine which drives an electrical generator. The unit runs on natural gas, propane or other gaseous fuels; it is compact, lightweight and clean burning. As a result, the units produce low emissions and are energy-efficient.
The basis of our overall business is founded on the ability to produce electrical power using state-of-the-art technology to produce electricity at a lower cost than the existing means of producing or providing primary electric power (Spark Price: the difference between the cost of electricity provided by the utility company planningand the cost of electricity produced by a PDI Power Solution), in its target markets. We expect that the difference between our cost to buildproduce electrical power and the current billing rate of existing local utility providers will present savings for our customers and a continual revenue stream for us.
The basic PDI Power Solution consists of three active components; a generator, system controller, and paralleling switch gear all mounted onto a common skid. The controller, switch gear and skid are all commercially available from multiple manufacturers built to our specifications. They are custom built to meet both our specifications as well as the customer’s specific power requirements. The PDI Power Solution can also have the option of having cogeneration capabilities of producing a combined heat power and cooling by adding custom integrated chillers and heat exchangers. These components once assembled onto the skid, can be put inside a weather and sound attenuated enclosure for stationary application or slid into a container and then mounted on a set of wheels for mobile and rapid deployment. The modular design approach allows for interchangeable components which allows for any component to be switched out as newer more cost effective technology becomes available. We believe this gives us the competitive advantage of upgrading a PDI Power Solution with new technology at the customer’s facility without replacing the entire system.
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Business Model
We plan to develop our business, producing and distributing primary electrical power and cogeneration CHCP capabilities through the PDI Power Solution product offerings, under long term master lease agreements, similar to the one we signed with Farmacia Brisas del Mar, at fixed capacity charge plus a usage charge based on actual power used at a fixed dollars per kilowatt hour ($/kWh). Installation, service and maintenance of the PDI Power Solution are initially being provided through independent contractors, at no cost to the customer.
We intend to provide a viable alternative for local utilities to reduce the demand on the primary grid by using our equipment and power, thereby increasing the limits and capabilities of the primary grid. By using our equipment, we expect that the customer will be able to solve several problems at once. First, expensive and polluting diesel units are replaced with cost-efficient, greener gensets. Second, the customer’s cost to produce the electrical power is reduced. Third, savings go directly to the bottom line on a monthly basis, no need to apply for energy credit annually. Fourth, maintenance is provided exclusively by us, thereby allowing the customer to reduce its workforce. Fifth, any tank farms and all other diesel support equipment or sell electrical generation technologyinfrastructure can be dismantled and equipment. The Companyremoved from the customer’s site.
Our History
Our company was incorporated in the State of Delaware in September 2006 and was formerly known as Greenmark Acquisition Corporation (“Greenmark”). On February 7, 2011, Greenmark Acquisition Corporation and Powerdyne, Inc., a Nevada corporation (“Powerdyne Nevada”), merged with Greenmark as the surviving company. Powerdyne Nevada was formed in February 2010 in the State of Nevada and had limited operations until the time of its combination with the Company.described above. As part of the merger, Greenmark Acquisition Corporation, the surviving entity, changed its name to Powerdyne International, Inc. Prior to the merger, Greenmark had nodid not have any ongoing business or operations and was established for the purpose of completing mergers and acquisitions with a target company, such as Powerdyne Nevada.
The Market
Our market is global and theour primary use of the PDIGensetfocus is focused toward commercial,on placing PDI Power Solutions in manufacturing and miningcommercial operations, andas well as any other existing independent power generation application that employs a diesel engine to drive a generator. Most mine operations, especially in South America, are over 5,000 feet above sea level and in remote locations. At theserequires high altitudes several diesel engines are required to run a single generator whereas only one of the Company’s genset units would be needed to drive the same generator. The Company intendsquality, steady electrical power generation. We intend to lease power stations thatour units based on usage to allow customers to generate electricity on a 24/7 basis and deliver that power, in concert with existing utility companies, into their existing grids.basis. The PDIGensetPDI Power Solution is ideal for any medium to large commercial user wherein electricity can be delivered atto the user’s location on a cost effective, and reliable basis. The Company believes that its unit outperforms any diesel driven generator set on initial cost, operating efficiency and performance.
Entry of the Company into the Market
We plan to enter selected target markets namely New England, Alaska,(i.e. the Caribbean Basin and South America.
Pricing
Our intent is to provide electrical power at a lower price than the Virgin Islands and the Dominican Republic.current utility companies. The Company’s focus will be toward augmenting the applications of the independent power utility companies in these markets.
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Employees
We have been abundantly available since the 1910s and diesel fuel was cheap until the late 1990s. The basic radial engine is mature technology but was unable to operate efficiently on natural gas or propane. Aviation fuel cost three to ten times more than diesel fuel, and, hence, radial engines were not used as prime movers.
We expect that itwe will hire additional personnel upon raising additional capitalas we expand our operations.
Available Information
Additional information about us is contained at our website,www.powerdyneinternational.com. Information on our website is not incorporated by reference into and as the Company expands.
Our phone number is (401) 739-3300 and Exchange Commission may be inspected at the Commission's principal office in Washington, D.C. Copies of all or any part of any filing may be obtained from the Public Reference Section of the Securities and Exchange Commission, 100 F Street N.E., Washington, D.C. 20549. Call the Commission at 1-800-SEC-0330 for further information on the operation of the public reference rooms. The Securities and Exchange Commission also maintains a web site at http://www.sec.gov that contains reports, proxy statements and information regarding registrants that file electronically with the Commission. All of the Company’s filings may be located under the CIKour facsimile number 0001435617.
Our corporate headquarters of the Company are located in Warwick,a full service office suite located in a building in Cranston, Rhode Island. InIsland, consisting of approximately 1,000 square feet of office space that we lease on a month-to-month pursuant to a lease agreement with a monthly rent of $500. We believe that our existing facilities are suitable and adequate and that we have sufficient capacity to meet our anticipated needs.
Additional locations may be needed in the near future, the Company plansprimarily administrative in nature; however some may also need to be both administrative as well as support field service offices and a warehouse facility for service inventory. The decision to open an additional regional office in the Caribbean Basin. Theseaddition locations will initially be administrative in naturemarket driven. Based on the strategic relationships that have developed with our generator suppliers and eventually expand ascontractors, we do not see the market demands to become fabrication sites.
Litigation
The Company is the named defendantnot involved in a civil suit in the District Court for the State of Rhode Island alleging that the company owes $6,875.00 on Book Accountany legal proceedings and is seeking $6,875.00 plus attorney’s fees. The claim is disputed and the company has filed a general denial and a counter claim, alleging faulty workmanship and seeking compensatory damages. The matter is in early stagesnot aware of discovery.
Not applicable.
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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERSANDMATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Since our common stock began trading in May of 2013 our common stock has been quoted on the OTC Bulletin Board under the symbol PWDY.
The following table sets forth the range of the high and low sales prices of our common stock for each of the calendar quarters during the years ended December 31, 2016 and December 31, 2015.
| OTC Bulletin Board | High | Low | ||||||
| 1st Quarter | $ | 0.0039 | $ | 0.0005 | ||||
| 2nd Quarter | $ | 0.0013 | $ | 0.0003 | ||||
| 3rd Quarter | $ | 0.0010 | $ | 0.0003 | ||||
| 4th Quarter | $ | 0.0005 | $ | 0.0003 | ||||
| Year Ended December 31, 2015 | ||||||||
| 1st Quarter | $ | 0.0011 | $ | 0.0002 | ||||
| 2nd Quarter | $ | 0.0009 | $ | 0.0002 | ||||
| 3rd Quarter | $ | 0.0007 | $ | 0.0003 | ||||
| Year Ending December 31, 2016 | ||||||||
The last price of our common stock as quoted on the OTC Bulletin Board on April 3, 2017 was $0.0004. As of December 31, 2016 we had approximately 40 stockholders of record.
Dividend Policy
We have never paid nor declared any cash dividends on our common stock to March 23, 2012,date, and do not anticipate paying such cash dividends in the foreseeable future. Whether we declare and pay dividends is determined by our Board of Directors at their discretion, subject to certain limitations imposed under Delaware corporate law. The Company raised an additional $29,000 from stock holder subscription agreementstiming, amount and form of dividends, if any, will depend on, among other things, our results of operations, financial condition, cash requirements and other factors deemed relevant by our Board of Directors
Equity Compensation Plan Information
Our board of directors adopted the 2014 Stock Option Plan (the “Plan”) in 2014 to promote our long-term growth and profitability by (i) providing our key directors, officers and employees with incentives to improve stockholder value and contribute to our growth and financial success and (ii) enable us to attract, retain and reward the best available persons for the purchasepositions of 966,667substantial responsibility. A total of 100,000,000 shares of our common stock.. The securities were issuedstock have been reserved for issuance upon exercise of options granted pursuant to an exemption from registrationthe Plan. The Plan allows us to grant options to our employees, officers and directors and those of our subsidiaries; provided that only our employees and those of our subsidiaries may receive incentive stock options under Section 4(2)the Plan. We have granted a total of 0 shares of stock as of December 31, 2016 under the Plan.
Set forth below is detail with respect to issuances under the Plan.
| Plan category | Number of securities issued under equity compensation plan | Weighted-average exercise price of outstanding options | Number of securities remaining available for future issuance under equity compensation plans | |||||||||
| Equity compensation plans approved by security holders | ||||||||||||
| Equity compensation plans not approved by security holders | ||||||||||||
| Total | -0- | -0- | 100,000,000 | |||||||||
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Sale of Unregistered Securities
We did not sell any equity securities during the fiscal year ended December 31, 2016 in transactions that were not registered under the Securities Act of 1933, as amended, other than as a transaction by an issuer not involving any public offering, as noted below. Each of these transactions was issued as part of a private placement of securities by the Companypreviously disclosed in which (i) no general advertising or solicitation was used, and (ii) the investors purchasing securities were acquiring the same for investment purposes only, without a view to resale. Furthermore, no underwriters participated or effectuated any of the transactions specified below. Also, no underwriting discounts or commissions applied to any of the transactions set forth below. All potential investors were contacted personally and possessed at the time of their investment bona fide substantive, pre-existing business relationships with the Company and/or its officers, directors and affiliates. No potential investors were contacted through other means, and no general advertising or general solicitation was used to solicit any investors. All investors were solicited in compliance with the safe harbor exemption provided by Rule 506 of Regulation D. To date, no more than 35 unaccredited investors have participated in the offering, in compliance with the safe-harbor requirements of Rule 506. The Company has filed a Form D with the Commission with respect to this continuing Regulation D private offering.
Issuer Purchases of Equity Securities
There were no issuer purchases of equity securities during the Securities Act of 1933 for the offer and sale up to 71,535,166 shares of common stock at $0.15 per share owned by current shareholders. The Company’s registration statement was declared effective by the Securities and Exchange Commission on June 13, 2012. On behalf of the Company, Spartan Securities Group, Ltd filed a form 15c2-11 and was cleared to submit a quote on the OTC Bulletin Board and in OTC Link for the Company under the symbol of PWDY. The company began trading in May of 2013.
| OTC Bulletin Board | ||||||||
| High | Low | |||||||
| Year Ended December 31, 2013 | ||||||||
2nd Quarter | $ | 0.17 | $ | 0.09 | ||||
3rd Quarter | $ | 0.20 | $ | 0.02 | ||||
4th Quarter | $ | 0.07 | $ | 0.01 | ||||
| Year Ending December 31, 2014 | ||||||||
1st Quarter (through March 14, 2014) | $ | 0.02 | $ | 0.01 | ||||
| Date | Shareholder Name | Number of Shares | Consideration | |||
| 10/15/13 | Axiom Financial, Inc. | 60,000 | $6,000 | |||
| 6/27/13 | Eric P.W. Hall | 441,177 | $30,000 | |||
| 7/2/13 | Kodiak Capital Group LLC | 1,102,942 | $75,000 | |||
| 7/5/13 | Manners, Inc. | 661,765 | $45,000 | |||
| 12/10/13 | CEDE & CO. | 1,190,476 | $15,000 |
There is no selected financial data required to be filed for a smaller reporting company.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONINFORMATION AND RESULTS OF OPERATIONS
We are an operational company and has no operating history andwhich has experienced losses since itsour inception. The Company'sOur independent auditors have issued a report questioning the Company'sraising a substantial doubt about our ability to continue as a going concern. The Company hasWe have only entered into one agreement for the leasing of our equipment to date and have not established ayet derived any revenue source other thanfrom such agreement. Our sources of cash to date have been capital invested by shareholders and venture capital investors/lenders. Our cumulative revenue, $1,240, has had no sales norcome from our one outstanding equipment lease agreement, of which $488 was received revenues since inception throughduring the year ended December 31, 2013.
The Company plansbasis of our overall business is founded on our ability to manufacture,produce electrical power using state-of-the-art technology to power electrical generation equipment to produce electricity at a lower cost than the existing means of producing or providing primary electric power in its target markets. We expect that the difference between our cost to produce electrical power and the current billing rate of existing local utility providers will present savings for our customers and revenue opportunity for us.
Our business is to install and maintain, own and operate patented portable electrical power generation equipment (“gensets”gensets”) intendedat client locations. We will own and maintain the equipment to be installed at a client location. The Company has applied for a patent for its electrical power generation equipment. The Company will own, maintain and lease the equipment towith the customer who will use it to produce its own supplemental electrical power. TheOur products are intended to be portable, easy-to-use unitunits that can be conveniently redeployeddeployed in various locations around the world. The units can also be assembled and combined to produce power centers providing up to 50 megawatts of power.
The following discussion contains forward-looking statements, as discussed above. Please see the sections entitled "Forward-Looking Condensed Statements" and "Risk Factors" for a discussion of the uncertainties, risks and assumptions associated with these forward-looking statements.
The following discussion and analysis of Powerdyne International, Inc.our financial condition and results of operations are based on theour audited condensed financial statements as of December 31, 20132016 and 2012,2015, which were prepared in accordance with U.S. generally accepted accounting principles ("GAAP").
Operationspower centers providing up to 50 megawatts of power. The Company's headquarters are located in Warwick, Rhode Island and operates a manufacturing facility in Bridgewater, Massachusetts.
Our strategy is to pursue selected opportunities in markets where inexpensive and environmentally friendly power sources are needed and/or required.
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Results of Operations - The year ended December 31, 20132016 compared to the year ended December 31, 2012:
Revenues
We generated revenues of $752 during the year ending December 31, 2015 and $488 during the year ending December 31, 2016, respectively.
Operating expenses
During the year ended December 31, 2016 total operating expenses decreased 59.18% to $166,165 from $407,101 for the year ended December 31, 2015. The decrease is related mainly due to a decrease of (i)$25,133 in salaries and wages (ii) $17,409 in outside sales consultant expense, (iii) $7,390 in filing fees(iv) $28,040 in legal and accounting(v) $12,875 in materials and supplies, and (vi) $122,500 in non-employee stock compensation. We also experienced decreases in payroll tax expense, freight and delivery, stock registration fees, internet expense, permit fees, investor relations activities, rent expense, equipment rental, engine fuel, cellphone expense, travel and entertainment expense and depreciation expense. This decrease was offset by increases of $8,209 in interest expense, $11,321 in bad debt expense, $1,804 in machine shop and outside service, and $1,249 in insurance expense.
Net loss
The net loss for the years ended December 31, 20132016 and 2012,2015, was $184,286 and $539,060, respectively.
Liquidity and Capital Resources
As of December 31, 20132016 and 2012, Powerdyne International, Inc.2015, we had working capital deficitdeficits of approximately $283,808$477,962 and $186,047,$452,739 respectively. The decrease in working capital in 20132016 of approximately $98,000 was$25,223 resulted primarily from normalincreased operating expenses.expenses of $240,936. For the year from December 31, 20122015 to December 31, 2013, Powerdyne International, Inc. had approximately $17,500 of net2016, our cash increase.decreased by $1,850. The cash used by operations of approximately $139,000$49,055 was primarily due to net loss from operations of $401,894$184,286 less add backsnon-cash adjustments to net operating cash flows of approximately $13,000$8,626 of depreciation, $156,000 of non-employee$11,321 in bad debt expense, $30,050 in stock compensation, and the$18,109 in loss on sale of equipment, an increase of approximately $70,000 of derivative related expenses and approximately $23,000 of accrued but unpaid expenses. Of theexpenses of $66,625, and an increase of taxes payable of $500. The total cash provided by investing activities of $18,000 was due to proceeds from sale of equipment. The total cash provided by financing activities of approximately $156,600, approximately $139,000$29,205 was used as working capital and in operating activities.
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We currently owe principal in the amount of approximately $30,000$400,810 (exclusive of depreciation, $646,000interest) under notes due to related parties payable with dues dates and principal amounts as follows:
| Maturity Date | Principal | |||
| Jan-17 | $ | 25,000 | ||
| Feb-17 | $ | 35,000 | ||
| Apr-17 | $ | 40,000 | ||
| May-17 | $ | 52,147 | ||
| Jun-17 | $ | 45,000 | ||
| Jul-17 | $ | 25,000 | ||
| Aug-17 | $ | 15,000 | ||
| Sep-17 | $ | 13,000 | ||
| Oct-17 | $ | 28,102 | ||
| Nov-17 | $ | 16,049 | ||
| Dec-17 | $ | 22,234 | ||
| Jan-18 | $ | 2,500 | ||
| Feb-18 | $ | 20,300 | ||
| Mar-18 | $ | 12,780 | ||
| Jun-18 | $ | 12,625 | ||
| Jul-18 | $ | 5,973 | ||
| Aug-18 | $ | 11,100 | ||
| Sep-18 | $ | 6,000 | ||
| Dec-18 | $ | 13,000 | ||
| Total | $ | 400,810 | ||
To date, we have generated revenue of employee/non-employee stock compensation, derivative$1,240, and related expenses of $70,000 and approximately $177,000 of accrued but unpaid expenses. Ofthere is doubt that we will have the total cash provided from financing activities of approximately $809,000, approximately $133,000 was usedrequisite funding to purchase equipment and remaining amount for working capital and operating activities.
We have no off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is deemed by our management to be material to investors.
Critical Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts during the reporting periods. Actual results could differ from those estimates. Significant estimates and assumptions included in Powerdyne International, Inc.’sour financial statements relate to estimate of loss contingencies and accrued other liabilities.
Fair Value of Financial Instruments
ASC 820-10 (formerly SFAS No. 157,Fair Value Measurements) requires entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value. ASC 820-10 defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. As of December 31, 20132016 and 2012,2015, the carrying value of certain financial instruments such as accounts receivable, accounts payable, notes payable-related parties, accrued expenses, and amounts due to/from related party approximates fair value due to the short-term nature of such instruments.
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Impairment of Long-Lived Assets
In accordance with ASC 350-30 (formerly SFAS No. 144,Accounting for the Impairment or Disposal of Long-Lived Assets), the Company evaluateswe evaluate long-lived assets for impairment whenever events or changes in circumstances indicate that their then carrying values may not be recoverable. When such factors and circumstances exist, the Company compareswe compare the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. The Company’sOur management currently believes there is no impairment of its long-lived assets. There can be no assurance however, that market conditions will not change or demand for the Company’sour products under development will continue. Either of these could result in future impairment of long-lived assets.
Recently Issued Accounting Pronouncements
In January 2010,June 2014, the FASB issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2010-19 (“Reporting Requirements. ASU 2010-19”), New2014-10 eliminates the distinction of a development stage entity and Enhanced Disclosures about Fair Value Measurements.certain related disclosure requirements, including the elimination of inception-to-date information on the statements of operations, cash flows and stockholders’ equity. The amendments in ASU 2010-06 provides amendments to FASB ASC 820-10 that requires new fair value disclosures and clarifies existing fair value disclosures required under FASB ASC 820-10. The new disclosures and clarifications of existing disclosures are2014-10 will be effective prospectively for interim and annual reporting periods beginning after December 15, 2009, except for certain disclosures2014, and interim periods within those annual periods, however early adoption is permitted. The Company adopted ASU 2014-10 since the quarter ended June 30, 2014, thereby no longer presenting or disclosing any information required by Topic 915.
In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about purchases, sales, issuances, and settlements in the roll forward activity in Level 3 fair value measurements. Those disclosures are effective now. The adoption of the new provisions within an Entity’s Ability to Continue as a Going Concern” (“ASU 2010-19 did not have a material impact on our consolidated financial position, results of operations, cash flows, or disclosures.
The financial statements and Report of Independent Registered Accounting Firm for the years ended December 31, 20132016 and 20122015 are attached to this report.
The Company had no disagreements on any matter of accounting principle or practice, financial statement disclosure or audit scope or procedure with its accountant.
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We have adopted by the Securities and Exchange Commission, the Company carried out an evaluation of the effectiveness of the design and operation of itsmaintain disclosure controls and procedures pursuantthat are designed to provide reasonable assurance that information required to be disclosed in the reports filed under the Exchange Act, Rules. This evaluation was donesuch as this Annual Report on Form 10-K, is collected, recorded, processed, summarized and reported within the time periods specified in the rules of the SEC. Our disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to management to allow timely decisions regarding required disclosure. As required under Exchange Act Rule 13a-15, our management, including our Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the fiscal year under the supervision and with the participation of the Company's principal executive officer and principal financial and accounting officer. Thereperiod covered by this Annual Report on Form 10-K, have been no significant changes in internal controls or in other factorsconcluded that, could significantly affect internal controls subsequent to the date of the evaluation. Based upon thatbased on such evaluation, they believe that the Company’s disclosure controls and procedures arewere effective in gathering, analyzing and disclosing information needed to ensure that the information required to be disclosed by the Company in its periodicthe reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and processed timely. Both officers are directly involvedreported, within the time periods specified in the day-to-day operations of the Company.
Management’s Report of Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in accordance with the Rule 13a-15 of the Securities Exchange Act Rule 13a-15. Our internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act as a process designed to provide reasonable assurance to our management and Board of 1934. The Company's presidentDirectors regarding the preparation and principalfair presentation of published financial and accounting officerstatements. Management conducted an evaluationassessment of the effectiveness of the Company’sour internal control over financial reporting as of December 31, 2013,2016 based on the framework and criteria establish in Internal Control Integrated Framework issuedestablished by the Committee of Sponsoring Organizations of the Treadway Commission.Commission in Internal Control-Integrated Framework (2013). Based on this evaluation,the assessment, management concluded that, the Company’sas of December 31, 2016, our internal control over financial reporting was not effective as of December 31, 2013, based on those criteria.
Our management does not expect that our disclosure controls and procedures and our internal control processes will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonably,reasonable, not absolute, assurance that the objectives of the control system are metmet. 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 error or fraud, if any, within our company have been detected.
Anton & Chia, the independent registered public accounting firm, is not required to and has not issued an attestation report on the effectiveness of the internal control over financial reporting.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and directors15d-15(f) of the Company have not made any changesExchange Act) that occurred during its fourthour fiscal quarter ended December 31, 2016 that has materially affect,affected, or areis reasonably likely to materially affect, itsour internal control over financial reporting.
There is no information required to be disclosed on Form 8-K during the fourth quarter covered by this Form 10-K not otherwise reported.
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Our Directors and Officers of the Company are as follows:
| Name | Age | Position | Year Commenced | |||
| Dale P. Euga | 66 | Chief Executive Officer, President and Director; Promoter | 2010 | |||
| Arthur M. Read, II, Esq. | 67 | Vice President, Assistant Secretary, General Counsel and Director | 2010 | |||
| Edwin S. Barton, II | 66 | Chief Operating Officer | 2010 | |||
| Stephen L. Caromile | 39 | Vice President, Lead Engineer | 2010 | |||
| Linda H. Madison | 66 | Secretary | 2011 |
| Name | Age | Position | Year Commenced As An Officer Or Director | |||||
| James F. O’Rourke | 62 | Chief Executive Officer and Director | 2014 | |||||
| Arthur M. Read, II, Esq. | 70 | Executive Vice President, General Counsel and Director | 2010 | |||||
| John M. Faulhaber | 83 | Director | 2014 | |||||
| Robert C. Hemsen | 68 | Director | 2014 | |||||
| Linda H. Madison | 69 | Secretary / Treasurer | 2011 |
James F. O’Rourke
James F. O’Rourke serves as the chief executive officer, presidentChief Executive Officer and a director of the Company, and is a promoterDirector of the Company. From 1967He attended Lowell Technological Institute. With over thirty-five years’ experience in manufacturing from design conception to 1971, Mr. Euga servedproduction as well as in the United States Army completing his service as commander of a Special Forces A-Team and retiring with a distinguished and honorable record. Mr. Euga graduated in 1976 from The Boston Architectural College with a degree in Architecture. From 1976 through 1988, Mr. Euga taught a design studio at the Boston Architectural College. He became a Registered Architect in 1980 and was further NCARB Certified in 1985 while owningacquisitions, mergers and managing a very successful architectural firm in Boston. In 1988the operational side of startup businesses, Mr. Euga formed ComVest International Inc., whichO’Rourke (the Vice Present and General Manager of SatCon Technology Corporation, the Manager of Drive Systems for its Applied Technology business unit and the Manager of its Magmotor business unit) was responsible for the OrganizationSatCon’s day-to-day operation and Financial Management for International Projects such as the overview of the construction of Mersa-Matruh Power and Desalination plant for the Government of Egypt. Mr. Euga also directly arranged acquisition and construction financing and oversaw the construction of industrial, manufacturing and resort facilitiessubsequently was instrumental in Panama, Netherlands, Belize, Bermuda and Spain, in addition to Mr. Euga worked as the coordinator and overseer for the lenders. In 1996 in concert with ComVest International Inc. Mr. Euga founded and managed Suburban Mortgage Company and built the company into 60 brokers, 12 processors, and 18 insurance agents plus a quality control team, and administrative staff. This complete full spectrum financial service company with 92 employees was acquired by Directors Mortgage Company (CA) in 2002. From 2002 until the formation of SatCon’s successor: SatCon Power Systems. Mr. O’Rourke then founded CM Technology (which designs and manufactures custom motors for the automotive, industrial and robotic markets as well as high power rotary uninterruptable power supplies (RUPS) for the distributed generation, industrial, telecommunication, cloud data center and power quality markets). Mr. O’Rourke, who is still actively involved in CM, joined Powerdyne Inc.,as a Nevada company,consultant in 2013 and was elected its CEO and a Director in 2014. Due to Mr. Euga was focused on independently developing the underlying product concepts relatedO’Rourke’s knowledge of our industry and his manufacturing experience we selected him to the PDIGenset. Since the inception of Powerdyne, Inc.,serve as a Nevada company, Mr. Euga has focused on specializing on the company's primary design and technological development of the engine and support systems and development and testing of fuel systems in support of the application to power generation. He has also been involved with the company organization and facilities procurement including client development, development of key staff, and continuing research and development of engine and electrical components. Mr. Euga remains very active with the Special Forces Association in Rhode Island and Massachusetts.
Arthur M. Read, II, Esq.
Arthur M. Read, II, Esq., serves as vice president, general counselExecutive Vice-President, General Counsel and as a directorDirector of the Company. Mr. Read received his Bachelor of Arts degree from Bethany College in 1968, and his Masters of Arts degree from the University of Rhode Island in 1971 and his Juris Doctor degree from Boston University School of Law in 1972. From1972-2001,From 1972-2001, Mr. Read started aswas an Associate, then stockholderStockholder and Vice-President of Gorham & Gorham, Inc. an established Rhode Island law firm, at whichwith whom he was engaged in the general practice of law with an emphasis on litigation, family law and divorce litigation, extensive appellate practice, commercial and business matters municipal law (including representation of municipalities and school committees, municipal boards and agencies), negligence, estate planning and administration. From 1974-75,had an extensive appellate practice. In 1974, Mr. Read was appointed by the Hon. Richard J. Israel (Ret.) (then Attorney General and, later, Associate Justice of the Superior Court) as a Special Assistant Attorney General by the Rhode Island Attorney General. In 2001, Mr. Read formed his own law practice. Mr. Read is admittedAdmitted to practice before the Rhode Island Supreme Court; United States District Court, District of Rhode Island; United States Supreme Court; United States Tax Court; and United States Court of Appeals. Martindale-Hubble (the nationally renowned attorney rating service) has awarded Mr. Read both the highest Peer Review rating: “AV® Preeminent™” and Client Review rating: “Preeminent”. Mr. Read is a member of the Rhode Island Bar Association, the Rhode Island Trial Lawyers’ Association, and American Trial Lawyers’ Association.Associations for Justice. Mr. Read’s extensive legal, commercial and business experience qualifies him to serve as a director.
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Robert C. Hemsen
Robert C. Hemsen, serves as chief operating officera director and the Vice-Chairman of the Company. Board of Directors.Mr. Barton isHemsen graduated from Adelphi University with both a seasoned corporateBBA and MBA. An Honorable Discharged Air Force veteran, Mr. Hemsen worked in various business positions of increasing responsibility, including fifteen years in executive positions, in the merged or acquired business units of Honeywell International. These would include assignments in FRAM/Autolite, Bendix Corporation, Allied and AlliedSignal Corporations. Hemsen joined IBM in 1994 after nearly twenty-five years with 35Honeywell International. His industrial experience involved business units in Aerospace & Defense, Automotive OEM & Aftermarket Products, Chemicals & Specialty Materials and Information Technology & Services. He retired from IBM as its Director of Human of Resources, Corporate Development, Mergers and Acquisitions. Due to Mr. Hemsen’s commercial and business experience we selected him to serve as a director
John M. Faulhaber
John M. Faulhaber serves as a Director and Chairman of the Board of Directors. A graduate of The Choate School (now Choate Rosemary Hall) and Middlebury College, Mr. Faulhaber served in and was honorably discharged from the United States Army as a Captain. He thereafter worked as a broker in New York City for an international stock brokerage firm for twelve years before becoming a Trust Officer and Vice President at the Private Bank of professional experience. Previously,Rhode Island Hospital Trust National Bank, where he served as Vice President and Directoruntil his retirement. He was subsequently elected the Grand Secretary of Rico, Inc., athe Grand Lodge of Freemasons for the State of Rhode Island manufacturing company,for thirteen years until his subsequent, semi-final, retirement. Mr. Faulhaber has been a lecturer at Providence College in Military Science, has devoted a substantial amount of his volunteer time as a Boy Scout leader and President of Imperia, Inc.,is active in his church where he also took on leadership roles. Mr. Faulhaber’s extensive experience with investments, money management and corporate governance qualify him to serve the corporation as a Massachusetts millwork and high-end manufacturer and distributor.
Linda H. Madison
Linda H. Madison serves as Secretary, principal financial officerPrincipal Financial and principal accounting officerAccounting Officer of the Company. Ms. Madison has 35forty years of operational and managerial experience. SheFor the period of eighteen years prior to joining the Company, she has served in the capacity of Administrative and Legal Assistant responsible for human resources, information technology, office coordination, creating various publications and maintainingdesigning and designingmaintaining complex data bases. She previously worked as the Executive Secretary and treasurerTreasurer for a large investment advisory firm in Rhode Island.
Director Independence
Although our common stock is not listed on any national securities exchange, for purposes of Theindependence we use the definition of independence applied by the NASDAQ Stock Market oneMarket. The Board has determined that due to each director’s relationship with us, that none of our directors is independent.
Audit Committee and Audit Committee Financial Expert
Our board of directors acts as our audit committee. We have determined that each of our directors is an “audit committee financial expert,” as that term is defined in Item 407(d) of Regulation S-K promulgated under the Securities Act.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the definitionsSecurities Exchange Act 1934 requires our directors and executive officers, and persons who own more than 10% of an independent director is a personregistered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and our other equity securities. Officers, directors and greater than 10% shareholders are required by the SEC regulations to furnish us with copies of all Section 16(a) forms they file. These filings are publicly available on the SEC’s website atwww.sec.gov. Based solely on our review of the copies of such forms received by us and our review of the SEC’s website, we believe that during fiscal year ended December 31, 2016, all filing requirements applicable to our officers, directors and greater than 10% percent beneficial owners were complied with other than an executive officer or employeeinadvertent late filing for Mr. Read of a company. The Company's board of directors has reviewed the materiality of any relationship that each of the directors has with the Company, either directly or indirectly. Based on this review, the board has determined that there are no independent directors.Form 4 for one stock acquisition.
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Code of Ethics
We have established and maintain a Code of Ethics pursuantwhich is applicable to rules describedall employees, officers, and directors. Our policy is designed to deter wrongdoing and to promote honest and ethical conduct and compliance with all applicable laws and regulations. It also communicates our expectations of our employees and helps enable us to provide accurate and timely disclosure in Regulation S-K. The Company has no operationsour filings with the SEC and other public communications. In addition, the policy incorporates guidelines pertaining to topics such as environmental compliance, health and safety compliance; diversity and non-discrimination; vendor relations, employee privacy; and business continuity.
We will provide any person without charge, upon written or business and does not have any revenues. The Company intendsoral request to adoptour corporate headquarters, a copy of our Code of Ethics to provide a manner of conduct. Because the Company does not have any activities, there are no activities or transactions which would be subject to this code. Finally the vice president of the Company is an attorney at law and subject to the ethical code established by the bars in which he is also a member. At the time the Company completes its initial public offering of securities, management anticipates that it will adopt such a code.
| Aggregate | All | Annual | ||||||||||||||||||||||||||||||||
| Annual | Annual | Accrued | Stock | Compen | Other | Comp- | ||||||||||||||||||||||||||||
| Payments | Payments | Salary Since | And | sation | Comp- | ensation | ||||||||||||||||||||||||||||
| Name/Position | Year | Salary | Made | Inception | Bonus | Options | Plans | ensation | Total | |||||||||||||||||||||||||
| Dale P. Euga | 2013 | $ | 0 | $ | 0 | $ | 52,962 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
| President | 2012 | $ | 2,032 | $ | 2,032 | $ | 54,940 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
| Arthur M. Read II, Esq. | 2013 | $ | 0 | $ | 0 | $ | 50,000 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
| Vice President | 2012 | $ | 0 | $ | 0 | $ | 50,000 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
| Annual | Annual | Stock | All | Annual | |||||||||||||||||||||||
| Payments | Payments | And | Compensation | Other | Compensation | ||||||||||||||||||||||
| Name/Position | Year | Salary | Made | Options | Plans | Compensation | Total | ||||||||||||||||||||
| James F. O’Rourke | 2016 | $ | 0 | $ | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
| Chief Executive Officer | 2015 | $ | 0 | $ | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
| Arthur M. Read II, Esq. | 2016 | $ | 0 | $ | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
| Vice President | 2015 | $ | 0 | $ | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
| Linda H. Madison Principal Financial Officer and | 2016 | $ | 3,277.08 | $ | 0 | 0 | 0 | 0 | $ | 3,277.08 | |||||||||||||||||
| Principal Accounting Officer | 2015 | $ | 28,410.20 | $ | 0 | 0 | 0 | 0 | $ | 28,410.20 | |||||||||||||||||
No executive officer has received total compensation in excess of $100,000 in the Company'sour fiscal years ended as of December 31, 20122015 and December 31, 2013, respectively (see discussion immediately below regarding shares of stock granted to officers, and classification of shares granted to Mr. Euga as non-compensatory).2016, respectively. Upon successful completion by the Company of a public offering in the future funding, however, certain management personnel willare entitled to receive suchthe compensation as is discussed below in “Anticipated Officer and Director Remuneration”.
Each of the officers has received certain shares of our common stock in the Company. With respect to Mr. Euga, all shares that he has received to date have been in respect of his role as a founder and initial proponent of the Company. Accordingly, the Company has not recorded any compensation expense in respect of any shares held by Mr. Euga in the Company nor do such shares issued to Mr. Euga represent compensation that was paid to Mr. Euga. With respect to the other four officers of the Company, shares issued to such officers were recorded at a fair market value of $0.01 per share for purposes of calculating a compensation expense to the Company during the years ended 2012 and 2011, respectively.
Other than with respect to Mr. Euga, Mr. Caromile and Ms. Madison, (each of whom received cash compensation from the Company in 2011), there are no current plans to pay or distribute cash or non-cash bonus compensation to our officers, of the Company, until such time as the Company iswe are profitable or experiencesexperience positive cash flow. However, the Board of Directors may allocate salaries and benefits to the officers in its sole discretion. No such personofficer is subject to a compensation plan or arrangement that results from his or her resignation, retirement, or any other termination of employment with the companyus or from a change in control of theour company or a change in his or her responsibilities following a change in control. The members of the board of directors may receive, if the board of directors so decides, a fixed fee and reimbursement of expenses, for attendance at each regular or special meeting of the board of directors, although no such program has been adopted to date. The CompanyWe do not currently has nohave any retirement, pension, or profit-sharing plan covering itsour officers and directors; however, the Company planswe plan to implement certain such benefits after sufficient funds are realized or raised by the Companyus (see “Anticipated Officer and Director Remuneration” below.)
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Officer and Ms. Madison are currently eligible to be paid a salary in order to ensure their respective availability toDirector Remuneration
During the Company; however, since November 2011, the Company has temporarily suspended payments or accruals of salaries to these officers, in order to conserve the Company’s working capital.
Although not presently offered, the Company anticipateswe anticipate that itsour officers and directors will be provided with a group health, vision and dental insurance program at subsidizes rates, or at theour sole expense of the Company,, as may be determined on a case-by-case basis by the Companyus in itsour sole discretion. In addition, the Company planswe plan to offer 401(k) matching funds as a retirement benefit, paid vacation days and paid holidays.
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information relating to equity awards outstanding at the end of December 31, 2016 for each Named Executive Officer.
| Name | Grant Date | Number of Securities Underlying Unexercised Stock Awards | Number of Securities Underlying Unexercised Stock Awards Exercisable | Number of Securities Underlying Unexercised Stock Awards Unexercisable | Grant Date fair value of Restricted Stock Awards ($/share) | |||||||||||||
| Arthur M. Read, II | 01/25/2016 | - | 30,000,000 | - | $ | 0.0002 | ||||||||||||
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following table sets forth information as of the date of this report regarding the beneficial ownership of the Company’s common stock by each of its executive officers and directors, individually and as a group and by each person who beneficially owns in excess of five percent of the common stock after giving effect to any exercise of warrants or options held by that person.
| Number of Shares of | Percent | |||||
| Name | Position | Common Stock | of Class (1) | |||
| Dale P. Euga | President and Director | 103,473,334 | 54% | |||
| Arthur M. Read, II, Esq. | Vice President and Director | 12,000,000 | 6% | |||
| Edwin S. Barton, II | Chief Operating Officer | 6,833,333 | 4% | |||
| Stephen L. Caromile | Vice President | 6,000,000 | 3% | |||
| Linda H. Madison | Secretary | 1,000,000 | * | |||
| Eric Foster | 5% shareholder | 16,000,000 | 8% | |||
| Total owned by officers and directors | 129,306,667 | 67% |
| Number of Shares of | ||||||||||
| Name | Position | Common Stock | Percent of Class(1) | |||||||
| James F. O’Rourke | Chief Executive Officer | 90,825,000 | 5.9 | |||||||
| Arthur M. Read, II, Esq. | Executive Vice President, General Counsel and Director | 120,000,000 | 7.9 | |||||||
| John M. Faulhaber | Chairman of the Board | 1,000,000 | * | |||||||
| Robert C. Hemsen | Vice Chairman of the Board | 6,010,000 | * | |||||||
| Linda H. Madison | Secretary | 90,000,000 | 5.9 | |||||||
| Total owned by officers and directors (5) | 307,835,000 | 20.15 | % | |||||||
* Less than 1%
| (1) | Based upon 1,527,930,584 shares outstanding. |
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During the year ended December 31, 2016 we entered into 7 promissory notes with two related parties with the principal amount totaling $29,205 and received the total related party loan proceeds of $29,205. At December 31, 2016 and 2015, we owed an aggregate of $400,810 to related parties in accordance with the law firm which acts as counsel toterms of notes that we issued. The total interest accrued on related party loans at December 31, 2016 and December 31, 2015 was $56,777 and $29,467, respectively.
Before the Company isbecame public, $11,321 was advanced to one stockholder. In the sole owner1st quarter of 2016 this advance was deemed uncollectible and director of Tiber Creek Corporation which owns 2,500,000 shares of the Company's common stock. Mr. Cassidy was a promoter of the Company priortherefore written off to the change of control of the Company. Tiber Creek received consulting fees of $75,000 from the Company and has received shares in the Company. Tiber Creek and its affiliate, IRAA Fin Serv, an unincorporated California business entity, each own 2,500,000 shares in the Company.
We obtained financing from five different related parties from 2012 through December 31, 2016. As of December 31, 2016, 82.61% of the short-term financing is from Arthur Read. The accrued interest payable to Mr. Read is $44,951. The following are breakdowns for the promissory notes issued to all five related parties.
We obtained financing from a related party in the form of three demand Notes Payable in the aggregate amount of $10,000 which have been outstanding since the year ended December 31, 2012. All three notes have been amended, extending the maturity dates. See maturity dates on table below. The Notes bear an interest rate of 7% per annum and are unsecured.
| Note | Principal | Rate | Accrued interest | Maturity | |||||||||||||||
| 12/31/16 | 12/31/15 | ||||||||||||||||||
| Promissory note 1 | $ | 6,000 | 7 | % | $ | 1,816 | $ | 1,395 | 9/4/2018 | ||||||||||
| Promissory note 2 | $ | 2,000 | 7 | % | $ | 594 | $ | 454 | 10/1/2017 | ||||||||||
| Promissory note 3 | $ | 2,000 | 7 | % | $ | 571 | $ | 430 | 12/3/2017 | ||||||||||
| Total | $ | 10,000 | $ | 2,981 | $ | 2,279 | |||||||||||||
| 15 |
We obtained financing from a related party in the form of twenty-one demand Notes Payable in the aggregate amount of $331,101 during the period from 2012 through December 31, 2015. We repaid a total of $2,353 of the principal on Note 7 during the years ended December 31, 2014 and December 31, 2015. Several of the notes have been amended and extended during the period from 2014 through December 31, 2016. See maturity dues on table below. The Notes bear an interest rate of 7% per annum and are unsecured.
| Note | Principal | Rate | Accrued interest | Maturity | |||||||||||||||
| 12/31/16 | 12/31/15 | ||||||||||||||||||
| Promissory note 1 | $ | 5,000 | 7 | % | $ | 1,522 | $ | 1,171 | 7/25/2018 | ||||||||||
| Promissory note 2 | $ | 11,000 | 7 | % | $ | 3,228 | $ | 2,456 | 10/22/2017 | ||||||||||
| Promissory note 3 | $ | 15,000 | 7 | % | $ | 4,306 | $ | 3,254 | 11/24/2017 | ||||||||||
| Promissory note 4 | $ | 102 | 7 | % | $ | 30 | $ | 23 | 10/22/2017 | ||||||||||
| Promissory note 5 | $ | 879 | 7 | % | $ | 252 | $ | 191 | 11/24/2017 | ||||||||||
| Promissory note 6 | $ | 973 | 7 | % | $ | 296 | $ | 228 | 7/25/2018 | ||||||||||
| Promissory note 7 | $ | 22,147 | 7 | % | $ | 4,305 | $ | 2,750 | 5/4/2017 | ||||||||||
| Promissory note 8 | $ | 7,000 | 7 | % | $ | 1,010 | $ | 518 | 12/11/2018 | ||||||||||
| Promissory note 9 | $ | 6,000 | 7 | % | $ | 853 | $ | 432 | 12/22/2018 | ||||||||||
| Promissory note 10 | $ | 25,000 | 7 | % | $ | 3,471 | $ | 1,716 | 1/8/2017 | ||||||||||
| Promissory note 11 | $ | 35,000 | 7 | % | $ | 4,672 | $ | 2,215 | 2/5/2017 | ||||||||||
| Promissory note 12 | $ | 40,000 | 7 | % | $ | 4,864 | $ | 2,056 | 4/8/2017 | ||||||||||
| Promissory note 13 | $ | 30,000 | 7 | % | $ | 3,492 | $ | 1,387 | 5/5/2017 | ||||||||||
| Promissory note 14 | $ | 45,000 | 7 | % | $ | 4,807 | $ | 1,648 | 6/24/2017 | ||||||||||
| Promissory note 15 | $ | 25,000 | 7 | % | $ | 2,508 | $ | 753 | 7/28/2017 | ||||||||||
| Promissory note 16 | $ | 15,000 | 7 | % | $ | 1,438 | $ | 385 | 8/20/2017 | ||||||||||
| Promissory note 17 | $ | 13,000 | 7 | % | $ | 1,167 | $ | 254 | 9/21/2017 | ||||||||||
| Promissory note 18 | $ | 5,000 | 7 | % | $ | 439 | $ | 88 | 10/13/2017 | ||||||||||
| Promissory note 19 | $ | 10,000 | 7 | % | $ | 823 | $ | 121 | 10/30/2017 | ||||||||||
| Promissory note 20 | $ | 3,000 | 7 | % | $ | 220 | $ | 10 | 12/15/2017 | ||||||||||
| Promissory note 21 | $ | 17,000 | 7 | % | $ | 1,249 | $ | 55 | 12/15/2017 | ||||||||||
| Total | $ | 331,101 | $ | 44,951 | $ | 21,711 | |||||||||||||
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We obtained financing from a related party in the form of six demand Notes Payable in the aggregate amount of $9,409 during the period from 2012 through December 31, 2016. Notes 1 - 4 were amended and extended. See maturity dates on table below. The Notes bear an interest rate of 7% per annum and are unsecured.
| Note | Principal | Rate | Accrued interest | Maturity | |||||||||||||||
| 12/31/16 | 12/31/15 | ||||||||||||||||||
| Promissory note 1 | $ | 234 | 7 | % | $ | 67 | $ | 50 | 12/5/2017 | ||||||||||
| Promissory note 2 | $ | 170 | 7 | % | $ | 49 | $ | 37 | 11/18/2017 | ||||||||||
| Promissory note 3 | $ | 4,100 | 7 | % | $ | 1,120 | $ | 833 | 2/5/2018 | ||||||||||
| Promissory note 4 | $ | 2,000 | 7 | % | $ | 546 | $ | 405 | 2/7/2018 | ||||||||||
| Promissory note 5 | $ | 1,780 | 7 | % | $ | 95 | $ | - | 3/29/2018 | ||||||||||
| Promissory note 6 | $ | 1,125 | 7 | % | $ | 40 | $ | - | 6/30/2018 | ||||||||||
| Total | $ | 9,409 | $ | 1,917 | $ | 1,325 | |||||||||||||
We obtained financing from a related party in the form of two demand Notes Payable in the aggregate amount of $18,000 during the year of 2013. Both notes were amended and extended during the quarter ended March 31, 2016. See maturity dates on table below. The Notes bear an interest rate of 7% per annum and are unsecured.
| Note | Principal | Rate | Accrued interest | Maturity | |||||||||||||||
| 12/31/16 | 12/31/15 | ||||||||||||||||||
| Promissory note 1 | $ | 10,000 | 7 | % | $ | 2,702 | $ | 2,000 | 2/21/2018 | ||||||||||
| Promissory note 2 | $ | 8,000 | 7 | % | $ | 2,123 | $ | 1,562 | 3/18/2018 | ||||||||||
| Total | $ | 18,000 | $ | 4,826 | $ | 3,562 | |||||||||||||
We obtained financing from a related party in the form of six demand Note Payables in the aggregate amount of $32,300 during the period from 2014 through December 31, 2016. The Notes bears an interest rate of 7% per annum and are unsecured.
| Note | Principal | Rate | Accrued interest | Maturity | |||||||||||||||
| 12/31/16 | 12/31/15 | ||||||||||||||||||
| Promissory note 1 | $ | 6,000 | 7 | % | $ | 1,011 | $ | 590 | 8/6/2018 | ||||||||||
| Promissory note 2 | $ | 2,500 | 7 | % | $ | 174 | $ | - | 1/4/2018 | ||||||||||
| Promissory note 3 | $ | 4,200 | 7 | % | $ | 242 | $ | - | 2/5/2018 | ||||||||||
| Promissory note 4 | $ | 3,000 | 7 | % | $ | 165 | $ | - | 3/20/2018 | ||||||||||
| Promissory note 5 | $ | 11,500 | 7 | % | $ | 406 | $ | - | 6/30/2018 | ||||||||||
| Promissory note 6 | $ | 5,100 | 7 | % | $ | 106 | $ | - | 8/8/2018 | ||||||||||
| Total | $ | 32,300 | $ | 2,104 | $ | 590 | |||||||||||||
During the year ended December 31, 2016 the total amount of related party loan proceeds was $29,205. The total interest accrued on related party loans at December 31, 2016 and December 31, 2015 was $56,777 and $29,467, respectively.
| 17 |
Audit Fees
The aggregate fees incurred for each of the last two years for professional services rendered by the independent registered public accounting firm for the audits of the Company's annual financial statements and review of financial statements included in the Company's Form 10-K and Form 10-Q reports and services normally provided in connection with statutory and regulatory filings or engagements were as follows:
| December 31, 2012 | December 31, 2013 | |||||
| $ | 18,616 | $ | 15,800 | |||
| December 31, 2015 | December 31, 2016 | |||||
| $ | 22,560 | $ | 23,100 | |||
Tax Fees
The Company incurred $0 for tax related services.
All Other Fees
The Company incurred $0 for other fees by the principal accountant for the years ended December 31, 20132016 and 2012.
The Company does not currently have an audit committee serving and as a result its board of directors performs the duties of an audit committee. The board of directors will evaluate and approve in advance, the scope and cost of the engagement of an auditor before the auditor renders audit and non-audit services. The Company does not rely on preapproval policies and procedures.
| 18 |
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
| 2.1 | Agreement and Plan of Merger (Incorporated by reference to Exhibit 2.1 of Form S-1 (File No.: 333-172509) filed with the SEC on February 28, 2011) |
| 3.1 | Certificate of Incorporation (Incorporated by reference to Exhibit 3.1 of Form S-1 (File No.: 333-172509) filed with the SEC on February 28, 2011) |
| 3.2 | Amended By-laws dated June 24, 2011(1) |
| 3.3 | Certificate of Merger (Incorporated by reference to Exhibit 3.3 of Form S-1 (File No.: 333-172509) filed with the SEC on February 28, 2011) |
| 3.4 | Certificate of Amendment to the Certificate of Incorporation (Incorporated by reference to Exhibit 3.4 of Form S-1 (File No.: 333-172509) filed with the SEC on February 28, 2011) |
| 3.5 | Certificate of Amendment to the Certificate of Incorporation (Incorporated by reference to Exhibit 3.5 of Form S-1 (File No.: 333-172509) filed with the SEC on February 28, 2011) |
| 3.6 | Certificate of Amendment to the Certificate of Incorporation (Incorporated by reference to Exhibit 10.1 of Form 8-K (File No.: 000-53259) filed with the SEC on December 13, 2013) |
| 4.1 | Stock Option Plan (Incorporated by referenced to Exhibit B to DEF Schedule 14-C (File No. 000-53259) filed with the SEC on January 22, 2015) |
| 10.1 | Agreement with Merchant Banking Advisors (Incorporated by reference to Exhibit 10.1 of Form S-1 (File No.: 333-172509) filed with the SEC on June 15, 2011) |
| 10.2 | Form of subscription agreement for private placement (Incorporated by reference to Exhibit 10.1 of Form S-1 (File No.: 333-172509) filed with the SEC on June 15, 2011) |
| 10.3 | Employment agreement and amendment of Linda Madison (Incorporated by reference to Exhibit 10.1 of Form S-1 (File No.: 333-172509) filed with the SEC on June 15, 2011)+ |
| 10.5 | Agreement with Tiber Creek Corporation (Incorporated by reference to Exhibit 10.1 of Form S-1 (File No.: 333-172509) filed with the SEC on December 9, 2011) |
| 10.6 | Lease agreement (Incorporated by reference to Exhibit 10.1 of Form S-1 (File No.: 333-172509) filed with the SEC on December 9, 2011) |
| 10.7 | Farmacia Birsas Del Mar Equipment Leasing Agreement(1)** |
| 10.8 | Investment Agreement (Incorporated by reference to Exhibit 10.1 of Form 8-K (File No.: 000-53259) filed with the SEC on December 13, 2013) |
10.9 | Registration Rights Agreement (Incorporated by reference to Exhibit 10.1 of Form 8-K (File No.: 000-53259) filed with the SEC on December 13, 2013) |
| 14 | Code of Ethics |
| 21 | List of Subsidiaries |
| 31.1 | Certification of James F. O’Rourke, Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a)(1) |
| 31.2 | Certification of Linda H. Madison, Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a)(1) |
| 32.1 | Certification of James F. O’Rourke, Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a)(1) |
| 32.2 | Certification of Linda H. Madison, Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a)(1) |
| 101 | Interactive Data File |
| 101.INS | XBRL Instance Document(1) |
| 101.SCH | XBRL Taxonomy Extension Schema Document(1) |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document(1) |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document(1) |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document(1) |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document(1) |
| (1) | Filed Herewith |
| + | Management Compensatory Plan |
| ** | Confidential treatment has been requested as to certain portions of this exhibit pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. |
| 19 |
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
POWERDYNE INTERNATIONAL, INC. | |||
| Dated: April | By: | /s/ | James F. O’Rourke |
| Chief Executive Officer | |||
| Dated: April | By: | /s/ Linda H. Madison | |
| Principal | |||
| Financial Officer and Principal | Accounting Officer | ||
Pursuant to the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
NAME | OFFICE | DATE | ||
| /s/ | April | |||
| James F. O’Rourke | ||||
| /s/ Arthur M. Read, II | Executive Vice-President, General Counsel and Director | April | ||
| Arthur M. Read, II | ||||
| /s/ John M. Faulhaber | Director and Chairman of the Board | April 13, 2017 | ||
| John M. Faulhaber | ||||
| /s/ Robert C. Hemsen | Director and Vice-Chairman of the Board | April 13, 2017 | ||
| Robert C. Hemsen |
| 20 |
POWERDYNE INTERNATIONAL, INC.
FINANCIAL STATEMENTS
December 31, 2016 and 2015
INDEX TO FINANCIAL STATEMENTS
Audit Opinion | F-2 |
| F-3 | |
| F-4 | |
| F-5 | |
| Statements of Cash Flows | F-6 |
| Notes to Financial Statements |
| F-1 |
Powerdyne International, Inc.
We have audited the accompanying balance sheets of Powerdyne International, Inc. (TheInc (the "Company") as of December 31, 20132016 and 20122015, and the related statementsstatement of operations, changes in stockholders' (deficit) equitystockholders’ deficit and cash flows for the years then ended; and for the period from February 2, 2010 (inception) to December 31, 2013.ended. These financial statements are the responsibility of the Company'sCompany’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States)States of America). 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 was 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 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. An audit also includes 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 Powerdyne International, Inc.the Company as of December 31, 2013,2016 and 20122015 and the results of its operations and its cash flows for the years then ended; and for the period from February 2, 2010 (inception) to December 31, 2013,ended, in conformity with accounting principles generally accepted in the United States.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As showndiscussed in the Note 4, to the financial statements, the Company has incurredhad minimal revenues and has an accumulated deficit of $1,581,925 from inception to December 31, 2013.$3,374,003. These conditions, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management's plans concerning these matters are also described in the Note 4, to the financial statements, which include the raising of additional equity financing. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/Anton & Chia, LLP
Newport Beach, California
April 13, 2017
| F-2 |
BALANCE SHEETS
December 31, 2013 | December 31, 2012 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 18,169 | $ | 665 | ||||
| Prepaid expenses | 495 | - | ||||||
| Advances to stockholder | 11,321 | 11,321 | ||||||
| Total current assets | 29,985 | 11,986 | ||||||
| Property and Equipment | ||||||||
| Property and equipment, net | 102,613 | 116,117 | ||||||
| Total Assets | $ | 132,598 | $ | 128,103 | ||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 162,661 | $ | 148,120 | ||||
Notes payable, net of unamortized, debt discounts of $24,750 and $0, respectively | 68,469 | -- | ||||||
| Due to related parties | 14,250 | 5,600 | ||||||
| Notes payable-related parties | 67,457 | 43,357 | ||||||
| Tax payable | 956 | 956 | ||||||
| Total current liabilities | 313,793 | 198,033 | ||||||
| Other liabilities: | ||||||||
| Derivative liability, net | 94,876 | - | ||||||
| Total Liabilities | 408,669 | 198,033 | ||||||
| Stockholders' Deficit: | ||||||||
Common stock; $0.0001 par value; 300,000,000 shares authorized, 196,673,027 shares issued and outstanding as of December 31, 2013 and 193,216,667 shares issued and outstanding as of December 31, 2012 | 19,667 | 19,322 | ||||||
| Additional paid-in capital | 1,286,187 | 1,090,778 | ||||||
| Accumulated deficit | (1,581,925 | ) | (1,180,030 | ) | ||||
| Total Stockholders' Deficit | (276,071 | ) | (69,930 | ) | ||||
| Total Liabilities and Stockholders' Deficit | $ | 132,598 | $ | 128,103 | ||||
| December 31, 2016 | December 31, 2015 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 72 | $ | 1,922 | ||||
| Advances to stockholder | - | 11,321 | ||||||
| Total current assets | 72 | 13,243 | ||||||
| Property and Equipment | ||||||||
| Property and equipment, net | 34,296 | 79,031 | ||||||
| Total Assets | $ | 34,368 | $ | 92,274 | ||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 135,502 | $ | 68,877 | ||||
| Due to related parties | 25,000 | 25,000 | ||||||
| Notes payable-related parties | 316,532 | 371,605 | ||||||
| Income tax payable | 1,000 | 500 | ||||||
| Total Current Liabilities | 478,034 | 465,982 | ||||||
| Long Term Liabilities | ||||||||
| Notes payable-related parties | 84,278 | - | ||||||
| Total Long Term Liabilities | 84,278 | - | ||||||
| Total Liabilities | 562,312 | 465,982 | ||||||
| Stockholders' Deficit: | ||||||||
| Common stock; $0.0001 par value; 2,000,000,000 sharesauthorized, 1,527,930,584 shares issued and outstandingas of December 31, 2016 and 1,379,430,584 shares issued andoutstanding as of December 31, 2015 | 152,793 | 137,943 | ||||||
| Additional paid-in capital | 2,693,266 | 2,678,066 | ||||||
| Accumulated deficit | (3,374,003 | ) | (3,189,717 | ) | ||||
| Total Stockholders' Deficit | (527,944 | ) | (373,708 | ) | ||||
| Total Liabilities and Stockholders' Deficit | $ | 34,368 | $ | 92,274 | ||||
The accompanying notes are an integral part of these financial statements.
| F-3 |
| For the year | For the year | For the period from February 2, 2010 | ||||||||||
| ended | ended | (inception) | ||||||||||
December 31, 2013 | December 31, 2012 | December 31, 2013 | ||||||||||
| Revenues | $ | - | $ | - | $ | - | ||||||
| Cost of revenues | - | - | - | |||||||||
| Gross profit | - | - | - | |||||||||
| Operating expenses | 330,340 | 127,015 | 1,506,546 | |||||||||
| Loss from operations | (330,340 | ) | (127,015 | ) | (1,506,546 | ) | ||||||
| Other (Income) Expense | ||||||||||||
| Derivative expense | 33,833 | -- | 33,833 | |||||||||
| Change in fair value of derivative | 18,296 | -- | 18,296 | |||||||||
| Amortization of debt discount | 18,469 | -- | 18,469 | |||||||||
| Total Other (Income) Expense | 70,598 | -- | 70,598 | |||||||||
| Loss before income tax expense | (400,938 | ) | (127,015 | ) | (1,577,144 | ) | ||||||
| Income tax expense | 956 | 956 | 4,780 | |||||||||
| Net loss | $ | (401,894 | ) | $ | (127,971 | ) | $ | (1,581,924 | ) | |||
| Basic and diluted loss per common share | $ | (0.00 | ) | $ | (0.00 | ) | ||||||
Basic and diluted weighted average common shares outstanding | 194,361,381 | 193,124,408 | ||||||||||
| For the year ended | For the year ended | |||||||
| December 31, 2016 | December 31, 2015 | |||||||
| Revenues | $ | 488 | $ | 752 | ||||
| Cost of revenues | - | - | ||||||
| Gross profit | 488 | 752 | ||||||
| Operating expenses | 166,165 | 407,101 | ||||||
| Loss from operations | (165,677 | ) | (406,349 | ) | ||||
| Other (Income) Expense | ||||||||
| Loss on sale of equipment | 18,109 | - | ||||||
| Derivative expense | - | 43,877 | ||||||
| Change in fair value of derivative | - | (50,345 | ) | |||||
| Amortization of debt discount | - | 138,260 | ||||||
| Total Other Expense | 18,109 | 131,792 | ||||||
| Loss before income tax expense | (183,786 | ) | (538,141 | ) | ||||
| Income tax expense | 500 | 919 | ||||||
| Net loss | $ | (184,286 | ) | $ | (539,060 | ) | ||
| Basic and diluted loss per common share | (0 | ) | (0 | ) | ||||
| Basic and diluted weighted average common shares outstanding | 1,517,448,344 | 963,014,524 | ||||||
The accompanying notes are an integral part of these financial statements.
| F-4 |
| Additional | Total Stockholders' | |||||||||||||||||||
| Common Stock | Paid-In | Accumulated | Equity | |||||||||||||||||
| Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||
| Balance, December 31, 2014 | 369,135,575 | 36,913 | 1,985,268 | (2,650,658 | ) | (628,477 | ) | |||||||||||||
| Settlement of derivative liability through conversion of notes payable | 454,267 | 454,267 | ||||||||||||||||||
| Stock issued for services | 279,600,000 | 27,960 | 111,840 | - | 139,800 | |||||||||||||||
| Common stock issued in exchange for debt | 730,695,009 | 73,070 | 126,691 | 199,761 | ||||||||||||||||
| Net loss for the period | (539,060 | ) | (539,060 | ) | ||||||||||||||||
| Balance, December 31, 2015 | 1,379,430,584 | 137,943 | 2,678,066 | (3,189,717 | ) | (373,708 | ) | |||||||||||||
| Stock issued for services | 148,500,000 | 14,850 | 15,200 | - | 30,050 | |||||||||||||||
| Net loss for the period | (184,286 | ) | (184,286 | ) | ||||||||||||||||
| Balance, December 31, 2016 | 1,527,930,584 | 152,793 | 2,693,266 | (3,374,003 | ) | (527,944 | ) | |||||||||||||
STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
| Additional | Common Stock | Total | ||||||||||||||||||||||||||
| Common Stock | Common Stock | Paid-In | Subscriptions | Accumulated | Stockholders' | |||||||||||||||||||||||
| Shares | Amount | Subscribed | Capital | Receivable | Deficit | Equity (Deficit) | ||||||||||||||||||||||
| Balance, February 2, 2010 (Inception) | 1,000,000 | $ | 100 | $ | - | $ | 900 | $ | - | $ | - | $ | 1,000 | |||||||||||||||
| Common stock subscribed | - | - | 191,900 | - | (61,915 | ) | - | 129,985 | ||||||||||||||||||||
| Stock issued for change in control | 188,000,000 | 18,800 | - | (18,800 | ) | - | - | - | ||||||||||||||||||||
| Stock issued for services | 16,000,000 | 1,600 | - | 158,400 | - | - | 160,000 | |||||||||||||||||||||
| Net loss for the period | - | - | - | - | - | (306,270 | ) | (306,270 | ) | |||||||||||||||||||
| Balance, December 31, 2010 | 205,000,000 | $ | 20,500 | $ | 191,900 | $ | 140,500 | $ | (61,915 | ) | $ | (306,270 | ) | $ | (15,285 | ) | ||||||||||||
| Recapitalization shares contributed from | ||||||||||||||||||||||||||||
| reverse merger agreement | (84,526,666 | ) | (8,453 | ) | - | 8,453 | - | - | - | |||||||||||||||||||
| Issuance pursuant to merger | ||||||||||||||||||||||||||||
| agreement for services - fair valued | 32,500,000 | 3,250 | 321,750 | - | - | 325,000 | ||||||||||||||||||||||
| Issuance per cash considerations in | ||||||||||||||||||||||||||||
| relation to the stockholder subscription | 36,026,666 | 3,603 | (191,900 | ) | 523,997 | (102,200 | ) | - | 233,500 | |||||||||||||||||||
| Common stock issued | 2,750,000 | 275 | - | 62,225 | 164,115 | - | 226,615 | |||||||||||||||||||||
| Net loss for the year | - | - | - | - | - | (745,789 | ) | (745,789 | ) | |||||||||||||||||||
| Balance, December 31, 2011 | 191,750,000 | 19,175 | - | 1,056,925 | - | (1,052,059 | ) | 24,041 | ||||||||||||||||||||
| Issuance per cash considerations in | ||||||||||||||||||||||||||||
| relation to the stockholder subscription | 966,667 | 97 | - | 28,903 | - | - | 29,000 | |||||||||||||||||||||
| Stock issued for services | 500,000 | 50 | - | 4,950 | - | - | 5,000 | |||||||||||||||||||||
| Net loss for the year | - | - | - | - | - | (127,971 | ) | (127,971 | ) | |||||||||||||||||||
| Balance, December 31, 2012 | 193,216,667 | 19,322 | - | 1,090,778 | - | (1,180,030 | ) | (69,930 | ) | |||||||||||||||||||
| Common stock issued for services | 2,265,884 | 226 | - | 155,774 | - | - | 156,000 | |||||||||||||||||||||
| Common stock issued in exchange for debt | 1,190,476 | 119 | - | 14,881 | - | - | 15,000 | |||||||||||||||||||||
| Settlement of derivative liability through | ||||||||||||||||||||||||||||
| conversion of notes payable | - | - | - | 24,754 | - | - | 24,754 | |||||||||||||||||||||
| Net loss for the year | - | - | - | - | - | (401,894 | ) | (401,894 | ) | |||||||||||||||||||
| Balance, December 31, 2013 | 196,673,027 | 19,667 | - | 1,286,187 | - | (1,581,924 | ) | (276,070 | ) | |||||||||||||||||||
| F-5 |
STATEMENTS OF CASH FLOWS
| From | ||||||||||||
| For the year ended | For the year ended | February 2, 2010 (Inception) to | ||||||||||
| December 31, 2013 | December 31, 2012 | December 31, 2013 | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| Operating Activities: | ||||||||||||
Net loss | $ | (401,894 | ) | $ | (127,971 | ) | $ | (1,581,924 | ) | |||
Adjustments to reconcile net loss | ||||||||||||
| to net cash used by operating activities: | ||||||||||||
Depreciation and amortization | 13,504 | 13,704 | 30,450 | |||||||||
Stock compensation | 156,000 | 5,000 | 646,000 | |||||||||
Derivative expense | 33,833 | - | 33,833 | |||||||||
Change in FV of derivatives | 18,296 | - | 18,296 | |||||||||
Amortization of debt discounts | 18,469 | - | 18,469 | |||||||||
| Changes in operating assets and liabilities: | ||||||||||||
Prepaid expenses | (495 | ) | 1,817 | (495 | ) | |||||||
Accrued expenses | 23,191 | 18,093 | 176,911 | |||||||||
Accrued income taxes | -- | -- | 956 | |||||||||
Net cash used by operating activities | (139,096 | ) | (89,357 | ) | (657,504 | ) | ||||||
| Investing Activities: | ||||||||||||
Organization expense | - | - | ||||||||||
Purchase of equipment | - | - | (133,063 | ) | ||||||||
Net cash used by investing activities | - | - | (133,063 | ) | ||||||||
| Financing Activities: | ||||||||||||
Advances to stockholder | - | - | (11,321 | ) | ||||||||
Notes payable | 156,600 | 43,358 | 199,957 | |||||||||
Proceeds from common stock | - | 29,000 | 620,100 | |||||||||
Net cash provided by financing activities | 156,600 | 72,358 | 808,736 | |||||||||
| Net change in cash | 17,504 | (16,999 | ) | 18,169 | ||||||||
| Cash, beginning of period | 665 | 17,664 | - | |||||||||
| Cash, end of period | $ | 18,169 | $ | 665 | $ | 18,169 | ||||||
| Non-cash investing and financing activities: | ||||||||||||
| Common stock issued in exchange for debt | $ | 15,000 | $ | - | $ | 15,000 | ||||||
Settlement of derivative liability through conversion of notes payable. | 24,854 | - | 24,754 | |||||||||
| 39,854 | $ | - | 39,754 | |||||||||
| Suppplemental disclosure if cash flow information | ||||||||||||
Cash paid for interest | - | - | - | |||||||||
Cash paid for taxes | $ | 956 | $ | 956 | $ | 4,780 | ||||||
| For the year | For the year | |||||||
| ended | ended | |||||||
| December 31, 2016 | December 31, 2015 | |||||||
| Operating Activities: | ||||||||
| Net loss | $ | (184,286 | ) | $ | (539,060 | ) | ||
| Adjustments to reconcile net loss to net cash used by operating activities: | ||||||||
| Depreciation and amortization | 8,626 | 10,925 | ||||||
| Bad Debt expense | 11,321 | - | ||||||
| Common stock issued for service and stock compensation | 30,050 | 139,800 | ||||||
| Loss on sale of equipment | 18,109 | - | ||||||
| Derivative and interest expense | - | 62,979 | ||||||
| Change in FV of derivatives | - | (50,345 | ) | |||||
| Amortization of debt discounts | - | 138,260 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accrued expenses | 66,625 | (1,166 | ) | |||||
| Due to related party | - | (8,425 | ) | |||||
| Taxes payable | 500 | (456 | ) | |||||
| Net cash used in operating activities | (49,055 | ) | (247,488 | ) | ||||
| Investing Activities: | ||||||||
| Purchase of equipment | - | (39,956 | ) | |||||
| Proceeds from sale of equipment | 18,000 | - | ||||||
| Net cash used by investing activities | 18,000 | (39,956 | ) | |||||
| Financing Activities: | ||||||||
| Principal paid on Notes payable related parties | - | (2,399 | ) | |||||
| Proceeds from Notes payable | - | 26,500 | ||||||
| Proceeds from Notes payable related parties | 29,205 | 263,000 | ||||||
| Net cash provided by financing activities | 29,205 | 287,101 | ||||||
| Net decrease in cash | (1,850 | ) | (343 | ) | ||||
| Cash, beginning of period | 1,922 | 2,265 | ||||||
| Cash, end of period | $ | 72 | $ | 1,922 | ||||
| Non-cash investing and financing activities: | ||||||||
| Common stock issued in settlement for debt | $ | 30,050 | $ | 199,761 | ||||
| Settlement of derivative liability through conversion of notes payable. | $ | - | $ | 454,267 | ||||
| Supplemental disclosure if cash flow information | ||||||||
| Cash paid for interest | $ | - | $ | - | ||||
| Cash paid for taxes | $ | - | $ | 1,375 | ||||
The accompanying notes are an integral part of these financial statements.
| F-6 |
POWERDYNE INTERNATIONAL, INC.
Powerdyne, Inc., was incorporated on February 2, 2010 in Nevada, and is registered to do business in Rhode Island and Massachusetts.Island. On February 7, 2011, Powerdyne, Inc. merged with Powerdyne International, Inc., formerly Greenmark Acquisition Corporation, a publicly held Delaware shell corporation with minimal assets and no operations.
On December 13, 2010, Powerdyne International, Inc., formerly Greenmark Acquisition Corporation, filed an Amended and Restated Articles of Incorporation in order to, among other things, increase the authorized capital stock to 300,000,000 common shares, par value $0.0001 per share. Unless the context specifies otherwise, as discussed in Note 2, references to the “Company” refers to Powerdyne International, Inc. and Powerdyne, Inc. after the merger.
At the closing of the merger, each share of Powerdyne, Inc.’s common stock issued and outstanding immediately prior to the closing of the Merger was exchanged for the right to receive 7,520 shares of common stock of Powerdyne International, Inc. Accordingly, an aggregate of 188,000,00188,000,000 shares of common stock of Powerdyne International, Inc. were issued to the holders of Powerdyne, Inc.’s common stock.
In 2014, Powerdyne International, Inc. filed an amendment to its Articles of Incorporation which increased the authorized capital stock to 550,000,000 common shares, par value $0.0001 per share.
On January 26, 2015, Powerdyne International, Inc. filed an amendment to its Articles of Incorporation which increased the authorized capital stock to 2,020,000,000 shares consisting of 2,000,000,000 common shares, par value $0.0001 per share and 20,000,000 shares which may be designated as common or preferred stock, par value $0.0001 per share.
In March 2014 the Company is a start-up organization which intends to producebegan production and distributedistribution of completely packaged independent electrical generator units that run on environmentally-friendly fuel sources, such as natural gas and propane. At this time, the majority stockholder has patents pending with the United States Patent Office regarding the unique design of these units.
2. REVERSE MERGER ACCOUNTING
On February 7, 2011, Greenmark Acquisition Corporation, which was a publicly held Delaware shell corporation, with no operations merged with Powerdyne, Inc. Upon closing of the transaction, Greenmark Acquisition Corporation, the surviving corporation in the merger, changechanged its name to Powerdyne International, Inc.
The merger is beingwas accounted for as a reverse-merger, and recapitalization in accordance with generally accepted accounting principles in the United States (“GAAP”). Powerdyne, Inc. iswas the acquirer for financial reporting purposes and the Company iswas the acquired company. Consequently, the assets and liabilities and the operations that are reflected in the historical financial statements prior to the Mergermerger are those of Powerdyne, Inc. and have been recorded at the historical cost basis of Powerdyne, Inc., and the financial statements after completion of the merger include the assets and liabilities of the Company and Powerdyne, Inc., historical operations of Powerdyne, Inc. and operations of the Company from the closing date of the Merger.merger. Common stock and the corresponding capital amounts of the Company pre-merger have beenwere retroactively restated as capital stock shares reflecting the exchange ratio in the merger.
3. BASIS OF PRESENTATION
The accompanying audited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and include all the notes required by generally 3. accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation of the financial statements have been included.
| F-7 |
POWERDYNE INTERNATIONAL, INC.
Notes to Financial Statements
December 31, 2016 and 2015
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The summary of significant accounting policies presented below is designed to assist in understanding the Company’s financial statements. Such financial statements and accompanying notes are the representations of the Company’s management, who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America (“GAAP”) in all material respects, and have been consistently applied in preparing the accompanying financial statements. The Company is classified as a development stage enterprise under GAAP and has not generated significant revenues from its principal operations.
Going Concern
Since its inception, the Company has devoted substantially all of its efforts to business planning, research and development, recruiting management and technical staff, acquiring operating assets and raising capital. Accordingly, the Company is considered to be in the development stage as defined in GAAP.The Company has not generated significant revenues from its principal operations, and there is no assurance of future revenues. As of December 31, 2013,2016, the Company had an accumulated deficit of $3,374,003. The Company’s continuation as a going concern is dependent on its ability to generate sufficient cash flows from inception of $1,581,925.
The Company’s activities will necessitate significant uses of working capital beyond 2013.December 31, 2016. Additionally, the Company’s capital requirements will depend on many factors, including the success of the Company’s continued research and development effortssales and the status of competitive products. The Company plans to continue financing its operations with cash received from financing activities more specificallyand revenue from one of its major shareholders.
While the Company strongly believes that its capital resources will be sufficient in the near term, there is no assurance that the Company’s activities will generate sufficient revenues to sustain its operations without additional capital or, if additional capital is needed, that such funds, if available, will be obtainable on terms satisfactory to the Company.Accordingly, these
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern; however, the above condition raises substantial doubt about the Company’s ability to do so. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that mightmay result fromshould the outcome of this uncertainty.
Use of Estimates
In preparing these condensedaudited financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
| F-8 |
POWERDYNE INTERNATIONAL, INC.
Notes to Financial Statements
December 31, 2016 and 2015
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Fair Value of Financial Instruments
The Company’sCompany follows guidance for accounting for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on a recurring basis. Additionally, the Company adopted guidance for fair value measurement related to nonfinancial items that are recognized and disclosed at fair value in the financial statements on a nonrecurring basis. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 inputs are unobservable inputs for the asset or liability.
The Company monitors the market conditions and evaluates the fair value hierarchy levels at least quarterly. For any transfers in and out of the levels of the fair value hierarchy, the Company elects to disclose the fair value measurement at the beginning of the reporting period during which the transfer occurred.
The Company's financial instruments includeconsisted of cash, accounts payable and accrued liabilities.liabilities, advances to stockholders, notes payable and convertible debt. The estimated fair value of these instrumentscash, accounts payable and accrued liabilities, advances to stockholders, and notes payable approximates its carrying amount due to the short maturity of these instruments.
Cash and Cash Equivalents
The Company considers all highly-liquid investments with maturities of three months or less when purchased to be cash equivalents. The Company had nodid not have any cash equivalents as of December 31, 20132016 and 2012.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company places its cash with high quality banking institutions. From time to time, the Company may maintain cash balances at certain institutions in excess of the Federal Deposit Insurance Corporation limit.
Property and Equipment net
Property and equipment is stated at cost. Capital expenditures for improvements and upgrades to existing equipment are also capitalized. Maintenance and repairs are expensed as incurred. The machinery and equipment, previously classified as ‘construction in process’ was placed into service on October 1, 2011 and the Company began to depreciate the assets at that time. The equipment is depreciated over 10 years on a straight-line basis. Vehicles are depreciated over 5 years using the straight-line basis. Depreciation expense
| F-9 |
POWERDYNE INTERNATIONAL, INC.
Notes to Financial Statements
December 31, 2016 and 2015
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Derivatives and Hedging
In April 2008, the FASB issued a pronouncement that provides guidance on determining what types of instruments or embedded features in an instrument held by a reporting entity can be considered indexed to its own stock for the purpose of evaluating the first criteria of the scope exception in the pronouncement on accounting for derivatives.
This pronouncement was effective for financial statements issued for fiscal years endedbeginning after December 31, 2013 and 2012 was $13,504 and $13,704 respectively, and $30,45015, 2008. The adoption of these requirements can affect the accounting for many convertible instruments with provisions that protect holders from a decline in the stock price. Each reporting period, the Company evaluates whether convertible debt to acquire stock of the Company contain provisions that protect holders from inception to December 31, 2013.
Long-Lived Assets
In accordance with ASC 350-30 (formerly SFAS No. 144,Accounting for the Impairment or Disposal of Long-Lived Assets), the Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their then carrying values may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. The Company’s management currently believes there is no impairment of its long-lived assets. There can be no assurance however, that market conditions will not change or demand for the Company’s products under development will continue. Either of these could result in future impairment of long-lived assets.
POWERDYNE INTERNATIONAL, INC.
As a result of the implementation of certain provisions of ASC 740,Income Taxes, (formerly FIN 48,Accounting for Uncertainty in Income Taxes – An Interpretation of FASB Statement No. 109),(“ASC 740”), which clarifies the accounting and disclosure for uncertainty in tax positions, as defined. ASC 740 seeks to reduce the diversity in practice associated with certain aspects of the recognition and measurement related to accounting for income taxes.
| F-10 |
POWERDYNE INTERNATIONAL, INC.
Notes to Financial Statements
December 31, 2016 and 2015
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
In 2010, the Company adopted Accounting for Uncertain Income Taxes under the provisions of ASC 740. ASC 740 clarifies the accounting for income taxes by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. It also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company did not recognize any additional liability for unrecognized tax benefits as a result of the adoption of ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Valuation allowances are established when it is more likely than not that some or all of the deferred tax assets will not be realized.
The Company believes that ourits income tax filing positions and deductions will be sustained on audit and dodoes not anticipate any adjustments that will result in a material change to ourits financial position. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to ASC 740. In addition, wethe Company did not record a cumulative effect adjustment related to the adoption of ASC 740. OurThe Company’s policy for recording interest and penalties associated with income-based tax audits is to record such items as a component of income taxes.
The Company’s tax provision is determined using an estimate of ourits annual effective tax rate using enacted tax rates expected to apply to taxable income in the years in which they are earned, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter we update ourthe Company updates its estimate of the annual effective tax rate, and if ourits estimated tax rate changes, we makethe Company makes a cumulative adjustment. Income taxes payable as of December 31, 20132016 and 2012 was $956 and $956, respectively. Income taxes paid for the years ended December 31, 20132015 were $1,000 and 2012 were $956 and 956,$500, respectively.
In accordance with ASC 718, the Company determines whether a share payment should be classified and accounted for as a liability award or equity award. All grants of share-based payments to service providers classified as equity awards are recognized in the financial statements based on their grant date fair values which are calculated using historical pricing. The Company has elected to recognize compensation expense based on the criteria that the stock awards vest immediately on the issuance date. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent period if actual forfeitures differ from initial estimates. There were no forfeitures of share based compensation.
Basic loss per common share excludes dilutive securities and is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted earnings per common share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Since the Company has only incurred losses, basic and diluted loss per share is the same. As of December 31, 20132016 and 2012,2015, there were no outstanding dilutive securities.
The following table represents the computation of basic and diluted losses per share:
Year ended December 31, 2013 | Year ended December 31, 2012 | |||||||
| $ | 401,894 | $ | (127,971 | ) | ||||
| Basic and fully diluted loss per share | $ | (0.00 | ) | $ | (0.00 | ) | ||
| 194,361,381 | 193,124,408 | |||||||
| Year ended December 31, 2016 | Year ended December 31, 2015 | |||||||
| Loss available for common shareholder | $ | (184,286 | ) | $ | (539,060 | ) | ||
| Basic and fully diluted loss per share | $ | (0.00 | ) | $ | (0.00 | ) | ||
| Weighted average common shares outstanding - basic and diluted | 1,517,448,344 | 963,014,524 | ||||||
Net loss per share is based upon the weighted average shares of common stock outstanding.
Recent Accounting Pronouncements
In January 2010, the FASB issued amended standards that require additional fair value disclosures. These disclosure requirements are effective in two phases. In the first quarter of 2010, we adopted the requirements for disclosures about inputs and valuation techniques used to measure fair value as well as disclosures about significant transfers. Beginning in the first quarter of 2011, these amended standards will require presentation of disaggregated activity within the reconciliation for fair value measurements using significant unobservable inputs (Level 3). These amended standards did not have any impact on our financial statements or disclosures.
In August 2014, the FASB (including its Emerging Issues Task Force),issued ASU No. 2014-15, “Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”). ASU 2014-15, which is effective for annual reporting periods ending after December 15, 2016, extends the responsibility for performing the going-concern assessment to management and contains guidance on how to perform a going-concern assessment and when going-concern disclosures would be required under U.S. GAAP. The Company elected to adopt ASU 2014-15 effective with this financial statement. Management’s evaluations regarding the United States Securitiesevents and Exchange Commission did not or are not believed by management to have a material impact onconditions that raise substantial doubt regarding the Company’s present or future financial statements.ability to continue as a going concern have been disclosed in this Note 5.
| F-11 |
POWERDYNE INTERNATIONAL, INC.
Notes to Financial Statements
December 31, 2016 and 2015
5. PROPERY AND EQUIPMENT - NET
Equipment consists of the following as of December 31, 20132016 and 2012:
December 31, 2013 | December 31, 2012 | |||||||
| Motor vehicles | $ | 1,976 | $ | 1,976 | ||||
| Machinery and equipment | 131,087 | 131,087 | ||||||
| 133,063 | 133,063 | |||||||
| Less accumulated depreciation | (30,450 | ) | (16,946 | ) | ||||
| Total equipment - net | $ | 102,613 | $ | 116,117 | ||||
| December 31, | December 31, | |||||||
| 2016 | 2015 | |||||||
| Machinery and equipment | $ | 39,956 | $ | 132,559 | ||||
| Less accumulated depreciation | (5,660 | ) | (53,528 | ) | ||||
| Total Property and Equipment | $ | 34,296 | $ | 79,031 | ||||
Equipment is stated at cost and depreciated on a straight-line basis over anthe assets’ estimated useful life of 10 years. Thelives: machinery and equipment that was previously classified as ‘construction in process,’ was placed into service on October 1, 2011.10 years. Total depreciation expense for the yearsperiods ended December 31, 20132016 and 20122015 was $13,504$8,626 and $13,704,$10,925, respectively.
6. COMMON STOCK
Stock issued and outstanding immediately prior to the closing of the merger was exchanged for the right to receive 7,520 shares of Powerdyne International, Inc. common stock. services
On December 11, 2010,January 19, 2016 the Company issued 2,000,000 shares of common stock to each of Tiber Creek Corporation and IRAA Fin Serv. for services rendered on behalf of Powerdyne Inc. The shares were valued at their estimated fair value of $0.01 per share for a total compensation of $40,000.
On December 3, 2013January 19, 2016 the Company issued 1,190,476500,000 shares to a consultant as compensation for services rendered. The Company valued the stock at $0.0003, for a total of $150.
On January 25, 2016 the Company issued 30,000,000 shares to stockholder as compensation for services rendered. The Company valued the stock at $0.0002, for a total of 6,000.
On January 25, 2016 the Company issued 75,000,000 shares to stockholder as compensation for services rendered. The Company valued the stock at $0.0002, for a total of $15,000.
On January 25, 2016 the Company issued 40,000,000 shares to a consultant as compensation for services rendered. The Company valued the stock at $0.0002, for a total of $8,000.
During the year ended December 31, 2016 148,500,000 shares were issued to consultants and stockholders as compensation for services rendered. The Company valued the stock at $0.0003 and $.00002 per share for a total of $30,050 based on the closing price of the day of issuance.
On June 30, 2016, the Board of Directors authorized the designation of 2,000,000 shares of stock as Series A Preferred Stock. The Series A Preferred Stock will not be entitled to dividends or payment upon liquidation, dissolution or winding up. Each share of Series A Preferred Stock will be entitled to 1,000 votes per share. Upon filing of a Certificate of Designations with the Secretary of State of the State of Delaware, we will be entitled to issue up to 2,000,000 shares of Series A Preferred Stock.
7. LEASE
On March 11, 2015 Powerdyne International, Inc. (the “Company”) finalized its negotiations with Farmacia Brisas del Mar, a corporation organized under the laws of Puerto Rico (the “Lessee”), and the Company and the Lessee have entered into a five-year contract to lease power generating equipment to Lessee based upon power consumption. In addition, the custom designed system will also provide cogeneration capabilities with the addition of chillers to support the air conditioning demands. The agreement provides for a payment to the Company of a monthly fee equal to the greater of a set monthly base rate or a monthly base rate plus an additional amount based on kilowatt wattage. The agreement provides for termination by the Company only in exchangethe event of nonperformance by the Lessee unless Lessee pays all payments due for the retirementremainder of $15,000the term. The agreement contains representation and warranties, default provisions and indemnification provisions typical for agreements of debt held bythis type. In 2016 the terms on the Farmacia Del Mar lease was modified to a venture capital lender.monthly payment, based on actual power consumption.
| F-12 |
POWERDYNE INTERNATIONAL, INC.
Notes to Financial Statements
December 31, 2016 and 2015
Asher Enterprises, Inc.8. RELATED PARTY –Promissory Note
The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as a liability once the conversion option becomes effective, since there is no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.
The Company obtained short-term cash flowfinancing from a related party in the form of three demand Notes Payable in the aggregate amount of $10,000 duringwhich have been outstanding since the year ended December 31, 2012. As of December 31, 2013,All three notes have been amended, extending the balance remains the same.maturity dates. See maturity dates on table below. The Notes bear an interest rate of 7% per annum and are unsecured.
| Note | Principal | Rate | Accrued interest | Maturity | ||||||||||||||
| 12/31/13 | 12/31/12 | |||||||||||||||||
| Promissory note 1 | $ | 6,000 | 7 | % | $ | 556 | $ | 136 | 9/4/2014 | |||||||||
| Promissory note 2 | $ | 2,000 | 7 | % | $ | 175 | $ | 35 | 10/1/2014 | |||||||||
| Promissory note 3 | $ | 2,000 | 7 | % | $ | 151 | $ | 11 | 12/3/2014 | |||||||||
| Total | $ | 10,000 | $ | 882 | $ | 182 | ||||||||||||
| Note | Principal | Rate | Accrued interest | Maturity | ||||||||||||||
| 12/31/16 | 12/31/15 | |||||||||||||||||
| Promissory note 1 | $ | 6,000 | 7 | % | $ | 1,816 | $ | 1,395 | 9/4/2018 | |||||||||
| Promissory note 2 | $ | 2,000 | 7 | % | $ | 594 | $ | 454 | 10/1/2017 | |||||||||
| Promissory note 3 | $ | 2,000 | 7 | % | $ | 571 | $ | 430 | 12/3/2017 | |||||||||
| Total | $ | 10,000 | $ | 2,981 | $ | 2,279 | ||||||||||||
The Company obtained short-term cash flowfinancing from a related party in the form of twenty-one demand Notes Payable in the aggregate amount of $331,101 during the period from 2012 through December 31, 2015. We repaid a total of $2,353 of the principal on Note 7 during the years ended December 31, 2014 and December 31, 2015. Several of the notes have been amended and extended during the period from 2014 through December 31, 2016. See maturity dues on table below. The Notes bear an interest rate of 7% per annum and are unsecured.
| F-13 |
POWERDYNE INTERNATIONAL, INC.
Notes to Financial Statements
December 31, 2016 and 2015
8. RELATED PARTY –Promissory Note (CONTINUED)
| Note | Principal | Rate | Accrued interest | Maturity | |||||||||||||||
| 12/31/16 | 12/31/15 | ||||||||||||||||||
| Promissory note 1 | $ | 5,000 | 7 | % | $ | 1,522 | $ | 1,171 | 7/25/2018 | ||||||||||
| Promissory note 2 | $ | 11,000 | 7 | % | $ | 3,228 | $ | 2,456 | 10/22/2017 | ||||||||||
| Promissory note 3 | $ | 15,000 | 7 | % | $ | 4,306 | $ | 3,254 | 11/24/2017 | ||||||||||
| Promissory note 4 | $ | 102 | 7 | % | $ | 30 | $ | 23 | 10/22/2017 | ||||||||||
| Promissory note 5 | $ | 879 | 7 | % | $ | 252 | $ | 191 | 11/24/2017 | ||||||||||
| Promissory note 6 | $ | 973 | 7 | % | $ | 296 | $ | 228 | 7/25/2018 | ||||||||||
| Promissory note 7 | $ | 22,147 | 7 | % | $ | 4,305 | $ | 2,750 | 5/4/2017 | ||||||||||
| Promissory note 8 | $ | 7,000 | 7 | % | $ | 1,010 | $ | 518 | 12/11/2018 | ||||||||||
| Promissory note 9 | $ | 6,000 | 7 | % | $ | 853 | $ | 432 | 12/22/2018 | ||||||||||
| Promissory note 10 | $ | 25,000 | 7 | % | $ | 3,471 | $ | 1,716 | 1/8/2017 | ||||||||||
| Promissory note 11 | $ | 35,000 | 7 | % | $ | 4,672 | $ | 2,215 | 2/5/2017 | ||||||||||
| Promissory note 12 | $ | 40,000 | 7 | % | $ | 4,864 | $ | 2,056 | 4/8/2017 | ||||||||||
| Promissory note 13 | $ | 30,000 | 7 | % | $ | 3,492 | $ | 1,387 | 5/5/2017 | ||||||||||
| Promissory note 14 | $ | 45,000 | 7 | % | $ | 4,807 | $ | 1,648 | 6/24/2017 | ||||||||||
| Promissory note 15 | $ | 25,000 | 7 | % | $ | 2,508 | $ | 753 | 7/28/2017 | ||||||||||
| Promissory note 16 | $ | 15,000 | 7 | % | $ | 1,438 | $ | 385 | 8/20/2017 | ||||||||||
| Promissory note 17 | $ | 13,000 | 7 | % | $ | 1,167 | $ | 254 | 9/21/2017 | ||||||||||
| Promissory note 18 | $ | 5,000 | 7 | % | $ | 439 | $ | 88 | 10/13/2017 | ||||||||||
| Promissory note 19 | $ | 10,000 | 7 | % | $ | 823 | $ | 121 | 10/30/2017 | ||||||||||
| Promissory note 20 | $ | 3,000 | 7 | % | $ | 220 | $ | 10 | 12/15/2017 | ||||||||||
| Promissory note 21 | $ | 17,000 | 7 | % | $ | 1,249 | $ | 55 | 12/15/2017 | ||||||||||
| Total | $ | 331,101 | $ | 44,951 | $ | 21,711 | |||||||||||||
The Company obtained financing from a related party in the form of six demand Notes Payable in the aggregate amount of $32,953$9,409 during the year endedperiod from 2012 through December 31, 2012. As of December 31, 2013, the outstanding balance remains the same.31,2 016. Notes 1 - 4 were amended and extended. See maturity dates on table below. The Notes bear an interest rate of 7% per annum and are unsecured.
| F-14 |
| Note | Principal | Rate | Accrued interest | Maturity | ||||||||||||||
| 12/31/13 | 12/31/12 | |||||||||||||||||
| Promissory note 1 | $ | 5,000 | 7 | % | $ | 472 | $ | 122 | 7/25/2014 | |||||||||
| Promissory note 2 | $ | 11,000 | 7 | % | $ | 918 | $ | 148 | 10/22/2014 | |||||||||
| Promissory note 3 | $ | 15,000 | 7 | % | $ | 1,156 | $ | 106 | 11/24/2014 | |||||||||
| Promissory note 4 | $ | 102 | 7 | % | $ | 8 | $ | 1 | 10/22/2014 | |||||||||
| Promissory note 5 | $ | 879 | 7 | % | $ | 68 | $ | 6 | 11/24/2014 | |||||||||
| Promissory note 6 | $ | 972 | 7 | % | $ | 92 | $ | 24 | 7/25/2014 | |||||||||
| Total | $ | 32,954 | $ | 2,714 | $ | 407 | ||||||||||||
POWERDYNE INTERNATIONAL, INC.
Notes to Financial Statements
December 31, 2016 and 2015
8. RELATED PARTY –Promissory Note (CONTINUED)
| Note | Principal | Rate | Accrued interest | Maturity | ||||||||||||||
| 12/31/16 | 12/31/15 | |||||||||||||||||
| Promissory note 1 | $ | 234 | 7 | % | $ | 67 | $ | 50 | 12/5/2017 | |||||||||
| Promissory note 2 | $ | 170 | 7 | % | $ | 49 | $ | 37 | 11/18/2017 | |||||||||
| Promissory note 3 | $ | 4,100 | 7 | % | $ | 1,120 | $ | 833 | 2/5/2018 | |||||||||
| Promissory note 4 | $ | 2,000 | 7 | % | $ | 546 | $ | 405 | 2/7/2018 | |||||||||
| Promissory note 5 | $ | 1,780 | 7 | % | $ | 95 | $ | - | 3/29/2018 | |||||||||
| Promissory note 6 | $ | 1,125 | 7 | % | $ | 40 | $ | - | 6/30/2018 | |||||||||
| Total | $ | 9,409 | $ | 1,917 | $ | 1,325 | ||||||||||||
The Company obtained short-term cash flow from a related party in the form of two demand Notes Payable in the aggregate amount of $404 during the year ended December 31, 2012 and an additional two demand Notes Payable in the aggregate amount of $6,100 during the year ended December 31, 2013. The Notes bear an interest rate of 7% per annum and are unsecured.
| Note | Principal | Rate | Accrued interest | Maturity | ||||||||||||||
| 12/31/13 | 12/31/12 | |||||||||||||||||
| Promissory note 1 | $ | 234 | 7 | % | $ | 17 | $ | 1 | 12/5/2014 | |||||||||
| Promissory note 2 | $ | 170 | 7 | % | $ | 13 | $ | 1 | 11/18/2014 | |||||||||
| Promissory note 3 | $ | 4,100 | 7 | % | $ | 259 | $ | - | 2/5/2015 | |||||||||
| Promissory note 4 | $ | 2,000 | 7 | % | $ | 126 | $ | - | 2/7/2015 | |||||||||
| Total | $ | 6,504 | $ | 415 | $ | 2 | ||||||||||||
| Note | Principal | Rate | Accrued interest | Maturity | ||||||||||||||
| 12/31/13 | 12/31/12 | |||||||||||||||||
| Promissory note1 | $ | 8,000 | 7 | % | 602 | $ | - | 3/18/2015 | ||||||||||
| Promissory note 2 | $ | 10,000 | 7 | % | 443 | $ | - | 2/21/2013 | ||||||||||
| Total | $ | 18,000 | 1045 | $ | - | |||||||||||||
| Note | Principal | Rate | Accrued interest | Maturity | ||||||||||||||
| 12/31/16 | 12/31/15 | |||||||||||||||||
| Promissory note 1 | $ | 10,000 | 7 | % | $ | 2,702 | $ | 2,000 | 2/21/2018 | |||||||||
| Promissory note 2 | $ | 8,000 | 7 | % | $ | 2,123 | $ | 1,562 | 3/18/2018 | |||||||||
| Total | $ | 18,000 | $ | 4,826 | $ | 3,562 | ||||||||||||
The Company obtained financing from a related party in the form of six demand Note Payables in the aggregate amount of $32,300 during the period from 2014 through December 31, 2016. The Notes bears an interest rate of 7% per annum and are unsecured.
| Note | Principal | Rate | Accrued interest | Maturity | ||||||||||||||
| 12/31/16 | 12/31/15 | |||||||||||||||||
| Promissory note 1 | $ | 6,000 | 7 | % | $ | 1,011 | $ | 590 | 8/6/2018 | |||||||||
| Promissory note 2 | $ | 2,500 | 7 | % | $ | 174 | $ | - | 1/4/2018 | |||||||||
| Promissory note 3 | $ | 4,200 | 7 | % | $ | 242 | $ | - | 2/5/2018 | |||||||||
| Promissory note 4 | $ | 3,000 | 7 | % | $ | 165 | $ | - | 3/20/2018 | |||||||||
| Promissory note 5 | $ | 11,500 | 7 | % | $ | 406 | $ | - | 6/30/2018 | |||||||||
| Promissory note 6 | $ | 5,100 | 7 | % | $ | 106 | $ | - | 8/8/2018 | |||||||||
| Total | $ | 32,300 | $ | 2,104 | $ | 590 | ||||||||||||
During the year ended December 31, 2016 the total amount of related party loan proceeds was $29,205. The total interest accrued on related party loans at December 31, 2016 and December 31, 2015 was $56,777 and $29,467, respectively.
Before the Company became public, $11,321 was advanced to one stockholder. In the 1st quarter of 2016 this advance was deemed uncollectible and therefore written off to bad debt expense. From time to time, the Company advances amounts to stockholders, as well as receiveswe receive payments from stockholders in the form of cash and/or out-of-pocket expenditures for the benefit of the Company, which are business in nature. The balance of advances to stockholder as of December 31, 20132016 and 2012 was $11,321 and $11,321, respectively.
9. MEMORANDUM OF UNDERSTANDING
Litigation
There are renewable at the Company’s option through December 2017. The Company shall pay this related party $300 per month, beginning January 1, 2012, for the term of the lease. In addition, The Company will be responsible for utilities used at this facility. The company no longer occupies this space as of December 31, 2012.
POWERDYNE INTERNATIONAL, INC.
Management has evaluated subsequent events through MarchDecember 31, 2014,2016, the date upon which the financial statements were issued. Subsequent events are as follows:
On February 13, 2014March 28, 2017, Powerdyne International Inc. entered into a fifteen year contract to lease power generating equipment. The Company issued 1,714, 286 shares in exchange for retirement of $12,000 of debt held by a venture capital lender.
F-15