SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM
8-K AMENDMENT NO. 1
_________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: November 12, 1998
CENTENARY INTERNATIONAL CORP.
(FORMERLY, R&R RESOURCES, INC.)
(Exact name of registrant as specified in its charter)
Nevada 000-23851 86-0874841
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation or organization) Identification No.)
12000 Westheimer, Suite 215
Houston, Texas 77077
(Address of principal executive offices, including zip code)
voice (281) 556-1870 / fax (281) 556-5072
(Registrant's telephone number, including area code)
_________________
_______________________________________________________________________________
<PAGE>
ITEM 7: Financial Statements
(a) Financial Statements of businesses acquired
Centenary S.A. - Report and Interim Financial Statements (UNAUDITED) - September
30, 1998 and 1997 and year end (Audited) Financial Statements - May 31, 1998 and
1997
(b) Proforma Financial Information
(c) Exhibits
Financial Data Schedules for the fiscal years ended May 31, 1998 and May 31,
1997.
Financial Data Schedules for the four month interim periods ended September 30,
1998 and September 30, 1997.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report on Form 8-K Amendment No. 1 to be signed
on its behalf by the undersigned hereunto duly authorized.
Centenary International Corp.
Date: January 26, 1999 /s/ Eduardo Sagarnaga
--------------------------------------
Eduardo Sagarnaga
its: Director, President
and Chief Executive Officer
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
Board of Directors
CENTENARY S.A.
We have audited the accompanying balance sheets of CENTENARY S.A. as of May 31,
1998 and 1997, and the related statements of operations, shareholders' equity
and cash flows for each of 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 auditing standards generally accepted
in Argentina which are in substantial agreement with those in the United States
of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about 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.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CENTENARY S.A. as of May 31,
1998 and 1997, and the results of its operations and its cash flows for each of
the years then ended in conformity with generally accepted accounting principles
in the United States of America.
Grant Thornton
Buenos Aires
July 31, 1998
<PAGE>
- 1 -
<TABLE>
<CAPTION>
CENTENARY S.A.
--------------
BALANCE SHEETS
--------------
(Stated in US Dollars)
May, 31 September, 30
------------------------------- -----------
1998 1997 1998
--------------- -------------- -----------
ASSETS (Unaudited)
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
CURRENT ASSETS
- -----------------------------------------------------------------------------
Cash 81,403 2,178,964 1,025,238
Accounts receivable, net of allowance for doubtful
accounts of 129,955 and 107,196 in 1998 and 1997
respectively 34,151,922 20,551,126 18,724,368
Other receivables (note 2) 4,817,050 1,352,496 3,787,490
Inventories 101,200 372,997 -
Properties held for sale (note 3) 118,688 920,852 -
Deferred tax asset (note 10) 46,147 108,344 206,070
--------------- -------------- -----------
Total current assets 39,316,410 25,484,779 23,743,166
--------------- -------------- -----------
Property, plant and equipment (note 4) 6,135,358 3,641,849 6,331,964
Intangible assets (note 5) 1,669,428 2,089,666 1,528,718
--------------- -------------- -----------
7,804,786 5,731,515 7,860,682
--------------- -------------- -----------
Total assets 47,121,196 31,216,294 31,603,848
=============== ============== ===========
LIABILITIES
- -----------------------------------------------------------------------------
CURRENT LIABILITIES
- -----------------------------------------------------------------------------
Accounts payable 19,381,490 7,549,175 7,724,578
Short term debt (note 6) 5,612,338 5,785,842 1,465,219
Long term debt - current portion 471,520 - 600,000
Accrued payroll and related expenses 74,683 14,458 45,827
Taxes payable 521,468 441,801 438,882
Customers advances 292,948 684,813 1,007,041
Other liabilities 270,878 180,000 451,200
Related party payable (note 7) - 4,479,049 -
--------------- -------------- -----------
Total current liabilities 26,625,325 19,135,138 11,732,747
--------------- -------------- -----------
Accounts payable long term 5,892,783 225,000 5,822,930
Advanced capital contribution (note 8) - 4,000,000 -
Long term debt (note 6) 6,166,667 5,000,000 6,388,718
Taxes payable 47,009 - 33,149
--------------- -------------- -----------
Total non-current liabilities 12,106,459 9,225,000 12,244,797
--------------- -------------- -----------
Total liabilities 38,731,784 28,360,138 23,977,544
--------------- -------------- -----------
SHAREHOLDERS' EQUITY
- -----------------------------------------------------------------------------
Common stock, $10 par value, 800,000 shares authorized;
800,000 and 250,000 issued and outstanding in May 1998 and 1997 respectively
and 800,000 in September 1998 8,000,000 2,500,000 8,000,000
Retained earnings - unappropriated 247,775 221,969 (515,333)
Retained earnings - appropriated (note 9) 141,637 134,187 141,637
--------------- -------------- -----------
Total shareholders' equity 8,389,412 2,856,156 7,626,304
--------------- -------------- -----------
Total liabilities and shareholders' equity 47,121,196 31,216,294 31,603,848
=============== ============== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
- 2 -
<TABLE>
<CAPTION>
CENTENARY S.A.
--------------
STATEMENTS OF OPERATIONS
------------------------
(Stated in US Dollars)
Years ended May 31, Four months ended September 30,
------------------------------------ -------------------------------
1998 1997 1998 1997
----------------- ----------------- ----------------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net sales 120,775,920 123,837,119 28,752,081 27,328,483
Cost of goods sold (100,015,387) (106,125,567) (22,389,458) (20,720,177)
----------------- ----------------- ----------------- ------------
Gross profit 20,760,533 17,711,552 6,362,623 6,608,306
Selling expenses (17,200,360) (14,941,381) (4,896,813) (3,888,779)
Administrative expenses (3,157,727) (2,072,909) (1,842,775) (974,951)
----------------- ----------------- ----------------- ------------
Operating income (loss) 402,446 697,262 (376,965) 1,744,576
Other income and expenses 1,293,648 340,588 (159,146) 46,321
Interest expense (1,477,469) (980,281) (386,920) (414,521)
----------------- ----------------- ----------------- ------------
Income (loss) before income taxes 218,625 57,569 (923,031) 1,376,376
Income (taxes) benefit (note 10) (185,369) (79,177) 159,923 (495,158)
----------------- ----------------- ----------------- ------------
Net income (loss) 33,256 (21,608) (763,108) 881,218
================= ================= ================= ============
Earnings (loss) per share, basic and diluted
.11 (.09) (.95) 3.52
================= ================= ================= ============
</TABLE>
The accompanying notes are an integral part of these statements.
- 3 -
<PAGE>
<TABLE>
<CAPTION>
CENTENARY S.A.
--------------
STATEMENT OF SHAREHOLDERS' EQUITY
---------------------------------
FOR THE YEARS ENDED MAY 31, 1998 AND 1997
-----------------------------------------
AND FOUR MONTHS ENDED SEPTEMBER 30, 1998 (UNAUDITED)
----------------------------------------------------
(Stated in US Dollars)
Common stock Retained earnings
------------------------ ------------------------------------------
Unappropriated Appropriated
---------- ------------------------------
Shares Amount Legal Other Total
------------ ---------- --------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Balance, May 31, 1996 250,000 2,500,000 252,507 30,200 95,057 125,257
Net income - - (21,608) - - -
Appropriated retained earnings (note 9) - - (8,930) 8,930 - 8,930
------------ ---------- ---------- --------- ---------- -------
Balance, May 31, 1997 250,000 2,500,000 221,969 39,130 95,057 134,187
Issuance of common stock 550,000 5,500,000 - - - -
Net income - - 33,256 - - -
Appropriated retained earnings (note 9) - - (7,450) 7,450 - 7,450
------------ ---------- ---------- --------- ---------- -------
Balance, May 31, 1998 800,000 8,000,000 247,775 46,580 95,057 141,637
Net income for the period of four months
(unaudited) - - (763,108) - - -
------------ ---------- ---------- --------- ---------- -------
Balance, September 30, 1998 (unaudited) 800,000 8,000,000 (515,333) 46,580 95,057 141,637
============ ========== ========== ========= ========== =======
</TABLE>
The accompanying notes are an integral part of these statements.
- 4 -
<PAGE>
<TABLE>
<CAPTION>
CENTENARY S.A.
--------------
STATEMENTS OF CASH FLOWS
------------------------
(Stated in US Dollars)
Years ended May 31, Four months ended September 30,
-------------------------------- ----------------------------
1998 1997 1998 1997
--------------- --------------- --------------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
- ----------------------------------------------------
Net income (loss) 33,256 (21,608) (763,108) 881,218
--------------- --------------- --------------- -----------
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
- ----------------------------------------------------
Depreciation of fixed assets 174,767 60,692 47,342 45,672
Amortization of intangible assets 422,129 18,974 140,710 140,801
Written-down of property held for sale - 211,233 - -
--------------- --------------- --------------- -----------
596,896 290,899 188,052 186,473
--------------- --------------- --------------- -----------
CHANGES IN ASSETS AND LIABILITIES
- ----------------------------------------------------
Accounts receivables (13,600,796) (6,512,115) 15,427,554 5,652,618
Other receivable (3,464,554) 187,304 1,029,560 (316,801)
Inventories 271,797 646,303 101,200 (90,825)
Deferred tax asset (liability) 62,197 (105,082) (159,923) 69,657
Accounts payable 17,500,098 (4,344,365) (11,726,765) (4,000,022)
Accrued payroll and related expenses 60,225 6,238 (28,856) 78,750
Taxes payable 126,676 327,964 (96,446) 285,027
Customers advances (391,865) 684,813 714,093 (169,659)
Other liabilities 90,878 (60,772) 180,322 83,000
Related party payable (4,479,049) 4,479,049 - (4,479,049)
--------------- --------------- --------------- -----------
(3,824,393) (4,690,663) 5,440,739 (2,887,304)
--------------- --------------- --------------- -----------
Net cash provided by (used in) operating activities (3,194,241) (4,421,372) 4,865,683 (1,819,613)
--------------- --------------- --------------- -----------
INVESTING ACTIVITIES
- ----------------------------------------------------
Proceeds of sales of investments - 9,662 - -
Purchase of fixed assets (2,948,144) (1,090,610) (243,948) (702,641)
Proceeds of sale of fixed assets 161,180 - - -
Increase of intangible assets (1,891) (2,103,440) - (70)
Proceeds of sale of property held for sale 920,852 - 118,688 -
--------------- --------------- --------------- -----------
Net cash provided by (used in) investing activities (1,868,003) (3,184,388) (125,260) (702,711)
--------------- --------------- --------------- -----------
FINANCING ACTIVITIES
- ----------------------------------------------------
Net borrowings (repayments) under short term debt (173,504) 330,738 (4,147,119) 1,378,734
Borrowings long term debt 1,638,187 5,000,000 350,531 1,294,547
Repayments long term debt - (488,095) - -
Advanced capital contribution (4,000,000) 4,000,000 - -
Issuance of common stock 5,500,000 - - -
--------------- --------------- --------------- -----------
Net cash provided (used in) financing activities 2,964,683 8,842,643 (3,796,588) 2,673,281
--------------- --------------- --------------- -----------
NET INCREASE (DECREASE) IN CASH (2,097,561) 1,236,883 943,835 150,957
--------------- --------------- --------------- -----------
CASH AT THE BEGINNING OF THE YEAR 2,178,964 942,081 81,403 2,178,964
--------------- --------------- --------------- -----------
CASH AT THE END OF THE YEAR 81,403 2,178,964 1,025,238 2,329,921
=============== =============== =============== ===========
Supplemental cash flow information:
Cash paid for incomes taxes 116,151 5,015 163,863 -
Cash paid for interest 1,447,304 983,945 337,370 395,996
--------------- --------------- --------------- -----------
1,563,455 988,960 501,233 395,996
=============== =============== =============== ===========
Non cash transaction:
Transfer of properties to property held for sale 118,688 920,852 - -
=============== =============== =============== ===========
</TABLE>
The accompanying notes are an integral part of the statements.
<PAGE>
- 5 -
CENTENARY S.A.
--------------
NOTES TO THE FINANCIAL STATEMENTS
---------------------------------
FOR THE YEARS ENDED OF MAY 31, 1998 AND 1997
--------------------------------------------
AND FOUR MONTHS ENDED SEPTEMBER 30,1998 AND 1997 (UNAUDITED)
------------------------------------------------------------
(stated in US Dollars)
1. Summary of significant accounting policies
----------------------------------------------
Business
- --------
CENTENARY S.A. (the "Company"), is an Argentine Company which primarily trades
commodities and agriproducts internationally. The primary commodities and
agriproducts which the Company trades are wheat, corn, livestock, meal and
poultry. The Company identifies and fulfulls the demand in foreign markets for
agricultural, livestock and agroindustrial surplus of Mercosur (South American
Common Market).
The Company also operates an Argentine ranch which is used for cattle breeding
and for the development of an olive tree grove.
Basis of presentation
- -----------------------
The financial statements have been prepared in accordance with generally
accepted accounting principles in the United States.
Allowance for doubtful accounts
- ----------------------------------
Management provides an allowance for doubtful accounts when collection of
accounts receivable is in doubt.
Inventories
- -----------
Inventories include merchandise for sale at the lower of cost or market. The
cost of inventories has been determined using the first-in first-out method.
Properties held for sale
- ---------------------------
Properties, held for sale are carried at the lower of cost or estimated selling
price less cost of disposal.
Property, plant and equipment
- --------------------------------
Property, plant and equipment are stated at cost. Breeding cattle are carried at
purchase price or the lower of accumulated maintenance costs or market.
Expenditures for betterments are capitalized. Costs of maintenance and repairs
are expensed.
Depreciation is provided using the straight line method over the estimated
useful lives of the related depreciable assets.
<PAGE>
- 6 -
CENTENARY S.A.
--------------
NOTES TO THE FINANCIAL STATEMENTS
---------------------------------
FOR THE YEARS ENDED OF MAY 31, 1998 AND 1997
--------------------------------------------
AND FOUR MONTHS ENDED SEPTEMBER 30,1998 AND 1997 (UNAUDITED)
------------------------------------------------------------
(stated in US Dollars)
Intangibles
- -----------
Intangible assets consist of patents and trademarks carried at cost less
accumulated amortization.
Amortization is provided over the estimated life of five years.
The carrying value of intangibles is reviewed if facts and circumstances
indicate that they may be impaired.
If this review indicates that the intangibles will not be recoverable, as
determined based on undiscounted cash flows of the related product, the
Company's carrying value will be reduced by the estimated shortfall of cash
flows.
Revenue recognition
- --------------------
Revenue is recognized when the product is shipped.
Income taxes
- -------------
The Company uses the liability method for accounting for income taxes. Under the
liability method, deferred tax assets and liabilities are determined based on
the difference between the financial statement and tax bases of assets and
liabilities as measured by the current enacted tax rates which will be in effect
when these differences reverse. Income tax expense is the tax payable for the
period and the change during the period in deferred tax assets and liabilities.
Foreign currency translation
- ------------------------------
The financial statements are translated from pesos to US Dollars using an actual
and average exchange rate of $ 1 = US$ 1 for the years presented. Beginning in
the year ending May 31, 1998, substantially all trading transactions are
denominated in US Dollars.
Earnings per share
- --------------------
Basic earnings per share is computed by dividing net income by the weighted
average number of common shares outstanding during the period. Weighted average
number of shares outstanding were 300,822 and 250,000 for 1998 and 1997
respectively.
Diluted earnings per share is equivalent to basic earnings per share because
there are no potentially dilutive equivalents.
<PAGE>
- 7 -
CENTENARY S.A.
--------------
NOTES TO THE FINANCIAL STATEMENTS
---------------------------------
FOR THE YEARS ENDED OF MAY 31, 1998 AND 1997
--------------------------------------------
AND FOUR MONTHS ENDED SEPTEMBER 30,1998 AND 1997 (UNAUDITED)
------------------------------------------------------------
(stated in US Dollars)
Fair value of financial instruments
- ---------------------------------------
The carrying value of financial instruments approximates fair value. The
Company's financial instruments are accounts receivable, accounts payable, short
term debt and long term debt. The Company does not have any off-balance sheet
financial instruments or derivatives.
Recent accounting pronouncements
- ----------------------------------
The Financial Accounting Standards Board (FASB) issued FASB No. 130, "Reporting
Comprehensive Income" which is effective for years beginning after December 15,
1997. The new statement requires companies to report comprehensive income in
their financial statements. The Company will provide the required disclosures
beginning in its fiscal year ending May 31, 1999.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information", which is effective for all periods
beginning after December 15, 1997. SFAS 131 requires that public business
enterprises report certain information about operating segments in complete sets
of financial statements of the enterprise and in condensed financial statements
of interim periods issued to shareholders. It also requires that public business
enterprises report certain information about their products and services, the
geographic areas in which they operate, and their major customers. Management is
currently evaluating the impact of the disclosure requirements of this
statement.
Use of estimates
- ------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual amounts could differ from those estimates.
<PAGE>
- 8 -
CENTENARY S.A.
--------------
NOTES TO THE FINANCIAL STATEMENTS
---------------------------------
FOR THE YEARS ENDED OF MAY 31, 1998 AND 1997
--------------------------------------------
AND FOUR MONTHS ENDED SEPTEMBER 30,1998 AND 1997 (UNAUDITED)
------------------------------------------------------------
(stated in US Dollars)
2. Other receivables
------------------
<TABLE>
<CAPTION>
Years ended May 31, September 30,
-------------------------- ---------
1998 1997 1998
------------ ------------ ---------
(Unaudited)
<S> <C> <C> <C>
Stockholders subscription 1,100,000 - 1,100,000
Related party (note 7) 1,024,992 - 693,478
Refundable tax credits 999,229 702,300 953,762
Notes receivable 870,290 - -
Credits with real guarantee 271,000 - -
Advances to directors 254,397 193,400 456,015
Other receivables 297,142 456,796 292,249
Guarantee deposits - - 291,986
------------ ------------ ---------
4,817,050 1,352,496 3,787,490
============ ============ =========
</TABLE>
The stockholders subscription receivable in the amount of 1,100,000 for 110,000
shares was paid before December 31, 1998.
3. Properties held for sale
---------------------------
At May 31, 1998 the Florida Street office was held for sale. The office is
carried at cost which does not exceed estimated net realizable value.
At May 31, 1997 the Marigold plant was held for sale. The property was written
down by 211,233 to its estimated realizable value. The property was sold in the
year ended May 31, 1998 for approximately 1,100,000.
<PAGE>
- 9 -
CENTENARY S.A.
--------------
NOTES TO THE FINANCIAL STATEMENTS
---------------------------------
FOR THE YEARS ENDED OF MAY 31, 1998 AND 1997
--------------------------------------------
AND FOUR MONTHS ENDED SEPTEMBER 30,1998 AND 1997 (UNAUDITED)
------------------------------------------------------------
(stated in US Dollars)
4. Property, plant and equipment
--------------------------------
<TABLE>
<CAPTION>
Years ended May 31, September 30,
------------------------- ----------
Estimated
useful life 1998 1997 1998
------------- ------------- ---------- ----------
(Unaudited)
<S> <C> <C> <C> <C>
Land, ranch - 1,992,000 1,992,000 1,992,000
Buildings, ranch 50 years 498,000 498,000 498,000
Buildings, office 50 years 699,000 171,164 699,000
Land improvements, ranch 50 years 1,187,714 363,618 1,335,000
Machinery 50 years 778,988 43,318 840,799
Furniture and fixtures 10 years 410,881 344,910 419,376
Olive trees 10 years 364,619 - 373,219
Breeding livestock - 299,385 259,792 297,576
Motor vehicles - 99,553 56,789 99,553
Growing cattle 5 years 41,178 29,906 49,908
------------- ------------- ---------- ----------
6,371,318 3,759,497 6,604,431
Accumulated depreciation (235,960) (117,648) (272,467)
------------- ------------- ---------- ----------
6,135,358 3,641,849 6,331,964
============= ============= ========== ==========
</TABLE>
5. Intangible assets
------------------
<TABLE>
<CAPTION>
Years ended May 31, September 30,
---------------------------- ----------
1998 1997 1998
------------- ------------- ----------
(Unaudited)
<S> <C> <C> <C>
Patents and trade marks 2,111,831 2,109,940 2,111,831
Accumulated amortization (442,403) (20,274) (583,113)
------------- ------------- ----------
1,669,428 2,089,666 1,528,718
============= ============= ==========
</TABLE>
<PAGE>
- 10 -
CENTENARY S.A.
--------------
NOTES TO THE FINANCIAL STATEMENTS
---------------------------------
FOR THE YEARS ENDED OF MAY 31, 1998 AND 1997
--------------------------------------------
AND FOUR MONTHS ENDED SEPTEMBER 30,1998 AND 1997 (UNAUDITED)
------------------------------------------------------------
(stated in US Dollars)
6 Debt
----
<TABLE>
<CAPTION>
Years ended May 31, September 30,
-------------------------- -------------
1998 1997 1998
------------ ------------ -------------
(Unaudited)
<S> <C> <C> <C>
Short term debt
Bank loans 2,120,000 456,000
Bank notes 1,389,050 4,806,300 400,000
Bank overdraft 2,103,288 523,542 1,065,219
------------ ------------ ------------
5,612,338 5,785,842 1,465,219
============ ============ =============
</TABLE>
The Company has a bank loan of 2,120,000 for the financing of exports which is
due June, 1998. The loan is collateralized by the ranch. The interest rate was
28.32% at May 31, 1998.
The Company has a bank notes of 1,389,050 for the financing of exports which is
due August, 1998. The interest rate was LIBOR (London Interbank Offered Rate)
(5.75% at May 31, 1998) plus 2%.
<TABLE>
<CAPTION>
Years ended May 31, September 30,
--------------------------- -------------
1998 1997 1998
------------- ------------ -------------
(Unaudited)
<S> <C> <C> <C>
Long term debt
Bank loans 6,638,187 5,000,000 6,988,718
Less current maturities, including
in long term debt-current portion (471,520) - (600,000)
------------- ------------ -------------
6,166,667 5,000,000 6,388,718
============= ============ =============
</TABLE>
<PAGE>
- 11 -
CENTENARY S.A.
--------------
NOTES TO THE FINANCIAL STATEMENTS
---------------------------------
FOR THE YEARS ENDED OF MAY 31, 1998 AND 1997
--------------------------------------------
AND FOUR MONTHS ENDED SEPTEMBER 30,1998 AND 1997 (UNAUDITED)
------------------------------------------------------------
(stated in US Dollars)
The Company has bank loans of 5,000,000 for the prefinancing of exports. The
loan is collateralized by the ranch. The interest rate was LIBOR (London
Interbank Offered Rate) (5.75% at May 31, 1998) plus 2%. Repayment of 3,000,000
is due in 45 monthly payments of 66,667 beginning January 1, 1999. Repayment of
2,000,000 is due at the Company's option at six months intervals until August,
2002.
The Company has a bank loan of 1,500,000 for financing the development of the
olive grove. The loan is collateralized by the ranch. The interest rate was
LIBOR (London Interbank Offered Rate ) (5.75 at May 31, 1998) plus 4.5%.
Repayment of this loan is due in 24 semi-annual payments of 62,500 beginning
December, 1999.
Maturities of long-term debt for the next five years at May 31, 1998, are as
follows:
<TABLE>
<CAPTION>
<S> <C>
1999 471,520
2000 862,500
2001 925,000
2002 925,000
2003 2,391,667
Thereafter 1,062,500
------------
6,638,187
============
</TABLE>
7. Related party payable
-----------------------
The pending balances, with related parties Companies are as follows:
<TABLE>
<CAPTION>
Years ended May 31, September 30,
--------- --------- -----------
1998 1997 1998
--------- --------- -----------
(Unaudited)
<S> <C> <C> <C>
- - Other receivables 1,024,992 - 693,478
========= ========= ===========
- - Related party payable - 4,479,049 -
========= ========= ===========
</TABLE>
<PAGE>
- 12 -
CENTENARY S.A.
--------------
NOTES TO THE FINANCIAL STATEMENTS
---------------------------------
FOR THE YEARS ENDED OF MAY 31, 1998 AND 1997
--------------------------------------------
AND FOUR MONTHS ENDED SEPTEMBER 30,1998 AND 1997 (UNAUDITED)
------------------------------------------------------------
(stated in US Dollars)
The Company purchased 25,718,571 and 17,529,338 of products and services from
affiliated companies, during 1998 and 1997. In addition, the Company provides
certain administrative services and pays certain expenses for an affiliated
company. The affiliated company reimbursed the Company for these costs totaling
204,140 and 272,000 during 1998 and 1997.
8. Advanced capital contribution
-------------------------------
As of May 31, 1997 certain shareholders contributed cash, which was converted to
common stock in the year ended May 31, 1998, following authorization for the
issuance of stock at the May 31, 1997 Shareholders Meeting.
9. Appropriated retained earnings
--------------------------------
According to the Argentina laws, 5% of the net earnings, calculated in
accordance with generally accepted accounting principles in Argentina, for the
year should be appropriated to increase the Legal Reserve up to 20% of common
stock.
In previous years the shareholders designated 95,057 of retained earnings as a
general reserve.
Appropriated retained earnings are not available for dividends.
<PAGE>
- 13 -
CENTENARY S.A.
--------------
NOTES TO THE FINANCIAL STATEMENTS
---------------------------------
FOR THE YEARS ENDED OF MAY 31, 1998 AND 1997
--------------------------------------------
AND FOUR MONTHS ENDED SEPTEMBER 30,1998 AND 1997 (UNAUDITED)
------------------------------------------------------------
(stated in US Dollars)
10. Income taxes
-------------
The components of income tax expenses are as follows:
<TABLE>
<CAPTION>
Years ended May 31, Four months ended September 30,
------------------------- -------------------------
1998 1997 1998 1997
----------- ------------ ------------ -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Current
Federal 123,172 184,259 - 425,451
State an local - - - -
---------- ----------- ----------- ----------
Total income taxes current 123,172 184,259 - 425,451
Deferred tax expense (benefit) 62,197 (105,082) (159,923) 69,707
----------- ----------- ----------- ----------
Income tax provision (benefit) 185,369 79,177 (159,923) 495,158
=========== ============ ============ ===========
</TABLE>
The income tax provisions reconciled to the tax computed at the statutory
Federal rate was:
<TABLE>
<CAPTION>
Years ended May 31, Four months ended September 30,
--------------------- ------------------------
1998 1997 1998 1997
--------- ---------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Tax at statutory rate 33% 33% (35%) 33%
Amortization of trademarks 63.7% 10.8% 6.7% 3.9%
Other not deductible expenses - 93.7% 11%
Other deductions (11.9%) - - (1%)
--------- ---------- ----------- -----------
84.8% 137.5% (17.3%) 35.9%
</TABLE>
<PAGE>
- 14 -
CENTENARY S.A.
--------------
NOTES TO THE FINANCIAL STATEMENTS
---------------------------------
FOR THE YEARS ENDED OF MAY 31, 1998 AND 1997
--------------------------------------------
AND FOUR MONTHS ENDED SEPTEMBER 30,1998 AND 1997 (UNAUDITED)
------------------------------------------------------------
(stated in US Dollars)
Significant components of the Company's deferred tax assets at May 31, 1998 and
1997 are us follows:
<TABLE>
<CAPTION>
Years ended May 31, September 30,
---------------------- -----------
1998 1997 1998
---------- ---------- -----------
(Unaudited)
<S> <C> <C> <C>
Deferred tax assets due to:
Net operating loss carry-over - - 157,127
Property held for sale, write-down - 69,707 -
Allowance for doubtful accounts 46,147 38,637 48,943
---------- ---------- -----------
46,147 108,344 206,070
========== ========== ===========
</TABLE>
The net operating loss of 157,127 expires in 2,003.
11. Segment information
--------------------
The Company's operations involve, basically, a single industry segment, trading
commodities and agriproducts internationally. In the future when the olive grove
has been developed there will be an additional segment. The geographic areas in
which the Company operates are Argentina, Pacific, Mercosur, Mediterranean,
Russia and ex - Soviet, China and Far East, Africa, Arab Countries, Caribbean
and Europe. Net sales by geographical area were as follows:
<PAGE>
- 15 -
CENTENARY S.A.
--------------
NOTES TO THE FINANCIAL STATEMENTS
---------------------------------
FOR THE YEARS ENDED OF MAY 31, 1998 AND 1997
--------------------------------------------
AND FOUR MONTHS ENDED SEPTEMBER 30,1998 AND 1997 (UNAUDITED)
------------------------------------------------------------
(stated in US Dollars)
<TABLE>
<CAPTION>
Years ended May 31,
--------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
Pacific 54,010,000 33,607,240
Caribbean 28,662,512 46,935,627
Russia and ex - Soviet 14,272,000 12,897,581
Arab Countries 6,940,000 -
Africa 5,720,000 3,022,995
Mediterranean Countries 4,390,000 2,504,250
Argentina 3,955.000 12,115,715
China and Far East 2,479,146 8,334,187
Mercosur 176,687 3,176,565
Europe 170,575 837,883
Other destinations - 405,076
--------------- ---------------
120,775,920 123,837,119
=============== ===============
</TABLE>
The Company has not identificable assets in other countries than Argentina.
12. Argentine financial statements
--------------------------------
The Company also prepares its financial statements in accordance with Argentine
generally accepted accounting principles. Those principles differ from U.S.
accounting principles in certain respects. The primary difference in the case of
the Company is that Argentine principles allow for the revaluation of fixed
assets to their appraisal value. Consequently, the Argentine financial
statements as of May 31, 1998 reflect fixed assets and equity $ 13,466,273
higher than on the U.S. statements. Equity is reflected at approximately $ 22
million on those statements.
<PAGE>
- 1 -
CENTENARY INTERNATIONAL CORP.
-----------------------------
INTRODUCTION TO PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
------------------------------------------------------------
UNAUDITED
---------
The Pro Forma Combined Balance Sheet as of September 30, 1998 and the Pro Forma
Combined Statements of Operations for the nine months ended September 30, 1998
and for the year ended December 31, 1997, present the results of continuing
operations of Centenary International Corp. (formerly R&R Resources Inc.) and
Centenary S.A. at historical cost. The merger of Centenary International Corp.
and Centenary S.A. can be described as a reverse acquisition where Centenary
International Corp. (a non-operating public shell company at the merger date)
acquired Centenary S.A.
The merger has been accounted for as a recapitalization and all assets and
liabilities of Centenary S.A. are recognized at historical cost. All future
presentations of the registrant's results of operations for the periods prior to
the November 12, 1998 merger, will be combined results of Centenary
International Corp. and Centenary S.A.
Centenary International Corp. will continue with the annual reporting period of
December 31.
These statements include all material adjustments necessary to present the pro
forma historical results of the above described transactions. The Pro Forma
Information does not purport to be indicative of the financial position or the
results of operations which would have actually been obtained if the acquisition
transaction had been consummated on the dates indicated. In addition, the Pro
Forma Financial Information does not purport to be indicative of the financial
position or results of operation that may be obtained in the future.
The Pro Forma Financial Information has been prepared by the Registrant and all
calculations have been made by the Registrant based on assumptions deemed
appropriated by the Registrant. Certain of these assumptions have been set forth
under the notes to Pro Forma Combined Financial Information.
The Pro Forma Financial Information should be read in conjunction with the
Registrant's historical financial statements and notes thereto and the related
historical financial statements and notes thereto for the acquired company.
- 2 -
<TABLE>
<CAPTION>
CENTENARY S.A.
--------------
PROFORMA COMBINED BALANCE SHEETS
--------------------------------
AS OF SEPTEMBER 30, 1998
------------------------
(Stated in US Dollars)
UNAUDITED
---------
Proforma as
R&R Resources Inc. Centenary S.A. Proforma adjustments adjusted
------------------- --------------- --------------------- ----------------
<S> <C> <C> <C> <C>
ASSETS
- ----------------------------------------------
CURRENT ASSETS
- ----------------------------------------------
Cash 32,405 1,025,238 (1) (32,405) 1,025,238
Accounts receivables 1,600 18,724,368 (1) (1,600) 18,724,368
Other receivables - 3,787,490 - 3,787,490
Deferred tax asset - 206,070 - 206,070
------------------- --------------- --------------------- ----------------
Total current assets 34,005 23,743,166 (34,005) 23,743,166
------------------- --------------- --------------------- ----------------
Other assets 49,050,412 - (2) (49,050,412) -
Property, plant and equipment 287,500 6,331,964 (2) (287,500) 6,331,964
Intangible assets - 1,528,718 - 1,528,718
------------------- --------------- --------------------- ----------------
49,337,912 7,860,682 (49,337,912) 7,860,682
------------------- --------------- --------------------- ----------------
Total assets 49,371,917 31,603,848 (49,371,917) 31,603,848
=================== =============== ===================== ================
LIABILITIES
- ----------------------------------------------
CURRENT LIABILITIES
- ----------------------------------------------
Accounts payable 64,966 7,724,578 (1) (64,966) 7,724,578
Short term debt - 1,465,219 - 1,465,219
Long term debt-current portion - 600,000 - 600,000
Accrued payroll and related expenses - 45,827 - 45,827
Taxes payable - 438,882 - 438,882
Customers advances - 1,007,041 - 1,007,041
Other liabilities - 451,200 - 451,200
------------------- --------------- --------------------- ----------------
Total current liabilities 64,966 11,732,747 (64,966) 11,732,747
------------------- --------------- --------------------- ----------------
Accounts payable long term - 5,822,930 - 5,822,930
Long term debt - 6,388,718 - 6,388,718
Taxes payable - 33,149 - 33,149
------------------- --------------- --------------------- ----------------
Total non-current liabilities - 12,244,797 - 12,244,797
------------------- --------------- --------------------- ----------------
Total liabilities 64,966 23,977,544 (64,966) 23,977,544
------------------- --------------- --------------------- ----------------
SHAREHOLDERS' EQUITY
- ----------------------------------------------
Common Stock, $001, par value, authorized
50,000,000 shares, issued and outstanding at
September 30, 1998, 18,963,410 9,155 (2) (3,185)
(2) (2,060)
(1) 15,053 18,963
---------------------
Paid in capital 49,357,003 (2) (20,696,898)
(2) (28,640,191)
(1) 8,000,000
(1) (38,877) 7,981,037
---------------------
Deficit accumulated (59,207) - (1) 59,207 -
Common stock, $10, par value authorized
800,000 shares, issued and outstanding at
September 30, 1998 - 8,000,000 (1) (8,000,000) -
Deficit accumulated - (373,696) - (373,696)
------------------- --------------- --------------------- ----------------
Total shareholders' equity 49,306,951 7,626,304 (49,306,951) 7,626,304
------------------- --------------- --------------------- ----------------
Total liabilities and shareholders' equity 49,371,917 31,603,848 (49,371,917) 31,603,848
=================== =============== ===================== ================
</TABLE>
The accompanying notes are an integral part of these statements.
- 3 -
<TABLE>
<CAPTION>
CENTENARY S.A.
--------------
PROFORMA COMBINED STATEMENT OF OPERATIONS
-----------------------------------------
FOR THE PERIOD OF NINE MONTHS ENDED SEPTEMBER 30, 1998
------------------------------------------------------
(Stated in US Dollars)
UNAUDITED
---------
Proforma as
R&R Resources Inc. Centenary S.A. Proforma adjustments adjusted
------------------- ---------------- -------------------- ---------------
<S> <C> <C> <C> <C>
Net sales 45,698 99,304,358 - 99,350,056
Cost of goods sold - (78,815,963) - (78,815,963)
------------------- ---------------- -------------------- ---------------
Gross profit 45,698 20,488,395 - 20,534,093
Oil gas expenses (32,825) - - (32,825)
Selling expenses - (14,801,257) - (14,801,257)
Administrative expenses (59,492) (3,222,920) - (3,282,412)
------------------- ---------------- -------------------- ---------------
Operating income (loss) (46,619) 2,464,218 - 2,417,599
Other income and expenses (net) - (237,837) - (237,837)
Interest expense - (1,003,594) - (1,003,594)
------------------- ---------------- -------------------- ---------------
Income (loss) before income taxes (46,619) 1,222,787 - 1,176,168
Income taxes - (77,237) - (77,237)
------------------- ---------------- -------------------- ---------------
Net income (loss) (46.619) 1,145,550 - 1,098,931
=================== ================ ==================== ===============
Earnings (loss) per share, basic and diluted (.005) .06
=================== ===============
Weighted average number of shares
outstanding 9,155,230 18,963,000
=================== ===============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
- 4 -
<TABLE>
<CAPTION>
CENTENARY S.A.
--------------
PROFORMA COMBINED STATEMENT OF OPERATIONS
-----------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1997
------------------------------------
(Stated in US Dollars)
UNAUDITED
---------
Proforma as
R&R Resources Inc. Centenary S.A. Proforma adjustments adjusted
------------------- ---------------- -------------------- ----------------
<S> <C> <C> <C> <C>
Net sales - 105,857,354 - 105,857,354
-
Cost of goods sold - (88,860,220) - (88,860,220)
------------------- ---------------- -------------------- ----------------
Gross profit - 16,997,134 - 16,997,134
Selling expenses - (14,401,745) - (14,401,745)
Administrative expenses (12,588) (3,028,011) - (3,040,599)
------------------- ---------------- -------------------- ----------------
Operating income (loss) (12,588) (432,622) - (445,210)
Other income and expenses (net) - 1,378,777 - 1,378,777
Interest expense - (649,411) - (649,411)
---------- --------------- ---------- ---------------
Income (loss) before income taxes (12,588) 296,744 - 284,156
Income taxes - (141,122) - (141,122)
------------------- ---------------- -------------------- ----------------
Net income (loss) (12,588) 155,622 - 143,034
=================== ================ ==================== ================
Earnings (loss) per share, basic and diluted .00 .008
=================== ================
Weighted average number of shares
outstanding 7,095,230 18,963,000
=================== ================
</TABLE>
The accompanying notes are an integral part of these statements.
- 5 -
CENTENARY INTERNATION CORP.
---------------------------
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
-----------------------------------------------------
(Stated in US Dollars)
UNAUDITED
---------
The Pro Forma Consolidated Balance Sheet as of September 30, 1998 and the Pro
Forma Combined Statements of Income for the nine months ended September 30, 1998
and for the year ended December 31, 1997, are derived from the historical
balance sheets and statements of income of R&R Resources Inc. (now known as
Centenary International Corp.) and Centenary S.A. that are contained in this
Form. 8-K/A. The Pro Forma Financial Information reflects adjustments to record
the effect of the November 12, 1998 "reverse acquisition" of Centenary S.A. by
Centenary International Corp. This transaction is recorded as a reverse
acquisition whereby the "reverse acquisition" of Centenary S.A. by Centenary
International Corp. (a non-operating public shell company at the merger date) is
treated as a recapitalization and all assets and liabilities of Centenary S.A.
are recognised at historical cost.
The Pro Forma Information does not purport to be indicative of the financial
position or the results of operations which would have actually been obtained if
the acquisition transaction had been consummated on the dates indicated. In
addition, the Pro Forma Financial Information does not purport to be indicative
of the financial position or results of operations that may be obtained in the
future.
The Pro Forma Financial Information should be read in conjunction with the
Registrant's historical financial statements and notes thereto and the related
historical financial statements and notes thereto for the acquired company.
The footnotes depicted on the Pro Forma Combined Financial Information are
described below:
1. Common stock and Paid in Capital, was adjusted to reflect the pro forma
effects of the issuance of 15,053,500 shares of the Company's common stock in
exchange for 800,000 shares of Centenary S.A. The recapitalization adjustment is
required to reflect the pro forma capital structure.
2. Common stock, Paid in Capital and Other Assets were adjusted to reflect
the "Pilares Rescission Agreement" and the "Gassiot Rescission Agreement" which
were entered into on November 12, 1998, the date of the merger. Pursuant to the
"Pilares Rescission Agreement" the Company rescinded its prior Acquisition
Agreement and Assignment with Pilares Oil & Gas, Inc. As a result, Pilares
tendered 3,185,230 shares of R&R Resources, Inc. common stock. In exchange R&R
Resources, Inc. Tendered 300,000 shares of Pain Rock stock to Pilares Oil & Gas.
The effect on R&R Resources, Inc. s Balance Sheet is reduce oil and gas
properties included in Other Assets by 20,700,083 and Common Stock by 3,185 and
Paid in Capital by 20,696,898. Pursuant to the "Gassiot Rescission Agreement"
the Company rescinded its prior Acquisition Agreement and assignment with Jimmy
M. Gassiot. As a result, Gassiot tendered 2,060,000 shares of R&R Resources,
Inc. common stock. In exchange R&R Resources, Inc. tendered 50 shares of
Subsurface stock to Gassiot. The effect is to reduce oil and gas properties
included in Other Assets by 28,359,173, Fixed assets by 287,500, Common stock by
2,060 and Paid in Capital by 28,640,191.
3. The pro forma earnings per share calculation is based on the pro forma
weighted average shares outstanding at September 30, 1998 and December 31, 1997
assuming the merger transaction (and the associated stock issuances) occurred at
the beginning of the fiscal year presented.
<TABLE> <S> <C>
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</TABLE>
