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
the fiscal year ended March 31, 2009
 
 OR
 
 TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
 OR
 
 SHELL
      COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934
 
 Date of
event requiring this shell company report______________
 
 For the transition period from
______________ to __________________
 
 Commission
      file number: 0-30314
 
 Bontan
      Corporation Inc.
 (Exact
      name of Registrant as specified in its
charter)
 
 Inapplicable
 (Translation of Registrant’s name into
English)
 
 Province
of Ontario, Canada
 (Jurisdiction of incorporation or
organization)
 
 47
Avenue Road, Suite 200, Toronto, Ontario, Canada, M5R 2G3
 (Address of principal executive
offices)
 
 i
 
 
 Kam
Shah, 416.929.1806,kam@bontancorp.com, Fax: 416.929.6612
 47
Avenue Road, Suite 200, Toronto, Ontario, Canada M5R 2G3
 
 (Name,telephone,e-mail
and/or facsimile number and Address of Company Contact Person)
 
 Securities
registered or to be registered pursuant to Section 12(b) of the
Act:
 
 Title of
each
class                                                                Name
of each exchange on which registered
 
 Not
applicable                                                                           Not
applicable
 
 Securities
registered or to be registered pursuant to Section 12(g) of the
Act.
 
 Common
shares without par value
 (Title of
Class)
 
 Securities
for which there is a reporting obligation pursuant to Section 15(d) of the
Act:
 
 Not
applicable
 (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
 
 Common
shares without par value – 30,820,743 as at March 31, 2009
 
 Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities
Act                Yes
___       No X__
 
 If this
report is an annual or transition report, indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.  Yes____  NoX
 
 Note –
Checking the box above will not relieve any registrant required to file reports
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from
their obligations under those Sections.
 
 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 report) and (2) has been subject to such filing requirements for
the past 90 days.
 Yes X                          No
   ii
  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).
 
 Indicate
by
checkmark                                                                                     Yes           X           No_______
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
one):
 
 Large
accelerated filer___Accelerated filer____ Non-accelerated filer X
 
 Indicate
by check mark which basis of accounting the registrant has used to prepare the
financial statements included in this filing:
 
 U.S.
GAAP_____ International Financial ReportingOther X
 Standards
as issued by the International _____
 Accounting
Standards Board
 
 
 If
“Other” has been checked in response to the previous question, indicate by check
mark which financial statement item the registrant has elected to
follow
 Item
17:XItem 18
 
 If this
is an annual report, indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act). Yes__ No_X__
  iii
  TABLE
OF CONTENTS
 
 
 Page No.Forward-looking
      statements
                1Foreign
      Private Issuer Status and Reporting currency
                2Part IItem
      1.
                Identity
      of Directors, Senior Management and Advisors
                2Item
      2.
                Offer
      Statistics and Expected Timetable
                2Item
      3.
                Key
      Information
                2Item
      4.
                Information
      on the Company
                10Item
      5.
                Operating
      and Financial Review and Prospects
                13Item
      6.
                Directors,
      Senior Management and Employees
                24Item
      7.
                Major
      Shareholders and Related Party Transactions
                29Item
      8.
                Financial
      Information
                30Item
      9.
                The
      Offer and Listing
                31Item
      10.
                Additional
      Information
                33Item
      11.
                Quantitative
      and Qualitative Disclosures about Market Risk
                44Item
      12.
                Description
      of Securities Other than Equity Securities
                45Part IIItem
      13.
                Defaults,
      Dividend Arrearages and Delinquencies
                45Item
      14.
                Material
      Modifications to the Rights of Security Holders and Use of
      Proceeds
                45Item
      15.
                Controls
      and Procedures
                45Item
      16.
                Audit
      Committee, Code of Ethics, and Principal Accountant’s Fees and
      Services
                47Part IIIItem
      17.
                Financial
      Statements
                48Item
      18.
                Financial
      Statements
                48Item
      19.
                Exhibits
                49-51
   iv
  FORWARD
LOOKING STATEMENTS
 
 
 This
annual report includes "forward-looking statements." All statements, other than
statements of historical facts, included in this annual report that address
activities, events or developments, which we expect or anticipate, will or may
occur in the future are forward-looking statements.
 
 The words
"believe", "intend", "expect", "anticipate", "project", "estimate", "predict"
and similar expressions are also intended to identify forward-looking
statements.
 
 These
forward-looking statements address, among others, such issues as:
 
 - Future
earnings and cash flow, - future plans and capital expenditures, - expansion and
other development trends of the resource sector.
 
 -
Expansion and growth of our business and operations, and
 
 - Our
prospective operational and financial information.
 
 These
statements are based on assumptions and analyses made by us in light of our
experience and our perception of historical trends, current conditions and
expected future developments, as well as other factors we believe are
appropriate in particular circumstances. However, whether actual results and
developments will meet our expectations and predictions depends on a number of
risks and uncertainties, which could cause actual results to differ materially
from our expectations, including the risks set forth in "Item 3-Key
Information-Risk Factors" and the following:
 
 -
                Fluctuations
      in prices of our products and
services,
 -
                Potential
      acquisitions and other business
opportunities,
 -
                General
      economic, market and business conditions,
and
 -
                Other
      risks and factors beyond our
control.
 
 Consequently,
all of the forward-looking statements made in this annual report are qualified
by these cautionary statements. We cannot assure you that the actual results or
developments anticipated by us will be realized or, even if substantially
realized, that they will have the expected effect on us or our business or
operations.
  Unless
the context indicates otherwise, the terms "Bontan Corporation Inc." the
"Company”,"Bontan", “we”, “us”, “our” are used interchangeably in this Annual
Report and mean Bontan Corporation Inc. and its subsidiary.
   -
1 -
  FOREIGN PRIVATE ISSUER
STATUS AND REPORTING CURRENCY
 
 
 Foreign
Private Issuer Status:
 
 Bontan
Corporation Inc. is a Canadian corporation incorporated under the laws of the
Province of Ontario. Approximately 83% of its common stock is held by non-United
States citizens and residents and our business is administered principally
outside the United States; As a result, we believe that we qualify as a "foreign
private issuer" for continuing to report regarding the registration of our
common stock using this Form 20-F annual report format.
 
 Currency
 
 The
financial information presented in this Annual Report is expressed in Canadian
dollars ("CDN $") and the financial data in this Annual Report is presented in
accordance with accounting principles generally accepted in Canada ("Can.
GAAP"). Such financial data conforms in all material respects with accounting
principles generally accepted in the United States ("U.S. GAAP") except as
disclosed in Note 17 of the Notes to Consolidated Financial Statements contained
herein.
 
 All dollar amounts set forth in this
report are in Canadian dollars, except where otherwise
indicated.
 
 PART I
 
 
 ITEM 1 – IDENTITY OF
DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
 
 Not
required since this is an annual report.
 
 ITEM 2 – OFFER STATISTICS
AND EXPECTED TIMETABLE
 
 Not
required since this is an annual report
 
 ITEM 3 – KEY
INFORMATION
 
 (A)
SELECTED FINANCIAL DATA
 
 This
Report includes consolidated financial statements of the Company for the years
ended March 31, 2009, 2008 and 2007. These financial statements were prepared in
accordance with accounting principles generally accepted in Canada. Reference is
made to Financial Statement Notes for a discussion of the material differences
between Canadian GAAP and U.S. GAAP, and their effect on the Company's financial
statements.
 
 The
following is a selected financial data for the Company for each of the last five
fiscal years 2005 through 2009 on a consolidated basis. The data is extracted
from the audited financial statements of the Company for each of the said
years.
 
 
 -
2 -
  SUMMARY
OF FINANCIAL INFORMATION IN THE COMPANY FINANCIAL STATEMENTS (Canadian
$)
 
 
 Operating
data – Fiscal year ended March 31
 
 2009
                
                
                2008
                
                
                2007
                
                
                2006
                
                
                2005(Restated)
                
                
                (Restated)Revenue
                
                
                52,937
                
                
                
                321,755
                
                
                $
                743,786
                
                
                $
                1,857,647
                
                
                $
                418,861Loss
      from continuing operations
                
                $
                (689,415
                )
                
                $
                (571,799
                )
                
                $
                (164,043
                )
                
                $
                (4,784,933
                )
                
                $
                (4,876,898
                )Loss
      from discontinued operations
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                (179,678
                )Net
      Loss
                
                $
                (689,415
                )
                
                $
                (571,799
                )
                
                $
                (164,043
                )
                
                $
                (4,784,933
                )
                
                $
                (5,056,576
                )Net
      loss per share (1)
                
                $
                (0.02
                )
                
                $
                (0.02
                )
                
                $
                (0.01
                )
                
                $
                (0.31
                )
                
                $
                (0.43
                )Working
      capital
                
                $
                1,431,495
                
                
                $
                5,173,892
                
                
                $
                6,624,466
                
                
                $
                5,285,784
                
                
                $
                4,734,269Total
      assets
                
                $
                1,592,947
                
                
                $
                5,239,122
                
                
                $
                6,672,918
                
                
                $
                5,450,772
                
                
                $
                5,075,158Capital
      stock
                
                $
                32,854,075
                
                
                $
                32,901,488
                
                
                $
                32,413,811
                
                
                $
                32,175,000
                
                
                $
                28,280,890Warrants
                
                $
                2,192,927
                
                
                $
                2,153,857
                
                
                $
                2,215,213
                
                
                $
                951,299
                
                
                $
                -Contributed
      surplus
                
                $
                4,154,266
                
                
                $
                4,077,427
                
                
                $
                4,069,549
                
                
                $
                4,069,549
                
                
                $
                3,795,078Accumulated
      other comprehensive loss
                
                $
                (4,425,018
                )
                
                $
                (1,306,768
                )Shareholders'
      equity
                
                $
                1,440,929
                
                
                $
                5,180,098
                
                
                $
                6,624,466
                
                
                $
                5,285,784
                
                
                $
                4,950,837Weighted
      average number of shares outstanding ( 2  )
                
                
                30,170,743
                
                
                
                28,840,653
                
                
                
                27,472,703
                
                
                
                15,655,023
                
                
                
                11,700,303
 
 1. The
effect of potential share issuances pursuant to the exercise of options and
warrants would be anti-dilutive and, therefore, basic and diluted losses per
share are the same.
 
 2.
Weighted average number of shares for a year was calculated by dividing the
total number of shares outstanding at the end of each of the months by
twelve.
 
 
 Selected
Financial Data (U.S. GAAP) – Fiscal year ended March 31
 
 2009
                
                
                2008
                
                
                2007
                
                
                2006
                
                
                2005Loss
      for year
                
                $
                (689,415
                )
                
                $
                (571,799
                )
                
                $
                (52,384
                )
                
                $
                (4,590,175
                )
                
                $
                (5,238,898
                )Comprehensive
      (Loss) Income
                
                $
                (3,807,665
                )
                
                $
                (2,838,269
                )
                
                $
                795,658
                
                
                $
                (4,038,005
                )
                
                $
                (5,273,144
                )Loss
      per share -Basic and diluted
                
                $
                (0.02
                )
                
                $
                (0.02
                )
                
                $
                0.00
                
                
                $
                (0.29
                )
                
                $
                (0.45
                )Total
      assets
                
                $
                1,592,947
                
                
                $
                5,239,122
                
                
                $
                7,632,619
                
                
                $
                6,197,700
                
                
                $
                4,858,590Shareholders'
      equity
                
                $
                1,440,929
                
                
                $
                5,180,098
                
                
                $
                7,584,167
                
                
                $
                4,734,269
                
                
                $
                4,734,269
 
 
 The
Company has not declared or paid any dividends in any of its last five financial
years.
 
 
 -
3 -
  Exchange
Rates
 
 In this
Annual Report on Form 20-F, unless otherwise specified, all monetary amounts are
expressed in Canadian dollars.  The exchange rates used herein were
obtained from Bank of Canada; however, they cannot be guaranteed.
 
 On June
30, 2009, the exchange rate, based on the noon buying rates, for the conversion
of Canadian dollars into United States dollars (the “Noon Rate of Exchange”) was
CDN $1.16=US$1
 
 The
following table sets out the high and low exchange rates in US dollar for one
Canadian dollar for each of the last six months
 
 2009
                
                June
                
                
                May
                
                
                April
                
                
                March
                
                
                February
                
                
                JanuaryHigh
      for period
                
                $
                0.92
                
                
                $
                0.91
                
                
                $
                0.84
                
                
                $
                0.82
                
                
                $
                0.82
                
                
                $
                0.85Low
      for period
                
                $
                0.86
                
                
                $
                0.84
                
                
                $
                0.79
                
                
                $
                0.77
                
                
                $
                0.79
                
                
                $
                0.79
 
 The
following table sets out the average exchange rates in US dollar for one
Canadian dollar for the five most recent financial years calculated by using the
average of the Noon Rate of Exchange on the last day of each month during the
period.
 
 
 Year
      Ended March 312009
                
                
                2008
                
                
                2007
                
                
                2006
                
                
                2005Average
      for the year
                
                
                0.89
                
                
                
                0.97
                
                
                
                0.88
                
                
                
                0.84
                
                
                
                0.79
 
 
 (B)  CAPITALIZATION
AND INDEBTEDNESS
 
 Not
applicable
 
 (C)  REASONS
FOR THE OFFER AND USE OF PROCEEDS
 
 Not
applicable
 
 (D)  RISK
FACTORS
 
 The
following is a brief discussion of those distinctive or special characteristics
of the Company’s operations and industry that may have a material impact on, or
constitute risk factors in respect of, the Company’s future financial
performance.
 
 We 
have  a  history  of  operating  losses  and 
may  not  achieve  or  sustain profitability in the
future.
 
 We have
incurred significant operating losses during recent fiscal years. We have not
yet had any revenue from the exploration activities nor.  As of March 31,
2009, we had an accumulated deficit of approximately $33 million.  We
currently have no interest in any oil or gas property or any natural resource
project.
   -
4 -
  We expect
to continue to incur losses until it is determined that properties or projects
in which we may acquire interests in the future can be sufficiently developed
for commercialization. Even if it is determined that such properties or projects
should be developed for commercialization, there is no certainty that we will
produce revenue, operate profitably or provide a return on investment in the
future. We cannot assure you that we will be able to achieve or sustain
profitable operations in the future.
 
 We
are in the process of seeking opportunities in oil and gas and any other sectors
and currently do not own any interests or properties.
 
 Currently,
we do not own any interest in any oil or gas project or any other
project.  We are assessing various opportunities, none of which may
meet our eligibility requirements. Consequently, we may not own any interest for
an indeterminate amount of time.  As a result, we will use our cash
resources to pay for expenses and costs we incur in our efforts to identify
appropriate opportunities as well as for our standard operating
costs.
 
 Our operations are subject to
substantial exploration and development risks.
 
 The
Company anticipates participating in oil and gas resource properties in the hope
of locating reserves.  The Company's property interests, when acquired
will most likely be in the exploration stage only. Accordingly, there is little
likelihood that the Company will realize any profits in the short to medium
term. Any profitability in the future from the Company's business will be
dependent upon locating reserves, which itself is subject to numerous risk
factors.
 
 The
business of exploring for and producing oil and gas involves a substantial risk
of investment loss which, even a combination of experience, knowledge and
careful evaluation may not be able to overcome.  The principal resources
necessary for the exploration and production of crude oil and natural gas are
leasehold prospects under which crude oil and natural gas reserves may be
discovered, drilling rigs and related equipment to explore for such reserves and
knowledgeable personnel to conduct all phases of crude oil and natural gas
operations, all of which requires a substantial investment.
 
 Drilling
oil and gas wells involves the risk that the wells will be unproductive or that,
although productive, the wells do not produce oil and/or gas in economic
quantities. Other hazards, such as unusual or unexpected geological formations,
pressures, fires, blowouts, loss of circulation of drilling fluids or other
conditions may substantially delay or prevent completion of any well. Adverse
weather conditions can also hinder drilling operations.
 
 A
productive well may become uneconomic in the event water or other deleterious
substances are encountered, which impair or prevent the production of oil and/or
gas from the well.  In addition, production from any well may be
unmarketable if it is impregnated with water or other deleterious substances.
 As with any petroleum property, there can be no assurance that oil and gas
will be produced from the properties in which the Company had and may in future
have interests.
  In
addition, the marketability of oil and gas, which may be acquired or discovered,
will be affected by numerous factors beyond the control of the Company.
 These factors include the proximity and capacity of oil and gas pipelines
and processing equipment, market fluctuations of prices, taxes, royalties, land
tenure, allowable production and environmental protection.
 
 The
extent of these factors cannot be accurately predicted, but the combination of
these factors may result in the Company not receiving an adequate return on
invested capital. There is no assurance that our anticipated exploration and
development activities in future resource properties will ultimately yield oil
or gas in commercial quantities.  Drilling for oil and gas may be
unprofitable. Dry holes and wells that are productive but do not produce
sufficient net revenues after drilling, operating and other costs are
unprofitable.  We cannot assure you that we will be able to achieve
profitable operations in the future.
  
 -
5 -
  In
determining the purchase price for our future interests, we will rely on both
internal and external assessments relating to estimates of exploration,
production and possible reserves that may prove to be materially
inaccurate.
 
 The price
we are willing to pay for an interest in an oil and gas project is based on a
combination of projected exploration and production costs and on the estimates
of potential reserves. Actual costs and reserve could vary materially from these
estimates. Consequently, the interests we acquire may be less unproductive than
expected, or not productive at all, which could adversely affect us or cause us
to lose our entire invest, or both.  Initial assessments of an
interest will be based on a report by engineers or firms of engineers and these
initial assessments may differ significantly from our subsequent
assessments.
 
 Our interests are
subject to uninsurable risks.
 
 Our
industry also experiences numerous operating risks. These operating risks
include the risk of fire, explosions, blow-outs, pipe failure, abnormally
pressured formations and environmental hazards. Environmental hazards include
oil spills, natural gas leaks, ruptures or discharges of toxic gases. Such
events could result in substantial damage to oil and gas wells, producing
facilities and other property and personal injury.  Although management
believes the operator of any properties in which the Company and its
subsidiaries may acquire interests, will acquire and maintain appropriate
insurance coverage in accordance with standard industry practice, the Company
and its subsidiaries may suffer losses from uninsurable hazards or from hazards
which the operator has chosen not to insure against because of high premium
costs or other reasons.  If any of these industry operating risks
occur, the Company and its subsidiaries may face liability.  The
payment of any such liabilities may have a material, adverse effect on the
Company's financial position.  We cannot assure you that insurance
held by the operator of any of our properties will be adequate to cover losses
or liabilities.
 
 Environmental
and other regulatory requirements may delay production and development of our
resource interests.
  The
current or future operations of the Company, including development activities
and commencement of production on its properties, require permits from various
governmental authorities and such operations will be subject to laws and
regulations governing prospecting, development, mining, production, exports,
taxes, labour standards, occupational health, waste disposal, toxic substances,
land use, environmental protection, safety and other matters. Companies engaged
in the development and operation of natural resource properties and related
facilities generally experience increased costs, and delays in production and
other schedules as a result of the need to comply with applicable laws,
regulations and permits.
 
 There can
be no assurance that approvals and permits required to commence production on
its properties will be obtained.  Additional permits and studies, which may
include environmental impact studies conducted before permits can be obtained,
may be necessary prior to operation of the properties in which the Company
acquires interests and there can be no assurance that the operator of these
interests or the Company will be able to obtain or maintain all necessary
permits that may be required to commence construction, development or operation
of oil and gas extraction facilities at these properties on terms which enable
operations to be conducted at economically justifiable costs.
  Failure
to comply with applicable laws, regulations, and permitting requirements may
result in enforcement actions against the operator of any of our resource
properties or us, including orders issued by regulatory or judicial authorities
causing operations to cease or be curtailed, and may include corrective measures
requiring capital expenditures, installation of additional equipment, or
remedial actions.
  
 -
6 -
 
 Conducting business in foreign
countries subjects us to special risks, which we have no control over.
  Company’s
current business strategy may involve participation in overseas projects in the
resource sector.  Consequently, the Company will be subject to certain
risks associated with foreign ownership, including currency fluctuations,
inflation, political instability and political risk. Oil, gas and other resource
exploration and production activities in foreign countries may be affected in
varying degrees by political stability and government regulations relating to
the resource industry. Any changes in regulations or shifts in political
conditions are beyond the control of the Company and may adversely affect its
business. Operations may be affected in varying degrees by government
regulations with respect to restrictions on production, price controls, export
controls, restriction of earnings, taxation laws, expropriation of property,
environmental legislation, water use and workplace safety.
 
 Our
short term investments
are susceptible to market fluctuations and other
risks.
 
 We have
approximately $1.4 million in cash ($0.4 million) and marketable securities
($1million fair value) as of March 31, 2009. Our marketable securities are
primarily securities of publicly held Canadian corporations.  The
value of these securities is subject to market fluctuations as well as the
specific risks of each particular issuer.  Although we believe we have
diversified our portfolio, we may lose some of our original investment in the
event that an investment does not perform as anticipated or we are unable to
hold the investment until it shows such performance.
 
 Further,
approximately $0.4 million or 33% of our investments are invested in one
Canadian marketable security. While the market value of this security at March
31, 2009 was less by approximately $1.4 million than its average cost of $1.8
million, it rose to $0.54 million on June 30, 2009, the date of this
report, there is no guarantee that the market price would rise to equal or
exceed our cost. In the event, we are unable to or do not sell these securities
on time and their market price gets adversely affected for whatever reasons, we
may lose significant sum of money. We are minimising this risk by having all our
investments monitored on a daily basis by consultants with substantial
experience and knowledge of the investment market.
 
 We
will need to raise additional funds in the future, which may not be available to
us.
 
 The
Company is currently without a source of revenue from operations and upon the
investment of its current cash and liquidity, resources will most likely be
required to issue additional securities to finance its operations and the
development of its projects.  We may not be able to obtain additional
financing on acceptable terms or at all. Failure to obtain additional financing
on a timely basis could cause the Company to sell or forfeit its interest in its
properties and reduce or terminate its operations on such properties or
discontinue operations entirely.
 
 There
is a substantial risk of dilution through possible equity financings and stock
options.
 
 Any
equity or debt financings, if available at all, may cause dilution to our
then-existing shareholders. If additional funds are raised through the issuance
of equity securities, the net tangible book value per share of our common shares
would decrease and the percentage ownership of then current shareholders would
be diluted.
 
 Additionally,
the Company may in the future grant to some or all of its own and its
subsidiaries' directors, officers, insiders and key consultants options to
purchase the Company's common shares as non-cash incentives to those people.
Such options may be granted at exercise prices equal to market prices at time
when the public market is depressed or below fair market value.  To
the extent that significant numbers of such options may be granted and
exercised, the interests of the then existing shareholders of the Company may be
subject to additional dilution.
   -
7 -
  We
are dependent upon our key managerial consultants, the loss of which would
negatively affect our business.
 
 Our
performance depends on a small number of key managerial consultants. In
particular, we believe our success is highly dependent upon the services of our
Chief Executive Officer and Chief Financial Officer, Mr. Kam Shah, as well
as Mr. Terence Robinson both of whom are consultants and who have been
significantly involved in locating and negotiating our resource investments.
Loss of either of their services could negatively affect our
business.
 
 Our
officers and directors reside outside of the United States and there is a risk
that civil liabilities and judgments may be unenforceable.
  The
Company and its officers and all but one of its directors are residents of
countries other than the United States, and most of the Company's assets are
located outside the United States.  As a result, it may not be possible for
investors to effect service of process within the United States upon such
persons or enforce in the United States against such persons judgments obtained
in United States courts, including judgments predicated upon the civil liability
provisions of United States federal securities laws or state securities
laws.
  Risk
Factors Relating to Our Common Shares
 
 Our
share price has been volatile in the past and may decline in the
future.
  In recent
years, the securities markets in Canada and the United States have experienced a
high level of price and volume volatility, and the market prices of securities
of many companies, particularly small mineral exploration companies like the
Company, have experienced wide fluctuations which have not necessarily been
related to the operating performance, underlying asset values or prospects of
such companies.  Our shares may continue to experience significant
market price and volume fluctuations in the future in response to factors, which
are beyond our control.
 
 Shares eligible
for future sale may depress our stock
price.
 
 At March
31, 2009, we had approximately 31 million shares of common stock outstanding. We
also have approximately 13.8 million and 4.8 million shares of commons stock
issuable under presently exercisable warrants and options, respectively, All
such shares except one million warrants, are registered pursuant to an effective
registration statement under the Act and are eligible for resale in the public
market.  Sales of shares of common stock pursuant to an effective
registration statement or under Rule 144 or another exemption under the Act
could have a material adverse effect on the price of our common stock and could
impair our ability to raise additional capital through the sale of equity
securities.
 
 We
do not intend to pay dividends.
  All of
the Company's available funds will be invested to finance the growth of the
Company's business and therefore investors cannot expect and should not
anticipate receiving a dividend on the Company's common shares in the
foreseeable future.
  
 -
8 -
  Our common stock is subject to penny
stock rules.
  The
capital stock of the Company would be classified as “penny stock” as defined in
Reg. § 240.3a51-1 promulgated under the Securities Exchange Act of 1934 (the
“1934 Act”).  In response to perceived abuse in the penny stock market
generally, the 1934 Act was amended in 1990 to add new requirements in
connection with penny stocks.  In connection with effecting any transaction
in a penny stock, a broker or dealer must give the customer a written risk
disclosure document that (a) describes the nature and level of risk in the
market for penny stocks in both public offerings and secondary trading, (b)
describes the broker’s or dealer’s duties to the customer and the rights and
remedies available to such customer with respect to violations of such duties,
(c) describes the dealer market, including “bid” and “ask” prices for penny
stock and the significance of the spread between the bid and ask prices, (d)
contains a toll-free telephone number for inquiries on disciplinary histories of
brokers and dealers, and (e) define significant terms used in the disclosure
document or the conduct of trading in penny stocks.  In addition, the
broker-dealer must provide to a penny stock customer a written monthly account
statement that discloses the identity and number of shares of each penny stock
held in the customer’s account, and the estimated market value of such shares.
 The extensive disclosure and other broker-dealer compliance related to
penny stocks may result in reducing the level of trading activity in the
secondary market for such stocks, thus limiting the ability of the holder to
sell such stock.
 
 Your
rights and responsibilities as a shareholder will be governed by Canadian law
and differ in some respects from the rights and responsibilities of shareholders
under U.S. law.
 
 We are
incorporated under Ontario Canada law. The rights and responsibilities of
holders of our shares are governed by our memorandum of association, our
articles of association and by Canadian law. These rights and responsibilities
may differ in some respects from the rights and responsibilities of shareholders
in typical U.S. corporations.
 
 Changing
regulation of corporate governance and public disclosure can cause additional
expenses and failure to comply may adversely affect our reputation and the value
of our securities.
 
 Changing
laws, regulations and standards relating to corporate governance and public
disclosure, including the Sarbanes-Oxley Act of 2002, new SEC regulations and
new and changing provisions of Canadian securities laws, are creating
uncertainty because of the lack of specificity and varying interpretations of
the rules. As a result, the application of the rules may evolve over time as new
guidance is provided by regulatory and governing bodies, which could result in
continuing uncertainty regarding compliance matters and higher costs
necessitated by ongoing revisions to disclosure and governance practices. We are
committed to maintaining high standards of corporate governance and public
disclosure. As a result, our efforts to comply with evolving laws, regulations
and standards have resulted in, and are likely to continue to result in,
increased general and administrative expenses and a diversion of management time
and attention from revenue-generating activities to compliance activities. Any
failure to comply with applicable laws may materially adversely affect our
reputation and the value of our securities.
 
 If
we fail to comply with Section 404 of the Sarbanes-Oxley Act of 2002, our
reputation and the value of our securities may be adversely
affected.
 
 Beginning
with our annual report for the year ending March 31, 2008, Section 404 of the
Sarbanes-Oxley Act of 2002 will require us to include an internal control report
of management with our annual report on Form 20-F, which is to include
management’s assessment of the effectiveness of our internal control over
financial reporting as of the end of the fiscal year. Effective at the fiscal
year 2010 that report will also be required to include a statement that our
independent auditors have issued an attestation report on management’s
assessment of our internal control over financial reporting. In order to achieve
compliance with Section 404 within the prescribed period, management had already
completed its initial assessment and subsequent updates of the adequacy of our
internal control over financial reporting, validated through testing that
controls were functioning as documented, remediated any control weaknesses that
were identified, and implemented a continuous reporting and improvement process
for internal control over financial reporting. Any failure to obtain the
attestation report on management’s assessment from our independent auditors, may
materially adversely affect our reputation and the value of our
securities.
   -
9 -
  If
we lose our status as a foreign private issuer, our compliance costs will
increase.
 
 We are a
"foreign private issuer" as defined under the Exchange Act. As a result, our
proxy solicitations are not subject to the disclosure and procedural
requirements of Regulation 14A under the Exchange Act and transactions in our
equity securities by our officers and directors are exempt from Section 16 of
the Exchange Act. In addition, we are not required under the Exchange Act to
file periodic reports and financial statements as frequently or as promptly as
U.S. companies whose securities are registered under the Exchange Act.   If
we lose our status as a foreign private issuer by our election or otherwise, we
will be subject to additional reporting obligations under the Exchange Act which
could increase our cost of operations.
  
 ITEM 4 – INFORMATION ON THE
COMPANY
 
 (A)  HISTORY
AND DEVELOPMENT OF THE COMPANY
 
 We are a
Canadian corporation incorporated under the laws of the Province of Ontario.
 Since April 2003, we have been a diversified natural resource company that
invests in exploration, development and exploitation projects worldwide through
our wholly-owned subsidiaries by acquiring joint venture, indirect and direct
participation interests and working interests in those projects. During the
fiscal year 2006, we sold our indirect participation interest in an oil
exploration project and wrote off our working interest in a gas project owing to
a dry test well. We currently do not own any interests in any oil or gas project
or any natural resource project.  We are currently seeking business
opportunities all sectors including Resource, Healthcare and High technology. We
have approximately $1.4 million in cash ($0.4 million) and marketable securities
($1 million) as of March 31, 2009.
 
 We were
originally incorporated under the Business Corporation Act (Ontario) in 1973
under the name Kamlo Gold Mines Limited and went through multiple name changes
and five major changes in our business activities including a marine propulsion
business, a snack food business, and an emerging technology investments
business. Details of these changes are provided in our Registration Statement on
Form 20-F dated June 12, 2000 and a summary is provided in our Annual Report on
Form 20-F dated August 29, 2006.  On April 21, 2003, we changed our name to
"Bontan Corporation Inc." when we adopted our business strategy to focus on the
natural resource sector. During the fiscal 2009, we reviewed several oil and gas
exploration and development projects but were unable to successfully participate
as some projects were found too expensive while others did not meet our
technical due diligence. We therefore began looking into business opportunities
in other sectors, especially health and pharmaceutical and internet and high
technology. We reviewed several acquisition proposals in the areas of emerging
high technologies, mobile applications and health and medical devices, record
keeping and generic drugs. Unfortunately, these proposals were too capital
intensive and involved long term commitments without any hope of commercial
success. The significant deterioration in the market conditions affected
business viability of many of the proposed projects and we decided not to risk
our limited resources but rather wait for the economic conditions to improve and
for less capital intensive and commercially ready projects.  We intend
to aggressively seek opportunities in these sectors and become operational again
in fiscal 2010.
  The
Company’s registered office is situated at 47 Avenue Road, Suite 200 Toronto,
Ontario, Canada M5R 2G3. The Company is a reporting issuer in the provinces of
Ontario. The Company’s shares have been listed on the Over the Counter Bulletin
Board (“OTCBB”) under the symbol “BNTNF” in the United States.
 
 -
10 -
  The
following is a summary of our key past events:
 
 a.
                The
      Company was incorporated under the name “Kamlo Gold Mines Limited and
      remained an inactive shell from the date of incorporation to
      1985.
 
 b.
                Between
      1986 and 1982, the Company was involved in the development of a new
      technology for the marine propulsion business. During this period, the
      Company went through three name
changes.
 
 c.
                Between
      1993 and 1996, the Company was involved in the distribution and
      manufacture of a snack food. During this period, the Company went through
      two more name changes.
 
 d.
                
                The
      Company remained an inactive shell since the closure of snack food
      business in November 1996 until December 1998 when it changed its name to
      Dealcheck.com Inc. and agreed on a new business strategy. This strategy
      focused on investing in new and emerging technology oriented projects and
      businesses.
 
 e.
                
                In
      1999, the company successfully raised $3.2 million, which were invested in
      various projects and companies over the next two years as per the new
      business strategy of the company. Unfortunately, IT sector performed
      poorly since 2001 and new and emerging technology-based businesses
      suffered significant losses, financial problems and bankruptcies. These
      factors adversely affected the company’s investments and its
      profitability. The company had to write off all its investments by the end
      of the fiscal 2003.
 
 f.
                
                In
      April 2003, the Company changed its business focus to resource industry
      based on the recommendations of its shareholders in the last shareholders’
      meeting. At that time, the Company commenced and successfully completed a
      private placement of approximately 8.9 million common shares, raising
      approximately US$3.1 million. These funds were primarily invested in
      projects involving oil and gas exploration and diamond mining projects in
      Brazil between April 2003 and September
2005,
 
 g.
                
                Diamond
      mining operations discontinued in December 2004. The company sold its
      interest in an oil exploration project in Papua New Guinea in July 2005
      for US$3.2 million. The Company’s cost of this project was approximately
      US$1.6 million. Further, in October 2004, the company acquired working
      interest in gas exploration project in Louisiana, USA.  Between
      March 2005 and September 2005, the company invested approximately $3.9
      million as its share of exploration costs. The exploration however proved
      a dry well and was therefore abandoned and the costs incurred were fully
      written off in December 2005.
 
 h.
                
                since
      then, the Company has been actively pursuing projects in all sectors but
      has so far been unable to find one which it can participate
      into.
 
 
 (B)  BUSINESS
OVERVIEW
 
 Our long
term business plan is focused on participating in a business activity in any
sector which can provide opportunities to increase the value of our shareholders
equity. While our thrust is still aimed towards oil and gas sector, we have now
begun reviewing business proposals in alternative energy sector, healthcare and
pharmaceutical sector and Internet and high technology sector. In our views all
these sectors provide business opportunities which will meet our mandate of
enhancing shareholders’ equity in a long run.
 
 Through
our wholly-owned subsidiary, we will continue to seek highly visible
opportunities in countries around the globe that offer exciting and attractive
propositions. We will seek to minimize risk by bringing in either joint venture,
carried or working interest partners, depending on the size and scale of the
project.
  
 -
11 -
  It is our
current belief that oil and gas exploration is a high priority all over the
world and especially in North America. Higher price levels for both these
natural resources which have occurred over the past few months have encouraged
new drilling activities.  Our past experience with our two oil and gas
projects enables us to more efficiently select and evaluate potential
exploration projects in the oil and gas sector than in the other resource
sectors.  During the past several months, we have received without
solicitation opportunities to participate in oil and gas exploration projects as
a result of our past involvement in similar projects.
 
 Therefore,
our current business model, based on our experience with resource projects
handled over the recent past and our assumptions set forth above, envisions the
following key features:
 
 
 a.
                Preference
      will be given to projects that have proven but undeveloped reserves rather
      than probable or potential
reserves;
  b.
                We
      will invest our resources in projects which involves multiple well
      exploration potentials;
 
 c.
                Preference
      will be given to explorations involving shallow wells (up to 7,500 ft.)
      rather than deep wells (over 15,000
ft.);
 
 d.
                Preference
      will be given to projects with other experienced partners who are involved
      in the project;
 
 e.           We
will attempt to allocate our cash or liquidity resources to more than one
project.
 
 However,
if the Company has sought and will continue to seek may seek opportunities in
other sectors as explained earlier.
 
 Meanwhile,
our short term strategy is to have the surplus cash invested mostly in
marketable securities to achieve higher returns than would be possible if these
funds were to remain in a bank account. While this strategy has resulted in
significant reduction in value due to sudden and unexpected downfall of the
stock market in North America, we believe that most of our investments should
recover in value within the next few months.
 
 
 (C)
ORGANIZATIONAL STRUCTURE
 
 As at
March 31, 2009, the Company had only one subsidiary, Bontan Oil and Gas
Corporation, which was incorporated on February 20, 2004 as an Ontario
corporation, wholly owned by the Company.
 
 Bontan
Oil and Gas Corporation is current inactive and is actively seeking
participation opportunity in oil and gas exploration and development
projects..
 
 
 (D)
PROPERTY PLANTS AND EQUIPMENT
 
 The
administrative head office of the Company is located in subleased premises at 47
Avenue Road, Suite 200, Toronto, Ontario, Canada. There is no long-term lease
commitment.
 
 The
Sub-leased area is approximately 950 sq .ft.
 
 
 See
Operating and Financial Review and Prospects – Item 5 for further
details.
  
 -
12 -
 
 ITEM 4A – UNRESOLVED STAFF
COMMENTS
 
 None.
 
 
 ITEM 5 – OPERATING AND
FINANCIAL REVIEW AND PROSPECTS
 
 (A)  OPERATING
RESULTS
 
 The
following discussion should be read in conjunction with the Audited Financial
Statements of the Company and notes thereto contained elsewhere in this
report.
 
 Results
of operations
 
 
 Year
      ended March 31
                
                2009
                
                
                2008
                
                
                2007in
      000' CDN $
                
                
                in
      000' CDN $
                
                
                in
      000' CDN $Income
                
                
                53
                
                
                
                322
                
                
                
                744Expenses
                
                
                (742
                )
                
                
                (894
                )
                
                
                (908
                )Net
      loss for year
                
                
                (689
                )
                
                
                (572
                )
                
                
                (164
                )Deficit
      at end of year
                
                
                (33,335
                )
                
                
                (32,645
                )
                
                
                (32,074
                )
 
 Overview
 
 The
following were the key events in fiscal 2009:
 
 1.
                The
      management continued to look for suitable business proposals and projects
      to participate into. We received several projects during the year of which
      about  fifteen were reviewed  and discussed in detail.
      Many of these related to emerging high technology projects, resource
      sector exploration and development projects. Unfortunately, we were unable
      to conclude successfully in any of these business proposals. They were
      either too pricey compared to the expected growth  and returns
      or they  carried considerable debts and other commitments which
      would affect their ability to achieve their stated targets. We also looked
      at possibilities of merging with existing businesses. Our efforts at
      getting a project or a business that can that can get us back into working
      mode and enhance our shareholders value still
  continue.
 
 2.
                We
      also had to spend considerable time and efforts in continually monitoring
      our short term investments. These investments which represented our
      surplus funds earmarked for future projects suffered adversely in value
      due to deteriorating economic conditions during the past several months.
      We were however able to dispose of some of these holdings at reasonable
      profits whenever opportunities arose. Some of our key investments,
      although suffered value depreciation on a temporary basis, do reflect
      strong possibility of  full recovery in the near future. We have
      discussed these investments later in this
  report.
 
  3.
                We
      revised the terms of our outstanding options and warrants by extending
      their maturity dates and reducing their exercise prices to ensure that
      these instruments continue to  provide easy access to further
      cash flows from our existing shareholders. Refer to notes 7 and 8 of the
      consolidated financial statements for fiscal 2009 which form part of this
      report for further details.
 
  -
13 -
  4.
                We
      also attempted to initiate a private placement to raise  up to
      US$ 500,000. However, this proved difficult due to our inability to secure
      a business project and extremely adverse market conditions. Still we were
      able to get a new investors to invest US$ 50,000. We have for now kept
      this private placement open.
 
  5.
                Two
      new accounting standards and an amendment to an existing accounting
      standard issued by the Canadian Institute of Chartered Accountants were
      adopted by the Company during the fiscal year 2009 on a prospective basis.
      These are more fully explained in note 2 to the consolidated financial
      statements for the fiscal year 2009 included in this
    report.
 
 
 The
following were key events in fiscal 2008:
 
 1.
                The
      management received and evaluated twenty two business proposals during the
      fiscal 2008. Eight in Oil and Gas sector, four in health and
      pharmaceutical sector, five in Internet and high technology sector, four
      in alternative energy sector and one was in banking sector. Unfortunately,
      none of these projects met with our acceptance criteria. they were either
      not supported by technically experienced partners or were too expensive to
      be profitable for the Company or highly speculative in nature with
      relatively longer potential payback
period.
 
 2.
                The
      Company carried out a formal evaluation of design and operation of its
      internal controls over financial reporting based on the framework and
      criteria established in internal control-Integrated Framework issued by
      the Committee of Sponsoring Organisations of the Treadway Commission. The
      evaluation resulted in a formal development of an internal control manual
      which was updated as at March 31, 2008 and will be followed to ensure
      adequate controls on the financial reporting by the Company and also to
      ensure compliance with the relevant statutory requirements in Canada and
      the USA.
 
 3.
                During
      the fiscal year 2008, the Company developed a supplementary plan to the
      existing 2007 Consultant Stock Compensation Plan to add one million common
      shares of the Company to the existing Plan. The supplemental plan was
      registered with the Securities and Exchange Commission on December 12,
      2007.
 
 4.
                The
      surplus funds meanwhile were continued to be invested in marketable
      securities. Approximately $2 million were realised from the sales and $3.4
      million were invested during the fiscal year
  2008.
 
 5.
                Two
      new accounting standards issued by the Canadian Institute of Chartered
      Accountants were adopted by the Company as at April 1, 2007 on a
      prospective basis. These are more fully explained in note 2 to the
      consolidated financial statements for the fiscal year 2008 included in
      this report.
 
 6.
                The
      Company corrected an error in valuation of warrants and share capital
      retroactively as more fully explained in note 9(a) (ii) to the
      consolidated financial statements for the fiscal year 2008 included in
      this report.
 
 The
following were the key events in fiscal 2007:
 
 1.
                The
      Company completed its private placement on April 16, 2006 and raised an
      additional $1.3 million between April 1, 2006 and the closing date. In
      this connection, the Company paid finder’s fee at 10% in cash and 10%
      (1,040,000) in warrants to Current Capital Corp., a related
      party.
 
 2.
                The
      Company initiated preparation of a prospectus and registration statement
      in Form F-3 for submission to US Securities and Exchange Commission in
      respect of shares issued and issuable under warrants issued under a
      private placement completed in April 2006. The prospectus became effective
      on November 30, 2006.
  
 -
14 -
 3.
                The
      directors of the Company approved a new plan – 2007 Consultants Stock
      Compensation Plan covering 1.5 million common shares of the company for
      issuance to consultants in settlement of their fees for services to be
      rendered during 2007. The Plan was formally filed with a registration
      statement Form S-8 with US Securities and Exchange Commission and became
      effective on January 16, 2007.
 
 4.
                The
      Company received several exploration participation proposals during the
      year, of which it carried out a detailed due diligence on three oil
      project proposals but eventually decided against participating in any of
      them due to unsatisfactory results of the due
  diligence.
 
 5.
                The
      surplus funds continued to be gainfully invested in short term marketable
      securities. The cash and marketable securities at fair market value of at
      March 31, 2007 were $7.3 million compared to $5.8 million as at March 31,
      2006. During the fiscal 2007, the company earned approximately 27% return
      on its short term investments of an average of approximately $2.6
      million.
 
 Income
 
 Income
comprised the following:
 
 Fiscal
      year ended March 31
                
                2009
                
                
                2008
                
                
                2007Realized
      gain on disposal of short term investments
                
                
                45,036
                
                
                
                248,455
                
                
                
                650,508Interest
                
                
                7,901
                
                
                
                73,300
                
                
                
                93,278Gain
      on sale of interest in oil exploration project
                
                
                -
                
                
                
                -
                
                
                
                -$
                52,937
                
                
                $
                321,755
                
                
                $
                743,786
 
 Gains
on disposal of short term investments
 
 As
explained earlier in this report, the management chose to invest surplus funds
into marketable securities on a short term basis while it seeks business
opportunities. However, market conditions during later part of the fiscal 2009
deteriorated significantly and many of our investments lost values as part of
the overall losses in the stock market. However, we were still able to identify
some opportunities and dispose of some of our holdings at a profit. We decided
not to sell securities which lost significant market values but rather use our
existing cash for operating needs and wait for these securities to regain their
original values before disposing them. During the fiscal year 2009, the Company
sold investments of approximately $1.8 million while invested approximately $2.4
million. Net return on investments disposed of during the year was approximately
2.5%
 
 During
the fiscal year 2008, the Company sold investments of approximately $ 2 million,
earning an average of 12% return.
 
 During
the fiscal year 2007, the Company disposed of investments worth approximately
$5.5 million, earning an average return of 12% and
  
 -
15 -
  Interest
Income
 
 Interest
was earned on cash funds held at the brokerage firms before they are being
invested in marketable securities.
 
 Significantly
higher interest income in fiscal 2007 was mainly due to higher cash balances
being held. Average cash during the fiscal 2007 was approximately $3.2 million
compared to $2.1 million in fiscal 2008 and $0.6 million in fiscal 2009.
Applicable interest rates also dropped during these periods from an average of
5% to 1%.
 
 Expenses
 
 The
overall analysis of the expenses is as follows:
 
 Fiscal
      year ended March 31
                
                2009
                
                
                2008
                
                
                2007Operating
      expenses
                
                $
                319,081
                
                
                $
                355,248
                
                
                $
                373,594Consulting
      fee & payroll
                
                
                480,050
                
                
                
                396,465
                
                
                
                418,434Exchange
      (gain)loss
                
                
                (119,789
                )
                
                
                141,841
                
                
                
                111,659Write
      off of short term investment
                
                
                63,010
                
                
                
                -
                
                
                
                -Write
      off of interest in gas exploration project
                
                
                -
                
                
                
                -
                
                
                
                4,142$
                742,352
                
                
                $
                893,554
                
                
                $
                907,829
 
 Operating
Expenses
 
 Fiscal
      year ended March 31
                
                2009
                
                
                2008
                
                2007Travel,
      meals and entertainment
                
                $
                66,896
                
                
                $
                120,008
                
                
                $
                108,266Shareholder
      information
                
                
                
                144,757
                
                
                
                133,502
                
                
                
                149,105Professional
      fees
                
                
                
                27,844
                
                
                
                34,601
                
                
                
                53,084Other
                
                
                
                79,584
                
                
                
                67,137
                
                
                
                63,139$
                319,081
                
                
                $
                355,248
                
                
                $
                373,594
  Travel, meals and
entertainment
 
 These
expenses are primarily incurred by the key consultant, Mr. Terence Robinson in
traveling to the USA and Europe and also in maintaining his net work which has
been successfully used in raising funds, in attracting qualified consultants
with minimum cash outlay and in securing suitable projects for the
Company.
 
 During
fiscal 2009, approximately $10,000 or 15% costs related to travels in connection
with conducting due diligence on three of the proposals that were being reviewed
on site in detail including pre-review meetings. The balance of the costs
represented meals and entertainment.
 
 Travel,
meals and entertainment costs during fiscal 2008 and 2007 included trips to USA,
Europe and Middle East by Mr. Robinson. These visits resulted in some of the
business proposals that were sent to us. They also helped introduce our Company
to new investors in Middle East and Europe.
   -
16 -
 
 Shareholder
information
 
 Shareholder
information costs comprise investor and media relations fee, costs of holding
annual general meeting of the shareholders and various regulatory filing
fees.
 
 Major
cost consists of media relation and investor relation services provided by
Current Capital Corp. under contracts dated July 1, 2004, which are being
renewed automatically unless canceled in writing by a 30-day notice for a total
monthly fee of US$10,000. Current Capital Corp. is a shareholder Corporation
where the Chief Executive and Financial Officer of the Company provide
accounting services.
 
 The
differences in fee between the three fiscal years 2009 through 2007 was due to
significant changes in the exchange rates between Canadian and US
dollars.
 
 The
management believes that such services are essential even in the current periods
when the Company does not have any active business. In fact, these services are
more vital to ensure our existing shareholder base and prospective
investors/brokers and other interested parties are constantly kept in contact
and their comments and concerns are brought to the attention of the management
on a timely basis.
 
 Professional
fees
 
 Professional
fees primarily consist of audit and legal fees.
 
 For
fiscal year 2009, audit fee was $25,000 and legal fees were $2,844.
 
 For
fiscal year 2008, audit fee was $25,000 and legal fees were $9,601. The legal
fee was mainly relating to registration of supplementary stock compensation
plan. And other legal advice.
 
 Fiscal
2007 professional fees consisted of audit fee of $ 25,700 for fiscal 2007 and
$6,000 for fiscal 2006 not accrued in that fiscal year and legal fee of $21,384.
Legal fees related to filing of the 2007 Consultant Stock Compensation Plan,
Registration statement for the shares issued and issuable under the 2006 private
placement and other legal matters.
 
 Other
operating costs
 
 These
costs include rent, telephone, Internet, transfer agents fees and other general
and administration costs.
 
 Effective
January 1, 2008, the Company increased its rental space from approximately 300
sq.ft. to 960 sq.ft. as a result, the rental cost has also
increased  from approximately $ 500 to $1,800. The other overheads
have remained consistent on a year to year basis.
 
 The
increased space would enable the management to meet prospective investors,
shareholders, business partners, auditors and other visitors in the office
rather than outside in a restaurant and achieve further savings in related
travel and entertainment expenses.
 
 Consulting
      fees and payroll
                
                2009
                
                
                2008
                
                
                2007Fees
      settled in common shares
                
                
                193,139
                
                
                
                314,248
                
                
                
                367,973Fee
      settled by issuance of options
                
                
                84,717
                
                
                
                -
                
                
                
                -Fee
      settled in cash
                
                
                166,928
                
                
                
                82,217
                
                
                
                50,461Payroll
                
                
                35,266
                
                
                
                -
                
                
                
                -$
                480,050
                
                
                $
                396,465
                
                
                $
                418,434
   -
17 -
  Stock
based compensation is made up of the Company’s common shares and options to
acquire the Company’s common shares being issued to various consultants and
directors of the Company for services provided. The Company used this method of
payment mainly to conserve its cash flow for business investments purposes. This
method also allows the Company to avail the services of consultants with
specialized skills and knowledge in the business activities of the Company
without having to deplete its limited cash flow.
 
 The
following were the major details forming part of the consulting fee and
payroll:
 
 1.
                Consulting
      fee in common shares comprise three consultants who were paid for their
      services in common shares - Mr. Kam Shah, the executive and financial
      officer, Mr. Terence Robinson, the key consultant and Mr. John Robinson.
      No new shares were issued during the fiscal
  year.
 
 2.
                Mr.
      Terence Robinson returned 275,000 shares previously issued as compensation
      for cancelation and instead requested cash payment. This reduced stock
      compensation costs by $64,395 and increased cash compensation by an agreed
      sum of $60,000.
 
 3.
                Option
      value included $76,839 resulting from the changes in terms of the existing
      options. These changes involved reduction in the exercise value and
      extension of the expiry dates as more fully explained in note 7 (i) to the
      consolidated financial statements for the fiscal
  2009.
 
 4.
                The
      balance of the options were issued to the two independent directors as
      part of their fees in their capacity as audit committee
      members.
 
 5.
                Majority
      of cash fee comprised $90,000 fee to Mr. Terence Robinson, including
      $60,000 on account of shares returned for cancellation as explained in 2.
      above. And $50,000 to Kam Shah.
 
 6.
                The
      administrative assistant was hired as an employee in May 2008 for the
      first time. The payroll reflected the salary and related expenses in
      connection with this position. In prior periods, administrative work used
      to be carried out by a contract
person.
 
 During
fiscal year 2008, the company registered a supplementary Plan to the existing
2007 Consultant Stock Compensation Plan. An additional one million common shares
were registered under this Plan with Securities and Exchange Commission. In
addition, the Company had 350,000 common shares unissued from the existing Plan.
The total of 1,350,000 common shares was issued to three consultants in lieu of
their fees for services to be provided as follows:
 
  -
18 -
  #
                Name
                Period
      of service
                #
      of shares to be issued
                Date
      of issuance of stock (a)
                Market
      price (US$)
                Fee
      in US$
                CDN$
      at
                Brief
      description of services to be performed
                Comments$1.01811
                John
      Robinson (a)
                Year
      ending June 30, 2009
                350,000
                28-Mar-08
                $0.23
                $80,500
                $81,957
                searching
      and evaluating new  project proposals, assisting Kam Shah in
      such evaluation and assisting Terence in managing our short term
      investment portfolios
                Consultant
      - per Contract extension letter dated August 15, 20052
                Terence
      Robinson(b )
                Year
      ending December 31, 2008
                *550,000
                28-Mar-08
                $0.23
                $126,500
                $128,790
                business
      development and managing our short term investment
    portfolios
                Currently
      under a consulting contract dated April 1, 2003 valid up to March 31,
      2009.3
                Kam
      Shah ( c)
                Year
      ending December 31, 2008
                450,000
                28-Mar-08
                $0.23
                $103,500
                $105,373
                act
      as CEO/CFO
                Currently
      under a consulting contract dated April 1, 2005 valid up to March 31,
      2010.1,350,000
                
                
                $310,500
                $316,120*
      During fiscal 2009, Mr. Robinson returned  275,000 shares for
      cancellation and was instead paid cash fee of $60,000 (see comments in
      item 2 above).
                  
                  
                  a.  John
      has been providing consulting services for the last few years. These
      services mainly included review of oil and gas proposals that are received
      and short listing them for further review and analysis by CEO. In
      addition, John also does constant research on companies acquiring oil and
      gas interest and major oil and gas plays under
      consideration.  The research has always proved useful in
      negotiating proper terms on any proposals and saved the company from over
      paying. During the past year and is now extending his research to
      proposals and projects in other sectors also. John also played an
      important role in managing our short term investments of around $6
      million. Watching this investment portfolio will be more critical due to
      highly fluctuating market conditions.Owing
      to the above, we have extended John's contract for another year to June
      30, 2009 and negotiated settlement of his fee for this period by issuance
      of the recommended number of shares.
                  
                  b.   Terence
      provides two main services to the company. Owing to his extensive network,
      he is constantly in touch with some of our key shareholders and potential
      investors to ensure that whenever the company needs additional funding, it
      can be easily raised through private placement. We had two such successful
      placements during the past five years. The second important service is
      business development through his network. The company receives lucrative
      proposals for acquiring interest in oil and gas projects from contacts
      known to Terence. Once we finalize such a project, he also helps secure
      best pricing. For the past few months, terence was involved in deciding on
      the marketable securities in which the company's surplus funds got
      invested on a short term basis. Our funds grew by over 100% owing to his
      selection of the marketable securities and decisions to buy and sell at
      the right time. He will continue to provide these services during the year
      2006 and has agreed to accept the proposed number of common shares in lieu
      of his fees for such services.C.  Kam
      Shah's role and responsibilities have grown significantly due to more
      complex regulatory changes. Compliance with SOX 404 inter control
      certification and documentation, which to other companies have cost in
      thousands and millions of dollars, have been compiled and implemented
      entirely by him without any outside help. He is also heavily involved in
      reviewing several proposals from different sectors requiring lot more
      research and attention. he has agreed to accept $10,000 per month in cash
      from January to May 2008. in addition to the shares as
    above.
   -
19 -
  On March
28, 2008, the Company issued 25,000 options to each of the two members of the
audit committee for their services during the fiscal 2009. These options were
valid for five years and exercisable to convert into equal number of common
shares of the Company at an exercise price of US$0.35 per option. The options
were valued at $ 7,878.
 
 
 During
the fiscal 2007, the Company only registered one Plan and issued common shares
to three existing consultants as explained below. No new consultants were hired
due to lack of any active projects.
 
 On
January 16, 2007, the Company registered 2007 Consultant Stock Compensation Plan
with the US Securities and Exchange Commission. The Company registered 1.7
million common shares under this Plan. On February 8, 2007, the company issued
1,150,000 common shares under this Plan to three existing consultants, who are
all related parties, for a value of $313,486 based on the market price of the
Company’s common shares on the date of their issuance.
 
 Exchange
(gain) Loss
  Exchange
      losses and gains related to translation losses and gains arising from
      converting foreign currency balances, mainly in US dollar, into Canadian
      dollar, which is the reporting unit of currency, on
      consolidation.
  The
      Company’s treasury transactions – issuance of shares, exercise of warrants
      and options are in US dollar. Similarly, approximately 5% cash and short
      term investments are in US dollars.
  During
      the fiscal year 2009, Canadian dollar continually weakened in value
      against US dollar – from $1.0279 per US dollar at March 31, 2008 to
      $1.2602 per US dollar at March 31, 2009 – approximately 23% reduction in
      value. As a result, year end revaluation of assets held in US dollar
      resulted in a significant exchange gain of
  $119,789.
  Canadian
      dollar has steadily strengthened against US dollar for the last three
      years – US$1 was equal to CDN$ 1.19 on an average during the fiscal year
      2006, CDN$1.14 during the fiscal year 2007 and CDN$ 1.03 during the fiscal
      year 2008. The Company held cash and short term investments in US dollar
      and all its treasury transactions were also in US dollars. Most of its
      expenses and liabilities were in Canadian dollars. This situation resulted
      in the Company having to book an exchange loss for each of these fiscal
      years on year end translation of its US dollar balances as per its stated
      accounting policy.
  As
      at march 31, 2008, the Company had net monetary assets of approximately
      $1.1 million in US dollar and issued common shares for $110,201 during the
      year.  The US dollar depreciated by around 10% compared to
      Canadian dollar during this period resulting in a year end translation
      loss of $141,841.
  As
      at March 31, 2007, the Company had net monetary assets of approximately
      $1.2 million in US dollar. and issued common shares for $1.2 million
      during the fiscal year. US Dollar depreciated by over 6% against Canadian
      dollar during the year resulting in a translation loss of
      $111,659.
 
  -
20 -
 
 Write
off of short term investment
 
 The
Company’s short term investment portfolio included an investment of
$63,010(US$50,000) in a private Canadian corporation. This Corporation was
engaged initially in exploration of oil and gas in Argentina and other South
American countries and later exploited hydro-electric projects in Panama.
Unfortunately, none of these projects came to fruition and the Corporation was
unable to attract more financing and as a result has now become inactive shell
with no funds. The management review of these affairs concluded that our
investment value has been permanently impaired and as a result, we decided to
fully write off this investment.
 
 There
were no such write offs in the fiscal years 2008 and 2007.
 
 Write
off of interest in gas exploration project –fiscal year 2007
 
 During
the fiscal 2007, the company received a final charge of $4,142 (US$ 3,638)
relating to closure of the drilled well in a gas exploration project in the
State of Louisiana, USA where the Company acquired 49% gross working interest.
No further charges are now expected in respect of this project.
 
 (B)           Liquidity
and Capital Resources
 
 Working
      Capital
 
 As at
March 31, 2009, the Company had a net working capital of approximately $1.4
million compared to a working capital of $5.2 million as at March 31,
2008.
 
 Almost
all of the working capital - approximately $1.4 million - at March 31, 2009 was
in the form of cash and short term investments compared to 94% - $4.9 million at
March 31, 2008.
 
 Significant
decline in the working capital was due to accounting for unrealised losses on
short term investments of approximately $4.4 million on application of fair
value based on market price as at March 31, 2009. This is further detailed under
investment cash flow section below.
 
 Cash on
hand as at March 31, 2008 was $0.4 million compared to $1.3 million as at March
31, 2008.
 
 Sudden
deterioration in the market condition has severely affected the Company’s
working capital base. Management however expects that its existing cash position
will enable it to meet its operating needs for the near future and to wait until
the market value of its available for sale investments improves.
 
 Near the
end of December 2008, the Company launched a new equity fund raising through a
private placement of up to US$ 500,000 to strengthen its working capital. As of
the date of this report, only one subscription has been received for US$ 50,000
under this private placement.
 
 Operating cash
      flow
 
 During
the fiscal year 2009, operating activities generated a net cash outflow of
$362,874, which was primarily met from the available cash on hand.
 
 During
the fiscal 2008, operating activities required net cash outflow of $482,662
which was off set by the net realised on disposal of short term investments of
$248,455 and balance from the available cash on hand.
 
 In fiscal
2007, the Company’s operating activities required net cash flow of $529,323
which was met from the net proceeds from the sale of short term investments of
$650,508.
   -
21 -
  The
company continues its efforts at keeping its operating cash requirements to
minimum. However, once the Company begins business activities these requirements
may have to be reassessed.
 
 Investing cash
      flows
 
 During
the fiscal year 2009, the Company invested $2.4 million in short term marketable
securities while sold marketable securities for net proceeds of $1.8 million.
The balance of the funds for investment after using the sales proceeds came from
the available cash on hand.
 
 The
Company had short term investments at a carrying cost of approximately $5.5
million as at March 31, 2009 – of which $5.2 million or 95% was held in Canadian
currency and the balance 5% was held in US currency. Approximately 95% of the
investments were in 24 public companies while 5% was invested in two private
companies. An investment of US$50,000 in a private corporation was written off
during the year due to permanent impairment of its carrying costs. These
investments were stated at their fair value of approximately $1.1 million as at
March 31, 2009 and the difference representing unrealised loss of approximately
$4.4 million was transferred to accumulated other comprehensive loss and
included under shareholders equity.
 
 During
the fiscal 2008, Company invested approximately $3.4 million in short term
marketable securities while realised approximately $2 million from the disposal
of such securities, which were partly used for the working capital as explained
above and remaining reinvested. Net additional investments were funded from the
available cash on hand.
 
 As a
result of the above, the Company had short term investments at a carrying cost
of approximately $4.9 million as of March 31, 2008 –approximately 94% was held
in Canadian currency and the balance $342,000 or 6% was held in US currency.
Approximately 94% of investments were in 32 public companies while 6% was
invested in three private companies.
 
 The fair
value of the above investments as at March 31, 2008, based primarily on the
quoted prices of the shares on that date, came to $3.6 million giving rise to an
unrealised loss of approximately $1.3 million. Company recognized this loss and
reduced the value of its short term investment to reflect the fair value on the
balance sheet as at March 31, 2008.
 
 During
the fiscal 2007, the Company invested $6.4 million in short term marketable
securities and realised $5.5 million from the sale of the short term marketable
securities. These proceeds were partly used to cover operating cash flow deficit
and balance reinvested.
 
 The
amounts at which the Company’s publicly-traded investments could be disposed of
currently may differ from fair values based on market quotes, as the value at
which significant ownership positions are sold is often different than the
quoted market price due to a variety of factors such as premiums paid for large
blocks or discounts due to illiquidity.
 
 The
following is a major composition of short term investments:
 
 
 March
      31,
                  
                  2009
                  
                  
                  
                  
                  
                  
                  
                  
                  2008in 000'#
      of shares
                  
                  
                  cost
                  
                  
                  fair
      value
                  
                  
                  #
      of shares
                  
                  
                  cost
                  
                  
                  fair
      valueMarketable
      SecuritiesBrownstone
      Ventures Inc.
                  
                  
                  1,227
                  
                  
                  
                  1838
                  
                  
                  
                  362
                  
                  
                  
                  1,267
                  
                  
                  1929
                  
                  
                  
                  1140Roadrunner
      Oil & Gas Inc.
                  
                  
                  1,529
                  
                  
                  
                  627
                  
                  
                  
                  145
                  
                  
                  
                  730
                  
                  
                  
                  331
                  
                  
                  
                  387Skana
      Capital Corp
                  
                  
                  773
                  
                  
                  
                  706
                  
                  
                  
                  186
                  
                  
                  
                  583
                  
                  
                  
                  585
                  
                  
                  
                  35623
      (2008: 26, 2007: ) other public companies - mainly resource
      sector
                  
                  
                  2082
                  
                  
                  
                  399
                  
                  
                  
                  
                  
                  
                  
                  1793
                  
                  
                  
                  1447$
                  5,253
                  
                  
                  $
                  1,092
                  
                  
                  
                  
                  
                  
                  $
                  4,638
                  
                  
                  $
                  3,330Non-marketable
      securitiesCookee
      Corp
                  
                  
                  1,000
                  
                  
                  
                  200
                  
                  
                  
                  -
                  
                  
                  
                  1,000
                  
                  
                  
                  200
                  
                  
                  
                  200One
      other private company ( 2008: two private companies,
      2007: )
                  
                  
                  
                  63
                  
                  
                  
                  -
                  
                  
                  
                  
                  
                  
                  
                  103
                  
                  
                  
                  103$
                  263
                  
                  
                  $
                  -
                  
                  
                  
                  
                  
                  
                  $
                  303
                  
                  
                  $
                  303$
                  5,516
                  
                  
                  $
                  1,092
                  
                  
                  
                  
                  
                  
                  $
                  4,941
                  
                  
                  $
                  3,633
 Management
believes that the reduction in fair value of the above investments due to
application of mark to market accounting rules is temporary and is a direct
effect of the adverse current market conditions in the resource sector in
general. The fundamentals of the investee corporations are strong in terms of
their financial and portfolio strength and will eventually reflect in higher
market prices once market condition improves for the resource
sector.
 
 Financing cash
      flows
 
 During
the fiscal 2009, the Company generated $56,000 in equity fund through a private
placement, net of finder’s fee of $6,228.On December 12, 2008, the
directors of the Company approved a private placement to raise equity funds of
up to US$500,000. The private placement comprises issuance up to ten million
units at US$0.05 each, being the prevailing market price, each unit consists of
one common share and one warrant exercisable at US$0.10 within two years of its
issuance. The private placement was considered necessary to improve the
Company’s liquidity and holding ability so that it may be able to gain higher
values for its investments once the current market conditions
improve.
 
 Equity
fund raised as above reflected subscription to one million units under the above
private placement by one accredited investor.
 
 During
the fiscal 2008, the Company received $110,000 net of the finder’s fee from
exercise of warrants by an existing shareholder. These funds were primarily used
to meet the operating cash flow deficit.
 
 During
the fiscal 2007, the Company raised an additional $1.2 million net of the
finders’ fee from private placement which commenced in late fiscal 2006 and
completed in April 2006.
  (C)           RESEARCH
AND DEVELOPMENT, PATENTS AND LICENSES
   The
Company has not spent any funds on research and development during the fiscal
years 2009, 2008 and 2007.
   -
22 -
 
  (D)           TREND
INFORMATION
   Our
business strategy is exploration of oil and gas, while we have also extended our
business plan to projects in other sectors like alternative energy, health and
pharmaceutical and internet and high technology so the prices and demands of
products and services in these sectors have a direct impact on our prospects for
success and our ability to raise capital. While the resource sector recently
encountered significant price reduction, current prices of crude oil and gas are
still attractive to make exploration commercially viable. High technology sector
continues to grow while most other sectors suffer from overall economic downturn
on a worldwide basis. Management believes that the current outlook for our
sectors will likely to improve in the foreseeable future. History has shown,
however, that there can be no such assurances.
   There are
no other trends, commitments, events or uncertainties presently known to
management that are reasonably expected to have a material effect on the
Company’s business, financial condition or results of operation other than
uncertainty as to the speculative nature of the business (Refer to the heading
entitled “Risk Factors”).
   (E)           OFF-BALANCE
SHEET ARRANGEMENTS
  At March
31, 2009, 2008 and 2007, the Company did not have any off balance sheet
arrangements, including any relationships with unconsolidated entities or
financial partnership to enhance perceived liquidity.
  (F)           CONTRACTUAL
OBLIGATIONS
   Not
applicable.
   (G)           SAFE
HARBOUR
   Not
applicable.
  ITEM 6 – DIRECTORS, SENIOR
MANAGEMENT AND EMPLOYEES
 
 (A)  DIRECTORS
AND SENIOR MANAGEMENT
 
 The
following table sets forth all current directors and executive officers of the
Company, with each position and office held by them in the Company, and the
period of service as such:
 
 Name
      and Position With the Company
                Other
      principal directorships
                Principal
      business activities outside the CompanyKam
      Shah
                  Director
      and Chairman
                  Chief
      Executive Officer and Chief Financial Officer
                Director
      – Argen Energy Corp, A Canadian private corporation.
                Provides
      accounting services to Current Capital Corp. and a part time practice as
      chartered accountant.Terence
      Robinson
                  Key
      Consultant
                None
                President
      of TR Network Inc. – an independent organisation providing business and
      financial services.Dean
      Bradley – Independent Director, Chair of the Audit
    Committee
                Director
      of Quasar Aviation Corporation and Quasar-Lite, Inc.
                Chief
      Executive Officer of Quasar Aviation Corporation and Quasar-Lite,
      Inc.Brett
      D. Rees – Independent Director, member of the Audit
    Committee
                Director
      of five Canadian private corporations.
                Independent
      broker in life and other insurance products and personal and estate
      financial planning.
 
 -
23 -
 
 Kam Shah joined the Company as
a Chief Financial Officer and was appointed to the Board on January 3, 1999. He
worked with PricewaterhouseCoopers LLP and Ernst & Young. He is a US
Certified Public Accountant and a Canadian Chartered Accountant.  He
has over fifteen years of international experience in corporate financial
analysis, mergers & acquisitions. Mr. Shah is responsible for the financial
and statutory matters of the Company and effective May 17, 2004, following
resignation of the Chairman, Mr. Terence Robinson, has also assumed the
responsibilities of the chairman of the Board and Chief Executive Officer of the
Company.
 
 Mr. Shah
is also a consultant providing accounting and tax services to Current Capital
Corp., (CCC) a private Ontario corporation, having its head office in Toronto.
CCC provides investors’ and media relations services to Bontan
Corporation.
 
 Terence Robinson was Chairman
of the Board and Chief Executive Officer of the Company since October 1, 1991.
He resigned from the Board on May 17, 2004 but continues with the Company as a
key consultant. He advises the board in the matters of shareholders relations,
fund raising campaigns, introduction and evaluation of investment opportunities
and overall operating strategies for the Company. He has over 25 years of
experience as merchant banker and venture capitalist and has successfully
secured financing for a number of start-up and small cap companies and currently
runs his own consulting firm in the name of TR Network Inc.
 
 Dean Bradleyis a
non-executive independent director based in Florida. He was first appointed
director of the Company on November 20, 2000. He assists the Company from time
to time in introducing new businesses and liaising with businesses in the USA in
which the Company has equity interest. Mr. Bradley had been CEO of many
corporations including real estate, mining, manufacturing, and import/export and
financial services corporations and is currently involved in two ventures as
explained above. Mr. Bradley is currently the chairman of the audit committee of
the Company.
 
 Brett Rees was appointed as
independent director and a member of the audit committee effective December 8,
2006. Mr. Rees is a Chartered life underwriter, financial consultant and
financial planner and a licensed mutual funds manager. He has over twenty years
of experience in various insurance products, estate planning, pension planning
for individual and corporation and in group benefit assessments. He is currently
an officer/director in five Canadian private corporations including Resolution
Oil & Gas Ltd., Resolution Mining Ltd and Platinum Equity
Funding.
 
 Management
Team
 
 The
Company‘s current management team consists only of Mr. Kam Shah whose background
details are given above.
 
 Mr.
Terence Robinson is a key consultant who basically acts in an advisory role with
no specific authority to bind the Company except in case of short term
investments where he is authorised to buy and sell marketable securities on
behalf of the Company and also advises as to when to buy or sell.. He is however
not authorised to withdraw or deposit any cash from and into our accounts with
the brokerage firms.
   -
24 -
  Mr. John
Robinson is another consultant who provides advisory services, primarily in
assisting in the research and evaluation of projects and in short term
investment activities with no specific authority to bind the Company except in
case of short term investments where he is authorised to buy and sell marketable
securities on behalf of the Company. He is however not authorised to withdraw or
deposit any cash from and into our accounts with the brokerage firms. Mr. John
Robinson is a brother of Mr. Terence Robinson and is the sole shareholder of
Current Capital Corp, which provides investor and media relations services to
the Company and is a shareholder.
 
 Mr.
Shah’s current consulting agreement is effective for five years to March 31,
2010. Copy of the new agreement was included in the Exhibits attached to fiscal
2005 annual report.
 
 Mr.
Terence Robinson’s consulting agreement was signed on April 1, 2003 and was
valid up to march 31, 2009. A new agreement has not yet been entered although
the management has established that Mr. Robinson’s services would be required
for fiscal 2010 an dbeyond.
 
 Mr. John
Robinson’s consulting agreement is renewed on an annual basis. The current
agreement expired on June 30, 2009. Renewal talks have not begun
yet.
  Family
Relationships
   There are
no family relationships between the directors and key management. A key
consultant, Mr. Terence Robinson is a brother of another consultant, Mr. John
Robinson who is part of the management team as explained above.
   Other
Relationships
   There are
no arrangements or understandings between any major shareholder, customer,
supplier or others, pursuantto which any
of the above-named persons were selected as directors or members of senior
management.
  (B)  COMPENSATION
 
 The
compensation payable to directors and officers of the Company and its subsidiary
is summarized below:
 
 1.           General
 
 The
Company does not compensate directors for acting solely as directors. Except as
described below, the Company does not have any arrangements pursuant to which
directors are remunerated by the Company or its subsidiary for their services in
their capacity as directors, other than options to purchase shares of the
Company which may be granted to the Company’s directors from time to time and
the reimbursement of direct expenses.
 
 The
Company does not have any pension plans.
 
 
 2.           Statement
of Executive Compensation
  The
following table and accompanying notes set forth all compensation paid by the
Company to its directors, senior management and key consultants for the fiscal
years ended March 31, 2009, 2008 and 2007:
  .
 -
25 -
 ANNUAL
      COMPENSATION
                  
                  
                  
                  
                  LONG-TERM
      COMPENSATIONAwards
                  
                  
                  PayoutsName
      and principal position
                  Year
                  
                  Fee
      (3)
                  
                  Bonus
                  Other
      annual compensation
                  
                  Securities
      under options/SARs Granted (1) & (4)
                  
                  Shares
      or units subject to resale restrictions
                  LTIP
      (2) payouts
                  
                  all
      other compensation($)
                  
                  ($)
                  ($)
                  
                  
                  (#
                  )
                  ($)
                  ($)Kam
      ShahCEO/CFO
                  2009
                  
                  
                  129,030
                  
                  
                  
                  
                  
                  5,574
                  
                  
                  
                  
                  
                  6,424CEO/CFO
                  2008
                  
                  
                  127,899
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  4,744CEO/CFO
                  2007
                  
                  
                  88,436
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  4,744Terence
      RobinsonConsultant
                  2009
                  
                  
                  122,198
                  
                  
                  
                  
                  
                  44,431
                  
                  
                  
                  
                  
                  5,824Consultant
                  2008
                  
                  
                  134,423
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  4,744Consultant
                  2007
                  
                  
                  141,715
                  
                  
                  
                  
                  
                  1,100,000
                  
                  
                  
                  
                  
                  4,744Dean
      BradleyIndependent
      director
                  2009
                  
                  
                  5,000
                  
                  
                  
                  
                  
                  4,656Independent
      director
                  2008
                  
                  
                  3,871
                  
                  
                  
                  
                  
                  25,000Independent
      director
                  2007
                  
                  
                  5,522Brett
      ReesIndependent
      director
                  2009
                  
                  
                  5000
                  
                  
                  
                  
                  
                  4337Independent
      director
                  2008
                  
                  
                  0
                  
                  
                  
                  
                  
                  25000Independent
      director
                  2007
                  
                  
                  0John
      RobinsonConsultant
                  2009
                  
                  
                  81911
                  
                  
                  
                  
                  
                  257192008
                  
                  
                  819262007
                  
                  
                  108552
  Notes:
 
 1.
                “SAR”
      means stock appreciation rights. The Company never issued any
      SARs
 2.
                “LTIP”
      means long term incentive plan.
 3.
                Fees
      were settled in cash and shares issued under Consultants Stock
      Compensation Plans.
 4.
                For
      the fiscal 2009, options included additional costs due to changes in the
      terms of the previously issued options. The additional cost
      was  estimated using Black-Scholes option price model as more
      fully explained in note 7 (i) to the consolidated financial statements for
      fiscal 2009 included herein.
  Long
Term Incentive Plan (LTIP) Awards
   The
Company does not have a LTIP, pursuant to which cash or non-cash compensation
intended to serve as an incentive for performance (whereby performance is
measured by reference to financial performance or the price of the Company’s
securities) was paid or distributed to the Named Executive Officers during the
most recently completed financial year.
   Defined
Benefit or Actuarial Plan Disclosure
   There is
no pension plan or retirement benefit plan that has been instituted by the
Company and none are proposed at this time.
   Indebtedness
of Directors, Executive Officers and Senior Officers
   Kam Shah,
the chief executive and financial officer was allowed to draw $10,000 per month
in arrears between June 1, 2008 and December 31, 2008 – total sum of $70,000.
This advance is repayable without interest when market price of the common
shares of the Company stays at US0.50 or above for a consecutive period of three
months. Interest cost waived worked out to be approximately $600 at 2% per
annum. This is included under other compensation under the Statement of
Executive Compensation above.
  -
26 -
  Directors’
and Officers’ Liability Insurance
   The
Company has purchased, at its expense, directors and officers liability
insurance policy to provide insurance against possible liabilities incurred by
them in their capacity as directors and officers of the Company.
  (C)  BOARD
PRACTICES
 
 Directors
may be appointed at any time in accordance with the by-laws of the Company and
then re-elected annually by the shareholders of the Company. Directors receive
no compensation for serving as such, other than stock option and reimbursement
of direct expenses. Officers are elected annually by the Board of Directors of
the Company and serve at the discretion of the Board of Directors.
 
 The
Company has not set aside or accrued any amount for retirement or similar
benefits to the directors.
 
 
 Mandate
of the Board
  
  The Board
has adopted a mandate, in which it has explicitly assumed responsibility for the
stewardship of Bontan Corporation Inc. In carrying out its mandate the Board
holds at least four meetings annually.  The frequency of meetings, as well
as the nature of the matters dealt with, will vary from year to year depending
on the state of our business and the opportunities or risks, which we face from
time to time. The Board held a total of 6 meetings during our financial year
ended March 31, 2008.  To assist in the discharge of its responsibilities,
the Board has designated one standing committee: an Audit Committee, as more
particularly discussed below.
  
  Audit
Committee
  
 The
members of the audit committee consisted of Dean Bradley and Mr. Brett Rees,
both are our independent directors.. The audit committee is charged with
overseeing the Company's accounting and financial reporting policies, practices
and internal controls. The committee reviews significant financial and
accounting issues and the services performed by and the reports of our
independent auditors and makes recommendations to our Board of Directors with
respect to these and related matters.
 
 The
Company’s Audit Committee’s charter was detailed in the annual report for fiscal
2005. The Charter became effective on August 2, 2005.
 
  Audit
Committee charter assists the Board in fulfilling its responsibilities for our
accounting and financial reporting practices by:
   ·
                reviewing
      the quarterly and annual consolidated financial statements and management
      discussion and analyses;
 ·
                meeting
      at least annually with our external
auditor;
  ·
                reviewing
      the adequacy of the system of internal controls in consultation with the
      chief executive and financial
officer;
   -
27 -
   ·
                reviewing
      any relevant accounting and financial matters including reviewing our
      public disclosure of information extracted or derived from our financial
      statements;
  ·
                establishing
      procedures for the receipt, retention and treatment of complaints received
      by us regarding accounting, internal controls or auditing matters and the
      confidential, anonymous submission by employees of concerns regarding
      questionable accounting or auditing
matters;
  ·
                pre-approving
      all non-audit services and recommending the appointment of external
      auditors; and
  ·
                reviewing
      and approving our hiring policies regarding personnel of our present and
      former external auditor
   A copy of
the Audit Committee Charter can be requested by calling (416)
929-1806.
  
 Compensation
Committee
 
 The
Company does not currently have a Compensation Committee. The directors
determined that, in light of the Company’s size and resources, setting up such a
committee would be too expensive and would not serve any useful purpose for the
Company at this time. The Company has, however, set up an Independent Review
Committee of the Board to review and approve all non-arms' length contracts.
This Committee has the same composition as the Audit Committee, and is currently
comprised of the two independent directors - Dean Bradley and Brett Rees. This
committee approves fees and major expenses of Mr. Shah and Mr. Terence
Robinson.
 
 Corporate
Governance Committee
 
 The
Company does not have a separate corporate governance committee. The CEO in
conjunction with the audit committee has developed and updated corporate
governance practices and policies, code of ethics and corporate disclosure
policy which form part of our internal control over financial reporting manual.
The goal is to provide a mechanism that can assist in our operations, including
but not limited to, the monitoring of the implementation of policies, strategies
and programs and the development, continuing assessment and execution of the
Company’s strategic plan.
 
 (D)  EMPLOYEES
 
 The
Company presently has one employee who serves as assistant to the chief
executive and financial officer. It uses the services of consultants from time
to time.
 
 (E)  SHARE
OWNERSHIP
 
 The
Company usually creates two Plans, Consultants Stock Compensation Plan and Stock
Option Plan.
 
 All
options under 1999 Plan, 2003 plan and The Robinson Plan and 50,000 options
under 2005 Plan were issued and as at June 30, 2008, the date of this report,
4,825,000 options were outstanding. 950,000 options have not yet been issued
under the 2005 Plan.
 
 All
shares reserved under the 2001, 2003, 2005 and 2007 and 2007 supplemental
Compensation Plans were issued before March 31, 2008. A new 2009 Consultant
Stock Compensation Plan was registered with Securities and Exchange Commission
on April 7, 2009 under the US Securities Act of 1933. 3,000,000 common shares of
the Company were registered under this Plan. As at June 30, 2009, the date of
this report, no shares have been issued under this Plan.
 
 The
objective of these Plans is to provide for and encourage ownership of common
shares of the Company by its directors, officers, consultants and employees and
those of any subsidiary companies so that such persons may increase their stake
in the Company and benefit from increases in the value of the common shares. The
Plans are designed to be competitive with the benefit programs of other
companies in the natural resource industry. It is the view of management that
the Plans are a significant incentive for the directors, officers, consultants
and employees to continue and to increase their efforts in promoting the
Company’s operations to the mutual benefit of both the Company and such
individuals and also allow the Company to avail of the services of experienced
persons with minimum cash outlay.
  -
28 -
  The
following table sets forth the share ownership of those persons listed in
subsection 6.B above and includes details of all options to purchase of the
Company held by such persons at March 31, 2009:
 
 Name
                
                #
      of Common shares held at March 31, 2009
                
                
                %
      of shares outstanding
                
                
                #
      of stock options
                
                Exercise
      price - in US$
                Expiry
      date(s)Kam
      Shah
                
                
                1,046,958
                
                
                
                3.40
                %
                
                
                100,000
                
                
                $
                0.15
                
                11-May-10125,000
                
                
                $
                0.15
                
                18-Aug-10125,000
                
                
                $
                0.15
                
                18-Aug-10Terence
      Robinson
                
                
                -
                
                
                
                
                
                
                
                1,690,000
                
                
                $
                0.15
                
                18-Aug-101,100,000
                
                
                $
                0.15
                
                5-Dec-11Dean
      Bradley
                
                
                -
                
                
                
                
                
                
                
                25,000
                
                
                $
                0.15
                
                28-Mar-1415,000
                
                
                $
                0.15
                
                11-May-105,000
                
                
                $
                0.15
                
                18-Aug-10Brett
      Rees
                
                
                -
                
                
                
                
                
                
                
                25,000
                
                
                $
                0.15
                
                28-Mar-14John
      Robinson *
                
                
                733,500
                
                
                
                2.38
                %
                
                
                1,615,000
                
                
                $
                0.15
                
                28-Oct-10* Includes
      common shares held in the name of Current Capital Corp., which is fully
      owned by Mr. John Robinson
 
 Terms of
all options were revised during the fiscal 2009. The revisions comprised
increasing the expiry dates by one year and reducing the exercise price, which
ranged between US$035 and US$1.00 to US$0.15. This is further explained in note
7 to the consolidated financial statements for fiscal 2009 included
herein.
 
 All
shares and options held by the above persons carry same rights as the other
holders of the Common shares of the Company.
 
 ITEM 7 – MAJOR SHAREHOLDERS
AND RELATED PARTY TRANSACTIONS
 
 (A)  MAJOR
SHAREHOLDERS
 
 The
Company's securities are recorded on the books of its transfer agent in
registered form. The majority of such shares are, however, registered in the
name of intermediaries such as brokerage houses and clearing-houses on behalf of
their respective clients. The Company does not have knowledge of all the
beneficial owners thereof.
 
 As at
June 30, 2009, Intermediaries like CDS & Co, Toronto, Canada and Cede &
Co of New York, USA held approximately 86% of the issued and outstanding common
shares of the company on behalf of several beneficial shareholders whose
individual holdings details were not available. The following are the known
shareholders holding more than 5% of the common shares of the company as at June
30, 2009.
 
 
 Name of Shareholder
                No. of Shares
                % of Issued SharesPinetree
      Resource Partnership
                2,861,000
                9.29
      %
 
 
 -
29 -
  At June
30, 2009, the Company had 30,820,743 shares of common stock outstanding, which,
as per the details provided by the Transfer Agents, were held by 81 record
holders excluding the beneficial shareholders held through the intermediaries,
49 of which, holding an aggregate of 5,330,822 shares (17.30%) of common stock,
were in the United States.
  The
Company is a publicly owned Canadian corporation, the shares of which are owned
by Canadian residents, US residents, and residents of other countries. The
Company is not owned or controlled directly or indirectly by another corporation
or any foreign government. There are no arrangements, known to the Company, the
operation of which may at a subsequent date result in a change of control of the
Company.
  (B)
RELATED PARTY TRANSACTIONS
 
 Given
below is background information on some of the key related parties and
transactions with them:
 
 1.
                Current
      Capital Corp. (CCC).  CCC is a related party in following ways
      –
 
 a.
                Director/President
      of CCC, Mr. John Robinson is a consultant with
  Bontan
 b.
                CCC
      provides media and investor relation services to Bontan under a consulting
      contract.
 c.
                Chief
      Executive and Financial Officer of Bontan is providing accounting services
      to CCC.
 d.
                CCC
      and John Robinson hold significant shares in
  Bontan.
 
 Bontan
shares premises with CCC for which CCC charges on a quarterly basis for the
rent, phone and utilities based on the actual costs and area occupied. Charges
from CCC reflect actual costs and do not include any mark ups.
 
 Another
charge from CCC relates to the investor relations and media relation services
provided under a contract. The charge is a fixed sum of US$10,000 per month plus
taxes.
 
 CCC is
also entitled to a finder’s fee at the rate of 10% of the gross money raised for
the Company through issuance of shares and warrants under private
placements.
 
 2.
                Mr.
      Kam Shah is a director of the Company and also provides services as chief
      executive and financial officer under a five-year contract. The
      compensation is decided by the board on an annual basis and is usually
      given in the form of cash, shares and
options.
 
 3.
                Mr.
      Terence Robinson used to be providing services as chief executive officer
      until May 2004 and was also a director until that date. Currently, Mr.
      Robinson is providing services as a key consultant under a five-year
      contract. His services include sourcing of new business opportunities on
      behalf of the company using his extensive network of business contacts and
      short term investments buy or sell decisions and advise on behalf of the
      Company. His remuneration is paid mostly in shares on an annual
      basis.
  Transactions
with related parties are incurred in the normal course of business and are
measured at the exchange amount. Related party transactions and balances have
been listed below:
 
 (i)
                Included
      in shareholders information expense is $133,785 (2008 – $124,231; 2007 –
      $136,249) to Current Capital Corp, (CCC) for media relation’s services.
      CCC is a shareholder corporation and a director of the Company provides
      accounting services as a
consultant.
 
 (ii)
                CCC
      charged approximately $37,800 for rent, telephone and other office
      expenses (2008: $27,300 and 2007:
$21,900).
  -
30 -
  (iii)
                Finders
      fees of $6,228 (2008: $12,245, 2007: $740,043) was charged by CCC in
      connection with the private placement. (The fee for 2007 included a cash
      fee of $130,313 and 1,040,000 warrants valued at $609,730 using the
      Black-Scholes option price model).
  (iv)
                Business
      expenses of $19,205 (2008 - $15,771; 2007 - $10,279) were reimbursed to
      directors of the corporation and $68,009 (2008 - $118,774, 2007: $85,862)
      to a key consultant and a former chief executive officer of the
      Company.
 
 (v)
                Shares
      issued to a director under the Consultant’s stock compensation plan –
      Nil  (2008 : 450,000 valued at $105,373, 2007: 350,000 valued at
      $95,409,). Shares issued to (returned by) a key consultant and a former
      chief executive officer of the Company under the Consultant stock
      compensation plan (275,000) valued at $ (64,395) (2008: 550,000 valued at
      $ 128,790, 2007: 500,000 valued at
$136,298).
 
 (vi)
                Options
      issued to directors under Stock option plans – nil (2008: 50,000 valued at
      $7,878, 2007:  nil).
 
 (vii)
                Cash
      fee paid to directors for services of $60,000 (2008:$33,871 and 2007: $
      nil). Cash fee paid to a key consultant and a former chief executive
      officer of the Company of $90,000 (2008 and 2007: $ nil). These fees are
      included under travel, promotion and consulting
  expenses.
 
 (viii)
                Accounts
      payable includes $15,482 (2008: $9,384, 2007: $3,471) due to CCC, $1,875
      (2008: $757, 2007: $1,431) due to a director and $67,212 (2008: $6,577,
      2007: $ 7,099) due to a key consultant and a former chief executive
      officer of the Company.
 
 (ix)
                Interest
      income includes $ nil (2008: $ nil & 2007: $1,398) representing
      interest received from the Chief Executive
  officer.
 
 (x)
                Included
      in short term investments is an investment of $200,000 (2008: $200,000,
      2007: $ nil) in a private corporation controlled by a brother of the key
      consultant. The investment was stated at market value which was considered
      nil as at March 31, 2009 ($200,000 as at March 31,
  2008)
 
 (xi)
                Included
      in short term investments is an investment of $1,837,956 carrying cost and
      $361,877 fair value (2008: 1,929,049 carrying cost and $1,140,120 fair
      value, 2007: $1,604,493 carrying cost and $2,710,760 fair value) in a
      public corporation controlled by a key shareholder of the Company. This
      investment represents common shares acquired in open market or through
      private placements and represents less than 1% of the issued and
      outstanding common shares of the said
  Corporation.
 
 (xii)
                Included
      in other receivable is an advance of $70,000 (2008 and 2007: $nil) made to
      Chief Executive Officer. The advance is repayable upon happening of
      certain events as explained in 6 (B) (2) above and carries no
      interest.
 
 (xiii)
                Included
      in other receivable is an advance of $5,814 made to a director (2008:
      $2,470 and 2007: $ nil), advance is against future fee and carries no
      interest.
 
 (C)
INTERESTS OF EXPERTS AND COUNSEL
 
 Not
applicable.
 
 ITEM 8 – FINANCIAL
INFORMATION
 
 (A)
CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
  Information
regarding our financial statements is contained under the caption "Item 17.
Financial Statements" below.
  -
31 -
  Legal
Proceedings
  There are
no material legal proceedings in progress or to the knowledge of the Company,
pending or threatened to which the Company is a party or to which any of its
properties is subject.
  Dividend
Policy
  Since its
incorporation, the Company has not declared or paid, and has no present
intention to declare or to pay in the foreseeable future, any cash dividends
with respect to its Common Shares. Earnings will be retained to finance further
growth and development of the business of the Company. However, if the Board of
Directors declares dividends, all Common Shares will participate equally in the
dividends, and, in the event of liquidation, in the net assets, of the
Company.
   (B)  SIGNIFICANT
CHANGES
  There
were no corporate changes and other significant events that occurred subsequent
to March 31, 2009 up to the date of this report, June 30, 2009, except for a
registration of 2009 Consultant Stock Option Plan on April 7, 2009 as explained
in item 6(E) above.
  ITEM 9 - THE OFFER AND
LISTING
   (A)  OFFER
AND LISTING DETAILS
  The
following tables set forth the reported high and low sale prices for the common
shares of the Company as quoted on OTCBB.
  The
following table outlines the annual high and low market prices for the five most
recent fiscal years:
  Fiscal year ended March 31
                
                High
                  In US$
                
                
                Low
                  In US$2009
                
                
                0.30
                
                
                
                0.032008
                
                
                0.47
                
                
                
                0.172007
                
                
                0.75
                
                
                
                0.222006
                
                
                1.51
                
                
                
                0.202005
                
                
                2.15
                
                
                
                0.33
  The
following table outlines the high and low market prices for each fiscal
financial quarter for the two most recent fiscal periods and any subsequent
period:
  Fiscal Quarter ended
                
                High
                
                
                LowIn US$
                
                
                In US$June
      30, 2009
                
                
                0.12
                
                
                
                0.06March
      31, 2009
                
                
                0.27
                
                
                
                0.08December
      31, 2008
                
                
                0.11
                
                
                
                0.03September
      30, 2008
                
                
                0.30
                
                
                
                0.07June
      30, 2008
                
                
                0.27
                
                
                
                0.20March
      31, 2008
                
                
                0.32
                
                
                
                0.17December
      31, 2007
                
                
                0.36
                
                
                
                0.17September
      30, 2007
                
                
                0.43
                
                
                
                0.21June
      30, 2007
                
                
                0.47
                
                
                
                0.25
   -
32 -
  The
following table outlines the high and low market prices for each of the most
recent six months:
  Month
                
                High
                
                
                LowIn US$
                
                
                In US$June
      2009
                
                
                0.12
                
                
                
                0.09May
      2009
                
                
                0.12
                
                
                
                0.07April
      2009
                
                
                0.10
                
                
                
                0.06March
      2009
                
                
                0.13
                
                
                
                0.08February
      2009
                
                
                0.18
                
                
                
                0.09January
      2009
                
                
                0.27
                
                
                
                0.12
  (B)  PLAN
OF DISTRIBUTION
   Not
applicable.
   (C)  MARKETS
  The
Company’s common shares were traded on the Over the Counter Bulletin Board
(OTCBB) under the symbol “DEAL” and on Canadian Dealing Network (CDN) under the
symbol “FDQI” until January 20, 1999.
 
 Effective
January 21, 1999. The Company’s shares were traded only on OTCBB. The symbol was
further changed to “NMBC” on August 13, 1999 and then to “DCHK” on November 3,
1999.
 
 On May
26, 2000, the Company shares were de-listed from OTCBB and began trading on the
“Pink Sheet” pending clearance of the Registration Statement, F-20 by Securities
and Exchange Commission (SEC). The Company filed F-20 originally in December
1999 and then filed several amendments in response to the comments received from
SEC to its submissions. The SEC clearance was finally received on June 16, 2000
and the common shares of the Company began trading again on OTCBB effective
August 2, 2000.
 
 The
company changed its name to Bontan Corporation Inc.  On April 21, 2003
and its common shares began trading, and currently trade under a new symbol
“BNTNF” on OTCBB.
 
  (D)  SELLING
SHAREHOLDERS
   Not
applicable.
   (E)  DILUTION
   Not
applicable.
   (F)  EXPENSES
OF THE ISSUE
   Not
applicable.
  -
33 -
   ITEM 10 – ADDITIONAL
INFORMATION
   (A)  SHARE
CAPITAL
   This Form
20F is being filed as an Annual Report under the Exchange Act and, as such,
there is no requirement to provide any information under this
section.
   (B)  MEMORANDUM
AND ARTICLES OF ASSOCIATION
   The
Memorandum and Articles of the Company are incorporated by reference to the
information in our registration statement on Form 20-F filed with the Securities
and Exchange Commission, in Washington, D.C. on June 12, 2000 to which our
Articles of Incorporation and Memorandum were filed as exhibits.
   No
further changes have been made to the Company’s Articles/Bylaws.
   The
Company’s articles of incorporation do not place any restrictions on the
Company’s objects and purposes.
   Certain Powers of
Directors
   The
Business Corporations
Act (Ontario) (the "OBCA") requires that every director who is a
party to a material contract or transaction or a proposed material contract or
transaction with a corporation, or who is a director or officer of, or has a
material interest in, any person who is a party to a material contract or
transaction or a proposed material contract or transaction with the corporation,
shall disclose in writing to the corporation or request to have entered in the
minutes of the meetings of directors the nature and extent of his or her
interest, and shall refrain from voting in respect of the material contract or
transaction or proposed material contract or transaction unless the contract or
transaction is: (a) an arrangement by way of security for money lent to or
obligations undertaken by the director for the benefit of the corporation or an
affiliate; (b) one relating primarily to his or her remuneration as a
director, officer, employee or agent of the corporation or an affiliate;
(c) one for indemnity of or insurance for directors as contemplated under
the OBCA; or (d) one with an affiliate. However, a director who is
prohibited by the OBCA from voting on a material contract or proposed material
contract may be counted in determining whether a quorum is present for the
purpose of the resolution, if the director disclosed his or her interest in
accordance with the OBCA and the contract or transaction was reasonable and fair
to the corporation at the time it was approved.
   The
Company's by-laws provide that the directors shall from time to time determine
by resolution the remuneration to be paid to the directors, which shall be in
addition to the salary paid to any officer or employee of the Company who is
also a director. The directors may also by resolution award special remuneration
to any director in undertaking any special services on the Company's behalf
other than the normal work ordinarily required of a director of the Company. The
by-laws provide that confirmation of any such resolution by the Company's
shareholders is not required.
   The
Company's by-laws also provide that the directors may: (a) borrow money
upon the credit of the Company; (b) issue, reissue, sell or pledge bonds,
debentures, notes or other evidences of indebtedness or guarantee of the
Company, whether secured or unsecured; (c) to the extent permitted by the
OBCA, give directly or indirectly financial assistance to any person by means of
a loan, a guarantee on behalf of the Company to secure performance of any
present or future indebtedness, liability or other obligation of any person, or
otherwise; and (d) mortgage, hypothecate, pledge or otherwise create a
security interest in all or any currently owned or subsequently acquired real or
personal, movable or immovable, tangible or intangible, property of the Company
to secure any such bonds, debentures, notes or other evidences of indebtedness
or guarantee or any other present or future indebtedness, liability or other
obligation of the Company.
   -
34 -
 
 The directors
may, by resolution, amend or repeal any by-laws that regulate the business or
affairs of the Company. The OBCA requires the directors to submit any such
amendment or repeal to the Company's shareholders at the next meeting of
shareholders, and the shareholders may confirm, reject or amend the amendment
or repeal.
   Meetings of
Shareholders
   The
OBCA requires the Company to call an annual shareholders' meeting not later than
15 months after holding the last preceding annual meeting and permits the
Company to call a special shareholders' meeting at any time. In addition, in
accordance with the OBCA, the holders of not less than 5% of the Company's
shares carrying the right to vote at a meeting sought to be held may requisition
our directors to call a special shareholders' meeting for the purposes stated in
the requisition. The Company is required to mail a notice of meeting and management information circular to
registered shareholders not less than 21 days and not more than
50 days prior to the date of any annual or special shareholders' meeting.
These materials also are filed with Canadian securities regulatory authorities
and the SEC. The Company's by-laws provide that a quorum of two shareholders in
person or represented by proxy holding or representing by proxy not less than
10% of the Company's issued shares carrying the right to vote at the meeting is
required to transact business at a shareholders' meeting. Shareholders, and
their duly appointed proxies and corporate representatives, as well as the
Company's auditors, are entitled to be admitted to the Company's annual and
special shareholders' meetings.
   Authorized
Capital
   The
Company's authorized capital consists of an unlimited number of shares of one
class designated as common shares. The Company may not create any class or
series of shares or make any modification to the provisions attaching to the
Company's common shares without the affirmative vote of two-thirds of the votes
cast by the holders of the common shares. The Company's common shares do not
have pre-emptive rights to purchase additional shares.
   Disclosure of Share
Ownership
   The
Securities Act
(Ontario) provides that a person or company that beneficially owns, directly or
indirectly, voting securities of an issuer or that exercises control or
direction over voting securities of an issuer or a combination of both, carrying
more than 10% of the voting rights attached to all the issuer's outstanding
voting securities (an "insider") must, within 10 days of becoming an
insider, file a report in the required form effective the date on which the
person became an insider, disclosing any direct or indirect beneficial ownership
of, or control or direction over, securities of the reporting issuer. The Securities Act (Ontario) also
provides for the filing of a report by an insider of a reporting issuer who
acquires or transfers securities of the issuer. This report must be filed within
10 days after the end of the month in which the acquisition or transfer
takes place.
   The
Securities Act
(Ontario) also provides that a person or company that acquires (whether or not
by way of a take-over bid, issuer bid or offer to acquire) beneficial ownership
of voting or equity securities or securities convertible into voting or equity
securities of a reporting issuer that, together with previously held securities
brings the total holdings of such holder to 10% or more of the outstanding
securities of that class, must (a) issue and file forthwith a news release
containing the prescribed information and (b) file a report within two
business days containing the same information set out in the news release. The
acquiring person or company must also issue a press release and file a
report each time it acquires an additional 2% or more of the outstanding
securities of the same class and every time there is a "material change" to the
contents of the news release and report previously issued
and filed.
   The
rules in the United States governing the ownership threshold above which
shareholder ownership must be disclosed are more stringent than those discussed
above. Section 13 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") imposes reporting requirements on persons who acquire
beneficial ownership (as such term is defined in
Rule 13d-3 under the Exchange Act) of more than 5% of a class of an
equity security registered under Section 12 of the Exchange Act. In
general, such persons must file, within 10 days after such acquisition, a
report of beneficial ownership with the SEC containing the information
prescribed by the regulations under Section 13 of the Exchange Act. This
information is also required to be sent to the issuer of the securities and to
each exchange where the securities are traded.
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35 -
  Restrictions on Share
Ownership by Non-Canadians
   There
are no limitations under the laws of Canada or in the constitutive documents of
the Company on the right of foreigners to hold or vote securities of the
Company, except that the Investment Canada Act may
require review and approval by the Minister of Industry (Canada) of certain
acquisitions of "control" of the Company by a "non-Canadian". The threshold for
acquisitions of control is generally defined as being one-third or more of the
voting shares of the Company. "Non-Canadian" generally means an individual who
is not a Canadian citizen, or a corporation, partnership, trust or joint venture
that is ultimately controlled by non-Canadians.
  (C)
MATERIAL CONTRACTS
 
 Except
for contracts entered into in the ordinary course of its business, there were no
material contracts to which we are or have been a party to for the two years
preceding this annual report.
  
 (D)
EXCHANGE CONTROLS
 
  There are
currently no laws, decrees, regulations or other legislation in Canada that
restricts the export or import of capital or that affects the remittance of
dividends, interest or other payments to non-resident holders of our securities
other than withholding tax requirements. There is no limitation imposed by
Canadian law or by our Articles of Incorporation or our other organizational
documents on the right of a non-resident of Canada to hold or vote our common
shares, other than as provided in the North American Free Trade Agreement
Implementation Act (Canada) and in the Investment Canada Act, as amended by the
World Trade Organization Agreement Implementation Act.
  The
Investment Canada Act requires notification and, in certain cases, advance
review and approval by the Government of Canada of the acquisition by a
“non-Canadian” of “control of a Canadian business”, all as defined in the
Investment Canada Act. Generally, the threshold for review will be higher
in monetary terms, and in certain cases an exemption will apply, for an investor
ultimately controlled by persons who are nationals of a WTO Member or have the
right of permanent residence in relation thereto.
   (E)  TAXATION
  Canadian Federal Income Tax
Consequences
   We
consider that the following summary fairly describes the principal Canadian
federal income tax consequences applicable to a holder of our common shares who
at all material times deals at arm’s length with our company, who holds all
common shares as capital property, who is resident in the United States, who is
not a resident of Canada and who does not use or hold, and is not deemed to use
or hold, his common shares of our company in connection with carrying on a
business in Canada (a “non-resident holder”). It is assumed that the common
shares will at all material times be listed on a stock exchange that is
prescribed for purposes of the Income Tax Act(Canada) (the “ITA”)
and regulations thereunder. Investors should be aware that the Canadian federal
income tax consequences applicable to holders of our common shares will change
if, for any reason, we cease to be listed on a prescribed stock exchange.
Accordingly, holders and prospective holders of our common shares should consult
with their own tax advisors with respect to the income tax consequences of them
purchasing, owing and disposing of our common shares should we cease to be
listed on a prescribed stock exchange.
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36 -
  This
summary is based upon the current provisions of the ITA, the regulations there
under, the Canada-United States Tax Convention as amended by the Protocols
thereto (the “Treaty”) as at the date of the registration statement and the
currently publicly announced administrative and assessing policies of the Canada
Revenue Agency (the “CRA”). This summary does not take into account Canadian
provincial income tax consequences. This description is not exhaustive of all
possible Canadian federal income tax consequences and does not take into account
or anticipate any changes in law, whether by legislative, governmental or
judicial action. This summary does, however, take into account all specific
proposals to amend the ITA and regulations there under, publicly announced by
the Government of Canada to the date hereof.
   This
summary does not address potential tax effects relevant to our company or those
tax considerations that depend upon circumstances specific to each investor.
Accordingly, holders and prospective holders of our common shares should consult
with their own tax advisors with respect to the income tax consequences to them
of purchasing, owning and disposing of common shares in our
company.
   Dividends
   The ITA
provides that dividends and other distributions deemed to be dividends paid or
deemed to be paid by a Canadian resident corporation (such as our company) to a
non-resident of Canada shall be subject to a non-resident withholding tax equal
to 25% of the gross amount of the dividend of deemed dividend. Provisions in the
ITA relating to dividend and deemed dividend payments to and gains realized by
non-residents of Canada, who are residents of the United States, are subject to
the Treaty. The Treaty may reduce the withholding tax rate on dividends as
discussed below.
   Article X
of the Treaty as amended by the US-Canada Protocol ratified on November 9, 1995
provides a 5% withholding tax on gross dividends or deemed dividends paid to a
United States corporation which beneficially owns at least 10% of the voting
stock of the company paying the dividend. In cases where dividends or deemed
dividends are paid to a United States resident (other than a corporation) or a
United States corporation which beneficially owns less than 10% of the voting
stock of a company, a withholding tax of 15% is imposed on the gross amount of
the dividend or deemed dividend paid. We would be required to withhold any such
tax from the dividend and remit the tax directly to CRA for the account of the
investor.
   The
reduction in withholding tax from 25%, pursuant to the Treaty, will not be
available:
   (a) if the shares in respect of which the dividends are paid formed part of
the business property or were otherwise effectively connected with a permanent
establishment or fixed base that the holder has or had in Canada within the 12
months preceding the disposition, or
   (b) the holder is a U.S. LLC which is not subject to tax in the
U.S.
   The
Treaty generally exempts from Canadian income tax dividends paid to a religious,
scientific, literary, educational or charitable organization or to an
organization exclusively administering a pension, retirement or employee benefit
fund or plan, if the organization is resident in the U.S. and is exempt from
income tax under the laws of the U.S.
   Capital
Gains
   A
non-resident holder is not subject to tax under the ITA in respect of a capital
gain realized upon the disposition of one of our shares unless the share
represents “taxable Canadian property” to the holder thereof. Our common shares
will be considered taxable Canadian property to a non-resident holder only
if-.
   (a)
the non-resident holder;
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37 -
  (b)
persons with whom the non-resident holder did not deal at arm’s length -
or
   (c) the non-resident holder and persons with whom he did not deal at arm’s
length,
   owned not
less than 25% of the issued shares of any class or series of our company at any
time during the five year period preceding the disposition. In the case of a
non-resident holder to whom shares of our company represent taxable Canadian
property and who is resident in the United States, no Canadian taxes will
generally be payable on a capital gain realized on such shares by reason of the
Treaty unless:
   (a) the value of such shares is derived principally from real property
(including resource property) situated in Canada,
   (b)
the holder was resident in Canada for 120 months during any period of 20
consecutive years preceding, and at any time during the 10 years immediately
preceding, the disposition and the shares were owned by him when he ceased to be
a resident of Canada,
   (c) they formed part of the business property or were otherwise effectively
connected with a permanent establishment or fixed base that the holder has or
bad in Canada within the 12 months preceding the disposition, or
   (d)
the holder is a U.S. LLC which is not subject to tax in the U.S.
   If
subject to Canadian tax on such a disposition, the taxpayer’s capital gain (or
capital loss) from a disposition is the amount by which the taxpayer’s proceeds
of disposition exceed (or are exceeded by) the aggregate of the taxpayer’s
adjusted cost base of the shares and reasonable expenses of disposition. For
Canadian income tax purposes, the “taxable capital gain” is equal to one-half of
the capital gain.
  U.S. Federal Income Tax
Consequences
   The
following is a discussion of the material United States Federal income tax
consequences, under current law, applicable to a U.S. Holder (as defined below)
of our common shares who holds such shares as capital assets. This discussion
does not address all potentially relevant Federal income tax matters and it does
not address consequences peculiar to persons subject to special provisions of
Federal income tax law, such as those described below as excluded from the
definition of a U.S. Holder. In addition, this discussion does not cover any
state, local, or foreign tax consequences. (See “Canadian Federal Income Tax
Consequences” above.)
   The
following discussion is based on the Internal Revenue Code of 1986, as amended
(the “Code”), Treasury Regulations, published Internal Revenue Service (“IRS”)
rulings, published administrative positions of the IRS and court decisions that
are currently applicable, any or all of which could be materially and adversely
changed, possibly on a retroactive basis, at any time. In addition, this
discussion does not consider the potential effects, both adverse and beneficial,
of any recently proposed legislation which, if enacted, could be applied,
possibly on a retroactive basis, at any time.
   The
discussion below does not address potential tax effects relevant to our company
or those tax considerations that depend upon circumstances specific to each
investor. In addition, this discussion does not address the tax consequences
that may be relevant to particular investors subject to special treatment under
certain U.S. Federal income tax laws, such as, dealers in securities, tax-exempt
entities, banks, insurance companies and non-U.S. Holders. Purchasers of the
common stock should therefore satisfy themselves as to the overall tax
consequences of their ownership of the common stock, including the State, local
and foreign tax consequences thereof (which are not reviewed herein), and should
consult their own tax advisors with respect to their particular
circumstances.
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38 -
  U.S.
Holders
   As used
herein, a “U.S. Holder” includes a beneficial holder of common shares of our
company who is a citizen or resident of the United States, a corporation or
partnership created or organized in or under the laws of the United States or of
any political subdivision thereof, any trust if a US court is able to exercise
primary supervision over the administration of the trust and one or more US
persons have the authority to control all substantial decisions of the trust,
any entity created or organized in the United States which is taxable as a
corporation for U.S. tax purposes and
   any other
person or entity whose ownership of common shares of our company is effectively
connected with the conduct of a trade or business in the United States. A U.S.
Holder does not include persons subject to special provisions of Federal income
tax law, such as tax-exempt organizations, qualified retirement plans, financial
institutions, insurance companies, real estate investment trusts, regulated
investment companies, broker-dealers, non-resident alien individuals or foreign
corporations whose ownership of our common shares is not effectively connected
with the conduct of a trade or business in the United States and shareholders
who acquired their shares through the exercise of employee stock options or
otherwise as compensation.
   Dividend Distribution on
Shares of our Company
   U.S.
Holders receiving dividend distributions (including constructive dividends) with
respect to the common shares of our company are required to include in gross
income for United States Federal income tax purposes the gross amount of such
distributions to the extent that we have current or accumulated earnings and
profits, without reduction for any Canadian income tax withheld from such
distributions. Such Canadian tax withheld may be deducted or may be credited
against actual tax payable, subject to certain limitations and other complex
rules, against the U.S. Holder’s United States Federal taxable income. See
“Foreign Tax Credit” below. To the extent that distributions exceed our current
or accumulated earnings and profits, they will be treated first as a return of
capital to the extent of the shareholder’s basis in the common shares of our
company and thereafter as gain from the sale or exchange of the common shares of
our company. Preferential tax rates for net long term capital gains may be
applicable to a U.S. Holder which is an individual, estate or
trust.
   In
general, dividends paid on our common shares will not be eligible for the
dividends received deduction provided to corporations receiving dividends from
certain United States corporations.
   Foreign Tax
Credit
   A U.S.
Holder who pays (or who has had withheld from distributions) Canadian income tax
with respect to the ownership of our common shares may be entitled, at the
election of the U.S. Holder, to either a deduction or a tax credit for such
foreign tax paid or withheld. This election is made on a year-by-year basis and
generally applies to all foreign income taxes paid by (or withheld from) the
U.S. Holder during that year. There are significant and complex limitations
which apply to the credit, among which is the general limitation that the credit
cannot exceed the proportionate share of the U.S. Holder’s United States income
tax liability that the U.S. Holder’s foreign source income bears to his or its
world-wide taxable income. In determining the application of this limitation,
the various items of income and deduction must be classified into foreign and
domestic sources. Complex rules govern income such as “passive income”, “high
withholding tax interest”, “financial services income”, “shipping income” and
certain other classifications of income. A U.S. Holder who is treated as a
domestic U.S. corporation owning 10% or more of our voting stock is also
entitled to a deemed paid foreign tax credit in certain circumstances for the
underlying foreign tax of our company related to dividends received or Subpart F
income received from us. (See the discussion below of Controlled Foreign
Corporations). The availability of the foreign tax credit and the application of
the limitations on the
 foreign
tax credit are fact specific and holders and prospective holders of our common
shares should consult their own tax advisors regarding their individual
circumstances.
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39 -
  Disposition of Common
Shares
   If a
“U.S. Holder” is holding shares as a capital asset, a gain or loss realized on a
sale of our common shares will generally be a capital gain or loss, and will be
long-term if the shareholder has a holding period of more than one year.
However, gains realized upon sale of our common shares may, under certain
circumstances, be treated as ordinary income, if we were determined to be a
“collapsible corporation” within the meaning of Code Section 341 based on the
facts in existence on the date of the sale (See below for definition of
“collapsible corporation”). The amount of gain or loss recognized by a selling
U.S. Holder will be measured by the difference between (i) the amount realized
on the sale and (ii) his tax basis in our common shares. Capital losses are
deductible only to the extent of capital gains. However, in the case of
taxpayers other than corporations (U.S.)$3,000 ($1,500 for married individuals
filing separately) of capital losses are deductible against ordinary income
annually. In the case of individuals and other non-corporate taxpayers, capital
losses that are not currently deductible may be carried forward to other years.
In the case of corporations, capital losses that are not currently deductible
are carried back to each of the three years preceding the loss year and forward
to each of the five years succeeding the loss year.
   A
“collapsible corporation” is a corporation that is formed or availed principally
to manufacture, construct, produce, or purchase prescribed types or property
that the corporation holds for less than three years and that generally would
produce ordinary income on its disposition, with a view to the stockholders
selling or exchanging their stock and thus realizing gain before the corporation
realizes two thirds of the taxable income to be derived from prescribed
property. Prescribed property includes: stock in trade and inventory; property
held primarily for sale to customers in the ordinary course of business;
unrealized receivables or fees, consisting of rights to payment for noncapital
assets delivered or to be delivered, or services rendered or to be rendered to
the extent not previously included in income, but excluding receivables from
selling property that is not prescribed; and property gain on the sale of which
is subject to the capital gain/ordinary loss rule. Generally, a shareholder who
owns directly or indirectly 5 percent or less of the outstanding stock of the
corporation may treat gain on the sale of his shares as capital
gain.
   Other Considerations for
U.S. Holders
   In the
following circumstances, the above sections of this discussion may not describe
the United States Federal income tax consequences resulting from the holding and
disposition of common shares of the Registrant. Our management is of the opinion
that there is little, if not, any likelihood that we will be deemed a “Foreign
Personal Holding Company”, a “Foreign Investment Company” or a “Controlled
Foreign Corporation” (each as defined below) under current and anticipated
conditions.
   Foreign Personal Holding
Company
   If at any
time during a taxable year more than 50% of the total combined voting power or
the total value of our outstanding shares is owned, actually or constructively,
by five or fewer individuals who are citizens or residents of the United States
and 60% or more of our gross income for such year was derived from certain
passive sources (e.g., from dividends received from its subsidiaries), we would
be treated as a “foreign personal holding company.” In that event, U.S. Holders
that hold common shares in our capital would be required to include in income
for such year their allocable portion of our passive income which would have
been treated as a dividend had that passive income actually been
distributed.
   Foreign Investment
Company
   If 50% or
more of the combined voting power or total value of our outstanding shares are
held, actually or constructively, by citizens or residents of the United States,
United States domestic partnerships or corporations, or estates or trusts other
than foreign estates or trusts (as defined by the Code Section 7701(a)(31)), and
we are found to be engaged primarily in the business of investing, reinvesting,
or trading in securities, commodities, or any interest therein, it is possible
that we might be treated as a “foreign investment company” as defined in Section
1246 of the Code, causing all or part of any gain realized by a U.S. Holder
selling or exchanging our common shares to be treated as ordinary income rather
than capital gains.
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40 -
  Passive Foreign Investment
Company
   A U.S.
Holder who holds stock in a foreign corporation during any year in which such
corporation qualifies as a passive foreign investment company (“PFIC”) is
subject to U.S. federal income taxation of that foreign corporation under one of
two alternative tax methods at the election of each such U.S.
Holder.
   Section
1297 of the Code defines a PFIC as a corporation that is not formed in the
United States and, for any taxable year, either (i) 75% or more of its gross
income is “passive income,” which includes interest, dividends and certain rents
and royalties or (ii) the average percentage, by value (or, if the company is a
controlled foreign corporation or makes an election, adjusted tax basis), of its
assets that produce or are held for the production of “passive income” is 50% or
more. For taxable years of U.S. persons beginning after December 31, 1997, and
for tax years of foreign corporations ending with or within such tax years, the
Taxpayer Relief Act of 1997 provides that publicly traded corporations must
apply this test on a fair market value basis only. The Registrant
believes that it is a PFIC.
   As a
PFIC, each U.S. Holder must determine under which of the alternative tax methods
it wishes to be taxed. Under one method, a U.S. Holder who elects in a timely
manner to treat the Registrant as a Qualified Electing Fund
   (“QEF”),
as defined in the Code, (an “Electing U.S. Holder”) will be subject, under
Section 1293 of the Code, to current federal income tax for any taxable year in
which we qualify as a PFIC on his pro-rata share of our (i) “net capital gain”
(the excess of net long-term capital gain over net short-term capital loss),
which will be taxed as long-term capital gain to the Electing U.S. Holder and
(ii) “ordinary earnings” (the excess of earnings and profits over net capital
gain), which will be taxed as ordinary income to the Electing U.S. Holder, in
each case, for the U.S. Holder’s taxable year in which (or with which) our
taxable year ends, regardless of whether such amounts are actually distributed.
Such an election, once made shall apply to all subsequent years unless revoked
with the consent of the IRS.
   A QEF
election also allows the Electing U.S. Holder to (i) generally treat any gain
realized on the disposition of his common shares (or deemed to be realized on
the pledge of his common shares) as capital gain; (ii) treat his share of our
net capital gain, if any, as long-term capital gain instead of ordinary income,
and (iii) either avoid interest charges resulting from PFIC status altogether
(see discussion of interest charge below), or make an annual election, subject
to certain limitations, to defer payment of current taxes on his share of our
annual realized net capital gain and ordinary earnings subject, however, to an
interest charge. If the Electing U.S. Holder is an individual, such an interest
charge would be not deductible.
   The
procedure a U.S. Holder must comply with in making a timely QEF election will
depend on whether the year of the election is the first year in the U.S.
Holder’s holding period in which we are a PFIC. If the U.S. Holder makes a QEF
election in such first year, (sometimes referred to as a “Pedigreed QEF
Election”), then the U.S. Holder may make the QEF election by simply filing the
appropriate documents at the time the U.S. Holder files its tax return for such
first year. If, however, we qualified as a PFIC in a prior year, then the U.S.
Holder may make an “Unpedigreed QEF Election” by recognizing as an “excess
distribution” (i) under the rules of Section 1291 (discussed below), any gain
that he would otherwise recognize if the U.S. Holder sold his stock on the
qualification date (Deemed Sale Election) or (ii) if we are a controlled foreign
corporation (“CFC”), the Holder’s pro rata share of the corporation’s earnings
and profits (Deemed Dividend Election) (But see “Elimination of Overlap Between
Subpart F Rules and PFIC Provisions”). The effect of either the deemed sale
election or the deemed dividend election is to pay all prior deferred tax, to
pay interest on the tax deferral and to be treated thereafter as a Pedigreed QEF
as discussed in the prior paragraph. With respect to a situation in which a
Pedigreed QEF election is made, if we no longer qualify as a PFIC in a
subsequent year, normal Code rules and not the PFIC rules will
apply.
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41 -
  If a U.S.
Holder has not made a QEF Election at any time (a “Non-electing U.S. Holder”),
then special taxation rules under Section 1291 of the Code will apply to (i)
gains realized on the disposition (or deemed to be realized by reason of a
pledge) of his common shares and (ii) certain “excess distributions”, as
specially defined, by our company. An “excess distribution” is any current-year
distribution in respect of PFIC stock that represents a ratable portion of the
total distributions in respect of the stock during the year that exceed 125
percent of the average amount of distributions in respect of the stock during
the three preceding years.
   A
Non-electing U.S. Holder generally would be required to pro-rate all gains
realized on the disposition of his common shares and all excess distributions
over the entire holding period for the common shares. All gains or excess
distributions allocated to prior years of the U.S. Holder (other than years
prior to our first taxable year during such U.S. Holder’s holding period and
beginning after January, 1987 for which it was a PFIC) would be taxed at the
highest tax rate for each such prior year applicable to ordinary income. The
Non-electing U.S. Holder also would be liable for interest on the deferred tax
liability for each such prior year calculated as if such liability had been due
with respect to each such prior year. A Non-electing U.S. Holder that is an
individual is not allowed a deduction for interest on the deferred tax
liability. The portions of gains and distributions that are not characterized as
“excess distributions” are subject to tax in the current year under the normal
tax rules of the Internal Revenue Code.
   If we are
a PFIC for any taxable year during which a Non-electing U.S. Holder holds common
shares, then we will continue to be treated as a PFIC with respect to such
common Shares, even if it is no longer by definition a PFIC. A Non-electing U.S.
Holder may terminate this deemed PFIC status by electing to recognize gain
(which will be taxed under the rules discussed above for Non-Electing U.S.
Holders) as if such common shares had been sold on the last day of the last
taxable year for which it was a PFIC.
   Under
Section 1291(f) of the Code, the Department of the Treasury has issued proposed
regulations that would treat as taxable certain transfers of PFIC stock by
Non-electing U.S. Holders that are generally not otherwise taxed, such as gifts,
exchanges pursuant to corporate reorganizations, and transfers at death. If a
U.S. Holder makes a QEF Election that is not a Pedigreed Election (i.e., it is
made after the first year during which we are a PFIC and the U.S. Holder holds
our shares) (a “Unpedigreed Election”), the QEF rules apply prospectively but do
not apply to years prior to the year in which the QEF first becomes effective.
U.S. Holders should consult their tax advisors regarding the specific
consequences of making a Non-Pedigreed QEF Election.
   Certain
special, generally adverse, rules will apply with respect to the common shares
while we are a PFIC whether or not it is treated as a QEF. For example under
Section 1297(b)(6) of the Code (as in effect prior to the Taxpayer Relief Act of
1997), a U.S. Holder who uses PFIC stock as security for a loan (including a
margin loan) will, except as may be provided in regulations, be treated as
having made a taxable disposition of such stock.
   The
foregoing discussion is based on currently effective provisions of the Code,
existing and proposed regulations thereunder, and current administrative rulings
and court decisions, all of which are subject to change. Any such change could
affect the validity of this discussion. In addition, the implementation of
certain aspects of the PFIC rules requires the issuance of regulations which in
many instances have not been promulgated and which may have retroactive effect.
There can be no assurance that any of these proposals will be enacted or
promulgated, and if so, the form they will take or the effect that they may have
on this discussion. Accordingly, and due to the complexity of the PFIC rules,
U.S. Holders of the Registrant are strongly urged to consult their own tax
advisors concerning the impact of these rules on their investment in our
company. For a discussion of the impact of the Taxpayer Relief Act of 1997 on a
U.S. Holder of a PFIC, see “Mark-to-Market Election For PFIC Stock Under the
Taxpayer Relief Act of 1997” and “Elimination of Overlap Between Subpart F Rules
and PFIC Provisions” below.
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42 -
  Mark-to-Market Election for
PFIC Stock Under the Taxpayer Relief Act of 1997
   The
Taxpayer Relief Act of 1997 provides that a U.S. Holder of a PFIC may make a
mark-to-market election with respect to the stock of the PFIC if such stock is
marketable as defined below. This provision is designed to provide a current
inclusion provision for persons that are Non-Electing Holders. Under the
election, any excess of the fair market value of the PFIC stock at the close of
the tax year over the Holder’s adjusted basis in the stock is included in the
Holder’s income. The Holder may deduct any excess of the adjusted basis of the
PFIC stock over its fair market value at the close of the tax year. However,
deductions are limited to the net mark-to-market gains on the stock that the
Holder included in income in prior tax years, or so called “unreversed
inclusions.” For purposes of the election, PFIC stock is marketable if it is
regularly traded on (1) a national securities exchange that is registered with
the SEC, (2) the national market system established under Section II A of the
Securities Exchange Act of 1934, or (3) an exchange or market that the IRS
determines has rules sufficient to ensure that the market price represents
legitimate and sound fair market value.
   A
Holder’s adjusted basis of PFIC stock is increased by the income recognized
under the mark-to-market election and decreased by the deductions allowed under
the election. If a U.S. Holder owns PFIC stock indirectly through a foreign
entity, the basis adjustments apply to the basis of the PFIC stock in the hands
of the foreign entity for the purpose of applying the PFIC rules to the tax
treatment of the U.S. owner. Similar basis adjustments are made to the basis of
the property through which the U.S. persons hold the PFIC stock.
   Income
recognized under the mark-to-market election and gain on the sale of PFIC stock
with respect to which an election is made is treated as ordinary income.
Deductions allowed under the election and loss on the sale of PFIC with respect
to which an election is made, to the extent that the amount of loss does not
exceed the net mark-to-market gains previously included, are treated as ordinary
losses. The U.S. or foreign source of any income or losses is determined as if
the amount were a gain or loss from the sale of stock in the PFIC.
   If PFIC
stock is owned by a CFC (discussed below), the CFC is treated as a U.S. person
that may make the mark-to-market election. Amounts includible in the CFC’s
income under the election are treated as foreign personal holding company
income, and deductions are allocable to foreign personal holding company
income.
   The above
provisions apply to tax years of U.S. persons beginning after December 31, 1997,
and to tax years of foreign corporations ending with or within such tax years of
U.S. persons.
   The rules
of Code Section 1291 applicable to nonqualified funds as discussed above
generally do not apply to a U.S. Holder for tax years for which a mark-to-market
election is in effect. If Code Section 1291 is applied and a mark-to-market
election was in effect for any prior tax year, the U.S. Holder’s holding period
for the PFIC stock is treated as beginning immediately after the last tax year
of the election. However, if a taxpayer makes a mark-to-market election for PFIC
stock that is a nonqualified fund after the beginning of a taxpayer’s holding
period for such stock, a co-ordination rule applies to ensure that the taxpayer
does not avoid the interest charge with respect to amounts attributable to
periods before the election.
   Controlled Foreign
Corporation Status
   If more
than 50% of the voting power of all classes of stock or the total value of the
stock of our company is owned, directly or indirectly, by U.S. Holders, each of
whom own after applying rules of attribution 10% or more of the total combined
voting power of all classes of stock of our company, we would be treated as a
“controlled foreign corporation” or “CFC” under Subpart F of the Code. This
classification would bring into effect many complex results including the
required inclusion by such 10% U.S. Holders in income of their pro rata shares
of “Subpart F income” (as defined by the Code) of our company and our earnings
invested in “U.S. property” (as defined by Section 956 of the Code). In
addition, under Section 1248 of the Code if we are considered a CFC at any time
during the five year period ending with the sale or exchange of its stock, gain
from the sale or exchange of common shares of our company by such a 10% U.S.
Holder of our common stock at any time during the five year period ending with
the sale or exchange is treated as ordinary dividend income to the extent of our
earnings and profits attributable to the stock sold or exchanged. Because of the
complexity of Subpart F, and because we may never be a CFC, a more detailed
review of these rules is beyond of the scope of this discussion.
  -
43 -
  Elimination of Overlap
Between Subpart F Rules and PFIC Provisions
   Under the
Taxpayer Relief Act of 1997, a PFIC that is also a CFC will not be treated as a
PFIC with respect to certain 10% U.S. Holders. For the exception to apply, (i)
the corporation must be a CFC within the meaning of section 957(a) of the Code
and (ii) the U.S. Holder must be subject to the current inclusion rules of
Subpart F with respect to such corporation (i.e., the U.S. Holder is a “United
States Shareholder,” see “Controlled Foreign Corporation,” above). The exception
only applies to that portion of a U.S. Holder’s holding period beginning after
December 31, 1997. For that portion of a United States Holder before January 1,
1998, the ordinary PFIC and QEF rules continue to apply.
   As a
result of this new provision, if we were ever to become a CFC, U.S. Holders who
are currently taxed on their pro rata shares of Subpart F income of a PFIC which
is also a CFC will not be subject to the PFIC provisions with respect to the
same stock if they have previously made a Pedigreed QEF Election. The PFIC
provisions will however continue to apply to U.S Holders for any periods in
which Subpart F does not apply (for example he is no longer a 10% Holder or we
are no longer a CFC) and to U.S. Holders that did not make a Pedigreed QEF
Election unless the U.S. Holder elects to recognize gain on the PFIC shares held
in our company as if those shares had been sold.
   ALL PROSPECTIVE INVESTORS ARE ADVISED
TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES
OF PURCHASING THE COMMON SHARES OF OUR COMPANY.
   (F)  DIVIDEND
AND PAYING AGENTS
   Not
applicable.
   (G)  STATEMENT
BY EXPERTS
   Not applicable.
   (H)  DOCUMENTS
ON DISPLAY
  The
documents concerning the Company referred to in this Annual Report may be
inspected at the Company's office at 47 Avenue Road, Suite 200, Toronto,
Ontario, Canada, M5R 2G3. The Company may be reached at (416) 929-1806.
Documents filed with the Securities and Exchange Commission ("SEC") may also be
read and copied at the SEC's public reference room at 100F Street, N. E.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms.
 
 The
Company is subject to reporting requirements as a “reporting issuer” under
applicable securities legislation in Canada and as a “foreign private issuer”
under the Securities Exchange Act of 1934 (the “Exchange Act”). As a result, we
must file periodic reports and other information with the Canadian securities
regulatory authorities and the Securities and Exchange Commission.
 
 A copy of
this Annual Information Form/Form 20-F Annual Report and certain other documents
referred to in this Annual Report and other documents filed by us may be
retrieved from the system for electronic document analysis and retrieval
(“SEDAR”) system maintained by the Canadian securities regulatory authorities at
www.sedar.ca or from the Securities and Exchange Commission electronic data
gathering, analysis and retrieval system (“EDGAR”) at www.sec.gov/edgar.
 
 -
44 -
  (I)  SUBSIDIARY
INFORMATION
 
 The
documents concerning the Company’s subsidiary referred to in this Annual Report
may be inspected at the Company's office at 47 Avenue Road, Suite 200, Toronto,
Ontario, Canada, M5R 2G3.
 
  ITEM 11 – QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  The
Company is exposed in varying degrees to a number of risks arising from
financial instruments. Management’s close involvement in the operations allows
for the identification of risks and variances from expectations. The Company
does not participate in the use of financial instruments to mitigate these risks
and has no designated hedging transactions. The Board approves and monitors the
risk management processes. The Board’s main objectives for managing risks are to
ensure liquidity, the fulfilment of obligations, the continuation of the
Company’s search for new business participation opportunities, and limited
exposure to credit and market risks while ensuring greater returns on the
surplus funds on hand. There were no changes to the objectives or the process
from the prior year.
 
 The types
of risk exposure and the way in which such exposures are managed are as
follows:
 
 (a)
Concentration risk:
 
 Concentration
risks exist in cash and cash equivalents because significant balances are
maintained with one financial institution and a brokerage firm. The risk is
mitigated because the financial institution is a prime Canadian bank and the
brokerage firm is well known Canadian brokerage firm with good market reputation
and all its assets are backed up by one of the major Canadian
banks.
 
 (b)
Market price risk:
 
 Market
risk primarily arises from the Company’s short term investments in marketable
securities which accounted for approximately 69% of total assets of the Company
as at March 31, 2009 (69% at March 31, 2008). Further, the Company’s holding in
one Canadian marketable security accounted for approximately 33% (2008: 31%) of
the total short term investment in marketable securities or 23% (2008: 21%) of
total assets at March 31, 2009.
 
 The
management tries to mitigate this risk by daily monitoring of all its
investments by experienced consultants and ensuring that investments are made in
companies which are financially stable with viable businesses.
 
 (c)
Liquidity risk:
 
 Liquidity
risk is the risk that the Company will not be able to meet its financial
obligations as they become due.
 
 The
Company ensures there is sufficient capital to meet short term business
requirements. In addition, management and key consultants opted for several
years to accept the Company’s common shares instead of cash towards their fee to
ensure greater cash flow for other operational and business needs.
 
 One of
management’s goals is to maintain an optimal level of liquidity through the
active management of the assets, liabilities and cash flows.
 
 The
Company’s maintains limited cash for its operational needs while most of its
surplus cash is invested in short term marketable securities which are available
on short notice to fund the Company’s operating costs and other financial
demands.
 
 -
45 -
  (d)
Currency risk
 
 The
operating results and financial position of the Company are reported in Canadian
dollars. Part of cash and short term investments are held in US dollars –
approximately 3% of total assets at March 31, 2009 (23% as at March 31, 2008).
The results of the Company’s operations are therefore subject to currency
transaction and translation risk.
 
 The
fluctuation of the US dollar in relation to the Canadian dollar will
consequently impact the loss of the Company and may also affect the value of the
Company’s assets and the amount of shareholders’ equity.
 
 Comparative
closing foreign exchange rates as at March 31, 2009 are as follows:
 
 March
31,
 2009                                  2008
 
 One US
Dollar to CDN
Dollar                                                                   1.2602                                1.0279
 
 The
Company has not entered into any agreements or purchased any foreign currency
hedging arrangements to hedge possible currency risks at this time.
 
  ITEM 12 – DESCRIPTION OF
SECURITIES OTHER THAN EQUITY SECURITIES
   Not
applicable.
   PART II
   ITEM 13 – DEFAULTS, DIVIDEND
ARREARAGES AND DELINQUENCIES
   None.
   ITEM 14 – MATERIAL
MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS
  None
 
 ITEM 15  -
CONTROLS AND PROCEDURES
 
 a)Evaluation ofDisclosure controls and
procedures
 
 We have
no employees. Our Chief Executive Officer who also serves as Chief Financial
Officer (“CEO”) is primarily responsible in establishing and maintaining
controls and procedures concerning disclosure of material information and their
timely reporting in consultation and under direct supervision of the audit
committee which comprises two independent directors. We therefore do not have an
effective internal controls and procedures due to lack of segregation of duties.
However, given the size and nature of our current operations and involvement of
independent directors in the process significantly reduce the risk factors
associated with the lack of segregation of duties.
 
 The CEO
has instituted a system of disclosure controls for the Company to ensure proper
and complete disclosure of material information. The limited number of
consultants and direct involvement of the CEO facilitates access to real time
information about developments in the business for drafting disclosure
documents. All documents are circulated to the board of directors and audit
committee according to the disclosure time-lines.
 
 -
46 -
  As at
March 31, 2009, the management carried out a comprehensive review and up date of
the internal controls existing over the financial reporting. Mitigating controls
and procedures were identified wherever possible. New procedures were
implemented in a couple of cases where it was evident that controls were not
robust enough to ensure appropriate disclosure in a timely manner. Some controls
were implemented as a secondary detection mechanism if the initial controls
failed to prevent errors from occurring.
 
 There were no significant changes in the Company's internal
controls or in other factors that could significantly affect these controls
subsequent to the date the CEO completed his evaluation, nor were there any
significant deficiencies or material weaknesses in the Company's internal
controls requiring corrective actions other than the lack of segregation of
duties.
 
 b) Management’s annual
report on internal control over financial reporting
 
 Management
of Bontan Corporation Inc. (The Company) is responsible for establishing and
maintaining adequate internal control over financial reporting. The Company’s
internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of the Company’s consolidated financial statements for external
reporting purposes in accordance with generally accepted accounting
principles.
 
 The
Company’s internal control over financial reporting includes policies and
procedures that:
 
 -
                Pertain
      to the maintenance of records that, in reasonable detail, accurately and
      fairly reflect transactions and dispositions of
  assets;
  -
                Provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of consolidated financial statements in accordance with
      generally accepted accounting principles, and that receipts and
      expenditures are being made only in accordance with authorizations of
      management and the Directors of the Company:
  and,
  -
                Provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use or disposition of the Company’s assets that
      could have a material effect on the Company’s consolidated financial
      statements.
  Due to
its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements on a timely basis. Also, projections of any
evaluation of the effectiveness of internal control over financial reporting are
subject to the risks that the controls may become inadequate because of changes
in conditions or that the degree of compliance with the policies or procedures
may deteriorate.
 
 Management
evaluated and updated the design and operation of the Company’s internal control
over financial reporting as of March 31, 2009, based on the framework and
criteria established in Internal Control – Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission and has
concluded that such internal control over financial reporting is
effective.
 
 There is
a lack of segregation of duties since Chief executive and financial officer
handles accounting records and is also a sole signatory to bank and brokerage
accounts. However, potential risks arising from this weakness are mitigated
significantly through independent reconciliations and direct involvement in
review process by the audit committee, which comprises all independent
directors. Management believes that benefits of hiring additional staff to
segregate these functions would not justify the costs under the current nature
and level of activities at the Company.
 
 c) Attestation report of the
registered public accounting firm
 
 Not
applicable, pursuant to temporary rules of the Securities and Exchange
Commission.
 
 -
47 -
 
 ITEM
16   (A)   AUDIT COMMITTEE FINANCIAL
EXPERTS
 
 As at the
Company’s financial year ended March 31, 2009, the audit committee consisted of
two independent directors, one of whom, Mr. Dean Bradley would be determined as
a financial expert, as that term is defined under Section 407 of the
Sarbanes-Oxley Act of 2002. Mr. Bradley’s background is described under Item
6(A) Directors and senior management.
 
 
 ITEM 16
(B)   CODE OF ETHICS
 
 We have
adopted a Code of Ethics, which applies to all employees, consultants, officers
and directors. A copy of our current code of ethics was included in the exhibits
to the annual report for the fiscal year ended March 31, 2007 (Exhibit Item
19(b) 11).
 
 A copy of
our Code of Ethics can be obtained  by writing to our corporate office
at 47 Avenue Road, Suite 200, Toronto, ON M5R 2G3 attention: Chief Executive
Officer.
 
 ITEM 16  (C)
PRINCIPAL ACCOUNTANT’S FEES AND SERVICES
  The
following outlines the expenditures for accounting fees for the last two fiscal
periods ended:
  
 March
      31 2009
                
                March
      31 2008Audit
      Fees
                25,000
                
                25,000
 
 Under our
existing policies, the audit committee must approve all audit and non-audit
related services provided by the auditors.
 
 ITEM 16 (D) - EXEMPTIONS
FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
 
 Not
applicable.
 
 
 ITEM 16
(E)                                - PURCHASES OF EQUITY
SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
 
  We did
not, nor did any affiliated purchaser, purchase any of our equity securities
during the fiscal year 2009.
  
  ITEM 16 (F) – CHANGE IN
REGISTRANT’S CERTIFYING ACCOUNTANT
  
  Not
applicable.
  
  ITEM 16 (G) – CORPORATE
GOVERNANCE
  
  Our
securities are listed on the Over The Counter Bulletin Board of NASDAQ. There
are no significant ways in which our corporate governance practices differ from
those followed by domestic companies under the listing standards of that
exchange except for proxy delivery requirements. The OTC Bulletin Board,
administered by NASDAQ requires the solicitation of proxies and delivery of
proxy statements for all shareholder meetings, and requires that these proxies
be solicited pursuant to a proxy statement that conforms to the proxy rules of
the U.S. Securities and Exchange Commission. As a foreign private issuer, the
Company is exempt from the proxy rules set forth in Sections 14(a), 14(b), 14(c)
and 14(f) of the Act. The Company solicits proxies in accordance with applicable
rules and regulations in Canada.
  -
48 -
  PART III
  ITEM 17 - FINANCIAL
STATEMENTS
 
 See the
Financial Statements and Exhibits listed in Item 19 hereof and filed as part of
this Annual Report. These financial statements were prepared in accordance with
Canadian GAAP and are expressed in Canadian dollars.  Such financial
statements have been reconciled to U.S. GAAP (see Note 16 therein). For a
history of exchange rates in effect for Canadian dollars as against U.S.
dollars, see Item 3(A) Exchange Rates of this Annual Report.
 
  ITEM 18 - FINANCIAL
STATEMENTS
  Not
applicable.
 
 ITEM 19 -
EXHIBITS
 
 (a)           Financial
Statements
 
 
 Description of Document
                Page No.Cover
      Sheet
                F-1Index
                F-2Independent
      Auditor’s Report dated June 11, 2009
                F-3Consolidated
      Balance Sheets as at March 31, 2009 and 2008
                F-4Consolidated
      Statements of Operations for the Fiscal Years Ended March 31, 2009, 2008
      and 2007
                F-5Consolidated
      Statements of Cash Flows for the Fiscal Years Ended March 31, 2009, 2008,
      and 2007
                F-6Consolidated
      Statements of Shareholders’ Equity for the Fiscal Years Ended March 31,
      2009, 2008, and 2007
                  Consolidated
      Statement of Comprehensive Loss and Accumulated
                  Other
      Comprehensive Loss for the Fiscal Years Ended March 31,
                  2009,
      2008 and 2007
                F-7-8
                  
                  F-9Notes
      to the Financial Statements
                F-10-29
 
 (b)           Exhibits
  The
following documents are filed as part of this Annual Report on Form
20-F
  1.1
                Articles
      of Incorporation of the Company - Incorporated herein by
      reference to Exhibit 1(ix) to the Company’s Registration Statement
      on Form 20-F filed on June 12,
2000.
   -
49 -
  1.2
                By-Laws
      of the Company - Incorporated herein by
      reference to Exhibit 1(xi) to the Company’s Registration Statement
      on Form 20-F filed on June 12,
2000.
 
 1.3
                Certificate
      of name change from Kamlo Gold Mines Limited to NRT Research Technologies
      Inc. - Incorporated
      herein by reference to Exhibit 1(iii) to the Company’s Registration
      Statement on Form 20-F filed on June 12,
2000.
 
 1.4
                Certificate
      of name change from NRT Research Technologies Inc. to NRT Industries Inc.
      - Incorporated herein by
      reference to Exhibit 1(iv) to the Company’s Registration Statement
      on Form 20-F filed on June 12,
2000.
 
 1.5
                Certificate
      of name change from NRT Industries Inc. to CUDA Consolidated Inc. - Incorporated herein by
      reference to Exhibit 1(v) to the Company’s Registration Statement
      on Form 20-F filed on June 12,
2000.
 
 1.6
                Certificate
      of name change from CUDA Consolidated Inc. to Foodquest Corp. - Incorporated herein by
      reference to Exhibit 1(vi) to the Company’s Registration Statement
      on Form 20-F filed on June 12,
2000.
 
 1.7
                Certificate
      of name change from Foodquest Corp. to Foodquest International Corp. -
      Incorporated herein by
      reference to Exhibit 1(vii) to the Company’s Registration Statement
      on Form 20-F filed on June 12,
2000.
 
 1.8
                Certificate
      of name change from Foodquest International Corp. to Dealcheck.com Inc. -
      Incorporated herein by
      reference to Exhibit 1(viii) to the Company’s Registration
      Statement on Form 20-F filed on June 12,
2000.
 
 1.9
                Certificate
      of name change from Dealcheck.com Inc. to Bontan Corporation Inc. -Incorporated herein by
      reference to Exhibit 1(viii) to the Company’s Annual Report on Form
      20-F filed on September 23, 2003.
 
 2(a)
                Specimen
      Common Share certificate - Incorporated herein by
      reference to Exhibit 1(viii) to the Company’s Annual Report on Form
      20-F filed on September 23, 2003.
 
 4(a)2.i
                Investor
      relations contract with Current Capital Corp. dated April 1, 2003Incorporated herein by
      referenceto Exhibit 4 (a) 2i to the Company’s Annual Report on
      Form 20-F for fiscal 2005 filed on September 28,
  2005.
 
 
 4(a)2.ii
                Media
      Relation Contract with Current Capital corp. dated April 1, 2003Incorporated herein by
      referenceto Exhibit 4 (a) 2ii to the Company’s Annual Report on
      Form 20-F for fiscal 2005 filed on September 28,
  2005.
 
 
 4(a)2.iii
                A
      letter dated April1, 2005 extending the contracts under 4(a)2.i and
      ii.Incorporated herein
      by referenceto Exhibit 4 (a) 2iii to the Company’s Annual Report
      on Form 20-F for fiscal 2005 filed on September 28,
  2005.
 
 4(c)1
                Consulting
      Agreement dated April 1, 2005 with Kam Shah Incorporated herein by
      referenceto Exhibit 4 (c) 1 to the Company’s Annual Report on Form
      20-F for fiscal 2005 filed on September 28,
  2005.
 
 4(c)2
                Consulting
      Agreement dated April 1, 2003 with Terence Robinson - Incorporated herein by
      referenceto Exhibit 4 (a) to the Company’s Annual Report on Form
      20-F for fiscal 2004 filed on August 30,
2004.
  -
50 -
  4(c)3
                Letter
      dated March 28, 2008 extending the Consulting Agreement with Mr. John
      Robinson to June 30, 2009 - Incorporated herein by reference toExhibit 4 (c) 3 to
      the Company’s Annual Report on Form 20-F for fiscal 2008 filed on August
      28, 2008.
 
 4(c)(iv)1
                The
      Robinson Option Plan, 2005 Stock Option Plan and 2005 Consultant Stock
      Compensation Plan -Incorporated herein by reference to Form S-8
      filed on December 5, 2005.
  4(c)(iv)2
                2007
      Consultant Stock Compensation Plan – Incorporated herein by
      reference to Form S-8 filed on January 16,
  2007.
  4(c)(iv)3     2009 Consultant Stock
Compensation Plan - Incorporated herein by reference to Form S-8 filed on April
7, 2009
 11
                Code
      of ethics of the Company incorporated herein by
      reference to Annual Report in form 20-F filed on May 29,
      2007
 
 
 12.1
                Certification
      of Chief Executive Officer and Chief Financial Officer Pursuant to Rule
      13a-14(a) or 15d-14(a )under the Securities Exchange Act of 1934, as
      amended.
 
 13.1
                Certification
      of Chief Executive Officer and Chief Financial Officer Pursuant to 18
      U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.
 
 
 SIGNATURES
 
 The
Company hereby certifies that it meets all of the requirements for filing on
Form 20-F and it has duly caused and authorized the undersigned to sign this
Annual Report on its behalf.
 
 DATED at
Toronto, Ontario, Canada, this 30th day of June, 2009.
 
 
 BONTAN
CORPORATION INC.
 
 Per:
 (signed) Kam Shah
 Title:
 Chairman and CEO
  -
51 -