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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of May 2015
Commission File No. 001-17863
CONTINENTAL ENERGY CORPORATION
(Translation of registrant’s name into English)
Unit 201, 2311 Tradition Way, Naples, Florida U.S.A. 34105
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F [ X ] Form 40-F [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Continental Energy Corporation | ||
(Registrant) | ||
Date: May 13, 2015 | By: | /s/ Robert V. Rudman |
Name: | Robert V. Rudman | |
Title: | Chief Executive Officer |
SEC 1815 (04-07) | Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. |
Exhibit 99.1
CONTINENTAL ENERGY CORPORATION
INTERIM FINANCIAL STATEMENTS
31 MARCH 2015
Expressed in U.S. Dollars
(Unaudited – Prepared by Management)
INTERIM FINANCIAL STATEMENTS
The financial statements included herein are management prepared, unaudited, condensed, interim, consolidated financial statements and are hereinafter referred to as the "Interim Financial Statements". These Interim Financial Statements are filed on SEDAR concurrently with Management's Discussion and Analysis ("MD&A") of the results for the same period, and may be read in conjunction with the MD&A.
NOTICE OF NO AUDITOR REVIEW
In accordance with National Instrument 51-102 Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of our Interim Financial Statements, then such statements must be accompanied by a notice indicating that they have not been reviewed by an auditor.
Neither the accompanying Interim Financial Statements as presented herein nor the accompanying MD&A have been reviewed by our auditors. Both the Interim Financial Statements and the MD&A have been prepared by and are the responsibility of the management of Continental Energy Corporation.
Continental Energy Corporation
Interim Financial Statements
(Unaudited – Prepared by Management and expressed in US Dollars)
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
ASSETS | Note | 31 March 2015 | 30 June 2014 | ||
Current | $ | $ | |||
Cash |
62,316 | 242,436 | |||
Receivables |
1,951 | 7,065 | |||
Prepaid expenses and deposits |
14,468 | 24,557 | |||
Assets held for sale |
4 | - | 565,596 | ||
78,735 | 839,654 | ||||
Non-current assets | |||||
Property, plant and equipment |
6 | 147,227 | 5,845 | ||
225,962 | 845,499 | ||||
LIABILITIES | |||||
Current | |||||
Accounts payable and accrued liabilities |
9 | 406,356 | 398,262 | ||
Loans |
8 | - | 750,000 | ||
Convertible debt |
7 | 408,670 | 374,890 | ||
Liabilities associated with assets held for sale |
4 | - | 10,296 | ||
815,026 | 1,533,448 | ||||
EQUITY (DEFICIENCY) | |||||
Share capital | 8 | 16,701,630 | 16,131,630 | ||
Conversion rights reserve | 7 | 92,966 | 56,966 | ||
Share based payment reserve | 9,401,487 | 9,401,487 | |||
Foreign currency translation reserve | 493 | (120 | ) | ||
Deficit | (26,785,309 | ) | (26,073,495 | ) | |
Equity (deficiency) attributable to: | |||||
Shareholders |
(588,733 | ) | (483,532 | ) | |
Non-controlling interests |
(331 | ) | (204,417 | ) | |
(589,064 | ) | (687,949 | ) | ||
225,962 | 845,499 |
Nature of Operations and Going Concern (Note 1)
ON BEHALF OF THE BOARD:
“Richard L. McAdoo”, Director & CEO
“Robert V. Rudman”, Director & CFO
- See Accompanying Notes -
2
Continental Energy Corporation
Interim Financial Statements
(Unaudited – Prepared by Management and expressed in US Dollars)
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
For the Three | For the Three | For the Nine | For the Nine | ||||||
Months | Months | Months | Months | ||||||
Ended | Ended | Ended | Ended | ||||||
Note | 31 March 2015 | 31 March 2014 | 31 March 2015 | 31 March 2014 | |||||
NET LOSS FOR THE PERIOD | $ | $ | $ | $ | |||||
Depreciation |
6 | 731 | 1,174 | 2,192 | 3,525 | ||||
Interest and bank charges |
7 | 12,000 | 42,573 | 73,006 | 110,225 | ||||
Management and consulting fees |
9 | 102,994 | 70,049 | 243,018 | 212,429 | ||||
Office and investor relations |
27,199 | 16,553 | 108,669 | 40,034 | |||||
Professional fees |
26,863 | 15,557 | 92,009 | 47,260 | |||||
Rent, maintenance and utilities |
4,316 | 3,322 | 16,878 | 13,428 | |||||
Share-based payments |
8 | - | - | - | 20,877 | ||||
Travel and accommodation |
4,637 | 11,428 | 21,454 | 23,998 | |||||
Loss before the undernoted | (178,740 | ) | (160,656 | ) | (557,226 | ) | (471,776 | ) | |
Other income (expenses) | |||||||||
Interest and foreign exchange |
2,318 | 3,782 | 3,164 | 4,475 | |||||
Loss on disposal of subsidiary |
4 | - | - | (159,837 | ) | - | |||
Loss for the period from continuing operations | (176,422 | ) | (156,874 | ) | (713,899 | ) | (467,301 | ) | |
Loss for the period from discontinued operations | 4 | - | (161,682 | ) | - | (382,254 | ) | ||
Net loss for the period | (176,422 | ) | (318,556 | ) | (713,899 | ) | (849,555 | ) | |
Net loss for the period attributable to: |
|||||||||
Shareholders of the Company |
(175,391 | ) | (239,332 | ) | (711,814 | ) | (662,251 | ) | |
Non-controlling interests |
(1,031 | ) | (79,224 | ) | (2,085 | ) | (187,304 | ) | |
COMPREHENSIVE LOSS FOR THE PERIOD | |||||||||
Net loss for the period | (176,422 | ) | (318,556 | ) | (713,899 | ) | (849,555 | ) | |
Other Comprehensive income (loss) to be reclassified to profit or loss in subsequent periods: | |||||||||
Exchange differences on translation of foreign operations |
287 | (4,936 | ) | 38,659 | (5,347 | ) | |||
Recycle of translation differences on disposal of subsidiary |
4 | - | - | (19,209 | ) | - | |||
Comprehensive loss for the period | (176,135 | ) | (323,492 | ) | (694,449 | ) | (854,902 | ) | |
Net comprehensive loss attributable to: | |||||||||
Shareholders of the Company |
(175,205 | ) | (241,849 | ) | (711,201 | ) | (664,978 | ) | |
Non-controlling interests |
(930 | ) | (81,643 | ) | 16,752 | (189,924 | ) | ||
Loss Per Share – Basic and Diluted | (0.00 | ) | (0.00 | ) | (0.01 | ) | (0.01 | ) | |
Weighted Average Number of Shares | 123,015,381 | 123,615,381 | 130,456,987 | 123,446,038 |
- See Accompanying Notes -
3
Continental Energy Corporation
Interim Financial Statements
(Unaudited – Prepared by Management and expressed in US Dollars)
CONSOLIDATED STATEMENTS OF CASH FLOW
For the Nine | For the Nine | ||||
Months | Months | ||||
Ended | Ended | ||||
Cash Resources Provided By (Used In) | Note | 31 March 2015 | 31 March 2014 | ||
Operating Activities | $ | $ | |||
Loss for the period |
(713,899 | ) | (849,555 | ) | |
Items not affecting cash |
|||||
Depreciation |
6 | 2,192 | 3,525 | ||
Interest on convertible debt |
7 | 69,780 | 104,057 | ||
Interest on related party loan |
- | 834 | |||
Equity loss from investment in affiliates |
4 | - | 382,258 | ||
Loss on disposal of subsidiary |
4 | 159,837 | - | ||
Share-based payments |
8 | - | 20,877 | ||
Changes in non-cash working capital |
|||||
Receivables |
5,114 | (1,244 | ) | ||
Prepaid expenses and deposits |
12,647 | (9,596 | ) | ||
Accounts payable and accrued liabilities |
(39,049 | ) | (24,673 | ) | |
(503,378 | ) | (373,517 | ) | ||
Investing Activities | |||||
Consideration received upon disposal of subsidiary |
4 | 200,000 | - | ||
Cash contribution to Ruaha Power |
5 | (10,000 | ) | - | |
Cash obtained upon acquisition of control of Ruaha Power |
5 | 13,049 | - | ||
203,049 | - | ||||
Financing Activities | |||||
Shares issued – cash |
8 | 120,000 | 40,000 | ||
Proceeds from loans |
- | 850,000 | |||
Repayment of loans |
- | (100,000 | ) | ||
Repayment of related party loan |
- | (6,561 | ) | ||
120,000 | 783,439 | ||||
Change in Cash | (180,329 | ) | 409,922 | ||
Effect of exchange rate changes on cash | 209 | (168 | ) | ||
Cash Position – Beginning of Period |
242,436 | 21,999 | |||
Cash Position – End of Period |
62,316 | 431,753 |
Supplemental cash flow information (Note 10)
- See Accompanying Notes -
4
Continental Energy Corporation
Interim Financial Statements
(Unaudited – Prepared by Management and expressed in US Dollars)
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIENCY)
Foreign | |||||||||||||||||
Share Based | Conversion | Currency | Non- | ||||||||||||||
Payment | Rights | Translation | controlling | ||||||||||||||
Common Share Capital | Reserve | Reserve | Reserve | Deficit | Interest | Total | |||||||||||
Note | Number | Amount $ | $ | $ | $ | $ | $ | $ | |||||||||
Balance on 30 June 2013 | 122,815,381 | 16,100,792 | 9,353,635 | 10,966 | - | (25,286,872 | ) | (51,435 | ) | 127,086 | |||||||
Private placements – cash |
8 | 800,000 | 30,838 | 9,162 | - | - | - | - | 40,000 | ||||||||
Convertible debt amendments |
7 | - | - | 17,813 | 46,000 | - | - | - | 63,813 | ||||||||
Share-based payments |
8 | - | - | 20,877 | - | - | - | - | 20,877 | ||||||||
Foreign currency translation |
- | - | - | - | (2,727 | ) | - | (2,620 | ) | (5,347 | ) | ||||||
Loss for the period |
- | - | - | - | - | (662,251 | ) | (187,304 | ) | (849,555 | ) | ||||||
Balance on 31 March 2014 | 123,615,381 | 16,131,630 | 9,401,487 | 56,966 | (2,727 | ) | (25,949,123 | ) | (241,359 | ) | (603,126 | ) | |||||
Balance on 30 June 2014 | 123,615,381 | 16,131,630 | 9,401,487 | 56,966 | (120 | ) | (26,073,495 | ) | (204,417 | ) | (687,949 | ) | |||||
Private placements – cash |
8 | 2,400,000 | 120,000 | - | - | - | - | - | 120,000 | ||||||||
Conversion of loan |
8 | 15,000,000 | 750,000 | - | - | - | - | - | 750,000 | ||||||||
Convertible debt amendments |
7 | - | - | - | 36,000 | - | - | - | 36,000 | ||||||||
Acquisition of Ruaha Power |
5 | 2,000,000 | 100,000 | - | - | - | - | 1,488 | 101,488 | ||||||||
Foreign currency translation |
- | - | - | - | 19,822 | - | 18,837 | 38,659 | |||||||||
Disposal of subsidiary |
4 | (20,000,000 | ) | (400,000 | ) | - | - | (19,209 | ) | - | 185,846 | (233,363 | ) | ||||
Loss for the period |
- | - | - | - | - | (711,814 | ) | (2,085 | ) | (713,899 | ) | ||||||
Balance on 31 March 2015 | 123,015,381 | 16,701,630 | 9,401,487 | 92,966 | 493 | (26,785,309 | ) | (331 | ) | (589,064 | ) |
- See Accompanying Notes -
5
Continental Energy Corporation
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(Unaudited – Prepared by Management and expressed in US Dollars)
31 MARCH 2015
1. | Nature of Operations and Going Concern |
Continental Energy Corporation (“Continental” or the “Company”) is incorporated under the laws of the Province of British Columbia, Canada. The Company’s registered address and records office is 900-885 West Georgia Street, Vancouver, British Columbia, Canada V6C 3H1.
The Company has historically been engaged in the assembly of a portfolio of oil and gas exploration properties. During the fourth fiscal quarter ended 30 June 2014, the Company began diversifying into a broader range of energy providing activities by entering into an early stage consortium focused on developing small scale, distributed hydropower, biomass, and solar energy solutions in underserved rural markets.
These Interim Financial Statements have been prepared on the basis of accounting principles applicable to a going concern, which assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations. The Company has incurred operating losses over the past several fiscal years and has no current source of operating cash flows. The Company’s ability to continue as a going concern is dependent upon its ability to obtain the financing necessary to acquire and develop its projects as well as fund ongoing administration expenses. There are no assurances that sufficient funding will be available.
Management intends to obtain additional funding by issuing common shares in private placements. There can be no assurance that management’s future financing actions will be successful. Management is not able to assess the likelihood or timing of improvements in the equity markets for raising capital for future acquisitions or expenditures.
These uncertainties indicate the existence of material uncertainty that cast significant doubt on the Company’s ability to continue as a going concern in the future. If the going concern assumption were not appropriate for these Interim Financial Statements, liquidation accounting would apply and adjustments would be necessary to the carrying values and classification of assets, liabilities, the reported income and expenses, and such adjustments could be material.
2. | Basis of Preparation |
These Interim Financial Statements have been prepared in accordance with International Accounting Standards (“IAS”) 34, Interim Financial Reporting, and are based on the principles of International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board and interpretations thereof made by the International Financial Reporting Interpretations Committee.
These Interim Financial Statements should be read in conjunction with the audited consolidated financial statements for the last fiscal year ended 30 June 2014, which were also prepared in accordance with IFRS.
The Company’s Board of Directors has delegated the responsibility and authority for approving quarterly financial statements and MD&A to its Audit Committee. The Audit Committee approved these Interim Financial Statements on 12 May 2015.
These Interim Financial Statements have been prepared on a historical cost basis and presented in United States (“US”) dollars, the functional currency of the Company, except when otherwise indicated.
3. | Significant Accounting Estimates and Judgments |
The preparation of these Interim Financial Statements in accordance with IFRS requires that the Company’s management make judgments and estimates and form assumptions that affect the amounts in the financial statements and related notes to those financial statements. Actual results could differ from those estimates. Judgments, estimates and assumptions are reviewed on an ongoing basis based on historical experience and other factors that are considered to be relevant under the circumstances. Revisions to judgments, estimates and assumptions are accounted for prospectively.
In preparing these Interim Financial Statements, the significant judgments made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those applied to the audited consolidated financial statements for the last fiscal year ended 30 June 2014.
6
Continental Energy Corporation
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(Unaudited – Prepared by Management and expressed in US Dollars)
31 MARCH 2015
4. | Disposal of Subsidiary |
On 4 June 2013, the Company acquired 51% of the shares of Visionaire Energy AS (“Visionaire Energy”), a privately held Norwegian holding company by issuing 20,000,000 of its common shares at a value of $900,000 to Visionaire Invest AS (the “Vendor”). Visionaire Energy is an inactive, holding entity with its principal assets being its shareholdings in two separate, privately owned, offshore oil and gas service providers both based in Bergen, Norway. Visionaire Energy owns a 49% equity interest in VTT Maritime AS (“VTT”) and a 41% equity interest in RADA Engineering and Consulting AS (“RADA”). Visionaire Energy exerts significant influence over both VTT and RADA, and accounts for them using the equity method.
Pursuant to a sales and purchase agreement dated 15 September 2014, with an effective date of 30 June 2014, the Company reached an agreement with the Vendor to sell its 51% interest in Visionaire Energy for $200,000 cash and the return of 20,000,000 common shares of the Company. The operations of Visionaire Energy were therefore classified as discontinued operations held for sale in the Company’s consolidated financial statements dated 30 June 2014.
The major classes of assets and liabilities of Visionaire Energy classified as held for sale were as follows:
30 June 2014 | ||
$ | ||
Cash | 6,528 | |
Investment in VTT and RADA | 559,068 | |
Assets held for sale | 565,596 | |
Accounts payable | 10,296 | |
Liabilities associated with assets held for sale | 10,296 |
The agreement was subject to the approval of the shareholders which was obtained at the Company’s annual meeting held on 5 December 2014, the effective date of disposal of Visionaire Energy.
Based on the book value of the net assets disposed of on 5 December 2014, the related sales proceeds and the effect of recycling of foreign exchange, the loss on disposal of Visionaire Energy was calculated to be $159,837, as summarized below:
5 December 2014 | |||
$ | |||
Cash | $ | 5,611 | |
Investment in VTT and RADA | 596,439 | ||
Accounts Payable | (8,850 | ) | |
Non-controlling interest | 185,846 | ||
Total net assets | 779,046 | ||
Consideration – Cash | 200,000 | ||
Consideration – Common shares of Continental | 400,000 | ||
Total consideration | 600,000 | ||
Loss on disposal before recycling of foreign exchange | 179,046 | ||
Recycling of foreign exchange | (19,209 | ) | |
Loss on disposal of Visionaire Energy | $ | 159,837 |
7
Continental Energy Corporation
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(Unaudited – Prepared by Management and expressed in US Dollars)
31 MARCH 2015
The discontinued results of Visionaire Energy during fiscal 2014 are presented below. Visionaire Energy did not have any transactions during the current fiscal year.
For the Three | For the Nine | |||
Months | Months | |||
Ended | Ended | |||
31 March 2014 | 31 March 2014 | |||
$ | $ | |||
Interest Income | - | (4 | ) | |
Equity loss from investment in associates | 161,682 | 382,258 | ||
Loss from discontinued operations | 161,682 | 382,254 | ||
Attributable to non-controlling interest | (79,224 | ) | (187,304 | ) |
Attributable to the shareholders of the Company | 82,458 | 194,950 |
Visionaire Energy incurred a foreign exchange gain on its cash balance held in Norwegian Kroner of $917 during the period until the disposal of the subsidiary on 5 December 2014 (nine months ended 31 March 2014 – loss of $168). Also during the nine months ended 31 March 2014, Visionaire Energy received $4 in interest on its cash balance. There were no other transactions impacting the operating, investing and financing cash flows of Visionaire Energy. The operations of Visionaire Energy also did not have any significant impact on the loss per share for the periods presented.
5. | Acquisition in Ruaha River Power Company Ltd. (“Ruaha Power) |
On 30 April 2014, during the last fiscal year ended 30 June 2014, the Company received 4,250,000 new-issue, fully paid-up, ordinary shares of Ruaha Power representing a 42.5% shareholding interest. Ruaha Power is a renewable energy power developer, incorporated and based in Dar es Salaam, Tanzania. It develops small and mid-sized power projects with the intent of acting as an independent power producer and distribution networks or “Mini” operator of off-grid isolated mini-grids. The Company was one of four founding shareholders of Ruaha Power. A privately owned Tanzanian company, Kitonga Electric Power Company (“Kitonga”) was issued a 15% stake in Ruaha Power. A privately owned American company, Pan African Management and Development Company, Inc. (“Panafra”) and its Tanzanian affiliate, Kastan Mining PLC (“Kastan”) were issued 30.0% and 12.5% respectively.
The Company earned its shares of Ruaha Power by incurring certain costs in enabling its management to do work and provide substantial assistance attributable to the creation and preparation of Ruaha Power’s business plans prior to the shares issue date. The Company did not capitalize any amount for the work done in consideration of the issue of shares at the 30 June 2014 fiscal year end because Ruaha Power at that time had no assets and had not yet commenced business operations.
Effective from 11 October 2014, the four founding shareholders of Ruaha Power entered into an agreement which terminated the original shareholder agreement. Pursuant to the termination agreement, Kitonga and Kastan withdrew as shareholders and returned their shares to Ruaha Power and Panafra. Continental and Panafra entered into a new agreement to reorganize and redistribute rights and shares of Ruaha Power on 29 October 2014; and the Company issued 2,000,000 of its common shares to Panafra and increased its shareholding in Ruaha Power from 42.5% to 65% thereby obtaining control over its operations. This acquisition of a 65% majority shareholding interest in Ruaha Power is considered to be an acquisition of a group of assets for accounting purposes as the construction of the Malolo Mini-Grid, the main asset of the entity, was in a very early stage, and Ruaha Power did not qualify as a business, as defined in IFRS 3, Business Combinations.
8
Continental Energy Corporation
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(Unaudited – Prepared by Management and expressed in US Dollars)
31 MARCH 2015
The purchase price and the net assets of Ruaha Power as of the date of acquisition are described below:
29 October 2014 | ||
$ | ||
2,000,000 common shares of Continental at $0.05 | 100,000 | |
Cash advance to Ruaha Power during the period | 10,000 | |
Total purchase price | 110,000 | |
Cash | 13,049 | |
Prepaid expenses and deposits | 2,562 | |
Equipment (Note 6) | 4,428 | |
Malolo Mini-Grid (Note 6) | 115,140 | |
Accounts payable and accrued liabilities | (23,691 | ) |
Non-controlling interest | (1,488 | ) |
Net assets acquired | 110,000 |
The Company elected to measure the non-controlling interest at a 35% proportionate share of Ruaha Power’s identifiable assets.
From the date of acquisition, Ruaha Power added a total of $3,872 in additional loss to the Company, net of allocation to non-controlling interest of $2,085.
On 15 August 2014, Ruaha Power entered into a joint venture agreement with Husk Power Systems Ltd. (“Husk Power”) for power generation at the Malolo Mini-Grid (the “Joint Venture”). As a portion of its contribution to the Joint Venture, Husk Power supplied a biomass gasifier power plant (the “Husk Plant”) at an agreed, deemed value of $60,000. The Husk Plant is to be used as the first embedded generator in the Malolo Mini-Grid. Ruaha Power undertook to construct the distribution network portion of the Malolo Mini-Grid as its portion of the Joint Venture. Once power sales commence, the Joint Venture parties have agreed to share, on an equal basis, the portion of the Malolo Mini-Grid net income after operating expenses that are attributable and limited to the power generated by the Husk Plant.
The Joint Venture was designed to allow Ruaha Power the rights to use the Husk Plant only. Ruaha Power maintains control over the Joint Venture’s operations. The Company’s contribution for construction of the Malolo Mini-Grid is capitalized within property, plant and equipment (Note 6). The payment to Husk Power, as dependent on future income, cannot be determined until the power sales commence. The Company will charge such payments as expenses in the periods in which they are incurred.
6. | Property, Plant and Equipment |
Computer | Automobile | ||||||
Equipment | and | Malolo | |||||
and Software | Equipment | Mini-Grid | Total | ||||
$ | $ | $ | $ | ||||
Balance as at 30 June 2014 | 4,521 | 1,324 | - | 5,845 | |||
Carrying value of asset of Ruaha Power upon acquisition |
- | 4,428 | 7,904 | 12,332 | |||
Excess of fair value of consideration over net assets of Ruaha Power |
- | - | 107,236 | 107,236 | |||
Additions | - | 7,000 | 16,272 | 23,272 | |||
Depreciation | (1,695 | ) | (496 | ) | - | (2,192 | ) |
Impact of foreign exchange | - | 652 | 82 | 734 | |||
Balance as at 31 March 2015 | 2,826 | 12,908 | 131,494 | 147,227 |
9
Continental Energy Corporation
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(Unaudited – Prepared by Management and expressed in US Dollars)
31 MARCH 2015
7. | Convertible Debt |
Total | ||
$ | ||
Balance on 30 June 2013 | 311,171 | |
Interest |
127,532 | |
Conversion rights - amendments |
(46,000 | ) |
Additional consideration warrants - amendment |
(17,813 | ) |
Balance on 30 June 2014 | 374,890 | |
Interest |
69,780 | |
Conversion rights - amendments |
(36,000 | ) |
Balance on 31 March 2015 | 408,670 |
On 21 September 2011, the Company issued a convertible promissory note for proceeds of $250,000. As additional consideration, the Company also issued 1,562,500 warrants (“the additional consideration warrants”) to the note holder.
The Company has since entered into multiple arrangements with the note holder for amendment of the terms of the convertible promissory note and the additional consideration warrants. The series of modifications caused additional value to the note holder and up until 30 June 2014, the Company recognized share based payments reserve and conversion rights reserve of $34,532 and $48,000, respectively (2013 – $16,719 and $2,000; 2014 - $17,813 and $46,000). As at 30 June 2014, the promissory note earned interest at 18% per annum, had maturity date of 30 April 2014, and could be converted to the common shares of the Company at $0.05 per share. The additional consideration warrants are exercisable at $0.05 per common share and expire on 31 December 2015.
On 28 July 2014, the Company reached an agreement with the note holder to extend the maturity date of the promissory note to 30 September 2014 without any additional consideration. This amendment resulted in an incremental value of $36,000.
The convertible promissory note is in default as of the date of these Interim Financial Statements.
The incremental value of the conversion rights of the note and the additional consideration warrants were calculated using the Black-Scholes model with the following assumptions:
Additional | ||||
Conversion | Consideration | |||
Fiscal 2014 | Rights | Warrants | ||
Expected dividend yield | Nil | Nil | ||
Expected stock price volatility | 86% | 86% | ||
Risk-free interest rate | 0.05% | 0.30% | ||
Expected life (years) | 0.09 – 0.14 | 1.27 – 1.76 | ||
Additional | ||||
Conversion | Consideration | |||
Fiscal 2015 | Rights | Warrants | ||
Expected dividend yield | Nil | - | ||
Expected stock price volatility | 87% | - | ||
Risk-free interest rate | 0.04% | - | ||
Expected life (years) | 0.18 | - |
10
Continental Energy Corporation
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(Unaudited – Prepared by Management and expressed in US Dollars)
31 MARCH 2015
8. | Share Capital |
Authorized Share Capital
500,000,000 common shares without par value and without special rights or restrictions attached.
500,000,000 preferred shares without par value and without special rights or restrictions attached.
Shares issued
Period ended 31 March 2015
On 4 August 2014, the Company completed a private placement consisting of 2,400,000 common shares at a price of $0.05 per share for total proceeds of $120,000.
On 22 August 2014, $750,000 loan, previously obtained on 3 March 2014, was converted into 15,000,000 common shares of the Company at a price of $0.05 per share.
On 29 October 2014, the Company issued 2,000,000 common shares at fair value of $100,000 for acquisition of Ruaha Power (Note 5).
On 5 December 2014, Visionaire Invest AS returned 20,000,000 common shares of the Company, with fair value of $400,000, for cancellation pursuant to the sale of the Company’s 51% interest in Visionaire Energy (Note 4).
Year ended 30 June 2014
On 25 July 2013, a private placement was completed for 500,000 units for total proceeds of $25,000. Each unit consists of one common share of the Company and one-half share purchase warrant. Each warrant has a term of three years and an exercise price of $0.10 per share. The Company allocated $19,623 to common shares and $5,377 to the share purchase warrants based on management’s estimate of relative fair values.
On 21 October 2013, a private placement was completed for 300,000 units for total proceeds of $15,000. Each unit consists of one common share of the Company and one share purchase warrant. Each warrant has a term of three years and an exercise price of $0.10 per share. The Company allocated $11,215 to common shares and $3,785 to the share purchase warrants based on management’s estimate of relative fair values.
Stock options
The Company has an approved incentive stock option plan under which the Board of Directors may, from time to time, grant options to directors, officers, employees or consultants. Options granted must be exercised within a period as determined by the board. Options vest on the grant date unless otherwise determined by the board. The aggregate number of common shares which may be reserved as outstanding options shall not exceed 25,000,000, and the maximum number of options held by any one individual at any one time shall not exceed 7.5% of the total number of the Company's issued and outstanding common shares and 15% of same for all related parties (officers, directors, and insiders) as a group.
A reconciliation of the Company’s stock options outstanding on 31 March 2015 and 30 June 2014 is as follows:
Weighted Average | ||||
Number of | Exercise Price | |||
Warrants | $ per Share | |||
Outstanding on 30 June 2013 and 2014 | 15,800,000 | 0.05 | ||
Expired |
(8,000,000 | ) | 0.05 | |
Outstanding on 31 March 2015 | 7,800,000 | 0.05 |
Period ended 31 March 2015
On 31 March 2015, 8,000,000 stock options exercisable at $0.05 per share expired without being exercised.
11
Continental Energy Corporation
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(Unaudited – Prepared by Management and expressed in US Dollars)
31 MARCH 2015
A summary of the Company’s options outstanding on 31 March 2015 and on 30 June 2014 is as follows:
Options | Options | Exercise | Expiry |
Outstanding | Exercisable | Price | Date |
7,800,000 | 7,800,000 | $0.05 | 31 December 2015 |
Warrants
A reconciliation of the Company’s warrants outstanding on 31 March 2015 and on 30 June 2014 is as follows:
Weighted Average | ||||
Number of | Exercise Price | |||
Warrants | $ per Share | |||
Outstanding on 30 June 2013 | 11,555,500 | 0.06 | ||
Issued |
2,550,000 | 0.06 | ||
Expired |
(2,643,000 | ) | 0.05 | |
Outstanding on 30 June 2014 | 11,462,500 | 0.05 | ||
Expired |
(2,000,000 | ) | 0.05 | |
Outstanding on 31 March 2015 | 9,462,500 | 0.05 |
Period ended 31 March 2015
On 5 January 2015, the terms of 2,600,000 and 375,000 outstanding share purchase warrants expiring on 7 January 2015 and 15 January 2015, respectively, were extended to expire on 7 January 2016 and 15 January 2016. The exercise price of these warrants remained at $0.05 per share. As these warrants were originally issued to investors in a private placement, no amount was recognized for the incremental increase in their fair value.
Year ended 30 June 2014
On 25 July 2013, a total of 250,000 share purchase warrants were issued in conjunction with the Company’s private placement, with an exercise price of $0.10 and a term expiring in three years from the date of issue. The total value of the warrants was $13,700 which was utilized to allocate $5,377 of the total proceeds of $25,000 to share based payments reserve.
On 1 October 2013, the Company issued a total of 2,000,000 share purchase warrants as total compensation to two arm’s length parties in exchange for investor relations and other financial services to the Company. Each warrant had a term of one year and an exercise price of $0.05 per common share. The Company calculated the value of these warrants to be $20,877 which was charged to the statement of loss and comprehensive loss as share-based payments during the year ended 30 June 2014. These warrants expired unexercised on 30 September 2014.
On 21 October 2013, a total of 300,000 warrants were issued in conjunction with the Company’s private placement, with an exercise price of $0.10 and a term expiring in three years from the date of the grant. The total value of the warrants was $4,050 which was utilized to allocate $3,785 of the total proceeds of $15,000 to share based payments reserve.
The fair value of the warrants issued was estimated using the Black-Scholes option pricing model, with the following assumptions:
Period Ended | Year Ended | |||
31 March 2015 | 30 June 2014 | |||
Expected dividend yield | - | Nil | ||
Expected stock price volatility | - | 86% | ||
Risk-free interest rate | - | 0.21% | ||
Expected life of warrants (years) | - | 1.43 |
12
Continental Energy Corporation
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(Unaudited – Prepared by Management and expressed in US Dollars)
31 MARCH 2015
A summary of the Company’s warrants outstanding on 31 March 2015 is as follows:
Number of Shares | Price Per Share | Expiry Date |
250,000 | $0.05 | 31 December 2015 |
1,562,500 | $0.05 | 31 December 2015 |
3,975,000 | $0.05 | 31 December 2015 |
2,600,000 | $0.05 | 7 January 2016 |
375,000 | $0.05 | 15 January 2016 |
150,000 | $0.10 | 28 June 2016 |
250,000 | $0.10 | 25 July 2016 |
300,000 | $0.10 | 23 October 2016 |
9,462,500 |
9. | Related Party Transactions |
As at 31 March 2015, $298,685 (30 June 2014 - $297,000) was payable to officers of the Company for management, consulting fees and short-term employee benefits. These amounts are included in accounts payable and are unsecured, non-interest bearing with no specific terms for repayment.
During the three and nine months ended 31 March 2015, the Company paid or accrued management, consulting fees and short-term employee benefits to officers of the Company in the amount of $99,185 and $234,185, respectively (2013 - $67,500 and $202,500, respectively).
10. | Supplemental cash flow information |
Non-Cash Investing and Financing Activities for the | 31 March 2015 | 31 March 2014 | |||
Nine Months Ended | Note | $ | $ | ||
Conversion option and additional consideration warrants amendment |
7 | (36,000 | ) | (63,813 | ) |
Share consideration for acquisition of Ruaha Power |
5 | (100,000 | ) | - | |
Cancellation of shares upon disposal of subsidiary |
4 | (400,000 | ) | - | |
Property, plant and equipment financed through accounts payable |
6 | (23,272 | ) | - | |
Loan converted to common shares of the Company |
8 | (750,000 | ) | - |
11. | Segmented Information |
The Company operates in one segment, being the business sector of acquiring participating interests in oil, gas, and alternative energy projects, producers, and related service providers doing business outside of North America. The Company’s non-current assets are segmented on a geographical basis as follows:
31 March 2015 | 30 June 2014 | |||
Geographic Segment | $ | $ | ||
Africa | 143,574 | - | ||
Southeast Asia | 3,653 | 5,845 | ||
Total Non-Current Assets | 147,227 | 5,845 |
13
Exhibit 99.2
MANAGEMENT’S DISCUSSION & ANALYSIS
FORM 51-102F1
CONTINENTAL ENERGY CORPORATION
For the Third Quarter of Fiscal 2015 Ended on 31 March 2015
This Management Discussion and Analysis (“MD&A”) has been prepared by the management of Continental Energy Corporation (the "Company") as of 12 May 2015 (the "Report Date"). It is intended to supplement and complement the unaudited, condensed, interim, consolidated quarterly financial statements (the "Interim Financial Statements") that are also prepared by management and filed herewith.
The Interim Financial Statements and this MD&A pertain to the three month period ended 31 March 2015, which corresponds to the Third Quarter of the Company's fiscal year ending 30 June 2015. This quarter is hereinafter referred to as the "Third Quarter" or as the "Past Quarter".
All financial information presented herein, and in the Interim Financial Statements, has been prepared in accordance with accounting policies consistent with International Financial Reporting Standards (“IFRS”). All amounts disclosed are in United States dollars unless otherwise stated.
PART-1 : NATURE OF BUSINESS
The Company is an emerging international energy investment company established to acquire participating interests in conventional, alternative, and renewable energy generation and distribution projects in a geographic area focused on the developing countries of the "Indian Ocean Rim", including those in bordering the Indian Ocean in Southeast Asia, East Africa, and South Asia.
PART-2 : HIGHLIGHTS OF THE THIRD QUARTER
Significant events which may have a material effect on the business affairs of the Company that have occurred during the Third Quarter are summarized below:
Corporate Communications Firm Retained
In a news release dated 12 February 2015, the Company announced that it had retained Heisler Communications to advise and provide strategic corporate communications services on behalf of the Company. Heisler Communications is a Toronto, Canada based capital markets communications firm providing a full range of traditional and digital marketing services to assist companies increase their visibility, manage investor expectations, and broaden and strengthen corporate awareness.
2.1 Share Purchase Warrants Activity During the Third Quarter
During the Past Quarter, the following activity involving the Company’s share purchase warrants occurred:
Exercises - No outstanding share purchase warrants were exercised.
New Issues - No new issues of share purchase warrants were made.
Expiry – No share purchase warrants expired.
Amendments – The terms of 2,975,000 of the Company’s outstanding share purchase warrants, exercisable at $0.05 per share and expiring during January 2015, were modified to extend the maturity date by one year.
2.2 Incentive Stock Options Activity During the Third Quarter
During the Past Quarter, the following activity involving the Company’s incentive stock options occurred:
Exercises - No outstanding incentive stock options were exercised.
New Grants - No new incentive stock options were granted.
Expiry- A total of 8,000,000 outstanding incentive stock options expired.
Amendments- No amendments were made to the terms of any outstanding incentive stock options.
2.3 Common Share Conversion Rights Activity During the Third Quarter
During the Past Quarter, the following activity involving the common share conversion rights issued by the Company occurred:
Exercises - There were no exercises of outstanding common share conversion rights.
New Issues - There were no new common shares conversion rights issued.
Expiry - No outstanding common shares conversion rights expired.
Amendments- No amendments were made to the terms of any outstanding common share conversion rights.
2.4 New Shares Issues During the Third Quarter
During the Past Quarter, there were no new common shares issued.
PART-3 : SHAREHOLDING AT END OF THE THIRD QUARTER
As at the end of the Third Quarter, the Company’s share capital was issued or held in reserve as follows:
123,015,381 | common shares were issued and outstanding. | |
9,462,500 | unexercised warrants were issued and outstanding. | |
7,800,000 | unexercised stock options were issued and outstanding. | |
5,000,000 | common shares were held in reserve against possible conversion of a $250,000 note. | |
Nil | preferred shares were issued and outstanding. |
PART-4 : SUBSEQUENT EVENTS TO THE REPORT DATE
No significant events possibly having material effect on the business affairs of the Company occurred since the end of the Third Quarter but prior to the Report Date of this MD&A.
4.1 Share Purchase Warrants Activity: Since Third Quarter End and Up to the Report Date
Exercises - No outstanding share purchase warrants were exercised.
New Issues- No share purchase warrants were issued.
Expiry - No share purchase warrants expired.
Amendments - No amendments were made to the terms of any outstanding share purchase warrants.
4.2 Incentive Stock Options Activity: Since Third Quarter End and Up to the Report Date
Exercises- No outstanding incentive stock options were exercised.
New Grants- No new incentive stock options were granted.
Expiry - No outstanding incentive stock options expired.
Amendments- No amendments were made to the terms of any outstanding incentive stock options.
4.3 Conversion Rights Activity: Since Third Quarter End and Up to the Report Date
Exercises - There were no exercises of outstanding common share conversion rights.
New Issues - There were no new common shares conversion rights issued.
Expiry- No outstanding common shares conversion rights expired.
Amendments- No amendments were made to the terms of any outstanding common share conversion rights.
4.4 New Shares Issues: Since Third Quarter End and Up to the Report Date
No new common shares were issued.
PART-5 : SHAREHOLDING AT THE REPORT DATE
As at the Report Date of this MD&A, the Company’s share capital is issued or held in reserve as follows:
123,015,381 | common shares were issued and outstanding. | |
9,462,500 | unexercised warrants were issued and outstanding. | |
7,800,000 | unexercised stock options were issued and outstanding. | |
5,000,000 | common shares were held in reserve against possible conversion of a $250,000 note. | |
Nil | preferred shares were issued and outstanding. |
PART-6 : FINANCIAL RESULTS OF OPERATIONS
Summary of Quarterly Results for the Last Eight Quarters
The following table sets out selected and unaudited quarterly financial information for the Company for its last eight quarters and is derived from Interim Financial Statements prepared by management in accordance with accounting policies consistent with IFRS.
Attributable to Shareholders of the Company | |||||
Income (loss) | Basic & | ||||
From | Diluted | ||||
Total Net | Income | Continued | Per Share | ||
Period | Revenue | Income (loss) | (loss) | Operations | Income (loss) |
Quarter-3 of Fiscal 2015 | Nil | (176,422) | (175,391) | (175,391) | (0.00) |
Quarter-2 of Fiscal 2015 | Nil | (335,998) | (334,944) | (334,944) | (0.00) |
Quarter-1 of Fiscal 2015 | Nil | (201,479) | (201,479) | (201,479) | (0.00) |
Quarter-4 of Fiscal 2014 | Nil | (89,934) | (124,372) | (160,216) | (0.00) |
Quarter-3 of Fiscal 2014 | Nil | (318,556) | (239,332) | (156,874) | (0.00) |
Quarter-2 of Fiscal 2014 | Nil | (341,133) | (254,287) | (163,897) | (0.00) |
Quarter-1 of Fiscal 2014 | Nil | (189,866) | (168,632) | (146,530) | (0.00) |
Quarter-4 of Fiscal 2013 | Nil | 47,508 | 29,308 | 10,365 | 0.00 |
Quarterly results will vary in accordance with the Company’s business and financing activities. The Company’s primary source of funding is through the issuance of share capital. When the capital markets are depressed, the Company’s activity level normally declines accordingly. As capital markets strengthen and the Company is able to secure equity financing with favorable terms, the Company’s business activity levels increase.
Until the end of fiscal 2014 on 30 June 2014, the Company used the equity accounting method for the business activity of two private Norwegian entities owned by the Company’s 51% owned subsidiary Visionaire Energy. This method caused significant variations in the Company’s results of operations from period to period prior to the end of fiscal 2014. The operations of Visionaire Energy were held for sale and discontinued effective 30 June 2014.
Another factor that affects the Company’s reported quarterly results are write-downs or write-offs of capitalized assets and its investments. The Company will write-down or write-off capitalized assets when no further work is warranted and also write-down or write-off its balances in investees if it determines that capitalized balances of these investments are impaired. The size and timing of these write-downs and write-offs cannot typically be predicted and affect the Company’s quarterly results. The Company regularly reviews its properties and investments for any indications of impairment.
Non-cash costs such as those attributable to calculated valuations of share based payments expenses also affect the size of the Company’s quarterly income (loss).
PART-7 : COMPARATIVE RESULTS OF OPERATIONS
Current and Comparative Periods
Nine month period ended 31 March 2015 (the “Current Period”) and the
Nine month period ended 31 March 2014 (the “Comparative Period”).
a) |
Overall, the Company incurred a loss from operations during the Current Period of $713,899 compared to a loss of $849,555 for the Comparative Period, a decrease of $135,656. |
b) |
The Company incurred a loss per share of $0.01 in the Current Period and $0.01 during the Comparative Period. |
c) |
Total equity loss from the results of the Norwegian subsidiaries during the Current Period was $nil compared to $382,254 for the Comparative Period as a result of Visionaire Energy’s discontinued operations. |
d) |
The Company disposed of its subsidiary, Visionaire Energy during the Current Period, for cash proceeds of $200,000 and the return of 20,000,000 common shares of the Company, with a fair value of $400,000. The book value of the net assets of Visionaire Energy, compared with the sales proceeds and the recycling of the related foreign exchange resulted in a loss of $159,837. |
e) |
Interest expense during the Current Period was $73,006 compared to $110,225 during the Comparative Period primarily due to the accretion of the Company’s convertible debt. |
f) |
The Company’s administrative costs were higher in the Current Period compared to the Comparative Period, primarily a result of higher management and consulting fees due to an increase in short-term employee benefits, and higher office costs and professional fees due to the changes involving its subsidiaries and timing differences relating to 2013 and 2014 regulatory filings and annual meetings. These administrative costs were higher in the Current Period by $143,973 (2015 - $443,696; 2014 - $299,723). |
g) |
Share-based payments expense were $nil during the Current Period compared to $20,877 during the Comparative Period as a result of the recognition of the fair value of 2,000,000 share purchase warrants granted to consultants during the Comparative Period. |
h) |
Cash used in operating activities during the Current Period was $503,378 compared to $373,517 used in the Comparative Period. The change is attributable to higher activity and the availability of more funds by the Company during the Current Period. |
i) |
Net cash raised from financing activities during the Current Period was $120,000 compared to $783,439 raised during the Comparative Period as a result of a $120,000 private placement in the Current Period compared primarily to a $40,000 private placement and net loan proceeds of $743,439 arranged during the Comparative Period. |
Current and Comparative Quarters
Three month period ended 31 March 2015 (the “Current Quarter”) and the
Three month period ended 31 March 2014 (the “Comparative Quarter”).
j) |
Overall, the Company incurred a loss from operations during the Current Quarter of $176,422 compared to a loss of $318,556 for the Comparative Quarter, a decrease of $142,134. |
k) |
The Company incurred a loss per share of $0.00 in the Current Quarter and the Comparative Quarter. |
l) |
Total equity loss from the results of the Norwegian subsidiaries during the Current Quarter was $nil compared to $161,682 for the Comparative Quarter as a result of Visionaire Energy’s discontinued operations. |
m) |
Interest expense during the Current Quarter was $12,000 compared to $42,573 during the Comparative Quarter primarily due to the accretion of the Company’s convertible debt. |
n) |
The Company’s administrative costs were higher in the Current Quarter compared to the Comparative Quarter, primarily a result of higher management and consulting fees due to an increase in short-term employee benefits, and higher office and investor relation costs, and professional fees due to the changes involving its subsidiaries. These administrative costs were higher in the Current Quarter by $54,897 (2015 - $157,056; 2014 - $102,159). |
o) |
Share-based payments expense was $nil during the Current Quarter and the Comparative Quarter. |
PART-8 : LIQUIDITY AND CAPITAL MANAGEMENT
As at the end of the Third Quarter, the Company’s Interim Financial Statements reflected an increase in the working capital deficiency of $42,497 from 30 June 2014, the end of the previous fiscal year. The working capital deficiency of $693,794 as at 30 June 2014 was increased to $736,291 by the end of the Third Quarter.
The Company has no significant operations that generate cash flow and its long term financial success is dependent on management’s ability to develop new business opportunities which become profitable. These undertakings can take many years and are subject to factors that are beyond the Company’s control.
In order to finance the Company’s growth and develop new business opportunities and to cover administrative and overhead expenses, the Company raises money through equity sales and from the exercise of convertible securities. Many factors influence the Company’s ability to raise such funds, including the health of the capital markets, the climate for investment in the sectors the Company is considering, the Company’s track record, and the experience and caliber of its management.
The Company does not have sufficient funds to meet its administrative requirements and new business development objectives over the next twelve months. Actual funding requirements may vary from those planned due to a number of factors, including providing for new opportunities as they arise. The Company believes it will be able to raise the necessary capital it requires, but recognizes there will be risks involved that may be beyond its control. The Company is actively sourcing new capital.
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to pursue new business development and to maintain a flexible capital structure for its projects for the benefits of its stakeholders. The Company's principal source of funds is from the issuance of common shares. In the management of capital, the Company includes the components of shareholders’ equity as well as cash and receivables.
The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, enter into joint venture arrangements, acquire or dispose of assets, or adjust the amount of cash and short-term investments. The Company’s investment policy is to invest its cash in liquid short-term interest-bearing investments selected with regard to the expected timing of expenditures from continuing operations. The Company is not subject to any externally imposed capital requirements and there was no change in the Company’s capital management during the period ended 31 March 2015.
PART-9 : RISKS AND UNCERTAINTIES
The Company has no history of profitable operations and is currently in the early stages of its development. As such, the Company is subject to many risks common to such enterprises, including under-capitalization, cash shortages and limitations with respect to personnel, financial and other resources and the lack of revenues. There is no assurance that the Company will be successful in achieving a return on shareholders' investment and the likelihood of success must be considered in light of its early stage of operations.
The Company has no source of operating cash flow and no assurance that additional funding will be available to it to take advantage of further growth and development of new opportunities and projects when required. Although the Company has been successful in the past in obtaining financing through the sale of equity securities or joint ventures, there can be no assurance that the Company will be able to obtain adequate financing in the future or that the terms of such financing will be favorable. Failure to obtain such additional financing could result in the delay or indefinite postponement of further growth or new opportunity development.
The Company is very dependent upon the personal efforts and commitment of its existing management. To the extent that management's services would be unavailable for any reason, a disruption to the operations of the Company could result, and other persons would be required to manage and operate the Company.
PART-10 : RELATED PARTY TRANSACTIONS
10.1 Transactions With Related Parties And Related Party Balances
At the end of the Third Quarter, $298,685 (30 June 2014 - $297,000) was payable to the CEO and the CFO of the Company. This amount is included in accounts payable and is unsecured, non-interest bearing and has no specific terms for repayment.
10.2 Compensation Of Key Management Personnel
During the third quarter and the nine months ended 31 March 2015, the Company paid or accrued management fees and short-term employee benefits to the CEO and the CFO of the Company in the amount of $99,185 and $234,185, respectively (2013 - $67,500 and $202,500, respectively).
PART-11 : MATERIAL CONTRACTS AND EVENTS
11.1 Off-Balance Sheet Arrangements
At the end of the Third Quarter, the Company does not have any off-balance sheet arrangements not already disclosed elsewhere in this MD&A or in the Interim Financial Statements.
11.2 Material Contracts & Commitments
During the Third Quarter, no new material contracts or commitments were undertaken, not elsewhere disclosed in this MD&A or in the Interim Financial Statements for the period.
11.3 Investor Relations, Publicity and Promotion
During the Third Quarter, no material new arrangements, or modifications to existing agreements, were made by the Company for investor relations services, publicity, promotion or advertising agreements which are not otherwise already disclosed in this MD&A or the Interim Financial Statements.
11.4 Financial Advice, New Business Consulting, Finder's Agreements, & Fund Raising
During the Third Quarter, no material new arrangements, or modifications to existing agreements, were made by the Company for investor relations services, publicity, promotion or advertising agreements which are not otherwise already disclosed in this MD&A or the Interim Financial Statements.
11.5 Claims, Contingencies & Litigation
As at the Report Date, the Company is in default of repayment of an unsecured $250,000 promissory note convertible into common shares of the Company. The Company has offered the holder terms for converting a portion of the note in accordance with its provisions together with extending its term. There are no guarantees that these discussions will result in a resolution mutually acceptable to the Company and the note holder. Except for the foregoing and any contingencies elsewhere disclosed herein, or in the Interim Financial Statements for the Third Quarter published herewith, the Company knows of no material, active or pending claims or legal proceedings against them; nor is the Company involved as a plaintiff in any material proceeding or pending litigation that might materially adversely affect the Company or a property interest of the Company.
PART-12 : CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements in accordance with IFRS requires that the Company’s management make judgments and estimates and form assumptions that affect the amounts in the financial statements and the related notes to those financial statements. Actual results could differ from those estimates. The Company reviews its judgments, estimates, and assumptions on an ongoing basis based on historical experience and other factors that are considered to be relevant under the circumstances. The Company’s critical accounting policies and estimates applied in the preparation of its Interim Financial Statements are the same as those applied to the audited consolidated financial statements for the last fiscal year ended 30 June 2014.
PART-13 : FINANCIAL INSTRUMENTS
The Company’s financial instruments as at 31 March 2015, consist of cash, accounts payable and accrued liabilities and the convertible debt. The fair value of these instruments approximates their carrying value due to their short-term maturity. There were no off-balance sheet financial instruments.
Cash, other than minor amounts of Indonesian Rupiahs and Tanzanian Shillings consist solely of cash deposits with major Canadian banks. The Company therefore considers its credit risk to be low. The Company does not use derivative or hedging instruments to reduce its exposure to fluctuations in foreign currency exchange rates involving Canadian dollar, Indonesian Rupiah and Tanzanian Shillings. However, as the Company holds its funds primarily in US dollars, the risk of foreign exchange loss is considered low by the Company’s management.
PART-14 : CONTINUOUS DISCLOSURE AND FILINGS
14.1 Additional Disclosure for Venture Issuers without Significant Revenue
Additional disclosure concerning the Company’s general and administrative expenses and other business development costs is provided in the Company’s statement of loss and comprehensive loss contained in its Interim Financial Statements for the Third Quarter.
14.2 Continuous Disclosure & Filings - Canada
Additional disclosure is made on a continuous basis in accordance with applicable laws and in compliance with securities rules and regulations of the British Columbia Securities Commission (“BCSC”). This disclosure and filings includes annual audited consolidated financial statements and quarterly unaudited interim financial statement. It also includes press releases, material change reports, and disclosure of new or changed circumstances regarding the Company. Shareholders and interested parties may obtain downloadable copies of these mandatory filings made by the Company on "SEDAR" (the System for Electronic Document Archiving and Retrieval at website www.sedar.com). The Company began filing on SEDAR in 1997. All Company filings made on SEDAR during the year and up to the date of this filing are incorporated herein by this reference.
14.3 Continuous Disclosure & Filings - USA
The Company is also a full reporting issuer and filer with the US Securities and Exchange Commission (“SEC”). The Company is required to file an annual report with the SEC in the format of a Form 20F annual report which includes audited annual consolidated financial statements. The Company files interim unaudited quarterly financial reports, press releases, material change reports, and disclosure of new or changed circumstances regarding the Company on a periodic basis under Form-6K. The Company has filed electronically on the SEC’s EDGAR database (website www.sec.gov/edgar) commencing with the Company’s Form 20F at its fiscal year end 2004. Prior to 2004 the Company filed Form 20F annual reports with the SEC in paper form. All Company filings made to US-SEC during the past fiscal year and during the Past Quarter and up to the date of this filing are incorporated herein by this reference.
PART-15 : FORWARD-LOOKING STATEMENTS
Forward-looking statements relate to future events or future performance and reflect management's expectations or beliefs regarding future events and include, but are not limited to, statements with respect to the estimation of reserves and resources, projections of anticipated revenue, the realization of reserve estimates, the timing and amount of estimated future production, cost, work schedules, capital requirements, success of resource exploration operations, environmental risks, permitting risks, unanticipated reclamation expenses, title disputes or claims and limitations on insurance coverage.
15.1 Forward Looking Words and Phrases
In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "projections", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved" or the negative of these terms or comparable terminology.
15.2 Risks and Uncertainties
By their very nature forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, risks related to actual results of exploration or new project development activities; changes in project parameters as plans continue to be refined; cash flow projections; future prices of resources; possible variations in resource reserves; accidents, labor disputes and other risks of the oil, gas, and alternative energy industries; delays in obtaining governmental approvals or financing or in the completion of development or construction activities; as well as other factors detailed from time to time in the Company's periodic filings on EDGAR and SEDAR.
15.3 No Assurance all Risks Anticipated
Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.
---o0o---
Exhibit 99.3
Form 52-109FV2
Certification of Interim Filings
Venture Issuer Basic Certificate
I, Richard L. McAdoo, Chief Executive Officer of Continental Energy Corporation, certify the following:
1. |
Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Continental Energy Corporation (the “issuer”) for the nine month interim period ended March 31, 2015. |
| |
2. |
No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
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3. |
Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
Date: May 12, 2015
(signed) ”Richard L. McAdoo”
Name: Richard L. McAdoo
Title: Chief Executive Officer
NOTE TO READER In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this OTC reporting issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of | |
| |
i) |
controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
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ii) |
a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. |
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The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of an OTC reporting issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation. |
Exhibit 99.4
Form 52-109FV2
Certification of Interim Filings
Venture Issuer Basic Certificate
I, Robert V. Rudman, Chief Financial Officer of Continental Energy Corporation, certify the following:
1. |
Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Continental Energy Corporation (the “issuer”) for the nine month interim period ended March 31, 2015. |
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2. |
No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
| |
3. |
Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
Date: May 12, 2015
(signed) “Robert V. Rudman”
Name: Robert V. Rudman
Title: Chief Financial Officer
NOTE TO READER In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this OTC reporting issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of | |
| |
i) |
controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
| |
ii) |
a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. |
| |
The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of an OTC reporting issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation. |
Exhibit99.5
NEWS RELEASE OTCQB: CPPXF |
CONTINENTAL ENERGY REPORTS THIRD QUARTER RESULTS
VANCOUVER, B.C. Canada – May 12, 2015 - Continental Energy Corporation (OTCQB: CPPXF) (the “Company”), an emerging international energy investment company focused on renewable, alternative, and conventional energy developments in Indonesia and Tanzania, today announced the financial results for its third quarter of fiscal 2015 ended March 31, 2015.
Current Working Capital – As at March 31, 2015, the Company’s interim statements reflect a working capital deficiency of $736,291 compared to a deficiency of $693,794 as at June 30, 2014, the end of the 2014 fiscal year. A short term loan in the amount of $750,000 was converted to common shares during the first quarter of fiscal year 2015 and the sale of the Norwegian subsidiary was completed during the second quarter that resulted in $200,000 of additional cash. However, current assets were reduced by $565,596 of subsidiary assets held for sale as at June 30, 2014, and the Company’s use of cash for its operations.
Operations – Overall, the Company incurred a loss of $176,422 from operations during the third quarter of fiscal 2015 compared to a loss of $318,556 for the comparative quarter in the prior year primarily due to the discontinued operations of the Company’s investment in its Norwegian affiliates. The sale of the Company’s Norwegian subsidiary, Visionaire Energy was completed during the second quarter of fiscal 2015. The Company used equity accounting for the losses of its Norwegian affiliates and the total equity loss during the current quarter was $nil compared to $161,682 for the comparative quarter in the prior year. The loss incurred during the third quarter of fiscal 2014 before the loss from discontinued operations was $156,874 compared to a loss of $176,422 for the third quarter of 2015. Cash used in operating activities during the third quarter of fiscal 2015 was $82,753 compared to $254,436 used in the third quarter of fiscal 2014. The change is attributable to the Company’s efforts of conserving more cash during the third quarter of fiscal 2015.
Full financial results including the Company’s unaudited, condensed interim consolidated financial statements and management’s discussion and analysis for its third quarter of fiscal 2015 are available for download from the SEDAR website at www.sedar.com.
For more information, visit our website at www.continentalenergy.com.
Robert V. Rudman, CPA | Trevor Heisler |
Chief Financial Officer | Investor Relations |
Continental Energy Corporation | Heisler Communications |
561-779-9202 | 416-500-8061 |
rrudman@continentalenergy.com | trevor@heislercommunications.com |
No securities regulatory authority has either approved or disapproved the contents of this news release.
Certain matters discussed within this press release may be forward looking statements within the meaning of the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995. Although Continental believes the expectations reflected in such forward-looking statements are based on reasonable expectations and assumptions, it can give no assurance that its expectations will be attained. There are many factors which may cause actual performance and results of these plans to be substantially different from the way they are described in these forward looking statements. Readers should also refer to the risk disclosures outlined in the Company's regulatory disclosure documents filed with the Securities and Exchange Commission available at www.sec.gov. The Company assumes no obligation to update the information in this release.
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