UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2009.
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 COMMISSION FILE NUMBER: 000-32089
 PURERAY CORPORATION
 (Exact name of registrant as specified in its charter)
 Washington
    
    91-2023071(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 3490 PIEDMONT ROAD, SUITE 1120
ATLANTA, GA 30305
(Address of principal executive office)
(404) 869-6242
(Registrants telephone number, including area code)
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller reporting company þ
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TABLE OF CONTENTS
 PagePART I  FINANCIAL INFORMATION
    
    
    1Item 1. Consolidated Financial Statements
    
    
    1Consolidated Balance Sheets as of January 31, 2009 (unaudited), and April 30, 2008
    
    
    F-1Consolidated Statements of Operations (unaudited) for the three and nine month periods ended
January 31, 2009 and 2008 and for the period from September 19, 2007 (inception of
PureCanada) through January 31, 2009
    
    
    F-2Consolidated Statements of Cash Flows (unaudited) for the nine month periods ended January
31, 2009 and 2008 and for the period from September 19, 2007 (inception of PureCanada)
through January 31, 2009
    
    
    F-3Consolidated Statements of Stockholders Equity (unaudited) for the period from
September 19, 2007 (inception of PureCanada) through January 31, 2009
    
    
    F-4Notes to Consolidated Financial Statements (unaudited)
    
    
    F-5Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    1Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    11Item 4T. Controls and Procedures
    
    
    11PART II  OTHER INFORMATION
    
    
    12Item 1. Legal Proceedings
    
    
    12Item 1A. Risk Factors
    
    
    12Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    12Item 3. Defaults upon Senior Securities
    
    
    12Item 4. Submission of Matters to a Vote of Security Holders
    
    
    12Item 5. Other Information
    
    
    12Item 6. Exhibits
    
    
    14SIGNATURES
    
    
    16
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PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
  
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 FORWARD-LOOKING STATEMENTS
    MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Overview
   1




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1.
    
    PureCanada issued 35,855,000 shares to founders and investors, of
which 15,185,000 shares were issued for $0.00001 per share in cash and
20,670,000 shares were issued as consideration for the transfer to
PureCanada of certain intangible assets by the founders of PureCanada.
The Exchangeable Shares include 4,355,000 shares (the Escrowed
Shares) issued to Kairos Partners, LLC (Kairos) pursuant to an
Escrow and Share Purchase Agreement (as defined below), under which
the Escrowed Shares will be held in escrow and incrementally released
upon the occurrence of certain performance-based milestone events. A
further discussion of the accounting treatment for the Escrowed Shares
is included in Note 4 to the Consolidated Financial Statements
beginning on page F-1 hereunder.2.
    
    We declared a 1.76 forward split of our Common Stock on May 23 2008,
after which there were 34,870,000 shares of our Common Stock
outstanding.3.
    
    Jim Glavas, our former President and a former director of the Company,
contributed 21,370,000 post-split restricted shares of our Common
Stock to us as a capital contribution for no consideration, after
which there were 13,500,000 shares of our Common Stock outstanding.4.
    
    Through an indirect wholly-owned subsidiary, we acquired all of the
PureCanada Shares by issuing one Exchangeable Share for each
PureCanada Share. The Exchangeable Shares are non-voting but have
other rights and privileges on a basis pari passu with our Common
Stock.5.
    
    Under an Exchange Agreement (as defined below), we issued 8,963,750
shares of our Special Voting Stock (as defined below) to a trustee to
be held for and on behalf of the registered holders of the
Exchangeable Shares.6.
    
    We completed a private placement (the Offering) of 2,000,000 Units
at a price of $1.00 per Unit, whereby each Unit is comprised of one
share of our Common Stock and one share purchase warrant at an
exercise price of $1.00 per share for a period of six months. As of
January 24, 2009, the share purchase warrants have expired.7.
    
    Jim Glavas, our former sole director, appointed Jefrey M. Wallace,
Derek Blackburn, Mickael Joasil and Frank ODea to our Board of
Directors, and subsequently resigned from the Board of Directors.
 2




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Business Operations
     Proposed Divestiture
  3




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##### 



Results of Operations
  From Inception of PureCanada on September 19, 2007 to January 31, 2009
       4




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Liquidity and Capital Resources
 From Inception of PureCanada on September 19, 2007 to January 31, 2009
     Entry Into Share Purchase Agreement
     5




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6




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
    
    545,000 Escrowed Shares, within 120 days after the end of the
financial year of PureCanada in which the sales of PureCanada and its
affiliates are at least US$8,000,000;
    
    545,000 Escrowed Shares, within 120 days after the end of the
financial year of PureCanada in which the minimum EBITDA of PureCanada
and its affiliates for such financial year, on a consolidated basis,
is at least US$1,000,000;
    
    545,000 Escrowed Shares, within 120 days after the end of the
financial year of PureCanada in which the minimum EBITDA of PureCanada
and its affiliates for such financial year, on a consolidated basis,
is at least US$2,500,000;
    
    545,000 Escrowed Shares, within 120 days after the end of the
financial year of PureCanada in which the minimum EBITDA of PureCanada
and its affiliates for such financial year, on a consolidated basis,
is at least US$5,000,000; and
    
    2,175,000 Escrowed Shares, within five days after the day on which the
shares of Common Stock of the Company are listed and posted for
trading on the Nasdaq Stock Market.
 7




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##### 




    
    paying any dividends on common stock or any other shares which by
their designation rank junior to the Exchangeable Shares, other than
stock dividends payable in common stock or any such other shares
ranking junior to the Exchangeable Shares;
    
    redeeming or purchasing or making any capital distribution in respect
of common stock or any other shares which by their designation rank
junior to the Exchangeable Shares with respect to the payment of
dividends or on any liquidation distribution;
    
    redeeming or purchasing any other shares which by their designation
rank equally with the Exchangeable Shares with respect to the payment
of dividends or on any liquidation distribution.
 8




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Entry Into Divestiture Agreement
  Critical Accounting Policies and Estimates
   9




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Stock-Based Compensation
  Long-lived Assets
   Income Taxes
  Related Party Transactions
   10




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Item 3. Quantitative and Qualitative Disclosures about Market Risk
  
 Item 4T. Controls and Procedures.
  11




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PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
 Recent Sales of Unregistered Securities
    
 Item 3. Defaults upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  
 Item 5. Other Information.
  12




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.
     13




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Item 6. Exhibits.
 Number
    
    Description3.1
    
    Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Companys Registration
Statement No. 333-38534 filed on June 2, 2000).3.2
    
    Articles of Amendment to Articles of Incorporation (incorporated by reference to Exhibit 3.1 to
the Companys Current Report on Form 8-K filed on March 25, 2003).3.3
    
    Articles of Amendment to Articles of Incorporation (incorporated by reference to Exhibit 3.1 to
the Companys Current Report on Form 8-K/A filed on October 9, 2008).3.4
    
    Bylaws (incorporated by reference to Exhibit 3.3 to the Companys Registration Statement No.
333-38534 filed on June 2, 2000).4.1
    
    Certificate of Designation of Special Voting Stock (incorporated by reference to Exhibit 4.1 to
the Companys Current Report on Form 8-K/A filed on October 9, 2008).10.1
    
    Share Purchase Agreement dated July 24, 2008 among the Company, PureRay Acquisition Inc., PureRay
Corporation, Mickael Joasil, Derek Blackburn, F.W.F. Robinson, Frank ODea, Kairos Partners, LLC,
Thomas J. Broeski, Raj Kurichh, Megs Padiachy , Ramila Padiachy, Patrick Pierre and Matthew Sicoli
(incorporated by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K/A filed on
October 9, 2008).10.2
    
    Voting and Exchange Trust Agreement dated July 24, 2008 among the Company, PureRay Holdings ULC,
PureRay Acquisition Inc. and Derek Blackburn (incorporated by reference to Exhibit 10.2 to the
Companys Current Report on Form 8-K/A filed on October 9, 2008).10.3
    
    Support Agreement dated July 24, 2008 among the Company, PureRay Holdings ULC and PureRay
Acquisition Inc. (incorporated by reference to Exhibit 10.3 to the Companys Current Report on
Form 8-K/A filed on October 9, 2008).10.4
    
    Capital Contribution Agreement dated July 24, 2008 between the Company and Jim Glavas
(incorporated by reference to Exhibit 10.4 to the Companys Current Report on Form 8-K/A filed on
October 9, 2008).10.5
    
    Escrow and Share Purchase Agreement
dated July 24, 2008 among Kairos Partners, LLC, PureRay
Acquisition Inc. and Wildeboer Dellelce LLP (incorporated by reference to Exhibit 10.5 to the
Companys Current Report on Form 8-K/A filed on October 9, 2008).10.6
    
    Assignment of Application dated July 2, 2008 between Mickael Joasil and PureRay Corporation
(incorporated by reference to Exhibit 10.6 to PureRay Corporations Current Report on Form 8-K/A
filed on October 9, 2008).10.7
    
    Assignment of Application dated July 2, 2008 between Mickael Joasil and PureRay Corporation
(incorporated by reference to Exhibit 10.7 to the Companys Current Report on Form 8-K/A filed on
October 9, 2008).
 14




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Number
    
    Description10.8
    
    Trademark Assignment dated July 16, 2008 (incorporated by reference to Exhibit 10.8 to the
Companys Current Report on Form 8-K/A filed on October 9, 2008).10.9
    
    Employment Agreement dated October 10, 2008 between the Company and John McIlwaine (incorporated
by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K filed on October 17,
2008).10.10
    
    2008 Stock Option and Incentive Plan (incorporated by reference to Exhibit 10.1 to the Companys
Current Report on Form 8-K filed on October 17, 2008).10.11
    
    Divestiture Agreement dated March 17, 2009 among the Company, Pure Ray Holdings ULC, PureRay
Corporation, Derek Blackburn in has capacity as Trustee, Mickael Joasil, Derek Blackburn, F.W.F.
Robinson, Frank ODea, Kairos Partners, LLC, Thomas J. Broeski, Raj Kurichh, Megs Padiachy,
Ramila Padiachy, Patrick Pierre and Matthew Sicoli.31.1
    
    Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a).31.2
    
    Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a).32.1
    
    Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 15




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SIGNATURES
  PURERAY CORPORATION
(Registrant)Date: March 17, 2009
    By:
    /s/ Jefrey M. WallaceJefrey M. WallacePrincipal Executive Officer Date: March 17, 2009
    By:
    /s/ Derek BlackburnDerek BlackburnPrincipal Financial Officer 16




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EXHIBIT INDEX
 Number
    
    Description10.1
    
    Divestiture Agreement dated March 17, 2009 among the Company, Pure Ray Holdings ULC,
PureRay Corporation, Derek Blackburn in has capacity as Trustee, Mickael Joasil, Derek
Blackburn, F.W.F. Robinson, Frank ODea, Kairos Partners, LLC, Thomas J. Broeski, Raj
Kurichh, Megs Padiachy, Ramila Padiachy, Patrick Pierre and Matthew
Sicoli.31.1
    
    Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a).31.2
    
    Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a).32.1
    
    Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.32.2
    
    Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
 17




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##### 



PURERAY CORPORATION
(a development stage company)
 
 CONSOLIDATED BALANCE SHEETS
 (Expressed in U.S. dollars)
 January 31, 2009
    
    April 30, 2008$
    
    $UnauditedASSETSCurrent AssetsCash
    
    
    109,296
    
    
    
    Prepaid expenses
    
    
    240,250
    
    
    
    11,240Due from related parties
    
    
    
    
    
    
    100,150Total Current Assets
    
    
    349,546
    
    
    
    111,390Other AssetsPatents
    
    
    19,200
    
    
    
    Total Assets
    
    
    368,746
    
    
    
    111,390LIABILITIES AND STOCKHOLDERS DEFICITCurrent LiabilitiesAccounts payable
    
    
    337,003
    
    
    
    59,751Accrued liabilities
    
    
    147,116
    
    
    
    70,092Due to a related party (Note 5)
    
    
    49,500
    
    
    
    11,240Note payable (Note 5)
    
    
    
    
    
    
    100,000Total Liabilities
    
    
    533,619
    
    
    
    241,083Contingencies and Commitments (Notes 4 and 5)Going Concern (Note 2)Stockholders Equity (Deficit)Preferred Stock; Par value $0.0001 per share; 8,963,750 shares issued and outstanding
    
    
    896
    
    
    
    Common Stock; Par value $0.0001 per share; 15,500,000 and 15,185,000 shares issued and outstanding
    
    
    1,550
    
    
    
    1,519Additional Paid-in Capital
    
    
    1,862,763
    
    
    
    Stock Subscription Receivable
    
    
    
    
    
    
    (1,369
    )Deficit Accumulated During the Development Stage
    
    
    (2,030,082
    )
    
    
    (129,843
    )Total Stockholders Deficit
    
    
    (164,873
    )
    
    
    (129,693
    )Total Liabilities and Stockholders Deficit
    
    
    368,746
    
    
    
    111,390




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##### 



PURERAY CORPORATION
(a development stage company)
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (Expressed in U.S. dollars)
 (unaudited)
 Accumulated FromThree Months
    
    Three Months
    
    Nine Months
    
    Nine Months
    
    September 19, 2007Ended
    
    Ended
    
    Ended
    
    Ended
    
    (Date of Inception)January 31, 2009
    
    January 31, 2008
    
    January 31, 2009
    
    January 31, 2008
    
    To January 31, 2009$
    
    $
    
    $
    
    $
    
    $Revenue
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ExpensesProfessional fees
    
    
    80,742
    
    
    
    
    
    
    
    722,596
    
    
    
    
    
    
    
    722,596Management and consulting fees
    
    
    277,210
    
    
    
    
    
    
    
    665,486
    
    
    
    
    
    
    
    715,486Product development
    
    
    57,077
    
    
    
    
    
    
    
    195,407
    
    
    
    
    
    
    
    195,407Marketing
    
    
    72,339
    
    
    
    
    
    
    
    156,073
    
    
    
    
    
    
    
    226,165Other
    
    
    59,965
    
    
    
    
    
    
    
    164,678
    
    
    
    
    
    
    
    174,429Total Expenses
    
    
    547,333
    
    
    
    
    
    
    
    1,904,240
    
    
    
    
    
    
    
    2,034,083Net Loss Before Other Income (Expense)
    
    
    (547,333
    )
    
    
    
    
    
    
    (1,904,240
    )
    
    
    
    
    
    
    (2,034,083
    )Other Income (Expense)Interest income
    
    
    590
    
    
    
    
    
    
    
    4,001
    
    
    
    
    
    
    
    4,001Net Loss for the Period
    
    
    (546,743
    )
    
    
    
    
    
    
    (1,900,239
    )
    
    
    
    
    
    
    (2,030,082
    )Net Loss Per Share  Basic and Diluted
    
    $
    (0.04
    )
    $
    
    
    
    
    $
    (0.11
    )
    $
    
    
    
    
    $
    (0.21
    )Weighted Average Number of Shares Outstanding
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Basic and Diluted
    
    
    15,500,000
    
    
    
    
    
    
    
    17,163,944
    
    
    
    
    
    
    
    9,459,614




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##### 



PURERAY CORPORATION
(a development stage company)
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Expressed in U.S. dollars)
 (unaudited)
 Accumulated FromNine Months
    
    Nine Months
    
    September 19, 2007Ended
    
    Ended
    
    (Date of Inception)January 31, 2009
    
    January 31, 2008
    
    To January 31, 2009$
    
    $
    
    $Operating ActivitiesNet loss
    
    
    (1,900,239
    )
    
    
    
    
    
    
    (2,030,082
    )Adjustments to reconcile net loss to cash used in operating activitiesShare-based consulting fees
    
    
    26,250
    
    
    
    
    
    
    
    26,250Change in operating assets and liabilitiesPrepaid expenses
    
    
    (229,009
    )
    
    
    
    
    
    
    (240,250
    )Accounts payable and accrued liabilities
    
    
    269,804
    
    
    
    
    
    
    
    399,648Net Cash Used in Operating Activities
    
    
    (1,833,194
    )
    
    
    
    
    
    
    (1,844,434
    )Financing ActivitiesDue to (from) related parties
    
    
    (11,240
    )
    
    
    
    
    
    
    Net Cash
Used in Financing Activities
    
    
    (11,240
    )
    
    
    
    
    
    
    Investing ActivitiesPatent costs
    
    
    (19,200
    )
    
    
    
    
    
    
    (19,200
    )Net cash from recapitalization
    
    
    1,972,930
    
    
    
    
    
    
    
    1,972,930Net Cash Provided By Investing Activities
    
    
    1,953,730
    
    
    
    
    
    
    
    1,953,730Increase in Cash
    
    
    109,296
    
    
    
    
    
    
    
    109,296Cash  Beginning of Period
    
    
    
    
    
    
    
    
    
    
    Cash  End of Period
    
    
    109,296
    
    
    
    
    
    
    
    109,296Non-cash Investing and Financing ActivitiesAcquistion of net assets of NAGA with issuance of stock
    
    
    1,838,759
    
    
    
    
    
    
    
    1,838,759Supplemental DisclosuresInterest paid
    
    
    
    
    
    
    
    
    
    
    Income taxes paid
    
    
    
    
    
    
    
    
    
    
    




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PURERAY CORPORATION
(a development stage company)
 
 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
 (Expressed in U.S. dollars)
 (unaudited)
 DeficitAccumulatedCommon Shares
    
    Preferred Shares
    
    Additional
    
    
    
    
    
    During thePar
    
    
    
    
    
    Par
    
    Paid -In
    
    Shareholder
    
    DevelopmentNumber
    
    Value
    
    Number
    
    Value
    
    Capital
    
    Subscription
    
    Stage
    
    Total#
    
    $
    
    #
    
    $
    
    $
    
    $
    
    $
    
    $Balance  September 19, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (Date of Inception)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Common shares subscribed
    
    
    15,185,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    150
    
    
    
    
    
    
    
    
    
    
    
    150Net loss for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (129,843
    )
    
    
    (129,843
    )Balance  April 30, 2008
    
    
    15,185,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    150
    
    
    
    
    
    
    
    (129,843
    )
    
    
    (129,693
    )Shares issued for intangible assets
    
    
    20,670,000
    
    
    
    2,067
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,067
    )
    
    
    
    
    
    
    Adjustment for change in Par Value
    
    
    
    
    
    
    1,519
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,519
    )
    
    
    
    
    
    
    Recapitalization transactions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Shares effectively issued to former NAGA
shareholders as part of the
recapitalization
    
    
    34,870,000
    
    
    
    3,487
    
    
    
    
    
    
    
    
    
    
    
    (3,487
    )
    
    
    
    
    
    
    
    
    
    
    Cancellation of founders stock
    
    
    (21,370,000
    )
    
    
    (2,137
    )
    
    
    
    
    
    
    
    
    
    
    2,137
    
    
    
    
    
    
    
    
    
    
    
    Shares of Pure Canada acquired by legal
acquiror
    
    
    (35,855,000
    )
    
    
    (3,586
    )
    
    
    
    
    
    
    
    
    
    
    (150
    )
    
    
    3,586
    
    
    
    
    
    
    
    (150
    )Net liabilities assumed in recapitalization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (160,996
    )
    
    
    
    
    
    
    
    
    
    
    (160,996
    )Unit Private Placement
    
    
    2,000,000
    
    
    
    200
    
    
    
    
    
    
    
    
    
    
    
    1,999,755
    
    
    
    
    
    
    
    
    
    
    
    1,999,955Issuance of Preferred Shares
    
    
    
    
    
    
    
    
    
    
    8,963,750
    
    
    
    896
    
    
    
    (896
    )
    
    
    
    
    
    
    
    
    
    
    Share-based consulting fees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,250
    
    
    
    
    
    
    
    
    
    
    
    26,250Net loss for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,900,239
    )
    
    
    (1,900,239
    )Balance  January 31, 2009
    
    
    15,500,000
    
    
    
    1,550
    
    
    
    8,963,750
    
    
    
    896
    
    
    
    1,862,763
    
    
    
    
    
    
    
    (2,030,082
    )
    
    
    (164,873
    )




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PURERAY CORPORATION
(a development stage company)
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 January 31, 2009
 (unaudited)
 1.
    
    Background
   a.
    
    PureCanada issued 35,855,000 shares to founders and investors, of
which 15,185,000 shares (subscribed as of April 30, 2008) were issued
for $0.00001 per share in cash, and 20,670,000 shares were issued as
consideration for the transfer to PureCanada of certain intangible
assets by the founders of PureCanada.b.
    
    NAGA declared a 1.76 forward split of its common stock on May 23,
2008, after which there were 34,870,000 shares of its common stock
outstanding.c.
    
    Jim Glavas, the former President and a former director of NAGA,
contributed 21,370,000 post-split restricted shares of NAGAs Common
Stock to NAGA as a capital contribution for no consideration, after
which there were 13,500,000 shares of NAGAs common stock outstanding.d.
    
    Pursuant to a Share Purchase Agreement, NAGA acquired, through an
indirect wholly-owned subsidiary (Acquisition Sub), all of the
outstanding shares of PureCanada by issuing one (1) exchangeable share
(the Exchangeable Shares) of Acquisition Sub for each share of
PureCanada (total Exchangeable Shares issued, 35,855,000). The
Exchangeable Shares are non-voting but have other rights and
privileges on a basis pari passu with the common stock of the Company.e.
    
    Under a Voting and Exchange Trust Agreement (the Exchange
Agreement), the Company issued shares of preferred stock of the
Company, par value $0.0001 per share (the Special Voting Stock), in
a ratio of a quarter (1/4) share of Special Voting Stock for each
Exchangeable Share issued in connection with the Acquisition (for a
total of 8,963,750 shares of Special Voting Stock) to a trustee to be
held for and on behalf of the registered holders of the Exchangeable
Shares.f.
    
    NAGA completed a private placement (the Offering) of 2,000,000 units
at a price of $1.00 per unit, whereby each unit is comprised of one
common share and one share purchase warrant (the Warrants) at an
exercise price of $1.00 per share for a period of six months. As of
January 24, 2009, the Warrants have expired.g.
    
    The former sole director of NAGA appointed three holders of
Exchangeable Shares to the Companys Board of Directors and
subsequently resigned from the Board of Directors.
 2.
    
    Basis of Presentation and Continuance of Business
  F-5




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3.
    
    Summary of Significant Accounting Policies
 Basis of Accounting
  Year end
  F-6




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Comparative Financial Statements
  Use of Estimates
  Cash and Cash Equivalents
  Research and Development Costs
  Foreign Currency Translation
  Long-lived Assets
  Financial Instruments
  F-7




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Income Taxes
  Comprehensive Income
  Basic and Diluted Net Loss per Share
  Stock-based Compensation
  Recent Accounting Pronouncements
   F-8




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F-9




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Reclassifications
  4.
    
    Shareholders Equity
  January 31,
    
    April 30,2009
    
    2008Preferred Shares
    
    
    8,963,750
    
    
    
    Common Shares
    
    
    15,500,000
    
    
    
    15,185,000
  a.
    
    The Exchangeable Shares (Note 1)b.
    
    Warrants issued for servicesIn October 2008, the Company granted
warrants to a non-employee for the purchase of 750,000 common shares
at an exercise price of $0.50 per share, based upon the average
trading price of the Companys common stock for the immediately
succeeding five days following the date of grant. The warrants vest in
four quarterly installments beginning November 1, 2009. At each
vesting date, the fair value of the vesting warrants will be charged
to consulting expense. During the three months ended January 31. 2009,
187,500 warrants vested, with a fair value of $26,250, determined
using the Black-Scholes Pricing Model with the following assumptions:
risk-free interest rate of 2.6%; expected life of 5.3 years; expected
volatility of 75%; and an expected dividend yield of 0.0%.c.
    
    2008 Stock Option and Incentive Plan (the 2008 Option Plan)The
Company adopted the 2008 Option Plan in October 2008. The 2008 Option
Plan authorizes up to 5,500,000 common shares for the grant of options
or restricted stock to qualified recipients, including employees and
non-employees. The exercise price of options and the value established
for restricted shares will be the then current fair value per common
share. Vesting schedules and other terms will be determined by the
Board of Directors upon each grant under the plan. No options or
restricted shares had been granted as of January 31, 2009.
 Earnings (Loss) per Share.
   F-10




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
    
    545,000 Escrowed Shares, within 120 days after the end of the
financial year in which the sales are at least US$8,000,000;
    
    545,000 Escrowed Shares, within 120 days after the end of the
financial year in which EBITDA for such financial year is at least
US$1,000,000;
    
    545,000 Escrowed Shares, within 120 days after the end of the
financial year in which EBITDA is at least US$2,500,000;
    
    545,000 Escrowed Shares, within 120 days after the end of the
financial year in which EBITDA is at least US$5,000,000; and
    
    2,175,000 Escrowed Shares, within five days after the day on which the
shares of common stock of the Company are listed and posted for
trading on the Nasdaq Stock Market.
    5.
    
    Related Party Transactions
    F-11




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F-12