UNITED STATES

SECURITIES
AND EXCHANGE COMMISSION

WASHINGTON,
D.C. 20549




FORM
10-K/A

(Amendment
No. 1)




ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT
OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2012

Commission File No. 000-27866




PowerVerde,
Inc.

(Exact name of registrant as specified in
its charter)




|Delaware                                                               |  | 88-0271109                                  
|---------------------------------------------------------------------- |  | --------------------------------------------
|(State or other jurisdiction of
        incorporation or organization) |  | (I.R.S. Employer
        Identification No.)
|                                                                       | 
|420 S. Dixie Highway Suite 4-B
        Coral Gables, FL                |  | 33146                                       
|(Address of principal executive offices)                               |  | (Zip Code)                                  

(305) 666-0024

(Registrant’s telephone number, including
area code)




Securities registered pursuant to Section
12(b) of the Act: None

Securities registered pursuant to Section
12(g) of the Act: Common Stock, par value $0.0001 per share




Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o
No x

Indicate by check mark if the registrant
is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o
No x

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 x No o

Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files). Yes x
No o

Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the
registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. o Disclosure not contained.

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



|Large accelerated
    filer |  | o |  | Accelerated
    filer     |  | o
|--------------------------- |  | - |  | ------------------------- |  | -
|                            |  |   | 
|Non-accelerated filer       |  | o |  | Smaller reporting company |  | x

Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x



State the aggregate
market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the
stock was sold, or the average bid and ask prices of such stock equity, as of June 29, 2012, the last business day of the issuer’s
most recently completed second fiscal quarter: $14,104,000.

As of May 13,
2013, the number of outstanding shares of common stock, $0.0001 par value per share, of the registrant was26,400,106.

DOCUMENTS INCORPORATED BY REFERENCE:None.







Explanatory Note

The purpose of this Amendment No. 1 on Form 10-K/A is to respond
to comments received from the U.S. Securities and Exchange Commission’s Division of Corporation Finance in its letter dated
December, 30, 2013, regarding our previously filed Annual Report on Form 10-K for the fiscal year ended December 31, 2012, filed
with the U.S. Securities and Exchange Commission on May 16, 2013 (“Original Form 10-K”). This amendment amends the
following:

| | ● | Part I, Item 1 (Business) has been amended to delete the section on pages 5-6 titled “Impact of the JOBS Act.”
This language was deleted as the Company does not qualify as an “emerging growth company” for purposes of the Jumpstart
Our Business Startup Act of 2012 (the “JOBS Act”).
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Exhibit 32.2 has been amended to correctly identify the Company’s Chief Financial Officer in the first paragraph.
| | - | -----------------------------------------------------------------------------------------------------------------

There are no changes to the Original Form 10-K other than those
outlined above. Except as required to reflect the changes noted above, this Amendment No. 1 on Form 10-K/A does not attempt to
modify or update any other disclosures set forth in our Original Form 10-K. Furthermore, this Amendment No. 1 on Form 10-K/A does
not purport to provide a general update or discussion of any other developments of the Company subsequent to the filing of the
Original Form 10-K.







PowerVerde, Inc.Annual Report on Form 10-K/AYear Ended December 31, 2012

INDEX

|                |    |                                 |  |     
|--------------- | -- | ------------------------------- |  | ----
|                |    |                                 |  | PAGE
|PART I          |    | 1                              
|                |    |                                 |  |     
|ITEM 1.         |    | BUSINESS.                       |  | 1   
|ITEM 1B.        |    | UNRESOLVED STAFF

    COMMENTS. |  | 12  
|ITEM 2.         |    | PROPERTIES.                     |  | 12  
|ITEM 3.         |    | LEGAL PROCEEDINGS.              |  | 12  
|ITEM 4.         |    | MINE SAFETY DISCLOSURES.        |  | 12  
|Not applicable. | 12
|                |    |                                 |  |     
|SIGNATURES      |    | 13                             









PART I

| | ITEM 1. | BUSINESS.
| | ------- | ---------



General

Vyrex Corporation (“Vyrex”

or the “Company”) was incorporated in Nevada in 1991, and operated as a research and development stage company seeking

to discover and develop pharmaceuticals, nutraceuticals and cosmeceuticals for the treatment and prevention of respiratory, cardiovascular

and neurodegenerative diseases and conditions associated with aging (the “Biotech Business”). The Biotech Business

was unsuccessful and, as a result, the Company ceased material operations relating to that business in October 2005; however, the

Company retained its intellectual property rights and contract rights relating to that business (the “Biotech IP”).

On October 17, 2005, the Company reincorporated in Delaware.

On February 11, 2008, Vyrex, PowerVerde,

Inc. (“PowerVerde”) and Vyrex Acquisition Corporation (“VAC”), a wholly-owned subsidiary of Vyrex, all

Delaware corporations, entered into an Agreement and Plan of Merger (the “Merger Agreement”). Pursuant to the terms

of the Merger Agreement, on February 12, 2008, VAC merged with and into PowerVerde, with PowerVerde remaining as the surviving

corporation and a wholly-owned subsidiary of Vyrex (the “Merger”). As consideration for the Merger, as of the closing

of the Merger, each issued and outstanding share of common stock of PowerVerde was converted into the right to receive 1.2053301

shares of the common stock of Vyrex and each share of VAC was converted into one share of PowerVerde common stock. As a result

of the Merger, the former shareholders of PowerVerde hold 95% of the common stock of Vyrex. Pursuant to the Merger Agreement, PowerVerde

paid $233,000 in accounts payable and other liabilities owed by Vyrex.

On August 6, 2008, at a special meeting

of shareholders, Vyrex’s name was changed to “PowerVerde, Inc.” Simultaneously, the name of our operating company,

PowerVerde, Inc., was changed to “PowerVerde Systems, Inc.”

In March 2009, we sold all of the Biotech

IP to Dr. Edward Gomez, a pre-Merger investor in PowerVerde and now a shareholder of the Company. In exchange for the assignment

of the Biotech IP to him, Dr. Gomez agreed to (i) pay all future costs and expenses relating to the Biotech IP, including, but

not limited to, patent fees, license fees and legal fees, and (ii) pay to the Company 20% of all net revenues received from the

sale and/or licensing of any of the Biotech IP.

Please note that the information provided

below relates to the combined company after the Merger. Since our operations after the Merger consist solely of PowerVerde operations,

except where the context otherwise requires, references throughout this Report hereafter to “PowerVerde,” “we,”

“us,” “our” and the “Company” will mean or refer to PowerVerde’s business and operations.

The Company is a Delaware corporation

formed in March 2007 by George Konrad and Fred Barker, who remain our two largest stockholders. Mr. Konrad served as an officer

and director of the Company until October 2012. Mr. Barker remains as an officer and director. See Item 10 “Directors, Executive

Officers and Corporate Governance.” The Company was formed in order to further develop, commercialize and market a series

of unique electric generating power systems designed to produce electrical power with zero emissions or waste byproducts, based

on a patented pressure-driven motor and related organic pressure-driven cycle components. The design of the motor was conceived

by Mr. Barker in January 2001. Mr. Barker previously had a working relationship with Mr. Konrad and enlisted Mr. Konrad and his

manufacturing expertise, together with Mr. Barker’s own engineering expertise, to co-develop the motor. As a research and

development company, we have tested and continue to test other style drivers as well.

1





An initial prototype of the motor was

created and tested in early 2002, and, based on positive test results, Messrs. Barker and Konrad concluded that the concept could

lead to a commercial product. A new design was developed in early 2007, which resulted in a motor that produced more torque and

horsepower, as well as being easier to mass produce. The prototype was tested extensively, and substantial tooling and engineering

with CAM/CNC programming was completed at the facility of Mr. Konrad’s company, Arizona Research and Development (“ARD”),

for the possibility of an eventual mass production model.

Based on data learned from these earlier

prototypes, PowerVerde has manufactured three 25/50kW motors and additional next generation motors or drivers as well. The Company

has been testing these devices on a more powerful and advanced organic pressure-driven cycle (OPDC) referred to as the Liberator.

During 2009, the Company also built and tested a 100kW pressure-driven motor at another machining and manufacturing facility, Global

Machine Works, in Arlington, WA. These two related but distinct systems are designed for two different markets. The 25/50kW system

uses low-grade heat (waste heat) as a fuel source, expanding a working fluid thereby driving the motor/generator, while the 100kW

system (without organic rankine cycle (“ORC”) or organic pressure driver cycle (“OPDC”) systems), uses

wasted energy (pressure) from natural gas pipeline and wellhead infrastructures to drive the motor/generator and create electric

power. In early 2010, our Board of Directors created two separate product lines: waste heat/solar organic rankine cycle powered

systems; and gas pipeline/wellhead waste energy recovery systems. Because the markets and customers for these two systems are entirely

different and the design and manufacturing are geographically separate, we believe that this bifurcation will result in a more

streamlined and efficient business structure. The development of the natural gas pipeline system has been suspended due to our

decision to dedicate our limited human and financial resources to commercialize our waste heat/solar thermal system, which we believe

has more near term potential.

In January 2011, we entered into a Binding

Letter of Intent for European Distribution (the “BLOI”) with Newton Investments BV, a Dutch corporation based in Leeuwarden,

Netherlands (“Newton”). Pursuant to the BLOI, Newton purchased one Liberator system for a discounted price of $130,000,

which was delivered in July 2011. In September 2011, we entered into a definitive License Agreement with Newton as contemplated

by the BLOI. Under the Agreement, Newton will, for a period of 10 years, be the exclusive manufacturer and distributor of the our

proprietary emissions-free electrical power generation systems (the “Systems”) in the 27 countries which are currently

members of the European Union, subject to Newton achieving minimum sales of at least 100 Systems per year, beginning in the second

year of the Agreement. Pursuant to the Agreement, we are entitled to a royalty equal to 20% of the gross sale price of each System

sold by Newton. We have authorized Newton to manufacture our Systems under a strict licensing agreement with a Dutch foundry and

machine shop, Autonational BV, based in Ijlst, Netherlands, and capable of producing hundreds of units per year. Of the 27 European

Union nations, we are initially focusing on the Netherlands, Belgium, Germany and the Scandinavian countries.

Despite our initial optimism, the PowerVerde

driver (motor) failed to demonstrate sufficient capacity for the uninterrupted hours of operation required for commercial performance.

PowerVerde has addressed this issue, and we believe that by the end of 2013 we will be able to deliver a commercial device capable

of operation for 25,000 hours (approximately three years) without major mechanical failure. There can be no assurance, however,

that these technical issues will be resolved. Due to the ongoing technical problems, Newton has yet to sell any of our Systems.

Consequently, we have delayed the commencement of Newton’s annual sales quotas until these problems are resolved.

In November 2011, we entered into a binding

letter of intent for the acquisition of all of the membership interests in Cornerstone Conservation Group LLC, Scottsdale, Arizona

(“Cornerstone”). The acquisition was consummated pursuant to a definitive agreement executed in March 2012. Cornerstone’s

main asset is its proprietary Combined Cooling, Heating and Power (“CCHP”) technology, which utilizes waste heat from

commercial and residential heating, ventilation air conditioning and refrigeration (“HVACR”) systems. Cornerstone also

has substantial experience and technology relating to geothermal or ground source heat pumps.

2





As consideration for the Cornerstone

acquisition, we issued (i) a total of 2,250,000 restricted shares of our common stock to Cornerstone’s members, Bryce

Johnson (“Johnson”), Paul Kelly (“Kelly”) and Vincent Hils (“Hils”) in the amounts of 1,575,000,

337,500 and 337,500 shares, respectively, (ii) 10,000 restricted shares to a Cornerstone employee, and (iii) three-year

warrants to purchase 150,000 shares each to Johnson and Kelly at exercise prices of $2.00-$4.00 per share. In November 2011, Johnson

joined our Board of Directors, and in January 2012 we moved our operations to a facility in Scottsdale, Arizona, owned by Johnson.

See “Item 2 - Properties.” Johnson also became our chief operating officer in January 2012. Johnson resigned from

his officer and director positions in March 2013. As a result of Johnson’s resignation, Management decided to impair the

goodwill entirely as of December 31, 2012.

We believe that Cornerstone’s technology

is very complementary to PowerVerde’s platform and existing markets – mainly through the conversion of thermal

energy into electric power generation. While we believe that the Cornerstone acquisition brings substantial opportunities for synergy,

there can be no assurance that the acquisition will prove successful.

Our focus for the remainder of 2013 is

to commercialize our waste heat power systems in our Phoenix facility for eventual deployment to Europe. We plan to complete our

development and testing by the summer of 2013 and have a market-ready system by the end of 2013; however, there can be no assurance

that we will meet this timetable or ever have a market-ready system. We and Newton continue discussions with certain manufacturers

of integrated components and service providers in the oil and natural gas industries, methane plants, as well as with electric

utility companies and government entities. There can be no assurance that any manufacturing, distribution or marketing agreements

will be successfully consummated or executed or that we will ever achieve material sales in Europe or elsewhere.

Employees

We currently have two full-time employees:

Messrs. Mark Prinz and Ellis Peterson, both based in Scottsdale, Arizona. Both of these employees were hired in 2011. Our chief

engineer, Hank Leibowitz, was hired pursuant to a part-time consulting agreement in October 2012.

Patents

Messrs. Barker and Konrad together obtained

U.S. Patent No. 6,840,151 for a “push-push type fluid pressure actuated motor,” which was issued on January 11, 2005.

On June 6, 2007, Messrs. Barker and Konrad and the Company’s predecessor, PowerVerde, LLC, permanently and exclusively assigned

to PowerVerde all rights to the patent and the other intellectual property relating to the PowerVerde systems. On July 16, 2008,

Messrs. Barker and Konrad filed U.S. Patent application No. 61/081,298 for a “system to produce electricity using waste energy

in natural gas pipelines.” This application was assigned to the Company; however, it was abandoned in 2009 because we decided

to replace it with a new and improved provisional patent application regarding the natural gas pipeline technology. Mr. Barker

filed on behalf of PowerVerde a new provisional patent application regarding this technology on April 7, 2010. On October 17, 2008,

Mr. Konrad and Mr. Brian K. Gray filed U.S. Patent application No. 12/253,580 for a “low temperature organic rankine cycle

system.” This application was assigned to the Company. There can be no assurance that these patents will be issued or maintained.

3





In late 2010, we began filing several

provisional patents covering our new organic pressure-driven cycle technology. In January 2011, we hired the inventor of this technology,

Keith Johnson, as a specialist in advanced pressure-driven systems. He has assigned to PowerVerde his patent application in this

field, U.S. Patent Application 61/424,249 filed on December 17, 2010. There can be no assurance that these patents will be issued

or maintained.

Pursuant to the Cornerstone acquisition,

we acquired all rights to U.S. Patent Application No. 12,749,416 filed on March 29, 2010, entitled “Solar Photovoltaic

Closed Fluid Loop Evaporation Tower.” This application was filed by Bryce Johnson as inventor and assigned to Cornerstone

in connection with the acquisition. There can be no assurance that this patent will be issued or maintained.

We expect to file additional patent applications

pertaining to our advanced organic pressure driven cycle later in 2013. There can be no assurances that we will be able to do so

or that any patents will be issued based on these applications.

Product Description

The 2007 advanced generation PowerVerde

motor, with its related organic rankine cycle (ORC) system, produced 10kW of net power. Our subsequent larger 25/50kW waste heat/solar

design was a next generation system. This system was designed to be installed in single- or multiple-stacked units for businesses,

factories, or any waste heat or solar application such as schools, hospitals, ships and other users of electric power. These non-combustion

motors are fueled by heat (waste heat), via an ORC related system, and create a pressure source powering the PowerVerde motor/generator

while emitting zero carbon emissions or waste stream byproducts. The other PowerVerde system was designed to operate on wellhead

or natural gas pipeline infrastructure and lacks the ORC component, but uses wasted latent energy (pressure) inherent in “city

gate” letdowns or wellheads as its pressure source. This project (well head or natural gas pipeline applications) has been

suspended so that we can focus exclusively on waste heat applications. To this end we anticipate and have designed systems that

will be scaled even larger in the future.

Our ORC system requires:

| | · | A heat source (solar, waste heat, geothermal or bio-mass);
| | - | ----------------------------------------------------------

| | · | An organic rankine cycle (ORC) or organic pressure driven

cycle (OPDC) style system to convert heat into pressure;
| | - | -------------------------------------------------------------------------------------------------------------------

| | · | PowerVerde motor to convert the pressure into horsepower;

and
| | - | --------------------------------------------------------------

| | · | A generator to convert the horsepower into electricity.
| | - | -------------------------------------------------------



We have built and tested the 25/50kW

ORC systems, and we believe that the overall design meets or exceeds performance metrics when compared to the industry at large.

We have, however, remained challenged with our inability to thus far generate the continuous hours of operation that we believe

necessary for commercial quality expectations. We continue to work toward our goal of a system capable of 25,000 hours (approximately

three years) of continuous operation. Meanwhile, we believe that we have successfully enhanced the system’s power capacity

to as much as 50kW or more of gross electrical power.

4





Government Regulations and Incentives

We believe that the time may be right

for the PowerVerde systems. Regulatory proposals to limit greenhouse gases are under consideration, particularly in Europe. One

such measure would be a carbon tax placed on fuels in proportion to their carbon content. Another would be a tax on oil. Yet another

would be a “cap and trade” system. All of these would drive up the price of electricity from fossil fuel sources, yet

have no impact on carbon-free renewable sources such as those offered by us; however, due to the weak economy in the United States

and Europe and strong political opposition, there can be no assurance that any of these measures will be implemented.

Governments, utilities, businesses, and

consumers alike are acutely aware of the negative effects of pollution and use of fossil fuels. Fossil fuel-based emissions contribute

to serious health and environmental conditions such as acid rain, particulate pollution, nitrogen deposition, and global climate

change. Consequently, government agencies in the United States and Europe at the national, state/provincial and local levels have

implemented and proposed various economic incentives in the form of tax credits, rebates, deductions, accelerated depreciation

and other subsidies designed to enhance the use of energy-efficient and clean power sources. We believe that these incentives will

have a substantial positive impact on demand for the PowerVerde systems; however, there can be no assurance that, even with these

incentives, our systems will be economically competitive or that the incentives will continue to be available.

We have applied and continue to apply

for federal grants, loans and/or other programs designed to assist development of renewable “green” energy sources,

and we have previously retained specialized consultants to assist in this endeavor; however, we have not been successful in these

ongoing efforts, and there can be no assurance that we will ever receive any governmental assistance.

Competition

We face substantial competition from
numerous other companies, most of whom have financial and other resources substantially greater than ours. Our competition is
worldwide, ranging from solo inventors and small businesses all the way to major utility companies and multinational corporations,
all of whom are attempting to design, develop and market clean and efficient methods for the generation and delivery of electricity.
This competition is expected to increase due to pressures arising from high prices of fossil fuels, environmental concerns and
the increased availability of governmental incentives and subsidies. These competitors may prove more successful in offering similar
products and/or may offer alternative products which prove superior in performance and/or more popular with potential customers
than our products. Our ability to commercialize our products and grow and achieve profitability in accordance with our business
plan will depend on our ability to satisfy our customers and withstand increasing competition by providing high-quality products
at reasonable prices. There can be no assurance that we will be able to achieve or maintain a successful competitive position.

5









Where You Can Find Additional Information



The Company is subject to the reporting

requirements under the Exchange Act. The Company files with, or furnishes to, the SEC quarterly reports on Form 10-Q, current

reports on Form 8-K, and amendments to those reports and will furnish its proxy statement. These filings are available free of

charge on the Company’s website, http://www.trunity.com, shortly after they are filed with, or furnished to, the

SEC.

The SEC maintains an Internet website,

http://www.sec.gov, that contains reports, proxy and information statements and other information regarding issuers.

Risks Related to General Economic Conditions

The current general economic and market conditions

and the volatility and disruption in the financial and capital markets has impacted us and could materially and adversely affect

our business and financial results in future periods.

The United States economy continues to

suffer from very unfavorable economic conditions, including a weak recovery from a severe recession in the general economy which

continues to impair the banking system and the financial markets, all accompanied by huge federal and state budget deficits and

a ballooning national debt. These negative conditions could persist or become even worse. General economic conditions have deteriorated

due to reduced credit resulting from weak economic conditions, resulting in slower economic activity, concerns about inflation,

deflation and government debt and deficits, volatility in energy prices, decreased consumer confidence, reduced corporate profits

and capital spending, adverse business conditions and liquidity concerns in our markets and other adverse effects on our potential

customers and markets. These poor economic conditions continue to make it very difficult for us to raise the capital we need to

complete the development and testing of our products so that we can begin sales. In the event that we are able to begin sales of

our products, these poor economic conditions may adversely affect our business and our financial condition and results of operations

by extending the length of the sales cycle and causing potential customers to delay, defer or decline to make purchases of our

products due to limitations on their capital expenditures and the adverse effects of the economy and the credit markets on them.

The weak economy is projected by many

economic experts to continue or deteriorate further throughout 2013 or longer. These conditions may make it extremely difficult

for our customers, our vendors and us to accurately forecast and plan future business activities. We cannot predict the timing,

strength or duration of this current weak economy or of a subsequent stronger economic recovery, or the effects thereof on our

customers and our markets. Our results of operations may be negatively impacted in future periods and experience substantial fluctuations

from period to period as a consequence of these factors, and such conditions and other factors affecting capital spending may affect

the timing of orders from major customers. These factors could adversely affect our ability to meet our capital requirements, support

our working capital requirements and growth objectives, maintain our existing or secure new financing arrangements, or otherwise

materially and adversely affect our business, financial condition and results of operations.

6





An increase in interest rates or lending rates or

tightening of the supply of capital in the global financial markets could make it difficult for end-users to finance the cost of

a PowerVerde system and could reduce the demand for our products and/or lead to a reduction in the average selling price for our

products.

We believe that, in the event that we

are able to commercialize our products, many of our end-users will depend on debt financing to fund the initial capital expenditure

required to purchase and install a PowerVerde system. As a result, an increase in interest rates or lending rates could make it

difficult for our end-users to secure the financing necessary to purchase and install PowerVerde systems on favorable terms, or

at all and thus lower demand and reduce our net sales. Due to the overall economic outlook, our end-users may change their decision

or change the timing of their decision to purchase and install PowerVerde systems. In addition, we believe that a significant percentage

of our end-users will install PowerVerde systems as an investment, funding the initial capital expenditure through a combination

of equity and debt. An increase in interest rates and/or lending rates could lower an investor’s return on investment in

PowerVerde systems, or make alternative investments more attractive relative to PowerVerde systems, and, in each case, could cause

these end-users to seek alternative investments. A reduction in the supply of project debt financing or equity investments could

reduce the number of our projects that receive financing and thus lower demand for PowerVerde system.

Reduced growth in or the reduction, elimination or

expiration of government subsidies, economic incentives and other support for renewable energy-sourced electricity applications

could reduce demand for our systems.

Reduced growth in or the reduction, elimination

or expiration of government subsidies, economic incentives and other support for renewable-sourced electricity may result in the

diminished competitiveness of our systems relative to conventional and non-renewable sources of energy, and could materially and

adversely affect our business.

Electric utility companies or generators

of electricity from fossil fuels or other renewable energy sources could also lobby for a change in the relevant legislation in

their markets to protect their revenue streams. Reduced growth in or the reduction, elimination or expiration of government subsidies

and economic incentives for renewable electricity generation applications, especially those in our target markets, could impede

our sales efforts and materially and adversely affect our business, financial condition and results of operations.

Existing regulations and policies and changes to these

regulations and policies may present technical, regulatory and economic barriers to the purchase and use of our renewable electricity

generation systems, which may significantly reduce demand for our systems.

The market for electricity generation

products is heavily influenced by foreign, federal, state and local government regulations and policies concerning the electric

utility industry, as well as policies promulgated by electric utilities. These regulations and policies often relate to electricity

pricing and technical interconnection of customer-owned electricity generation. In the United States and in a number of other countries,

these regulations and policies have been modified in the past and may be modified again in the future. These regulations and policies

could deter end-user purchases of our systems.

We anticipate that our systems and their

installation will be subject to oversight and regulation in accordance with national and local ordinances relating to building

codes, safety, environmental protection, utility interconnection and metering and related matters. It is difficult to track the

requirements of individual states and design equipment to comply with the varying standards. Any new government regulations or

utility policies pertaining to our systems may result in significant additional expenses to us and our potential customers and,

as a result, could cause a significant reduction in demand for our systems.

7





Risks Related to Our Business

We need to raise substantial additional capital to

fund our business.

We will need to raise promptly substantial

additional funds. Without such additional funds, we may have to cease operations. We will require substantial additional funding

for our contemplated research and development activities, commercialization of our products and ordinary operating expenses. Adequate

funds for these purposes may not be available when needed or on terms acceptable to us, especially due to the ongoing weak economy.

Insufficient funds may require us to delay or scale back our activities or to cease operations.

We face substantial competition in our industry, and

we may be unable to attract customers and maintain a viable business.

We face substantial competition from

numerous other companies, most of whom have financial and other resources substantially greater than ours. Our competition is worldwide,

ranging from solo inventors and small businesses all the way to major utility companies and multinational corporations, all of

whom are attempting to design, develop and market clean and efficient methods for the generation and delivery of electricity. This

competition is expected to increase due to pressures arising from high prices of fossil fuels, environmental concerns and the availability

of governmental incentives and subsidies. These competitors may prove more successful in offering similar products and/or may offer

alternative products which prove superior in performance and/or more popular with potential customers than our products. Our ability

to commercialize our products and grow and achieve profitability in accordance with our business plan will depend on our ability

to satisfy our customers and withstand increasing competition by providing high-quality products at reasonable prices. There can

be no assurance that we will be able to achieve or maintain a successful competitive position.

Our success is dependent on the services of our key

management and personnel.

Our success will depend in large part

upon the skill and efforts of our founder Fred Barker and other key personnel hired or who may be hired, including our chief engineer,

Hank Leibowitz, and our system specialist, Mark Prinz. Loss of any such personnel, whether due to resignation, death, and disability

or otherwise, could have a material adverse effect on our business. In addition, Messrs. Barker and Leibowitz do not intend to

work for PowerVerde on a full-time basis, as they have substantial other business activities. They intend to dedicate the time

they deem appropriate to meet PowerVerde’s needs; however, there can be no assurance that they will be willing or able to

dedicate such time and attention as would maximize PowerVerde’s chances for success.

We have a limited operating history.

We have only a limited operating history.

We have yet to generate any material revenues from our systems, as we have sold only one system, in a discounted sale to Newton,

and the commercial value of our products is uncertain. There can be no assurance that we will ever be profitable. Further, we are

subject to all the risks inherent in a new business including, but not limited to: intense competition; lack of sufficient capital;

loss of protection of proprietary technology and trade secrets; difficulties in commercializing its products, managing growth and

hiring and retaining key employees; adverse changes in costs and general business and economic conditions; and the need to achieve

product acceptance, to enter and develop new markets and to develop and maintain successful relationships with customers, third

party suppliers and contractors.

8





We may have difficulty in protecting our intellectual

property and may incur substantial costs to defend ourselves in patent infringement litigation.

We rely primarily on a combination of

trade secrets, patents, copyright and trademark laws, and confidentiality procedures to protect our proprietary technology, which

is our principal asset.

Our ability to compete effectively will

depend to a large extent on our success in protecting our proprietary technology, both in the United States and abroad. There can

be no assurance that (i) any patents that we have applied or apply for will be issued, (ii) any patents issued, including our existing

U.S. Patent No. 6,840,151, on which our current products are based, will not be challenged, invalidated, or circumvented, (iii)

that we will have the financial resources to enforce our patents or (iv) the patent rights granted will provide any competitive

advantage. We could incur substantial costs in defending any patent infringement suits or in asserting our patent rights, including

those granted by third parties, and we might not be able to afford such expenditures.

We have limited protection over our trade secrets

and know-how.

Although we have entered into confidentiality

and invention agreements with our key personnel, there can be no assurance that these agreements will be honored or that we will

be able to protect our rights to our non-patented trade secrets and know-how effectively. There can be no assurance that competitors

will not independently develop substantially equivalent or superior proprietary information and techniques or otherwise gain access

to our trade secrets and know-how.



We may be unable to obtain required licenses from

third-parties for product development.

We may be required to obtain licenses

to patents or other proprietary rights from third parties. If we do not obtain required licenses, we could encounter delays in

product development or find that the development, manufacture or sale of products requiring these licenses could be foreclosed.

The reduction, elimination or unavailability of contemplated

government incentives may force our business plan to be changed and may materially adversely affect our business.

Our business plan relies to a significant

extent on the availability of substantial federal, state and local governmental incentives for the development, production and

purchase of energy-saving, environmentally-friendly products such as our systems. These incentives include, among others, tax deductions,

tax credits, rebates, accelerated depreciation and government loans, grants and other subsidies. There can be no assurance that

some or all of these incentives will not be substantially reduced or eliminated, nor can there be any assurance that any currently

proposed incentives will actually take effect. Similarly, there can be no assurance that we will ever receive any government loans,

grants or other subsidies.

Lower energy prices may hinder our ability to attract

customers and be profitable.

Our products are energy-efficient electric

generators which compete primarily with conventional fossil fuel-generated electricity produced and delivered by conventional utility

companies. A significant decrease in the price of oil and/or natural gas could therefore materially adversely affect our competitive

position. We were adversely affected by the substantial drop in oil and natural gas prices following the onset of the financial

crisis in September 2008. While oil prices have remained at high levels in recent years due to increased global demand, Middle

East tension and inflation fears, they remain well below their pre-crisis peaks, natural gas prices have decreased substantially

in recent years due to increased supply resulting from the use of new drilling techniques. The substantially decreased cost of

natural gas-generated electricity, if sustained, could materially adversely affect our business.

9





We may be unable to purchase materials and parts on

commercially reasonable terms from suppliers.

If we are able to commercialize our systems,

our success will depend to a large extent on our ability to obtain a reliable supply of materials and parts from our suppliers

on commercially reasonable terms. This may not prove possible due to competition, inflation, shortages, international crises, adverse

economic and political conditions and business failures of suppliers or other reasons.

Our insurance may not provide adequate coverage.

Although we maintain general and product

liability, property and commercial crime insurance coverage which we consider prudent, there can be no assurance that such insurance

will prove adequate in the event of actual casualty losses or broader calamities such as terrorist attacks, earthquakes, financial

crises, economic depressions or other catastrophic events, which are either uninsurable or not economically insurable. Any such

losses could have a material adverse effect on PowerVerde.

We may be unable to obtain or maintain insurance for

our commercial products.

The design, development and manufacture

of our products involve an inherent risk of product liability claims and associated adverse publicity. There can be no assurance

we will be able to maintain insurance for any of our proposed commercial products. Such insurance is expensive, difficult to obtain

and may not be available in the future on acceptable terms or at all. We are also exposed to product liability claims in the event

the use of our proposed products result in injury.

Risks Related to Our Common Stock; Liquidity Risks

Our stock price is highly volatile.

The market prices for securities of emerging

and development stage companies such as ours have historically been highly volatile, and our limited history has reflected this

volatility. Difficulty in raising capital as well as future announcements concerning us or our competitors, including the results

of testing, technological innovations or new commercial products, government regulations, developments concerning proprietary rights,

litigation or public concern as to safety of potential products developed by us or others, may have a significant adverse impact

on the market price of our stock.

We do not pay dividends on our common stock, and we

have no intention to do so in the future.

For the near-term, we intend to retain

remaining future earnings, if any, to finance our operations and do not anticipate paying any cash dividends with respect to our

common stock or may be unable to sell at a fair price.

There has been limited trading in our stock.

Our common stock is currently quoted

on the OTCBB under the symbol “PWVI.” Since our February 2008 Merger with our predecessor Vyrex Corporation, our stock

has been thinly traded, and no assurance can be given as to when, if ever, an active trading market will develop or, if developed,

that it will be sustained. As a result, investors may be unable to sell their shares of our common stock.

10





We may issue additional shares of our stock which

may dilute the value of our stock.

Shares which we issue pursuant to private

placements generally may be sold in the public market after they have been held for six months, pursuant to Rule 144. The sale

or availability for sale of substantial amounts of common stock in the public market under Rule 144 or otherwise could materially

adversely affect the prevailing market prices of our common stock and could impair our ability to raise additional capital through

the sale of our equity securities.

We may issue shares of preferred stock that could

defer a change of control or dilute the interests of holders of our common stock shareholders.

Our Board of Directors is authorized

to issue up to 50,000,000 shares of preferred stock. The Board of Directors has the power to establish the dividend rates, liquidation

preferences, voting rights, redemption and conversion terms and privileges with respect to any series of preferred stock. The issuance

of any series of preferred stock having rights superior to those of the common stock may result in a decrease in the value or market

price of the common stock and could further be used by the Board of Directors as a device to prevent a change in control favorable

to the Company. Holders of preferred stock to be issued in the future may have the right to receive dividends and certain preferences

in liquidation and conversion rights. The issuance of such preferred stock could make the possible takeover of the Company or the

removal of management of the Company more difficult, and adversely affect the voting and other rights of the holder of the common

stock, or depress the market price of the common stock.

Our common stock is covered by SEC “penny stock”

rules which may make it more difficult for you to sell or dispose of our common stock.

Since we have net tangible assets of

less than $1,000,000, transactions in our securities are subject to Rule 15g-9 under the Exchange Act which imposes additional

sales practice requirements on broker-dealers who sell such securities to persons other than established customers and “accredited

investors” (generally, individuals with a net worth in excess of $1,000,000 or annual incomes exceeding $200,000 or $300,000

together with their spouses). For transactions covered by this Rule, a broker-dealer must make a special suitability determination

for the purchaser and have received the purchaser’s written consent to the transaction prior to the sale. Consequently, this

Rule may affect the ability of broker-dealers to sell our securities, and may affect the ability of shareholders to sell any of

our securities in the secondary market.

The Commission has adopted regulations

which generally define a “penny stock” to be any non-NASDAQ equity security of a small company that has a market price

(as therein defined) less than $5.00 per share, or with an exercise price of less than $5.00 per share subject to certain exceptions,

and which is not traded on any exchange or quoted on NASDAQ. For any transaction by broker-dealers involving a penny stock (unless

exempt), the rules require delivery, prior to a transaction in a penny stock, of a risk disclosure document relating to the penny

stock market. Disclosure is also required to be made about compensation payable to both the broker-dealer and the registered representative

and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information

for the penny stock held in an account and information on the limited market in penny stocks.

11





FORWARD-LOOKING STATEMENTS

Prospective investors are cautioned that

the statements in this Report that are not descriptions of historical facts may be forward-looking statements that are subject

to risks and uncertainties. This Report contains certain forward-looking statements within the meaning of Section 27A of the Securities

Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are based on the beliefs of

our management as well as on assumptions made by and information currently available to us as of the date of this Report. When

used in this Report, the words “plan,” “will,” “may,” “anticipate,” “believe,”

“estimate,” “expect,” “intend,” “project” and similar expressions, as they relate

to PowerVerde, are intended to identify such forward-looking statements. Although PowerVerde believes these statements are reasonable,

actual actions, operations and results could differ materially from those indicated by such forward-looking statements as a result

of the risk factors included in this Report or other factors. We must caution, however, that this list of factors may not be exhaustive

and that these or other factors, many of which are outside of our control, could have a material adverse effect on PowerVerde and

our ability to achieve our objectives. All forward-looking statements attributable to PowerVerde or persons acting on our behalf

are expressly qualified in their entirety by the cautionary statements set forth above.

| | ITEM 1B. | UNRESOLVED STAFF COMMENTS.
| | -------- | --------------------------



None.

| | ITEM 2. | PROPERTIES.
| | ------- | -----------



We do not own any real property. On January

1, 2012 our Board of Directors agreed to end the rental agreement with ARD and moved our operations to a 5,000 foot facility owned

by our then-director and chief operating officer Bryce Johnson (who resigned in March 2013), located at 7595 E. Gray Rd., Scottsdale,

Arizona. We expect to substantially increase our use of this facility by the end of 2013, and we believe that the facility will

be adequate to satisfy our needs for at least the next year. Since March 2012, we have used the facility for a fee of $700 per

month, which covers overhead costs. We believe that our relationship with Mr. Johnson, who remains a major PowerVerde shareholder,

is good, and we believe that this good relationship will continue and allow us to use the facility on current terms for at least

the next year; however, there can be no assurance that this will be the case as we do not have a signed lease.

| | ITEM 3. | LEGAL PROCEEDINGS.
| | ------- | ------------------



On November 2, 2012, Keith Johnson, our

former Chief Technical Officer, filed suit against our operating subsidiary PowerVerde Systems, Inc., in Maricopa County, Arizona,

Superior Court. The suit includes claims for breach of his employment agreement, for back pay and related claims. Mr. Johnson,

whose salary was $12,500 per month, seeks back pay of $37,500, reimbursement of expenses totaling $5,012 and other unspecified

damages. We believe that Mr. Johnson voluntarily terminated his employment in accordance with the agreement and that he has been

paid in full. In an abundance of caution, we also gave Mr. Johnson 30 days’ notice of termination without cause pursuant

to the employment agreement, with this notice to be effective only if the Court determines that his employment was not previously

terminated by him. Mr. Johnson ceased working for the Company in early September 2012. Based on the foregoing, we believe

that we have substantial defenses to Mr. Johnson’s claims, which we have denied in our answer. We intend to vigorously defend

the case, which we believe will not have a material impact on the Company.

| | ITEM 4. | MINE SAFETY DISCLOSURES.
| | ------- | ------------------------



Not

applicable.

12







SIGNATURES

In accordance
with Section 13 or 15(d) of the Exchange Act, the Registrant has duly caused this Amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.

|                        | POWERVERDE, INC.
|----------------------- | ----------------
|                        |                 
|Dated: January 15, 2014 | by:             
|                        |                 
|                        |                 



In accordance
with the Exchange Act, this Amendment has been signedby the following persons on behalf of the Registrant and in the capacities
and on the dates indicated.

|Signature                 |  | Title                                  |  | Date            
|------------------------- |  | -------------------------------------- |  | ----------------
|                          |  |                                        |  |                 
|/s/
    Fred Barker       |  | Vice President, Secretary and Director |  | January 15, 2014
|                          |  |                                        |  |                 
|/s/
    Richard H. Davis. |  | Chief Executive Officer, Director      |  | January 15, 2014
|                          |  |                                        |  |                 
|/s/
    John L. Hofmann   |  | Chief Financial Officer                |  | January 15, 2014

13