10-Q 1 f10q0316_powerdyneinter.htm QUARTERLY REPORT

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2016

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

For the transition period from to

Commission file number 0-53259

POWERDYNE INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Delaware		20-5572576
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

Jefferson Place

100 Jefferson Boulevard, Suite 200

Warwick, Rhode Island 02888-3849

(Address of principal executive offices) (zip code)

401/739-3300

(Registrant's telephone number, including area code)

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

☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer", "accelerated filer", "non-accelerated filer", and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large Accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒

(do not check if smaller reporting company)

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

☐ Yes ☒ No

Indicate the number of shares outstanding of each of the registrant's classes of common stock as of the latest practicable date.

Class		Outstanding at March 31, 2016

Common Stock, par value $0.0001		1,527,930,584 shares

POWERDYNE INTERNATIONAL, INC.

FINANCIAL STATEMENTS

March 31, 2016 and 2015

INDEX TO FINANCIAL STATEMENTS

(Unaudited)

Condensed Balance Sheets	2

Condensed Statements of Operations	3

Condensed Statements of Cash Flows	4

Notes to Condensed Financial Statements	5

POWERDYNE INTERNATIONAL, INC.

CONDENSED BALANCE SHEETS

	March 31, 2016			December 31, 2015
	(unaudited)

ASSETS

Current Assets:
Cash	$	263		$	1,922
Other receivable		676			-
Advances to stockholder		-			11,321
Total current assets		939			13,243

Property and Equipment
Property and equipment, net		75,717			79,031

Total Assets	$	76,656		$	92,274

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:
Accounts payable and accrued expenses	$	97,684		$	68,877
Due to related parties		25,000			25,000
Notes payable-related parties		151,205			371,605
Income tax payable		500			500
Total current liabilities		274,389			465,982
Long Term Liabilities:
Notes payable-related parties	$	231,880		$	-
Total Liabilities		506,269			465,982

Stockholders' Deficit:
Common stock; $0.0001 par value; 2,000,000,000 shares authorized, 1,527,930,584 shares issued and outstanding as of March 31, 2016 and 1,379,430,584 shares issued and outstanding as of December 31, 2015		152,793			137,943
Additional paid-in capital		2,693,266			2,678,066
Accumulated deficit		(3,275,672	)		(3,189,717	)
Total Stockholders' Deficit		(429,613	)		(373,708	)

Total Liabilities and Stockholders' Deficit	$	76,656		$	92,274

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

POWERDYNE INTERNATIONAL, INC.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

	For the three months ended March 31, 2016			For the three months ended March 31, 2015

Revenues	$	264		$	-
Cost of revenues		-			-
Gross profit		264			-
Operating expenses		86,219			62,993

Loss from operations		(85,955	)		(62,993	)

Other (Income) Expense
Derivative expense		-			25,961
Change in fair value of derivative		-			(168,804	)
Amortization of debt discount		-			42,021
Total Other (Income) Expense		-			(100,822	)

Income (loss) before income tax expense		(85,955	)		37,829

Income tax (income) expense		-			(456	)

Net income (loss)	$	(85,955	)	$	38,285

Basic and diluted Income/(loss) per common share	$	(0.00	)	$	0.00
Basic and diluted weighted average common shares outstanding		1,487,403,111			404,035,080

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

POWERDYNE INTERNATIONAL, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the three months ended March 31, 2016			For the three months ended March 31, 2015
	(unaudited)			(unaudited)

Operating Activities:
Net income (loss)	$	(85,955	)	$	38,285
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization		3,314			2,315
Write off of advances to shareholder		11,321			-
Stock compensation		30,050			-
Derivative and interest expense		6,555			25,961
Change in FV of derivatives		-			(168,804	)
Amortization of debt discounts		-			42,021
Changes in operating assets and liabilities:
Other receivable		(676	)		-
Accrued expenses		22,252			5,193
Due to related party		-			(6,200	)
Taxes payable		-			(956	)
Net cash used by operating activities		(13,139	)		(62,185	)

Financing Activities:
Principal paid on Notes payable related parties		-			(1,199	)
Proceeds from Notes payable		11,480			26,500
Proceeds from Notes payable related parties		-			60,000
Net cash provided by financing activities		11,480			85,301

Net increase (decrease) in cash		(1,659	)		23,116
Cash, beginning of period		1,922			2,265

Cash, end of period	$	263		$	25,381

Non-cash investing and financing activities:
Common stock issued for service	$	14,850		$	12,405
Settlement of derivative liability through conversion of notes payable	$	-		$	130,791
Supplemental disclosure if cash flow information
Cash paid for interest	$	-		$	-
Cash paid for taxes	$	-		$	500

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

POWERDYNE INTERNATIONAL, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

March 31, 2016 and 2015

(Unaudited)

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 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.

On January 26, 2015, Powerdyne International, Inc. filed a current report on a Definitive Information Statement on Schedule 14C in order to increase 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.

After the merger the Company begun production and distribution of completely packaged independent electrical generator units that run on environmentally-friendly fuel sources, such as natural gas and propane.

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 International, 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 International, Inc. and have been recorded at the historical cost basis of Powerdyne International, 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 International, 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.

3. BASIS OF PRESENTATION

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include all the notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation of the financial statements have been included.

POWERDYNE INTERNATIONAL, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

March 31, 2016 and 2015

(Unaudited)

3. BASIS OF PRESENTATION (Continued)

Certain information and footnote disclosure normally included in financial statements in accordance with generally accepted accounting principles have been omitted pursuant to the rules of the United States Securities and Exchange Commission (“SEC”). These unaudited financial statements should be read in conjunction with our audited financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 filed on April 14, 2016.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The summary of significant accounting policies presented below is designed to assist in understanding the Company’s financial statements. Such 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 financial statements.

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, and there is no assurance of future revenues. As of March 31, 2016, the Company had an accumulated deficit of $3,275,672. 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.

The Company expects that its activities will necessitate significant uses of working capital beyond March 31, 2016. Additionally, the Company’s capital requirements will depend on many factors, including the success of the Company’s continued marketing and sales efforts and the status of competitive products. The Company plans to continue financing its operations with cash received from financing activities.

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 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 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.

Use of Estimates

In preparing these audited financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

POWERDYNE INTERNATIONAL, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

March 31, 2016 and 2015

(Unaudited)

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Cash

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 March 31, 2016 and December 31, 2015, respectively.

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.

Property and Equipment

Property and 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 equipment is depreciated over 10 years on a straight-line basis. Depreciation expense for the periods ended March 31, 2016 and 2015 was $3,314 and $2,315, respectively.

This pronouncement was effective for financial statements issued for fiscal years beginning after December 15, 2008. The adoption of these requirements can affect the accounting for many convertible instruments with provisions that protect holders from a decline in the stock price. Each reporting period, the Company evaluates whether convertible debt to acquire stock of the Company contain provisions that protect holders from declines in the stock price or otherwise could result in modification of the exercise price under the respective convertible debt agreements. The Company determined that the conversion features in the convertible notes issued during the second, third, and fourth quarters of 2014, contained such provisions and recorded such instruments as derivative liabilities. See Note 8, Convertible Debt.

Long-Lived Assets

In accordance with ASC 350-30 (formerly SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets), the Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their then carrying values may not be recoverable. 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.

Income Taxes

As a result of the implementation of certain provisions of ASC 740, Income Taxes, (formerly FIN 48, Accounting for Uncertainty in Income Taxes – An Interpretation of FASB Statement No. 109), (“ASC 740”), which clarifies the accounting and disclosure for uncertainty in tax positions, as defined. ASC 740 seeks to reduce the diversity in practice associated with certain aspects of the recognition and measurement related to accounting for income taxes.

In 2010, the Company adopted Accounting for Uncertain Income Taxes under the provisions of ASC 740. ASC 740 clarifies the accounting for income taxes by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. It also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company did not recognize any additional liability for unrecognized tax benefits as a result of the adoption of ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Valuation allowances are established when it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company believes that its income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its financial position. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to ASC 740. In addition, the Company did not record a cumulative effect adjustment related to the adoption of ASC 740. The Company’s policy for recording interest and penalties associated with income-based tax audits is to record such items as a component of income taxes.

The Company’s tax provision was determined using an estimate of its annual effective tax rate using enacted tax rates expected to apply to taxable income in the years in which they are earned, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter the Company updates our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment. Income taxes payable as of March 31, 2016 and December 31, 2015 were $500 and $500, respectively.

POWERDYNE INTERNATIONAL, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

March 31, 2016 and 2015

(Unaudited)

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Loss 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. Since the Company has only incurred losses, basic and diluted loss per share is the same. As of March 31, 2016 and December 31, 2015, there were no outstanding dilutive securities.

The following table represents the computation of basic and diluted losses per share:

	Three Months ended March 31,			Three Months ended March 31,
	2016			2015
(Income) Loss available for common shareholder	$	(85,955	)	$	38,285
Basic and fully diluted loss per share	$	(0.00	)	$	0.0

Weighted average common shares outstanding - basic and diluted		1,487,403,111			404,035,080

Net loss per share is based upon the weighted average shares of common stock outstanding.

Recent Accounting Pronouncements

“In June 2014, the FASB issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. ASU 2014-10 eliminates the distinction of a development stage entity and certain related disclosure requirements, including the elimination of inception-to-date information on the statements of operations, cash flows and stockholders’ equity. The amendments in ASU 2014-10 will be effective prospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, however early adoption is permitted. The Company adopted ASU 2014-10 since the quarter ended June 30, 2014, thereby no longer presenting or disclosing any information required by Topic 915.”

5. PROPERTY AND EQUIPMENT - NET

Equipment consists of the following as of March 31, 2016 and December 31, 2015:

	March 31, 2016			December 31, 2015
Machinery and equipment	$	171,043		$	171,043
Less impairment of equipment		(38,484	)		(38,484	)
		132,559			132,559
Less accumulated depreciation		(56,842	)		(53,528	)

Total Property and Equipment	$	75,717		$	79,031

Equipment is stated at cost and depreciated on a straight-line basis over the assets’ estimated useful lives: machinery and equipment 10 years. Total depreciation expense for the periods ended March 31, 2016 and 2015 was $3,314 and $2,315, respectively.

POWERDYNE INTERNATIONAL, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

March 31, 2016 and 2015

(Unaudited)

6. LEASE

On March 11, 2015 Powerdyne International, Inc. (the “Company”) finalized its negotiations with Farmacia Brisas del Mar, a corporation organized under the laws of Puerto Rico (the “Lessee”), and the Company and the Lessee have entered into a five-year contract to lease power generating equipment to Lessee based upon power consumption. In addition, the custom designed system will also provide cogeneration capabilities with the addition of chillers to support the air conditioning demands. The agreement provides for a payment to the Company of a monthly fee equal to the greater of a set monthly base rate or a monthly base rate plus an additional amount based on kilowatt wattage. The agreement provides for termination by the Company only in the event of nonperformance by the Lessee unless Lessee pays all payments due for the remainder of the term. The agreement contains representation and warranties, default provisions and indemnification provisions typical for agreements of this type.

7. COMMON STOCK

Stock issued for services

On January 19, 2016 the Company issued 3,000,000 shares to a consultant as compensation for services rendered. The Company valued the stock at $0.0003, for a total of $900.

On January 19, 2016 the Company issued 500,000 shares to a consultant as compensation for services rendered. The Company valued the stock at $0.0003, for a total of $150.

On January 25, 2016 the Company issued 30,000,000 shares to stockholder as compensation for services rendered. The Company valued the stock at $0.0002, for a total of 6,000.

On January 25, 2016 the Company issued 75,000,000 shares to stockholder as compensation for services rendered. The Company valued the stock at $0.0002, for a total of $15,000.

On January 25, 2016 the Company issued 40,000,000 shares to a consultant as compensation for services rendered. The Company valued the stock at $0.0002, for a total of $8,000.

8. RELATED PARTY – Promissory Note

The Company obtained short-term cash flow from a related party in the form of three demand Notes Payable in the aggregate amount of $10,000 which have been outstanding since the year ended December 31, 2012. Two notes were amended and extended during 2014, and one note was amended and extended during the quarter ended September 30, 2015, changing the maturity date to one year later than what was on original notes. The Notes bear an interest rate of 7% per annum and are unsecured. The Company as of March 31, 2016 has outstanding notes in the amount of $383,085.

Note	Principal		Rate				Accrued interest			Maturity
							3/31/16	12/31/15
Promissory note 1	$	6,000		7	%	$	1,499	$	1,395		9/4/2016
Promissory note 2	$	2,000		7	%	$	489	$	454		10/1/2017
Promissory note 3	$	2,000		7	%	$	465	$	430		12/3/2017
Total	$	10,000				$	2,453	$	2,279

The Company obtained short-term cash flow from a related party in the form of nine demand Notes Payable in the aggregate amount of $70,953 during the period from 2012 through December 31, 2014. During the quarters ended September 30, 2015, June 30, 2015 and March 31, 2015 the Company borrowed $53,000, $115,000 and $60,000, respectively, in the form of eight demand notes. The Company repaid the principal amount of $453 during the year ended December 31, 2014, and $1,199 during the quarter ended March 31, 2015, and $700 during the quarter ended June 30, 2015. Notes 1 through 6 were amended and extended during 2014, changing the maturity date to one year later than what was on original notes. Notes 1 and 6 were amended again during the quarter ended September 30, 2015, changing the maturity date to one year later than what was on original notes. The Notes bear an interest rate of 7% per annum and are unsecured.

POWERDYNE INTERNATIONAL, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

March 31, 2016 and 2015

(Unaudited)

8. RELATED PARTY – Promissory Note (Continued)

Note	Principal		Rate				Accrued interest			Maturity
							3/31/16	12/31/15
Promissory note 1	$	5,000		7	%	$	1,258	$	1,171		7/25/2016
Promissory note 2	$	11,000		7	%	$	2,648	$	2,456		10/22/2017
Promissory note 3	$	15,000		7	%	$	3,515	$	3,254		11/24/2017
Promissory note 4	$	102		7	%	$	25	$	23		10/22/2017
Promissory note 5	$	879		7	%	$	206	$	191		11/24/2017
Promissory note 6	$	973		7	%	$	245	$	228		7/25/2016
Promissory note 7	$	22,147		7	%	$	3,137	$	2,750		5/4/2016
Promissory note 8	$	7,000		7	%	$	640	$	518		12/11/2016
Promissory note 9	$	6,000		7	%	$	536	$	432		12/22/2016
Promissory note 10	$	25,000		7	%	$	2,153	$	1,716		1/8/2017
Promissory note 11	$	35,000		7	%	$	2,826	$	2,215		2/5/2017
Promissory note 12	$	40,000		7	%	$	2,754	$	2,056		4/8/2017
Promissory note 13	$	30,000		7	%	$	1,910	$	1,387		5/5/2017
Promissory note 14	$	45,000		7	%	$	2,435	$	1,648		6/24/2017
Promissory note 15	$	25,000		7	%	$	1,189	$	753		7/28/2017
Promissory note 16	$	15,000		7	%	$	647	$	385		8/20/2017
Promissory note 17	$	13,000		7	%	$	481	$	254		9/21/2017
Promissory note 18	$	5,000		7	%	$	175	$	88		10/13/2017
Promissory note 19	$	10,000		7	%	$	295	$	121		10/30/2017
Promissory note 20	$	3,000		7	%	$	62	$	10		12/15/2017
Promissory note 21	$	17,000		7	%	$	352	$	55		12/15/2017
Total	$	331,101				$	27,489	$	21,711

The Company obtained short-term cash flow from a related party in the form of five demand Notes Payable in the aggregate amount of $6,504 during the period from 2012 through March 31, 2013, and $1,780 during the quarter ended March 31, 2016. Notes 1 and 2 were amended and extended during 2014, changing the maturity date to one year later than what was on original notes. Notes 3 and 4 were amended and extended during the quarter ended March 31, 2015, changing the maturity date to one year later than what was on original notes, and then amended and extended during the quarter ended March 31, 2016 changing the maturity date to two years later than what was on amended notes. The Notes bear an interest rate of 7% per annum and are unsecured.

POWERDYNE INTERNATIONAL, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

March 31, 2016 and 2015

(Unaudited)

8. RELATED PARTY – Promissory Note (Continued)

Note	Principal		Rate			Accrued interest				Maturity
						3/31/16		12/31/15
Promissory note 1	$	234		7	%	$	54	$	50		12/5/2017
Promissory note 2	$	170		7	%	$	40	$	37		11/18/2017
Promissory note 3	$	4,100		7	%	$	904	$	833		2/5/2018
Promissory note 4	$	2,000		7	%	$	440	$	405		2/7/2018
Promissory note 5	$	1,780		7	%	$	1	$	-		3/29/2018
Total	$	8,284				$	1,439	$	1,325

The Company obtained short-term cash flow from a related party in the form of two demand Notes Payable in the aggregate amount of $18,000 during the year of 2013. Both notes were amended and extended during the quarter ended March 31, 2015, changing the maturity date to one year later than what was on original notes, and amended and extended during the quarter ended March 31, 2016 changing the maturity date to two years later than what was on amended notes. The Notes bear an interest rate of 7% per annum and are unsecured.

Note	Principal		Rate			Accrued interest				Maturity
						3/31/16		12/31/15
Promissory note 1	$	10,000		7	%	$	2,175	$	2,000		2/21/2018
Promissory note 2	$	8,000		7	%	$	1,702	$	1,562		3/18/2018
Total	$	18,000				$	3,877	$	3,562

The Company obtained short-term cash flow from a related party in the form of one demand Note Payable in the aggregate amount of $6,000 during the year of 2014, and three demand Notes Payable in the aggregate amount of $9,700 during the quarter ended March 31, 2016. The Note bears an interest rate of 7% per annum and is unsecured.

Note	Principal		Rate			Accrued interest				Maturity
						3/31/16		12/31/15
Promissory note 1	$	6,000		7	%	$	695	$	590		8/6/2016
Promissory note 2	$	2,500		7	%	$	42	$	-		1/4/2018
Promissory note 3	$	4,200		7	%	$	20	$	-		2/5/2018
Promissory note 4	$	3,000		7	%	$	7	$	-		3/20/2018
Total	$	15,700				$	764	$	590

During the three months ended March 31, 2016 the total amount of related party loan proceeds was $11,480. The total interest accrued on related party loans at March 31, 2016 and December 31, 2014 was $36,022 and $29,467, respectively.

From time to time, the Company advances amounts to stockholders, as well as receives payments from stockholders in the form of cash and/or out-of-pocket expenditures for the benefit of the Company, which are business in nature. The balance of advances to stockholder as of March 31, 2016 and December 31, 2015 was $-0- and $11,321, respectively. Amounts accrued, but not yet paid as due to related party at March 31, 2016 and December 31, 2015 was $25,000 and $25,000, respectively.

9. COMMITMENTS AND CONTINGENCIES

Litigation

There are no pending, threatened or actual legal proceedings in which the Company or any subsidiary is a party.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We are an operational stage company to date which has experienced losses since our inception. Our independent auditors have issued a report raising a substantial doubt about our ability to continue as a going concern. We have only entered into one agreement for the leasing of our equipment to date and have derived minimal revenue from such agreement. Our sources of cash to date have been capital invested by shareholders and venture capital investors/lenders. Our only revenue, $1,016, has come from our one equipment lease agreement.

The basis of our overall business is founded on our ability to produce electrical power using state-of-the-art technology to power electrical generation equipment to produce electricity at a lower cost than the existing means of producing or providing primary electric power in its target markets. We expect that the difference between our cost to produce electrical power and the current billing rate of existing local utility providers will present savings for our customers and revenue opportunity for us.

Our business is to install and maintain, own and operate electrical power generation equipment (“gensets”) at client locations. We will own and maintain the equipment to be installed with the customer who will use it to produce its own electrical power. Our products are intended to be portable, easy-to-use units that can be conveniently deployed in various locations around the world. The units can also be assembled and combined to produce power centers providing up to 50 megawatts of power.

The following discussion contains forward-looking statements, as discussed above. Please see the sections entitled "Forward-Looking Statements" and "Risk Factors" for a discussion of the uncertainties, risks and assumptions associated with these forward-looking statements.

The following discussion and analysis of Powerdyne International, Inc. financial condition and results of operations are based on the unaudited financial statements as of March 31, 2016 and 2015, which were prepared in accordance with U.S. generally accepted accounting principles ("GAAP").

Plan of Operations

The Company's strategy is to pursue selected opportunities in markets where inexpensive and environmentally friendly power sources are needed and/or required.

Results of Operations - The three months ended March 31, 2016 compared to the three months ended March 31, 2015:

Revenues

Powerdyne International, Inc. generate revenue of $264 during the three months ended March 31, 2016, but did not generate revenues during the three months ended March 31, 2015.

Total operating expenses

During the three months ended March 31, 2016, total operating expenses increased 36.87% to $86,219 from $62,993 for the three months ended March 31, 2015. The increase from March 31, 2016 to march 31, 2015 is primarily due to increases of $25,145 in consulting expenses, 11,321 in bad debt expense, and $6,000 in non-employee stock compensation. The increase was offset by decreases of $3,825 in salaries and wages, $5,825 in outside sales consulting, $4,127 in legal and accounting, $1,850 in PR and promotion, And $1,347 in stock registration fees.

Net loss

During the three months ended March 31, 2016, the net loss increased 327.22% to ($85,955) from $37,829 for the three months ended March 31, 2015. Other expenses for the period ending March 31, 2015 included amortization of debt expense, and derivative expense from the notes issued to investors and change in fair value of derivatives related to the note issuances.

Liquidity and Capital Resources

As of March 31, 3016 and December 31, 2015, Powerdyne International, Inc. had working capital deficits of $505,330 and $452,739, respectively. For the three months ended March 31, 2016, Powerdyne International, Inc. had $1,659 decrease in cash compared to the year end. The cash used in operations of ($13,139) was primarily due to net loss from operations of $85,955 plus non-cash expenses of $3,314 of depreciation, $11,321 of bad debt expense, $30,050 of common stock issued for services and stock compensation, $6,555 of interest expense, $676 increase in other receivable, and $22,252 increase in accrued expenses. The total cash provided by financing activities of $11,480 was due to of proceeds of notes payable to related parties.

We currently owe $383,085 (exclusive of interest) under notes due to related parties, of which $22,147 is due May 2016, $5,973 is due July 2016, $6,000 is due August 2016, $6,000 is due September 2016, $13,000 is due December 2016, $25,000 is due January 2017, $35,000 is due February 2017, $40,000 is due April 2017, $30,000 is due May 2017, $45,000 is due June 2017, $25,000 is due July 2017, $15,000 is due August 2017, $13,000 is due September 2017, $28,102 is due October 2017, $16,049 is due November 2017, $22,234 is due December 2017, $2,500 is due January 2018, $20,300 is due February 2018, and $12,780 is due March 2018. There can be no assurance that we will have the requisite funding to repay these loans when due.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is deemed by our management to be material to investors.

Critical Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts during the reporting periods. Actual results could differ from those estimates. Significant estimates and assumptions included in Powerdyne International, Inc.’s financial statements relate to estimate of loss contingencies and accrued other liabilities.

Fair Value of Financial Instruments

ASC 820-10 (formerly SFAS No. 157, Fair Value Measurements) requires entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value. ASC 820-10 defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. As of March 31, 2016 and December 31, 2015, the carrying value of certain financial instruments such as accounts receivable, accounts payable, accrued expenses, and amounts due to/from related party approximates fair value due to the short-term nature of such instruments.

Impairment of Long-Lived Assets

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable to smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2016. The term "disclosure controls and procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of March 31, 2016, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were not effective at the reasonable assurance level due to the insufficient controls over timely financial statement preparation and review as well as over the preparation and review around accounting for certain complex transactions.

The design of monitoring controls used to assess the design and operating effectiveness of our internal controls is inadequate. We also do not have an adequate internal process to report deficiencies in internal control to management on a timely basis.

Changes in Internal Control over Financial Reporting

We continue to make progress towards remediating the material weaknesses in our internal control over financial reporting. The actions taken include, amongst others, (i) installing a new accounting system which allows us to implement appropriate procedures and processes necessary for adequate controls (ii) implementing month end and period end closing procedures and review processes for key aspects of our financial reporting process, (iii) designing, documenting and implementing policies and procedures; and (iv) instituting formal procedures for accounting for options.

No other changes in our internal control over financial reporting occurred during the quarter ended March 31, 2016 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II

ITEM 1. LEGAL PROCEEDINGS

There are no pending, threatened or actual legal proceedings in which the Company or any subsidiary is a party.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On January 19, 2016 we issued 3,000,000 shares of our common stock to a consultant for services provided. The issuance of the shares was made in reliance upon Section 4(a) (2) of the Securities Act of 1933, as amended, the consultant represented that they were an accredited investor and no general solicitation was used.

On January 19, 2016 we issued 500,000 shares of our common stock to a consultant for services provided. The issuance of the shares was made in reliance upon Section 4(a) (2) of the Securities Act of 1933, as amended, the consultant represented that they were an accredited investor and no general solicitation was used.

On January 25, 2016 we issued 75,000,000 shares of our common stock to a stockholder for services provided. The issuance of the shares was made in reliance upon Section 4(a) (2) of the Securities Act of 1933, as amended, the stockholder represented that they were an accredited investor and no general solicitation was used.

On January 25, 2016 we issued 30,000,000 shares of our common stock to a stockholder for services provided. The issuance of the shares was made in reliance upon Section 4(a) (2) of the Securities Act of 1933, as amended, the stockholder represented that they were an accredited investor and no general solicitation was used.

On January 25, 2016 we issued 40,000,000 shares of our common stock to a consultant for services provided. The issuance of the shares was made in reliance upon Section 4(a) (2) of the Securities Act of 1933, as amended, the consultant represented that they were an accredited investor and no general solicitation was used.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

There were no matters submitted to a vote of the security holders during the quarter covered by this report.

ITEM 5. EXHIBITS

(a)

Exhibits

31.1	Certification of the Chief Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1	Certification of the Chief Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2	Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

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

	POWERDYNE INTERNATIONAL, INC.

Dated: May 22, 2016	By:	/s/ James F. O’Rourke
		Chief Executive Officer (Principal Executive Officer)

Dated: May 22, 2016	By:	/s/ Linda H. Madison
		Chief Financial Officer (Principal Accounting Officer)