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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, 2002
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)
1040-885 WEST GEORGIA STREET,
VANCOUVER, BRITISH COLUMBIA, CANADA V6C 3E8
(Address of principal executive offices) (Zip Code)
(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:
COMMON 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, 2002, the Registrant had 21,760,068 common 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. [X]
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TABLE OF CONTENTS
Page
PART I
Item 1. Identity of Directors, Senior Management and Advisers.................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....................15
Item 8. Financial Information................................................17
Item 9. The Offer and Listing................................................18
Item 10. Additional Information...............................................19
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..................................................23
Item 17. Financial Statements.................................................26
Item 18. Financial Statements.................................................41
Item 19. Exhibits.............................................................41
Signatures...........................................................44
Certifications................................................................44
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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, 2002 and 2001. 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 Common Shares and it does not expect
to pay dividends in the foreseeable future.
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.
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(In thousands of US dollars except per share amounts and weighted average common
shares outstanding).
2002 2001 2000 1999 1998
-------- ------- ------- -------- --------
Statements of Loss Data:
Revenues $ 33 $ 85 $ 34 $ 161 $ 335
Net loss - Canadian GAAP (202) (850) (1,114) (11,112) (1,740)
Net income (loss) - US GAAP (202) (850) (459) (7,342) 3,070
Net loss per share - Canadian GAAP (0.01) (0.04) (0.08) (0.88) (0.14)
Net income (loss) per share - US GAAP (0.01) (0.04) (0.03) (0.58) 0.24
Weighted average common shares outstanding 21,760 21,760 14,234 12,607 12,607
Statements of Cash Flows Data:
Cash provided by (used in):
Operating activities - (120) 133 (619) (1,260) (1,311)
Financing activities - 95 901 330 375 --
Investing activities - -- (1,005) (33) (3,650) (3,399)
Balance Sheet Data (end of period)
Total Assets 196 73 64 1,322 11,841
Net Asset 101 54 3 787 11,524
Capital Stock - Canadian GAAP 41,442 41,442 40,541 40,211 39,836
- US GAAP 41,463 41,463 40,562 40,887 44,283
Long Term Obligations 250,000 -- -- -- --
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 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
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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.
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 interest in only one property. The
property has no known reserves and it appears very unlikely that it will advance
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. While the Company may generate additional working capital through
the operation, development, sale or possible syndication of its properties,
there is no assurance that any such funds will be available for operations.
The development of any ore deposits, if found on the Company's
property, depends upon the Company's ability to obtain financing through joint
venturing of projects, debt financing, equity financing or other means. There is
no assurance that the Company will be able to obtain the required financing.
Failure to obtain additional financing on a timely basis could cause the Company
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 by the Company
may be affected by numerous factors which are beyond the control of the Company
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
5
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 EXPENDITURES MADE BY THE COMPANY IN THE
EXPLORATION OF ITS 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 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 Mantle Minerals Inc. and Callinan Mines Limited, each of 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
6
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.
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 June 30, 2002, 2,165,000 shares of
common stock for issuance upon the exercise of incentive stock options (please
refer to Item 6.B Stock Option Plan); 3,000,000 shares for issuance upon
conversion of its outstanding convertible debentures, and 6,000,340 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 Common 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.
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 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 at
1040-885 West Georgia Street, Vancouver,
7
British Columbia, Canada V6C 3E8 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.
The business of the Company consists, and over the past eight years has
consisted of, the exploration for and, if warranted, development of precious
metal properties. The Company's activities have 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, on
all but one property, 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. Currently, the Company has no subsidiary companies.
The Company has carried out exploration programs with a view to
determining the existence of gold and other commercial metal reserves and, if
warranted, to define and extract mineralized material if found to be
economically viable. Commercialization of mineralized material is subject to not
only feasibility study, but environmental impact studies, and approval of
commercialization plans by the appropriate state or governmental agencies
regulating such activities in the jurisdiction in which the properties are
located. The Company has not succeeded in ascertaining the existence of any
reserves on its property. Please refer to "ITEM 3. KEY INFORMATION - D. RISK
FACTORS" for a detailed discussion of the risk factors that affect the Company's
current operations.
C. 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.
Except as disclosed herein, the Company does not possess reliable information
concerning the history of previous operations including the names of previous
operators, if any, on any of its properties.
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 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
8
wrote down its $1,000,800 investment in Cactus Gold Corp. (a privately held
company conducting exploration programs in Nevada). Subsequent to June 30, 2002,
the Company granted an option to an unaffiliated corporation to acquire the
Company's interest in and to the California Mine Crown Grants situated in the
Kootenay Land District. All funds invested by the Company are lost when no
economic mineralization is found in an area and the concession is abandoned.
The Company owns a 25% interest in five mineral claims in the Mackenzie
Mining District of the Northwest Territories. This interest is carried at a
nominal value. There are no assurances that there is any mineralization in
quantities to justify commencement of mining activities on this property.
REAL PROPERTY
The Company's executive offices are located in Vancouver. The office
space is provided to the Company under a Management Services Agreement dated
July 18, 2002 (the "Management Agreement") between the Company and First Fiscal
Management Ltd., a privately held corporation ("FFM"). FFM is controlled by
Michael Cytrynbaum. Mr. Cytrynbaum is one of the Company's directors and its
chief executive officer. The Company believes that its current facilities are
adequate for the Company's current operating level and presently foreseeable
growth. Under the terms of the Management Agreement, the Company pays FFM
approximately $10,000 per month. The Management Agreement may be terminated by
FFM on 60 days notice and by the Company on not less than 6 months notice. The
Company believes that the terms of the Management Agreement are as favorable as
those that could be obtained from an unaffiliated third party. PLEASE REFER TO
"ITEM 7 - RELATED PARTY TRANSACTIONS."
EQUIPMENT
The Company does not own and/or lease any office equipment consisting
of computers, 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.
A. GENERAL.
The Company is involved in the exploration for and, if warranted, the
development of precious metal properties.
9
B. OPERATING RESULTS.
YEAR ENDED JUNE 30, 2002 COMPARED TO THE YEAR ENDED JUNE 30, 2001
During the year ended June 30, 2002 ("Fiscal 2002"), the Company
incurred a loss of $202,622, as compared to a loss of $850,000 for the year
ended June 30, 2001 ("Fiscal 2001"). The difference is substantially
attributable to (i) cash received from a trustee of $310,000, 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.
YEAR ENDED JUNE 30, 2001 COMPARED TO THE YEAR ENDED JUNE 30, 2000
During Fiscal 2001, the Company incurred a loss of $850,000, as
compared to a loss of $1,114,000 for the year ended June 30, 2000 ("Fiscal
2000"). The loss in Fiscal 2001 was net of (i) cash received from a trustee of
$310,000, which was the amount previously established as an allowance for the
class action lawsuit and (ii) the write-down of the investment in Cactus Gold
Corp. of $1,000,800.
In connection with the Company's lawsuit against former management, in
Fiscal 2000 the Company obtained an order to have paid in to a court account
$264,000 paid out to former management upon their resignation. The Company also
wrote-down its $582,000 investment in its Mexican mineral properties. Operating
(administrative) costs before depreciation (and inclusive of accounting, legal
and consulting fees) decreased to $218,000 for Fiscal 2001, from $280,000 in
Fiscal 2000.
YEAR ENDED JUNE 30, 2000 COMPARED TO THE YEAR ENDED JUNE 30, 1999
During Fiscal 2000, the Company incurred a loss of $1,114,000, as
compared to a loss of $11,112,000 for the year ended June 30, 1999 (hereinafter
referred to as "Fiscal 1999"). The loss incurred for Fiscal 2000 included (i) an
allowance (in the amount of $264,000) established by the Company for recovery in
connection with its lawsuit against certain of its former directors and officers
and (ii) write-downs of mineral properties in Mexico of $582,000. This compares
to a write down of property investment of $184,000 in Fiscal 1999, an $875,000
allowance for the class action lawsuit settlement, and a $8,855,000 loss on the
sale of the Company's Nicaraguan subsidiary. Operating (administrative) costs
before depreciation (and inclusive of accounting, legal and consulting fees)
decreased to $280,000 during Fiscal 2000, from $1,238,000 in Fiscal 1999.
C. LIQUIDITY AND CAPITAL RESOURCES.
WORKING CAPITAL
On June 30, 2002 the Company had a working capital of $101,000 as
compared to a working capital of $33,000 at June 30, 2001. 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. Subsequent to
the fiscal year ended June 30, 2002 the Company completed a convertible
debenture issue of U.S. $300,000, of which $250,000 had been received at June
30, 2002. Cumulatively, from the Company's inception, it has raised $25,617,000
through the sale of its securities.
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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 three years, the Company has reduced its operating
costs to approximately $250,000 per annum. The Company has no material
commitments for capital expenditure in the current fiscal year. Subject to the
ultimate resolution of its lawsuit against certain of its former directors and
officers, 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 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. The Company presently has an interest in only one property;
this property contains no known mineral reserves; the limited activities on the
property to date have been exploratory in nature.
RECENT FINANCINGS
The Company completed a convertible debenture issue of U.S. $300,000,
of which $250,000 had been received including $50,000 in satisfaction of an
existing corporate debt and/or held in trust with the Company's lawyers at June
30, 2002. The balance of $50,000 was received, after June 30, 2002. The
debentures are unsecured, bear interest at 2% per annum, and have a maturity
date of July 31, 2004. The debentures will be deemed to have been converted into
"units" of the Company on July 31, 2003 in the ratio of one unit for each U.S.
$.10 (3,000,000 units). Each unit consists of, if the authorized capital of the
company includes variable multiple voting common shares, one variable multiple
voting common share and one non-transferable share purchase warrant to acquire
one subordinate voting common share at $.30 per share, otherwise, one common
share and one non-transferable share purchase warrant to acquire two common
shares at U.S. $.30 per share before July 31, 2004. Related parties subscribed
for U.S. $75,000 of the debentures.
D. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.
Not applicable.
11
E. TREND INFORMATION.
EXPLORATION ACTIVITIES
The Company's future profitability is dependent on the successful
definition of geological resources on its mining properties and the
establishment of positive comprehensive feasibility studies on these geological
resources. Upon completion of positive feasibility studies, the Company's
success is dependent on the successful construction, financing and operation of
a facility to extract the minerals from the geological resource located.
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, which
has a market value at June 30, 2002 of $8,033. 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.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. DIRECTORS AND SENIOR MANAGEMENT.
The following table provides the full name, and function in the
Company of the directors, executive officers and key employees of the Company:
Name and place of residence Age Director since
- --------------------------- --- -----------------
Michael Cytrynbaum 61 July 18, 2002
West Vancouver, B.C.
Murray F. Kosick 52 May 5, 1999
Victoria, B.C
Reinhard Siegrist 55 December 16, 1997
Wettswil, Switzerland
On July 18, 2002, Anne C. Eilers resigned as President and a Director
of the Company, and was replaced by Michael Cytrynbaum.
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. In addition, Mr. Cytrynbaum is a
director of Microcell Telecommunications Inc., a cellular network company and is
a director of three junior resources companies, Mantle Minerals Inc., 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 three years. Dr. Kosick sold his private dentist practice twelve
years ago and returned to dentistry from
12
retirement three 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 former director of Aton Asset Management, Zurich and is now
retired. Mr. Siegrist has been a director of Central Minera Corp. since December
16, 1997.
B. COMPENSATION.
Anne C. Eilers served as president of the Company through the fiscal
year ended June 30, 2002. No other executive officer of the Company was paid
more than $40,000 in compensation during that financial year. The following
table provides a summary of the compensation earned by Ms. Eilers during the
financial year ended June 30, 2002 and the two preceding fiscal years:
SUMMARY COMPENSATION TABLE
----------------------------------------------------------------------------
ANNUAL COMPENSATION
------------------------------------------------- LONG-TERM COMPENSATION
NAME AND OTHER ANNUAL SECURITIES UNDER OPTIONS
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION GRANTED(#)
- ------------------ ---- ------ ----- ------------ ------------------------
Anne C. Eilers(1) 2002 US$35,754(2) $Nil $Nil 0
President and CEO 2001 US$59,769(2) Nil $Nil 425,000
2000(1) US$53,974(2) Nil $Nil 375,000
(1) From May 5, 1999 to March 13, 2000 Ms. Eilers was Secretary of the
Corporation. On March 13, 2000 she was appointed President of the
Corporation. Ms. Eilers resigned as President on July 18, 2002.
(2) The amounts shown were paid to Ms. Eilers, A.C. Eilers & Associates
Management Corp. and Buzz Communications Inc., both companies
controlled by Anne C. Eilers.
Since July 18, 2002, FFM has received approximately $30,000 under the terms of
the Management Agreement. In addition, Michael Cytrynbaum was granted an option
to acquire up to 500,000 shares at a price of $0.20 per share. PLEASE REFER TO
"STOCK OPTION PLAN" BELOW.
STOCK OPTION PLAN
At the annual meeting held in December 1996 the shareholders of the
Company approved the adoption of a Stock Option 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
shares may be made subject to options under the Plan. There are currently
1,325,000 outstanding options, all exercisable at US$0.20 per share and all
expiring on or before December 31, 2005. Of these, 1,050,000 are held by our
directors and senior officers. No options were exercised, nor were any new
options granted, in the financial year ended June 30, 2002. The following table
sets out certain information concerning options outstanding as at the end of
that financial year:
VALUE OF UNEXERCISED
SECURITIES AGGREGATE UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
NAME AND PRINCIPAL ACQUIRED ON VALUE AS AT JUNE 30, 2002 JUNE 30, 2002
POSITION EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------ ----------- --------- ------------------------- -------------------------
Anne C. Eilers Nil Nil 800,000/800,000 Nil
President and Director
13
On July 18, 2002 Anne C. Eilers resigned as President and a Director of
the Corporation, and was replaced by Michael Cytrynbaum. Ms. Eilers' options
expired in accordance with their terms on September 14, 2002 (as to 375,000
options) and October 18, 2002 (as to 425,000 options), having not been
previously exercised.
On October 7, 2002 the Board of Directors approved the grant of an
option to Mr. Cytrynbaum to purchase up to 500,000 shares at a price of US$0.20
and also approved (a) the extension from December 3, 2003 to December 31, 2005
of the expiry date on an aggregate of 200,000 options previously granted to
Murray Kosick and Reinhard Siegrist and (b) the grant to each of them of new
options to purchase 150,000 shares at a price of US$0.20 each expiring on
December 31, 2005. In addition, options to purchase an aggregate of 125,000
shares at a price of US$0.20 and expiring on December 31, 2005 were granted to
certain officers and employees.
Officers and Directors held an aggregate of 1,150,000 incentive stock
options during the year ended June 30, 2002, none of which were exercised.
During the year ended June 30, 2002, no incentive stock options were granted. On
October 7, 2002 options to purchase up to 500,000 shares at $0.20 per share were
granted to Michael Cytrynbaum. Additional options to purchase up to 125,000
shares were granted to other employees and officers. The following table sets
forth certain information regarding the outstanding options at each of June 30,
2002 and October 31, 2002:
COMMON SHARES COMMON SHARES VALUE OF UNEXERCISED
UNDER OPTION UNDER OPTION IN THE MONEY OPTIONS AT
JUNE 30, 2002 OCT. 31, 2002 EXERCISE EXPIRATION JUNE 30, 2002
HOLDERS EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE PRICE DATE EXERCISABLE/UNEXERCISABLE
- --------------------------- ------------------------- ------------------------- -------- ---------- -------------------------
MICHAEL CYTRYNBAUM 500,000 $0.20 12/31/05 Nil
REINHARD SIEGRIST 250,000 250,000 $0.20 12/31/05 Nil
CLARION FINANCIAL 200,000 250,000 $0.20 12/31/05 Nil
BARBARA WEST 0 25,000 $0.20 12/31/05 Nil
JOAN JAMIESON 0 50,000 $0.20 12/31/05 Nil
MURRAY KOSICK 100,000 250,000 $0.20 12/31/05 Nil
A.C. EILERS & ASSOCIATES(1) 300,000 0 $0.20 expired Nil
BUZZ COMMUNICATIONS INC.(1) 500,000 0 $0.20 expired Nil
(1) A.C. Eilers & Associates and Buzz Communications Inc. are
companies controlled by Anne Eilers, the former President and a
former Director of the Company. Ms. Eilers resigned as President
and a Director of the Company and was replaced by Michael
Cytrynbaum on July 18, 2002. Ms. Eilers' options expired in
accordance with their terms on September 14, 2002 (as to 375,000
options) and October 18, 2002 (as to 425,000 options). Ms. Eilers
had not exercised her options.
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
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."
14
C. BOARD PRACTICES.
Each director is elected for a one year term and until his successor
has been duly elected. Except for Mr. Cytrynbaum, who was appointed on July 18,
2002, 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, 2002, 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, 2002, concerning (i) persons
and companies that own of record or are known by the Company to own
beneficially, directly or indirectly, more than 5% of the outstanding Common
Shares and (ii) beneficial ownership by the Company's directors and members of
its administrative, supervisory or management bodies, of outstanding Common
Shares:
NAME AND ADDRESS OF NUMBER OF SHARES BENEFICIALLY OR
SHAREHOLDER DIRECTLY OWNED PERCENTAGE OF CLASS
- --------------------------------- -------------------------------- -------------------
Philgold Investments Inc. 2,000,000 9%
Michael Cytrynbaum 1,559,090(1)(4) 7%
Dr. Murray F. Kosick 1,009,101(2) 4.5%
Reinhard Siegrist 550,000(3) 2%
Officers and Directors as a Group 3,118,191(4) 14%
(3 people)
1. 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 Common shares (see ITEM 6. DIRECTORS,
SENIOR MANAGEMENT AND EMPLOYEES - Stock Option Plan). Also
includes 562,500 escrow shares which were cancelled in November,
2002.
2. Includes 250,000 options to acquire Common shares (see ITEM 6.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES - Stock Option Plan),
and 300,000 warrants to purchase 150,000 Common shares,
exercisable at US$0.15 and 100,000 warrants to purchase 50,000
Common Shares, exercisable at US$0.30 all expiring on November 30,
2003 and all held by Anna Kosick, the wife of Murray Kosick. Dr.
Kosick disclaims any beneficial interest in these warrants or the
underlying Common Shares.
3. Includes 250,000 options to acquire Common shares (see ITEM 6.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES - Stock Option Plan),
and 300,000 warrants to acquire 150,000 Common shares at US$0.15
per share, expiring on November 30, 2003, held by Mr. Siegrist.
4. Includes 562,500 shares which were cancelled on November 21, 2002.
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.
15
SHARE PURCHASE WARRANTS
As at October 31, 2002 there were 6,003,340, share purchase warrants
issued and outstanding. All warrants expire on November 30, 2003. Of the
outstanding warrants, 3,000,000 are exchangeable at two warrants per share at
$0.15 and the remaining 3,003,340 are exchangeable at two warrants per share at
$0.30.
The following table indicates the approximate number of record holders
of Common Shares as at October 31, 2002, the number of record holders of Common
Shares with United States addresses and the portion and percentage of Common
Shares so held in the United States. On such date, 21,760,068 Common Shares were
outstanding.
TOTAL NUMBER OF
NUMBER REGISTERED NUMBER OF COMMON PERCENTAGE OF COMMON SHARES
OF HOLDERS U.S. HOLDERS SHARES HELD IN THE U.S. HELD IN THE U.S.
- ---------- ------------ ----------------------- ---------------------------
639 509 9,474,653 44%
Depositories, brokerage firms and financial institutions hold a
substantial number of Common Shares in "street names." The computation of the
number and percentage of Common Shares held in the United States is based upon
the number of Common Shares held of record by holders with United States
addresses. United States residents may beneficially own Common Shares held of
record by non-United States residents.
B. RELATED PARTY TRANSACTIONS.
During the years ended June 30, 2002, 2001, and 2000; and, for the
period from June 30, 2002 through September 30, , 2002 the Company paid
consulting or administration fees to the following directors or officers:
NAME OCTOBER 31, 2002 2002 2001 2000
- ------------------------------- ---------------- ------ ------- -------
A.C. Eilers & Associates(1) $7,677 $15,938 $15,000
Buzz Communications Inc.(1) 15,995 43,831 57,100
First Fiscal Management Ltd.(2) $30,000 -- -- --
1. A company controlled by Anne Eilers.
2. A company controlled by Michael Cytrynbaum.
During the period from July 1, 2001 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.
16
ITEM 8. FINANCIAL INFORMATION
A. STATEMENTS AND OTHER FINANCIAL INFORMATION.
See Item 17 for the Company's Financial Statements.
SUIT AGAINST FORMER OFFICERS AND DIRECTORS
On May 19, 1999, the Company filed a motion against former officers of
the Company, Messrs. Lavarack and Manning, respectively, to recover $264,000.
The $264,000 was paid to Messrs. Lavarack and Manning by the Company, by these
two previous officers to themselves or their holding companies on April 30,
1999, the date of their respective resignation. On May 19, 2000, the Company
obtained an ex parte Order requiring ordering Messrs. Lavarack and Manning to
pay these sums into a Court account (and/or lawyer's trust account) pending
resolution of the action. Funds have either been paid into Court or are held in
lawyer's trusts accounts. The matter is currently before the Courts, with the
Court date scheduled for November 2002.
Other than the foregoing, 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.
B. SIGNIFICANT CHANGES.
During the year ended June 30, 2002, the Company has continued to
relieve itself of obligations and recover previously incurred costs. All
outstanding matters with the exception of the recovery of US $264,000 paid into
Court have been resolved.
On July 18th, 2002, the resignation of Ms. Anne Eilers as President and
Director of Central Minera Corp. was accepted. Mr. Michael Cytrynbaum has
assumed the responsibility of President and has been appointed a Director of the
Company also as of July 18th, 2002. As part of the change of management, the
Company surrendered its lease of office space in North Vancouver, British
Columbia. The Company entered into the Management Agreement with FFM, a company
controlled by Mr. Cytrynbaum. The Management Agreement includes provision for
reasonable office facilities for the use by the Company.
Subsequent to the June 30, 2002, the Company completed a convertible
debenture issue of US $300,000. The debentures are unsecured, bear interest at
2% per annum and have a maturity date of July 31, 2004. The debentures will be
deemed to have been converted into units of the Company on July 31, 2003 in the
ratio of one unit for each US $0.10 (3,000,000 units). Please refer to "ITEM 5.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS - RECENT FINANCINGS."
17
ITEM 9. THE OFFER AND LISTING
A. OFFER AND LISTING DETAILS/MARKETS.
The Common 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 common shares commenced trading on the Over the Counter
Market - Pink Sheets (the "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 Common Shares on the Pink Sheets for the
period indicated.
HIGH LOW VOLUME
------- ------- ---------
FISCAL YEAR ENDED JUNE 30, 2002 $0.17 $0.08 0
FOURTH QUARTER $0.17 $0.08 0
THIRD QUARTER $0.16 $0.10 0
SECOND QUARTER $0.17 $0.10 0
FIRST QUARTER $0.15 $0.08 0
FISCAL YEAR ENDED JUNE 30, 2001 $0.5500 $0.0625
FOURTH QUARTER $0.2500 $0.1000 813,700
THIRD QUARTER $0.5000 $0.1800 1,559,000
SECOND QUARTER $0.5500 $0.1500 732,800
FIRST QUARTER $0.2500 $0.0625 133,550
FISCAL YEAR ENDED JUNE 30, 2000 $0.8750 $0.0500
FISCAL YEAR ENDED JUNE 30, 1999 $0.5625 $0.0500
FISCAL YEAR ENDED JUNE 30, 1998 $2.063 $0.0100
The following table sets forth the high and low market prices for each
month during the most recent six months:
HIGH LOW
----- -----
OCTOBER 2002 $0.15 $0.14
SEPTEMBER 2002 $0.16 $0.15
AUGUST 2002 $0.15 $0.14
JULY 2002 $0.15 $0.05
JUNE 2002 $0.16 $0.10
MAY 2002 $0.17 $0.17
18
B. PLAN OF DISTRIBUTION.
Not applicable to Form 20-F filed as an Annual Report.
C. SELLING SHAREHOLDERS.
Not applicable to Form 20-F filed as an Annual Report.
D. DILUTION.
Not applicable to Form 20-F filed as an Annual Report.
E. EXPENSES OF THE ISSUE.
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 Corporation which were included as Exhibits to the Company
Annual Report on Form 20-F, file number 0-24570, filed for June 30, 1999; 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.
19
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. As the Company currently only has one class of shares, the rights,
preferences and restrictions of this class of shares is 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 Common 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.
4. 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.
5. 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.
6. 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.
20
7. 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.
8. There are no provisions in the Company's Articles, stipulating
ownership thresholds above which shareholder ownership must be
disclosed.
B. LEGAL LIMITATIONS
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 common
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.
21
C. PROPOSED CHANGES TO SHAREHOLDER RIGHTS
Please refer to "PART II. ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS
OF SECURITY HOLDERS AND USE OF PROCEEDS"
D. MATERIAL CONTRACTS.
NONE
E. 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 Common
Shares, other than withholding tax requirements (see "Item 10E - Taxation").
F. TAXATION.
The following is a summary of the principal Canadian federal income tax
considerations generally applicable in respect of the Common Shares. The tax
consequences to any particular holder of Common 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
Common Shares as capital property and will not use or hold the Common 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 Common 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.
22
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 Common Shares and
no opinion or representation with respect to the United States federal income
tax consequences to any such holder or prospective holder is made. Holders and
prospective holders of Common Shares are urged therefore to consult their own
tax advisors with respect to their particular circumstances.
G. DIVIDENDS AND PAYING AGENTS.
Not applicable to Form 20-F used to file an Annual Report.
H. STATEMENT BY EXPERTS.
Not applicable to Form 20-F used to file an Annual Report.
I. 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.
J. 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
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.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS
23
AMENDMENT TO ARTICLES
BACKGROUND - PRIVATE PLACEMENT OF CONVERTIBLE DEBENTURES
On July 18, 2002 the Company completed a private placement of an
aggregate of US$300,000 in principal amount of unsecured convertible
debentures for cash proceeds of US$250,000. The balance of US$50,000
was issued in consideration for the settlement of an existing demand
liability. The debentures mature and will become repayable, with
accrued interest at the rate of 2% per annum, on July 31, 2004. The
debentures are convertible into Units of the Company at the rate of 1
Unit for each US$0.10 in principal amount of the debentures and will be
deemed to have been so converted as at July 31, 2003. If on July 31,
2003 the authorized capital of the Company includes a class of Variable
Multiple Voting Shares having the special rights and restrictions
described below, each Unit will consist of (a) one Variable Multiple
Voting Share and (b) one non-transferable share purchase warrant,
exercisable at US$0.30 at any time prior to July 31, 2004, to acquire
one Subordinate Voting Share (i.e. a Common share). If, on July 31,
2003, the authorized capital of Central Minera does not include
Variable Multiple Voting Shares, the debentures will be deemed to have
been converted on that date into Units consisting of (a) 1 Common share
and (b) one non-transferable share purchase warrant, exercisable at
US$0.30 at any time prior to July 31, 2004, to acquire two Common
shares.
PURPOSE OF THE PROPOSED AMENDMENT TO THE ARTICLES
The purpose of the proposed amendment to the Articles is to create a
class of Multiple Variable Voting Shares having the rights provided for as part
of the terms attached to the convertible debentures and to re-designate the
existing Common shares as Subordinate Voting Shares without any change in their
rights. Under the Yukon Business Corporations Act (the "YBCA") a special
resolution (that is, one voted for by a majority of two-thirds of the votes
cast) is required to make the amendments to the Company's Articles that are
necessary to create a class of Variable Multiple Voting Shares with the rights
described above, and to re-designate the existing Common shares as Subordinate
Voting Shares. The text of the proposed special resolution (the "Special
Resolution") is set out in Schedule A to this proxy circular.
The Variable Multiple Voting Shares will have the following rights:
1. Voting Rights
At any meeting of shareholders, 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.
2. Exchange right
Each Variable Multiple Voting Share will be exchangeable at any time,
at the option of the holder, into one Subordinate Voting Share. Upon the number
of outstanding Variable Multiple Voting Shares falling below 1,500,000, all
outstanding Variable Multiple Voting Shares will be deemed to have been
exchanged for Subordinate Voting Shares.
24
3. Concurrent capital alterations
If the Variable Multiple Voting Shares are subdivided or , the
Subordinate Voting Shares will be subdivided or in the same manner and to the
same extent.
4. Restrictions on transfer
The Variable Multiple Voting Shares will be transferable only with the
prior approval of a resolution of the Board of Directors of the Corporation.
Upon conversion of the outstanding debentures on May 31, 2003, 3,000,000
Variable Multiple Voting Shares will be issued. If there is no increase in the
number of presently outstanding Common shares (which will be re-designated
Subordinate Voting Shares), there will be 21,760,068 such shares outstanding.
Accordingly, each Variable Multiple Voting Share will be entitled to (21,760,068
x 0.55 = 11,968,037) / (3,000,000 x 0.45 = 1,350,000), or 8.87 votes. As a
class, therefore, the Variable Multiple Voting Shares will be entitled to cast
26,610,000 votes and the Subordinate Voting Shares will be entitled to cast
21,760,068 votes.
25
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 immediately below. The Audit Report
of Steele & Co., Chartered Accountants is included herein immediately preceding
the respective financial statements, notes, schedules, etc.
INDEX TO FINANCIAL STATEMENTS
Page
----
Auditors' Report dated September 11, 2002.....................................28
Comments by Auditors for U.S. Readers on Canada-US Reporting Conflict.........28
Balance Sheets dated June 30, 2002 and 2001...................................29
Statement of Operations and Deficit for the years ended
June 30, 2002, 2001 and 2000.............................................30
Statements of Cash Flows for the years ended
June 30, 2002, 2001 and 2000.............................................31
Notes to the Financial Statements for the years ended
June 30, 2001, 2001 and 2000..........................................32-40
26
CENTRAL MINERA CORP.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
JUNE 30, 2002
(EXPRESSED IN U.S. DOLLARS)
27
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, 2002 and 2001 and the statements of operations and
deficit and cash flow for the years then ended. 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, 2002 and 2001 and
the results of its operations and changes in its cash resources for the years
then ended in accordance with Canadian generally accepted accounting principles
consistently applied.
Vancouver, Canada /s/ Steel & Co.
September 11, 2002 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 11, 2002 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 /s/ Steel & Co.
September 11, 2002 CHARTERED ACCOUNTANTS
28
CENTRAL MINERA CORP.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
(EXPRESSED IN U.S. DOLLARS)
JUNE 30,
------------------------------
2002 2001
------------- -------------
ASSETS
CURRENT
CASH (NOTE 4) $ 6,021 $ 30,805
FUNDS HELD IN TRUST (NOTE 8) 175,000 --
ACCOUNTS RECEIVABLE AND PREPAID EXPENSES 8,929 15,863
MARKETABLE SECURITIES (NOTE 5) 6,418 6,418
------------- -------------
196,368 53,086
RENT DEPOSIT -- 17,559
CAPITAL (NOTE 6) -- 2,424
MINERAL PROPERTIES AND INTERESTS (NOTE 7) 2 2
------------- -------------
$ 196,370 $ 73,071
============= =============
LIABILITIES
CURRENT
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES $ 75,290 $ 19,118
LOAN PAYABLE (NOTE 10) 19,749 --
------------- -------------
95,039 19,118
SHARE CAPITAL AND DEFICIT
CONVERTIBLE DEBENTURES (NOTE 8) 250,000 --
SHARE CAPITAL (NOTE 9) 41,441,851 41,441,857
DEFICIT (41,590,526) (41,387,904)
------------- -------------
101,331 53,953
------------- -------------
$ 196,370 $ 73,071
============= =============
RELATED PARTY TRANSACTIONS (NOTE 10)
COMMITMENTS AND CONTINGENCIES (NOTE 11)
APPROVED BY THE DIRECTORS
/s/ Murray Kosick /s/ Michael Cytrynbaum
------------------------------ ------------------------------
Director Director
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
29
CENTRAL MINERA CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS AND DEFICIT
(EXPRESSED IN U.S. DOLLARS)
CUMULATIVE YEARS ENDED JUNE 30,
TO JUNE 30, ----------------------------------------
2002 2002 2001 2000
------------ ----------- ----------- -----------
ADMINISTRATION EXPENSES
ACCOUNTING AND AUDIT $ 685,214 $ 23,845 $ 24,771 $ 34,154
CONSULTING FEES 1,693,818 40,490 64,048 89,647
AMORTIZATION 281,939 912 15,194 8,940
LEGAL 1,713,892 75,944 33,673 77,191
OFFICE 921,463 12,268 14,072 18,900
RENT 726,272 72,065 65,010 43,695
SALARIES AND BENEFITS 279,398 -- -- 6,600
TRANSFER AGENT AND FILING FEES 145,417 8,042 11,418 4,971
TRAVEL AND PROMOTION 1,194,529 999 4,648 4,531
------------ ----------- ----------- -----------
7,641,942 234,565 232,834 288,629
------------ ----------- ----------- -----------
INTEREST AND OTHER INCOME (1,510,588) (30,242) (85,495) (11,067)
LOSS (GAIN) ON FOREIGN EXCHANGE 55,496 (3,213) 4,462 3,700
WRITE-DOWN OF INVESTMENT IN 1,000,799 -- 1,000,799 --
PRIVATE COMPANY (NOTE 7)
(GAIN) ON SALE AND WRITE-DOWN OF (16,040) -- 7,222 (23,262)
MARKETABLE SECURITIES
WRITE-DOWN OF MINERAL 24,724,036 -- 960 582,468
PROPERTIES (NOTE 7)
LOSS ON SALE OF CAPITAL ASSETS 11,307 1,512 -- 9,795
TERMINATION COSTS PAID 264,000 -- -- 264,000
INTO COURT
ALLOWANCE (RECOVERIES) FOR 564,462 -- (310,538) --
LAWSUIT SETTLEMENT
LOSS ON SALE OF SUBSIDIARY 8,855,112 -- -- --
------------ ----------- ----------- -----------
33,948,584 (31,943) 617,410 825,634
------------ ----------- ----------- -----------
NET LOSS FOR THE PERIOD 41,590,526 202,622 850,244 1,114,263
DEFICIT BEGINNING OF THE PERIOD -- 41,387,904 40,537,660 39,423,397
------------ ----------- ----------- -----------
DEFICIT END OF THE PERIOD $ 41,590,526 $41,590,526 $41,387,904 $40,537,660
============ =========== =========== ===========
NET LOSS PER COMMON SHARE $ .01 $ .04 $ .08
----------- ----------- -----------
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 21,760,068 21,760,068 14,233,777
=========== =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
30
CENTRAL MINERA CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOW
(EXPRESSED IN U.S. DOLLARS)
CUMULATIVE YEARS ENDED JUNE 30,
TO JUNE 30, ---------------------------------------
2002 2002 2001 2000
------------ --------- ----------- -----------
CASH PROVIDED (USED) BY
OPERATING ACTIVITIES
NET LOSS FOR THE PERIOD $(41,590,526) $(202,622) $ (850,244) $(1,114,263)
ITEMS NOT INVOLVING CASH
AMORTIZATION 281,938 912 15,194 8,940
LOSS ON SALE OF SUBSIDIARY 8,855,112 -- -- --
LOSS ON SALE OF CAPITAL
ASSETS 11,307 1,512 -- 9,795
WRITE-DOWN OF INVESTMENT 1,000,799 -- 1,000,799 --
WRITE-DOWN OF MINERAL
PROPERTIES 24,724,036 -- 960 582,468
SHARE CONSIDERATION PAYABLE
INCLUDED IN ALLOWANCE FOR
LAWSUIT SETTLEMENT 375,000 -- -- --
------------ --------- ----------- -----------
(6,342,334) (200,198) 166,709 (513,060)
NET CHANGE IN NON-CASH
WORKING CAPITAL ITEMS
ACCOUNTS RECEIVABLE AND
PREPAID EXPENSES (8,929) 6,934 7,990 391,961
RENT DEPOSIT -- 17,559 -- (17,559)
MARKETABLE SECURITIES (6,418) -- 162 (6,580)
ACCOUNTS PAYABLE AND
ACCRUED LIABILITIES 75,290 56,172 (41,842) (23,904)
PAYABLE UNDER STIPULATION
OF SETTLEMENT AGREEMENT -- -- -- (450,000)
OWING TO RELATED PARTIES -- -- -- --
------------ --------- ----------- -----------
(6,282,391) (119,533) 133,019 (619,142)
------------ --------- ----------- -----------
FINANCING ACTIVITIES
LOAN AND DEBENTURES PAYABLE 269,749 269,749 -- --
FUNDS HELD IN TRUST (175,000) (175,000) -- --
SHARES ISSUED FOR CASH 25,316,857 -- 901,002 330,000
------------ --------- ----------- -----------
25,411,606 94,749 901,002 330,000
------------ --------- ----------- -----------
INVESTING ACTIVITIES
MINERAL PROPERTIES (17,310,637) -- (957) (33,022)
INVESTMENT IN PRIVATE COMPANY (1,000,799) -- (1,000,800) --
PURCHASE OF CAPITAL ASSETS (811,758) -- (3,636) --
------------ --------- ----------- -----------
(19,123,194) -- (1,005,393) (33,022)
------------ --------- ----------- -----------
CHANGE IN CASH FOR THE PERIOD 6,021 (24,784) 28,628 (322,164)
CASH BEGINNING OF THE PERIOD -- 30,805 2,177 324,341
------------ --------- ----------- -----------
CASH END OF THE PERIOD $ 6,021 $ 6,021 $ 30,805 $ 2,177
============ ========= =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
31
CENTRAL MINERA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002
(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 September 11, 2002,
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, 2002, 2001 and 2000, the Company sustained
operating losses of $202,622, $850,244 and $1,114,263 respectively and as
at June 30, 2002, had a net equity deficiency of $148,669.
2. CONTINUING OPERATIONS
The Company is engaged in the acquisition, exploration and development of
mineral properties. At the Company's annual general meeting in December,
2000, 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 of these properties 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 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.
32
CENTRAL MINERA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002
(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.
c. Loss Per Share
Loss per share has been calculated using the weighted average number of
shares outstanding.
d. Estimates and Fair Values
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. The financial
instruments, which are reported as assets and liabilities, both
recognized and unrecognized, are carried at amounts which approximate
fair values.
e. Stock-Based Compensation Plans
The Company grants to its directors, employees and consultants
incentive stock options to acquire shares in the Company at or above
market value at the date of grant. The options are exercisable upon
issue and have fixed exercise prices and expiry dates not exceeding
five years. Generally, the Company is entitled to reserve up to 10% of
its issued capital for stock-based compensation plans. No compensation
expenses are recognized for these options when issued. Any
consideration received on the exercise of options is credited to share
capital.
f. 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.
33
CENTRAL MINERA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002
(EXPRESSED IN U.S. DOLLARS)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
g. 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. CASH
The Company maintains its cash balances in various currencies. At the year
end, the currencies held and the United States equivalents were as follows:
2002 2001
------- -------
Canadian dollars $3,051 $22,981
U.S. dollars 2,970 7,824
------- -------
$6,021 $30,805
======= =======
5. MARKETABLE SECURITIES
Marketable securities are carried in the accounts at the lesser of quoted
market value and cost. The current quoted market value of the securities is
$6,600.
6. CAPITAL ASSETS
NET BOOK VALUE
----------------
2002 2001
---- ------
Office furniture and equipment $ -- $2,424
==== ======
7. 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.
34
CENTRAL MINERA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002
(EXPRESSED IN U.S. DOLLARS)
7. MINERAL PROPERTIES AND INTERESTS (CONTINUED)
b. Mineral Property Interests
The Company owns a 25% interest in five mineral claims in the Mackenzie
Mining District of the Northwest Territories which are carried at a
nominal value. The remaining 75% interest is owned by a public company
under common management. The Company has abandoned its mineral
interests in Mexico, Nicaragua and Nevada and all property-related
costs have been expensed.
8. CONVERTIBLE DEBENTURES
The Company has completed a convertible debenture issue of U.S. $300,000,
of which U.S. $175,000 was held in trust with the Company's lawyers at June
30, 2002. The debentures are unsecured, bear interest at 2% per annum, and
have a maturity date of July 31, 2004. The debentures will be deemed to
have been converted into units of the Company on July 31, 2003 in the ratio
of one unit for each U.S. $.10 (3,000,000 units). Each unit will consist
of, if the authorized capital of the company includes variable multiple
voting common shares (Note 9), one variable multiple voting common share
and one non-transferrable share purchase warrant to acquire one subordinate
voting common share at $.30 per share, otherwise, one common share and one
non-transferrable share purchase warrant to acquire two common shares at
U.S. $.30 per share before July 31, 2004. Related parties have subscribed
for U.S. $125,000 of the debentures.
Funds received $ 75,000
Funds held in trust 175,000
--------
Balance at June 30, 2002 250,000
Funds received subsequent to the year end 50,000
--------
Total $300,000
========
9. SHARE CAPITAL
a. Authorized and Proposed
Unlimited number of common shares without par value
The company intends to present for shareholder approval at its 2002
annual general meeting a resolution to alter its existing share capital
into variable multiple voting common shares and subordinate voting
common shares. The variable multiple voting common share will be
identical to the subordinate shares except they will entitle the holder
to more than one vote calculated on a predetermined ratio between the
share classes. The variable multiple voting common shares will be
convertible 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.
35
CENTRAL MINERA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002
(EXPRESSED IN U.S. DOLLARS)
9. SHARE CAPITAL (CONTINUED)
b. Issued
PRICE PER
SHARE SHARES CONSIDERATION
--------- ---------- -------------
Balance June 30, 2000 15,756,728 $40,165,855
Shares issued
For cash - Private placement $ .30 3,003,340 901,002
For debt settlement $.125 3,000,000 375,000
---------- -----------
Balance June 30, 2001 and 2002 21,760,068 $41,441,857
========== ===========
c. Escrow Agreements
Issued and outstanding share capital includes 2,562,500 shares of the
Company which are subject to escrow agreements.
d. Share Purchase Options
Details of director, employee and consultants share purchase options
are as follows:
BALANCE BALANCE
JUNE 30, JUNE 30, EXERCISE
2001 CHANGE 2002 PRICE EXPIRY DATE
--------- --------- --------- -------- ------------------
1,100,000 (700,000) 400,000 $ .20 December 3, 2003
-- 700,000 700,000 October 18, 2002
1,065,000 -- 1,065,000 $ .20 September 14, 2002
--------- -------- ---------
2,165,000 -- 2,165,000
========= ======== =========
f. Share Purchase Warrants
BALANCE BALANCE
JUNE 30, JUNE 30, EXERCISE
2001 CHANGE 2002 PRICE EXPIRY DATE
--------- --------- --------- ---------- ------------------
3,000,000 -- 3,000,000 $.15/2 wts November 30, 2003
3,003,340 -- 3,003,340 $.30/2 wts November 30, 2003
--------- --------- ---------
6,003,340 -- 6,003,340
========= ========= =========
Under the conversion terms of the convertible debentures the company is
obligated to issue 3,000,000 common shares and share purchase warrants
by July 31, 2003.
36
CENTRAL MINERA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002
(EXPRESSED IN U.S. DOLLARS)
10. RELATED PARTY TRANSACTIONS
The loan payable is from a shareholder and is unsecured, non-interest
bearing and payable on demand.
Accounts payable includes $Nil (2001 - $5,756) owing to a company
controlled by a director/officer and a public company under common
management. The amounts owing are unsecured with no fixed repayment terms.
Related party transactions not separately disclosed elsewhere in these
financial statements were as follows:
2002 2001 2000
------- ------- -------
Consulting or other fees paid to directors/officers
or to companies controlled by directors/officers $35,754 $59,769 $78,222
------- ------- -------
Occupancy costs charged to companies controlled by a
director/officer and a public company under common
management $29,135 $52,280 $36,285
------- ------- -------
Sale of marketable securities to a public company
under common management $ -- $ -- $25,400
======= ======= =======
11. COMMITMENTS AND CONTINGENCIES
Subsequent to the year end, the Company entered into a management
agreement, with a company controlled by a director, which requires minimum
annual payments of approximately $118,000. The agreement contains a clause
requiring a termination payment of approximately $60,000.
The Company commenced an action to recover $264,000 claimed by certain
former officers as remuneration for services rendered and termination
payments. The amount has been paid into Court pending settlement of the
action and was expensed during 2000. Any recoveries will be recorded as a
reduction of costs in the period received.
12. INCOME TAXES
As at June 30, 2002, the Company has Canadian operating losses available to
reduce future years' taxable income of approximately $3,780,000. The losses
commence to expire in 2003. No future income tax benefit has been reflected
in the financial statements.
37
CENTRAL MINERA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002
(EXPRESSED IN U.S. DOLLARS)
13. SEGMENTED INFORMATION
The Company is organized based on geographic areas. Information by
reportable segment is as follows:
MEXICO AND
2002 CANADA USA OTHER TOTAL
---- -------- ------ ---------- --------
Operations
Interest income $ (199) $ -- $ -- $ (199)
Amortization 912 -- -- 912
Administration and other 201,909 -- -- 201,909
-------- ------ ------ --------
Loss for the year $202,622 $ -- $ -- $202,622
======== ====== ====== ========
Total assets $196,370 $ -- $ -- $196,370
======== ====== ====== ========
MEXICO AND
2001 CANADA USA OTHER TOTAL
---- -------- ---------- ---------- --------
Operations
Interest income $ (22,169) $ -- $ -- $(22,169)
Amortization 15,194 -- -- 15,194
Administration and other 1,000,799 -- 857,219
---------- ------- --------
Loss for the year $(150,555) $1,000,799 $ -- $850,244
========= ========== ======= ========
Total assets $ 73,070 $ 1 $ -- $ 73,071
========= ========== ======= ========
MEXICO AND
2000 CANADA USA OTHER TOTAL
---- -------- ------ ---------- -----------
Operations
Interest income $(11,067) $ -- $ -- $ (11,067)
Amortization 8,940 -- -- 8,940
Administration and other 621,944 1,375 493,071 1,116,390
-------- ------ -------- -----------
Loss for the year $619,817 $1,375 $493,071 $ 1,114,263
======== ====== ======== ===========
Total assets $ 64,049 $ 1 $ 105 $ 64,155
======== ====== ======== ===========
38
CENTRAL MINERA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002
(EXPRESSED IN U.S. DOLLARS)
14. RECONCILIATION TO ACCOUNTING PRINCIPLES GENERALLY ACCEPTED
IN THE UNITED STATES ("US 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
accounting principles follows:
a. Income Taxes
For the purposes of U.S. GAAP, the Company adopted Financial Accounting
Standards Board Statement No. 109 "Accounting for Income Taxes".
Statement 109 changed the method companies use to account for income
taxes from the deferral method to an asset and liability method. As
indicated, the Company has unrecognized losses being carried forward
for income tax purposes. As there is no certainty as to utilization of
the losses, the benefit attributable thereto would be fully offset by a
valuation allowance. Accordingly, the application of Statement 109 does
not result in a material difference for U.S. GAAP accounting purposes.
b. Stock-Based Compensation
For purposes of U.S. GAAP, the Company has chosen 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 for the excess
of the quoted market price over the exercise price granted to employees
and directors under stock option plans. 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.
For U.S. GAAP purposes, escrowed shares would be considered to be a
compensatory arrangement between the Company and the holder of the
shares. Accordingly, the difference between the fair value of shares at
the time the shares are eligible for release from escrow and the issue
price of the shares is recognized as a charge to income in the period
they are eligible for release from escrow.
c. New 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.
133 ("SFAS 133") "Accounting for Derivative Instruments and
Hedging Activity" has no impact on U.S. GAAP differences.
39
CENTRAL MINERA CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2002
(EXPRESSED IN U.S. DOLLARS)
14. RECONCILIATION TO ACCOUNTING PRINCIPLES GENERALLY ACCEPTED
IN THE UNITED STATES ("US GAAP") (CONTINUED)
c. New Accounting Standards (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, 2002 2001 2000
-------- ------------ ------------ ------------
Share capital, under Canadian GAAP $ 41,441,857 $ 41,441,857 $ 40,165,855
Adjustment for APB No. 25 21,563 21,563 21,563
------------ ------------ ------------
Share capital under U.S. GAAP $ 41,463,420 $ 41,463,420 $ 40,187,418
============ ========== ============
Deficit, under Canadian GAAP $(41,590,526) $(41,387,904) $(40,537,660)
Adjustment for APB No. 25 (21,563) (21,563) (21,563)
------------ ----------- ------------
Deficit, under U.S. GAAP $(41,612,089) $(41,409,467) $(40,559,223)
============ =========== ============
Year Ended June 30, 2002 2001 2000
------------------- --------- --------- -----------
Loss for the period under Canadian GAAP $(202,622) $(850,244) $(1,114,263)
Adjustment for APB No. 25 -- -- 655,312
--------- --------- -----------
Net (loss) for the year under U.S. GAAP $(202,622) $(850,244) $ (458,951)
========= ========= ===========
Net (loss) per share under U.S. GAAP $ (.01) $ (.04) $ (.03)
========= ========= ===========
There is no effect on the statement of cash flow for the difference between
Canadian GAAP and U.S. GAAP.
40
ITEM 18. FINANCIAL STATEMENTS
The Company has elected to report under Item No. 17.
ITEM 19. EXHIBITS
THE FOLLOWING EXHIBITS ARE FILED WITH THIS REPORT:
1. Management Services Agreement dated July 18, 2002.
2. Voting Trust Agreement dated July 18, 2002.
3. Consulting Services Agreement dated October 1, 1999
4. Amendment to the Option Agreement dated
The following exhibits filed are by incorporation to the Registration Statement
or Annual Report referenced:
Filed and incorporated herein by reference to the Company's October, 1994
Registration Statement:
5. Certificate of Incorporation; Company Act Memorandum; Articles
6. Consent to Transfer Within Escrow
7. Agreement dated December 29, 1989 between Richard Palmer and Delgratia
Developments Ltd., as amended February 1 and September 1, 1991;
Agreement dated June 27, 1991 between Delgratia Developments Ltd. And
Multiplex Resources Ltd; Agreement dated August 17, 1992 between
Delgratia Developments and Michael Marvin Magrum.
8. Letter of Intent dated June 23, 1993 with CanAlaska Resources Ltd.
9. Letter of Intent dated June 8, 1994 with North Atlantic Resources S.A.,
as amended June 14, 1994
10. Letter of Intent dated May 5, 1994 with 419353 B.C. Ltd.
11. Letter of Intent dated May 16, 1994 with Eduardo Boullosa
12. Directors and Employees Incentive Stock Option Agreements with each of
Terry Alexander, David Robinson, David Alexander, Jason Shepard and
Anne Eilers.
13. Acceptance of Listing Agreement dated June 24, 1992 from the Vancouver
Stock Exchange and Conditional Listing Letter dated June 15, 1992.
14. Letter dated February 4, 1994 from the Vancouver stock exchange as to
the Company's Private Placement Submission No. 58632
15. Letter to the Vancouver Stock exchange regarding the company's Private
Placement of 1,000,000 Units at $2.42 per Unit.
16. Letter dated October 26, 1993 from the Vancouver Stock Exchange as to
the Company's Private Placement Submission No. 65629.
17. Memorandum of Agreement dated October 6, 1994 between Delgratia
Developments Ltd. and International CanAlaska Resources Ltd.
41
18. Service Agreement dated May 6, 1994 between Delgratia Developments Ltd.
and 419353 BC Ltd.
FILED AND INCORPORATED HEREIN BY REFERENCE TO THE ANNUAL REPORT DATED
AUGUST 29, 1996:
19. Option Agreements on Mexican properties for Columbia, El LeonIII, El
Barril, Ex-Jet, San Juan, El Torito, and San Quintin.
20. Geophysical and Geochemical Methods for Mapping Gold-Bearing structures
in Nicaragua by R.S. Middleton & E.E. Campbell.
21. Agreement between North Atlantic Resources, S.A. and Delgratia
Developments Ltd. dated October 19, 1994.
22. Agreement between Delgratia Mining Corporation and WMC (Nicaragua) Inc.
dated April 1, 1995
FILED AND INCORPORATED HEREIN BY REFERENCE TO THE ANNUAL REPORT DATED
DECEMBER 12, 1996:
23. Option Agreement on Mexican properties for Los Placeres, San Quintin,
Juan Sebastian, Chapala, AT-PVG, Arco Iris I, Arco Iris II, Terry.
24. Agreement dated December 7, 1995 between Pinewood Resources Ltd. and
Delgratia Mining Corporation, amendment thereto dated January 15, 1996
and V.S.E. acceptance letter dated January 31, 1996.
25. Letter dated August 21, 1996 from the V.S.E. confirming the Company's
voluntary delisting effective the close of business August 23, 1996.
26. Agreement between Delgratia Mining Corporation, Philgold Investments
Inc., Nevada Gold Corp., and Valley Gold Corp. dated November 7, 1996.
27. Delgratia Mining Corporation 1996 Stock Option Plan dated November 6,
1996.
FILED AND INCORPORATED HEREIN BY REFERENCE TO THE ANNUAL REPORT DATED
JANUARY 13, 1998:
28. Standstill and Amending Agreement between Delgratia Mining Corporation,
Philgold Investments Inc., Nevada Gold Corp., and Valley Gold Corp.
dated June 17, 1997.
29. Lock-up and Escrow Agreement and Amendment thereto, between Delgratia
Mining Corporation, Pacific Corporate Trust and Philgold Investments
Inc. dated April 9, 1997
FILED AND INCORPORATED HEREIN BY REFERENCE TO THE ANNUAL REPORT DATED
JANUARY 6, 1999:
30. Further Amending Agreement between Delgratia Mining Corporation,
Philgold Investments Inc., Nevada Gold Corp., and Valley Gold Corp.
dated January 15, 1998.
42
31. Third Amending Agreement between Delgratia Mining Corporation, Philgold
Investments Inc., Nevada Gold Corp., and Valley Gold Corp. dated June
18, 1998.
32. Fourth Amending Agreement between Delgratia Mining Corporation,
Philgold Investments Inc., Nevada Gold Corp., and Valley Gold Corp.
33. Second Amendment to Lock-up and Escrow Agreement and Amendment thereto,
between Delgratia Mining Corporation, Pacific Corporate Trust and
Philgold Investments Inc.
34. Third Amendment to Lock-up and Escrow Agreement and Amendment thereto,
between Delgratia Mining Corporation, Pacific Corporate Trust and
Philgold Investments Inc.
35. Fourth Amendment to Lock-up and Escrow Agreement and Amendment thereto,
between Delgratia Mining Corporation, Pacific Corporate Trust and
Philgold Investments Inc.
36. Report on the Columbus, Kuikuinita and Kisalala Concessions, Nicaragua
by Behre Dolbear & Company, Inc. dated February 1998.
37. Memorandum of Understanding dated December 9, 1998 entered into by the
Class Action Plaintiffs and the Settling Defendants which included
Delgratia Mining Corporation.
FILED AND INCORPORATED HEREIN BY REFERENCE TO THE ANNUAL REPORT DATED
DECEMBER 24, 1999:
38. Notice of Filing Stipulation of Settlement and Attendant Proposed
Orders.
39. Share Purchase Agreement between Caballo Holdings Corporation,
Industrias Amalgamada, S.A. and Mangalarga Holdings Corporation.
40. Fifth Amendment to Lock-up and Escrow Agreement and Amendment thereto,
between Delgratia Mining Corporation, Pacific Corporate Trust and
Philgold Investments Inc.
41. Option and Joint Venture Agreement between Central Minera Corp. and
Lysander Minerals Ltd. for the Terry Concessions in Baja California
dated November 15, 1999.
42. Certificate of Continuance of Central Minera Corp. to the Yukon
Territories with By-Laws of the Corporation.
43
SIGNATURES
The registrant 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
----------------------
Michael Cytrynbaum,
Date: November 27, 2002 President and Director
CERTIFICATIONS
I, MICHAEL CYTRYNBAUM, CERTIFY THAT:
1. I HAVE REVIEWED THIS ANNUAL REPORT ON FORM 20-F OF CENTRAL MINERA CORP.
2. BASED ON MY KNOWLEDGE, THIS ANNUAL REPORT DOES NOT CONTAIN ANY UNTRUE
STATEMENT OF A MATERIAL FACT OR OMIT TO STATE A MATERIAL FACT NECESSARY TO MAKE
THE STATEMENTS MADE, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH SUCH STATEMENTS
WERE MADE, NOT MISLEADING WITH RESPECT TO THE PERIOD COVERED BY THIS ANNUAL
REPORT;
3. BASED ON MY KNOWLEDGE, THE FINANCIAL STATEMENTS, AND OTHER FINANCIAL
INFORMATION INCLUDED IN THIS ANNUAL REPORT, FAIRLY PRESENT IN ALL MATERIAL
RESPECTS THE FINANCIAL CONDITION, RESULTS OF OPERATIONS AND CASH FLOWS OF THE
REGISTRANT AS OF, AND FOR, THE PERIODS PRESENTED IN THIS ANNUAL REPORT;
November 27, 2002
/s/ MICHAEL CYTRYNBAUM
MICHAEL CYTRYNBAUM
44