Interim Financial Statements - June 30, 2012 - SEDAR Final

7/31/2019 Interim Financial Statements - June 30, 2012 - SEDAR Final

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VENGA AEROSPACE SYSTEMS INC.

Condensed Interim Consolidated Financial Statementsfor the Three and Six Month Period Ended June 30, 2012

(Expressed in Canadian Dollars)

(Unaudited Prepared by Management)


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

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION(Expressed in Canadian Dollars)(Unaudited - Prepared by Management)

As at

June 30, 201

December 31, 20

$$

(Unaudite

(Audite

ASSETS

Current Assets

Cash and cash equivalents

631

5,108

Prepaids and sundry receivables

1,1

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1,8

5,1

Other Assets

Investment (Notes 3(b) and 10)51,051,0

Investment in Global Mineral Investments, LLC (Notes 3 (a) and 12)

485,4

485,4

Total Assets

538,2

541,5

LIABILITIES AND SHAREHOLDERS EQUITY

Current Liabilities

Accounts payable and accrued charges 26,014

20,772

Due to Directors (Note 7)

48,0

39,0

Total Liabilities

74,0

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59,7

Shareholders' Equity

Capital Stock

17,268,9

17,268,9

Contributed Surplus

890,6

890,6

Deficit

(17,695,44

(17,677,84

Total Equity

464,2

481,8

Total Liabilities and Shareholders' Equity

538,2

541,5

Going Concern (Note 2)

The accompanying notes are an integral part of these unaudited condensed interim consolidated financialstatements

Approved on behalf of the Board

"Hirsh Kwinter" (signed)

Director

"Dr. Ezra Franken ("signed")

Hirsh Kwinter

Dr. Ezra Franken

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Venga Aerospace Systems Inc.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS ANDCOMPREHENSIVE LOSS(Expressed in Canadian Dollars)(Unaudited - Prepared by Management)

Three Months Ended Six Months Ended

June 30, 2012 June 30, 2011 June 30, 2012 June 30, 20

EXPENSESOffice and general $ 5,101 $ 5,075 $ 11,950 $ 10

Professional fees 5,643 476 5,643 1

10,744 5,551 17,593 12

Net loss and comprehensive loss for the period $(10,744)

$(5,551)

$(17,593) (12,

Basic and diluted loss per common share $(0.00004) $ (0.00002) $ (0.00007) (0.00

Weighted average number of shares outstanding 239,171,893 239,171,893 239,171,893 239,171

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The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements


CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY(Expressed in Canadian Dollars)(Unaudited - Prepared by Management)

Share Capital

# of Shares AmountContributed

Surplus Deficit Total

Balance January 1, 2011 239,171,893 $ 17,268,966 $ 890,684 $ (17,501,620) $ 658,03

Net loss and comprehensiveoss for the six month periodended June 30, 2011 (12,594) (12,59

Balance June 30, 2011 239,171,893 $

17,268,966

$ 890,684 $ (17,514,214) $ 645,43

Net loss and comprehensiveoss for the six month periodended December 31, 2011 (163,635) (163,63

Balance December 31,011

239,171,893 $ 17,268,966 $ 890,684 $ (17,677,849) $ 481,80

Net loss and comprehensiveoss for the six month periodended June 30, 2012 (17,593) (17,59

Balance June 30, 2012 239,171,893 $ 17,268,966 $ 890,684 $ (17,695,442) $ 464,20

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CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW(Expressed in Canadian Dollars)(Unaudited - Prepared by Management)

Three Months Ended Six Months Ended

June 30, 2012 June 30, 2011 June 30, 2012 June 30, 20

OPERATING ACTIVITIES

Net Loss $ (10,744) $ (5,551) $ (17,593) $ (12,5

Changes in non-cash working capital items

Prepaids and sundry receivables (883) (319) (1,126)

Accounts payable and accrued charges (445) (5,515) 5,242 (14,30

Cash Flow Used in Operating Activities (12,072) (11,385) (13,477) (26,8

FINANCING ACTIVITIES

Loan from Directors 9,000 12,000 9,000 19,0

Cash Flow From Financing Activities 9,000 12,000 9,000 19,0

Net Increase (Decrease) in Cash (3,072) 615 (4,477) (7,8

Cash beginning of period 3,703 1,304 5,108 9,8

Cash end of period $ 631 $ 1,919 $ 631 $ 1,

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Notes to the Condensed Interim Consolidated Financial Statementsfor the Six Month Period Ended June 30, 2012(Expressed in Canadian Dollars)(Unaudited - Prepared by Management)

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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 BeSilver Mines Limited and Silver Monarch Mines Limited to become Frodac Consolidated Energy Resources LtOn July 25, 1985, the Company changed its name to Global Aerospace Systems Inc. and on November 3, 198

the Company further changed its name to Venga Aerospace Systems Inc.

In addition, these condensed interim unaudited consolidated financial statements include the wholly ownedsubsidiary Venga Joint Venture Ltd., which is inactive.

2. GOING CONCERN

These condensed interim unaudited consolidated financial statements have been prepared in accordance wIFRS applicable accounting principles to the presentation of interim financial statements and to a going concewhich assumes that the Company will be able to realize its assets, including the ultimate realization of its lonterm investments, and discharge its liabilities in the normal course of business. Recurring sources of revenhave not yet proven to be sufficient. The Company needs to obtain additional financing to enable it to continue 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 raadditional financing. However, management is reasonably confident but can offer no guarantee that it will be abto secure the necessary financing to enable the Company to continue as a going concern. These condensinterim unaudited consolidated financial statements do not give effect to adjustments that would be necessashould the Company be unable to continue as a going concern. There is no assurance that this will be successfu

If the going concern basis is not appropriate, material adjustments may be necessary in the carrying amounand/or classification of assets and liabilities and the loss for the period reported in these condensed interunaudited consolidated financial statements.

3. OPERATIONS

(a) Mining and Resource Unit

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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 proposed to lease anddevelop gold mining concessions in West Africa. On August 31, 2007, GMI was awarded four Class B GoldMining Licences (the GMI Mining Licences) by the Ministry of Lands, Mines and Energy of the Republic ofLiberia (the Ministry) for four, separate concessions (the GMI Concessions) located in the Sanquin MiningZone in the Republic of Liberia. In consideration for business and management services that the Companyrendered GMI, on September 6, 2007, the Companys ownership interest in GMI was increased from 3% to4%.

On October 10, 2008, the Company announced that it entered into a funding and operating agreement (theFunding Agreement) with GMI and a number of investors to raise, by way of a non-brokered privateplacement (the Offering or the Placement), the sum of $535,000.00 through the issue of 10,700,000common shares at a price of $0.05 per share. The announced use of the proceeds from the Offering was tofund GMIs Proposed Dredging


Notes to the Condensed Interim Consolidated Financial Statementsfor the Period Ended June 30, 2012(Expressed in Canadian Dollars)(Unaudited - Prepared by Management)

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3. OPERATIONS (continued)

(a) Mining and Resource Unit (continued)

Operations (the "Proposed Dredging Operations") that GMI planned to carry out in those portions of the UpperTartweh River system flowing through the GMI Concessions; to acquire an additional 16% equity interest inGMI (giving Venga a 20% total interest) and for general corporate purposes. The Company and GMIspecifically agreed that the Funding Agreement did not create (whether directly or by implication) apartnership between the Company and GMI, nor did the Funding Agreement create, whether directly orindirectly, a joint venture between the parties. Under the terms of the Funding Agreement, the Companysecured an immediate 20% investment interest in GMI with:

GMI retaining full and complete operational control of all GMIs business operations including, but notlimited to, the Proposed Dredging Operations and Venga being given management of the financial affairsof the Proposed Dredging Operations;

Venga being given the entitlement to receive an annual financial management fee (which fee, nor any

portion of same, has yet to be received by the company as of the date of these financial statements)calculated as being the greater of $120,000.00 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, including diamonds, being for thebenefit of all parties to the Funding Agreement so that such revenues will be included in the calculation ofthe distributable profits from the Proposed Dredging Operations that are payable to such parties pursuantto the terms of the Funding Agreement;

Subject to the approval of the Ministry, the records of the Ministry with respect to the GMIs Concessionsto be amended to reflect Vengas direct ownership of these concessions in a percentage that is equal toVengas then equity ownership position in GMI; and

Any additional mining concessions secured or negotiated by GMI or Venga in Liberia or West Africa to beacquired in the joint names of GMI and Venga reflecting the parties equal ownership of such additional

concessions.

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On July 18, 2011, the Company announced that GMI, in association with Kiwi, Inc. had signed an Exploration aDevelopment Agreement (the "Exploration Agreement") with Tawana Resources NL ("Tawana") wherein Ggranted Tawana exclusive exploration rights to the GMI Concessions (which exclusive exploration rights ahereinafter referred to as the "Sinoe Project") in Sinoe County, Liberia. Tawana paid GMI an initial exclusivoption fee to secure binding exclusivity and exclusive rights to due diligence over what Tawana has described GMI's 'highly prospective ground in Liberia'.

In an earlier July 13, 2011 press release, Tawana announced that pursuant to the terms of Exploration Agreemeand pending successful due diligence, Tawana had acquired from GMI, what Tawana described as a highprospective land package within arguably one of the most prospective Birimian gold structures currently beiexplored in Liberia. Tawana also confirmed that an aggressive field sampling and mapping program was to completed in the Sinoe Project and that it had retained the services of the GMIs site manager to build accetracks, additional camp facilities and maintain logistical supplies to facilitate exploration activities.

Pursuant to the terms of the Exploration Agreement, GMI, in association with Kiwi, Inc. will actively participate anassist Tawana in the development and operation of the Sinoe Project, retain and independently develop certaidentified gold mining sites within the Sinoe Project and continue to pursue GMI's current and planned godredging operations in the GMI Concessions.



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(a) Mining and Resource Unit (continued)

On August 16, 2011, the Company and Tawana issued separate press releases announcing that Tawana hsuccessfully completed its due diligence and that Tawana was proceeding with its planned acquisition of thexclusive exploration and development rights to the Sinoe Project. Tawana announced that pursuant to the termof the Exploration Agreement, it had paid GMI a $10,000 USD option payment to secure exclusive exploratiorights and had paid GMI a further $40,000 USD upon Tawana's successful completion of its due diligence. TExploration Agreement required Tawana to pay GMI a further $50,000 USD (the "Execution Payment") withinmonths of the commencement of Tawana's exploration in the Sinoe Project. Tawana announced it expected ththe initial soil sampling data would delineate high priority targets for a drilling program that would be commencin 2012. Tawana further announced that it would fully fund exploration operations at the Sinoe Project during tfirst year of the Exploration Agreement and then have the option (the "Tawana Option") to purchase the GConcessions outright from GMI through the payment to GMI of a combination of Tawana common shares acash.

On January 18, 2012, the Company announced that GMI had resumed its Liberian gold mining operations wdredging at GMI's Dugbe River site having begun on January 15, 2012. As of the date of these condensed interunaudited consolidated financial statements, the Company has yet to receive confirmation as to the continuity ato the results, if any, of GMI's dredge mining operations that were recommenced in January of 2012.

On February 6, 2012, Tawana announced that pursuant to the terms of the Exploration Agreement Tawana hpaid GMI the $50,000 USD Execution Payment. On February 7, 2012, the Company announced that Tawana hidentified several high priority soil anomalies from its ongoing geological exploration program at the Sinoe Projeand that Tawana had confirmed that it had received results from approximately 2,000 samples taken from its initsoil sampling program which confirmed two large, coherent and continuous + 30ppb soil anomalies with resultsup to 1 g/t providing confidence of significant mineralization occurring below within the explored area of the SinoProject. Tawana further announced that it was in the process of completing a further soil sampling and trenchiprogram, and subject to the results of these programs, was scheduled to commence drilling at the Sinoe Proje

during the second quarter of 2012.

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On March 12, 2012, Tawana announced the results from an additional approximately 1,300 soil sampling takfrom its maiden sampling grid. These additional results extended the known gold anomalism from a strike lengof 5.8 kilometers to a total strike length of 9 kilometers and having widths of between 400 meters to 1,600 meteThe anomalism is broadly defined by +30 ppb with the highest results returned at approximately 1 g/t.

(b) 3D Graphics Unit

In November of 2006, the Company entered into a joint venture agreement (the JV Agreement) with 3DP NorAmerica, Inc., of Kenner, Louisiana; United Business & Capital Services, LLC of Kenner, Louisiana; EKG, LLCLafayette, Louisiana and Armadillo Photo Supply, Inc. of Houston, Texas creating a new commercial entity, t3DP North America Joint Venture (the New JV), to provide a range of advanced 3D products and print servicfor both commercial and consumer customers. The Company retains a 30% ownership interest in the New JV w3DP North America, Inc., who acts as the managing venturer of the New JV, owning the remaining 70% of thventure.

(c) Aerospace Unit

The Company, in association with ARINC Incorporated (www.arinc.com), made an unsolicited proposal to tCanadian government to provide replacement jet aircraft for the Canadian Forces' Snowbirds aerial demonstratisquadron. As a direct result of the continuing delays in the Canadian government's decision with respect

selecting a program to



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(c) Aerospace Unit (continued)

replace or upgrade the Snowbirds' aircraft, the Company is holding its Snowbirds' aircraft replacement proposalabeyance pending receipt of a positive response from the Canadian government

4.BASIS OF PREPARATION

(a) Statement of Compliance

These condensed interim unaudited consolidated financial statements have been prepared using accountingpolicies consistent with the International Financial Reporting Standards (IFRS) issued by the Internationa

Accounting Standards Board (IASB) and Interpretations of the International Financial Reporting InterpretationsCommittee (IFRIC). These condensed interim unaudited consolidated financial statements have beenprepared in accordance with International Accounting Standard 34, Interim Financial Reporting. Accordinglythey do not include all of the information required for full annual financial statements required by IFRS as issuedby IASB and interpretations issued by IFRIC.

These condensed interim unaudited consolidated financial statements for the period ended June 30, 2012 havebeen prepared by management, reviewed by the Audit Committee and approved and authorized for issue by theBoard of Directors on August 22, 2012. Shortly thereafter, the financial statements are made available toshareholders and others through filing on the System for Electronic Document Analysis and Retrieva(SEDAR).

(b)Basis of Presentation

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These condensed interim unaudited consolidated financial statements have been prepared on the historical cosbasis except for financial instruments, which are measured at fair value. These financial statements have beenprepared using IFRS principles applicable to a going concern, which contemplate the realization of assets andsettlement of liabilities in the normal course of business as they come due. All amounts are presented in Canadiandollars, unless otherwise indicated.

(c)Adoption of New and Revised Standards and Interpretations

The IASB issued a number of new and revised International Accounting Standards, International FinanciaReporting Standards, amendments and related interpretations which are effective for the Companys financiayear beginning on or after January 1, 2011. For the purpose of preparing and presenting the financiastatements for the relevant periods, the Company has consistently adopted all these new standards.

At the date of authorization of these condensed interim unaudited consolidated financial statements, the IASBand IFRIC have issued the following new and revised Standards and Interpretations which are not yet effectivefor the relevant reporting periods.

IFRS 9 Financial Instruments IFRS 9 Financial Instruments is part of IASBs wider project to replace

IFRS 39 Financial Instruments: Recognition and Measurement. IFRS 9 retains but simplifies the mixedmeasurement model and establishes two primary measurement categories for financial assets: amortizedcost and fair value. The basis of classification depends on the entitys business model and the contractualcash flow characteristics of the financial asset. The standard is effective for annual periods beginning onour


Notes to the Condensed Interim Consolidated Financial Statementsfor the Period Ended June 30, 2012(Expressed in Canadian Dollars)

(Unaudited - Prepared by Management)__________________________________________________________________________________________

4.BASIS OF PREPARATION (continued)

(c)Adoption of New and Revised Standards and Interpretations (continued)

after January 1, 2015. The Company is in the process of evaluating the impact of the new standard on theaccounting for available-for-sale investment.

IFRS 10 Consolidated Financial Statements IFRS 10 establishes principles for the presentation andpreparation of consolidated financial statements when an entity controls one or more entities. IFRS 10

replaces the consolidation requirements of SIC-12 Consolidation Special Purpose Entities and IAS 27Consolidated and Separate Financial Statements and is effective for annual periods beginning on or afterJanuary 1, 2013. Earlier adoption is permitted. IFRS 10 builds upon existing principles by identifying theconcept of control as the determining factor in whether an entity should be included within theconsolidated financial statements of the parent company. The standard provides additional guidance toassist in the determination of control where this is difficult to assess. The Company is currently assessingthe financial impact of the new standard.

IFRS 12 Disclosure of Interests in Other Entities IFRS 12 is a new and comprehensive standard ondisclosure requirements for all forms of interests in other entities, including subsidiaries, jointarrangements, associates and unconsolidated structured entities. IFRS is effective for annual periodsbeginning on or after January 1, 2013. The Company is currently assessing the financial impact of thenew standard.

IFRS 13 Fair-Value Measurement IFRS 13 Fair Value Measurement aims to improve consistency and

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reduce complexity by providing a precise definition of fair value and a single source of fair valuemeasurement and disclosure requirements for use across IFRSs. The effective date of this new standardis for annual periods beginning on or after January 1, 2013. The Company is currently assessing thefinancial impact of the new standard.

5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These condensed interim unaudited consolidated financial statements follow the same accounting policies andmethods of application as the Company's most recent annual financial statement.

a) Basis of Presentation

The Company has prepared these comparative condensed interim unaudited consolidated financial statementson a consolidated basis which includes its wholly-owned subsidiary, Venga Joint Venture Ltd.

(b) Principles of Consolidation

These condensed interim unaudited consolidated financial statements include the accounts of VengaAerospace Systems Inc. ("the Company") and its subsidiary.

(c) Use of EstimatesThe preparation of these condensed interim unaudited consolidated financial statements in accordance with IFRrequires management to make judgments, estimates and assumptions that affect the application of accountipolicies and the reported amounts of assets, liabilities, revenues and expenses as well as the disclosure contingent assets and liabilities at the date of the financial statements. Judgments, estimates and underlyiassumptions are reviewed on a continuous basis and are based on managements experience and other factoincluding expectations of futu



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5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(c) Use of Estimates (continued)

events that are believed to be reasonable under the circumstances. Actual outcomes could differ from thoseestimates.

Significant areas of financial reporting the require managements estimates and judgements are as follows:

Accrued liabilities

The Company uses estimates to record the expenses that have been incurred but payments have not beenmade.

Impairment of long- term investments

The Company records impairment of long-term investments based on managements determination. Judgmentis required to determine the extent of impairment.

(d) Financial Instruments

Financial assets

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Financial assets are classified into three categories:

Fair value through profit or loss (FVTPL)

Held to maturity (HTM); and

Loans and receivables.

Financial assets at fair value through profit or loss (FVTPL)

A financial asset is classified at fair value through profit or loss if it is classified as held-for-trading or isdesignated as such upon initial recognition. Financial assets are designated as at FVTPL if the Companymanages such investments and makes purchase and sale decisions based on their fair value in accordancewith the Companys risk management strategy. Attributable transaction costs are recognized in profit or losswhen incurred. FVTPL are measured at fair value, and changes are recognized in the statements of operationsand comprehensive loss. Cash is categorized as FVTPL and is carried at fair value.

Held to maturity (HTM)

These assets are non-derivative financial assets with fixed or determinable payments and fixed maturities thatthe Companys management has the positive intention and ability to hold to maturity. These assets aremeasured at amortized costs using the effective interest method. If there is objective evidence that the asset is

impaired, determined by reference to external credit ratings and other relevant indicators, the financial asset ismeasured at the present value of estimated future cash flows. Any changes to the carrying amount of theinvestment, including impairment losses, are recognized in the statements of operations and comprehensiveloss.

Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted on an activemarket. Such assets are initially recognized at fair value plus any direct attributable transaction costs. Subsequeto initial



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(d) Financial Instruments (continued)

recognition, loans and receivables are measured at amortized cost using the effective interest method, less anyimpairment loss. The Company classified its financial assets which consisted of prepaids and sundryreceivables as loans and receivables.

Financial liabilities

Financial liabilities are classified as other financial liabilities. This category includes accounts payable and accrucharges and due to directors, all of which are recognized at amortized cost.

Impairment of financial assets

Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial asseare impaired when there is objective evidence that, as a result of one or more events that occurred after the initrecognition of the financial assets, the estimated future cash flows of the investments have been affected.

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For all financial assets, objective evidence of impairment could include:

significant financial difficulty of the issuer or counterparty; or it becomes probable that the borrower will enter bankruptcy or financial re-organization.

For certain categories of financial assets, such as receivables, assets that are assessed not to be impairedindividually are subsequently assessed for impairment on a collective basis. The carrying amount of financial

assets is reduced by the impairment loss directly for all financial assets except receivables, where thecarrying amount is reduced through the use of an allowance account. Subsequent recoveries of receivablespreviously written off are credited against the allowance account. Changes in the carrying amount of theallowance account are recognized in the statement of comprehensive loss. If, in a subsequent year, theamount of the impairment loss decreases and the decrease can be related objectively to an event occurringafter the impairment was recognized, the previously recognized impairment loss is reversed through thestatement of loss and comprehensive loss to the extent that the carrying amount of the investment at the datethe impairment is reversed does not exceed what the amortized cost would have been had the impairment notbeen recognized.

(e) Income Taxes

The Company uses the asset and liability method of accounting for income taxes under which future taxassets and liabilities are recognized for differences between the financial statement carrying amounts ofexisting assets and liabilities and their respective tax bases. Future tax assets and liabilities are measuredusing substantively enacted tax rates in effect in the year in which those temporary differences are expectedto be recovered or settled. The effect on future tax assets and liabilities of a change in tax rates is recognizedas part of the provision for income taxes in the year that includes the enactment date. A valuation allowance isrecorded to the extent there is uncertainty regarding realization of future tax assets.

(f) Translation of Foreign Currencies

Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchangeprevailing at the year end, non-monetary assets and liabilities are translated at historical rates and revenueand expenses are translated at the rate of exchange in effect on the transaction dates. Exchange gains andlosses arising on translation of monetary items are included in income in the year in which they occur.



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(g) Long-term Investments

Long-term investments are recorded at cost. Long-term investments classified as held-to maturity financialinstruments, are valued at amortized cost, with changes in valuation charged to operations. Long-terminvestments classified as available-for-sale financial instruments, are valued at fair market value, withchanges in valuation charged to comprehensive income. Long-term investments in equity instruments that donot have a quoted market price in an active market and whose fair value cannot be reliably measured aremeasured at cost gains and losses are recognized when investments are sold. Income is recognized only tothe extent 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-lived assets for impairment when events or changes in circumstances indicate that the carrying amount maynot 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

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is measured as the amount 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 methodin computing earnings/loss per share. Under this method, basic loss per share is computed by dividingearnings 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 assumesthat proceeds received from in-the-money stock options are used to repurchase common shares at theprevailing market rate. The weighted average number of common shares outstanding during the period was239,171,893 (2011 - 239,171,893).

(j) Revenue Recognition

Revenue is recognized to the extent that it is probable that future economic benefits will flow to the Companyand the revenue can be reliably measured. Revenue is measured at the fair value of the considerationreceived or to be received.

Revenue is earned from the provision of consulting services, licence fees and if and when the Companyreceives its share of profits from the Company's 3D graphics and mining and resources business units. TheCompany recognizes revenue from consulting services when performance of the consulting services are

complete and recognizes revenue from the Company's 3D graphics and mining and resources business unitswhen such profit distributions are received. Licence fees represent fees that the New JV is contractuallyrequired to pay the Company for use of the Company's CLIK 3D trade name.

6.CAPITAL STOCK

Authorized: Unlimited common stock and special shares without par value

Issued: June 30, 2012 June 30, 2011

239,171,893 239,171,893

$17,268,966 $17,268,966



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6.CAPITAL STOCK (continued)

As of June 30, 2012, the Company had not issued any warrants or options nor were there any outstandingwarrants or options.

7. RELATED PARTY TRANSACTIONS

Directors of the Company advanced the Company the sum of $48,000 as loans due and payable on demandwhich loans are non - interest bearing. These funds were to be used by the Company for its ongoingcorporate and business operations.

8.CAPITAL MANAGEMENT

The Companys 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

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optimizes the cost of capital within a framework of acceptable risk. In the management of capital, theCompany includes share capital, contributed surplus and deficit.

The Company manages the capital structure and makes adjustments to it in light of changes in economic conditionsand the risk characteristics of the underlying assets. To maintain or adjust its capital structure, the Company mayissue 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 operatingcapital and the Companys capital resources are largely determined by the strength of the junior public markets andby the status of the Companys projects in relation to these markets and its ability to compete for investor support ofits projects.

The Company is not subject to externally imposed capital requirements

10. INVESTMENT IN NEW JV

June 30, 2012June 30, 2011

$$

Investment, end of period

51,000

200,000

Pursuant to the terms of the JV Agreement, and in order to provide the New JV with working or operational capital,the Company advanced $600,000 USD to the New JV. The Company has no management rights or furtherfunding requirements or obligations with respect to the New JV. The Companys participation in the New JV islimited to the Companys right to receive 30% of the New JVs net profits as and when such profits are distributedto the joint venturers in accordance with the terms and provisions of the New JV Agreement. As a consequence ofboth the continuing delays in the New JV becoming operational and the New JVs outstanding and unfulfilledobligation to pay the Company a licensing fee as required pursuant to the terms of the New JV Agreement,Management elected in 2008 to take write down its investment interest in the New JV for



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10. INVESTMENT IN NEW JV (continued)

impairment to $300,000 and to take a further write down for impairment loss of $100,000 in 2010. With the New JVcontinuing to experience delays in becoming operational and following an appraisal by 3DP North America Inc. ofthe fair market value of JVs assets, management decided to record a further impairment loss of $149,000 of the

Company's interest in the New JV in 2011.

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The Company is only liable to the extent of its investment and is indemnified from the other joint venturers for anyexcess losses and liabilities. Upon termination of the New JV, the Company is entitled to its capital account sharein net assets of the New JV.

11. VENGA'S LICENCE FEE

Pursuant to the terms of the New JV Agreement, the Company granted the New JV a licence (the "Venga Licence")during the currency of the New JV Agreement to use, market, operate and commercially exploit the business tradename 'CLIK 3D'. In consideration of the Company's granting of the Venga Licence, the New JV agreed to pay Venga,the sum of fifty thousand ($50,000.00) dollars (the "Venga Licence Fee") each year or part year during the currencyof the New JV Agreement. Notwithstanding the terms of the New JV Agreement, the New JV has failed to pay theCompany the required Venga Licence Fee for the years 2006 through 2011. The Company has advised the New JVthat the Company is not waiving any right to recover any portion of the accumulated, unpaid and outstanding amountfor the Venga Licence Fee and that the Company is and continues to regard the accumulated, unpaid andoutstanding amount for the Venga Licence Fee a valid, legal debt owed by the New JV to the Company. However, inaccordance with the Companys significant accounting policies with respect to revenue recognition, revenue withrespect to Vengas licence fee has not been recorded for the periods ended June 30, 2012 or June 30, 2011.

12. INVESTMENT IN GLOBAL MINERAL INVESTMENTS LLC

Pursuant to the terms and provisions of the Funding Agreement, the Company, currently has a 20% (June 30,2011 - 20%) interest. The Funding Agreement provides that the Company will participate in the profitsgenerated through from the Companys management of the financial aspects of the Proposed DredgingOperation, for which the Company is entitled to receive a management fee in accordance with the terms of theFunding Agreement, the Company has no management rights or ongoing funding requirements with respect toGMI or the Proposed Dredging Operation. The Company and GMI have specifically agreed that no termcondition or provision in the Funding Agreement will act to, or be deemed to, create or establish in law, orotherwise, a form of partnership between GMI and the Company nor will the terms, conditions and provisions ofthe Funding Agreement create, or be deemed to create or establish, in law or otherwise, a joint venture betweenthe Company and GMI with respect to the Proposed Dredging Operation or otherwise.

As of the date of these condensed interim unaudited consolidated financial statements the Company has yet toreceive confirmation as to the results of GMI's dredge mining operations that were recommenced in February,2011. On April 11, 2011, the Company announced that GMI had signed a funding and operational agreemen(the "Operational Agreement") with Kiwi, Inc., a Liberian based mining company to fund and manage GMI'sdredge mining and planned land based mining operations at GMI's Kumasi Hill 15 and Kumasi Hill 18concessions ("GMI's Planned Land Based Operations") located in Sinoe County, Liberia. Pursuant to the termsof the Operational Agreement, Kiwi, Inc. agreed to commence full mining operations at GMI's two Kumasi Hilsites by October 1, 2011. While the Corporation has received confirmation from GMI that the original October 12011 date for the commencement of mining operations at GMI's two Kumasi Hill sites has been extended, as ofthe date of these condensed interim



____________________________________________________________________________________________

12. INVESTMENT IN GLOBAL MINERAL INVESTMENTS LLC (continued)

unaudited consolidated financial statements the Company has yet to receive confirmation as to when, or even if,such

mining operations will begin. The Operational Agreement further provides that Kiwi, Inc. will have full operationa

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management of GMI's dredge mining operations and Planned Land Based Operations, with all profit derivedfrom such operations being divided equally between Kiwi, Inc. and GMI.

In Managements opinion the investment in GMI is not impaired as of June 30, 2012.

13. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

(a) Measurement and Fair Value

The Companys financial assets and liabilities are classified and measured as follows:

Classification Measurement Fair ValueJune 30, 2012

Fair vaJune 30, 2

$

$

Financial assets:

Cash and cash equivalent

Prepaids and sundry receivables

Held for trading

Loans and receivables

Fair value

Amortized cost

631

1,191

1,

Financial liabilities:

Accounts payable and accrued charges

Due to Directors

Other financial liabilities

Other financial liabilities

Amortized cost

Amortized cost

26,014

48,000

23,

19,

Fair value is the amount at which a financial instrument could be exchanged between willing parties, based onthe current markets for instruments with the same risk, principal and remaining maturity. The fair values of theCompanys financial instruments approximate their carrying values because of the short-term nature of theseinstruments.

Financial instruments recorded at fair value at the balance sheet date are classified using a fair value hierarchythat reflects the significance of the inputs used in making the measurements. The fair value hierarchy has thefollowing levels:

Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identicalassets or liabilities.

Level 2 fair value measurements are those derived from inputs other than quoted prices included within level 1that are not observable for the asset or liability, either directly(i.e. as prices) or indirectly (i.e. derived from prices);and

Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset orliability that are not based on observable market data.



_________________________________________________________________________________________

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13. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)

(a) Measurement and Fair Value (continued)

The fair value of cash is measured based on Level 1 inputs referred to in the three levels of the hierarchy notedabove. The Company does not have any Level 2 or 3 fair value measurements. There have been no significanttransfers between levels.

(b) Risk

The Company has exposure to a credit risk; liquidity risk; foreign currency risk and interest risk from its usefinancial instruments. The Company's cash is held in major Canadian banks and their subsidiaries. Managemeapproves and monitors the risk management process. There has been no change in the Company's rmanagement process for the period ended June 30, 2012.

Credit Risk

Credit risk represents the financial loss that the Company would experience if a counterparty to a financinstrument failed to meet its obligations to the Company. Cash consists of cash bank balances held in a majCanadian financial institution. As a result, there is no significant credit risk related to the Company's assets. Tcarrying amounts of this financial asset represent the maximum credit exposure.

Liquidity Risk

The Company ensures, including arranging a loan from a director, that there is sufficient capital in order to meshort-term business requirements after taking into account the Company's holdings of cash. The Company's cais held in major Canadian banks and their subsidiaries. As of the period ended June 30, 2012, the Company hcash of $631 and thus the Company faces a liquidity risk.

Foreign Currency Risk

While the Company's functional currency is the Canadian dollar, the Company is subject to normal market risincluding fluctuations in foreign exchange rates. The Company has not entered into any derivatives or contracto hedge or otherwise mitigate this exposure. As at June 30, 2012, the Company held no financial instrumensubject to foreign exchange rates.

Interest Rate Risk

Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes market interest rates. The risk that the Company will realize a loss due to a change in interest rates is limitbecause the Company as at June 30, 2012, had no interest bearing financial assets or liabilities.

14. COMMITMENTS AND CONTRACTUAL OBLIGATIONS

The Company had no contractual or other obligations as at June 30, 2012.

15. SUBSEQUENT EVENTS

On July 27, 2012 the Company announced that GMI had released a National Instrument ("NI") 43-101 compliareport (the "Technical Report") which determined that the GMI Concessions were 'an exploration project of meand recommended that a more comprehensive, two phase exploration programme be carried out. The TechnicReport,


Notes to the Condensed Interim Consolidated Financial Statementsfor the Period Ended June 30, 2012(Expressed in Canadian Dollars)

(Unaudited - Prepared by Management)

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_________________________________________________________________________________________

15. SUBSEQUENT EVENTS (continued)

which is compliant with NI 43-101 and companion policy NI 43-101CP and Form 43-101FI, was prepared independent Qualified Person Pierre C. LaBrque P.ENG. of La Prairie, Quebec.

For the purposes of preparing the Technical Report, Mr. LaBrque visited the GMI Concessions for a ten dperiod in May of 2012 and relied on information gained from published geological reports including the UGeological Survey of Liberia and Tawana Tawana's 2011 and 2012 geochemical surveys and from the direct, osite discussions that Mr. LaBrque had with GMI's representatives who were familiar with the GMI Concessioand the area in general. The Technical Report affirmed Mr. LaBrque's opinion that all information set out in treport, and the conclusions on which such information is based, should be considered reliable.

The Technical Report confirmed that the GMI Concessions are underlain by Precambrian rock formations whbelong to the West African Precambrian (Guinean) shield and that the Dugbe Shear, a major east/west structufeature in the area, is believed to cross the central part of the GMI Concessions. The Technical Report furthnotes that Tawana's geochemical survey clearly outlined two anomalous zones in the GMI Concessions that wecharacterized by more than 30 ppb Au and up to 1 g/t in soils. Mineralization in the GMI Concessions, the repstated, mainly consists in "native gold occurring as a fine powder/dust and in flakes of different sizes" and"present in both the alluvial and the eluvial parts" of the GMI Concessions' overburden. The Technic

Report confirmed that a few surface samples were taken from various parts of the GMI Concessioand forwarded to Laboratoire D'Analyse Bourlamaque Lt e. of Val d'Or, Quebec for analysis to 'verify tpresence of gold". The results of the sampling programme showed up to 1.49 g/t which confirmed the "presenof gold" in the GMI Concessions and which results "should spur on further exploration".

In the conclusion to his report, Mr. LaBrque wrote:

"The geology underlying the exploration licence of Global Mineral Investments, LLC is most favourableto host gold deposits in the underlying geological formations and in the overlying overburden (placerdeposits). The area under consideration, encompassing the property of GMI, is host to a number ofgold artisanal mining operations. Several places are still actively mined by those informal miners andseveral other places have been in the past targets of such operations.

There are several interpreted possible shear zones which have been outlined within the limits of the

exploration licence. The most prominent is the eastern extension of the Dugbe shear zone whichcrosses the middle part of the concession.

As all experienced explorationists are aware, features like the presence of shear zones are positive forgold exploration. The fractures and stockwork generated by shearing/faulting favour the formation ofauriferous quartz veins and lenses, so their presence cannot be overlooked.

Some 20-40 km east of the limits of the licence of GMI, major discoveries have unveiled two deposits(Hummingbird) totaling some 2.8 Moz Au while Equator Resources will drill test the Bukon Jedeh Goldanomaly in order to determine its economic potential. All these gold occurrences are located in theneighbourhood of the Dugbe shear.

In a general way, the geology in the surroundings of the Hummingbird and Equator discoveries is thesame as that underlying the exploration licence of GMI. So, gold deposits may be found in both places,

in the bedrock and in the overburden as alluvial and eluvial placers."

The author of the Technical Report, Mr. Pierre LeBrque, graduated from the cole Polytechnique (Facuof Engineering), University of Montreal in 1971 with a B.A. Sc. degree in Geological Engineering. MLeBrque has practiced his profession continuously since his graduation and has extensive experience in phases of mini


Notes to the Condensed Interim Consolidated Financial Statements

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for the Period Ended June 30, 2012(Expressed in Canadian Dollars)(Unaudited - Prepared by Management)

_________________________________________________________________________________________

15. SUBSEQUENT EVENTS (continued)

exploration and development in both Canada and internationally, including participating in mining projects situatinsuch countries as Madagascar, Sierra Leone, Angola, Nigeria, Algeria, Mali, Peru, Bolivia, Mongolia aKazakhstan. The mining operations that Mr. LeBrque has participated in have included the exploration adevelopment of gold, silver, uranium, zinc, lead, bentonite and kieselghur projects. Mr. LeBrque is a membergood standing of the Order des Ing nieurs du Quebec which is an official association legally created the Government of Quebec to supervise the practice of professional engineering and applisciences. Mr. LeBrque was a member of an advisory committee that provided recommendations to tSecurities Commission of Quebec concerning the guidelines used to accept technical reports produced to suppopublic financing of mining exploration companies.

On July 27, 2012 the Company further announced that it has been advised by GMI that Tawana and GMI havagreed to extend the option period within which Tawana has to finalize its purchase of the GMI Concessions September 28, 2012 from the originally stipulated date of June 28th 2012.

On July 27, 2012 the Company further announced that GMI has advised the Company that the Ministry hrevoked GMI's exploration licence for the GMI Concessions for alleged regulatory breaches. The Companpress release further provided a statement from Jon O'Regan, GMI's President, asserting GMI's position that tMinistry's actions were "unwarranted" and that GMI was taking the "necessary steps to resolve this situation."

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Documents

Interim Financial Statements - June 30, 2012 - SEDAR Final