UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE ACT OF 1934
OR
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934 For Fiscal Year
Ended June 30, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the Transition Period from _____________ to________________
COMMISSION FILE NO. 0-24570
CENTRAL MINERA CORP.
(FORMERLY, DELGRATIA MINING CORPORATION)
(Exact name of registrant as specified in its charter)
YUKON, CANADA
(Jurisdiction of incorporation or organization)
P.O. BOX 93038, CAULFEILD VILLAGE R.P.O.
WEST VANCOUVER, BRITISH COLUMBIA, CANADA
V7W 3G4
(604) 687-6191
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
SUBORDINATE VOTING SHARES
(NO PAR VALUE)
Title of Class
Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report: As of June 30, 2004, the Registrant had 24,969,517 Subordinate Voting
shares (previously Common shares prior to redesignation) outstanding. As of June
30, 2004, the Registrant had 3,000,000 Variable Multiple Voting shares
outstanding.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes __X__ No ______
Indicate by check mark which financial statement item the registrant has elected
to follow. Item 17 ... X.... Item 18 .......
(APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PAST FIVE YEARS)
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 14 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes __X__ No ______
-1-
TABLE OF CONTENTS
Page
PART I
Item 1. Identity of Directors, Senior Management and Adviser..................................3
Item 2. Offer Statistics and Expected Timetable...............................................3
Item 3. Key Information.......................................................................3
Item 4. Information on the Company............................................................7
Item 5. Operating and Financial Review and Prospects..........................................9
Item 6. Directors, Senior Management and Employees...........................................12
Item 7. Major Shareholders and Related Party Transactions....................................14
Item 8. Financial Information................................................................16
Item 9. The Offer and Listing................................................................16
Item 10. Additional Information...............................................................18
Item 11. Quantitative and Qualitative Disclosures about Market Risk...........................23
Item 12. Description of Securities other than Equity Securities...............................23
PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies......................................23
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds.........24
Item 15. Controls and Procedures..............................................................24
Item 16A. Audit Committee Financial Expert.....................................................24
Item 16B. Code of Ethics.......................................................................24
Item 16C. Principal Accountant Fees and Services...............................................24
Item 16D. Exemption from Listing Standards for the Audit Committee.............................25
Item 17. Financial Statements.................................................................25
Item 18. Financial Statements.................................................................25
Item 19. Exhibits.............................................................................26
Signature Page.......................................................................30
-2-
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable to Form 20-F filed as an Annual Report.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not Applicable to Form 20-F filed as an Annual Report.
ITEM 3. KEY INFORMATION
A. SELECTED FINANCIAL DATA
Central Minera Corp. (the "Company" or "Central Minera") has a limited
history of operations and has not generated any operating revenues. The
following table sets forth, for the periods and the dates indicated, selected
financial and operating data for the Company. Certain prior years' amounts have
been reclassified to conform to the presentation used for the years ended June
30, 2004, 2003 and 2002. This information should be read in conjunction with the
Company's Financial Statements and Notes thereto and "Item 5 - Operating and
Financial Review and Prospects" included elsewhere herein. The selected
financial data provided below is not necessarily indicative of the future
results of operations or financial performance of the Company. To date the
Company has not paid any dividends on the shares and it does not expect to pay
dividends in the foreseeable future.
(In thousands of US dollars except per share amounts)
2004 2003 2002 2001 2000
- -------------------------------------------------- -------- --------- -------- -------- --------
Statements of Loss Data:
Revenues $ 0 $ 119 $ 33 $ 85 $ 34
Net loss - Canadian GAAP (137) (186) (202) (850) (1,114)
Net income (loss) - US GAAP (137) (177) (202) (850) (459)
Net loss per share - Canadian GAAP (0.01) (0.01) (0.01) (0.04) (0.08)
Net income (loss) per share - US GAAP (0.01) (0.01) (0.01) (0.04) (0.03)
Weighted average Common shares outstanding 25,490 21,826 21,760 21,760 14,234
Statements of Cash Flows Data:
Cash provided by (used in):
Operating activities- (125) (239) (120) 133 (619)
Financing activities- 221 302 95 901 330
Investing activities - - (3) - (1,005) (33)
Balance Sheet Data (end of period)
Total Assets 176 95 196 73 64
Net Asset 154 71 101 54 3
Capital Stock - Canadian GAAP 42,060 41,538 41,442 41,442 40,166
- US GAAP 42,072 41,551 41,463 41,463 40,187
Long Term Obligations - 300 250 - -
-3-
The Financial Statements of the Company have been prepared in
accordance with accounting principles generally accepted in Canada ("Canadian
GAAP"). These principles, as applied to the Company, differ in some respects
from those generally accepted in the United States ("U.S. GAAP"). For a
comparison of these differences between Canadian GAAP and U.S. GAAP, see Note 14
to the Financial Statements of the Company. All dollar amounts herein are
expressed as US dollars unless otherwise indicated.
B. CAPITALIZATION AND INDEBTEDNESS
NOT APPLICABLE TO FORM 20-F FILED AS AN ANNUAL REPORT.
C. REASONS FOR THE OFFER AND USE OF PROCEEDS
Not applicable to Form 20-F filed as an annual report.
D. RISK FACTORS
FORWARD LOOKING STATEMENTS
This Report includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and
Section 21E of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"). Any statements that express or involve discussions with respect
to predictions, expectations, beliefs, plans, projections, objectives,
assumptions of future events or performance (often, but not always, using words
or phrases such as "expects" or "does not expect", "is expected", "anticipates",
or "does not anticipate", "plans", "estimates" or "intends", or stating that
certain actions, events or results "may", "could", "would", "might", or "will"
be taken, occur or be achieved) are not statements of historical facts and may
be "forward-looking statements". Forward-looking statements are based on
expectations, estimates and projections at the time the statements are made and
include, but are not limited to, the statements under "Item 5- Operating and
Financial Review and Prospects" and located elsewhere herein regarding industry
prospects and the Company's financial position. Although the Company believes
that the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to have
been correct. Important factors that could cause actual results to differ
materially from the Company's expectations are more fully disclosed herein.
Important risks include the Company's lack of cash flow and resultant need for
additional funding, the risks associated with resource exploration and
development, the fact that there are no proven reserves on the Company's
properties, risks associated with the property title, currency fluctuation,
unstable metal prices, and various environment and political situations. All
subsequent written and oral forward-looking statements attributed to the Company
or persons acting on its behalf are expressly qualified in their entirety by the
Cautionary Statements.
-4-
THE COMPANY'S BUSINESS IS SUBJECT TO A NUMBER OF RISK FACTORS THAT ARE
SET FORTH BELOW:
o THE COMPANY HAS NO HISTORY OF CASH FLOW FROM OPERATIONS AND MAY REQUIRE
ADDITIONAL FUNDS TO CONDUCT FURTHER EXPLORATION ACTIVITIES.
Currently the Company has an indirect interest in one property through
its ownership of 15% of the outstanding shares of Cactus Gold Corp. ("Cactus").
The property has not advanced to the commercial production stage. The Company
has no history of earnings or cash flow from operations. Historically, the only
source of funds available to the Company is through (i) the sale of its equity
shares or (ii) borrowings. Even if the results of future exploration programs
are encouraging, the Company may not have sufficient funds to conduct the
further exploration that may be necessary to determine whether or not a
commercial deposit exists on any of its properties.
The development of any ore deposits, if found on the Cactus property,
depends upon Cactus's ability to obtain financing through joint venturing of
projects, debt financing, equity financing or other means. There is no assurance
that Cactus will be able to obtain the required financing. Failure to obtain
additional financing on a timely basis could cause Cactus to forfeit its
interest in such properties, dilute its interests in the properties and/or
reduce or terminate its operations.
o THE RESOURCE EXPLORATION BUSINESS IS EXTREMELY SPECULATIVE AND SUBJECT
TO MANY FACTORS BEYOND THE COMPANY'S CONTROL WHICH MAY RESULT IN THE
COMPANY NOT RECEIVING AN ADEQUATE RETURN ON INVESTMENT CAPITAL.
Resource exploration and development is a speculative business,
characterized by a number of significant risks including, among other things,
unprofitable efforts resulting not only from the failure to discover mineral
deposits but from finding mineral deposits which, though present, are
insufficient in quantity and quality to return a profit from production. In
addition, the marketability of minerals acquired or discovered may be affected
by numerous factors which are beyond the control of the Company and Cactus and
which cannot be accurately predicted, such as market fluctuations, the proximity
and capacity of milling facilities, mineral markets and processing equipment,
and such other factors as government regulations, including regulations relating
to royalties, allowable production, importing and exporting of minerals, and
environmental protection, the combination of which factors may result in the
Company not receiving an adequate return on investment capital.
o THERE IS NO CERTAINTY THAT ANY EXPENDITURE MADE BY THE COMPANY IN THE
EXPLORATION OF ITS INDIRECT INTEREST IN THE PROPERTY WILL RESULT IN
DISCOVERIES OF MINERALIZED MATERIAL IN COMMERCIAL QUANTITIES.
Most exploration projects do not result in the discovery of commercial
ore deposits and no assurance can be given that any particular level of recovery
of gold from ore reserves will in fact be realized or that any identified
mineral deposit will ever qualify as a commercially mineable (or viable) ore
body which can be legally and economically exploited. Estimates of reserves,
mineral deposits and production costs can also be affected by such
-5-
factors as environmental permitting regulations and requirements, weather,
environmental factors, unforeseen technical difficulties, unusual or unexpected
geological formations and work interruptions.
o MINING OPERATIONS GENERALLY INVOLVE A HIGH DEGREE OF RISK AS TO WHICH
THE COMPANY DOES NOT HAVE ANY INSURANCE.
The business of gold mining is subject to a variety of risks such as
cave-ins, flooding, environmental hazards, the discharge of toxic chemicals and
other hazards. Such occurrences may delay production, increase production costs
or result in liability. The payment of such liabilities may have a material,
adverse effect on the Company's financial position. The Company does not have
nor does it presently intend to obtain any insurance as to such hazards.
o CONFLICTS OF INTEREST MAY ARISE BECAUSE ONE OF THE COMPANY'S DIRECTORS
IS ALSO A DIRECTOR OF OTHER MINERAL RESOURCE COMPANIES.
Mr. Michael Cytrynbaum, one of the Company's Directors, serves as a
Director of Callinan Mines Limited which is a resource exploration and/or
development company. To the extent that such other companies may participate in
ventures in which the Company may participate, Mr. Cytrynbaum may have a
conflict of interest in negotiating and concluding terms respecting the extent
of such participation. In addition, conflicts of interest may arise from time to
time, as a result of the Company engaging in transactions in which Directors and
Officers of the Company may have an interest. Please refer to "Item 7 - Related
Party Transactions."
From time to time several companies may participate in the acquisition,
exploration and development of natural resource properties thereby allowing for
their participation in larger programs. Permitting involvement in a greater
number of programs reduces the financial exposure in respect of any one program.
It is also possible that a particular company will assign all or a portion of
its interest in a particular program to another of these companies due to the
financial position of the company making the assignment. In the event that a
conflict of interest arises, a Director who has such a conflict will abstain
from voting for or against the approval any action by the Company with respect
to the subject matter giving rise to the conflict of interest. In appropriate
cases the Company will establish a special committee of independent Directors to
review a matter in which several Directors, or management, may have a conflict.
Moreover, in accordance with the laws of the Yukon Territories, the Directors of
the Company are required to act honestly, in good faith and in the best interest
of the Company. In determining whether the Company will participate in a
particular program and the interest therein to be acquired by it, the Directors
will primarily consider the potential benefits to the Company, the degree of
risk to which the Company may be exposed and its financial position at that
time. Other than as indicated, the Company has no other procedures or mechanisms
to deal with conflicts of interest. As of the date hereof, the Company is not
aware of the existence of any conflict of interest on the part of any Director
or Officer as described herein.
-6-
o CURRENCY FLUCTUATIONS MAY HAVE AN ADVERSE EFFECT ON THE COMPANY'S
FINANCIAL CONDITION.
The Company maintains its accounts in United States dollars. The
Company's operations in Canada and United States make it subject to foreign
currency fluctuations and such fluctuations may materially affect the Company's
financial position and results. At the present time the Company does not engage
in hedging activities.
o THE COMPANY FACES COMPETITION FROM LARGER COMPANIES THAT HAVE GREATER
FINANCIAL AND OTHER RESOURCES THAN THE COMPANY.
Significant competition exists for the limited number of gold
acquisition opportunities available in the United States and Canada. As a result
of this competition, some of which is from large established mining companies
with substantial capabilities and greater financial and technical resources than
the Company, the Company may be unable to acquire additional attractive gold
mining properties on terms it considers acceptable.
o THE COMPANY CURRENTLY HAS SHARES RESERVED FOR FUTURE ISSUANCE THAT WHEN
ISSUED WILL CAUSE AN EQUITY DILUTION TO THE CURRENT STOCKHOLDERS.
The Company has reserved, as of October 31, 2004, 1,625,000 Subordinate
Voting shares for issuance upon the exercise of incentive stock options (please
refer to Item 6.B Stock Option Plan); and 2,166,114 Subordinate Voting shares
for issuance upon exercise of outstanding warrants. Furthermore, the Company may
enter into commitments in the future, which would require the issuance of
additional Subordinate Voting shares and may grant additional stock options and
warrants. Issuance of additional shares would be subject to certain regulatory
approvals and compliance with applicable securities legislation.
o THE COMPANY HAS ISSUED 3,000,000 VARIABLE MULTIPLE VOTING SHARES.
On July 31, 2003 under the terms of an outstanding Convertible Debenture,
the Company issued 3,000,000 Variable Multiple Voting shares. Directors and
Officers of the Company hold or control 2,500,000 Variable Multiple Voting
shares. Accordingly management will have effective control of the Company's
business affairs. Please refer to "Item 10. Additional Information" and
"Item 14. Material Modifications to the Rights of Security Holders and Use
of Proceeds".
ITEM 4. INFORMATION ON THE COMPANY
A. HISTORY, DEVELOPMENT AND ORGANIZATIONAL STRUCTURE OF THE COMPANY
The Company was incorporated under the laws of the Province of British
Columbia on February 14, 1984 as Delgratia Developments Ltd. The Company
underwent a change in control on June 10, 1992 and commenced its present
business at that time. On April 18, 1995, the Company officially changed its
name from Delgratia Developments Ltd. to Delgratia Mining Corporation. On
February 1, 1999, the Company changed its name to Central Minera Corp. and also
transferred its jurisdiction of incorporation from British
-7-
Columbia to the Yukon Territories of Canada through continuance of the Company
under the Business Corporations Act (Yukon). The Company's executive offices are
located P.O. Box 93038, Caulfeild Village R.P.O., West Vancouver, British
Columbia, Canada, V7W 3G4 and its phone number at the principal place of
business is (604) 687-6191. The Company is a reporting issuer in the Province of
British Columbia, Canada.
B. BUSINESS OVERVIEW
Up until recently the focus of the Company had consisted of, the
exploration for and, if warranted, development of precious metal properties. The
Company's activities had been focused on the acquisition and exploration of
mining properties located in Canada, Mexico, Nicaragua and the United States. As
each of the Company's mineral properties was without a known body of proven
reserves, due to financial considerations such as property holding costs and
exploration commitments, the Company has either liquidated its investments or
has allowed, or is in the process of allowing, its options, to lapse in all of
these countries.
The Company sold all of its operations, mineral properties and
subsidiaries in Nicaragua on June 30, 1999 and wrote off its Mexican investments
in 2000. The Company had operated its businesses in Mexico and Nicaragua through
corporate subsidiaries incorporated in the property's respective country. The
Company wrote off its investment in Cactus Gold Corp. in the fiscal year ending
June 30, 2001.
C. ORGANIZATIONAL STRUCTURE
The Company has no subsidiary companies.
D. PROPERTY, PLANTS AND EQUIPMENT
The Company presently has no properties containing proven reserves. The
limited activities on such properties to date have been exploratory in nature.
The Company has limited financial resources and there is no assurance
that additional funding will be available to allow the Company to complete
sufficient work on any future properties to determine the existence of gold
reserves on the properties or, if warranted, to establish the feasibility of
production from such reserves. Failure to obtain additional financing could
result in delay or indefinite postponement of further exploration and
development with the possible loss of properties. The Company's operations are
subject to certain risks, including currency fluctuations.
The Company has abandoned its mineral interests in Mexico, Nicaragua
and Nevada and all property-related costs have been expensed. In the year ended
June 30, 2001 the Company wrote down its $1,000,800 investment in Cactus Gold
Corp. (a privately held company conducting exploration programs in Nevada). An
option granted to an unaffiliated corporation to acquire the Company's interest
in and to the California Mine Crown Grants situated in the Kootenay Land
District has lapsed. All funds invested by the Company are lost when no economic
mineralization is found in an area and the concession is abandoned.
-8-
The Company owns a 25% interest in five mineral claims in the
Mackenzie Mining District of the Northwest Territories. This interest has been
written off and the property is now abandoned.
EQUIPMENT
The Company owns one computer but does not own and/or lease any
additional office equipment consisting of photocopiers and other office
equipment. All of its office equipment needs are provided under the terms of the
Management Agreement.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
This discussion should be read in conjunction with the audited
financial statements of the Company and related notes thereto included herein.
GENERAL
The Company is involved in the exploration for and, if warranted, the
development of precious metal properties.
A. OPERATING RESULTS.
YEAR ENDED JUNE 30, 2004 COMPARED TO THE YEAR ENDED JUNE 30, 2003
During the year ended June 30, 2004 ("Fiscal 2004"), the Company
incurred a loss of $137,273 compared with a loss of $185,888 for the year ended
June 30, 2003 ("Fiscal 2003"). The company incurred administrative expenses of
$130,159 in Fiscal 2004 as compared to $301,313 in Fiscal 2003. Significant
variances include: (i) a decrease of $24,568 in consulting fees due to First
Fiscal Management Ltd. voluntarily agreeing to accept one-half of their monthly
fee for an indefinite period of time to assist with cash flow constraints; (ii)
and a decrease in legal expenses of $121,658.
YEAR ENDED JUNE 30, 2003 COMPARED TO THE YEAR ENDED JUNE 30, 2002
During the year ended June 30, 2003 ("Fiscal 2003"), the Company
incurred a loss of $185,888 compared with a loss of $202,622 for the year ended
June 30, 2002 ("Fiscal 2002"). This operating loss was partially offset by a one
time only payment in settlement of the lawsuit against former management. The
company incurred administrative expenses of $301,313 in Fiscal 2003 as compared
to $234,565 in Fiscal 2002. Significant variances include: (i) an increase of
$66,814 in consulting fees due to the inclusion of office space in the
Management Agreement and offset by a decrease in rent of $59,950; (ii) an
increase in travel and promotion of $20,373; (iii) and reduction of accounting
and audit fees of $15,704; and (iv) and increase in legal expenses of $53,916.
-9-
YEAR ENDED JUNE 30, 2002 COMPARED TO THE YEAR ENDED JUNE 30, 2000
During the year ended June 30, 2002 ("Fiscal 2002"), the Company
incurred a loss of $202,622, as compared to a loss of $850,244 for the year
ended June 30, 2001 ("Fiscal 2001"). The difference is substantially
attributable to (i) cash received from a trustee of $310,538, which was
recovered from allowance for the class action lawsuit; as well as (ii) the
write-down of the investment in Cactus Mining Corp. of $1,000,800 in Fiscal
2001. The Company incurred administrative expenses of $234,565 in Fiscal 2002 as
compared to $232,834 in Fiscal 2001.
B. LIQUIDITY AND CAPITAL RESOURCES
WORKING CAPITAL
On June 30, 2004 the Company had a working capital of $153,000 as
compared to a working capital of $69,000 at June 30, 2003. As none of the
Company's mineral properties have advanced to the commercial production stage
and it has no history of earnings or cash flow from operations, the Company
relies on the sale of its equity shares for its source of funds. The Company
completed a private placement of 1,200,000 Units at a price of $0.05 per Unit
for gross proceed of $60,000 on February 14, 2004. Each Unit consists of one
Subordinate Voting share in the Capital of the Company and one warrant entitling
the holder to acquire one additional Subordinate Voting share at a price of
$0.10 until February 13, 2006. Prior to the expiry date of May 30, 2004,
3,211,670 warrants were exercised for proceeds of $160,583 with 1,605,835
Subordinate Voting shares issued from Treasury. Cumulatively, from the Company's
inception, it has raised $41,759,052 through the sale of its securities.
The Company's major use of funds has been in connection with its
operations and mineral property expenditures. In order to reduce operational and
mineral property expenditures, the Company has reduced staff, and sold its major
properties. The Company anticipates that it will continue to have losses from
operations until it can advance its properties to the commercial production
stage.
During the past four years, the Company has reduced its operating costs
to approximately $250,000 per annum with additional reductions being achieved in
the past fiscal year with operating costs of $130,000. The Company has no
material commitments for capital expenditure in the current fiscal year. The
Company, in its opinion, may not have sufficient working capital for the
Company's present requirements. If necessary, the Company would seek to obtain
additional working capital by way of private placement of equity shares and/or
by borrowing requisite funds from shareholders. The Company has no agreements
with any third party to provide such financing and no assurance can be given
that such financing will be available if needed.
PROPERTY ACQUISITIONS AND DIVESTURES
The Company has limited financial resources and there is no assurance
that additional funding will be available to allow the Company to complete
sufficient work on any of its
-10-
properties to determine the existence of gold reserves or, if warranted, to
establish the feasibility of production from such reserves. Failure to obtain
additional financing could result in delay or indefinite postponement of further
exploration and development with the possible loss of properties.
RECENT FINANCINGS
A private placement of 1,200,000 Units at a price of $0.05 per unit for
gross proceeds of $60,000 was completed on February 14, 2004. Each Unit consists
of one Subordinate Voting share and one warrant entitling the holder to acquire
one additional Subordinate Voting share at a price of $0.10 per Subordinate
Voting share until February 13, 2006.
Prior to their expiry date of May 30, 2004, 3,211,670 warrants were
exercised at an exercise price of $0.10 and two warrants per one Subordinate
Voting share. Proceeds of $160,583 were realized.
The Company completed a convertible debenture issue of U.S. $300,000 on
July 18, 2002. Related parties subscribed $250,000 for the debentures. The
debentures converted to Units of the Company on July 31, 2003 in the ratio of
one unit for each $0.10 (3,000,000 units). The Units consist of one Variable
Multiple Voting share and one non-transferable share purchase warrant to acquire
one Subordinate Voting share at $0.10 per share. Please refer to Item 10 -
Additional Information A. Share Capital
A private placement of 966,114 Units at a price of $0.10 per Unit for
gross proceeds of $96,611 was completed on June 5, 2003. Each Unit consists of
one Subordinate Voting share in the capital of Central Minera and one warrant
entitling the holder to acquire one additional Subordinate Voting share at a
price of $0.10 per Subordinate Voting share until June 5, 2005. 750,000 of the
Units were paid for in cash and 216,114 Units were issued as consideration for
settlement of an existing demand liability.
C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.
Not applicable.
D. TREND INFORMATION
MARKET RISK SENSITIVE INSTRUMENTS
The Company does not hold any market risk sensitive instruments other
than 75,000 shares of Pinewood Resources Ltd., a British Columbia corporation,
and 12,500 shares of Island Arc Mining Corp. which have a quoted market value at
June 30, 2004 of $17,125. These securities are carried at an estimated net
realizable value of $2,000. On October 20, 2004, the Island Arc Mining Corp.
shares were sold for net proceeds of $1,227. Given the limited impact of foreign
currency fluctuations, the Company does not hedge its foreign currency net
investments with currency borrowings or other hedging instruments.
-11-
E. OFF BALANCE SHEET ARRANGEMENTS
Not applicable.
F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
Not applicable.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. DIRECTORS AND SENIOR MANAGEMENT
The following table provides the full name of the Directors of the
Company:
<Table>
<Caption>
Name and place of residence Age Director since
--------------------------- --- --------------
Michael Cytrynbaum 63 July 18, 2002
Montreal, Quebec, Canada
Murray F. Kosick 54 May 5, 1999
Victoria, B.C, Canada
Reinhard Siegrist 57 December 16, 1997
Wettswil, Switzerland
</Table>
Mr. Michael Cytrynbaum is President of First Fiscal Management Ltd. a
private company involved in financial reorganizations, financial and real estate
workouts and consulting, and start up companies. Mr. Cytrynbaum also serves as
chairman of two publicly traded companies, Look Communications Inc., a Canadian
broadcast and internet services provider, and Ignition Point Technologies Corp.
a Vancouver based broadband technology company and is a Director of two junior
resources companies, Callinan Mines Limited and Central Minera Corp. as well as
being a Director of Peer 1 Network Enterprises, Inc., a provider of high
performance internet bandwidth. Mr. Cytrynbaum has been a Director of Central
Minera Corp. since July 18, 2002.
Dr. Murray Kosick has been an associate in a private dental practice
for the past five years. Dr. Kosick sold his private dentist practice and
returned to dentistry from retirement five years ago. Dr. Kosick has been a
Director of Central Minera Corp. since May 5, 1999.
Mr. Reinhard Siegrist is a Certified Accountant of Switzerland. Mr.
Siegrist was a former Director of Aton Asset Management, Zurich and is currently
an independent investor and financial advisor. Mr. Siegrist has been a Director
of Central Minera Corp. since December 16, 1997.
-12-
B. COMPENSATION.
No executive Officer of the Company other than as detailed below was
paid more than $40,000 in compensation during the financial year. The following
table provides a summary of the compensation earned by Michael Cytrynbaum during
the financial years ended June 30, 2004 and June 30, 2003:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ------------------------
NAME AND OTHER ANNUAL SECURITIES UNDER OPTIONS
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION GRANTED(#)
- ------------------ ---- ------ ----- ------------ ------------------------
Michael Cytrynbaum(1) 2004 Nil Nil $67,000(2)
President 2003 Nil Nil $94,000(2) 500,000
(1) Michael Cytrynbaum was appointed President of the Company on July 18, 2002.
(2) The amount shown was paid to First Fiscal Management Ltd.
STOCK OPTION PLAN
At the annual meeting held in December 1996 the shareholders of the
Company approved the adoption of a Stock Option Plan (the "Plan") designed to
enable the Company to attract, retain and motivate qualified employees. Certain
amendments to the Plan were approved by our shareholders in December 1999. As
amended, the Plan allows us to grant options to present and former Directors,
Officers, employees, consultants and advisors. The Plan is administered by our
Board of Directors which is authorized to decide to whom options may be granted,
the number of options granted to any person, the exercise price, which may not
be less than $0.15 per share, the term (which may not be longer than 10 years
from the date of grant) and any restrictions upon exercise. A maximum of
3,000,000 Subordinate Voting shares may be made subject to options under the
Plan. There are currently 1,625,000 outstanding options, all exercisable at
US$0.20 per Subordinate Voting share. 300,000 of the outstanding options expire
on December 31, 2004 and the remaining 1,325,000 expire on or before December
31, 2005. These 1,325,000 outstanding options are held by our Directors and
senior Officers. No options were exercised in the financial year ended June 30,
2004.
No options were granted during the current fiscal year. The following
table sets forth certain information regarding the outstanding options at June
30, 2004:
SUBORDINATE VOTING EXERCISE VALUE OF UNEXERCISED IN
HOLDERS SHARES PRICE EXPIRATION THE MONEY OPTIONS AT
UNDER OPTION DATE JUNE 30, 2004
JUNE 30, 2004 EXERCISABLE/UNEXERCISABLE
EXERCISABLE/UNEXERCISABLE
- -------------------------- -------------------------- ---------- ------------ ---------------------------
MICHAEL CYTRYNBAUM 500,000/0 $0.20 12/31/05 Nil/Nil
REINHARD SIEGRIST 250,000/0 $0.20 12/31/05 Nil/Nil
CARLO CIVELLI 250,000/0 $0.20 12/31/05 Nil/Nil
BARBARA WEST 25,000/0 $0.20 12/31/05 Nil/Nil
JOAN JAMIESON 50,000/0 $0.20 12/31/05 Nil/Nil
MURRAY KOSICK 250,000/0 $0.20 12/31/05 Nil/Nil
GORDON ELLIS 300,000/0 $0.20 12/31/04 Nil/Nil
-13-
Other than compensation paid as disclosed above under the heading
"Related Party Transactions", none of the Directors of the Company have received
any cash compensation, directly or indirectly, for their services rendered
during the most recently completed financial year of the Company. Other than the
Stock Option Plan, the Company does not have any non-cash compensation plans for
its Directors and it does not propose to pay or distribute any non-cash
compensation during the current fiscal year. Please refer to "Item 7. - Related
Party Transactions."
C. BOARD PRACTICES
Each Director is elected for a one year term and until his successor
has been duly elected. The current Directors were elected Directors at the
Company's last annual general meeting of shareholders held in Vancouver, British
Columbia, Canada. The Company's audit committee consists of all of the Company's
Directors. The Company does not have a separate remuneration committee.
D. EMPLOYEES
At the end of the year ended June 30, 2004, the Company had no
employees.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. MAJOR SHAREHOLDERS
As far as is known, the Company is not directly or indirectly owned or
controlled by any corporation or by any foreign government. The following table
sets forth certain information, as at October 31, 2004, concerning (i) persons
and companies that own outstanding shares of record or are known by the Company
to own beneficially, directly or indirectly, more than 5% of the outstanding
shares and (ii) beneficial ownership of outstanding shares by the Company's
Directors:
NAME AND ADDRESS OF NUMBER OF SHARES BENEFICIALLY OR PERCENTAGE OF CLASS
SHAREHOLDER DIRECTLY OWNED
------------------- -------------------------------- -------------------
Carlo Civelli 1,316,114 Subordinate Voting shares 5.2%
2,250,000 Variable Multiple Voting 75.0%
shares (1)
Michael Cytrynbaum 1,004,590 Subordinate Voting shares (2) 4.0%
Dr. Murray F. Kosick 1,009,001 Subordinate Voting shares (3) 4.0%
250,000 Variable Multiple Voting shares 8.3%
Reinhard Siegrist 850,000 Subordinate Voting shares (4) 3.4%
Officers and Directors as a Group 4,179,705 Subordinate Voting shares 16.7%
(4 people) 2,500,000 Variable Multiple Voting 83.3%
shares (5)
-14-
1. Includes 250,000 options to acquire Subordinate Voting shares (see
Item 6. Directors, Senior Management And Employees-Stock Option Plan).
Does not include 250,000 warrants to purchase 250,000 Subordinate
Voting shares exercisable at $0.10 expiring on June 5, 2005. Does not
include 216,114 warrants to purchase 216,114 Subordinate Voting shares
exercisable at $0.10 expiring on June 5, 2005 nor 600,000 warrants to
purchase 600,000 Subordinate Voting shares exercisable at $0.10
expiring on February 13, 2006 held by Clarion Finanz A.G.
2. Mr. Cytrynbaum exercises voting control or direction over these
shares pursuant to an agreement dated as of July 18, 2002, but in
respect of which he disclaims any beneficial interest. Includes 500,000
options to acquire Subordinate Voting shares (see Item 6. Directors,
Senior Management And Employees - Stock Option Plan).
3. Includes 250,000 options to acquire Subordinate Voting shares (see
Item 6. Directors, Senior Management And Employees - Stock Option
Plan). Does not include 100,000 warrants to purchase 100,000
Subordinate Voting shares exercisable at $0.10 expiring on June 5, 2005
or 200,000 warrants to purchase 200,000 Subordinate Voting shares
exercisable at $0.10 expiring on February 13, 2006.
4. Includes 250,000 options to acquire Subordinate Voting shares (see
Item 6. Directors, Senior Management And Employees-Stock Option Plan).
Does note include 400,000 warrants to purchase 400,000 Subordinate
Voting shares exercisable at $0.10 expiring on June 5, 2004 nor 200,000
warrants to purchase 200,000 Subordinate Voting shares exercisable at
$0.10 expiring on February 13, 2006.
5. The Directors and Officers as a group control or direct 51.1% of the
total voting rights of the shares of the Company.
OPTIONS TO PURCHASE SECURITIES FROM THE COMPANY OR SUBSIDIARIES
Please refer to "Item 6. Directors, Senior Management and Employees"
for a detailed discussion of the Company's Stock Option Plan and outstanding
options.
SHARE PURCHASE WARRANTS
As at October 31, 2004 there were 2,166,114 share purchase warrants
outstanding. 966,114 warrants to purchase 966,114 Subordinate Voting shares
exercisable at $0.10 expire on June 5, 2005 and 1,200,000 warrants to purchase
1,200,000 Subordinate Voting shares exercisable at $0.10 expire on February 13,
2006.
SHARES HELD IN THE UNITED STATES
The following table indicates the approximate number of record holders
of shares as at November 17, 2004, the number of record holders of shares with
United States addresses and the portion and percentage of shares so held in the
United States. On such date, 24,969,517 Subordinate Voting shares in the capital
of the Company and 3,000,000 Variable Multiple Voting shares were outstanding.
TOTAL NUMBER NUMBER OF
OF HOLDERS REGISTERED NUMBER OF PERCENTAGE OF SHARES HELD IN
U.S. HOLDERS SHARES HELD IN THE U.S. THE U.S.
---------------- ----------------- -------------------------------- --------------------------------
648 514 10,474,503 42%
Depositories, brokerage firms and financial institutions hold a
substantial number of Subordinate Voting shares in "street names." The
computation of the number and percentage of Subordinate Voting shares held in
the United States is based upon the number of Subordinate Voting shares held of
record by holders with United States addresses. United States residents may
beneficially own Subordinate Voting shares held of record by non-United States
residents.
-15-
B. RELATED PARTY TRANSACTIONS
During the years ended June 30, 2004, 2003, 2002, and 2001, the Company
paid consulting or administration fees to the following Directors or Officers:
NAME 2004 2003 2002 2001
- -------------------------- ---- ---- ---- ----
A.C. Eilers & Associates(1) $ 7,677 $15,938
Buzz Communications Inc.(1) $15,995 $43,831
First Fiscal Management Ltd. $67,200 $94,390
(2)
1. A company controlled by Anne Eilers.
2. A company controlled by Michael Cytrynbaum.
During the period from July 1, 2003 to the date hereof, none of the
Directors, Officers, of the Company or their respective associates have been
indebted to the Company. Please also refer to Item 6. above.
ITEM 8. FINANCIAL INFORMATION
A. STATEMENTS AND OTHER FINANCIAL INFORMATION.
See Item 17 for the Company's Financial Statements.
The Company knows of no contemplated or pending legal or arbitration
proceedings including those relating to bankruptcy, governmental receivership or
similar proceeding and those involving any third party against it, nor is the
Company involved as a plaintiff in any material pending litigation.
The Company knows of no pending proceedings to which any current
Director, member of senior management, or affiliate is either a party adverse to
the Company or its subsidiaries or has a material interest adverse to the
Company or its subsidiaries.
To the best of the Company's Managements' knowledge, the Company has
not since the date of its incorporation, declared or paid any dividends, nor
does it intend to declare any dividends for the foreseeable future.
ITEM 9. THE OFFER AND LISTING
A AND C. OFFER AND LISTING DETAILS/MARKETS
The Common Shares (now Subordinate Voting shares) were listed on the
Vancouver Stock Exchange (the "VSE") on June 22, 1992. The Company commenced its
present business at that time. At the Company's request, the Company's shares
were delisted from the VSE on August 23, 1996.
On May 1, 1995, the Company was listed on the NASDAQ Stock Market
Inc.'s Small Cap Market ("NASDAQ-SCM") under the symbol DELGF. At the close of
business on May 29, 1997, the Company was delisted from the NASDAQ-SCM. On May
30, 1997, the Company's shares commenced trading on the Over the Counter Market
- - Pink Sheets (the
-16-
"Pink Sheets") under the symbol DGRTF. The Company currently trades under the
symbol CENMF.
The following table sets forth the reported high and low prices and
trading volume of the outstanding shares on the Pink Sheets for the period
indicated.
HIGH LOW VOLUME
------------- -------------- ---------------
FIRST QUARTER ENDED SEPTEMBER 30, 2004 $0.07 $0.05 0
FISCAL YEAR ENDED JUNE 30, 2004 $0.25 $0.02 0
FOURTH QUARTER $0.13 $0.02 0
THIRD QUARTER $0.20 $0.09 0
SECOND QUARTER $0.16 $0.12 0
FIRST QUARTER $0.25 $0.16 0
FISCAL YEAR ENDED JUNE 30, 2003 $0.35 $0.06 0
FOURTH QUARTER $0.35 $0.06 0
THIRD QUARTER $0.12 $0.08 0
SECOND QUARTER $0.25 $0.10 0
FIRST QUARTER $0.16 $0.05 0
FISCAL YEAR ENDED JUNE 30, 2002 $0.17 $0.08 0
FISCAL YEAR ENDED JUNE 30, 2001 $0.55 $0.0625 0
FISCAL YEAR ENDED JUNE 30, 2000 $0.875 $0.05 0
The following table sets forth the high and low market prices for each
month during the most recent six months:
HIGH LOW
------------- -----------
OCTOBER 2004 $0.10 $0.05
SEPTEMBER 2004 $0.07 $0.05
AUGUST 2004 $0.10 $0.07
JULY 2004 $0.10 $0.07
JUNE 2004 $0.07 $0.02
MAY 2004 $0.08 $0.04
B. PLAN OF DISTRIBUTION
Not applicable to Form 20-F filed as an Annual Report.
D. SELLING SHAREHOLDERS
Not applicable to Form 20-F filed as an Annual Report.
E. DILUTION
Not applicable to Form 20-F filed as an Annual Report.
F. EXPENSES OF THE ISSUE
-17-
Not applicable to Form 20-F filed as an Annual Report.
ITEM 10. ADDITIONAL INFORMATION
A. SHARE CAPITAL
Not applicable to Form 20-F filed as an Annual Report.
B. MEMORANDUM AND ARTICLES OF ASSOCIATION
The Company's Certificate of Incorporation, Memorandum of Association,
and Article of Incorporation, which were included as Exhibits 1.1, to the
Company's Registration Statement on Form 20-F, file number 0-24570, filed for
September 30, 1994; Certificate of Change of Name, and Certificate of
Continuance of Central Minera Corp. to the Yukon Territories, and Amendment to
the By-Laws of the Company which were included as Exhibits to the Company Annual
Report on Form 20-F, file number 0-24570, filed for June 30, 1999; and the
Company's Certificate of Amendment of the Articles which was included in the
Company's 6K filing made on February 28, 2003, file number 000-24570; are hereby
incorporated by reference.
1. The Company was incorporated under the Company Act of the Province
of British Columbia on February 14,1984, number 274269, as Delgratia
Developments Ltd. On April 18, 1995, the Company's name was changed to
Delgratia Mining Corporation On February 1, 1999, the Company's name
was changed to Central Minera Corp. and the jurisdiction was
transferred and continued under the Business Corporations Act of the
Yukon Territories of Canada. With respect to the Company's objects and
purposes they are unrestricted except as defined by the laws of Canada,
and the direction of the Shareholders by way of the Board of Directors
annually elected.
2. With respect to Directors:
a. A Director's power to vote on a proposal, arrangement or
contract in which the Director is materially interested is
limited by Part 15. Under this Part, a Company's Director
cannot vote in respect of any contract or transaction with the
Company in which he is interested.
b. Under Part 15, a quorum of Directors must be in place to
vote compensation to themselves or any member of their body.
c. Under Part 8, the Directors may from time to time on behalf
of the Company borrow money in such a manner and amount, on
such security, form such sources and upon such terms and
conditions as they think fit.
d. Under Part 13, at each annual shareholders meeting, the
Directors shall retire, and a new Board of Directors voted in
by the members. The number of annual terms, the age of the
Director are both unrestricted.
3. The Company currently has two classes of shares. The rights,
privileges, conditions and restriction attached to the Variable
Multiple Voting shares and the Subordinate Voting shares are as
follows:
i. General. Except as otherwise expressly provided herein, each
Variable Multiple Voting Share and each Subordinate Voting Share
shall have the same
-18-
rights with respect to dividends, return of capital or other
distribution of the assets of the Corporation upon a liquidation
or dissolution or other distribution of assets among its
shareholders for the purpose of winding up its affairs, whether
voluntary or involuntary and with respect to attendance at
meetings of shareholders, as if such shares constituted a single
class.
ii. Meetings and Voting.
(a) The holders of the Variable Multiple Voting Shares and
the holders of the Subordinate Voting Shares shall be
entitled to receive notice of any meeting of shareholders of
the Corporation and to attend and vote thereat as a single
class on all matters to be voted on by the shareholders of
the Corporation. At any such meeting:
(i) the number of votes attached to each Variable Multiple
Voting Share will be determined by the formula:
B x 0.55
--------
A x 0.45
where B is the number of issued Subordinate Voting
Shares and A is the number of issued Variable Multiple
Voting Shares; and
(ii) each Subordinate Voting Share will be entitled to one
vote per share.
(b) Paragraph (a) (i) does not apply to a meeting where only
the holders of shares of one class are entitled to vote separately
pursuant to any provision of the Yukon Business Corporations Act or
otherwise.
iii. Exchange of Variable Multiple Voting Shares into Subordinate
Voting Shares.
(a) Each outstanding Variable Multiple Voting Share may at
any time be exchanged, at the option of the holder exercised
by notice in writing to the Corporation signed by the holder
and accompanied by a certificate or certificates representing
the Variable Multiple Voting Shares in respect of which the
holder desires to exercise such right of exchange, into one
Subordinate Voting Share. (b) Upon receipt of the notice and
certificate or certificates, the Corporation shall, effective
as of the date of such receipt, issue or cause to be issued a
certificate or certificates representing the number of
Subordinate Voting Shares issuable upon conversion. If less
than all of the shares represented by a certificate in
respect of which the holder has given the notice referred to
in paragraph (a) are to be exchanged, the holder shall be
entitled to receive a new certificate representing the
Variable Multiple Voting Shares represented by the original
certificate that are not to be exchanged. (c) Upon the number
of outstanding Variable Multiple Voting Shares falling below
1,500,000, all Variable Multiple Voting Shares then
outstanding will be deemed to have been exchanged on the same
basis for Subordinate Voting Shares without further action on
the part of the holder.
iv. Subdivision or consolidation. If at any time the Variable
Multiple Voting Shares or the Subordinate Voting Shares are
at any time subdivided, consolidated or otherwise
reclassified or exchanged for the shares of another class,
except as a result of the exercise of the right of exchange
provided for in paragraph 3, the rights privileges and
restrictions attached to the shares of the other class shall
be amended at the same time so as to preserve the rights
conferred hereby on each class in relation to the other
class.
-19-
v. Transfer of Variable Multiple Voting Shares restricted. No
Variable Multiple Voting Share shall be transferred except with the
prior approval of a resolution of the directors of the
Corporation. The directors may in their absolute discretion
refuse to approve of any proposed transfer and shall not be
required to given any reason for such refusal.
4. Common rights, preferences and restrictions are as follows:
a. Part 20 gives the Directors the right to declare dividends. Under
Part 23, the Directors fix in advance a date restricted by the
Company Act, which is deemed to be the Record Date. All
holders of shares on that date, are entitled to receive the
Dividend.
b. The Articles do not allow for Directors to stand for re-election at
staggered intervals.
c. The Articles are silent with respect to how dividends are determined
by the Directors. As indicated in Part 20, Directors may take
into consideration the amount of profits realized in
determining dividend size.
d. Part 20 gives the Directors the right to distribution of surplus in
regards to liquidation of corporate assets.
e. There are no redemption provision with respect to the Company's
stock, however, Part 7 gives the Directors the right to redeem
some but not all of the shares. The Company though could not
vote these shares.
f. Part 15 gives the Directors the right to borrow, it also gives the
Directors the right to establish sinking fund provisions, if
they either feel that this is necessary, or if it is part of
the lending agreement.
g. Part 3 gives the Directors the right to issue new shares.
h. Part 3 states that, if a reporting company, the Directors can
instruct the Company to issue up to 25% shares, before getting
shareholder approval.
5. Under Part 6, only the members or shareholders can vote to alter
their rights. With a public Company this would also have to be approved
by the B.C. Securities Commission.
6. Annual General Meetings must take place within 6 months of the
fiscal year end or 13 months of the previous Annual General Meeting.
With respect to Annual General Meetings and Extraordinary General
Meetings, the meeting date must be published approximately two months
before the meeting date. The Record Date is approximately 1.5 months
before Meeting Date. All registered shareholders and proxy holders are
allowed to attend. Other attendance is restricted by the Company.
7. There are no limitations on rights to own securities, including the
rights of non-resident or foreign shareholders to hold or exercise
voting right on the securities imposed by the Company's Articles.
8. There are no provisions in the Company's Articles which would have
an effect of delaying, deferring or preventing a change in control of
the Company and that would operate only with respect to a merger,
acquisition or corporate restructuring involving the Company.
9. There are no provisions in the Company's Articles, stipulating
ownership thresholds above which shareholder ownership must be
disclosed.
LEGAL LIMITATIONS
-20-
There is no limitation imposed by Canadian law or by the constituent
documents of the Company on the right of a non-resident to hold or vote the
Subordinate Voting shares and the Variable Multiple Voting shares (the "Voting
Shares"), other than are provided in the Investment Canada Act (Canada) (the
"Investment Act"), as amended by the World Trade Organization Agreement
Implementation Act (the "WTOA Act"). The Investment Act generally prohibits
implementation of a re-viewable investment by an individual, government, or
agency thereof, corporation, partnership, trust or joint venture that is not a
"Canadian", as defined in the Investment Act (a "non-Canadian"), unless, after
review, the minister responsible for the Investment Act is satisfied that the
investment is likely to be of net benefit to Canada. An investment in the Voting
Shares of the Company by a non-Canadian (other than a "WTO Investor", as defined
below) would be re-viewable under the Investment Act if it were an investment to
acquire control of the Company and the Company was not, immediately prior to the
implementation of the investment, controlled by a WTO Investor, and the value of
the assets of the Company were $5.0 million or more. An investment in Voting
Shares of the Company by a WTO Investor would be re-viewable under the
Investment Act if it were an investment to acquire direct control of the
Company, and the value of the assets of the Company equaled or exceeded $179
million (threshold amount for 1998). A non-Canadian, whether a WTO Investor or
otherwise, would acquire control of the Company for purposes of the Investment
Act if he or she acquired a majority of the Voting Shares of the Company. The
acquisition of less than a majority, but at least one-third of the Voting Shares
of the Company, would be presumed to be an acquisition of control of the
Company, unless it could be established that the Company was not controlled in
fact by the acquirer through the ownership of the Voting Shares. In general, an
individual is a WTO Investor if he or she is a "national" of a country (other
than Canada) that is a member of the World Trade Organization ("WTO Member") or
has a right of permanent residence in a WTO Member other than Canada. A
corporation or other entity will be a WTO Investor if it is a "WTO
Investor-controlled entity" pursuant to detailed rules set out in the Investment
Act. The United States is a WTO Member.
Certain transactions involving Voting Shares of the Company would be
exempt from the Investment Act, including: (a) an acquisition of Voting Shares
of the Company if the acquisition were made in connection with the person's
business as a trader or dealer in securities: (b) an acquisition or control of
the Company in connection with the realization of a security interest granted
for a loan or other financial assistance and not for the purpose related to the
provisions of the Investment Act: and (c) an acquisition of control of the
Company by reason of an amalgamation, merger, consolidation or corporate
reorganization, following which the ultimate direct or indirect control in fact
of the Company, through the ownership of voting interests, remains unchanged.
PROPOSED CHANGES TO SHAREHOLDER RIGHTS
Please refer to "Part II. ITEM 14.Material Modifications to the Rights
of Security Holders and Use of Proceeds."
-21-
C. MATERIAL CONTRACTS
None
D. EXCHANGE CONTROLS
There is no law or governmental decree or regulation in Canada that
restricts the export or import of capital, including the availability of cash
and cash equivalents for use by the Company's group, or affects the remittance
of dividends, interest or other payments to a non-resident holder of shares,
other than withholding tax requirements (see "Item 10E - Taxation").
E. TAXATION
The following is a summary of the principal Canadian federal income tax
considerations generally applicable in respect of the shares. The tax
consequences to any particular holder of shares will vary according to the
status of that holder as an individual, trust, corporation, or member of a
partnership, the jurisdiction in which that holder is subject to taxation, the
place where that holder is resident and, generally, according to that holder's
particular circumstances. This summary is applicable only to holders who are
resident in the United States, have never been resident in Canada, hold their
shares as capital property and will not use or hold the shares in carrying on
business in Canada. The consequences, if any, of state and local taxes are not
considered. Security holders are urged to seek the advice of their own tax
advisors, tax counsel or accountants with respect to the applicability or effect
of these provisions on their own taxes. The Company has not paid dividends on
the shares in any of its last five fiscal years, and has no plans to pay
dividends in the immediate future.
Generally, dividends paid by Canadian corporations to non-resident
shareholders are subject to a withholding tax of 25% of the gross amount of such
dividends. However, Article X of the reciprocal tax treaty between Canada and
the United States reduces the withholding tax to 15% of the gross amount of the
dividends paid to residents of the United States. The withholding tax rate on
the gross amount of dividends is reduced to 5% if the beneficial owner of the
dividend is a U. S. corporation, which owns at least 10% of the voting stock of
the Canadian corporation paying the dividends.
A non-resident who holds shares of the Company as capital property will
not be subject to Canadian tax on capital gains realized on the disposition of
such shares unless such shares are "taxable Canadian property" within the
meaning of the Income Tax Act (Canada) and no relief is afforded under any
applicable tax treaty. The shares of the Company would be taxable Canadian
property of a non-resident if at any time during the five year period
immediately preceding a disposition by the non-resident of such shares not less
than 25% of the issued shares of any class of the Company belonged to the
non-resident, persons with whom the non-resident did not deal at arm's length,
or to the non-resident and persons with whom the non-resident did not deal at
arm's length.
This discussion is not intended to be, nor should it be construed to
be, legal or tax advice to any holder or prospective holder of shares and no
opinion or representation with
-22-
respect to the United States federal income tax consequences to any such holder
or prospective holder is made. Holders and prospective holders of shares are
urged therefore to consult their own tax advisors with respect to their
particular circumstances.
F. DIVIDENDS AND PAYING AGENTS
Not applicable to Form 20-F used to file an Annual Report.
G. STATEMENT BY EXPERTS
Not applicable to Form 20-F used to file an Annual Report.
H. DOCUMENTS ON DISPLAY
The documents concerning the Company which are referred to in this
Report are either annexed hereto as exhibits (See Item 19) or may be inspected
at the principal executive offices of the Company.
We previously have filed with the Securities and Exchange Commission a
Registration Statement on Form 20-F. A copy of the Registration Statement and
subsequently filed annual reports on Form 20-F, including exhibits, may be
reviewed at the Securities and Exchange Commission's public reference room at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
I. SUBSIDIARY INFORMATION
Not applicable for reports filed in the United States.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required in a Form 20-F filed as an Annual Report by a small
business issuer.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not required in a Form 20-F filed as an annual report.
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
There have been no defaults dividend arrearages and delinquencies with
respect to the Company's securities.
-23-
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND
USE OF PROCEEDS
There have been no modifications to the rights of security holders
during the current fiscal year.
ITEM 15. CONTROLS AND PROCEDURES
As of the end of the period covered by this Annual Report on Form 20-F,
we conducted an evaluation (under the supervision and with the participation of
our management, including the President, who acts as our principal executive
officer and principal financial officer), pursuant to Rule 13a-15 promulgated
under the Exchange Act, of the effectiveness of the design and operation of our
disclosure controls and procedures. Based on the evaluation, our President
concluded that as of the evaluation date, such disclosure controls and
procedures were effective in ensuring that the information required to be
disclosed by us in reports we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
rules and forms of the Securities and Exchange Commission.
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our board of directors has not, as yet formally certified any of its
members as an audit committee financial expert, because it believes that such a
step is unnecessary at this time due to the Company's limited operations.
ITEM 16B. CODE OF ETHICS
Our board of directors not, as yet, adopted a formal code of ethics for
our President. The board believes that our existing internal control procedures
and current business practices are adequate to promote honest and ethical
conduct and to deter wrongdoing on the part of these executives.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Pannell Kerr Forster served as our auditors for the year ended June 30,
2004. Steele & Co. served as our auditors for the year ended June 30, 2003. The
following tables set forth the aggregate fees for professional services rendered
by both firms to us in 2004 and 2003.
AUDIT FEES AUDIT-RELATED TAX FEES ALL OTHER FEES
FEES
----------------- ------------------ ------------------ ------------------
2003 2004 2003 2004 2003 2004 2003 2004
------ ------ ------ ------ ------ ------ ------ ------
Pannell Kerr Forster 0 0 0 0 0 0 0 0
Steele & Co. 5,000 0 460 1,400 175 185 0 0
-24-
ITEM 16D. EXEMPTION FROM THE LISTING STANDARDS FOR THE AUDIT COMMITTEE
Not applicable to the Company at this time.
ITEM 17. FINANCIAL STATEMENTS
The financial statements of the Company have been prepared on the basis
of Canadian GAAP. A reconciliation to U.S. GAAP is included therein.
The auditors' report, financial statements and notes thereto, schedules
thereto as required under Item 17 are found following ITEM 19. The Audit Report
of Pannel Kerr Forster, Chartered Accountants is included herein immediately
preceding the respective financial statements, notes, schedules, etc.
INDEX TO FINANCIAL STATEMENTS Page
Auditors' Report dated October 5, 2004.........................................................31
Comments by Auditors for U.S. Readers on Canada-US Reporting Conflict..........................31
Auditors' Report dated September 9, 2003.......................................................32
Comments by Auditors for U.S. Readers on Canada-US Reporting Conflict..........................32
Balance Sheets dated June 30, 2004 and 2003...................................................33
Statement of Operations and Deficit for the years ended June 30, 2004, 2003 and 2002..........34
Statements of Cash Flows for the years ended
June 30, 2004, 2003 and 2002................................................................35
Notes to the Financial Statements for the years ended
June 30, 2004...............................................................................36
ITEM 18. FINANCIAL STATEMENTS
The Company has elected to report under Item No. 17.
-25-
ITEM 19. EXHIBITS
The following exhibits are filed with this report:
Exhibit Number Description
- --------------------- --------------------------------------------------------------------------------------------
1.1* Certificate of Incorporation
1.2* Company Act Memorandum
1.3* Articles
1.4** Certificate of Continuance of Central Minera Corp. to the Yukon Territories with By-laws
of the Company.
1.5**** Amendment to Articles
3*** Voting Trust Agreement dated July 18, 2002
4.1*** Management Services Agreement dated July 18, 2002
4.2*** Consulting Services Agreement dated October 1, 1999
4.3*** Amendment to the Option Agreement
4.4**** Agreement and Mutual Release dated December 8, 2002
12.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
12.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
13.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
13.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
* Incorporated by reference to the Company's Registration Statement on
Form 20-F, file number 0-24570, as filed on September 30, 1994.
** Incorporated by reference to the Company's Annual Report on Form 20-F, as
filed on December 24, 1999.
*** Incorporated by reference to the Company's
Annual Report on Form 20-F, as filed on November 29, 2002.
**** Incorporated by reference to the Company's Annual Report on Form 20-F, as filed on December 1,
2003.
-26-
SIGNATURE
Central Minera Corp. hereby certifies that it meets all of the
requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign this annual report on its behalf.
Central Minera Corp.
By: /s/ MICHAEL CYTRYNBAUM
-------------------------------
Name: Michael Cytrynbaum
Title: President
Dated: November 26, 2004
AUDITORS' REPORT
TO THE SHAREHOLDERS OF
CENTRAL MINERA CORP.
We have audited the balance sheet of Central Minera Corp. (a development stage
company) as at June 30, 2004 and the statements of operations and deficit and
cash flow for the year ended June 30, 2004. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit 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 plan and perform an audit to
obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at June 30, 2004 and the
results of its operations and its cash flows for the year then ended in
accordance with Canadian generally accepted accounting principles.
The financial statements as at June 30, 2003 and for the years ended June 30,
2003 and 2002 were audited by other auditors who expressed an opinion without
reservation on those statements in their report dated September 9, 2003.
Vancouver, Canada "Pannell Kerr Forster"
October 5, 2004 CHARTERED ACCOUNTANTS
COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA-U.S. REPORTING CONFLICT
In the United States, reporting standards for auditors require the addition of
an explanatory paragraph (following the opinion paragraph) when the financial
statements are affected by conditions and events that cast substantial doubt on
the Company's ability to continue as a going concern, such as that described in
Note 1 of these financial statements. Our report to the shareholders dated
October 5, 2004 is expressed in accordance with Canadian reporting standards
which do not permit a reference to such uncertainties in the auditors' report
when the uncertainties are adequately disclosed in the financial statements.
Vancouver, Canada "Pannell Kerr Forster"
October 5, 2004 CHARTERED ACCOUNTANTS
STEELE & CO.*
CHARTERED ACCOUNTANTS
*Representing incorporated professionals
SUITE 808 TELEPHONE: (604) 687-8808
808 WEST HASTINGS STREET TELEFAX: (604) 687-2702
VANCOUVER, B.C., CANADA V6C 1C8 EMAIL: EMAIL@STEELE-CO.CA
AUDITORS' REPORT
TO THE SHAREHOLDERS OF
CENTRAL MINERA CORP.
We have audited the balance sheets of Central Minera Corp. (a
development stage company) as at June 30, 2003 and 2002 and the
statements of operations and deficit and cash flow for the periods
ended June 30, 2003 and 2002. These financial statements are the
responsibility of the Company's management. 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. Those standards require that we plan and perform an
audit to obtain reasonable assurance whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all
material respects, the financial position of the Company as at June 30,
2003 and 2002 and the results of its operations and changes in its cash
resources for the years ended June 30, 2003 and 2002 in accordance with
Canadian generally accepted accounting principles consistently applied.
Vancouver, Canada "STEELE & CO."
September 9, 2003 CHARTERED ACCOUNTANTS
COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA-U.S. REPORTING CONFLICT
In the United States, reporting standards for auditors require the
addition of an explanatory paragraph (following the opinion paragraph)
when the financial statements are affected by conditions and events
that cast substantial doubt on the Company's ability to continue as a
going concern, such as that described in Note 1 of these financial
statements. Our report to the shareholders dated September 9, 2003 is
expressed in accordance with Canadian reporting standards which do not
permit a reference to such uncertainties in the auditors' report when
the uncertainties are adequately disclosed in the financial statements.
Vancouver, Canada "STEELE & CO."
September 9, 2003 CHARTERED ACCOUNTANTS
CENTRAL MINERA CORP.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
JUNE 30,
(EXPRESSED IN U.S. DOLLARS)
2004 2003
------------ ------------
ASSETS
CURRENT
CASH AND TERM DEPOSITS (NOTE 5) $ 161,322 $ 65,569
ACCOUNTS RECEIVABLE 7,049 19,143
MARKETABLE SECURITIES (NOTE 6) 2,000 8,513
PREPAID EXPENSES 4,141 -
------------ ------------
174,512 93,225
EQUIPMENT (NOTE 7) 1,476 2,109
MINERAL PROPERTIES AND INTERESTS (NOTE 8) 2 2
------------ ------------
$ 175,990 $ 95,336
============ ============
LIABILITIES
CURRENT
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES $ 21,552 $ 24,209
------------ ------------
SHARE CAPITAL AND DEFICIT
CONVERTIBLE DEBENTURES (NOTE 9) - 300,000
SHARE CAPITAL (NOTE 10)
VARIABLE MULTIPLE VOTING SHARES 300,000 -
SUBORDINATE VOTING SHARES 41,759,052 41,538,468
CONTRIBUTED SURPLUS ARISING FROM
STOCK-BASED COMPENSATION (NOTE 10) 9,073 9,073
DEFICIT (41,913,687) (41,776,414)
------------ ------------
154,438 71,127
------------ ------------
$ 175,990 $ 95,336
============ ============
GOING CONCERN CONSIDERATIONS (NOTE 1)
RELATED PARTY TRANSACTIONS (NOTE 11)
COMMITMENTS (NOTE 12)
APPROVED BY THE DIRECTORS
"Michael Cytrynbaum"
"Murray Kosick"
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
CENTRAL MINERA CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS AND DEFICIT
YEAR ENDED JUNE 30,
(EXPRESSED IN U.S. DOLLARS)
CUMULATIVE
TO JUNE 30,
2004 2004 2003 2002
------------ ------------ ------------ ------------
ADMINISTRATION EXPENSES
ACCOUNTING AND AUDIT $ 705,975 $ 12,620 $ 8,141 $ 23,845
AMORTIZATION 282,944 633 372 912
CONSULTING FEES 1,883,858 82,736 107,304 40,490
LEGAL 1,851,954 8,202 129,860 75,944
OFFICE 933,055 5,680 5,912 12,268
RENT 726,425 - 153 72,065
SALARIES AND BENEFITS 292,748 1,496 11,854 -
TRANSFER AGENT AND FILING FEES 177,141 15,379 16,345 8,042
TRAVEL AND PROMOTION 1,219,314 3,413 21,372 999
------------ ------------ ------------ ------------
8,073,414 130,159 301,313 234,565
------------ ------------ ------------ ------------
INTEREST AND OTHER INCOME (1,517,908) (70) (7,249) (30,242)
LOSS (GAIN) ON FOREIGN EXCHANGE 44,549 625 (11,572) (3,213)
WRITE-DOWN OF INVESTMENT IN
PRIVATE COMPANY (NOTE 8) 1,000,799 - - -
LOSS (GAIN) ON SALE AND WRITE-
DOWN OF MARKETABLE SECURITIES (7,402) 6,559 2,079 -
WRITE-DOWN OF MINERAL
PROPERTIES (NOTE 8) 24,724,778 - 741 -
LOSS ON SALE OF PROPERTY
AND EQUIPMENT 11,307 - - 1,512
SETTLEMENT OF LAWSUITS,
NET OF (RECOVERIES) 729,038 - (99,424) -
LOSS ON SALE OF SUBSIDIARY 8,855,112 - - -
------------ ------------ ------------ ------------
33,840,273 7,114 (115,425) (31,943)
------------ ------------ ------------ ------------
NET LOSS FOR THE PERIOD 41,913,687 137,273 185,888 202,622
DEFICIT BEGINNING OF THE PERIOD - 41,776,414 41,590,526 41,387,904
------------ ------------ ------------ ------------
DEFICIT END OF THE PERIOD $ 41,913,687 $ 41,913,687 $ 41,776,414 $ 41,590,526
============ ============ ============ ============
BASIC AND DILUTED LOSS PER SHARE $ .01 $ .01 $ .01
============ ============ ============
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 25,490,936 21,826,240 21,760,068
============ ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
CENTRAL MINERA CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOW
YEAR ENDED JUNE 30,
(EXPRESSED IN U.S. DOLLARS)
CUMULATIVE
TO JUNE 30,
2004 2004 2003 2002
------------ ------------ ------------ ------------
CASH PROVIDED (USED) BY
OPERATING ACTIVITIES
NET LOSS FOR THE PERIOD $(41,913,687) $ (137,273) $ (185,888) $ (202,622)
ITEMS NOT INVOLVING CASH
AMORTIZATION 282,944 633 372 912
LOSS ON SALE OF SUBSIDIARY 8,855,112 - - -
LOSS ON SALE OF PROPERTY
AND EQUIPMENT 11,307 - - 1,512
WRITE-DOWN OF INVESTMENT IN
PRIVATE COMPANY 1,000,799 - - -
WRITE-DOWN OF MINERAL
PROPERTIES 24,724,777 - 741 -
STOCK COMPENSATION EXPENSE 9,073 - 9,073 -
SHARE CONSIDERATION PAYABLE
INCLUDED IN SETTLEMENT
OF LAWSUITS 375,000 - - -
------------ ------------ ------------ ------------
(6,654,675) (136,640) (175,702) (200,198)
NET CHANGE IN NON-CASH
WORKING CAPITAL ITEMS
ACCOUNTS RECEIVABLE (7,049) 12,094 (10,214) 6,934
PREPAID EXPENSES (4,141) (4,141) - 17,559
MARKETABLE SECURITIES (2,000) 6,513 (2,095) -
ACCOUNTS PAYABLE AND
ACCRUED LIABILITIES 21,552 (2,657) (51,081) 56,172
------------ ------------ ------------ ------------
(6,646,313) (124,831) (239,092) (119,533)
------------ ------------ ------------ ------------
FINANCING ACTIVITIES
LOAN AND CONVERTIBLE
DEBENTURES PAYABLE - (300,000) 30,251 269,749
FUNDS HELD IN TRUST - - 175,000 (175,000)
SHARES ISSUED FOR CASH, LOAN
AND CONVERTIBLE DEBENTURES 25,934,051 520,584 96,611 -
------------ ------------ ------------ ------------
25,934,051 220,584 301,862 94,749
------------ ------------ ------------ ------------
INVESTING ACTIVITIES
MINERAL PROPERTIES (17,311,378) - (741) -
INVESTMENT IN PRIVATE COMPANY (1,000,799) - - -
PURCHASE OF PROPERTY
AND EQUIPMENT (814,239) - (2,481) -
------------ ------------ ------------ ------------
(19,126,416) - (3,222) -
------------ ------------ ------------ ------------
CHANGE IN CASH FOR THE PERIOD 161,322 95,753 59,548 (24,784)
CASH AND TERM DEPOSITS BEGINNING
OF THE PERIOD - 65,569 6,021 30,805
------------ ------------ ------------ ------------
CASH AND TERM DEPOSITS END OF THE
PERIOD $ 161,322 $ 161,322 $ 65,569 $ 6,021
============ ============ ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
CENTRAL MINERA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2004
(EXPRESSED IN U.S. DOLLARS)
1. GOING CONCERN CONSIDERATIONS
These financial statements have been prepared on the assumption that the
Company will continue as a going concern, meaning it will continue in
operation for the foreseeable future and will be able to realize assets
and discharge liabilities in the normal course of operations. Different
bases of measurement may be appropriate when a company is not expected to
continue operations for the foreseeable future. As at October 5, 2004, the
Company had not reached a level of operations which would finance
day-to-day activities. The Company's continuation as a going concern is
dependent upon its ability to attain profitable operations and generate
funds therefrom and/or raise equity capital or borrowings sufficient to
meet current and future obligations.
For the years ended June 30, 2004, 2003 and 2002, the Company sustained
operating losses of $137,273, $185,888 and $202,622 respectively.
2. CONTINUING OPERATIONS
The Company is incorporated under the laws of Yukon Territory of Canada.
The principal business activity is the acquisition, exploration and
development of mineral properties. At the Company's annual general meeting
in December, 2002, the shareholders approved the consolidation of the
Company's shares to a maximum ratio of 1:20 and to change its domicile.
The directors are authorized to implement these changes at their
discretion. No changes have been implemented.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Mineral Properties
The Company accounts for its mineral properties whereby all direct
costs relative to the acquisition are capitalized and all
exploration and development expenditures are expensed until an
economic feasibility study is completed. All pre-production revenue
and option proceeds received are first credited against the costs of
the related property, with any excess credited to earnings. Once
commercial production has commenced, the net costs of the applicable
property are charged to operations using the unit-of-production
method based on reserves. On an ongoing basis, the Company evaluates
each property based on results to date to determine the nature of
exploration work that is warranted in the future. If there is little
prospect of future work being carried out on a property, the costs
related to that property are written down to the estimated amount
recoverable.
The Company's mineral properties are in the exploration stage and it
has not yet been determined whether or not the properties contain
ore reserves that are economically recoverable. The amounts shown
for mineral properties are not intended to reflect present or future
values. The recoverability of the investment in these properties is
dependent upon the existence of economically recoverable reserves,
confirmation of the Company's interest in the mineral properties,
the ability of the Company to finance their development and upon
future profitable production.
CENTRAL MINERA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2004
(EXPRESSED IN U.S. DOLLARS)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
b. Foreign Currency Translation
The Company's operations have been translated into U.S. dollars
using the temporal method. Under this method, monetary assets and
liabilities have been translated at the period end exchange rates.
Non-monetary assets have been translated using historical rates of
exchange. Revenues and expenses have been translated into U.S.
dollars at the average rate of exchange prevailing during the
period, except for amortization, which is translated at exchange
rates applicable to the related asset. Translation gains or losses
are included in the determination of earnings (loss).
c. Loss Per Share
Loss per share has been calculated using the weighted average number
of shares outstanding.
d. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Significant areas
requiring the use of management estimates relate to the
determination of impairment of assets, environmental issues and the
outcome of lawsuits. Actual results could differ from those
estimates.
e. Equipment
Equipment is recorded at cost. The cost, less the salvage or
residual value, is charged to income over its estimated useful life,
using the declining balance method:
Office furniture and equipment declining balance at 30% per annum
f. Incentive Stock Options
On July 1, 2002, the Company prospectively adopted the
recommendations of the Canadian Institute of Chartered Accountants
("CICA") related to the recognition, measurement and disclosure of
stock-based compensation. Those recommendations encouraged, but did
not require, enterprises to recognize compensation costs for
incentive stock options using the fair value based method. Under the
fair value based method, the value of a stock option is determined
using an option pricing model that takes into account, as of the
grant date, the exercise price, expected life of the option, the
current price of the underlying stock, its expected volatility,
expected dividends on the stock and the risk-free interest rate over
the expected life of the option.
CENTRAL MINERA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2004
(EXPRESSED IN U.S. DOLLARS)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
f. Incentive Stock Options (Continued)
Effective for the year ended June 30, 2004, the Company
prospectively adopted the new recommendations of the CICA with
respect to stock-based compensation. Under the new recommendations,
the Company recognizes compensation costs for the granting of all
stock options and direct awards of stock.
Previously, the Company accounted for incentive stock options using
the settlement method. Under this method, no compensation expense
was recognized on the grant of incentive stock options and
consideration received on exercise was credited to share capital.
g. Income Taxes
The Company accounts for income taxes whereby the cost (benefit) of
current and future income taxes is recognized as income tax expense
in the determination of results of operations for the period. Future
income tax liabilities (assets) are the amount of income taxes
arising from taxable temporary differences between the tax bases of
an asset or liability and its carrying amount in the balance sheet.
Income tax liabilities and assets are recognized when they are more
likely than not to be realized and are measured using the income tax
rates and laws that are expected to apply at the time of settlement
or realization.
h. Cumulative and Comparative Figures
The cumulative amounts in the statements of operations and cash flow
include the results of operations which were discontinued by the
disposal or abandonment of subsidiary companies. Certain of the
comparative figures have been re-classified to conform to the
current year's financial statement presentation.
4. FINANCIAL INSTRUMENTS
The carrying value of cash and term deposits, accounts receivable,
marketable securities and accounts payable and accrued liabilities
approximate their fair value due to the short-term maturity of these
financial instruments.
The Company is not exposed to any significant interest rate price
risk or cash flow risk due to the short-term maturity of its
monetary assets and liabilities.
The Company is not exposed to any significant credit risk with
respect to its accounts receivable, nor does it expect any credit
losses.
The Company translates the results of its operations into U.S.
currency using rates approximating the rate of exchange prevailing
on the transaction date. The exchange rate may vary from time to
time. Translation gains or losses are included in the determination
of earnings (loss).
CENTRAL MINERA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2004
(EXPRESSED IN U.S. DOLLARS)
5. CASH AND TERM DEPOSITS
The Company maintains its cash balances in various currencies. At the year
end, the currencies held and the United States equivalents were as
follows:
2004 2003
-------- --------
Canadian dollars $ 4,179 $ 8,839
U.S. dollars 157,143 56,730
-------- --------
$161,322 $ 65,569
======== ========
6. MARKETABLE SECURITIES
Marketable securities in public companies are carried in the accounts at
the lesser of estimated net realizable value and cost.
7. EQUIPMENT
2004 2003
-------- --------
Office furniture and equipment $ 2,481 $ 2,481
Accumulated amortization (1,005) (372)
-------- --------
Net book value $ 1,476 $ 2,109
======== ========
8. MINERAL PROPERTIES AND INTERESTS
a. Investment in Private Company
The Company acquired a 15.72% interest in a private company
incorporated in Nevada, U.S.A. The Nevada company is in the
development stage and is exploring properties in southern Nevada
(the "Eldorado Project"). It is unlikely that any benefit will
accrue to the Company during the development stages and the
Company's investment of $1,000,800 has been written down to a
nominal value.
b. Mineral Property Interests
The Company has abandoned its mineral interests in Canada, Mexico,
Nicaragua and Nevada and all property-related costs have been
expensed.
9. CONVERTIBLE DEBENTURES
The debentures were unsecured, had a maturity date of July 31, 2004, and
were deemed to have been converted into units of the Company on July 31,
2003 in the ratio of one unit for each $.10 (3,000,000 units). Each unit
was comprised of one variable multiple voting share and one
non-transferrable share purchase warrant to acquire one subordinate voting
share at $.10 (originally $.30) per share before July 31, 2004. Related
parties subscribed for the debentures.
CENTRAL MINERA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2004
(EXPRESSED IN U.S. DOLLARS)
10. SHARE CAPITAL
a. Authorized
3,000,000 variable multiple voting shares without par value
Unlimited number of subordinate voting shares without par
value
The variable multiple voting shares are identical to the
subordinate shares except they may only be transferred with
the approval of the directors and entitle the holder to more
than one vote, calculated on a predetermined ratio between the
share classes. The variable multiple voting shares may be
converted into subordinate shares at a ratio of 1:1 with a
mandatory conversion if the then outstanding balance is less
than 1,500,000 shares.
b. Issued
SHARE
PRICE SHARES CONSIDERATION
--------- ---------- -------------
Variable Multiple Voting Shares
Shares Issued
Conversion of convertible debentures $ .10 3,000,000 $ 300,000
========== ============
Subordinate Voting Shares
Balance June 30, 2002 21,760,068 $ 41,441,857
Shares issued
For cash - Private placement $ .10 750,000 75,000
For debt settlement (related party
loan payable) $ .10 216,114 21,611
Escrow shares cancelled (562,500) -
---------- ------------
Balance June 30, 2003 22,163,682 41,538,468
Shares issued
For cash - Private placement $ .05 1,200,000 60,000
For cash - Warrants exercised $ .10 1,605,835 160,584
---------- ------------
Balance June 30, 2004 24,969,517 $ 41,759,052
========== ============
c. Incentive Stock Option
The Company has a stock option plan for which options granted under
the plan generally have a maximum term of ten years. The exercise
price of each option equals the market price of the Company's shares
on the date of the grant.
CENTRAL MINERA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2004
(EXPRESSED IN U.S. DOLLARS)
10. SHARE CAPITAL (CONTINUED)
c. Incentive Stock Option (Continued)
Details of director, employee and consultant share purchase options
are as follows:
2004 2003
------------------------------- --------------------------------
WEIGHTED WEIGHTED
NUMBER OF AVERAGE NUMBER OF AVERAGE
OPTIONS EXERCISE PRICE OPTIONS EXERCISE PRICE
--------- -------------- --------- --------------
Balance Beginning of the Year 1,925,000 $ .20 2,165,000 $ .20
Granted - $ - 1,925,000 $ .20
Cancelled (300,000) $ .20 (2,165,000) $ .20
--------- ------------ -------- ------------
Balance End of the Year 1,625,000 $ .20 1,925,000 $ .20
========= ============ ========= ============
BALANCE BALANCE
JUNE 30, JUNE 30, EXERCISE
2003 CHANGE 2004 PRICE EXPIRY DATE
- --------- -------- --------- -------------- -----------------
300,000 (300,000) - $ .20 December 31, 2003
300,000 - 300,000 $ .20 December 31, 2004
1,325,000 - 1,325,000 $ .20 December 31, 2005
- --------- -------- ---------
1,925,000 (300,000) 1,625,000
========= ======== =========
As at June 30, 2004, the weighted average remaining contractual life of the
stock options is 16 months.
The Company is required to disclose the pro-forma effects on net loss and net
loss per share data as if the Company had elected to use the fair value approach
to account for its incentive stock options plans as described in Note 3(f). For
2003, if this approach had been applied, the Company's net loss and net loss per
share would have been as below:
Loss for the year, as reported $ 185,888
Add fair value of stock based compensation 32,540
Less intrinsic value of stock based compensation -
------------
Pro-forma loss for the year $ 218,428
============
Basic and fully diluted loss per share
As reported $ .01
Pro-forma $ .01
The fair value for the options was estimated using the Black-Scholes option
pricing model assuming: no expected dividends; interest rate - 3.25%, term - 2
years; and share price volatility - 36%.
CENTRAL MINERA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2004
(EXPRESSED IN U.S. DOLLARS)
10. SHARE CAPITAL (CONTINUED)
c. Incentive Stock Option (Continued)
Option pricing models require the input of highly subjective
assumptions, including the expected price volatility. Changes in
these assumptions can materially affect the fair value estimate and,
therefore, the existing models do not necessarily provide a reliable
single measure of the fair value of the Company's stock options.
d. Share Purchase Warrants
2004 2003
--------------------------- ------------------------------
WEIGHTED WEIGHTED
NUMBER OF AVERAGE NUMBER OF AVERAGE
WARRANTS EXERCISE PRICE WARRANTS EXERCISE PRICE
---------- -------------- --------- --------------
Balance Beginning of the Year 6,969,454 $ .18 6,003,340 $ .20
Issued 4,200,000 $ .10 - $ -
Exercised (3,211,670) .18 966,114 $ .10
Lapsed (2,791,670) $ .18 - $ -
---------- ---------- --------- ---------
Balance End of the Year 5,166,114 $ .10 6,969,454 $ .18
========== ========== ========= =========
BALANCE BALANCE
JUNE 30, JUNE 30, EXERCISE
2003 CHANGE 2004 PRICE EXPIRY DATE
- --------- ---------- --------- ----------- -----------------
6,003,340 (6,003,340) - $.10 / 2wts May 30, 2004
- 3,000,000 3,000,000 $.10 / 1wt July 31, 2004
966,114 - 966,114 $.10 / 1wt June 5, 2005
- 1,200,000 1,200,000 $.10 / 1wt February 13, 2006
- --------- --------- ---------
6,969,454 (1,803,340) 5,166,114
======== ========== =========
During the year, the Company extended the expiry date of 6,003,340 outstanding
warrants to May 30, 2004. As at June 30, 2004, the weighted average remaining
contractual life of the warrants is 7 months.
CENTRAL MINERA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2004
(EXPRESSED IN U.S. DOLLARS)
11. RELATED PARTY TRANSACTIONS
Related party transactions not separately disclosed elsewhere in these
financial statements were as follows:
2004 2003 2002
---------- ---------- ----------
Consulting or other fees paid to directors/officers
or to companies controlled by directors/officers $ 67,200 $ 94,390 $ 35,754
========== ========== ==========
Occupancy costs charged to companies controlled
by a director/officer and a public company under
common management $ - $ - $ 29,135
========== ========== ==========
12. COMMITMENTS
The Company has entered into a management agreement, with a company
controlled by a director, which requires minimum annual payments of
approximately $134,000 ($180,000 Cdn). The agreement contains a clause
requiring a termination payment of approximately $64,000. The corporate
related party has voluntarily reduced the monthly fee to $5,600 (Cdn.
$7,500) commencing March, 2003.
13. INCOME TAXES
The income taxes shown on the statements of operations and deficit differ
from the amounts calculated by applying the combined Canadian Federal and
Provincial statutory rates due to the following:
2004 2003 2002
----------- ---------- ----------
Income tax recovery at statutory rates $ (50,269) $ (71,790) $ (82,305)
Write-down and loss on investments 2,402 803 -
Other - - 614
Benefit of income tax losses which has
not been recognized 47,867 70,987 81,691
----------- ---------- ----------
$ - $ - $ -
=========== ========== ==========
Future income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. The
components of future tax assets are as follows:
2004 2003
-------------- --------------
Non-capital losses carried forward $ 1,207,263 $ 1,673,836
Resource-related expenditures 132,478 138,977
Investment losses 4,396,786 4,612,484
-------------- --------------
5,736,527 6,425,297
Less: Valuation allowance (5,736,527) (6,425,297)
-------------- --------------
Net future income tax assets $ - $ -
============== ==============
CENTRAL MINERA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2004
(EXPRESSED IN U.S. DOLLARS)
13. INCOME TAXES (CONTINUED)
As at June 30, 2004, the Company has operating losses of approximately
$3,297,000, resource-related expenditures of approximately $362,000, and
capital losses of approximately $12,006,500 available for carry-forward to
reduce future years' taxable income. No future income tax benefit has been
recognized in the accounts. The availability of the operating losses
expires as follows:
2005 $ 459,000
2006 1,807,000
2007 449,000
2009 317,000
2010 123,000
2011 142,000
------------
$ 3,297,000
============
14. RECONCILIATION TO ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED
STATES ("U.S. GAAP")
These financial statements have been prepared in accordance with
accounting principles generally accepted in Canada. A description of
accounting principles that differ in certain respects from United States
generally accepted accounting principles follows:
a. Stock-Based Compensation
The Company has elected, commencing with the year ended June 30,
2004, to account for stock-based compensation using SFAS 123.
Accordingly, compensation cost for stock options is measured at the
fair value of options granted. For the years ended June 30, 2003 and
2002, the Company elected to apply the intrinsic value-based method
of accounting prescribed by Accounting Principles Board Opinion No.
25 ("APB No. 25") "Accounting for Stock Issued to Employees" for
measuring the value of stock-based compensation. The intrinsic
value-based method requires that compensation expense be recorded at
the time of granting an option for the excess of the quoted market
price over the option exercise price. If a stock option is not
exercised, the compensation expense recorded in the previous period
is reversed by decreasing the compensation expense in the period of
forfeiture. No compensation expense was required to be recognized
for those years.
b. Other Accounting Standards
i. The Company has adopted the Statement of Financial Accounting
Standards No. 130 (" SFAS 130") "Reporting Comprehensive
Income" with no impact on U.S. GAAP differences.
ii. The Company does not have any derivative or hedging
instruments and, therefore, Statement of Financial Accounting
Standards No. 149 ("SFAS 149") "Accounting for Derivative
Instruments and Hedging Activity" has no impact on U.S. GAAP
differences.
The adoption of these new pronouncements is not expected to
have an effect on the financial position or results of
operations.
CENTRAL MINERA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2004
(EXPRESSED IN U.S. DOLLARS)
14. RECONCILIATION TO ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED
STATES ("U.S. GAAP") (CONTINUED)
The effect of the differences between Canadian GAAP and U.S. GAAP on the
balance sheets and statements of operations and deficit is summarized
below:
June 30, 2004 2003 2002
-------------- --------------- ---------------
Share capital, under Canadian GAAP $ 42,059,052 $ 41,538,469 $ 41,441,858
Adjustment for APB No. 25 12,490 12,490 21,563
-------------- --------------- ---------------
Share capital under U.S. GAAP $ 42,071,542 $ 41,550,959 $ 41,463,421
============== =============== ===============
Deficit, under Canadian GAAP $ (41,913,687) $ (41,776,414) $ (41,590,526)
Adjustment for APB No. 25 (12,490) (12,490) (21,563)
-------------- --------------- ---------------
Deficit, under U.S. GAAP $ (41,926,177) $ (41,788,904) $ (41,612,089)
============== =============== ===============
Loss for the period under Canadian GAAP $ (137,273) $ (185,888) $ (202,622)
Adjustment for APB No. 25 - 9,073 -
-------------- --------------- ---------------
Comprehensive loss under U.S. GAAP $ (137,273) $ (176,815) $ (202,622)
============== =============== ===============
Basic and diluted loss per share under
U.S. GAAP $ (.01) $ (.01) $ (.01)
============== =============== ===============
There is no effect on the statement of cash flow for the difference between
Canadian GAAP and U.S. GAAP.