PwrCor, Inc. - Annual Report: 2019 (Form 10-K)

Except for the historical information contained herein, some of the statements in this Report contain forward-looking statements that involve risks and uncertainties. These statements are found in the sections entitled “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operation,” and “Risk Factors.” They include statements concerning: our business strategy; expectations of market and customer response; liquidity and capital expenditures; future sources of revenues; expansion of our proposed product line; and trends in industry activity generally. In some cases, you can identify forward-looking statements by words such as “may,” “will,” “should,” “expect,” “plan,” “could,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” “goal,” or “continue” or similar terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including, but not limited to, the risks outlined under “Risk Factors,” that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. For example, assumptions that could cause actual results to vary materially from future results include, but are not limited to: our ability to successfully develop and market our products to customers; our ability to generate customer demand for our products in our target markets; the development of our target markets and market opportunities; our ability to manufacture suitable products at competitive cost; market pricing for our products and for competing products; the extent of increasing competition; technological developments in our target markets and the development of alternate, competing technologies in them; and sales of shares by existing shareholders. Although we believe that the expectations reflected in the forward looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Unless we are required to do so under federal securities laws or other applicable laws, we do not intend to update or revise any forward-looking statements.

iv

We are a Delaware corporation whose principal office is located at 60 E. 42nd Street, Suite 4600, New York, NY 10165. Unless the context otherwise requires, the terms “we”, “us”, “our”, or “the Company” as used herein refer to PwrCor, Inc. and our subsidiaries, Cornerstone Program Advisors LLC (“Cornerstone”) and Sustainable Energy Industries, Inc. (“Sustainable”).  Until March 3, 2017, the Company was named Receivable Acquisition & Management Corporation, and did business as Cornerstone Sustainable Energy.

Description of the Business

The Company specializes in delivering energy infrastructure and alternative energy solutions to a range of commercial customers and to institutions such as hospitals and universities. The Company has expanded and transformed its business to take advantage of opportunities in the alternative energy and clean energy arenas.

The Company has two major business components. The first major business component is the management of infrastructure projects for commercial and institutional customers. These projects typically involve some combination of energy infrastructure components, including electrical power generation, steam production, or chilled water production, as well as the infrastructure to distribute these services.  Generally, the Company acts as the representative of the customer in overseeing and managing an infrastructure project, or can take the role of project developer under an agreement with the customer. The Company has competitors, some of which are very large and well-recognized. However, in the non-profit hospital and university market in its geographical scope of operation, has developed a reputation for excellence and an established market position. The Company operates in this first business component under its subsidiary, Cornerstone, a Delaware limited liability company, which it acquired in a merger on May 15, 2013 (the “Merger”).

The second major business component is the commercialization of its own proprietary engine technology which converts low-grade heat to mechanical energy. The Company is actively marketing the technology particularly for power generation, and installed the first of its engines approximately a year ago. The technology used is non-polluting and entirely “green.” Based on its knowledge of the industry, management believes that the Company’s technology is arguably superior to all other lower-temperature engine technologies, such as those utilizing the organic Rankine physical cycle, and operates effectively at lower temperature ranges and heat flow volume than any others in the market. The engines in this configuration promise to deliver substantial cost savings in most client applications, and are not unusually costly as compared to competing technologies.  Although the engine is readily built to order of common parts and components, continued material investments are expected to be required by the Company.  The Company has generated initial revenues through this business component. The Company operates in this second major business component under its subsidiary, Sustainable, a New York corporation, which it acquired in the Merger.

The Company’s primary markets are (i) large domestic non-profit institutions and organizations, particularly where electricity rates are high, and currently localized in the Northeast; (ii) the waste-heat-to-energy and geothermal marketplace, primarily domestic, typically power generation; and (iii) the independent power producer market, also primarily domestic.  All of these markets are large and multifaceted with no dominant customers.

Cornerstone is an energy infrastructure project management company focused on healthcare and higher learning institutions.  Sustainable is focused on the alternative energy business, with an emphasis on its proprietary “green” engine technology.

Prior to 2013, the Company was in the business of acquiring portfolios of performing, sub-performing and non-performing consumer and commercial receivables.  The Company is no longer in this business; however, it has had minimal revenues from collections on a remaining portfolio of non-performing consumer and commercial receivables.

1

Strategy

The Company is pursuing three growth initiatives:

(1)  Acquiring and applying “cleantech solutions” - technology, equipment and methods to solve client needs and provide a competitive advantage, such as cleantech engine technology.  In the first such acquisition, the Company merged with Sustainable, the holder of manufacturing and sales rights for an engine technology that has since been abandoned by the Company in favor of a superior technology for which it has committed development resources, and for which it has acquired exclusive worldwide rights under an agreement described in the section beginning below under “Technology Market, License and Agreements”.

(2)  Making strategic acquisitions and entering into strategic joint ventures in and around its core areas of expertise. The first of these was in cleantech, described directly above.  Other potential acquisition or merger targets are continually under review. They must meet rigorous financial and growth criteria, offer a strategic fit, and expand the market or competitive position of the Company. Targets include those in the data center, clean water, bio incineration, waste heat recovery, and clean engine technologies.

(3)  Establishing and leveraging alliances, a number of which are established or in some level of development. We also intend to source business by helping companies offer a uniquely competitive financing and development platform to existing and prospective non-profit clients such as universities, hospitals and municipalities.

For the most part, power technologies are well known and widely available. The Company is focused on selecting the right technology or technologies for each project, and maintaining a constant focus on both cost effectiveness for the client and financial returns to the Company.  To enhance its competitive position, however, the Company will focus on obtaining exclusive market positions and enhancing its technological strengths.

Industry Overview

The general marketplace for the Company’s offerings is composed of large consumers and producers of power which have an interest in (a) reducing energy consumption, (b) reducing the cost of energy, (c) improving the environmental profile of their energy production, or (d) some combination of these. The Company is engaged in this overall energy infrastructure industry at two separate points. These sub-industries, or markets, are relatively distinct, albeit related, so each will be described separately.

One market is composed of consumers of large amounts of energy, including large hospitals, colleges and universities. These institutions often operate large, and frequently aging, centralized utility plant and infrastructure installations which provide heat (typically steam), cooling (chilled water), and power to a sizeable campus of buildings. Energy infrastructure upgrades and improvements are often required to provide for expansion of campus facilities, replace aging equipment, and reduce the cost and/or the amount of their energy consumption. The Company, acting as the client’s representative, helps design and develop upgrades to or replacements of such facilities, and then oversees the implementation projects for these institutions. The Company may act as project developer or co-developer, and offers to arrange or assist in the project financing.  Projects are typically multi-year commitments and often complex.

The other market is the waste-heat-to-energy industry.  The industry involves technologies for converting wasted heat or geothermal heat to power production. One example is the enormous and largely unexploited low-grade geothermal market. Vast geothermal resources are currently untapped because earlier technologies were incapable of converting low-grade heat and low volume heat flows into power. The Company has a proprietary technology that can be utilized to convert this enormous natural resource into baseload power.

2

Technology Market, License and Agreements

The waste-heat-to-energy market, typical of the power production industry, relies heavily on experience, and the Company’s technology is relatively new and has little track record.  However, the scale of the available resource is so sizeable that there is a great deal of interest in developing it. The market potential has not been accurately measured because no technology existed to develop it.  However, it is estimated that the energy available from lower temperature geothermal resources is a multiple of the energy tapped at higher temperature levels.  The geothermal market in the U.S. alone has approximately 3,600MW of installed capacity.  Almost all the added capacity increase in the past two decades has utilized lower temperature resources, yet far from as low as those at which the Company’s technology can operate. Currently, an additional 1,200MW is in some stage of development, representing an anticipated investment of some $4 to $5 billion. Although the Company’s technology can be configured to operate in the entire range of temperatures, its prime market is in these untapped lower temperature resources.  This is in addition to a related market opportunity for adding this technology to capture waste heat from existing higher-temperature geothermal plants in a “bottoming cycle”, enabling them to increase output from an already-tapped resource.

The Company's technology is also well suited to the waste heat recovery market as related to industries that create wasted heat as a result of their manufacturing or production processes. This market is well defined and, according to a report published by the U.S. Department of Energy, “The United States industrial sector accounts for approximately one-third of all energy used in the United States, consuming approximately 32 quadrillion (million billion) BTUs of energy annually and emitting about 1,680 million metric tons of carbon dioxide associated with this energy use.” The opportunity in the waste heat recovery market is substantial. The report continues, “A valuable alternative approach to improving overall energy efficiency is to capture and reuse the lost or ‘waste heat’ that is intrinsic to all industrial manufacturing. During these manufacturing processes, as much as 20% to 50% of the energy consumed is ultimately lost via waste heat contained in streams of hot exhaust gases and liquids, as well as through heat conduction, convection, and radiation from hot equipment surfaces and from heated product streams.  In some cases, such as industrial furnaces, waste heat recovery can improve energy efficiency by 10% to as much as 50%.”

The advantage of recapturing and utilizing waste heat is that it typically replaces purchased electric power, much of which does and will continue to require burning fossil fuels, or directly replaces fuels which must be purchased and combusted. Thus it actually can directly reduce emissions and eliminate transmission losses. Projections of market potential are truly enormous, with unrecovered waste heat in industrial processes estimated at half a quintillion (billion billion) BTUs.

In the third quarter of 2017, when patents had expired on technology the Company had licensed from a third party, the Company terminated the agreements it had with that party, a business which had not successfully commercialized its technology and which no longer had any active business.

In the fourth quarter of 2017, the Company finalized 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 officers and directors of the Company, who also serve in management positions with TTH.  TTH is the owner of certain patent applications and 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 for the patent applications and inventions licensed thereunder was paid for by TTH.  TTH, rather than the Company, was 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 license to use the Technical Information to make, use or sell any products (the “Licensed Products”) and/or services which would be covered by any Licensed Patent.  As an entity organized to develop, acquire, and/or improve thermal energy technologies, TTH owns or controls various intellectual property it is engaged in offering for licensing purposes.  Although the Patent License is non-exclusive, TTH may not license these specific Licensed Patents and Technical Information to any competitive entity, or to any other entity without the prior written consent of the Company.

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The Company agreed to pay TTH a royalty equal to five (5%) percent 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 Company has branded its engine technology “PwrCor™”.

On December 27, 2016, the Company entered into an agreement with Modoc County, California, to supply its PwrCor™ engine as part of a demonstration project that converts ultra-low-grade heat into electricity.  The heat is being obtained from a geothermal hot spring which comes to the surface at temperatures of approximately 190° F. Funding was arranged by Modoc County via a grant from the California Energy Commission with the Company entitled to revenues of up to $123,624 while being responsible for expenses of up to $54,000. The project manager was Modoc County.  In early 2018, the PwrCor engine was delivered, installed, demonstrated to produce electricity as agreed, and accepted by the client.  Subsequently, certain infrastructure modifications required to be made by other parties as specified for the continued operation of the engine were not completed, so the unit is standing by but not, to the Company’s knowledge, currently operating.

Employees

As of December 31, 2019, the Company had four consultants as officers under consulting agreements, with Thomas Telegades, the CEO and interim CFO; Peter Fazio, the COO; Wallace Baker, the Chief Administrative Officer and Corporate Secretary; and James Valentino, the non-executive Chairman; and no part-time employees. See Item 11 “Executive Compensation” below. Carefully selected contractors are used for managing infrastructure projects, matched to the needs of these clients. Their staffing levels vary depending on the number and size of infrastructure projects underway. The Company prefers to outsource non-core, non-critical activities wherever possible, including manufacturing activities.

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

None.

The Company maintains its headquarters office at 60 E. 42nd Street, Suite 4600, New York, NY 10165.  At year-end 2019, the Company was leasing facilities for executive and administrative purposes in New York City and nearby suburbs on an as-needed basis for approximately $450 a month.  No -lease exceeds one year in duration.

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.

None.

4

The Company’s common stock, par value $0.001 per share, trades on the OTC Markets under the symbol “PWCO”.  The Company changed its symbol from “CSEI” to “PWCO” effective March 29, 2017 as a result of the Company’s name change. The liquidity of our shares on the OTCQB is limited, and prices quoted may not be a reliable indication of the value of our common stock. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

Holders

As of April 10, 2020, there were 255 holders of record of our common stock. The number of record holders was determined from the records of our transfer agent and may not include beneficial owners of common stock whose shares are held in the names of various security brokers, dealers, and registered clearing agencies.

Dividends

The Company has never declared or paid any cash dividends on its common stock, and does not anticipate paying any cash dividends to stockholders in the foreseeable future. In addition, any future determination to pay cash dividends will be at the discretion of the Board of Directors and will be dependent upon the financial condition, results of operations, capital requirements, and such other factors as the Board of Directors deem relevant.

Equity Compensation Plans

The following table contains information about the Company’s common stock that may be issued under its equity compensation plans as of December 31, 2019. See Item 11 - “Executive Compensation-Benefit Plans” for a description of these stock option and incentive plans.

(1) Our 2013 Equity Incentive Award Plan was adopted by our stockholders on or about July 12, 2013.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers.

There were no purchases made during the fourth quarter of the issuer’s fiscal year.

Not required.

5

The following 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 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 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 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 were 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 a proprietary 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. The corporate name change in Delaware to “PwrCor, Inc.” was effective on March 3, 2017.

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. 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 and our consideration of going concern. These accounting policies are described at relevant sections in this discussion and analysis and in the financial statements included in this annual report.

Results of Operations

Year ended December 31, 2019 as compared with December 31, 2018.

Revenue

During the year ended December 31, 2019, the Company had a net loss of ($449,421) on revenues of $757,639, versus a net loss of ($328,280) on revenues of $1,109,642 in the year ended December 31, 2018. The increased loss was primarily due to increased research and development expenditures related to a newer technology engine design.

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The margin of project management revenue over the corresponding cost of subcontracted consultants for such projects improved from 2018 to 2019. The gross profit for that activity for the year ended December 31, 2019 was approximately 20% of project management revenues, versus approximately 14% in 2018, primarily due to a reduction in contractor resources and improved cost management.

The revenue decrease for the year ended December 31, 2019, as compared to the prior year was a consequence of decreased billings for the Company’s largest customer not fully offset by other business.

Operating Expenses

Total operating expenses for the year ended December 31, 2019 were $1,207,060, versus $1,437,922 during the year ended December 31, 2018. The 16% decrease in operating expenses in 2019 as compared with 2018 resulted from primarily the decline in expenditures for contractor consulting expenses as billable hours decreased.

General and Administrative expenses for the year ended December 31, 2019 were $97,384, versus $168,279, during the year ended 2018, a decrease of 42%, as rent, utilities and related expenses declined.  Legal, accounting, and other professional fees decreased to $135,932 in 2019 from $137,301 in 2018, a negligible change.

Technology research, development and fulfillment expenses increased from $253,107 in 2018 to $376,432 in 2019, an increase of 49%, as technology development expenditures were incurred related to a new engine design.

Consulting Expenses

The Company outsources a significant portion of its project management, oversight and advisory activities to a carefully selected group of small firms and subcontractors with expertise specific to the projects underway.  As of the year ended December 31, 2019, the Company was using five 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 December 31, 2019, the Company had a working capital deficit of ($483,815) versus a working capital deficit of ($15,182) as of year ended December 31, 2018. This change was due to the increased expenditures related to technology development and the lower project management revenue.

As of December 31, 2019, the Company had net cash of $126,632 as compared with $345,406 at December 31, 2018. For the year ended December 31, 2019, the change in net cash (used) by operating activities was ($178,274) as compared with ($99,694) at December 31, 2018. The decrease in net cash used by operating activities was primarily due to the increase in net loss from ($328,280) to ($449,421).  In 2019, $40,500 was used by investing activities in a final payment to the Licensor on the 2017 License Agreement.

At the end of 2019, there was no net cash provided by financing activities versus $335,366 during 2018, as the Company did not have an investor financing in 2019.

The recent worldwide emergence of a new and in some cases fatal coronavirus has caused major disruptions to daily life domestically and around the world.  Most important to the Company, these developments are causing significant changes in a wide array of business activities and disruption in capital markets.  Regarding the first, the Company is currently engaged in projects at hospitals primarily in the New York City, and there can be no assurance that these hospitals will continue the Company’s activity uninterrupted while dealing with potentially major demands on their treatment facilities, or whether the hospital environments will be sufficiently safe for the Company’s consultants to continue to work on-site.  Regarding the second, the dramatic swings in financial markets and the related uncertainties are likely to challenge efforts to obtain additional capital during this pandemic and, possibly, in its near term aftermath.

7

Given these major uncertainties, the Company cannot reliably project its results from its project management operations for at least the next six months, so it is uncertain whether any such revenue, together with existing cash and cash infusions by major stockholders, will be sufficient to finance its operations for the next twelve months.

However, the Company has engaged the services of an investment bank and is actively seeking additional capital to cover any working capital needs and to fund growth initiatives in its identified markets. 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 initiative is also in the process of actively introducing the Company’s engine technology to business in a set of identified key markets to accelerate the commercialization of the Company’s latest generation product.  These efforts also have no assurance, particularly in an environment where businesses are being disrupted, of achieving their objectives at sufficient scale to achieve desirable levels of cash flow. The continued operations of the Company are dependent on its ability to collect its receivables and increase revenues.

Income Taxes

The Company has not incurred a material amount of taxes to New Jersey, New York State and New York City, and does not expect any material income tax liability for the period ended December 31, 2019.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

Not required.

8

To the Board of Directors and Stockholders of PwrCor, Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of PwrCor, Inc. (the “Company”) as of December 31, 2019 and 2018, and the related statements of operations, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2019, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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

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

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

Emphasis of Matter

As discussed in note 4 to the financial statements, two customers accounted for substantially all of the Company’s revenue for the years ended December 31, 2019 and 2018. Our opinion is not modified with respect to this matter.

Explanatory Paragraph - Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in note 2 to the financial statements, the Company has a working capital deficit and continues to incur net losses from operations. To meet its obligations and to sustain its operations the Company will need to seek funds through capital raising or financing sources as well from generating increased revenues from its products and services. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s evaluation of the events and conditions and management’s plans regarding those matters are also described in note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter.

/s/ PKF O'Connor Davies, LLP

We have served as the Company’s auditor since 2012.

New York, New York

April 13, 2020

F-1

PwrCor, Inc.

See notes to financial statements

F-2

PwrCor, Inc.

See notes to financial statements

F-3

PwrCor, Inc.

For the Years Ended December 31, 2018 and December 31, 2019

See notes to financial statements

F-4

PwrCor, Inc.

See notes to financial statements

F-5

PwrCor, Inc.

December 31, 2019

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 formed July 26, 2010, 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 in March 2017.

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 valuation of shares issued for services, recognition of income for work completed and unbilled to customers, the allowance for doubtful accounts, and the valuation of License Agreements. Actual results could differ from those estimates.

In view of the disruptions to the economy resulting from the recently emerged worldwide virus pandemic, the Company’s ongoing business activities may be curtailed for a period.  In consequence, there can be no assurance that funds generated from operations, together with existing cash and cash infusions by stockholders, will be sufficient to finance the Company’s operations for the next twelve months.  The Company is actively seeking additional capital to cover its working capital needs and to fund growth initiatives in its identified markets, and has engaged the services of an investment bank to assist in this and in actively introducing the Company’s engine technology to business in a set of identified key markets to accelerate the commercialization of the Company’s latest generation product.  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 receive revenues.

Cash

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

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.

F-6

PwrCor, Inc.

Notes to Financial Statements

December 31, 2019

2. Significant Accounting Policies (continued)

Accounts Receivable (continued)

At December 31, 2019, an allowance for doubtful accounts was made totaling $52,105 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. In 2018, this allowance was $56,204.

Revenue Recognition

Revenues are recognized when the Company satisfies a performance obligation by transferring goods or services promised in a contract to a customer, in an amount that reflects the consideration to be received in exchange for those goods or services.

Revenue from contract customers is recognized by: (1) identifying the contract with the customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to separate performance obligations; and (5) recognizing revenues when (or as) each performance obligation is satisfied.

The majority of the Company’s revenue is currently from products and services transferred to customers at a point in time. It was 100.0% and approximately 95.5% of revenue for the years ended December 31, 2019 and 2018, respectively. These revenues are generated by providing consulting services to customers under a contractual arrangement. They are (a) time and expense arrangements, under which the customer pays the Company, typically as billed in a monthly invoice, based on hours incurred and contracted rates; (b) performed activities arrangements, under which the customer pays the Company for particular tasks performed (typically tasks which can be valued, but for which time spent is highly variable or unpredictable), based on contracted rates; or (c) reimbursements by the customer for certain identified expenses, such as travel, out-of-pocket, or advances on behalf of the customer.

The Company recognizes revenue for (a) and (b) at the point in time in which the customer is provided the service and is invoiced for that period.  Amounts under (c) are generally included in revenues in the period invoiced, and an equivalent amount of reimbursable expenses is included in costs of services in the period in which the expense is incurred.

The Company’s performance obligations under its engine business are generally satisfied as “over time”. There was no revenue from products or services transferred to a customer over time in 2019, but accounted for approximately 4.5% of revenue for the year ended December 31, 2018, respectively. Revenue under this type of contract is generally recognized based upon the proportion of actual costs incurred to estimated total project costs, which is considered most indicative of the Company’s performance to date under the terms of the contract.

Progress payments, which when involved are invoiced, are typically characteristic of such contracts, but do not affect revenue recognition.  In this regard and in other instances, 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.

The Company had unbilled receivables (contract assets) of $63,410 and $146,000 at December 31, 2019 and 2018, respectively. There were no costs in excess of billings and billings in excess of costs associated with “over time” contracts at December 31, 2019 or 2018. There was no revenue recognized during the year ended December 31, 2019 and 2018 that was included in contract liabilities at the beginning of the period.

In much of the Company’s business, customers request changes in contract specifications or in the scope or amount of services to be delivered.  These are typically covered under the contract with the customer.

F-7

PwrCor, Inc.

Notes to Financial Statements

December 31, 2019

2. Significant Accounting Policies (continued)

Fixed Assets

Fixed assets are being depreciated on the straight line basis over a period of five years. Accumulated depreciation at December 31, 2019 and 2018 was $27,879 and $20,091, respectively.

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 (2016 - 2018).

Basic and Diluted Net (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 (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 (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.

For 2019 and 2018, basic (loss) and diluted (loss) per share were the same. The warrants outstanding at December 31, 2019 are antidilutive.

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2016-02: “Leases” (“ASU 2016-02”). ASU 2016-02 creates new accounting and reporting guidelines for leasing arrangements. The new standard will require organizations that lease assets to recognize assets and liabilities on the balance sheet related to the rights and obligations created by those leases, regardless of whether they are classified as finance or operating leases. Consistent with current guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease primarily will depend on its classification as a finance or operating lease. The standard will also require new disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The new standard is effective for the Company’s 2019 calendar year, with early application permitted. The Company has evaluated the impact of ASU 2016-02 on its consolidated financial statements, and it did not have a material impact as the Company’s lease obligation is less than one year.

On June 20, 2018, FASB issued Accounting Standards Update No. 2018-07, “Compensation - Stock Compensation” (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). ASU 2018-07 is intended to reduce cost and complexity and to improve financial reporting for share-based payments issued to non-employees. This ASU expands the scope of ASC Topic 718, “Compensation - Stock Compensation”, which currently only includes share-based payments issued to employees, to also include share-based payments issued to non-employees for goods and services. Consequently, the accounting for share-based payments to non-employees and employees will be substantially aligned. ASU 2018-07 supersedes ASC Subtopic 505-50, “Equity - Equity-Based Payments to Non-Employees”. The amendments in this ASU are effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Company has evaluated the impact of this standard and it did not have a material impact on the Company’s financial statements.

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.

F-8

PwrCor, Inc.

Notes to Financial Statements

December 31, 2019

2. Significant Accounting Policies (continued)

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.

3. Related Party Transactions

Consulting Fees

Certain stockholders of the Company and entities affiliated with management that perform services for customers were compensated at various rates. Total consulting expenses incurred by these entities amounted to $386,735 and $598,917 for the years ended December 31, 2019 and 2018, respectively. Amounts payable to these entities amounted to $102,700 and $210,606 at December 31, 2019 and 2018, respectively.

Prepaid Expenses

There were no amounts advanced to related entities in 2019 or 2018.

Technology Development Fees

Under a technology development agreement the Company has with TTH, the Company reimburses TTH for managing the work by a contracted third party on various technology developments as agreed to on a case-by-case basis. The amounts payable under this arrangement amounted to $243,112 at December 31, 2019 and 2018. The Company obtains full rights to any intellectual property it develops or acquires through such payments.

Intangible Asset Valuation

The Company performs a qualitative assessment of its intangible assets to determine whether the existence of events and circumstances leads to a determination that it is more likely than not that the fair value of its one such asset is less than its carrying amount. As a result of management’s qualitative assessment, the Company determined that the carrying value of its license agreement warranted no loss or impairment as of December 31, 2019.

License Agreements

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 officers and 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 for the patent applications and inventions licensed thereunder 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.

F-9

PwrCor, Inc.

Notes to Financial Statements

December 31, 2019

2. Related Party Transactions (continued)

The Company will pay TTH a royalty equal to five (5%) percent 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, which has been paid.  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 December 31, 2019 and 2018 balance sheet presents the carrying value of the license fee at $135,000, net of $27,000 and $13,500, respectively, in accumulated amortization. The cost of the license agreement is being amortized over ten years for an estimated $13,500 annually.

The Company periodically performs an analysis of its contractual rights and arrangements and establishes asset value based on that analysis.

4. 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 approximately 92.1% and 5.2% of the Company’s total revenue during the year ended December 31, 2019, and two customers accounted for 91.9% and 4.5% during the year ended December 31, 2018, respectively.

Two customers accounted for approximately 73.9% and 14.4% of total net accounts receivable at December 31, 2019, and two customers accounted for 93.6% and 6.4%, respectively, at December 31, 2018.

5. Stock Issuance

In August, September and October 2018, the Company issued 2,500,000 shares of common stock at a per share price of $0.14 to three individual investors in return for gross proceeds of $350,000. Each share issued was accompanied by a warrant for one-half share of common stock; the warrants are exercisable at a price of $0.40 per share.

At December 31, 2019, the Company had 4,575,000 warrants outstanding.  Of these, 3,325,000 warrants were exercisable at $0.30 per share but may be redeemed by the Company if not exercised, in whole or in part, on at least twenty days’ prior written notice, at a price of $.001 per share; provided the average closing bid price of the Common Stock is at or above $1.00 per share for at least twenty consecutive trading days ending with three business days prior to the redemption notice.  An additional 1,250,000 warrants are exercisable at $0.40 per share but may be redeemed by the Company if not exercised, in whole or in part, on at least twenty days’ prior written notice, at a price of $.001 per share; provided the average closing bid price of the Common Stock is at or above $1.50 per share for at least twenty consecutive trading days ending with three business days prior to the redemption notice.

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 these transactions. The proceeds of these transactions were used for the Company’s working capital and general corporate purposes. The shares issued to these investors are restricted securities.

In December 2018, the Company also issued 180,000 shares for professional services. The shares were valued at $18,000 or $0.10 per share, based on their contract price.

F-10

PwrCor, Inc.

Notes to Financial Statements

December 31, 2019

6. Commitments and Contingencies

Consultants

The Company entered into an agreement with Thomas Telegades, Chief Executive Officer, Interim Chief Financial Officer, and Director of the Company, under which Mr. Telegades shall serve on a full-time basis as Chief Executive Officer for a three year term beginning on May 15, 2013, which was renewed on May 15, 2016 and again on May 15, 2019. The agreement specifies that Mr. Telegades shall be paid annual compensation of up to $150,000 for his services. The agreement includes non-competition and non-solicitation provisions which expire the later of three years from May 15, 2019, or one year following his termination or voluntary resignation.

The Company entered into an agreement with Peter Fazio, the Chief Operating Officer and Director of the Company, under which Mr. Fazio shall serve on a full-time basis as Chief Operating Officer of the Company for a three year term beginning on May 15, 2013, which was renewed on May 15, 2016 and again on May 15, 2019. The agreement specifies that Mr. Fazio shall be paid annual compensation of up to $150,000 for his services. The agreement includes non-competition and non-solicitation provisions which expire the later of three years from May 15, 2019, or one year following his termination or voluntary resignation.

The Company entered into an agreement with Gramercy Ventures LLC (“Gramercy”), under which the manager of Gramercy, James Valentino, who is also one of the directors of the Company, serves on a full-time basis as consultant to and non-executive Chairman of the Board of the Company for a three year term beginning on July 1, 2014, which was renewed on July 1, 2017. The agreement specifies that Gramercy shall be paid an annual compensation of up to $150,000 for such services. This agreement includes non-competition and non-solicitation provisions which expire the later of three years from July 1, 2017, or one year following his termination or voluntary resignation.

The Company entered into an agreement with Wallace Baker, a director of the Company, under which Mr. Baker serves on a full-time basis as Chief Administrative Officer and Secretary of the Company for a three year term beginning on July 1, 2014, which was renewed on July 1, 2017. The agreement specifies that Mr. Baker shall be paid annual compensation of up to $150,000 for his services. This agreement includes non-competition and non-solicitation provisions which expire the later of three years from July 1, 2017, or one year following his termination or voluntary resignation.

For 2019 and 2018, no amounts were paid to these officers nor were any amounts accrued.

The Company’s operations and financial performance may be affected by the recent coronavirus outbreak which has spread globally and is expected to adversely affect economic conditions throughout the world.  If the outbreak continues and conditions worsen, the Company may experience a disruption in operations as well as a decline in revenue activities. The outbreak is likely to adversely affect the Company’s business, financial conditions, and results of operations on an interim basis.

F-11

PwrCor, Inc.

Notes to Financial Statements

December 31, 2019

7. Income Taxes

There was no provision for income tax for the years ended December 31, 2019 and 2018. The Company files a consolidated federal income tax return.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted by the U.S.  Among the changes to the U.S. Internal Revenue Code, the Tax Act lowered the U.S. Federal income tax rate applicable to corporations from 35% to 21%, effective January 1, 2018.

The difference between the basis of assets and liabilities for financial and income tax reporting are not considered material. There were approximately $2,229,000 in net operating loss carryforwards at December 31, 2019, and approximately $1,560,000 at December 31, 2018, representing a potential deferred tax asset. The deferred tax asset amounted to approximately $468,000 at December 31, 2019 at current corporate tax rates, as compared to $328,000 at December 31, 2018. Of the total $2,229,000 total net operating losses at December 31, 2019, approximately $1,560,000 expire in various years through 2037 and approximately $669,000 carry forward indefinitely. For net operating losses prior to the Merger, net operating loss carryforwards are subject to limitations as a result of a change in ownership as defined by IRC Section 382. Upon an assessment of the potential of realizing these deferred tax assets in the future, an offsetting valuation allowance has been established for the full amount of the deferred tax assets.

F-12

None.

(a) Disclosure Controls and Procedures

Our principal executive and principal financial officer has evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a - 15(e) and 15d - 15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this annual report. This 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. He has concluded that, based on such evaluation, as detailed below, our disclosure controls and procedures were effective as of December 31, 2019.

(b) Management’s Annual Report on Internal Control over Financial Reporting

Internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) refers to the process designed by, or under the supervision of, our principal executive officer and principal financial officer, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.

Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management has used the 2013 framework set forth in the report entitled “Internal Control - Integrated Framework” published by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission to evaluate the effectiveness of the Company’s internal control over financial reporting. Based on that evaluation, management concluded that the Company’s internal controls and procedures are effective.

(c) Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting, as defined in Rules 13a-15(f) of the Exchange Act, in 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

None.

9

Our current directors and officers are listed below. Each of our directors will serve for one year or until their respective successors are elected and qualified. Our officers serve at the pleasure of the Board.

Set forth below is biographical information for each officer and director.

THOMAS TELEGADES was appointed a director and Chief Executive Officer of the Company on May 15, 2013.  Since September 2006, Thomas has served as the managing member of Cornerstone Program Advisors LLC, an energy infrastructure project management company focused on healthcare and higher learning institutions, which became a subsidiary of the Company as a result of the Merger.  Mr. Telegades has an MBA from Fairleigh Dickinson University and has a BAS from Florida Atlantic University.

PETER FAZIO was appointed a director and Chief Operating Officer of the Company on May 15, 2013.  Since June 2008, Peter has served as Chief Executive Officer of Sustainable Energy Industries Inc., and its predecessor Sustainable Energy Industries, LLC an alternative energy business, with emphasis on “green” engine technology, which became a subsidiary of the Company as a result of the Merger.  From February 2009 until February 2011, Mr. Fazio was Vice President of New Construction for Schlesinger/Siemens.  He has more than twenty-five years of experience in sales, management, employee relations, cost control and project management, and will continue in these roles with the Company.

JAMES VALENTINO has been Chairman of the Board of the Company since May 2013. He spent most of his career as an executive in the financial services industry, with experience in marketing, interactive commerce, creative business strategy development and information technology. More recently, he had over a decade of involvement with growing new businesses.  Mr. Valentino is a patented inventor and was a founder, early backer, influencer, and/or director or board chairman of a number of emerging private companies, notably JibJab.  Mr. Valentino served as Chairman of the Board of MetLife Trust Company, and co-founded and served as Chairman of the Board for eComForum, a Washington, D.C. based e-commerce advocacy group. Mr. Valentino is a graduate of City University-Brooklyn College with a BS degree in Economics and Math, and has completed extensive graduate work at Baruch Business College in Information Technology and Computer Methodology. He is a graduate of the M.I.T. Sloan School Senior Executive Program, where he served on the Board of Governors. He is also a member of the New York Academy of Sciences.

WALLACE BAKER has served in the capacity of Chief Administrative Officer and director since May 2013.  He was elected corporate Secretary in December 2013.  He spent most of his career in the financial services industry as a financial analyst and an executive focused largely on corporate finance, financial modeling, controls and performance measurement, as well as corporate planning and strategy.  Mr. Baker was a founder of MetLife Trust Company and served on its Board of Directors, and subsequently became involved as a founder, early backer and/or principal in a number of emerging private companies. Mr. Baker has an undergraduate degree in Economics from Brown University, and an MBA in Finance from New York University.

10

MONIRUL HOQUE was elected to the Board in January 2017. He has over 20 years of experience with global financial services firms including GE Capital, JP Morgan and Bank of America. Mr. Hoque has been employed by Alliance Global Finance since November 2012, as a Special Situations and Growth Capital Private Equity Investor. Earlier, he was employed by Sawmill Capital Partners as an Emerging Markets Financial Advisor, by Al Rayan Investments in Doha, Qatar, as Managing Director of the group focused on emerging markets, and by Bank of America Securities where he ran the Principal Financial Real Estate and Infrastructure Strategies Group. He has worked in investment and corporate banking, private equity, real estate, and asset management, and has extensive experience in investing debt and equity products and their derivatives. Mr. Hoque earned a master’s degree with honors in Finance from Columbia University. Through a combined degree program, he received a BS in Electrical Engineering from Columbia University and a BA in Physics from Bard College; both degrees were earned with honors.

Involvement in Certain Legal Proceedings

To the best of our knowledge, none of our directors or executive officers has, during the past ten years:

·been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); 

·had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time; 

·been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity; 

·been found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; 

·been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or 

·been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. 

Except as set forth in our discussion below in “Certain Relationships and Related Transactions and Director Independence,” none of our directors or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the Commission.

11

Term of Office

Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the Board.

Code of Ethics

The Company has adopted a Code of Ethics, a copy of which has been previously filed with the SEC.

Corporate Governance

The business and affairs of the Company are managed under the direction of our Board.  The Board has conducted meetings as needed since the Closing of the Merger.  Each of our directors has attended all meetings either in person or via telephone conference.

Board Leadership Structure and Role in Risk Oversight

Our board of directors is primarily responsible for overseeing our risk management processes. The board of directors receives and reviews periodic reports from management, auditors, legal counsel, and others, as considered appropriate regarding the Company’s assessment of risks. The board of directors focuses on the most significant risks facing the Company and the Company’s general risk management strategy, and also ensures that risks undertaken by the Company are consistent with the board’s appetite for risk. While the board oversees our company’s risk management, management is responsible for day-to-day risk management processes. We believe this division of responsibilities is the most effective approach for addressing the risks facing our company and that our board leadership structure supports this approach.

The Company does not have an audit committee, compensation committee or nominating committee.  The board of directors is responsible for all aspects of governance of the Company, including functions that would be delegated to such committees.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires the Company’s directors, executive officers and persons who own more than ten percent of the Company’s outstanding Common Stock to file with the SEC and the Company reports on Form 4 and Form 5 reflecting transactions affecting beneficial ownership. Based solely on a review of the copies of the reports furnished to us, or written representations that no reports were required to be filed, we believe that during the fiscal year ended December 31, 2019 all Section 16(a) filing requirements applicable to our directors, officers, and greater than 10% beneficial owners were complied with.

Summary Compensation Table

The following table sets forth compensation awarded to, earned by or paid to our Chief Executive Officer and the four other most highly compensated executive officers for the years ended December 31, 2019 and 2018 (collectively, the “Named Executive Officers”).

12

SUMMARY COMPENSATION TABLE

(1)Each of Messrs. Telegades, Fazio, Valentino, and Baker were owed compensation under their respective consulting agreements with the Company as discussed on the next page.  For 2019 and 2018, all of the Company’s officers waived any compensation owed to them under such agreements. No amounts were paid to these officers nor did any amounts accrue. 

Outstanding Equity Awards at Year-End

None.

Option Exercises and Stock Vested

No executive officer identified in the Summary Compensation Table above received or exercised any option in fiscal year 2019.

Benefit Plans

In 2013, the Board adopted and received consent of majority of shareholders for the Company’s 2013 Equity Incentive Award Plan (the “2013 Plan”) and the reservation of an aggregate of 3,000,000 shares of the Company’s common stock for issuance pursuant to the 2013 Plan. The 2013 Plan will be used to help attract, retain and motivate employees, consultants and directors.

The affirmative vote of the Majority Shareholders was required for the approval of the 2013 Plan.

The 2013 Plan is available to employees and consultants of the Company and its subsidiaries and members of the Board, or as applicable, members of the board of directors.  The Board believes that the 2013 Plan will promote the success and enhance the value of the Company by continuing to link the personal interests of participants to those of the Company and its stockholders and by providing participants with an incentive for outstanding performance to generate superior returns to our stockholders. The Board further believes that the 2013 Plan will provide flexibility to the Company in its ability to motivate, attract and retain the services of employees, consultants and Directors upon whose judgment, interest and special effort the successful operation of the Company is largely dependent.

13

The 2013 Plan provides for the grant of stock options (both incentive stock options and nonqualified stock options), restricted stock, stock appreciation rights, performance shares, performance stock units, dividend equivalents, stock payments, deferred stock, restricted stock units and performance-based awards to eligible participants.

There were no grants of plan-based awards to named executive officers for the year ended December 31, 2019.

Non-qualified Deferred Compensation

The Company does not have any defined contribution or other plan which provides for the deferral of compensation on a basis that is not tax-qualified.

Consulting Agreements

The Company entered into an agreement in 2013 and renewed in 2016 and again in 2019 with Thomas Telegades, Chief Executive Officer, Interim Chief Financial Officer, and Director of the Company, under which Mr. Telegades shall serve on a full-time basis as Chief Executive Officer for a three year term beginning on May 15, 2019. The agreement specifies that Mr. Telegades shall be paid annual compensation of up to $150,000 for his services. The agreement includes non-competition and non-solicitation provisions which expire the later of three years from May 15, 2019, or one year following his termination or voluntary resignation.

The Company entered into an agreement in 2013 and renewed in 2016 and again in 2019 with Peter Fazio, the Chief Operating Officer and Director of the Company, under which Mr. Fazio shall serve on a full-time basis as Chief Operating Officer of the Company for a three year term beginning on May 15, 2019. The agreement specifies that Mr. Fazio shall be paid annual compensation of up to $150,000 for his services. The agreement includes non-competition and non-solicitation provisions which expire the later of three years from May 15, 2019, or one year following his termination or voluntary resignation.

The Company entered into an agreement with Gramercy Ventures LLC (“Gramercy”), under which the manager of Gramercy, James Valentino, who is also one of the directors of the Company, serves on a full-time basis as consultant to and non-executive Chairman of the Board of the Company for a three year term beginning on July 1, 2017. The agreement specifies that Gramercy shall be paid an annual compensation of up to $150,000 for such services. This agreement includes non-competition and non-solicitation provisions which expire the later of three years from July 1, 2017, or one year following his termination or voluntary resignation.

The Company entered into an agreement with Wallace Baker, a director of the Company, under which Mr. Baker serves on a full-time basis as Chief Administrative Officer and Secretary of the Company for a three year term beginning on July 1, 2017. The agreement specifies that Mr. Baker shall be paid annual compensation of up to $150,000 for his services. This agreement includes non-competition and non-solicitation provisions which expire the later of three years from July 1, 2017, or one year following his termination or voluntary resignation.

For 2019 and 2018, no amounts were paid to these officers nor did any amounts accrue.

All of our officers and/or directors will continue to be active in other companies. All officers and directors have retained the right to conduct their own independent business interests.

Potential Payments upon Termination or Change-in-Control

None.

Director Compensation Arrangements

Our directors do not receive compensation of any form for serving in this capacity, including for their attendance at meetings of the Board.

14

The following table sets forth certain information concerning the ownership of our common stock as of April 13, 2020, with respect to: (i) each person known to us to be the beneficial owner of more than five percent of each class of stock; (ii) all of our directors and executive officers; and (iii) all of our directors and executive officers as a group. The notes accompanying the information in the table are necessary for a complete understanding of the information provided below. As of April 13, 2020 there were 210,342,722 shares of common stock outstanding.

We believe that all persons named in the table have sole voting and investment power with respect to all shares shown as being owned by them, except as otherwise provided in the footnotes to the below table.

Under federal securities laws, a person or group of persons is: (a) deemed to have “beneficial ownership” of any shares as of a given date which such person has the right to acquire within 60 days after such date and (b) assumed to have sold all shares registered hereby in this offering. For purposes of computing the percentage of outstanding shares held by each person or group of persons named above on a given date, any security which such person or persons has the right to acquire within 60 days after such date is deemed to be outstanding for the purpose of computing the percentage ownership of such person or persons, but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. This assumes that options, warrants or convertible securities that are held by such person or group of persons and which are exercisable within 60 days of the date of this report, have been exercised or converted.

(1)Except as otherwise set forth below, the address of each of the persons listed below is c/o PwrCor, Inc., 60 E. 42nd Street, Suite 4600, New York, New York 10165. 

(2)Based on 210,342,722 shares of Common Stock as of April 13, 2020. 

(3)These shares are owned by Semper Fi Energy Holdings, LLC of which Mr. Telegades is a control person. This number does not include 8,757,827 shares owned by Cornerstone Program Advisors Ltd, an entity owned by Mr. Telegades’ wife or 500,000 shares owned by his wife. 

(4)Consists entirely of Common Stock held by Mosalu Family Trust of which Mr. Fazio is a control person.  Mr. Fazio may be deemed to be the beneficial owner of the Common Stock held by the Mosalu Family Trust. 

(5)Includes 29,026,269 shares of Common Stock held by Gramercy Ventures, LLC, of which Mr. Valentino is the manager. Mr. Valentino disclaims beneficial interest of the shares owned by Gramercy Ventures LLC. This number also includes 500,000 shares of Common Stock held in an IRA owned by Mr. Valentino. 

(6)Includes 29,456,540 shares of Common Stock held by Wentworth Dukeshire Trust. Mr. Baker disclaims beneficial ownership of such shares, as he does not control the power to vote or dispose of these shares. The trust is controlled by independent trustees. This number also includes 858,290 shares of Common Stock owned by Mr. Baker. 

15

(7)Includes 160,000 shares of Common Stock of which Mr. Khan is legal Custodian and of which Mr. Khan may be deemed to be the beneficial owner. Mr. Khan was the Chief Executive Officer of the Company until May 15, 2013 and was on the board of directors of the Company until June 26, 2014. The address of Mr. Khan is 732 Pembroke Way, Ridgefield, NJ 07657. 

Equity Compensation Plan Information

See Part II, Item 5, “Equity Compensation Plans” for information regarding our equity compensation plans.

Since January 1, 2019, there has not been any transaction or series of similar transactions to which we were or are a party in which the amount involved exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at the applicable year-end and in which any of our directors or executive officers, any holder of more than 5% of any class of our voting securities or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest, other than the compensation arrangements described in “Executive Compensation” and the transactions set forth below.

In connection with the Merger by and among the Company, Cornerstone, and Sustainable, which was completed May 15, 2013, the Company entered into a voluntary share exchange transaction (the “Exchange”) whereby the Company acquired all of the issued and outstanding membership units of Cornerstone and the issued and outstanding shares of Sustainable in exchange for the issuance to the members of Cornerstone and issuance to the shareholders of Sustainable a total of approximately 176,400,000 shares of Common Stock of the Company (the “Consideration Shares”). Prior to the Merger, the Company had approximately 19,600,000 shares of common stock issued and outstanding. All of the Common Stock owned by directors Thomas Telegades, Peter Fazio, James Valentino, and Wallace Baker, or by trusts or limited liability companies at their designation, as of December 31, 2019 consists of Consideration Shares that they received in connection with the Merger, shares acquired from other directors, or shares received as a result of additional contributed capital invested in the Company.

See Part II, Item 11, “Employment Agreements” for information regarding the compensation agreements with the various officers and directors of the Company. For 2018 and 2019, all of the Company’s officers waived any compensation owed to them under such agreements. No amounts were paid to these officers nor did any amounts accrue.

In 2019, the Company incurred $111,189 in charges to Cornerstone Program Advisors Ltd for various consulting services. Cornerstone Program Advisors Ltd has provided such services to the Company since 2013 after the Merger and did so to Cornerstone prior to the Merger, when it was also a member of Cornerstone. As noted above, Cornerstone Program Advisors Ltd is wholly-owned by Thomas Telegades’ wife. Mr. Telegades is the Chief Executive Officer of the Company.

In 2017, the Company undertook an obligation of $135,000 to Thermal Tech Holdings, LLC for licensing certain intellectual property. Thermal Tech Holdings, LLC is owned by entities which are controlled by persons related to Mr. Telegades, Chief Executive Officer of the Company, and Mr. Baker, Chief Administrative Officer of the Company. See Item 1 - “Business”.

Director Independence

Because our common stock is not currently listed on a national securities exchange, we have used the definition of “independence” of The NASDAQ Stock Market to make this determination. NASDAQ Listing Rule 5605(a)(2) provides that an “independent director” is a person other than an officer or employee of the Company or any other individual having a relationship which, in the opinion of the Company’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The NASDAQ listing rules provide that a director cannot be considered independent if:

·the director is, or at any time during the past three years was, an employee of the company; 

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·the director or a family member of the director accepted any compensation from the company in excess of $120,000 during any period of 12 consecutive months within the three years preceding the independence determination (subject to certain exclusions, including, among other things, compensation for board or board committee service); 

·a family member of the director is, or at any time during the past three years was, an executive officer of the company; 

·the director or a family member of the director is a partner in, controlling stockholder of, or an executive officer of an entity to which the company made, or from which the company received, payments in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenue for that year or $200,000, whichever is greater (subject to certain exclusions); 

·the director or a family member of the director is employed as an executive officer of an entity where, at any time during the past three years, any of the executive officers of the company served on the compensation committee of such other entity; or the director or a family member of the director is a current partner of the company’s outside auditor, or at any time during the past three years was a partner or employee of the company’s outside auditor, and who worked on the company’s audit. 

Monirul Hoque was elected an independent director of the Company at our January 20, 2017, Annual Meeting of Shareholders. We do not have an audit committee, compensation committee or nominating committee.

Audit and Non-Audit Fees

Aggregate fees for professional services rendered for the Company by PKF O’Connor Davies, LLP (“PKF”), the Company’s Independent Certified Public Accountants, for the years ended December 31, 2019 and December 31, 2018 are set forth below. The aggregate fees included in the Audit category are fees billed for the fiscal years for the audit of the Company’s annual financial statements and review of financial statements and statutory and regulatory filings or engagements. The aggregate fees included in each of the other categories are fees billed in the fiscal years.

Audit Fees for the fiscal years ended December 31, 2019 and 2018 were for professional services rendered for the audits and quarterly reviews of the financial statements of the Company.

As the Company does not have a formal audit committee, the services described above were not approved by the audit committee under the de minimus exception provided by Rule 2-01(c)(7)(i)(C) under Regulation S-X.  Further, as the Company does not have a formal audit committee, the Company does not have audit committee pre-approval policies and procedures. However, all of the above services and fees were reviewed and approved by the entire board of directors either before or after the respective services were rendered.

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In accordance with SEC Release 33-8238, Exhibit 32.1 is being furnished and not filed.

*Filed herewith

**XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of this annual report or 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.

(1)Filed as an Exhibit to the Current Report on Form 8-K, filed with the SEC on April 4, 2013. 

(2)Filed as an Exhibit to the Current Report on Form 8-K, filed with the SEC on May 21, 2013. 

(3)Filed as an Exhibit to the Registration Statement on Form S-8, filed with the SEC on July 15, 2013. 

(4)Filed as an Exhibit to the Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on May 7, 2014. 

(5)Filed as an Exhibit to the Current Report on Form 8-K, filed with the SEC on July 2, 2014. 

(6)Filed as an Exhibit to the Current Report on Form 8-K, filed with the SEC on March 8, 2017. 

(7)Filed as an Exhibit to the Current Report on Form 8-K, filed with the SEC on October 18, 2017. 

(8)Filed as an Exhibit to the Current Report on Form 8-K, filed with the SEC on January 3, 2017. 

(9)Filed as an Exhibit to the Current Report on Form 8-K, filed with the SEC on December 27, 2017 

(10)Filed as an Exhibit to the Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on March 30, 2018. 

None.

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

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

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