The following discussion should be read in conjunction with the financial
statements of Power Americas Resource Group Ltd (the "Company"), which are
included elsewhere in this Form 10-Q. Certain statements contained in this
report, including statements regarding the anticipated development and expansion
of the Company's business, the intent, belief or current expectations of the
Company, its directors or its officers, primarily with respect to the future
operating performance of the Company and the products it expects to offer and
other statements contained herein regarding matters that are not historical
facts, are "forward-looking" statements. Future filings with the Securities and
Exchange Commission, future press releases and future oral or written statements
made by or with the approval of the Company, which are not statements of
historical fact, may contain forward-looking statements. Because such statements
include risks and uncertainties, actual results may differ materially from those
expressed or implied by such forward-looking statements.
All forward-looking statements speak only as of the date on which they are made.
The Company undertakes no obligation to update such statements to reflect events
that occur or circumstances that exist after the date on which they are made.
Results of Operations for the Three Months Ended November 30, 2022 and 2021
Revenues
We did not earn any revenues during three months ending November 30, 2022 and
2021.
Operating Expenses
Operating expenses increased to $129,078 for the three months ended November 30,
2022, from $18,747 for the same period ended November 30, 2021.
Our operating expenses for the three months ended November 30, 2022, consisted
mainly of professional fees of $53,614 and general and administrative costs of
$75,464 and our operating expenses for the three months ended November 30, 2021,
consisted mainly of professional fees of $18,737 and general and administrative
costs of $10. The reason for the increase is primarily related to the additional
cost associated our filings and stock based compensation that occurred during
the year ended November 30, 2022.
Other Income (Expenses)
We had other expenses of $53 for the three months ended November 30, 2022,
compared with other income of $77,275 for the three months ended November 30,
2021.
Our other expenses for the three months ended November 30, 2022 consisted mainly
of $8,250 in interest expense, a gain on debt forgiveness of $8,593, and gain on
foreign currency translation of 182, and a loss on derivative liability of
578 compared with the three months ended November 30, 2021 consisted mainly of
$7,282 in interest expense and a gain on debt forgiveness of $84,557. The reason
for the decrease in other income is primarily the result of an decrease in the
debt forgiveness during the three month end November 30, 2022.
Net Loss
We recorded a net loss of $129,131 for the three months ended November 30, 2022,
as compared with a net income of $58,528 for the three months ended November 30,
2021. The reason for the decrease in net income is primarily the result of an
decrease in the debt forgiveness during the three month end November 30, 2022.
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Results of Operations for the Six Months Ended November 30, 2022 and 2021
Revenues
We did not earn any revenues during six months ending November 30, 2022 and
2021.
Operating Expenses
Operating expenses increased to $207,446 for the six months ended November 30,
2022, from $21,847 for the same period ended November 30, 2021.
Our operating expenses for the six months ended November 30, 2022, consisted
mainly of professional fees of $$131,864 and general and administrative costs of
$75,582 and our operating expenses for the six months ended November 30, 2021,
consisted mainly of professional fees of $21,837 and general and administrative
costs of $10. The reason for the increase is primarily related to the additional
cost associated our filings and stock based compensation that occurred during
the year ended November 30, 2022.
Other Income (Expenses)
We had other expenses of $1,955 for the six months ended November 30, 2022,
compared with other income of $72,790 for the six months ended November 30,
2021.
Our other expenses for the six months ended November 30, 2022 consisted mainly
of $11,533 in interest expense, a gain on debt forgiveness of $8,593, and gain
on foreign currency translation of 1,620 and a loss on derivative liability of
$635 compared with the six months ended November 30, 2021 consisted mainly of
$11,576 in interest expense and a gain on debt forgiveness of $84,557. The
reason for the decrease in other income is primarily the result of an decrease
in the debt forgiveness during the six months ended November 30, 2022.
Net Loss
We recorded a net loss of $209,401 for the six months ended November 30, 2022,
as compared with a net income of $51,123 for the six months ended November 30,
2021. The reason for the decrease in net income is primarily the result of a
decrease in the debt forgiveness during the six months ended November 30, 2022.
Liquidity and Capital Resources
As of November 30, 2022, we had total current assets of $0 and total assets in
the amount of $5,000,000. Our total current liabilities as of November 30, 2022
were $489,099. We had a working capital deficit of $489,099 as of November 30,
2022, compared with a working capital deficit of $377,569 as of May 31, 2022.
Cash Flows from Operating, Investing and Financing Activities
Year ended November 30,
2022 2021
Net cash used in operating activities $ (125,351 ) $ (21,847 )
Net cash used in investing activities
- -
Net cash provided by financing activities 125,034 25,000
Net increase/(decrease) in Cash
- 3,153
Cash, beginning 317 -
Cash, ending $ - $ 3,153
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Operating activities
For the six months ended November 30, 2022, net cash flows used in operating
activities consisted of a net loss of $209,401 loss on change in derivative
liabilities of $635, gain on forgives of debt of $8,593, and a net increase in
change of operating assets and liabilities of $18,218. For the six months ended
November 30, 2021, net cash flows used in operating activities consisted of a
net loss of $51,123 loss on change in derivative liabilities of $11, gain on
forgives of debt of $84,557, and a net increase in change of operating assets
and liabilities of $11,576.
Financing activities
Net cash provided by financing activities for the period ended November 30, 2022
was $125,034, as compared to $25,000 for the same period of 2021. The increase
of net cash provided by financing activities was mainly attributable more cash
raised from debt, equity, and royalty
Based upon our current financial condition, we do not have sufficient cash to
operate our business at the current level for the next twelve months. We intend
to fund operations through increased sales and debt and/or equity financing
arrangements, which may be insufficient to fund expenditures or other cash
requirements. We plan to seek additional financing in a private equity offering
to secure funding for operations. There can be no assurance that we will be
successful in raising additional funding. If we are not able to secure
additional funding, the implementation of our business plan will be impaired.
There can be no assurance that such additional financing will be available to us
on acceptable terms or at all.
Going concern- The accompanying financial statements have been prepared in US
dollars and in accordance with accounting principles generally accepted in the
United States ("GAAP") on a going concern basis, which contemplates the
realization of assets and the satisfaction of liabilities and commitments in the
normal course of business. The Company commenced its craft brewing activities in
September 2014. During the six months ended November 30, 2022, the Company has
incurred net losses of $209,401 and accumulated deficits of $2,608,254. The
Company expects losses to continue until it can achieve profitable operations
from its craft beer operations. These conditions raise substantial doubt about
the Company's ability to continue as a going concern. These consolidated
financial statements do not include any adjustments that may result from the
outcome of these aforementioned uncertainties.
Off Balance Sheet Arrangements
As of November 30, 2022, there were no off balance sheet arrangements.
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Recently Issued Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, ASC Subtopic 470-20 "Debt-Debt with
"Conversion and Other Options" and ASC subtopic 815-40 "Hedging-Contracts in
Entity's Own Equity". The standard reduced the number of accounting models for
convertible debt instruments and convertible preferred stock. Convertible
instruments that continue to be subject to separation models are (1) those with
embedded conversion features that are not clearly and closely related to the
host contract, that meet the definition of a derivative, and that do not qualify
for a scope exception from derivative accounting; and, (2) convertible debt
instruments issued with substantial premiums for which the premiums are recorded
as paid-in capital. The amendments in this update are effective for fiscal years
beginning after December 15, 2021, including interim periods within those fiscal
years. Early adoption is permitted, but no earlier than fiscal years beginning
after December 15, 2020, including interim periods within those fiscal years.
The Company is currently assessing the impact of the adoption of this standard
on its consolidated financial statements.
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 will do not
expect the adoption of this guidance to have a material impact on our
consolidated financial statements.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):
Disclosure Framework - Changes to the Disclosure Requirements for Fair Value
Measurement. The ASU modifies the disclosure requirements in Topic 820, Fair
Value Measurement, by removing certain disclosure requirements related to the
fair value hierarchy, modifying existing disclosure requirements related to
measurement uncertainty and adding new disclosure requirements, such as
disclosing the changes in unrealized gains and losses for the period included in
other comprehensive income for recurring Level 3 fair value measurements held at
the end of the reporting period and disclosing the range and weighted average of
significant unobservable inputs used to develop Level 3 fair value measurements.
This ASU is effective for public companies for annual reporting periods and
interim periods within those annual periods beginning after December 15, 2019.
The Company is currently evaluating the effect, if any, that the ASU will have
on its consolidated financial statements.
In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation
(Topic 718), Improvements to Nonemployee Share-based Payments ("ASU 2018-07").
This ASU expands the scope of Topic 718 to include share-based payment
transactions for acquiring goods and services from nonemployees. The effective
date for the standard is for interim periods in fiscal years beginning after
December 15, 2018, with early adoption permitted, but no earlier than the
Company's adoption date of Topic 606. Under the new guidance, the measurement of
nonemployee equity awards is fixed on the grant date. The new guidance is
required to be applied retrospectively with the cumulative effect recognized at
the date of initial application. The Company is currently evaluating the effect
ASU 2018-07 will have on the consolidated 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.
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