UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM-20F

[ _ ] Registration Statement pursuant to section 12 (B) or (G) of the Securities Exchange Act of 1934

or

[X] Annual Report pursuant to section 13 or 15(D) of the Securities Exchange Act of 1934

For the Fiscal Year ended 30 JUNE 2016

or

[ _ ] Transition Report pursuant to section 13 or 15 (D) of the Securities Exchange Act of 1934

or

[ _ ] Shell Company Report pursuant to section 13 or 15(D) of the Securities Exchange Act of 1934

Commission file number 0-17863

CONTINENTAL ENERGY CORPORATION

(Exact name of Registrant as specified in its charter)

British Columbia, Canada
(Jurisdiction of incorporation or organization)

900-885 West Georgia Street, Vancouver, British Columbia, Canada V6C 3H1
(Address of principal registered, records, and executive office)

Robert Rudman, CPA, Chief Financial Officer, phone 561-779-9202, rrudman@continentalenergy.com
900-885 West Georgia Street, Vancouver, British Columbia, Canada V6C 3H1
(Company contact person's name, phone number, and E-mail and street addresses)

Securities registered or to be registered pursuant to Section 12(b) of the Act: Not Applicable
 
Securities registered or to be registered pursuant to Section 12(g) of the Act: Common Shares, No Par Value
 
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: Not Applicable
 
Indicate the number of outstanding shares of each of the Registrant's classes of capital or common 123,015,381 common shares
shares as of the close of the period covered by the annual report:  

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. [ _ ] YES [ X ] NO
 
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant    
to Section 13 or 15(d) of the Securities Exchange Act of 1934. Note – Checking the box above will not relieve any registrant [ X ] YES [ _ ] NO
required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under    
those Sections.    
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the    
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required [ X ] YES [ _ ] NO
to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every    
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) [ _ ] YES [ X ] NO
during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. [ _ ] Large accelerated filer
See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one): [ _ ] Accelerated filer
[ X ] Non-accelerated filer

 

Indicate by check mark which basis of accounting the registrant has used to
prepare the financial statements included in this filing: (Check one): [ _ ] US GAAP [ X ] IFRS as issued by the IASB [ _ ] Other

 

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement [ _ ] Item-17 [ _ ] Item-18
item the registrant has elected to follow.    

 

If this is an annual report, indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the [ _ ] YES [ X ] NO
Exchange Act.    
 
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or    
15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. [ _ ] YES [ X ] NO
(Applicable Only To Issuers Involved In Bankruptcy Proceedings During The Past Five Years)    

 





PART-I

This report is made on EDGAR in electronic form, in English, on US SEC Form-20F pursuant to sections 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") and constitutes an "Annual Report" report by the filer, a foreign private issuer.

The following defined terms are used consistently throughout this Annual Report.

In accordance with the Company's Canadian securities regulatory requirements and continuous disclosure obligations promulgated under National Instrument 51-102, the Company is also filing a copy of this Form-20F on SEDAR in Canada as an "AIF" or "Annual Information Form". This AIF filing is as permitted under Part-1.1.(1) of NI 51-102. Some additional content required by Form NI 51-102F2 AIF is contained herein that would not otherwise be required for the sole purposes of a Form-20F Annual Report pursuant to sections 13 or 15(d) of the Exchange Act.

ITEM - 1 : IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

This Form-20F is filed as an Exchange Act "Annual Report" and therefore the provision of information called for by this Item-1 is not applicable. Disclosure of information on directors and senior managers may instead be found in Item-6.

ITEM - 2 : OFFER STATISTICS AND EXPECTED TIMETABLE

This Form-20F is filed as an Exchange Act "Annual Report" and not as a "registration statement" and therefore the provision of information called for by this Item-2 is not applicable.

Item - 3 : Key Information

A.     

SELECTED FINANCIAL DATA.

The financial data for Fiscal Years ended 6/30/14, 6/30/15, and 6/30/16 as shown in the following table is derived from our audited financial statements as indicated in the independent auditor’s report included elsewhere in this Annual Report. The data for the Fiscal Years ended 6/30/12 and 6/30/13 are derived from the Company's audited financial statements, not included herein, but filed with previous Form-20FAnnual Reports and incorporated herein by this reference.

Commencing from 7/01/11 and for the Fiscal Years ended 6/30/12, 6/30/13, 6/30/14, 6/30/15 and 6/30/16, the Company's financial statements were prepared in accordance with International Financial Reporting Standards {"IFRS") as issued by the International Accounting Standards Board ("IASB") instead of GAAP. The first annual IFRS consolidated financial statements were prepared for the Fiscal Year ended 6/30/12 with restated comparatives for the previous Fiscal Year ended 6/30/11.

The Company has not calculated and is not reporting any ratio of earning to fixed charges, to combined fixed charges or to any dividends and has not calculated and reported any other ratios, other than earnings per share, in this Annual Report; and hence no basis for such calculation is included.





The selected financial data set forth in the following table, stated in accordance with IFRS as issued by IASB, should be read in conjunction with the financial statements and other financial information included elsewhere in the Annual Report.

Selected Financial Data For Last Five Fiscal Years
  For Last 5 Fiscal Years Ended
In US$ 000's, except for shares data

6/30/16

6/30/15

6/30/14

6/30/13

6/30/12

Revenue

-

-

-

-

-

Net Loss

(473)

(956)

(939)

(700)

(1,847)

Loss Per Share – Basic

(0.00)

(0.01)

(0.01)

(0.01)

(0.02)

Loss Per Share – Diluted

(0.00)

(0.01)

(0.01)

(0.01)

(0.02)

Dividends per Share

-

-

-

-

-

Weighted Average Number of Shares (000’s)

128,601

128,601

123,488

101,947

81,086

Working Capital

(1,282)

(836)

(694)

(745)

(278)

Oil and Gas Properties

-

-

-

-

0.001

Long Term Debt

-

-

-

-

-

Shareholders Equity (deficiency)

(1,280)

(833)

483

179

(149)

Total Assets

7

20

845

897

298

Foreign Currency Exchange - The Company's financial statements are stated in US Dollars ("$" or "US$"). The Company transacts most of its business in US Dollars but has some expenditures and deposits denominated in six other currencies: Canadian Dollars (“CDN”), Indonesian Rupiah (“IDR”"), United Arab Emirates Dirham ("AED"), Singapore Dollars (“SGD”), Malaysian Ringgit ("MYR"), and Norwegian Krone ("NOK"). The following table sets forth the rate of exchange for these currencies upon the last trading day at the end of the 5 most recently completed Fiscal Years and at the most recently completed calendar month preceding the Report Date.

  Foreign Currency Exchange Rates
  Equal to One US Dollar
 

CDN

IDR

AED

SGD

MYR

NOK

Month Ended 5/31/17

1.3473

13,315

3.6722

1.3839

4.2807

8.4392

Fiscal Year Ended 6/30/16

1.2991

13,204

3.6729

1.3479

3.9948

8.3913

Fiscal Year Ended 6/30/15

1.2475

13,359

3.6728

1.3474

3.7639

7.8612

Fiscal Year Ended 6/30/14

1.0672

11,859

3.6728

1.2466

3.0298

6.1331

Fiscal Year Ended 6/30/13

1.0487

9,901

3.6728

1.2708

3.1829

6.0718

Fiscal Year Ended 6/30/12

1.0166

9,385

3.6728

1.2654

3.1717

5.9582

 

B.     

CAPITALIZATION AND INDEBTEDNESS.

This Form-20F is filed as an Exchange Act "Annual Report" and therefore the provision of information called for by this Item-3.B is not applicable.

C.     

REASONS FOR THE OFFER AND USE OF PROCEEDS.

This Form-20F is filed as an Exchange Act "Annual Report" and therefore the provision of information called for by this Item-3.C is not applicable.

D.     

RISK FACTORS.

Much of the information contained in this Annual Report includes or is based on estimates, projections or other “forward looking” statements. Such forward looking statements include any projections or estimates made by our Company and our management in connection with our business operations. While these forward looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections assumptions or other future performance suggested herein.

Such estimates, projections or other forward looking statements involve various risks and uncertainties as outlined below. We caution the reader that important factors in some cases have affected and, in the future, could materially affect actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other forward looking statements.

Our business prospects as an emerging international energy producer, our ongoing operations at a particular project, or our overall financial condition could be harmed due to any of the following risks:





a)     

Competitive Risk - Competition among international energy producing companies for quality international oil, gas, and electricity production properties; for reliable joint venture partners; and for limited amounts of new development capital is intense.

 

b)     

Political Risk - The Company's business activities and investments are all located out of its home jurisdiction of Canada and are subject to the political risks of foreign investment. These include potential changes in laws affecting foreign ownership, contract and area tenure, government participation, taxation, royalties, duties, rates of exchange and exchange controls. Any new government policies adverse to the Company could include a change in crude oil pricing policy, expropriation, nationalization, renegotiation or nullification of existing concessions and contracts, taxation policies, foreign exchange and repatriation restrictions, international monetary fluctuations and currency controls. Direct and indirect effects of the decline in value of the local currency have included high levels of domestic inflation, reductions in employment, high interest rates, unavailability of traditional sources of financing, and an overall contraction in production and income levels. These conditions have affected and may continue to affect the operating environment in a particular country, as well as the cost and availability of financing for natural resources development efforts. The normal economic conditions in any country may sustain shocks that exacerbate adverse economic conditions and such shocks could originate from various sources, including social unrest, terrorism, Islamic fundamentalism, secessionist provinces, lack of government effectiveness due to political uncertainty, or policy initiatives that are adverse to foreign investment.

 

c)     

Minority Shareholding Risks - The Company from time to time holds only a minority or similar non-controlling shareholding interest in a partially owned subsidiary company which in turn owns and operates a particular project, property, business, and/or investment. In such cases the Company may exert no direct management control and have only very limited influence on decisions which may impact the performance of such partially owned subsidiary. This lack of direct management control could have a detrimental effect upon the value of the Company’s interests.

 

d)     

JV Operator Risk - It is customary in the international oil and gas exploration and production business to share geological and engineering risks through partnerships with other oil companies through a Joint Venture ("JV") arrangement under a joint operating agreements. One member of the JV group, usually the one with the largest interest, is the designated "Operator" for the JV and conducts all management of operations on the property or project on behalf of the group. The Company's degree of influence and control over the Operator and the JV is directly proportional to the amount of participating interest held by the Company in proportion to that held by other interest holders. Annual budgets and major expenditures are authorized by the JV group members voting according to their respective percentage holding of the JV. In any case where the Company holds less than a voting control interest in the JV, the Company is at risk of being forced into contributing its shares of costs on activities it does not want to pursue or giving up some portion of its interest in the entire JV if it elects not to pay its share or fails to pay its share, as may be provided for under the terms of the joint operating agreement.

 

e)     

JV Partner Risk - Any number of risks beyond the control of the Company could have a detrimental effect on the Company's JV partners, including the JV Operator and cause them to be unable to fund their own share of JV costs or meet their share of JV commitments. In such case there is a high degree of risk that the Company would not be able to take up and pay a failed partner's share of JV costs and the Company's own JV interest may thereby be detrimentally affected.

 

f)     

Geological Risk - From time to time the Company participates in exploration for new oil and gas accumulations or it evaluates the availability of sufficient water, wind, or geothermal resources to justify a possible alternative energy development. Each of these activities involves a high degree of geological risk. There is no assurance that expenditure to be made by the Company in the search for such resources will result in any discoveries of sufficient resources of a quantity to justify or sustain a commercial development.

 

g)     

Transport Risk - The marketability of any oil, gas, or electrical power which the Company may produce may be affected by numerous factors beyond the control of the Company. These factors may determine whether a new project is commercially viable at all, and include the proximity and capacity of existing pipelines, storage capacity, power transmission lines, and the locations of principal off-takers or markets.

 

h)     

Operating Risks - Oil, gas, and electricity production operations involve risks normally incident to such heavy industrial activities, including fires, spills, equipment failure, accidents, and well blowouts. Any of these hazards could result in damage to, or destruction of, our facilities or properties. Such hazards could also injure persons or adversely affect the environment. Dealing with such damage could greatly increase the cost of operations and detrimentally affect our financial condition.

 

i)     

Environmental Risks - Environmental standards imposed by federal, state, or local authorities of the countries in which we conduct our business activities may be changed and such changes may have material adverse effects on our activities. Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus causing an adverse effect on us. Additionally, we may be subject to liability for pollution or other environmental damages which we may elect not to insure against due to prohibitive premium costs and other reasons. We may become subject to liability for pollution or hazards against which we cannot adequately insure or which we may elect not to insure. Incurring any such liability may have a material adverse effect on our financial position and operations.

 

j)     

Health and Safety Risks - Many of our business activities are subject to health and safety standards imposed by federal, state, or local authorities of the countries in which we conduct our business activities. We may become subject to claims for liability for injuries or deaths to our workers or others against which we cannot adequately insure or which we may elect not to insure. Incurring any such liability may have a material adverse effect on our financial position and operations.

 





k)     

Title Risk - We have or may acquire leases, rights or other property associated with our projects, but the property may be subject to prior unregistered agreements, or transfers which have not been recorded or detected through our due diligence searches. We believe our interests are valid, but this is no guarantee against possible claims. If title to property associated with our projects is challenged, we may have to expend funds defending any such claims and our ownership interest therein may be detrimentally affected if we lose.

 

l)     

Price Volatility Risks - During the past few years, world oil and gas prices have undergone an unprecedented rise followed closely by a precipitous decline. Skyrocketing demand in emerging markets has driven electricity prices to record highs in many localities. This price volatility has substantial impact upon the international oil and gas and energy business and the Company's business in particular. The nature of the impact and its future effect upon the Company is almost impossible to determine with any degree of confidence. Continued volatility of oil, gas, and electricity prices adds substantial risk to the Company's efforts to plan, budget, or forecast its business activities. Price volatility may contribute to an inability of the Company to repay any debt or pay any obligations on its projects which could have serious and material adverse consequences on the Company.

 

m)     

Currency/Exchange Rate Risk - Many of the financial obligations and commitments the Company from time to time undertakes in its international energy business are denominated in US Dollars. A substantial amount of the Company's business transactions are, and may be, denominated in other currencies. Fluctuations in these currencies may have a substantial effect on the Company’s financial statements due to related gains or losses due to exchange rate changes. The Company does not hedge and engage in other strategies to protect itself from adverse fluctuations in the respective exchange rate. Significant variations in exchange rates could have a material adverse effect on the ability of the Company to meet its obligations.

 

n)     

Financing Risks - The Company is not generating income or revenue, has generated losses to date and does not presently have sufficient financial resources to undertake by itself all of its planned acquisitions. The Company’s ability to continue as a going concern depends upon its ability to obtain new financing. There is no assurance that the Company will be able to obtain such financing on acceptable terms, or at all. There is no assurance that the Company will be able to extend or defer its contractual work commitments in the event sufficient funds are not available. It is possible that prolonged inability of the Company to fund its commitments could result in a loss of some or all of its interest. Management is pursuing all available options to raise working capital and funds for its various projects. There can be no assurance that the management will be successful.

 

 

o)     

Liquidity Risk - The future development of the properties of the Company and acquisition of new properties shall depend upon the ability of the Company to finance through the joint venturing of projects, debt financing, equity financing or other means. The Company intends to raise required additional funds by selling equity or debt securities, until it develops or acquires cash flow from operations. While the Company has been successful in raising the necessary funds in the past, there can be no assurance it can continue to do so. If such funds cannot be secured, the Company will be forced to curtail its exploration/development efforts to a level for which funding can be secured. There is no assurance that the Company will be successful in obtaining such financing. This situation could be exacerbated by acts of international terrorism or unforeseen political disturbances. Material increases or decreases in the Company's liquidity are substantially determined by the success or failure of its exploration programs or the acquisition of new properties and projects.

 

p)     

Stock Market Volatility - The effect of volatile oil and gas prices as described above has had a huge effect upon the world stock markets and most companies, including the Company have seen a severe reduction in their market capitalization. Lower stock prices and loss of investor confidence reduce the Company's ability to raise equity capital on the stock markets.

 

q)     

Risk of Future Changes in Regulatory Environment - Regardless of their location, our properties and our operations thereon are governed by laws and regulations relating to the development, production, marketing, pricing, transportation and storage of crude oil, taxation and environmental and safety matters. Changes to regulations or compliance with regulations may cause substantial delays or require capital outlays in excess of those anticipated causing an adverse effect on our Company. Further, exploration and production activities are subject to certain environmental regulations which may prevent or delay the commencement or continuance of our operations.

 

r)     

Risks relating to our Common Stock - Shareholders' interests in our Company will be diluted and investors may suffer dilution in their net book value per share if we issue additional shares or raise funds through the sale of equity securities. In the event that we are required to issue additional shares, enter into private placements to raise financing through the sale of equity securities or acquire additional oil and gas property interests in the future from the issuance of shares of our common stock to acquire such interests, the interests of existing shareholders in our Company will be diluted and existing shareholders may suffer dilution in their net book value per share depending on the price at which such securities are sold. If we do issue additional shares, it will cause a reduction in the proportionate ownership and voting power of all existing shareholders.

 





s)     

Risk of Concentration of Shareholder Control - Principal shareholders, senior management and Directors have significant influence regarding share ownership. This concentration could lead to conflicts of interest and difficulties for non-insider investors effecting corporate changes, and could adversely affect our Company's share price. As of the Report Date, our senior management, Directors and greater than five percent shareholders (and their affiliates), acting together, held approximately 47 percent of the issued and outstanding shares of our Company and have the ability to influence all matters submitted to our Company's shareholders for approval (including the election and removal of Directors and any merger, consolidation or sale of all or substantially all of our Company's assets) and to control our Company's management and affairs (see "Share Ownership" below in this Annual Report).Accordingly, this concentration of ownership may have the effect of delaying, deferring or preventing a change in control of our Company, impeding a merger, consolidation, takeover or other business combination involving our Company or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of our Company, which in turn could have a material adverse effect on the market price of our shares. Employee, Director and consultant stock options and warrants could lead to greater concentration of share ownership among insiders and could lead to dilution of share ownership which could lead to depressed share prices.

 

t)     

Stock Option Risk - Because the success of our Company is highly dependent upon our respective employees, our Company has granted to certain employees, Directors and consultants stock options to purchase shares of our common stock as non-cash incentives (see "Share Ownership" below in this Annual Report).To the extent that significant numbers of such stock options may be granted and exercised, the interests of the other shareholders of our Company may be diluted causing possible loss of investment value.

 

u)     

No Dividend Distribution - We have never declared or paid cash dividends on our common shares and do not anticipate doing so in the foreseeable future. Our Board of Directors may never declare cash dividends, and such action is exclusively within our discretion. Shareholders cannot expect to receive a dividend on our common stock in the foreseeable future, if at all.

 

v)     

Penny Stock Rules - Trading of our common stock may be restricted by the Securities and Exchange Commission (SEC)'s "Penny Stock" rules which may limit a shareholder's ability to buy and sell our shares. The SEC has adopted rules which generally define "penny stock" to be any equity security that has a market price (as defined) less than US$5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors”. The term "accredited investor" refers generally to institutions with assets in excess of US$5,000,000 or individuals with a net worth in excess of US$1,000,000 or annual income exceeding US$200,000 or US$300,000 jointly with their spouse.

 

 

The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation.

 

 

In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the share that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common shares.

 

w)     

Limitations to Buy or Sell Shares - The National Association of Securities Dealer (NASD) has adopted sales practice requirements which may limit a shareholder's ability to buy and sell our shares. In addition to the "penny stock" rules described above, the NASD has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, the NASD believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The NASD requirements make it more difficult for broker-dealers to recommend that their customers buy our common shares, which may limit your ability to buy and sell our shares and have an adverse effect on the market for our shares.

 

 

x)     

Indemnity of Officers and Directors - Our articles contain provisions that state, subject to applicable law, we must indemnify every Director or officer of our Company, subject to the limitations of the Business Corporations Act (British Columbia), against all losses or liabilities that our Company's Directors or Officers may sustain or incur in the execution of their duties. Our articles further state that no Director or officer will be liable for any loss, damage or misfortune that may happen to, or be incurred by our Company in the execution of his duties if he acted honestly and in good faith with a view to the best interests of our Company. Such limitations on liability may reduce the likelihood of litigation against our Company's Officers and Directors and may discourage or deter our shareholders from suing our Company's Officers and Directors based upon breaches of their duties to our Company, though such an action, if successful, might otherwise benefit our Company and our shareholders.






y)     

Management and Employee Risks - Key management employees may fail to properly carry out their duties or may leave, which could negatively impact our corporate operations and/or our share price. Our Company’s financial condition and the success of our oil and gas operations is dependent on our ability to hire and retain highly skilled and qualified personnel. We face competition for qualified personnel from numerous industry sources, and we may not be able to attract and retain qualified personnel on acceptable terms. The loss of service of any of our key personnel could have a material adverse effect on our operations and/or financial condition, which may negatively impact our share price. We do not have key-man insurance on any of our employees.

 

z)     

Key Management Risk - The Company depends entirely upon its management to identify, acquire, finance and operate a portfolio of oil and gas exploration properties through which the Company can grow and achieve oil production and a steady income. The Company's management is comprised of a small number of key employees with technical skills and expertise in the business, the loss of any one of whom could harm the Company. The Company does not currently maintain "key-man" insurance for any of its employees.

 

aa)     

Forward-Looking Statements - This Annual Report may contain forward-looking statements as that term is defined in Section 27A of the United States Securities Act of 1933 and Section 21E of the United States Securities Exchange Act of 1934.These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors" that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Item - 4 : Information on the Company

A.     

HISTORY AND DEVELOPMENT OF THE COMPANY.

 

a)     

Name of the Company - The name of the company is "Continental Energy Corporation" and it is herein referred to as the "Company". Upon its incorporation on May 29, 1984, the name of the Company was "Intl. Focus Res. Inc.” On January 3, 1996 the name was changed to "Continental Copper Corporation”. On October 23, 1997 the name was changed to "Continental Energy Corporation".

 

b)     

Incorporation - The Company was incorporated under the Business Corporations Act of British Columbia on May 29, 1984 under incorporation number BC0278646 issued by the Province of British Columbia Registrar of Companies in Victoria, British Columbia, Canada.

 

c)     

Domicile - The Company is a limited liability company and its domicile is at its registered and records office located at 900-885 West Georgia Street, Vancouver, British Columbia, Canada V6C 3H1, telephone +1-604-687-5700, care of the Company's general counsel, Clark Wilson LLP. The Company does not have an office in the USA.

   
d)     

Important Events – Except for those certain events described in Item-4.A.h and Item-4.A.i herein below, the Company has not made, during the fiscal year covered by this Annual Report and up to the Report Date, any important events in the development of the its business through any material reclassification, merger or consolidation or any of its significant subsidiaries; any acquisitions or dispositions of material assets other than in the ordinary course of business; any material changes in the mode of conducting its business or to the types of business conducted; name changes; or any bankruptcy, receivership or similar proceedings with respect to the Company or any one of its significant subsidiaries.

 

e)     

Important Investments or Divestitures – Except for Visionaire subsidiary divestiture and those certain additional events described in Item- 4.A.h and Item-4.A.i herein below, the Company has not made, during its last three financial years and up to the Report Date, any material capital expenditure investments and divestitures (including interests in other companies).

 

f)     

Important Planned Investments or Divestitures – As at the Report Date, the Company does not have any material capital expenditures and divestitures (including interests in other companies) planned and/or committed under contract. However, the Company is always looking to develop new business opportunities for expansion of its core business interests in upstream and downstream oil and gas and in conventional and alternative energy within the Company's focus area of Indonesia. The Company expects to source external finance for any new acquisitions or opportunities realized.

 

g)     

Public Takeover Offers – During the fiscal year covered by this annual report and up to the Report Date, the Company has not received or sought any public takeover offers by third parties in respect of the Company’s shares, nor has the Company made any public offers in respect of a takeover of other Companies’ shares.

 





h)     

Material Events Occurring Since the Beginning of Fiscal 2016 on 7/01/15 – Described in Chronological Order

 

1)- Annual and Quarterly Financial and Regulatory Filings

 

i)     

Cease Trade Order

On 6/23/17, the Company completed the audits, financial reports, and made all of the regulatory filings to remedy and cure a cease trade order issued on 11/4/15 by the British Columbia Securities Commission ("BCSC"). The order was issued because the Company was at that time deficient in its regulatory requirements involving the filing of its audited consolidated financial statements for the fiscal year ended 6/30/15. The order prohibits trading of the Company’s securities in Canada until the deficiency is cured by the Company filing the required delinquent financial reports and a revocation order is issued by the BCSC.

In addition to the audited statements for the year ended 6/30/15, the Company must also prepare and file the same for the year ended 6/30/16, plus the six interim quarterly financial reports for the three fiscal quarters ended 3/31/16 and the three quarters ended 3/31/17. The Company completed its annual audits and filed both its delinquent Fiscal 2015 report on 5/24/17 and this Fiscal 2016 report on 6/21/17. Three of the six delinquent interim reports for the three quarters ended 3/31/16 were completed and filed on 6/20/17.

The remaining interim reports for the three quarters ended 3/31/17 were completed and filed on 6/23/17. These last reports complete the requirements to remedy and cure the deficiency which led to the cease trade order. The Company intends to immediately apply to the BCSC for a revocation order.

ii)     

Annual Financial Report Filed Late for Fiscal 2015

On 5/24/17 we made a late filing of the required audited annual financial reports and other disclosure for our Fiscal 2015 year ended 6/30/15. These reports were filed electronically on SEDAR in compliance with regulations of British Columbia Securities Commission in our home country, and in the form required by Canadian Securities Administrator's National Instruments 51-102 “Continuous Disclosure Obligations” and 51-109 "Certification of Disclosure in Annual Filings". These reports included audited, annual, consolidated financial statements for the Fiscal 2015 year ended 6/30/15 plus management's discussion and analysis thereof.

iii)     

Annual Oil & Gas Activity and Reserves Report Filed Late for Fiscal 2015

On 5/24/17 we made a late filing of the Company's required annual oil and gas activities and reserves report for Fiscal 2015. These reports were filed electronically on SEDAR in compliance with regulations of British Columbia Securities Commission in our home country, and in the form required by Canadian Securities Administrator's National Instrument 51-101 “Standards of Disclosure for Oil and Gas Activities”.

iv)     

Annual Report on Form 20F Filed Late for Fiscal 2015

On 5/26/17 we made a late filing on EDGAR of the required audited annual financial reports and other disclosure on US SEC Form 20F Annual Report for our Fiscal 2015 year ended 6/30/15. The Form 20F Annual Report was filed concurrently as a voluntary "Annual Information Form" or "AIF" filing on SEDAR in compliance with regulations of British Columbia Securities Commission in our home country, and in the form required by Canadian Securities Administrator's National Instruments 51-102 “Continuous Disclosure Obligations” and 51-109 "Certification of Disclosure in Annual Filings". These reports included audited, annual, consolidated financial statements for the Fiscal 2015 year ended 6/30/15 plus management's discussion and analysis thereof.

v)     

Reports Filed Late for Quarters Ended 9/30/15, 12/31/15 and 3/31/16

On 6/20/17 we made a single late filing of three interim quarterly financial reports for the quarters ended 9/30/15, 12/31/15, and 3/31/16; which are the first three quarters of our Fiscal 2016. These reports were filed electronically on SEDAR in compliance with regulations of British Columbia Securities Commission in our home country, and in the form required by Canadian Securities Administrator's National Instruments 51-102 “Continuous Disclosure Obligations” and 51-109 "Certification of Disclosure in Interim Filings". These reports included management prepared, unaudited, interim, consolidated financial statements for each one of the three quarters plus management's discussion and analysis thereof. The same three quarterly financial reports were also filed on the same date on EDGAR under Form 6K.

vi)     

Annual Financial Report Filed Late for Fiscal 2016

On 6/21/17 we made a late filing of the required audited annual financial reports and other disclosure for our Fiscal 2016 year ended 6/30/16. These reports were filed electronically on SEDAR in compliance with regulations of British Columbia Securities Commission in our home country, and in the form required by Canadian Securities Administrator's National Instruments 51-102 “Continuous Disclosure Obligations” and 51-109 "Certification of Disclosure in Annual Filings". These reports included audited, annual, consolidated financial statements for the Fiscal 2016 year ended 6/30/16 plus management's discussion and analysis thereof.

vii)     

Annual Oil & Gas Activity and Reserves Report Filed Late for Fiscal 2016

On 6/21/17 we made a late filing of the Company's required annual oil and gas activities and reserves report for Fiscal 2016. These reports were filed electronically on SEDAR in compliance with regulations of British Columbia Securities Commission in our home country, and in the form required by Canadian Securities Administrator's National Instrument 51-101 “Standards of Disclosure for Oil and Gas Activities”.





viii)     

Reports Filed Late for Quarters Ended 9/30/16, 12/31/16 and 3/31/17

On 6/23/17 we made a single late filing of three interim quarterly financial reports for the quarters ended 9/30/16, 12/31/16, and 3/31/17; which are the first three quarters of our Fiscal 2017. These reports were filed electronically on SEDAR in compliance with regulations of British Columbia Securities Commission in our home country, and in the form required by Canadian Securities Administrator's National Instruments 51-102 “Continuous Disclosure Obligations” and 51-109 "Certification of Disclosure in Interim Filings". These reports included management prepared, unaudited, interim, consolidated financial statements for each one of the three quarters plus management's discussion and analysis thereof.

ix)     

AIF on Form 20F Filed on SEDAR for Fiscal 2016

On 6/29/17, on the same date we filed this Form 20F Annual Report, for the Fiscal 2016 year ended 6/30/16 on EDGAR, we also filed a copy of this Form 20F as a voluntary "Annual Information Form" or "AIF" filing on SEDAR in compliance with regulations of BC Securities Commission in our home country. The AIF is in a form acceptable under Canadian Securities Administrator's National Instruments 51-102 “Continuous Disclosure Obligations” and 51-109 "Certification of Disclosure in Annual Filings".

2)- Share Capital - Authorized and Issued

 

i)     

Authorized Share Capital at 6/30/16 End of Fiscal Year 2016

At the end of Fiscal 2015 the Company's authorized capital consisted of 500,000,000 common shares without par value and without special rights or restrictions attached and 500,000,000 preferred shares without par value and with special rights and restrictions attached. There were no changes to the Company's authorized share capital during Fiscal 2016 or up to the Report Date.

ii)     

New Share Issues During Fiscal Year 2016 Ended 6/30/16

 

 

There were no new issues of share capital of any class or series by the Company during Fiscal 2016.

 

iii)     

New Share Issues From 7/01/16 up to the Report Date 6/29/17

There were no new issues of share capital of any class or series by the Company during the period from the end of Fiscal 2016 up to the Report Date.

3)- Share Purchase Warrant Activity

 

i)     

Share Purchase Warrant Activity During Fiscal Year 2016 Ended 6/30/16

On 10/13/15, as an incentive for a $10,000 loan from a director, the Company issued 2,000,000 common share purchase warrants to the director, with an exercise price of $0.01 per share and expiry date of 12/31/17. During Fiscal 2016, a total of 8,912,500 common share purchase warrants expired without exercise. No warrants were exercised during Fiscal 2016. There were no amendments to the terms of any common share purchase warrants during Fiscal 2016.

ii)     

Share Purchase Warrant Activity From 7/01/16 up to the Report Date 6/29/17

During the period from the end of Fiscal 2016 up to the Report Date, there were no new issues, exercises, or amendments to the terms of any share purchase warrants. A total of 250,000 warrants expired without exercise on 7/25/16 and another 300,000 on 10/23/16. At the Report Date there are a total of 2,000,000 common share purchase warrants outstanding at an exercise price of US$ 0.01 until 12/31/17.

4)- Share Purchase Warrant Activity

 

i)     

Stock Option Activity During Fiscal Year 2016 Ended 6/30/16

During the Fiscal 2016 year there were no new issues, exercises, or amendments to the terms of any stock options. A total of 6,800,000 common share purchase stock options expired on 12/31/15 without exercise. At the 6/30/16 Fiscal 2016 year end there were no common share purchase stock options issued or outstanding.

ii)     

Stock Option Activity From 7/01/16 up to the Report Date 6/29/17

During the period from the end of Fiscal 2016 up to the Report Date, there were no new issues, expiries, exercises, or amendments to the terms of any stock options. At the Report Date there are no common share purchase stock options issued or outstanding.

i)     

Subsequent Material Events Occurring Since 6/30/16 up to the Report Date – Described in Chronological Order

 

1)- Director Resignation – Effective upon 12/30/16, Mr. John Tate resigned from the Company's board of directors.
 
2)- Joint Development Agreement Signed – On 1/04/17, the Company entered into a Joint Development Agreement (the "CHI JDA") with Continental Hilir Indonesia Pte. Ltd. ("CHI"), a private Singapore company, for the joint development of Small-Scale Refinery Projects in Indonesia. CHI and the Company are related parties and at the Report Date share three common directors. The CHI JDA is more fully described herein below in Item-4.C.c. "Joint Ventures".
 




  3)- Consulting and Joint Development Agreement Signed – On 2/28/17, the Company entered into a Consulting and Joint Development Agreement (the "CHMEA JDA") with Continental Hilir MEA (FZE) ("CHMEA"), a private company registered in the Sharjah Airport International Free Zone of the United Arab Emirates, for the joint development of Small-Scale Refinery Projects in the Middle East and Africa. CHMEA and the Company are related parties and at the Report Date share one common director. The CHMEA JDA is more fully described herein below in Item-4.C.c."Joint Ventures".
 
  4)- Director Appointment – Upon 3/31/17, Mr. Karsani Aulia was appointed a director of the Company by action of the board of directors to fill the vacancy on the board.
 
  5)- Code of Business Conduct and Ethics – Upon 5/14/17, the board of directors adopted a new and revised "Code" of Business Conduct and Ethics for the Company. A complete copy of the Code was filed by the Company on SEDAR on 16/05/17 and is publicly available in PDF form for download from the SEDAR website. The PDF download link can be found after a search of the Company's filings at SEDAR's website http://sedar.com/search/. A complete copy of the Code was also filed by the Company on EDGAR on 17/05/17 under cover of a Form-6K filing.
 
  6)- Charter of the Audit Committee – Upon 5/14/17, the board of directors adopted a new and revised "Charter" for the Company's Audit Committee. A complete copy of the Charter was filed by the Company on SEDAR on 5/16/17 and is publicly available in PDF form for download from the SEDAR website. The PDF download link can be found after a search of the Company's filings at SEDAR's website http://sedar.com/search/. A complete copy of the Charter was also filed by the Company on EDGAR on 5/17/17 under cover of Form-6K.
 
  7)- Charter of the Governance and Nominating Committee – Upon 5/14/17, the board of directors adopted a new and revised "Charter" for the Company's Governance and Nominating Committee. A complete copy of the Charter was filed by the Company on SEDAR on 5/16/17 and is publicly available in PDF form for download from the SEDAR website. The PDF download link can be found after a search of the Company's filings at SEDAR's website http://sedar.com/search/. A complete copy of the Charter was also filed by the Company on EDGAR on 5/17/17 under cover of a Form-6K filing.
 
  8)- Charter of the Compensation Committee – Upon 5/17/17, the board of directors adopted a new and revised "Charter" for the Company's Compensation Committee. A complete copy of the Charter was filed by the Company on SEDAR on 5/23/17 and is publicly available in PDF form for download from the SEDAR website. The PDF download link can be found after a search of the Company's filings at SEDAR's website http://sedar.com/search/. A complete copy of the Charter was also filed by the Company on EDGAR on 5/23/17 under cover of a Form-6K filing.
 
  9)- Charter of the Reserves Committee – Upon 5/17/17, the board of directors adopted a new and revised "Charter" for the Company's Governance and Nominating Committee. A complete copy of the Charter was filed by the Company on SEDAR on 5/23/17 and is publicly available in PDF form for download from the SEDAR website. The PDF download link can be found after a search of the Company's filings at SEDAR's website http://sedar.com/search/. A complete copy of the Charter was also filed by the Company on EDGAR on 5/23/17 under cover of a Form-6K filing.
 
  10)- AGM Notice and Record Date Set – Upon 6/05/17, the Company caused its registrar and transfer agent, Computershare, to file on SEDAR a Notice of Meeting and Record Date for the Company's annual general meeting of shareholders for Fiscal 2015 and Fiscal 2016 years to be held on 8/04/17 in the Company's registered and records office at 900-885 West Georgia Street, Vancouver, British Columbia, Canada V6C 3H1. The official "Record Date" for the purposes of determining those shareholders of record entitled to vote at the meeting is 6/30/17. The formal notice and agenda for the meeting will be published on the Record Date.

 

B.     

BUSINESS OVERVIEW.

The Company is an emerging developer of conventional and alternative energy capacity integrated with upstream and downstream petroleum supply within the Republic of Indonesia. Why Indonesia? Already a G20 member, Indonesia is predicted by the World Bank to grow to the 4th largest economy in the world by 2045.

C.     

ORGANIZATIONAL STRUCTURE.

The Company conducts and manages substantially all of its business activities through the use of wholly-owned corporate subsidiaries, partially owned joint venture corporations, and joint ventures. The Company itself functions as a holding company centralizing management and administrative activities while specific project and property ownership and management are held and vested in the subsidiary, joint venture company or joint venture.

a)     

Wholly-owned Subsidiaries - From time to time the Company establishes certain wholly and exclusively owned and controlled subsidiary companies usually for a special and single purpose such as, for example, to own and hold the rights to a specific oil and gas property. The accounts of wholly-owned subsidiaries are consolidated into those of the Company. At the Report Date, and during the past three Fiscal Years, the Company has no wholly-owned subsidiaries.

 

b)     

Partially Owned Joint Venture Companies - From time to time the Company participates in certain special purpose joint venture companies which are jointly owned with other non-related shareholders and are jointly operated and controlled pursuant to the terms of a joint venture company shareholders agreement. At the Report Date the Company's interests in partially owned joint venture corporations include the following:

 





c)     

Joint Ventures - From time to time the Company enters joint ventures with other partners pursuant to a joint venture agreement or joint operating agreement. Such unincorporated joint venture arrangements are a customary practice for multiple otherwise unrelated companies to jointly own and share the risks and rewards of the oil, gas, and energy business. At the Report Date the Company's is involved in the following joint ventures:

D.     

PROPERTY, PLANT, AND EQUIPMENT.

 

a)     

Oil and Gas Reserves - As at the Report Date, we have not established substantive proved reserves that are material to our operations or financial position in accordance with reserve guidance set out in US SEC Industry Guide 2 - Disclosure of Oil and Gas Operations. We have not filed reports claiming oil or gas reserves to any other federal authority or agency since the beginning of the last Fiscal Year.

 





b)     

Oil and Gas Production- As at the Report Date, we have not established oil or gas production.

 

c)     

Drilling Activity - The following table sets out the number of wells we participated in during each of our three most recently completed Fiscal Years.

 

Wells by Classification Drilling Activity for Fiscal Year Ended
6/30/16 6/30/15 6/30/14
Gross Net Gross Net Gross Net
Exploratory Wells Drilled

0

0

0

0

0

0

Development Wells Drilled

0

0

0

0

0

0

Total - Wells by Classification

0

0

0

0

0

0

             
Wells by Type Gross Net Gross Net Gross Net
Productive Oil Wells Completed

0

0

0

0

0

0

Productive Gas Wells Completed

0

0

0

0

0

0

Service Wells Completed

0

0

0

0

0

0

Dry Holes Drilled

0

0

0

0

0

0

Total - Wells by Type

0

0

0

0

0

0

Notes: A “gross well” is a well in which we own a participating interest. The total number of gross wells is the total number of wells in which we own or owned a participating interest.
 
  A “net well” is deemed to exist when the sum of all fractional ownership interests in gross wells equals one. The number of net wells is the sum of the proportion of the actual fractional participating interests we own in gross wells expressed as whole numbers and fractions thereof.
 
  A “service well” is a well drilled for purposes other than oil or gas production, for example for use as a water or gas injection well or as a salt water disposal well.
 
  A “dry hole” is an exploratory or a development well found to be incapable of producing either oil or gas in sufficient quantities to justify completion as a commercially productive oil or gas well. A “productive” well is an exploratory or a development well that is not a dry hole.

 

d)     

Acreage, Project Areas and Leases - The following table sets out the acreage of project areas, production sharing contract areas, and leases in which we have or held a participating interest, as at the end of each of our three most recently completed Fiscal Years. All of our acreage is undeveloped. As used in the table a “gross acre” is an acre in which we own or owned a participating interest. The total number of gross acres is the total number of acres in which we own or owned a participating interest. A “net acre” is deemed to exist when the sum of all fractional ownership interests in gross acres equals one. The number of net acres is the sum of the proportion of the actual fractional participating interests we own or owned in gross acres expressed as whole numbers and fractions thereof.

 

Lease, Area, PSC, or Property Acreage and Leases at Fiscal Year Ended
6/30/16 6/30/15 6/30/14
Gross  Net  Gross  Net Gross  Net
 

-

-

-

-

-

-

Total - Acres

-

-

-

-

- 

-

Notes to table: At the end of Fiscal 2015 and as of the Report date the Company has no oil and gas leases or production sharing contracts.

e)     

Oil and gas costs. - The following table summarizes the costs incurred in oil and gas property acquisition, exploration, development, and related joint venture activities for our Company for our three most recently completed Fiscal Years.

  Oil and Gas Costs at Fiscal Year Ended
Cost 6/30/16 6/30/15 6/30/14
Oil and Gas Costs

--

--

--

 Total - US$

--

--

--

Item - 4A : Unresolved Staff Comments

We are filing this Form-20F as an Annual Report under the Exchange Act and not as a registration statement, therefore the provision of information called for by this Item-4A is not applicable.





Item - 5 : Operating and Financial Review and Prospects

A.     

OPERATING RESULTS.

The following discussion of the Company's financial results includes those for the most recently completed last three Fiscal Years ended 6/30/16, 6/30/15, and 6/30/14. As used below, the phrases "last year" and "prior year" refers to financial results for the same fiscal period ended 30 June of the previous Fiscal Year.

FINANCIAL RESULTS FOR THE COMPANY’S FISCAL YEAR 2016, ENDED 6/30/16

All balances referred to in the following discussion are in US$ currency unless otherwise indicated.

Finance during Fiscal Year 2016 Ended 6/30/16 - During the Fiscal Year ended 6/30/16, the Company received $71,500 from the proceeds of loans from two related parties. In the prior year ended 6/30/15, $120,000 was received as proceeds of private placements. The Company also converted its loan payable of $750,000 into common shares.

Income during Fiscal Year 2016 Ended 6/30/16 - Overall, from operations during the Fiscal Year ended 6/30/16, the Company had a loss of $473,289 compared to a loss of $956,418 in the prior year ended 6/30/15. The Company had a loss per share of $0.00 in 2016 compared to a loss per share of $0.01 in 2015.

Expenses during Fiscal Year 2016 Ended 6/30/16 - General and administrative expenses decreased by $324,549 from $799,379 to $474,830 for the Fiscal Years ended 6/30/15 and 6/30/16 respectively. The decrease is attributable to the lower share-based payments expense of $26,200 compared to $100,000 in Fiscal 2015. The Company’s office and investor relations costs were also lower in Fiscal 2016 compared to Fiscal 2015. The office and investor relations costs were $122,321 in Fiscal 2015 and only $40,396 in Fiscal 2016. Professional fees were less by $48,599 in Fiscal 2016 compared to Fiscal 2015. In addition, interest charges were $84,551 in Fiscal 2015 but only $47,385 in Fiscal 2016.

Financial Results For the Company’s Fiscal Year 2015, Ended 6/30/15

All balances referred to in the following discussion are in US$ currency unless otherwise indicated.

Loss during Fiscal Year 2015 Ended 6/30/15 - Overall, the Company had a loss from operations during Fiscal 2015 of $956,418 compared to $939,489 in the prior year ended 6/30/2014. The Company had a loss per share of $0.01 in Fiscal 2015 and Fiscal 2014. The primary contributor to the overall increase in the loss incurred during the year were the Company’s general and administrative expenses as described below, which increased by $168,866. During Fiscal 2015, the Company recognized a loss of $159,837 on the disposal of the Company’s 51% owned subsidiary Visionaire Energy AS. During Fiscal 2014, the Company used the equity accounting method to account for its portion of the operations of Visionaire Energy AS and its affiliates, which resulted in a loss during 6/30/14 of $311,972, and therefore a resultant decrease in Visionaire Energy AS related cost to the Company of $152,135, and offsetting the overall increase in administrative costs.

Finance during Fiscal Year 2015 Ended 6/30/15 - Financing activities during Fiscal 2015 provided $120,000 from private placements on issuance of 2,400,000 common shares of the Company. The Company also converted its loan payable of $750,000 into common shares of the Company by issuing 15,000,000 shares of its common stock. During the prior year, the Company raised $40,000 from private placements and a further $750,000 from said loan, which, as noted above, was converted into the common shares of the Company during Fiscal 2015.

Investments during Fiscal Year 2015 Ended 6/30/15 – The Company sold its 51% interest in Visionaire Energy AS for total consideration of $1,200,000, consisting of the return of 20 million common shares of the Company, issued as part of the original investment in Visionaire Energy AS plus $200,000 in cash. The approval for the disposal of the Company’s shareholders was sought and received on 12/5/2014.

Expenses during Fiscal Year 2015 Ended 6/30/15 - General and administrative expenses during Fiscal 2015 amounted to $799,379 compared to $630,513 during Fiscal 2014, an increase of $168,866. The increase in cost was primarily the result of the stock-based compensation provided to a director by issuing 2,000,000 common shares of the Company. The stock-based compensation amounted to $100,000 compared to $20,877, which pertained to the fair value of the stock options granted during Fiscal 2014, resulting in an overall increase in the expense of $79,123. Other costs with significant increases during 6/30/15 were management fees and salaries, which increased by $54,392 as a result of medical insurance benefits provided to the Company’s officers, and, office costs and professional fees which increased by a combined $79,394 due to the changes involving the Company’s structure, i.e. the sale of Visionaire Energy AS, and the timing difference to Fiscal 2014 regulatory filings and annual meetings. These higher costs were off-set by a decrease in the overall interest charges related to the Company’s convertible promissory note. The interest charges decreased by $50,803 as, during Fiscal 2014, the Company had a series of amendments to the terms of the promissory note which resulted in a higher interest expense to accrete the promissory note to its face value with the amended terms. During Fiscal 2015, the Company only had one amendment to the terms of the promissory notes.





Financial Results For the Company’s Fiscal Year 2014, Ended 6/30/14

All balances referred to in the following discussion are in US$ currency unless otherwise indicated.

Loss during Fiscal Year 2014 Ended 6/30/14 - Overall, the Company had a loss from operations during the Fiscal Year ended 6/30/14 of $939,489 compared to $700,115 in the prior year ended 6/30/13. The Company had a loss per share of $0.01 in Fiscal 2014 compared to a loss per share of $0.01 in Fiscal 2013. The increase in loss was primarily due to the operations of the Company's 51% owned subsidiary Visionaire Energy AS, and its Norwegian investments, VTT Maritime AS and RADA Engineering and Consulting AS. The Company uses the equity method to account for its portion of the operations of these Affiliates and recorded a loss of $311,972 during 2014 Year while in the Prior Year, the Company recorded an income of $37,143.

Finance during Fiscal Year 2014 Ended 6/30/14 - Financing activities during Fiscal 2014 provided net cash proceeds of $761,517 primarily from a $750,000 loan and a $40,000 private placement compared to net cash proceeds of $42,948, resulting primarily from a $44,500 private placement during Fiscal 2013.

Investments during Fiscal Year 2014 Ended 6/30/14 - Subsequent to the end of Fiscal 2014, on 9/15/14, the Company sold its entire 51% interest in Visionaire Energy AS with effect from the end of Fiscal 2014 on 6/30/14, for total consideration of $1,200,000 consisting of 20 million Company shares valued at $1,000,000 plus $200,000 in cash. The sale transaction is subject to approval of the shareholders to be sought at the Company's 2014 AGM scheduled for 12/05/14. Consequently, the operations of Visionaire's investment in its Norwegian affiliates VTT Maritime AS and RADA Engineering and Consulting AS are presented as discontinued operations in the Company’s audited annual financial statements for Fiscal 2014 ended 6/30/14.

With effect from 4/30/14, the Company acquired a 42.5% equity interest in Ruaha River Power Company Ltd. ("Ruaha Power"), a renewable energy power developer based in Dar es Salaam, Tanzania. The Company is Ruaha Power's single largest shareholder. A private American development company owns 30% and two Tanzanian companies own 12.5% and 15% respectively. The Company earned its fully paid-up stake in Ruaha Power for its technical contributions to the initial geotechnical evaluation and feasibility study work on Ruaha Power's Lukosi River hydropower project performed by the Company from its Jakarta office.

Expenses during Fiscal Year 2014 Ended 6/30/14 - General and administrative expenses decreased by $8,707 from $639,220 to $630,513 for the fiscal years ended 30/06/13 and 30/06/14, respectively. The significant changes to general and administrative expenses are as follows: Most significantly, interest charges increased from $66,055 to $135,354 as a result of multiple amendments to the terms of the Company’s convertible promissory note and recognition of the interest expense to accrete the promissory note up to its face value upon the maturity of the note with such amended terms. This increase in interest charges was offset by decreases in professional fees and share-based payments expense. Professional fees incurred by the Company decreased from $104,690 to $67,266 as a result of the reduced charges from the Company’s accounting service provider. Share-based payments expense decreased from $52,250 to $20,877, reflecting the calculated fair value of share purchase options and warrants granted by the Company during the respective years. During Fiscal 2013, the Company granted 7.8 million incentive stock options to its directors, officers and consultants whereas in Fiscal 2014, the Company granted 2 million share purchase warrants to service providers as non-cash compensation for services rendered.

B.     

LIQUIDITY AND CAPITAL RESOURCES.

The following discussion of the Company's liquidity and working capital situation includes those for the most recently completed last three Fiscal Years ended 6/30/16, 6/30/15, and 6/30/14. Cash on hand is sufficient to fund the Company’s overhead costs and new business development costs for the immediate future. The Company intends to focus its efforts on acquisitions of new properties to generate revenue. The Company also intends to conduct additional fund raising activities during the next fiscal year.

C.     

RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

We do not currently, and did not previously, have research and development policies in place. Over the past three Fiscal Years, no funds were expended by our Company on research and development activities.





D.     

TREND INFORMATION.

The Company is aware of two global market trends which we believe could have a material effect upon our business operations. These are:

E.     

Off-balance sheet arrangements.

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

F.     

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS.

The table below reflects our “Short Term” (at least one year), “Mid Term” (two to three years) and “Long Term” (over three years) debt and fixed contractual obligations for the upcoming five Fiscal Years:

Contractual Obligations as at 6/30/16
Obligation Total Short Term Mid Term Long Term
Debt Principal nil nil nil nil
Debt Service Interest nil nil nil nil
Non-Cancelable Leases nil nil nil nil
Environmental liabilities nil nil nil nil
Asset Retirement Obligations nil nil nil nil
Property Work Commitments nil nil nil nil
Totals nil nil nil nil

 

G.     

SAFE HARBOR.

The safe harbor provided in Section 27A of the Securities Act and Section 21E of the Exchange Act (“statutory safe harbors”) shall apply to forward-looking information provided pursuant to Item 5.E and 5.F.

Item - 6 : Directors, Officers, Employees and Their Compensation

A.     

DIRECTORS AND OFFICERS.

Directors - The term "Directors" as used herein includes and is limited to those persons duly elected or appointed to the Board of Directors of the Company in the manner provided for in the Company’s articles of association and in accordance with applicable law.





Board of Directors
Director’s
Name
Type of
Director
Age First
Appointed
Standing
Committee
Memberships
Functional
Expertise Brought
to the Company
Other Public
Company
Directorships
Richard L. McAdoo Executive Director &
Chief Executive Officer
63 Jan 1999 Reserves, Compensation Businessman &
Petroleum Geologist
None
Phillip B. Garrison Non-Executive &
Independent Director
64 Sep 2007 Audit, Reserves,
Compensation, Governance
Businessman &
Accountant
None
Robert V. Rudman Executive Director &
Chief Financial Officer
69 Dec 2009 Audit Businessman &
Accountant
None
Karsani Aulia Non-Executive &
Independent Director
64 Mar 2017 Audit, Reserves,
Compensation, Governance
Businessman &
Petroleum Geologist
None




John Tate is a senior executive with global experience in emerging and frontier markets gained in positions with major US multinational corporations, an early stage software company and a start-up copper mining and mineral processing company in Africa. He has been residing in Dar es Salaam, Tanzania, East Africa since 2007 where he serves as the Chief Executive Officer and Chairman of Kastan Mining PLC. Prior to his relocation to Africa, Mr. Tate was the Chief Financial Officer of a software as a service company in Cincinnati, Ohio. From 2000 to 2005, he was the Assistant Treasurer, Global Operations for a logistics and supply chain management company. His earlier business career involved 10 years with Ford Motor Credit Company and served in various senior financial positions in international postings in Korea, Thailand, and India. Mr. Tate earned a Bachelor's and a Master's degree in finance at Colorado State University and he is a Certified Public Accountant. At the date of his election, Mr. Tate also served as a founder, director, Chief Financial Officer, resident manager, and shareholder of the Company's Tanzania affiliate, Ruaha River Power Company Limited ("Ruaha Power") and thereby exerted effective management control over Ruaha Power. At the date of his election Mr. Tate indirectly owned a 35% equity interest in Ruaha Power through Pan African Management and Development Company, Inc., a private company owned and controlled by Mr. Tate and his family.

Senior Management or Officers - The term "Officers" as used herein includes and is limited to those senior managers or executive managers who are either Chairman, President, Vice President, Secretary, Treasurer, CEO, COO, or CFO of the Company or hold position of similar capacity in wholly-owned subsidiaries.





Officers
Officer’s Name Positions Held Age Date First
Appointed
Functional
Expertise Brought to the
Company
Other Public
Company
Directorships
Richard L. McAdoo Chairman & CEO
Chief Executive Officer
63 Jan 1999 Businessman &
Petroleum Geologist
None
Robert V. Rudman Director & CFO
Chief Financial Officer
69 Sep 2009 Businessman &
Chartered Accountant
None
B.     

COMPENSATION.

The Company’s executive compensation program is designed to attract, motivate and retain high performing senior executives, encourage and reward superior performance and align the executives’ interests with those of the Company’s shareholders. Individual compensation may be based on individual experience and performance or other criteria deemed important by the Compensation Committee. In order to meet the Company’s objectives, executive compensation is guided by three principles: 1) providing executives with an equity-based incentive plan, namely a stock option plan; 2) aligning employee compensation with Company corporate objectives; and 3) attracting and retaining qualified individuals in key positions.

a)     

Compensation Policy Elements - An executive compensation policy has been established to acknowledge and reward the contributions of the executive Officers to the Company’s success and to ensure competitive compensation, in order that the Company may benefit from the expertise required to pursue its objectives. The Company’s executive compensation policy is comprised of both fixed and variable components. The variable components include equity and non-equity incentive plans. Each compensation component has a different function, but all elements are intended to work in concert to maximize Company and individual performance by establishing specific, competitive operational and financial goals and by providing financial incentives to employees based on their level of attainment of these goals. The Company’s current executive compensation program is comprised of the following components:





b)     

Compensation on Termination - There are no Company policies providing for, and no provisions in the Company’s employment agreements with its Officers or employees for, incremental payments to be made to them by the Company in the event of termination of their employment “Without Cause”.

 

c)     

Compensation on Change of Control of Company - There are no Company policies providing for, and no provisions in the Company’s employment agreements with its Officers or employees for incremental payments to be made to them by the Company in the event of termination of their employment on the event of any “Change of Control” of the Company.

 

d)     

Compensation of Directors-The Company has no standard arrangement pursuant to which Directors are compensated by the Company for their services solely in their capacity as Directors except for the granting from time to time of incentive stock options in accordance with the Company’s Stock Option Plan and except for compensation paid to Directors who are also executive Officers. No cash compensation was paid to any Director of the Company for the Director’s services as a Director during the most recently completed financial year, other than the reimbursement of out-of-pocket expenses.

 

e)     

Compensation of Officers and Directors- During the most recently completed financial year of the Company, the Company compensated its Directors and Officers as set forth in the following table. The Company reports its financial statements in US dollars and therefore all amounts therein are reported in US dollars.

 

Summary Table - Compensation of Directors and Officers During Fiscal 2016
Name and Principal
Position
Fiscal Year
Ended
Salary Share-Based
Awards (1)
Options
Granted (1)
Non-Equity Incentive Plan
Compensation
Pension
Contributions
All Other
Compensation
Total
Compensation
(US$)
Annual Long-Term
Officers                  
Richard L. McAdoo
Chairman & CEO
30-JUN-16 $150,000 Nil Nil Nil Nil Nil Nil $150,000
Robert V. Rudman
CFO
30-JUN-16 $120,000 Nil Nil Nil Nil Nil $12,915 (2) $132,915
Non-Executive Directors   Fees             Fees
Phillip B. Garrison
Non-Executive Director
30-JUN-16 Nil $26,200 (3) Nil Nil Nil Nil Nil $26,200
John Tate (4)
Non-Executive Director
30-JUN-16 Nil Nil Nil Nil Nil Nil Nil Nil
Karsani Aulia (5)
Non-Executive Director
30-JUN-16 Nil Nil Nil Nil Nil Nil Nil Nil

Notes to the table:

1     

When applicable the value of the share-based and options awards reflects the fair value of options granted on the dates of grant. The fair value is computed using the Black Scholes option pricing model with the following weighted average assumptions: a) average risk-free interest rate; b) expected years of life of the option; c) the price of the stock on the grant date; d) expected volatility as a percentage; and e) no expected dividend payments. The Black Scholes model is used to compute option fair values because it is the most commonly used option pricing model and is considered to produce a reasonable estimate of fair value.






2     

Reflects cost of personal medical insurance provided.

3     

Reflects the Black Scholes pricing model for warrants issued as compensation for a non-interest bearing loan.

4     

Mr. Tate resigned effective 12/30/16 subsequent to the end of Fiscal 2016.

5     

Mr. Aulia was appointed a director on 3/31/17, subsequent to the end of Fiscal 2016.

 

C.     

BOARD PRACTICES.

 

a)     

Number of Directors - The number of Directors on the Company's Board of Directors was fixed at four (4) directors at the last annual general meeting. Under the Company's articles of incorporation, the Board is entitled to add one (1) director at any time, should it deem necessary or desirable.

 

b)     

Election of Directors - The Directors of the Company are elected at each annual general meeting and hold office until the next annual general meeting. In the event or resignation of a sitting Director, the Board of Directors may act to appoint a replacement Director who shall serve until the next general meeting.

 

c)     

Independence and Executive Directors – At the Report Date, the Company has four sitting directors, two of whom are Executive Directors and two of whom are both Non-Executive Directors and also Independent Directors as described below:

 

i)     

Executive Directors – The Company considers directors two of its four directors, McAdoo and Rudman, to be "Executive Directors" by virtue of the fact both are salaried employees paid directly by the Company for personal services rendered in their capacities as senior executive officers of the Company.

 

ii)     

Non-Executive Directors – The Company considers two of its four directors, Aulia and Garrison, to be "Non-Executive Directors" by virtue of the fact that neither is a salaried employee paid by the Company for personal services and neither has been paid directly or indirectly for services rendered as a consultant, advisor, or contractor to the Company.

 

iii)     

Independent Directors – The Company considers directors Aulia and Garrison to be "Independent Directors" by virtue of the fact that both are Non-Executive Directors, neither is holder of, or director or officer of a holder, of 10% or more of the Company's voting stock, and neither is a director, officer, or major shareholder of an affiliate controlled by the Company or in control of the Company. Each also meets the requirements of an "Independent Director" as defined in Part-1.2(1) of NI 58-101 Disclosure of Corporate Governance Practices.

 

d)     

Orientation of New Directors – The Company makes an effort to provide newly appointed or elected Directors with a copy of all policies, codes of conduct, and board committee charters then currently in effect at the time of election for their information. Additionally, the Company assists all new Directors with registering on the "NI 55-102 System for Electronic Disclosure by Insiders" or "SEDI"; and advising of the requirements for each new Director to file and view insider reports electronically that are required of Directors by Canadian Securities Administrators.

 

e)     

Nomination of Directors - The Company maintains a standing board committee, that in accordance with its charter, is charged with the task to identify, evaluate, interview, and recommend qualified individual candidates for nomination as potential directors to be elected or appointed to the Board, or as qualified candidates to be hired by Continental in the capacity of senior executive and senior financial officers. See Item-6.C.j "Governance and Nominating Committee" herein below.

 

f)     

Other Directorships – As at the Report Date, no directors of the Company are also serving as a director of any other reporting issuer in any jurisdiction, whether domestic USA or foreign.

 

g)     

Code of Business Conduct and Ethics - The Company publishes a written Code of Business Conduct and Ethics (the "Code"). The most recent revision of this Code was adopted by the board of directors on 5/14/17. The Code is deemed to include all the Policies published and described in the following section.

 

i)     

The purpose of the Code is to promote ethical and responsible decision making by all of the directors, officers, managers, and all other employees of the Company. The core principles of the Code embrace the values of honesty, integrity, excellence, accountability, transparence, independence, and common-sense ethical responsibility.

 

ii)     

A complete copy of the Code has also been filed and made available for public viewing on 5/17/17 as Exhibit-99.1 under cover of a Form-6K Report of Foreign Issuer made on the SEC's EDGAR system. The Code is hereby incorporated into this Form-20F by this reference.

 

iii)     

A complete copy of the Code has also been filed and made publicly available on the Canadian Securities Administrators SEDAR system in accordance with requirements of Part-2.3 of NI 58-101 Disclosure of Corporate Governance Practices. The Code is in the form of a convenient PDF file which can be downloaded from the SEDAR website, and a search for the Company's 'Code of Conduct' filing dated 5/16/17, at http://sedar.com/search/.

 

h)     

Published Corporate Policies – In addition to the Code of Business Conduct and Ethics described in the preceding section, the Company adopts from time to time and as deemed necessary or desirable certain policies, procedures, guidelines, and recommended practices or procedures for specific administrative, social, compliance, environmental, or ethical issues (each one of which are herein referred to as a "Policy"). Each Policy forms an integral part of the Code described in the preceding section. Policies are applicable to all directors, officers, full and part-time employees, casual hires, consultants, advisers, contractors, and suppliers who are working under direct contract to the Company

 





or any one of the Company's wholly owned subsidiaries, its majority owned or otherwise controlled subsidiaries, and any joint ventures under its designated operational control. As at the Report Date the Company has adopted, published, and made publicly available the following Policies:

  i)     

"Policy on Trading and Company Securities" – The purpose of this Policy is to the purpose of this Policy is intended to prevent "Insider Trading" by persons in possession of "Material Non-Public Information" concerning the Company or its business operations and activities; prevent "Tipping" by persons in possession of the same information" from informing or conveying such knowledge to any other persons; and provide guidance to persons subject to this Policy to permit them to lawfully conduct legitimate transactions for their own personal benefit in the securities of the Company. A complete copy of this Policy been filed and made available for public viewing on 5/23/17 as Exhibit-99.3 under cover of a Form-6K Report of Foreign Issuer made on the SEC's EDGAR system. The said Policy is hereby incorporated into this Form-20F by this reference. This Policy is also available in the form of a convenient PDF file which, after a search for the Company's 'Other Security Holders Documents' filing dated 5/23/17, can be downloaded from the SEDAR website http://sedar.com/search/.

 

i)     

Audit Committee - The Company's Board of Directors has chartered a standing "Audit Committee" and charged it with the responsibility of coordinating, reviewing, and working with the Company’s accountants and auditors regarding the preparation, review, and approval of the Company's annual audited financial statements and related regulatory filings in both Canada and the USA. The most recent revision of the Charter of the Audit Committee was adopted by the board of directors on 5/14/17.

 

i)     

In addition to its USA reporting obligations, our Audit Committee operates under the Company's obligations pursuant to the regulatory practices prescribed by the Canadian Securities Administrators under National Instrument 52-110 Audit Committees and its Companion Policy 52-110CP as last amended and in force and effect (both herein referred to as "NI-52-110").

 

ii)     

The Audit Committee does not consist of the entire Board of Directors. At the Report Date the Audit Committee has three duly appointed members, a majority of whom are "Independent Directors" as defined in Part-1.4 or in Part-6.1.1 of NI 52-110 Audit Committees. The two Independent Directors on the Audit Committee are directors Garrison and Aulia. All three Audit Committee members are "Financially Literate" as such term is defined in Part-1.6 of NI 52-110 Audit Committees.

 

iii)     

The Company considers two members of the Audit Committee, directors Garrison and Rudman, to be "Audit Committee Financial Experts" as such term is defined in Regulation S-K 17 CFR Part 229.407(d)(5)(ii). Mr. Rudman is a Chartered Professional Accountant in Canada and a former employee of public accounting firm Price Waterhouse. Mr. Garrison is a Certified Public Accountant and a former employee of public accounting firm Arthur Young and Co.

 

iv)     

The Audit Committee operates under a formal written "Charter" that is adopted by the Board and amended from time to time as and when the Board deems necessary or appropriate. The most recent revision of the Charter of the Audit Committee is dated 5/14/17.

 

v)     

A complete copy of the Charter of the Audit Committee has also been filed and made available for public viewing on 5/17/17 as Exhibit-99.2 under cover of a Form-6K Report of Foreign Issuer made on the SEC's EDGAR system. The Charter of the Audit Committee is hereby incorporated into this Form-20F by this reference.

 

vi)     

A complete copy of the Charter of the Audit Committee has also been filed and made publicly available on the Canadian Securities Administrators SEDAR system. The Charter is in the form of a convenient PDF file which can be found and downloaded from the SEDAR website, after a search for the Company's 'Other Security Holders Documents' filing dated 5/16/17, at http://sedar.com/search/.

 

j)     

The Governance and Nominating Committee - The Company’s Board of Directors has chartered a standing "Governance and Nominating Committee" and charged it with responsibility for oversight of the periodic review, amendment, and approval of the Company's "Code of Business Conduct and Ethics"; and with the task to identify, evaluate, interview, and recommend qualified individual candidates for nomination as potential directors to be elected or appointed to the Board or as qualified candidates to be hired by Continental in the capacity of senior executive and senior financial officers. The most recent revision of the Charter of the Governance and Nominating was adopted by the board of directors on 5/14/17.

 

i)     

The Governance and Nominating Committee does not consist of the entire Board of Directors. At the Report Date the Governance and Nominating Committee has two duly appointed members, all of whom are "Independent Directors" as defined in Part-1.2(1) of NI 58-101 Disclosure of Corporate Governance Practices. The Independent Directors on the Governance and Nominating Committee are directors Garrison and Aulia.

 

ii)     

A complete copy of the Charter of the Governance and Nominating Committee has also been filed and made available for public viewing on 5/17/17 as Exhibit-99.3 under cover of a Form-6K Report of Foreign Issuer made on the SEC's EDGAR system. The Charter of the Governance and Nominating Committee is hereby incorporated into this Form-20F by this reference.

 

iii)     

A complete copy of the Charter of the Governance and Nominating Committee has also been filed and made publicly available on the Canadian Securities Administrators SEDAR system in accordance with requirements of Part-2.3 of NI 58-101 Disclosure of Corporate Governance Practices. The Charter is in the form of a convenient PDF file which can be found and downloaded from the SEDAR website, after a search for the Company's 'Other Security Holders Documents' filing dated 5/16/17, at http://sedar.com/search/.






k)     

The Compensation Committee - The Company’s Board of Directors has chartered a standing "Compensation Committee" and charged it with responsibility for oversight and periodic review of the Company's "equity incentive plans", "incentive plan", "equity incentive plans", and "plans" for "share-based awards" and "option-based awards" as such terms are all defined in Part-1.2 of NI 58-102F6 Statement of Executive Compensation and herein referred to collectively as "Compensation Plans". After such review, the Committee shall advise the Board of any recommendations for additions or revisions to the Compensation Plans.

 

i)     

The Compensation Committee does not consist of the entire Board of Directors. At the Report Date the Compensation Committee has three duly appointed members, a majority of whom are "Independent Directors" as defined in Part-1.2(1) of NI 58-101 Disclosure of Corporate Governance Practices. The Independent Directors on the Governance and Nominating Committee are directors Garrison and Aulia.

 

ii)     

A complete copy of the Charter of the Compensation Committee has also been filed and made available for public viewing on 5/23/17 as Exhibit-99.1 under cover of a Form-6K Report of Foreign Issuer made on the SEC's EDGAR system. The Charter is hereby incorporated into this Form-20F by this reference.

 

iii)     

A complete copy of the Charter of the Compensation Committee has also been filed and made publicly available on the Canadian Securities Administrators SEDAR system in accordance with requirements of Part-2.3 of NI 58-101 Disclosure of Corporate Governance Practices. The Charter is in the form of a convenient PDF file which can be found and downloaded from the SEDAR website, after a search for the Company's 'Other Security Holders Documents' filing dated 5/23/17, at http://sedar.com/search/.

 

 

l)     

Reserves Committee - The Board of Directors has chartered a standing "Reserves Committee" and charged it with responsibility for oversight of the preparation, review, and approval of the Company's oil and gas activity and reserves reporting. The Reserves Committee operates pursuant to the regulatory requirements prescribed by the Canadian Securities Administrators under National Instrument 51-101 Statement Of Reserves Data And Other Oil And Gas Information ("NI-51-101").

 

i)     

The Reserves Committee does not consist of the entire Board of Directors. At the Report Date the Reserves Committee has three duly appointed members, a majority of whom are "Independent Directors" as defined in Part-1.2(1) of NI 58-101 Disclosure of Corporate Governance Practices. The Independent Directors on the Committee are directors Garrison and Aulia.

 

ii)     

A complete copy of the Charter of the Reserves Committee has also been filed and made available for public viewing on 5/23/17 as Exhibit-99.2 under cover of a Form-6K Report of Foreign Issuer made on the SEC's EDGAR system. The Charter is hereby incorporated into this Form-20F by this reference.

 

iii)     

A complete copy of the Charter of the Reserves Committee has also been filed and made publicly available on the Canadian Securities Administrators SEDAR system in accordance with requirements of Part-2.3 of NI 58-101 Disclosure of Corporate Governance Practices. The Charter is in the form of a convenient PDF file which can be found and downloaded from the SEDAR website, after a search for the Company's 'Other Security Holders Documents' filing dated 5/23/17, at http://sedar.com/search/.

   
D.     

EMPLOYEES.

During Fiscal 2015, in addition to its Officers, the Company had two full time employees, who were all located at the Company’s Indonesia representative office in Jakarta. Of these two employees is accounting staff and the other is administrative and support staff. None of the Company’s employees are represented by a union.

E.     

SHARE OWNERSHIP BY DIRECTORS AND OFFICERS.

The table below lists, as at the Report Date, the number of voting securities owned directly or indirectly by all Directors and Officers. The common share voting rights of our Directors and Officers do not differ from those of any other shareholders. The amounts of common shares shown do not include those common shares that a Director or Officer may yet acquire upon exercise of any outstanding options or warrants.

Voting Shares Owned by Directors And Officers
Type of Name of Number of Voting % of Total Voting
Security Beneficial Owner Securities Owned Securities Issued
Common Shares Richard L. McAdoo, Director & CEO

9,579,158

7.8 %

Common Shares Robert V. Rudman, Director & CFO

3,752,000

3.0 %

Common Shares Karsani Aulia, Non-Executive Director

0

-.-

Common Shares Phillip B. Garrison, Non-Executive Director

0

-.-

 

Directors & Officers as a Group

13,331,158

10.8 %

Common Shares Total Issued & Outstanding

123,015,381

100.0 %

 





Incentive Stock Options Held by Directors and Officers - The table below lists, as at the Report Date, the number of incentive stock options held by each Director and Officer. Incentive stock options are granted to the Company’s management, employees, and consultants in accordance with our formal written Stock Option Plan that is described in more detail in Section-6.B. The number of options held, as at the Report Date, by Directors and Officers as a group plus those options held by other employees and consultants as a group is also shown.

Incentive Stock Options Held by Directors and Officers
Name of Optionee
Directors & Officers
US$ Option
Exercise Price
Date Option
Expires
Number of
Options
Percent
Of Total
Richard McAdoo, Director & CEO n/a n/a 0 0
Robert Rudman, Director & CFO n/a n/a 0 0
Karsani Aulia, Director n/a n/a 0 0
Phillip B. Garrison, Director n/a n/a 0 0

Total Directors & Officers as a Group

0 0
Other Optionees as a Group n/a n/a 0 0

Total Stock Options Outstanding at the Report Date

0 0

Item - 7 : Major Shareholders and Related Party Transactions

Authorized Share Capital - At the Report Date, the authorized capital of the Company consists of One Billion (1,000,000,000) shares divided into Five Hundred Million (500,000,000) common shares without par value and Five Hundred Million (500,000,000) preferred shares without par value.

Authorized Common Shares- At the Report Date, all of the 500,000,000 authorized common shares of the Company are of the same class and, once issued, rank equally as to dividends, voting powers, and participation in assets. Holders of common shares are entitled to one vote for each share held of record in all matters to be acted upon by the shareholders. Holders of common shares are entitled to receive such dividends as may be declared from time to time by the Board of Directors, in its discretion, out of funds legally available therefore.

Authorized Preferred Shares - At the Report Date, the authorized capital of the Company includes 500,000,000 preferred shares. The Board of Directors, using its own discretion, may from time to time by resolution, alter the Articles of the Company to divide the preferred shares into special series or classes of preferred shares in differing amounts of preferred shares having separate special terms and conditions attached to each such series. The Directors may create and designated a particular series of preferred shares, fix the number of preferred shares to be included in such designated series, and determine the consideration for which any series is to be sold or issued. Further, the Directors may create, define and attach special rights and restrictions to the preferred shares of any particular series including, rates and other conditions of any dividends; the rights and terms of provisions for cancellation, redemption, conversion, exchange, and/or retraction of the series; and the terms and conditions of any voting rights or restrictions. Holders of preferred shares shall be entitled, on the distribution of assets of the Company or on the liquidation, dissolution or winding-up of the Company, to receive before any distribution to be made to holders of common shares or any other series or class of shares capital ranking junior to the preferred shares as specifically provided in the special rights and restrictions attached to any particular series of the preferred shares issued.





Issued and Outstanding Share Capital - At the Company’s most recently completed Fiscal 2016 year ended on 6/30/16, the total number of common shares issued and outstanding was 123,015,381. As of the Report Date the total number of common shares issued and outstanding is 123,015,381. Zero preferred shares were issued at the end of Fiscal 2016, and none are issued as of the Report Date. The authorized and issued share capital of the Company is summarized in the table below.

Authorized And Issued Share Capital
Authorized
Share Capital
Issued and Outstanding
Share Capital
Type of Security Number of
Shares
Audited Fiscal
Year End 6/30/16
Last Unaudited
Month End 5/31/17
At The
Report Date
Common Shares 500,000,000

123,015,381

123,015,381

123,015,381

Preferred Shares 500,000,000

0

0

0

Fully Diluted Basis Shareholding - As at the Report Date, on a fully diluted basis, there are 123,015,381 common shares of the Company either issued or allocated under unexercised outstanding options, warrants, and debt conversion rights. This fully-diluted total includes 123,015,381 common shares actually issued and outstanding plus 2,000,000 outstanding unexercised warrants, plus -0- outstanding unexercised options to purchase additional common shares, plus 5,000,000 outstanding unexercised rights to convert against a promissory note; all as summarized in the table below.

Fully Diluted Shareholding
Type of Security Audited Fiscal
Year End 6/30/16
Last Unaudited
Month End 5/31/17
At The
Report Date
Common Shares

123,015,381

123,015,381

123,015,381

Warrants

2,550,000

2,000,000

2,000,000

Options

0

0

0

Debt Conversion Rights

5,000,000

5,000,000

5,000,000

Fully Diluted Total

130,565,381

130,015,381

130,015,381

 

A.     

MAJOR SHAREHOLDERS.

Definition of Major Shareholder - As used herein the term “Major Shareholder” refers to beneficial owners of 5% or more of each class of the Company’s voting securities, including our common shares. As at the Report Date the Company has one class of common shares outstanding, of which 123,015,381 are issued and entitled to vote.

Voting Rights - The voting rights of our Major Shareholders do not differ from the voting rights of shareholders who are not Major Shareholders.





List of Major Shareholders - To the knowledge of the Directors and Officers of the Company, no person beneficially owns, directly or indirectly, or exercises control or direction over common shares carrying more than 5% of the voting rights attached to all issued and outstanding shares of the Company at the Report Date except for those Major Shareholders who, together with their respective share holdings, are listed in the following table:

Major Shareholders
Type of Security Name of Major Shareholder Voting Shares Owned % of Total
Common Shares Mr. J. Khan (1)

15,000,000

12.2 %

Common Shares Dr. K. Tan (2)

15,000,000

12.2 %

Common Shares Mr. R. L. McAdoo (3)

9,579,158

7.8 %

 

Major Shareholders as a Group

39,579,158

32.2 %

Common Shares Total Issued & Outstanding (4)

123,015,381

100.0 %

Notes to Table:

1     

Major Shareholder, Malaysian businessman

2     

Major Shareholder, Malaysian businessman

3     

Major Shareholder, Executive Director, Chairman, and CEO of the Company.

4     

Does not included shares held by nominee depositories CDS and CEDE as described in the following section. The Company is not aware of the identities of unregistered shareholders and beneficial owners of the shares held by nominee depositories CDS or CEDE.

Registered and Unregistered Shareholders - We estimate that the total number of Registered and Unregistered Shareholders of the Company is approximately 990, based on the following assumptions:

Geographic Distribution of Shareholders - We estimate the location of Registered Shareholders from the registered certificate addresses provided by our transfer agent. In the case of Unregistered Shareholders, we presume that the shares held by Canadian depository CDS represent Canadian or other Non-US holders and we presume that shares held at CEDE are attributable to USA resident holders although we have no way of knowing these facts as certain. As at the Report Date, based on mailings at our annual general meetings, we estimate that 21% of shares are held by residents located in the USA, another 28% in Canada, and the remaining 51% in other countries.

Control - To the extent known to the Company, the Company is not owned or controlled directly or indirectly by another corporation, or by any foreign government, or by any other natural or legal person severally or jointly, other than disclosed herein.

Change of Control - To the extent known to the Company, there are no arrangements, the operation of which may at a subsequent date result in a change of control of the Company.

B.     

RELATED PARTY TRANSACTIONS.

Management Fees - During the Fiscal Year ended 6/30/16, management fees in the amount of $282,915 were paid or accrued to officers of the Company. At the end of Fiscal 2016, a total amount of $616,697 was payable to officers and director of the Company relating to accrued and outstanding management compensation and personal loans made to the Company.

Loans from Directors - During the year ended 6/30/16, two directors of the Company loaned $10,000 and $61,500, respectively, to the Company for assistance with working capital. These loans are interest free with no fixed repayment terms.





Share Based Award - During the year ended 6/30/16, the Company issued a director an amount of 2,000,000 common share purchase warrants having an exercise price of $0.01 per share and an expiry date of 12/31/17 as compensation for a $10,000 loan. The Company calculated the Black Scholes fair value of these warrants to be $26,200 which was charged to the statement of loss as share-based payments.

Visionaire Transaction - The Company acquired a 51% stake in Visionaire Energy AS ("VE") from Visionaire Invest AS ("VIN") in a shares-swap transaction completed during Fiscal 2013 on 6/04/13. VIN retained a 49% stake in VE. The Company issued 20,000,000 common shares to VIN in consideration for 51% of the shares of VE. At closing of the transaction, Mr. Johnny Christiansen became a director of the Company. Mr. Christiansen is also the chief executive officer of both VE and of VIN. He also beneficially owns 29% of the shares of VIN. The 20,000,000 shares of the Company owned by VIN represent about 14% of the Company's issued and outstanding share capital, an amount which is in excess of 10%, and makes VIN an insider, affiliate, and related party of the Company. On 9/15/14, the Company entered into a sale and purchase agreement with VIN to sell its 51% equity interest in VE back to VIN for total consideration of $1,200,000 consisting of a return of its 20,000,000 Company shares valued at $0.05 per share plus $200,000 in cash. Mr. Christiansen abstained from voting on the director's resolution to sell the VE stake; and resigned, also on 9/15/14, from the Company's board upon signature of the agreement. The sale transaction was voted on and approved by the shareholders at the Company's AGM on 12/05/14 and immediately closed thereupon, ending the related party relationship.

Panafra, Kastan, and Mr. John Tate - On 12/05/14, Mr. John Tate was elected at the 2014 AGM to serve as a director on the Company's board. He so served until his resignation effective 31/12/16. During the period of his services Mr. Tate was a related party to both Pan African Management and Development Company, Inc. ("Panafra") a company incorporated in Delaware, and to Kastan Mining PLC ("Kastan") a company incorporated in Tanzania. Mr. Tate and his family owned shareholding and management control of both Panafra and Kastan. Prior to Mr. Tate becoming a director and a related party, the Company had, after fully arms-length negotiations, entered into agreements on 9/24/14 and on 10/11/14, with Kastan and Panafra concerning joint holdings of shares of the Company's Ruaha River Power Company PLC affiliate. See further discussion in Item-4.C.b "Partially Owned Joint Venture Companies.

Joint Development Agreement – On 4/01/17, the Company entered into a Joint Development Agreement (the "CHI JDA") with Continental Hilir Indonesia Pte. Ltd. ("CHI"), a private Singapore company, for the joint development of Small-Scale Refinery Projects in Indonesia. CHI and the Company are related parties and at the Report Date share three common directors. See further discussion in Item-10.C "Material Contracts".

Consulting and Joint Development Agreement – On 28/02/17, the Company entered into a Consulting and Joint Development Agreement (the "CHMEA JDA") with Continental Hilir MEA (FZE) ("CHMEA"), a private company registered in the Sharjah Airport International Free Zone of the United Arab Emirates, for the joint development of Small-Scale Refinery Projects in the Middle East and Africa. CHMEA and the Company are related parties and at the Report Date share one common director. See further discussion in Item-10.C "Material Contracts".

Except for the related party transactions described in the preceding paragraphs, and to the extent of the Company’s knowledge, during the Company’s Fiscal Year ended 6/30/16 and up to the Report Date there were no loans, guarantees, transactions, or currently proposed transactions between the Company and

(a)     

enterprises that directly or indirectly through one or more intermediaries, control or are controlled by, or are under common control with, the Company;

 

(b)     

associates (An associate is an unconsolidated enterprise in which the Company has a significant influence or which has significant influence over the Company);

 

(c)     

individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them significant influence over the Company, and close members (Close members of an individual’s family are those that may be expected to influence, or be influenced by, that person in their dealings with the Company.) of any such individual’s family;

 

(d)     

Directors, Officers, and key management personnel, that is, those persons having authority and responsibility for planning, directing and controlling the activities of the Company, including close members of such individuals’ families; and

 

(e)     

enterprises in which a substantial interest in the voting power is owned, directly or indirectly, by any person described in (c) or (d) or over which such a person is able to exercise significant influence. This includes enterprises owned by Directors or Major Shareholders of the Company and enterprises that have a member of key management in common with the Company. Significant influence over an enterprise is the power to participate in the financial and operating policy decisions of the enterprise but is less than control over those policies.

 

C.     

INTERESTS OF EXPERTS AND COUNSEL.

Since the end of the Company's Fiscal 2016, to the best of our knowledge, there are no transactions, or proposed transactions, which have materially affected or will materially affect the Company in which any auditors, experts, counsel, or independent advisors has had or will have any direct or material indirect interest.

Item - 8 : Financial Information

A.     

CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION.

The Company’s audited financial statements prepared using IFRS as issued by IASB, together with the independent auditor's report thereon for the Company's Fiscal 2016 year, are attached as an integral part field with this Annual Report. They are further described in "Item 18 - Financial Statements".





a)     

Canadian Financial Disclosure Standards NI 51-102 - The Company is obliged, in its home country of Canada, to prepare certain financial reports pursuant to the standards required by the Canadian Securities Administrators ("CSA") pursuant to National Instrument 51-102 Continuous Disclosure Obligations and its Companion Policy NI 51-102CP (herein both referred to as "NI 51-102").

 

b)     

Electronic SEDAR Filings - NI 51-102 mandates that the Company file electronically, the Company's annual audited financial statements and its interim quarterly financial statements, together with a management discussion and analysis for each period, via the CSA's System for Electronic Document Archiving and Retrieval better known as “SEDAR”. The Company began filing electronically on SEDAR in 1997. Copies of the Company’s SEDAR filings may be downloaded from the SEDAR website at www.sedar.com.

 

c)     

Audited Annual Financial Statements - The Company prepares NI 51-102 annual audited consolidated financial statements as at its year end date of 30 June. These consolidated financial statements include the accounts of the Company and its majority owned subsidiaries.

 

d)     

Interim Quarterly Financial Statements - During the course of the Company’s Fiscal Year, management prepares NI 51-102 compliant, unaudited, interim, quarterly consolidated financial statements together with a management discussion and analysis and files it on SEDAR within 60 days of each of the fiscal quarters ended 30 September, 31 December, and 31 March.

 

e)     

EDGAR Form-6K Filings – The Company has adopted the regular practice of filing its NI 51-102 compliant interim quarterly financial statements and management discussion and analysis on EDGAR under cover of Form-6K filings at the same time it files them on SEDAR.

 

f)     

Reporting Currency - Commencing for its 7/31/02 year end the Company adopted the U.S. currency as its reporting currency and has prepared its financial statements since then on that basis. The accounts of the Company are prepared in U.S. dollars.

 

g)     

Canadian GAAP - Prior to and including the Company's Fiscal Year ended 6/30/11, the Company's financial statements were prepared in accordance with Canadian Generally Accepted Accounting Principles ("GAAP"), the application of which, in the case of the Company, conformed in all material respects for the periods presented with US GAAP, except as disclosed in footnotes to those financial statements.

 

h)     

IFRS - International Financial Reporting Standards - The Canadian Accounting Standards Board has mandated the replacement of Canadian GAAP with International Financial Reporting Standards ("IFRS") for all Canadian publicly accountable enterprises. The effective changeover date for the Company was 7/01/11, at which time the Company ceased using Canadian GAAP and replaced it with IFRS. The Company issued its first set of interim quarterly financial statements prepared under IFRS for the quarter ended 9/30/11 including comparative IFRS financial results and an opening balance sheet as at 7/01/10. The first annual IFRS consolidated financial statements were prepared for the Company's fiscal year ended 6/30/12 which incorporated restated comparatives for the previous Fiscal Year ended 6/30/11. Commencing from 7/01/11, the Company's financial statements were and are prepared in accordance with IFRS as issued by the International Accounting Standards Board or IASB.

 

B.     

SIGNIFICANT CHANGES.

 

a)     

Legal Proceedings - As of the Report Date, the Company knows of no material, active or pending legal proceedings against them; nor is the Company involved as a plaintiff in any material proceeding or pending litigation.

 

b)     

Default on Convertible Note - 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.

 

i)     

On 9/21/11, 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 9/22/13, the original maturity date.

 

ii)     

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 11/21/12, the Company reached an agreement with the note holder that increased the interest rate retroactively to 18%, extended the maturity date to 3/21/13, 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.

 

iii)     

On 5/21/13, the Company reached an agreement with the note holder that extended the maturity date to 9/21/13, extended the term of the additional consideration warrants to 3/21/15, 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.

 

iv)     

On 10/4/13, the Company reached an agreement with the note holder that extended the maturity date to 11/15/13. This amendment to the terms of the note resulted in an incremental value of $8,500.

 

v)     

On 12/12/13, the Company reached an agreement with the note holder that extended the maturity date to 1/31/14 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.

 





vi)     

On 3/31/14, the Company reached an agreement with the note holder that extended the maturity date to 4/30/14 and extended the term of the additional consideration warrants to 12/31/15. 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.

 

vii)     

On 7/28/14, the Company reached an agreement with the note holder to extend the maturity date of the promissory note to 9/30/14 without any additional consideration.

 

viii)     

The incremental value of the conversion rights of the note and the additional consideration warrants were calculated using the Black- Scholes model as further discussed in Note 10 to the Company's attached annual audited financial statements.

 

c)     

Cease Trade Order – On 6/23/17, the Company completed the audits, financial reports, and made all of the regulatory filings to remedy and cure a cease trade order issued on 11/4/15 by the British Columbia Securities Commission ("BCSC"). The order was issued because the Company was at that time deficient in its regulatory requirements involving the filing of its audited consolidated financial statements for the fiscal year ended 6/30/15. The order prohibits trading of the Company’s securities in Canada until the deficiency is cured by the Company filing the required delinquent financial reports and a revocation order is issued by the BCSC.

 

 

In addition to the audited statements for the year ended 6/30/15, the Company must also prepare and file the same for the year ended 6/30/16, plus the six interim quarterly financial reports for the three fiscal quarters ended 3/31/16 and the three quarters ended 3/31/17. The Company completed its annual audits and filed both its delinquent Fiscal 2015 report on 5/24/17 and this Fiscal 2016 report on 6/21/17. Three of the six delinquent interim reports for the three quarters ended 3/31/16 were completed and filed on 6/20/17. The remaining interim reports for the three quarters ended 3/31/17 were completed and filed on 6/23/17. These last reports complete the requirements to remedy and cure the deficiency which led to the cease trade order. The Company intends to immediately apply to the BCSC for a revocation order.

 

d)     

Dividend Distributions - Holders of our common shares are entitled to receive such dividends as may be declared from time to time by our board, in its discretion, out of funds legally available for that purpose. The Company has not declared any dividends for the last five Fiscal Years and does not anticipate that it will do so in the foreseeable future. We intend to retain future earnings, if any, for use in the operation and expansion of our business and do not intend to pay any cash dividends in the foreseeable future.

Item - 9 : The Offer and Listing .

A.     

OFFER AND LISTING DETAILS.

Since 3/24/98, the Company's common shares trade on the OTC Markets in the United States under the symbol "CPPXF". The following table lists trading price history of the Company's common shares and the high and low trading prices for each of the past six months, each of the past eleven quarters, and each of the past five fiscal years.

Price History US$ US$  
 
Price History US$ US$  

Price History US$ US$
For the Month High Low For the Quarter High Low For the Fiscal High Low
Ended Price Price Ended Price Price Year's Ended Price Price
05/31/2017 $0.03 $0.03 03/31/2017 $0.02 $0.00 06/30/2016 $0.02 $0.01
04/30/2017 $0.08 $0.01 12/31/2016 $0.02 $0.00 06/30/2015 $0.04 $0.00
03/31/2017 $0.01 $0.01 09/30/2016 $0.04 $0.00 06/30/2014 $0.10 $0.01
02/31/2017 $0.02 $0.00 06/30/2016 $0.02 $0.01 06/30/2013 $0.14 $0.01
01/31/2017 $0.01 $0.00 03/31/2016 $0.02 $0.00 06/30/2012 $0.18 $0.04
12/31/2016 $0.02 $0.00 12/31/2015 $0.03 $0.00  
  09/30/2015 $0.03 $0.00
06/30/2015 $0.04 $0.00
03/31/2015 $0.03 $0.00
12/31/2014 $0.05 $0.01
09/30/2014 $0.05 $0.03

 

B.     

PLAN OF DISTRIBUTION.

This Form-20F is filed as an Exchange Act "Annual Report" and therefore the provision of information called for by this Item-9.B is not applicable.

C.     

MARKETS.

Since 3/24/98, the Company's common shares have been quoted and traded under the symbol "CPPXF" on the OTC Markets QB or Pink tiers or one of their respective predecessors.

D.     

SELLING SHAREHOLDERS

This Form-20F is filed as an Exchange Act "Annual Report" and therefore the provision of information called for by this Item-9.D is not applicable.





E.     

DILUTION.

This Form-20F is filed as an Exchange Act "Annual Report" and therefore the provision of information called for by this Item-9.E is not applicable.

F.     

EXPENSES OF THE ISSUE.

This Form-20F is filed as an Exchange Act "Annual Report" and therefore the provision of information called for by this Item-9.F is not applicable.

Item - 10 : Additional Information .

A.     

SHARE CAPITAL.

This Form-20F is filed as an Exchange Act "Annual Report" and therefore the provision of information called for by this Item-10.A is not applicable.

B.     

MEMORANDUM AND ARTICLES OF ASSOCIATION.

The Company was incorporated in British Columbia, Canada, on 5/29/84 under the name "Intl. Focus Res. Inc.". On 1/03/96 the name was changed to "Continental Copper Corporation". On 10/23/97 the name was changed to "Continental Energy Corporation". On 6/23/04, the Company was transitioned under the Business Corporation Act (British Columbia).At an annual general meeting of the shareholders on 1/25/06 the shareholders adopted an amended Articles to conform them to the Business Corporations Act (British Columbia), enacted in 2004, as it required. At a special general meeting of the shareholders on 9/10/08 the shareholders amended and adopted the Company’s current Articles.

Set out below is a summary of various provisions of our Notice of Articles and Articles prescribed by the Business Corporations Act (British Columbia) in respect of:(i) objects and purposes: (ii) directors; (iii) authorized capital; (iv) rights, preference and restrictions attached to our classes of shares; (v) shareholder meetings; and (vi) limitation on rights of non-Canadians; (vii) delay of change of control; and (viii) reporting of share ownership.

Objects and Purposes - Neither our Notice of Articles or Articles contain a limitation on our objects and purposes.

Directors - Our Articles have provisions related to conflicts of interests of directors in certain corporate transactions. A director or senior officer who holds a disclosable interest in a contract or transaction into which the Company proposes to enter into, must disclose such interest and is liable to account to the Company for any profit that accrues to the director or senior offer as a result of the transaction if the provisions for disclosure and director approval set out in the Business Corporations Act (British Columbia) are not complied with. A director with a disclosable interest in a contract or transaction is not entitled to vote on any directors’ resolution approving the contract or transaction, unless all directors have an interest in the contract or transaction. A director with a disclosable interest in a contract or transaction is entitled to be counted as part of the quorum for the directors’ meeting to consider the contract or transaction. Under the Business Corporations Act (British Columbia), a director does not hold a disclosable interest in a contract or transaction merely because it relates to his/her compensation in his/her capacity as a director, officer, employee or agent of the Company. Our Articles provide that our directors may, without shareholder approval, borrow money upon the credit of our Company, issue and sell bonds or debentures and provide guarantees. Neither our Notice of Articles nor Articles set out a mandatory retirement age for our directors and our directors are not required to own securities of our Company in order to serve as directors.

Authorized Capital - Our Notice of Articles provide that our authorized capital consists of 500,000,000 shares of common stock, without par value, and 500,000,000 shares of preferred stock, without par value. Our preferred stock may be issued in one or more series and our directors may fix the number of shares which is to comprise each series and the designation, rights, privileges, restrictions and conditions attaching to each series.

Rights, Preferences and Restrictions -Pursuant to our Articles and the Business Corporations Act (British Columbia), holders of our common stock are entitled to vote at all meetings of shareholders, except meetings at which only holders of a specified class of shares are entitled to vote, receive any dividend declared by our Company's board of directors and, subject to the rights, privileges, restrictions and conditions attaching to any other class of shares, receive the remaining property of our Company upon dissolution. Shares of our preferred stock of each series rank on a parity with our share of preferred stock of any other series and are entitled to a preference over shares of our common stock with respect to the payment of dividends and the distribution of assets or return of capital in the event of liquidation, dissolution or winding-up of our Company. The provisions in our Articles attaching to our common stock and our preference stock may be altered, amended, repealed, suspended or changed by the affirmative vote of the holders of not less than two-thirds of the outstanding shares of common stock and two-thirds of the shares of preferred stock, as applicable. With the exception of special resolutions (i.e. resolutions in respect of fundamental changes to our Company, including: the sale of all or substantially all of its assets, an merger or other arrangement or an alteration to our Company's authorized capital) that require the approval of two-thirds of the votes cast by shareholders (holding common stock) entitled to vote at a meeting, either in person or by proxy, resolutions to approve matters brought before a meeting of our shareholders require approval by a simple majority of the votes cast by shareholders entitled to vote at a meeting, either in person or by proxy.





Shareholder Meetings - The Business Corporations Act (British Columbia) provides that:(i) meetings of shareholders must be held in British Columbia, unless otherwise provided in a company's Articles; (ii) directors must call an annual general of shareholders not later than 15 months after the last preceding annual general and once in every calendar year;(iii) for the purpose of determining shareholders entitled to receive notice of or vote at meetings of shareholders, the directors may fix in advance a date as the record date for that determination, provided that such date shall not precede by more than 50 days or by less than 21 days the date on which the meeting is to be held; (iv) a quorum of shareholders for a shareholder meeting may be set by the Articles and the Company’s Articles provide that the quorum for the transaction of business at a meeting of our shareholders is two shareholders, or one or more proxy holder representing two members, or one member and proxy holder representing another member; (v) the holders of not less than five percent of the issued shares entitled to vote at a meeting may requisition the directors to call a meeting of shareholders for the purposes stated in the requisition; and (vii) upon the application of a director or shareholder entitled to vote at the meeting, the Supreme Court of British Columbia may order a meeting to be called, held and conducted in a manner that the Court directs.

Limitations on Rights of Non-Canadians - Except as provided in the Investment Canada Act, there are no limitations specific to the rights of non-Canadians to hold or vote our common stock under the laws of Canada or British Columbia or in our charter documents. See "Exchange Controls" below in this Annual Report for a discussion of the principal features of the Investment Canada Act for non-Canadian residents proposing to acquire our common stock.

Delay of Change of Control - Pursuant to the provisions of the Business Corporations Act (British Columbia), at each annual general meeting of our shareholders all of our directors retire and the shareholders appoint a new board of directors. Each director holds office until our next annual general meeting unless:(i) he dies or resigns; (ii) he is removed by ordinary resolution of our shareholders (or class or series of shareholders if such class or series has the exclusive right to elect one or more directors); or (iii) the director becomes disqualified to hold officer, as provided under the Business Corporations Act (British Columbia).A director appointed or elected to fill a vacancy on our board holds office for the unexpired term of his predecessor (generally, until our next annual general meeting).With the exception of provisions in our Articles that limit the number of directors that can be appointed between annual meetings of shareholders and that give our directors the authority to issue blank check preferred stock, there are no provisions in our Notice of Articles or Articles that would have the effect of delaying, deferring or preventing a change in control of our Company, and that would operate only with respect to a merger, acquisition or corporate restructuring involving our Company.

Reporting of Share Ownership -Neither our Notice of Articles or Articles contain any provisions governing the ownership threshold above which shareholder ownership must be disclosed. Securities legislation in Canada, however, requires that we disclose in our annual general meeting proxy statement, holders who beneficially own more than ten percent of our issued and outstanding shares, and United States Federal securities laws require the disclosure in this Annual Report on Form-20F of holders who own more than five percent of our issued and outstanding shares.

C.     

MATERIAL CONTRACTS

Malaysia Joint Study and Bid Group Agreement - On 11/12/13, subsequent to the end of Fiscal 2012, the Company entered into a 50/50 joint bid arrangement with an established Malaysian partner to evaluate opportunities and present carefully selected bids for new oil and gas production sharing and risk service contracts offered in Malaysia by PETRONAS, the national oil company. At the Report Date, the Malaysia Joint Study and Bid Group remains in effect.

Joint Development Agreement – On 4/01/17, the Company entered into a Joint Development Agreement (the "CHI JDA") with Continental Hilir Indonesia Pte. Ltd. ("CHI"), a private Singapore company, for the joint development of Small-Scale Refinery Projects in Indonesia. CHI and the Company are related parties and at the Report Date share three common directors. The CHI JDA provides that CHI may earn an 80% participating interest with the Company on realization of any new Small Scale Refinery ("SSR") developments in Indonesia by providing reimbursable cash advances to the Company from time to time and also carrying or paying for the Company's 20% participating interest share of feasibility studies, pre-operations costs, proposal preparation, and presentation costs to local commercial partners and to foreign direct investment and SSR licensing authorities. At the Report Date, the CHI JDA remains in full force and effect.

Consulting and Joint Development Agreement – On 28/02/17, the Company entered into a Consulting and Joint Development Agreement (the "CHMEA JDA") with Continental Hilir MEA (FZE) ("CHMEA"), a private company registered in the Sharjah Airport International Free Zone of the United Arab Emirates, for the joint development of Small-Scale Refinery Projects in the Middle East and Africa. CHMEA and the Company are related parties and at the Report Date share one common director. The CHMEA JDA provides that CHMEA may earn a 50% participating interest with the Company on realization of any new SSR developments in the Middle East and Africa by providing reimbursable cash advances to the Company from time to time and also carrying or paying for the Company's 50% participating interest share of feasibility studies, pre-operations costs, proposal preparation, and presentation costs to local commercial partners and to foreign direct investment and SSR licensing authorities. At the Report Date, the CHMEA JDA remains in full force and effect.

D.     

EXCHANGE CONTROLS.

Except as discussed in ITEM-10.E, "Taxation", the Company is not aware of any Canadian federal or provincial laws, decrees, or regulations that restrict the export or import of capital, including foreign exchange controls, or that affect the remittance of dividends, interest or other payments to non-Canadian holders of the common shares. There are no limitations on the right of non-Canadian owners to hold or vote the common shares imposed by Canadian federal or provincial law or by the charter or other constituent documents of the Company.





The Investment Canada Act (the “Investment Act”), which generally prohibits a reviewable investment by an entity that is not a “Canadian”, as defined, unless after review, the minister responsible for the Investment Act is satisfied that the investment is likely to be of net benefit to Canada. An investment in the Shares by a non-Canadian who is not a “WTO investor” (which includes governments of, or individuals who are nationals of, member states of the World Trade Organization and corporations and other entities which are controlled by them), at a time when the Company was not already controlled by a WTO investor, would be reviewable under the Investment Act under three circumstances. First, if it was an investment to acquire control (within the meaning of the Investment Act) and the value of the Company’s assets, as determined under Investment Act regulations, was C$5 million or more. Second, the investment would also be reviewable if an order for review was made by the federal cabinet of the Canadian government on the grounds that the investment related to Canada’s cultural heritage or national identity (as prescribed under the Investment Act), regardless of asset value. Third, the investment would also be reviewable if an order for review is made by the federal cabinet of the Canadian government on the grounds that an investment by a non-Canadian could be injurious to national security.

An investment in the Shares by a WTO investor, or by a non-Canadian at a time when the Company was already controlled by a WTO investor, would be reviewable under the Investment Act if it was an investment to acquire control and the value of the Company’s assets, as determined under Investment Act regulations, was not less than a specified amount, which for 2009 is C$312 million.

The usual thresholds for review for direct acquisitions of Canadian businesses (other than acquisitions of cultural businesses) by foreign investors will change as of a date to be determined by the federal cabinet of the Canadian Government. At that time transactions will be reviewable only if the “enterprise value” of the assets of the Canadian business is equal to or greater than (a) C$600 million, in the case of investments made during the first two years after the amendments come into force; (b) C$800 million, in the case of investments made during the third and fourth years after the amendments come into force; and (c) C$1 billion, in the case of investments made between the fifth year after the amendments come into force and December 31 of the sixth year after the amendments come into force. This threshold will thereafter be adjusted on an annual basis.

The Investment Act provides detailed rules to determine if there has been an acquisition of control. For example, a non-Canadian would acquire control of the Company for the purposes of the Investment Act if the non-Canadian acquired a majority of the Shares. The acquisition of less than a majority, but one-third or more, of the Shares would be presumed to be an acquisition of control of the Company unless it could be established that, on the acquisition, the Company not controlled in fact by the acquirer. An acquisition of control for the purposes of the Investment Act could also occur as a result of the acquisition by a non-Canadian of all or substantially all of the Company’s assets.

E.     

TAXATION.

Canadian Federal Income Tax Considerations - The following summary discusses only the Canadian federal income tax considerations generally applicable to a holder (a "Holder") of one or more common shares of the Company who, for the purposes of the Income Tax Act (Canada) (the "Tax Act") is a non-resident of Canada who holds common shares as capital property. The summary deals with the provisions of the Tax Act in force on 12/31/99. It does not discuss all the tax consequences that may be relevant to particular holders in light of their circumstances or to holders subject to special rules. It is therefore not intended to be, nor should it be construed to be, legal or tax advice to any holder of common shares of the Company and no opinion or representation with respect to the Canadian income tax consequences to any such holder or prospective holder is made. Holders and prospective holders should therefore consult their own tax advisers with respect to their particular circumstances.

Dividends - A Holder will be subject to Canadian withholding tax ("Part XIII Tax") equal to 25%, or such lower rate as may be available under an applicable tax treaty, of the gross amount of any dividend paid or deemed to be paid on common shares. Under the Canada-US Income Tax Convention (1980) as amended by the Protocols signed on 6/14/83, 3/28/84, 3/17/95, and 7/29/97 (the "Treaty"), the rate of Part XIII Tax applicable to a dividend on common shares paid to a Holder who is a resident of the United States and who is the beneficial owner of the dividend, is 5%.If the Holder is a company that owns at least 10% of the voting stock of the Company paying the dividend, and, in all other cases, the tax rate is 15% of the gross amount of the dividend. The Company will be required to withhold the applicable amount of Part XIII Tax from each dividend so paid and remit the withheld amount directly to the Receiver General for Canada for the account of the Holder.

Disposition of Common Shares - A Holder who disposes of a common share, including by deemed disposition on death, will not normally be subject to Canadian tax on any capital gain (or capital loss) thereby realized unless the common share constituted "taxable Canadian property" as defined by the Tax Act. Generally, a common share of a public corporation will not constitute taxable Canadian property of a Holder if the share is listed on a prescribed stock exchange unless the Holder or persons with whom the Holder did not deal at arm's length alone or together held or held options to acquire, at any time within the five years preceding the disposition, 25% or more of the shares of any class of the capital stock of the Company. A Holder who is a resident of the United States and realizes a capital gain on a disposition of a common share that was taxable Canadian property will nevertheless, by virtue of the Treaty, generally be exempt from Canadian tax thereon unless (a) more than 50% of the value of the common shares is derived from, or from an interest in, Canadian real estate, including Canadian mineral resource properties, (b) the common share formed part of the business property of a permanent establishment that the Holder has or had in Canada within the 12 month period preceding the disposition, or (c) the Holder is an individual who (i) was a resident of Canada at any time during the 10 years immediately preceding the disposition, and for a total of 120 months during any period of 20 consecutive years, preceding the disposition, and (ii) owned the common share when he ceased to be resident in Canada. A Holder who is subject to Canadian tax in respect of a capital gain realized on a disposition of a common share must include three quarters of the capital gain (taxable capital gain) in computing the Holder's taxable income earned in Canada. The Holder may, subject to certain limitations, deduct three-quarters of any capital loss (allowable capital loss) arising on a disposition of taxable Canadian property from taxable capital gains realized in the year of disposition in respect to taxable Canadian property and, to the extent not so deductible, from such taxable capital gains realized in any of the three preceding years or any subsequent year.





United States Taxation - For federal income tax purposes, an individual who is a citizen or resident of the United States or a domestic corporation ("US Taxpayer") will recognize a gain or loss on the sale of the Company's common shares equal to the difference between the proceeds from such sale and the adjusted tax basis of the common shares. The gain or loss will be a capital gain or capital loss if the Company's common shares are capital assets in the hands of the US Taxpayer. For federal income tax purposes, a US Taxpayer will be required to include in gross income dividends received on the Company's common shares. A US Taxpayer who pays Canadian tax on a dividend on common shares will be entitled, subject to certain limitations, to a credit (or alternatively, a deduction) against federal income tax liability.

A domestic corporation that owns at least 10% of the voting shares of the Company should consult its tax advisor as to applicability of the deemed paid foreign tax credit with respect to dividends paid on the Company's common shares. Under a number of circumstances, United States Investor acquiring shares of the Company may be required to file an information return with the Internal Revenue Service Center where they are required to file their tax returns with a duplicate copy to the Internal Revenue Service Center, Philadelphia, PA 19255. In particular, any United States Investor who becomes the owner, directly or indirectly, of 10% or more of the shares of the Company will be required to file such a return. Other filing requirements may apply, and United States Investors should consult their own tax advisors concerning these requirements.

This is not intended to be, nor should it be construed to be, legal or tax advice to any holder of common shares of the Company and no opinion or representation with respect to the US income tax consequences to any such holder or prospective holder is made. Holders and prospective holders should therefore consult their own tax advisers with respect to their particular circumstances.

F.     

DIVIDENDS AND PAYING AGENTS.

This Form-20F is filed as an Exchange Act "Annual Report" and therefore the provision of information called for by this Item-10.F is not applicable.

G.     

STATEMENT BY EXPERTS.

This Form-20F is filed as an Exchange Act "Annual Report" and therefore the provision of information called for by this Item-10.G is not applicable.

H.     

DOCUMENTS ON DISPLAY.

Documents and agreements concerning our Company referred to in this Annual Report may be viewed by appointment during normal business hours at our registered and records office at 900-885 West Georgia Street, Vancouver, British Columbia, V6C 3H1, Canada.

I.     

SUBSIDIARY INFORMATION.

As of the Report Date, we have no direct and indirectly owned subsidiaries incorporated in the United States.

Item - 11 : Quantitative and Qualitative Disclosure About Market Risk .

This Form-20F is filed as an Exchange Act "Annual Report" and therefore the provision of information called for by this Item-11 is not applicable.

Item - 12 : Description of Securities Other than Equity Securities .

This Form-20F is filed as an Exchange Act "Annual Report" and therefore the provision of information called for by this Item-12 is not applicable.

PART-II

Item - 13 : Defaults, Dividend Arrearages and Delinquencies .

A.     

MATERIAL DEFAULT IN PAYMENT.

See disclosure in Item-8.B.b "Default on Convertible Note" above.

B.     

PAYMENT OF DIVIDENDS.

No payments of dividends of any kind have been made by the Company during the past Fiscal Year covered by this Annual Report or during the period up to the Report Date. No declarations of dividends of any kind have been made during the same period and consequently no dividend payments are accrued or in arrears.





Item - 14 : Material Modifications to Rights of Security Holders and Use of Proceeds .

A.     

From the beginning of the Fiscal Year covered by this Annual Report up to the Report Date neither the Company nor anyone else has modified materially the instruments defining the rights of holders of any class of the Company's securities.

 

B.     

From the beginning of the Fiscal Year covered by this Annual Report up to the Report Date neither the Company nor anyone else has modified materially or qualified the rights evidenced by any class of the Company's securities by issuing or modifying any other class of securities.

 

C.     

From the beginning of the Fiscal Year covered by this Annual Report up to the Report Date neither the Company nor anyone else has withdrawn or substituted a material amount of the assets securing any class of the Company's securities.

 

D.     

From the beginning of the Fiscal Year covered by this Annual Report up to the Report Date there have been no changes to the trustees or paying agents for any class of the Company's securities.

 

D.     

From the beginning of the Fiscal Year covered by this Annual Report up to the Report Date the Company has not filed a first Securities Act registration statement.

Item - 15 : Controls and Procedures .

A.     

DISCLOSURE CONTROLS AND PROCEDURES.

As required under applicable United States securities regulatory requirements, we have carried out an evaluation of the effectiveness of the design and operation of our Company's disclosure controls and procedures as at Fiscal Year ended 6/30/16 to prevent a material weakness. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time period specified in SEC rules and forms. Disclosure controls and procedures include, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Chief Executive Officer and Finance Manager, to allow timely decisions regarding required disclosure.

The Company carried out an evaluation under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of its disclosure controls and procedures as of the end of the period covered by this Annual Report. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of 6/30/16.

B.     

MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING.

Our management is responsible for establishing and maintaining effective internal control over financial reporting as defined in Rules 13a-15 under the Securities Exchange Act of 1934. Our internal control over financial reporting is a process designed under the supervision of our principal executive officer and principal financial officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with accounting principles generally accepted in the United States.

Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Our management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control — Integrated Framework, issued in 1992 by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the assessment, management determined that we maintained effective internal control over financial reporting as of 6/30/16, based on those criteria.

C.     

ATTESTATION REPORT OF THE REGISTERED PUBLIC ACCOUNTING FIRM.

This report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company's registered public accounting firm pursuant to the Dodd-Frank Wall Street Reform Act of 2010 that provides small public companies with market capitalizations below $75 million a permanent exemption from the Sarbanes-Oxley Section 404(b) requirement to obtain an audit of internal controls over financial reporting.

D.     

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING.

There were no changes in the Company’s internal control over financial reporting procedures or in other factors that have materially affected, or are reasonably likely to materially affect these internal controls over financial reporting subsequent to the date of management's last evaluation.





E.     

OUTSOURCED ACCOUNTING AND CONTROLLER FUNCTIONS.

The Company outsources its internal controller and accounting functions under contract dated with AVISAR Chartered Professional Accountants of Langley, British Columbia, Canada. Beginning on that contract date and continuing as of the Report Date, AVISAR prepares financial reports for the Company, including annual and quarterly financial statements. AVISAR is also involved, together with the Company's CEO and CFO, in the preparation of the management discussion and analysis that forms, with the financial statements, a part of each annual or quarterly financial report. These reports are filed on SEDAR in Canada in accordance with the requirements of Canadian Securities Administrators NI 51-102 Continuous Disclosure Obligations. AVISAR also works with the Company's auditors, Davidson & Company LLP and assists them in the completion of their annual audits of the Company's financial statements.

Item - 16 : [Reserved]

A.     

AUDIT COMMITTEE FINANCIAL EXPERT.

Our Board of Directors has determined that we have at least two members of our Audit Committee, Mr. Rudman and Mr. Garrison, that each qualify as an "Audit Committee Financial Expert" as defined in Regulation S-K (17 CFR Part 229.407(d)(5)(ii)). Mr. Rudman is a Certified Professional Accountant and Mr. Garrison is a Certified Public Accountant. Both have prior experience working at junior and senior management levels with public accounting firms. Mr. Rudman worked for Price Waterhouse Coopers, and Mr. Garrison worked for Arthur Young and Company. Our Board of Directors considers all three duly appointed members of the Company's Audit Committee to be "Financially Literate" as they are required to be in accordance with the meaning of that term as set forth in Part-1.6 of NI 52-110 Audit Committees

B.     

CODE OF ETHICS OF SENIOR FINANCIAL OFFICERS.

In addition to the Code of Business Conduct and Ethics published by the Company and described and incorporated herein as provided for in Item-6.B.h "Code of Business Conduct and Ethics" above our senior financial officers subscribe an additional code of ethics for the purposes of inclusion in this Annual Report. This additional code complies with Section-406 of the Sarbanes-Oxley Act of 2002 and the rules of the SEC promulgated thereunder. A copy of this additional code of ethics, entitled "Code of Ethics for Senior Financial Officers" and signed by the Company's two senior financial officers the CEO and the CFO and is filed with this Annual Report and annual audited financial statements for Fiscal 2015 as an attachment marked Exhibit-11.1.

C.     

INDEPENDENT CERTIFYING AUDITOR'S FEES AND SERVICES.

For Fiscal 2014 - The Company engaged Dale Matheson Carr-Hilton Labonte LLP ("DMCL") Chartered Accountants, of Vancouver, British Columbia, Canada as the Company's independent certifying auditors on 10/13/06. DMCL is a member of the Chartered Professional Accountants of Canada British Columbia and a member of the Chartered Professional Accountants of Canada. In addition, DMCL is registered with the Public Company Accountability Oversight Board. Our Board of Directors appointed DMCL as our principal certifying accountant to audit our financial statements for the Fiscal 2014 and earlier period covered by this Annual Report.

For Fiscal 2015 and 2016 - Effective 12/31/14, the Company completed a Change of Auditor more fully described in Item-16.F below. The Vancouver, British Columbia, Canada based firm of Davidson & Company LLP (“Davidson”) was engaged as the Company’s auditors. Davidson is a member of the Chartered Professional Accountants of Canada British Columbia, a member of the Chartered Professional Accountants of Canada and is registered with the Public Company Accountability Oversight Board. Our Board of Directors appointed Davidson as our independent certifying accountant to audit our financial statements for the Fiscal 2015 period covered by this Annual Report.

Audit Fees - The aggregate fees billed by Davidson for professional services rendered for the audit of our annual financial statements for the year ended 6/30/15 are estimated at $15,000. The aggregate fees billed by Davidson for professional services rendered for the audit of our annual financial statements for the year ended 6/30/16 are estimated at $15,000.

Tax Fees - The aggregate fees billed by Davidson for professional services rendered and related to tax advice, return preparation, and tax planning for the year ended 6/30/15 were $ nil and the aggregate fees to be rendered by Davidson for similar services for the year ended 6/30/16 are also estimated to be $ nil.

Audit Committee Pre-Approved Procedures - Our Audit Committee pre-approves all services provided by our principal accountants and their fees were reviewed and approved by the Audit Committee before the respective services were rendered and none of such services were approved by the Audit Committee pursuant to paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X.

D.     

EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES.

The provision of information called for by this Item-16.D is not applicable.





E.     

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS.

During the most recently completed Fiscal Year ended 6/30/15 and covered by this Annual Report the Company made no repurchases of its own securities pursuant to any plan or program. The Company made no public announcements of any securities repurchase plans or programs during the year. There are no outstanding securities that may yet be purchased under any plan or program attributable to the past or prior years as at the Report Date.

F.     

CHANGE IN REGISTRANT’S INDEPENDENT CERTIFYING AUDITOR.

Davidson & Company LLP (“Davidson”) was engaged as the Company’s successor auditors, replacing Fiscal Year 2014 and former auditor Dale Matheson Carr-Hilton Labonte LLP ("DMCL"), who resigned at the request of the Company effective 12/31/14.

The Company completed a Change of Auditor in accordance with the Part-4.11 Change of Auditor provisions of the Canadian Securities Regulators NI 51-102 Continuous Disclosure Obligations. By order of the Company's board, a "Notice of Change of Auditor" dated 12/31/14 and filed on SEDAR on 1/09/15 (the "Notice"). The Notice was given, at the order of the board, by the Company to the British Columbia Securities Commission and the Alberta Securities Commission as per Section-4.11(7) of NI 51-102, and it stated that:

1.     

DMCL has resigned as auditors of the Issuer at the request of the Issuer effective 12/31/14;

 

2.     

the resignation of DMCL and the appointment of Davidson as the Issuer's auditor have been considered and approved by the Issuer's Board of Directors;

 

3.     

there was no modified opinion in DMCL's report for the Issuer's most recently completed fiscal year, nor for any subsequent period;

 

4.     

there have been no "reportable events" within the meaning assigned under subsection 4.11(1) of Nl 51-102.

In a letter, the "DMCL Letter" dated 12/31/14 and filed on SEDAR on 1/09/15, DMCL, acknowledged its review and agreement with the content of the Notice as required in connection with its resignation as the Company's auditor.

In a letter, the "Davidson Letter" dated 1/08/15 and filed on SEDAR on 1/09/15, DMCL, acknowledged its review and agreement with the content of the Notice as required in connection with its proposed engagement by the Company as auditor.

The Notice, DMCL Letter, and Davidson Letter were included as Exhibits 99-4, 99-5, and 99-6 respectively in a Form-6K filing reporting the auditor change that was made by the Company on EDGAR dated 1/12/15. These said exhibits are hereby incorporated into this Annual Report on Form-20F by this reference.

G.     

CORPORATE GOVERNANCE.

The Company’s securities are quoted on the OTCQB and are not listed on a national securities exchange in its home country of Canada. This Annual Report is for our Fiscal Year ended 6/30/16. Therefore, the provision of information called for by this Item-16.G is not applicable.

H.     

MINE SAFETY DISCLOSURE.

Neither the Company, nor any one of its subsidiaries, act as operators of a coal or other mine. Therefore, the provision of mine safety information called for by this Item-16.H is not applicable in this Annual Report.

PART - III

Item - 17 : Financial Statements .

Refer to "Item 18 – Financial Statements" below.

Item - 18 : Financial Statements .

The Company is providing its audited annual financial statements with this Annual Report on Form-20F in the substance and form described in the following list and attached and labeled Exhibit-18 following Item-19 and the Signatures below:

List of Consolidated Financial Statements Filed Herewith as an Integrated Part of this Annual Report

(1)     

Financial Statement Title Page.

 





(2)     

Independent Auditor's Reports for Fiscal 2016 and Fiscal 2015 by Davidson & Company LLP.

 

(3)     

Audited Consolidated Financial Statements for the past two Fiscal Years ended 6/30/16 and 6/30/15, including:

 

a.     

Consolidated Statements of Financial Position.

 

b.     

Consolidated Statements of Comprehensive Loss.

 

c.     

Consolidated Statements of Cash Flow.

 

d.     

Consolidated Statement of Changes in Equity (Deficiency).

 

e.     

Notes to the Consolidated Financial Statements.

 

(4)     

Management's Discussion & Analysis for the 2016 fiscal year ended 6/30/16 made on Form 51-102F in accordance with the Company's obligations in its home country pursuant to the Canadian Securities Administrator's National Instrument NI 51-102 Continuous Disclosure Obligations and its Companion Policy NI 51-102CP.

 





Item - 19 : Exhibits.

Exhibit Description
01.1 (1) Articles of Incorporation as last amended at a special general meeting on 9/10/08.
01.2 (2) Notice of amended Articles of the Company as last recorded with the Registrar of British Columbia on 11/13/09.
11.1 Code of Ethics of Senior Financial Officers, CEO and CFO, dated at the Report Date.
12.1 Section 302 Certification under Sarbanes-Oxley Act of 2002 for CEO, dated at the Report Date.
12.2 Section 302 Certification under Sarbanes-Oxley Act of 2002 for CFO, dated at the Report Date.
13.1 Section 906 Certification under Sarbanes-Oxley Act of 2002 for CEO, dated at the Report Date.
13.2 Section 906 Certification under Sarbanes-Oxley Act of 2002 for CFO, dated at the Report Date.
18.0 Audited Annual Financial Statements More Fully Described in Item-18 above.
99.1 Audit Committee Charter, incorporated herein by reference to a copy filed on EDGAR under Form-6K on 5/17/17.
99.2 Governance and Nominating Committee Charter, incorporated herein by reference to a Form-6K filed on EDGAR on 5/17/17.
99.3 Compensation Committee Charter, incorporated herein by reference to a copy filed on EDGAR under Form-6K on 5/23/17.
99.4 Reserves Committee Charter, incorporated herein by reference to a copy filed on EDGAR under Form-6K on 5/23/17.
99.5 Policy on Trading and Company Securities, incorporated herein by reference to a copy filed on an EDGAR Form-6K on 5/23/17.

Notes:

(1) Incorporated by reference to a copy furnished to the SEC under Form-6K on 10/10/08.
(2) Incorporated by reference to a copy furnished to the SEC under Form-6K on 12/14/09.

SIGNATURES

CONTINENTAL ENERGY CORPORATION

<Signed>

_______________________________________

By: Richard L. McAdoo

Director & Chief Executive Officer

Report Date:
June 29, 2017





2016 FORM-20F EXHIBIT - 11.1

CODE OF ETHICS FOR SENIOR FINANCIAL OFFICERS

This constitutes the Company's Code of Ethics for senior financial officers as required by Section 406 of the Sarbanes-Oxley Act of 2002, for all companies reporting under Section 13(a) and 15(d) of the Securities Exchange Act of 1934

Last Revised on June 29, 2017

The Chief Executive Officer, Chief Financial Officer and Controller (collectively, the "Senior Financial Officers") of Continental Energy Corporation (the "Company") must adhere to this Code of Ethics for Senior Officers, in addition to all other applicable Company Policies and the Company's separately published Code of Business Conducts and Ethics for all its employees. The Company currently has no officer serving in the capacity of Controller.

1. PRINCIPLES GOVERNING PROFESSIONAL AND ETHICAL CONDUCT

It is the policy of the Company that its Senior Financial Officers will adhere to, advocate for, and promote professional and ethical conduct; honesty and integrity, and accountability for adherence to this code.

2. CONFLICTS OF INTEREST

The Senior Financial Officers must promote a culture of honesty and integrity throughout the Company and avoid conflicts of interest with the Company. The Senior Financial Officers should avoid actual or apparent conflicts of interest between personal and professional relationships. Any situation, transaction or relationship that involves, or may reasonably be expected to involve, a conflict of interest with the Company must be disclosed immediately to the Audit Committee.

3. FINANCIAL REPORTING AND DISCLOSURE

Senior Financial Officers shall provide fair, accurate, timely, and understandable disclosure in this Form-20F Annual Report of a "foreign private issuer" under Section 13(a) and 15(d) of the Securities Exchange Act of 1934. The said officers seek to provide disclosure to the investment community that is not only in conformity with Section 406 of the Sarbanes-Oxley Act of 2002, but that also fairly presents the financial condition and results of operations of the Company to its shareholders and possible investors. Senior Financial Officers shall also seek to promote ethical behavior by other Company employees involved in financial reporting.

4. COMPLIANCE WITH APPLICABLE LAWS, RULES AND REGULATIONS

It is the policy of the Company to comply with all applicable laws, rules and regulations of federal, state and local governments and other regulatory agencies that affect the conduct of the Company's business and financial reporting. The Senior Financial Officers are expected to be familiar with the legal and regulatory requirements applicable to their business responsibilities and to fulfill their duties in accordance with these laws, rules and regulations.

5. WAIVER

Waivers of this Code of Ethics may only be granted by the Company’s Audit Committee and will be disclosed in accordance with applicable securities laws.

6. CODE COMPLIANCE AND VIOLATIONS

Compliance with this Code of Ethics is mandatory. Each Senior Financial Officer shall promptly report any information he or she may have concerning evidence of any material violation of the securities or other laws, rules or regulations applicable to the Company and the operation of its business, by the Company, or any of its agents, and any violation of this Code of Ethics to the Company’s Audit Committee. The Audit Committee may determine, or designate appropriate persons to determine, appropriate disciplinary action, up to and including termination of employment, in the event of any such violation.

The undersigned incumbent Senior Financial Officers have read the foregoing and certify their compliance with this Code of Ethics.

<Signed> <Signed>
_____________ _____________
Richard L. McAdoo Robert V. Rudman
Chief Executive Officer Chief Financial Officer

 





2016 FORM - 20F EXHIBIT - 12.1

SARBANES OXLEY ACT OF 2002 SECTION 302 CERTIFICATIONS

The disclosure required to be filed pursuant to Section 302 of the Sarbanes Oxley Act of 2002 is included below in this Exhibit-12.1 in the form required as Certificates by the Company's CFO.

CFO CERTIFICATE

I, Robert V. Rudman, certify that:

1.     

I have reviewed and read this annual report on Form-20F of Continental Energy Corporation (the “Company”) for the Company's fiscal year ended 30 June 2016;

 

 
2.     

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

 
3.     

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

 

 
4.     

The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

 

 
  (a)     

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

   

 
  (b)     

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

   

 
  (c)     

Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

   

 
  (d)     

Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonable likely to materially affect, the Company’s internal control over financial reporting; and

   

 
5.     

The Company’s other certifying officer and I have disclosed, based on our most recent evaluations of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):

 

 
  (a)     

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

   

 
  (b)     

any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Dated: June 29, 2017

<Signed>

__________________
Robert V. Rudman
Chief Financial Officer





2016 FORM-20F EXHIBIT - 12.2

SARBANES OXLEY ACT OF 2002 SECTION 302 CERTIFICATIONS

The disclosure required to be filed pursuant to Section 302 of the Sarbanes Oxley Act of 2002 is included below in this Exhibit-12.2 in the form required as Certificates by the Company's CEO.

CEO CERTIFICATE

I, Richard L. McAdoo, certify that:

1.     

I have reviewed and read this annual report on Form-20F of Continental Energy Corporation (the “Company”) for the Company's fiscal year ended 30 June 2016;

 

 
2.     

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

 
3.     

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

 

 
4.     

The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

 

 
  (a)     

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

   

 
  (b)     

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

   

 
  (c)     

Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

   

 
  (d)     

Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonable likely to materially affect, the Company’s internal control over financial reporting; and

   

 
5.     

The Company’s other certifying officer and I have disclosed, based on our most recent evaluations of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):

 

 
  (a)     

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

   

 
  (b)     

any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Dated: June 29, 2017

<Signed>

__________________
Richard L. McAdoo
Chief Executive Officer





2016 FORM-20F EXHIBIT - 13.1

Certification Furnished Pursuant To Rule 13a-14(B) (17 CFR 240.13a-14(B)) or
Rule 15d-14(B) (17 CFR 240.15d-14(B)) and Section 1350 of Chapter 63 Of Title 18 of
The United States Code (18 U.S.C. 1350), Promulgated Under Section 906 of The Sarbanes-Oxley Act of 2002

In connection with the Annual Report on Form-20F for the fiscal year ended 30 June 2016 of Continental Energy Corporation, a British Columbia, Canada corporation (the “Company”), as filed with the Securities and Exchange Commission on the date hereof (the “Annual Report”), I, Richard L. McAdoo, Chief Executive Officer of the Company certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.     

The Annual Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

 

 

2.     

The information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: June 29, 2017

<Signed>

__________________
Richard L. McAdoo
Chief Executive Officer

2016 FORM-20F EXHIBIT - 13.2

Certification Furnished Pursuant To Rule 13a-14(B) (17 CFR 240.13a-14(B)) or
Rule 15d-14(B) (17 CFR 240.15d-14(B)) and Section 1350 of Chapter 63 Of Title 18 of
The United States Code (18 U.S.C. 1350), Promulgated Under Section 906 of The Sarbanes-Oxley Act of 2002

In connection with the Annual Report on Form-20F for the fiscal year ended 30 June 2016 of Continental Energy Corporation, a British Columbia, Canada corporation (the “Company”), as filed with the Securities and Exchange Commission on the date hereof (the “Annual Report”), I, Robert V. Rudman, Chief Financial Officer of the Company certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.     

The Annual Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

 

 
2.     

The information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: June 29, 2017

<Signed>

__________________
Robert V. Rudman
Chief Financial Officer

The foregoing certifications are being furnished solely pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. § 1350 and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section.





2016 FORM-20F EXHIBIT - 18.0

AUDITED CONSOLIDATED FINANCIAL STATEMENTS

CONTINENTAL ENERGY CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

30 June 2016

Expressed in U.S. Dollars

Contents






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Directors of
Continental Energy Corporation

We have audited the accompanying financial statements of Continental Energy Corporation, which comprise the statements of financial position as of June 30, 2016 and 2015, and the related statements of loss and comprehensive loss, changes in deficiency, and cash flow for the years ended June 30, 2016 and 2015, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, these financial statements present fairly, in all material respects, the financial position of Continental Energy Corporation as at June 30, 2016 and 2015, and its financial performance and its cash flows for the years ended June 30, 2016 and 2015, in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.






Emphasis of Matter

Without qualifying our opinion, we draw attention to Note 1 in the financial statements which indicate that Continental Energy Corporation has suffered recurring losses from operations and has a net capital deficiency. These matters, along with the other matters set forth in Note 1, indicate the existence of material uncertainties that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

“DAVIDSON & COMPANY LLP”

Vancouver, Canada Chartered Professional Accountants

June 29, 2017

 





CONTINENTAL ENERGY CORPORATION

FINANCIAL STATEMENTS

30 JUNE 2016

Expressed in U.S. Dollars

1





Continental Energy Corporation
Financial Statements
(Expressed in US Dollars)

STATEMENTS OF FINANCIAL POSITION

ASSETS Note 30 June 2016   30 June 2015  
Current   $   $  
Cash   1,290   4,015  
Receivables   1,278   731  
Prepaid expenses and deposits   3,349   12,636  
    5,917   17,382  
Non-current assets          
Property, plant and equipment   1,461   2,922  
    7,378   20,304  
LIABILITIES          
Current          
Accounts payable and accrued liabilities 11 751,783   434,244  
Loans from related parties 11 71,500   -  
Convertible debt 9 465,014   419,890  
    1,288,297   854,134  
DEFICIENCY          
Share capital 10 16,201,630   16,201,630  
Conversion rights reserve   92,966   92,966  
Share-based payment and other reserve 10 9,927,687   9,901,487  
Deficit   (27,503,202 ) (27,029,913 )
    (1,280,919 ) (833,830 )
    7,378   20,304  

Nature of Operations and Going Concern (Note 1)
Subsequent Events (Note 15)

ON BEHALF OF THE BOARD:

“Richard L. McAdoo”, Director & CEO

“Robert V. Rudman”, Director & CFO

- See Accompanying Notes -

2





Continental Energy Corporation
Financial Statements
(Expressed in US Dollars)

STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

    Year Ended   Year Ended  
  Note 30 June 2016   30 June 2015  
EXPENSES   $   $  
Depreciation   1,461   2,923  
Interest and bank charges 9 47,385   84,551  
Management and consulting fees 11 290,627   336,889  
Office and investor relations   40,396   122,321  
Professional fees   56,319   104,918  
Rent, maintenance and utilities   3,928   21,216  
Share-based payments 10 26,200   100,000  
Travel and accommodation   8,514   26,561  
    (474,830 ) (799,379 )
Other income (expenses)          
Interest and foreign exchange   1,541   2,798  
Loss on disposal of subsidiary 8 -   (159,837 )
Net loss for the year   (473,289 ) (956,418 )
         
COMPREHENSIVE LOSS FOR THE YEAR        
Net loss for the year   (473,289 ) (956,418 )
Other Comprehensive income (loss) to be reclassified to profit or loss in subsequent periods:        

Exchange differences on translation of foreign operations

  -   37,900  

Recycle of translation differences on disposal of subsidiary

8 -   (19,209 )
Comprehensive loss for the year   (473,289 ) (937,727 )
Comprehensive loss attributable to:        

Shareholders of the Company

  (473,289 ) (956,298 )

Non-controlling interests

  -   18,571  
Loss Per Share – Basic and Diluted   (0.00 ) (0.01 )
Weighted Average Number of Shares 128,601,682   128,601,682  

- See Accompanying Notes -

3





Continental Energy Corporation
Financial Statements
(Expressed in US Dollars)

STATEMENTS OF CASH FLOW

    Year Ended   Year Ended  
Cash Resources Provided By (Used In) Note 30 June 2016   30 June 2015  
Operating Activities   $   $  

Loss for the year

  (473,289 ) (956,418 )

Items not affecting cash

         

Depreciation

  1,461   2,923  

Interest on convertible debt

9 45,124   81,000  

Loss on disposal of subsidiary

8 -   159,837  

Share-based payments

10 26,200   100,000  

Changes in non-cash working capital

         

Receivables

  (547 ) 6,334  

Prepaid expenses and deposits

  9,287   11,921  

Accounts payable and accrued liabilities

  317,539   35,982  
    (74,225 ) (558,421 )
Investing Activities          

Consideration received upon disposal of subsidiary

8 -   200,000  
    -   200,000  
Financing Activities          

Shares issued – cash

10 -   120,000  

Proceeds from loans from related parties

11 71,500   -  
    71,500   120,000  
           
Change in cash   (2,725 ) (238,421 )

Cash Position – Beginning of Year

  4,015   242,436  

Cash Position – End of Year

  1,290   4,015  

Supplemental cash flow information (Note 13)

- See Accompanying Notes -

4





Continental Energy Corporation
Financial Statements
(Expressed in US Dollars)

STATEMENTS OF CHANGES INEQUITY (DEFICIENCY)

            Share-Based       Foreign              
            Payment and   Conversion   Currency       Non-      
            Other   Rights   Translation       controlling      
    Share Capital Reserve   Reserve   Reserve   Deficit   Interest   Total  
  Note Number   Amount $   $   $   $   $   $   $  
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

10 2,400,000   120,000   -   -   -   -   -   120,000  

Conversion of loan

10 15,000,000   750,000   -   -   -   -   -   750,000  

Convertible debt amendments

9 -   -   -   36,000   -   -   -   36,000  

Shares issued for services

10 2,000,000   100,000   -   -   -   -   -   100,000  

Foreign currency translation

  -   -   -   -   19,329   -   18,571   37,900  

Disposal of subsidiary

8 (20,000,000 ) (900,000 ) 500,000   -   (19,209 ) -   185,846   (233,363 )

Loss for the year

  -   -   -   -   -   (956,418 ) -   (956,418 )
Balance on 30 June 2015   123,015,381   16,201,630   9,901,487   92,966   -   (27,029,913 ) -   (833,830 )
                                   

Incentive warrants

10 -   -   26,200   -   -   -   -   26,200  

Loss for the year

  -   -   -   -   -   (473,289 ) -   (473,289 )
Balance on 30 June 2016   123,015,381   16,201,630   9,927,687   92,966   -   (27,503,202 ) -   (1,280,919 )

- See Accompanying Notes -

5





Continental Energy Corporation

NOTES TO THE FINANCIAL STATEMENTS
(Expressed in US Dollars)
30 JUNE 2016

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 but has begun diversifying its business into a broader range upstream and downstream oil and gas activities. These include new small-scale, distributed oil refineries and gas-turbine power plant developments fully integrated with smaller and stranded oil and gas production in underserved local markets.

At the 21 June 2017 date of this filing the Company has completed the audits, financial reports, and made most of the regulatory filings to remedy and cure a cease trade order issued on 4 November 2015 by the British Columbia Securities Commission ("BCSC"). The order was issued because the Company was at that time deficient in its regulatory requirements involving the filing of its audited consolidated financial statements for the fiscal years ended 30 June 2015. The order prohibits trading of the Company’s securities in Canada until the deficiency is cured by the Company filing the required delinquent financial reports and a revocation order is issued by the BCSC.

In addition to the audited statements for the year ended 30 June 2015, the Company must also prepare and file the same for the year ended 30 June 2016, plus the six interim quarterly financial reports for the three fiscal quarters ended 31 March 2016 and the three quarters ended 31 March 2017. The Company completed its annual audits and filed both its delinquent Fiscal 2015 report on 24 May 2017 and this Fiscal 2016 report on 21 June 2017. Three of the six delinquent interim reports for the three quarters ended 31 March 2016 were completed and filed on 20 June 2017. The Company is working to complete and file the last late reports for the three quarters ended 31 March 2017. When filed, these last reports complete the requirements to remedy and cure the deficiency which led to the cease trade order. The Company intends to immediately thereafter apply to the BCSC for a revocation order.

These 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 raising capital for future expenditures or acquisitions.

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 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 financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and the interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”). The policies presented in Note 3 were consistently applied to all periods presented.

The Company’s Board of Directors, upon the recommendation of its Audit Committee, has approved these financial statements on 20 June 2017.

These 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.

6





Continental Energy Corporation

NOTES TO THE FINANCIAL STATEMENTS
(Expressed in US Dollars)
30 JUNE 2016

3. Summary of Significant Accounting Policies

Foreign Currencies

The functional currency is the currency of the primary economic environment in which the entity operates. The functional currency determinations were conducted through an analysis of the consideration factors identified in IAS 21, the Effects of Changes in Foreign Exchange Rates (“IAS 21”).

The Company’s functional and presentation currency is the U.S. dollar.

Any transactions in currencies other than the functional currency have been translated to the U.S. dollar in accordance with IAS 21. Transactions in currencies other than the functional currency are recorded at that rates of exchange prevailing on dates of transactions. At the end of each reporting period, monetary assets and liabilities that are denominated in foreign currencies are translated at the rates prevailing at that date. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at rates prevailing at the date when the fair value was determined. All gains and losses on translation of these foreign currency transactions are included in the statements of loss and comprehensive loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Loss per Share

Basic loss per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the period. The computation of diluted earnings per share assumes the conversion, exercise or contingent issuance of securities only when such conversion, exercise or issuance would have a dilutive effect on earnings per share. The dilutive effect of convertible securities is reflected in diluted earnings per share by application of the “if converted” method. The dilutive effect of outstanding options and warrants and their equivalents is reflected in diluted earnings per share by application of the treasury stock method. In the years when the Company reports a loss, the effect would be anti-dilutive, and therefore, basic and diluted loss per share are the same.

Share Based Payments

The Company grants stock options to buy common shares of the Company to directors, officers, employees and service providers. The board of directors grants such options for periods of up to five years, with vesting periods determined at its sole discretion and at prices equal to or greater than the closing market price on the day preceding the date the options were granted. An individual is classified as an employee when the individual is an employee for legal or tax purposes (direct employee) or provides services similar to those performed by a direct employee.

The fair value of the share purchase options granted is measured using the Black-Scholes option pricing model taking into account the terms and conditions upon which the share purchase options were granted. At each statement of financial position reporting date, the amount recognized as an expense is adjusted to reflect the actual number of share purchase options that are expected to vest.

Unit Private Placements

The Company values warrants issued as part of a private placement unit by allocating the proceeds from the issuance of units between common shares and common share purchase warrants on a pro-rata basis based on relative fair values as follows:

The fair value attributed to the warrants is recorded in the share based payment reserve.

Property, Plant and Equipment

Equipment is carried at cost less accumulated depreciation. Depreciation is charged so as to write-off the cost of these assets, less residual value, over their estimated useful economic lives on 50% declining balance basis, for automobiles, office furniture, computers and other equipment including software.

7





Continental Energy Corporation

NOTES TO THE FINANCIAL STATEMENTS
(Expressed in US Dollars)
30 JUNE 2016

Financial Instruments

Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are offset and the net amount is reported in the statement of financial position when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.

Financial assets:

Financial assets are classified into one of the following categories:

The classification is determined at initial recognition and depends on the nature and purpose of the financial asset.

  (i) FVTPL financial assets

Financial instruments are classified as FVTPL when the financial instrument is held for trading or is designated as FVTPL.

A financial instrument is classified as held for trading if:

Financial instruments classified as FVTPL are stated at fair value with any resultant gain or loss recognized in profit or loss.

The Company has no financial assets classified as FVTPL.

  (ii) AFS financial assets

Instruments held by the Company that are classified as AFS are stated at fair value. Gains and losses arising from changes in fair value are recognized directly in equity in the investments revaluation reserve. When an investment is disposed of or is determined to be impaired, the cumulative gain or loss previously recognized in the investments revaluation reserve is included in profit or loss for the period.

The fair value of AFS monetary assets denominated in a foreign currency is translated at the spot rate on the statement of financial position date. The change in fair value attributable to translation differences due to a change in amortized cost of the asset is recognized in profit or loss, while all other changes are recognized in equity/deficiency.

The Company has no financial assets classified as AFS.

  (iii) HTM financial assets

Investments are recognized on a trade-date basis and are initially measured at fair value, including transaction costs. After initial recognition, the Company carries the assets at amortized costs less impairment. The Company assesses its intention and ability to hold its held-to-maturity investments to maturity not only when those financial assets are initially recognized, but also at the end of each subsequent reporting period. The Company has no HTM financial assets.

  (iv) Loans and receivable

Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables.

8





Continental Energy Corporation

NOTES TO THE FINANCIAL STATEMENTS
(Expressed in US Dollars)
30 JUNE 2016

Loans and receivables are initially recognized at the transaction value and subsequently carried at amortized cost less impairment losses. The impairment loss of receivables is based on a review of all outstanding amounts at year end. Bad debts are written off during the year in which they are identified. Interest income is recognized by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

The Company has classified receivables and cash as loans and receivables.

  (v) Effective interest method

The effective interest method calculates the amortized cost of a financial asset and allocates interest income over the corresponding period. The effective interest rate is the rate that discounts estimated future cash receipts over the expected life of the financial instrument, or, where appropriate, a shorter period.

  (vi) Derecognition of financial assets

A financial instrument is derecognized when:

Financial liabilities:

Financial liabilities are classified into one of the following categories:

The classification is determined at initial recognition and depends on the nature and purpose of the financial liability.

  (i) FVTPL financial liabilities

This category comprises derivatives, or liabilities acquired or incurred principally for the purpose of selling or repurchasing it in the near term. They are carried on the statement of financial position at fair value with changes in fair value recognized in the profit or loss.

  (ii) Other financial liabilities

These are initially measured at fair value, net of transaction costs, and are subsequently measured at amortized cost using the effective interest method, with interest expense recognized on an effective yield basis. The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expenses over the corresponding period. The effective interest rate is the rate that exactly discounts estimated future cash payments over the expected life of the financial liability, or, where appropriate, a shorter period.

The Company has classified accounts payable, accrued liabilities, loans from related parties, and convertible debt other financial liabilities.

  (iii) Derecognition of financial liabilities

Financial liabilities are derecognized when the Company’s obligations are discharged, cancelled or they expire.

Impairment

Financial assets

At each reporting date, the Company assesses whether there is objective evidence that a financial asset is impaired. If such evidence exists, the Company recognizes an impairment loss as follows:

9





Continental Energy Corporation

NOTES TO THE FINANCIAL STATEMENTS
(Expressed in US Dollars)
30 JUNE 2016

Impairment losses on financial assets carried at amortized cost are reversed in subsequent periods if the amount of the loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized. Impairment losses on available-for-sale equity instruments are not reversed.

Non-financial assets

At the end of each reporting period, the Company reviews the carrying amounts of its long lived assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the CGU to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual CGUs, or otherwise they are allocated to the smallest group of CGUs for which a reasonable and consistent allocation basis can be identified.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset or CGU is estimated to be less than its carrying amount, the carrying amount of the asset or CGU is reduced to its recoverable amount. An impairment loss is recognized in profit or loss.

Where an impairment loss subsequently reverses for assets with a finite useful life, the carrying amount of the asset or CGU is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset or CGU in prior periods. A reversal of an impairment loss is recognized in profit or loss.

Compound Financial Instruments

Compound financial instruments issued by the Company comprise convertible promissory notes that can be converted into fixed number of common shares of the Company. The liability component of the compound financial instrument is recognized initially at the fair value of a similar liability that does not have any equity conversion option. The equity component is recognized as the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts. Should a compound financial instrument have more than one equity component, transaction costs are allocated to the equity components in proportion to their respective fair values.

Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortized cost using the effective interest method. The equity component of a compound financial instrument is not re-measured subsequent to initial recognition.

Income Taxes

Income tax expense consists of current and deferred tax expense. Income tax expense is recognized in the statements of comprehensive loss.

Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at period end, adjusted for amendments to tax payable with regards to previous years.

Deferred taxes are recorded using the liability method. Under the liability method, deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted or substantively enacted tax rates expected to apply when the asset is realized or the liability settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that substantive enactment occurs.

10





Continental Energy Corporation

NOTES TO THE FINANCIAL STATEMENTS
(Expressed in US Dollars)
30 JUNE 2016

A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. To the extent that the Company does not consider it probable that a deferred tax asset will be recovered, it provides a valuation allowance against the excess.

The following temporary differences do not result in deferred tax assets or liabilities:

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset when they relate to income taxes levied by the same taxation authority.

4. Significant Accounting Estimates and Judgments

The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, profit and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and further periods if it affects both current and future periods.

Critical Accounting Estimates:

Significant estimates relate to, but are not limited to

Share-based compensation

The Company provides compensation benefits to its employees, directors and officers through a stock option plan. The fair value of each option award is estimated on the date of the grant using the Black-Scholes option pricing model. Expected volatility is based on historical stock price volatility of comparable companies in a similar stage of life cycle as the Company. The Company uses historical data to estimate option exercises and forfeiture rates within the valuation model. The risk-free interest rate for the expected term of the option is based on the yields of government bonds.

When the Company determines it necessary to modify the terms of the options, the Black-Scholes option pricing model is utilized at the date of the modification and uses the modified terms in order to calculate the incremental change in value of the original option.

Changes in these assumptions, especially the volatility and the expected life determination could have a material impact on the Company’s comprehensive loss for the year.

Warrant valuation

The Company grants warrants in conjunction with private placements and as compensation for financing arrangements. The fair value of each warrant granted is estimated on the date of the grant using the Black-Scholes option pricing model. Expected volatility is based on historical stock price volatility of comparable companies in a similar stage of life cycle as the Company. The Company uses historical data to estimate the timing of warrant exercises within the valuation model. The risk-free interest rate for the expected term of the warrant is based on the yields of government bonds. When the Company determines it necessary to modify the terms of a warrants, the Black-Scholes option pricing model is utilized at the date of the modification and uses the modified terms in order to calculate the incremental change in value of the original warrant if the warrants were originally issued as compensation.

Changes in these assumptions, especially the volatility and the expected life determination could have a material impact on the Company’s comprehensive loss for the year.

11





Continental Energy Corporation

NOTES TO THE FINANCIAL STATEMENTS
(Expressed in US Dollars)
30 JUNE 2016

Critical Judgments:

Recovery of deferred taxes

Judgment is required in determining whether deferred tax assets are recognized on the statement of financial position. Deferred tax assets require management to assess the likelihood that the Company will generate taxable income in future periods in order to utilize recognized deferred tax assets. Estimates of future taxable income are based on forecasted cash flows and the application of existing tax laws in each jurisdiction. The Company has not recognized any deferred tax assets on the statement of financial position as at 30 June 2016.

5. Standards Issued but Not Yet Effective

Certain new standards, interpretations, amendments and improvements to existing standards were issued by the IASB or IFRIC, that are mandatory for accounting periods on after July 1, 2016. Many are not applicable or do not have a significant impact on the Company and have been excluded from the summary below.

The Company is currently assessing the impact of the following standards, which have not yet been adopted.

IFRS 9 Financial Instruments

This standard and its consequential amendments will replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost or fair value, replacing the multiple rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. Most of the requirements in IAS 39 for classification and measurement of financial liabilities were carried forward unchanged to IFRS 9, except that an entity choosing to measure a financial liability at fair value will present the portion of any change in its fair value due to changes in the entity’s own credit risk in other comprehensive income, rather than within profit or loss. The new standard also requires a single impairment method to be used, replacing the multiple impairment methods in IAS 39. IFRS 9 is effective for annual periods beginning on or after January 1, 2018. Earlier adoption is permitted.

IFRS 2, Share Based Payments

The IASB issued amendments to IFRS 2 Share-Based Payments that address three main areas: the effects of vesting conditions on the measurement of a cash-settled share-based payment transaction; the classification of a share-based payment transaction with net settlement features for withholding tax obligations; and accounting where a modification to the terms and conditions of a share-based payment transaction changes its classification from cash settled to equity settled. On adoption, entities are required to apply the amendments without restating prior periods, but retrospective application is permitted if elected for all three amendments and other criteria are met. The amendments are effective for annual periods beginning on or after January 1, 2018, with early application permitted.

IFRS 16, Leases

This standard and its consequential amendments will replace IAS 17 – Leases and its associated interpretative guidance. IFRS 16 applies a control model to the identification of leases, distinguishing between a lease and a service contract on the basis of whether the customer controls the asset being leased. For those assets determined to meet the definition of a lease, IFRS 16 introduces significant changes to the accounting by lessees, introducing a single, on-balance sheet accounting model that is similar to current finance lease accounting, with limited exceptions for short-term leases or leases of low value assets. Lessor accounting remains similar to current accounting practice. IFRS 16 is effective for annual periods beginning on or after January 1, 2019.

6. Capital Management

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 deficiency 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

12





Continental Energy Corporation

NOTES TO THE FINANCIAL STATEMENTS
(Expressed in US Dollars)
30 JUNE 2016

issue new shares, enter into joint venture property arrangements, acquire or dispose of assets, or adjust the amount of cash and short-term investments.

The Company’s investment policy is to invest any excess cash in highly 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 year ended 30 June 2016.

7. Financial Risk Management

The Company’s financial instruments are exposed to certain financial risks. The risk exposures and the impact on the Company’s financial instruments are summarized below.

Currency risk

The Company is primarily exposed to currency fluctuations relative to the U.S. dollar through expenditures that are denominated in foreign currencies. Also, the Company is exposed to the impact of currency fluctuations on its foreign currency monetary assets and liabilities.

The Company is exposed to foreign currency risk through the following financial assets and liabilities denominated in currencies other than U.S. dollars:

      Accounts  
      payable and  
      accrued  
30 June 2016 Cash Receivables liabilities  
Canadian dollars - 1,662 (113,539 )
Indonesian Rupiah 11,640,117 - (28,443,867 )
         
       Accounts  
      payable and  
      accrued  
30 June 2015 Cash Receivables liabilities  
Canadian dollars 23 912 (73,999 )
Indonesian Rupiah 13,563,611 - (32,305,867 )

At 30 June 2016, with other variables unchanged, a 10% change in exchange rates would affect the loss by $10,631 (2015 - $5,998).

Credit risk

Credit risk is the risk of loss if a customer or third party to a financial instrument fails to meet its contractual obligations. The Company’s cash is held by reputable financial institutions. Receivables consist of goods and services taxes due from the Federal Government of Canada. Management believes that the credit risk concentration with respect to cash and receivables is remote.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. Liquidity requirements are managed based on expected cash flows to maintain sufficient capital to meet short term obligations. As at 30 June 2016, the Company had a cash balance of $1,290 which is not sufficient to settle current liabilities of $1,288,297. The Company’s management continues to work on obtaining financing to meet these obligations and also on reaching alternative arrangements with relevant parties.

13





Continental Energy Corporation

NOTES TO THE FINANCIAL STATEMENTS
(Expressed in US Dollars)
30 JUNE 2016

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company has a positive cash balance and its debt is either interest free or bears interest at fixed rates. The Company has no significant concentrations of interest rate risk arising from operations.

8. 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”).

Pursuant to a sales and purchase agreement dated 15 September 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 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:

  $  
Cash 5,611  
Equity Investments 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  

 

9. Convertible Debt

 

  Total  
  $  
Balance on 30 June 2014 374,890  
Interest 81,000  
Conversion rights - amendments (36,000 )
Balance on 30 June 2015 419,890  
Interest 45,124  
Balance on 30 June 2016 465,014  

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.

14





Continental Energy Corporation

NOTES TO THE FINANCIAL STATEMENTS
(Expressed in US Dollars)
30 JUNE 2016

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. As at 30 June 2016, the promissory note paid interest at 18% per annum and could be converted to the common shares of the Company at $0.05 per share. The additional consideration warrants were exercisable at $0.05 per common share and expired on 31 December 2015 without being exercised.

On 28 July 2014, the Company reached an agreement with the note holder to extend the maturity date of the promissory note from 30 April 2014 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 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 2015 Rights   Warrants  
Expected dividend yield Nil   -  
Expected stock price volatility 87%   -  
Risk-free interest rate 0.04%   -  
Expected life (years) 0.18   -  

 

10. 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 with special rights or restrictions attached.

Shares issued

Year ended 30 June 2016

There were no common or preferred share issued.

Year ended 30 June 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, a $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 consulting services. The amount was recognized as share-based payments expense on the Company’s statement of loss.

On 5 December 2014, Visionaire Invest AS returned 20,000,000 common shares of the Company, with a fair value of $400,000, for cancellation pursuant to the sale of the Company’s 51% interest in Visionaire Energy (Note 8).

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.

15





Continental Energy Corporation

NOTES TO THE FINANCIAL STATEMENTS
(Expressed in US Dollars)
30 JUNE 2016

A reconciliation of the Company’s stock options outstanding on 30 June 2016 and 30 June 2015 is as follows:

      Weighted Average  
  Number of   Exercise Price  
  Warrants   $ per Share  
Outstanding on 30 June 2014 15,800,000   0.05  

Expired

(9,000,000 ) 0.05  
Outstanding on 30 June 2015 6,800,000   0.05  

Expired

(6,800,000 ) 0.05  
Outstanding on 30 June 2016 -   -  

Warrants

A reconciliation of the Company’s warrants outstanding on 30 June 2016 and on 30 June 2015 is as follows:

      Weighted Average  
  Number of   Exercise Price  
  Warrants   $ per Share  
Outstanding on 30 June 2014 11,462,500   0.05  

Expired

(2,000,000 ) 0.05  
Outstanding on 30 June 2015 9,462,500   0.05  

Issued

2,000,000   0.01  

Expired

(8,912,500 ) 0.05  
Outstanding on 30 June 2016 2,550,000   0.03  

Year ended 30 June 2016

As an incentive for the $10,000 loan from a director (Note 11), the Company issued on 13 October 2015 to the director, 2,000,000 share purchase warrants with an exercise price of $0.01 per share and expiry date of 31 December 2017. The Company calculated the fair value of these warrants to be $26,200 which was charged to the statement of loss as share-based payments.

Year ended 30 June 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.

The fair value of the warrants issued was estimated using the Black-Scholes option pricing model, with the following assumptions:

  Year Ended   Year Ended  
  30 June 2016   30 June 2015  
Expected dividend yield Nil   -  
Expected stock price volatility 86%   -  
Risk-free interest rate 0.64%   -  
Expected life of warrants (years) 2.22   -  

16





Continental Energy Corporation

NOTES TO THE FINANCIAL STATEMENTS
(Expressed in US Dollars)
30 JUNE 2016

A summary of the Company’s warrants outstanding on 30 June 2016 is as follows:

Number of Price Per Share Expiry Date
Shares    
250,000 $0.10 25 July 2016
300,000 $0.10 23 October 2016
2,000,000 $0.01 31 December 2017
2,550,000    
(Note 15)    

 

11. Related Party Transactions

As at 30 June 2016, $616,967 (2015 - $371,146) was payable to officers of the Company as salary, fees, or other compensation. These amounts are included in accounts payable and accrued liabilities and are unsecured, non-interest bearing with no specific terms for repayment.

During the year ended 30 June 2016, the Company paid or accrued salary, fees, or other compensation to officers of the Company in the amount of $282,915 (2015 - $305,794).

During the year ended 30 June 2016, two directors of the Company loaned $10,000 and $61,500, respectively, to the Company for assistance with working capital. These loans are interest free with no fixed repayment terms.

The Company issued a promissory note in recognition of the receipt of the $10,000 loan and as an incentive for the loan, granted 2,000,000 share purchase warrants to the lending director, with an exercise price of $0.01 per share and expiry date of 31 December 2017 (Note 10).

12. Income Taxes

The Company is domiciled in Canada and is therefore subject to tax on estimated assessable profit at the rate of 26.00% (2015 – 26.00%). The Company has no assessable profit in Canada.

The tax expense at statutory rates for the Company can be reconciled to the reported income taxes per the statement of loss as follows:

  Year Ended   Year Ended  
  30 June 2016   30 June 2015  
  $   $  
Loss before income taxes (473,289 ) (956,418 )
Federal and provincial statutory tax rate 26.00 % 26.00 %
Income tax recovery based on the above rates (123,055 ) (248,669 )
Non-deductible expenses and other 88,524   459,456  
Expiry of tax losses -   73,454  
Losses and temporary differences for which no tax benefit has been recorded 34,531   (284,241 )
Total income taxes -   -  

17





Continental Energy Corporation

NOTES TO THE FINANCIAL STATEMENTS
(Expressed in US Dollars)
30 JUNE 2016

The Company’s unrecognized deferred tax assets are as follows:

  30 June 2016   30 June 2015  
  $   $  
Non-capital losses 1,799,260   1,732,374  
Capital losses 381,861   395,425  
Resource properties 390,005   403,858  
Capital assets 139,343   143,927  
Share issue costs and other 9,964   10,318  
Total unrecognized deferred tax assets 2,720,433   2,685,902  

In assessing the recoverability of deferred tax assets other than deferred tax assets resulting from the initial recognition of assets and liabilities that do not affect accounting or taxable profit, the Company’s management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

The Company has non-capital loss carry-forwards of approximately $6,920,000 that may be available for tax purposes in Canada as follows:

Expiring on Canada  
30 June $  
2027 1,135,000  
2028 1,023,000  
2029 1,092,000  
2030 633,000  
2031 439,000  
2032 455,000  
2033 462,000  
2034 397,000  
2035 828,000  
2036 456,000  
Non-capital loss carry-forwards 6,920,000  

The Company’s tax assets related to the other categories disclosed above are not subject to expiry provisions under the Canadian tax regime.

13. Supplemental cash flow information

 

Non-Cash Investing and Financing Activities for the   30 June 2016   30 June 2015  
Year Ended Note $   $  
Conversion option and additional consideration warrants amendment 9 -   36,000  
Incentive share purchase warrants for loan 10 26,200   -  
Cancellation of shares upon disposal of subsidiary 8 -   400,000  
Loan converted to common shares of the Company 10 -   750,000  

18





Continental Energy Corporation

NOTES TO THE FINANCIAL STATEMENTS
(Expressed in US Dollars)
30 JUNE 2016

14. 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 consist of computer and other equipment and are all located in Indonesia.

15. Subsequent Events

 

1.     

A total of 550,000 outstanding warrants, exercisable at $0.10 per share, expired unexercised.

 

 
2.     

On 4 January 2017, the Company entered into a Joint Development Agreement (the “CHI JDA”) with Continental Hilir Indonesia Pte. Ltd. (“CHI”), a private Singapore company, for the joint development of Small-Scale Refinery Projects in Indonesia. CHI and the Company are related parties and at the date of these financial statements share three common directors. The CHI JDA provides that CHI may earn an 80% participating interest with the Company on realization of any new Small Scale Refinery (“SSR”) developments in Indonesia by providing reimbursable cash advances to the Company from time to time and also carrying or paying for the Company's 20% participating interest share of feasibility studies, pre-operations costs, proposal preparation, and presentation costs to local commercial partners and to foreign direct investment and SSR licensing authorities.

 

 
3.     

On 28 February 2017, the Company entered into a Consulting and Joint Development Agreement (the “CHMEA JDA”) with Continental Hilir MEA (FZE) (“CHMEA”), a private company registered in the Sharjah Airport International Free Zone of the United Arab Emirates, for the joint development of Small-Scale Refinery Projects in the Middle East and Africa. CHMEA and the Company are related parties and at the date of these financial statements share one common director. The CHMEA JDA provides that CHMEA may earn a 50% participating interest with the Company on realization of any new SSR developments in the Middle East and Africa by providing consulting services and reimbursable cash advances to the Company from time to time and also carrying or paying for the Company’s 50% participating interest share of feasibility studies, pre-operations costs, proposal preparation, and presentation costs to local commercial partners and to foreign direct investment and SSR licensing authorities.

 

 
4.     

Upon 14 May 2017, the board of directors adopted a new and revised “Code” of Business Conduct and Ethics for the Company. A complete copy of the Code was filed by the Company on SEDAR on 16 May 2017 and is publicly available in PDF form for download from the SEDAR website.

 

 
5.     

Upon 14 May 2017, the board of directors adopted a new and revised “Charter” for the Company's Audit Committee. A complete copy of the Charter was filed by the Company on SEDAR on 16 May 2017 and is publicly available in PDF form for download from the SEDAR website.

 

 
6.     

On 24 May 2017 we made a late filing of the required audited annual financial reports and other disclosure for our Fiscal 2015 year ended 30 June 2015. These reports included the Company's required annual oil and gas activities and reserves report for Fiscal 2015.

 

 
7.     

On 26 May 2017 we made a late filing on EDGAR of the required audited annual financial reports and other disclosure on US SEC Form 20F Annual Report for our Fiscal 2015 year ended 30 June 2015. The Form 20F Annual Report was filed concurrently as a voluntary “Annual Information Form” or “AIF” filing on SEDAR.

 

 
8.     

On 5 June 2017, the Company caused its registrar and transfer agent, Computershare, to file on SEDAR a Notice of Meeting and Record Date for the Company's annual general meeting of shareholders for Fiscal 2015 and Fiscal 2016 years to be held on 4 August 2017 in the Company's registered and records office in Vancouver. The official “Record Date” for the purposes of determining those shareholders of record entitled to vote at the meeting is 30 June 2017.

 

 

9.     

On 20 June 2017 the Company made a late filing of interim financial reports for the three Fiscal 2016 quarters ended 30 September 2015, 31 December 2015, and 31 March 2016. These three quarterly reports were each filed electronically on SEDAR in compliance with NI 51-102 and NI 51-109. The reports included unaudited and management prepared consolidated financial statements for each quarter plus management's discussion and analysis thereof.

---oOo---

19





CONTINENTAL ENERGY CORPORATION FORM 51-102F1

Management’s Discussion and Analysis

For the Fourth Quarter and Fiscal Year Ended on 30 June 2016

This Management Discussion and Analysis (“MD&A”) has been prepared by the management of Continental Energy Corporation (the "Company") as of 21 June 2017 (the "Report Date").

This MD&A pertains to the three (3) months quarter ended 30 June 2016 that is hereinafter referred to as "This Quarter". This Quarter corresponds to the "Fourth Quarter" ending the Company's fiscal year. Therefore, this MD&A also pertains to the twelve (12) months period of the Company's fiscal year ended 30 June 2016 ("Fiscal 2016").

This MD&A is intended to be read in conjunction with the audited annual consolidated financial statements, the notes thereto, and the auditor's report to the Company for its Fiscal 2016 year ended on 30 June 2016 (the "Audited Annual Financial Statements") that are published and filed herewith.

This MD&A is intended to supplement and complement the unaudited, condensed, interim, consolidated quarterly financial statements (the "Interim Financial Statements") that were separately prepared and filed by management, on similar forms with similar management discussion, for each one of the preceding three Fiscal 2016 quarters, ended on 30 September 2015, on 31 December 2015, and on 31 March 2016.

All financial information presented herein, and in the Interim Financial Statements, and in the Audited Annual Financial Statements has been prepared in accordance with accounting policies consistent with International Financial Reporting Standards (“IFRS”) promulgated by the International Accounting Standards Board. All amounts disclosed are in United States dollars unless otherwise stated.

PART - 1 : NATURE OF BUSINESS

The Company is an emerging developer of conventional and alternative energy capacity integrated with upstream and downstream petroleum supply within the Republic of Indonesia. Why Indonesia? Already a G20 member, Indonesia is predicted by the World Bank to grow to the 4th largest economy in the world by 2045.

PART - 2 : HIGHLIGHT EVENTS DURING THIS QUARTER

Significant events which may have a material effect on the business affairs of the Company that have occurred during This Quarter are summarized below:

Corporate Activity

The Company explored new opportunities in its core business areas and searched for new sources of capital during This Quarter.

2. 1 Share Purchase Warrants Activity During This Quarter

2. 2 Incentive Stock Options Activity During This Quarter





2. 3 Common Share Conversion Rights Activity During This Quarter

2. 4 New Shares Issues During This Quarter

PART - 3 : SHAREHOLDING AT THE END OF THIS QUARTER AND FISCAL 2016

As at the end of This Quarter and end Fiscal 2016, the Company’s share capital was issued or held in reserve as follows:

123,015,381   common shares were issued and outstanding.
2,550,000   unexercised warrants were issued and outstanding.
0   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

Significant events which may have a material effect on the business affairs of the Company that have occurred subsequent to the end of This Quarter and up to the Report Date are summarized below:

Small Scale Refinery Opportunity

In August and November 2016, Indonesia’s Energy Ministry issued new regulations opening up, for the first time, the crude oil refining and distribution business to private sector companies. The new regulations provide for substantial fiscal incentives and perpetual licenses to private companies to build, own, and operate "Small Scale Refineries or SSRs". SSRs are defined as having a maximum capacity of 20,000 barrels per day and are intended to be co-located with existing domestic crude oil production to both stimulate more oil production by reducing crude oil transport costs and provide refined fuel products to local domestic markets at reduced or eliminated import costs.

As an incentive to SSR operators, these crude and products transport costs savings may be passed through to the SSR operator in the form of a reduced feedstock price agreed by the Energy Ministry in the license, for locally produced crude oil delivered at the SSR plant gate.

Indonesia is taking a page from the global power generation industry, who has come to the realization that multiple small-scale, geographically distributed refining capacity is simply more cost efficient and provides more direct local and regional economic benefits than a few huge-scale refineries requiring multi-billion dollar investment.

This is a completely new business opening, with no large players or competitive actors already in the market or expected to appear. The opportunity lies with smaller companies who can put together the technical expertise, Indonesian operating knowledge, and financial packages needed.

The Company's 20+ years of Indonesian oil and gas operating experience and relationship building put it in a unique position to take advantage of these SSR opportunities. To this end the Company entered into, during late 2016, four Memorandums of Understanding with private Indonesian company partners to jointly pursue SSR licenses vertically integrated with, and co-located with, upstream crude oil feedstock from four production sharing contract areas operated by the partners.

Director Resignation

Effective upon 30 December 2016, Mr. John Tate resigned from the Company’s board of directors to pursue his own business interests.





Joint Development Agreement Signed

On 4 January 2017, the Company entered into a Joint Development Agreement (the “CHI JDA”) with Continental Hilir Indonesia Pte. Ltd. (“CHI”), a private Singapore company, for the joint development of Small-Scale Refinery Projects in Indonesia. CHI and the Company are related parties and at the Report Date share three common directors. The CHI JDA provides that CHI may earn an 80% participating interest with the Company on realization of any new Small Scale Refinery ("SSR") developments in Indonesia by providing reimbursable cash advances to the Company from time to time and also carrying or paying for the Company's 20% participating interest share of feasibility studies, pre-operations costs, proposal preparation, and presentation costs to local commercial partners and to foreign direct investment and SSR licensing authorities.

Consulting and Joint Development Agreement Signed

On 28 February 2017, the Company entered into a Consulting and Joint Development Agreement (the “CHMEA JDA") with Continental Hilir MEA (FZE) (“CHMEA”), a private company registered in the Sharjah Airport International Free Zone of the United Arab Emirates, for the joint development of Small-Scale Refinery Projects in the Middle East and Africa. CHMEA and the Company are related parties and at the Report Date share one common director. The CHMEA JDA provides that CHMEA may earn a 50% participating interest with the Company on realization of any new Small Scale Refinery ("SSR") developments in the Middle East and Africa by providing consulting services and reimbursable cash advances to the Company from time to time and also carrying or paying for the Company's 50% participating interest share of feasibility studies, pre-operations costs, proposal preparation, and presentation costs to local commercial partners and to foreign direct investment and SSR licensing authorities.

Director Appointment

Upon 31 March 2017, Mr. Karsani Aulia was appointed a director of the Company by action of the board of directors to fill the vacancy on the board. Mr. Aulia is a graduate of the Bandung Institute of Technology and received his Master’s degree in petroleum geology, cum laude, from the Colorado School of Mines in 1982.

He worked for PT Caltex Pacific Indonesia (Chevron-Texaco) from 1976 until 2004. There he held various technical and operating positions including Vice President Exploration and General Manager of Resources and Production for Caltex’s onshore Minas Field, the largest oilfield in Asia with a daily production of over 200,000 BPD. From 2002 until 2004 he served on Chevron's Worldwide Asset Management Committee and its Technology Council.

From 2004 to 2007 he served as the General Manager for the Coastal Plains Pekanbaru PSC a local government owned oil and gas operating company with 27,000 BOPD oil production from the Riau Province, onshore Sumatra. Between 2007 and 2015, he served as Senior Vice President of Operations and Technology for Samudra Energy Ltd. an oil and gas exploration and production company based in Jakarta and Singapore. Under his leadership, Samudra Energy had a period of successful growth to become one of the top ten hydrocarbon producing companies in Indonesia.

Code of Business Conduct and Ethics

Upon 14 May 2017, the board of directors adopted a new and revised "Code" of Business Conduct and Ethics for the Company. A complete copy of the Code was filed by the Company on SEDAR on 16 May 2017 and is publicly available in PDF form for download from the SEDAR website. The PDF download link can be found after a search of the Company's filings at SEDAR's website http://sedar.com/search/. A complete copy of the Code was also filed by the Company on EDGAR on 17 May 2017 under cover of a Form-6K filing.

Charter of the Audit Committee

Upon 14 May 2017, the board of directors adopted a new and revised "Charter" for the Company's Audit Committee. A complete copy of the Charter was filed by the Company on SEDAR on 16 May 2017 and is publicly available in PDF form for download from the SEDAR website. The PDF download link can be found after a search of the Company's filings at SEDAR's website http://sedar.com/search/. A complete copy of the Charter was also filed by the Company on EDGAR on 17 May 2017 under cover of a Form-6K filing.

Charter of the Governance and Nominating Committee

Upon 14 May 2017, the board of directors adopted a new and revised "Charter" for the Company's Governance and Nominating Committee. A complete copy of the Charter was filed by the Company on SEDAR on 16 May 2017 and is publicly available in PDF form for download from the SEDAR website. The PDF download link can be found after a search of the Company's filings at SEDAR's website http://sedar.com/search/. A complete copy of the Charter was also filed by the Company on EDGAR on 17 May 2017 under cover of a Form-6K filing.





Charter of the Compensation Committee

Upon 17 May 2017, the board of directors adopted a new and revised “Charter” for the Company’s Compensation Committee. A complete copy of the Charter was filed by the Company on SEDAR on 23 May 2017 and is publicly available in PDF form for download from the SEDAR website. The PDF download link can be found after a search of the Company's filings at SEDAR’s website http://sedar.com/search/. A complete copy of the Charter was also filed by the Company on EDGAR on 23 May 2017 under cover of a Form-6K filing.

Charter of the Reserves Committee

Upon 17 May 2017, the board of directors adopted a new and revised “Charter” for the Company’s Governance and Nominating Committee. A complete copy of the Charter was filed by the Company on SEDAR on 23 May 2017 and is publicly available in PDF form for download from the SEDAR website. The PDF download link can be found after a search of the Company’s filings at SEDAR's website http://sedar.com/search/. A complete copy of the Charter was also filed by the Company on EDGAR on 23 May 2017 under cover of a Form-6K filing.

Annual Financial Report Filed Late for Fiscal 2015

On 24 May 2017 we made a late filing of the required audited annual financial reports and other disclosure for our Fiscal 2015 year ended 30 June 2015. These reports were filed electronically on SEDAR in compliance with NI 51-102 and NI 51-109. These reports included audited, annual, consolidated financial statements for the Fiscal 2015 year plus management's discussion and analysis thereof.

Annual Oil & Gas Activity and Reserves Report Filed Late for Fiscal 2015

On 24 May 2017 we made a late filing of the Company's required annual oil and gas activities and reserves report for Fiscal 2015. These reports were filed electronically on SEDAR in compliance with NI 51-101.

Annual Report on Form 20F Filed Late for Fiscal 2015

On 26 May 2017 we made a late filing on EDGAR of the required audited annual financial reports and other disclosure on US SEC Form 20F Annual Report for our Fiscal 2015 year ended 6/30/15. The Form 20F Annual Report was filed concurrently as a voluntary “Annual Information Form” or “AIF” filing on SEDAR in compliance with NI 51-102 and NI 51-109. These reports included audited, annual, consolidated financial statements for Fiscal 2015 plus the disclosure required by Form 20F as an Annual Report.

AGM Notice and Record Date Set

On 5 June 2017, the Company caused its registrar and transfer agent, Computershare, to file on SEDAR a Notice of Meeting and Record Date for the Company's annual general meeting of shareholders for Fiscal 2015 and Fiscal 2016 years to be held on 4 August 2017 in the Company's registered and records office at 900-885 West Georgia Street, Vancouver, British Columbia, Canada V6C 3H1. The official “Record Date” for the purposes of determining those shareholders of record entitled to vote at the meeting is 30 June 2017. The formal notice and agenda for the meeting will be published on the Record Date.

Interim Quarters Financial Reports Filed

On 19 June 2017 the Company made a late filing of interim financial reports for the Fiscal 2016 quarters ended 30 September 2015, 31 December 2015, and 31 March 2016. These three quarterly reports were each filed electronically on SEDAR in compliance with NI 51-102 and NI 51-109. The reports included unaudited and management prepared consolidated financial statements for each quarter plus management’s discussion and analysis thereof.

Cease Trade Order

At the 21 June 2017 date of this filing the Company has completed the audits, financial reports, and made most of the regulatory filings to remedy and cure a cease trade order issued on 4 November 2015 by the British Columbia Securities Commission (“BCSC”). The order was issued because the Company was at that time deficient in its regulatory requirements involving the filing of its audited consolidated financial statements for the fiscal years ended 30 June 2015. The order prohibits trading of the Company’s securities in Canada until the deficiency is cured by the Company filing the required delinquent financial reports and a revocation order is issued by the BCSC.





In addition to the audited statements for the year ended 30 June 2015, the Company must also prepare and file the same for the year ended 30 June 2016, plus the six interim quarterly financial reports for the three fiscal quarters ended 31 March 2016 and the three quarters ended 31 March 2017. The Company completed its annual audits and filed both its delinquent Fiscal 2015 report on 24 May 2017 and this Fiscal 2016 report on 21 June 2017. Three of the six delinquent interim reports for the three quarters ended 31 March 2016 were completed and filed on 20 June 2017. The Company is working to complete and file the last late reports for the three quarters ended 31 March 2017. When filed, these last reports complete the requirements to remedy and cure the deficiency which led to the cease trade order. The Company intends to immediately thereafter apply to the BCSC for a revocation order.

4. 1 Share Purchase Warrants Activity: Since This Quarter End and Up to the Report Date

4. 2 Incentive Stock Options Activity: Since This Quarter End and Up to the Report Date

4. 3 Conversion Rights Activity: Since This Quarter End and Up to the Report Date

4. 4 New Shares Issues: Since This Quarter End and Up to the Report Date

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.
2,000,000   unexercised warrants were issued and outstanding.
0   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

Selected Annual Information for Last Three Fiscal Years

The following table sets out selected annual financial information for the Company and is derived from its audited, consolidated financial statements for the last three fiscal years ended 30 June 2016, 2015 and 2014 respectively.

US$ 2016   2015   2014  
Revenue Nil   Nil   Nil  
             
Income (Loss) Attributable to the Shareholders of the Company            
From Continuing Operations (473,289 ) (956,418 ) (627,517 )
From Discontinued Operations Nil   Nil   (159,106 )

Total for the Year

(473,289 ) (956,418 ) (786,623 )
             
Income (Loss) Attributable to the Non-Controlling Interests            
From Continuing Operations Nil   Nil   Nil  
From Discontinued Operations Nil   Nil   (152,866 )

Total for the Year

Nil   Nil   (152,866 )
             
Net Loss for the Year (473,289 ) (956,418 ) (939,489 )
             
Basic and Diluted Loss per Share            
             
Attributable to the Shareholders of the Company            
From Continuing Operations (0.0 ) (0.01 ) (0.01 )

Total

(0.0 ) (0.01 ) (0.01 )
             
Total Assets 7,378   20,304   845,499  
Total Long-Term Liabilities Nil   Nil   Nil  
Dividends Declared Nil   Nil   Nil  

 





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-4 of Fiscal 2016 Nil (121,367 ) (121,367 ) (121,367 ) (0.00 )
Quarter-3 of Fiscal 2016 Nil (110,496 ) (110,496 ) (110,496 ) (0.00 )
Quarter-2 of Fiscal 2016 Nil (137,892 ) (137,892 ) (137,892 ) (0.00 )
Quarter-1 of Fiscal 2016 Nil (103,534 ) (103,534 ) (103,534 ) (0.00 )
Quarter-4 of Fiscal 2015 Nil (128,476 ) (128,476 ) (128,476 ) (0.00 )
Quarter-3 of Fiscal 2015 Nil (173,476 ) (173,476 ) (173,476 ) (0.00 )
Quarter-2 of Fiscal 2015 Nil (452,987 ) (452,987 ) (452,987 ) (0.00 )
Quarter-1 of Fiscal 2015 Nil (201,479 ) (201,479 ) (201,479 ) (0.00 )

PART - 7 : COMPARATIVE RESULTS OF OPERATIONS

Current and Comparative Periods

This Quarter and the twelve (12) months period and Fiscal Year ended 30 June 2016 (the “Current Period”); and the Last Fiscal Year's twelve (12) months period ended 30 June 2015 (the “Comparative Period”).


a)     

Overall, the Company incurred a loss from operations during the Current Period of $473,289 compared to a loss of $956,418 for the Comparative Period, a decrease of $483,129.

 

 
b)     

The Company incurred a loss per share of $0.00 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 $159,837 for the Comparative Period as a result of Visionaire Energy AS’s discontinued operations. The Company disposed of its subsidiary, Visionaire Energy AS during the Comparative 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 AS, compared with the sales proceeds and the recycling of the related foreign exchange resulted in a loss of $159,837.

 

 
d)     

Interest expense during the Current Period was $47,385 compared to $84,551 during the Comparative Period primarily due to the accretion of the Company’s convertible debt.





e)     

The Company’s administrative costs were higher in the Comparative Period compared to the Current Period, primarily a result of higher management and consulting fees due to an increase in employee benefits, and higher office costs and professional fees due to the changes involving its subsidiaries and timing differences relating to regulatory filings and annual meetings. These administrative costs were higher in the Comparative Period by $194,074 (Comparative Periods 2016 - $391,270; 2015 - $585,344).

 

 
f)     

Share-based payments expense were $26,200 during the Current Period compared to $100,000 during the Comparative Period.

 

 
g)     

Cash used in operating activities during the Current Period was $74,225 compared to $558,421 used in the Comparative Period. The change is attributable to lower activity and the disposal of the Norwegian subsidiaries by the Company during the Comparative Period.

 

 
h)     

Net cash raised from financing activities during the Current Period was $71,500 compared to $120,000 raised during the Comparative Period.

Current and Comparative Quarters

This Quarter and the three (3) months period ended 30 June 2016 (the “Current Quarter”) and the Last year's fourth quarter and three month period ended 30 June 2015 (the “Comparative Quarter”).


i)     

Overall, the Company incurred a loss from operations during the Current Quarter of $121,367 compared to a loss of $128,476 for the Comparative Quarter, a decrease of $7,109

 

 
j)     

The Company incurred a loss per share of $0.00 in the Current Quarter and the Comparative Quarter.

 

 
k)     

Interest expense during the Current Quarter was $11,853 compared to $11,627 during the Comparative Quarter primarily due to the accretion of the Company’s convertible debt.

 

 
l)     

The Company’s administrative costs were lower in the Current Quarter compared to the Comparative Quarter, primarily a result of lower management and consulting fees due to a decrease in employee benefits and lower office and investor relation costs, and professional fees due to the changes involving its subsidiaries. These administrative costs were lower in the Current Quarter by $4,270 (Comparative Quarters 2016 - $106,162; 2015 - $110,432).

 

 
m)     

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 this Fiscal Year 2016 on 30 June 2016, the Company’s Audited Annual Financial Statements reflect a working capital deficit of $1,282,380 compared to a working capital deficit of $836,752 at the end of the prior Fiscal 2015 year.

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 30 June 2016.

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 This Quarter and Fiscal 2016, $616,967 (30 June 2015 - $371,146) 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.

During the year ended 30 June 2016, two directors of the Company loaned $10,000 and $61,500, respectively, to the Company for assistance with working capital. These loans are interest free with no fixed repayment terms.

The Company issued a promissory note in recognition of the receipt of the $10,000 loan and as an incentive for the loan, granted 2,000,000 share purchase warrants to the lending director, with an exercise price of $0.01 per share and expiry date of 31 December 2017.

10 . 2 Compensation Of Key Management Personnel

During This Quarter and the twelve (12) months ended 30 June 2016, the Company paid or accrued salary, fees, or other compensation to the CEO and the CFO of the Company in the amount of $150,000 and $132,915, respectively (30 June 2015 - $156,776 and $149,018, respectively).

PART - 11 : MATERIAL CONTRACTS AND EVENTS

11 . 1 Off-Balance Sheet Arrangements

At the end of This Quarter, the Company does not have any off-balance sheet arrangements not already disclosed elsewhere in this MD&A or in the Audited Annual Financial Statements that are published and filed herewith.

11 . 2 Material Contracts & Commitments

During This Quarter, no new material contracts or commitments were undertaken, not elsewhere disclosed in this MD&A or in the Audited Annual Financial Statements that are published and filed herewith.





11 . 3 Investor Relations, Publicity and Promotion

During This 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 in the Audited Annual Financial Statements that are published and filed herewith.

11 . 4 Financial Advice, New Business Consulting, Finder's Agreements, & Fund Raising

During This 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 in the Audited Annual Financial Statements that are published and filed herewith.

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 Audited Annual Financial Statements that are published and filed 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 Annual Financial Statements.

PART - 13 : FINANCIAL INSTRUMENTS

The Company’s financial instruments as at the end of This Quarter, 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, 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 and Indonesian Rupiah. 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 the Audited Annual Financial Statements that are published and filed herewith.

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 statements. 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 This 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.

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