UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2017March 31, 2018

or

[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

Commission File Number: 001-09370

PWRCOR, INC.

(Exact Name of Registrant as Specified in the Charter)

(212) 796-4097

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X]  No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X]  No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”,filer,” “accelerated filer”filer,” “smaller reporting company,” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act):  Yes [  ]  No [X]

As of August 11, 2017,May 14, 2018, there were 200,739,432207,662,722 shares of the registrant’s common stock outstanding.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

PwrCor, Inc.

Financial Statements

For the SixThree Months Ended

June 30, 2017March 31, 2018

PwrCor, Inc.

Balance Sheet

See notes to financial statements

PwrCor, Inc.

Statement of Operations

(Unaudited)

See notes to financial statements

PwrCor, Inc.

Statement of Stockholders’ Equity

For the SixThree Months Ended June 30, 2017March 31, 2018

(Unaudited)

See notes to financial statements

PwrCor, Inc.

Statement of Cash Flows

(Unaudited)

See notes to financial statements

7

PwrCor, Inc.

Notes to Financial Statements

June 30, 2017March 31, 2018

(Unaudited)

1. Organization and Nature of Business

PwrCor, Inc. (the “Company” or “PwrCor”) was until the first quarter of 2017 named Receivable Acquisition and& Management Corporation (“RAMCO”) and doing business as Cornerstone Sustainable Energy. RAMCO, a public reporting entity, was in the business to purchase, manage and collect defaulted consumer receivables.  RAMCO ceased investments in distressed consumer credit portfolios in September 2007 and since then was in the process of running off existing portfolios.

Sustainable Energy LLC (“Sustainable LLC”) is a New York limited liability company formed on July 26, 2010. Sustainable LLC is involved in developing and improving the efficiency of energy infrastructure using a combination of traditional and advanced technologies. On March 29, 2013, Sustainable LLC contributed certain assets and liabilities into a newly formed entity, Sustainable Energy Industries, Inc. (“Sustainable”). At the time, Sustainable LLC had a license agreement with a third party involving manufacturing and licensing, and limited assets, liabilities and operations.

Cornerstone Program Advisors LLC (“Cornerstone”) is, a Delaware limited liability company, formed on January 5, 2009. Cornerstone is an energy infrastructure project management company focused on healthcare and higher learning institutions.

Sustainable Energy Industries, Inc. (��Sustainable”) is a New York corporation involved in developing and improving the efficiency of energy infrastructure using advanced proprietary technologies.  As a result of a reverse merger acquisition (the “Merger”) between the Company,RAMCO, Cornerstone, and Sustainable during 2013, the Company adopted a business plan to build on the business of Cornerstone and Sustainable in energy infrastructure and alternative energy.

In January 2017, the Company’s shareholders approved a name change to PwrCor, Inc., which became effective inon March 3, 2017.

Note 2. Significant Accounting Policies

Basis of Presentation and Use of Estimates

The Company prepares its financial statements in conformity with accounting principles generally accepted in the United States of America which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Some of the more significant estimates required to be made by management include recognition of incomerevenue for work completed and unbilled to customers, the allowance for doubtful accounts, and the valuation of the License Agreement.accounts. Actual results could differ from those estimates.

The Company believes that funds generated from operations, together with existing cash and cash infusions by major stockholders will be sufficient to finance its operations for the next twelve months, but are likely to be insufficient to fund all of its contractual obligations and to fundsignificant growth.  The Company raised $665,000 in gross capital during the second half of 2017 and, over time, expects to seek additional capital to cover any working capital needs, and its contractual obligations, and to fund growth initiatives in its identified markets.  However, there can be no assurance that any new debt or equity financing arrangement will be available to the Company when needed on acceptable terms, if at all.  The continued operations of the Company are dependent on its ability to raise funds, collect accounts receivable, and generate revenue.

8

PwrCor, Inc.

Notes to Financial Statements

June 30, 2017

(Unaudited)

2. Significant Accounting Policies (continued)

Unaudited Financial Statements

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for financial information and with the instructions to Form 10-Q. They do not include all information and footnotes required by United States generally accepted accounting principles for complete financial statements. The unaudited financial statements should be read in conjunction with those financial statements included in the Company’s Form 10-K for the year ended December 31, 2016.2017.  In the opinion of Management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the three and six months ended June 30, 2017,March 31, 2018, are not necessarily indicative of the results that may be expected for the year ending December 31, 2017.2018.

Cash

The Company continually monitors its positions with, and the credit quality of, the financial institutions it invests with. From time to time, however briefly, the Company maintains balances in operating accounts in excess of federally insured limits.

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PwrCor, Inc.

Notes to Financial Statements

March 31, 2018

(Unaudited)

2. Significant Accounting Policies (continued)

Accounts Receivable

Receivables are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to a valuation allowance based on its assessment of the current status of individual accounts. At June 30,March 31, 2018, and December 31, 2017, noan allowance for doubtful accounts has been provided.was made totaling $58,704 and $63,270, respectively, to provide for the possibility of a revenue shortfall from the project in Modoc County, and is reflected in the accounts receivable balance on the balance sheet in the accompanying financial statements.  

IncomeRevenue Recognition

The Company’s revenue is recognized when the Company satisfies its performance obligation(s) under the contract (either implicit or explicit) by transferring the promised product or service to its customer either when (or as) its customer obtains control of the product or service. A performance obligation is a promise in a contract to transfer a distinct product or service to a customer. A contract’s transaction price is allocated to each distinct performance obligation. The majority of the Company’s contracts have a single performance obligation, as the promise to transfer products or services is not separately identifiable from other promises in the contract and, therefore, not distinct.

Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or providing services. As such, revenue is recorded net of returns, allowances, customer discounts, and incentives. Sales, value add, and other taxes collected from customers and remitted to governmental authorities are accounted for on a net (excluded from revenues) basis.

The Company’s performance obligations under its engine business are generally satisfied as over time. Revenue from products or services transferred to its customer over time accounted for approximately 14.7% and 11.6% of revenue for the three months ended March 31, 2018 and 2017, respectively. Revenue under this contract is generally recognized over time using an input measure based upon the proportion of actual costs incurred to estimated total project costs, which is a method used to best depict the Company’s performance to date under the terms of the contract.

Accounting for over time contracts involves the use of various techniques to estimate total revenue and costs. The Company estimates profit on such contracts as the difference between total estimated revenue and expected costs to complete a contract and recognizes income fromthat profit over the salelife of servicesthe contract. Contract estimates are based on various assumptions to project the outcome of future events that may span several years. These assumptions include, among other things, labor productivity, costs and products when persuasive evidenceavailability of an arrangementmaterials. The nature of these long-term agreements may give rise to several types of variable consideration, such as claims, awards and incentive fees. These amounts of variable consideration are not expected to be significant. Additionally, contract estimates may include additional revenue for submitted contract modifications if there exists services have been rendered or delivery has occurred,and enforceable right to the feemodification, the amount can be reasonably estimated and its realization is fixed or determinableprobable. These estimates are based on historical collection experience, anticipated performance, and the collectabilityCompany’s best judgment at the time. These amounts are generally included in the contract’s transaction price and are allocated over the remaining performance obligations. Changes in judgments on these above estimates could impact the timing and amount of revenue recognized with a resulting impact on the related income is reasonably assured.timing and amount of associated income.

The Company principally derives incomemay receive payments from fees for services generated on a project-by-project basis. Prior to the commencement of a project, the Company reaches agreement with the client on rates for servicescustomers based upon contractual billing schedules; accounts receivable are recorded when the scoperight to consideration becomes unconditional. In the event a contract loss becomes known, the entire amount of the project, staffing requirements and the level of client involvement. Itestimated loss is the Company’s policy to obtain written agreements from new clients prior to performing services. In these agreements, the clients acknowledge that they will pay based upon the amount of time spent on the project or an agreed-upon fee structure. Income for services rendered is recognized on a time and materials basis or on a fixed-fee or capped-fee basis in accordance with accounting and disclosure requirements for income recognition.

Fees for services that have been performed, but for which the Company has not invoiced the customers, are recorded as unbilled receivables.

Income for time and materials contracts are recognized based on the number of hours worked by the Company’s subcontractors at an agreed upon rate per hour, and are recognized in the period in which services are performed. Income for time and materials contracts is billed monthly or in accordance with the specific contractual termsStatement of each project.

Operations.

9

PwrCor, Inc.

Notes to Financial Statements

June 30, 2017March 31, 2018

(Unaudited)

2. Significant Accounting Policies (continued)

IncomeThe majority of the Company’s revenue is from engine sales contracts is recognized underproducts and services transferred to customers at a point in time and was approximately 85.3% and 88.4% of revenue for the percentage of completion method, measured bythree months ended March 31, 2018 and 2017, respectively. The Company recognizes revenue at the percentage of total costs incurred to date to estimated total costs for each contract.  This method is used because management considers expended costs to be the best available measure of progress on these contracts.  Provisions for estimated losses on uncompleted contracts are madepoint in the periodtime in which the losses are determined.  Changescustomer obtains control of the product or service, which is generally when product title passes to the customer upon shipment.  

The timing of revenue recognition, billings and cash collections results in job performance, job conditions, and estimated profitability may result in revisions tobilled receivables, costs and income and are recognized in the period in which the revisions are determined.  Deferred income represents the net amount due, or received, under contract terms in excess of billings (contract assets), and billings in excess of costs (contract liabilities, previously deferred revenue) on the work completed to date.Balance Sheet. Contract liabilities additionally include customer advances or prepayments. Costs in excess of billings and billings in excess of costs associated with over time contracts were not significant at March 31, 2018 or 2017. Revenue recognized during the three months ended March 31, 2018 and 2017 that was included in contract liabilities at the beginning of the period was $0 and $34,587, respectively.   

On March 31, 2018, the Company had no remaining performance obligations.

Fixed Assets

Fixed assets are being depreciated on the straight line basis over a period of five years.

License Agreement

The cost of the license agreement (see Note 4) is being amortized on a straight-line basis over 20 years.  The license agreement is tested annually for impairment or earlier if an indication of impairment exists.  The Company believes that the license agreement has not been impaired.

Income Taxes

The Company recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by the tax authorities. Management has analyzed the Company’s tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on returns filed for open tax years (2012(2013 - 2015)2016).

Basic and Diluted Net Income (Loss) per Share

The Company computes income (loss) per share in accordance with “ASC-260”, “Earnings per Share” which requires presentation of both basic and diluted income (loss) per share on the face of the statement of operations. Basic income (loss) per share is computed by dividing net income available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive income (loss) per share excludes all potential common shares if their effect is anti-dilutive.

The Company has no potential dilutive instrumentsCompany’s outstanding warrants are anti-dilutive, and accordingly basic income (loss) and diluted income(loss) per share are the same.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards BoardFASB issued Accounting Standards Update No.(“ASU”) 2014-09, "Revenue“Revenue from Contracts with Customers"Customers (Topic 606) ("” (“ASU 2014-09"2014-09”)., which supersedes the revenue recognition requirements in ASC 605, “Revenue Recognition.” ASU 2014-09 is a comprehensive newbased on the principle that revenue recognition model requiring a company to recognize revenueis recognized to depict the transfer of goods or services to a customer atcustomers in an amount reflectingthat reflects the consideration itto which the entity expects to receivebe entitled in exchange for those goods or services. In adopting ASU 2014-09, companies may use eitherIt also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue, cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a full retrospective or a modified retrospective approach.contract. ASU 2014-09 is effective for the first interim period within annual reporting periodsfiscal years beginning after December 15, 2017, and early adoption is not permitted. The Company will adopt ASU 2014-09 during the first quarter of fiscal 2018. Management is evaluating the provisions of this statement and has not determined what impact the adoption of ASU 2014-09 will have on the Company's financial position or results of operations.including interim periods within that reporting period.

10

PwrCor, Inc.

Notes to Financial Statements

June 30, 2017March 31, 2018

(Unaudited)

2. Significant Accounting Policies (continued)

In August 2014, the FASB issued Accounting Standards Update 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”). In connection with preparing financial statements for each annual and interim reporting period, an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued (or at the date that the financial statements are available to be issued when applicable). Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued (or available to be issued). The term probable is used consistently with its use in Topic 450, Contingencies. The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company has adopted the provisions of ASU 2014-15, and accordingly management has assessed its ability to meet its obligations2014-09 on January 1, 2018, using the modified retrospective approach. Revenue from the Company’s sale of services are generally recognized either when services are performed (i.e. point in time) or under engine sales contracts, as they become due over the next twelve months.  Based on management’s assessmentCompany transfers control of the product or service to its customers (i.e. over time), which approximates the previously used percentage-of-completion method of accounting. As such, the adoption of ASU 2014-09 had no material impact to the Company’s expected future revenue and expenses, management believesfinancial position or results of operations; however, the Company can continue to operate as a going concern.has now presented the disclosures required by this new standard herein.

All other accounting standards that have been issued or proposed by the FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption.

3. Related Party Transactions

Consulting Fees

Certain stockholders of the Company and entities affiliated with management perform services forto customers and were compensated at various rates. Total consulting expenses incurred by these stockholdersentities for the three months ended March 31, 2018 and entities2017 amounted to $265,458$143,454 and $272,949 for the six months ended June 30, 2017 and 2016,$132,795, respectively. Amounts payable to these stockholders and entities at June 30,March 31, 2018 and 2017 totaled $144,875 and 2016 totaled $128,444 and $184,383,$133,548, respectively.

4. License Agreement

DuringAt the period from late 2010 to late 2012,time of the Merger, Sustainable LLC entered intohad a series of agreements including aan exclusive, renewable 20-year engine technology License Agreementlicense agreement (the “Contracts”“Agreement”) with a third party licensor (the “Licensor”) that had developed engines capable of converting low grade heat into other forms of energy. The agreements were assigned to the Company.  Under the terms of the Contracts, Sustainable LLC obtained exclusive, renewable 20-year license rightsAgreement, it could be cancelled by the Company during the term once the patents upon which it was based expired. The newer of two patents expired in August of 2017, and the Company elected at that time to exercise its right to cancel the Agreement.

The third party licensor had been classified in 2010 as dissolved by the Delaware Division of Corporations, and similarly by the Arizona Corporation Commission, and has not reinstated its charters. Despite this status, during July, 2017, the Company received a demand letter from the principal of that firm claiming that an aggregate total of $1,104,367 was due the firm under the Agreement, and to the principal for consulting work. The Company and its counsel believe that the claims are without merit and would vigorously defend any potential lawsuit. The Company believes it has no outstanding obligation to either party, and took the remaining unamortized asset value of the Agreement, $20,307, as a charge against earnings in the engines developedthird quarter of 2017.

Subsequently, in December, 2017, the Company entered into an intellectual property license agreement with Thermal Tech Holdings, LLC, a Delaware limited liability company (“TTH”). TTH is an entity owned equally by two entities affiliated, respectively, with two directors of the Licensor (the “License Agreement”)Company, who also serve in management positions with TTH.

TTH is the owner of certain patent applications as well as the rightsinventions relating to develop, manufacturethe Company’s proprietary engine technology (the “Licensed Patents and integrate such engines into its projects.

Technical Information”). The exclusive market rights ofLicensed Patents and Technical Information were developed by an independent non-profit research institute (the “Contractor”). All work done by the License Agreement provideContractor was paid for by TTH in order that Sustainable LLC make a cash payment of $200,000 and issue common stock in Sustainable representing a small minority ownership position inTTH, rather than the Company, along with periodic quarterly paymentswould be at risk if the research, development, engineering and design work were of $25,000 commencing six months afterlittle or no value. Furthermore, the initial $200,000 payment.  These payments reset to $50,000 per quarter after three payments, and are subject to further resets to up to $100,000 depending on engine sales volume.  Under certain circumstances, engine royalty fees and referral fees can increasework performed by the quarterly payment from time to time.  In the event of non-payment, Sustainable, LLC retains a non-exclusive license subject to royalty fees.

Contractor for TTH was confidential for competitive business reasons.

11

PwrCor, Inc.

Notes to Financial Statements

June 30, 2017March 31, 2018

(Unaudited)

4. License Agreement (continued)

On May 15, 2013, in connection withThe Patent License grants the Merger (see Note 1), Sustainable LLC assignedCompany a worldwide non-exclusive license to use the ContractsTechnical Information to Sustainable.make, use or sell any products and/or services which would be covered by these specific Licensed Patents.  However, TTH may not license any Licensed Patents and Technical Information to any competitive entity, or to any other entity without the prior written consent of the Company.

The agreement calls for the Company to pay TTH a royalty equal to five percent (5%) of the Net Revenue (as defined) of all Licensed Products covered by a Licensed Patent sold by the Company and its affiliates, as well as an initial license fee of $135,000.  The Patent License will terminate upon the expiration of all Licensed Patents. The Company after acquiring 100% ownership interest in Sustainable, LLC issued 2,435,430 shares tomay terminate the Licensor which represents a small minority position inagreement on ninety (90) days’ prior written notice. TTH may terminate the Company as required underagreement on ninety (90) days’ prior written notice for uncured defaults (as defined).

The accompanying March 31, 2018 balance sheet presents the terms of the License Agreement.  At the time of issuance, these shares were valued at $48,709 representing the faircarrying value of the RAMCO shares.

In addition, during the fiscal year ended December 31, 2013, the Company made paymentslicense fee at $91,125, which is net of $13,000 that were applied against the required initial $200,000 cash payment as stated under the termsan unpaid balance of $40,500 and $3,375 in accumulated amortization.  The cost of the License Agreement.

At June 30, 2017, the License Agreement has been presented on the balance sheet net of accumulated amortization of $41,245.

In the event the Company elects not to pay for exclusivity under the License Agreement, no cash payment or periodic increasing payments are due.

In connection with a November 5, 2013, proceeding commenced by the Securities Division of the Arizona Corporation Commission (the “ACC”) the Company learned that the Licensor had been classified as dissolved by the Delaware Division of Corporations after March 1, 2010 for failure to pay franchise taxes to the State of Delaware, and similarly classified by the ACC as of approximately the same time.

In performing due diligence in regard to the status of the Licensor, the Company subsequently also learned that two United States patents that were licensed to the Company under the License Agreement have been classified as expired due to the Licensor’s failure to pay maintenance fees thereon.  In conjunction with the Licensor, in April 2015, the Company arranged for the principal United States patent to be reinstated, and itlicense agreement is now again in effect. In addition, the Company had been informed by Licensor’s management that steps were being taken to have the Delaware dissolution remedied, but may not be successful.

To the best of the Company’s knowledge at present, none of these issues presents a near-term hindrance to the Company’s continued focus on establishing and growing its engine technology business, and the international patent rights remain intact.  However, although the Company has obtained previously described rights to all forms of intellectual property covering the engine technology that is the subject of the Contracts, at this time there can be no assurance that the foregoing matters will not have a material adverse effect on the Company’s operations.

After careful assessment, the Company has concluded that no adjustment to the value of the Contracts or amounts due thereunder should be made at the current time.

The Company periodically performs an analysis of its contractual rights and arrangements and establishes asset value based on that analysis.amortized over ten years.

5. Concentrations

The Company grants credit in the normal course of business to its customers.  The Company periodically performs credit analysis and monitors the financial condition of its customers to reduce credit risk.

Two customers accounted for 90.1%92.9% and 9.9%7.1%, respectively, of total project management incomerevenue during the sixthree months ended June 30, 2017,March 31, 2018, and two customers accounted for 96.2%90.1% and 2.9%9.9%, respectively, during the sixthree months ended June 30, 2016.March 31, 2017.

Two project management customers accounted for 85.5%93.1% and 5.2%6.9%, respectively, of total project management accounts receivable at June 30, 2017,March 31, 2018, and for 92.5%90.1% and 5.7%9.9%, respectively, at June 30, 2016.

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PwrCor, Inc.March 31, 2017.  Project management accounts receivable constituted 94.2% of receivables at March 31, 2018, but all of receivables as of March 31, 2017.

Notes to Financial Statements

June 30, 2017

(Unaudited)All of the revenue from the Company’s heat conversion technology was from the same customer in the quarters ended March 31, 2018 and March 31, 2017.

6. CommitmentsStock Issuance

Engine Agreement

On December 27, 2016,In September and October 2017, the Company entered into an agreement with Modoc County, California,issued 6,650,000 shares of common stock at a per share price of $0.10 to supply its PwrCor™ engine as partthirteen individual investors in return for a capital infusion of $665,000.  Each share issued was accompanied by a demonstration project that will convert ultra low-grade heat into electricity.  The heat will be obtained fromwarrant for one-half share of common stock; the warrants are exercisable at a geothermal hot spring which comes to the surface at temperaturesprice of approximately 190° F.

Funding was arranged by Modoc County via a grant from the California Energy Commission with the Company entitled to revenues of up to $123,624.$0.30 per share.  The Company has estimated thatclaims an exemption from registration pursuant to Section 4(a)(2) of the total costs to be incurredSecurities Act of 1933, as amended, and Rule 506(b) of Regulation D promulgated thereunder.  No commissions were paid and no underwriter or placement agent was involved in connection with this contract will be $163,049, thus resulting in a $39,425 loss.  This total loss amount has been recognized in the accompanying statementtransaction. The proceeds of operationsthis transaction were used for the period ended June 30, 2017.  The project will be managed by Warner Mountain Energy, which specified the PwrCor™ engine,Company’s working capital and is expected to be completed by the fall of 2017.general corporate purposes.

7. Subsequent Events

Management has evaluated subsequent events for disclosure and/or recognition in the financial statements through the date that the financial statements were available to be issued, and determined there were none to report.

issued.

Item 2. Management’s Discussion & Analysis of Financial Condition and Results of Operations.

The following management’s discussion and analysis should be read in conjunction with the Company’s historical consolidated financial statements and the related notes thereto included in our audited financial statements for the year ended December 31, 2015,2017, and the notes thereto.  The management’s discussion and analysis contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect” and the like, and/or future tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this quarterly report. The Company’s actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this quarterly report.

Overview

On May 15, 2013, Receivable Acquisition & Management Corporation, a Delaware corporation completed the acquisition of Cornerstone Program Advisors LLC, a Delaware limited liability company (“Cornerstone”) and Sustainable Energy Industries, Inc., a Delaware corporation (“Sustainable”), and the Company assumed the operations of each of these entities (the “Merger”).  Receivable Acquisition & Management Corporation had operated as a business purchasing and collecting upon defaulted consumer receivables; those operations were ceased and collections on any remaining receivables are being run off.  Cornerstone has been in the business of managing energy infrastructure projects, specializing in the non-profit marketplace.  Sustainable is in the business of developing, marketing, and implementing clean tech technologies.  Shareholders approved a name change to PwrCor, Inc. at the shareholder meeting in January, 2017.  The Company has refocused on managing energy infrastructure projects and developing applications for an environmentally benign heat conversion technology with particular focus on the geothermal and independent powerwaste-heat-to-energy production markets.

Shareholders approved a name change to PwrCor, Inc. at the shareholder meeting in January, 2017, by a large majority of shareholder votes.  The corporate name change in Delaware to “PwrCor, Inc.” was effective on March 3, 2017.

Results of Operations

During the three and six month periodsperiod ended June 30, 2017,March 31, 2018, the Company had a net loss(loss) of ($23,021) and ($92,513), respectively,50,646) on revenues of $262,922 and $524,966, respectively,$324,613, versus net income of $414 anda net (loss) of ($20,245)69,492) on revenues of $245,331 and $474,032, respectively,$262,044 in the three and six month periodsperiod ended June 30, 2016.March 31, 2017.  The net lossresults in the most recent three month period in 2017 as compared tofirst fiscal quarter of 2018 reflected the corresponding period last year was due primarily to costswinding down of parts and materials to be used inexpenses on the engine to be delivered to Modoc County.  The larger net lossproject in the six month period in 2017 as compared to the corresponding period last year was due to both an increase in professional fees associated with our shareholder meetingCalifornia and stockholder communicationsreduced shareholder-related expenses, as well as the increased costs associated with the Modoc Countyan improvement in project noted previously.management revenues.

Revenue

Revenues from the Company’s major customer showed a slight declinean increase of approximately 4% while24%, largely attributable to some increased activity with the customer. The margin of project management revenue over the corresponding cost of subcontracted consultants for such projects has increasedremained approximately steady from 20162017 to 2017 due primarily to client coverage of direct related expenses.2018. This gross profit for the sixthree month period ended June 30, 2017,March 31, 2018, was 21%17% of revenues, versus 20%18% for the corresponding period in 2016.2017.

Revenue increased 7% and 11%, respectively, forIn the three and six month periodsperiod ended June 30, 2017,March 31, 2018, revenues showed a 23.9% increase as compared to the corresponding periodsperiod in 2017.  The revenue increase for the period is a consequence of engine revenue from 2016. This is primarily due to recognition of revenue on the Modoc County project.previously announced engine project in California as well as higher project management billings.

1413

Operating Expenses

Total operating expenses for the three and six month periodsperiod ended June 30, 2017March 31, 2018 were $285,943 and $617,479 respectively,$375,259, versus $244,917 and $494,277, respectively,$331,536 during the three and six month periodsperiod ended June 30, 2016.March 31, 2017. The 17%13.2% increase in operating expenses in the three month period in 2017, as well as2018 against the 25% increase in operating expenses in the six monthcorresponding period in 2017 against the corresponding periods in 2016, arewas almost entirely due to an increase in professionalhigher consulting fees associated with our shareholder meeting and stockholder communications, as well as the increased costs associated with the Modoc Countyhigher project noted above.management activity.

Consulting Expenses

The Company outsources a significant portion of its project management, oversight and advisory activities to a carefully selected group of small firms, individuals and subcontractors with expertise specific to the projects underway. As of the quarter ended June 30, 2017,March 31, 2018, the Company was using six such consulting resources. Consulting expenses consistently constitute the bulk of operating costs for the project advisory and management business activities of the Company, and accordingly generally track revenue.

Liquidity and Capital Resources

As of June 30, 2017,March 31, 2018, the Company had a working capital deficit (that is, total current assets minus total current liabilities) of ($27,419)106,880) versus working capital of $62,348($57,073) as of the year ended December 31, 2016.  The change2017. This deficit increase was due primarily to a deficit was primarily due to an increasegrowth in accrued costs, mostly associated withexpenses that exceeded the Modoc County project.growth in accrued receivables.

For the period ended June 30, 2017,As of March 31, 2018, the Company had net cash of $79,794$82,995 versus $90,764$114,217 at December 31, 2016.2017. For the sixthree months ended June 30, 2017,March 31, 2018, net cash (used) by operating activities was ($10,970)26,739) versus ($29,246) for the three months ended March 31, 2017. The change in net cash (used)used by operating activities of  ($41,599) for the six months ended June 30, 2016.  The improvementthree month period in 2017 to net cash fromused by operating activities was primarily duein the recent three month period resulted largely from changes in working capital accounts related to an increasethe conclusion of the project in accounts payable and accrued costs.California.

For the six monthsthree month periods ended June 30,March 31, 2018 and March 31, 2017, thereno cash was no net cashexpended or provided or used by financing oractivities.  Cash was used in the quarter ended March 31, 2018 in investing activities unchanged fromfor the six months ended June 30, 2016.purchase of capital equipment in the amount of $4,483, while none was used in the comparable 2017 period.

The Company believes that funds generated from operations, together with existing cash and cash infusions by major stockholders will be sufficient to finance its operations for the next twelve months, but are likely to be insufficient to fund all of its contractual obligation and to fundsignificant growth. The Company has been exploring options and alternatives for raising additional capital to cover any working capital needs and its contractual obligation, and to fund growth initiatives in its identified markets. However, there can be no assurance that the Company will be able to raise sufficient capital on acceptable terms. The continued operations of the Company are dependent on its ability to collect its receivables and increase revenues.

Income Taxes

The Company did not record any income tax provision for the sixthree month period ended June 30, 2017,March 31, 2018, and does not expect any material income tax liability for the period.  There were no income and related taxes for 2016 paid in the quarter ended June 30, 2017.

Critical Accounting Policy & Estimates

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations section discusses our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period.

On an ongoing basis, management evaluates its estimates and judgments, including those related to revenue recognition, accrued expenses, financing operations, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

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Actual results may differ from these estimates under different assumptions and conditions. The most significant accounting estimates inherent in the preparation of our financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources. These accounting policies are described at relevant sections in this discussion and analysis and in the condensed consolidated financial statements included in this quarterly report.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

The Issuer is not required to provide the information called for in this item due to its status as a Smaller Reporting Company.

Item 4. Controls and Procedures.

Evaluation of disclosure controls and procedures

The term “disclosure controls and procedures” is defined in Rules 13(a)-15e and 15(d) - 15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company’s principal executive officer and principal financial officer has evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2017.March 31, 2018. He has concluded that, as of June 30, 2017,March 31, 2018, our disclosures, controls and procedures were effective to ensure that:

(1)

Information required to be disclosed by the Company in reports that it files or submits under the act is recorded, processed, summarized and reported, within the time periods specified in the Commissions’ rules and forms; and

(2)

Controls and procedures are designed by the Company to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management including the principal executive and principal financial officers or persons performing similar functions, as appropriate to allow timely decisions regarding financial disclosure.

This term refers to the controls and procedures of a Company that are designed to ensure that information required to be disclosed by a Company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within the required time periods. Management continues to take steps to improve its controls and procedures, and expects, further, that the growing scale of the business will enable the Company to obtain additional resources to assist in that effort.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting or in any other factors that could significantly affect these controls during the quarter ended June 30, 2017,March 31, 2018, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company is not a party to any material pending legal proceedings or a proceeding being contemplated by a governmental authority nor is any of the Company’s property the subject of any pending legal proceedings or a proceeding being contemplated by a governmental authority except as set forth in our Annual Report on Form 10-K for December 31, 20162017 from which there have been no material changes.

Item 1A. Risk Factors.

Subsequent to June 30, 2017, the Company received a demand letter from the principal of the Licensor claiming that an aggregate total of $1,104,367 was due to the Licensor under the License Agreement, and to the principal for consulting work.  The Company and its counsel believe that the claims are without merit and would vigorously defend any potential lawsuit.None.

Item 2. Unregistered Sale of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosure

Not Applicable.

Item 5. Other Information

None.

Item 6. Exhibits

In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed.

* Furnished herewith. XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

SIGNATURES

In accordance with the requirements of the Exchange Act, the Company has caused this report to be signed by the undersigned, thereunto duly authorized.

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