UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
For the quarter
ended September 30, 2014
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: 333-184363
POWERSTORM CAPITAL CORP.
(Name of registrant as specified in its
charter)
DELAWARE |
45-3733512 |
(State or other jurisdiction of incorporation or
organization) |
(I.R.S. Employer Identification No.) |
31244 Palos Verdes Dr. W, Ste 245
Rancho Palos Verdes, CA 90275-5370
(Address of principal executive offices)
(Zip Code)
1-424-327-2991
(Registrant's telephone number, including
area code)
N/A
(Former name, former address and former
fiscal year, if changed since last report)
Indicate by check
mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes
x
No ¨
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No
x
Indicate by check
mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting
company" in Rule 12b-2 of the Exchange Act.
Large accelerated Filer |
¨ |
|
Accelerated Filer |
¨ |
Non-accelerated Filer |
¨ |
|
Small Reporting Company |
x |
(Do not check if smaller reporting
company)
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No
x
As
of November 14, 2014, there were 20,917,484 shares of common stock issued and outstanding.
TABLE OF CONTENTS
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This Quarterly
Report on Form 10-Q (this “Report”) contains “forward-looking statements” within the meaning of Section
27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”). Forward-looking statements discuss matters that are not historical facts.
Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,”
“believe,” “estimate,” “intend,” “could,” “should,” “would,”
“may,” “seek,” “plan,” “might,” “will,” “expect,” “predict,”
“project,” “forecast,” “potential,” “continue” negatives thereof or similar expressions.
Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations
about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that
may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations
or plans expressed or implied by such forward-looking statements.
We cannot predict
all of the risks and uncertainties. Accordingly, such information should not be regarded as representations that the results or
conditions described in such statements or that our objectives and plans will be achieved and we do not assume any responsibility
for the accuracy or completeness of any of these forward-looking statements. These forward-looking statements are found at various
places throughout this Report and include information concerning possible or assumed future results of our operations, including
statements about potential acquisition or merger targets; business strategies; future cash flows; financing plans; plans and objectives
of management; any other statements regarding future acquisitions, future cash needs, future operations, business plans and future
financial results, and any other statements that are not historical facts.
These forward-looking
statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks,
uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially
from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions,
the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time
than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as
of the date of this Report. All subsequent written and oral forward-looking statements concerning other matters addressed in this
Report and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements
contained or referred to in this Report.
Except to the
extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new
information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements.
POWERSTORM CAPITAL CORP.
INDEX TO FINANCIAL STATEMENTS
POWERSTORM CAPITAL CORP.
Balance Sheets
(Unaudited)
| |
September 30, 2014 | | |
December 31, 2013 | |
ASSETS | |
| | | |
| | |
Current Assets | |
| | | |
| | |
Cash and cash equivalents | |
$ | 10,329 | | |
$ | 7,543 | |
Accounts receivable | |
| 4,846 | | |
| - | |
Prepaid expenses | |
| 1,655 | | |
| 1,402 | |
Total current assets | |
| 16,830 | | |
| 8,945 | |
| |
| | | |
| | |
Furniture and office equipment, net | |
| 4,655 | | |
| 5,584 | |
Trademarks | |
| 7,612 | | |
| 5,828 | |
Other assets | |
| 2,500 | | |
| 2,500 | |
TOTAL ASSETS | |
$ | 31,597 | | |
$ | 22,857 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |
| | | |
| | |
| |
| | | |
| | |
Current Liabilities | |
| | | |
| | |
Accounts payable | |
$ | 34,910 | | |
$ | 52,486 | |
Advances from related party | |
| 19,347 | | |
| 24,171 | |
TOTAL LIABILITIES | |
| 54,257 | | |
| 76,657 | |
| |
| | | |
| | |
Commitments and Contingencies | |
| | | |
| | |
| |
| | | |
| | |
Stockholders’ Deficit | |
| | | |
| | |
Preferred stock, par value $0.01 per share, 5,000,000 shares authorized; 0 shares issued and outstanding | |
| - | | |
| - | |
Common stock, par value $0.001 per share, 300,000,000 shares authorized; 20,917,484 and 20,116,381 shares issued and outstanding at September 30, 2014 and December 31, 2013, respectively | |
| 20,917 | | |
| 20,116 | |
Additional paid-in capital | |
| 373,977 | | |
| 157,533 | |
Accumulated deficit | |
| (417,554 | ) | |
| (231,449 | ) |
TOTAL STOCKHOLDERS’ DEFICIT | |
| (22,660 | ) | |
| (53,800 | ) |
| |
| | | |
| | |
TOTAL LIABILITIES & STOCKHOLDERS’ DEFICIT | |
$ | 31,597 | | |
$ | 22,857 | |
The accompanying notes are an integral part
of these unaudited financial statements.
POWERSTORM CAPITAL CORP.
Statements of Operations
(Unaudited)
| |
Three Months Ended September 30, 2014 | | |
Three Months Ended September 30, 2013 | | |
Nine Months Ended September 30, 2014 | | |
Nine Months Ended September 30, 2013 | |
| |
| | |
| | |
| | |
| |
Revenues | |
$ | 93,258 | | |
$ | 15,160 | | |
$ | 119,563 | | |
$ | 21,760 | |
Cost of revenues | |
| 65,756 | | |
| - | | |
| 65,756 | | |
| - | |
Gross profit | |
| 27,502 | | |
| 15,160 | | |
| 53,807 | | |
| 21,760 | |
| |
| | | |
| | | |
| | | |
| | |
Operating expenses | |
| | | |
| | | |
| | | |
| | |
General and administrative | |
| 107,533 | | |
| 39,494 | | |
| 253,392 | | |
| 101,891 | |
Depreciation expense | |
| 310 | | |
| 282 | | |
| 929 | | |
| 812 | |
Total operating expenses | |
| 107,843 | | |
| 39,776 | | |
| 254,321 | | |
| 102,703 | |
| |
| | | |
| | | |
| | | |
| | |
Loss from operations | |
| (80,341 | ) | |
| (24,616 | ) | |
| (200,514 | ) | |
| (80,943 | ) |
| |
| | | |
| | | |
| | | |
| | |
Gain on settlement of accounts payable | |
| 384 | | |
| - | | |
| 14,409 | | |
| - | |
Other income | |
| - | | |
| - | | |
| - | | |
| 270 | |
| |
| | | |
| | | |
| | | |
| | |
Net loss | |
$ | (79,957 | ) | |
$ | (24,616 | ) | |
$ | (186,105 | ) | |
$ | (80,673 | ) |
| |
| | | |
| | | |
| | | |
| | |
Loss per common share - basic and diluted | |
$ | (0.00 | ) | |
$ | (0.00 | ) | |
$ | (0.01 | ) | |
$ | (0.00 | ) |
| |
| | | |
| | | |
| | | |
| | |
Weighted average number of common shares outstanding - basic and diluted | |
| 20,853,957 | | |
| 19,838,586 | | |
| 20,614,968 | | |
| 19,512,340 | |
The accompanying notes are an integral part
of these unaudited financial statements.
POWERSTORM CAPITAL CORP.
Statements of Cash Flows
(Unaudited)
| |
Nine Months Ended September 30, 2014 | | |
Nine Months Ended September 30, 2013 | |
Cash flows from operating activities | |
| | | |
| | |
Net loss | |
$ | (186,105 | ) | |
$ | (80,673 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | |
| | | |
| | |
Share-based compensation | |
| 53,909 | | |
| - | |
Depreciation expense | |
| 929 | | |
| 812 | |
Gain on settlement of accounts payable | |
| 14,409 | | |
| - | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Accounts receivable | |
| (4,846 | ) | |
| (2,018 | ) |
Prepaid expenses | |
| (253 | ) | |
| (7,770 | ) |
Accounts payable | |
| (30,484 | ) | |
| 17,464 | |
Net cash used in operating activities | |
| (152,441 | ) | |
| (72,185 | ) |
| |
| | | |
| | |
Cash flow from investing activities: | |
| | | |
| | |
Purchase of furniture and office equipment | |
| - | | |
| (871 | ) |
Acquisition of trademarks | |
| (1,784 | ) | |
| (1,179 | ) |
Net cash used in investing activities | |
| (1,784 | ) | |
| (2,050 | ) |
| |
| | | |
| | |
Cash flows from financing activities: | |
| | | |
| | |
Issuance of common stock for cash | |
| - | | |
| 25,000 | |
Payments made on trademarks | |
| 157,011 | | |
| 46,858 | |
Net cash provided by financing activities | |
| 157,011 | | |
| 71,858 | |
| |
| | | |
| | |
Net change in cash and cash equivalents | |
| 2,786 | | |
| (2,377 | ) |
Cash and cash equivalents - beginning of period | |
| 7,543 | | |
| 3,559 | |
Cash and cash equivalents - end of period | |
$ | 10,329 | | |
$ | 1,182 | |
| |
| | | |
| | |
Supplemental disclosure of cash flows information:
| |
| | | |
| | |
Cash paid during the period for: | |
| | | |
| | |
Interest | |
$ | - | | |
$ | - | |
Income taxes | |
$ | - | | |
$ | - | |
| |
| | | |
| | |
Non-cash investing and financing activities: | |
| | | |
| | |
Shares issued to repay advances from related party | |
$ | 136,735 | | |
$ | 60,638 | |
Shares issued to settle accounts payable | |
$ | 1,500 | | |
$ | - | |
Additional paid-in capital contribution by shareholder to pay accounts payable on behalf of the Company | |
$ | 25,100 | | |
$ | - | |
The accompanying notes are an integral part
of these unaudited financial statements.
POWERSTORM CAPITAL CORP.
Notes to Financial Statements
(Unaudited)
NOTE 1 – GENERAL ORGANIZATION AND BUSINESS OPERATIONS
Powerstorm Capital Corp. (the “Company”)
was incorporated in Delaware on October 10, 2011 and is located in Rancho Palos Verdes, California. The Company’s vision
and mission is to electrify rural communities in developing countries and power the growth of global mobile communication through
the development, delivery and utilization of patent pending hybrid energy storage systems.
NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements have
been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).
In the opinion of management, these financial statements include all adjustments, which, unless otherwise disclosed, are of a normal
recurring nature, necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods
presented.
The accompanying unaudited interim financial
statements as of September 30, 2014 and for the three and nine months ended September 30, 2014 and 2013 have been prepared in accordance
with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information
and on the same basis as the annual audited financial statements. In the opinion of management, these financial statements include
all adjustments, which, unless otherwise disclosed, are of a normal recurring nature, necessary for a fair presentation of the
financial position, results of operations, and cash flows for the periods presented. The results for interim periods are not necessarily
indicative of results for the entire year. The balance sheet at December 31, 2013 has been derived from audited financial statements;
however, the notes to the financial statements do not include all of the information and notes required by accounting principles
generally accepted in the United States of America for complete financial statements. The accompanying unaudited interim financial
statements should be read in conjunction with the financial statements and notes thereto for the period ended December 31, 2013
included in 10-K filed with SEC on April 15, 2014.
Use of Estimates
The preparation of financial statements
in conformity with US 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 financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid
short-term investments purchased with an original maturity of three months or less to be cash equivalents. These investments are
carried at cost, which approximates fair value.
Allowance for Doubtful Accounts
The allowance for doubtful accounts reflects
our best estimate of probable losses inherent in the accounts receivable balance. The Company determines the allowance based on
known troubled accounts, historical experience, and other currently available evidence. As of September 30, 2014, the Company estimated
allowance of $0 for doubtful accounts.
Intangible Assets
The Company’s intangible assets consist
of trademarks with indefinite life. The Company capitalizes the filing and legal fees related to the trademark registrations, which
totaled $7,612 and $5,828 as of September 30, 2014 and December 31, 2013, respectively.
The Company reviews
its indefinite-lived intangible assets for impairment whenever events or circumstances indicate that the carrying amount of an
asset may not be recoverable. The Company assesses recoverability by reference to future cash flows from the products underlying
these intangible assets. If these estimates change in the future, the Company may be required to record impairment charges for
these assets. As of September 30, 2014, no impairment was recorded.
Furniture and Office Equipment
Furniture and office equipment is stated
at cost and depreciated using the straight-line method over 7 years, the estimated life of the asset. Computers and software developed
or obtained for internal use are depreciated using the straight-line method over the estimated useful life of 5 years. Repairs
and maintenance are charged to expense as incurred.
Income Taxes
The Company uses the asset and liability
method in accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences
between financial reporting and income tax carrying amounts of assets and liabilities and are measured using the enacted tax rates
and laws that will be in effect when the differences are expected to reverse. The Company reviews deferred tax assets for a valuation
allowance based upon whether it is more likely than not that the deferred tax asset will be fully realized. A valuation allowance,
if necessary, is provided against deferred tax assets, based upon management’s assessment as to their realization.
Revenue
Recognition
The Company’s revenue generated consisted
of revenues from consulting services and products sold. Revenue is recognized at the time when a price is fixed and determinable,
persuasive evidence of an arrangement exists, the service has been rendered, the products have been delivered and collectability
is assured.
Stock-Based Compensation
The Company expenses the cost of employee
services received in exchange for an award of equity instruments based on the grant date fair value of such instruments over the
service period.
Equity instruments issued to parties other
than employees for acquiring goods or services are recorded at either the fair value of the consideration received or the fair
value of the instruments issued in exchange for such services, whichever is more reliably measurable.
Net Loss per Common Share
Basic net loss per common share is computed
by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per common
share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive
effect of common stock equivalents. In periods when losses are reported, the diluted weighted-average number of common shares outstanding
excludes common stock equivalents because their inclusion would be anti-dilutive. There were no potentially dilutive securities
as of September 30, 2014 and December 31, 2013.
Recent Accounting Pronouncements
In 2014, the FASB issued ASU 2014-10, Development
Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. ASU 2014-10 eliminates the distinction of
a development stage entity and certain related disclosure requirements, including the elimination of inception-to-date information
on the statements of operations, cash flows and stockholders’ equity. The amendments in ASU 2014-10 will be effective prospectively
for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, however early
adoption is permitted. The Company evaluated and adopted ASU 2014-10 for the reporting period ended June 30, 2014.
Subsequent Events
The Company evaluates subsequent events
through the date when financial statements are issued for disclosure consideration.
NOTE 3 – GOING CONCERN
The accompanying financial statements were
prepared in conformity with U.S. GAAP, which contemplates continuation of the Company as a going concern and depends upon the Company’s
ability to establish itself as a profitable business. The Company is a start-up company and has incurred an accumulated loss of
$417,554 since inception. The Company has negative working capital of $37,427 and will require additional funds to finance
its business plan for the next twelve months. Due to the start-up nature of the Company, the Company expects to incur additional
losses in the immediate future. The Company’s ability to continue as a going concern is dependent upon its ability to generate
future profitable operations and/or obtain the necessary financing to meet its obligations and repay its liabilities arising from
normal business operations when they become due. To date, the Company’s founders have provided funding for operations
until the Company raises sufficient capital to provide for the first-year operating expenses.
The Company is planning to obtain financing
either through the issuance of equity or debt. To the extent that funds generated from any private placements, public offerings,
and/or bank financings are insufficient, the Company will have to raise additional working capital through other sources.
NOTE 4 – FURNITURE AND OFFICE
EQUIPMENT
| |
September 30, 2014 | | |
December 31, 2013 | |
Furniture and equipment | |
$ | 5,391 | | |
$ | 5,391 | |
Computers and software | |
| 2,183 | | |
| 2,183 | |
Less: accumulated depreciation | |
| (2,919 | ) | |
| (1,990 | ) |
Furniture and office equipment, net | |
$ | 4,655 | | |
$ | 5,584 | |
During the three months ended September 30, 2014 and 2013, the
Company recorded depreciation expense of $310 and $282, respectively.
During the nine months ended September 30, 2014 and 2013, the
Company recorded depreciation expense of $929 and $812, respectively.
NOTE 5 – RELATED PARTY TRANSACTIONS
On March 31, 2014, the Company issued 736,520
shares of common stock to a related party, KeyMedia Management, Inc., as reimbursement for the advances and payments made on behalf
of the Company of $73,652. The shares were valued at their fair value of $0.1 per share.
On September 30, 2014, the Company issued
63,083 shares of common stock to a related party, KeyMedia Management, Inc., as reimbursement of the advances and payments made
on behalf of the Company of $63,083. The shares were valued at their fair value of $1 per share.
As of September 30, 2014 and December 31,
2013, the Company also had advances from KeyMedia Management, Inc. of $19,347 and $24,171, respectively.
NOTE 6 – COMMITMENTS AND CONTINGENCIES
On May 12, 2014, the Company entered into
a supply contract with a third party from Republic of Azerbaijan. In accordance with the agreement, the Company will sell the batteries
and related components and provide services to the third party for 69,358 Euros (approximately $95,419 USD). 30% of the total amount
above shall be paid in advance within 5 banking days from the receipt of the invoice from the Company by the third party. 60% of
the total amount shall be paid within 20 banking days after completion of the delivery of the goods and receipt of the delivery
documents. The remaining 10% shall be paid after completion of the installation and commissioning and signature by this third party
and the Company. As of September 30, 2014, no activity has been executed and therefore no revenue is recorded.
NOTE 7 – GAIN ON SETTLEMENT OF
ACCOUNTS PAYABLE
During the nine months ended September
30, 2014, the Company and two of its vendors reached settlements on outstanding accounts payable. The vendors forgave $14,409 related
to previous services provided and the Company recorded a gain on settlement of accounts payable of $14,409.
NOTE 8 – EQUITY
Common shares
The Company is authorized to issue 305,000,000
shares of capital stock. These shares are divided into two classes, with 300,000,000 shares designated as common stock at $0.001
par value and 5,000,000 shares designated as preferred stock at $0.01 par value.
During the nine months ended September 30, 2014, the Company
issued:
| - | 736,520 shares of common stock on March 30, 2014 to a related party for advances and payments made on
behalf of the Company of $73,652. These shares were valued at their grant date fair value of $0.01 per share.
|
| - | 1,500 shares of common stock on September 8, 2014 to a third party to settle accounts payable. These shares
were valued at their grant date fair value of $1 per share.
|
| - | 63,083 shares of common stock on September 30, 2014 to a related party for advances and payments made
on behalf of the Company. These shares were valued at their grant date fair value of $1 per share.
|
Stock-based compensation expense
During the nine months ended September
30, 2014, the Company appointed five new members to its board of advisors and promised to issue 10,000 shares to each advisor upon
completion of their one year term. In addition, the Company promised to issue 50,000 shares to a third party for the services rendered
until Jan 1, 2015.
As of September 30, 2014, the Company has not issued any shares to the board of advisors and the third party.
For the nine months ended September 30, 2014, the Company recorded share-based compensation and additional paid-in capital of $53,909.
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
The following is management’s
discussion and analysis of the consolidated financial condition and results of operations of Powerstorm Capital Corp. (“Powerstorm”,
the “Company”, “we”, and “our”) for the quarter period ended September 30, 2014. This discussion
contains forward-looking statements based upon current expectations that involve risks and uncertainties, such as its plans, objectives,
expectations and intentions. Its actual results and the timing of certain events could differ materially from those anticipated
in these forward-looking statements. The following information should be read in conjunction with the consolidated interim financial
statements for the period ended September 30, 2013 and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q
(this “Report”).
Overview
Powerstorm is a start-up company focused
on developing and delivering innovative, power agnostic, best-in-class, green turnkey power management and energy storage solutions
such as our Modular Energy Storage Solution (“MESS”) to Mobile Network Operators (MNOs) – throughout the emerging
world. Access to affordable, reliable and environmentally friendly power is a key factor in global telecommunication and/or data
center site operations and profitability. Powerstorm’s innovative energy storage solutions are combined with high quality
service which works to reduce operators overall operating expenses and capital expenditures, ensure scalability, and help power
the growth of mobile communication and electricity throughout rural communities worldwide.
Powerstorm Capital Corp. was formed in
2011 to focus exclusively on serving the need for energy storage and management solutions, and delivering power to the rural communities
that need it the most, and to pursuing opportunities previously identified related to growth and technology shifts in the industry.
The Company’s founders and management team have significant experience and relationships in the mobile telecommunications
industry, with geographical focus in Africa, the Middle East, Eastern Europe and Southeast Asia. Having worked in mobile telecom
for the past decade, the founders observed a massive need to renew, upgrade and deploy new hybrid energy storage solutions in these
emerging markets.
Powerstorm key competitive advantage over
its peers is its extensive sourcing knowledge and experience in the global telecommunication market arena. With deep roots in telecom
industries and a strong understanding of the geographical differences within the global industries, Powerstorm an active player
in the evolution of the space.
Powerstorm has been focused primarily on
the planning and development of its business model, and identifying its initial target customer base. While the market is continuing
to evolve, Powerstorm has been identifying its current and potential future market position, target customer base and potential
long-term customer pipeline.
As of September 30, 2014, Powerstorm has
limited operating history for investors to evaluate the potential of our business. As such, the Company currently has limited written
or oral commitments to provide products services to customers. In addition, our sources of cash are not adequate for the next 12
months of operations. If Powerstorm is unable to raise additional cash, we will either have to suspend or cease our expansion plans
entirely.
Powerstorm provides more effective and
efficient green hybrid energy storage solutions such as our MESS, which includes an 8 year battery guarantee, to MNOs in emerging
market nations worldwide. Powerstorm’s MESS combined with high quality service is an immediate and reliable solution that
addresses massive community and telecom energy storage needs helping MNO’s to reduce overall operating expenses and fuel
costs. These two often go hand in hand. By improving the combustion of diesel generators, one is able to reduce the amount and
cost of fuel consumed. Solar-powered solutions for the towers also open the way to further cost reductions.
Growth in Emerging Markets
In emerging markets, telecoms operators
will continue to benefit from the growth of mobile penetration and rising GDP per capita that will increase telecoms service spending
in all four regions. Improved mobile connectivity will also stimulate usage of data services, but we believe that mobile voice
will remain predominant because fixed infrastructure will continue to be poor. We believe Africa is poised to be the next global
success story. The African mobile telecom market is anticipated to grow from a combined value of over US$60 billion in 2013 to
a value in 2020 of almost US$234 billion, with a compound annual growth rate (CAGR) of 21.27%.
Mobile Tower Market
Operators across the world, especially
those in developing markets, face challenges in sustaining margins with declining average return per unit (“ARPU”).
Population distribution patterns in developing markets complicate the situation since access to telecom services varies significantly
between urban and rural areas leaving operators in these countries to balance the cost of operations in congested and saturated
urban setups with the costs of new network rollouts in other areas. In this context, tower sharing offers a compelling proposition.
Operating costs associated with the running
and maintenance of tower infrastructure, like diesel generators, air-conditioning equipment, and security and site rentals, form
a significant portion of operator OPEX. These costs are compounded in rural areas due to limited infrastructure facilities such
as roads and a steady supply of electricity. For instance, in India the operational costs per tower have been estimated by analysts
to increase by up to 20 per cent in remote inaccessible terrain.
For incumbent operators, sharing their
existing tower assets helps in reducing the cost of network operations significantly. For instance, in the Middle East-Africa (“MEA”)
region, it is estimated that tower sharing with a tenancy ratio of two would enable operators to achieve an annual tower OPEX reduction
of 12-15 percent.
In most developing markets, incumbents
continue to expand their networks to reach out to rural areas and improve coverage in dense urban pockets. Tower sharing benefits
operators in achieving cost effective market coverage by helping reduce cost duplication. For example, in MEA, it has been estimated
that an additional 100,000 towers would be required to extend reach in the next five years, a growth of over 50 percent from current
figures. Therefore, it is believed that tower sharing could achieve potential savings of $8bn in that period.
With incremental operating costs being
low, additional tenants on towers lead to very high margins. In developing markets the tenancy ratio per tower ranges between 1.1
and 1.3 compared to 2.2 -3.0 in developed markets such as the US12. Estimates indicate that a typical break-even tenancy ratio
per tower site in developing markets of Asia, Middle East and Africa is 1.5.
Our Strategy
Powerstorm intends to serve the strong, growing demand for telecommunications
infrastructure worldwide and in particular in emerging markets, while helping bring power to the 1.5 billion people living in energy
poverty with virtually no mobile connection to the world.
Due to the continued increase in subscribers for wireless personal
telecommunication services, we expect telecommunication operators and wireless carriers will need to add a significant number of
cell sites to maintain the performance of their networks in the areas they currently cover, and to extend service to new markets.
In addition, we believe that as wireless data services, such as e-mail, Internet access, and video, are deployed on a widespread
basis, these providers will need to augment the cell density of their existing networks throughout the emerging world, and upgrade
the technology used in their networks to accommodate the need for greater coverage and bandwidth, as well as increase efficiency
and reduce operating costs.
Out of five million cellular towers worldwide,
three million are in emerging regions such as Africa and the Middle East. Of these, over one million are tied to unstable grids
and about 640,000 are off-grid. To maintain and grow this network, telecommunication operators must ensure access to energy sources,
and must store, manage and deploy power efficiently and reliably. Navigant Research forecasts that revenue for off-grid base station
power will grow from $1.6 billion in 2012 to more than $10.5 billion in 2020.
Presently telecommunication operators in emerging areas rely
principally on diesel generators as a primary energy source for cellular towers. Not only are these generators costly to operate
and maintain, but also they rely on fossil fuels, thus causing harm to the environment. As a result, the industry is looking to
alternative energy sources, including solar, wind, and hydroelectric, to power mobile telecommunications over the coming decades.
The ultimate goal is a “green base station,” which will likely be powered by a combination of renewable energy and
fuel cell technology. We believe that this technology shift presents a compelling business opportunity.
With significant experience and relationships in the mobile
telecommunications industry, with geographical focus in Africa, the Middle East, Eastern Europe and Southeast Asia, Powerstorm’s
founders are strategically positioned to capitalize on this technology shift and compelling opportunity. Their legacy in providing
replacement equipment to telecom operators has conferred an understanding of the needs and technology acquisition behavior of these
operators, and has given us a recognizable brand in this market and positioned us well to capitalize on the present energy storage
opportunity occurring in telecom.
As part of our planning activities, Powerstorm has evaluated
solutions to reduce network-operating expenditures. We have met and discussed integration of hybrid power with leading telecommunication
operators, suppliers and integrators. Powerstorm identified general infrastructure deficiencies and power management gaps as opportunities
to propose more compelling hybrid power solutions to meet global operators demand to reduce network costs and increase efficiencies
by deploying hybrid technologies.
Powerstorm offers proprietary branded solutions
that integrate equipment manufactured by existing suppliers and continues to develop its MESS storage solution for MNO and Home
storage solutions for community power. Powerstorm intends to advance its research and development efforts in the coming years,
to continue to develop proprietary technology solutions that offer advantages such as increased duty cycle, reduced installation
cost, superior energy efficiency, and value-added features. Moreover, Powerstorm plans to develop these solutions through internal
research and development, as well as strategic initiatives such as mergers and acquisitions, licenses, joint ventures, and joint
development arrangements, among other activities.
Since the end of the GSMA show in February
of 2014, Powerstorm has accumulated a potential deal flow pipeline, but has not closed any such offering and is fiercely negotiating
with the operators. The Company cannot guarantee and positive outcome or give a timeline of deal closure.
Results of Operations
| |
Three Months Ended September 30, 2014 | | |
Three Months Ended September 30, 2013 | | |
Nine Months Ended September 30, 2014 | | |
Nine Months Ended September 30, 2014 | |
Revenues | |
$ | 93,258 | | |
$ | 15,160 | | |
$ | 119,563 | | |
$ | 21,760 | |
Cost of revenues | |
| 65,756 | | |
| - | | |
| 65,756 | | |
| - | |
Total operating expenses | |
| (107,843 | ) | |
| (39,776 | ) | |
| (254,321 | ) | |
| (102,703 | ) |
Gain on settlement of accounts payable | |
| 384 | | |
| - | | |
| 14,409 | | |
| - | |
Other income
| |
| - | | |
| - | | |
| - | | |
| 270 | |
Net loss | |
$ | (79,957 | ) | |
$ | (24,616 | ) | |
$ | (186,105 | ) | |
$ | (80,673 | ) |
For the three months ended September 30, 2014 and 2013
Revenues
We generated revenues from consulting services
and products sold of $93,258 during the three months ended September 30, 2014 and $15,160 revenues during the three months ended
September 30, 2013, respectively. The increase of $78,098 was primarily because we provided more consulting services and sold
more products.
Cost of revenues
We had cost of revenues of $65,756 and $0 for the three months
ended September 30, 2014 and 2013, respectively. The increase was primary due to the increase in sales of products.
Operating Expenses
We incurred total operating expenses of
$107,843 and $39,776 for the three months ended September 30, 2014 and 2013, respectively. The increase of $68,067 was primarily
due to the increase in consulting fees and expenses in connection with business development.
Net Loss
During the three months ended September
30, 2014 and 2013, we incurred a net loss of $79,957 and $24,616, respectively. The increase of $55,341 was primarily due to the
increase in consulting fees and expenses related to business development.
From the nine months ended September
30, 2014 and 2013
Revenues
We generated revenues from consulting services
of $119,563 and $21,760 during the nine months ended September 30, 2014 and 2013, respectively. The increase of $97,803 was
due to the increase in sales of products.
Cost of revenues
We had cost of revenues of $65,756 and $0 for the nine months
ended September 30, 2014 and 2013, respectively. The increase was primary due to the increase in sales of products.
Operating Expenses
We incurred total operating expenses of
$254,321 and $102,703 for the nine months ended September 30, 2014 and 2013, respectively. The increase of $151,618 was primarily
due to the increase in consulting fees and other expenses related to business development.
Net Loss
During the nine months ended September
30, 2014 and 2013, we incurred a net loss of $186,105 and $80,673, respectively. The increase of $105,432 was primarily due to
the increase in consulting fees and other operating expenses related to business development.
Liquidity and Capital Resources
Our financial condition as of September
30, 2014 and December 31, 2013 is summarized as follows:
Working Capital:
| |
September 30, 2014 | | |
December 31, 2013 | |
Current assets | |
$ | 16,830 | | |
$ | 8,945 | |
Current liabilities | |
| (54,257 | ) | |
| (76,657 | ) |
Working capital deficit | |
$ | (37,427 | ) | |
$ | (67,712 | ) |
Cash Flows:
| |
Nine Months Ended September 30, | |
| |
2014 | | |
2013 | |
Cash used in operating activities | |
$ | (152,441 | ) | |
$ | (72,185 | ) |
Cash used in investing activities | |
| (1,784 | ) | |
| (2,050 | ) |
Cash provided by financing activities | |
| 157,011 | | |
| 71,858 | |
Net increase (decrease) in cash | |
$ | 2,786 | | |
$ | (2,377 | ) |
We have incurred an accumulated loss of
$417,554 since inception and we had a working capital deficit of $37,427 as of September 30, 2014, which indicate substantial doubt
as to our ability to continue as a going concern.
From inception to date, our founders have
made contributions to fund our operations. We will be required to raise additional capital over the next twelve months to meet our
current administrative expenses.
We plan to secure financing through the
issuance of equity or debt. If we are not able to generate sufficient funds from any private placement, public offerings, or bank
financings, we will need to raise additional working capital through other sources.
Our resources were insufficient to effectuate
our inaugural business plan dated October 10, 2011, that extended through the period ending September 30, 2014. We had expected
to incur a minimum of $150,000 in operating expenses during the subsequent 12 months of operations.
We had previously indicated that we would
have to raise the funds to pay for these expenses. We may have to borrow money from founders or shareholders, issue debt or equity,
or enter into a strategic arrangement with a third party. There is no assurance that we will secure additional capital. There currently
are no agreements, arrangements, or understandings that would enable us to obtain funds through bank loans, lines of credit, or
any other source. If we are unable to raise funds for acquisitions it will have a severe negative impact on our ability to execute
our business plans.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Critical Accounting Policies and Estimates
The preparation of financial statements
in conformity with generally accepted accounting principles requires management to select appropriate accounting policies and to
make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses.
Intangible Assets
The Company’s intangible assets consist
of trademarks with indefinite life. The Company capitalizes the filing and legal fees related to the trademark registrations, which
totaled $7,612 and $5,828 as of September 30, 2014 and December 31, 2013, respectively. The Company reviews its indefinite-lived
intangible assets for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable.
The Company assesses recoverability by reference to future cash flows from the products underlying these intangible assets. If
these estimates change in the future, the Company may be required to record impairment charges for these assets. As of September
30, 2014, no impairment was recorded.
Revenue Recognition
The Company’s revenue generated during the development
stage consisted of revenues from consulting and advisory services. Revenue is recognized at the time when a price is fixed and
determinable, persuasive evidence of an arrangement exists, the service has been provided, and collectability is assured.
Stock-Based Compensation
The Company expenses the cost of employee
services received in exchange for an award of equity instruments based on the grant date fair value of such instruments over the
service period.
Equity instruments issued to parties other
than employees for acquiring goods or services are recorded at either the fair value of the consideration received or the fair
value of the instruments issued in exchange for such services, whichever is more reliably measurable.
Recent Accounting Pronouncements
In June 2014, the FASB issued ASU 2014-10, Development Stage
Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. ASU 2014-10 eliminates the distinction of a development
stage entity and certain related disclosure requirements, including the elimination of inception-to-date information on the statements
of operations, cash flows and stockholders’ equity. The amendments in ASU 2014-10 will be effective prospectively for annual
reporting periods beginning after December 15, 2014, and interim periods within those annual periods, however early adoption is
permitted. The Company evaluated and adopted ASU 2014-10 for the reporting period ended June 30, 2014.
Item 3. Quantitative and Qualitative Disclosures About
Market Risk.
We are a smaller
reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
Our disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Exchange Act of 1934) are designed to ensure that information required to be disclosed in the
reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified
in the rules and forms of the SEC. Our disclosure controls and procedures are also designed to ensure that information required
to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management,
including our principal executive and principal financial officer, to allow timely decisions regarding required disclosure. Our
chief executive officer and chief financial officer have reviewed the effectiveness of our disclosure controls and procedures as
of September 30, 2014 and, based on his evaluation, and has concluded that the disclosure controls and procedures were not effective
due to the following identified material weaknesses:
| 1) | Insufficient segregation of duties. We did not
sufficiently segregate duties over incompatible functions at our corporate headquarters. |
| 2) | Lack of formal policies and procedures necessary to adequately review significant accounting transactions. Although
the financial statements and footnotes are reviewed by our management, we do not have a formal policy to review significant accounting
transactions and the accounting treatment of such transactions. |
| 3) | Audit
Committee and Financial Expert. The Company does not have
a formal audit committee with a financial expert, and thus the Company lacks the board oversight role within the financial reporting
process. |
Changes in Internal Control over Financial Reporting
There were no
changes in our internal control over financial reporting during the nine months ended September 30, 2014 that materially affected,
or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II. - OTHER INFORMATION
Item 1. Legal
Proceedings
We are currently
not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations.
There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened
against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers
or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
Item 1A. Risk
Factors
We are a smaller
reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
Item 2. Unregistered
Sales of Equity Securities and Use of Proceeds
On March 30, 2014,
736,520 shares of common stock to a related party entity for advances and payments made on behalf of the Company of $73,652. These
shares were valued at their fair value of $0.01 per share.
On September 8,
2014, 1,500 shares of common stock were issued to a third party to settle accounts payable. These shares were valued at their fair
value of $1 per share.
On September 30,
2014, 63,083 shares of common stock to a related party for advances and payments made on behalf of the Company. These shares were
valued at their fair value of $1 per share.
The above issuances of shares are exempt
from registration, pursuant to Section 4(2) of the Securities Act. These securities qualified for exemption under Section 4(2)
of the Securities Act since the issuance securities by us did not involve a public offering. The offering was not a “public
offering” as defined in Section 4(2) due to the insubstantial number of persons involved in the deal, size of the offering,
manner of the offering and number of securities offered. We did not undertake an offering in which we sold a high number of securities
to a high number of investors. In addition, these stockholders had the necessary investment intent as required by Section 4(2)
since they agreed to and received share certificates bearing a legend stating that such securities are restricted pursuant to Rule
144 of the Securities Act. This restriction ensures that these securities would not be immediately redistributed into the market
and therefore not be part of a “public offering.” Based on an analysis of the above factors, we have met the requirements
to qualify for exemption under Section 4(2) of the Securities Act for this transaction.
Item 3. Defaults
upon Senior Securities
None.
Item 4. Mine
Safety Disclosures
Not applicable.
Item 5. Other
information
None.
Item 6. Exhibits
Exhibits |
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31.1 |
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Certification of Principal Executive Officer and Principal Financial Officer of the Registrant 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 of the Registrant pursuant to 18U.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, Exhibit 32.1 is being furnished and not filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
POWERSTORM CAPITAL CORP. |
|
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|
|
|
Date: November 14, 2014
|
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|
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|
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By: |
Michel Freni |
|
|
|
Michel Freni |
|
|
|
Chief Executive Officer (Duly Authorized, Principal Executive Officer and Principal Financial Officer) |
|
Exhibit 31.1
CERTIFICATION
OF PRINCIPAL EXECUTIVE OFFICER
AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO EXCHANGE ACT RULE 13a-14(a)/15d-14(a)
AS ADOPTED PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Michel Freni that:
1. |
I have reviewed this Quarterly Report on Form 10-Q of Powerstorm Capital Corp.; |
|
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have: |
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(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principals; |
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(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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(d) |
Disclosed in this report any change in the registrant’s internal control over financing reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
|
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5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
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(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
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(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 14, 2014 |
|
/s/ Michel Freni |
Michel Freni
Chief Executive Officer |
(Principal Executive Officer and Principal Financial
Officer) |
Exhibit 32.1
CERTIFICATION OF
PRINCIPAL EXECUTIVE OFFICER
AND PRNCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT of 2002
In connection with the Quarterly Report
of Powerstorm Capital Corp. (the “Company”) on Form 10-Q for the period ended September 30, 2014 as filed with the
Securities and Exchange Commission on the date hereof (the “Quarterly Report”), Michel Freni, Chief Executive Officer
of the Company, certifies , pursuant to 18 U.S.C. section 1350 of the Sarbanes-Oxley Act of 2002, that:
1. |
The Quarterly Report, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
2. |
The information contained in such Quarterly Report, fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: November 14, 2014 |
By: /s/ Michel Freni |
Michel Freni
Chief Executive Officer |
(Principal Executive Officer and Principal Financial
Officer) |
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