Exhibit 99.1


CONTINENTAL ENERGY CORPORATION

INTERIM FINANCIAL STATEMENTS

30 SEPTEMBER 2014

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 30 September 2014 30 June 2014  
Current   $   $  

Cash

  113,659   242,436  

Receivables

  669   7,065  

Prepaid expenses and deposits

  37,952   24,557  

Assets held for sale

5   577,536     565,596  
    729,816   839,654  
               
Non-current assets          

Equipment

    5,115     5,845  
      734,931     845,499  
             
LIABILITIES          
Current          

Accounts payable and accrued liabilities

8 309,891   398,262  

Loans

7 -   750,000  

Convertible debt

6 386,232   374,890  

Liabilities associated with assets held for sale

5   9,822      10,296  
      705,945     1,533,448  
           
EQUITY (DEFICIENCY)          
Share capital 7 17,001,630   16,131,630  
Conversion rights reserve 6 92,966   56,966  
Share based payment reserve   9,401,487   9,401,487  
Foreign currency translation reserve   6,211   (120 )
Deficit     (26,274,974 )   (26,073,495 )
Equity (deficiency) attributable to:          

Shareholders

  227,320   (483,532 )

Non-controlling interests

    (198,334 )   (204,417 )
      28,986     (687,949 )
       734,931     845,499  

Nature of Operations and Going Concern (Note 1)
Subsequent Events (Notes 4)

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  
    Months   Months  
    Ended   Ended  
  Note 30 September 2014 30 September 2013  
NET LOSS FOR THE PERIOD   $   $  

Depreciation

  730   1,175  

Interest and bank charges

6 48,704   32,337  

Management and consulting fees

8 70,889   72,301  

Office expenses and investor relations

  37,234   10,511  

Professional fees

  34,088   15,386  

Rent, maintenance and utilities

  7,261   6,574  

Travel and accommodation

     3,448     4,652  
Loss before the undernoted   (202,354 ) (142,936 )
Other income (expenses)          

Interest income

  14   3  

Foreign exchange gain

     861     (3,739 )
Loss for the period from continuing operations   (201,479 ) (146,672 )
Loss for the period from discontinued operations 5    -     (43,194 )
Net loss for the period     (201,479 )   (189,866 )
               
Net loss for the period attributable to:          

Shareholders of the Company

  (201,479 ) (168,632 )

Non-controlling interests

    -     (21,234 )
               
COMPREHENSIVE LOSS FOR THE PERIOD          
Net loss for the period   (201,479 ) (189,866 )
Other Comprehensive loss to be reclassified to profit or loss in subsequent periods:          

Exchange differences on translation of foreign operations

     12,414     -  
Comprehensive loss for the period      (189,065 )   (189,866 )
               
Net comprehensive loss attributable to:          

Shareholders of the Company

  (195,148 ) (168,632 )

Non-controlling interests

     6,083      (21,234 )
Loss Per Share Basic and Diluted      (0.00 )   (0.00 )
Weighted Average Number of Shares Outstanding      131,461,033      123,179,511   

- 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 Three   For the Three  
    Months   Months  
    Ended   Ended  
Cash Resources Provided By (Used In) Note 30 September 2014 30 September 2013   
Operating Activities   $   $  

Loss for the period

  (201,479 ) (189,866 )

Items not affecting cash

         

Depreciation

  730   1,175  

Interest on convertible debt

6 47,342   30,061  

Interest on related party loan

8 -   328  

Equity loss (income) from investment in affiliates

5 -   43,194  

Changes in non-cash working capital

         

Receivables

  6,396   (72 )

Prepaid expenses and deposits

  (13,395 ) (14,623 )

Accounts payable and accrued liabilities

    (88,371 )   105,346  
      (248,777 )   (24,457 )
               
Financing Activities          

Shares issued – cash

7 120,000   25,000  

Repayment of related party loan

8   -     (4,761 )
      120,000     20,239  
               
Change in Cash   (128,777 ) (4,218 )

Cash Position Beginning of Period

    242,436     21,999  

Cash Position End of Period

    113,659     17,781  

Supplemental cash flow information (Note 9)

- 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

7 500,000 19,623 5,377 - -   -     -   25,000  

Loss for the period

    -     -     -     -     -      (718,315 )    18,200      (700,115 )
Balance on 30 September 2013     123,315,381     16,120,415     9,359,012     10,966     -     (25,455,504 )    (72,669 )   (37,780 )
                                                   
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

7 2,400,000 120,000 - - -   -     -   120,000  

Conversion of loan

7 15,000,000 750,000 - - -   -     -   750,000  

Convertible debt amendments

6 - - - 36,000 -   -     -   36,000  

Foreign currency translation

  - - - - 6,331   -     6,083   12,414  

Loss for the period

    -     -     -     -     -     (201,479 )    -     (201,479 )
Balance on 30 September 2014     141,015,381     17,001,630     9,401,487     92,966     6,211     (26,274,974 )    (198,334 )   28,986  

- See Accompanying Notes -

5





Continental Energy Corporation
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(Unaudited Prepared by Management and expressed in US Dollars)
30 SEPTEMBER 2014

1. Nature of Operations and Going Concern

Continental Energy Corporation (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 oil and gas exploration company 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 provider 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 new projects and develop them as well as fund ongoing administration expenses. There are no assurances that sufficient funding will be available to further develop its projects.

Management intends to obtain additional funding by issuing common stock 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 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 18 November 2014.

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)
30 SEPTEMBER 2014

4. Investments

Visionaire Energy AS ("Visionaire Energy")

On 4 June 2013, the Company acquired 51% of the shares of 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.

The allocation of the purchase price and the reconciliation of the balance as at 30 June 2014 is as follows:

Fair value of the shares issued $ 900,000  
Cash acquired   (6,844 )
Payable to related party assumed   1,711  
Non-controlling interest   (69,635 )
Equity loss from affiliate since acquisition   (266,022 )
Foreign currency translation   (142 )
Reclassification as held for sale (Note 5)   (559,068 )
Value of investment on 30 June 2014 $ -  

The movement in the investment during the period is as follows:

Value of investment on 30 June 2014 $ -  
Foreign currency translation   12,240  
Reclassification as held for sale (Note 5)   (12,240 )
Value of investment on 30 September 2014 $ -  

Ruaha River Power Company Limited ("Ruaha")

On 30 April 2014, the Company received 4,250,000 fully paid-up ordinary shares of Ruaha, a renewable energy power developer based in Tanzania, representing a 42.5% interest. The Company has not capitalized any amount for its investment in Ruaha, a Tanzanian company, as the entity is inactive and has no assets

On 11 October, 2014, two shareholders of Ruaha withdrew as shareholders and returned their shares for cancellation. The Company, as a result, now owns 58.6% of such shares providing it with controlling interest in Ruaha effective 11 October 2014. Ruaha remains inactive and the increased ownership interest in the entity is not expected to have a material impact on the consolidated records of the Company until Ruaha commences operations.

7





Continental Energy Corporation
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(Unaudited Prepared by Management and expressed in US Dollars)
30 SEPTEMBER 2014

5. Discontinued Operations Held for Sale

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.

The agreement is subject to the approval of the shareholders at an annual meeting to be held on 5 December 2014.

The discontinued results of Visionaire Energy are presented below:

  For the Three For the Three  
  Months Months  
  Ended Ended  
  30 September 2014 30 September 2013  
    $     $  
Equity income from investment in associates   -     43,194  
Income from discontinued operations   -     43,194  
Attributable to non-controlling interest - (21,234 )
Income attributable to the shareholders of the Company   -     21,960  
             

The major classes of assets and liabilities of Visionaire Energy classified as held for sale are as follows:

  30 September 2014 30 June 2014
  $ $
Cash 6,228 6,528
Investment   571,308     559,068  
Assets held for sale   577,536     565,596  
             
Accounts payable   9,822     10,296  
Liabilities associated with assets held for sale   9,822     10,296  

Visionaire Energy incurred a foreign exchange loss on its cash balance held in Norwegian Kroner of $300 during the three months ended 30 September 2014. 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.

6. 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

47,342  

Conversion rights - amendments

(36,000 )
Balance on 30 September 2014 386,232  

8





Continental Energy Corporation
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(Unaudited Prepared by Management and expressed in US Dollars)
30 SEPTEMBER 2014

On 21 September 2011, the Company issued a convertible promissory note for proceeds of $250,000. The note principal was convertible, at the election of the holder, at any time during its term into 3,125,000 common shares of the Company. Any unpaid interest thereupon is also convertible, at the option of the holder, at the same conversion rate. As additional consideration, the Company issued 1,562,500 warrants (“the additional consideration warrants”) to the note holder, exercisable at $0.12 per share up to 22 September 2013, the original maturity date.

The note originally accumulated interest at a rate of 10% per annum or at 15% per annum in the event of default of payment. On 21 November 2012, the Company reached an agreement with the note holder that increased the interest rate retroactively to 18%, extended the maturity date to 21 March 2013, and reduced the conversion price from $0.08 to $0.05 per share. This amendment to the terms of the note resulted in an incremental value of $1,000.

On 21 May 2013, the Company reached an agreement with the note holder that extended the maturity date to 21 September 2013, extended the term of the additional consideration warrants to 21 March 2015, and reduced the exercise price of the additional consideration warrants to $0.08.This amendment to the terms of the note resulted in an incremental value of $1,000 and the amendment to the terms of the additional consideration warrants resulted in an incremental value of $16,719.

On 4 October 2013, the Company reached an agreement with the note holder that extended the maturity date to 15 November 2013. This amendment to the terms of the note resulted in an incremental value of $8,500.

On 12 December 2013, the Company reached an agreement with the note holder that extended the maturity date to 31 January 2014 and reduced the exercise price of the additional consideration warrants to $0.05. This amendment to the terms of the note resulted in an incremental value of $31,500 and the amendment to the terms of the additional consideration warrants resulted in an incremental value of $10,782.

On 31 March 2014, the Company reached an agreement with the note holder that extended the maturity date to 30 April 2014 and extended the term of the additional consideration warrants to 31 December 2015. This amendment to the terms of the note resulted in an incremental value of $6,000 and the amendment to the terms of the additional consideration warrants resulted in an incremental value of $7,031.

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. 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 -

9





Continental Energy Corporation
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(Unaudited Prepared by Management and expressed in US Dollars)
30 SEPTEMBER 2014

7. 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 30 September 2014

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.

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 shareholders of the Company approved an incentive stock option plan on 30 November 2012 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 summary of the Company’s options outstanding on 30 September 2014 and on 30 June 2014 is as follows:

Options Options Exercise Expiry
Outstanding Exercisable Price Date
8,000,000 8,000,000 $0.05 31 March 2015
7,800,000 7,800,000 $0.05 31 December 2015
15,800,000 15,800,000    

10





Continental Energy Corporation
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(Unaudited Prepared by Management and expressed in US Dollars)
30 SEPTEMBER 2014

Warrants

      Weighted Average
  Number of   Exercise Price
  Warrants     $ per Share  
Outstanding on 30 June 2013 11,555,500   0.06

Granted

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  
Warrants outstanding on 30 September 2014 9,462,500     0.05  

Year ended 30 June 2014

On 1 October 2013, the Company granted 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 granted 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 granted was estimated using the Black-Scholes option pricing model, with the following assumptions:

  Period Ended Year Ended
  30 September 2014 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

A summary of the Company’s warrants outstanding on 30 September 2014 is as follows:

Number of Shares Price Per Share Expiry Date
2,600,000 $0.05 7 January 2015
375,000 $0.05 15 January 2015
250,000 $0.08 15 March 2015
1,562,500 $0.05 31 December 2015
3,975,000 $0.05 31 December 2015
150,000 $0.10 28 June 2016
250,000 $0.10 28 July 2016
300,000 $0.10 21 October 2016
9,462,500    

11





Continental Energy Corporation
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(Unaudited Prepared by Management and expressed in US Dollars)
30 SEPTEMBER 2014

8. Related Party Transactions

As at 30 September 2014, $264,560 (30 June 2014 - $298,400) was payable to officers of the Company. This amount is included in accounts payable and is unsecured, non-interest bearing and has no specific terms for repayment.

During the period ended 30 September 2014, the Company paid or accrued management fees to officers of the Company in the amount of $67,500 (2013 - $67,500).

9. Supplemental cash flow information

 

    Three Months Three Months
    Ended Ended
Non-Cash Investing and Note 30 September 2014 30 September 2013
Financing Activities   $ $
       
Conversion option amendments 6 36,000 -
Loan conversion 7   750,000     -  

 

10. Segmented Information

The Company operates in one segment, being the business sector of acquiring participating equity interests in oil, gas, and alternative energy projects, producers, and related service providers doing business outside of North America. All of the Company’s long-term assets are located in Southeast Asia.

12