UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

 

x

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

 

For the quarterly period ended March 31, 2014

 

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: 333-184363

 

POWERSTORM CAPITAL CORP.

(Name of registrant as specified in its charter)

 

DELAWARE	45-3733512
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

 

31244 Palos Verdes Dr W, Ste 245

Rancho Palos Verdes, CA 90275-5370

(Address of principal executive offices) (Zip Code)

 

1-424-327-2991

(Registrant's telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

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 ¨ No x

 

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 ¨ No x

 

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	¨		Small Reporting Company	x

(Do not check if smaller reporting company)

 

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

 

As of May 14, 2014, there were 20,892,901  shares of common stock issued and outstanding.

 

  

TABLE OF CONTENTS

 

		Page
PART I. - FINANCIAL INFORMATION
Item 1.	Financial Statements.	F-1
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	3
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	7
Item 4.	Controls and Procedures.	7
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings.	8
Item 1A.	Risk Factors.	8
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	8
Item 3.	Defaults Upon Senior Securities.	8
Item 4.	Mine Safety Disclosures.	8
Item 5.	Other Information.	8
Item 6.	Exhibits.	8

  

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q (this “Report”) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “predict,” “project,” “forecast,” “potential,” “continue” negatives thereof or similar expressions. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements.

 

We cannot predict all of the risks and uncertainties. Accordingly, such information should not be regarded as representations that the results or conditions described in such statements or that our objectives and plans will be achieved and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. These forward-looking statements are found at various places throughout this Report and include information concerning possible or assumed future results of our operations, including statements about potential acquisition or merger targets; business strategies; future cash flows; financing plans; plans and objectives of management; any other statements regarding future acquisitions, future cash needs, future operations, business plans and future financial results, and any other statements that are not historical facts.

 

These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report. All subsequent written and oral forward-looking statements concerning other matters addressed in this Report and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Report.

 

Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

 

  

PART 1 - FINANCIAL INFORMATION

Item 1. Financial Statements.

 

POWERSTORM CAPITAL CORP.

(A DEVELOPMENT STAGE COMPANY)

INDEX TO FINANCIAL STATEMENTS

 

Balance Sheets as of March 31, 2014 and December 31, 2013 (Unaudited)		F-2
Statements of Operations for the three months ended  March 31, 2014 and 2013, and for the period from October 10, 2011 (Inception) through March 31, 2014 (Unaudited)		F-3
Statements of Cash Flows for the three months ended March 31, 2014 and 2013, and for the period from October 10, 2011 (Inception) through March 31, 2014 (Unaudited)		F-4
Notes to the Financial Statements (Unaudited)		F-5

 

 

POWERSTORM CAPITAL CORP.

(A DEVELOPMENT STAGE COMPANY)

Balance Sheets

(Unaudited)

 

		March 31, 2014				December 31, 2013
ASSETS
Current Assets
Cash and cash equivalents		$	5,252			$	7,543
Prepaid expenses			1,516				1,402
Total current assets			6,768				8,945
Furniture and office equipment, net			5,274				5,584
Trademarks			6,733				5,828
Other assets			2,500				2,500
TOTAL ASSETS		$	21,275			$	22,857
LIABILITIES AND STOCKHOLDERS’  DEFICIT
Current Liabilities
Accounts payable		$	41,207			$	52,486
Advances from related party			-				24,171
Total Liabilities			41,207				76,657
Commitments and contingencies
STOCKHOLDERS’ DEFICIT
Preferred stock, par value $0.01 per share, 5,000,000 shares authorized; 0 shares issued and outstanding			-				-
Common stock, par value $0.001 per share, 300,000,000 shares authorized; 20,852,901 and 20,116,381 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively			20,853				20,116
Additional paid-in capital			236,048				157,533
Deficit accumulated during the development stage			(276,833	)			(231,449	)
TOTAL STOCKHOLDERS’ DEFICIT			(19,932	)			(53,800	)
TOTAL LIABILITIES & STOCKHOLDERS’  DEFICIT		$	21,275			$	22,857

  

The accompanying notes are an integral part of these unaudited financial statements.

 

 

POWERSTORM CAPITAL CORP.

(A DEVELOPMENT STAGE COMPANY)

Statements of Operations

(Unaudited)

  

		Three Months Ended March 31, 2014				Three Months Ended  March 31, 2013				From October 10, 2011 (Inception) to March 31, 2014
REVENUES		$	12,850			$	2,200			$	44,911
OPERATING EXPENSES:
General and administrative			71,949				27,857				333,739
Depreciation expense			310				249				2,300
Total operating expenses			72,259				28,106				336,039
Loss from operations			(59,409	)			(25,906	)			(291,128	)
Gain on settlement of accounts payable			14,025				-				14,025
Other income			-				270				270
NET LOSS		$	(45,384	)		$	(25,636	)		$	(276,833	)
Loss per common share - basic and diluted		$	(0.00	)		$	(0.00	)
Weighted average number of common shares outstanding - basic and diluted			20,124,569				19,241,311

 

The accompanying notes are an integral part of these unaudited financial statements.

 

 

POWERSTORM CAPITAL CORP.

(A DEVELOPMENT STAGE COMPANY)

Statements of Cash Flows 

(Unaudited)

 

		Three Months Ended March 31, 2014				Three Months Ended March 31, 2013				From October 10, 2011 (Inception) through March 31, 2014
Cash flows from operating activities
Net loss		$	(45,384	)		$	(25,636	)		$	(276,833	)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation			600				-				27,013
Shares issued for expenses incurred			-				-				9,273
Gain on settlement of accounts payable			(14,025	)			-				(14,025	)
Depreciation expense			310				249				2,300
Changes in operating assets and liabilities:
Prepaid expenses			(114	)			(849	)			(2,616	)
Accounts payable			2,746				9,992				55,232
Net cash used in operating activities			(55,867	)			(16,244	)			(199,656	)
Cash flow from investing activities:
Purchase of furniture and office equipment			-				(871	)			(7,574	)
Acquisition of trademarks			(905	)			(629	)			(3,808	)
Net cash used in investing activities			(905	)			(1,500	)			(11,382	)
Cash flows from financing activities:
Issuance of common stock for cash			-				-				35,000
Advances from related party			54,481				16,033				181,290
Net cash provided by financing activities			54,481				16,033				216,290
Net change in cash and cash equivalents			(2,291	)			(1,711	)			5,252
Cash and cash equivalents - beginning of period			7,543				3,559				-
Cash and cash equivalents - end of period		$	5,252			$	1,848			$	5,252
Supplemental disclosure of cash flow information:
Cash paid during the period for :
Interest		$	-			$	-			$	-
Income taxes		$	-			$	-			$	-
Non-cash investing and financing activities:
Shares issued for prepaid expenses		$	-			$	-			$	2,800
Shares issued for capitalized trademarks		$	-			$	-			$	2,925
Shares issued for other assets		$	-			$	-			$	1,400
Shares issued to repay related party advances		$	73,652			$	13,780			$	176,290
Additional paid-in capital contribution by shareholder to pay accounts payable on behalf of the Company		$	5,000			$	-			$	5,000

 

The accompanying notes are an integral part of these unaudited financial statements.

 

 

POWERSTORM CAPITAL CORP.

(A DEVELOPMENT STAGE COMPANY)

Notes to Financial Statements

(Unaudited)

 

NOTE 1 – GENERAL ORGANIZATION AND BUSINESS OPERATIONS

 

Powerstorm Capital Corp. (the “Company”) is a development stage company incorporated in Delaware on October 10, 2011 and is located in Rancho Palos Verdes, California. The Company was formed solely for the purpose of identifying and entering into business acquisitions within the telecommunications infrastructure space. To date, the Company has not entered into any discussions or negotiations with any companies it would intend to acquire. The Company’s management intends to focus on targets located primarily in Asia, South America, and Western and Eastern Europe, as it believes that businesses with operating history and growth potential in these locations would benefit significantly from access to the United States capital markets and may offer the potential for capital appreciation stemming from the economic growth in such emerging markets.

 

NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). In the opinion of management, these financial statements include all adjustments, which, unless otherwise disclosed, are of a normal recurring nature, necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented.

 

The accompanying unaudited interim financial statements as of March 31, 2014, for the three months ended March 31, 2014 and 2013 and for the period from October 10, 2011 (inception) through March 31, 2014 have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and on the same basis as the annual audited financial statements. In the opinion of management, these financial statements include all adjustments, which, unless otherwise disclosed, are of a normal recurring nature, necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented. The results for interim periods are not necessarily indicative of results for the entire year. The balance sheet at December 31, 2013 has been derived from audited financial statements; however, the notes to the financial statements do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. The accompanying unaudited interim financial statements should be read in conjunction with the financial statements and notes thereto for the period from October 10, 2011 (inception) to December 31, 2013 included in 10-K filed with SEC on April 15, 2014.

 

Development Stage Activities

 

The Company is presently in the development stage, with no revenues. Accordingly, all of the Company’s operating results and cash flows reported in the accompanying financial statements are considered to be those arising from the development stage activities and represent the ”cumulative from inception” amounts from its development stage activities.

 

Use of Estimates

 

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid short-term investments purchased with an original maturity of three months or less to be cash equivalents. These investments are carried at cost, which approximates fair value.

 

Intangible Assets

 

The Company’s intangible assets consist of trademarks with indefinite life. The Company capitalizes the filing and legal fees related to the trademark registrations, which totaled $6,733 and $5,828 as of March 31, 2014 and December 31, 2013, respectively.

 

The Company reviews its indefinite-lived intangible assets for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. The Company assesses recoverability by reference to future cash flows from the products underlying these intangible assets. If these estimates change in the future, the Company may be required to record impairment charges for these assets. As of March 31, 2014, no impairment was recorded.

 

Furniture and Office Equipment

 

Furniture and office equipment is stated at cost and depreciated using the straight-line method over 7 years, the estimated life of the asset. Computers and software developed or obtained for internal use are depreciated using the straight-line method over the estimated useful life of 5 years. Repairs and maintenance are charged to expense as incurred.

 

  

Income Taxes

 

The Company uses the asset and liability method in accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and income tax carrying amounts of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company reviews deferred tax assets for a valuation allowance based upon whether it is more likely than not that the deferred tax asset will be fully realized. A valuation allowance, if necessary, is provided against deferred tax assets, based upon management’s assessment as to their realization.

 

Revenues Recognition

 

The Company’ revenue generated during the development stage consisted of revenues from consulting and advisory services. Revenue is recognized at the time when a price is fixed and determinable, persuasive evidence of an arrangement exists, the service has been provided, and collectability is assured.

 

Stock-Based Compensation

 

The Company expenses the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of such instruments over the service period.

 

Equity instruments issued to parties other than employees for acquiring goods or services are recorded at either the fair value of the consideration received or the fair value of the instruments issued in exchange for such services, whichever is more reliably measurable.

 

Net Loss per Common Share

 

Basic net loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, the diluted weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. There were no potentially dilutive securities as of March 31, 2014 and December 31, 2013.

 

Subsequent Events

 

The Company evaluates subsequent events through the date when financial statements are issued for disclosure consideration.

 

New Accounting Pronouncements

 

The Company does not expect adoption of the new accounting pronouncements will have a material effect on the Company’s financial statements.

 

NOTE 3 – GOING CONCERN

 

The accompanying financial statements were prepared in conformity with U.S. GAAP, which contemplates continuation of the Company as a going concern and depends upon the Company’s ability to establish itself as a profitable business. The Company is a development stage company and has incurred an accumulated loss of $276,233 since inception. The Company has negative working capital of $34,439 and will require additional funds to finance its business plan for the next twelve months. Due to the start-up nature of the Company, the Company expects to incur additional losses in the immediate future. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due. To date, the Company’s founders have provided funding for operations until the Company raises sufficient capital to provide for the first-year operating expenses.

 

The Company is planning to obtain financing either through the issuance of equity or debt. To the extent that funds generated from any private placements, public offerings, and/or bank financings are insufficient, the Company will have to raise additional working capital through other sources.

 

 

NOTE 4 – FURNITURE AND OFFICE EQUIPMENT, NET

 

		March 31, 2014				December 31, 2013
Furniture and equipment		$	5,391			$	5,391
Computers and software			2,183				2,183
Less: accumulated depreciation			(2,300	)			(1,990	)
Furniture and office equipment, net		$	5,274			$	5,584

 

During the three months ended March 31, 2014 and 2013, the Company recorded depreciation expense of $310 and $249, respectively.

  

NOTE 5 – RELATED PARTY TRANSACTIONS

 

From October 10, 2011 (inception) through March 31, 2014, a related party entity advanced to the Company and made payments to several of the Company’s vendors on behalf of the Company for a total of $181,290. The Company’s President and Chairman of the Board of Directors serves as the president of this related party entity. The advances are due on demand and bear no interest.

 

On October 15, 2012, the Company issued 420,000 shares of common stock to this related party entity as reimbursement for the advances and payments made on behalf of the Company. The shares were valued at the fair value of the expense reimbursement of $42,000.

 

On March 22, 2013, the Company issued 137,800 shares of common stock to this related party entity as reimbursement for the advances and payments made on behalf of the Company. The shares were valued at the fair value of the expense reimbursement of $13,780.

 

On June 30, 2013, the Company issued 245,180 shares of common stock to this related party entity in full reimbursement for the advances and payments made on behalf of the Company. The shares were valued at the fair value of the expense reimbursement of $24,518.

 

On September 30, 2013, the Company issued 223,401 shares of common stock to this related party entity in full reimbursement for the advances and payments made on behalf of the Company. The shares were valued at the fair value of the expense reimbursement of $22,340.

  

On March 31, 2014, the Company issued 736,520 shares of common stock to this related party entity in full reimbursement for the advances and payments made on behalf of the Company of $73,652. The shares were valued at the fair value of $0.1 per share.

 

As of March 31, 2014 and December 31, 2013, the Company owed to this related party entity $0 and $24,171, respectively.

      

NOTE 6 – EQUITY

 

Common shares

 

The Company is authorized to issue 305,000,000 shares of capital stock. These shares are divided into two classes with 300,000,000 shares designated as common stock at $0.001 par value and 5,000,000 shares designated as preferred stock at $0.01 par value.

 

During the three months ended March 31, 2014, the Company issued:

 

-	736,520 shares of common stock to a related party entity for advances to the Company and payments made on behalf of the Company of $73,652. These shares were valued at the fair value of $0.01 per share.

 

During the period from October 10, 2011 (inception) through December 31, 2013, the Company issued:

 

-

51,000 shares of common stock to third-party providers for legal and consulting services received. These shares were valued at their grant date fair value of $5,100.

 

-

100,000 shares of common stock to third-party investors for cash proceeds of $10,000.

 

-

420,000 shares of common stock to a related party entity for advances to the Company and payments made on behalf of the Company. These shares were valued at the fair value of the expense reimbursement and assets purchased of $42,000.

 

-

15,000,000 shares of common stock to its founders at par value of $0.001 per share.

 

-

25,000 shares of common stock to one of its executive officers and a third party vendor for services provided to the Company. These shares were recorded at their fair value of $113.

 

 

-

3,630,000 shares of common stock to Key Media Management for payments made on behalf of the Company. These shares were valued at the fair value of the expense reimbursement and assets purchased of $16,398.

  

-

On March 22, 2013 - 137,800 shares of common stock to a related party entity for advances to the Company and payments made on behalf of the Company. These shares were valued at the fair value of the expense reimbursement and assets purchased of $13,780.

 

-

On May 2, 2013 - 50,000 shares of common stock to a third party for cash proceeds of $5,000.

 

-

On May 17, 2013 - 100,000 shares of common stock to a third party for cash proceeds of $10,000.

 

-

On June 30, 2013 - 245,180 shares of common stock to a related party entity for advances to the Company and payments made on behalf of the Company. These shares were valued at the fair value of the expense reimbursement and assets purchased of $24,518.

 

-

On July 21, 2013 - 100,000 shares of common stock to a third party for cash proceeds of $10,000.

 

-

On September 30, 2013 – 223,401 shares of common stock to related party entities for advances to the Company and payments made on behalf of the Company. These shares were valued at the fair value of the expense reimbursement of $22,340.

 

-

On December 31, 2013 – 34,000 shares of common stock to various third party providers for consulting and marketing services received. These shares were valued at the fair value of the service rendered of $3,400.

 

Stock-based compensation expense

 

During the three months ended March 31, 2014, the Company appointed 5 new members to its board of advisors, and promised to issue 10,000 shares to each advisor upon completion of their one year term. As of March 31, 2014, the Company has not issued a share to the board of advisors. The Company recorded Share-based compensation and additional paid-in capital related to the shares of $600.

 

NOTE 7 – GAIN ON SETTLEMENT OF ACCOUNTS PAYABLE

 

In 2014, the Company and one of its vendors reached a settlement on an outstanding accounts payable. The Company’s vendor forgave a $14,025 accounts receivable on the previous services provided and the Company recorded a gain on settlement of accounts payable of $14,025.

 

 

Item 2.

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

 

The following is management’s discussion and analysis of the consolidated financial condition and results of operations of Powerstorm Capital Corp. (“Powerstorm”, the “Company”, “we”, and “our”) for the three month period ended March 31, 2014. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties, such as its plans, objectives, expectations and intentions. Its actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements. The following information should be read in conjunction with the consolidated interim financial statements for the period ended December 31, 2013 and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q (this “Report”).

 

Overview

 

Powerstorm provides equipment and services for the emerging telecommunication infrastructure industry, particularly in energy storage and management, base stations, telecommunication towers and related equipment.

 

The founders of Powerstorm have worked in mobile telecommunications for the past decade. Our founders formed Powerstorm to pursue opportunities they had identified related to growth and technology shifts in the industry, particularly as they relate to renew, upgrade and deploy new hybrid energy storage solutions in emerging markets.

  

We are a development stage company, and to date, our development efforts have been focused primarily on planning and development of our business model. To date we have limited operating history for investors to evaluate the potential of our business. As such, we have not yet built our customer base or fully defined our market position. We do not currently have any written or oral commitments to provide products services to customers. In addition, our sources of cash are not adequate for the next 12 months of operations. If we are unable to raise additional cash, we will either have to suspend or cease our expansion plans entirely.

 

Our Strategy

 

Powerstorm intends to serve the strong, growing demand for telecommunications infrastructure worldwide, and in particular in emerging markets.

 

Due to the continued increase in subscribers for wireless personal communication and phone services, we expect wireless carriers will need to add a significant number of cell sites to maintain the performance of their networks in the areas they currently cover and to extend service to new markets. In addition, we believe that as wireless data services, such as e-mail, Internet access, and video, are deployed on a widespread basis, wireless carriers will need to augment the cell density of their existing networks throughout the emerging world. They will also need to upgrade the technology used in their networks to accommodate the need for greater coverage and bandwidth, as well as increase efficiency and reduce operating costs.

 

Out of five million cellular towers worldwide, three million are in emerging regions such as Africa and the Middle East. Of these, over one million are tied to unstable grids and 640,000 are off-grid. To maintain and grow this network, telecommunication operators must ensure access to energy sources, and must store, manage and deploy power efficiently and reliably. Navigant Research forecasts that revenue for off-grid base station power will grow from $1.6 billion in 2012 to more than $10.5 billion in 2020.

 

 

Presently operators in emerging areas rely principally on diesel generators as a primary energy source for cellular towers. These generators are costly to operate and maintain, rely on fossil fuels, and cause harm to the environment. As a result, the industry is looking to alternative energy sources, including solar, wind, and hydroelectric, to power mobile telecommunications over the coming decades. The ultimate goal is a “green base station,” which will likely be powered by a combination of renewable energy and fuel cell technology. We believe that this technology shift presents a compelling business opportunity.

 

Our founders and management team has significant experience and relationships in the mobile telecommunications industry, with geographical focus in Africa, the Middle East, Eastern Europe and Southeast Asia. Our founders’ legacy in providing replacement equipment to telecom operators has conferred an understanding of the needs and technology acquisition behavior of these operators, and has given Powerstorm a recognizable brand in this market. Accordingly, the Company believes it is well positioned to capitalize on the hybrid energy opportunity.

 

As part of its planning activities, Powerstorm has evaluated solutions to reduce network operating expenditures. Powerstorm has met and discussed integration of hybrid power with leading telecommunication operators, suppliers and integrators. Powerstorm identified general infrastructure deficiencies and power management gaps as opportunities to propose more compelling hybrid power solutions to meet global operators demand to reduce network costs and increase efficiencies by deploying hybrid technologies.

 

Powerstorm plans to start by offering branded solutions that integrate equipment manufactured by existing suppliers. In the coming years, we intend to develop proprietary technology solutions that offer advantages such as increased duty cycle, reduced installation cost, superior energy efficiency, and value-added features. We intend to develop these solutions through internal research and development, as well as strategic initiatives such as mergers and acquisitions, licenses, joint ventures, and joint development arrangements, among other activities.

  

Powerstorm has in his pipeline since the end of the GSMA show Feb 2014 a possible deal flow of more than 300 sites for 2014 but has not closed any such offering and is fiercely negotiating with the operators. The Company can not guarantee and positive outcome or give a timeline of deal closure.

 

Results of Operations

 

		Three Months Ended March 31, 2014				Three Months Ended March 31, 2013				From October 10, 2011 (Inception) Through March 31, 2014
Revenues		$	12,850			$	2,200			$	44,911
Total operating expenses			72,259				28,106				336,039
Gain on settlement of accounts payable			14,025				-				14,025
Other Income			-				270				270
Net loss		$	(45,384	)		$	(25,636	)		$	(276,833	)

 

For the three months ended March 31, 2014 and 2013

 

Revenues

 

We are still in our development stage and have generated some non-recurring revenues from consulting services of $12,850 during the three months ended March 31, 2014 and $2,200 revenues during the three months ended March 31, 2013. The increase of $10,650 over the prior year was primarily because we provided more consulting services provided.

 

 

Operating Expenses

 

We incurred total operating expenses of $72,259 and $28,106 for the three months ended March 31, 2014 and 2013, respectively. The increase of $44,153 over the prior year was primarily due to an increase in professional fees and filings fees in connection with the preparation and filing of the registration statement with the Securities and Exchange Commission (the “SEC”).

 

Net Loss

 

During the three months ended March 31, 2014 and 2013, we incurred a net loss of $45,384 and $25,636, respectively. The increase of $19,748 in net loss over the prior same quarter was primarily due to an increase in consulting fees in connection with the business development.

 

From October 20, 2011 (Inception) through March 31, 2014

 

Revenues

 

For the period from October 10, 2011 (Inception) to March 31, 2014, we generated some non-recurring revenues from consulting services of $44,911.

 

Operating Expenses

 

We incurred total operating expenses of $336,039 for the period since inception on October 10, 2011 to March 31, 2014, which consisted primarily of general and administrative expenses. For the three months ended March 31, 2014 our general and administrative expenses were comprised of audit and accounting fees of $5,689, legal fees of $4,044, consulting fee of $37,573, rent expense of $7,500, filing fees of $936, marketing expenses of $3,266, and other expenses totaling $12,941. The legal fees were primarily incurred in connection with the preparation and filing the registration statement with the SEC. The increase in consulting fees was primary incurred in connection with the business development.

 

Net Loss

 

We had a net loss of $276,833 for the period from October 10, 2011 (Inception) to March 31, 2014 due to incurred operating expenses and some non-recurring revenues. 

 

Liquidity and Capital Resources

 

Our financial condition as of March 31, 2014 and December 31, 2013 is summarized as follows:

 

Working Capital:

 

		March 31, 2014				December 31, 2013
Current assets		$	6,768			$	8,945
Current liabilities			(41,207	)			(76,657	)
Working capital (deficit)		$	(34,439	)		$	(67,712	)

 

Cash Flows:

 

		Three Months Ended March 31,								From October 10, 2011 (Inception) through March 31,
		2014				2013				2014
Cash used in operating activities		$	(55,867	)		$	(16,244	)		$	(199,656	)
Cash used in investing activities			(905	)			(1,500	)			(11,382	)
Cash provided by financing activities			54,481				16,033				216,290
Net increase (decrease) in cash		$	(2,291	)		$	(1,711	)		$	5,252

 

 

We are a development stage company and have incurred an accumulated loss of $276,833 since inception. We had a working capital deficit of $34,439 for the three months ended March 31, 2014, which is not sufficient to finance over business plan for the next twelve months. Our independent auditors have issued an audit opinion for us for the financial statements ended December 31, 2013 and the period then ended, which includes a statement expressing substantial doubt as to our ability to continue as a going concern due to our limited liquidity and our lack of revenues.

 

We have minimal operating expenses at the present time due to our limited business activities. To date, our founders have provided funding for our operations. We will, however, be required to raise additional capital over the next twelve months to meet our current administrative expenses.

 

We plan to secure financing either through the issuance of equity or debt. To the extent that funds generated from any private placements, public offerings, and/or bank financings are insufficient, we will need to raise additional working capital through other sources.

 

Our resources were insufficient to effectuate our inaugural business plan dated October 10, 2011, that extended through the period ending March 31, 2014. We had expected to incur a minimum of $150,000 in operating expenses during the subsequent 12 months of operations.

 

We had previously indicated that we would have to raise the funds to pay for these expenses. We may have to borrow money from founders or shareholders, issue debt or equity, or enter into a strategic arrangement with a third party. There is no assurance that we will secure additional capital. There currently are no agreements, arrangements, or understandings that would enable Powerstorm to obtain funds through bank loans, lines of credit, or any other source. If we are unable to raise funds for acquisitions it will have a severe negative impact on our ability to execute our business.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

Critical Accounting Policies and Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to select appropriate accounting policies and to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses.

 

Intangible Assets

 

The Company’s intangible assets consist of trademarks with indefinite life. The Company capitalizes the filing and legal fees related to the trademark registrations, which totaled $6,733 and $5,828 as of March 31, 2014 and December 31, 2013, respectively. The Company reviews its indefinite-lived intangible assets for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. The Company assesses recoverability by reference to future cash flows from the products underlying these intangible assets. If these estimates change in the future, the Company may be required to record impairment charges for these assets. As of March 31, 2014, no impairment was recorded.

 

 

Revenues Recognition

 

The Company’ revenue generated during the development stage consisted of revenues from consulting and advisory services. Revenue is recognized at the time when a price is fixed and determinable, persuasive evidence of an arrangement exists, the service has been provided, and collectability is assured.

 

Stock-Based Compensation

 

The Company expenses the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of such instruments over the service period.

 

Equity instruments issued to parties other than employees for acquiring goods or services are recorded at either the fair value of the consideration received or the fair value of the instruments issued in exchange for such services, whichever is more reliably measurable.

 

Recent Accounting Pronouncements

 

The Company does not expect adoption of the new accounting pronouncements will have a material effect on the Company’s financial statements.

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

 

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

 

Item 4.

Controls and Procedures.

 

Disclosure of Controls and Procedures

 

Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Our disclosure controls and procedures are also designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officer, to allow timely decisions regarding required disclosure. Our chief executive officer and chief financial officer have reviewed the effectiveness of our disclosure controls and procedures as of March 31, 2014 and, based on his evaluation, and has concluded that the disclosure controls and procedures were not effective due to the material weaknesses, which is that we did not sufficiently segregate duties over incompatible functions at our corporate headquarters.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting during the three months ended March 31, 2014 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

 

PART II. - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

 

Item 1A. Risk Factors

 

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

 

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

 

On December 31, 2013, the Company issued 34,000 shares of common stock to various third party providers for consulting and marketing services received. These shares were valued at the fair value of the service rendered of $3,400.

 

On March 31, 2014, the Company issued 736,520 shares of common stock to this related party entity in full reimbursement for the advances and payments made on behalf of the Company of $73,652. The shares were valued at the fair value of $0.1 per share.

 

The above issuances of shares are exempt from registration, pursuant to Section 4(2) of the Securities Act. These securities qualified for exemption under Section 4(2) of the Securities Act since the issuance securities by us did not involve a public offering. The offering was not a “public offering” as defined in Section 4(2) due to the insubstantial number of persons involved in the deal, size of the offering, manner of the offering and number of securities offered. We did not undertake an offering in which we sold a high number of securities to a high number of investors. In addition, these stockholders had the necessary investment intent as required by Section 4(2) since they agreed to and received share certificates bearing a legend stating that such securities are restricted pursuant to Rule 144 of the Securities Act. This restriction ensures that these securities would not be immediately redistributed into the market and therefore not be part of a “public offering.” Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(2) of the Securities Act for this transaction.

 

Item 3. Defaults upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other information

 

None.

 

Item 6. Exhibits

 

Exhibits
31.1	Certification of Principal Executive Officer and Principal Financial Officer of the Registrant pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Principal Executive Officer and Principal Financial Officer of the Registrant pursuant to 18U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Schema
101.CAL	XBRL Taxonomy Calculation Linkbase
101.DEF	XBRL Taxonomy Definition Linkbase
101.LAB	XBRL Taxonomy Label Linkbase
101.PRE	XBRL Taxonomy Presentation Linkbase

 

*In accordance with SEC Release 33-8238, Exhibit 32.1 is being furnished and not filed. 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

	POWERSTORM CAPITAL CORP.
Date: May 20, 2014
	By:	Michel Freni
		Michel Freni
		Chief Executive Officer and Chief Financial Officer (Duly Authorized, Principal Executive Officer and Principal Financial Officer)