UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended: August 31, 2014
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ______________ to ______________
Commission file number: 000-51736
DOMINOVAS ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 20-5854735
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1395 Chattahoochee Avenue, Atlanta, GA 30318
(Address of principal executive offices) (Zip Code)
Tel: (800) 679-1249
(Registrant's telephone number, including area code)
(former address - 302, 1912 Enterprise Way, Kelowna, BC V1Y 9S9)
(formerly Western Standard Energy Corp.)
Securities registered pursuant to Section 12(b) of the Act
Title of Each Class Name of each Exchange on which registered
------------------- -----------------------------------------
Nil N/A
Securities registered pursuant to Section 12(g) of the Act
Common Stock, par value $0.001 per share
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]
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 such 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. Yes [X] 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 (ss.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). Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [X]
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 [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act). Yes [ ] No [X]
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was last sold, or the average bid and asked price of such common equity, as of
the last business day of the registrant's latest practicable date.
90,525,125 shares of common stock at a price of $0.30 per share for an aggregate
market value of $27,157,538.
1. The aggregate market value of the voting stock held by non-affiliates is
computed by reference to the price at which the common equity was last sold as
reported on Stockwatch.
Note.--If a determination as to whether a particular person or entity is an
affiliate cannot be made without involving unreasonable effort and expense, the
aggregate market value of the common stock held by non-affiliates may be
calculated on the basis of assumptions reasonable under the circumstances,
provided that the assumptions are set forth in this Form.
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [ ] No [ ]
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date: 90,525,125 shares of common
stock outstanding as at November 15, 2014.
DOCUMENTS INCORPORATED BY REFERENCE
Not Applicable
TABLE OF CONTENTS
PART I
ITEM 1. BUSINESS 3
ITEM 1A. RISK FACTORS 9
ITEM 1B. UNRESOLVED STAFF COMMENTS 12
ITEM 2. PROPERTIES 12
ITEM 3. LEGAL PROCEEDINGS 12
ITEM 4. MINE SAFETY DISCLOSURES 12
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 13
ITEM 6. SELECTED FINANCIAL DATA 15
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION 16
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 22
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 23
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL MATTERS 34
ITEM 9A(T). CONTROLS AND PROCEDURES 34
ITEM 9B. OTHER INFORMATION 35
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 35
ITEM 11. EXECUTIVE COMPENSATION 39
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS 41
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE 42
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES 42
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES. 44
SIGNATURES 45
2
PART I
ITEM 1. BUSINESS
FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements that relate to future
events or our future financial performance. In some cases, one can identify
forward-looking statements by terminology such as "may", "should", "expects",
"plans", "anticipates", "believes", "estimates", "predicts", "potential" or
"continue" or the negative of these terms or other comparable terminology. These
statements are only predictions and involve known and unknown risks,
uncertainties and other factors, including the risks in the section entitled
"Risk Factors" that may cause our or our industry's actual results, levels of
activity, performance or achievements to be materially different from any future
results, levels of activity, performance or achievements expressed or implied by
these forward-looking statements.
Although we believe the expectations reflected in the forward-looking statements
are reasonable, we cannot guarantee future results, levels of activity,
performance or achievements. Except as required by applicable law, including the
securities laws of the United States, we do not intend to update any of the
forward-looking statements to conform these statements to actual results.
Unless otherwise stated, our financial statements are stated in United States
Dollars (US$) and are prepared in accordance with United States Generally
Accepted Accounting Principles.
In this annual report, unless otherwise specified, all references to "common
shares" refer to the common shares in our capital stock.
As used in this annual report, the terms "we", "us", "our" and "Dominovas
Energy" mean Dominovas Energy Corporation, and our wholly-owned subsidiary,
Dominovas Technologies, LLC, unless otherwise indicated.
CORPORATE OVERVIEW
Dominovas Energy Corporation is an early stage company engaged in the marketing,
design, manufacture and deployment of multi-megawatt power plants.
The Company has an inception date of October 16, 2003 as Comtrix Inc. From
incorporation until June 2005, our operating activities consisted primarily of
developing fingerprint recognition products for residential buildings in China.
Our management investigated opportunities and challenges in the business of
developing fingerprint recognition products and security for residential
buildings in China and determined that the business did not present the best
opportunity for our company to realize value for our shareholders. Accordingly,
we abandoned this business plan and focused on the identification of other
suitable business opportunities and/or business combinations.
On June 23, 2006, the company executed a letter of intent with Lusora Corp.
wherein, the existing shareholders of Lusora Corp. agreed to exchange issued and
outstanding shares of its common stock for the same number of shares of our
company. Also effective June 23, 2006, the company changed its name from
"Comtrix Inc." to "Lusora Healthcare Systems Inc." In addition, effective June
23, 2006 the company effected a 25 for one forward stock split of our
authorized, issued and outstanding common stock. As a result, authorized capital
increased from 75,000,000 shares of common stock with a par value of $0.001 to
1,857,000,000 shares of common stock with a par value of $0.001.
On September 7, 2007, the company changed our name from "Lusora Healthcare
Systems Inc." to "Western Standard Energy Corp" when the company decided to
change the focus of its business plan from wireless personal security and
monitoring systems to acquisition and exploration in the oil and gas industry.
In addition on September 7, 2007, the company affected a 1.5 for one stock split
of its authorized and issued and outstanding common stock. As a result, its
authorized capital increased from 1,875,000,000 shares of common stock with a
par value of $0.001 to 2,812,500,000 shares of common stock with a par value of
$0.001.
3
On February 20, 2014 Western Standard Energy Corp. ("we" or the "Company")
entered into an Equity Purchase Agreement (the "EPA") with Dominovas Energy, LLC
("Dominovas Energy") and the Members of Dominovas Energy (the "Members").
Pursuant to the EPA we acquired 100% of the outstanding limited liability
company units of Dominovas Energy, a Delaware limited liability company, as more
fully described in Item 2.01. The purchase price consisted of 45,000,000 shares
of our common stock, which constitutes 50% of our outstanding common stock after
closing of this transaction. The Agreement also provided for two of Dominovas
Energy's Members be added to its Board of Directors. The Agreement contained
customary representations, warranties, covenants and closing conditions.
In connection with the EPA, on February 20, 2014 the company entered into a
three-year employment agreement with Neal Allen, our Chairman, President and
CEO, with the agreement becoming effective on March 1, 2014. Mr. Allen's salary
will be $177,000 per year, increasing by 25% eighteen months from the effective
date. The agreement contains customary non-competition, non-solicitation and
non-disclosure provisions.
In connection with the EPA, on February 20, 2014 the company also entered into a
three-year employment agreement with Michael Watkins,
the company's Chief Operating Officer (COO), with the agreement becoming
effective on March 1, 2014. Mr. Watkins' salary will be $104,000 per year,
increasing by 25% eighteen months from the effective date. Mr. Watkins will
receive a one-time advance of 7.5% of salary; subsequent salary payments will be
adjusted to reflect the salary as advanced. The agreement contains customary
non-competition, non-solicitation and non-disclosure provisions.
DESCRIPTION OF BUSINESS
Dominovas Energy is part of the fuel cell and sustainable/alternative energy
industry. Fuel cells are an efficient, combustion-less, reliable, and virtually
pollution-free energy source that provide electricity to power a wide array of
applications, including buildings (manufacturing facilities, hotels and
hospitals), primary power for grid integration, automobiles, emergency back-up
systems, and base load grid power. A fuel cell uses fuel - usually hydrogen,
extracted from common fuels such as natural gas, and oxygen - to produce
electricity. In principle, a fuel cell is an electrochemical device that
operates like a battery. However, unlike a battery, a fuel cell requires
re-fueling and not recharging. Fuel cells will continue to produce electricity
and heat as long as there is a constant fuel source. Hydrogen fuel cells work
simply, have no moving parts, and operate silently, with water and excess heat
as their only by-products. Fuel cells thus provide the ideal solution for a
myriad of portable, on-board and stationary electric power generation
applications.
Dominovas Energy has identified marketing and sales opportunities for fuel cells
in emerging market countries, where electricity supply is frequently unreliable,
antiquated, and expensive as compared to the cost of electricity and the
production, thereof, in the United States. Dominovas Energy currently has active
projects in Africa. Dominovas Energy works with and has engaged the host
nation's government. Initial project sizes range from 5 to 10 Megawatts (MW),
with eventual project size of 200 to 3000 MW. Project cost projections range
from $25 million to $50 million. Dominovas Energy will provide power to the
local utilities under power purchase agreements (PPA's), and prior to deployment
it will require specific guarantees, bonding or other credit support, as
necessary, where the local contracting entities do not enjoy strong credit
ratings.
The Dominovas Energy fuel cell system is named RUBICON(TM). It is a modular
solid oxide fuel cell (SOFC) system that operates at high temperatures (up to
1,000 C). Dominovas Energy has identified the following advantages of its
technology over competitive energy producing systems: (1) all solid components,
(2) accelerated electrochemical kinetics proceed without the need for expensive
noble metals such as platinum, (3) internal fuel reforming is possible and
carbon monoxide may be used as a fuel and (4) more tolerant of fuel
contaminants, including sulfur, because per design of the system these
components dissipate before deposition onto the fuel cell components.
Additional advantages of the RUBICON(TM) are that it is silent and
environmentally friendly, and capable of reforming multiple fuels such as
diesel, natural gas, propane, ethanol, syngas, methanol and bio-fuels.
4
Dominovas Energy has executed an MOU in which Delphi has agreed to manufacture
the SOFC stacks for the RUBICON and will source as necessary for additional
components required to meet the multi-MW production schedule based upon the
amount of MWs that are projected specific to projected sales.
Dominovas Energy is headquartered at 1395 Chattahoochee Ave; Atlanta, Georgia
30318.. The facility is located in an industrial space located near downtown
Atlanta in approximately 20,000 square feet. It is anticipated that the power
electronics as necessary for intra-unit communication and operation as well as
certain testing and assembly will be perfected in the Atlanta facility. Certain
manufacturing relative to the MW needed to fulfill sales will occur in Michigan
concomitant with Delphi's commitment. All manufacture of the RUBICON(TM) will be
completed prior to shipment and deployment..
Historically, the primary manufacturing challenges for the commercial
development of the SOFC market was the lack of companies with the necessary
resources to support stack development and the subsequent requirements as are
key to the integration of the stack with a reformer. Dominovas Energy
Corporation has partnered with Delphi, the leading SOFC stack developer in the
world. Delphi is based in Michigan, USA, with a track record of over 14 years of
SOFC R&D and product development experience along the sizeable capital
commitment that is required to develop a commercial product. Delphi has
significant knowledge and scientific expertise with respect to SOFC development
with a total Intellectual Property portfolio of over 281 products, including 219
patents. Delphi has expensed over $250M in the development and perfection of
their SOFC technology over the last 14 years. Delphi's SOFC stacks can
accommodate a variety of fuels including hydrogen, natural gas, diesel,
logistics fuel (JP-8) etc. The technological contribution by Dominovas Energy to
its projects includes, but is not limited to its proprietary algorithms, which
the company believes improves the operating conditions and efficiencies of
utilizing multiple fuel. The company will also install the RUBICON's(TM)' power
electronics along with a "state of the art" communications suite infrastructure
within each RUBICON(TM). These components allow for the remote monitoring of the
system, as well as the internal operations of each unit.
Given the vast need for electricity in emerging markets around the globe,
Dominovas Energy has been very measured in its selection process for specific
target markets. Initial deployments of the RUBICON(TM) will be in Guinea West
Africa, and Angola West Africa where the company has secured commitments by
government officials to deploy a specific number of MWs. In fact, the need is so
great in Guinea,
Dominovas Energy has had to initially limit the client base within the Country
to meet the current demand. The initial clients include the Ports and Mines..
Dominovas Energy also has projects earmarked in the private and governmental
sectors of additional African countries and has an expectation of a positive
close to the sales cycle to generate an additional 500MW - 1500MW of new
business in the foreseeable future.
COMPETITORS AND DOMINOVAS ENERGY'S COMPETITIVE ADVANTAGES
Dominovas Energy's "competitors" are not "competitors" in the true sense of the
word. Its" competitors" produce and sell specific technologies that are
currently being deployed to provide electricity within the theaters of operation
that Dominovas Energy is engaging. Primarily, GenSets, gas turbines,
micro-turbines, solar and wind technologies are Dominovas Energy's competitors.
These competing technologies are expected to offer power as generators within
power plants as well as when used as standalone power generators.
There are several competing fuel cell technologies. Alkaline fuel cell
technology requires pure hydrogen as a fuel and, since it operates at low
temperature (50-250 C), an expensive catalyst (platinum) is needed. Molten
Carbonate fuel cells operate at higher temperature and use lower-cost nickel as
a catalyst; however, they require a corrosive electrolyte. Phosphoric Acid fuel
cells and proton exchange membrane (PEM) all require pure hydrogen as a fuel.
Dominovas Energy considers that its SOFC system enjoys advantages over these
competing fuel cell technologies in that it accepts multiple fuel types.
5
As a competitive advantage, fuel cells enjoy efficiency advantages over other
common combustion fuel-utilizing power generating systems, providing up to 55%
efficiency without counting additional efficiencies of waste heat utilization.
Other systems have lower efficiencies: thermoelectric generator (3-4%), engine
driven generator (15-25%), gas turbine generator (20-25%) and steam turbine
generator (25-35%).
PATENTS, TRADEMARKS AND COPYRIGHTS
Dominovas Energy formally applied to have Dominovas Energy Corporation (the
mark) recognized as an official Trademark symbol, protected by the rights,
thereto, as offered by the United State Patent and Trademark Office (USPTO),
July 4th, 2014. The registered serial number is 86328976.
SUMMARY OF APPLICATION DATA FOLLOWS:
APPLICATION DATA: TRADEMARK/SERVICE MARK APPLICATION, PRINCIPAL REGISTER TEAS
PLUS APPLICATION
The applicant, Dominovas Energy Corporation, a corporation of Nevada, having an
address of 1395 Chattahoochee Avenue, Atlanta, Georgia 30318 United States,
requests registration of the trademark/service mark identified above in the
United States Patent and Trademark Office on the Principal Register established
by the Act of July 5, 1946 (15 U.S.C. Section 1051 et seq.), as amended, for the
following:
International Class 009: Apparatus and instruments for conveying, distributing,
transforming, storing, regulating or controlling electric current; Electrical
distribution boxes; Electrical distribution systems, namely, power distribution
panels; Electrical power distribution units; Electricity router for managing and
optimizing energy loads within a building; Electronic devices, namely, energy
meters for tracking and monitoring energy usage; Electronic monitors and monitor
modules for monitoring electric current and electrical signals; Fuel cells; Test
stations for fuel cells.
In International Class 009, the mark was first used by the applicant or the
applicant's related company or licensee predecessor in interest at least as
early as 06/30/2010, and first used in commerce at least as early as 06/30/2010,
and is now in use in such commerce. The applicant is submitting one(or more)
specimen(s) showing the mark as used in commerce on or in connection with any
item in the class of listed goods and/or services, consisting of a(n) Company
Website.
Specimen-1 [SPE0-50167967-145514421_._Screen_Shot_2014-06-26_at_3.58.37_PM.pdf]
International Class 035: Energy management services, namely, providing a service
that allows customers to purchase energy from various energy providers; Energy
usage management; Energy usage management information services; Information in
the field of energy efficiency; Retail electricity provider services, namely,
providing a service that allows customers to purchase energy, namely,
electricity, and renewable energy; Utility bill management services, namely,
tracking, reporting, analyzing and delivering energy information in the form of
utility bills and utility meter data rate schedules.
In International Class 035, the mark was first used by the applicant or the
applicant's related company or licensee predecessor in interest at least as
early as 06/30/2010, and first used in commerce at least as early as 06/30/2010,
and is now in use in such commerce. The applicant is submitting one(or more)
specimen(s) showing the mark as used in commerce on or in connection with any
item in the class of listed goods and/or services, consisting of a(n) Company
Website.
Specimen-1 [SPE0-1-50167967-145514421_._Screen_Shot_2014-06-26_at_3.58.37_
PM.pdf] International Class 039: Distribution of energy
In International Class 039, the mark was first used by the applicant or the
applicant's related company or licensee predecessor in interest at least as
early as 06/30/2010, and first used in commerce at least as early as 06/30/2010,
and is now in use in such commerce. The applicant is submitting one(or more)
6
specimen(s) showing the mark as used in commerce on or in connection with any
item in the class of listed goods and/or services, consisting of a(n) Company
Website.
Specimen-1 [SPE0-2-50167967-145514421_._Screen_Shot_2014-06-26_at_3.58.37_
PM.pdf]
International Class 040: Energy generation services; Energy recycling services,
namely, capturing and conversion of wasted energy into electricity and useful
steam; Generation of energy; Leasing of energy generating equipment; Leasing of
renewable energy equipment for use in converting renewable resources into power;
Production of energy; Production of energy via renewable and non- renewable
fuels.
In International Class 040, the mark was first used by the applicant or the
applicant's related company or licensee predecessor in interest at least as
early as 06/30/2010, and first used in commerce at least as early as 06/30/2010,
and is now in use in such commerce. The applicant is submitting one(or more)
specimen(s) showing the mark as used in commerce on or in connection with any
item in the class of listed goods and/or services, consisting of a(n) Company
Website.
Specimen-1 [SPE0-3-50167967-145514421_._Screen_Shot_2014-06-26_at_3.58.37_
PM.pdf]
Specimen-2 [SPE0-50167967-224942725_._Screen_Shot_2014-06-26_at_3.58.37_PM.pdf]
For informational purposes only, applicant's website address is:
www.dominovasenergy.com
The applicant's current Correspondence Information:
Michael Watkins, COO
1395 Chattahoochee Avenue
Atlanta, Georgia 30318
770-331-8018 (phone)
michael@dominovasenergy.com;neal@dominovas.com;
kerry@dominovasenergy.com (authorized)
Dominovas Energy formally applied to have RUBICON (the mark) recognized as an
official Trademark symbol, protected by the rights, thereto, as offered by the
United State Patent and Trademark Office (USPTO), July 4th, 2014. The registered
serial number is 86330322.
SUMMARY OF APPLICATION DATA FOLLOWS:
APPLICATION DATA: TRADEMARK/SERVICE MARK APPLICATION, PRINCIPAL REGISTER TEAS
PLUS APPLICATION
The applicant, Dominovas Energy Corporation, a corporation of Nevada, having an
address of 1395 Chattahoochee Avenue, Atlanta, Georgia 30318 United States,
requests registration of the trademark/service mark identified above in the
United States Patent and Trademark Office on the Principal Register established
by the Act of July 5, 1946 (15 U.S.C. Section 1051 et seq.), as amended, for the
following:
International Class 009: Apparatus and instruments for conveying, distributing,
transforming, storing, regulating or controlling electric current; Electrical
distribution boxes; Electrical distribution systems, namely, power distribution
panels; Electrical power distribution units;
Electricity router for managing and optimizing energy loads within a building;
Electronic devices, namely, energy meters for tracking and monitoring energy
usage; Electronic monitors and monitor modules for monitoring electric current
and electrical signals.
In International Class 009, the mark was first used by the applicant or the
applicant's related company or licensee predecessor in interest at least as
early as 08/04/2010, and first used in commerce at least as early as 08/04/2010,
and is now in use in such commerce. The applicant is submitting one(or more)
specimen(s) showing the mark as used in commerce on or in connection with any
item in the class of listed goods and/or services, consisting of a(n) Website.
7
Specimen-1 [SPE0-715680180-104023336_._Use_in_Commerce_Website.pdf]
International Class 040: Production of energy; Production of energy via
renewable and non-renewable fuels.
In International Class 040, the mark was first used by the applicant or the
applicant's related company or licensee predecessor in interest at least as
early as 08/04/2010, and first used in commerce at least as early as 08/04/2010,
and is now in use in such commerce. The applicant is submitting one(or more)
specimen(s) showing the mark as used in commerce on or in connection with any
item in the class of listed goods and/or services, consisting of a(n) Website.
Specimen-1 [SPE0-1-715680180-104023336_._Use_in_Commerce_Website.pdf]
For informational purposes only, applicant's website address is:
www.dominovasenergy.com
The applicant's current Correspondence Information:
Michael Watkins, COO
1395 Chattahoochee Avenue
Atlanta, Georgia 30318
(800) 679-1249 (phone)
michael@dominovasenergy.com;neal@dominovas.com;
kerry@dominovasenergy.com (authorized)
Dominovas Energy's Executive Vice President for Fuel Cell Operations, Shamiul
Islam, Ph.D., owns the following patents:
1. Josephine M. Hill and SHAMIUL ISLAM, `CHEMICAL COMPOSITIONS SUITABLE FOR USE
AS SOLID OXIDE FUEL CELL ANODES, AND PROCESSES FOR MAKING SAME', US provisional
patent, Filed on Feb. 2013.
2. Byong-Taek Lee, Ho-Yeon Song, SHAMIUL ISLAM and Min-Sung Kim, `METHOD OF
POROUS UNIDIRECTIONAL SI2N2O-SI3N4 COMPOSITE USING ETHANOL BUBBLES IN A VISCOUS
POLYMERIC SLURRY'. Korean patent. Registration no. 1010442020000, Application
no. 1020090016255, (2009).
EMPLOYEES
Dominovas Energy presently has ten (10) employees. We believe that our
relationship with our employees is satisfactory. We plan to employ more
qualified employees in the future, as contracts are executed resulting in
multi-megawatt orders. We plan to keep staff at a minimum to minimize overhead.
All employees have signed non-competes and non-disclosure agreements as well as
a Foreign Corruption Practices Act (FCPA) document.
GOVERNMENT REGULATIONS
Our business is not subject to substantial regulation. However, our target
markets, such as power generation, are subject to varying degrees of regulation,
which varies depending on the host nation. We plan to work closely with the host
nation governments in implementing our projects and to carefully comply with all
applicable regulations.
INVESTMENT IN PRO ECO ENERGY
Dominovas Energy Corporation additionally owns 41% of the common stock of Pro
Eco Energy Ltd., ("Pro Eco Energy"), which is a combination of two private
related companies - Swiss Solar Tech (SST) Ltd. and Pro Eco Energy Ltd. The two
companies are located in Summerland, British Columbia and each provides energy
efficient and environmentally friendly heating and cooling HVAC systems for
commercial buildings. The combined entities specialize in a variety of clients
including hotels, resorts and multi-residential buildings, combining solar
thermal with ground - source heat pumps, heat recovery systems and geothermal
8
ground loops as necessary to improve efficiency and reduce energy costs.. Pro
Eco Energy expects that, by utilizing the most advanced technologies and
custom-designed hybrid systems, energy cost savings of greater than 50% can be
realized for customers.
ITEM 1A. RISK FACTORS
Investing in our common stock involves a high degree of risk. You should
carefully consider the risks described below, together with the other
information contained in this filing, before making your decision to invest in
shares of our common stock. We cannot assure you that any of the events
discussed in the risk factors below will not occur. These risks could have an
adverse impact on our business, results of operations, financial condition and
cash flows. If any of the following risks develops into an actual event, the
trading price of our common stock could decline, and you could lose all or part
of your investment.
WE HAVE LIMITED OPERATING HISTORY AND FACE MANY OF THE RISKS AND DIFFICULTIES
FREQUENTLY ENCOUNTERED BY DEVELOPMENT STAGE COMPANY.
To date, our efforts have been focused primarily on the research, design,
development and marketing of our business model. We, including our subsidiary,
have limited operating history for investors to evaluate the potential of our
business development. We have limited net revenues and net income from
operations. There can be no assurance that we will be able to implement our
business plan based on the foregoing factors.
WE EXPECT TO COMPETE WITH MORE ESTABLISHED AND WELL-RECOGNIZED COMPANIES, WHICH
MAY HAVE A COMPETITIVE ADVANTAGE.
We operate primarily in the fuel cell industry, which is, with a number of small
and large companies in the United States and abroad. We expect that some of our
competitors and potential competitors have substantially greater capital
resources and more experience in our industry and may have significant
competitive advantages. Some of our competitors are part of national or
international companies and may be able to receive administrative, financial and
other support that reduce their operating costs and have successful marketing
and promotional campaigns.
OUR FUTURE SUCCESS IS DEPENDENT, IN PART, ON THE PERFORMANCE AND CONTINUED
SERVICE OF OUR OFFICERS AND DIRECTORS, AND ANY LOSS OF THEIR SERVICES WOULD
LIKELY RESULT IN MATERIAL AND ADVERSE EFFECTS ON OUR OPERATING RESULTS.
We depend upon the experience, abilities and continued services of our officers
and directors. The loss of the services of our officers could have a material
adverse effect on our business, financial condition or results of operation.
IF WE CANNOT HIRE OR RETAIN SKILLED EXECUTIVE, MANAGERIAL AND TECHNICAL
PERSONNEL, OUR BUSINESS CAN BE ADVERSELY AFFECTED.
A failure to attract and retain qualified individuals for our senior executive
and technical positions could adversely affect our operations and any future
revenues. We continue to seek additional qualified personnel in order to expand
our development efforts and operations. There is no assurance that we will be
able to attract and retain any such qualified personnel.
OUR PRODUCTS DO NOT YET HAVE AN OPERATIONAL HISTORY OF RUNNING AT FULL CAPACITY
ON AN EXTENDED BASIS IN THE EMERGING MARKETS THAT WE INTEND TO ENTER.
The modules included in our products have been operated successfully in a number
of locations on a trial or limited scale basis. However, the products have not
yet been demonstrated operating at full capacity in the emerging markets that we
intend to enter.
THE MARKET FOR OUR PRODUCTS IS NOT WIDELY ESTABLISHED, AND COMPETITORS MAY
BETTER PREDICT HOW THE MARKET WILL DEVELOP.
9
There is a significant market risk resulting from the fact that our products and
technology, as well as fuel cell technology in general, have not yet been fully
accepted by the target markets. Significant efforts are still required to
overcome the market's heavy reliance on traditional power generation sources.
Additionally, competing makers of fuel cell systems may better predict the
direction in which the market may develop. We will need to continue to invest in
marketing and sales, along with keeping its research active specific to newer
iterations of new and improved fuel cell methodologies relative to the
RUBICON's(TM) operation and deployment, in order to remain competitive.
THE POWER INDUSTRY REGULATORY FRAMEWORK MAY DISFAVOR FUEL CELLS AS A SOURCE OF
POWER.
A number of power generating technologies that we consider to be less
competitive receive significant government subsidies both domestically and
abroad.. To the extent that technologies such as solar, wind, bio-fuel and
geothermal energy are favored by governmental policies and programs and fuel
cells are not, it could make it more costly for us to overcome these economic
incentives for our potential customers to select the favored technologies.
WE WILL REQUIRE FINANCING TO ACHIEVE OUR CURRENT BUSINESS STRATEGY AND OUR
INABILITY TO OBTAIN SUCH FINANCING COULD PROHIBIT US FROM EXECUTING OUR BUSINESS
PLAN AND CAUSE US TO SLOW DOWN OUR EXPANSION OF OPERATIONS.
We will need to raise additional funds through public or private debt or sale of
equity to achieve our current business strategy. Initially, seed money is needed
to fund our international projects and for working capital to build and carry
our power generating facilities until payment is made by our customers. Our
capital requirements to implement our business strategy will be significant.
Moreover, in addition to monies needed to continue operations over the next
twelve months, we anticipate requiring additional funds in order to
significantly expand our operations and undertake performance under some of the
important contracts we have been awarded. If we are unable to obtain financing
on acceptable terms, we could be forced to delay or scale back our business
plan. In addition, such inability to obtain financing on acceptable terms could
have a material adverse effect on our business, operating results, or financial
condition. Currently, we have no established bank-financing arrangements.
Therefore, it is likely we would need to seek additional financing through
subsequent future private offering of our equity securities, or through
strategic partnerships and other arrangements with corporate partners.
WE MAY FACE DAMAGE TO OUR PROFESSIONAL REPUTATION OR LEGAL LIABILITY IF OUR
POTENTIAL CLIENTS ARE NOT SATISFIED WITH OUR SERVICES.
As a development stage company in the fuel cell industry, we will initially
depend to a large extent on our relationships with our potential clients and our
reputation for professional services and integrity to attract and retain
clients. The members of the target industries are likely to communicate with one
another. As a result, if a client is not satisfied with our services or it may
be more damaging in our business than in other businesses. To date, Dominovas
Energy has had no adverse interactions with potential or actual clients.
WE MAY FACE LEGAL LIABILITIES FROM WARRANTY CLAIMS MADE AGAINST OUR PRODUCTS.
Our agreements with customers may involve projects that are critical to the
operations of our clients' businesses. If we fail to meet our contractual
obligations, we could be subject to legal liability, which could adversely
affect our business, operating results and financial condition. The provisions
we typically include in our contracts which are designed to limit our exposure
to legal claims relating to our services may not protect us or may not be
enforceable under some circumstances or under the laws of some jurisdictions. If
a legal judgment is rendered against us we may be forced to limit out proposed
operations or cease our operations. Defending ourselves in any large lawsuit
would likely result in a material adverse effect on our operations.
RISK RELATED TO OUR CAPITAL STOCK
OUR SECURITIES ARE CONSIDERED HIGHLY SPECULATIVE BECAUSE OF THE EARLY STAGE OF
DEVELOPMENT AND NATURE OF OUR BUSINESS.
10
We operate in an industry that is highly competitive, fast developing and
subject to rapid technological advances. We do not have a significant market
presence, and have generated limited revenues. Any profitability of our business
depends on our successfully executing our business plan, which is subject to the
risks inherent in any new business and those risks specific to the fuel cell
industry. In addition, we continue to seek additional investment either through
debt or equity to develop our business plan and to sustain our future business
operations.
OUR SECURITIES ARE SUBJECT TO THE "PENNY STOCK" REGULATIONS OF THE SEC, WHICH
MAY RESTRICT TRADING OF OUR COMMON STOCK IN THE EVENT A TRADING MARKET DEVELOPS
FOR OUR SHARES.
The SEC defines a "penny stock" as any equity security other than a security
excluded from such definition by Rule 3a51-1 of the Exchange Act. Generally, a
"penny stock" is any equity security that has a market price of less than $5.00
per share or an exercise price of less than $5.00 per share, subject to certain
exceptions. Since our shares are not listed on a national stock exchange and the
market price of our shares is less than $5.00 per share, our securities are
subject to the penny stock rules under Rule 15g-9 of the Exchange Act, which
imposes restrictions on broker-dealers who sell to persons other than
established customers and accredited investors.
The penny stock rules require a broker-dealer to, prior to the sale of the penny
stock to approve the purchaser's account for transactions in penny stocks by
obtaining the purchaser's information regarding his or her financial situation,
investment experience and investment objectives. The broker-dealer must deliver
a standardized risk disclosure document prepared by the SEC to provide the
purchaser with additional information including current bid and offer quotations
for the penny stock, the compensation of the broker- dealer and its salesperson
in the transaction, and monthly account statements showing the market value of
each penny stock held in the purchaser's account. The broker-dealer must make a
written determination that the penny stock is a suitable investment for the
purchaser and that the purchaser has sufficient knowledge and experience in
financial matters. In addition, the broker-dealer must receive the purchaser's
written agreement to the transaction. These additional requirements may affect
the ability of broker-dealers to trade our securities and reduce the level of
trading activity in the secondary market. As a result, penny stock rules limit
the marketability of our common stock and may discourage investors from
purchasing our common stock at such time, if ever, that our stock is available
for market purchase.
FUTURE SALES OR ISSUANCES OF SUBSTANTIAL AMOUNTS OF OUR COMMON STOCK COULD
AFFECT THE MARKET PRICE OF OUR COMMON STOCK.
In the future, we may issue our authorized but previously unissued equity
securities, resulting in the dilution of the ownership interests of our present
stockholders.
We may also issue additional shares of our common stock or other securities that
are convertible into or exercisable for common stock in connection with hiring
or retaining employees or consultants, future acquisitions, future sales of our
securities for capital raising purposes, or for other business purposes.
Future sales or issuances of substantial amounts of our common stock, or
securities convertible or exchangeable into shares of our common stock, in the
public market, or perceptions that those sales, issuances and/or conversions
could occur, could adversely affect the price of our common stock at such time,
if ever, that our stock is traded, and our ability to raise capital in the
future. At the present time, we expect that we will require substantial amounts
of outside funding to finance our operations and pay our obligations under an
acquisition contract, which could be raised through the sale of our common stock
or securities exercisable or convertible into our common stock. Our ability to
issue additional shares of our common stock or any class of stock that is
convertible into shares of common stock may be limited by the causing an
"overhang" that may reduce the price of our common stock if, as and when there
is trading in our common stock.
WE WILL INCUR SIGNIFICANT COSTS AS A RESULT OF OPERATING AS A PUBLIC COMPANY,
AND OUR MANAGEMENT WILL DEVOTE SIGNIFICANT TIME TO NEW COMPLIANCE INITIATIVES.
We will incur significant legal, accounting and other expenses as a public
company, including costs resulting from public company reporting obligations
11
under the Securities Exchange Act of 1934, as amended, and regulations regarding
corporate governance practices, such as accurately and timely filing annual and
interim reports, soliciting proxies for annual and special meetings of
stockholders, conflicts of interest policies and a code of conduct. Our
management and other personnel will need to devote a significant amount of time
to ensure that we comply with all of these requirements. Moreover, the reporting
requirements, rules and regulations will increase our legal and financial
compliance costs and will make some activities more time- consuming and costly.
Any changes we make to comply with these obligations may not be sufficient to
allow us to satisfy our obligations as a public company on a timely basis, or at
all. These reporting requirements, rules and regulations, coupled with the
increase in potential litigation exposure associated with being a public
company, could also make it more difficult for us to attract and retain
qualified persons to serve on our board of directors or board committees or to
serve as executive officers, or to obtain certain types of insurance, including
directors' and officers' insurance, on acceptable terms.
THERE IS NO ASSURANCE OF A CONTINUING PUBLIC MARKET OR THAT OUR COMMON STOCK
WILL EVER TRADE ON A RECOGNIZED EXCHANGE. THEREFORE, YOU MAY BE UNABLE TO
LIQUIDATE YOUR INVESTMENT IN OUR STOCK.
While our common shares trade on the OTC Bulletin Board, the market for our
common stock has not been liquid and trading has often been sporadic. There is
no assurance that this market will grow into a regular trading market, or that
if a trading market is developed, it will be sustained. In the absence of a
trading market, an investor may be unable to liquidate their investment.
WE DO NOT INTEND TO PAY ANY DIVIDENDS.
We have not paid any dividends on our common stock and do not anticipate
declaring any dividends on our common stock in the foreseeable future. Our board
of directors presently intends to retain all earnings, if any, for use in our
business operations and development of facilities.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None
ITEM 2. PROPERTIES
The Company presently utilizes modest office facilities adequate for the
Company's current operations. The facility that the Company is leasing is an
approximately 20,000 square foot office and plant facility in the Atlanta area.
An additional and larger building may be required in the future.
OFF BALANCE SHEET ARRANGEMENTS
We have no off balance sheet arrangements.
ITEM 3. LEGAL PROCEEDINGS
We know of no material, existing or pending legal proceedings against our
Company, nor are we involved as a plaintiff in any material proceeding or
pending litigation. There are no proceedings in which any of our directors,
officers or affiliates, or any registered or beneficial stockholder, is an
adverse party or has a material interest adverse to our interest.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable
12
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
MARKET INFORMATION
Our common stock is quoted on the OTC Bulletin Board under the symbol "DNRG".
The following table shows the quarterly range of high and low bid information
for our common stock over the fiscal quarters for the last two fiscal years as
quoted on the OTC Bulletin Board. The bid prices represent quotations by dealers
without adjustments for retail mark-ups, mark-downs or commissions and may not
represent actual transactions. Investors should not rely on historical prices of
our common stock as an indication of its future price performance.
The last sale price of our common stock as reported on Yahoo! Finance on
November 21, 2014 was $.35 per share:
Quarter Ended Bid High Bid Low
------------- -------- -------
08/31/2014 $ 0.60 $ 0.60
05/31/2014 $ 0.00 $ 0.00
02/28/2014 $ 0.00 $ 0.00
11/30/2013 $ 0.00 $ 0.00
08/31/2013 $ 0.00 $ 0.00
05/31/2013 $ 0.00 $ 0.00
02/29/2013 $ 0.00 $ 0.00
11/30/2012 $ 0.00 $ 0.00
TRANSFER AGENT
Our shares of common stock are in registered form. Our transfer agent for our
common stock is the Nevada Agency and Trust Company at 50 West Liberty Street,
Suite 880, Reno, NV 89501, Tel: 775-322-0626 Fax: 775-322-5623
HOLDERS OF COMMON STOCK
As of August 31, 2014, we had 90,525,125 shares of our common stock outstanding.
Our shares of common stock are certificated.. Our transfer agent for our common
stock is the Nevada Agency and Trust Company at 50 West Liberty Street, Suite
880, Reno, NV 89501, Tel: 775-322-0626 Fax: 775-322-5623
DIVIDEND POLICY
We have not declared or paid any cash dividends on our common stock or other
securities and do not anticipate paying any cash dividends in the foreseeable
future. Any future determination to pay cash dividends will be at the discretion
of the Board of Directors and will be dependent upon our financial condition,
results of operations, capital requirements, and such other factors as the Board
of Directors deem relevant.
RECENT SALES OF UNREGISTERED SECURITIES
Authorized: 200,000,000 common shares.
On April 14, 2010, the Company adopted a stock option plan allowing the
Company's directors to grant up to 5,000,000 stock options pursuant to the terms
and conditions of the stock option plan. As at August 31, 2014 no options have
been granted.
On November 12, 2012, the Company issued 30,769,857 shares of common stock at
$0.00125 per share for gross proceeds of $38,462.
13
On November 27, 2012, the Company issued 480,000 common shares at $0.25 per
share for gross proceeds of $120,000.
On November 12, 2012, the Company issued 2,500,000 shares of common stock in
exchange for the conversion of $3,125 of debt (Note 3).
On December 1, 2013, the Company issued 1,000,000 shares to an officer of the
Company for accounting services rendered. The fair value of the shares is
$10,000.
On December 1, 2013, the Company issued 1,000,000 shares to a director of the
Company for consulting services rendered. The fair value of the shares is
$10,000.
On December 1, 2013, the Company issued 2,250,000 shares to directors of the
Company for directors' fees. The fair value of the shares is $22,500.
On December 6, 2013, the Company issued 3,016,666 shares at $0.01 per share for
gross proceeds of $30,167.
On December 15, 2013, the Company issued the 4,000,000 shares for the
acquisition of 41% of Pro Eco. The estimated fair value of the shares on
issuance was $198,788 (Note 3).
On December 20, 2013, the Company issued 3,000,000 shares to settle debt of
$75,000 owing to an officer of the Company and to the President and CEO of the
Company. The fair value of the shares was $30,000. The gain on the settlement of
the debt of $45,000 has been recorded as additional paid in capital.
On January 22, 2014, the Company issued 1,285,000 shares at $0.01 per share for
gross proceeds of $12,850.
On February 20, 2014, the Company acquired 100% of Dominovas Energy LLC in
exchange for 45,000,000 of the Company's common shares. The estimated fair value
of the shares on issuance was $450,000 (Note 8).
On February 20, 2014, a director of the Company cancelled 4,495,734 shares owned
by the President and CEO of the Company.
On May 15, 2014, the Company issued 467,200 shares at $0.25 per share for gross
proceeds of $116,800.
On August 31, 2014, the Company issued 60,000 shares at $0.25 per share for
gross proceeds of $15,000.
During the period from January 1, 2010 to February 24, 2014 there were no other
issuances of common stock.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
On April 14, 2010, the Company adopted a stock option plan allowing the
Company's directors to grant options to purchase up to 5,000,000 shares of the
Company's common stock pursuant to the terms and conditions of the stock option
plan. As of November 30, 2014, no such options have been granted.
REPURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
On February 13, 2014, the holders of a debenture convertible into common stock
of the Company contributed such debenture to the Company without consideration.
No interest or principal was paid or will be payable on such debenture, and such
debenture was not converted into common stock of the Company. Dallas Gray did
not receive any consideration for the cancellation of his shares.
On February 24, 2014 Dallas Gray returned 4,495,734 shares of common stock of
the Company for cancellation.
14
LEGAL PROCEEDINGS
None
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
During the year ended August 31, 2014, the Company incurred $23,000 (2013 -
$87,000) in consulting fees to a relative of a director of the Company. As at
August 31, 2014, $Nil (2013 - $22,500) owing to the related party is included in
accounts payable. The amount is unsecured, non-interest bearing and due on
demand.
During the year ended August 31, 2014, the Company incurred $23,514 (2013 -
$55,000) in accounting fees to a director of the Company. As at August 31, 2014,
$Nil (2013 - $41,096) owing to the related party is included in accounts
payable. The amount is unsecured, non-interest bearing and due on demand.
During the year ended August 31, 2014, the Company incurred wages of $46,500
(2013 - $Nil), $30,000 (2013 - $Nil), $52,000 (2013 - $Nil) and $88,500 (2013 -
$Nil) to the Executive Vice President of Operations, the Executive Vice
President of Fuel Cell Operations, the Chief Operating Officer and the President
and Chief Executive Office of the Company, respectively. As at August 31, 2014,
unpaid wages of $162,950 (2013 - $Nil) was owing to the related parties and is
included in accounts payable.
As at August 31, 2014, the Company owed notes payable of $50,000 (2013 -
$75,000) to a consultant of the Company and $Nil (2013 - $75,000) to a relative
of a director of the Company. The notes are non-interest bearing, unsecured and
due on demand.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
The following table is a summary of purchases made by or on behalf of our
Company or any "affiliated purchaser," of shares or other units of any class of
our equity securities that is registered by the issuer pursuant to section 12 of
the Exchange Act.
Maximum Number
(or Approximate
Dollar Value) of
Total Number of Shares (or Units)
Shares (or Units) that May Yet Be
Total Number of Purchased as Part of Purchased Under
Shares (or Units) Average Price Paid Publicly Announced the Plans or
Period Purchased per Share (or Unit) Plans or Programs Programs
------ --------- ------------------- ----------------- --------
08/31/2014 60,000 $.25 Nil Nil
ITEM 6. SELECTED FINANCIAL DATA
Not applicable.
15
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
The following discussion should be read in conjunction with our financial
statements and the related notes that appear elsewhere in this annual 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 annual report on Form 10-K.
OVERVIEW AND RECENT DEVELOPMENTS
Dominovas Energy Corporation has engaged the opportunity to support and deploy a
"NextGen" clean energy, maximally-efficient, Solid Oxide Fuel Cell (SOFC) as
perfected via our proprietary reformer and "Intelligent Communications Operating
System" (ICOS), coupled with our unparalleled and advanced knowledge of fuel
cells that will allow the manufacturing of what we know will be "THE" fuel cell
standard of fuel cell systems worldwide.
Emerging markets globally are facing major challenges with the current state of
their energy infrastructure, even as their economies continue growing at
trajectory rates. Dominovas Energy and the various country leaders that have
been engaged agree that the provision of technologically-advanced and advanced
energy infrastructure will play a crucial role in facilitating their respective
country's continued expectation, relative to strong economic growth domestically
and continued global competitiveness.
The first step in the process is to examine and analyze the current "State of
Energy" in the various emerging markets around the world. With site visits to
Africa and through additional research, Dominovas Energy has identified key
partners and has created strategies to capture sizable market share of the power
generation industry. Dominovas Energy's early missions have been quite
successful and cumulated in its obtaining Letters of Interest or Memorandum of
Understanding for the deployment of multiple MWs.
Most recently, Dominovas Energy was humbled by the openness and sincerity
displayed and shared by the government during our site visits to Luanda, Angola
and Conakry, Guinea. Increasingly, Dominovas Energy is given the opportunity to
present its technology solution that has the overwhelming potential to
positively affect countries on an epic scale. Key has been the relationship that
Dominovas Energy has with key decision and policy makers that openly have
exhibited the willingness to acknowledge the problem that severely threatens the
viability of their countries. This truly speaks volumes about the strength and
courage of these leaders we are currently engaging.
Through research and interviews we have found that governments of countries in
emerging markets spend an enormous amount on fuel stock for their own power
generation plants and/or third party electricity generation plants, which in
turn convert the fuel to electricity and release the electricity to the grid. A
critical disconnect within the system, however, lies in the fact that as a
result of degradation to the existing transmission infrastructure, on average
approximately 60% of the power generated reaches end users.
The energy generators sole responsibility is to create the energy. Typically,
the government has the responsibility of collecting payment for the energy that
has been generated and consumed. This places the government in an untenable
position between the number of those legally receiving energy and not paying,
along with the rate of those "diverting" electricity at over 40%...small numbers
individually, but collectively the numbers account for millions of dollars a
year in lost revenue and unintended subsidies.
Dominovas Energy's "Distributed Power Solution" drastically reduces the
immediate need to upgrade transmission infrastructure due to the RUBICON'S(TM)
ability to be deployed where it is needed and not rely on long and expensive
transmission lines. The RUBICON'S(TM) modular design, relatively small
footprint, quiet nature, and low carbon foot print make it a perfect candidate
for being deployed in center city, residential, and/or industrial settings.
Dominovas Energy expects that the deployment of the RUBICON(TM) wiLl
successfully address the concerns relative to the immediacy in the need for
power, without sacrificing quality of life.
16
The RUBICON(TM) additionally is expected to provide significant returns for
shareholders due to its intent to enter into long-teRm profitable contracts. In
fact, the RUBICON(TM) brings many options to the table that were, heretofore,
not possible because tHe technological advances had not been made to allow for
such opportunities. For example, because the RUBICON(TM) has the uniqUe ability
to function utilizing multiple fuel sources, there is a great opportunity to
revitalize and expand into the mining, agricultural, and industrial sectors to
levels never witnessed before; the potential benefit is to be able to provide
reliable electricity more efficiently to the mining sector and the remediation
of the bio waste that can now be used as fuel for entire countries.
For emerging markets, the impact nets the following: self-sufficiency in energy
and job creation, savings in fuel costs, decreased emissions, and overall
improved quality of life. This is made possible because of the efficiencies of
the RUBICON(TM) and tHe inefficiencies of other technologies, coupled with the
inadequacies and shortcomings of the current distribution system now in place in
most emerging countries.
The cornerstones upon which Dominovas Energy confidently and without reservation
feels it can and will effectuate change of epic proportion across the globe,
when given the opportunity are:
* Close to 100% Green Technology.
* Modular energy systems that allow for unparalleled efficiencies.
* Unrivaled Affordability Creating a True "ROI."
* Create the Fuel Cell Universe in Africa, for worldwide development,
manufacturing, distribution, and new technology research.
All energy options are not created equal. The exigent nature of emerging
markets' energy needs should not create a situation, whereby, the immediate need
is tempered and the problem not solved, but exacerbated. Current options are
problematic in that many solutions are insufficient and create results of a
greater magnitude.
Several targeted countries are currently seeking to add coal-fired, hydropower,
wind, and solar plants. Fuel cell generated power is a great complement to any
country's sustainable power generation plan. It is our stance that there is not
one solution that fits all scenarios, but the RUBICON(TM) is definitely a
solution that is robust, clean, and can be deployed profitably.
Our audited financial statements are stated in United States Dollars and are
prepared in accordance with United States Generally Accepted Accounting
Principles.
LIQUIDITY
ANTICIPATED CASH REQUIREMENTS
Over the next 12 months, we have estimated our minimum cash requirements as
follows:
Operating Expenses
Management and consulting fees $1,160,000
Professional fees 60,000
General, administration and all other expenses 2,045,000
----------
Total $3,265,000
==========
For the 12 months ended August 31, 2014, we recorded a net operating loss of
$1,953,707. As at August 31, 2014, we had cash of $5,096 and for the next 12
17
months, management estimates minimum cash requirements of $3,265,000 to fund our
on-going operations and planned fuel cell design, manufacture and business
development activities. Accordingly, we do not have sufficient funds to meet our
plan of operation over the next 12 months and will need to obtain further
financing.
Our financial condition for the years ended August 31, 2014 and 2013 and the
changes between those periods for the respective items are summarized as
follows:
WORKING CAPITAL
Our working capital position as at August 31, 2014 compared to August 31, 2013
and the cash flows for the years then ended are summarized below:
12 months Ended August 31,
2014 2013
------------ ------------
Current Assets $ 37,037 $ 3,156
Current Liabilities 1,346,846 359,329
Working Capital (Deficiency) $ (1,116,903) $ (356,173)
The increase in our working capital deficiency was primarily due to an increase
liabilities related to the acquisition and an increase in business development
activities.
CASH FLOWS
12 months Ended August 31,
2014 2013
------------ ------------
Net cash used in Operating Activities $ (209,645) $ (307,538)
Net cash provided by(used in)Investing Activities $ (10,000) $ --
Net cash provided by Financing Activities $ 224,741 $ 307,538
Increase (Decrease) in Cash during the Year $ -- $ --
Cash, Beginning of Year $ -- $ --
Cash, End of Year $ 5,096 $ --
During the years ended August 31, 2014 and 2013:
(i) Net cash used in operating activities was $209,645 for our year ended
August 31, 2014 and $307,538 for our year ended August 31, 2013.
(ii) Net cash provided by/used in investing activities was $10,000 and $Nil
for our years ended August 31, 2014 and 2013.
(iii)Net cash from financing activities was $224,741 for our year ended
August 31, 2014 and $307,538 for our year ended August 31, 2013.
RESULTS OF OPERATIONS
The following summary of our results of operations should be read in conjunction
with our audited financial statements for the year ended August 31, 2014 and
2013 which are included herein.
18
12 months Ended August 31,
2014 2013
------------ ------------
Revenue $ Nil $ Nil
------------ ------------
Expenses
Audit and accounting fees 60,120 68,538
Depreciation -- --
Consulting fees and expenses 43,750 127,625
Corporate finance fee -- 47,250
Directors' fees 25,000 --
Due Diligence fee -- 35,761
Foreign exchange loss 4,087 1,790
Fain on settlement of debt (140,000) 40,000
Interest expense 16,712 10,979
Investor communications and transfer agent 11,159 13,689
Dominovas Energy LLC acquisition costs 513,652 --
Legal fees 208,659 22,456
Loss on investment 15,882 --
Marketing 4,540 --
Office and general administration 902,252 43,983
Salaries and management fees 217,000 --
Travel and entertainment 70,894 14,084
------------ ------------
Total expenses 1,953,707 386,155
Other items -- 40,000
------------ ------------
Net Loss (1,953,707) (426,155)
============ ============
REVENUE
We have not earned any revenues since our inception and we do not anticipate
earning revenues until such time as we have deployed the initial RUBICON(TM)
fuel cell power plants under a long-term agreement. We are currently in the
early stage of our business and we can provide no assurances that we will sign a
long-term agreement..
EXPENSES
Our operating expenses for the year ended August 31, 2014 compared to the same
period in 2013 increased by the net amount of $1,527,551.
GOING CONCERN
The audited financial statements accompanying this report have been prepared on
a going concern basis, which implies that our Company will continue to realize
its assets and discharge its liabilities and commitments in the normal course of
business. Our Company has not generated revenues since inception, has never paid
any dividends and is unlikely to pay dividends or generate earnings in the
immediate or foreseeable future. The continuation of our Company as a going
concern is dependent upon: (i) the continued financial support from our
shareholders; (ii) the ability of our Company to continue raising necessary
equity financing to achieve its operating objectives; and (iii) the eventual
attainment of profitable operations. As at August 31, 2014, our Company has a
negative working capital of $1,116,902..
Our independent auditors included an explanatory paragraph in their annual
report on our financial statements for the year ended August 31, 2014 regarding
concerns about our ability to continue as a going concern. In addition, our
financial statements contain further note disclosures in this regard. The
continuation of our business plan is dependent upon our ability to continue
raising sufficient new capital from equity or debt markets in order to fund our
19
on-going operating losses and oil and gas acquisition and exploration
activities. The issuance of additional equity securities could result in a
significant dilution in the equity interests of our current stockholders.
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.
Estimates used in preparing these financial statements include the carrying
value of oil and gas properties, and the fair value of stock-based compensation.
FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash, other receivables, accounts
payable and amounts due to related parties. 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. The Company accounts for foreign currency transactions in accordance
with SFAS No. 52, "Foreign Currency Translation" (ASC 830). 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
Income taxes are provided for in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"), as
interpreted by FASB Interpretation No. 48, "Accounting for Uncertainty in Income
Taxes - an interpretation of FASB Statement No. 109" ("FIN 48"). Deferred tax
assets and liabilities are recorded for temporary differences between the tax
basis of assets and liabilities, computed pursuant to FIN 48 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
20
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 in accordance with SFAS No. 128,
"Earnings per Share", which requires presentation 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.
COMPREHENSIVE INCOME (LOSS)
Comprehensive income (loss) is defined as the change in equity of a business
enterprise during a period from transactions and other events and circumstances
from non-owner sources. Other than reported net income (loss), comprehensive
income (loss) includes foreign currency translation adjustments and unrealized
gains and losses on available-for-sale investments, which are disclosed in the
accompanying consolidated statements of stockholders' deficit as comprehensive
income (loss).
LONG-LIVED ASSETS
In accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets", the carrying value of intangible assets and other long-lived
assets is reviewed on a regular basis for the existence of facts or
circumstances that may suggest impairment. The Company recognizes impairment
when the sum of the expected undiscounted future cash flows is less than the
carrying amount of the asset. Impairment losses, if any, are measured as the
excess of the carrying amount of the asset over its estimated fair value.
ASSET RETIREMENT OBLIGATIONS
The Company accounts for asset retirement obligations in accordance with the
provisions of Statement of Financial Accounting Standard (SFAS) No. 143
"Accounting for Asset Retirement Obligations". SFAS No. 143 requires the Company
to record the fair value of an asset retirement obligation as a liability in the
period in which it incurs an obligation associated with the retirement of
tangible long-lived assets resulting from the acquisition, construction,
development and/or normal use of these assets. At August 31, 2014, the Company
has not recognized any amount for asset retirement obligations.
STOCK-BASED COMPENSATION
The Company has adopted the fair value recognition provisions of SFAS No. 123R,
"Share Based Payments", 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.
The Company on April 14, 2010 adopted a stock option plan. However no options
have been granted as at August 31, 2014 and therefore no stock-based
compensation has been recorded to date for stock options.
21
RECENT ACCOUNTING PRONOUNCEMENTS
The FASB established the FASB Accounting Standards Codification ("Codification")
as the source of authoritative U.S. generally accepted accounting principles
("GAAP") recognized by the FASB to be applied by nongovernmental entities in the
preparation of financial statements issued for interim and annual periods ending
after September 15, 2009. The codification has changed the manner in which U.S.
GAAP guidance is referenced, but did not have an impact on our consolidated
financial position, results of operations or cash flows.
In January 2010, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") 2010-06, "Fair Value Measurements and
Disclosures (Topic 820) -- Improving Disclosures about Fair Value Measurements."
This ASU requires some new disclosures and clarifies some existing disclosure
requirements about fair value measurement as set forth in Accounting Standards
Codification ("ASC") 820. ASU 2010-06 amends ASC 820 to now require: (1) a
reporting entity should disclose separately the amounts of significant transfers
in and out of Level 1 and Level 2 fair value measurements and describe the
reasons for the transfers; and (2) in the reconciliation for fair value
measurements using significant unobservable inputs, a reporting entity should
present separately information about purchases, sales, issuances, and
settlements. In addition, ASU 2010-06 clarifies the requirements of existing
disclosures. ASU 2010-06 is effective for interim and annual reporting periods
beginning after December 15, 2009, except for the disclosures about purchases,
sales, issuances, and settlements in the roll forward of activity in Level 3
fair value measurements. Those disclosures are effective for fiscal years
beginning after December 15, 2010, and for interim periods within those fiscal
years. Early application is permitted. The Company will comply with the
additional disclosures required by this guidance upon its adoption in January
2010.
Also in January 2010, the FASB issued Accounting Standards Update No. 2010-03,
"Extractive Activities--Oil and Gas--Oil and Gas Reserve Estimation and
Disclosures." This ASU amends the "Extractive Industries--Oil and Gas" Topic of
the Codification to align the oil and gas reserve estimation and disclosure
requirements in this Topic with the SEC's Release No. 33-8995, "Modernization of
Oil and Gas Reporting Requirements (Final Rule)," discussed below. The
amendments are effective for annual reporting periods ending on or after
December 31, 2009, and the adoption of these provisions on December 31, 2009 did
not have a material impact on our consolidated financial statements.
SEC'S FINAL RULE ON OIL AND GAS DISCLOSURE REQUIREMENTS
On December 31, 2008, the Securities and Exchange Commission, referred to in
this report as the SEC, issued Release No. 33-8995, "Modernization of Oil and
Gas Reporting Requirements (Final Rule)," which revises the disclosures required
by oil and gas companies. The SEC disclosure requirements for oil and gas
companies have been updated to include expanded disclosure for oil and gas
activities, and certain definitions have also been changed that will impact the
determination of oil and gas reserve quantities. The provisions of this final
rule are effective for registration statements filed on or after January 1,
2010, and for annual reports for fiscal years ending on or after December 31,
2009.
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.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable
22
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
[LETTERHEAD OF DALE MATHESON CARR-HILTON LABONTE LLP]
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of
Dominovas Energy Corporation (formerly Western Standard Energy Corp.)
We have audited the accompanying consolidated balance sheets of Dominovas Energy
Corporation (formerly Western Standard Energy Corp.) as of August 31, 2014 and
2013 and the related consolidated statements of operations, stockholders'
deficit and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform an audit to obtain reasonable assurance whether the consolidated
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of Dominovas Energy Corp. (formerly
Western Standard Energy Corp.) as of August 31, 2014 and 2013 and the results of
its operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company has not generated revenues since
inception, has incurred losses in developing its business, and further losses
are anticipated. The Company requires additional funds to meet its obligations
and the costs of its operations. These factors raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in this
regard are described in Note 1. The consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
/s/ Dale Matheson Carr-Hilton Labonte LLP
-----------------------------------------------
CHARTERED ACCOUNTANTS
Vancouver, Canada
December 24, 2014
23
Dominovas Energy Corporation
(formerly Western Standard Energy Corp.)
CONSOLIDATED BALANCE SHEETS
August 31, August 31,
2014 2013
------------ ------------
ASSETS
CURRENT ASSETS
Cash $ 5,096 $ --
Prepaids 31,941 3,156
------------ ------------
37,037 3,156
------------ ------------
Interest in Pro Eco Energy 192,906 --
------------ ------------
$ 229,943 $ 3,156
============ ============
LIABILITIES
CURRENT LIABILITIES
Bank indebtedness $ -- $ 76
Accounts payable 281,815 76,464
Accrued liabilities 1,015,031 4,500
Due to related parties -- 139,860
Notes payable 50,000 150,000
Convertible debentures -- 128,289
------------ ------------
1,346,846 359,329
------------ ------------
STOCKHOLDERS' DEFICIT
COMMON STOCK
Authorized:
200,000,000 common shares with par value of $0.001
Issued and outstanding:
90,525,125(August 31,2013-33,941,993) common shares 90,527 33,942
ADDITIONAL PAID IN CAPITAL 5,955,332 4,818,940
OBLIGATION TO ISSUE SHARES -- 150,000
DEFICIT (7,162,762) (5,359,055)
------------ ------------
(1,116,903) (356,173)
------------ ------------
$ 229,943 $ 3,156
============ ============
The accompanying notes are an integral part of these financial statements
24
Dominovas Energy Corporation
(formerly Western Standard Energy Corp.)
CONSOLIDATED STATEMENTS OF OPERATIONS
Year ended Year ended
August 31, August 31,
2014 2013
------------ ------------
EXPENSES
Audit and accounting fees $ 60,120 $ 68,538
Consulting fees and expenses 43,750 127,625
Corporate finance fee -- 47,250
Directors' fees 25,000 --
Due diligence fee -- 35,761
Foreign exchange loss 4,087 1,790
Gain on settlement of debt (140,000) 40,000
Interest expense 16,712 10,979
Investor communications and transfer agent 11,159 13,689
Write-off of intangible asset 513,652 --
Legal fees 208,659 22,456
Loss on equity accounted investment 15,882 --
Marketing 4,540 --
Office and general administration 902,252 43,983
Salaries and management fees 217,000 --
Travel and entertainment 70,894 14,084
------------ ------------
1,953,707 426,155
------------ ------------
NET LOSS $ (1,953,707) $ (426,155)
============ ============
LOSS PER SHARE - BASIC AND DILUTED $ (0.03) $ (0.02)
============ ============
WEIGHTED AVERAGE NUMBER OF COMMON STOCK
OUTSTANDING - BASIC AND DILUTED 66,491,440 27,172,296
============ ============
The accompanying notes are an integral part of these financial statements..
25
Dominovas Energy Corporation
(formerly Western Standard Energy Corp.)
STATEMENTS OF CASH FLOWS
Year ended Year ended
August 31, August 31,
2014 2013
------------ ------------
CASH FLOW FROM OPERATING ACTIVITIES
Net loss $ (1,953,707) $ (426,155)
Non-cash items included in net loss
Write off of intangible asset 513,652 --
Interest expense 11,711 10,979
Loss on equity accounted investment 15,882 --
Loss (Gain) on settlement of debt (140,000) 40,000
Stock issued for service 42,500 --
Changes in non-cash working capital
Prepaid expenses (28,785) (3,156)
Accounts payable and accrued liabilities 1,329,102 70,794
------------ ------------
NET CASH USED IN OPERATING ACTIVITIES (209,645) (307,538)
------------ ------------
INVESTING ACTIVITIES
Investment in Pro Eco (10,000) --
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (10,000) --
------------ ------------
FINANCING ACTIVITIES
Notes payable 50,000 150,000
Issuance of common shares for cash 174,817 158,462
Convertible debt -- (1,000)
Bank debt (76) 76
------------ ------------
NET CASH FROM FINANCING ACTIVITIES 224,741 307,538
------------ ------------
CHANGE IN CASH 5,096 --
Cash, beginning -- --
------------ ------------
CASH, ENDING $ 5,096 $ --
============ ============
SUPPLEMENTARY INFORMATION CASH PAID FOR:
Interest $ -- $ --
Income tax $ -- $ --
============ ============
NON-CASH FINANCING AND INVESTING ACTIVITIES
Forgiveness of debt $ 140,000 $ --
Loans converted to common shares $ 75,000 $ --
============ ============
The accompanying notes are an integral part of these financial statements
26
Dominovas Energy Corporation
(formerly Western Standard Energy Corp.)
STATEMENTS OF STOCKHOLDERS' DEFICIT
Common stock Additional Obligation Total
------------------- Paid in to Issue Subscription Accumulated Stockholders'
Shares Amount Capital Shares Receivable Deficit Deficit
------ ------ ------- ------ ---------- ------- -------
Net Loss -- $ -- $ -- $ -- $ -- $ (121,798) $ (121,798)
---------- ------- ---------- --------- ------- ----------- -----------
BALANCE AUGUST 31, 2012 192,136 192 4,670,033 -- (125) (4,932,900) (262,800)
Issuance of stock under private
placement for cash of $0.00125
per share 30,769,857 30,770 7,692 -- -- -- 38,462
Issuance of stock under private
placement for cash of $0.25
per share 480,000 480 119,520 -- -- -- 120,000
Issuance of stock under debt
conversion 2,500,000 2,500 625 -- -- -- 3,125
Share subscription cancelled -- -- (125) -- 125 -- --
Equity portion of convertible
debt -- -- 21,195 -- -- -- 21,195
Obligation to issue shares -- -- -- 150,000 -- -- 150,000
Net Loss -- -- -- -- -- (426,155) (426,155)
---------- ------- ---------- --------- ------- ----------- -----------
BALANCE AUGUST 31, 2013 33,941,993 33,942 4,818,940 150,000 -- (5,359,055) (356,173)
Issuance of stock under private
placement for cash of $0.01
per share 4,301,666 4,302 38,715 -- -- -- 43,017
Issuance of stock under debt
conversion 3,000,000 3,000 72,000 -- -- -- 75,000
Issuance of stock for services 4,250,000 4,250 38,250 -- -- -- 42,500
Issuance of stock for
acquisition of Pro Eco 4,000,000 4,000 194,788 -- -- -- 198,788
Cancellation of shares (4,495,734) (4,496) 4,496 -- -- -- --
Forgiveness of obligation
to issue shares -- -- -- (150,000) -- 150,000 --
Issuance of stock for
acquisition of Dominovas 45,000,000 45,000 405,000 -- -- -- 450,000
Issuance of stock under private
placement for cash of $0.25
per share 527,200 527 131,273 -- -- -- 131,800
Gain on forgiveness of related
party debt -- -- 251,872 -- -- -- 251,872
Net Loss -- -- -- -- -- (1,953,707) (1,953,707)
---------- ------- ---------- --------- ------- ----------- -----------
BALANCE AUGUST 31, 2014 90,525,125 $90,525 $5,955,334 $ -- $ -- $(7,162,762) $(1,116,903)
========== ======= ========== ========= ======= =========== ===========
The accompanying notes are an integral part of these financial statements
27
Dominovas Energy Corporation
(formerly Western Standard Energy Corp.)
NOTES TO FINANCIAL STATEMENTS
August 31, 2014
1. NATURE OF BUSINESS AND CONTINUANCE OF OPERATIONS
Dominovas Energy Corporation (formerly Western Standard Energy Corp.) (the
"Company") was incorporated on February 2, 2005 under the laws of the State of
Nevada.
On November 29, 2013, the Company acquired 41% of Pro Eco Energy Ltd. ("Pro
Eco") in exchange for 4,000,000 of the Company's common shares. Pro Eco is a
private company located in Summerland, B.C, Canada in the business of providing
energy efficient and environmentally friendly heating, ventilation and air
conditioning ("HVAC") systems for commercial buildings (Note 3).
On December 2, 2013, the Company entered into an agreement to acquire an
additional 8.25% of Pro Eco (Note 3).
On February 20, 2014, the Company acquired 100% of Dominovas Energy LLC., which
has completed the development of a unique electric power generating Fuel Cell
system (Note 8).
On February 24, 2014, Dominovas Energy LLC changed its name to Dominovas
Technologies LLC ("Dominovas Technologies") and is now a wholly owned subsidiary
of the Company.
On February 24, 2014, Western Standard Energy Corp. changed its name to
Dominovas Energy Corporation.
GOING CONCERN
These financial statements have been prepared in accordance with United States
generally accepted accounting principles (" US GAAP"), on a going concern basis,
which contemplated the realization of assets and the satisfaction of liabilities
and commitments in the normal course of business. The Company incurred a net
loss of $1,953,707 for the year ended August 31, 2014 [2013 - $426,155] and at
August 31, 2014 had a deficit accumulated of $7,162,762.. The Company has no
revenue and has an accumulated deficit and negative working capital of
$1,309,809.. Further losses are anticipated in the development of its business
and there can be no assurance that the Company will be able to achieve or
maintain profitability. The continuing operations of the Company and the
recoverability of the carrying value of its assets depends upon the ability of
the Company to obtain necessary financing to fund its on-going working capital
requirements and exploration activities, and upon future profitable operations.
The accompanying financial statements do not include any adjustments related to
the recoverability and classification of asset carrying amounts or the amount
and classification of liabilities that might result from the outcome of this
uncertainty. There is no assurance that equity or debt capital will be available
as necessary to meet the Company's capital requirements or, if the capital is
available, that it will be on terms acceptable to the Company. The issuances of
additional equity securities by the Company may result in significant dilution
in the equity interests of its current shareholders. Obtaining commercial loans,
assuming those loans would be available, will increase the Company's liabilities
and future cash commitments. If the Company is unable to obtain financing in the
amounts and on terms deemed acceptable, the business and future success may be
adversely affected.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements of the Company have been prepared in accordance with US
GAAP and are presented in US dollars. The Company has elected to early adopt the
guidance in FASB Topic and no longer provides the accounting disclosures for
development stage companies. Accordingly, the figures for the period from
inception to the current period are no longer provided and all references to
development stage operations have been removed. Other recent accounting
pronouncements with future effective dates are not expected to have an impact on
the Company's financial statements.
28
USE OF ESTIMATES AND ASSUMPTIONS
The preparation of financial statements in conformity with US GAAP required
management to make estimated and assumption that affect the report amounts of
assets and liabilities and disclosure of contingent assets and liability at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. The Company regularly evaluates estimates
and assumptions. 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 from
making judgments about the carrying values of assets and liabilities and the
accrual of costs and expenses that are not readily apparent from other sources.
The actual results experienced by the Company may differ materially and
adversely from the Company's estimates. To the extent there are material
differences between the estimates and the actual results, future results of
operations will be affected.
FINANCIAL INSTRUMENTS
The fair value of the Company's financial instruments, consisting of bank
indebtedness, accounts payable, convertible debentures and notes payable are
estimated to approximate to their carrying value. It is management's opinion
that the Company is not exposed to significant interest, currency or credit
risks arising from these financial instruments.
FOREIGN CURRENCY TRANSLATION
Foreign denominated monetary assets and liabilities are translated into their
United States dollar equivalents using foreign exchange rates which prevailed at
the balance sheet date. Expenses are translated at average rates of exchange
during the period. Gains or losses resulting from foreign currency transactions
are included in results of operations.
INCOME TAXES
Deferred income taxes are provided for tax effects of temporary differences
between the tax basis of asset and liabilities and their reported amounts in the
financial statements. The Company uses the liability method to account for
income taxes, which requires deferred taxes to be recorded at the statutory rate
expected to being in effect when the taxes are paid. Valuation allowances are
provided for a deferred tax asset when it is probable that such asset will not
be realized.
Management evaluated tax positions taken or expected to be taken in a tax
return. The evaluation of a tax position included a determination of whether a
tax position should be recognized in the financial statements and such a
position should only be recognized if the Company determines that it is more
likely than not that the tax position will be sustained upon examination by the
tax authorities, based upon the technical merits of the position. For those tax
positions that should be recognized, the measurement of a tax position is
determined as being the largest amount of benefit that is greater than fifty
percent likely of being realized upon ultimate settlement.
INVESTMENTS
Long term investments in which the Company has voting interests of 20% to 50%,
or where the Company otherwise has the ability to exercise significant
influence, are accounted for using the equity method. Under this method, the
Company's share of the investees' earnings and losses are included in operations
and its investments therein are adjusted by a like amount. Dividends are
credited to the investment accounts.
LOSS PER SHARE
Basic loss per share is computed by dividing net loss available to common
shareholders by the weighted average number of outstanding common shares during
the period. Diluted loss per share gives effect to all dilutive potential common
shares outstanding during the period. Dilutive loss per share excludes all
potential common shares if there effect is anti-dilutive. Because the Company
does not have any potentially dilutive securities, diluted loss per share is
equal to basic loss per share.
29
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.
3. INTEREST IN PRO ECO ENERGY
On November 29, 2013, the Company acquired 41% of Pro Eco in exchange for
4,000,000 of the Company's common shares (Note 5).
On December 2, 2013, the Company entered into an agreement to acquire an
additional 8.25% of Pro Eco in exchange for the following payments:
* $10,000 due on December 2, 2013 (paid);
* $10,000 due December 31, 2013 (unpaid);
* $10,000 due January 31, 2014 (unpaid); and
* $10,000 due May 31, 2014 (unpaid).
The Company has decided to terminate the agreement and return 600,000 shares to
the vendor. During the year ended August 31, 2014, the Company recognized its
portion of the loss in Pro Eco of $15,882.
4. CONVERTIBLE DEBENTURE
On May 22, 2013, the Company entered into a securities purchase agreement. Under
this agreement, a convertible debenture (the "Debenture") in the amount of
CDN$140,000 was issued to the Lenders. The Debenture is also convertible, only
upon default, into shares of the Company's common stock equal in number to 50%
of the total issued and outstanding Common Stock of the Company at the time of
conversion. The Debenture is unsecured and matures on May 15, 2014. The Company
also had to deliver 600,000 common shares of the Company to the Lenders by May
15, 2014.
On February 11, 2014, the Debenture holders agreed to cancel the Debenture and
waived any and all obligation of the Company to pay the debenture or issue the
shares. As a result, a gain on the settlement of $290,000 has been recognized in
for the year ended August 31, 2014.
5. COMMON STOCK
Authorized: 200,000,000 common shares.
On April 14, 2010, the Company adopted a stock option plan allowing the
Company's directors to grant up to 5,000,000 stock options pursuant to the terms
and conditions of the stock option plan. As at August 31, 2014 no options have
been granted.
On November 12, 2012, the Company issued 30,769,857 shares of common stock at
$0.00125 per share for gross proceeds of $38,462.
On November 27, 2012, the Company issued 480,000 common shares at $0.25 per
share for gross proceeds of $120,000.
On November 12, 2012, the Company issued 2,500,000 shares of common stock in
exchange for the conversion of $3,125 of debt (Note 3).
On December 1, 2013, the Company issued 1,000,000 shares to an officer of the
Company for accounting services rendered. The fair value of the shares is
$10,000.
30
On December 1, 2013, the Company issued 1,000,000 shares to a director of the
Company for consulting services rendered. The fair value of the shares is
$10,000.
On December 1, 2013, the Company issued 2,250,000 shares to directors of the
Company for directors' fees. The fair value of the shares is $22,500.
On December 6, 2013, the Company issued 3,016,666 shares at $0.01 per share for
gross proceeds of $30,167.
On December 15, 2013, the Company issued the 4,000,000 shares for the
acquisition of 41% of Pro Eco. The estimated fair value of the shares on
issuance was $198,788 (Note 3).
On December 20, 2013, the Company issued 3,000,000 shares to settle debt of
$75,000 owing to an officer of the Company and to the President and CEO of the
Company. The fair value of the shares was $30,000. The gain on the settlement of
the debt of $45,000 has been recorded as additional paid in capital.
On January 22, 2014, the Company issued 1,285,000 shares at $0.01 per share for
gross proceeds of $12,850.
On February 20, 2014, the Company acquired 100% of Dominovas Energy LLC in
exchange for 45,000,000 of the Company's common shares. The estimated fair value
of the shares on issuance was $450,000 (Note 8).
On February 20, 2014, a director of the Company cancelled 4,495,734 shares owned
by the President and CEO of the Company.
On May 15, 2014, the Company issued 467,200 shares at $0.25 per share for gross
proceeds of $116,800.
On August 31, 2014, the Company issued 60,000 shares at $0.25 per share for
gross proceeds of $15,000.
6. RELATED PARTY TRANSACTIONS
During the year ended August 31, 2014, the Company incurred $23,000 (2013 -
$87,000) in consulting fees to a relative of a director of the Company. As at
August 31, 2014, $Nil (2013 - $22,500) owing to the related party is included in
accounts payable. The amount is unsecured, non-interest bearing and due on
demand.
During the year ended August 31, 2014, the Company incurred $23,514 (2013 -
$55,000) in accounting fees to a director of the Company. As at August 31, 2014,
$Nil (2013 - $41,096) owing to the related party is included in accounts
payable. The amount is unsecured, non-interest bearing and due on demand.
During the year ended August 31, 2014, the Company incurred wages of $46,500
(2013 - $Nil), $30,000 (2013 - $Nil), $52,000 (2013 - $Nil) and $88,500 (2013 -
$Nil) to the Executive Vice President of Operations, the Executive Vice
President of Fuel Cell Operations, the Chief Operating Officer and the President
and Chief Executive Office of the Company, respectively. As at August 31, 2014,
unpaid wages of $162,950 (2013 - $Nil) was owing to the related parties and is
included in accounts payable.
As at August 31, 2014, the Company owed notes payable of $50,000 (2013 -
$75,000) to a director of the Company and $Nil (2013 - $75,000) to a relative of
a director of the Company. The notes are non-interest bearing, unsecured and due
on demand.
7. INCOME TAXES
As at August 31, 2014, the Company had accumulated non-capital loss
carry-forwards of approximately $5,234,000. These losses are available to reduce
taxable income in future taxation years and begin to expire in 2025 after a
carry-forward period of 20 years. The Company is required to compute the
deferred tax benefits from non-capital loss carrying-forwards. However, due to
the uncertainty of realization of these loss carry-forwards, a full valuation
allowance has been provided against this deferred tax asset.
31
At August 31, 2014 and 2013, the components of the deferred tax asset, the
statutory tax rate, the effective tax rate and the elected amount of the
valuation allowance are shown below:
August 31, August 31,
2014 2013
------------ ------------
Net loss $ (1,953,707) $ (386,156)
Statutory tax rate 35% 35%
Expected tax recovery (683,797) (135,155)
Non-deductible items 130,779 14,000
Change in valuation allowance 553,019 121,155
------------ ------------
Actual tax recovery $ -- $ --
============ ============
August 31, August 31,
2014 2013
------------ ------------
Non-capital tax loss carry forwards $ 6,085,771 $ 4,505,717
Statutory tax rate 35% 35%
Deferred tax asset 2,130,000 1,577,001
Less: valuation allowance (2,130,000) (1,577,001)
------------ ------------
NET DEFERRED TAX ASSET $ -- $ --
============ ============
8. COMMITMENTS
The Company entered into a lease agreement on November 1, 2014 for a term of
five years.. Under the agreement, the Company is committed to the following
monthly rent payments:
Dates Monthly Amount
----- --------------
Though October 2015 $13,374.44
November 1, 2015 to October 31, 2016 $13,775.67
November 1, 2016 to October 31, 2017 $14,188.94
November 1, 2017 to October 31, 2018 $14,614.61
November 1, 2018 to October 31, 2019 $15,053.05
Under the agreement, the Company also has to incur $125,000 in leasehold
improvements by September 30, 2014. If the expenses are not incurred by
September 30, 2014, the total lease will be in default. As at the date of these
financial statements, the Company has not yet incurred the required expenditures
and the lease is in default. As a result, the entire lease obligation of
$852,081 has been accrued for in these financial statements.
On March 1, 2014, the Company entered into an employment agreement with the
President and Chief Executive Officer of the Company. Under the agreement, the
Company will pay him an annual salary of $177,000 for 18 months with a 25%
increase after 18 months. The agreement will be in effect for 3 years.
On March 1, 2014, the Company entered into an employment agreement with the
Chief Operating Officer of the Company. Under the agreement, the Company will
pay him an annual salary of $104,000 for 18 months with a 25% increase after 18
months. The agreement will be in effect for 3 years.
On March 1, 2014, the Company entered into an employment agreement with the
Executive Vice President of Operations of the Company. Under the agreement, the
Company will pay him an annual salary of $93,000 for 18 months with a 25%
increase after 18 months. The agreement will be in effect for 3 years.
On March 1, 2014, the Company entered into an employment agreement with the
Executive Vice President of Fuel Cell Operations of the Company. Under the
agreement, the Company will pay him an annual salary of $112,000. The agreement
will be in effect for 5 years.
32
9. ACQUISITION OF DOMINOVAS ENERGY LLC
On February 20, 2014, the Company acquired 100% of Dominovas Technologies by
issuing 45,000,000 of its common stock with a fair value of $450,000. At the
date of the acquisition, Dominovas Technologies had net liabilities of $63,652
and the Company recognized goodwill of $513,652 on the acquisition. As Dominovas
Technologies has not commenced operations or earned any revenues to date,
management has determined goodwill to be impaired and has written off the entire
amount as at August 31, 2014.
10. SUBSEQUENT EVENT
On October 17, 2014, the Company issued 20,000 shares at $0.25 per share for
gross proceeds of $5,000.
33
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL MATTERS
None
ITEM 9A(T). CONTROLS AND PROCEDURES
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING.
Our Company's management is responsible for establishing and maintaining
adequate internal control over financial reporting (as defined in Rules
13a-15(f) and 15d-15(f) of the Exchange Act) for our company. Our Company's
internal control over financial reporting is designed to provide reasonable
assurance, not absolute assurance, regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles in the United States of
America. Internal control over financial reporting includes those policies and
procedures that: (i) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of our
company's assets; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles in the United States of
America, and that our Company's receipts and expenditures are being made only in
accordance with authorizations of our management and directors; and (iii)
provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could have a
material effect on the financial statements. Because of its inherent
limitations, internal control over financial reporting may not prevent or detect
misstatements. In addition, projections of any evaluation of effectiveness to
future periods are subject to the risk that controls may become inadequate
because of changes in conditions and that the degree of compliance with the
policies or procedures may deteriorate.
Our Management, including our principal executive officer and principal
financial officer, conducted an evaluation of the design and operation of our
internal control over financial reporting as of August 31, 2014 based on the
criteria set forth in Internal Control - Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission. The objectives
of internal control include providing management with reasonable, but not
absolute, assurance that assets are safeguarded against loss from unauthorized
use or disposition, and that transactions are executed in accordance with
management's authorization and recorded properly to permit the preparation of
the consolidated financial statements in conformity with accounting principles
generally accepted in the United States. Our management has concluded that, as
of August 31, 2014, our internal control over financial reporting is effective.
Our management reviewed the results of their assessment with our Board of
Directors.
This report does not include an attestation report of our registered public
accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by our company's registered
public accounting firm pursuant to temporary rules of the SEC that permit our
company to provide only management's report in this Annual Report on Form 10-K.
INHERENT LIMITATIONS ON EFFECTIVENESS OF CONTROLS
Internal control over financial reporting has inherent limitations which include
but is not limited to the use of independent professionals for advice and
guidance, interpretation of existing and/or changing rules and principles,
segregation of management duties, scale of organization, and personnel factors.
Internal control over financial reporting is a process which involves human
diligence and compliance and is subject to lapses in judgment and breakdowns
resulting from human failures. Internal control over financial reporting also
can be circumvented by collusion or improper management override. Because of its
inherent limitations, internal control over financial reporting may not prevent
or detect misstatements on a timely basis, however these inherent limitations
are known features of the financial reporting process and it is possible to
34
design into the process safeguards to reduce, though not eliminate, this risk.
Therefore, even those systems determined to be effective can provide only
reasonable assurance with respect to financial statement preparation and
presentation. Projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or procedures
may deteriorate.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have been no changes in our internal controls over financial reporting
that occurred during the year ended August 31, 2013 that have materially or are
reasonably likely to materially affect, our internal controls over financial
reporting.
CERTIFICATES
Certificates with respect to disclosure controls and procedures and internal
control over financial reporting under Rules 13a-14(a) or 15d-14(a) of the
Exchange Act are attached to this Annual Report on Form 10-K.
ITEM 9B. OTHER INFORMATION
None
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
As at the date of this report, our directors and executive officers, their ages,
positions held, and duration of such, are as follows:
All directors of our Company hold office until the next annual meeting of the
Shareholders or until their successors have been elected and qualified. The
executive officers of our company are appointed by our board of directors and
hold office until their death, resignation or removal from office. Our
directors, executive officers and the executive officers of our operating
subsidiaries, as well as the positions held, age and duration of appointment for
such persons are as follows:
DIRECTORS AND OFFICERS
BOARD OF DIRECTORS
Neal Allen
Emilio De Jesus
Dallas Gray
Darren Jacklin
Spero Plavoukos
EXECUTIVE OFFICERS
Name Age Position
---- --- --------
Neal Allen 57 President, Chief Executive Officer and Director
Michael Watkins 46 Chief Operating Officer
Dallas Gray 44 Treasurer and Director
FAMILY RELATIONSHIPS
There are no family relationships between any director, executive officer, or
person nominated or chosen by us to become a director or executive officer.
35
BUSINESS EXPERIENCE
The following is a brief account of the education and business experience of our
directors and executive officers during at least the past five years, indicating
their business experience, principal occupations during the period, and the
names and principal businesses of the organizations by which they were employed.
MR. NEAL ALLEN, age 57, is a member of our Board of Directors and was appointed
as Chairman of the Board of Directors, President and Chief Executive Officer of
the Company by our Board of Directors. Mr. Allen's expertise and experience are
consistent with the duties that are customary and usual to those of Chairman,
President and Chief Executive Officer. He is also charged with the title of
Senior Strategist. Mr. Allen also served as the Chairman of Private Asset Group,
LLC. Private Asset Group, LLC specialized in the development and implementation
of proprietary revenue models. Private Asset Group, LLC, acting as a force
multiplier ensured optimal deployment, utilization, and management of all
resultant cash flow. Private Asset Group, LLC is engaged by high net worth
individuals, private trusts, and select private equity concerns. Under Mr.
Allen's watch, Private Asset Group's endeavors included the ownership of a
"major brand" automobile dealership, several healthcare companies, waste
management and disposal enterprises, land acquisition and development company,
and natural resource development enterprise.
MR. EMILIO DE JESUS, age 37, who originally hails from Angola, has a Bachelor of
Science in Electrical Engineering from Temple University in Philadelphia; a
Master's Degree in Telecommunications Management from the Stevens Institute of
Technology in Hoboken, NJ; and a MBA from George Washington University in
Washington, DC. Mr. De Jesus held several management positions with Verizon
Communications from 2000 to 2010, including Digital and Design Engineer, Manager
IOF and Broadcast Video, Senior Staff Consultant and Systems Development
Manager. From 2012 to 2013, he was a Director of Grupo Jemilce, responsible for
strategy and systems development with a focus on waste management and
commodities procurement. Since 2012 he has also been Senior Vice President for
Operations of Worldtibe Group International, responsible for business
development in emerging markets with a focus on transfer of knowledge and
investments in Africa, coordinating the creation of joint ventures between North
American and African business.
MR. MICHAEL WATKINS, age 46, was appointed Chief Operating Officer of the
Company by our Board of Directors. He is responsible for operational and policy
matters and has the specific objective of increasing efficiency and developing
sustainable revenue models. Mr. Watkins was formerly the Managing Partner of
TEAL Development Group, LLC, a real estate development firm specializing in the
development and construction of Class A residential and commercial properties.
Mr. Watkins was previously a United States Air Force officer and veteran during
the 1990s.
MR. DALLAS GRAY, age 45, is a member of our Board of Directors and our
Treasurer. Mr. Gray has 20+ years of experience in radio. He is presently the
General Manager of K96-3, the Classic Rock station broadcasting from Kelowna,
British Columbia. He also serves as General Manager for Penticton, British
Columbia, station CIGV, now called Country 100.7. Prior to this assignment, Mr.
Gray was retail sales manager for Sun-FM / AM 1150, as well as Silk-FM, for
Astral Radio, commencing in 2001. He has served as a director of Sun Country
Radio since 2008 and has been on the Board of the Downtown Kelowna Association
since 2010, where he is currently the President. Mr. Gray is a member of the
Board of Directors of the British Columbia Association of Broadcasters (BCAB)
and was co-chair of that association's 2013 convention.
MR. DARREN JACKLIN, age 42, is a member of our Board of Directors. Mr. Jacklin
is engaged in business and management training and consulting. For over 18
years, Mr. Jacklin has mentored entrepreneurs and business owners in over 40
countries. He has personally trained people at over 140 Fortune 500 companies.
36
MR. SPERO PLAVOUKOS, age 51, is a member of our Board of Directors. Currently,
Mr. Plavoukos is serving as Vice President of Pacific Design Center, with
specific duties and responsibilities that include the management, special
projects and special events of the campus, which is located in West Hollywood,
California and is comprised of over 1,750,000 square feet of Class "A" office
and showroom space. Mr. Plavoukos' commitment to fiscal responsibility coupled
with the implementation of unique, common sense, above-standard operating
procedure, and the creation of event-savvy teams have consistently allowed his
operations to experience unprecedented growth and profitability.
Neal Allen and Michael Watkins have each entered into an employment agreement or
related transaction with the Company, which is described in Item 1.01 above. We
do not have an employment agreement with Mr. Gray.
Neither Neal Allen, Emilio De Jesus, Michael Watkins, Dallas Gray, Darren
Jacklin nor Spero Plavoukos have entered into any arrangement or understanding
with any other person in connection with his appointment as an officer or
director of Dominovas Energy Corp.
None of the following persons named as: Neal Allen, Emilio De Jesus, Dallas
Gray, Darren Jacklin or Spero Plavoukos are related to any director, executive
officer or person nominated or chosen by the Company to become a director or
executive officer.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
Our directors, executive officers and control persons have not been involved in
any of the following events during the past five years:
1. any Federal bankruptcy or state insolvency petition filed by or
against any business or property of which such person was a general
partner or executive officer either at the time of the bankruptcy or
within two years prior to that time;
2. any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor
offenses);
3. being subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type of
business, securities or banking activities;
4. being the subject of any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any Federal or State authority
barring, suspending or otherwise limiting for more than 60 days the
right of such person to engage in any activity described in paragraph
f)(3)(i) of this section, or to be associated with persons engaged in
any such activity;
5. being found by a court of competent jurisdiction in a civil action or
by the Commission to have violated any Federal or State securities
law, and the judgment in such civil action or finding by the
Commission has not been subsequently reversed, suspended, or vacated;
or
6. being found by a court of competent jurisdiction (in a civil action),
the Securities and Exchange Commission or the Commodity Futures
Trading Commission to have violated a federal or state securities or
commodities law, and the judgment has not been reversed, suspended, or
vacated.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires our executive officers and directors
and persons who own more than 10% of a registered class of our equity securities
to file with the SEC initial statements of beneficial ownership, reports of
changes in ownership and annual reports concerning their ownership of our common
stock and other equity securities, on Forms 3, 4 and 5 respectively. Executive
officers, directors and greater than 10% shareholders are required by the SEC
regulations to furnish us with copies of all Section 16(a) reports that they
file.
37
Based solely on our review of the copies of such forms received by us, or
written representations from certain reporting persons, we believe that all
filing requirements applicable to our officers, directors and greater than 10%
beneficial owners were complied with, with the exception of the following:
Number of
Transactions Not
Number of Late Reported on a Failure to File
Name Reports Timely Basis Requested Forms
---- ------- ------------ ---------------
Nil Nil Nil Nil
CODE OF ETHICS
We have adopted a Code of Ethics as falls under our adopted Foreign Corruption
and Practices Act directive and as such all employees have executed same.
CORPORATE GOVERNANCE
None of our directors are independent as the term is used in Item 7(d)(3)(iv) of
Schedule 14A under the SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. We do not
have a standing Nominating, Compensation or Audit Committee.
NOMINATING COMMITTEE
We do not have standing nominating or compensation committees, or committees
performing similar functions. Our board of directors believe that it is not
necessary to have a standing compensation committee at this time because the
functions of such committee are adequately performed by our board of directors.
Our board of directors also is of the view that it is appropriate for us not to
have a standing nominating committee because our board of directors has
performed and will perform adequately the functions of a nominating committee.
Our board of directors has not adopted a charter for the nomination committee.
There has not been any defined policy or procedure requirements for stockholders
to submit recommendations or nomination for directors. Our board of directors
does not believe that a defined policy with regard to the consideration of
candidates recommended by stockholders is necessary at this time because we
believe that, given the early stages of our development, a specific nominating
policy would be premature and of little assistance until our business operations
are at a more advanced level. There are no specific, minimum qualifications that
our board of directors believes must be met by a candidate recommended by our
board of directors. The process of identifying and evaluating nominees for
director typically begins with our board of directors soliciting professional
firms with whom we have an existing business relationship, such as law firms,
accounting firms or financial advisory firms, for suitable candidates to serve
as directors. It is followed by our board of directors' review of the
candidates' resumes and interview of candidates. Based on the information
gathered, our board of directors then makes a decision on whether to recommend
the candidates as nominees for director. We do not pay any fee to any third
party or parties to identify or evaluate or assist in identifying or evaluating
potential nominee.
A shareholder who wishes to recommend nominees to our board of directors may do
so by directing a written request addressed to our Chairman, President and Chief
Executive Officer, Neal Allen, 1395 Chattahoochee Ave; Atlanta, Ga 30318.
AUDIT COMMITTEE AND AUDIT COMMITTEE FINANCIAL EXPERT
We do not have a standing audit committee at the present time. Our board of
directors has determined that we do not have a board member that qualifies as an
"audit committee financial expert" as defined in Item 407(d)(5)(ii) of
Regulation S-K, nor do we have a board member that qualifies as "independent" as
the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities
Exchange Act of 1934, as amended.
We believe that an audit committee, including at least one independent director,
is an important part of the normal process of oversight in the establishment and
monitoring of required internal controls over financial reporting. However, we
believe this would be too costly and burdensome and is not completely warranted
in our circumstances given the early stage of our development; the fact we have
not generated any revenues from operations to date; and funding resources are
limited. In the meantime, we believe our board of directors is capable of
38
analyzing and evaluating our financial statements and understanding internal
controls and procedures over financial reporting.
OTHER COMMITTEES
All proceedings of our board of directors for the year ended August 31, 2014
were conducted by resolutions consented to in writing by our directors and filed
with the minutes of the proceedings of the board of directors. Our company
currently does not have nominating, compensation or audit committees or
committees performing similar functions nor does our company have a written
nominating, compensation or audit committee charter. Our board of directors
believes it is not necessary to have such committees for the reasons indicated
above.
Our Company does not have any defined policy or procedural requirements for
shareholders to submit recommendations or nominations for directors. Our
directors believe that, given the stage of our development, a specific
nominating policy would be premature and of little assistance until our business
operations develop to a more advanced level. Our company does not currently have
any specific or minimum criteria for the election of nominees to the Board of
Directors and we do not have any specific process or procedure for evaluating
such nominees. Our board of directors will assess all candidates, whether
submitted by management or shareholders, and make recommendations for election
or appointment.
A shareholder who wishes to communicate with our board of directors may do so by
directing a written request addressed to our Chairman, President and Chief
Executive Officer, Neal Allen, 1395 Chattahoochee Ave; Atlanta, Ga 30318.
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The particulars of compensation paid to the following persons:
(a) our principal executive officer;
(b) executive officers who were serving as executive officers at the end
of the years ended August 31, 2014 and 2013; and
(c) up to two additional individuals for whom disclosure would have been
provided under (b) but for the fact that the individual was not
serving as our executive officer at the end of the most recently
completed financial year, who we will collectively refer to as the
named executive officers, for our year ended August 31, 2014, are set
out in the following summary compensation table:
Non-equity
Incentive Non-qualified
Stock Plan Deferred All Other
Name Position Year Salary Bonus Awards Option Compensation Compensation Compensation Total
---- -------- ---- ------ ----- ------ ------ ------------ ------------ ------------ -----
Neal Allen President, 2013 0 0 0 0 0 0 0 0
CEO 2014 0 0 13,764,000 0 0 0 0 0
Michael COO 2013 0 0 0 0 0 0 0 0
Watkins 2014 0 0 13,764,000 0 0 0 0 0
Dallas Gray Director & 2013 0 0 2,000,000 0 0 0 0 0
Former 2014 0 0 0 0 0 0 0 0
President,
CEO
Darren Director 2013 0 0 250,000 0 0 0 0 0
Jacklin 2014 0 0 0 0 0 0 0 0
39
There are no arrangements or plans in which we provide pension, retirement or
similar benefits for directors or executive officers. Our directors and
executive officers may receive stock options at the discretion of our board of
directors in the future. We do not have any material bonus or profit sharing
plans pursuant to which cash or non-cash compensation is or may be paid to our
directors or executive officers, except that stock options may be granted at the
discretion of our board of directors from time to time. We have no plans or
arrangements in respect of remuneration received or that may be received by our
executive officers to compensate such officers in the event of termination of
employment (as a result of resignation, retirement, change of control) or a
change of responsibilities following a change of control.
EMPLOYMENT CONTRACTS
We are party to two employment contracts with directors and officers; Neal Allen
chairman of the board, CEO and president and Michael Watkins, COO.
DIRECTOR COMPENSATION POLICY
Directors of our Company may be paid for their expenses incurred in attending
each meeting of the directors. In addition to expenses, directors may be paid a
sum for attending each meeting of the directors or may receive a stated salary
as director. No payment precludes any director from serving our company in any
other capacity and being compensated for such service. During the year ended
August 31, 2014, we did not pay any compensation or grant any stock options to
our directors.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
As at August 31, 2014, we had not adopted any equity compensation plan and no
stock, options, or other equity securities were awarded to our executive
officers except as listed below.
Equity
Incentive
Equity Plan
Incentive Awards:
Plan Market or
Awards: Payout
Equity Number of Value of
Incentive Number Unearned Unearned
Plan Awards; of Market Shares, Shares,
Number of Number of Number of Shares Value of Units or Units or
Securities Securities Securities or Units Shares or Other Other
Underlying Underlying Underlying of Stock Units of Rights Rights
Unexercised Unexercised Unexercised Option Option That Stock That That That
Options Options Unearned Exercise Expiration Have Not Have Not Have Not Have Not
Name Exercisable(#) Unexercisable(#) Options(#) Price($) Date Vested(#) Vested($) Vested(#) Vested(#)
---- -------------- ---------------- ---------- ----- ---- --------- --------- --------- ---------
Neal
Allen 0 0 0 0 0 0 0 0 0
Michael
Watkins 0 0 0 0 0 0 0 0 0
OPTION EXERCISES AND STOCK VESTED TABLE
Not applicable.
40
RE-PRICING OF OPTIONS/SARS
None.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
We have not adopted a stock option plan and have not granted any stock options.
EQUITY COMPENSATION PLAN INFORMATION
Number of Securities
Number of Securities to be Remaining Available for
Issued Upon Exercise of Weighted-Average Exercise Future Issuance Under
Outstanding Options, Price of Outstanding Options, Equity Compensation Plans
Warrants and Rights Warrants and Rights (excluding column (a))
Plan Category (a) (b) (c)
------------- ------------------- ------------------- -------------------------
Equity Compensation Plans Nil Nil Nil
Approved by Security
Holders
Equity Compensation Plans Not Nil Nil Nil
Approved by Security Holders
Total Nil Nil Nil
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
In the following tables, we have determined the number and percentage of shares
beneficially owned in accordance with Rule 13d-3 of the Exchange Act based on
information provided to us by our controlling shareholder, executive officers
and directors, and this information does not necessarily indicate beneficial
ownership for any other purpose. In determining the number of shares of our
common stock beneficially owned by a person and the percentage ownership of that
person, we include any shares as to which the person has sole or shared voting
power or investment power, as well as any shares subject to warrants or options
held by that person that are currently exercisable or exercisable within 60
days.
Amount and
Nature of
Title of Name and Address Beneficial Percent
Class of Beneficial Owner Ownership of Class (2)
----- ------------------- --------- --------
Common Neal Allen 13,680,333 15.11%
Atlanta, GA
Common Spero Plavoukos 14,764,332 16.31%
West Hollywood, CA
Common Michael Watkins 13,764,333 15.20%
Grapevine, TX
Common Dallas Gray 2,250,000 2.48%
Kelowna, BC
Common Darren Jacklin 250,000 0.28%
Vancouver, BC
Common Emilio De Jesus 300,000 0.33%
Atlanta, GA *
----------
* Includes 300,000 shares owned by Guazenhe, LLC
2. Percentage of ownership is based on 90,525,125 common shares issued and
outstanding as of December 1, 2014.
41
CHANGES IN CONTROL
None.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
TRANSACTIONS WITH RELATED PERSONS
None of the following parties has, since our date of incorporation, had any
material interest, direct or indirect, in any transaction with us or in any
presently proposed transaction that has or will materially affect us, other than
as noted in this section:
(i) Any of our directors or officers;
(ii) Any person proposed as a nominee for election as a director;
(iii)Any person who beneficially owns, directly or indirectly, shares
carrying more than 5% of the voting rights attached to our outstanding
shares of common stock;
(iv) Any of our promoters; and
(v) Any member of the immediate family (including spouse, parents,
children, siblings and in- laws) of any of the foregoing persons.
PENSION, RETIREMENT OR SIMILAR BENEFIT PLANS
There are no arrangements or plans in which we provide pension, retirement or
similar benefits for directors or executive officers. We have no material bonus
or profit sharing plans pursuant to which cash or non-cash compensation is or
may be paid to our directors or executive officers, except that stock options
may be granted at the discretion of the Board of Directors or a committee
thereof.
We have no plans or arrangements in respect of remuneration received or that may
be received by our executive officers to compensate such officers in the event
of termination of employment (as a result of resignation, retirement, change of
control) or a change of responsibilities following a change of control, where
the value of such compensation exceeds $60,000 per executive officer.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
AUDIT FEES
For the years ended August 31, 2014 and 2013, the aggregate fees billed by Dale
Matheson Carr-Hilton Labonte LLP for professional services rendered for the
quarterly reviews and annual audit of our consolidated financial statements
included in our quarterly reports on Form 10Q and our annual report on Form 10-K
were:
Year Ended Year Ended
August 31, 2014 August 31, 2013
--------------- ---------------
Audit Fees and Audit Related Fees $ 16,800 $13,500
Income Tax Fees $ Nil $ 2,000
All Other Fees $ Nil $ 4,500
Total $ 16,800 $20,000
POLICY ON PRE-APPROVAL BY AUDIT COMMITTEE OF SERVICES PERFORMED BY INDEPENDENT
AUDITORS
We do not use Dale Matheson for financial information system design and
implementation. These services, which include designing or implementing a system
that aggregates source data underlying the financial statements or generates
information that is significant to our financial statements, are provided
internally or by other service providers. We do not engage Dale Matheson to
provide compliance outsourcing services.
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Effective May 6, 2003, the Securities and Exchange Commission adopted rules that
require that before Dale Matheson is engaged by us to render any auditing or
permitted non-audit related service, the engagement be:
* approved by our audit committee (which consists of our entire board of
directors); or
* entered into pursuant to pre-approval policies and procedures
established by the board of directors, provided the policies and
procedures are detailed as to the particular service, the board of
directors is informed of each service, and such policies and
procedures do not include delegation of the board of directors'
responsibilities to management.
The board of directors pre-approves all services provided by our independent
auditors. All of the above services and fees were reviewed and approved by the
board of directors either before or after the respective services were rendered.
The board of directors has considered the nature and amount of fees billed by
Dale Matheson and believes that the provision of services for activities
unrelated to the audit is compatible with maintaining Dale Matheson's
independence.
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PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Exhibits required by Item 601 of Regulation S-K:
3.01 Articles of Incorporation. (attached as an exhibit to our Registration
Statement on Form SB-2, filed on November 2, 2005).
3.02 Bylaws (attached as an exhibit to our Registration Statement on Form
SB-2, filed on November 2, 2005).
3.03 Articles of Merger (attached as an exhibit to our current report on
Form 8-K filed on June 28, 2006).
3.04 Certificate of Change dated June 8, 2006 (attached as an exhibit to our
Registration Statement on Form S-1 filed on July 28, 2014).
3.05 Certificate of Change dated August 27, 2007 (attached as an exhibit to
our Registration Statement on Form S-1 filed on July 28, 2014).
3.06 Articles of Merger dated August 27, 2007 (attached as an exhibit to our
Registration Statement on Form S-1 filed on July 28, 2014).
3.07 Articles of Merger dated November 28, 2007 (attached as an exhibit to
our Registration Statement on Form S-1 filed on July 28, 2014).
3.08 Certificate of Amendment to Articles of Incorporation filed February
24, 2014 (attached as an exhibit to our current report on Form 8-K
filed on February 28, 2014)
10.01 Equity Purchase Agreement, dated as of February 20, 2014 among Western
Standard Energy Corp., Dominovas Energy, LLC and the Members of
Dominovas Energy, LLC 2014 (attached as an exhibit to our current
report on Form 8-K filed on February 28, 2014).
10.02 Employment Agreement of Neal Allen dated February 20, 2014 2014
(attached as an exhibit to our current report on Form 8-K filed on
February 28, 2014).
10.03 Employment Agreement of Michael Watkins dated February 20, 2014 2014
(attached as an exhibit to our current report on Form 8-K filed on
February 28, 2014).
10.04 Equity Purchase Agreement between the Company and Kodiak Capital Group,
LLC (attached as an exhibit to our current report on Form 8-K filed on
October 21, 2014).
10.05 Registration Rights Agreement between the Company and Kodiak Capital
Group, LLC (attached as an exhibit to our current report on Form 8-K
filed on October 21, 2014).
10.06 Note by the Company to Kodiak Capital Group, LLC (attached as an
exhibit to our Registration Statement on Form S-1 filed on November 13,
2014).
31.1 Certification Statement pursuant to Section 302 of the Sarbanes- Oxley
Act of 2002
32.1 Certification Statement pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002
101 Interactive Data Files pursuant to Rule 405 of Regulation S-T.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
DOMINOVAS ENERGY CORPORATION
By: /s/ Neal Allen
-----------------------------------------
Neal Allen
Chairman, President, CEO, CFO, Secretary,
Treasurer and Director
Principal Executive Officer,
Principal Financial Officer
and Principal Accounting Officer
Dated: December 31, 2014
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