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VOSCON INC.

Certified Public Accountants

BUCHANAN RENEWABLE ENERGIES (LIBERIA), INC. (BR INC.) AUDITORS’ REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2010

CONTENTS GENERAL INFORMATION BOARD OF DIRECTORS’ REPORT AUDITORS’ REPORT STATEMENT OF INCOME & EXPENSES BALANCE SHEET STATEMENT OF CHANGES IN EQUITY STATEMENT OF CASH FLOWS NOTES TO THE FINANCIAL STATEMENTS

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KLM Building 56 Broad Street P O Box 474 Monrovia. Durand James J.BUCHANAN RENEWABLE ENERGIES (LIBERIA). Liberia 1 . 80 Broad Street Monrovia BANKERS: International Bank Liberia Limited (IBLL) Global Bank Liberia Limited (GBLL) Ecobank Liberia Limited (EBLL) LEGAL COUNSEL: Sherman & Sherman Suite 203. Steele REGISTERED OFFICE: Buchanan House Tubman Boulevard 19th Street Sinkor AUDITORS: VOSCON Inc. (Certified Public Accountants) FedEx Plaza.) GENERAL INFORMATION FOR THE YEAR ENDED DECEMBER 31. 2010 BOARD OF DIRECTORS: Xavier Giboin Donald J. (BR INC. INC.

and making accounting estimates that are reasonable in the circumstances. The directors have made an assessment of the company’s ability to continue as a going concern and have no reason to believe the business will not be a going concern in the years ahead. INC. the statement of changes in equity and statement of cash flows for the period then ended. Board of Directors’ responsibility statement The Company’s directors are responsible for the preparation and fair presentation of the financial statements. economic and managerial services. Approval of the financial statements The financial statements were approved by the board of directors on ……………. (BR INC. and to rehabilitate ports and salvage ships. The board of directors’ responsibility also includes maintaining adequate accounting records and an effective system of risk Board of Directors. the statement of income and expenses. Principal activities The principal activities of the company are to render administrative. selecting and applying appropriate accounting policies. 2010 The board of directors presents their report and audited financial statements for the year ended December 31. and the report of the board of directors in accordance with International Financial Reporting Standards (IFRS). The company will continue to meet its obligations for its liabilities in the normal conduct of its business. financial. whether due to fraud or error. 2010. and the notes to the financial statements. and in the manner required by the Association’s Law Title 5 of the Liberian Code of Laws Revised. comprising the balance sheet as at December 31.) BOARD OF DIRECTORS’ REPORT FOR THE YEAR ENDED DECEMBER 31. . implementing and maintaining internal controls relevant to the preparation and fair presentation of these financial statements that are free from material misstatement. Results The results for the periods and the state of the Company’s affairs are shown in the attached financial statements. The notes to the financial statements include a summary of significant accounting policies and other explanatory notes. The directors’ responsibility includes: designing. Going concern The financial statements have been prepared on the going concern basis of accounting which assumes that the company will and can continue to exist as a going concern and that the assets will be realized in the normal course of the company’s business for at least the values contained in the financial statements. 2010. 2010.BUCHANAN RENEWABLE ENERGIES (LIBERIA).

2010 Board of Directors The members of the board that acted during the period are listed on page 1.2 BUCHANAN RENEWABLE ENERGIES (LIBERIA). INC. Auditors The auditors. Director ……………………………. Director ……………………………. (BR INC. Director . By Order of the Board of Directors ……………………………. VOSCON Inc. has expressed their willingness to continue in office.) BOARD OF DIRECTORS’ REPORT (continued) FOR THE YEAR ENDED DECEMBER 31.

Sackeyfio. changes in equity.) as at December 31.Com Certified Public Accountants Business Solutions Consultants FedEx Plaza 3rd Floor 80 Broad Street. We conducted our audit in accordance with International Standards on Auditing Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement We conducted our audit in accordance with International Standards on Auditing (ISA). (BR Inc. K.3 Box 10 . 2010. CPA . Founderson. on a test basis. Inc. CPA • Theo. and the related statements of income & expenses. and cash flows for year then ended. Opinion In our opinion. CA. AUDITORS’ REPORT Independent auditors’ report to the shareholders of Buchanan Renewable Energies (Liberia). We believe that our audit provides a reasonable basis for our opinion. Dekonty Joseph. Inc. Liberia Telefax: (231) 226 707 Cell: +231 6 514 965 Email: vosconliberia@vosconafrica. and of the results of its operations and its cash flows for the year then ended December 31.0011 1000 Monrovia 10. (BR Inc.com Website: vosconafrica.) as at December 31. 2010. 2010 Monrovia ______________________________________________________________ • Vincent O. Auditors’ Responsibility for the Financial Statements Our responsibility is to express an opinion on these financial statements based on our audit. Monrovia VOSCON INC. as well as evaluating the overall financial statement presentation. and are in accordance with International Financial Reporting Standards (IFRS) and the manner required by the Association’s Law Title 5 of the Liberian Code of Laws Revised. These financial statements are prepared in accordance with the accounting polices set out on pages 9 to 14. An audit includes examining. An audit also includes assessing the accounting principles used and significant estimates made by management. (BR Inc. (Certified Public Accountants) September 25. evidence supporting the amounts and disclosures in the financial statements.) We have audited the accompanying balance sheet of Buchanan Renewable Energies (Liberia). • George K. the financial statements referred to above give a true and fair view of the financial positions of Buchanan Renewable Energies (Liberia). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and accompanying notes are free of material misstatement. Directors Responsibility for the Financial Statements The company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and in the manner required by the Association’s Law Title 5 of the Liberian Code of Laws Revised. Inc. 2010.

507) (861) (1.391.294) (416.644) (537.A MEMBER FIRM OF VOSCON INTERNATIONAL SERVICES BUCHANAN RENEWABLE ENERGIES (LIBERIA).759) (1.770.034) (2.770.275 1.581. INC.204. (BR INC.713) (15.081) (735.810.552) (735.) STATEMENTS OF INCOME AND EXPENSES FOR THE YEAR ENDED DECEMBER 31.669) (235.529 468.428) (4.810.187.552) 5 1.759) (2.529 The notes on pages 9 to 17 are an integral part of these financial statements . 2010 Year Ended 12/31/09 For Eight Months 12/31/08 In United States dollars Note INCOME Revenue Total revenues EXPENSES Office & Administrative expenses Production costs Finance costs Depreciation expense 9 Total expenses Loss before tax Corporate tax Net loss for the period 16 6 7 8 (3.275 468.

419 (3.636) 10.761 8.494.756.044.297 501.083) 1.450.000 813.772 94.813 1. .721.609.702 2.500.361 3.868 4.419 (735.865.507.494.727.355.999 The financial statements set on pages 5 to 8 were approved by the Board of Management on __________ 2010 and were signed on their behalf by: _________________ Don Durand Director 6 ____________________ Ethel Knuckles Financial Controller The notes on pages 9 to 17 are an integral part of these financial statements.5 BUCHANAN RENEWABLE ENERGIES (LIBERIA).500.333 3.889 541.466 901.510 128.999 10 11 12 9 4.000 1.714.730 8.264 1.510.525 1.000 1.552) (726.497.675 1.510.094 50 9. 2010 Year Ended 12/31/09 For Eight Months 12/31/08 In United States dollars Note ASSETS Non-current assets Fixed assets (net) Prepaid leases Total non-current assets Current assets Intercompany receivables Receivables & prepayments Cash & bank balances Total current assets Total assets LIABILITIES AND EQUITY Equity Share capital Additional capital Retained earnings Total equity Non-current liabilities Inter-company loan payables Total non-current liabilities Current liabilities Intercompany payables Payables & accruals Total current liabilities Total liabilities and equity 14 15 13 50 9. INC.094 1.890 127.000 1.861.083 2.105) (3.000 10.727.658.465 104.407 62. (BR INC.) BALANCE SHEETS AS AT DECEMBER 31.

770. INC.105) 50 50 - 9.419 9.) STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED DECEMBER 31. (BR INC.346) (2.346) (736.083) (726.759) (3.346) (736.083) (2.770.497.419 7 .BUCHANAN RENEWABLE ENERGIES (LIBERIA).507.759) (3.419 - Total 9.469 (736.419 - 50 9.346) (726. 2010 Share Capital Addition / changes in equity Loss for the period Balance at 31 December 2008 Balance at 1 January 2010 Addition / changes in equity Loss for the period Balance at 31 December 2010 50 - Additional Retained Capital Earnings 9.636) (736.

509.356.064.161) (735.889) 62.500.303 (3.552) 416.343) 414. (BR INC. 2010 Year Ended 12/31/09 For Eight Months 12/31/08 In United States dollars Cash flows from operating activities Deficit for the period Adjustment to reconcile deficit with cash Provided from operations: Depreciation F.321) 861 861 (734.361 1.818.525) (541.BUCHANAN RENEWABLE ENERGIES (LIBERIA). INC.010 417.788.000 (3.419 1.711.052.000 1.356.) STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31.469 1.633) (1.818.000 9.836) (2.A.000 127.353.941) (2.000 128.813) (501.010.001) 838. & Reclassification (Net) Total adjustments Net (Loss)/income before changes in working capital Changes in assets and liabilities: Prior Year Adjustment Prepaid leases Receivable & prepayments Intercompany receivables Payables & accruals Intercompany payable Net changes in working capital Total cash used in operating activities Cash flows from investing activities: Purchase of fixed assets Total cash used in investing activities Cash flows from financing activities: Share capital Capital surplus Inter-company loan Net cash flows from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year 9.131) (3. Adj.589 (844.633) (794) (10.000 1.085 (151.658.428 1.108.508) (94.438 (2.675 1.131) (1.010.691) The notes on pages 9 to 17 are an integral part of these financial statements 8 .187) (5.407 1.361 50 9.

2010 comprise those of the Company alone. The financial statements are presented in United States Dollars. which is the company’s functional and reporting currency. (c) Functional and reporting currency Items included in the financial statements are measured using the currency of the primary economic environment in which the company operates (the Source and Functional currency). on May 28. Tubman Boulevard. It was initially incorporated as Buchanan Renewables Energies (Liberia) Inc. financial. and then amended on August 26. and also rehabilitates ports and salvages ships. 2008. The financial statements of the Company as at and For the year ended December 31. 2010 1. Basis of preparation (a) Basis of presentation of the financial statement These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP). Congo Town. (BR INC. 9 . (b) Basis of measurement The financial statements have been prepared on the historical cost basis. (the “Company”) is a company domiciled in Liberia. Monrovia. The address of the Company’s registered office is Buchanan House.) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31. economic and managerial services. 2. The company renders administrative. 2007 in Monrovia.BUCHANAN RENEWABLE ENERGIES (LIBERIA). Reporting entity Buchanan Renewables Inc. INC.

Depreciation Provisions Significant accounting policies The accounting policies set out below have been applied consistently to all periods presented in these financial statements. information about significant areas of estimation. Cost includes expenditures that are directly attributable to the acquisition of the assets. . (b) Fixed assets (operating assets) (i) Recognition and measurement Items of operating assets are measured at cost less accumulated depreciation and impairment losses. 2010 Basis of preparation (continued) (d) Use of estimates and judgments The preparation of financial statements requires management to make judgments. Estimates and underlying assumptions are reviewed on an on going basis. In particular. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. income and expenses. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected. Purchased software that is integral to the functionality of the related equipment is capitalized as part of that equipment.) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31. The cost of self constructed assets includes the cost of materials and direct labor. Actual results may differ from these estimates. estimates and assumptions that affect the applications of accounting policies and the reported amounts of assets.BUCHANAN RENEWABLE ENERGIES (LIBERIA). any other costs directly attributable to bringing the assets to a working condition for its intended use. liabilities. INC. uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amount recognized in the financial statements are described in the following notes: Notes 3(b) (iii) Notes 3(d) 3. and the cost of dismantling and removing the items and restoring the site on which they are located. (BR INC. (a) Foreign currency transactions Transactions in foreign currencies are translated to the respective functional currency of the company at exchange rates at the dates of the transactions.

Leasehold improvements are amortized over the life of the improvement or the life of the lease. 2010 Significant accounting policies (continued) When parts of an item of fixed assets have different useful lives. cash and cash equivalents. loans and borrowings and trade and other payables. (c) Financial instruments Useful Life 5 years 5 years 8 years 5 years Non-derivative financial instruments Non-derivative financial instruments comprise trade and other receivables. . Any gains or losses are recognized in the income statement as other operating income or external expenses respectively. INC. (iii) Depreciation Depreciation is recognized in profit or loss on a straight line basis over the estimated useful lives of each part of an item of fixed assets.) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31. whichever is shorter. they are accounted for as separate items (major components) of fixed assets.10 BUCHANAN RENEWABLE ENERGIES (LIBERIA). (ii) Subsequent costs The cost of replacing part of an item of fixed assets is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within that part will flow to the company and its cost can be measured reliably. Land is not depreciated. The cost of the day-to-day servicing of fixed assets is recognized in profit or loss as incurred. The estimated useful lives of the assets for the period are as follows: Assets Office equipment Housing furniture Production equipment Tools (iv) Disposals Gains or losses on the disposal or scrapping of fixed assets are determined as the difference between the sales price less the cost of dismantling selling and re-establishing the assets and the carrying amount. (BR INC.

the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A financial instrument is recognized if the company becomes a party to the contractual provisions of the instrument. Cash and cash equivalents comprise cash balances and call deposit. except as described below. Subsequent to initial recognition. Accounting for finance expenses is discussed in note 3(e). (d) Provisions Provisions for legal claims are recognized when the company has a present legal or constructive obligation as a result of past events. any directly attributable transaction costs. and the amount has been reliably estimated. . Provisions are not recognized for future operating losses. 2010 Significant accounting policies (continued) Non-derivative financial instruments are recognized initially at fair value plus. Where there are a number of similar obligations. non-derivative financial instruments are measured as described below. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. for instruments not at fair value. and it is more likely than not that an outflow of resources will be required to settle the obligation.11 BUCHANAN RENEWABLE ENERGIES (LIBERIA). INC. (BR INC. through profit or loss. Bank overdrafts that are repayable on demand and form an integral part of the company’s cash management are included as a component of cash and cash equivalents for the purpose of the cash flows statement. less any impairment losses. Derivative financial instruments The company does not hold derivative financial instruments to hedge its foreign currency and interest rate risk exposures. Financial assets are derecognized if the company’s contractual rights to the cash flows from the financial assets expire or if the company transfers the financial asset to another party without retaining control or substantially all risks and rewards of the asset. Other non-derivative financial instruments are measured at amortized cost using the effective interest method.) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31.

salaries and depreciation as well as other indirect costs. (i) Revenue Revenue is recognized after management services rendered have been invoiced to the entity which benefited from services. (f) Office & Administrative expenses Administrative expenses comprise expenses relating to administrative staff and management. it is maintained at the initial amount recorded. (BR INC. (g) Borrowings Borrowings are recognized initially at fair value. The company has no legal or constructive obligations to pay further contribution if the fund does not hold sufficient assets to pay all employees the benefit relating to employees service in the current and prior period. If the amount is denominated in a currency other than the reporting currency of the company. including office expenses. being the proceeds net of transaction costs incurred. . 2010 Significant accounting policies (continued) (e) Finance expenses Finance expenses comprise mainly bank charges and commission recognized in the income statement. A defined contribution is a pension plan under which the company pays fixed contribution into the separate entity. The scheme is generally funded through payments to the National Social Security and Welfare Corporation (NASSCORP). The company also has no further payment obligations once the contributions have been paid. less any repayments made as at the reporting date. it is revaluated and adjusted though the income statement at each reporting date.12 BUCHANAN RENEWABLE ENERGIES (LIBERIA).) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31. INC. The contributions are recognized as employee benefit expense when they are due. Borrowings are classified as current liabilities unless when the company has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. If the amount borrowed is denominated in United States Dollars which is the company’s functional and reporting currency. (h) Employee benefits Pension obligations The company operates a defined contribution scheme.

724 807.529 6.695 88.275 1.044.375 2. 2010 4.644 509.832 216.690 166.840 67.523 3.376 8. Financial risk factors The company’s activities expose it to a variety of financial risks.164 1.992 223. (BR INC.810. INC.039 5.335 20.016 5.713 .375 60.475 635 100.000 8.391.859 2.810.858 90.356 7.275 468.388 152.297 82.13 BUCHANAN RENEWABLE ENERGIES (LIBERIA).750 18.393 58.709 31. including: (a) Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash and marketable securities. Office & administrative expenses In United States dollars Personnel cost Other personnel cost Advertising & public relations Auto repairs & maintenance Occupancy expenses Computer & internet expenses Donations Network Cable/DSTV Fuel expenses Management fees Office supplies Postage Telephone & communications Car rental Professional fees Consultant fees Licenses& permit Medical & insurance expenses Shipping expenses Travel & entertainment Miscellaneous expenses 1.538 761 245. Finance cost In United States dollar Management fees 1. The company manages this risk by maintaining sufficient cash.) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31.780 6.504 8.134 249.755 10.187.529 468.860 7.168 19.210 36. Year Ended 12/31/09 For Eight Months 12/31/08 5.039 16. and investing any excess cash over its anticipated requirements.209 1.543 157. and the availability of funding through an adequate amount of committed credit facilities.598 44.

14 BUCHANAN RENEWABLE ENERGIES (LIBERIA).365 235.504 984 537.294 13.580 190. Finance cost In United States dollar Bank charges & fees Interest expense BR BV Interest expense 32.669 - 8.892 1. (BR INC.438 82.) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31.349 12.765 84. Production cost In United States dollar Personnel cost Spare parts Fuel expenses Supplies Repairs & maintenance Travel cost Miscellaneous expense 224. INC. 2010 Year Ended 12/31/09 For Eight Months 12/31/08 7.412 5.688 70.615 15.878 48.507 15 .

575 11.075 (54) 3.Mot Production & Equipment Tools Equipment Housing Furniture Leasehold Improvement Vehicle Boats Total .706 815. (BR INC.) NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED DECEMBER 31.573 396. 2010 Carrying amount: December 31.772 552 3. 2010 9. INC.165) 5.706 111.347. 2010 Additions Adj.210 11.139 226 4.131 815.465 1.637 396. 2010 Current charge Adj.056 1.637 83 1.784 (1.599 Office & Compt. 2010 1. /Reclassification December 31.356.755 11. 2010 December 31.428 (155) 417.000 11. /Reclassification/Write-Off .170 2.575 861 416.227 19.633 Depreciation: Jan.633 3.050 1.801 5.175 4.203 3. 2008 12.175 1.134 5. Fixed assets In United States dollars Cost: Jan.198. 1.413 1.801.756.085 (101) 4.482 100.173.818.170 16 11.131 (1.374 1.347.362 2. 1.725 2.BUCHANAN RENEWABLE ENERGIES (LIBERIA).935 111.850.362 12.165) 16.223 917 15.175 815.355.880 4.December 31.356.708 17.

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Service Payable to Fuel 161.000 13.044 1.000 23.280 2.472 127.000 1. Intercompany receivables Receivable from BR Technical Service Receivable from BR Fuel Receivable from BR Port Project.887 813.000 1.039. INC.272 170.361 1.529 50 50.000 14.682 89.) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31. (BR INC.658.963 111.121 111. Receivable from BR Power 651.260 436.234 541.682 807.935 126.000 10.407 . Receivables & prepayments In United States dollars Accrued receivable Shareholder’s receivable Loan receivable Supplier Advance Employees’ Receivable Prepayments 50 50.889 For Eight Months 12/31/08 11.000 45. Intercompany loan payables In United States Dollar Loan payable to BRBV 10.807 3.954 501.091 73. 2010 Year Ended 12/31/09 10.619 128.500.500.797 878 12.813 12. Intercompany payables In United States Dollar Loan Payable to BRBV Payable to BRBV Inte Payable to BRBV Payable to BR Power Payable to Technical Service Payable to Mgmt.890 374. Cash & bank balances In United States dollars Cash on hand Cash at bank 3.742 124.BUCHANAN RENEWABLE ENERGIES (LIBERIA).510 468.988 31.510.466 1.609.415.000 1.510.

095 2.210 603.17 BUCHANAN RENEWABLE ENERGIES (LIBERIA).361 16. (BR INC. Contingent Liability There exists a pending litigation between J. 2010.675 Corporate Tax Currently. 2010 Year Ended 12/31/09 For Eight Months 12/31/08 15. 17.919 901. and Buchanan Renewable in which the Hearing Officer rule against BR to the effect that the Union be paid US$10. the Company is experiencing loss.030 18.099 62. 14. Capital Commitment There were no major commitments to Capital Expenditure at December 31. BR file a Petition for Judicial Review before the National Labor Court.451 28. Erastus Diggs et. 2010. 18. The Revenue Code of 2000 of Liberia provides for a company to carry losses forward for a period of five (5) years. Payables & accruals In United States dollars Withheld taxes payable to GOL Payable to GOL Overdraft Accrued Payables 3rd Party Payables Accounts payable 160.366.264 16.774 120. al. This Petition for Judicial Review is pending as at December 31. .) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31.00. INC.

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