SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 

(Mark One)

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

 

For the quarterly period ended September 30, 2012

 

OR

 

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

For the transition period from to

 

Commission file number 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 Identification No.)
incorporation or organization)

 

300 Centerville Road

Suite 100E

Warwick, Rhode Island 02886

(Address of principal executive offices) (zip code)

 

401/739-3300

(Registrant's telephone number, including area code)

 

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

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

 

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 July 20, 2012
Common Stock, par value $0.0001		193,216,667 shares

 

Documents incorporated by reference:            None

  

 

POWERDYNE INTERNATIONAL INC.

INDEX TO FORM 10-Q FILING

september 30, 2012 and 2011

 

TABLE OF CONTENTS

 

				Page  Numbers
PART I - FINANCIAL INFORMATION
Item 1.		Financial Statements (unaudited)
		Balance Sheets (unaudited)		2
		Statements of Operations (unaudited)		3
		Statements of Cash Flows (unaudited)		5
		Notes to Financial Statements (unaudited)		6
Item 2.		Management Discussion and Analysis of Financial Condition and Results of Operations		17
Item 3.		Quantitative and Qualitative Disclosures About Market Risk		19
Item 4.		Controls and Procedures		19
PART II - OTHER INFORMATION
Item 1.		Legal Proceedings		21
Item 1A		Risk Factors		21
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		21
Item 3.		Defaults Upon Senior Securities		21
Item 4.		Submission of Matters to a Vote of Security Holders		21
Item 5.		Other information		21
Item 6.		Exhibits		22
CERTIFICATIONS
	Exhibit 31 – Management certification
	Exhibit 32 – Sarbanes-Oxley Act

 

 

PART I

 

POWERDYNE INTERNATIONAL, INC.

(A Development Stage Company)

BALANCE SHEETS

 

		September 30, 2012				December 31, 2011
		(unaudited)
ASSETS
Current Assets:
Cash		$	117			$	17,664
Prepaid expenses			-				1,817
Advances to stockholder			11,321				11,321
Total current assets			11,438				30,802
Equipment, net			119,493				129,821
Total Assets		$	130,931			$	160,623
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable and accrued expenses		$	140,669			$	135,626
Due to related party			4,700				-
Notes payable-related party			11,000				—
Tax payable			—				956
Total current liabilities			156,369				136,582
Total Liabilities			156,369				136,582
Stockholders' Equity (Deficit):
Common stock; $0.0001 par value;  300,000,000 shares authorized, 193,216,667 shares issued and outstanding as of September 30, 2012 and 191,750,000 shares issued and outstanding as of December 31, 2011			19,322				19,175
Additional paid-in capital			1,090,778				1,056,925
Accumulated deficit			(1,135,538	)			(1,052,059	)
Total Stockholders' Equity (Deficit)			(25,438	)			24,041
Total Liabilities and Stockholders' Equity (Deficit)		$	130,931			$	160,623

 

 

POWERDYNE INTERNATIONAL, INC.

(A Development Stage Company)

STATEMENTS OF OPERATIONS

(Unaudited)

 

		For the three				For the three				For the Nine				For the Nine				For the period from
		months  ended				months  ended				Months Ended				Months Ended				February 2, 2010 (inception)
		September 30, 2012				September 30, 2011				September 30, 2012				September 30, 2011				to September 30, 2012
Revenues		$	-			$	-			$	-			$	-			$	-
Cost of revenues			-				-				-				-				-
Gross profit			-				-				-				-				-
Operating expenses			22,610				49,892				83,479				694,272				1,132,670
Loss from operations			(22,610	)			(49,892	)			(83,479	)			(694,272	)			(1,132,670	)
Income tax expense			—				956				—				1,912				2,868
Net loss		$	(22,610	)		$	(50,848	)		$	(83,479	)		$	(696,184	)		$	(1,135,538	)
Basic and diluted loss per common share		$	(0.00	)		$	(0.00	)		$	(0.00	)		$	(0.00	)
Basic and diluted weighted average common shares outstanding			193,216,667				190,608,696				193,093,431				191,890,110

 

 

POWERDYNE INTERNATIONAL, INC.

(A Development Stage Company)

STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

For the period from February 2, 2010 (Inception) to September 30, 2012

 

														Additional												Total
		Common Stock								Common Stock				Paid-In				Common Stock				Accumulated				Stockholders'
		Shares				Amount				Subscribed				Capital				Subscriptions Receivable				Deficit				Equity (Deficit)
Balance, February 2, 2010 (Inception)			1,000,000			$	100			$	-			$	900			$	-			$	-			$	1,000
Common stock subscribed			-				-				191,900				-				(61,915	)			-				129,985
Stock issued for change in control			188,000,000				18,800				-				(18,800	)			-				-				-
Stock issued for services			16,000,000				1,600				-				158,400				-				-				160,000
Net loss for the period			-				-				-				-				-				(306,270	)			(306,270	)
Balance, December 31, 2010  (1)			205,000,000				20,500				191,900				140,500				(61,915	)			(306,270	)			(15,285	)
Recapitalization shares contributed from
reverse merger agreement			(84,526,666	)			(8,453	)			-				8,453				-				-				-
Issuance pursuant to merger
agreement for services - fair valued			32,500,000				3,250				-				321,750				-				-				325,000
Issuance per cash considerations in
relation to the stockholder subscription			36,026,666				3,603				(191,900	)			523,997				(102,200	)			-				233,500
Common stock issued			2,750,000				275				-				62,225				164,115								226,615
Net loss for the year			-				-				-				-				-				(745,789	)			(745,789	)
Balance, December 31, 2011			191,750,000				19,175				-				1,056,925				-				(1,052,059	)			24,041
Issuance per cash considerations in			-				-				-				-				-				-				-
relation to the stockholder subscription			966,667				97				-				28,903				-				-				29,000
Stock issued for services			500,000				50				-				4,950				-				-				5,000
Net loss for the nine months ended 9/30/2012			-				-				-				-				-				(83,479	)			(83,479	)
Balance, September 30, 2012, (Unaudited)			193,216,667			$	19,322			$	-			$	1,090,778			$	-			$	(1,135,538	)		$	(25,438	)

 

(1) The capital accounts of the Company have been retroactivrly restated to reflect the equivalent number of common shares based on the exchange ratio of the merger transaction. See Note 2.

 

 

POWERDYNE INTERNATIONAL, INC.

(A Development Stage Company)

STATEMENTS OF CASH FLOWS

(Unaudited)

 

		For The Nine				For The Nine				From February 2, 2010
		Months Ended				Months Ended				(Inception) to
		September 30, 2012				September 30, 2011				September 30, 2012
Operating Activities:
Net loss		$	(83,479	)		$	(696,184	)		$	(1,135,538	)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization			10,328				66				13,570
Stock compensation			5,000				325,000				490,000
Changes in operating assets and liabilities:
Prepaid expenses			1,817				(3,409	)			—
Accrued expenses			5,043				89,529				140,669
Due to related party			4,700				-				4,700
Tax payable			(956	)			-				—
Net cash used in operating activities			(57,547	)			(284,998	)			(486,599	)
Investing Activities:
Purchase of equipment			-				(113,162	)			(133,063	)
Net cash used in investing activities			-				(113,162	)			(133,063	)
Financing Activities:
Advances to stockholder			-				(9,927	)			(11,321	)
Notes payable			11,000				-				11,000
Proceeds from issuance of common stock			29,000				452,615				620,100
Net cash provided by financing activities			40,000				442,688				619,779
Net change in cash			(17,547	)			44,528				117
Cash, beginning of period			17,664				2,059				-
Cash, end of period		$	117			$	46,587			$	117
Suppplemental disclosure of cash flow information
Cash paid for interest		$	-			$	-			$	-
Cash paid for taxes		$	956			$	-			$	2,868

 

 

POWERDYNE INTERNATIONAL, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

September 30, 2012 and 2011

(Unaudited)

 

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 shell corporation with minimal assets and no operations.

 

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.

 

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. At this time, the majority stockholder has patents pending with the United States Patent Office regarding the unique design of these units.

 

2. REVERSE MERGER ACCOUNTING

 

On February 7, 2011, Greenmark Acquisition Corporation, which was a publicly held Delaware shell corporation with no operations 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 is being accounted for as a reverse-merger, and recapitalization in accordance with generally accepted accounting principles in the United States (“GAAP”). Powerdyne, Inc. is the acquirer for financial reporting purposes and the Company is 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 have been retroactively restated as capital stock shares reflecting the exchange ratio in the merger.

 

 

POWERDYNE INTERNATIONAL, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

September 30, 2012 and 2011

(Unaudited)

 

2. REVERSE MERGER ACCOUNTING (CONTINUED)

 

In conjunction with the merger, the Company received no cash and assumed no liabilities from Greenmark Acquisition Corporation. All members of the Company’s executive management are from Powerdyne, Inc.

 

3. BASIS OF PRESENTATION

 

The accompanying unaudited financial statements primarily reflect the financial position, results of operations and cash flows of the Company (as discussed above). The accompanying unaudited financial statements have been prepared in accordance with GAAP for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission. Accordingly, these interim financial statements do not include all of the information and footnotes required by GAAP for annual financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012 or for any other period. These financial statements and accompanying notes should be read in conjunction with the financial statements and notes thereto in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011 on file with the SEC (our “Annual Report”). There have been no material changes to our significant accounting policies as compared to the significant accounting policies described in our Annual Report.

 

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. The Company is classified as a development stage enterprise under GAAP and has not generated significant revenues from its principal operations.

 

Development Stage and 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. Accordingly, the Company is considered to be in the development stage as defined in GAAP. The Company has not generated significant revenues from its principal operations, and there is no assurance of future revenues. As of September 30, 2012, the Company had an accumulated deficit from inception of $1,135,538.

 

 

POWERDYNE INTERNATIONAL, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

September 30, 2012 and 2011

(Unaudited)

 

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

The Company’s activities will necessitate significant uses of working capital beyond 2012. 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, more specifically from one of its major shareholders.

 

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 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.

 

Fair Value of Financial Instruments

 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on the Company’s principal or, in the absence of a principal, most advantageous market for the specific asset or liability.

 

GAAP provides for a three-level hierarchy of inputs to valuation techniques used to measure fair value, defined as follows:

 

Level 1 — Inputs that are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability, including:

- Quoted prices for similar assets or liabilities in active markets

- Quoted prices for identical or similar assets or liabilities in markets that are not active.

- Inputs other than quoted prices that are observable for the asset or liability

- Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

 

 

POWERDYNE INTERNATIONAL, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

September 30, 2012 and 2011

(Unaudited)

 

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Level 3 — Inputs that are unobservable and reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances (e.g., internally derived assumptions surrounding the timing and amount of expected cash flows). The Company did not measure any financial instruments presented on the balance sheets at fair value on a recurring basis using significantly unobservable inputs (Level 3) during the nine months ended September 30, 2012 or during the year ended December 31, 2011.

 

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 include cash and accrued liabilities. The estimated fair value of these instruments approximates its carrying amount due to the short maturity of these instruments.

 

Management believes it is not practical to estimate the fair value of advances to stockholder because the transactions cannot be assumed to have been consummated at arm’s length, the terms are not deemed to be market terms, there are no quoted values available for these instruments, and an independent valuation would not be practical due to the lack of data regarding similar instruments, if any, and the associated potential costs.

 

Cash and Cash Equivalents

 

The Company considers all highly-liquid investments with maturities of three months or less when purchased to be cash equivalents. The Company had no cash equivalents as of September

30, 2012 and December 31, 2011.

 

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.

 

Revenue Recognition

 

The Company is in the development stage and has yet to realize revenues from planned operations.  The Company will recognize revenue on arrangements in accordance with Financial

 

 

POWERDYNE INTERNATIONAL, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

September 30, 2012 and 2011

(Unaudited)

 

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Accounting Standards Board Accounting Standards Codification (“ASC”) No. 605, “Revenue Recognition”.  In all cases, revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured. The Company has not recorded any sales transactions since inception.

 

Equipment, net

 

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 process’ 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 nine months ended September 30, 2012 and 2011 was $10,328 and $0, respectively, and $13,570 for the period from inception to September 30, 2012.

 

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.

 

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.

 

 

POWERDYNE INTERNATIONAL, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

September 30, 2012 and 2011

(Unaudited)

 

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT INUED)

 

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. Taxes payable as of September 30, 2012 and December 31, 2011 was $0 and $956, respectively.

 

Share Based Compensation

 

The Company applies ASC 718, Share-Based Compensation to account for its service providers’ share-based payments. Common stock of the Company was given to service providers to retain their assistance in becoming a U.S. public company, assistance with public company regulations, investors’ communications and public relations with broker-dealers, market makers and other professional services.

 

In accordance with ASC 718, the Company determines whether a share payment should be classified and accounted for as a liability award or equity award. All grants of share-based payments to service providers classified as equity awards are recognized in the financial statements based on their grant date fair values which are calculated using historical pricing.

 

The Company has elected to recognize compensation expense based on the criteria that the stock awards vest immediately on the issuance date. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent period if actual forfeitures differ from initial estimates. There were no forfeitures of share based compensation.

 

 

POWERDYNE INTERNATIONAL, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

September 30, 2012 and 2011

(Unaudited)

 

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

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 September 30, 2012 and 2011, there were no outstanding dilutive securities.

 

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

 

		Nine months				Nine months
		ended September				ended September
		30, 2012				30, 2011
Loss available for common shareholder		$	(83,479	)		$	(696,184	)
Basic and fully diluted loss per share		$	(0.00	)		$	(0.00	)
Weighted average common shares outstanding - basic and diluted			193,093,431				191,890,110

 

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

 

Recent Accounting Pronouncements

 

Adopted -

 

In May 2011, the Financial Accounting Standards Board ("FASB") issued a new accounting standard on fair value measurements that clarifies the application of existing guidance and disclosure requirements, changes certain fair value measurement principles and requires additional disclosures about fair value measurements. The standard is effective for interim and annual periods beginning after December 15, 2011. Adoption of this accounting standard did not have a material impact on our financial statements and related disclosures.

 

 

POWERDYNE INTERNATIONAL, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

September 30, 2012 and 2011

(Unaudited)

 

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Not Adopted -

 

In December 2011, the FASB issued ASU 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. The amendments in this update require an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. This update will enhance disclosures required by U.S. GAAP by requiring improved information about financial instruments and derivative instruments. The requirements of this update are effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. Entities should provide the disclosures required retrospectively for all comparative periods presented. We are currently evaluating the impact of adopting ASU 2011-11 on the consolidated financial statements.

 

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the United States Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

 

5. EQUIPMENT - NET

 

Equipment consists of the following as of September 30, 2012 and December 31, 2011:

 

		September 30, 2012				December 31, 2011
Motor vehicles		$	1,976			$	1,976
Machinery and equipment			131,087				131,087
Less accumulated depreciation			(13,570	)			(3,242	)
Total equipment - net		$	119,493			$	129,821

 

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. The machinery and equipment that was previously classified as ‘construction in process,’ was placed into service on October 1, 2011. Total depreciation expense for the nine months ended September 30, 2012 and 2011 was $10,328 and $0, respectively and from February 2, 2010 (Inception) to September 30, 2012 was $13,570.

 

6. COMMON STOCK

 

Starting in June 2010, the Company entered into various stockholder subscription agreements with private investors in order to provide working capital for the Company. The agreements were sold to private investors at $0.01 to $0.03 per share in various share amounts. The agreement stipulated that the shares of common stock would not be issued to the investors until the execution of the reverse merger agreement and subsequent Initial Public Offering. During fiscal year 2010, the Company raised $191,900 from the stockholder subscription agreements for the purchase of 19,190,000 shares of common stock. The Company had $61,915 in common stock subscription receivable as of December 31, 2010. The 19,190,000 shares of common stock were issued on February 8, 2011.

 

 

POWERDYNE INTERNATIONAL, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

September 30, 2012 and 2011

(Unaudited)

 

6. COMMON STOCK (CONTINUED)

 

On December 11, 2010, the Company issued 2,000,000 shares of common stock to each of Tiber Creek Corporation and IRAA Fin Serv. for services rendered on behalf of Powerdyne Inc. The shares were valued at their estimated fair value of $0.01 per share for a total compensation of $40,000.

 

On December 13, 2010, the Company issued 188,000,000 to Dale Euga, the sole shareholder of Powerdyne Inc. The shares were issued to effect a change of control of the Company in anticipation of the merger that was eventually consummated with Powerdyne, Inc.

 

On December 13, 2010, the Company issued 12,000,000 shares of common stock to Arthur Read, II, Esq for services rendered on behalf of Powerdyne Inc. The shares were valued at their estimated fair value of $0.01 per share for a total compensation of $120,000.

 

On February 7, 2011, in connection with the merger, Dale Euga contributed 84,526,666 shares of common stock to the Company which were then cancelled. Mr. Euga received no compensation for these shares.

 

On February 8, 2011, the Company issued 32,500,000 shares of common stock to employees and consultants for services. The Company recorded an expense of $325,000 based on an estimated fair value of $0.01 per share.

 

Pursuant to the terms and conditions of the merger on February 7, 2011 (see Note 1 and 2) 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 Powerdyne International, Inc. common stock.

 

For the nine months ended September 30, 2012, the Company raised an additional $29,000 from stockholder subscription agreements for the purchase of 966,667 shares of common stock. In total, the Company has raised $619,100 in cash from common stock subscriptions since inception. In addition, during the same period, 500,000 shares were issued to a consultant as compensation for services rendered. The Company valued the award of stocks at $0.01 per share.

 

7. RELATED PARTY

 

The Company obtained short-term cash flow from a related party in the form of a demand Note Payable in the amount of $5,000 on July 25, 2012. The Note bears an interest rate of 7% per annum. This Note Payable is unsecured.

 

 

POWERDYNE INTERNATIONAL, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

September 30, 2012 and 2011

(Unaudited)

 

7. RELATED PARTY (CONTINUED)

 

The Company obtained short-term cash flow from a related party in the form of a demand Note Payable in the amount of $6,000 on September 4, 2012. The Note bears an interest rate of 7% per annum. This Note Payable is unsecured

 

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 September 30, 2012 and December 31, 2011 was $11,321 and $11,321, respectively. Besides, as stated in Note 9, the Company has signed a real property rental agreement with a related party for its’ manufacturing facilities that begins January 1, 2012. Rent accrued, but not yet paid, as Due to Related Party at September 30, 2012 and December 31, 2011 was $2,700 and $0, respectively. The Company has an agreement with an outside consultant, a related party. Amounts paid to this consultant for the nine months ended September 30, 2012 and 2011 was $16,000 and $18,000, respectively. Amounts accrued, but not yet paid, as Due to Related Party at September 30, 2012 and December 31, 2011 was $2,000 and $0, respectively.

 

8. MEMORANDUM OF UNDERSTANDING

 

The Company entered into a Memorandum of Understanding (MoU) with Turning Mill, LLC, a Massachusetts company that has developed a business model that utilizes various federal and state renewable energy programs. The MoU sets forth a framework for the companies to begin to collaborate in the clean, renewable energy market place. This MoU expired December 31, 2011.

 

On February 6, 2012, the Company signed a “Developers License Agreement” with AMCANCO, LLC (“AMCANCO”), a limited liability corporation organized and existing in Massachusetts. AMANCO has agreed to use its resources and interest to develop renewable energy projects utilizing the Company’s generator set technology. This agreement essentially replaces the MoU with Turning Mills, LLC.

 

9. COMMITMENTS AND CONTINGENCIES

 

Lease Commitments

 

The Company entered into an operating lease agreement for its manufacturing facilities with a related party on October 1, 2011. The initial term of the lease begins January 1, 2012 and ends March 31, 2012. The Company has the option to renew the lease for an additional three month term beginning April 1, 2012. Additional three month terms are renewable at the Company’s option through December 2017. The Company shall pay this related party $300 per month, beginning January 1, 2012, for the term of the lease. In addition, The Company is responsible for utilities used at this facility.

 

 

POWERDYNE INTERNATIONAL, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

September 30, 2012 and 2011

(Unaudited)

 

9. COMMITMENTS AND CONTINGENCIES (CONTINUED)

 

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.

 

10. RESTATEMENT

 

The Company has restated its financial statements for the period ended December 31, 2010. Subsequent to the filing of the original financial statements, management identified an omission in the financial statement. In December 2010, Greenmark issued 16,000,000 shares of its common stock for services rendered on behalf of Powerdyne Inc. The shares were valued at their estimated fair value of $0.01 per share for a total compensation of $160,000. The Company did not record the $160,000 expense for the services rendered. The effect of this correction was to increase net loss for the period from inception to December 31, 2010 from $146,270, as previously reported, to $306,270.

 

 

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

 

The Company is a development stage company and has experienced losses since its inception. The Company's independent auditors have issued a report raising a substantial doubt about the Company's ability to continue as a going concern. The Company has not established a revenue source since inception. The only source of cash has been capital invested by shareholders and the Company has had no sales nor received revenues since inception through September 30, 2012.

 

The Company plans to manufacture, install, maintain, own and operate patented portable electrical power generation equipment (“gensets^”) intended to be installed at a client location. The Company has applied for a patent for its electrical power generation equipment. The Company will own, maintain and lease the equipment to the customer who will use it to produce its own supplemental electrical power. The products are intended to be portable, easy-to-use units that can be conveniently redeployed 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 Powerdyne International, Inc. financial condition and results of operations are based on the unaudited financial statements as of September 30, 2012 and 2011, which were prepared in accordance with U.S. generally accepted accounting principles ("GAAP").

 

Operations

 

The Company's initial product is the PDIGenset (patent pending) which is a self-contained generator that is powered by a modified radial air cooled engine to drive a minimum of a 1-megawatt generator. The entire unit, which runs on natural gas or propane, is compact, lightweight and clean burning. As a result, the unit will produce extremely low emissions and is extremely energy-efficient.

 

The Company has recently completed a fully operational factory Series 2 prototype, which has been tested and is ready as a demonstration unit. This unit is available for any prospective customer to view in full operational capacity. In addition, the Series 2 prototype is ready to be manufactured for customers upon placement of customer orders.

 

On February 28, 2011, the Company filed with the Securities and Exchange Commission a registration statement on Form S-1 for the offer and sale of up 16,000,000 shares of Common Stock by the Company at $0.15 per share and for the offer of 71,535,166 shares of Common Stock by the holders of those shares at $0.15 per share. The Company has amended its registration to include only the registration of the 71,535,166 shares of Common Stock by the holders thereof. The registration statement has not been declared effective and no sales have been made.

 

 

Overview

 

The Company plans to manufacture, install, maintain and lease its own portable electrical power equipment (for which the Company has applied for a patent). The Company plans to manufacture portable electrical power equipment intended to be installed at client locations. The Company will own, maintain and lease the equipment to the customer who will use it to produce its own supplemental electrical power. The Company's products are intended to be portable, easy-to-use units that can be conveniently redeployed in various locations around the world. The Company's units can also be assembled and combined to produce power centers providing up to 50 megawatts of power. The Company's headquarters are located in Warwick, Rhode Island and operates a manufacturing facility in Bridgewater, Massachusetts.

 

The Company will market its products in locations where inexpensive electrical power is needed and clean energy powered electrical equipment is needed and/or required.

 

Plan of Operations

 

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

 

Results of Operations - The nine months ended September 30, 2012 compared to the nine months ended September 30, 2011:

 

Revenues

 

Powerdyne International, Inc. did not generate revenues during the nine months ended September 30, 2012 and 2011.

 

Operating expenses

 

During the nine months ended September 2012 and 2011, total operating expenses were $83,479 and $694,272, respectively. The decrease related to the selling, general and administrative expenses was approximately $611,000.  This decrease resulted primarily from the decrease in officers and director salaries of approximately $147,000, of which approximately $115,000 remains accrued and unpaid, a decrease in employee stock compensation of approximately $320,000, a decrease in consulting, professional and outside services of approximately $37,000, and decreases in wages and salaries paid of approximately $30,000, travel expenses of approximately $11,000. general factory expense of $40,000, which includes expenses such as rents, parts & hardware, utilities, equipment rentals, factory supplies and insurance and a decrease in legal and accounting of $13,000.

 

Net loss

 

During the nine months ended September 30, 2012 and 2011, the net loss was $83,479 and $696,184, respectively.

 

Liquidity and Capital Resources

 

As of September 30, 2012 and December 31, 2011, Powerdyne International, Inc. had a working capital deficit of $144,931 and $105,780, respectively.   For the nine months ended September 30, 2012, Powerdyne International, Inc. had approximately $17,500 decrease in cash. The cash used in operations of approximately $57,500 was primarily due to net loss from operations of $83,479 less non-cash adjustments to net operating cash flows of approximately $10,000 of depreciation, $5,000 of employee stock compensation, the decrease of prepaid expenses of $2,000, the increase of accrued but unpaid expenses of approximately $10,000 and the decrease of approximately $1,000 in tax payable. Of the total cash provided by financing activities of approximately $40,000, $0 was used to purchase equipment and the remaining amount for working capital and operating activities.

 

 

For the period from February 2, 2010 (inception) to September 30, 2012, Powerdyne International Inc. had approximately $100 of net cash increase. The cash used in operations of approximately $487,000 was primarily due to net loss from operations of $1,135,538 less non-cash adjustments to net operating cash flows of approximately $490,000 of employee stock compensation, $14,000 of depreciation, and approximately $145,000 of accrued but unpaid expenses. Of the total cash provided by financing activities of approximately $620,000, approximately $133,000 was used to purchase equipment and the remaining amount for working capital and operating activities.

 

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

 

Those material accounting policies that we believe are the most critical to an investor’s understanding of our financial results and conditions are discussed in Notes 2, 3 and 4 of the unaudited financial statements.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Information not required to be filed by Smaller Reporting Companies.

 

ITEM 4. CONTROLS AND PROCEDURES.

 

Disclosures and Procedures

 

Pursuant to Rules adopted by the Securities and Exchange Commission. the Company 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 and first quarter under the supervision and with the participation of the Company's 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 the Company's disclosure controls and procedures are effective in gathering, analyzing and disclosing information needed to ensure that the information required to be disclosed by the Company in its periodic reports is recorded, summarized and processed timely. Both officers are directly involved in the day-to-day operations of the Company.

 

Management's Report of Internal Control over Financial Reporting

 

The Company is 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. The Company's president and principal financial and accounting officer conducted an evaluation of the effectiveness of the Company's internal control over financial reporting as of December 31, 2011, and as of September 30, 2012, based on the criteria established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the Company's internal control over financial reporting was effective as of September 30, 2011 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

 

There has been no change in the Company's internal control procedures over financial reporting that were identified in connection with such evaluation that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

 

 

PART II

 

ITEM 1. LEGAL PROCEEDINGS

 

There are no pending, threatened or actual legal proceedings in which the Company or any subsidiary is a party in amounts over $10,000. The Company is involved with a former employee for claims of expenses for approximately $6,500.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

On December 11, 2010, the Company issued 4,000,000 shares of its common stock in addition to the then outstanding 1,000,000 shares of common stock. As part of the change in control effected on December 13, 2010, the Company issued 200,000,000 shares of common stock to the following shareholders in the following amounts:

 

Dale P. Euga			188,000,000
Arthur M. Read, II			12,000,000

 

On February 7, 2011, Mr. Euga contributed back to the Company 84,526,666 shares of his 188,000,000 common stock without remuneration.

 

Subsequent to the contribution of such shares and ending June 30, 2011, the Company issued 68,526,666 shares to officers, directors, and private investors pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933, as amended, as transactions by an issuer not involving any public offering, as follows:

 

Edwin S. Barton, II			6,833,333
Stephen L. Caromile			6,000,000
Linda H. Madison			1,000,000
Eric Foster			18,000,000
57 Investors			37,193,333

 

Between August 8 and August 22, 2011 the Company issued 2,000,000 shares to six investors pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933, as amended, as transactions by an issuer not involving any public offering,

 

For the period ended June 30, 2012, the Company raised $29,000 from stockholder subscription agreements for the purchase of 966,667 shares of common stock. In addition, during the period ended June 30, 2012, 500,000 shares were issued to a consultant as compensation for services rendered.

 

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 

There were no matters submitted to a vote of the security holders during the quarter covered by this report.

 

ITEM 5. OTHER INFORMATION

 

  (a) Not applicable.

 

 

  (b) Item 407(c)(3) of Regulation S-K:

 

During the quarter covered by this Report, there have not been any material changes to the procedures by which security holders may recommend nominees to the Board of Directors.

 

ITEM 6. EXHIBITS

 

(a)        Exhibits

 

31.1

Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

31.2

Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

32.1

Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

32.2

Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

SIGNATURES

 

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

 

	POWERDYNE INTERNATIONAL, INC.
	By:   /s/ Dale P. Euga
Dated: November 13, 2012	President and Principal executive officer
	By:   /s/ Linda H. Madison
Dated: November 13, 2012	Principal financial officer