EDGAR 10-K Filing

Company CIK: 933972
Filing Year: 2021
Filename: 933972_10-K_2021_0001575705-21-000115.json

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ITEM 1. BUSINESS
ITEM 1. BUSINESS.
General
Vyrex Corporation (“Vyrex” or the “Company”) was incorporated in Nevada in 1991 and operated as a research and development 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 held 95% of the common stock of 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 other than existing licensing contract rights 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. Mr. Konrad served as an officer and director of the Company until October 2012. Mr. Barker served as an officer and director until January 2015. 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 expander motor and related organic rankine cycle technology. 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.
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. The Company has since abandoned this style of expander and is now focused on a new planetary or quad rotor style expander or motor.
Based on data learned from these earlier prototypes, PowerVerde has manufactured, retrofitted or purchased from third party manufacturers, different expanders and related generation equipment. The Company has been testing these devices on a more powerful and advanced organic rankine cycle (ORC) system referred to as the Liberator. The Company has 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 source (waste heat) as a fuel source, expanding a working fluid thereby driving the expander/generator, while the 100kW system (without ORC) uses wasted energy (pressure) from natural gas pipeline or 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.
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, (“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.
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 and $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 continued to operate our laboratory and test the Liberator within Mr. Johnson’s facility, where several infrastructure upgrades were completed. See Item 2 “Properties.”
Certain of our non-combustion expanders are fueled by heat (waste heat), via an ORC related system, and create a pressure source powering the PowerVerde expander/generator while emitting zero carbon emissions or waste stream byproducts. The other PowerVerde system, designed to operate on wellhead or natural gas pipeline infrastructure, lacks the ORC component, but includes a pressure cycle known as the Wet Steam Cycle (WSC) using our licensed planetary-style expander. This latter system uses wasted latent energy (pressure) inherent in “city gate” letdowns or wellheads as its pressure source.
Our ORC system requires:
● A heat source (solar, waste heat, geothermal or bio-mass);
● An organic rankine cycle (ORC) or WSC style system to convert heat into pressure;
● PowerVerde expander to convert the pressure into horsepower; and
● A generator to convert the horsepower into electricity.
Our WSC system requires:
● a pressure source such as gas wellhead;
● a planetary expander or other style expander: and
● an off-the-shelf commodity boiler to create heated steam or an exogenous source.
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.
PowerVerde has responded to its difficulties in producing commercially viable systems or stand alone energy systems by focusing on expanders for non-traditional sources such as high temperature/high pressure applications, including supercritical or near supercritical conditions. Within this field of interest PowerVerde designed and patented a unique wet steam cycle (WSC) process that uses steam or supercritical gas instead of refrigerants but at conditions well beyond that offered by commercially available systems.
In late 2017, PowerVerde was introduced to a project funded by the Bill and Melinda Gates Foundation commonly referred to as the “Reinventing the Toilet Project”. The foundation is focused on global sanitation improvements. One of the foundation-supported projects, ongoing for the previous six years, involves a technology being developed at Duke University. This technology consists mainly of a chemical reaction called supercritical water oxidation (SCWO). The concept requires a unique reactor or bioreactor that converts any organic matter such as fecal sludge into pathogen-free water and mineral ash. This bioreactor trademarked AirSCWO, utilizing compressors and pumps, is energy intensive. However, the reaction itself is exothermic, meaning it gives off heat during the reaction. The caloric value (heat content) of the fecal sludge is the source of this heat release. If this heat release is captured and converted into electricity the AirSCWO’s parasitic energy requirements may be offset or eliminated or may even result in net electricity produced. In the latter example the bioreactor, designed for processing municipal fecal sludge and other organic waste, becomes an electrical-generating machine producing free electricity as a byproduct.
After a highly competitive global search, as we announced in April 2018, PowerVerde was selected by Duke to develop the residual heat-to-power system to work in conjunction with the bioreactor. We have begun the engineering and design process. Our selection was likely influenced by our focus on high temperature and pressure expanders and consistent with our WSC design. We believe the SCWO application is an excellent fit for our new product goal of providing expanders and systems capable of operating at elevated operating conditions where competition is limited.
To maintain our focus of designing small energy systems, typically under 500 kilowatts and usually utilizing non-turbine expanders, we have made a decision to transition into a specialty engineering company. Our focus is now directed on applications where our ability to design and operate at elevated conditions gives us a substantial competitive edge. We believe that price points are less important when necessity meets reality, or where resources and options are scarce. As such PowerVerde has partnered with 374Water Inc. (“374Water”), a newly formed for-profit corporation, spun out of Duke University, hoping to revolutionize the way municipal fecal sludge is processed. 374 Celsius is the temperature at which water becomes supercritical, hence the name 374Water. In its supercritical state water becomes a dense gas. PowerVerde is currently and exclusively designing expanders capable of working at near supercritical conditions involving high temperature and pressure for this project.
On November 6, 2019, PowerVerde and 374Water entered into a memorandum of understanding (the “MOU”) regarding the strategic relationship between the parties whereby they intended for PowerVerde to provide the complete heat recovery system, including an advanced expander, for 374Water’s SCWO system. The MOU was conditioned upon 374Water raising sufficient equity capital by March 31, 2020; however, the deadline was extended by the parties to December 31, 2020. Part of the contemplated funding was to be used to purchase two nominal 60 kW expanders from PowerVerde at a price to be agreed upon, which was expected to be approximately $500,000. In addition, upon closing of the financing, 374Water was to issue equity to PowerVerde in the form of restricted stock and stock options.
On September 20, 2020, the MOU was superseded by a Binding Letter of Intent for merger (the “LOI”) signed by PowerVerde and 374Water. Subject to the terms and conditions set forth in the LOI, 374Water will merge into a newly- formed wholly-owned subsidiary of PowerVerde (the “Sub”), with the Sub as the surviving corporation (the “Merger”). Upon closing of the Merger, PowerVerde will issue new shares of PowerVerde stock to 374Water shareholders such that 374Water shareholders will own approximately 60% of the combined company, and PowerVerde shareholders will own approximately 40%. The Merger is subject to adjustments for liabilities, and the closing is contingent on the achievement of certain milestones and satisfaction of conditions by both parties prior to closing, including the raising of at least $6.25 million of additional equity capital pursuant to a private placement, by March 31, 2021.
As of the date of this Report, PowerVerde is holding $1,636,545 in escrow for purposes of the private placement. There can be no assurance that PowerVerde will be able to raise the balance of the necessary funds or consummate the Merger. Similarly, there can be no assurance that if the Merger is consummated the transaction will yield a profitable business for PowerVerde.
On April 15, 2017, we entered into an assembly agreement with Liberty Plugins, Inc. (“Liberty”) to assemble Liberty’s Hydra electronic vehicle charging systems and ship completed Hydras to Liberty’s facility in Santa Barbara, California (the “Liberty Agreement”). Liberty has agreed to pay $1,000 for each Hydra assembled. As of December 31, 2020, we have built and shipped 132 Hydras.
Our previous main source of funding, the Biotech IP license contract, expired in March 2018. We received our final installment of Biotech IP revenue in the second quarter of 2018, based on royalties accrued in the first quarter of 2018 in the amount of $159,094. Going forward, unless and until we are able to successfully commercialize our Systems and generate positive cash flow from operations, through the 374Water Merger or otherwise, we will have to rely on privately-raised equity and/or debt capital to fund our operations. There can be no assurance that we will be able to raise the necessary capital on commercially reasonable terms. If we are unable to do so, we will have to cease operations.
Employees
In addition to our CEO Richard Davis and our President Daniel Bogar, we currently have one full-time employee: Mark Prinz based in Scottsdale, Arizona. Mr. Prinz was hired in 2011. Our chief engineer, Hank Leibowitz, was hired pursuant to a part-time consulting agreement in October 2012. Mr. Leibowitz has been designated our chief design engineer. See Item 11. “Executive Compensation/ Employment Agreements.”
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.
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.
On June 25, 2015, our consultant Hank Leibowitz assigned to PowerVerde his U.S. Patent Application No. 62/172,616, filed on June 8, 2015 for “a system and method using high temperature sources [such as gas well flaring] in Rankine cycle power systems.” There can be no assurance that this patent, which we expect to use in connection with our WSC system, will be issued or maintained. We have agreed to pay Mr. Leibowitz a 2% royalty for any and all revenues of products and/or project sales by us based on this patent.
Government Regulations and Incentives
Regulatory proposals to limit greenhouse gases remain 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 economic conditions 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 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. We also face substantial competition from sustained low prices for oil and natural gas. There can be no assurance that we will be able to achieve or maintain a successful competitive position.
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, www.powerverdeinc.com shortly after they are filed with, or furnished to, the SEC.
The SEC maintains an Internet website, www.sec.gov, that contains reports, proxy and information statements and other information regarding issuers.
Risks Related to General Economic Conditions
Our financial condition and results of operations may be negatively affected by public health crises such as the ongoing coronavirus pandemic.
Severe financial market and economic disruptions may occur in response to public health epidemics, and the U.S. and global economies are suffering huge negative impacts as a result of the ongoing coronavirus pandemic. The rapid spread of the coronavirus, and the fear associated with this pandemic, along with the negative impact on economic growth and financial markets generally, may have a material adverse effect on the demand for our systems in the U.S. and abroad. If our customers and/or sources of financing are materially adversely affected by the pandemic and the accompanying economic crisis, our financial condition and results of operations could be materially adversely affected. Moreover, our operations and productivity could be negatively affected if our employees or agents are quarantined as the result of exposure to coronavirus or another contagious illness. The extent to which the coronavirus crisis impacts us will depend on future developments, which are highly uncertain at this time and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus, its economic and social impact and the measures taken to contain or treat the coronavirus, among others.
Increases in interest rates, or tightening of the supply of capital in the volatile 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, increases in interest 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 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 systems.
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.
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. Insufficient funds may require us to delay or scale back our activities or to cease operations. Our sole source of material revenues has been Biotech IP licensing fees. Our license agreement expired in March 2018, when the underlying patents expired, and our final royalty payment, for royalties accrued in the first quarter of 2018, was received in the second quarter of 2018.
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 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, Mr. Leibowitz does not intend to work for PowerVerde on a full-time basis, as he has substantial other business activities. He intends to dedicate the time he deems appropriate to meet PowerVerde’s needs; however, there can be no assurance that he 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 2011 sale to a former European distributor, 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.
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 prevented.
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, we have never received, and 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 become profitable.
Our products are energy-efficient electric generators which compete primarily with conventional fossil fuel-generated electricity produced and delivered by conventional utility companies. The significant decreases in the prices of oil and natural gas in recent years, and in particular the sharp drop in these prices in early 2020, have materially adversely affected our competitive position. If sustained, these lower fossil fuel prices and the corresponding lower cost of fossil fuel-generated electricity could materially adversely affect our business.
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.
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 at a fair price, if at all.
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 further, they could 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.
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.

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ITEM 1A. RISK FACTORS

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ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.

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ITEM 2. PROPERTIES
ITEM 2. PROPERTIES.
We do not own any real property. On January 1, 2012 our Board of Directors 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. From March 2012 to June 2013, we used the facility for a fee of $700 per month, which covered overhead costs. Since July 2013, this fee has not been charged. We have not used this facility since January 2018, as our engineer has done his work during this period from a facility at his home. The Scottsdale facility remains available on an as-needed basis based on our good relationship with Mr. Johnson, who remains a major PowerVerde shareholder. We are also exploring the possibility of using testing and/or manufacturing facilities located in Europe in the event that the 374Water Merger is consummated.

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ITEM 3. LEGAL PROCEEDINGS
ITEM 3. LEGAL PROCEEDINGS.
None.

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ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Our common stock trades on the Over-The-Counter Bulletin Board (“OTCBB”) under the symbol “PWVI.” The over-the-counter market quotations provided below reflect inter-dealer prices, without retail mark-ups, mark-down or commission and may not represent actual transactions. The following table sets forth the range of high and low sales prices on the OTCBB for the periods indicated.
Period Beginning
Period Ending
High Low
January 1, 2019 March 31, 2019 $ 0.94 $ 0.05
April 1, 2019 June 30, 2019 $ 0.15 $ 0.08
July 1, 2019 September 30, 2019 $ 0.15 $ 0.08
October 1, 2019 December 31, 2019 $ 0.18 0.00
January 1, 2020 March 31, 2020 $ 0.25 $ 0.08
April 1, 2020 June 30, 2020 $ 0.37 $ 0.11
July 1, 2020 September 30, 2020 $ 0.68 $ 0.25
October 1, 2020 December 31, 2020 $ 0.95 $ 0.36
January 1, 2021 March 3, 2021 $ 0.89 $ 0.16
Dividends
We have never declared or paid any cash dividends on our common stock, nor do we intend to declare or pay any cash dividends on our common stock in the foreseeable future. Subject to the limitations described below, the holders of our common stock are entitled to receive only such dividends (cash or otherwise) as may (or may not) be declared by our Board of Directors.
Recent Sales of Unregistered Securities
All of PowerVerde’s sales of unregistered securities since inception have been made pursuant to private offerings to accredited investors. The sales set forth below were made pursuant to an exemption from registration requirements under Regulation D and/or Section 4(2) of the Securities Act of 1933, as amended. Except as otherwise noted below, no placement agent fees or commissions were paid on these offerings, and net proceeds were used for working capital.
In 2019, we issued convertible promissory notes in the aggregate principal amount of $300,000, of which $200,000 is due to related parties and stockholders and $100,000 is due to nonrelated parties. The notes are to be paid in one principal payment, along with any unpaid interest by December 31, 2021. Interest is payable semiannually at 10%. The notes were convertible into common stock at a price of $.20 per share through December 31, 2019, and are convertible at $.30 per share from January 1, 2020, through December 31, 2020, and $.40 per share from January 1, 2021, through the maturity date of December 31, 2021.
In December 2019, we issued a convertible promissory note in the principal amount of $25,000 to a related party in connection with a loan in the same amount. The note is to be paid in one principal payment, along with any unpaid interest by December 31, 2022. Interest is payable semiannually at 10%. The note is convertible into common stock at a price of $.20 per share through December 31, 2020, $.30 per share from January 1, 2021 through December 31, 2021, and $.40 per share from January 1, 2022, through the maturity date of December 31, 2022. On December 4, 2020, the note along with accrued interest totaling $26,072 was converted into 130,362 shares of common stock.
In 2020, the Company issued convertible promissory notes in the aggregate principal amount of $886,000, of which $125,000 is due to related parties and stockholders and $761,000 is due to nonrelated parties. The notes are to be paid in one principal payment, along with any unpaid interest by December 31, 2023. Interest is payable semiannually at 10% on June 30 and December 31. The notes are convertible into common stock at a price of $.20 per share through December 31, 2020, $.30 per share from January 1, 2021 through December 31, 2021, and $.40 per share from January 1, 2022 through the maturity date of December 31, 2023.
Issuer Purchases of Equity Securities
During the year ended December 31, 2020, the Company purchased from George Konrad, the Company’s founder and former CEO and Director (“Konrad”) all of Konrad’s 4,027,408 shares of Company common stock (the “Shares”), representing 12.7% of the Company’s issued and outstanding common stock, for an aggregate price of $300,000 ($.074 per share). The Company raised the funds used for the purchase of the shares through a private placement of convertible notes to related parties, stockholders and non-related accredited investors.

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ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. SELECTED FINANCIAL DATA.
Not required for smaller reporting companies.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis should be read in conjunction with the financial statements and notes thereto appearing elsewhere herein.
Critical Accounting Policies
The consolidated financial statements of PowerVerde, Inc. are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these consolidated financial statements requires our management to make estimates and assumptions about future events that effect the amounts reported in the financial statements and related notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. We believe the following critical accounting policies affect its more significant judgments and estimates used in the preparation of the consolidated financial statements.
Revenue Recognition
Revenue from royalties and assembly services with a related party are unrelated to our planned operations. Royalties are recognized as earned in the period the sales to which the royalties relate occur. Manufacturing assembly services with a related party are recognized as revenue when the assembled product is shipped to the customer. Revenues recognized under these agreements amount to 100% of total revenues for the years ended December 31, 2020 and 2019.
Common Stock Purchase Warrants
The Company accounts for common stock purchase warrants in accordance with ASC Topic 815- 40, Derivatives and Hedging - Contracts in Entity’s Own Equity (“ASC 815-40”). Based on the provisions of ASC 815- 40, the Company classifies as equity any contracts that (i) require physical settlement or net-share settlement, or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company), or (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). All outstanding warrants as of December 31, 2020 and 2019, were classified as equity.
Intellectual Property
	The Company reviews intangible assets with finite lives for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company uses an estimate of the undiscounted cash flows over the remaining life of its long-lived assets, or related group of assets where applicable, in measuring whether the assets to be held and used will be realizable. In the event of impairment, the Company would discount the future cash flows using its then estimated incremental borrowing rate to estimate the amount of the impairment. 	
Stock-based compensation.
We account for stock-based compensation based on ASC Topic 718-Stock Compensation which requires expensing of stock options and other share-based payments based on the fair value of each stock option awarded. The fair value of each stock option is estimated on the date of grant using the Black-Scholes valuation model. This model requires management to estimate the expected volatility, expected dividends, and expected term as inputs to the valuation model.
Overview
From January 1991 until October 2005, the Company devoted substantially all of its efforts and resources to research and development related to its unsuccessful Biotech Business, in particular the study of biological oxidation and antioxidation directed to the development of potential therapeutic products for the treatment of various diseases and conditions. In the most recent years, the Company’s research focused mainly on targeted antioxidant therapeutics and nutraceuticals. The Company is a development stage company, has never generated any substantial revenue from product sales and has relied primarily on equity financing, licensing revenues, and various debt instruments for its working capital. The Company has been unprofitable since its inception.
Following the cessation of material Biotech Business operations in October 2005, the Company turned its primary focus to seeking an appropriate merger partner for its public shell. This resulted in the February 2008 Merger with Vyrex. In March 2009, we assigned most of our Biotech intellectual property other than our rights under existing licensing agreements (the “Biotech IP”) to an investor in exchange for his agreement to pay all future expenses relating to the Biotech IP and to pay us 20% of any net proceeds received from future sale and/or licensing of the Biotech IP. We do not expect this arrangement to generate material revenues.
Since the Merger, we have focused on the development and testing of our electric power systems, and since 2008 we have focused on their applicability to thermal and formerly natural gas pipeline operations. We have abandoned the pipeline opportunities in terms of focusing on the thermal applications. The Company’s business is subject to significant risks, including the risks inherent in our research and development efforts, uncertainties associated with obtaining and enforcing patents and intense competition. See “Risk Factors.”
Except as specifically noted to the contrary, the following discussion relates only to PowerVerde since, as a result of the Merger, the only historical financial statements presented for the Company in periods following the Merger are those of the operating entity, PowerVerde.
Results of Operations
Years ended December 31, 2020 and 2019
We had no revenues in 2020 other than $40,000 from assembly revenues under the assembly agreement with our one customer, Liberty Plugins Inc. In 2019, we generated $24,000 in assembly revenues. In both years, we had substantial expenses due to our ongoing research and development activities and efforts to commercialize our systems, as well as substantial administrative expenses associated with our status as a public company. Our research and development expenses decreased by $104,360 (47.7%) in 2020 compared to 2019, and our general and administrative expenses increased by $106,295 (48.9%). The increase in general and administrative expenses is primarily due to the increase in legal fees and employee salaries. Our interest expense increased by $101,986 (306%) due to the higher balance of notes outstanding in 2020. Our net loss increased by 3.6% in 2020. Substantial net losses will continue until we are able to successfully commercialize and market our systems, as to which there can be no assurance.
Liquidity and Capital Resources
We have financed our operations since inception principally through the sale of debt and equity securities. Also, from 2012-18 we received material amounts of Biotech IP licensing fees. As of December 31, 2020, we had a working capital deficit of $237,593 as compared to a working capital deficit of $63,638 as of December 31, 2019. This decrease in working capital is due primarily to increased operating expenses financed through related and nonrelated party convertible notes payable.
Our Biotech IP license agreement expired in March 2018 due to the expiration of our underlying patents. Consequently, we have no further material source of revenues. We are generating some revenue by using our employee to provide part-time skilled manufacturing services to a third party under the Liberty Agreement; however, we expect this arrangement to generate no more than $4,000 per month. This arrangement generated revenues of $40,000 in 2020 and $24,000 in 2019.
Our proposed Merger with 374Water, which is scheduled to close on March 31, 2021, would be based on our raising a minimum of $6.25 million in net proceeds through the sale of Series D Preferred Stock convertible into common stock at a price of $.30 per share. We believe that this funding will be sufficient to fund our post-Merger business plan; however, there can be no assurance that we will timely raise the required equity capital, that the Merger will be consummated, or if consummated the Merger will generate profitable operations for the Company. As of the date of this Report, we are holding $1,636,545 in escrow for purposes of the private placement required for the Merger.
We continue to seek funding from private equity and debt investors, as we need to promptly raise substantial additional capital in order to finance our plan of operations. There can be no assurance that we will be able to promptly raise the necessary funds. If we do not promptly raise the necessary funds, we may be forced to cease operations.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not required for smaller reporting companies.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements of the Company and other information required by this Item are set forth herein in a separate section beginning with the Index to the Financial Statements on page.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.

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ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
The Company, under the supervision and with the participation of its management, including the Chief Executive Officer and President, evaluated the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management, including our principal executive officer and principal financial officer, is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our internal control over financial reporting as of December 31, 2020. Our management’s evaluation of our internal control over financial reporting was based on the framework in Internal Control-Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded that as of December 31, 2020, our internal control over financial reporting was not effective.
The ineffectiveness of our internal control over financial reporting was due to the following material weaknesses which we identified in our internal control over financial reporting:
(1) the lack of multiples levels of management review on complex accounting and financial reporting issues, and business transactions,
(2) a lack of adequate segregation of duties and necessary corporate accounting resources in our financial reporting process and accounting function as a result of our limited financial resources to support hiring of personnel and implementation of accounting systems, and
(3) a lack of entity level controls due to ineffective board of directors and no audit committee
No Attestation Report
This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.
Changes in Internal Control Over Financial Reporting
There were no significant changes in internal control over financial reporting during the fourth quarter of 2020 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
ITEM 9B. OTHER INFORMATION.
None.
PART III

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The names of our officers and directors, as well as certain information about them are set forth below:
Name
Age
Position(s)
Held Since
Richard H. Davis
Chief Executive Officer, Director
Daniel T. Bogar
President
John L. Hofmann
Chief Financial Officer
Richard H. Davis. Mr. Davis joined our Board in February 2008 in connection with the Vyrex Merger, and he became Chief Executive Officer in August 2011. He received a B.S degree in economics from Florida State University in 1982. He joined First Equity Corporation (“First Equity”) in Miami that same year. First Equity operated as a regional full-service brokerage and investment bank. Mr. Davis’ duties included equity deal structure and brokerage-related activities. After First Equity was acquired in 2001, Mr. Davis joined the corporate finance department of William R. Hough & Company (“Hough”), where he continued structuring equity finance and private acquisitions. Hough was acquired in 2004 by RBC Dain Rauscher (“Dain”), a global investment banking firm. Dain consolidated Hough’s corporate finance activities into its New York offices. Mr. Davis elected to remain in Miami and joined Martinez-Ayme Securities (“MAS”), assuming the newly-created position of managing director of corporate finance. In 2005 Mr. Davis resigned from MAS and ceased working as an investment banker. Since 2016, Mr. Davis has focused principally on his work as CEO of PowerVerde.
Daniel T. Bogar. Mr. Bogar is an executive with decades of experience in managing, growing and financing companies. From 1987-2000 he served in various management positions with Cellstar Corporation, a pioneer provider of cellular telephone service, in Miami, Florida, and Mexico City, Mexico. In his last position with Cellstar, Mr. Bogar served as President of the Americas region from 1999-2000. From 2000-2009, he served as Managing Director of Stanford Group Holdings (“Stanford”), a wealth management firm based in Houston, Texas. Mr. Bogar served as President/COO of American Green Technology, Inc./Vida Shield (“AGT”), a South Bend, Indiana manufacturer of LED industrial lighting products and anti-microbial lighting products, from inception in 2009 until 2018. Since 2019, Mr. Bogar has served as an adjunct professor of management at the McCoy School of Business, Texas State University, San Marcos, Texas.
On December 18, 2013, the SEC entered a final decision against Mr. Bogar finding that, in connection with his work on behalf of Stanford, which collapsed in 2009, he violated Section 17(a) of the Securities Act of 1933, Sections 10(b) and 15(c)(1) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The SEC found Mr. Bogar liable as a result of gross negligence but not willful fraud. Mr. Bogar, his family and friends suffered substantial losses as a result of their investments in Stanford’s securities. Pursuant to the SEC decision, Mr. Bogar was ordered (a) to cease and desist from committing or causing any violations or future violations of the relevant securities laws; (b) barred from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization and prohibited, permanently, from serving or acting as an employee, officer, director, member of an advisory board, investment adviser or depositor of, or principal underwriter for, a registered investment company or affiliated person of such investment adviser, depositor, or principal underwriter; (c) to disgorge $1,555,485.75, plus prejudgment interest; and (d) to pay a civil money penalty of $260,000.
On August 28, 2018, certain noteholders of AGT unaffiliated with AGT’s majority shareholder Ushio America Inc. (“Ushio”) filed an involuntary chapter 11 petition against AGT in the U.S. Bankruptcy Court for the Southern District of Texas. The petition was granted on October 2, 2018. AGT had run out of cash due to Ushio’s refusal to provide further funding and refusal to extend the maturity of prior financing by Ushio which was secured by AGT’s intellectual property (“IP”) and other assets. On December 18, 2018, the court appointed a trustee for AGT, and on July 11, 2019, the court granted the trustee’s motion to convert the case to a Chapter 7 liquidation.
On October 30, 2019, the trustee filed an adversary complaint against Ushio and its affiliates alleging fraud, breach of fiduciary duty and other claims. In essence the trustee alleges that Ushio and its affiliates acted in bad faith in connection with their investment in and control of AGT for the purpose of misappropriating AGT’s IP and other assets. Ushio denies the allegations.
John L. Hofmann. Mr. Hofmann became our Chief Financial Officer in August 2011. Since December 2017, he has been a partner in the accounting firm of KSDT and Company, Miami, Florida (“KSDT”). Previously, he was president of J L Hofmann & Associates, P.A., Coral Gables, Florida (“JLHPA”), where he provided financial consulting and accounting services to select clientele since 1990. JLHPA and KSDT have provided services to PowerVerde since July 2010. Mr. Hofmann also serves as Operating Partner of Taft Street Partners I, Ltd., providing consulting services and capital for commercial and residential real estate projects. Mr. Hofmann started his career working with multinational companies for ten years as a Senior Manager for PricewaterhouseCoopers LLP (“PwC”). While at PwC, he traveled extensively primarily working on international tax matters and issues concerning the Internal Revenue Service. Locally, Hofmann has worked with the Miami Dolphins, Carnival Cruise Line, Royal Caribbean Cruise Line, Resorts International and Terremark Worldwide. Mr. Hofmann earned his Bachelor of Science in Accounting at the University of Florida and obtained his Master of Science in Taxation from Florida International University. Mr. Hofmann became a Certified Public Accountant through the Florida Board of Accountancy in 1982. He is a member of the Florida Institute of CPAs.
Election of Directors
Holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of the stockholders, including the election of directors. Cumulative voting with respect to the election of directors is not permitted by our Certificate of Incorporation.
Our Board of Directors shall be elected at the annual meeting of the shareholders or at a special meeting called for that purpose. Each director shall hold office until the next annual meeting of shareholders and until the director’s successor is elected and qualified.
Committees
Our Board of Directors does not yet have any committees; however, we may establish an audit committee and a compensation/stock option committee in the near future.
Advisory Board Members
In March 2010, our Board of Directors created an Advisory Board to advise and recommend, on a non-legally-binding basis, certain directions or actions deemed to be beneficial to the Company’s success. The Advisory Board’s members may be shareholders or non-shareholders; however, each member represents a specific industry or vocation complementary to the Company’s anticipated markets, customers and technical needs. It is anticipated that the Advisory Board will meet once a year in person and meet by conference call quarterly. We expect to compensate the Advisory Board members with restricted stock and/or options; however, the compensation plan has not yet been established. The members of the Advisory Board are as follows:
● Stephen H. McKnight. Mr. McKnight is active in real estate investment and management. Through his firms, he has created a portfolio in excess of 2.0 million square feet of commercial property, mostly in the Southwest United States. Mr. McKnight is also active in both equity and debt holdings, managing both trusts and family estates. He received an MBA from the University of Pittsburg in 1975.
● Randy Hinson. Mr. Hinson founded and successfully operated a pump manufacturing business in Houston, Texas. Mr. Hinson recently sold the company to a publicly-traded oil company, and remains under a non-compete contract during an agreed-upon transition process.
● Leon Breece. Mr. Breece has operated as an entrepreneur and CPA in the Los Angeles, California area for many years. Mr. Breece’s company, Breece and Associates, handles accounting and tax matters for established companies and high profile individuals. He is an active investor in both the stock market and early stage private companies.
● Dr. Robert F. Ehrman. Dr. Ehrman is an owner and manager of commercial real estate, and has owned and managed several successful businesses. He attended the University of Miami School of Medicine, Northwestern Chiropractic College, and the University of Minnesota. Mr. Ehrman is a resident of Miami, Florida.
All of the Advisory Board Members are PowerVerde shareholders.
Compliance with Section 16(a) of the Securities and Exchange Act of 1934
Under the securities laws of the United States, our directors, executive officers and any persons holding more than 10% of the Company’s common stock are required to report their initial ownership of the Company’s common stock and any subsequent changes in that ownership to the Securities and Exchange Commission. Specific due dates for these reports have been established and the Company is required to identify in this Report those persons who failed to timely file these reports. All of the filing requirements were satisfied in 2019. In making this disclosure, we have relied solely on written representations of our directors and executive officers and copies of the reports that have been filed with the Commission.
Code of Ethics
We have not adopted a code of ethics for our management because of the costs involved and our lack of resources and limited operations.

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ITEM 11. EXECUTIVE COMPENSATION
ITEM 11. EXECUTIVE COMPENSATION.
Through April 2020, we have not paid any cash compensation to officers or directors in such capacity. Since becoming PowerVerde officers, Messrs Davis and Hofmann have received as compensation only grants of options and warrants.
Employment Agreements
Effective June 15, 2011, we entered into an employment agreement with Mark P. Prinz, pursuant to which Mr. Prinz serves as a Project Engineer. Pursuant to this agreement, we paid Mr. Prinz a salary of $11,250 per month through June 2013. Based on an amendment effective July 1, 2013, his salary has been $7,500 per month since then. This agreement is terminable by either party without cause upon 30 days’ prior written notice. In connection with this employment agreement, we granted Mr. Prinz (i) a 10-year option to purchase 100,000 shares of our common stock at a price of $1.23 per share (the market price on the date of grant); and (ii) a 10-year option to purchase 100,000 shares of our common stock at a price of $2.00 per share. In each case, one-fourth of the option shares, i.e., 25,000 shares, vested as of the date of the employment agreement, and the balance vested in equal installments every six months thereafter until fully vested, provided that Mr. Prinz was still employed by us at the time and subject to PowerVerde achieving certain operational targets. Additionally, in connection with this employment agreement, Mr. Prinz assigned certain intellectual property rights to the Company. The employment agreement contains standard confidentiality provisions, as well as standard non-competition and non-solicitation provisions which survive for two years following termination of employment.
On October 25, 2012, we entered into a consulting agreement with Hank Leibowitz, the principal of Waste Heat Solutions, LLC and an expert with 39 years experience in the field of advanced energy systems. Pursuant to this consulting agreement, which is terminable by either party on 30 days’ notice, we pay to Mr. Leibowitz’s company, Waste Heat Solutions LLC (“WHS”), $7,500 per month. In connection with this consulting agreement, we issued to (i) a fully vested 10-year option to purchase 500,000 shares of common stock at $.56 per share and (ii) a 10-year option, vesting six months from the contract date, i.e., on April 25, 2013, to purchase an additional 500,000 shares at $.56 per share. This consulting agreement contains standard confidentiality provisions, as well as standard non-competition and non-soliciting provisions which survive for two years following termination of the consultancy.
On September 1, 2019, we hired Daniel Bogar to serve as our President, reporting to the CEO. As compensation, Mr. Bogar received a fully-vested non-qualified option to purchase 1,000,000 shares of our common stock at an exercise price of $.10 per share, with an expiration date of June 30, 2026. In addition, Mr. Bogar will receive an annual salary of $90,000 beginning on the closing of a private financing with gross proceeds of at least $1,000,000; however, we will be permitted to defer the salary to the extent required to maintain solvency.
On September 1, 2020, we entered into one-year employment agreements with Messrs. Bogar and Davis at an annual salary of $90,000 each; however, we are permitted to defer payment of the salary to the extent required to maintain solvency.
May 2018 Option Issuance
On May 30, 2018, our Board of Directors agreed to extend all outstanding management and non-employee stock options and warrants (covering 5,975,000 shares) to a common expiration date of June 30, 2026 and adjust the exercise prices to $0.12. The 2,300,000 warrants were cancelled and the 3,675,000 options were terminated and reissued with the adjusted terms. The reissued options included options held by Mr. Davis (2,400,000 shares), Mr. Hofmann (1,200,000 shares) and WHS (1,000,000 shares).
On May 30, 2018, the Company also issued new, immediately vested stock options with an exercise price of $0.12 and an expiration date of June 30, 2026, to: Mr. Davis for 1,300,000 shares; WHS for 500,000 shares; and Mr. Hofmann for 800,000 shares.
We may also issue to our officers and directors further stock options on terms and conditions to be determined by our Board of Directors or designated committee.
Compensation of Directors
We have not yet determined a compensation plan for our directors. We intend to provide our directors with reasonable compensation for their services in cash, stock and/or options.
Indemnification of Directors and Officers
Our Certificate of Incorporation allows us to indemnify our present and former officers and directors and other personnel against liabilities and expenses arising from their service to the full extent permitted by Delaware law. The persons indemnified include our (i) present or former directors or officers, (ii) any person who while serving in any of the capacities referred to in clause (i) who served at our request as a director, officer, partner, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, and (iii) any person nominated or designated by (or pursuant to authority granted by) our Board of Directors or any committee thereof to serve in any of the capacities referred to in clauses (i) or (ii).

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following table sets forth certain information as of March 9, 2021, regarding the beneficial ownership of our common stock by (i) each of our directors and “named executive officers”; and (ii) all of our executive officers and directors as a group. To our knowledge, no other person beneficially owns more than 5% of our common stock. As of March 9, 2021, we had 27,878,060 shares outstanding.
Name and Address of Beneficial Owner Shares Owned Percent of Class
Bryce Johnson1 2,608,333 9.36 %
7595 E. Gray Road
Scottsdale, Arizona 85266
Cindy Barker2 1,695,990 6.08 %
21615 N Second Avenue
Phoenix, AZ 85027
Officers and Directors
Richard H. Davis3 4,103,033 14.29 %
8365 SW 168 Terrace
Palmetto Bay, FL l33157
Daniel T. Bogar4 1,000,000 3.59 %
1415 Pioneer Drive
New Braunfels, TX 78132
John L. Hofmann5 2,000,000 7.17 %
9300 S. Dadeland Blvd, Ste 600
Miami, FL 33156
All Directors and Executive Officers as a group (3 persons)6 6,982,898 25.05 %
1 Mr. Johnson resigned as an officer and director in March 2013. Includes 900,000 shares represented by currently exercisable warrants.
2 These shares were owned by our co-founder Fred Barker and his wife Cindy Barker as joint tenants until Mr. Barker’s death in August 2020. Mr. Barker resigned as an officer and director in January 2015.
3 Mr. Davis’ shares include: 3,700,000 shares represented by currently exercisable options, 114,033 shares owned by Mr. Davis’ wife, as to which he disclaims beneficial ownership, and 10,000 shares owned by Darby Shore Management, Inc., a Florida corporation (“Darby”), for which Mr. Davis is an officer, director and 25% shareholder. Mr. Davis may be deemed to have voting and investment power over these shares held by Darby.
4 All of these shares are represented by currently exercisable options.
5 All of these shares are represented by currently exercisable options.
6 Includes 6,700,000 shares represented by currently exercisable options.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
See Item 11. “Executive Compensation.”
Mr. Barker resigned from his positions as an officer and director of the Company in January 2015.
From July 2010 until December 2017, the accounting firm J.L. Hofmann & Associates, P.A. (“JLHPA”), whose principal is our CFO John L. Hofmann, provided financial consulting and accounting services to the Company. In December 2017, J.L. Hofmann & Associates, P.A. merged with Kabat, Schertzer, De La Torre, Taraboulos & Co, LLC (“KSDT”). The Company paid $53,395 and $37,334 to KSDT for its services in the years ended December 31, 2020 and 2019, respectively.
We do not have any independent directors, as our sole director Mr. Davis is an officer. We intend to seek qualified independent directors to serve on our Board of Directors by the end of 2021.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
The firm of D. Brooks & Associates Certified Public Accountants was designated by our Board of Directors to audit the consolidated financial statements of our company for the fiscal years ended December 31, 2020. The following table summarizes the aggregate fees billed or to be billed to us by our independent registered accounting firms D. Brooks and Associates CPAs, PA, and Cherry Bekaert LLP for the fiscal years indicated:
Principal Accountant Fees and Service
Audit Fees 	 $ 79,750 $ 54,500
Total	 $ 79,750 $ 54,500
Tax Fees
The aggregate fees billed or expected to be billed by KSDT for tax compliance, tax advice and tax planning rendered to the Company for each of the fiscal years ended December 31, 2020 and 2019 were approximately $2,000.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
See Exhibit Index and Financial Statements Index, below.
PowerVerde, Inc. and Subsidiary
Annual Report on Form 10-K
Year Ended December 31, 2020
Page
REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED STATEMENTS OF OPERATIONS
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
and PowerVerde, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of PowerVerde, Inc. (the Company) as of December 31, 2020, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the year ended December 31, 2020, and the related notes to the consolidated financial statements (collectively referred to as the consolidated financial statements).
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for the year ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.
Substantial Doubt Regarding Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has incurred operating losses, has incurred negative cash flows from operations and has an accumulated deficit. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plan regarding these matters is also described in Note 2 to the consolidated financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain, an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
D. Brooks and Associates CPAs, P.A.
We have served as the Company’s auditor since 2020.
Palm Beach Gardens, Florida
March 9, 2021
PGA Blvd, Suite 104 ■ Palm Beach Gardens, Florida 33410 ■ Main Office : 561.429.6225 ■ Fax : 561.282.3444
dbrookscpa.com
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of
PowerVerde, Inc. and Subsidiary
Coral Gables, Florida
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheet of PowerVerde, Inc. and Subsidiary (the “Company”) as of December 31, 2019, and the related consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows for the year then ended, and the related notes to the consolidated financial statements (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in note 2 to the consolidated financial statements, the Company has historically incurred net losses and negative operating cash flows. As of December 31, 2019, the Company had an accumulated deficit of $12,572,714. These factors, and others discussed in Note 2, raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/Cherry Bekaert LLP
We have served as the Company’s auditor from 2010 through 2019.
Coral Gables, Florida
April 14, 2020
POWERVERDE, INC. AND SUBSIDIARY
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
CONSOLIDATED BALANCE SHEETS
December 31,
Assets
Current Assets:
Cash $ 95,386 $ 20,033
Accounts receivable - related party 13,000 6,000
Prepaid expenses 22,000 11,460
Total Current Assets $ 130,386 $ 37,493
Liabilities and Stockholders' Deficit
Current Liabilities:
Accounts payable and accrued expenses $ 76,381 $ 101,131
Convertible notes payable to related parties and stockholders, net of debt discount and issuance costs 194,422 -
Convertible notes payable, net of debt discount and issuance costs 97,176 -
Total Current Liabilities 367,979 101,131
Long Term Liabilities
Convertible notes payable to related parties and stockholders, net of debt discount and issuance costs, less current portion 20,536 211,900
Convertible notes payable, net of debt discount and issuance costs, less current portion 203,851 94,354
Total Long Term Liabilities 224,387 306,254
Total Liabilities 592,366 407,385
Commitments and Contingencies (Notes 5 and 10)
Stockholders’ Deficit
Preferred stock:
50,000,000 preferred shares authorized, 0 preferred shares issued at December 31, 2020 and 2019 - -
Common stock:
200,000,000 common shares authorized, par value $0.0001 3,997 3,981
per share, 40,455,468 common shares issued; 27,878,060 and 31,750,106 shares outstanding at December 31, 2020 and December 31, 2019, respectively
Additional paid-in capital 13,431,536 12,689,980
Treasury stock, 12,577,408 and 8,550,000 common shares at cost, respectively (791,139 ) (491,139 )
Accumulated deficit (13,106,374 ) (12,572,714 )
Total Stockholders' Deficit (461,980 ) (369,892 )
Total Liabilities and Stockholders' Deficit $ 130,386 $ 37,493
The accompanying notes are an integral part of these consolidated financial statements.
POWERVERDE, INC. AND SUBSIDIARY
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31, 2020 and 2019
Revenue - related party $ 40,000 $ 24,000
Operating Expenses
Research and development 114,559 218,919
General and administrative 323,806 217,510
Total Operating Expenses 438,365 436,429
Loss from Operations (398,365 ) (412,429 )
Other Expenses
Loss on impairment - (69,178 )
Interest expense (135,295 ) (33,309 )
Total Other Expenses (135,295 ) (102,487 )
Loss before Income Taxes (533,660 ) (514,916 )
Provision for Income Taxes - -
Net Loss $ (533,660 ) $ (514,916 )
Net Loss per Share - Basic and Diluted $ (0.01 ) $ (0.02 )
Weighted Average Common Shares Outstanding - Basic and Diluted 30,742,649 31,750,106
The accompanying notes are an integral part of these consolidated financial statements.
POWERVERDE, INC. AND SUBSIDIARY
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
For the years ended December 31, 2020 and 2019
Common Shares Common Stock Additional Paid in Capital Treasury Stock Accumulated Deficit Total Stockholders’ Equity (Deficit)
Balances, December 31, 2018 31,750,106 $ 3,981 $ 12,609,980 $ (491,139 ) $ (12,057,798 ) $ 65,024
Stock-based compensation - - 80,000 - - 80,000
Net loss - - - - (514,916 ) (514,916 )
Balances, December 31, 2019 31,750,106 $ 3,981 $ 12,689,980 $ (491,139 ) $ (12,572,714 ) $ (369,892 )
Repurchase of common stock shares from related party (4,027,408 ) - - (300,000 ) - (300,000 )
Issuance of common stock upon warrant exercise 25,000 2,997 - - 3,000
Conversion of note payable and accrued interest 130,362 26,059 - - 26,072
Beneficial Conversion Feature on Convertible Notes Payable - - 712,500 - - 712,500
Net loss - - - - (533,660 ) (533,660 )
Balances, December 31, 2020 27,878,060 $ 3,997 $ 13,431,536 $ (791,139 ) $ (13,106,374 ) $ (461,980 )
The accompanying notes are an integral part of these consolidated financial statements.
POWERVERDE, INC. AND SUBSIDIARY
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2020 and 2019
Cash Flows from Operating Activities
Net loss (533,660 ) (514,916 )
Adjustments to reconcile net loss to net cash used by operating activities:
Impairment of intangible assets - 69,178
Depreciation and amortization - 5,633
Amortization of debt issuance costs 13,530 7,254
Amortization of debt discount 59,327 -
Stock based compensation - 80,000
Changes in operating assets and liabilities
Accounts receivable with related party and prepaid expenses (17,540 ) 3,406
Accounts payable and accrued expenses (23,679 ) 61,996
Cash Used In Operating Activities (502,022 ) (287,449 )
Cash Flows from Financing Activities
Proceeds from convertible notes payable, related parties and stockholders 125,000 200,000
Proceeds from convertible notes payable 761,000 125,000
Payments for debt issuance costs (11,625 ) (26,000 )
Proceeds from warrant exercise 3,000 -
Payment for stock repurchase from related party (300,000 ) -
Cash Provided by Financing Activities 577,375 299,000
Net Change in Cash 75,353 11,551
Cash at Beginning of Period 20,033 8,482
Cash at End of Period $ 95,386 $ 20,033
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest $ 62,438 $ 25,871
Cash paid during the period for income taxes $ - $ -
Non-Cash Financing Activities
Beneficial conversion feature on convertible notes payable $ 712,500 $ -
Conversion of convertible note payable with related party and accrued interest $ 26,072 $ -
The accompanying notes are an integral part of these consolidated financial statements.
POWERVERDE, INC. AND SUBSIDIARY
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Nature of Business
PowerVerde, Inc. (the “Company”) is a “C” Corporation organized under the Laws of Delaware with operations in Scottsdale, Arizona. The Company’s two founders, now its largest shareholders, have conceived and developed the use of a power systems patent. For several years, the Company has been undertaking research and development on a power generating system based on the patent and related intellectual property, which it hopes to commercialize.
The Company has not generated revenues from its planned operations. During the years ended December 31, 2020 and 2019, the Company’s revenues have been generated from an assembly agreement with a related party.
Note 2 - Going Concern
The financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As of December 31, 2020, the Company had a working capital deficit of $237,593. As of December 31, 2020, the Company has an accumulated deficit of $13,106,374. The Company had a net loss of $533,660 and $501,022 of net cash used in operations for the year ended December 31, 2020. These conditions raise substantial doubt about the company’s ability to continue as a going concern.
The Company has historically relied upon unrelated and related party debt and equity financing to fund its cash flow shortages and will require either additional debt or equity financing to sustain its operations.
The Company continues to seek funding from private debt and equity investors, as it needs to promptly raise substantial additional capital in order to finance its plan of operations. There can be no assurance that the Company will be able to promptly raise the necessary funds on commercially acceptable terms, if at all. If the Company does not raise the necessary funds, it may be forced to cease operations. These financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 3 - Summary of Significant Accounting Policies
Cash Equivalents
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company held no cash equivalents at December 31, 2020 and 2019.
Accounts Receivable and Concentration
Accounts receivable consist of balances due from assembly services with a related party. The Company monitors accounts receivable and provides allowances when considered necessary. At December 31, 2020 and 2019, accounts receivable were considered to be fully collectible. Accordingly, no allowance for doubtful accounts was provided. At December 31, 2020 and 2019, accounts receivable were due from one related customer.
Revenue Recognition and Concentration
The Company follows the revenue standards of Financial Accounting Standards Board Update No. 2014-09: “Revenue from Contracts with Customers (Topic 606).” The core principle of this Topic is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Revenue is recognized in accordance with that core principle by applying the following five steps: 1) identify the contracts with a customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations; and 5) recognize revenue when (or as) we satisfy a performance obligation.
Royalties are recognized as earned in the period the sales to which the royalties relate occur. The Company has not yet generated any royalty revenues. Manufacturing assembly services are recognized as revenue when the assembled product is delivered to the customer and the Company has completed its performance obligations. Revenues for the years ended December 31, 2020 and 2019 were generated from manufacturing assembly services and are from one related customer.
Impairment of Long-Lived Assets
Impairment losses are recorded on long-lived assets (property, equipment and intellectual property) used in operations when impairment indicators are present and the undiscounted expected cash flows estimated to be generated by those assets are less than the carrying value of such assets. As of June 2019, the Company recognized an impairment loss of $69,178. The intellectual property was fully amortized as of December 31, 2019.
The Company reviews intangible assets with finite lives for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company uses an estimate of the undiscounted cash flows over the remaining life of its long-lived assets, or related group of assets where applicable, in measuring whether the assets to be held and used will be realizable. In the event of impairment, the Company would discount the future cash flows using its then estimated incremental borrowing rate to estimate the amount of the impairment.
Stock-based Compensation
The Company has accounted for stock-based compensation under the provisions of Accounting Standards Codification (ASC) Topic 718 - “Stock Compensation” which requires the use of the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (stock options and common stock purchase warrants). The fair value of each stock option award is estimated on the date of grant using the Black-Scholes valuation model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. Expected volatilities are based on historical volatility of peer companies and other factors estimated over the expected term of the stock options. The expected term of options granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus the contract term. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term.
Accounting for Uncertainty in Income Taxes
The Company follows the provisions of ASC Topic 740-10, “Accounting for Uncertainty in Income Taxes” which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This topic also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. There is no uncertain tax positions as of December 31, 2020 and December 30, 2019.
Income Tax Policy
The Company accounts for income taxes using the liability method prescribed by ASC 740 - Income Taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.
Research and Development Costs
The Company’s research and development costs are expensed in the period in which they are incurred. Such expenditures amounted to $114,559 and $218,919 for the years ended December 31, 2020 and 2019, respectively.
Earnings (Loss) Per Share
Earnings (loss) per share is computed in accordance with FASB ASC Topic 260, “Earnings per Share”. Diluted earnings per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock, common stock equivalents and other potentially dilutive securities outstanding during the period. Certain common stock equivalents were not included in the earnings (loss) per share calculation as their effect would be anti-dilutive. Warrants exercisable for 950,000 and 975,000 shares as of December 31, 2020 and December 31, 2019, respectively, were excluded from weighted average common shares outstanding on a diluted basis as well as options for 12,180,500 shares.
Financial Instruments
The Company carries cash, accounts receivable, accounts payable, accrued expenses and convertible notes payable, at historical costs. The respective estimated fair values of these assets and liabilities approximate carrying values due to their short-term nature.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
Reclassification
Certain amounts in the 2019 financial statements have been reclassified to conform to the 2020 presentation with no impact to stockholders’ deficit or net loss.
Note 4 - Recent Accounting Pronouncements
In August, 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-06, “Debt-Debt with Conversion and other options” which simplifies the accounting for convertible debt instruments and convertible preferred stock. The ASU is effective for public companies for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. The Company is evaluating the impact ASU 2020-06 could have on its consolidated financial statements.
There are several other new accounting pronouncements issued or proposed by the FASB. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial position, operating results, or cash flows.
Note 5 - Intellectual Property and License Agreement
On June 1, 2016, the Company entered into a ten-year License Agreement with Helidyne LLC for total consideration of $100,000 to utilize the Helidyne intellectual property in the manufacturing of planetary rotor expanders and the incorporation of same in the Company’s distributed electric power generation systems. The license agreement also grants the Company an exclusive license to sell the expanders whether manufactured by Helidyne or by the Company. The Company’s royalty obligation begins on the earlier of the commercialization of the product or three years from the effective date of the agreement. Once the royalty obligation begins, the minimum annual royalty is $50,000 for each of the first six years, and $100,000, per commercial year, for the remainder of the agreement. Helidyne has defaulted under the agreement. Royalties would be payable only if Helidyne performs as required, or if the Company elects to produce its own expanders using Helidyne technology.
In the second quarter of 2019, management of the Company evaluated the continued default by Helidyne and determined that Helidyne will not be able to perform under the license agreement for the foreseeable future. The Company’s license agreement continues to be active and the Company may utilize the Helidyne intellectual property in marketing its own products. Under the terms of the license agreement, the Company has the right to develop a prototype utilizing the Helidyne technology at its own cost. Due to the continued default by Helidyne and the potential cost of developing its own prototype, the Company has determined that the intangible asset related to the above license agreement is impaired and recognized an impairment charge of $69,178 in the second quarter of 2019, which is 100% of the net carrying value.
For the years ended December 31, 2020 and 2019, amortization expense was $0 and $5,000, respectively.
Note 6 - Convertible Notes Payable to Related Parties/Stockholders and Nonrelated Parties
In January, March, and May 2019, the Company issued Convertible Notes Payable totaling $200,000 to related parties and stockholders and $100,000 convertible note payable to a nonrelated party. The notes are to be paid in one principal payment, along with any unpaid interest by December 31, 2021. Interest is payable semiannually at 10%. The notes are convertible into common stock at a price of $.20 per share through December 31, 2019, $.30 per share from January 1, 2020 through December 31, 2020, and $.40 per share from January 1, 2021 through the maturity date of December 31, 2021.
In December 2019, the Company issued a Convertible Note Payable in the principal amount of $25,000 to a stockholder in connection with a loan in the same amount. The note is to be paid in one principal payment, along with any unpaid interest by December 31, 2022. Interest is payable semiannually at 10%. The note is convertible into common stock at a price of $.20 per share through December 31, 2020, $.30 per share from January 1, 2021 through December 31, 2021, and $.40 per share from January 1, 2022 through the maturity date of December 31, 2022. On December 4, 2020, the note along with accrued interest totaling $26,072 was converted into 130,362 shares of common stock.
In March 2020, the Company issued a Convertible Note Payable in the principal amount of $100,000 to a nonrelated party in connection with a loan in the same amount. The note is to be paid in one principal payment, along with any unpaid interest by December 31, 2022. Interest is payable semiannually at 10%. The note is convertible into common stock at a price of $.20 per share through December 31, 2020, $.30 per share from January 1, 2021 through December 31, 2021, and $.40 per share from January 1, 2022 through the maturity date of December 31, 2022.
In June 2020, the Company issued a Convertible Note Payable in the principal amount of $25,000 to a related party in connection with a loan in the same amount. The note is to be paid in one principal payment, along with any unpaid interest by July 31, 2023. Interest is payable semiannually at 10%. The note is convertible into common stock at a price of $.20 per share through December 31, 2020, $.30 per share from January 1, 2021 through December 31, 2021, and $.40 per share from January 1, 2022 through the maturity date of July 31, 2023.
In the third quarter 2020, the Company issued Convertible Notes Payable totaling $511,000, of which $25,000 was with a stockholder and the remaining $486,000 was with nonrelated accredited investors in connection with loans for the same amount. The notes are to be paid in one principal payment, along with any unpaid interest by December 31, 2023. Interest is payable semiannually at 10% on June 30 and December 31. The notes are convertible into common stock at a price of $.20 per share through December 31, 2020, $.30 per share from January 1, 2021 through December 31, 2021, and $.40 per share from January 1, 2022 through the maturity date of December 31, 2023.
In the fourth quarter 2020, the Company issued Convertible Notes Payable totaling $250,000, of which $75,000 was with a related party and stockholder and the remaining $175,000 was with nonrelated accredited investors in connection with loans for the same amount. The notes are to be paid in one principal payment, along with any unpaid interest by December 31, 2023. Interest is payable semiannually at 10% on June 30 and December 31. The notes are convertible into common stock at a price of $.20 per share through December 31, 2020, $.30 per share from January 1, 2021 through December 31, 2021, and $.40 per share from January 1, 2022 through the maturity date of December 31, 2023.
Consequently, the Company has outstanding Convertible Notes Payable in an aggregate principal amount of $1,186,000 through December 31, 2020, of which $325,000 are due to related parties and stockholders, and $861,000 are to nonrelated parties (collectively referred to as the “Notes”). See Note 12 for further related party transactions.
The Convertible Notes Payable that were issued in the third and fourth quarter 2020 included a beneficial conversion feature, which is recorded as a discount against the Notes and amortized through the earlier of the conversion into common stock, or the maturity date. Amortization of the debt discount is reported as interest expense in the Statement of Operations The total debt discount associated with the beneficial conversion feature for the year ended December 31, 2020 was $712,500. Total amortization associated with the beneficial conversion feature debt discount was $59,327 for the year ended December 31, 2020.
Total debt issuance costs were $11,625 and $26,000 for the years ended December 31, 2020 and December 31, 2019, respectively. Total amortization associated with the debt issuance costs paid was $13,530 and $7,254 for the years ended December 31, 2020 and December 31, 2019, respectively.
Convertible Notes Payable at December 31, 2020 and December 31, 2019 consisted of the following:
December 31, December 31,
Current:
Convertible notes payable to related parties and stockholders $ 200,000 $ -
Less:
Unamortized debt issuance costs 5,578 -
Total convertible notes payable to related parties and stockholders $ 194,422 $ 0
Convertible notes payable $ 100,000 $ -
Less:
Unamortized debt issuance costs 2,824 -
Total convertible notes payable, net $ 97,176 $ 0
Long Term:
Convertible notes payable to related parties and stockholders $ 125,000 $ 225,000
Less:
Unamortized debt discount - beneficial conversion feature 103,092 -
Unamortized debt issuance costs 1,371 13,100
Total convertible notes payable to related parties and stockholders $ 20,536 $ 211,900
Convertible notes payable $ 761,000 $ 100,000
Less:
Unamortized debt discount - beneficial conversion feature 550,080 -
Unamortized debt issuance costs 7,069 5,646
Total convertible notes payable, net $ 203,851 $ 94,354
Note 7 - Warrants
Warrants
During September 2015, the Company issued five-year warrants to a stockholder for the purchase 25,000 shares of common stock at an exercise price of $.12 per share as additional consideration for a $25,000 loan. On September 30, 2020, the stockholder exercised the warrant for 25,000 shares at $0.12 per share, totaling $3,000.
During June 2016, the Company issued warrants to a stockholder for the purchase of 900,000 shares of common stock at an exercise price of $0.11 per share in consideration for the Company utilizing his facility space from January 2013 to December 2015. These warrants expire in June 2021. As of December 31, 2020, all of these warrants were outstanding.
In July 2016, a warrant for the purchase of 25,000 shares of common stock at an exercise price of $.19 per share was issued to a stockholder as additional consideration for a $25,000 loan. These warrants expire in July 2021. As of December 31, 2020, all of these warrants were outstanding.
In October 2016, another warrant for the purchase of 25,000 shares of common stock was issued to the same stockholder at an exercise price of $.15 per share as additional consideration for extending the maturity of the $25,000 loan for an additional 90 days. These warrants expire in October 2021. As of December 31, 2020, all of these warrants were outstanding.
A summary of warrants issued, exercised and expired during the year ending December 31, 2020 is as follows:
Shares Weighted Average Exercise Price Aggregate Intrinsic Value
Balance at December 31, 2019 975,000 $ .11 $ 0
Exercised (25,000 ) .12 -
Balance at December 31, 2020 950,000 $ .11 $ 690,500
Note 8 - Stock Options
Stock option activity for the year ended December 31, 2020, is summarized as follows:
Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years)
Options outstanding and exercisable at December 31, 2019 12,180,500 $ 0.21 5.59
Options outstanding and exercisable at December 31, 2020 12,180,500 $ 0.21 4.63
Total stock option compensation was $0 and $80,000 for the years ended December 31, 2020 and 2019. There is no unrecognized compensation expense associated with the option.
Note 9 - Stockholders’ Deficit
On September 30, 2020, a shareholder exercised a warrant for 25,000 shares at $0.12 per share, totaling $3,000.
The Company also purchased from George Konrad, the Company’s founder and former CEO and Director (“Konrad”) all of Konrad’s 4,027,408 shares of Company common stock (the “Shares”), representing 12.7% of the Company’s issued and outstanding common stock, for an aggregate price of $300,000 ($.074 per share). The Company raised the funds used for the purchase of the shares through a private placement of convertible notes to related parties, stockholders and non-related accredited investors (see Note 6).
On December 4, 2020, a stockholder converted a Convertible Note Payable in the principal amount of $25,000 along with accrued interest totaling $26,072 into 130,362 shares of common stock (see Note 6).
Note 10 - Commitments and Contingencies
On June 25, 2015, Company consultant Hank Leibowitz assigned to the Company a patent he obtained for a system and method for using high temperature sources in Rankine cycle power systems. The Company has agreed to pay Mr. Leibowitz a 2% royalty for any and all revenues of products and/or project sales by the Company based on the subject patent. At December 31, 2020, no royalties have been paid on this agreement.
On September 20, 2020, the Company signed a Binding Letter of Intent for a merger (the “LOI”) with 374Water Inc. (“374Water”) a privately-held company based in Durham, North Carolina www.374water.com.
Subject to the terms and conditions set forth in the LOI, 374Water will merge into a newly- formed wholly-owned subsidiary of the Company (the “Sub”), with the Sub as the surviving corporation (the “Merger”). Upon closing of the Merger, the Company will issue new shares of common stock to 374Water shareholders such that 374Water shareholders will own approximately 60% of the combined company, and the Company’s shareholders will own approximately 40%. The Merger is subject to adjustments for liabilities, and the closing is contingent on the achievement of certain milestones and satisfaction of conditions by both parties prior to closing, including the raising of net proceeds of at least $6.25 million of additional capital pursuant to a private placement by March 31, 2021. (See Note 13)
Note 11 - Income Taxes
Deferred income taxes are provided based on the provisions of ASC Topic 740, “Accounting for Income Taxes”, to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
Significant components of the Company’s net deferred income taxes are as follows:
December 31,
Deferred tax assets:
Net operating loss carryforwards $ 1,953,623 1,773,162
Start-up cost 109,218 129,091
Goodwill 279,200 309,039
Stock based compensation 538,113 538,113
Other 16,636 1,079
Deferred tax assets 2,896,789 2,750,484
Less valuation allowance (2,896,789 ) (2,750,484 )
Net deferred tax assets after valuation allowance $ - -
A reconciliation of the U.S. statutory federal income tax rate to the effective income tax rate (benefit) follows:
Rate Reconciliation
December 31,
Rate Reconciliation
Federal income tax at statutory rate (112,069 ) (108,133 )
State Tax (18,795 ) (18,134 )
Change in Valuation Allowance 146,306 89,146
Permanent Differences 14,217
Other (15,734 ) 22,904
- -
In assessing the ability to realize a portion of the deferred tax assets, management considers whether it is more than likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities and projected future taxable income in making the assessment. After consideration of the evidence, both positive and negative, management has determined that a $2,896,789 valuation allowance at December 31, 2020 is necessary. The change in the valuation allowance for the current year is $146,306, which represents the changes in the deferred items. At December 31, 2020, the Company has available net operating loss carry forwards for federal income tax purposes of $7,958,781 expiring at various times from 2028 through 2033.
Note 12- Related Party Transactions
From July 2010 until December 2017, the accounting firm J.L. Hofmann & Associates, P.A. (“JLHPA”), whose principal is our CFO John L. Hofmann, provided financial consulting and accounting services to the Company. In December 2017, J.L. Hofmann & Associates, P.A. merged with Kabat, Schertzer, De La Torre, Taraboulos & Co, LLC (“KSDT”). The Company paid $53,395 and $37,334 to KSDT for its services in the years ended December 31, 2020 and 2019, respectively.
The Company’s consultant and shareholder Hank Leibowitz receives compensation of $7,500 per month, totaling $90,000 for the 2020. At December 31, 2020, Mr. Leibowitz was owed accrued compensation of $45,000, which is included in accounts payable and accrued expense on the accompanying balance sheets.
On April 15, 2017, the Company entered into an assembly agreement with Liberty Plugins, Inc. (“Liberty”) to assemble Liberty’s Hydra electronic vehicle charging systems and ship completed Hydras to Liberty’s facility in Santa Barbara, California (the “Liberty Agreement”). Initially, Liberty agreed to pay $1,000 for the first 10 Hydras assembled in a month, $750 per Hydra for the next 10 Hydras assembled per month and $500 per Hydra for each Hydra assembled above 20 per month. The Company has never assembled/shipped more than 10 Hydras in any month and does not expect to do so in the future. Revenue for these products is reflected in the revenue -related party on the Company’s consolidated statement of operations and amounted to $40,000 and $24,000 for the years ended December 31, 2020 and 2019, respectively. The Liberty Agreement is subject to termination by either party on 30 days notice.
The company’s CEO is a minority interest holder and member of the Board of Directors of Liberty. Therefore, transactions with Liberty have been disclosed as transactions with a related party.
See Note 6 for convertible notes issued to related parties and Note 9 for repurchase of stock from a related party.
Note 13 - Subsequent Events
As of March 5, 2021, the Company is holding in escrow $1,636,545 for purposes of the private placement required to generate net proceeds of $6.25 million as a condition of the closing of the Merger. (See Note 10)
EXHIBIT INDEX
Exhibit No.
Description
3.1
Certificate of Incorporation of Vyrex Corporation as filed with the Delaware Secretary of State on September 8, 2005.1
3.2
Bylaws of Vyrex Corporation, dated as of September 9, 2005. 1
3.3
Amended and Restated Certificate of Incorporation of Vyrex Corporation as filed with the Delaware Secretary of State on August 14, 2008. 2
10.1
Agreement and Plan of Merger, dated as of February 11, 2008 by and among Vyrex Corporation, Vyrex Acquisition Corporation and PowerVerde, Inc. 3
10.4
Intellectual Property Transfer Agreement dated as of March 4, 2009, between PowerVerde, Inc. and Edward C. Gomez. 6
10.9
Agreement dated April 7, 2011, between PowerVerde, Inc. and George Konrad. 8
10.10
Employment Agreement dated April 7, 2011, between PowerVerde, Inc. and George Konrad. 8
10.11
Employment Agreement dated as of June 15, 2011, between PowerVerde, Inc. and Mark P. Prinz 16
10.14
Amendment to Agreement dated August 19, 2011, between PowerVerde, Inc. and George Konrad.16
10.16
Binding Letter of Intent for Acquisition dated November 1, 2011, between PowerVerde, Inc., Bryce Johnson, Paul Kelly and Vince Hils. 10,
10.18
Membership Interest Purchase Agreement between PowerVerde, Inc., Bryce Johnson, Paul Kelly and Vince Hils dated March 30, 2012. 12
10.19
Agreement dated October 16, 2012, among PowerVerde, Inc., George Konrad and Arizona Research and Development Inc. 13
10.20
Consulting Agreement between the Company and Waste Heat Solutions LLC dated October 25, 2012. 14
10.21
Form of Series A Secured Promissory Note dated December 2012. 14
10.22
Security Agreement between PowerVerde Inc. and Series A Note holders dated December 31, 2012. 14
10.23
DELETE OR FILE FOR 2020 10K DOES NOT LINKAmendment to the Settlement Agreement between the Company and George Konrad dated February 7, 2014. 15
10.24
Assignment of Intellectual Property Agreement between PowerVerde Inc. and Vyrex IP Holdings Inc. dated June 30, 2015. 17
10.25
Form of Series B Convertible Promissory Note, dated January 2019. 18
10.26
Employment Agreement between PowerVerde Inc. and Daniel T. Bogar dated September 1, 2020 19
10.27
Employment Agreement between PowerVerde Inc. and Richard H. Davis dated September 1, 2020.20
10.28
Binding Letter of Intent dated September 20, 2020, between PowerVerde Inc. and 374Water Inc. 21
21.1
Subsidiaries of the Company. 1
31.1
Certification of the Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002. *
31.2
Certification of the Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002. *
32.1
Certification of the Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002. *
32.2
Certification of the Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002. *
* Filed herewith.
1 Previously filed on Form 8-K filed with the SEC on October 21, 2005.
2 Previously filed on Form 10-Q for the quarter ended June 30, 2008, as filed with the SEC on August 19, 2008.
3 Previously filed on Form 8-K with the SEC on February 12, 2008. Nonmaterial schedules and exhibits identified in the Agreement and Plan of Merger have been omitted pursuant to Item 601(b)(2) of Regulation S-B. The Company agrees to furnish supplementally to the SEC upon request by the SEC a copy of any omitted schedule(s) or exhibit(s).
4 Previously filed on Form 10-K for the year ended December 31, 2008, as filed with the SEC on April 15, 2009.
5 Previously filed on Form 10-Q for the quarter ended September 30, 2009, as filed with the SEC on November 17, 2009.
6 Previously filed on Form 10-K for the year ended December 31, 2008, as filed with the SEC on April 15, 2009.
7 Previously filed on Form 8-K filed with the SEC on February 4, 2011.
8 Previously filed on Form 10-K for the year ended December 31, 2010, as filed with the SEC on April 7, 2011.
9 Previously filed on Form 8-K filed with the SEC on September 30, 2011
10 Previously filed on Form 8-K filed with the SEC on November 7, 2011
11 Previously filed on Form 8-K filed with the SEC on February 9, 2012.
12 Previously filed on Form 8-K filed with the SEC on April 5, 2012.
13 Previously filed on Form 8-K filed with the SEC on October 22, 2012.
14 Previously filed on Form 10-K for the year ended December 31, 2012, as filed with the SEC on May 16, 2013.
15 Previously filed on Form 10-K for the year ended December 31, 2013, as filed with the SEC on March 17, 2014.
16 Previously filed on Form 10-Q for the quarter ended June 30, 2011, as filed with the SEC on August 22, 2011.
17 Previously filed on Form 10-K for the year ended December 31, 2015, as filed with the SEC on March 30, 2016.
18 Previously filed on Form 10-K for the year ended December 31, 2018, as filed with the SEC on March 29, 2019.
19 Previously filed on Form 10-Q for the quarter ended September 30, 2020, as filed with the SEC on November 16, 2020.
20 Previously filed on Form 10-Q for the quarter ended September 30, 2020, as filed with the SEC on November 16, 2020.
21 Previously filed on Form 8-K filed with the SEC on September 24, 2020.