Escolar Documentos
Profissional Documentos
Cultura Documentos
INDEX
Page
Auditors' report 1
FINANCIAL STATEMENTS
We have audited the consolidated balance sheets of VENGA AEROSPACE SYSTEMS INC. as at
December 31, 2009 and 2008 and the consolidated statements of operations and deficit and cash flows
for the years then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with Canadian generally accepted auditing standards. 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.
In our opinion, these consolidated financial statements present fairly, in all material respects, the financial
position of the Company as at December 31, 2009 and 2008 and the results of its operations and the
changes in cash flows for the years then ended in accordance with Canadian generally accepted
accounting principles.
Toronto, Canada
April 29, 2010
-1-
VENGA AEROSPACE SYSTEMS INC.
CONSOLIDATED BALANCE SHEETS
AS AT DECEMBER 31, 2009 AND 2008
ASSETS
2009 2008
$ $
Current Assets
Cash 42,025 74,942
Prepaids and sundry receivables 10,102 13,835
52,127 88,777
Other Assets
Investment (note 8, 3(a) and 13) 300,000 300,000
Investment in Global Mineral Investments, LLC (note 9 and 3(b)) 485,400 485,400
LIABILITIES
Current Liabilities
Accounts payable and accrued charges 24,784 23,496
Deferred revenue 0 3,579
24,784 27,075
SHAREHOLDERS' EQUITY
812,743 847,102
" Hirsh Kwinter " Director " Dr. Ezra Franken " Director
The accompanying notes are an integral part of these consolidated financial statements
-2-
VENGA AEROSPACE SYSTEMS INC.
CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
2009 2008
$ $
EXPENSES
Bad debt expense 50,000 50,000
General and administrative 18,133 32,680
Professional fees 16,226 26,590
84,359 109,270
Net loss per share - basic and fully diluted (0.0001) (0.0016)
The accompanying notes are an integral part of these consolidated financial statements
-3-
VENGA AEROSPACE SYSTEMS INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
2009 2008
$ $
OPERATING ACTIVITIES
Net (Loss) (34,359) (359,270)
Items not affecting cash
Deferred revenue amortization (3,579) 0
(37,938) (359,270)
Changes in non-cash working capital items
Prepaids and sundry receivables 3,733 (8,717)
Accounts payable and accrued charges 1,288 1,770
5,021 (6,947)
INVESTING ACTIVITIES
Decrease in investment 0 300,000
Increase in investment in private company 0 (435,000)
FINANCING ACTIVITIES
Proceeds from issuance of common stock 0 545,000
The accompanying notes are an integral part of these consolidated financial statements
-4-
VENGA AEROSPACE SYSTEMS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
1. CORPORATE PROFILE
The Company was incorporated under the Business Corporations Act (Ontario) by certificates of
amalgamation dated April 26, 1979, amalgamating Frodac Mines Ltd., Great Bear Silver Mines
Limited and Silver Monarch Mines Limited to become Frodac Consolidated Energy Resources Ltd.
On July 25, 1985, it changed its name to Global Aerospace Systems Inc. and on November 3,
1987, the company further changed its name to Venga Aerospace Systems Inc.
In addition, these consolidated financial statements include the wholly owned subsidiary Venga
Joint Venture Ltd., which is inactive.
2. GOING CONCERN
These financial statements have been prepared in accordance with Canadian generally accepted
accounting principles applicable to a going concern which assumes that the Company will be able
to realize its assets, including the ultimate realization of its long-term investments, and discharge its
liabilities in the normal course of business. Recurring sources of revenue have not yet proven to be
sufficient. The Company needs to obtain additional financing to enable it to continue its business.
In the absence of additional financing, the Company may not have sufficient funds to meet its
obligations. Management continues to monitor the cash needs and consider various alternatives to
raise additional financing. However, management is reasonably confident but can offer no
guarantee that it will be able to secure the necessary financing to enable the Company to continue
as a going concern. These financial statements do not give effect to adjustments that would be
necessary should the Company be unable to continue as a going concern. There is no assurance
that this will be successful.
If the going concern basis is not appropriate, material adjustments may be necessary in the carrying
amounts and/or classification of assets and liabilities and the loss for the period reported in these
financial statements.
3. OPERATIONS
a. 3D Graphics Unit
In November of 2006, the Company entered into a joint venture agreement (the "New JV
Agreement") with 3DP North America, Inc., of Kenner, Louisiana; United Business & Capital
Services, LLC of Kenner, Louisiana; EKG, LLC of Lafayette, Louisiana and Armadillo Photo Supply,
Inc. of Houston, Texas, creating a business venture, the 3DP North America Joint Venture (the
"New JV"), to provide a range of advanced 3D products and print services for both commercial and
consumer markets. The Company has a 30% ownership interest in the New JV with 3DP North
America, Inc., who acts as the managing venturer of the New JV, owning the remaining 70% of the
business venture. Pursuant to the terms of the New JV Agreement, the Company advanced
$600,000 USD of capital to the New JV and upon termination of the New JV, the company is
entitled to its capital account share in assets of the New JV. The Company has no management
rights or further funding requirements or obligations with respect to the New JV. The Company's
participation in the New JV is limited to the Company's right to receive 30% of the New JV's net
profits as and when such profits are distributed to the joint venturers in accordance with the terms
and provisions of the New JV Agreement. The Company is only liable to the extent of its investment
and is indemnified from the other joint venturers for any excess losses and liabilities. The New JV
purchased two Chinese manufactured, specialized, 3D print / processors which have now been
delivered to the New JV's Houston, Texas production facility and are fully operational since
December 31, 2009.
-5-
VENGA AEROSPACE SYSTEMS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
The Company initially acquired a 3% interest, together with an option to acquire up to an additional
15% interest, in Global Mineral Investments, LLC ("GMI"), a private U.S. corporation that proposes
to lease and develop gold mining concessions in West Africa. On August 31, 2007, GMI was
awarded four Class B Gold Mining Licences by the Ministry of Lands, Mines and Energy of the
Republic of Liberia for four, separate concessions located in the Sanquin Mining Zone, Sinoe
County in the Republic of Liberia. In consideration of services that the Company rendered GMI, on
September 6, 2007, the Company's ownership interest in GMI was increased from 3% to 4%.
In February of 2010, the Company was advised by GMI that the GMI Mining Licences had been
renewed by the Ministry for an additional one year period.
On October 10, 2008 the Company announced that it has entered into a funding and operating
agreement (the "Funding Agreement") with GMI and a number of investors to raise, by way of a
non-brokered private placement (the "offering" or the "placement"), the sum of $535,000 through
the issue of 10,700,000 common shares at a price of $0.05 per share. The announced use of the
proceeds from the Offering was to fund GMI's Proposed Dredging Operations; to acquire an
additional 16% equity interest in GMI (giving Venga a 20% total interest) and for general corporate
purposes. The Company and GMI specifically agreed that the Funding Agreement did not create
(whether directly or by implication) a partnership between the Company and GMI, nor did the
Funding Agreement create, whether directly or indirectly, a joint venture between the parties. Under
the terms of the Funding Agreement, the Company secured an immediate 20% investment interest
in GMI with:
GMI retaining full and complete operational control of all GMI's business operations
including, but not limited to, the Proposed Dredging Operations and Venga being given
management of the financial affairs of the Proposed Dredging Operations;
Venga being given the entitlement to receive an annual financial management fee
calculated as being the greater of $120,000 or an amount equal to 1% of all monies
received, disbursed or distributed by the Company as the financial manager of the
Proposed Dredging Operations;
Revenues derived from the recovery of all minerals other than gold, being for the benefit of
all parties to the Funding Agreement so that such revenues will be included in the
calculation of the distributed profits from the Proposed Dredging Operations that are
payable to such parties pursuant to the terms of the Funding Agreement;
The records of Liberia's Ministry of Lands, Mines and Energy with respect to the GMI's
Concessions to be amended to reflect Venga's direct ownership of these concessions in a
percentage that is equal to Venga's then equity ownership position in GMI;
Venga was granted an option over the next year to acquire up to an additional 5% equity
interest in GMI at a cost of $100,000 per 1% so acquired; and
-6-
VENGA AEROSPACE SYSTEMS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
The consolidated financial statements include the accounts of Venga Aerospace Systems
Inc. ("the Company") and its subsidiary.
The Company classifies all financial instruments. The Company classifies cash, accounts
receivable, accounts payable and accrued liabilities as held for trading financial
instruments. Investments with a maturity date and fixed or determinable payments that the
entity has the positive intention and ability to hold to maturity, are classified as held-to-
maturity financial instruments. Investments that do not have fixed terms or determinable
payments and are not actively bought and sold for the purpose of profit taking, are
classified as available-for-sale financial instruments.
(e) Income Taxes
The Company uses the asset and liability method of accounting for income taxes under
which future tax assets and liabilities are recognized for differences between the financial
statement carrying amounts of existing assets and liabilities and their respective tax bases.
Future tax assets and liabilities are measured using substantively enacted tax rates in
effect in the year in which those temporary differences are expected to be recovered or
settled. The effect on future tax assets and liabilities of a change in tax rates is recognized
as part of the provision for income taxes in the year that includes the enactment date. A
valuation allowance is recorded to the extent there is uncertainty regarding realization of
future tax assets.
Monetary assets and liabilities denominated in foreign currencies are translated at the rate
of exchange prevailing at the year end, non-monetary assets and liabilities are translated at
historical rates and revenue and expenses are translated at the rate of exchange in effect
on the transaction dates. Exchange gains and losses arising on translation of monetary
items are included in income in the year in which they occur.
-7-
VENGA AEROSPACE SYSTEMS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
Long-lived assets, including capital assets, are amortized over their useful lives. The
Company reviews long-lived assets for impairment when events or changes in
circumstances indicate that the carrying amount may not be recoverable. If the sum of the
undiscounted cash flows expected to result from the use and eventual disposition of a
group of assets is less than its carrying amount, it is considered impaired. An impairment
loss is measured as the amount by which the carrying amount of the group of assets
exceeds its fair value.
The Canadian Institute of Chartered Accountants ("CICA") recommends the use of the
treasury stock method in computing earnings/loss per share. Under this method, basic loss
per share is computed by dividing earnings available to common shareholders by the
weighted average number of common shares outstanding during the year. In computing the
loss per share on a fully diluted basis, the treasury stock method assumes that proceeds
received from in-the-money stock options are used to repurchase common shares at the
prevailing market rate.
The weighted average number of common shares outstanding during the year was
239,171,893 (2008 - 230,361,060).
Revenue is earned from the provision of consulting services, licence fees and providing 3D
film print/processing services. The Company recognizes revenue from consulting services
when performance of the consulting services are complete and recognizes revenue from
the provision of 3D film print/processing services when the printed 3D images are shipped
to the customer. The licence fees represent an annual fee that the New JV pays the
Company for use of the Company's CLIK 3D trade name. Deferred revenue is amortized to
income as it is earned.
On January 1, 2008, the Company adopted the revised CICA Handbook Section 1400 - General
Standards of Financial Statement Presentation. Based on the revisions in this Section, the
Company is now required to disclose any uncertainties related to its ability to continue as a going
concern. The Company has complied with these requirements and has made the required
disclosures in note 2.
As of January 1, 2008, the Company adopted CICA Handbook Section 3031 - Inventories which
requires that additional details be provided regarding the determination and recognition of
inventories and the information to be presented. The adoption of this new section does not have
any effect on the Company's financial statements for the year ended December 31, 2009.
-8-
VENGA AEROSPACE SYSTEMS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
As of January 1, 2008, the Company adopted CICA Handbook Sections 3862 - Financial
Instruments – Disclosures; and 3863 - Financial Instruments – Presentation which replaces the
existing Section 3861 Financial Instruments - Disclosure and Presentation.
As of January 1, 2008 the Company adopted CICA Handbook Section 1535 Capital Disclosures. In
accordance with this section, the Company is required to disclose its objectives, policies and
processes for managing capital. This information is included in note 7.
As of January 1, 2009, the Company adopted CICA Handbook Section 3064 - Goodwill and
Intangible Assets which replaces CICA Handbook Sections 3062 - Goodwill and Other Intangible
Assets and Section 3450 - Research and Development Costs. The adoption of this new section
does not have any effect on the Company's financial statements for the year ended December 31,
2009.
In 2006, the Canadian Accounting Standards Board ("AcSB") published a new strategic plan that
will significantly affect financial reporting requirements for Canadian companies. The AcSB
strategic plan outlines the convergence of Canadian GAAP with IFRS over an expected five year
transitional period. In February 2008, the AcSB announced that 2011 is the changeover date for
publicly-listed companies to use IFRS, replacing Canada'S own GAAP. The date is for interim and
annual financial statements relating to fiscal years beginning on or after January 1, 2011. The
transition date of January 1, 2011 will require the restatement for comparative purposes of amounts
reported by the Company for the year ended December 31, 2010. While the Company has begun
assessing the adoption of IFRS for 2011, the financial reporting impact of the transition to IFRS
cannot be reasonably estimated at this time.
6. FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash, accounts receivable, investments, accounts
payable and accrued liabilities. It is the opinion of management that the Company is not exposed to
significant interest risk arising from its financial instruments. The fair values of these financial
instruments approximate their carrying values, unless otherwise noted.
Credit Risk:
The Company derived net sales from one (2008 - one) major customer amounting to approximately
$50,000 representing 100% of total revenues (2008 - $50,000 representing 100% of total
revenues). Accounts receivable from the above significant customer at December 31, 2009
amounted to approximately $Nil (2008 - $Nil).
Consulting contracts billed in U.S. dollars by the Company are recorded at the exchange rate in
effect at the time of sale, and are collected on standard trade payable terms. Excess U.S. dollar
balances are converted to Canadian dollars on a regular basis. The Company does not enter into
foreign currency hedges. Further devaluation in the U.S. dollar relative to the Canadian dollar could
impact the Company's ability to continue at current sales growth rates and attain cash positive
operations as substantially all of the sales contracts are denominated in U.S. dollars.
-9-
VENGA AEROSPACE SYSTEMS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
7. CAPITAL MANAGEMENT
The Company's objectives when managing capital are to safeguard its ability to continue as a going
concern to pursue the development of its three business segments and to maintain a flexible capital
structure which optimizes the cost of capital within a framework of acceptable risk. In the
management of capital, the Company includes share capital, contributed surplus and deficit.
The Company manages the capital structure and makes adjustments to it in light of changes in
economic conditions and the risk characteristics of the underlying assets. To maintain or adjust its
capital structure, the Company may issue new shares, issue new debt, acquire or dispose of assets
or adjust the amount of cash and cash equivalents.
The Company is dependent on the capital markets and potential private investors as its sole source
of operating capital and the Company's capital resources are largely determined by the strength of
the junior public markets and by the status of the Company's projects in relation to these markets
and its ability to compete for investor support of its projects.
8. INVESTMENT IN NEW JV
The Company, which holds a 30% interest in the New JV has no management rights or ongoing
funding requirements or obligations with respect to the New JV. The Company's participation in the
management and operation of the New JV is limited to the Company's right to receive 30% of the
New JV's net profits or losses as and when such profits or losses are distributed to the joint
venturers in accordance with the terms and provisions of the New JV Agreement. The Company is
only liable to the extent of its investment and is indemnified from the other joint venturers for any
excess losses and liabilities. Upon termination of the New JV, the Company is entitled to its capital
account share in net assets of the New JV.
Pursuant to the terms and provisions of the Funding Agreement, the Company, currently has a 20%
(2008 - 20%) interest with an option to acquire up to an additional 5% interest in GMI. The Funding
Agreement provides that the Company will participate in the profits generated through GMI's
business operations in an amount that is equal to the Company's then investment/equity interest in
GMI. Aside from the Company's management of the financial aspects of the Proposed Dredging
Operation, for which the Company is entitled to receive a management fee, the Company has no
management rights or ongoing funding requirements with respect to GMI or the Proposed Dredging
Operation. The Company and GMI have specifically agreed that no term, condition or provision in
the Funding Agreement will act to, or be deemed to, create or establish in law, or otherwise, a form
of partnership between GMI or the Company nor will the terms, conditions and provisions of the
Funding Agreement create, or be deemed to create or establish, in law or otherwise, a joint venture
between the Company and GMI with respect to the Proposed Dredging Operation or otherwise.
-10-
VENGA AEROSPACE SYSTEMS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
(a) Authorized:
Unlimited common stock
Further to the terms of an offering that the Company first announced on October 10, 2008 (the
"October Offering"), the Exchange accepted and approved for filing documentation with respect to
the October Offering on October 21, 2008. Pursuant to the terms of the Exchange's said approval,
the Company on the closing of the October Offering, the Company agreed to issue 10,900,000
common shares at $0.05 per share for gross proceeds of $545,000. The Company announced that
the proceeds of the October Offering would be used to finance the Proposed Dredging Operations
and for the Company's general corporate purposes. On November 24, 2008, the Company
announced the closing of the October Offering and issued 10,900,000 common shares for gross
proceeds of $545,000 in accordance with the terms of the approved October Offering.
The Company has determined that it has two active operating segments (3D graphic's unit and
Mining and Resource unit). During the period ending December 31, 2009 revenues from U.S. sales
totalled $NIL and Canadian sales totalled $50,000.
Segmented information:
2009 2008
$ $
3D graphics 50,000 50,000
Mining and resource 0 0
Total 50,000 50,000
Approximately 100% (2008 - 100%) of the Company's revenue has been derived from one (2008 -
one) customer.
-11-
VENGA AEROSPACE SYSTEMS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
In fiscal 2008, as a direct consequence of the accumulated and unexpected delays that the New JV
(notes 3(a) and 8) has encountered in becoming operational, management decided to record
approximately 50% as a write-down of the Company's investment interest in the New JV.
The provision for income taxes differs from that calculated by applying statutory rates for
the following reasons:
2009 2008
$ $
The tax effect of temporary differences that gives rise to future income tax assets and
liabilities are as follows:
2009 2008
$ $
In assessing the realizability of future tax assets, management considers whether it is more likely
than not that some portion or all of the future tax assets will not be realized. The ultimate realization
of future tax assets is dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible.
-12-
VENGA AEROSPACE SYSTEMS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
The Company has accumulated losses for income tax purposes totalling approximately $1,100,897
for which the tax benefits have not been recognized in the financial statements. These losses can
be deducted from future years' taxable income and expire as follows:
$
2010 113,718
2014 345,277
2015 244,780
2026 219,473
2027 82,466
2028 60,824
2029 34,359
1,100,897
15. LITIGATION
The Company has now issued a claim against Anchor Securities Limited ("Anchor") and Anchor's
president Martin Heppner, in the Ontario Superior Court of Justice to recover the $10,000
advance/deposit that the Company forwarded Anchor in 2008 with respect to a now lapsed Term
Sheet wherein Anchor was engaged by the Company to assist in the raising of financing for the
Company's Liberian gold mining interests.
On the February 2, 2010 the Company announced that GMI had signed a letter of intent ("LOI") with
RAM Consulting Group ("RAM Consulting") of Charlotte, North Carolina wherein RAM agreed, on a
best efforts basis, to raise $12 million dollars to finance GMI's proposed land based gold mining
operations in Liberia. On April 22, 2010, the Company announced that GMI's dredging operation in
the Dugbe River during the period of March 1 through March 31, 2010 had produced or recovered a
further 19 ounces of what the Ministry described as 'high grade' gold. The Company also
announced that GMI continued to be in consultation with RAM Consulting with respect to the LOI.
-13-