The accompanying notes are an integral part of these unaudited consolidated financial statements.
The accompanying notes are an integral part of these unaudited consolidated financial statements.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
Note 1 – Basis of Presentation
Nature of Business
Novagen Ingenium Inc. (referred to herein collectively with its subsidiaries as "Novagen" and the "Company"), was incorporated in the State of Nevada, U.S.A., on June 22, 2005 under the name of Pickford Minerals, Inc. Since then, the Company has changed its name to Novagen Ingenium, Inc., and formed or acquired various subsidiaries which are in the business of engine design and development, precision engineering services and industrial services supply.
Novagen operates from leased premises situated at Arundel, Queensland, Australia for use as an office, workshop, prototype machine shop and engine assembly shop. Novagen also operates from shared premises situated at Ernest, Queensland, Australia for precision engineering services, CNC machining and production machining services. Further, Novagen operates administrative and office activities from shared leased offices located at Oro Valley, Arizona USA.
Engine Development
The reciprocating internal combustion engine has been in commercial operation for more than a century with many advances in technical operation resulting in numerous differentiated designs, including two stroke, four stroke, rotary, turbine, radial, in-line, v block, boxer, side valve and overhead engines. Over the past century, in-line and V-block engines have become the dominant configurations in non-aircraft commercial applications. Modern engines have seen the inclusion of radical technologies such as staggered crank shaft journals, piston coolers, complex computer electrical control systems and other advancements which are now mainstream features. Novagen is focused on new geometric configuration design engines. Novagen intends to develop engines based on disruptive innovative designs and technology that can be powered by gasoline, diesoline, biofuels, liquid petroleum gas, steam, permanent magnets and other alternative power sources.
The Novagen Y Engine;
On July 5, 2012 Novagen acquired all the issued and outstanding shares of Y Engine Developments Pty Ltd., an Australian company, from Micheal Nugent, the President and CEO of Novagen. Y Engine Developments was the owner of all of the intellectual property, patentable rights, prototype models and associated machinery and parts of the opposing piston, divaricate cylinder Y engine (The Novagen Y Engine). On October 14, 2012, Novagen filed for patent protection of the Novagen Y-Engine with the United States Patent and Trade Mark Office. On November 2, 2012, Novagen filed an updated patent application and is currently preparing the utility patent application. The Novagen Y Engine (patent pending) under development is a new design engine configuration that utilizes opposing pistons and three angled cylinders with 180º crank journals.
The Renegade V-Twin Custom Motorcycle Engine;
On June 1, 2012 Novagen acquired all of the issued and outstanding shares of R Urban Streetwear Pty Ltd (formally Renegade Engine Company Pty Ltd) (Renegade). Renegade was in the business of design, manufacture and distribution of V-Twin engines, custom motorcycles and related urban clothing under the Renegade brand. On March 26, 2015, Novagen sold R Urban Streetwear Pty Ltd. to a related party for AU$1, but retained the Renegade trademark, engine manufacturing design, development and manufacturing operations. Renegade Engine Company, a division of Novagen Precision Engineering Services Pty Ltd, designs, develops and manufactures high end custom motorcycle V Twin motorcycle engines. Renegade has supplied USA legendary custom motorcycle manufacturer, Jesse James with engines and parts in line with developing a branded Jesse James Renegade V-Twin engine. This work is ongoing.
Novagen Precision Engineering;
On April 22, 2013 Novagen acquired all of the plant, equipment and inventory of N.C. Precision Engineering Pty Ltd., a precision engineering business located in Ernest, Queensland, Australia. Novagen utilizes the plant and equipment, which is a full-service precision engineering and production manufacturing facility to develop prototype parts for the Novagen Y engine, new parts for the Renegade V-Twin custom motorcycle engine and other components including tooling as required.
Industrial Supply Services;
Novagen supplies industrial services such as specific vehicle supply, labor supply and engineering services on a commercial basis.
On September 18, 2015, the registrant and Roadships Holdings Inc, A Delaware corporation (Roadships”) entered into a share exchange agreement under which Novagen agreed to purchase from Roadships all of the issued and outstanding shares of Roadships.US, Inc. a Nevada company. Roadships.US, Inc. owns assets and intellectual property relating to transport and shipping.
From October 2015 through June 2016, Novagen supplied branded vehicles to Tautachrome, Inc. for a promotional tour of Universities in Australia.
From November 2016, Novagen has been supplying branded transport equipment to K Bees Transport, a division of Syndicated Transport and Trucking Pty Ltd.
On December 15, 2016 Novagen Precision Engineering Pty Ltd registered Novagen Truckfix as a trading name in Australia to carry out commercial work in the sales, service and repair of transport vehicles.
Basis of Presentation
The interim consolidated financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in U.S. Dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.
These statements reflect all adjustments, which in the opinion of management, are necessary for fair presentation of the information contained therein. Except as otherwise disclosed, all such adjustments are of a normal recurring nature. These interim condensed financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2015 and notes thereto included in the Company’s Annual Report on Form 10-K, filed with the Commission on June 6, 2016. The Company follows the same accounting policies in the preparation of interim reports.
Note 2 – Going Concern
As shown in the accompanying financial statements, the Company incurred net losses from operations resulting in an accumulated deficit of $3,313,698, and a working capital deficit of $1,380,501 as of March 31, 2016. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company is currently in search of additional sources of capital to fund short term operations. The Company, however, is dependent upon its ability to secure equity and/or debt financing and there are no assurances that the Company will be successful; therefore, without sufficient financing it would be unlikely for the Company to continue as a going concern.
The financial statements do not include any adjustments that might result from the outcome of any uncertainty as to the Company’s ability to continue as a going concern. The financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 3 – Related Party Transactions
During the three months ended March 31, 2016, we had borrowings from related parties of $58,914 and repaid $50 to related parties and accrued an additional $12,143 in interest.
The Company evaluated the terms of the above related-party notes in accordance with ASC Topic No. 815 – 40,
Derivatives and Hedging - Contracts in Entity’s Own Stock
and determined that the underlying common stock is indexed to the Company’s common stock. We determined that the conversion features did not meet the definition of a liability and therefore did not bifurcate the conversion feature and account for it as a separate derivative liability. The Company further analyzed the convertible debts for a beneficial conversion feature under ASC 470-20 on the date of the notes and determined that no beneficial conversion feature exists.
Note 4 – Notes Payable
During the three months ended March 31, 2016, we borrowed AU$15,000 (US$10,828) on a previously-existing promissory note (on which we had a balance before this borrowing of AU$100,000 (US$72,831). That note bears interest at 5%, is callable by the maker at any time, and is convertible to common stock at $0.10 per share.
In addition, we borrowed AU$20,000 (US$14,438) from an unrelated party with whom we do not have a formal promissory note.
The Company evaluated the terms of the above third-party note in accordance with ASC Topic No. 815 – 40,
Derivatives and Hedging - Contracts in Entity’s Own Stock
and determined that the underlying common stock is indexed to the Company’s common stock. We determined that the conversion features did not meet the definition of a liability and therefore did not bifurcate the conversion feature and account for it as a separate derivative liability. The Company further analyzed the convertible debts for a beneficial conversion feature under ASC 470-20 on the date of the notes and determined that no beneficial conversion feature exists.
At December 31, 2015, we had $45,982 in unpaid interest to unrelated parties. During the three months ended March 31, 2016, we accrued an additional $6,074 in interest and paid none of the outstanding interest balances. At March 31, 2016, we adjusted the account to reflect the period end currency exchange rate and recorded an unrealized loss in that account of $4,687. At March 31, 2016, we have unpaid interest to unrelated parties of $56,743.
Note 5 – Stockholders’ Equity
We issued no common or preferred stock during the three months ended March 31, 2016.
For the three months ended March 31, 2016, we imputed $2,019 on several non-interest-bearing notes.