P2 Solar, Inc 10-Q for FY2024 Q2
P2 Solar, Inc. (PTOS)
About this 10-Q
P2 Solar, Inc filed this 10-Q on November 20, 2023, covering the quarter ended September 30, 2023 (FY2024 Q2).
Headline figures
Quarter ended September 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $92.4K
- compared with $0 a year earlier
- Net loss
- $41.44K
- compared with a net loss of $74.73K a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
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For the Quarterly Period Ended |
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For the transition period from ____________ to_____________ |
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(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act: None
Title of Each Class | Trading Symbol(s) | Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☐ | Smaller reporting company | ||
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| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
As of November 20, 2023, the Company had
Table of Contents
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION. |
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. |
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SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS
CERTAIN STATEMENTS IN THIS REPORT, INCLUDING STATEMENTS IN THE FOLLOWING DISCUSSION, ARE WHAT ARE KNOWN AS "FORWARD LOOKING STATEMENTS", WHICH ARE BASICALLY STATEMENTS ABOUT THE FUTURE. FOR THAT REASON, THESE STATEMENTS INVOLVE RISK AND UNCERTAINTY SINCE NO ONE CAN ACCURATELY PREDICT THE FUTURE. WORDS SUCH AS "PLANS," "INTENDS," "WILL," "HOPES," "SEEKS," "ANTICIPATES," "EXPECTS "AND THE LIKE OFTEN IDENTIFY SUCH FORWARD LOOKING STATEMENTS BUT ARE NOT THE ONLY INDICATION THAT A STATEMENT IS A FORWARD LOOKING STATEMENT. SUCH FORWARD LOOKING STATEMENTS INCLUDE STATEMENTS CONCERNING OUR PLANS AND OBJECTIVES WITH RESPECT TO THE PRESENT AND FUTURE OPERATIONS OF THE COMPANY, AND STATEMENTS WHICH EXPRESS OR IMPLY THAT SUCH PRESENT AND FUTURE OPERATIONS WILL OR MAY PRODUCE REVENUES, INCOME OR PROFITS. NUMEROUS FACTORS AND FUTURE EVENTS COULD CAUSE THE COMPANY TO CHANGE SUCH PLANS AND OBJECTIVES OR FAIL TO SUCCESSFULLY IMPLEMENT SUCH PLANS OR ACHIEVE SUCH OBJECTIVES OR CAUSE SUCH PRESENT AND FUTURE OPERATIONS TO FAIL TO PRODUCE REVENUES, INCOME OR PROFITS. THEREFORE, THE READER IS ADVISED THAT THE FOLLOWING DISCUSSION SHOULD BE CONSIDERED IN LIGHT OF THE DISCUSSION OF RISKS AND OTHER FACTORS CONTAINED IN THE FORM 10-K OF THE COMPANY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND IN THE COMPANY'S OTHER FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. NO STATEMENTS CONTAINED IN THE FOLLOWING DISCUSSION SHOULD BE CONSTRUED AS A GUARANTEE OR ASSURANCE OF FUTURE PERFORMANCE OR FUTURE RESULTS.
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| Table of Conents |
PART I
ITEM 1. FINANCIAL STATEMENTS.
P2 SOLAR, INC.
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED SEPTEMBER 30, 2023 and 2022
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| Table of Contents |
P2 SOLAR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2023 AND MARCH 31, 2023
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| March 31, 2023 |
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ASSETS |
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Current Assets |
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Cash |
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Accounts receivable |
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Other receivable |
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Prepaid expense |
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Total Current Assets |
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Goodwill |
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TOTAL ASSETS |
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LIABILITIES AND STOCKHOLDERS’ DEFICIT |
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Current Liabilities |
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Accounts payable and accrued liabilities |
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Accrued interest |
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Promissory notes payable |
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Convertible notes payable |
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Due to related parties |
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Total Current Liabilities |
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Total Liabilities |
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Stockholders’ Deficit |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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Accumulated other comprehensive loss |
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Total Stockholders’ Deficit |
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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| Table of Contents |
P2 SOLAR INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS AND THREE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(UNAUDITED)
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REVENUE |
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Cost of revenue |
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Gross Profit |
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OPERATING EXPENSES |
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General and Administrative expenses |
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Professional fees |
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Management salaries- related party |
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Total Operating Expenses |
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OPERATING LOSS |
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OTHER INCOME (EXPENSES) |
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Interest expense |
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Foreign exchange loss |
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Other income |
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Total Other Income (Expenses) |
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Provision for income taxes |
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NET LOSS |
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COMPREHENSIVE LOSS |
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Net loss |
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Foreign currency adjustment |
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Total comprehensive income (loss) |
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NET LOSS PER SHARE: BASIC AND DILUTED |
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WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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| Table of Contents |
P2 SOLAR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE SIX MONTHS AND THREE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(UNAUDITED)
Six Months Ended September 30, 2023
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| Paid-In Capital |
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| Comprehensive Loss |
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| Stockholders' Deficit |
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Balance - March 31, 2023 |
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Foreign exchange translation adjustment |
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Net loss |
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Balance - June 30, 2023 |
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Foreign exchange translation adjustment |
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Net loss |
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Balance - September 30, 2023 |
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Six Months Ended September 30, 2022
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Balance - March 31, 2022 |
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Foreign exchange translation adjustment |
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Net loss |
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Balance - June 30, 2022 |
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Foreign exchange translation adjustment |
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Net loss |
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Balance - September 30, 2022 |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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| Table of Contents |
P2 SOLAR INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(UNAUDITED)
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net loss |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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Other receivable |
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Prepaid expense |
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Accounts payable and accrued liabilities |
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Accrued interest |
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Management salary payable |
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Net cash provided by (used in) operating activities |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Advancement from related parties |
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Repayment to related parties |
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Net cash provided by financing activities |
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Cash and cash equivalents - beginning of period |
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Cash and cash equivalents - end of period |
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Supplemental Cash Flow Disclosures |
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Cash paid for interest |
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Cash paid for income taxes |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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| Table of Contents |
P2 SOLAR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTMEBER 30, 2023
(UNAUDITED)
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
The Company was incorporated as Spectrum Trading Inc. under the laws of the Province of British Columbia, Canada, on November 21, 1990. On May 14, 1999, the Company was discontinued in British Columbia and was reincorporated as Spectrum International Inc. in the State of Delaware, U.S.A. Effective September 3, 2004, the Company changed its name from Spectrum International Inc. to Natco International Inc. On March 11, 2009, the Company changed its name from Natco International Inc. to P2 Solar, Inc. The Company’s current business operations are focused on the construction of rooftop solar systems residential and commercial buildings in British Columbia, Canada.
On February 22, 2023, the Company acquired all outstanding shares of Futricity Solar, Inc., a corporation specializing in solar system installing which is owned by the Director and Officer of the Company. Futricity Solar Inc. has become a wholly owned subsidiary of the Company.
On November 24, 2022, British Columbia Securities Commission (BCSC) issued a “Partial Revocation Order” of the “Cease Trade Order” (CTO) that was issued on March 6, 2015, on all securities trading of the Company. Under the Partial Revocation Order, the Company will be allowed to complete a private placement in the province of British Columbia (the Private Placement) of up to $
NOTE 2 - GOING CONCERN UNCERTAINTY
As reflected in the accompanying condensed consolidated financial statements, the Company has an accumulated deficit of $
Management believes that the current actions to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern. There are no assurances that additional funds will be available when needed from any source or, if available, will be available on terms that are acceptable to us.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars. The Company uses the accrual basis of accounting and has adopted a March 31 fiscal year end.
Basis of Consolidation
These consolidated financial statements include the accounts of the Company and its wholly owned subsidiary Futricity Solar, Inc. All material intercompany balances and transactions have been eliminated.
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| Table of Contents |
Foreign Currency Translations
The Company’s reporting currency is U.S. (USD) dollar and functional currency for the Company and its wholly owned subsidiary is Canadian dollar (CAD). All transactions initiated CAD are translated into U.S. dollars in accordance with ASC 830-30, “Translation of Financial Statements,” as follows:
| 1) | Monetary assets and liabilities at the rate of exchange in effect at the balance sheet date. |
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| 2) | Equity at historical rates. |
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| 3) | Revenue and expense items at the average rate of exchange prevailing during the period. |
Adjustments arising from such translations are deferred until realization and are included as a separate component of stockholders’ equity as a component of comprehensive income or loss. Therefore, translation adjustments are not included in determining net income (loss) but reported as other comprehensive income. Gains and losses from foreign currency transactions are included in earnings in the period of settlement.
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| Six Months Ended |
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Spot USD: CAD exchange rate |
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Average USD: CAD exchange rate |
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| ||
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents include cash in banks, money market funds, and certificates of term deposits with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value. As of September 30, 2023 and March 31, 2023, the Company had cash of $
Accounts Receivable
Accounts receivable are recorded in accordance with ASC 310, “Receivables.” Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company does not currently have any amount recorded as an allowance for doubtful accounts. Based on management’s estimate and based on all accounts being current, the Company has not deemed it necessary to reserve for doubtful accounts at this time.
| 10 |
| Table of Contents |
As of September 30, 2023 and March 31, 2023, the Company had accounts receivable of $
As of September 30, 2023, the Company has two customers contributed over 10% of the accounts receivable at
Other Receivable
Other receivable relates to Goods and services tax (GST) recoverable of $
Prepaid Expense
Prepaid expense relates to legal retainer made for future services in advance that will be expensed over time as the benefit of the services is received in the future expected within one year. As of September 30, 2023 and March 31, 2023, prepaid expense was $
Accounts Payable
Accounts Payable comprised of trade payable to vendors of $
Related Parties
We follow ASC 850, “Related Party Disclosures”, for the identification of related parties and disclosure of related party transactions. (see Note 6)
Fair Value of Financial Instruments
The Company adopted the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures,” which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.
The estimated fair value of certain financial instruments, including accounts payable and accrued liabilities. are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The carrying amounts of our short and long term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates taken together with other features such as concurrent issuances of warrants and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk.
ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:
Level 1 - | quoted prices in active markets for identical assets or liabilities |
|
|
Level 2 - | quoted prices for similar assets and liabilities in active markets or inputs that are observable |
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|
Level 3 - | inputs that are unobservable (for example cash flow modeling inputs based on assumptions) |
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Impairment of tangible and intangible assets
Tangible and intangible assets (excluding goodwill) are assessed at each reporting date for indications that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company makes an estimate of the asset's recoverable amount. The asset's recoverable amount is the higher of an assets or cash-generating unit's fair value less costs of disposal and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or a group of assets exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or the group of assets.
Goodwill
We allocate goodwill to reporting units based on the reporting unit expected to benefit from the business combination. We evaluate our reporting units on an annual basis and, if necessary, reassign goodwill using a relative fair value allocation approach. Goodwill is tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit.
Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The fair value of each reporting unit is estimated primarily through the use of a discounted cash flow methodology. This analysis requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, and determination of our weighted average cost of capital.
The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results, market conditions, and other factors. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit.
On February 22, 2023, the Company acquired all outstanding shares of Futricity Solar, Inc., which generated goodwill of $3,168 (CAD 4,287). The Company has accounted for the transaction in accordance with ASC 805 “Business Combinations.” (see Note 4)
Based on the Company’s analysis of goodwill as of September 30, 2023 no indicators of impairment exist. No impairment loss on goodwill was recognized for the six months ended September 30, 2023.
Revenue Recognition
The Company recognizes revenue from the sale of products and services in accordance with ASC 606, “Revenue Recognition” following the five steps procedure:
Step 1: Identify the contract(s) with customers.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to performance obligations.
Step 5: Recognize revenue when the entity satisfies a performance obligation.
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The Company’s revenue derives from installation of rooftop solar systems. For the six months ended September 30, 2023 and 2022, the Company recognized revenue of $
During the six moths ended September 30, 2023, the Company has five customers contributed over
Net Income (Loss) per Share
The Company computes basic and diluted net loss per share amounts in accordance with ASC Topic 260, “Earnings per Share.” Basic loss per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of shares of common stock outstanding during the reporting period. Diluted loss per share reflects the potential dilution that could occur if convertible notes to issue common stock were converted resulting in the issuance of common stock that could share in the loss of the Company. For the six months ended September 30, 2023 convertible notes were potentially dilutive instruments and were not included in the calculation of diluted loss per share as their effect would be antidilutive.
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| September 30, 2023 |
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| (Shares) |
| |
Convertible Notes |
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Recently Issued Accounting Pronouncements
In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12), which simplifies the accounting for income taxes. This guidance will be effective for entities for the fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020 on a prospective basis, with early adoption permitted. We adopted the new standard effective April 1, 2021 and there was no material impact on the Company’s financial statements.
Management has considered all recent accounting pronouncements issued. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.
NOTE 4 - ACQUISITIONS
On February 22, 2023, the Company acquired all outstanding shares of Futricity Solar, Inc., a corporation specializing in solar system installation which is owned by the Director and Officer of the Company. Futricity Solar Inc. has become a wholly owned subsidiary of the Company. The purchase price is equal to
The following table summarizes the fair value of the consideration paid by the Company:
Total Purchase Price |
| $ |
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Bank |
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| |
Total identifiable assets |
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Shareholder Loan |
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| ( | ) |
GST Payable |
|
| ( | ) |
Total identifiable liabilities |
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| ( | ) |
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|
Net assets (liabilities) |
|
| ( | ) |
Goodwill |
| $ |
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| 13 |
| Table of Contents |
NOTE 5 - PROMISSORY NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE
Promissory Notes
As of September 30, 2023 and March 31, 2023, the promissory notes payable to non-affiliates are summarized as follows:
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| September 30, |
|
| March 31, |
| ||
Note |
| Expiry Date |
| 2023 |
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| 2023 |
| ||
Promissory Note - September 2011 |
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| $ |
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| $ |
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Promissory Note - October 2013 |
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Promissory Note - November 2013 |
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Promissory Note - November 2013 |
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Promissory Note - December 2013 |
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Promissory Note - January 2014 |
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Promissory Note - February 2014 |
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Promissory Note - March 2014 |
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Promissory Note - May 2014 |
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Promissory Note - July 2014 |
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Promissory Note - September 2014 |
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Promissory Note - September 2015 |
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Promissory Note - January 2018 |
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Promissory Note - June 2021 |
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Promissory Note - August 2021 |
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Promissory Note - August 2021 |
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Promissory Note - November 2021 |
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Less: non-current portion of promissory note payable |
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Current portion of promissory note payable |
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| $ |
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| $ |
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| 14 |
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During the six months ended September 30, 2023, the Company repaid in full the promissory note payable to Azariah Zemarium in the amount of $
During the six months ended September 30, 2023, the Company repaid promissory notes of $
Convertible Notes
As of September 30, 2023 and March 31, 2023, the convertible notes payable to non-affiliates are summarized as follows:
|
|
|
| September 30, |
|
| March 31, |
| ||
Note |
| Expiry Date |
| 2023 |
|
| 2023 |
| ||
Convertible Note - December 2022 |
|
| $ |
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| $ |
| |||
Convertible Note - February 2023 |
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Convertible Note - June 2023 |
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Convertible Note - August 2023 |
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convertible Note - September 2023 |
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Less: non-current portion of convertible note payable |
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Current portion of convertible note payable |
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| $ |
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| $ |
| ||
During the six months ended September 30, 2023, the Company issued convertible notes to non-affiliates totaling $
During the six months ended September 30, 2023 and 2022, the Company incurred interest expense on promissory notes and convertible notes of $
NOTE 6- RELATED PARTY TRANSACTIONS
During the six months ended September 30, 2023 and September 30, 2022, the Director and Officer of the Company advanced $
During the six months ended September 30, 2023 and September 30, 2022, the Company incurred management salary to the Director and Officer of $
As of September 30, 2023 and March 31, 2023, the amount due to another Director of the Company of $
The loans to the related parties are unsecured, due on demand and non-interest bearing.
As of September 30, 2023 and March 31, 2023, the total amount due to related parties was $
NOTE 7 - EQUITY
Authorized Stock
The Company has authorized
Common Stock
As of September 30, 2023 and March 31, 2023, the issued and outstanding common stock was
NOTE 8 - SUBSEQUENT EVENTS
Subsequent to September 30, 2023, and through the date that these financials were issued, the Company had the following subsequent events:
There have been no significant Subsequent events
| 15 |
| Table of Contents |
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.
This management discussion and analysis of the financial position and results of operation (“MD&A”) for P2 Solar, Inc. (the “Company”) is prepared as at November 15, 2023 and should be read in conjunction with the unaudited consolidated interim financial statements for the three and six months ended September 30, 2023 and in conjunction with the audited consolidated financial statements for the year ended March 31, 2023.
Background and Overview
P2 Solar, Inc., incorporated in the State of Delaware, has been in existence as a Company (including its predecessor British Columbia Corporation) since 1990. the Company’s current business operations are focused on the construction and installation of residential and commercial rooftop and ground mount solar energy systems in Canada. The Company is currently an emerging stage company.
The Company has limited revenues and is dependent upon financing to continue basic operations. Management intends to rely upon advances or loans from management, significant stockholders or third parties to meet the cash requirements of the Company, but the Company has not entered into written agreements guaranteeing funds and, therefore, no one is obligated to provide funds to the Company in the future. These factors raise substantial doubt as to the ability of the Company to continue as a going concern.
Results of Operation
The following discussion and analysis provide information that management of the Company believes is relevant to an assessment and understanding of the results of operation and financial condition of the Company for the three months and six months ended September 30, 2023, as compared to the three months and six months ended September 30, 2022. The Company’s financial statements are stated in US Dollars and are prepared in accordance with generally accepted accounting principles of the United States (“GAAP”).
Three Month Period ended September 30, 2023 and September 30, 2022
|
| Three Months Ended |
|
|
|
|
|
|
| |||||||
|
| September 30, |
|
| Change |
|
| Change |
| |||||||
|
| 2023 |
|
| 2022 |
|
| Amount |
|
| Percentage |
| ||||
Revenue |
| $ | 92,399 |
|
| $ | - |
|
| $ | 92,399 |
|
|
| 100 | % |
Cost of Goods Sold |
|
| 49,857 |
|
|
| - |
|
|
| 49,857 |
|
|
| 100 | % |
Gross Profit |
|
| 42,542 |
|
|
| - |
|
|
| 42,542 |
|
|
| 100 | % |
Operating expenses |
|
| 59,403 |
|
|
| 18,269 |
|
|
| 41,134 |
|
|
| 225 | % |
Loss from operations |
|
| (16,861 | ) |
|
| (18,269 | ) |
|
| 1,408 |
|
|
| -8 | % |
Other expenses |
|
| (24,579 | ) |
|
| (56,456 | ) |
|
| 31,877 |
|
|
| -56 | % |
Net Loss |
| $ | (41,440 | ) |
| $ | (74,725 | ) |
| $ | 33,285 |
|
|
| -45 | % |
Foreign currency adjustment |
|
| 36,637 |
|
|
| 102,501 |
|
|
| (65,864 | ) |
|
| -64 | % |
Comprehensive income (loss) |
|
| (4,803 | ) |
|
| 27,776 |
|
|
| (32,579 | ) |
|
| -117 | % |
Revenue from Operations
The Company started to generate sales from installation of rooftop solar systems during Q1 ended June 30, 2023. During the three months ended September 30, 2023 and 2022, the Company recognized revenue of $92,399 and $nil and incurred cost of sales of $49,857 and $nil, resulting in gross profit of $42,542 and $nil, respectively.
Operating Expenses
During the three months ended September 30, 2023, the Company had operating expenses of $59,403 as compared to operating expenses of $18,269 during the three months ended September 30, 2022, an increase of $41,134, or approximately 225%. The increase in operating expenses was primarily attributable to an increase in professional fees and general and administrative expenses.
| 16 |
| Table of Contents |
Loss and Comprehensive Loss
The Company had comprehensive loss of $4,803 for the three months ended September 30, 2023, as compared to comprehensive income of $27,776 for the three months ended September 30, 2022, a change of $32,579 or approximately 117%. The change from comprehensive income for the three months ended September 30, 2022 to comprehensive loss for the three months ended September 30, 2023 was primarily attributable to a decrease in foreign currency gain for the three months ended September 30, 2023. Actual net loss for the three months ended September 30, 2023 was $41,440 as compared to net loss of $74,725 for the three months ended September 30, 2022.
Six Month Period ended September 30, 2023 and September 30, 2022
|
| Six Months Ended |
|
|
|
|
|
|
| |||||||
|
| September 30, |
|
| Change |
|
| Change |
| |||||||
|
| 2023 |
|
| 2022 |
|
| Amount |
|
| Percentage |
| ||||
Revenue |
| $ | 132,066 |
|
| $ | - |
|
| $ | 132,066 |
|
|
| 100 | % |
Cost of Goods Sold |
|
| 67,783 |
|
|
| - |
|
|
| 67,783 |
|
|
| 100 | % |
Gross Profit |
|
| 64,283 |
|
|
| - |
|
|
| 64,283 |
|
|
| 100 | % |
Operating expenses |
|
| 113,314 |
|
|
| 46,610 |
|
|
| 66,704 |
|
|
| 143 | % |
Loss from operations |
|
| (49,031 | ) |
|
| (46,610 | ) |
|
| (2,421 | ) |
|
| 5 | % |
Other expenses |
|
| (18,176 | ) |
|
| (88,510 | ) |
|
| 70,334 |
|
|
| -79 | % |
Net Loss |
| $ | (67,207 | ) |
| $ | (135,120 | ) |
| $ | 67,913 |
|
|
| -50 | % |
Foreign currency adjustment |
|
| (1,134 | ) |
|
| 152,664 |
|
|
| (153,798 | ) |
|
| -101 | % |
Comprehensive income (loss) |
|
| (68,341 | ) |
|
| 17,544 |
|
|
| (85,885 | ) |
|
| -490 | % |
Revenue from Operations
The Company started to generate sales from installation of rooftop solar systems during Q1 ended June 30, 2023. During the six months ended September 30, 2023 and 2022, the Company recognized revenue of $132,066 and $nil and incurred cost of sales of $67,783 and $nil, resulting in gross profit of $64,283 and $nil, respectively.
Operating Expenses
During the six months ended September 30, 2023, the Company had operating expenses of $113,314 as compared to operating expenses of $46,610 during the six months ended September 30, 2022, an increase of $66,704, or approximately 143%. The increase in operating expenses was primarily attributable to an increase in professional fees and general and administrative expenses. The increase in professional fees during the six months ended September 30, 2023 was due to an increase in audit fees for the completion of an audit of its financial statements for the years ended March 31, 2023, 2022 and 2021.
Loss and Comprehensive Loss
The Company had comprehensive loss of $68,341 for the six months ended September 30, 2023, as compared to comprehensive income of $17,544 for the six months ended September 30, 2022, a change of $85,885 or approximately 490%. The change from comprehensive income for the six months ended September 30, 2022 to comprehensive loss for the six months ended September 30, 2023 was primarily attributable to a decrease in foreign currency gain for the six months ended September 30, 2023. Actual net loss for the six months ended September 30, 2023 was $67,207 as compared to net loss of $135,120 for the six months ended September 30, 2022.
| 17 |
| Table of Contents |
Liquidity and Capital Resources
Working Capital (Deficiency)
|
| September 30, 2023 |
|
| March 31, 2023 |
|
| Change Amount |
|
| Change Percentage |
| ||||
Current Assets |
| $ | 58,742 |
|
| $ | 16,907 |
|
| $ | 41,835 |
|
|
| 247 | % |
Current Liabilities |
|
| 1,817,327 |
|
|
| 1,707,152 |
|
|
| 110,175 |
|
|
| 6 | % |
Working Capital (Deficiency) |
| $ | (1,758,585 | ) |
| $ | (1,690,245 | ) |
|
| (68,340 | ) |
|
| 4 | % |
As of September 30, 2023, the Company’s balance sheet reflects total assets of $61,910 as compared to total assets of $20,075 as of March 31, 2023, an increase of $41,835 or approximately 247%. The increase was primarily attributable to the fact that in this period the accounts receivable and cash on hand increased as compared to the year ended March 31, 2023. The company’s subsidiary, Futricity Solar, Inc, started producing income.
The balance sheet of the Company reflects that as of September 30, 2023, it had total current liabilities of $1,817,327, as compared to total current liabilities of $1,707,152 at March 31, 2023, an increase of $110,175 or approximately 6%. The increase was primarily attributable to the increase in accounts payable of $46,228, increase in due to related parties of $42,774, increase in accrued interest of $12,334 and increase in convertible notes payable of $62,888.
Working capital deficiency increased from $1,690,245 as of March 31, 2023 to $1,758,585 as of September 30, 2023 mainly due to the increase in accounts payable, due to related parties, accrued interest and convertible notes payable.
The Company does not have sufficient assets or capital resources to pay its on-going expenses beyond December 31, 2023. On November 24, 2022, the British Columbia Securities Commission issued a partial revocation order, permitting the Company to complete a private placement of up to CAD $110,000 with friends, family and close business associates. Since that date, the Company has raised this full amount in several tranches. This money is enough to pay for all audit and filing-related expenses. On September 18, 2023, the Company has filed for the final revocation of the cease trade order. All filings are up to date in British Columbia and with the SEC. However, the Company does not have the funds to continue its business plan. Some money for day-to-day expenses can be expected from its subsidiary Futricity Solar, Inc. as that company can fund its own expenses and installations from its own cash flow.
To date, the Company has primarily financed its operations through equity investment from investors, shareholder loans, and credit facilities from Canadian chartered banks and increases in payables and share subscriptions. Most of the financing has been debt financing from related and unrelated parties. Currently, the estimated fixed costs of the Company, other than salary and wages are approximately $5,000 per month; that figure includes $500 for general and administrative expenses, $3,500 for professional fees, and $1,000 for miscellaneous expenses. The Company will have to raise approximately $5,000 per month to cover operating expenses, and additional funds to cover the expansion of solar installation business.
The Company will need additional capital to operate and expand its for solar installation business. The Company anticipates that it will attempt to raise money from individual investors by selling convertible preferred shares. The Company is currently working on the terms of the preferred shares. Furthermore, the Company has had preliminary discussions with a number of groups regarding the financing; management is hopeful that the Company will be able to obtain financing. However, there is no guarantee that it will be successful in raising any additional capital. If management is unable to finance the Company by debt or equity financing, or a combination of the two, management will have to look for other sources of funding to meet the requirements of the Company. That source has not yet been identified.
The financial statements have been prepared on the going concern basis under which an entity is considered to be able to realize its assets and satisfy its liabilities in the ordinary course of business. Operations to date have been primarily financed by long-term debt and equity transactions as well as increases in payables and related party loans. The future operations of the Company are dependent upon the identification and successful completion of additional long-term or permanent equity financing, the continued support of creditors and shareholders, and, ultimately, the achievement of profitable operations. There can be no assurance that it will be successful. If the Company is not successful in raising further capital it will be required to reduce operations or liquidate assets. Management of the Company will continue to evaluate the projected expenditure of the Company relative to its available cash and to seek additional means of financing in order to satisfy working capital and other cash requirements.
| 18 |
| Table of Contents |
Cash Flows
|
| Six Months Ended |
| |||||
|
| September 30, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
Cash provided by (used in) Operating Activities |
| $ | 5,035 |
|
| $ | (54,349 | ) |
Cash used in Investing Activities |
|
| - |
|
|
| - |
|
Cash provided by Financing Activities |
|
| 23,477 |
|
|
| 639 |
|
Effects on changes in foreign exchange rate |
|
| (760 | ) |
|
| 45,697 |
|
Net changes in cash during period |
| $ | 27,752 |
|
| $ | (8,013 | ) |
Operating Activities
For the six months ended September 30, 2023, net cash provided by operating activities was $5,035, related to our net loss of $67,207, decreased by net changes in operating assets and liabilities of $72,242.
For the six months ended September 30, 2022, net cash used in operating activities was $54,349, related to our net loss of $135,120, decreased by net changes in operating assets and liabilities of $80,770.
Investing Activities
We did not use any funds for investing activities for the six months ended September 30, 2023 and 2022.
Financing Activities
For the six months ending September 30, 2023, net cash provided by financing activities was $23,477 from advancement from related parties of $43,223 and proceed from issuance of convertible notes of $63,332, offset by repayment to related parties of $28,787 and repayment of promissory notes of $54,391.
For the six months ending September 30, 2022, net cash provided by financing activities was $639 from advancement from related parties of $5,557 offset by repayment to related parties of $4,918.
Related party Transactions
During the six months ended September 30, 2023 and September 30, 2022, Raj-Mohinder Gurm, Chief Executive Officer, Chief Financial Officer and a Director of the Company advanced $43,323 and $5,557 to the Company to support operating cost and was repaid of $28,787 and $4,918, respectively. During the six months ended September 30, 2023 and September 30, 2022, the Company incurred management salary to Raj-Mohinder Gurm, Chief Executive Officer, Chief Financial Officer and a Director of the company of $27,896 and $28,999, respectively. As of September 30, 2023 and March 31, 2023, the accrued management salary to Mr. Gurum was $663,780 and $635,477, respectively. As of September 30, 2023 and March 31, 2023, the total amount due to Mr. Gurum was $719,479 and $676,706 respectively.
As of September 30, 2023 and March 31, 2023, the amount due to Hans Edblad, aDirector of the Company was $1,257 and $1,256, respectively.
The loans to the related parties are unsecured, due on demand and non-interest bearing.
As of September 30, 2023 and March 31, 2023, the total amount due to related parties was $720,736 and $677,962, respectively.
| 19 |
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Commitments and Obligations
At September 30, 2023, the Company reported notes payable totaling $553,651 with accrued interest of $276,816. All of the notes payable are non-collateralized, carry varied interest rates from 5% to 10% and are due on demand.
During the Six-month period ended September 30, 2023, and September 30, 2022, the Company incurred management salary to its Chief Executive Officer of $27,896 and $28,999, respectively. As of September 30, 2023, and September 30, 2022, the accrued management salary was $663,780 and $600,096, respectively. As of September 30, 2023, and September 23, 2022, the total amount due to the Director and Officer was $$719,479 and $676,706 respectively.
As of September 30, 2023, and September 30, 2022, the amount due to another Director of the Company was $1,257 and $1256, respectively.
The loans and amounts owing to the related parties are unsecured, due on demand and non-interest bearing.
Off Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements.
Emerging Growth Company
The Company qualifies as an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). A company qualifies as an emerging growth company if it has total annual gross revenues of less than $1.07 billion during its most recently completed fiscal year and, as of December 8, 2011, had not sold common equity securities under a registration statement. Under the JOBS Act the Company is permitted to, and intends to, rely on exemptions from certain disclosure requirements.
In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company has elected to take advantage of the benefits of this extended transition period. The financial statements of the Company may therefore not be comparable to those of companies that comply with such new or revised accounting standards.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable.
ITEM 4. CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act of 1934) that are designed to ensure that information required to be disclosed in the filings of the Company under the Exchange Act is recorded, processed, summarized and reported within the periods specified in the rules and forms of the SEC. This information is accumulated to allow management of the Company to make timely decisions regarding required disclosure. The Chief Executive Officer of the Company, who serves as the principal executive officer and principal financial officer of the Company, evaluated the effectiveness of the disclosure controls and procedures of the Company as of the end of the period covered by this report and he determined that the disclosure controls and procedures of the Company were not effective due to a control deficiency. During the period the Company did not have additional personnel to allow segregation of duties to ensure the completeness or accuracy of the information of the Company. Due to the size and operations of the Company management is unable to remediate this deficiency until it is able to attract additional directors and officers and other personnel.
Changes in Internal Control over Financial Reporting
There has been no change in internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f)) that occurred during the quarter ended September 30, 2023, that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting of the Company.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 1A. RISK FACTORS.
Part I, Item 1A. Risk Factors of our 2023 Annual Report on Form 10-K includes a detailed discussion of the risk factors of the Company. Those risks and uncertainties have the potential to materially affect the financial condition and results of operations of the Company. There have been no material changes in the risk factors of the Company from those previously disclosed in Part I, Item 1A, of the 2023 Annual Report of the Company on Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
During the second quarter of 2023, the Company issued two convertible notes for an aggregate total of $55,000 CAD ($40,680 USD). Both promissory notes are due on demand and bear an interest rate of 5% per annum.
The above issuances were exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, as sales of the securities did not involve any public offering.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not Applicable.
ITEM 4. MINE SAFETY DISCLOSURES.
Not Applicable.
ITEM 5. OTHER INFORMATION.
None.
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ITEM 6. EXHIBITS.
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3.2 |
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10.1 |
| Agreement for the Acquisition of Futricity Solar, Inc. by P2 Solar, Inc. dated February 19, 2023. |
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| Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* | |
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| SCH XBRL Schema Document.* |
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| INS XBRL Instance Document.* |
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| CAL XBRL Taxonomy Extension Calculation Linkbase Document.* |
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| LAB XBRL Taxonomy Extension Label Linkbase Document.* |
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| PRE XBRL Taxonomy Extension Presentation Linkbase Document.* |
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| DEF XBRL Taxonomy Extension Definition Linkbase Document.* |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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| P2 SOLAR, INC. | |
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Date: | November 20, 2023 |
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| /s/Raj-Mohinder Gurm |
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| Raj-Mohinder Gurm, Chief Executive Officer | |
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Date: | November 20, 2023 |
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| /s/Raj-Mohinder Gurm |
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| Raj-Mohinder Gurm, Chief Financial Officer |
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EXHIBIT 31.1
CERTIFICATION
I, Raj-Mohinder Gurm, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of P2 Solar, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statements of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; |
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| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonable likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Dated: November 20, 2023 | By: | /s/ Raj-Mohinder Gurm | |
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| Raj-Mohinder Gurm |
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| President and Chief Executive Officer |
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| (Principal Executive Officer) |
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EXHIBIT 31.2
CERTIFICATION
I, Raj-Mohinder Gurm, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of P2 Solar, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statements of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; |
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| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonable likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Dated: November 20, 2023 | By: | /s/ Raj-Mohinder Gurm | |
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| Raj-Mohinder Gurm |
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| Chief Financial Officer |
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EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of P2 Solar, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2023, as filed with the Securities and Exchange Commission (the “Report”), the undersigned certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of the undersigned’s knowledge, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Dated: November 20, 2023 | By: | /s/ Raj-Mohinder Gurm | |
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| Raj-Mohinder Gurm |
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| President and Chief Executive Officer |
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EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of P2 Solar, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2023, as filed with the Securities and Exchange Commission (the “Report”), the undersigned certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of the undersigned’s knowledge, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Dated: November 20, 2023 | By: | /s/ Raj-Mohinder Gurm | |
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| Raj-Mohinder Gurm |
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| Chief Financial Officer |
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