ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company is a development stage company and has no operating history and has experienced losses since its inception. The Company’s independent auditors have issued a report questioning the Company’s ability to continue as a going concern. The Company has not established a revenue source other than capital invested by shareholders and has had no sales nor received revenues since inception through June 30,March 31, 2011.
Liquidity. The Company plansreceived $364,485 from the private sale of its stock in the period from February 2, 2010 (inception) to manufacture, install, maintain, own and operate patented portable electrical power generation equipment ("gensets") intended to be installed at a client location.March 31, 2011. The Company has applied for a patent for its electrical power generation equipment.no continuous methods of generating cash.
Capital Resources. The Company will own, maintain and lease the equipment to the customer who will use it to produce its own supplemental electrical power. The products are intended to be portable, easy-to-use unit that can be conveniently redeployed 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 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. financial condition and results of operations are based on the unaudited financial statements as of June 30, 2011, which were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).
Operations
The Company's initial product is the PDIGenset (patent pending) which is a self contained generator that is powered by a modified radial air cooled engine to drive a minimum of a 1-megawatt generator. The entire unit, which runs on natural gas or propane, is compact, lightweight and clean burning. As a result, the unit will produce extremely low emissions and is extremely energy-efficient.
The Company is completing its Series 2 prototype. The Series 2 uses a Pratt + Whitney R2800 engine. The Series 2 prototype prime mover has been operated and is currently being mated to a standard 1MW generator to make a genset. The unit has been run and upgraded but the Company awaiting the receipt of some updated parts. After of such parts, the Company will be bench test the Series 2 prototype prime mover and develop up-to-date data. The Company expects it to operate with more efficiency and will bench test with better test results than the Series 1 prototype due to improvements that Pratt + Whitney madeincurred capital expenditures in the designthree months ended March 31, 2011 of the engine, itself, as well as improvements that have been added to the design of our genset.
After completion of the prototype and the bench testing, the company will be able to begin to market the Series 2 PDIGenSet.
On February 28, 2011, the Company filed with the Securities and Exchange Commission a registration statement on Form S-1 for the offer and sale of up 16,000,000 shares of Common Stock by the Company at $0.15 per share and for the offer of 67,318,500 shares of Common Stock by the holders of those shares at $0.15 per share. The Company has amended its registration to include only the registration of the 67,318,500 shares of Common Stock by the holders thereof. The registration statement has not been declared effective and no sales have been made.$78,800.
Overview
The Company plans to manufacture, install, maintain and lease its own portable electrical power equipment (for which the Company has applied for a patent). The Company plans to manufacture portable electrical power equipment intended to be installed at client locations. The Company will own, maintain and lease the equipment to the customer who will use it to produce its own supplemental electrical power. The Company’s products are intended to be portable, easy-to-use units that can be conveniently redeployed in various locations around the world. The Company’s units can also be assembled and combined to produce power centers providing up to 50 megawatts of power.
Operations
On February 7, 2011, Greenmark Acquisition Corporation merged with Powerdyne, Inc. (Nevada). Powerdyne, Inc. (Nevada) was formed in February 2010 in the State of Nevada and had limited operations. Greenmark Acquisition Corporation was incorporated in the State of Delaware in September 2006 and was a development stage company. As part of that merger, Greenmark Acquisition Corporation, the surviving corporation, changed its name to Powerdyne International, Inc. (the "Company"). The merger was effectuated as a statutory merger, and a certificate of merger was filed in the State of Delaware effecting the transaction.
The Company’s headquarters are locatedproduct ‘genset’ unit (PDIGenset) is a self contained generator that is powered by a modified radial air cooled engine to drive a minimum of a 1-megawatt generator. The entire unit, which runs on natural gas or propane, is compact, lightweight and clean burning. As a result, the unit produces extremely low emissions and is extremely energy-efficient.
The current prototype (designated as a Series 2 prototype) has completed the final phases of testing. The earlier version of the prototype (Series 1 prototype) was tested and results obtained from the bench testing of this earlier Series 1 prototype version. During 2011, the Company developed and tested a variety of components (transmission elements) to have the engine effectively and efficiently drive the generator of the Series 2 prototype. The Company recently completed a fully operational factory Series 2 prototype, which is test certified and ready as a demonstration unit. This unit is available for any prospective customer to view in Warwick, Rhode Islandfull operational capacity. In addition, the Series 2 prototype is ready to be manufactured for customer upon placement of customer orders.
The Company intends to market and operatesdistribute its products worldwide. However, initially the Company has directed its plan of initial operations and market entry to the State of Alaska, the Commonwealth of Puerto Rico and the nation of the Dominican Republic. As it intends to provide remote, independent and cost efficient primary electrical power generating systems, the Company’s potential customers include a variety of small independent utility companies, mining operations, manufacturing centers, and commercial enterprises worldwide. The Company plans to build portable generator equipment specific to its clients’ specifications which thereafter generates electrical power for the customer to run its facility, operation or other power needs. The Company expects that in Bridgewater, Massachusetts.many markets any excess electricity generated can be sold by the customer to its primary electrical utility, thereby reducing the customer’s operating costs.
The Company presently has three (3) employees and a total of five (5) executive officers. Mr. Euga, Mr. Caromile and Ms. Madison are eligible to receive a salary; the remaining officers receive no salaries or other compensation and are currently not eligible for any salaries. The remaining officers will not receive any compensation until, and if, the Company raises or procures adequate capital (through operations, financings or otherwise) to pay such compensation.
The Company has filed with the Securities and Exchange Commission a registration statement on Form S-1 for the sale by selling shareholders of 70,068,499 shares of the common stock of the Company at an offering price of $0.15 per share. The offering has not yet been declared effective and no sales have been made pursuant to such offering. The Company will market its products in locations where inexpensive electrical power is needed and clean energy powered electrical equipment is needed and/or required.not realize any proceeds from the offering.
Plan of Operations
The Company’s s strategy is to pursue selected opportunities in markets where inexpensive and environmentally friendly power sources are needed and/or required.
Results of Operations - The three months ended March 31, 2011 compared to the three months ended March 31, 2010:
Results of Operations: -Six Months Ended June 30, 2011 compared to Six Months Ended June 30, 2010:Revenues
Revenues
Powerdyne International, Inc. did not generate revenues during the sixthree months ended June 30,March 31, 2011.
Total operating expenses
During the sixthree months ended June 30,March 31, 2011 and 2010 total operating expenses were $815,335approximately $575,087 and $1,125, respectively. The increase related to the selling, general and administrative expenses was approximately $744,000.$574,000. This increase resulted primarily from the increase in salaries accrued but not paid to Officers and directors of approximately $147,000, employee stock compensation of approximately $495,000,$325,000, consulting, professional and outside services of approximately $46,000,$38,000, wages and salaries paid of approximately $18,000,$14,000, legal and accounting fees of approximately $32,000$13,000 and travel expenses of approximately $12,000.$11,000.
Net loss
During the Sixthree months ended June 30,March 31, 2011 and 2010, the net loss was $815,335$576,043 and $1,125, respectively.
Liquidity and Capital Resources
As of June 30, 2011 and 2010, Powedyne International, Inc. Inc. had working capital deficit of approximately ($47,320) and ($37,078) respectively. The decrease in working capital in 2011 of approximately $10,000 resulted primarily from purchases of fixed asset equipment. For the period from June 30, 2010 to June 2011, Powerdyne International, Inc. had approximately $80,000 of net cash increase. The cash provided (used) by operations of approximately ($230,000) was primarily due to net loss from operations of $815,000 less add backs of approximately $495,000 of employee stock compensation and approximately $105,000 of accrued but unpaid expenses. Of the total cash provided from financing activities of approximately $413,000, approximately $102000 was used to purchase equipment and remaining amount for working capital and operating activities.
For the period from February 2, 2010 (inception) to June 30, 2011, Powerdyne International Inc. had approximately $82,000 of net cash increase. The cash provided (used) by operations of approximately ($340,000) was primarily due to net loss from operations of $962,000 less add backs of approximately $495,000 of employee stock compensation and approximately $148,000 of accrued but unpaid expenses. Of the total cash provided from financing activities of approximately $543,000, approximately $124,000 was used to purchase equipment and remaining amount for working capital and operating activities.
Powerdyne International, Inc. expects to secure its first sales contract during the next year ended December 31, 2011. This should provide the company with sufficient cash flow to continue operations without seeking additional investor funding and/or debt financing. The Company anticipates this contract will produce approximately $750,000 in revenues and approximately $100,000 in net income. However, there can be no assurance that the sales contract will be secured during the period, if at all. If Powerdyne International, Inc. is not successful in generating sufficient revenues and sales contracts, this could have a material adverse effect on its business, results of operations liquidity and financial condition.
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.’s 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 June 30, 2011 and 2010, the carrying value of certain financial instruments such as accounts receivable, accounts payable, accrued expenses, and amounts due to/from related party approximates fair value due to the short-term nature of such instruments.
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 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.
Recently Issued Accounting Pronouncements
In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2010-19 (“ASU 2010-19”), New and Enhanced Disclosures about Fair Value Measurements. 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 are effective for interim and annual reporting periods beginning after December 15, 2009, except for certain disclosures 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 ASU 2010-19 did not have a material impact on our consolidated financial position, results of operations, cash flows, or disclosures.
Other recent accounting pronouncements issued by the FASB and the AICPA did not, or are not believed by management to, have a material impact on Mediamatic Ventures, Inc.’s present or future financial statements.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Information not required to be filed by Smaller Reporting Companies.smaller reporting companies.
ITEM 4. Controls and Procedures.
Disclosures and Procedures
Pursuant to Rules adopted by the Securities and Exchange Commission. the Company carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Exchange Act Rules. This evaluation was done as of the end of the fiscal year and first quarter under the supervision and with the participation of the Company's principal executive officer and principal financial and accounting officer. There have been no significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of the evaluation. Based upon that evaluation, they believe that the Company's disclosure controls and procedures are effective in gathering, analyzing and disclosing information needed to ensure that the information required to be disclosed by the Company in its periodic reports is recorded, summarized and processed timely. Both officers are directly involved in the day-to-day operations of the Company.
Management's Report of Internal Control over Financial Reporting
The Company is responsible for establishing and maintaining adequate internal control over financial reporting in accordance with the Rule 13a-15 of the Securities Exchange Act of 1934. The Company's president and principal financial and accounting officer conducted an evaluation of the effectiveness of the Company's internal control over financial reporting as of December 31, 2010, and as of June 30,March 31, 2011, based on the criteria establish in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the TreaedwayTreadway Commission. Based on this evaluation, management concluded that the Company's internal control over financial reporting was effective as of June 30,March 31, 2011 based on those criteria. A control system can provide only reasonably, not absolute, assurance that the objectives of the control system are met and no evaluation of controls can provide absolute assurance that all control issues have been detected.
Anton & Chia the independent registered public accounting firm, 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 noThe Company effected a change in control on December 13, 2010 resulting in the resignation of the then sole officer and director. New officers and directors were then in charge of the Company's internal control procedurescontrols over financial reporting and have not made changes in such controls that were identified in connection with such evaluation that occurred during the period covered by this report that have materially affected,affect, or are reasonably likely to materially affect, the Company'sits internal control over financial reporting.
PART II
ITEM 1. LEGAL PROCEEDINGS
There are currently no pending, threatened or actual legal proceedings in which the Company or any subsidiary is a party, in amounts over $10,000. except as set forth directly below.
The Company is involved withhas asserted a claim against a former employee for claims$5,000.00 for funds advanced to the former employee. The former employee has asserted a claim against the Company in response. It is the opinion of expensesthe Company’s legal counsel that the former employee’s claim is meritless and is only an attempt to avoid paying the Company’s demand for approximately $6,500.$5,000.00.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On December 11, 2010, the Company issued 4,000,000 shares of its common stock in addition to the then outstanding 1,000,0002,000,000 shares of common stock. stock were issued to each of Tiber Creek Corporation and IRAA Fin Serv. As part of thea change in control effected on December 13, 2010, the CompanyGreenmark Acquisition Corporation issued 200,000,000 shares of common stock to the following shareholders in the following amounts:
| 188,000,000 | |
Arthur M. Read, II, Esq. | | | 12,000,000 | |
On February 7, 2011, Mr. Euga contributed back to the Company 84,526,666 shares of his 188,000,000 common stock without remuneration.were contributed by Dale P. Euga to the Company. Mr. Euga received no remuneration or consideration therefor.
SubsequentFrom February 8, 2011 to the contributionMarch 31, 2011, 68,526,666 shares of such shares and ending June 30, 2011,common stock were issued by the Company to various shareholders pursuant to executed subscription agreements or in connection with shares issued 68,526,666 shares to officers directors, and private investorsand/or consultants in connection with their services for the Company, as follows: