NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2022, and 2021
1.
ORGANIZATION
Powerdyne,
Inc., was incorporated on February 2, 2010, in Nevada, and is registered to do business in Rhode Island and Massachusetts. On February
7, 2011, Powerdyne, Inc. merged with Powerdyne International, Inc., formerly Greenmark Acquisition Corporation, a publicly held Delaware
corporation.
On
December 13, 2010, Powerdyne International, Inc., formerly Greenmark Acquisition Corporation, filed an Amended and Restated Articles
of Incorporation in order to, among other things, increase the authorized capital stock to 300,000,000 common shares, par value $0.0001
per share. Unless the context specifies otherwise, as discussed in Note 2, references to the “Company” refers to Powerdyne
International Inc. and Powerdyne Inc. after the merger.
At
the closing of the merger, each share of Powerdyne, Inc.’s common stock issued and outstanding immediately prior to the closing
of the Merger was exchanged for the right to receive 7,520 shares of common stock of Powerdyne International, Inc. Accordingly, an aggregate
of 188,000,000 shares of common stock of Powerdyne International Inc. were issued to the holders of Powerdyne Inc.’s common stock.
In
2014, Powerdyne International, Inc. filed an amendment to its Articles of Incorporation which increased the authorized capital stock
to 550,000,000 common shares, par value $0.0001 per share.
On
January 26, 2015, Powerdyne International, Inc. filed an amendment to its Articles of Incorporation which increased the authorized capital
stock to 2,020,000,000 shares consisting of 2,000,000,000 common shares, par value $0.0001 per share and 20,000,000 shares which may
be designated as common or preferred stock, par value $0.0001 per share.
During
the year ended December 31, 2022, the Company ended the mining of Sia coin and any crypto currency due to the lack of productivity
of its crypto miners.
On
March 6, 2022, pursuant to a Securities Purchase Agreement (the “SPA”), Powerdyne International, Inc. (the “Company”),
acquired all of the issued and outstanding membership interests of Creative Motion Technology, LLC, a Massachusetts limited liability
company, (the “Membership Interest”). The Membership Interest was owned by Mr. James F. O’Rourke, the principal owner
and sole director and officer of the Company. The purchase price paid by the Company was 2,000,000 shares of its Series A Preferred Stock
valued at $1,500,000, which each Series A Preferred Stock is convertible into 1,000 common shares of the Company at a fixed price of
$0.0001 at the option of the holder.
Creative
Motion Technology, LLC (“CM Tech”) is a small New England based motor manufacturer founded in 2004 and has been in business
for over 17 years. CM Tech’s management has over 60 years of design and manufacturing expertise, specializing in the design and
custom building of industrial servomotors both brush and brushless motor designs. CM Tech’s current market focus is on the niche
motor demands for low volume, high-quality cost-effective motors which are primarily used in industrial robotics for the semiconductor
manufacturing industry. The motors that CM Tech currently has in production primarily provide the X, Y, and Z axis articulation in
factory automation robots.
POWERDYNE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022, and 2021
1.
ORGANIZATION (continued)
Included
with CM Tech acquisition is Frame One, which is a custom picture framing shop located in North Reading, MA. Frame One has been in business
since 2006 and brings with it a strong client base consisting of local schools, colleges, artist guilds, artists, interior decorators/designers,
museums, photographers, art galleries and theaters.
The
issuance of the 2,000,000 shares of Series A Preferred Stock pursuant to the Securities Purchase Agreement were made in reliance on the
exemption from registration afforded under Section 4(2), of the Securities Act of 1933, as amended, and/or Rule 506 of Regulation D promulgated
thereunder. Such offer and sale were not conducted in connection with a public offering, and no public solicitation or advertisement
was made or relied upon by the Seller/Investor in connection with the issuance by the Company of the Shares.
2.
REVERSE MERGER ACCOUNTING
On
February 7, 2011, Greenmark Acquisition Corporation, which was a publicly held Delaware corporation, merged with Powerdyne, Inc. Upon
closing of the transaction, Greenmark Acquisition Corporation, the surviving corporation in the merger, changed its name to Powerdyne
International, Inc.
The
merger was accounted for as a reverse-merger, and recapitalization in accordance with generally accepted accounting principles in the
United States (“GAAP”). Powerdyne Inc. was the acquirer for financial reporting purposes and the Company was the acquired
company. Consequently, the assets and liabilities and the operations that are reflected in the historical financial statements prior
to the merger are those of Powerdyne, Inc. and have been recorded at the historical cost basis of Powerdyne, Inc., and the financial
statements after completion of the merger include the assets and liabilities of the Company and Powerdyne, Inc., historical operations
of Powerdyne, Inc. and operations of the Company from the closing date of the merger. Common stock and the corresponding capital amounts
of the Company pre-merger were retroactively restated as capital stock shares reflecting the exchange ratio in the merger. In conjunction
with the merger, the Company received no cash and assumed no liabilities from Greenmark Acquisition Corporation.
On
March 6, 2022, the Company acquired CM Tech from its 100%
owner, the CEO of Powerdyne International, Inc. The merger was accounted for as a recapitalization in accordance with generally
accepted accounting principles in the United States (“GAAP”). The transaction was recorded as a recapitalization
transaction with the difference between the historical cost of the assets and liabilities assumed with the purchase price recorded
as a loss on related party acquisition for $1,391,370
in our consolidated statement of operations. The transaction was not a business combination or a reverse merger
transaction.
POWERDYNE
INTERNATIONAL, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2022, and 2021
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The
summary of significant accounting policies presented below is designed to assist in understanding the Company’s consolidated financial
statements.
Such
consolidated financial statements and accompanying notes are the representations of the Company’s management, who are responsible
for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States
of America (“GAAP”) in all material respects and have been consistently applied in preparing the accompanying consolidated
financial statements.
Basis
of Presentation
The
accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”)
as promulgated in the United States of America.
Going
Concern
Since
its inception, the Company has devoted substantially all of its efforts to business planning, research and development, recruiting management
and technical staff, acquiring operating assets and raising capital. The Company has not generated significant revenues from its principal
operations until March 6, 2022, with the acquisition of CM Tech that will generate between $1.5 to $2.0M in revenues annually. As of
December 31, 2022, the Company had an accumulated deficit of $4,993,228. The Company’s continuation as a going concern is dependent
on its ability to generate sufficient cash flows from operations to meet its obligations and/or obtaining additional financing from its
members or other sources, as may be required. For the year ended December 31, 2022, CM Tech has negative cash flow from operations, however,
the Company’s management expects that this will change in the near future.
The
Company’s activities will necessitate significant uses of working capital beyond December 31, 2022. Additionally, the Company’s
capital requirements will depend on many factors, including the success of the Company’s sales, cash flow from operations and the
status of competitive products. The Company plans to continue financing its operations with cash received from financing activities,
revenue from operations and or affiliate funding.
While
the Company strongly believes that its capital resources will be sufficient in the near term, there is no assurance that the Company’s
activities will generate sufficient revenues to sustain its operations without additional capital or, if additional capital is needed,
that such funds if available, will be obtainable on terms satisfactory to the Company.
The
accompanying audited consolidated financial statements have been prepared assuming that the Company will continue as a going concern;
however, the above condition raises substantial doubt about the Company’s ability to do so. The consolidated financial statements
do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts
and classifications of liabilities that may result should the Company be unable to continue as a going concern.
Principles
of Consolidation
Our
consolidated financial statements include the accounts of Powerdyne International Inc and its one division and related subsidiaries.
All intercompany transactions and balances have been eliminated.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The
Company places its cash with high quality banking institutions. From time to time, the Company may maintain cash balances at certain
institutions in excess of the Federal Deposit Insurance Corporation limit. The Company has not incurred any loss from this risk, nor
does it expect to. The Company’s revenues from product sales and accounts receivable have no material or significant concentration
in any one or a multitude of customers and all receivables are expected to be collected.
POWERDYNE
INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2022, and 2021
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Cash
and Cash Equivalents
The
Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. The Company
did not have any cash equivalents as of December 31, 2022, and 2021, respectively.
Allowances
for Sales Returns and Doubtful Accounts
Sales
Returns - We may, on a case-by-case basis, accept returns of products from our customers, without restocking charges, when they can demonstrate
an acceptable cause for the return.
Doubtful
Accounts - Accounts receivable are recorded at net realizable value or the amount we expect to collect on gross customer trade receivables.
We evaluate the collectability of our accounts receivable based on a combination of factors. If we become aware of a customer’s
inability to meet its financial obligations after a sale has occurred, we record an allowance to reduce the net receivable to the amount
we reasonably believe we will be able to collect from the customer. For all other customers, we recognize allowances for doubtful accounts
based on the length of time the receivables are past due, the current business environment and historical experience. If the financial
condition of our customers were to deteriorate or if economic conditions worsen, additional allowances may be required in the future.
All of our accounts receivable are trade-related receivables.
The
allowance for sales returns and doubtful accounts as of December 31, 2022, amounted to $0.
The
Company sometimes receives cash deposits in advance of manufacturing and shipping its products. As of December 31, 2022, there is $10,231
in advance deposits recorded on the balance sheet. When the products are shipped to the customer the advance deposits are recognized
as product revenue.
Inventory
Inventory,
consisting principally of products held for sale, is stated at the lower of cost, using the first-in, first-out method, and net realizable
value. The amount presented in the accompanying consolidated balance sheet has no valuation allowance.
We
regularly evaluate our inventory to identify costs in excess of the lower of cost and net realizable value, slow-moving inventory and
potential obsolescence.
Equipment
Equipment
is stated at cost. Capital expenditures for improvements and upgrades to existing equipment are also capitalized. Maintenance and repairs
are expensed as incurred. The computer equipment is depreciated over 5 years on a straight-line basis. Depreciation expense for the years
ended December 31, 2022, was $6,000 and 2021 was $3,000, respectively.
Intangible
asset - Cryptocurrency
The
Company considers intangible assets - cryptocurrency to be revenue that has been earned, but for which no cash has been received. Intangible
assets consist of crypto mined coins that are held in a digital wallet and have not been cashed out. The basis of the valuation is the
market price of the Sia coins on December 31, 2022. The Company considers this to be an intangible asset under GAAP guidelines. The Company
had $6,103 of intangible assets as of December 31, 2022, and $13,389 as of December 31, 2021. Revenue is recognized on the last date
of the quarter based on the transaction price of the Sia coin at that date times the number of coins in the wallet. Unrealized gains
and losses are recognized quarterly based on the fluctuation in the market value of the coin versus the value booked when obtained. As
of December 31, 2022, there was no evidence that the Company’s intangible assets were impaired. The Company holds other cryptocurrencies
under intangible assets, such as Bitcoin, etc. and these currencies are marked to market at the end of each quarter ended. The crypto-currency
account also holds cash that is re-classed to cash at the end of each quarter ended. The Company recorded a decrease of $7,286 in the
crypto-currency for the year ended due to the decline in the crypto-currency market.
Impairment
of Long-Lived Assets and Long-Lived Assets to Be Disposed Of
In
accordance with ASC 360, the Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate
that their net book value may not be recoverable.
POWERDYNE
INTERNATIONAL, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2022, and 2021
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Long-Lived
Assets (Continued)
When
such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset
or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess
of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets
and is recorded in the period in which the determination is made. The Company’s management currently believes there is no impairment
of its long-lived assets. There can be no assurance, however, that market conditions will not change or demand for the Company’s
products under development will continue. Either of these could result in future impairment of long-lived assets.
Shipping
Activities
Outbound
shipping charges to customers are included in “Product revenue”. Outbound shipping-related costs are included in “Cost
of products sold”.
Stock-Based
Compensation
We
account for all share-based compensation in accordance ASC 718-20. Stock-based compensation cost is measured at the grant date, based
on the estimated fair value of the award, and is recognized as expense over the requisite vesting period.
Income
Taxes
We
account for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years
in which the temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are recorded, when necessary,
to reduce deferred tax assets to the amount expected to be realized.
ASC
740, Income Taxes (“ASC 740”), which clarifies the accounting and disclosure for uncertainty in tax positions, as defined,
seeks to reduce the diversity in practice associated with certain aspects of the recognition and measurement related to accounting for
income taxes. We adopted the provisions of ASC 740 as of January 1, 2007, and have analyzed filing positions in each of the federal and
state jurisdictions where we are required to file income tax returns, as well as all open tax years in these jurisdictions. We have identified
the U.S. federal and California as our “major” tax jurisdictions. With limited exceptions, we remain subject to Internal
Revenue Service (“IRS”) examination of our income tax returns filed within the last three (3) years, and to Massachusetts
Department of Revenue examination of our income tax returns filed within the last four (4) years. However, we have certain tax attribute
carryforwards which will remain subject to review and adjustment by the relevant tax authorities until the statute of limitations closes
with respect to the year in which such attributes are utilized.
We
believe that our income tax filing positions and deductions will be sustained in the audit and do not anticipate any adjustments that will
result in a material change to our financial position. Therefore, no reserves for uncertain income tax positions have been recorded pursuant
to ASC 740. Our policy for recording interest and penalties associated with income-based tax audits is to record such items as a component
of income taxes.
Income
taxes payable as of December 31, 2022, and December 31, 2021, were $2,950 and $2,550, respectively.
POWERDYNE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022, and 2021
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair
Value of Financial Instruments
The
Company follows guidance for accounting for fair value measurements of financial assets and financial liabilities and for fair value
measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on a recurring basis. Additionally,
the Company adopted guidance for fair value measurement related to nonfinancial items that are recognized and disclosed at fair value
in the financial statements on a nonrecurring basis. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation
techniques used to measure fair value.
The
hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements)
and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair
value hierarchy are as follows:
●
Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or
liabilities.
●
Level 2 - Quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly, for substantially
the full term of the asset or liability.
●
Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable.
To
the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair
value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value
hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed
is determined based on the lowest level input that is significant to the fair value measurement.
The
Company monitors the market conditions and evaluates the fair value hierarchy levels at least quarterly. For any transfers in and out
of the levels of the fair value hierarchy, the Company elects to disclose the fair value measurement at the beginning of the reporting
period during which the transfer occurred.
The
Company’s financial instruments consisted of cash, accounts receivable, intangible assets – cryptocurrency, accounts payable
and accrued expenses, advance deposit, due to related party - CEO, sales tax payable, and income tax payable. The estimated fair value
of these financial instruments approximates its carrying amount due to the short maturity of these instruments.
POWERDYNE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022, and 2021
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Los)
per Common Share
Basic
loss per common share excludes dilutive securities and is computed by dividing net loss by the weighted average number of common shares
outstanding during the period. Diluted earnings per common share reflect the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared
in the earnings of the entity. As of December 31, 2022, and December 31, 2021, there were no outstanding dilutive securities, except
as of December 31, 2022, there was 2,000,000 Series A Preferred Stock outstanding, however, they were not included in the calculations
as they are considered anti-dilutive.
The
following table represents the computation of basic and diluted losses per share:
Net
loss per share is based upon the weighted average shares of common stock outstanding.
SCHEDULE OF COMPUTATION OF BASIC AND DILUTED
INCOME (LOSS) PER SHARE
| | |
Year ended
December 31, 2022 | | |
Year ended
December 31, 2021 | |
| | |
| | |
| |
| Loss available for common shareholder | |
$ | (1,342,016 | ) | |
$ | (43,156 | ) |
| Basic and fully diluted loss per share | |
$ | (0.00 | ) | |
$ | (0.00 | ) |
| | |
| | | |
| | |
| Weighted average common shares outstanding - basic and diluted | |
| 1,862,430,584 | | |
| 1,903,348,392 | |
Use
of Estimates and Assumptions
Our
management has made several estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent
assets and liabilities to prepare these consolidated financial statements in conformity with accounting principles generally accepted
in the United States of America. Actual results could differ from those estimates.
POWERDYNE
INTERNATIONAL, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2022, and 2021
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Recent
Accounting Guidance Not Yet Adopted
Accounting
for Income Taxes
In
December 2019, the FASB issued Accounting Standards Update (“ASU”) 2019-12, “Simplifying the Accounting for Income
Taxes”. The pronouncement simplifies the accounting for income taxes by removing certain exceptions to the general principles
in ASC Topic 740, “Income Taxes”. The pronouncement also improves consistent application of and simplifies GAAP for
other areas of Topic 740 by clarifying and amending existing guidance. ASU 2019-12 will be effective for us beginning in the third quarter
of fiscal 2022, with early adoption permitted. The adoption of this standard did not have a material impact on our consolidated financial
statements.
In
October 2020, the FASB issued ASU No. 2020-10 Codification Improvements, to make incremental improvements to U.S. GAAP and address
stakeholder suggestions, including, among other things, clarifying that the requirement to provide comparative information in the financial
statements extends to the corresponding disclosures section. The amendments in this update will be effective for us beginning with fiscal
year 2021, with early adoption permitted. The amendments in this update should be applied retrospectively and at the beginning of the
period that includes the adoption date. The adoption of the amendments in this update did not have a material impact on our consolidated
financial statements.
The
Company has implemented all new accounting pronouncements that are in effect and that may impact its consolidated financial statements
and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on
its financial position or results of operations.
Revenue
Recognition
Sia
coin is the only crypto coin that Powerdyne is mining. The coins are held in the Company’s Sia coin digital wallet. When coins
are going to be exchanged for USD, they are then transferred to the company’s exchange wallet held at a US based crypto exchange
which provides support for two-factor authentication. We also have wallet password management, and offsite backups. The coins are held
in anticipation of future price appreciation as crypto currencies become more widely accepted, but some coins may be exchanged for USD
on an as needed basis. The Company also realizes there is no guarantee the coins will appreciate in value. Revenue is recognized on the
last date of the quarter based on the market price of the Sia coin at that date times the number of coins in the wallet. The Company
no longer is in the business of producing Sia coins.
As
of March 6, 2022, with the acquisition of CM Tech, we recognize revenue from contracts with customers in accordance with Financial
Accounting Standards Board (“FASB”) ASC Topic 606, “Revenue from Contracts with Customers” (“ASC
606”). Revenue is recognized at the point at which control of the underlying products are transferred to the customer.
Satisfaction of our performance obligations occurs upon the transfer of control of products from our facilities. We consider
customer purchase orders to be the contracts with a customer. All revenue is generated from contracts with customers.
Business
Segments
We
primarily service the Original Equipment Manufacturers (OEM’s) in the semiconductor market by supplying custom designed motors
for the robotics used in semiconductor manufacturing equipment. We provide cost-effective value-added turn-key solutions to our
clients’ drives and articulation needs.
POWERDYNE
INTERNATIONAL, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2022, and 2021
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The
Market
We
service the Global Semiconductor Equipment Manufacture’s our Sales to International customers were 36% and 54 % of our total sales
in 2022 and 2021, respectively.
4.
EQUIPMENT - NET
Equipment
consists of the following as of December 31, 2022, and 2021:
SCHEDULE OF EQUIPMENT-NET
| | |
December 31, 2022 | | |
December 31, 2021 | |
| | |
(unaudited) | | |
(audited) | |
| Cryptocurrency miners | |
$ | 15,000 | | |
$ | 15,000 | |
| Less accumulated depreciation | |
| (15,000 | ) | |
| (9,000 | ) |
| | |
| | | |
| | |
| Total Equipment | |
$ | — | | |
$ | 6,000 | |
Equipment
is stated at cost and depreciated on a straight- line basis over the assets’ estimated useful lives: computer equipment 5 years.
Total depreciation expense for the year ended December 31, 2022, and 2021 was $6,000 and $3,000, respectively.
During
the quarter ended March 31, 2019, Powerdyne International, Inc. purchased several crypto currency miners and began mining certain crypto
coins. This was done in an effort to enter into the crypto markets and explore other potential revenue opportunities for Powerdyne International,
Inc.
During
the year ended December 31, 2022, Powerdyne stopped the mining of Sia coin and any crypto currency due the lack of productivity of
its crypto miners.
5.
DUE TO RELATED PARTY - CEO
During
the year ended December 31, 2022, our CEO advanced the Company $69,197 (2021 - $60,000). The amount accrued but not yet paid to our CEO
on December 31, 2022, and December 31, 2021, was $223,079 and $153,900, respectively. The debt is unsecured and is not guaranteed by
the Company. The CEO can call debt obligation at any time.
6.
ACQUISITION OF PRIVATE COMPANY OWNED BY CEO
On
March 6, 2022, pursuant to a Securities Purchase Agreement (the “SPA”), Powerdyne International, Inc. (the “Company”),
acquired 100% of the issued and outstanding membership interests of Creative Motion Technology, LLC, a Massachusetts limited liability
company, (the “Membership Interest”). The Membership Interest was owned by Mr. James F. O’Rourke, the principal owner
and sole director and officer of the Company. The purchase price paid by the Company was 2,000,000 shares of its Series A Preferred Stock
valued at $1,500,000, which each Series A Preferred Stock is convertible into 1,000 common shares of the Company at a fixed price of
$0.0001 at the option of the holder.
Creative
Motion Technology, LLC (“CM Tech”) is a small New England based motor manufacturer founded in 2004 and has been in business
for over 17 years. CM Tech’s management has over 60 years of design and manufacturing expertise, specializing in the design and
custom building of industrial servomotors both brush and brushless motor designs. CM Tech’s current market focus is on the niche
motor demands for low volume, high-quality cost-effective motors which are primarily used in industrial robotics for the semiconductor
manufacturing industry. The motors that CM Tech currently has in production primarily provide the X, Y, and Z axis articulation in
factory automation robots.
Included
with CM Tech acquisition is Frame One, which is a custom picture framing shop located in North Reading, MA. Frame One has been in business
since 2006 and brings with it a strong client base consisting of local schools, colleges, artist guilds, artists, interior decorators/designers,
museums, photographers, art galleries and theaters.
The
foregoing description of the SPA does not purport to be complete and is qualified in its entirety by reference to the complete text of
the document, which is filed as an exhibit to this report and is incorporated herein by reference.
The
following table summarizes the consideration transferred to acquire CM Tech and the amounts of identified assets acquired recorded at
historical cost at the acquisition date and the consideration provided:
SCHEDULE OF AMOUNTS OF IDENTIFIED ASSETS ACQUIRED AND LIABILITIES
| | |
| | |
| Cash | |
$ | 26,042 | |
| Inventory | |
| 82,588 | |
| Total Assets Acquired | |
| 108,630 | |
| Loss on acquisition of entity owned by CEO. | |
| 1,391,370 | |
| | |
| | |
| The purchase price consists of the following: | |
| | |
| Preferred Shares | |
| 1,500,000 | |
| Total Purchase Price | |
$ | 1,500,000 | |
The
historical cost of the assets acquired includes cash and inventory at approximately $108,630. There is no impairment to the cash and
inventory received.
POWERDYNE
INTERNATIONAL, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
December
31, 2022, and 2021
6.
ACQUISITION OF PRIVATE COMPANY OWNED BY CEO (Continued)
The
pro forma information below presents statements of operations data as if the acquisition of CM Tech took place on January 1, 2020.
SCHEDULE OF STATEMENTS OF OPERATION
| | |
Consolidated | | |
Consolidated | |
| | |
For the year | | |
For the year | |
| | |
ended | | |
ended | |
| | |
December 31,
2021 | | |
December 31,
2020 | |
| | |
| | |
| |
| Revenues | |
$ | 1,224,290 | | |
$ | 985,613 | |
| Cost of Goods Sold | |
| 721,243 | | |
| 525,454 | |
| Gross profit | |
$ | 503,047 | | |
$ | 460,159 | |
| Operating expenses | |
| 265,779 | | |
| 245,531 | |
| | |
| | | |
| | |
| Net Income | |
$ | 237,268 | | |
$ | 214,628 | |
7.
STOCKHOLDERS’ EQUITY / (DEFICIT)
Preferred
Stock – There are 20,000,000 shares of authorized preferred stock, par value $0.0001 per share, with 2,000,000 shares issued and
outstanding as of December 31, 2022 (2021 – 0). The 2,000,000 preferred shares issued to our CEO have a conversion ratio from one
preferred share into 1,000 common shares at par value.
Common
Stock - There are 2,000,000,000 shares of authorized Class A common stock, par value $0.0001 per share, with 1,862,430,584 shares issued
and outstanding as of December 31, 2022, and 2021.
March
6, 2022, the Company issued 2,000,000 preferred shares to our CEO in exchange for his 100% owned private company CMT Tech. Each preferred
share converts into 1,000 common shares at par value.
No
common stock was issued by the Company for the years ended December 31, 2022, and 2021, respectively.
Common
Stock Surrendered
On
October 1, 2021, a stockholder surrendered 2,500,000 shares to the Company.
On
October 12, 2021, a stockholder surrendered 50,000,000 shares to the Company.
8.
INCOME TAXES
Income
tax provision is summarized as follows:
SCHEDULE OF INCOME TAX PROVISION
| | |
2022 | | |
2021 | |
| | |
Year Ended December 31, | |
| | |
2022 | | |
2021 | |
| Current: | |
| | | |
| | |
| Federal | |
$ | 10,448 | | |
$ | - | |
| State | |
| 3,980 | | |
| - | |
| Total | |
| 14,429 | | |
| - | |
| Deferred: | |
| | | |
| | |
| Federal | |
| - | | |
| - | |
| State | |
| - | | |
| - | |
| Change in valuation allowance | |
| 57,805 | | |
| - | |
| Net operating losses | |
| (72,234 | ) | |
| | |
| | |
| | | |
| | |
| Income tax provision | |
$ | - | | |
$ | - | |
POWERDYNE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022, and 2021
8.
INCOME TAXES (Continued)
The
actual income tax provision differs from the “expected” tax computed by applying the Federal corporate tax rate of 21% to
the income before income taxes as follows:
SCHEDULE OF INCOME BEFORE INCOME TAXES
| | |
2022 | | |
2021 | |
| | |
Year Ended December 31, | |
| | |
2022 | | |
2021 | |
| “Expected” income tax benefit | |
$ | 49,754 | | |
$ | - | |
| State tax expense, net of Federal Benefit | |
| 3,980 | | |
| - | |
| Change in valuation allowance | |
| 57,805 | | |
| - | |
| Other | |
| - | | |
| - | |
| Net operating losses | |
| (111,540 | ) | |
| - | |
| | |
| | | |
| | |
| Income tax provision | |
$ | - | | |
$ | - | |
The
tax effects of temporary differences which give rise to significant portions of the deferred taxes are summarized as follows:
SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES
| |
| 2022 | | |
| 2021 | |
| | |
Year Ended December 31, | |
| |
| 2022 | | |
| 2021 | |
| Deferred tax assets: | |
| | | |
| | |
| Inventory reserves | |
$ | - | | |
$ | - | |
| Allowances for bad debts and returns | |
| - | | |
| - | |
| Accrued expenses | |
| (50,055 | ) | |
| 7,750 | |
| Asset valuation reserves | |
| - | | |
| - | |
| Net operating loss carry forwards - estimated | |
| 4,993,228 | | |
| 4,993,228 | |
| Other | |
| - | | |
| - | |
| Total deferred tax assets | |
| 4,943,173 | | |
| 5,000,978 | |
| Valuation allowance | |
| (4,943,173 | ) | |
| (5,000,978 | ) |
| | |
| | | |
| | |
| Net deferred tax assets | |
| - | | |
| - | |
| Deferred tax liabilities: | |
| | | |
| | |
| Deferred state taxes | |
| - | | |
| - | |
| Total deferred tax liabilities | |
| - | | |
| - | |
| | |
| | | |
| | |
| Net deferred tax assets | |
$ | - | | |
$ | - | |
As
of December 31, 2022, we have $4,993,228 in estimated net operating loss carryforwards for federal and state income tax purposes. In
assessing the realizability of the deferred tax assets, management considers whether it is more likely than not that some portion or
all of the deferred tax assets will not be realized. We consider the scheduled reversal of deferred tax assets, the level of historical
taxable income and tax planning strategies in making the assessment of the realizability of deferred tax assets. We have identified the
U.S. federal, Delaware, and Massachusetts “major” tax jurisdiction. Delaware is for Franchise Tax Purposes only, which we
paid $1,200 in 2022 and 2021. With limited exceptions, we remain subject to IRS examination of our income tax returns filed within the
last three (3) years, and to Massachusetts Department of Revenue examination of our income tax returns within the last four (4) years.
9.
COMMITMENTS AND CONTINGENCIES
Office
Space
Our
corporate headquarters are in a full-service office suite located in a building in North Reading, Massachusetts, consisting of approximately
5,000 square feet of retail, manufacturing, and office space. The lease was signed in 2006 and is extended every twelve months. The Company
is required to provide six months’ notice before the lease is terminated. We pay $4,000 per month. There was a two-month deposit,
which was applied against monthly rents over ten years ago.
Litigation
There
is no pending, threatened or actual legal proceedings in which the Company or any subsidiary is a party.
10. SUBSEQUENT EVENTS
On February 27, 2023, the Company issued 7,500,000
shares to a consultant as compensation for accounting services rendered.
On
February 27, 2023, the Company issued 15,000,000 shares to a consultant as compensation for legal services rendered.