UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

 FORM 10-Q

 

  X   

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

For the quarterly period ended March 31, 2015

       

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

For the transition period from ______ to _______

Commission File Number 000-53299

POWRTEC INTERNATIONAL CORP.

(Exact name of registrant as specified in its charter)

 

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

 

1669 Hollenbeck Avenue, Suite 142

Sunnyvale, CA 94087

(Address of principal executive offices)

(408) 374-1900

(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  X   No       

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes       No  X   

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes       No  X   

As of May 12, 2015, there were 102,780,377 shares of the registrant’s $0.001 par value common stock issued and outstanding.

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POWRTEC INTERNATIONAL CORP.

TABLE OF CONTENTS

		Page
PART I.              FINANCIAL INFORMATION
ITEM 1.	CONSOLIDATED FINANCIAL STATEMENTS	3
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	12
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	14
ITEM 4.	CONTROLS AND PROCEDURES	14
PART II.            OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	15
ITEM 1A.	RISK FACTORS	15
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	15
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	15
ITEM 4.	MINE SAFETY DISCLOSURES	15
ITEM 5.	OTHER INFORMATION	15
ITEM 6.	EXHIBITS	15

Special Note Regarding Forward-Looking Statements

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

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

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PART I - FINANCIAL INFORMATION

 

ITEM 1.

CONSOLIDATED FINANCIAL STATEMENTS

POWRtec International Corp.

March 31, 2015

Index

Consolidated Balance Sheets

4

Consolidated Statements of Operations

5

Consolidated Statements of Cash Flows

6

Notes to the Consolidated Financial Statements

7

3

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POWRTEC INTERNATIONAL CORP.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
				March 31, 2015		December 31, 2014
Assets
	Current assets:
		Cash and cash equivalents	$	860	$	1,948
		Total current assets and total assets	$	860	$	1,948
Liabilities and stockholders' deficiency
	Current liabilities:
		Accounts payable		582,361		582,361
		Payable to related parties		1,728,274		1,720,444
		Accrued liabilities		1,076,862		1,079,087
		Deferred revenue		147,987		147,987
		Accrued interest		120,519		115,175
		Notes due to related party		71,500		58,500
		Term notes		25,000		25,000
		Convertible notes		182,580		182,580
	Total current liabilities and total liabilities			3,935,083		3,911,134
Stockholders' deficiency:
	Preferred stock, $0.001 par value; 5,000,000 shares authorized; 0 shares issued and outstanding			-		-
	Common stock, $0.001 par value; 300,000,000 shares authorized; 102,780,377 shares issued and outstanding at March 31, 2015 and December 31, 2014.			102,780		102,780
	Additional paid-in capital			5,152,161		5,149,531
	Accumulated deficit			(9,189,164)		(9,161,497)
	Total stockholders' deficiency			(3,934,223)		(3,909,186)
Total liabilities and stockholders' deficiency			$	860	$	1,948

See notes to consolidated financial statements.

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POWRTEC INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
				For the three months ended
				March 31, 2015			March 31, 2014
Revenue			$	-		$	-
Cost of goods sold				-			-
Gross profit				-			-
Operating expenses
	Selling and marketing			3,991			2,575
	General and administrative			18,332			85,752
		Total operating expenses		22,323			88,327
Operating loss				(22,323)			(88,327)
Interest expense				5,344			8,010
Net loss before tax provision				(27,667)			(96,337)
Tax provision				-			-
Net loss			$	(27,667)		$	(96,337)
Basic and diluted loss per share of common stock			$	(0.00)		$	(0.00)
Weighted average number of common shares outstanding
	used in basic and diluted loss per share			102,780,377			102,780,377

See notes to consolidated financial statements.

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POWRTEC INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
				For the three months ended
				March 31, 2015		March 31, 2014
Operating activities
	Net loss		$	(27,667)	$	(96,337)
	Adjustments to reconcile net loss to net cash used in operating activities
		Stock based compensation expense		2,630		2,630
		Accruals for expenses payable to related parties		7,830		95,388
		Interest accrued on notes		5,344		8,010
	Changes in operating assets and liabilities
		Accrued liabilities		(2,225)		(5,085)
	Net cash provided by (used in) operating activities			(14,088)		4,606
	Financing activities
		Net change in bank overdraft		-		(99)
		Proceeds from notes payable to related party		13,000		-
	Net cash provided by (used in) financing activities			13,000		(99)
	Net increase (decrease) in cash and equivalents			(1,088)		4,507
	Cash and cash equivalents at beginning of year			1,948		5
	Cash and cash equivalents at end of year		$	860	$	4,512
	Supplemental disclosures of cash flow information:
		Cash paid for interest	$	-	$	-
		Cash paid for taxes	$	800	$	800

See notes to consolidated financial statements.

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POWRTEC INTERNATIONAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2015

(Unaudited)

1. OVERVIEW

Basis of Presentation

These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of March 31, 2015 and the results of operations and cash flows for the periods presented. The results of operations for the three months ended March 31, 2015 are not necessarily indicative of the operating results for the full fiscal year or any future period. These consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. The Company’s accounting policies are described in the Notes to Consolidated Financial Statements in its Annual Report on Form 10-K for the year ended December 31, 2014, filed on March 19, 2015, and updated, as necessary, in this Quarterly Report on Form 10-Q.

Corporate History

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

The consolidated statements of operations include the results of operations of POWRtec from its inception, and the results of operations of SFCF from the Acquisition Date through March 31, 2015. Our fiscal year end is December 31.

Going concern

The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern, which assumes the Company will realize its assets and discharge its liabilities in the normal course of business. The Company requires additional funds to continue operations. As reflected in the accompanying financial statements, the Company has a net loss since inception of approximately $9.2 million, has experienced a number of quarters with no revenue, and has a cash balance of $860. As of March 31, 2015, total liabilities exceeded total assets by over $3.9 million. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement a business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Because the Company has net losses since inception and does not expect to be profitable until 2015 or later, it will most likely be required to raise required additional funds through convertible debt, debt or equity financings or by selling its assets.

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

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Uses of estimates in the preparation of financial statements

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

Recent accounting pronouncements

 

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

3. DEFERRED REVENUE

The Company sells its meters under the terms of a supply contract with its single customer that provides for certain advance payments. Any such payments received by the Company in advance of shipments are treated as deferred revenue which is then recognized as revenue when subsequently shipped and invoiced. Deferred revenue at March 31, 2015 and March 31, 2014 was $147,987 and, $147,987, respectively

4. WARRANTY RESERVE

Based on experience, the Company has determined that replacement of certain components in its meters may be necessary from time to time, and estimates and accrues for the potential cost of this component replacement.   The last order received from its only customer included a credit allowance for past warranty claims which would be amortized ratably over the shipments made against that order.  No shipments have been made in the 21 months ended March 31, 2015, and accordingly the unamortized balance of $25,393 remained unchanged at March 31, 2015 and 2014.  Warranty reserves were included as accrued liabilities in the accompanying balance sheets.

5. NOTES PAYABLE

A)

CONVERTIBLE NOTES

At various times, starting July 1, 2010, the Company has raised funds through the issuance of unsecured convertible promissory notes for terms ranging from six months to two years at interest rates ranging from 6% to 60% per annum. As of November 2, 2013 the notes have all matured and the Company has attempted to repay the noteholders, however such attempts have been unsuccessful as the Company has been unable to locate the noteholders at the addresses provided, nor find them in an internet search. The Company has continued to accrue interest while it seeks an appropriate resolution.

Summary			March 31, 2015		December 31, 2014
Principal amount of convertible notes issued		$	290,080	$	290,080
Amounts repaid			(89,500)		(89,500)
Amounts converted			(18,000)		(18,000)
Balance of principal amount			182,580		182,580
Note discount			(52,461)		(52,461)
less Accumulated amortization of discount			52,461		52,461
Convertible notes, net of discount		$	182,580	$	182,580

As at March 31, 2015 and December 31, 2014, the Company had accrued $120,519 and $115,175 respectively of interest on the notes, which will be paid, or converted into common stock when the noteholders can be contacted.  Based on the share price of $.002 at March 31, 2015, the Company would require, approximately 99 million shares of common stock to convert the notes and accrued interest then outstanding.

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The Company recognizes the underlying value of embedded derivatives in accordance with ASC 815-15-25-1. The value of the option for noteholders to convert their notes into shares of common stock is calculated and credited as a derivative liability for the duration of the notes, while an offsetting amount is classified as a discount to the principal value of the notes. Since no new convertible notes were issued during the three months ended March 31, 2015 and year ended December 31, 2014, no derivative value was added to the discount reserve or derivative liability in these years, respectively. The value of the debt discount is amortized as interest expense on a straight line basis over the life of the notes. As at December 31, 2014, the convertible notes had reached maturity, and the discount and derivative liability were fully amortized.

B)

TERM NOTES

The Company also has an unsecured term note for $25,000, which was due April 12, 2012. The interest rate on this note is 8% per annum and interest expense of $493 was accrued for the three months ended March 31, 2015 and March 31, 2014, respectively. The note has reached its maturity date, and the Company has let the note roll over on a month to month basis with no change in terms.

6. INCOME TAXES

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

			Three months ended		Year ended
			March 31, 2015		December 31, 2014
Statutory federal income tax rate			34.0%		34.0%
State income tax, net of federal benefits			6.0%		6.0%
Permanent differences			0.0%		0.0%
Valuation allowance			-40.0%		-40.0%
Income tax provision (benefit)			0.0%		0.0%
The benefit for income tax is summarized as follows:
			Three months ended		Year ended
			March 31, 2015		December 31, 2014
Federal
	Current	$	-	$	-
	Deferred		-		4,958
State
	Current		-		-
	Deferred		-		875
Change in valuation allowance			-		(5,833)
Income tax provision (benefit)		$	-	$	-
The tax effects of temporary differences that give rise to the Company's net deferred tax asset as of March 31, 2015 and December 31, 2014 are as follows:
			Three months ended		Year ended
			March 31, 2015		December 31, 2014
Deferred tax asset
	Net operating loss carryovers	$	(3,664,599)	$	(3,664,599)
	Accrued and stock based compensation		1,143,212		1,143,212
	Accrued interest		46,070		46,070
	Deferred revenue		59,195		59,195
Total deferred tax assets			(2,416,122)		(2,416,122)
	Valuation allowance		2,416,122		2,416,122
Deferred tax asset, net of allowance		$	-	$	-

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In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.  Based on the assessment, the Company has established a full valuation allowance against all of the deferred tax assets for every period because it is more likely than not that all of the deferred tax assets will not be realized. The Company is currently open to audit for all years because of its large net operating loss carry-forwards, however the Company is only open to additional tax assessments under the Internal Revenue Code statute of limitations for the years ended December 31, 2009 to present.

The Company does not currently have any ongoing tax examinations. If there is a change in ownership, the ability to fully utilize the tax losses may be limited.

7. STOCKHOLDERS’ DEFICIENCY

Common stock and warrants

The Company has reserved shares of common and preferred stock for issuance at March 31, 2015 and December 31, 2014, as follows:

Authorized shares
		March 31, 2015		December 31, 2014
Common shares, par value $0.001		300,000,000		300,000,000
Preferred shares, par value $0.001		5,000,000		5,000,000

Stock Option Plan

On December 15, 2010, the Company established the 2010 Share Incentive Plan (the “ Plan”), which permits the granting of stock options (including incentive stock options within the meaning of Code Section 422 and non-qualified stock options), stock appreciation rights, restricted or unrestricted stock awards, phantom stock, performance awards, and other stock-based awards. The Plan is not registered under Form S-8, and the Company will not register thereunder.

During the three months ended March 31, 2015 there were no grants, exercises or cancellations under the Plan and at March 31, 2015, 3,691,781 shares of Common Stock remain available for future grants.

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

During the three months ended March 31, 2015, and 2014, the Company recorded $2,630 and $2,630 of stock-based compensation expense, respectively, related to stock options granted to employees, directors and consultants.  

Warrants

The Company has issued to former directors and consultants of the Company a total of 3,436,230 warrants to purchase shares of common stock at prices ranging from $.004 to $0.11. The Company accounts for the compensation value embedded in the warrants in accordance to the provisions of ASC 718, "Stock Compensation" (formerly referred to as SFAS No. 123(R)). We estimate the fair value of each warrant award on the date of grant using the Black-Scholes option-pricing model, and appropriate assumptions for volatility, the expected term of options and the risk-free rate for the expected term of the option, and amortize the compensation expense on a straight-line basis over the shorter of the directors’ service periods or life of the warrant. During the three months ended March 31, 2015 and 2014, the Company did not record any equity-based compensation expense related to warrants granted to directors and consultants because the respective service periods had been fully amortized.  

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8. RELATED PARTY TRANSACTIONS

The following amounts are included as payable to related parties at March 31, 2015 and December 31, 2014, respectively.

		March 31, 2015		December 31, 2014
Due to CEO for accrued payroll	$	1,599,976	$	1,599,976
Due to CEO for advances provided to Company		71,500		58,500
Due to CFO for accrued consulting fees		128,298		120,468
Total due to related parties	$	1,799,774	$	1,778,944

9. COMMITMENTS AND CONTINGENCIES

The Company has no lease commitments. We do not own any real estate.

The Company has a judgment amount of $139,000 awarded against the Company for back rent, legal, and court costs. An amount of $38,000 is included in accrued liabilities being a management estimate of what the judgment could be settled for.

10. SUBSEQUENT EVENTS

The Company has evaluated events occurring after the date of these financial statements through May 12, 2015, the date that these financial statements were issued. There were no material subsequent events as of that date which would require disclosure in or adjustments to these financial statements.

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ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

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

RESULTS OF OPERATIONS

Working Capital

Working capital			March 31, 2015		December 31, 2014
	Current assets	$	860	$	1,948
	Current liabilities		3,935,083		3,911,134
	Working capital (deficit)	$	(3,934,223)	$	(3,909,186)

Cash Flows

The Company used $1,088 of cash in the three months ended March 31, 2015, as compared to $4,507 of cash generated in the three months ended March 31, 2014.

Three months ended March 31, 2015 and 2014

Operating Revenues

The market for the Company’s products is focused on international utility companies that are typified by lengthy evaluation periods and slow sales cycles. Following a slow-down in the construction and utility markets, we had received no orders since 2009. Starting from June 2012, we have resumed shipments to our former customer but on an irregular basis. No shipments took place in either of the three month periods ended March 31, 2015, or 2014, respectively. There are no assurances when additional shipments will be made, if at all.

Operating Expenses and Net Loss

		For the three months ended
Operating expenses		March 31, 2015			March 31, 2014		Change		%
Selling and marketing	$	3,991		$	2,575	$	1,416		55.0%
General and administrative		18,332			85,752		(67,420)		-78.6%
Total operating expenses	$	22,323		$	88,327	$	(66,004)		-74.7%

Selling and marketing

Selling and marketing activities are minimal in both periods as we wait to support our single customer’s requirements.

Research and development

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

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General and administrative

General and administrative expenses decreased approximately $67,000 for the three month period ended March 31, 2015 compared to the corresponding prior year period, following a Board decision to withhold the CEO’s salary until sales resume. General and administrative expenses relate principally to payroll accrual and the costs of compliance with our SEC reporting responsibilities.

Interest expenses

Interest expense includes interest on notes issued by the Company since 2010 to generate cash and pay for operating expenses. Interest expense decreased from $8,010 for the three months ended March 31, 2014 to $5,344 for the three months ended March 31, 2015.

Liquidity and Capital Resources

During the three months ended March 31, 2015, approximately $14,000 of net cash was used by operating activities of which approximately $27,000 was due to losses from operations, offset by advances made by a related party.

Going Concern

The Company requires additional funds to continue operations. As reflected in the accompanying financial statements, the Company has a net loss since inception of approximately $9.2 million, has experienced a number of quarters with no revenue, and has a cash balance of only $860. As of March 31, 2015, total liabilities exceeded total assets by over $3.9 million. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement a business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Because the Company has net losses since inception and does not expect to be profitable until later in 2015, it will most likely be required to raise these additional funds through convertible debt, debt or equity financings or by selling its assets.

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

Off-Balance Sheet Arrangements

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

Future Financings

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

Critical Accounting Policies

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

 

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

Recently Issued Accounting Pronouncements

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

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 4. 

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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

Based on this evaluation, our principal executive and principal financial and accounting officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) were effective as of March 31, 2015.

Changes in Internal Control over Financial Reporting

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

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

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PART II - OTHER INFORMATION

ITEM 1. 

LEGAL PROCEEDINGS

In the ordinary course of business, we may be subject to claims, counter claims, suits and other litigation of the type that generally arises from the conduct of our business. We are not aware of any threatened or pending litigation that we expect will have a material adverse effect on our business operations, financial condition or results of operations.

ITEM 1A.

RISK FACTORS

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

ITEM 2. 

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

1.

Quarterly Issuances:

None.

2.

Subsequent Issuances:

None.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.  

MINE SAFTEY DISCLOSURES

Not Applicable.

ITEM 5.

OTHER INFORMATION

None.

ITEM 6.

EXHIBITS

Exhibit
Number	Description of Exhibit	Filing
3.01	Certificate of Incorporation	Filed with the SEC on March 19, 2007 as part of our Registration Statement on Form SB-2.
3.01(a)	Amended and Restated Certificate of Incorporation	Filed with the SEC on May 28, 2010 as part of our Current Report on Form 8-K.
3.02	Bylaws	Filed with the SEC on March 19, 2007 as part of our Registration Statement on Form SB-2.
4.01	2010 Share Incentive Plan	Filed with the SEC on August 23, 2010 as part of our Registration Statement on Form S-8.
4.02	Sample Qualified Stock Option Grant Agreement	Filed with the SEC on August 23, 2010 as part of our Registration on Form S-8.
4.03	Sample Non-Qualified Stock Option Grant Agreement	Filed with the SEC on August 23, 2010 as part of our Registration Statement on Form S-8.
4.04	Sample Performance-Based Award Agreement	Filed with the SEC on August 23, 2010 as part of our Registration Statement on Form S-8.
10.01	Share Exchange Agreement between School4Chauffeurs, Inc., POWRtec Corporation and POWRtec Corporation Shareholders	Filed with the SEC on May 17, 2010 as part of our Current Report on Form 8-K.
10.02	Convertible Promissory Note between the Company and Koryak Investments S.A. dated July 1, 2010	Filed with the SEC on August 16, 2010 as part of our Quarterly Report on Form 10-Q.
10.03	Promissory Note between the Company and The Management AB dated July 9, 2010	Filed with the SEC on August 16, 2010 as part of our Quarterly Report on Form 10-Q.

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10.04	Nordic Advisory Board Agreement between the Company and Anders Sagadin dated December 1, 2010		Filed with the SEC on May 13, 2011 as part of our Quarterly Report on form 10-Q.
10.05	Nordic Advisory Board Agreement between the Company and Anders Rudlang dated December 1, 2010		Filed with the SEC on May 13, 2011 as part of our Quarterly Report on form 10-Q
10.06	First Extension to the Management AB Note dated January 9, 2011		Filed with the SEC on May 13, 2011 as part of our Quarterly Report on form 10-Q
10.07	Convertible Promissory Note between the Company and Asher Enterprises, Inc. dated March 15, 2011		Filed with the SEC on March 24, 2011 as part of our Current Report on Form 8-K.
10.08	Securities Purchase Agreement between the Company and Asher Enterprises, Inc. dated March 15, 2011		Filed with the SEC on March 24, 2011 as part of our Current Report on Form 8-K.
10.09	Subscription Agreement between the Company and Laurag Associates S.A. dated April 7, 2011.		Filed with the SEC on April 15, 2011 as part of our Annual Report on Form 10-K.
10.10	Second Extension to the Management AB Note dated April 9, 2011		Filed with the SEC on May 13, 2011 as part of our Quarterly Report on Form 10-Q.
10.11	Unsecured Promissory Note between the Company and Koryak Investments executed April 12, 2011		Filed with the SEC on May 13, 2011 as part of our Quarterly Report on Form 10-Q.
10.12	Securities Purchase Agreement between the Company and Asher dated May 19, 2011		Filed with the SEC on May 24, 2011 as part of our Current Report on Form 8-K.
10.13	Convertible Promissory Note dated May 19, 2011		Filed with the SEC on May 24, 2011 as part of our Current Report on Form 8-K.
10.14	Securities Purchase Agreement between the Company and Asher dated July 26, 2011		Filed with the SEC on July 28, 2011 as part of our Current Report on Form 8-K.
10.15		Convertible Promissory Note dated July 26, 2011	Filed with the SEC on July 28, 2011 as part of our Current Report on Form 8-K.
10.16		Consulting Agreement between the Company and Simon Westbrook entered into on August 3, 2011.	Filed with the SEC on March 30, 2012 as part of our Annual Report on Form 10-K.
16.01	Letter from Former Accountant Kyle L. Tingle, CPA, LLC, dated August 4, 2010		Filed with the SEC on August 11, 2010 as part of our Current Report on Form 8-K.
21.01	List of Subsidiaries		Filed with the SEC on May 17, 2010 as part of our Current Report on Form 8-K.
31.01	Certification of Principal Executive Officer Pursuant to Rule 13a-14		Filed herewith.
31.02	Certification of Principal Financial Officer Pursuant to Rule 13a-14		Filed herewith.
32.01	CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act		Filed herewith.
32.02	CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act		Filed herewith.
101.INS*	XBRL Instance Document		Filed herewith.
101.SCH*	XBRL Taxonomy Extension Schema Document		Filed herewith.
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document		Filed herewith.
101.LAB*	XBRL Taxonomy Extension Labels Linkbase Document		Filed herewith.
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document		Filed herewith.
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document		Filed herewith.

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

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SIGNATURES

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

POWRTEC INTERNATIONAL CORP.

Dated:  May 14, 2015

/s/ Grant Jasmin

By: Grant Jasmin

Its: President, Chief Executive Officer, and Secretary

Dated:  May 14, 2015

/s/ Simon Westbrook

By:  Simon Westbrook

Its:  Chief Financial Officer, Principal Accounting Officer, and Treasurer

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

Dated:  May 14, 2015

/s/ Grant Jasmin

By:  Grant Jasmin

Its:  Director

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