10-Q

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 September 30, 2011

. 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)

with a copy to:

Carrillo Huettel, LLP

3033 Fifth Ave. Suite 400

San Diego, CA 92103

Telephone (619) 546-6100

Facsimile (619) 546-6060

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  X  No .

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  X  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	. (Do not check if a smaller reporting company)	Smaller reporting company	X .

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

As of November 10, 2011, there were 100,634,402 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
ITEM 1.	FINANCIAL STATEMENTS	3
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	13
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	15
ITEM 4.	CONTROLS AND PROCEDURES	15
PART II. OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	16
ITEM 1A.	RISK FACTORS	16
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	16
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	17
ITEM 4.	[REMOVED AND RESERVED]	17
ITEM 5.	OTHER INFORMATION	17
ITEM 6.	EXHIBITS	18

Special Note Regarding Forward-Looking Statements

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

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

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PART I - FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

Index

Unaudited Condensed Balance Sheets

4

Unaudited Condensed Statements of Operations

5

Unaudited Condensed Statements of Cash Flows

6

Notes to the Unaudited Condensed Financial Statements

7

3

POWRTEC INTERNATIONAL CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
				September 30, 2011		December 31, 2010
				(Unaudited)		(Audited)
Assets
	Current assets:
		Cash and cash equivalents	$	1,942	$	2,272
		Prepaid expenses and other current assets		2,926		23,290
		Total current assets		4,868		25,562
		Deposits and other non current assets		-		13,255
		Total assets	$	4,868	$	38,817
Liabilities and stockholders' deficiency
	Current liabilities:
		Accounts payable	$	593,270	$	585,270
		Accrued liabilities		2,006,463		1,805,478
		Customer deposits		122,740		122,740
		Accrued interest		28,084		14,222
		Derivative liability		57,567		-
	Notes payable
		Notes due to related party		46,917		84,120
		Term notes		25,000		25,000
		Convertible notes, net of discounts		150,574		64,712
	Total current liabilities and liabilities			3,030,615		2,701,542
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; 100,634,402 and 100,162,540 shares issued and outstanding at September 30, 2011 and December 31, 2010, respectively		100,634		100,163
	Additional paid-in capital			4,935,647		4,841,369
	Accumulated deficit			(8,062,028)		(7,604,257)
	Total stockholders' deficiency			(3,025,747)		(2,662,725)
Total liabilities and stockholders' deficiency			$	4,868	$	38,817
See notes to consolidated financial statements.

4

POWRTEC INTERNATIONAL CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
				Three months				Nine months
				September 30, 2011		September 30, 2010		September 30, 2011		September 30, 2010
Revenue			$	-	$	-	$	-	$	-
Cost of goods sold				-		-		-		-
Gross profit				-		-		-		-
Operating expenses
	Selling and marketing			-		4,661		-		5,017
	Research and development			4,621		45,467		35,128		136,130
	General and administrative			107,860		233,926		345,231		905,812
		Total operating expenses		112,481		284,054		380,359		1,046,959
Operating loss				(112,481)		(284,054)		(380,359)		(1,046,959)
Interest expense				56,658		12,108		77,412		13,715
Net loss			$	(169,139)	$	(296,162)	$	(457,771)	$	(1,060,674)
Basic and diluted loss per share of common stock			$	(0.00)	$	(0.01)	$	(0.00)	$	(0.01)
Weighted average number of common shares outstanding used in basic and diluted loss per share				100,404,517		100,047,594		100,302,459		99,045,517
See notes to consolidated financial statements.

5

POWRTEC INTERNATIONAL CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
				Nine months
				September 30, 2011		September 30, 2010
Operating activities
	Net loss		$	(457,771)	$	(1,064,674)
	Adjustments to reconcile net loss to net cash used in operating activities
		Depreciation		-		3,797
		Non cash consulting expense		-		62,999
		Amortization of discount on convertible notes		8,461		5,504
		Stock based compensation expense		15,228		41,590
		Interest accrued on notes		28,084		-
		Derivative liability		57,567		-
	Changes in operating assets and liabilities
		Accounts receivable		-		-
		Prepaid expenses		20,364		272,856
		Other non current assets		13,255		-
		Accounts payable		8,000		203,047
		Accrued liabilities		186,763		342,699
		Customer deposits		-		-
	Net cash used in operating activities			(120,049)		(132,182)
	Financing activities
		(Repayment of) proceeds from  shareholder loans		(37,203)		50,600
		Proceeds from sale of convertible notes		107,500		77,039
		Proceeds from sale of common stock		49,422		-
	Net cash provided by financing activities			119,719		127,639
	Net increase in cash and equivalents			(330)		(4,543)
	Cash and cash equivalents at beginning of period			2,272		694
	Cash and cash equivalents at end of period		$	1,942	$	(3,849)
	Supplemental disclosures of cash flow information
		Cash paid for interest	$	-	$	-
		Cash paid for taxes	$	800	$	800
See notes to consolidated financial statements.

6

POWRTEC INTERNATIONAL CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2011

1. OVERVIEW

Basis of Presentation

The 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 September 30, 2011 and the results of operations and cash flows for the periods presented. The results of operations for the three months and nine months ended September 30, 2011 are not necessarily indicative of the operating results for the full fiscal year or any future period. These condensed 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, 2010. 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, 2010, filed on April 15, 2011, 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 $8.0 million.  As of September 30, 2011, current liabilities exceeded current assets by approximately $3.0 million and total liabilities exceeded total assets by approximately $3.1 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 does not expect to be profitable until 2012 or later, it will most likely be required to raise these additional funds through extended credit from vendors and service providers, convertible debt or term debt, or equity financings which will be dilutive to current shareholders, 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

Use of Estimates

The preparation of the financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. These estimates and assumptions include valuing equity securities and derivative financial instruments issued in financing transactions and share based payment arrangements, determining the fair value common stock prior to the completion of the merger, the collectability of accounts receivable and deferred taxes and related valuation allowances. Certain of our estimates, including evaluating the collectability of accounts receivable, could be affected by external conditions, including those unique to our industry, and general economic conditions. It is possible that these external factors could have an effect on our estimates that could cause actual results to differ from our estimates. We re-evaluate all of our accounting estimates at least quarterly based on these conditions and record adjustments when necessary.

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. 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.

8

Stock-based compensation

We account 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, using the assumptions noted in the table below. Expected volatility was based on the historical volatility of a peer group of publicly traded companies. The expected term of options was based upon the simplified method provided by the SEC in Staff Accounting Bulletin No, 107, “Share-Based Payments”, and (“SAB 107”). The risk-free rate for the expected term of the option is based on the U.S. Treasury Constant Maturity rate. That cost is recognized over the period during which an employee is required to provide service in exchange for the award, the requisite service period. No compensation cost is recognized for equity instruments for which employees do not render the requisite service. The grant date fair value of employee share options and similar instruments is estimated using the Black-Scholes model adjusted for the unique characteristics of those instruments.

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, which is measured as of the “valuation date” the stock options or common stock warrants are fair valued using the Black-Scholes model on the basis of the market price of the underlying common stock on the “valuation date”, which for options and warrants related to contracts that have substantial disincentives to non-performance is the date of the contract, and for all other contracts is the vesting date. 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. Where expense must be recognized prior to a valuation date, the expense is computed under the Black-Scholes option-pricing model on the basis of the market price of the underlying common stock at the end of the period, and any subsequent changes in the market price of the underlying common stock through the valuation date is reflected in the expense recorded in the subsequent period in which that change occurs.

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. CUSTOMER DEPOSITS

In October 2006, the Company and Dong Energy (“Dong”) signed the revised Supplement to Framework, valid for eighteen months for the Company to sell a maximum 206,000 meters to Dong. As part of this agreement, Dong paid a $600,000 deposit which is recorded as revenue of $3.00 per unit upon shipment.  As of September 30, 2011 and December 31, 2010, customer deposits were $122,740. There are approximately 40,000 units remaining to be shipped under this deposit arrangement.

4. 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				Nine months
		September 30, 2011		September 30, 2010		September 30, 2011		September 30, 2010
Net loss allocable to common shareholders	$	(169,139)	$	(296,162)	$	(457,771)	$	(1,060,674)
Basic and diluted loss per share allocable to common shareholders	$	(0.00)	$	(0.01)	$	(0.00)	$	(0.01)
Weighted average shares used to compute basic and diluted loss per share allocable to common shareholders		100,404,517		100,047,594		100,302,459		99,045,517

9

Outstanding common stock equivalents are excluded from the calculation of diluted net loss per share, as their effect is anti-dilutive in all periods.

5. NOTES PAYABLE – RELATED PARTIES

In 2004, the Company entered into a series of unsecured noninterest bearing promissory notes with an officer of the Company. These notes are adjusted from time to time as the officer advances additional cash to meet urgent needs, and may be repaid from time to time as and when cash availability allows. The note payable balance was $46,917 and $84,120 as of September 30, 2011 and December 31, 2010, respectively.  The officer has not made a formal demand for repayment of these notes payable.

6. NOTES PAYABLE

Since July 1, 2010, the Company has raised working capital through the issuance of a series of short-term convertible promissory notes (the “Notes”), with maturity dates ranging from nine to twelve months. These Notes are convertible into shares of common stock on varying terms at the noteholders’ election or upon maturity and, accordingly, the Company recognizes a derivative liability in the conversion option in line with ASC 470-20. The liability is measured at the time of issuance or renewal, using the Black Scholes formula and an assumed risk free interest rate of 2.0%, and volatility of 50%.  The value of the derivative liability is carried as a credit while an offsetting amount is recognized as a discount to the principal value of the Notes and is amortized on a straight-line basis over the term of the Notes. The Company regularly reviews the carrying value of the derivative liability and adjusts to market value as required. When a note is extinguished through repayment or conversion, the related derivative liability is cancelled and posted as a credit to additional paid-in capital. The Notes, which are unsecured, are subject to interest at rates ranging from 8% pa to 60% pa which is accrued and subject to conversion along with the principal amounts of the Notes.  As at September 30, 2011 three of the Notes had reached maturity and were extended by the respective noteholders for additional six month terms.  

Summary of convertible notes at September 30, 2011
Issuance date	Maturity date, incl rollovers*		Interest rate pa	Conversion terms	Principal amount	Net discount	Net value of notes	Interest accrued
7-Jul-10	7-May012	*	8.00%	75% of the avg of closing price in 30 trading days preceding conversion	$ 25,000	$ 3,841	$ 21,159	$ 2,466
25-Aug-10	25-Feb-12	*	8.00%	75% of the avg of closing price in 30 trading days preceding conversion	25,000	5,741	19,259	18,411
9-Jul-10	9-Apr-12	*	60.00%	Convertible into 65,000 shares at $0.50 p/s for principal & interest if not paid when due	25,000	-	25,000	2,197
15-Mar-11	17-Dec-11		8.00%	58% of the 5 lowest of last 10 trading days OTC closing price pre conversion date	35,000	4,082	30,918	1,527
5-Mar-11	9-Feb-12		8.00%	55% of the 5 lowest of last 10 trading days OTC closing price pre conversion date	35,000	5,292	29,708	1,135
21-Jul-11	25-Apr-12		8.00%	55% of the 5 lowest of last 10 trading days OTC closing price pre conversion date	37,500	12,970	24,530	584
				Total	$ 182,500	$ 31,926	$ 150,574	$ 26,319

Interest and debt amortization expense for the nine months ended September 30, 2011 and 2010 was $77,412 and $13,715, respectively.

The Company also has an unsecured term note for $25,000 due November 12, 2011. The interest rate on this note is 8% pa and $1,764 was accrued as at September 30, 2011.

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:

10

		September 30, 2011
Deferred tax assets:
Net operating loss carry forwards	$	(8,062,028)
add back compensation accruals		1,776,252
		(6,285,776)
Statutory tax rate (combined federal and state)		37.60%
Non-capital tax loss		2,363,452
Valuation allowance		(2,363,452)
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 authorized shares of common and preferred stock for issuance at September 30, 2011, and December 31, 2010, as follows:

	September 30,	December 31,
	2011	2010
Common stock	300,000,000	300,000,000
Preferred stock	5,000,000	5,000,000

.

The Company has granted warrants to two members of its Board of Directors to purchase 3.2 million shares at $0.175 per share and, using a Black Scholes model has determined the value of this non-cash compensation which will be amortized over the five year life of the warrants. The warrant compensation expense for the nine months ended September 30, 2011 and September 30, 2010 was $23,022 in both periods.

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 were reserved for issuance to employees, management and consultants of the Company.  The options under this plan were cancelled and new options were reissued pursuant to a new 2010 Powrtec Stock Incentive Plan (the “New Plan”).

Activity with respect to outstanding stock options under the New Plan was as follows:

2010 Incentive Stock Option Plan	Number of shares	Weighted average exercise price
Options outstanding at December 31, 2010	6,600,000	$0.00025 to $0.175
Granted	-
Exercised	-
Cancelled	(600,000)
Options outstanding at September 30, 2011	6,000,000	$0.00025 to $0.175

Stock Option Pool	Number of shares
Options authorized	10,000,000
Issued	6,600,000
Cancelled	(600,000)
Exercised	-
Available	4,000,000

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During each of the nine months ended September 30, 2011 and 2010, the Company recorded $34,412 and $29,131 respectively, in stock-based compensation expense related to stock options and warrants granted to employees, directors and consultants.   No stock options have been granted in 2011.

9. RELATED PARTY TRANSACTIONS

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

See Note 8 for a description of the stock sale agreements entered into between the Company and certain officers, individuals, and customers.

Accounts payable as of September 30, 2011 and December 31, 2010 includes approximately $354,000 and $346,000 of accounts payable for the consulting services rendered by our former Chief Financial Officer.

Accrued liabilities includes approximately $13,000 for consulting services rendered by our new Chief Financial Officer.

Accrued payroll as of September 30, 2011 and December 31, 2010 includes approximately $860,000 and $673,000 of accrued payroll liabilities to our Chief Executive 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. The Company had no rental expense in the three months or nine months ended September 30, 2011.

11. SUBSEQUENT EVENTS

On November 2, 2011 and November 3, 2011, the Company repaid two of the convertible notes, one for the balance of $27,000 and the other for $35,000.

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ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR 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

Working Capital

Working Capital			September 30, 2011		December 31, 2010
	Current assets	$	4,868	$	25,562
	Current liabilities		3,030,615		2,701,542
	Working capital (deficit)	$	(3,025,747)	$	(2,675,980)

Cash Flows

Cash Flows for the nine months ended			September 30, 2011		September 30, 2010
	Net cash used by operating activities	$	(120,049)	$	(132,182)
	Net cash from financing activities		119,719		127,639
	Net increase in cash	$	(330)	$	(4,543)

Operating Revenues

The Company had no revenues in the three month and nine month periods ending September 30, 2011 and 2010 as our only customer has not ordered any meters since late 2009 due to a slowing in meter deployment.

Operating Expenses and Net Loss

Expenses for three months ended			September 30, 2011		September 30, 2010		Change $	Change %
	Selling and marketing	$	-	$	4,661	$	(4,661)	-100.0%
	Research and development		4,621		45,467		(40,846)	-89.8%
	General and administrative		107,860		233,926		(126,066)	-53.9%
	Total operating expenses	$	112,481	$	284,054	$	(171,573)	-60.4%
Expenses for nine months ended			September 30, 2011		September 30, 2010		Change $	Change %
	Selling and marketing	$	-	$	5,017	$	(5,017)	-100.0%
	Research and development		35,128		136,130		(101,002)	-74.2%
	General and administrative		345,231		905,812		(560,581)	-61.9%
	Total operating expenses	$	380,359	$	1,046,959	$	(666,600)	-63.7%

Selling and marketing

Selling and marketing activities have been very limited in all periods due to lack of resources and a focus on a single major customer.

13

Research and development

Research and development expenses decreased approximately $40,000 and $101,000, respectively, for the three and nine month periods ending September 30, 2011 compared to the corresponding prior year periods.  The Company has reduced its engineering and development activities to minimize cash flow until it secures new sales orders.

General and administrative

General and administrative expenses decreased approximately $126,000 and $561,000, respectively, for the three and nine month periods ending September 30, 2011 compared to the corresponding prior year periods.  The Company has reduced its general and administrative activities to minimize cash flow until it secures new sales orders. 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. Notes payable increased from $64,712, net, at December 31, 2010 to $150,574, net at September 30, 2011. As a result, interest expense including amortization of debt discount increased from $12,108 to $56,658 for the three months ended September 30, 2010 and 2011,  and from $13,715 to $77,412 for the nine months ended September 30, 2010 and 2011, respectively.

Liquidity and Capital Resources

During the nine months ended September 30, 2011, approximately $120,000 of net cash was used in operating activities. This resulted from an operating loss of approximately $458,000, offset by a reduction in working capital of approximately $228,000 and non-cash expenses of $109,000. During the nine months ended September 30, 2011 the Company generated approximately $120,000 from financing activities including $107,500 from the sale of convertible notes and $49,000 from the sale of common stock.

During the nine months ended September 30, 2010, approximately $132,000 of net cash was used in operating activities. This resulted from an operating loss of approximately $1,064,000, offset by a reduction in working capital of approximately $819,000, and non-cash expenses of $114,000. During the nine months ended September 30, 2010 the Company generated approximately $128,000 from financing activities as a result of the sale of $77,000 of convertible notes and $51,000 from a shareholder loan.

Quarterly Developments

On August 3, 2011, Len Wood resigned as the Company’s Chief Financial Officer.  His resignation did not involve any disagreement with the Company on any matter relating to the Company’s operations, policies, practices or otherwise.

On August 3, 2011, Simon Westbrook was appointed as the Company’s Chief Financial Officer.  On August 3, 2011, Mr. Westbrook accepted the appointment.

On August 22, 2011, Henrik Rouf was appointed as a member of the Company’s Nordic Advisory Board.

Subsequent Developments

None.

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 $8.0 million.  As of September 30, 2011, current liabilities exceeded current assets by approximately $3.0 million and total liabilities exceeded total assets by approximately $3.1 million. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement a business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Because the Company has net losses since inception and does not expect to be profitable until 2012 or later, it will most likely be required to raise these additional funds through extended credit from vendors and service providers, convertible debt, debt or equity financings which will be dilutive to current shareholders, or by selling its assets.

14

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.

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").

15

Based on this evaluation, our principal executive and principal financial and accounting officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) were effective as of September 30, 2011.

Changes in Internal Control over Financial Reporting

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

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

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.

ITEM 2. 

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

1.

Quarterly Issuances:

On March 15, 2011, the Company issued a convertible promissory note and received proceeds of $35,000. The note is due for repayment on or before December 17, 2011, carries interest at 8% and, at the option of holder, may be converted into common shares of the Company at any time after 180 days from the issuance date, at a conversion price based on 58% of the average of the lowest three closing bid prices during the ten trading days preceding the conversion date. The Company made the offer and sale in reliance on the exemption from registration afforded by Section 4(2) to the Securities Act of 1933, as amended, on the basis that the securities were offered and sold in a non-public offering to a “sophisticated investor” who had access to registration-type information about the Company. No commission was paid in connection with the sale of the Note

On April 9, 2011, the Company entered into an Agreement to Extend Term of Promissory Note (the “Second Extension”) with the Management AB to extend the terms of that certain Promissory Note entered into between the Company and the Management AB dated July 9, 2010 (the “Note”). The Second Extension extends the due date of the Note from January 9, 2011 to October 9, 2011. Other than the foregoing, the terms and conditions of the Note remain the same. The Company made the offer and sale in reliance on the exemption from registration afforded by Section 4(2) to the Securities Act of 1933, as amended, on the basis that the securities were offered and sold in a non-public offering to a “sophisticated investor” who had access to registration-type information about the Company. No commission was paid in connection with the sale of the Note.

On May 5, 2011, the Company issued a convertible promissory note and received proceeds of $35,000. The note is due for repayment on or before February 9, 2012, carries interest at 8% and, at the option of holder,  may be converted into common shares of the Company at any time after 180 days from the issuance date, at a conversion price based on 55% of the average of the lowest three closing bid prices during the ten trading days preceding the conversion date. The Company made the offer and sale in reliance on the exemption from registration afforded by Section 4(2) to the Securities Act of 1933, as amended, on the basis that the securities were offered and sold in a non-public offering to a “sophisticated investor” who had access to registration-type information about the Company. No commission was paid in connection with the sale of the Note.

16

On July 21, 2011, the Company issued a convertible promissory note and received proceeds of $37,500. The note is due for repayment on or before April 25, 2012, carries interest at 8% and, at the option of holder,  may be converted into common shares of the Company at any time after 180 days from the issuance date, at a conversion price based on 55% of the average of the lowest three closing bid prices during the ten trading days preceding the conversion date. The Company made the offer and sale in reliance on the exemption from registration afforded by Section 4(2) to the Securities Act of 1933, as amended, on the basis that the securities were offered and sold in a non-public offering to a “sophisticated investor” who had access to registration-type information about the Company. No commission was paid in connection with the sale of the Note.

2.

Subsequent Issuances:

None.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.  

[REMOVED AND RESERVED]

ITEM 5.

OTHER INFORMATION

None.

17

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.
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.
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.

18

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:  November 10, 2011

/s/ Grant Jasmin                               

By: Grant Jasmin

Its: President & Chief Executive Officer

Dated:  November 10, 2011

/s/ Simon Westbrook                         

By:  Simon Westbrook

Its:  Chief Financial Officer & Principal Accounting Officer

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:  November 10, 2011

/s/ Grant Jasmin                              

By:  Grant Jasmin

Its:  Director

19

EX-31.1

Exhibit 31.01

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER PURSUANT TO RULE 13a-14

I, Grant Jasmin, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of POWRtec International Corp.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)   

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)   

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)    

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)   

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 10, 2011

/s/ Grant Jasmin                       

By: Grant Jasmin

Its: Principal Executive Officer

EX-31.2

Exhibit 31.02

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO RULE 13a-14

I, Simon Westbrook, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of POWRtec International Corp.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)  

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)  

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) 

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) 

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)  

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 10, 2011

/s/ Simon Westbrook                  

By: Simon Westbrook

Its:  Principal Financial Officer

EX-32.1

Exhibit 32.01

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of POWRtec International Corp. (the “Company”) on Form 10-Q for the period ending September 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Grant Jasmin, Chief Executive Officer, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

(1) 

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) 

The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Grant Jasmin             

By: Grant Jasmin

Chief Executive Officer

Dated: November 10, 2011

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.02

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of POWRtec International Corp. (the “Company”) on Form 10-Q for the period ending September 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Simon Westbrook, Chief Financial Officer, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

(1)     

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)    

The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Simon Westbrook      

By: Simon Westbrook

Chief Financial Officer

Dated: November 10, 2011

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

CONDENSED BALANCE SHEETS Parentheticals (USD $)	Sep. 30, 2011	Dec. 31, 2010
Preferred Stock, par or stated value	$ 0.001	$ 0.001
Preferred Stock, shares authorized	5,000,000	5,000,000
Preferred Stock, shares issued	0	0
Preferred Stock, shares outstanding	0	0
Common Stock, par or stated value	$ 0.001	$ 0.001
Common Stock, shares authorized	300,000,000	300,000,000
Common Stock, shares issued	100,634,402	100,162,540
Common Stock, shares outstanding	100,634,402	100,162,540

XML

CONDENSED STATEMENT OF OPERATIONS (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Revenue
Cost of goods sold
Gross profit
Operating Expenses:
Selling and marketing		4,661		5,017
Research and development	4,621	45,467	35,128	136,130
General and administrative	107,860	233,926	345,231	905,812
Total operating expenses	112,481	284,054	380,359	1,046,959
Operating loss	(112,481)	(284,054)	(380,359)	(1,046,959)
Interest expense	56,658	12,108	77,412	13,715
Net loss	$ (169,139)	$ (296,162)	$ (457,771)	$ (1,060,674)
Basic and diluted loss per share of common stock	$ 0.00	$ (0.01)	$ 0.00	$ (0.01)
Weighted average number of common shares outstanding used in basic and diluted loss per share	100,404,517	100,047,594	100,302,459	99,045,517

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Document and Entity Information	9 Months Ended
	Sep. 30, 2011	Nov. 10, 2011
Document And Entity Information
Entity Registrant Name	POWRTEC CORP
Document Type	10-Q
Document Period End Date	Sep. 30, 2011
Amendment Flag	false
Entity Central Index Key	0001387673
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		100,634,402
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q3

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Income Taxes

9 Months Ended

Sep. 30, 2011

Income Taxes

Income Tax Disclosure [Text Block]

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:

		September 30, 2011
Deferred tax assets:
Net operating loss carry forwards	$	(8,062,028)
add back compensation accruals		1,776,252
		(6,285,776)
Statutory tax rate (combined federal and state)		37.60%
Non-capital tax loss		2,363,452
Valuation allowance		(2,363,452)
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.

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CustomerDepositsTextBlock

9 Months Ended

Sep. 30, 2011

CustomerDepositsTextBlock

CustomerDepositsTextBlock

3. CUSTOMER DEPOSITS

In October 2006, the Company and Dong Energy ("Dong") signed the revised Supplement to Framework, valid for eighteen months for the Company to sell a maximum 206,000 meters to Dong. As part of this agreement, Dong paid a $600,000 deposit which is recorded as revenue of $3.00 per unit upon shipment.  As of September 30, 2011 and December 31, 2010, customer deposits were $122,740. There are approximately 40,000 units remaining to be shipped under this deposit arrangement.

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Related Party Disclosures

9 Months Ended

Sep. 30, 2011

Related Party Disclosures

Related Party Transactions Disclosure [Text Block]

9. RELATED PARTY TRANSACTIONS

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

See Note 8 for a description of the stock sale agreements entered into between the Company and certain officers, individuals, and customers.

Accounts payable as of September 30, 2011 and December 31, 2010 includes approximately $354,000 and $346,000 of accounts payable for the consulting services rendered by our former Chief Financial Officer.

Accrued liabilities includes approximately $13,000 for consulting services rendered by our new Chief Financial Officer.

Accrued payroll as of September 30, 2011 and December 31, 2010 includes approximately $860,000 and $673,000 of accrued payroll liabilities to our Chief Executive Officer.

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Commitment and Contingencies

9 Months Ended

Sep. 30, 2011

Commitment and Contingencies

Commitments and Contingencies Disclosure [Text Block]

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. The Company had no rental expense in the three months or nine months ended September 30, 2011.

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Equity

9 Months Ended

Sep. 30, 2011

Equity

Stockholders' Equity Note Disclosure [Text Block]

8. STOCKHOLDERS' DEFICIENCY

Common stock and warrants

The Company has authorized shares of common and preferred stock for issuance at September 30, 2011, and December 31, 2010, as follows:

	September 30,	December 31,
	2011	2010
Common stock	300,000,000	300,000,000
Preferred stock	5,000,000	5,000,000

.

The Company has granted warrants to two members of its Board of Directors to purchase 3.2 million shares at $0.175 per share and, using a Black Scholes model has determined the value of this non-cash compensation which will be amortized over the five year life of the warrants. The warrant compensation expense for the nine months ended September 30, 2011 and September 30, 2010 was $23,022 in both periods.

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 were reserved for issuance to employees, management and consultants of the Company.  The options under this plan were cancelled and new options were reissued pursuant to a new 2010 Powrtec Stock Incentive Plan (the "New Plan").

Activity with respect to outstanding stock options under the New Plan was as follows:

2010 Incentive Stock Option Plan	Number of shares	Weighted average exercise price
Options outstanding at December 31, 2010	6,600,000	$0.00025 to $0.175
Granted	-
Exercised	-
Cancelled	(600,000)
Options outstanding at September 30, 2011	6,000,000	$0.00025 to $0.175

Stock Option Pool	Number of shares
Options authorized	10,000,000
Issued	6,600,000
Cancelled	(600,000)
Exercised	-
Available	4,000,000

During each of the nine months ended September 30, 2011 and 2010, the Company recorded $34,412 and $29,131 respectively, in stock-based compensation expense related to stock options and warrants granted to employees, directors and consultants.   No stock options have been granted in 2011.

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Organization, Consolidation and Presentation of Financial Statements

9 Months Ended

Sep. 30, 2011

Organization, Consolidation and Presentation of Financial Statements

Nature of Operations [Text Block]

1. OVERVIEW

Basis of Presentation

The 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 September 30, 2011 and the results of operations and cash flows for the periods presented. The results of operations for the three months and nine months ended September 30, 2011 are not necessarily indicative of the operating results for the full fiscal year or any future period. These condensed 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, 2010. 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, 2010, filed on April 15, 2011, 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 $8.0 million.  As of September 30, 2011, current liabilities exceeded current assets by approximately $3.0 million and total liabilities exceeded total assets by approximately $3.1 million. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. The ability to continue as a going concern is dependent on the Company's ability to raise additional capital and implement a business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Because the Company has net losses since inception and does not expect to be profitable until 2012 or later, it will most likely be required to raise these additional funds through extended credit from vendors and service providers, convertible debt or term debt, or equity financings which will be dilutive to current shareholders, or by selling its assets.

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

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Earnings Per Share

9 Months Ended

Sep. 30, 2011

Earnings Per Share

Earnings Per Share [Text Block]

4. 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				Nine months
		September 30, 2011		September 30, 2010		September 30, 2011		September 30, 2010
Net loss allocable to common shareholders	$	(169,139)	$	(296,162)	$	(457,771)	$	(1,060,674)
Basic and diluted loss per share allocable to common shareholders	$	(0.00)	$	(0.01)	$	(0.00)	$	(0.01)
Weighted average shares used to compute basic and diluted loss per share allocable to common shareholders		100,404,517		100,047,594		100,302,459		99,045,517

Outstanding common stock equivalents are excluded from the calculation of diluted net loss per share, as their effect is anti-dilutive in all periods.

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RelatedPartiesNotesPayableTextBlock

9 Months Ended

Sep. 30, 2011

RelatedPartiesNotesPayableTextBlock

RelatedPartiesNotesPayableTextBlock

5. NOTES PAYABLE - RELATED PARTIES

In 2004, the Company entered into a series of unsecured noninterest bearing promissory notes with an officer of the Company. These notes are adjusted from time to time as the officer advances additional cash to meet urgent needs, and may be repaid from time to time as and when cash availability allows. The note payable balance was $46,917 and $84,120 as of September 30, 2011 and December 31, 2010, respectively.  The officer has not made a formal demand for repayment of these notes payable.

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NotesPayableTextBlock

9 Months Ended

Sep. 30, 2011

NotesPayableTextBlock

NotesPayableTextBlock

6. NOTES PAYABLE

Since July 1, 2010, the Company has raised working capital through the issuance of a series of short-term convertible promissory notes (the "Notes"), with maturity dates ranging from nine to twelve months. These Notes are convertible into shares of common stock on varying terms at the noteholders' election or upon maturity and, accordingly, the Company recognizes a derivative liability in the conversion option in line with ASC 470-20. The liability is measured at the time of issuance or renewal, using the Black Scholes formula and an assumed risk free interest rate of 2.0%, and volatility of 50%.  The value of the derivative liability is carried as a credit while an offsetting amount is recognized as a discount to the principal value of the Notes and is amortized on a straight-line basis over the term of the Notes. The Company regularly reviews the carrying value of the derivative liability and adjusts to market value as required. When a note is extinguished through repayment or conversion, the related derivative liability is cancelled and posted as a credit to additional paid-in capital. The Notes, which are unsecured, are subject to interest at rates ranging from 8% pa to 60% pa which is accrued and subject to conversion along with the principal amounts of the Notes.  As at September 30, 2011 three of the Notes had reached maturity and were extended by the respective noteholders for additional six month terms.  

Summary of convertible notes at September 30, 2011
Issuance date	Maturity date, incl rollovers*		Interest rate pa	Conversion terms	Principal amount	Net discount	Net value of notes	Interest accrued
7-Jul-10	7-May012	*	8.00%	75% of the avg of closing price in 30 trading days preceding conversion	$ 25,000	$ 3,841	$ 21,159	$ 2,466
25-Aug-10	25-Feb-12	*	8.00%	75% of the avg of closing price in 30 trading days preceding conversion	25,000	5,741	19,259	18,411
9-Jul-10	9-Apr-12	*	60.00%	Convertible into 65,000 shares at $0.50 p/s for principal & interest if not paid when due	25,000	-	25,000	2,197
15-Mar-11	17-Dec-11		8.00%	58% of the 5 lowest of last 10 trading days OTC closing price pre conversion date	35,000	4,082	30,918	1,527
5-Mar-11	9-Feb-12		8.00%	55% of the 5 lowest of last 10 trading days OTC closing price pre conversion date	35,000	5,292	29,708	1,135
21-Jul-11	25-Apr-12		8.00%	55% of the 5 lowest of last 10 trading days OTC closing price pre conversion date	37,500	12,970	24,530	584
				Total	$ 182,500	$ 31,926	$ 150,574	$ 26,319

Interest and debt amortization expense for the nine months ended September 30, 2011 and 2010 was $77,412 and $13,715, respectively.

The Company also has an unsecured term note for $25,000 due November 12, 2011. The interest rate on this note is 8% pa and $1,764 was accrued as at September 30, 2011.

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CONDENSED STATEMENTS OF CASH FLOWS (USD $)	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
Operating Activities
Net loss	$ (457,771)	$ (1,060,674)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		3,797
Non cash consulting expense		62,999
Amortization of discount on convertible notes	8,461	5,504
Stock based compensation expense	15,228	41,590
Interest accrued on notes	28,084
Changes In Operating Assets And Liabilities Abstract
Accounts receivable
Derivative liability	57,567
Prepaid expenses	20,364	272,856
Other non current assets	13,255
Accounts payable	8,000	203,047
Accrued liabilities	186,763	342,699
Customer deposits
Net cash used in operating activities	(120,049)	(132,182)
Financing Activities
(Repayment of) proceeds from shareholder loans	(37,203)	50,600
Proceeds from sale of convertible notes	107,500	77,039
Proceeds from sale of common stock	49,422
Net cash provided by financing activities	119,719	127,639
Net increase in cash and equivalents	(330)	(4,543)
Cash and cash equivalents at beginning of period	2,272	694
Cash and cash equivalents at end of period	1,942	(3,849)
Supplemental Disclosures Of Cash Flow Information
Cash paid for interest
Cash paid for taxes	$ 800	$ 800

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Accounting Policies

9 Months Ended

Sep. 30, 2011

Accounting Policies

Significant Accounting Policies [Text Block]

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of the financial statements in conformity with Generally Accepted Accounting Principles ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. These estimates and assumptions include valuing equity securities and derivative financial instruments issued in financing transactions and share based payment arrangements, determining the fair value common stock prior to the completion of the merger, the collectability of accounts receivable and deferred taxes and related valuation allowances. Certain of our estimates, including evaluating the collectability of accounts receivable, could be affected by external conditions, including those unique to our industry, and general economic conditions. It is possible that these external factors could have an effect on our estimates that could cause actual results to differ from our estimates. We re-evaluate all of our accounting estimates at least quarterly based on these conditions and record adjustments when necessary.

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. 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.

Stock-based compensation

We account 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, using the assumptions noted in the table below. Expected volatility was based on the historical volatility of a peer group of publicly traded companies. The expected term of options was based upon the simplified method provided by the SEC in Staff Accounting Bulletin No, 107, "Share-Based Payments", and ("SAB 107"). The risk-free rate for the expected term of the option is based on the U.S. Treasury Constant Maturity rate. That cost is recognized over the period during which an employee is required to provide service in exchange for the award, the requisite service period. No compensation cost is recognized for equity instruments for which employees do not render the requisite service. The grant date fair value of employee share options and similar instruments is estimated using the Black-Scholes model adjusted for the unique characteristics of those instruments.

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, which is measured as of the "valuation date" the stock options or common stock warrants are fair valued using the Black-Scholes model on the basis of the market price of the underlying common stock on the "valuation date", which for options and warrants related to contracts that have substantial disincentives to non-performance is the date of the contract, and for all other contracts is the vesting date. 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. Where expense must be recognized prior to a valuation date, the expense is computed under the Black-Scholes option-pricing model on the basis of the market price of the underlying common stock at the end of the period, and any subsequent changes in the market price of the underlying common stock through the valuation date is reflected in the expense recorded in the subsequent period in which that change occurs.

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.

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Subsequent Events

9 Months Ended

Sep. 30, 2011

Subsequent Events

Subsequent Events [Text Block]

11. SUBSEQUENT EVENTS

On November 2, 2011 and November 3, 2011, the Company repaid two of the convertible notes, one for the balance of $27,000 and the other for $35,000.

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CONDENSED BALANCE SHEETS (USD $)	Sep. 30, 2011	Dec. 31, 2010
Current assets:
Cash and cash equivalents	$ 1,942	$ 2,272
Prepaid expenses and other current assets	2,926	23,290
Total current assets	4,868	25,562
Deposits and other non-current assets		13,255
Total assets	4,868	38,817
Accounts payable	593,270	585,270
Accrued liabilities	2,006,463	1,805,478
Customer Deposits	122,740	122,740
Accrued Interest	28,084	14,222
Derivative liability	57,567
Notes due to related party	46,917	84,120
Term notes	25,000	25,000
Convertible notes, net of discounts	150,574	64,712
Total current liabilities and liabilities	3,030,615	2,701,542
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 100,634,402 and 100,162,540 shares issued and outstanding at September 30, 2011 and December 31, 2010, respectively	$ 100,634	$ 100,163
Additional paid-in capital	4,935,647	4,841,369
Accumulated deficit	(8,062,028)	(7,604,257)
Total stockholders' deficiency	(3,025,747)	(2,662,725)
Total liabilities and stockholders' deficiency	$ 4,868	$ 38,817