The following management's discussion and analysis should be read in conjunction
with the Company's historical consolidated financial statements and the related
notes thereto included in our audited financial statements for the year ended
December 31, 2020, and the notes thereto. The management's discussion and
analysis contains forward-looking statements that involve risks and
uncertainties, such as statements of our plans, objectives, expectations and
intentions. Any statements that are not statements of historical fact are
forward-looking statements. When used, the words "believe," "plan," "intend,"
"anticipate," "target," "estimate," "expect" and the like, and/or future tense
or conditional constructions ("will," "may," "could," "should," etc.), or
similar expressions, identify certain of these forward-looking statements. These
forward-looking statements are subject to risks and uncertainties that could
cause actual results or events to differ materially from those expressed or
implied by the forward-looking statements in this quarterly report. The
Company's actual results and the timing of events could differ materially from
those anticipated in these forward-looking statements as a result of several
factors. The Company does not undertake any obligation to update forward-looking
statements to reflect events or circumstances occurring after the date of this
quarterly report.
Overview
On May 15, 2013, Receivable Acquisition & Management Corporation, a Delaware
corporation, completed the acquisition of Cornerstone Program Advisors LLC, a
Delaware limited liability company ("Cornerstone") and Sustainable Energy
Industries, Inc., a Delaware corporation ("Sustainable"), and the Company
assumed the operations of each of these entities (the "Merger"). Receivable
Acquisition & Management Corporation had operated as a business purchasing and
collecting upon defaulted consumer receivables; those operations were ceased and
collections on any remaining receivables are being run off. Cornerstone has been
in the business of managing energy infrastructure projects, specializing in the
non-profit marketplace. Sustainable is in the business of developing, marketing,
and implementing clean tech technologies. The Company has refocused on managing
energy infrastructure projects and developing applications for an
environmentally benign heat conversion technology with particular focus on the
geothermal and waste-heat-to-energy production markets.
Shareholders approved a name change to PwrCor, Inc. at the shareholder meeting
in January, 2017, by a large majority of shareholder votes. The corporate name
change in Delaware to "PwrCor, Inc." was effective on March 3, 2017.
Results of Operations
During the three and six month periods ended June 30, 2021, the Company had a
net loss of ($22,723) and ($68,502), respectively, on revenues of $16,625 and
$26,500, respectively, versus a net loss of ($40,743) and ($66,649),
respectively, on revenues of $41,570 and $155,340, respectively, in the three
and six month period ended June 30, 2020. The slightly higher net loss in the
six month period in 2021 as compared to the corresponding period last year was
due primarily to lower consulting fee revenue in connection with reduced client
activity, moderated by correspondingly lower fees for the Company's consulting
contractors. The reduced business activity is largely a result of the impact of
COVID-19 on the operations of our project management customers, which are
currently all hospitals.
Revenue
Revenue declined 60% for the three month period and 83% for the six month period
ended June 30, 2021, as compared to the corresponding periods from 2020, due to
reduced activity with a major customer. The margin of project management revenue
over the corresponding cost of subcontracted consultants for such projects has
increased from 2020 to 2021 due to a changing mix of customer and consultant
activity. This gross profit for the six month period ended June 30, 2021, was
52% of revenues, versus 36% for the corresponding period in 2020.
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Operating Expenses
Total operating expenses for the three and six month periods ended June 30, 2021
were $39,348 and $95,002 respectively, versus $82,313 and $221,989 respectively,
during the three and six month periods ended June 30, 2020. The 52% decrease in
operating expenses in the three month period, and 57% decrease in the six month
period in 2021, against the corresponding period in 2020, were primarily due to
lower costs of subcontracted consultants naturally resulting from the decreased
project management activity noted above. Both periods saw most expenses decline
in 2021 in tandem with reduced business activity.
Consulting Expenses
The Company outsources a significant portion of its project management,
oversight and advisory activities to a carefully selected group of small firms,
individuals and subcontractors with expertise specific to the projects underway.
As of the quarter ended June 30, 2021, the Company was using two 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. Consulting expenses for the
three and six month periods in 2021 are a net total after downward adjustments
for prior-period accruals.
Liquidity and Capital Resources
As of June 30, 2021, the Company had a working capital deficit (that is, total
current assets minus total current liabilities) of ($559,532) versus a working
capital deficit of ($499,557) as of the year ended December 31, 2020. The
working capital deficit increase was due primarily to a reduction in receivables
and increase in payables.
For the period ended June 30, 2021, the Company had cash of $33,708 versus
$49,729 at December 31, 2020. For the six months ended June 30, 2021, net cash
(used) by operating activities was ($16,020) versus net cash (used) by operating
activities of ($21,743) for the six months ended June 30, 2020. The major factor
in the change in net cash from operating activities for the six months ended
June 30, 2021, compared to the higher decrease for the period ended June 30,
2020, was the conservation of cash during this difficult business period.
For the three month periods ended June 30, 2021 and June 30, 2020, no cash was
provided by financing activities and no cash was used in investing activities.
The worldwide emergence of a novel 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 disruptions in capital markets.
Regarding the first, the Company has been engaged in projects at hospitals
primarily in the New York City, which have been dealing with unprecedented
losses to their normal business and less than forecast demand for virus-related
treatments. Dealing with these financial losses, there can be no assurance that
these hospitals will resume the Company's activity in the near term, and if so
at what level of activity, or even 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.
While the Company's has open purchase orders with its primary client,
construction projects involving capital expenditures for facilities expansion
and renovation are being re-prioritized in light of the financial impact of the
COVID emergency, and some have been postponed. Work that continues is primarily
offsite, and at a modified pace. The timing of returning to normality is
unpredictable at the current time.
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 possible
cash infusions by major stockholders, will be sufficient to finance its
operations for the next twelve months.
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In 2020, the Company applied for and received temporary federal assistance in
the form of an economic injury disaster loan, known as EIDL. The Company is
using the loan for qualifying expenses. In view of the continuing effects of
the COVID pandemic on Company operations, in early 2021 the Company applied for
an increase in the amount loaned to the Company under the EIDL program, and
received approval in July for a supplemental amount, bringing the total amount
on the 30 year loan to $200,000.
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. However, progress with those initiatives
linked closely to the oil and gas markets may continue to lag due to continued
financial uncertainty in those 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 businesses 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 largely dependent on its ability to
collect its receivables and increase revenues.
Income Taxes
The Company did not record any income tax provision for the six month period
ended June 30, 2021 and 2020, and does not expect any material income tax
liability for the period. There were approximately $1,800 in minimum taxes paid
in the six months ended June 30, 2021, most covering earlier periods.
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. These accounting policies are described at relevant sections
in this discussion and analysis and in the condensed consolidated financial
statements included in this quarterly report.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements.
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