UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
	THE SECURITIES EXCHANGE ACT OF 1934

 

For the Quarterly Period Ended March 31, 2013

 

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 Number 0-23851

 

Centenary International Corporation

 

(Exact name of registrant as specified in its charter)

 

NEVADA		90-0294913
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

 

Av. Roque Saenz Pena 971– 8 Piso, (C1035AAE) Buenos Aires, Argentina
(Address of principal executive offices)	(Zip Code)

 

(011-5411) 4328-3996

(Registrant’s telephone number, including area code)

 

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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer   ¨ (Do not check if a smaller reporting company)	Smaller reporting company x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨

 

APPLICABLE ONLY TO CORPORATE ISSUERS:

 

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

 

Class	Outstanding as of May 18, 2013
Common Stock, $.001 par value	576,682

 

 

TABLE OF CONTENTS

 

Heading		Page
	PART  I – FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Balance Sheets – March 31, 2013 (unaudited) and December 31, 2012	4
	Statements of Operations – three months ended March 31, 2013 and 2012 and the period from inception of the development stage on January 1, 2000 to March 31, 2013 (unaudited)	5
	Statements of Cash Flows – three months ended March 31, 2013 and 2012 and the period from inception of the development stage on January 1, 2000 to March 31, 2013 (unaudited)	6
	Notes to Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	9
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	14
Item 4.	Controls and Procedures	14
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	15
Item 1A.	Risk Factors	15
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	15
Item 3.	Defaults Upon Senior Securities	15
Item 4.	Mine Safety Disclosures	15
Item 5.	Other Information	15
Item 6.	Exhibits	15
	Signatures	17

 

 

PART I – FINANCIAL INFORMATION

 

Item 1.

Financial Statements

 

The accompanying balance sheets of Centenary International Corporation at March 31, 2013 and December 31, 2012, and the related statements of operations and cash flows for the three months ended March 31, 2013 and 2012 and the period from inception of the development stage on January 1, 2000 through March 31, 2013, have been prepared by management in conformity with United States generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the period ended March 31, 2013, are not necessarily indicative of the results that can be expected for the fiscal year ending December 31, 2013.

  

 

Centenary International Corporation

(A Development Stage Company)

Balance Sheets

 

		March 31,				December 31,
		2013				2012
		(Unaudited)
ASSETS
CURRENT ASSETS
Cash		$	-			$	-
Total Current Assets			-				-
TOTAL ASSETS		$	-			$	-
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable		$	19,885			$	14,644
Accrued interest payable - related parties			37,969				35,220
Convertible notes payable - related parties, net			301,249				286,428
Total Current Liabilities			359,103				336,292
STOCKHOLDERS' DEFICIT
Common stock; 50,000,000 shares authorized, at $0.001 par value, 576,682 and 576,682 shares issued and outstanding, respectively			577				577
Additional paid-in capital			8,564,999				8,564,999
Deficit accumulated prior to the development stage			(6,319,106	)			(6,319,106	)
Deficit accumulated during the development stage			(2,605,573	)			(2,582,762	)
Total Stockholders' Deficit			(359,103	)			(336,292	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT		$	-			$	-

 

The accompanying notes are an integral part of these financial statements.

 

 

Centenary International Corporation

(A Development Stage Company)

Statements of Operations

(Unaudited)

 

										From inception
										of the
										Development
										Stage on
										January 1,
		For the Three Months Ended								2000 Through
		March 31,								March 31,
		2013				2012				2013
REVENUES		$	-			$	-			$	-
OPERATING EXPENSES
General and administrative			19,855				21,427				704,426
Total Operating Expenses			19,855				21,427				704,426
OPERATING LOSS			(19,855	)			(21,427	)			(704,426	)
OTHER INCOME (EXPENSE)
Other income			-				-				52,958
Interest expense			(2,956	)			(2,503	)			(247,537	)
Total Other Income (Expense)			(2,956	)			(2,503	)			(194,579	)
LOSS FROM CONTINUING OPERATIONS			(22,811	)			(23,930	)			(899,005	)
LOSS FROM DISCONTINUED OPERATIONS			-				-				(1,706,568	)
NET LOSS BEFORE INCOME TAXES			(22,811	)			(23,930	)			(2,605,573	)
PROVISION FOR INCOME TAXES			-				-				-
NET LOSS		$	(22,811	)		$	(23,930	)		$	(2,605,573	)
BASIC LOSS PER COMMON SHARE		$	(0.04	)		$	(0.04	)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING			576,682				576,682

  

The accompanying notes are an integral part of these financial statements.

  

 

Centenary International Corporation

(A Development Stage Company)

Statements of Cash Flows

(Unaudited)

 

										From Inception
										of the
										Development
										Stage on
										January 1,
		For the Three Months Ended								2000 Through
		March 31,								March 31,
		2013				2012				2013
OPERATING ACTIVITIES
Net loss		$	(22,811	)		$	(23,930	)		$	(2,605,573	)
Adjustments to reconcile net loss to net cash used by operating activities:
Discontinued operations			-				-				2,677,112
Gain on expiration of debt			-				-				(1,015,382	)
Amortization of loan discount			207				132				1,364
Changes in operating assets and liabilities
Prepaid expenses			-				(8,250	)			-
Accrued interest payable			2,749				2,371				255,736
Accounts payable			5,241				8,665				248,169
Net Cash Used in Operating Activities			(14,614	)			(21,012	)			(438,574	)
INVESTING ACTIVITIES			-				-				-
FINANCING ACTIVITIES
Borrowings of convertible notes payable-related parties			14,614				21,012				438,574
Net Cash Provided by Financing Activities			14,614				21,012				438,574
NET DECREASE IN CASH			-				-				-
CASH AT BEGINNING OF PERIOD			-				-				-
CASH AT END OF PERIOD		$	-			$	-			$	-
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID FOR:
Interest		$	-			$	-			$	83
Income Taxes		$	-			$	-			$	-
NON CASH FINANCING ACTIVITIES:
Contributed capital		$	-			$	-			$	10,929
Common stock issued for debt		$	-			$	-			$	191,500
Related-party debt forgiveness		$	-			$	-			$	2,918
Discount on convertible notes		$	-			$	1,373			$	1,373

 

The accompanying notes are an integral part of these financial statements.

 

  

CENTENARY INTERNATIONAL CORPORATION

(A Development Stage Company)

Notes to the Financial Statements

March 31, 2013 and 2012

 

NOTE 1 – CONDENSED FINANCIAL STATEMENTS

 

The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at March 31, 2013 and for all periods presented have been made.

 

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2012 audited financial statements. The results of operations for the periods ended March 31, 2013 and 2012 are not necessarily indicative of the operating results for the full years.

 

NOTE 2 – GOING CONCERN

 

The Company's financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company does not have significant cash or other current assets, nor does it have an established source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. The Company is seeking to merge with or acquire an existing operating company.

 

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish its merger and/or acquisition strategy, and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern.

 

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES

 

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

 

Recent Accounting Pronouncements

The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company’s financial position, or statements.

 

NOTE 4 – RELATED PARTY TRANSACTIONS

 

The Company owes convertible notes payable to shareholders of $301,249 and $286,428 plus accrued interest of $37,969 and $35,220 as of March 31, 2013 and December 31, 2012, respectively. Notes are convertible at the discretion of the holder and accrue interest at the 360-day LIBOR plus 2% per annum (calculated on the date of issuance), and are due one year from the date of issuance. On December 20, 2009, each of the outstanding notes was extended for a period of one year, under the original terms. As of December 31, 2010, 2011 and 2012, each of these notes was extended through the same date in 2013. Should the Company default on the notes, they are subject to a penalty such that they would accrue interest at 150% of the original rate, commencing on the due date. On February 23, 2012 the Company borrowed $22,310 pursuant to the terms above. Of this amount, $1,298 has been recorded as a loan discount. On May 14, 2012 the Company borrowed $17,547 pursuant to the terms above. Of this amount $75 has been recorded as a loan discount. During the three months ended March 31, 2013 the Company borrowed $14,614 pursuant to the terms above. During the three months ended March 31, 2013 a total of $207 of the debt discount was amortized to interest expense, leaving an unamortized discount of $9 at March 31, 2013.

 

 

CENTENARY INTERNATIONAL CORPORATION

(A Development Stage Company)

Notes to the Financial Statements

March 31, 2013 and 2012

 

NOTE 5 – COMMITMENTS AND CONTINGENCIES

 

On September 22, 2009, the Company executed a non-binding Memorandum of Understanding (the “MOU”) with Clear S.R.L. of Comodoro Rivadavia, Argentina (“Clear SRL”), Oil m&s S.A. (“Oil m&s”) and Petrolera Cerro Negro S.A. (“PCN”) pursuant to which the Company shall acquire from Clear SRL ninety-nine and 96/100 percent (99.96%) of the issued and outstanding shares of PCN which shall become a majority-owned subsidiary of the Company. PCN owns an Oil & Gas Area Concession of “Cerro Negro,” Chubut Province, Argentina. In payment for the PCN shares, the Company will issue to Clear SRL a total of 2,129,870 new shares of the Company’s common stock. In addition, Oil m&s agreed to loan to PCN sufficient funds to comply with a Development Program which provides for the drilling of eleven wells in the concession over a specified period of time. The loan to PCN will provide that Oil m&s may, at its option, elect to convert the balance of the loan to 2,129,870 shares of the Company’s common stock following completion of the eleven new wells.

 

The Company’s acquisition of PCN will be a related-party transaction since Clear SRL is owned sixty percent (60%) by Mr. Cristobal Manual Lopez. The Company is owned forty-eight and 37/100 percent (48.37%) directly by Mr. Lopez and forty and 40/100 percent (40.40%) by Oil m&s. Mr. Lopez owns eight tenths of one percent (0.8%) of Oil m&s and serves as its President and director. Mr. Carlos Fabian DeSousa, the President and sole director of the Company, owns six tenths of one percent (0.6%) of Oil m&s and serves as its Vice President and director. In addition, through one or more other companies, Mr. Lopez and Mr. De Sousa collectively have indirect ownership of a majority of stock in Oil m&s.

 

The acquisition is subject to the signing of a definitive acquisition agreement by the parties. Closing of the acquisition of PCN is also subject to a number of conditions and legal regulations, including obtaining certain governmental approvals in Argentina. The Company is in the process of forming a wholly-owned subsidiary corporation in Argentina that will likely be used to facilitate the proposed acquisition.

 

Because of delays associated with the acquisition of PCN and Centenary’s worsening financial condition, the parties may rescind the MOU.

 

NOTE 6 – SUBSEQUENT EVENTS

 

The Company has evaluated subsequent events from the balance sheet date through the date the financial statements were issued and has determined that there are no items to disclose.

  

 

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

 

The following information should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this Form 10-Q. The Company’s fiscal year end is December 31.

 

Centenary International Corporation, a Nevada corporation (the "Company" or “Centenary”), was incorporated on June 10, 1997. From its inception through the 1999 fiscal year, the Company was considered an exporter of food stuffs and commodities from Argentina to the world. However, the Company abandoned this line of business in 1999, before any revenues were earned. The Company re-entered the development stage on January 1, 2000, and has remained an inactive development stage company since that date. The Company’s ongoing business expenses are funded primarily through shareholder loans.

 

The Company’s current focus is to seek out and consummate a merger with, or an acquisition of, an existing operating entity. Management investigates possible merger candidates and acquisition opportunities from time to time. However, management can provide no assurance that we will have the ability to acquire or merge with an operating business, business opportunity or property that will be of material value to us.

 

It is anticipated that we will require only nominal capital to maintain our corporate viability until such time as we are able to consummate an acquisition or merger with an operating business. However, unless we are able to facilitate an acquisition of or merger with an operating business or are able to obtain significant outside financing, there is substantial doubt about our ability to continue as a going concern.

 

Except as disclosed in a Current Report on Form 8-K filed by Centenary on September 25, 2009, Centenary has not yet entered into any agreement, nor do we have any commitment or understanding to enter into or become engaged in any transaction, as of the date of this filing. As of the date hereof, we have not made any arrangements or definitive agreements to use outside advisors or consultants.

 

Until such time as we acquire another business or company, we do not intend to use any employees with the possible exception of part-time clerical assistance on an as-needed basis. Outside advisors or consultants will likely be used only if they can be obtained for minimal cost or on a deferred payment basis. Management is confident that it will be able to operate in this manner and to continue its search for business opportunities during the next twelve months.

 

As disclosed in a Current Report on Form 8-K filed by Centenary on September 25, 2009, Centenary announced that on September 22nd 2009, it executed a non-binding Memorandum of Understanding (the “MOU”) with Clear S.R.L. of Comodoro Rivadavia, Argentina (“Clear SRL”), Oil m&s S.A. (“Oil m&s”) and Petrolera Cerro Negro S.A. (“PCN”) pursuant to which Centenary shall acquire from Clear SRL ninety-nine and 96/100 percent (99.96%) of the issued and outstanding shares of PCN which shall become a majority-owned subsidiary of Centenary. PCN owns the Oil & Gas Area Concession of “Cerro Negro,” Chubut Province, Argentina, valued at approximately US$1,064,935. In payment for the PCN shares, Centenary will issue to Clear SRL a total of 2,129,870 new shares of Centenary common stock. In addition, Oil will loan to PCN sufficient funds to comply with a Development Program which provides for the drilling of eleven wells in the concession over a specified period of time. The loan to PCN will provide that Oil m&s may, at its option, elect to convert the balance of the loan to 2,129,870 shares of Centenary common stock following completion of the eleven new wells.

 

The acquisition of PCN by Centenary will be a related party transaction since Clear SRL is owned sixty percent (60%) by Mr. Cristobal Manual Lopez. Centenary is owned forty-eight and 37/100 percent (48.37%) directly by Mr. Lopez and forty and 40/100 percent (40.40%) by Oil m&s. Mr. Lopez owns eight tenths of one percent (0.8%) of Oil m&s and serves as its President and director. Mr. Carlos Fabian DeSousa, the President and sole director of Centenary, owns six tenths of one percent (0.6%) of Oil m&s and serves as its Vice President and director.

 

 

The acquisition is subject to the signing of a definitive acquisition agreement by the parties. Closing of the acquisition of PCN is also subject to a number of conditions and legal regulations, including government approvals in Argentina.

 

The Cerro Negro concession is a 186 km2 area in Chubut Province in the South of Argentina, with 31 out of 45 oil wells in production at present. Through March 31, 2013 it had an accumulated production of 2,333,179 barrels of oil equivalent (“boe”).

 

The concession finishes on 12/31/2025 and until this time the proved reserves of oil reach 3,553,440 boe and unproved reserves reach 2,409,945 boe.

 

Because of delays associated with the acquisition of PCN and Centenary’s worsening financial condition, the parties may rescind the MOU.

 

Results of Operations - Three Months Ended March 31, 2013

 

Revenues and Other Income

 

We had no revenues in either of the three month periods ended March 31, 2013 or 2012. If we are able to successfully complete the proposed acquisition of an oil and gas company in Argentina during the year ending December 31, 2013, we should begin to generate revenues in the year ending December 31, 2013.

 

Expenses

 

We had general and administrative expenses of $19,855 in the three month period ended March 31, 2013, a decrease of $1,572 from the $21,427 of general and administrative expenses incurred in the three month period ended March 31, 2012. The decrease in general and administrative expenses is attributable primarily to a decrease in legal and accounting expenses. We incurred interest expense of $2,956_in the three months ended March 31, 2013, an increase of $453 from the interest expense of $2,503 incurred in the three months ended March 31, 2012. The increase in interest expense in the later period is attributable to the fact that the balance of notes payable – related parties was higher in the later period. If we are able to successfully complete the acquisition of an oil and gas company in Argentina during the year ending December 31, 2013, we expect that our general and administrative expenses will increase significantly.

 

Net Losses

 

We had a net loss of $22,811, or $0.04 per share, during the three month period ended March 31, 2013, compared to a net loss of $23,930, or $0.04 per share, during the comparable period of 2012. The primary reason for the $1,119 decrease in net loss was a decrease in general and administrative expenses, partially offset by an increase in interest expense, in the later period.

 

Liquidity and Capital Resources – March 31, 2013

 

The Company is in the development stage and, since inception, has experienced significant changes in liquidity, capital resources and shareholders’ equity. As of March 31, 2013 the Company has $0 in total assets, with total liabilities of $359,103. The liabilities consist of convertible notes payable – related parties of $301,249, accrued interest payable - related parties of $37,969 and accounts payable of $19,885.

 

Cash flow used in operating activities was $14,614 for the three months ended March 31, 2013, which is identical to the financing cash flows from notes borrowed. It reflects the net loss incurred for the three months ended March 31, 2013, less increases in accounts payable of $5,241, accrued interest payable of $2,749, and $207 in amortization of loan discount.

 

 

The Company’s current assets are not sufficient to conduct its plan of operation over the next twelve (12) months. The Company anticipates that it may need to raise approximately $350,000 from equity or debt financing arrangements to meet the Company’s expenses in the next twelve (12) months if the Company remains as a development stage company searching for business opportunities. Alternatively, if the Company is not required to pay off its existing notes payable to related parties in the next twelve months, the Company may only need to borrow or raise approximately $50,000 to meet its expenses in the next twelve months if it remains as a development Company searching for business opportunities. If the Company successfully closes its proposed acquisition during 2013, the Company anticipates that it may need to raise approximately $350,000 from equity or debt financing arrangements to meet the Company’s expenses in the next twelve (12) months. We have no current commitments or arrangements with respect to, or immediate sources of funding. Further, no assurances can be given that funding, if needed, would be available or available to us on acceptable terms. Although our principal shareholder or a company affiliated with him would be the most likely source of new funding in the form of loans or equity placements in the near future, no commitments have been made for future investment and the Company has no agreement formal or otherwise. The Company’s inability to obtain funding, if required, would have a material adverse affect on its plan of operation.

 

We expect to rely at least partially on our principal shareholder or a company with which he is affiliated to pay our expenses in the future, because we have no cash or sources of revenues, and anticipate having none until such time that we complete a merger with or acquisition of an existing operating company. There is no assurance that we will complete such a merger or acquisition or that our principal shareholder or his affiliated company will continue indefinitely to pay our expenses. As of March 31, 2013 we had no cash and current liabilities totaled $359,103.

 

All of the Company’s liabilities are current liabilities due within the next year.

 

The Company has no current plans to make any changes in the number of employees unless the Company can successfully close the proposed acquisition of an oil and gas company in Argentina, in which case the Company would expect to increase the number of employees following the acquisition.

 

In the opinion of management, inflation has not and will not have a material effect on our operations until such time as we successfully complete an acquisition or merger. At that time, management will evaluate the possible effects of inflation on our business and operations.

 

Capital Expenditures

 

The Company expended no amounts on capital expenditures during the year ended December 31, 2012 or during the year ended December 31, 2011. The Company expended no amounts on capital expenditures during the three months ended March 31, 2013, and the Company has no current plans for the purchase or sale of any plant or equipment in the current fiscal year.

 

Critical Accounting Policies

 

In the notes to the Company’s financial statements for the year ended December 31, 2012, included in the Company’s annual report filed on Form 10-K, the Company discusses those accounting policies that are considered to be significant in determining the results of operations and its financial position. The Company believes that the accounting principles utilized by it conform to accounting principles generally accepted in the United States of America.

 

 

The preparation of financial statements requires Company management to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. By their nature, these judgments are subject to an inherent degree of uncertainty. On an on-going basis, the Company evaluates estimates. The Company bases its estimates on historical experience and other facts and circumstances that are believed to be reasonable, and the results form the basis for making judgments about the carrying value of assets and liabilities. The actual results may differ from these estimates under different assumptions or conditions.

 

Going Concern

 

The Company believes there is substantial doubt as to the Company’s ability to continue as a going concern as a result of recurring losses, lack of revenue-generating activities and a deficit accumulated during the development stage in the amount of $2,605,573 as of March 31, 2013. The Company’s ability to continue as a going concern is subject to the ability of the Company to realize a profit from operations and/or obtain funding from outside sources. Since the Company has no revenue generating operations, our plan to address the Company’s ability to continue as a going concern over the next twelve months includes: (1) obtaining additional funding from the sale of our securities; and/or (2) obtaining loans and grants from our principal shareholders and/or various financial institutions, where possible. Although we believe that we will be able to obtain the necessary funding to allow the Company to remain a going concern through the methods discussed above, there can be no assurances that such methods will prove successful.

 

Plan of Operation

 

The Company’s current focus is to seek out and consummate a merger with, or an acquisition of, an existing operating entity. We intend to actively seek out and investigate possible business opportunities for the purpose of possibly acquiring or merging with one or more business ventures. We do not intend to limit our search to any particular industry or type of business. From time to time we investigate possible merger candidates and acquisition opportunities. However, we can provide no assurance that we will have the ability to acquire or merge with an operating business, business opportunity, or property that will be of material value to us.

 

As disclosed in a Current Report on Form 8-K filed by Centenary on September 25, 2009, Centenary announced that on September 22nd 2009, it executed a non-binding Memorandum of Understanding (the “MOU”) with Clear S.R.L. of Comodoro Rivadavia, Argentina (“Clear SRL”), Oil m&s S.A. (“Oil m&s”) and Petrolera Cerro Negro S.A. (“PCN”) pursuant to which Centenary shall acquire from Clear SRL ninety-nine and 96/100 percent (99.96%) of the issued and outstanding shares of  PCN which shall become a majority-owned subsidiary of Centenary.  PCN owns the Oil & Gas Area Concession of “Cerro Negro,” Chubut Province, Argentina, valued at approximately US$1,064,935.  In payment for the PCN shares, Centenary will issue to Clear SRL a total of 2,129,870 new shares of Centenary common stock.  In addition, Oil m&s will loan to PCN sufficient funds to comply with a Development Program which provides for the drilling of eleven wells in the concession over a specified period of time.  The loan to PCN will provide that Oil m&s may, at its option, elect to convert the balance of the loan to 2,129,870 shares of Centenary common stock following completion of the eleven new wells.

 

The acquisition of PCN by Centenary will be a related party transaction since Clear SRL is owned sixty percent (60%) by Mr. Cristobal Manual Lopez.  Centenary is owned forty-eight and 37/100 percent (48.37%) directly by Mr. Lopez and forty and 40/100 percent (40.40%) by Oil m&s.  Mr. Lopez owns eight tenths of one percent (0.8%) of Oil m&s and serves as its President and director.  Mr. Carlos Fabian DeSousa, the President and sole director of Centenary, owns six tenths of one percent (0.6%) of Oil m&s and serves as its Vice President and director. In addition, through one or more other companies, Mr. Lopez and Mr. De Sousa collectively have indirect ownership of a majority of stock in Oil m&s.

 

 

The acquisition is subject to the signing of a definitive acquisition agreement by the parties.  Closing of the acquisition of PCN is also subject to a number of conditions and legal regulations, including obtaining certain governmental approvals in Argentina.  An application was filed in Chubut Province, Argentina in March 2010 seeking government approval to allow Centenary to become a shareholder of an Argentine company.  The application is in process.  

 

The Cerro Negro concession is a 186 km2 area in Chubut Province in the South of Argentina, with 31 out of 45 oil wells in production at present. Through March 31, 2013, it had an accumulated production of 2,333,179 barrels of oil equivalent (“boe”).

 

The concession finishes on December 31, 2025 and until this time the proved reserves of oil reach 3,553,440 boe and unproved reserves reach 2,409,945 boe.

 

Because of delays associated with the acquisition of PCN and Centenary’s worsening financial condition, the parties may rescind the MOU.

 

Because we lack significant funds, it may be necessary for our officers, directors and principal stockholders or their affiliates to either advance funds or to accrue expenses until such time as a successful business consolidation can be made. Management intends to hold expenses to a minimum and to obtain services on a contingency basis when possible. However, if we engage outside advisors or consultants in our search for business opportunities, our expenses will increase.

 

We believe the best method available to us to raise capital is the private sale of our securities. Because we are a development stage company, it is unlikely that we could make a public sale of securities or be able to borrow any significant sum from either a commercial or private lender. We anticipate that our principal shareholder will continue to arrange for loans to be made to the Company in the near term to support our operations. However, he is not contractually obligated to provide additional funds to us. There can be no assurance that we will be able to obtain additional funding when and if needed, or that such funding, if available, can be obtained on acceptable terms.

 

We do not intend to use any employees, with the possible exception of part-time clerical assistance on an as-needed basis. Outside advisors or consultants will be used only if they can be obtained for minimal cost or on a deferred payment basis. Management is confident that it will be able to operate in this manner and to continue its search for business opportunities during the next twelve months. Management further believes that we will not have to make any equipment purchases in the immediate future.

 

Net Operating Loss

 

We have accumulated approximately $394,537 of net operating loss carry forwards as of March 31, 2013. This loss carry forward may be offset against taxable income and income taxes in future years through the year 2033. The use of these losses to reduce future income taxes will depend on the generation of sufficient taxable income prior to the expiration of the net operating loss carry forwards. In the event of certain changes in control, there will be an annual limitation on the amount of net operating loss carry forwards which can be used. No tax benefit has been reported in the financial statements as of March 31, 2013 because it has been fully offset by a valuation reserve. The use of future tax benefit is undeterminable because we presently have no operations.

 

Critical Accounting Policies

 

In the notes to the Company’s financial statements for the year ended December 31, 2012, included in the Company’s annual report filed on Form 10-K, the Company discusses those accounting policies that are considered to be significant in determining the results of operations and its financial position. The Company believes that the accounting principles utilized by it conform to accounting principles generally accepted in the United States of America.

 

 

The preparation of financial statements requires Company management to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. By their nature, these judgments are subject to an inherent degree of uncertainty. On an on-going basis, the Company evaluates estimates. The Company bases its estimates on historical experience and other facts and circumstances that are believed to be reasonable, and the results form the basis for making judgments about the carrying value of assets and liabilities. The actual results may differ from these estimates under different assumptions or conditions.

 

Forward-Looking and Cautionary Statements

 

This report contains certain forward-looking statements. These statements relate to future events or our future performance and involve known and unknown risks and uncertainties. Actual results may differ substantially from such forward-looking

statements, including, but not limited to, the following:

 

·

our ability to search for an appropriate business opportunity and to subsequently acquire or merge with such entity;

·

to meet our cash and working capital needs;

·

our ability to maintain our corporate existence as a viable entity; and

·

other risks detailed in our periodic report filings with the SEC.

 

In some cases, you can identify forward-looking statements by terminology such as “may,” “will” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” or the negative of these terms or other comparable terminology.

 

These statements are only predictions. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

A “smaller reporting company” (as defined by Item 10 of Regulation S-K) is not required to provide the information required by this Item pursuant to Item 305(e) of Regulation S-K.

 

Item 4.

Controls and Procedures

 

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of management, including our chief executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (“Exchange Act”). Based upon that evaluation, our chief executive officer and principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms, and that such information was accumulated and communicated to our chief executive officer and chief financial officer, in a manner that allowed for timely decisions regarding required disclosures. There have been no changes in our internal controls or in other factors which could significantly affect internal controls subsequent to the date we carried out our evaluation.

 

During the three months ended March 31, 2013, no changes occurred with respect to our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, internal control over financial reporting.

 

 

PART II – OTHER INFORMATION

 

Item 1.

Legal Proceedings

 

There are no material pending legal proceedings to which we are a party or to which any of our property is subject and, to the best of our knowledge, no such actions against us are contemplated or threatened.

 

Item 1A.

Risk Factors

 

A “smaller reporting company” (as defined by Item 10 of Regulation S-K) is not required to provide the information required by this Item.

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

During the three month period ended March 31, 2013, the Company did not issue any shares of its unregistered common stock. For a description of any sales of shares of the Company’s unregistered stock made in the past three years, please refer to the Company’s Annual Reports on Form 10-K, and the Company’s Quarterly Reports on Form 10-Q filed since December 31, 2009.

 

Item 3.

Defaults Upon Senior Securities

 

This Item is not applicable.

 

Item 4.

Mine Safety Disclosures

 

This Item is not applicable.

 

Item 5.

Other Information

 

This Item is not applicable.

 

Item 6.

Exhibits

 

(a)

Exhibits:

 

	Exhibit 3.1*	Articles of Incorporation of the Company (incorporated by reference from the Form 10-SB filed with the Commission on February 27, 1998).
	Exhibit 3.2*	By-laws of the Company (incorporated by reference from the Form 10-SB filed with the Commission on February 27, 1998).
	Exhibit 3.3*	Certificate of Amendment to Articles of Incorporation dated effective March 30, 2007 (effecting a 1 share for 100 shares reverse stock split of outstanding common stock) (incorporated by reference from the Form 10-KSB for the year ended December 31, 2006 filed with the Commission on April 12, 2007).
	Exhibit 14.1*	Code of Ethics (incorporated by reference from the Form 10-K for the year ended December 31, 2008 filed with the Commission on April 1, 2009)
	Exhibit 31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	Exhibit 31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

	Exhibit 32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	Exhibit 32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	Exhibit 101.INS	XBRL Instance Document**
	Exhibit 101.PRE	XBRL Taxonomy Extension Presentation Linkbase**
	Exhibit 101.LAB	XBRL Taxonomy Extension Label Linkbase**
	Exhibit 101.DEF	XBRL Taxonomy Extension Definition Linkbase**
	Exhibit 101.CAL	XBRL Taxonomy Extension Calculation Linkbase**
	Exhibit 101.SCH	XBRL Taxonomy Extension Schema **

 

*Previously filed

 

**Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed “furnished” and not “filed” or part of a registration statement or prospectus for purposes of Sections 11 and 12 of the Securities Act of 1933, or deemed “furnished” and not “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise is not subject to liability under these sections.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

	CENTENARY INTERNATIONAL CORPORATION
Date: May 21, 2013	By:	/s/ Carlos Fabian De Sousa
		Carlos Fabian De Sousa
		President, Sole Director, Chief Executive
		Officer, Chief Financial Officer and
		Principal Accounting Officer