SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

(Mark One)

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

 

For the fiscal year ended December 31, 2014

  

¨ 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 0-53259

 

POWERDYNE INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

 

Delaware		20-5572576
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

 

Jefferson Place

100 Jefferson Blvd, Suite 200

Warwick, Rhode Island 02888

Registrant's telephone number, including area code: (401) 739-3300

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Exchange Act:

Common Stock, $.0001 par value per share

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act ¨ Yes x  No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ¨  Yes  x  No

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. x  Yes  ¨  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 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). x  Yes  ¨  No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x  Yes  ¨  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", "non-accelerated filer", and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

	Large Accelerated filer	¨	Accelerated filer	¨
	Non-accelerated filer	¨	Smaller 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 x  No

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter.

$0 based on $0 which was the closing price at which the registrant’s common stock was last sold on that date

Indicate the number of shares outstanding of each of the registrant's classes of common stock as of the latest practicable date.

	Class		Outstanding at December 31, 2014
	Common Stock, par value $0.0001		369,135,575 shares

Documents incorporated by reference: None

 

PART I

 

ITEM 1. BUSINESS

 

Overview

 

Powerdyne International, Inc. (the “Company”) is a development stage company without an operating history which has experienced losses since its inception. As shown in the financial statements, we have incurred an accumulated deficit of $2,650,658 from inception to December 31, 2014. Our independent registered public accounting firm has issued language in their audit report raising substantial doubt about our ability to continue as a going concern.

 

We are a development stage company providing independent and cost effective green electrical power through the leasing of our electrical generation equipment under the trade name of PDI Power Solutions. To date, we have entered into one agreement for the leasing of our equipment. Our PDI Power Solution is a customized green power solution which allows a client to run either independent of the grid forming his own micro-grid with the option for cogeneration(CHPC), while allowing the grid to act as a UPS System (uninterruptable power supply) if he chooses. Each PDI Power Solution is customized to meet individual client’s unique power requirements. This is accomplished by using a modular design approach for the integration of all the components which make up each system. A typical PDI Power Solution is made up of a generator (gaseous), system controller which allows for remote diagnostics, monitoring and control of a parallel generator system, a modified cooling system, options of heat exchanger or chiller all packaged in either a weather proof/sound attenuated enclosure. The cogeneration capabilities CHPC (combination heat/power/cooling) are achieved by adding a closed loop cooling system to the generators with the addition of a heat exchanger and/or chiller. The heat exchanger produces hot water which allows for the pre heating of hot water and or heat. The chillers provide the cooling for support of air conditioning or refrigeration needs. The PDI Power Solutions are intended to be either stationary or portable power systems ready for rapid global deployment taking only a few hours for installation. These systems can be packaged into modules of up to 50 megawatts in power.

 

We intend to acquire all the components needed to make a PDI Power Solution and either have them installed at the generator manufactures facility per Powerdyne specifications or integrated at the client’s site. We have developed strategic alliances with both our generator manufacturer and installation contractor in order to enable us to be able to do installations at either location.

 

Our potential customers include a variety of small to medium size manufacturing companies, hotels and commercial enterprises worldwide. However, we initially intend to focus our marketing and sales efforts in the Caribbean and California markets, where we believe there is a great need for independent cost effective reliable power. The lease that we recently entered into is for the leasing of our PDI Power Solutions in Puerto Rico. Once established in the Caribbean and California, we intend to expand our marketing throughout North America and as we move into other regions in North America we plan to increase the power ratings of the PDI Power Solutions to include multi megawatt power generating systems.

 

Recent Developments

 

On March 11, 2015, we entered into our first equipment lease with Farmacia Brisas del Mar, a corporation organized under the laws of Puerto Rico (the “Lessee”). The agreement is for a term of five years and provides that the Lessee will lease our power generating equipment for the fees described below. The custom designed system will also provide cogeneration capabilities with the addition of chillers to support the air conditioning demands. The agreement provides for a payment to us of a monthly fee equal to the greater of a set monthly base rate or a monthly base rate plus an additional amount based on kilowatt wattage. The agreement provides for termination only in the event of nonperformance by us unless Lessee pays all payments due for the remainder of the term. The agreement contains representation and warranties, default provisions and indemnification provisions typical for agreements of this type.

 

 

Products

 

Our product (PDI Power Solution) is a self-contained generator powered by a gaseous fueled engine which drives an electrical generator. The unit, which runs on natural gas, propane and other gaseous fuels, is compact, lightweight and clean burning. As a result, the units produce low emissions and are energy-efficient.

 

The basis of our overall business is founded on the ability to produce electrical power using state-of-the-art technology to produce electricity at a lower cost than the existing means of producing or providing primary electric power (Spark Price; the difference between the cost of electricity provide by the utility company and the cost of electricity produced by a PDI Power Solution), in its target markets. We expect that the difference between our cost to produce electrical power and the current billing rate of existing local utility providers will present savings for our customers and a continual revenue stream for us.

 

The basic PDI Power Solution consists of three active components; a generator, system controller, and paralleling switch gear all mounted onto a common skid. The controller, switch gear and skid are all commercially available from multiple manufacturers built to our specifications. They are custom built to meet both our specifications as well as the customer’s specific power requirements. The PDI Power Solution can also have the option of having cogeneration capabilities of producing a combined heat power and cooling by adding custom integrated chillers and heat exchangers. These components once assembled onto the skid, can be put inside a weather and sound attenuated enclosure for stationary application or slid into a container and then mounted on a set of wheels for mobile and rapid deployment. The modular design approach allows for interchangeable components which allows for any component to be switched out as newer more cost effective technology becomes available. We believe this gives us the competitive advantage of upgrading a PDI Power Solution with new technology at the customer’s facility without replacing the entire system.

 

Business Model

 

We plan to develop our business, producing and distributing primary electrical power and cogeneration CHCP capabilities through the PDI Power Solution product offerings, under long term master lease agreements at fixed base rates plus a fixed rate for the use of incremental power above the fixed rate. Installation, service and maintenance of the PDI Power Solution are initially being provided through independent contractors, at no cost to the customer.

 

We intend to provide a viable alternative for local utilities to reduce the demand on the primary grid by using our equipment and power, thereby increasing the limits and capabilities of the primary grid. By using our equipment, we expect that the customer will be able to solve several problems at once. First, expensive and polluting diesel units are replaced with cost efficient, greener gensets. Second, the customer’s cost to produce the electrical power is reduced. Third, savings go directly to the bottom line on a monthly basis, no need to apply for energy credit annually. Fourth, maintenance is provided exclusively by us, thereby allowing the customer to reduce its workforce. Fifth, the tank farms and all other diesel support equipment can be dismantled and removed from the sites. This concept is designed to dovetail with the power company’s plans of action currently envisioned and being implemented by the local utilities.

 

Our History

 

The Company was incorporated in the State of Delaware in September 2006 and was formerly known as Greenmark Acquisition Corporation (“Greenmark”). On February 7, 2011, Greenmark Acquisition and Powerdyne, Inc., a Nevada corporation (“Powerdyne Nevada”), merged with Greenmark as the surviving company. Powerdyne Nevada was formed in February 2010 in the State of Nevada and had limited operations until the time of its combination with the Company. As part of the merger, Greenmark Acquisition Corporation, the surviving entity, changed its name to Powerdyne International, Inc. Prior to the merger, Greenmark had no ongoing business or operations and was established for the purpose of completing mergers and acquisitions with a target company, such as Powerdyne Nevada.   

 

 

The Market

 

Our market is global and our primary focus is on use of the PDI Power Solutions in manufacturing and commercial operations, as well as any other existing independent power generation application that requires high quality electricity and steady electrical power generation. We intend to lease our units based on usage to allow customers to generate electricity on a 24/7 basis. The PDI Power Solution is ideal for any medium to large commercial user wherein electricity can be delivered at the user’s location on a cost effective, reliable basis.

 

Entry into the Market

 

We plan to enter selected Target markets (i.e. the Caribbean and California) based upon the Sparks Spread. These two markets were selected because we believe they have the greatest potential for immediate acceptability of the PDI Power Solution Due to cost and reliability as well as offering the greatest profit potential. Once established, we plan to expand further into the Caribbean and North American markets using the same criteria: Spark Spread and profitability.

 

Pricing

 

Our intent is to provide electrical power at a lower price than the current utility companies. The PDI Power Solution pricing is based on the spark spread (the difference between the cost of electricity provided by the utility company and the cost of electricity produced by a PDI Power Solution.) Based on this model the PDI Power Solutions can typically offer a Spark Price of 15%. If we use the Caribbean as an example with an average electric rate of $0.30/kWh, a Spark Price of $0.05/kWh, a client using 150,000 kWh per month the customer would be expected to save $90,000 a year using a PDI Power Solution which in turns generates $450,000 in revenue per year for the life of the contract.

 

Employees

 

We have a total of four (4) executive officers, only one of whom, Ms. Madison, is employed on a full time basis and is eligible to receive a salary. The remaining officers will not receive any compensation until, and if, we raise or procures adequate capital (through operations, financings or otherwise) to pay such compensation.

 

We expect that we will hire additional personnel as we expand our operations.

 

Available Information

 

Our documents filed with the Securities and Exchange Commission may be inspected at the Commission's principal office in Washington, D.C. Copies of all or any part of any filing may be obtained from the Public Reference Section of the Securities and Exchange Commission, 100 F Street N.E., Washington, D.C. 20549. Call the Commission at 1-800-SEC-0330 for further information on the operation of the public reference rooms. The Securities and Exchange Commission also maintains a web site at http://www.sec.gov that contains reports, proxy statements and information regarding registrants that file electronically with the Commission.

 

Additional information about us is contained at our website, www.powerdyneinternational.com. Information on our website is not incorporated by reference into this report. We make available on our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K as soon as reasonably practicable after those reports are filed with the SEC.

 

ITEM 2. PROPERTIES

 

Our corporate headquarters are located in a full service office suite located in a building in Warwick, Rhode Island, consisting of approximately 1,000 square feet of office space on a month-to-month lease agreement. We believe that our existing facilities are suitable and adequate and that we have sufficient capacity to meet our current anticipated needs.

 

 

Additional locations may be needed in the future, primarily administrative in nature; however some may also need to be both administrative as well as support field service offices and a warehouse facility for service inventory. The decision to open addition locations will be market driven. Based on the strategic relationships that have developed with our generator suppliers and contactors, we do not see the need for manufacturing space for the foreseeable future.

 

ITEM 3. LEGAL PROCEEDINGS

 

Litigation

 

During the ordinary course of the Company’s business, it is subject to various claims and litigation. Management believes that the outcome of such claims or litigation will not have a material adverse effect on the Company’s financial position, results of operations or cash flow.

 

The Company is involved in a legal settlement with a former employee of the Company. The Company is seeking reimbursement of expenses paid in the amount of $5,000. The former employee is seeking further additional expenses incurred in the amount of $6,500. It is the opinion of the Company’s legal counsel that the legal action is without merit and no accrual has been recorded for this claim.

 

The Company was the named defendant in a civil suit in the District Court for the State of Rhode Island alleging that the Company owes the defendant $6,875 and is seeking $6,875 plus attorney’s fees. The claim was settled for the amount of $3,864 which was paid on September 4, 2014.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

 

PART II

 

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERSAND ISSUER PURCHASES OF EQUITY SECURITIES

 

Since our common stock began trading in May of 2013 our common stock has been quoted on the OTC Bulletin Board under the symbol PWDY.

 

The following table sets forth the range of the high and low sales prices of our common stock for each of the calendar quarters during the years ended December 31, 2014 and December 31, 2013.

 

OTC Bulletin Board		High				Low
2nd Quarter		$	0.17			$	0.09
3rd Quarter		$	0.20			$	0.02
4th Quarter		$	0.07			$	0.01
Year Ended December 31, 2013
1st Quarter		$	0.02			$	0.01
2nd Quarter		$	0.014			$	0.0016
3rd Quarter		$	0.015			$	0.0011
Year Ending December 31, 2014		$	0.0045			$	0.0008

 

The last price of our common stock as quoted on the OTC Bulletin Board was $0.0012.  As of December 31, 2014 we had approximately 26 stockholders of record.

 

Dividend Policy

 

We have never paid any cash dividends on our common stock to date, and do not anticipate paying such cash dividends in the foreseeable future. Whether we declare and pay dividends is determined by our Board of Directors at their discretion, subject to certain limitations imposed under Delaware corporate law. The timing, amount and form of dividends, if any, will depend on, among other things, our results of operations, financial condition, cash requirements and other factors deemed relevant by our Board of Directors.

 

Sale of Unregistered Securities

 

First Quarter 2014

 

On February 13, 2014, we issued 1,714,286 shares in exchange for the extinguishment of $12,000 of debt held by a venture capital lender. The issuance was exempt from registration under the exemption provided by Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”).

 

Second Quarter 2014

 

On April 10, 2014, we issued 3,659,574 shares in exchange for the extinguishment of $15,500 of debt and $1,700 of accrued interest held by a venture capital lender. The issuance was exempt from registration under the exemption provided by Section 3(a)(9) of the Securities Act.

 

On May 8, 2014, we entered into an agreement with an another unrelated party in order to obtain short term cash flow in the form of a $30,000, eight (8) percent convertible Note Payable (“LG Note 1”). The maturity date is one year from the effective date of the Note Payable. The lender has the right to convert at 55% of the lowest trading price of our common stock during the twenty day period prior to the conversion date after 180 days.  

 

 

On May 9, 2014, we entered into an agreement with an another unrelated party in order to obtain short term cash flow in the form of a $30,000, eight (8) percent convertible Note Payable. The maturity date is one year from the effective date of the Note Payable. The lender has the right to convert at 55% of the lowest closing bid price of our common stock during the twenty day period prior to the conversion date after 180 days.

 

On May 12, 2014, we issued 5,769,231 shares in exchange for the extinguishment of $15,000 of debt held by a venture capital lender. The exchange was exempt from registration under the exemption provided by Section 3(a)(9) of the Securities Act.

 

On May 21, 2014, we issued 8,952,381 shares in exchange for the extinguishment of $17,500 of debt and $1,300 of accrued interest held by a venture capital lender. The exchange was exempt from registration under the exemption provided by Section 3(a)(9) of the Securities Act.

 

On May 27, 2014, we issued 7,142,857 shares in exchange for the extinguishment of $15,000 of debt held by a venture capital lender. The exchange was exempt from registration under the exemption provided by Section 3(a)(9) of the Securities Act.

 

On June 4, 2014, we issued 10,444,444 shares in exchange for the extinguishment of $17,500 of debt and $1,300 of accrued interest held by a venture capital lender. The exchange was exempt from registration under the exemption provided by Section 3(a)(9) of the Securities Act of 1933, as amended.

 

On June 11, 2014, we issued 7,500,000 shares in exchange for the extinguishment of $8,550 of debt held by a venture capital lender. The exchange was exempt from registration under the exemption provided by Section 3(a)(9) of the Securities Act.

 

Third Quarter 2014

 

On August 11, 2014, we issued 12,200,000 shares in exchange for the extinguishment of $12,444 of debt held by a venture capital lender. The exchange was exempt from registration under the exemption provided by Section 3(a)(9) of the Securities Act of 1933, as amended.

 

On September 17, 2014, we issued 12,800,000 shares in exchange for the extinguishment of $8,448 of debt held by a venture capital lender. The exchange was exempt from registration under the exemption provided by Section 3(a)(9) of the Securities Act.

 

On September 4, 2014, we entered into an agreement with the Investor/Lender (“LG Note 2”) in order to obtain short term cash flow in the form of a $26,500, eight (8) percent convertible Note Payable. The maturity date is one year from the effective date of the Note Payable. The lender has the right to convert at 55% of the lowest trading price of our common stock during the twenty day period prior to the conversion date after 180 days.

   

On September 19, 2014, the Company entered into an agreement with an another unrelated party in order to obtain short term cash flow in the form of a $59,000, ten (10) percent convertible Note Payable. The $59,000 included a $5,000 original issue discount and $4,000 for the lender’s legal fees. Interest accrues at zero (0) percent for the first three months and if the borrower does not repay a payment of consideration on or before 90 days from its Effective Date, a one-time interest charge of 12% shall be applied to the principal sum. The maturity date is one year from the effective date of the Note Payable. The lender has the right to convert at 60% of the lowest closing bid price of our common stock during the twenty-five day period prior to the conversion date or $0.002, whichever is less. 

 

Fourth Quarter 2014

 

On November 10, 2014, we issued 5,821,244 shares in exchange for the extinguishment of $4,000 of debt and $162 of accrued interest held by a venture capital lender. The exchange was exempt from registration under the exemption provided by Section 3(a)(9) of the Securities Act.

 

 

On November 17, 2014, we issued 1,212,121 shares in exchange for the extinguishment of $1,000 of debt held by a venture capital lender. The exchange was exempt from registration under the exemption provided by Section 3(a)(9) of the Securities Act.

 

On November 24, 2014, we issued 8,391,608 shares in exchange for the extinguishment of $6,000 of debt held by a venture capital lender. The exchange was exempt from registration under the exemption provided by Section 3(a)(9) of the Securities Act.

 

On December 1, 2014, we issued 9,848,485 shares in exchange for the extinguishment of $6,500 of debt held by a venture capital lender. The exchange was exempt from registration under the exemption provided by Section 3(a)(9) of the Securities Act.

 

On December 4, 2014, we issued 7,575,758 shares in exchange for the extinguishment of $5,000 of debt held by a venture capital lender. The exchange was exempt from registration under the exemption provided by Section 3(a)(9) of the Securities Act.

 

On December 11, 2014, we issued 7,972,018 shares in exchange for the extinguishment of $4,385 of debt held by a venture capital lender. The exchange was exempt from registration under the exemption provided by Section 3(a)(9) of the Securities Act.

 

On December 17, 2014, we issued 15,380,327 shares in exchange for the extinguishment of $7,115 of debt and $1,344 of accrued interest held by a venture capital lender. The exchange was exempt from registration under the exemption provided by Section 3(a)(9) of the Securities Act.

 

Unless otherwise stated, the sales of the above securities were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act (or Regulation D promulgated thereunder), as transactions by an issuer not involving any public offering. The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these transactions.

 

ITEM 6. SELECTED FINANCIAL DATA

 

There is no selected financial data required to be filed for a smaller reporting company.

 

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL INFORMATION AND RESULTS OF OPERATIONS

 

We are a development stage company and has experienced losses since our inception. Our independent auditors have issued a report raising a substantial doubt about our ability to continue as a going concern. We have only entered into one agreement for the leasing of our equipment to date and have not yet derived any revenue from such agreement.  Our sources of cash to date have been capital invested by shareholders and venture capital investors/lenders. We had no sales nor received revenues since inception through December 31, 2014.

 

The basis of our overall business is founded on our ability to produce electrical power using state-of-the-art technology to power electrical generation equipment to produce electricity at a lower cost than the existing means of producing or providing primary electric power in its target markets. We expect that the difference between our cost to produce electrical power and the current billing rate of existing local utility providers will present savings for our customers and revenue opportunity for us.

 

Our business is to install and maintain, own and operate electrical power generation equipment (“gensets”) at client locations. We will own and maintain the equipment to be installed with the customer who will use it to produce its own electrical power. Our products are intended to be portable, easy-to-use units that can be conveniently deployed in various locations around the world. The units can also be assembled and combined to produce power centers providing up to 50 megawatts of power.

 

 

The following discussion contains forward-looking statements, as discussed above. Please see the sections entitled "Forward-Looking Statements" and "Risk Factors" for a discussion of the uncertainties, risks and assumptions associated with these forward-looking statements.

 

The following discussion and analysis of our financial condition and results of operations are based on the audited condensed financial statements as of December 31, 2014 and 2013, which were prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2014 found in this report.

 

Operations

  

Our strategy is to pursue selected opportunities in markets where inexpensive and environmentally friendly power sources are needed and/or required.

 

Results of Operations - The year ended December 31, 2014 compared to the year ended December 31, 2013:

 

Revenues

 

We did not generate revenues during the years ended December 31, 2014 and 2013, respectively.

 

Operating expenses

 

During the years ended December 31, 2014 total operating expenses increased 13% to $374,840 from $330,340 for the year ended December 31, 2013. The increase is related mainly due to $18,231 in consulting expense, $77,825 in public relations and promotion expense, $18,036 in interest expense, $97,703 in employee stock compensation expense, $5,040 in venture capital expense, and $38,484 in loss from impairment to machinery and equipment. This increase was offset by decreases in salaries and wages of $98,314 and $150,000 of non-employee stock compensation expense to compensate certain vendors for services rendered which they accepted in stock rather than cash.

 

Net loss

 

During the years ended December 31, 2014 and 2013, the net loss was $1,068,733 and $401,894, respectively. Other expenses included amortization of debt expense and derivative expense from the notes issued to investors and change in fair value of derivatives related to the note issuances.

 

Liquidity and Capital Resources

 

As of December 31, 2014 and 2013, Powerdyne International, Inc. had working capital deficits of ($678,477) and ($378,684), respectively.  The decrease in working capital in 2014 of $299,793 resulted primarily from increased operating expenses. For the year from December 31, 2013 to December 31, 2014, Powerdyne International, Inc. had $15,904 of net cash decrease. The cash used by operations of $244,951 was primarily due to net loss from operations of $1,068,733 less non-cash adjustments to net operating cash flows of $13,240 of depreciation, $39,373 of loss from impairment to machinery and equipment, $142,703 in stock compensation, $692,249 of derivative and interest expense, $183,759 of amortization of debt discounts, a negative change of $159,406 in change in fair value of derivatives, a decrease in prepaid expenses of $495, a decrease in due to related party of $19,175, and a decrease of accrued but unpaid expenses of $107,806. The total cash provided by financing activities of $229,047 was due to $185,500 of proceeds of notes payable to third parties, $44,000 of proceeds from notes payable to related parties, less repayment of principal on notes payable to related parties of $453.

 

We currently owe $151,500 (exclusive of interest) owed under three convertible notes, of which $26,000 is due May 2015, $85,500 is due September 2015, and $40,000 is due September 2016.  We also owe $111,004 (exclusive of interest) under notes due to related parties, of which $16,100 is due February 2015, $8,000 is due March 2015, $5,972 is due July 2015, $6,000 is due September 2015, $13,102 is due October 2015, $16,049 is due November 2015, $2,234 is due December 2015, $24,547 is due May 2016, $6,000 is due August 2016, and $13,000 is due December 2016.  To date, we have not generated any revenue and there can be no assurance that we will have the requisite funding to repay these loans when due. 

 

 

Off-Balance Sheet Arrangements 

 

We have no off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is deemed by our management to be material to investors.

 

Critical Accounting Policies

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts during the reporting periods.  Actual results could differ from those estimates. Significant estimates and assumptions included in our financial statements relate to estimate of loss contingencies and accrued other liabilities.

 

Fair Value of Financial Instruments

 

ASC 820-10 (formerly SFAS No. 157, Fair Value Measurements ) requires entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value. ASC 820-10 defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. As of December 31, 2014 and 2013, the carrying value of certain financial instruments such as accounts receivable, accounts payable, notes payable-related parties, accrued expenses, and amounts due to/from related party approximates fair value due to the short-term nature of such instruments.

 

Impairment of Long-Lived Assets

 

`In accordance with ASC 350-30 (formerly SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets), we evaluate long-lived assets for impairment whenever events or changes in circumstances indicate that their then carrying values may not be recoverable. When such factors and circumstances exist, we compare the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. Our management currently believes there is no impairment of its long-lived assets. There can be no assurance however, that market conditions will not change or demand for our products under development will continue. Either of these could result in future impairment of long-lived assets.

 

Recently Issued Accounting Pronouncements

 

“In June 2014, the FASB issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. ASU 2014-10 eliminates the distinction of a development stage entity and certain related disclosure requirements, including the elimination of inception-to-date information on the statements of operations, cash flows and stockholders’ equity. The amendments in ASU 2014-10 will be effective prospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, however early adoption is permitted. The Company adopted ASU 2014-10 since the quarter ended June 30, 2014, thereby no longer presenting or disclosing any information required by Topic 915.”

 

In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”). ASU 2014-15, which is effective for annual reporting periods ending after December 15, 2016, extends the responsibility for performing the going-concern assessment to management and contains guidance on how to perform a going-concern assessment and when going-concern disclosures would be required under U.S. GAAP. The Company elected to adopt ASU 2014-15 effective with this financial statement. Management’s evaluations regarding the events and conditions that raise substantial doubt regarding the Company’s ability to continue as a going concern have been disclosed in this Note 4 - Capital resources.

 

 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

The financial statements and Report of Independent Registered Accounting Firm for the years ended December 31, 2014 and 2013 are attached to this report.

 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

The Company had no disagreements on any matter of accounting principle or practice, financial statement disclosure or audit scope or procedure with its accountant.

 

ITEM 9A. CONTROLS AND PROCEDURES

 

Pursuant to Rules adopted by the Securities and Exchange Commission, we carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Exchange Act Rules. This evaluation was done as of the end of the fiscal year under the supervision and with the participation of our principal executive officer and principal financial and accounting officer. There have been no significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of the evaluation. Based upon that evaluation, they believe that our disclosure controls and procedures are effective in gathering, analyzing and disclosing information needed to ensure that the information required to be disclosed by us in our periodic reports is recorded, summarized and processed timely. Both officers are directly involved in our day-to-day operations.

 

Management’s Report of Internal Control over Financial Reporting

 

We are responsible for establishing and maintaining adequate internal control over financial reporting in accordance with the Rule 13a-15 of the Securities Exchange Act of 1934. Our principal executive officer and principal financial and accounting officer conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2014, based on the criteria establish in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2014, based on those criteria. A control system can provide only reasonably, not absolute, assurance that the objectives of the control system are met and no evaluation of controls can provide absolute assurance that all control issues have been detected.

 

Anton & Chia, the independent registered public accounting firm, has not issued an attestation report on the effectiveness of the internal control over financial reporting.

 

Changes in Internal Control Over Financial Reporting

 

The officers and directors of our have not made any changes during its fourth fiscal quarter that materially affect, or are reasonably likely to materially affect, its internal control over financial reporting.

 

ITEM 9B. OTHER INFORMATION

 

There is no information required to be disclosed on Form 8-K during the fourth quarter covered by this Form 10-K not otherwise reported.

 

 

PART III

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

 

Our Directors and Officers are as follows:

 

Name		Age		Position		Year Commenced
James F. O’Rourke		60		Chief Executive Officer and Director		2013
Arthur M. Read, II, Esq.		67		Executive Vice President, Assistant Secretary, General Counsel and Director		2010
Dale P. Euga		67		President and Director		2010
John M. Faulhaber		81		Director		2014
Robert C. Hemsen		66		Director		2014
Linda H. Madison		67		Secretary		2011

 

James F. O’Rourke

 

James F. O’Rourke serves as Chief Executive Officer and Director of the Company. He attended Lowell Technological Institute. With over thirty-five years’ experience in manufacturing from design conception to production as well as in acquisitions, mergers and managing the operational side of startup businesses, Mr. O’Rourke (the Vice Present and General Manager of SatCon Technology Corporation, the Manager of Drive Systems for its Applied Technology business unit and the Manager of its Magmotor business unit) was responsible for SatCon’s day-to-day operation and subsequently was instrumental in the formation of SatCon’s successor: SatCon Power Systems. Mr. O’Rourke then founded CM Technology (which designs and manufactures custom motors for the automotive, industrial and robotic markets as well as high power rotary uninterruptable power supplies (RUPS) for the distributed generation, industrial, telecommunication, cloud data center and power quality markets). Mr. O’Rourke, who is still actively involved in CM, joined Powerdyne as a consultant in 2013 and was elected its CEO and a Director in 2014. Due to Mr. O’Rourke’s knowledge of our industry and his manufacturing experience we selected him to serve as a director.

 

Dale P. Euga

 

Dale P. Euga serves as President and a Director. From 1967 to 1971, Mr. Euga served in the United States Army completing his service as commander of a Special Forces A-Team. Mr. Euga graduated in 1976 from The Boston Architectural College with a degree in Architecture. From 1976 through 1988, Mr. Euga taught a design studio at the Boston Architectural College. He became a Registered Architect in 1980 and was further NCARB Certified in 1985 while owning and managing an architectural firm in Boston. In 1988 Mr. Euga formed ComVest International Inc., which was responsible for the Organization and Financial Management for International Projects such as the overview of the construction of Mersa-Matruh Power and Desalination plant for the Government of Egypt. In 1996 in concert with ComVest International Inc. Mr. Euga founded and managed Suburban Mortgage Company which was acquired by Directors Mortgage Company (CA) in 2002. From 2002 until the formation of Powerdyne, Inc., a Nevada company, Mr. Euga was focused on independently developing the underlying product concepts related to the PDIGenset. Since the inception of Powerdyne, Inc., a Nevada company, Mr. Euga has focused on specializing on our primary design and technological development of the engine and testing of fuel systems in support of the application to power generation. He has also been involved with the company organization, client development, development of key staff, and continuing research and development of engine and electrical components. Due to Mr. Euga’s knowledge of our products and his industry experience we selected him to serve as a director.

 

 

Arthur M. Read, II, Esq.

 

Arthur M. Read, II, Esq., serves as Executive Vice-President, General Counsel and as a Director of the Company. Mr. Read received his Bachelor of Arts degree from Bethany College in 1968, and his Masters of Arts from the University of Rhode Island in 1971 and his Juris Doctor from Boston University School of Law in 1972. From 1972-2001, Mr. Read started as an Associate, then stockholder and Vice-President of Gorham & Gorham, Inc. an established Rhode Island law firm, with whom he was engaged in the general practice of law with an emphasis on litigation, commercial and business matters, family law and divorce litigation, municipal law negligence, estate planning and administration and had an extensive appellate practice. In 1974, Mr. Read was appointed a Special Assistant Attorney General by the state Attorney General. In 2001, Mr. Read formed his own law practice. Admitted to practice before the Rhode Island Supreme Court; United States District Court, District of Rhode Island; United States Supreme Court; United States Tax Court; and United States Court of Appeals, Martindale-Hubble (the nationally renowned attorney rating service, ) has awarded Mr. Read both the highest Peer Review rating: “AV® Preeminent™” and the highest Client Review rating: “Preeminent”. Mr. Read is a member of the Rhode Island Bar Association, the Rhode Island and American Associations for Justice. Mr. Read’s extensive legal, commercial and business experiences qualify him to serve as a director.

 

Robert C. Hemsen

 

Robert C. Hemsen, serves as a director and the Vice-Chairman of the Board of Directors. Mr. Hemsen graduated from Adelphi University with a BBA and MBA.  He entered the USAF and was trained in ground support electronics. After his Honorable Discharge from the US Air Force, Mr. Hemsen worked in various positions of increasing responsibility, including 15 years in executive positions, in the merged or acquired business units of Honeywell International. These would include assignments in FRAM/Autolite, Bendix Corporation, Allied and AlliedSignal Corporations. Hemsen joined IBM in 1994 after nearly 25 years with Honeywell International. His industrial experience involved business units in Aerospace & Defense, Automotive OEM & Aftermarket Products, Chemicals & Specialty Materials and Information Technology & Services. He retired from IBM as Director of Human of Resources, Corporate Development, Mergers and Acquisitions. Due to Mr. Hemsen’s commercial and business experience we selected him to serve as a director

 

John M. Faulhaber

 

John M. Faulhaber serves as a Director and Chairman of the Board of Directors. A graduate of The Choate School (now Choate Rosemary Hall) and Middlebury College, Mr. Faulhaber served in and was honorably discharged from the United States Army as a Captain. He thereafter worked as a broker in New York City for an international stock brokerage firm for twelve years before becoming a Trust Officer and Vice President at the Private Bank of Rhode Island Hospital Trust National Bank, where he served until his retirement.  He was subsequently elected the Grand Secretary of the Grand Lodge of Freemasons for the State of Rhode Island for thirteen years until his subsequent, semi-final, retirement. Mr. Faulhaber has been a lecturer at Providence College in Military Science, has devoted a substantial amount of his volunteer time as a Boy Scout leader and is active in his church where he also took on leadership roles. Mr. Faulhaber’s extensive experience with investments, money management and corporate governance qualify him to serve the corporation as a Director in a leadership role.

 

Linda H. Madison

 

Linda H. Madison serves as Secretary, Principal Financial Officer and Principal Accounting Officer of the Company. Ms. Madison has 40 years of operational and managerial experience. For the period of eighteen years prior to joining the Company, she has served in the capacity of Administrative and Legal Assistant responsible for human resources, information technology, office coordination, creating various publications and maintaining and designing complex data bases. She previously worked as the Executive Secretary and Treasurer for a large investment advisory firm in Rhode Island.

 

 

Director Independence

 

Pursuant to Rule 4200 of The NASDAQ Stock Market one of the definitions of an independent director is a person other than an executive officer or employee of a company. Our board of directors has reviewed the materiality of any relationship that each of the directors has with us, either directly or indirectly. Based on this review, the board has determined that there are no independent directors.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Securities Exchange Act 1934 requires our directors and executive officers, and persons who own more than 10% of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and our other equity securities. Officers, directors and greater than 10% shareholders are required by the SEC regulations to furnish us with copies of all Section 16(a) forms they file. These filings are publicly available on the SEC’s website at www.sec.gov. Based solely on our review of the copies of such forms received by us and our review of the SEC’s website, we believe that during fiscal year ended December 31, 2014, all filing requirements applicable to our officers, directors and greater than 10% percent beneficial owners were complied with other than an inadvertent late filing for Messrs. Hemsen and Faulhaber of their initial Form 3.

 

Code of Ethics

 

The Company has not at this time adopted a Code of Ethics pursuant to rules described in Regulation S-K. The Company has no operations or business and does not have any revenues. The Company intends to entertain adopting a Code of Ethics to provide a manner of conduct at it next Board meeting.

  

Legal Proceedings

 

We are involved in a legal settlement with a former employee. We are seeking reimbursement of expenses paid in the amount of $5,000. The former employee is seeking further additional expenses incurred in the amount of $6,500. It is the opinion of our legal counsel that the legal action is without merit and no accrual has been recorded for this claim.

 

We were the named defendant in a civil suit in the District Court for the State of Rhode Island alleging that we owe the defendant $6,875 and is seeking $6,875 plus attorney’s fees. The claim was settled for the amount of $3,864 which was paid on September 4, 2014.

Not applicable.

 

 

ITEM 11. EXECUTIVE COMPENSATION

 

				Annual				Annual				Stock								All				Annual
				Payments				Payments				And				Compensation				Other				Compensation
Name/Position		Year		Salary				Made				Options				Plans				Compensation				Total
James F. O’Rourke		2014		$	0			$	0				0				0				0				0
Chief Executive Officer		2013		$	0			$	0				0				0				0				0
Dale P. Euga		2014		$	5,131.79			$	0			$	97,703.35	(1)			0				0			$	102,835.14
President		2013		$	0			$	0				0				0				0				0
Arthur M. Read II, Esq.		2014		$	0			$	0				0				0				0				0
Vice President		2013		$	0			$	0				0				0				0				0
Linda H. Madison		2014		$	18,004.86			$	0				0				0				0			$	18,004.86
Principal Financial Officer and Principal Accounting Officer		2013		$	6,470.15			$	0				0				0				0			$	6,470.15

 

(1)	Includes shares of stock issued to Mr. Euga pursuant to the anti-dilutionprovisions in his employment agreement that provides for him to maintain his ownership of 51% of outstanding shares of common stock. The value of annual tru-up shares are the closing price on November 1.

 

Other than with respect to Mr. Euga, no executive officer has received total compensation in excess of $100,000 in our fiscal years ended as of December 31, 2013 and December 31, 2014, respectively (see discussion immediately below regarding shares of stock granted to officers, and classification of shares granted to Mr. Euga as non-compensatory). Upon successful completion future funding, however, certain management personnel are entitled to receive the compensation as is discussed below in “Anticipated Officer and Director Remuneration”.

 

Each of the officers has received certain shares of our common stock. With respect to Mr. Euga, all shares shown above are shares issued to him pursuant to the anti-dilution provisions in his employment agreement that provideds for him to maintain his ownership of 51% of our outstanding shares of common stock. The initial shares issues to him were issued in respect of his role as a founder and initial proponent of our company. Accordingly, other than as set forth in the table above we have not recorded any compensation expense in respect of any shares held by Mr. Euga nor do such shares issued to Mr. Euga represent compensation that was paid to Mr. Euga.

 

Other than with respect to Mr. Euga and Ms. Madison, there are no current plans to pay or distribute cash or non-cash bonus compensation to our officers, until such time as we are profitable or experiences positive cash flow. However, the Board of Directors may allocate salaries and benefits to the officers in its sole discretion. No officer is subject to a compensation plan or arrangement that results from his or her resignation, retirement, or any other termination of employment with us or from a change in control of our company or a change in his or her responsibilities following a change in control. The members of the board of directors may receive, if the board of directors so decides, a fixed fee and reimbursement of expenses, for attendance at each regular or special meeting of the board of directors, although no such program has been adopted to date. We currently have no retirement, pension, or profit-sharing plan covering its officers and directors; however, we plan to implement certain such benefits after sufficient funds are realized or raised by us (see “Anticipated Officer and Director Remuneration” below.)

 

 

Employment Agreements

 

We have entered into employment agreements with each of our officers. Ms. Madison is currently eligible to be paid a salary in order to ensure her availability to us.

 

Effective January 2011, we entered into an employment agreement with Ms. Madison (with a start date of March 2011) that provides three (3) weeks paid vacation per year starting at the 50th week of employment (with an additional week added every successive year thereafter, up to eight (8) weeks maximum). Such agreement provides Ms. Madison with a base salary of seventy-five thousand dollars ($75,000.00) per year and eligibility for a cash bonus at our discretion (based upon individual performance and our financial success. Pursuant to such agreement we also agreed to compensate Ms. Madison for hours worked for us without pay from November 1, 2010 at the rate of thirty-five dollars ($35.00) per hour. However, because we were and currently are unable to make such payments, the wages earned have not be paid but instead have been accrued by us until cash flow and profitability allow payment to be made. Ms. Madison was also issued 1,000,000 shares of our common stock at par value of $0.0001 per share. The employment agreement states that if we establish profit sharing, 401(k) or other retirement account plans for employees, or medical or life insurance as a benefit of employment, these benefits will also become available to Ms. Madison at such time. If Ms. Madison is required to relocate, we agreed to pay or reimburse the reasonable costs of relocation. We also agreed to provide Ms. Madison with a suitable motor vehicle and a gasoline card with which to pay for gasoline and maintenance. The vehicle may be used for private use, and Ms. Madison has the right to purchase the vehicle from us subject to certain terms and conditions.

 

The employment agreement of Ms. Madison described above was modified in June 2011 to state that accruals and payments of salary would end effective April 1, 2011. Further, accrual and payment of salary would only occur when we determine that we have appropriate positive cash flow and/or profitability to perform the same. In addition, accrual and payment for expenses and time incurred during the fiscal year ended December 31, 2010 ceased as well, until such time when we experience positive cash flow and/or profitability.

 

Anticipated Officer and Director Remuneration

 

During the year ended December 31, 2014, we did not pay any compensation to our directors. We intend to pay annual salaries to all our officers and to pay an annual stipend to our directors when and if sufficient funds are realized. At such time, we anticipate offering cash and non-cash compensation to officers and directors.

 

Although not presently offered, we anticipate that our officers and directors will be provided with a group health, vision and dental insurance program at subsidizes rates, or at our sole expense , as may be determined on a case-by-case basis by us in ours sole discretion. In addition, we plan to offer 401(k) matching funds as a retirement benefit, paid vacation days and paid holidays.

 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

 

The following table sets forth information as of the date of this report regarding the beneficial ownership of the Company’s common stock by each of its executive officers and directors, individually and as a group and by each person who beneficially owns in excess of five percent of the common stock.

 

				Number of Shares of		Percent
Name		Position		Common Stock		of Class (1)
James F. O’Rourke		Chief Executive Officer		825,000		*
Dale P. Euga		President and Director		141,024,408		38%
Arthur M. Read, II, Esq.		Executive Vice President, General Counsel and Director		12,000,000		*
John M. Faulhaber		Chairman of the Board		500,000		*
Robert C. Hemsen		Vice Chairman of the Board		5,100,000		*
Linda H. Madison		Secretary		1,000,000		*
Total owned by officers and directors				160,449,408		43%

 

* Less than 1%

 

(1) Based upon 369,135,575 shares outstanding.

 

 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

 

During the year ended December 31, 2014 the total amount of related party loan proceeds was $44,000 and the total principal repaid on related party loans was $453. The total interest accrued on related party loans at December 31, 2014 and December 31, 2013 was $11,124 and $5,056, respectively.

 

From time to time, the Company advances amounts to stockholders, as well as receives payments from stockholders in the form of cash and/or out-of-pocket expenditures for the benefit of the Company, which are business in nature. The balance of advances to stockholder as of December 31, 2014 and December 31, 2013 was $11,321 and $11,321, respectively. Amounts accrued, but not yet paid as due to related party at December 31, 2014 and December 31, 2013 was $33,425 and $14,250, respectively.

 

The Company obtained short-term cash flow from a related party in the form of three demand Notes Payable in the aggregate amount of $10,000 which have been outstanding since the year ended December 31, 2012. The 3 notes were amended and extended during 2014, changing the maturity date to one year later than on the original due date. The Notes bear an interest rate of 7% per annum and are unsecured.

 

Note		Principal				Rate				Accrued interest								Maturity
										12/31/14				12/31/13
Promissory note 1		$	6,000				7	%		$	975			$	556			9/4/2015
Promissory note 2		$	2,000				7	%		$	314			$	175			10/1/2015
Promissory note 3		$	2,000				7	%		$	290			$	151			12/3/2015
Total		$	10,000							$	1,579			$	882

 

The Company obtained short-term cash flow from a related party in the form of nine demand Notes Payable in the aggregate amount of $70,500 during the period from 2012 through December 31, 2014. The Company repaid the principal amount of $228 during the quarter ended September 30, 2014, and $225 during the quarter ended December 31, 2014. Notes 1 through 6 were amended and extended during 2014, changing the maturity date to one year later than what was on original notes. The Notes bear an interest rate of 7% per annum and are unsecured.

 

Note		Principal				Rate				Accrued interest								Maturity
										12/31/14				12/31/13
Promissory note 1		$	5,000				7	%		$	821			$	472			7/25/2015
Promissory note 2		$	11,000				7	%		$	1,686			$	918			10/22/2015
Promissory note 3		$	15,000				7	%		$	2,203			$	1,156			11/24/2015
Promissory note 4		$	102				7	%		$	16			$	8			10/22/2015
Promissory note 5		$	879				7	%		$	129			$	68			11/24/2015
Promissory note 6		$	972				7	%		$	160			$	92			7/25/2015
Promissory note 7		$	24,547				7	%		$	1,148			$	-			5/4/2016
Promissory note 8		$	7,000				7	%		$	28			$	-			12/11/2016
Promissory note 9		$	6,000				7	%		$	12			$	-			12/22/2016
Total		$	70,500							$	6,203			$	2,714

 

 

The Company obtained short-term cash flow from a related party in the form of four demand Notes Payable in the aggregate amount of $6,504 during the period from 2012 through March 31, 2013. Notes 1 and 2 were amended and extended during 2014, changing the maturity date to one year later than the original maturity date. The Notes bear an interest rate of 7% per annum and are unsecured.

 

Note		Principal				Rate				Accrued interest								Maturity
										12/31/14				12/31/13
Promissory note 1		$	234				7	%		$	34			$	17			12/5/2015
Promissory note 2		$	170				7	%		$	25			$	13			11/18/2015
Promissory note 3		$	4,100				7	%		$	546			$	259			2/5/2015
Promissory note 4		$	2,000				7	%		$	265			$	126			2/7/2015
Total		$	6,504							$	870			$	415

 

The Company obtained short-term cash flow from a related party in the form of two demand Notes Payable in the aggregate amount of $18,000 during the year of 2013. Note 1 was amended and extended during 2014, changing the maturity date to one year later than the original maturity date. The Notes bear an interest rate of 7% per annum and are unsecured.

 

Note		Principal				Rate				Accrued interest								Maturity
										12/31/14				12/31/13
Promissory note 1		$	10,000				7	%			1,300				602			2/21/2015
Promissory note 2		$	8,000				7	%			1,002				443			3/18/2015
Total		$	18,000								2,302			$	1,045

 

The Company obtained short-term cash flow from a related party in the form of one demand Note Payable in the aggregate amount of $6,000 during the year of 2014. The Note bears an interest rate of 7% per annum and is unsecured.

 

Note		Principal				Rate				Accrued interest								Maturity
										12/31/14				12/31/13
Promissory note 1		$	6,000				7	%			170				-			8/6/2016
Total		$	6,000								170			$	-

 

During the year ended December 31, 2014 the total amount of related party loan proceeds was $44,000 and the total principal repaid on related party loans was $453. The total interest accrued on related party loans at December 31, 2014 and December 31, 2013 was $11,124 and $5,056, respectively.

 

From time to time, the Company advances amounts to stockholders, as well as receives payments from stockholders in the form of cash and/or out-of-pocket expenditures for the benefit of the Company, which are business in nature. The balance of advances to stockholder as of December 31, 2014 and December 31, 2013 was $11,321 and $11,321, respectively. Amounts accrued, but not yet paid as due to related party at December 31, 2014 and December 31, 2013 was $33,425 and $14,250, respectively.

 

 

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

 

Audit Fees

 

The aggregate fees incurred for each of the last two years for professional services rendered by the independent registered public accounting firm for the audits of the Company's annual financial statements and review of financial statements included in the Company's Form 10-K and Form 10-Q reports and services normally provided in connection with statutory and regulatory filings or engagements were as follows:

 

December 31, 2013				December 31, 2014
$	15,800			$	18,350

 

Tax Fees

 

The Company incurred $0 for tax related services.

 

All Other Fees

 

The Company incurred $0 for other fees by the principal accountant for the years ended December 31, 2014 and 2013.

 

The Company does not currently have an audit committee serving and as a result its board of directors performs the duties of an audit committee. The board of directors will evaluate and approve in advance, the scope and cost of the engagement of an auditor before the auditor renders audit and non-audit services. The Company does not rely on preapproval policies and procedures.

 

 

PART IV

 

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

 

2.1	Agreement and Plan of Merger (Incorporated by reference to Exhibit 2.1 of Form S-1 (File No.: 333-172509) filed with the SEC on February 28, 2011)
3.1	Certificate of Incorporation (Incorporated by reference to Exhibit 3.1 of Form S-1 (File No.: 333-172509) filed with the SEC on February 28, 2011)
3.2	Amended By-laws dated June 24, 2011(1)
3.3	Certificate of Merger (Incorporated by reference to Exhibit 3.3 of Form S-1 (File No.: 333-172509) filed with the SEC on February 28, 2011)
3.4	Certificate of Amendment to the Certificate of Incorporation (Incorporated by reference to Exhibit 3.4 of Form S-1 (File No.: 333-172509) filed with the SEC on February 28, 2011)
3.5	Certificate of Amendment to the Certificate of Incorporation (Incorporated by reference to Exhibit 3.5 of Form S-1 (File No.: 333-172509) filed with the SEC on February 28, 2011)
3.6	Certificate of Amendment to the Certificate of Incorporation (Incorporated by reference to Exhibit 10.1 of Form 8-K (File No.: 000-53259) filed with the SEC on December 13, 2013)
4.1	Stock Option Plan (Incorporated by referenced to Exhibit B to DEF Schedule 14-C (File No. 000-53259) filed with the SEC on January 22, 2015)
10.1	Agreement with Merchant Banking Advisors (Incorporated by reference to Exhibit 10.1 of Form S-1 (File No.: 333-172509) filed with the SEC on June 15, 2011)
10.2	Form of subscription agreement for private placement (Incorporated by reference to Exhibit 10.1 of Form S-1 (File No.: 333-172509) filed with the SEC on June 15, 2011)
10.3	Employment agreement and amendment of Linda Madison (Incorporated by reference to Exhibit 10.1 of Form S-1 (File No.: 333-172509) filed with the SEC on June 15, 2011)+
10.4	Employment agreement and amendment of Dale Euga (Incorporated by reference to Exhibit 10.1 of Form S-1 (File No.: 333-172509) filed with the SEC on May 29, 2012)+
10.5	Agreement with Tiber Creek Corporation (Incorporated by reference to Exhibit 10.1 of Form S-1 (File No.: 333-172509) filed with the SEC on December 9, 2011)
10.6	Lease agreement (Incorporated by reference to Exhibit 10.1 of Form S-1 (File No.: 333-172509) filed with the SEC on December 9, 2011)
10.7	Farmacia Birsas Del Mar Equipment Leasing Agreement(1)**
10.8	Investment Agreement (Incorporated by reference to Exhibit 10.1 of Form 8-K (File No.: 000-53259) filed with the SEC on December 13, 2013)
10.9	Registration Rights Agreement (Incorporated by reference to Exhibit 10.1 of Form 8-K (File No.: 000-53259) filed with the SEC on December 13, 2013)
31.1	Certification of James F. O’Rourke, Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a)(1)
31.2	Certification of Linda H. Madison, Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a) (1)
32.1	Certification of James F. O’Rourke, Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a) (1)
32.2	Certification of Linda H. Madison, Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a) (1)
101	Interactive Data File
101.INS	XBRL Instance Document(1)
101.SCH	XBRL Taxonomy Extension Schema Document(1)
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document(1)
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document(1)
101.LAB	XBRL Taxonomy Extension Label Linkbase Document(1)
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document(1)

 

(1)  Filed Herewith

+    Management Compensatory Plan

** Confidential treatment has been requested as to certain portions of this exhibit pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

 

SIGNATURES

 

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

 

	POWERDYNE INTERNATIONAL, INC.
Dated:  April 14, 2015	By:	/s/ James F. O’Rourke
		Chief Executive Officer
Dated:  April 14, 2015	By:	/s/ Linda H. Madison
		Principal Financial Officer and Principal Accounting Officer

 

Pursuant to the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

NAME		OFFICE		DATE
/s/ James F. O’Rourke		Chief Executive Officer and Director		April 14, 2015
James F. O’Rourke
		President and Director
Dale P. Euga
/s/ Arthur M. Read, II		Executive Vice-President, General Counsel and Director		April 14, 2015
Arthur M. Read, II
/s/ John M. Faulhaber		Director and Chairman of the Board		April 14, 2015
John M. Faulhaber
/s/ Robert C. Hemsen		Director and Vice-Chairman of the Board		April 14, 2015
Robert C. Hemsen

 

 

 

 

 

POWERDYNE INTERNATIONAL, INC.

 

FINANCIAL STATEMENTS

 

December 31, 2014 and 2013

 

 

 

 

 

 

INDEX TO FINANCIAL STATEMENTS

 

Report of Independent Registered Accounting Firm	F-1
Balance Sheets	F-2
Statements of Operations	F-3
Statement of Changes in Stockholders’ Deficit	F-4
Statements of Cash Flows	F-5
Notes to Financial Statements	F-6

 

 

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and

Stockholders of Powerdyne International, Inc.

 

We have audited the accompanying balance sheets of Powerdyne International, Inc. (the “Company”) as of December 31, 2014 and 2013, and the related statements of operations, stockholders’ deficit, and cash flows for the years then ended. Powerdyne International, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Powerdyne International, Inc. as of December 31, 2014 and 2013, and the results of its operations and its cash flows for the two years then ended in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 5 to the financial statements, the Company has had no revenues and incurred an accumulated deficit of $ 2,650,658 since inception. These conditions, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management's plans concerning these matters are also described in Note 5, which includes the raising of additional equity financing or merger with another entity. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ Anton & Chia, LLP
Newport Beach
April 14, 2015

  

 

 

POWERDYNE INTERNATIONAL, INC.

BALANCE SHEETS

 

 

		December 31, 2014				December 31, 2013
ASSETS
Current Assets:
Cash		$	2,265			$	18,169
Prepaid expenses			-				495
Advances to stockholder			11,321				11,321
Total current assets			13,586				29,985
Property and Equipment
Property and equipment, net			50,000				102,613
Total Assets		$	63,586			$	132,598
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable and accrued expenses		$	72,703			$	162,661
Notes payable, net of unamortized debt discounts of $85,260 and $49,031, respectively			66,240				68,469
Due to related parties			33,425				14,250
Notes payable-related parties			111,004				67,457
Tax payable			956				956
Derivative liability			407,735				94,876
Total Liabilities			692,063				408,669
Stockholders' Deficit:
Common stock; $0.0001 par value; 550,000,000 shares authorized, 369,135,575 shares issued and outstanding as of December 31, 2014 and 196,673,027 shares issued and outstanding as of December 31, 2013			36,913				19,667
Additional paid-in capital			1,985,268				1,286,187
Accumulated deficit			(2,650,658	)			(1,581,925	)
Total Stockholders' Deficit			(628,477	)			(276,071	)
Total Liabilities and Stockholders' Deficit		$	63,586			$	132,598

 

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

 

 

 

POWERDYNE INTERNATIONAL, INC.

STATEMENTS OF OPERATIONS

 

  

		For the year ended December 31, 2014				For the year ended December 31, 2013
Revenues		$	-			$	-
Cost of revenues			-				-
Gross profit			-				-
Operating expenses			374,840				330,340
Loss from operations			(374,840	)			(330,340	)
Other (Income) Expense
Derivative expense			668,584				33,833
Change in fair value of derivative			(159,406	)			18,296
Amortization of debt discount			183,759				18,469
Total Other (Income) Expense			692,937				70,598
Loss before income tax expense			(1,067,777	)			(400,938	)
Income tax expense			956				956
Net loss		$	(1,068,733	)		$	(401,894	)
Basic and diluted loss per common share		$	(0.00	)		$	(0.00	)
Basic and diluted weighted average common shares outstanding			246,371,285				194,361,381

 

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

 

 

 

POWERDYNE INTERNATIONAL, INC.
STATEMENT OF STOCKHOLDERS’ DEFICIT

FOR THE YEAR ENDED DECEMBER 31, 2014 AND 2013

  

 

		Common Stock								Additional Paid-In				Accumulated				Total Stockholders'
		Shares				Amount				Capital				Deficit				Deficit
Balance, January 1, 2013			193,216,667			$	19,322			$	1,090,778			$	(1,180,030	)		$	(69,930	)
Common stock issued for services			2,265,884				226				155,774				-				156,000
Common stock issued in exchange for debt			1,190,476				119				14,881				-				15,000
Settlement of derivative liability through conversion of notes payable			-				-				24,754				-				24,754
Net loss for the year			-				-				-				(401,894	)			(401,894	)
Balance, December 31, 2013			196,673,027			$	19,667			$	1,286,187			$	(1,581,925	)		$	(276,071	)
Settlement of derivative liability through conversion of notes payable			-				-				411,876				-				411,876
Stock issued for services			46,078,214				4,608				138,096				-				142,703
Common stock issued in exchange for debt			126,384,334				12,638				149,110				-				161,748
Net loss for the period			-				-				-				(1,068,733	)			(1,068,733	)
Balance, December 31, 2014			369,135,575			$	36,913			$	1,985,268			$	(2,650,658	)		$	(628,477	)

  

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

 

 

 

POWERDYNE INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS

 

 

		For the year  ended December 31, 2014				For the year ended December 31, 2013
Operating Activities:
Net loss		$	(1,068,733	)		$	(401,894	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			13,240				13,504
Loss from impairment and disposal loss			39,373				-
Stock based compensation			142,703				156,000
Derivative and interest expense			668,585				33,833
Change in FV of derivatives			(159,406	)			18,296
Amortization of debt discounts			183,759				18,469
Changes in operating assets and liabilities:
Prepaid expenses			495				(495	)
Accrued expenses			(84,143	)			23,191
Due to related party			19,175				--
Net cash used in operating activities			(244,951	)			(139,096	)
Financing Activities:
Principal paid on Notes payable related parties			(453	)			-
Proceeds from Notes payable			185,500				156,600
Proceeds from Notes payable related parties			44,000				-
Net cash provided by financing activities			229,047				156,600
Net change in cash			(15,904	)			17,504
Cash, beginning of period			18,169				665
Cash, end of period		$	2,265			$	18,169
Non-cash investing and financing activities:
Common stock issued in settlement for debt		$	161,748			$	15,000
Settlement of derivative liability through conversion of notes payable.			411,876				24,754
Supplemental disclosure if cash flow information
Cash paid for interest			-				-
Cash paid for taxes		$	956			$	956

  

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

 

POWERDYNE INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2014 and 2013

 

1. ORGANIZATION

 

Powerdyne, Inc., was incorporated on February 2, 2010 in Nevada, and is registered to do business in Rhode Island and Massachusetts. On February 7, 2011, Powerdyne, Inc. merged with Powerdyne International, Inc., formerly Greenmark Acquisition Corporation, a publicly held Delaware corporation.

 

On December 13, 2010, Powerdyne International, Inc., formerly Greenmark Acquisition Corporation, filed an Amended and Restated Articles of Incorporation in order to, among other things, increase the authorized capital stock to 300,000,000 common shares, par value $0.0001 per share. Unless the context specifies otherwise, as discussed in Note 2, references to the “Company” refers to Powerdyne International, Inc. and Powerdyne, Inc. after the merger.

 

At the closing of the merger, each share of Powerdyne, Inc.’s common stock issued and outstanding immediately prior to the closing of the Merger was exchanged for the right to receive 7,520 shares of common stock of Powerdyne International, Inc. Accordingly, an aggregate of 188,000,000 shares of common stock of Powerdyne International, Inc. were issued to the holders of Powerdyne, Inc.’s common stock.

 

On July 25, 2014, Powerdyne International, Inc. filed Form 14C in order to increase the authorized capital stock to 550,000,000 common shares, par value $0.0001 per share.

 

The Company is a start-up organization which intends to produce and distribute completely packaged independent electrical generator units that run on environmentally-friendly fuel sources, such as natural gas and propane.

 

2. REVERSE MERGER ACCOUNTING

 

On February 7, 2011, Greenmark Acquisition Corporation, which was a publicly held Delaware corporation, merged with Powerdyne, Inc. Upon closing of the transaction, Greenmark Acquisition Corporation, the surviving corporation in the merger, changed its name to Powerdyne International, Inc.

 

The merger was accounted for as a reverse-merger, and recapitalization in accordance with generally accepted accounting principles in the United States (“GAAP”). Powerdyne, Inc. was the acquirer for financial reporting purposes and the Company was the acquired company. Consequently, the assets and liabilities and the operations that are reflected in the historical financial statements prior to the merger are those of Powerdyne, Inc. and have been recorded at the historical cost basis of Powerdyne, Inc., and the financial statements after completion of the merger include the assets and liabilities of the Company and Powerdyne, Inc., historical operations of Powerdyne, Inc. and operations of the Company from the closing date of the merger. Common stock and the corresponding capital amounts of the Company pre-merger were retroactively restated as capital stock shares reflecting the exchange ratio in the merger. In conjunction with the merger, the Company received no cash and assumed no liabilities from Greenmark Acquisition Corporation.

 

 

POWERDYNE INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2014 and 2013

 

3. BASIS OF PRESENTATION

 

The accompanying audited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include all the notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation of the financial statements have been included.

 

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The summary of significant accounting policies presented below is designed to assist in understanding the Company’s financial statements. Such financial statements and accompanying notes are the representations of the Company’s management, who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America (“GAAP”) in all material respects, and have been consistently applied in preparing the accompanying financial statements.

 

Capital Resources

 

Since its inception, the Company has devoted substantially all of its efforts to business planning, research and development, recruiting management and technical staff, acquiring operating assets and raising capital. The Company has not generated significant revenues from its principal operations, and there is no assurance of future revenues. As of December 31, 2014, the Company had an accumulated deficit from inception of $2,650,658.

 

The Company’s activities will necessitate significant uses of working capital beyond 2014. Additionally, the Company’s capital requirements will depend on many factors, including the success of the Company’s continued research and development efforts and the status of competitive products. The Company plans to continue financing its operations with cash received from financing activities.

 

While the Company strongly believes that its capital resources will be sufficient in the near term, there is no assurance that the Company’s activities will generate sufficient revenues to sustain its operations without additional capital or, if additional capital is needed, that such funds, if available, will be obtainable on terms satisfactory to the Company.

 

Use of Estimates

 

In preparing these audited financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

 

 

POWERDYNE INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2014 and 2013

 

Fair Value of Financial Instruments

 

The Company follows guidance for accounting for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on a recurring basis.  Additionally, the Company adopted guidance for fair value measurement related to nonfinancial items that are recognized and disclosed at fair value in the financial statements on a nonrecurring basis. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

 

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

 

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

 

Level 3 inputs are unobservable inputs for the asset or liability.

 

The Company monitors the market conditions and evaluates the fair value hierarchy levels at least quarterly. For any transfers in and out of the levels of the fair value hierarchy, the Company elects to disclose the fair value measurement at the beginning of the reporting period during which the transfer occurred.

 

The Company's financial instruments consisted of cash, accounts payable and accrued liabilities, advances to stockholders, notes payable and convertible debt. The estimated fair value of cash, accounts payable and accrued liabilities, advances to stockholders, and notes payable approximates its carrying amount due to the short maturity of these instruments. The recognition of the derivative values of convertible debt are based on the weighted-average Black-Scholes option pricing model.

 

Cash

 

The Company considers all highly-liquid investments with maturities of three months or less when purchased to be cash equivalents. The Company had cash in the amount of $2,265 and $18,169 as of December 31, 2014 and December 31, 2013, respectively.

 

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company places its cash with high quality banking institutions. From time to time, the Company may maintain cash balances at certain institutions in excess of the Federal Deposit Insurance Corporation limit. The Company has not incurred any loss from this risk.

 

 

POWERDYNE INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2014 and 2013

 

Property and Equipment

 

Property and equipment is stated at cost. Capital expenditures for improvements and upgrades to existing equipment are also capitalized. Maintenance and repairs are expensed as incurred. The machinery and equipment, previously classified as “construction in progress” was placed into service on October 1, 2011 and the Company began to depreciate the assets at that time. The equipment is depreciated over 10 years on a straight-line basis. Vehicles are depreciated over 5 years using the straight-line basis. Depreciation expense for the periods ended December 31, 2014 and 2013 was $13,240 and $13,504, respectively.

 

Derivatives and Hedging

 

In April 2008, the FASB issued a pronouncement that provides guidance on determining what types of instruments or embedded features in an instrument held by a reporting entity can be considered indexed to its own stock for the purpose of evaluating the first criteria of the scope exception in the pronouncement on accounting for derivatives. This pronouncement was effective for financial statements issued for fiscal years beginning after December 15, 2008. The adoption of these requirements can affect the accounting for many convertible instruments with provisions that protect holders from a decline in the stock price. Each reporting period, the Company evaluates whether convertible debt to acquire stock of the Company contain provisions that protect holders from declines in the stock price or otherwise could result in modification of the exercise price under the respective convertible debt agreements. The Company determined that the conversion feature in the convertible notes issued during the fourth quarter of 2013, and the first, second, third, and fourth quarters of 2014 contained such provisions and recorded such instruments as derivative liabilities. See Note 8, Convertible Debt.

 

Long-Lived Assets

 

In accordance with ASC 350-30 (formerly SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets), the Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their then carrying values may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. The Company’s management currently believes there is no impairment of its long-lived assets. There can be no assurance however, that market conditions will not change or demand for the Company’s products under development will continue. Either of these could result in future impairment of long-lived assets.

 

 

POWERDYNE INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2014 and 2013

 

Income Taxes

 

As a result of the implementation of certain provisions of ASC 740, Income Taxes, (formerly FIN 48, Accounting for Uncertainty in Income Taxes – An Interpretation of FASB Statement No. 109), (“ASC 740”), which clarifies the accounting and disclosure for uncertainty in tax positions, as defined. ASC 740 seeks to reduce the diversity in practice associated with certain aspects of the recognition and measurement related to accounting for income taxes.

 

In 2010, the Company adopted Accounting for Uncertain Income Taxes under the provisions of ASC 740. ASC 740 clarifies the accounting for income taxes by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. It also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company did not recognize any additional liability for unrecognized tax benefits as a result of the adoption of ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Valuation allowances are established when it is more likely than not that some or all of the deferred tax assets will not be realized.

 

We believe that our income tax filing positions and deductions will be sustained on audit and do not anticipate any adjustments that will result in a material change to our financial position. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to ASC 740. In addition, we did not record a cumulative effect adjustment related to the adoption of ASC 740. Our policy for recording interest and penalties associated with income-based tax audits is to record such items as a component of income taxes.

 

Our tax provision determined using an estimate of our annual effective tax rate using enacted tax rates expected to apply to taxable income in the years in which they are earned, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment. Income taxes payable as of December 31, 2014 and December 31, 2013 were $956 and $956, respectively.

 

Loss per Common Share

 

Basic loss per common share excludes dilutive securities and is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted earnings per common share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Since the Company has only incurred losses, basic and diluted loss per share is the same. As of December 31, 2014 and 2013, there were no outstanding dilutive securities.

 

 

POWERDYNE INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2014 and 2013

 

The following table represents the computation of basic and diluted losses per share:

 

		Year ended December 31, 2014				Year ended December 31, 2013
Loss available for common shareholder		$	(1,068,733	)		$	(401,894	)
Basic and fully diluted loss per share		$	(0.00	)		$	(0.00	)
Weighted average common shares outstanding - basic and diluted			246,371,285				194,361,381

 

Net loss per share is based upon the weighted average shares of common stock outstanding.

 

Recent Accounting Pronouncements

 

In June 2014, the FASB issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. ASU 2014-10 eliminates the distinction of a development stage entity and certain related disclosure requirements, including the elimination of inception-to-date information on the statements of operations, cash flows and stockholders’ equity. The amendments in ASU 2014-10 will be effective prospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, however early adoption is permitted. The Company adopted ASU 2014-10 since the quarter ended June 30, 2014, thereby no longer presenting or disclosing any information required by Topic 915.

 

In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”). ASU 2014-15, which is effective for annual reporting periods ending after December 15, 2016, extends the responsibility for performing the going-concern assessment to management and contains guidance on how to perform a going-concern assessment and when going-concern disclosures would be required under U.S. GAAP. The Company elected to adopt ASU 2014-15 effective with this financial statement. Management’s evaluations regarding the events and conditions that raise substantial doubt regarding the Company’s ability to continue as a going concern have been disclosed in this Note 5.

 

5. GOING CONCERN

 

The Company has not yet generated any revenue since inception to date and has sustained operating losses during the period ended December 31, 2014. The Company had a working capital deficit of $678,477 and an accumulated deficit of $2,650,658 as of December 31, 2014. The Company's continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations and/or obtaining additional financing from its members or other sources, as may be required.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern; however, the above condition raises substantial doubt about the Company's ability to do so. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

 

 

POWERDYNE INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2014 and 2013

 

In order to maintain its current level of operations, the Company will require additional working capital from either cash flow from operations or from the sale of its equity. However, the Company currently has no commitments from any third parties for the purchase of its equity. If the Company is unable to acquire additional working capital, it will be required to significantly reduce its current level of operations.

 

6. PROPERTY AND EQUIPMENT - NET

 

Equipment consists of the following as of December 31, 2014 and December 31, 2013:

 

		December 31, 2014				December 31, 2013
Motor vehicles		$	-			$	1,976
Machinery and equipment			131,087				131,087
Less impairment of equipment			(38,484	)			-
			92,603				133,063
Less accumulated depreciation			(42,603	)			(30,450	)
Total Property and Equipment		$	50,000			$	102,613

 

Equipment is stated at cost and depreciated on a straight-line basis over the assets’ estimated useful lives: vehicles 5 years and machinery and equipment 10 years. Total depreciation expense for the periods ended December 31, 2014 and 2013 was $13,240 and $13,504, respectively.

 

During the year ended December 31, 2014, the Company determined that machinery and equipment was impaired due to changes in technology resulting in more cost effective production of the products. The residual value of this machinery and equipment is $50,000, therefore $39,373 was recorded as an impairment loss.

 

7. COMMON STOCK

 

During the year ended December 31, 2013, 2,265,884 shares were issued to three consultants as compensation for services rendered. The Company valued the stock at $0.068 per share for a total of $150,000. The Company also issued 60,000 shares to one consultant as compensation for services rendered. The Company valued the stock at $0.10, for a total of $6,000. On December 3, 2013 the Company issued 1,190,476 shares in exchange for the retirement of $15,000 of debt held by a venture capital lender.

 

 

POWERDYNE INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2014 and 2013

 

Stock issued for services

 

On March 20, 2014 the Company issued 3,500,000 shares to a consulting company as compensation for services rendered/to be rendered. The Company valued the stock at $0.01, for a total of $35,000.

 

On November 5, 2014 the Company issued 37,578,214 shares of common stock to stockholder as compensation for services rendered. The Company valued the stock at $.0026 per share for a total of $97,703.

 

During the year ended December 31, 2014 5,000,000 shares were issued to a consultant as compensation for services rendered. The Company valued the stock at $0.002 per share for a total of $10,000.

 

As of December 31, 2014 the total number of shares of common stock issued for services was 46,078,214 and the Company valued the total of the stock issued for services to be $142,703.

 

Common stock issued in exchange for debt

 

On February 13, 2014 the Company issued 1,714,286 shares in exchange for the extinguishment of $12,000 of debt held by a venture capital lender.

 

On April 10, 2014 the Company issued 3,659,574 shares in exchange for the extinguishment of $15,500 of debt and $1,700 of accrued interest held by a venture capital lender. This conversion extinguished the Company’s first note payable with this venture capital lender.

 

On May 12, 2014 the Company issued 5,769,231 shares in exchange for the extinguishment of $15,000 of debt held by a venture capital lender. On May 21, 2014 the Company issued 8,952,381 shares in exchange for the extinguishment of $17,500 of debt and $1,300 of accrued interest held by a venture capital lender. These conversions extinguished the Company’s second note payable with this venture capital lender. This conversion extinguished the Company’s second note payable with this venture capital lender.

 

On May 27, 2014 the Company issued 7,142,857 shares in exchange for the extinguishment of $15,000 of debt held by a venture capital lender. On June 4, 2014 the Company issued 10,444,444 shares in exchange for the extinguishment of $17,500 of debt and $1,300 of accrued interest held by a venture capital lender. These conversions extinguished the Company’s third note payable with this venture capital lender.

 

On June 11, 2014 the Company issued 7,500,000 shares in exchange for the extinguishment of $8,550 of debt held by a venture capital lender.

 

On July 3, 2014, the Company entered into a consulting agreement with an outside consulting firm to handle some of its investor relations/public relations in exchange of 5,000,000 shares of restricted stock. The agreement calls for shares to be issued upon execution of the agreement.

 

 

POWERDYNE INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2014 and 2013

 

On August 11, 2014 the Company issued 12,200,000 shares in exchange for the extinguishment of $12,444 of debt held by a venture capital lender. On September 17, 2014 the Company issued 12,800,000 shares in exchange for the extinguishment of $8,448 of debt held by a venture capital lender.

 

On November 10, 2014 the Company issued 5,821,244 shares in exchange for the extinguishment of $4,000 of debt and $162 of accrued interest held by a venture capital lender.

 

On November 17, 2014 the Company issued 1,212,121 shares in exchange for the extinguishment of $1,000 of debt held by a venture capital lender.

 

On November 24, 2014 the Company issued 8,391,608 shares in exchange for the extinguishment of $6,000 of debt held by a venture capital lender.

 

On December 1, 2014 the Company issued 9,848,485 shares in exchange for the extinguishment of $6,500 of debt held by a venture capital lender.

 

On December 4, 2014 the Company issued 7,575,758 shares in exchange for the extinguishment of $5,000 of debt held by a venture capital lender.

 

On December 11, 2014 the Company issued 7,972,018 shares in exchange for the extinguishment of $4,385 of debt held by a venture capital lender.

 

On December 17, 2014 the Company issued 15,380,327 shares in exchange for the extinguishment of $7,115 of debt and $1,344 of accrued interest held by a venture capital lender. These conversions extinguished the Company’s note payable with this venture capital lender.

 

As of December 31, 2014 the total number of shares of common stock issued in exchange for settlement of debt was 126,384,334 and the value of the total stock issued in exchange for settlement of debt was $161,748.

 

8. CONVERTIBLE DEBT

 

Asher Enterprises, Inc.

 

On June 3, 2013 Powerdyne International entered into an agreement for the sale of a Convertible Promissory Note (“Asher Note 1”) in the principal amount $42,500 with an interest rate of 8% per annum pursuant to the terms of a Securities Purchase Agreement between Asher Enterprises, Inc. (“Asher”), a Delaware corporation, and Powerdyne International Inc. The Asher Note 1 closed on June 5, 2013 and matures on March 6, 2014. After 180 days, the Investor/Lender has the option of converting some or all principal and accrued interest into common shares of the Company. The conversion rate is 58% of the average of the lowest three trading day prices of the Company during the ten trading day period prior to the conversion date. The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as a liability once the conversion option becomes effective, since there is no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.

 

 

POWERDYNE INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2014 and 2013

 

On December 10, 2013 the Investor/Lender exercised its right to convert $15,000 of the Asher Note 1into into 1,190,476 common shares. The Company has determined that the conversion feature is considered an embedded beneficial conversion feature and thereby creates a derivative liability for the Company. On the date of conversion, the Company calculated the value of the derivative liability using the weighted-average Black-Scholes option pricing model, which approximates the Monte Carlo and other binomial valuation techniques, with the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 506.82%; (iii) risk free rate of 0.13%, (iv) expected term of 3 months, (v) market value share price of $0.022, and (vi) per share conversion price of $0.0126. Based upon this model, the Company determined an initial derivative liability value of $62,131, which it recorded as a derivative liability as of the date of issuance while also recording a $15,000 non-cash amortization expense of debt discount and a $42,500 debt discount on its balance sheet in relation to the derivative liability of this note. This conversion produced an increase in additional paid in capital of $24,754 and a decrease in the derivative liability by the same amount. In addition, the Company recorded a derivative expense of $19,631, and a change in fair value of derivative of $8,004 during the year ended December 31, 2014.

 

On December 31, 2013, the Company revalued the derivative value of the $42,500 8% Note using the weighted-average Black-Scholes option pricing model with the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 483.43%; (iii) risk free rate of 0.13%, (iv) expected term of 2 months, (v) market value share price of $0.184, and (vi) per share conversion price of $0.00998. The Company determined the derivative value to be $47,494 as of December 31, 2013, which represents a change in the fair value of the derivative in the amount of $2,113 as compared to the derivative value on December 10, 2013. Accordingly, the Company recorded a non-cash change in fair value of the derivative liability of $2,113 while also increasing the derivative liability from $45,383 to $47,494 as of December 31, 2013. Also recorded for that period was an amortization of debt discount of $2,750. The derivative liability balance as of December 31, 2013 was $47,494 and the debt discount balance as of December 31, 2013 was $24,750.

 

 

POWERDYNE INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2014 and 2013

 

On February 13, 2014, the Investor/Lender exercised its right to convert an additional $12,000 of the Asher Note 1 (the second conversion of this note) into 1,714,286 common shares. The Company has determined that the conversion feature is considered an embedded beneficial conversion feature and thereby creates a derivative liability for the Company. On the date of conversion, the Company calculated the value of the derivative liability using the weighted-average Black-Scholes option pricing model, which approximates the Monte Carlo and other binomial valuation techniques, with the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 455.63%; (iii) risk free rate of 0.12%, (iv) expected term of 6 months, (v) market value share price of $0.0143, and (vi) per share conversion price of $0.007. Based upon this model, the Company determined an initial derivative liability value of $62,131, which it recorded as a derivative liability as of the date of issuance while also recording a $15,000 non-cash amortization expense of debt discount and a $42,500 debt discount on its balance sheet in relation to the derivative liability of this note. This conversion produced an increase in additional paid in capital of $23,112 and a decrease in the derivative liability by the same amount. In addition, the Company recorded an amortization of debt discount of $12,000 and a reduction of debt discounts of the same amount. There was also an increase in the change in fair value of the derivative liability of $549 while also producing an increase in the derivative liability by the same amount.

 

On March 31, 2014, the Company revalued the derivative value of the $42,500 8% Note using the weighted-average Black-Scholes option pricing model with the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 353.85%; (iii) risk free rate of 0.12%, (iv) expected term of 6 months, (v) market value share price of $0.015, and (vi) per share conversion price of $0.0059. The Company determined the derivative liability value to be $34,509 as of March 31, 2014, which represents a change in the fair value of the derivative in the amount of $9,093 as compared to the derivative value on February 13, 2014. Accordingly, the Company recorded a non-cash change in fair value of the derivative liability of $9,093 while also increasing the derivative liability from $25,315 to $34,509 as of March 31, 2014. Also recorded for that period was an amortization of debt discount in the amount of $4,650. The derivative liability balance as of March 31, 2014 and December 31, 2013 was $34,509 and $47,494, respectively. The debt discount balance as of March 31, 2014 and December 31, 2013 was $29,299 and $24, 750, respectively.

 

On April 10, 2014, the Investor/Lender exercised its right to convert the balance of the Asher Note 1 loan amount of $15,500 plus $1,700 of accrued and unpaid interest of the Note 1 (the third conversion of this note) into 3,659,574 common shares. The Company has determined that the conversion feature is considered an embedded conversion feature and thereby creates a derivative liability for the Company. On the date of conversion, the Company calculated the value of the derivative liability using the weighted-average Black-Scholes option pricing model, which approximates the Monte Carlo and other binomial valuation techniques, with the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 352.69%; (iii) risk free rate of 0.09%, (iv) expected term of 6 months, (v) market value share price of $0.0121, and (vi) per share conversion price of $0.0047. This conversion produced an increase in additional paid in capital of $38,666 and a decrease in the derivative liability by the same amount. In addition, the Company recorded an amortization of debt discount of $15,500 and a reduction of debt discounts of the same amount. There was also an increase in the change in fair value of the derivative liability of $4,258 while also producing an increase in the derivative liability by the same amount. This note was fully converted into common stock as of April 10, 2014. Accordingly, the Company recorded a non-cash change in fair value of the derivative liability of $4,258 while also decreasing the derivative liability from $38,666 to $-0- as of December 31, 2014. Also recorded for that period was an amortization of debt discount of $24,750. The derivative liability balance as of December 31, 2014 and 2013 was $-0- and $47,473, respectively. The debt discount balance as of December 31, 2014 and 2013 was $-0- and $24,750, respectively.

 

 

POWERDYNE INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2014 and 2013

 

On August 27, 2013 Powerdyne International entered into an agreement for the sale of a Convertible Promissory Note (“Asher Note 2”) in the principal amount $32,500 with an interest rate of 8% per annum pursuant to the terms of a Securities Purchase Agreement between Asher and Powerdyne International Inc. The Asher Note 2 closed on August 29, 2013 and matures on May 29, 2014. This Note 2 is convertible at 58% of the average of the lowest three trading prices of Powerdyne’s common stock during the ten trading day period prior to the conversion date after 180 days. Powerdyne analyzed the conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as a liability once the conversion option becomes effective after 180 days due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.

 

On May 12, 2014 the Investor/Lender exercised its right to convert $15,000 of the Asher Note 2 into 5,769,231 common shares. The Company has determined that the conversion feature is considered an embedded conversion feature and thereby creates a derivative liability for the Company. On the date of conversion, the Company calculated the value of the derivative liability using the weighted-average Black-Scholes option pricing model, which approximates the Monte Carlo and other binomial valuation techniques, with the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 262.20%; (iii) risk free rate of 0.09%, (iv) expected term of 6 months, (v) market value share price of $0.0040, and (vi) per share conversion price of $0.0026. This conversion produced an increase in additional paid in capital of $16,582 and a decrease in the derivative liability by the same amount. There was also a decrease in the change in fair value of the derivative liability of $36,261 while also producing a decrease in the derivative liability by the same amount. In addition, the Company recorded an amortization of debt discount of $15,000 and a reduction of debt discounts of the same amount.

 

 

POWERDYNE INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2014 and 2013

 

On May 21, 2014 the Investor/Lender exercised its right to convert the balance of the Asher Note 2 loan amount of $17,500 plus $1,300 of accrued and unpaid interest of the Note 2 into 8,952,381 common shares. The Company has determined that the conversion feature is considered an embedded conversion feature and thereby creates a derivative liability for the Company. On the date of conversion, the Company calculated the value of the derivative liability using the weighted-average Black-Scholes option pricing model, which approximates the Monte Carlo and other binomial valuation techniques, with the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 271.35%; (iii) risk free rate of 0.08%, (iv) expected term of 6 months, (v) market value share price of $0.0060, and (vi) per share conversion price of $0.0021. This conversion produced an increase in additional paid in capital of $43,780 and a decrease in the derivative liability by the same amount. There was also an increase in the change in fair value of the derivative liability of $24,434 while also producing an increase in the derivative liability by the same amount. In addition, the Company recorded an amortization of debt discount of $17,500 and a reduction of debt discounts of the same amount. This note was fully converted into common stock as of May 21, 2014. Accordingly, the Company recorded a non-cash change in fair value of the derivative liability of $24,434 while decreasing the derivative liability from $43,780 to $-0- as of December 31, 2014. Also recorded for that period was an amortization of debt discount of $17,500, and total amortization of debt discount for the year was $32,500. The derivative liability balance as of December 31, 2014 and 2013 was $-0- and $-0-, respectively. The debt discount balance as of December 31, 2014 and 2013 was $-0- and $-0-, respectively.

 

On October 2, 2013 Powerdyne International entered into an agreement for the sale of a Convertible Promissory Note (“Asher Note 3”) in the principal amount $32,500 with an interest rate of 8% per annum pursuant to the terms of a Securities Purchase Agreement between Asher and Powerdyne International.  This Note closed on October 7, 2013 and matures on July 7, 2014. The Note is convertible at 58% of the average of the lowest three trading prices of Powerdyne’s common stock during the ten trading day period prior to the conversion date after 180 days.

 

On May 27, 2014 the Investor/Lender exercised its right to convert $15,000 of the Asher Note 3 into 7,142,857 common shares. The Company has determined that the conversion feature is considered a beneficial conversion feature and thereby creates a derivative liability for the Company. On the date of conversion, the Company calculated the value of the derivative liability using the weighted-average Black-Scholes option pricing model, which approximates the Monte Carlo and other binomial valuation techniques, with the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 350.42%; (iii) risk free rate of 0.08%, (iv) expected term of 6 months, (v) market value share price of $0.0042, and (vi) per share conversion price of $0.0021. Based upon this model, the Company determined an initial derivative liability value of $46,126, which it recorded as a derivative liability as of the date of issuance while also recording a derivative expense of $13,626 and a $32,500 debt discount on its balance sheet in relation to the derivative liability of this note. This conversion produced an increase in additional paid in capital of $23,658 and a decrease in the derivative liability by the same amount. There was also an increase in the change in fair value of the derivative liability of $5,134 while also producing an increase in the derivative liability by the same amount. In addition, the Company recorded an amortization of debt discount of $15,000 and a reduction of debt discounts of the same amount.

 

 

POWERDYNE INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2014 and 2013

 

On June 4, 2014 the Investor/Lender exercised its right to convert the balance of the loan amount of $17,500 plus $1,300 of accrued and unpaid interest of the Asher Note 3 into 10,444,444 common shares. The Company has determined that the conversion feature is considered an embedded conversion feature and thereby creates a derivative liability for the Company. On the date of conversion, the Company calculated the value of the derivative liability using the weighted-average Black-Scholes option pricing model, which approximates the Monte Carlo and other binomial valuation techniques, with the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 317.81%; (iii) risk free rate of 0.10%, (iv) expected term of 6 months, (v) market value share price of $0.0029, and (vi) per share conversion price of $0.0018. This conversion produced an increase in additional paid in capital of $24,137 and a decrease in the derivative liability by the same amount. There was also an increase in the change in fair value of the derivative liability of $3,465 while also producing an increase in the derivative liability by the same amount. In addition, the Company recorded an amortization of debt discount of $17,500 and a reduction of debt discounts of the same amount. This note was fully converted into common stock as of June 4, 2014. Accordingly, the Company recorded a non-cash change in fair value of the derivative liability of $3,465 while decreasing the derivative liability from $24,137 to $-0- as of December 31, 2014. Also recorded for that period was an amortization of debt discount of $17,500, and total amortization of debt discount for the year was $32,500. The derivative liability balance as of December 31, 2014 and 2013 was $-0- and $-0-, respectively. The debt discount balance as of December 31, 2014 and 2013 was $-0- and $-0-, respectively.

 

Powerdyne analyzed the conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as a liability once the conversion option becomes effective after 180 days due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.

 

JMJ Financial

 

On December 11, 2013, the Company entered into an agreement with an another unrelated party in order to obtain short term cash flow in the form of a $25,000, ten (10) percent convertible Note Payable. Interest accrues at zero (0) percent for the first three months and if the borrower does not repay a payment of consideration on or before 90 days from its Effective Date, a one time interest charge of 12% shall be applied to the principal sum. The maturity date is two years from the effective date of the Note Payable. The lender has the right to convert some or all of the Note Payable into common stock of the Company at a discount rate of $0.022 or 60% of market, whichever is less. As a result of the convertible note payable, the Company realized the derivative nature of those instruments. Accordingly, the Company recognized following charges to operations: derivative expense of $14,202 and amortization of debt discounts of $719. Furthermore, the Company recognized derivative liabilities in the amount of $39,201 and debt discounts in the amount of $24,281 which is amortized.

 

 

POWERDYNE INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2014 and 2013

 

On December 31, 2013, the Company revalued the derivative value of the $25,000 10% Note using the weighted-average Black-Scholes option pricing model with the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 483.43%; (iii) risk free rate of 0.13%, (iv) expected term 1 year, (v) market value share price of $0.184, and (vi) per share conversion price of $0.00912. The Company determined the derivative value to be $47,381 as of December 31, 2013, which represents a change in the fair value of the derivative in the amount of $8,179 as compared to the derivative value on December 11, 2013. Accordingly, the Company recorded a non-cash change in fair value of the derivative liability of $8,179 while also increasing the derivative liability from $39,202 to $47,381 as of December 31, 2013. Also recorded for that period was an amortization of debt discount of $719.

 

On March 31, 2014, the Company revalued the derivative value of the $25,000 10% Note using the weighted-average Black-Scholes option pricing model with the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 273.63%; (iii) risk free rate of 0.12%, (iv) expected term of 1 year, (v) market value share price of $0.015, and (vi) per share conversion price of $0.00306. The Company determined the derivative value to be $106,994 as of March 31, 2014, which represents a change in the fair value of the derivative in the amount of $59,614 as compared to the derivative value on December 11, 2013. Accordingly, the Company recorded a non-cash change in fair value of the derivative liability of $59,614 while also increasing the derivative liability from $47,381 to $106,994 as of March 31, 2014. Also recorded for that period was an amortization of debt discount of $3,082.

 

On June 11, 2014 the Investor/Lender exercised its right to convert $8,550 of the Note into 7,500,000 common shares. The Company has determined that the conversion feature is considered an embedded conversion feature and thereby creates a derivative liability for the Company. On the date of conversion, the Company calculated the value of the derivative liability using the weighted-average Black-Scholes option pricing model, which approximates the Monte Carlo and other binomial valuation techniques, with the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 305.24%; (iii) risk free rate of 0.10%, (iv) expected term of 1 year, (v) market value share price of $0.0027, and (vi) per share conversion price of $0.00114. This conversion produced an increase in additional paid in capital of $16,718 and a decrease in the derivative liability by the same amount. There was also a decrease in the change in fair value of the derivative liability of $52,245 producing a decrease in the derivative liability by the same amount. In addition, the Company recorded an amortization of debt discount of $8,550 and a reduction of debt discounts of the same amount.

 

On June 30, 2014, the Company revalued the derivative value of the $25,000 10% Note using the weighted-average Black-Scholes option pricing model with the following assumptions; (i) dividend yield of 0%; (ii) expected volatility of 312.32%; (iii) risk free rate of 0.11%, (iv) expected term of 1 year, (v) market value share price of $0.0022, and (vi) per share conversion price of $0.0012. The Company determined the derivative value to be $28,711 as of June 30, 2014, which represents a change in the fair value of the derivative in the amount of $9,320 as compared to the derivative value on June 11, 2014. Accordingly, the Company recorded a non-cash change in fair value of the derivative liability of $9,320 while also increasing the derivative liability by the same amount.

 

 

POWERDYNE INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2014 and 2013

 

On August 11, 2014 the Investor/Lender exercised its right to convert $12,444 of the Note into 12,200,000 common shares. The Company has determined that the conversion feature is considered an embedded conversion feature and thereby creates a derivative liability for the Company. On the date of conversion, the Company calculated the value of the derivative liability using the weighted-average Black-Scholes option pricing model, which approximates the Monte Carlo and other binomial valuation techniques, with the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 408.20%; (iii) risk free rate of 0.10%, (iv) expected term of 1year, (v) market value share price of $0.0089, and (vi) per share conversion price of $0.00102. This conversion produced an increase in additional paid in capital of $104,008 and a decrease in the derivative liability by the same amount. There was also an increase in the change in fair value of the derivative liability of $159,857 producing an increase in the derivative liability by the same amount.

 

On September 17, 2014 the Investor/Lender exercised its right to the balance of the loan amount of $4,006 plus $4,442 of accrued and unpaid interest of the Note into 12,800,000 common shares. The Company has determined that the conversion feature is considered an embedded conversion feature and thereby creates a derivative liability for the Company. On the date of conversion, the Company calculated the value of the derivative liability using the weighted-average Black-Scholes option pricing model, which approximates the Monte Carlo and other binomial valuation techniques, with the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 380.81%; (iii) risk free rate of 0.12%, (iv) expected term of 1 year, (v) market value share price of $0.0032, and (vi) per share conversion price of $0.00066. This conversion produced an increase in additional paid in capital of $37,981 and a decrease in the derivative liability by the same amount. There was also a decrease in the change in fair value of the derivative liability of $39,075 producing a decrease in the derivative liability by the same amount.

 

On September 30, 2014, the Company revalued the derivative value of the $1,669 10% Note using the weighted-average Black-Scholes option pricing model with the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 403.21%; (iii) risk free rate of 0.13%, (iv) expected term of 1 year, (v) market value share price of $0.007, and (vi) per share conversion price of $0.00144. The Company determined the derivative value to be $7,600 as of September 30, 2014, which represents a change in the fair value of the derivative in the amount of $96 as compared to the derivative value on September 17, 2014. Accordingly, the Company recorded a non-cash change in fair value of the derivative liability of $96 while also increasing the derivative liability by the same amount.

 

 

POWERDYNE INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2014 and 2013

 

On December 31, 2014, the Company revalued the derivative value of the $1,669 10% Note using the weighted-average Black-Scholes option pricing model with the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 330.81%; (iii) risk free rate of 0.25%, (iv) expected term of 1 year, (v) market value share price of $0.0012, and (vi) per share conversion price of $0.003. The Company determined the derivative value to be $6,339 as of December 31, 2014, which represents a decrease in the fair value of the derivative in the amount of $1,261 as compared to the derivative value on September 30, 2014. Accrued interest at December 31, 2014 and December 31, 2013 was $1,669 and $0, respectively. Accordingly, the Company recorded a non-cash decrease in fair value of the derivative liability of $1,261 while also decreasing the derivative liability from $7,600 to $-0- as of December 31, 2014. The derivative liability balance as of December 31, 2014 and 2013 was $6,339 and $47,381, respectively. The debt discount balance as of December 31, 2014 and 2013 was $-0- and $24,281, respectively.

 

On August 20, 2014, the note with the Investor/Lender was amended allowing the Company to borrow additional funds from the Investor/Lender in order to obtain short term cash flow in the amount of $40,000 (“JMJ Note 2”), and the Company did borrow said amount of funds on September 4, 2014. The terms of the original note remain the same. As a result of the additional convertible note payable, the Company realized the derivative nature of those instruments. Accordingly, the Company recognized the derivative expense of $401,991, derivative liabilities in the amount of $441,991, and debt discounts in the amount of $40,000 which will be amortized throughout the term of the note.

 

On September 30, 2014, the Company revalued the derivative value of the $40,000 10% Note using the weighted-average Black-Scholes option pricing model with the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 392.24%; (iii) risk free rate of 0.13%, (iv) expected term of 1 year, (v) market value share price of $0.007, and (vi) per share conversion price of $0.00144. The Company determined the derivative value to be $225,582 as of September 30, 2014, which represents a decrease in the fair value of the derivative in the amount of $216,409 as compared to the derivative value on August 20, 2014. Accordingly, the Company recorded a non-cash decrease in fair value of the derivative liability of $216,409 while also decreasing the derivative liability by the same amount. In addition, the Company recorded an amortization of debt discount of $2,244 and a reduction of debt discounts of the same amount.

 

On December 31, 2014, the Company revalued the derivative value of the $40,000 10% Note using the weighted-average Black-Scholes option pricing model with the following assumptions; (i) dividend yield of 0%; (ii) expected volatility of 388.80%; (iii) risk free rate of 0.12%, (iv) expected term of 1 year, (v) market value share price of $0.0012, and (vi) per share conversion price of $0.0003. The Company determined the derivative value to be $176,689 as of December 31, 2014, which represents a change in the fair value of the derivative in the amount of $48,893 as compared to the derivative value on September 30, 2014. Accordingly, the Company recorded a non-cash decrease in fair value of the derivative liability of $48,893 while also decreasing the derivative liability by the same amount. In addition, the Company recorded an amortization of debt discount of $5,034 and a reduction of debt discounts of the same amount. Accrued interest at December 31, 2014 and December 31, 2013 was $9,778 and $0, respectively. Accordingly, the Company recorded a non-cash decrease in fair value of the derivative liability of $48,893 while also decreasing the derivative liability from $225,582 to $176,689 as of December 31, 2014. Also recorded for that period was an amortization of debt discount of $5,034. The derivative liability balance as of December 31, 2014 and 2013 was $176,689 and $-0-, respectively. The debt discount balance as of December 31, 2014 and 2013 was $32,722 and $-0-, respectively.

 

 

POWERDYNE INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2014 and 2013

 

LG Capital Funding, LLC

 

On May 8, 2014, the Company entered into an agreement with an another unrelated party in order to obtain short term cash flow in the form of a $30,000, eight (8) percent convertible Note Payable (“LG Note 1”). The maturity date is one year from the effective date of the Note Payable. The lender has the right to convert at 55% of the lowest trading price of the Company’s common stock during the twenty day period prior to the conversion date after 180 days. This note is secured by Company common stock.

 

On November 10, 2014 the Investor/Lender exercised its right to convert $4,000 plus $162 of accrued and unpaid interest of the Note 1 into 5,821,244 common shares. The Company has determined that the conversion feature is considered an embedded conversion feature and thereby creates a derivative liability for the Company. On the date of conversion, the Company calculated the value of the derivative liability using the weighted-average Black-Scholes option pricing model, which approximates the Monte Carlo and other binomial valuation techniques, with the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 374.08%; (iii) risk free rate of 0.07%, (iv) expected term of 1 year, (v) market value share price of $0.0033, and (vi) per share conversion price of $0.00072. This conversion produced an increase in additional paid in capital of $17,677 and a decrease in the derivative liability by the same amount. There was also an increase in the change in fair value of the derivative liability of $32,237 producing an increase in the derivative liability by the same amount.

 

On December 31, 2014, the Company revalued the derivative value of the $26,000 8% Note using the weighted-average Black-Scholes option pricing model with the following assumptions; (i) dividend yield of 0%; (ii) expected volatility of 374.08%; (iii) risk free rate of 0.04%, (iv) expected term of 1 year, (v) market value share price of $0.0012, and (vi) per share conversion price of $0.00039. The Company determined the derivative value to be $69,604 as of December 31, 2014, which represents a decrease in the fair value of the derivative in the amount of $40,131 as compared to the derivative value on November 10, 2014. Accordingly, the Company recorded a non-cash decrease in fair value of the derivative liability of $40,131 while also decreasing the derivative liability by the same amount. In addition, the Company recorded an amortization of debt discount of $9,243 and a reduction of debt discounts of the same amount. Accrued interest at December 31, 2014 and December 31, 2013 was $2,203 and $0, respectively. Accordingly, the Company recorded a non-cash decrease in fair value of the derivative liability of $40,131 while also decreasing the derivative liability from $95,175 to $69,606 as of December 31, 2014 .Also recorded for that period was an amortization of debt discount of $9,243. The derivative liability balance as of December 31, 2014 and 2013 was $69,606 and $-0-, respectively. The debt discount balance as of December 31, 2014 and 2013 was $20,757 and $-0-, respectively.

 

 

POWERDYNE INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2014 and 2013

 

On September 4, 2014, the Company entered into an agreement with the Investor/Lender (“LG Note 2”) in order to obtain short term cash flow in the form of a $26,500, eight (8) percent convertible Note Payable. The maturity date is one year from the effective date of the Note Payable. The lender has the right to convert at 55% of the lowest trading price of the Company’s common stock during the twenty day period prior to the conversion date after 180 days. As of December 31, 2014 this note has not yet met its 180 days criteria. This note is secured by Company common stock.

 

Adar Bays, LLC

 

On May 9, 2014, the Company entered into an agreement with an another unrelated party in order to obtain short term cash flow in the form of a $30,000, eight (8) percent convertible Note Payable. The maturity date is one year from the effective date of the Note Payable. The lender has the right to convert at 55% of the lowest closing bid price of the Company’s common stock during the twenty day period prior to the conversion date after 180 days. This note is secured by Company common stock.

 

On November 17, 2014 the Investor/Lender exercised its right to convert $1,000 of the Note into 1,212,121 common shares. The Company has determined that the conversion feature is considered an embedded conversion feature and thereby creates a derivative liability for the Company. On the date of conversion, the Company calculated the value of the derivative liability using the weighted-average Black-Scholes option pricing model, which approximates the Monte Carlo and other binomial valuation techniques, with the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 369.49%; (iii) risk free rate of 0.07%, (iv) expected term of 6 months, (v) market value share price of $0.002, and (vi) per share conversion price of $0.00083. This conversion produced an increase in additional paid in capital of $2,119 and a decrease in the derivative liability by the same amount. There was also a decrease in the change in fair value of the derivative liability of $37,163 producing a decrease in the derivative liability by the same amount.

 

On November 24, 2014 the Investor/Lender exercised its right to convert $6,000 of the Note into 8,391,608 common shares. The Company has determined that the conversion feature is considered an embedded conversion feature and thereby creates a derivative liability for the Company. On the date of conversion, the Company calculated the value of the derivative liability using the weighted-average Black-Scholes option pricing model, which approximates the Monte Carlo and other binomial valuation techniques, with the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 374.87%; (iii) risk free rate of 0.08%, (iv) expected term of 6 months, (v) market value share price of $0.0019, and (vi) per share conversion price of $0.00072. This conversion produced an increase in additional paid in capital of $14,016 and a decrease in the derivative liability by the same amount. There was also a change in fair value of the derivative liability of $6,586 producing an increase in the derivative liability by the same amount.

 

 

POWERDYNE INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2014 and 2013

 

On December 1, 2014 the Investor/Lender exercised its right to convert $6,500 of the Note into 9,848,485 common shares. The Company has determined that the conversion feature is considered an embedded conversion feature and thereby creates a derivative liability for the Company. On the date of conversion, the Company calculated the value of the derivative liability using the weighted-average Black-Scholes option pricing model, which approximates the Monte Carlo and other binomial valuation techniques, with the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 383.37%; (iii) risk free rate of 0.08%, (iv) expected term of 6 months, (v) market value share price of $0.0015, and (vi) per share conversion price of $0.00066. This conversion produced an increase in additional paid in capital of $12,819 and a decrease in the derivative liability by the same amount. There was also a decrease in the change in fair value of the derivative liability of $8,857 producing a decrease in the derivative liability by the same amount.

 

On December 4, 2014 the Investor/Lender exercised its right to convert $5,000 of the Note into 7,575,758 common shares. The Company has determined that the conversion feature is considered an embedded conversion feature and thereby creates a derivative liability for the Company. On the date of conversion, the Company calculated the value of the derivative liability using the weighted-average Black-Scholes option pricing model, which approximates the Monte Carlo and other binomial valuation techniques, with the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 385.74%; (iii) risk free rate of 0.08%, (iv) expected term of 6 months, (v) market value share price of $0.0015, and (vi) per share conversion price of $0.00066. This conversion produced an increase in additional paid in capital of $9,850 and a decrease in the derivative liability by the same amount. There was also a decrease in the change in fair value of the derivative liability of $39 producing a decrease in the derivative liability by the same amount.

 

On December 11, 2014 the Investor/Lender exercised its right to convert $4,385 of the Note into 7,972,018 common shares. The Company has determined that the conversion feature is considered an embedded conversion feature and thereby creates a derivative liability for the Company. On the date of conversion, the Company calculated the value of the derivative liability using the weighted-average Black-Scholes option pricing model, which approximates the Monte Carlo and other binomial valuation techniques, with the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 390.58%; (iii) risk free rate of 0.09%, (iv) expected term of 6 months, (v) market value share price of $0.0014, and (vi) per share conversion price of $0.00055. This conversion produced an increase in additional paid in capital of $9,738 and a decrease in the derivative liability by the same amount. There was also a change in fair value of the derivative liability of $3,223 producing an increase in the derivative liability by the same amount.

 

 

POWERDYNE INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2014 and 2013

 

On December 17, 2014 the Investor/Lender exercised its right to the balance of the loan amount of $7,115 plus $1,344 of accrued interest of the Note into 15,380,327 common shares. The Company has determined that the conversion feature is considered an embedded conversion feature and thereby creates a derivative liability for the Company. On the date of conversion, the Company calculated the value of the derivative liability using the weighted-average Black-Scholes option pricing model, which approximates the Monte Carlo and other binomial valuation techniques, with the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 376.95%; (iii) risk free rate of 0.11%, (iv) expected term of 6 months, (v) market value share price of $0.0013, and (vi) per share conversion price of $0.00055. This conversion produced an increase in additional paid in capital of $17,015 and a decrease in the derivative liability by the same amount. There was also a decrease in the change in fair value of the derivative liability of $1,772 producing a decrease in the derivative liability by the same amount. In addition, the Company recorded an amortization of debt discount of $30,000 and a reduction of debt discounts of the same amount. This note was fully converted into common stock as of December 17, 2014. Accordingly, the Company recorded a non-cash decrease in fair value of the derivative liability of $1,772 while also decreasing the derivative liability from $17015 to $-0- as of December 31, 2014. Also recorded for that period was an amortization of debt discount of $30,000. The derivative liability balance as of December 31, 2014 and 2013 was $-0- and $-0-, respectively. The debt discount balance as of December 31, 2014 and 2013 was $-0- and $-0-, respectively.

 

Tonaquint, Inc.

 

On September 19, 2014, the Company entered into an agreement with an another unrelated party in order to obtain short term cash flow in the form of a $59,000, ten (10) percent convertible Note Payable. Interest accrues at zero (0) percent for the first three months and if the borrower does not repay a payment of consideration on or before 90 days from its Effective Date, a one time interest charge of 12% shall be applied to the principal sum. The maturity date is one year from the effective date of the Note Payable. The lender has the right to convert at 60% of the lowest closing bid price of the Company’s common stock during the twenty-five day period prior to the conversion date or $0.002, whichever is less. In such case, the lender shall have the right to convert at 55% of the lowest closing bid price of the Company’s common stock applicable to all future conversions. As a result of the convertible note payable, the Company realized the derivative nature of those instruments. Accordingly, the Company recognized following charge to operations: derivative expense of $81,713. Furthermore, the Company recognized derivative liabilities in the amount of $131,713 and debt discounts in the amount of $50,000 which is amortized throughout the term of the note.

 

 

POWERDYNE INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2014 and 2013

 

On September 30, 2014, the Company revalued the derivative value of the $59,000 10% Note using the weighted-average Black-Scholes option pricing model with the following assumptions: (i) dividend yield of 0%; (ii) expected volatility of 350.09%; (iii) risk free rate of 0.13%, (iv) expected term of 1 year, (v) market value share price of $0.007, and (vi) per share conversion price of $0.00162. The Company determined the derivative value to be $245,715 as of September 30, 2014, which represents a change in the fair value of the derivative in the amount of $114,002 as compared to the derivative value on September 19, 2014. Accordingly, the Company recorded a non-cash change in fair value of the derivative liability of $114,002 while also increasing the derivative liability from $131,713 to $245,715 as of September 30, 2014.In addition, the Company recorded an amortization of debt discount of $5,616 and a reduction of debt discounts of the same amount.

 

On December 31, 2014, the Company revalued the derivative value of the $59,000 10% Note using the weighted-average Black-Scholes option pricing model with the following assumptions; (i) dividend yield of 0%; (ii) expected volatility of 347.59%; (iii) risk free rate of 0.25%, (iv) expected term of 1 year, (v) market value share price of $0.0012, and (vi) per share conversion price of $0.00042. The Company determined the derivative value to be $155,103 as of December 31, 2014, which represents a change in the fair value of the derivative in the amount of $90,612 as compared to the derivative value on September 30, 2014. Accordingly, the Company recorded a non-cash decrease in fair value of the derivative liability of $90,612 while also decreasing the derivative liability by the same amount. In addition, the Company recorded an amortization of debt discount of $12,603 and a reduction of debt discounts of the same amount. Accrued interest at December 31, 2014 and December 31, 2013 was $7,352 and $0, respectively. Accordingly, the Company recorded a non-cash decrease in fair value of the derivative liability of $90,612 while also increasing the derivative liability from $245,715 to $155,103 as of December 31, 2014. Also recorded for that period was an amortization of debt discount of $12,603. The derivative liability balance as of December 31, 2014 and 2013 was $155,103 and $-0-, respectively. The debt discount balance as of December 31, 2014 and 2013 was $31,781 and $-0-, respectively.

 

The total derivative liability balance at December 31, 2014 and 2013 was $407,735 and $94,876, respectively. The total note payable balance at December 31, 2014 and 2013 was $151,500 and $117,500, respectively and the unamortized debt discounts balance at December 31, 2014 and 2013 was $85,260 and $49,031, respectively. During the year ended December 31, 2014 the total amount of proceeds from notes payable was $185,500 and the total amount of notes payable converted to common stock in exchange for settlement of debt was $155,942, and also $5,806 of accrued interest was converted to common stock in exchange for settlement of debt. In addition, the derivative expense at December 31, 2014 and 2013 was $668,584 and $33,833, respectively, and the change in fair value of derivatives at December 31, 2014 and 2013 was income of $159,406 and expense of $18,296, respectively. The total amortization of the debt discount at December 31, 2014 and 2013 was $183,759 and $18,469, respectively.

 

 

POWERDYNE INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2014 and 2013

 

9. RELATED PARTY – PROMISSORY NOTE

 

During the year ended December 31, 2014 the total amount of related party loan proceeds was $44,000 and the total principal repaid on related party loans was $453. The total interest accrued on related party loans at December 31, 2014 and December 31, 2013 was $11,124 and $5,056, respectively.

 

From time to time, the Company advances amounts to stockholders, as well as receives payments from stockholders in the form of cash and/or out-of-pocket expenditures for the benefit of the Company, which are business in nature. The balance of advances to stockholder as of December 31, 2014 and December 31, 2013 was $11,321 and $11,321, respectively. Amounts accrued, but not yet paid as due to related party at December 31, 2014 and December 31, 2013 was $33,425 and $14,250, respectively.

 

The Company obtained short-term cash flow from a related party in the form of three demand Notes Payable in the aggregate amount of $10,000 which have been outstanding since the year ended December 31, 2012. The 3 notes were amended and extended during 2014, changing the maturity date to one year later than on the original due date. The Notes bear an interest rate of 7% per annum and are unsecured.

 

Note		Principal				Rate				Accrued interest								Maturity
										12/31/14				12/31/13
Promissory note 1		$	6,000				7	%		$	975			$	556			9/4/2015
Promissory note 2		$	2,000				7	%		$	314			$	175			10/1/2015
Promissory note 3		$	2,000				7	%		$	290			$	151			12/3/2015
Total		$	10,000							$	1,579			$	882

 

The Company obtained short-term cash flow from a related party in the form of nine demand Notes Payable in the aggregate amount of $70,500 during the period from 2012 through December 31, 2014. The Company repaid the principal amount of $228 during the quarter ended September 30, 2014, and $225 during the quarter ended December 31, 2014. Notes 1 through 6 were amended and extended during 2014, changing the maturity date to one year later than what was on original notes. The Notes bear an interest rate of 7% per annum and are unsecured.

 

 

POWERDYNE INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2014 and 2013

 

Note		Principal				Rate				Accrued interest								Maturity
										12/31/14				12/31/13
Promissory note 1		$	5,000				7	%		$	821			$	472			7/25/2015
Promissory note 2		$	11,000				7	%		$	1,686			$	918			10/22/2015
Promissory note 3		$	15,000				7	%		$	2,203			$	1,156			11/24/2015
Promissory note 4		$	102				7	%		$	16			$	8			10/22/2015
Promissory note 5		$	879				7	%		$	129			$	68			11/24/2015
Promissory note 6		$	972				7	%		$	160			$	92			7/25/2015
Promissory note 7		$	24,547				7	%		$	1,148			$	-			5/4/2016
Promissory note 8		$	7,000				7	%		$	28			$	-			12/11/2016
Promissory note 9		$	6,000				7	%		$	12			$	-			12/22/2016
Total		$	70,500							$	6,203			$	2,714

 

The Company obtained short-term cash flow from a related party in the form of four demand Notes Payable in the aggregate amount of $6,504 during the period from 2012 through March 31, 2013. Notes 1 and 2 were amended and extended during 2014, changing the maturity date to one year later than the original maturity date. The Notes bear an interest rate of 7% per annum and are unsecured.

 

Note		Principal				Rate				Accrued interest								Maturity
										12/31/14				12/31/13
Promissory note 1		$	234				7	%		$	34			$	17			12/5/2015
Promissory note 2		$	170				7	%		$	25			$	13			11/18/2015
Promissory note 3		$	4,100				7	%		$	546			$	259			2/5/2015
Promissory note 4		$	2,000				7	%		$	265			$	126			2/7/2015
Total		$	6,504							$	870			$	415

 

The Company obtained short-term cash flow from a related party in the form of two demand Notes Payable in the aggregate amount of $18,000 during the year of 2013. Note 1 was amended and extended during 2014, changing the maturity date to one year later than the original maturity date. The Notes bear an interest rate of 7% per annum and are unsecured.

 

Note		Principal				Rate				Accrued interest								Maturity
										12/31/14				12/31/13
Promissory note 1		$	10,000				7	%			1,300				602			2/21/2015
Promissory note 2		$	8,000				7	%			1,002				443			3/18/2015
Total		$	18,000								2,302			$	1,045

 

 

POWERDYNE INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2014 and 2013

 

The Company obtained short-term cash flow from a related party in the form of one demand Note Payable in the aggregate amount of $6,000 during the year of 2014. The Note bears an interest rate of 7% per annum and is unsecured.

 

Note		Principal				Rate				Accrued interest								Maturity
										12/31/14				12/31/13
Promissory note 1		$	6,000				7	%			170				-			8/6/2016
Total		$	6,000								170			$	-

 

During the year ended December 31, 2014 the total amount of related party loan proceeds was $44,000 and the total principal repaid on related party loans was $453. The total interest accrued on related party loans at December 31, 2014 and December 31, 2013 was $11,124 and $5,056, respectively.

 

From time to time, the Company advances amounts to stockholders, as well as receives payments from stockholders in the form of cash and/or out-of-pocket expenditures for the benefit of the Company, which are business in nature. The balance of advances to stockholder as of December 31, 2014 and December 31, 2013 was $11,321 and $11,321, respectively. Amounts accrued, but not yet paid as due to related party at December 31, 2014 and December 31, 2013 was $33,425 and $14,250, respectively.

 

10. COMMITMENTS AND CONTINGENCIES

 

Litigation

 

During the ordinary course of the Company’s business, it is subject to various claims and litigation. Management believes that the outcome of such claims or litigation will not have a material adverse effect on the Company’s financial position, results of operations or cash flow.

 

The Company is involved in a legal settlement with a former employee of the Company. The Company is seeking reimbursement of expenses paid in the amount of $5,000. The former employee is seeking further additional expenses incurred in the amount of $6,500. It is the opinion of the Company’s legal counsel that the legal action is without merit and no accrual has been recorded for this claim.

 

The Company was the named defendant in a civil suit in the District Court for the State of Rhode Island alleging that the Company owes the defendant $6,875 and is seeking $6,875 plus attorney’s fees. The claim was settled for the amount of $3,864 which was paid on September 4, 2014.

 

 

POWERDYNE INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2014 and 2013

 

Financing Agreements

 

On June 5, 2013, the Company signed a “Term Sheet” with a venture capital group, outlining the equity financing arrangement the companies have agreed on. On August 7, 2013, the Company signed an “Investment Agreement” with that venture capital group which details and supersedes the “Term Sheet” financing arrangement. The “Investment Agreement” calls for the Company to make available to the venture capital group for purchase up to $3,000,000 in a “Registered Direct Offering” of the Company’s common stock at 80% of market price under certain conditions. The Company is required to prepare a stock registration statement that is declared “effective” by the Securities and Exchange Commission. The Company was required to pay for the document preparation fees as well as issue 5% of the offering amount in newly issued common stock representing a commitment fee upon execution of the term sheet. As partial fulfillment of the commitment fee, the Company issued 441,177 shares at $0.068 per share for a total value of $30,000 on June 27, 2013. The Company issued the balance of the commitment shares totaling 1,764,707 shares at $0.068 per share for a total value of $120,000. These shares were issued on July 2, 2013.

 

11. SUBSEQUENT EVENTS

 

Management has evaluated subsequent events through April 15, 2015, the date upon which the financial statements were issued. Subsequent events are as follows:

 

On January 26, 2015, Powerdyne International, Inc. filed Form 8-K in order to increase the authorized capital stock to 2,020,000,000 shares consisting of 2,000,000,000 common shares, par value $0.0001 per share and 20,000,000 shares which may be designated as common or preferred stock, par value $0.0001 per share. On March 11, 2015, Powerdyne International, Inc. filed a Form 8-K announcing it entered into a five-year contract with Farmacia Brisas del Mar, a corporation organized under the laws of Puerto Rico, to lease power generating equipment based upon power consumption. The custom designed system will also provide cogeneration capabilities with the addition of chillers to support the air conditioning demands.

 

 

F-31