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[July 15, 2014]
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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