10-Q 1 pwco_10q.htm QUARTERLY REPORT 10Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q


(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended June 30, 2018

or


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


For the transition period from ______________ to ______________


Commission File Number: 001-09370


PWRCOR, INC.

(Exact Name of Registrant as Specified in the Charter)


Delaware

 

13-3186327

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer Identification No.)

 

 

 

60 E. 42nd Street, Suite 4600

 

 

New York, NY

 

10165

(Address of Principal Executive Offices)

 

(Zip Code)


(212) 796-4097

(Registrant’s telephone number, including area code)


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


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X]  No [  ]


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the 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

[  ]

Smaller reporting company

[X]

(Do not check if smaller reporting company)

 

Emerging growth company

[  ]


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]


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


As of August 10, 2018, there were 207,662,722 shares of the registrant’s common stock outstanding.





TABLE OF CONTENTS



PART I. FINANCIAL INFORMATION

3

Item 1. Financial Statements

3

Balance Sheets As Of June 30, 2018 (Unaudited) and December 31, 2017

4

Statement of Operations for the Three and Six Months ended June 30, 2018 and 2017 (Unaudited)

5

Statement of Stockholders’ Equity for the Six Months Ended June 30, 2018 (Unaudited)

6

Statement of Cash Flows for the Six Months Ended June 30, 2018 and 2017 (Unaudited)

7

Notes to Financial Statements (Unaudited)

8

Item 2. Management’s Discussion & Analysis of Financial Condition and Results of Operations.

14

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

16

Item 4. Controls and Procedures.

16

PART II. OTHER INFORMATION

17

Item 1. Legal Proceedings

17

Item 1A. Risk Factors.

17

Item 2. Unregistered Sale of Equity Securities and Use of Proceeds

17

Item 3. Defaults Upon Senior Securities

17

Item 4. Mine Safety Disclosure

17

Item 5. Other Information

17

Item 6. Exhibits

17

SIGNATURES

18






















2




PART I. FINANCIAL INFORMATION


Item 1. Financial Statements



PwrCor, Inc.


Financial Statements

For the Six Months Ended

June 30, 2018










































3




PwrCor, Inc.


Balance Sheets



 

June 30,

2018

 

December 31,

2017

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

Cash

$

34,583

 

$

114,217

Accounts receivable

 

280,532

 

 

215,993

Prepaid expenses and deposits

 

42,279

 

 

54,667

Total Current Assets

 

357,394

 

 

384,877

 

 

 

 

 

 

Intangible asset - license agreement

 

87,750

 

 

94,500

 

 

 

 

 

 

Fixed asset - engines, net of accumulated depreciation

 

22,743

 

 

22,154

 

 

 

 

 

 

Total Assets

$

467,887

 

$

501,531

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

Accounts payable and accrued expenses

$

488,392

 

$

441,950

Total Current Liabilities

 

488,392

 

 

441,950

 

 

 

 

 

 

Common stock, $0.001 par value: 325,000,000 shares

  authorized; 207,662,722 shares issued and outstanding

  at June 30, 2018 and December 31, 2017

$

207,662

 

$

207,662

Additional paid-in capital

 

960,224

 

 

960,224

Retained earnings (deficit)

 

(1,188,391)

 

 

(1,108,305)

Total Stockholders’ Equity (Deficit)

 

(20,505)

 

 

59,581

 

 

 

 

 

 

Total Liabilities and Stockholders’ Equity (Deficit)

$

467,887

 

$

501,531














See notes to financial statements



4




PwrCor, Inc.


Statement of Operations

(Unaudited)



 

Three Months Ended

June 30

Six Months Ended

June 30

 

2018

 

2017

2018

 

2017

 

 

 

 

 

 

 

 

 

 

 

REVENUE

 

 

 

 

 

 

 

 

 

 

Project Management

$

246,696

 

$

235,632

$

523,457

 

$

467,234

Engine Business

 

-

 

 

27,290

 

73,177

 

 

57,732

 

 

 

 

 

 

 

 

 

 

 

Total Revenue

 

246,696

 

 

262,922

 

596,634

 

 

524,966

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

Consulting fees

 

219,953

 

 

176,567

 

428,773

 

 

344,284

Engine Production

 

-

 

 

-

 

41,247

 

 

-

General and Administrative

 

32,803

 

 

90,979

 

92,543

 

 

177,748

Legal and other professional fees

 

25,880

 

 

18,397

 

91,332

 

 

95,447

 

 

 

 

 

 

 

 

 

 

 

Total Expenses

 

276,136

 

 

285,943

 

653,895

 

 

617,479

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

$

(29,440)

 

$

(23,021)

$

(80,086)

 

$

(92,513)

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss) per Common Share

$

(0.00)

 

$

(0.00)

$

(0.00)

 

$

(0.00)

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Common Shares Outstanding

 

207,662,722

 

 

200,739,432

 

207,662,722

 

 

200,739,432




















See notes to financial statements



5




PwrCor, Inc.


Statement of Stockholders’ Equity

For the Six Months Ended June 30, 2018

(Unaudited)



 

 

Common Stock

 

Additional

 

Retained

 

Total

 

 

Number of

Shares

 

Amount

 

Paid-in

Capital

 

Earnings

(Deficit)

 

Stockholders’

Equity (Deficit)

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2017

 

207,662,722

$

207,662

$

960,224

$

(1,108,305)

$

59,581

Net Income (Loss)

 

-

 

-

 

-

 

(80,086)

 

(80,086)

Balance, June 30, 2018

 

207,662,722

$

207,662

$

960,224

$

(1,188,391)

$

(20,505)


































See notes to financial statements



6




PwrCor, Inc.


Statement of Cash Flows

(Unaudited)



 

Six Months Ended

June 30

 

2018

 

 

2017

 

 

 

 

 

 

NET INCOME (LOSS)

$

(80,086)

 

$

(92,513)

Adjustments to reconcile net income (loss) to net cash

provided by operating activities

 

 

 

 

 

    Depreciation and amortization

 

10,644

 

 

3,421

    Bad debt (recovery) and allowance for doubtful accounts

 

(7,066)

 

 

-

Changes in Assets and Liabilities

 

 

 

 

 

    Decrease (increase) in accounts receivable

 

(57,472)

 

 

7,433

    Decrease (increase) in prepaid expenses and deposits

 

12,388

 

 

(471)

    Increase (decrease) in accounts payable and accrued expenses

 

84,735

 

 

105,747

    Increase (decrease) in deferred revenue

 

-

 

 

(34,587)

    Increase (decrease) in accrued engine development costs

 

(38,294)

 

 

-

      Total Adjustments

 

4,935

 

 

81,542

 

 

 

 

 

 

        Net Cash Provided (Used) by Operating Activities

 

(75,151)

 

 

(10,970)

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

Purchase of fixed assets

 

(4,483)

 

 

-

      Net Cash (Used) in Investing Activities

 

(4,483)

 

 

-

 

 

 

 

 

 

Net increase (decrease) in cash

 

(79,634)

 

 

(10.970)

 

 

 

 

 

 

Cash, beginning of period

 

114,217

 

 

90,764

 

 

 

 

 

 

Cash, end of period

$

34,583

 

$

79,794




 













See notes to financial statements



7



PwrCor, Inc.


Notes to Financial Statements

June 30, 2018

(Unaudited)


1. Organization and Nature of Business


PwrCor, Inc. (the “Company” or “PwrCor”) was until the first quarter of 2017 named Receivable Acquisition & Management Corporation (“RAMCO”) and doing business as Cornerstone Sustainable Energy. RAMCO, a public reporting entity, was in the business to purchase, manage and collect defaulted consumer receivables.


Cornerstone Program Advisors LLC (“Cornerstone”), a Delaware limited liability company, is an energy infrastructure project management company focused on healthcare and higher learning institutions. Sustainable Energy Industries, Inc. (“Sustainable”) is a New York corporation involved in developing and improving the efficiency of energy infrastructure using advanced proprietary technologies.  As a result of a reverse merger acquisition (the “Merger”) between RAMCO, Cornerstone, and Sustainable during 2013, the Company adopted a business plan to build on the business of Cornerstone and Sustainable in energy infrastructure and alternative energy.


In January 2017, the Company’s shareholders approved a name change to PwrCor, Inc., which became effective on March 3, 2017.


Note 2. Significant Accounting Policies


Basis of Presentation and Use of Estimates


The Company prepares its financial statements in conformity with accounting principles generally accepted in the United States of America which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Some of the more significant estimates required to be made by management include recognition of revenue for work completed and unbilled to customers, and the allowance for doubtful accounts. Actual results could differ from those estimates.


The Company believes that funds generated from operations, together with existing cash and cash infusions by major stockholders will be sufficient to finance its operations for the next twelve months, but are likely to be insufficient to fund significant growth. The Company raised $665,000 in gross capital during the second half of 2017 and, over time, expects to seek additional capital to cover any working capital needs, and to fund growth initiatives in its identified markets.  However, there can be no assurance that any new debt or equity financing arrangement will be available to the Company when needed on acceptable terms, if at all. The continued operations of the Company are dependent on its ability to raise funds, collect accounts receivable, and generate revenue.


Unaudited Financial Statements


The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for financial information and with the instructions to Form 10-Q. They do not include all information and footnotes required by United States generally accepted accounting principles for complete financial statements. The unaudited financial statements should be read in conjunction with those financial statements included in the Company’s Form 10-K for the year ended December 31, 2017. In the opinion of Management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the three and six months ended June 30, 2018, are not necessarily indicative of the results that may be expected for the year ending December 31, 2018.


Cash


The Company continually monitors its positions with, and the credit quality of, the financial institutions it invests with. From time to time, however briefly, the Company maintains balances in operating accounts in excess of federally insured limits.



8



PwrCor, Inc.


Notes to Financial Statements

June 30, 2018

(Unaudited)


2. Significant Accounting Policies (continued)



Accounts Receivable


Receivables are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to a valuation allowance based on its assessment of the current status of individual accounts. At June 30, 2018, and December 31, 2017, an allowance for doubtful accounts was made totaling $56,204 and $63,270, respectively, to provide for the possibility of a revenue shortfall from the project in Modoc County, and is reflected in the accounts receivable balance on the balance sheet in the accompanying financial statements.  


Revenue Recognition


The Company’s revenue is recognized when the Company satisfies its performance obligation(s) under the contract (either implicit or explicit) by transferring the promised product or service to its customer either when (or as) its customer obtains control of the product or service. A performance obligation is a promise in a contract to transfer a distinct product or service to a customer. A contract’s transaction price is allocated to each distinct performance obligation. The majority of the Company’s contracts have a single performance obligation, as the promise to transfer products or services is not separately identifiable from other promises in the contract and, therefore, not distinct.


Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or providing services. As such, revenue is recorded net of returns, allowances, customer discounts, and incentives. Sales and other taxes collected from customers and remitted to governmental authorities are accounted for on a net (excluded from revenues) basis.


The Company’s performance obligations under its engine business are generally satisfied as over time. Revenue from products or services transferred to its customer over time accounted for approximately 12.3% and 11.0% of revenue for the six months ended June 30, 2018 and 2017, respectively. Revenue under this contract is generally recognized over time using an input measure based upon the proportion of actual costs incurred to estimated total project costs, which is a method used to best depict the Company’s performance to date under the terms of the contract.


Accounting for over time contracts involves the use of various techniques to estimate total revenue and costs. The Company estimates profit on such contracts as the difference between total estimated revenue and expected costs to complete a contract and recognizes that profit over the life of the contract. Contract estimates are based on various assumptions to project the outcome of future events that may span several years. These assumptions include, among other things, labor productivity, costs and availability of materials. The nature of these long-term agreements may give rise to several types of variable consideration, such as claims, awards and incentive fees. These amounts of variable consideration are not expected to be significant. Additionally, contract estimates may include additional revenue for submitted contract modifications if there exists and enforceable right to the modification, the amount can be reasonably estimated and its realization is probable. These estimates are based on historical collection experience, anticipated performance, and the Company’s best judgment at the time. These amounts are generally included in the contract’s transaction price and are allocated over the remaining performance obligations. Changes in judgments on these above estimates could impact the timing and amount of revenue recognized with a resulting impact on the timing and amount of associated income.


The Company may receive payments from customers based upon contractual billing schedules; accounts receivable are recorded when the right to consideration becomes unconditional. In the event a contract loss becomes known, the entire amount of the estimated loss is recognized in the Statement of Operations.




9



PwrCor, Inc.


Notes to Financial Statements

June 30, 2018

(Unaudited)


2. Significant Accounting Policies (continued)


The majority of the Company’s revenue is from products and services transferred to customers at a point in time and was approximately 87.7% and 89.0% of revenue for the six months ended June 30, 2018 and 2017, respectively. The Company recognizes revenue at the point in time in which the customer obtains control of the product or service, which is generally when product title passes to the customer upon shipment.  


The timing of revenue recognition may differ from the timing of invoicing to customers and these timing differences result in contract assets or contract liabilities (deferred revenue) on the Company’s balance sheet. The Company records a contract asset when revenue is recognized prior to invoicing, or contract liabilities when revenue is recognized subsequent to invoicing. Contract liabilities additionally include customer advances or prepayments. Costs in excess of billings and billings in excess of costs associated with over time contracts were not significant at June 30, 2018 or 2017. Revenue recognized during the six months ended June 30, 2018 and 2017 that was included in contract liabilities at the beginning of the period was $0 and $34,587, respectively.


On June 30, 2018, the Company had no remaining performance obligations.


Fixed Assets


Fixed assets are being depreciated on the straight line basis over a period of five years.


License Agreement


The cost of the license agreement (see Note 4) is being amortized on a straight-line basis over 10 years.  The license agreement is tested annually for impairment or earlier if an indication of impairment exists.  The Company believes that the license agreement has not been impaired.


Income Taxes


The Company recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by the tax authorities. Management has analyzed the Company’s tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on returns filed for open tax years (2013 - 2016).  The Company’s tax years end September 30.


Basic and Diluted Net Income (Loss) per Share


The Company computes income (loss) per share in accordance with “ASC-260”, “Earnings per Share” which requires presentation of both basic and diluted income (loss) per share on the face of the statement of operations. Basic income (loss) per share is computed by dividing net income available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive income (loss) per share excludes all potential common shares if their effect is anti-dilutive.


The Company has no dilutive instruments and accordingly basic income (loss) and diluted income per share are the same.








10



PwrCor, Inc.


Notes to Financial Statements

June 30, 2018

(Unaudited)


2. Significant Accounting Policies (continued)


Recent Accounting Pronouncements


In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”), which supersedes the revenue recognition requirements in ASC 605, “Revenue Recognition.” ASU 2014-09 is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. It also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue, cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period.


The Company adopted the provisions of ASU 2014-09 on January 1, 2018, using the modified retrospective approach. Revenue from the Company’s sale of services are generally recognized either when services are performed (i.e. point in time) or under engine sales contracts, as the Company transfers control of the product or service to its customers (i.e. over time), which approximates the previously used percentage-of-completion method of accounting. As such, the adoption of ASU 2014-09 had no material impact to the Company’s financial position or results of operations; however, the Company has now presented the disclosures required by this new standard herein.


All other accounting standards that have been issued or proposed by the FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption.




3. Related Party Transactions


Consulting Fees


Certain stockholders of the Company and entities affiliated with management perform services for customers and were compensated at various rates. Total consulting expenses incurred by these stockholders and entities amounted to $295,269 and $265,458 for the six months ended June 30, 2018 and 2017, respectively.  Amounts payable to these stockholders and entities at June 30, 2018 and 2017 totaled $155,482 and $128,444, respectively.


4. License Agreement


At the time of the Merger, Sustainable had a series of agreements including an exclusive, renewable 20-year engine technology license agreement (the “Agreement”) with a third party licensor that had developed engines capable of converting heat into other forms of energy. The agreements were assigned to the Company.  Under the terms of the Agreement, it could be cancelled by the Company during the term once the patents upon which it was based expired. The newer of two patents expired in August of 2017, and the Company elected at that time to exercise its right to cancel the Agreement.


The third party licensor had been classified in 2010 as dissolved by the Delaware Division of Corporations, and similarly by the Arizona Corporation Commission, and has not reinstated its charters. Despite this status, during July, 2017, the Company received a demand letter from the principal of that firm claiming that an aggregate total of $1,104,367 was due the firm under the Agreement, and to the principal for consulting work. The Company and its counsel believe that the claims are without merit and would vigorously defend any potential lawsuit. The Company believes it has no outstanding obligation to either party, and took the remaining unamortized asset value of the Agreement, $20,307, as a charge against earnings in the third quarter of 2017.




11



PwrCor, Inc.


Notes to Financial Statements

June 30, 2018

(Unaudited)


4. License Agreement (continued)


Subsequently, in December 2017, the Company entered into an intellectual property license agreement with Thermal Tech Holdings, LLC, a Delaware limited liability company (“TTH”). TTH is an entity owned equally by two entities affiliated, respectively, with two directors of the Company, who also serve in management positions with TTH.


TTH is the owner of certain patent applications as well as the inventions relating to the Company’s proprietary engine technology (the “Licensed Patents and Technical Information”). The Licensed Patents and Technical Information were developed by an independent non-profit research institute (the “Contractor”). All work done by the Contractor was paid for by TTH in order that TTH, rather than the Company, would be at risk if the research, development, engineering and design work were of little or no value. Furthermore, the work performed by the Contractor for TTH was confidential for competitive business reasons.


The Patent License grants the Company a worldwide non-exclusive license to use the Technical Information to make, use or sell any products and/or services which would be covered by these specific Licensed Patents.  However, TTH may not license any Licensed Patents and Technical Information to any competitive entity, or to any other entity without the prior written consent of the Company.


The agreement calls for the Company to pay TTH a royalty equal to five percent (5%) of the Net Revenue (as defined) of all Licensed Products covered by a Licensed Patent sold by the Company and its affiliates, as well as an initial license fee of $135,000.  The Patent License will terminate upon the expiration of all Licensed Patents. The Company may terminate the agreement on ninety (90) days’ prior written notice. TTH may terminate the agreement on ninety (90) days’ prior written notice for uncured defaults (as defined).


The accompanying June 30, 2018 balance sheet presents the carrying value of the license fee at $87,750, which is net of an unpaid balance of $40,500 and $6,750 in accumulated amortization.  The cost of the license agreement is being amortized over ten years.



5. Concentrations


The Company grants credit in the normal course of business to its customers.  The Company periodically performs credit analysis and monitors the financial condition of its customers to reduce credit risk.


Two customers accounted for 94.5% and 5.5%, respectively, of total project management revenue during the six months ended June 30, 2018, and two customers accounted for 90.1% and 9.9%, respectively, during the six months ended June 30, 2017.


Two project management customers accounted for 98.3% and 1.7%, respectively, of total project management accounts receivable at June 30, 2018, and for 90.8% and 5.4%, respectively, at December 31, 2017.  Project management accounts receivable constituted 94.8% of receivables at June 30, 2018, and 98.5% of net receivables as of December 31, 2017.


All of the revenue from the Company’s heat conversion technology was from the same customer in the periods ended June 30, 2018 and June 30, 2017.







12



PwrCor, Inc.


Notes to Financial Statements

June 30, 2018

(Unaudited)


6. Stock Issuance


In September and October 2017, the Company issued 6,650,000 shares of common stock at a per share price of $0.10 to thirteen individual investors in return for a capital infusion of $665,000.  Each share issued was accompanied by a warrant for one-half share of common stock; the warrants are exercisable at a price of $0.30 per share.  The Company claims an exemption from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506(b) of Regulation D promulgated thereunder.  No commissions were paid and no underwriter or placement agent was involved in this transaction. The proceeds of this transaction were used for the Company’s working capital and general corporate purposes.


7. Subsequent Events


Management has evaluated subsequent events for disclosure and/or recognition in the financial statements through the date that the financial statements were available to be issued.
































13




Item 2. Management’s Discussion & Analysis of Financial Condition and Results of Operations.


The following management’s discussion and analysis should be read in conjunction with the Company’s historical consolidated financial statements and the related notes thereto included in our audited financial statements for the year ended December 31, 2017, and the notes thereto.  The management’s discussion and analysis contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect” and the like, and/or future tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this quarterly report. The Company’s actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this quarterly report.


Overview


On May 15, 2013, Receivable Acquisition & Management Corporation, a Delaware corporation completed the acquisition of Cornerstone Program Advisors LLC, a Delaware limited liability company (“Cornerstone”) and Sustainable Energy Industries, Inc., a Delaware corporation (“Sustainable”), and the Company assumed the operations of each of these entities (the “Merger”).  Receivable Acquisition & Management Corporation had operated as a business purchasing and collecting upon defaulted consumer receivables; those operations were ceased and collections on any remaining receivables are being run off.  Cornerstone has been in the business of managing energy infrastructure projects, specializing in the non-profit marketplace.  Sustainable is in the business of developing, marketing, and implementing clean tech technologies.  The Company has refocused on managing energy infrastructure projects and developing applications for an environmentally benign heat conversion technology with particular focus on the geothermal and waste-heat-to-energy production markets.


Shareholders approved a name change to PwrCor, Inc. at the shareholder meeting in January, 2017, by a large majority of shareholder votes.  The corporate name change in Delaware to “PwrCor, Inc.” was effective on March 3, 2017.


Results of Operations


During the three and six month periods ended June 30, 2018, the Company had a net loss of ($29,440) and ($80,086), respectively, on revenues of $246,696 and $596,634, respectively, versus a net loss of ($23,021) and ($92,513) on revenues of $262,922 and $524,966, respectively, in the three and six month periods ended June 30, 2017. The higher net loss in the most recent three month period in 2018 as compared to the corresponding period last year was due primarily to temporarily tighter margins from the costs of subcontracted consultants.  The smaller net loss in the six month period in 2018 as compared to the corresponding period last year was reflected the winding down of expenses on the engine project in California, as well as an improvement in project management revenues.


Revenue


Revenues for the six months ended June 30, 2018 as compared to the same period in 2017 from the Company’s major customer showed a 12% increase due to increased activity with the customer. The margin of project management revenue over the corresponding cost of subcontracted consultants for such projects has decreased from 2017 to 2018 due primarily to a changing mix of customer activity. This gross profit for the six month period ended June 30, 2018, was 16% of revenues, versus 21% for the corresponding period in 2017.


Revenue declined 6% for the three month period and increased 14% for the six month period ended June 30, 2018, as compared to the corresponding periods from 2017. The decline in the three month period was largely attributable to the winding down of the engine project in California, while over the entire six month period project management revenues showed growth due to increased activity with the larger customer.




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Operating Expenses


Total operating expenses for the three and six month periods ended June 30, 2018 were $276,136 and $653,895 respectively, versus $285,943 and $617,479, respectively, during the three and six month periods ended June 30, 2017.  The 3% decrease in operating expenses in the three month period in 2018 was largely due to the elimination of costs associated with the engine project in California, while the 6% increase in operating expenses in the six month period in 2018, against the corresponding periods in 2017, was due to higher costs of subcontracted consultants naturally resulting from the increased project management activity noted above.


Consulting Expenses


The Company outsources a significant portion of its project management, oversight and advisory activities to a carefully selected group of small firms, individuals and subcontractors with expertise specific to the projects underway.  As of the quarter ended June 30, 2018, the Company was using six such consulting resources. Consulting expenses consistently constitute the bulk of operating costs for the project advisory and management business activities of the Company, and accordingly generally track revenue.


Liquidity and Capital Resources


As of June 30, 2018, the Company had a working capital deficit (that is, total current assets minus total current liabilities) of ($130,999) versus a working capital deficit of ($57,073) as of the year ended December 31, 2017.  The change to a deficit was primarily due to a decline in prepaid expenses and an increase in increase in accrued costs, in part associated with the California engine project.


For the period ended June 30, 2018, the Company had cash of $34,583 versus $114,217 at December 31, 2017.  For the six months ended June 30, 2018, net cash (used) by operating activities was ($75,151) versus net cash (used) by operating activities of  ($10,970) for the six months ended June 30, 2017.  The major factor in the change in net cash from operating activities was an increase in accounts receivable.


For the six month periods ended June 30, 2018 and June 30, 2017, no cash was expended or provided by financing activities. Cash was used in the period ended June 30, 2018 in investing activities for the purchase of capital equipment in the amount of $4,483, while none was used in the comparable 2017 period.


The Company believes that funds generated from operations, together with existing cash and cash infusions by major stockholders will be sufficient to finance its operations for the next twelve months, but are likely to be insufficient to fund significant growth. The Company has been exploring options and alternatives to fund growth initiatives in its identified markets. However, there can be no assurance that the Company will be able to raise sufficient capital on acceptable terms. The continued operations of the Company are dependent on its ability to collect its receivables and increase revenues.


Income Taxes


The Company did not record any income tax provision for the six month period ended June 30, 2018, and does not expect any material income tax liability for the period.  There were no income and related taxes for 2017 paid in the six months ended June 30, 2018.


Critical Accounting Policy & Estimates


Our Management’s Discussion and Analysis of Financial Condition and Results of Operations section discusses our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period.





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On an ongoing basis, management evaluates its estimates and judgments, including those related to revenue recognition, accrued expenses, financing operations, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.


Actual results may differ from these estimates under different assumptions and conditions. The most significant accounting estimates inherent in the preparation of our financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources. These accounting policies are described at relevant sections in this discussion and analysis and in the condensed consolidated financial statements included in this quarterly report.


Off-Balance Sheet Arrangements


The Company has no off-balance sheet arrangements.


Item 3. Quantitative and Qualitative Disclosures about Market Risk.


The Issuer is not required to provide the information called for in this item due to its status as a Smaller Reporting Company.


Item 4. Controls and Procedures.


Evaluation of disclosure controls and procedures


The term “disclosure controls and procedures” is defined in Rules 13(a)-15e and 15(d) - 15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company’s principal executive officer and principal financial officer has evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2018. He has concluded that, as of June 30, 2018, our disclosures, controls and procedures were effective to ensure that:


(1)

Information required to be disclosed by the Company in reports that it files or submits under the act is recorded, processed, summarized and reported, within the time periods specified in the Commissions’ rules and forms; and


(2)

Controls and procedures are designed by the Company to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management including the principal executive and principal financial officers or persons performing similar functions, as appropriate to allow timely decisions regarding financial disclosure.


This term refers to the controls and procedures of a Company that are designed to ensure that information required to be disclosed by a Company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within the required time periods. Management continues to take steps to improve its controls and procedures, and expects, further, that the growing scale of the business will enable the Company to obtain additional resources to assist in that effort.


Changes in Internal Control over Financial Reporting


There were no changes in the Company’s internal control over financial reporting or in any other factors that could significantly affect these controls during the quarter ended June 30, 2018, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.





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PART II. OTHER INFORMATION


Item 1. Legal Proceedings


The Company is not a party to any material pending legal proceedings or a proceeding being contemplated by a governmental authority nor is any of the Company’s property the subject of any pending legal proceedings or a proceeding being contemplated by a governmental authority except as set forth in our Annual Report on Form 10-K for December 31, 2017 from which there have been no material changes.


Item 1A. Risk Factors.


None.


Item 2. Unregistered Sale of Equity Securities and Use of Proceeds


None.


Item 3. Defaults Upon Senior Securities


None.


Item 4. Mine Safety Disclosure


Not Applicable.


Item 5. Other Information


None.


Item 6. Exhibits


Exhibit

Number

 

Exhibit Title

31.1

 

Certification of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

 

Certification of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS *

 

XBRL Instance Document

101.SCH *

 

XBRL Taxonomy Schema

101.CAL *

 

XBRL Taxonomy Calculation Linkbase

101.DEF *

 

XBRL Taxonomy Definition Linkbase

101.LAB *

 

XBRL Taxonomy Label Linkbase

101.PRE *

 

XBRL Taxonomy Presentation Linkbase


In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed.


* Furnished herewith. XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.






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SIGNATURES


In accordance with the requirements of the Exchange Act, the Company has caused this report to be signed by the undersigned, thereunto duly authorized.


 

 

PWRCOR, INC.

 

 

 

Date:  August 10, 2018

By:

/s/ Thomas Telegades

 

Name:

Thomas Telegades

 

Title:

Chief Executive Officer

 

 

Interim Chief Financial Officer

 

 

(Principal Executive Officer, Interim Principal Financial Officer

and Principal Accounting Officer)





































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