PTOS P2 Solar Inc (PK)

P2 SOLAR INC.

(A development stage company)

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDER EQUITY (DEFICIENCY)

(Expressed in U.S. dollars)

(Unaudited)

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

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The accompanying notes are an integral part of these interim condensed consolidated financial statements.

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The accompanying notes are an integral part of these interim condensed consolidated financial statements.

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P2 SOLAR INC.

(A development stage company)

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P2 SOLAR INC.

(A development stage company)

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. dollars)

(Unaudited)

NINE MONTHS ENDED DECEMBER 31, 2013

1.

BASIS OF PRESENTATION, NATURE OF OPERATIONS AND GOING CONCERN (cont’d…)

A development stage company

The accompanying financial statements have been prepared in accordance with FASB ASC Topic 915 Development Stage Entities .  A development stage enterprise is one in which planned principal operations have not commenced; or if its operations have commenced, there have been no significant revenues derived there from. As of December 31, 2013, the Company has not fully commenced operations nor has it received significant revenues from its planned principal operations.

Going concern

These financial statements have been prepared on the basis of accounting principles applicable to a going concern which assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations. The Company has incurred significant operating losses over the past three years.  These factors raise substantial doubt about the Company’s ability to continue as a going concern.   The Company's continued existence is dependent upon its ability to raise additional capital and to achieve profitable operations through building of power plants in India and elsewhere.

If the going concern assumptions were not appropriate for these financial statements, then adjustments would be necessary to the carrying values of assets and liabilities, the reported revenues and expenses and the balance sheet classifications used.

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Recent authoritative accounting pronouncements

We do not expect the adoption of any recently issued accounting pronouncements to have a significant impact on our net results of operations, financial position and cash flows.

3.

RELATED PARTY TRANSACTIONS

Other than as disclosed elsewhere in these financial statements, the following amounts have been recorded as transactions with related parties:

a)

Amounts due to related parties are as follows:

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P2 SOLAR INC.

(A development stage company)

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. dollars)

(Unaudited)

NINE MONTHS ENDED DECEMBER 31, 2013

3.

RELATED PARTY TRANSACTIONS (cont’d…)

b)

As at December 31, 2013, a director and officer of the Company held approximately 33.40% of the issued and outstanding shares of the Company.

c)

Salaries and benefits include $54,145 (2012 - $56,227) paid or accrued to a director and officer of the Company.

4.

CAPITAL STOCK

a)

Authorized stock

The Company has authorized 500,000,000 common shares with a par value of $0.001 per share. Each common share shall entitle the holder to one vote, in person or proxy on any matter on which action of the stockholder of the corporation is sought. The Company has authorized 5,000,000 shares of preferred stock with a par value of $0.001 per share. The holders of preferred stock have no rights except as determined by the Board of Directors of the Company and/or provided by Delaware General Corporate Law.

b)

Share issuances

During the nine-month period ended December 31, 2013 the Company issued 2,500,000 shares with a value of $100,000 as consideration for consulting services rendered during the period.  

c)

Share subscriptions

At December 31, 2013 there were no outstanding share subscriptions

d)

Warrants

No warrants were issued in this period.

e)

Stock options

No stock options were issued in this period.

Pursuant to a consulting agreement, the Company has committed to issue to the Chief Executive Officer 67,000 share purchase options every April. These options will be exercisable at $0.10 per share and will expire five years after the date of grant. Further bonus options are available to the Chief Executive Officer. These bonus options entitle the Chief Executive Officer to purchase shares at 20% below the market price up to a value determined by 5% of the amount of annual profits from sales in excess of $2,500,000 up to $3,999,999 and 8% of the amount of annual profits from sales in excess of $4,000,000. To date, sales have not exceeded $2,500,000 and thus no bonus options have been issued.  No options have been granted under this agreement.

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P2 SOLAR INC.

(A development stage company)

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. dollars)

(Unaudited)

NINE MONTHS ENDED DECEMBER 31, 2013

4.

The following table provides certain information with respect to the above referenced warrants and options outstanding at December 31, 2013:

5.

UNEARNED INCOME

In March 2013, the Company was engaged to undertake the construction of a 53 KWp solar PV facility for a company based in Canada.  The customer advanced $80,721 (Cdn$79,450) to the Company during the year ended March 31, 2013, and further Cdn$80,000 during the period ended September 30, 2013.  The Company had recorded $80,721 as Unearned Revenue as at March 31, 2013 as the project was not completed and hence the revenue has not yet been earned.  The Company has recorded all the revenue as income during the period ended December 31, 2013.

6.

 LOANS PAYABLE

During the period ended December 31, 2013, the Company entered into promissory note agreements whereby it borrowed an aggregate of $133,405, resulting in total loans payable of $330,687 (March 31, 2013 - $197,282).  These notes bear interest between 5% to 10% per annum, are unsecured and are payable between on demand and two years.  

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P2 SOLAR INC.

(A development stage company)

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. dollars)

(Unaudited)

NINE MONTHS ENDED DECEMBER 31, 2013

7.

OTHER SIGNIFICANT EVENTS

Prior to May 10, 2013, the Company, through its partial ownership interest in Solarise Power, Inc. (“Solarise”), a privately owned Nevada corporation, was involved in the research and development of solar panel technology.  The Company and Solarise have been, for the last two years, working on creating a working prototype of a high efficiency Solar Panel.  All efforts have been unsuccessful. As a result, subsequent to the fiscal year ended March 31, 2013, effective as of May 10, 2013, the Company and Solarise have agreed in principal to cancel the Company’s 1,000,000 preferred shares owned by Solarise in exchange for 1,004,999 Solarise common shares owned by the Company, effectively reversing the transaction that was consummated on September 6, 2010.  The agreement in principal has been approved at a meeting of the shareholders of Solarise, and is subject to approval by the Company’s board of directors.  Once the agreement in principal is approved and finalized the Company will have no further ties with Solarise or the panel it was trying to develop.

In April 2013, the Company, through an affiliated entity, Jagat Energy Pvt. Ltd. (“Jagat”), an Indian corporation, acquired the rights to develop and construct two hydro projects located in Ludhiana, Punjab, India, and, as of the date of this Form 10-Q is also negotiating with the Indian government officials to acquire the additional solar project identified below.   Costs incurred by the Company totalled $77,049 (March 31, 2013 - $65,024) as of December 31, 2013.  

On August 7 ^th 2013, the Company signed a memorandum of understanding with an Indian company to acquire a hydro project.  The power plant is already commissioned and revenue producing.

The closing of the sale is scheduled to be in May 2014.

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ITEM 2.

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India

During the past 12 to 18 months, the Company concentrated a significant amount of its resources and efforts on developing solar Photo Voltaic (“PV”) and hydro projects in India.  The Company’s management team identified India as an emerging market that offered solar PV and hydro investment returns superior to other markets.  Our management spent a significant amount of time in India reviewing dozens of projects, ultimately settling on two hydro projects and one solar project that we determined were worth pursuing. As discussed in detail below, The Company, through an affiliated entity, Jagat Energy Pvt. Ltd., an Indian corporation, acquired the rights to two hydro projects located in Ludhiana, Punjab, India.  On August 7 ^th 2013, the Company signed a Memorandom of Understanding (“MOU”) with an Indian company to acquire two small hydro projects, 9.5 MWp and 5.7 MWp.  The 9.5 MWp power plant is already commissioned and revenue producing, and the 5.7 MWp power plant will be commissioned in March 2014.  Both of these project are located on Yamana river in the State of Uttarakhanda in Northern India.  Following a period of  due diligence the Company elected not to pursue the 5.7 MW project and continue the due diligence, on 9.5 MW project.  The anticipated closing on the sale of the 9.5 MW project is scheduled to be in May 2014.  

The Company, through an affiliated entity, Jagat Energy Pvt. Ltd. (“Jagat”), an Indian corporation, acquired the rights to develop and construct two hydro projects located in Ludhiana, Punjab, India, and, as of the date of this Form 10-Q is also negotiating with the Indian government officials to acquire the additional solar project identified below.  At the present time, we do not have a direct ownership interest in Jagat.  However, through contractual arrangements between the Company, Jagat and two shareholders of Jagat, we control Jagat and it is considered to be our operating affiliate because we are able to exert effective control over it and to receive all of the economic benefits derived from its business operations.  In the interest of acquiring the equity of Jagat, the Company has sent money to Jagat for the acquisition of new shares of capital stock in Jagat.  These shares are in the process of being issued.  Once issued, the company will own approximately 93% of the outstanding capital stock of Jagat Energy.  Additionally, following the acquisition of the shares of capital stock in Jagat, the two other shareholders of Jagat will transfer their shares of capital stock in Jagat to the Company so that Jagat will become a wholly owned subsidiary of the Company. Subsequent to the period ended December, 31, 2013, the shares of Jagat were issued to the Company.  Additionally, the other two shareholders in Jagat are in the process of transferring their shares to the Company.

Details of the two hydro projects and the one solar project are as follows:

(i)

Construction of a 700 kilowatt  hydro project on an irrigation canal:

·

Purchase price: 1.55 million INR (approx. $32,000)

·

Location: Sidhwan irrigation canal in Rajgarh located in Ludhiana, Punjab, India

(ii)

 Construction of an additional 500 kilowatt project a few kilometers downstream from the 700 kilowatt project on irrigation canal:

·

Purchase price: 1.55 million INR (approx. $32,000)

·

Location: Sidhwan irrigation canal in Tibba located in Ludhiana, Punjab, India

(iii)

 1 Megawatt solar project on top of irrigation canal:

·

Purchase Price: To be determined

·

Location: Sidhwan irrigation canal in Ludhiana, Punjab, India

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The 1MW canal solar project is the first phase of a project that will ultimately expand to 7-10 MW at the same site.  The technology to be deployed in all projects is standard off the shelf equipment.  There is no technology risk.  Based on current timelines, the Company anticipates that it will commission the solar project in India during the fourth quarter of 2014.  The hydro projects have a longer build time, approximately 10 months, as such, the Company anticipates that they will be operational spring of 2015.

Additionally, prior to May 10, 2013, the Company, through its partial ownership interest in Solarise Power, Inc. (“Solarise”), a privately owned Nevada corporation, was involved in the research and development of solar panel technology.  Solarise specializes in the development of solar panel technology, specifically the manufacturing of solar panels utilizing a technology referred to as the JIL Technology.  The Company and Solarise have been, for the last two years, working on creating a working prototype of the high efficiency Solar Panel.  All efforts have been unsuccessful. As a result, effective as of May 10, 2013, the Company and Solarise agreed in principal to cancel the Company’s 1,000,000 preferred shares owned by Solarise in exchange for 1,004,999 Solarise common shares owned by the Company, effectively reversing the transaction that was consummated on September 6, 2010.  The agreement in principal has been approved at a meeting of the shareholders of Solarise, and is subject to approval by the Company’s board of directors.  Once the agreement in principal is approved and finalized the Company will have no further ties with Solarise or the panel it was trying to develop.

Results of Operation

The following discussion and analysis provides information that we believe is relevant to an assessment and understanding of our results of operation and financial condition for the three and nine months ended December 31, 2013, as compared to the three and nine months ended December 31, 2012. The following discussion should be read in conjunction with the Financial Statements and related Notes appearing elsewhere in this Form 10-Q.  Our financial statements are stated in US Dollars and are prepared in accordance with generally accepted accounting principles of the United States (“GAAP”).

Results of Operations for the Three Months Ended December 31, 2013 Compared to the Three Months Ended December 31, 2012.

Revenue

During the three months ended December 31, 2013, the Company had revenues of $nil as compared to revenues of $nil during the three months ended December 31, 2012.

Operating Expenses

During the three months ended December 31, 2013 the Company had operating expenses of $72,105 as compared to operating expenses of $29,532 during the three months ended December 31, 2012, an increase of $42,573 or approximately 144%. The decrease in operating expenses experienced by the Company was primarily attributable to a decrease in general and administrative expenses.

Net Loss

The Company had a net loss of $72,105 for the three months ended December 31, 2013, as compared to a net loss of $29,810 for the three months ended December 31, 2012, a change of $42,295 or approximately 142%.  The change in net loss experienced by the Company was primarily attributable to the fact that the Company travel expenses were much lower in this quarter.

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Results of Operations for the Nine Months Ended December 31, 2013 Compared to the Nine Months Ended December 31, 2012.

Revenue

During the nine months ended December 31, 2013, the Company had revenues of $154,936 as compared to revenues of $nil during the nine months ended December 31, 2012, an increase of $154,936. The increase in revenue experienced by the Company was attributable to the fact that the revenue received by the Company from its work on the Canada Ticket Project in Langley.

Operating Expenses

During the nine months ended December 31, 2013, the Company had operating expenses of $260,965 as compared to operating expenses of $128,052 during the nine months ended December 31, 2012, an increase of $132,913 or approximately 104%. The increa in operating expenses experienced by the Company was primarily attributable to a expenses incurred by the Company relating to the work performed on the Canada Ticket Project in Langley.

Net Loss

The Company had a net loss of $232,723 for the nine months ended December 31, 2013, as compared to a net loss of $128,633 for the nine months ended December 31, 2012, a change of $104,090 or approximately 81%.  The change in net loss experienced by the Company was primarily attributable to the fact that the Company experienced an increase in operating expenses during the nine months ended December 31, 2013.

Liquidity and Capital Resources

As of December 31, 2013, the Company’s unaudited balance sheet reflects total assets of $145,741, as compared to total assets of $101,375 during the fiscal year ended March 31, 2013, an increase of $44,366 or approximately 44%.  The increase was primarily attributable to the fact that in this quarter the Company invested more money into the two projects in India, as compared to the fiscal year ended March 31, 2013.

Our unaudited balance sheet reflects that as of December 31, 2013, we have total current liabilities of $744,322, as compared to total current liabilities of $602,818 at March 31, 2013, an increase of $141,504.  The increase was primarily attributable to the fact that during the quarter ended December 31, 2013, the Company received a loan of $165,000 from unrelated parties to be used to fund operating expenses and ongoing expenses related to projects in India.  

The Company does not have sufficient assets or capital resources to pay its on-going expenses.  Additionally, the Company does not currently have the funds necessary to proceed with the development of power plants in India. 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 un-related parties.  The Langley project that was built for a client was paid for by that client and provided the first income for the Company. Currently, our estimated fixed costs at this time are approximately $4,500 per month; that figure includes $500 for utilities, $3,000 for loan interest and principle payments, and $1,000 for miscellaneous expenses. We will have to raise approximately $4,500 per month to cover operating expenses, and additional funds to cover expenses of the two acquired projects in India to establish the two power plants.

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The Company estimates that the total aggregate costs for the construction of the two hydro projects will be approximately $3.7 million dollars.  The hydro project in Rajgarh located in Ludhiana, Punjab, India is estimated to cost $2.2 million and the hydro project in Tibba located in Ludhiana, Punjab, India Tibba is estimated to cost $1.5 million.   The Company anticipates that it will attempt to raise the money from local individual investors by selling convertible preferred shares.  We are currently working on the terms of the preferred shares. Furthermore, we have had preliminary discussions with a number of groups regarding the financing; we are hopeful that we will be able to obtain financing.  However, there is no guarantee that we will be successful in raising any additional capital.  If we are unable to finance the Company by debt or equity financing, or a combination of the two, we will have to look for other sources of funding to meet our requirements.  That source has not yet been identified.   

Our 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. Our future operations 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 we will be successful. If we are not, we will be required to reduce operations or liquidate assets. We will continue to evaluate our projected expenditures relative to our available cash and to seek additional means of financing in order to satisfy working capital and other cash requirements.

Off Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

ITEM 3.

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As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures.  Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report due to the existence of several material weaknesses in our internal controls over financial reporting.  

Changes in Internal Control over Financial Reporting

There was no change in the Company's internal control over financial reporting during the period ended December 31, 2013, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

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ITEM 6.

EXHIBITS.

(a)

The following exhibits are filed herewith:

31.1

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.

31.2

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.

32.1

Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101

INS XBRL Instance Document.

101

SCH XBRL Schema 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.

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