UNITED
STATES
  SECURITIES
AND EXCHANGE COMMISSION
  Washington,
D.C. 20549
  FORM
10-K
  
 [X]
              ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
 For the fiscal year ended December 31,
2008
 Or
 
 [
]           TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
 EXCHANGE ACT OF 1934
 
 For the transition period from
_________ to _____________
 
 
 Commission
file number: 000-51139
 
  NAVIDEC FINANCIAL SERVICES,
INC.
  (Exact
name of registrant as specified in its charter)
  
 Colorado
              
              13-4228144State
      or other jurisdiction of incorporation or organization
              
              I.R.S.
      Employer Identification No.2000
      South Colorado Boulevard, Suite 200, Denver, CO 80222(Address
      of principal executive offices) (Zip Code)Registrant’s
      telephone number, including area code:
                (303)222-1000Securities
      registered pursuant to Section 12(b) of the Act:Title
      of each class registered
              
              Name
      of each exchange on which registeredNot
      Applicable
              
              Not
      ApplicableSecurities
      registered pursuant to Section 12(g) of the Act:Common Stock
                (Title
      of class)
  
  
 Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
 Yes |_| No |X|
 
  Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.
 |_|
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (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 |X| No |_|
 
 Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (ss. 229.405 of this chapter) is not contained herein, and will
not 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-K
or any amendment to this Form 10-K. |X|
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See definitions of “large accelerated filer,” “accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check
One).
 
 Large
      accelerated filer
              [___]
              
              Accelerated
      filer
              [___]Non-accelerated
      filer
                (Do
      not check if a smaller reporting company)
              [___]
              
              Smaller
      reporting company
              [_X_]
 
 Indicate
by check mark whether the Registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
 Yes |_| No |X|
 
 The
aggregate market value of voting stock held by non-affiliates of the registrant
was approximately $4,568,000 as of December 31, 2008.
 
 There
were 9,019,057 shares outstanding of the registrant's Common Stock as of March
30, 2009.
  
  TABLE OF CONTENTS
 
 PART
      IPageITEM
      1
                
                Business
                1ITEM
      1 A.
                
                Risk Factors
                7ITEM
      1 B.
                
                Unresolved Staff Comments
                17ITEM
      2
                
                Properties
                18ITEM
      3
                
                Legal Proceedings
                18ITEM
      4
                
                Submission of Matters to a Vote of Security
      Holders
                19PART
      IIITEM
      5
                
                Market for Registrant’s Common Equity, Related Stockholder
      Matters and Issuer Purchases of Equity Securities
                19ITEM
      6
                
                Selected Financial Data
                22ITEM
      7
                
                Management’s Discussion and Analysis of Financial Condition
      and Results of Operations
                22ITEM
      7 A.
                
                Quantitative and Qualitative Disclosures About Market
      Risk
                27ITEM
      8
                
                Financial Statements and Supplementary
    Data
                27ITEM
      9
                
                Changes in and Disagreements with Accountants on Accounting
      and Financial Disclosure
                27ITEM
      9 A.
                
                Controls and Procedures
                28ITEM
      9 A(T).
                
                Controls and Procedures
                29ITEM
      9B
                
                Other Information
                30PART
      IIIITEM
      10
                
                Directors, Executive Officers, and Corporate
      Governance
                31ITEM
      11
                
                Executive Compensation
                33ITEM
      12
                
                Security Ownership of Certain Beneficial Owners and
      Management and Related Stockholder Matters
                37ITEM
      13
                
                Certain Relationships and Related Transactions, and
      Director Independence
                38ITEM
      14
                
                Principal Accounting Fees and Services
                39PART
      IVITEM
      15
                
                Exhibits, Financial Statement Schedules
                40SIGNATURES
                
                Signatures
                41
 
  Navidec
Financial Services, Inc.
  Note
about Forward-Looking Statements
 
 This
From 10-K contains forward-looking statements, such as statements relating to
our financial condition, results of operations, plans, objectives, future
performance and business operations. These statements relate to expectations
concerning matters that are not historical facts. These forward-looking
statements reflect our current views and expectations based largely upon the
information currently available to us and are subject to inherent risks and
uncertainties. Although we believe our expectations are based on reasonable
assumptions, they are not guarantees of future performance and there are a
number of important factors that could cause actual results to differ materially
from those expressed or implied by such forward-looking statements. By making
these forward-looking statements, we do not undertake to update them in any
manner except as may be required by our disclosure obligations in filings we
make with the Securities and Exchange Commission under the Federal securities
laws. Our actual results may differ materially from our forward-looking
statements.
 
 PART
I
 ITEM
1.  BUSINESS
 
  General
  
 The
following is a summary of some of the information contained in this
document.  Unless the context requires otherwise, references in this
document to “Navidec Financial Services,” “Navidec”, “Navidec,” or the “Company”
is to Navidec Financial Services, Inc. and its subsidiaries.
  Navidec
Financial Services, Inc. was incorporated in December 2002 in the state of
Colorado, as a wholly owned subsidiary of Navidec Inc. ("Old Navidec").
Navidec’s operations are primarily centered in Colorado and Arizona. Navidec
maintains a website at www.navidec.com,
which is not incorporated in and is not a part of this report.
 
 Navidec
has four business enterprises:
 
 ·
              Creating
      or acquiring a controlling interest in development stage enterprises with
      the expectation of further developing the enterprise and then taking the
      enterprise public.  The Company generally focuses on developing
      one enterprise at a time to take public.  Currently the
      enterprise the Company is developing to take public is Northsight, Inc.
      (Northsight”) its wholly owned subsidiary.  Northsight is
      registered as a mortgage broker in Arizona and
      Colorado.  Northsight is actively seeking to merge with a
      mortgage bank.
 ·
              Originating
      and self funding short term first lien mortgage loans to purchasers of
      discounted residential real estate that are rehabilitating the properties
      and resell or rent the properties.
 ·
              Purchasing
      and rehabilitating for its own account discounted residential real estate
      to resell or rent through Southie Development, LLC. (“Southie”), a wholly
      owned subsidiary.
 ·
              Trading
      public securities solely for the Company’s own account (“Trading
      Account”).  Trading is limited to no more than 35% of net
      tangible shareholder equity.  The Trading Account was 5.2% of
      net shareholder equity as of December 31,
2008.
 
 On July
9, 2008, the Board of Directors of Navidec declared two dividend distributions
for its shareholders as of September 8, 2008. On October 2, 2008, Navidec’s
Board, at the recommendation of the National Association of Securities Dealers,
changed the record date and “ex-dividend” date to be the date that a
Registration Statement on Form S-1 for Navidec the dividend securities is
declared effective by the Securities and Exchange Commission.
  1
 Navidec
Financial Services, Inc.
  
 The first
dividend is a distribution of two Navidec Warrants to purchase $0.001 par value
common shares of Navidec, for each share of Navidec. The “A” Warrant, will be
exercisable at $2.00 per share until July 1, 2013, and the “B” Warrant will be
exercisable at $4.00 per share until July 1, 2013.
 
 The
second dividend is a distribution of a Unit of Northsight. The Northsight Units
to be distributed will consist of one common share of Northsight, a Northsight
“A” Purchase Warrant, exercisable at $2.00 per share until July 1, 2013, and a
“B” Purchase Warrant exercisable at $4.00 per share until July 1, 2013. The
Units will be distributed one Unit of Northsight for each 2.27336 shares of
Navidec.  Navidec currently owns 20,000,000 common shares of
Northsight.  Navidec will distribute 4,000,000 Units to the Navidec
shareholders, resulting in Navidec owning 16,000,000 Units after the dividend
distribution.
 
 SUBSIDIARIES
 
 NORTHSIGHT, INC. (formerly
Navidec Mortgage Holdings, Inc.)
 
 On
September 11, 2003, Navidec, Inc. (“Old Navidec”) purchased an 80% interest in
Northsight Mortgage Group, LLC ("NMG"), an Arizona mortgage broker, in exchange
for 197,056 shares of Old Navidec common stock, valued at
$246,320.  The remaining 20% of NMG was owned by Dan Walen, James
Kearns and Ronald Lynch.
 
 In
September 2004, the Company was spun off from Old Navidec as part of a reverse
merger completed between BPZ Resources, Inc and Old Navidec.  As a
condition to the reverse merger, the Company assumed all the legacy assets and
liabilities of Old Navidec which included the 80% ownership of NMG.
 
 On May 4,
2005, we formed Navidec Mortgage Holdings, Inc., a Colorado corporation ("NMH"),
as a subsidiary and received 8,000,000 common shares of NMH.  On
November 11, 2007, NMH amended its articles of incorporation and changed its
name to Northsight.
 
 On
October 12, 2007, we exchanged our 80% interest in NMG for 12,000,000 common
shares of Northsight to bring the total common shares of Northsight owned by
Navidec to 20,000,000 shares. On October 12, 2007, Northsight purchased the
remaining 20% minority interest in NMG from the minority members for 800,000
shares of Northsight. As a result of this transaction and at December 31, 2008
we owned 98% of Northsight and the former minority members of NMG owned 2% of
Northsight.
 
 Starting
in July 2007, we began lending money to Northsight to enable Northsight to make
short term, mortgage backed loans to borrowers who were purchasing deeply
discounted or foreclosed residential real estate in Arizona and
Colorado.  From July 2007 until June 2008, Navidec advanced funds for
Northsight to lend as short-term mortgage backed loans. The advances to
Northsight yield 12% and are callable on demand by Navidec.  Our loans
to Northsight are collateralized by first deeds of trust or assignments of trust
deeds on residential real estate. In June 2008, Northsight transferred the
ownership of the first lien mortgages and notes to Navidec in exchange for
$4,311,000, the amount owed Navidec from Northsight.  As of December
31, 2008, Navidec had $2,203,000 (net of an allowance for impairment of
$476,000) in short term bridge loans outstanding.
 
 Due to a
dramatically worsening mortgage, housing and macro-economic environment in the
last year, Northsight modified its business plan.  Wholesale mortgage
lending declined significantly due to a drop off in wholesale mortgage lenders,
thereby making it extremely difficult for mortgage brokers to find mortgage loan
products.  Mortgage banks, as compared to a mortgage broker, have
fared better although at less than optimum levels.  Northsight is
actively looking for a mortgage bank, with which to merge.
  2
 Navidec
Financial Services, Inc.
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 Additionally,
Northsight has cut back significantly on short term bridge lending in an effort
to reduce its exposure to credit risk.  The largest portion of the
Company’s consolidated operational expense was related to short term bridge
loans and conventional mortgage originations. Those operational expenses have
been significantly reduced.
 
 Northsight
is a mortgage broker subject to state and federal regulations regarding consumer
protection, including Truth-In-Lending and RESPA, since it originates consumer
loans. NMG is a licensed mortgage broker in the State of
Arizona.  There are registration and limited licensing requirements
for being a mortgage broker in the State of Colorado.
 
 Upon,
effectiveness of the Registration Statement our subsidiary Northsight intends to
register its common stock and warrants with FINRA for trading on the over the
counter bulletin board market.
 
 SOUTHIE DEVELOPMENTS,LLC and
NORTHSIGHT DEVELOPMENT, LLC
 
 Navidec
formed a Colorado limited liability company, Southie Developments, LLC,
(“Southie”) on January 31, 2008, as its sole and managing member.  We
organized Southie to develop residential real estate for resale and to own and
manage residential real estate acquired via foreclosure of real estate loans
owned by Navidec.  Once a real estate loan defaults and Navidec
obtains title to the collateral, Navidec transfers the property to Southie for
development and management.  As part of the management and development
of the properties transferred to it, Southie honors any existing residential
leases and will potentially expend monies for rehabilitation of the property
with the option of selling the property in a short time period, usually less
than one year.  However, if Southie deems the property to be a good
longer term investment, they might hold the property for periods longer than 12
months.  Further, Navidec will use Southie for purchasing and
rehabilitating for our own account discounted residential real estate to resell
or rent.  At December 31, 2008, Southie owns 11 properties, as
discussed below.
 
 In
November 2007, Northsight purchased 56 Thomas Park, South Boston, Massachusetts
02127, a residential property, for $1,200,000 (“Thomas Park Property”). The
Thomas Park Property is a 6,000 square feet single family residence that
Northsight is converting into three 2,000 square feet individual condominium
single family units. Northsight expects to purchase additional properties in the
Boston area market to develop and sell or rent. As of May 19, 2008, Southie
acquired a $1,200,000 construction loan with Mt. Washington Cooperative Bank for
the development of the Thomas Park Property. The loan is due November 19, 2009,
monthly interest only payments, with a prime plus 2% interest rate and an
interest rate floor of 7%.  As of December 31, 2008, the balance owed
on the loan was $1,141,000.  As of December 31, 2008, the Company had
invested $2,805,000 including the bank construction loan of $1,141,000. The
Company estimates that construction will be completed in June 2009.
 
 Southie
has the following residential properties acquired by foreclosure or deed-in-lieu
process:
 
 o
              Garfield
      (CO) –held for resale
 o
              Horseshoe
      Place (AZ) –held for resale
 o
              Montecito
      (AZ) –held for resale
 o
              Pontiac
      (CO) –held for resale
 o
              Kearney
      (CO) –held for resale
 o
              Joliet
      (CO) –held for resale
 o
              Passion
      Drive (AZ) – held as a rental
property
 o
              Cherryvale
      (CO) – held for resale
 o
              Squaw
      Peak (AZ) – held as a rental
property
 o
              Williams
      (CO) – held as a rental
property
  3
 Navidec
Financial Services, Inc.
 Table of Contents
  
 JAGUAR INVESTMENT
GROUP,
LLC:
 
 On
February 14, 2008, Jaguar Group, LLC ("Jaguar") and Northsight formed a limited
liability company, Jaguar Investment Group, LLC ("JIG") and signed an operating
agreement whereby Northsight and Jaguar would each contribute $4,000,000, as
capital in the form of cash or real estate equity, and own a 50% voting and
revenue interest in the limited liability company.  The purpose of the
joint venture was to provide wholesale financing loan products to the real
estate mortgage industry.  The joint venture has been terminated as a
result of Jaguar’s inability to fund its portion of the capital contribution and
default on a loan made by the Company to Jaguar.
 
 In
December 2007, the Company made a loan of $1,100,000 to Jaguar. As of September
30, 2008 the Company set up an allowance for the  full amount of the
Jaguar promissory note.   On September 29, 2008, we filed a
lawsuit, in the Boulder County District Court, against Jaguar Associated Group,
LLC (Broomfield CO); John R. Reinholdt II and the Estate of John R. Reinholdt
Sr. (Defendants).   The lawsuit was filed in order to procure
payment of the $1,100,000 loan granted by us to Jaguar and immediate payment of
other receivables in the amount of $307,000 owed by Jaguar to us.  On
November 19, 2008, the Court entered a default judgment for $3,107,209 against
Jaguar and John R. Reinholdt II.
 
 On
February 3, 2009, the Company filed a lawsuit including claims involving civil
violations of the Colorado
Organized Crime Control Act, in the Boulder County District Court against
Raina Reinholdt, Marilyn Reinholdt, Mary Ann Hocker and other Jaguar related
entities.  The defendants in this lawsuit have failed to answer the
complaint and the Company has filed for default judgment in the amount of
$3,773,811.
 
 Presently
the Company is working with outside counsel and has hired an attorney with real
estate collection experience to work full-time, in-house to aid in the
collection of this judgment.
 
 INVESTMENTS
 
 AEGIS BUSINESS GROUP,
INC./GRIZZLE NOTE
 
 On
December 13, 2005, we sold shares of our former subsidiary, Aegis Business
Group, Inc., to Mr. Robert Grizzle, the then Chief Operating Officer of Navidec
and Mr. Ralph Armijo, a former director.
 
 The terms
of the sale of AegisUSA provided for a $100,000 cash payment to us at the
closing of the sale and a $528,000 note due and payable to us on December 31,
2006. The note carried an 8% interest rate and was collateralized by 2,000,000
common shares and 3,000,000 preferred shares of Aegis.
  4
 Navidec
Financial Services, Inc.
 Table of Contents
  
 On May 3,
2007, Mr. Armijo paid us $300,000, in cash, and surrendered to us other
consideration in payment for the purchase of his shares of Aegis. In May 2007,
we re-negotiated the terms of the note with Mr. Grizzle as part of a Separation
Agreement, effective September 30, 2007. As part of the Separation Agreement,
Mr. Grizzle executed a note payable for $450,000 payable at the earlier of one
year from the date that the common stock is publicly traded and his shares are
registered for resale under an effective registration statement filed by us or
December 31, 2009. The note carries an 8% interest rate and is collateralized by
1,000,000 Aegis common shares, 1,500,000 Aegis preferred shares, 220,000 shares
of our common stock and 200,000 options to purchase shares of our common stock
at $0.05 per share held by Mr. Grizzle.  On October 17, 2008, we filed
a Registration Statement on Form S-8, registering 200,000 shares underlying
options for Mr. Grizzle with the SEC.
 
 COMPETITION
 
 We face
intense competition in the business of originating mortgage loans. Our
competitors include other mortgage brokers, mortgage banking companies, finance
companies, commercial banks, credit unions and thrift institutions. Federally
chartered banks and thrifts can preempt some of the state lending laws to which
we may be subject, thereby giving them a competitive advantage. In addition,
many of these competitors have considerably greater technical and marketing
resources than we have. Competition among industry participants can take many
forms, including convenience in obtaining a loan, customer service, marketing
and distribution channels, amount and term of the loan, loan origination fees
and interest rates. Additional competition may lower the rates we can charge
borrowers, thereby potentially lowering gains on future loan sales.
 
 Governmental
Regulation
 
 Northsight’s
lending business is regulated in some aspects by state government agencies and
may be subject to federal and state laws, rules and regulations. Northsight is
also subject to judicial and administrative decisions that impose requirements
and restrictions on their business. At the federal level, these laws and
regulations may include the: Equal Credit Opportunity Act; Federal Truth in
Lending Act and Regulation Z; Home Ownership and Equity Protection Act; Real
Estate Settlement Procedures Act; Fair Credit Reporting Act; Fair Debt
Collection Practices Act; Home Mortgage Disclosure Act; Fair Housing Act;
Telephone Consumer Protection Act; Gramm-Leach-Bliley Act; Fair and Accurate
Credit Transactions Act; CAN-SPAM Act; Sarbanes-Oxley Act; and the Patriot
Act.
 
 These
laws, rules and regulations, among other things: impose licensing obligations
and financial requirements on Northsight; limit the interest rates, finance
charges, and other fees that Northsight may charge; prohibit discrimination;
impose underwriting requirements; mandate disclosures and notices to consumers;
mandate the collection and reporting of statistical data regarding our
customers; regulate our marketing techniques and practices; require the
safeguarding of non-public information about customers; regulate collection
practices; require Northsight to prevent money-laundering or doing business with
suspected terrorists; and impose corporate governance, internal control and
financial reporting obligations and standards.
 
 Failure
to comply with these laws could lead to: civil and criminal liability; loss of
approved status; demands for indemnification or loan repurchases from buyers of
our loans; class action lawsuits; and administrative enforcement
actions.
 
 State
Laws: Navidec, through Northsight is regulated by Arizona and Colorado lending
supervisory agencies, although Navidec believe that minimal regulation is
applicable to the commercial, non-consumer investor loans that are provided
through Northsight.
  5
 Navidec
Financial Services, Inc.
 Table of Contents
  
 Licensing
 
 As of
December 31, 2008, we have no mortgage banking licenses.  NMG, a
subsidiary of Northsight, our subsidiary, has a mortgage broker’s license in
Arizona.  Navidec acts as a direct lender on our loans and this
exempts us from many regulations due to the fact they are commercial,
non-consumer loans.
 
 Environmental
 
 In the
course of our business, we may acquire properties securing loans that are in
default or properties for development. There is a risk that hazardous or toxic
waste could be found on such properties although we intend to always conduct a
Level 1 Environmental test for asbestos on each property prior to acquisition or
foreclosure. Soil tests are not performed. If this occurs, we could be held
responsible under applicable law for the cost of cleaning up or removing the
hazardous waste. This cost could exceed the value of the underlying
properties.
 
 Employees
 
 At
December 31, 2008, the Company and its subsidiaries employed 19 full-time
employees and 1 part-time employee.  During the quarter ended March
31, 2009, the Company reduced its staff and had 5 full time employees and no
part time employees. None of these employees are covered by a collective
bargaining agreement.  The Chief Executive Officer and the Controller
have entered into employment agreements with Navidec.  We consider our
relationship with our employees to be good.
 
 Available
Information
 
 The
Company’s common stock is traded on the Over-The-Counter Stock Market under the
symbol “NVDF.” A copy of our Annual Report on Form 10-K along with copies of our
quarterly reports on Form 10-Q and current  reports on Form 8-K
required to be filed with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended, and can be found on the Edgar
database at www.sec.gov.  In
addition our SEC reports are available free of charge from the Company upon
written request to Wayne Harding, Controller, Navidec Financial Services, Inc.
Annex Building Ste. 200, 2000 S Colorado Blvd., Denver CO  80222, or
you may retrieve investor information by going to the Company’s website at www.navidec.com.
 
 Sarbanes-Oxley
Act of 2002
 
 In 2002
the Sarbanes-Oxley Act of 2002 (the “Act”) was enacted which mandated a variety
of reforms intended to address corporate and accounting fraud. The Act provides
for the establishment of a Public Company Accounting Oversight Board (“PCAOB”)
which enforces auditing, quality control and independence standards for firms
that audit SEC-reporting companies and is funded by fees from all SEC-reporting
companies. The Act imposes higher standards for auditor independence and
restricts performance of consulting services by auditing firms to companies they
audit. Any non-audit services being provided to an audit client requires
preapproval by the Company’s audit committee members. The Act requires chief
executive officers and chief financial officers, or their equivalent, to certify
to the accuracy of periodic reports filed with the SEC, subject to civil and
criminal penalties if they knowingly or willfully violate this certification
requirement.
  6
 Navidec
Financial Services, Inc.
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 The Act
also increases the oversight and authority of audit committees of publicly
traded companies. Audit committee members must be independent under the
securities laws and are barred from accepting consulting, advisory or other
compensatory fees from the issuer. Audit committees of publicly traded companies
have authority to retain their own counsel and other advisors funded by the
company. Audit committees must establish procedures for the receipt, retention
and treatment of complaints regarding accounting and auditing matters and
procedures for confidential, anonymous submission of employee concerns regarding
questionable accounting or auditing matters.
 
 It is
unlawful for any person who is not a registered public accounting firm (“RPAF”)
with the PCAOB to audit an SEC-reporting company. Under the Act, a RPAF is
prohibited from performing statutorily mandated audit services for a company if
such company’s chief executive officer, chief financial officer, comptroller,
chief accounting officer or any person serving in equivalent positions has been
employed by such firm and participated in the audit of such company during the
one-year period preceding the audit initiation date. The Act also prohibits any
officer or director of a company or any other person acting under their
direction from taking any action to fraudulently influence, coerce, manipulate
or mislead any independent public or certified accountant engaged in the audit
of the Company’s financial statements for the purpose of rendering the financial
statements materially misleading. The Act requires the RPAF that issues the
audit report to obtain an understanding of internal control, assess the risk
that a material weakness exists, test and evaluate the design and operating
effectiveness of internal control and report on the Company’s internal controls.
In addition, the Act requires that each financial report required to be prepared
in accordance with generally accepted accounting principles and filed with the
SEC reflect all material correcting adjustments that are identified by a RPAF in
accordance with generally accepted accounting principles and the rules and
regulations of the SEC.
 
 During
2008, our previous RPAF, Jaspers + Hall, became un-registered by the
PCAOB.  Therefore, the Company engaged a new RPAF, Schumacher &
Associates to re-audit our financial statements for the year ended December 31,
2007 and audit our financial statements for the year ended December 31,
2008.  During this audit, the Company became aware of past financial
issues to be corrected and therefore financials for the year ending December 31,
2007 were restated.  (See Note 2)
 
 
 Item
1A.                      Risk
Factors
 
 Navidec
securities are highly speculative and should be purchased only by persons who
can afford to lose their entire investment.  Readers should carefully
consider the following risk factors, as well as all other information set forth
elsewhere in this annual report, in relation to the shares of its common
stock.
 
 Company
Risk Factors
 
 Weakening
economic conditions, including the recent downturn in financial markets and
reduced consumer spending, may adversely affect our ability to grow or maintain
our business.
 
 Our
ability to grow or maintain our business may be adversely affected by weakening
economic conditions, including the effect of wavering consumer confidence,
rising unemployment, tight credit markets, declines in financial markets,
falling home prices and other factors.
 
 Navidec
can give no assurance of success or profitability to investors.
 
 There is
no assurance that the Company will continue to operate profitably. There is no
assurance that the Company will generate revenues or profits, or that the market
price of its common stock will be increased thereby.
  7
 Navidec
Financial Services, Inc.
 Table of Contents
  
 Officers and directors may have
conflicts of interest which may not be resolved favorably to the
Company.
 
 Certain
conflicts of interest may exist between the Company and our Officers and
Directors.  Our Officers and Directors have other business interests
to which they devote their attention and may be expected to continue to do so
although management time should be devoted to our business.  As a
result, conflicts of interest may arise that can be resolved only through
exercise of such judgment as is consistent with fiduciary duties to
us.  See “Directors, Executive Officers, and Control Persons" (page
29), and "Conflicts of Interest" (page 30).
 
 Navidec
may in the future issue more shares which could cause a loss of control by
present management and current stockholders.
 
 Navidec
may issue further shares as consideration for the cash or assets or services out
of its authorized but unissued common stock that would, upon issuance, represent
a majority of the voting power and equity of the Company.  The result
of such an issuance would be those new stockholders and management would control
the Company, and persons unknown could replace present management. Such an
occurrence would result in a greatly reduced percentage of ownership of the
Company by our current shareholders, which could present significant risks to
investors.
 
 Navidec
has a relatively short operating history, so investors have no way to gauge our
long term performance.
 
 Navidec
was formed in December 2002 and in 2003 acquired control of Northsight, a
mortgage broker.  Northsight represent a significant portion of
Navidec's assets.  Northsight has developed a new business plan that
should be regarded as a new or development venture with all of the unforeseen
costs, expenses, problems, and difficulties to which such ventures are
subject.  The Northsight new business plan should be considered highly
speculative.
 
 Navidec
is not diversified and is dependent on only one business.
 
 Because
of the limited financial resources, Navidec may not be able to diversify its
operations.  The inability to diversify
our  activities  into more than one area
will  subject  Navidec
to  economic  fluctuations  within  the
real  estate  finance industry and
therefore  increase the risks associated with its operations due to
lack of diversification.
 
 Navidec’s
officers and directors may have conflicts of interests as to corporate
opportunities which Navidec may not be able or allowed to participate
in.
 
 Presently  there
is no requirement  contained in our Articles
of  Incorporation, Bylaws,  or
minutes  which  requires  officers
and  directors of our business to disclose  to
us  business  opportunities  which  come
to  their  attention.  Our officers and directors
do, however, have a fiduciary duty of loyalty to us to disclose to us any
business opportunities which come to their attention, in their capacity as an
officer and/or director or otherwise.  Excluded from this
duty  would  be  opportunities   which  the  person  learns  about  through  his
involvement as an officer and director of another company.  Navidec
has no intention of merging with or acquiring business opportunity from any
affiliate or officer or director. (See "Conflicts of Interest" at page
30.)
  8
 Navidec
Financial Services, Inc.
 Table of Contents
  
 Navidec
has substantial competitors who have an advantage over the Company in resources
and management.
 
 Most
of  Navidec's  competitors  have  significantly  greater  financial  resources,
technical expertise and managerial  capabilities than us and,
consequently,  Navidec will be at a competitive disadvantage in
identifying and developing or exploring
suitable  prospects.  Competitors’ resources could overwhelm
Navidec restricted efforts and cause adverse consequences to Navidec's
operational performance.
 
 Navidec
has agreed to indemnification of officers and directors as is provided by
Colorado Statutes.
 
 Colorado
Statutes provide for the indemnification of our directors, officers, employees,
and agents, under certain circumstances, against attorney's fees and other
expenses incurred by them in any litigation to which they become a party arising
from their association with any activities on our behalf.  Navidec
will also
bear  the  expenses  of  such  litigation  for
any of our  directors,  officers, employees,  or
agents, upon such person's promise to repay us therefore if it is
ultimately  determined  that any
such  person  shall not have
been  entitled  to indemnification.   This
indemnification policy could result in substantial expenditures by us that
Navidec will be unable to recoup.
 
 Our
directors' liability to us and shareholders is limited.
 
 Colorado
Revised Statutes exclude personal liability of Navidec directors and our
stockholders for monetary damages for breach of fiduciary duty except in certain
specified circumstances. Accordingly, Navidec will have a much more limited
right of action against our directors that otherwise would be the
case.  This provision does not affect the liability of any director
under federal or applicable state securities laws.
 
 Navidec
may depend upon outside advisors, who may not be available on reasonable terms
and as needed.
 
 To
supplement the business experience of Navidec's officers and directors, Navidec
may be required to employ accountants, technical experts, appraisers, attorneys,
or other consultants or advisors.  Our Board without any input from
stockholders will make the selection of any such
advisors.  Furthermore, Navidec anticipates that such persons will be
engaged on an "as needed” basis without a continuing fiduciary or other
obligation to us. In the event Navidec considers it necessary to hire outside
advisors, it may elect to hire persons who are affiliates, if they are able to
provide the required services.
 
 RISK
FACTORS RELATING TO NAVIDEC’S AND ITS SUBSIDIARIES’ BUSINESS
 
 Navidec's  subsidiary's  real  estate  loan  portfolios  have  significant  type
and geographic concentrations and an economic slowdown or depressed residential
real estate  market in our primary  markets  could
be  detrimental  to our  financial
condition.
 
 A
substantial portion of Northsight (the Navidec subsidiary) residential real
estate loans are to customers located in Arizona and
Colorado.  Deterioration  in
economic  conditions  in these  markets or in
the  housing  market  could have a
material  adverse  effect on the quality of
these  portfolios and the demand for our products and services. In
addition, during periods of economic recession, we may experience a decline in
collateral values and an increase in delinquencies.
  9
 Navidec
Financial Services, Inc.
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 Accordingly,  the  ultimate  collectability  of
a  substantial  portion  of  our
commercial  loan portfolio is  susceptible to
economic  changes in these markets including increases in interest
rates. A significant downturn in the commercial or residential real estate
market in these areas would be detrimental to our financial
condition.
 If
the  value of
real  estate  in  Northsight's  market  areas  were
to  decline
materially,  a  significant  portion  of  their  loan  portfolio   could  become
under-collateralized,  which could have a material adverse effect on
Navidec's asset quality, capital structure and profitability.
 
 Northsight’s
loan portfolio is comprised of loans collateralized by residential real estate.
At December 31, 2008, approximately 100% of Navidec's loans had real estate as a
component of collateral.  In the majority of these loans, real estate
was the primary collateral component.  The real estate collateral that
provides an alternate source of repayment in the event of default may
deteriorate in value during the term of the loan.  If Navidec is
required  to  liquidate  the  collateral
securing  a loan to satisfy  the debt  during a
period of  reduced  real  estate values, our
earnings and capital could be adversely affected.  Navidec is subject
to increased  lending  risks in the form of
loan  defaults  as a result of the high
concentration  of
real  estate  lending  in our
loan  portfolio  should the real estate market turn
downward.
 
 Navidec's/Northsight's  business
is subject to interest  rate risk and stock  market risk
and  variations  in interest  rates and/or the
stock market may  negatively affect its financial
performance.
 
 The
majority of Navidec's assets and liabilities are monetary in nature or related
to stock market prices of a single company and subject Navidec to significant
risk from changes in interest rates.  Fluctuations in interest rates
are not predictable or controllable.  Like
most  financial  institutions,  changes  in
interest  rates can impact our net interest  income as well
as the  valuation of
our  assets  and  liabilities.  Based on
Navidec's  analysis  of
the  interest  rate sensitivity of Navidec's
assets,  an increase in the general level of interest rates
may  negatively  affect  the  market  value
of the  portfolio  equity,  but will
positively  affect  Navidec's
net  interest  income  since most of
our  assets  have floating rates of interest that adjust
fairly quickly to changes in market rates
of  interest.  Additionally,  an  increase
in  interest  rates may,  among other
things,  reduce the  demand for loans and
our  ability  to  originate  loans.  A
decrease in the general level of interest rates may affect Navidec through,
among other things, increased prepayments on Northsight’s loan and
mortgage-backed securities portfolios and increased competition for loans.
Accordingly,  changes in
the  level  of  market  interest  rates  affect  Northsight's  net  yield  on
interest-earning  assets,  loan  origination  volume,  loan
and  mortgage-backed securities portfolios, and Northsight's overall
results.
 
 The  current  dislocations  in
the  subprime  mortgage  sector,  and
the current weakness in the
broader  financial  market,  could  adversely  affect
Navidec, which
could  result  in  increases  in  defaults,  reductions  in  our  liquidity  and
reductions in the value of the investments in our portfolio.
 
 The  continuing  dislocations  in
the subprime  mortgage  sector and the current weakness in
the broader  financial  market could adversely affect the
Northsight portfolio  and could  cause Navidec to be
unable  to  continue  to
raise  additional financing.  This could potentially limit
our ability to continue operations, increase our costs and reduce our
liquidity.
 
 Recent
developments in the market for many types of mortgage products have resulted in
reduced liquidity for, and value of, these assets.  Although this
reduction in liquidity has been most acute with regard to subprime assets, there
has been an overall reduction in liquidity and value across the credit spectrum
of mortgage products.
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 Navidec
Financial Services, Inc.
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 Navidec's/Northsight's
mortgage loan originations are dependent on external factors.
 
 -
              As
      a
      mortgage  lender,  through  Northsight,  the
      Navidec  subsidiary,  is
      subject  to  changes  in  consumer  and
      real  estate-related  laws and regulations that could
      subject Navidec to lawsuits or adversely affect Navidec profitability or
      ability to remain competitive.
 
 -
              Northsight  must  comply  with  the  applicable  licensing  and  other
      regulatory  requirements of each  jurisdiction in
      which  Northsight is authorized to lend.  Northsight
      is subject to examination by each such jurisdiction,  and if it
      is  determined  that we are not in compliance with
      the  applicable  requirements,  Northsight  may
      be fined  and the license to lend may be suspended or
      revoked.
 
 -
              Northsight
      is competing for mortgage loans against much larger, better-known mortgage
      originators that affect our ability to originate mortgage loans at
      attractive yields and spreads.
 
 Deteriorating
credit quality, particularly in residential construction and development loans,
may adversely impact Navidec.
 
 The real
estate  industry  has  experienced  a
downturn  in credit  performance, particularly  in
2008,  credit  conditions may
continue  to  deteriorate  in the near
term.  This deterioration may result in higher costs associated with
real estate development projects for Navidec.
 
 Recently
declining values of residential real estate may increase our credit losses,
which would negatively affect our financial results.
 
 Navidec,  through  its  subsidiary  Northsight,   offers  collateralized  loans,  including
commercial loans, real estate,  construction,  home
equity,  and consumer loans. Northsight loans are collateralized by
real estate (both residential and commercial) in the market area. A major change
in the real estate market, such as deterioration in the value of this
collateral, or in the local or national economy, could adversely affect our
customer's ability to pay these loans, which in turn could impact us. Risk of
loan defaults and foreclosures are unavoidable in the banking industry, and
Northsight tries to limit our exposure to this risk by monitoring the extensions
of credit and collateral, carefully.  Navidec cannot fully eliminate
credit risk, and as a result credit losses may occur in the future.
 
 Navidec,
through our subsidiary Northsight face intense competition that could adversely
impact our business and our revenue.
 
 We face
intense competition from other financial and mortgage companies, internet-based
lending companies where entry barriers are relatively low, and from traditional
bank and thrift lenders to the mortgage industry. As we seek to expand our
business further, we will face a significant number of additional competitors,
many of whom will be well-established in the markets Northsight seeks to
penetrate. Most of our competitors are much larger, have better name
recognition, and have far greater financial and other resources than we
have.
   11
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Financial Services, Inc.
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 The
government-sponsored entities Fannie Mae and Freddie Mac may also expand their
participation in the mortgage industry. These government-sponsored entities have
a size and cost-of-funds advantage that allows them to purchase loans with lower
rates or fees than we can offer. While the government-sponsored entities
presently do not have the legal authority to originate mortgage loans, they do
have the authority to buy loans. A material expansion of their involvement in
the market to purchase loans could change the dynamics of the industry by virtue
of their sheer size, pricing power and the inherent advantages of a government
charter. In addition, if as a result of their purchasing practices, these
government-sponsored entities experience significantly higher-than-expected
losses, such experience could adversely affect the overall investor perception
of the mortgage industry.  While our loans are higher risk loans that
do not compete directly with FHA, GNMA and FNMA, or competition with very low
rates could have an adverse impact on our business.
  The
intense competition in the mortgage industry has also led to rapid technological
developments, evolving industry standards and frequent releases of new products
and enhancements. As mortgage products are offered more widely through
alternative distribution channels, such as the internet, we may be required to
make significant changes to our current retail operations and information
systems to compete effectively. Our inability to adapt to other technological
changes in the industry could significantly harm our business, financial
condition, liquidity and results of operations.
  Competition
in the industry can take many forms, including interest rates and costs of a
loan, less stringent underwriting standards, convenience in obtaining a loan,
customer service, amount and term of a loan and marketing and distribution
channels. The need to maintain mortgage loan volume in this competitive
environment creates a risk of price competition in the mortgage industry. Price
competition could cause us to lower the interest rates that we offer borrowers,
which could lower the value of our loans. If our competitors adopt less
stringent underwriting standards we will be pressured to do so as well, which
would result in greater loan risk without compensating pricing. If we do not
relax underwriting standards in response to our competitors, we may lose market
share. Any increase in these pricing and underwriting pressures could reduce the
volume of our loan originations and sales and significantly harm our business,
financial condition, liquidity and results of operations.
 
 Defective
loans may harm our subsidiary Northsight’s business.
  In
connection with the origination of loans, our subsidiary Northsight is required
to make a variety of customary representations and warranties regarding the
loans Northsight originates, primarily related to fraud on the application and
first payment defaults. These representations and warranties relate to, among
other things, compliance with laws; regulations and underwriting standards; the
accuracy of information in the loan documents and loan file; and the
characteristics and enforceability of the loan.
  Our
subsidiary Northsight may be subject to losses due to fraudulent and negligent
acts on the part of loan applicants, mortgage brokers, other vendors and our
employees.
  When we
originate mortgage loans through our subsidiary, Northsight, we rely heavily
upon information supplied by third parties including the information contained
in the loan application regarding employment and income history, property
appraisal and title information. Whether a misrepresentation is made by the loan
applicant, the mortgage broker, another third party or one of Northsight’s own
employees, Northsight often bears the risk of loss associated with the
misrepresentation. Even though Northsight may have rights against persons and
entities who made or knew about the misrepresentation, such persons and entities
are often difficult to locate and it is often difficult to collect any monetary
losses that Northsight has suffered from them.
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 Navidec
Financial Services, Inc.
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 Although
we have, through Northsight, controls and processes in place that are designed
to identify misrepresented information in Northsight’s loan origination
operations, we cannot assure the investor that Northsight can detect or will
detect all misrepresented information in Northsight’s loan originations. If
Northsight experiences a significant number of such fraudulent or negligent
acts, our business, financial condition, liquidity and results of operations
could be significantly harmed.
  The
inability to attract and retain qualified employees could significantly harm our
business.
  We depend
upon our subsidiary Northsight’s loan officers to attract borrowers, by, among
other things, developing relationships with financial institutions, other
mortgage companies, real estate agents, borrowers and others. We believe that
these relationships lead to repeat and referral business. The market for skilled
executive officers and loan officers is highly competitive and historically has
experienced a high rate of turnover. In addition, if a manager leaves us there
is a likelihood that other members of his or her team will follow. Competition
for qualified loan officers may lead to increased hiring and retention costs.
Our subsidiary, Northsight’s, inability to attract or retain a sufficient number
of skilled loan officers and other key employees at manageable costs could harm
our business.
  If
we do not manage Northsight effectively, our financial performance could be
harmed.
  We have
experienced substantial changes in industry and real estate markets that place
certain pressures on Northsight management, administrative, operational and
financial infrastructure. We expect to continue to experience this type of
constant and rapid change. Any increase in the size of Northsight operations may
make it more difficult for us to ensure that Northsight originates quality
loans. We will need to attract and hire additional sales and management
personnel in an intensely competitive hiring environment in order to preserve
and increase our market share.  At the same time, we will need to
continue to upgrade and expand our financial, operational and managerial systems
and controls, which could require capital and human resources beyond what we
currently have. We cannot assure you that we will be able to meet our capital
needs; expand our systems effectively; allocate our human resources optimally;
identify and hire qualified employees; or effectively integrate acquired
businesses to achieve growth.
 
 Our
financial results fluctuate as a result of seasonality and other timing factors,
which makes it impossible to predict our future performance.
  Our
business is generally subject to seasonal trends. These trends reflect the
general pattern of housing sales, which typically peak during the spring and
summer seasons. Our quarterly operating results have fluctuated in the past and
are expected to fluctuate in the future, reflecting in part seasonality of the
industry.
  We
are subject to many statutory and regulatory compliance risks, any of which
could jeopardize our business.
  The
multi-state scope of our operations exposes the Company to risks of
noncompliance with an increasing and inconsistent body of complex laws and
regulations at the federal, state and local levels.
   13
 Navidec
Financial Services, Inc.
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 Our
subsidiary Northsight is currently licensed as a mortgage broker in Arizona and
must comply with the laws and regulations, as well as judicial and
administrative decisions, of Arizona, as well as an extensive body of federal
laws and regulations. The volume of new or modified laws and regulations has
increased in recent years. The laws and regulations of multiple states and
federal laws are different, complex and, in some cases, in direct conflict with
each other. If Northsight operations grow to include other states, it may be
more difficult to comprehensively identify, to accurately interpret and to
properly program Northsight’s technology systems and effectively train the
Company’s personnel with respect to all of these laws and regulations, thereby
potentially increasing our exposure to the risks of noncompliance with these
laws and regulations. Increased regulation would result in increased compliance
costs.
  Our
subsidiary’s failure to comply with these laws can lead to civil and criminal
liability; loss of our licenses and right to do business in the various states;
class action lawsuits; and administrative enforcement actions.
  Several
federal, state and local laws and regulations have been adopted or are under
consideration intended to eliminate so-called "predatory" lending practices.
Many of these laws and regulations impose broad restrictions on certain commonly
accepted lending practices, including some of our subsidiary, Northsight’s,
practices. There can be no assurance that these proposed laws, rules and
regulations, or other similar laws, rules or regulations, will not be adopted in
the future. Adoption of these laws and regulations could have a material adverse
impact on our business by substantially increasing the costs of compliance with
a variety of inconsistent federal, state and local rules, or by restricting our
ability to charge rates and fees adequate to compensate the Company for the risk
associated with certain loans.
  The
increased governmental scrutiny of Fannie Mae and Freddie Mac may also result in
regulatory changes and oversight which may have an adverse impact on the
industry generally, and in turn have a negative effect on our
business.
 
 We
may be unable to compete effectively with financial institutions that are exempt
from certain state restrictions.
  Certain
federally chartered financial institutions are exempt from the state laws to
which we may be subject and may operate more effectively under the federal laws
that govern their operations. The increasing number of federal, state and local
"anti-predatory lending" laws may restrict our ability to originate or increase
our risk of liability with respect to certain mortgage loans and could increase
our cost of doing business.
  The
continued enactment of these laws, rules and regulations may prevent the Company
from making certain loans and may cause our subsidiary, Northsight, to reduce
the APR or the points and fees on loans that we, through Northsight, do make. If
nothing else, the growing number of these laws, rules and regulations will
increase our cost of doing business as we are required to develop systems and
procedures to ensure that we, through our subsidiary Northsight, does not
violate any aspect of these new requirements. Any of the foregoing could
significantly harm our business, financial condition, liquidity and results of
operations.
 
 We
may not find suitable business for investment.
 
 Even
though Navidec management is looking for suitable companies for investment,
there can be no assurance of finding a suitable company.  If this is
the case, a key component of the Navidec business model will not take
place.
  14
 Navidec
Financial Services, Inc.
 Table of Contents
  
 We
may find a suitable investment but lack majority control.
 
 Navidec intends to take
a controlling interest in companies that they invest in.  However, it
might be a situation whereby majority control is not available, or is lost due
to negotiations or further future dilution.   If Navidec does not
have majority control, Navidec will lose a significant advantage of control over
the company, finances, management and direction.
 
 We
may lose all of our investment, which, depending on the amount of our
investment, could have a material impact on our market valuation.
 
 Navidec
may make an investment in an enterprise which later can go out of business or
substantially reduce the business opportunity.  Further, our
investment in any company will not assure success of that company.  If
we invest a substantial amount of our assets and the business fails, Navidec and
its shareholders will be adversely impacted.
 
 Trading
securities involve a high degree of risk.
 
 Navidec
can deploy up to 35% of its net tangible shareholder equity for trading public
securities.  The market is volatile and the invested money can be
completely lost.
 
 Trading
securities relies solely on one person, our CEO.
 
 Our CEO
is the person responsible for the trading of securities.  He can make
mistakes in the selection of securities.  Further, if something
happens to our CEO, someone else in the Company may be unable to replace the
trading activity and able to close out positions in a profitable
manner.
 
 Investing
in residential real estate is high risk.
 
 Real
estate prices can deflate, have deflated, and there is no guarantee that real
estate prices will not continue to decrease.  If real estate prices
continue to decrease, the Company will be exposed to additional write down (or
impairment) of the real estate owned.  Depending on the price
decrease, this could have a significant impact on shareholders’
equity.
 
 
 RISK
FACTORS RELATING TO NAVIDEC’S COMMON STOCK
 
 The
regulation of penny stocks by SEC and FINRA may discourage the tradability of
Navidec securities.
 
 Navidec
is a “penny stock” company.  Our securities currently trade on the OTC
Bulletin Board and are subject to a Securities and Exchange Commission rule that
imposes special sales practice requirements upon broker-dealers who sell such
securities to persons other than established customers or accredited
investors.  For purposes of the rule, the
phrase  "accredited  investors"  means, in general
terms, institutions with assets in excess of $5,000,000, or individuals having a
net worth in excess
of  $1,000,000  or  having  an
annual  income  that  exceeds $200,000 (or that,
when combined with a spouse's income, exceeds $300,000).  For
transactions  covered  by
the  rule,  the  broker-dealer  must  make  a  special
suitability  determination for the purchaser and receive the
purchaser's written agreement to the transaction  prior to the
sale.  Effectively, this discourages broker-dealers from executing
trades in penny stocks.  Consequently,  the rule will affect
the ability of purchasers in this offering to sell their  securities
in any  market  that
might  develop  therefore  because  it  imposes  additional
regulatory burdens on penny stock transactions.
  15
 Navidec
Financial Services, Inc.
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 In
addition, the Securities and Exchange Commission has adopted a number of rules
to regulate "penny stocks." Such rules include Rules 3a51-1, 15g-1, 15g-2,
15g-3,  15g-4,  15g-5, 15g-6, 15g-7, and 15g-9 under the
Securities and Exchange Act of 1934, as amended. Because our securities
constitute "penny stocks" within the meaning of the rules, the rules would apply
to us and to our securities. The rules will further affect the ability of owners
of shares to sell our securities in any market that might develop for them
because it imposes additional regulatory burdens on penny stock
transactions.
 
 Shareholders  should  be  aware  that,  according  to  Securities  and  Exchange
Commission,  the  market  for
penny  stocks has  suffered  in
recent  years from patterns of fraud and abuse. Such patterns include
(i) control of the market for the  security  by one or a
few  broker-dealers  that
are  often  related  to the promoter or issuer;
(ii) manipulation of prices through prearranged  matching of purchases
and sales and false and misleading press releases; (iii) "boiler room"
practices   involving   high-pressure   sales  tactics  and  unrealistic   price
projections  by  inexperienced  sales
persons;  (iv)  excessive and  undisclosed
bid-ask  differentials  and  markups  by  selling  broker-dealers;  and  (v)
the wholesale dumping of the same securities by promoters
and  broker-dealers  after prices have
been  manipulated to a
desired  consequent  investor  losses.  Navidec's
management is aware of the abuses that have occurred historically in the penny
stock market.  Although Navidec does not expect to be in a position to
dictate the behavior of the market or of broker-dealers who participate in the
market, management will strive within the confines of practical limitations to
prevent the described patterns from being established with respect to Navidec
securities.
 
 Rule
144 sales in the future may have a depressive effect on Navidec stock
price.
 
 Some of
the outstanding shares of common stock held by our present officers, directors,
and affiliate stockholders are "restricted securities” within the meaning of
Rule 144 under the Securities Act of 1933, as amended.  As restricted
Shares,  these shares may be resold only  pursuant to an
effective  registration statement or under the requirements of Rule
144 or other  applicable  exemptions
from  registration  under  the  Act  and  as  required  under  applicable  state
securities  laws.  Rule
144  provides  in  essence  that
a  person  who has held restricted  securities for
six months may, under certain conditions,  sell every three months, in
brokerage transactions, a number of shares that does not exceed
the  greater of 1.0% of
a  company's  outstanding  common  stock
or the  average weekly trading volume during the four calendar weeks
prior to the sale. There is
no  limit  on  the  amount  of  restricted  securities  that  may
be  sold  by a non-affiliate after the owner has held the
restricted securities for a period of six months.  A sale under Rule
144 or under any other exemption from the Act, if available, or pursuant to
subsequent registration of shares of common stock of present stockholders, may
have a depressive effect upon the price of the common stock in any
market.
  Navidec
investors may suffer future dilution due to issuances of shares for various
considerations in the future.
 
 There may
be substantial dilution to Navidec shareholders as a result of future decisions
of the Board to issue shares without shareholder approval for cash, services, or
acquisitions.
  16
 Navidec
Financial Services, Inc.
 Table of Contents
  
 Navidec
stock may be thinly traded and as a result shareholders may be unable to sell at
or near ask prices or at all if shareholders desire to liquidate
shares.
 
 The
shares of Navidec common stock are thinly-traded on the OTC Bulletin Board,
meaning that the number of persons interested in purchasing our common shares at
or near ask prices at any given time may be relatively small. This situation is
attributable  to a
number  of  factors,  including  the
fact that Navidec is a small
company  which  is  relatively   unknown  to  stock  analysts,   stock  brokers,
institutional  investors and others in the investment community that
generate or influence  sales  volume,  and
that  even if Navidec came to the  attention  of
such persons,  they tend to be risk-averse  and would be
reluctant to follow an early stage  company or purchase or
recommend  the  purchase of any of our  Securities
until such time as Navidec became more seasoned and viable. As a
consequence,  there may be periods of several days or more when
trading  activity in our  Securities is minimal
or  non-existent,  as compared to a seasoned issuer which
has a large and steady volume of trading  activity that
will  generally  support  continuous sales without
an adverse effect on Navidec's  Securities  price. Navidec
cannot give you any assurance that a broader or more active public trading
market for our common Securities will be sustained. Due to these conditions,
Navidec can give investors no assurance that they will be able to sell their
shares at or near ask prices or at all if their desire to liquidate their
Securities of Navidec.
 
 Navidec
common stock may be volatile, which substantially increases the risk that
shareholders may not be able to sell Navidec Securities at or above the price
that paid for the security.
 
 Because
of the limited trading market for Navidec common stock and because of the
possible price volatility, shareholders may not be able to sell Navidec shares
of common stock when desired.  The inability to sell Navidec
Securities in a rapidly declining market may substantially increase the risk of
loss because of such illiquidity and because the price for Navidec Securities
may suffer greater declines because of the price volatility.
 
 The price
of Navidec common stock that will prevail in the market after this offering may
be higher or lower than the price the shareholder may pay.  Certain
factors, some of which are beyond our control, that may cause our share price to
fluctuate significantly include, but are not limited to the
following:
 
 -
              Variations
      in our quarterly operating results;
 -
              Loss  of  a  key  relationship  or  failure  to  complete  significant
      transactions;
 -
              Additions
      or departures of
  key  personnel;  and
 -
              Fluctuations
      in stock market price and volume.
 
 Additionally,   in  recent   years  the  stock   market  in  general,   and  the
over-the-counter  markets
in  particular,  have  experienced  extreme  price
and volume  fluctuations.  In some cases, these fluctuations
are unrelated or disproportionate to the operating performance of the underlying
company.  These market and industry factors may materially and
adversely affect Navidec stock price, regardless of our operating
performance.  In the past, class action litigation often has been
brought against companies following periods of volatility in the market price of
those companies common stock.  If Navidec become  involved
in this type of  litigation  in the future,  it
could  result in  substantial  costs and diversion
of  management  attention  and  resources,  which
could have a further negative effect on the investment in Navidec
stock.
 
 
 Item
1B.                      Unresolved
Staff Comments
 
 None
  17
 Navidec
Financial Services, Inc.
 Table of Contents
  
 
 ITEM 2. DESCRIPTION OF PROPERTIES
 
 Corporate
Offices
 
 In
February 2008, Navidec along with its subsidiary, Northsight opened offices at
2000 S. Colorado Blvd, Suite 2000, Denver, Colorado.  The lease for
this office is approximately $4,701 per month.  The lease has a
remaining term of approximately 2 1/2 years.
 
 The
Company maintains an office at the home of the President, John McKowen. The
Company reimburses Mr. McKowen at the rate of $3,500 per month for the use of
the facilities.
 
 During
the period of January 1, 2007 through June 30, 2007, the Company leased office
space at 8310 South Valley Highway, 3rd Floor, Englewood, Colorado
80112.  The lease for this space expired in June 2007. The Company
paid $4,500 per month for the use of this office and related
facilities.
 
 Northsight
Offices
 
 Northsight,
our subsidiary, also has offices located at 8520 E. Shea Blvd., Scottsdale,
Arizona.  The lease for this facility has a current lease rate of
approximately $6,700 per month through July 31, 2010.
 
 ITEM 3.  LEGAL PROCEEDINGS
 
 Northsight
Bridge Loan Suit
 
 Northsight
is a defendant in a lawsuit filed on April 2, 2008 in Jackson County Circuit
Court in Missouri whereby a Northsight bridge loan borrower, Lydia Carson (a
co-defendant), is being sued by the former owners of a property for failure to
pay the balance of a note made by the borrower to purchase the property from the
plaintiffs, Devoe.  On December 31, 2008, the amount owed by Lydia Carson
to the Company is $253,000 (note balance of $315,000 less escrow held of
$62,000) of which the Company has set up an allowance of $146,000 against the
balance of $253,000. The Company is currently in the process of filing a Motion
for Summary Judgment in the matter.
 
 Jaguar
Suit
 
 On
September 29, 2008, we filed a lawsuit, in the Boulder County District Court,
against Jaguar Associated Group, LLC (Broomfield CO); John R. Reinholdt II and
the Estate of John R. Reinholdt Sr. (Defendants).   The lawsuit
was filed in order to procure payment of the $1,100,000 loan granted by us to
the Jaguar and additional advances to Jaguar for $307,000.   On
November 19, 2008, the court entered a default judgment for $3,107,209 against
Jaguar and John R. Reinholdt II.  Presently the Company is working
with outside counsel and hired an attorney with real estate collection
experience to work full-time, in-house to aid in the collection of this
judgment.  We are also attempting to obtain judgments against other
Jaguar parties.
 
 
  18
 Navidec
Financial Services, Inc.
 Table of Contents
  
 
 There are
no other legal actions that name the Company and/or its officers and directors
as defendants.
 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
 
 On
November 6, 2008, the Company held its Annual Shareholders’ Meeting at its
offices at 2000 South Colorado Blvd, Annex Suite 200 in Denver,
Colorado.  The shares necessary for a quorum were present at the
meeting and the following proposals were voted on and passed.
 
 For
                Against
                WithholdProposal
      1:  To elect three directors (John McKowen, Jolee Henry, and
      Howard Farkas to hold office until the next annual meeting of
      shareholders.
                John
      McKowen
                  Jolee
      Henry
                  Howard
      Farkas
                6,635,085
                  6,448,163
                  6,648,202
                0
                  0
                  0
                34,485
                  221,401
                  21,368Proposal
      2: To appoint Schumacher and Associates, CPAs as independent auditors for
      fiscal year ended December 31, 2008
                
                6,647,285
                1,466
                20,819
 
 During
the year ended December 31, 2008, other than the above proposals, no other
matters were submitted to the Company’s shareholders for approval.
 
 PART
II
 
 ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
 
 Price
Range of Common Stock
 
 The
Common Stock is presently traded on the over-the-counter market on the OTC
Bulletin Board maintained by the Financial Industry Regulatory Authority
("FINRA").  On  September  17,  2007,  our  common  stock  began  trading
on the over-the-counter  bulletin  board.  The
NASDAQ symbol for the common stock is "NVDF."
 
 The
following table sets forth the range of high and low bid quotations for the
common stock of each full quarterly period during the years ended December 31,
2008 and 2007. The quotations were obtained from information published by the
FINRA and reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not necessarily represent actual transactions.
 
 Quarter
      Ended
                      High
                      Low2008March
      31st
                      $
      1.74
                      $
      1.01June
      30th
                      $
      1.65
                      $
      1.42September
      30th
                      $
      2.00
                      $
      0.72December
      31st
                      $
      1.00
                      $
      0.702007March
      31st
                      $
      0.00
                      $
      0.00June
      30th
                      $
      0.00
                      $
      0.00September
      30th
                      $
      0.60
                      $
      0.10December
      31st
                      $
      1.12
                      $
      0.30
 
  19
 Navidec
Financial Services, Inc.
 Table of Contents
  
 As of
December 31, 2008, there were 227 shareholders of record. We estimate that there
are approximately 1,000 beneficial shareholders.  In many instances, a
registered stockholder is a broker or other entity holding shares in street name
for one or more customers who beneficially own the shares.
 
 Our
transfer agent is Computershare, 350 Indiana Street, Suite 800, Golden, Colorado
80401. The telephone number is 303-262-0710.
 
 Dividends
 
 As of
the  filing  of this  annual
report,  we  have  not  paid  any  cash
or stock dividends  to shareholders, though the Board of Directors has
declared two non-cash dividend distributions, see below.  There are
no  restrictions  which  would limit our ability
to pay dividends  on common  equity  or that
are  likely  to do so in
the  future.  The Colorado Revised Statutes, however, do
prohibit us from declaring dividends where, after giving effect to the
distribution of the dividend; we would not be able to pay our debts as they
become due in the usual course of business; or our total assets would be less
than the sum of the total liabilities plus the amount that would be needed to
satisfy the rights of shareholders who have preferential rights superior to
those receiving the distribution.
 
 On July
9, 2008, the Board of Directors of Navidec declared two dividend distributions
for its shareholders as of September 8, 2008. On October 2, 2008, Navidec
modified the record date and “ex-dividend” date to be the date that a
Registration Statement on Form S-1 for the dividend securities is declared
effective by the Securities and Exchange Commission.
 
 The first
dividend is a distribution of two Navidec Warrants to purchase common shares of
Navidec, $.001 par value, for each share of Navidec. The Units consist of an “A”
Warrant, exercisable at $2.00 per share until July 1, 2013, and a “B” Warrant
exercisable at $4.00 per share until July 1, 2013.
 
 The
second dividend is distribution of a Unit of Northsight, Inc ("Northsight"). The
Units will be distributed one Unit of Northsight for each 2.27336 shares of
Navidec.  Navidec currently owns 20,000,000 Units of
Northsight.  Navidec will
distribute  4,000,000  Units to
its  shareholders,  resulting  in
Navidec  owning 16,000,000
Unit  after  the  dividend  distribution.   The
Northsight Units to be distributed will consist of one share of Northsight, a
Northsight “A” Purchase Warrant, exercisable at $2.00 per share until July 1,
2013, and a “B” Purchase Warrant exercisable at $4.00 per share until July 1,
2013.
 
 Northsight
intends to file a Registration Statement on Form S-1, registering the Units with
the Securities and Exchange Commission and upon the effectiveness of the
registration statement, make the necessary filings with FINRA for Northsight’s
common stock to trade upon the Over the Counter Bulletin Board.
 
 Penny
Stock
 
 Penny
Stock Regulation Broker-dealer practices in connection with transactions in
"penny stocks" are regulated by certain penny stock rules adopted by the
Securities and Exchange Commission. Penny stocks generally are equity securities
with a price of less than $5.00.  Excluded from the penny
stock  designation are securities  registered  on
certain  national  securities  exchanges or quoted
on
NASDAQ,  provided  that  current  price
and volume  information  with respect to
transactions  in such securities is provided by
the  exchange/system  or sold to established customers or
accredited investors.
  20
 Navidec
Financial Services, Inc.
 Table of Contents
  
 The penny
stock rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standardized risk disclosure
document that provides information about penny stocks and the risks in the penny
stock market. The broker-dealer also must provide the customer with current bid
and offer quotations for the penny stock, the compensation of the broker-dealer
and its salesperson in connection with the transaction, and the monthly account
statements showing the market value of each penny stock held in the customer’s
account.  In addition, the penny stock rules generally require that
prior to a transaction in a penny stock; the broker-dealer must make a special
written determination that the penny stock is a suitable investment for the
purchaser and receive the purchaser's written agreement to the
transaction.
 
 These
disclosure requirements may have the effect of reducing the level of trading
activity in the secondary market for a stock that becomes subject to the penny
stock rules.  As our securities have become subject to the penny stock
rules, investors may find it more difficult to sell their
securities.
 
 Recent
Sales of Unregistered Securities
 
 We made
the following unregistered sales of our securities from January 1, 2008 through
December 31, 2008:
 
 DATE
      OF SALE
              
              TITLE
      OF SECURITIES
              
              NO.
      OF SHARES
              
              CONSIDERATION
              
              CLASS
      OF PURCHASERJanuary
      14, 2008
              
              Common
              
              100,000
              
              $5,000
              
              Common
 
 Recent
Issuance of Options
 
 We made
the following issuance of options from January 1, 2008 through December 31, 2008
to a director and employees of the Company:
 
 
 DATE
      OF ISSUE
                
                TITLE
      OF SECURITIES
                
                NO.
      OF SHARES
                
                VESTING
                
                EXERCISE
      PRICEJuly
      1, 2008
                
                Common
                
                200,000
                
                1/3
      Immediate
                  1/3, 12 months
                  1/3, 24 months
                
                $2.00July
      28, 2008
                
                Common
                
                200,000
                
                1/3,
      12 months
                  1/3,
      24 months
                  1/3,
      36 months
                
                $2.00December
      2, 2008
                
                Common
                
                360,000
                
                1/3,
      12 months
                  1/3,
      24 months
                  1/3,
      36 months
                
                $2.00
 
 
 Exemption From Registration
Claimed
 
 All of
the sales by us of our unregistered securities were made in reliance upon
Section 4(2) of the Securities Act of 1933, as amended (the “1933
Act”).  The entity listed above that purchased the unregistered
securities was an existing shareholder, known to us and our management, through
pre-existing business relationships, as a long standing business
associate.  The entity was provided access to all material
information, which it requested, and all information necessary to verify such
information and was afforded access to our management in connection with the
purchases.  The purchaser of the unregistered securities acquired such
securities for investment and not with a view toward distribution, acknowledging
such intent to us. All certificates or agreements representing such securities
that were
  21
 Navidec
Financial Services, Inc.
 Table of Contents
  issued
contained restrictive legends, prohibiting further transfer of the certificates
or agreements representing such securities, without such securities either being
first registered or otherwise exempt from registration in any further resale or
disposition.
 
 Purchases
of Equity Securities by the Small Business Issuer and Affiliated
Purchasers
 
 Not
applicable.
 
 ITEM 6. SELECTED FINANCIAL INFORMATION
 
 Not
applicable.
 
 ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
OF OPERATION
 
 The
following  discussion  should be read in
conjunction  with the  consolidated
financial  statements  and
notes  thereto  and the
other  financial  information included  elsewhere
in this report.  This discussion contains forward-looking statements
that involve risks and uncertainties. Our actual results could differ materially
from those anticipated in these forward looking statements as a result of any
number of factors, including those set forth under "Risk Factors" on page 7 and
elsewhere in this report.
 
 Plan
of Operations - Overview
 
 During
2008, Navidec focused its business development activities on its subsidiary,
Northsight.  Northsight business activities are focused on providing
residential real estate investors and purchasers’   bridge
financing to purchase and rehabilitate discounted or foreclosed residential real
estate property.
 
 In early
2009, Navidec has reduced the bridge financing program to refocus on developing
residential real estate for our own benefit. This includes the completion and
sale of the Thomas Park project in South Boston (with an anticipated additional
expenditure of $150,000), the fix and sale of real estate owned and using our
liquidity to acquire other properties to fix and sale or to fix and
rent.
 
 Navidec
is also looking for other suitable businesses to invest as an active
participant.  We plan to do this by creating or acquiring a
controlling interest in development stage enterprises with the expectation of
further developing the enterprise and then taking the enterprise
public.  The Company generally focuses on developing one enterprise at
a time to take public.  There can be no assurances that any of our
investments will be successful.  (See Risk Factors beginning on Page
7.)
 
 In the
continuance of our business operations, we do not intend to purchase or sell any
significant assets.  However, due to economic conditions there might
be a reduction   in the number of employees.
 
 In
addition, the United States and the global business community is experiencing
severe instability in the commercial and investment banking systems which is
likely to continue to have far-reaching effects on the economic activity in the
country for an indeterminable period.  The short term impact is the
reduction of credit, the inability of many borrowers to acquire adequate
financing, reduction in work forces and possibly the continued decrease in
housing prices.  These market adjustments could cause a further
erosion in our collateral against our short term mortgage loans and erosion of
the market value of the real estate we own.
 
 The
long-term impact on the United States economy and the Company’s operating
activities and ability to raise capital cannot be predicted at this time, but
may be substantial.
  22
 Navidec
Financial Services, Inc.
 Table of Contents
  
 Subsequent
to the issuance of the Company's audited financial statements for the year ended
December 31, 2007, the Company determined that it would restate its
financial statements for the year ended December 31, 2007 as contained in
its Annual Report on Form 10KSBA, dated April 28, 2008 and the Form 10-Qs for
the quarterly periods ended March 31, 2008, June 30, 2008 and September 30,
2008.
 
 As a
result of the revocation of the registration with the Public Accounting
Oversight Board (PCAOB) of its previous auditors, Jaspers + Hall, PC, the
Company was required to engage new PCAOB registered accountants and re-audit its
2007 Financial Statements.
 
 During
the re-audit, the Company determined that it had not used the proper cost in
computing the gain on the sale of 980,000 BPZ Energy, Inc. (“BPZ”) common
shares.  The BPZ shares were acquired through warrants issued as a
result of the reverse merger with BPZ and Navidec, Inc. and the Company had
originally valued the warrants at $1.88 a share. The warrants had a strike price
of $2.00 a share.  Upon exercising the warrants and selling the
shares, the Company had reported a cost of $2.00 in its 2007 financial
statements.  The Company should have used $3.88 a share, which is the
original value of $1.88 a share plus the strike price of $2.00 a share. The
Company incorrectly reduced the cost with a corresponding decrease to Additional
Paid In Capital in 2007.
 
 As a
result, the Company over stated its earnings from the sale of BPZ shares by
$1,842,000 during the year ended December 31, 2007.  In the
restatement of the December 31, 2007 financial statements, the $1,842,000 was
accounted for as Additional Paid In Capital, to correct the previous incorrect
reduction in Additional Paid In Capital.  The result from the change
was a decrease in Retained earnings of $1,842,000 and an increase of $1,842,000
in Additional Paid In Capital.  This correction resulted in no overall
change in Stockholders’ Equity.
 
 Due to
using the incorrect BPZ cost, as of December 31, 2006 the BPZ asset and the
corresponding unrealized gain on securities were overstated by approximately
$900,000. Also in 2006, an additional 100,000 shares of BPZ were received by the
Company via a default judgment received by the Company.  A fair market
value of approximately $300,000 was not recognized upon receipt, which amount
would increase earnings in 2006 by $300,000. In addition, the Company had
incorrectly recorded an increase of $1,200,000 to Additional Paid In Capital in
2005.  The net impact on December 31, 2006 Stockholders’ Equity was an
approximate $1,800,000 reduction.
 
 Additionally,
as of December 31, 2007, the BPZ asset and the corresponding unrealized gain on
securities were overstated by approximately $810,000, due to failure to reduce
unrealized gains by related deferred taxes. In addition, unrealized gains were
understated by $240,000 due to the cost adjustment. The net impact on December
31, 2007 Shareholders’ Equity from this matter, exclusive of the tax
considerations below, is an approximate $570,000 reduction.  Since all
of the remaining BPZ investment was sold in 2008, the unrealized BPZ gains were
eliminated from the balance sheet along with the prior adjustments for
unrealized gains.
 
 The
Company also corrected deferred revenue from mortgage origination and accrued
expenses at December 31, 2007, that were previously recorded in 2008 of
approximately $200,000.  This correction resulted in a decrease of the
Company’s 2007 income of $200,000; however, increased revenue and decreased
expenses by the same amount for the year ended December 31, 2008.
 
  23
 Navidec
Financial Services, Inc.
 Table of Contents
  
 Results
of Operations
 
 For
the Year Ended December 31, 2008 Compared to the Year Ended December 31,
2007
 
 Our
revenues are a result of the activities of Northsight as a mortgage broker and
Navidec as a mortgage banker in the real estate
industry.    For the first six months of 2008, and all of
2007, Northsight acted as both a broker and banker, with Northsight’s source of
funds coming from Navidec.  Northsight paid interest on the funds that
Navidec advanced.  Beginning in July 2008, Navidec purchased the short
term mortgage notes back from Northsight in exchange for the amount owed by
Northsight to Navidec.
 
 During
the year ended December 31, 2008, we recognized revenues of $1,001,000, compared
to $643,000 in revenues during the year ended December 31, 2007, from operations
in the mortgage industry.  The increase of $358,000 was primarily a
result of additional advertising and marketing.  Cost of delivering
Northsight’s services (our cost of sales) was $858,000 for the year ended
December 31, 2008 compared to $597,000 for the year ended December 31,
2007.  The increase of $261,000 was a result of higher advertising,
higher marketing costs and increase in head count.
 
 Interest
revenues increased from $201,000 during the year ended December 31, 2007 to
$313,000 during the year ended December 31, 2008.  This increase of
$112,000 was a result of an increase during 2008 of the short term mortgage
notes outstanding.
 
 During
the year ended December 31, 2008, operating expenses were $2,349,000 compared to
$1,157,000 for the year ended December 31, 2007.  The increase of
$1,192,000 was primarily a result of expanding our short term mortgage offering
in both Colorado and Arizona including management salaries and infrastructure
investment.  There is also an increase of $114,000 to recognize stock
options issued to employees and accounted for under FAS 123R.  These
figures produced a loss from operations of $1,858,000 for the year ended
December 31, 2008 compared to a loss from operations of $910,000 for the year
ended December 31, 2007.
 
 During
the year ended December 31, 2008, we recognized a gain on the sale of our
investment in BPZ of $5,393,000 (total investment gain of $5,581,000) compared
to $3,317,000 for the year ended December 31, 2007.  We recognized
$1,578,000 and $314,000 in unrealized gains during the years ended December 31,
2008 and 2007, respectively.  On December 31, 2008, we held no BPZ
stock or warrants.
 
 During
the year ended December 31, 2007, we recognized a gain on the settlement of debt
of $50,000 via a default judgment awarded to us on March 28, 2006 in the
District Court of the City and County of Colorado.  The default
judgment was against Larson International Limited, a foreign corporation and
Leslie Greyling (a/k/a Leon Larson), an individual.  The amount of the
judgment was for $419,144 plus accrual of interest.  In 2006, the
Company also received from Greyling 100,000 shares of BPZ with a value of
$295,000. The Company continues to pursue the collection of the balance of the
settlement.
 
 During
the year ended December 31, 2008, the Company filed a lawsuit to collect on a
note receivable payable by Jaguar Group, LLC and Welend Associated Group
(“Jaguar”) and additional advances made by the Company to
Jaguar.   The note was for $1,100,000 and the additional
receivables were for $307,000.  During 2008, the Company received a
default judgment against Jaguar Group LLC and John Reinholdt Jr. (a principal in
Jaguar) for $3,107,000.  Management is aggressively pursuing the
collection of this judgment.  However, no assurance can be made of
collecting any of this judgment.  Therefore, Management has
established an allowance for the full amount of this debt and receivable for
$1,407,000 as of December 31, 2008.
  24
 Navidec
Financial Services, Inc.
 Table of Contents
  
 During  the
year  ended  December  31,  2008,  we  recognized  a
net  income  of $182,000 compared to a net income of
$2,301,000 during the year ended December 31, 2007. The resulting decrease of
$2,120,000 in net income was a direct result of the $2,752,000 allowance for
impairment against short term notes receivable, real estate owned and the Jaguar
note and receivable combined with the $734,000 (before tax credit of $170,000)
increase in operational losses as we built Northsight for expansion into the
mortgage market.
 
 LIQUIDITY
 
 From the
Company’s inception through December 31, 2008, we have funded our operations
primarily from the following sources:
 -
              Equity
      proceeds through private placements of Navidec
  securities;
 -
              Revenue
      generated from operations;
 -
              Loans
      and lines of credit;
 -
              Sales
      of equity investments;
 -
              Proceeds
      from the exercise of legacy Navidec, Inc.
  Options
 
 Cash flow
from operations has not historically been sufficient to sustain our operations
without the above additional sources of capital.  As of December 31,
2008, the Company had cash and cash equivalents of $874,000. Cash flow consumed
by our operating activities totaled $6,866,000 for the year ended December 31,
2008 compared to operating activities consuming $3,954,000 for the year ended
December 31, 2007.
 
 Cash
flows provided by our investing activities for the year ended December 31, 2008
were $5,232,000 compared to $4,198,000 for the year ended December 31,
2007.  In the year ended December 31, 2008 we received proceeds of
$5,581,000 (net of our cost) from the sale of equity investments which was
largely attributable to our sale of BPZ stock compared to $3,317,000 for the
year ended December 31, 2007. We expended $96,000 in the purchase of fixed
assets compared to purchase of $25,000 in fixed assets for the year ended
December 31, 2007.  During 2008, we invested $1,529,000 in our Thomas
Park (South Boston) real estate project.
 
 Net cash
produced in financing activities was $1,101,000 for the year ended December 31,
2008 compared to a production of cash of $984,000 for the year ended December
31, 2007.
 
 CRITICAL
ACCOUNTING POLICIES
 
 Navidec
has identified the policies below as critical to Navidec business operations and
the understanding of Navidec results from operations.  The impact and
any associated
risks  related  to  these  policies  on
the  Company’s  business  operations  is
discussed   throughout   Management’s   Discussion  and  Analysis  of  Financial
Conditions and Results of Operations where such policies affect Navidec reported
and expected  financial  results.  For a detailed
discussion on the application of these and other accounting policies, see Note 2
in the Notes to the Consolidated Financial Statements beginning on page 47 of
this document.  Note that the
Company’s  preparation  of
this  document  requires  Navidec to
make  estimates  and
assumptions   that  affect  the  reported  amount  of  assets  and  liabilities,
disclosure of  contingent  assets
and  liabilities  at the date of Navidec financial
statements,  and
the  reported  amounts  of  revenue  and  expenses  during  the
reporting period.  There can be no assurance that actual results will
not differ from those estimates.
  25
 Navidec
Financial Services, Inc.
 Table of Contents
  
 Revenue
Recognition
 
 Navidec
follows very specific and detailed guidelines in measuring revenue; however,
certain judgments may affect the application of Navidec revenue
policy.  Revenue results are difficult to predict, and any shortfall
in revenue or delay in recognizing revenue could cause Navidec operating results
to vary significantly from quarter to quarter and could result in future
operating losses.
 
 REVENUES
BUSINESS DEVELOPMENT SERVICES
 
 Revenue
from Navidec business development services is generally derived from time and
materials contracts and is recognized as the work is
completed.  Revenue recognition for time and materials contracts is
not significantly impacted by judgments and estimates. Within the business
development division a small amount of the work is performed based on fixed
price agreements.  When this occurs the projects are generally of a
short duration and revenue is recognized when the project is
completed.
 
 REVENUES
FROM MORTGAGE SERVICES
 
 Revenues  from  mortgage   brokerage   operations   are  generally   related  to
transaction-based   fees  and  are  recognized  at  the   consummation   of  the
transactions, generally when mortgage transactions close.  FAS 65
(Accounting for Certain Mortgage Banking Activities) and FAS 91 (Accounting for
Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans and
Initial Direct Costs of Leases) require that fees collected by a mortgage
banking entity be amortized over the expected life of the
loan.   In our case, this is generally 90 days.
 
 ALLOWANCE
FOR BAD DEBT
 
 Navidec’s
policy on allowances for bad debt determines the timing and recognition of
expenses.  The Company follows guidelines that establishes allowances
based off of historical and account specific trends; however, certain judgments
affect the application of Navidec bad debt allowance policy. Navidec receivables
are recorded net of an allowance for doubtful accounts which requires management
to estimate amounts due which may not be collected.  This estimate
requires consideration of general economic conditions, overall historical trends
related to the Company’s collection of receivables, customer specific payment
history, and customer specific factors affecting their ability to pay amounts
due.  Management routinely assesses and revises its estimate of the
allowance for doubtful accounts.  As of year ended December 31, 2007,
we had $5,000 allowances for bad debt. As of December 31, 2008 we had the
following allowances:
 
 Allowance
      for
                    AmountShort
      Term Mortgages
                    $
      476,000Jaguar
      Note Receivable
                    1,407,000Boston
      Property – Thomas Park
                    492,000Real
      Estate  owned – depreciation
                    27,000Real
      Estate owned – impairments
                    298,000Total
                    $
      2,700,000
 
 GOODWILL
AND INTANGIBLE ASSETS
 
 Navidec
does not carry any intangible assets or goodwill on its books as of December 31,
2008 and 2007.
  26
 Navidec
Financial Services, Inc.
 Table of Contents
  
 QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
 Navidec
is exposed to the impact of interest rate changes and change in the market
values of the Company’s investments.  Based on
Navidec's  market  risk  sensitive
instruments  outstanding  as of December 31,
2008,  as described  below,  it has
determined  that there was no  material  market
risk  exposure to the  Company's consolidated financial
position, results of operations, or cash flows as of such date. Navidec does not
enter into derivatives or other financial instruments for trading or speculative
purposes.
 
 INTEREST
RATE RISK
 
 At
December 31, 2008, the Company’s exposure to market rate risk for changes in
interest rates relates primarily to its borrowings, as well as, its mortgage
services business.  Navidec has not used derivative financial
instruments in its credit facilities.  A hypothetical 10% increase in
the Prime rate would not be significant to the Company's financial position,
results of operations, or cash flows.
 
 IMPAIRMENT
POLICY
 
 Once per
quarter, Navidec examines all of their assets for proper valuation and to
determine if an allowance for impairment is necessary.  In terms of
real estate owned, this impairment examination also includes the accumulated
depreciation.   Management examines market valuations and if an
additional impairment is necessary for lower of cost or market, then impairment
is booked.  Conversely, if Management determines the impairment to be
excessive, then the impairment will be reduced.  Each real estate
property and note held is analyzed quarterly.
 
 INVESTMENT
RISK
 
 In
addition to the Navidec's investments in securities of BPZ, from time to time
Navidec has made investments in equity instruments in companies for business and
strategic purposes.  These investments, when held, are included in
other long-term assets and are accounted for under the cost method since
ownership is less than 20% and Navidec does not assert significant
influence.
 
 INFLATION
 
 Navidec
does not believe that inflation will have a material impact on its future
operations.
 
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
 
 We are
exposed to the impact of interest rate changes and change in the market values
of our real estate properties. Based on our market risk sensitive instruments
outstanding as of December 31, 2008, as described below, it was determined that
there was no material market risk exposure to our consolidated financial
position, results of operations, or cash flows as of such date. We do not enter
into derivatives or other financial instruments for trading or speculative
purposes.
 
 ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
 
 The
Report of the Independent  Registered  Accounting Firm
appearing at Page 40 and the
Consolidated  Financial  Statements and Notes to
Consolidated  Financial Statements appearing at Pages 41 through 60
hereof are incorporated herein by reference.
  27
 Navidec
Financial Services, Inc.
 Table of Contents
  
 
 ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
 
 During
the year ended December 31, 2007 and the period of January 1, 2008 through
October 27, 2008, we had no disagreements with our Independent Registered Public
Accounting Firm, Jaspers + Hall, P.C.  However, on October 28, 2008,
the Company was notified that Jaspers + Hall, P.C. ability to audit registered
companies was revoked by the Public Company Accounting Oversight Board
(“PCAOB”).  Therefore, on October 28, 2008, the Jaspers + Hall, P.C.
were dismissed as the Company’s Independent Registered Public Accounting
Firm.
 
 On
November 1, 2008, the Board of the Company approved the engagement of new
auditors, Schumacher & Associates, Inc., of Denver, Colorado to be the
Company’s independent registered public accountant.  No audit
committee exists, other than the members of the Board of Directors.
 
 ITEM 9A.  CONTROLS AND PROCEDURES
 
 Disclosures
Controls and Procedures
 
 We have
adopted and maintain disclosure controls and procedures (as such term is defined
in Rules  13a-15(e) and 15d-15(e)  under the
Securities  Exchange Act of
1934,  as  amended  (the  "Exchange  Act")  that
are  designed  to ensure  that
information  required to be disclosed in our reports  under
the Exchange Act, is recorded,  processed,  summarized and
reported within the time periods  required
under  the  SEC's  rules and forms  and
that the  information  is  gathered  and
communicated to our management, including our Chief Executive Officer (Principal
Executive Officer) and Chief Financial Officer (Principal Financial Officer), as
appropriate, to allow for timely decisions regarding required
disclosure.
 
 As
required by SEC Rule 15d-15(b), Mr. John McKowen, our Chief Executive Officer
and Principal Financial Officer carried out an evaluation under the supervision
and with the participation of our management, of the effectiveness of the design
and operation of our disclosure controls and procedures pursuant to Exchange Act
Rule 15d-14 as of the end of the period covered by this report
 
 The
Company,  under the supervision and with the  participation of the
Company's management,   including  the  Company's 
Chief  Executive  Officer/Acting  Chief Financial 
Officer,  performed an evaluation of the  effectiveness of the design
and operation of the Company's disclosure controls and procedures as of December
31, 2008.  Based  on that  evaluation,  the 
Chief  Executive  Officer/Acting  Chief Financial Officer 
concluded that,  because of the material weakness in internal control
over  financial  reporting  described  below,  the
Company's  disclosure controls and procedures were not effective as of
December 31, 2008.
  28
 Navidec
Financial Services, Inc.
 Table of Contents
  
 ITEM 9A(T).CONTROLS AND
PROCEDURES
 
 Management's
Annual Report on Internal Control Over Financial Reporting.
 
 Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting for the company in accordance with as defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our
internal  control over financial  reporting is designed to
provide reasonable  assurance regarding
the  reliability  of  financial  reporting  and  the  preparation  of  financial
statements  for  external   purposes  in  accordance  with  generally   accepted
accounting  principles.  Our internal control over financial
reporting includes those policies and procedures that:
 
 (i)
              pertain
      to the  maintenance  of records  that, in
      reasonable detail,  accurately and fairly reflect
      the  transactions and dispositions of our
  assets;
 
 (ii)
              provide
      reasonable  assurance that transactions are recorded as
      necessary to permit  preparation of
      financial  statements  in accordance with generally
      accepted accounting principles, and that our receipts
      and  expenditures  are being made on  in
      accordance  with  authorizations  of
      our  management  and directors;
  and
 
 (iii)
              provide
      reasonable  assurance regarding prevention or timely detection
      of unauthorized acquisition, use or disposition of
      our  assets  that  could  have  a  material  effect  on  our
      financial statements.
 
 Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
 
 Management’s assessment of the
effectiveness of the small business issuer’s internal control over financial
reporting as of the year ended December 31, 2008, is that we believe that
internal control over financial reporting has not been effective, and we in the
process of improving controls.  We have identified certain material
weaknesses of accounting relating to ashortage of qualified information
technology, IT personnel and financial reporting personnel due to limited
financial resources.  This material weakness can lead to the
following:
 ·
              An
      inability to ensure there is timely analysis and review of accounting
      records, spreadsheets, and supporting data;
and
 ·
              an
      inability to effectively monitor access to, or maintain effective controls
      over changes to, certain financial application programs and related
      data.
 
 Considering
the nature and extent of our current operations and any risks or errors in
financial reporting under current operations, the fact that we have been a small
business with limited employees and that our Chief Financial Officer resigned in
2007 caused a weakness in internal controls involving the areas disclosed
above.
  29
 Navidec
Financial Services, Inc.
 Table of Contents
  
 We now
have, in 2008, hired a full time in-house Certified Public Accountant and have
taken the following steps:
 ·
              we
      have authorized the addition of additional staff members to the finance
      department to ensure that there are sufficient resources within the
      department to prepare our financial statements and disclosures in
      accordance with accounting principles generally accepted in the United
      States of America; and
 ·
              we
      are in the process of analyzing our processes for all business units and
      the establishment of formal policies and procedures with necessary
      segregation of duties, which will establish mitigating controls to
      compensate for the risk due to lack of segregation of
      duties.
 
 This  annual  report  does
not include an  attestation  report of
the  company's
registered  public  accounting  firm
regarding  internal  control over financial
reporting.  Management's  report was not subject to
attestation by the Company's
registered  public  accounting  firm pursuant to
temporary rules of the SEC that permit the Company to provide only management's
report in this annual report.
 
 There  was
no change in
our  internal  control  over  financial  reporting  that
occurred  during the fiscal  year ended December 31, 2008
that has materially affected,  or is reasonably  likely to
materially  affect,  our internal control over financial
reporting.
 
 ITEM 9B. OTHER INFORMATION
 
 None
  30
 Navidec
Financial Services, Inc.
 Table of Contents
  
 PART
III
 
 ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16 (a) OF THE
EXCHANGE ACT
 
 At
December 31, 2008, our officers and directors were the individuals listed
below:
 
 Age
                Position
                TermJohn
      McKowen
                59
                Chief
      Executive Officer, Chief Financial Officer, Chairman of the Board of
      Directors
                AnnualHoward
      L. Farkas
                84
                Director
                AnnualJolee
      Henry
                54
                Director
                Annual
 
 Navidec
officers are elected by the board of directors at the first meeting after each
annual meeting of Navidec shareholders and hold office until their successors
are duly elected and qualified under Navidec bylaws.
 
 The
directors named above will serve until the next annual meeting of the Company's
stockholders. Thereafter, directors will be elected for one-year terms at the
annual stockholders’ meeting.  Officers will hold their positions at
the pleasure of the board of directors absent any employment
agreement.  There is no arrangement or understanding between the
directors and officers of the Company and any other person pursuant to which any
director or officer was or is to be selected as a director or
officer.
 
 The
directors and officers of the Company will devote such time to the Company's
affairs on an "as needed” basis, but no less than 20 hours per
month.  As a result, the actual amount of time, which they will devote
to the Company’s affairs is unknown and is likely to vary substantially from
month to month.
 
 BIOGRAPHICAL
INFORMATION
 
 Management  will
devote minimal time to the  operations of the Company,  and
any time spent will
be  devoted  to  screening  and  assessing  and,  if  warranted,
negotiating to acquire business opportunities.
 
 JOHN R.
MCKOWEN.  Mr. McKowen has served as the Chief Executive Officer and a
Director and Chairman of the Board of the Company since the Company was founded
in December 2002.  Mr. McKowen also served as President and Chief
Executive Officer of Navidec, Inc. from August 2003 to September 2004 and served
as a director of Navidec, Inc., now BPZ, from December 2002 to May 2005. Mr.
McKowen was hired by Navidec, Inc. as a financial consultant in 1996 and was
involved in the private, public and secondary financing of Navidec, Inc. He
served as a financial consultant to Navidec, Inc. until March 1999. Mr. McKowen
began his career in the financial services industry 1978.  In 1984 Mr.
McKowen began working as an independent consultant and has worked in that
capacity for the last 23 years. Mr. McKowen received a B.A. in economics from
Metropolitan State College.
  31
 Navidec
Financial Services, Inc.
 Table of Contents
  
 HOWARD L.
FARKAS. Mr. Farkas serves as a Director of the Company since July 12,
2006.  Mr. Farkas is the owner and managing broker of Windsor Gardens
Realty, Inc., a residential real estate brokerage company, which he co-founded
in 1964. He also serves as President of Farkas Group, Inc., a company that
provides management services to various business interests.  He serves
as a director of  Synthetech,  Inc.,  a
public  chemical  research
and  manufacturing  company  whose  products
are used extensively  in new
drug  research;  Logic  Devices,  Inc.,
a publicly  held and traded semiconductor  design and
manufacturing  company for which he also serves as
Chairman;  Northwestern  Engineering  Company,  a
privately held real estate, lumber  processing,  and hotel
owner and operator;  and Ivory LLC,  Aragorn LLC,
Strider  LLC,  Angel  LLC,  and
Buddy  LLC,  all of which are in the gas and oil exploration
and development business.
 
 Mr.
Farkas is a licensed CPA, though not presently in practice, a real estate
broker, and graduated from the University of Denver with a BS (BA)
degree.  He has had extensive experience in running large companies in
the condominium construction and management business over a period in excess of
twenty years.
 
 JOLEE R.
HENRY.  Effective July 1, 2008, Mrs. Henry was appointed a director of
the Company.  She was voted to an annual term at the November 2008
Shareholder meeting. Ms. Henry serves as a Director of the Company. Ms. Henry
was previously married to John R. McKowen, the CEO and President of the
Company.  Ms. Henry currently is a licensed therapist in the State of
Colorado and nationally.  Ms. Henry has founded, developed and
operated or sold three separate startup companies.  From 1984 to 1991,
Ms. Henry founded and operated a company called Jules's Books, which was the
first children’s book publisher to create and nationally distribute pre-reading
plasticized children’s natural history picture books to museums and other public
history outlets.  From 1989 to 1996, Ms. Henry  founded
and  operated a
company  called  Forever  Pesto which
created,  manufactured and nationally
distributed  proprietary pesto products to sales outlets like City
Markets,  Vaughn's,  Safeway and Dean & Deluca. In 1995,
Ms. Henry developed, obtained a provisional patent and sold a natural zinc
lollipop concept called Zinky-Pop.  Ms. Henry currently holds an
active real estate license from the State of Colorado.
 
 Ms. Henry
earned a BA from Arizona State University, 1977 and a Master's Degree from the
University of Northern Colorado, 2001. Both degrees are in Psychology and
Community Counseling.
 
 Ms.
Henry  currently  is a member of
the  National  Board of Certified Counselors, the Colorado
Association for Psychotherapists, Association for Death
Education  and  Counseling,  Hospice of
Metro  Denver,  the American  Society of Clinical
Hypnosis, the National Board of Certified Clinical
Hypnotherapist,  and the American Counseling Association.
 
 COMMITTEE
OF THE BOARD OF DIRECTORS
 
 We are
managed under the direction of our board of directors.  Navidec's
board of directors also acts as the audit committee with Mr. Farkas acting as
the chair.
 
 CONFLICTS
OF INTEREST - GENERAL
 
 Our
directors and officers are, or may become, in their individual capacities,
officers, directors, controlling shareholder and/or partners of other entities
engaged in a variety of businesses.  Thus, there exist potential
conflicts of interest   including,   among other
things,   time, efforts and corporation opportunity, involved in
participation with such other business entities. While each officer and director
of our business is engaged in business activities outside of our business, they
devote to our business such time as they believe to be
necessary.
  32
 Navidec
Financial Services, Inc.
 Table of Contents
  
 
 CONFLICTS
OF INTEREST - CORPORATE OPPORTUNITIES
 
 Presently
no requirement is contained in our Articles of Incorporation, Bylaws, or minutes
which require officers and directors of our business to disclose to us business
opportunities which come to their attention. Our officers and directors
do,  however,  have a  fiduciary  duty
of  loyalty to us to  disclose  to us any
business  opportunities  which come to their
attention,  in their capacity as an
officer  and/or  director  or  otherwise.  Excluded  from  this  duty  would  be
opportunities  which the
person  learns  about  through  his  involvement  as
an officer and director of another company. We have no intention of merging with
or acquiring an affiliate, associate person or business opportunity from any
affiliate or any client of any such person.
 
 SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
 
 Section  16(a)  of  the  Securities  Exchange  Act  requires  our  Officers  and
Directors, and persons who own more than 10% of a registered class of our equity
securities,  to file reports of ownership and changes in ownership
with the SEC.
Officers,  directors  and  greater  than
10%  shareholders  are  required by SEC regulation
to furnish us with copies of all Section 16(a) forms they file. Based solely on
our review of copies of
such  reports  received,  and  representations
from certain  reporting  persons,  we believe
that, during the fiscal year ended December  31, 2008,  some
of the  Section  16(a)
filing  requirements  applicable  to our
officers,  directors  and  greater  than
10%  beneficial  owners  were  not filed
in compliance with all applicable requirements.
 
 ITEM 11.  EXECUTIVE COMPENSATION
 
 The
following table sets forth certain information concerning compensation paid by
the Company to the President and the Company’s two most highly compensated
executive officers for the fiscal year ended December 31, 2008, 2007 and 2006
(the "Named Executive Officers"):
  33
 Navidec
Financial Services, Inc.
 Table of Contents
  
 
 SUMMARY EXECUTIVE
COMPENSATION TABLE
 
 Name
      & Position
                            Year
                            Salary
      ($)
                            Bonus
      (S)
                            Stock
      Awards ($)
                            Option
      Awards ($)
                            Non-equity
      incentive plan comp
                              ($)
                            Non-qualified
      deferred comp earnings ($)
                            All
      other comp ($)
                            Total
      ($)JohnMcKowen,
                              President
                            2008(1)
                            270,833
                            0
                            0
                            0
                            0
                            0
                            45,779
                            316,6122007(2)
                            156,000
                            100,000
                            0
                            0
                            0
                            0
                            0
                            256,0002006(3)
                            150,000
                            0
                            0
                            13,963
                            0
                            0
                            0
                            163,963Robert
      Grizzle,
                              CFO
      & COO
                            2008
                            0
                            0
                            0
                            0
                            0
                            0
                            0
                            02007(4)
                            87,500
                            0
                            0
                            0
                            0
                            0
                            0
                            87.5002006
                            112,500
                            0
                            0
                            4,265
                            0
                            0
                            0
                            116,765
 
 (1)
      Other Compensation is the taxable portion of the health insurance benefit
      ($11,765); auto allowance ($13,014), and office reimbursement
      ($21,000).
 (2)  During
      the year ended December 31, 2007, Mr. McKowen received a cash bonus of
      $100,000, which was offset against advances of $5,372 owed to the Company.
      He received a net amount of $94,638 before
  taxes.
 (3)  Mr.
      McKowen’s options were granted on July 12, 2006.  A black-shoals
      computation indicated an immaterial value upon grant and
      vesting.
 (4)  In
      September 2007, Mr. Grizzle resigned as the Chief Financial Officer and
      Chief Operating Officer of the Company.  When Mr. Grizzle’s
      options were granted and vested, a black-shoals computation showed an
      immaterial value.
 
 Employment
Agreements
 
 On
September 9, 2004, the Company entered into an employment agreement with John
McKowen, as President and CEO.  The initial term of the contract was 2
years, which renews automatically for successive one year terms unless and until
either party delivers notice of termination within  30 days of the
expiration of the then current term.
  34
 Navidec
Financial Services, Inc.
 Table of Contents
  
 OUTSTANDING EQUITY AWARDS AT
FISCAL YEAR END
 The
following table sets forth certain information concerning outstanding equity
awards held by the President and our most highly compensated executive officers
for the fiscal year ended December 31, 2008 (the "Named Executive
Officers"):
 
 No.
      of securities underlying unexercised options
                  (#)
                No.
      of securities underly-ing unexer-cised options
                  (#)
                Equity
      incentive plan awards: No. of securities underly-ing unexer-cised unearned
      options
                  (#)
                Option
      exercise price ($)
                Option
      expir-ation date
                No.
      of shares or units of stock that have not vested (#)
                Market
      Value of shares or units of stock that have not vested
                  ($)
                Equity
      incentive plan awards: no. of unearned shares, units or other rights that
      have not vested
                  (#)
                Equity
      incentive plan awards; Market or payout value of unearned shares, units or
      other rights that have not vested
                  ($)John
      McKowen, President
                1,480,948
                0
                0
                $1.25
                7/11/16
                0
                0
                0
                0Robert
      Grizzle, CFO, COO
                200,000
                0
                0
                $0.05
                9/21/04
                0
                0
                0
                0452,362
                0
                0
                $1.25
                7/11/16
                0
                0
                0
                0
 
 DIRECTOR
COMPENSATION
 The
following table sets forth certain information concerning compensation paid to
our directors for services as directors, but not including compensation forservices as
officers reported in the "Summary Executives Compensation Table” during the year
ended December 31, 2008:
 
 Name
                Fees
      earned or paid in cash
                  ($)
                Stock
      awards
                  ($)
                Option
      Awards ($)
                Non-equity
      incentive plan compen-
                  sation
                  ($)
                Non-
                  Qualified
                  Deferred
      compen-
                  sation
      earnings
                  ($)
                All
      other compen-sation
                  ($)
                Total
                  ($)John
      McKowen (1)
                0
                0
                0
                0
                0
                0
                0Howard
      Farkas
                35,000(2)
                0
                0
                0
                0
                1,346(3)
                36,346Jolee
      Henry
                5,000
                0
                61,985(4)
                0
                0
                0
                66,985
 (1)  During
      the year ended December 31, 2008, Mr. McKowen received compensation as set
      forth in the Executive Compensation Table on page
  33.
 (2)
      During the year ended December 31, 2008, and included in this amount, Mr.
      Farkas was paid $2,000 for services rendered in
  2007.
 (3)  The
      Company purchased a computer for Mr.
Farkas.
 (4)
      Ms. Henry was awarded 200,000 options in July 2008 with one-third vesting
      immediately, one-third in July 2009 and the remaining one-third in July
      2010 with a strike price of $2.00/share.  The value of the
      option award was derived by using a black-shoals
    calculation.
  35
 Navidec
Financial Services, Inc.
 Table of Contents
  
 Each
outside director receives $5,000 per meeting for their services when the board
meeting discusses financial results.  This amount is limited to
$20,000 per year.  This includes services for the Audit
Committee.
 
 LONG TERM
COMPENSATION PLANS AND STOCK OPTIONS
 
 The board
of directors has adopted a Management Incentive Plan that contemplates the
issuance of options as well as cash bonuses to certain executive officers and
key employees of the Company.  The incentive plan is administered by
the Company's board of directors and it is contemplated that bonuses will be
granted following the successful closing of a transaction by the business
development division of the Company.  The amount of the grants will be
based on the value of
the  transaction  and  participants  are  designated
by the  Company's  board of directors
upon  recommendation  by the Chief
Executive  Officer.  There have not been any stock options
granted under this incentive plan.
 
 Stock
Option Plan
 
 On May 6,
2005, the Company's board of directors adopted the Navidec Financial Services,
Inc.  2005 Stock  Option  Plan  pursuant
to which the board may grant options to  purchase a maximum
of  5,000,000  shares of Navidec common  stock to
key
employees,  directors  and  consultants.  As
of December  31,  2008,  options to
purchase  an  aggregate  of  3,941,510  shares
of common  stock were  issued and
outstanding  consisting of options to purchase 200,000 shares of
common stock at an  exercise  price of $0.05 per
share,  options
to  purchase  2,981,510  shares of common stock at
an exercise  price of $1.25 per share and options to purchase an
aggregate of 760,000  shares of common stock at an exercise price of
$2.00 per share.  The later options were granted to the Company’s
executive officers and Directors and are subject to approval by the shareholders
at the next annual meeting of the Company.  The option plan only
provides for the grant of nonqualified stock options.
 
 The
exercise price of options may not be less than the fair market value on the date
of grant as determined by the board of directors and will expire no later than
the tenth anniversary of the date of grant. The board may establish vesting or
other requirements which must be met prior to the exercise of the stock
options.  In the event of
a  corporate  transaction  involving  Navidec  (including,
without  limitation,   any  stock  dividend,  stock  split,  extraordinary  cash
dividend,  recapitalization,  reorganization,  merger,
consolidation,  split-up, spin-off,  combination or exchange
of shares),  the board may adjust outstanding awards to preserve the
benefits or potential benefits of the awards.
 
 Audit
Committee
 
 The
Company does not have a separate Audit Committee.  The members of the
Board sit as the Audit Committee and Mr. Farkas is the chair of this
committee.
 
 Code of
Ethics
 
 The
Company has not adopted a Code of Ethics for the Board and the salaried
employees.
  36
 Navidec
Financial Services, Inc.
 Table of Contents
  
 
 ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
 
 The
following  table sets
forth  certain  information  regarding
the  beneficial ownership of outstanding shares of the Company's
common stock as of December 31, 2008 on a
fully  diluted  basis,  by (a) each person known
by the Company to own beneficially  5% or more of
the  outstanding  shares  of
common  stock,  (b) the Company's
directors,  Chief Executive Officer and executive officers whose total
compensation  exceeded  $100,000 for the last fiscal year,
and (c) all directors and executive officers of the Company as a
group.
 
 Title
      of Class
                Name
      and Address of Beneficial Owner
                Amount
      and Nature of Beneficial Owner
                Percent
      of Class (1)Common
      Shares
                John
      McKowen (2)
                  2000
      S Colorado Blvd
                  Annex
      Bldg Ste 200
                  Denver
      CO  80222
                3,277,002
                21.43%Common
      Shares
                Robert
      Grizzle (3)
                  6501
      S Fiddler’s Green Cr.
                  Ste.
      116
                  Greenwood
      Village CO  80111
                872,362
                5.63%Common
      Shares
                Howard
      Farkas (4)
                  2000
      S Colorado Blvd.
                  Annex
      Bldg.  Ste 200
                  Denver
      CO  80222
                1,223,200
                7.89%Common
      Shares
                Jolee
      Henry (5)
                  2000
      S Colorado Blvd.
                  Annex
      Bldg.  Ste 200
                  Denver
      CO  80222
                1,512,850
                9.76%Total
      for all Directors and Executive Officers as a Group (3 persons, excluding
      Robert Grizzle)
                6,013,052
                38.80%
 
 (1)  Applicable
      percentage ownership is based on 9,019,057 shares of common stock issued
      and outstanding as of December 31, 2008. Beneficial ownership is
      determined in accordance with the rules of the Securities and Exchange
      Commission and generally includes voting or investment power with respect
      to securities. Shares of common stock that are currently exercisable or
      exercisable within 60 days of December 31, 2008 are deemed to be
      beneficially owned by the person holding such securities for the purpose
      of computing the percentage of ownership of such person, but are not
      treated as outstanding for the purpose of computing the percentage
      ownership of any other person.  For the purpose of the Officers
      and Directors compensation, there are 9,019,057 common shares outstanding;
      3,248,177 options and 2,815,000 warrants, for a total dilution pool of
      15,498,900 which is used as the denominator is the Percent of Class
      calculation.
 (2)  Mr.
      McKowen holds, directly, 1,796,054 shares of the Company’s common
      stock.  He holds options exercisable for 1,480,948 shares of the
      Company’s common stock.
 (3)
      Mr. Grizzle holds, directly, 220,000 shares of the Company’s common
      stock.  He hold options exercisable for 652,362 shares of the
      Company’s common stock.  Mr. Grizzle resigned as the Chief
      Financial Officer and Chief Operating Officer of the Company in September,
      2007.
 (4)
      Mr. Farkas holds, directly and beneficially, 200,000 shares with his wife
      of the Company’s common stock.  He holds options exercisable for
      1,023,200 shares of the Company’s common
stock.
 (5)
      Ms. Henry holds, directly, 1,312,850 shares of the Company’s common stock.
      She holds options exercisable for 200,000 shares of the Company’s common
      stock.
  37
 Navidec
Financial Services, Inc.
 Table of Contents
  
 ITEM  13.  CERTAIN   RELATIONSHIPS   AND
RELATED   TRANSACTIONS   AND DIRECTOR
INDEPENDENCE
 
 Intercompany
Transactions
 
 Starting  in
July  2007,  Navidec  began  lending  money  to  Northsight  to  enable
Northsight  to make
short  term,  mortgage  backed  loans
to  borrowers  who are
purchasing  deeply  discounted or
foreclosed  residential real estate in Arizona and Colorado. As of
December 31, 2007, Navidec had lent Northsight $5,826,000.  The loans
to Northsight yield 12% and are callable on demand by Navidec. The loans to
Northsight  are  collateralized by a
first  security  interest
in  Northsight's  equity interest  in
its  warehouse  lines of  credit  and
first  deeds of trust.  As of December 31, 2007, Northsight
had $2,204,000 in short term bridge loans outstanding.
 
 In June,
2008, Navidec became the direct funding source for the short term, mortgage
backed loans with Northsight acting as the mortgage
originator.  Therefore, Northsight transferred the loans outstanding
back to Navidec in exchange for the cancellation of the intercompany
note.  As of December 31, 2008, Navidec had $2,203,000 in short term
bridge loans outstanding, which is net of an allowance for uncollectable loans
of $476,000.
 
 Officer
and Directors Transactions
 
 During
the year ended December 31, 2008, the Company paid Mr.  McKowen, the
President of the Company, total compensation of $340,612 which consists of
salary of $270,833, health insurance benefit of $11,765, auto allowance of
$13,014, and an office reimbursement of $21,000.
 
 During
the year ended December 31, 2008, the Company reimbursed Mr. McKowen at the rate
of $1,750 per month for the use of approximately 750 square feet in his
home.  During the year ended December 31, 2008, the Company reimbursed
Mr. McKowen, $21,000 in rent.
 
 On May 3
2007, Navidec signed a Settlement Agreement with Mr. Armijo and Mr. Grizzle and
received $300,000 in cash from Mr. Ralph Armijo and the transfer of 68,862 share
of Navidec common stock and surrender of 100,000 options to purchase Navidec
common stock at $0.28 of the Company as payment in full for his obligation under
the terms of the original note. At the same time the Company re-negotiated the
terms of the original note with Mr. Grizzle, the former Chief Financial Officer,
whereby Mr. Grizzle executed a note payable to the Company for
$450,000.  The  re-negotiated  note carries an 8%
interest  rate and is collateralized by
1,000,000  Aegis  common  shares, 1,500,000 Aegis
preferred  shares,  220,000 shares of the Company's common
stock and 200,000  options to purchase  shares of the
Company's  common stock at $0.05 per share held by Mr.
Grizzle.  Further the note provides that the note shall be repaid at
the earlier of one year from the date that the common stock of the Company is
publicly traded
  38
 Navidec
Financial Services, Inc.
 Table of Contents
  and his
shares are  registered  for resale  under an
effective  registration  statement  filed by the
Company or December  31,  2009. On October 17, 2008, the
Company filed with the SEC an S-8 registration statement registering Mr.
Grizzle’s shares.  Therefore, the $450,000 note is due on October 17,
2009.  Further, under the terms of the Settlement Agreement dated May
17, 2007, Mr. Grizzle resigned as the Chief Operating Officer and the Chief
Financial Officer of the Company, effective September 30, 2007.
 
 ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES
 
 GENERAL.
Schumacher and Associates, LLC has been engaged as the Company's principal audit
accounting firm from November 5, 2008 to date.  The Company's Board of
Directors has considered whether the provisions of audit services are compatible
with maintaining Schumacher’s independence.  Prior to November 5,
2008, Jaspers + Hall, P.C. was engaged as the Company’s principal accounting
firm for the year ended December 31, 2007 and the period of January 1, 2008
through October 28, 2008.
 
 The
following table represents aggregate fees billed to the Company during the year
ended December 31, 2008 by both Schumacher ($11,800) and by Jaspers ($27,000)
and for the year ended December 31, 2007 by Jaspers ($31,100).
 
 Year
      Ended December 31,2008
                    
                    2007Audit
      Fees
                    
                    $38,800
                    
                    $31,100Audit-related
      Fees
                    
                    0
                    
                    0Tax
      Fees
                    
                    0
                    
                    0All
      Other Fees
                    
                    0
                    
                    0Total
      Fees
                    
                    $38,800
                    
                    $31,100
 
 The
Company uses a different CPA/Attorney firm for the preparation of income tax
reporting.
  39
 Navidec
Financial Services, Inc.
 Table of Contents
  
 PART
IV
 
 ITEM
15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES
 
 The
following is a complete list of exhibits filed as part of this Form 10K. Exhibit
number corresponds to the numbers in the Exhibit table of Item 601 of Regulation
S-K.
 
 Number
                            Description3.3
                            Articles
      of Organization – Southie Developments, LLC – 1/31/08
                            Filed
      Herewith3.4
                            Articles
      of Amendment – Southie Developments, LLC – 2/22/08
                            Filed
      Herewith10
                            John
      McKowen Employment Agreement
                            Filed
      Herewith21
                            List
      of Subsidiaries
                            Filed
      Herewith31.1
                            Certification
      of Chief Executive Officer pursuant to Section 302 of  the
      Sarbanes-Oxley Act
                            Filed
      Herewith32.1
                            Certification
      of Principal Executive Officer pursuant to Section 906  of the
      Sarbanes-Oxley Act
                            Filed
      Herewith
 
  40
 Navidec
Financial Services, Inc.
 Table of Contents
  SIGNATURES
 
 Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
 
 
 Navidec
      Financial Services, Inc.Dated:
      April 14, 2009By:
              /s/John
      McKowenJohn
      McKowen,
                President,
      Chief Accounting Officer and Director
 
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
  
 Dated:
      April 14, 2009Navidec
      Financial Services, Inc./s/John
      McKowenJohn
      McKowen, President, Chief Accounting Officer and
  Director/s/Howard
      L. FarkasHoward
      L. Farkas, Director/s/Jolee
      HenryJolee
      Henry, Director
  
  41
 Navidec
Financial Services, Inc.
 Table of Contents
  
 NAVIDEC
FINANCIAL SERVICES, INC. AND SUBSIDIARIES
 
 Report
of Independent Registered Public Accounting Firm
 
 
 Board of
Directors and Shareholders
 Navidec
Financial Services, Inc. and Consolidated Subsidiaries
 
 We have
audited the accompanying consolidated balance sheets of Navidec Financial
Services, Inc. and Consolidated Subsidiaries, as of December 31, 2008 and 2007
(as restated), and the related consolidated Statements of Earnings,
Stockholders' Equity, and Cash Flows for the years ended December 31, 2008 and
2007 (as restated). These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
 
 We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States of America). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform an audit of its internal
control over financial reporting.  Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the company's internal control
over financial reporting.  Accordingly, we express no such opinion.
 An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audit provides a reasonable basis for our opinion.
 
 In our
opinion, the financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Navidec Financial
Services, Inc. and Consolidated Subsidiaries as of December 31, 2008 and 2007
(as restated), and the results of its consolidated operations and cash flows for
the years ended December 31, 2008 and 2007 (as restated), in conformity with
accounting principles generally accepted in the United States of
America.
 
 As
disclosed in Note 2 to the financial statements, the Company has restated its
consolidated balance sheet as of December 31, 2007, and the related consolidated
statements of earnings, stockholders’ equity and cash flows for the year then
ended.
 
 SCHUMACHER
& ASSOCIATES, INC.
 
 Denver,
Colorado
 April 10,
2009
 
 
  42
 Navidec
Financial Services, Inc.
 Table of Contents
  
 NAVIDEC
FINANCIAL SERVICES, INC. AND SUBSIDIARIES
 Consolidated
Balance Sheets (In Thousands)
 December
      31,
                          
                          December
      31,2008
                          
                          2007ASSETS
                          
                          
                          
                          RESTATEDCurrent
      AssetsCash
      and cash equivalents
                          $
                          874
                          $
                          1,407Mortgages
      receivable - net of allowance of $476 on December 31, 2008 and $5 on
      December 31, 2007 and unearned income of $6 and $51 at December 31, 2008
      and 2007, respectively
                          
                          2,197
                          
                          2,148Note
      receivable - Jaguar Group LLC - net of allowance of $1,407 on December 31,
      2008 and $54 imputed interest on December 31, 2007 (Notes 1,
      4)
                          
                          -
                          
                          1,047Accrued
      interest receivable
                          
                          88
                          
                          45Advances
      receivable - related party
                          
                          -
                          
                          5Prepaid
      Expenses
                          
                          21
                          
                          62Total
      Current Assets
                          
                          3,180
                          
                          4,714Property,
      equipment and software, net (Note 2)
                          
                          114
                          
                          45Other
      AssetsNote
      receivable - Aegis/Grizzle - (Note 4)
                          
                          450
                          
                          450Marketable
      securities held for resale - BPZ Energy - (Note 5)
                          
                          -
                          
                          2,541Investment
      in real estate - Boston Property net of impairment of $492 on December 31,
      2008 and $0 on December 31, 2007
                          
                          2,315
                          
                          1,279Other
      real estate owned - net of impairment of $298 and depreciation of $27 on
      December 31, 2008 and $0 on December 31, 2007 (Note 5)
                          
                          3,288
                          
                          379Other
      assets
                          
                          3
                          
                          15Total
      Other Assets
                          
                          6,056
                          
                          4,664TOTAL
      ASSETS
                          
                          $
                          9,350
                          $
                          9,423LIABILITIES
      & STOCKHOLDERS' EQUITYLiabilitiesCurrent
      LiabilitiesAccounts
      Payable
                          $
                          149
                          $
                          15Accrued
      income taxes payable (Note 2)
                          
                          85
                          
                          -Short
      term borrowings  (Note 7)
                          
                          1,391
                          
                          286Accrued
      liabilities
                          
                          38
                          
                          154Total
      Current Liabilities
                          
                          1,663
                          
                          455Commitments
      and Contingencies (Notes 1, 2, 4, 5, 6, 8, 9, 10, 11, 12 and
      13)Stockholders'
      EquityCommon
      stock, $0.001 par value, 100,000,000 shares authorized, 9,019,057 and
      8,924,583 shares issued and outstanding at December 31, 2008 and December
      31, 2007, respectively
                          
                          9
                          
                          9Additional
      paid-in capital
                          
                          8,873
                          
                          8,758Accumulated
      other comprehensive income (Note 2)
                          
                          -
                          
                          1,578Accumulated
      deficit
                          
                          (1,195)
                          
                          (1,377)Total
      Stockholders' Equity
                          
                          7,687
                          
                          8,968TOTAL
      LIABILITIES & STOCKHOLDERS' EQUITY
                          $
                          9,350
                          $
                          9,423
 
 The
accompanying notes to consolidated financial statements are an integral part of
these statements.
  43
 Navidec
Financial Services, Inc.
 Table of Contents
  NAVIDEC
FINANCIAL SERVICES, INC. AND SUBSIDIARIES
 Consolidated
Statements of Earnings  (In Thousands)
 
 For
      the Year EndedDecember
      31,RESTATED2008
                      
                      2007RevenueLoan
      fees
                      $
                      1,001
                      $
                      643Interest
      revenues
                      
                      313
                      
                      201Other
      Revenue
                      
                      35
                      
                      -Total
      Revenue
                      
                      1,349
                      
                      844Cost
      of loan fees including facilities and commissions
                      
                      (858)
                      
                      (597)Gross
      Profit
                      
                      491
                      
                      247Operating
      Expenses:General
      and administrative
                      
                      2,295
                      
                      1,152Depreciation
      and amortization
                      
                      54
                      
                      5Total
      operating expenses
                      
                      2,349
                      
                      1,157Loss
      from operations
                      
                      (1,858)
                      
                      (910)Other
      income (expense)Gain
      on sale of investments
                      
                      5,581
                      
                      3,317Impairments
      and allowances (Note 5)
                      
                      (2,752)
                      
                      (5)Impairment
      on Goodwill
                      
                      -
                      
                      (132)Other
      Gain or (Loss)
                      
                      44
                      
                      49Miscellaneous
      non-operating expense
                      
                      (77)
                      
                      -Interest
      Expense
                      
                      (116)
                      
                      (18)Total
      other (expense) income
                      
                      2,680
                      
                      3,211Net
      Income before  income tax
                      
                      822
                      
                      2,301Income
      TaxesProvision
      for income tax (Note 2)
                      
                      640
                      
                      -Net
      Income
                      $
                      182
                      $
                      2,301Earnings
      Per Share
                      $
                      0.02
                      $
                      0.26Weighted
      Average Shares Outstanding
                      
                      9,040
                      
                      8,719
 
 The
accompanying notes to consolidated financial statements are an integral part of
these statements.
  44
 Navidec
Financial Services, Inc.
 Table of Contents
  
 NAVIDEC FINANCIAL SERVICES, INC. AND
SUBSIDIARIES
 Consolidated
Statements of Cash Flows (In Thousands)
 
 RESTATED2008
                    
                    2007Cash
      Flows from Operating Activities:Net
      Income
                    $
                    182
                    $
                    2,301Adjustments
      to reconcile net income to net cash used in operating
      activities:Depreciation
      expense
                    
                    54
                    
                    5Discount
      on note receivable
                    
                    -
                    
                    54Gain
      on sale investments
                    
                    (5,581)
                    
                    (3,317)Other
                    
                    -
                    
                    41Increase
      in allowances and impairments
                    
                    2,752
                    
                    137Issuance
      of stock options to directors and employees
                    
                    114
                    
                    -Changes
      in operating assets and liabilities:Decrease
      in accounts receivable
                    
                    2
                    
                    50(Increase)
      decrease in accrued interest receivable
                    
                    (43)
                    
                    (50)Decrease
      (increase)  in prepaid expenses and other assets
                    
                    41
                    
                    (20)(Increase)
      in short term loans receivable
                    
                    (4,557)
                    
                    (3,246)(See
      Supplemental Information below)(Increase)
      decrease in other assets
                    
                    15
                    
                    -Increase
      (decrease) in accounts payable
                    
                    134
                    
                    (62)(Decrease)
      increase in accrued liabilities and other
                    
                    21
                    
                    153Net
      Cash (Used in) by Operating Activities
                    
                    (6,866)
                    
                    (3,954)Cash
      Flows from Investing Activities:Investments
      (increased) decreasedBoston
      real estate
                    
                    (1,529)
                    
                    (1,279)Other
      real estate (See Supplemental Information below)
                    
                    -
                    
                    (419)Marketable
      securities - BPZ purchases
                    
                    (1,272)
                    
                    (2,127)BPZ
      stock/warrant sales
                    
                    8,120
                    
                    7,748Payments
      received on Grizzle/Armijo Note
                    
                    -
                    
                    300(Acquisition)
      of property, equipment and software
                    
                    (96)
                    
                    (25)Other
      assets
                    
                    5
                    
                    -Net
      proceeds from sale of other equity investments
                    
                    4
                    
                    -Net
      Cash Provided by Investing Activities
                    
                    5,232
                    
                    4,198Cash
      Flows from Financing Activities:Option
      exercise proceeds
                    
                    5
                    
                    50Net
      increase in short term borrowings
                    
                    1,100
                    
                    286Increase
      in Common Stock
                    
                    -
                    
                    1Legacy
      options exercised
                    
                    -
                    
                    647Retirement
      of stock
                    
                    (4)
                    
                    -Net
      Cash Provided by Financing Activities
                    
                    1,101
                    
                    984Net
      (Decrease) Increase in Cash & Cash Equivalents
                    
                    (533)
                    
                    1,228Beginning
      Cash & Cash Equivalents
                    
                    1,407
                    
                    179Ending
      Cash & Cash Equivalents
                    $
                    874
                    $
                    1,407
 The
accompanying notes to consolidated financial statements are an integral part of
these statements
 Continued
on the next page
  45
 Navidec
Financial Services, Inc.
 Table of Contents
  
 Continued
from previous page
 
 Supplemental
      Disclosure of Cash Flow InformationNon-cash
      exchange of receivable for real estate notes
                    $
                    3,233
                    $
                    -Non
      cash settlement of note receivable
                    
                    -
                    
                    150Cash
      paid for Interest
                    $
                    116
                    $
                    2Cash
      paid for Income Taxes (Note 2)
                    $
                    554
                    $
                    -Increase
      in Additional Paid In Capital due to stock options issued
                    $
                    114
                    $
                    -
 
 The
accompanying notes to consolidated financial statements are an integral part of
these statements
 
 
  46
 Navidec
Financial Services, Inc.
 Table of Contents
  NAVIDEC
FINANCIAL SERVICES, INC. AND SUBSIDIARIES
 CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ EQUITY
 For
the Year Ended December 31, 2008 and 2007   (In
thousands)
 
 Voting
                                                          
                                                          Additional
                                                          
                                                          Accumulated
      OtherCommon
      Stock
                                                          
                                                          Paid-in
                                                          
                                                          Comprehensive
                                                          
                                                          Accumulated
                                                          
                                                          Stockholders'Shares
                                                          
                                                          Amount
                                                          
                                                          Capital
                                                          
                                                          Income
                                                          
                                                          (Deficit)
                                                          
                                                          EquityBalances,
      December 31, 2006 (as previously reported)
                                                          7,950
                                                          $
                                                          8
                                                          $
                                                          9,413
                                                          $
                                                          1,483
                                                          $
                                                          (3,973)
                                                          $
                                                          6,931Adjust
      unrealized gains
                                                          -
                                                          
                                                          -
                                                          
                                                          -
                                                          
                                                          (902)
                                                          
                                                          -
                                                          
                                                          (902)Reverse
      incorrect entry
                                                          -
                                                          
                                                          -
                                                          
                                                          (1,203)
                                                          
                                                          -
                                                          
                                                          -
                                                          
                                                          (1,203)Legal
      Settlement
                                                          -
                                                          
                                                          -
                                                          
                                                          -
                                                          
                                                          -
                                                          
                                                          295
                                                          
                                                          295Balances,
      December 31, 2006 (as restated)
                                                          7,950
                                                          
                                                          8
                                                          
                                                          8,210
                                                          
                                                          581
                                                          
                                                          (3,678)
                                                          
                                                          5,121Net
      income
                                                          -
                                                          
                                                          -
                                                          
                                                          -
                                                          
                                                          -
                                                          
                                                          2,301
                                                          
                                                          2,301Options
      exercised
                                                          1,000
                                                          
                                                          1
                                                          
                                                          49
                                                          
                                                          -
                                                          
                                                          -
                                                          
                                                          50BPZ
      transaction correction
                                                          33
                                                          
                                                          -
                                                          
                                                          2
                                                          
                                                          -
                                                          
                                                          -
                                                          
                                                          2Private
      placement correction
                                                          9
                                                          
                                                          -
                                                          
                                                          -
                                                          
                                                          -
                                                          
                                                          -
                                                          
                                                          -Legacy
      options exercised
                                                          -
                                                          
                                                          -
                                                          
                                                          647
                                                          
                                                          -
                                                          
                                                          -
                                                          
                                                          647Retirement
      of stock - Armijo Settlement
                                                          (68)
                                                          
                                                          -
                                                          
                                                          (150)
                                                          
                                                          -
                                                          
                                                          -
                                                          
                                                          (150)Change
      in unrealized gains
                                                          -
                                                          
                                                          -
                                                          
                                                          -
                                                          
                                                          997
                                                          
                                                          -
                                                          
                                                          997Balances,
      December 31, 2007
                                                          8,924
                                                          
                                                          9
                                                          
                                                          8,758
                                                          
                                                          1,578
                                                          
                                                          (1,377)
                                                          
                                                          8,968Net
      income
                                                          -
                                                          
                                                          -
                                                          
                                                          -
                                                          
                                                          -
                                                          
                                                          182
                                                          
                                                          182Options
      exercised
                                                          100
                                                          
                                                          -
                                                          
                                                          5
                                                          
                                                          -
                                                          
                                                          -
                                                          
                                                          5Change
      in unrealized gains
                                                          -
                                                          
                                                          -
                                                          
                                                          -
                                                          
                                                          (1,578)
                                                          
                                                          -
                                                          
                                                          (1,578)Options
      issued
                                                          -
                                                          
                                                          -
                                                          
                                                          114
                                                          
                                                          -
                                                          
                                                          -
                                                          
                                                          114Retirement
      of Stock - open market purchases
                                                          (5)
                                                          
                                                          -
                                                          
                                                          (4)
                                                          
                                                          -
                                                          
                                                          -
                                                          
                                                          (4)Balances
      - December 31, 2008
                                                          9,019
                                                          $
                                                          9
                                                          $
                                                          8,873
                                                          $
                                                          -
                                                          $
                                                          (1,195)
                                                          $
                                                          7,687
 
 The
accompanying notes to consolidated financial statements are an integral part of
these statements.
  47
 Navidec
Financial Services, Inc.
 Table of Contents
  NAVIDEC
FINANCIAL SERVICES, INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 For
the Years Ended December 31, 2008 and 2007
 
 NOTE
1 - ORGANIZATION
 
 Navidec
Financial Services, Inc. ("Navidec" or “Company") was incorporated in December
2002, as a wholly owned subsidiary of Navidec Inc. ("Old
Navidec").  In September 2004, Old Navidec consummated a reverse
merger agreement with BPZ Energy, Inc. a Texas corporation established in 2001
("BPZ") whereby Old Navidec transferred all of its asset, liabilities and
historical operations into Navidec and Old Navidec changed its name to BPZ
Energy Inc.  Also pursuant to the merger agreement, Old Navidec
affected a one share of Navidec for one share of Old Navidec spin off to the
shareholders of record of Old Navidec.
 
 Navidec
is now a holding company that is in the business of creating or acquiring a
controlling interest in development stage enterprises with the expectation of
further developing the enterprise and then taking the enterprise
public.
 
 On
September 11, 2003, Old Navidec purchased an 80% interest in Northsight Mortgage
Group, LLC ("NMG"), an Arizona mortgage broker.  Navidec received the
80% interest in NMG as part of the merger agreement with BPZ.  On May
4, 2005, the Company formed Navidec Mortgage Holdings, Inc., a Colorado
corporation ("NMH"), as a subsidiary of Navidec and received 2,000,000 common
shares of NMH.  On November 11, 2007, NMH amended its articles of
incorporation in order to change its name to Northsight, Inc.
("Northsight").
 
 On
October 12, 2007, Navidec exchanged its 80% interest in NMG for 3,000,000 common
shares of Northsight to bring the total common shares of Northsight owned by
Navidec to 5,000,000 shares. On October 12, 2007, Northsight then purchased the
remaining 20% minority interest in NMG from the minority member for 100,000
shares of Northsight. As a result of this transaction, Navidec owns 98% of
Northsight and the former minority member of NMG owns 2% of
Northsight.
 
 On July
9, 2008, the Board of Directors of Navidec declared two dividend distributions
for its shareholders as of September 8, 2008. On October 2, 2008, Navidec
modified the record date and “ex-dividend” date to be the date that a
Registration Statement on Form S-1for Northsight for the dividend securities is
declared effective by the Securities and Exchange Commission.
 
 The first
dividend is a distribution of two Navidec Warrants to purchase common shares of
Navidec, $.001 par value, for each share of Navidec. The Units consist of an “A”
Warrant, exercisable at $2.00 per share until July 1, 2013, and a “B” Warrant
exercisable at $4.00 per share until July 1, 2013.
 
 The
second dividend is distribution of a Unit of Northsight, Inc ("Northsight"). The
Units will be distributed one Unit of Northsight for each 2.27336 shares of
Navidec.  Navidec currently owns 20,000,000 Units of
Northsight.  Navidec will
distribute  4,000,000  Units to
its  shareholders,  resulting  in
Navidec  owning 16,000,000
Unit  after  the  dividend  distribution.   The
Northsight Units to be distributed will consist of one share of Northsight, a
Northsight “A” Purchase Warrant, exercisable at $2.00 per share until July 1,
2013, and a “B” Purchase Warrant exercisable at $4.00 per share until July 1,
2013.
  48
 Navidec
Financial Services, Inc.
 Table of Contents
  
 Starting
in July 2007, Navidec began lending money to Northsight to enable Northsight to
make short term, first deed of trust collateralized loans to borrowers who are
purchasing deeply discounted or  foreclosed residential real estate in
Arizona and Colorado.   During the year ended December 31, 2007,
Navidec had lent Northsight approximately $5,826,000.  The loans to
Northsight yield 12% and are callable on demand by Navidec.  As of
December 31, 2008, Navidec had approximately $2,203,000 (net of allowance of
$476,000) and as of December 31, 2007 had $2,204,000 (net of allowance of
$5,000) in short term bridge loans outstanding.
 
 Southie
Development, LLC (Southie) was formed in January 2008 and is wholly-owned by
Navidec. The purpose of Southie is to develop residential real estate for resale
and to own and manage residential real estate acquired via default of real
estate loans owned by Navidec.  Once a real estate loan defaults and
Navidec obtains title to the collateral, Navidec transfers the property to
Southie for development and management.   As part of the
management and development of the properties transferred to it, Southie honors
any existing residential leases, will potentially expend monies for
rehabilitation of the property with the goal of selling the property in a short
time period, usually less than one year.  However, if the Company
deems the property to be a good longer term investment, it might hold the
property for longer periods.
 
 The
Company purchased a home in South Boston on December 4, 2007 (Thomas Park) and
began improving the property with the intent to construct three condominium
units for resale. The purchase price was $1,200,000 plus closing costs. As of
May 19, 2008, the Company acquired a $1,200,000 line with Mt. Washington
Cooperative Bank for the development of Thomas Park. The line is due November
19, 2009, monthly interest only payments, with a prime plus 2% interest rate and
an interest rate floor of 7%.  As of December 31, 2008, the balance
owed on this line was $1,140,000.  As of December 31, 2008, the
Company had invested $2,805,000 including a bank line of $1,140,000. The Company
estimates that construction will be completed by May 2009.
 
 Jaguar
Group Investments, LLC
 
 In
February 2008, our subsidiary, Northsight entered into a joint venture agreement
with Jaguar Group, LLC.  The purpose of this joint venture was to
provide wholesale financing loan products to the real estate mortgage industry.
This joint venture is now inactive.
 
 Northsight
was to purchase 50% equity and voting interest in Jaguar Investment Group, LLC
(Jaguar) and the remaining 50% was to be owned by Jaguar Group,
LLC.  Each equity interest was to be purchased for $4 million dollars
each, to be in the form of cash, real estate equity, and/or any form of
consideration agreed by both members.  The joint venture was never
funded due to Jaguar Group, LLC’s inability to fund its
portion.  During the year ended December 31, 2008 the Company advanced
an additional $322,000 of which $307,000 remained due from Jaguar.
 
 On
September 29, 2008, Northsight filed a lawsuit, in the Boulder County District
Court, against Jaguar Group, LLC, John R. Reinholdt II and the Estate of John R.
Reinholdt Sr. (Defendants) for non-payment of a $1,100,000 loan made by the
Company to Jaguar.  The lawsuit also demands immediate payment of
other receivables in the amount of $307,000 owed by Jaguar to the Company. 
The lawsuit alleges breach of the security and purchase agreements, fraud, civil
theft, and conversion.
 
 On
November 19, 2008, Northsight received a default judgment against Jaguar Group,
LLC and John R Reinholdt II for $3,107,000.  The Company is pursuing
collection against this judgment.  Due to uncertainty of collecting
the balance, the Company has provided an allowance for the full amount of the
Jaguar receivable at December 31, 2008.
  49
 Navidec
Financial Services, Inc.
 Table of Contents
  
 NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Restatement
of Results
 
 Subsequent
to the issuance of the Company's audited financial statements for the year ended
December 31, 2007, the Company determined that it would restate its
financial statements for the year ended December 31, 2007 as contained in
its Annual Report on Form 10KSBA, dated April 28, 2008 and the Form 10-Qs for
the quarterly periods ended March 31, 2008, June 30, 2008 and September 30,
2008.
 
 As a
result of the revocation of the registration with the Public Accounting
Oversight Board (PCAOB) of its previous auditors, Jaspers + Hall, PC, the
Company was required to engage new PCAOB registered accountants and re-audit its
2007 Financial Statements.
 
 During
the re-audit, the Company determined that it had not used the proper cost in
computing the gain on the sale of 980,000 BPZ Energy, Inc. (“BPZ”) common
shares.  The BPZ shares were acquired through warrants issued as a
result of the reverse merger with BPZ and Navidec, Inc. and the Company had
originally valued the warrants at $1.88 a share. The warrants had a strike price
of $2.00 a share.  Upon exercising the warrants and selling the
shares, the Company had reported a cost of $2.00 in its 2007 financial
statements.  The Company should have used $3.88 a share, which is the
original value of $1.88 a share plus the strike price of $2.00 a share. The
Company incorrectly reduced the cost with a corresponding decrease to Additional
Paid In Capital in 2007.
 
 As a
result, the Company over stated its earnings from the sale of BPZ shares by
$1,842,000 during the year ended December 31, 2007.  In the
restatement of the December 31, 2007 financial statements, the $1,842,000 was
accounted for as Additional Paid In Capital, to correct the previous incorrect
reduction in Additional Paid In Capital.  The result from the change
was a decrease in Retained earnings of $1,842,000 and an increase of $1,842,000
in Additional Paid In Capital.  This correction resulted in no overall
change in Stockholders’ Equity.
 
 Due to
using the incorrect BPZ cost, as of December 31, 2006 the BPZ asset and the
corresponding unrealized gain on securities were overstated by approximately
$900,000. Also in 2006, an additional 100,000 shares of BPZ were received by the
Company via a default judgment received by the Company.  A fair market
value of approximately $300,000 was not recognized upon receipt, which amount
would increase earnings in 2006 by $300,000. In addition, the Company had
incorrectly recorded an increase of $1,200,000 to Additional Paid In Capital in
2005.  The net impact on December 31, 2006 Stockholders’ Equity was an
approximate $1,800,000 reduction.
 
 Additionally,
as of December 31, 2007, the BPZ asset and the corresponding unrealized gain on
securities were overstated by approximately $810,000, due to failure to reduce
unrealized gains by related deferred taxes. In addition, unrealized gains were
understated by $240,000 due to the cost adjustment. The net impact on December
31, 2007 Shareholders’ Equity from this matter, exclusive of the tax
considerations below, is an approximate $570,000 reduction.  Since all
of the remaining BPZ investment was sold in 2008, the unrealized BPZ gains were
eliminated from the balance sheet along with the prior adjustments for
unrealized gains.
 
 The
Company also corrected deferred revenue from mortgage origination and accrued
expenses at December 31, 2007, that were previously recorded in 2008 of
approximately $200,000.  This correction resulted in a decrease of the
Company’s 2007 income of $200,000; however, increased revenue and decrease
expenses by the same amount for the year ended December 31,
2008.
  50
 Navidec
Financial Services, Inc.
 Table of Contents
  
 
 A summary
of the significant effects of the restatement is as follows (in
thousands):
 December
      31,
                            December
      31,2007
                            2007Previously
      Reported
                            RESTATED
                            ChangeASSETS:Current
      Assets:Cash
      and cash equivalents
                            $       1,424
                            $       1,407
                            $      (17)Marketable
      securities
                            -
                            -
                            -Accounts
      receivable, net
                            -
                            
                            -S/T
      Mortgages receivable
                            2,204
                            2,148
                            (56)S/T
      Note receivable - Jaguar Group LLC
                            1,100
                            1,047
                            (53)Accrued
      interest receivable
                            46
                            45
                            (1)Advances
      receivable - related party
                            5
                            5
                            -Prepaid
      expenses
                            -
                            62
                            62Total
      Current Assets
                            4,779
                            4,714
                            (65)Property, equipment and
      software, net
                            39
                            45
                            6Other
    AssetsNotes
      receivable - (Note 4) - Aegis/Grizzle
                            450
                            450
                            -Investment
      - BPZ Energy - (note 4A)
                            3,354
                            2,541
                            (813)Investments
      - (Note 4A)
                            1,639
                            1,658
                            19Other
      assets
                            15
                            15
                            -Goodwill
                            -
                            -
                            -Total
      Other Assets
                            5,458
                            4,664
                            (794)TOTAL
      ASSETS
                            $    10,276
                            $       9,423
                            $    (853)LIABILITIES
      & STOCKHOLDERS' EQUITY:Current
      Liabilities:Accounts
      payable
                            $            15
                            $           15
                            $            -Short
      term borrowings  (Note 5A)
                            285
                            286
                            1Accrued
      taxes and liabilities
                            102
                            154
                            52Total
      Current Liabilities
                            402
                            455
                            53Stockholders'
      Equity:Common
      stock
                            9
                            9
                            -Additional
      paid-in capital
                            7,402
                            8,758
                            1,356Unrealized
      gain on securities
                            2,149
                            1,578
                            (571)Accumulated
      earnings / (deficit)
                            314
                            (1,377)
                            (1,691)Total
      Stockholders' Equity
                            9,874
                            8,968
                            (906)TOTAL
      LIABILITIES & STOCKHOLDERS' EQUITY
                            $     10,276
                            $       9,423
                            $    (853)
 
  51
 Navidec
Financial Services, Inc.
 Table of Contents
  
 
 12/31/2007
      - Previously Reported
                            12/31/2007
      Restated Balances
                            2007
      ChangeRevenue
                            $             689
                            $            844
                            $         155Cost
      of loan fees
                            -
                            (597)
                            (597)Gross
      Profit
                            689
                            247
                            (442)Operating
      Expenses:General
      and administrative
                            1,630
                            1,152
                            (478)Impairment,
      depreciation and amortization
                            4
                            5
                            1Total
      operating expenses
                            1,634
                            1,157
                            (477)Loss
      from operations
                            (945)
                            (910)
                            (35)Other
      income (expense)Gain
      on sale of BPZ investment
                            5,212
                            3,317
                            (1,895)Impairments
      and allowances
                            -
                            (5)
                            (5)Other
      gain or (loss)
                            50
                            49
                            (1)Interest
      income
                            202
                            -
                            (202)Interest
      (expense)
                            (2)
                            (18)
                            (16)Impairment
      on goodwill
                            (127)
                            (132)
                            (5)Other
      income (expense)
                            5,335
                            3,211
                            (2,124)Net
      Income before taxes
                            4,390
                            2,301
                            (2,089)Income
      TaxesProvision
      for income tax
                            (103)
                            -
                            (103)Net
      Income (Loss)
                            $          4,287
                            $          2,301
                            $    (1,986)Earnings
      Per Share
                            $            0.48
                            $            0.26
                            $      (0.22)Weighted
      Average Shares Outstanding
                            8,925
                            8,971
                            (46)
 
  52
 Navidec
Financial Services, Inc.
 Table of Contents
  
 Principles
of Consolidations
 
 The
accompanying consolidated financial statements include the accounts of Navidec
and its subsidiary, Northsight, Inc., Northsight Mortgage formerly known as
Navidec Mortgage Holdings, Inc., and Southie Development, LLC. Navidec owns 98%
of Northsight and the former minority member or Northsight Mortgage Group, LLC
owns 2% of Northsight, Inc.  Navidec owns 100% of Southie Development,
LLC.   As of December 31, 2008 and 2007, Northsight, Inc. had a
negative stockholders’ deficit, therefore, the consolidated financial statements
do not include a provision for a liability for minority interest.  All
significant inter-company balances and transactions have been eliminated in
consolidation.
 
 Reclassification
 
 Certain
amounts previously reported have been reclassified to conform to current
presentation.  For the years ended December 31, 2008 and 2007 certain
facility related expenses, loan officer commissions and salaries, sales manager
salaries and payroll overhead, and advertising costs were reclassified to the
cost of loans.
 
 Use
of Estimates
 
 The
preparation of financial statements in conformity with generally accepted
accounting principles in the United States requires management to make estimates
and assumptions.  These estimates and assumptions affect the reported
amounts of assets and  liabilities,  disclosure of
contingent  assets and  liabilities at the date of
the  financial  statements  and
the  reported  amounts of  revenues  and
expenses during the reported period. Actual results could differ materially from
those estimates.
 
 Cash
and Cash Equivalents
 
 For
purposes of reporting cash flows, Navidec considers cash and cash equivalents to
include highly liquid investments with original maturities of 90 days or less.
Those are readily convertible into cash and not subject to significant risk from
fluctuations in interest
rates.  The  recorded  amounts  for
cash  equivalents
approximate  fair  value  due  to  the  short-term  nature  of  these  financial
instruments.
 
 Concentration
of Credit Risk
 
 Financial
instruments that potentially subject Navidec to significant concentrations of
credit risk include cash equivalents, notes receivable and trade accounts
receivable.  The Company maintains its cash and investment balances in
the form of bank demand deposits, money market accounts, commercial papers and
short-term notes with financial institutions that management believes to be of
high credit quality.  Accounts receivable are typically
uncollateralized and are derived from transactions with and from customers
primarily located in the United States.
 
 As of
December 31, 2008, the Company had $401,000 in a stock brokerage account, which
SIPC insures up to $500,000, but is not insured by the FDIC.  As of
December 31, 2008, the Company had no more than $250,000 in any individual bank
demand deposit, which is the amount covered by FDIC insurance.
  53
 Navidec
Financial Services, Inc.
 Table of Contents
  
 Management
reviews accounts receivable periodically and reduces the carrying amount by a
valuation allowance that reflects management's best estimate of amounts that may
not be collectible.  Allowances, if any, for uncollectible accounts
receivable are determined based upon information available and historical
experience.  As of December 31, 2008, there was an allowance of
$476,000 against a short term mortgage balance of $2,673,000. There was a $5,000
allowance at December 31, 2007 against a balance of $2,148,000.
 
 During
the quarter ended June 30, 2008, management felt, based on prevailing market
conditions, that it was necessary to increase
allowances.   During the quarter ended June 30, 2008, an
allowance of approximately $853,000 was established for short term notes
receivable and an allowance of approximately $198,000 was established for the
real estate owned by Southie.
 
 During
the quarter ended September 30, 2008, the allowance accounts were reviewed and
adjusted.  As a result of the review the real estate owned allowance
was decreased by $46,000 for a balance of $807,000 at September 30,
2008.
 
 During
the quarter ended September 30, 2008, as a result of the lawsuit filed against
Jaguar, the Company increased their allowances to the full amount of the note
and account receivables owed by Jaguar, which is $1,407,000.
 
 During
the quarter ended December 31, 2008, the allowance accounts were reviewed and
adjusted.  As a result of the review the real estate owned allowance
was increased by $100,000, for a year end allowance of $298,000.  The
allowance against short term mortgage notes receivable was reduced by $308,000,
for a year end allowance of $476,000.
 
 No
revenues to unaffiliated customers represented 10% or more of the Company’s
revenue for the year ended December 31, 2008.
 
 Notes
Receivable
 
 The
Company carries its notes receivable at cost or loan balance, subject to the
valuation procedures described below.  The book value of these
financial instruments is representative of their fair values. As of December 31,
2008 and 2007, the Company had a total of $2,197,000 and $2,148,000,
respectively, invested in notes receivable, net of an allowance for bad debt of
$476,000 and $5,000 respectively. The notes receivable as of December 31, 2008
is net of deferred income of $6,000 related to recognizing our fee income over
the expected useful life of our notes receivable.  The deferred income
was $51,000 as of December 31, 2007.
 
 Interest
is accrued monthly on notes receivable as earned and is no longer accrued if the
loan becomes more than 90 days past due.   The Company provides a
valuation for certain loans that are delinquent.  The valuation
account is netted against notes receivable.  As of December 31, 2007,
no loans were in excess of 90 days past due.   As of December 31,
2008, loans totaling $1,455,000 were past 90 days due.  Total interest
accrued on these delinquent loans was $24,000 at December 31,
2008.
  54
 Navidec
Financial Services, Inc.
 Table of Contents
  
 Investments
 
 Investments
in publicly traded equity securities over which Navidec does not exercise
significant influence are recorded at market value in accordance with Financial
Accounting Statement (“FAS”) No. 115, "Accounting for Certain Investments in
Debt and Equity Securities", which requires that all applicable investments be
classified as trading securities, available for sale securities or
held-to-maturity securities. Comprehensive income includes net income or loss
and changes in equity from the market price variations in stock and warrants
held by the Company.
 
 Investments
in non-publicly traded equity securities or non-marketable equity securities are
stated at the lower of cost or estimated realizable value.
 
 Other
Real Estate Owned
 
 Other
real estate owned is comprised of real estate and other assets acquired through
foreclosure, acceptance of a deed in lieu of foreclosure or otherwise acquired
from the debtor in lieu of repayment of the debt. Assets acquired through or
instead of loan foreclosure are initially recorded at fair value less costs to
sell when acquired, establishing a new cost basis. Revenues, expenses and
subsequent adjustments to fair value less estimated costs to sell are classified
as expenses for other real estate owned.
 
 Property
and Equipment
 
 Property
and equipment are stated at cost less accumulated depreciation and amortization.
Depreciation is computed principally on the straight-line method over the
estimated useful life of each type of asset which ranges from three to seven
years. Leasehold improvements are amortized over the remaining term of the
applicable leases or their useful lives, whichever is shorter. Maintenance and
repairs are charged to expense as incurred; improvements and betterments are
capitalized. Upon retirement or disposition, the related costs and accumulated
depreciation are removed from the accounts, and any resulting gains or losses
are credited or charged to income.
 
 Below is
a summary of premises and equipment:
 
 Asset
      Type
                  Life
      in Years
                  December
      31, 2008
                  December
      31, 2007Office
      equipment & Furniture
                  5 –
      7
                  $
      102,000
                  $
      91,000Computers
                  3
                  33,000
                  24,000Website
                  3
                  2,000
                  -Subtotal
                  
                  137,000
                  115,000Less
      Accumulated Depreciation
                  
                  23,000
                  70,000Net
      Book Value
                  
                  $
      114,000
                  $
      45,000
 
 Fair
Value of Financial Instruments
 
 The
carrying value of cash and cash equivalents, trade receivables and payables
approximated their fair value because of their short-term nature. Investments in
debt securities are recorded at their amortized cost, which approximates fair
value because of their short-term maturity.  Investments in marketable
equity securities are recorded at fair value based upon quoted market
prices.  Investments in non-marketable equity securities are based
upon recent sales of similar securities by the investees and approximated their
carrying value. The Company’s borrowings approximate their carrying amounts
based upon interest rates currently available to the Company.
  55
 Navidec
Financial Services, Inc.
 Table of Contents
  
 Revenue
Recognition
 
 Mortgage
Revenues
 
 The
Company primarily recognizes its operating revenue through its subsidiary,
Northsight, Inc., by charging origination fees from borrowers and earning
interest and penalty fees on outstanding loan balances.  Northsight
recognizes fee and interest income on bridge, asset and conventional mortgage
loans after mortgage loan transactions close.
 
 Northsight
acts as the mortgage broker and Navidec acts as the mortgage
banker.  Under FAS 65, Northsight is allowed to recognize the
origination and associated fees in placing a loan when the loan is
closed.  However, since the statements are consolidated and Navidec is
the mortgage banker, under FAS 91, Navidec, and the consolidated financial
statements of Navidec, defers the revenue from the origination and associated
fees over the expected life of the loan, which is usually 90 days.
 
 Loan
origination fees and other lender fees received by the Company are deferred and
recognized as income over the life of the loan, which is normally 90 days.
During the years ended December 31, 2008 and 2007, the Company recognized income
totaling $1,001,000 and $643,000, respectively from origination
fees.  At December 31, 2008 and 2007, the Company had deferred revenue
of $6,000 and $51,000, respectively.
 
 Interest
Revenues
 
 Revenues
from interest are recorded at the time they are earned, thus the revenues shown
are for interest actually received and the accruals for that which is due to the
Company except for delinquent accruals over 90 days as discussed under notes
receivable above. Interest continues to accrue until a foreclosure process
begins.  At that point, no additional interest is accrued for book
purposes. Interest revenues for the year ended December 31, 2008 were
approximately $313,000 and excludes accruals for delinquent notes receivable
over 90 days.  Navidec accrues interest and penalty interest income at
the end of each quarter.
 
 Marketing
and Advertising Expenses
 
 For the
years ended December 31, 2008 and 2007, the Company expended $186,000 and
$10,000, respectively on advertising and marketing.  The Company
expenses these costs when incurred.
 
 Stock
Based Compensation
 
 Beginning
January 1, 2006, the Company adopted the provisions of and accounts for
stock-based compensation in accordance with Statement of Financial Accounting
Standards (SFAS) No. 123 – revised 2004 (SFAS 123R), Share-Based Payment, which
replaced SFAS No. 123 (SFAS 123), Accounting for Stock-based
Compensation, and supersedes APB Opinion No. 25 (APB 25), Accounting for Stock Issued to
Employees.  Under the fair value recognition provisions of this
statement, stock-based compensation cost is measured at the grant date based on
the fair value of the award and is recognized as expense on a straight-line
basis over the requisite service period, which generally is the vesting
period.  The Company elected the modified-prospective method, under
which prior periods are not revised for comparative purposes.  The
valuation provisions of SFAS 123R apply to new grants and to grants that were
outstanding as of the effective date and are subsequently modified.
   56
 Navidec
Financial Services, Inc.
 Table of Contents
  
  All
options granted prior to the adoption of SFAS 123R and outstanding during the
periods presented were fully-vested at the date of adoption.
 
 In
December 2007, the SEC issued Staff Accounting Bulletin (“SAB”) 110 which was
issued to express the understanding that the use of a “simplified” method, as
discussed in SAB 107 in developing an estimate of expected term of “plain
vanilla” share options in accordance with FASB No. 123R would be acceptable
beyond December 31, 2007. The Company adopted this standard beginning January
2008, and it did not have a material impact on the Company’s consolidated
financial statements.
 
 Income
Taxes
 
 Provision
for income taxes represents actual or estimated amounts payable on tax return
filings each year. Deferred tax assets and liabilities are recorded for the
estimated future tax effects of temporary differences between the tax basis of
assets and liabilities and amounts reported in the accompanying balance sheets,
and for operating loss and tax credit carry forwards.  The change in
deferred tax assets and liabilities for the period measures the deferred tax
provision or benefit for the period.  Effects of changes in enacted
tax laws on deferred tax assets and liabilities are reflected as adjustment to
the tax provision or benefit in the period of enactment.
 
 Net
Income per Share
 
 Basic net
income per share is computed by dividing net income available to common
shareholders for the period by the weighted average number of common shares
outstanding for the period. Diluted net income per share is computed by dividing
the net income for the period by the weighted average number of common and
potential common shares outstanding during the period.
 
 The
dilutive effect of 3,941,510 options and 2,815,000 warrants at December 31,
2008, has not been included in the determination of diluted earnings per share
since, under FAS-128R they would anti-dilutive.
 
 Comprehensive
Income (Loss)
 
 Comprehensive
income (loss) includes net income or loss and changes in equity from the market
price variations in the BPZ stock held by the Company.  At December
31, 2008, there were no remaining shares of BPZ to sell, and during the year
ending December 31, 2008 the remaining shares of BPZ were sold representing a
gain of approximately $5,381,000.  The Company sold other securities
for a net gain of $56,000, for a total gain of $5,437,000, recognizing
$1,578,000 in unrealized gains for year ended December 31, 2008.  For
the year ended December 31, 2007, the Company sold BPZ shares for a gain of
$3,317,000, recognizing $314,000 in unrealized gains.
 
 Recently
issued Accounting Pronouncements
 
 In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial
Liabilities (SFAS No. 159). SFAS No. 159 permits
entities to choose to measure, on an item-by-item basis, specified financial
instruments and certain other items at fair value. Unrealized gains and losses
on items for which the fair value option has been elected are required to be
reported in earnings at each reporting date. SFAS No. 159 is effective for
fiscal years beginning after November 15, 2007, the
  57
 Navidec
Financial Services, Inc.
 Table of Contents
  provisions
of which are required to be applied prospectively. We believe that SFAS 159
should not have a material impact on our financial position or results of
operations
 
 In
December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business Combinations, or
SFAS No. 141R. SFAS No. 141R will change the accounting for business
combinations. Under SFAS No. 141R, an acquiring entity will be required to
recognize all the assets acquired and liabilities assumed in a transaction at
the acquisition-date fair value with limited exceptions. SFAS No. 141R will
change the accounting treatment and disclosure for certain specific items in a
business combination. SFAS No. 141R applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15, 2008.
Accordingly, any business combinations we engage in will be recorded and
disclosed following existing GAAP until January 1, 2009. We expect SFAS
No. 141R will have an impact on accounting for business combinations once
adopted but the effect is dependent upon acquisitions at that time. We are still
assessing the impact of this pronouncement.
 
 In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements—An Amendment of ARB No. 51,or SFAS
No. 160”. SFAS No. 160 establishes new accounting and reporting
standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. SFAS No. 160 is effective for fiscal years
beginning on or after December 15, 2008. We believe that SFAS 160 should
not have a material impact on our financial position or results of
operations.
 
 In March
2008, the FASB issued Statement No. 161, “Disclosures about Derivative
Instruments and Hedging Activities—an amendment of FASB Statement No. 133”
(SFAS 161). The Statement requires companies to provide enhanced disclosures
regarding derivative instruments and hedging activities. It requires companies
to better convey the purpose of derivative use in terms of the risks that such
company is intending to manage. Disclosures about (a) how and why an entity
uses derivative instruments, (b) how derivative instruments and related
hedged items are accounted for under SFAS No. 133 and its related
interpretations, and (c) how derivative instruments and related hedged
items affect a company’s financial position, financial performance, and cash
flows are required. This Statement retains the same scope as SFAS No. 133
and is effective for fiscal years and interim periods beginning after
November 15, 2008. The Company does not expect the adoption of SFAS 161 to
have a material effect on its results of operations and financial
condition.
 
  In May
2008, the FASB issued FASB Staff Position (FSP) No. APB 14-1 “Accounting for
Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement)” (FSP APB 14-1). FSP APB 14-1
requires the issuer of certain convertible debt instruments that may be settled
in cash (or other assets) on conversion to separately account for the liability
(debt) and equity (conversion option) components of the instrument in a manner
that reflects the issuer’s non-convertible debt borrowing rate. FSP
APB 14-1 is effective for fiscal years beginning after December 15,
2008 on a retroactive basis and will be adopted by the Company in the first
quarter of fiscal 2009. The Company does not expect the adoption of FSP APB 14-1
to have a material effect on its results of operations and financial
condition.
 
 In June
2008, the FASB issued FSP EITF 03-6-1, “Determining Whether Instruments Granted
in Share-Based Payment Transactions are Participating Securities.” This FSP
provides that unvested share-based payment awards that contain nonforfeitable
rights to dividends or dividend equivalents (whether paid or unpaid) are
participating securities and shall be included in the computation of earnings
per share
  58
 Navidec
Financial Services, Inc.
 Table of Contents
  pursuant
to the two-class method. The FSP is effective for financial statements issued
for fiscal years beginning after December 15, 2008, and interim periods within
those fiscal years. Upon adoption, companies are required to retrospectively
adjust earnings per share data (including any amounts related to interim
periods, summaries of earnings and selected financial data) to conform to
provisions of this FSP. The Company does not anticipate the adoption of FSP EITF
03-6-1 will have a material impact on its results of operations, cash flows or
financial condition.
 
 There
were various other accounting standards and interpretations issued in 2008 and
2007, none of which are expected to have a material impact on the Company’s
financial position, operations or cash flows.
 
 
 NOTE
3 - INVESTMENT IN BPZ
 
 Upon
consummation of the merger transaction between Old Navidec and BPZ, BPZ issued
604,246 shares of its common stock to Navidec.  These shares were
issued in consideration of Navidec's assumption of all of the pre-merger
business assets and liabilities of Old Navidec.  During 2007 and 2008,
these shares were freely tradeable and qualify as "marketable securities" as
that term is defined by FAS 115.  Therefore, this investment was
carried on the books at the fair market value.
 
 The
Company's "investments in BPZ" of 300,000 shares were valued at $2,541,000 on
December 31, 2007 which amount is net of taxes of $885,000.  On
December 31, 2007, our cost was $936,000, which is $3.21 a share computed at the
market value of BPZ at September 10, 2004 when the reverse merger was closed.
The Company held no shares of BPZ at December 31, 2008.
 
 We had
the following proceeds from the sale of BPZ stock:
 Year
      Ending
                  ProceedsDecember
      31, 2006
                  $
      893,000December
      31, 2007
                  $
      7,748,000December
      31, 2008
                  $
      8,120,000
 
 
 NOTE
4 – NOTES RECEIVABLE
 
 Notes
Receivable – General
 
 During
the year ended December 31, 2007, the Company entered a transaction with a
former officer of the Company, Mr. Robert Grizzle.  In exchange for
Mr. Grizzle’s shares in the Company, on May 3, 2007, Mr. Grizzle executed a note
payable to the Company in the amount of $450,000. The note carries an 8%
interest rate and is collateralized by 1,000,000 Aegis USA common shares,
1,500,000 Aegis USA preferred shares, 220,000 shares of the Company's common
stock and 200,000 options to purchase shares of the Company's common stock at
$0.05 per share held by Mr. Grizzle.  The note is a limited recourse
note whereby Mr. Grizzle is personally responsible for one half the original
principal and interest. The balance owed is collateralized by Mr. Grizzle’s
Aegis common and preferred shares and the Company’s common stock. Further, the
note provides that at the earlier of one year from the date that the common
stock of the Company is publicly traded and his shares are registered for resale
under an effective  registration statement filed by the Company or
December 31, 2009.  On September 30, 2007, Mr. Grizzle resigned as the
Chief Operating Officer and the Chief Financial Officer of the
Company.  On October 17, 2008, the Company filed with the SEC an S-8
registration statement registering Mr. Grizzle’s shares.
  59
 Navidec
Financial Services, Inc.
 Table of Contents
  
 On
December 13, 2007, Northsight, Inc. (formerly Navidec Mortgage Holdings, Inc.)
entered into a loan agreement with Welend Associated Group, LLC, a Colorado
limited liability company and Jaguar Group, LLC, (Jaguar) a Colorado limited
liability company, each with joint and severable liability, in the amount of
$1,100,000. The note carries an interest rate of 0% and has a maturity date of
six months from the date of the note.  Therefore, the Company imputed
an 11% interest rate on the note, recognizing $60,000 in imputed interest, with
$6,000 being amortized for the year ended December 31, 2007 and the remainder
amortized in the first six months for the year ended December 31,
2008.
 
 As
consideration for making the loan to Jaguar, the Company in substance received
the ability to utilize
 Jaguar’s
line of credit funding capabilities it had through third party lenders since
Jaguar agreed to acquire loans from the Company.  Collateral for the
note is a first security interest in the equity of the debtor’s warehouse line
of credit with Colorado State Bank.  As of December 31, 2008 there is
an additional receivable from Jaguar for approximately $307,000 which represents
loans funded by Navidec but not yet funded by Jaguar.
 
 On
September 29, 2008, Northsight filed a lawsuit, in the Boulder County District
Court, against Jaguar Group, LLC, John R. Reinholdt II and the Estate of John R.
Reinholdt Sr. (Defendants) for non-payment of a $1,100,000 loan made by the
Company to Jaguar.  The lawsuit also demands immediate payment of
other receivables in the amount of $307,000 owed by Jaguar to the Company. 
The lawsuit alleged breach of the security and purchase agreements, fraud, civil
theft, and conversion.
 
 During
the quarter ended September 30, 2008, as a result of the lawsuit filed against
Jaguar, the Company increased their provision for allowances to the full amount
of the note and account receivables owed by Jaguar, which is
$1,407,000.  On November 11, 2008, the District Court in Boulder
County entered a default judgment against John Reinholdt Jr (a principal in
Jaguar and related entities) and Jaguar Associated Group for $3,107,000 which
the Company is attempting to collect.  Due to the uncertainly of
collecting the balance, the Company has provided an allowance for the full
amount of the Jaguar receivable at December 31, 2008.
 
 Mortgages
Receivable
 
 In July
2007, Northsight, Inc. (formerly Navidec Mortgage Holdings, Inc.), a 98% owned
subsidiary of the Company, began making short term loans to purchasers of
residential properties who purchase their property as part of or after the
repossession in a foreclosure proceeding.  As of December 31, 2007,
Navidec had $2,148,000 in such loans (net of allowance of $5,000 and unearned
income of $51,000).  The loans are made primarily to good credit
borrowers and are collateralized by a first mortgage on the purchased
properties.  The average numbers of days outstanding for the loans are
less than 90 days, and the primary takeout on the loans is long term financing
through secondary sources such as the Federal National Mortgage
Association.
 
 In June
2008, the Company transferred the ownership of the short term loans from
Northsight, Inc. to the Company.  Due to this transfer, the Company
funds and owns the loans.  There is no longer an intercompany transfer
of funds for mortgage loans.  As of December 31, 2008, Navidec had
$2,197,000 (net of allowance of $476,000 and net of unearned income of $6,000)
in such loans.    As of December 31, 2008, $1,422,000 in
loans were past 90 days due.
 
  60
 Navidec
Financial Services, Inc.
 Table of Contents
  
 Summary
of Receivables
 
 Note
      From
                Due
                Principal
      Amount
                12/31/08
      Balance
                Annual
      Interest rate
                Accrued
      Interest
                CollateralRobert
      Grizzle
                Oct
      17, 2009
                $450,000
                $450,000
                8%
                $60,000
                Shares
      and options in Navidec and AegisWelend-Jaguar
                June
      13, 2008
                1,100,000
                1,407,000
                0%
                $-0-
                Junior
      security in residential mortgagesShort
      term home mortgages
                Various
      and on-gong
                2,197,000
                2,679,000
                9.95%
      to 14%
                $28,000
                First
      mortgageTotal
                
                
                $4,536,000
                
                88,000Less:
      Impairments
                
                
                1,883,000Less
      Deferred Income
                
                
                6,000Net
      Balance
                
                
                $2,647,000
 
 
 NOTE
5 – INVESTMENTS
 
 In
December 2007, Northsight, Inc. (a 98% owned subsidiary of the Company)
purchased a 3 unit property in Boston, Massachusetts, known as Thomas Park. The
objective is to rehabilitate the property and then sell it.  During
the quarter ending June 30, 2008, this property was transferred to Southie
Development, LLC (a 100% owned subsidiary of the Company). As of December 31,
2008, the Company and subsidiaries had invested a total of approximately
$2,807,000 in the property.  Part of this investment is funded by a
$1,200,000 line of credit from Mt. Washington Cooperative Bank, of which
$1,141,000 was due on this line as of December 31, 2008.   At the
end of 2008, the Company performed an analysis of the fair market value of the
Thomas Park and reduced the market price by a 6% cost of sale and $150,000
estimated to complete the project and determined an allowance/impairment of
$492,000 was necessary, which amount was taken in the fourth quarter of
2008.   In 2008, we capitalized $15,000 in interest that we paid
to Mt. Washington Cooperative Bank.
 
 On
December 20, 2007, Northsight repossessed a property with a value of $360,000
securing one of its short term loans due to non-payment. During the year ended
December 31, 2008, the Company took title to additional properties for
non-payment.  The Company has expended fix up costs on these
properties and have added the cost to their valuation.  All of these
properties are held as real estate owned and some provide rental income. The
properties may be held to rent or may be sold in the future.  At
December 31, 2008, the valuation of these real estate owned properties is
$3,613,000 less an impairment allowance of $298,000 and accumulated depreciation
on the rental properties of $27,000, for a net balance of
$3,288,000.
 
 
 NOTE
6 – SHORT TERM BORROWINGS
 
 Effective
August, 2007 the Company’s subsidiary Northsight, Inc. arranged for a bank line
of credit.  As of December 31, 2007, the subsidiary had drawn $155,000
against a total line of $286,000.  During the year ended December 31,
2008, the Company paid the outstanding amount owed on the line.  The
line expired on August 31, 2008 and the Company did not renew the line of
credit.
  61
 Navidec
Financial Services, Inc.
 Table of Contents
  The
Company has a first mortgage loan against one of their real estate
owned.  As of December 31, 2008, the balance was $250,000, with a rate
of 10.99%, payments of interest only and due May 1, 2009.
 
 In May
2008, Northsight arranged for a construction line of credit for $1,200,000, due
November 2009.  Proceeds from this line are used strictly for the
renovation of the Thomas Park property in Boston with the intent to
resale.  As for December 31, 2008, the balance outstanding was
$1,141,000.  (See also Note 5.)  This construction line is
due November 19, 2009 with interest only payments at prime +2%, with a floor at
7%.  The line contains the general covenants which management believes
are in full compliance.  This note is collateralized by a first
security interest in Thomas Park and the personal signature of John McKowen,
CEO.
 
  NOTE
7 – INFORMATION ON BUSINESS SEGMENTS
  We
organize our business segments based on the nature of the products and services
offered. We operate in four principal business segments: venture capital
formation and investment (Navidec parent company), Mortgage Lending (Northsight,
Inc.), Real Estate Development (Southie LLC), Real Estate Management (Legendary
Investment Group, LLC). All significant inter-company balances and transactions
have been eliminated in consolidation.
  In the
following tables of financial data, the total of the operating results of these
business segments is reconciled, as appropriate, to the corresponding
consolidated amount. The “Other income (expense)” includes the costs for certain
stock-based compensation programs (including stock-based compensation costs for
stock options and restricted stock as discussed in Note 8).  Further
there are some corporate expenses that were not allocated to the business
segments, and these expenses are contained in the “Total Operating Expenses”
under Navidec Financial Services.
 
 Operating
results for each of the segments of the Company are as follows:
 For
      the Year Ended
                  
                  For
      the Year EndedDecember
      31, 2008
                  
                  December
      31, 2007(In
      thousands)
                  
                  (In
      thousands) (Restated)Navidec
                  
                  Northsight,
                  
                  Southie,
                  
                  Legendary
                  
                  Navidec
                  
                  Northsight,
                  
                  Southie,
                  
                  LegendaryFinancial
                  
                  Inc.
                  
                  LLC
                  
                  Investment
                  
                  Financial
                  
                  Inc.
                  
                  LLC.
                  
                  InvestmentServices
                  
                  
                  
                  
                  
                  LLC
                  
                  Services
                  
                  
                  
                  
                  
                  LLCRevenueLoan
      fees, interest and other
                  $
                  313
                  $
                  1,001
                  $
                  35
                  $
                  -
                  $
                  -
                  $
                  844
                  $
                  -
                  $
                  -Cost
      of Services
                  
                  -
                  
                  811
                  
                  47
                  
                  -
                  
                  -
                  
                  597
                  
                  -
                  
                  -Gross
      Profit
                  
                  313
                  
                  190
                  
                  (12)
                  
                  -
                  
                  -
                  
                  247
                  
                  -Total
      Operating Expenses
                  
                  1,384
                  
                  904
                  
                  50
                  
                  11
                  
                  912
                  
                  245
                  
                  -
                  
                  -Other
      Income/(Expense)Gain
      on sale of investments
                  
                  5,581
                  
                  -
                  
                  -
                  
                  -
                  
                  3,317
                  
                  -
                  
                  -
                  
                  -Impairments
                  
                  (1,962)
                  
                  -
                  
                  (790)
                  
                  
                  
                  (137)
                  
                  -
                  
                  -
                  
                  -Other
      income/(expense)
                  
                  (67)
                  
                  (20)
                  
                  (62)
                  
                  -
                  
                  50
                  
                  (18)
                  
                  -
                  
                  -Total
      Other Income/(Expense)
                  
                  3,552
                  
                  (20)
                  
                  (852)
                  
                  -
                  
                  3,230
                  
                  (18)
                  
                  -
                  
                  -Income
      Taxes (Expense)/Credit
                  
                  (810)
                  
                  170
                  
                  -
                  
                  -
                  
                  -
                  
                  -
                  
                  -
                  
                  -Net
      Income (Loss)
                  $
                  1,671
                  $
                  (564)
                  $
                  (914)
                  $
                  (11)
                  $
                  2,318
                  $
                  (16)
                  $
                  -
                  $
                  -
 
  62
 Navidec
Financial Services, Inc.
 Table of Contents
  
 NOTE
8 - EQUITY TRANSACTIONS
 
 Common
Stock
 
 During
the year ended December 31, 2008, the Company issued 100,000 shares of its
common stock in connection with the exercise of an option for cash of
$5,000.
 
 During
the year ended December 31, 2008 the Board of Directors authorized the
re-purchase of the Company’s common stock in the open market.  The
buyback program is limited by the lesser amount of the following
criteria:
 ·
              Trading
      profits, at the time of purchase of Company stock, realized during the
      present fiscal year on all securities traded by Navidec;
  or
 ·
              An
      amount equal to a maximum of one percent (1%) of Navidec tangible net
      assets; or
 ·
              An
      amount of re-purchase not to exceed
$500,000.
 
 During
the year ended December 31, 2008, 5,526 shares were purchased on the open market
at a cost of $3,967, after brokerage fees.
 
 During
the year ended December 31, 2007 the following equity transactions
occurred:
 ·
              Ralph
      Armijo granted to the Company 68,862 shares of the Company’s common stock
      valued at $150,000 in partial payment to amounts owed to the Company
      during 2007.  (See also Note
4)
 ·
              The
      company issued 33,397 shares of its common stock to Cede & Co. 
       The shares were issued as the result of reconciliation with the DTC,
      where it found that it issued 33,397 fewer shares to Cede & Co than it
      was required to under the terms of the agreement with BPZ.  The share
      issuance was valued at $2,000.
 ·
              9,000 shares were issued to a
      shareholder after a review of the private placement offering in a prior
      year showed the previous non-issuance of the shares to theinvestor.
 
 Due to
the immateriality of the 33,397 and 9,000 shares, these corrections were not
recorded as prior period adjustments.
 
 For the
year ended December 31, 2007,  $647,000 was received and increased
Additional Paid In Capital due to holders of Old Navidec options (See Note 1)
exercising their options to purchase BPZ stock.  Under the terms of
the reverse merger with BPZ, the Company received the strike price of the
options when the options are exercised.   At the end of December
31, 2007 and 2008, there were no legacy options outstanding.
 
 During the year ended December 31,
2007, two shareholders of the Company exercised options exercisable for a total
of 1,000,000 shares of the Company’s restricted common stock at $0.05 per share
for cash of $50,000.
  63
 Navidec
Financial Services, Inc.
 Table of Contents
  
 Stock
Options
 
 The
Company has a Stock Incentive Plan (the "Incentive Plan"), that allows the
Company to grant incentive stock options and/or purchase rights (collectively
"Rights") to officers, employees, former employees and consultants of the
Company and its subsidiaries.   The board has given the ability
to grant Rights to the CEO.
 
 During
the year ended December 31, 2008, the Company awarded 760,000 options at
$2.00/share in Navidec common shares and 1,200,000 options at $0.50/share in
Northsight, Inc.  Under FAS 123R, the grant and vesting of the options
caused payroll expense to increase $114,000 with an offset to Additional Paid In
Capital.  A Black-Scholes computation was made using a volatility of
58.4% for both companies.
 
 In
computing the fair value under 123R, the following values were
used:
 Navidec
                  NorthsightExpected
      stock price volatility
                  43%
                  43%Risk-free
      interest rate
                  2.64%
                  2.64%Expected
      option life (years)
                  3.8
      to 6
                  6Expected
      annual dividend yield
                  0%
                  0%
 
 
 A summary
of the Navidec option plan is as follows:
  Shares
                  Weighted
      Average
                    Exercise
      PriceOutstanding,
      January 1, 2007
                  5,331,510
                  $1.61Granted
                  -
                  -Cancelled
                  -
                  -Expired
                  (
      650,000)
                  $1.00Exercised
                  (
      1,000,000)
                  $0.15Outstanding,  January
      1, 2008
                  3,681,510
                  $
      1.18Granted
                  760,000
                  $
      2.00Cancelled
                  (400,000)
                  $
      1.00Expired
                  -
                  -Exercised
                  (100,000)
                  -Outstanding,
      December 31, 2008
                  3,941,510
                  $
      1.33Options
      Exercisable , December 31, 2008
                  3,248,177
                  $
      1.16
 
 The
Company also holds, as collateral on the Grizzle note (Note 4), 200,000 options
to purchase shares in Navidec at $0.05/share.
  64
 Navidec
Financial Services, Inc.
 Table of Contents
  
 A summary
of the Northsight option plan is as follows:
 
 Shares
                  Weighted
      Average
                    Exercise
      PriceOutstanding,
      January 1, 2007
                  -
                  -Granted
                  -
                  -Cancelled
                  -
                  -Expired
                  -
                  -Exercised
                  -
                  -Outstanding,  January
      1, 2008
                  -
                  -Granted
                  1,200,000
                  $
      0.50Cancelled
                  (617,223)
                  $
      0.50Expired
                  -
                  -Exercised
                  -
                  -Outstanding,
      December 31, 2008
                  582,777
                  $
      0.50Options
      Exercisable , December 31, 2008
                  222,276
                  $
      0.50
 
 If all of
the Northsight options outstanding at December 31, 2008 were exercised, then the
minority interest would increase from the existing 2% to 5%.
 
 In
December 2007, the SEC issued Staff Accounting Bulletin (“SAB”) 110 which was
issued to express the understanding that the use of a “simplified” method, as
discussed in SAB 107 in developing an estimate of expected term of “plain
vanilla” share options in accordance with FASB No. 123R would be acceptable
beyond December 31, 2007. The Company adopted this standard beginning January
2008, and it did not have a material impact on the Company’s consolidated
financial statements.
 
 The fair
value of each option award is estimated on the date of grant using a
Black-Scholes option pricing model that uses the assumptions noted in the table
below. Because this option valuation model incorporates ranges of assumptions
for inputs, those ranges are disclosed above. The Company utilizes historical
volatility of other entities in a similar line of business for a period
commensurate with the contractual term of the underlying financial instruments
and used daily intervals for price observations. The Company will continue to
consider the volatilities of those entities unless circumstances change such
that the identified entities are no longer similar to the Company or until there
is sufficient information available to utilize the Company’s own stock
volatility. The risk-free rate for periods within the expected term of the
option is based on the U.S. Treasury yield curve in effect at the time of grant.
The Company believes these estimates and assumptions are reliable. However,
these estimates and assumptions may change in the future based on actual
experience as well as market conditions.
 
 As of
December 31, 2008, the future value of the existing stock options in Navidec is
$240,000 and $3,000 for Northsight.
  65
 Navidec
Financial Services, Inc.
 Table of Contents
  
 Warrants
 
 At
December 31, 2008, the following warrants to purchase common stock were
outstanding:
  Number
      of common
                      shares
      covered by warrants
                    Exercise
      Price
                    Expiration
      Date1,332,500
                    $4.00
                    August
      20101,332,500
                    2.00
                    August
      2010150,000
                    1.00
                    July
      20102,815,000
 
 
 During
the year ended December 31, 2008 and 2007 the Company did not issue any
warrants.
 
 On July
9, 2008, The Board of Directors of Navidec declared two dividend distributions
for its shareholders as of September 8, 2008, record date. One distribution is
to the Company’s Shareholders of common stock and warrants in the Company’s
subsidiary Northsight.  The other distribution is
warrants.  Each common share of Navidec receives an “A” Warrant to
purchase one share of the Company’s common stock for $2 and a “B” Warrant to
purchase one share of the Company’s common stock for $4.  Both
warrants expire July 1, 2013. On October 2, 2008, Navidec has modified the
record date and “ex-dividend” date to be the date that a Registration Statement
on Form S-1 for Northsight, Inc. for the dividend securities is declared
effective by the Securities and Exchange Commission.
 
 
  NOTE
9 – INCOME TAXES
  At
September 30, 2008, the Company estimated a total income tax liability of
$1,084,000 of which $636,000 remained payable at that date.  During
the fourth quarter of 2008, the Company evaluated the book versus tax
differences as it pertains to specifically identifiable bad debts and their
judgments against Jaguar.  This analysis gave rise to a decrease in
tax expense to $640,000 for the year ended December 31, 2008, with $85,000
remaining payable as of December 31, 2008.
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 Navidec
Financial Services, Inc.
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  Statutory
Rate Reconciliation:
  Federal
      Rate
                  34.00%State
      Rate
                  4.63%Federal
      benefit of State Rate
                  (1.57)%Net
      Effective Rate
                  37.06%
 
 Our
provision for federal and foreign income tax expense consisted of the following
components:
 
 (in
      thousands)
                  2008
                  2007Federal
      income taxes:Current
                  $
      566
                  -Deferred
                  -
                  -Total
      Federal income taxes
                  566
                  -State
      income taxes:Current
                  74
                  -Deferred
                  -
                  -Total
      state income taxes
                  74
                  -Total
      Income Taxes
                  $
      640
                  -
 
 Our
reconciliation of income tax expense computed using the statutory tax rate reconciliation of
37.06% to actual income tax expense is as follows:
 
 (in
      thousands)
                  2008
                  2007Federal
      and state income taxes expense at blended rate
                  $
      577
                  853Reduction
      in tax expense:Net
      operating loss carry forward
                  -
                  (853
                  )Increase
      in tax expense:State
      taxes non-deductible items
                  27
                  -Prior
      period taxes paid in 2008
                  36
                  -Total
      state income taxes
                  63
                  ---Total
      Income Taxes
                  $
      640
                  ---
 
  67
 Navidec
Financial Services, Inc.
 Table of Contents
  
 
 NOTE
10 - COMMITMENTS AND CONTINGENCIES
 
 Operating
Leases
 
 In August
2005, the Company along with its subsidiary, Northsight entered into an office
lease for the Phoenix operations for a payment of $6,697, plus pass throughs,
per month.  The lease expires July 31, 2010.
 
 In
February 2008, the Company along with its subsidiary, Northsight opened offices
at 2000 S. Colorado Blvd, Suite 200, Denver, Colorado. The lease for this office
is $4,701 per month, plus pass throughs. The lease expires February 28,
2011.
 
 The
amounts due at the base rate are as follows:
 
 Period
                  Amount
      Due2009
                  $
      137,0002010
                  $
      104,0002011
                  $
      7,000
 
 The
Company also has equipment and software leases with the following
commitments:
 
 Period
                  Amount
      Due2009
                  $
      20,0002010
                  $
      6,0002011
                  $
      5,000
 
 For the
years ended December 31, 2008 and 2007, respectively, total office, equipment
and facilities rental was $197,000 and 139,000.
 
 Defined
Contribution Plan
 
 Navidec
has a 401(k) profit sharing plan (the “Plan").  Subject to
limitations, eligible employees may make voluntary contributions to the Plan.
The Company may, at its discretion, make additional contributions to the Plan.
The Company did not contribute during the years ended December 31, 2008 or
December 31, 2007.
 
 Over
Charging by Thomas Park General Contractor
 
 At the
end of December 2008, the Company performed a review of the expenses submitted
by the general contractor on the Thomas Park condo conversion and compared these
amounts to the draws paid by the Company to the general
contractor.   The review revealed that approximately $135,000 was
overpaid to the general contractor.  The Company plans to request the
return of the overpayment of funds and is in the process of completing an
internal investigation.  The Company has been in contact with the
general contractor about the repayment.   The general contractor
has represented that he is unable to pay but will sign a promissory note for the
balance due.
 
 The
Company, at the end of December 31, 2008 established an impairment allowance of
$492,000 which includes the overpayment.
  68
 Navidec
Financial Services, Inc.
 Table of Contents
  
 NOTE
11 – RELATED PARTY TRANSACTIONS
 
 The
Company rents part of the CEO’s private home for the CEO’s office for $1,750 per
month.  There is no long term commitment for this
payment.
 
 As of
December 31, 2007, the Company advanced to the CEO $5,000 to cover pending
expenses to be paid by the CEO on behalf of the Company.  This advance
was repaid in January 2008, when the CEO received his bonus
payment.
 
 
 NOTE
12 – OTHER LEGAL PROCEEDINGS
 
 The
Company is a co-defendant in a lawsuit filed on April 2, 2008 in Jackson County
Circuit Court in Missouri.   The Company loaned money to Lydia
Carson (borrower) to purchase a home in Kansas City
Missouri.   The plaintiffs (Devoe) claim they have a superior
lien on the property that was in place before the borrower borrowed money from
the Company for the purchase. On December 31, 2008, the amount owed by Lydia
Carson to the Company is $253,000 (note balance of $315,000 less escrow held of
$62,000). Our attorneys believe that we have a first lien position and are in
the process of filing for a summary judgment in our favor.
 
 On
February 3, 2009, Northsight, Inc. filed a civil action in Boulder County
District Court against Raina Reinholdt, Marilyn Reinholdt, Mary Ann Hocker,
Brooklyn Heights Homes, LLC, EZ Loans, LLC, Greenland Homes Development, LLC,
Impresto, LLC, Jaguar Associated Group, LLC, Quiklend, LLC, UR Funded II, LLC,
Xact Funding, LLC, Windsor Investment Group, LLC, seeking damages for fraudulent
representation, civil conspiracy and violation of the Colorado Organized Crime
Control Act. Northsight is currently awaiting responsive pleadings from the
defendants.
 
 On
February 4, 2009, Northsight, Inc. filed a civil action against John Reinholdt,
II and Tanya Reinholdt seeking to invalidate the transfer of two improved
parcels of real property from John Reinholdt, II to his wife, Tanya Reinholdt
for no consideration.  The lawsuit also seeks to foreclose
Northsight’s judgment lien attached to both properties.  No answers
have been filed by either defendant and consequently, Northsight had moved for
default judgment but no order has entered as of yet.
 
 On March
5, 2009, Northsight moved to intervene in a pending civil action by Colorado
State Bank and Trust against Welend Associated Group, LLC, another Jaguar Group,
LLC affiliate, currently pending in Denver District Court.  Northsight
seeks a judgment against Welend for breach of the terms of the promissory note
and security agreement dated December 13, 2007 between Welend and
Northsight.  Northsight previously obtained a judgment against Jaguar
Group, LLC as a result of its breach of the same note and security agreement but
because Welend had filed a Chapter 11 bankruptcy case at the time, Northsight
was stayed from joining Welend as a defendant. Because the bankruptcy case was
recently dismissed, Northsight is now able to bring its action against Welend
within the context of a pending receivership action in Denver District Court
which consolidates all civil actions against Welend.  (See Note
4)
  69
 Navidec
Financial Services, Inc.
 Table of Contents
  
 
 NOTE
13 – SUBSEQUENT EVENTS
 
 Stock
Buyback Program
 
 During
2008 the Board of Directors authorized the re-purchase of the Company’s common
stock in the open market.  The buyback program is limited by the
lesser amount of the following criteria:
 ·
              Trading
      profits, at the time of purchase of Company stock, realized during the
      present fiscal year on all securities traded by Navidec;
  or
 ·
              An
      amount equal to a maximum of one percent (1%) of Navidec tangible net
      assets; or
 ·
              An
      amount of re-purchase not to exceed
$500,000.
 
 As of
February 28, 2009, 100,000 shares have been acquired for a total purchase price
of $57,979.  During 2008, 5,526 shares were purchased at a cost of
$3,967 and 94,474 shares were acquired through February 28, 2009 for a cost of
$54,012.  It is anticipated that the Company will continue in its
buyback program within the guidelines set forth by the Board.
  70