Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2009
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file # 333-149617
NOVAGEN SOLAR, INC.
(Exact Name of Registrant as Specified in its Charter)
NEVADA
(State or other jurisdiction of incorporation or organization)
98-0471927
(I.R.S. Employer Identification number)
1440-3044 BLOOR STREET WEST, TORONTO, ONTARIO M8X 2Y8
(Address of principal executive offices)
Registrant's telephone number, including area code: 647.456.9521
Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered under Section 12(g) of the Act:
Common stock, $0.0001 par value 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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K 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. [ ]
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 Act (Check one):
[ ] Large Accelerated Filer [ ] Accelerated Filer
[ ] Non-accelerated Filer [X] Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
As of March 30, 2010 the registrant had 12,651,300 shares of its Common Stock
outstanding.
FORWARD LOOKING STATEMENTS
Certain statements made in this Annual Report are "forward-looking statements"
(within the meaning of the Private Securities Litigation Reform Act of 1995)
regarding the plans and objectives of management for future operations. Such
statements involve known and unknown risks, uncertainties and other factors that
may cause actual results, performance or achievements of the Company to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. The forward-looking
statements made in this Report are based on current expectations that involve
numerous risks and uncertainties. The Company's plans and objectives are based,
in part, on assumptions involving the growth and expansion of business.
Assumptions relating to the foregoing involve judgments with respect to, among
other things, future economic, competitive and market conditions and future
business decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond the control of the Company. Although the
Company believes that its assumptions underlying the forward-looking statements
are reasonable, any of the assumptions could prove inaccurate and, therefore,
there can be no assurance that the forward-looking statements made in this
Report will prove to be accurate. In light of the significant uncertainties
inherent in the forward-looking statements made in this Report, the inclusion of
such information should not be regarded as a representation by the Company or
any other person that the objectives and plans of the Company will be achieved.
As used in this annual report, the terms "we", "us", "our", "Company" and
"Novagen Solar" means Novagen Solar Inc., unless otherwise indicated.
PART I
ITEM 1. BUSINESS.
OVERVIEW
Novagen Solar Inc. (the "Company") is a full service solar power developer based
in Toronto, Ontario. Novagen will market, sell, design and install solar energy
plants across North America, with an emphasis on turnkey commercial power
systems, brownfield revitalization, land reclamation and off-grid community
developments. Novagen's flexible business model will utilize best-in-class
products in conjunction with innovative financial solutions to maximize solar
yield and generate substantial value for our stockholders while contributing to
energy security, social equity, and protection of the ecosystem upon which life
depends.
CORPORATE HISTORY
Novagen was incorporated in the State of Nevada on June 22, 2005 under the name
of Pickford Minerals Inc. We were originally engaged in the exploration of
mineral deposits in Labrador, Newfoundland, but due to higher than anticipated
costs were unable to implement our exploration program. Motivated by
developments in solar technology and believing that market conditions and
legislative incentives were favorable, our management made a strategic decision
in April 2009 to pursue opportunities in the solar industry.
On April 27, 2009, we entered into an agreement to acquire all the issued and
outstanding shares of Novagen Solar (Canada) Ltd., a privately held Canadian
corporation formed on February 14, 2009 ("NSC"). NSC is an authorized sales
representative of Rainbow Solar Inc. ("RSi"), a Delaware corporation engaged in
the marketing, sale and distribution of a portfolio of solar products based on
leading technologies. NSC is licensed under an agreement dated February 19,
2009, as amended on July 10, 2009 (the "Sales License"), for a period of 10
years to sell and distribute RSi's products anywhere in the world, with the
exclusive right to sell and distribute in Canada. On May 12, 2009, we changed
our name to Novagen Solar Inc. The acquisition of NSC closed on July 10, 2009.
Since closing the acquisition of NSC, we have abandoned our mineral exploration
interests and focused our business operations exclusively on solar energy. On
December 1, 2009, the acquisition of NSC was rescinded, resulting in all shares
exchanged through the acquisition of NSC being returned to the transferors.
The address for our head office is 1440-3044 Bloor Street West, Toronto, Ontario
M8X 2Y8. Our telephone number is (647) 456-9521. Our facsimile number is (647)
439-3785. Our common stock is quoted on the NASD Over-the-counter Bulletin
Board under the symbol "NOVZ".
PRODUCTS AND SERVICES
We intend to offer a number of solar products and services that seek to generate
revenue from initial installation activities, as well as potential recurring
revenue from an installed base of customers. Such products and services will
include the following:
SOLAR POWER PLANT DEVELOPMENT
Commercial Solar Installations. We plan to develop, finance, construct and
operate commercial solar installations throughout North America, with a focus on
rooftop and open-space systems that produce one Megawatt of electricity or less.
This is an area of the market that we believe to be underserved. We believe
this sector offers faster deployment and better prospects for generating
additional business from customers with multiple locations. We will offer
property owners a comprehensive range of participation levels and financing
packages, including leasing arrangements, that will have the broadest possible
appeal. As part of our turnkey system, we will design and specify the
appropriate system, manage its installation and maintenance, and arrange for all
of the necessary financing. We will also take care of the required permitting
and apply for subsidies. Additionally, we will arrange for monitoring and
maintenance to ensure installed systems are kept in peak condition throughout
their expected life.
Solar Power Plants. We intend to develop large scale (in excess of one
Megawatt), ground-mounted solar power plants, either alone or in partnership
with others.
Brownfield Revitalization Brownfields are real property, the expansion,
redevelopment, or reuse of which may be complicated by the presence or potential
presence of a hazardous substance, pollutant, or contaminant. Cleaning up and
reinvesting in these properties protects the environment, reduces blight, and
takes development pressures off greenspaces and working lands. We believe that
solar energy technologies are well suited for use at brownfield sites because
they require very little maintenance and can be installed on the ground without
penetrating the surface or disturbing existing contamination. We intend to work
with property owners and municipalities to assist in the revitalization of
brownfields by providing turnkey solar energy solutions utilizing best-in-class
photovoltaic arrays and building integrated solar energy systems.
Land Reclamation. Land reclamation refers to the restoration of land damaged by
mining, erosion, or some other activity or process. The process of reclamation
includes maintaining water and air quality, minimizing flooding, erosion and
damage to wildlife and aquatic habitats caused by surface mining. In respect of
former mining sites, reclamation generally involves filling in excavations,
grading the land to avoid leaving steep slopes, placing the original topsoil on
the graded surface, and planting the topsoil with vegetation. Through a
collaboration with our industry partners, we plan to provide mining companies
with sustainable solar energy solutions for responsible exploration and mining
practices, such as providing solar power for mining operations and reclamation
activities, and post-reclamation solar power plant development.
Off-Grid Communities. According to Natural Resources Canada, there are over 300
remote communities in Canada with a total population of 200,000. These
communities are not connected to the North American electrical grid or piped
natural gas network and are permanent or long-term settlements. Many of them
are very dependent on imported oil and pay energy costs that can be up to 10
times higher than in the rest of Canada. We intend to assist Canada's remote
communities to deploy solar solutions appropriate for their needs, including the
development of solar power plants to provide clean, reliable energy. In
addition to providing turnkey systems, we will assist communities to establish
and nurture a maintenance support infrastructure for their power plant(s). Such
an infrastructure, while not complex, must be functional and appropriate for the
size, complexity and sophistication of the system deployed. We will provide
training for local residents, documentation matched to local capabilities,
spare-parts inventory and component resupply. By providing communities with
appropriate technology and infrastructure training, we will improve their
self-sufficiency while creating jobs and supporting the local economy.
MANUFACTURING
We intend to engage in manufacture of PV products within the next two years of
operations, with a focus on modules, inverters and mounting/tracking systems
utilized in our solar plants. The determination as to which products we will
seek to manufacture will depend on market response, the availability of raw
materials, available capital, and our ability to obtain manufacturing rights on
a profitable basis. There can be no assurance that we will have access to
sufficient capital to develop manufacturing operations. If we are unable to
establish manufacturing operations, we will be entirely dependent upon third
parties for the supply of products, which could limit our growth and results of
operations.
COMPETITION
The solar market is intensely competitive and rapidly evolving. The number of
solar product resellers and integrators has rapidly increased due to the growth
of actual and forecast demand for solar products and the relatively low barriers
to entry. We have only recently commenced operations, and do not presently
hold a significant competitive market position in the solar market. Many of our
competitors are large, well established companies with substantially larger
operating staffs and greater capital resources than we have, which have been
engaged in the solar energy business for a much longer time than we have.
Our ability to compete will depend upon our ability to establish supply
relationships with wholesalers, OEM distributors and independent manufacturers
providing the most efficient solutions. Specifically, we will compete with
major PV module manufacturers, such as Sharp Corporation, Suntech Power, BP
Solar, GE Energy, Mitsubishi, and Sanyo; and integrated manufacturers of PV
products such as First Solar, Inc., Kyocera Corporation, Renewable Energy
Corporation, Solar World AG and Sun Power Corporation. We will also compete
with numerous regional and national solar installation companies, including
First Solar Inc., Skypower, Pod Generating Group and CarbonFree Technology Inc.
We also expect to compete with new entrants to the solar market, including those
that offer more advanced technological solutions or that have greater financial
resources. Furthermore, the entire solar industry also faces competition from
conventional energy and non-solar renewable energy providers.
We believe that we will be able to successfully compete by integrating our
products together with our installation services to provide turnkey solar power
solutions. By providing strong technical, financial and regulatory expertise,
while capitalizing on our management's relationships with government, suppliers
and enterprise-level end users, we believe that Novagen will be able to
establish itself in North America as a significant full-service solar power
developer.
SUPPLIERS
By establishing strategic partnerships with major component suppliers we will
ensure that every new project is designed and installed with the most advanced
technology appropriate for our customers. We will purchase PV panels used in
our solar power systems principally from PowerCom Co. Inc., Green Energy
Technology Inc., Day4Energy Inc., Kyocera Solar and Suntech America and we
purchase inverters principally from SatCon Power Systems, which components will
represent approximately two-thirds of our component requirements. Hardware and
other materials will be readily available for off-the-shelf purchase.
We intend to remain independent of any one technology or equipment vendor to
ensure that we will be able to offer our customers turnkey solutions best suited
to their individual needs. As such, we do not have supply agreements with our
suppliers, except for purchase orders on a case-by-case basis. Although PV
panels are manufactured world-wide, we are subject to market price fluctuation
and vendor lead time and inventory for the components that we purchase.
MARKETING
We will sell our solar power systems directly to commercial, industrial and
governmental customers, through an internal sales and marketing staff. We may
appoint additional sales representatives as independent contractors to solicit
business and identify potential development opportunities. We expect to rely
heavily on the relationships between our management and end users in our target
market.
We believe that, depending upon the size of the projects, it is likely that a
significant portion of our initial business will derive from a small number of
customers. There can be no assurance that the loss of any such customer would
not adversely affect our business or results of operations. We expect that our
customer mix will change as we expand our operations.
REGULATIONS
The market for electricity generation products is heavily influenced by
national, regional and local government regulations and policies concerning the
electric utility industry, as well as internal policies and regulations
promulgated by electric utilities. These regulations and policies often relate
to electricity pricing and technical interconnection of customer-owned
electricity generation. In Canada and in a number of other countries, these
regulations and policies are being modified and may continue to be modified.
Customer purchases of, or further investment in the research and development of,
alternative energy sources, including solar power technology, could be deterred
by these regulations and policies, which could result in a significant reduction
in the potential demand for our solar products.
Our operations are subject to a variety of national, federal, regional and local
laws, rules and regulations relating to worker safety and the use, storage,
discharge and disposal of environmentally sensitive materials. Because we
outsource and do not manufacture our solar power systems, we do not use,
generate, store or discharge toxic, volatile or otherwise hazardous chemicals
and wastes. We believe that we are in compliance in all material respects with
all laws, rules, regulations and requirements that affect our business.
Further, we believe that compliance with such laws, rules, regulations and
requirements does not impose a material impediment on our ability to conduct
business.
GOVERNMENT SUBSIDIES AND INCENTIVES
We believe that economic and national security issues, technological advances,
environmental regulations seeking to limit emissions by fossil fuel, air
pollution regulations restricting the release of greenhouse gasses, aging
electricity transmission infrastructure and depletion and limited supply of
fossil fuels, has made reliance on traditional sources of fuel for generating
electricity less attractive. Government policies, in the form of both regulation
and incentives, have accelerated the adoption of solar technologies by
businesses and consumers. For example, in the United States, the 2005 energy
bill enacted a 30% investment tax credit for solar, and in January 2006
California approved the largest solar program in the country's history that
provides for long term subsidies in the form of rebates to encourage use of
solar energy where possible.
Currently, the cost of solar power exceeds the cost of power furnished by the
electric utility grid in many locations. Various subsidies and tax incentive
program exist at the national, regional and local levels to encourage the
adoption of solar power including the following:
Capital Cost Rebates - provide funds to customers based on the cost of size of a
customer's solar power system.
Performance-Based Incentives - provide funding to customers based on the energy
produced by their solar energy system.
Feed-In Tariff Subsidies - government imposed prices set above market rates
(which may differ by system size or application) that utilities are required to
pay for renewable electricity generated by end-users for a guaranteed period of
time.
Tax Credits - reduce a customer's taxes at the time the taxes are due.
Net Metering - enables end-users to sell any excess electricity they generate
from solar energy to their local utility in exchange for a credit against their
utility bills (usually combined with rebates).
Renewable Portfolio Standards - government mandates that a certain portion of
electricity delivered to customers by utilities come from a set of eligible
renewable energy resources, and in some instances, that a portion of the
renewable energy quota must be generated by solar energy.
If any of these subsidies or incentives are discontinued, reduced or
substantially modified, if growth in any such subsidies or incentives is
reduced, or if renewable portfolio standards or similar production requirements
are changed or eliminated, demand for our solar products could decline or never
develop, and our results of operations and financial condition could be
materially and adversely affected as a result.
Despite the benefits of solar power, there are also certain risks and challenges
faced by solar power. Solar power is heavily dependent on government subsidies
to promote acceptance by mass markets. We believe that the near-term growth in
the solar energy industry depends significantly on the availability and size of
these government subsidies and on the ability of the industry to reduce the cost
of generating solar electricity. The market for solar energy products is, and
will continue to be, heavily dependent on public policies that support growth of
solar energy. There can be no assurance that such policies will continue. Any
decrease in the level of rebates, incentives or other government support for
solar energy would have an adverse affect on our ability to sell our products.
Incentives vary by country, region, and electric utility. Within the United
States, one national incentive is the federal 30% investment tax credit ("ITC")
and special depreciation rules. The ITC credit is capped at $2,000 for
residential customers while commercial customers are not subjected to any cap
while federally approved accelerated depreciation is limited to commercial
customers. The economic value in each given situation of the ITC and
accelerated depreciation depends on the tax status of the customer.
Additionally, several states offer various tax credits to commercial and
residential customers. Residential customers and commercial customers are often
eligible for different non-tax incentives such as rebates, grants, performance
based incentives and feed-in-tariffs, which vary greatly from state to state and
utility to utility and are often tiered according to a project's size and
eligibility. Support for solar energy projects outside the United States also
vary greatly based on different programs in each country.
Within Canada, the Province of Ontario has implemented a program for
feed-in-tariff subsidies ("FiT"). Under the FiT program, the Provincial
electric utility will purchase power generated through PV at premium rates for a
period of 20 years, guaranteed by the Provincial Government. Additional
provincial policies that will encourage the development of solar energy in
Canada are expected in 2010.
BUILDING CODES
We are required to obtain building permits and comply with local ordinances and
building codes for each project, the cost of which is included in our estimated
costs for each proposal.
RESEARCH AND DEVELOPMENT
We have not undertaken any research or development over the last two fiscal
years.
INTELLECTUAL PROPERTY
We currently have no employees. We may utilize independent contractors and
consultants from time to time to assist in the development of our business.
Independent contractors are generally paid on a commission, hourly or
job-related basis, depending on the services being performed.
ENVIRONMENTAL
Our operations are currently limited to the sale and distribution of solar
products. As such, we are not aware of any environmental laws that are
applicable to our business, or which could result in any material compliance
costs to us or effects on our business.
EMPLOYEES
We currently have no employees other than our officers and directors, who have
not been paid for their services. As we implement our business plan, we expect
to add employees as appropriate.
ITEM 1A. RISK FACTORS
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act
and are not required to provide the information required under this item.
ITEM 1B. UNRESOLVED STAFF COMMENTS
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act
and are not required to provide the information required under this item.
ITEM 2. PROPERTIES
We do not presently own or have an interest in any real property.
ITEM 3. LEGAL PROCEEDINGS
Neither Novagen Solar, nor any of its officers or directors is a party to any
material legal proceeding or litigation and such persons know of no material
legal proceeding or contemplated or threatened litigation. There are no
judgments against Novagen Solar or its officers or directors. None of our
officers or directors have been convicted of a felony or misdemeanor relating to
securities or performance in corporate office.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 11, 2009, the Company's Articles of Incorporation were duly amended and
the Company's name changed under Article 1 of the Articles of Incorporation from
"Pickford Minerals, Inc." to "Novagen Solar Inc." The amendment was made
effective on May 12, 2009 through the filing of a Certificate of Amendment with
the Secretary of State of Nevada. The amendment of the Company's Articles of
Incorporation was approved under section 78.320 of the Nevada Revised Statutes
and the Company's Bylaws, which provide that any action required or permitted to
be taken at a meeting of the stockholders may be taken without a meeting if
stockholders holding at least a majority of the voting power sign a written
consent approving the action. On April 26, 2009, the director of the Company
approved and recommended the amendment. On May 11, 2009, stockholders holding at
least a majority of the voting rights of all outstanding shares of the Company's
capital stock voted in favor of the amendment by written consent.
PART II
ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
Our common stock is quoted on the OTC Bulletin Board under the symbol "NOVZ".
Trading of our stock is sporadic and does not constitute an established public
market for our shares.
For the periods indicated, the following table sets forth the high and low bid
prices per share of common stock. The following quotations obtained from
otcMarkets.com reflect the high and low bids for our shares of common stock
based on inter-dealer prices, without retail mark-up, mark-down or commission
and may not represent actual transactions.
--------------------------------------
QUARTER ENDED HIGH LOW
--------------------------------------
March 31, 2009 $0.00 $0.00
June 30, 2009 $0.25 $0.01
September 30, 2009 $0.55 $0.20
December 31, 2009 $0.53 $0.05
======================================
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On July 10, 2009, we issued 3,000,000 restricted common shares at $0.006 per
share to the former shareholders of NSC in exchange for all of their shares in
NSC in connection with our acquisition of all the issued and outstanding shares
of NSC. The shares were issued without registration under the Securities Act of
1933 in reliance on an exemption from registration provided by Regulation S of
the Securities Act. No general solicitation was made in connection with the
offer or sale of these securities. The common shares were surrendered to the
Company on December 1, 2009, as part of the rescission of the acquisition of
NSC.
On September 8, 2009, we issued 200,000 common shares to a director of the
Company as consideration for his service provided as a director at a fair market
value of $0.55 per share for $110,000.
HOLDERS
On December 31, 2009, the shareholders' list of our shares of common stock
showed 60 registered holders of our shares of common stock and 12,651,300 shares
of common stock outstanding. The number of record holders was determined from
the records of our transfer agent and does not include beneficial owners of
shares of common stock whose shares are held in the names of various security
brokers, dealers, and registered clearing agencies.
DIVIDEND POLICY
We have not declared or paid any cash dividends on our common stock. We
currently intend to retain future earnings, if any, to finance the expansion of
our business. As a result, we do not anticipate paying any cash dividends in the
foreseeable future.
SHARE PURCHASE WARRANTS
We have not issued and do not have outstanding any warrants to purchase shares
of our common stock.
OPTIONS
We have not issued and do not have outstanding any options to purchase shares of
our common stock.
CONVERTIBLE SECURITIES
As part of our acquisition of NSC, on July 10, 2009 we issued a non-interest
bearing convertible demand debenture for $30,000 to one of its former
shareholders. The convertible debenture was surrendered, unredeemed and
unconverted, to the Company on December 1, 2009, as part of the rescission of
the acquisition of NSC.
As part of the rescission of our acquisition of NSC, on December 31, 2009 we
issued a non-interest bearing convertible demand note for $50,000 to NSC. NSC
may, upon 61 days written notice to the Company, convert the principal amount
owing into common shares of our capital stock. The conversion rate will be the
average volume weighted closing price of the Company's stock on the NASD
over-the-counter bulletin board for the 10 business days preceding the notice
date.
We have not otherwise issued and do not have outstanding any other securities
convertible into shares of our common stock or any rights convertible or
exchangeable into shares of our common stock.
PENNY STOCK REGULATION
Our shares must comply with the Penny Stock Reform Act of 1990, which may
potentially decrease our shareholders' ability to easily transfer their shares.
Broker-dealer practices in connection with transactions in "penny stocks" are
regulated. Penny stocks generally are equity securities with a price of less
than $5.00. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document that provides information about penny
stocks and the risks in the penny stock market. The broker-dealer also must
provide the customer with 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 customer's account. In addition, the penny stock rules generally require
that prior to a transaction in a penny stock, the broker-dealer make a special
written determination that the penny stock is a suitable investment for the
purchaser and receive the purchaser's written agreement to the transaction.
These disclosure requirements may have the effect of reducing the level of
trading activity in the secondary market for a stock that must comply with the
penny stock rules. Since our shares must comply with such penny stock rules, our
shareholders will in all likelihood find it more difficult to sell their
securities.
ITEM 6. SELECTED FINANCIAL DATA
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act
and are not required to provide the information required under this item.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Until July 10, 2009, our business plan was to explore our mineral property to
determine whether it contained commercially exploitable reserves of valuable
minerals. Our plan was to commence a mineral exploration program that would
have involved expanded geological mapping, and geochemical sampling that would
cover previously established grid areas, as well as other prospective sites that
might have been developed to delineate either base metals or industrial
minerals. Due to higher than anticipated fuel costs, we were unable to commence
our exploration program as planned in 2008. By the second quarter of 2009, we
had insufficient capital to initiate complete our program. In light of market
conditions, our management determined in our second fiscal quarter of 2009 that
it was in the Company's best interests to review opportunities in the field of
solar energy.
On April 27, 2009, we entered into the Reorganization Agreement with the
shareholders of Novagen Solar (Canada) Ltd. ("NSC") to acquire all the issued
and outstanding shares of NSC. NSC was the exclusive sales agent in Canada of
RSi, and a non-exclusive sales agent for RSi everywhere else in the world. The
acquisition of NSC was closed on July 10, 2009. As a result of the acquisition,
we abandoned our mineral exploration interests (including a mineral exploration
deposit of $7,610) and began pursuing the marketing, sale and distribution of PV
products as our primary business. Accordingly, our accumulated operating losses
of $41,580 to December 31, 2008 reflect our past activities that have been
either discontinued or abandoned.
On November 10, 2009, the Company agreed with NSC and RSi to terminate the Sales
License granting NSC the right to sell photovoltaic products distributed by RSi.
The termination releases all parties to the sales license from all claims
arising from the sales license or the termination thereof. As a result of the
termination of the sales license, all parties are released from their
obligations thereunder: NSC will not be licensed to sell any products
distributed by RSI in Canada or elsewhere, and the Company will have no
obligation to issue any shares to RSi. On December 1, 2009, the acquisition of
NSC was rescinded, resulting in all issued and outstanding shares of NSC being
returned to the original NSC shareholders in exchange for all securities issued
by the Company as part of the acquisition.
As part of the rescission of our acquisition of NSC, on December 31, 2009 we
issued a non-interest bearing convertible demand note for $50,000 to NSC for the
acquisition of the solar panels. NSC may, upon 61 days written notice to the
Company, convert the principal amount owing into common shares of our capital
stock. The conversion rate will be the average volume weighted closing price of
the Company's stock on the NASD over-the-counter bulletin board for the 10
business days preceding the notice date.
We have not earned revenue since inception and we presently have no solar power
installations in operation. Since inception, our activities have been financed
from the proceeds of share subscriptions and loans from management and
non-affiliated third parties.
On January 23, 2008, we issued a promissory note for $15,000 to a non-affiliated
third party. The promissory note accrued interest at the rate of 20% per annum,
and was due and payable on July 23, 2008. Proceeds from the promissory note
were used to pay for offering expenses, claim renewal and working capital. The
note, together with $1,811 in interest, was repaid in full on August 26, 2008.
On March 10, 2008 we filed a Registration Statement with the Securities and
Exchange Commission in respect of an initial public offering of a minimum of
1,200,000 and a maximum of 2,000,000 shares of our common stock at $0.05 per
share. On April 8, 2008 the Securities and Exchange Commission declared our
Form S-1 Registration Statement (Commission File No. 333-149617) effective. Our
offering commenced on the effective date and terminated on August 6, 2008. As
of August 7, 2008, we sold a total of 1,200,000 shares of our common stock for
gross proceeds of $60,000.
On July 10, 2009, we issued a non-interest bearing convertible debenture for
$30,000 to a former shareholder of NSC in exchange for all of its shares of NSC.
The convertible debenture was surrendered, unredeemed and unconverted, to the
Company on December 1, 2009, as part of the rescission of the acquisition of
NSC.
OPERATING EXPENSES FROM CONTINUED OPERATIONS
Operating expenses consisted of consulting fees, professional fees, interest
expenses and other general corporate expenses. Operating expenses were $396,673
for the year ended December 31, 2009, compared with $29,599 in operating
expenses for the year ended December 31, 2008. The increase was a result of
costs associated with our change of business and consulting fees associated with
the exploration of our mineral properties.
Marketing expenses for the 2009 fiscal year were $184,591, compared to Nil for
fiscal 2008. Marketing expenses included all costs associated with exhibiting
at the ICSC trade show in Las Vegas, Nevada and the Intersolar trade shows in
Munich, Germany and San Francisco, California.
Director fees in fiscal 2009 were $110,000, compared to Nil for the 2008 fiscal
year. The increase was due to issuance of 200,000 common stock at a price of
$0.55 per share to a director of the Company.
Professional fees were $17,905 for the year ended December 31, 2009, compared
with $24,312 for the year ended December 31, 2008. Professional fees incurred
in fiscal year 2009 consist of accounting fees associated with our acquisition
of NSC, and the audited financial statements and periodic reporting obligations.
Consulting fees for the year ended December 31, 2009 were $2,300, compared with
$1,412 for the year ended December 31, 2008. Consulting fees incurred in fiscal
2009 were due to assistance with the preparation of our quarterly financial
reports.
General office expenses were $7,684 for the year ended December 31, 2009,
compared with office expenses of $2,064 for the year ended December 31, 2008.
The increase was due to increase in operating activities in 2009.
NET LOSS FOR THE YEAR
We recorded a net loss of $396,673 for the year ended December 31, 2009,
compared with a net loss of $29,599 for the year ended December 31, 2008.
LIQUIDITY AND CAPITAL RESOURCES.
As at December 31, 2009 we had total assets of $304 comprised entirely of cash.
This is a decrease from total assets of $52,867 as at December 31, 2008,
primarily due to marketing and travel expenses associated with our attendance at
various trade shows, professional fees, the abandonment of mineral exploration
deposit and office expenses.
As of December 31, 2009, our total liabilities increased to $248,501 comprised
of $42,651 owing to a director for expenses incurred on our behalf and $155,850
in trade debt arising from professional fees and our exhibition at several trade
shows. As of December 31, 2008, total liabilities were $14,391.
Our business is in the early stages of development. We do not presently have
sufficient capital to sustain minimal operations for the next 12 months, but our
President has undertaken to provide such financing as may be required in that
regard. Our management believes that a minimum of $600,000 will be required to
implement plan of operations and secure development and regulatory approvals
over the next six months. Our currently available capital and cash flows from
operations are insufficient to execute our current business plan and fund
business operations long enough to become cash flow positive or to achieve
profitability. Our ultimate success will depend upon our ability to raise
capital.
We will be required to pursue sources of additional capital through various
means, including joint venture projects and debt or equity financings. Future
financings through equity investments are likely to be dilutive to existing
stockholders. Also, the terms of securities we may issue in future capital
transactions may be more favorable for our new investors. Newly issued
securities may include preferences, superior voting rights, and the issuance of
warrants or other derivative securities, which may have additional dilutive
effects. Further, we may incur substantial costs in pursuing future capital and
financing, including investment banking fees, legal fees, accounting fees,
printing and distribution expenses and other costs. We may also be required to
recognize non-cash expenses in connection with certain securities we may issue,
such as convertible notes and warrants, which will adversely impact our
financial condition.
Our ability to obtain needed financing may be impaired by such factors as the
capital markets, both generally and specifically in the renewable energy
industry, and the fact that we have not been profitable, which could impact the
availability or cost of future financings. If the amount of capital we are able
to raise from financing activities, together with our revenue from operations,
is not sufficient to satisfy our capital needs, even to the extent that we
reduce our operations accordingly, we may be required to cease operations.
There is no assurance that we will be able to obtain financing on terms
satisfactory to use, or at all. We do not have any arrangements in place for
any future financing. If we are unable to secure additional funding, we may
cease or suspend operations. We have no plans, arrangements or contingencies in
place in the event that we cease operations.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act
and are not required to provide the information required under this item.
ITEM 8. FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
NOVAGEN SOLAR INC.
(AN EXPLORATION STAGE COMPANY)
FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
Report of Independent Registered Public Accounting Firm
Balance Sheets
Statements of Stockholders Equity
Statements of Operations
Statements of Cash Flows
Notes to Financial Statements
CHANG LEE LLP
Chartered Accountants
505-815 Hornby Street
Vancouver, B.C., V6Z 2E6
Tel: 604-687-3776
Fax: 604-688-3373
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
NOVAGEN SOLAR INC.
(A development stage company)
We have audited the accompanying balance sheets of Novagen Solar Inc. (a
development stage company) as at December 31, 2009 and 2008 and the related
statements of stockholders' equity, operations and cash flows for the years then
ended and for the period from June 22, 2005 (date of inception) to December 31,
2009. 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 audit 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 financial
statements are free of material misstatement. An audit 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 audit provides 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 the Company as at December 31,
2009 and 2008 and the results of its operations and its cash flows for the years
then ended and for the period from June 22, 2005 (date of inception) to December
31, 2009, 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 Note 1 to the financial
statements, the Company incurred losses from operations since inception, has not
attained profitable operations and is dependent upon obtaining adequate
financing to fulfil its intended business venture. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also discussed in Note 1. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Vancouver, Canada Chang Lee LLP
March 29, 2010 Chartered Accountants
NOVAGEN SOLAR INC.
(A development stage company)
Balance Sheets
December 31, 2009 and 2008
(Expressed in U.S. Dollars)
-------------------------------------------------------------------------------------------------
December 31 December 31
2009 2008
-------------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 304 $ 45,257
-------------------------------------------------------------------------------------------------
Exploration program security deposit - 7,610
-------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 304 $ 52,867
=================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities 155,850 14,391
Convertible Debenture 50,000 -
Owing to related parties 42,651 -
-------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 248,501 14,391
-------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY (DEFICIENCY)
SHARE CAPITAL
Authorized:
50,000,000 preferred shares at a par value of $0.0001 per share
Issued and outstanding: Nil
100,000,000 common shares with a par value of $0.0001 per share
Issued and outstanding: 12,651,300 common shares 1,265 1,245
(December 31, 2008: 12,451,300)
ADDITIONAL PAID-IN CAPITAL 188,791 78,811
(DEFICIT) ACCUMULATED DURING THE EXPLORATION STAGE (438,253) (41,580)
-------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY) (248,197) 38,476
-------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) $ 304 $ 52,867
=================================================================================================
The accompanying notes are an integral part of these financial statements.
NOVAGEN SOLAR INC.
(A development stage company)
Statements of Stockholders' Equity (Deficiency)
For the period from June 22, 2005 (inception) to December 31, 2009
(Expressed in U.S. Dollars)
------------------------------------------------------------------------------------------------------------------------------------
Deficit
accumulated Total
Additional during shareholder's
Preferred Stock Common Stock paid-in exploration equity
Shares Amount Shares Amount capital stage (deficiency)
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2005 - $ - 11,251,300 $ 1,125 $ 18,931 $ (6,418) $ 13,638
------------------------------------------------------------------------------------------------------------------------------------
Net (loss) and comprehensive (loss) for the year - - - - - (5,935) (5,935)
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2006 - $ - 11,251,300 $ 1,125 $ 18,931 $ (12,353) $ 7,703
------------------------------------------------------------------------------------------------------------------------------------
Net income and comprehensive income for the year - - - - - 372 372
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2007 - $ - 11,251,300 $ 1,125 $ 18,931 $ (11,981) $ 8,075
------------------------------------------------------------------------------------------------------------------------------------
Issuance of common stock for cash on August 6, 2008 - - 1,200,000 120 59,880 - 60,000
at $0.05 per share
Net (loss) and comprehensive (loss) for the year - - - - - (29,599) (29,599)
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2008 - $ - 12,451,300 $ 1,245 $ 78,811 $ (41,580) $ 38,476
------------------------------------------------------------------------------------------------------------------------------------
Issuance of common stock for shares on July 10, 2009 - - 3,000,000 300 17,968 - 18,268
at $0.006 per share
Rescind issuance of common stock for shares - - (3,000,000) (300) (17,968) - (18,268)
at $0.006 per share
Issuance of common stock for service on - - 200,000 20 109,980 - 110,000
September 8, 2009 at $0.55 per share
Net (loss) and comprehensive (loss) for the year - - - - - (396,673) (396,673)
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2009 - $ - 12,651,300 $ 1,265 $ 188,791 $ (438,253) $ (248,197)
====================================================================================================================================
The accompanying notes are an integral part of these financial statements
NOVAGEN SOLAR INC.
(A development stage company)
Statements of Operations
(Expressed in U.S. Dollars)
--------------------------------------------------------------------------------------------------------------------------
Cumulative from
June 22, 2005
(inception) to Year ended Year ended
December 31, 2009 December 31, 2009 December 31, 2008
--------------------------------------------------------------------------------------------------------------------------
EXPENSES
Bank charges $ 261 $ 67 $ 152
Consulting fees 3,712 2,300 1,412
Director fees 110,000 110,000 -
Interest expenses 1,811 - 1,811
Marketing expenses 184,591 184,591 -
Office expenses 10,602 6,920 132
Professional fees 42,217 17,905 24,312
Resource property acquisition and exploration costs 7,568 - -
Transfer expenses 2,584 803 1,781
Travel expenses 16,583 16,583 -
Write-off Exploration program security deposit 7,610 7,610 -
Project investigation 50,000 50,000 -
Foreign exchange loss (gain) (316) (106) (1)
--------------------------------------------------------------------------------------------------------------------------
LOSS FROM OPERATIONS 438,253 396,673 29,599
--------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) FOR THE PERIOD $ (438,253) $ (396,673) $ (29,599)
--------------------------------------------------------------------------------------------------------------------------
BASIC AND DILUTED LOSS PER SHARE $ (0.03) $ (0.00)
===========================================================================================================================
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
- Basic and diluted 12,513,766 11,828,349
===========================================================================================================================
The accompanying notes are an integral part of these financial statements
NOVAGEN SOLAR INC.
(A development stage company)
Statements of Cash Flows
(Expressed in U.S. Dollars)
----------------------------------------------------------------------------------------------------------
Cumulative from
June 22, 2005
(inception) to Year ended Year ended
December 31, 2009 December 31, 2009 December 31, 2008
----------------------------------------------------------------------------------------------------------
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
Net income (loss) for the period $ (438,253) $ (396,673) $ (29,599)
Adjustment for items not involving cash:
- Project investigation 50,000 50,000 -
- consulting fee 110,000 110,000 -
- Write-off Exploration program security deposit - 7,610 -
Changes in operating assets and liabilities
- (increase) decrease in prepaid expenses - - 1,222
- accounts payable and accrued liabilities 155,850 141,459 14,391
- due to a related party 42,651 42,651 -
- exploration program security deposit - - (2,801)
NET CASH FROM (USED IN) OPERATING ACTIVITIES (79,752) (44,953) (16,787)
----------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 80,056 - 60,000
----------------------------------------------------------------------------------------------------------
NET CASH FROM FINANCING ACTIVITIES 80,056 - 60,000
----------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 304 (44,953) 43,213
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD - 45,257 2,044
----------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 304 $ 304 $ 45,257
==========================================================================================================
The accompanying notes are an integral part of these financial statements
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Novagen Solar Inc. (hereinafter "the Company"), was incorporated in the State of
Nevada, U.S.A., on June 22, 2005 under the name of Pickford Minerals, Inc. The
Company's fiscal year end is December 31. On May 12, 2009, the Company changed
its name to Novagen Solar Inc.
The Company was originally engaged in the exploration of mineral deposits in
Labrador, Newfoundland, but was unable to implement its exploration program. In
April 2009, the Company began to pursue business opportunities relating to
photovoltaic solar energy.
On April 27, 2009, the Company entered into a Share Purchase Agreement (the
"Reorganization Agreement") with Novagen Solar (Canada) Ltd., a privately held
Canadian corporation formed on February 14, 2009 ("NSC"). Upon the closing of
the Reorganization Agreement on July 10, 2009, the shareholders of NSC delivered
all of their equity interests in NSC to the Company in exchange for 3,000,000
shares of common stock in the Company and 3,000,000 convertible securities of
the Company, as a result of which NSC became a wholly-owned subsidiary of the
Company (the "Reorganization"). The debenture is non-interest bearing,
convertible at the rate of $0.01 per share at the option of the holder. NSC is
a sales company engaged in the business of selling a variety of photovoltaic
products. At the time of the Reorganization, NSC had the exclusive right in
Canada and the non-exclusive right elsewhere to sell a line of photovoltaic
products distributed by Rainbow Solar Inc, a Delaware corporation ("RSI"). The
RSI sales license was terminated by mutual consent on November 10, 2009. (See
also Note 9).
On December 1, 2009, the Reorganization Agreement was rescinded, with the former
shareholders of NSC exchanging all securities received under the Reorganization
Agreement for all the issued and outstanding shares of NSC (the "Rescission").
As part of the Rescission, on December 1, 2009 the Company issued a non-interest
bearing convertible demand note for $50,000 to NSC for the sample solar panels
used by the Company. NSC may convert the principal amount owing into common
shares of our capital stock. The conversion rate will be the average volume
weighted closing price of the Company's stock on the NASD over-the-counter
bulletin board for the 10 business days prior to the surrender date and the
conversion is deemed to have been effected on the 61st day following the
surrender date.
These financial statements have been prepared in accordance with generally
accepted accounting principles in the United States of America applicable to a
going concern which assume that the Company will realize its assets and
discharge its liabilities in the normal course of business. The Company has
incurred accumulated losses of $438,253 since inception and has not generated
any revenue. The future of the Company is dependent upon its ability to develop
profitable sales and distribution operations. These factors create doubt as to
the ability of the Company to continue as a going concern. Realization values
may be substantially different from the carrying values as shown in these
financial statements should the Company be unable to continue as a going
concern. Management is in the process of identifying sources for additional
financing, or will provide the necessary financial support, to fund the ongoing
development of the Company's business.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Company have been prepared in accordance with
the generally accepted accounting principles in the United States of America.
Because a precise determination of many assets and liabilities is dependent upon
future events, the preparation of financial statements for a period necessarily
involves the use of estimates that have been made using careful judgment. The
financial statements have, in management's opinion been properly prepared within
reasonable limits of materiality and within the framework of the significant
accounting policies summarized below:
Accounting Method
The Company's financial statements are prepared using the accrual basis of
accounting in accordance with accounting principles generally accepted in the
United States of America.
Use of 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 for the reporting period. The
Company reviews its estimates on an ongoing basis. The estimates were based on
historical experience and on various other assumptions that the Company believes
to be reasonable under the circumstances. Actual results could differ from
these estimates. The Company believes the judgments and estimates required in
its accounting policies to be critical in the preparation of the Company's
financial statements.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly
liquid investments and short-term debt instruments with original maturities of
three months or less to be cash equivalents. As at December 31, 2009 and 2008,
there were no cash equivalents.
Concentration of Credit Risk
The Company places its cash and cash equivalents with high credit quality
financial institutions. As of December 31, 2009, the Company had $nil in a bank
beyond insured limit (December 31, 2008: $nil).
Foreign Currency Transactions
The Company is located and operating outside of the United States of America.
It maintains its accounting records in U.S. Dollars as follows:
At the transaction date each asset, liability, revenue and expense is translated
into U.S. dollars by the use of the exchange rate in effect at that date. At
the period end, monetary assets and liabilities are re-measured by using the
exchange rate in effect at that date. The resulting foreign exchange gains and
losses are included in operations.
Fair Value of Financial Instruments
The Company's financial instruments as defined by Accounting Standards
Codification ("ASC") 825, "Disclosures about Fair Value of Financial
Instruments," include cash and cash equivalents and accounts payable and accrued
liabilities. Fair values were assumed to approximate carrying value for these
financial instruments, except where noted. Management is of the opinion that
the Company is not exposed to significant interest or credit risks arising from
these financial instruments. The Company is operating outside the United States
of America and has significant exposure to foreign currency risk due to the
fluctuation of currency in which the Company operates and U.S. dollars.
Mineral Property Payments and Exploration Costs
The Company expenses all costs related to the acquisition, maintenance and
exploration of mineral claims in which it has secured exploration rights prior
to establishment of proven and probable reserves. When it has been determined
that a mineral property can be economically developed as a result of
establishing proven and probable reserves, the costs incurred to develop such
property are capitalized. Such costs will be amortized using the
units-of-production method over the estimated life of the probable reserve. To
date, the Company has shifted its focus on the solar panel and therefore, all
costs are being expensed.
Long-lived assets impairment
Long-lived assets of the Company are reviewed for impairment whenever events or
circumstances indicate that the carrying amount of assets may not be
recoverable, pursuant to guidance established in ASC 360, Accounting for the
Impairment or Disposal of Long-Lived Assets.
Management considers assets to be impaired if the carrying value exceeds the
future projected cash flows from related operations (undiscounted and without
interest charges). If impairment is deemed to exist, the assets will be written
down to fair value. Fair value is generally determined using a discounted cash
flow analysis.
Assets Retirement Obligations
The Company has adopted ASC 410, Accounting for Assets Retirement Obligations
which requires that the fair value of a liability for an asset retirement
obligation be recognized in the period in which it is incurred. ASC 410 requires
the Company to record a liability for the present value of the estimated site
restoration costs with corresponding increase to the carrying amount of the
related long-lived assets. The liability will be accreted and the asset will be
depreciated over the life of the related assets. Adjustments for changes
resulting from the passage of time and changes to either the timing or amount of
the original present value estimate underlying the obligation will be made. As
at December 31, 2009 and 2008 the Company does not have any asset retirement
obligations.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Stock-Based Compensation
The Company adopted ASC 718, "Share-Based Payment", to account for its stock
options and similar equity instruments issued. Accordingly, compensation costs
attributable to stock options or similar equity instruments granted are measured
at the fair value at the grant date, and expensed over the expected vesting
period. ASC 718 requires excess tax benefits be reported as a financing cash
inflow rather than as a reduction of taxes paid.
The Company did not grant any stock options during the years ended December 31,
2009 and 2008.
Comprehensive Income
The Company adopted ASC 220, Reporting Comprehensive Income, which establishes
standards for reporting and display of comprehensive income, its components and
accumulated balances. The Company is disclosing this information on its
Statement of Stockholders' Equity. Comprehensive income comprises equity except
those resulting from investments by owners and distributions to owners. The
Company has no elements of "other comprehensive income" for the years ended
December 31, 2009 and 2008.
Income Taxes
The Company has adopted ASC 740, Accounting for Income Taxes, which requires the
Company to recognize deferred tax liabilities and assets for the expected future
tax consequences of events that have been recognized in the Company's financial
statements or tax returns using the liability method. Under this method,
deferred tax liabilities and assets are determined based on the temporary
differences between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect in the years in which the
differences are expected to reverse.
Basic and Diluted Loss Per Share
In accordance with ASC 260 - "Earnings Per Share", the basic loss per common
share is computed by dividing net loss available to common stockholders by the
weighted average number of common shares outstanding. Diluted loss per common
share is computed similar to basic loss per common share except that the
denominator is increased to include the number of additional common shares that
would be outstanding if the potential common shares had been issued and if the
additional common shares were dilutive. The Company's potentially dilutive
shares, which include convertible securities, have not been included in the
computation of diluted loss per share as the result would be anti-dilutive.
Newly Adopted Accounting Pronouncements and New Accounting Pronouncements
On January 1, 2009, the Company adopted ASC 805, "Business Combinations". ASC
805 applies the acquisition method of accounting for business combinations
established in ASC 805 to all acquisitions where the acquirer gains a
controlling interest, regardless of whether consideration was exchanged.
Consistent with ASC 805 requires the acquirer to fair value the assets and
liabilities of the acquiree and record goodwill on bargain purchases, with main
difference the application to all acquisitions where control is achieved. The
adoption of this statement did not have a material effect on the Company's
financial position or results of operations.
On January 1, 2009, the Company adopted ASC 160, (prior authoritative
literature: SFAS 160, Non-controlling Interests in Consolidated Financial
Statements - An amendment of ARB No. 51). ASC 160 requires companies with
noncontrolling interests to disclose such interests clearly as a portion of
equity but separate from the parent's equity. The noncontrolling interest's
portion of net income must also be clearly presented on the Income Statement.
The adoption of this statement did not have a material effect on the Company's
financial position or results of operations.
On January 1, 2009, the Company adopted ASC 815-10 (prior authoritative
literature: SFAS 161, Disclosures about Derivative Instruments and Hedging
Activities-an amendment of FASB Statement No. 133). ASC 815-10 requires
companies with derivative instruments to disclose information that should enable
financial-statement users to understand how and why a company uses derivative
instruments, how derivative instruments and related hedged items are accounted
for under ASC 815 "Accounting for Derivative Instruments and Hedging Activities"
and how derivative instruments and related hedged items affect a company's
financial position, financial performance and cash flows. The adoption of this
statement did not have a material effect on the Company's financial position or
results of operations.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
On January 1, 2009, the Company adopted FSP No. 142-3, "Determination of the
Useful Life of Intangible Assets" ("FSP 142-3"), as codified in ASC subtopic
350-30, Intangibles - Goodwill and Other: General Intangibles Other than
Goodwill (ASC 350-30) and ASC topic 275, Risks and Uncertainties (ASC 275),
which amends the factors an entity should consider in developing renewal or
extension assumptions used in determining the useful life of recognized
intangible assets under FASB Statement No. 142, as codified in ASC topic 350,
Intangibles Goodwill and Other (ASC 350). This new guidance applies
prospectively to intangible assets that are acquired individually or with a
group of other assets in business combinations and asset acquisitions. The
adoption of this statement did not have a material effect on the Company's
financial statements.
On January 1, 2009, the Company adopted FASB Staff Position ("FSP") APB 14-1,
"Accounting for Convertible Debt Instruments That May Be Settled in Cash upon
Conversion (Including Partial Cash Settlement)", as coded in ASC 470 "debt".
ASC 470 specifies that issuers of convertible debt instruments that may be
settled in cash upon conversion (including partial cash settlement) should
separately account for the liability and equity components in a manner that will
reflect the entity's nonconvertible debt borrowing rate when interest cost is
recognized in subsequent periods. The adoption of this statement did not have a
material effect on the Company's financial statements.
On April 1, 2009, the Company adopted ASC 944-20, "Accounting for Financial
Guarantee Insurance Contracts" (formerly SFAS No. 163, Accounting for Financial
Guarantee Insurance - an interpretation of FASB Statement No. 60, Accounting and
Reporting by Insurance Enterprises). ASC 944-20 requires that an insurance
enterprise recognize a claim liability prior to an event of default (insured
event) when there is evidence that credit deterioration has occurred in an
insured financial obligation. The adoption of ASC 944-20 has no effect on the
Company's financial reporting at this time.
On April 1, 2009, the Company adopted ASC 260-10, "Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating
Securities." ASC 260-10 provides that unvested share-based payment awards that
contain non-forfeitable rights to dividends or dividend equivalents (whether
paid or unpaid) are participating securities and shall be included in the
computation of earnings per share pursuant to the two-class method. Upon
adoption, a company is required to retrospectively adjust its earnings per share
data (including any amounts related to interim periods, summaries of earnings
and selected financial data) to conform with the provisions of ASC 260-10. The
adoption of this statement did not have a material effect on the Company's
future financial position or results of operations.
In December 2008, the FASB issued FSP FAS 132(R)-1, "Employers' Disclosures
about Postretirement Benefit Plan Assets", as coded in ASC 715-20. This new
standard requires enhanced disclosures about plan assets in an employer's
defined benefit pension or other postretirement plan. Companies will be required
to disclose information about how investment allocation decisions are made, the
fair value of each major category of plan assets, the basis used to determine
the overall expected long-term rate of return on assets assumption, a
description of the inputs and valuation techniques used to develop fair value
measurements of plan assets, and significant concentrations of credit risk. This
statement is effective for fiscal years ending after December 15, 2009. The
adoption of this statement is not expected to have a material effect on the
Company's future financial position or results of operations.
In October 2008, the FASB issued FSP FAS 157-3, Determining the Fair Value of a
Financial Asset When the Market for That Asset Is Not Active, as coded in ASC
820-10, The standard addresses the application of Statement of Financial
Accounting Standards ("SFAS") No.157 for illiquid financial instruments. ASC
820-10 clarifies that approach to determining fair value other than the market
approach may be appropriate when the market for a financial asset is not active.
ASC 820-10 was effective upon issuance, including prior periods for which
financial statements have not been issued. The adoption of ASC 820-10 had no
impact on the Company's results of operations, financial condition or cash
flows.
On April 1, 2009, the Company adopted ASC 323-10, "Equity Method Investment
Accounting Considerations" that addresses how the initial carrying value of an
equity method investment should be determined, how an impairment assessment of
an underlying indefinite-lived intangible asset of an equity method investment
should be performed, how an equity method investee's issuance of shares should
be accounted for, and how to account for a change in an investment from the
equity method to the cost method. The adoption of ASC 323-10 did not have a
material impact on our financial condition or results of operations.
In April, 2009, the FASB issued ASC subtopic 820-10 (formerly Staff Position No.
FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the
Asset or Liability Have Significantly Decreased and Identifying Transactions
That Are Not Orderly). ASC 820-10 provides additional guidance for estimating
fair value when the volume and level of activity for the asset or liability have
significantly decreased. This ASC subtopic also includes guidance on identifying
circumstances that indicate a transaction is not orderly. The adoption of ASC
820-10 will not have a material impact on the Company's financial statements.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
On January 1, 2009, the Company adopted ASC 820 Fair Value Measurements and
Disclosures ("ASC 820"). The Company's adoption of ASC 820 did not materially
affect the Company's financial position, results of operations or liquidity. As
defined in ASC 820, fair value is based on the price that would be received to
sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. In order to increase consistency
and comparability in fair value measurements, ASC 820 establishes a fair value
hierarchy that prioritizes observable and unobservable inputs used to measure
fair value into three broad levels, which are described below:
- Level 1: Quoted prices (unadjusted) in active markets that are accessible
at the measurement date for assets or liabilities. The fair value hierarchy
gives the highest priority to Level 1 inputs.
- Level 2: Inputs other than quoted prices within Level 1 that are
observable for the asset or liability, either directly or indirectly.
- Level 3: Unobservable inputs that are used when little or no market data
is available. The fair value hierarchy gives the lowest priority to Level 3
inputs
In determining fair value, the Company utilizes valuation techniques that
maximize the use of observable inputs and minimize the use of unobservable
inputs to the extent possible as well as considers counterparty credit risk in
its assessment of fair value.
The Company's financial instruments consist principally of cash and cash
equivalents, accounts payable and accrued liabilities, convertible debentures,
and amounts owing to related parties. Pursuant to ASC 820, the fair value of
cash and cash equivalents is determined based on "Level 1" inputs, which consist
of quoted prices in active markets for identical assets. The recorded values of
all other financial instruments approximate their current fair values because of
their nature and respective maturity dates or durations.
In April, 2009, the FASB issued ASC 820-10-50 (formerly Staff Position No. FAS
107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial
Instruments) that expands to interim periods the existing annual requirement to
disclose the fair value of financial instruments that are not reflected on the
balance sheet at fair value. The new guidance could potentially require
additional disclosures in interim periods after the Company's fiscal year ending
2010. Adoption of this FSP will not have a material impact on the Company's
financial statements.
On April 1, 2009, the FASB issued ASC 320-10-65 (formerly Staff Position No. FSP
FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary
Impairments). ASC 320-10-65 amends the other-than-temporary impairment guidance
in U.S. GAAP for debt securities to make the guidance more operational and to
improve the presentation and disclosure of other-than-temporary impairments on
debt and equity securities in the financial statements. ASC 320-10-65 does not
amend existing recognition and measurement guidance related to
other-than-temporary impairments of equity securities. The Company adopted ASC
320-10-65 on October 1, 2009. The adoption of this FSP did not have a material
impact on the Company's financial statements.
In June 2009, the FASB issued ASC 860, Transfers and Servicing. ASC 860
requires more information about transfers of financial assets, including
securitization transactions, and where entities have continuing exposure to the
risks related to transferred financial assets. It eliminates the concept of a
"qualifying special-purpose entity," changes the requirements for derecognizing
financial assets, and requires additional disclosures. It also enhances
information reported to users of financial statements by providing greater
transparency about transfers of financial assets and an entity's continuing
involvement in transferred financial assets. ASC 860 is effective for fiscal
years beginning after November 15, 2009.
Other accounting standards that have been issued or proposed by the FASB or
other standards-setting bodies that do not require adoption until a future date
are not expected to have a material impact on the Company's financial statements
upon adoption.
NOTE 3 - MINERAL PROPERTY INTEREST
On October 31, 2005 the Company acquired a 100% interest in two non-contiguous
properties located between Paradise River and Eagle River, approximately 22 km.
west-southwest of the community of Paradise River, Labrador, Canada. The claims
were acquired from a non-affiliated third party for a total consideration of
$4,026, which covered an exploration program security deposit and staking and
other related costs of $441 (CAD$500) and $3,585, respectively. The Company
expensed the staking and other related costs of $3,585 in connection with the
acquisition of the mineral claims.
In connection with above noted mineral properties, the Company was required to
pay exploration program security deposits of $7,610 (CAD$9,300) and $4,809
(CAD$4,950) in fiscal years 2008 and 2007, respectively. Following the
Reorganization, the Company elected to abandon its interest in its mineral
properties and has forfeited the exploration program deposit.
NOTE 4 - CONVERTIBLE DEBENTURE
The Company issued a non-interest bearing debenture in an amount equal to
$50,000 that is convertible at the rate of the average volume weighted closing
price of the common shares on the NASD over-the-counter bulletin board for a
period of 10 business days prior to the surrender date and the conversion is
deemed to have been effected on the 61st day following the surrender date. In
accordance with EITF 98-5 "Accounting for Convertible Securities with Beneficial
Conversion Features or Contingently Adjustable Conversion Ratios", the Company
determined that the convertible debentures contained no embedded beneficial
conversion feature as the convertible debentures were issued with a conversion
price the same as the fair market value of the Company's common shares at the
time of issuance, being $0.53 per share. The carrying value of the convertible
debentures is equal to the fair value as they are non-interest bearing and due
on demand. As of the date of this report, the debenture has not been redeemed
or converted by the holder.
NOTE 5 - PREFERRED AND COMMON STOCK
The Company has 50,000,000 shares of preferred stock authorized and none issued
The Company has 100,000,000 shares of common stock authorized, of which
12,651,300 shares are issued and outstanding. All shares of common stock are
non-assessable and non-cumulative, with no preemptive rights.
On September 8, 2009, the Company issued 200,000 common shares to a director of
the Company as consideration for his services as a director at the fair market
value of $0.55 per share for a total of $110,000.
Under the terms of the Reorganization, on July 10, 2009, the Company issued
3,000,000 common shares at deemed value of $0.006 per share to the shareholders
of Novagen Solar (Canada) Ltd. The shares were surrendered to the Company on
December 1, 2009, as part of the Rescission.
During the year ended December 31, 2008, the Company issued 1,200,000 common
shares at $0.05 per share pursuant to a registered public offering for gross
proceeds of $60,000.
NOTE 6 - INCOME TAXES
At December 31, 2009, the Company had deferred tax assets of approximately
$153,400 principally arising from net operating loss carryforwards for income
tax purposes. As our management cannot determine that it is more likely than not
that we will realize the benefit of the deferred tax asset, a valuation
allowance equal to the deferred tax asset has been established at December 31,
2009. The significant components of the deferred tax asset at December 31, 2009
and 2008 were as follows:
--------------------------------------------------------------------------------
December 31, 2009 December 31, 2008
--------------------------------------------------------------------------------
Net operating loss carryforwards $ 153,400 $ 14,600
Valuation allowance (153,400) (14,600)
Net deferred tax asset $ - $ -
================================================================================
At December 31, 2009, we had net operating loss carryforwards of approximately
$438,300, which expire in the year 2025 through to 2029.
NOTE 7 - SUBSEQUENT EVENTS, COMMITMENT AND CONTINGENCY
None noted.
NOTE 8 - SEGMENT INFORMATION
The Company currently conducts all of its operations in Canada.
NOTE 9 - RELATED PARTY TRANSACTIONS
During the year ended December 31, 2009, the Company issued 200,000 common stock
to one of its directors as consideration for his services as a director at the
fair market value of $0.55 per share for a total of $110,000.
As at December 31, 2009, the Company owed $42,651 (2008: $6,494) to a director
of the Company, for the expenses he paid on behalf of the Company.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
As of December 31, 2009, we carried out an evaluation, under the supervision and
with the participation of our management, including our Chief Executive Officer
and Chief Financial Officer (who are one and the same person), of the
effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended. Based solely on the material
weaknesses described below, our Chief Executive Officer and Chief Financial
Officer concluded that, as of December 31, 2009, the Company's disclosure
controls and procedures were not effective:
1. The Company presently has only one officer and no employees. Inasmuch as
there is no segregation of duties within the Company, there is no management
oversight, no one to review control documentation and no control documentation
is being produced.
CHANGES IN DISCLOSURE CONTROLS AND PROCEDURES
There were no changes in disclosure controls and procedures that occurred during
the period covered by this report that have materially affected, or are
reasonably likely to materially effect, our disclosure controls and procedures.
We will not be implementing any changes to our disclosure controls and
procedures until there is a significant change in our operations or capital
resources.
LIMITATIONS ON THE EFFECTIVENESS OF CONTROLS
Our management, including our CEO and CFO (who are one and the same person),
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.
CEO AND CFO CERTIFICATIONS
Appearing immediately following the Signatures section of this report there are
Certifications of our CEO and CFO (who are one and the same person). The
Certifications are required in accordance with Section 302 of the Sarbanes-Oxley
Act of 2002 (the Section 302 Certifications). This Item of this report is the
information concerning the Evaluation referred to in the Section 302
Certifications and this information should be read in conjunction with the
Section 302 Certifications for a more complete understanding of the topics
presented.
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 Act Rule
13a-15(f). Our 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 (i) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the
assets of the Company; (ii) 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 (iii) 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.
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 assessed the effectiveness of our internal control over financial
reporting as of December 31, 2009. In making this assessment, it used the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control-Integrated Framework. Based solely on the
material weaknesses described below, our management has concluded that, as of
December 31, 2009, the Company's internal control over financial reporting was
not effective. Management has identified the following deficiencies that, when
aggregated, may possibly be viewed as a material weakness in our internal
control over financial reporting as of December 31, 2009:
1. We do not have an Audit Committee - While not being legally obligated to
have an audit committee, it is our management's view that such a committee,
including a financial expert member, is an utmost important entity level control
over our financial statements. To date we have not established an audit
committee.
2. Insufficient documentation of financial statement preparation and review
procedures - We employ policies and procedures in reconciliation of the
financial statements and the financial information based on which the financial
statements are prepared. Notwithstanding, the controls and policies we employ
are not sufficiently documented.
3. We did not maintain proper segregation of duties for the preparation of
our financial statements - As of December 31, 2009 the majority of the
preparation of financial statements was carried out by one person.
Additionally, we currently only have two officers/directors having oversight on
all transactions. This has resulted in several deficiencies including:
a. Significant, non-standard journal entries were prepared and approved by
the same person, without being checked or approved by any other personnel.
b. Lack of control over preparation of financial statements, and proper
application of accounting policies.
4. We lack sufficient information technology controls and procedures - As of
December 31, 2009, we lacked a proper data back up procedure, and while backup
did take place in actuality, we believe that it was not regulated by methodical
and consistent activities and monitoring.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
We have also established and evaluated our internal control over financial
reporting, and there have been no significant changes in our internal controls
or in other factors that could significantly affect those controls subsequent to
the date of their last evaluation. Nor have there have been any changes in our
internal control over financial reporting during the last fiscal quarter. We do
not intend to implement any changes to our internal control over financial
reporting until there is a significant change in our level of operations and
capital resources.
This annual report does not include an attestation report of our registered
public accounting firm regarding internal control over financial reporting. We
are not required to provide an attestation report by our registered public
accounting firm pursuant to the rules of the Securities and Exchange Commission.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
DIRECTORS AND OFFICERS
The following sets forth our directors, executive officers, promoters and
control persons, their ages, and all offices and positions held. Directors are
elected for a period of one year and thereafter serve until their successor is
duly elected by the shareholders. Officers and other employees serve at the
will of the Board of Directors.
--------------------------------------------------------------------------------
TERM PERIOD SERVED AS
NAME POSITION AGE DIRECTOR/OFFICER
--------------------------------------------------------------------------------
Thomas Mills Chief Executive Officer, 41 2009 to present
President,
Chief Financial Officer,
Principal Accounting Officer
and a director
Gary MacDonald a director 41 2009 to present
================================================================================
Thomas Mills is presently our sole officer and a director since July 10, 2009.
Mr. Mills was the co-founder of Thrust Energy Corp., an oil and gas exploration
company in June 2005, and has been its Chief Executive Officer, President, Chief
Financial Officer and a director since inception. Mr. Mills was also the
co-founder of AMP Productions Ltd., a motion picture production company in March
2003, and has served as its Chief Executive Officer, President, Chief Financial
Officer and a director since its inception. Mr. Mills was the co-founder of
Kingston Mines Ltd., a mineral exploration company in June 2005, and was its
Vice-President, Chief Financial Officer and a director until April 2008. Mr.
Mills also served as the President of Kingston Mines Ltd. from January 2008
until April 2008. From 2001 to September 2004, Mr. Mills was the Chief
Executive Officer and President of Torrent Energy Corp., a natural gas
exploration company, acting as its Chief Financial Officer from March 2004 to
September 2004. He received his Bachelor of Laws degree from the University of
British Columbia in 1996, and holds a Bachelor of Arts degree with an emphasis
on management and organizational behavior, obtained from the University of
Waterloo, Waterloo, Ontario in 1992. Mr. Mills was called to the Bar of British
Columbia in 1997, and remains a part-time practicing member.
Gary MacDonald has been a director of Novagen Solar Inc. as of September 8,
2010. Since November 1999, Mr. MacDonald has been a director of Cons AGX
Resources Corp. located in Vancouver, British Columbia. Cons AGX, now named
Petro Rubiales Energy Corp., is engaged in the business of oil and gas
exploration and is traded on the TSX Venture Exchange under the symbol PRE.
Since October 2002, Mr. MacDonald has been president and a director of Tapestry
Resource Corp. located in Vancouver, British Columbia. Tapestry is engaged in
the business of mining exploration. Tapestry is traded on the TSX Venture
Exchange under the symbol TPR.H. Since October 2002, Mr. MacDonald has been the
sole officer and a director of Oronova Mining Corp., an exploration stage mining
company located in Las Vegas, Nevada. Since October 2004, Mr. MacDonald has
been the Director of Astra Capital Corp. located in Calgary, Alberta, Canada.
Astra Capital is engaged in the business of capital raising and mergers and
acquisitions. Since January 1999, Mr. MacDonald has been a Director of Obelisk
International Ltd. located in Calgary, Alberta, Canada. Obelisk International
is engaged in the business of capital raising and mergers and acquisitions.
From October 2004 to January 2007, Mr. MacDonald was a director of Cierra
Pacific Ventures Ltd., and exploration stage mining company located in
Vancouver, British Columbia. Cierra Pacific Ventures is traded on TSX Venture
Exchange under the symbol CIZ.H. From March 2003 to January 2007, Mr. MacDonald
was the president and a director of Harlow Ventures Inc., an exploration stage
mining company located in Vancouver, British Columbia. Harlow Ventures is
traded on the TSX Venture Exchange under the symbol HLW.H. From July 2004 to
June 2007, Mr. MacDonald was a director or Tapango Resources Ltd. and
exploration stage mining company located in Vancouver, British Columbia.
Tapango Resources is traded on the TSX Venture Exchange under the symbol TPA.H.
From October 2002 to October 2006, Mr. MacDonald was the sole officer and a
director of Glengarry Developments, an exploration stage mining company located
in Vancouver.
The address for all our officers and directors is 1440-3044 Bloor Street West,
Toronto, Ontario M8X 2Y8.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
During the past five years none of our directors, executive officers, promoters
or control persons have:
(1) had any bankruptcy petition filed by or against any business 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) been convicted in a criminal proceeding or subject to a pending criminal
proceeding;
(3) been 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; or
(4) 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, and the judgment has not been
reversed, suspended, or vacated.
COMMITTEES OF THE BOARD
All proceedings of the board of directors for the fiscal year ended December 31,
2009 were conducted by resolutions consented to in writing by our board of
directors and filed with the minutes of the proceedings of our 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 does not believe that it is necessary to have such committees because
it believes that the functions of such committees can be adequately performed by
the board of directors.
Our company does not have any defined policy or procedure requirements for
shareholders to submit recommendations or nominations for directors. The board
of directors believes 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. The 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 President, Thomas Mills, at the
address appearing on the first page of this registration statement.
AUDIT COMMITTEE FINANCIAL EXPERT
We do not have a standing audit committee. Our directors perform the functions
usually designated to an audit committee. 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) 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)(B) of Schedule 14A under the Securities Exchange Act of 1934, as
amended, and as defined by Rule 4200(a)(14) of the NASD Rules.
We believe that our board of directors is capable of analyzing and evaluating
our financial statements and understanding internal controls and procedures for
financial reporting. Our board of directors does not believe that it is
necessary to have an audit committee because management believes that the
functions of an audit committees can be adequately performed by the board of
directors. In addition, we believe that retaining an independent director who
would qualify as an "audit committee financial expert" would be overly costly
and burdensome and is not warranted in our circumstances given the stage of our
development and the fact that we have not generated any positive cash flows from
operations to date.
As we generate revenue in the future, we intend to form a standing audit
committee and identify and appoint a financial expert to serve on our audit
committee.
CODE OF ETHICS
The Company has adopted a Code of Ethics for Senior Financial Officers that is
applicable to our principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions. A copy of our Code of Ethics for Senior Financial Officers is filed
as an exhibit to this annual report on Form 10-K.
INDEMNIFICATION
Under our Articles of Incorporation and Bylaws of the corporation, we may
indemnify an officer or director who is made a party to any proceeding,
including a law suit, because of his position, if he acted in good faith and in
a manner he reasonably believed to be in our best interest. We may advance
expenses incurred in defending a proceeding. To the extent that the officer or
director is successful on the merits in a proceeding as to which he is to be
indemnified, we must indemnify him against all expenses incurred, including
attorney's fees. With respect to a derivative action, indemnity may be made only
for expenses actually and reasonably incurred in defending the proceeding, and
if the officer or director is judged liable, only by a court order. The
indemnification is intended to be to the fullest extent permitted by the laws of
the State of Nevada.
Regarding indemnification for liabilities arising under the Securities Act of
1933, which may be permitted to directors or officers under Nevada law, we are
informed that, in the opinion of the Securities and Exchange Commission,
indemnification is against public policy, as expressed in the Act and is,
therefore, unenforceable.
ITEM 11. EXECUTIVE COMPENSATION
To date we have no employees other than our officers. No compensation has been
awarded, earned or paid to our officers. We have no employment agreements with
any of our officers. We do not contemplate entering into any employment
agreements until such time as we have proven mineral reserves.
There is no arrangement pursuant to which any of our directors has been or is
compensated for services provided as one of our directors.
There are no stock option plans, retirement, pension, or profit sharing plans
for the benefit of our officers or directors. We do not have any long-term
incentive plans that provide compensation intended to serve as incentive for
performance.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDERS MATTERS
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of December 31, 2009 by (i) each person known
by us to be a beneficial owner of more than five percent (5%) of our issued and
outstanding common stock; (ii) each of our Directors and executive officers; and
(iii) all our directors and executive officers as a group.
--------------------------------------------------------------------------------
Name Shares Beneficially Owned %
--------------------------------------------------------------------------------
Thomas E. Mills 9,000,000 71%
Gary MacDonald 200,000 2%
--------------------------------------------------------------------------------
Directors and officers as a group (two persons) 9,200,000 73%
--------------------------------------------------------------------------------
Total Shares Issued and Outstanding 12,651,300 100%
================================================================================
Unless otherwise noted, we believe that all persons named in the table have sole
voting and investment power with respect to all shares of common stock
beneficially owned by them. For purposes hereof, a person is considered to be
the beneficial owner of securities that can be acquired by such person within 60
days from the date hereof, upon the exercise of warrants or options or the
conversion of convertible securities. Each beneficial owner's percentage
ownership is determined by assuming that any such warrants, options or
convertible securities that are held by such person (but not those held by any
other person) and which can be exercised within 60 days from the date hereof,
have been exercised.
The address for all our directors, executive officers and beneficial owners of
more than 5% of our issued and outstanding shares is 3044 Bloor Street West,
Suite 1440, Toronto, Ontario M8X 2Y8.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
As at December 31, 2009, $42,651 is owed to a director for expenses incurred on
our behalf.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
AUDIT FEES
The aggregate fees billed by Chang Lee LLP Chartered Accountants for
professional services rendered for the audit of our annual financial statements
included in this Annual Report on Form 10-K for the fiscal years ended December
31, 2009 and 2008 were $5,000 and $4,372 respectively.
AUDIT RELATED FEES
For the fiscal year ended December 31, 2009 and 2008, the aggregate fees billed
for assurance and related services by Chang Lee LLP relating to our quarterly
financial statements (and the pro-forma financial statements included in our
current report on Form 8-K filed July 15, 2009), which are not reported under
the caption "Audit Fees" above, were $13,533 and $2,888, respectively.
TAX FEES
For the fiscal years ended December 31, 2009 and 2008, the aggregate fees billed
for tax compliance, by Chang Lee LLP were nil.
ALL OTHER FEES
For the fiscal years ended December 31, 2009 and 2008, the aggregate fees billed
by Chang Lee LLP for other non-audit professional services, other than those
services listed above, totaled nil.
Effective May 6, 2003, the Securities and Exchange Commission adopted rules that
require that before Chang & Lee is engaged by us or our subsidiaries to render
any auditing or permitted non-audit related service, the engagement be:
-approved by our audit committee; or
-entered into pursuant to pre-approval policies and procedures established by
the audit committee, provided the policies and procedures are detailed as to the
particular service, the audit committee is informed of each service, and such
policies and procedures do not include delegation of the audit committee's
responsibilities to management.
We do not have an audit committee. Our entire board of directors pre-approves
all services provided by our independent auditors. The pre-approval process has
just been implemented in response to the new rules. Therefore, our board of
directors does not have records of what percentage of the above fees were
pre-approved. However, all of the above services and fees were reviewed and
approved by the entire board of directors either before or after the respective
services were rendered.
PART IV
ITEM 13. EXHIBITS
EXHIBIT TITLE
3.1 Amended Articles of Incorporation, Novagen Solar Inc.
3.2 Amended Bylaws, Novagen Solar Inc.
14.1 Code of Ethics for Senior Financial Officers, Novagen Solar Inc.
31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
NOVAGEN SOLAR INC.
Date: March 30, 2010 By:/s/ Thomas Mills
Thomas Mills
Chief Executive Officer, President,
Chief Financial Officer and
Principal Accounting Officer
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
SIGNATURE TITLE DATE
/s/ Thomas Mills Chief Executive Officer, March 30, 2010
Thomas Mills President,
Chief Financial Officer,
Principal Accounting Officer and
a director
/s/ Gary MacDonald a director March 30, 2010
Gary MacDonal