ETHEMA HEALTH Corp - Quarter Report: 2011 September (Form 10-Q)

a50120546.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

OF 1934

For the Quarterly Period ended September 30, 2011

Commission File number 0-15078

NOVA NATURAL RESOURCES CORPORATION

(Name of Small Business Issuer in its charter)

Colorado

(State or other

jurisdiction of incorporation

Identification No.)

84-1227328

(I.R.S. Employer of

Incorporation

Identification No.)

Suite 300, 5734 Yonge Street,

North York, Ontario, Canada M2M 4E7

(Address of principal executive offices)

(416) 222-5501)

(issuer's phone number)

Securities registered under Section 12(b) of the Act: NONE

Securities registered under Section

12(g) of the Act:

Common Stock, $.01 Par Value

(Title of Class)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12months (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 o

Check if disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will 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-Q or any amendment to this Form 10-Q. x

Issuer's revenues for its most recent fiscal year totaled: $506,718 Documents Incorporated by Reference: None

Transitional Small Business Disclosure Format:

Yes o. No x.

As of September 30, 2011, the Registrant had outstanding no shares of Convertible Preferred Stock, $1.00 par value issued and outstanding. The number of Shares of Common Stock Outstanding $.01 par value as of September 30, 2011, was 13,521,568.

NOVA NATURAL RESOURCES CORPORATION

Index to Form 10-Q

PART 1. FINANCIAL INFORMATION		Page No.


Item 1.	Financial Statements	1

	Consolidated Interim Balance Sheets as of September 30, 2011, September 30, 2010 and December 31, 2010	2

	Consolidated Interim Statement of Changes in Stockholders’ Deficit	3

	Consolidated Interim Statements of Operations for the Quarters Ended September 30, 2011 and September 30, 2010 and Nine Month Periods Ended September 30, 2011 and September 30, 2010	4

	Consolidated Interim Statements of Cash Flows for the Quarters Ended September 30, 2011 and September 30, 2010 and Nine Month Periods Ended September 30, 2011 and September 30, 2010	5

	Notes to the Financial Statements	6-15

Item 2.	Management Discussion and Analysis	16

Item 3.	Quantitative and Qualitative disclosure about Market Risk	17

Item 4.	Controls and Procedures	17

PART 2. OTHER INFORMATION

Item 1	Legal Proceedings	18

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18

Item 3.	Defaults upon Senior Securities	18

Item 4.	Submission of Matters to a Vote of Security Holders	18

Item 5.	Other Information	18

Item 6.	Exhibits	19

PART 1

NOVA NATURAL RESOURCES CORPORATION

Consolidated Financial Statements

For the Nine Months Ended September 30, 2011

(Expressed in U.S. $)

Unaudited

CONTENTS

	Page
Report of Independent Registered Public Accounting Firm	1

Consolidated Interim Balance Sheets as of September 30, 2011, September 30, 2010 and December 31, 2010	2

Consolidated Interim Statements of Changes in Stockholders’ Deficit	3

Consolidated Interim Statements of Operations for the Quarters Ended September 30, 2011 and September 30, 2010 and Nine Month Periods Ended September 30, 2011 and September 30, 2010	4

Consolidated Interim Statements of Cash Flows for the Quarters Ended September 30, 2011 and September 30, 2010 and Nine Month Periods Ended September 30, 2011 and September 30, 2010	5

Notes to the Consolidated Interim Financial Statements	6 - 15

Report of Independent Registered Public Accounting Firm

To the Shareholders of:

Nova Natural Resources Corporation

We have reviewed the accompanying interim Balance Sheets of Nova Natural Resources Corporation as of September 30, 2011, and the related interim Statements of Operations, Changes in Stockholders’ Deficit and Statements of Cash Flows for the quarters ended September 30, 2011 and September 30, 2010 and nine-month periods ended September 30, 2011 and September 30, 2010. These interim financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

The comparative December 31, 2010 figures have been audited by another accountant.

“Jarvis Ryan Associates”

Chartered Accountants

Mississauga, Ontario, Canada

December 28, 2011

NOVA NATURAL RESOURCES CORPORATION
Consolidated Interim Balance Sheets

	September 30, 2011				September 30, 2010				December 31, 2010
	September 30, 2011				September 30, 2010				December 31, 2010
	(Unaudited)				(Unaudited)
ASSETS
Current assets
Cash		$	-			$	19,912			$	48,376
Accounts receivable			153,760				39,948				40,907
Harmonized sales tax receivable			52,692
Loan receivable (note 6)			51,468				-				-
Prepaid expenses			65,597				50,700				52,436
Inventory			10,460				3,774				10,965
Total current assets			333,977				114,334				152,684

Fixed assets, net of accumulated depreciation (note 7)			589,926				345,670				342,695

Total assets		$	923,903			$	460,004			$	495,379

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Bank overdraft		$	27,175			$	4,396			$	15
Accounts payable and accrued liabilities			520,315				98,753				298,529
Withholding taxes payable			123,376
Deferred revenue			30,843				-				-
Convertible notes payable (note 8)			1,967,211				-				420,601
Related party notes (note 9)			357,508				538,943				404,895
Total current liabilities			3,026,428				642,092				1,124,040

Convertible notes payable, net of current portion (note 8)			-				170,696				25,000

Total liabilities			3,026,428				812,788				1,149,040

Stockholders' deficit
Common stock; $0.01 par value, 50,000,000 shares
authorized; 13,521,568 shares issued and outstanding
(note 11)			135,216				50,218				50,218
Additional paid-in capital			5,716,666				5,631,664				5,631,664
Other comprehensive loss			136,016				(793	)			(12,855	)
Accumulated deficit			(8,090,423	)			(6,033,873	)			(6,322,688	)
Total stockholders' deficit			(2,102,525	)			(352,784	)			(653,661	)

Total liabilities and stockholders' deficit		$	923,903			$	460,004			$	495,379
Commitments and contingencies (note 12)

See accompanying notes to the consolidated interim financial statements
Subject to Report of Independent Registered Public Accounting Firm dated December 28, 2011

NOVA NATURAL RESOURCES CORPORATION
Consolidated Interim Statements of Changes in Stockholders' Deficit
(Unaudited)


	Common Stock						Additional Paid in Capital		Other Comprehensive Income			Accumulated Deficit			Total
	Shares			Amount			Additional Paid in Capital		Other Comprehensive Income			Accumulated Deficit			Total

Balance, December 31, 2007		8,071,764		$	80,718		$	5,622,164	$	-		$	(5,801,382	)	$	(98,500	)

Adjustment		-			-			-		-			(30	)		(30	)

Common stock rescinded		(4,000,000	)		(40,000	)		-		-			-			(40,000	)
Common stock issued for convertible note		950,000			9,500			9,500		-			-			19,000
Net loss, year ended December 31, 2008		-			-			-		-			(14,289	)		(14,289	)
Balance, December 31, 2008		5,021,764			50,218			5,631,664		-			(5,815,701	)		(133,819	)
Net loss, year ended December 31, 2009		-			-			-					(39,719	)		(39,719	)
Balance, December 31, 2009		5,021,764			50,218			5,631,664		-			(5,855,420	)		(173,538	)
Foreign currency translation		-			-			-		(12,855	)		-			(12,855	)
Net loss, year ended December 31, 2010		-			-			-		-			(467,268	)		(467,268	)
Balance, December 31, 2010		5,021,764			50,218			5,631,664		(12,855	)		(6,322,688	)		(653,661	)
Common stock issued for convertible note		8,500,000			85,000			85,000		-			-			170,000
Foreign currency translation		-			-			-		148,871			-			148,871
Adjustment		(196	)		(2	)		2		-			-			-
Net loss, nine month period ended September 30, 2011		-			-			-		-			(1,767,735	)		(1,767,735	)

Balance, September 30, 2011		13,521,568		$	135,216		$	5,716,666	$	136,016		$	(8,090,423	)	$	(2,102,525	)

See accompanying notes to the consolidated interim financial statements

Subject to Report of Independent Registered Public Accounting Firm dated December 28, 2011

NOVA NATURAL RESOURCES CORPORATION
Consolidated Interim Statements of Operations
(Unaudited)


	Quarter Ended September 30,						Nine Month Period Ended September 30,
	2011			2010			2011			2010
Revenues	$	506,718		$	75,931		$	1,017,431		$	81,895
Cost of services provided		215,109			44,790			510,296			48,368
Gross margin		291,609			31,141			507,135			33,527

Operating expenses
Bad debts		1,730						1,730
Continuing education		2,526			(10	)		8,118			6,030
Depreciation		39,146			-			87,105			-
General and administrative		172,685			14,492			304,531			21,136
Management fees (note 9)		29,631			-			385,520			-
Meals and entertainment		120			1,097			2,599			7,738
Medical records		30,111			16,015			71,336			16,015
Professional fees		155,255			4,773			286,832			49,945
Rent (note 9)		128,143			19,538			344,731			35,943
Salaries and wages		541,794			27,079			774,906			52,205
Travel		6,587			7,385			7,462			20,525
Total operating expenses		1,107,728			90,369			2,274,870			209,537

Other expense
Interest expense		-			1,751			-			2,443
Total other expense		-			1,751			-			2,443

Net loss applicable to common shareholders	$	(816,119	)	$	(60,979	)	$	(1,767,735	)	$	(178,453	)

Other comprehensive (loss) income
Foreign currency translation adjustment		152,895			(1,778	)		148,871			(793	)

Total comprehensive loss	$	(663,224	)	$	(62,757	)	$	(1,618,864	)	$	(179,246	)

Basic and diluted loss per common share	$	(0.13	)	$	(0.01	)	$	(0.33	)	$	(0.04	)

Weighted average shares outstanding		6,130,434			5,021,764			5,395,382			5,021,764

See accompanying notes to the consolidated interim financial statements

Subject to Report of Independent Registered Public Accounting Firm dated December 28, 2011

NOVA NATURAL RESOURCES CORPORATION
Consolidated Interim Statements of Cash Flows
(Unaudited)

	Quarter Ended September 30,							Nine Month Period Ended September 30,
	2011				2010			2011			2010
Operating activities
Net loss		$	(816,119	)	$	(60,979	)	$	(1,767,735	)	$	(178,453	)
Adjustment to reconcile net loss to net cash used in operating activities:
Depreciation			39,146			-			87,105			-

Changes in operating assets and liabilities
Accounts receivable			41,381			(30,451	)		(112,853	)		(39,672	)
Harmonized sales tax receivable			(52,692	)		-			(52,692	)		-
Prepaid expenses			(13,757	)		7,022			(13,161	)		(50,350	)
Inventory			907			-			505			-
Accounts payable and accrued liabilities			247,476			(6,917	)		221,785			87,713
Withholding taxes payable			123,376			-			123,376			-
Deferred revenue			30,843			-			30,843			-
Other current asset			-			(3,774	)		-			(3,748	)
Net cash used in operating activities			(399,439	)		(95,099	)		(1,482,827	)		(184,510	)

Investing activities
Purchase of fixed assets			(18,588	)		(264,613	)		(334,335	)		(343,285	)
Net cash provided by investing activities			(18,588	)		(264,613	)		(334,335	)		(343,285	)

Financing activities
Loan receivable			(51,468	)		-			(51,468	)		-
Proceeds from bank overdraft			317,741			1,964			27,160			4,366
(Conversion of) proceeds from convertible notes payable			(223,081	)		145,716			1,521,610			169,691
Proceeds from issuance of common stock			84,998			-			85,000			-
Proceeds from additional paid-in capital			85,002			-			85,000			-
Proceeds from (advances to) related party notes			1,319			201,464			(47,387	)		368,064
Net cash used in financing activities			214,511			349,144			1,619,915			542,121

Effect of exchange rate on cash			(87,050	)		(1,773	)		148,871			36

Net change in cash			(290,566	)		(12,341	)		(48,376	)		14,362
Beginning cash balance			290,566			32,253			48,376			5,550
Ending cash balance		$	-		$	19,912		$	-		$	19,912

See accompanying notes to the consolidated interim financial statements

Subject to Report of Independent Registered Public Accounting Firm dated December 28, 2011

NOVA NATURAL RESOURCES CORPORATION

Notes to the Consolidated Interim Financial Statements

September 30, 2011

Note 1 - Nature of business

Nova Natural Resources Corporation (the “Company”) was incorporated under the laws of the state of Colorado, USA, on April 1, 1993. As at September 30, 2011, the Company owns 100% of the outstanding shares of each of 1816191 Ontario Limited and Greenestone Clinic Muskoka Inc., both of which were incorporated in 2010 under the laws of the Province of Ontario, Canada. 1816191 Ontario Limited and Greenestone Clinic Muskoka Inc. provide medical services to various patients in clinics located in two regions in Ontario, Canada; the city of Toronto and the regional municipality of Muskoka. These consolidated interim financial statements have been prepared in accordance with United States generally accepted accounting principles ("US GAAP"). Certain comparative figures have been reclassified to conform to the current period's financial presentation.

Note 2 – Going concern

The Company’s financial statements have been prepared in accordance with US GAAP applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations in the normal course of business. As at September 30, 2011, the Company has a working capital deficiency of $2,692,451, and accumulated deficit of $8,090,423. Accordingly, the Company will be dependent upon the raising of additional capital through placement of common stock, and, or debt financing in order to implement its business plan. There is no assurance that the Company will be successful with future financing ventures, and the inability to secure such financing may have a material adverse effect on the Company’s financial condition. These consolidated interim financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations.

Note 3 - Significant accounting policies

The accounting policies of the Company are in accordance with US GAAP applied on a basis consistent with that of the preceding year. Outlined below are those policies considered particularly significant.

Principals of consolidation

The accompanying consolidated interim financial statements include the accounts of the Company and its two subsidiaries, as noted in note 1. All inter-company transactions and balances have been eliminated on consolidation.

The Company’s subsidiaries functional currency is the Canadian dollar (CAD), while the Company’s reporting currency is the U.S. dollar (USD). All transactions initiated in Canadian dollars are translated into U.S. dollars in accordance with ASC 830, "Foreign Currency Translation" as follows:

i) Monetary assets and liabilities at the rate of exchange in effect at the balance sheet date.

ii) Equity at historical rates.

iii) Revenue and expense items at the average rate of exchange prevailing during the period.

NOVA NATURAL RESOURCES CORPORATION

Notes to the Consolidated Interim Financial Statements

September 30, 2011

Note 3 - Significant accounting policies (cont’d)

Principals of consolidation (cont’d)

Adjustments arising from such translations are deferred until realization and are included as a separate component of stockholders’ deficit as a component of other comprehensive income or loss. Therefore, translation adjustments are not included in determining net income (loss) but reported as other comprehensive income.

For foreign currency transactions, the Company translates these amounts to the Company’s functional currency at the exchange rate effective on the invoice date. If the exchange rate changes between the time of purchase and the time actual payment is made, a foreign exchange transaction gain or loss results which is included in determining net income for the period.

Revenue recognition

There are several main streams of revenue for the Company.

Revenue recognized in 1816191 Ontario Limited occurs when the service is provided to the patient, at which time title to the service and significant risks of ownership have passed.

Revenue recognized in Greenestone Clinic Muskoka Inc. occurs proportionately over the term of the patients’ treatment. Customer deposits represents monies held by the Company from when the patients become admitted to treatment and are fully refunded, less any patients personal withdrawals during the time of treatment, at the time of discharge. Deferred revenue represents monies deposited by the patients for future services to be provided by the Company. Such monies will be recognized into revenue as the patient progresses through their treatment term.

Use of estimates

The preparation of financial statements in accordance with US GAAP requires management to make estimates and assumptions that affect the recognition, measurement and disclosure of amounts reported in the financial statements and accompanying notes. The reported amounts, including revenue recognized in Greenestone Clinic Muskoka Inc., amortization, allowance for doubtful accounts, inventory, furniture and equipment additions, deferred revenue and note disclosures are determined using management's best estimates based on assumptions that reflect the most probable set of economic conditions and planned courses of action. Actual results will differ from such estimates.

Cash

The Company's policy is to disclose bank balances under cash, including bank overdrafts with balances that fluctuate frequently from being positive to overdrawn and term deposits with a maturity period of three months or less from the date of acquisition. There were no cash equivalents as of September 30, 2011.

Financial instruments

The Company initially measures its financial assets and liabilities at fair value, except for certain non-arm's length transactions. The Company subsequently measures all its financial assets and financial liabilities at amortized cost.

Financial assets measured at amortized cost include cash, accounts receivable, prepaid expenses and inventory. Financial liabilities measured at amortized cost include bank overdraft, accounts payable and accrued liabilities, customer deposits and deferred revenue.

NOVA NATURAL RESOURCES CORPORATION

Notes to the Consolidated Interim Financial Statements

September 30, 2011

Note 3 - Significant accounting policies (cont’d)

Financial instruments (cont’d)

Financial assets measured at cost are tested for impairment when there are indicators of impairment. The amount of the write-down is recognized in net income. The previously recognized impairment loss may be reversed to the extent of the improvement, directly or by adjusting the allowance account, provided it is no greater than the amount that would have been reported at the date of the reversal had the impairment not been recognized previously. The amount of the reversal is recognized in net income.

The Company recognizes its transaction costs in net income in the period incurred. However, financial instruments that will not be subsequently measured at fair value are adjusted by the transaction costs that are directly attributable to their origination, issuance or assumption.

FASB ASC 820 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1. Observable inputs such as quoted prices in active markets;

Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3. Unobservable inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions.

The Company does not have assets or liabilities measured at fair value on a recurring basis at September 30, 2011. The Company did not have any fair value adjustments for assets and liabilities measured at fair value on a non-recurring basis during the quarter ended September 30, 2011.

Fixed assets

Fixed assets are recorded at cost. Amortization is calculated on the declining balance method at the following annual rates:

	Medical equipment	25%
	Furniture and equipment	30%
	Computer equipment	30%
	Computer software	100%

Leasehold improvements are amortized using the straight-line method over the term of the lease. Half rates are used in the year of acquisition.

Income taxes

The Company uses the asset and liability method to account for income taxes. Under this method, future income tax assets and liabilities are determined based on the difference between the carrying value and the tax basis of the assets and liabilities. Any change in the net amount of future income tax assets and liabilities is included in income. Future income tax assets and liabilities are determined based on enacted or substantively enacted tax rates and laws which are expected to apply to the Company's taxable income for the periods in which the assets and liabilities will be recovered. Future income tax assets are recognized when it is more likely than not that they will be realized.

NOVA NATURAL RESOURCES CORPORATION

Notes to the Consolidated Interim Financial Statements

September 30, 2011

Note 3 - Significant accounting policies (cont’d)

Earnings per share information

FASB ASC 260, “Earnings Per Share” provides for calculation of "basic" and "diluted" earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income (loss) applicable to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity similar to fully diluted earnings per share. Basic and diluted loss per share was the same, at the reporting dates, as there were no common stock equivalents outstanding.

Share based expenses

ASC 718 "Compensation - Stock Compensation" codified SFAS No. 123 prescribes accounting and reporting standards for all stock-based payments award to employees, including employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights that may be classified as either equity or liabilities. The Company should determine if a present obligation to settle the share-based payment transaction in cash or other assets exists. A present obligation to settle in cash or other assets exists if: (a) the option to settle by issuing equity instruments lacks commercial substance or (b) the present obligation is implied because of an entity's past practices or stated policies. If a present obligation exists, the transaction should be recognized as a liability; otherwise, the transaction should be recognized as equity.

The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50 "Equity - Based Payments to Non-Employees" which codified SFAS 123 and the Emerging Issues Task Force consensus in Issue No. 96-18 ("EITF 96-18"), "Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring or in Conjunction with Selling, Goods or Services". Measurement of share-based payment transactions with non-employees shall be based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction should be determined at the earlier of performance commitment date or performance completion date.

Note 4 – Recently Issued Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board, or “FASB,” issued new guidance on the presentation of comprehensive income. The guidance requires that all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. It eliminates the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity. Additionally, the guidance requires that reclassification adjustments between other comprehensive income and net income be presented on the face of the financial statements, except in the case of foreign currency translation adjustments that are not the result of complete or substantially complete liquidation of an investment in a foreign entity. The amendments in this update are to be applied retrospectively and are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The Company does not expect adoption of the new guidance to have a material impact on the consolidated financial statements.

In May 2011, FASB issued new guidance to achieve common fair value measurement and disclosure requirements between US GAAP and International Financial Reporting Standards. This new guidance amends current fair value measurement and disclosure guidance to include increased transparency around valuation inputs and investment categorization. This new guidance is to be applied prospectively and is effective during interim and annual periods beginning after December 15, 2011. The Company does not expect adoption of the new guidance to have a material impact the consolidated financial statements.

NOVA NATURAL RESOURCES CORPORATION

Notes to the Consolidated Interim Financial Statements

September 30, 2011

Note 5 – Financial instruments

The Company is exposed to various risks through its financial instruments. The following analysis provides a measure of the Company's risk exposure and concentrations at the balance sheet date, September 30, 2011:

(a)	Credit risk

	Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Financial instruments that subject the Company to credit risk consist primarily of cash, accounts receivable and bank overdraft.

	Credit risk associated with cash and bank overdraft is minimized by ensuring these financial assets and liabilities are placed with financial institutions with high credit ratings.

	With respect to accounts receivable, concentration of credit risk is minimal as the Company receives all of its revenues from the Ontario Ministry of Health and Long-Term Care, a provincially regulated program. Allowances are provided for potential losses that have been incurred at the balance sheet date.

(b)	Liquidity risk

	Liquidity risk is the risk the Company will not be able to meet its financial obligations as they fall due. The Company is subject to this risk given its working capital deficiency of $2,692,451 and accumulated deficit of $8,090,423. As disclosed in note 2, the Company will be dependent upon the raising of additional capital in order to implement its business plant. There is no assurance that the Company will be successful with future financing ventures, and the inability to secure such financing may have a material adverse effect on the Company’s financial condition.

(c)	Market risk

	Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk, and other price risk. The Company is exposed to currency risk.

	i.	Interest rate risk

		Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company has no outstanding loans influenced by market interest rates, and thus is not subject to interest rate risk.

	ii.	Currency risk

		Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company’s subsidiaries operate in Canada and are subject to fluctuations in the Canadian dollar. The Company has not entered into any hedging agreements to mediate this risk.

NOVA NATURAL RESOURCES CORPORATION

Notes to the Consolidated Interim Financial Statements

September 30, 2011

Note 5 – Financial instruments (cont’d)

(c)	Market risk (cont’d)

	i.	Other price risk

		Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. The Company is not exposed to this risk.

Note 6 –Loan receivable

The Company provided a loan to an arm’s length third-party during the quarter ended September 30, 2011. The loan does not bear interest, is unsecured and has no specific terms of repayment. Subsequent to the quarter ended September 30, 2011, the balance of the loan receivable was repaid in full.

Note 7 –Fixed assets

					Net Book Value
	Cost		Accumulated Amortization		September 30, 2011		September 30, 2010		December 31, 2010
Medical equipment	$	265,115	$	73,865	$	191,250	$	76,546	$	228,930
Furniture and equipment		346,065		29,435		316,630		198,054		47,737
Computer equipment		12,492		468		12,024		-		-
Computer software		18,517		2,312		16,205		-		-
Leasehold improvements		79,343		25,526		53,817		71,070		66,028
	$	721,532	$	131,606	$	589,926	$	345,670	$	342,695

During the quarter ended June 30, 2011, a subsidiary purchased $269,982 of fixed assets from a related party (note 9). Since the subsidiary’s facilities became available for use during the quarter ended September 30, 2011, amortization has started to be taken on these fixed assets during the quarter ended September 30, 2011 in accordance with the Company’s amortization policies.

Note 8 – Convertible notes payable

The notes are convertible at the option of the holder up to the maturity date; any convertible debentures still outstanding as at their maturity date will automatically convert into common stock of the Company. The Company has adequate common shares in its treasury to cover the conversions if all notes are exercised.

NOVA NATURAL RESOURCES CORPORATION

Notes to the Consolidated Interim Financial Statements

September 30, 2011

Note 8 – Convertible notes payable (cont’d)

The Company has the following convertible notes outstanding.

Note		Amount		Issuance Date	Conversion Price in USD		Number of Shares		Maturity Date
	1		50,500	4/01/10	$	0.01		5,050,000		n/a
	2		9,540	12/01/10	$	0.10		100,000	December 1, 2012
	3		23,850	12/01/10	$	0.10		250,000	December 1, 2012
	4		23,850	12/01/10	$	0.10		250,000	December 1, 2012
	5		23,850	12/01/10	$	0.10		250,000	December 1, 2012
	6		47,700	12/01/10	$	0.10		500,000	December 1, 2012
	7		9,540	12/01/10	$	0.10		100,000	December 1, 2012
	8		10,073	12/01/10	$	0.10		105,590	December 1, 2012
	9		14,310	12/01/10	$	0.10		150,000	December 1, 2012
	10		143,100	12/01/10	$	0.10		1,500,000	December 1, 2012
	11		23,850	12/01/10	$	0.10		250,000	December 1, 2012
	12		23,850	12/01/10	$	0.10		250,000	December 1, 2012
	13		47,700	12/01/10	$	0.10		500,000	December 1, 2012
	14		25,000	12/01/10	$	0.10		250,000	December 1, 2012
	15		45,792	1/31/11	$	0.10		480,000	January 31, 2013
	16		50,000	3/30/11	$	0.15		333,333	March 30, 2013
	17		15,000	3/30/11	$	0.15		100,000	March 30, 2013
	18		23,850	3/30/31	$	0.15		166,667	March 30, 1933
	19		28,620	3/30/11	$	0.15		200,000	March 30, 2013
	20		9,540	3/31/11	$	0.15		66,667	March 31, 2013
	21		95,400	3/31/11	$	0.15		666,667	March 31, 2013
	22		9,540	3/31/11	$	0.15		66,667	March 31, 2013
	23		9,540	3/31/11	$	0.15		66,667	March 31, 2013
	24		95,400	3/31/11	$	0.15		666,667	March 31, 2013
	25		47,700	3/31/11	$	0.15		333,333	March 31, 2013
	26		28,620	3/31/11	$	0.15		200,000	March 31, 2013
	27		19,080	3/31/11	$	0.15		133,333	March 31, 2013
	28		4,770	3/31/11	$	0.15		33,333	March 31, 2013
	29		23,850	4/15/11	$	0.10		250,000	April 15, 2013
	30		5,724	6/15/11	$	0.10		60,000	June 15, 2013
	31		7,632	6/15/11	$	0.10		80,000	June 15, 2013

*The actual number of shares issued if converted will vary depending on the exchange rate at time of conversion.

NOVA NATURAL RESOURCES CORPORATION

Notes to the Consolidated Interim Financial Statements

September 30, 2011

Note 8 – Convertible notes payable (cont’d)

Note		Amount		Issuance Date	Conversion Price in USD		Number of Shares		Maturity Date
	32		3,816	6/15/11	$	0.10		40,000	June 15, 2013
	33		74,412	6/15/11	$	0.10		780,000	June 15, 2013
	34		190,800	6/24/11	$	0.15		1,333,333	June 24, 2013
	35		28,620	6/30/11	$	0.15		200,000	June 30, 2013
	36		15,264	6/30/11	$	0.15		106,667	June 30, 2013
	37		30,528	6/30/11	$	0.15		213,333	June 30, 2013
	38		62,964	6/30/11	$	0.15		440,000	June 30, 2013
	39		57,240	6/30/11	$	0.15		400,000	June 30, 2013
	40		66,780	6/30/11	$	0.15		466,667	June 30, 2013
	41		13,833	6/30/11	$	0.15		96,667	June 30, 2013
	42		143,100	6/30/11	$	0.15		1,000,000	June 30, 2013
	43		47,700	6/30/11	$	0.15		333,333	June 30, 2013
	44		138,330	6/30/11	$	0.15		966,667	June 30, 2013
	45		4,770	7/30/11	$	0.15		33,333	July 30, 2013
	46		4,770	7/30/11	$	0.15		33,333	July 30, 2013
	47		4,770	7/30/11	$	0.15		33,333	July 30, 2013
	48		10,000	7/30/11	$	0.15		66,667	July 30, 2013
	49		9,540	7/30/11	$	0.15		66,667	July 30, 2013
	50		8,586	7/30/11	$	0.15		60,000	July 30, 2013
	51		2,147	7/30/11	$	0.15		15,000	July 30, 2013
	52		4,770	8/26/11	$	0.15		33,333	August 26, 2013
	53		47,700	8/26/11	$	0.15		333,333	August 26, 2013
		$	1,967,211					20,460,590

*The actual number of shares issued if converted will vary depending on the exchange rate at time of conversion.

During the quarter ended September 30, 2011, the Company issued 8,500,000 common shares from convertible notes payable at a conversion rate of $0.02 per share.

During the quarter ended September 30, 2011, the Company issued $72,010 Series C convertible debentures for cash consideration. These debentures bear no interest and are convertible into common shares of the Company at the rate of $0.15 per share between six months after their date of issuance and their maturity date of two years from their date of issuance. All convertible debentures still outstanding as at their date of maturity will automatically convert into common stock at the rate of $0.15 per share.

During the quarter ended September 30, 2011, the Company issued $25,043 of Series E convertible debentures in satisfaction of liabilities related to services provided to the Company. These debentures bear no interest and are convertible into common shares of the Company at the rate of $0.15 per share between six months after their date of issuance and their maturity date of two years from their date of issuance. All convertible debentures still outstanding as at their date of maturity will automatically convert into common stock at the rate of $0.15 per share.

NOVA NATURAL RESOURCES CORPORATION

Notes to the Consolidated Interim Financial Statements

September 30, 2011

Note 9 – Related party transactions

The Company is related to Greenestone Clinic Inc. as it is controlled by one of the Company’s directors. During the nine-month period ended September 30, 2011, the Company purchased $269,982 of furniture and equipment from Greenestone Clinic Inc. The transaction was measured at the exchange amount, being the fair market value of the furniture and equipment acquired.

The Company had management fees totaling $27,352 during the quarter ended September 30, 2011 to the director for services which are included in management fees.

The Company entered into an agreement to lease premises from Cranberry Cove Holdings Ltd. at market terms. Cranberry Cove Holdings Ltd. is related to the Company by virtue of its shareholder being a director of the Company. Rent is measured at the exchange amount, being the fair market value to rent the premise (note 12).

The officers and directors of the Company are involved in other business activities and opportunities that, in the future, may result in potential conflicts of interest between the Company and their other business interest. The Company has not formulated a policy for the resolution of such conflicts.

Note 10 – Income taxes

Current or deferred U.S. federal income tax provision or benefits have not been provided for any of the periods presented because the Company has experienced operating losses since inception. Under ACS 740 “Income Taxes,” when it is more likely than not that a tax asset cannot be realized through future income the Company must allow for this future tax benefit. The Company has provided a full valuation allowance on the net deferred tax asset, consisting of net operating loss carry forwards, because management has determined that it is more likely than not that they will not earn income sufficient to realize the deferred tax assets during the carry forward period.

The Company has not taken a tax position that, if challenged, would have a material effect on the financial statements for the nine month periods ended September 30, 2011 and September 30, 2010, applicable under ACS 740. As a result of the adoption of ACS 740, the Company did not recognize any adjustment to the liability for uncertain tax position and therefore did not record any adjustment to the beginning balance of accumulated deficit on the balance sheet.

The component of the Company’s deferred tax asset as of September 30, 2011, September 30, 2010 and December 31, 2010 is as follows:

	September 30, 2011			September 30, 2010			December 31, 2010
Net operating loss carry forward	$	8,090,423		$	6,033,873		$	6,322,688
Valuation allowance		(8,090,423	)		(6,033,873	)		(6,322,688	)
Net deferred tax asset	$	-		$	-		$	-

A reconciliation of income taxes computed at the 35% statutory rate to the income tax recorded is as follows:

	September 30, 2011			September 30, 2010			December 31, 2010
Tax at statutory rate	$	618,707		$	41,536		$	163,544
Valuation allowance		(618,707	)		(41,536	)		(163,544	)
Net deferred tax asset	$	-		$	-		$	-

NOVA NATURAL RESOURCES CORPORATION

Notes to the Consolidated Interim Financial Statements

September 30, 2011

Note 10 – Income taxes (cont’d)

The Company did not pay any income taxes during the nine month periods ended September 30, 2011 and September 30, 2010.

The net federal operating loss carry forward will expire in 2023. This carry forward may be limited upon the consummation of a business combination under IRC Section 381.

Note 11 – Stockholders’ deficit

Common stock

The authorized common stock of the Company consists of 50,000,000 shares with par value of $0.01. As of September 30, 2011 the Company had 13,521,568 shares of its $0.01 par value common stock issued and outstanding.

During the quarter ended September 30, 2011, the Company issued 8,500,000 common stock from convertible notes payable at a conversion rate of $0.02 per share.

Net loss per common share

Net loss per share is computed using the basic and diluted weighted average number of common shares outstanding during the period. The weighted-average number of common shares outstanding during each period is used to compute basic loss per share. Diluted loss per share is computed using the weighted average number of shares and dilutive potential common shares outstanding unless common stock equivalent shares are anti-dilutive. Dilutive potential common shares are additional common shares that will be exercised. Basic net loss per common share is based on the weighted average number of shares of common stock outstanding during the quarter ended September 30, 2011.

Note 12 – Commitments and contingencies

The Company is committed under two non-cancellable operating lease agreements for rental of premises. The rental of premise agreement for the subsidiary, 1816191 Ontario Inc. expires July 31, 2013 and the premise agreement for the subsidiary, Greenestone Clinic Muskoka Inc. expires March 31, 2016 (note 9).

Future minimum annual payment requirements are as follows:

2011	$	144,531
2012		669,708
2013		748,413
2014		629,640
2015		629,640
Thereafter		157,410
	$	2,979,342

Note 13 – Subsequent events

Subsequent to the quarter ended September 30, 2011, $51,134 of convertible debentures were issued at a conversion price in USD of $0.15. The notes are convertible at the option of the holder up to the maturity date; any convertible debentures still outstanding as at their maturity date will automatically convert into common stock of the Company

Item 2. Management Discussion and Analysis

The following Management's Discussion and Analysis ("MD&A) for the three month period ended September 30, 2011 compared with the three month period ended September 30, 2010, provides readers with an overview of the operations of Nova Natural Resources Corporation ("Nova"). The MD&A provides information that the management of Nova believes is important to access and understand the results of operations and the financial condition of the Company. Our objective is to present readers with a view of Nova through the eyes of management.

This discussion and analysis should be read in conjunction with Nova's financial statements and accompanying notes to the financial statements for the nine month period ended September 30, 2011.

About Nova Natural Resources Corporation

Nova has been a business in transition since the divesture of the electronic business. Management has reviewed many business opportunities but has passed on those that did not ensure the company with free and clear assets and exclusive protection of the opportunity. On March 29, 2010 the company entered into an agreement with Greenestone Clinic Inc. (“Greenestone”) whereby it would provide consulting services to Nova for the development and operation of medical clinics in the province of Ontario, Canada. The term of the agreement was for one year whereby Greenestone would provide both the medical and business expertise in the initial startup of private clinics. Greenestone was to provide the technical assistance to ensure the clinics are in compliance with governmental policy and procedure requirements and the necessary detailed operational requirements to operate the clinics. At the time of entering into this agreement, Greenestone had an operational facility with some services Nova planned to offer in its first Ontario facility.

Nova opened its first clinic in the last days of the second quarter of 2010 in North York, Ontario. During the third quarter of 2010, the operations at the North York Clinic increased its medical services with 146 medical procedures performed. The volume of operations continued to increase during the fourth quarter of 2010, such that 172 medical procedures were performed. During the first quarter of 2011, 437 endoscopy procedures were performed and in the second quarter of 2011, 561 endoscopy procedures were performed.

During the third quarter of 2011, 540 endoscopy procedure were performed, giving rise to gross revenue of $279,446, substantially all of which was earned from the Ontario Health Insurance Plan (“OHIP”). As amounts owing from OHIP are backed by the government of Ontario, we see very little credit risk attributable to revenues billed to or owing from OHIP from time to time. This amount was 97% of the previous quarter due mainly to a two week shutdown in August for holidays.

Nova opened its addiction treatment center in the third quarter. The treatment center opened cautiously and took its first patients in July and August, most of which were done at nominal fee or no fee. Clients began to increase in September at a steady pace and the company generated $213,035 in revenue from the treatment center during the quarter. The treatments conducted during the opening months were successful and the staff were well prepared. Management believe that a good foundation was laid and significant growth will occur in the treatment facility over the coming year.

Nova also began to generate revenue from its executive treatment team in the area of “fit to work” assessments and conducted these assessments in its Toronto facilities. Modest revenue of $14,237 was generated in the quarter and management believes that this revenue will continue to increase in the coming year.

Key components of operating expenses during the quarter ended September 30, 2011 were as follows:

-payments to doctors performing services: in general, the doctor performing the actual medical procedure will receive 60% of the amounts we receive from OHIP as payment for the procedure performed; included in cost of services provided of $215,109 for the third quarter are Doctors fees of $167,154 and direct costs of $47,955. For the 9 month period cost of services provided are 510,296 including Doctors fees of $459,746 and direct costs of $50,550.

-salaries and wages for the 9 month period were $774,906 which are broken down to be $145,323 for the Toronto Clinic staff and $629,853 for the Muskoka Clinic staff

-premises rent for the 9 month period of $344,731 which consists of $153,052 for the Toronto Clinic and $191,679 for the Muskoka Clinic.

-professional and fees to third-party service providers (in Canada) of $286,232 were mostly one time fees that were incurred due to the set up of the operations in Muskoka and the Executive Medical Care service in the Toronto Clinic

-management fees of $33,157 were incurred in the third quarter and were a total of $385,520 for the 9 month period. This reflects a large reduction of cost of management going forward.

Salaries and wages and premises rent increased significantly due to the expense of operation of the Treatment Centre at the Company’s Bala, Ontario location. During the third quarter the Nova’s new Albany Clinic in downtown Toronto went through the College of Physicians and Surgeons inspection process. The College passed the premises subsequent to the quarter end and the Company will begin to perform endoscopy procedures at the Albany Clinic in January of 2012.

During the first quarter Greenestone, a consultant to the Company offered to give up premises in Bala, Ontario previously leased by Greenestone and operated as a private medical resort and also allowed the company to use its name. The company though a wholly owned subsidiary Greenestone Clinc Muskoka Inc. (“Greenestone Muskoka”) entered into a new lease with the owner of the Bala, Ontario property to operate a mental health and addiction treatment center at the property. The owner of the property is company wholly owned by the president of Nova. The lease is a five year lease with renewal options at the end of the first and second years of the five year term. The lease is a net lease and the company has a non-disturbance agreement from the mortgage lenders on the property for the whole term. The company has an option to purchase the property at any time during the term of the lease at appraised values. Greenestone Muskoka purchased all of the assets of Greenestone that were used for the operation of the Bala property. The new subsidiary will operate all private medical services provided to clients of the company including private executive medicals, coaching, counciling, and addiction treatment. The company raised and additional $97,053 through the issue of convertible notes during the third quarter to finance operational shortfalls during the start up phase of the treatment center.

Management's discussion of anticipated future operations contains predictions and projections which may constitute forward looking statements. The Private Securities Litigation Reform Act of 1995, including provisions contained in Section 21E of the Securities Exchange Act of 1934, provides a safe harbor for forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that a variety of factors could cause the Company's actual results and experience to differ materially from the anticipated results or other expectations expressed in the Company's forward-looking statements.

Forward-looking Information

This Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose any statements contained in this Form 10-K which is not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as "may", "will", "expect", "believe", "anticipate", "estimate", or "continue" or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties and actual results may differ materially depending on a variety of factors, many of which are not within the Company's control.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable because we are a smaller reporting company.

Item 4. Controls and Procedures

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Rule 13a-15(f). The Company's internal control over financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America

Our internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention of overriding controls. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. 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. Our management made an internal assessment of the effectiveness of our internal control over financial reporting as of 09/30/211. In making this assessment, it used the Company’s new auditor and management staff and the Company’s bank account management team. Based on this evaluation, our management concluded that the internal control has become more effective since there has been a qualified internal accountant hired to prepare the Company’s financial statements in conjunction with the input of the President and CEO. Restriction son Bank accounts have tightened and more oversight is given to the day to day cash balances. The Board of the Company has reviewed these statements and approved them . The board is a small board and two of the three board members are considered to be independent. There is no formal audit committee since the Board is small and the financial statements are reviewed by the whole board.

Part 2. OTHER INFORMATION

Item 1. Legal Proceedings

The subsidiary 1816191 Ontario Inc. received notice during the first quarter of 2011 that an individual that suffered a perforated colon during a colonoscopy procedure intended to litigate against the Company’s subsidiary 1816191 Ontario Inc. and the Doctor that performed the Procedure. The insurer for the doctor and the company were notified and there been no claim filed during the third quarter or subsequent to the quarter end.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3. Defaults upon Senior Securities

None

Item 4. Submission of Matters to a Vote of Securities Holders

Not applicable

Item 5. Other Matters

Not applicable

ITEM 6. Exhibits

Exhibit No. Description

Exhibit 31.1 Section 302 Certification of the Chief Executive Officer

Exhibit 32.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2003

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

NOVA NATURAL RESOURCES CORPORATION

Registrant

DATE: December 28, 2011

By: /s/ Shawn Leon

Shawn Leon

President & CEO