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

Consolidated Balance Sheets as at March 31, 2007

(With Comparative Figures for the Year Ended December 31, 2006)

March 31, 2007 December 31, 2006

(Unaudited) (Audited)
Current Assets
Cash $ 58,645 $ 207,679
Accounts receivable and sundry assets 4,849 4,830
Inventory 12,885 12,885
Deposits on equipment ( note 3 [b] ) 374,373 253,654
Loan receivable ( note 5 ) 257,584 238,720
708,336 717,768
Other Assets
Investment in private company ( note 6 ) 50,400 50,400

Total Assets $ 758,736 $ 768,168

Accounts payable and accrued liabilities $ 26,868 $ 32,005
Deferred revenue 22,298 5,072
49,166 37,077


Capital stock ( note 7) 16,723,966 16,723,966

Contributed surplus 890,684 890,684

Deficit (16,905,080) (16,883,559)

709,570 731,091
Total Liabilities and Shareholders’ Equity $ 758,736 $ 768,168

Going Concern (note 2)

Approved on behalf of the Board

“ Hirsh Kwinter” Director “Dr. Ezra Franken” Director

See accompanying notes

Venga Aerospace Systems Inc.
Consolidated Statement of Operations and Deficit
for the Three Month Period Ended March 31, 2007
(With Comparative Figures for the Three Month Period Ended March 31, 2006)

March 31, 2007 March 31, 2006

Sales $ 0 $ 677

Professional fees 2,109 4,771
General and administrative 19.412 32,992
21,521 37,763

Net Loss (21,521) (37,086)

Deficit, Beginning of year (16,883,559) (16,665,546)

Deficit, End of period $ (16,905,080) $ (16,702,632)

Loss Per Common Share $ (0.0001) $ (0.0001)

Venga Aerospace Systems Inc.

Consolidated Statement of Cash Flows

for the Three Month Period Ended March 31, 2007
(With Comparative Figures for the Three Month Period Ended March 31, 2006)

March 31, 2007 March 31, 2006

Net loss $ (21,521) $ (37,086)
Adjustments for non-cash items:
Deferred revenue amortization 17, 226 ----
Changes in non-cash assets and liabilities (144,739) 23,388

Cash Used in Operating Activities (149,034) (13,698)

Receipts from related parties. ---- 12,000

Cash Provided By Financing Activities ---- 12,000

NET CHANGE IN CASH (149,034) (1,698)

CASH, Beginning of year $ 207,679 $ 7,467

CASH, End of period $ 58,645 $ 5,769

Venga Aerospace Systems Inc.
Notes to the Consolidated Financial Statements
for the three month period ended March 31, 2007


The Company was incorporated under the Business Corporations Act (Ontario) by certificate of
amalgamation dated April 26, 1979, amalgamating Frodac Mines Ltd., Great Bear Silver Mines Limited and
Silver Monarch Mines Limited to become Frodac Consolidated Energy Resources Ltd. On July 25, 1985, it
changed its name to Global Aerospace Systems Inc. and on November 3, 1987, the Company further
changed its name to Venga Aerospace Systems Inc. (the “Company”).

These consolidated interim financial statements have been prepared on the basis of accounting principles
applicable to a going concern, which assumes that the Company will continue in operation for the
foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of

The Company’s ability to remain as a going concern is dependant upon it successfully implementing its
business plan including, a return to profitable operations and to raise additional capital. Management
believes that steps taken to date and those in process will allow it to continue as a going concern. There
can be no assurance that the Company will be successful in its efforts.

If the going concern assumptions were not appropriate for these consolidated interim financial statements,
then adjustments would be necessary to the carrying values of assets and liabilities, the reported expenses
and losses per share and the balance sheet classifications used.

a. Aerospace Unit

Venga’s aeronautics division was engaged in the development of a full scale, composite jet drone/aircraft
known as the TG-10 Brushfire. In May of 1998, a full-scale prototype of the Company’s drone/aircraft was
completely destroyed in a fire. Further development of Venga’s composite drone/aircraft program has been
held in abeyance, pending the securing of adequate funding for the program.

On June 17, 2004, the Company entered into a development agreement with Air Combat Warfare
International (“ACWI”) of Ayr, Ontario, wherein both parties agreed to make coordinated efforts to attempt to
exploit ACWI’s existing and potential head and sub-contracts to supply flight and combat support services
for the U.S. military and the military forces of Canada and various other NATO countries. The Company
has now extended its development agreement with ACWI to April 3, 2008.

The Company, in association with ARINC Incorporated (“ARINC”) has now made an unsolicited proposal to
the Canadian government (the “Venga/ARINC Proposal”) to provide replacement jet aircraft for the
Canadian Forces’ Snowbirds aerial demonstration squadron. The Venga/ARINC Proposal is based on
providing the Canadian Forces newer, Hawk jet aircraft on a turnkey 20-year lease program. In October of
2006, representatives from the Company and ARINC completed a fact-finding trip to Switzerland, where
inspections of the Hawk aircraft that Venga intends to purchase and then lease to the Canadian Forces,
pursuant to the Venga/ARINC Proposal were completed. The Venga/ARINC Proposal is currently being
reviewed by various branches of the Canadian government and the Canadian Forces and has yet to be
accepted. On January 30, 2007, the Company signed a letter of intent with ARINC (the “ARINC / Venga
Letter of Intent”) confirming the parties’ intention to finalize a full teaming agreement with respect to the
Venga/ARINC Proposal.

b. 3D Graphics Unit

On November 14, 2006, the Company entered into a joint venture agreement (the “New JV Agreement”)
with 3DP North America, Inc., of Kenner, Louisiana; United Business & Capital Services, LLC of Kenner,
Louisiana; EKG, LLC of Lafayette, Louisiana and Armadillo Photo Supply, Inc. of Houston, Texas
(“Armadillo”) creating a new joint venture, the 3DP North America Joint Venture (the “New JV”), to provide a
range of advanced 3D products and print services for both commercial and consumer markets. The
Company will retain a 30% ownership interest in the New JV with 3DP North America, Inc., who will act as
the managing venturer of the New JV, owning the remaining 70% of the venture. The New JV Agreement
required the New JV to purchase certain of the Company’s existing 3D consumer camera inventories and
production equipment for $50,000.00 USD and to pay the Company an annual licencing fee of $50,000.00
USD during both the initial seven year term and, if applicable, the seven year additional term of the New JV.
The New JV’s purchase of the Company’s existing 3D consumer camera inventories and production
equipment was completed on December 1, 2006, with the purchased assets being shipped on December
21, 2006, to the New JV’s planned production facility in Houston, Texas. The Company, which holds a 30%
equity interest with respect to profits in the New JV, has no management rights or ongoing funding
requirements or obligations with respect to the New JV. Pursuant to the terms of the New JV Agreement,
the Company has now advanced $600,000 USD of capital to the New JV and upon termination of the New
JV, the Company is entitled to receive back its capital investment from the New JV’s assets. The
Company’s participation in the management and operation of the New JV is limited to the Company’s right
to receive 30% of the New JV’s new profits as and when such profits are distributed to the joint venturers in
accordance with the terms and provisions of the New JV Agreement. The New JV has entered into a
purchase agreement to acquire two 3D processors and subject to the terms of this agreement has paid
deposits towards the purchase of this print/processing equipment.


a. Principles of Consolidation

The consolidated interim financial statements include the accounts of the Company and its subsidiaries, all
of which are wholly owned.

Investments in jointly controlled companies, jointly controlled partnerships and unincorporated joint
ventures are accounted for using the proportionate consolidation method, whereby the Company’s
proportionate share of revenues, expenses, assets and liabilities are included in the accounts.

Investments in companies over which the Company has significant influence are accounted for using the
equity method.

b. Basis of Presentation

The accompanying unaudited financial statements have been prepared by management in accordance with
Generally Accepted Accounting Principles (GAAP). They have been prepared on a basis consistent with
those followed in the most recent audited financial statements. These unaudited interim financial
statements do not include all of the information and footnotes required by GAAP for annual statements and
therefore should be read in conjunction with the audited financial statements and notes included in the
Company’s Annual Report for the year ended December 31, 2006. These interim financial statements were
not examined by the Company’s auditors.

Management has prepared these interim comparative financial statements on a consolidated basis which
includes its wholly-owned subsidiary, Venga Joint Venture Ltd. and a 30% proportionate consolidation with
the New JV. The New JV Agreement provides that the Company will participate in 30% of profits generated
through the New JV. The Company was required to fund a maximum of $600,000 USD of capital to the New
JV and upon termination of the New JV, the Company is entitled to receive back its capital investment from
the New JV’s assets. As at March 31, 2007, the Company has funded 95% of the New JV’s activities. As a
result, these consolidated interim statements include the Company’s proportionate share of the net assets of
the New JV being 95%. The Company is only liable to the extent of its investment and is indemnified from
the other joint venturers for any excess losses and liabilities. The basis of consolidation is proportionate
capital share, which will vary over time, and not profit share. All inter-company transactions and balances
have been eliminated on consolidation.

c. Use of Estimates

The preparation of these consolidated financial statements, in conformity with Canadian GAAP, requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities
at the date of the financial statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from these estimates. Significant estimates include prepaid
expenses and certain accrued liabilities.

d. Financial Instruments

The Company’s financial instruments consist of cash, accounts receivable, loans receivable, accounts
payable, accrued liabilities and loans payable. It is the opinion of management that the Company is not
exposed to significant interest, foreign exchange and credit risks arising from its financial instruments. The
fair values of these financial instruments approximate their carrying values, unless otherwise noted.

Credit Risk: The Company does not have a significant exposure to any individual customer or counter

Foreign Currency Risk: Consulting contracts billed in U.S. dollars by the Company are recorded at the
exchange rate in effect at the time of sales and are collected on standard trade payable terms. Excess
U.S. dollar balances are converted to Canadian dollars on a regular basis. The Company does not enter
into foreign currency hedges. Further devaluation in the U.S. dollar, relative to the Canadian dollar, could
affect the Company’s ability to continue at current sales growth rates and attain cash – positive operations
as substantially all of the sales contracts are denominated in U.S. dollars.

e. Inventory

The Company records inventory at the lower of cost and net realizable value. Cost is determined on the
first – in, first – out basis.

f. Income Tax

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

g. Translation of Foreign Currencies

Monetary assets and liabilities are translated at the current period-end exchange rate. All other assets and
liabilities are translated at the exchange rates in effect at the dates of the transactions. Revenue and
expense items are translated at the monthly average exchange rate for the year. Exchange gains and
losses are charged to income.
h. Long-term Investments

Long-term investments are recorded at cost. Gains and losses are recognized when investments are sold.
Income is recognized only to the extent dividends are received.

i. Impairment of Long-lived Assets

Long-lived assets, including capital assets, are amortized over their useful lives. The Company reviews
long-lived assets for impairment when events or changes in circumstances indicate that the carrying
amount may not be recoverable. If the sum of the undiscounted cash flows expected to result from the use
and eventual disposition of a group of assets is less than its carrying amount, it is considered impaired. An
impairment loss is measured as the amount by which the carrying amount of the group of assets exceeds
its fair value. At March 31, 2007, no such impairment has occurred.

j. Basic and Diluted Loss Per Share.

The Canadian Institute of Chartered Accountants (“CICA”) recommends the use of the treasury stock
method in computing earnings/loss per share. Under this method, basic loss per share is computed by
dividing earnings available to common shareholders by the weighted average number of common shares
outstanding during the year. In computing the loss per share on a fully diluted basis, the treasury stock
method assumes that proceeds received from in-the-money stock options are used to repurchase common
shares at the prevailing market rate.

The weighted average number of common shares outstanding as of March 31, 2007, was 228,271,893
(March 31, 2006 - 201,184,633).

k. Revenue Recognition

The Company recognizes revenue when the sale or service is completed.

l. Comparative Figures

The Company has reclassified the comparative figures, where necessary, to conform to the current period’s


The loan receivable from EKG, LLC is repayable within one year, is non-interest bearing and is unsecured.


The Company, through a shares for debt conversion, received an immediate 3% interest and an option to
acquire up to an additional 15% interest in Global Mineral Investments, LLC (“GMI”), a private, U.S.
corporation, engaged in the leasing and development of gold mining concessions in West Africa. GMI has
been invited by Liberia’s Ministry of Lands, Mines and Energy to evaluate and possibly acquire gold
concessions in that country’s Sinoe County region. In addition, the Liberian government has indicated that
certain oil concessions may be made available to GMI.

Authorized: Unlimited common and special shares without par value

March 31, 2007 December 31, 2006

Issued Common Shares: 228,271,893 228,271,893
Value: $ 16,723,966 $ 16,723,966


The Company has accumulated losses for income tax purposes totalling approximately $1,108,437 for which the
tax benefits have not been recognized in the financial statements. These losses can be deducted from future
years' taxable income and expire as follows:

2007 60,000
2008 120,000
2009 60,000
2013 198,000
2014 451,000
2026 219,473


On April 23, 2007, the parties renewed the Venga/ARINC Letter of Intent for a further 90 - day period.