PINX:CRNSF Coronus Solar Inc Annual Report 10-K Filing - 3/31/2012

Effective Date 3/31/2012

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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 MARCH 31, 2012

Commission file number   000-53697

CORONUS SOLAR INC.
(Exact name of registrant as specified in its charter)

British Columbia, Canada
(State or other jurisdiction of incorporation or organization)

1100-1200 West 73rd Avenue
Vancouver, British Columbia
Canada   V6P 6G5
(Address of principal executive offices, including zip code.)

604-267-7078
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Securities registered pursuant to section 12(g) of the Act:
NONE
COMMON STOCK

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 required to file reports pursuant to Section 13 or Section 15(d) of the Act:    YES [X]   NO [   ]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   YES [X]   NO [   ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES [   ]   NO [X]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   [   ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 
Large Accelerated Filer
[   ]
Accelerated Filer
[   ]
 
Non-accelerated Filer
[   ]
Smaller Reporting Company
[X]
 
(Do not check if a smaller reporting company)
   

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES [   ]   NO [X]

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of March 31, 2012: $4,225,252.

As of June 26, 2012, 27,096,086 shares of the registrant’s common stock were outstanding.





 
 

 



 
Page
   
 
     
Business.
3
Risk Factors.
12
Unresolved Staff Comments.
14
Properties.
15
Legal Proceedings.
17
     
 
     
Market for the Registrant’s Common Equity, Related Stockholders Matters and Issuer Purchases of Equity Securities.
17
Selected Financial Data.
18
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
19
Quantitative and Qualitative Disclosures About Market Risk.
30
Financial Statements and Supplementary Data.
30
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
68
Controls and Procedures.
68
Other Information.
69
     
 
     
Directors, Executive Officers and Corporate Governance.
69
Executive Compensation.
73
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
76
Certain Relationships and Related Transactions, and Director Independence.
77
Principal Accounting Fees and Services.
78
   
 
     
Exhibits and Financial Statement Schedules.
79
     
 
85
     
 
86








 
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PART I

ITEM 1.          BUSINESS.

General

We, Coronus Solar Inc. (the “Company”), are a solar photovoltaic (PV) developer. Our plan is to deploy, own and operate utility-scale, solar PV power systems in the State of California. Our immediate-term focus is on small deployments, in multiples of 1.5 MW systems. By focusing on small deployments, we are eligible to obtain “must take” power purchase agreements (PPAs) under the California Public Utilities Commission’s (CPUC’s) feed-in tariff for small generators. By focusing on small deployments, we can interconnect to an existing utility distribution network that can support small interconnections. Our plan is to deploy a portfolio of systems.

Our immediate-term strategy is to procure PPAs from Southern California Edison (SCE), a leading utility in California, under the CPUC’s feed-in tariff for small generators. Under the current feed-in tariff, SCE is obligated to buy renewable energy from renewable energy producers, and the feed-in tariff, which is regulated by the government, fixes the price, at the onset, SCE pays per unit of electricity. The term of the PPAs we intend to procure is 20 years. Currently, the program is restricted to facilities of rated generating capacity of 1.5 MW in size or less. We are entitled to enter into multiple PPAs, provided we deploy multiple facilities. Additionally, we are entitled to site multiple 1.5 MW systems on the same parcel, provided there is no material transmission network impact. Accordingly, our immediate-term strategy is to cluster multiple 1.5 MW systems on the same parcel.

On March 31, 2011, we and Coronus Energy Corp. (“Coronus”), our wholly-owned subsidiary, entered into a purchase agreement for utility-scale, ground-mount, solar PV power systems (the “Solar Power Systems Agreement”) with Belectric, Inc. (“Belectric”). Under the Solar Power Systems Agreement, Coronus agreed to acquire a total of 21 MW of utility-scale, ground-mount, solar PV power systems from Belectric. To satisfy this initial 21 MW round of deployments, as expeditiously as possible, our strategy, as described above, is to pursue the feed-in tariff for small generators. Under the existing feed-in tariff, SCE’s allocated share of the current 500 MW statewide cap is 247.690 MW. Service under the feed-in tariff is on a first-come-first-served basis and will be closed to new customers once the total rated generating capacity of eligible facilities within SCE’s service territory reaches 247.690 MW. Once SCE reaches its allocated share of the statewide cap, it will keep a wait list of projects to backfill projects that are withdrawn or terminated.

CPUC proceedings are underway to implement Senate Bill 32 (“SB 32”), which amends the existing feed-in tariff, by establishing a new pricing methodology and key program design features, expanding the program to include projects up to 3 MW, and setting a new statewide capacity cap of 750 MW under the program.

As of June 20, 2012, under the current feed-in tariff, SCE had 100.8 MW of project bandwidth executed and 146.9 MW of project bandwidth available. As of the date of this annual report, we have eighteen 1.5 MW systems currently under utility interconnection study, and two 1.5 MW systems at the pre- utility interconnection study stage. There is no assurance the utility studies will result in economically feasible interconnections. Further, there is no assurance we will be able to deploy 21 MW of systems, if any, under the feed-in tariff before the feed-in tariff is fully subscribed. By not acting quickly enough, and by not pursuing feasible projects, we may miss the feed-in tariff allotments.

Belectric

On March 31, 2011, we and Coronus entered into a purchase agreement for utility-scale, ground-mount, solar PV power systems (the “Solar Power Systems Agreement”) with Belectric. Under the Solar Power Systems Agreement, Coronus agreed to acquire a total of 21 MW_ac of utility-scale, ground-mount, solar PV power systems from Belectric, for total consideration of $76,818,000, exclusive of taxes (the “Basic Price”). On entering into the Solar Power Systems Agreement, we paid 15% of the Basic Price, or $11,522,700, by way of issuing 10,974,000 shares of our common stock (the “Payment Shares”) to Belectric, at a deemed price of $1.05 per share. The fair

 
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value per share at the date of issuance of the Payment Shares was $0.60. Accordingly, as at March 31, 2011, we recorded $6,584,400 under shareholders’ equity and construction in progress ($6,584,400 as at March 31, 2012). As a consequence of the issuance of the Payment Shares, Belectric is our largest shareholder, holding 40.5% of the issued and outstanding shares of our common stock at the date of this report.

Under the Solar Power Systems Agreement, Coronus has until December 31, 2013, to deploy the solar PV systems. Under the Solar Power Systems Agreement, Coronus is to provide the sites for the systems, pay for the utility interconnection requests and studies, and obtain the power purchase agreements and land use permits. Additionally, Coronus is to provide Belectric with satisfactory proof of secured financing, on a per project basis, prior to the commencement of construction of each of the systems. Under the Solar Power Systems Agreement, Belectric is to provide all services necessary for delivery to Coronus of turnkey, operation ready, solar PV systems, and for connection of the systems to the utilities’ grids. Belectric agrees to design the systems to optimize revenue, with emphasis placed on the utilities’ time of delivery periods and factors. Additionally, Belectric shall be responsible for managing the operation of the solar PV systems, throughout the duration of the power purchase agreement underlying each system, and will receive, for the services to be provided, remuneration in the amount of USD $25 per kWp (DC rated output) per year.

There is no assurance Coronus will be able to provide Belectric with satisfactory proof of secured financing, on a per project basis. The Solar Power Systems Agreement is incorporated by reference as Exhibit 10.18 of this annual report.

With “Belectric” subsidiaries in 15 countries, Belectric International designs, manufactures and constructs utility-scale, solar PV systems worldwide. According to IMS Research’s 2011 Global PV System Integrator Rankings, Belectric International was the global leader again in 2011, developing nearly 400 MW of solar PV systems worldwide.

The Coronus Acquisition

On November 2, 2009, we completed the agreement (the “Agreement”) to acquire all of the issued and outstanding shares of Coronus Energy Corp. (“Coronus”), a development stage company founded to deploy, own and operate utility-scale solar power systems in the State of California. We acquired all of the outstanding shares of Coronus in exchange for 2,000,000 shares of our common stock at a deemed value of $0.025 per share. We issued the 2,000,000 shares of our common stock to Mark Burgert, the sole principal of Coronus. Under the Agreement, Jeff Thachuk, our president, transferred 2,025,000 of his shares of our common stock to Mr. Burgert for $1. The transfer of these common shares was treated, as a contribution by Mr. Thachuk, as part of the consideration for the acquisition. The transaction was accounted for as the purchase of assets. The Coronus assets acquired by us consisted of a detailed business plan regarding the market for, and deployment of, utility-scale solar power systems in the State of California, as well as minimal working capital.

Under the Agreement, options to acquire 905,000 shares of our common stock held by various persons were cancelled. Under the Agreement, Mr. Thachuk was appointed as a director and the chairman, CEO, CFO, secretary and treasurer of Coronus. Mr. Burgert continued to hold office of president in Coronus. On closing, we engaged Mr. Burgert as a consultant. As consideration therefore, we issued Mr. Burgert fully vested options to acquire (i) 150,000 shares of our common stock, exercisable at $0.065 per share until April 22, 2015, and (ii) 200,000 shares of our common stock, exercisable at $0.065 per share until March 31, 2016. On closing, 9,050,000 shares of our common stock collectively owned by Messrs. Thachuk and Burgert were placed into voluntary escrow, to be released to each of them on the basis of one common share each for each $0.50 earned in revenue by us on a consolidated basis. Messrs. Thachuk and Burgert maintain full voting and dividend rights in the 9,050,000 shares that were placed into escrow.


 
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On February 1, 2012, Mr. Burgert’s engagements as consultant and as president of Coronus were terminated by mutual agreement. Accordingly, Mr. Burgert no longer holds any positions with us. Mr. Burgert had no disagreements with us or Coronus over practices, policies or operations. Mr. Burgert continues to hold the options, as described above, and Mr. Burgert will continue to hold them until the options expire or until Mr. Burgert exercises them. On February 1, 2012, Mr. Thachuk replaced Mr. Burgert as president of Coronus. As of the date of this annual report, we have not entered into any new compensatory arrangements with Mr. Thachuk in respect of this appointment.

The above discussions reflect the 2 for 1 stock split, which occurred on November 3, 2009.

Sycamore & Solar PV Asset Sale

On March 19, 2012, Coronus, through its wholly-owned subsidiary, Coronus Hesperia West 1 LLC, entered into a feed-in tariff Power Purchase Agreement (“PPA”) with SCE. The PPA relates to Coronus’ application for interconnection service and the feed-in tariff for a 1.2 MW solar PV power system on the 20 acre parcel of vacant land, situated west of Hesperia, in the County of San Bernardino, California, Coronus agreed to acquire pursuant to the “Hesperia West” Vacant Land Purchase Agreement, Coronus entered into on November 9, 2011.

On April 5, 2012, Coronus entered into a Solar Photovoltaic Asset Sale Agreement (the “Solar PV Asset Sale Agreement”) with Sycamore Physicians Partners LLC (“Sycamore”). Under the Solar PV Asset Sale Agreement, Coronus agreed to sell, assign and transfer to Sycamore, Coronus’ sole membership in Coronus Hesperia West 1 LLC. Additionally, under the Solar PV Asset Sale Agreement, Coronus agreed to assign to Sycamore, the “Hesperia West” Vacant Land Purchase Agreement. Further, under the Solar PV Asset Sale Agreement, Coronus agreed to use its best efforts to obtain a second PPA from SCE in relation to the Hesperia West parcel, and to sell this PPA (relating to a 1.5 MW solar PV system) to Sycamore if obtained.

Under the Solar PV Asset Sale Agreement, Sycamore agreed to pay $1,726,219 (the “Basic Price”) to Coronus for the sole ownership in Coronus Hesperia West 1 LLC, the assignment of the “Hesperia West” Vacant Land Purchase Agreement, and the second PPA. On executing the Solar PV Asset Sale Agreement, Sycamore agreed to pay $817,200 to Coronus, and Coronus agreed to transfer the sole membership in Coronus Hesperia West 1 LLC and assign the “Hesperia West” Vacant Land Purchase Agreement to Sycamore. Under the Solar PV Asset Sale Agreement, Sycamore agreed to pay the balance of the Basic Price, or $909,019, to Coronus on delivery of the second PPA. On April 11, 2012, Sycamore paid the $817,200 to Coronus, and on April 12, 2012, Coronus transferred the sole ownership in Coronus Hesperia West 1 LLC and assigned the “Hesperia West” Vacant Land Purchase Agreement to Sycamore.

Our History and Development

Our legal name and the name under which we carry on business is Coronus Solar Inc. We were incorporated federally in Canada pursuant to the provisions of the Canada Business Corporations Act of 1985, as amended, on December 3, 2001 under the name “The Lecturenet Learning Corporation”. On August 13, 2002, our articles were amended to split or subdivide the shares of our common stock on the basis of one and one-half post-subdivision shares for every one share of common stock previously held. On August 26, 2002, our articles were further amended to change our name to “InsightfulMind Learning, Inc.” On September 24, 2002, our articles were amended again to remove restrictions on the number of shareholders that we may have and to remove the prohibition from inviting the public to subscribe for our securities. On November 3, 2009, our articles were amended again to 1) split or subdivide the shares of our common stock on the basis of two post-subdivision shares for every one share of common stock previously held, 2) remove any restrictions on the right of our shareholders to transfer shares of our common stock, and 3) change our name to “Coronus Solar Inc.” Our corporate headquarters are located in Canada, at Suite 1100 – 1200 West 73rd Avenue, Vancouver, British Columbia V6P 6G5. Our registered and records office is also in Canada at 1600 – 609 Granville Street, Vancouver, British Columbia V7Y 1C3.

 
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We are extra provincially registered in the Province of British Columbia, Canada under the British Columbia Business Corporations Act pursuant to a Certificate of Registration dated January 24, 2002 issued by the Registrar of Companies for the Province of British Columbia.

We were originally founded to create a web-based e-learning business that offered a variety of extracurricular, educational courses over the Internet. On completion of the Coronus acquisition, we redirected our business from delivering educational courses over the Internet to the deployment and operation of utility-scale solar power systems in the State of California. We now focus all of our efforts on the business of Coronus, our wholly-owned subsidiary. Coronus is a solar PV developer, founded to deploy, own and operate utility-scale solar PV power systems in the State of California. Coronus was formed as a Delaware corporation on June 23, 2009, under the name Coronus Energy Corp. Coronus’ registered agent is Agents and Corporations, Inc. 1201 Orange Street, Suite 600, One Commerce Center, P.O. Box 511 Wilmington, Delaware 19801.

Industry

Solar power systems are renewable energy sources that rely on the sun as an energy source and do not require a fossil fuel supply. Solar power generation is virtually pollution free, capable of generating electricity without air or water emissions, noise, vibration, or waste generation. In particular, solar power does not generate greenhouse gases that contribute to global climate change or other air pollutants, as power generation based on fossil fuel combustion does, and does not generate radioactive or other wastes as nuclear power and coal combustion do. While many of the costs of fossil fuels are well known, others (pollution related health problems, environmental degradation, the impact on national security from relying on foreign energy sources) are indirect and difficult to calculate. These are traditionally external to the pricing system, and are thus often referred to as externalities. A corrective pricing mechanism, such as a carbon tax, accounts for these externalities and leads to solar power being cheaper to the consumer than fossil fuel based energy.

Solar power provides electrical generation by means of heat engines or photovoltaics. Our business is premised on photovoltaics, which is a method for generating electric power by using solar cells to convert energy from the sun into electricity. According to GlobalData, a market research firm, the global solar PV market witnessed high growth in 2009 and 2010, with 23,874 MW of annual installed capacity coming online in these two years compared to the 8,675 MW installed collectively in 2007 and 2008. According to GlobalData, the market is driven by market stimulation packages offered by governments across the world, which includes the U.S. government. In the U.S., the growth momentum of the solar PV market has been largely facilitated by the support mechanisms provided by the federal and state governments. According to GlobalData, the cumulative solar PV power installed capacity in the U.S. increased from 168 MW in 2001 to 2,561 MW in 2010 at a compound annual growth rate of 35.4%. According to GlobalData, the cumulative installed capacity is expected to grow from 2,561 MW by 2010 to 50,107 MW by the end of 2020, growing at a compound annual growth rate of 34.6%. The solar PV market is expected to continue to be driven by investment tax credits (due to expire in 2016) at the federal level and other, state-level programs.

According to the Solar Energy Industries Association (SEIA), in 2011, there was 542.2 MW of installed solar power in California, ranking California first, among all U.S. states for installed solar in 2011. Additionally, in 2011, there was 1,877.9 MW of installed solar power cumulative to date in California, ranking California first, among all U.S. states for installed solar power cumulative to date.

According to the California Energy Commission’s Energy Almanac, in 2010, California generated 71% of its electricity in-state. Of California’s in-state generation, 14.6% of the electricity came from renewable sources. Of this, despite the solar PV market’s rapid growth over the past few years, solar power (which includes both solar PV and solar thermal) supplied only 0.40% of California’s total in-state energy supply in 2010.

According to GlobalData, solar PV technology will reach grid parity in the US for some PV projects in 2014; by 2017 most regions in the country will reach grid parity in alignment with average electricity prices in the residential sector.

 
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Photovoltaic Systems

Photovoltaics is a method for generating electric power by using solar cells to convert energy from the sun into electricity. Some materials, known as semiconductors, exhibit a property known as the photoelectric effect that causes them to absorb photons of light and release electrons. When these free electrons are captured, an electric current results that can be used as electricity.
 
Crystalline silicon-based technologies and thin-film technologies are the two primary technologies currently used in the solar power industry. Most solar PV modules in the market today are of the crystalline silicon-based type. These modules are made of the semiconductor material silicon and have a top and bottom electrical contact to move the electricity out of the solar cell. Solar modules usually consist of individual solar cells connected together, an encapsulant to protect against moisture and other environmental factors, and a sheet of glass for support. The individual solar cells do not require ongoing maintenance and have proven to last over 20 years. New and emerging thin film modules use very thin layers of semiconductor material, typically deposited on glass substrates, where the individual cells are connected through a monolithically integrated process during the deposition steps instead of assembled as individual cells. Solar PV systems are arrangements of solar PV modules connected to determine the total power output of the system. Energy is converted into direct-current, or DC, electricity when sunlight hits a solar PV module. In grid-tied applications, an inverter is used to convert the DC electricity from the solar PV system into alternating current, or AC electricity, which is interconnected directly to the electric utility grid. In addition, solar PV systems usually have mounting structures, cable cords to route the power, and circuit protection.

Per watt installation and annualized operating costs for a solar power plant have realized reductions over the last several years. The main driver for these reductions has been reductions in the price of solar modules, as well as advancements in panel assembly, installation techniques, and operating systems that together have helped to reduce material and labor costs. Nonetheless, government tax incentives and other support for solar electricity generation, such as renewable portfolio standards and feed-in tariffs, continue to be key to the adoption of solar power systems. In the U.S., tax incentive programs exist at both the federal and state level and can provide investment tax credits, accelerated depreciation and property tax exemptions for operators. Government mandated renewable portfolio standards are typically regionally or state based and direct regulated power utilities to supply a portion of their total electricity in the form of renewable electricity sources. Government mandated feed-in tariffs require that regulated utilities are required to pay for renewable electricity generated by end-users and delivered into the electrical power grid.

Regulations and policies relating to electricity pricing and interconnection also encourage distributive generation with photovoltaic systems. Photovoltaic systems generate most of their electricity during the afternoon hours when the demand for and cost of electricity is highest. As a result, electricity generated by photovoltaic systems mainly competes with expensive peak hour electricity, rather than the less expensive average price of electricity. Modifications to the peak hour pricing policies of utilities, such as to a flat rate, would require photovoltaic systems to achieve lower prices in order to compete with the price of electricity.

Due to rapid industry-wide silicon production capacity expansion since 2008, the solar power industry is experiencing an oversupply of high-purity silicon, resulting in falling silicon prices. Increases in polysilicon production and an oversupply of solar cells and modules have resulted in substantial downward pressure on prices throughout the value chain. In June 2009, SolarBuzz reported in its Retail Price Survey, the lowest retail prices for a silicon mono-crystalline module and a silicon multi-crystalline module were $2.80 per watt and $2.48 per watt respectively. In the same survey, SolarBuzz reported the lowest retail price for a thin film module was $1.76 per watt. In March 2012, SolarBuzz reported in its Retail Price Survey, the lowest retail prices for a silicon mono-crystalline module and a silicon multi-crystalline module were $1.10 per watt and $1.06 per watt respectively. In the same survey, SolarBuzz reported the lowest retail price for a thin film module was $0.84 per watt. Solar module price is the key element in the total price of an installed solar PV system, as, traditionally, the module cost represented roughly 50 percent of the total installed cost of the system.


 
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California Energy Market

Size & Makeup

California is the eighth largest economy in the world, according to the State’s Legislative Analyst’s Office. To meet the needs of its growing population, California’s economy depends upon affordable, reliable, and environmentally sound supplies of electricity, natural gas, and transportation fuels. Fueled by population growth, the demand for electricity in California is increasing. At the same time, the mandate to decrease greenhouse gas emissions is ever present. According to the California Energy Commission (the “Energy Commission”), in 2010, California produced 70.6% of the electricity it uses; the rest is imported from the Pacific Northwest (8.5%) and the U.S. desert southwest (20.1%). Natural gas is the main source for electricity at 41.9% of the total system power. According to the Energy Commission, in 2005, Californians spent $31 billion for their electricity.

The Energy Commission projects per capita electricity consumption to remain relatively constant over the next decade at just above 7,500 kilowatt hours (kWh) per person. Per capita consumption has been relatively constant over the past 15 years, fluctuating between 7,200 and 7,800 kWh per person, depending on economic and annual temperature conditions. However, the Energy Commission forecasts growth in statewide annual electricity consumption over the next decade of 3% annually. Population growth is the driving force behind this growth.

Electricity Prices

The nominal price Californians pay for electricity has steadily risen over the past 30 years. According to the Energy Commission, the nominal, average retail electricity prices, charged by investor-owned utilities and municipal utilities, from 1982 to 2008, have grown 2.1% annually. The Energy Commission forecasts the nominal price of electricity will continue to rise. According to them, the weighted average price, over the next five years, calculated from the retail electricity price forecasts of three investor-owned utilities and thirteen publicly-owned utilities, will increase by 1.5% annually.

Renewables Portfolio Standard (RPS)

A renewables portfolio standard (RPS) is a regulation that requires the increased production of energy from renewable energy sources, such as wind, solar, biomass, and geothermal. The policy ensures that a minimum amount of renewable energy is included in the portfolio mix of electricity resources serving a state or country, and – by increasing the required amount over time – the RPS can put the electricity industry on a path toward increasing sustainability. RPS-type mechanisms have been adopted in several countries, including Britain, Italy, Poland, Sweden, Belgium, and Chile, as well as in 35 U.S. states and the District of Columbia. Regulations vary from state to state, and there is no federal policy. Together these 35 U.S. states and the District of Columbia account for more than half of the electricity sales in the U.S. (source: U.S. Department of Energy). Of all the state-based RPS programs in place today, no two are the same. Each has been designed taking into account state-specific policy objectives (e.g. economic growth, diversity of energy supply, environmental concerns), local resource endowment, and the capacity to expand renewable energy production.

Established in 2002 under Senate Bill 1078 and accelerated in 2006 under Senate Bill 107, California’s Renewables Portfolio Standard (RPS) is one of the most ambitious renewable energy standards in the United States. Under California’s RPS statutes, retail sellers of electricity in California were required to increase the amount of renewable energy they procure each year by at least 1 percent until 20 percent of their retail sales were served with renewable energy by December 31, 2010. On November 17, 2008, then Governor Arnold Schwarzenegger signed executive order S-14-08 which mandated a RPS of 33% by 2020, which sits in addition to the 20% by 2010 order. According to the California Public Utilities Commission (CPUC), California’s three large Investor Owned Utilities (IOUs) – Pacific Gas and Electric (PG&E), Southern California Edison (SCE) and San Diego Gas and Electric (SDG&E) – collectively served 20.6% of their 2011 retail electricity sales with renewable power.


 
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The California Energy Commission (the “Energy Commission”) and the California Public Utilities Commission (CPUC) work collaboratively to implement the RPS, with each agency assigned specific roles. The Energy Commission’s roles are to 1) certify eligible renewable resources that meet certain criteria and 2) design and implement a tracking and verification system to ensure that renewable energy output is counted only once for the purpose of the RPS. The CPUC’s roles are to 1) determine annual procurement targets and enforce compliance, 2) review and approve each IOU’s renewable energy procurement plan, 3) review IOU contracts for RPS-eligible energy, and 4) establish the standard terms and conditions used by IOUs in their contracts for eligible renewable energy.

Procurement from a renewable facility cannot be counted towards a load serving entity’s RPS obligation unless that facility has been certified as RPS-eligible by the Energy Commission. In general, a facility is eligible if it uses an eligible renewable resource or fuel, satisfies resource-specific criteria, and is either located within the state or satisfies applicable requirements for out-of-state facilities. Solar photovoltaic (PV) is an eligible renewable resource, with no resource-specific criteria. Accordingly, because our plan is to locate our facilities within the state, our facilities will be RPS eligible. Further, in terms of delivery, according to the Energy Commission, PV facilities delivering electricity to the grid are relatively straightforward to integrate into RPS implementation because the generation can be readily measured and procured, with standard metering.

Feed-In Tariff for Small Generators

On February 14, 2008, by adopting Resolution E-4137, the CPUC made a new feed-in tariff available for the purchase of up to 500 MW, as amended by Senate Bill 380, of renewable generating capacity from small generating facilities throughout California. The feed-in tariff presents a simple mechanism for small renewable generators to sell power to a utility at predefined terms and conditions, without contract negotiations. Presently, the government regulates the tariff rate. Under the feed-in tariff, utilities are obligated to buy renewable energy from producers, and the feed-in tariff sets the price which these utilities pay per unit of electricity. Currently, the feed-in tariff provide a 10, 15, or 20-year fixed-price, non-negotiable contract to participating small renewable generators, sized up to 1.5 megawatts (MW). The rate paid by the utility is fixed at the time the power purchase contract is signed with no escalation over the 10, 15 or 20 year contract period. Accordingly, although fixing the price at the onset provides certainty, it doesn’t provide for adjustments to offset rising maintenance and operating expenses, over the course of the contract, due to inflation. Currently, customers can sell renewable power under the feed-in tariff to Southern California Edison (SCE), Pacific Gas and Electric Company (PG&E), San Diego Gas and Electric Company (SDG&E), PacifiCorp, Sierra Pacific Power Company, Bear Valley Electric Service Division of Golden State Water Company, and Mountain Utilities. Any customer may sell to SCE, PG&E, or SDG&E, but the feed-in tariffs are limited to water and waste water customers with respect to the other utilities.

To qualify for the feed-in tariffs, the electric generation facility must be an eligible renewable energy resource. All renewable generation technologies, including solar, wind, geothermal, biomass, biogas, small hydro and fuel cells that use renewable fuels, are eligible. Currently, the tariffs are intended for smaller installations, up to 1.5 MW in size, where the host is a retail customer of the utility, interconnected and operated in parallel with the utility’s transmission and distribution system. The tariffs must be made available until the combined statewide cumulative rated capacity of eligible generation installed reaches500 MW. SCE’s allocated share of the 500 MW statewide cap is 247.690 MW. Service under the feed-in tariff is on a first-come-first-served basis and will be closed to new customers once the total rated generating capacity of eligible facilities within SCE’s service territory reaches 247.690 MW. Once SCE reaches its allocated share of the statewide cap, it will keep a wait list of projects to backfill projects that are withdrawn or terminated.

CPUC proceedings are underway to implement Senate Bill 32 (“SB 32”), which amends the existing feed-in tariff, by establishing a new pricing methodology and key program design features, expanding the program to include projects up to 3 MW, and setting a new statewide capacity cap of 750 MW under the program.

As of June 20, 2012, under the current feed-in tariff, SCE had 100.8 MW of project bandwidth executed and 146.9 MW of project bandwidth available.

 
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Feed-In Tariff Rates

Currently, the rate sellers receive for their eligible renewable generation sold onto the grid is the market price as determined by the Energy Commission. Each year, the Energy Commission has updated the Market Price Referent (MPR) for use in the 10, 15, and 20 year long-term contracts. The MPR is the basis for the tariff rate. The MPR, a per kilowatt-hour price, is the predicted annual average cost of production for a combined-cycle, natural gas fired, baseload proxy plant. Further, the tariff is time differentiated. Energy produced during utility peak hours commands a higher price, reflecting the higher cost of generation during those hours. Conversely, energy produced during off-peak hours is less valuable to the utility and the tariff varies accordingly. Using Time of Delivery (TOD) adjustment factors results in annual payments under the feed-in tariff program that better match with the MPR.

Marketing Strategy

Must-Take Contracts

Our strategy is to enter into must-take contracts (power purchase agreements) with investor-owned utilities, under the feed-in tariff for small generators. Our plan is to deploy 1.5 MW solar PV power systems, the maximum effective capacity of a participating facility under the current feed-in tariff. Under the feed-in tariff, the large, investor owned utility is obligated by law to buy, without contract negotiations, the renewable energy we produce, at predefined rates, and under predefined terms and conditions. The feed-in tariff program exempts us from competitive solicitations. Under the feed-in tariff, we are not precluded from participating more than once. Accordingly, our plan is to enter into multiple power purchase agreements, in respect of multiple 1.5 MW systems.

Southern California Edison

To calculate the actual price paid for eligible renewable power under the feed-in tariff, the metered energy production at the point of interconnection is multiplied by the applicable Market Price Referent and then by the applicable Time of Delivery (TOD) adjustment factor. The TOD adjustment factors are different for each utility. The two utilities relevant to Coronus are Southern California Edison (SCE) and Pacific Gas and Electric (PG&E). Based on a comparative analysis, reflecting the different TOD adjustment factors, under the feed-in tariff, we estimate SCE pays 15% more than PG&E for power generated by a solar PV system. Accordingly, our strategy is to locate our solar PV systems within the territory of SCE. SCE serves more than 13 million people in a 50,000 square-mile area of central, coastal and southern California, excluding the City of Los Angeles and certain other cities. Based in Rosemead, California, the utility has been providing electric service in the region for more than 120 years. SCE’s service territory includes more than 180 cities.

SCE administers its share of the feed-in tariff program under the name “Schedule CREST”. Service under Schedule CREST is on a first-come-first-served basis and will be closed to new customers once the total rated generating capacity of eligible renewable generating facilities within SCE’s service territory reaches 247.690 MW, which is SCE’s allocated share of the current 500 MW statewide cap. Once SCE reaches its allocated share of the statewide cap, it will keep a wait list of projects to backfill projects that are withdrawn or terminated.

Our goal is to enter into the standardized, must-take, full buy/sell, Schedule CREST Power Purchase Agreements (CREST PPAs) with SCE, where SCE purchases all of our generation, net of station use. We would select a term of 20 years, as the customer may select the term. There is no regulatory approval process. The tariff and the CREST PPA were previously reviewed and approved by the California Public Utilities Commission. Once we and SCE sign a CREST PPA, it becomes effective and legally binding. To procure the CREST PPA, we require 1) a site, 2) an SCE retail account at the site, 3) engineered designs of the proposed 1.5 MW solar PV system, 4) an interconnection agreement with SCE, and 5) us committing to complete the construction of the plant and achieve initial operation within 18 months of the CREST PPA execution date.


 
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Siting

Our strategy is to locate our solar PV systems within the territory of SCE. Generally, we are looking at desert sites (the Mojave and Sonoran deserts), with service, where large plots of land are available and affordable. To accommodate a 1.5 MW solar PV system, we will require a 10 acre parcel of land.

Growth

Under the feed-in tariff, we are not precluded from participating more than once. Accordingly, our plan is to enter into multiple power purchase agreements.

Competition

The solar energy and renewable energy industries are both highly competitive and continually evolving as participants strive to distinguish themselves within their markets and compete within the larger electric power industry. Within the renewable energy industry, we compete with other renewable energy technologies including hydro, wind, geothermal, bio-mass and tidal. Additionally, solar power competes with conventional fossil fuels. We believe solar power has certain advantages when compared to these other power generating technologies and offers a stable power price compared to utility network power, which typically increases as fossil fuel prices increase. In addition, solar power systems do not produce air, water and noise emissions. The current high up-front cost of solar relative to utility network power, however, is the primary market barrier for on-grid applications.

In the large scale, on-grid solar power systems market, we face direct competition from companies that develop, own and operate solar power plants or sell turnkey solar power plants to end-users, such as utilities. In the context of our business plans, and our desire to capitalize on California’s feed-in tariff for small generators, we face direct competition from electric generation facilities that are eligible for and pursue the feed-in tariff. To be eligible, the facility must utilize an eligible renewable generation technology, which includes solar, wind, geothermal, biomass, biogas, small hydro and fuel cells that use renewable fuels. Additionally, the facility must currently restrict the size of its installation to 1.5 MW. In the context of the feed-in tariff, we intend to compete primarily on the basis of speed, arriving prior to the exhaustion of the program’s current capacity, by way of allotments.

Many of our competitors are larger, have greater financial resources, longer operating histories, and greater brand name recognition, than we do. In addition, many of our competitors may have well-established relationships with key utilities. It is possible that new competitors or alliances among existing competitors could emerge and rapidly acquire significant market share, which would harm our business. If we fail to compete successfully, our business would suffer and we may be unable to gain market share.

Physical Plant

Design and Deployment

On March 31, 2011, we and Coronus entered into a purchase agreement for utility-scale, ground-mount, solar PV power systems (the “Solar Power Systems Agreement”) with Belectric. Under the Solar Power Systems Agreement, Coronus agreed to acquire a total of 21 MW_ac of solar PV systems from Belectric. Coronus has until December 31, 2013, to deploy the solar PV systems. Under the Solar Power Systems Agreement, Coronus is to provide the sites for the systems, pay for the utility interconnection requests and studies, and obtain the power purchase agreements and land use permits. Additionally, Coronus is to provide Belectric with satisfactory proof of secured financing, on a per project basis, prior to the commencement of construction of each of the systems. Under the Solar Power Systems Agreement, Belectric is to provide all services necessary for delivery to Coronus of turnkey, operation ready, solar PV systems, and for connection of the systems to the utilities’ grids. Belectric agrees to design the systems to optimize revenue, with emphasis placed on the utilities’ time of delivery periods and factors. Additionally, Belectric shall be responsible for managing the operation of the solar PV systems, throughout the duration of the power purchase agreement underlying each system, and will receive, for the services to be provided, remuneration in the amount of $25 per kWp (DC rated output) per year.

 
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With “Belectric” subsidiaries in 15 countries, Belectric International designs, manufactures and constructs utility-scale, solar PV systems worldwide. According to IMS Research’s 2011 Global PV System Integrator Rankings, Belectric International was the global leader again in 2011, developing nearly 400 MW of solar PV systems worldwide.

We intend to maintain property insurance policies to cover our PV systems against losses due to fire, floods and other natural disasters.

Financial Analysis

Installed, we forecast a 1.5 MW_ac solar PV system will cost $5.5 million, inclusive of taxes, and over the course of 20 years, we estimate the system would generate $8.3 million in tariffs. We base our cost forecast on the pricing we negotiated, adjusted to reflect the fair value of the payment shares we issued on entering into the agreement, with Belectric, under the Solar Power Systems Agreement. We calculate our estimated tariffs using PVSYST, modeling software for the study, sizing, simulation and data analysis of solar PV systems. Using NREL meteorological data for Twentynine Palms, California, and system design inputs based on First Solar modules and the Belectric design, we generate a monthly/hourly production forecast. We then apply to this production forecast the Market Price Referent for a power purchase agreement entered into in 2012, with a commercial operation date of 2014, adjusted to factor in SCE’s Time of Delivery factors, to arrive at our revenue forecast. This estimate includes an allowance for revenue erosion, as a consequence of equipment degradation, equal to 0.7% per year. Ground-mounted, fixed-tilt systems, such as those we intend to deploy, contain no moving parts, and as a consequence, maintenance and operating costs are kept to a minimum. Over the course of 20 years, adjusted for inflation, at a compounded annual inflation rate of 2.79%, we forecast the expenses for a 1.5 MW_ac system, comprised of maintenance and operating costs, property tax, general administration and insurance, to be $1.4 million.

Employees & Consultants

We are developing our solar business through Coronus, as a wholly-owned subsidiary. As of the date of this annual report, we have one person actively engaged in the business of Coronus, our president, Jeff Thachuk. Mr. Thachuk is the chairman, president, CEO, CFO, secretary and treasurer of Coronus, and is responsible for business development, strategy and direction, as well as operations and administration. Mr. Thachuk devotes 40 hours per week towards the management of Coronus.

Offices

Our executive office is located at Suite 1100 – 1200 West 73rd Avenue, Vancouver, British Columbia, Canada V6P 6G5. We lease our office, month-to-month. We pay CAD$350 per month for the office, which includes the services of a shared receptionist, and a further CAD$55 per month for Internet and CAD$60 for a dedicated phone. On top of this, we are billed for photocopies, long distance phone/fax, and postage for outgoing mail, if and when we use these services.

ITEM 1A.       RISK FACTORS.

Risks Related to Our Business

We need to raise significant capital in order to grow our business and fund our operations, as planned, which may not be available on acceptable terms or at all.

Our currently available capital resources and cash flows from operations are insufficient to meet our working capital and capital expenditure requirements. We need to raise significant capital to fund our plans, which includes the acquisition of private lands, and the funding of the solar PV power systems under the Solar Power Systems Agreement. Further, we will need operating capital until our solar PV power systems are online. Our cash requirements will depend on numerous factors, including, but not limited to, whether we’re able to procure the

 
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feed-in tariff power purchase agreements, and if so, whether we enter into multiple agreements, the costs of the private lands, and the needs of our general working capital. If adequate capital does not become available when needed on acceptable terms, or at all, our ability to fund our operations, and implement our plans will be hampered, resulting in our business, operating results, and/or financial condition being materially adversely affected.

Our ability to raise capital is hampered by adverse changes in general economic market conditions.

The U.S. economy is currently undergoing turmoil, amid stock market volatility, difficulties in the financial services sector, tightening of the credit markets, softness in the housing markets, concerns of inflation and deflation, reduced corporate profits and capital spending, reduced consumer spending, and continuing economic uncertainties. This turmoil and the uncertainty about future economic conditions could negatively impact our ability to obtain debt or equity financing of our operations. The cost and availability of credit has been and may continue to be adversely affected as concerns about the stability of the markets generally and the strength of counterparties specifically has led many lenders and institutional investors to reduce, and in some cases, cease, to provide funding to borrowers. If these market and economic conditions continue, they may limit our ability to access the capital markets to meet liquidity and capital expenditure requirements. We cannot predict the timing, strength or duration of this global economic downturn.

Our ability to obtain market share and revenues depends on our ability to successfully procure power purchase agreements from investor-owned utilities.

Our plan is to procure power purchase agreements from investor-owned utilities under California’s feed-in tariff program for small generators. Although the feed-in tariffs present a mechanism for small renewable generators to sell power to a utility at predefined terms and conditions, without contract negotiations, the utility stipulates, as a special condition, that the facility be strategically located and interconnected to the electric transmission system in a manner that optimizes the deliverability of electricity generated at the facility to load centers. Although we believe we will be able to satisfy this special condition, there is no assurance we will. Failure to do so will result in our inability to procure the power purchase agreements, which would materially and adversely affect our business, operating results, and/or financial condition.

We face competition from other companies applying for the feed-in tariffs under California’s feed-in tariff program for small generators.

Under the feed-in tariff program for small generators, SCE’s allocated share of the statewide cap is 247.7 MW, which, as of June 20, 2012, 100.8 MW are executed, leaving 146.9 MW available. Eligible facilities extend beyond solar PV and include all competing renewable generation technologies, such as wind, geothermal, biomass, biogas, small hydro and fuel cells that use renewable fuels. Service under the program is on a first-come-first-served basis and will be closed to new customers once SCE reaches its allocated share of the statewide cap. If we fail to compete effectively, by not acting quickly enough, we may miss executing on the available MW. If we fail to obtain service under the program, we may be unable to increase our market share and revenues, which would materially and adversely affect our business, operating results, and/or financial condition.

We are dependent upon one solar PV systems integrator for systems installation.

Under the Solar Power Systems Agreement with Belectric, Belectric is to provide all services necessary for delivery to Coronus of 21 MW of turnkey, operation ready, solar PV systems, and for connection of the systems to the utilities’ grids. Accordingly, we are dependent on Belectric to deploy our systems. Delays or failures in delivery, shortages caused by inadequate production capacity or unavailability, financial failure, or otherwise, experienced by Belectric, would adversely affect or limit the implementation of our plans, which would materially and adversely affect our business, operating results, and/or financial condition. If we would be required to locate and contract with a substitute solar PV systems integrator, we may have difficulty identifying a substitute in a timely manner and on commercially reasonable terms. If this were to occur, our business would be harmed.


 
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We have a limited operating history and expect to incur losses into the future.

As a development stage company, we have a limited operating history upon which an evaluation of our future success or failure can be made. To achieve and maintain profitability and positive cash flow we are dependent upon our ability to generate revenues and our ability to generate a profit. If we are unable to raise sufficient capital to fund our plans and/or unable to procure power purchase agreements under California’s feed-in tariff program for small generators, we may have to suspend or cease operations.

The success of our business depends on the continuing contributions of Jefferson Thachuk.

We rely heavily on the services of Jefferson Thachuk. Loss of the services of Mr. Thachuk would adversely impact our operations. We do not carry key person life insurance on our senior management/ key personnel.

Risks Relating to Our Industry

Existing regulations, and changes to such regulations, may present technical, regulatory and economic barriers to the installation of our solar PV power systems, which have a material adverse affect on our business and results of operations.

Installation of solar PV power systems are subject to oversight and regulation in accordance with national and local ordinances, building codes, zoning, environmental protection regulation, utility interconnection requirements for metering and other rules and regulations. We rely on Belectric to design systems that agree to these standards. Certain cities may have ordinances that prevent or increase the cost of installation of solar PV power systems. In addition, new government regulations or utility policies pertaining to solar PV power systems are unpredictable and may result in significant additional expenses or delays and, as a result, could cause a significant adverse impact on our operations.

Reduced growth in or the reduction, elimination or expiration of government subsidies, economic incentives and other support for on-grid solar electricity applications could impede or frustrate the implementation of our plans, materially and adversely affecting our business, financial condition and results of operations.

Reduced growth in or the reduction, elimination or expiration of government subsidies, economic incentives and other support for on-grid solar electricity may result in the diminished competitiveness of solar energy relative to conventional and non-solar renewable sources of energy, and could materially and adversely affect the growth of the solar energy industry. We believe that the near-term growth of the market for on-grid applications, where solar energy is used to supplement the electricity a consumer purchases from the utility network, depends significantly on the availability and size of government subsidies and economic incentives. Federal, state and local governmental bodies in many countries, most notably Germany, Italy, Spain, France, Greece, Portugal, South Korea, Japan, Canada and the United States, have provided subsidies in the form of feed-in tariffs, rebates, tax incentives and other incentives to end-users, distributors, systems integrators and manufacturers of PV products. Many of these government incentives expire, phase out over time or require renewal by the applicable authority.

Electric utility companies or generators of electricity from fossil fuels or other renewable energy sources could also lobby for a change in the relevant legislation in their markets to protect their revenue streams.

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 under this item.


 
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ITEM 2.          PROPERTIES.

Twentynine Palms East

On August 28, 2010, Coronus entered into a Vacant Land Purchase Agreement (the “Twentynine Palms East Agreement”) to acquire a 30 acre parcel of vacant land, situated east of Twentynine Palms, in the County of San Bernardino, California, from Gary and Sylvia Wright. The purchase price of $32,000, all cash, was paid on January 24, 2011. Accordingly, Coronus owns this parcel. At this point in time, we have opted not to pursue interconnection agreements for solar PV power systems sited on this parcel. Based on the feedback we received from SCE’s distribution engineers, the anticipated network upgrade costs to accommodate the systems are currently prohibitive. Accordingly, we are currently assessing alternative uses for this parcel, including a sale.

Twentynine Palms North

On January 23, 2011, Coronus entered into a Vacant Land Purchase Agreement (the “Twentynine Palms North Agreement”) to acquire a 39.25 acre parcel of vacant land, situated north of Twentynine Palms, in the County of San Bernardino, California, from Joshua Tree Holdings. The purchase price was $40,000. Coronus agreed to pay $8,000, with Joshua Tree Holdings agreeing to carry back the balance amount of $32,000 for two years at 6.5% per annum interest, with monthly payments of interest only. On May 16, 2011, the transaction closed. Accordingly, Coronus owns this parcel. At this point in time, we are pursuing multiple interconnection agreements for 1.5 MW solar PV power systems in respect of the 12kV distribution circuit that feeds this parcel. Specifically, we have three systems currently under utility study. In addition to these three systems, we have two more systems under utility study in respect of a second 12kV distribution circuit west of the 12kV distribution circuit that feeds this parcel.

Newberry Springs

On January 24, 2011, Coronus entered into a Vacant Land Purchase Agreement (the “Newberry Springs Agreement”) to acquire a 20 acre parcel of vacant land, situated in Newberry Springs, in the County of San Bernardino, California, from Mike Hoch. The purchase price was $45,000. Coronus agreed to pay $8,000, with Mike Hoch agreeing to carry back the balance amount of $37,000 for two years at 6.5% per annum interest, with monthly payments of interest only. On March 17, 2011, the transaction closed. Accordingly, Coronus owns this parcel. At this point in time, we are precluded from pursuing interconnection agreements for solar PV power systems sited on this parcel. Based on the feedback we received from SCE’s transmission engineers, the existing, regional specific, transmission infrastructure lacks the transmission capacity we would require to deploy our solar PV power systems on this parcel. Although SCE plans to upgrade this transmission infrastructure, these upgrades are not slated for completion till 2018 – 2019. Accordingly, we are currently assessing alternative uses for this parcel, including a sale.

Joshua Tree East

On May 9, 2011, Coronus entered into a Vacant Land Purchase Agreement (the “Joshua Tree East Agreement”) to acquire a 56.03 acre parcel of vacant land, situated east of Joshua Tree, in the County of San Bernardino, California, from Sal, Alfred and Frances Gonzalez. The purchase price was $200,000. Coronus agreed to pay $30,000, with Sal, Alfred and Frances Gonzalez agreeing to carry back the balance amount of $170,000 for three years at 6.5% per annum interest, with monthly payments of interest only. On June 30, 2011, the transaction closed. Accordingly, Coronus owns this parcel. At this point in time, we are pursuing multiple interconnection agreements for 1.5 MW solar PV power systems sited on this parcel. Specifically, we have five systems currently under utility study.


 
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Adelanto West

On September 23, 2011, Coronus entered into a Vacant Land Purchase Agreement (the “Adelanto West Agreement”) to acquire a 40 acre parcel of vacant land, situated in the City of Adelanto, County of San Bernardino, California, from Zacarias and Elisa Ramirez. The purchase price was $400,000. Coronus agreed to pay $165,000, with Zacarias and Elisa Ramirez agreeing to carry back the balance amount of $235,000 for three years at 6.5% per annum interest, with monthly payments of interest only. On April 19, 2012, the transaction closed. Accordingly, Coronus owns this parcel. At this point in time, we are pursuing multiple interconnection agreements for 1.5 MW solar PV power systems sited on this parcel. Specifically, we have two systems currently under utility study.

Yucca Valley East

On October 9, 2011, Coronus entered into a Vacant Land Purchase Agreement (the “Yucca Valley East Agreement”) to acquire a 34.07 acre parcel of vacant land, situated east of Yucca Valley, in the County of San Bernardino, California, from Peter and Ann Wellington. The purchase price is $170,000. Coronus deposited $1,000 into escrow and agrees to deposit an additional $33,000 within sufficient time to close escrow. Peter and Ann Wellington agree to carry back the balance amount of $136,000 for two years at 6.5% per annum interest, with monthly payments of interest only. Additionally, on closing, Coronus agrees to pay the realtor commission of $5,000. Initially, close of escrow was December 15, 2011, but was extended to August 15, 2012. Initially, the Yucca Valley East Agreement was subject to Coronus’ Board of Director approval on or before November 30, 2011, but this approval was extended to on or before July 31, 2012. Effective April 4, 2012, Coronus is now required to make the following, non-refundable payments to Peter and Ann Wellington:

April 30, 2012 - $909 (paid on April 27, 2012)
May 31, 2012 - $939 (paid on May 29, 2012)
June 30, 2012 - $909 (paid on June 29, 2012)
July 31, 2012 - $939
August 15, 2012 - $455

The above, non-refundable payments are separate from the purchase price, and not related to the deposit or installment note. See Note 18(d).

At this point in time, we are pursuing multiple interconnection agreements for 1.5 MW solar PV power systems sited on this parcel. Specifically, we have three systems currently under utility study.

Phelan South

On April 25, 2012, Coronus entered into a Vacant Land Purchase Agreement (the “Phelan South Agreement”) to acquire a 40 acre parcel of vacant land, situated in Phelan, an unincorporated community in the County of San Bernardino, California, from Lora Steinmann. The purchase price is $350,000, all cash. Close of escrow is August 15, 2012. Coronus deposited $1,000 into escrow and agrees to deposit an additional $349,000 within sufficient time to close escrow. Under the Phelan South Agreement, Ms. Steinmann agrees to include, and transfer to Coronus, one share of Sheep Creek Water Co. Additionally, on closing, Coronus agrees to pay the realtor commission of $5,000. The Phelan South Agreement is subject to Coronus’ Board of Director approval on or before July 31, 2012. At this point in time, we are pursuing multiple interconnection agreements for 1.5 MW solar PV power systems sited on this parcel. Specifically, we have submitted preliminary interconnection applications for two systems.


 
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Solar Photovolatic Power Systems

On March 31, 2011, we and Coronus entered into a purchase agreement for utility-scale, ground-mount, solar PV power systems (the “Solar Power Systems Agreement”) with Belectric. Under the Solar Power Systems Agreement, Coronus agreed to acquire a total of 21 MW_ac of utility-scale, ground-mount, solar PV power systems from Belectric, for total consideration of $76,818,000, exclusive of taxes (the “Basic Price”). On entering into the Solar Power Systems Agreement, we paid 15% of the Basic Price, or $11,522,700, by way of issuing 10,974,000 shares of our common stock to Belectric, at a deemed price of $1.05 per share. The fair value per share at the date of issuance was $0.60. Accordingly, as at March 31, 2011, we recorded $6,584,400 under shareholders’ equity and construction in progress.

Under the Solar Power Systems Agreement, Coronus has until December 31, 2013, to deploy the solar PV systems. Under the Solar Power Systems Agreement, Coronus is to provide the sites for the systems, pay for the utility interconnection requests and studies, and obtain the power purchase agreements and land use permits. Additionally, Coronus is to provide Belectric with satisfactory proof of secured financing, on a per project basis, prior to the commencement of construction of each of the systems. Under the Solar Power Systems Agreement, Belectric is to provide all services necessary for delivery to Coronus of turnkey, operation ready, solar PV systems, and for connection of the systems to the utilities’ grids. There is no assurance Coronus will be able to provide Belectric with satisfactory proof of secured financing, on a per project basis. The Solar Power Systems Agreement is incorporated by reference as Exhibit 10.18 of this annual report.

ITEM 3.          LEGAL PROCEEDINGS.

We are not presently a party to any litigation.


PART II

ITEM 5.
MARKET FOR COMMON STOCK, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Our stock was listed for trading on the Bulletin Board operated by the Financial Industry Regulatory Authority (FINRA) on May 6, 2009 under the symbol “IMNDF”. On October 13, 2009, our shareholders approved the change of our name from InsightfulMind Learning, Inc. to Coronus Solar Inc. and the split of our common stock on the basis of 2 new shares for each 1 old share. In respect of the Bulletin Board, the name change and the 2 for 1 forward split took effect at the open of business, January 15, 2010. On this date, FINRA issued us the new symbol “CRNSF”. The figures set forth below reflect the 2 for 1 stock split.

Fiscal Year
   
2012
High Bid
Low Bid
 
Fourth Quarter: 1/1/12 to 3/31/12
$0.60
$0.60
 
Third Quarter: 10/1/11 to 12/31/11
$0.60
$0.60
 
Second Quarter: 7/1/11 to 9/30/11
$0.60
$0.60
 
First Quarter: 4/1/11 to 6/30/11
$1.00
$0.60
     

Fiscal Year
   
2011
High Bid
Low Bid
 
Fourth Quarter: 1/1/11 to 3/31/11
$0.60
$0.40
 
Third Quarter: 10/1/10 to 12/31/10
$0.40
$0.25
 
Second Quarter: 7/1/10 to 9/30/10
$0.25
$0.10
 
First Quarter: 4/1/10 to 6/30/10
$0.10
$0.10


 
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Holders

On May 10, 2012, we had 49 shareholders of record of our common stock.

Section 15(g) of the Securities Exchange Act of 1934

Our shares are covered by section 15(g) of the Securities Exchange Act of 1934, as amended that imposes additional sales practice requirements on broker/dealers who sell such securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses). For transactions covered by the Rule, the broker/dealer must make a special suitability determination for the purchase and have received the purchaser’s written agreement to the transaction prior to the sale. Consequently, the Rule may affect the ability of broker/dealers to sell our securities and also may affect your ability to sell your shares in the secondary market.

Section 15(g) also imposes additional sales practice requirements on broker/dealers who sell penny securities. These rules require a one page summary of certain essential items. The items include the risk of investing in penny stocks in both public offerings and secondary marketing; terms important to an understanding of the function of the penny stock market, such as bid and offer quotes, and dealers’ spread; broker/dealer compensation; the broker/dealers’ duties to its customers, including the disclosures required by any other penny stock disclosure rules; the customers’ rights and remedies in cases of fraud in penny stock transactions; and, FINRA’s toll free telephone number and the central number of the North American Administrators Association, for information on the disciplinary history of broker/dealers and their associated persons.

Securities Authorized for Issuance Under Equity Compensation Plans

     
Number of securities
 
Number of securities to
Weighted-average
remaining available for
 
be issued upon exercise
exercise price of
Future issuance under
 
of outstanding options,
outstanding options,
equity compensation plans
 
warrants and rights
warrants and rights
(excluding securities
Plan category
(a)
(b)
in column (a)) (c)
Equity compensation plans
0
0
1,969,608
approved by security holders (1)
     
       
Equity compensation plans not
0
0
0
approved by securities holders
     
       
Total
0
0
1,969,608

(1)
At our annual shareholders’ meeting on August 31, 2011, we proposed and the shareholders re-approved a 10% “rolling” stock option plan (the “Option Plan”). As at the date of this annual report, no options under the Option Plan have been granted.

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 under this item.


 
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ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

This section of this annual report on Form 10-K includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this annual report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.

Plan of Operation

Estimates and Assumptions

In the preparation of our financial statements, no estimates have been used since there is insufficient historical information in which to base such estimates.

Trends Affecting Our Business

In the past three and one-half years, solar module prices have been reduced by more than half, due to the impact of the global economic downturn, reduced silicon prices, increased polysilicon supply, and a general oversupply of solar modules on the market. Although we expect solar module prices to stay at current levels, or continue to decline, but not as drastically, a rebound in solar module prices would materially impact the viability of our business model, possibly rendering our model nonviable.

Plan of Operation For The Next Twelve Months

Our efforts are focused on raising capital through the sale of common stock in private placements to position us with sufficient funds to execute on the business plan of Coronus, our wholly-owned subsidiary. Coronus is a development-stage company founded to deploy and operate utility-scale solar photovoltaic (PV) power systems in the State of California. The business plan of Coronus calls for 1) the procurement of 20-year, “must-take” power purchase agreements from Southern California Edison (SCE), under the California Public Utilities Commission’s (CPUC’s) feed-in tariff for small generators, and 2) the development of the corresponding, utility-scale, 1.5 MW solar PV power systems. The “CREST” tariff is SCE’s allocation of the feed-in tariff.

On May 16, 2011, Coronus completed the Vacant Land Purchase Agreement (the “Twentynine Palms North Agreement”), which Coronus entered into on January 23, 2011. Under the Twentynine Palms North Agreement, Coronus acquired a 39.25 acre parcel of vacant land, situated north of Twentynine Palms, in the County of San Bernardino, California. At this point in time, we are pursuing multiple interconnection agreements for 1.5 MW solar PV power systems in respect of the 12kV distribution circuit that feeds this parcel. Specifically, we have three systems currently under utility study. In addition to these three systems, we have two more systems under utility study in respect of a second 12kV distribution circuit west of the 12kV distribution circuit that feeds this parcel.

On June 30, 2011, Coronus completed the Vacant Land Purchase Agreement (the “Joshua Tree East Agreement”), which Coronus entered into on May 9, 2011. Under the Joshua Tree East Agreement, Coronus acquired a 56.03 acre parcel of vacant land, situated east of Joshua Tree, in the County of San Bernardino, California. At this point in time, we are pursuing multiple interconnection agreements for 1.5 MW solar PV power systems sited on this parcel. Specifically, we have five systems currently under utility study.


 
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On April 19, 2012, Coronus completed the Vacant Land Purchase Agreement (the “Adelanto West Agreement”), which Coronus entered into on September 23, 2011. Under the Adelanto West Agreement, Coronus acquired a 40 acre parcel of vacant land, situated in the City of Adelanto, County of San Bernardino, California. At this point in time, we are pursuing multiple interconnection agreements for 1.5 MW solar PV power systems sited on this parcel. Specifically, we have two systems currently under utility study.

On September 30, 2011, Coronus entered into a Vacant Land Purchase Agreement (the “Apple Valley East Agreement”) to acquire a 20 acre parcel of vacant land, situated east of Apple Valley, in the County of San Bernardino, California. At this point in time, we are pursuing multiple interconnection agreements for 1.5 MW solar PV power systems in respect of the 12kV distribution circuit that feeds this parcel. Specifically, we have two systems currently under utility study.

On October 9, 2011, Coronus entered into a Vacant Land Purchase Agreement (the “Yucca Valley East Agreement”) to acquire a 34.07 acre parcel of vacant land, situated east of Yucca Valley, in the County of San Bernardino, California. At this point in time, we are pursuing multiple interconnection agreements for 1.5 MW solar PV power systems sited on this parcel. Specifically, we have three systems currently under utility study.

On November 9, 2011, Coronus entered into a Vacant Land Purchase Agreement (the “Hesperia West Agreement”) to acquire a 20 acre parcel of vacant land, situated west of Hesperia, in the County of San Bernardino, California. Despite assigning the Hesperia West Agreement to Sycamore, pursuant to the Solar PV Asset Sale Agreement, as disclosed below, at this point in time, we are pursuing an interconnection agreement for a 1.5 MW solar PV power system sited on this parcel, and this system is currently under utility study.

On April 25, 2012, Coronus entered into a Vacant Land Purchase Agreement (the “Phelan South Agreement”) to acquire a 40 acre parcel of vacant land, situated in Phelan, an unincorporated community in the County of San Bernardino, California. At this point in time, we are pursuing multiple interconnection agreements for 1.5 MW solar PV power systems sited on this parcel. Specifically, we have submitted preliminary interconnection applications for two systems.

In addition to the above, we are presently evaluating further vacant lands, ranging in size between 20 and 50 acres, for purchase. Over the course of the next twelve months, our intention is to acquire further lands, and to submit generating facility interconnection applications to SCE in respect of utility-scale, solar PV power systems to be sited on these lands.

Results of Operations

Fiscal Year Ended March 31, 2012 Compared to Fiscal Year Ended March 31, 2011

1.         Revenue and Operating Expenses
 
Interest and bank charges expense increased by $18,474 or 983% from $1,880 for the year ended March 31, 2011 to $20,354 for the year ended March 31, 2012. The principal reason for the increase was that amortization on discount of convertible notes for the year ended March 31, 2012 was $13,684 compared to zero ($nil) amortization on discount of convertible notes for the year ended March 31, 2011. In February, 2012, we issued two convertible promissory notes for CAD$100,000 and 166,666 transferrable warrants for gross proceeds of CAD$100,000. The discount on issuance of the convertible promissory notes is being amortized over the life of the notes. Additionally, $2,405 in interest incurred on the Newberry Springs vacant land purchase installment note contributed to the increase. In the previous year, only $100 was incurred in interest in respect of the Newberry Springs vacant land purchase installment note. Additionally, in the current year, we incurred $1,595 in convertible note interest; whereas, in the previous year, we incurred no ($nil) convertible note interest.


 
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Office and miscellaneous expense increased by $35,702 or 174% from $20,529 for the year ended March 31, 2011 to $56,231 for the year ended March 31, 2012. The reason for the increase was increased filing fees, in addition to a $20,000 expense incurred under the Advisory Agreement with Source Capital Group Inc. In the current year, in respect of filing fees, both EDGAR and Canadian reporting related, we incurred $23,359 in expenses, as compared to $9,179 in the previous year.

Professional fees increased by $13,289 or 19% from $71,123 for the year ended March 31, 2011 to $84,412 for the year ended March 31, 2012. The principal reason for the increase was that in the current year, we incurred $23,000 in legal costs in respect of U.S. tax review of federal renewable energy investment tax credits and grants. In the previous year, we incurred $6,200 in legal costs in respect of U.S. tax review of federal renewable energy investment tax credits and grants.

Salaries and wages increased by $51,181 or 145% from $35,420 for the year ended March 31, 2011 to $86,601 for the year ended March 31, 2012. The reason for the increase was the salary increase of our principal executive officer during the year. Effective June 1, 2011, our principal executive officer’s salary was increased from CAD$3,000 per month to CAD$8,000 per month. In the past, our principal executive officer forgave this salary when due, and had done so for five years. However, effective October 1, 2011, this salary now accrues, and is paid when practical.

Travel expense increased by $718 or 59% from $1,219 for the year ended March 31, 2011 to $1,937 for the year ended March 31, 2012. In the previous year, the travel expense related to an on-site meeting in California with Belectric, our solar PV systems integrator. In the current year, the travel expense related to an on-site meeting in New York, with an investment bank.

Feasibility study expense increased by $92,470 or 758% from $12,200 for the year ended March 31, 2011 to $104,670 for the year ended March 31, 2012. The increase was due to the expensed portion of the numerous deposits Coronus paid throughout the year to SCE for interconnection studies.

Foreign exchange loss expense increased by $736 or 29% from $2,499 for the year ended March 31, 2011 to $3,235 for the year ended March 31, 2012. The foreign exchange loss was attributable to the fluctuation of the USD/CAD exchange rate.

Write-down of land deposits expense decreased by $5,190 or 62% from $8,400 for the year ended March 31, 2011 to $3,210 for the year ended March 31, 2012. Write-down of land deposits expense was attributable to a cancelled vacant land purchase agreement. In the previous year, in respect of the vacant land purchase agreement, we had paid $8,400 in land deposits.  In the current year, we had paid $3,210 in land deposits. When we cancelled the agreement this year, we forfeited the land deposits.

Debt forgiven income for the year ended March 31, 2012 was $7,967 compared to zero ($nil) debt forgiven income for the year ended March 31, 2011. At year end March 31, 2012, our U.S. tax attorney reduced an outstanding invoice, plus interest, in the amount of $7,967.

2.         Assets and Liabilities

Other receivables decreased by $2,179 or 71% from $3,079 for the year ended March 31, 2011 to $900 for the year ended March 31, 2012. The decrease was due to the refund we received in respect of a Canadian Harmonized Sales Tax (HST) receivable.

Prepaid expenses and deposit increased by $41,203 or 4,350% from $946 at March 31, 2011 to $42,149 at March 31, 2012. The increase was due to the non-expensed portion of the numerous deposits Coronus paid throughout the year to SCE for interconnection studies.


 
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Assets held for sale was $40,161 at March 31, 2012 compared to no assets held for sale ($nil) at March 31, 2011. The assets held for sale relate to the prepaid and deposit assets of Coronus Hesperia West 1 LLC, and are carried at the lower of carrying value or fair value less costs to sell.

Property, plant and equipment increased by $256,597 or 328% from $78,192 at March 31, 2011 to $334,789 at March 31, 2012. The increase was due to the vacant land Coronus purchased during the year, namely the Twentynine Palms North and Joshua Tree East parcels, for $40,000 and $200,000, respectively.

Intangible asset decreased by $7,167 or 63% from $11,347 at March 31, 2011 to $4,180 at March 31, 2012. On completion of the Coronus acquisition on November 2, 2009, we acquired a business plan, with the fair value of $21,500. The business plan is amortized over its useful life of three years. The decrease reflects the amortization of the business plan over the course of the year.

Accounts payable and accrued liabilities increased by $87,779 or 154% from $56,877 at March 31, 2011 to $144,656 at March 31, 2012. The increase was due to us incurring expenses, in the absence of us raising additional capital through the sale of common stock in private placements.

Convertible notes payable was $15,198 at March 31, 2012 compared to no convertible notes payable ($nil) at March 31, 2011. The convertible notes payable relate to convertible promissory notes we issued for gross proceeds of CAD$100,000. These convertible promissory notes bear an annual interest rate of 12%. We allocated the convertible notes and the detached warrants on a relative fair value basis, and calculated the embedded conversion beneficiary future. The discount on issuance of the convertible promissory notes is being amortized over the life of the notes.

Current notes payable was $37,100 at March 31, 2012 compared to no current notes payable ($nil) at March 31, 2011. The current notes payable relate to Coronus’ Newberry Springs vacant land purchase. Under the agreement to purchase, the seller agreed to carry back $37,000 of the purchase price for two years at 6.5% per annum interest, with monthly payments of interest only. On March 17, 2011, the transaction closed. Accordingly, the note is now due within one year, and therefore no longer a long-term liability. At March 31, 2012, the Company had accrued interest payable of $100.

Liabilities held for sale was $33,475 at March 31, 2012 compared to no liabilities held for sale ($nil) at March 31, 2011. The liabilities held for sale relate to the accounts payable and accrued liabilities of Coronus Hesperia West 1 LLC and the cost and liabilities incurred in relation to the Hesperia West Agreement.

Notes payable increased by $165,084 or 446% from $37,000 at March 31, 2011 to $202,084 at March 31, 2012. In the previous year, the notes payable related to Coronus’ Newberry Springs vacant land purchase. Under the agreement to purchase, the seller agreed to carry back $37,000 of the purchase price for two years at 6.5% per annum interest, with monthly payments of interest only. In the current year, this $37,000 was classified as a current liability, as the note matures within one year. Additionally, in the current year, the notes payable were attributable to Coronus’ Twentynine Palms North and Joshua Tree East vacant land purchases. Under the agreements to purchase, the sellers agreed to carry back $32,000 and $170,000, respectively, of the purchase prices. At March 31, 2012 the Company had accrued interest payable of $84.

Fiscal Year Ended March 31, 2011 Compared to Fiscal Year Ended March 31, 2010

1.         Revenue and Operating Expenses

We achieved no revenue ($nil) for the year ended March 31, 2011 compared to $249 for the year ended March 31, 2010. The $249 in revenue for the year ended March 31, 2010 was attributable to sales of our online course, MathNote SAT®, which we discontinued on November 2, 2009, on completion of the acquisition of Coronus.


 
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Amortization expense increased by $3,067 or 74% from $4,169 for the year ended March 31, 2010 to $7,236 for the year ended March 31, 2011. On completion of the Coronus acquisition on November 2, 2009, we acquired a business plan, with the fair value of $21,500. The business plan is amortized over its useful life of three years. In respect of the comparative year, the Company’s website development was substantially completed in October 2005, and the capitalized cost related thereto was amortized over three years. Accordingly, this cost was substantially fully amortized by March 31, 2010.

Interest on shareholder loan increased by $3,816 or 76% from $4,997 for the year ended March 31, 2010 to $8,813 for year ended March 31, 2011. The reason for the increase was the result of further loans made to the Company by the shareholder, a director of the Company, over the course of the year. In the comparative year, the shareholder loan was non-interest bearing. Despite this, the Company charged imputed interest of 4% per annum and recorded the interest as additional paid in capital. Effective April 1, 2010, the outstanding loan principal now accrues interest at the annual rate of 4%.

Interest and bank charges expense decreased by $617 or 25% from $2,497 for the year ended March 31, 2010 to $1,880 for the year ended March 31, 2011. The reason for the decrease is we incurred no credit card service charges for online course sales for the year ended March 31, 2011.

Office and miscellaneous expense increased by $7,333 or 56% from $13,196 for the year ended March 31, 2010 to $20,529 for the year ended March 31, 2011. The principal reason for the increase was that we incurred rent expense for an office in Canada on a month-to-month basis during the current year, and incurred no such expense in the comparative year. Additionally, we incurred greater filing fees and printing and mailing fees during the year, as compared to the comparative year.

We incurred no stock based compensation expense ($nil) for the year ended March 31, 2011compared to $26,144 for the year ended March 31, 2010. We incurred the expense in the comparative year due to the stock options we granted to Mark Burgert on November 2, 2009 by engaging Mr. Burgert as a consultant, in relation to the Coronus acquisition. As consideration therefore, we issued Mr. Burgert fully vested options to acquire (i) 150,000 shares of our common stock, exercisable at $0.065 per share until April 22, 2015, and (ii) 200,000 shares of our common stock, exercisable at $0.065 per share until March 31, 2016.

Telephone and utilities expense decreased by $660 or 48% from $1,369 for the year ended March 31, 2010 to $709 for the year ended March 31, 2011. The reason for the decrease is the result of savings of roughly $50 per month in our monthly telephone expense.

We incurred no advertising and promotion expense ($nil) for the year ended March 31, 2011 compared to $1,514 for the year ended March 31, 2010. The reason for the decrease was that, in anticipation of the closing of the Coronus acquisition in early November, 2009, we suspended and ceased indefinitely all advertising of our online course in October, 2009.

We incurred $1,219 in travel expense for the year ended March 31, 2011 compared to no travel expense ($nil) for the year ended March 31, 2010. In the current year, the travel expense related to an on-site meeting with a solar PV systems integrator in California.

We incurred $12,200 in feasibility study expense for the year ended March 31, 2011 compared to no feasibility study expense ($nil) for the year ended March 31, 2010. In the current year, the feasibility study expense related to deposits Coronus paid to Southern California Edison in respect of four Rule 21 generating facility interconnection applications and two WDAT SGIP interconnection and distribution service requests.

We incurred $2,499 in foreign exchange losses for the year ended March 31, 2011 compared to no foreign exchange loss (gain) ($nil) for the year ended March 31, 2010. In the current year, the foreign exchange loss was attributable to the strong Canadian dollar, as our functional currency is the Canadian dollar.


 
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We incurred $8,400 in write-down of land deposits for the year ended March 31, 2011 compared to no write-down of land deposits ($nil) for the year ended March 31, 2010. In the current year, as at March 31, 2011, we had paid $8,400 in land deposits in respect of one vacant land purchase agreement, the Vidal Agreement. Subsequent to our year end, the parties to the Vidal Agreement cancelled the agreement, and the land deposits Coronus made were forfeited.

We incurred no write down in website development costs expense ($nil) for the year ended March 31, 2011 compared to $3,245 for the year ended March 31, 2010. On completion of the acquisition of Coronus on November 2, 2009, we wrote off the balance of our website development costs of $3,245.

We incurred no write-off trademark cost expense ($nil) for the year ended March 31, 2011 compared to $279 for the year ended March 31, 2010. On completion of the acquisition of Coronus on November 2, 2009, we wrote off the balance of our intangible asset of $279 (relating to the “MathNote” trademark).

We achieved no debt forgiven income ($nil) for the year ended March 31, 2011 compared to $5,225 in debt forgiven income for the year ended March 31, 2010. On August 10, 2009, the course author we used previously waived a non-interest bearing, outstanding invoice, dated March 15, 2008, in the amount of $757 and at year end March 31, 2010, a financial consultant we used previously waived an outstanding invoice, plus interest, in the amount of $4,468.

2.            Assets and Liabilities

Construction in progress was $6,586,415 at March 31, 2011 compared to no construction in progress ($nil) at March 31, 2010. On March 31, 2011, the Company and Coronus entered into a purchase agreement for utility-scale, ground-mount, solar PV power systems with Belectric, a U.S.-based solar PV systems integrator. Under the agreement, Coronus agreed to acquire a total of 21 MW_ac of utility-scale, ground-mount, solar PV power systems from Belectric, for total consideration of $76,818,000, exclusive of taxes (the “Basic Price”). On entering into the agreement, the Company paid 15% of the Basic Price, or $11,522,700, by way of issuing 10,974,000 shares of its common stock to Belectric, at a deemed price of $1.05 per share. The fair value per share at the date of issuance was $0.60. As a result, $6,584,400 was recorded under shareholders’ equity and construction in progress.

Property, plant and equipment increased by $77,883 or 25,000% from $309 at March 31, 2010 to $78,192 at March 31, 2011. The increase was due to the California vacant land Coronus purchased during the year, namely the Twentynine Palms East parcel and the Newberry Springs parcel.

Intangible asset decreased by $7,167 or 39% from $18,514 at March 31, 2010 to $11,347 at March 31, 2011. On completion of the Coronus acquisition on November 2, 2009, we acquired a business plan, with the fair value of $21,500. The business plan is amortized over its useful life of three years. The decrease reflects the amortization of the business plan over the course of the year.

Loan from a shareholder increased by $114,854 or 75% from $154,096 at March 31, 2010 to $268,950 at March 31, 2011. The reason for the increase was the result of further loans made to the Company by the shareholder, a director of the Company, over the course of the period, for working capital.

Note payable was $37,100 at March 31, 2011 compared to no note payable ($nil) at March 31, 2010. The note payable relates to Coronus’ Newberry Springs vacant land purchase. Under the agreement to purchase, the seller agreed to carry back $37,000 of the purchase price for two years at 6.5% per annum interest, with monthly payments of interest only. On March 17, 2011, the transaction closed. At March 31, 2011, the Company had accrued interest payable of $100.


 
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3.            Share Capital

Share capital increased by $6,655,093 or 960% from $692,751 at March 31, 2010 to $7,347,844 at March 31, 2011. On January 21, 2011, the Company completed a non-brokered private placement, issuing 212,500 shares of common stock to eleven investors, at a price of CAD$0.40 per share, for gross proceeds of CAD$85,000. On March 31, 2011, the Company and Coronus entered into a purchase agreement for utility-scale, ground-mount, solar PV power systems with Belectric, a U.S.-based solar PV systems integrator. Under the agreement, Coronus agreed to acquire a total of 21 MW_ac of utility-scale, ground-mount, solar PV power systems from Belectric, for total consideration of $76,818,000, exclusive of taxes (the “Basic Price”). On entering into the agreement, the Company paid 15% of the Basic Price, or $11,522,700, by way of issuing 10,974,000 shares of its common stock to Belectric, at a deemed price of $1.05 per share. The fair value per share at the date of issuance was $0.60. As a result, $6,584,400 was recorded under shareholders’ equity and construction in progress.

Limited Operating History; Need for Additional Capital

There is limited historical financial information about us upon which to base an evaluation of our performance. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources.

To become profitable and competitive, we need to obtain Power Purchase Agreements from SCE, under the California Public Utilities Commission’s feed-in tariff program for small generators, obtain land use permits, and secure financing, on a per project basis, to pay Belectric, in installments, to construct the utility-scale, solar PV systems. There is no assurance that we will be able to obtain power purchase agreements or land use permits. Further, there is no assurance that we will be able to secure financing, or secure financing on acceptable terms. If financing is not available on acceptable terms, we may be unable to develop our operations.
 
 
We expect to raise additional capital through the sale of common stock in private placements, or through the sale of one or more of our solar PV projects under development. There is no assurance, however, that we will be able to raise any capital through the sale of common stock, or that we will be able to raise any capital through the sale of our solar PV projects under development. Further, equity financing could result in additional dilution to existing shareholders.

We do not believe that possible inflation and price changes will affect our revenues.

Our auditors have issued a going concern opinion in our consolidated financial statements for the year ended March 31, 2012. This means that there is substantial uncertainty that we will continue operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Liquidity and Capital Resources

Since inception, we have issued 27,096,086 shares of our common stock and received cash of $598,806.

On March 19, 2012, Coronus, through its wholly-owned subsidiary, Coronus Hesperia West 1 LLC, entered into a Power Purchase Agreement (“PPA”) with SCE. The PPA relates to Coronus’ application for interconnection service and the CREST tariff for a 1.2 MW solar PV power system (the “Coronus Hesperia West 1 Project”) on the 20 acre parcel of vacant land, situated west of Hesperia, in the County of San Bernardino, California, Coronus agreed to acquire pursuant to the “Hesperia West” Vacant Land Purchase Agreement, Coronus entered into on November 9, 2011. On April 5, 2012, Coronus entered into a Solar Photovoltaic Asset Sale Agreement (the “Solar PV Asset Sale Agreement”) with Sycamore Physicians Partners LLC (“Sycamore”). Under the Solar PV Asset Sale Agreement, Coronus agreed to sell, assign and transfer to Sycamore, Coronus’ sole membership in Coronus Hesperia West 1 LLC. Additionally, under the Solar PV Asset Sale Agreement, Coronus agreed to assign to Sycamore, the “Hesperia West” Vacant Land Purchase Agreement. Further, under the Solar PV Asset Sale Agreement, Coronus agreed to use its best efforts to obtain a second PPA from SCE in relation to the Hesperia West parcel, and to sell this PPA (relating to a 1.5 MW solar PV system) to Sycamore if obtained.


 
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Under the Solar PV Asset Sale Agreement, Sycamore agreed to pay $1,726,219 (the “Basic Price”) to Coronus for the sole ownership in Coronus Hesperia West 1 LLC, the assignment of the “Hesperia West” Vacant Land Purchase Agreement, and the second PPA. On executing the Solar PV Asset Sale Agreement, Sycamore agreed to pay $817,200 to Coronus, and Coronus agreed to transfer the sole membership in Coronus Hesperia West 1 LLC to Sycamore and to assign the “Hesperia West” Vacant Land Purchase Agreement to Sycamore. Under the Solar PV Asset Sale Agreement, Sycamore agreed to pay the balance of the Basic Price, or $909,019, to Coronus on delivery of the second PPA. On April 11, 2012, Sycamore paid the $817,200 to Coronus, and on April 12, 2012, Coronus transferred the sole ownership in Coronus Hesperia West 1 LLC to Sycamore and assigned the “Hesperia West” Vacant Land Purchase Agreement to Sycamore.

We expect to obtain capital through the sale of our common stock, or through the sale of one or more of our solar PV projects under development. There is no assurance we will obtain further PPAs, obtain land use permits, or secure financing, on a per project basis, to pay Belectric, in installments, to construct the utility-scale, solar PV systems. Further, there is no assurance we will sell any shares of common stock, or that we will be able to raise any capital through the sale of our solar PV projects under development. We believe that capital generated from the sale of our common stock, or through the sale of our solar PV projects under development, will allow us to operate for the next twelve months. Capital raised from the sale of common stock and capital raised from the sale of solar PV projects under development are our only anticipated sources of additional capital.

To develop a 1.5 MW solar power plant, we forecast the cost to be $5.5 million, inclusive of taxes. We base our cost forecast on the pricing we negotiated, adjusted to reflect the fair value of the payment shares we issued on entering into the agreement, with Belectric, under the purchase agreement for utility-scale, ground-mount, solar PV power systems (the “Solar Power Systems Agreement”). Under the Solar Power Systems Agreement, Coronus has until December 31, 2013, to deploy the solar PV systems. Under the Solar Power Systems Agreement, Coronus is to provide the sites for the systems, pay for the utility interconnection requests and studies, and obtain the power purchase agreements and land use permits. Additionally, Coronus is to provide Belectric with satisfactory proof of secured financing, on a per project basis, prior to the commencement of construction of each of the systems. Under the Solar Power Systems Agreement, Belectric is to provide all services necessary for delivery to Coronus of turnkey, operation ready, solar PV systems, and for connection of the systems to the utilities’ grids. There is no assurance Coronus will be able to provide Belectric with satisfactory proof of secured financing, on a per project basis.

On August 28, 2010, Coronus entered into a Vacant Land Purchase Agreement (“the “Twentynine Palms East Agreement”) to acquire a 30 acre parcel of vacant land, situated east of Twentynine Palms, in the County of San Bernardino, California, from Gary and Sylvia Wright. The purchase price of $32,000, all cash, was paid on January 24, 2011. Accordingly, Coronus owns this parcel. At this point in time, we have opted not to pursue interconnection agreements for solar PV power systems sited on this parcel. Based on the feedback we received from SCE’s distribution engineers, the anticipated network upgrade costs to accommodate the systems are currently prohibitive. Accordingly, we are currently assessing alternative uses for this parcel, including a sale.

On January 23, 2011, Coronus entered into a Vacant Land Purchase Agreement (the “Twentynine Palms North Agreement”) to acquire a 39.25 acre parcel of vacant land, situated north of Twentynine Palms, in the County of San Bernardino, California, from Joshua Tree Holdings. The purchase price was $40,000. Coronus agreed to pay $8,000, with Joshua Tree Holdings agreeing to carry back the balance amount of $32,000 for two years at 6.5% per annum interest, with monthly payments of interest only. On May 16, 2011, the transaction closed. Accordingly, Coronus owns this parcel. At this point in time, we are pursuing multiple interconnection agreements for 1.5 MW solar PV power systems in respect of the 12kV distribution circuit that feeds this parcel.

On January 24, 2011, Coronus entered into a Vacant Land Purchase Agreement (the “Newberry Springs Agreement”) to acquire a 20 acre parcel of vacant land, situated in Newberry Springs, in the County of San Bernardino, California, from Mike Hoch. The purchase price was $45,000. Coronus agreed to pay $8,000, with Mike Hoch agreeing to carry back the balance amount of $37,000 for two years at 6.5% per annum interest, with monthly payments of interest only. On March 17, 2011, the transaction closed. Accordingly, Coronus owns this parcel. At this point in time, we are precluded from pursuing interconnection agreements for solar PV power

 
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systems sited on this parcel. Based on the feedback we received from SCE’s transmission engineers, the existing, regional specific, transmission infrastructure lacks the transmission capacity we would require to deploy our solar PV power systems on this parcel. Although SCE plans to upgrade this transmission infrastructure, these upgrades are not slated for completion till 2018 – 2019. Accordingly, we are currently assessing alternative uses for this parcel, including a sale.

On May 9, 2011, Coronus entered into a Vacant Land Purchase Agreement (the “Joshua Tree East Agreement”) to acquire a 56.03 acre parcel of vacant land, situated east of Joshua Tree, in the County of San Bernardino, California, from Sal, Alfred and Frances Gonzalez. The purchase price was $200,000. Coronus agreed to pay $30,000, with Sal, Alfred and Frances Gonzalez agreeing to carry back the balance amount of $170,000 for three years at 6.5% per annum interest, with monthly payments of interest only. On June 30, 2011, the transaction closed. Accordingly, Coronus owns this parcel. At this point in time, we are pursuing multiple interconnection agreements for 1.5 MW solar PV power systems sited on this parcel.

On September 23, 2011, Coronus entered into a Vacant Land Purchase Agreement (the “Adelanto West Agreement”) to acquire a 40 acre parcel of vacant land, situated in the City of Adelanto, County of San Bernardino, California, from Zacarias and Elisa Ramirez. The purchase price was $400,000. Coronus agreed to pay $165,000, with Zacarias and Elisa Ramirez agreeing to carry back the balance amount of $235,000 for three years at 6.5% per annum interest, with monthly payments of interest only. On April 19, 2012, the transaction closed. Accordingly, Coronus owns this parcel. At this point in time, we are pursuing multiple interconnection agreements for 1.5 MW solar PV power systems sited on this parcel.

On October 9, 2011, Coronus entered into a Vacant Land Purchase Agreement (the “Yucca Valley East Agreement”) to acquire a 34.07 acre parcel of vacant land, situated east of Yucca Valley, in the County of San Bernardino, California, from Peter and Ann Wellington. The purchase price is $170,000. Coronus deposited $1,000 into escrow and agrees to deposit an additional $33,000 within sufficient time to close escrow. Peter and Ann Wellington agree to carry back the balance amount of $136,000 for two years at 6.5% per annum interest, with monthly payments of interest only. Additionally, on closing, Coronus agrees to pay the realtor commission of $5,000. Initially, close of escrow was December 15, 2011, but was extended to August 15, 2012. Initially, the Yucca Valley East Agreement was subject to Coronus’ Board of Director approval on or before November 30, 2011, but this approval was extended to on or before July 31, 2012. Effective April 4, 2012, Coronus is now required to make the following, non-refundable payments to Peter and Ann Wellington:

April 30, 2012 - $909 (paid on April 27, 2012)
May 31, 2012 - $939 (paid on May 29, 2012)
June 30, 2012 - $909
July 31, 2012 - $939
August 15, 2012 - $455

The above, non-refundable payments are separate from the purchase price, and not related to the deposit or installment note. At this point in time, we are pursuing multiple interconnection agreements for 1.5 MW solar PV power systems sited on this parcel.

On April 25, 2012, Coronus entered into a Vacant Land Purchase Agreement (the “Phelan South Agreement”) to acquire a 40 acre parcel of vacant land, situated in Phelan, an unincorporated community in the County of San Bernardino, California, from Lora Steinmann. The purchase price is $350,000, all cash. Close of escrow is August 15, 2012. Coronus deposited $1,000 into escrow and agrees to deposit an additional $349,000 within sufficient time to close escrow. Under the Phelan South Agreement, Ms. Steinmann agrees to include, and transfer to Coronus, one share of Sheep Creek Water Co. Additionally, on closing, Coronus agrees to pay the realtor commission of $5,000. The Phelan South Agreement is subject to Coronus’ Board of Director approval on or before July 31, 2012.


 
-27-

 


Under the CPUC’s current feed-in tariff for small generators, we are entitled to enter into multiple 1.5 MW power purchase agreements provided we deploy multiple 1.5 MW solar power systems. Further, we are entitled to deploy multiple 1.5 MW solar power systems on the same parcel, provided this works from a utility interconnection point of view. Because we estimate the cost to develop a 1.5 MW solar power plant to be $5.5 million, inclusive of taxes, we estimate the cost to develop one to three 1.5 MW solar power plants, per parcel, to be $5.5 million to $16.5 million, inclusive of taxes. We expect to obtain the capital to pay for these power plants, through the sale of our common stock and through non-recourse senior secured debt. There is no assurance, however, that we will be able to raise this capital through the sale of common stock, or through non-recourse senior secured debt.

On February 2, 2012, we conducted a non-brokered private placement, issuing a senior secured, convertible promissory note (the “Adair Note”) and transferrable warrant (the “Adair Warrant”) to Russell Adair, for proceeds of CAD$50,000. The Adair Note matured on February 2, 2013 and bore interest at an annual rate of 12%, payable in cash at maturity, prepayment or conversion. At or before maturity, the Adair Note and any accrued interest were convertible at the holder’s option into shares of our common stock, at a price of CAD$0.60 per share. On April 20, 2012, we repaid Mr. Adair, in full, the CAD$50,000 in principal and CAD$1,282.20 in interest owning against the Adair Note. The Adair Warrant entitles the holder thereof to purchase an aggregate of 83,333 shares of our common stock at an exercise price of CAD$0.75 for a period of five years. Mr. Adair continues to hold the Adair Warrant.

On February 23, 2012, we conducted a non-brokered private placement, issuing a senior secured, convertible promissory note (the “Zakaib Note”) and transferrable warrant (the “Zakaib Warrant”) to Frank Zakaib, for proceeds of CAD$50,000. The Zakaib Note matured on February 2, 2013 and bore interest at an annual rate of 12%, payable in cash at maturity, prepayment or conversion. At or before maturity, the Zakaib Note and any accrued interest were convertible at the holder’s option into shares of our common stock, at a price of CAD$0.60 per share. On April 20, 2012, we repaid Mr. Zakaib, in full, the CAD$50,000 in principal and CAD$936.99 in interest owning against the Zakaib Note. The Zakaib Warrant entitles the holder thereof to purchase an aggregate of 83,333 shares of our common stock at an exercise price of CAD$0.75 for a period of five years. Mr. Zakaib continues to hold the Zakaib Warrant.

As a consequence of shareholder loans, we were indebted to our principal executive officer, who serves also as a director, in the amount of $243,288, inclusive of interest, through March 31, 2012. As of March 31, 2010, the loans were interest free, unsecured and due on demand. Effective April 1, 2010, the aggregate loan accrued interest at the annual rate of 4%. At March 31, 2012, the Company had accrued interest payable of $17,991 on the shareholder loan. As in the past, the loan was unsecured and due on demand. Additionally, our principal executive officer earns a salary of CAD$8,000 per month, effective June 1, 2011 (CAD$3,000 per month historically) but forgave this salary when due, and had done so for the past five years. Effective October 1, 2011, this salary of CAD$ 48,000 is now accrued. In addition to the above, at March 31, 2012, included in accounts payable, CAD$1,189 was owed to our principal executive officer for out-of-pocket expenses. This amount remained payable and did not accrue interest. This amount was not reflected in the shareholder loans described above.

Our principal executive officer had verbally agreed to not seek repayment of the shareholder loans, salary, or out-of-pocket expenses until such time as we were generating sufficient revenues to allow for the repayment of the debt without putting an undue burden on our retained earnings, or until such time as we had raised sufficient capital to eliminate our working capital deficiency. The proceeds from the Solar PV Asset Sale Agreement with Sycamore eliminated our working capital deficiency. Accordingly, on April 18, 2012, we repaid, in full, the shareholder loan, as at April 18, 2012, and interest outstanding, as at April 18, 2012. Additionally, we repaid, in full, the out-of-pocket expenses outstanding, as at April 18, 2012. As a result, on April 18, 2012, we repaid our principal executive officer CAD$237,780 and USD $7,021. Additionally, but for six months of accrued salary, we now pay our principal executive officer’s salary when due.

As of March 31, 2012, our total current assets were $83,537 and our total current liabilities were $473,717 resulting in a working capital deficiency of $390,180.


 
-28-

 


Off Balance Sheet Arrangements

We have no off balance sheet arrangements.

Critical Accounting Policies

Accounting Pronouncements Adopted During the Period

Compensation – stock compensation

On April 1, 2011, the Company adopted ASU No. 2010-13 “Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades” (“ASU 2010-13”). ASU 2010-13 clarifies that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. Such an adoption does not have a material impact on the Company’s financial statements.

Business Combination
 
On April 1, 2011, the Company adopted the FASB Accounting Standards Update No. 2010-29, “Business Combinations (Topic 805)” (“ASU 2010-29”).  ASU 2010-29 is intended to address diversity in practice regarding pro forma revenue and earnings disclosure requirements for business combinations.  ASU 2010-29 specifies that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only.  The amendments also expand the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings.  The amendments affect any public entity as defined by Topic 805 that enters into business combinations that are material on an individual or aggregate basis. The adoption of this ASU will effect business acquisitions incurred after March 31, 2011. Such an adoption does not have a material impact on the Company’s financial statements.

Fair Value Measurement

On January 1, 2012, the Company adopted ASU No. 2011-04 “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” to provide additional guidance on fair value disclosures. This guidance contains certain updates to the measurement guidance as well as enhanced disclosure requirements. The most significant change in disclosures is an expansion of the information required for “Level 3” measurements including enhanced disclosure for: (1) the valuation processes used by the reporting entity; and (2) the sensitivity of the fair value measurement to changes in unobservable inputs and the interrelationships between those unobservable inputs, if any. This guidance only affects the Company’s “Level 3” disclosures.

Intangibles – Goodwill and Other

On January 1, 2012, the Company adopted ASC 350 “Intangibles - Goodwill and other” intended to simplify goodwill impairment testing. Entities will be allowed to perform a qualitative assessment on goodwill impairment to determine whether it is more likely than not (defined as having a likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. Adoption of the guidance did not have a material impact on the Company’s financial statements.


 
-29-

 


Comprehensive Income - Amendments to Presentation of Reclassification of Items Out of Accumulated Other Comprehensive Income

On January 1, 2012, the Company adopted ASU 2011-12, “Comprehensive Income - Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05.”  ASU 2011-12 defers changes in ASU No. 2011-05 that relate to the presentation of reclassification adjustments to allow the FASB time to redeliberate whether to require presentation of such adjustments on the face of the financial statements to show the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income.  ASU 2011-12 allows entities to continue to report reclassifications out of accumulated other comprehensive income consistent with the presentation requirements in effect before ASU No. 2011-05.  All other requirements in ASU No. 2011-05 are not affected by ASU No. 2011-12.  Adoption of the guidance did not have a material effect on the Company’s financial position or results of operations.

New Accounting Pronouncements

Presentation of Comprehensive Income

In June 2011, the FASB issued ASU 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income”, to provide guidance on the presentation of comprehensive income. This guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. The guidance allows two presentation alternatives: (1) present items of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income; or (2) in two separate, but consecutive, statements of net income and other comprehensive income. This guidance is effective as of the beginning of a fiscal year that begins after December 15, 2011. Early adoption is permitted, but full retrospective application is required under both sets of accounting standards. This Company is currently evaluating which presentation alternative it will utilize.

Disclosures About Offsetting Assets and Liabilities
 
       In December, 2011, the FASB issued ASU 2011-11, “Disclosures about Offsetting Assets and Liabilities”, in an effort to improve comparability between US GAAP and IFRS financial statements with regard to the presentation of offsetting assets and liabilities on the statement of financial position arising from financial and derivative instruments, and repurchase agreements. The ASU establishes additional disclosures presenting the gross amounts of recognized assets and liabilities, offsetting amounts, and the net balance reflected in the statement of financial position. Descriptive information regarding the nature and rights of the offset must also be disclosed. The adoption of the new guidance is not expected to have an impact on the Company’s financial statements.

       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.

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 under this item.

ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.


 
-30-

 




Independent Auditors’ Report


To the Board of Directors and Stockholders of

CORONUS SOLAR INC.
(A development stage company)


We have audited the consolidated balance sheets of Coronus Solar Inc.  (“the Company”) (a development stage company) as at March 31, 2012 and 2011 and the related consolidated statements of stockholders’ equity, operations and comprehensive loss and cash flows for the years then ended and for the period cumulative from inception December 3, 2001 (inception) to March 31, 2012. These consolidated financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance whether the 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as at March 31, 2012 and 2011 and the results of its operations and its cash flows for the years then ended and for the period cumulative from inception on December 3, 2001 to March 31, 2012 in conformity with generally accepted accounting principles in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 2 to the financial statements, the Company has losses from operations since its inception and has a working capital deficiency.  These factors raise substantial doubt about its ability to continue as a going concern.  Management’s plans in regard to these matters are also described in Note 2.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.



Vancouver, Canada
MNP LLP
 
 
June 29, 2012
Chartered Accountants
   
   
   
   
   
   
   
   
   
   
   
   
   
 
ACCOUNTING    CONSULTING    TAX
2300, 1055 DUNSMUIR STREET, BOX 49148, VANCOUVER, BC  V7X 1J1
1.877.688.8408  P: 604.685.8408  F: 604.685.8594  mnp.ca
 
   
   
   
   
   

 
 
 
 

 
-31-

 
CORONUS SOLAR INC.
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEETS
(Expressed in US Dollars)


     
March 31,
 
March 31,
     
2012
 
2011
           
ASSETS
       
CURRENT
       
 
Cash and cash equivalents
$
327
$
6,233
 
Other receivables
 
900
 
3,079
 
Prepaid expenses and deposit (Note 17(d))
 
42,149
 
946
 
Assets held for sale (Note 9)
 
40,161
 
-
           
TOTAL CURRENT ASSETS
 
83,537
 
10,258
           
CONSTRUCTION IN PROGRESS (Note 17(a))
 
6,584,400
 
6,586,415
           
PROPERTY, PLANT AND EQUIPMENT (Note 7)
 
334,789
 
78,192
           
INTANGIBLE ASSET (Note 8)
 
4,180
 
11,347
           
TOTAL ASSETS
$
7,006,906
$
6,686,212
           
           
LIABILITIES
       
CURRENT
       
 
Accounts payable and accrued liabilities
$
144,656
$
56,877
 
Loan from a shareholder (Note 10)
 
243,288
 
259,738
 
Convertible notes payable (Note 12)
 
15,198
 
-
 
Notes payable (Note 11)
 
37,100
 
-
 
Liabilities held for sale
 
33,475
 
-
           
TOTAL CURRENT LIABILITIES
 
473,717
 
316,615
           
NOTES PAYABLE (Note 11)
 
202,084
 
37,000
           
TOTAL LIABILITIES
 
675,801
 
353,615
           
STOCKHOLDERS' EQUITY
       
SHARE CAPITAL  (Note 13)
       
 
Authorized:
       
 
Unlimited voting common shares without par value
       
 
Issued and outstanding:
       
 
27,096,086 common shares (March 31, 2011: 26,729,086)
 
7,474,452
 
7,347,844
           
ADDITIONAL PAID IN CAPITAL
 
598,534
 
364,542
           
ACCUMULATED OTHER COMPREHENSIVE LOSS
 
(26,232)
 
(34,938)
           
DEFICIT, accumulated during the development stage
 
(1,715,649)
 
(1,344,851)
           
TOTAL STOCKHOLDERS' EQUITY
 
6,331,105
 
6,332,597
           
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
7,006,906
$
6,686,212
           
CONTINGENT LIABILITIES (Note 15)
       
GOING CONCERN (Note 2)
       


(See accompanying notes to the financial statements)


 
-32-

 

CORONUS SOLAR INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Expressed in U.S. Dollars)
 

             
Cumulative from
             
inception
     
Years ended March 31,
 
(December 3, 2001) to
     
2012
 
2011
 
March 31, 2012
               
REVENUE
$
-
$
-
$
1,751
               
EXPENSES
           
 
Amortization
 
7,221
 
7,236
 
53,147
 
Consulting fee
 
-
 
-
 
20,928
 
Interest on shareholder loan
 
9,081
 
8,813
 
27,873
 
Interest and bank charges
 
20,354
 
1,880
 
32,854
 
Office and miscellaneous
 
56,231
 
20,529
 
106,690
 
Professional fees
 
84,412
 
71,123
 
349,399
 
Repairs and maintenance
 
-
 
-
 
869
 
Salaries and wages
 
86,601
 
35,420
 
469,214
 
Stock based compensation
 
-
 
-
 
492,309
 
Telephone and utilities
 
811
 
709
 
12,377
 
Advertising and promotion
 
202
 
-
 
9,124
 
Travel
 
1,937
 
1,219
 
3,156
 
Feasibility study
 
104,670
 
12,200
 
116,870
 
Foreign exchange loss
 
3,235
 
2,499
 
5,734
 
Write-down of land deposits
 
3,210
 
8,400
 
11,610
 
Write down in website development costs
 
-
 
-
 
17,390
 
Write-off trademark cost
 
-
 
-
 
279
               
     
377,965
 
170,028
 
1,729,823
               
OTHER ITEMS
           
 
Interest income
 
-
 
-
 
31
 
Debt forgiven
 
7,967
 
-
 
13,192
 
Others
 
(800)
 
-
 
(800)
               
     
7,167
 
-
 
12,423
               
NET LOSS FOR THE PERIOD
 
(370,798)
 
(170,028)
 
(1,715,649)
             
Other comprehensive income (loss) for the period
           
             
Exchange difference on translation
 
8,706
 
(11,701)
 
(26,232)
             
COMPREHENSIVE LOSS FOR THE PERIOD
$
(362,092)
$
(181,729)
$
(1,741,881)
             
Basic and diluted loss per share
$
(0.01)
$
(0.01)
   
             
Weighted average number of common shares outstanding - basic and diluted
 
27,049,223
 
15,612,823
   


(See accompanying notes to the financial statements)


 
-33-

 


CORONUS SOLAR INC.
(A Development Stage Company)
December 3, 2001 (inception) to March 31, 2012
(Expressed in U.S. Dollars)


     
ACCUMULATED
DEFICIT
 
     
OTHER
ACCUMULATED
 
   
ADDITIONAL
COMPREHENSIVE
DURING
TOTAL
 
COMMON
PAID-IN
INCOME
DEVELOPMENT
STOCKHOLDERS’
 
SHARES
AMOUNT
CAPITAL
(LOSS)
STAGE
EQUITY
             
Stock issued for service at $0.0525 per share
           
on December 5, 2001
75,000
3,931
-
-
-
3,931
Stock issued for cash at $0.0002 per share
           
on December 5, 2001, revalued at $0.0525 per share
6,750,000
353,767
-
-
-
353,767
Stock issued for cash at $0.0525 per share
           
on December 5, 2001
300,000
15,722
-
-
-
15,722
Stock-based compensation on 75,000 options granted
-
-
6,026
-
-
6,026
Comprehensive income (loss):
           
Currency translation adjustment
-
-
-
(9)
-
(9)
(Loss) for the period
-
-
-
-
(376,277)
(376,277)
 
           
Balance, March 31, 2002
7,125,000
373,420
6,026
(9)
(376,277)
3,160
 
           
Stock issued for cash at $0.055 per share
           
on April 5, 2002
235,294
12,916
-
-
-
12,916
Stock issued for cash at $0.0725 per share
           
on June 18, 2002
88,890
6,458
-
-
-
6,458
Exercise of warrants at $0.055 per share
           
on August 15, 2002
235,294
12,916
-
-
-
12,916
Stock issued for cash at $0.0725 per share
           
on December 16, 2002
44,444
3,229
-
-
-
3,229
on January 10, 2003
44,446
3,229
-
-
-
3,229
on January 21, 2003
88,890
6,458
-
-
-
6,458
on March 7, 2003
205,690
14,944
-
-
-
14,944
on March 13, 2003
27,644
2,008
-
-
-
2,008
Stock issued for debt at $0.0725 per share
           
on January 15, 2003
22,222
1,615
-
-
-
1,615
Imputed interest from shareholder loan
-
-
340
-
-
340
Stock-based compensation on 25,000 options granted
-
-
1,957
-
-
1,957
Comprehensive income (loss):
           
Currency translation adjustment
-
-
-
197
-
197
(Loss) for the year
-
-
-
-
(67,360)
(67,360)
 
           
Balance, March 31, 2003
8,117,814
437,194
8,323
188
(443,637)
2,068
 
           
Stock issued for cash at $0.0835 per share
           
on April 2, 2003
88,890
7,403
-
-
-
7,403
on May 13, 2003
44,446
3,702
-
-
-
3,702
on May 21, 2003
44,446
3,702
-
-
-
3,702
on June 23, 2003
133,334
11,105
-
-
-
11,105
on August 1, 2003
44,444
3,702
-
-
-
3,702
on August 6, 2003
44,446
3,702
-
-
-
3,702
on October 24, 2003
50,000
4,164
-
-
-
4,164
on November 18, 2003
50,000
4,164
-
-
-
4,164
Stock issued for debt at $0.0835 per share
           
on April 15, 2003
22,222
1,851
-
-
-
1,851
on July 15, 2003
22,222
1,851
-
-
-
1,851
on October 15, 2003
22,222
1,851
-
-
-
1,851
Comprehensive income (loss):
           
Currency translation adjustment
-
-
-
(265)
-
(265)
(Loss) for the year
-
-
-
-
(63,056)
(63,056)
 
           
Balance, March 31, 2004
8,684,486
484,390
8,323
(77)
(506,693)
(14,057)
 
           
Stock issued for cash at $0.039 per share
           
on June 15, 2004
1,200,000
47,054
-
-
-
47,054
on June 30, 2004
400,000
15,685
-
-
-
15,685
on December 17, 2004
1,510,000
59,210
-
-
-
59,210
Forgiveness of debt by a director and shareholder
-
-
3,921
-
-
3,921
Comprehensive income (loss):
           
Currency translation adjustment
-
-
-
(12,847)
-
(12,847)
(Loss) for the year
-
-
-
-
(65,452)
(65,452)
 
           
Balance, March 31, 2005
11,794,486
606,339
12,244
(12,924)
(572,145)
33,514

(See accompanying notes to the financial statements)

 
-34-

 


CORONUS SOLAR INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
December 3, 2001 (inception) to March 31, 2012
(Expressed in U.S. Dollars)

     
ACCUMULATED
DEFICIT
 
     
OTHER
ACCUMULATED
 
   
ADDITIONAL
COMPREHENSIVE
DURING
TOTAL
 
COMMON
PAID-IN
INCOME
DEVELOPMENT
STOCKHOLDERS’
 
SHARES
AMOUNT
CAPITAL
(LOSS)
STAGE
EQUITY
 
           
Exercise of warrants at $0.042 per share
           
on July 28, 2005
200,000
8,385
-
-
-
8,385
on September 14, 2005
100,000
4,193
-
-
-
4,193
Stock issued for debt at $0.042 per share
           
on March 15, 2006
395,600
16,586
-
-
-
16,586
Forgiveness of debt by a director and shareholder
-
-
34,798
-
-
34,798
Imputed interest from shareholder loan
-
-
350
-
-
350
Stock-based compensation on 450,000 options granted
-
-
31,972
-
-
31,972
Comprehensive income (loss):
           
Currency translation adjustment
-
-
-
1,059
-
1,059
(Loss) for the year
-
-
-
-
(112,773)
(112,773)
 
           
Balance, March 31, 2006
12,490,086
635,502
79,364
(11,865)
(684,918)
18,083
 
           
Stock issued for cash at $0.044 per share
           
on November 24, 2006
600,000
26,369
-
-
-
26,369
on December 7, 2006
400,000
17,579
-
-
-
17,579
Forgiveness of debt by a director and shareholder
-
-
31,643
-
-
31,643
Imputed interest from shareholder loan
-
-
939
-
-
939
Stock-based compensation on 100,000 options granted
-
-
7,932
-
-
7,932
Comprehensive income (loss):
           
Currency translation adjustment
-
-
-
(108)
-
(108)
(Loss) for the year
-
-
-
-
(65,430)
(65,430)
 
           
Balance, March 31, 2007
13,490,086
679,450
119,877
(11,973)
(750,348)
37,006
 
           
Stock issued for debt at $0.0485 per share
           
on May 4, 2007
52,500
2,548
-
-
-
2,548
Forgiveness of debt by a director and shareholder
-
-
34,950
-
-
34,950
Imputed interest from shareholder loan
-
-
1,126
-
-
1,126
Stock-based compensation on 100,000 options granted
-
-
8,787
-
-
8,787
Comprehensive income (loss):
           
Currency translation adjustment
-
-
-
4,447
-
4,447
(Loss) for the year
-
-
-
-
(96,432)
(96,432)
 
           
Balance, March 31, 2008
13,542,586
681,999
164,740
(7,526)
(846,780)
(7,567)
 
           
Forgiveness of debt by a director and shareholder
-
-
31,932
-
-
31,932
Imputed interest from shareholder loan
-
-
2,228
-
-
2,228
Stock-based compensation
-
-
55,180
-
-
55,180
Comprehensive income (loss):
           
Currency translation adjustment
-
-
-
10,232
-
10,232
(Loss) for the year
-
-
-
-
(172,863)
(172,863)
 
           
Balance, March 31, 2009
13,542,586
681,999
254,080
2,706
(1,019,643)
(80,858)
 
           
Stock issued for acquisition of Coronus Energy Corp.
           
on November 2, 2009
2,000,000
10,752
10,886
-
-
21,638
Forgiveness of debt by a director and shareholder
-
-
33,015
-
-
33,015
Imputed interest from shareholder loan
-
-
4,997
-
-
4,997
Stock-based compensation
-
-
26,144
-
-
26,144
Comprehensive income (loss):
           
Currency translation adjustment
-
-
-
(25,943)
-
(25,943)
(Loss) for the year
-
-
-
-
(155,180)
(155,180)
 
           
Balance, March 31, 2010
15,542,586
$        692,751
$          329,122
$              (23,237)
$       (1,174,823)
$              (176,187)
 
           
Stock issued for cash at $0.402 per share
           
on January 21, 2011 (net of share issuance cost)
212,500
70,693
-
-
-
70,693
Stock issued for construction of solar power plants
           
on March 31, 2011
10,974,000
6,584,400
-
-
-
6,584,400
Forgiveness of debt by a director and shareholder
-
-
35,420
-
-
35,420
Comprehensive income (loss):
           
Currency translation adjustment
-
-
-
(11,701)
-
(11,701)
(Loss) for the year
-
-
-
-
(170,028)
(170,028)
 
           
Balance, March 31, 2011
26,729,086
7,347,844
364,542
(34,938)
(1,344,851)
6,332,597
 
           
Stock issued for cash at $0.624 per share
           
on May 10, 2011
350,000
120,838
90,628
-
-
211,466
Stock issued for cash at $0.598 per share
           
on October 24, 2011
17,000
5,770
4,501
-
-
10,271
Forgiveness of debt by a director and shareholder
-
-
38,165
-
-
38,165
Warrants and conversion beneficiary features
-
-
100,698
-
-
100,698
Comprehensive income (loss):
           
Currency translation adjustment
-
-
-
8,706
-
8,706
(Loss) for the year
-
-
-
-
(370,798)
(370,798)
             
Balance, March 31, 2012
27,096,086
$      7,474,452
$          598,534
$                 (26,232)
$       (1,715,649)
$             6,331,104

(See accompanying notes to the financial statements)

 
-35-

 

CORONUS SOLAR INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. Dollars)

               
Cumulative from
               
inception
       
Years ended March 31,
 
(December 3, 2001) to
       
2012
 
2011
 
March 31, 2012
                 
OPERATING ACTIVITIES
           
 
Net loss from operations
$
(370,798)
$
(170,028)
$
(1,715,649)
 
Adjustments to reconcile net loss to net cash
           
   
used in operating activities:
           
   
Amortization
 
7,221
 
7,236
 
53,147
   
Foreign exchange gain/loss
 
-
 
2,499
 
(20,930)
   
Forgiveness of debt
 
38,165
 
35,420
 
249,069
   
Imputed interests
 
9,081
 
8,813
 
27,873
   
Share issued for services / debts
 
-
 
-
 
26,301
   
Stock based compensation
 
-
 
-
 
492,309
   
Amortization on discount of convertible notes
 
15,198
 
-
 
15,198
   
Write down of website development costs
 
-
 
-
 
17,390
   
Write-off trademark cost
 
-
 
-
 
279
 
Changes in non-cash working capital:
           
   
Other receivables
 
2,110
 
(1,454)
 
355
   
Prepaid expenses
 
(79,372)
 
(373)
 
(66,020)
   
Accounts payables and accrued liabilities
 
133,393
 
10,078
 
177,679
                 
NET CASH USED IN OPERATING ACTIVITIES
 
(245,002)
 
(107,808)
 
(742,999)
                 
INVESTING ACTIVITIES
           
 
Property, plant and equipment
 
-
 
-
 
(1,871)
 
Land acquisition
 
(54,649)
 
(77,941)
 
(132,590)
 
Land Deposit
 
-
 
(2,015)
 
(46,408)
 
Intangible asset
 
-
 
-
 
(369)
                 
NET CASH USED IN INVESTING ACTIVITIES
 
(54,649)
 
(79,956)
 
(181,238)
                 
FINANCING ACTIVITIES
           
 
Issuance of common shares
 
221,737
 
70,693
 
591,861
 
Loan from a shareholder
 
(28,499)
 
85,156
 
195,617
 
Note payable
 
100
 
37,000
 
37,100
 
Convertible note payable
 
100,698
 
-
 
100,698
                 
NET CASH FROM FINANCING ACTIVITIES
 
294,036
 
192,849
 
925,276
                 
EFFECT OF EXCHANGE RATE ON CASH
 
(291)
 
(146)
 
(712)
                 
NET INCREASE (DECREASE) IN CASH
 
(5,906)
 
4,939
 
327
                 
CASH AND CASH EQUIVALENTS
           
CASH AND CASH EQUIVALENTS - Beginning of Year
 
6,233
 
1,294
 
-
                 
CASH AND CASH EQUIVALENTS - End of Year
$
327
$
6,233
$
327
                 
SUPPLEMENTAL CASH FLOWS INFORMATION
           
 
Interest expense paid in cash
$
15,949
$
1,041
$
17,636
 
Taxes paid in cash
$
-
$
-
$
-
                 
NON-CASH FINANCING ACTIVITIES
           
 
Issuance of common shares for acquisition of Coronus Energy Corp.
$
-
$
-
$
21,638
 
Establishment of intangible asset through acquisition of Coronus Energy Corp.
$
-
$
-
$
21,500
 
Issuance of common shares for construction of solar power plant
$
-
$
6,584,400
$
6,584,400
 
(See accompanying notes to the financial statements)
 
 
-36-

 
CORONUS SOLAR INC.
(A Development Stage Enterprise)
(Expressed in U.S. Dollars)
Year Ended March 31, 2012



Note 1 – Nature of Operations

Coronus Solar Inc. (“the Company”) was incorporated under the Canada Business Corporations Act on December 3, 2001 under the name “The LectureNet Learning Corporation” and was registered extra-provincially in the Province of British Columbia on January 24, 2002. The name of the Company was changed to InsightfulMind Learning, Inc. effective August 26, 2002 and was further changed to Coronus Solar Inc. on November 3, 2009.

The Company’s current business is to deploy and operate utility-scale solar power systems in the State of California, U.S.A. The Company is located in the City of Vancouver, Province of British Columbia, Canada.

On November 2, 2009, the Company completed an agreement (the “Share Purchase Agreement”) to acquire all of the issued and outstanding shares of Coronus Energy Corp. (“Coronus”), a start-up stage company founded to deploy and operate utility-scale solar power systems in the State of California. Under the Share Purchase Agreement, the Company acquired all of the outstanding shares of Coronus in exchange for 2,000,000 (post stock forward split) common shares of the Company, at a deemed value of $0.025 per share.

Under the Share Purchase Agreement, 2,025,000 common shares of the Company held by Mr. Jeff Thachuk, President of the Company, were transferred to Mr. Mark Burgert, the sole principal of Coronus, for $1, on August 19, 2009 and an aggregate of 905,000 (post stock forward split) stock options of the Company held by various persons were cancelled on August 10, 2009. Mr. Thachuk was appointed as a director and the Chairman, CEO, CFO, Secretary and Treasurer of Coronus, with Mr. Burgert continuing to hold the office of President of Coronus.

The transfer of the 2,025,000 common shares of the Company held by Mr. Thachuk to Mr. Burgert was treated, as a contribution by Mr. Thachuk, as part of the consideration for the acquisition of Coronus. Accordingly, a total of 4,025,000 common shares was determined as the consideration for the acquisition.

The Company has engaged Mr. Burgert as a consultant, and in consideration for this engagement, granted to Mr. Burgert an aggregate of 350,000 options exercisable at a price of $0.065 per share. Additionally, the 9,050,000 common shares of the Company that are now collectively held between Messrs. Thachuk and Burgert have been placed into voluntary escrow, to be released to each of them on the basis of one common share each for each $0.50 earned in revenue by the Company on a consolidated basis.


Note 2 – Basis of Presentation - Going Concern Uncertainties

The Company is considered a development stage company as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 915 “Development Stage Entities”. The accompanying consolidated financial statements have been prepared in conformity




 
-37-

 
CORONUS SOLAR INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
Year Ended March 31, 2012



Note 2 – Basis of Presentation - Going Concern Uncertainties – Continued

with generally accepted accounting principles in the United States, which contemplate continuation of the Company as a going concern.  However, the Company has limited operations and has sustained operating losses in recent years resulting in an accumulated deficit. In view of these matters, realization of a major portion of the assets in the accompanying balance sheet is dependent upon the continued operations of the Company, which in turn is dependent upon the Company’s ability to meet its financing requirements, and the success of its future operations.

The Company’s ability to continue as a going concern is in substantial doubt and is dependent upon obtaining additional financing and/or achieving a sustainable profitable level of operations. Management plans to obtain additional financing through the issuance of shares, in order to allow the Company to complete its development phase and commence earning revenue. These financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities other than in the normal course of business.

The Company will seek additional equity as necessary and it expects to raise funds through private or public equity investment in order to support existing operations and expand the range of its business. There is no assurance that such additional funds will be available for the Company on acceptable terms, if at all.

Information on the Company’s working capital and deficit is:

   
2012
 
2011
         
Working capital (deficiency)
$
(390,180)
$
(306,357)
Deficit
 
1,715,649
 
1,344,851


Note 3 – Summary of Significant Accounting Policies

(a) Principles of consolidation

The accompanying consolidated financial statements include the accounts of Coronus Solar Inc. and its 100% owned subsidiaries, Coronus Energy Corp. and Coronus Hesperia West 1 LLC (collectively, the “Company”). All significant inter-company transactions and accounts have been eliminated in consolidation.

(b) Basis of Presentation

These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), and are expressed in U.S. dollars.


 
-38-

 
CORONUS SOLAR INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
Year Ended March 31, 2012


 
Note 3 – Summary of Significant Accounting Policies – Continued

(c) Use of estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from the estimates.  Areas requiring significant management estimates relate to determination of useful life of long-lived assets and intangible assets, impairment of long-lived assets, fair value of stock-based compensation, and valuation allowance for future income tax assets.

(d) Foreign currency translation and transactions

Coronus Solar Inc.’s functional currency is Canadian dollars. Coronus Energy Corp and Coronus Hesperia West 1 LLC’s functional currency is US dollars. Transactions in other currencies are recorded in Canadian and US dollars at the rates of exchange prevailing when the transactions occur. Monetary assets and liabilities denominated in other currencies are translated into Canadian and US dollars at rates of exchange in effect at the balance sheet dates. Exchange gains and losses are recorded in the statements of operations.

The Company has chosen U.S. dollars as its reporting currency. Coronus Solar Inc.’s assets and liabilities are translated into the reporting U.S. dollars at exchange rates at the balance sheet date, equity accounts are translated at historical exchange rate and revenues and expenses are translated by using the average exchange rates. Accumulated translation adjustments are reported as a separate component of other comprehensive income (loss) in the statement of stockholders’ equity (deficiency).

(e) Cash and cash equivalents

Cash and cash equivalents are highly liquid investments, such as cash on hand and term deposits with major financial institutions, having a term to maturity of three months or less at the date of acquisition that are readily convertible to known amounts of cash. As at March 31, 2012 and 2011, there were no cash equivalents.

(f) Property, Plant and Equipment

Property, Plant and Equipment is recorded at cost less accumulated amortization. Property, Plant and Equipment is amortized over estimated useful lives using the following rates and methods:

Office equipment
20%
declining balance method
Computer equipment
30%
declining balance method
Computer software
100%
declining balance method

Amortization is provided at one half of the stated rates in the year of acquisition.

Land is recorded at the cost. No amortization was provided for.

 
-39-

 
CORONUS SOLAR INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
Year Ended March 31, 2012



Note 3 – Summary of Significant Accounting Policies – Continued

(g) Construction in progress

Construction-in-progress (“CIP”) represents Solar Photovolatic Power Systems under construction, and is stated at cost less accumulated impairment losses, if any. Costs include construction and acquisition costs. No provision for depreciation is made on construction-in-progress until such time as the assets are completed and ready for use. When the asset being constructed becomes available for use, the CIP is transferred to the appropriate category of property, plant and equipment.

(h) Concentration of credit risk

The Company places its cash and cash equivalents with high credit quality financial institutions. At March 31, 2012, the Company had $nil (2011 - $nil) in a bank beyond insured limits.

(i) Intangible assets

Intangible assets are recorded at cost and are amortized on a straight-line basis over the period of their useful life.

On November 2, 2009, the Company, through the acquisition of Coronus, obtained a business plan to deploy and operate utility-scale solar power systems in the State of California, U.S.A. The business plan was recorded at fair value on the acquisition date and was amortized over its estimated useful life of 3 years.

(j) Impairment of long lived assets

Long-lived assets of the Company are reviewed for impairment whenever events or changes in circumstances indicate that their carrying value has become impaired, in accordance with the guidance established in ASC Topic 360-10, Property, Plant and Equipment - Overall. An impairment loss would be recognized when the carrying amount of an asset exceeds the estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition. The amount of the impairment loss to be recorded is calculated by the excess of the asset’s carrying value over its fair value. Fair value is generally determined using a discounted cash flow analysis.

(k) Asset retirement obligation

The Company has adopted ASC Topic 410-20, Asset Retirement and Environmental Obligations - Asset Retirement Obligations. An asset retirement obligation is a legal obligation associated with the retirement of tangible long-lived assets that the Company is required to settle. The Company recognizes the fair value of a liability for an asset retirement obligation in the period in which it is incurred when a reasonable estimate of fair value can be made. The carrying amount of the related long-lived asset is increased by the same amount as the liability. To date, the Company has not incurred any asset retirement obligations.




 
-40-

 
CORONUS SOLAR INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
Year Ended March 31, 2012



Note 3 – Summary of Significant Accounting Policies – Continued

(l) Advertising expenses

Advertising costs are expensed as incurred. Advertising expense for the year ended March 31, 2012 was $202 (2011: $nil).

(m) Stock based compensation

The Company adopted ASC Topic 718-10, Compensation - Stock Compensation - Overall, 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 Topic 718-10 requires excess tax benefits be reported as a financing cash inflow rather than as a reduction of taxes paid.

(n) Loss per share

Basic loss per share is calculated using the weighted average number of shares outstanding during the year. The Company has adopted ASC Topic 260-10, Earnings per Share - Overall, and uses the treasury stock method to compute the dilutive effect of options, warrants and similar instruments. Under this method, the dilutive effect on loss per share is recognized on the use of the proceeds that could be obtained upon exercise of options, warrants and similar instruments. It assumes that the proceeds would be used to purchase common shares at the average market price during the period. As the Company has incurred net losses since its inception, the stock options as disclosed in Note 13(b) were not included in the computation of loss per share as their inclusion would be anti-dilutive.

ASC Topic 260-10-45 states that all outstanding unvested share-based payment awards that contain rights to non-forfeitable dividends participate in undistributed earnings with common shareholders and, therefore, need to be included in the earnings allocation in computing earnings per share under the two-class method.
 
(o) Income taxes

The Company accounts for income taxes under the provisions of ASC Topic 740-10, 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. The effect on deferred income tax assets and liabilities of a change in income tax rates is included in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred income tax assets to the amount expected to be realized.

(p) Fair value of financial instruments

The estimated fair values for financial instruments under ASC Topic 825-10, Financial Instruments, are determined at discrete points in time based on relevant market information. These estimates involve

 
-41-

 
CORONUS SOLAR INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
Year Ended March 31, 2012



Note 3 – Summary of Significant Accounting Policies – Continued

(p) Fair value of financial instruments - Continued

uncertainties and cannot be determined with precision. The estimated fair value of the Company’s financial instruments includes cash and cash equivalents, accounts payable and accrued liabilities and loan from a shareholder. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The fair value of these financial instruments approximates their carrying values, unless otherwise noted.

ASC Topic 820-10 provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information. The fair value hierarchy distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:

·
Level one –
Quoted market prices in active markets for identical assets or liabilities;
     
·
Level two –
Inputs other than level one inputs that are either directly or indirectly observable; and
     
·
Level three –
Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.

For the years ended March 31, 2012 and 2011, the fair value of cash and cash equivalents was measured using Level one inputs.

The book values of cash and cash equivalents, accounts payable and accrued liabilities, and loan from a shareholder approximate their respective fair values due to the short-term nature of these instruments. The book value of note payable as at March 31, 2012 approximates the fair value. Items identified are measured at fair value on a recurring basis.

There were no assets or liabilities measured at fair value on a non-recurring basis during the years ended March 31, 2012 and 2011.

(q) Comprehensive income (loss)

The Company accounts for comprehensive income under the provisions of ASC Topic 220-10, Comprehensive Income - Overall, which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. The Company is disclosing this information on its Statements of Operations and Comprehensive Income (Loss). The Company’s comprehensive income (loss) consists of net earnings (loss) for the period and currency translation adjustments.







 
-42-

 
CORONUS SOLAR INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
Year Ended March 31, 2012



Note 3 – Summary of Significant Accounting Policies – Continued

(r) Revenue recognition

Before the acquisition of Coronus on November 2, 2009, the Company’s revenue consisted of sales of internet educational courses to end-users through the Company’s website which was recognized when services were rendered and payments were received or rights to receive consideration were obtained and collection of consideration was reasonably assured.


Note 4 - Accounting Pronouncements Adopted During the Period

(i) Compensation - stock compensation

On April 1, 2011, the Company adopted ASU No. 2010-13 “Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades” (“ASU 2010-13”). ASU 2010-13 clarifies that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. Such an adoption does not have a material impact on the Company’s financial statements.

(ii) Business Combination
 
On April 1, 2011, the Company adopted the FASB Accounting Standards Update No. 2010-29, “Business Combinations (Topic 805)” (“ASU 2010-29”).  ASU 2010-29 is intended to address diversity in practice regarding pro forma revenue and earnings disclosure requirements for business combinations.  ASU 2010-29 specifies that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only.  The amendments also expand the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings.  The amendments affect any public entity as defined by Topic 805 that enters into business combinations that are material on an individual or aggregate basis. The adoption of this ASU will effect business acquisitions incurred after March 31, 2011. Such an adoption does not have a material impact on the Company’s financial statements.

(iii) Fair Value Measurement

On January 1, 2012, the Company adopted ASU No. 2011-04 “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” to provide additional guidance on fair value disclosures. This guidance contains certain updates to the measurement guidance as well as enhanced disclosure requirements. The most significant change in disclosures is an expansion of the information required for “Level 3” measurements including enhanced disclosure for: (1) the valuation processes used by the reporting entity; and (2) the sensitivity of the fair value measurement to changes in unobservable inputs and the interrelationships between those unobservable inputs, if any. This guidance only affects the Company’s “Level 3” disclosures.

 
-43-

 
CORONUS SOLAR INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
Year Ended March 31, 2012



Note 4 - Accounting Pronouncements Adopted During the Period – Continued

(iv) Intangibles - Goodwill and Other

On January 1, 2012, the Company adopted ASC 350 “Intangibles - Goodwill and other” intended to simplify goodwill impairment testing. Entities will be allowed to perform a qualitative assessment on goodwill impairment to determine whether it is more likely than not (defined as having a likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. Adoption of the guidance did not have a material impact on the Company’s financial statements.

(v) Comprehensive Income - Amendments to Presentation of Reclassification of Items Out of Accumulated Other Comprehensive Income

On January 1, 2012, the Company adopted ASU 2011-12, “Comprehensive Income - Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05.”  ASU 2011-12 defers changes in ASU No. 2011-05 that relate to the presentation of reclassification adjustments to allow the FASB time to redeliberate whether to require presentation of such adjustments on the face of the financial statements to show the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income.  ASU 2011-12 allows entities to continue to report reclassifications out of accumulated other comprehensive income consistent with the presentation requirements in effect before ASU No. 2011-05.  All other requirements in ASU No. 2011-05 are not affected by ASU No. 2011-12.  Adoption of the guidance did not have a material effect on the Company’s financial position or results of operations.


Note 5 – New Accounting Pronouncements

(i) Presentation of Comprehensive Income

In June 2011, the FASB issued ASU 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income”, to provide guidance on the presentation of comprehensive income. This guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. The guidance allows two presentation alternatives: (1) present items of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income; or (2) in two separate, but consecutive, statements of net income and other comprehensive income. This guidance is effective as of the beginning of a fiscal year that begins after December 15, 2011. Early adoption is permitted, but full retrospective application is required under both sets of accounting standards. This Company is currently evaluating which presentation alternative it will utilize.






 
-44-

 
CORONUS SOLAR INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
Year Ended March 31, 2012



Note 5 – New Accounting Pronouncements – Continued

(ii) Disclosures About Offsetting Assets and Liabilities

In December, 2011, the FASB issued ASU 2011-11, “Disclosures about Offsetting Assets and Liabilities”, in an effort to improve comparability between US GAAP and IFRS financial statements with regard to the presentation of offsetting assets and liabilities on the statement of financial position arising from financial and derivative instruments, and repurchase agreements. The ASU establishes additional disclosures presenting the gross amounts of recognized assets and liabilities, offsetting amounts, and the net balance reflected in the statement of financial position. Descriptive information regarding the nature and rights of the offset must also be disclosed. The adoption of the new guidance is not expected to have an impact on the Company’s financial statements.

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 6 – Earnings (Loss) per Share

Basic earnings or loss per share is based on the weighted average number of shares outstanding during the period of the financial statements. Diluted earnings or loss per share are based on the weighted average number of common shares outstanding and dilutive common stock equivalents. All per share and per share information are adjusted retroactively to reflect stock splits and changes in par value, when applicable. Diluted loss per share has not been presented as the effect on basic loss per share would be anti-dilutive. Potentially dilutive securities include options that are disclosed in Note 13(b).


Note 7 - Property, Plant and Equipment

Property, plant and equipment at March 31, 2012 and 2011 were summarized as follows:

       
Accumulated
 
Net book
March 31, 2012
 
Cost
 
depreciation
 
value
             
Office equipment
$
1,373
$
1,220
$
153
Computer equipment
 
1,051
 
1,014
 
37
Land
 
334,599
 
-
 
334,599
 
$
337,023
$
2,234
$
334,789





 
-45-

 
CORONUS SOLAR INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
Year Ended March 31, 2012



Note 7 - Property, Plant and Equipment – Continued

       
Accumulated
 
Net book
March 31, 2011
 
Cost
 
depreciation
 
value
             
Office equipment
$
1,412
$
1,215
$
197
Computer equipment
 
1,080
 
1,026
 
54
Land
 
77,941
 
-
 
77,941
 
$
80,433
$
2,241
$
78,192


Acquisition of Vacant Land

(i) Twentynine Palms East

On August 28, 2010, the Company’s wholly-owned subsidiary, Coronus Energy Corp. (“Coronus”), entered into a Vacant Land Purchase Agreement (“the “Twentynine Palms East Agreement”) to acquire a 30 acre parcel of vacant land, situated east of Twentynine Palms, in the County of San Bernardino, California. The purchase price was $32,000. The transaction closed on January 24, 2011.

(ii) Newberry Springs

On January 24, 2011, Coronus entered into a Vacant Land Purchase Agreement (the “Newberry Springs Agreement”) to acquire a 20 acre parcel of vacant land, situated in Newberry Springs, in the County of San Bernardino, California. The purchase price was $45,000. Coronus paid $8,000 and the vendor agreed to carry back the balance amount of $37,000 for two years at 6.5% per annum interest, with monthly payments of interest only. The transaction closed on March 17, 2011.

(iii) Twentynine Palms North

On January 23, 2011, Coronus entered into a Vacant Land Purchase Agreement (the “Twentynine Palms North Agreement”) to acquire a 39.25 acre parcel of vacant land, situated north of Twentynine Palms, in the County of San Bernardino, California. The purchase price was $40,000. Coronus paid $8,000 and the vendor agreed to carry back the balance amount of $32,000 for two years at 6.5% per annum interest, with monthly payments of interest only. The transaction closed on May 16, 2011.

(iv) Joshua Tree East

On May 9, 2011, Coronus entered into a Vacant Land Purchase Agreement (the “Joshua Tree East Agreement”) to acquire a 56.03 acre parcel of vacant land, situated east of Joshua Tree, in the County of San Bernardino, California. The purchase price was $200,000. Coronus paid $30,000 and the vendor agreed to carry back the balance amount of $170,000 for three years at 6.5% per annum interest, with monthly payments of interest only. The transaction closed on June 30, 2011.



 
-46-

 
CORONUS SOLAR INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
Year Ended March 31, 2012



Note 8 - Intangible Assets

The Business Plan was acquired through the acquisition of Coronus Energy Corp. on November 2, 2009. The capital cost was amortized over 3 years.

Intangible assets at March 31, 2012 and 2011 were summarized as follows:

   
Accumulated
 
Net book
March 31, 2012
Cost
amortization
Write-off
value
         
Business plan
21,500
17,320
-
4,180
         
         
   
Accumulated
 
Net book
March 31, 2011
Cost
amortization
Write-off
value
         
Business plan
21,500
10,153
-
11,347


Note 9- Assets Held for Sale

Assets held for sale as March 31, 2012 and 2011 were comprised of the following:

   
2012
 
2011
Prepaid and deposit
$
 40,161
$
-
         
Total
$
 40,161
$
-

Liabilities associated with assets held for sale as of March 31, 2012 and 2011 were comprised of the following:

   
2012
 
2011
Accounts payable and accrued liabilities
$
33,475
$
-
         
Total
$
 33,475
$
-

As of March 31, 2012, the assets and liabilities of Coronus Hesperia West 1 LLC and the cost and liabilities incurred in relation to the Hesperia West Agreement were reclassified as held for sale. The assets held for sale are carried in the Consolidated Balance Sheet as of March 31, 2012 at the lower of carrying value or fair value less costs to sell. The Company expects to complete a sale of all of these assets within the next twelve months for amounts that equal or exceed their individual carrying values. Please also see note 18 (a)



 
-47-

 
CORONUS SOLAR INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
Year Ended March 31, 2012



Note 10 - Loan From A Shareholder

Loan from a shareholder represents a series of loans from a director and shareholder of the Company which are unsecured and due on demand.

Effective April 1, 2010, the loan payable to a shareholder of CAD$156,500 (USD$154,096) as at March 31, 2010 accrues interest at the annual rate of 4%. The loan is unsecured and due on demand.

During the year ended March 31, 2011, the shareholder lent the Company a further CAD$89,500 (USD $92,097) and USD$6,600 for working capital. The additional loan is unsecured and due on demand, and accrues interest at the annual rate of 4%.

During the year ended March 31, 2012, the shareholder lent the Company a further CAD$39,300 (USD$39,335). The additional loan is unsecured and due on demand, and accrues interest at the annual rate of 4%.

During the year ended March 31, 2012, the director and shareholder was repaid by the Company CAD$66,800 (USD$66,831) of the principal amount owing, in respect of the loan.

At March 31, 2012, the Company has accrued interest payable of $17,991 (2011: $9,212).


Note 11 - Notes Payable

Notes payable at March 31, 2012 is summarized as follows:

Vacant Land
 
2012
 
2011
         
Twentynine Palms North
 
32,084
 
-
Joshua Tree East
 
170,000
 
-
 
$
202,084
$
-
Current
       
Newberry Springs
$
37,100
$
37,000
 
$
239,184
$
37,000


On March 17, 2011, Coronus completed the Newberry Springs Vacant Land Purchase Agreement to acquire a 20 acre parcel of vacant land, situated in Newberry Springs, in the County of San Bernardino, California, from Mike Hoch. Mike Hoch agreed to carry back the balance amount of $37,000 for two years at 6.5% per annum interest, with monthly payments of interest only. At March 31, 2012, the Company has accrued interest payable of $100 (2011: $100).

On May 16, 2011, Coronus completed the Twentynine Palms North Vacant Land Purchase Agreement to acquire a 39.25 acre parcel of vacant land, situated north of Twentynine Palms, in the County of San Bernardino, California, from Joshua Tree Holdings. Joshua Tree Holdings agreed to carry back the balance amount of $32,000 for two years at 6.5% per annum interest, with monthly payments of interest only. At March 31, 2012, the Company has accrued interest payable of $84 (2011: $nil).

 
-48-

 
CORONUS SOLAR INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
Year Ended March 31, 2012



Note 11 - Notes Payable – Continued

On June 30, 2011, Coronus completed the Joshua Tree East Vacant Land Purchase Agreement to acquire a 56.03 acre parcel of vacant land, situated east of Joshua Tree, in the County of San Bernardino, California, from Sal, Alfred and Frances Gonzalez. Sal, Alfred and Frances Gonzalez agreed to carry back the balance amount of $170,000 for three years at 6.5% per annum interest, with monthly payments of interest only. At March 31, 2012, the Company paid interest of $1,817 (2011: $nil).


Note 12 – Convertible Promissory Notes

On February 2, 2012, the Company issued a convertible promissory note for CAD$50,000 and 83,333 transferrable warrants for gross proceeds of CAD$50,000. On February 23, 2012, the Company issued a second convertible promissory note for CAD$50,000 and a further 83,333 transferrable warrants for gross proceeds of CAD$50,000. These convertible promissory notes, totalling CAD$100,000, mature on February 2, 2013, and bear an annual interest rate of 12%. The notes have a first priority interest in all the assets of the Company. The holders of the notes can convert the note and accrued interest, at or before the maturity date, into common shares of the Company at CAD$0.60 each. Each warrant entitles the holder thereof to purchase a further common share of the Company at an exercise price of CAD$0.75 for a period of five years.

According to ASC 470, the proceeds received in a financing transaction should first be allocated to the convertible promissory notes and the detached warrants on a relative fair value basis. The allocated value of the detached warrants is recorded in paid-in-capital. ASC 470 should then be applied to the amount allocated to the convertible promissory note, and an effective conversion price should be calculated and used to measure the intrinsic value, if any, of the embedded conversion option. The intrinsic value of the conversion option is recognized as a reduction to the carrying amount of the convertible debt and an addition to the paid-in-capital.

The Company determined that the amounts allocated to the convertible promissory notes, the embedded conversion beneficiary features option, and warrants are CAD$nil, CAD$43,429, and CAD$56,571, respectively.

The discount on issuance of the convertible promissory notes, CAD$100,000, is being amortized over the life of the notes. During the year ended March 31, 2012, an amount of CAD$15,184 (USD$15,198) was amortized.  See Note 18(e).

 
US$
CAD$
Face value
100,090
100,000
Effective interest (137%)
(84,892)
 (84,816)
 
15,198
15,184






 
-49-

 
CORONUS SOLAR INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
Year Ended March 31, 2012



Note 13 - Stockholders’ Equity

(a) Common Stock

On December 5, 2001, the Company (i) issued 6,750,000 common shares for cash to the founder and sole director of the Company at $0.0002 per share; (ii) issued 75,000 common shares for service to a party related to the founder of the Company at $0.0525 per share; and (iii) issued 300,000 common shares for cash to the sole director of the Company pursuant to a private placement at $0.0525 per share. The Company recorded the 6,750,000 shares issued to the founder at fair value at $0.0525 per share and recorded a stock based compensation of $352,337.

For the fiscal year ended March 31, 2003, the Company issued (i) 235,294 units for cash at $0.055 per unit for total proceeds of $12,916; (ii) issued 500,004 common shares for cash at $0.0725 per share for total proceeds of $36,326; (iii) issued 235,294 common shares upon the exercise of warrants for cash at

$0.055 per share for total proceeds of $12,916; and (iv) issued 22,222 common shares for the settlement of debt at $0.0725 per share for the total debt of $1,615. In connection with the above unit issuance, each unit consisted of one common share and one share purchase warrant with an exercise price at $0.055 per share. The Company adopted the residual approach and allocated the total proceeds to the common shares and $nil to the share purchase warrants.

For the fiscal year ended March 31, 2004, the Company (i) issued 500,006 common shares for cash at $0.0835 per share for total proceeds of $41,644; and (ii) issued 66,666 common shares for the settlement of the debt at $0.0835 for the total debt of $5,552.

For the fiscal year ended March 31, 2005, the Company (i) issued 1,200,000 units for cash at $0.039 per unit for total proceeds of $47,054; and (ii) issued 1,910,000 common shares for cash at $0.039 per share for total proceeds of $74,895. Each unit consisted of one common share and one share purchase warrant with an exercise price at $0.039 per share. The Company adopted the residual approach and allocated the total proceeds to the common stocks and $nil to the share purchase warrants.

For the fiscal year ended March 31, 2006, the Company (i) issued 300,000 common shares at $0.042 per share pursuant to the exercise of warrants for total proceeds of $12,578; and (ii) issued 395,600 common shares at $0.042 per share for the settlement of debt of $16,586.

For the fiscal year ended March 31, 2007, the Company issued 1,000,000 common shares for cash at $0.044 per share for total proceeds of $43,948.

For the fiscal year ended March 31, 2008, the Company issued 52,500 common shares at $0.0485 per share for the settlement of debt of $2,548.

On November 2, 2009, the Company issued 2,000,000 common shares in connection with the acquisition of all the issued and outstanding shares of Coronus at a deemed value of $0.025 per share.  These shares were recorded, proportionately with the shares transferred by Mr. Jeff Thachuk to Mr. Mark Burgert, based on the fair value of the assets acquired.


 
-50-

 
CORONUS SOLAR INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
Year Ended March 31, 2012



Note 13 - Stockholders’ Equity – Continued

(a) Common Stock – Continued

On January 21, 2011, the Company completed a non-brokered private placement, issuing 212,500 shares of common stock to eleven investors, at a price of CAD$0.402 per share, for gross proceeds of CAD$85,000. In connection with the completion of the private placement, the Company paid CAD$7,500 in finder’s fees in cash, to certain arm’s length parties, and CAD$6,807 in legal, accounting, transfer agent and filing fees.

On March 31, 2011, the Company and its wholly-owned subsidiary, Coronus Energy Corp. (“Coronus”), entered into a purchase agreement for utility-scale, ground-mount, solar photovoltaic (“PV”) power systems (the “Solar Power Systems Agreement”) with Belectric, Inc. (“Belectric”). Under the Solar Power Systems Agreement, Coronus agreed to acquire a total of 21 MW_ac of utility-scale, ground-mount, solar PV power systems from Belectric, for total consideration of $76,818,000, exclusive of taxes (the “Basic Price”). On entering into the Solar Power Systems Agreement, the Company paid 15% of the Basic Price, or $11,522,700, by way of issuing 10,974,000 shares of its common stock to Belectric, at a deemed value of $1.05 per share. The fair value per share at the date of issuance was $0.60. As a result, $6,584,400 was recorded under shareholders’ equity and construction in progress.

On May 10, 2011, the Company completed a non-brokered private placement of 350,000 units at a price of CAD $0.60 per unit for proceeds of CAD $210,000. Each unit was comprised of one common share in the capital of the Company and one non-transferrable share purchase warrant. Each warrant entitles the holder thereof to purchase a further common share at an exercise price of CAD $0.75 for a period of five years. The value assigned to the underlying warrants was CAD$90,000 ($93,652). See Note 13(c).

On October 24, 2011, the Company completed a non-brokered private placement of 17,000 units at a price of CAD$0.60 per unit for gross proceeds of CAD$10,200. Each unit is comprised of one common share in the capital of the Company and one non-transferrable share purchase warrant. Each warrant entitles the holder thereof to purchase a further common share at an exercise price of CAD $0.75 for a period of five years. The value assigned to the underlying warrants was CAD$4,470 ($4,452). See Note 13(c).

As at March 31, 2012, 20,103,500 (2011- 8,500,000) shares of the Company’s common stock were restricted shares.

(b) Stock Options

Since inception, the Company has entered into various stock option agreements with its directors, employees and consultants.

During the years ended March 31, 2012 and 2011, there were no options granted.

Changes in stock options for the years ended March 31, 2012 and 2011 are summarized as follows:


 
-51-

 
CORONUS SOLAR INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
Year Ended March 31, 2012



Note 13 - Stockholders’ Equity – Continued

(b) Stock Options – Continued

 
Options Outstanding
 
Number of
 
Weighted average
 
shares
 
exercise price
       
Balance, March 31, 2010
745,000
$
0.065
Issued
-
 
-
Cancelled
-
 
-
Balance, March 31, 2012 and 2011
745,000
$
0.065


The Company has the following options outstanding and exercisable at March 31, 2012:

     
Outstanding
 
Exercisable
         
Weighted
           
     
Number
 
Average
 
Weighted
 
Number
 
Weighted
 
Range of
 
Outstanding at
 
Remaining
 
Average
 
Exercisable at
 
Average
 
Exercise
 
March 31,
 
Contractual
 
Exercise
 
March 31,
 
Exercise
 
Prices
 
2012
 
Life (Years)
 
Price
 
2012
 
Price
                       
$
0.065
 
740,000
 
3.65
$
0.065
 
740,000
$
0.065
 
0.105