UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
or
For the Fiscal Year ended
or
or
Commission file number
(Exact name of Registrant as specified in its charter)
British Columbia,
(Jurisdiction of incorporation or organization)
(
(Company contact person's name, phone number, and E-mail and 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 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 ] | ||||
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 ] | ||||
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 ] | ||||
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 ] | ||||
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See definition of "accelerated filer", large accelerated filer", and "emerging growth company" in Rule 12b-2 of the Exchange Act. | [ _ ] Large accelerated filer [ _ ] Accelerated filer [ X ] | ||||
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. See Part-II, Section-15.C exemption. | [ _ ] | ||||
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: | [ _ ] US GAAP [ X ] as issued by the IASB [ _ ] Other | ||||
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. | |||||
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TABLE OF CONTENTS
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ITEM-1 : Identity Of Directors, Senior Management And Advisers | 3 |
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ITEM-6 : Directors, Officers, Employees and Their Compensation | 16 |
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ITEM-11 : Quantitative and Qualitative Disclosure About Market Risk | 31 |
ITEM-12 : Description of Securities Other than Equity Securities | 31 |
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ITEM-14 : Material Modifications to Security Holder Rights & Use of Proceeds | 31 |
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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 (the "Exchange Act") and constitutes an "Annual Report" report by the filer, a foreign private issuer. The following defined terms are used consistently throughout this Annual Report.
·Company - 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 under the symbol "CPPXF".
·Date Format - Dates are expressed in this Annual Report in the form "6/30/20", which in this case means 30 June 2020.
·Fiscal Year - The Company's fiscal year ends on June 30th and the term "Fiscal Year" shall refer to a year so ending. This Annual Report is for the period pertaining to our Fiscal Year ended on 6/30/20, which is herein referred to as "Fiscal 2020", and includes audited annual consolidated financial statements as at that date.
·Report Date - The date of this Annual Report is 10/28/20, which is referred to herein as the "Report Date". This Annual Report was prepared during October 2020 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 under National Instrument 51-102, the Company is also filing a copy of this Form-20F on SEDAR in Canada as an "AIF" or "Annual Information Form". This AIF filing is as permitted under Part-1.1.(1) of NI 51-102. Some additional content required by Form NI 51-102F2 AIF is 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 Exchange Act.
ITEM-1 : Identity Of Directors, Senior Management And Advisers
This Form-20F is filed as an 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
This Form-20F is filed as an 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-3 : Key Information
A. SELECTED FINANCIAL DATA.
The financial data for Fiscal Years ended 6/30/18, 6/30/19, and 6/30/20 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 Years ended 6/30/16 and 6/30/17 are derived from the Company's audited financial statements, not included herein, but filed with previous Form-20F Annual Reports and incorporated herein by this reference. Commencing from 7/01/11 and for the Fiscal Years ended 6/30/12 and later, the Company's financial statements were prepared in accordance with International Financial Reporting Standards {"IFRS") as issued by the International Accounting Standards Board ("IASB") instead of GAAP. The Company's first annual IFRS consolidated financial statements were prepared for the Fiscal Year 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, in this Annual Report; and hence no basis for such calculation is included. The selected financial data set forth in the following table, stated in accordance with IFRS as issued by IASB, 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 | ||||||
| For Last 5 Fiscal Years Ended |
| ||||
In US$ 000's, except for shares data | 6/30/20 | 6/30/19 | 6/30/18 | 6/30/17 | 6/30/16 |
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Revenue | - | - | - | - | - |
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Net Loss | (355) | (516) | (712) | (439) | (473) |
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Loss Per Share – Basic | (0.00) | (0.00) | (0.01) | (0.00) | (0.00) |
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Loss Per Share – Diluted | (0.00) | (0.00) | (0.01) | (0.00) | (0.00) |
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Dividends per Share | - | - | - | - | - |
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Weighted Average Number of Shares (000's) | 174,715 | 171,091 | 152,620 | 123,015 | 123,015 |
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Working Capital (deficiency) | (549) | (318) | (537) | (1,721) | (1,282) |
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Oil and Gas Properties | - | - | - | - | - |
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Long Term Debt | 152 | 81 | - | - | - |
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Shareholders Equity (deficiency) | (701) | (399) | (536) | (1,720) | (1,280) |
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Total Assets | 92 | 102 | 78 | 54 | 7 |
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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 two other currencies: Canadian Dollars ("CDN") and Indonesian
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Rupiah ("IDR"). 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 |
Month Ended 9/30/20 | 1.3339 | 14,918 |
Fiscal Year Ended 6/30/20 | 1.3577 | 14,295 |
Fiscal Year Ended 6/30/19 | 1.3086 | 14,121 |
Fiscal Year Ended 6/30/18 | 1.3140 | 14,330 |
Fiscal Year Ended 6/30/17 | 1.2982 | 13,333 |
Fiscal Year Ended 6/30/16 | 1.2991 | 13,204 |
B. CAPITALIZATION AND INDEBTEDNESS.
This Form-20F is filed as an 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.
This Form-20F is filed as an 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 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, our ongoing operations at a particular project, or our overall financial condition could be harmed due to any of the following risks:
a)Emerging Economy Operational Risk - A substantial component of the Company's business activities are conducted in the Republic of Indonesia and the Company considers itself to be an "Emerging Market Issuer" as defined in the Issuer Guide for Companies Operating in Emerging Markets (the "EMI Guide") published by the Ontario Securities Commission as Staff Notice 51-720. The EMI Guide identifies eight matters as worthy of additional disclosure that Emerging Market Issuer's consider. These are: 1) the local business and operating environment, 2) language and cultural differences, 3) corporate structure, 4) related parties, 5) risk management and disclosure, 6) internal controls, 7) use of and reliance on experts, and 8) oversight of the external auditor and how the effect on the Company's operations of these eight matters may differ in the emerging market from what may be expected if the Company's same business activities were conducted in Canada. Most of these risks are described in the following paragraphs.
b)Corporate Structure, Indonesia Corporation Law, and the Two Tier Board - The Company operates its Indonesian business activities through two special purpose, limited liability, corporate subsidiaries, each incorporated in Indonesia. Indonesian law requires a new company to have at least two shareholders and a two board governance structure consisting of a managing board of directors having at least one director and a supervisory board of commissioners having at least one commissioner. Both boards are shareholder elected. The board of commissioners advise and supervise the board of directors who manage the company's operations. The Company exerts absolute control over its Indonesian subsidiaries due to its shareholder voting control and control of the composition of both board its Indonesian subsidiaries.
c)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 that are adverse to the Company's interests could include a change in crude oil or refined petroleum products pricing policy, expropriation, nationalization, 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 commercial business activity. 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.
d)Taxation Risks on International Operations - The governments and other regulatory agencies in Indonesia may make changes in laws or regulations relating to taxation or impose higher tax rates which may affect the Company's operations in a significant manner. These governments and agencies may not allow certain deductions in calculating tax payable that the Company believes should be deductible under applicable laws or may have differing views as to values of transferred properties.
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e)Jurisdiction Conflict Risk on International Operations - The Company's international operations may also be adversely affected by laws and policies of Canada, the United States and other jurisdictions affecting foreign trade, taxation and investment. The Company may be at a disadvantage in that it may be required to compete against corporations or other entities from countries that are not subject to Canadian laws and regulations, including the Corruption of Foreign Public Officials Act or similar legislation of other jurisdictions, including the United States Foreign Corrupt Practices Act. Residents or nationals of countries not subject to such legal regimes may offer inducements to foreign governments and foreign public officials to entice such governments and officials to deal with them to the disadvantage of the Company. Furthermore, in the event of a dispute arising from international operations, the Company may be subject to the exclusive jurisdiction of foreign courts or may not be successful in subjecting foreign persons to the jurisdiction of courts in Canada.
f)Legal Risks in International Operations - Some of the jurisdictions in which the Company operates may have less developed legal systems than jurisdictions with more established economies which may result in risks such as (a) difficulty in obtaining effective legal redress in the courts of such jurisdictions, whether in respect of breaches of law or regulation or in an ownership dispute, being more difficult to obtain; (b) a higher degree of discretion on the part of governmental authorities; () the lack of judicial or administrative guidance on interpreting applicable rules and regulations; (d) inconsistencies or conflicts between and within various laws, regulations, decrees, orders and resolutions; or () relative inexperience of the judiciary and courts in such matters. There can be no assurance that joint operations, licenses, license applications or other legal arrangements will not be adversely affected by the actions of government authorities or other third parties and the effectiveness of and enforcement of such arrangements in these jurisdictions cannot be assured. Failure to comply with applicable laws, regulations and permit requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment or remedial actions. Parties engaged in oil and gas operations may be required to compensate those suffering loss or damage by reason of such activities and may have civil or criminal fines or penalties imposed.
g)Legal System Differences in Indonesia - Indonesia uses a Civil Law legal system based on the Roman-Dutch Model influenced by Customary Law which differs to a modest extent from the Common Law legal system used in Canada and the USA. Civil Law is the most widespread type of legal system in the world, applied in various forms in approximately 150 countries. The Civil Law system is derived mainly from the Roman Corpus Juris Civilus, a collection of laws and legal interpretations compiled under the East Roman (Byzantine) Emperor Justinian I between A.D. 528 and 565. Roman-Dutch Model refers to a variant type of Civil Law originally based on Roman Law as applied in the Netherlands. Roman-Dutch Model Civil Law serves as the basis for legal systems in several modern day countries, including Indonesia, all of whom were formerly Dutch colonies. The Dutch historian/lawyer Simon van Leeuwen coined the term "Roman-Dutch law" in 1652.
Customary Law is a type of legal system that serves as the basis of, or in Indonesia's case has influenced, the present-day laws in approximately 40 countries. There is no single history of Customary Law such as that found in Civil Law or Common Law. As the term implies, Customary Law is based upon the customs of a community. Common attributes of customary legal systems are that they are seldom written down, they embody an organized set of rules regulating social relations, and they are agreed upon by members of the community. Although such law systems include sanctions for law infractions, resolution tends to be reconciliatory rather than punitive. The peoples of what is now Indonesia practiced customary law many centuries prior to Dutch colonial influence. Following colonization, many Customary Laws were written down and incorporated to varying extents into the Roman-Dutch Model of Civil Law that exists today.
Common Law aka "English Common Law" is a type of legal system used in the United Kingdom and approximately 80 countries formerly part of or influenced by the former British Empire including Canada and the USA. Formed by King Henry II in 1189 who established the king's court and designated that laws were "common" to the entire English realm.
The major feature of Common Law legal systems is "legal precedent" - referred to as stare decisis, meaning "to stand by things decided." In the Common Law system, court judges are bound in their decisions in large part by the rules, cases, and other doctrines developed - and supplemented over time - by the judges of earlier courts. The major feature of Civil Law systems is that the laws are organized into systematic written codes. In Civil Law legal systems the sources recognized as authoritative are principally legislation - especially codifications in constitutions or statutes enacted by governments - and secondarily, custom.
h)Anti-Corruption Violations - The Canadian Corruption of Foreign Public Officials Act, the U.S. Foreign Corrupt Practices Act, and similar anti-bribery laws generally prohibit companies from making improper payments to foreign officials for the purpose of obtaining or retaining business. Given the nature of the Company's business and international operations, the Company has extensive regulatory and business interaction with governments and government-owned entities and frequent contact with persons who may be considered foreign officials in parts of the world that have experienced governmental corruption to some degree, and in which strict compliance with anti-bribery laws may conflict with local customs or practice. While the Company has an anti-corruption compliance policy, the Company cannot guarantee that its employees, officers, directors, agents, contractors, counterparties, or business partners have not in the past or will not in the future engage in conduct undetected by the Company's processes and procedures and for which the Company might be held liable under applicable anti-corruption laws. Violations of these laws, or allegations or investigations of allegations of such violations, could harm the Company's reputation, disrupt its business and result in a material adverse effect on the business, results of operations, and financial condition of the Company.
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i)Government Approvals - The Company is dependent on receipt and maintenance of Indonesian government approvals, licenses, and permits to develop and operate its business. Any change in government or legislation or delays in receiving government approvals or permits may delay the realization of the Company's projects. The Company's contractors and other counterparties who are subject to similar regulatory requirements may also face similar delays or fail to obtain or maintain the necessary approvals, licenses, registration or permits. If any of these occur, the Company or the sub-contractors or other counterparties that perform obligations for it could materially and adversely affect the Company's business, prospects, financial condition and results of operations.
j)Licensing and Regulatory Requirements - The Company's current operations are, and future operations will be, dependent upon the maintenance of appropriate licenses, leases, regulations and approvals of governmental authorities for construction, operation, marketing, pricing, transportation and storage of crude oil, natural gas and refined petroleum fuels and products, taxation and environmental and health and safety matters. The Company cannot guarantee that authorizations will be granted, renewed, renewable, extended, or may be withdrawn, or made subject to limitations or onerous conditions. The Company is subject to extensive government laws and regulations governing many aspects of its business. Although the Company believes it has good relations with the governments of the countries in which it operates, there can be no assurance that the actions of present or future governments in these countries, or of governments of other countries in which the Company may operate in the future, will not materially adversely affect the business or financial condition of the Company.
k)Marketability Risks - The marketability of refined petroleum products, fuels, crude oil, and natural gas utilized or produced by the Company will be affected by numerous factors beyond the control of the Company. These factors include physical and chemical characteristics and quality, market fluctuations, the proximity and capacity of petroleum transport and processing infrastructure. All of these factors could result in a material decrease in the Company's net revenue or a material increase in operating costs, causing a material adverse effect on the Company's business operations.
l)Fluctuating Commodity and Refined Product Prices - The prices of the Company's commodity feedstocks and refined petroleum fuels and products can be influenced by global and regional supply and demand factors, which are factors that are beyond our control and can result in a degree of price volatility.
m)Competitive Risk - The upstream and downstream petroleum industry in Indonesia is competitive in all its phases. The Company actively competes for capital, skilled personnel, undeveloped land, acquisitions, access to equipment, access to processing facilities, pipelines, and marine tankers, and in all other aspects of its operations. The Company's competitors include oil and gas companies which many have greater technical and financial resources, staff and facilities than those of the Company. Some of those competitors not only explore for, develop and produce oil and natural gas but also carry on refining operations and market petroleum and other products on a world-wide basis and as such have greater and more diverse resources on which to draw. The Company's ability to effectively compete in the future will depend not only on its ability to develop its present projects, but also on its ability to capitalize on new opportunities. Competitive factors in the distribution and marketing of refined petroleum products, crude oil and natural gas include price and methods and reliability of delivery.
n)Minority Shareholding Risks - The Company from time to time holds only a minority or similar non-controlling shareholding interest in a partially owned subsidiary company which in turn owns and operates a particular project, property, business, and/or investment. In such cases the Company may exert no direct management control and have only very limited influence on decisions which may impact the performance of such partially owned subsidiary. This lack of direct management control could have a detrimental effect upon the value of the Company's interests.
o)Joint Arrangements and Non-Operatorship - The Company may carry out a portion of its business through joint operations and similar arrangements with third parties. These arrangements involve a number of risks, including: disputes with partners in connection with the performance of their obligations under the relevant joint operating agreements, disputes as to the scope of each party's responsibilities under such arrangements, financial difficulties encountered by partners affecting their ability to perform their obligations under the relevant joint operating agreement, and conflicts between the policies or objectives adopted by partners and those adopted by the Company. In joint operating agreements where the Company is a non-operator, there are risks of limited ability to influence or control operations or future development, safety and environmental standards, and timing and amount of capital expenditure spending. The Company's partners that operate these properties may not necessarily share the Company's health, safety and environmental standards or strategic or operational goals, which may result in accidents, regulatory misalignments, project delays or unexpected future costs, all of which may affect the viability of these projects. In the event that the Company encounters any of the foregoing issues with respect to its joint operating partners, its business, prospects, financial condition and results of operation may be materially and adversely affected. As a result, the Company's ability to execute its business plan may be constrained by partner involvement and the action of its joint operating partners particularly where the joint operating partner is the operator and/or holds a significantly larger interest in the property than the Company.
p)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.
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q)Counterparty Credit Risk - In the normal course of business, the Company enters into contractual sales and purchase relationships with counterparties including suppliers of crude oil feedstock and other commodities and offtake of refined fuels and products. If such counterparties do not fulfil their contractual obligations or settle their liabilities to the Company, the Company may suffer losses. Fluctuations in prevailing prices of could have a material adverse effect on the operations and financial condition of such counterparties. The Company also has credit risk arising from cash and cash equivalents held with banks and financial institutions. Losses due to the failure by counterparties to fulfil their contractual obligations may adversely affect the Company's financial condition.
r)Transport Risk - The marketability of any oil, gas, or refined petroleum products 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.
s)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 affect our financial condition.
t)Infrastructure Risk - Petroleum transport, storage, and delivery infrastructure development in areas of Indonesia in which the Company operates are often limited. This may affect the Company's ability to receive crude oil feedstock and deliver refined fuels and petroleum products to available markets. There can be no assurance that lack of infrastructure in areas in which the Company operates, actions by companies doing business there, or actions taken by the international community will not have a material adverse effect on the available infrastructure and in turn on the Company's ability to operate and on its financial conditions or operations.
u)Environmental Concerns - Both the upstream and downstream sectors of the oil and gas industry are subject to extensive and changing international, national and local environmental and safety laws, regulations, treaties and conventions in force in the jurisdictions in which the Company operates (for example, in relation discharge of materials into the environment and otherwise relating to environmental protection). This legislation may change in a manner that may require additional or stricter standards than those now in effect, a heightened degree of responsibility for companies and their directors and employees and more stringent enforcement of existing laws and regulations. Such legislation or regulations may require additional capital expenditures or operating expenses in order for the Company to maintain compliance with international and/or national regulations. The Company may also become subject to additional laws and regulations if it enters new markets.
There may be unforeseen environmental liabilities resulting from the Company's operations that may be costly to remedy. In particular, the acceptable level of pollution and the potential clean-up costs and obligations and liability for toxic or hazardous substances for which the Company may become liable as a result of its activities may be impossible to assess against the current legal framework and current enforcement practices of the various jurisdictions in which the Company operates. The Company could also become subject to personal injury or property damage claims relating to the release of or exposure to hazardous materials associated with its operations. In addition, failure to comply with applicable laws and regulations may result in administrative and civil penalties, criminal sanctions or the suspension or termination of the Company's operations. The extent of potential liability, if any, for the costs of abatement of environmental hazards cannot be accurately determined and consequently no assurances can be given that the costs of implementing environmental measures or meeting any liabilities in the future will not be material to the Company or affect its business or operations.
v)Climate Change - Due to concern over the risk of climate change, a number of countries have adopted, or are considering the adoption of, regulatory frameworks to reduce greenhouse gas emissions. These regulatory measures may include, among others, adoption of cap and trade regimes, carbon taxes, increased efficiency standards, and incentives or mandates for renewable energy. Compliance with changes in laws and regulations relating to climate change could increase the Company's costs of operating and could require it to make significant financial expenditures that cannot be predicted with certainty at this time. Additionally, adverse effects upon the oil and natural gas industry relating to climate change, including growing public concern about the environmental impact of climate change, may also adversely affect demand for the Company's products. For example, increased regulation of greenhouse gases or other concerns relating to climate change may reduce the demand for oil and natural gas and refined petroleum products in the future. Any long-term material adverse effect on the oil and natural gas industry could have a significant financial and operational adverse impact on the Company's business that cannot be predicted with certainty at this time.
w)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.
x)Covid 19 Pandemic Risks - The continuing direct and indirect impact of the Covid 19 pandemic on the Company presents a great risk and high level of uncertainty affecting the Company's ability to conduct its business, raise project finance, and implement development of its plans and projects.
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y)Title Risk - We have or may acquire leases, rights or other real 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 affected if we lose.
z)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.
aa)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, especially the Indonesian Rupiah. 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. Significant variations in exchange rates could have a material adverse effect on the ability of the Company to meet its obligations because the Company is exposed to fluctuations in the value of the Rupiah against the US Dollar on working capital of the Company's Indonesian subsidiaries and of their respective Rupiah denominated accounts receivable, accounts payable and accrued liabilities, which are exposed to fluctuations against the US Dollar.
bb)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.
cc)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.
dd)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.
ee)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.
ff)Risks relating to our Common Stock - Shareholders' interests in our Company will be diluted and investors may suffer dilution in their net book value per share if we issue additional shares or raise funds through the sale of equity securities. In the event that we are required to issue additional shares, enter into private placements to raise financing through the sale of equity securities or acquire additional oil and gas property interests in the future from the issuance of shares of our common stock to acquire such interests, the interests of existing shareholders in our Company will be diluted and existing shareholders may suffer dilution in their net book value per share depending on the price at which such securities are sold. If we do issue additional shares, it will cause a reduction in the proportionate ownership and voting power of all existing shareholders.
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gg)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 approximately 47 percent of the issued and outstanding shares of our Company and have the ability to influence all matters submitted to our Company's shareholders for approval (including the election and removal of Directors and any merger, consolidation or sale of all or substantially all of our Company's assets) and to control our Company's management and affairs (see "Share Ownership" below in this Annual Report).Accordingly, this concentration of ownership may have the effect of delaying, deferring or preventing a change in control of our Company, impeding a merger, consolidation, takeover or other business combination involving our Company or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of our Company, which in turn could have a material adverse effect on the market price of our shares. Employee, Director and consultant stock options and warrants could lead to greater concentration of share ownership among insiders and could lead to dilution of share ownership which could lead to depressed share prices.
hh)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.
ii)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, and such action is exclusively within our discretion. Shareholders cannot expect to receive a dividend on our common stock in the foreseeable future, if at all.
jj)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.
kk)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.
ll)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.
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mm)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.
nn)Key Management Risk - The Company depends entirely upon its management and personnel to identify, acquire, finance and operate a portfolio of upstream and downstream oil and gas assets through which the Company can grow. 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. There is strong competition for qualified personnel in the oil and natural gas industry, as such there can be no assurance that the Company will be able to continue to attract and retain all personnel necessary for the development and operation of its business. The Company does not currently maintain "key-man" insurance for any of its employees.
oo)Forward-Looking Statements - This Annual Report may contain forward-looking statements as that term is defined in Section 27A of the United States Securities Act of 1933 and Section 21E of the United States Securities 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-4 : Information on the Company
A. HISTORY AND DEVELOPMENT OF THE COMPANY.
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 - The Company was incorporated under the Business Corporations Act of British Columbia on May 29, 1984 under incorporation number BC0278646 issued by the Province of British Columbia Registrar of Companies in Victoria, British Columbia, Canada.
c)Domicile - The Company is a limited liability company and its domicile is at its registered and records office located at 1500-1055 West Georgia Street, Vancouver, British Columbia, Canada V6E 4N7, telephone +1-604-687-5700, care of the Company's general counsel, McMillan 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 the CHI Transaction described in Item-8.B.c herein below, the Company has not made, during its last three financial years and up to the Report Date, any material capital expenditure investments and divestitures (including interests in other companies).
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 its core business interests in upstream and downstream oil and gas within the Company's focus area of Indonesia. The Company expects to source external finance for any new acquisitions or opportunities realized.
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.
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h)Material Events Occurring During the Fiscal 2020 Year - 7/01/19 to 6/30/20 – Described in Chronological Order
i)New Director Appointed - In a news release dated 10/01/19 the Company announced the appointment of a new and additional independent director, Mr. Stuart J. Doshi, to the Company's board of directors. He has also been appointed to serve on the Audit, Governance, and Compensation board committees. Mr. Doshi is a resident of San Francisco, California. Stuart is a graduate of the University of San Francisco with a degree in Finance and holds an MA in Economics from UC Santa Barbara. He has over 40 years of extensive experience in the founding, management, financing, and operations of energy and resource development business. He began his oil and gas career at Natomas Company soon after its acquisition of the Independent Indonesian American Petroleum Company (IIAPCO) and the discovery of substantial oil reserves in Indonesia's first offshore production sharing contract. Stuart rose through a variety of executive management positions to become director of corporate planning for Natomas at the time of its merger with Diamond Shamrock.
ii)Directors Meetings - In accordance with the Company's policy of holding periodic board meetings on or about the first Saturday of every other month. The meetings were held by VoIP conference call and all of the Company's directors were present at each meeting. The board discussed the Company's plans and progress on its objectives. The board held meetings during the second quarter of Fiscal 2020 were held on 8/03/19, 8/3119, and 9/30/19. The board held meetings during the second quarter on 10/05/19, and 12/07/19. The board held meetings during the third quarter on 1/04/20 and 3/07/20. The board held meetings during the fourth quarter on 5/02/20 and 6/06/20.
iii)Vice President Resignation - The Company's Vice President of Business Development gave notice of his resignation in order to pursue other personal opportunities. The resignation is effective on 12/07/19.
iv)Annual General Meeting Notice for Fiscal 2019 - The Company published notice that its Fiscal 2019 Annual General Meeting will be held on 12/09/19 at the Company's registered offices in Vancouver. All holders of the Company's shares as of the 10/28/19 (the "Record Date") for the meeting will be entitled to receive a package of proxy related materials including an Information Circular containing details of matters to be voted on at the meeting. The notice, agenda, and information circular were posted on SEDAR and available for public download. The same were mailed to those shareholders that were registered shareholders and non-objecting beneficial owners on the Record Date.
v)Audited Annual Financial Statements for Fiscal 2019 - The Company completed its annual audit for its Fiscal 2019 year ended 6/30/19. The audited annual consolidated financial statements, management discussion and analysis, and annual reports on Form-20F were filed on both SEDAR and on EDGAR and are available for public download.
vi)Annual General Meeting Held - The Company held its Fiscal 2019 Annual General Meeting on 12/09/19 at the Company's registered offices in Vancouver. By majority vote of those cast at the Annual General Meeting, incumbent directors McAdoo, Garrison, Aulia, Klein, and Doshi were re-elected to serve as directors until the next annual general meeting. Davidson and Co were re-appointed as the Company's auditors for Fiscal 2020.
vii)Board Committee Appointees Confirmed - At the board meeting held on 12/09/19, the standing committees of the board of directors were confirmed and constituted as follow:
Audit Committee
·Independent director Klein, Chairman of the Audit Committee.
·Independent director Doshi, Member of the Audit Committee.
·Executive director Garrison, Member of the Audit Committee
Governance Committee
·Independent director Doshi, Chairman of the Governance Committee.
·Independent director Klein, Member of the Governance Committee.
·Executive director McAdoo, Member of the Governance Committee.
Compensation Committee
·Independent director Doshi, Chairman of the Compensation Committee.
·Independent director Klein, Member of the Compensation Committee.
·Executive director Aulia, Member of the Compensation Committee.
Reserves Committee
·Executive director Aulia, Chairman of the Reserves Committee.
·Independent director Doshi, Member of the Reserves Committee
·Independent director Klein, Member of the Reserves Committee.
viii)Options Expired - A total of 500,000 incentive stock options expired in accordance with their terms on 01/07/20.
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ix)Working Capital Loans - On 3/23/20, the Company issued two promissory notes to unrelated arms-length parties for an aggregate principal amount of $150,000 in respect of working capital loans to the Company. The notes bear non-compounding simple interest at a rate of six (6%) per year, become due and payable on 7/01/21, may be repaid together with all accumulated interest thereon, at the election of the holders, in cash or in the form of the Company's common shares valued at the volume weighted average trading price during the twenty business days preceding the maturity date or as a participation at the same terms of any private placement closed by the Company prior to the maturity date.
x)Warrants Amended - On 3/23/20, the term of a total of 14,000,000 outstanding common share purchase warrants held by unrelated parties were amended from an old expiry date of 6/30/20 to a new expiry date of 6/30/22. There was no change to the exercise price of five US cents ($0.05) each.
xi)Covid 19 Effect on Ongoing Operations - During the fourth quarter of fiscal 2020, the Company's ability to pursue its ongoing operations activities in both Indonesia and Canada This Quarter have been severely affected due to the Covid 19 pandemic largely due to travel limitations, face to face meeting restrictions, and many potential investors, partners, and contractors reducing their own activity for the same reasons.
i)Subsequent Material Events Occurring Since 6/30/20 up to the Report Date – Described in Chronological Order
i)Directors Meetings - In accordance with the Company's policy of holding periodic board meetings on or about the first Saturday of every other month. The meetings were held by VoIP conference call and all of the Company's directors were present at each meeting. The board discussed the Company's plans and progress on its objectives. The board held meetings subsequent to the 6/3-/20 fiscal year end on 7/04/20 and 9/12/20.
ii)Covid 19 Effect on Ongoing Operations - Subsequent to the end of fiscal year 2020 and up to the Report Date, the Company's ability to pursue its ongoing operations activities in both Indonesia and Canada have been severely affected due to the Covid 19 pandemic largely due to travel limitations, face to face meeting restrictions, and many potential investors, partners, and contractors reducing their own activity for the same reasons..
B. BUSINESS OVERVIEW.
The Company is an emerging developer of conventional and alternative energy capacity integrated with upstream and downstream petroleum supply within the Republic of Indonesia. Why Indonesia? Already a G20 member, Indonesia is predicted by the World Bank to grow to the 4th largest economy in the world by 2045. The Company is a developer of modular, small-scale crude oil refineries that are co-located with smaller and/or stranded oil and gas producing fields. Each refinery is designed to refine high demand motor fuels for supply to underserved local markets in the Republic of Indonesia. The Company operates its primary business activities through two special purpose, limited liability, corporate subsidiaries more fully described in the following section. Each of these subsidiaries has received the necessary investment licenses to permit foreign direct investment in Indonesia and one has received the required licenses from the Indonesian Ministry of Mines and Energy to build, own, and operate a petroleum refining business.
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)Majority and 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 build, own, and operate an oil refinery. The accounts of wholly-owned subsidiaries are consolidated into those of the Company. The Company's current business activities are limited to the upstream, midstream, and downstream industries of the oil and gas business and are geographically concentrated within the Republic of Indonesia. The Company operates these business activities through two special purpose, limited liability, corporate subsidiaries, each incorporated in Indonesia in 2017.
The companies law of Indonesia mandates at least two shareholders and imposes a two tiered, shareholder elected, two board governance regime consisting of a managing board of directors having at least one director and a supervisory board of commissioners having at least one commissioner. The board of commissioners advise and supervise the board of directors who manage the company's operations. The Company exerts absolute control over its Indonesian subsidiaries due to its shareholder voting control and control of the composition of both board its Indonesian subsidiaries. At the Report Date the Company's subsidiaries include:.
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PT Continental Hilir Indonesia ("PT-CHI")
PT-CHI was incorporated on 9/12/17 under a foreign direct investment license with the Indonesian government as a management consulting business. The Company acts through PT-CHI and utilizes it to seek out and develop new Indonesian downstream oil and gas industry business opportunities for the Company's benefit. PT-CHI successfully identified and developed one such opportunity which directly led to the formation of a second new special purpose corporate subsidiary, KKC, to build, own, and operate the Maloy Refinery. A total of 85% of the allocated share capital of PT-CHI is owned by the Company and 15% was allocated to three directors of the Company, in the proportions 5% each, who hold the shares in trust for the Company. PT-CHI has a board of directors with three duly elected members and a board of commissioners with two duly elected members. PT-CHI shares two directors with the Company and the third PT-CHI is an employee of the Company. Another two directors of the Company are commissioners of PT-CHI. As of 6/30/19 and the Report Date, no other directors, officers, or senior executives of PT-CHI have been appointed, and PT-CHI has not issued any management contracts.
PT Kilang Kaltim Continental ("KKC")
KKC was incorporated on 12/05/17 under a foreign direct investment license with the Indonesian government and holds other licenses from the Ministry of Mines and Energy which permit it to build, own, and operate a 24,000 barrels per day capacity crude oil refinery at the KIPI Maloy International Port and Industrial Park, a new special economic zone and industrial center located in the Kutai Timur Regency of East Kalimantan Province, Indonesia. The Maloy Refinery is intended to refine local domestic Indonesian crude oil feedstocks into motor fuels and other refined products for sale direct to underserved industrial and retail consumers within the East Kalimantan Province. The Company directly owns a total of 80% of the allocated share capital of KKC and indirectly owns the other 20% through its subsidiary PT-CHI's direct shareholding of 20% in KKC. KKC has a board of directors with one duly elected member and a board of commissioners with one duly elected member. Both the KKC director and the KKC commissioner are also directors of the Company As of 6/30/20 and at the Report Date, no other directors, officers, or senior executives of KKC have been appointed.
b)Joint Ventures - From time to time the Company enters joint ventures with other partners pursuant to a joint venture agreement or joint operating agreement. Such unincorporated joint venture arrangements are a customary practice for multiple otherwise unrelated companies to jointly own and share the risks and rewards of the oil, gas, and energy business. At the Report Date the Company's is not involved in any joint venture activities.
D. PROPERTY, PLANT, AND EQUIPMENT.
a)Oil and Gas Reserves - Historically the Company has been involved in oil and gas exploration and production activities, but as at the Report Date, we have not established substantive proved reserves that are material to our operations or financial position in accordance with reserve guidance set out in US SEC Industry Guide 2 - Disclosure of Oil and Gas Operations. We have not filed reports claiming oil or gas reserves to any other federal authority or agency since the beginning of the last Fiscal Year.
b)Oil and Gas Production- Historically the Company has been involved in oil and gas exploration and production activities, but as at the Report Date, we have not established oil or gas production.
c)Oil and Gas Drilling Activity - The Company has not participated in the drilling or completion of any number of oil or gas wells during each of our three most recently completed Fiscal Years.
d)Oil and Gas Acreage, Project Areas and Leases - The Company has not held acreage, project areas, or leases for oil and gas activities during each of our three most recently completed Fiscal Years.
e)Oil and gas costs. - The Company has not held incurred oil and gas exploration, drilling, acreage, leases, or project area costs for oil and gas activities during each of our three most recently completed Fiscal Years.
ITEM-4A : Unresolved Staff Comments
We are filing this Form-20F as an Annual Report under the Exchange Act and not as a registration statement, therefore the provision of information called for by this Item-4A is not applicable.
ITEM-5 : Operating and Financial Review and Prospects
A. OPERATING RESULTS.
The following discussion of the Company's financial results includes those for the most recently completed last three Fiscal Years ended 6/30/20, 6/30/19, and 6/30/18. As used below, the phrases "last year" and "prior year" refers to financial results for the same fiscal period ended 30 June of the previous Fiscal Year. Additional information on the Company's operating results is presented in the Exhibit-18 attachment to its audited annual financial statements entitled "Management Discussion and Analysis" made on Form 51-102F in accordance with the Company's obligations in its home country pursuant to the Canadian Securities Administrator's National Instrument NI 51-102 Continuous Disclosure Obligations and its Companion Policy NI 51-102CP.
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FINANCIAL RESULTS FOR THE COMPANY'S FISCAL YEAR 2020, ENDED 6/30/20
All balances referred to in the following discussion are in US$ currency unless otherwise indicated.
Loss during Fiscal Year 2020 Ended 6/30/20 - Overall, the Company incurred a loss from operations during Fiscal 2020 of $355,119 compared to a loss of $516,860 for Fiscal 2019, a decrease of $161,741, primarily due to reduced expenditures on third party services. The Company incurred a loss per share of $0.00 in Fiscal 2020 compared to a loss per share of $0.00 in Fiscal 2019.
Finance during Fiscal Year 2020 Ended 6/30/20 - During Fiscal 2020, the Company received $170,000 in working capital loads from related parties and non-related party shareholders compared to $515,081 raised during Fiscal 2019. The Company's plans for raising finance during fiscal 2020 were restricted during the second half of the Current Fiscal Year due to Covid19 impacts.
Expenses during Fiscal Year 2020 Ended 6/30/20 - The Company's cash administrative costs were $299,022 during Fiscal 2020 compared to $405,295 during Fiscal 2019, a reduction of $106,273, primarily due to paying off promissory notes during Fiscal 2019 and reduced Fiscal 2020 expenditures on third party services and reduced operational costs attributable in the second half of Fiscal 2020 due to Covid19 impacts. Share-based payments expense were $52,495 during the Fiscal 2020 compared to $92,250 during the Fiscal 2019 primarily as a result of fewer new incentive stock options grants. Interest expense during Fiscal 2020r was $10,089 compared to $18,637 during Fiscal 2019, a reduction of $8,548, primarily due to paying off promissory notes during Fiscal 2019.
FINANCIAL RESULTS FOR THE COMPANY'S FISCAL YEAR 2019, ENDED 6/30/19
All balances referred to in the following discussion are in US$ currency unless otherwise indicated.
Loss during Fiscal Year 2019 Ended 6/30/19 - The Company incurred a loss from operations of $516,860 during Fiscal 2019 compared to a loss of $712,711 during Fiscal 2018, a decrease in loss of $195,851 from the prior year. The decrease is primarily attributable to non-cash financing costs associated with the Fiscal 2018 issue of common shares in lieu of cash to pay off convertible debt, incur transaction costs on an acquisition, and settle payable employee compensation. The Company incurred a loss per share of $0.00 in Fiscal 2019 compared to $0.00 in Fiscal 2018.
Finance during Fiscal Year 2019 Ended 6/30/19 - Net cash raised by the Company during Fiscal 2019 was $515,081 compared to $436,576 raised during the previous Fiscal 2018 year. During both Fiscal 2019 and 2018, the funds raised by the Company were primarily as a result of private placements.
Expenses during Fiscal Year 2019 Ended 6/30/19 - Interest expenses during the Fiscal 2019 were $18,637 compared to $9,541 during the previous Fiscal 2018 year, an increase of $9,096 due interest accrued on the Company's outstanding promissory notes. Cash administrative costs were $405,295 during Fiscal 2019 compared to $555,266 during Fiscal 2018, a decrease of $149,971 largely attributable to higher professional fees and regulatory compliance costs incurred during the previous Fiscal 2018 year in order to complete annual audits and restore the Company's regulatory filings to current. Shares-based payments expenses were $92,250 during Fiscal 2019 compared to $41,950 during Fiscal 2018.
FINANCIAL RESULTS FOR THE COMPANY'S FISCAL YEAR 2018, ENDED 6/30/18
All balances referred to in the following discussion are in US$ currency unless otherwise indicated.
Loss during Fiscal Year 2018 Ended 6/30/18 - The Company incurred a loss from operations of $712,711 during Fiscal 2018 compared to a loss of $439,606 during Fiscal 2017, an increase in loss of $273,105 primarily due to non-cash costs attributable to financing costs on the payoff of convertible debt and transaction costs on an acquisition, both of which involved the Company issuing its common shares in lieu of cash. The Company also recorded a gain on settlement of previously payable management fees through issuance of its common shares, reducing the impact of these non-cash costs. The Company incurred a loss per share of $0.00 in 2018 and $0.00 in 2017.
Finance during Fiscal Year 2018 Ended 6/30/18 - During 2018, the Company raised funds from private placements and exercise of warrants of $370,000. A total of $79,676 was advanced to the Company by a joint venture partner compared to $301,990 during 2017.
Expenses during Fiscal Year 2018 Ended 6/30/18 - The Company's administrative costs were higher by $165,265 in 2018 compared to 2017, primarily due to the Company's increased activity. The Company incurred higher professional and filing fees, office costs and travel expenses (in combination higher by $262,189 in comparison to 2017) to expand its business plans to become a developer of crude oil refineries. As a result, the Company also incurred $25,000 in engineering studies on the Maloy refinery. These higher costs were offset primarily by lower management fees (by $126,206) due to the Company's CEO suspending his salary for the entire fiscal year and the resignation of the Company's CFO during part of the year and him not charging any fees in the capacity of the Acting CFO. The Company's interest costs were lower in 2018 by $37,304 due to the settlement of its convertible debt. All other expenses incurred during Fiscal 2018 remained consistent with Fiscal 2017.
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B. LIQUIDITY AND CAPITAL RESOURCES.
The following discussion of the Company's liquidity and working capital situation includes those for the most recently completed last three Fiscal Years ended 6/30/20, 6/30/19, and 6/30/18. Cash on hand is not sufficient to fund the Company's overhead costs and new business development costs for the immediate future. The Company intends to focus its efforts on development of its existing and identified refinery projects to generate revenue. The Company also intends to conduct additional fund raising activities both at the corporate level and for project finance during the next fiscal year.
·Working Capital Situation at End Fiscal 2020 on 6/30/20 - At the end of Fiscal 2020 on 6/30/20, the Company's consolidated financial statements reflect a working capital deficit of $549,182 compared to $317,523 at the end of the prior Fiscal 2019 year. During Fiscal 2020, the Company spent $171,789 on its operations. It received $150,000 in proceeds from loans from third parties and $20,000 from loans from related parties for a total of $170,000 for net cash flows from financing activities.
·Working Capital Situation at End Fiscal 2019 on 6/30/19 - At the end of Fiscal 2019 on 6/30/19, the Company's consolidated financial statements reflect a working capital deficit of $317,523 compared to a working capital deficit of $536,676 at the end of the prior Fiscal 2018 year. During Fiscal 2019, the Company spent $479,843 on its operations. It received $550,000 in private placements of common shares and warrants. The Company also repaid promissory note principal of $30,000 and interest of $4,919, for net cash flows from financing activities of $515,081.
·Working Capital Situation at End Fiscal 2018 on 6/30/18 - At the end of Fiscal 2018 on 6/30/18, the Company's consolidated financial statements reflect a working capital deficit of $536,676 compared to $1,721,256 in the previous year. Cash used in operating activities was $430,847 compared to $307,222 in Fiscal 2017 due to the Company's higher activities during Fiscal 2018. The Company received cash from financing activities of $436,576 compared to $331,090. During Fiscal 2018, the funds raised by the Company were primarily as a result of private placements whereas during Fiscal 2017, the Company had primarily received advances from its joint venture partners.
C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.
We do not currently, and did not previously, have research and development policies in place. Over the past three Fiscal Years, no funds were expended by our Company on research and development activities.
D. TREND INFORMATION.
The Company is aware of certain South East Asia and Indonesian market trends which we believe could have a material effect upon our business operations. These are:
·Rising Fuel Demand in Indonesia – Fuel demand in Indonesia already reached 1.6 million barrels per day (bpd). However, oil refining capacity only stands around 1.1 million bpd, implying that 43 percent of fuel consumption in Indonesia needs to be imported from abroad. Oil refining capacity today is roughly the same as it was 15 years ago, meaning that there has been limited progress in development of Indonesia's downstream oil industry. Without adding refining capacity, Indonesia is on track to become the world's largest fuel importer within the next decade.
·Indonesia Refinery Incentives - Indonesia currently has six oil refineries, all operated by the nation's state-owned energy company Pertamina. The government has continuously emphasized the need to boost investment in Indonesia's downstream oil industry and has deregulated permitting and provide pioneer industry status of tax holidays for private refiners. Stagnating investment is reflected by the fact that Pertamina has not built a new oil refinery in the last quarter of a century. Growing energy demand and manufacturing activities are creating investment opportunities in Indonesia's downstream oil and gas sector. While in the past most oil and gas would be exported, strong economic growth and rapidly rising household spending mean the sector is increasingly focused on the home market. The Indonesian government is pushing to expedite the industry's reorientation, which presents challenges and opportunities for businesses.
·Petroleum Refineries - The Indonesian government has been lethargic about adding oil refining capacity for the best part of the last two decades, which has created a substantial domestic supply gap and dependence on refined petroleum imports. The Energy and Mineral Resources Ministry has stated that Indonesia needs at least 750,000 barrels per day (bpd) in new refining capacity in addition to the current 1 million bpd (in practice refineries run below full capacity). Transportation fuel demand is rising quickly, as is feedstock demand from the petrochemical sector, which is forecast to outperform the overall economy over the coming years. Pertamina has entered into agreements with Middle Eastern companies and is seeking further cooperation with foreign firms on more refineries. Incentives to compensate for high upfront costs have been one of the main sticking points in negations, but as demand increases, so too does the pressure on the government to accommodate investors with more attractive arrangements to offset some of the capital risk.
·Crude Price Gap – Since 2011 there has been a marked change to the historical gap between the global market price of benchmark crude oils WTI and Brent. Prior to 2011, the Brent versus WTI spread traded in a range between a $4 discount for Brent to a $4 premium for Brent oil. The normal state of the relationship was a discount for the Brent crude. Brent has higher sulfur content than WTI, so Brent is more expensive to refine into gasoline. In addition, in years past there were greater supplies of Brent crude as the U.S. was a big importer of the commodity. Therefore, the Brent discount relative to WTI generally hovered between $2 and $4 per barrel. In recent years, volatility in the spread between the two oils has increased and Brent crude has moved to a premium to WTI. Near the Report Date Brent is trading at a $3 premium to WTI.
The Company expects this trend to continue and the gap to continue or widen in the foreseeable future due largely to the success and revitalization of the US shale oil producers whose oil production is a substitute in terms of volume to non-US sourced oil such as Brent. The Company's core business focus is Indonesia and the SE Asia region where the higher Brent price received for any oil we produce would have a positive effect on the Company. Similarly, the WTI-Brent gap and Brent premium is largely reflected in the prices of refined petroleum products and rapidly rising
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consumer demand in our core region of operations would also have a positive effect on product revenues for any small-scale refinery we may develop.
·Natural Gas Prices in SE Asia – Increasing consumer demand in SE Asia for electrical power is driving a rapidly growing market that is also becoming increasingly environmentally aware of the benefits of natural gas power generation over the traditional alternative of coal. Already, gas producers with access to any of the limited pipeline capacity of Indonesia enjoy long-term gas supply contract prices with commercial and sovereign cross-border buyers who pay at multiples of 3 to 5 times over peak season Henry Hub gas prices. New pipeline capacity is being laid to make more gas available to feed the demand. The Company sees the trend from coal to gas as the fuel of choice, and the continued increase in market demand for power, constrained by available transport capacity, as having a possible positive impact on the Company for any gas production or gas-fired power plants it develops.
E. Off-balance sheet arrangements.
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS.
The table below reflects our "Short Term" (at least one year), "Mid Term" (two to three years) and "Long Term" (over three years) debt and fixed contractual obligations for the upcoming five Fiscal Years:
Contractual Obligations as at 6/30/20 | ||||
Obligation | Total | Short Term | Mid Term | Long Term |
Debt Principal | 70,000 | 70,000 | nil | nil |
Debt Service Interest | 17,813 | 17,813 | nil | nil |
Non-Cancelable Leases | Nil | Nil | nil | nil |
Environmental liabilities | Nil | Nil | nil | nil |
Asset Retirement Obligations | Nil | Nil | nil | nil |
Property Work Commitments | Nil | Nil | nil | nil |
Totals | 87,813 | 87,813 | nil | nil |
G. SAFE HARBOR.
The safe harbor provided in Section 27A of the Securities Act and Section 21E of the Exchange Act ("statutory safe harbors") shall apply to forward-looking information provided pursuant to Item 5.E and 5.F.
ITEM-6 : Directors, Officers, Employees and Their Compensation
A.DIRECTORS AND OFFICERS.
Directors - The term "Directors" as used herein includes and is limited to those persons duly elected or appointed to the Board of Directors of the Company in the manner provided for in the Company's articles of association and in accordance with applicable law.
·Terms - The Directors each generally serve in their respective capacities from their election on the day of the Annual General Meeting of the Company held each year normally in December. Directors serve until the next Annual General Meeting or until a successor is duly elected. In the event a Director's office is vacated for any reason then, in accordance with the Articles of the Company, casual vacancies may be filled by appointment by the remaining Directors. In such cases the persons filling the vacancy holds office until the next Annual General Meeting at which time they may be re-elected or replaced.
·Family Relationships -There are no family relationships between any of the Directors. There are no family relationships between any Director and any of the Officers of our Company.
·Non-Arm's Length Arrangements - There are no arrangements or understandings between the Company and its major shareholders, customers, suppliers, or others, pursuant to which any Director or executive officer was selected.
·Non-Executive or Independent Directors - The Company distinguishes its Directors into two groups, "Executive Directors" and "Non-Executive Directors". Executive Directors are those Directors who also serve as executive Officers employed under contract for such service by the Company. Non-Executive Directors are also considered to be "Independent Directors" who do not also serve as executive Officers of the Company and have no contractual relationship with the Company for personal services outside those of being solely a Director.
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·Directors at the Report Date - The names and other information concerning the sitting Directors of the Company at the Report Date are set forth in the following table. Directors of the Company may from time to time serve as the Directors or Officers of other public companies unrelated to the Company, and the following table also shows related parties and other public companies of which a Director may also serve as a Director.
Board of Directors | ||||||
Director's Name | Type of Director | Age | First Appointed | Standing Committee Memberships | Functional Expertise Brought to the Company | Other Public Company Directorships |
Richard L. McAdoo | Executive Director & Chief Executive Officer | 66 | Jan 1999 | Governance | Emerging Markets Businessman & Petroleum Geologist | None |
Phillip B. Garrison | Executive Director & Acting Chief Financial Officer | 67 | Sep 2007 | Audit | Emerging Markets Businessman & Accountant | None |
Karsani Aulia | Non-Executive & Independent Director | 67 | Mar 2017 | Compensation, Reserves | Emerging Markets Businessman & Petroleum Geologist | None |
Glenn Klein | Non-Executive & Independent Director | 73 | Oct 2018 | Audit, Compensation, Governance, Reserves | Emerging Markets Businessman & Banker | None |
Suresh J. Doshi | Non-Executive & Independent Director | 75 | Sep 2019 | Audit, Compensation, Governance, Reserves | Emerging Markets Businessman & Energy Executive | Geopetro Resources Company |
·Experience and Principal Business Activities of the Directors - A brief description of the qualifications, experience, and principal business activities of each Director referenced in the preceding table follows:
ØExecutive Director - Richard L. McAdoo holds a Bachelors and a Master's degree in Geology from Texas Tech University; and a Master's degree in Business Administration from Boston University. He is registered as a Certified Petroleum Geologist by the American Association of Petroleum Geologists. Actively involved in the international oil exploration and production business for the last 35 years, Mr. McAdoo has held a variety of technical and management positions in exploration and production for Mobil Oil Company, Phillips Petroleum Company, Jackson Exploration, Inc., Triton Energy Corporation, Tracer Petroleum Company, and others in many regions including the North Sea, Middle East, Africa, South America, former Soviet Union, and Southeast Asia. A long-time resident of Jakarta, Indonesia, he is a tireless promoter of small or stranded oil and gas fields as ideal candidates for innovative conventional and alternative energy solutions to the SE Asia region's chronic undersupply of electrical power and transportation fuels.
ØExecutive Director - Phillip B. Garrison is a resident of Dubai, United Arab Emirates. He is a graduate of the University of Oklahoma and holds an MBA from Southern Methodist University. He is a CPA registered in Texas. He is a past President of the American Business Council in Dubai and is a trustee of the American School of Dubai. After graduation from OU, Mr. Garrison began his career in 1975 in the Oklahoma City office of the public accounting firm of Arthur Young and Company before eventually becoming the Director of Tax in its Hong Kong office. In 1987 he joined Caltex (a Chevron-Texaco joint venture company) in its Irving, Texas office before being posted to Caltex's Dubai office in 1994 as its Managing Director, responsible for downstream and marketing activities in the Middle East. In 2001 he founded Downstream Developments Inc. in Dubai and consults on and develops ventures for transportation and logistics, oil and gas infrastructure projects, and petroleum product marketing. Recently he has worked with the Falcon Group of Dubai, a FEDEX subcontractor in the Middle East and North Africa, as its Managing Director. He also worked with Specialist Group Dubai as its executive officer in charge of operations for its British Military contracts providing logistics, bulk fuels transportation, and waste management services in Iraq during the conflict there.
ØExecutive Director – Karsani Aulia is a resident of Jakarta, Indonesia. He is a graduate of the Bandung Institute of Technology and received his Master's degree in petroleum geology, cum laude, from the Colorado School of Mines in 1982. He worked for PT Caltex Pacific Indonesia (Chevron-Texaco) from 1976 until 2004. There he held various technical and operating positions including Vice President Exploration and General Manager of Resources and Production for Caltex's onshore Minas Field, the largest oilfield in Asia with a daily production of over 200,000 BPD. From 2002 until 2004 he served on Chevron's Worldwide Asset Management Committee and its Technology Council. From 2004 to 2007 he served as the General Manager for the Coastal Plains Pekanbaru PSC a local government owned oil and gas operating company with 27,000 BOPD oil production from the Riau Province, onshore Sumatra. Between 2007 and 2015, he served as Senior Vice President of Operations and Technology for Samudra Energy Ltd. an oil and gas exploration and production company based in Jakarta and Singapore. Under his leadership, Samudra Energy had a period of successful growth to become one of the top ten hydrocarbon producing companies in Indonesia.
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ØNon-Executive Director – Glenn S. Klein is a resident of North Saanich, BC, Canada. He is a career banker with over 44 years' experience and is an expert in international corporate debt restructuring in emerging economies. He began his career and worked for 30 years (1966 – 1996) at the Royal Bank of Canada (RBC) in various roles at RBC branches in Vancouver, Regina, and Montreal. He rose to Regional General Manager for RBC based in Dubai, with responsibility for RBC's interests in the Middle East during the first Gulf War. During his tenure, the RBC Dubai office produced the highest financial results, return on capital and productivity for European units for five consecutive years. Since leaving RBC, Mr. Klein has held several executive level banking roles including serving as the Executive Vice President and General Manager of Banco De La Paz based in Bolivia, and as Dubai based Senior Vice President of Emirates NBD, by assets the largest bank in the Middle East. At ENBD he was responsible for the problem corporate debt portfolio. Under his management, the bank achieved significant recoveries in excess of USD 300 million over a 12-year period. He is also a member of the working group for the SWIFT bank transfer system based on a nomination by the Canadian Bankers Association.
ØNon-Executive Director – Suresh "Stuart" J. Doshi is a resident of San Francisco, California. Stuart is a graduate of the University of San Francisco with a degree in Finance and holds an MA in Economics from UC Santa Barbara. He has over 40 years of extensive experience in the founding, management, financing, and operations of energy and resource development business. He began his oil and gas career at Natomas Company soon after its acquisition of the Independent Indonesian American Petroleum Company (IIAPCO) and the discovery of substantial oil reserves in Indonesia's first offshore production sharing contract. Stuart rose through a variety of executive management positions to become director of corporate planning for Natomas at the time of its merger with Diamond Shamrock. During his time at Natomas, Stuart served as manager of its crude oil marketing arm where he oversaw sales to global markets of millions of barrels of oil produced by Natomas from its Indonesian oilfields. Stuart also served in senior executive management positions with Energy Sources Group and Pan Pacific Petroleum before co-founding Geopetro Resources Company, where he continues to serve as Chairman and CEO. Stuart has been involved in taking energy companies public on the Toronto Stock Exchange and on the former American Stock Exchange (now NYSE MKT).
·Directors Changes During Fiscal 2020 – During Fiscal 2020 one new director, Mr. Suresh "Stuart" J. Doshi, was appointed a director of the Company on 9/30/19 by action of the board of directors. At the Company's AGM on 12/07/19 incumbent directors McAdoo, Garrison, Aulia, Klein, and Doshi were re-elected.
·Directors Changes Subsequent to End Fiscal 2020 – Since the end of Fiscal 2020 and up to the Report Date there have been no changes to the Company's board of directors.
Senior Management or Officers - The term "Officers" as used herein includes and is limited to those senior managers or executive managers who are either Chairman, President, Vice President, Secretary, Treasurer, CEO, COO, or CFO of the Company or hold position of similar capacity in wholly-owned subsidiaries.
·Terms - Officers are appointed by the Board of Directors and hold office indefinitely at the pleasure of the Board of Directors.
·Family Relationships - There are no family relationships between any of the Company's Officers and Directors.
·Non-Arm's Length Arrangements - There are no arrangements or understandings between the Company and its major shareholders, customers, suppliers, or others, pursuant to which any Officer was selected.
·Management Contracts - Senior executive management functions of the Company and its subsidiaries are not performed by anyone other than Directors or Officers of the Company.
·Officers at the Report Date - The names and other information concerning the incumbent Officers of the Company at the Report Date are shown in the following table.
Officers | |||||
Officer's Name | Positions Held | Age | Date First Appointed | Functional Expertise Brought to the Company | Other Public Company Directorships |
Richard L. McAdoo | Chairman & Chief Executive Officer | 66 | Jan 1999 | Businessman & Petroleum Geologist | None |
Phillip B. Garrison | Director & Acting Chief Financial Officer | 67 | Nov 2018 | Businessman & Accountant | None |
·Qualifications and Experience of the Officers - A brief description of the qualifications, experience, and principal business activities of each Officer follows:
§Richard L. McAdoo is the Company's Chairman and Chief Executive Officer or CEO. See other details in the preceding section concerning Directors experience.
§Phillip B. Garrison is the Company's Acting Chief Financial Officer or Acting CFO. See other details in the preceding section concerning Directors experience.
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B.COMPENSATION.
The Company's executive compensation program is designed to attract, motivate and retain high performing senior executives, encourage and reward superior performance and align the executives' interests with those of the Company's shareholders. Individual compensation may be based on individual experience and performance or other criteria deemed important by the Compensation Committee. In order to meet the Company's objectives, executive compensation is guided by three principles: 1) providing executives with an equity-based incentive plan, namely a stock option plan; 2) aligning employee compensation with Company corporate objectives; and 3) attracting and retaining qualified individuals in key positions.
a)Compensation Policy Elements - An executive compensation policy has been established to acknowledge and reward the contributions of the executive Officers to the Company's success and to ensure competitive compensation, in order that the Company may benefit from the expertise required to pursue its objectives. The Company's executive compensation policy is comprised of both fixed and variable components. The variable components include equity and non-equity incentive plans. Each compensation component has a different function, but all elements are intended to work in concert to maximize Company and individual performance by establishing specific, competitive operational and financial goals and by providing financial incentives to employees based on their level of attainment of these goals. The Company's current executive compensation program is comprised of the following components:
·Base Salary - Salaries of the Company's executive Officers are reviewed periodically by the Compensation Committee. In determining individual base salaries, the Compensation Committee takes into consideration individual circumstances that may include the scope of an executive's position, location of employment, the executive's relevant competencies, experience, performance, and retention risk.
·Non-Equity Incentives - The Company has no formal short or long term non-equity incentive compensation plan having objective targets or measures in determining non-equity incentives, but instead periodically makes cash bonuses allocated and paid to one or more executives based on merit and individual accomplishment and contribution to advancing the Company's project development and strategic objectives. The granting of cash incentives requires the approval of both the Compensation Committee and the Board of Directors and are based upon an assessment of each individual's performance in achieving significant value for the Company, specifically; an executive being instrumental in successfully negotiating a new property acquisition, arranging a financing, drilling a successful well, closing a corporate merger or acquisition, or playing a substantive role in a similar milestone event.
·2017 Stock Option Plan - The Company has no formal long term equity compensation plan having objective targets or measures in determining equity incentives. Instead incentive compensation paid to the Company's executive Officers consists exclusively of Option-Based awards pursuant to the Company's formal stock option plan, from time to time approved by the shareholders. The Company' current incentive stock option plan was adopted and approved at an annual general meeting on 8/04/17. It is known as the "2017 Stock Option Plan", and permits the directors to grant up to 17,471,538 options to purchase common shares, an amount equivalent to 10% of the total common shares issued and outstanding on its approval date. A summary of other key elements of the 2017 Stock Option Plan is as follows:
a)Purpose of Plan - The purpose of the 2017 Stock Option Plan (the "Plan") is to provide the Company with an equity based compensation mechanism (in this case one common share (a "Share") of the Company underlying each "Option") to attract, retain and motivate qualified "Executives", "Employees" and "Consultants" (as each group is defined in the Plan) to contribute toward the long term goals of the Company. It also encourages such individuals to acquire Shares of the Company as long term investments, and thereby aligns the common interests of such individuals to those of the Company's other shareholders.
b)Oversight of the Plan - The Compensation Committee of the board of directors is charged with oversight and management of the Plan. The Compensation Committee also determines, subject to the provisions of the Plan, those Executives, Employees and Consultants to whom Options are to be granted; the Exercise Price at which the Option may be exercised; the term for which the Option is to be valid; and the special terms or vesting milestones of the Option, if any, set out in the Option certificate delivered to the holder.
c)Participation in Plan - The Compensation Committee of the board of directors is charged with oversight and management of the Plan. The Compensation Committee also determines those Executives, Employees and Consultants to whom Options are to be granted.
d)Maximum Number of Shares - The aggregate maximum number of Options which may be granted under the Plan, including any options granted pursuant to a previous plan, may not exceed ten percent (10%) of the total number of the Company's common shares issued and outstanding upon any grant date.
e)Rolling Return - If any Option expires or otherwise terminates for any reason without having been exercised in full, the number of Shares in respect of such expired or terminated Option shall again be available for the purposes of granting Options pursuant to this Plan. Similarly, 10% of the new shares created on any Option exercise shall contribute to the available pool of Options available for grant.
f)Exercise Price of Option - The "Exercise Price" shall not be less than the "Market Value" of the Shares as of the grant date. The Market Value of the Shares for a particular grant date is the closing trading price of the Shares on the day immediately preceding the grant date, and may be less than this price only if it is within the discounts permitted by the applicable listing requirements and regulatory authorities.
g)Limitations on Grant Amounts - The following limitations shall apply to the Plan and all Options granted thereunder:
i.The maximum number of Options which may be granted to any one Option holder under the Plan within any twelve (12) month period shall be five percent (5%) of the total number of the Company's common shares issued and outstanding upon the grant date.
ii.If required by listing or regulatory rules, disinterested shareholder approval is required to the grant to Insiders, within a twelve (12) month period, of a number of Options which, when added to the number of outstanding incentive stock options granted to Insiders within the previous twelve (12) months, exceed ten percent (10%) of the issued Shares;
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iii.The maximum number of Options which may be granted to any one Consultant within any twelve (12) month period must not exceed two percent (2%) of the total number of the Company's common shares issued and outstanding upon the grant date; and
iv.The maximum number of Options which may be granted within any twelve (12) month period to Employees or Consultants engaged in investor relations activities must not exceed two percent (2%) of the total number of the Company's common shares issued and outstanding upon the grant date, and such options must vest in stages over twelve (12) months with no more than twenty-five (25%) of the Options vesting in any three (3) month period.
h)No Transfers - Options granted under the Plan are not transferable and may not be assigned.
i)Limitations on Term - The expiry date of an Option may be fixed by the Compensation Committee at the date of grant provided that the expiry date of no Option shall be later than the tenth (10th) anniversary of its grant date. Additionally:
i.In the event of the death or disability of the holder, the Options shall expire be exercisable by the holder's personal representative for a period of one-year from the date of death or disability.
ii.In the event of termination of employment, engagement, or holding of the office for which the Options were granted for any reason including resignation, the Option shall expire thirty (30) days after such termination.
·Pension Plan Benefits - The Company does not currently have any formal pension plans that oblige the Company to make payments or provide benefits at, following, or in connection with retirement of its Directors, Officers, or employees.
·Share-Based Awards - The Company does not currently have any formal short or long term share-based award plans that oblige the Company to make any direct grants and issues of Company securities to its Directors, Officers, or employees as compensation. The Company's Board may from time to time approve award of shares to directors, officers, and/or employees as a performance bonus for exemplary service to the Company in a situation where the awardee's efforts were instrumental.
b)Compensation on Termination - There are no Company policies providing for, and no provisions in the Company's employment agreements with its Officers or employees for, incremental payments to be made to them by the Company in the event of termination of their employment "Without Cause".
c)Compensation on Change of Control of Company - There are no Company policies providing for, and no provisions in the Company's employment agreements with its Officers or employees for incremental payments to be made to them by the Company in the event of termination of their employment on the event of any "Change of Control" of the Company.
d)Compensation of Directors-The Company has no standard arrangement pursuant to which Directors are compensated by the Company for their services solely in their capacity as Directors except for the granting from time to time of incentive stock options in accordance with the Company's Stock Option Plan and except for compensation paid to Directors who are also executive Officers. No cash compensation was paid to any Director of the Company for the Director's services as a Director during the most recently completed financial year, other than the reimbursement of out-of-pocket expenses.
e)Compensation of Officers and Directors- During its most recently completed financial year ended 6/30/20, the Company compensated its Directors and Officers as set forth in the following table. The Company reports its financial statements in US dollars and therefore all amounts therein are reported in US dollars.
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Summary Table - Compensation of Directors and Officers During Fiscal 2020 | |||||||||||
End Note >: |
| (1) | (2) | (3) | (4) | (5) | |||||
Name and Position Held | Fiscal Year Ended | Salary, Wages, and Fees | Shares Awards & Option Grants | Non-Equity Incentive Plans | Other | Total | |||||
From Company | From Subsidiary | Value of Shares & Options | Number of Shares | Number of Options | Annual | Long Term | Pension | Value of All Other Compensation | US$ Compensation | ||
Company Officers |
|
|
|
|
|
|
|
|
|
|
|
Richard L. McAdoo(a) CEO and Director | 6/30/20 | Nil | $41,732 | Nil | Nil | Nil | Nil | Nil | Nil | Nil | $41,732 |
Phillip B. Garrison(b) Acting CFO and Director | 6/30/20 | $42,000 | Nil | $20,998 | Nil | 2,000,000 | Nil | Nil | Nil | Nil | $62,998 |
Officers of Subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
Karsani Aulia(c) Director and Officer of Subsidiary | 6/30/20 | Nil | $41,732 | Nil | Nil | Nil | Nil | Nil | Nil | Nil | $41,732 |
Non-Executive Directors |
| Fees |
|
|
|
|
|
|
|
|
|
Glenn S. Klein Non-Executive Director | 6/30/20 | Nil | Nil | $10,499 | Nil | 1,000,000 | Nil | Nil | Nil | Nil | $10,499 |
Suresh J. "Stuart" Doshi Non-Executive Director | 6/30/20 | Nil | Nil | $20,998 | Nil | 2,000,000 | Nil | Nil | Nil | Nil | $20,998 |
Former Officer |
|
|
|
|
|
|
|
|
|
|
|
Byron Tsokas(d) Vice President | 6/30/20 | $5,250 | Nil | Nil | Nil | Nil | Nil | Nil | Nil | Nil | $5,250 |
Notes to the table:
1Salary, wages, and fees paid directly by the Company or by a Company subsidiary as indicated.
2When applicable the value of any share-based performance reward or bonus, and for incentive stock options grants which reflects the fair value of stock options granted on the dates of grant. The fair value is computed using the Black Scholes option pricing model with the following weighted average assumptions: a) average risk-free interest rate; b) expected years of life of the option; c) the price of the stock on the grant date; d) expected volatility as a percentage; and e) no expected dividend payments. The Black Scholes model is used to compute option fair values because it is the most commonly used option pricing model and is considered to produce a reasonable estimate of fair value.
3Value of non-equity incentives and annual, long-term, and pension plan contributions for services rendered.
4Value of benefits and other forms of compensation paid for services rendered.
Notes to the directors and officers:
aThe Company's CEO is also an officer of a subsidiary of the Company and is compensated by it directly for services rendered to both the subsidiary and the Company.
bThe Company's Acting CFO was appointed to post on 11/07/19.
cThe Company's Executive Director is also an officer of a subsidiary of the Company and is compensated by it directly for services rendered to both the subsidiary and the Company.
dThe former Vice President resigned effective 11/06/19.
C.BOARD PRACTICES.
a)Number of Directors - The number of Directors on the Company's Board of Directors was fixed at five (5) directors at the fiscal 2019 annual general meeting. Under the Company's articles of incorporation, the Board is entitled to add one (1) director at any time.
b)Election of Directors - The Directors of the Company are elected at each annual general meeting and hold office until the next annual general meeting. In the event or resignation of a sitting Director, the Board of Directors may act to appoint a replacement Director who shall serve until the next general meeting.
c)Independence and Executive Directors – At the Report Date, the Company has five sitting directors, three of whom are Executive Directors and two of whom are both Non-Executive Directors and also Independent Directors as described below:
i)Executive Directors – The Company considers three of its four directors, McAdoo, Garrison, and Aulia, to be "Executive Directors" by virtue of the fact that they are each salaried employees paid directly by the Company or by one the Company's subsidiaries for personal services rendered in their capacities as senior executive officers of the Company or of the subsidiary.
ii)Non-Executive Directors – The Company considers two of its five directors, Klein and Doshi, to be "Non-Executive Directors" by virtue of the fact that neither is a salaried employee paid by the Company or by a subsidiary of the Company for personal services and neither has been paid directly or indirectly for services rendered as a consultant, advisor, or contractor to the Company or to one of the Company's subsidiaries.
iii)Independent Directors – The Company considers two of its five directors, Klein and Doshi, to be "Independent Directors" by virtue of the fact that both are Non-Executive Directors, neither is holder of, or director or officer of a holder, of 10% or more of the Company's voting stock, and neither is a director, officer, or major shareholder of an affiliate controlled by the Company or in control of the Company.
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Each also meets the requirements of an "Independent Director" as defined in Part-1.2(1) of NI 58-101 Disclosure of Corporate Governance Practices.
d)Orientation of New Directors – The Company makes an effort to provide newly appointed or elected Directors with a copy of all policies, codes of conduct, and board committee charters then currently in effect at the time of election for their information. Additionally, the Company assists all new Directors with registering on the "NI 55-102 System for Electronic Disclosure by Insiders" or "SEDI"; and advising of the requirements for each new Director to file and view insider reports electronically that are required of Directors by Canadian Securities Administrators.
e)Nomination of Directors - The Company maintains a standing board committee, that in accordance with its charter, is charged with the task to identify, evaluate, interview, and recommend qualified individual candidates for nomination as potential directors to be elected or appointed to the Board, or as qualified candidates to be hired by Continental in the capacity of senior executive and senior financial officers. See Item-6.C.j "Governance and Nominating Committee" herein below.
f)Scheduled Bi-Monthly Meetings - The board of directors has adopted a policy to hold periodic board meetings on or about the first Saturday of every other month. The board holds meetings using VoIP conference calls unless it is feasible to meet in person. The purpose of these scheduled meetings is to coordinate and discuss the Company's plans and progress on its objectives, in addition to dealing with any issues which may arise and require resolution by board approval. Additional meetings are called as and when required.
g)Other Directorships – As at the Report Date, no directors of the Company are also serving as a director of any other reporting issuer in any jurisdiction, whether domestic USA or foreign, except for director Doshi who serves as director and CEO of Geopetro Resources Company, a USA company an issuer on the OTC-Pink.
h)Code of Business Conduct and Ethics - The Company publishes a written Code of Business Conduct and Ethics (the "Code"). The most recent revision of this Code was adopted by the board of directors and filed on SEDAR on 1/10/20. The Code is deemed to include all the Policies published and described in the following section.
i)The purpose of the Code is to promote ethical and responsible decision making by all of the directors, officers, managers, and all other employees of the Company. The core principles of the Code embrace the values of honesty, integrity, excellence, accountability, transparence, independence, and common-sense ethical responsibility.
ii)A complete copy of the Code has also been filed and made publicly available on the Canadian Securities Administrators SEDAR system in accordance with requirements of Part-2.3 of NI 58-101 Disclosure of Corporate Governance Practices in the Company's home jurisdiction of Canada. The Code is in the form of a convenient PDF file which can be downloaded from the SEDAR website, and a search for the Company's 'Code of Conduct' filing dated 1/10/20, at http://sedar.com/search/. The Code is hereby incorporated into this Form-20F by this reference.
i)Published Corporate Policies – In addition to the Code described in the preceding section, the Company adopts from time to time and as deemed necessary or desirable certain policies, procedures, guidelines, and recommended practices or procedures for specific administrative, social, compliance, environmental, or ethical issues (each one of which are herein referred to as a "Policy"). Each Policy forms an integral part of the Code described in the preceding section. Policies are applicable to all directors, officers, full and part-time employees, casual hires, consultants, advisers, contractors, and suppliers who are working under direct contract to the Company or any one of the Company's wholly owned subsidiaries, its majority owned or otherwise controlled subsidiaries, and any joint ventures under its designated operational control. A complete copy of each Policy has also been filed and made publicly available on the Canadian Securities Administrators SEDAR system in accordance with requirements of Part-2.3 of NI 58-101 Disclosure of Corporate Governance Practices in the Company's home jurisdiction of Canada. Each Policy is also available in the form of a convenient PDF file which, after a search for the Company's 'Other Security Holders Documents' filing dated 1/10/20, can be downloaded from the SEDAR website http://sedar.com/search/. Each Policy as filed on SEDAR is hereby incorporated into this Form-20F by this reference. As at the Report Date the Company has adopted, published, and made publicly available the following Policies on SEDAR, attached as part of the 'Code of Conduct' filing dated 1/10/20:
i)"Policy on Control of Information and Insider Trading" - The purpose of this Policy is to the purpose of this Policy is intended to prevent "Insider Trading" by persons in possession of "Material Non-Public Information" concerning the Company or its business operations and activities; prevent "Tipping" by persons in possession of the same information" from informing or conveying such knowledge to any other persons; and provide guidance to persons subject to this Policy to permit them to lawfully conduct legitimate transactions for their own personal benefit in the securities of the Company.
ii)"Policy on Bribery and Anti-Corruption" - This Policy sets out the responsibilities of the Company and its affiliates, in preventing Bribery and Corruption of Government Officials. This Policy also applies to individuals and corporate counterparties who work for and conduct business on behalf of Continental, all of whom have a separate personal responsibility and may separately be held accountable and personally liable for any Bribery or Corruption issues that may arise. This Policy is intended to guide management, individual personnel, and corporate counterparties to recognize situations which might give rise to possible Bribery and Corruption concerns and the procedures for preventing, reporting, and dealing with such issues.
iii)"Policy on Compliance with Sanctions and Trade Restrictions" - This Policy sets out the responsibilities of the Company and its subsidiaries, associates, affiliates, and personnel in complying with applicable international economic and legal "Sanctions" (as such term is broadly defined in Section-4 of the Policy to include Embargoes, Trade Restrictions, Asset Freezes, Export Controls, and Financial Prohibitions, and other types of Sanctions), many of which are intended to combat global terrorist activities, enforce laws,
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and/or force political change. This Policy also applies to individuals and corporate counterparties who work for and conduct business on behalf of the Company, all of whom have a separate personal responsibility and may separately be held accountable and personally liable for any Sanctions related issues that may arise. This Policy is intended to guide management, individual personnel, and corporate counterparties to recognize situations which might give rise to possible Sanctions concerns and the procedures for preventing, reporting, and dealing with such issues.
j)Standing Board Committees - The Company's Board of Directors has created four "Standing Committees", each made up of at least 3 directors who are charged with the responsibility of coordinating, reviewing, and establishing working guidelines with certain corporate governance matters. Each Standing Committee operates under a formal written "Charter" that is adopted by the Board and amended from time to time as and when the Board deems necessary or appropriate. A complete copy of each Charter has also been filed and made publicly available on the Canadian Securities Administrators SEDAR system in accordance with requirements of Part-2.3 of NI 58-101 Disclosure of Corporate Governance Practices in the Company's home jurisdiction of Canada. Each Charter is also available in the form of a convenient PDF file which can be downloaded from the SEDAR website http://sedar.com/search/. Each Policy as filed on SEDAR is hereby incorporated into this Form-20F by this reference. Each one of the four Standing Committee Charters as filed on SEDAR is hereby incorporated into this Form-20F by this reference, and the most recent revisions of the Charters for each of the four Standing Committees were filed on SEDAR dated 1/10/20. The four Standing Committees are:
i)Audit Committee and its Charter - The Company's Board of Directors has created a standing "Audit Committee" and charged it with the responsibility of coordinating, reviewing, and working with the Company's accountants and auditors regarding the preparation, review, and approval of the Company's annual audited financial statements and related regulatory filings in both Canada and the USA. The Audit Committee operates under a formal written Charter that is adopted by the Board and amended from time to time as and when the Board deems necessary or appropriate. The most recent revision of the Charter of the Audit Committee is dated 1/10/20.
a.In addition to its USA reporting obligations, our Audit Committee operates under the Company's obligations pursuant to the regulatory practices prescribed by the Canadian Securities Administrators under National Instrument 52-110 Audit Committees and its Companion Policy 52-110CP as last amended and in force and effect (both herein referred to as "NI-52-110").
b.The Audit Committee does not consist of the entire Board of Directors. At the Report Date the Audit Committee has three duly appointed members, a majority of whom are "Independent Directors" as defined in Part-1.4 or in Part-6.1.1 of NI 52-110 Audit Committees. The two Independent Directors on the Audit Committee are directors Klein and Doshi and Mr. Klein serves as Audit Committee chair.
c.The Company considers all three members of the Audit Committee to be "Financially Literate" as such term is defined in Part-1.6 of NI 52-110 Audit Committees.
d.The Company considers all three members of the Audit Committee to be "Audit Committee Financial Experts" as such term is defined in Regulation S-K 17 CFR Part 229.407(d)(5)(ii).
ii)Governance and Nominating Committee and its Charter - The Company's Board of Directors has created a standing "Governance and Nominating Committee" and charged it with responsibility for oversight of the periodic review, amendment, and approval of the Company's "Code of Business Conduct and Ethics"; and with the task to identify, evaluate, interview, and recommend qualified individual candidates for nomination as potential directors to be elected or appointed to the Board or as qualified candidates to be hired by Continental in the capacity of senior executive and senior financial officers. The Governance and Nominating Committee operates under a formal written Charter that is adopted by the Board and amended from time to time as and when the Board deems necessary or appropriate. The most recent revision of the Charter of the Governance and Nominating Committee is dated 1/10/20.
a.The Governance and Nominating Committee does not consist of the entire Board of Directors. At the Report Date the Governance and Nominating Committee has three duly appointed members, two of whom are "Independent Directors" as defined in Part-1.2(1) of NI 58-101 Disclosure of Corporate Governance Practices. The Independent Directors on the Governance and Nominating Committee are directors Klein and Doshi.
b.The Governance and Nominating Committee is expressly established with the intent of operating in full compliance with Continental's obligations to the Canadian Securities Administrators pursuant to:
1.National Instrument 58-101 Disclosure of Corporate Governance Practices as last amended and in force and effect,
2.National Policy 58-201 Corporate Governance Guidelines as last amended and in force and effect, and
3.The certain provisions of Section-3.8 of NP-58-201 which provides that the Company's Board of Directors adopt a written code of business conduct and ethics that is applicable to directors, officers and employees of the issuer and which constitutes written standards that are reasonably designed to promote integrity and to deter wrongdoing.
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iii)The Compensation Committee - The Company's Board of Directors has created a standing "Compensation Committee" and charged it with responsibility for oversight and periodic review of the Company's "equity incentive plans", "incentive plan", "equity incentive plans", and "plans" for "share-based awards" and "option-based awards" as such terms are all defined in Part-1.2 of Canadian National Instrument NI 58-102F6 Statement of Executive Compensation and herein referred to collectively as "Compensation Plans". After such review, the Committee shall advise the Board of any recommendations for additions or revisions to the Compensation Plans. The Compensation Committee does not consist of the entire Board of Directors. At the Report Date the Compensation Committee has three duly appointed members, a majority of whom are "Independent Directors" as defined in Part-1.2(1) of NI 58-101 Disclosure of Corporate Governance Practices. The Independent Directors on the Governance and Nominating Committee are directors Klein and Doshi.
iv)Reserves Committee - The Board of Directors has created a standing "Reserves Committee" and charged it with responsibility for oversight of the preparation, review, and approval of the Company's oil and gas activity and reserves reporting. The Reserves Committee operates pursuant to the regulatory requirements prescribed by the Canadian Securities Administrators under National Instrument 51-101 Statement Of Reserves Data And Other Oil And Gas Information. The Reserves Committee does not consist of the entire Board of Directors. At the Report Date the Reserves Committee has three duly appointed members, a majority of whom are an "Independent Directors" as defined in Part-1.2(1) of NI 58-101 Disclosure of Corporate Governance Practices. The Independent Directors on the Committee are directors Klein and Doshi.
D.EMPLOYEES.
During Fiscal 2020, including its corporate officers, the Company has five full time employees, four of whom are located at the Company's Indonesia representative office in Jakarta and the Indonesian offices of the Company's subsidiaries. Of the two employees who are not senior officers, one is accounting staff and the other is administrative and support staff. None of the Company's employees are not represented by a union.
E.SHARE OWNERSHIP BY DIRECTORS AND OFFICERS.
The table below lists, as at the Report Date, the number of voting securities owned directly or indirectly by all Directors and Officers. The common share voting rights of our Directors and Officers do not differ from those of any other shareholders. The amounts of common shares shown do not include those common shares that a Director or Officer may yet acquire upon exercise of any outstanding options or warrants.
Voting Shares Owned by Directors And Officers | ||||
Type of Security | Name of Beneficial Owner | Number of Voting Securities Owned | % of Total Voting Securities Issued | |
Common Shares | Richard L. McAdoo, Director & CEO | 13,579,158 | 7.77 % | |
Common Shares | Phillip B. Garrison, Executive Director | 3,000,000 | 1.72 % | |
Common Shares | Karsani Aulia, Executive Director | 1,000,000 | 0.57 % | |
Common Shares | Glenn S. Klein, Independent Director | 0 | -.- | |
Common Shares | Stuart J. Doshi, Independent Director | 3,906,875 | 2.23 % | |
| Directors & Officers as a Group | 21,486,033 | 12.30 % | |
Common Shares | Total Issued & Outstanding | 174,715,381 | 100.00 % | |
Incentive Stock Options Held by Directors and Officers - The table below lists, as at the Report Date, the number of incentive stock options held by each Director and Officer. Incentive stock options are granted to the Company's management, employees, and consultants in accordance with our formal written Stock Option Plan that is described in more detail in Section-6.B. The number of options held, as at the Report Date, by Directors and Officers as a group plus those options held by other employees and consultants as a group is also shown.
Incentive Stock Options Held by Directors and Officers | ||||
Name of Optionee Directors & Officers | US$ Option Exercise Price | Date Option Expires | Number of Options | Percent Of Total |
Richard McAdoo, Director & CEO | $ 0.05 | 30-June-2021 | 2,000,000 | 16.6% |
Karsani Aulia, Director | $ 0.05 | 30-June-2021 | 2,000,000 | 16.6% |
Phillip B. Garrison, Director & Acting CFO | $ 0.05 | 30-June-2021 | 4,000,000 | 33.3% |
Glenn S. Klein, Director | $ 0.05 | 30-June-2021 | 2,000,000 | 16.6% |
Stuart J. Doshi, Director | $ 0.05 | 30-June-2021 | 2,000,000 | 16.6% |
Total Directors & Officers as a Group | 12,000,000 | 100% | ||
Other Optionees as a Group | n/a | n/a | 0 | 0 |
Total Stock Options Outstanding at the Report Date | 12,000,000 | 100% | ||
ITEM-7 : Major Shareholders and Related Party Transactions
Authorized Share Capital - At the Report Date, the authorized capital of the Company consists of One Billion (1,000,000,000) shares divided into Five Hundred Million (500,000,000) common shares without par value and Five Hundred Million (500,000,000) preferred shares without par value.
Authorized Common Shares - At the Report Date, all of the 500,000,000 authorized common shares of the Company are of the same class and, once issued, rank equally as to dividends, voting powers, and participation in assets. Holders of common shares are entitled to one vote for each share
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held of record in all matters to be acted upon by the shareholders. Holders of common shares are entitled to receive such dividends as may be declared from time to time by the Board of Directors, in its discretion, out of funds legally available therefore.
Authorized Preferred Shares - At the Report Date, the authorized capital of the Company includes 500,000,000 preferred shares. The Board of Directors, using its own discretion, may from time to time by resolution, alter the Articles of the Company to divide the preferred shares into special series or classes of preferred shares in differing amounts of preferred shares having separate special terms and conditions attached to each such series. The Directors may create and designated a particular series of preferred shares, fix the number of preferred shares to be included in such designated series, and determine the consideration for which any series is to be sold or issued. Further, the Directors may create, define and attach special rights and restrictions to the preferred shares of any particular series including, rates and other conditions of any dividends; the rights and terms of provisions for cancellation, redemption, conversion, exchange, and/or retraction of the series; and the terms and conditions of any voting rights or restrictions. Holders of preferred shares shall be entitled, on the distribution of assets of the Company or on the liquidation, dissolution or winding-up of the Company, to receive before any distribution to be made to holders of common shares or any other series or class of shares capital ranking junior to the preferred shares as specifically provided in the special rights and restrictions attached to any particular series of the preferred shares issued.
Issued and Outstanding Share Capital - At the Company's most recently completed fiscal year ended on 6/30/20, the total number of common shares issued and outstanding was 174,715,381. As of the Report Date the total number of common shares issued and outstanding is 174,715,381. Zero preferred shares were issued at the end of Fiscal 2020, and none are issued as of the Report Date. The authorized and issued share capital of the Company is summarized in the table below.
Authorized And Issued Share Capital | ||||
Authorized Share Capital | Issued and Outstanding Share Capital | |||
Type of Security | Number of Shares | Audited FY End 6/30/20 | Last Unaudited Month End 9/30/20 | At The Report Date |
Common Shares | 500,000,000 | 174,715,381 | 174,715,381 | 174,715,381 |
Preferred Shares | 500,000,000 | 0 | 0 | 0 |
Fully Diluted Basis Shareholding - As at the Report Date, on a fully diluted basis, there are 174,715,381 common shares of the Company either issued or allocated under unexercised outstanding options, warrants, and debt conversion rights. This fully-diluted total includes 199,715,381 common shares actually issued and outstanding plus 25,000,000 outstanding unexercised warrants to purchase additional common shares and a total of 12,000,000 outstanding unexercised incentive stock options; all as summarized in the table below.
Fully Diluted Shareholding | |||
Type of Security | Audited FYE 6/30/20 | Last Unaudited Month End 9/30/20 | At The Report Date |
Common Shares | 174,715,381 | 174,715,381 | 174,715,381 |
Warrants | 25,000,000 | 25,000,000 | 25,000,000 |
Options | 12,000,000 | 12,000,000 | 12,000,000 |
Fully Diluted Total | 211,715,381 | 211,715,381 | 211,715,381 |
A.MAJOR SHAREHOLDERS.
Definition of Major Shareholder - As used herein the term "Major Shareholder" refers to beneficial owners of 5% or more of each class of the Company's voting securities, including our common shares. As at the Report Date the Company has one class of common shares outstanding, of which 174,715,381 are issued and entitled to vote.
Voting Rights - The voting rights of our Major Shareholders do not differ from the voting rights of shareholders who are not Major Shareholders.
List of Major Shareholders - To the knowledge of the Directors and Officers of the Company, no person beneficially owns, directly or indirectly, or exercises control or direction over common shares carrying more than 5% of the voting rights attached to all issued and outstanding shares of the Company at the Report Date except for those Major Shareholders who, together with their respective share holdings, are listed in the following table:
Major Shareholders | |||
Type of Security | Name of Major Shareholder | Voting Shares Owned | % of Total |
Common Shares | Mr. J. Khan (1) | 15,000,000 | 8.6 % |
Common Shares | Dr. K. Tan (2) | 15,000,000 | 8.6 % |
Common Shares | Mr. R. L. McAdoo (3) | 13,579,158 | 7.7 % |
Common Shares | 21st Century Group Holdings Ltd. (4) | 13,000,000 | 7.4 % |
Common Shares | Tri-Emirates Investments Ltd. (5) | 11,000,000 | 6.3% |
| Major Shareholders as a Group | 67,579,158 | 38.7 % |
Common Shares | Total Issued & Outstanding (6) | 174,715,381 | 100.0 % |
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Notes to Table:
1Major Shareholder, Malaysian businessman
2Major Shareholder, Malaysian businessman
3Major Shareholder, Chairman, and CEO of the Company.
4Major Shareholder, British Virgin Islands company owned by UAE resident family.
5Major Shareholder, Cayman Islands company owned by UAE resident family.
6The major shareholders listed do not include any possible major shareholders whose shares are held by nominee depositories CDS and CEDE as described in the following section. The Company is not aware of the identities of unregistered shareholders and beneficial owners of the shares held by nominee depositories CDS or CEDE.
Registered and Unregistered Shareholders - We estimate that the total number of Registered and Unregistered Shareholders of the Company is approximately 990, based on the following assumptions:
·Registered Shareholders - The Company knows the names, residences, and respective numbers of shares held by only those holders who possess a paper certificate on file with our registrar and transfer agent (collectively our "Registered Shareholders"). Each year our transfer and clearing agents Computershare and Broadridge furnish us with a list of Registered Shareholders entitled to vote at our annual general meeting and we use this list to mail proxy and meeting information, and some information about non-objecting beneficial owners who are unknown to us but hold our shares through an intermediary broker dealer or similar financial institution. As at the most recent record date for an annual general meeting we had 190 registered shareholders holding about 57% of our outstanding common shares.
·Unregistered Shareholders - The Company has researched to the best of its ability, the "Unregistered Shareholders". The shares of our Unregistered Shareholders are commonly held by brokerage firms that use a share depository institution as its nominee and clearing house on behalf of banks, brokerage firms, institutions and their respective clients. Two of these share depository institutions, CDS and CEDE, hold a majority of the Company's issued and outstanding common shares as shown in the preceding table. Canadian Depository for Securities, Inc., or "CDS" is a Canadian depository and "CEDE" an American nominee of the Depository Trust Company is a USA depository. The actual number of shareholders, the amount of shares owned by each, the residence of each, and the identities of each actual individual shareholder represented by the CDS and CEDE holdings is not known to the Company except for a limited amount of shareholders who have elected to receive annual meeting proxy and other information directly from the Company. We estimate the number of our Unregistered Shareholders from the number of proxy materials requested of the Company by various brokerage houses for distribution to our shareholders at the record date of our most recently held annual general or special shareholders meeting. Unregistered Shareholders hold about 43% of our outstanding common shares.
Geographic Distribution of Shareholders - We estimate the location of Registered Shareholders from the registered certificate addresses provided by our transfer agent. In the case of Unregistered Shareholders, we presume that the shares held by Canadian depository CDS represent Canadian or other Non-US holders and we presume that shares held at CEDE are attributable to USA resident holders although we have no way of knowing these facts as certain. As at the Report Date, based on mailings of proxy materials for our annual general meetings, we estimate that 21% of shares are held by residents located in the USA, another 28% in Canada, and the remaining 51% in other countries.
Control - To the extent known to the Company, the Company is not owned or controlled directly or indirectly by another corporation, or by any foreign government, or by any other natural or legal person severally or jointly, other than disclosed herein.
Change of Control - To the extent known to the Company, there are no arrangements, the operation of which may at a subsequent date result in a change of control of the Company.
B.RELATED PARTY TRANSACTIONS.
Management Compensation - During this fiscal year ended 6/30/20, the Company paid or accrued salary, fees, or other compensation to the Company's officers in the amount of $130,895.
Related Party Balances - As at the 6/30/20 end of this fiscal year, the Company owes its officers an aggregate amount of $271,683 as accumulated but unpaid salary and fees.
Loans from CEO - As at the 6/30/20 end of this fiscal year, the Company owes its CEO an aggregate amount of $87,500 for personal loans made by him to the Company during and prior to Fiscal 2018. This loan is interest free with no fixed repayment terms.
Loans from Directors - As at the 6/30/20 end of this fiscal year, the Company owes $20,000 to two directors for personal loans in the amount of $10,000 each, made by them to the Company during Fiscal 2020. These loans are interest free with no fixed repayment terms.
Salary Suspension - CEO - During the fiscal year ended 6/30/18, the Company's CEO voluntarily suspended and terminated payment and accrual of salary commencing from 7/01/17 and continuing at the Report Date until such time as the Company's financial condition permits a resumption of such cost.
Options Grants - During this year ended 6/30/20, the Company granted a total of 5,000,00 incentive stock options to three directors. The options have an exercise price of US$ 0.05 per share and an expiry date of 6/30/21.
Other Related Party Transactions - Except for the related party transactions described in the preceding paragraphs or in the notes to the financial statements, and to the extent of the Company's knowledge, during the Company's Fiscal Year ended 6/30/20 and up to the Report Date there were no loans, guarantees, transactions, or currently proposed transactions between the Company and
(a) enterprises that directly or indirectly through one or more intermediaries, control or are controlled by, or are under common control with, the Company;
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(b) associates (An associate is an unconsolidated enterprise in which the Company has a significant influence or which has significant influence over the Company);
(c) individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them significant influence over the Company, and close members (Close members of an individual's family are those that may be expected to influence, or be influenced by, that person in their dealings with the Company.) of any such individual's family;
(d) Directors, Officers, and key management personnel, that is, those persons having authority and responsibility for planning, directing and controlling the activities of the Company, including close members of such individuals' families; and
(e) enterprises in which a substantial interest in the voting power is owned, directly or indirectly, by any person described in (c) or (d) or over which such a person is able to exercise significant influence. This includes enterprises owned by Directors or Major Shareholders of the Company and enterprises that have a member of key management in common with the Company. Significant influence over an enterprise is the power to participate in the financial and operating policy decisions of the enterprise but is less than control over those policies.
C.INTERESTS OF EXPERTS AND COUNSEL.
Since the end of the Company's Fiscal 2020, to the best of our knowledge, there are no transactions, or proposed transactions, which have materially affected or will materially affect the Company in which any auditors, experts, counsel, or independent advisors has had or will have any direct or material indirect interest.
ITEM-8 : Financial Information
A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION.
The Company's audited financial statements prepared using IFRS as issued by IASB, together with the independent auditor's report thereon for the Company's Fiscal 2020 year ended 6/30/20, are attached as an integral part field with this Annual Report. They are further described in "Item 18 - Financial Statements".
a)Canadian Financial Disclosure Standards NI 51-102 - The Company is obliged, in its home country of Canada, to prepare certain financial reports pursuant to the standards required by the Canadian Securities Administrators ("CSA") pursuant to National Instrument 51-102 Continuous Disclosure Obligations and its Companion Policy NI 51-102CP (herein both referred to as "NI 51-102").
b)Electronic SEDAR Filings - NI 51-102 mandates that the Company file electronically, the Company's annual audited financial statements and its interim quarterly financial statements, together with a management discussion and analysis for each period, via the CSA's System for Electronic Document Archiving and Retrieval better known as "SEDAR". The Company began filing electronically on SEDAR in 1997. Copies of the Company's SEDAR filings may be downloaded from the SEDAR website at www.sedar.com.
c)Audited Annual Financial Statements - The Company prepares NI 51-102 annual audited consolidated financial statements as at its year end date of 30 June. These consolidated financial statements include the accounts of the Company and its majority owned subsidiaries.
d)Interim Quarterly Financial Statements - During the course of the Company's Fiscal Year, management prepares NI 51-102 compliant, unaudited, interim, quarterly consolidated financial statements together with a management discussion and analysis and files it on SEDAR within 60 days of each of the fiscal quarters ended 30 September, 31 December, and 31 March.
e)EDGAR Form-6K Filings – The Company has adopted the regular practice of filing its NI 51-102 compliant interim quarterly financial statements and management discussion and analysis on EDGAR under cover of Form-6K filings at the same time it files them on SEDAR.
f)Reporting Currency - Commencing for its 7/31/02 year end the Company adopted the U.S. currency as its reporting currency and has prepared its financial statements since then on that basis. The accounts of the Company are prepared in U.S. dollars.
g)Canadian GAAP - Prior to and including the Company's Fiscal Year ended 6/30/11, the Company's financial statements were prepared in accordance with Canadian Generally Accepted Accounting Principles ("GAAP"), the application of which, in the case of the Company, conformed in all material respects for the periods presented with US GAAP, except as disclosed in footnotes to those financial statements.
h)IFRS - International Financial Reporting Standards - The Canadian Accounting Standards Board has mandated the replacement of Canadian GAAP with International Financial Reporting Standards ("IFRS") for all Canadian publicly accountable enterprises. The effective changeover date for the Company was 7/01/11, at which time the Company ceased using Canadian GAAP and replaced it with IFRS. The Company issued its first set of interim quarterly financial statements prepared under IFRS for the quarter ended 9/30/11 including comparative IFRS financial results and an opening balance sheet as at 7/01/10. The first annual IFRS consolidated financial statements were prepared for the Company's fiscal year ended 6/30/12 which incorporated restated comparatives for the previous Fiscal Year ended 6/30/11. Commencing from 7/01/11, the Company's financial statements were and are prepared in accordance with IFRS as issued by the International Accounting Standards Board or IASB.
i)Dividend Distributions - Holders of our common shares are entitled to receive such dividends as may be declared from time to time by our board, in its discretion, out of funds legally available for that purpose. The Company has not declared any dividends for the last five Fiscal Years and does not anticipate that it will do so in the foreseeable future. We intend to retain future earnings, if any, for use in the operation and expansion of our business and do not intend to pay any cash dividends in the foreseeable future.
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j)Legal Proceedings - As of the Report Date, the Company knows of no material, active or pending legal proceedings against them; nor is the Company involved as a plaintiff in any material proceeding or pending litigation.
B. SIGNIFICANT CHANGES.
There have been no significant changes to the Company's foregoing financial information as described in this Item-8 above since the end of the fiscal year covered by this annual report on Form-20F and up to the Report Date.
ITEM-9 : The Offer and Listing
A. OFFER AND LISTING DETAILS.
Since 3/24/98, the Company's common shares trade on the OTC Markets in the United States under the symbol "CPPXF". The following table lists trading price history of the Company's common shares and the high and low trading prices for each of the past six months, each of the past eleven quarters, and each of the past five fiscal years.
Price History | US$ | US$ |
| Price History | US$ | US$ |
| Price History | US$ | US$ |
For the Month | High | Low |
| For the Quarter | High | Low |
| For the Fiscal | High | Low |
Ended | Price | Price |
| Ended | Price | Price |
| Year's Ended | Price | Price |
09/30/2020 | $0.02 | $0.01 |
| 09/30/2020 | $0.02 | $0.01 |
| 06/30/2020 | $0.01 | $0.01 |
08/31/2020 | $0.02 | $0.01 |
| 06/30/2020 | $0.03 | $0.01 |
| 06/30/2019 | $0.02 | $0.02 |
07/31/2020 | $0.02 | $0.01 |
| 03/31/2020 | $0.01 | $0.01 |
| 06/30/2018 | $0.03 | $0.02 |
06/30/2020 | $0.02 | $0.01 |
| 12/31/2019 | $0.01 | $0.01 |
| 06/30/2017 | $0.03 | $0.02 |
05/31/2020 | $0.03 | $0.01 |
| 09/30/2019 | $0.03 | $0.03 |
| 06/30/2016 | $0.02 | $0.01 |
04/30/2020 | $0.03 | $0.01 |
| 06/30/2019 | $0.02 | $0.02 |
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| 03/31/2019 | $0.02 | $0.02 |
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| 12/31/2018 | $0.01 | $0.01 |
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| 09/30/2018 | $0.04 | $0.03 |
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| 06/30/2018 | $0.03 | $0.03 |
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| 03/31/2018 | $0.03 | $0.03 |
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B. PLAN OF DISTRIBUTION. This Form-20F is filed as an "Annual Report" and the information called for by this Item-9.B is not applicable.
C. MARKETS. Since 3/24/98, the Company's common shares have been quoted and traded under the symbol "CPPXF" on the OTC Markets QB or Pink tiers or one of their respective predecessors.
D. SELLING SHAREHOLDERS. This Form-20F is filed as an "Annual Report" and the information called for by this Item-9.D is not applicable.
E. DILUTION. This Form-20F is filed as an "Annual Report" and the information called for by this Item-9.E is not applicable.
F. EXPENSES OF THE ISSUE. This Form-20F is filed as an "Annual Report" and the information called for by this Item-9.F is not applicable.
ITEM-10 : Additional Information
A. SHARE CAPITAL. This Form-20F is filed as an "Annual Report" and the information called for by this Item-10.A is not applicable.
B. MEMORANDUM AND ARTICLES OF ASSOCIATION.
The Company was incorporated in British Columbia, Canada, on 5/29/84 under the name "Intl. Focus Res. Inc.". On 1/03/96 the name was changed to "Continental Copper Corporation". On 10/23/97 the name was changed to "Continental Energy Corporation". On 6/23/04, the Company was transitioned under the Business Corporation Act (British Columbia). At an annual general meeting of the shareholders on 1/25/06 the shareholders adopted an amended Articles to conform them to the Business Corporations Act (British Columbia), enacted in 2004, as it required. At an annual general meeting of the shareholders on 8/04/17 the shareholders amended, restated, and adopted the Company's current Articles of Association.
Set out below is a summary of various provisions of our Notice of Articles and Articles prescribed by the Business Corporations Act (British Columbia) in respect of:(i) objects and purposes: (ii) directors; (iii) authorized capital; (iv) rights, preference and restrictions attached to our classes of shares; (v) shareholder meetings; and (vi) limitation on rights of non-Canadians; (vii) delay of change of control; and (viii) reporting of share ownership.
Objects and Purposes - Neither our Notice of Articles or Articles contain a limitation on our objects and purposes.
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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 nor 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 two-thirds of the outstanding shares of common stock and two-thirds 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 two-thirds 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 this Annual Report on Form-20F of holders who own more than five percent of our issued and outstanding shares.
C. MATERIAL CONTRACTS
As at the 6/30/20 end of Fiscal 2020, and at the Report Date, the Company does not hold any contracts with third parties that it deems material.
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D. EXCHANGE CONTROLS.
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.
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 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.
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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.
This Form-20F is filed as an Exchange Act "Annual Report" and therefore the provision of information called for by this Item-10.F is not applicable.
G. STATEMENT BY EXPERTS.
This Form-20F is filed as an 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 Suite 1500-1055 West Georgia Street, Vancouver, British Columbia, V6E 4N7 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.
The Company is not in material default of any payments due at the end of the past Fiscal Year covered by this Annual Report or at the Report Date.
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 Security Holder Rights & Use of Proceeds
A. From the beginning of the Fiscal Year covered by this Annual Report up to the Report Date neither the Company nor anyone else has modified materially the instruments defining the rights of holders of any class of the Company's securities.
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B. From the beginning of the Fiscal Year covered by this Annual Report up to the Report Date neither the Company nor anyone else has modified materially or qualified the rights evidenced by any class of the Company's securities by issuing or modifying any other class of securities.
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 during the Fiscal 2020 year ended 6/30/20 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 Acting Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as at the end of Fiscal 2020 on 6/30/20.
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 in Internal 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 during the Fiscal 2020 year ended 6/30/20, 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.ACCOUNTING AND CONTROLLER FUNCTIONS.
Prior to 10/31/19 the Company outsourced its internal controller and accounting functions to AVISAR Chartered Professional Accountants of Langley, British Columbia, Canada. Beginning on 11/01/19 the Company ended this arrangement and the Company's Acting CFO and CEO resumed preparation of consolidated, un-audited, quarterly interim financial statements and reports. The Company's Acting CFO and CEO, in conjunction with the Company's auditors, also prepare the Company's annual audited financial statements and reports. This practice continues at the end of fiscal 2020 and is continuing as of the Report Date.
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ITEM-16 : [Reserved]
A. AUDIT COMMITTEE FINANCIAL EXPERT.
Our Board of Directors has determined that we have at least two members of our Audit Committee, Mr. Doshi and Mr. Garrison, that each qualify as an "Audit Committee Financial Expert" as defined in Regulation S-K (17 CFR Part 229.407(d)(5)(ii)). Mr. Doshi has years of experience as a CEO of publicly listed companies on the Toronto Stock Exchange and the NYSE MKT. Mr. Garrison is a Certified Public Accountant with prior experience working at junior and senior management levels with public accounting firm 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 in Part-1.6 of NI 52-110 Audit Committees
B. CODE OF ETHICS OF SENIOR FINANCIAL OFFICERS.
In addition to the Code of Business Conduct and Ethics published by the Company and described and incorporated herein as provided for in Item-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 is filed with this Annual Report as an attachment marked Exhibit-11.1.
C. INDEPENDENT CERTIFYING AUDITOR'S FEES AND SERVICES.
The Vancouver, British Columbia, Canada based firm of Davidson & Company LLP ("Davidson") serves as the Company's independent auditors, and has since 12/31/14. 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 2020 period covered by this Annual Report.
Audit Fees - The aggregate fees to be billed by Davidson for professional services rendered for the audit of our annual financial statements for the year ended 6/30/20 are estimated at CDN$ 30,000. The aggregate fees billed by Davidson for professional services rendered for the audit of our annual financial statements for the previous fiscal year ended 6/30/19 were CDN$ 30,000.
Tax Fees - The aggregate fees billed by Davidson for professional services rendered and related to tax advice, return preparation, and tax planning for the year ended 6/30/20 were $ nil and the aggregate fees to be rendered by Davidson for similar services for the previous year ended 6/30/19 are also $ 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 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.
During the Company's two most recently completed fiscal years and up to the Report Date there have been no changes to the Company's independent auditors, Davidson & Company LLP.
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 6/30/19. 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.
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PART-III
ITEM-17 : Financial Statements
The Company is providing its audited annual financial statements with this Annual Report on Form-20F in the substance and form described in the following list and the Signatures below:
List of Consolidated Financial Statements Filed Herewith as an Integrated Part of this Annual Report
(1)Financial Statement Title Page.
(2)Independent Auditor's Reports for the past three Fiscal Years ended 6/30/20, 6/30/19 and 6/30/18 by Davidson & Company LLP.
(3)Audited Consolidated Financial Statements for the past three Fiscal Years ended 6/30/20, 6/30/19 and 6/30/18, including:
a.Consolidated Statements of Financial Position.
b.Consolidated Statements of Comprehensive Loss.
c.Consolidated Statements of Cash Flow.
d.Consolidated Statement of Changes in Deficiency.
e.Notes to the Consolidated Financial Statements.
(4)Management's Discussion & Analysis for the 2020 fiscal year ended 6/30/20 made on Form 51-102F in accordance with the Company's obligations in its home country pursuant to the Canadian Securities Administrator's National Instrument NI 51-102 Continuous Disclosure Obligations and its Companion Policy NI 51-102CP.
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AUDITED CONSOLIDATED FINANCIAL STATEMENTS
CONTINENTAL ENERGY CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
30 June 2020
Expressed in U.S. Dollars
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Report of Independent Registered Public Accounting Firm
To the Shareholders and Directors of
Continental Energy Corporation
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial position of Continental Energy Corporation (the “Company”), as of June 30, 2020 and 2019, and the related consolidated statements of loss and comprehensive loss, cash flows, and changes in deficiency for the years ended June 30, 2020, 2019, and 2018, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2020 and 2019, and the results of its operations and its cash flows for the years ended June 30, 2020, 2019, and 2018 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatements of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
We have served as the Company’s auditor since 2015.
“DAVIDSON & COMPANY LLP”
Chartered Professional Accountants
Vancouver, Canada
October 28, 2020
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Continental Energy Corporation
Consolidated Financial Statements
(Expressed in U.S. Dollars)
STATEMENTS OF FINANCIAL POSITION
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ASSETS | Note | 30 June 2020 | 30 June 2019 |
Current |
| $ | $ |
Cash |
| ||
Receivables |
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Prepaid expenses and deposits |
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|
|
|
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LIABILITIES |
|
|
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Current |
|
|
|
Accounts payable and accrued liabilities | 12 | ||
Loans from related parties | 12 | ||
Promissory notes | 10 | ||
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Non-current |
|
|
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Promissory notes | 10 | ||
| |||
DEFICIENCY |
|
|
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Share capital | 11 | ||
Share-based payment and other reserve | 11 | ||
Deficit |
| ( | ( |
| ( | ( | |
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Nature of Operations and Going Concern (Note 1)
- See Accompanying Notes –
ON BEHALF OF THE BOARD:
"Richard L. McAdoo", Director & CEO
"Phillip B. Garrison", Director & Acting CFO
- 37 -
Continental Energy Corporation
Consolidated Financial Statements
(Expressed in U.S. Dollars)
STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
| Year Ended | Year Ended | Year Ended | |
| Note | 30 June 2020 | 30 June 2019 | 30 June 2018 |
EXPENSES |
| $ | $ | $ |
Corporate administrative and office costs |
| |||
Depreciation |
| |||
Engineering and technical services |
| |||
Interest and bank charges | 10 | |||
Management and employee salaries | 12 | |||
Professional fees |
| |||
Regulatory compliance and filing fees |
| |||
Share-based payments | 11,12 | |||
Travel and accommodation |
| |||
| ( | ( | ( | |
OTHER INCOME (EXPENSES) |
|
|
|
|
Interest and foreign exchange |
| ( | ( | ( |
Financing cost | 9 | ( | ||
Settlement of debt | 11, 12 | |||
Transaction cost | 6 | ( | ||
Loss and comprehensive loss for the year |
| ( | ( | ( |
Loss Per Share - Basic and Diluted |
| ( | ( | ( |
Weighted Average Number of Shares - Basic and Diluted | ||||
- See Accompanying Notes -
- 38 -
Continental Energy Corporation
Consolidated Financial Statements
(Expressed in U.S. Dollars)
STATEMENTS OF CASH FLOWS