XOTC:NOVZ Quarterly Report 10-Q 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-Q

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2012

 

or

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

 

Commission file # 333-149617

 

NOVAGEN SOLAR, INC.

(Exact Name of Registrant as Specified in its Charter)

 

Nevada   98-0471927
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification number)
     
284 West Millbrook Road, Raleigh, North Carolina   27609

(Address of principal executive offices)

 

  (Zip Code)

 

Registrant's telephone number: 310-994-7988

 

Securities registered under Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.0001 par value

 

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Issuer 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 x No ¨

 

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

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

 

As of May 14, 2012 the registrant had 43,675,900 shares of its Common Stock outstanding.

 
 

Part I -- Financial Information

 

Novagen Solar Inc.

(A Development Stage Company)

Consolidated Balance Sheets

(Expressed in US Dollars)

(Unaudited)

 

   March 31,  December 31
   2012  2011
ASSETS          
           
CURRENT ASSETS          
Cash  $472   $—   
GST refund receivable   4,698    —   
Total Current Assets   5,170    —   
           
PROPERTY AND EQUIPMENT, net   20,142    —   
           
TOTAL ASSETS  $25,312   $—   
           
LIABILITIES AND STOCKHOLDERS' DEFICIT          
           
CURRENT LIABILITIES          
Accounts payable and accrued liabilities  $5,569   $267 
Payroll withholding payable   8,976    —   
Notes payable   135,151    —   
TOTAL CURRENT LIABILITIES   149,696    267 
           
STOCKHOLDERS' EQUITY          
Preferred stock,  $0.0001 par value, 50,000,000 shares authorized; no shares issued and outstanding, respectively   —      —   
           
Common stock,  $0.0001 par value, 100,000,000 shares authorized; 43,675,900 shares issued and outstanding, respectively   4,367    4,367 
           
Additional paid-in capital   516,330    516,330 
Accumulated other comprehensive income   1,776    —   
Accumulated deficit prior to current development stage   (520,964)   (520,964)
Accumulated deficit during development stage   (125,893)   —   
TOTAL STOCKHOLDERS' EQUITY   (124,384)   (267)
           
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT  $25,312   $—   

 

The accompanying notes are an integral part of these financial statements.

1
 

NOVAGEN SOLAR INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Expressed in US Dollars)

(Unaudited)

 

         Cumulative from
         January 1, 2012
   Three months  Three months  (beginning of
   Ended  Ended  development stage)
   March 31,  March 31,  to March 31,
   2012  2011  2012
                
REVENUES  $—     $—     $—   
                
EXPENSES               
Administration expenses   18,274    8,042    18,274 
Depreciation   362    —      362 
Professional fees   15,669    6,467    15,669 
Rent   11,082    —      11,082 
Travel   10,090    —      10,090 
Compensation related expenses   62,597    —      62,597 
Research & development   7,819    —      7,819 
Total Expenses   125,893    14,509    125,893 
                
NET LOSS   (125,893)   (14,509)   (125,893)
                
OTHER COMPREHENSIVE INCOME               
Currency translation   1,776    —      1,776 
                
NET COMPREHENSIVE LOSS  $(124,117)  $(14,509)  $(124,177)
                
BASIC AND DILUTED NET LOSS PER SHARE  $   $      
                
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING   43,675,900    43,675,900      

 

The accompanying notes are an integral part of these financial statements.

2
 

NOVAGEN SOLAR INC.

(A Develoment Stage Company)

CONSOLIDATED STATEMENT OF CASH FLOWS

(Expressed in US Dollars)

(Unaudited)

 

         Cumulative from
         January 1, 2012
         (beginning of
   Three months ended  Three months ended  development stage)
   March 31  March 31,  to March 31,
   2012  2011  2012
                
CASH FLOWS FROM OPERATING ACTIVITIES:               
Net loss for the period  $(125,893)  $(14,509)  $(125,893)
Adjustments to reconcile net loss to net cash used by operating activities:               
Depreciation   362    —      362 
Changes in assets and liabilities:               
Prepaid expense   —      7,833    —   
GST refund receivable   (4,698)   —      (4,698)
Accounts payable and accrued liabilities   5,302    6,676    5,302 
Payroll withholding payable   8,976    —      8,976 
Net cash used by operating activities   (115,951)   —      (115,951)
                
CASH FLOWS FROM INVESTING ACTIVITIES:               
Purchase of property & equipment   (20,499)   —      (20,499)
Net cash used by investing activities   (20,499)   —      (20,499)
                
CASH FLOWS FROM FINANCING ACTIVITIES:               
Proceeds from  notes payable   135,151    —      135,151 
Net cash provided by financing activities   135,151    —      135,151 
                
NET INCREASE (DECREASE) IN CASH   (1,299)   —      (1,299)
Foreign currency translation gain   1,771    —      1,771 
                
CASH, BEGINNING OF PERIOD   —      —      —   
                
CASH, END OF PERIOD  $472   $—     $472 
                
SUPPLEMENTAL CASH FLOW INFORMATION:               
Interest paid  $—     $—     $—   
Income taxes paid  $—     $—     $—   

 

The accompanying notes are an integral part of these financial statements.

 

 

3
NOVAGEN SOLAR INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2012
(EXPRESSED IN US DOLLARS)
(UNAUDITED)

NOTE 1: ORGANIZATION AND DESCRIPTION OF BUSINESS

 

Novagen Solar Inc. (hereinafter “the Company”), was incorporated in the State of Nevada, U.S.A., on June 22, 2005 under the name of Pickford Minerals, Inc. The Company’s fiscal year end is December 31. On May 12, 2009, the Company changed its name to Novagen Solar Inc. The Company was originally engaged in the exploration of mineral deposits in Labrador, Newfoundland, but was unable to implement its exploration program. In April 2009, the Company began to pursue business opportunities relating to photovoltaic solar energy.

 

On December 7, 2011, there was a change in control of the Company when Twenty Second Trust, a trust organized under the laws of the State of Queensland, Australia acquired control of the Company by purchasing 67% of the issued and outstanding shares of the Company’s common stock from shareholders of the Company. Following the change in control of the Company, the board of directors has determined that the Company should expand its business to include the development of environmentally sustainable energy solutions through innovative and eco-friendly products and technologies.

 

On January 3, 2012, the Company formed Novagen Pty Ltd. under the laws of Australia, as a wholly owned operating subsidiary. All of the Company’s operations are currently conducted through Novagen Pty Ltd. On January 17, 2012, the Company formed Novagen Production Pty Ltd. under the laws of Australia, as a wholly owned non-operating subsidiary. On March 2, 2012, the Company formed Novagen Finance Pty Ltd. under the laws of Australia, as a wholly owned non-operating subsidiary. The Company is currently investigating the acquisition of technologies to be acquired by the respective subsidiaries.

 

As part of the change in control and the incorporation of the new Australian subsidiaries, the Company has effectively entered into a new development stage for accounting purposes effective with the beginning of this quarter on January 1, 2012.

 

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The financial statements of the Company have been prepared in accordance with the generally accepted accounting principles in the United States of America. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates that have been made using careful judgment. The financial statements have, in management’s opinion been properly prepared within reasonable limits of materiality and within the framework of the significant accounting policies summarized below:

 

Accounting Method

 

The Company’s financial statements are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America and reported in US Dollars.

 

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses for the reporting period. The Company reviews its estimates on an ongoing basis. The estimates were based on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ from these estimates. The Company believes the judgments and estimates required in its accounting policies to be critical in the preparation of the Company’s financial statements.

 

4
NOVAGEN SOLAR INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2012
(EXPRESSED IN US DOLLARS)
(UNAUDITED)

Cash and Cash Equivalents

 

For purposes of the statement of cash flows, the Company considers all highly liquid investments and short-term debt instruments with original maturities of three months or less to be cash equivalents. As at March 31, 2012 and December 31, 2011, there were no cash equivalents.

 

Property and Equipment

 

The Company has property and equipment being depreciated over the period between two to thirty-five years. Depreciation on property and equipment is provided on a straight line basis over their expected useful lives as follows:

 

Computer equipment 2 years straight line
Property improvements 10 to 35 years straight line
Equipment 7 years straight line

 

Concentration of Credit Risk

 

The Company places its cash and cash equivalents with high credit quality financial institutions in uninsured accounts.

 

Consolidation Policy

 

In January and March 2012, the Company incorporated three wholly owned subsidiaries, and as such, the consolidated financial statements include the accounts of Novagen Solar Inc. and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated upon consolidation.

 

Reclassifications

Certain financial statement amounts for the prior period have been reclassified to conform to the current period presentation. These reclassifications had no effect on the net loss or accumulated deficit as previously reported.

 

Foreign Currency Translations

 

The Company is located and operating outside of the United States of America. It maintains its accounting records in Australian Dollars. For reporting purposes the Company reports its financial information in US Dollars.

 

Transactions in a currency other than the functional currency (“foreign currency”) are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Exchange gains and losses are recorded in the statements of income and comprehensive income.

 

Assets and liabilities of the Company and its subsidiaries are translated into the 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. Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component of other comprehensive income in the statements of stockholders’ equity.

 

Fair Value of Financial Instruments

 

The Company's financial instruments as defined by Accounting Standards Codification (“ASC”) 825, "Disclosures about Fair Value of Financial Instruments," include accounts payable and accrued liabilities and notes payable. Fair values were assumed to approximate carrying value for these financial instruments, except where noted. Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments. The Company is operating outside the United States of America and has significant exposure to foreign currency risk due to the fluctuation of currency in which the Company operates and U.S. dollars.

 

5
NOVAGEN SOLAR INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2012
(EXPRESSED IN US DOLLARS)
(UNAUDITED)

Long-lived assets impairment

 

Long-lived assets of the Company are reviewed for impairment whenever events or circumstances indicate that the carrying amount of assets may not be recoverable, pursuant to guidance established in ASC 360, Accounting for the Impairment or Disposal of Long-Lived Assets.

 

Management considers assets to be impaired if the carrying value exceeds the future projected cash flows from related operations (undiscounted and without interest charges). If impairment is deemed to exist, the assets will be written down to fair value. Fair value is generally determined using a discounted cash flow analysis.

 

Going Concern

 

These financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America applicable to a going concern which assumes that the Company will realize its assets and discharge its liabilities in the normal course of business. As of December 31, 2011, the Company has incurred accumulated losses of $520,964 since inception and has not generated any revenue. In the first quarter the Company had additional losses of $125,893 as it began development of its new enterprises. The future of the Company is dependent upon its ability to develop profitable sales and distribution operations. These factors create doubt as to the ability of the Company to continue as a going concern. Realization values may be substantially different from the carrying values as shown in these financial statements should the Company be unable to continue as a going concern. Management is in the process of identifying sources for additional financing, or will provide the necessary financial support, to fund the ongoing development of the Company's businesses.

 

Stock-Based Compensation

 

The Company adopted ASC 718, "Share-Based Payment", to account for its stock options and similar equity instruments issued. Accordingly, compensation costs attributable to stock options or similar equity instruments granted are measured at the fair value at the grant date, and expensed over the expected vesting period. ASC 718 requires excess tax benefits be reported as a financing cash inflow rather than as a reduction of taxes paid. The Company did not grant any stock options during the year ended December 31, 2011 and the quarter ended March 31, 2012.

 

Comprehensive Income

 

The Company adopted ASC 220, "Reporting Comprehensive Income", which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. The Company is disclosing this information on its Statement of Stockholders' Equity and its Statements of Operations and Comprehensive Income. The Company’s comprehensive income consists of net earnings for the period and currency translation adjustments.

 

Income Taxes

 

The Company has adopted ASC 740, "Accounting for Income Taxes", which requires the Company to recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns using the liability method. Under this method, deferred tax liabilities and assets are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse.

 

6
NOVAGEN SOLAR INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2012
(EXPRESSED IN US DOLLARS)
(UNAUDITED)

Basic and Diluted Loss Per Share

 

In accordance with ASC 260 – “Earnings Per Share”, the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would be outstanding if the potential common shares had been issued and if the additional common shares were dilutive. At March 31, 2012 and 2011, the basic loss per share was equal to diluted loss per share as there were no dilutive instruments.

 

Business Combinations

 

ASC 805 applies the acquisition method of accounting for business combinations established in ASC 805 to all acquisitions where the acquirer gains a controlling interest, regardless of whether consideration was exchanged. ASC 805 establishes principles and requirements for how the acquirer: a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree; b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and c) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. The adoption of the standard did not have a material impact on the Company.

 

Development Stage Enterprise

 

With the control change in December 2011, the Company entered into a new development stage prior to establishing profitable operations. During the development stage all equity transactions, operations and cash flows will be reported on the cumulative basis until sales are recognized in the normal course of the Company’s planned business. Losses accumulated in prior exploration stage and development stage activities are accumulated separately and reported on the balance sheet as a separate component of stockholders’ equity.

 

Fair Value Measurement and Disclosures

 

The Company adopted ASC 820 Fair Value Measurements and Disclosures (“ASC 820”). As defined in ASC 820, fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:

 

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

 

Level 2: Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly.

 

Level 3: Unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

 

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value.

 

The Company’s financial instruments consist principally of cash, accounts payable and accrued liabilities, payroll withholding payable, and notes payable. Pursuant to ASC 820, the fair value of cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

 

7
NOVAGEN SOLAR INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2012
(EXPRESSED IN US DOLLARS)
(UNAUDITED)

New Accounting Pronouncements

 

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on our financial position or results of operations.

 

NOTE 3: PROPERTY AND EQUIPMENT

 

The Company has property and equipment being depreciated over period between two to thirty-five years. Depreciation on property and equipment is provided on a straight line basis over their expected useful lives.

 

          Accumulated     Net book  
   

Cost

$

   

amortization

$

   

value

$

 
                         
March 31, 2012                        
Computer equipment     2,723       118       2,605  
Property improvements     3,591       44       3,547  
Equipment     14,190       200       13,990  
      20,504       362       20,142  
December 31, 2011                        
Computer equipment     -       -       -  
Property improvements     -       -       -  
Equipment     -       -       -  
      -       -       -  

 

NOTE 4: NOTES PAYABLE

 

The Company entered into four notes payable at the end of March 2012 for a total $129,889 in Australian Dollars. These notes are demand notes with no guarantee, no stated maturity date bearing 5% annual interest on un-matured amounts and 10% on matured, unpaid amounts. As demand notes these notes are considered current liabilities. No interest was accrued as of March 31, 2012 and the reported balance owing in US Dollars was $135,151. These loans were from officers of the Company and its affiliates.

 

NOTE 5: PREFERRED AND COMMON STOCK

 

The Company has 50,000,000 shares of preferred stock authorized and none issued. The Company has 100,000,000 shares of common stock authorized, of which 43,675,900 shares are issued and outstanding. All shares of common stock are non-assessable and non-cumulative, with no preemptive rights.

 

On August 16, 2010, the Company issued 21,224,600 shares of common stock to three of its creditors at a price of $0.01 per share, in full and final settlement of a debt of $212,246 owed to the creditors. One of the creditors was the prior sole director of the Company, and he received 5,855,800 shares of common stock in full and final settlement of $58,558 owed to him by the Company for expenses incurred on the Company’s behalf.

 

On August 16, 2010 the Company issued 10,000,000 shares of common stock at a price of $0.01 per share to five purchasers for total cash proceeds of $100,000.

 

8
NOVAGEN SOLAR INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2012
(EXPRESSED IN US DOLLARS)
(UNAUDITED)

NOTE 6: SEGMENTED INFORMATION

 

The Company identifies its segments based on the way management organizes the Company to assess performance and make operating decisions regarding the allocation of resources. In accordance with the criteria in FASB ASC 280 "Segment Reporting", the Company has concluded it has one reportable segment and the Company currently conducts all of its operations in Australia.

 

NOTE 7: RELATED PARTY TRANSACTIONS

 

On August 16, 2010, the Company issued 5,855,800 shares of common stock to its prior sole director at a price of $0.01 per share, in full and final settlement of a debt of $58,558 owed to him by the Company for expenses incurred on the Company’s behalf.

 

In connection with the issuance of 10,000,000 common shares at a price of $0.01 to five purchasers, 2,300,000 shares of common stock were issued to the mother of our prior sole director for total proceeds of $23,000.

 

On August 16, 2010 the Company issued 15,368,800 shares of common stock at a price of $0.01 per share to a creditor in full and final settlement of a debt of $153,688. Upon the issuance, the creditor owned 36% interest of the Company.

 

On December 7, 2011, a former director of the Company released the Company from all debt owing to him for disbursements incurred on behalf of the Company. As a result of the release, $13,395 was forgiven and recorded in additional paid in capital. Also during the year ended December 31, 2011, a company related to an officer of the Company forgave $5,000 used to pay for outstanding bills and the amount was recorded in additional paid in capital. At March 31, 2011, the Company owed nothing to any director or officer of the Company.

 

Also see note 4.

 

NOTE 8: SUBSEQUENT EVENTS, COMMITMENTS AND CONTINGENCIES

 

The Company has commitments from various venders for the contribution of inventory, vehicles, equipment and office equipment which are being negotiated in exchange for shares controlled by current directors and management of the Company. This negotiation is expected to be completed in the second quarter of 2012.

 

9
 

Item 2. Management's Discussion and Analysis or Plan of Operations

 

The following discussion and analysis of our plan of operation should be read in conjunction with the financial statements and the related notes. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Our actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of certain factors.

 

Overview

 

Novagen Solar Inc. (hereinafter “the Company”), was incorporated in the State of Nevada, U.S.A., on June 22, 2005 under the name of Pickford Minerals, Inc. The Company’s fiscal year end is December 31. On May 12, 2009, the Company changed its name to Novagen Solar Inc. The Company was originally engaged in the exploration of mineral deposits in Labrador, Newfoundland, but was unable to implement its exploration program. In April 2009, the Company began to pursue business opportunities relating to photovoltaic solar energy.

 

On December 7, 2011, there was a change in control of the Company when Twenty Second Trust, a trust organized under the laws of the State of Queensland, Australia acquired control of the Company by purchasing 67% of the issued and outstanding shares of the Company’s common stock from shareholders of the Company. Following the change in control of the Company, the board of directors determined that the Company should expand its business to include the development of environmentally sustainable energy solutions through innovative and eco-friendly products and technologies.

 

On January 3, 2012, the Company formed Novagen Pty Ltd. under the laws of Australia, as a wholly owned operating subsidiary. All of the Company’s operations are currently conducted through Novagen Pty Ltd. On January 17, 2012, the Company formed Novagen Production Pty Ltd. under the laws of Australia, as a wholly owned non-operating subsidiary. On March 2, 2012, the Company formed Novagen Finance Pty Ltd. under the laws of Australia, as a wholly owned non-operating subsidiary. The Company is currently investigating the acquisition of technologies to be acquired by the respective subsidiaries.

 

As part of the change in control and the incorporation of the new Australian subsidiaries, the Company has effectively entered into a new development stage for accounting purposes effective with the beginning of this quarter on January 1, 2012.

 

Our business is in the early stages of development. We presently have no solar power installations in operation and no products, materials or technological processes ready for commercialization. We have not earned revenue since inception.

 

Our currently available capital and cash flow has been generated from through share subscriptions and loans from management and non-affiliated third parties and it is management’s intention that this will continue.

 

Our ultimate success will depend upon our ability to raise capital including joint venture projects and debt or equity financings. Future financings through equity investments are likely to be dilutive to existing stockholders. Also, the terms of securities we may issue in future capital transactions may be more favorable for our new investors. Newly issued securities may include preferences, superior voting rights, and the issuance of warrants or other derivative securities, which may have additional dilutive effects. Further, we may incur substantial costs in pursuing future capital and financing, including investment banking fees, legal fees, accounting fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expenses in connection with certain securities we may issue, such as convertible notes and warrants, which will adversely impact our financial condition.

 

Our ability to obtain needed financing may be impaired by such factors as the capital markets, both generally and specifically in the renewable energy industry, and the fact that we have not been profitable, which could impact the availability or cost of future financings. If the amount of capital we are able to raise from financing activities, together with our revenue from operations, is not sufficient to satisfy our capital needs, even to the extent that we reduce our operations accordingly, we may be required to cease operations.

 

As a result of the foregoing, our auditors have expressed doubt about our ability to continue as a going concern in our financial statements for the year ended December 31, 2011.

 

Results of Operations

 

We recorded a net loss of $125,893 for the three months ended March 31, 2012, compared with a net loss of $14,509 for the three months ended March 31, 2011. Operating expenses consisted of compensation related expenses, administration expenses, professional fees, and other general corporate expenses.

 

Compensation related expenses amounted to $62,597 for the three months ended March 31, 2012 compared with $nil for the three months ended March 31, 2011. The increase was due to the Company hired 7 employees during the period.

 

Administration expenses amounted to $18,274 for the three months ended March 31, 2012 compared with $8,042 for the three months ended March 31, 2011.

 

Professional fees were $15,669 for the three months ended March 31, 2012, compared with $6,467 for the three months ended March 31, 2011. Professional fees incurred consist of legal and accounting fees associated with a registration statement filed with the SEC, preparation of our audited financial statements and our periodic reporting obligations.

 

Liquidity and Capital Resources

 

As at March 31, 2012, we had total assets of $25,312 comprised of $20,142 in property and equipment, a value-added tax refund receivable of $4,698 and $472 in cash. This reflects an increase of the value of our total assets from $nil as at December 31, 2011.

 

As of March 31, 2012, our total liabilities increased to $149,696 from $267 as of December 31, 2011. The increase was primarily due to $135,151 in notes payable, $8,976 in payable withholding from salaries and wages and $5,569 in trade debt.

 

The Company entered into four notes payable at the end of March 2012 for a total $129,889 in Australian Dollars. These notes are demand notes with no guarantee, no stated maturity date bearing 5% annual interest on un-matured amounts and 10% on matured, unpaid amounts. As demand notes these notes are considered current liabilities. No interest was accrued as of March 31, 2012 and the reported balance owing in US Dollars was $135,151. These loans were from officers of the Company and its affiliates.

 

The Company has commitments from various venders for the contribution of inventory, vehicles, equipment and office equipment which are being negotiated in exchange for shares controlled by current directors and management of the Company. This negotiation is expected to be completed in the second quarter of 2012, but there can be no assurance that we will be successful in acquiring such assets on terms acceptable to us, or at all.

 

10
 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

In connection with the preparation of this quarterly report on Form 10-Q, an evaluation was carried out by our management, with the participation of the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”) as of March 31, 2012. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures.

 

Based on that evaluation, the Company’s management concluded, as of the end of the period covered by this report, that the Company’s disclosure controls and procedures were not effective.

 

Changes in Disclosure Controls and Procedures

 

As of the end of the period covered by this report, there have been no changes in internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the quarter ended March 31, 2012, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

Part II. Other Information

 

Item 1. Legal Proceedings

 

No director, person nominated to become a director, executive officer, promoter or control person of our company has, during the last ten years: (i) been convicted in or is currently subject to a pending a criminal proceeding (excluding traffic violations and other minor offenses); (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to any federal or state securities or banking or commodities laws including, without limitation, in any way limiting involvement in any business activity, or finding any violation with respect to such law, nor (iii) any bankruptcy petition been filed by or against the business of which such person was an executive officer or a general partner, whether at the time of the bankruptcy or for the two years prior thereto.

 

Item 1A. Risk Factors

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this Item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

The Company did not sell any securities during the three month period ended March 31, 2012.

 

Item 3. Default Upon Senior Notes

 

Not applicable.

 

Item 5. Other Information

 

None.

 

11
 

Item 6. Exhibits

 

Exhibit Description
   
31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

Signatures

 

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  NOVAGEN SOLAR INC.
   
Date: May 14, 2012

By: /s/ Micheal P. Nugent

Micheal P. Nugent

Chief Executive Officer, President,

Chief Financial Officer and

Principal Accounting Officer

   
   
Date: May 14, 2012

By: /s/ Michael Norton-Smith

Michael Norton-Smith

Chief Financial Officer and

Principal Accounting Officer

 

XOTC:NOVZ Quarterly Report 10-Q Filling

XOTC:NOVZ Stock - Get Quarterly Report SEC Filing of XOTC:NOVZ stocks, including company profile, shares outstanding, strategy, business segments, operations, officers, consolidated financial statements, financial notes and ownership information.

XOTC:NOVZ Quarterly Report 10-Q Filing - 3/31/2012
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