Attached files
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the Fiscal year ended December 31, 2009
Commission File number 0-15078
NOVA NATURAL RESOURCES CORPORATION
----------------------------------
(Name of Small Business Issuer in its charter)
Colorado 84-1227328
(State or other (I.R.S. Employer of
jurisdiction of incorporation Incorporation
Identification No.) Identification No.)
2000 NE 22nd ST
Wilton Manors, Fl 33305 (828) 489-9408
(Address of principal executive offices) (issuer's phone number)
Securities registered under Section 12(b) of the Act: NONE
Securities registered under Section
12(g) of the Act:
Common Stock, $.01 Par Value
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12months (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
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will 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]
Issuer's revenues for its most recent fiscal year totaled: None Documents
Incorporated by Reference: None Transitional Small Business Disclosure Format:
Yes___. No. X
As of December 31, 2009, the Registrant had outstanding no shares of Convertible
Preferred Stock, $1.00 par value issued and outstanding.
Number of Shares of Common Stock Outstanding $.01 par value as of December 31,
2009, 5,021,764
Transitional Small Business Disclosure Format YES ___ NO X
NOVA NATURAL RESOURCES CORPORATION
TABLE OF CONTENTS
Page
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PART I
Item 1. Business 3
Item 1A. Risk Factors 7
Item 2. Description of Property 7
Item 3. Legal Proceedings 7
Item 4. Submission of Matter to a Vote of Security Holders 7
PART II
Item 5. Market for Common Equity and Related Stockholder Matters 7
Item 6. Selected Financial Data 8
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 8
Item 7A. Quantitative and Qualitative Disclosure about Market Risk 9
Item 8. Financial Statements and Supplementary Data 10
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 18
Item 9A(T). Controls and Procedures 18
PART III
Item 10. Directors, Executive Officers and Corporate Governance 19
Item 11. Executive Compensation 21
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related shareholder Matters 21
Item 13. Certain Relationships and Related Transactions 21
Item 14. Principal Accounting Fees and Services 22
PART IV
Item 15. Exhibits, Financial Statement Schedules 22
Signatures 23
2
PART 1
Item 1. Description of Business
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On March 29, 2010 the company entered into an agreement with Greenestone Clinic
Inc., a Private Canadian Corporation, to provide Consulting Services to Nova
Natural Resources Corporation for the development and operation of certain
Medical Clinics in the province of Ontario, Canada. The term of the agreement is
for one year whereby Greenestone will provide both the medical and business
expertise in the initial startup of private clinics. Greenestone will provide
the technical assistance to insure the clinics are in compliance with
governmental policy and procedure requirements and the necessary detailed
operational requirements to operate the clinics. Greenestone currently has an
operational facility with some services Nova plans to offer in its first Ontario
facility which may be viewed at www.greenestone.net.
Nova Natural Resources Corporation (the "Registrant", "Company" or "Nova") was
incorporated under Colorado Law on April 1, 1993 and is the surviving company in
a merger, effective February 1, 1995, of the Company and Nova Natural Resources
Corporation, a Delaware corporation. The merger was effected to change the
Company's domicile from Delaware to Colorado and caused no change in the
Company's capitalization. The Delaware Corporation was the successor to Nova
Petroleum Corporation and Power Resources Corporation, which merged in 1986.
Prior to that merger, Nova Petroleum Corporation and Power Resources Corporation
operated since 1979 and 1972, respectively.
Significant changes in the Company business
On February 27, 2001, the Company closed a transaction pursuant to the terms of
an Asset Purchase Agreement dated February 9, 2001 (the "Agreement") with TORITA
DONGHAO LLC ("Torita Delaware"), a Delaware Corporation, by which Torita
Delaware acquired control of the Company.
Torita Delaware manufactures, markets, and sells electronic equipment, including
computer hardware, computer monitors, television sets, internet access devices
for use with TV sets, digital video devices (DVD's) and related equipment.
Torita Delaware's products are marketed in Southeast Asia. Its production
facilities occupy 128,000 square feet in Zhuhai City in the People's Republic of
China ("PRC") and include six manufacturing lines with an annual production
capacity of approximately 1 million PC's, 1 million DVD devices and 200,000 TV
sets. Torita Delaware owns 50% of the former cosmetics arm of Torita Group,
though this business line has not played a significant role in the Company's
operations. The Company wrote off its equity investment of $15,107 in the
cosmetics company in the fourth quarter of the fiscal year, since it is
uncertain whether this investment will be recoverable.
Torita Delaware was formed by the spin-off of the electronics and the cosmetics
divisions of the Torita Group of the PRC. Torita Group ("Torita"), a large,
diversified company with over ten years of operating history in China, was
composed of several divisions with diverse business interests. During calendar
year 2001, Torita went into receivership due to its large portfolio of
non-performing real estate assets. These assets are in the process of
disposition, a process expected to take several years to accomplish. Although
Torita Delaware and Torita are completely separate companies, this event caused
an indirect effect on the Company's ability to do business.
Historically, the Company's electronics manufacturing operations utilized
Torita's credit facilities as its major source of working capital. When the
Company became independent of Torita, it no longer had access to that capital,
but the relationship was retained with Torita's lenders, including the
maintenance of a $7 million line of credit with a local bankWhen Torita
subsequently went into receivership, even though the Company was no longer
affiliated with Torita, this line of credit was withdrawn. In addition, Torita's
bankruptcy filing caused many of the Company's existing suppliers to cut off
their credit terms with the Company, due to the past close association of the
two companies. These events made it much more difficult for the Company to
obtain credit in China.
On March 16, 2003, pursuant to unanimous approval of the board of directors of
Nova, the Company authorized its president to secure a convertible note from
Henan Zhenyuen (Group) Co., LTD, and to appoint three new Directors. The company
appointed Ms. Li Wang, Mr. Yanbo Yin both Chinese Nationals and reappointed Mr.
Chris Tse. Mr. Tse was also appointed the President and CEO of the company upon
the resignation of its former President Mr. Edward Chan. Mr. Chan also resigned
as a Director of the company. Additionally, Mr. Han Zhende of the Torita group
resigned as a Director. The note from Zhenyuen (Group) was never secured. The
company secured funding from a company called Good Creative Limited a BVI. This
information was communicated in an 8K filing and press release by the current
management.
3
On 11 November 2003 Nova entered into an agreement to divest of the core
business, the electronic assets the company had idled at 2002 year end. The
electronic business unit declined shortly after acquisition due to a slow down
in demand for existing products and a lack of immediate working capital required
for new product introduction. Revenue decreased significantly from 2001 of
$4.8MM to 2002 of $.4MM whereby the company was unable to continue operations.
Previous management was unsuccessful in efforts to raise the necessary working
capital in the time frame in which the business unit had opportunities for its
product. The decrease in demand, consumption of saleable inventory and lack of
working capital resulted in discontinuing the operations at year end 2002. The
business had remained idle while the new management team and board of directors
accessed the market conditions for the company products and production
capabilities. The current board of directors had determined that restarting the
operations created significant risk for its shareholders and determined that
raising funds with equity would be difficult if not impossible. Therefore, the
Directors approached the original owners and reached an agreement for the return
of assets in turn for the return of the Torita Electronic (Hong Kong) Ltd.,
common stock in the amount of 138,612,287 shares. This was the control block
originally issued for the assets but did not include stock issued for services
in connection with facilitation of the deal and payment for services. The
divesture agreement was entered into with Han Zhende, President of Torita
Electronic (Hong Kong) Company Ltd., and provided for the return of the assets
acquired from the original agreement, dated Feb 09 2001 between Torita Donghao,
LLC and Nova Natural Resource Corporation. The agreement provided for the return
of assets, assumption of all liabilities associated with the Chinese operation
in turn for the return to Nova the 138,612,287 shares of common stock originally
issued to Torita Electronic (Hong Kong) Ltd.
On 17 Jun 2004 Nova entered into an agreement to purchase the assets of two Gas
Stations located in Anyang City, Henan Province, China from Great Frame
International Enterprise Limited, a Hong Kong Company. The stations were
equipped with LPG refilling equipment. The stations along with a recently
acquired LPG conversion technology would allow Nova to continue the conversion
of additional vehicles within the Anyang market and expand into other markets
within the region. The stations had the capacity to generate in excess of two
million dollars in combined fuel alternatives, but the primary focus was to
convert and service LPG vehicles. This was due to higher gross margins and the
positive environmental impact. Nova intended to issue 600,000 shares of common
stock at an agreed price of $2.00 per share, for a total purchase price of
$1,200,000. The majority owner and President/Director of Great Frame
International Enterprise Limited was Wang Li; Ms Li was also a director of Nova.
Upon the completion of the proposed agreement Wang Li would have become the
largest shareholder of NOVA with approximately 45% of the issued and outstanding
shares. This acquisition was designed to prove the LPG conversion technology was
a benefit for both Nova and the Chinese market. The average cost to convert a
taxi from gas to LPG was approximately $420 and the conversion cost for a bus
was approximately 25% higher. It was estimated that the average taxi would drive
450KM per day with a monthly fuel saving of $73.00, creating a pay back for the
driver in six months. The pay back for a bus was approximately one and a half
years, but combined with the positive environmental results the local
governments were eager to convert. The company expected the primary growth
revenue generator would be the refilling of the LPG vehicles; the current gross
margin was significantly higher than that of the non converted petrol vehicles.
Given the increasing vehicles entering the Chinese market and vast number of
vehicles that could benefit from the conversion the company worked for over one
year to try and bring this deal to a successful close. The company engaged
several outside parties in both the US and China to develop a successful
structure for the transaction whereby Nova would have full rights privileges and
true ownership of the assets identified in the deal. Although representatives of
Nova visited the sites of these assets, the deal was complicated by a transfer
of the state assets to the Hong Kong Company. This transfer could not be assured
was acceptable under Chinese Law, making the deal risky on the representations
made by Great Frame International and since Wang Li was a director of both
companies Nova consulted with additional resources. The company evaluated
several alternatives in restructuring the deal, but in meeting with Chinese
Accountants and Legal Advisors, it was determined that the transaction could not
be structured in a manner initially negotiated. This information was
communicated in an 8K filing and press release by the current management.
On 1 July 2005 Nova rescinded the agreement entered into on June 17, 2004 to
purchase the assets of two Gas Stations located in Anyang City, Henan Province,
China. The agreement previously entered into with Great Frame International
Enterprise Limited, a Hong Kong Company, provided that Great Frame would provide
written evidence that the agreement was in compliance with Chinese Laws and
procedures and that the assets described in the agreement were not encumbered in
any manner. Failing to comply with this requirement the company cancelled the
agreement. Additionally, Mr. Chris Tse President & CEO and Chairman of the
Board, accepted the resignation of Wang Li and Yin Yanbo as directors of the
company and decided to serve as sole officer and director of the company until
such time as qualified replacements could be selected. This information was
communicated in the form of an 8K filing by the current management.
On March 29, 2010 the company entered into an agreement with Greenestone Clinic
Inc., a Private Canadian Corporation, to provide Consulting Services to Nova
Natural Resources Corporation for the development and operation of certain
Medical Clinics in the province of Ontario, Canada. The term of the agreement is
for one year whereby Greenestone will provide both the medical and business
expertise in the initial startup of private clinics. Greenestone will provide
the technical assistance to insure the clinics are in compliance with
governmental policy and procedure requirements and the necessary detailed
operational requirements to operate the clinics. Greenestone currently has an
operational facility with some services Nova plans to offer in its first Ontario
facility which may be viewed at www.greenestone.net
4
Change in Control
Effective at Closing of the Torita Delaware transaction, all of Nova's officers
and directors, except Brian B. Spillane, resigned, as contemplated by the
Agreement. Edward T. S. Chan, CEO of Torita Delaware, thereupon was named
President, Treasurer and a Director of the Company. Mr. Spillane resigned as
President, but remains a Director of the Company, and was appointed its
Secretary. Mr. Spillane continued his affiliation with the Company and continued
to maintain the Company's corporate office in Denver, Colorado at the request of
Torita Delaware. This request was not a requirement for approval of the
transaction by the Company's former Board of Directors. In September 2001, Han
Zhende and Chris Tse, both based in China, were appointed Directors of the
Company. Mr. Han is the Company's Chief Operating Officer, and is in charge of
the Company's electronics manufacturing operations in Zhuhai City, the People's
Republic of China. Mr. Tse resigned as Vice President and a Director of the
Company in November.
Upon effectuation of the Agreement, Torita Electronic (Hong Kong) Ltd. held
138,612,287 shares of the Registrant's $0.10 par value common stock, 59.5% of
the total common shares issued and outstanding, and therefore became the new
controlling shareholder of the Company. Affiliates of Torita Delaware controlled
an additional 32% of the then-issued and outstanding shares. The consideration
used to obtain such control was the acquisition by the Company of 100% of the
business and operating assets of Torita Delaware.
On March 16 2003 the board of directors accepted the resignation of Mr. Edward
Chan as the President and CEO and appointed Mr. Chris Tse to the position of
President and CEO.
On June 30, 2003, pursuant to majority shareholder consent and affirmed by
199,873,886 votes constituting 71.5% of the 279,551,551 shares issued and
outstanding as of June 28, 2003, the majority shareholders voted and approved
the appointment of Mr. Chris Tse as the Company President and Chief Executive
Officer and appointment to the Board of Directors. Mr. Edward Chan was
terminated as the President and Chief Executive Officer and removed from the
Board of Directors. This action was in response to the failure of Mr. Chan to
place into writing his verbal resignation as the President and from the Board of
Directors. This information was communicated in an 8K filing and press release
by the current management.
On March 15, 2007 the shareholders of Nova Natural Resources Corp., by majority
consent accepted the resignation of the sole Director and Officer of the Company
Mr. Chris Tse, appointed Mr. David Putnam as the President & CEO and Chief
Financial Officer of the Company, and appointed Mr. Nick Laroche as a Company
Director. Mr. Putnam currently resides in Toronto, Ontario; therefore the
Company executive offices are in the process of being relocated to Toronto,
Ontario. This action was taken by the Shareholders of the Corporation by a vote,
or concurrence of the majority of the outstanding shares. This action was
approved in excess of the two third majority as required by Colorado Law and the
Company Articles of Incorporation.
On October 1, 2007 the Board accepted the resignation of Mr. David Putnam, the
President & CEO, additionally Mr. Putnam resigned from the Board of Directors.
The Board accepted the appointed of Mr. Wayne A. Doss to serve as the President
and CEO and Director replacing Mr. Putnam. Mr. Doss has been a consultant and
business advisor for the company since 2001.
Employees
At December 31, 2009, Nova had only one employee, its President & CEO, Mr. Wayne
A. Doss.
Environmental Regulations
The Company is not currently subject to any pending administrative or judicial
enforcement proceedings arising under environmental laws or regulations.
Environmental laws and regulations may be adopted in the future which may have
an impact upon the Company's operations.
5
Other Information
-----------------
Material Events that occurred during 2007/2008/2009
On March 15, 2007 the shareholders of Nova Natural Resources Corp., by majority
consent accepted the resignation of the sole Director and Officer of the Company
Mr. Chris Tse, appointed Mr. David Putnam as the President & CEO and Chief
Financial Officer of the Company, and appointed Mr. Nick Laroche as a Company
Director. Mr. Putnam currently resides in Toronto, Ontario, therefore the
Company executive offices are in the process of being relocated to Toronto,
Ontario. This action was taken by the Shareholders of the Corporation by a vote,
or concurrence of the majority of the outstanding shares. This action was
approved in excess of the two third majority as required by Colorado Law and the
Company Articles of Incorporation.
On March 31, 2007 the newly appointed Board of Directors approved the
appointment of Mr. Putnam as the Company President & CEO and the majority
consent in reference to the appointment of the new Directors, Mr. Putnam and Mr.
Laroche. The New Board of Directors approved the issuance of 2,500,000 shares of
rule144 restricted common stock for each of it new Directors. The Board of
directors authorized the President to proceed with the acquisition of the Lotta
Minutes Prepaid Calling Card transaction after reviewing the Executive Summary.
The Board authorized the President to proceed with securing the rights and
privileges in an asset acquisition structure whereby Nova Natural Resources
would acquire 100% of said rights and privileges. The President was authorized
to issue up to ten million (10,000,000) shares of Nova Natural Resources Rule
144 Restricted Common Shares and up to $500,000.00 (with the condition the funds
would be paid based upon a future funding or once the company has adequate
working capital) to secure rights.
On April 15, 2007 the Board approved the Lotta Minutes Pre-Paid Calling Card
transaction and authorized the President to issue ten million (10,000,000)
shares of Nova Natural Resources Rule 144 Restricted Common Stock to Glen Simon
for 100% of 2133185 Ontario Inc., for all rights and privileges concerning the
Lotta Minutes deal as defined in the Lotta Minutes Executive Summary and
documentation.
On April 30, 2007 the Board approved the consulting contracts with two outside
consultants to assist the company in its new venture. The consultants, Mr.
Aluwahlia and Mr. Wendlegoed will each receive 2,500,000 shares of rule 144
Restricted Common Stock at .01 for said services.
On October 1, 2007 the Company cancelled the Lotta Minutes deal for non
performance of the acquisition agreement terms, ten million (10,000,000) shares
were authorized to be issued in conjunction with the closing of the deal, the
shares were never issued and the board of directors cancelled the authorization
to issue said shares and the five million (5,000,000) shares for the consultants
associated with the Lotta Minutes Deal.
On October 1, 2007 the Board accepted the resignation of Mr. David Putnam, its
President and CEO, additionally Mr. Putnam resigned from the Board of Directors.
The Board accepted the appointed of Mr. Wayne A. Doss to serve as the President
and CEO and Director replacing Mr. Putnam. Mr. Doss has been a consultant and
business advisor for the company since 2001.
On June 20, 2008 the Board of Directors cancelled the authorization for the
issuance of five million (5,000,000) shares to Mr. Laroche and Mr. Putnam which
were authorized March 31, 2007, but were never issued. The Board of Directors
initially approved the issuance of 2,500,000 shares of rule144 restricted common
stock for each Director. The Board felt the shares were not warranted. The Board
approved the issuance of one million (1,000,000) shares of rule 144 restricted
common stock for Mr. Doss the current President and CEO for services to the
company since Mr. Doss has served without salary since the October 1, 2007
appointment.
On July 1, 2008 the Board of Directors approved the conversion of a Convertible
Note Payable in the amount of 19,000.00 to convert at .02 per share for the
issuance of nine hundred fifty thousand shares (950,000) of rule-144 restricted
common stock.
6
Item 1A. Risk Factors
---------------------
Not applicable because we are a smaller reporting company.
Item 2. Description of Properties
---------------------------------
The executive offices of the Company are located in a residence at 2000 NE 22 ND
Street, Wilton Manors, Florida, 33305. The space is approximately 250 sq ft. The
Company is currently in the process of relocating its executive offices to
Canada.
Item 3. Legal Proceedings
-------------------------
The Company knows of no legal proceedings contemplated or threatened against it.
Item 4. Submission of Matter to a Vote of Security Holders
----------------------------------------------------------
No matters were submitted to a vote of security holders during the fourth
quarter of fiscal 2008.
Part II
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Item 5. Market for Common Equity and Related Shareholder matters
----------------------------------------------------------------
The Company's Common Stock is quoted on the OTC Bulletin Board under the symbol
"NVNJ" at December 31, 2009 with no trading activity. The company must seek
sponsorship by a market maker to file the 15C211 to return to the OTCBB active
trading and plans to do so in 2010. The number of record holders of the
Company's Common Stock as of December 31, 2009 was approximately 115 in
certificate holders.
As of December 31, 2009 1,553 option shares were outstanding under the Company's
employee stock option plan.
On 13 August 2003 the shareholders of Nova Natural Resources Corp., by majority
consent authorized the Board of Directors to institute a 1 for 3000 reverse
stock split with no fractional shares to be issued. Nova, a Colorado Corporation
required two thirds majority for such action. The majority consent was approved
by two hundred two million one hundred sixth four thousand (202,164,000) votes
and constituted an approval in excess of the two thirds required. The board
approved the reverse and set the effective date for August 22, 2003. Further,
the shareholders authorized the Board of Directors to increase the common stock
authorized and issued to 50,000,000 shares following the implementation of the
reverse.
The Company has not paid any dividends on its Common Stock and does not expect
to do so in the foreseeable future. The Company intends to employ its cash flow
and earnings, if any, for working capital needs.
7
Shareholders
The number of record holders of the Company's Common Stock as of December 31,
2009 was approximately 115.
Dividends
To date, we have not paid any cash dividends on our common stock, nor do we
anticipate that we will pay dividends in the foreseeable future. Payment of
dividends in the future will depend upon the Company's earnings and its cash
requirements at that time.
Securities Authorized for Issuance Under Equity Compensation Plans
As of fiscal 2009, no securities were authorized for issuance under compensation
plans previously approved by security holders. As of fiscal 2009, no securities
were authorized for issuance under compensation plans not previously approved by
security holders.
Equity Securities Issuances During Fiscal 2007/2008
o On March 31, 2007 the Company issued two million five hundred thousand shares
of restricted common stock to each of the new Directors Mr. Putnam and Mr.
Laroche, for a total of five million (5,000,000) shares.
o On March 31, 2007 the Company issued 1,250,000 shares of restricted common
stock to its consultant Mr. Wayne A Doss for services.
o On April 15, 2007, the Company was authorized to issue 10,000,000 shares of
restricted common stock for the acquisition of the Lotta Minutes Calling Card
rights.
o On April 30, 2007 the Company was authorized to issue 5,000,000 shares of
restricted common stock to two consultants involved in the Lotta Minutes Deal.
o On October 1, 2007 the Company cancelled the Lotta Minutes deal for non
performance of the acquisition agreement terms, ten million (10,000,000) shares
were authorized to be issued in conjunction with the closing of the deal, the
shares were never issued and the board of directors cancelled the authorization
to issue said shares and the five million (5,000,000) shares for the consultants
associated with the Lotta Minutes Deal.
On June 20, 2008 the Board of Directors cancelled the authorization for the
issuance of five million (5,000,000) shares to Mr. Laroche and Mr. Putnam which
were authorized March 31, 2007, but were never issued. The Board of Directors
initially approved the issuance of 2,500,000 shares of rule144 restricted common
stock for each Director. The Board felt the shares were not warranted. The Board
approved the issuance of one million (1,000,000) shares of rule 144 restricted
common stock for Mr. Doss the current President and CEO for services to the
company since Mr. Doss has served without salary since the October 1, 2007
appointment.
On July 1, 2008 the Board of Directors approved the conversion of a Convertible
Note Payable in the amount of 19,000.00 to convert at .02 per share for the
issuance of nine hundred fifty thousand shares (950,000) of rule-144 restricted
common stock.
Item 6. Selected Financial Data
-------------------------------
Not Applicable because we are a smaller reporting company.
Item 7. Management Discussion and Analysis
------------------------------------------
The following Management's Discussion and Analysis ("MD&A) for the twelve month
period ended December 31, 2009 compared with the twelve month period ended
December 31, 2008 provides readers with an overview of the operations of Nova
Natural Resources Corporation ("Nova"). The MD&A provides information that the
management of Nova believes is important to access and understand the results of
operations and the financial condition of the Company.
8
Our objective is to present readers with a view of Nova through the eyes of
management.
This discussion and analysis should be read in conjunction with Nova's financial
statements and accompanying notes to the financial statements for the twelve
month period ended December 31, 2009.
About Nova Natural Resources Corporation
Nova has been a business in transition since the divesture of the electronic
business. Management has reviewed many business opportunities but has passed on
those that did not insure the company with free and clear assets and exclusive
protection of the opportunity. On March 29, 2010 the company entered into an
agreement with Greenestone Clinic Inc., a Private Canadian Corporation, to
provide Consulting Services to Nova Natural Resources Corporation for the
development and operation of certain Medical Clinics in the province of Ontario,
Canada. The term of the agreement is for one year whereby Greenestone will
provide both the medical and business expertise in the initial startup of
private clinics. Greenestone will provide the technical assistance to insure the
clinics are in compliance with governmental policy and procedure requirements
and the necessary detailed operational requirements to operate the clinics.
Greenestone currently has an operational facility with some services Nova plans
to offer in its first Ontario facility which may be viewed at
www.greenestone.net
The Company has not earned any revenue from limited principal operations since
2002. Accordingly, the Company's activities have been accounted for as those of
a "Development Stage Enterprise" as set forth in Financial Accounting Standards
Board Statement No. 7 (" SFAS 7 ").
Management's discussion of anticipated future operations contains predictions
and projections which may constitute forward looking statements. The Private
Securities Litigation Reform Act of 1995, including provisions contained in
Section 21E of the Securities Exchange Act of 1934, provides a safe harbor for
forward-looking statements. In order to comply with the terms of the safe
harbor, the Company notes that a variety of factors could cause the Company's
actual results and experience to differ materially from the anticipated results
or other expectations expressed in the Company's forward-looking statements. The
risks and uncertainties that may affect the operations, performance, development
and results of the Company's business include, but are not limited to, the
following:
Forward-looking Information
This Form 10-K contains certain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. For this purpose any
statements contained in this Form 10-K which is not statements of historical
fact may be deemed to be forward-looking statements. Without limiting the
foregoing, words such as "may", "will", "expect", "believe", "anticipate",
"estimate", or "continue" or comparable terminology are intended to identify
forward-looking statements. These statements by their nature involve substantial
risks and uncertainties and actual results may differ materially depending on a
variety of factors, many of which are not within the Company's control.
ITEM 7A. QUANTITIATIVE AND QUALITATIVE DISCLOUSURES ABOUT MARKET RISK
---------------------------------------------------------------------
Not applicable because we are a smaller reporting company.
9
Item 8. Financial Statements and Supplementary Data
---------------------------------------------------
NOVA NATURAL RESOURCES CORPORATION
Financial Statements
December 31, 2009 and 2008
NOVA NATURAL RESOURCES CORPORATION
Financial Statements
December 31, 2009 and 2008
TABLE OF CONTENTS
Page(s)
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Report of Independent Registered Accounting Firm F-1
Balance Sheets as of December 31, 2009 and 2008 F-2
Statements of Operations for years ended
December 31, 2009, 2008 and 2007 F-3
Changes in Stockholders' Deficit for the years ended
December 31, 2009 and 2008 F-4
Statements of Cash Flows for the years ended
December 31, 2009, 2008 and 2007 F-5
Notes to the Financial Statements F-6 - F-11
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Nova Natural Resources Corporation
We have audited the accompanying balance sheets of Nova Natural Resources
Corporation (the Company) as of December 31, 2009 and 2008, and the related
statements of operations, changes in stockholders' equity, and cash flows for
the years then ended, and the year ended December 31, 2007. These 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 of America). Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether
the 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, 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, the financial statements referred to above present fairly, in
all material respects, the financial position of Nova Natural Resources
Corporation as of December 31, 2009 and 2008, and the results of its operations
and cash flows for the years then ended, and the year ended December 31, 2007,
in conformity with accounting principles generally accepted in the United States
of America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in financial statement Note 2,
the Company has incurred losses since inception, and has not engaged in any
operations. This raises substantial doubt about the Company's ability to meet
its obligations and to continue as a going concern. Management's plans in regard
to this matter are described in Note 2. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ EddyChin, Chartered Accountant
Eddy Chin, Chartered Accountant
Thornhill, Ontario
March 29, 2010
F-1
NOVA NATURAL RESOURCES CORPORATION
Balance Sheets
December 31,
2009 2008
--------------- ----------------
ASSETS
Current assets
Cash $ 5,550 $ 849
--------------- ----------------
Total current assets 5,550 849
--------------- ----------------
Total assets $ 5,550 $ 849
=============== ================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable and accrued liabilities $ 10,401 $ 37,676
Related party notes 168,687 96,992
--------------- ----------------
Total current liabilities 179,088 134,668
--------------- ----------------
Stockholders' deficit
Common stock; $.01 par value, 50,000,000 shares authorized; 5,021,764
shares issued and outstanding 50,218 50,218
Additional paid-in capital 5,631,664 5,631,664
Accumulated deficit (5,855,420) (5,815,701)
--------------- ----------------
Total stockholders' deficit (173,538) (133,819)
--------------- ----------------
Total liabilities and stockholders' deficit $ 5,550 $ 849
=============== ================
See accompanying notes to financial statements
F-2
NOVA NATURAL RESOURCES CORPORATION
Statement of Operations
Year Ended December 31,
2009 2008 2007
---------------- ---------------- ---------------------
Revenues $ - $ - $ -
---------------- ---------------- ---------------------
Operating expenses
General and administrative 39,719 14,289 88,500
---------------- ---------------- ---------------------
Total operating expenses 39,719 14,289 88,500
---------------- ---------------- ---------------------
Net loss $ (39,719) $ (14,289) $ (88,500)
================ ================ =====================
Net loss per common share $ (0.01) $ (0.00) $ (0.01)
================ ================ =====================
Weighted average shares outstanding 5,021,764 5,021,764 8,071,764
================ ================ =====================
See accompanying notes to financial statements
F-3
NOVA NATURAL RESOURCES CORPORATION
Statement of Changes in Stockholders' Deficit
Common Stock
Additional Accumulated
Shares Amount Paid-in Capital Deficit Total
--------------- ---------------- --------------- --------------- -----------------
Balance, December 31, 2007 8,071,764 $ 80,718 $ 5,622,164 $ (5,801,382) $ (98,500)
Adjustment - - - (30) (30)
Common stock rescinded (4,000,000) (40,000) - - (40,000)
Common stock issued for convertible note 950,000 9,500 9,500 - 19,000
Net loss, year ended December 31, 2009 - - - (14,289) (14,289)
--------------- ---------------- --------------- --------------- -----------------
Balance, December 31, 2009 5,021,764 50,218 5,631,664 (5,815,701) (133,819)
Net loss, year ended December 31, 2009 - - - (39,719) (39,719)
--------------- ---------------- --------------- --------------- -----------------
Balance, December 31, 2009 5,021,764 $ 50,218 $ 5,631,664 $ (5,855,420) $ (173,538)
=============== ================ =============== =============== =================
See accompanying notes to financial statements
F-4
NOVA NATURAL RESOURCES CORPORATION
Statements of Cash Flows
Year Ended December 31,
2009 2008 2007
-------------- ------------- --------------
Operating activities
Net loss $ (39,719) $ (14,289) $ (88,500)
Adjustment to reconcile net loss to net cash used in
operating activities:
Accounts payable and accrued liabilities (27,275) (10,354) 26,000
-------------- ------------- --------------
Net cash used in operating activities (66,994) (24,643) (62,500)
-------------- ------------- --------------
Investing activities -
-------------- ------------- --------------
Financing activities
Common stock issued for cash - - 62,500
Common stock rescinded - (40,000) -
Common stock issued for convertible note - 19,000 -
Proceeds from related party notes 90,695 65,492 -
Repayments of related party notes (19,000) (19,000) -
-------------- ------------- --------------
Net cash used in financing activities 71,695 25,492 62,500
-------------- ------------- --------------
Net change in cash during the year 4,701 849 -
Beginning cash balance 849 -
-------------- ------------- --------------
Ending cash balance 5,550 849 -
============== ============= ==============
Supplemental cash flow information
Cash paid for interest $ - $ - $ -
============== ============= ==============
Cash paid for income taxes $ - $ - $ -
============== ============= ==============
See accompanying notes to financial statements
F-5
NOVA NATURAL RESOURCES CORPORATION
Notes to Financial Statements
December 31, 2009 and 2008
Note 1 - Nature of Business
Nova Natural Resources Corporation (the Company) is a Colorado Corporation
formed for the purpose of mineral exploration. Management has decided that the
company would be more valuable and the interest of its shareholders would be
better served by the sale or reverse merger of the company and is actively
looking at new business opportunities.
Note 2 - Significant Accounting Policies
Estimates
---------
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.
Actual results could differ from those estimates.
Cash
----
For the Statements of Cash Flows, all highly liquid investments with maturity of
three months or less are considered to be cash equivalents. There were no cash
equivalents as of December 31, 2009, 2008 or 2007.
Income taxes
------------
Income taxes are provided for using the liability method of accounting in
accordance with SFAS No. 109 "Accounting for Income Taxes," and clarified by FIN
48, "Accounting for Uncertainty in Income Taxes-an interpretation of FASB
Statement No. 109." A deferred tax asset or liability is recorded for all
temporary differences between financial and tax reporting. Temporary
differences are the differences between the reported amounts of assets and
liabilities and their tax basis. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effect of changes in tax laws
and rates on the date of enactment.
Share Based Expenses
--------------------
ASC 718 "Compensation - Stock Compensation" codified SFAS No. 123 prescribes
accounting and reporting standards for all stock-based payments award to
employees, including employee stock options, restricted stock, employee stock
purchase plans and stock appreciation rights. , may be classified as either
equity or liabilities. The Company should determine if a present obligation to
settle the share-based payment transaction in cash or other assets exists. A
present obligation to settle in cash or other assets exists if: (a) the option
to settle by issuing equity instruments lacks commercial substance or (b) the
present obligation is implied because of an entity's past practices or stated
policies. If a present obligation exists, the transaction should be recognized
as a liability; otherwise, the transaction should be recognized as equity.
F-6
NOVA NATURAL RESOURCES CORPORATION
Notes to Financial Statements
December 31, 2009 and 2008
Note 2 - Significant Accounting Policies (continued)
Share Based Expenses (continued)
--------------------------------
The Company accounts for stock-based compensation issued to non-employees and
consultants in accordance with the provisions of ASC 505-50 "Equity - Based
Payments to Non-Employees" which codified SFAS 123 and the Emerging Issues Task
Force consensus in Issue No. 96-18 ("EITF 96-18"), "Accounting for Equity
Instruments that are Issued to Other Than Employees for Acquiring or in
Conjunction with Selling, Goods or Services". Measurement of share-based payment
transactions with non-employees shall be based on the fair value of whichever is
more reliably measurable: (a) the goods or services received; or (b) the equity
instruments issued. The fair value of the share-based payment transaction should
be determined at the earlier of performance commitment date or performance
completion date.
Going Concern
-------------
The Company's financial statements are prepared using accounting principles
generally accepted in the United States of America applicable to a going concern
which contemplates the realization of assets and liquidation of liabilities in
the normal course of business. The Company has not yet established an ongoing
source of revenues sufficient to cover its operating costs and allow it to
continue as a going concern. The ability of the Company to continue as a going
concern is dependent on the Company obtaining adequate capital to fund operating
losses until it becomes profitable. If the Company is unable to obtain adequate
capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other
things, additional capital resources. Management's plans to obtain such
resources for the Company include (1) obtaining capital from management and
significant stockholders sufficient to meet its minimal operating expenses, and
(2) as a last resort, seeking out and completing a merger with an existing
operating company. However, management cannot provide any assurances that the
Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain profitable
operations. The accompanying financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a going concern.
Recently Implemented Standards
------------------------------
ASC 105, Generally Accepted Accounting Principles ("ASC 105") (formerly
Statement of Financial Accounting Standards No. 168, The FASB Accounting
Standards Codification and the Hierarchy of Generally Accepted Accounting
Principles a replacement of FASB Statement No. 162) reorganized by topic
existing accounting and reporting guidance issued by the Financial Accounting
Standards Board ("FASB") into a single source of authoritative generally
accepted accounting principles ("GAAP") to be applied by nongovernmental
entities. All guidance contained in the Accounting Standards Codification
("ASC") carries an equal level of authority. Rules and interpretive releases of
the Securities and Exchange Commission ("SEC") under authority of federal
securities laws are also sources of authoritative GAAP for SEC registrants.
Accordingly, all other accounting literature will be deemed "non-authoritative".
F-7
NOVA NATURAL RESOURCES CORPORATION
Notes to Financial Statements
December 31, 2009 and 2008
Note 2 - Significant Accounting Policies (continued)
Recently Implemented Standards (continued)
------------------------------------------
ASC 105 is effective on a prospective basis for financial statements issued for
interim and annual periods ending after September 15, 2009. The Company has
implemented the guidance included in ASC 105 as of July 1, 2009. The
implementation of this guidance changed the Company's references to GAAP
authoritative guidance but did not impact the Company's financial position or
results of operations.
ASC 855, Subsequent Events ("ASC 855") (formerly Statement of Financial
Accounting Standards No. 165, Subsequent Events) includes guidance that was
issued by the FASB in May 2009, and is consistent with current auditing
standards in defining a subsequent event. Additionally, the guidance provides
for disclosure regarding the existence and timing of a company's evaluation of
its subsequent events. ASC 855 defines two types of subsequent events,
"recognized" and "non-recognized". Recognized subsequent events provide
additional evidence about conditions that existed at the date of the balance
sheet and are required to be reflected in the financial statements.
Non-recognized subsequent events provide evidence about conditions that did not
exist at the date of the balance sheet but arose after that date and, therefore;
are not required to be reflected in the financial statements. However, certain
non-recognized subsequent events may require disclosure to prevent the financial
statements from being misleading. This guidance was effective prospectively for
interim or annual financial periods ending after June 15, 2009. The Company
implemented the guidance included in ASC 855 as of April 1, 2009. The effect of
implementing this guidance was not material to the Company's financial position
or results of operations.
In August 2009, the FASB issued Accounting Standards Update No. 2009-05,
"Measuring Liabilities at Fair Value," ("ASU 2009-05"). ASU 2009-05 provides
guidance on measuring the fair value of liabilities and is effective for the
first interim or annual reporting period beginning after its issuance. The
Company's adoption of ASU 2009-05 did not have an effect on its disclosure of
the fair value of its liabilities.
In September 2009, the FASB issued ASC Update No. 2009-12, Fair Value
Measurements and Disclosures (Topic 820): Investments in Certain Entities that
Calculate Net Asset Value per Share (or Its Equivalent) ("ASC Update No.
2009-12"). This update sets forth guidance on using the net asset value per
share provided by an investee to estimate the fair value of an alternative
investment. Specifically, the update permits a reporting entity to measure the
fair value of this type of investment on the basis of the net asset value per
share of the investment (or its equivalent) if all or substantially all of the
underlying investments used in the calculation of the net asset value is
consistent with ASC 820. The update also requires additional disclosures by each
major category of investment, including, but not limited to, fair value of
underlying investments in the major category, significant investment strategies,
redemption restrictions, and unfunded commitments related to investments in the
major category. The amendments in this update are effective for interim and
annual periods ending after December 15, 2009 with early application permitted.
The Company does not expect that the implementation of ASC Update No. 2009-12
will have a material effect on its financial position or results of operations.
F-8
NOVA NATURAL RESOURCES CORPORATION
Notes to Financial Statements
December 31, 2009 and 2008
Note 2 - Significant Accounting Policies (continued)
Recently Implemented Standards (continued)
------------------------------------------
In June 2009, FASB issued Statement of Financial Accounting Standards No. 167,
Amendments to FASB Interpretation No. 46(R) ("Statement No. 167"). Statement No.
167 amends FASB Interpretation No. 46R, Consolidation of Variable Interest
Entities an interpretation of ARB No. 51 ("FIN 46R") to require an analysis to
determine whether a company has a controlling financial interest in a variable
interest entity. This analysis identifies the primary beneficiary of a variable
interest entity as the enterprise that has a) the power to direct the activities
of a variable interest entity that most significantly impact the entity's
economic performance and b) the obligation to absorb losses of the entity that
could potentially be significant to the variable interest entity or the right to
receive benefits from the entity that could potentially be significant to the
variable interest entity. The statement requires an ongoing assessment of
whether a company is the primary beneficiary of a variable interest entity when
the holders of the entity, as a group, lose power, through voting or similar
rights, to direct the actions that most significantly affect the entity's
economic performance. This statement also enhances disclosures about a company's
involvement in variable interest entities. Statement No. 167 is effective as of
the beginning of the first annual reporting period that begins after November
15, 2009. Although Statement No. 167 has not been incorporated into the
Codification, in accordance with ASC 105, the standard shall remain
authoritative until it is integrated. The Company does not expect the adoption
of Statement No. 167 to have a material impact on its financial position or
results of operations
In June 2009, the FASB issued Statement of Financial Accounting Standards No.
166, Accounting for Transfers of Financial Assets an amendment of FASB Statement
No. 140 ("Statement No. 166"). Statement No. 166 revises FASB Statement of
Financial Accounting Standards No. 140, Accounting for Transfers and
Extinguishment of Liabilities a replacement of FASB Statement 125 ("Statement
No. 140") and requires additional disclosures about transfers of financial
assets, including securitization transactions, and any continuing exposure to
the risks related to transferred financial assets. It also eliminates the
concept of a "qualifying special-purpose entity", changes the requirements for
derecognizing financial assets, and enhances disclosure requirements. Statement
No. 166 is effective prospectively, for annual periods beginning after November
15, 2009, and interim and annual periods thereafter. Although Statement No. 166
has not been incorporated into the Codification, in accordance with ASC 105, the
standard shall remain authoritative until it is integrated. The Company does not
expect the adoption of Statement No. 166 will have a material impact on its
financial position or results of operations.
Note 3 - Stockholders' Equity
Common stock
------------
The authorized common stock of the Company consists of 50,000,000 shares with
par value of $0.01.
During the year ended December 31, 2009, the Company rescinded 4,000,000 shares
of common stock issued to a consultant and also issued 950,000 shares of common
stock valued at $19,000 for the conversion of an outstanding note payable. The
Company did not issue any stock during the year ended December 31, 2009.
There were 5,021,764 common shares outstanding as of December 31, 2009 and 2008.
The Company is not authorized to issue preferred stock.
F-9
NOVA NATURAL RESOURCES CORPORATION
Notes to Financial Statements
December 31, 2009 and 2008
Note 3 - Stockholders' Equity (continued)
Net loss per common share
-------------------------
Net loss per share is calculated in accordance with SFAS No. 128, "Earnings Per
Share." The weighted-average number of common shares outstanding during each
period is used to compute basic loss per share. Diluted loss per share is
computed using the weighted averaged number of shares and dilutive potential
common shares outstanding. Dilutive potential common shares are additional
common shares assumed to be exercised. Basic net loss per common share is based
on the weighted average number of shares of common stock outstanding during 2009
or 2008.
Note 4 - Income Taxes
We did not provide any current or deferred U.S. federal income tax provision or
benefit for any of the periods presented because we have experienced operating
losses since inception. Per Statement of Accounting Standard No. 109 "Accounting
for Income Tax" and FASB Interpretation No. 48 "Accounting for Uncertainty in
Income Taxes an interpretation of FASB Statement No.109", when it is more likely
than not that a tax asset cannot be realized through future income the Company
must allow for this future tax benefit. We provided a full valuation allowance
on the net deferred tax asset, consisting of net operating loss carry-forwards,
because management has determined that it is more likely than not that we will
not earn income sufficient to realize the deferred tax assets during the
carry-forward period.
The provision for income taxes differs from the amount computed by applying the
statutory federal income tax rate to income before provision for income taxes.
The sources and tax effects of the differences for the periods presented are as
follows:
Income tax provision at the federal statutory rate 35%
Effect on operating losses -35%
----------
-
Net deferred tax assets consist of the following:
2009 2008 2007
-------------- ------------- ---------------
Net operating loss carry forward $ 5,855,420 $ 5,815,701 $ 5,801,382
Valuation allowance (5,855,420) (5,815,701) (5,801,382)
-------------- ------------- ---------------
Net deferred tax asset $ - $ - $ -
============== ============= ===============
F-10
NOVA NATURAL RESOURCES CORPORATION
Notes to Financial Statements
December 31, 2009 and 2008
Note 4 - Income Taxes (continued)
A reconciliation of income taxes computed at the statutory rate is as follows:
2009 2008 2007
---------------- --------------- -----------------
Tax at statutory rate $ 39,719 $ 14,289 $ 88,500
Valuation allowance (39,719) (14,289) (88,500)
---------------- --------------- -----------------
Net deferred tax asset $ - $ - $ -
================ =============== =================
The Company did not pay any income taxes during the years ended December 31,
2009, 2008 or 2007
The net federal operating loss carry forward will expire in 2023 and 2024. This
carry forward may be limited upon the consummation of a business combination
under IRC Section 381.
Note 5 - Related Party Transactions
The Company has received loans multiple shareholders totaling from inception to
December 31, 2009 for the purposes of funding operations. The loans are
non-interest bearing and due on demand and as such are included in current
liabilities as of the balance sheet dates. Additionally, the loans are
convertible to common stock at the option of the note holder. Imputed interest
has been considered but was determined to be immaterial to the financial
statements as a whole.
The Company received proceeds from such loans of $90,695 and $65,492 during the
years ended December 31, 2009 and 2008. Additionally, $19,000 of the loans were
repaid with cash during 2009 and $19,000 was converted to 950,000 shares of
common stock during the year ended December 31, 2009.
Note 6 - Subsequent Events
The Company has evaluated subsequent events through March 25, 2010 and
determined there are no events to disclose.
F-11
Item 9. Changes in and Disagreements with Accountants on Accounting and ------
Financial Disclosure
None
Item 9A(T). Controls and Procedures
-----------------------------------
Evaluation of Disclosure Controls and Procedures
We maintain "disclosure controls and procedures," as such term is defined in
Rule 13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"),
that are designed to ensure that information required to be disclosed in our
Exchange Act reports is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission rules and
forms, and that such information is accumulated and communicated to our
management, including our Chief Executive Officer and Chief Financial Officer,
as appropriate, to allow timely decisions regarding required disclosure. We
conducted an evaluation (the "Evaluation"), under the supervision and with the
participation of our Chief Executive Officer ("CEO") and Chief Financial Officer
("CFO"), of the effectiveness of the design and operation of our disclosure
controls and procedures ("Disclosure Controls") as of the end of the period
covered by this report pursuant to Rule 13a-15 of the Exchange Act. Based on
this Evaluation, our President has concluded that the Company's disclosure
controls and procedures were effective.
Changes in Internal Controls
----------------------------
We have also evaluated our internal controls for financial reporting, and there
have been no changes in our internal controls that have materially affected, or
are reasonably likely to material affect, the internal control over financial
reporting or in other factors that could affect those controls subsequent to the
date of their last evaluation.
Limitations on the Effectiveness of Controls
--------------------------------------------
Our President and CEO, does not expect that our Disclosure Controls and internal
controls will prevent all errors and all fraud. A control system, no matter how
well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Further, the design
of a control system must reflect the fact that there are resource constraints,
and the benefits of controls must be considered relative to their costs. Because
of the inherent limitations in all control systems, no evaluation of controls
can provide absolute assurance that all control issues and instances of fraud,
if any, within the Company have been detected. These inherent limitations
include the realities that judgments in decision-making can be faulty, and that
breakdowns can occur because of a simple error or mistake. Additionally,
controls can be circumvented by the individual acts of some persons, by
collusion of two or more people, or by management or board override of the
control.
The design of any system of controls also is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions; over time, controls may become inadequate because of changes
in conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be detected.
Management's Report on Internal Control over Financial Reporting
----------------------------------------------------------------
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Exchange Rule
13a-15(f). The Company's internal control over financial reporting is a process
designed to provide reasonable assurance to our management and board of
directors regarding the reliability of financial reporting and the preparation
of the financial statements for external purposes in accordance with accounting
principles generally accepted in the United States of America
Our internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the
assets of the Company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with accounting principles generally accepted in the United States of
America, and that receipts and expenditures of the Company are being made only
in accordance with authorizations of management and directors of the Company;
and (3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the Company's assets that could
have a material effect on the financial statements.
18
Because of its inherent limitations, internal controls over financial reporting
may not prevent or detect misstatements. All internal control systems, no matter
how well designed, have inherent limitations, including the possibility of human
error and the circumvention of overriding controls. Accordingly, even effective
internal control over financial reporting can provide only reasonable assurance
with respect to financial statement preparation. Also, 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.
Our management made an internal assessment of the effectiveness of our internal
control over financial reporting as of 12/31/2007. In making this assessment, it
used the experience of the President and CEO. Based on this evaluation, our
management concluded that the internal control is ineffective since there is a
material weakness in our internal control over financial reporting. A material
weakness is a deficiency, or a combination of control deficiencies, in internal
control over financial reporting such that there is a reasonable possibility
that a material misstatement of the Company's annual or interim financial
statements will not be prevented or detected on a timely basis.
The material weakness relates to the lack of segregation of duties in financial
reporting, as our financial reporting and all accounting functions are performed
by the President and CEO with no oversight by another internal professional with
accounting expertise. Our President does possess accounting expertise but our
company does not have an audit committee. This weakness is due to the company's
lack of working capital to hire additional staff. To remedy this material
weakness, we intend to raise additional capital to engage another internal
accountant to assist with financial reporting as soon as our finances will
allow.
This annual 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 registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission that permit us to provide only management's report in this annual
report.
PART III
Item 10. Directors, Executive Officers, and Corporate Governance
----------------------------------------------------------------
The following table sets forth the names and ages of the member(s) of our Board
of Directors and our executive officers and the positions held by each.
Name Age Position
------------------- ------- --------------------------------
Wayne A. Doss 56 President, chief executive officer and director
DR Luke Fazio 34 Director
Mr. Doss was elected as president, chief executive officer and director in
October 2007.
Set forth below are descriptions of the background of the executive officer and
director of the Company and principal occupations for the past five years:
Wayne A. Doss was elected as president, chief executive officer and director of
Nova Natural Resources Corporation in October 2007 and has acted in a consultant
capacity since 2003. Before being elected as president, chief executive officer
and director of Nova Mr. Doss was a business consultant for several Public
Companies. Mr. Doss was the President and CEO of Keller Industries and Keller
Ladders from 1989 to 2000, until the unit was sold. Keller was a 250,000,000
building products company with over 4,000 employees.
The President and Chief Executive Officer was appointed by the Board of
Directors and holds office at the discretion of the Board.
None of the officers or Board member(s) has been involved in any bankruptcy
petition filed by or against any business of which they were a general partner
or executive officer, either at the time of the bankruptcy or within two years
prior to that time.
None of the officers or Board member(s) has any conviction in a criminal
proceeding or is subject to a pending criminal proceeding.
None of the officers or Board members is 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. None of the officers or Board members have
been found by a court of competent jurisdiction (in a civil action), the
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law.
Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the
Exchange Act requires our officers and directors and persons who own more than
10% of a registered class of our equity securities, to file reports of ownership
and changes in ownership of equity securities of Nova with the SEC. Officers,
directors and greater than 10% stockholders are required by the SEC regulations
to furnish us with copies of all Section 16(a) forms that they file. Mr. Wayne
Doss has not filed Form 4 Statement of Changes in Beneficial Ownership but his
holdings are reflected in this filing.
On March 29, 2010, Mr. Wayne A. Doss, Director of the company placed the name of
Dr. Luke Fazio MD CM FRCSC, forward for nomination to the Board of Directors of
the company. The Board of Directors unanimously resolved that Dr. Luke Fazio MD
CM FRCSC be elected to the Board of Directors of Nova Natural Resources
Corporation and serve for one year unless reelected for a longer term.Dr. Luke
Fazio, 34, completed his medical school training at McGill University in
Montreal in 1999. He performed his training in Urology at the University of
Western Ontario and became a fellow of the Royal College of Surgeons of Canada
in 2004. Dr. Fazio went on to a fellowship in endourology and minimally-invasive
surgery at St. Michael's Hospital in Toronto in association with the University
of Toronto. Dr. Fazio has been on staff as an attending urologist at Kingston
General Hospital in association with Queen's University. Dr. Fazio is currently
on staff at Humber River Hospital in Toronto practicing general urology with a
special interest in the management of urinary stones and minimally-invasive
surgery. Dr. Fazio also serves as a member of the medical team at Greenestone
Clinic in Muskoka, Ontario, Canada
19
Code of Ethics
The Board of Directors adopted a Code of Business Conduct and Ethics applicable
to all of our directors, officers and employees, including our CEO and senior
officers. A copy of our Code of Ethics is attached hereto as an Exhibit 14.
Shareholders may also request a copy of the Code of Ethics from:
Nova Natural Resources Corporation Attention: Investor Relations 2000 NE 22nd
Street Wilton Manors, Fl. 33305
Board Meetings and Committees
On March 15, 2007 the shareholders of Nova Natural Resources Corp., by majority
consent accepted the resignation of the sole Director and Officer of the Company
Mr. Chris Tse, appointed Mr. David Putnam as the President & CEO and Chief
Financial Officer of the Company, and appointed Mr. Nick Laroche as a Company
Director. Mr. Putnam currently resides in Toronto, Ontario, therefore the
Company executive offices are in the process of being relocated to Toronto,
Ontario. This action was taken by the Shareholders of the Corporation by a vote,
or concurrence of the majority of the outstanding shares. This action was
approved in excess of the two third majority as required by Colorado Law and the
Company Articles of Incorporation.
On March 31, 2007 the newly appointed Board of Directors approved the
appointment of Mr. Putnam as the Company President & CEO and the majority
consent in reference to the appointment of the new Directors, Mr. Putnam and Mr.
Laroche. The New Board of Directors approved the issuance of 2,500,000 shares of
rule144 restricted common stock for each of it new Directors. The Board of
directors authorized the President to proceed with the acquisition of the Lotta
Minutes Prepaid Calling Card transaction after reviewing the Executive Summary.
The Board authorized the President to proceed with securing the rights and
privileges in an asset acquisition structure whereby Nova Natural Resources
would acquire 100% of said rights and privileges. The President was authorized
to issue up to ten million (10,000,000) shares of Nova Natural Resources Rule
144 Restricted Common Shares and up to $500,000.00 (with the condition the funds
would be paid based upon a future funding or once the company has adequate
working capital) to secure rights.
On April 15, 2007 the Board approved the Lotta Minutes Pre-Paid Calling Card
transaction and authorized the President to issue ten million (10,000,000)
shares of Nova Natural Resources Rule 144 Restricted Common Stock to Glen Simon
for 100% of 2133185 Ontario Inc., for all rights and privileges concerning the
Lotta Minutes deal as defined in the Lotta Minutes Executive Summary and
documentation.
On April 30, 2007 the Board approved the consulting contracts with two outside
consultants to assist the company in its new venture. The consultants, Mr.
Aluwahlia and Mr. Wendlegoed will each receive 2,500,000 shares of rule 144
Restricted Common Stock at .01 for said services.
On October 1, 2007 the Company cancelled the Lotta Minutes deal for non
performance of the acquisition agreement terms, ten million (10,000,000) shares
were authorized to be issued in conjunction with the closing of the deal, the
shares were never issued and the board of directors cancelled the authorization
to issue said shares and the five million (5,000,000) shares for the consultants
associated with the Lotta Minutes Deal.
On March 29, 2010, Mr. Wayne A. Doss, Director of the company placed the name of
Dr. Luke Fazio MD CM FRCSC, forward for nomination to the Board of Directors of
the company. The Board of Directors unanimously resolved that Dr. Luke Fazio MD
CM FRCSC be elected to the Board of Directors of Nova Natural Resources
Corporation and serve for one year unless reelected for a longer term.Dr. Luke
Fazio, 34, completed his medical school training at McGill University in
Montreal in 1999. He performed his training in Urology at the University of
Western Ontario and became a fellow of the Royal College of Surgeons of Canada
in 2004. Dr. Fazio went on to a fellowship in endourology and minimally-invasive
surgery at St. Michael's Hospital in Toronto in association with the University
of Toronto. Dr. Fazio has been on staff as an attending urologist at Kingston
General Hospital in association with Queen's University. Dr. Fazio is currently
on staff at Humber River Hospital in Toronto practicing general urology with a
special interest in the management of urinary stones and minimally-invasive
surgery. Dr. Fazio also serves as a member of the medical team at Greenestone
Clinic in Muskoka, Ontario, Canada.
On March 29, 2010, Mr. Nick Laroche, Director of Nova Natural Resources
Corporation resigned and the Board of Directors accepted the resignation. Mr.
Laroche decided to focus on his business interest and relocated to The Peoples
Republic of China to join his new wife.
20
Audit Committee
We currently do not have an Audit Committee, the Board currently handles the
duties of the Audit Committee. The Company does not believe that not having an
Audit Committee will have any adverse effect on its financial statements, based
upon current operations. Management will assess whether an Audit Committee may
be necessary in the future.
Item 11. Executive Compensation
-------------------------------
The President, Chief Executive Officer and Director has received cash
compensation for our last fiscal year. There have been no annuity, pension or
retirement benefits ever paid to our officers or directors. We currently do not
have an employment agreement with the President, Chief Executive Officer and
Sole Director.
Summary Compensation Table
The following table shows the compensation for the fiscal year ended December
31, 2009 earned by the President, Chief Executive Officer and Director:
Fiscal Stock
Year Awards Option All Other
Name and Principle Position Ended Salary ($) Bonus ($) ($)(1) Awards ($)\ Compensation ($) Total ($)
---------------------------------------------------------------------------------------------------------------------------------
Wayne A. Doss (as) 2009 $ 0 $ 0 $ 10,000 $ 0 $ 0 $ 10,000
President, Chief Executive
Officer
2008 $ 0 $ 0 $ 10,000 $ 0 $ 0 $ 10,000
Item 12. Security Ownership of Certain Beneficial Owners and Management and
---------------------------------------------------------------------------
Related Stockholder Matters.
----------------------------
The following table sets forth information regarding the ownership of our common
stock as of December 31, 2009 by: (i) each Director; (ii) each of the Named
Executives Officers in the Summary Compensation Table; (iii) all Executive
Officers and Directors of the Company as a group and (iv) all those known by us
to be beneficial owners of more than five percent of our common stock. As of
December 31, 2009, there are 5,021,764 shares of common stock outstanding.
Title Of Class Name and Beneficial Owner Amount and Nature of Beneficial Percent of Class
Owner
------------------------------------------------------------------------------------------------------
Common Stock Wayne Doss 2,430,000 48.4
Common Stock Ed Blasiak 475,000 9.5
Common Stock Robert Salna 400,000 8
Item 13. Certain Relationships and Related Transactions
-------------------------------------------------------
None
21
Item 14. Principal Accountant Fees and Services
-----------------------------------------------
In January 2002, the Company's Board engaged Eddy S.L. Chin Chartered Accountant
as the independent accountant of the Company.
Fees that we paid to Eddy S.L. Chin Chartered Accountant for the fiscal year
ended December 31, 2009, fees paid for the fiscal year ended December 31, 2008
and December 31, 2007 are set forth below:
--------------------------------------------------------------------------------
2009 2008 2007
Audit fees $ 10,000 $ 10,000 $ 10,000
Tax fees 0
All other fees 0
---------------------------------------------------
$ 10,000 $ 10,000 $ 10,000
===================================================
Audit Fees
Audit fees were for professional services rendered for the audit of our annual
financial statements for the years ended December 31, 2009, 2008 and 2007.
Tax Fees
Nil fees were paid to auditors for tax compliance, tax advice or tax compliance
services during the fiscal years ended December 31, 2009, 2008and 2007.
All Other Fees
We did not incur any other fees billed by auditors for services rendered to our
Company, other than the services covered in "Audit Fees" for the fiscal years
ended December 31, 2009, 2008 and 2007.
PART IV
-------
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
-------------------------------------------------
Exhibit No. Description
Exhibit 14 Code of Ethics
Exhibit 31.1 Section 302 Certification of the Chief Executive Officer
Exhibit 32.1 Certification of the Chief Executive Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2003
22
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NOVA NATURAL RESOURCES CORP.
----------------------------
Registrant
DATE: March 30, 2010 By: /S/ Wayne A. Doss
-------------------------------
Wayne A. Doss
President, CEO and CFO
23
