UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
Commission File number 0-15078
NOVA NATURAL RESOURCES CORPORATION
----------------------------------
(Name of Small Business Issuer in its charter)
Colorado 84-1227328
(State or other jurisdiction (I.R.S. Employer
Of incorporation Identification No.)
2951 Simms St. (954) 925-9502
Hollywood, Fl 33020 (issuer's phone number)
(Address of principal executive offices)
Securities registered under Section 12(b) of the Act: NONE
Securities registered under Section 12(g) of the Act:
Common Stock, $.10 Par Value
----------------------------
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12months (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 No X
---
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will 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-QSB or any amendment to
this Form 10-QSB. [X]
Issuer's revenues for its most recent fiscal year totaled: None
Documents Incorporated by Reference: None
Transitional Small Business Disclosure Format: Yes . No. X
--- ---
As of March 31 2003, the Registrant had outstanding no shares of Convertible
Preferred Stock, $1.00 par value issued and outstanding.
Number of Shares of Common Stock Outstanding $.10 par value as of March 31,
2003, 279,551,551
Transitional Small Business Disclosure Format YES NO XX
--- --
1
NOVA NATURAL RESOURCES CORPORATION
Index to Form 10-Q
PART 1. FINANCIAL INFORMATION
- -----------------------------
Item 1. Financial Statements.
Balance Sheets at March 31, 2003 (unaudited)
Statements of Operations and Accumulated Surplus for the three
months ended March 31, 2003 and 2002 (unaudited)
Statements of Cash Flow ended March 31, 2003 and 2002 (unaudited)
Report of Independent Registered Public Accountant Firm
Certificate of the CEO and CFO
Certificated pursuant to 18 U.S.C. Section 1350
Item 2. Management discussion and Analysis of Financial Condition and Results
of Operations
Item 3. Description of Business
Item 4. Significant changes in the company business
Item 5. Change in Control
Part 2. OTHER INFORMATION
- ----------------------------
Item 1. Common Stock
Item 2. Environmental
Item 3. Employees
Item 4. Capital assets
Item 5. Legal Proceedings
Item 6. Market for Common Equity and related Shareholder matters
Item 7. Material Subsequent Events
Signatures
2
NOVA NATURAL RESOURCES CORPORATION
BALANCE SHEET
AS OF MARCH 31, 2003
- --------------------------------------------------------------------------------
Unaudited
03/31/2003 03/31/2002
ASSETS ---------- ----------
Current
Cash in Bank $ 54,641 $ -
Accounts Receivable 288,919 288,919
Inventories - Note 2 73,584 73,584
Prepaid Expenses and Deposits 2,963 2,963
-------------------------------
420,107 365,466
Long Term
Capital Assets - Note 2 2,366,126 2,366,126
-------------------------------
2,366,126 2,366,126
2,786,233 2,731,592
-------------------------------
LIABILITIES
Current
Accounts Payable and Accruals 705,656 608,648
-------------------------------
STOCKHOLDERS' EQUITY
Common stock, $0.10 par value, 300,000,000
shares authorized; 270,832,724 shares issued
and outstanding 27,083,272 27,125,139
Additional Paid in Capital (19,455,716) (19,455,716)
Accumulated Surplus (Deficit) (5,546,979) (5,546,479)
-------------------------------
2,080,577 2,122,944
$ 2,786,233 $ 2,731,592
-------------------------------
3
- --------------------------------------------------------------------------------
NOVA NATURAL RESOURCES CORPORATION
STATEMENTS OF OPERATIONS AND ACCUMULATED SURPLUS
FOR THE PERIOD ENDED MARCH 31, 2003
- --------------------------------------------------------------------------------
Unaudited Unaudited
03/31/2003 03/31/2002
---------- ----------
Sales Revenue $ - $ 326,902
Less Cost of Sales - (225,504)
----------------------------------
Gross Margin - 101,398
Expenses:
Administrative 1,000 136,269
Financial and Selling - 1,779
----------------------------------
1,000
Income/(Loss) from Other Operations - 9,737
----------------------------------
Net Income/(Loss) for the period $ (1,000) $ (26,913)
==================================
Basic and diluted net income (loss) per share $ (0.0000) $ (0.0001)
==================================
Weighted Average Common Shares Outstanding 279,551,551 270,832,724
==================================
4
- --------------------------------------------------------------------------------
NOVA NATURAL RESOURCES CORPOATION
STATEMENTS OF CASH FLOW
FOR THE PERIOD ENDED MARCH 31, 2003
- --------------------------------------------------------------------------------
Unaudited Unaudited
03/31/03 03/31/02
-------- --------
Cash Provided by (Used in):
Operating Activities
Cash from Operations $ (1,000) $ (26,913)
Cash Provided from non cash items
Amortization - 55,151
Changes in operating assets and liabilities:
Decrease (Increase) in:
Accounts Receivable - (151,151)
Prepaid Expenses and Other - (2,926)
Inventory - 33,946
Accounts Payable and Accruals 1,000 91,108
------------------------------
1,000 (785)
Increase (Decrease) in Cash during the period - (785)
Cash Balance - beginning of period 54,641 12,635
------------------------------
Cash Balance - end of period $ 54,641 $ 11,850
------------------------------
5
- --------------------------------------------------------------------------------
NOVA NATURAL RESOURCES CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MARCH 31, 2003
UNAUDITED
- --------------------------------------------------------------------------------
1. Nature of Business
- --------------------------------------------------------------------------------
Nova International Corporation is an amalgamation of Nova Natural Resources
Corporation and Zhuhai Donghao Electronic Development Ltd. The latter was
formerly called Donghao Computer Enterprises Co. Ltd. It was renamed in
June 2000. The financial position these two corporation has been combined
using The "Pooling of Interest" method of business combinations.
2. Summary of Significant Accounting Policies
- --------------------------------------------------------------------------------
a. Inventories
Inventories are stated at the lower of cost and market, cost being
determined under the first-in, first-out method.
b. Capital Assets
Capital assets are stated at cost. Amortization is provided at rates which
are designed to write off the assets over their estimated useful lives.
c. Foreign Currency Translation
The assets, liabilities and operations of Zhuhai Donghao Electronic
Development Ltd. were measured in the currency of the People's Republic of
China ($RMB). The assets and liabilities have been translated to the United
States ($US) dollars at the current rate of $RMB 8.28 to $US 1.00. The
revenue, expenses, gains and losses of the corporation have been translated
using a weighted average of $RMB 8.28 to $US 1.00.
d. Revenue Recognition
Product sales are recognized upon shipment provided that persuasive evidence
of an arrangement exists, no significant obligations remain, the fee is
fixed and determinable and collectibility is considered probable. An
allowance for sales return is recorded at the time revenue is recognized
based on the corporation's historical experience.
6
- --------------------------------------------------------------------------------
NOVA NATURAL RESOURCES CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MARCH 31, 2003
- --------------------------------------------------------------------------------
3. Comparative Figure
- --------------------------------------------------------------------------------
Some of the comparative figures have been restated to conform to the current
year's financial statement presentation.
4. Receivable from Affiliated Parties
- --------------------------------------------------------------------------------
The receivable from affiliated parties are balances outstanding with various
divisions of the Torita Corporation Ltd. These receivables are not expected
to be collected within one year.
7
NOVA NATURAL RESOURCES CORPORATION
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
Nova Natural Resources Corporation
I have reviewed the Balance Sheet of Nova Natural Resources Corporation as of
March 31, 2003, and the Statements of Net Income and Cash Flows for the
three-month periods ended March 31, 2003 and March 31, 2002. These Financial
Statements are the responsibility of the Company's management.
I conducted my review in accordance with the standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board (United States), the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, I do not express such an opinion.
Based on my review, I are not aware of any material modifications that should be
made to the Financial Statements referred to above for them to be in conformity
with U.S. generally accepted accounting principles.
I have previously audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the Balance Sheet of Nova
Natural Resources Corporation as of December 31, 2002 and the related Statements
of Net Income and Cash Flows for the year then ended (not presented herein); and
in my report dated March 14, 2007, I expressed an unqualified opinion on those
Financial Statements. In my opinion, the information set forth in the
accompanying Balance Sheet as December 31, 2002, is fairly stated, in all
material respects, in relation to the Balance Sheet from which it has been
derived.
Eddy Chin
Chartered Accountant
Licensed Public Accountant
Thornhill, Ontario, Canada
June 5, 2007
8
EXHIBIT 31.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER AND
CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, David Putnam., certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Nova Natural
Resources Corp.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) [Paragraph omitted pursuant to SEC Release 33-8238];
c) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(d) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial date and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
9
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: June 6, 2007 By: /s/ David Putnam
David Putnam, Chief Executive
Officer and Chief Financial Officer
EXHIBIT 32.1
CERTIFICATION OF CEO AND CFO PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Nova Natural Resources Corp.
(the "Company") on Form 10-QSB for the period ended March 31, 2003 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), the
undersigned, David Putnam, as Chief Executive Officer and Chief Financial
Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best
of his knowledge that:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company at the dates and for the periods shown in such report.
Date: June 6, 2007 By: /s/ David Putnam
David Putnam, Chief Executive
Officer and Chief Financial Officer
10
Item 2. Management Discussion and Analysis
- -------------------------------------------
Management's discussion of anticipated future operations contains predictions
and projections which may constitute forward looking statements. The Private
Securities Litigation Reform Act of 1995, including provisions contained in
Section 21E of the Securities Exchange Act of 1934, provides a safe harbor for
forward-looking statements. In order to comply with the terms of the safe
harbor, the Company notes that a variety of factors could cause the Company's
actual results and experience to differ materially from the anticipated results
or other expectations expressed in the Company's forward-looking statements. The
risks and uncertainties that may affect the operations, performance, development
and results of the Company's business include, but are not limited to, the
following:
Liquidity and Capital Resources
The Company did not have adequate working capital during the quarter to operate
the facility. The facility was in a shut down mode and the assets remained at
the year end value pending disposition.
Forward-looking Information
This Form 10-QSB contains certain forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. For this purpose any
statements contained in this Form 10-QSB which is not statements of historical
fact may be deemed to be forward-looking statements. Without limiting the
foregoing, words such as "may", "will", "expect", "believe", "anticipate",
"estimate", or "continue" or comparable terminology are intended to identify
forward-looking statements. These statements by their nature involve substantial
risks and uncertainties and actual results may differ materially depending on a
variety of factors, many of which are not within the Company's control.
Item 3. Description of Business
- --------------------------------
Nova Natural Resources Corporation (the "Registrant", "Company" or "Nova") was
incorporated under Colorado Law on April 1, 1993 and is the surviving company in
a merger, effective February 1, 1995, of the Company and Nova Natural Resources
Corporation, a Delaware corporation. The merger was effected to change the
Company's domicile from Delaware to Colorado and caused no change in the
Company's capitalization. The Delaware Corporation was the successor to Nova
Petroleum Corporation and Power Resources Corporation, which merged in 1986.
Prior to that merger, Nova Petroleum Corporation and Power Resources Corporation
operated since 1979 and 1972, respectively.
Item 4. Significant changes in the Company business
- ----------------------------------------------------
On February 27, 2001, the Company closed a transaction pursuant to the terms of
an Asset Purchase Agreement dated February 9, 2001 (the "Agreement") with TORITA
DONGHAO LLC ("Torita Delaware"), a Delaware Corporation, by which Torita
Delaware acquired control of the Company.
Torita Delaware manufactures, markets, and sells electronic equipment, including
computer hardware, computer monitors, television sets, internet access devices
for use with TV sets, digital video devices (DVD's) and related equipment.
Torita Delaware's products are marketed in Southeast Asia. Its production
facilities occupy 128,000 square feet in Zhuhai City in the People's Republic of
China ("PRC") and include six manufacturing lines with an annual production
capacity of approximately 1 million PC's, 1 million DVD devices and 200,000 TV
sets. Torita Delaware owns 50% of the former cosmetics arm of Torita Group,
though this business line has not played a significant role in the Company's
operations. The Company wrote off its equity investment of $15,107 in the
cosmetics company in the fourth quarter of the fiscal year, since it is
uncertain whether this investment will be recoverable.
11
Torita Delaware was formed by the spin-off of the electronics and the cosmetics
divisions of the Torita Group of the PRC. Torita Group ("Torita"), a large,
diversified company with over ten years of operating history in China, was
composed of several divisions with diverse business interests. During calendar
year 2001, Torita went into receivership due to its large portfolio of
non-performing real estate assets. These assets are in the process of
disposition, a process expected to take several years to accomplish. Although
Torita Delaware and Torita are completely separate companies, this event caused
an indirect effect on the Company's ability to do business.
Historically, the Company's electronics manufacturing operations utilized
Torita's credit facilities as its major source of working capital. When the
Company became independent of Torita, it no longer had access to that capital,
but the relationship was retained with Torita's lenders, including the
maintenance of a $7 million line of credit with a local bank. . When Torita
subsequently went into receivership, even though the Company was no longer
affiliated with Torita, this line of credit was withdrawn. In addition, Torita's
bankruptcy filing caused many of the Company's existing suppliers to cut off
their credit terms with the Company, due to the past close association of the
two companies. These events made it much more difficult for the Company to
obtain credit in China. On March 16, 2003, pursuant to unanimous approval of the
board of directors of Nova, the Company authorized its president to secure a
convertible note from Henan Zhenyuen (Group) Co., LTD, and to appoint three new
Directors. The company appointed Ms. Li Wang, Mr. Yanbo Yin both Chinese
Nationals and reappointed Mr. Chris Tse. Mr. Tse was also appointed the
President and CEO of the company upon the resignation of its former President
Mr. Edward Chan. Mr. Chan also resigned as a Director of the company.
Additionally, Mr. Han Zhende of the Torita group resigned as a Director. The
note from Zhenyuen (Group) was never secured. The company secured funding from a
company called Good Creative Limited a BVI. This information was communicated in
an 8K filing and press release by the current management.
Item 5. CHANGE IN CONTROL
- ---------------------------
Effective at Closing of the Torita Delaware transaction, all of Nova's
officers and directors, except Brian B. Spillane, resigned, as contemplated by
the Agreement. Edward T. S. Chan, CEO of Torita Delaware, thereupon was named
President, Treasurer and a Director of the Company. Mr. Spillane resigned as
President, but remains a Director of the Company, and was appointed its
Secretary. Mr. Spillane continued his affiliation with the Company and continued
to maintain the Company's corporate office in Denver, Colorado at the request of
Torita Delaware. This request was not a requirement for approval of the
transaction by the Company's former Board of Directors. In September 2001, Han
Zhende and Chris Tse, both based in China, were appointed Directors of the
Company. Mr. Han is the Company's Chief Operating Officer, and is in charge of
the Company's electronics manufacturing operations in Zhuhai City, the People's
Republic of China. Mr. Tse resigned as Vice President and a Director of the
Company in November.
Upon effectuation of the Agreement, Torita Electronic (Hong Kong) Ltd. held
138,612,287 shares of the Registrant's $0.10 par value common stock, 59.5% of
the total common shares issued and outstanding, and therefore became the new
controlling shareholder of the Company. Affiliates of Torita Delaware controlled
an additional 32% of the then-issued and outstanding shares. The consideration
used to obtain such control was the acquisition by the Company of 100% of the
business and operating assets of Torita Delaware.
On March 16 2003 the board of directors accepted the resignation of Mr. Edward
Chan as the President and CEO and appointed my Chris Tse to the position of
President and CEO.
12
Part 2. OTHER INFORMATION
- ---------------------------
Item 1. Common Stock
- ----------------------
As of December 31, 2001 11,653,000 option shares were outstanding under the
Company's employee stock option plan. On June 10, 2002 Mr. Chan exercised
4,661,200 shares at .005 per share for a total of $23,306. Mr. Spillane
exercised 2,330,600 shares at .005 per share for a total or $11,653. As a result
of this issuance the remaining option shares outstanding under the Company's
employee stock option plan at December 31, 2003 is 1,553.
On May 31, 2002 the company issued the remaining balance of 1,727,027 from an
S-8 filing that was effective September 14, 2001. The filing was for 2,500,000
shares of which 636,364 shares were issued to Mr. Chan in lieu of salary and
136,609 shares were issued for legal services in October 2001. The balance of
1,727,027 was issued on May 31, 2002 as follows: Mr. Chan, 227,000 for a value
of $908, Mr Spillane, 1,200,000 for a value of $4,800, and Mr. Stubbs 300,027
for a value of $1,200.
Currently there are 279,551,551 common shares outstanding. There are no shares
of the Company's convertible preferred stock outstanding. Holders of Common
Stock are entitled to cast one vote for each share held of record on all matters
submitted to a vote of shareholders and are not entitled to cumulate votes for
the election of directors. Holders of Common Stock do not have preemptive rights
to subscribe for additional shares of Common Stock issued by the Company.
Holders of Common Stock are entitled to receive dividends as may be declared by
the Company's Board of Directors out of funds legally available for that
purpose, subject to the rights of the holders of the Company's Preferred Stock.
But currently No Preferred Stock has been issued. Holders of the Common Stock
and Preferred Stock have equal rights to all dividends declared and paid by the
Company. In the event of liquidation, holders of Common Stock are entitled to
share, pro rata, in any distribution of the Company's assets remaining after
payment of liabilities, subject to the preferences and rights of the holders of
Preferred Stock. The Company has not paid and has no current plan to pay
dividends.
Item 2. Environmental Regulations
- -----------------------------------
The Company is not currently subject to any pending administrative or judicial
enforcement proceedings arising under environmental laws or regulations.
Environmental laws and regulations may be adopted in the future which may have
an impact upon the Company's operations.
Item 3. Employees
- -------------------
At March 31, 2003, Nova had only one employee, its President & CEO, Mr. Chris
Tse
Item 4. Capital Assets
- -----------------------
The Company's capital assets located in the PRC, and consist of factory
machinery, electronic manufacturing and testing equipment, installation and
assembly equipment, packing equipment and microcomputers, factory computer and
audio equipment, a central computer system, and various small office machines
and office equipment were transfer back in exchange of the return of 138,612,287
shares of its common stock. The book value of these assets at December 31, 2002
was $2,366,126.
OFFICE LEASE AND EQUIPMENT
The company leases its manufacturing and office space in Zhuhai City, PRC on a
month to month basis. Due to the large amount of vacant space readily available
in Zhuhai City at reasonable cost, the company will not sign a long term lease.
Given the uncertainty of the business it is unlikely that any long term
commitment will be made.
13
INVENTORIES
The company valued the inventory at the same value as December 31, 2002,
$73,584,000 even thought it had idled the production facility. Management
believes that this inventory is still stated at the lower of cost and or market
value.
Item 5. Legal Proceedings
- --------------------------
The Company knows of no legal proceedings contemplated or threatened against it.
Item 6. Market for Common Equity and Related Shareholder matters
- -----------------------------------------------------------------
The Company's Common Stock is quoted on the OTC Bulletin Board under the symbol
"NVNJ" at 3/31/2003 and has had no trading activity. The number of record
holders of the Company's Common Stock as of December 31, 2003 was approximately
5000.
As of March 31, 2003 1,553 option shares were outstanding under the Company's
employee stock option plan.
On 13 August 2003 the shareholders of Nova Natural Resources Corp., by majority
consent authorized the Board of Directors to institute a 1 for 3000 reverse
stock split with no fractional shares to be issued. Nova, a Colorado Corporation
required two thirds majority for such action. The majority consent was approved
by two hundred two million one hundred sixth four thousand (202,164,000) votes
and constituted an approval in excess of the two thirds required. The board
approved the reverse and set the effective date for August 22, 2003. Further,
the shareholders authorized the Board of Directors to increase the common stock
authorized and issued to 50,000,000 shares following the implementation of the
reverse.
The Company has not paid any dividends on its Common Stock and does not expect
to do so in the foreseeable future. The Company intends to employ its cash flow
and earnings, if any, for working capital needs.
Item 7. Material Subsequent Events that occurred after the close of the
quarter;
On June 30, 2003 pursuant to majority shareholder consent and affirmed by
199,873,886 votes constituting 71.5% of the 279,551,551 shares issued and
outstanding as of June 28th 2003, the majority shareholders voted and approved
the appointment of Mr. Chris Tse as the Company President and Chief Executive
officer and the appointment to the Board of Directors. Mr. Edward Chan was
terminated as the President and Chief Executive Officer and removed from the
board of directors. This action was in response to the failure of Mr. Chan to
place into writing his verbal resignation as the President and from the Board of
Directors. This information was communicated in an 8K filing and press release
by the current management.
On 13 August 2003 the shareholders of Nova Natural Resources Corp., by majority
consent authorized the Board of Directors to institute a 1 for 3000 reverse
stock split with no fractional shares to be issued. Nova, a Colorado Corporation
required two thirds majority for such action. The majority consent was approved
by two hundred two million one hundred sixth four thousand (202,164,000) votes
and constituted an approval in excess of the two thirds required. The board
approved the reverse and set the effective date for August 22, 2003. Further,
the shareholders authorized the Board of Directors to increase the common stock
authorized and issued to 50,000,000 shares following the implementation of the
reverse. The majority shareholder consent also gave the Board the authorization
to negotiate the terms and conditions to sale the assets back to Torita.
14
On 11 November 2003 Nova entered into an agreement to divest of the core
business, the electronic assets the company had idled at 2002 year end. The
electronic business unit declined shortly after acquisition due to a slow down
in demand for existing products and a lack of immediate working capital required
for new product introduction. Revenue decreased significantly from 2001 of
$4.8MM to 2002 of $.4MM whereby the company was unable to continue operations.
Previous management was unsuccessful in efforts to raise the necessary working
capital in the time frame in which the business unit had opportunities for its
product. The decrease in demand, consumption of saleable inventory and lack of
working capital resulted in discontinuing the operations at year end 2002. The
business had remained idle while the new management team and board of directors
accessed the market conditions for the company products and production
capabilities. The current board of directors had determined that restarting the
operations created significant risk for its shareholders and determined that
raising funds with equity would be difficult if not impossible. Therefore, the
Directors approached the original owners and reached an agreement for the return
of assets in turn for the return of the Torita Electronic (Hong Kong) Ltd.,
common stock in the amount of 138,612,287 shares. This was the control block
originally issued for the assets but did not include stock issued for services
in connection with facilitation of the deal and payment for services. The
divesture agreement was entered into with Han Zhende, President of Torita
Electronic (Hong Kong) Company Ltd., and provided for the return of the assets
acquired from the original agreement, dated Feb 09 2001 between Torita Donghao,
LLC and Nova Natural Resource Corporation. The agreement provided for the return
of assets, assumption of all liabilities associated with the Chinese operation
in turn for the return to Nova the 138,612,287 shares of common stock originally
issued to Torita Electronic (Hong Kong) Ltd.
On 17 Jun 2004 Nova entered into an agreement to purchase the assets of two Gas
Stations located in Anyang City, Henan Province, China from Great Frame
International Enterprise Limited, a Hong Kong Company. The stations were
equipped with LPG refilling equipment. The stations along with a recently
acquired LPG conversion technology would allow Nova to continue the conversion
of additional vehicles within the Anyang market and expand into other markets
within the region. The stations had the capacity to generate in excess of two
million dollars in combined fuel alternatives, but the primary focus was to
convert and service LPG vehicles. This was due to higher gross margins and the
positive environmental impact. Nova intended to issue 600,000 shares of common
stock at an agreed price of $2.00 per share, for a total purchase price of
$1,200,000. The majority owner and President/Director of Great Frame
International Enterprise Limited was Wang Li; Ms Li was also a director of Nova.
Upon the completion of the proposed agreement Wang Li would have become the
largest shareholder of NOVA with approximately 45% of the issued and outstanding
shares.
This acquisition was designed to prove the LPG conversion technology was a
benefit for both Nova and the Chinese market. The average cost to convert a taxi
from gas to LPG was approximately $420 and the conversion cost for a bus was
approximately 25% higher. It was estimated that the average taxi would drive
450KM per day with a monthly fuel saving of $73.00, creating a pay back for the
driver in six months. The pay back for a bus was approximately one and a half
years, but combined with the positive environmental results the local
governments were eager to convert. The company expected the primary growth
revenue generator would be the refilling of the LPG vehicles; the current gross
margin was significantly higher than that of the non converted petrol vehicles.
Given the increasing vehicles entering the Chinese market and vast number of
vehicles that could benefit from the conversion the company worked for over one
year to try and bring this deal to a successful close. The company engaged
several outside parties in both the US and China to develop a successful
structure for the transaction whereby Nova would have full rights privileges and
true ownership of the assets identified in the deal. Although representatives of
Nova visited the sites of these assets, the deal was complicated by a transfer
of the state assets to the Hong Kong Company. This transfer could not be assured
was acceptable under Chinese Law, making the deal risky on the representations
made by Great Frame International and since Wang Li was a director of both
companies Nova consulted with additional resources. The company evaluated
several alternatives in restructuring the deal, but in meeting with Chinese
Accountants and Legal Advisors, it was determined that the transaction could not
be structured in a manner initially negotiated. This information was
communicated in an 8K filing and press release by the current management.
15
On 1 July 2005 Nova rescinded the agreement entered into on June 17, 2004 to
purchase the assets of two Gas Stations located in Anyang City, Henan Province,
China. The agreement previously entered into with Great Frame International
Enterprise Limited, a Hong Kong Company, provided that Great Frame would provide
written evidence that the agreement was in compliance with Chinese Laws and
procedures and that the assets described in the agreement were not encumbered in
any manner. Failing to comply with this requirement the company cancelled the
agreement. Additionally, Mr. Chris Tse President & CEO and Chairman of the
Board, accepted the resignation of Wang Li and Yin Yanbo as directors of the
company and decided to serve as sole officer and director of the company until
such time as qualified replacements could be selected. This information was
communicated in the form of an 8K filing by On March 15, 2007 the shareholders
of Nova Natural Resources Corp., by majority consent accepted the resignation of
the sole Director and Officer of the Company Mr. Chris Tse, appointed Mr. David
Putnam as the President & CEO and Chief Financial Officer of the Company,
appointed Mr. Putnam to serve as a Director of the Company, and appointed Mr.
Nick Laroche as a Company Director. This action was taken by the Shareholders of
the Corporation by a vote, or concurrence of the majority of the outstanding
shares. This action was approved in excess of the two third majority as required
by Colorado Law and the Company Articles of Incorporation.
On March 31, 2007 the newly appointed Board of Directors approved the
appointment of Mr. Putnam as the Company President & CEO and the majority
consent in reference to the appointment of the new Directors, Mr. Putnam and Mr.
Laroche. The New Board of Directors approved the issuance of 2,500,000 shares of
rule 144 restricted common stock for each of it new Directors. The Board of
directors authorized the President to proceed with the acquisition of the Lotta
Minutes Prepaid Calling Card transaction after reviewing the Executive Summary.
The Board authorized the President to proceed with securing the rights and
privileges in an asset acquisition structure whereby Nova Natural Resources
would acquire 100% of said rights and privileges. The President was authorized
to issue up to ten million (10,000,000) shares of Nova Natural Resources Rule
144 Restricted Common Shares and up to $500,000.00 (with the condition the funds
would be paid based upon a future funding or once the company has adequate
working capital) to secure rights.
On April 15, 2007 the Board approved the Lotta Minutes Pre-Paid Calling Card
transaction and authorized the President to issue ten million (10,000,000)
shares of Nova Natural Resources Rule 144 Restricted Common Stock to Glen Simon
for 100% of 2133185 Ontario Inc., for all rights and privileges concerning the
Lotta Minutes deal as defined in the Lotta Minutes Executive Summary and
documentation.
On April 30, 2007 the Board approved the consulting contracts with two outside
consultants to assist the company in its new venture. The consultants, Mr.
Aluwahlia and Mr. Wendlegoed will each receive 2,500,000 shares of rule 144
Restricted Common Stock at .01 for said services.
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NOVA NATURAL RESOURCES CORP.
----------------------------
Registrant
DATE: July 6, 2007 By: /S/ David Putnam
---------------------------
David Putnam
President & CEO and CFO
16