PINX:POWT POWRtec International Corp Quarterly Report 10-Q Filing - 6/30/2012

Effective Date 6/30/2012

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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 June 30, 2012


      . 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.

  X  . Yes            .  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).    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" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer

      .                                      

Accelerated Filer  

      .   


Non-Accelerated Filer

      .                 

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    X  .    No


As of August 10, 2012, there were 101,273,291 shares of the registrant’s $0.001 par value common stock issued and outstanding.


















POWRTEC INTERNATIONAL CORP.*




TABLE OF CONTENTS 

 

 

Page

PART I.              FINANCIAL INFORMATION

 

  

 3

ITEM 1.

FINANCIAL STATEMENTS

 

ITEM 2.

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

14

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

16

ITEM 4.

CONTROLS AND PROCEDURES

 

  

 17

PART II.               OTHER INFORMATION

 

  

 17

ITEM 1.

LEGAL PROCEEDINGS

 

ITEM 1A.

RISK FACTORS

17

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

18

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

18

ITEM 4.

MINE SAFETY DISCLOSURES

18

ITEM 5.

OTHER INFORMATION

18

ITEM 6.

EXHIBITS

19


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.





2





PART I - FINANCIAL INFORMATION

 

ITEM 1.

FINANCIAL STATEMENTS



POWRtec International Corp.


June 30, 2012




Index



Unaudited Consolidated Balance Sheets

4


Unaudited Consolidated Statements of Operations

5


Unaudited Consolidated Statements of Cash Flows

6


Notes to the Unaudited Consolidated Financial Statements

7






















3






POWRTEC INTERNATIONAL CORP.

 CONSOLIDATED  BALANCE SHEETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2012

 

December 31, 2011

 Assets

 

(Unaudited)

 

(Audited)

 

 Current assets:

 

 

 

 

 

 

 Cash and cash equivalents

$

47,303

$

554

 

 

 Receivables and other current assets

 

72,420

 

-

 

 

 Total current assets and total assets

$

119,723

$

554

 

 

 

 

 

 

 

 Liabilities and stockholders' deficiency

 

 

 

 

 

 Current liabilities:

 

 

 

 

 

 

 Accounts payable

$

593,272

$

593,270

 

 

 Accrued liabilities

 

2,194,510

 

2,103,073

 

 

 Deferred revenue

 

287,120

 

122,740

 

 

 Accrued interest

 

44,854

 

35,608

 

 

 Derivative liability

 

490

 

20,959

 

 

 Notes due to related party

 

-

 

48,617

 

 

 Term notes

 

25,000

 

25,000

 

 

 Convertible notes, net of discounts

 

159,930

 

178,264

 

 Total current liabilities and total liabilities

 

3,305,176

 

3,127,531

 

 

 

 

 

 

 

 Stockholders' deficiency:

 

 

 

 

 

Preferred stock, $0.001 par value; 5,000,000 shares authorized; 0 shares issued and outstanding

 

-

 

-

 

 Common stock, $0.001 par value; 300,000,000 shares authorized; 101,273,291 and 100,634,402 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively

 

101,273

 

100,634

 

Additional paid-in capital

 

5,129,707

 

5,034,663

 

Accumulated deficit

 

(8,416,433)

 

(8,262,274)

 

 Total stockholders' deficiency

 

(3,185,453)

 

(3,126,977)

 

 

 

 

 

 

 

 Total liabilities and stockholders' deficiency

$

119,723

$

554


See notes to consolidated financial statements.



4





POWRTEC INTERNATIONAL CORP.

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

 

Three months

 

Six months

 

 

 

 

June 30, 2012

 

June 30, 2011

 

June 30, 2012

 

June 30, 2011

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

$

472,754

$

-

$

472,754

$

-

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

320,906

 

-

 

320,906

 

-

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

151,848

 

-

 

151,848

 

-

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

Selling and marketing

 

12,241

 

30,740

 

29,846

 

30,741

 

Research and development

 

2,500

 

25,885

 

4,186

 

35,507

 

General and administrative

 

104,353

 

98,415

 

225,482

 

201,631

 

 

Total operating expenses

 

119,094

 

155,040

 

259,514

 

267,879

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

32,754

 

(155,040)

 

(107,666)

 

(267,879)

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

15,340

 

9,056

 

46,493

 

20,754

 

 

 

 

 

 

 

 

 

 

 

Net income ( loss)

$

17,414

$

(164,096)

 

(154,159)

$

(288,633)

 

 

 

 

 

 

 

 

 

 

 

Basic loss per share of common stock

$

0.00

$

(0.00)

$

(0.00)

$

(0.00)

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding used in basic  loss per share

 

101,273,291

 

100,211,850

 

101,090,751

 

100,176,629

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted result per share of common stock

$

0.00

$

(0.00)

$

(0.00)

$

(0.00)

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding used in fully diluted result per share

 

111,217,958

 

100,211,850

 

101,090,751

 

100,176,629

 

 

 

 

 

 

 

 

 

 

 

Note diluted shares results per share not quoted where the effect would be anti-dilutive.

 

 

 

 


See notes to consolidated financial statements.



5





POWRTEC INTERNATIONAL CORP.

 

 

 

 

 

 

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the six months ended

Unaudited

 

 

 

 

June 30, 2012

 

June 30, 2011

 

 

 

 

 

 

 

Operating activities

 

 

 

 

 

Net loss

$

(154,159)

$

(288,633)

 

Adjustments to reconcile net loss to net cash used in operating activities

 

 

 

 

 

 

Amortization of discount on convertible notes

 

9,166

 

12,287

 

 

Accrual of prepayment penalties and interest on convertible notes

 

18,079

 

-

 

 

Stock based compensation expense

 

19,635

 

9,242

 

 

Interest accrued on notes

 

9,246

 

20,796

 

 

Conversion of note into common stock

 

37,500

 

-

 

 

Amortization of deferred revenue

 

164,380

 

-

 

Changes in operating assets and liabilities

 

 

 

 

 

 

Receivables and other current assets

 

(72,420)

 

22,614

 

 

Other non-current assets

 

-

 

13,255

 

 

Accounts payable

 

2

 

10,000

 

 

Accrued liabilities

 

91,437

 

124,304

 

Net cash (used) provided by operating activities

 

122,866

 

(76,135)

 

 

 

 

 

 Financing activities

 

 

 

 

 

 

(Repayment of) loans to related party

 

(48,617)

 

(24,203)

 

 

Proceeds from (repayment of) convertible notes

 

(27,500)

 

70,000

 

 

Proceeds from sale of common stock

 

-

 

49,000

 

Net cash provided (used) by financing activities

 

(76,117)

 

94,797

 

 

 

 

 

 

 

 

Net increase in cash and equivalents

 

46,749

 

18,662

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

554

 

2,272

 

Cash and cash equivalents at end of period

$

47,303

$

20,934

 

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information

 

 

 

 

 

 

Cash paid for interest

$

-

$

-

 

 

Cash paid for taxes

$

1,600

$

800


See notes to consolidated financial statements.



6





POWRTEC INTERNATIONAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2012


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 June 30, 2012 and the results of operations and cash flows for the periods presented. The results of operations for the six months ended June 30, 2012 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, 2011. 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, 2011, filed on March 30, 2012, and updated, as necessary, in this Quarterly Report on Form 10-Q.


Corporate History


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


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


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


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


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


Going concern


The Company requires additional funds to continue operations. As reflected in the accompanying financial statements, the Company has a net loss since inception of approximately $8.4 million and has a cash balance of only $47,303. As of June 30, 2012, current liabilities exceeded current assets by approximately $3.2 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.



7





Because the Company has net losses since inception and has only recently achieved a profitable quarter, 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.


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.  

 

Concentration of Credit Risk


The Company places its cash with two commercial financial institutions and at times may exceed federally insured limits. Management believes that these institutions are financially sound and accordingly, minimal credit risk exists. To date the Company sells its meters to a single customer who pays for the meters using letters of credit and there have been no credit losses.


Cash and cash equivalents


The Company considers all highly liquid debt investments with original maturities of three months or less when purchased to be cash equivalents.  The carrying amounts approximate fair market value because of the short maturity.


The Company maintains cash balances at various commercial financial institutions.  Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $250,000.  The Company's accounts at these institutions may, at times, exceed the federally insured limits.  The Company has not experienced any losses in such accounts.


Fair values of financial instruments


Pursuant to ASC 820, Fair Value Measurements and Disclosures and ASC 825, Financial Instruments, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 and 825 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 and 825 prioritizes the inputs into three levels that may be used to measure fair value:


Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.


Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.


Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.



8




The Company’s financial instruments consist principally of cash, accounts payable, and amounts due to related parties. Pursuant to ASC 820 and 825, the fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.


Property and equipment


As a result of inadequate cash to pay the rent on its former premises, the Company had to vacate and remove its property and equipment from those premises and operate virtually. This property and equipment was fully-depreciated and, to avoid storage costs, was disposed of at minimal expense.

 

Impairment of long-lived assets


In accordance with the provisions of ASC 360,” Impairment or Disposal of Long-lived Assets,” formerly SFAS 144, the Company reviews long-lived assets, including property and equipment, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying amount. Impairment, if any, is measured as the amount by which the carrying value of a long-lived asset exceeds its fair value. Through June 30, 2012, there have been no such impairment losses.


Research and development costs


Research and development costs are charged to operations as incurred. Research and development expenses consist primarily of expense of research and development staff, materials and supplies for prototype meter development, and the cost of certain contractors involved in the development process.


Stock-based compensation


We account for share-based compensation plans in accordance with the provisions of ASC 718, "Stock Compensation". We estimate the fair value of each option award on the date of grant using the Black-Scholes option-pricing model, using appropriate assumptions on volatility, expected term, and risk-free rate for the expected term of the option. The resulting compensation expense is recognized over the period during which an employee is required to provide service in exchange for the option grant. No compensation cost is recognized for equity instruments for which employees do not render the requisite service.


The Company from time to time issues common stock, stock options or common stock warrants to acquire services or goods from non-employees. Common stock, stock options and common stock warrants issued to other than employees or directors are recorded on the basis of their fair value at date of grant using the Black-Scholes model.  Expense related to the options and warrants is recognized on a straight-line basis over the shorter of the period over which services are to be received or the vesting period.



9





Loss per Share


The Company computes net loss per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method, and warrants using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. Loss per share is as follows (in thousands, except per share data).


 

 

Three months ended

 

Six months ended

 

 

June 30, 2012

 

June 30, 2011

 

June 30, 2012

 

June 30, 2011

 

 

 

 

 

 

 

 

 

Net income/ (loss) allocable to common shareholders

$

17,414

$

(164,096)

$

(154,159)

$

(288,633)

 

 

 

 

 

 

 

 

 

Basic  loss per share allocable to common stockholders

$

0.00

$

(0.00)

$

(0.00)

$

0.00

 

 

 

 

 

 

 

 

 

Weighted average shares used to compute basic income/ (loss) per share allocable to common stockholders

 

101,273,291

 

100,211,850

 

101,090,751

 

(100,176,629)

 

 

 

 

 

 

 

 

 

Fully diluted result per share allocable to common shareholders

$

0.00

$

(0.00)

$

(0.00)

$

(0.00)

 

 

 

 

 

 

 

 

 

Weighted average shares used to compute fully diluted loss per share allocable to common stockholders

 

111,217,958

 

100,211,850

 

101,090,751

 

100,176,629

 

 

 

 

 

 

 

 

 

Diluted share results are not quoted where the effect would be anti-dilutive.

 

 

 

 

 

 


Revenue recognition


Revenues are generally recognized upon shipment of product, which corresponds with the transfer of title. Delivery is considered to occur when title to the products has passed to the customer, which typically occurs at physical delivery of the products from the Company’s contract manufacturers to a common carrier. The Company recognizes revenue when all of the following have occurred: persuasive evidence of an agreement with the customer exists; products are shipped and the customer takes delivery and assumes the risk of loss; the selling price is fixed or determinable; and collectability of the selling price is reasonably assured. The costs of shipping are billed to the customer upon shipment and are included in cost of sales. The Company has not established an allowance for doubtful accounts as shipments are generally pre-paid.


Comprehensive Loss


ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at June 30, 2012, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.


Recent accounting pronouncements

 

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


3. DEFERRED REVENUE


Following an initial order in 2006, in January 2012 the Company received a follow-on order from Dong Energy (“Dong”) for the supply of additional meters.   Under the terms of the agreement, the Company will supply a total of 53,500 meters for an aggregate consideration of $2,511,881. The Company is required to ship these meters in six installments over the next six months. Dong has paid an initial advance of $233,975, and will pay for the balance of the contract in six equal installments at the time of the shipments. Prepaid amounts are recorded as deferred revenue, and the balance of deferred revenue is amortized to revenue based on actual shipments made. At June 30, 2012, the Company had recorded deferred revenue of $287,120 and amortized total revenue of $472,754.



10





4. WARRANTY RESERVE


Prior to the order from Dong, the Company estimated that it had approximately $55,000 in warranty liabilities in connection with shipments delivered under these prior orders.  The follow-on order includes shipments made as warranty replacements, and the Company is amortizing the warranty reserve on a straight line basis, over the actual shipments made. As of June 30, 2012 and December 31, 2011, warranty reserves were $45,131 and $55,000, respectively, and are included in accrued liabilities in the accompanying financial statements.


5. NOTES PAYABLE – RELATED PARTIES


From time to time, the Company has had insufficient funds to make necessary payments. In these circumstances an officer of the Company has made advances in the form of promissory notes, which may be repaid or extended at any time, subject to availability of cash.  Such advances are at the sole discretion of the officer and there is no undertaking or commitment to make any additional advances at any time. The net balance outstanding under this note was $0 and $48,617 at June 30, 2012 and December 31, 2011 and respectively.  


6. NOTES PAYABLE


A)

CONVERTIBLE NOTES


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


Summary

 

 

Principal amount of convertible notes issued

$

290,080

Amounts repaid

 

(89,500)

Amounts converted

 

(18,000)

Balance of principal amount, June 30, 2012

$

182,580


As at June 30, 2012 and December 31, 2011, respectively, the Company had accrued $44,854 and $35,608 of interest on the notes, which will be repaid, or converted into common stock on maturity.  Based on the share price of $.01 at June 30, 2012, the Company would require approximately 9.7 million shares of common stock to convert the notes then outstanding.


The Company recognizes the underlying value of embedded derivatives in accordance with ASC 815-15-25-1. The value of the option for noteholders to convert their notes into shares of common stock is calculated and credited as a derivative liability for the duration of the notes, while an offsetting amount is classified as a discount to the principal value of the notes. The derivative value added to the discount reserve and derivative value was $0 and $15,522 during the six months ended June 30, 2012 and 2011, respectively. The value of the debt discount is amortized as interest expense on a straight line basis over the life of the notes. During the six months ended June 30, 2012 and 2011, the Company amortized $9,166 and $12,287, respectively, as debt discount expense. The principal amount and net discount on the convertible notes are shown in the following table.


Summary

 

June 30, 2012

 

December 31, 2011

Principal amount of convertible notes

$

182,580

$

220,080

Note discount, net of amortization

 

(22,650)

 

(41,816)

Net value of notes

$

159,930

$

178,264


At June 30, 2012, the Company valued the derivative liability and determined that the carrying value was in excess of the market value by $4,242 and, accordingly, reduced the derivative liability by this amount, with an offset to additional paid-in capital.


B)

TERM NOTES


The Company also has an unsecured term note for $25,000, due April 12, 2012. The interest rate on this note is 8% pa and interest expense of $3,266 was accrued as at June 30, 2012. The note has been rolled over on a month to month basis since the maturity date.



11





7. 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:


 

 

June 30, 2012

Deferred tax assets:

 

 

  Net operating loss carry forwards

$

(8,416,433)

  add back compensation accruals

 

1,952,414

 

 

(6,464,019)

Statutory tax rate (combined federal and state)

 

37.60%

Non-capital tax loss

 

2,430,471

Valuation allowance

 

(2,430,471)

Deferred tax asset

$

-

 

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


8. STOCKHOLDERS’ DEFICIENCY


Common stock and warrants


The Company has reserved shares of common and preferred stock for issuance at June 30, 2012, and December 31, 2011, as follows:


 

 

June 30, 2012

 

December 31, 2011

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 Based Compensation


Stock Option Plan


In 2004, the POWRtec Board of Directors adopted the 2004 Incentive Stock Plan (the " Prior Plan"), under which shares of common stock are reserved for issuance to employees, management and consultants of the Company.  On December 15, 2010, the Company established an additional share incentive plan, the 2010 Share Incentive Plan (the “New Plan”), which superceded the Prior Plan, and all grants under the Prior Plan were cancelled. The New Plan permits the granting of stock options (including incentive stock options within the meaning of Code Section 422 and non-qualified stock options), stock appreciation rights, restricted or unrestricted stock awards, phantom stock, performance awards, and other stock-based awards. The New Plan has authorized 15,000,000 shares of Common Stock issuable pursuant to all awards granted under the Plan, and 6,000,000 options were reissued under the New Plan to reflect the post-merger split of shares of forty for one. This resulted in a re-measurement event creating additional stock based compensation of $1,160,000.

 

Activity with respect to outstanding stock options under the New Plan during the six months ended June 30, 2012 was as follows:


In 000s shares

 

Shares available for grant

# Options outstanding

Weighted average price

Balance December 31, 2010

 

9,000,000

6,000,000

$                     0.18

Granted

 

(1,000,000)

1,000,000

$                     0.08

Exercised

 

-

-

 

Cancelled

 

-

-

 

Balance December 31, 2011

 

8,000,000

7,000,000

$                     0.13

Granted

 

-

-

 

Exercised

 

-

-

 

Cancelled

 

-

-

 

Balance June 30, 2012

 

8,000,000

7,000,000

$                     0.13




12





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 six months ended June 30, 2012 and 2011, the Company recorded $19,635 and $9,242 of stock-based compensation expense, respectively, related to stock options granted to employees, directors and consultants.  


Warrants


The Company has issued to directors of the Company a total of 3,436,230 warrants to purchase shares of common stock at prices ranging from $.004 to $.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 directors’ service periods.


During the six months ended June 30, 2012 and 2011, the Company recorded $15,381 and $25,636 of equity-based compensation expense, respectively, related to warrants granted to employees, directors and consultants.  


9. RELATED PARTY TRANSACTIONS


See Note 5 for a description of loans provided to the Company by certain officers of the Company.


Accounts payable as of June 30, 2012 includes approximately $354,000, of accounts payable for the consulting services of our former Chief Financial Officer.


Accrued payroll as of June 30, 2012 includes approximately $1,047,000 of accrued payroll liabilities to our Chief Executive Officer.


Accrued consulting fees as of June 30, 2012 includes approximately $38,000 of accrued consulting fees payable to our current Chief Financial Officer.


10. COMMITMENTS AND CONTINGENCIES


The Company was committed under the second extension of an operating lease for office space which expired at the end of February 2010 at a monthly rental of $10,494 plus certain operating costs. The Company rented this office space on a month to month basis at the same monthly rental rate of $10,494 plus certain operating costs and owes approximately $139,000 of back rent, legal, and court costs as of December 31, 2010 due to a judgment obtained by the former landlord for unpaid rent. We are currently using free generic executive office space on a month-to-month basis. The space is being provided to us by an unrelated business associate of our sole officer and director. It is our belief that the space is adequate for our immediate needs. Additional space may be required if we expand our operations. We do not foresee any significant difficulties in obtaining any required additional facilities. We do not own any real estate.






13




ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND PLAN OF OPERATION


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


Operating Revenues and gross profit for the three months ended June 30, 2012


The Company had $472,754 revenues in the three month period ending June 30, 2012 compared to $0 in the three months ended June 30, 2011 as our only customer, Dong, had not ordered any meters since late 2009 due to a slowing in meter deployment, and has only recently resumed installations.  After taking into account amortization of $9,869 warranty reserve, the gross profit was $151,848, a gross margin of 32.1%. The Company expects shipments, revenue and gross profit to be similar in the September quarter.


Operating Expenses and net income for the three months ended June 30, 2012


 

June 30, 2012

 

June 30, 2011

 

Change $

 

Change %

Selling and marketing

$12,241

 

$30,740

 

($18,499)

 

-62%

Research and development

$2,500

 

$25,885

 

($23,385)

 

-559%

General and administrative

$104,353

 

$98,415

 

$5,938

 

3%

Total operating expenses

$119,094

 

$155,040

 

($35,946)

 

 


Selling and marketing


Selling and marketing activities have decreased in the current quarter as a result of reduced travel expenses following pursuit and receipt of a follow-on sales order from our previous customer in the March quarter.


Research and development


Research and development expenses decreased approximately $23,000 for the three month period ending June 30, 2012 compared to the corresponding prior year period.  The Company has reduced its engineering and development activities to minimize cash flow while it focuses resources on the fulfillment of a new sales order.


General and administrative


General and administrative expenses increased approximately $6,000 for the three period ending June 30, 2012 compared to the corresponding prior year period but remain low to minimize cash flow. General and administrative expenses relate principally to the service and other costs of compliance.


Interest expenses


Interest expense relates to the notes issued by the Company to generate cash and pay for operating expenses, commencing in 2010. Convertible notes payable were $159,930 at June 30, 2012, net of discount, compared to $137,533, net, at June 30, 2011, consequently interest on notes, inclusive of debt discount expense, were higher at $15,340 in the three months ended June 30, 2012 compared to $9,056 in the three months ended June 30, 2011.



14





Operating Revenues and gross profit for the six months ended June 30, 2012


The Company had $472,754 revenues in the six month period ending June 30, 2012 compared to $0 in the six months ended June 30, 2011 as our only customer, Dong, had not ordered any meters since late 2009 due to a slowing in meter deployment, and has only recently resumed installations.  After taking into account amortization of $9,869 warranty reserve, the gross profit was $151,848, a gross margin of 32.1%.


Operating Expenses and net income for the six months ended June 30, 2012


 

June 30, 2012

 

June 30, 2011

 

Change $

 

Change %

Selling and marketing

$29,846

 

$30,741

 

($895)

 

-3%

Research and development

$4,186

 

35,507

 

($31,321)

 

-88%

General and administrative

$225,482

 

201,631

 

$23,851

 

12%

Total operating expenses

$259,514

 

$267,879

 

($8,365)

 

 


Selling and marketing


Selling and marketing activities relate mainly to travel expenses, and have remained almost unchanged for the six months ended June 30, 2011 and 2012.


Research and development


Research and development expenses decreased approximately $31,000 for the six month period ending June 30, 2012 compared to the corresponding prior year period.  The Company has reduced its engineering and development activities to minimize cash flow while it focuses resources on the fulfillment of a new sales order.


General and administrative


General and administrative expenses increased approximately $24,000 for the six period ending June 30, 2012 compared to the corresponding prior year period and relate principally to the service and other costs of compliance with filings required as a public company. These costs have increased as a result of new XBRL reporting requirements, and service provider fees.


Interest expenses


Interest expense relates to the notes issued by the Company to generate cash and pay for operating expenses, commencing in 2010. Convertible notes payable were $159,930 at June 30, 2012, net of discount, compared to $137,533, net, at June 30, 2011, consequently interest on notes, inclusive of debt discount expense, were higher at $46,493 in the six months ended June 30, 2012 compared to $20,754 in the six months ended June 30, 2011.


Liquidity and Capital Resources


Working Capital


 

 

 

June 30, 2012

 

December 31, 2011

Total assets

$

119,723

$

554

Total Liabilities

 

3,305,176

 

3,127,531

 

Excess (deficit)

$

(3,185,453)

$

(3,126,977)


Cash Flows


 

 

June 30, 2012

 

June 30, 2011

Net cash (used) provided by operating activities

122,866

 

(76,135)

Net cash provided (used) by financing activities

(76,117)

 

94,797

 

Net increase  in cash and equivalents

46,749

 

18,662




15





During the six months ended June 30, 2012, approximately $123,000 of net cash was generated by operating activities. This resulted from an operating loss of approximately $154,000, offset by an decrease of $31,000 in cash provided by working capital.  The Company repaid approximately $76,000 in loans from a related party and a convertible note holder.


Going Concern


The Company requires additional funds to continue operations. As reflected in the accompanying financial statements, the Company has a net loss since inception of approximately $8.4 million and has a cash balance of only $47,303. As of June 30, 2012, current liabilities exceeded current assets by approximately $3.2 million. Although the Company shipped products in the three months ended June 30, 2012, and recorded revenue for the first time since 2010, the Company still has only one customer, and there can be no assurance of continuing orders. Unless the Company can secure additional customers for its products, it remains highly vulnerable to changes in the fortunes of its only customer. 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 secure additional customers and orders for its products. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.


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


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.

 

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.



16





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 Chief Executive and Chief 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 June 30, 2012. Please refer to our Annual Report on Form 10-K as filed with the SEC on March 30, 2012, for a complete discussion relating to the foregoing evaluation of Disclosure Controls and Procedures.


Changes in Internal Control over Financial Reporting


Our management has also evaluated our internal control over financial reporting, and 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.


PART II - OTHER INFORMATION


ITEM 1. 

LEGAL PROCEEDINGS


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


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


ITEM 1A.

RISK FACTORS


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



17





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.  

SAFETY MINE 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.

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.



18





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.




19





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:  August 14, 2012

/s/ Grant Jasmin

By: Grant Jasmin

Its: President, Chief Executive Officer, and Secretary




Dated:  August 14, 2012

/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:  August 14,  2012

/s/ Grant Jasmin

By:  Grant Jasmin

Its:  Director



20



PINX:POWT POWRtec International Corp Quarterly Report 10-Q Filling

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