UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.20549D.C. 20549
FORM-20F
[ _ ] Registration Statement Pursuant To Sectionpursuant to section 12 (B) Oror (G) Of Theof the Securities Exchange Act Ofof 1934
or
[X]X] Annual Report Pursuant To Section pursuant to section 13 Oror 15(D) Of Theof the Securities Exchange Act Ofof 1934
For the Fiscal Year ended 30 JUNE 30, 2013or
2015
or
[ _ ] Transition Report Pursuant To Sectionpursuant to section 13 Oror 15 (D) Of Theof the Securities Exchange Act Ofof 1934Commission file number 0-17863
or
[ _ ] Shell Company Report Pursuant To Sectionpursuant to section 13 Oror 15(D) Of Theof the Securities Exchange Act Ofof 1934
Commission file number 0-17863
CONTINENTAL ENERGY CORPORATION
(Exact name of Registrant as specified in its charter)
British Columbia, Canada
(Jurisdiction of incorporation or organization)
900-885 West Georgia Street, Vancouver, British Columbia, Canada V6C 3H1
(Address of principal registered, records, and executive office)
Robert Rudman, CA,CPA, Chief Financial Officer, phone 561-779-9202, rrudman@continentalenergy.com2311 Tradition Way, Unit 201, Naples, Florida, U.S.A., 34105900-885 West Georgia Street, Vancouver, British Columbia, Canada V6C 3H1
( Name, Telephone, E-mail and/or FacsimileCompany contact person's name, phone number, and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:Not Applicable
Securities registered or to be registered pursuant to Section 12(g) of the Act:Common Shares, Without Par Value
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:Not Applicable
Indicate the number of outstanding shares of each of the Registrant's classes of capital or common shares as of the close of the period covered by the annual report:There were 122,815,381 common shares, without par value, issuedE-mail and outstanding as of 6/30/13.street addresses)
Securities registered or to be registered pursuant to Section 12(b) of the Act: | Not Applicable |
Securities registered or to be registered pursuant to Section 12(g) of the Act: | Common Shares, No Par Value |
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: | Not Applicable |
Indicate the number of outstanding shares of each of the Registrant's classes of capital or common | 123,015,381 common shares |
shares as of the close of the period covered by the annual report: |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. [ ] YES [X]NO
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. [X]YES[ ] NO
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.[X]YES[ ] NO
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [ ] YES [X]NO
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X]YES[ ] NO
Indicate by check mark | [ _ ] YES | [X] NO |
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant | ||
to Section 13 or 15(d) of the Securities Exchange Act of 1934.Note – Checking the box above will not relieve any registrant | [X] YES | [ _ ] NO |
required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under | ||
those Sections. | ||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the | ||
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required | [X] YES | [ _ ] NO |
to file such reports), and (2) has been subject to such filing requirements for the past 90 days. | ||
Indicate by check mark whether the registrant has | ||
Interactive Data File required to | [ _ ] YES | [X] |
during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. | [ _ ] Large accelerated filer |
See definition of | [ |
[X]Non-accelerated filer |
Indicate by check mark which basis of accounting the registrant has used to | |||
prepare the financial statements included in this filing: (Check one): | [ _ ] US GAAP | [X] IFRS as issued by the IASB | [ _ ] Other |
Indicate by check mark which financial statement item the registrant has elected to follow. [ ] Item-17 [X]Item-18
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement | [ _ ] Item-17 | [ _ ] Item-18 |
item the registrant has elected to follow. |
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] YES [X]NO
If this is an annual report, indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the | [ _ ] YES | [X] NO |
Exchange Act. | ||
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or | ||
15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. | [ _ ] YES | [X] NO |
(Applicable Only To Issuers Involved In Bankruptcy Proceedings During The Past Five Years) |
PART-I
This report is made on EDGAR in electronic form, in English, on US SEC Form-20F pursuant to sections 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. (Applicable Only To Issuers Involved In Bankruptcy Proceedings During The Past Five Years(the "Exchange Act") [ ] YES [X]NO
Report Date:May 13, 2014
TABLE OFCONTENTSFORM-20F - ANNUALREPORT
---oOo---
PART - I
This United States Securities and Exchange Commission filing on Form-20F is made asconstitutes an "Annual Report" pursuant to section 13 or 15(d) ofreport by the Securities Exchange Act of 1934. Further, thefiler, a foreign private issuer.
The following defined terms are used consistently throughout this Annual Report.
Dates are expressed in this Annual Report in the form "6/30/13Company", which in this case means June 30, 2013.
The Company's fiscal year ends on June 30thand the term "Fiscal Year" shall refer to a year so ending.
This Annual Report is for our most recently completed Fiscal Year, ended on 6/30/13 and hereinafter referred to as “Fiscal 2013”, and includes audited annual consolidated financial statements as at that date. It also includes management prepared and unaudited interim consolidated financial statements through 12/31/13.
This Annual Report was prepared in May 2014 and information contained herein is current and valid as at 5/13/14, which is referred to hereinafter as the"Report Date"except where the context may otherwise specify.
- As used in this Annual Report, the terms "we", "us", "our" and "Company" all refer to and mean Continental Energy Corporation, a foreign private issuer incorporated in British Columbia, Canada, whose shares trade on the OTCQB.OTCQB under the symbol "CPPXF".
Unless otherwise noted hereinDate Format- Dates are expressed in this Annual Report in the currency abbreviations $, US$form "6/30/15", which in this case means 30 June 2015.
Fiscal Year- The Company's fiscal year ends on June 30thand USD allthe term "Fiscal Year" shall refer to United States dollars; CDN refers to Canadian dollars; IDR to Indonesian Rupiah; SGD to Singapore dollars; MYR to Malaysian ringgit; and NOK to Norwegian krone.a year so ending.
Fiscal 2015- This Annual Report contains forward-lookingis for the period pertaining to our Fiscal Year ended on 6/30/15, which is herein referred to as “Fiscal2015”, and includes audited annual consolidated financial statements as at that termdate.
Report Date- The date of this Annual Report is defined5/26/17, which is referred to herein as the"Report Date". This Annual Report was prepared during May 2017 and the information contained herein is current and valid as at the Report Date.
In accordance with the Company's Canadian securities regulatory requirements and continuous disclosure obligations promulgated underNational Instrument 51-102, the Company is also filing a copy of this Form-20F on SEDAR in Section 27ACanada as an "AIF" or "Annual Information Form". This AIF filing is as permitted underPart-1.1.(1) of NI 51-102. Some additional content required byForm NI 51-102F2 AIFis contained herein that would not otherwise be required for the sole purposes of a Form-20F Annual Report pursuant to sections 13 or 15(d) of the United States Securities Act of 1933 and Section 21E of the United States SecuritiesExchange Act.
ITEM - 1 : IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
This Form-20F is filed as an Exchange Act of 1934.These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors" that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
ITEM-1 : IDENTITY OFDIRECTORS, SENIORMANAGEMENT ANDADVISERS
We are filing this Form-20F as an annual report under the Exchange Act"Annual Report" and therefore the provision of information called for by this Item-1 is not applicable. Disclosure of information on directors and senior managers may instead be found in Item-6.
ITEM - 2 : OFFER STATISTICS AND EXPECTED TIMETABLE
ITEM-2 : OFFERSTATISTICS ANDEXPECTEDTIMETABLE
We are filing thisThis Form-20F is filed as an annual report under the Exchange Act "Annual Report" and not as a "registration statement" and therefore the provision of information called for by this Item-2 is not applicable.
ITEM-3Item - 3 : KEYINFORMATIONKey Information
A. | |
SELECTED FINANCIAL DATA. |
The financial data for Fiscal yearsYears ended 6/30/11,13, 6/30/12,14, and 6/30/1315 as shown in the following table is derived from our audited financial statements as indicated in the independent auditor’s report included elsewhere in this Annual Report. The data for the Fiscal yearsYears ended 6/30/0911 and 6/30/1012 are derived from the Company's audited financial statements, not included herein, but filed with previous Form-20FAnnual Reports and incorporated herein by this reference.
The financial data shown in the following table is derived from the financial statements of the Company, which for Fiscal Years ending 6/30/11 and earlier, havehas been prepared in accordance with Canadian Generally Accepted Accounting Principles (“GAAP”), the application of which, in the case of the Company, conforms in all material respects for the periods presented with US GAAP, except as disclosed in footnotes to the financial statements.
Commencing from 7/1/01/11 and for the Fiscal Years ended 6/30/12, 6/30/13, 6/30/14, and 6/30/13,15, the Company's financial statements were prepared in accordance with International Financial Reporting Standards {"IFRS") issued by the International Accounting Standards Board ("IASB") instead of GAAP. The first annual IFRS consolidated financial statements were prepared for the Fiscal yearYear ended 6/30/12 with restated comparatives for the previous Fiscal Year ended 6/30/11.
The Company has not calculated and is not reporting any ratio of earning to fixed charges, to combined fixed charges or to any dividends and has not calculated and reported any other ratios, other than earnings per share, as set forth above, in this Annual Report; and hence no basis for such calculation is included.
The selected financial data set forth in the following table should be read in conjunction with the financial statements and other financial information included elsewhere in the Annual Report.
SELECTED FINANCIAL DATA FOR LAST FIVE FISCAL YEARS | ||||||||||
Selected Financial Data For Last Five Fiscal Years | Selected Financial Data For Last Five Fiscal Years | |||||||||
For Last 5 Fiscal Years Ended | For Last 5 Fiscal Years Ended | |||||||||
In US$ 000's, except for shares data | *6/30/13 | *6/30/12 | **6/30/11 | 6/30/10 | 6/30/09 | *6/30/15 | *6/30/14 | *6/30/13 | *6/30/12 | **6/30/11 |
Revenue | - | - | - | - | - | |||||
Net Income (Loss) | (700) | (1,847) | (1,894) | (1,275) | (3,129) | |||||
Earnings (Loss) Per Share – Basic | (0.01) | (0.02) | (0.03) | (0.02) | (0.05) | |||||
Earnings (Loss) Per Share – Diluted | (0.01) | (0.02) | (0.03) | (0.02) | (0.05) | |||||
Net Loss | (956) | (939) | (700) | (1,847) | (1,894) | |||||
Loss Per Share – Basic | (0.01) | (0.02) | (0.03) | |||||||
Loss Per Share – Diluted | (0.01) | (0.02) | (0.03) | |||||||
Dividends per Share | - | - | - | - | - | |||||
Weighted Average Number of Shares (000’s) | 101,947 | 81,086 | 72,390 | 70,045 | 69,163 | 128,601 | 123,488 | 101,947 | 81,086 | 72,390 |
Working Capital | (745) | (278) | (822) | (185) | 528 | (836) | (694) | (745) | (278) | (822) |
Oil and Gas Properties | - | 0.001 | 0.001 | - | 0.001 | 0.001 | ||||
Long Term Debt | - | - | - | - | - | |||||
Shareholders Equity (deficiency) | 179 | (149) | (803) | (166) | 566 | (833) | 483 | 179 | (149) | (803) |
Total Assets | 897 | 298 | 44 | 119 | 636 | 20 | 845 | 897 | 298 | 44 |
US GAAP Shareholders' Equity (deficiency) | n/a* | n/a* | n/a** | (166) | 566 | |||||
US GAAP Net Income (Loss) | n/a* | n/a* | n/a** | (1,275) | (3,129) | |||||
US GAAP Net (Loss) per Share Basic | n/a* | n/a* | n/a** | (0.02) | (0.05) | |||||
US GAAP Net (Loss) per Share Diluted | n/a* | n/a* | n/a** | (0.02) | (0.05) | |||||
US GAAP Weighted Avg No. of Shares (000's) | n/a* | n/a* | n/a** | 70,045 | 69,163 |
Notes: | * Stated in accordance with | |
** Restated in accordance with IFRS on 7/ |
Foreign Currency Exchange- The Company's financial statements are stated in US Dollars ("$" or "US$"). The Company transacts most of its business in US Dollars but has some expenditures and deposits denominated in fivesix other currencies: Canadian Dollars (“CDN”CDN”), Indonesian Rupiah (“IDR”IDR”"), United Arab Emirates Dirham ("AED"), Singapore Dollars (“SGD”SGD”), Malaysian Ringgit ("MYR"MYR"), and Norwegian Krone ("NOK"NOK"). The following table sets forth the rate of exchange for these currencies upon the last trading day at the end of the 5 most recently completed Fiscal Years and at the most recently completed calendar month preceding the Report Date.
FOREIGN CURRENCY EXCHANGE RATES | |||||
Equal to One US Dollar | |||||
CDN | IDR | SGD | MYR | NOK | |
Month Ended 03/31/14 | 1.1229 | 11,299 | 1.2720 | 3.2613 | 5.9861 |
Fiscal Year Ended 06/30/13 | 1.0487 | 9,901 | 1.2708 | 3.1829 | 6.0718 |
Fiscal Year Ended 06/30/12 | 1.0166 | 9,385 | 1.2654 | 3.1717 | 5.9582 |
Fiscal Year Ended 06/30/11 | 1.0370 | 8,570 | 1.2276 | 3.0789 | 5.3886 |
Fiscal Year Ended 06/30/10 | 1.0504 | 9,063 | 1.3984 | 3.4234 | 6.5142 |
Fiscal Year Ended 06/30/09 | 1.1566 | 10,210 | 1.4477 | 3.4765 | 9.0258 |
Foreign Currency Exchange Rates | ||||||
Equal to One US Dollar | ||||||
CDN | IDR | AED | SGD | MYR | NOK | |
Month Ended 3/31/17 | 1.3320 | 13,319 | 3.6728 | 1.3968 | 4.4271 | 8.5769 |
Fiscal Year Ended 6/30/16 | 1.2991 | 13,204 | 3.6729 | 1.3479 | 3.9948 | 8.3913 |
Fiscal Year Ended 6/30/15 | 1.2475 | 13,359 | 3.6728 | 1.3474 | 3.7639 | 7.8612 |
Fiscal Year Ended 6/30/14 | 1.0672 | 11,859 | 3.6728 | 1.2466 | 3.0298 | 6.1331 |
Fiscal Year Ended 6/30/13 | 1.0487 | 9,901 | 3.6728 | 1.2708 | 3.1829 | 6.0718 |
Fiscal Year Ended 6/30/12 | 1.0166 | 9,385 | 3.6728 | 1.2654 | 3.1717 | 5.9582 |
B. | |
CAPITALIZATION AND INDEBTEDNESS. |
We are filing thisThis Form-20F is filed as an annual report under the Exchange Act "Annual Report" and therefore the provision of information called for by this Item-3.B is not applicable.
C. | REASONS FOR THE OFFER AND USE OF PROCEEDS. |
We are filing thisThis Form-20F is filed as an annual report under the Exchange Act "Annual Report" and therefore the provision of information called for by this Item-3.C is not applicable.
D. | |
RISK FACTORS. |
Much of the information contained in this annual reportAnnual Report includes or is based on estimates, projections or other “forward looking” statements. Such forward looking statements include any projections or estimates made by our Company and our management in connection with our business operations. While these forward looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections assumptions or other future performance suggested herein.
Such estimates, projections or other forward looking statements involve various risks and uncertainties as outlined below. We caution the reader that important factors in some cases have affected and, in the future, could materially affect actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other forward looking statements.
Our business prospects as an emerging international energy producer, our ongoing operations at a particular project, or our overall financial condition could be harmed due to any of the following risks:
a) | Competitive Risk- Competition among international energy producing companies for quality international oil, gas, and electricity production properties; for reliable joint venture partners; and for limited amounts of new development capital is intense. | |
b) | Political Risk- The Company's business activities and investments are all located out of its home jurisdiction of Canada and are subject to the political risks of foreign investment. These include potential changes in laws affecting foreign ownership, contract and area tenure, government participation, taxation, royalties, duties, rates of exchange and exchange controls. Any new government policies adverse to the Company could include a change in crude oil pricing policy, expropriation, nationalization, renegotiation or nullification of existing concessions and contracts, taxation policies, foreign exchange and repatriation restrictions, international monetary fluctuations and currency controls. Direct and indirect effects of the decline in value of the local currency have included high levels of domestic inflation, reductions in employment, high interest rates, unavailability of traditional sources of financing, and an overall contraction in production and income levels. These conditions have affected and may continue to affect the operating environment in a particular country, as well as the cost and availability of financing for natural resources development efforts. The normal economic conditions in any country may sustain shocks that exacerbate adverse economic conditions and such shocks could originate from various sources, including social unrest, terrorism, Islamic fundamentalism, secessionist provinces, lack of government effectiveness due to political uncertainty, or policy initiatives that are adverse to foreign investment. | |
|
c) | Minority Shareholding Risks- The Company from time to time holds only a minority or similar non-controlling |
d) | JV Operator Risk- It is customary in the international oil and gas exploration and production business to share geological and engineering risks through partnerships with other oil companies through a Joint Venture ("JV") arrangement under a joint operating agreements. One member of the JV group, usually the one with the largest interest, is the designated "Operator" for the JV and conducts all management of operations on the property or project on behalf of the group. The Company's degree of influence and control over the Operator and the JV is directly proportional to the amount of participating interest held by the Company in proportion to that held by other interest holders. Annual budgets and major expenditures are authorized by the JV group members voting according to their respective percentage holding of the JV. In any case where the Company holds less than a voting control interest in the JV, the Company is at risk of being forced into contributing its shares of costs on activities it does not want to pursue or giving up some portion of its interest in the entire JV if it elects not to pay its share or fails to pay its share, as may be provided for under the terms of the joint operating agreement. |
e) | JV Partner Risk- Any number of risks beyond the control of the Company could have a detrimental effect on the Company's JV partners, including the JV Operator and cause them to be unable to fund their own share of JV costs or meet their share of JV commitments. In such case there is a high degree of risk that the Company would not be able to take up and pay a failed partner's share of JV costs and the Company's own JV interest may thereby be detrimentally affected. | |
f) | Geological Risk- From time to time the Company participates in exploration for new oil and gas accumulations or it evaluates the availability of sufficient water, wind, or geothermal resources to justify a possible alternative energy development. Each of these activities involves a high degree of geological risk. There is no assurance that | |
g) | Transport Risk- The marketability of any oil, gas, or electrical power which the Company may produce may be affected by numerous factors beyond the control of the Company. These factors may determine whether a new project is commercially viable at all, and include the proximity and capacity of existing pipelines, storage capacity, power transmission lines, and the locations of principal off-takers or markets. | |
| ||
h) | Operating Risks- Oil, gas, and electricity production operations involve risks normally incident to such heavy industrial activities, including fires, spills, equipment failure, accidents, and well blowouts. Any of these hazards could result in damage to, or destruction of, our facilities or properties. Such hazards could also injure persons or adversely affect the environment. Dealing with such damage could greatly increase the cost of operations and detrimentally | |
i) | Environmental Risks- Environmental standards imposed by federal, state, or local authorities of the countries in which we conduct our business activities may be changed and such changes may have material adverse effects on our activities. Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus causing an adverse effect on us. Additionally, we may be subject to liability for pollution or other environmental damages which we may elect not to insure against due to prohibitive premium costs and other reasons. We may become subject to liability for pollution or hazards against which we cannot adequately insure or which we may elect not to insure. Incurring any such liability may have a material adverse effect on our financial position and operations. |
j) | Health and Safety Risks- Many of our business activities are subject to health and safety standards imposed by federal, state, or local authorities of the countries in which we conduct our business activities. We may become subject to claims for liability for injuries or deaths to our workers or others against which we cannot adequately insure or which we may elect not to insure. Incurring any such liability may have a material adverse effect on our financial position and operations. |
k) | Title Risk- We have or may acquire leases, rights or other property associated with our projects, but the property may be subject to prior unregistered agreements, or transfers which have not been recorded or detected through our due diligence searches. We believe our interests are valid, but this is no guarantee against possible claims. If title to property associated with our projects is challenged, we may have to expend funds defending any such claims and our ownership interest therein may be detrimentally |
l) | Price Volatility Risks- During the past few years, world oil and gas prices have undergone an unprecedented rise followed closely by a precipitous decline. Skyrocketing demand in emerging markets has driven electricity prices to record highs in many localities. This price volatility has substantial impact upon the international oil and gas and energy business and the Company's business in particular. The nature of the impact and its future effect upon the Company is almost impossible to determine with any degree of confidence. Continued volatility of oil, gas, and electricity prices adds substantial risk to the Company's efforts to plan, budget, or forecast its business activities. Price volatility may contribute to an inability of the Company to repay any debt or pay any obligations on its projects which could have serious and material adverse consequences on the Company. |
m) | Currency/Exchange Rate Risk- Many of the financial obligations and commitments the Company from time to time undertakes in its international energy business are denominated in US Dollars. A substantial amount of the Company's business transactions are, and may be, denominated in other currencies. Fluctuations in these currencies may have a substantial effect on the Company’s financial statements due to related gains or losses due to exchange rate changes. The Company does not hedge and engage in other strategies to protect itself from adverse fluctuations in the respective exchange rate. Significant variations in exchange rates could have a material adverse effect on the ability of the Company to meet its obligations. |
n) | Financing Risks- The Company is not generating income or revenue, has generated losses to date and does not presently have sufficient financial resources to undertake by itself all of its planned acquisitions. The Company’s ability to continue as a going concern depends upon its ability to obtain new financing. There is no assurance that the Company will be able to obtain such financing on acceptable terms, or at all. |
There is no assurance that the Company will be able to extend or defer its contractual work commitments in the event sufficient funds are not available. It is possible that prolonged inability of the Company to fund its commitments could result in a loss of some or all of its interest. Management is pursuing all available options to raise working capital and funds for its various projects. There can be no assurance that the management will be successful. | |
o) | Liquidity Risk- The future development of the properties of the Company and acquisition of new properties shall depend upon the ability of the Company to finance through the joint venturing of projects, debt financing, equity financing or other means. The Company intends to raise required additional funds by selling equity or debt securities, until it develops or acquires cash flow from operations. While the Company has been successful in raising the necessary funds in the past, there can be no assurance it can continue to do so. If such funds cannot be secured, the Company will be forced to curtail its exploration/development efforts to a level for which funding can be secured. There is no assurance that the Company will be successful in obtaining such financing. This situation could be exacerbated by acts of international terrorism or unforeseen political disturbances. Material increases or decreases in the Company's liquidity are substantially determined by the success or failure of its exploration programs or the acquisition of new properties and projects. |
p) | Stock Market Volatility- The effect of volatile oil and gas prices as described above has had a huge effect upon the world stock markets and most companies, including the Company have seen a severe reduction in their market capitalization. Lower stock prices and loss of investor confidence reduce the Company's ability to raise equity capital on the stock markets. |
q) | Risk of Future Changes in Regulatory Environment- Regardless of their location, our properties and our operations thereon are governed by laws and regulations relating to the development, production, marketing, pricing, transportation and storage of crude oil, taxation and environmental and safety matters. Changes to regulations or compliance with regulations may cause substantial delays or require capital outlays in excess of those anticipated causing an adverse effect on our Company. Further, exploration and production activities are subject to certain environmental regulations which may prevent or delay the commencement or continuance of our operations. |
r) | Risks |
s) | Risk of Concentration of Shareholder Control- Principal shareholders, senior management and Directors have significant influence regarding share ownership. This concentration could lead to conflicts of interest and difficulties for non-insider investors effecting corporate changes, and could adversely affect our Company's share price. As of the Report Date, our senior management, Directors and greater than five percent shareholders (and their affiliates), acting together, held |
t) | Stock Option Risk- Because the success of our Company is highly dependent upon our respective employees, our Company has granted to certain employees, Directors and consultants stock options to purchase shares of our common stock as non-cash incentives (see "Share Ownership" below in this Annual Report).To the extent that significant numbers of such stock options may be granted and exercised, the interests of the other shareholders of our Company may be diluted causing possible loss of investment value. |
u) | No Dividend Distribution- We have never declared or paid cash dividends on our common shares and do not anticipate doing so in the foreseeable future. Our Board of Directors may never declare cash dividends, |
v) | Penny Stock Rules- Trading of our common stock may be restricted by the Securities and Exchange Commission (SEC)'s "Penny Stock" rules which may limit a shareholder's ability to buy and sell our shares. The SEC has adopted rules which generally define "penny stock" to be any equity security that has a market price (as defined) less than US$5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors”. The term "accredited investor" refers generally to institutions with assets in excess of US$5,000,000 or individuals with a net worth in excess of US$1,000,000 or annual income exceeding US$200,000 or US$300,000 jointly with their spouse. |
The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation.
In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the share that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common shares.
w) | Limitations to Buy or Sell Shares- The National Association of Securities Dealer (NASD) has adopted sales practice requirements which may limit a shareholder's ability to buy and sell our shares. In addition to the "penny stock" rules described above, the NASD has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, the NASD believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The NASD requirements make it more difficult for broker-dealers to recommend that their customers buy our common shares, which may limit your ability to buy and sell our shares and have an adverse effect on the market for our shares. |
x) | Indemnity of Officers and Directors- Our articles contain provisions that state, subject to applicable law, we must indemnify every Director or officer of our Company, subject to the limitations of the Business Corporations Act (British Columbia), against all losses or liabilities that our Company's Directors or Officers may sustain or incur in the execution of their duties. Our articles further state that no Director or officer will be liable for any loss, damage or misfortune that may happen to, or be incurred by our Company in the execution of his duties if he acted honestly and in good faith with a view to the best interests of our Company. Such limitations on liability may reduce the likelihood of litigation against our Company's Officers and Directors and may discourage or deter our shareholders from suing our Company's Officers and Directors based upon breaches of their duties to our Company, though such an action, if successful, might otherwise benefit our Company and our shareholders. |
y) | Management and Employee Risks- Key management employees may fail to properly carry out their duties or may leave, which could negatively impact our corporate operations and/or our share price. Our Company’s financial condition and the success of our oil and gas operations is dependent on our ability to hire and retain highly skilled and qualified personnel. We face competition for qualified personnel from numerous industry sources, and we may not be able to attract and retain qualified personnel on acceptable terms. The loss of service of any of our key personnel could have a material adverse effect on our operations and/or financial condition, which may negatively impact our share price. We do not have key-man insurance on any of our employees. |
z) | Key Management Risk- The Company depends entirely upon its management to identify, acquire, finance and operate a portfolio of oil and gas exploration properties through which the Company can grow and achieve oil production and a steady income. The Company's management is comprised of a small number of key employees with technical skills and expertise in the business, the loss of any one of whom could harm the Company. The Company does not currently maintain "key-man" insurance for any of its employees. |
aa) |
|
ITEM-4Item - 4 : INFORMATION ON THECOMPANYInformation on the Company
A. | |
HISTORY AND DEVELOPMENT OF THE COMPANY. |
Name and Incorporation- The Company was incorporated in British Columbia, Canada, on May 29, 1984 under the name "Intl. Focus Res. Inc.” On January 3, 1996 the name was changed to "Continental Copper Corporation”. On October 23, 1997 the name was changed to "Continental Energy Corporation".
Domicile- The Company’s home country is Canada, its place of incorporation. The Company has no assets, no property, no employees, no Director, and no management located or residing in Canada. Other than legal, audit, and accounting services contracted in Canada to meet statutory requirements, the Company conducts all of its business outside Canada.
Share Capital- All references herein to common shares refer to the Company's authorized share capital of "Common Shares" without Par Value unless otherwise indicated. All references herein to preferred shares refer to the Company's authorized share capital of "Preferred Shares" without Par Value unless otherwise indicated. The Preferred Shares are not listed or registered for trading on any exchange or trading system. The only share trading market for the Common Shares is the OTCQB under the symbol "CPPXF".
Principal Executive Office- The Company's principal executive and operational management office is located at Jl. Kenanga 62, Cilandak, Jakarta, 12560, Indonesia; the telephone number is +6221-7883-2942 and the facsimile number is +6221-780-4344. The office is rented and consists of approximately 400 square meters floor space. The Company began occupying this facility in October 2006 and considers the facility adequate for current needs.
Representative Office- The Company utilizes a representative office at 2311 Tradition Way, Unit 201, Naples, Florida, U.S.A., 34105; the telephone number is +1-561-779-9202.
Registered Records Office- The Company's registered office and records office are located, care of the Company's general legal counsel, at 900-885 West Georgia Street, Vancouver, British Columbia, V6C 3H1, Canada. The website address is www.continentalenergy.com.
MATERIAL EVENTS OCCURRING DURING THE LAST FISCAL YEAR ENDED 6/30/13
Reports Filed for Quarter Ended 6/30/12 –On 9/17/12, we filed the required financial reports and other disclosure in compliance with regulations of our home jurisdiction and the British Columbia Securities for the quarter ended 6/30/12, the end of the fourth quarter and our Fiscal Year 2012. These reports were filed electronically on SEDAR and included audited consolidated financial statements for the quarter plus a management discussion and analysis thereof. This filing also included the Company's annual reserves report for Fiscal Year 2012 in the form referred to in Canadian National Instrument 51-101 “Standards of Disclosure for Oil and Gas Activities”.
a) | Name of the Company- The name of the company is "Continental Energy Corporation" and it is herein referred to as the "Company". Upon its incorporation on May 29, 1984, the name of the Company was "Intl. Focus Res. Inc.” On January 3, 1996 the name was changed to "Continental Copper Corporation”. On October 23, 1997 the name was changed to "Continental Energy Corporation". |
b) | Incorporation- |
c) | Domicile- The Company is a limited liability company and its domicile is at its registered and records office located at 900-885 West Georgia Street, Vancouver, British Columbia, Canada V6C 3H1, telephone +1-604-687-5700, care of the Company's general counsel, Clark Wilson LLP. The Company does not have an office in the USA. |
d) | Important Events– Except for those certain events described in Item-4.A.h and Item-4.A.i herein below, the Company has not made, during the fiscal year covered by this Annual Report and up to the Report Date, any important events in the development of the its business through any material reclassification, merger or consolidation or any of its significant subsidiaries; any acquisitions or dispositions of material assets other than in the ordinary course of business; any material changes in the mode of conducting its business or to the types of business conducted; name changes; or any bankruptcy, receivership or similar proceedings with respect to the Company or any one of its significant subsidiaries. |
e) | Important Investments or Divestitures– Except for |
f) | Important Planned Investments or Divestitures– As at the Report Date, the Company does not have any material capital expenditures and divestitures (including interests in other companies) planned and/or committed under contract. However, the Company is always looking to develop new business opportunities for expansion of |
g) | Public Takeover Offers– During the fiscal year covered by this annual report and up to the Report Date, the Company has not received or sought any public takeover offers by third parties in respect of the Company’s shares, nor has the Company made any public offers in respect of a takeover of other Companies’ shares. |
Bengara-II PSC Permitted to Expire- Pursuant to a news release dated 10/16/12 the Company announced that Kunlun Energy Ltd., acting in its capacity as operator of the Bengara-II Production Sharing Contract (“PSC”) and 70% majority shareholder of the Company's 18% owned subsidiary, Continental-GeoPetro (Bengara-II) Ltd., has terminated negotiations with Indonesian authorities for an extension of the PSC's term. Consequently the Bengara-II PSC shall be relinquished and allowed to expire in accordance with its terms.
COO Resignation- The Company's President/COO resigned effective 10/31/12 to pursue other business interests.
Reports Filed for Quarter Ended 9/30/12- On 11/26/12, we filed the required financial reports and other disclosure in compliance with regulations of our home jurisdiction and the British Columbia Securities for the quarter ended 9/30/12, the end of the first quarter and first three months of our Fiscal Year 2013. These reports were filed electronically on SEDAR and included management prepared but unaudited consolidated financial statements for the quarter plus a management discussion and analysis thereof.
Annual General Meeting of Shareholders- The Company held its AGM on 11/30/12 and all resolutions brought before the meeting were approved including the re-election of the Company’s four Directors and the re-appointment of the auditors for the ensuing year. In addition, an ordinary resolution to adopt the Company’s proposed amended and restated Stock Option Plan was approved.
New Indonesian Joint Bid Group Established- On 2/4/13, the Company announced that it had entered into a joint bid arrangement with another local industry player to present bids for new Indonesian Production Sharing Contracts (“PSCs”) offered by Indonesian oil and gas authorities in 2013.
Reports Filed for Quarter Ended 12/31/12- On 3/4/13, we filed the required financial reports and other disclosure in compliance with regulations of our home jurisdiction and the British Columbia Securities for the quarter ended 12/31/12, the end of the second quarter and first six months of our Fiscal Year 2013. These reports were filed electronically on SEDAR and included management prepared but unaudited consolidated financial statements for the quarter plus a management discussion and analysis thereof.
TGE Shares Returned- On 5/7/12 the Company entered into an option agreement and acquired 300,000 shares of Tawau Green Energy Sdn. Bhd ("TGE") for 6,000,000 Malaysian Ringgit (“MYR”) (about US$1,965,600). TGE is a privately held company based in Malaysia and is in the business of developing geothermal energy. Under the terms of the agreement, the first MYR 3,000,000 must be paid by the 1st anniversary of the agreement, 5/7/13. The remaining MYR 3,000,000 of the investment was to be earned through the Company’s expenditures on a mutually agreed upon work program by the first anniversary of the agreement, or if not the Company must return an amount from its 300,000 TGE shares to the seller in proportion to the Company shortfall. By 5/7/13, the Company had invested a total of $114,769 in TGE. On 5/20/13 the Company returned all 300,000 of the TGE shares and wrote off its investment in TGE.
Acquisition of Majority Interest in Visionaire Energy- On 6/4/13, the Company acquired a 51% shareholding stake in VE. The acquisition was accomplished by an arms-length, non-cash, share-swap transaction with Visionaire Invest AS ("VI"), the sole shareholder of VE. The Company issued 20 million of its common shares, representing a stake of approximately 16.7% in the Company to VI, in exchange for 51% of the authorized and outstanding shares of VE. The principal assets of VE are its management and its shareholdings in two separate, privately owned, offshore oil and gas service providers both based in Bergen, Norway. VE owns a 49% shareholding equity interest in VTT Maritime AS and a 41% equity interest in RADA Engineering and Consulting AS.
Appointment of New Director- On 6/17/13, Johnny Christiansen was appointed to the Board of Directors. Mr. Christiansen is the Founder and CEO of Visionaire Invest AS, a Norwegian investment company which owns a 49% stake in Visionaire Energy AS, of which he is also Chairman.
CEO and CFO Appointed to Board of Visionaire Energy AS- On 6/19/13, the Company’s CEO, Richard L. McAdoo and its CFO, Robert V. Rudman both joined the Board of Directors of the Company's 51% owned subsidiary, Visionaire Energy AS.
New Share Issues– During the Fiscal Year ended June 30, 2013, the Company issued a total of 23,275,000 news common shares. In January 2013, a private placement was completed for 2,975,000 shares for total proceeds of $59,500. In June 2013, a share-swap with the Norwegian company of Visionaire Invest AS involving 20,000,000 Company shares was completed. Also in June 2013, a private placement was completed for 300,000 shares for total proceeds of $15,000.
Share Purchase Warrant Activity- During the 2013 Fiscal Year, a total of 3,125,000 warrants were issued in conjunction with two private placements and a total of 12,350,000 expired for a net decrease in total warrants of 9,225,000.
Incentive Stock Option Activity- On 12/31/12, a total of 8,340,000 stock options expired and on 1/04/13 at total of 7,800,000 new stock options were granted for a net decrease in total stock options of 540,000 for the 2013 Fiscal Year.
Convertible Promissory Note- On 9/10/11, the Company issued to the Encompass Fund (the “Holder”) a convertible note in the principal sum of $250,000 together with Interest at the annual rate of 10%, a conversion rate of $0.08 per share, and a maturity date of 9/16/12. In addition to the issuance of the note, the Company issued a total of 1,562,500 share purchase warrants to the Holder at the closing. The warrants had a fixed two year term and an exercise price of $0.12 per share. On 11/12/12, the Company and the Holder agreed to amend the note (1) to reflect a new annual interest rate of 18% to take effect from the issue date of 9/21/11, (2) to reduce the conversion rate from $0.08 to $0.05 per share, and (3) to extend
h) | |
Material Events Occurring During The Last Fiscal Year Ended 6/30/15 – Described in Chronological Order |
the maturity date to 3/15/13.On 5/14/13, the Company and the Holder further agreed (1) to amend the note by extending the maturity date to 9/16/13, (2) to extend the term of the warrants to 3/21/15, and (3) to reduce the exercise price of the warrants to $0.08.
MATERIAL EVENTS OCCURRING SINCE THELAST FISCAL YEAR END 6/30/13 UNTIL THE REPORT DATE
Reports Filed for Quarters Ended 9/30/13, 12/31/13, and 3/31/14- On 5/02/14 and 5/09/14 we filed the required interim quarterly financial reports and other disclosure in compliance with regulations of our home jurisdiction and the British Columbia Securities for the quarters ended 9/30/13, 12/31/13, and 3/31/14, the first three quarters of our Fiscal 2014. These reports were filed electronically on SEDAR and included management prepared, but unaudited, interim, condensed, consolidated financial statements for the quarter plus a management discussion and analysis thereof.
Annual Financial Report Filed for Fiscal 2013-– On 4/23/14 we filedmade a late filing of the required audited annual financial reports and other disclosure in compliance with regulations of our home jurisdiction and the British Columbia Securities for our Fiscal 2013 ended 6/30/13. These reports were filed electronically on SEDAR and included audited consolidated financial statements for the year plus a managementmanagement's discussion and analysis thereof. This filing also included the Company's annual reserves report for Fiscal Year 2013 in the form referred to in Canadian National Instrument 51-101 “Standards of Disclosure for Oil and Gas Activities”.
Establishes Joint Venture in Malaysia- On 11/12/13, the Company entered into a 50/50 joint bid arrangement with an established Malaysian partner to evaluate opportunities and present carefully selected bids for new oil and gas production sharing and risk service contracts offered in Malaysia by PETRONAS, the national oil company.
Reports Filed for QuarterQuarters Ended 9/30/14, 12/31/14 and 3/31/1315-– On 12/2/13,5/02/14 we filed the required interim quarterly financial reports and other disclosure in compliance with regulations of our home jurisdiction and the British Columbia Securities for the quarters ended 9/30/13 and 12/31/13, the first two quarters of our Fiscal 2014. On 5/02/14 we filed the required interim quarterly financial reports and other disclosure in compliance with regulations of our home jurisdiction and the British Columbia Securities for the quarter ended 3/31/13, the end of14, the third quarter and first nine months of our Fiscal Year 2013.2014. These reports were filed electronically on SEDAR and included management prepared, but unaudited, interim, condensed, consolidated financial statements for the quarter plus a managementmanagement's discussion and analysis thereof.
Results of Bengara-II Contract Bid Reported2013 Cease Trade Order Revoked –- OnThe British Columbia Securities Commission issued the Company a cease trade order on 12/23/13 which was followed on 3/26/14 by a similar cease trade order from the Alberta Securities Commission. These orders were issued because the Company announced thatwas at the time deficient in its Indonesian production sharing contract (PSC) bid group was oneregulatory requirements involving the filing of seven unsuccessful biddersits audited consolidated financial statements for the Bengara-II Block pursuant to a bid submitted to Indonesian oilyear ended 6/30/13 and gas regulator, MIGAS, on 2/14/its Quarterly Statements for the quarters ended 9/30/13 and 12/31/13. The winning bidorders prohibited trading of the Company’s securities in Canada until the deficiency was submitted by PT Tansri Madjid Energi, an Indonesian coal mining company,cured and consisted of a firm work obligation of US$ 51,750,000the orders revoked. The Company made the filings to be carried out duringcure the first three PSC contract years plus a signature bonus of US$ 2,500,000. The winning work commitment includes the drilling of 5 exploratory wells, acquisition of 500 line kilometers of 2D seismic data,deficiencies on 5/02/14 and acquisition of 200 square kilometers of 3D seismic data.
Norwegian Affiliate Awarded Major Contract-made application for revocation on 5/05/14. On 1/13/7/23/14, the Company announced that its affiliate, VTT Maritime AS ("VTT"), had been awarded a contract valued at US$ 10.3 million byBritish Columbia Securities Commission and the Norwegian Road Authority ("NorRoad") for a portion of NorRoad's planned highway E39 improvement project. UnderAlberta Securities Commission revoked their cease trade orders against the contract, VTT will provide sea mapping, seismic surveying and measurement wire drilling at the site of a major subsea tunnel location.Company.
Convertible Promissory Note –- On 9/10/11, the Company issued to the Encompass Fund (the “Holder”) a convertible note in the principal sum of $250,000 together with Interest at the annual rate of 10%, a conversion rate of $0.08 per share, and a maturity date of September 16, 2012. In addition to the issuance of the note, the Company issued a total of 1,562,500 share purchase warrants to the Holder at the closing. The warrants had a fixed two year term and an exercise price of $0.12 per share. On 11/12/12 and on 5/14/13,7/28/14, the Company and the Holder agreed to amendholder of the note. On 10/4/13, it was furtherconvertible promissory note agreed to amend the note by extending the maturity date to 11/9/30/14.
Private Placements –On 8/04/14, the Company completed a private placement consisting of 2,400,000 common shares at an issue price of $0.05 per share for total proceeds of $120,000. On 8/22/14, a $750,000 interest free loan was converted into a private placement of 15,000,000 common shares at an issue price of $0.05 per share. The two private placements raised $870,000 in capital for the Company.
Sale of Norwegian Subsidiary –On 9/15/1314, the Company entered into a sale and purchase agreement to sell its 51% equity interest in Visionaire Energy AS to Visionaire Invest AS for total consideration of $1.2 million consisting of 20 million Company shares plus $200,000 in cash. The sale transaction is subject to approval of the shareholders to be sought at the Company's 2014 AGM scheduled for 12/05/14.
Sale of Norwegian Subsidiary –Also on 9/15/14, pursuant to and dated effective with the same agreement, Mr. Johnny Christiansen, the CEO of Visionaire Invest AS, resigned from the Company's board of directors.
New Affiliate Acquired in Tanzania –In a press release dated 9/24/14, the Company acquired 4,250,000 of the founders shares in Ruaha River Power Company Ltd. ("Ruaha Power"), a renewable energy power developer based in Dar es Salaam, Tanzania. The Company earned its shares in Ruaha Power for its technical contributions to the initial geotechnical evaluation and feasibility study work on Ruaha Power's Lukosi River hydropower project performed by the Company from its Jakarta office. Ruaha Power develops small to mid-sized power projects with the intent of acting as an independent power producer and distribution network operator of off-grid isolated mini-grids ("Mini-Grids"). Ruaha Power is committed to profitably developing and operating its Mini-Grids by selling electrical power directly to consumers at pre-pay meters in the vast underserved rural and small urban markets of Tanzania. Ruaha Power is currently developing a biomass, solar PV, diesel hybrid Mini-Grid at Malolo village in central Tanzania. It is also conducting a feasibility study on a 25MW development of grid-connected generation capacity at potential run-of-river hydropower sites on Tanzania's Lukosi River.
The Company was one of the four founding shareholders of Ruaha Power who were issued a total of 10,000,000 founders shares and retained an additional 90,000,000 of authorized but unissued share capital for future fund raises. In addition to the Company's 42.5% stake in those issued, a private American development company, Pan African Management and Development Company, Inc. ("Panafra") owned 30% and two Tanzanian companies, Kastan Mining PLC ("Kastan") and Kitonga Electric Power Company each owned 12.5% and 15% respectively. Both Panafra and Kastan were then owned and controlled by Mr. John Tate and his family. Mr. Tate is a resident of Tanzania and also the senior executive in management control of Ruaha Power. Subsequent to the transaction, on 12/05/14, Mr. Tate was elected at the 2014 AGM and served as a director on the Company's board until his resignation effective 31/12/13,16. See Item-4.C.b. "Partially Owned Joint VentureCompanies". Also see further discussion in Item-7.B "Related Party Transactions.
Annual General Meeting Scheduled –On 9/29/14, the Company published and filed on SEDAR, its notice of record date and meeting date for its annual general meeting for the fiscal year ended 6/30/14. The record date for rights to vote is 10/24/14. The meeting is set for 12/05/14 and will be held at the boardroom of the Company's transfer agent in Vancouver.
Ruaha Power Teams Up With Husk Power Systems –In a news release dated 10/01/14 the Company announced that its Tanzanian affiliate, Ruaha River Power Company Ltd. ("Ruaha Power"), had entered into a joint venture agreement with Husk Power Systems ("HPS") and had taken delivery of its first 32kW biomass power plant at its Dar es Salaam workshop. The power plant will provide primary generation capacity at Ruaha Power's first build-own-operate "Mini-Grid" network which shall generate, distribute, and sell electrical power directly to residential, commercial, and light industrial customers at pre-pay meters.
Ruaha Power plans to install several similar Mini-Grids in the Morogoro and Iringa Regions of Tanzania. The generation plant runs on syngas produced in an integrated biomass gasifier fueled by locally available agricultural residue. The plant and its related systems are proprietary designs supplied by HPS, and will be operated as an embedded generator within Ruaha Power's biomass-diesel hybrid Mini-Grid under the terms of a 50/50 joint venture arrangement between HPS and Ruaha Power.
Ruaha Power Kicks Off Malolo Mini-Grid –In a news release dated 10/07/14 the Company announced that its Tanzanian affiliate, Ruaha River Power Company Ltd. ("Ruaha Power"), had commenced construction of the Phase-I development of its Malolo Mini-Grid and had begun signing up first subscribers from a waiting list of 400 customers.
The Malolo Mini-Grid is the first of four separate, isolated rural "Mini-Grids" to be built, owned, and operated by the Ruaha Power, from which it intends to generate, distribute, and sell electrical power directly to consumers at pre-payment meters. When complete, the four Malolo Mini- Grids will have a combined generation capacity of 300kW and each Mini-Grid shall directly deliver 75kW of power to a combined total of approximately 2,500 identified residential, commercial, and light industrial customers. The Mini-Grids are being installed in an area surrounding the village of Malolo and three nearby villages, all located in the Kilosa District, Morogoro Region, Tanzania.
Shareholder Changes in Tanzanian Affiliate –In a news release on 11/04/14, the Company announced that with effect from 10/11/14, the four founding shareholders of the Company’s affiliate in Tanzania, Ruaha River Power Company Limited, (“Ruaha Power”) entered an agreement which terminated the original shareholders’ agreement dated 4/30/14. Pursuant to the termination agreement, two founding shareholders withdrew and returned 2,750,000 shares to Ruaha Power. On 10/29/14 the two remaining shareholders of Ruaha Power, the Company and Pan African Management and Development Company, Inc. ("Panafra") entered into an agreement to reorganize and redistribute the Holder agreed (1)2,750,000 shares of Ruaha Power. The Company issued 2,000,000 of its common shares to amendPanafra designees Mr. John Tate and his wife Ms. Younghee Han and increased its shareholding in Ruaha Power from 4,250,000 to 6,500,000 ordinary shares. Panafra, a Delaware based American company beneficially owned and controlled by Mr. Tate and his wife, took up 500,000 and increased its Ruaha Power shares to 3,500,000. Subsequent to the notetransaction, on 12/05/14, Mr. John Tate was elected at the 2014 AGM to serve as a director on the Company's board and served until his resignation effective 31/12/16. See Item-4.C.b. "Partially Owned Joint Venture Companies". Also see further discussion in Item-7.B "Related Party Transactions.
Reports Filed for Q1: Quarter Ended 9/30/14– On 11/11/14 we filed the required interim quarterly management discussion, analysis, and financial reports required in compliance with regulations of our home jurisdiction and the British Columbia Securities Commission for the quarter and three months ended 9/30/14, the first quarter of our 2015 Fiscal Year. These reports were filed electronically on SEDAR and included management prepared, but unaudited, interim, condensed, consolidated financial statements for the quarter plus management's discussion and analysis thereof.
New Director Elected at 2014 AGM –The Company’s 2014 AGM was held on 12/05/14 in Vancouver, British Columbia, Canada and four Directors were elected to the Board. In addition to the re-election of Richard L. McAdoo, Robert V. Rudman and Phillip B. Garrison; Mr. John Tate joined the Board of Directors. Former director, Mr. David Yu, did not stand for re-election.
Close of Sale of Norwegian Subsidiary- On 9/15/14, the Company entered into a sale and purchase agreement to sell its 51% equity interest in Visionaire Energy AS to Visionaire Invest AS for total consideration of $1,200,000 consisting of 20,000,000 Company shares valued at $0.05 per share plus $200,000 in cash. The sale transaction was approved and closed by extendingvote of the maturity dateCompany's shareholders at the AGM on 12/05/14.
Ruaha Power Receives Renewable Energy Grants –In a news release on 12/09/14, the Company announced that its Tanzanian subsidiary, Ruaha River Power Company Ltd. ("Ruaha Power"), had been appointed manager of a US$ 95,000 grant from the Rural Energy Agency of Tanzania. The grant is made under the Tanzania Energy Development Access program with funds provided by the World Bank and the Global Environmental Fund. The proceeds of the grant are to 1/be used to conduct a site specific technical and environmental study for a Ruaha Power proposed two megawatt hybrid renewable energy generation and distribution network, or "Mini-Grid", incorporating a mix of run-of-river hydropower, solar photovoltaic, and biomass gasifier technologies. The study area is in the Iringa and Dodoma regions of central Tanzania and is near the 300 kilowatt Malolo Mini-Grid, an existing hybrid biomass-diesel-solar power project, already under development by Ruaha Power.
In a news release on 12/15/14, the Company announced that the United States Trade Development Agency had awarded a $600,000 grant to support the development by Continental's subsidiary, Ruaha River Power Company Limited ("Ruaha Power"), of two 10 Megawatt ("MW") run- of-river hydropower facilities that will supply power to both the national grid and to off-grid villages in the Lukosi River basin region of Tanzania. The grant is to fund a detailed feasibility study, to be undertaken by U.S. consulting company Knight Piesold & Co., that will evaluate technical requirements of the proposed facilities and make recommendations on a standardized 10 MW hydropower plant design, layout, and equipment
Reports Filed for Q2: Quarter Ended 12/31/14– On 2/11/15 we filed the required interim quarterly management discussion, analysis, and financial reports required in compliance with regulations of our home jurisdiction and the British Columbia Securities Commission for the quarter and six months ended 12/31/14, the Second quarter of our 2015 Fiscal Year. These reports were filed electronically on SEDAR and (2)included management prepared, but unaudited, interim, condensed, consolidated financial statements for the quarter plus management's discussion and analysis thereof.
Corporate Communications Firm Retained –In a news release dated 2/12/15, the Company announced that it had retained Heisler Communications to reduceadvise and provide strategic corporate communications services on behalf of the Company. Heisler Communications is a Toronto, Canada based capital markets communications firm providing a full range of traditional and digital marketing services to assist companies increase their visibility, manage investor expectations, and broaden and strengthen corporate awareness.
Reports Filed for Q3: Quarter Ended 3/31/15– On 5/12/15 we filed the required interim quarterly management discussion, analysis, and financial reports required in compliance with regulations of our home jurisdiction and the British Columbia Securities Commission for the quarter and nine months ended 3/31/15, the Third quarter of our 2015 Fiscal Year. These reports were filed electronically on SEDAR and included management prepared, but unaudited, interim, condensed, consolidated financial statements for the quarter plus management's discussion and analysis thereof.
Authorized Share Capital at 6/30/15 End of Fiscal Year 2015– At the end of Fiscal 2015 the Company's authorized capital consisted of 500,000,000 common shares without par value and without special rights or restrictions attached and 500,000,000 preferred shares without par value and without special rights or restrictions attached. There were no changes to the Company's authorized share capital during Fiscal 2015.
New Share Issues During Fiscal Year 2015 Ended 6/30/15– During Fiscal 2015 the Company issued 17,400,000 new common shares for total cash of $870,000 pursuant to private placements and an additional 2,000,000 shares were issued in a swap for shares at a fair value of $100,000. Additionally, the Company received 20,000,000 of its own common shares for cancellation pursuant to an asset sale. Details of these transactions are as follows:
On 8/04/14, the Company completed a private placement consisting of 2,400,000 common shares at a price of $0.05 per share for total proceeds of $120,000.
On 8/22/14, a loan made to the Company in the amount of $750,000 on 3/03/14, was converted into 15,000,000 common shares of the Company at a price of $0.05 per share.
On 10/29/14, the Company issued 2,000,000 common shares at fair value of $100,000 in a shares-swap exchange and acquisition by the Company of 2,250,000 ordinary shares of Ruaha River Power Company Ltd.
On 5/12/14, the Company received 20,000,000 common shares at fair value of $400,000, returned for cancellation by Visionaire Invest AS pursuant to the sale of the Company’s 51% interest in the shares of Visionaire Energy AS.
Share Purchase Warrant Activity During Fiscal Year 2015 Ended 6/30/15– During Fiscal 2015, the Company did not issue any new share purchase warrants. A total of 2,000,000 outstanding and unexercised share purchase warrants expired; and the terms of 2,975,000 outstanding share purchase warrants were amended. Details of these transactions are as follows:
On 9/30/14 a total of 2,000,000 unexercised share purchase warrants expired. These warrants were originally issued on 1/10/13 as total compensation to two arm’s length parties in exchange for investor relations and other financial services to the Company. Each warrant had a term of one year and an exercise price of $0.05 per common share. The Company calculated the value of these warrants from $0.08 to $0.05. be $20,877 which was charged to the statement of loss and comprehensive loss as share-based payments during Fiscal 2014.
On 1/05/15, the term of 2,600,000 and 375,000 outstanding share purchase warrants expiring on 1/07/15 and 1/15/15, respectively, were extended to expire on 1/07/16 and 1/15/16. The exercise price of these warrants was not amended and remained at $0.05 per share. As these warrants were originally issued to investors in a private placement, no amount was recognized for the incremental increase in their fair value.
Incentive Stock Option Activity During Fiscal Year 2015 Ended 6/30/15– During Fiscal 2015 the Company did not grant any new incentive stock options. No amendments were made to the terms of any outstanding stock options and no stock options were exercised during Fiscal 2015. A total of 9,000,000 outstanding and unexercised stock options expired as follows:
On 3/31/14,15 a total of 8,000,000 outstanding and unexercised stock options expired.
On 6/05/15 a total of 1,000,000 outstanding and unexercised stock options expired.
i) | Subsequent Material Events Occurring Since 6/30/15 up to the Report Date – Described in Chronological Order |
Cease Trade Order– On 11/04/15, the British Columbia Securities Commission (the "BCSC") issued the Company a cease trade order. This order was issued because at that time the Company was deficient in its regulatory requirements due to the Company's failure to file its audited consolidated financial statements for the fiscal year ended 6/30/15 on SEDAR by the BCSC's filing deadline. The order prohibits trading of the Company’s securities in Canada until such time as the deficiency is cured by the Company and a revocation order is issued by the holder ofBCSC.
New Share Issues- During the period between theyear ended 6/30/13 Fiscal Year end and15. At the Report Date, the Company issuedis completing an independent audit on its FY 2016 annual statements and preparing interim financial statements for the six quarters ended 9/30/15, 12/31/15, 3/31/16, 9/30/16, 12/31/16, and 3/31/17. When completed, the Company shall file the remaining statements on SEDAR and apply to the BCSC for a totalrevocation of 800,000the order.
Director Resignation– Effective upon 12/30/16, Mr. John Tate resigned from the Company's board of directors.
Joint Development Agreement Signed –On 1/04/17, the Company entered into a Joint Development Agreement (the "CHI JDA") with Continental Hilir Indonesia Pte. Ltd. ("CHI"), a private Singapore company, for the joint development of Small-Scale Refinery Projects in Indonesia. CHI and the Company are related parties and at the Report Date share three common directors. The CHI JDA is more fully described herein below in Item-4.C.c. "Joint Ventures".
Consulting and Joint Development Agreement Signed –On 2/28/17, the Company entered into a Consulting and Joint Development Agreement (the "CHMEA JDA") with Continental Hilir MEA (FZE) ("CHMEA"), a private company registered in the Sharjah Airport International Free Zone of the United Arab Emirates, for the joint development of Small-Scale Refinery Projects in the Middle East and Africa. CHMEA and the Company are related parties and at the Report Date share one common director. The CHMEA JDA is more fully described herein below in Item-4.C.c."Joint Ventures".
Director Appointment– Upon 3/31/17, Mr. Karsani Aulia was appointed a director of the Company by action of the board of directors to fill the vacancy on the board.
Code of Business Conduct and Ethics– Upon 5/14/17, the board of directors adopted a new common shares.and revised "Code" of Business Conduct and Ethics for the Company. A private placementcomplete copy of 500,000 sharesthe Code was filed by the Company on SEDAR on 16/05/07 and is publicly available in PDF form for total proceedsdownload from the SEDAR website. The PDF download link can be found after a search of $25,000the Company's filings at SEDAR's website http://sedar.com/search/. A complete copy of the Code was also filed by the Company on EDGAR on 17/05/07 under cover of a Form-6K filing.
Charter of the Audit Committee– Upon 5/14/17, the board of directors adopted a new and revised "Charter" for the Company's Audit Committee. A complete copy of the Charter was filed by the Company on SEDAR on 5/16/07 and is publicly available in PDF form for download from the SEDAR website. The PDF download link can be found after a search of the Company's filings at SEDAR's website http://sedar.com/search/. A complete copy of the Charter was also filed by the Company on EDGAR on 5/17/07 under cover of a Form-6K filing.
Charter of the Governance and Nominating Committee– Upon 5/14/17, the board of directors adopted a new and revised "Charter" for the Company's Governance and Nominating Committee. A complete copy of the Charter was filed by the Company on SEDAR on 5/16/07 and is publicly available in PDF form for download from the SEDAR website. The PDF download link can be found after a search of the Company's filings at SEDAR's website http://sedar.com/search/. A complete copy of the Charter was also filed by the Company on EDGAR on 5/17/07 under cover of a Form-6K filing.
FYE 2015 Audited Annual Financial Statements Filed– Upon 5/24/17, the Company completed the filing on 7/25/13SEDAR with Canadian Securities Administrators, the Company's audited annual consolidated financial statements and another of 300,000 sharesmanagement discussion and analysis for total proceeds of $15,000 on 10/21/13.its Fiscal 2015 year ended 6/30/15.
Share Purchase Warrant Activity- During From End Fiscal 2015 up to the period betweenReport Date– Subsequent to the 6/30/13end of Fiscal Year end2015 and up to the Report Date, the Company issueddid not issue any new share purchase warrants. No warrants were exercised and no amendments were made to the terms of any outstanding share purchase warrants. A total of 9,462,000 outstanding and unexercised share purchase warrants expired. Details of these transactions are as follows:
On 12/31/15 a total of 2,550,000 warrants. Of this total, 550,000 were issued in conjunction with two private placements and the other 2,000,0005,787,500 unexercised share purchase warrants expired. These warrants were originally issued to two financial consultants. Duringinvestors as a part of a unit with a common share pursuant to private placements.
On 1/07/16, the period, 2,643,000terms of 2,600,000 unexercised share purchase warrants expired during this period.expired. These warrants were originally issued to investors as a part of a unit with a common share pursuant to private placements.
On 1/15/16, the terms of 375,000 unexercised share purchase warrants expired. These warrants were originally issued to investors as a part of a unit with a common share pursuant to private placements.
On 6/28/16, the terms of 150,000 unexercised share purchase warrants expired. These warrants were originally issued to investors as a part of a unit with a common share pursuant to private placements.
On 7/25/16, the terms of 250,000 unexercised share purchase warrants expired. These warrants were originally issued to investors as a part of a unit with a common share pursuant to private placements.
On 10/23/16, the terms of 300,000 unexercised share purchase warrants expired. These warrants were originally issued to investors as a part of a unit with a common share pursuant to private placements.
Incentive Stock Option Activity- During the period between the 6/30/13 From End Fiscal Year end and2015 up to the Report Date– Subsequent to the end of Fiscal 2015 and up to the Report Date, the Company did not grant any new incentive stock options. No options were exercised and no amendments were made to the terms of any outstanding options. On 12/31/15, a total of 6,800,000 outstanding and unexercised incentive stock options were granted, exercised, expired, or amended.expired.
B. | |
BUSINESS OVERVIEW. |
The Company is an emerging international energy investment company established to acquire participating interests in oil, gas,developer of conventional and alternative energy projects, producers,capacity integrated with upstream and related services providers doing business outsidedownstream petroleum supply within the Republic of North America.Indonesia. Why Indonesia? Already a G20 member, Indonesia is predicted by the World Bank to grow to the 4thlargest economy in the world by 2045.
C. | |
ORGANIZATIONAL STRUCTURE. |
The Company conducts and manages substantially all of its business activities through the use of wholly-owned corporate subsidiaries, partially owned joint venture corporations, and joint ventures. The Company itself functions as a holding company centralizing management and administrative activities while specific project and property ownership and management are held and vested in the subsidiary, joint venture company or joint venture.
a) | Wholly-owned Subsidiaries- From time to time the Company establishes certain wholly and exclusively owned and controlled subsidiary companies usually for a special and single purpose such as, for example, to own and hold the rights to a specific oil and gas property. The accounts of wholly-owned subsidiaries are consolidated into those of the Company. At the Report Date, and during the past three Fiscal Years, the
|
b) | Partially Owned Joint Venture Companies- From time to time the Company participates in certain special purpose joint venture companies which are jointly owned with other non-related shareholders and are jointly operated and controlled pursuant to the terms of a joint venture company shareholders agreement. At the Report Date the Company's interests in partially owned joint venture corporations include the following:
|
Ruaha River Power Company Limited ("Ruaha Power")is a joint venture company and renewable energy power developer incorporated in Tanzania and based in Dar es Salaam. The authorized share capital of Ruaha Power is 100 Billion Tanzanian Shillings consisting of 100 Million shares of nominal value 1,000 Tanzanian Shillings. Ruaha Power develops small to mid-sized power projects with the intent of acting as an independent power producer and distribution network operator of off-grid isolated mini-grids ("Mini-Grids"). Ruaha Power is committed to profitably developing and operating its Mini-Grids by selling electrical power directly to consumers at pre-pay meters in the vast underserved rural and small urban markets of Tanzania. Ruaha Power is developing a biomass, solar PV, diesel hybrid Mini-Grid at Malolo village in central Tanzania. It is also conducting a feasibility study on a 25MW development of grid-connected generation capacity at potential run-of-river hydropower sites on Tanzania's Lukosi River.
At the end of Fiscal 2015, the Company owned 6,500,000 ordinary shares of Ruaha Power, then representing an equity interest of 6.5% of Ruaha Power's authorized share capital. Panafra, a Delaware based American company, and at end Fiscal 2015, a related party under the control of then director, Mr. John Tate, owned the remaining 3.5%. The remaining 90% of the authorized share capital was then unissued pending future fund raises. See Item-7.B.b. "Related Party Transactions". Since the end of Fiscal 2015 effective management control over Ruaha Power is exerted by Mr. Tate and his family, and the Company has no further financial or management obligations to it or related to it.
Tawau Green Energy Sdn. Bhd. ("TGE")is a joint venture company incorporated in Malaysia. During Fiscal Year 2012, on 5/7/12, the Company acquired 300,000 shares, representing a 10% stake, of TGE.TGE is a privately held company incorporated in and based in Kota Kinabalu, Sabah, Malaysia and is in the business of developing a geothermal energy resource at its Apas Kiri project site, Sabah, Malaysia. On 5/20/13, during Fiscal Year 2013, the Company returned all 300,000 of the TGE shares and wrote off its investment in TGE. At the Report Date, the Company owns no shares of TGE.
Visionaire Energy AS ("VE")is a joint venture company incorporated in Norway. On 6/4/13, the Company acquired a 51% shareholding stake in VE. The acquisition was accomplished by an arms-length, non-cash, share-swap transaction with Visionaire Invest AS ("VI"), the sole shareholder of VE. The Company issued 20 million of its common shares, representing a stake of approximately 16.7% in the Company to VI, in exchange for 51% of the authorized and outstanding shares of VE. The principal assets of VE are its management and its shareholdings in two separate, privately owned, offshore oil and gas service providers both based in Bergen, Norway. VE owns a 49% shareholding equity interest in VTT Maritime AS and a 41% equity interest in RADA Engineering and Consulting AS.
Visionaire Energy AS ("VE")is a company incorporated in Norway. On 6/04/13, the Company acquired a 51% shareholding stake in VE. The acquisition was accomplished by an arms-length, non-cash, share-swap transaction with Visionaire Invest AS ("VI"), the sole shareholder of VE. The Company issued 20 million of its common shares, representing a stake of approximately 16.7% in the Company to VI, in exchange for 51% of the authorized and outstanding shares of VE. The principal assets of VE are its minority and non-controlling shareholdings in two separate, privately owned, offshore oil and gas service providers both based in Bergen, Norway. VE owns a 49% shareholding equity interest in VTT Maritime AS and a 41% equity interest in RADA Engineering and Consulting AS.
On 9/15/14, the Company entered into a sale and purchase agreement to sell its 51% equity interest in Visionaire Energy AS to Visionaire Invest AS for total consideration of $1,200,000 consisting of 20,000,000 Company shares valued at $0.05 per share plus $200,000 in cash. The sale transaction was approved by vote of the shareholders at the Company's 2014 AGM on 12/05/14 and effectively closed at the same time. From then and at end Fiscal 2015 the Company has no remaining interests in VE or obligations related to it.
Continental-GeoPetro (Bengara-II) Ltd. ("CGB2")was incorporated on 09/09/97 under the British Virgin Islands International Business Corporations Act. CGB2 is a special and single purpose joint venture company established to exclusively hold and operate the Bengara-II
Block oil and gas property under an Indonesian production sharing contract of which CGB2 at one time owned an undivided 100% participating interest. That expiry of the contract formerly owned by CGB2 was announced by the Company in a press release dated 10/16/12. At the Report Date, the Company owns 9,000 shares of CGB2 representing a minority 18% stake in CGB2. GeoPetro Resources Company owns 12%. Kunlun Energy Company Ltd. owns 70% and exerts effective management control of CGB2. CGB2 is dormant and the Company has no further obligations to it or related to it.
CBM Joint Study and Bid Group Agreement- On 5/05/12 the Company announced that it had entered into a Joint Study and Bid Group Agreement with CBM Asia Development Corp. to bid for new coal bed methane properties development in Indonesia. The agreement expired and terminated on 4/27/14 in accordance with its provisions because no new bids were submitted. The exclusivity provisions of the agreement remained in effect until 4/27/15 and the confidentiality provisions remained effective until 4/27/16. As at the Report Date, the CBM Joint Study and Bid Group Agreement is no longer in force or effect and the Company has no further obligations related to it.
Malaysia Joint Study and Bid Group Agreement- On 11/12/13, subsequent to the end of Fiscal 2012, the Company entered into a 50/50 joint bid arrangement with an established Malaysian partner to evaluate opportunities and present carefully selected bids for new oil and gas production sharing and risk service contracts offered in Malaysia by PETRONAS, the national oil company. At the Report Date, the Malaysia Joint Study and Bid Group remains in effect.
Joint Development Agreement –On 4/01/17, the Company entered into a Joint Development Agreement (the "CHI JDA") with Continental Hilir Indonesia Pte. Ltd. ("CHI"), a private Singapore company, for the joint development of Small-Scale Refinery Projects in Indonesia. CHI and the Company are related parties and at the Report Date share three common directors. The CHI JDA provides that CHI may earn an 80% participating interest with the Company on realization of any new Small Scale Refinery ("SSR") developments in Indonesia by providing reimbursable cash advances to the Company from time to time and also carrying or paying for the Company's 20% participating interest share of feasibility studies, pre-operations costs, proposal preparation, and presentation costs to local commercial partners and to foreign direct investment and SSR licensing authorities. At the Report Date, the CHI JDA remains in full force and effect.
Consulting and Joint Development Agreement –On 28/02/17, the Company entered into a Consulting and Joint Development Agreement (the "CHMEA JDA") with Continental Hilir MEA (FZE) ("CHMEA"), a private company registered in the Sharjah Airport International Free Zone of the United Arab Emirates, for the joint development of Small-Scale Refinery Projects in the Middle East and Africa. CHMEA and the Company are related parties and at the Report Date share one common director. The CHMEA JDA provides that CHMEA may earn a 50% participating interest with the Company on realization of any new SSR developments in the Middle East and Africa by providing reimbursable cash advances to the Company from time to time and also carrying or paying for the Company's 50% participating interest share of feasibility studies, pre-operations costs, proposal preparation, and presentation costs to local commercial partners and to foreign direct investment and SSR licensing authorities. At the Report Date, the CHMEA JDA remains in full force and effect.
Directors- Our Articles have provisions related to conflicts of interests of directors in certain corporate transactions. A director or senior officer who holds a disclosable interest in a contract or transaction into which the Company proposes to enter into, must disclose such interest and is liable to account to the Company for any profit that accrues to the director or senior offer as a result of the transaction if the provisions for disclosure and director approval set out in the Business Corporations Act (British Columbia) are not complied with. A director with a disclosable interest in a contract or transaction is not entitled to vote on any directors’ resolution approving the contract or transaction, unless all directors have an interest in the contract or transaction. A director with a disclosable interest in a contract or transaction is entitled to be counted as part of the quorum for the directors’ meeting to consider the contract or transaction. Under the Business Corporations Act (British Columbia), a director does not hold a disclosable interest in a contract or transaction merely because it relates to his/her compensation in his/her capacity as a director, officer, employee or agent of the Company. Our Articles provide that our directors may, without shareholder approval, borrow money upon the credit of our Company, issue and sell bonds or debentures and provide guarantees. Neither our Notice of Articles or Articles set out a mandatory retirement age for our directors and our directors are not required to own securities of our Company in order to serve as directors.
Authorized Capital-Our Notice of Articles provide that our authorized capital consists of 500,000,000 shares of common stock, without par value, and 500,000,000 shares of preferred stock, without par value. Our preferred stock may be issued in one or more series and our directors may fix the number of shares which is to comprise each series and the designation, rights, privileges, restrictions and conditions attaching to each series.
Rights, Preferences and Restrictions-Pursuant to our Articles and the Business Corporations Act (British Columbia), holders of our common stock are entitled to vote at all meetings of shareholders, except meetings at which only holders of a specified class of shares are entitled to vote, receive any dividend declared by our Company's board of directors and, subject to the rights, privileges, restrictions and conditions attaching to any other class of shares, receive the remaining property of our Company upon dissolution. Shares of our preferred stock of each series rank on a parity with our share of preferred stock of any other series and are entitled to a preference over shares of our common stock with respect to the payment of dividends and the distribution of assets or return of capital in the event of liquidation, dissolution or winding-up of our Company. The provisions in our Articles attaching to our common stock and our preference stock may be altered, amended, repealed, suspended or changed by the affirmative vote of the holders of not less than 2/3s of the outstanding shares of common stock and 2/3s of the shares of preferred stock, as applicable. With the exception of special resolutions (i.e. resolutions in respect of fundamental changes to our Company, including: the sale of all or substantially all of its assets, an merger or other arrangement or an alteration to our Company's authorized capital) that require the approval of 2/3s of the votes cast by shareholders (holding common stock) entitled to vote at a meeting, either in person or by proxy, resolutions to approve matters brought before a meeting of our shareholders require approval by a simple majority of the votes cast by shareholders entitled to vote at a meeting, either in person or by proxy.
Shareholder Meetings-The Business Corporations Act (British Columbia) provides that:(i) meetings of shareholders must be held in British Columbia, unless otherwise provided in a company's Articles; (ii) directors must call an annual general of shareholders not later than 15 months after the last preceding annual general and once in every calendar year;(iii) for the purpose of determining shareholders entitled to receive notice of or vote at meetings of shareholders, the directors may fix in advance a date as the record date for that determination, provided that such date shall not precede by more than 50 days or by less than 21 days the date on which the meeting is to be held; (iv) a quorum of shareholders for a shareholder meeting may be set by the Articles and the Company’s Articles provide that the quorum for the transaction of business at a meeting of our shareholders is two shareholders, or one or more proxy holder representing two members, or one member and proxy holder representing another member; (v) the holders of not less than five percent of the issued shares entitled to vote at a meeting may requisition the directors to call a meeting of shareholders for the purposes stated in the requisition; and (vii) upon the application of a director or shareholder entitled to vote at the meeting, the Supreme Court of British Columbia may order a meeting to be called, held and conducted in a manner that the Court directs.
Limitations on Rights of Non-Canadians-Except as provided in the Investment Canada Act, there are no limitations specific to the rights of non-Canadians to hold or vote our common stock under the laws of Canada or British Columbia or in our charter documents. See "Exchange Controls" below in this Annual Report for a discussion of the principal features of the Investment Canada Act for non-Canadian residents proposing to acquire our common stock.
Delay of Change of Control-Pursuant to the provisions of the Business Corporations Act (British Columbia), at each annual general meeting of our shareholders all of our directors retire and the shareholders appoint a new board of directors. Each director holds office until our next annual general meeting unless:(i) he dies or resigns; (ii) he is removed by ordinary resolution of our shareholders (or class or series of shareholders if such class or series has the exclusive right to elect one or more directors); or (iii) the director becomes disqualified to hold officer, as provided under the Business Corporations Act (British Columbia).A director appointed or elected to fill a vacancy on our board holds office for the unexpired term of his predecessor (generally, until our next annual general meeting).With the exception of provisions in our Articles that limit the number of directors that can be appointed between annual meetings of shareholders and that give our directors the authority to issue blank check preferred stock, there are no provisions in our Notice of Articles or Articles that would have the effect of delaying, deferring or preventing a change in control of our Company, and that would operate only with respect to a merger, acquisition or corporate restructuring involving our Company.
Reporting of Share Ownership-Neither our Notice of Articles or Articles contain any provisions governing the ownership threshold above which shareholder ownership must be disclosed. Securities legislation in Canada, however, requires that we disclose in our annual general meeting proxy statement, holders who beneficially own more than ten percent of our issued and outstanding shares, and United States Federal securities laws require the disclosure in our annual report on Form-20F of holders who own more than five percent of our issued and outstanding shares.
D. | EXCHANGE CONTROLS. |
TGE Agreement- On 5/7/12, the Company acquired 300,000 shares, representing a 10% stake, of Tawau Green Energy Sdn. Bhd. ("TGE") for the sum of 6,000,000 Malaysian Ringgit (“MYR”) ($1,965,600). During Fiscal 2013, the TGE Agreement was terminated on 5/20/13 and the Company returned all 300,000 of the TGE shares and wrote off its investment in TGE. As at the Report Date, the TGE Agreement is no longer in force or effect.
Except as discussed in ITEM-10.E, "Taxation", the Company is not aware of any Canadian federal or provincial laws, decrees, or regulations that restrict the export or import of capital, including foreign exchange controls, or that affect the remittance of dividends, interest or other payments to non-Canadian holders of the common shares. There are no limitations on the right of non-Canadian owners to hold or vote the common shares imposed by Canadian federal or provincial law or by the charter or other constituent documents of the Company.
The Investment Canada Act (the “Investment Act”), which generally prohibits a reviewable investment by an entity that is not a “Canadian”, as defined, unless after review, the minister responsible for the Investment Act is satisfied that the investment is likely to be of net benefit to Canada. An investment in the Shares by a non-Canadian who is not a “WTO investor” (which includes governments of, or individuals who are nationals of, member states of the World Trade Organization and corporations and other entities which are controlled by them), at a time when the Company was not already controlled by a WTO investor, would be reviewable under the Investment Act under three circumstances. First, if it was an investment to acquire control (within the meaning of the Investment Act) and the value of the Company’s assets, as determined under Investment Act regulations, was C$5 million or more. Second, the investment would also be reviewable if an order for review was made by the federal cabinet of the Canadian government on the grounds that the investment related to Canada’s cultural heritage or national identity (as prescribed under the Investment Act), regardless of asset value. Third, the investment would also be reviewable if an order for review is made by the federal cabinet of the Canadian government on the grounds that an investment by a non-Canadian could be injurious to national security.
An investment in the Shares by a WTO investor, or by a non- Canadian at a time when the Company was already controlled by a WTO investor, would be reviewable under the Investment Act if it was an investment to acquire control and the value of the Company’s assets, as determined under Investment Act regulations, was not less than a specified amount, which for 2009 is C$312 million.
The usual thresholds for review for direct acquisitions of Canadian businesses (other than acquisitions of cultural businesses) by foreign investors will change as of a date to be determined by the federal cabinet of the Canadian Government. At that time transactions will be reviewable only if the “enterprise value” of the assets of the Canadian business is equal to or greater than (a) C$600 million, in the case of investments made during the first two years after the amendments come into force; (b) C$800 million, in the case of investments made during the third and fourth years after the amendments come into force; and (c) C$1 billion, in the case of investments made between the fifth year after the amendments come into force and December 31 of the sixth year after the amendments come into force. This threshold will thereafter be adjusted on an annual basis.
The Investment Act provides detailed rules to determine if there has been an acquisition of control. For example, a non-Canadian would acquire control of the Company for the purposes of the Investment Act if the non-Canadian acquired a majority of the Shares. The acquisition of less than a majority, but one-third or more, of the Shares would be presumed to be an acquisition of control of the Company unless it could be established that, on the acquisition, the Company not controlled in fact by the acquirer. An acquisition of control for the purposes of the Investment Act could also occur as a result of the acquisition by a non-Canadian of all or substantially all of the Company’s assets.
E. | TAXATION. |
The Bengara-II Production Sharing Contract (“PSC”)- On 12/04/97 Continental-GeoPetro (Bengara-II) Ltd. (“CGB2”) entered into a Production Sharing Contract (“PSC”) for the Bengara-II PSC contract area with the Minister of Mines and Energy of the Republic of Indonesia. Pursuant to a news release dated 10/16/12, during Fiscal 2013, the Company announced that negotiations with the Indonesian government for an extension of the Bengara-II PSC's term had terminated. Consequently, as at the Report Date the Bengara-II PSC has been relinquished and allowed to expire in accordance with its term.
CBM Joint Study and Bid Group Agreement- On 5/5/12 the Company announced that it had entered into a Joint Study and Bid Group Agreement with CBM Asia Development Corp. ("CBM Asia") a Canadian CBM developer with existing CBM developments in Indonesia. Subsequent to the end of Fiscal 2012, the CBM Joint Venture agreement expired and terminated on 4/27/14 in accordance with its provisions. The exclusivity provisions of the agreement remain in effect for an additional 1 year and the confidentiality provisions for an additional 2 years.
Malaysia Joint Study and Bid Group Agreement –On 11/12/13, subsequent to the end of Fiscal 2012, the Company entered into a 50/50 joint bid arrangement with an established Malaysian partner to evaluate opportunities and present carefully selected bids for new oil and gas production sharing and risk service contracts offered in Malaysia by PETRONAS, the national oil company. At the Report Date, the Malaysia Joint Study and Bid Group remains in effect.
Indonesian Bid Group Agreement– On 2/4/13, the Company announced that it had entered into a joint bid arrangement with another local industry player to present bids for new Indonesian production sharing contracts offered by Indonesian oil and gas authorities in 2013.
Except as discussed in ITEM-10.E, "Taxation", the Company is not aware of any Canadian federal or provincial laws, decrees, or regulations that restrict the export or import of capital, including foreign exchange controls, or that affect the remittance of dividends, interest or other payments to non-Canadian holders of the common shares. There are no limitations on the right of non-Canadian owners to hold or vote the common shares imposed by Canadian federal or provincial law or by the charter or other constituent documents of the Company.
The Investment Canada Act (the “Investment Act”), which generally prohibits a reviewable investment by an entity that is not a “Canadian”, as defined, unless after review, the minister responsible for the Investment Act is satisfied that the investment is likely to be of net benefit to Canada. An investment in the Shares by a non-Canadian who is not a “WTO investor” (which includes governments of, or individuals who are nationals of, member states of the World Trade Organization and corporations and other entities which are controlled by them), at a time when the Company was not already controlled by a WTO investor, would be reviewable under the Investment Act under three circumstances. First, if it was an investment to acquire control (within the meaning of the Investment Act) and the value of the Company’s assets, as determined under Investment Act regulations, was C$5 million or more. Second, the investment would also be reviewable if an order for review was made by the federal cabinet of the Canadian government on the grounds that the investment related to Canada’s cultural heritage or national identity (as prescribed under the Investment Act), regardless of asset value. Third, the investment would also be reviewable if an order for review is made by the federal cabinet of the Canadian government on the grounds that an investment by a non-Canadian could be injurious to national security.
An investment in the Shares by a WTO investor, or by a non- Canadian at a time when the Company was already controlled by a WTO investor, would be reviewable under the Investment Act if it was an investment to acquire control and the value of the Company’s assets, as determined under Investment Act regulations, was not less than a specified amount, which for 2009 is C$312 million.
The usual thresholds for review for direct acquisitions of Canadian businesses (other than acquisitions of cultural businesses) by foreign investors will change as of a date to be determined by the federal cabinet of the Canadian Government. At that time transactions will be reviewable only if the “enterprise value” of the assets of the Canadian business is equal to or greater than (a) C$600 million, in the case of investments made during the first two years after the amendments come into force; (b) C$800 million, in the case of investments made during the third and fourth years after the amendments come into force; and (c) C$1 billion, in the case of investments made between the fifth year after the amendments come into force and December 31 of the sixth year after the amendments come into force. This threshold will thereafter be adjusted on an annual basis.
The Investment Act provides detailed rules to determine if there has been an acquisition of control. For example, a non-Canadian would acquire control of the Company for the purposes of the Investment Act if the non-Canadian acquired a majority of the Shares. The acquisition of less than a majority, but one-third or more, of the Shares would be presumed to be an acquisition of control of the Company unless it could be established that, on the acquisition, the Company not controlled in fact by the acquirer. An acquisition of control for the purposes of the Investment Act could also occur as a result of the acquisition by a non-Canadian of all or substantially all of the Company’s assets.
Canadian Federal Income Tax Considerations- The following summary discusses only the Canadian federal income tax considerations generally applicable to a holder (a "Holder") of one or more common shares of the Company who, for the purposes of the Income Tax Act (Canada) (the "Tax Act") is a non-resident of Canada who holds common shares as capital property. The summary deals with the provisions of the Tax Act in force on 12/31/99. It does not discuss all the tax consequences that may be relevant to particular holders in light of their circumstances or to holders subject to special rules. It is therefore not intended to be, nor should it be construed to be, legal or tax advice to any holder of common shares of the Company and no opinion or representation with respect to the Canadian income tax consequences to any such holder or prospective holder is made. Holders and prospective holders should therefore consult their own tax advisers with respect to their particular circumstances.
Dividends- A Holder will be subject to Canadian withholding tax ("Part XIII Tax") equal to 25%, or such lower rate as may be available under an applicable tax treaty, of the gross amount of any dividend paid or deemed to be paid on common shares. Under the Canada-US Income Tax Convention (1980) as amended by the Protocols signed on 6/14/83, 3/28/84, 3/17/95, and 7/29/97 (the "Treaty"), the rate of Part XIII Tax applicable to a holder (a "Holder") of one or more common shares of the Company who, for the purposes of the Income Tax Act (Canada) (the "Tax Act") is a non-resident of Canada who holds common shares as capital property. The summary deals with the provisions of the Tax Act in force on 12/31/99.It does not discuss all the tax consequences that may be relevant to particular holders in light of their circumstances or to holders subject to special rules. It is therefore not intended to be, nor should it be construed to be, legal or tax advice to any holder of common shares of the Company and no opinion or representation with respect to the Canadian income tax consequences to any such holder or prospective holder is made. Holders and prospective holders should therefore consult their own tax advisers with respect to their particular circumstances.
Dividends- A Holder will be subject to Canadian withholding tax ("Part XIII Tax") equal to 25%, or such lower rate as may be available under an applicable tax treaty, of the gross amount of any dividend paid or deemed to be paid on common shares. Under the Canada-US Income Tax Convention (1980) as amended by the Protocols signed on 6/14/83, 3/28/84, 3/17/95, and 7/29/97 (the "Treaty"), the rate of Part XIII Tax applicable
to a dividend on common shares paid to a Holder who is a resident of the United States and who is the beneficial owner of the dividend, is 5%.If the Holder is a company that owns at least 10% of the voting stock of the Company paying the dividend, and, in all other cases, the tax rate is 15% of the gross amount of the dividend. The Company will be required to withhold the applicable amount of Part XIII Tax from each dividend so paid and remit the withheld amount directly to the Receiver General for Canada for the account of the Holder.
Disposition of Common Shares- A Holder who disposes of a common share, including by deemed disposition on death, will not normally be subject to Canadian tax on any capital gain (or capital loss) thereby realized unless the common share constituted "taxable Canadian property" as defined by the Tax Act. Generally, a common share of a public corporation will not constitute taxable Canadian property of a Holder if the share is listed on a prescribed stock exchange unless the Holder or persons with whom the Holder did not deal at arm's length alone or together held or held options to acquire, at any time within the five years preceding the disposition, 25% or more of the shares of any class of the capital stock of the Company. A Holder who is a resident of the United States and realizes a capital gain on a disposition of a common share that was taxable Canadian property will nevertheless, by virtue of the Treaty, generally be exempt from Canadian tax thereon unless (a) more than 50% of the value of the common shares is derived from, or from an interest in, Canadian real estate, including Canadian mineral resource properties, (b) the common share formed part of the business property of a permanent establishment that the Holder has or had in Canada within the 12 month period preceding the disposition, or (c) the Holder is an individual who (i) was a resident of Canada at any time during the 10 years immediately preceding the disposition, and for a total of 120 months during any period of 20 consecutive years, preceding the disposition, and (ii) owned the common share when he ceased to be resident in Canada. A Holder who is subject to Canadian tax in respect of a capital gain realized on a disposition of a common share must include three quarters of the capital gain (taxable capital gain) in computing the Holder's taxable income earned in Canada. The Holder may, subject to certain limitations, deduct three-quarters of any capital loss (allowable capital loss) arising on a disposition of taxable Canadian property from taxable capital gains realized in the year of disposition in respect to taxable Canadian property and, to the extent not so deductible, from such taxable capital gains realized in any of the three preceding years or any subsequent year.
United States Taxation- For federal income tax purposes, an individual who is a citizen or resident of the United States or a domestic corporation ("US Taxpayer") will recognize a gain or loss on the sale of the Company's common shares equal to the difference between the proceeds from such sale and the adjusted tax basis of the common shares. The gain or loss will be a capital gain or capital loss if the Company's common shares are capital assets in the hands of the US Taxpayer. For federal income tax purposes, a US Taxpayer will be required to include in gross income dividends received on the Company's common shares. A US Taxpayer who pays Canadian tax on a dividend on common shares will be entitled, subject to certain limitations, to a credit (or alternatively, a deduction) against federal income tax liability.
A domestic corporation that owns at least 10% of the voting shares of the Company should consult its tax advisor as to applicability of the deemed paid foreign tax credit with respect to dividends paid on the Company's common shares. Under a number of circumstances, United States Investor acquiring shares of the Company may be required to file an information return with the Internal Revenue Service Center where they are required to file their tax returns with a duplicate copy to the Internal Revenue Service Center, Philadelphia, PA 19255. In particular, any United States Investor who becomes the owner, directly or indirectly, of 10% or more of the shares of the Company will be required to file such a return. Other filing requirements may apply, and United States Investors should consult their own tax advisors concerning these requirements.
This is not intended to be, nor should it be construed to be, legal or tax advice to any holder of common shares of the Company and no opinion or representation with respect to the US income tax consequences to any such holder or prospective holder is made. Holders and prospective holders should therefore consult their own tax advisers with respect to their particular circumstances.
F. | DIVIDENDS AND PAYING AGENTS. |
We are filing this
This Form-20F is filed as an annual report under the Exchange Act "Annual Report" and therefore the provision of information called for by this Item-10.F is not applicable.
G. | STATEMENT BY EXPERTS. |
We are filing this
This Form-20F is filed as an annual report under the Exchange Act "Annual Report" and therefore the provision of information called for by this Item-10.G is not applicable.
H. | DOCUMENTS ON DISPLAY. |
Documents and agreements concerning our Company referred to in this Annual Report may be viewed by appointment during normal business hours at our registered and records office at 900-885 West Georgia Street, Vancouver, British Columbia, V6C 3H1, Canada.
I. | SUBSIDIARY INFORMATION. |
As of the Report Date, we have no direct and indirectly owned subsidiaries incorporated in the United States.
Item - 11 : Quantitative and Qualitative Disclosure About Market Risk .
This Form-20F is filed as an Exchange Act "Annual Report" and therefore the provision of information called for by this Item-11 is not applicable.
Item - 12 : Description of Securities Other than Equity Securities .
This Form-20F is filed as an Exchange Act "Annual Report" and therefore the provision of information called for by this Item-12 is not applicable.
PART-II
Item - 13 : Defaults, Dividend Arrearages and Delinquencies .
A. | MATERIAL DEFAULT IN PAYMENT. |
See disclosure inItem-8.B.b "Default on Convertible Note"above.
B. | PAYMENT OF DIVIDENDS. |
No payments of dividends of any kind have been made by the Company during the past Fiscal Year covered by this Annual Report or during the period up to the Report Date. No declarations of dividends of any kind have been made during the same period and consequently no dividend payments are accrued or in arrears.
Item - 14 : Material Modifications to Rights
of Security Holders and Use of Proceeds .
A. | From the beginning of the
| ||||||||||||||||
B. | From the | ||||||||||||||||
C. | From the beginning of the Fiscal Year covered by this Annual Report up to the Report Date neither the Company nor anyone else has withdrawn or substituted a material amount of the assets securing any class of the Company's securities. | ||||||||||||||||
D. | From the beginning of the Fiscal Year covered by this Annual Report up to the Report Date there have been no changes to the trustees or paying agents for any class of the Company's securities. | ||||||||||||||||
D. | From the beginning of the Fiscal Year covered by this Annual Report up to the Report Date the Company has not filed a first Securities Act registration statement. |
Item - 15 : Controls and Procedures .
A. | DISCLOSURE CONTROLS AND PROCEDURES. |
As required under applicable United States securities regulatory requirements, we have carried out an evaluation of the effectiveness of the design and operation of our Company's disclosure controls and procedures as at Fiscal Year ended 6/30/15 to prevent a material weakness. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time period specified in SEC rules and forms. Disclosure controls and procedures include, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Chief Executive Officer and Finance Manager, to allow timely decisions regarding required disclosure.
The Company carried out an evaluation under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of its disclosure controls and procedures as of the end of the period covered by this Annual Report. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of 6/30/15.
B. | MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING. |
Our management is responsible for establishing and maintaining effective internal control over financial reporting as defined in Rules 13a-15 under the Securities Exchange Act of 1934. Our internal control over financial reporting is a process designed under the supervision of our principal executive officer and principal financial officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with accounting principles generally accepted in the United States.
Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Our management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established inInternal Control — Integrated Framework, issued in 1992 by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the assessment, management determined that we maintained effective internal control over financial reporting as of 6/30/15, based on those criteria.
C. | ATTESTATION REPORT OF THE REGISTERED PUBLIC ACCOUNTING FIRM. |
This report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company's registered public accounting firm pursuant to the Dodd-Frank Wall Street Reform Act of 2010 that provides small public companies with market capitalizations below $75 million a permanent exemption from the Sarbanes-Oxley Section 404(b) requirement to obtain an audit of internal controls over financial reporting.
D. | CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING. |
There were no changes in the Company’s internal control over financial reporting procedures or in other factors that have materially affected, or are reasonably likely to materially affect these internal controls over financial reporting subsequent to the date of management's last evaluation.
E. | OUTSOURCED ACCOUNTING AND CONTROLLER FUNCTIONS. |
The Company outsources its internal controller and accounting functions under contract dated with AVISAR Chartered Professional Accountants of Langley, British Columbia, Canada. Beginning on that contract date and continuing as of the Report Date, AVISAR prepares financial reports for the Company, including annual and quarterly financial statements. AVISAR is also involved, together with the Company's CEO and CFO, in the preparation of the management discussion and analysis that forms, with the financial statements, a part of each annual or quarterly financial report. These reports are filed on SEDAR in Canada in accordance with the requirements ofCanadian Securities Administrators NI 51-102 Continuous Disclosure Obligations. AVISAR also works with the Company's auditors, Davidson & Company LLP and assists them in the completion of their annual audits of the Company's financial statements.
Item - 16 : [Reserved]
ITEM-16 : [RESERVED]
A. | AUDIT COMMITTEE FINANCIAL EXPERT. |
Our Board of Directors has determined that we have one member of our Audit Committee that qualifies as an "Audit Committee financial expert" as defined in Item 401(e) of Regulation S-B. We believe that the members of our Board of Directors, who are the same members of our Audit Committee, are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting.
Our Board of Directors has determined that we have at least two members of our Audit Committee, Mr. Rudman and Mr. Garrison, that each qualify as an "Audit Committee Financial Expert" as defined inRegulation S-K (17 CFR Part 229.407(d)(5)(ii)). Mr. Rudman is a Certified Professional Accountant and Mr. Garrison is a Certified Public Accountant. Both have prior experience working at junior and senior management levels with public accounting firms. Mr. Rudman worked for Price Waterhouse Coopers, and Mr. Garrison worked for Arthur Young and Company.
Our Board of Directors considers all three duly appointed members of the Company's Audit Committee to be "Financially Literate" as they are required to be in accordance with the meaning of that term as set forth inPart-1.6 of NI 52-110 Audit Committees
Our Board of Directors has determined that Phillip B. Garrison and David Yu qualify as "independent" members of our Audit Committee as that term is defined in Rule 4350(d) of the Marketplace Rules of the National Association of Securities Dealers (NASD).We believe that having an Audit Committee that consists entirely of independent Directors is not warranted in our circumstances given the early stages of our development and the fact that we have not generated revenues to date.
B. | CODE OF ETHICS OF SENIOR FINANCIAL OFFICERS. |
We have formally adopted a written code of ethics that applies to our principal executive officer, our principal financial officer,
In addition to the Code of Business Conduct and Ethics published by the Company and described and incorporated herein as provided for inItem-6.B.h "Code of Business Conduct and Ethics"above our senior financial officers subscribe an additional code of ethics for the purposes of inclusion in this Annual Report. This additional code complies with Section-406 of the Sarbanes-Oxley Act of 2002 and the rules of the SEC promulgated thereunder. A copy of this additional code of ethics, entitled "Code of Ethics for Senior Financial Officers" and signed by the Company's two senior financial officers the CEO and the CFO and our principal accounting officer, or persons performing similar functions (collectively our “Senior Financial Officers”). A copy of this code of ethics, signed by the appropriate Senior Financial Officers of our Company, is filed with this Annual Report and annual audited financial statements for Fiscal 2015 as an attachment marked Exhibit-11.1.
C. | INDEPENDENT CERTIFYING AUDITOR'S FEES AND SERVICES. |
The Company engaged Dale Matheson Carr-Hilton Labonte LLP ("DMCL") Chartered Accountants, of Vancouver, British Columbia, Canada as the Company's auditors on 10/13/06. DMCL is a member of the Institute of Chartered Accountants of British Columbia. The firm is also a member of the Canadian Institute of Chartered Accountants. In addition, DMCL is registered with the Public Company Accountability Oversight Board. Our Board of Directors appointed DMCL as our principal accountant to audit our financial statements for Fiscal 2013, the period covered by this Annual Report.
Audit Fees-The aggregate fees billed by DMCL for professional services rendered for the audit of our annual financial statements for the year ended 6/30/13 were $20,000 (2012 - $ 20,000).
Audit Related Fees-The aggregate fees billed by DMCL for professional services rendered and related to the audit of our annual financial statements for the year ended 6/30/13 including reviews of related annual regulatory filings made in British Columbia and in this Annual Report are expected to be approximately $nil (2012 - $nil).
Tax Fees-The aggregate fees billed by DMCL for professional services rendered and related to tax advice, return preparation, and tax planning for the year ended 6/30/13 were $nil (2012 - $nil).
Audit Committee Pre-Approved Procedures- Our Audit Committee pre-approves all services provided by DMCL as our principal accountant. DMCL’s
For Fiscal 2014- The Company engaged Dale Matheson Carr-Hilton Labonte LLP ("DMCL") Chartered Accountants, of Vancouver, British Columbia, Canada as the Company's independent certifying auditors on 10/13/06. DMCL is a member of the Chartered Professional Accountants of Canada British Columbia and a member of the Chartered Professional Accountants of Canada. In addition, DMCL is registered with the Public Company Accountability Oversight Board. Our Board of Directors appointed DMCL as our principal certifying accountant to audit our financial statements for the Fiscal 2014 and earlier period covered by this Annual Report.
For Fiscal 2015- Effective 12/31/14, the Company completed a Change of Auditor more fully described in Item-16.F below. The Vancouver, British Columbia, Canada based firm ofDavidson & Company LLP(“Davidson”) was engaged as the Company’s auditors. Davidson is a member of the Chartered Professional Accountants of Canada British Columbia, a member of the Chartered Professional Accountants of Canada and is registered with the Public Company Accountability Oversight Board. Our Board of Directors appointed Davidson as our independent certifying accountant to audit our financial statements for the Fiscal 2015 period covered by this Annual Report.
Audit Fees-The aggregate fees billed by DMCL for professional services rendered for the audit of our annual financial statements for the year ended 6/30/14 were $27,000. The aggregate fees billed by Davidson for professional services rendered for the audit of our annual financial statements for the year ended 6/30/15 are estimated at $15,000.
Tax Fees-The aggregate fees billed by DMCL for professional services rendered and related to tax advice, return preparation, and tax planning for the year ended 6/30/14 were $ nil and the aggregate fees to be rendered by Davidson for similar services for the year ended 6/30/15 are also estimated at nil.
Audit Committee Pre-Approved Procedures- Our Audit Committee pre-approves all services provided by our principal accountants and their fees were reviewed and approved by the Audit Committee before the respective services were rendered and none of such services were approved by the Audit Committee pursuant to paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X.
D. | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES. |
The provision of information called for by this Item-16.D is not applicable.
E. | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS. |
During the most recently completed Fiscal Year ended 6/30/13
During the most recently completed Fiscal Year ended 6/30/15 and covered by this Annual Report the Company made no repurchases of its own securities pursuant to any plan or program. The Company made no public announcements of any securities repurchase plans or programs during the year. There are no outstanding securities that may yet be purchased under any plan or program attributable to the past or prior years as at the Report Date.
F. | CHANGE IN REGISTRANT’S INDEPENDENT CERTIFYING AUDITOR. |
Davidson & Company LLP (“Davidson”) was engaged as the Company’s successor auditors, replacing FY 2014 and former auditor Dale Matheson Carr-Hilton Labonte LLP ("DMCL"), who resigned at the request of the Company effective 12/31/14.
The Company completed a Change of Auditor in accordance with thePart-4.11 Change of Auditorprovisions of theCanadian Securities Regulators NI 51-102 Continuous Disclosure Obligations. By order of the Company's board, a "Notice of Change of Auditor" dated 12/31/14 and filed on SEDAR on 1/09/15 (the "Notice"). The Notice was given, at the order of the board, by the Company to the British Columbia Securities Commission and the Alberta Securities Commission as perSection-4.11(7) of NI 51-102, and it stated that:
1. | DMCL has resigned as auditors of the Issuer at the request of the Issuer effective December 31, 2014; |
The provision
the resignation of information calledDMCL and the appointment of Davidson as the Issuer's auditor have been considered and approved by the Issuer's Board of Directors;
there was no modified opinion in DMCL's report for by this Item-16.F is not applicable. Therethe Issuer's most recently completed fiscal year, nor for any subsequent period;
there have been no changes to our certifying accountant during"reportable events" within the meaning assigned undersubsection 4.11(1) of Nl 51-102.
In a letter, the "DMCL Letter" dated 12/31/14 and filed on SEDAR on 1/09/15, DMCL, acknowledged its review and agreement with the content of the Notice as required in connection with its resignation as the Company's auditor.
In a letter, the "Davidson Letter" dated 1/08/15 and filed on SEDAR on 1/09/15, DMCL, acknowledged its review and agreement with the content of the Notice as required in connection with its proposed engagement by the Company as auditor.
The Notice, DMCL Letter, and Davidson Letter were included as Exhibits 99-4, 99-5, and 99-6 respectively in a Form-6K filing reporting the auditor change that was made by the Company on EDGAR dated 1/12/15. These said exhibits are hereby incorporated into this Annual Report on Form-20F by this reference.
G. | CORPORATE GOVERNANCE. |
The Company’s securities are quoted on the OTCQB and are not listed on a national securities exchange in its home country of Canada. This Annual Report is for our Fiscal Year ended 6/30/15. Therefore, the provision of information called for by this Item-16.G is not applicable.
H. | MINE SAFETY DISCLOSURE. |
Neither the Company, nor any one of its subsidiaries, act as operators of a coal or other mine. Therefore, the provision of mine safety information called for by this Item-16.H is not applicable in this Annual Report.
PART - III
Item - 17 : Financial Statements .
Refer to "Item 18 – Financial Statements" below.
Item - 18 : Financial Statements .
The Company is providing its audited annual financial statements for Fiscal 2015 with this Annual Report on Form-20F in the form described in the following list and attached and labeled Exhibit-18 following Item-19 and the Signatures below:
Consolidated Financial Statements Filed Herewith as an Integrated Part of this Annual Report
(1) | Financial Statement Title Page. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(2) | Independent Auditor's Report for Fiscal 2015 by Davidson & Co. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(3) | Independent Auditor's Report for Fiscal 2014 by DMCL. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(4) | Audited Consolidated Financial Statements for the past two
|