|
Item 2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of Operations.
|
The following discussion is intended
to assist you in understanding our business and results of operations together with the Company’s present financial condition.
This section should be read in conjunction with our historical combined and consolidated financial data included elsewhere in this
Report. Statements in the Company’s discussion may be forward-looking statements. These forward-looking statements involve
risks and uncertainties. The Company cautions that a number of factors could cause future production, revenues and expenses to
differ materially from our expectations. Please see “Cautionary Note Regarding Forward-Looking Statements.”
Overview
Powerstorm Capital Corporation (the “Company”
or “Powerstorm”), is a development stage company formed solely for the purpose of identifying and consulting with companies
related to telecommunications infrastructure. We intend to focus on targets based primarily in Asia, South America, and Europe
for two reasons. First, we believe that businesses with an operating history and growth potential in these locations would benefit
significantly from access to the United States markets. Second, companies in emerging markets may offer the potential of capital
appreciation as those markets experience economic growth.
Our Strategy
We intend to capitalize on the continued
increase in the use of wireless communication services and the resulting infrastructure requirements for current and future generations
of wireless communication technologies. We are focused on strategy, business incubation and funding of emerging telecommunication
infrastructure companies with particular interest in the mobile telephony space. In addition to incubation, business development
support and facilitated access to funding, the Company is looking to be at the NextGen supply-chain forefront in e-Learning.
Our strategy includes a specific focus
on: (1) creative and localized business thinking; (2) focus on quality; (3) commitment and dependability; (4) outstanding client
care; (5) delivering genuine value and efficiency; and (6) durability. To that end, we are focusing on three segments of the telecom
infrastructure market:
|
·
|
Extending connections to un-served or
underserved areas rural, off-grid;
|
|
·
|
Optimizing to higher capacity, via increased
transmission microwave or via installing fiber optic cables instead of copper cables;
|
|
·
|
Offering Access to Power via Optimized
and Hybrid Solutions;
|
We are excited about exploring the prospect
of supporting the emerging sector of open online courses and other e-leaning opportunities.
Due to the continued increase in subscribers
for wireless personal communication and phone services, we expect wireless carriers will need to add a significant number of cell
sites to maintain the performance of their networks in the areas they currently cover and to extend service to new markets. In
addition, we believe that as wireless data services, such as e-mail, Internet access, and video, are deployed on a widespread basis,
wireless carriers will need to augment the cell density of their existing networks. The widespread deployment of those services
also may necessitate an overlay of new technology equipment and increase the demand for geographic expansion of network coverage.
Management is strongly rooted in the telecom
industry and with strong understanding of the geographical and cultural differences of the industry; we are an active player with
geographical focus in Africa and South-East Asia.
As part of its strategy to build new business
over three continents during 2013, Powerstorm evaluated solutions to reduce network opex across 60 networks that introduced a turnkey
hybrid power component. Powerstorm met and discussed integration of hybrid power with infrastructure development of telecommunication
companies including, but not limited to: Ericsson, Eltek, Flexenclosures, Huawei, ZTE, and NSN.
Powerstorm identified technical and financial
gaps as opportunities to propose more compelling hybrid power solutions as global operators are continually seeking ways to reduce
network opex and increase efficiencies by deploying hybrid technologies.
Powerstorm looks forward to serving global
operators’ need to reduce network opex by deploying hybrid technologies. As we streamline efficiencies, knowledge of our
success will rapidly spread throughout the telecommunications community that will lead to a healthy client base for us. It does
not take a visionary to understand that access to renewable and cost-effective energy will positively impact opex for new clients.
Given Powerstorm’s targeted experience and resources, management is confident of its ability to thrive in this sector.
Hybrid Projects
Country
|
|
Client
|
|
Project details
|
|
Subscribers
No. client
|
|
|
Subscribers
No Country
|
|
|
Population
|
|
|
Market
Share of
Operator
|
|
Australia
|
|
Mining Company
|
|
Optimized Batteries Solution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
USA
|
|
Manufacturer
|
|
Off Grid Solar + Batteries Solution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mozambique
|
|
Fixedline Operator
|
|
Off Grid Solar + Batteries + Cooling Solution
|
|
|
88,000
|
|
|
|
88,000
|
|
|
|
23,000,000
|
|
|
|
100.0
|
%
|
Tajikistan
|
|
Wireless Operator
|
|
Free Cooling Solutions
|
|
|
2,500,000
|
|
|
|
7,000,000
|
|
|
|
7,600,000
|
|
|
|
35.7
|
%
|
Somalia
|
|
Wireless Operator
|
|
Off Grid Solar + Batteries Solution
|
|
|
530,000
|
|
|
|
2,200,000
|
|
|
|
10,000,000
|
|
|
|
24.1
|
%
|
Guyana
|
|
Wireless Operator
|
|
Off Grid Solar + Batteries Solution
|
|
|
350,000
|
|
|
|
700,000
|
|
|
|
750,000
|
|
|
|
50.0
|
%
|
South Sudan
|
|
Wireless Operator
|
|
Off Grid Hybrid Solutions
|
|
|
600,000
|
|
|
|
1,400,000
|
|
|
|
10,000,000
|
|
|
|
42.9
|
%
|
Nepal
|
|
Wireless Operator
|
|
Off Grid Hybrid Solutions
|
|
|
10,000,000
|
|
|
|
18,700,000
|
|
|
|
26,500,000
|
|
|
|
53.5
|
%
|
Rwanda
|
|
Wireless Operator
|
|
Off Grid Hybrid Solutions
|
|
|
1,600,000
|
|
|
|
5,000,000
|
|
|
|
11,000,000
|
|
|
|
32.0
|
%
|
Mauritania
|
|
Wireless Operator
|
|
Off Grid Hybrid Solutions
|
|
|
2,000,000
|
|
|
|
2,800,000
|
|
|
|
3,300,000
|
|
|
|
71.4
|
%
|
Niger
|
|
Wireless Operator
|
|
Off Grid Hybrid Solutions
|
|
|
400,000
|
|
|
|
3,800,000
|
|
|
|
16,000,000
|
|
|
|
10.5
|
%
|
DRC
|
|
Wireless Operator
|
|
Off Grid Solar + Batteries Solution
|
|
|
2,800,000
|
|
|
|
17,000,000
|
|
|
|
68,000,000
|
|
|
|
16.5
|
%
|
Mali
|
|
Wireless Operator
|
|
Off Grid Hybrid Solutions
|
|
|
5,400,000
|
|
|
|
10,000,000
|
|
|
|
16,000,000
|
|
|
|
54.0
|
%
|
Afghanistan
|
|
Wireless Operator
|
|
Free Cooling Solutions
|
|
|
3,500,000
|
|
|
|
17,000,000
|
|
|
|
35,000,000
|
|
|
|
20.6
|
%
|
Guinea
|
|
Wireless Operator
|
|
Off Grid Solar + Batteries Solution
|
|
|
300,000
|
|
|
|
6,000,000
|
|
|
|
10,000,000
|
|
|
|
5.0
|
%
|
Mexico
|
|
Wireless Operator
|
|
Hybrid Solutions
|
|
|
27,000,000
|
|
|
|
83,000,000
|
|
|
|
115,000,000
|
|
|
|
32.5
|
%
|
Burkina Faso
|
|
Wireless Operator
|
|
Off Grid Solar + Batteries Solution
|
|
|
2,000,000
|
|
|
|
8,000,000
|
|
|
|
17,000,000
|
|
|
|
25.0
|
%
|
Guinea-Bissau
|
|
Wireless Operator
|
|
Off Grid Solar + Batteries Solution
|
|
|
25,000
|
|
|
|
1,000,000
|
|
|
|
1,500,000
|
|
|
|
2.5
|
%
|
Armenia
|
|
Wireless Operator
|
|
Unstable Grid Solar + Battery Solution
|
|
|
600,000
|
|
|
|
2,800,000
|
|
|
|
3,100,000
|
|
|
|
21.4
|
%
|
South Sudan
|
|
Wireless Operator
|
|
Off Grid Solar + Batteries Solution
|
|
|
420,000
|
|
|
|
1,400,000
|
|
|
|
8,250,000
|
|
|
|
30.0
|
%
|
Azerbaijan
|
|
Wireless Operator
|
|
Wind + Solar Hybrid Solutions
|
|
|
2,000,000
|
|
|
|
8,000,000
|
|
|
|
9,300,000
|
|
|
|
25.0
|
%
|
Tajikistan
|
|
Fixedline Operator
|
|
Off Grid Hybrid Power + Power Redistribution Solutions
|
|
|
2,700,000
|
|
|
|
7,000,000
|
|
|
|
7,600,000
|
|
|
|
38.6
|
%
|
Gabon
|
|
Wireless Operator
|
|
Off Grid Solar + Batteries Solution
|
|
|
200,000
|
|
|
|
1,300,000
|
|
|
|
1,500,000
|
|
|
|
15.4
|
%
|
Morocco
|
|
Wireless Operator
|
|
Off Grid Solar + Batteries Solution
|
|
|
12,000,000
|
|
|
|
36,000,000
|
|
|
|
32,000,000
|
|
|
|
33.3
|
%
|
Peru
|
|
Wireless Operator
|
|
Off Grid Solar + Batteries + Cooling Solution
|
|
|
15,000,000
|
|
|
|
28,000,000
|
|
|
|
29,000,000
|
|
|
|
53.6
|
%
|
Jordan
|
|
Wireless Operator
|
|
Free Cooling Solutions
|
|
|
3,000,000
|
|
|
|
7,400,000
|
|
|
|
6,500,000
|
|
|
|
40.5
|
%
|
Results of Operations
|
|
Three
Months
Ended
September 30,
2013
|
|
|
Three
Months
Ended
September 30,
2012
|
|
|
Nine
Months
Ended
September 30,
2013
|
|
|
Nine
Months
Ended
September 30,
2012
|
|
|
From
October 10,
2011
(Inception)
Through
September 30,
2013
|
|
Revenues
|
|
$
|
15,160
|
|
|
$
|
-
|
|
|
$
|
21,760
|
|
|
$
|
-
|
|
|
$
|
21,760
|
|
Total operating expenses
|
|
|
39,776
|
|
|
|
12,559
|
|
|
|
102,703
|
|
|
|
49,612
|
|
|
|
204,685
|
|
Other Income
|
|
|
-
|
|
|
|
-
|
|
|
|
270
|
|
|
|
-
|
|
|
|
270
|
|
Net loss
|
|
$
|
(24,616
|
)
|
|
$
|
(12,559
|
)
|
|
$
|
(80,673
|
)
|
|
$
|
(49,612
|
)
|
|
$
|
(182,655
|
)
|
For the Three Months Ended September 30, 2013 and 2012
Revenues
We are still in our development stage and
have generated insignificant revenues from consulting services of $15,160 during the three months ended September 30, 2013 and
$0 revenues during the three months ended September 30, 2012. The revenue is generated from consulting service provided to a third
party.
Operating Expenses
We incurred total operating expenses of
$39,776 and $12,559 for the three months ended September 30, 2013 and 2012, respectively. These expenses primarily consisted of
general and administrative expenses incurred in connection with the day-to-day operation of our business, the preparation of our
periodic reports, and stock-based compensation to third-party providers for legal and consulting services received.
Net Loss
During the three month ended September
30, 2013 and 2012, we incurred a net loss of $24,616 and $12,559, respectively. We are incurring more expenses due to start-up
phase of our proposed business operations.
For the Nine Months Ended September 30, 2013 and 2012
Revenues
We are still in our development stage and
have generated insignificant revenues from consulting services of $21,760 during the nine months ended September 30, 2013 and $0
revenues during the nine months ended September 30, 2012. The revenue is generated from consulting service provided to a third
party.
Operating Expenses
We incurred total operating expenses of
$102,703 and $49,612 for the nine months ended September 30, 2013 and 2012, respectively, which consisted of general and administrative
expenses incurred in connection with the day-to-day operation of our business, the preparation of our periodic reports, and stock-based
compensation to third-party providers for legal and consulting services received.
Net Loss
During the nine month ended September 30,
2013 and 2012, we incurred a net loss of $80,673 and $49,612, respectively. The increase of the net loss is due to increased operating
expenses and insufficient revenue generated.
From October 20, 2011 (Inception) through September 30,
2013
Revenues
For the period from October 10, 2011 (Inception)
to September 30, 2013, we generated insignificant revenues from consulting services of $21,760.
Operating Expenses
We incurred total operating expenses of
$204,685 for the period since inception on October 10, 2011 to September 30, 2013, which consisted primarily of general and
administrative expenses. The legal fees were primarily incurred in connection with the preparation and filing of the registration
statement with the SEC.
Net Loss
We had a net loss of $182,655 for the period
from October 10, 2011 (Inception) to September 30, 2013 due to incurred operating expenses and insignificant revenues.
Liquidity and Capital Resources
Our financial condition as of September
30, 2013 and December 31, 2012 and for the nine months ended September 30, 2013 and 2012 is summarized as follows:
Working Capital:
|
|
September 30,
2013
|
|
|
December 31,
2012
|
|
Current assets
|
|
$
|
11,225
|
|
|
$
|
3,814
|
|
Current liabilities
|
|
|
(32,108
|
)
|
|
|
(28,424
|
)
|
Working capital (deficit)
|
|
$
|
(20,883
|
)
|
|
$
|
(24,610
|
)
|
Cash Flows:
|
|
Nine Months
Ended
September 30,
|
|
|
From
October 10,
2011
(Inception)
through
September 30,
|
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
Cash used in operating activities
|
|
$
|
(72,185
|
)
|
|
$
|
(40,708
|
)
|
|
$
|
(126,619
|
)
|
Cash used in investing activities
|
|
|
(2,050
|
)
|
|
|
(7,367
|
)
|
|
|
(9,837
|
)
|
Cash provided by financing activities
|
|
|
71,858
|
|
|
|
49,065
|
|
|
|
137,638
|
|
Net increase in cash
|
|
$
|
1,182
|
|
|
$
|
990
|
|
|
$
|
1,182
|
|
We are a development stage company and
have incurred an accumulated loss of $182,655 since inception. Powerstorm has working capital deficit of $20,883 at September 30,
2013, which is not sufficient to finance its business plan for the next twelve months. Our independent auditors have issued an
audit opinion for us for the financial statements ended December 31, 2012 and the period then ended, which includes a statement
expressing substantial doubt as to our ability to continue as a going concern due to our limited liquidity and our lack of revenues.
We have minimal operating expenses at the
present time due to our limited business activities. To date, our founders have provided funding for our operations. We will, however,
be required to raise additional capital over the next twelve months to meet our current administrative expenses.
We are planning to obtain financing either
through the issuance of equity or debt. To the extent that funds generated from any private placements, public offerings, and/or
bank financings are insufficient, we will have to raise additional working capital through other sources.
We didn’t have sufficient resources
to effectuate our business plan from October 10, 2011 (Inception) through the period ended September 30, 2013. We expected to incur
a minimum of $150,000 in expenses during the next 12 months of operations.
We indicated that we would have to raise
the funds to pay for these expenses. We may have to borrow money from founders or shareholders, issue debt or equity, or enter
into a strategic arrangement with a third party. There is no assurance that we will secure additional capital. There currently
are no agreements, arrangements, or understandings that would enable Powerstorm to obtain funds through bank loans, lines of credit,
or any other source. If we are unable to raise funds for acquisitions it will have a severe negative impact on our ability to execute
our business.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Critical Accounting Policies and Estimates
The preparation of financial statements
in conformity with generally accepted accounting principles requires management to select appropriate accounting policies and to
make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses.
Estimates
In preparing our financial statements,
we make estimates and assumptions that affect the accounting for and recognition and disclosure of assets, liabilities, equity,
revenues and expenses. We must make these estimates and assumptions because certain information that we use is dependent on future
events, cannot be calculated with a high degree of precision from data available or simply cannot be readily calculated based on
generally accepted methods. In some cases, these estimates are particularly difficult to determine and we must exercise significant
judgment. We periodically evaluate our estimates and judgments that are most critical in nature. We believe that the following
discussion of critical accounting policies address all important accounting areas where the nature of accounting estimates or assumptions
is material due to the levels of subjectivity and judgment. Actual results could differ materially from the estimates and assumptions
that we use in the preparation of our financial statements.
Intangible Assets
The Company’s intangible assets consist
of trademarks with indefinite life. The Company capitalizes the filing and legal fees related to the trademark registrations, which
totaled $5,749 and $4,570 as of September 30, 2013 and December 31, 2012, respectively. The Company reviews its indefinite-lived
intangible assets for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable.
The Company assesses recoverability by reference to future cash flows from the products underlying these intangible assets. If
these estimates change in the future, the Company may be required to record impairment charges for these assets. As of September
30, 2013, no impairment was recorded.
Stock-Based Compensation
The Company expenses the cost of employee
services received in exchange for an award of equity instruments based on the grant date fair value of such instruments over the
service period.
Equity instruments issued to parties other
than employees for acquiring goods or services are recorded at either the fair value of the consideration received or the fair
value of the instruments issued in exchange for such services, whichever is more reliably measurable.
Recent Accounting Pronouncements
The Company does not expect adoption of the new accounting pronouncements
will have a material effect on the Company’s financial statements.