P2 Solar, Inc 10-Q for FY2025 Q1
P2 Solar, Inc. (PTOS)
About this 10-Q
P2 Solar, Inc filed this 10-Q on August 20, 2024, covering the quarter ended June 30, 2024 (FY2025 Q1).
Headline figures
Quarter ended June 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $15.61K
- down 60.6% from $39.67K a year earlier
- Net loss
- $35.59K
- compared with a net loss of $25.77K a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
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For the transition period from ____________ to ____________ |
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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. ☒ |
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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). ☒ |
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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. |
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☐ | Smaller reporting company | ||
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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. |
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). |
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Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. |
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As of August 14, 2024, 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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PART I
ITEM 1. FINANCIAL STATEMENTS
P2 SOLAR, INC.
UNAUDITED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED JUNE 30, 2024 and 2023
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P2 SOLAR, INC.
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2024 AND MARCH 31, 2024
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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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Contingent Liability |
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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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P2 SOLAR INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2024 AND 2023
(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 gain (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 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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P2 SOLAR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE THREE MONTHS ENDED JUNE 30, 2024 AND JUNE 30, 2023
(UNAUDITED)
Three Months Ended June 30, 2024
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Balance - March 31, 2024 |
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Foreign exchange translation adjustment |
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Net loss |
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Balance - June 30, 2024 |
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Three Months Ended June 30, 2023
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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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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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P2 SOLAR INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 2024 AND JUNE 30, 2023
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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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Accounts payable and accrued liabilities |
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Management salary payable |
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Net cash 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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Proceeds from issuance of promissory notes |
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Net cash provided by (used in) financing activities |
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Effect of exchange rate changes on cash |
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Net change in cash and cash equivalents |
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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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P2 SOLAR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2024
(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 unaudited 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 accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles used in the United States of America (“US GAAP”) and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Financial Statements filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. This report should be read in conjunction with the audited financial statements and the footnotes thereto for the fiscal year ended March 31, 2024 included in the Company’s Annual Report on Form 10-K as filed with the SEC on July 16, 2024.
Basis of Consolidation
These condensed 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.
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. |
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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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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 June 30, 2024 and March 31, 2024, 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.
As of June 30, 2024 and March 31, 2024, the Company had accounts receivable of $
As of June 30, 2024 and March 31, 2024, the Company has one customers and three customers contributed over 10% of the accounts receivable, respectively.
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 June 30, 2024 and March 31, 2024, 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.
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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 |
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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) |
Convertible Financial Instruments
The Company bifurcates conversion options from their host instruments and accounts for them as free-standing derivative financial instruments if certain criteria are met. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not remeasured at fair value under otherwise applicable US GAAP with changes in fair value reported in earnings as they occur, and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule is when the host instrument is deemed to be conventional, as that term is described under applicable US GAAP.
When the Company has historically determined that the embedded conversion options should not be bifurcated from their host instruments, discounts have been recorded for the intrinsic value of conversion options embedded in the instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the instrument. On April 1, 2021, the Company chose to early adopt ASU 2020-06 and did not record a beneficial conversion feature (“BCF”) discount on the issuance of convertible notes with the conversion rate below the Company’s market stock price on the date of note issuance.
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 $
| 11 |
| Table of Contents |
Based on the Company’s analysis of goodwill as of March 31, 2024, no indicators of impairment exist. No impairment loss on goodwill was recognized for the year ended March 31, 2024.
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.
The Company’s revenue derives from installation of rooftop solar systems. For the three months ended June 30, 2024 and 2023, the Company recognized revenue of $
During the three months ended June 30, 2024 and 2023, the Company has three customers and 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 three months ended June 30, 2024 and 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.
|
| June 30, |
|
| June 30, |
| ||
|
| 2024 |
|
| 2023 |
| ||
|
| (Shares) |
|
| (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 |
| $ |
| |
|
|
|
|
|
Bank |
|
|
| |
Total identifiable assets |
|
|
| |
|
|
|
|
|
Shareholder Loan |
|
| ( | ) |
GST Payable |
|
| ( | ) |
Total identifiable liabilities |
|
| ( | ) |
|
|
|
|
|
Net assets (liabilities) |
|
| ( | ) |
Goodwill |
| $ |
|
| 12 |
| Table of Contents |
NOTE 5 - PROMISSORY NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE
Promissory Notes
As of June 30, 2024 and March 31, 2024, the promissory notes payable to non-affiliates are summarized as follows:
|
|
|
| June 30, |
|
| March 31, |
| ||
Note |
| Expiry Date |
| 2024 |
|
| 2024 |
| ||
Promissory Note - September 2011 |
|
| $ |
|
| $ |
| |||
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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| |||
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| ||
Less: non-current portion of promissory note payable |
|
|
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|
|
|
| ||
Current portion of promissory note payable |
|
|
| $ |
|
| $ |
| ||
During the three months ended June 30, 2024 and 2023, the Company issued promissory notes to non-affiliates totalling USD
During the three months ended June 30, 2024 and 2023, the Company did not made any repayment and repaid in full the promissory note payable to Azariah Zemarium in the amount of US$
Convertible Notes
As of June 30, 2024 and March 31, 2024, the convertible notes payable to non-affiliates are summarized as follows:
|
|
|
| June 30, |
|
| March 31, |
| ||
Note |
| Expiry Date |
| 2024 |
|
| 2024 |
| ||
Convertible Note - December 2022 |
|
| $ |
|
| $ |
| |||
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 |
|
|
|
|
|
|
|
| ||
Current portion of convertible note payable |
|
|
| $ |
|
| $ |
| ||
During the three months ended June 30, 2024 and 2023, the Company issued convertible notes to non-affiliates totaling $
During the three months ended June 30, 2024 and 2023, the Company incurred interest expense on promissory notes and convertible notes of $
NOTE 6 - RELATED PARTY TRANSACTIONS
During the three months ended June 30, 2024 and 2023, the Director and Officer of the Company advanced $
| 13 |
| Table of Contents |
During the three months ended June 30, 2024 and 2023, the Company incurred management salary to the Director and Officer of $
As of June 30, 2024 and March 31, 2024, 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 June 30, 2024 and March 31, 2024, the total amount due to related parties was $
NOTE 7 - EQUITY
Authorized Stock
The Company has authorized
Common Stock
As of June 30, 2024 and March 31, 2024, the issued and outstanding common stock was
NOTE 8 - SUBSEQUENT EVENTS
Subsequent to June 30, 2024, and through the date that these financials were issued, the Company had the Management has evaluated subsequent events through the date these financial statements were issued. Based on our evaluation, no events have occurred that require disclosure.
| 14 |
| Table of Contents |
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.
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 ended June 30, 2024 as compared to the three months ended June 30, 2023. 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 June 30, 2024 and June 30, 2023
|
| Three Months Ended |
|
|
|
|
|
|
| |||||||
|
| June 30, |
|
| Change |
|
| Change |
| |||||||
|
| 2024 |
|
| 2023 |
|
| Amount |
|
| Percentage |
| ||||
Revenue |
| $ | 15,609 |
|
| $ | 39,667 |
|
| $ | (24,058 | ) |
|
| -61 | % |
Cost of Goods Sold |
|
| 292 |
|
|
| 17,926 |
|
|
| (17,634 | ) |
|
| -98 | % |
Gross Loss |
|
| 15,317 |
|
|
| 21,741 |
|
|
| (6,424 | ) |
|
| -30 | % |
Operating expenses |
|
| 34,867 |
|
|
| 53,910 |
|
|
| (19,044 | ) |
|
| -35 | % |
Loss from operations |
|
| (19,550 | ) |
|
| (32,169 | ) |
|
| 12,619 |
|
|
| -39 | % |
Other expenses |
|
| (16,043 | ) |
|
| 6,403 |
|
|
| (22,445 | ) |
|
| -351 | % |
Net Loss |
| $ | (35,592 | ) |
| $ | (25,766 | ) |
| $ | (9,826 | ) |
|
| 38 | % |
Foreign currency adjustment |
|
| 18,385 |
|
|
| (37,771 | ) |
|
| 56,156 |
|
|
| -149 | % |
Comprehensive loss |
|
| (17,207 | ) |
|
| (63,537 | ) |
|
| 46,330 |
|
|
| -73 | % |
Sales
During the three months ended June 30, 2024, the Company had sales of $15,609 as compared to sales of $39,667 during the three months ended June 30, 2023. The Company started to generate sales from installation of rooftop solar systems during Q1 ended June 30, 2023 upon the acquisition of Futricity in February 2023.
Operating Expenses
During the three months ended June 30 2024, the Company had operating expenses of $34,867 as compared to operating expenses of $53,910 during the three months ended June 30, 2023, a decrease of $19,044, or approximately 35%. The decrease in operating expenses was attributed to the decrease in professional fees.
Comprehensive Loss
The Company had comprehensive loss of $17,207 for the three months ended June 30, 2024 as compared to comprehensive loss of $63,537 for the three months ended June 30, 2023, a change of $46,330 or approximately 73%. The decrease in comprehensive loss for the three months ended June 30, 2024 from the three months ended June 30, 2023 was primarily attributable to a decrease in foreign currency loss for the three months ended June 30, 2024. Actual net loss for the three months ended June 30, 2024 was $17,207 as compared to net loss of $63,537 for the three months ended June 30, 2023.
Liquidity and Capital Resources
Working Capital (Deficiency)
|
| June 30, |
|
| March 31, |
|
| Change |
|
| Change |
| ||||
|
| 2024 |
|
| 2024 |
|
| Amount |
|
| Percentage |
| ||||
Current Assets |
| $ | 15,640 |
|
| $ | 24,358 |
|
| $ | (8,718 | ) |
|
| -36 | % |
Current Liabilities |
|
| 1,868,707 |
|
|
| 1,860,217 |
|
|
| 8,490 |
|
|
| - |
|
Working Capital (Deficiency) |
| $ | (1,853,067 | ) |
| $ | (1,835,859 | ) |
|
| (17,208 | ) |
|
| 1 | % |
| 15 |
| Table of Contents |
As of June 30, 2024, the Company’s balance sheet reflects total current assets of $15,640 as compared to $24,358 as of March 31, 2024, a decrease of $8,718 or approximately 36%. The increase was primarily attributable to a decrease in accounts receivable as compared to March 31, 2024.
The balance sheet of the Company reflects that as of June 30, 2024, it had total current liabilities of $1,868,707 as compared to total current liabilities of $1,860,217 at March 31, 2024, an increase of $8,490.
Working capital deficiency increased from $1,835,859 as of March 31, 2024 to $1,853,067 as of June 30, 2024 mainly due to the increase in accounts payable, due to related parties and accrued interest.
The Company does not have sufficient assets or capital resources to pay its on-going expenses beyond March 31, 2024. During the year ended March 31, 2024, the Company raised CAD $110,000, it was allowed to raise under the terms of the partial revocation of the cease trade order imposed by the British Columbia Securities Commission. This money is enough to pay for all Audit and filing-related expenses. The Company has filed for final revocation of the cease trade order and expect the Cease Trade Order to be revoked in the next 30 to 45 days, however, there is no guarantee that it will happen. 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 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 estimates that the total aggregate costs for expansion for solar installation business will be roughly $2,000,000. 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.
Cash Flows
|
| Three Months Ended |
| |||||
|
| June 30, |
| |||||
|
| 2024 |
|
| 2023 |
| ||
Cash used in Operating Activities |
| $ | (8,743 | ) |
| $ | (1,621 | ) |
Cash used in Investing Activities |
|
| - |
|
|
| - |
|
Cash provided by (used in) Financing Activities |
|
| (8,890 | ) |
|
| 14,359 |
|
Effects on changes in foreign exchange rate |
|
| 21,134 |
|
|
| (10,210 | ) |
Net changes in cash during period |
| $ | 3,501 |
|
| $ | 2,528 |
|
Operating Activities
For the three months ended June 30, 2024, net cash used in operating activities was $8,743 related to our net loss of $35,592, decreased by net changes in operating assets and liabilities of $26,849.
For the three months ended June 30, 2023, net cash used in operating activities was $1,621, related to our net loss of $25,766, decreased by net changes in operating assets and liabilities of $24,144.
Investing Activities
We did not have any investing activities for the three months ended June 30, 2024 and 2023.
| 16 |
| Table of Contents |
Financing Activities
For the three months ending June 30, 2024, net cash used in financing activities was $8,890 from advancement from related parties of $25,493 offset by repayment to related parties of $34,384
For the three months months ending June 30, 2023, net cash provided by financing activities was $14,359 from advancement from related parties of $24,263 and proceed from issuance of promissory notes of $22,341 offset by repayment to related parties of $14,372 and repayment of promissory notes of $17,873.
Related party Transactions
During the three months ended June 30, 2024 and 2023, the Director and Officer of the Company advanced $25,493 and $24,263 to the Company to support operating cost and was repaid of $34,384 and $14,372, respectively.
During the three months ended June 30, 2024 and 2023, the Company incurred management salary to the Director and Officer of $13,681 and $13,941, respectively. As of June 30, 2024 and March 31, 2024, the accrued management salary was $696,713 and $689,942, respectively. As of June 30, 2024 and March 31, 2024, the total amount due to the Director and Officer was $755,670 and $741,901 respectively.
As of June 30, 2024 and March 31, 2024, the amount due to another Director of the Company of $1,242 and $1,255, respectively.
The loans to the related parties are unsecured, due on demand and non-interest bearing.
As of June 30, 2024 and March 31, 2024, the total amount due to related parties was $756,912 and $743,156, respectively.
Commitments and Obligations
At June 30, 2024, the Company reported notes payable totaling $552,658 with accrued interest of $301,995. All of the notes payable are non-collateralized, carry varied interest rates from 5% to 10% and are due on demand.
During the three-month period ended June 30, 2024 and 2023, the Company incurred management salary to its Chief Executive Officer of $13,681 and $13,941, respectively. As of June 30, 2024 and March 31, 2024, the accrued management salary was $696,713 and $689,942, respectively. As of June 30, 2024 and March 31, 2024, the total amount due to the Director and Officer was $$755,670 and $741,901 respectively.
As of June 30, 2024 and March 31, 2024, the amount due to another Director of the Company was $1,242 and $1255, 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.
| 17 |
| Table of Contents |
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 June 30, 2024 that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting of the Company.
| 18 |
| Table of Contents |
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.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not Applicable.
ITEM 4. MINE SAFETY DISCLOSURES.
Not Applicable.
ITEM 5. OTHER INFORMATION.
None.
| 19 |
| Table of Contents |
ITEM 6. EXHIBITS.
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
|
101 |
| SCH XBRL Schema Document.* |
101 |
| INS XBRL Instance Document.* |
101 |
| CAL XBRL Taxonomy Extension Calculation Linkbase Document.* |
101 |
| LAB XBRL Taxonomy Extension Label Linkbase Document.* |
101 |
| PRE XBRL Taxonomy Extension Presentation Linkbase Document.* |
101 |
| DEF XBRL Taxonomy Extension Definition Linkbase Document.* |
| 20 |
| Table of Contents |
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.
|
| P2 SOLAR, INC. |
| |
|
|
|
| |
Date: | August 20, 2024 |
|
| |
|
|
| /s/ Raj-Mohinder Gurm | |
|
| Raj-Mohinder S. Gurm, Chief Executive Officer |
| |
|
|
|
| |
Date: | August 20, 2024 |
|
| |
|
|
| /s/ Raj-Mohinder Gurm | |
|
| Raj-Mohinder S. Gurm, Chief Financial Officer |
| |
| 21 |
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: |
|
| (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: August 20, 2024 | 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: August 20, 2024 | By: | /s/ Raj-Mohinder Gurm | |
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| Raj-Mohinder Gurm |
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| Chief Financial Officer |
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| (Principal 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 June 30, 2024 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: August 20, 2024 | 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 June 30, 2024 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: August 20, 2024 | By: | /s/ Raj-Mohinder Gurm | |
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| Raj-Mohinder Gurm |
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| Chief Financial Officer |
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