UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

  X . QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2013

      . TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934

For the transition period from ______ to _______

Commission File Number 000-53299

POWRTEC INTERNATIONAL CORP.

(Exact name of registrant as specified in its charter)

Delaware		20-5478196
(State of incorporation)		(I.R.S. Employer Identification No.)

1669 Hollenbeck Avenue, Suite 142

Sunnyvale, CA 94087

(Address of principal executive offices)

(408) 374-1900

(Registrant’s telephone number)

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 (§232.405 of this chapter) 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. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	.	Accelerated filer	.
Non-accelerated filer	. (Do not check if a smaller reporting company)	Smaller reporting company	X .

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

As of November 11, 2013, there were 101,273,291 shares of the registrant’s $0.001 par value common stock issued and outstanding.

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POWRTEC INTERNATIONAL CORP.

TABLE OF CONTENTS

Special Note Regarding Forward-Looking Statements

Information included in this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of POWRtec International Corp. (the “Company”), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

*Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we," "our," "us," the "Company," or "POWT" refers to POWRtec International Corp.

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PART I - FINANCIAL INFORMATION

ITEM 1.

CONSOLIDATED FINANCIAL STATEMENTS

POWRtec International Corp.

September 30, 2013

Index

Consolidated Balance Sheets	4
Consolidated Statements of Operations	5
Consolidated Statements of Cash Flows	6
Notes to the Consolidated Financial Statements	7

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POWRTEC INTERNATIONAL CORP.
CONSOLIDATED BALANCE SHEETS
				September 30, 2013		December 31, 2012
Assets				(Unaudited)
	Current assets:
		Cash	$	3,909	$	107,822
		Accounts receivable		72,420		-
		Total current assets and total assets	$	76,329	$	107,822
Liabilities and stockholders' deficiency
	Current liabilities:
		Accounts payable	$	593,271	$	594,145
		Accrued liabilities		2,479,624		2,318,823
		Deferred revenue		147,987		217,561
		Accrued interest		79,154		58,695
		Derivative liability		6		6
		Term notes		25,000		25,000
		Convertible notes, net of discounts		181,667		169,479
	Total current liabilities and liabilities			3,506,709		3,383,709
Stockholders' deficiency:
		Preferred stock, $0.001 par value; 5,000,000 shares authorized; 0 shares issued and outstanding		-		-
		Common stock, $0.001 par value; 300,000,000 shares authorized; 101,273,291 shares issued and outstanding at September 30, 2013 and December 31, 2012, respectively		101,273		101,273
	Additional paid-in capital			5,137,591		5,129,643
	Accumulated deficit			(8,669,244)		(8,506,803)
	Total stockholders' deficiency			(3,430,380)		(3,275,887)
Total liabilities and stockholders' deficiency			$	76,329	$	107,822
See notes to consolidated financial statements.

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POWRTEC INTERNATIONAL CORP.
CONSOLIDATED  STATEMENTS OF OPERATIONS
For the three months and nine months ended
(Unaudited)
			Three months				Nine months
			September 30, 2013		September 30, 2012		September 30, 2013		September 30, 2012
Revenue		$	-	$	472,754	$	472,754	$	945,509
Cost of goods sold			-		320,906		320,906		641,812
Gross profit			-		151,848		151,848		303,697
Operating expenses
	Selling and marketing		3,566		13,821		12,627		43,667
	Research and development		-		-		-		4,186
	General and administrative		82,691		116,519		269,014		341,926
	Total operating expenses		86,257		130,340		281,641		389,779
Operating income (loss)			(86,257)		21,508		(129,793)		(86,082)
Interest expense			2,782		11,694		32,648		58,187
Net income ( loss)		$	(89,039)	$	9,814	$	(162,441)	$	(144,269)
Basic loss per share of common stock		$	(0.00)	$	0.00	$	(0.00)	$	(0.00)
Weighted average number of common shares outstanding used in basic  loss per share			101,273,291		101,273,291		101,273,291		101,145,513
Fully diluted result per share of common stock				$	0.00
Weighted average number of common shares outstanding used in fully diluted result per share					111,104,368
Note diluted shares results per share not quoted where the effect would be anti-dilutive.
See notes to consolidated financial statements.

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POWRTEC INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended
Unaudited
				September 30, 2013		September 30, 2012
Operating activities
	Net loss		$	(162,441)	$	(144,269)
	Adjustments to reconcile net loss to net cash used in operating activities
		Amortization of discount on convertible notes		12,188		13,940
		Accrual of prepayment penalties on convertible notes		-		18,079
		Stock based compensation expense		7,948		29,998
		Interest accrued on notes		20,459		16,166
		Amortization of deferred revenue		(69,574)		94,821
	Changes in operating assets and liabilities
		Accounts receivable		(72,420)		(144,840)
		Accounts payable		(874)		1
		Accrued liabilities		160,801		161,710
	Net cash provided by (used in) operating activities			(103,913)		45,606
	Financing activities
		Repayment of shareholder loans		-		(11,117)
		Repayment of convertible notes		-		(27,500)
	Net cash used in financing activities			-		(38,617)
	Net increase (decrease) in cash			(103,913)		6,989
	Cash at beginning of period			107,822		554
	Cash at end of period		$	3,909	$	7,543
	Supplemental disclosures of cash flow information
		Cash paid for interest	$	-	$	-
		Cash paid for taxes	$	800	$	1,600
See notes to consolidated financial statements.

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POWRTEC INTERNATIONAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

1. OVERVIEW

Basis of Presentation

These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of September 30, 2013 and the results of operations and cash flows for the periods presented. The results of operations for the three months and nine months ended September 30, 2013 are not necessarily indicative of the operating results for the full fiscal year or any future period. These consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. The Company’s accounting policies are described in the Notes to Consolidated Financial Statements in its Annual Report on Form 10-K for the year ended December 31, 2012, filed on April 1, 2013, and updated, as necessary, in this Quarterly Report on Form 10-Q.

Corporate History

We were incorporated on April 19, 2006 under the name School4Chauffeurs, Inc. ("SFCF") in the State of Delaware. We had been in the process of establishing ourselves as a specialty educational vocational skill service for the limousine and driver industry.  We had intended to provide driver training to all entry-level employees as well as to employees of small to medium sized limousine companies.

On April 16, 2010, the Company filed an Information Statement Pursuant to Section 14(F) of the Securities Exchange Act of 1934 and Rule 14f-1 thereunder announcing that Grant Jasmin (“Mr. Jasmin”) acquired the majority of the issued and outstanding common stock of the Company from Jeffrey E. Jones (“Mr. Jones”) per the terms of a common stock purchase agreement between Mr. Jasmin and Mr. Jones. Pursuant to the terms of the Purchase Agreement, Mr. Jasmin acquired control of 1,700,000 shares of SFCF’s issued and outstanding common stock representing approximately 70% of the total shares issued and outstanding.

On May 14, 2010, SFCF, POWRtec Corporation, a Delaware corporation (“POWRtec”) and the shareholders of POWRtec (the “POWRtec Shareholders”) closed a transaction pursuant to that certain Share Exchange Agreement (the “Share Exchange Agreement”), whereby SFCF acquired approximately 100% of the outstanding shares of common stock of POWRtec (the “POWRtec Stock”) from the POWRtec Shareholders.  In exchange for the POWRtec Stock, SFCF issued 1,750,001 shares of its common stock. As a result of closing the transaction the POWRtec Shareholders now hold approximately 70% of our issued and outstanding common stock.  

On May 20, 2010, we filed an Amended and Restated Certificate of Incorporation with the Delaware Secretary of State. As a result of the Amended and Restated Certificate of Incorporation, SFCF: (i) changed its name to “POWRtec International Corp.;” and, (ii) increased the aggregate number of authorized shares to 305,000,000 shares, consisting of 300,000,000 shares of Common Stock, par value $0.001 per share and 5,000,000 shares of preferred stock, par value $0.001 per share.  

In addition to the name change, the Company's Board of Directors approved a forward split of the issued and outstanding common shares, whereby every one old share of common stock was exchanged for 40 new shares of the Company's common stock. As a result, the issued and outstanding shares of common stock increased from 2,500,001 prior to the forward split to 100,000,040 following the forward split.

The Company now designs, develops and sells intelligent electricity meters to utility companies to enable real time management of electricity consumption as a way of balancing energy supply and demand.

These financial statements report on the consolidated results of POWRtec International Corp. from April 19, 2006 and POWRtec Corporation from the date of the merger in May 14, 2010.

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Going concern

The Company requires additional funds to continue operations. As reflected in the accompanying financial statements, the Company has a net loss since inception of approximately $8.7 million, has experienced a number of quarters with no revenue, and has a cash balance of only $3,909. As of September 30, 2013, current liabilities exceeded current assets by over $3.4 million. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement a sustainable business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Because the Company has incurred net losses since inception, is dependent on a single international customer, and has rarely achieved a profitable quarter, it will most likely be required to raise additional funds through convertible debt, debt or equity financings or by selling its assets.

Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern. However, this additional financing may not be available on a timely basis or on terms acceptable to it, or at all. The Company’s ability to obtain such financing may be impaired by the current economic conditions and the lack of liquidity in the credit markets. If the Company is unable to secure additional funding, it may have to discontinue operations; delay additional development or commercialization of its meters; license to third parties the rights to commercialize products or technologies that it would otherwise seek to commercialize; reduce marketing, customer support, or other resources devoted to its system: or any combination of these activities. Any of these results would materially harm the Company’s business, financial condition, and results of operations, and there can be no assurance that any of these results will result in cash flows that will be sufficient to fund its current or future operating needs. The Company may also need to seek protection under the U.S. Bankruptcy Code or otherwise liquidate its assets, which may result in the failure of the Company’s stockholders to receive value for their ownership of its stock.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Uses of estimates in the preparation of financial statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.

Recent accounting pronouncements

From time to time new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that may have an impact on the Company’s accounting and reporting.  The Company believes that such recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations and cash flows when implemented.

3. DEFERRED REVENUE

Following an initial order in 2006, in January 2012 the Company received a follow-on order from Dong Energy (“Dong”) for the supply of additional meters.   Under the terms of the agreement, the Company will supply a total of 53,500 meters for an aggregate consideration of $2,511,881. The Company is required to ship these meters in six installments. Dong has paid an initial advance of $233,975, and will pay for the balance of the contract in six equal installments following actual deliveries. Prepaid amounts are recorded as deferred revenue, and the balance of deferred revenue is amortized to revenue based on actual shipments made. At September 30, 2013, and December 31, 2012, the Company had recorded deferred revenue of $147,987 and $217,561, respectively.

4. WARRANTY RESERVE

Prior to the order from Dong, the Company estimated that it had approximately $55,000 in warranty liabilities in connection with shipments delivered under these prior orders.  The follow-on order includes shipments made as warranty replacements, and the Company is amortizating the warranty reserve on a straight line basis, over the actual shipments made. As of September 30, 2013 and December 31, 2012, warranty reserves were $25,393 and $35,262, respectively, and are included in accrued liabilities in the accompanying financial statements.

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5. NOTES PAYABLE

A)

CONVERTIBLE NOTES

At various times, starting July 1, 2010, the Company has raised funds through the issuance of unsecured convertible promissory notes for terms ranging from six months to two years.

Summary			September 30, 2013
Principal amount of convertible notes issued		$	290,080
Amounts repaid			(89,500)
Amounts converted			(18,000)
Balance of principal amount			182,580
Note discount			(52,461)
less Accumulated amortization of discount			51,549
Convertible notes, net of discount		$	181,667

As at September 30, 2013 and December 31, 2012, respectively, the Company had accrued $79,154 and $58,695 of interest on the notes, which will be repaid, or converted into common stock on maturity.  Based on the share price of $.004 at September 30, 2013, the Company would require approximately 46.0 million shares of common stock to convert the notes then outstanding.

The Company recognizes the underlying value of embedded derivatives in accordance with ASC 815-15-25-1. The value of the option for noteholders to convert their notes into shares of common stock is calculated and credited as a derivative liability for the duration of the notes, while an offsetting amount is classified as a discount to the principal value of the notes. In the absence of any new notes issued in the three months or nine months ended September 30, 2013 and 2012, respectively, there were no adjustments to the discount reserve or derivative value in either period.

At September 30, 2013, the Company valued the derivative liability and determined that the current carrying value was in in line with market value.

B)

TERM NOTES

The Company also has an unsecured term note for $25,000 that was due April 12, 2012 carrying interest at the rate of 8% per annum, payable at maturity. The note has been rolled over on a month-to-month basis since the maturity date.

6. INCOME TAXES

The Company recognizes deferred income tax liabilities and assets for the expected future tax consequences of events that have been recognized in the financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement and income tax purposes under enacted tax laws and rates.  Components of the Company’s deferred tax liabilities and assets are as follows:

		September 30, 2013		December 31, 2012
Deferred tax assets:
Net operating loss carry forwards	$	(8,669,244)	$	(8,506,803)
add back compensation accruals	$	2,319,822		2,219,547
		(6,349,422)		(6,287,256)
Statutory tax rate (combined federal and state)		37.60%		37.60%
Non-capital tax loss		2,387,383		2,364,008
Valuation allowance		(2,387,383)		(2,364,008)
Deferred tax asset		-		-

 

A valuation allowance for the deferred tax asset has been provided, as it is more likely that not that this asset will not be realized.

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7. STOCKHOLDERS’ DEFICIENCY

Common stock and warrants

The Company has reserved shares of common and preferred stock for issuance at September 30, 2013, and December 31, 2012, as follows:

Authorized shares
		September 30, 2013		December 31, 2012
Common shares, par value $0.001		300,000,000		300,000,000
Preferred shares, par value $0.001		5,000,000		5,000,000

Stock Option Plan

In 2004, the POWRtec Board of Directors adopted the 2004 Incentive Stock Plan (the " Prior Plan"), under which shares of common stock are reserved for issuance to employees, management and consultants of the Company.  On December 15, 2010, the Company established an additional share incentive plan, the 2010 Share Incentive Plan (the “New Plan”), which superseded the Prior Plan, and all grants under the Prior Plan were cancelled. The New Plan permits the granting of stock options (including incentive stock options within the meaning of Code Section 422 and non-qualified stock options), stock appreciation rights, restricted or unrestricted stock awards, phantom stock, performance awards, and other stock-based awards. The New Plan has authorized 15,000,000 shares of Common Stock issuable pursuant to all awards granted under the Plan, and 6,000,000 options were reissued under the New Plan to reflect the post-merger split of shares of forty for one.

During the nine months ended September 30, 2013 there were no grants, exercises or cancellations under the Plan and at September 30, 2013, 3,691,781 shares of Common Stock remain available for future grants.

The Company accounts for share-based compensation plans in accordance to the provisions of ASC 718, "Stock Compensation" (formerly referred to as SFAS No. 123(R)). We estimate the fair value of each option award on the date of grant using the Black-Scholes option-pricing model, and appropriate assumptions for volatility, the expected term of options and the risk-free rate for the expected term of the option.

During the nine months ended September 30, 2013 and 2012, the Company recorded $7,948 and $8,006 of stock-based compensation expense, respectively, related to stock options granted to employees, directors and consultants.  

Warrants

The Company has issued to former directors and consultants of the Company a total of 3,436,230 warrants to purchase shares of common stock at prices ranging from $.004 to $0.11. The Company accounts for the compensation value embedded in the warrants in accordance to the provisions of ASC 718, "Stock Compensation" (formerly referred to as SFAS No. 123(R)). We estimate the fair value of each warrant award on the date of grant using the Black-Scholes option-pricing model, and appropriate assumptions for volatility, the expected term of options and the risk-free rate for the expected term of the option, and amortize the compensation expense on a straight-line basis over the shorter of the directors’ service periods or life of the warrant.

During the three months ended September 30, 2013 and 2012, the Company recorded $0 and $23,022 of equity-based compensation expense, respectively, related to warrants granted to directors and consultants.  

Convertible Notes

The Company converted $0 and $10,000 of convertible notes into shares of common stock during the nine months ended September 30, 2013 and 2012, respectively.

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8. RELATED PARTY TRANSACTIONS

The following amounts are included as outstanding liabilities arising from service provided by related parties and the expenses incurred by the Company in the nine months ended September 30, 2013 and 2012, as shown below.

			Balance outstanding at		Expense for nine months ended
	Included in		September 30, 2013		September 30, 2013		September 30, 2012
Former chief financial officer	Accounts payable	$	353,918	$	-	$	-
Chief executive officer	Accrued liabilities	$	1,287,976	$	187,200	$	187,200
Current chief financial officer	Accrued liabilities	$	76,045	$	24,788	$	37,656

9. COMMITMENTS AND CONTINGENCIES

The Company has no lease commitments. We are currently using free generic executive office space on a month-to-month basis. The space is being provided to us by an unrelated business associate of one of our officers and directors. It is our belief that the space is adequate for our immediate needs. Additional space may be required if we expand our operations. We do not foresee any significant difficulties in obtaining any required additional facilities. We do not own any real estate.

10. SUBSEQUENT EVENTS

The Company has evaluated events occurring after the date of these financial statements through November 11, 2013, the date that these financial statements were issued.

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ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements.  You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms.  These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements.  Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements.  We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

RESULTS OF OPERATIONS

Working Capital

		September 30, 2013		December 31, 2012
Current assets	$	76,329	$	107,822
Current liabilities		3,506,709		3,383,709
Working deficit	$	(3,430,380)	$	(3,275,887)

Cash Flows

		September 30, 2013		September 30, 2012
Net cash provided by (used in) operating activities		(103,913)		45,606
Net cash used in financing activities		-		(38,617)
	Net increase  in cash	(103,913)		6,989

Three months ended September 30, 2013 and 2012

Operating Revenues

The market for the Company’s products is focused on international utility companies that are typified by lengthy evaluation periods and slow sales cycles. Following a slow-down in the construction and utility markets, we had received no orders since 2009. Starting from June 2012, we have resumed shipments to our former customer but on an irregular basis. Shipments took place in both of the three month periods ended September 30, 2013 and 2012 respectively although there are no assurances when additional shipments will be made, if at all.

Operating Expenses and Net Loss

For the three months ended

		September 30, 2013		September 30, 2012		Change $		Change %
Selling and marketing	$	3,566	$	13,821	$	(10,255)		-74%
Research and development		-		-		-
General and adiministrative		82,691		116,519		(33,828)		-29%
Total operating expenses	$	86,257	$	130,340	$	(44,083)		-34%

Selling and marketing

Selling and marketing activities have decreased in the current quarter as a result of reduced travel expenses follow receipt of a sales order from our previous customer in June 2012.

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Research and development

The Company has reduced its engineering and development activities to minimize cash flow until it secures new sales orders.

General and administrative

General and administrative expenses decreased approximately $34,000 for the three month period ended September 30, 2013 compared to the corresponding prior year period, but remain low to minimize cash flow until we secure new sales orders. General and administrative expenses relate principally to the service and other costs of compliance.

Interest expenses

Interest expense includes interest and amortization of discount on convertible notes issued by the Company to generate cash and pay for operating expenses, commencing in 2010. Convertible notes payable increased from $169,479, net, at December 31, 2012 to $181,667, net at September 30, 2013 due to continuing amortization of note discount over the terms of the remaining notes. Interest expense including amortization of debt discount decreased from $11,694 for the three months ended September 30, 2012 to $2,782 for the three months ended September 30, 2013.

Nine months ended September 30, 2013 and 2012

Operating Revenues

The market for the Company’s products is focused on international utility companies that are typified by lengthy evaluation periods and slow sales cycles. Following a slow-down in the construction and utility markets, we had received no orders since 2009. Starting from June 2012, we have resumed shipments to our former customer but on an irregular basis. Shipments took place in both of the nine month periods ended September 30, 2013 and 2012 respectively although there are no assurances when additional shipments will be made, if at all.

Operating Expenses and Net Loss

For the nine months ended

		September 30, 2013		September 30, 2012		Change $		Change %
Selling and marketing	$	12,627	$	43,667	$	(31,040)		-71%
Research and development		-		4,186		(4,186)		-100%
General and adiministrative		269,014		341,926		(72,912)		-21%
Total operating expenses	$	281,641	$	389,779	$	(108,138)		-28%

Selling and marketing

Selling and marketing activities have decreased in the current quarter as a result of reduced travel expenses follow receipt of a sales order from our previous customer in June 2012.

Research and development

The Company has reduced its engineering and development activities to minimize cash flow until it secures new sales orders.

General and administrative

General and administrative expenses decreased approximately $73,000 for the nine month period ended September 30, 2013 compared to the corresponding prior year period, but remain low to minimize cash flow until we secure new sales orders. General and administrative expenses relate principally to the service and other costs of compliance.

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Interest expenses

Interest expense relates to the notes issued by the Company to generate cash and pay for operating expenses, commencing in 2010. Convertible notes payable increased from $169,479, net, at December 31, 2012 to $181,667, net at September 30, 2013 due to continuing amortization of note discount over the terms of the remaining notes. As a result of approaching note maturities and near full amortization of debt discount, interest expense including amortization of debt discount decreased from $58,187 for the nine months ended September 30, 2012 to $32,648 for the nine months ended September, 30, 2013.

Liquidity and Capital Resources

During the nine months ended September 30, 2013, approximately $104,000 of net cash was used by operating activities of which approximately $162,000 was due to losses from operations, offset by changes in working capital.

Going Concern

The Company requires additional funds to continue operations. As reflected in the accompanying financial statements, the Company has a net loss since inception of approximately $8.7 million, has experienced a number of quarters with no revenue, and has a cash balance of only $3,909. As of September 30, 2013, current liabilities exceeded current assets by over $3.4 million. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement a business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Because the Company has net losses since inception and does not expect to be profitable until later in 2014, it will most likely be required to raise these additional funds through convertible debt, debt or equity financings or by selling its assets.

Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern. However, this additional financing may not be available on a timely basis or on terms acceptable to it, or at all. The Company’s ability to obtain such financing may be impaired by the current economic conditions and the lack of liquidity in the credit markets. If the Company is unable to secure additional funding, it may have to discontinue operations; delay additional development or commercialization of its meters; license to third parties the rights to commercialize products or technologies that it would otherwise seek to commercialize; reduce marketing, customer support, or other resources devoted to its system: or any combination of these activities. Any of these results would materially harm the Company’s business, financial condition, and results of operations, and there can be no assurance that any of these results will result in cash flows that will be sufficient to fund its current or future operating needs. The Company may also need to seek protection under the U.S. Bankruptcy Code or otherwise liquidate its assets, which may result in the failure of the Company’s stockholders to receive value for their ownership of its stock.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or 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 are material to stockholders.

Future Financings

We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities.

Critical Accounting Policies

Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

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We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

Recently Issued Accounting Pronouncements

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

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 4. 

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act").

Based on this evaluation, our principal executive and principal financial and accounting officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) were effective as of September 30, 2013.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The Company is not required by current SEC rules to include, and does not include, an auditor’s attestation report. The Company’s registered public accounting firm has not attested to Management’s reports on the Company’s internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. 

LEGAL PROCEEDINGS

On November 5, 2010, 747 Camden, LLC ("Plaintiff") filed an unlawful detainer complaint in the Superior Court of California - County of Santa Clara against the Company, seeking to recover possession of our corporate office as well as past due rent in the amount of $126,189.11, reasonable attorney fees, forfeiture of the lease agreement, prejudgment interest and damages of $420.06 for each day that the Company remained in possession from November 1, 2010 through entry of judgment. Judgment has been entered in favor of Plaintiff for $139,000 which has been accrued by the Company in accounts payable and accrued liabilities.

Other than the foregoing, we know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

ITEM 1A.

RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 2. 

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

1.

Quarterly Issuances:

None.

2.

Subsequent Issuances:

None.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.  

MINE SAFTEY DISCLOSURES

Not Applicable.

ITEM 5.

OTHER INFORMATION

None.

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ITEM 6.

EXHIBITS

Exhibit
Number	Description of Exhibit	Filing
3.01	Certificate of Incorporation	Filed with the SEC on March 19, 2007 as part of our Registration Statement on Form SB-2.
3.01(a)	Amended and Restated Certificate of Incorporation	Filed with the SEC on May 28, 2010 as part of our Current Report on Form 8-K.
3.02	Bylaws	Filed with the SEC on March 19, 2007 as part of our Registration Statement on Form SB-2.
4.01	2010 Share Incentive Plan	Filed with the SEC on August 23, 2010 as part of our Registration Statement on Form S-8.
4.02	Sample Qualified Stock Option Grant Agreement	Filed with the SEC on August 23, 2010 as part of our Registration on Form S-8.
4.03	Sample Non-Qualified Stock Option Grant Agreement	Filed with the SEC on August 23, 2010 as part of our Registration Statement on Form S-8.
4.04	Sample Performance-Based Award Agreement	Filed with the SEC on August 23, 2010 as part of our Registration Statement on Form S-8.
10.01	Share Exchange Agreement between School4Chauffeurs, Inc., POWRtec Corporation and POWRtec Corporation Shareholders	Filed with the SEC on May 17, 2010 as part of our Current Report on Form 8-K.
10.02	Convertible Promissory Note between the Company and Koryak Investments S.A. dated July 1, 2010	Filed with the SEC on August 16, 2010 as part of our Quarterly Report on Form 10-Q.
10.03	Promissory Note between the Company and The Management AB dated July 9, 2010	Filed with the SEC on August 16, 2010 as part of our Quarterly Report on Form 10-Q.
10.04	Nordic Advisory Board Agreement between the Company and Anders Sagadin dated December 1, 2010	Filed with the SEC on May 13, 2011 as part of our Quarterly Report on form 10-Q.
10.05	Nordic Advisory Board Agreement between the Company and Anders Rudlang dated December 1, 2010	Filed with the SEC on May 13, 2011 as part of our Quarterly Report on form 10-Q
10.06	First Extension to the Management AB Note dated January 9, 2011	Filed with the SEC on May 13, 2011 as part of our Quarterly Report on form 10-Q
10.07	Convertible Promissory Note between the Company and Asher Enterprises, Inc. dated March 15, 2011	Filed with the SEC on March 24, 2011 as part of our Current Report on Form 8-K.
10.08	Securities Purchase Agreement between the Company and Asher Enterprises, Inc. dated March 15, 2011	Filed with the SEC on March 24, 2011 as part of our Current Report on Form 8-K.
10.09	Subscription Agreement between the Company and Laurag Associates S.A. dated April 7, 2011.	Filed with the SEC on April 15, 2011 as part of our Annual Report on Form 10-K.
10.10	Second Extension to the Management AB Note dated April 9, 2011	Filed with the SEC on May 13, 2011 as part of our Quarterly Report on Form 10-Q.
10.11	Unsecured Promissory Note between the Company and Koryak Investments executed April 12, 2011	Filed with the SEC on May 13, 2011 as part of our Quarterly Report on Form 10-Q.
10.12	Securities Purchase Agreement between the Company and Asher dated May 19, 2011	Filed with the SEC on May 24, 2011 as part of our Current Report on Form 8-K.
10.13	Convertible Promissory Note dated May 19, 2011	Filed with the SEC on May 24, 2011 as part of our Current Report on Form 8-K.
10.14	Securities Purchase Agreement between the Company and Asher dated July 26, 2011	Filed with the SEC on July 28, 2011 as part of our Current Report on Form 8-K.
10.15	Convertible Promissory Note dated July 26, 2011	Filed with the SEC on July 28, 2011 as part of our Current Report on Form 8-K.
10.16	Consulting Agreement between the Company and Simon Westbrook entered into on August 3, 2011.	Filed with the SEC on March 30, 2012 as part of our Annual Report on Form 10-K.
16.01	Letter from Former Accountant Kyle L. Tingle, CPA, LLC, dated August 4, 2010	Filed with the SEC on August 11, 2010 as part of our Current Report on Form 8-K.

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Exhibit
Number	Description of Exhibit	Filing
21.01	List of Subsidiaries	Filed with the SEC on May 17, 2010 as part of our Current Report on Form 8-K.
31.01	Certification of Principal Executive Officer Pursuant to Rule 13a-14	Filed herewith.
31.02	Certification of Principal Financial Officer Pursuant to Rule 13a-14	Filed herewith.
32.01	CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act	Filed herewith.
32.02	CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act	Filed herewith.
101.INS*	XBRL Instance Document	Filed herewith.
101.SCH*	XBRL Taxonomy Extension Schema Document	Filed herewith.
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith.
101.LAB*	XBRL Taxonomy Extension Labels Linkbase Document	Filed herewith.
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith.
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith.

*Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

POWRTEC INTERNATIONAL CORP.

Dated:  November 14 2013

/s/ Grant Jasmin

By: Grant Jasmin

Its: President , Chief Executive Officer, and Secretary

Dated:  November 14, 2013

/s/ Simon Westbrook

By:  Simon Westbrook

Its:  Chief Financial Officer,  

Principal Accounting Officer, and Treasurer

Pursuant to the requirement of 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:

Dated:  November 14, 2013

/s/ Grant Jasmin

By:  Grant Jasmin

Its:  Director

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