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EX-32.1 - CERTIFICATION - Novagen Ingenium Inc.novz_10k31dec10ex321.txt
EX-31.1 - CERTIFICATION - Novagen Ingenium Inc.novz_10k31dec10ex311.txt

                                 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, 2010

[     ] 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:     647.628.5375

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 31, 2011 the registrant had 43,675,900 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" means Novagen Solar Inc., unless otherwise indicated. PART I ITEM 1. BUSINESS. OVERVIEW Solar power systems are used in industrial, commercial and residential applications to convert sunlight directly into electricity. Higher global energy prices, increased environmental awareness and the desire for energy security are accelerating the adoption of solar power. Governments around the world have also implemented various tariffs, tax credits and other incentives designed to encourage the use of solar power. Novagen Solar Inc. 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. Novagen is strategically positioned to capitalize on the feed-in-tariff rates for photovoltaic energy currently in effect in Ontario, Canada. 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"). At the time of the acquisition, NSC was engaged in the marketing, sale and distribution of a portfolio of solar products based on leading technologies. 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. 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 Pink OTC Markets OTCQB under the symbol "NOVZ". 1
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. SOLAR POWER PLANT DEVELOPMENT Commercial Solar Installations. We plan to develop, finance, construct and operate commercial solar installations in Ontario and throughout the rest of 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. We plan to seek regulatory approval for a 10 Megawatt installation in Ontario, Canada, by the end of 2011. 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. The U.S. Environmental Protection Authority estimates that there are more than 450,000 brownfields in the U.S. The number of brownfields in Canada is not known, but according to the Canadian Brownfields Network, many are held by municipalities. 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 ten 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. 2
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 products 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. 3
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. On October 1, 2009, the Province of Ontario approved the highest feed-in-tariff subsidies in North America at that time. 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. 4
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 2011. 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. We intend to establish cooperative research and development agreements with certain universities, customers and suppliers with a view to developing new solar products to which we will have sales rights. Our participation in any such arrangement may be limited to financing and administration. We may conduct the research or development ourselves, or in conjunction with others. When we collaborate on the development of any intellectual property, we will seek ownership of the intellectual property or the exclusive worldwide right to exploit such intellectual property. We have not established a budget for contributions to research and development. Where appropriate, we may also acquire, commercialize and improve new or existing technologies. INTELLECTUAL PROPERTY We do not own any of the intellectual property rights to any of the products that we sell. ENVIRONMENTAL Our planned operations are currently limited to the development and operation of solar power stations. 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 sole officer and director, who have not been paid for his services. As we implement our business plan, we expect to add significant numbers of employees. We anticipate that by December 31, 2011, we will have approximately five full-time employees, of which two will be sales-related, one will be an electrical engineer, one will be executive and one will be administrative. 5
By March 31, 2011, we intend to engage the services of a construction professional to oversee power plant development. We may also retain qualified persons from time to time on a contract basis to further assist in power plant development. We plan to keep our operating costs low by using supplemental contract labor and subcontracting portions of work to installers and other specialists, as is common in the construction industry. By June 30, 2011, we intend to engage two new executive officers, being the President and the Chief Financial Officer, and an additional external director. While we do not presently have any employment agreements with our officers and directors, we plan to enter into agreements with each of our key employees, including executive officers, by June 30, 2011. We do not presently have pension, health, annuity, insurance, stock options, profit sharing or similar benefit plans; however, we may adopt such plans in the future. There are presently no personal benefits available to our officers and directors. See "Executive Compensation". 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 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 Inc. or its officers or directors. None of our officers or directors have been convicted of a felony or misdemeanour 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. 6
PART II ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our shares trade under the symbol "NOVZ" on the Pink OTC Markets OTCQB. Very limited trading activity with our common stock has occurred during the past two years and the subsequent interim period; therefore, only limited historical price information is available. The following table sets forth the high and low bid prices of our common stock for the last two fiscal years, as reported by Pink OTC Markets Inc. and represents inter dealer quotations, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions: -------------------------------- QUARTER ENDED HIGH LOW -------------------------------- December 31, 2010 $0.46 $0.11 September 30, 2010 $1.00 $0.13 June 30, 2010 $0.15 $0.15 March 31, 2010 $0.52 $0.15 December 31, 2009 $0.55 $0.05 September 30, 2009 $0.55 $0.01 June 30, 2009 $0.12 $0.01 March 31, 2009 $0.10 $0.01 -------------------------------- UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS On July 19, 2009, we issued 5,000,000 restricted common shares at $0.01 per share to the former stockholders 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 in reliance on an exemption provided by Regulation S promulgated under 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, 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. The shares were issued without registration in reliance on an exemption provided by Regulation S promulgated under the Securities Act. No general solicitation was made in connection with the offer or sale of these securities. On March 31, 2010 the director surrendered these shares to the Company. On December 31, 2009, we issued to NSC a non-interest bearing note in an amount equal to $50,000 that was 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. The note was issued as part of the rescission of our acquisition of NSC, to reimburse NSC for $50,000 in costs and expenses incurred by it in the acquisition of its sales license from RSi. The note was issued without registration in reliance on an exemption provided by Regulation S promulgated under the Securities Act. On August 10, 2010 we repaid the note in full. NSC was formerly controlled by our sole officer and director, but on July 1, 2010, he divested all his interest in the NSC and does not retain any beneficial ownership of NSC whatsoever. On August 16, 2010, we issued 15,138,800 shares of our common stock to a creditor of Novagen at a price of $0.01 per share, in full and final settlement of a debt of $151,388 owed by Novagen to the creditor. The shares were issued without registration in reliance upon exemptions provided by Sections 4(2) and 4(6) of the Securities Act and Regulation D promulgated thereunder. On August 16, 2010, we issued 230,000 shares of our common stock to a creditor of Novagen at a price of $0.01 per share, in full and final settlement of a debt of $2,300 owed by Novagen to the creditor. The shares were issued without registration in reliance on an exemption provided by Regulation S promulgated under the Securities Act. On August 16, 2010, we issued 5,855,800 shares of our common stock to Ophion Management Ltd., a company controlled by our sole officer and director, at a price of $0.01 per share, in full and final settlement of a debt of $58,558 owed by Novagen to our sole officer and director. The shares were issued without registration in reliance on an exemption provided by Regulation S promulgated under the Securities Act. 7
On August 16, 2010 we issued 10,000,000 shares of our common stock at a price of $0.01 per share to five purchasers for total cash proceeds of $100,000. The shares were issued without registration in reliance on an exemption provided by Regulation S promulgated under the Securities Act. No general solicitation was made in connection with the offer or sale of these securities. One of the purchasers, who acquired 2,300,000 shares through the offering, is the mother of our sole officer and director. HOLDERS On March 30, 2010, the stockholders' list of our shares of common stock showed 37 registered holders of our shares of common stock and 43,675,900 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. 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 stockholders. 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. We paid the note in full on August 10, 2010. 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. 8
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THE FOLLOWING DISCUSSION AND ANALYSIS OF OUR PLAN OF OPERATION SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND THE RELATED NOTES. THIS DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS BASED UPON CURRENT EXPECTATIONS THAT INVOLVE RISKS AND UNCERTAINTIES, SUCH AS OUR PLANS, OBJECTIVES, EXPECTATIONS AND INTENTIONS. OUR ACTUAL RESULTS AND THE TIMING OF CERTAIN EVENTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS. 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 and complete our program. In light of market conditions, our management determined in our second fiscal quarter of 2009 that it was in our best interests to review opportunities in the field of solar energy. On April 27, 2009, we entered into the Reorganization Agreement with the stockholders of 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 and began pursuing the marketing, sale and distribution of PV products as our primary business. On November 10, 2009, we agreed with NSC and RSi to terminate the Sales License granting NSC the right to sell photovoltaic products distributed by RSi. The termination released all parties to the sales license from all claims and obligations arising from the sales license or the termination thereof. 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 stockholders 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 demand note for $50,000 to NSC for the acquisition of the solar panels. On August 10, 2010, we repaid the demand note in full. Our business is in the early stages of development. We presently do not have sufficient funds to sustain minimal operations for the next 12 months. We do not currently have any cash flows from operations and our available capital is insufficient to implement our business plan and fund business operations long enough to become cash flow positive or to achieve profitability. Our management believes that a minimum of $600,000 will be required to execute our business plan and secure development and regulatory approvals for solar power stations over the next twelve 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. 9
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. We have not earned revenue since inception and we presently have no solar power installations in operation. Since inception, we have suffered recurring losses and net cash outflows from operations, and our activities have been financed from the proceeds of share subscriptions and loans from management and non-affiliated third parties. We expect to continue to incur substantial losses to implement our business plan. We have not established any other source of equity or debt financing and there can be no assurance that we will be able to obtain sufficient funds to implement our business plan. As a result of the foregoing, our auditors have expressed substantial doubt about our ability to continue as a going concern in our financial statements for the year ended December 31, 2010. If we cannot continue as a going concern, then investors may lose all of their investment. RESULTS OF OPERATIONS We recorded a net loss of $64,209 for the year ended December 31, 2010, compared with a net loss of $396,673 for the year ended December 31, 2009. Operating expenses consisted of professional fees, consulting fees and other general corporate expenses. Professional fees were $39,828 for the year ended December 31, 2010, compared with $17,905 for the year ended December 31, 2009. Professional fees incurred in fiscal year 2010 consist of legal and accounting fees associated with a registration statement filed with the SEC on August 27, 2010, preparation of our audited financial statements and our periodic reporting obligations. Consulting fees for the year ended December 31, 2010 were $15,667, compared with $2,300 for the year ended December 31, 2009. All consulting fees incurred by Novagen in fiscal 2010 were related to Novagen's corporate development initiatives. General office expenses were $5,199 for the year ended December 31, 2010, compared with office expenses of $7,684 for the year ended December 31, 2009. LIQUIDITY AND CAPITAL RESOURCES. As of December 31, 2010, our total liabilities decreased to $7,993 comprised of $3,968 in trade debt arising from professional fees and $4,025 owing to a director for expenses incurred on our behalf. As of December 31, 2009, total liabilities were $248,501 comprised of $155,850 in trade debt, $50,000 in convertible note and $42,651 owning to a director for expenses incurred on our behalf. On August 10, 2010, we repaid the convertible note owing to NSC in full. On August 16, 2010, we issued 21,224,600 shares of our common stock in full and final satisfaction of $212,246 in debt, of which $58,558 was owed to our sole director and officer. Our management believes that the retirement of the outstanding debt obligations will improve Novagen's ability to obtain financing. On August 16, 2010, Novagen issued a total of 10,000,000 shares of our common stock at $0.01 per share for gross proceeds of $100,000. 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. 10
ITEM 8. FINANCIAL STATEMENTS INDEX TO FINANCIAL STATEMENTS NOVAGEN SOLAR INC. (AN EXPLORATION STAGE COMPANY) FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 Report of Independent Registered Public Accounting Firm Balance Sheets Statements of Stockholders Equity Statements of Operations and Comprehensive Loss Statements of Cash Flows Notes to Financial Statements 11
CHANG LEE LLP Chartered Accountants 606-815 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, 2010 and 2009 and the related statements of stockholders' equity, operations and comprehensive loss and cash flows for the years then ended and for the period from June 22, 2005 (date of inception) to December 31, 2010. 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, 2010 and 2009 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, 2010, 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 24, 2011 Chartered Accountants 12
NOVAGEN SOLAR INC. (A development stage company) Balance Sheets December 31, 2010 and 2009 (Expressed in U.S. Dollars) -------------------------------------------------------------------------------------------------- December 31 December 31 2010 2009 -------------------------------------------------------------------------------------------------- ASSETS CURRENT ASSETS Cash and cash equivalents $ - $ 304 Prepaid expenses 7,833 - -------------------------------------------------------------------------------------------------- TOTAL ASSETS $ 7,833 $ 304 ================================================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) LIABILITIES CURRENT LIABILITIES Accounts payable and accrued liabilities 3,968 155,850 Convertible debenture - related party - 50,000 Due to a related party 4,025 42,651 -------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 7,993 248,501 -------------------------------------------------------------------------------------------------- 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: 43,675,900 common shares 4,367 1,265 (December 31, 2009: 12,651,300) ADDITIONAL PAID-IN CAPITAL 497,935 188,791 (DEFICIT) ACCUMULATED DURING THE DEVELOPMENT STAGE (502,462) (438,253) -------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY) (160) (248,197) -------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) $ 7,833 $ 304 ================================================================================================== The accompanying notes are an integral part of these financial statements. 13
NOVAGEN SOLAR INC. (A development stage company) Statements of Stockholders' Equity (Deficiency) For the period from June 22, 2005 (inception) to December 31, 2010 (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 - - 1,200,000 120 59,880 - 60,000 on August 6, 2008 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 - - 3,000,000 300 17,968 - 18,268 on July 10, 2009 at $0.006 per share Rescind issuance of common stock at $0.006 per share - - (3,000,000) (300) (17,968) - (18,268) Issuance of common stock for service - - 200,000 20 109,980 - 110,000 on 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) ----------------------------------------------------------------------------------------------------------------------------------- Issuance of common stock - - 10,000,000 1,000 99,000 - 100,000 in August 16, 2010 at $0.01 per share Issuance of common stock for debt settlement in - - 21,224,600 2,122 210,124 - 212,246 August 16, 2010 at $0.01 per share Cancellation of common stock - - (200,000) (20) 20 - - Net (loss) and comprehensive (loss) for the year - - - - - (64,209) (64,209) ----------------------------------------------------------------------------------------------------------------------------------- Balance, December 31, 2010 - $ - 43,675,900 $ 4,367 $ 497,935 $ (502,462) $ (160) =================================================================================================================================== The accompanying notes are an integral part of these financial statements. 14
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, 2010 December 31, 2010 December 31, 2009 --------------------------------------------------------------------------------------------------------------- EXPENSES Bank charges $ 411 $ 150 $ 67 Consulting fees 19,379 15,667 2,300 Director fees 110,000 - 110,000 Interest expenses 1,811 - - Marketing expenses 184,591 - 184,591 Office expenses 15,801 5,199 6,920 Professional fees 83,685 39,828 17,905 Resource property acquisition and exploration costs 7,568 - - Transfer expenses 3,039 455 803 Travel expenses 17,211 628 16,583 Write-off Exploration program security deposit 7,610 - 7,610 Project investigation 50,000 - 50,000 Foreign exchange loss (gain) 1,356 2,282 (106) LOSS FROM OPERATIONS 502,462 (64,209) 396,673 NET LOSS AND COMPREHENSIVE LOSS FOR THE YEAR $ (502,462) $ (64,209) $ (396,673) BASIC AND DILUTED LOSS PER SHARE $ (0.03) $ (0.03) WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - Basic and diluted 24,220,533 12,513,766 =============================================================================================================== The accompanying notes are an integral part of these financial statements 15
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, 2010 December 31, 2010 December 31, 2009 ------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES Net income (loss) for the period $ (502,462) $ (64,209) $ (396,673) Adjustment for items not involving cash: - Project investigation 50,000 - 50,000 - Director fees 110,000 - 110,000 - Write-off Exploration program security deposit - - 7,610 Changes in operating assets and liabilities - (increase) decrease in prepaid expenses (7,833) (7,833) - - accounts payable and accrued liabilities 157,656 1,806 141,459 ------------------------------------------------------------------------------------------------------------ NET CASH FROM (USED IN) OPERATING ACTIVITIES (192,639) (70,236) (44,953) CASH FLOWS FROM FINANCING ACTIVITIES Convertible debenture - related party (50,000) - (50,000) Due to a related party 62,583 19,932 42,651 Proceeds from issuance of common stock 180,056 100,000 - ------------------------------------------------------------------------------------------------------------ NET CASH FROM FINANCING ACTIVITIES 192,639 69,932 - ------------------------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS - (304) (44,953) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD - 304 45,257 ------------------------------------------------------------------------------------------------------------ CASH AND CASH EQUIVALENTS, END OF PERIOD $ - $ - $ 304 ============================================================================================================ SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS: INTEREST PAID IN CASH $ - $ - $ - ------------------------------------------------------------------------------------------------------------ INCOME TAX PAID IN CASH $ - $ - $ - ------------------------------------------------------------------------------------------------------------ NON-CASH FLOWS INFORMATION: ISSUANCE OF COMMON SHARES FOR SETTLEMENT OF DEBT $ 212,246 $ 212,246 $ - ============================================================================================================ The accompanying notes are an integral part of these financial statements 16
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 note 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. 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. The Company paid the note in full on August 10, 2010. 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 $502,462 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. 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, 2010 and 2009, there were no cash equivalents. 17
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Concentration of Credit Risk The Company places its cash and cash equivalents with high credit quality financial institutions in uninsured accounts. 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, accounts payable and accrued liabilities, convertible note and due to a related party. 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. 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. 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, 2010. 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, 2010 and 2009. 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. 18
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. As at December 31, 2010, the basic loss per share was equal to diluted loss per share as there was no dilutive instrument. 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. ASC 805 establishes principles and requirements for how the acquirer: a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree; b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and c) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. The adoption of the standard did not have a material impact on the Company Non-controlling Interests in Consolidated Financial Statements 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. Disclosure about Derivative Instruments and Hedging Activities 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. Determination of the Useful Life of Intangible Assets 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. Accounting for Convertible Debt Instruments 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. Accounting for Financial Guarantee Insurance Contracts 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. 19
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Share-Based Payments Transactions 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. Equity Method Investment Accounting Considerations 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. Fair Value Measurement and Disclosures The Company adopted ASC 820 Fair Value Measurements and Disclosures ("ASC 820"). 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 debenture - related party, and due to a related party. 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. New Accounting Pronouncements In October 2009, the FASB issued ASU 2009-13, Revenue Recognition (Topic 605), Multiple-Deliverable Revenue Arrangements amending ASC 605. ASU 2009-13 requires entities to allocate revenue in an arrangement using estimated selling prices of the delivered goods and services based on a selling price hierarchy. ASU 2009-13 eliminates the residual method of revenue allocation and requires revenue to be allocated using the relative selling price method. ASU 2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The Company is currently evaluating the impact of ASU 2009-13, but does not expect its adoption to have a material impact on the Company's financial position or results of operations. In January 2010, the FASB issued ASU No. 2010-06 Fair Value Measurements and Disclosures Topic 820 "Improving Disclosures about Fair Value Measurements." This ASU requires certain new disclosures and clarifies existing disclosure requirements about fair value measurement as set forth in Codification Subtopic 820-10. The FASB's objective is to improve these disclosures and, thus, increase the transparency in financial reporting. This ASU is effective for fiscal years beginning on or after December 15, 2009, and interim periods within those fiscal years. The adoption of this ASU did not have a material impact on the Company's financial statements. In February 2010, the FASB issued ASC No. 2010-09, "Amendments to Certain Recognition and Disclosure Requirements", which eliminates the requirement for SEC filers to disclose the date through which an entity has evaluated subsequent events. ASC No. 2010-09 is effective for its fiscal quarter beginning after 15 December 2010. The adoption of ASC No. 2010-09 is not expected to have a material impact on the Company's financial statements. 20
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) On March 5, 2010, the FASB issued ASU No. 2010-11 Derivatives and Hedging Topic 815 "Scope Exception Related to Embedded Credit Derivatives." This ASU clarifies the guidance within the derivative literature that exempts certain credit related features from analysis as potential embedded derivatives requiring separate accounting. The ASU specifies that an embedded credit derivative feature related to the transfer of credit risk that is only in the form of subordination of one financial instrument to another is not subject to bifurcation from a host contract under ASC 815-15-25, "Derivatives and Hedging - Embedded Derivatives - Recognition." All other embedded credit derivative features should be analyzed to determine whether their economic characteristics and risks are "clearly and closely related" to the economic characteristics and risks of the host contract and whether bifurcation is required. The adoption of this ASU did not have a material impact on the Company's financial statements. In April 2010, the FASB issued ASU 2010-13, "Compensation-Stock Compensation (Topic 718): Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades," or ASU 2010-13. This ASU provides amendments to Topic 718 to clarify that an employee share-based payment award with an exercise price denominated in currency of a market in which a substantial portion of the entity's equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The Company does not expect the adoption of ASU 2010-13 to have a significant impact on its financial statements. In April 2010, the FASB codified the consensus reached in Emerging Issues Task Force Issue No. 08-09, "Milestone Method of Revenue Recognition." FASB ASU No. 2010-17 "Revenue Recognition - Milestone Method (Topic 605)" provides guidance on defining a milestone and determining when it may be appropriate to apply the milestone method of revenue recognition for research and development transactions. FASB ASU No. 2010 - 17 is effective for fiscal years beginning on or after June 15, 2010, and is effective on a prospective basis for milestones achieved after the adoption date. The Company does not expect this ASU will have a material impact on its financial position or results of operations. In May 2010, the FASB issued Accounting Standards Update 2010-19 (ASU 2010-19), Foreign Currency (Topic 830): Foreign Currency Issues: Multiple Foreign Currency Exchange Rates. The amendments in this Update are effective as of the announcement date of March 18, 2010. The Company does not expect the provisions of ASU 2010-19 to have a material effect on the Company's financial position, results of operations or cash flows of the Company. 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 - PREPAID EXPENSES On August 24, 2010, the Company entered into a consulting agreement with a shareholder of the Company for corporate development services and fund raising for a period of six months commencing on September 1, 2010. The Company agreed to pay $23,500 for the service in advance. As at December 31, 2010, the Company made the payment of $23,500 of which $15,667 was expensed in consulting fees in fiscal 2010. NOTE 4 - CONVERTIBLE NOTE - RELATED PARTY The Company issued a non-interest bearing note 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 notes contained no embedded beneficial conversion feature as the convertible notes 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 notes is equal to the fair value as they are non-interest bearing and due on demand. The note was paid in full by the Company on August 10, 2010. 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 43,675,900 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. On March 31, 2010 the former director surrendered these shares to the Company. 21
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. On August 16, 2010, the Company issued 21,224,600 shares of common stock to three of its creditors at a price of $0.01 per share, in full and final settlement of a debt of $212,246 owed to the creditors. One of the creditors was the sole director of the Company, and he received 5,855,800 shares of common stock in full and final settlement of $58,558 owed to him by the Company for expenses incurred on the Company's behalf. On August 16, 2010 the Company issued 10,000,000 shares of common stock at a price of $0.01 per share to five purchasers for total cash proceeds of $100,000. NOTE 6 - SEGMENT INFORMATION The Company currently conducts all of its operations in Canada. NOTE 7 - RELATED PARTY TRANSACTIONS During the fiscal year 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. On March 31, 2010 these shares were surrendered to the Company and recorded as additional paid-in capital. On August 16, 2010, the Company issued 5,855,800 shares of common stock to its sole director at a price of $0.01 per share, in full and final settlement of a debt of $58,558 owed to him by the Company for expenses incurred on the Company's behalf. In connection with the issuance of 10,000,000 common shares at a price of $0.01 to five purchasers, 2,300,000 shares of common stock were issued to the mother of our sole director for total proceeds of $23,000. On August 16, 2010 the Company issued 15,368,800 shares of common stock at a price of $0.01 per share to a creditor in full and final settlement of a debt of $153,688. Upon the issuance, the creditor owned 36% of the Company. As at December 31, 2010 the Company owed $4,025 (December 31, 2009 - $42,651) to the sole director of the Company, for expenses he paid on behalf of the Company. See Note 4. NOTE 8 - INCOME TAXES At December 31, 2010, the Company had deferred tax assets of approximately $175,900 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, 2010. The significant components of the deferred tax asset at December 31, 2010 and 2009 were as follows: -------------------------------------------------------------------------- December 31, 2010 December 31, 2009 -------------------------------------------------------------------------- Net operating loss carryforwards $ 175,900 $ 153,400 Valuation allowance (175,900) (153,400) Net deferred tax asset $ - $ - -------------------------------------------------------------------------- At December 31, 2010, we had net operating loss carryforwards of approximately $502,462, which expire in the year 2026 through to 2031. 22
NOTE 9 - SUBSEQUENT EVENTS, COMMITMENT AND CONTINGENCY None noted. 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, 2010, 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, 2010 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. 23
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, 2010. 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, 2010, 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, 2010: 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, 2010 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, 2010 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. 24
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 stockholders. Officers and other employees serve at the will of the Board of Directors. ------------------------------------------------------------------------------- TERM SERVED AS NAME AND ADDRESS POSITION AGE DIRECTOR/OFFICER ------------------------------------------------------------------------------- Thomas Mills Chief Executive Officer, 42 2009 to present 1440-3044 Bloor Street West, President, Toronto, Ontario M8X 2Y8 Chief Financial Officer and a director ================================================================================ 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. INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS During the past ten 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. 25
COMMITTEES OF THE BOARD All proceedings of the board of directors for the fiscal year ended December 31, 2010 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. Novagen 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. Novagen does not have any defined policy or procedure requirements for stockholders 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 stockholders, 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. INDEMNIFICATION Under our Articles of Incorporation and Bylaws, 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. 26
ITEM 11. EXECUTIVE COMPENSATION To date we have no employees other than our sole officer and director. No compensation has been awarded, earned or paid to our sole officer and director. We have no employment agreements with our officer. We do not contemplate entering into any employment agreements until such time as we have positive cash flows from operations. 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, as of March 28, 2010, information concerning ownership of the Company's securities by (i) each Director, (ii) each executive officer, (iii) all directors and executive officers as a group; and (iv) each person known to the Company to be the beneficial owner of more than five percent of each class: The number and percentage of shares beneficially owned includes any shares as to which the named person has sole or shared voting power or investment power and any shares that the named person has the right to acquire within 60 days. -------------------------------------------------------------------------------- BENEFICIAL OWNERSHIP NAME OF BENEFICIAL OWNER COMMON PERCENTAGE SHARES OF CLASS -------------------------------------------------------------------------------- Thomas Mills 14,855,800 34.0% All directors and executive officers, as a group 14,855,800 34.0% Gisela Mills (1) 2,840,000 6.5% Fahrinsland Capital LLC 15,738,800 36.0% All beneficial owners of more than 5% of the 18,578,800 42.5% Company's common stock, as a group ================================================================================ (1) Gisela Mills is the mother of Thomas Mills, our sole officer and director. The mailing address for all directors, executives officers and beneficial owners of more than 5% of our common stock is 3044 Bloor Street West, Suite 1440, Toronto, ON M8X 2Y8. 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. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE As part of the rescission of the acquisition of NSC, we agreed to reimburse NSC for $50,000 in costs and expenses incurred by it in the acquisition of its sales license from RSi. On December 31, 2009, we issued to NSC a non-interest bearing convertible debenture in an amount equal to $50,000. On August 10, 2010, we repaid the debenture in full. Thomas Mills, our sole director and officer, was a controlling shareholder of NSC until July 1, 2010, when he divested himself of all beneficial ownership of it. 27
As at August 1, 2010, the Company owed $58,558 to Thomas Mills, our sole officer and director, for disbursements he incurred on behalf of the Company. On August 4, 2010, we agreed to issue 5,855,800 shares of our common stock to Ophion Management Ltd., a company controlled by Mr. Mills, at a price of $0.01 per share, in full and final settlement of the amount owing to Mr. Mills. The shares were issued on August 16, 2010. On August 4, 2010, we accepted a subscription for 2,300,000 shares of our common stock from Gisela Mills at $0.01 per share, for gross proceeds of $23,000. The shares were issued on August 16, 2010. Gisela Mills is the mother of Thomas Mills, our sole officer and director. 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, 2010 and 2009 were $7,358 and $5,000 respectively. AUDIT RELATED FEES For the fiscal years ended December 31, 2010 and 2009, 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 $7,811 and $13,533, respectively. TAX FEES For the fiscal years ended December 31, 2010 and 2009, the aggregate fees billed for tax compliance, by Chang Lee LLP were nil. ALL OTHER FEES For the fiscal years ended December 31, 2010 and 2009, 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. 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. 28
PART IV ITEM 13. EXHIBITS -------------------------------------------------------------------------------- EXHIBIT TITLE -------------------------------------------------------------------------------- 3.1 Articles of Incorporation, Novagen Solar Inc., incorporated by reference from the amended Form 10-K filed May 17, 2010 (1) 3.2 Amended and Restated Bylaws, Novagen Solar Inc., incorporated by reference from the amended Form 10-K filed May 17, 2010 (1) 4.1 Form of Stock certificate, Novagen Solar Inc. (2) 14.1 Code of Ethics for Senior Financial Officers, Novagen Solar Inc. (2) 31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 -------------------------------------------------------------------------------- (1) Previously included as an exhibit to the Registration Statement on Form S-1 filed August 27, 2010. (2) Previously included as an exhibit to the Annual Report on Form 10-K filed March 31, 2010. 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 28, 2011 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, President, March 28, 2011 Thomas Mills Chief Financial Officer, Principal Accounting Officer & a directo