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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q


[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2012


[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Commission File Number: 333-91190


P2 SOLAR, INC.

 (Exact name of registrant as specified in its charter)


Delaware

 

98-0234680

(State or other jurisdiction of incorporation)

 

(IRS Employer Identification Number)

 

Unit 204, 13569 – 76 Avenue

Surrey, British Columbia, Canada, V3W 2W3

(Address of principal executive offices)

(888) 945-4440

Registrant’s telephone number, including area code:


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 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.  [ X ] Yes   [ ] No


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). [X] Yes   [ ] No


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting Company.  See the definitions of “large accelerated filer,” “accelerated filer” and smaller reporting Company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer [ ]

Accelerated filer [ ]

Non-accelerated filer [ ]  (Do not check if a smaller reporting Company)

Smaller reporting Company [ X ]


Indicate by check mark whether the registrant is a shell Company (as defined in Rule 12b-2 of the Exchange Act). [ ]Yes

[ X ] No


As of November 14, 2012 the Issuer had 57,838,179 shares of common stock issued and outstanding.



1






PART I-FINANCIAL INFORMATION


ITEM 1.

FINANCIAL STATEMENTS.


The financial statements of P2 Solar, Inc., a Delaware corporation, included herein were prepared, without audit, pursuant to rules and regulations of the Securities and Exchange Commission.  Because certain information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America were condensed or omitted pursuant to such rules and regulations, these financial statements should be read in conjunction with the financial statements and notes thereto included in the audited financial statements of the Company in the Company's Form 10-K for the fiscal year ended March 31, 2012, and all amendments thereto.


P2 SOLAR, INC.

(A DEVELOPMENT STAGE COMPANY)

INTERIM FINANCIAL STATEMENTS

PERIOD ENDED SEPTBMER 30, 2012



INDEX TO FINANCIAL STATEMENTS:

Page

 

 

Balance Sheet

3-4

 

 

Statements of Operations

5-6

 

 

Statements of Stockholders’ Equity (Deficit)

7-8

 

 

Statements of Cash Flows

9-10

 

 

Notes to Unaudited Financial Statements   

11-15






2







 

P2 Solar Inc.

 

 

 

 

 

Balance Sheet

 

 

 

 

 

Expressed in U.S Dollars

 

 

 

 

 

 

 

September  30, 2012

 

March 31, 2012

 

 

 

(Unaudited)

 

(Audited)

ASSETS

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

Cash

 

 $             -

 

 $      4,857

 

Prepaid Assets

 

          7,236

 

            7,236

 

Performance Bond

 

-

 

-

 

Interest Receivable on Loan to PVT

 

-

 

-

 

Loan to PVT

 

-

 

-

 

Security for Legal Costs PVT

 

-

 

-

 

 

 

 

 

 

 

Total Current Assets

 

7,236

 

12,093

 

 

 

 

 

 

 Long Term Assets

 

 

 

 

 

Solar Panel License

 

-

 

-

 

 

 

 

 

 

Total Assets

 

 $          7,236

 

 $   12,093

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Bank Indebtedness

 

5,403

 

 $               -

 

Accounts Payable

 

100,056

 

88,385

 

Lassen License Payable

 

-

 

-

 

Accrued Liabilities

 

10,000

 

10,000

 

Loan Payable

 

111,370

 

111,370

 

Loan Payable (Debt converted adjusted)

 

-

 

-

 

Due to related Parties

 

198,720

 

133,447

 

 

 

 

 

 

 

Total Current Liabilities

 

425,549

 

343,202

 

 

 

 

 

 

 

Total Liabilities

 

425,549

 

343,202

 

 

 

 

 

 

Stockholders' Equity

 

 

 

 

 

Authorized:

 

 

 

 

 

 500,000,000 Common Shares, with a par value $0.001,

 

 

 

 



3








 

5,000,000 preferred shares, with a par value $0.001,  

 

 

 

 

 

Issued:

 

 

 

-

 

Common shares – 57,838,179

 

 $         57,788

 

57,228

 

Additional Paid-in Capital

 

6,229,883

 

6,175,240

 

Preferred Shares Issued :1,000,000

 

 

 

 

 

Paid in Capital

 

1,000

 

1,000

 

Additional Paid in Capital Preferred Shares

 

2,268,900

 

2,268,900

 

Share subscriptions

 

-

 

40,375

 

Other Comprehensive (Loss)

 

(310,587)

 

(307,438)

 

Deficit Accumulated during Development Stage

 

(8,665,297)

 

(8,566,473)

 

 

 

 

 

 

 

Total Stockholders' Equity

 

 (418,313)

 

(331,109)

 

 

 

 

 

 

Total Liabilities and Stockholders' Equity

 

 $           7,236

 

 $     12,093

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these statements





4







 

P2 Solar Inc.

 

 

 

 

 

 

 

 

 

 

 

Statements of Operations

 

 

 

 

 

 

 

 

 

 

 

Expressed in U.S Dollars

 

 

 

 

 

 

 

 

 

 

 

Unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months

 

Three Months

 

Six Months

 

Six Months

 

Since

 

 

 

Ending

 

Ending

 

Ending

 

Ending

 

Inception

 

 

 

Sept 30

 

Sept 30

 

Sept 30

 

Sept 30

 

Sept 30

 

 

 

2012

 

2011

 

2012

 

2011

 

2012

 

 

 

 

 

 

 

 

 

 

 

 

Income

 

 

 

 

 

 

 

 

 

 

 

Sales

 

 $                   -

 

 $                   -

 

 $                   -

 

 $                   -

 

 $                 -

 

Cost of Sales

 

-

 

                      -

 

 -

 

-

 

                    -

 

Gross Profit

 

 $                   -

 

 $                   -

 

 $                   -

 

 $                   -

 

 $                 -

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

Advertising and Promotion

 

-

 

100,659

 

-

 

113,053

 

173,047

 

Bank Charges

 

267

 

756

 

704

 

1,015

 

7,378

 

Consulting Fees

 

-

 

59,931

 

-

 

240,131

 

919,039

 

Legal and Accounting

 

25,421

 

98,280

 

27,408

 

106,769

 

422,655

 

Rent

 

2,915

 

2,949

 

5,840

 

6,635

 

51,744

 

Salaries and benefits

 

18,624

 

18,597

 

37,534

 

38,439

 

321,475

 

Office and other

 

5,173

 

5,278

 

5,532

 

6,229

 

38,878

 

Telephone and Utilities

 

1,482

 

929

 

2,022

 

1,607

 

15,051

 

Travel and trade shows

 

2,194

 

24,842

 

4,712

 

29,345

 

126,299

 

Warrants & option expenses

 

14,768

 

10,777

 

14,768

 

10,777

 

491,601

 

Currency Exchange Loss (Gain)

 

-

 

4,496

 

-

 

5,956

 

6,498

 

Impairment Loss

 

-

 

(285)

 

-

 

43,349

 

4,306,356

 

Total Expenses

 

70,844

 

327,209

 

98,520

 

603,305

 

6,880,021

 

 

 

 

 

 

 

 

 

 

 

        

Net Loss from Operations

 

(70,844)

 

(327,209)

 

(98,520)

 

(603,305)

 

(6,880,021)

 

 

 

 

 

 

 

 

 

 

 

 

Other Items

 

 

 

 

 

 

 

 

 

 

 

Interest on PVT Loan

 

-

 

14,881

 

-

 

28,725

 

-

 

Other Income

 

-

 

-

 

-

 

-

 

-

 

Interest Expense

 

(243)

 

4

 

(304)

 

(553)

 

(87,349)

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss before Tax

 

(71,087)

 

(312,325)

 

(98,824)

 

(575,133)

 

(6,967,370)

 

Income Tax

 

-

 

                -

 

-

 

-

 

(6,418)

Net  Loss

 

(71,087)

 

(312,325)

 

(98,824)

 

(575,133)

 

(6,973,788)

 

 

 

 

 

 

 

 

 

 

 

                    

 

Other comprehensive income

 

(582)

 

4,538

 

(3,149)

 

3,299

 

121,797



5








 

 

 

 

 

 

 

 

 

 

 

 

Net Loss and Comprehensive Loss

 

$   (71,669)

 

 $  (307,787)

 

$  (101,973)

 

 $ (571,834)

 

 $ (6,851,991)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted

 

 

 

 

 

 

 

 

 

 

 

(Loss) per Share

 

$      (0.00)

 

 $      (0.01)

 

$      (0.00)

 

 $      (0.01)

 

$      (0.12)

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average

 

 

 

 

 

 

 

 

 

 

   Number of Shares

 

57,501,222

 

53,414,792

 

57,420,146

 

52,174,874

 

57,838,179

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these statements




6








P2 Solar Inc.

Statements of Shareholders Equity

Expressed in U.S Dollars

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common

Common

Additional

Preferred

Preferred

Additional

Shares

Other

Deficit

Total

 

Shares

Shares

Paid-In

Shares

Shares

Paid-In

Subscribed

Comprehensive

 

 

 

(Number)

(Amount)

Capital

(Number)

(Amount)

Capital

 

Income (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance (deficiency) March 31, 2008

20,447,614

20,447

1,092,740

-

-

-

    1,384,277

    $  (432,384)

$      (1,908,493)

156,588

 

 

 

 

 

 

 

 

 

 

 

 

 

Cancelled share subscription

-

-

-

-

-

-

(1,384,277)

-

-

 (1,384,277)

 

Shares for services

500,000

500

     169,500

-

-

-

-

-

-

      170,000

 

Change in foreign currency translation adjustment

-

-

-

-

-

-

-

      326,276

-

      326,276

 

Net loss

-

-

-

-

-

-

-

-

     (277,592)

     (277,592)

 

Balance (deficiency)    March 31, 2009

36,881,817

36,881

2,795,722

-

-

-

-

$       (106,108)

 (2,186,085)

540,410

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares Issued

15,934,203

15,934

1,533,482

-

-

-

-

-

-

1,549,416

 

Shares Cancelled

(8,915,871)

(8,916)

-

-

-

-

-

-

-

(8,916)

 

Converted Share Equity

3,797,189

3,797

375,922

-

-

-

-

-

-

379,719

 

Shares Issued for Service

450,000

450

67,050

-

-

-

-

-

-

67,500

 

Warrant and Option expense

-

-

     361,426

-

-

-

-

-

-

361,426

 

Share subscription

-

-

-

-

-

-

24,000

-

-

24,000

 

Change in foreign currency translation adjustment

-

-

-

-

-

-

-

(245,390)

-

(245,390)

 

Net loss

-

-

-

-

-

-

-

-

(852,453)

(852,453)

 

Balance (deficiency)  Mar.31, 2010

33,097,589

33,097

3,944,571

-

-

-

24,000

(351,498)

(3,038,538)

611,632

 

 

 

 

 

 

 

 

 

 

 

 



7









 

Shares Issued

884,454

885

344,451

-

-

-

-

-

-

345,336

 

Cancelled share subscription

-

-

-

-

-

-

     (24,000)

-

-

       (24,000)

 

Shares Issued

16,257,258

16,257

1,596,613

-

-

-

-

-

-

1,612,870

 

Shares for services

2,873,332

2,873

103,509

-

-

-

-

-

-

106,382

 

Warrant and Option Expense

-

-

       94,627

-

-

-

-

-

-

        94,627

 

Share Subscription

-

-

-

-

-

-

32,000

-

-

32,000

 

Change in foreign currency translation adjustment

-

-

-

-

-

-

-

         54,006

-

        54,006

 

Net loss

-

-

-

-

-

-

-

-

     (2,939,535)

     (2,939,535)

 

Balance (deficiency) March 31, 2011

52,228,179

52,228

5,739,320

1,000,000

1,000

2,268,900

32,000

     (297,492)

 (5,978,073)

1,817,883

 

 

 

 

 

 

 

 

 

 

 

 

 

Cancelled share subscription

-

-

-

-

-

-

(32,000)

-

-

(32,000)

 

Shares Issued

520,000

470

45,730

-

-

-

-

-

-

46,200

 

Shares for services

4,590,000

4,590

369,410

-

-

-

-

-

-

374,000

 

Warrant and Option Expense

-

-

20,780

-

-

-

-

-

-

10,777

 

Share Subscription

-

-

-

-

-

-

40,375

-

-

40,375

 

Change in foreign currency translation adjustment

-

-

-

-

-

-

-

(9,946)

-

(9,946)

 

Net loss

-

-

-

-

-

-

-

-

(2,588,400)

(2,578,397)

 

Balance (deficiency) March 31, 2012

57,338,179

57,288

6,175,240

1,000,000

1,000

2,268,900

40,375

(307,438)

(8,566,473)

(331,109)

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares Issued

500,000

500

39,875

-

-

-

(40,375)

-

-

-

 

Warrant and Option Expense

-

-

14,768

-

-

-

-

-

-

14,768

 

Change in foreign currency translation adjustment

-

-

-

-

-

-

-

(3,149)

-

(3,149)

 

Net loss

-

-

-

-

-

-

-

-

(98,824)

(98,824)

 

Balance (deficiency) September 30, 2012

57,838,179

57,788

6,229,883

1,000,000

1,000

2,268,900

-

(310,587)

(8,665,297)

(418,313)

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these statements

 




8








 

P2 Solar Inc.

 

 

 

 

 

 

 

Statements of Cash Flows

 

 

 

 

 

 

 

Expressed in U.S Dollars

 

 

 

 

 

 

 

Unaudited

 

 

 

 

 

 

 

 

 

Six Months

 

Six Months

 

 

 

 

 

Ended

 

Ended

 

(Inception) to

 

 

 

Sept 30

 

Sept 30

 

Sept 30

 

 

 

2012

 

2011

 

2012

Operating Activities

 

 

 

 

 

 

 

Net (Loss)

$

(98,824)

$

(575,133)

$

(6,973,788)

 

Adjustments to reconcile Net (Loss)

 

 

 

 

 

 

 

   Shares issued for services

 

-

 

331,500

 

720,382

 

   Warrants & option expenses

 

14,768

 

10,777

 

491,601

 

   Loss on loan

 

-

 

-

 

1,763,837

 

Interest due to related parties

 

-

 

533

 

82,601

 

Wages accrued to director

 

37,534

 

38,439

 

321,475

 

Loss on fixed assets

 

-

 

-

 

2,500,000

 

Changes in Current Assets

 

 

 

 

 

 

 

(Increase)/Decrease in interest receivable

 

-

 

(27,920)

 

(196,580)

 

(Increase)/Decrease in prepaid expense

 

-

 

142,080

 

145

 

 

 

 

 

 

 

 

 

Changes in Current Liabilities

 

 

 

 

 

 

 

   Increase/(Decrease) in accounts payable

 

11,672

 

23,807

 

3,215

 

   Increase/(Decrease) in accrued liabilities

 

-

 

(10,000)

 

(70,419)

 

 

 

 

 

 

 

 

 

Net Cash Provided by Operating Activities

 

(34,850)

 

(65,897)

 

(1,357,531)

 

 

 

 

 

 

 

 

Investment Activities

 

 

 

 

 

 

 

Investment in Lassen

 

-

 

-

 

-

 

Solar Panel License

 

-

 

-

 

(230,000)

 

Loan to PVC

 

-

 

-

 

-

 

Net Cash (Used) by Investment Activities

 

-

 

-

 

(230,000)

 

 

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

 

 

Bank Indebtedness

 

5,403

 

-

 

(12,331)

 

Due to Related Party

 

27,740

 

(27,310)

 

(89,943)

 

Security for Legal Costs PVT

 

-

 

7,734

 

-

 

Loans Payable

 

-

 

50,070

 

(706,578)

 

Loans Payable Converted to Shares

 

-

 

-

 

(18,456)

 

Performance Bond

 

-

 

15,171

 

-

 

Proceeds from Subscriptions Receivable

 

-

 

-

 

96,375

 

Conversion of Related Party Debts

 

-

 

-

 

(20,690)

 

Issuance of Preferred Shares

 

-

 

-

 

-



9








 

Proceeds from sale of Common Stock

 

-

 

14,200

 

2,022,682

 

 

 

 

 

 

 

 

 

Net Cash Provided by Financing Activities

 

33,142

 

59,865

 

1,271,058

 

 

 

 

 

 

 

 

 

Foreign Exchange

 

(3,149)

 

3,299

 

316,473

 

 

 

 

 

 

 

 

Change in cash and cash equivalents

 

(4,857)

 

(2,733)

 

(0.00)

Cash, Beginning of Period

 

4,857

 

3,162

 

-

Cash, End of Period

 

0

 

429

 

-

 

 

 

 

 

 

 

 

Supplemental Information:

 

 

 

 

 

 

 

Interest Paid

$

304

$

-

$

6,897

 

Income Taxes Paid

$

-

$

-

$

4,386

 

 

 

 

 

 

 

 

Non-cash investing and financing activities

 

 

 

 

 

 

 

Common stock issued in connection with:

 

 

 

 

 

 

 

  Share Subscriptions

$

500,000

$

-

$

-

 

  Services

$

-

$

-

$

2,267,298

 

  Warrants

$

-

$

-

$

466,830

 

  Conversion of notes payable

$

-

$

-

$

1,082,590

 

  Director's Debt

$

-

$

-

$

800,000

 

Preferred stock issued in connection with in investment

$

-

$

-

$

2,269,900

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these statements

 

 

 

 

 

 

 

 

 

 

 

 



10






P2 Solar, Inc.

Development Stage Company

Notes to Interim Financial Statements

For the Six Months Ended September 30, 2012

Expressed in US Dollars


1.

Basis of Presentation, Nature of Operations and Going Concern


The accompanying unaudited condensed financial statements have been prepared in accordance with both generally accepted accounting principles for interim financial information, and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The accompanying unaudited condensed financial statements reflect all adjustments (consisting of normal recurring accruals) that are, in the opinion of management, considered necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year.


The condensed financial statements and related disclosures have been prepared with the presumption that users of the interim financial information have read or have access to our annual audited financial statements for the preceding fiscal year. Accordingly, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes thereto contained in the Annual Report on Form 10-K for the year ended March 31, 2012.


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 the Natco International Inc. to P2 Solar, Inc. The Company is in the development stage and has had no revenue since inception.


 The Company signed a letter of agreement in February, 2008 with Lassen Energy, Inc. to do a share exchange merger.  On November 28, 2008, the Company cancelled the merger agreement with Lassen and instead signed a licensing agreement with Lassen that gives the Company rights to their products in India, Canada, and Hawaii.  On September 3, 2010, the Company cancelled the licensing agreement with Lassen and signed a broader agreement with a company called Solarise Power Inc. (Solarise). Lassen, DBK, and Darry Boyd moved the entire Intellectual property (IP) pertaining to JIL Technology into Solarise and P2 solar owns 34% of Solarise.


The company had signed two Option Agreements in Bulgaria to purchase Solar projects.  First project was 7.3 MW located in South western Part of Bulgaria and the second project is 14.35 MW located in North Eastern part of Bulgaria.  The company did its due-diligence on both projects; both project did not meet our due diligence standards so the projects was abandoned.  The company is actively working with groups in India to acquire projects in that country.


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. The Company's continued existence is dependent upon its ability to raise additional capital and to achieve profitable operations through Solarise and financing and building of power plant in India and elsewhere.


If the going concern assumptions were not appropriate for these financial statements, then adjustments



11






would be necessary in 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


In May 2011, FASB issued Accounting Standards Update No. 2011-04, “Fair Value Measurements (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU 2011-04”).  ASU 2011-04 changes the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements to ensure consistency between U.S. GAAP and IFRS. ASU 2011-04 also expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. This new guidance is to be applied prospectively.  The Company anticipates that the adoption of this standard will not materially expand its financial statement note disclosures.


In June 2011, FASB issued ASU No. 2011-05, “Comprehensive Income (ASC Topic 220): Presentation of Comprehensive Income” (“ASU 2011-05”), which amends current comprehensive income guidance.  This accounting update eliminates the option to present the components of other comprehensive income as part of the statement of shareholders’ equity.  Instead, the Company must report comprehensive income in either a single continuous statement of comprehensive income which contains two sections, net income and other comprehensive income, or in two separate but consecutive statements.  ASU 2011-05 will be effective for public companies during the interim and annual periods beginning after December 15, 2011, with early adoption permitted.  The Company is reviewing ASU 2011-05 to ascertain its impact on the Company’s financial position, results of operations or cash flows as it only requires a change in the format of the current presentation.


In September 2011, the FASB issued ASU 2011-08 which provides an entity the option to first assess qualitative factors to determine whether it is necessary to perform the current two-step test for goodwill impairment.  If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required.  Otherwise, no further testing is required. The revised standard is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011.   We do not expect that the adoption of this standard will have a material impact on our results of operations, cash flows or financial condition.


In December 2011, FASB issued Accounting Standards Update 2011-11, “Balance Sheet - Disclosures about Offsetting Assets and Liabilities” to enhance disclosure requirements relating to the offsetting of assets and liabilities on an entity's balance sheet. The update requires enhanced disclosures regarding assets and liabilities that are presented net or gross in the statement of financial position when the right of offset exists, or that are subject to an enforceable master netting arrangement. The new disclosure requirements relating to this update are retrospective and effective for annual and interim periods beginning on or after January 1, 2013. The update only requires additional disclosures, as such, we do not expect that the adoption of this standard will have a material impact on our results of operations, cash flows or financial condition.


There were various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company's financial position, results of operations or cash flows.


Management does not believe that any other recently issued, but not yet effective, accounting standards if



12






currently adopted would have a material effect on the accompanying financial statements.


3.

Bank Indebtedness


The company was $5,403 indebted to the Bank


4.

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:


 

 

Sept  2012

 

Sept 2011

Loans payable to a directors and officers of the company. The loans are unsecured, due on demand and non-interest bearing (2011 - 10%). It is expected that these loans will be repaid within the next 12 months.

 

28,762

 

4,015

 

 

 

 

 

Wages and bonus payable to a director and officer of the company. This liability is unsecured, due on demand and non-interest bearing (2011 - nil%).

 

169,958

 

89,296

 

 

 

 

 

Accrued Interest payable                                                              

 

 

 

6,534

 

 

$ 198,720

 

$ 99,845

Less: Current portion

 

(198,720)

 

(99,845)

Long-term portion

 

$ -

 

$ -


b) Interest expense on amounts due to directors and an officer was $nil (2011 - $10,852).


c) Salaries and benefits include $75,407 (2011 - $73,462) paid to a director and officer of the Company.


d) As at September 30, 2012, a director and officer of the Company held approximately 33.40% of the issued and outstanding shares of the Company.


5.

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


There were 500,000 shares issued in the current quarter to two individuals


c) Share Subscriptions




13






There are no outstanding share subscriptions.


d) Warrants


No new warrants were issued for current quarter.


e) Stock Options


There were 200,000 options issued to a company consultant for services. As to the total number of Shares with respect to which the Option is granted, the Option shall be exercisable as follows: (i) 50% of the Option (100,000 Shares) in the aggregate may be exercised on or after November 21, 2009 at an Exercise Price of $0.20 per Share; and (ii) 50% of the Option (100,000 Shares) in the aggregate may be exercised on or after November 1, 2010 at an Exercise Price in an amount per Share that is 25% less than the ten day moving average of the Company’s Common Stock immediately prior to November 1, 2010.


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.


Under the Black-Scholes pricing model, the fair value of the warrants as of the issuance date was calculated to be $20,780 and charged as warrants expense for the period ended September 30, 2012. The fair value of each option granted is estimated at the respective grant date using the Black-Scholes Option Module. The following assumptions were made in estimating fair value:


 

Warrants & options

 

Expected volatility

 

1.57

 

 

 

 

 

 

 

Expected life (year)

 

4~5

 

 

 

 

 

 

 

Risk-free interest rate

 

0.19~ 0.25%

 

 

 

 

 

 

 

Dividend yield

 

-

 

 


The following table summarizes stock options and warrants outstanding as of June 30, 2012, as well as activity during the three months then ended:


 

 

Warrants

 

Options

Balance June 30, 2012

 

1,420,000

 

200,000

 

 

 

 

 

Issued

 

0

 

0

 

 

 

 

 

 

 

 

 

 

Exercised & expired

 

0

 

0

 

 

 

 

 

Balance, September 30, 2012

 

1,420,000

 

200,000



14










The following table provides certain information with respect to the above referenced warrants and options outstanding at September 30, 2012:


 

 

Exercise Price

 

Number of Outstanding

 

Weighted Average Exercise Price

 

Weighted Average Life Years

 

 

 

 

 

 

 

 

 

Warrants

 

0.42

 

350,000

 

0.42

 

.50

Warrants

 

0.25

 

1,070,000

 

0.25

 

2.5

 

 

 

 

 

 

 

 

 

Options

 

0.2

 

200,000

 

0.2

 

6.67


f) Debt Conversion


No debit conversion in this period



6.

Other Significant and Subsequent Events


On June 15, 2012 further 384,454 warrants exercisable at $0.42 have expired.


There are no other current or subsequent events to report




15






ITEM 2.

 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.


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 THIS REPORT ON FORM 10-Q 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.


Background and Overview


P2 Solar, Inc., a Delaware has been in existence as a Company (including our predecessor British Columbia Corporation) since 1990.   As discussed more fully below, the Company’s current business operations are focused on: i) solar panel technology; and ii) the potential construction of a solar power plant located in India, and Ontario, Canada.  The Company is currently a development stage company.


Solar Panel Technology


The Company, through its ownership interest in Solarise Power, Inc. (“Solarise”), a privately owned Nevada corporation, is involved in the research and development of solar panel technology.  Solarise specializes in the development of solar panel technology, utilizing the JIL Technology.  The Company, through Solarise, is currently testing the hybrid panel containing the JIL Technology internally.  The Company has had a few issues with inconsistent performance and overheating of the panel that it is working towards solving.  Once the internal tests are completed the panel will be sent for independent testing and power certification with Intertek Laboratories in California.  


Power Plant Construction Business


During the fiscal year ended March 31, 2012, the Company concentrated a significant amount of its resources and efforts on developing solar PV projects in Bulgaria.  The Company’s management team identified Bulgaria as an emerging market that offered solar PV investment returns superior to other markets.  Our management spent a significant amount of time in Bulgaria reviewing dozens of projects, ultimately settling on two that we believed were worth pursuing.  However, due to financing issues and



16






European economic issues, the Company was unable to proceed with its desired projects in Bulgaria.


In addition to the work in Bulgaria, the Company has continued to review projects in India that fall under various state solar PV tariff regimes.  The Company has also devoted time to assessing the returns available under the National Solar Mission's REC (renewable energy credit) regime, where solar PV developers sign PPAs at average wholesale power rates (Rupees 3-5) and are awarded REC credits which can be sold in two trading markets established in India.  The REC trading markets are supported by RPO (renewable power purchase obligations required of established producers) and a trading band that establishes a minimum and maximum price for the REC credits for a set number of years.  


Power trading firms in India are beginning to offer power purchase contracts for long periods of time, whereby they assume some of the risk of wholesale and REC pricing, enabling solar PV developers to seek funding based on these commitments.  During the next several months management anticipates that it will pursue certain REC-based solar PV opportunities in India, as well as certain state-level solar PV opportunities.  


During the fiscal period ending September 30, 2012, and the subsequent twelve months, the Company anticipates that it will continue to pursue the development of the solar power plant in India, Ontario, and other parts of the world.  Additionally, the Company will work towards the development and commercialization of the hybrid solar panel containing JIL Technology.


Results of Operation


As of September 30, 2012, the Company remained in the development stage and had not generated any revenue from operations.  As a result, no meaningful comparison is possible regarding results of operation for the fiscal period ended September 30, 2012 as compared to the fiscal period ended September 30, 2011.


Liquidity and Capital Resources


The following discussion and analysis provides information that we believe is relevant to an assessment and understanding of our financial condition for the six months ended September 30, 2012. The following summary should be read in conjunction with the financial statements and accompanying notes to them included elsewhere in this report.  Our financial statements are stated in US Dollars and are prepared in accordance with generally accepted accounting principals of the United States (“GAAP”).


During the fiscal period ended September 30, 2012, the Company did not have any sales or generate any revenues.  As of September 30, 2012, the Company’s audited balance sheet reflects total assets of $7,236, as compared to total assets of $1,894,823 during the fiscal period ended September 30, 2011, a decrease of $1,887,587 or approximately 99.6%.  The decrease was primarily attributable to the fact that in February 2012, the Company signed a settlement agreement with Photo Violation Technologies; no funds were paid as a result of the settlement agreement.  As a result of the settlement agreement, the Company no longer classifies the claims against Photo Violation Technologies as an asset.


As of September 30, 2012, the Company’s audited balance sheet reflects total liabilities of $425,549.  The Company has bank indebtedness of $(5,403) and a deficit accumulated during the development stage of $8,665,297.  


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 make contributions to Solarise to facilitate the development of the JIL Technology or proceed with the joint development of a power plant in



17






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.  Currently, our estimated fixed costs at this time are approximately $5400 per month; that figure includes $900 for lease payments, $500 for utilities, $3,000 for loan interest and principle payments, and $1,000 for miscellaneous expenses. We will have to raise approximately $5400 per month to cover operating expenses, and additional funds to cover contributions to Solarise and expenses if the Company enters into a business relationship with an Indian company relating to the establishment of a solar power plant.


The Company anticipates that it will attempt to raise approximately 2 to 3 million dollars through the sale of the Company’s securities to cover the Company’s operating expenses.  Furthermore, if the Company enters into a business relationship with an Indian company relating to the establishment of a solar power plant, the Company will pursue a combination of debt and equity financing in an effort to raise the necessary funds to cover the expenses associated with the development of the power plant.  We have had preliminary discussions with a number of groups regarding both a smaller and larger 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.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.


Not Applicable.


ITEM 4.

CONTROLS AND PROCEDURES.


Disclosure Controls and Procedures


The Securities and Exchange Commission defines the term “disclosure controls and procedures” to mean a Company's controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated



18






to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.  The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC's rules and forms and that information required to be disclosed is accumulated and communicated to principal executive and principal financial officers to allow timely decisions regarding disclosure.


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 are designed to provide reasonable assurance of achieving the objectives of timely alerting them to material information required to be included in our periodic SEC reports and of ensuring that such information is recorded, processed, summarized and reported within the time periods specified.  Our chief executive officer and chief financial officer also concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report to provide reasonable assurance of the achievement of these objectives.  


Changes in Internal Control over Financial Reporting


There was no change in the Company's internal control over financial reporting during the period ended September 30, 2012, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.


PART II-OTHER INFORMATION


ITEM 1.

LEGAL PROCEEDINGS.


None.


ITEM 1A.

 RISK FACTORS.


Not Applicable.


ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.


None.


ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.


None.


ITEM 4.

MINE SAFETY DISCLOSURES.


None.




19






ITEM 5.    

OTHER INFORMATION.


None.


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.


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.

                                   

 By: /s/ Raj-Mohinder S. Gurm

                                      

 -----------------------------------

                                     

 Name: Raj-Mohinder S. Gurm

 Date: November 19, 2012              

 Title: Chief Executive Officer & Chief Financial Officer




20