UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2009
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file # 333-149617
NOVAGEN SOLAR, INC.
(Exact Name of Registrant as Specified in its Charter)
NEVADA
(State or other jurisdiction of incorporation or organization)
98-0471927
(I.R.S. Employer Identification number)
1440-3044 BLOOR STREET WEST, TORONTO, ONTARIO M8X 2Y8
(Address of principal executive offices)
Registrant's telephone number, including area code: 647.456.9521
Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered under Section 12(g) of the Act:
Common stock, $0.0001 par value per share
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.
Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act.
Yes [ ] No [X]
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company in Rule 12b-2 of the Act (Check one):
[ ] Large Accelerated Filer [ ] Accelerated Filer
[ ] Non-accelerated Filer [X] Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
As of March 30, 2010 the registrant had 12,651,300 shares of its Common Stock outstanding.
FORWARD LOOKING STATEMENTS
Certain statements made in this Annual Report are "forward-looking statements"
(within the meaning of the Private Securities Litigation Reform Act of 1995)
regarding the plans and objectives of management for future operations. Such
statements involve known and unknown risks, uncertainties and other factors that
may cause actual results, performance or achievements of the Company to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. The forward-looking
statements made in this Report are based on current expectations that involve
numerous risks and uncertainties. The Company's plans and objectives are based,
in part, on assumptions involving the growth and expansion of business.
Assumptions relating to the foregoing involve judgments with respect to, among
other things, future economic, competitive and market conditions and future
business decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond the control of the Company. Although the
Company believes that its assumptions underlying the forward-looking statements
are reasonable, any of the assumptions could prove inaccurate and, therefore,
there can be no assurance that the forward-looking statements made in this
Report will prove to be accurate. In light of the significant uncertainties
inherent in the forward-looking statements made in this Report, the inclusion of
such information should not be regarded as a representation by the Company or
any other person that the objectives and plans of the Company will be achieved.
As used in this annual report, the terms "we", "us", "our", "Company" and "Novagen Solar" means Novagen Solar Inc., unless otherwise indicated.
PART I
ITEM 1. BUSINESS.
OVERVIEW
Novagen Solar Inc. (the "Company") is a full service solar power developer based in Toronto, Ontario. Novagen will market, sell, design and install solar energy plants across North America, with an emphasis on turnkey commercial power systems, brownfield revitalization, land reclamation and off-grid community developments. Novagen's flexible business model will utilize best-in-class products in conjunction with innovative financial solutions to maximize solar yield and generate substantial value for our stockholders while contributing to energy security, social equity, and protection of the ecosystem upon which life depends.
CORPORATE HISTORY
Novagen was incorporated in the State of Nevada on June 22, 2005 under the name of Pickford Minerals Inc. We were originally engaged in the exploration of mineral deposits in Labrador, Newfoundland, but due to higher than anticipated costs were unable to implement our exploration program. Motivated by developments in solar technology and believing that market conditions and legislative incentives were favorable, our management made a strategic decision in April 2009 to pursue opportunities in the solar industry.
On April 27, 2009, we entered into an agreement to acquire all the issued and outstanding shares of Novagen Solar (Canada) Ltd., a privately held Canadian corporation formed on February 14, 2009 ("NSC"). NSC is an authorized sales representative of Rainbow Solar Inc. ("RSi"), a Delaware corporation engaged in the marketing, sale and distribution of a portfolio of solar products based on leading technologies. NSC is licensed under an agreement dated February 19, 2009, as amended on July 10, 2009 (the "Sales License"), for a period of 10 years to sell and distribute RSi's products anywhere in the world, with the exclusive right to sell and distribute in Canada. On May 12, 2009, we changed our name to Novagen Solar Inc. The acquisition of NSC closed on July 10, 2009. Since closing the acquisition of NSC, we have abandoned our mineral exploration interests and focused our business operations exclusively on solar energy. On December 1, 2009, the acquisition of NSC was rescinded, resulting in all shares exchanged through the acquisition of NSC being returned to the transferors.
The address for our head office is 1440-3044 Bloor Street West, Toronto, Ontario M8X 2Y8. Our telephone number is (647) 456-9521. Our facsimile number is (647) 439-3785. Our common stock is quoted on the NASD Over-the-counter Bulletin Board under the symbol "NOVZ".
PRODUCTS AND SERVICES
We intend to offer a number of solar products and services that seek to generate revenue from initial installation activities, as well as potential recurring revenue from an installed base of customers. Such products and services will include the following:
SOLAR POWER PLANT DEVELOPMENT
Commercial Solar Installations. We plan to develop, finance, construct and operate commercial solar installations throughout North America, with a focus on rooftop and open-space systems that produce one Megawatt of electricity or less. This is an area of the market that we believe to be underserved. We believe this sector offers faster deployment and better prospects for generating additional business from customers with multiple locations. We will offer property owners a comprehensive range of participation levels and financing packages, including leasing arrangements, that will have the broadest possible appeal. As part of our turnkey system, we will design and specify the appropriate system, manage its installation and maintenance, and arrange for all of the necessary financing. We will also take care of the required permitting and apply for subsidies. Additionally, we will arrange for monitoring and maintenance to ensure installed systems are kept in peak condition throughout their expected life.
Solar Power Plants. We intend to develop large scale (in excess of one Megawatt), ground-mounted solar power plants, either alone or in partnership with others.
Brownfield Revitalization Brownfields are real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant. Cleaning up and reinvesting in these properties protects the environment, reduces blight, and takes development pressures off greenspaces and working lands. We believe that solar energy technologies are well suited for use at brownfield sites because they require very little maintenance and can be installed on the ground without penetrating the surface or disturbing existing contamination. We intend to work with property owners and municipalities to assist in the revitalization of brownfields by providing turnkey solar energy solutions utilizing best-in-class photovoltaic arrays and building integrated solar energy systems.
Land Reclamation. Land reclamation refers to the restoration of land damaged by mining, erosion, or some other activity or process. The process of reclamation includes maintaining water and air quality, minimizing flooding, erosion and damage to wildlife and aquatic habitats caused by surface mining. In respect of former mining sites, reclamation generally involves filling in excavations, grading the land to avoid leaving steep slopes, placing the original topsoil on the graded surface, and planting the topsoil with vegetation. Through a collaboration with our industry partners, we plan to provide mining companies with sustainable solar energy solutions for responsible exploration and mining practices, such as providing solar power for mining operations and reclamation activities, and post-reclamation solar power plant development.
Off-Grid Communities. According to Natural Resources Canada, there are over 300 remote communities in Canada with a total population of 200,000. These communities are not connected to the North American electrical grid or piped natural gas network and are permanent or long-term settlements. Many of them are very dependent on imported oil and pay energy costs that can be up to 10 times higher than in the rest of Canada. We intend to assist Canada's remote communities to deploy solar solutions appropriate for their needs, including the development of solar power plants to provide clean, reliable energy. In addition to providing turnkey systems, we will assist communities to establish and nurture a maintenance support infrastructure for their power plant(s). Such an infrastructure, while not complex, must be functional and appropriate for the size, complexity and sophistication of the system deployed. We will provide training for local residents, documentation matched to local capabilities, spare-parts inventory and component resupply. By providing communities with appropriate technology and infrastructure training, we will improve their self-sufficiency while creating jobs and supporting the local economy.
MANUFACTURING
We intend to engage in manufacture of PV products within the next two years of operations, with a focus on modules, inverters and mounting/tracking systems utilized in our solar plants. The determination as to which products we will seek to manufacture will depend on market response, the availability of raw materials, available capital, and our ability to obtain manufacturing rights on a profitable basis. There can be no assurance that we will have access to sufficient capital to develop manufacturing operations. If we are unable to establish manufacturing operations, we will be entirely dependent upon third parties for the supply of products, which could limit our growth and results of operations.
COMPETITION
The solar market is intensely competitive and rapidly evolving. The number of solar product resellers and integrators has rapidly increased due to the growth of actual and forecast demand for solar products and the relatively low barriers to entry. We have only recently commenced operations, and do not presently hold a significant competitive market position in the solar market. Many of our competitors are large, well established companies with substantially larger operating staffs and greater capital resources than we have, which have been engaged in the solar energy business for a much longer time than we have.
Our ability to compete will depend upon our ability to establish supply relationships with wholesalers, OEM distributors and independent manufacturers providing the most efficient solutions. Specifically, we will compete with major PV module manufacturers, such as Sharp Corporation, Suntech Power, BP Solar, GE Energy, Mitsubishi, and Sanyo; and integrated manufacturers of PV products such as First Solar, Inc., Kyocera Corporation, Renewable Energy Corporation, Solar World AG and Sun Power Corporation. We will also compete with numerous regional and national solar installation companies, including First Solar Inc., Skypower, Pod Generating Group and CarbonFree Technology Inc. We also expect to compete with new entrants to the solar market, including those that offer more advanced technological solutions or that have greater financial resources. Furthermore, the entire solar industry also faces competition from conventional energy and non-solar renewable energy providers.
We believe that we will be able to successfully compete by integrating our products together with our installation services to provide turnkey solar power solutions. By providing strong technical, financial and regulatory expertise, while capitalizing on our management's relationships with government, suppliers and enterprise-level end users, we believe that Novagen will be able to establish itself in North America as a significant full-service solar power developer.
SUPPLIERS
By establishing strategic partnerships with major component suppliers we will ensure that every new project is designed and installed with the most advanced technology appropriate for our customers. We will purchase PV panels used in our solar power systems principally from PowerCom Co. Inc., Green Energy Technology Inc., Day4Energy Inc., Kyocera Solar and Suntech America and we purchase inverters principally from SatCon Power Systems, which components will represent approximately two-thirds of our component requirements. Hardware and other materials will be readily available for off-the-shelf purchase.
We intend to remain independent of any one technology or equipment vendor to ensure that we will be able to offer our customers turnkey solutions best suited to their individual needs. As such, we do not have supply agreements with our suppliers, except for purchase orders on a case-by-case basis. Although PV panels are manufactured world-wide, we are subject to market price fluctuation and vendor lead time and inventory for the components that we purchase.
MARKETING
We will sell our solar power systems directly to commercial, industrial and governmental customers, through an internal sales and marketing staff. We may appoint additional sales representatives as independent contractors to solicit business and identify potential development opportunities. We expect to rely heavily on the relationships between our management and end users in our target market.
We believe that, depending upon the size of the projects, it is likely that a significant portion of our initial business will derive from a small number of customers. There can be no assurance that the loss of any such customer would not adversely affect our business or results of operations. We expect that our customer mix will change as we expand our operations.
REGULATIONS
The market for electricity generation products is heavily influenced by national, regional and local government regulations and policies concerning the electric utility industry, as well as internal policies and regulations promulgated by electric utilities. These regulations and policies often relate to electricity pricing and technical interconnection of customer-owned electricity generation. In Canada and in a number of other countries, these regulations and policies are being modified and may continue to be modified. Customer purchases of, or further investment in the research and development of, alternative energy sources, including solar power technology, could be deterred by these regulations and policies, which could result in a significant reduction in the potential demand for our solar products.
Our operations are subject to a variety of national, federal, regional and local laws, rules and regulations relating to worker safety and the use, storage, discharge and disposal of environmentally sensitive materials. Because we outsource and do not manufacture our solar power systems, we do not use, generate, store or discharge toxic, volatile or otherwise hazardous chemicals and wastes. We believe that we are in compliance in all material respects with all laws, rules, regulations and requirements that affect our business. Further, we believe that compliance with such laws, rules, regulations and requirements does not impose a material impediment on our ability to conduct business.
GOVERNMENT SUBSIDIES AND INCENTIVES
We believe that economic and national security issues, technological advances, environmental regulations seeking to limit emissions by fossil fuel, air pollution regulations restricting the release of greenhouse gasses, aging electricity transmission infrastructure and depletion and limited supply of fossil fuels, has made reliance on traditional sources of fuel for generating electricity less attractive. Government policies, in the form of both regulation and incentives, have accelerated the adoption of solar technologies by businesses and consumers. For example, in the United States, the 2005 energy bill enacted a 30% investment tax credit for solar, and in January 2006 California approved the largest solar program in the country's history that provides for long term subsidies in the form of rebates to encourage use of solar energy where possible.
Currently, the cost of solar power exceeds the cost of power furnished by the electric utility grid in many locations. Various subsidies and tax incentive program exist at the national, regional and local levels to encourage the adoption of solar power including the following:
Capital Cost Rebates - provide funds to customers based on the cost of size of a customer's solar power system.
Performance-Based Incentives - provide funding to customers based on the energy produced by their solar energy system.
Feed-In Tariff Subsidies - government imposed prices set above market rates (which may differ by system size or application) that utilities are required to pay for renewable electricity generated by end-users for a guaranteed period of time.
Tax Credits - reduce a customer's taxes at the time the taxes are due.
Net Metering - enables end-users to sell any excess electricity they generate from solar energy to their local utility in exchange for a credit against their utility bills (usually combined with rebates).
Renewable Portfolio Standards - government mandates that a certain portion of electricity delivered to customers by utilities come from a set of eligible renewable energy resources, and in some instances, that a portion of the renewable energy quota must be generated by solar energy.
If any of these subsidies or incentives are discontinued, reduced or substantially modified, if growth in any such subsidies or incentives is reduced, or if renewable portfolio standards or similar production requirements are changed or eliminated, demand for our solar products could decline or never develop, and our results of operations and financial condition could be materially and adversely affected as a result.
Despite the benefits of solar power, there are also certain risks and challenges faced by solar power. Solar power is heavily dependent on government subsidies to promote acceptance by mass markets. We believe that the near-term growth in the solar energy industry depends significantly on the availability and size of these government subsidies and on the ability of the industry to reduce the cost of generating solar electricity. The market for solar energy products is, and will continue to be, heavily dependent on public policies that support growth of solar energy. There can be no assurance that such policies will continue. Any decrease in the level of rebates, incentives or other government support for solar energy would have an adverse affect on our ability to sell our products.
Incentives vary by country, region, and electric utility. Within the United States, one national incentive is the federal 30% investment tax credit ("ITC") and special depreciation rules. The ITC credit is capped at $2,000 for residential customers while commercial customers are not subjected to any cap while federally approved accelerated depreciation is limited to commercial customers. The economic value in each given situation of the ITC and accelerated depreciation depends on the tax status of the customer.
Additionally, several states offer various tax credits to commercial and residential customers. Residential customers and commercial customers are often eligible for different non-tax incentives such as rebates, grants, performance based incentives and feed-in-tariffs, which vary greatly from state to state and utility to utility and are often tiered according to a project's size and eligibility. Support for solar energy projects outside the United States also vary greatly based on different programs in each country.
Within Canada, the Province of Ontario has implemented a program for feed-in-tariff subsidies ("FiT"). Under the FiT program, the Provincial electric utility will purchase power generated through PV at premium rates for a period of 20 years, guaranteed by the Provincial Government. Additional provincial policies that will encourage the development of solar energy in Canada are expected in 2010.
BUILDING CODES
We are required to obtain building permits and comply with local ordinances and building codes for each project, the cost of which is included in our estimated costs for each proposal.
RESEARCH AND DEVELOPMENT
We have not undertaken any research or development over the last two fiscal years.
INTELLECTUAL PROPERTY
We currently have no employees. We may utilize independent contractors and consultants from time to time to assist in the development of our business. Independent contractors are generally paid on a commission, hourly or job-related basis, depending on the services being performed.
ENVIRONMENTAL
Our operations are currently limited to the sale and distribution of solar products. As such, we are not aware of any environmental laws that are applicable to our business, or which could result in any material compliance costs to us or effects on our business.
EMPLOYEES
We currently have no employees other than our officers and directors, who have not been paid for their services. As we implement our business plan, we expect to add employees as appropriate.
ITEM 1A. RISK FACTORS
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
ITEM 1B. UNRESOLVED STAFF COMMENTS
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
ITEM 2. PROPERTIES
We do not presently own or have an interest in any real property.
ITEM 3. LEGAL PROCEEDINGS
Neither Novagen Solar, nor any of its officers or directors is a party to any material legal proceeding or litigation and such persons know of no material legal proceeding or contemplated or threatened litigation. There are no judgments against Novagen Solar or its officers or directors. None of our officers or directors have been convicted of a felony or misdemeanor relating to securities or performance in corporate office.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 11, 2009, the Company's Articles of Incorporation were duly amended and the Company's name changed under Article 1 of the Articles of Incorporation from "Pickford Minerals, Inc." to "Novagen Solar Inc." The amendment was made effective on May 12, 2009 through the filing of a Certificate of Amendment with the Secretary of State of Nevada. The amendment of the Company's Articles of Incorporation was approved under section 78.320 of the Nevada Revised Statutes and the Company's Bylaws, which provide that any action required or permitted to be taken at a meeting of the stockholders may be taken without a meeting if stockholders holding at least a majority of the voting power sign a written consent approving the action. On April 26, 2009, the director of the Company approved and recommended the amendment. On May 11, 2009, stockholders holding at least a majority of the voting rights of all outstanding shares of the Company's capital stock voted in favor of the amendment by written consent.
PART II
ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
Our common stock is quoted on the OTC Bulletin Board under the symbol "NOVZ". Trading of our stock is sporadic and does not constitute an established public market for our shares.
For the periods indicated, the following table sets forth the high and low bid prices per share of common stock. The following quotations obtained from otcMarkets.com reflect the high and low bids for our shares of common stock based on inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
-------------------------------------- QUARTER ENDED HIGH LOW -------------------------------------- March 31, 2009 $0.00 $0.00 June 30, 2009 $0.25 $0.01 September 30, 2009 $0.55 $0.20 December 31, 2009 $0.53 $0.05 ====================================== |
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On July 10, 2009, we issued 3,000,000 restricted common shares at $0.006 per share to the former shareholders of NSC in exchange for all of their shares in NSC in connection with our acquisition of all the issued and outstanding shares of NSC. The shares were issued without registration under the Securities Act of 1933 in reliance on an exemption from registration provided by Regulation S of the Securities Act. No general solicitation was made in connection with the offer or sale of these securities. The common shares were surrendered to the Company on December 1, 2009, as part of the rescission of the acquisition of NSC.
On September 8, 2009, we issued 200,000 common shares to a director of the Company as consideration for his service provided as a director at a fair market value of $0.55 per share for $110,000.
HOLDERS
On December 31, 2009, the shareholders' list of our shares of common stock showed 60 registered holders of our shares of common stock and 12,651,300 shares of common stock outstanding. The number of record holders was determined from the records of our transfer agent and does not include beneficial owners of shares of common stock whose shares are held in the names of various security brokers, dealers, and registered clearing agencies.
DIVIDEND POLICY
We have not declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future.
SHARE PURCHASE WARRANTS
We have not issued and do not have outstanding any warrants to purchase shares of our common stock.
OPTIONS
We have not issued and do not have outstanding any options to purchase shares of our common stock.
CONVERTIBLE SECURITIES
As part of our acquisition of NSC, on July 10, 2009 we issued a non-interest bearing convertible demand debenture for $30,000 to one of its former shareholders. The convertible debenture was surrendered, unredeemed and unconverted, to the Company on December 1, 2009, as part of the rescission of the acquisition of NSC.
As part of the rescission of our acquisition of NSC, on December 31, 2009 we issued a non-interest bearing convertible demand note for $50,000 to NSC. NSC may, upon 61 days written notice to the Company, convert the principal amount owing into common shares of our capital stock. The conversion rate will be the average volume weighted closing price of the Company's stock on the NASD over-the-counter bulletin board for the 10 business days preceding the notice date.
We have not otherwise issued and do not have outstanding any other securities convertible into shares of our common stock or any rights convertible or exchangeable into shares of our common stock.
PENNY STOCK REGULATION
Our shares must comply with the Penny Stock Reform Act of 1990, which may potentially decrease our shareholders' ability to easily transfer their shares. Broker-dealer practices in connection with transactions in "penny stocks" are regulated. Penny stocks generally are equity securities with a price of less than $5.00. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules generally require that prior to a transaction in a penny stock, the broker-dealer make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that must comply with the penny stock rules. Since our shares must comply with such penny stock rules, our shareholders will in all likelihood find it more difficult to sell their securities.
ITEM 6. SELECTED FINANCIAL DATA
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Until July 10, 2009, our business plan was to explore our mineral property to determine whether it contained commercially exploitable reserves of valuable minerals. Our plan was to commence a mineral exploration program that would have involved expanded geological mapping, and geochemical sampling that would cover previously established grid areas, as well as other prospective sites that might have been developed to delineate either base metals or industrial minerals. Due to higher than anticipated fuel costs, we were unable to commence our exploration program as planned in 2008. By the second quarter of 2009, we had insufficient capital to initiate complete our program. In light of market conditions, our management determined in our second fiscal quarter of 2009 that it was in the Company's best interests to review opportunities in the field of solar energy.
On April 27, 2009, we entered into the Reorganization Agreement with the shareholders of Novagen Solar (Canada) Ltd. ("NSC") to acquire all the issued and outstanding shares of NSC. NSC was the exclusive sales agent in Canada of RSi, and a non-exclusive sales agent for RSi everywhere else in the world. The acquisition of NSC was closed on July 10, 2009. As a result of the acquisition, we abandoned our mineral exploration interests (including a mineral exploration deposit of $7,610) and began pursuing the marketing, sale and distribution of PV products as our primary business. Accordingly, our accumulated operating losses of $41,580 to December 31, 2008 reflect our past activities that have been either discontinued or abandoned.
On November 10, 2009, the Company agreed with NSC and RSi to terminate the Sales License granting NSC the right to sell photovoltaic products distributed by RSi. The termination releases all parties to the sales license from all claims arising from the sales license or the termination thereof. As a result of the termination of the sales license, all parties are released from their obligations thereunder: NSC will not be licensed to sell any products distributed by RSI in Canada or elsewhere, and the Company will have no obligation to issue any shares to RSi. On December 1, 2009, the acquisition of NSC was rescinded, resulting in all issued and outstanding shares of NSC being returned to the original NSC shareholders in exchange for all securities issued by the Company as part of the acquisition.
As part of the rescission of our acquisition of NSC, on December 31, 2009 we issued a non-interest bearing convertible demand note for $50,000 to NSC for the acquisition of the solar panels. NSC may, upon 61 days written notice to the Company, convert the principal amount owing into common shares of our capital stock. The conversion rate will be the average volume weighted closing price of the Company's stock on the NASD over-the-counter bulletin board for the 10 business days preceding the notice date.
We have not earned revenue since inception and we presently have no solar power installations in operation. Since inception, our activities have been financed from the proceeds of share subscriptions and loans from management and non-affiliated third parties.
On January 23, 2008, we issued a promissory note for $15,000 to a non-affiliated third party. The promissory note accrued interest at the rate of 20% per annum, and was due and payable on July 23, 2008. Proceeds from the promissory note were used to pay for offering expenses, claim renewal and working capital. The note, together with $1,811 in interest, was repaid in full on August 26, 2008.
On March 10, 2008 we filed a Registration Statement with the Securities and Exchange Commission in respect of an initial public offering of a minimum of 1,200,000 and a maximum of 2,000,000 shares of our common stock at $0.05 per share. On April 8, 2008 the Securities and Exchange Commission declared our Form S-1 Registration Statement (Commission File No. 333-149617) effective. Our offering commenced on the effective date and terminated on August 6, 2008. As of August 7, 2008, we sold a total of 1,200,000 shares of our common stock for gross proceeds of $60,000.
On July 10, 2009, we issued a non-interest bearing convertible debenture for $30,000 to a former shareholder of NSC in exchange for all of its shares of NSC. The convertible debenture was surrendered, unredeemed and unconverted, to the Company on December 1, 2009, as part of the rescission of the acquisition of NSC.
OPERATING EXPENSES FROM CONTINUED OPERATIONS
Operating expenses consisted of consulting fees, professional fees, interest expenses and other general corporate expenses. Operating expenses were $396,673 for the year ended December 31, 2009, compared with $29,599 in operating expenses for the year ended December 31, 2008. The increase was a result of costs associated with our change of business and consulting fees associated with the exploration of our mineral properties.
Marketing expenses for the 2009 fiscal year were $184,591, compared to Nil for fiscal 2008. Marketing expenses included all costs associated with exhibiting at the ICSC trade show in Las Vegas, Nevada and the Intersolar trade shows in Munich, Germany and San Francisco, California.
Director fees in fiscal 2009 were $110,000, compared to Nil for the 2008 fiscal year. The increase was due to issuance of 200,000 common stock at a price of $0.55 per share to a director of the Company.
Professional fees were $17,905 for the year ended December 31, 2009, compared with $24,312 for the year ended December 31, 2008. Professional fees incurred in fiscal year 2009 consist of accounting fees associated with our acquisition of NSC, and the audited financial statements and periodic reporting obligations.
Consulting fees for the year ended December 31, 2009 were $2,300, compared with $1,412 for the year ended December 31, 2008. Consulting fees incurred in fiscal 2009 were due to assistance with the preparation of our quarterly financial reports.
General office expenses were $7,684 for the year ended December 31, 2009, compared with office expenses of $2,064 for the year ended December 31, 2008. The increase was due to increase in operating activities in 2009.
NET LOSS FOR THE YEAR
We recorded a net loss of $396,673 for the year ended December 31, 2009, compared with a net loss of $29,599 for the year ended December 31, 2008.
LIQUIDITY AND CAPITAL RESOURCES.
As at December 31, 2009 we had total assets of $304 comprised entirely of cash. This is a decrease from total assets of $52,867 as at December 31, 2008, primarily due to marketing and travel expenses associated with our attendance at various trade shows, professional fees, the abandonment of mineral exploration deposit and office expenses.
As of December 31, 2009, our total liabilities increased to $248,501 comprised of $42,651 owing to a director for expenses incurred on our behalf and $155,850 in trade debt arising from professional fees and our exhibition at several trade shows. As of December 31, 2008, total liabilities were $14,391.
Our business is in the early stages of development. We do not presently have sufficient capital to sustain minimal operations for the next 12 months, but our President has undertaken to provide such financing as may be required in that regard. Our management believes that a minimum of $600,000 will be required to implement plan of operations and secure development and regulatory approvals over the next six months. Our currently available capital and cash flows from operations are insufficient to execute our current business plan and fund business operations long enough to become cash flow positive or to achieve profitability. Our ultimate success will depend upon our ability to raise capital.
We will be required to pursue sources of additional capital through various means, including joint venture projects and debt or equity financings. Future financings through equity investments are likely to be dilutive to existing stockholders. Also, the terms of securities we may issue in future capital transactions may be more favorable for our new investors. Newly issued securities may include preferences, superior voting rights, and the issuance of warrants or other derivative securities, which may have additional dilutive effects. Further, we may incur substantial costs in pursuing future capital and financing, including investment banking fees, legal fees, accounting fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expenses in connection with certain securities we may issue, such as convertible notes and warrants, which will adversely impact our financial condition.
Our ability to obtain needed financing may be impaired by such factors as the capital markets, both generally and specifically in the renewable energy industry, and the fact that we have not been profitable, which could impact the availability or cost of future financings. If the amount of capital we are able to raise from financing activities, together with our revenue from operations, is not sufficient to satisfy our capital needs, even to the extent that we reduce our operations accordingly, we may be required to cease operations.
There is no assurance that we will be able to obtain financing on terms satisfactory to use, or at all. We do not have any arrangements in place for any future financing. If we are unable to secure additional funding, we may cease or suspend operations. We have no plans, arrangements or contingencies in place in the event that we cease operations.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
ITEM 8. FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
NOVAGEN SOLAR INC.
(AN EXPLORATION STAGE COMPANY)
FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
Report of Independent Registered Public Accounting Firm
Balance Sheets
Statements of Stockholders Equity
Statements of Operations
Statements of Cash Flows
Notes to Financial Statements
CHANG LEE LLP
Chartered Accountants
505-815 Hornby Street
Vancouver, B.C., V6Z 2E6
Tel: 604-687-3776
Fax: 604-688-3373
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
NOVAGEN SOLAR INC.
(A development stage company)
We have audited the accompanying balance sheets of Novagen Solar Inc. (a development stage company) as at December 31, 2009 and 2008 and the related statements of stockholders' equity, operations and cash flows for the years then ended and for the period from June 22, 2005 (date of inception) to December 31, 2009. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as at December 31, 2009 and 2008 and the results of its operations and its cash flows for the years then ended and for the period from June 22, 2005 (date of inception) to December 31, 2009, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company incurred losses from operations since inception, has not attained profitable operations and is dependent upon obtaining adequate financing to fulfil its intended business venture. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also discussed in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Vancouver, Canada Chang Lee LLP March 29, 2010 Chartered Accountants
NOVAGEN SOLAR INC.
(A development stage company)
Balance Sheets
December 31, 2009 and 2008
(Expressed in U.S. Dollars)
-------------------------------------------------------------------------------------------------
December 31 December 31
2009 2008
-------------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 304 $ 45,257
-------------------------------------------------------------------------------------------------
Exploration program security deposit - 7,610
-------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 304 $ 52,867
=================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities 155,850 14,391
Convertible Debenture 50,000 -
Owing to related parties 42,651 -
-------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 248,501 14,391
-------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY (DEFICIENCY)
SHARE CAPITAL
Authorized:
50,000,000 preferred shares at a par value of $0.0001 per share
Issued and outstanding: Nil
100,000,000 common shares with a par value of $0.0001 per share
Issued and outstanding: 12,651,300 common shares 1,265 1,245
(December 31, 2008: 12,451,300)
ADDITIONAL PAID-IN CAPITAL 188,791 78,811
(DEFICIT) ACCUMULATED DURING THE EXPLORATION STAGE (438,253) (41,580)
-------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY) (248,197) 38,476
-------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) $ 304 $ 52,867
=================================================================================================
|
The accompanying notes are an integral part of these financial statements.
NOVAGEN SOLAR INC.
(A development stage company)
Statements of Stockholders' Equity (Deficiency)
For the period from June 22, 2005 (inception) to December 31, 2009
(Expressed in U.S. Dollars)
------------------------------------------------------------------------------------------------------------------------------------
Deficit
accumulated Total
Additional during shareholder's
Preferred Stock Common Stock paid-in exploration equity
Shares Amount Shares Amount capital stage (deficiency)
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2005 - $ - 11,251,300 $ 1,125 $ 18,931 $ (6,418) $ 13,638
------------------------------------------------------------------------------------------------------------------------------------
Net (loss) and comprehensive (loss) for the year - - - - - (5,935) (5,935)
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2006 - $ - 11,251,300 $ 1,125 $ 18,931 $ (12,353) $ 7,703
------------------------------------------------------------------------------------------------------------------------------------
Net income and comprehensive income for the year - - - - - 372 372
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2007 - $ - 11,251,300 $ 1,125 $ 18,931 $ (11,981) $ 8,075
------------------------------------------------------------------------------------------------------------------------------------
Issuance of common stock for cash on August 6, 2008 - - 1,200,000 120 59,880 - 60,000
at $0.05 per share
Net (loss) and comprehensive (loss) for the year - - - - - (29,599) (29,599)
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2008 - $ - 12,451,300 $ 1,245 $ 78,811 $ (41,580) $ 38,476
------------------------------------------------------------------------------------------------------------------------------------
Issuance of common stock for shares on July 10, 2009 - - 3,000,000 300 17,968 - 18,268
at $0.006 per share
Rescind issuance of common stock for shares - - (3,000,000) (300) (17,968) - (18,268)
at $0.006 per share
Issuance of common stock for service on - - 200,000 20 109,980 - 110,000
September 8, 2009 at $0.55 per share
Net (loss) and comprehensive (loss) for the year - - - - - (396,673) (396,673)
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2009 - $ - 12,651,300 $ 1,265 $ 188,791 $ (438,253) $ (248,197)
====================================================================================================================================
|
The accompanying notes are an integral part of these financial statements
NOVAGEN SOLAR INC.
(A development stage company)
Statements of Operations
(Expressed in U.S. Dollars)
--------------------------------------------------------------------------------------------------------------------------
Cumulative from
June 22, 2005
(inception) to Year ended Year ended
December 31, 2009 December 31, 2009 December 31, 2008
--------------------------------------------------------------------------------------------------------------------------
EXPENSES
Bank charges $ 261 $ 67 $ 152
Consulting fees 3,712 2,300 1,412
Director fees 110,000 110,000 -
Interest expenses 1,811 - 1,811
Marketing expenses 184,591 184,591 -
Office expenses 10,602 6,920 132
Professional fees 42,217 17,905 24,312
Resource property acquisition and exploration costs 7,568 - -
Transfer expenses 2,584 803 1,781
Travel expenses 16,583 16,583 -
Write-off Exploration program security deposit 7,610 7,610 -
Project investigation 50,000 50,000 -
Foreign exchange loss (gain) (316) (106) (1)
--------------------------------------------------------------------------------------------------------------------------
LOSS FROM OPERATIONS 438,253 396,673 29,599
--------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) FOR THE PERIOD $ (438,253) $ (396,673) $ (29,599)
--------------------------------------------------------------------------------------------------------------------------
BASIC AND DILUTED LOSS PER SHARE $ (0.03) $ (0.00)
===========================================================================================================================
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
- Basic and diluted 12,513,766 11,828,349
===========================================================================================================================
|
The accompanying notes are an integral part of these financial statements
NOVAGEN SOLAR INC.
(A development stage company)
Statements of Cash Flows
(Expressed in U.S. Dollars)
----------------------------------------------------------------------------------------------------------
Cumulative from
June 22, 2005
(inception) to Year ended Year ended
December 31, 2009 December 31, 2009 December 31, 2008
----------------------------------------------------------------------------------------------------------
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
Net income (loss) for the period $ (438,253) $ (396,673) $ (29,599)
Adjustment for items not involving cash:
- Project investigation 50,000 50,000 -
- consulting fee 110,000 110,000 -
- Write-off Exploration program security deposit - 7,610 -
Changes in operating assets and liabilities
- (increase) decrease in prepaid expenses - - 1,222
- accounts payable and accrued liabilities 155,850 141,459 14,391
- due to a related party 42,651 42,651 -
- exploration program security deposit - - (2,801)
NET CASH FROM (USED IN) OPERATING ACTIVITIES (79,752) (44,953) (16,787)
----------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 80,056 - 60,000
----------------------------------------------------------------------------------------------------------
NET CASH FROM FINANCING ACTIVITIES 80,056 - 60,000
----------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 304 (44,953) 43,213
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD - 45,257 2,044
----------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 304 $ 304 $ 45,257
==========================================================================================================
|
The accompanying notes are an integral part of these financial statements
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Novagen Solar Inc. (hereinafter "the Company"), was incorporated in the State of Nevada, U.S.A., on June 22, 2005 under the name of Pickford Minerals, Inc. The Company's fiscal year end is December 31. On May 12, 2009, the Company changed its name to Novagen Solar Inc.
The Company was originally engaged in the exploration of mineral deposits in Labrador, Newfoundland, but was unable to implement its exploration program. In April 2009, the Company began to pursue business opportunities relating to photovoltaic solar energy.
On April 27, 2009, the Company entered into a Share Purchase Agreement (the "Reorganization Agreement") with Novagen Solar (Canada) Ltd., a privately held Canadian corporation formed on February 14, 2009 ("NSC"). Upon the closing of the Reorganization Agreement on July 10, 2009, the shareholders of NSC delivered all of their equity interests in NSC to the Company in exchange for 3,000,000 shares of common stock in the Company and 3,000,000 convertible securities of the Company, as a result of which NSC became a wholly-owned subsidiary of the Company (the "Reorganization"). The debenture is non-interest bearing, convertible at the rate of $0.01 per share at the option of the holder. NSC is a sales company engaged in the business of selling a variety of photovoltaic products. At the time of the Reorganization, NSC had the exclusive right in Canada and the non-exclusive right elsewhere to sell a line of photovoltaic products distributed by Rainbow Solar Inc, a Delaware corporation ("RSI"). The RSI sales license was terminated by mutual consent on November 10, 2009. (See also Note 9).
On December 1, 2009, the Reorganization Agreement was rescinded, with the former shareholders of NSC exchanging all securities received under the Reorganization Agreement for all the issued and outstanding shares of NSC (the "Rescission"). As part of the Rescission, on December 1, 2009 the Company issued a non-interest bearing convertible demand note for $50,000 to NSC for the sample solar panels used by the Company. NSC may convert the principal amount owing into common shares of our capital stock. The conversion rate will be the average volume weighted closing price of the Company's stock on the NASD over-the-counter bulletin board for the 10 business days prior to the surrender date and the conversion is deemed to have been effected on the 61st day following the surrender date.
These financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America applicable to a going concern which assume that the Company will realize its assets and discharge its liabilities in the normal course of business. The Company has incurred accumulated losses of $438,253 since inception and has not generated any revenue. The future of the Company is dependent upon its ability to develop profitable sales and distribution operations. These factors create doubt as to the ability of the Company to continue as a going concern. Realization values may be substantially different from the carrying values as shown in these financial statements should the Company be unable to continue as a going concern. Management is in the process of identifying sources for additional financing, or will provide the necessary financial support, to fund the ongoing development of the Company's business.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Company have been prepared in accordance with the generally accepted accounting principles in the United States of America. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates that have been made using careful judgment. The financial statements have, in management's opinion been properly prepared within reasonable limits of materiality and within the framework of the significant accounting policies summarized below:
Accounting Method
The Company's financial statements are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses for the reporting period. The Company reviews its estimates on an ongoing basis. The estimates were based on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ from these estimates. The Company believes the judgments and estimates required in its accounting policies to be critical in the preparation of the Company's financial statements.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly liquid investments and short-term debt instruments with original maturities of three months or less to be cash equivalents. As at December 31, 2009 and 2008, there were no cash equivalents.
Concentration of Credit Risk
The Company places its cash and cash equivalents with high credit quality financial institutions. As of December 31, 2009, the Company had $nil in a bank beyond insured limit (December 31, 2008: $nil).
Foreign Currency Transactions
The Company is located and operating outside of the United States of America. It maintains its accounting records in U.S. Dollars as follows:
At the transaction date each asset, liability, revenue and expense is translated into U.S. dollars by the use of the exchange rate in effect at that date. At the period end, monetary assets and liabilities are re-measured by using the exchange rate in effect at that date. The resulting foreign exchange gains and losses are included in operations.
Fair Value of Financial Instruments
The Company's financial instruments as defined by Accounting Standards Codification ("ASC") 825, "Disclosures about Fair Value of Financial Instruments," include cash and cash equivalents and accounts payable and accrued liabilities. Fair values were assumed to approximate carrying value for these financial instruments, except where noted. Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments. The Company is operating outside the United States of America and has significant exposure to foreign currency risk due to the fluctuation of currency in which the Company operates and U.S. dollars.
Mineral Property Payments and Exploration Costs
The Company expenses all costs related to the acquisition, maintenance and exploration of mineral claims in which it has secured exploration rights prior to establishment of proven and probable reserves. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property are capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserve. To date, the Company has shifted its focus on the solar panel and therefore, all costs are being expensed.
Long-lived assets impairment
Long-lived assets of the Company are reviewed for impairment whenever events or circumstances indicate that the carrying amount of assets may not be recoverable, pursuant to guidance established in ASC 360, Accounting for the Impairment or Disposal of Long-Lived Assets.
Management considers assets to be impaired if the carrying value exceeds the future projected cash flows from related operations (undiscounted and without interest charges). If impairment is deemed to exist, the assets will be written down to fair value. Fair value is generally determined using a discounted cash flow analysis.
Assets Retirement Obligations
The Company has adopted ASC 410, Accounting for Assets Retirement Obligations which requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred. ASC 410 requires the Company to record a liability for the present value of the estimated site restoration costs with corresponding increase to the carrying amount of the related long-lived assets. The liability will be accreted and the asset will be depreciated over the life of the related assets. Adjustments for changes resulting from the passage of time and changes to either the timing or amount of the original present value estimate underlying the obligation will be made. As at December 31, 2009 and 2008 the Company does not have any asset retirement obligations.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Stock-Based Compensation
The Company adopted ASC 718, "Share-Based Payment", to account for its stock options and similar equity instruments issued. Accordingly, compensation costs attributable to stock options or similar equity instruments granted are measured at the fair value at the grant date, and expensed over the expected vesting period. ASC 718 requires excess tax benefits be reported as a financing cash inflow rather than as a reduction of taxes paid.
The Company did not grant any stock options during the years ended December 31, 2009 and 2008.
Comprehensive Income
The Company adopted ASC 220, Reporting Comprehensive Income, which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. The Company is disclosing this information on its Statement of Stockholders' Equity. Comprehensive income comprises equity except those resulting from investments by owners and distributions to owners. The Company has no elements of "other comprehensive income" for the years ended December 31, 2009 and 2008.
Income Taxes
The Company has adopted ASC 740, Accounting for Income Taxes, which requires the Company to recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns using the liability method. Under this method, deferred tax liabilities and assets are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse.
Basic and Diluted Loss Per Share
In accordance with ASC 260 - "Earnings Per Share", the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would be outstanding if the potential common shares had been issued and if the additional common shares were dilutive. The Company's potentially dilutive shares, which include convertible securities, have not been included in the computation of diluted loss per share as the result would be anti-dilutive.
Newly Adopted Accounting Pronouncements and New Accounting Pronouncements
On January 1, 2009, the Company adopted ASC 805, "Business Combinations". ASC 805 applies the acquisition method of accounting for business combinations established in ASC 805 to all acquisitions where the acquirer gains a controlling interest, regardless of whether consideration was exchanged. Consistent with ASC 805 requires the acquirer to fair value the assets and liabilities of the acquiree and record goodwill on bargain purchases, with main difference the application to all acquisitions where control is achieved. The adoption of this statement did not have a material effect on the Company's financial position or results of operations.
On January 1, 2009, the Company adopted ASC 160, (prior authoritative literature: SFAS 160, Non-controlling Interests in Consolidated Financial Statements - An amendment of ARB No. 51). ASC 160 requires companies with noncontrolling interests to disclose such interests clearly as a portion of equity but separate from the parent's equity. The noncontrolling interest's portion of net income must also be clearly presented on the Income Statement. The adoption of this statement did not have a material effect on the Company's financial position or results of operations.
On January 1, 2009, the Company adopted ASC 815-10 (prior authoritative literature: SFAS 161, Disclosures about Derivative Instruments and Hedging Activities-an amendment of FASB Statement No. 133). ASC 815-10 requires companies with derivative instruments to disclose information that should enable financial-statement users to understand how and why a company uses derivative instruments, how derivative instruments and related hedged items are accounted for under ASC 815 "Accounting for Derivative Instruments and Hedging Activities" and how derivative instruments and related hedged items affect a company's financial position, financial performance and cash flows. The adoption of this statement did not have a material effect on the Company's financial position or results of operations.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
On January 1, 2009, the Company adopted FSP No. 142-3, "Determination of the Useful Life of Intangible Assets" ("FSP 142-3"), as codified in ASC subtopic 350-30, Intangibles - Goodwill and Other: General Intangibles Other than Goodwill (ASC 350-30) and ASC topic 275, Risks and Uncertainties (ASC 275), which amends the factors an entity should consider in developing renewal or extension assumptions used in determining the useful life of recognized intangible assets under FASB Statement No. 142, as codified in ASC topic 350, Intangibles Goodwill and Other (ASC 350). This new guidance applies prospectively to intangible assets that are acquired individually or with a group of other assets in business combinations and asset acquisitions. The adoption of this statement did not have a material effect on the Company's financial statements.
On January 1, 2009, the Company adopted FASB Staff Position ("FSP") APB 14-1, "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)", as coded in ASC 470 "debt". ASC 470 specifies that issuers of convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) should separately account for the liability and equity components in a manner that will reflect the entity's nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. The adoption of this statement did not have a material effect on the Company's financial statements.
On April 1, 2009, the Company adopted ASC 944-20, "Accounting for Financial Guarantee Insurance Contracts" (formerly SFAS No. 163, Accounting for Financial Guarantee Insurance - an interpretation of FASB Statement No. 60, Accounting and Reporting by Insurance Enterprises). ASC 944-20 requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation. The adoption of ASC 944-20 has no effect on the Company's financial reporting at this time.
On April 1, 2009, the Company adopted ASC 260-10, "Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities." ASC 260-10 provides that unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. Upon adoption, a company is required to retrospectively adjust its earnings per share data (including any amounts related to interim periods, summaries of earnings and selected financial data) to conform with the provisions of ASC 260-10. The adoption of this statement did not have a material effect on the Company's future financial position or results of operations.
In December 2008, the FASB issued FSP FAS 132(R)-1, "Employers' Disclosures about Postretirement Benefit Plan Assets", as coded in ASC 715-20. This new standard requires enhanced disclosures about plan assets in an employer's defined benefit pension or other postretirement plan. Companies will be required to disclose information about how investment allocation decisions are made, the fair value of each major category of plan assets, the basis used to determine the overall expected long-term rate of return on assets assumption, a description of the inputs and valuation techniques used to develop fair value measurements of plan assets, and significant concentrations of credit risk. This statement is effective for fiscal years ending after December 15, 2009. The adoption of this statement is not expected to have a material effect on the Company's future financial position or results of operations.
In October 2008, the FASB issued FSP FAS 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active, as coded in ASC 820-10, The standard addresses the application of Statement of Financial Accounting Standards ("SFAS") No.157 for illiquid financial instruments. ASC 820-10 clarifies that approach to determining fair value other than the market approach may be appropriate when the market for a financial asset is not active. ASC 820-10 was effective upon issuance, including prior periods for which financial statements have not been issued. The adoption of ASC 820-10 had no impact on the Company's results of operations, financial condition or cash flows.
On April 1, 2009, the Company adopted ASC 323-10, "Equity Method Investment Accounting Considerations" that addresses how the initial carrying value of an equity method investment should be determined, how an impairment assessment of an underlying indefinite-lived intangible asset of an equity method investment should be performed, how an equity method investee's issuance of shares should be accounted for, and how to account for a change in an investment from the equity method to the cost method. The adoption of ASC 323-10 did not have a material impact on our financial condition or results of operations.
In April, 2009, the FASB issued ASC subtopic 820-10 (formerly Staff Position No. FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly). ASC 820-10 provides additional guidance for estimating fair value when the volume and level of activity for the asset or liability have significantly decreased. This ASC subtopic also includes guidance on identifying circumstances that indicate a transaction is not orderly. The adoption of ASC 820-10 will not have a material impact on the Company's financial statements.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
On January 1, 2009, the Company adopted ASC 820 Fair Value Measurements and Disclosures ("ASC 820"). The Company's adoption of ASC 820 did not materially affect the Company's financial position, results of operations or liquidity. As defined in ASC 820, fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:
- Level 1: Quoted prices (unadjusted) in active markets that are accessible
at the measurement date for assets or liabilities. The fair value hierarchy
gives the highest priority to Level 1 inputs.
- Level 2: Inputs other than quoted prices within Level 1 that are
observable for the asset or liability, either directly or indirectly.
- Level 3: Unobservable inputs that are used when little or no market data
is available. The fair value hierarchy gives the lowest priority to Level 3
inputs
In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value.
The Company's financial instruments consist principally of cash and cash equivalents, accounts payable and accrued liabilities, convertible debentures, and amounts owing to related parties. Pursuant to ASC 820, the fair value of cash and cash equivalents is determined based on "Level 1" inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
In April, 2009, the FASB issued ASC 820-10-50 (formerly Staff Position No. FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments) that expands to interim periods the existing annual requirement to disclose the fair value of financial instruments that are not reflected on the balance sheet at fair value. The new guidance could potentially require additional disclosures in interim periods after the Company's fiscal year ending 2010. Adoption of this FSP will not have a material impact on the Company's financial statements.
On April 1, 2009, the FASB issued ASC 320-10-65 (formerly Staff Position No. FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments). ASC 320-10-65 amends the other-than-temporary impairment guidance in U.S. GAAP for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. ASC 320-10-65 does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities. The Company adopted ASC 320-10-65 on October 1, 2009. The adoption of this FSP did not have a material impact on the Company's financial statements.
In June 2009, the FASB issued ASC 860, Transfers and Servicing. ASC 860 requires more information about transfers of financial assets, including securitization transactions, and where entities have continuing exposure to the risks related to transferred financial assets. It eliminates the concept of a "qualifying special-purpose entity," changes the requirements for derecognizing financial assets, and requires additional disclosures. It also enhances information reported to users of financial statements by providing greater transparency about transfers of financial assets and an entity's continuing involvement in transferred financial assets. ASC 860 is effective for fiscal years beginning after November 15, 2009.
Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company's financial statements upon adoption.
NOTE 3 - MINERAL PROPERTY INTEREST
On October 31, 2005 the Company acquired a 100% interest in two non-contiguous properties located between Paradise River and Eagle River, approximately 22 km. west-southwest of the community of Paradise River, Labrador, Canada. The claims were acquired from a non-affiliated third party for a total consideration of $4,026, which covered an exploration program security deposit and staking and other related costs of $441 (CAD$500) and $3,585, respectively. The Company expensed the staking and other related costs of $3,585 in connection with the acquisition of the mineral claims.
In connection with above noted mineral properties, the Company was required to pay exploration program security deposits of $7,610 (CAD$9,300) and $4,809 (CAD$4,950) in fiscal years 2008 and 2007, respectively. Following the Reorganization, the Company elected to abandon its interest in its mineral properties and has forfeited the exploration program deposit.
NOTE 4 - CONVERTIBLE DEBENTURE
The Company issued a non-interest bearing debenture in an amount equal to $50,000 that is convertible at the rate of the average volume weighted closing price of the common shares on the NASD over-the-counter bulletin board for a period of 10 business days prior to the surrender date and the conversion is deemed to have been effected on the 61st day following the surrender date. In accordance with EITF 98-5 "Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios", the Company determined that the convertible debentures contained no embedded beneficial conversion feature as the convertible debentures were issued with a conversion price the same as the fair market value of the Company's common shares at the time of issuance, being $0.53 per share. The carrying value of the convertible debentures is equal to the fair value as they are non-interest bearing and due on demand. As of the date of this report, the debenture has not been redeemed or converted by the holder.
NOTE 5 - PREFERRED AND COMMON STOCK
The Company has 50,000,000 shares of preferred stock authorized and none issued
The Company has 100,000,000 shares of common stock authorized, of which 12,651,300 shares are issued and outstanding. All shares of common stock are non-assessable and non-cumulative, with no preemptive rights.
On September 8, 2009, the Company issued 200,000 common shares to a director of the Company as consideration for his services as a director at the fair market value of $0.55 per share for a total of $110,000.
Under the terms of the Reorganization, on July 10, 2009, the Company issued 3,000,000 common shares at deemed value of $0.006 per share to the shareholders of Novagen Solar (Canada) Ltd. The shares were surrendered to the Company on December 1, 2009, as part of the Rescission.
During the year ended December 31, 2008, the Company issued 1,200,000 common shares at $0.05 per share pursuant to a registered public offering for gross proceeds of $60,000.
NOTE 6 - INCOME TAXES
At December 31, 2009, the Company had deferred tax assets of approximately $153,400 principally arising from net operating loss carryforwards for income tax purposes. As our management cannot determine that it is more likely than not that we will realize the benefit of the deferred tax asset, a valuation allowance equal to the deferred tax asset has been established at December 31, 2009. The significant components of the deferred tax asset at December 31, 2009 and 2008 were as follows:
--------------------------------------------------------------------------------
December 31, 2009 December 31, 2008
--------------------------------------------------------------------------------
Net operating loss carryforwards $ 153,400 $ 14,600
Valuation allowance (153,400) (14,600)
Net deferred tax asset $ - $ -
================================================================================
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At December 31, 2009, we had net operating loss carryforwards of approximately $438,300, which expire in the year 2025 through to 2029.
NOTE 7 - SUBSEQUENT EVENTS, COMMITMENT AND CONTINGENCY
None noted.
NOTE 8 - SEGMENT INFORMATION
The Company currently conducts all of its operations in Canada.
NOTE 9 - RELATED PARTY TRANSACTIONS
During the year ended December 31, 2009, the Company issued 200,000 common stock to one of its directors as consideration for his services as a director at the fair market value of $0.55 per share for a total of $110,000.
As at December 31, 2009, the Company owed $42,651 (2008: $6,494) to a director of the Company, for the expenses he paid on behalf of the Company.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
As of December 31, 2009, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer (who are one and the same person), of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based solely on the material weaknesses described below, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2009, the Company's disclosure controls and procedures were not effective:
1. The Company presently has only one officer and no employees. Inasmuch as there is no segregation of duties within the Company, there is no management oversight, no one to review control documentation and no control documentation is being produced.
CHANGES IN DISCLOSURE CONTROLS AND PROCEDURES
There were no changes in disclosure controls and procedures that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially effect, our disclosure controls and procedures. We will not be implementing any changes to our disclosure controls and procedures until there is a significant change in our operations or capital resources.
LIMITATIONS ON THE EFFECTIVENESS OF CONTROLS
Our management, including our CEO and CFO (who are one and the same person), does not expect that our disclosure controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management or board override of the control.
The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
CEO AND CFO CERTIFICATIONS
Appearing immediately following the Signatures section of this report there are
Certifications of our CEO and CFO (who are one and the same person). The
Certifications are required in accordance with Section 302 of the Sarbanes-Oxley
Act of 2002 (the Section 302 Certifications). This Item of this report is the
information concerning the Evaluation referred to in the Section 302
Certifications and this information should be read in conjunction with the
Section 302 Certifications for a more complete understanding of the topics
presented.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention of overriding controls. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2009. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based solely on the material weaknesses described below, our management has concluded that, as of December 31, 2009, the Company's internal control over financial reporting was not effective. Management has identified the following deficiencies that, when aggregated, may possibly be viewed as a material weakness in our internal control over financial reporting as of December 31, 2009:
1. We do not have an Audit Committee - While not being legally obligated to have an audit committee, it is our management's view that such a committee, including a financial expert member, is an utmost important entity level control over our financial statements. To date we have not established an audit committee.
2. Insufficient documentation of financial statement preparation and review procedures - We employ policies and procedures in reconciliation of the financial statements and the financial information based on which the financial statements are prepared. Notwithstanding, the controls and policies we employ are not sufficiently documented.
3. We did not maintain proper segregation of duties for the preparation of our financial statements - As of December 31, 2009 the majority of the preparation of financial statements was carried out by one person. Additionally, we currently only have two officers/directors having oversight on all transactions. This has resulted in several deficiencies including:
a. Significant, non-standard journal entries were prepared and approved by the same person, without being checked or approved by any other personnel.
b. Lack of control over preparation of financial statements, and proper application of accounting policies.
4. We lack sufficient information technology controls and procedures - As of December 31, 2009, we lacked a proper data back up procedure, and while backup did take place in actuality, we believe that it was not regulated by methodical and consistent activities and monitoring.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
We have also established and evaluated our internal control over financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of their last evaluation. Nor have there have been any changes in our internal control over financial reporting during the last fiscal quarter. We do not intend to implement any changes to our internal control over financial reporting until there is a significant change in our level of operations and capital resources.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. We are not required to provide an attestation report by our registered public accounting firm pursuant to the rules of the Securities and Exchange Commission.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
DIRECTORS AND OFFICERS
The following sets forth our directors, executive officers, promoters and control persons, their ages, and all offices and positions held. Directors are elected for a period of one year and thereafter serve until their successor is duly elected by the shareholders. Officers and other employees serve at the will of the Board of Directors.
--------------------------------------------------------------------------------
TERM PERIOD SERVED AS
NAME POSITION AGE DIRECTOR/OFFICER
--------------------------------------------------------------------------------
Thomas Mills Chief Executive Officer, 41 2009 to present
President,
Chief Financial Officer,
Principal Accounting Officer
and a director
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Thomas Mills is presently our sole officer and a director since July 10, 2009. Mr. Mills was the co-founder of Thrust Energy Corp., an oil and gas exploration company in June 2005, and has been its Chief Executive Officer, President, Chief Financial Officer and a director since inception. Mr. Mills was also the co-founder of AMP Productions Ltd., a motion picture production company in March 2003, and has served as its Chief Executive Officer, President, Chief Financial Officer and a director since its inception. Mr. Mills was the co-founder of Kingston Mines Ltd., a mineral exploration company in June 2005, and was its Vice-President, Chief Financial Officer and a director until April 2008. Mr. Mills also served as the President of Kingston Mines Ltd. from January 2008 until April 2008. From 2001 to September 2004, Mr. Mills was the Chief Executive Officer and President of Torrent Energy Corp., a natural gas exploration company, acting as its Chief Financial Officer from March 2004 to September 2004. He received his Bachelor of Laws degree from the University of British Columbia in 1996, and holds a Bachelor of Arts degree with an emphasis on management and organizational behavior, obtained from the University of Waterloo, Waterloo, Ontario in 1992. Mr. Mills was called to the Bar of British Columbia in 1997, and remains a part-time practicing member.
Gary MacDonald has been a director of Novagen Solar Inc. as of September 8, 2010. Since November 1999, Mr. MacDonald has been a director of Cons AGX Resources Corp. located in Vancouver, British Columbia. Cons AGX, now named Petro Rubiales Energy Corp., is engaged in the business of oil and gas exploration and is traded on the TSX Venture Exchange under the symbol PRE. Since October 2002, Mr. MacDonald has been president and a director of Tapestry Resource Corp. located in Vancouver, British Columbia. Tapestry is engaged in the business of mining exploration. Tapestry is traded on the TSX Venture Exchange under the symbol TPR.H. Since October 2002, Mr. MacDonald has been the sole officer and a director of Oronova Mining Corp., an exploration stage mining company located in Las Vegas, Nevada. Since October 2004, Mr. MacDonald has been the Director of Astra Capital Corp. located in Calgary, Alberta, Canada. Astra Capital is engaged in the business of capital raising and mergers and acquisitions. Since January 1999, Mr. MacDonald has been a Director of Obelisk International Ltd. located in Calgary, Alberta, Canada. Obelisk International is engaged in the business of capital raising and mergers and acquisitions. From October 2004 to January 2007, Mr. MacDonald was a director of Cierra Pacific Ventures Ltd., and exploration stage mining company located in Vancouver, British Columbia. Cierra Pacific Ventures is traded on TSX Venture Exchange under the symbol CIZ.H. From March 2003 to January 2007, Mr. MacDonald was the president and a director of Harlow Ventures Inc., an exploration stage mining company located in Vancouver, British Columbia. Harlow Ventures is traded on the TSX Venture Exchange under the symbol HLW.H. From July 2004 to June 2007, Mr. MacDonald was a director or Tapango Resources Ltd. and exploration stage mining company located in Vancouver, British Columbia. Tapango Resources is traded on the TSX Venture Exchange under the symbol TPA.H. From October 2002 to October 2006, Mr. MacDonald was the sole officer and a director of Glengarry Developments, an exploration stage mining company located in Vancouver.
The address for all our officers and directors is 1440-3044 Bloor Street West, Toronto, Ontario M8X 2Y8.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
During the past five years none of our directors, executive officers, promoters or control persons have:
(1) had any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
(2) been convicted in a criminal proceeding or subject to a pending criminal proceeding;
(3) been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or
(4) been found by a court of competent jurisdiction in a civil action, the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.
COMMITTEES OF THE BOARD
All proceedings of the board of directors for the fiscal year ended December 31, 2009 were conducted by resolutions consented to in writing by our board of directors and filed with the minutes of the proceedings of our board of directors. Our company currently does not have nominating, compensation or audit committees or committees performing similar functions nor does our company have a written nominating, compensation or audit committee charter. Our board of directors does not believe that it is necessary to have such committees because it believes that the functions of such committees can be adequately performed by the board of directors.
Our company does not have any defined policy or procedure requirements for shareholders to submit recommendations or nominations for directors. The board of directors believes that, given the stage of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. Our company does not currently have any specific or minimum criteria for the election of nominees to the board of directors and we do not have any specific process or procedure for evaluating such nominees. The board of directors will assess all candidates, whether submitted by management or shareholders, and make recommendations for election or appointment.
A shareholder who wishes to communicate with our board of directors may do so by directing a written request addressed to our President, Thomas Mills, at the address appearing on the first page of this registration statement.
AUDIT COMMITTEE FINANCIAL EXPERT
We do not have a standing audit committee. Our directors perform the functions usually designated to an audit committee. Our board of directors has determined that we do not have a board member that qualifies as an "audit committee financial expert" as defined in Item 407(d)(5) of Regulation S-K, nor do we have a board member that qualifies as "independent" as the term is used in Item 7(d)(3)(iv)(B) of Schedule 14A under the Securities Exchange Act of 1934, as amended, and as defined by Rule 4200(a)(14) of the NASD Rules.
We believe that our board of directors is capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. Our board of directors does not believe that it is necessary to have an audit committee because management believes that the functions of an audit committees can be adequately performed by the board of directors. In addition, we believe that retaining an independent director who would qualify as an "audit committee financial expert" would be overly costly and burdensome and is not warranted in our circumstances given the stage of our development and the fact that we have not generated any positive cash flows from operations to date.
As we generate revenue in the future, we intend to form a standing audit committee and identify and appoint a financial expert to serve on our audit committee.
CODE OF ETHICS
The Company has adopted a Code of Ethics for Senior Financial Officers that is applicable to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of our Code of Ethics for Senior Financial Officers is filed as an exhibit to this annual report on Form 10-K.
INDEMNIFICATION
Under our Articles of Incorporation and Bylaws of the corporation, we may indemnify an officer or director who is made a party to any proceeding, including a law suit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best interest. We may advance expenses incurred in defending a proceeding. To the extent that the officer or director is successful on the merits in a proceeding as to which he is to be indemnified, we must indemnify him against all expenses incurred, including attorney's fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada.
Regarding indemnification for liabilities arising under the Securities Act of 1933, which may be permitted to directors or officers under Nevada law, we are informed that, in the opinion of the Securities and Exchange Commission, indemnification is against public policy, as expressed in the Act and is, therefore, unenforceable.
ITEM 11. EXECUTIVE COMPENSATION
To date we have no employees other than our officers. No compensation has been awarded, earned or paid to our officers. We have no employment agreements with any of our officers. We do not contemplate entering into any employment agreements until such time as we have proven mineral reserves.
There is no arrangement pursuant to which any of our directors has been or is compensated for services provided as one of our directors.
There are no stock option plans, retirement, pension, or profit sharing plans for the benefit of our officers or directors. We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDERS MATTERS
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of December 31, 2009 by (i) each person known
by us to be a beneficial owner of more than five percent (5%) of our issued and
outstanding common stock; (ii) each of our Directors and executive officers; and
(iii) all our directors and executive officers as a group.
-------------------------------------------------------------------------------- Name Shares Beneficially Owned % -------------------------------------------------------------------------------- Thomas E. Mills 9,000,000 71% Gary MacDonald 200,000 2% -------------------------------------------------------------------------------- Directors and officers as a group (two persons) 9,200,000 73% -------------------------------------------------------------------------------- Total Shares Issued and Outstanding 12,651,300 100% ================================================================================ |
Unless otherwise noted, we believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them. For purposes hereof, a person is considered to be the beneficial owner of securities that can be acquired by such person within 60 days from the date hereof, upon the exercise of warrants or options or the conversion of convertible securities. Each beneficial owner's percentage ownership is determined by assuming that any such warrants, options or convertible securities that are held by such person (but not those held by any other person) and which can be exercised within 60 days from the date hereof, have been exercised.
The address for all our directors, executive officers and beneficial owners of more than 5% of our issued and outstanding shares is 3044 Bloor Street West, Suite 1440, Toronto, Ontario M8X 2Y8.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
As at December 31, 2009, $42,651 is owed to a director for expenses incurred on our behalf.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
AUDIT FEES
The aggregate fees billed by Chang Lee LLP Chartered Accountants for professional services rendered for the audit of our annual financial statements included in this Annual Report on Form 10-K for the fiscal years ended December 31, 2009 and 2008 were $5,000 and $4,372 respectively.
AUDIT RELATED FEES
For the fiscal year ended December 31, 2009 and 2008, the aggregate fees billed for assurance and related services by Chang Lee LLP relating to our quarterly financial statements (and the pro-forma financial statements included in our current report on Form 8-K filed July 15, 2009), which are not reported under the caption "Audit Fees" above, were $13,533 and $2,888, respectively.
TAX FEES
For the fiscal years ended December 31, 2009 and 2008, the aggregate fees billed for tax compliance, by Chang Lee LLP were nil.
ALL OTHER FEES
For the fiscal years ended December 31, 2009 and 2008, the aggregate fees billed by Chang Lee LLP for other non-audit professional services, other than those services listed above, totaled nil.
Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before Chang & Lee is engaged by us or our subsidiaries to render any auditing or permitted non-audit related service, the engagement be:
-approved by our audit committee; or
-entered into pursuant to pre-approval policies and procedures established by the audit committee, provided the policies and procedures are detailed as to the particular service, the audit committee is informed of each service, and such policies and procedures do not include delegation of the audit committee's responsibilities to management.
We do not have an audit committee. Our entire board of directors pre-approves all services provided by our independent auditors. The pre-approval process has just been implemented in response to the new rules. Therefore, our board of directors does not have records of what percentage of the above fees were pre-approved. However, all of the above services and fees were reviewed and approved by the entire board of directors either before or after the respective services were rendered.
PART IV
ITEM 13. EXHIBITS
EXHIBIT TITLE
3.1 Amended Articles of Incorporation, Novagen Solar Inc.
3.2 Amended Bylaws, Novagen Solar Inc.
14.1 Code of Ethics for Senior Financial Officers, Novagen Solar Inc.
31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
NOVAGEN SOLAR INC.
Date: March 30, 2010 By:/s/ Thomas Mills
Thomas Mills
Chief Executive Officer, President,
Chief Financial Officer and
Principal Accounting Officer
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In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Thomas Mills Chief Executive Officer, March 30, 2010
Thomas Mills President,
Chief Financial Officer,
Principal Accounting Officer and
a director
/s/ Gary MacDonald a director March 30, 2010
Gary MacDonald
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AMENDED AND RESTATED
ARTICLES OF INCORPORATION
FIRST. The name of the corporation is:
NOVAGEN SOLAR INC.
SECOND. Its registered office in the State of Nevada is located at 2533 North Carson Street, Carson City, Nevada 89706 that this Corporation may maintain an office, or offices, in such other place within or without the State of Nevada as may be from time to time designated by the Board of Directors, or by the By-Laws of said Corporation, and that this Corporation may conduct all Corporation business of every kind and nature, including the holding of all meetings of Directors and Stockholders, outside the State of Nevada as well as within the State of Nevada
THIRD. The objects for which this Corporation is formed are: To engage in any lawful activity, including, but not limited to the following:
(A) Shall have such rights, privileges and powers as may be conferred upon corporations by any existing law.
(B) May at any time exercise such rights, privileges and powers, when not inconsistent with the purposes and objects for which this corporation is organized.
(C) Shall have power to have succession by its corporate name for the period limited in its certificate or articles of incorporation, and when no period is limited, perpetually, or until dissolved and its affairs wound up according to law.
(D) Shall have power to sue and be sued in any court of law or equity.
(E) Shall have power to make contracts.
(F) Shall have power to hold, purchase and convey real and personal estate and to mortgage or lease any such real and personal estate with its franchises. The power to hold real and personal estate shall include the power to take the same by devise or bequest in the State of Nevada, or in any other state, territory or country.
(G) Shall have power to appoint such officers and agents as the affairs of the corporation shall require, and to allow them suitable compensation.
(H) Shall have power to make By-Laws not inconsistent with the constitution or laws of the United States, or of the State of Nevada, for the management, regulation and government of its affairs and property, the transfer of its stock, the transaction of its business, and the calling and holding of meetings of its stockholders.
(I) Shall have power to wind up and dissolve itself, or be wound up or dissolved.
(J) Shall have power to adopt and use a common seal or stamp, and alter the same at pleasure. The use of a seal or stamp by the corporation on any corporate documents is not necessary. The corporation may use a seal or stamp, if it desires, but such use or nonuse shall not in any way affect the legality of the document.
(K) Shall have power to borrow money and contract debts when necessary for the transaction of its business, or for the exercise of its corporate rights, privileges or franchises, or for any other lawful purpose of its incorporation; to issue bonds, promissory notes, bills of exchange, debentures, and other obligations and evidences of indebtedness, payable at a specified time or times, or payable upon the happening of a specified event or events, whether secured by mortgage, pledge or otherwise, or unsecured, for money borrowed, or in payment for property purchased, or acquired, or for any other lawful object.
(L) Shall have power to guarantee, purchase, hold, sell, assign, transfer, mortgage, pledge or otherwise dispose of the shares of the capital stock of, or any bonds, securities or evidences of the indebtedness created by, any other corporation or corporations of the State of Nevada, or any other state or government, and, while owners of such stock, bonds, securities or evidences of indebtedness, to exercise all the rights, powers and privileges of ownership, including the right to vote, if any.
(M) Shall have power to purchase, hold, sell and transfer shares of its own capital stock, and use therefor its capital, capital surplus, surplus, or other property or fund. (N) Shall have power to conduct business, have one or more offices, and |
hold, purchase, mortgage and convey real and personal property in the State of Nevada, and in any of the several states, territories, possessions and dependencies of the United States, the District of Columbia, and any foreign countries.
(0) Shall have power to do all and everything necessary and proper for the accomplishment of the objects enumerated in its certificate or articles of incorporation, or any amendment thereof, or necessary or incidental to the protection and benefit of the corporation, and, in general, to carry on any lawful business necessary or incidental to the attainment of the objects of the corporation, whether or not such business is similar in nature to the objects set forth in the certificate or articles of incorporation of the corporation, or any amendment thereof.
(P) Shall have power to make donations for the public welfare or for charitable, scientific or educational purposes.
(Q) Shall have power to enter into partnerships, general or limited, or joint ventures, in connection with any lawful activities, as may be allowed by law.
FOURTH. That the total number of common stock authorized that may be issued by the Corporation is ONE HUNDRED MILLION (100,000,000) shares of common stock at a par value of ONE HUNDREDTH OF A CENT ($.0001). FIFTY MILLION (50,000,000) shares of preferred stock at a par value of ONE HUNDREDTH OF A CENT ($.0001). Said shares may be issued by the corporation from time to time, for such considerations as may be fixed by the Board of Directors.
FIFTH. The governing board of this corporation shall be known as directors, and the number of directors may from time to time be increased or decreased in such manner as shall be provided by the By-Laws of this Corporation, providing that the number of directors shall not be reduced to fewer than one (1).
The name and post office address of the first board of Directors shall be one
(1) in number and listed as follows:
NAME POST OFFICE ADDRESS
Brent Buscay 2533 North Carson Street
Carson City, Nevada 89706
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SIXTH. The capital stock, after the amount of the subscription price, or par value, has been paid in, shall not be subject to assessment to pay the debts of the corporation.
SEVENTH. The name and post office address of the Incorporator signing the Articles of Incorporation is as follows:
NAME POST OFFICE ADDRESS
Brent Buscay 2533 North Carson Street
Carson City, Nevada 89706
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EIGHTH. The resident agent for this corporation shall be:
LAUGHLIN ASSOCIATES, INC.
The address of said agent, and, the registered or statutory address of this corporation in the state of Nevada, shall be:
2533 North Carson Street Carson City, Nevada 89706
NINTH. The corporation is to have perpetual existence.
TENTH. In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized:
Subject to the By-Laws, if any, adopted by the Stockholders, to make, alter or amend the By-Laws of the Corporation.
To fix the amount to be reserved as working capital over and above its capital stock paid in; to authorize and cause to be executed, mortgages and liens upon the real and personal property of this Corporation.
By resolution passed by a majority of the whole Board, to designate one (1) or more committees, each committee to consist of one or more of the Directors of the Corporation, which, to the extent provided in the resolution, or in the By-Laws of the Corporation, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Corporation. Such committee, or committees, shall have such name, or names, as may be stated in the By-Laws of the Corporation, or as may be determined from time to time by resolution adopted by the Board of Directors.
When and as authorized by the affirmative vote of the Stockholders holding stock entitling them to exercise at least a majority of the voting power given at a Stockholders meeting called for that purpose, or when authorized by the written consent of the holders of at least a majority of the voting stock issued and outstanding, the Board of Directors shall have power and authority at any meeting to sell, lease or exchange all of the property and assets of the Corporation, including its good will and its corporate franchises, upon such terms and conditions as its board of Directors deems expedient and for the best interests of the Corporation.
ELEVENTH. No shareholder shall be entitled as a matter of right to subscribe for or receive additional shares of any class of stock of the Corporation, whether now or hereafter authorized, or any bonds, debentures or securities convertible into stock, but such additional shares of stock or other securities convertible into stock may be issued or disposed of by the Board of Directors to such persons and on such terms as in its discretion it shall deem advisable.
TWELFTH. No director or officer of the Corporation shall be personally liable to the Corporation or any of its stockholders for damages for breach of fiduciary duty as a director or officer involving any act or omission of any such director or officer; provided, however, that the foregoing provision shall not eliminate or limit the liability of a director or officer (i) for acts or omissions which involve intentional misconduct, fraud or a knowing violation of law, or (ii) the payment of dividends in violation of Section 78.300 of the Nevada Revised Statutes. Any repeal or modification of this Article by the stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director or officer of the Corporation for acts or omissions prior to such repeal or modification.
THIRTEENTH. This Corporation reserves the right to amend, alter, change or repeal any provision contained in the Articles of Incorporation, in the manner now or hereafter prescribed by statute, or by the Articles of Incorporation, and all rights conferred upon Stockholders herein are granted subject to this reservation.
AMENDED AND RESTATED BYLAWS
OF
NOVAGEN SOLAR INC.
ARTICLE I
SHAREHOLDER'S MEETINGS
01. ANNUAL MEETINGS
The annual meeting of the shareholders of this Corporation, for the purpose of election of Directors and for such other business as may properly be brought before it, shall be held at the registered office of the Corporation, or such other places, either within or without the State of Nevada, as may be designated by the notice of the meeting, and shall be held on such date and at such time as may be designated from time to time by the Board of Directors.
02. SPECIAL MEETINGS
Special meetings of the shareholders of this Corporation, for any purpose or purposes unless otherwise proscribed by statute or of the Articles of Incorporation, may be called at any time by the holders of ten percent (10%) of the issued and outstanding voting shares of the Corporation entitled to vote, or by the President or by the Secretary or by the Board of Directors or a majority thereof. No business shall be transacted at any special meeting of shareholders except as is specified in the notice calling for said meeting. The Board of Directors may designate any place, either within or without the State of Nevada, as the place of any special meeting called by the president or the Board of Directors, and special meetings called at the request of shareholders shall be held at such place in the State of Nevada, as may be determined by the Board of Directors and placed in the notice of such meeting.
03. NOTICE OF MEETING
Written notice of annual or special meetings of shareholders stating the place, day, and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called shall be given by the Secretary or the President or persons authorized to call the meeting to each shareholder of record entitled to vote at the meeting. Such notice shall be given not less than ten (10) nor more than fifty (50) days prior to the date of the meeting, and such notice shall be deemed to be delivered when deposited in the United States mail addressed to the shareholder at his/her address as it appears on the stock transfer books of the Corporation.
04. WAIVER OF NOTICE
Notice of the time, place, and purpose of any meeting may be waived in writing and will be waived by any shareholder by his/her attendance thereat in person or by proxy. Any shareholder so waiving shall be bound by the proceedings of any such meeting in all respects as if due notice thereof had been given.
05. QUORUM AND ADJOURNED MEETINGS
At all meetings of shareholders, except where otherwise provided by statute or by the Articles of Incorporation, or by these Bylaws, the presence, in person or by proxy duly authorized, of the holder or holders of not less than twenty percent (20%) of the outstanding shares of stock entitled to vote shall constitute a quorum for the transaction of business. In the absence of a quorum, any meeting of stockholders may be adjourned, from time to time, either by the chairman of the meeting or by vote of the holders of a majority of the shares represented thereat, but no other business shall be transacted at such meeting. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. The shareholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum.
06. PROXIES
At all meetings of shareholders, a shareholder may vote by proxy executed in writing by the shareholder or by his/her duly authorized attorney in fact. Such proxy shall be filed with the secretary of the Corporation before or at the time of the meeting. No proxy shall be valid after three (3) months from the date of its execution, unless otherwise provided in the proxy. All questions regarding the qualification of voters, the validity of proxies and the acceptance or rejection of votes shall be decided by the inspectors of election who shall be appointed by the Board of Directors, or if not so appointed, then by the presiding Officer of the meeting.
07. VOTING OF SHARES
Except as otherwise provided in the Articles of Incorporation or in these Bylaws, every shareholder of record shall have the right at every shareholder's meeting to one (1) vote for every share standing in his/her name on the books of the Corporation, and the affirmative vote of a majority of the shares represented at a meeting and entitled to vote thereat shall be necessary for the adoption of a motion or for the determination of all questions and business which shall come before the meeting, unless the question is one upon which by express provision of the Statutes or of the Articles of Incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question. Upon demand of any Shareholder, the vote for directors and the vote upon any question before the meeting shall be by ballot.
08. ACTION WITHOUT A MEETING
Any action which may be taken by the vote of the Shareholders at a meeting may be taken without a meeting if authorized by the written consent of Shareholders holding at least a majority of the voting power, unless the provisions of the statutes or the Articles of Incorporation require a greater proportion of voting power to authorize such action in which case the greater proportion of written consents shall be required.
ARTICLE II
DIRECTORS
01. GENERAL POWERS
The business and affairs of the Corporation shall be managed by its Board of Directors which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Articles of Incorporation or by these Bylaws directed or required to be exercised or done by the Shareholders.
02. NUMBER, TENURE AND QUALIFICATIONS
The number of Directors of the Corporation shall be not less than one nor more than seven (7). The Directors shall be elected at the annual general meeting of the Shareholders and except as provided in Section 2 of this Article, each Director shall hold office until the next annual meeting of shareholders and/or until his/her successor shall have been elected and qualified. Directors need not be residents of the State of Nevada or shareholders of the Corporation. No reduction of the authorized number of Directors shall have the effect of removing any Director prior to the expiration of his term of office.
03. ELECTION
The Directors shall be elected by the shareholders at their annual meeting each year; and if, for any cause the Directors shall not have been elected at an annual meeting, they may be elected at a special meeting of shareholders called for that purpose in the manner provided by these Bylaws.
04. VACANCIES
In case of any vacancy in the Board of Directors including that caused by an increase in the authorized number of Directors, the remaining Director(s), whether constituting a quorum or not, may elect a successor to hold office for the unexpired portion of the terms of the Director(s) whose place shall be vacant, and until his/her successor shall have been duly elected and qualified. A vacancy or vacancies in the Board of Directors shall be deemed to exist in the case of the death, resignation or removal of any Directors, or if the authorized number of Directors be increased, or if the Shareholders fail at any annual or special meeting of Shareholders at which any Director or Directors are elected to elect the full authorized number of Directors to be voted for at the Meeting. If the Board of Directors accepts the resignation of a Director tendered to take effect at a future time, the Board of Directors or the Shareholders shall have power to elect a successor to take office when the resignation is to become effective.
05. RESIGNATION
Any Director may resign at any time by delivering written notice to the secretary of the Corporation.
06. MEETINGS
At any annual, special or regular meeting of the Board of Directors, any business may be transacted, and the Board may exercise all of its powers. Any such annual, special or regular meeting of the Board of Directors of the Corporation may be held outside of the State of Nevada, and any member or members of the Board of Directors of the Corporation may participate in any such meeting by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time; the participation by such means shall constitute presence in person at such meeting. The transactions at any meeting of the Board of Directors, however called and noticed or wherever held, shall be as valid as though it had been held at a meeting duly held after regular call and notice, if a quorum be present, and if, either before or after the meeting, each of the Directors not present signs a written waiver of notice, or a consent to holding such meeting, or an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or made part of the minutes of the minutes of the meeting.
A. Annual Meeting of Directors
Annual meetings of the Board of Directors shall be held immediately after the annual shareholders' meeting or at such time and place as may be determined by the Directors. No notice of the annual meeting of the Board of Directors shall be necessary.
B. Special Meetings
Special meetings of the Directors shall be called at any time and place upon the call of the President, Secretary or any Director. Notice of the time and place of each special meeting shall be given by the secretary, or the persons calling the meeting, by mail, telegram, facsimile or by personal communication by telephone or otherwise at least twenty-four (24) hours in advance of the time of the meeting. The purpose of the meeting need not be given in the notice. Notice of any special meeting may be waived in writing or by facsimile (either before or after such meeting) and will be waived by any Director in attendance at such meeting. Such mailing, telegraphy, or delivery as above provided shall be due, legal and personal notice to such Director
C. Regular Meetings of Directors
Regular meetings of the Board of Directors shall be held at such place and on such day and hour as shall from time to time be fixed by resolution of the Board of Directors. No notice of regular meetings of the Board of Directors shall be necessary.
07. QUORUM AND VOTING
A majority of the Directors presently in office shall constitute a quorum for all purposes, but a lesser number may adjourn any meeting, and the meeting may be held as adjourned without further notice. At each meeting of the Board at which a quorum is present, the act of a majority of the Directors present at the meeting shall be the act of the Board of Directors unless a greater number be required by statute or the Articles of Incorporation. The Directors present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough Directors to leave less than a quorum. Any action of a majority, although not at a regularly called meeting, and the record thereof, if assented to in writing by all of the other members of the Board of Directors shall be as valid and effective in all respects as if passed by the Board of Directors at a regular meeting.
08. COMPENSATION
By resolution of the Board of Directors, the Directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as Director. No such payment shall preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor.
09. PRESUMPTION OF ASSENT
A Director of the Corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his/her dissent shall be entered in the minutes of the meeting or unless he/she shall file his/her written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action.
10. EXECUTIVE AND OTHER COMMITTEES
The Board of Directors, by resolution adopted by a majority of the full Board of Directors, may designate from among its members an executive committee and one or more other committees, each of which, to the extent provided in such resolution, shall have and may exercise all the authority of the Board of Directors, but no such committee shall have the authority of the Board of Directors, in reference to amending the Articles of Incorporation, adoption a plan of merger or consolidation, recommending to the shareholders the sale, lease, exchange, or other disposition of all of substantially all the property and assets of the dissolution of the Corporation or a revocation thereof, designation of any such committee and the delegation thereto of authority shall not operate to relieve any member of the Board of Directors of any responsibility imposed by law. Such committee or committees shall have such name or names as may be determined from time to time by the Board of Directors. The members of any such committee present at any meeting and not disqualified from voting may, whether or not they constitute a quorum, unanimously appoint another member of the Board of Directors to act at the meeting in place of any absent or disqualified member. At meetings of such committees, a majority of the members or alternate members shall constitute a quorum for the transaction of business, and the act of a majority of the members or alternate members at any meeting at which there is a quorum shall be the act of the committee. The committees shall keep regular minutes of their proceedings and report the same to the Board of Directors.
11. CHAIRMAN OF BOARD OF DIRECTORS
The Board of Directors may, in its discretion, elect a chairman of the Board of Directors from its members; and, if a chairman has been elected, he/she shall, when present, preside at all meetings of the Board of Directors and the shareholders and shall have such other powers as the Board may prescribe.
12. REMOVAL
Directors may be removed from office with or without cause by a vote of shareholders holding a majority of the shares entitled to vote at an election of Directors. The holders of a majority of the issued and outstanding voting shares entitled to vote may at any time peremptorily terminate the office of any or all of the Directors by vote at a meeting called for such purpose or by a written statement filed with the Secretary or, in his absence, with any other officer. Such removal shall be effective immediately, even if successors are not elected simultaneously.
ARTICLE III
ACTIONS BY WRITTEN CONSENT
Any corporate action required by the Articles of Incorporation, Bylaws, or the laws under which this Corporation is formed, to be voted upon or approved at a duly called meeting of the Directors or shareholders may be accomplished without a meeting if a written memorandum of the respective Directors or shareholders, setting forth the action so taken, shall be signed by all the Directors or shareholders, as the case may be and such written consent is filed with the minutes of the proceedings by the Board of Directors or committee of the Board of Directors.
ARTICLE IV
OFFICERS
01. OFFICERS DESIGNATED
The Officers of the Corporation shall be a president, one or more vice presidents (the number thereof to be determined by the Board of Directors), a secretary and a treasurer, each of whom shall be elected by the Board of Directors. Such other Officers and assistant officers as may be deemed necessary may be elected or appointed by the Board of Directors. Any office may be held by the same person, except that in the event that the Corporation shall have more than one director, the offices of president and secretary shall be held by different persons.
02. ELECTION, QUALIFICATION AND TERM OF OFFICE
Each of the Officers shall be elected by the Board of Directors. None of said Officers except the president need be a Director, but a vice president who is not a Director cannot succeed to or fill the office of president. The Officers shall be elected by the Board of Directors. Except as hereinafter provide, each of said Officers shall hold office from the date of his/her election until the next annual meeting of the Board of Directors and until his/her successor shall have been duly elected and qualified.
03. POWERS AND DUTIES
The powers and duties of the respective corporate Officers shall be as follows:
A. President
The president shall be the chief executive Officer of the Corporation and, subject to the direction and control of the Board of Directors, shall have general charge and supervision over its property, business, and affairs. He/she shall, unless a Chairman of the Board of Directors has been elected and is present, preside at meetings of the shareholders and the Board of Directors.
B. Vice President
In the absence of the president or his/her inability to act, the senior vice president shall act in his place and stead and shall have all the powers and authority of the president, except as limited by resolution of the Board of Directors.
C. Secretary
The secretary shall:
1. Keep the minutes of the shareholder's and of the Board of Directors meetings in one or more books provided for that purpose;
2. See that all notices are duly given in accordance with the provisions of these Bylaws or as required by law;
3. Be custodian of the corporate records and of the seal of the Corporation and affix the seal of the Corporation to all documents as may be required;
4. Keep a register of the post office address of each shareholder which shall be furnished to the secretary by such shareholder;
5. Sign with the president, or a vice president, certificates for shares of the Corporation, the issuance of which shall have been authorized by resolution of the Board of Directors;
6. Have general charge of the stock transfer books of the corporation; and,
7. In general perform all duties incident to the office of secretary and such other duties as from time to time may be assigned to him/her by the president or by the Board of Directors.
D. Treasurer
Subject to the direction and control of the Board of Directors, the treasurer shall have the custody, control and disposition of the funds and securities of the Corporation and shall account for the same; and, at the expiration of his/her term of office, he/she shall turn over to his/her successor all property of the Corporation in his/her possession.
04. REMOVAL
The Board of Directors shall have the right to remove any Officer whenever in its judgment the best interest of the Corporation will be served thereby.
05. VACANCIES
The Board of Directors shall fill any office which becomes vacant with a successor who shall hold office for the unexpired term and until his/her successor shall have been duly elected and qualified.
06. SALARIES
The salaries of all Officers of the Corporation shall be fixed by the Board of Directors.
ARTICLE V
SHARE CERTIFICATES AND CAPITAL STOCK
01. FORM AND EXECUTION OF CERTIFICATES
Certificates for shares of the Corporation shall be in such form as is consistent with the provisions of the Corporation laws of the State of Nevada. They shall be signed by the president and by the secretary, and the seal of the Corporation shall be affixed thereto. Certificates may be issued for fractional shares. If the Corporation shall be authorized to issue more than one class of stock or more than one series of any class, the designations, preferences and relative participating, optional or other special rights of the various classes of Shares or series thereof and the qualifications, limitations or restrictions of such rights, shall be set forth in full or summarized on the face or the back of the certificate, which the Corporation shall issue to represent such Shares
02. TRANSFERS
Shares may be transferred by delivery of the certificates therefor, accompanied either by an assignment in writing on the back of the certificates or by a written power of attorney to assign and transfer the same signed by the record holder of the certificate. Except as otherwise specifically provided in these Bylaws, no shares shall be transferred on the books of the Corporation until the outstanding certificate therefor has been surrendered to the Corporation.
03. LOSS OR DESTRUCTION OF CERTIFICATES
In case of loss or destruction of any certificate of shares, another may be issued in its place upon proof of such loss or destruction and upon the giving of a satisfactory bond of indemnity to the Corporation. A new certificate may be issued without requiring any bond, when in the judgment of the Board of Directors it is proper to do so.
04. FACSIMILE SIGNATURES
If a certificate is signed by a transfer agent other than the Corporation or its employees or (2) by a registrar other than the Corporation or its employees, the signatures of the Officers of the Corporation may be facsimiles. In case any Officer who has signed or whose facsimile signature has been placed upon a certificate shall cease to be such Officer before such certificate is issues, such certificate may be issued with the same effect as though the person had not ceased to be such Officer. The seal of the Corporation, or a facsimile thereof, may, but need not be, affixed to certificates of Stock.
05. REGISTERED OWNER
The Corporation shall be entitled to recognize the person registered on its books as the owner of shares to be the exclusive owner for all purposes including voting and distribution, and the Corporation shall not be bound to recognize any equitable or other claim or interest in such shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Nevada.
ARTICLE VI
BOOKS AND RECORDS
01. BOOKS OF ACCOUNTS, MINUTES AND SHARE REGISTER
The Corporation shall keep complete books and records of accounts and minutes of the proceedings of the Board of Directors and shareholders and shall keep at its registered office, principal place of business, or at the office of its transfer agent or registrar a share register giving the names of the shareholders in alphabetical order and showing their respective addresses and the number of shares held by each.
02. COPIES OF RESOLUTIONS
Any person dealing with the Corporation may rely upon a copy of any of the records of the proceedings, resolutions, or votes of the Board of Directors or shareholders, when certified by the president or secretary.
ARTICLE VII
CORPORATE SEAL
The following is an impression of the corporate seal of this Corporation:
ARTICLE VIII
LOANS
Generally, no loans shall be made by the Corporation to its Officers or Directors, unless first approved by the holder of two-third of the voting shares, and no loans shall be made by the Corporation secured by its shares. Loans shall be permitted to be made to Officers, Directors and employees of the Corporation for moving expenses, including the cost of procuring housing. Such loans shall be limited to $25,000.00 per individual upon unanimous consent of the Board of Directors.
ARTICLE IX
INDEMNIFICATION OF DIRECTORS AND OFFICERS
01. INDEMNIFICATION
The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that such person is or was a Director, Trustee, Officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a Director, Trustee, Officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgment, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Corporation, and with respect to any criminal action proceeding, had reasonable cause to believe that such person's conduct was unlawful.
02. DERIVATIVE ACTION
The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in the Corporation's favor by reason of the fact that such person is or was a Director, Trustee, Officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a Director, Trustee, Officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorney's fees) and amount paid in settlement actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to amounts paid in settlement, the settlement of the suit or action was in the best interests of the Corporation; provided, however, that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for gross negligence or willful misconduct in the performance of such person's duty to the Corporation unless and only to the extent that, the court in which such action or suit was brought shall determine upon application that, despite circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as such court shall deem proper. The termination of any action or suit by judgment or settlement shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Corporation.
03. SUCCESSFUL DEFENSE
To the extent that a Director, Trustee, Officer, employee or Agent of the Corporation has been successful on the merits or otherwise, in whole or in part in defense of any action, suit or proceeding referred to in Paragraphs .01 and .02 above, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith.
04. AUTHORIZATION
Any indemnification under Paragraphs .01 and .02 above (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the Director, Trustee, Officer, employee or agent is proper in the circumstances because such person has met the applicable standard of conduct set forth in Paragraphs .01 and .02 above. Such determination shall be made (a) by the Board of Directors of the Corporation by a majority vote of a quorum consisting of Directors who were not parties to such action, suit or proceeding, or (b) is such a quorum is not obtainable, by a majority vote of the Directors who were not parties to such action, suit or proceeding, or (c) by independent legal counsel (selected by one or more of the Directors, whether or not a quorum and whether or not disinterested) in a written opinion, or (d) by the Shareholders. Anyone making such a determination under this Paragraph .04 may determine that a person has met the standards therein set forth as to some claims, issues or matters but not as to others, and may reasonably prorate amounts to be paid as indemnification.
05. ADVANCES
Expenses incurred in defending civil or criminal action, suit or proceeding shall be paid by the Corporation, at any time or from time to time in advance of the final disposition of such action, suit or proceeding as authorized in the manner provided in Paragraph .04 above upon receipt of an undertaking by or on behalf of the Director, Trustee, Officer, employee or agent to repay such amount unless it shall ultimately be by the Corporation is authorized in this Section.
06. NONEXCLUSIVITY
The indemnification provided in this Section shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any law, bylaw, agreement, vote of shareholders or disinterested Directors or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a Director, Trustee, Officer, employee or agent and shall inure to the benefit of the heirs, executors, and administrators of such a person.
07. INSURANCE
The Corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a Director, Trustee, Officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a Director, Trustee, Officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability assessed against such person in any such capacity or arising out of such person's status as such, whether or not the corporation would have the power to indemnify such person against such liability.
08. "CORPORATION" DEFINED
For purposes of this Section, references to the "Corporation" shall include, in
addition to the Corporation, an constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had the power and authority to
indemnify its Directors, Trustees, Officers, employees or agents, so that any
person who is or was a Director, Trustee, Officer, employee or agent of such
constituent corporation or of any entity a majority of the voting Shares of
which is owned by such constituent corporation or is or was serving at the
request of such constituent corporation as a Director, Trustee, Officer,
employee or agent of the corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under the provisions of this
Section with respect to the resulting or surviving Corporation as such person
would have with respect to such constituent corporation if its separate
existence had continued.
09. FURTHER BYLAWS
The Board of Directors may from time to time adopt further Bylaws with specific respect to indemnification and may amend these and such Bylaws to provide at all times the fullest indemnification permitted by the General Corporation Law of the State of Nevada.
ARTICLE X
AMENDMENT OF BYLAWS
01. BY THE SHAREHOLDERS
These Bylaws may be amended, altered, or repealed at any regular or special meeting of the shareholders if notice of the proposed alteration or amendment is contained in the notice of the meeting.
02. BY THE BOARD OF DIRECTORS
These Bylaws may be amended, altered, or repealed by the affirmative vote of a majority of the entire Board of Directors at any regular or special meeting of the Board.
ARTICLE XI
FISCAL YEAR
The fiscal year of the Corporation shall be set by resolution of the Board of Directors.
ARTICLE XII
RULES OF ORDER
The rules contained in the most recent edition of Robert's Rules or Order, Newly Revised, shall govern all meetings of shareholders and Directors where those rules are not inconsistent with the Articles of Incorporation, Bylaws, or special rules or order of the Corporation.
ARTICLE XIII
REIMBURSEMENT OF DISALLOWED EXPENSES
If any salary, payment, reimbursement, employee fringe benefit, expense allowance payment, or other expense incurred by the Corporation for the benefit of an employee is disallowed in whole or in part as a deductible expense of the Corporation for Federal Income Tax purposes, the employee shall reimburse the Corporation, upon notice and demand, to the full extent of the disallowance. This legally enforceable obligation is in accordance with the provisions of Revenue Ruling 69-115, 1969-1 C.B. 50, and is for the purpose of entitling such employee to a business expense deduction for the taxable year in which the repayment is made to the Corporation. In this manner, the Corporation shall be protected from having to bear the entire burden of disallowed expense items.
ARTICLE IXV
GENERAL PROVISIONS
01. REGISTERED OFFICE
The registered office of the Corporation shall be in Carson City, State of Nevada. The Corporation may also have offices at such other places both within and without the State of Nevada as the Board of Directors may from time to time determine or the business of the Corporation may require.
02. DISTRIBUTIONS
Distributions upon the capital stock of the Corporation, subject to the provision of the Articles of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Distributions may be paid in cash, in property or in shares of capital stock, subject to the provisions of the Articles of Incorporation.
03. RESERVES
Before payment of any distribution, there may be set aside out of any funds of the Corporation available for distributions such sum or sums as the Directors may from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing distributions or for repairing or maintaining any property of the Corporation or for such other purpose as the Directors shall think conducive to the interest of the Corporation, and the Directors may modify or abolish any such reserve in the manner in which it was created.
04. CHECKS AND NOTES
All checks or demands for money and notes of the Corporation shall be signed by such Officer or Officers or such other person or persons as the Board of Directors may from time to time designate.
CERTIFICATE OF SECRETARY
I, Thomas Mills hereby certify that I am the duly appointed Secretary of the Corporation and that the foregoing Bylaws, constitute the code of Bylaws of the Corporation as duly adopted at a special meeting of the Board of Directors of the Corporation.
DATED this 31st day of March, 2010.
/s/ Thomas Mills Thomas Mills Secretary |
CODE OF ETHICS FOR SENIOR FINANCIAL OFFICERS
Novagen Solar Inc. promotes ethical conduct in the practice of financial management. Senior financial officers hold an important and elevated role in corporate governance. They are uniquely capable and empowered to ensure that shareholders' interests are appropriately balanced, protected and preserved.
It is the policy of Novagen Solar Inc. that the principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar function will adhere to the following principles governing their professional and ethical conduct in fulfillment of their responsibilities:
1. Act with honesty and integrity, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships.
2. Provide full, fair, accurate, timely, and understandable disclosure in reports and documents filed with the SEC as well as other public communications.
3. Comply with the laws of federal, state, and local governments applicable to Pickford Minerals Inc., and the rules and regulations of regulatory agencies.
4. Be accountable for promoting adherence to this code.
Exhibit 31.1
CERTIFICATION
I, Thomas Mills, certify that:
1. I have reviewed this annual report on Form 10-K of Novagen Solar Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and
5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the small business issuer's board of directors:
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.
March 31, 2010
By /s/ Thomas Mills Thomas Mills President, Chief Executive Officer, Chief Financial Officer, and Principal Accounting Officer |
Exhibit 32.1
CERTIFICATIONS PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Novagen Solar Inc. on Form 10-K for the
year ended December 31, 2009 as filed with the Securities and Exchange
Commission on the date hereof (the Report), I, Thomas Mills, President, Chief
Executive Officer, Chief Financial Officer and Principal Accounting Officer of
the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: March 31, 2010 By /s/ Thomas Mills Thomas Mills Chief Executive Officer, President, Chief Financial Officer and Principal Accounting Officer |