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.

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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.

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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:

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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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