10-K 1 s117413_10k.htm FORM 10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended: December 31, 2018

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

For the transition period from _____________ to ___________________

Commission File No. 333-218737

POWERCOMM HOLDINGS INC.

(Exact name of registrant as specified in its charter)

Delaware

47-3152668

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

9701 Fallard Court

Upper Marlboro, Maryland 20772

(Address of principal executive offices)

Issuer’s telephone number: 703-746-8980

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

Securities Registered pursuant to Section 12(g) of the Exchange Act: Common Stock, $.0001 par value per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

Yes ☐ No ☒

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

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).

Yes ☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

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 definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth 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	☒
		Emerging growth company	☒

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

Yes ☐ No ☒

As of June 30, 2018, the last business day of the registrant’s most recently completed second fiscal quarter, there was no established public trading market for the common stock of the registrant and therefore, an aggregate market value of the registrant’s common stock is not determinable.

At April 15, 2019, there were 24,330,000 shares of the registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None

TABLE OF CONTENTS

PART I
ITEM 1. BUSINESS		3
ITEM 1A. RISK FACTORS		12
ITEM 1B. UNRESOLVED STAFF COMMENTS		12
ITEM 2. PROPERTIES		12
ITEM 3. LEGAL PROCEEDINGS		12
ITEM 4. MINE SAFETY DISCLOSURES		12
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES		13
ITEM 6. SELECTED FINANCIAL DATA		14
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		14
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		21
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA		21
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE		21
ITEM 9A. CONTROLS AND PROCEDURES		21
ITEM 9B. OTHER INFORMATION		23
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE		23
ITEM 11. EXECUTIVE COMPENSATION		25
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS		26
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, DIRECTOR INDEPENDENCE		26
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES		28
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES		29

Throughout this report, unless otherwise designated, the terms “we,” “us,” “our,” “the Company,” “our company” and “PowerComm” refer to PowerComm Holdings, Inc. and its wholly owned subsidiary, PowerComm Construction, Inc., on a consolidated basis. All amounts in this report are in U.S. Dollars, unless otherwise indicated.

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains “forward-looking statements.” The use of words such as “anticipates,” “estimates,” “expects,” “intends,” “plans” and “believes,” among others, generally identify forward-looking statements. These forward-looking statements are based on our management’s expectations and assumptions about future events as of the date of this Annual Report on Form 10-K, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Forward-looking statements include statements about our expectations, beliefs or intentions regarding our product offerings, business, financial condition, results of operations, strategies or prospects. You can identify forward-looking statements by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results as of the date they are made. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These forward-looking statements are only predictions and reflect our views as of the date they are made with respect to future events and financial performance. We undertake no obligation to update, and we do not have a policy of updating or revising, these forward-looking statements.

PART I

ITEM 1. BUSINESS.

THE BUSINESS

Corporate History and General Information

PowerComm Holdings, Inc. (the “Company”) was incorporated in the State of Delaware on January 12, 2015, and was formerly known as White Grotto Acquisition Corporation (“White Grotto” or “White Grotto Acquisition”). The Company is in the business of electric utility, fiber optic, and telecommunications construction and maintenance services.

On September 14, 2015, the Company implemented a change of control by issuing shares to new shareholders, redeeming shares of existing shareholders, electing new officers and directors and accepting the resignations of its then existing officers and directors. In connection with the change of control, the shareholders of the Company and its board of directors unanimously approved the change of the Company’s name from White Grotto Acquisition Corporation to PowerComm Holdings, Inc.

On November 15, 2016, the Company entered into a stock-for-stock acquisition agreement (the “Acquisition Agreement”) with PowerComm Construction, Inc., a private company organized under the laws of the Commonwealth of Virginia (“PCC”). Under the Acquisition Agreement, the Company issued to PCC 200,000 shares of its common stock, valued at $0.0001 per share, in exchange for all of the issued and outstanding stock of PCC. Mr. David Kwasnik, who is the officer, director and majority shareholder of the Company, was the sole shareholder of PCC prior to the acquisition.

For the purposes of disclosures throughout this annual report, when the “Company” is used, it refers to PowerComm Holdings Inc. and its wholly owned subsidiary PCC.

The Company is located at 9701 Fallard Court, Upper Marlboro, Maryland 20772. The Company’s main phone number is (703) 746-8980. The Company’s fiscal year end is December 31. Neither the Company nor its predecessors have filed for bankruptcy, receivership or any similar proceedings nor are in the process of filing for bankruptcy, receivership or any similar proceedings.

The Business

On November 15, 2016, PowerComm Holdings, Inc., a Delaware corporation, entered into a merger agreement (the “Acquisition”) with PowerComm Construction, Inc., a Virginia corporation (“PCC”). PowerComm Construction is a construction company with expertise in a variety of electric utility, fiber optic, and telecommunications construction and maintenance services and is qualified also to do business in all 50 states, the District of Columbia and Puerto Rico The current business of PCC is in electric utility, fiber optic, and telecommunications construction and maintenance services. PCC installs, connects and services the energy and communications sectors. Experienced PCC teams also build and maintain America’s infrastructure from fiber-optic lines to high voltage lines to cellular communication towers. PCC has its headquarters in Northern Virginia, with offices in Southern Maryland, Nashville, Tennessee, and Washington, D.C. Prior to the Acquisition, the Company had no business or operations. Pursuant to the Acquisition, the Company has acquired the business plan, operations and contracts of its now wholly-owned subsidiary, PowerComm Construction, Inc. (“PCC” or “PowerComm Construction”).

The Company, through its wholly owned subsidiary PCC, installs, connects and services the energy and communications sectors. Experienced PCC teams also build and maintain America’s infrastructure from fiber-optic lines to high voltage lines to cellular communication towers. The current business of PCC is in electric utility, fiber optic, and telecommunications construction and maintenance services. PCC has provided for almost 20 years a diverse range of power services, telecommunications and fiber optic services and cellular services. PCC is a longstanding service provider that works on complex projects for industry leaders. PCC service crews perform electrical power line work on overhead and underground power distribution infrastructures as well as on transmission and sub-transmission lines.

Among other notable achievements in its current business are the following:

	○	PCC is a Contractor of Choice (COC) for Pepco /Exelon and was awarded a $56 million contract to perform manhole and conduit installation, repair and paving within the National Capitol region.

	○	PCC holds a $4 million plus contract with Pepco Holdings Inc. to conduct manhole inspection and repair that includes the installation of inner-duct, fiber optic cable as well as installation and repair of low voltage (1,000 volts or less) cable.

	○	PCC has a $5 million plus contract with Pepco Holdings Inc. to provide traffic control services throughout the Washington, D.C. Metro area.

	○	PCC obtained a contract with Pepco/Exelon to provide high/low-voltage cabling installation and repair throughout the Washington, D.C. Metro area.

	○	PCC was just awarded a contract with Southern Company to provide electric overhead distribution, transmission installation and repair services to its subsidiaries Georgia Power and Gulf Power through 2020.

	○	PCC recently obtained a contract with RCN to provide fiber-optic cabling installation and repair throughout the Washington, D.C. Metro area.

	○	PCC is a certified contractor with Entergy and its affiliates (Entergy Arkansas, Louisiana, Mississippi, New Orleans and Texas), Southern Company and its affiliates (Georgia Power, Alabama Power, Mississippi Power and Gulf power) and Exelon and its affiliates (Pepco Holdings Inc. and Baltimore Gas & Electric), allowing PCC to provide power-related services across much of the United States.

	○	In its Cell Tower Division, PCC is recognized as a Master Services Provider for Crown Castle and SBA Communications, two of the largest telecommunications tower owners in the world. PCC manages small cell, Distributed Antenna Systems (“DAS”) and cellular connections for new tower builds, as well as, the installation and repair for leading cell tower companies.

	○	PCC recently won inclusion as a Google Fiber Contractor. PCC expects to be able to provide underground and overhead power construction work for planned multi-city, fiber “roll-outs.”

	○	PCC has been providing contracting work over several years to many prominent Fortune 500 companies including well-known companies such as AT&T and Sprint and Exelon.

PCC Received National Minority Supplier Development Council Certification

In June, 2016, PCC received minority-owned certification from the Capital Region of the National Minority Supplier Development Council (“NMSDC”). NMSDC is one of the country’s leading corporate membership organizations committed to helping supplier diversity by matching certified minority-owned businesses to its vast network corporate members who wish to purchase their products, services and solutions. Its corporate membership includes many of the largest public and privately-owned companies, as well healthcare companies, colleges and universities. NMSDC maintains rigorous certification standards and PCC anticipates that such certification will provide a large base for growth and potential new projects.

Recent Developments

Real Estate Acquisition

On July 12, 2018, the Company, jointly with a related entity, closed on the purchase of an industrial property in Upper Marlboro, Prince George’s County, Maryland. The Company paid $1.575 million plus closing costs. The industrial property is approximately 1.77 acres, fenced and paved, which will provide for the ability of the Company to significantly increase its truck fleet and has an office building and drive up warehouse of approximately 12,000 square feet. The facility will house all of the Company’s operations and will function as corporate headquarters. The Company financed 85% of the purchase price, or approximately $1.339 million. The purchase loan bears interest at a rate of 5.24% per annum, payable over 10 years at $8,076 monthly with a payment due on the 120^th month estimated at approximately $1,008,000, and is secured with a first mortgage on the real estate and the personal guarantee of David Kwasnik, the Chief Executive Officer and majority shareholder of the Company. The purchase loan was made to the Company and to Kwasnik Properties, LLC (the “LLC”) on a joint and several basis. The two members of the LLC are David and Laura Kwasnik, both officers and majority shareholders of the Company. The Company has moved the majority of its operating assets and all personnel to the new facilities. A portion of the truck and equipment fleet is kept at another leased facility.

The Company has included the financial statements of the LLC in these consolidated financial statements and will continue to do so in future filings in accordance with the “Variable Interest Entity” rules.

Purchase of Equipment

In 2018, the Company purchased certain equipment and rolling stock for the amount of approximately $1,478,000, of which approximately $1,057,000 was financed.

The Company’s Presence in the Market

The Company, through its wholly owned subsidiary PCC, has a specialty in providing power related services, which include power transmission (overhead and underground) as well as distribution (overhead and underground). PCC services include a vast range, spanning pole and tower erection, ground testing, conductor installation, voltage conversion and splicing. PCC possesses all necessary equipment for new construction and maintenance of overhead transmission and distribution power lines and can purchase, rent or lease any additional equipment required to complete a project.

PCC also provides both overhead and underground services in telecom and fiber optics, including splicing, inner duct, pole placement and mapping/planning.

PCC cellular services span a range of tower services and maintenance. For tower services, PCC offers construction (such as tower inspection, installation, testing), civil (such as rooftop installations, shelter work, power plant installation) and additional customized services (such as laptop testing, troubleshooting and integration work). For maintenance services, PCC offers both antenna and line maintenance (such as RF testing, alarm troubleshooting and fiber testing) as well as tower structure maintenance (such as tower customization, inspection and tower decommissioning).

PCC trains its employees in-house, providing instruction in CPR, OSHA 10 and 30 and confined space training. Safety is a priority at PCC, so the company uses ANSI-approved multi-gas monitors in its underground work environment. PCC has annual pole-top rescue training and other bucket truck rescue training. PCC adheres to the APPA (American Public Power Association) safety guideline and manual in its business practices and operations.

PCC works closely with, and relies heavily on, IBEW (International Brotherhood Electrical Workers) to help provide the necessary manpower for all its power line and related projects. The Company currently has agreements in place with multiple IBEW local unions throughout the United States, although is not subject to IBEW’s collective bargaining agreements.

Intellectual Property Assets

The Company, through its wholly owned subsidiary PCC, has the following intellectual property assets:

○

Trademark for “Get Connected and Feel the Power” [Reg. No. 3,273,692, registered in 2009 with the U.S. Patent and Trademark Office]

○

Trademark for PCC and PowerComm Construction, Inc. (as shown in the mark) [Reg. No. 4,706,133, registered 2015 with the U.S. Patent and Trademark Office]

○

Trademark for PCC PowerComm Construction, Inc. [Reg. No. 4,815,529, registered 2015 with the U.S. Patent and Trademark Office]

Competition and Regulation

The infrastructure maintenance and construction business is highly competitive. We compete with other independent contractors, including larger regional and national firms that may have financial, operational, technical and marketing resources that exceed our own. Competitive factors include: level of technical expertise and experience, industry reputation, quality of work, price, geographic presence, dependability, availability of skilled personnel, worker safety and financial stability. Our management believes that we compete favorably with our competitors on the basis of these factors. There can be no assurance that our competitors will not develop the expertise, experience and resources to provide services that are superior in both price and quality to our services, or that we will be able to maintain or enhance our competitive position.

We are subject to various federal, state and local statutes and rules regarding, among other things, contractor licensing, electrical codes, worker safety and environmental protection. We believe that we are in substantial compliance with all applicable regulatory requirements.

Suppliers

The Company obtains its equipment from John Deere, Altec Industries, Ford Motor Company and similar commercial equipment vendors. All other materials utilized by the Company in providing its services are supplied by its customers in accordance with their internal standards and specifications.

Other than as provided in the foregoing, currently, the Company has no other principal suppliers or strategic partners.

Customers

PCC has a history of working with a wide range of industry leaders, which include the following clients:

●

Potomac Electric Power Co.

●

Southern Company (and its affiliates Georgia Power and Gulf Power)

●

Exelon

●

Entergy

●

AT&T

●

Sprint

●

Spectrum Wireless Solutions

●

Crown Castle

●

Ansco & Associates, LLC

●

SBA Communications

●

NES

●

RCN Communications Inc.

In the years ended December 31, 2018 and 2017, three customers accounted for 100% of our revenues, with Pepco/Exelon accounting for approximately 98% and 81% revenues in these years, respectively.

Employees

PowerComm Holdings, Inc. only has 1 employee and PCC has approximately 100 employees.

Legal Matters

In April 2014, Gregory Randolph, a former employee of the Company filed a Class Action Labor Lawsuit against the Company in the Maryland Federal District Court. The lawsuit alleged that he and 48 other flaggers of the Company were not paid overtime pay which in Maryland is time and ½. The Company asserted that Mr. Randolph’s testimony as to the amount of hours he worked was completely false and that he was correctly paid for the hours he worked per his time slips. As of December 2015, the Company has offered $100,000 to settle the case, which the Court subsequently approved after having conducted a fairness hearing. The Company accrued contingent loss of $100,000 during the year ended December 31, 2014. No additional contingent liability was accrued during the year ended December 31, 2015. On April 28, 2016, as stated, the settlement agreement was approved by the Court and judgment for plaintiffs was entered in the amount of $100,000. On April 29, 2016, the Company made payments to plaintiffs in the total amount of $100,000. On November 21, 2016, the Court ordered that the plaintiffs’ revised petition for award of attorneys’ fees and costs was granted, and that the Company is responsible for payment of $188,616, payable in twenty-four (24) installments starting December 2, 2016.

In 2017, the Company appealed the attorney fee award to the United States Court of Appeals for the Fourth Circuit (“4th Circuit”). On October 31, 2017 the 4th Circuit ruled in the Company’s favor and reversed and remanded the attorney fee award back to the trial court as excessive. As of December 31, 2017, the Company had paid approximately $86,000. Based on the 4th Circuit’s reversal and remand, the accrual of the remaining prior amounts recorded was reversed, and the Company believes that its payments made through December 31, 2017 to be sufficient under the 4^th Circuit’s instructions provided in the remand back to the trial court.

Recently, on June 1, 2018, and based on the 4^th Circuit’s remand, the trial court issued a second ruling which reduced the attorney fee award by approximately $6,000. Subsequently, in 2018, the Company asserts that the trial court’s ruling is erroneous, as the reduction should have been far greater, and appealed again to the 4^th Circuit (the second appeal). Presently, the parties have completed briefing to the 4^th Circuit on the second appeal, and the 4^th Circuit has set a date of May 8, 2019 to hear oral argument. A ruling from the 4^th Circuit on the second appeal will be made subsequent to the May 2019 oral argument.

THE COMPANY

Change of Control

The Company was incorporated in the State of Delaware on January 12, 2015, and was formerly known as White Grotto Acquisition Corporation (“White Grotto” or “White Grotto Acquisition”).

On September 14, 2015, the Company implemented a change of control by issuing shares to new shareholders, redeeming shares of existing shareholders, electing a new officer and director and accepting the resignations of its then existing officers and directors. In connection with the change of control, the shareholders of the Company and its board of directors unanimously approved the change of the Company’s name from White Grotto Acquisition Corporation to PowerComm Holdings, Inc.

On November 15, 2016, the “Company”, entered into a stock-for-stock acquisition agreement (the “Acquisition Agreement”) with PowerComm Construction, Inc., a private company organized under the laws of the Commonwealth of Virginia (“PCC”). Under the Acquisition Agreement, the Company issued to PCC 200,000 shares of its common stock, valued at $0.0001 per share, in exchange for all of the issued and outstanding stock of PCC. Mr. David Kwasnik, who is the officer, director and majority shareholder of the Company, was the sole shareholder of PCC prior to the acquisition.

Research and Development

The Company has not to date undertaken, and does not currently plan to undertake, any material research and development activities.

Employees

David Kwasnik is the sole officer and director of the Company. Mr. Kwasnik has allocated time to the activities of the Company and receives compensation from PCC.

There are no agreements or understandings for the officer or director to resign at the request of another person and the above-named officer and director is not acting on behalf of nor will act at the direction of any other person.

Set forth below are the names of the director and officer of the Company, all positions and offices with the Company held, the period during which they have served as such, and the business experience during at least the last five years:

David Kwasnik serves as the President, Secretary, Treasurer and sole officer and director of the Company, positions at the Company that he has held since September 2015. Since 1995, Mr. Kwasnik has served as the president and chief executive officer of PowerComm Construction, a privately-held company until the merger with Powercomm Holdings, Inc. in 2016. He has managed and directed all aspects and technological operations, procurement and project management activities for the company’s telecommunications, power transmission and distribution construction projects.

Property

The Company has administrative offices located at 9701 Fallard Court, Upper Marlboro, Maryland 20772.

The Company entered into a month-to-month lease agreement on January 31, 2014 for approximately 22,000 square feet to rent a small office space and vehicle yard located at 6000 Walker Mill Road, Capitol Heights MD. Through July, 2018, the Company paid $3,500 per month. In August, 2018, the lease was amended to include only the vehicle yard and was reduced to $1,500 a month. The term remains month to month.

The Company entered into a month-to-month lease agreement on July 1, 2016 for a 200 square foot office space located at 110 Maryland Avenue Washington, DC. The Company pays $800 per month through April, 2018, at which time the lease was terminated.

In 2016, The Company entered into a month-to-month lease agreement to rent a portion of the premises located at 3429 Ramsgate Terrace, Alexandia, Virginia, 22309 with an officer, director and shareholder of the Company. The Company agreed to a monthly rental rate of $2,600. This lease was terminated upon closing of the property located at 9701 Fallard Court, Upper Marlboro, Maryland. In January 2019, the Company agreed to a new month-to-month lease at a rate of $1,000 per month.

Subsidiaries

The Company has one subsidiary, PowerComm Construction Inc., which it wholly owns.

Additionally, and as more fully described in the notes to the financial statements herein, in 2018, David and Laura Kwasnik, the holders of approximately 91% of the stock of the Company setup a new entity, Kwasnik Properties, LLC (“KP”) with the intent of acquiring land and building for use in the operations of PCC. The Company has determined that KP represents a variable interest entity in which PCH and its wholly owned subsidiary are the primary beneficiary, and which will be required to bear essentially all of the losses in event of a disruptive event. The determination was based primarily upon (1) the only tenant for the property acquired is PCC and (2) the lenders required that PCC be included as a co-borrower on the note and (3) with essentially no equity contributed to KP by the Kwasniks. Based upon this, the Company has consolidated KP into PCC.

All rents charged to PCC by KP and all deposits from PCC to KP have been eliminated upon consolidation in these financial statements.

Jumpstart Our Business Startups Act

In April, 2012, the Jumpstart Our Business Startups Act (“JOBS Act”) was enacted into law. The JOBS Act provides, among other things:

Exemptions for emerging growth companies from certain financial disclosure and governance requirements for up to five years and provides a new form of financing to small companies;

Amendments to certain provisions of the federal securities laws to simplify the sale of securities and increase the threshold number of record holders required to trigger the reporting requirements of the Securities Exchange Act of 1934;

Relaxation of the general solicitation and general advertising prohibition for Rule 506 offerings;

Adoption of a new exemption for public offerings of securities in amounts not exceeding $50 million; and

Exemption from registration by a non-reporting company of offers and sales of securities of up to $1,000,000 that comply with rules to be adopted by the SEC pursuant to Section 4(6) of the Securities Act and exemption of such sales from state law registration, documentation or offering requirements.

In general, under the JOBS Act a company is an emerging growth company if its initial public offering (“IPO”) of common equity securities was effected after December 8, 2011 and the company had less than $1 billion of total annual gross revenues during its last completed fiscal year. A company will no longer qualify as an emerging growth company after the earliest of

(i) the completion of the fiscal year in which the company has total annual gross revenues of $1 billion or more,

(ii) the completion of the fiscal year of the fifth anniversary of the company’s IPO;

(iii) the company’s issuance of more than $1 billion in nonconvertible debt in the prior three-year period, or

(iv) the company becoming a “larger accelerated filer” as defined under the Securities Exchange Act of 1934.

The JOBS Act provides additional new guidelines and exemptions for non-reporting companies and for non-public offerings. Those exemptions that impact the Company are discussed below.

Financial Disclosure. The financial disclosure in a registration statement filed by an emerging growth company pursuant to the Securities Act of 1933 will differ from registration statements filed by other companies as follows:

(i) audited financial statements required for only two fiscal years;

(ii) selected financial data required for only the fiscal years that were audited;

(iii) executive compensation only needs to be presented in the limited format now required for smaller reporting companies.

(A smaller reporting company is one with a public float of less than $75 million as of the last day of its most recently completed second fiscal quarter)

However, the requirements for financial disclosure provided by Regulation S-K promulgated by the Rules and Regulations of the SEC already provide certain of these exemptions for smaller reporting companies. The Company is a smaller reporting company. Currently a smaller reporting company is not required to file as part of its registration statement selected financial data and only needs audited financial statements for its two most current fiscal years and no tabular disclosure of contractual obligations.

The JOBS Act also exempts the Company’s independent registered public accounting firm from complying with any rules adopted by the Public Company Accounting Oversight Board (“PCAOB”) after the date of the JOBS Act’s enactment, except as otherwise required by SEC rule.

The JOBS Act also exempts an emerging growth company from any requirement adopted by the PCAOB for mandatory rotation of the Company’s accounting firm or for a supplemental auditor report about the audit.

Internal Control Attestation. The JOBS Act also provides an exemption from the requirement of the Company’s independent registered public accounting firm to file a report on the Company’s internal control over financial reporting, although management of the Company is still required to file its report on the adequacy of the Company’s internal control over financial reporting.

Section 102(a) of the JOBS Act exempts emerging growth companies from the requirements in §14A(e) of the Securities Exchange Act of 1934 for companies with a class of securities registered under the 1934 Act to hold shareholder votes for executive compensation and golden parachutes.

Other Items of the JOBS Act. The JOBS Act also provides that an emerging growth company can communicate with potential investors that are qualified institutional buyers or institutions that are accredited to determine interest in a contemplated offering either prior to or after the date of filing the respective registration statement. The Act also permits research reports by a broker or dealer about an emerging growth company regardless if such report provides sufficient information for an investment decision. In addition, the JOBS Act precludes the SEC and FINRA from adopting certain restrictive rules or regulations regarding brokers, dealers and potential investors, communications with management and distribution of a research reports on the emerging growth company IPO.

Section 106 of the JOBS Act permits emerging growth companies to submit 1933 Act registration statements on a confidential basis provided that the registration statement and all amendments are publicly filed at least 21 days before the issuer conducts any road show. This is intended to allow the emerging growth company to explore the IPO option without disclosing to the market the fact that it is seeking to go public or disclosing the information contained in its registration statement until the company is ready to conduct a roadshow.

Election to Opt Out of Transition Period. Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a 1933 Act registration statement declared effective or do not have a class of securities registered under the 1934 Act) are required to comply with the new or revised financial accounting standard.

The JOBS Act provides a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of the transition period.

Reports to Security Holders

In March 2015, the Company (as White Grotto Acquisition Corporation) filed a Form 10-12G general registration of securities pursuant to the Securities Exchange Act of 1934 and is a reporting company pursuant such Act and files with the Securities and Exchange Commission quarterly and annual reports and management shareholding information. The Company intends to deliver a copy of its annual report to its security holders, and will voluntarily send a copy of the annual report, including audited financial statements, to any registered shareholder who requests the same.

The Company’s documents filed with the Securities and Exchange Commission may be inspected at the Commission’s principal office in Washington, D.C. Copies of all or any part of the registration statement may be obtained from the Public Reference Section of the Securities and Exchange Commission, 100 F Street N.E., Washington, D.C. 20549. Call the Commission at 1-800-SEC-0330 for further information on the operation of the public reference rooms. The Securities and Exchange Commission also maintains a web site at http://www.sec.gov that contains reports, proxy statements and information regarding registrants that file electronically with the Commission. All of the Company’s filings may be located under the CIK number 0001634424.

PLAN OF OPERATION

Background

The Company is an early-stage company that specializes in providing services related to overhead and underground electrical transmission distribution, construction and maintenance.

PowerComm Holdings Inc. was originally named White Grotto Acquisition Corporation (“White Grotto”) and incorporated on January 12, 2015 under the laws of the State of Delaware to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions.

In March 2015, White Grotto Acquisition Corporation filed a registration statement with the Securities and Exchange Commission on Form 10-12g pursuant to Securities Exchange Act of 1934 and became a public reporting company.

On September 14, 2015, PowerComm Holdings, Inc. effected a change in control of White Grotto Acquisition Corporation. As part of that change in control, the then officers and directors of White Grotto resigned, the Company redeemed 19,500,000 shares of the then 20,000,000 shares of common stock outstanding. David L. Kwasnik, Sr. was appointed the sole officer and director of the Company and the Company issued 20,000,000 shares of common stock to Mr. Kwasnik. In addition, the Company changed its name to PowerComm Holdings Inc.

On November 15, 2016, PowerComm Holdings Inc. entered into a stock-for-stock acquisition agreement (the “Acquisition Agreement”) with PowerComm Construction, Inc., a private company organized under the laws of the Commonwealth of Virginia (“PCC”). Under the Acquisition Agreement, the Company issued to PCC 200,000 shares of its common stock, valued at $0.0001 per share, in exchange for all of the issued and outstanding stock of PCC. Mr. David Kwasnik, who is the officer, director and majority shareholder of the Company, was the sole shareholder of PCC prior to the acquisition

The Company’s corporate offices are located at 9701 Fallard Court, Upper Marlboro, Maryland 20772. The Company’s email address is dkwasnik@powercommconstruction.com, and its website is www.PowerCommConstruction.com. The Company’s telephone number is 703-746-8980. The Company has only recently emerged from its status as a development-stage company, and it has limited operating history and has achieved profitability only in the current, and prior, year.

Business Summary

Overview

The Company, through its wholly owned subsidiary PowerComm Construction, Inc., installs, connects and services the energy and communications sectors. Experienced PCC teams also build and maintain America’s infrastructure from fiber-optic lines to high voltage lines to cellular communication towers. The current business of PCC is in electric utility, fiber optic, and telecommunications construction and maintenance services. PCC has provided for almost 20 years a diverse range of power services, telecommunications and fiber optic services and cellular services. PCC is a longstanding service provider that works on complex projects for industry leaders. PCC service crews perform electrical power line work on overhead and underground power distribution infrastructures as well as on transmission and sub-transmission lines.

Sources of Revenue

The Company earns revenue from the operations of its wholly owned subsidiary, PowerComm Construction, Inc., which provides services related to overhead and underground electrical transmission distribution, construction and maintenance.

ITEM 1A. RISK FACTORS.

As a “smaller reporting company”, we have elected not to provide the disclosure required by this item.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

Not applicable.

ITEM 2. PROPERTIES.

The Company has its headquarters at 9701 Fallard Court, Upper Marlboro, Maryland 20772.

ITEM 3. LEGAL PROCEEDINGS.

In 2017, the Company appealed the attorney fee award to the United States Court of Appeals for the Fourth Circuit (“4th Circuit”). On October 31, 2017 the 4th Circuit ruled in the Company’s favor and reversed and remanded the attorney fee award back to the trial court as excessive. As of December 31, 2017, the Company had paid approximately $86,000. Based on the 4^th Circuit’s reversal and remand, the accrual of the remaining prior amounts recorded was reversed, and the Company believes that its payments made through December 31, 2017 to be sufficient under the 4^th Circuit’s instructions provided in the remand back to the trial court.

Recently, on June 1, 2018, and based on the 4th Circuit’s remand, the trial court issued a ruling which reduced the attorney fee award by approximately $6,000. Subsequently, in 2018, the Company asserts that the trial court’s ruling is erroneous, as the reduction should have been far greater, and appealed again to the 4^th Circuit (the second appeal). Presently, the parties have completed briefing to the 4^th Circuit on the second appeal, and the 4^th Circuit has set a date of May 8, 2019 to hear oral argument. A ruling from the 4^th Circuit on the second appeal will be made subsequent to the May 2019 oral argument.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

There is currently no public market for the Company’s securities.

At such time as it qualifies, the Company may choose to apply for quotation of its securities on the OTC Bulletin Board. The OTC Bulletin Board is a dealer-driven quotation service. Unlike the Nasdaq Stock Market, companies cannot directly apply to be quoted on the OTC Bulletin Board, only market makers can initiate quotes, and quoted companies do not have to meet any quantitative financial requirements. Any equity security of a reporting company not listed on the Nasdaq Stock Market or on a national securities exchange is eligible.

As such time as it qualifies, the Company may choose to apply for quotation of its securities on the Nasdaq Capital Market. In general there is greatest liquidity for traded securities on the Nasdaq Capital Market and less on the OTC Bulletin Board. It is not possible to predict where, if at all, the securities of the Company will be traded following a business combination.

Stockholders

As of the date of this report, there were approximately 47 stockholders.

Dividends

We have not paid, nor declared, any cash dividends since our inception and do not intend to declare or pay any such dividends in the foreseeable future. Our ability to pay cash dividends is subject to limitations imposed by state law.

Securities Authorized for Issuance Under Equity Compensation Plans

As of the year ended December 31, 2018, neither PowerComm Holdings, Inc. nor its wholly owned subsidiary, PowerComm Construction, Inc., had compensation plans (including individual compensation arrangements) under which our Common Stock was authorized for issuance.

The Company’s management will review the adoption of an equity compensation plan in the future.

Recent sales of unregistered securities

The Company has issued the following securities in the last three (3) years. All such securities were issued pursuant to an exemption from registration of the Securities Act of 1933, as amended, as a transaction by an issuer not involving any public offering, as noted below. Each of these transactions was issued as part of a private placement of securities by the Company in which (i) no general advertising or solicitation was used, and (ii) the investors purchasing securities were acquiring the same for investment purposes only, without a view to resale. Furthermore, no underwriters participated or effectuated any of the transactions specified below. Also, no underwriting discounts or commissions applied to any of the transactions set forth below. All potential investors were contacted personally and possessed at the time of their investment bona fide substantive, pre-existing business relationships with the Company and/or its officers, directors and affiliates. No potential investors were contacted through other means, and no general advertising or general solicitation was used to solicit any investors.

In the past three years, the Company has sold securities which were not registered as follows:

The Company (as White Grotto Acquisition Corporation) issued and aggregate of 20,000,000 common shares on formation in January 2015 pro rata (10,000,000 each) to James Cassidy and James McKillop, at a purchase price equal $0.0001 per share, of which all but an aggregate of 500,000 shares were redeemed at a redemption price equal to $0.0001 per share.

On September 16, 2015, the Company issued 20,000,000 shares of its common stock to David Kwasnik, at a purchase price equal to $0.0001 per share as part of a change in control. Consideration for these shares were paid through the forgiveness of $2,000 worth of debt owed to Mr. Kwasnik by the Company.

On November 15, 2016, pursuant to the Acquisition, the Company issued 200,000 shares of its common stock, valued at $0.0001 per share, in exchange for all the outstanding shares of PCC then held by the sole shareholder, David Kwasnik.

On April 12, 2017, the Company issued 160,000 shares of its common stock to 16 shareholders, at a purchase price equal to $0.0001 per share, as part of a private placement for total proceeds of $16.00, pursuant to executed subscription agreements under a Regulation D offering or other private placement of securities. Each of these transactions was issued as part of the private placement of securities by the Company in which no underwriting discounts or commissions applied to any of the transactions. The Company conducted such private placement offering in order to build a base of shareholders and establish relationships with a variety of shareholders. Tiber Creek Corporation did not assist the Company in conducting the offering. The Company treated this, in essence, as an offering of shares for services and has recorded compensation expense for the difference between the calculated fair value, from the independent valuation, and the cash price paid. The Company recorded compensation expense of $21,744.

On April 12, 2017, the Company issued 2,120,000 shares of its common stock, at a cost basis of $0.136 per share, to 7 employees of PCC in exchange for services rendered. The Company recorded compensation expense at a share price of $0.136 based on an independent valuation of the Company. The Company recorded compensation expense of $288,320.

On April 12, 2017, the Company issued 350,000 shares of its common stock, at a cost basis of $0.136 per share, to 21 independent contractors unaffiliated with the Company, in exchange for services rendered. The Company recorded compensation expense at a share price of $0.136 based on an independent valuation of the Company. The Company recorded compensation expense of $47,600.

On June 7, 2017, the Company issued 1,000 shares of its Series A Preferred Stock to David Kwasnik, the Company’s sole officer and director, for services provided. The Company valued the Series A Preferred shares issued at $1,800. The Company recorded compensation expense of $1,800.

In October 2017, the Company sold 1 million shares of common stock to one investor at $0.10 per share for cash proceeds of $100,000.

No shares were issued in the year ended December 31, 2018.

ITEM 6. SELECTED FINANCIAL DATA.

As a “smaller reporting company,” we have elected not to provide the disclosure required by this item.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our audited consolidated financial statements and notes to our financial statements included elsewhere in this report. This discussion contains forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors discussed elsewhere in this report.

Certain information included herein contains statements that may be considered forward-looking statements, such as statements relating to our anticipated revenues, gross margin and operating results, future performance and operations, plans for future expansion, capital spending, sources of liquidity, and financing sources. This forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future, and accordingly, such results may differ from those expressed in any forward-looking statements made herein. These risks and uncertainties include those relating to our liquidity requirements, the continued growth of the industry of our Company’s business, the success of our operations, marketing and sales activities, vigorous competition in the industry of our Company’s business, dependence on existing management, leverage and debt service (including sensitivity to fluctuations in interest rates), domestic or global economic conditions, the inherent uncertainty and costs of prolonged arbitration or litigation, and changes in federal or state tax laws or the administration of such laws.

Overview

PowerComm Holdings, Inc., through its wholly owned subsidiary PowerComm Construction, Inc., installs, connects and services the energy and communications sectors. Experienced PCC teams also build and maintain America’s infrastructure from fiber-optic lines to high voltage lines to cellular communication towers. The current business of PCC is in electric utility, fiber optic, and telecommunications construction and maintenance services. PCC has provided for almost 20 years a diverse range of power services, telecommunications and fiber optic services and cellular services. PCC is a longstanding service provider that works on complex projects for industry leaders. PCC service crews perform electrical power line work on overhead and underground power distribution infrastructures as well as on transmission and sub-transmission lines.

The Company has expertise in a variety of electric utility, fiber optic, and telecommunications construction and maintenance services and is qualified also to do business in all 50 states, the District of Columbia and Puerto Rico The current business of the Company is in electric utility, fiber optic, and telecommunications construction and maintenance services. The Company installs, connects and services the energy and communications sectors. Experienced teams also build and maintain America’s infrastructure from fiber-optic lines to high voltage lines to cellular communication towers. The Company has its headquarters in Northern Virginia, with offices in Southern Maryland, Nashville, Tennessee, and Washington, D.C.

On July 12, 2018, the Company, jointly with a related entity, closed on the purchase of an industrial property in Upper Marlboro, Prince George’s County, Maryland. The Company paid $1.575 million plus closing costs. The industrial property is approximately 1.77 acres, fenced and partially paved, which will provide for the ability of the Company to significantly increase its truck fleet, and has an office building and drive up warehouse of approximately 12,000 square feet. The facility will house all of the Company’s operations and will function as corporate headquarters. The Company financed 85% of the purchase price, or approximately $1.339 million. The purchase loan bears interest at a rate of 5.24% per annum, payable over 10 years at $8,076 monthly with a payment due on the 120^th month estimated at approximately $1,008,000, and is secured with a first mortgage on the real estate and the personal guarantee of David Kwasnik, the Chief Executive Officer and majority shareholder of the Company. The purchase loan was made to the Company and to Kwasnik Properties, LLC (the “LLC”) on a joint and several basis. The two members of the LLC are David and Laura Kwasnik, both officers and majority shareholders of the Company. The Company has moved the majority of its operating assets and all personnel to the new facilities. A portion of the truck and equipment fleet is kept at another leased facility.

The Company has filed a registration statement on Form S-1 to register the resales of common stock shares held by certain existing shareholders of the Company. As of the date of this Report, the registration statement was under review by the U.S. Securities and Exchange Commission.

For the year ended December 31, 2018, the Company generated $13,621,599 in net revenues and had net income of $775,608. As of December 31, 2018, the Company had retained earnings of $506,887.

Revenues and Losses

During the year ended December 31, 2018, the Company posted net revenues of $13,621,599 and costs of revenues of $10,974,859 resulting in a gross profit of $2,646,740. For that same year ended, total operating expenses were $1,714,187, consisting of depreciation expense of $341,804 and general and administrative expenses of $1,372,383. Interest expense totaled $107,810, and other income totaled $43,562, including $36,460 from gain on disposal of assets. Income from operations and before income taxes totaled $868,305. After income tax expense of $92,697, the Company generated net income of $775,608.

Based on past performance, the Company has been dependent on revenues generated from only a few customers including primarily Exelon Corporation (“Exelon”) through its subsidiary Potomac Electric Power Co. (“PEPCO”) and RCN Telecom Services, LLC (“RCN”). For the years ended December 31, 2018 and 2017, service revenue from these customers accounted for 99% and 98% of the Company’s revenue, respectively.

During the fourth quarter of both the years ended December 2018 and 2017, respectively, our revenue was down relative to the first three quarters of the year. The reason is because utility companies, throughout the industry in our geographic area, typically designate the period from mid-November through mid-January, annually, as the time devoted to general maintenance of their properties, which is done, primarily, by their internal teams due to inclement weather conditions during this time period. Accordingly, contracts and work orders are typically not issued for that period. Vendors, such as PCH, must rely on other types of work until mid-January when the maintenance cycle ends. However, we are fortunate in that we have been able to secure a portion of Pepco’s maintenance work during this time period. The contracts for these maintenance services produce revenue at a much lower rate, but consume the same costs and expenses as a normal job.

Liquidity and Capital Resources

As of December 31, 2018, the Company’s working capital position had declined from $0.122 million as of December 31, 2017 to a deficit of $54,359, and its cash position had declined to $154,034 from approximately $715,000 as of December 31, 2017. In addition, for the year ended December 31, 2018, the Company’s cash flows from operating activities decreased to approximately $0.973 million from cash flows used in operations of $1.354 million in 2017. The Company has been notified that it is now a preferred vendor for all of Exelon Corp. and has begun receiving new contracts and has begun bidding on additional contracts. In 2018, the Company has significantly increased its revenue run rate and expects the increases to continue into 2019 and 2020. The increased revenue has allowed the Company to begin operating profitably and the Company expects that those conditions will not only continue but increase in the coming quarters as new contracts are received and executed upon. The Company expects that its liquidity will decline significantly in the 4th quarter of each year so long as its subsidiary, PCC, maintains the cash basis of accounting for income tax purposes under the Internal Revenue Code of the United States. Under the cash basis of accounting, PCC is able to reduce its current year income tax liabilities by paying its expenses in an accelerated manner prior to year end. Under the new provisions within the Tax Cuts and Jobs Act of 2018 (TCJA), PCC may maintain its usage of the cash basis of accounting for income tax purposes until such time as on a three year rolling basis, its average revenues for that three year period, are greater than $25 million.

Results of Operations

Discussion of the Year Ended December 31, 2018 as compared to the Year Ended December 31, 2017

Our total net revenue was $13,621,599 compared to $7,399,730 for the years ended December 31, 2018 and 2017, respectively, representing an increase of $6,221,869, or approximately 84%, in 2018. The increase in our revenue in 2018, as compared to 2017, can largely be attributed to many positive events, including being named a Contractor of Choice for PEPCO / Exelon, which led to the Company being awarded several new multi-year contracts from PEPCO including one for $56 million and two others for $5 million and $4 million, respectively. Additionally, going forward into 2019, the Company has contracts with companies such as Southern Company, Georgia Power, Gulf Power, Entergy and its affiliates, and Google, among others. In June, 2016, PCC received minority-owned certification status from the Capital Region of the National Minority Supplier Development Council (“NMSDC”). NMSDC is one of the country’s leading corporate membership organizations committed to helping supplier diversity by matching certified minority-owned businesses to its vast network corporate members who wish to purchase their products, services and solutions. Its corporate membership includes many of the largest public and privately-owned companies, as well healthcare companies, colleges and universities. NMSDC maintains rigorous certification standards and PCC anticipates that such certification will provide a large base for growth and potential new projects.

Our cost of revenue was $10,974,859 compared to $4,578,775 for the years ended December 31, 2018 and 2017, respectively, representing an increase of $6,396,084, or approximately 140%, in 2018 comparing that in 2017. The increase is the result of the 84% growth in revenues. Because our cost of revenues grew by 140%, the gross margin on revenue fell from 38% in 2017 to 19% in 2018. Our decrease in margin in 2018 was primarily the result of several things. As further outlined above, revenue drops off in the fourth quarter when the utility companies enter their internal maintenance cycle. This has a fairly material downward impact on revenue but minimal impact on costs. We make every effort to not lay off any workers during this period. Since our cost of labor has grown significantly from 2017 the impact on our 2018 margin was much more significant. Additionally, we continue to hire, acquire operating assets and incur costs to ‘stay ahead’ of the revenue growth curve that has occurred recently and that we expect to continue. In both 2018 and 2017, we increased our use of agreements with local International Brotherhood of Electrical Workers Unions (“IBEW” locals) in which we contract with the local to provide skilled professionals to assist us with our contract jobs and we agree to compensate the IBEW local for each professional for the time at their standard contract rates plus a fixed rate to cover their vacation, health and sick pay and other benefits of the given IBEW local. We do not enter into and are not part of any collective bargaining agreement when we contract for the use of their local employees.

Although the net changes and percent changes for our revenues and our cost of revenue for years ended December 31, 2018 and 2017 are summarized above, these trends should not necessarily be viewed as a definitive indication of our future results.

Gross profit was $2,646,740 compared to $2,820,955 for the years ending December 31, 2018 and 2017, respectively, a decrease of $174,215, or 6%, from 2018 to 2017. The decrease was mainly due to the customer’s fourth quarter maintenance cycle impact on revenue and the accelerated growth in costs in order to sustain the growth in revenue, both as noted above.

The operating expenses for the Company were $1,714,187 compared to $1,772,611 for the years ended December 31, 2018 and 2017, respectively, representing a decrease of $58,424, or approximately 3%, in 2018 compared to 2017. The overall decrease in our operating expenses in 2018, as compared to 2017, reflects a reduction in share based compensation expense in 2018 of $0 as compared to $359,464 in 2017. In addition, 2018 saw an increase in depreciation and amortization expense to $341,804 from $210,984 in 2017. We expect that as we continue to grow our business that we will continue to acquire additional capital equipment for use in our business and depreciation and amortization expense will corresponding also increase. For general and administrative expense, 2018 saw a reduction in cash basis compensation and related expenses to approximately $720,000 from $848,000 in 2017. We expect going forward that our general and administrative salary and related costs will expand as our business expands. This decrease in compensation and related expenses was offset by an increase in professional fees. In 2018, our professional fees increased to approximately $330,000 from $111,000 in 2017. Part of the increase was due to our putting into escrow approximately $83,000 in order for PCC to continue its appeal of the professional fees awarded to the plaintiffs in the 2016 class action lawsuit described previously in this annual report, and the remaining increase was primarily due to the growth of operations in 2018 compared to 2017. We expect in the future that professional fees will grow in line with the future growth of the Company.

Interest expense was $107,810 compared to $90,471 in the years ended December 31, 2018 and 2017, respectively, an increase of approximately 19%. The change in interest expense for the year-end periods was due primarily to the fact that, in 2018, the Company borrowed approximately $1,056,000 from various lenders to purchase machinery and equipment, primarily vehicles, and borrowed $1,338,750 to purchase the land and building that now serves as the Company headquarters.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies

The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires making estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

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

Since PowerComm Holdings, Inc. and PCC were entities under Mr. Kwasnik’s common control prior to the Acquisition on November 15, 2016, the Acquisition was accounted for as a restructuring transaction in accordance with generally accepted accounting principles (“GAAP”). PowerComm Holdings Inc. has recast prior period consolidated financial statements to reflect the conveyance of PowerComm Holdings Inc. to PCC as if the restructuring transaction had occurred as of the earliest date of the consolidated financial statements. All significant intercompany transactions and account balances have been eliminated.

The accompanying consolidated financial statements include the accounts of PowerComm Holdings, Inc. and its wholly owned subsidiary, PowerComm Construction, Inc. All material intercompany accounts, transactions and profits have been eliminated in consolidation.

USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with 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 date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant estimates include, but are not limited to, assumptions used in the valuation of equity compensation and assumptions used in our impairment testing of long-lived assets.

CASH AND CASH EQUIVALENTS

The Company considers all cash on hand and in banks, certificates of deposit and other highly-liquid investments with original maturities of three months or less, when purchased, to be cash and cash equivalents. As of December 31, 2018 and 2017, the Company has unsecured deposits of $142,945 and $480,360, respectively.

ACCOUNTS RECEIVABLE

Accounts receivable are recorded at net realizable value consisting of the carrying amount less allowance for doubtful accounts, as needed. We assess the collectability of accounts receivable based primarily upon the creditworthiness of the customer as determined by credit checks and analysis, as well as the customer’s payment history. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends, and changes in customer payment patterns to evaluate the adequacy of these reserves. While management uses the best information available upon which to base estimates, future adjustments to the allowance may be necessary if economic conditions differ substantially from the assumptions used for the purposes of analysis. As of December 31, 2018 and 2017, the Company had no assessed allowance for doubtful accounts respectively.

FIXED ASSETS

Fixed assets consist of land, buildings, trucks and vehicles, machinery and equipment, computers, furniture and fixtures, leasehold improvements. They are stated at cost less accumulated depreciation. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations.

Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets or lease term as follows:

Category		Useful life (in years)
Computers		5
Office Furniture and Fixtures		7
Machinery and Equipment		5 - 7
Trucks and Vehicles		5 - 7
Leasehold Improvements		5 - 15
Buildings		39

The Company applies the provisions of FASB ASC Topic 360 (ASC 360), “Property, Plant, and Equipment” which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with ASC 360, at least on an annual basis. ASC 360 requires the impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal. For the years ended December 31, 2017 and 2016, there was no impairment of long-lived assets recorded.

REVENUE RECOGNITION

The Company performs underground and overhead utility services primarily in the eastern and southeastern regions of the United States for utility companies. The Company’s work is performed under cost-plus-fee contracts. The length of the Company’s contracts vary, but are typically two to three years in length. While the contracts that the Company enters into are multi-year in nature, the services performed under those contracts generally occurs under discrete projects that are individually billed and that range from a couple of weeks to as short as a few days in length. In most instances, the Company bills its customer on a near daily basis. Prior to adoption of ASC 606, the Company’s policy was that revenue became fixed and determinable upon signoff of the work performed by the customer. Upon signoff, the customer accepted the work performed and therefore no warranty or defect allowances were able to be presented by the customer. Upon adoption of ASC 606, revenue becomes recognizable by the Company when control of the goods and services performed are transferred to the customer. The Company’s policy is that transfer of control occurs when the customer signs off on the work performed. The result of the adoption of ASC 606, therefore, did not constitute a material change in how the Company recognizes revenue.

COST OF REVENUE

Costs of revenue include all direct materials, labor costs, equipment and those indirect costs, including depreciation of machinery and equipment, trucks and vehicles, and indirect labor, supplies, tools, repairs and miscellaneous job costs. Changes in job performance, job conditions and estimated profitability, may result in revisions to costs and income and are recognized in the period in which the revisions are determined.

DEBT ISSUANCE COSTS

The Company’s policy in regards to fees and costs incurred to obtain general term loans and notes with regular payment schedules or repayment due at end of maturity for a fixed principal draw at inception is to record these amounts net against the loan principal in the balance sheet and to amortize the costs over the life of the loan or note ratably in regards to the amount outstanding under the loan or note. As of December 31, 2018 and 2017, the amounts of unamortized loan fees outstanding reported in the balance sheet was $8,923 and $0, respectively for these types of loan fees and costs. For lines of credit, the Company’s policy is to record a long-term asset in the balance sheet and to amortize the loan fees and costs over the term of the credit facility without regard to the amount of the line of credit utilized. As of December 31, 2018 and 2017, the amounts of unamortized loan fees reported in the balance sheet was $11,457 and $0, respectively for this type of loan fees and costs.

INCOME TAXES

Under ASC 740, “Income Taxes,” deferred tax assets and liabilities are recognized for the future tax consequences attributable to operating losses and tax credit carryforwards, as well as differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

A valuation allowance is established when it is more likely than not that some or all of the deferred tax assets will not be realized.

EARNINGS PER COMMON SHARE

Basic earnings and loss per common share excludes dilution and is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted earnings and loss per common share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the loss of the entity. As of December 31, 2018 and 2017, there are no outstanding dilutive securities.

FAIR VALUE OF FINANCIAL INSTRUMENTS

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

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

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

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

The carrying amounts of financial assets such as cash approximate their fair values because of the short maturity of these instruments.

RECLASSIFICATIONS

Certain amounts in the prior period consolidated financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported consolidated net loss.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). ASU 2018-13, which is intended to improve the effectiveness of fair value measurement disclosures, modifies the disclosure requirements for certain estimates and assumptions used in determining the fair value of assets and liabilities. This update is effective for interim and annual periods beginning after December 15, 2019. Certain amendments, including the disclosure of the range and weighted average of significant observable inputs used to develop Level 3 fair value measurements, should be applied prospectively, while other amendments should be applied retrospectively. Quanta is evaluating the impact of this new standard on its consolidated financial statements and will adopt the new standard effective January 1, 2020.

In August 2018, the SEC issued Release No. 33-10532, Disclosure Update and Simplification, which amends and clarifies certain financial reporting disclosure requirements. The principal change from this new guidance will be the inclusion of a statement of changes in shareholders’ equity in the Company’s interim consolidated financial statements beginning with the quarter ended March 31, 2019.

In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718) – Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2017-07”). ASU 2018-07 expands the guidance in Topic 718, regarding share-based payment accounting, to include share-based payment transactions for acquiring goods and services from non-employees. The Company will early adopt this guidance in 2019, which is not expected to materially impact its consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (“Tax Act”). The new guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years and can be early adopted. The Company is still evaluating the impacts of this standard should it choose to make this reclassification.

In January 2017, the FASB issued ASU 2017-01, Clarifying the Definition of a Business, which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The new guidance is effective for annual periods beginning after December 15, 2018, including interim periods within those periods. The impact to the Company’s consolidated financial statements will depend on the facts and circumstances of any specific future transactions.

In February 2016, the FASB issued ASU 2016-02, Leases, which requires lessees to recognize a right-to-use asset and a lease liability for virtually all leases (other than leases meeting the definition of a short-term lease). The new guidance is effective for fiscal years beginning after December 15, 2019 and interim periods beginning the following fiscal year. The Company is in the process of evaluating the impact of the new guidance on the Company’s consolidated financial statements and anticipates this impact will not be material to its consolidated balance sheets.

Management is in the process of assessing the impact of the above on the Company’s consolidated financial statements.

All other newly issued accounting pronouncements, but not yet effective, have been deemed either immaterial or not applicable.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

As a “smaller reporting company”, we have elected not to provide the disclosure required by this item.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The required financial statements are included following the signature page of this Annual Report on Form 10-K.

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

None.

ITEM 9A. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our prior principal executive and financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 15d-15(e) of the Securities Exchange Act of 1934, as amended, the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and principal financial officer concluded that our disclosure controls and procedures as of the end of the period covered by this report (based on the evaluation of these controls and procedures required by Rule 15d-15(b) of the Exchange Act) were effective in ensuring that information required to be disclosed by us in reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, and (ii) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. As of the end of the period covered by the Report, we had failed to adequately invest in personnel and systems to accumulate, record and properly report on our results of operations.

We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of our company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Management assessed our internal control over financial reporting as of December 31, 2018, the end of our fiscal year. Management based its assessment on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO 2013 Criteria). Management’s assessment included evaluation of such elements as the design and operating effectiveness of key financial reporting controls, process documentation, accounting policies, and our overall control environment.

Based on our assessment, management has concluded that our internal control over financial reporting was not effective, as of the end of the fiscal year, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

Inherent limitations on effectiveness of controls

Internal control over financial reporting has inherent limitations which include but is not limited to the use of independent professionals for advice and guidance, interpretation of existing and/or changing rules and principles, segregation of management duties, scale of organization, and personnel factors. Internal control over financial reporting is a process which involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a timely basis, however these inherent limitations are known features of the financial reporting process and it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rule 15d-15(f) of the Exchange Act) that occurred during the year ended December 31, 2018, that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Officers and Directors

David Kwasnik serves as the sole officer and director of the Company. Mr. Kwasnik also serves as the sole officer and director of PCC.

David Kwasnik, Sr., age 51, serves as the President, Secretary, Treasurer and sole officer and director of the Company, positions at the Company that he has held since September 2015. Since 1995, Mr. Kwasnik has served as the president and chief executive officer of PowerComm Construction, a privately-held company. He has managed and directed all aspects and technological operations, procurement and project management activities for the company’s telecommunications, power transmission and distribution construction projects.

Director Independence

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

Committees and Terms

The Board of Directors has not established any committees. The Company will notify its shareholders for an annual shareholder meeting and that they may present proposals for inclusion in the Company‘ s proxy statement to be mailed in connection with any such annual meeting; such proposals must be received by the Company at least 90 days prior to the meeting. No other specific policy has been adopted in regard to the inclusion of shareholder nominations to the Board of Directors.

Indemnification of Officers, Directors, Employees and Agents

The Certificate of Incorporation and bylaws of the Company provide that the Company shall, to the fullest extent permitted by applicable law, as amended from time to time, indemnify all directors of the Company, as well as any officers or employees of the Company to whom the Company has agreed to grant indemnification.

Section 145 of the Delaware General Corporation Law empowers a corporation to indemnify its directors and officers and to purchase insurance with respect to liability arising out of their capacity or status as directors and officers provided that this provision shall not eliminate or limit the liability of a director (I) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) arising under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit.

The Delaware General Corporation Law provides further that the indemnification permitted thereunder shall not be deemed exclusive of any other rights to which the directors and officers may be entitled under the corporation’s by-laws, any agreement, vote of shareholders or otherwise.

The effect of the foregoing is to require the Company to indemnify the officers and directors of the Company for any claim arising against such persons in their official capacities if such person acted in good faith and in a manner that he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.

INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING THE COMPANY PURSUANT TO THE FOREGOING PROVISIONS, IT IS THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION THAT SUCH INDEMNIFICATION IS AGAINST PUBLIC POLICY AS EXPRESSED IN THE ACT AND IS THEREFORE UNENFORCEABLE.

Legal Proceedings

In 2017, the Company appealed the attorney fee award to the United States Court of Appeals for the Fourth Circuit (“4th Circuit”). On October 31, 2017, the 4th Circuit ruled in the Company’s favor and reversed and remanded the attorney fee award back to the trial court as excessive. As of December 31, 2017, the Company had paid approximately $86,000. Based on the 4^th Circuit’s reversal and remand, the accrual of the remaining prior amounts recorded was reversed, and the Company believes that its payments made through December 31, 2017 to be sufficient under the 4^th Circuit’s instructions provided in the remand back to the trial court.

Code of Ethics

Our Board of Directors has not adopted a code of ethics. We anticipate that we will adopt a code of ethics when we increase either the number of our Directors or the number of our employees.

Family Relationships

There are no family relationships between any director, executive officer, or person nominated or chosen by the Company to become a director or executive officer.

ITEM 11. EXECUTIVE COMPENSATION

Executive Compensation

David Kwasnik has served as the only officer and director of the Company. Mr. Kwasnik has also served as the only officer and director of PCC, the wholly owned subsidiary. Mr. Kwasnik only received compensation from PCC for his services as an officer or director.

Name and principle position	Year	Salary
David Kwasnik, President and CEO	2018	$	208,462
	2017	$	170,000

The Board of Directors may allocate salaries and benefits to the officers in its sole discretion. No officer is subject to a compensation plan or arrangement that results from his or her resignation, retirement, or any other termination of employment with the Company or from a change in control of the Company or a change in his or her responsibilities following a change in control. The members of the Board of Directors may receive, if the Board so decides, a fixed fee and reimbursement of expenses, for attendance at each regular or special meeting of the Board, although no such program has been adopted to date. The Company currently has no retirement, pension, or profit-sharing plan covering its officers and directors.

Narrative Disclosure to Summary Compensation Table

There are no formal employment agreements between the Company and its executive officers. The compensation discussed herein addresses all compensation awarded to, earned by, or paid to our named executive officers.

PCC has a tax-qualified, defined-contribution 401(k) pension plan made available to participating employees of the Company. Other than the foregoing, there are no other stock option plans, retirement, pension, or profit sharing plans for the benefit of our officers and directors other than as described herein.

Outstanding Equity Awards at Fiscal Year-End

There are no current outstanding equity awards to our executive officers as of December 31, 2018.

Employment Agreements

The Company shall enter into and maintain customary employment agreements with each of its officers and employees.

Code of Ethics

Our Board of Directors has not adopted a code of ethics. We anticipate that we will adopt a code of ethics when we increase either the number of our Directors or the number of our employees.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act may require our executive officers and Directors, and persons who own more than ten percent of our common stock to file reports of ownership and change in ownership with the Securities and Exchange Commission and the exchange on which the common stock is listed for trading. Executive officers, Directors and more than ten percent (10%) stockholders are required by regulations promulgated under the Exchange Act to furnish us with copies of all Section 16(a) reports filed. Based solely on our review of copies of the Section 16(a) reports filed for the fiscal years ended December 31, 2018, we believe that our executive officers, Directors and ten percent (10%) stockholders complied with all reporting requirements applicable to them.

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

The following table sets forth information with respect to ownership of issued and outstanding stock of the Company as of the date hereof by each executive officer and director of the Company and any person or group known by the Company to be the beneficial owner of more than 5% of any class of the Company’s voting securities:

COMMON STOCK

	Common Shares		Percentage
	Owned		Of Class(1)
David L. Kwasnik (2)(3) President and CEO		20,200,000		83.0	%
David L. Kwasnik (2)(3) President and CEO
Laura Kwasnik (3) >5% Shareholder		2,000,000		8.2	%

(1)	Based on 24,330,000 common stock shares outstanding or issuable.

(2)	Consists of 20,000,000 shares initially owned in the Company and 200,000 shares received in exchange for the 10,000 shares of PCC owned by him pursuant to the Acquisition.

(3)	Shareholder’s address is 3429 Ramsgate Terrace, Alexandria, Virginia 22309.

SERIES A PREFERRED STOCK

Series A Preferred

Shares Owned

Percentage of Class (1)

David L. Kwasnik (2)(3)

1,000

100

President and CEO

(1)	Based on 1,000 Series A Preferred Stock shares outstanding.

(2)

Consists of 1,000 shares of Series A Preferred Stock, purchased at par value, which, voting together as a class, have the right to vote 51% of the Company’s voting shares on any and all shareholder matters (the “Majority Voting Rights”). Additionally, the Company shall not adopt any amendments to the Company’s Bylaws, Articles of Incorporation, as amended, make any changes to the Certificate of Designations establishing the Series A Preferred Stock, or effect any reclassification of the Series A Preferred Stock, without the affirmative vote of at least 60% of the outstanding shares of Series A Preferred Stock. However, the Company may, by any means authorized by law and without any vote of the holders of shares of Series A Preferred Stock, make technical, corrective, administrative or similar changes to such Certificate of Designations that do not, individually or in the aggregate, adversely affect the rights or preferences of the holders of shares of Series A Preferred Stock. Other than the Majority Voting Rights, the Series A Preferred Stock does not have any other dividend, liquidation, conversion, or redemption rights, whatsoever.

(3)	Mr. Kwasnik’s address is 3429 Ramsgate Terrace, Alexandria, Virginia 22309.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, DIRECTOR INDEPENDENCE.

Certain Relationships and Related Transactions

James Cassidy, a partner in the law firm which acts as counsel to the Company and a promoter of the Company, is the sole owner and director of Tiber Creek Corporation which owns 250,000 shares of the Company’s common stock. Tiber Creek and its affiliate, MB Americus LLC, a California limited liability company, each currently hold 250,000 shares in the Company.

James Cassidy and James McKillop, who is the sole officer and owner of MB Americus, LLC, were both formerly officers and directors of the Company and are deemed to be promoters of the Company. As the organizers and developers of White Grotto Acquisition Corporation, Mr. Cassidy and Mr. McKillop were involved with the Company prior to the Acquisition. In particular, Mr. Cassidy provided services to the Company without charge, including preparation and filing of the charter corporate documents and preparation of the instant registration statement.

On November 15, 2016, PowerComm Holdings Inc., a Delaware corporation (the “Company”), entered into a stock-for-stock acquisition agreement (the “Acquisition Agreement”) with PowerComm Construction, Inc., a private company organized under the laws of the Commonwealth of Virginia. David Kwasnik, the Company’s sole officer and director, is also the sole officer and director of PowerComm Construction, Inc.

On November 9, 2016 and December 8, 2016, Mr. Kwasnik advanced cash amounts of $18,000 and $50,000, respectively, to the Company for operating capital. The total advance of $68,000 was unsecured, due on demand and bears no rate of interest. As of December 31, 2018 and 2017, the balances due to related party amounted to $0 and $43,288, respectively.

On April 12, 2017, the Company issued 110,000 shares of its common stock, at $.001 per share, to certain family members of David Kwasnik, an officer and director of the Company, in connection with a private placement offering, which includes the issuance of (1) 10,000 shares to Robert Bechta, who is the father-in-law of David Kwasnik, Sr., an officer and director of the Company; (2) 10,000 shares to Aleecia Bechta-Kwasnik, who is the daughter of David Kwasnik, Sr., an officer and director of the Company; (3) 10,000 shares to Deborah Leuthner, who is the sister-in-law of David Kwasnik, Sr., an officer and director of the Company; (4) 10,000 shares to Jordan Castillo, who is the son-in-law of David Kwasnik, Sr., an officer and director of the Company; (5) 10,000 shares to Lynda Walters, who is the sister-in-law of David Kwasnik, Sr., an officer and director of the Company; (6) 10,000 shares to Chad Walters, who is the nephew of David Kwasnik, Sr., an officer and director of the Company; (7) 10,000 shares to Amanda Quinlan, who is the daughter of David Kwasnik, Sr., an officer and director of the Company; (8) 10,000 shares to Jessica Bonilla, who is the niece of David Kwasnik, Sr., an officer and director of the Company; (9) 10,000 shares to Maria A. Bonilla, who is the sister-in-law of David Kwasnik, Sr., an officer and director of the Company; (10) 10,000 shares to Gerardo L. Perez, who is the uncle of David Kwasnik, Sr., an officer and director of the Company; and (11) 10,000 shares to Bruce Foote Jr., who is the nephew of David Kwasnik, Sr., an officer and director of the Company.

On April 12, 2017, the Company issued 2,120,000 shares of its common stock, at a cost basis of $0.136 per share, to 7 employees of the Company in exchange for services rendered, which includes the issuance of (1) 10,000 shares to David L. Kwasnik Jr., who is the son of David Kwasnik, an officer and director of the Company; and (2) 2,000,000 shares to Laura Kwasnik, who is the wife of David Kwasnik, an officer and director of the Company.

On April 12, 2017, the Company issued 10,000 shares of its common stock, at a cost basis of $0.136 per share, to Alan Kwasnik, who is an independent contractor unaffiliated with the Company, in exchange for services rendered to the Company. Alan Kwasnik is the brother of David Kwasnik, an officer and director of the Company.

On April 12, 2017, the Company issued 10,000 shares of its common stock, at a cost basis of $0.136 per share, to Vilma Bonilla-Foote, who is an independent contractor unaffiliated with the Company, in exchange for services rendered to the Company. Vilma Bonilla-Foote is the sister of David Kwasnik, an officer and director of the Company.

On August 1, 2017, The Company entered into a lease agreement for a portion of the premises located at 3429 Ramsgate Terrace, Alexandria, Virginia 22309 with David Kwasnik, Sr., an officer and director of the Company. The Company pays $2,600 per month and the term is month-to-month. The lease was amended on January 1, 2019 to $1,000 per month.

In July 2018, David Kwasnik advanced $5,000 to Kwasnik Properties LLC. The $5,000 remains outstanding as of December 31, 2018.

Director Independence

Our securities are not listed on a national securities exchange or in an inter-dealer quotation system which has requirements that directors be independent. Therefore, we have adopted the independence standards of the American Stock Exchange, now known as the NYSE MKT LLC, to determine the independence of our directors and those directors serving on our committees. These standards provide that a person will be considered an independent director if he or she is not an officer of the company and is, in the view of the company’s board of directors, free of any relationship that would interfere with the exercise of independent judgment. Our board of directors has determined that as of the date of this Report, we had no independent directors.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

Audit Fees

The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of our annual financial statement and review of financial statements included in our 10-Q reports and services normally provided by the accountant in connection with statutory and regulatory filings or engagements were $83,594 for fiscal year ended December 31, 2017, and $ 92,287 for fiscal year ended December 31, 2018.

Audit-Related Fees

The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of our financial statements that are not reported above were $20,940 and $4,520 for fiscal years ended December 31, 2017 and 2018, respectively.

Tax Fees

The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were nil for fiscal years ended December 31, 2017 and 2018, respectively.

All Other Fees

The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported above were nil for fiscal years ended December 31, 2017 and 2018, respectively.

Audit Committee

As of the date of this Annual Report, the Company did not have a standing audit committee serving, and as a result our board of directors performs the duties of an audit committee. Our board of directors will evaluate and approve in advance, the scope and cost of the engagement of an auditor before the auditor renders audit and non-audit services. We do not rely on pre-approval policies and procedures.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a)

Financial Statements Index

The following financial statements are filed with this report:

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets at December 31, 2018 and 2017

Consolidated Statements of Operations for the years ended December 31, 2018 and December 31, 2017

Consolidated Statements of Cash Flows for the years ended December 31, 2018 and December 31, 2017

Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the years ended December 31, 2018 and 2017

Notes to Consolidated Financial Statements

EXHIBITS

Exhibit No.		Description

2.1		Agreement and Plan of Reorganization between PowerComm Holdings, Inc. and PowerComm Construction, Inc. (filed as exhibit to the Form 8-K filed November 23, 2016)
3.1		Certificate of Incorporation (filed as exhibit to the Form 10-12G filed March 3, 2015)
3.2		By-laws (filed as exhibit to the Form 10-12G filed March 3, 2015)
3.3		Sample stock certificate (filed as exhibit to the Form 10-12G filed March 3, 2015)
3.4		Series A Certificate of Designation of PowerComm Holdings Inc. filed with the Secretary of State of Delaware on June 6, 2017 (filed on Form 8-K on June 8, 2017 (File No.: 000-55391) as Exhibit 3.1)
10.1		Master Agreement for Services between Southern Company Services, Inc. and PowerComm Construction Inc. (filed as an exhibit to the Form 8-K/A filed October 5, 2017)
10.2		Master Services Agreement between RCN Telecom Services LLC and PowerComm Construction Inc. (filed as an exhibit to the Form 8-K/A filed October 5, 2017)
10.3		Construction Contract between PHI Service Company and PowerComm Construction Inc. (filed as an exhibit to the Form 8-K/A filed October 5, 2017)
10.4		District of Columbia Commercial Lease Agreement between Meltz Communications LLC and PowerComm Construction, Inc. (filed as an exhibit to the Form S-1/A filed November 13, 2017)
10.5		Lease Agreement between Roger Alson and PowerComm Construction, Inc. (filed as an exhibit to the Form S-1/A filed November 13, 2017)
21.1		List of Subsidiaries (filed as an exhibit to the Form S-1/A filed November 13, 2017)
31.1*		Rule 15d-14(a) Certification by Principal Executive Officer and Principal Financial Officer
32.1*		Section 1350 Certification of Principal Executive Officer and Principal Financial Officer

* Filed herewith

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on April 15, 2019.

	POWERCOMM HOLDINGS, INC.

	By:	/s/ David Kwasnik
	Title:	Chief Executive Officer and Treasurer

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on April 15, 2019.

	By:	/s/ David Kwasnik
	Title:	Chief Executive Officer (Principal Executive Officer)

	By:	/s/ David Kwasnik
	Title:	Treasurer (Principal Financial Officer)

	By:	/s/ David Kwasnik
	Title:	Treasurer (Principal Accounting Officer)

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons, constituting all of the members of the board of directors, in the capacities and on the dates indicated.

Signature	Capacity	Date

/s/ David Kwasnik	Director	April 15, 2019
David Kwasnik

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT

TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED

SECURITIES PURSUANT TO SECTION 12 OF THE ACT

We will furnish to the Securities and Exchange Commission, at the same time that it is sent to stockholders, any proxy or information statement that we send to our stockholders in connection with any annual stockholders’ meeting.

FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm	F-1

Consolidated Balance Sheets as of December 31, 2018 and 2017	F-2

Consolidated Statements of Operations for the years ended December 31, 2018 and 2017	F-3

Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the years ended December 31, 2018 and 2017	F-4

Consolidated Statements of Cash Flows for the years ended December 31, 2018 and 2017	F-5

Notes to Consolidated Financial Statements	F-6

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors

of PowerComm Holdings, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of PowerComm Holdings, Inc. and subsidiary (the “Company”) as of December 31, 2018 and 2017, the related consolidated statements of operations, stockholders’ equity and cash flows for the years ended December 31, 2018 and 2017, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ LJ Soldinger Associates, LLC

Deer Park, IL

April 16, 2019

We have served as the Company’s auditor since 2017.

F-1

POWERCOMM HOLDINGS INC.

CONSOLIDATED BALANCE SHEETS

	As of December 31,
	2018			2017
Assets
Current assets
Cash and cash equivalents	$	154,034		$	715,499
Accounts receivables, net		770,884			401,919
Prepaid expenses		182,830			126,162
Other current assets		15,250			—
Total Current Assets		1,122,998			1,243,580

Property and equipment, net		3,836,568			1,114,425
Deferred line of credit costs		11,457			—
Deferred income tax benefit		206,100			—

Total Assets	$	5,177,123		$	2,358,005

Liabilities and Stockholders’ Deficit
Current liabilities
Accounts payable	$	301,778		$	132,367
Accrued expenses		274,376			270,199
Income taxes payable		—			240,700
Line of credit		80,000			176,865
Short-term loans		52,878			38,145
Long-term debt, current portion		463,325			219,932
Due to related party		5,000			43,288
Total current liabilities		1,177,357			1,121,496

Long-term debt, net		2,329,841			641,692
Deferred income taxes		700,000			400,500
Total liabilities		4,207,198			2,163,688

Commitments and contingencies

Stockholders’ equity
Preferred stock, $0.0001 par value, 20,000,000 shares authorized; 1,000 shares outstanding as of December 31, 2018 and 2017, respectively		—			—
Common Stock, $0.0001 par value, 100,000,000 shares authorized; 24,330,000 shares issued, issuable and outstanding as of December 31, 2018 and 2017, respectively		2,433			2,433
Discount on Common Stock		(50	)		(50	)
Additional paid-in capital		460,655			460,655
Retained earnings (Accumulated deficit)		506,887			(268,721	)
Total stockholders’ equity		969,925			194,317

Total Liabilities and Stockholders’ Equity	$	5,177,123		$	2,358,005

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

F-2

POWERCOMM HOLDINGS INC.

CONSOLIDATED STATEMENT OF OPERATIONS

	For the Year Ended December, 31,
	2018			2017
Revenues, net	$	13,621,599		$	7,399,730
Costs of revenue		10,974,859			4,578,775
Gross profit		2,646,740			2,820,955

Operating expenses
General and administrative		1,372,383			1,202,163
Depreciation expense		341,804			210,984
Share based compensation		—			359,464
Total Operating Expenses		1,714,187			1,772,611

Operating Income		932,553			1,048,344

Other Income (Expense)
Interest expense		(107,810	)		(90,471	)
Gain on disposal of assets		36,460			—
Other income (expense), net		7,102			(1,750	)
Total Other Income (Expense)		(64,248	)		(92,221	)

Income from operations before income taxes		868,305			956,123
Income tax expense		92,697			641,200

Net Income	$	775,608		$	314,923

Income per share - basic and diluted	$	0.03		$	0.01

Weighted average common shares outstanding - basic and diluted		24,330,000			22,762,164

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

F-3

POWERCOMM HOLDINGS INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

	Series A Preferred Stock				Common Stock				Discount on Common Stock			Additional Paid-In Capital		Subscription Received in advance			Retained Earnings (Accumulated Deficit)			Total Stockholders’ Equity (Deficit)
	Shares		Amount		Shares		Amount
Balance, December 31, 2016		—		—		20,700,000	$	2,070	$	(2,050	)	$	1,538	$	45,000		$	(583,644	)	$	(537,086	)
Issuance of preferred stock		1,000											1,800								1,800
Issuance of common stock in private offering						160,000		16					21,744								21,760
Issuance of common stock for services						2,470,000		247					335,673								335,920
Conversion of officer advance to common stock										2,000											2,000
Issuance of common stock for cash proceeds						1,000,000		100					99,900		(45,000	)					55,000
Net income																		314,923			314,923

Balance, December 31, 2017		1,000	$	—		24,330,000	$	2,433	$	(50	)	$	460,655	$	—		$	(268,721	)	$	194,317

Net income																		775,608			775,608

Balance, December 31, 2018		1,000	$	—		24,330,000	$	2,433	$	(50	)	$	460,655	$	—		$	506,887		$	969,925

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

F-4

POWERCOMM HOLDINGS INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

	For the Year Ended December, 31,
	2018			2017
Operating Activities
Net income	$	775,608		$	314,923
Adjustments to reconcile net income to net cash provided by (used) in operating activities:
Depreciation and amortization		341,804			210,984
Gain on disposal of assets		(36,460	)		—
Stock-based compensation expense		—			359,464
Changes in Operating Assets and Liabilities
(Increase) in Accounts receivable		(368,965	)		(338,718	)
Decrease in Prepaid expenses and Other current assets		234,345			83,893
Increase in Accounts payable		169,411			132,367
Increase (Decrease) in Current and Deferred Income taxes payable		(147,300	)		641,200
Increase in Accrued expenses		4,177			36,554
Increase (decrease) in Other liabilities		—			(86,449	)
Net cash provided by (used in) operating activities		972,620			1,354,218

Investing Activities
Capital expenditures		(430,801	)		(65,552	)
Real estate acquisition		(279,976	)		—
Proceeds from disposal of capital assets		65,348			—
Net cash used in investing activities		(645,429	)		(65,552	)

Financing Activities
Proceeds from advances – related party		5,000			13,871
Repayment of related party advances		(43,288	)		(21,716	)
Proceeds from payable to unrelated party		—			40,000
Repayments of unrelated party advances		—			(69,070	)
Line of credit advance (repayment), net		(96,865	)		(438,311	)
Note payable principal payments		(744,580	)		(202,701	)
Other financing activities		(8,923	)		—
Proceeds from issuance of common stock		—			55,016
Net cash (used in) provided by financing activities		(888,656	)		(622,911	)

Net increase (decrease) in cash		(561,465	)		665,755
Cash, beginning of period		715,499			49,744

Cash, end of period	$	154,034		$	715,499

Supplemental Disclosures:
Cash paid during the year for:
Taxes	$	236,388		$	—
Interest	$	107,810		$	90,471

Non-cash investing and financing activities:
Equipment purchases financed	$	1,056,966		$	596,226
Reclass between additional paid in capital and subscription received in advance	$	—		$	45,000
Non-cash debt fees	$	11,457		$	—
Real estate purchase financed	$	1,338,750		$	—
Financed insurance premiums	$	313,414		$	101,113
Conversion of related party note to discount	$	—		$	2,000

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

F-5

POWERCOMM HOLDINGS INC.

Notes to Consolidated Financial Statements

December 31, 2018

NOTE 1 – ORGANIZATION AND NATURE OF OPERATIONS

ORGANIZATION

The Company was incorporated in the State of Delaware on January 12, 2015, and was formerly known as White Grotto Acquisition Corporation (“White Grotto” or “White Grotto Acquisition”). On September 14, 2015, the Company implemented a change of control by issuing shares to new shareholders, redeeming shares of existing shareholders, electing a new officer and director and accepting the resignations of its then existing officers and directors. In connection with the change of control, the shareholders of the Company and its board of directors unanimously approved the change of the Company’s name from White Grotto Acquisition Corporation to PowerComm Holdings, Inc. (“PCH” or the “Company”).

On November 15, 2016, the Company entered into a merger agreement (the “Acquisition”) with PowerComm Construction, Inc., a Virginia corporation (“PCC”). The current business of PCC is in electric utility, fiber optic, and telecommunications construction and maintenance services. PCC installs, connects and services the energy and communications sectors. Pursuant to the Acquisition, the Company has acquired the business plan, operations and contracts of its now wholly-owned subsidiary, PowerComm Construction, Inc. (“PCC” or “PowerComm Construction”).

PRINCIPALS OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned or controlled subsidiaries. All material intercompany accounts, transactions and profits have been eliminated in consolidation.

In 2018, as more fully described in Note 4, David and Laura Kwasnik, the holders of approximately 91% of the stock of the Company setup a new entity, Kwasnik Properties, LLC (“KP”) with the intent of acquiring land and building for use in the operations of PCC. The Company has determined that KP represents a variable interest entity in which PCH and its wholly owned subsidiary are the primary beneficiary, and which will be required to bear essentially all of the losses in event of a disruptive event. The determination was based primarily upon (1) the only tenant for the property acquired is PCC and (2) the lenders required that PCC be included as a co-borrower on the note and (3) with essentially no equity contributed to KP by the Kwasniks. Based upon this, the Company has consolidated KP into PCC.

All rents charged to PCC by KP and all deposits from PCC to KP have been eliminated upon consolidation in these financial statements.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

F-6

POWERCOMM HOLDINGS INC.

Notes to Consolidated Financial Statements

December 31, 2018

CASH AND CASH EQUIVALENTS

ACCOUNTS RECEIVABLE

FIXED ASSETS

Fixed assets consist of land, buildings, trucks and vehicles, machinery and equipment, computers, furniture and fixtures, and leasehold improvements. They are stated at cost less accumulated depreciation. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations.

Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets or lease term as follows:

Category		Useful life (in years)
Computers		5
Office Furniture and Fixtures		7
Machinery and Equipment		5 - 7
Trucks and Vehicles		5 - 7
Leasehold Improvements		5 - 15
Buildings		39

The Company applies the provisions of FASB ASC Topic 360 (ASC 360), “Property, Plant, and Equipment” which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with ASC 360, at least on an annual basis. ASC 360 requires the impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal. For the years ended December 31, 2018 and 2017, there was no impairment of long-lived assets recorded.

F-7

POWERCOMM HOLDINGS INC.

Notes to Consolidated Financial Statements

December 31, 2018

REVENUE RECOGNITION

COST OF REVENUE

DEBT ISSUANCE COSTS

INCOME TAXES

A valuation allowance is established when it is more likely than not that some or all of the deferred tax assets will not be realized.

F-8

POWERCOMM HOLDINGS INC.

Notes to Consolidated Financial Statements

December 31, 2018

EARNINGS PER COMMON SHARE

FAIR VALUE OF FINANCIAL INSTRUMENTS

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

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

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

The carrying amounts of cash, accounts receivable and accounts payable and accrued expenses approximate their fair values because of the short-term nature and maturity of these instruments. The carrying amount of variable rate debt also approximates fair value.

RECLASSIFICATIONS

NOTE 2 - NEW ACCOUNTING PRONOUNCEMENTS

F-9

POWERCOMM HOLDINGS INC.

Notes to Consolidated Financial Statements

December 31, 2018

Management is in the process of assessing the impact of the above on the Company’s consolidated financial statements.

All other newly issued accounting pronouncements, but not yet effective, have been deemed either immaterial or not applicable.

NOTE 3 – REVENUE

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, which is also referred to as Accounting Standards Codification (“ASC”) Topic 606 (“Topic 606”), which superseded most revenue recognition guidance, as well as certain cost recognition guidance. The update, together with other clarifying updates, requires that the recognition of revenue related to the transfer of goods or services to customers reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The update also requires additional qualitative and quantitative disclosures about the nature, amount, timing and uncertainty of revenues and cash flows arising from customer contracts, including significant judgments and changes in judgments, and information about contract balances and performance obligations.

F-10

POWERCOMM HOLDINGS INC.

Notes to Consolidated Financial Statements

December 31, 2018

The Company adopted the new revenue recognition guidance using the modified retrospective transition method effective January 1, 2018, applying the guidance to contracts that were not substantially complete as of such date. PCH’s financial results for reporting periods after January 1, 2018 have been and will be presented under the new guidance, while financial results for prior periods will continue to be reported in accordance with the prior guidance and PCH’s historical accounting policy. The Company has not experienced significant changes to the pattern of revenue recognition for its contracts, the identification of contracts and performance obligations or the measurement of variable consideration. Accordingly, the adoption of Topic 606 had no material impact on revenues recognized in years prior to 2018. For the year ended December 31, 2018, the impact related to the adoption of the new revenue recognition guidance on revenues, contract assets and contract liabilities was immaterial.

Contracts

The Company derives revenue primarily from utility construction projects performed under: (i) master and other service agreements, which provide a menu of available services in a specific geographic territory that are utilized on an as-needed basis and identified with specific purchase orders, and are typically priced using price per unit basis; or (ii) contracts for specific projects requiring the construction and installation of specified units, or maintenance thereof, within an infrastructure system, which can be subject to multiple pricing options, including fixed price, unit price, time and materials or cost plus a markup. Revenue derived from projects performed under master service and other service agreements, and priced on a per purchase order basis, totaled in excess of 90% of consolidated revenues for both the years ended December 31, 2018 and 2017, respectfully.

With insignificant exceptions, the Company performs services based on individual purchase orders issued under the terms of master service agreements. The average duration of the projects governed by the purchase orders is less than three months. The revenue from these services is recognized at a point in time, which is generally when the work has been performed and control has passed to the customer via their written acceptance. Point in time revenue accounted for 100% of consolidated revenue for both the years ended December 31, 2018 and 2017, respectively. For the years ended December 31, 2018 and 2017, all revenues were generated from work performed in the Washington DC regional area. Except for minimal amounts, all revenue was for services provided to local non-government utility companies.

NOTE 4 – PROPERTY AND EQUIPMENT, NET

Property and equipment consists of the following:

	December 31,
	2018			2017
Land	$	442,400		$	—
Building and improvements		1,184,230			—
Vehicles & trucks		3,194,287			2,241,584
Equipment & machinery		1,000,862			560,723
Office furniture & fixtures		145,299			103,686
Computer & software		25,647			25,647
		5,992,725			2,931,640
Less: accumulated depreciation		(2,156,157	)		(1,817,215	)
Net property and equipment	$	3,836,568		$	1,114,425

Depreciation expense was $341,804 and $210,984 for years ended December 31, 2018 and 2017, respectively.

REAL ESTATE ACQUISTION

On July 12, 2018, the Company, jointly with a related entity, closed on the purchase of an industrial property in Upper Marlboro, Prince George’s County, Maryland. The Company paid $1.575 million plus closing costs. The industrial property is approximately 1.77 acres, fenced and partially paved, which will provide for the ability of the Company to significantly increase its truck fleet, and has an office building and drive up warehouse of approximately 12,000 square feet. The facility will house all of the Company’s operations and will function as corporate headquarters. The Company financed 85% of the purchase price, or approximately $1.339 million. The purchase loan bears interest at a rate of 5.24% per annum, payable over 10 years at $8,076 monthly with a payment due on the 120^th month estimated at approximately $1,008,000, and is secured with a first mortgage on the real estate and the personal guarantee of David Kwasnik, the Chief Executive Officer and majority shareholder of the Company. The purchase loan was made to the Company and to Kwasnik Properties, LLC (the “LLC”) on a joint and several basis. The two members of the LLC are David and Laura Kwasnik, both officers and majority shareholders of the Company. The Company has moved the majority of its operating assets and all personnel to the new facilities. A portion of the truck and equipment fleet is kept at another leased facility.

F-11

POWERCOMM HOLDINGS INC.

Notes to Consolidated Financial Statements

December 31, 2018

NOTE 5 – DEBT

Lines of Credit

Lines of credit consist of the following:

	December 31,
	2018		2017
$500,000 Line of Credit with Branch Banking and Trust Company (“BB&T”), variable interest rate equal to BB&T’s Prime Rate, at 5.50% per annum as of December 31, 2018, due on July 12, 2020, interest due monthly, secured by all of the accounts receivable, chattel paper, equipment and intangible assets of the Company together with a cross guarantee of the new property purchased by Kwasnik Properties, LLC. The Company incurred $11,457 of costs associated with this line of credit and will amortize these costs ratably over the life of the line of credit.	$	80,000	$	—

$200,000 Line of Credit with SunTrust Bank, variable interest rate equal to the Prime Rate as published in the Wall Street Journal plus 6%, secured by all assets of the Company. Retired as of December 31, 2018.		—		176,865
Total	$	80,000	$	176,865

Short Term Debt

Short term debt consists of the following:

	December 31,
	2018		2017
Notes payable to an insurance premium finance company, terms ranging from eight to nine months, bearing interest at rates ranging from 8.3% to 9.3%, per annum, monthly payments totaling $13,319, secured by various insurance policies and all rights thereto, as of December 31, 2018.	$	52,878	$	38,145
Total Short Term Debt	$	52,878	$	38,145

F-12

POWERCOMM HOLDINGS INC.

Notes to Consolidated Financial Statements

December 31, 2018

Long-term debt

Long-term debt consists of the following:

	December 31,
	2018			2017
Multiple notes payable, to various banks and finance organizations, maturing at various dates from February 2019 through August 2024, bearing interest rates ranging from 0% to approximately 8.0%, per annum, monthly payments totaling $45,981, secured by vehicles and equipment	$	1,496,135		$	861,624

Note payable to a bank, maturing in July 2028, bearing interest at a rate of 5.24% per annum, monthly payment of $8,076, secured by real estate and the personal guarantee of the majority shareholder. In addition, the deed of trust for the loan carries a cross guarantee to the collateral underlying the line of credit outstanding. The Company incurred loan costs in the amount of $9,157 and will amortize these costs ratably over the term of the loan		1,305,954			—
	$	2,802,089		$	861,624
Less: Current Portion		(463,325	)		(219,932	)
Less: Discount		(8,923	)
Total Long Term Debt	$	2,329,841		$	641,692

The principal maturities of debt outstanding with a term greater than one year on December 31, 2018 were as follows:

	Debt Maturities
2019	$	463,325
2020		427,960
2021		395,900
2022		208,860
2023		123,870
Thereafter		1,182,174
Total	$	2,802,089

Interest expense for the years ended December 31, 2018 and 2017 amounted to $107,810 and $90,471, respectively.

F-13

POWERCOMM HOLDINGS INC.

Notes to Consolidated Financial Statements

December 31, 2018

NOTE 6 - ACCRUED EXPENSES

Accrued expenses consisted of the following:

	December 31,
	2018		2017
Accrued professional fees	$	—	$	55,000
Accrued payroll expenses		156,674		118,774
Credit cards payable		101,185		58,335
Accrued interest expenses		—		256
Others		16,517		37,834
Totals	$	274,376	$	270,199

NOTE 7 - DUE TO RELATED PARTY

As of December 31, 2018 and 2017, the balances due to a related party amounted to $5,000 and $43,288, respectively, and are unsecured. There is no written agreement and the funds are due on demand with no maturity date, and bearing no interest.

NOTE 8 - STOCKHOLDERS’ EQUITY

As of December 31, 2018, the Company was authorized to issue 100,000,000 shares of $0.0001 par value common stock and 20,000,000 shares of $0.0001 par value preferred stock.

Preferred Stock

On June 6, 2017, the Company filed a “Certificate of Designation” with the Delaware Secretary of State, whereby 1,000 shares have been designated as Series A Preferred shares. The rights and privileges of the Series A shares consist of the right to vote on all shareholder matters equal to fifty-one percent (51%) of the total vote. Additionally, the Company cannot alter or change the provisions of the Certificate of Incorporation so as to adversely affect the voting powers, preferences or special rights of the Series A Preferred Stock, or create or issue additional shares of Series A Preferred Stock without the consent of a minimum of sixty percent (60%) of the holders of the Series A Preferred Stock. Additionally, in the event of any liquidation, dissolution or winding up of the Company the holders of the Series A shares will not be entitled to participate in any distribution of assets of the Company. The Series A Preferred shares cannot be converted into or exchanged for shares of any other series of class of capital stock of the Company.

Common Stock

On September 1, 2017 (“Effective Date”), the Company entered into a “Debt Conversion Agreement” (“Conversion Agreement”) with Mr. David Kwasnik, an officer, shareholder and creditor (“Creditor”). As of the Effective Date the Company owed to Creditor a total amount of $85,004 (the “Debt”) for advances made by Creditor to the Company. Per the Conversion Agreement the Creditor agreed to convert $2,000 of the Debt in exchange for the Company agreeing to offset a previously recorded $2,000 discount against 20,000,000 shares of the common stock of the Company that were previously issued to the Creditor. These shares issued to Creditor are now deemed to be fully paid and non-assessable.

In October 2017, the Company sold 1 million shares of common stock to one investor at $0.10 per share for cash proceeds of $100,000.

F-14

POWERCOMM HOLDINGS INC.

Notes to Consolidated Financial Statements

December 31, 2018

Share Based Payments

On April 12, 2017, the Company issued a total of 2,470,000 common shares as compensation to 28 employees and consultants for services performed. The Company recorded compensation expense at a share price of $0.136 based on an independent valuation of the Company. The Company recorded compensation expense of $335,920.

On April 12, 2017, the Company issued 160,000 shares of its common stock to 16 shareholders, at a purchase price equal to par value of $0.0001 per share, as part of a private placement for total proceeds of $16.00, pursuant to executed subscription agreements under a Regulation D offering or other private placement of securities. Each of these transactions was issued as part of the private placement of securities by the Company in which no underwriting discounts or commissions applied to any of the transactions. The Company conducted such private placement offering in order to build a base of shareholders and establish relationships with a variety of shareholders. The Company treated this, in essence, as an offering of shares for services and has recorded compensation expense for the difference between the calculated fair value, from the independent valuation, and the cash price paid. The Company recorded compensation expense of $21,744.

In, 2017, the Company issued 1,000 shares of Series A Preferred Stock to an officer and director for services provided. The Company valued the Series A Preferred shares issued at $1,800. The Company recorded compensation expense of $1,800.

NOTE 9 - CONCENTRATIONS

For the years ended December 31, 2018 and 2017, respectively, service revenue from Potomac Electric Power Co (“PEPCO”), which is now a wholly owned subsidiary of Exelon Corp, accounted for 98% and 81% of the Company’s net revenue, respectively. Accounts receivable due from PEPCO accounted for 82% and 78% of the Company accounts receivable balances as of December 31, 2018 and 2017, respectively. For the years ended December 31, 2018 and 2017, three customers accounted for 100% of the Company’s revenues, respectively, and two customers accounted for 100% of its accounts receivable balance, respectively.

The Company relies heavily on certain International Brotherhood of Electrical Workers Union (“IBEW”) locals in and around Virginia and Washington DC in order to provide the Company with specialized contract workers. The agreements with the IBEW require the Company to pay at the full union rate, including a stipend for all health, welfare and pension amounts the contract employees would earn as if they were employed by a union workshop. The Company is not required to become a union contractor as part of its agreements with the IBEW locals.

NOTE 10 - COMMITMENTS AND CONTINGENCIES

Litigation

F-15

POWERCOMM HOLDINGS INC.

Notes to Consolidated Financial Statements

December 31, 2018

In 2017, the Company appealed the attorney fee award to the United States Court of Appeals for the Fourth Circuit (“4^th Circuit”). On October 31, 2017 the 4^th Circuit ruled in the Company’s favor and reversed and remanded the attorney fee award back to the trial court as excessive. As of December 31, 2017, the Company had paid approximately $86,000. Based on the 4^th Circuit’s reversal and remand, the accrual of the remaining prior amounts recorded was reversed, and the Company believes that its payments made through December 31, 2017 to be sufficient under the 4^th Circuit’s instructions provided in the remand back to the trial court.

Commitments:

Rental Payments under Month-to-Month Operating Leases

The Company entered into a month-to-month lease agreement on July 1, 2016 for a 200 square foot office space located at 110 Maryland Avenue Washington, DC. The Company paid $800 per month through April, 2018, at which time the lease was terminated.

In 2016, The Company entered into a month-to-month lease agreement to rent a portion of the premises located at 3429 Ramsgate Terrace, Alexandria, Virginia, 22309 with an officer, director and shareholder of the Company. The Company agreed to a monthly rental rate of $2,600. The lease can be terminated by mutual agreement of the two parties or after 30 days written notice.

Rent costs totaled approximately $70,325 and $100,125, including $20,800 and $38,700 to related parties, for 2018 and 2017, respectively.

NOTE 11 – INCOME TAXES

PowerComm Construction, Inc. was a pass-through entity under the Internal Revenue Code of the United States and the states it performs business in, prior to its merger with PowerComm Holdings, Inc. Because of this, the income or losses of PowerComm Construction Inc. flowed directly to its shareholders and therefore no assets or liabilities were recorded for income taxes. As of January 1, 2017, the Company has recorded a liability and corresponding long-term deferred income tax expense in the amount of approximately $107,000, because as of the merger, PowerComm Construction, Inc. changed its tax status and is no longer a pass-through entity. The Company is now fully responsible for the tax assets and liabilities resulting from the consolidated operations of the Company.

F-16

POWERCOMM HOLDINGS INC.

Notes to Consolidated Financial Statements

December 31, 2018

The following table shows a reconciliation of income tax expense between the amount reported and the amount under the statutory tax rates in effect for the year ended December 31, 2018:

	2018			2017
Income tax expense from statutory rate	$	234,400		$	382,400
Effect of change in tax status		—			107,100
Effect of permanent timing differences		13,900			151,700
Effect of change in statutory rate		(147,000	)		—
Other		800			—
Remove income from pass through entities		(9,400	)		—
Income tax expense, as reported	$	92,700		$	641,200

The current income tax provision represents the estimated amount of income taxes paid or payable for the year, as well as changes in estimates from prior years. The deferred income tax provision represents the change in deferred tax liabilities and assets. The following table presents the significant components of the provision for income taxes:

	2018		2017
Current
Federal	$	—	$	198,500
State		—		42,200
Total current provision	$	—	$	240,700

Deferred
Federal	$	72,100	$	296,500
State		20,600		104,000
Total deferred provision	$	92,700	$	400,500

Income tax expense, net	$	92,700	$	641,200

On December 22, 2017, the Tax Act was signed into law and significantly reformed the Internal Revenue Code of 1986, as amended. The Tax Act will significantly impact the Company by reducing the federal corporate tax rate from 35% to 21%, effective January 1, 2018, and by allowing expensing of certain capital expenditures. However, the Tax Act limits the deductibility of meals, entertainment expenses and certain executive compensation, imposes limitations on the deductibility of interest expense and eliminates the domestic production activities deduction.

Shortly after the Tax Act was enacted, the Securities and Exchange Commission issued guidance under Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”) to address the application of GAAP and direct taxpayers to consider the impact of the Act as “provisional” when a registrant does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete the accounting for the change in tax law. In accordance with SAB 118, the Company has recognized the provisional tax impacts, outlined above, related to the re-measurement of its net deferred tax liability. The ultimate impact may differ from the provisional amounts, possibly materially, due to, among other things, the significant complexity of the Tax Act, anticipated additional regulatory guidance or related interpretations that may be issued by the Internal Revenue Service (the “IRS”), changes in accounting standards, legislative actions, future actions by states within the U.S. and changes in estimate, analysis, interpretations and assumptions the Company has made.

F-17

POWERCOMM HOLDINGS INC.

Notes to Consolidated Financial Statements

December 31, 2018

Deferred income taxes are recorded based upon temporary differences between the financial statement and tax bases of assets and liabilities and available net operating loss and tax credit carryforwards. Temporary differences and carryforwards that comprised deferred income tax assets and liabilities were as follows:

	2018		2017
Deferred income tax assets
Net operating loss carryforwards	$	154,200	$	—
Investments		51,900		51,900
		206,100		51,900
Deferred income tax liabilities
Depreciation		483,400		254,300
Cash basis tax adjustment		216,600		198,100
		700,000		452,400

Net deferred income tax liability	$	493,900	$	400,500

The Company’s deferred income tax assets and liabilities are subject to adjustment in future periods based on the Company’s ongoing evaluations of such deferred assets and liabilities and new information available to the Company.

Valuation allowances are recognized on deferred tax assets if the Company believes it is more likely than not that some or all of the deferred tax assets will not be realized. The Company believes the majority of the deferred tax assets will be realized due to the reversal of certain significant temporary differences and anticipated future taxable income from operations and, accordingly, has not recorded an allowance.

NOTE 12 - SUBSEQUENT EVENTS

In 2019 through the date of these financial statements, the Company has financed the purchase of certain equipment and rolling stock in the amount of approximately $135,900.

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