interim financial statements march 31, 2009 - final

8/14/2019 Interim Financial Statements March 31, 2009 - Final

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VENGA AEROSPACE SYSTEMS INC.

CONSOLIDATED INTERIM FINANCIAL STATEMENTSFOR THE THREE MONTH PERIOD ENDED MARCH 31, 2009


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Venga Aerospace Systems Inc.(Incorporated under the laws of the Province of Ontario)

Consolidated Balance Sheets as at March 31, 2009

(With Comparative Figures for the Year Ended December 31, 2008)____________________________________________________________________________________________

March 31, 2009

(Unaudited)

December 31, 2008

(Audited)

ASSETS

Current Assets

Cash $ 66,613 $ 74,942

Accounts receivable and sundry assets 14,123 13,835

80,736 88,777

Other Assets

Investment (notes 3(b) and 8) 300,000 300,000

Investment in Global Mineral Investments, LLC (notes 3 (c) and 9) 485,400 485,400

Total Assets $ 866,136 $ 874,177

LIABILITIES

Current Liabilities

Accounts payable and accrued charges $ 23,074 $ 23,496

Deferred revenue 3,579 3,579

26,653 27,075

SHAREHOLDERS EQUITY

Capital stock (note 10) 17,268,966 17,268,966

Contributed surplus 890,684 890,684

Deficit (17,320,167) (17,312,548)

839,483 847,102

Total Liabilities and Shareholders Equity $ 866,136 $ 874,177

Going Concern (note 2 )

Approved on behalf of the Board

Hirsh Kwinter Director Dr. Ezra Franken Director

See accompanying notes

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Venga Aerospace Systems Inc.

Consolidated Statement of Operations and Deficitfor the Three Month Period Ended March 31, 2009

(With Comparative Figures for the Three Month Period Ended March 31, 2008)

UNAUDITED

_____________________________________________________________________________________________

March 31, 2009 March 31, 200

Sales $ 0 $

Expenses

General and administrative 7,619 7,80

7,619 7,80

Net Loss (7,619) (7,804

Deficit, Beginning of year (17,312,548) (16,953,278

Deficit, End of period $ (17,320,167) $ (16,961,08

Loss Per Common Share $ (0.00003) $ (0.0000

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Consolidated Statement of Cash Flows

for the Three Month Period Ended March 31, 2009

(With Comparative Figures for the Three Month Period Ended March 31, 2008)

UNAUDITED

____________________________________________________________________________________________

March 31, 2009 March 31, 2008

OPERATING ACTIVITIES

Net loss $ (7,619) $ (7,804)

Changes in non-cash assets and liabilities

(710) (15,701)

CASH PROVIDED (USED) IN OPERATING ACTIVITIES (8,329) (23,505)

FINANCING ACTIVITIES

Loan from Director 0 10,000

CASH PROVIDED BY FINANCING ACTIVITIES 0 10,000

NET CHANGE IN CASH (8,329) (13,505)

CASH, Beginning of year $ 74,942 $ 31,159

CASH, End of period $ 66,613 $ 17,654

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Notes to the Consolidated Financial Statementsfor the Three Month Period Ended March 31, 2009

1. CORPORATE PROFILE

Venga Aerospace Systems Inc. (the Company) was originally incorporated under the Business Corporations A(Ontario) by certificates of amalgamation dated April 26, 1979, amalgamating Frodac Mines Ltd., Great Bear SilvMines Limited and Silver Monarch Mines Limited to become Frodac Consolidated Energy Resources Ltd. On July 21985, the Company changed its name to Global Aerospace Systems Inc. and on November 3, 1987, the Compafurther changed its name to Venga Aerospace Systems Inc.

In addition, these interim consolidated financial statements include the wholly owned subsidiary Venga Joint VentureLtd., which is inactive.

2. GOING CONCERN

These financial statements have been prepared in accordance with Canadian generally accepted accounting principlapplicable to a going concern which assumes that the Company will be able to realize its assets, including the ultimarealization of its long-term investments, and discharge its liabilities in the normal course of business. Recurring sourcof revenue have not yet proven to be sufficient. The Company needs to obtain additional financing to enable it continue its business. In the absence of additional financing, the Company may not have sufficient funds to meet obligations. Management continues to monitor the cash needs and consider various alternatives to raise additionfinancing. However, management is reasonably confident but can offer no guarantee that it will be able to secure thnecessary financing to enable the Company to continue as a going concern. These financial statements do not gieffect to adjustments that would be necessary should the Company be unable to continue as a going concern. There 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/classification of assets and liabilities and the loss for the period reported in these financial statements.

3. OPERATIONS

(a) Aerospace Unit

The Company, in association with ARINC Incorporated (www.arinc.com), has made an unsolicited proposal to tCanadian government to provide replacement jet aircraft for the Canadian Forces' Snowbirds aerial demonstratisquadron. In July of 2007, ARINC advised the Company that as a consequence of ARINC's decision to discontinue aircraft maintenance division, ARINC was withdrawing from further participation in the Company's Snowbirds' aircrareplacement proposal. As a direct result of the continuing delays in the Canadian government's decision with respectselecting a program to replace or upgrade the Snowbirds' aircraft, the Company is holding its Snowbirds' aircrareplacement proposal in abeyance pending receipt of a positive response from the Canadian government.

(b) 3D Graphics Unit

In November of 2006, the Company entered into a joint venture agreement (the "New JV Agreement") with 3DP NorAmerica, Inc., of Kenner, Louisiana; United Business & Capital Services, LLC of Kenner, Louisiana; EKG, LLC Lafayette, Louisiana and Armadillo Photo Supply, Inc. of Houston, Texas, creating a business venture, the 3DP NorAmerica Joint Venture (the "New JV"), to provide a range of advanced 3D products and print services for bocommercial and consumer markets. The Company has a 30% ownership interest in the New JV with 3DP NorAmerica, Inc., who acts as the managing venturer of the New JV, owning the remaining 70% of the business venturPursuant to the terms of the New JV Agreement, the Company advanced $600,000 USD of capital to the New JV anupon termination of the New JV, the company is entitled to its capital account share in assets of the New JV. TCompany has no management rights or further funding requirements or obligations with respect to the New JV. T

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Company's participation in the New JV is limited to the Company's right to receive 30% of the New JV's net profits and when such profits are distributed to the joint venturers in accordance with the terms and provisions of the New J

Agreement. The Company is only liable to the extent of its investment and is indemnified from the other joint venturefor any excess losses and liabilities. The New JV purchased two Chinese manufactured, specialized, 3D printprocessors with the first of these specialized 3D print / processors having been delivered to the New JVs Housto

Texas production facility in January of 2008 with the second of the specialized 3D print/processors having beedelivered in March of 2009.

(c) Mining and Resource Unit

The Company initially acquired a 3% interest, together with an option to acquire up to an additional 15% interest,Global Mineral Investments, LLC ("GMI"), a private U.S. corporation that proposes to lease and develop gold mininconcessions in West Africa. On August 31, 2007, GMI was awarded four Class B Gold Mining Licences (the GMining Licences) by the Ministry of Lands, Mines and Energy of the Republic of Liberia (the Ministry) for foseparate concessions (the GMI Concessions) located in the Sanquin Mining Zone, Sinoe County in the RepublicLiberia. In consideration of services that the Company rendered GMI, on September 6, 2007, the Company's ownershinterest in GMI was increased from 3% to 4%.

In July of 2008, the Company was advised by GMI that the GMI Mining Licences had been renewed by the Ministry for aadditional one year period.

On October 10, 2008 the Company announced that it has entered into a funding and operating agreement (the FundiAgreement) with GMI and a number of investors to raise, by way of a non-brokered private placement (the Offeringthe sum of $535,000.00 through the issue of 10,700,000 common shares at a price of $0.05 per share. On October 12008, the Company announced that its Offering had been oversubscribed by $10,000 with 10,900,000 common sharexpected to be issued for aggregate gross proceeds of $545,000. On October 21, 2008, the Company announced that tExchange had accepted for filing documentation with respect to the Offering and that pursuant to this acceptance, on closing, tCompany would be issuing 10,900,000 common shares for gross proceeds of $545,000 and on November 24, 2008 tCompany announced that the Offering had closed.

The announced use of the proceeds from the Offering was to fund GMIs gold dredging operations (the Propos

Dredging Operations) that GMI planned to carry out in those portions of the Upper Tartweh River system flowithrough the GMI Concessions; to acquire an additional 16% equity interest in GMI (giving Venga a 20% total interesand for general corporate purposes. The Company and GMI specifically agreed that the Funding Agreement did ncreate (whether directly or by implication) a partnership between the Company and GMI, nor did the Funding Agreemecreate, whether directly or indirectly, a joint venture between the parties. Under the terms of the Funding Agreemethe Company secured an immediate 20% investment interest in GMI with:

GMI retaining full and complete operational control of all GMIs business operations including, but not limited the Proposed Dredging Operations and Venga being given management of the financial affairs of the ProposDredging Operations;

Venga being given the entitlement to receive an annual financial management fee calculated as being tgreater of $120,000.00 or an amount equal to 1% of all monies received, disbursed or distributed by thCompany as the financial manager of the Proposed Dredging Operations;

Revenues derived from the recovery of all minerals other than gold, including diamonds, being for the benefitall parties to the Funding Agreement so that such revenues will be included in the calculation of the distributabprofits from the Proposed Dredging Operations that are payable to such parties pursuant to the terms of tFunding Agreement;

The records of the Ministry with respect to the GMIs Concessions to be amended to reflect Vengas dire

ownership of these concessions in a percentage that is equal to Vengas then equity ownership position in GM

Venga being granted an option over the next two years to acquire up to an additional 5% equity interest in GMat a cost of $100,000.00 per 1 % so acquired; and

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comprehensive income. Gains and losses are recognized when investments are sold. Income is recognized only to textent dividends are received.

(h) Impairment of Long-lived Assets

Long-lived assets, including capital assets, are amortized over their useful lives. The Company reviews long-liveassets for impairment when events or changes in circumstances indicate that the carrying amount may not

recoverable. If the sum of the undiscounted cash flows expected to result from the use and eventual disposition ogroup of assets is less than its carrying amount, it is considered impaired. An impairment loss is measured as tamount by which the carrying amount of the group of assets exceeds its fair value.

(i) Basic and Diluted Loss per Share

The Canadian Institute of Chartered Accountants ("CICA") recommends the use of the treasury stock method computing earnings/loss per share. Under this method, basic loss per share is computed by dividing earnings availabto common shareholders by the weighted average number of common shares outstanding during the year. In computithe loss per share on a fully diluted basis, the treasury stock method assumes that proceeds received from in-thmoney stock options are used to repurchase common shares at the prevailing market rate.

The weighted average number of common shares outstanding as of March 31, 2009 was 239,171,893 as compared to

March 31,2008, where the weighted average of common shares outstanding was 228, 271, 893.

(j) Revenue Recognition

Revenue is earned from the provision of consulting services, licence fees and providing 3D film print/processiservices. The Company recognizes revenue from consulting services when performance of the consulting services acomplete and recognizes revenue from the provision of 3D film print/processing services when the printed 3D imagare shipped to the customer. The licence fees represent an annual fee that the New JV is required to pay the Compafor use of the Company's CLIK 3D trade name. Deferred revenue is amortized to income as it is earned.

5.CHANGES IN ACCOUNTING POLICIES

On January 1, 2008, the Company adopted the revised CICA Handbook Section 1400 General Standards of Financ

Statement. Based on the revisions in this Section, the Company is now required to disclose any uncertainties relatedits ability to continue as a going concern. The Company has complied with these requirements and has made trequired disclosures in Note 2.

As of January 1, 2008, the Company will be required to adopt CICA Handbook Section 3031 Inventories whrequires that additional details be provided regarding the determination and recognition of inventories and tinformation to be presented. The adoption of this new section does not have any affect on the Companys financstatements for the period ended March 31, 2009.

As of January 1, 2008, the Company adopted CICA Handbook Sections 3862 - Financial Instruments Disclosures a3863 - Financial Instruments Presentation; which replaces the existing Section 3861 Financial InstrumentsDisclosuresand Presentation.

On January 1, 2008 the Company adopted CICA Handbook Section 1535 Capital Disclosures. In accordance wthis Section, the Company is required to disclose its objectives, policies and processes for managing capital. Thinformation is included in note 7.

Future Change in Accounting Policies

As of January 1, 2009, the Company has adopted CICA Handbook Section 3064 - Goodwill and Intangible Assets whreplaces CICA Handbook Sections 3062 - Goodwill and Other Intangible Assets and Section 3450 - Research aDevelopment Costs. The Company is assessing the impact of these new standards on its interim consolidated financstatements; however, the adoption is not expected to have a material impact on its interim consolidated financstatements.

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In 2006, the Canadian Accounting Standards Board (AcSB) published a new strategic plan that will significantly affefinancial reporting requirements for Canadian companies. The AcSB strategic plan outlines the convergence Canadian GAAP with IFRS over an expected five year transitional period. In February 2008, the AcSB announced th2011 is the changeover date for publicly-listed companies to use IFRS, replacing Canadas own GAAP. The date is interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. The transiti

date of January 1, 2011 will require the restatement for comparative purposes of amounts reported by the Company fthe year ended December 31, 2010. While the Company has begun assessing the adoption of IFRS for 2011, tfinancial 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 accruliabilities. It is the opinion of management that the Company is not exposed to significant interest risk arising from financial instruments. The fair values of these financial instruments approximate their carrying values, unless otherwinoted.

Foreign Currency Risk

Consulting contracts billed in U.S. dollars by the Company are recorded at the exchange rate in effect at the time sale, and are collected on standard trade payable terms. Excess U.S. dollar balances are converted to Canadian dollaon a regular basis. The Company does not enter into foreign currency hedges. Further devaluation in the U.S. dollrelative to the Canadian dollar could impact the Company's ability to continue at current sales growth rates and attacash positive operations as substantially all of the sales contracts are denominated in U.S. dollars.

7.CAPITAL MANAGEMENT

The Companys objectives when managing capital are to safeguard its ability to continue as a going concern to pursuthe development of its three business segments and to maintain a flexible capital structure which optimizes the cost capital within a framework of acceptable risk. In the management of capital, the Company includes share capitcontributed surplus and deficit.

The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions athe risk characteristics of the underlying assets. To maintain or adjust its capital structure, the Company may issue neshares, 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 capiand the Companys capital resources are largely determined by the strength of the junior public markets and by thstatus of the Companys projects in relation to these markets and its ability to compete for investor support of projects.

The Company is not subject to externally imposed capital requirements.

8. INVESTMENT IN NEW JV

The Company, which holds a 30% interest in the New JV has no management rights or ongoing funding requirements obligations with respect to the New JV. The Company's participation in the management and operation of the New JVlimited to the Company's right to receive 30% of the New JV's net profits or losses as and when such profits or losseare distributed to the joint venturers in accordance with the terms and provisions of the New JV Agreement. TCompany is only liable to the extent of its investment and is indemnified from the other joint venturers for any excelosses and liabilities. Upon termination of the New JV, the Company is entitled to its capital account share in net asseof the New JV.

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9. INVESTMENT IN PRIVATE COMPANY

Pursuant to the terms and provisions of the Funding Agreement, the Company, currently has a 20% (March 31, 20084%) interest with an option to acquire up to an additional 5% interest in GMI. The Funding Agreement provides that t

Company will participate in the profits generated through GMIs business operations in an amount that is equal to tCompanys then investment/equity interest in GMI. Aside from the Companys management of the financial aspectsthe Proposed Dredging Operation, for which the Company is entitled to receive a management fee, the Company hno management rights or ongoing funding requirements with respect to GMI or the Proposed Dredging Operation. TCompany and GMI have specifically agreed that no term, condition or provision in the Funding Agreement will act to,be deemed to, create or establish in law, or otherwise, a form of partnership between GMI and the Company nor will tterms, conditions and provisions of the Funding Agreement create, or be deemed to create or establish, in law otherwise, a joint venture between the Company and GMI with respect to the Proposed Dredging Operation otherwise.

10.CAPITAL STOCK

Authorized: Unlimited common stock and special shares without par value

Issued: March 31, 2009 March 31, 2008

239,171,893 228, 271, 893

$17,268,966 $16,723,966

11.INCOME TAXES

The Company has accumulated losses for income tax purposes totaling approximately $1,410,238 for which the tbenefits have not been recognized in the financial statements. These losses can be deducted from future years' taxabincome and expire as follows:

$

2009 47,8532010 113,7182014 345,2772015 244,7802026 219,4732027 80,4282028 358,709

1,410,238

12.SUBSEQUENT EVENTS

On April 30, 2009, the Company announced that GMI had started construction of an access road to GMIs GoldMatta mining slocated in the Sanquin Mining Zone, Liberia and that the mining equipment and supplies to be used in the Proposed DredginOperations had been delivered to the said GoldMatta mining site.

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interim financial statements march 31, 2009 - final

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