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DOMINOVAS ENERGY CORP - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
(Edgar Glimpses Via Acquire Media NewsEdge) The following discussion should be read in conjunction with our financial
statements and the related notes that appear elsewhere in this interim report.
The following discussion contains forward-looking statements that reflect our
plans, estimates and beliefs. Our actual results could differ materially from
those discussed in the forward looking statements. Factors that could cause or
contribute to such differences include those discussed below and elsewhere in
this interim report on Form 10-Q.
Our interim financial statements are stated in United States Dollars and are
prepared in accordance with United States Generally Accepted Accounting
Principles.
Since we are a development stage company, there is no assurance that a
commercially viable business will be identified in the near term.
Our plan of operation is to seek for opportunities in the green and renewable
energy industry.
LIQUIDITY
ANTICIPATED CASH REQUIREMENTS
For the nine months ended May 31, 2014, we recorded a net operating loss of
$706,492 and have an accumulated deficit of $6,065,547 since inception. As at
May 31, 2014, we had cash of $82,078. We do not have sufficient funds for
working capital and will need to obtain further financing.
Our financial condition as at May 31, 2014 and 2013 and the results of
operations and cash flows for the nine months then ended are summarized as
follows:
WORKING CAPITAL
Our working capital position as at May 31, 2014 compared to May 31, 2013 and the
cash flows for the six months then ended are summarized below:
9 months Ended May 31,
2014 2013
---------- ----------
Current Assets $ 114,019 $ 3,276
Current Liabilities (434,386) (312,946)Working Capital (Deficiency) $(320,367) $(309,670)
The increase in our working capital deficiency was primarily due to an increase
for legal fees and wages.
CASH FLOWS
9 months Ended May 31,
2014 2013
---------- ----------Net cash used in Operating Activities $ (223,242) $ (308,341)
Net cash used in Investing Activities $ (10,000) $ --
Net cash provided by Financing Activities $ 315,396 $ 308,462
Increase in Cash during the Period $ 82,154 $ 121Cash, Beginning of Period $ (76) $ --
Cash, End of Period $ 82,078 $ 121
9
RESULTS OF OPERATIONS
The following is a summary of our results of operations for the nine months
ended May 31, 2014 and 2013:
Nine months Ended May 31,
2014 2013
---------- ----------
Revenue $ Nil $ Nil
---------- ----------
Expenses Audit and accounting fees 74,230 49,197
Consulting fees and expenses 64,750 112,625
Corporate finance fee -- 47,250
Directors' fees 25,000 --
Foreign exchange loss 4,087 --
Gain on settlement of debt (290,000) 40,000
Interest expense 16,712 11,730
Investor relations, transfer agent and media 8,663 13,565
Dominovas Energy LLC acquisition costs 469,457 --
Legal fees 115,510 22,456
Loss on investment 17,402 --
Marketing 4,578 --
General and office administration 145,107 86,200
Travel and entertainment 50,996 --
---------- ----------
Total expenses 706,492 383,022
---------- ----------
Net Loss $ (706,492) $ (383,022)
========== ==========
REVENUE
We have not earned any revenues since our inception and we do not anticipate
earning revenues until such time as we acquire revenue producing assets.
EXPENSES
Our operating expenses for the nine months ended May 31, 2014 compared to the
same period in 2013 increased by the net amount of $323,470 primarily due to the
acquisition costs for Dominovas Energy LLC, and for our portion of the loss in
Pro Eco.
APPLICATION OF CRITICAL ACCOUNTING POLICIES
BASIS OF PRESENTATION
These financial statements and related notes are presented in accordance with
generally accepted accounting principles in the United States of America ("US")
and are expressed in US dollars. The Company is an exploration stage company as
defined by Statement of Financial Accounting Standard ("SFAS") No. 7,
"Accounting and Reporting by Development Stage Enterprises" and has not realized
any revenues from its planned operations to date.
USE OF ESTIMATES AND ASSUMPTIONS
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 of the financial statements and
the reported amounts of revenues and expenses during the reporting period. The
Company bases its estimates and assumptions on current facts, historical
experience and various other factors that it believes to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities and the accrual of costs and
expenses that are readily apparent from other sources. The actual results
experienced by the Company may differ materially from the Company's estimates.
To the extent there are material differences, future results may be affected.
10FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash, accounts payable, notes
payable and convertible debentures. It is management's opinion that the Company
is not exposed to significant interest, currency or credit risks arising from
these financial instruments. The fair value of these financial instruments
approximates their carrying values due to the relatively short maturity of these
instruments.
FOREIGN CURRENCY TRANSLATION
The functional and reporting currency of the Company is the United States
dollar.. Monetary assets and liabilities denominated in foreign currencies are
translated into United States Dollars at the period-end exchange rates.
Non-monetary assets and liabilities are translated at the historical rates in
effect when the assets were acquired or obligations incurred. Transactions
occurring during the period are translated at rates in effect at the time of the
transaction. The resulting foreign exchange gains and losses are included in
operations.
INCOME TAXES
Deferred tax assets and liabilities are recorded for temporary differences
between the tax basis of assets and liabilities, and the reported amounts in the
consolidated financial statements using the statutory tax rates in effect for
the year when the reported amount of the asset or liability is recovered or
settled, respectively. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in the results of operations in the period
that includes the enactment date. A valuation allowance is recorded to reduce
the carrying amounts of deferred tax assets to the amount that is more likely
than not to be realized. For each tax position taken or expected to be taken in
a tax return, the Company determine whether it is more likely than not that the
position will be sustained upon examination based on the technical merits of the
position, including resolution of any related appeals or litigation. A tax
position that meets the more likely than not recognition threshold is measured
to determine the amount of benefit to recognize. The tax position is measured at
the largest amount of benefit that is greater than 50% likely of being realized
upon settlement.
LOSS PER SHARE
The Company computes net loss per share of both basic and diluted loss per share
("LPS") on the face of the statement of operations. Basic LPS is computed by
dividing the net loss available to common shareholders by the weighted average
number of outstanding common shares during the period. Diluted LPS gives effect
to all potentially dilutive common shares outstanding during the period,
including convertible debt, stock options and warrants, using the treasury stock
method. The computation of diluted LPS does not assume conversion, exercise or
contingent exercise of securities that would have an anti-dilutive effect on
LPS.
STOCK-BASED COMPENSATION
The Company has adopted the fair value recognition policy, whereby compensation
expense is recognized for all share-based payments based on the fair value at
monthly vesting dates, estimated in accordance with the provisions of SFAS 123R.
All transactions in which goods and services are the consideration received for
the issuance of equity instruments are accounted for based on fair value of the
consideration received or the fair value of the equity instrument issued,
whichever is more reliably measurable. Equity instruments issued to Advisory
Board members and the cost of the services received as consideration are
measured and recognized based on the fair value of the equity instruments
issued.
On April 14, 2010, our shareholders approved our 2010 Equity Compensation Plan.
Under the 2010 Plan, options may be granted to our directors, officers,
employees and consultants as determined by our board of directors. Pursuant to
the 2010 Plan, we reserved for issuance up to 5,000,000 shares of our
outstanding common stock under the 2010 plan. However no options have been
11granted as at November 30, 2013 and therefore no stock-based compensation has
been recorded to date for stock options.
RECENT ACCOUNTING PRONOUNCEMENTS
Recent pronouncements with future effective dates are either not applicable or
are not expected to be significant to the financial statement of the Company.
OFF-BALANCE SHEET ARRANGEMENTS
We have no significant off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial position, revenues and expenses, results of operations,
liquidity, capital expenditures or capital resources that are material to
stockholders.
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