FORM 5 QUARTERLY LISTING STATEMENT Name of Listed Issuer: Makena Resources Inc. (the Issuer ). Trading Symbol: MKNA This Quarterly Listing Statement must be posted on or before the day on which the Issuer s unaudited interim financial statements are to be filed under the Securities Act, or, if no interim statements are required to be filed for the quarter, within 60 days of the end of the Issuer s first, second and third fiscal quarters. This statement is not intended to replace the Issuer s obligation to separately report material information forthwith upon the information becoming known to management or to post the forms required by the Exchange Policies. If material information became known and was reported during the preceding quarter to which this statement relates, management is encouraged to also make reference in this statement to the material information, the news release date and the posting date on the Exchange website. General Instructions (a) (b) Prepare this Quarterly Listing Statement using the format set out below. The sequence of questions must not be altered nor should questions be omitted or left unanswered. The answers to the following items must be in narrative form. When the answer to any item is negative or not applicable to the Issuer, state it in a sentence. The title to each item must precede the answer. The term Issuer includes the Listed Issuer and any of its subsidiaries. (c) Terms used and not defined in this form are defined or interpreted in Policy 1 Interpretation and General Provisions. There are three schedules which must be attached to this report as follows: SCHEDULE A: FINANCIAL STATEMENTS Financial statements are required as follows: For the first, second and third financial quarters interim financial statements prepared in accordance with the requirements under Ontario securities law must be attached. If the Issuer is exempt from filing certain interim financial statements, give the date of the exempting order. SCHEDULE B: SUPPLEMENTARY INFORMATION The supplementary information set out below must be provided when not included in Schedule A.
1. Related party transactions All related party transactions have been disclosed in the Issuer s financial statements for the nine months ended March 31, 2018. Provide disclosure of all transactions with a Related Person, including those previously disclosed on Form 10. Include in the disclosure the following information about the transactions with Related Persons: (a) (b) (c) (d) (e) (f) A description of the relationship between the transacting parties. Be as precise as possible in this description of the relationship. Terms such as affiliate, associate or related company without further clarifying details are not sufficient. A description of the transaction(s), including those for which no amount has been recorded. The recorded amount of the transactions classified by financial statement category. The amounts due to or from Related Persons and the terms and conditions relating thereto. Contractual obligations with Related Persons, separate from other contractual obligations. Contingencies involving Related Persons, separate from other contingencies. 2. Summary of securities issued and options granted during the period. All securities issued and options have been disclosed in the notes to the financial statement for the nine months ended March 31, 2018. Provide the following information for the period beginning on the date of the last Listing Statement (Form 2A): (a) summary of securities issued during the period,
Date of Issue Type of Security (common shares, convertible debentures, etc.) 10/27/17 Common shares 10/27/17 Common shares 1/2/18 Common shares Type of Issue (private placement, public offering, exercise of warrants, etc.) Private Placement Number Price Total Proceeds Type of Consideratio n (cash, property, etc.) Describe relationship of Person with Issuer (indicate if Related Person) 4,166,667 $0.12 $500,000 Cash 23 Unrelated Placees and 2 Insiders Exchange 10,236,166 $0.12 $1,228,340 Debt Unrelated N/A Property Acquisition Commission Paid $9,600 2,300,000 $0.11 $253,000 Property Unrelated N/A (b) summary of options granted during the period, None Date Number Name of Optionee if Related Person and relationship Generic description of other Optionees Exercise Price Expiry Date Market Price on date of Grant 3. Summary of securities as at the end of the reporting period. A summary of securities has been provided in the notes to the financial statements for the nine months ended March 31, 2018. Provide the following information in tabular format as at the end of the reporting period: (a) (b) (c) description of authorized share capital including number of shares for each class, dividend rates on preferred shares and whether or not cumulative, redemption and conversion provisions, number and recorded value for shares issued and outstanding, description of options, warrants and convertible securities outstanding, including number or amount, exercise or conversion price and expiry date, and any recorded value, and
(d) number of shares in each class of shares subject to escrow or pooling agreements or any other restriction on transfer. 4. List the names of the directors and officers, with an indication of the position(s) held, as at the date this report is signed and filed. Name of Director Spencer Smyl Gurcharn Deol Gregory Thomson Juliana Daley Position(s) Held CEO, Secretary & Director Director Director CFO SCHEDULE C: MANAGEMENT DISCUSSION AND ANALYSIS Provide Interim MD&A if required by applicable securities legislation. See Management s Discussion & Analysis attached.
Certificate Of Compliance The undersigned hereby certifies that: 1. The undersigned is a director and/or senior officer of the Issuer and has been duly authorized by a resolution of the board of directors of the Issuer to sign this Quarterly Listing Statement. 2. As of the date hereof there is no material information concerning the Issuer which has not been publicly disclosed. 3. The undersigned hereby certifies to the Exchange that the Issuer is in compliance with the requirements of applicable securities legislation (as such term is defined in National Instrument 14-101) and all Exchange Requirements (as defined in CNSX Policy 1). 4. All of the information in this Form 5 Quarterly Listing Statement is true. Dated July 20, 2018. Spencer Smyl Name of Director or Senior Officer Spencer Smyl Signature Issuer Details Name of Issuer Makena Resources Inc. Issuer Address Director, CEO, Secretary Official Capacity For Quarter Ended Mar. 31, 2018 Date of Report YY/MM/D 18/07/20 #1470-701 W. Georgia Street City/Province/Postal Code Vancouver, BC V7Y 1C6 Contact Name Spencer Smyl Contact Email Address Issuer Fax No. (604 )689-1733 Contact Position CEO Web Site Address Issuer Telephone No. ( 604) 685-5150 Contact Telephone No. ( 604) 685-5150 spencer@asiaasset.net www.makenaresourcesinc.com
Schedule A Financial Statements [inserted as following pages]
MAKENA RESOURCES INC. CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Expressed in Canadian Dollars) March 31, 2018
NOTICE OF NO AUDITOR REVIEW The unaudited condensed consolidated interim financial statements, and accompanying notes thereto, for the periods ended March 31, 2018 and 2017 have not been reviewed by the Company s external auditor.
MAKENA RESOURCES INC. CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION (Expressed in Canadian Dollars) ASSETS March 31, 2018 June 30, 2017 Current assets Cash $ 137,962 $ 103,902 Marketable securities Note 4 111,095 - Receivables 8,624 16,907 Prepaid expenses 761 7,235 Total current assets 258,442 128,044 Non-current assets Marketable securities Note 4 85,000 - Exploration and evaluation assets Note 5 996,709 1,571,386 Total assets $ 1,340,151 $ 1,699,430 LIABILITIES Current liabilities Accounts payable and accrued liabilities Notes 6 and 10 $ 746,703 $ 808,399 Interest payable Note 7-2,255 Loans payable Note 7-29,500 Flow-through share premium liability Note 8 6,611 6,611 Total current liabilities 753,314 846,765 Non-current liabilities Loans payable Note 7-1,236,000 Total liabilities 753,314 2,082,765 SHAREHOLDERS EQUITY (DEFECIENCY) Share capital Note 9 21,771,049 19,701,208 Reserves Note 9 2,561,674 2,545,674 Accumulated deficit (23,745,886) (22,630,217) Total shareholders equity (deficiency) 586,837 (383,335) Total liabilities and shareholders equity (deficiency) $ 1,340,151 $ 1,699,430 Nature and Continuance of Operations (Note 1) Subsequent Events (Notes 4, 5 & 14) APPROVED BY THE DIRECTORS: Spencer Smyl Director Charn Deol Director Spencer Smyl Charn Deol The accompanying notes form an integral part of these condensed consolidated interim financial statements.
MAKENA RESOURCES INC. CONDENSED CONSOLIDATED INTERIM STATEMENTS OF LOSS AND COMPREHENSIVE LOSS (Expressed in Canadian Dollars) Three months ended Nine months ended March 31, March 31, 2018 2017 2018 2017 Operating expenses Consulting $ 111,600 $ 111,600 $ 334,800 $ 336,675 Management fees Note 11-37,200-126,900 Office and miscellaneous 13,192 15,325 33,014 40,769 Professional fees Note 11 7,861 5,063 40,366 21,470 Shareholder information - 256-8,706 Share-based payments Note 9 - - - 204 Transfer agent and filing fees 3,869 7,089 22,070 21,732 Travel and promotion Note 11 14,231 7,200 33,209 24,100 (150,753) (183,733) (463,459) (580,556) Interest expense Note 7 17 - (21,980) - Other income on settlement of flow-through share premium liability Note 8 - - - 30,889 Gain on write-off of accounts payable - - - 8,630 General exploration - - - (159,169) Loss on sale of marketable securities (534) - (534) - Unrealized loss on marketable securities (34,605) - (34,605) - Write-down of exploration and evaluation assets Note 5 (526,091) - (595,091) - (561,213) - (652,210) (119,650) Net comprehensive loss for the period $ (711,966) $ (183,733) $ (1,115,669) $ (700,206) Loss per share basic and diluted Note 10 $ (0.03) $ (0.03) $ (0.07) $ (0.10) Weighted average number of shares outstanding basic and diluted Note 10 23,845,073 7,093,339 16,079,625 6,915,237 The accompanying notes form an integral part of these condensed consolidated interim financial statements.
MAKENA RESOURCES INC. CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS (Expressed in Canadian Dollars) Nine months ended March 31, 2018 2017 Operating Activities Loss for the period $ (1,115,669) $ (700,206) Adjustments for non-cash items: Accrued interest on loans payable 21,997 - Flow-through share premium - (30,889) Gain on write-off of accounts payables - (8,630) Share-based payments - 204 Unrealized loss on marketable securities 34,605 - Write-down of exploration and evaluation assets 595,091 - Changes in non-cash working capital items: Receivables 8,283 1,630 Related party receivables - 32,609 Prepaid expenses 6,474 (1,301) Accounts payable and accrued liabilities 15,030 486,879 Cash used in operating activities (434,189) (219,704) Investing Activities Exploration and evaluation assets (24,800) (80,000) Proceeds on sale of marketable securities 69,300 - Cash provided by (used in) investing activities 44,500 (80,000) Financing Activities Proceeds from issuance of share capital 500,000 - Share issue costs (10,499) (600) Interest paid (24,252) - Loan repayment (41,500) - Cash provided by (used in) financing activities 423,749 (600) Change in cash during the period 34,060 (300,304) Cash, beginning of the period 103,902 342,334 Cash, end of the period $ 137,962 $ 42,030 Supplemental Disclosure with Respect to Cash Flows (Note 13) The accompanying notes form an integral part of these condensed consolidated interim financial statements.
MAKENA RESOURCES INC. CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY (DEFICIENCY) (Expressed in Canadian Dollars) Share Capital Accumulated Number of shares Amount Reserves Deficit Total Balance, June 30, 2016 5,618,351 $ 18,839,020 $ 2,468,102 $ (20,300,477) $ 1,006,645 Share issue costs - (600) - - (600) For exploration and evaluation assets 1,475,000 830,000 - - 830,000 Stock options issued - - 204-204 Loss for the period - - - (700,206) (700,206) Balance, March 31, 2017 7,093,351 19,668,420 2,468,306 (21,000,683) 1,136,043 Stock options exercised 100,000 16,500 - - 16,500 Stock options issued - - 93,656-93,656 Transfer of reserves on options exercised - 16,288 (16,288) - - Loss for the period - - - (1,629,534) (1,629,534) Balance, June 30, 2017 7,193,351 19,701,208 2,545,674 (22,630,217) (383,335) Share issued for private placement 4,166,667 500,000 - - 500,000 Share issue costs - (10,499) - - (10,499) Shares issued on settlement of loans 10,199,999 1,224,000 - - 1,224,000 Shares issued on settlement of accounts payable 36,167 4,340 - - 4,340 Broker warrants issued for private placement - (16,000) 16,000 - - For exploration and evaluation assets 2,300,000 368,000 - - 368,000 Loss for the period - - - (1,115,669) (1,115,669) Balance, March 31, 2018 23,896,184 $ 21,771,049 $ 2,561,674 $ (23,745,886) $ 586,837 The accompanying notes form an integral part of these condensed consolidated interim financial statements.
1. NATURE AND CONTINUANCE OF OPERATIONS Makena Resources Inc. (the Company ) is an exploration stage public company and is listed on the Canadian Securities Exchange (the CSE ) under the symbol MKNA. The Company s principal business activities include acquiring and exploring exploration and evaluation assets. At March 31, 2018, the Company had exploration and evaluation assets located in Canada. The Company s head office and principal business address is Suite 1470, 701 West Georgia Street, Vancouver, British Columbia, V7Y 1C6. The Company s registered and records office is located at 800 885 West Georgia Street, Vancouver, British Columbia, V6C 3H1. These condensed consolidated interim financial statements have been prepared on a going concern basis, which contemplates continuity of normal business activities and the realization of assets and discharge of liabilities in the normal course of business. At March 31, 2018, the Company had a working capital deficiency of $494,872, had not yet achieved profitable operations and has an accumulated deficit of $23,745,886 since its inception. The Company expects to incur further losses in the development of its business, all of which cast substantial doubt on the Company s ability to continue as a going concern. The Company will require additional financing in order to conduct its planned work programs on exploration and evaluation assets, meet its ongoing levels of corporate overhead and discharge its liabilities as they come due. While the Company has been successful in securing financings in the past, there is no assurance that it will be able to do so in the future. Accordingly, these condensed consolidated interim financial statements do not give effect to adjustments, if any, that would be necessary should the Company be unable to continue as a going concern. If the going concern assumption was not used then the adjustments required to report the Company s assets and liabilities on a liquidation basis could be material to these condensed consolidated interim financial statements. 2. BASIS OF PREPARATION a) Statement of Compliance These condensed consolidated interim financial statements of the Company have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting ( IAS34 ) as issued by the International Accounting Standards Board ( IASB ). Therefore, these condensed consolidated interim financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the Company s most recently issued audited financial statements for the year ended June 30, 2017, which includes information necessary or useful to understanding the Company s business and financial statement presentation. In particular, the Company s significant accounting policies, use of judgements and estimates were presented in Note 2 and Note 3 of these audited financial statements, and have been consistently applied in the preparation of these condensed consolidated interim financial statements. These condensed consolidated interim financial statements were authorized for issue by the Board of Directors on May 30, 2018.
2. BASIS OF PREPARATION (continued) b) Subsidiaries Subsidiaries are entities controlled by the Company. Control exists when the Company has power over an investee, when the Company is exposed, or has rights, to variable returns from the investee and when the Company has the ability to affect those returns through its power over the investee. Subsidiaries are included in the consolidated financial results of the Company from the effective date of acquisition up to the effective date of disposition or loss of control. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Company. The principal subsidiaries of the Company as of March 31, 2018 are as follows: D u r i n Principal Name of subsidiary activity Incorporation 2018 2017 g Canasia Clone Holding company Canada 100% 100% Property Corp. t DB Diamond Holdings Holding company Canada N/A 100% h Inc. e Bachman Lithium Holding company Canada N/A 100% Corp. n Barker Cariboo Gold Holding company Canada 100% N/A i Corp. n e months ended March 31, 2018, DB Diamond Holdings Inc. and Bachman Lithium Corp. amalgamated into Canasia Clone Property Corp, and Barker Cariboo Gold Corp. became a wholly-owned subsidiary of the Company. 3. ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE The Company has reviewed new and revised accounting pronouncements that have been issued but are not yet effective. The Company has not early adopted any new standard and is currently evaluating the impact, if any, that the following standard might have on its condensed consolidated interim financial statements. IFRS 9 Financial Instruments ( IFRS 9 ) Place of Ownership Interest March 31, Ownership Interest June 30, In November 2009, the IASB issued IFRS 9 Financial Instruments as the first step in its project to replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 retains but simplifies the mixed measurement model and establishes two primary measurement categories for financial assets: amortized cost and fair value. The basis of classification depends on an entity s business model and the contractual cash flow of the
financial asset. Classification is made at the time the financial asset is initially recognized, namely when the entity becomes a party to the contractual provisions of the instrument. 3. ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE (continued) IFRS 9 amends some of the requirements of IFRS 7 Financial Instruments: Disclosures, including added disclosures about investments in equity instruments measured at fair value in other comprehensive income, and guidance on financial liabilities and derecognition of financial instruments. The amended standard is effective for annual periods beginning on or after January 1, 2018. 4. MARKETABLE SECURITIES The Company's marketable securities are recorded at fair market value as they are classified as at fair value through profit or loss ( FVTPL ) financial instruments. Marketable securities comprise the following: Common Market shares value Costs Balance, June 30, 2017 - $ - $ - Addition 3,000,000 300,000 300,000 Disposals (693,000) (69,300) (69,300) Fair value adjustment - (34,605) - Balance, March 31, 2018 2,307,000 $ 196,095 $ 230,700 The Company holds equity securities in a publicly traded company, Sunvest Minerals Corp. ( Sunvest ; Note 5). During the nine months ended March 31, 2018, the Company sold 693,000 common shares of Sunvest for gross proceeds of $68,766 and accordingly, the Company recorded a loss on sale of marketable securities of $534. Subsequent to March 31, 2018, the Company sold 100,000 Sunvest shares for gross proceeds of $7,750.
5. EXPLORATION AND EVALUATION ASSETS The Company s exploration and evaluation assets consist of the following mineral properties: BC Clone Property SK Patterson Claims SK DB Diamond Prospect QC Bachman Lithium Prospect Barkerville West Prospect Total Balance, June 30, 2016 $ 1,873,733 $ - $ - $ - $ $ 1,873,733 Acquisition costs - - 560,000 270,000-830,000 Deferred exploration expenditures Camp - 51,469 - - - 51,469 Drilling 29,010 90,835 - - - 119,845 Engineering fees 4,200 - - - - 4,200 Field equipment and 4,694 35,609 - - - 40,303 supplies Geological expenses 2,150 14,100 - - - 16,250 Helicopter services 29,060 - - - - 29,060 Lab and assay 4,444 - - - - 4,444 Reclamation 5,000 - - - - 5,000 Travel, accommodation 5,182 17,156 - - - 22,338 and miscellaneous Advance for exploration 1,260 (50,000) - - - (48,740) Write-down of exploration and evaluation assets (1,217,347) (159,169) - - - (1,376,516) Balance, June 30, 2017 741,386-560,000 270,000-1,571,386 Acquisition costs - - - - 383,000 383,000 Deferred exploration expenditures Field equipment and - - - - 2,700 2,700 supplies Geological expenses - - - - 3,518 3,518 Travel, accommodation - - - - 3,582 3,582 and miscellaneous Recovery of exploration (372,386) - - - - (372,386) and evaluation assets Write-down of exploration and evaluation assets (69,000) - - (133,291) (392,800) (595,091) Balance, March 31, 2018 $ 300,000 $ - $ 560,000 $ 136,709 $ - $ 996,709
5. EXPLORATION AND EVALUATION ASSETS (continued) Title to Interests in Exploration and Evaluation Assets Title to exploration and evaluation asset interests involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently ambiguous conveyancing history characteristic of many exploration and evaluation assets. The Company has investigated title to all of its exploration and evaluation assets and, to the best of its knowledge, title to all of its interests are in good standing. However, this should not be construed as a guarantee of title. The concessions may be subject to prior claims, agreements or transfers, and rights of ownership may be affected by undetected defects. BC Clone Mineral Claims - Option Agreement By an option agreement dated November 28, 2005 and amended June 9, 2009, the Company acquired the right to earn an undivided 50% interest in the Clone mineral claims, located in the Skeena Mining Division of northwestern British Columbia. Under the terms of the option agreement, the Company earned its undivided 50% interest in the Clone mineral claims by paying a total of $120,000 cash consideration, issuing 500 common shares, and incurring exploration expenditures on the Clone mineral claims aggregating $1,800,000. In August 2017, the Company decided to drop or reduce the size of certain mineral claims. Accordingly, prior acquisition costs of $56,538 and exploration costs of $706,043 associated with these claims were written off as of June 30, 2017. Furthermore, on September 26, 2017, the Company entered into a purchase agreement (the Agreement ) with an arm s length party, Sunvest. Sunvest agreed to acquire all of the Company s right, title and interest in and to the undivided 50% interest in the Clone mineral claims. In consideration, Sunvest agreed to pay the Company an aggregate total of $300,000 over a two-year period ($100,000 on or before October 5, 2018 and the remaining $200,000 on or before October 5, 2019); issue 3,000,000 common shares of Sunvest to the Company on or before October 10, 2017 (received); and assume the liabilities incurred by the Company in connection with its interest in the Clone mineral claims totalling $72,386 (assumed). The Company agreed not to sell, deal, assign or transfer 1,000,000 of Sunvest shares until February 12, 2018, 1,000,000 until October 5, 2018 and 1,000,000 until October 5, 2019. Accordingly, the Company further wrote off the carrying value of the Clone mineral claims by $454,766 as of June 30, 2017 and $69,000 as of March 31, 2018, respectively. This transaction closed during the nine months ended March 31, 2018. SK DB Diamond Prospect Share Purchase Agreement On June 28, 2016, the Company entered into a share purchase agreement (the Agreement ) with three arm s length vendors (the Vendors ) to purchase 100% of the issued and outstanding shares of DB Diamond Holdings Inc. ( DB ), which holds a 100% interest in prospective diamond claims in the Athabasca region of Saskatchewan. The acquisition has been accounted for as an asset acquisition. In July 2016, the Company issued 800,000 shares (issued at a value of $560,000) to the Vendors pursuant to the Agreement.
5. EXPLORATION AND EVALUATION ASSETS (continued) QC Bachman Lithium Prospect Share Purchase Agreement On August 24, 2016, the Company entered into a share purchase agreement (the Agreement ) with three arm s length vendors (the Vendors ) to purchase 100% of the issued and outstanding shares of Bachman Lithium Corp. ( Bachman ). The sole asset of Bachman consisted of certain mineral claims in the Abitibi area of Quebec Province. The acquisition has been accounted for as an asset acquisition. In September 2016, the Company issued 675,000 shares (issued at a value of $270,000) to the Vendors pursuant to the Agreement. Subsequent to March 31, 2018, the Company decided to drop or reduce the size of certain mineral claims. Accordingly, prior acquisition costs of $133,291 associated with these claims were written off as of March 31, 2018. BC Barker Cariboo Gold Prospect (Barkerville West) Share Purchase Agreement On December 20, 2017, the Company entered into a share purchase agreement (the Agreement ) with an arm s length vendor (the Vendor ) to purchase 100% of the issued and outstanding shares of Barker Cariboo Gold Corp. ( Barker ). The sole asset of Barker consisted of certain mineral claim in the Cariboo Region of British Columbia. The acquisition was accounted for as an asset acquisition. On January 2, 2018, the Company issued 2,300,000 shares and paid $15,000 to the Vendor pursuant to the Agreement. Barker became a whollyowned subsidiary of the Company. Subsequent to March 31, 2018, the property claims were dropped and prior acquisition costs of $383,000 and exploration costs of $9,800 associated with these claims were written off as of March 31, 2018. 6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities recognized in the statement of financial position can be analyzed as follows: March 31, 2018 June 30, 2017 Trade payables $ 477,809 $ 662,474 Related party payable 140,169 - Accrued liabilities 128,725 145,925 Total payables $ 746,703 $ 808,399 All amounts are short-term. The carrying value of trade payables and accrued liabilities is considered a reasonable approximation of fair value. 7. LOANS PAYABLE In May and June 2017, the Company received loan advances totalling $29,500 from three arm s length parties (the Lenders ), bearing 18% interest per annum and due upon demand. During the nine months ended March 31, 2018, the Company fully repaid these loans.
7. LOANS PAYABLE (continued) In May 2017, the Company announced a private placement of up to 14,583,333 units at $0.12 per unit for gross proceeds of up to $1,750,000. The Company received $1,236,000 in share subscriptions from eight arm's length parties and one director of the Company (collectively, the "Subscribers) in connection with this private placement. In June 2017, the Company cancelled the private placement. The Company entered into loan agreements (the Agreements") with the Subscribers. Pursuant to the terms of the Agreements, the Subscribers agreed to convert a total of $1,236,000 into loans payable, bearing 5% interest per annum and due on July 19, 2018. During the nine months ended March 31, 2018, the Company repaid loan principal of $12,000 to the director and loan interest of $24,252 to all lenders. The remaining loans of $1,224,000 were settled at a deemed price of $0.12 per unit. Each unit consisted of one common share of the Company and one share purchase warrant which entitles the holder to purchase one additional common share of the Company at a price of $0.16 per share until October 27, 2022. As at March 31, 2018, $Nil (June 30, 2017: $1,265,500) of loan principal and $Nil (June 30, 2017: $2,255) of loan interest were outstanding towards these loans. 8. FLOW-THROUGH SHARE PREMIUM LIABILITY Balance at June 30, 2016 $ 37,500 Liability derecognized due to exploration expenditures renounced to shareholders (30,889) Balance at June 30, 2017 and March 31, 2018 $ 6,611 During the year ended June 30, 2016, the Company closed a private placement of 375,000 flow-through units at $0.40 per unit for gross proceeds of $150,000. Each flow-through unit consisted of one flow-through common share and one share purchase warrant. The premium received on the flow-through shares issued was determined to be $37,500 and was recorded as a share capital reduction. An equivalent premium liability was also recorded. During the year ended June 30, 2017, the Company renounced and incurred the exploration expenditures. Accordingly, the Company derecognized the flow-through share premium liability of $30,889 and recognized it as other income. 9. SHARE CAPITAL AND RESERVES Authorized: An unlimited number of common shares, without par value An unlimited number of Class A preferred shares, without par value (a) Private placements Nine months ended March 31, 2018
The Company closed a private placement (the Offering ) consisting of 4,166,667 units at $0.12 per unit for gross proceeds of $500,000. The Company closed a private 9. SHARE CAPITAL AND RESERVES (continued) (a) Private placements (continued) placement (the Offering ) consisting of 4,166,667 units at $0.12 per unit for gross proceeds of $500,000. Each unit consisted of one common share of the Company and one share purchase warrant which entitles the holder to purchase one additional common share of the Company at a price of $0.16 per share until October 27, 2022. In connection with the Offering, the Company paid aggregate finders fees of $9,600, filing fees of $899 and issued 80,000 broker warrants. The broker warrants are exercisable into one common share each at $0.16 per share until October 27, 2022. The broker warrants were valued at $16,000 using the Black-Scholes pricing model with the following assumptions: dividend yield 0%, expected volatility 376.4%, risk-free interest rate 1.66% and an expected life of five years. Nine months ended March 31, 2017 The Company did not close any private placements during the nine months ended March 31, 2017. (a) Share purchase warrants The following is a summary of changes in share purchase warrants from June 30, 2016 to March 31, 2018: Weighted Average Exercise Price Number Balance, June 30, 2016 4,319,628 $1.22 Expired (50,000) $2.00 Balance, June 30, 2017 4,269,628 $1.21 Issued 14,482,833 $0.16 Balance, March 31, 2018 18,752,461 $0.40 At March 31, 2018, the Company had 18,752,461 share purchase warrants outstanding. Each warrant entitles the holder the right to purchase one common share as follows: Exercise Number Price Expiry Date 161,586 $1.00 August 9, 2018 266,683 $3.60 October 24, 2018 50,234 $3.60 November 5, 2018 30,250 $4.00 December 2, 2018 337,500 $1.00 August 21, 2019 520,000 $1.00 July 6, 2020 349,000 $1.00 November 19, 2020 1,625,000 $1.00 April 6, 2021 929,375 $1.00 June 20, 2021
14,482,833 $0.16 October 27, 2022 18,752,461 9. SHARE CAPITAL AND RESERVES (continued) (c) Share-based payments The Company has a stock option plan whereby the maximum number of shares reserved for issue under the plan shall not exceed 10% of the outstanding common shares of the Company, as at the date of grant. Under the plan, the exercise price of each option may not be less than the market price of the Company s stock as calculated on the date of grant less the applicable discount, subject to a minimum exercise price of $0.10. The options can be granted for a maximum term of 5 years and vesting periods are determined by the Board of Directors. Pursuant to the regulations of the CSE, stock options may be granted outside of the stock option plan. The following is a summary of changes in share purchase options from June 30, 2016 to March 31, 2018: Weighted Average Number Exercise Price Outstanding and exercisable, June 30, 2016 149,650 $3.23 Granted 580,000 $0.17 Exercised (100,000) $0.165 Expired (13,000) $25.00 Forfeited (48,450) $1.16 Outstanding and exercisable, June 30, 2017 and March 31, 2018 568,200 $0.33 At March 31, 2018, 568,200 employee and director share purchase options were outstanding and exercisable entitling the holders thereof the right to purchase one common share for each option held as follows: Number Exercise Price Expiry Date 16,750 $1.20 August 15, 2018 35,450 $1.30 December 20, 2018 41,000 $1.00 August 28, 2019 475,000 $0.165 May 4, 2022 568,200 During the nine months ended March 31, 2018, the Company did not grant any stock options. Subsequent to March 31, 2018, 60,150 stock options were forfeited upon the resignation of an executive officer. During the nine months ended March 31, 2017, 5,000 stock options were granted with an exercise price of $0.05 per share and an expiry date of January 26, 2017. The weighted
average fair value of the options issued during the nine months ended March 31, 2017 was estimated at $0.04 per option at the grant date using the Black-Scholes option pricing model with the following assumptions: 9. SHARE CAPITAL AND RESERVES (continued) (c) Share-based payments (continued) Nine months ended March 31, 2018 Nine months ended March 31, 2017 Weighted average expected dividend yield N/A 0.0% Weighted average expected volatility N/A 186.3% Weighted average risk-free interest rate N/A 0.56% Weighted average expected term N/A 0.25 year * Expected volatility has been based on historical volatility of the Company s publicly traded shares. Total expenses arising from share-based payment transactions recognized during the nine months ended March 31, 2018 were $Nil (nine months ended March 31, 2017: $204). (d) Escrow shares As at March 31, 2018, 1,594 (June 30, 2017: 1,594) common shares are held in escrow. 10. LOSS PER SHARE The calculation of basic and diluted loss per share was based on the following data: Nine months ended March 31, 2018 2017 Net Loss $ (1,115,669) $ (700,206) Weighted average number of common shares for the purpose of basic and diluted loss per share 16,079,625 6,915,237 The basic loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. The diluted loss per share reflects the potential dilution of common share equivalents, such as stock options and share purchase warrants, in the weighted average number of common shares outstanding during the period, if dilutive. All of the stock options and share purchase warrants currently issued (see Note 9) were anti-dilutive for the nine months ended March 31, 2018 and 2017. The loss per share for the nine months ended March 31, 2018 was $0.07 (nine months ended March 31, 2017: $0.10).
11. RELATED PARTY TRANSACTIONS Key management personnel compensation Key management of the Company are directors and officers of the Company and their remuneration includes the following: Nine months ended March 31, 2018 2017 Professional fees $ 12,000 $ 53,875* Travel and promotion - 7,200 Management fees - 126,900 $ 12,000 $ 187,975 * This is the gross amount paid to an officer prior to chargeback of $27,619 reimbursed by related companies with certain directors in common and a common officer. Related party balances At March 31, 2018, accounts payable and accrued liabilities include $140,169 (June 30, 2017: $231,349) payable to a public company with a common director, one former director, and a private company controlled by a former director for unpaid fees. These amounts are unsecured, non-interest bearing and payable on demand. As outlined in Note 7, in June 2017, the Company entered into a loan agreement with a director of the Company, to convert funds of $12,000 received from this director for a cancelled private placement into a loan, bearing 5% interest per annum. During the nine months ended March 31, 2018, $12,000 of loan principal and $186 of loan interest was fully repaid towards this loan. 12. SEGMENTAL REPORTING The Company operates in one business segment, being the acquisition and exploration of mineral properties in Canada. 13. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS Investing and financing activities that do not have a direct impact on cash flows are excluded from the statement of cash flows. Nine months ended March 31, 2018: a) Pursuant to the debt settlement agreements, the Company settled loans in the amount of $1,224,000 and settled accounts payable of $4,340 in exchange for the issuance of 10,199,999 units and 36,167 units, respectively. b) The Company issued 80,000 broker warrants valued at $16,000 in connection with the October 2017 private placement
13. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS (continued) c) The Company issued 2,300,000 common shares valued at $368,000 pursuant to the acquisition of Barker Cariboo Gold Corp. (Note 5). Nine months ended March 31, 2017: a) The Company issued 800,000 common shares valued at $560,000 pursuant to the DB share purchase agreement. b) The Company issued 675,000 common shares valued at $270,000 pursuant to the Bachman share purchase agreement. 14. SUBSEQUENT EVENTS BC Barker Cariboo Gold Prospect (Barkerville South) Property Purchase Agreement On May 4, 2018, the Company entered into a property purchase agreement (the Agreement ) with an arm s length vendor (the Vendor ) to acquire a 100% interest in 641 hectares of land prospective for gold in the Cariboo Region of B.C. ( Barkerville South ) by issuing 2,100,000 shares to the Vendor pursuant to the Agreement.
Schedule B Supplementary Information [included in Schedule A ]
Schedule C Management s Discussion & Analysis [inserted as following pages]
Date of Report: May 30, 2018 Makena Resources Inc. Management Discussion and Analysis For the nine months ended March 31, 2018 The following discussion and analysis of the Company's financial condition and results of operations for the nine months ended March 31, 2018 should be read in conjunction with the financial statements and related notes. The requisite financial data presented for the relevant periods has been prepared in accordance with International Financial Reporting Standards ( IFRS ) as issued by the International Accounting Standards Board ( IASB ) and interpretations issued by the International Financial Reporting Interpretations Committee ( IFRIC ). Disclaimer for Forward-Looking Information Certain statements in this annual report are forward-looking statements which reflect management s expectations regarding future growth, results of operations, performance, business prospects and opportunities such as intended work programs on existing properties, the Company's ability to meet financial commitments and its ability to raise funds when required. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them. These forward-looking statements reflect management s current views and are based on certain assumptions and speak only as of the date of this report. These assumptions, which include management s current expectations, estimates and assumptions about current mineral property interests, the global economic environment, the market price and demand for commodities and the Company s ability to manage its property interests and operating costs, may prove to be incorrect. A number of risks and uncertainties could cause actual results to differ materially from those expressed or implied by the forward-looking statements, including (1) a downturn in general economic conditions, (2) a decreased demand or price of commodities, (3) delays in the start of projects with respect to its property interests, (4) inability to locate and acquire additional property interests, (5) the uncertainty of government regulation and politics in North America regarding mining, (6) potential negative financial impact from regulatory investigations, claims, lawsuits and other legal proceedings and challenges, and (7) other factors beyond the Company's control. There is a significant risk that such forward-looking statements will not prove to be accurate. Investors are cautioned not to place undue reliance on these forward-looking statements. No forward-looking statement is a guarantee of future results. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Additional information about these and other assumptions, risks and uncertainties are set out in the section entitled Risk Factors below. Nature of Business The Company s principal business activities include acquiring, exploring and evaluation of mineral properties. At March 31, 2018, the Company s mineral interests are located in Canada as further described below.
Mineral Properties BC Clone Mineral Claims By an option agreement dated November 28, 2005, and amended June 9, 2009, the Company acquired the right to earn an undivided 50% interest in the Clone mineral claims, situated in the Skeena Mining Division of northwestern British Columbia. Under the terms of the option agreement, the Company earned its undivided 50% interest in the Clone mineral claims by paying a total of $120,000 cash consideration, issuing 500 common shares, and incurring exploration expenditures on the Clone mineral claims aggregating $1,800,000. In August 2017, the Company decided to drop or reduce the size of certain mineral claims. Accordingly, prior acquisition costs of $56,538 and exploration costs of $706,043 associated with these claims were written off as of June 30, 2017. In September 2017, the Company entered into a purchase agreement (the Agreement ) with an arm s length party, Sunvest Minerals Corp. ( Sunvest ). Sunvest agreed to acquire all of the Company s right, title and interest in and to the undivided 50% interest in the Clone mineral claims. In consideration, Sunvest agreed to pay the Company an aggregate total of $300,000 over a two year period ($100,000 on or before October 5, 2018 and the remaining $200,000 on or before October 5, 2019); issue 3,000,000 common shares of Sunvest to the Company on or before October 10, 2017 (received); and assume the liabilities incurred by the Company in connection with its interest in the Clone mineral claims totaling $72,386 (assumed). The Company agreed not to sell, deal, assign or transfer 1,000,000 of Sunvest shares until February 12, 2018, 1,000,000 until October 5, 2018 and 1,000,000 until October 5, 2019. Accordingly, the Company further wrote off the carrying value of the Clone mineral claims by $454,766 as of June 30, 2017 and $69,000 as of March 31, 2018, respectively. This transaction closed during the nine months ended March 31, 2018. SK DB Diamond Prospect On June 28, 2016, the Company entered into a share purchase agreement (the DB Agreement ) with three arm s length vendors (the Diamond Vendors ) to purchase a 100% of the issued and outstanding shares of DB Diamond Holdings Inc. ( DB ), which holds a 100% interest in prospective diamond claims in the Athabasca of Saskatchewan. The acquisition has been accounted for as an asset acquisition. In July 2016, the Company issued 800,000 shares (issued at a value of $560,000) to the Diamond Vendors pursuant to the DB Agreement. Management plans to investigate this property further if it raises further funding. Although the Company has secured financings in the past, there is no assurance that it will be able to do so in the future on terms that are favourable to the Company or at all. QB Bachman Lithium Prospect On August 24, 2016, the Company entered into a share purchase agreement (the Bachman Agreement ) with three arm s length vendors (the Bachman Vendors ) to purchase 100% of the issued and outstanding shares of Bachman Lithium Corp. ( Bachman ). The sole asset of Bachman consisted of certain mineral claims in the Abitibi area of Quebec Province. The acquisition has been accounted for as an asset acquisition. In September 2016, the Company issued 675,000 shares (issued at a value of $270,000) to the Bachman Vendors pursuant to the Bachman Agreement.
In May 2018, the Company decided to drop or reduce the size of certain mineral claims. Accordingly, prior acquisition costs of $133,291 associated with these claims were written off as of March 31, 2018. As at March 31, 2018, the Company had spent a total of $Nil in exploration expenditures on the remaining claims of this property. Management has allotted $31,200 to be spent in exploration on this property during the second quarter of 2018. BC Barker Cariboo Gold Prospect (Barkerville West) Share Purchase Agreement On December 20, 2017, the Company entered into a share purchase agreement (the Agreement ) with an arm s length vendor (the Vendor ) to purchase 100% of the issued and outstanding shares of Barker Cariboo Gold Corp. ( Barker ). The sole asset of Barker consisted of certain mineral claim in the Cariboo Region of British Columbia. The acquisition has been accounted for as an asset acquisition. On January 2, 2018, the Company issued 2,300,000 shares (issued at a value of $368,000) and paid $15,000 to the Vendor pursuant to the Agreement. Barker became a wholly-owned subsidiary of the Company. In May 2018, the property claims were dropped and prior acquisition costs of $383,000 and exploration costs of $9,800 associated with these claims were written off as of March 31, 2018. BC Barker Cariboo Gold Prospect (Barkerville South) Property Purchase Agreement On May 4, 2018, the Company entered into a property purchase agreement (the Agreement ) with an arm s length vendor (the Vendor ) to acquire a 100% interest in 641 hectares of land prospective for gold in the Cariboo Region of B.C. by issuing 2,100,000 shares pursuant to the Agreement. Management is in the process of planning a work program which is expected to be initiated shortly. The extent of the work program will partially depend on if additional funds are required to be raised, through equity financings, shareholder loans, or otherwise, to continue exploration on this property. Although the Company has secured financings in the past, there is no assurance that it will be able to do so in the future on terms that are favourable to the Company or at all. Overall Performance The Company is a mineral exploration issuer engaged in the business of the acquisition, exploration and, if warranted, development of mineral properties. As such, it has not had any revenues in the past two fiscal years. The Company does not expect to generate consistent revenues from production of its properties in the foreseeable future. The Company expects to continue to incur expenses as work is conducted to further explore and develop its mineral properties. The Company has conducted limited exploration on its mineral properties to date, due to, among other things, the uncertainties associated with the prices of precious and base metals and other minerals, restrictions on accessing the mineral properties due to climate issues, the availability of equity financing for the purposes of mineral exploration and development and the global economic climate. The Company is in the process of exploring its mineral properties and has not yet determined whether the mineral properties contain reserves that are economically recoverable. The Company s future performance is largely tied to the outcome of future exploration and the overall financial markets.
The recoverability of minerals from the Company s mineral properties are dependent upon, among other things, the discovery of economically recoverable reserves, the ability of the Company to obtain necessary financing to continue to explore and develop its properties and upon future profitable production. Uncertainty in credit markets has led to increased difficulties in raising and borrowing funds. As a result, the Company may have difficulties raising equity financing for the purposes of exploration and development of the Company s mineral properties, without diluting the interests of current shareholders of the Company. As at March 31, 2018, the Company had a working capital deficiency of $494,872 and cash of $137,962 as compared to working capital deficiency of $718,721 and cash of $103,902 as at June 30, 2017. As at March 31, 2018, the Company had an accumulated deficit of $23,745,886 since inception. The Company expects to incur further losses in the development of its business, all of which casts substantial doubt on the Company s ability to continue as a going concern. Net comprehensive loss increased from $700,206 for the nine months ended March 31, 2017 to $1,115,669 for the nine months ended March 31, 2018. The increase in net comprehensive loss was mainly due to an increase in the write-down of exploration and evaluation properties, as well as to a increases in interest expense, unrealized loss on marketable securities, and a decrease in other income on settlement of flow-through share premium liability offset by a decrease in operating and general exploration expenses. As a result, management believes that the Company s available funds will not be sufficient to meet its working capital requirements for the next twelve month period. Management anticipates that additional funds will need to be raised, through equity financings, shareholder loans, or otherwise, to fund the Company s planned work programs on its mineral properties and ongoing operations. Although the Company has secured financings in the past, there is no assurance that it will be able to do so in the future on terms that are favourable to the Company or at all. The Company may have difficulty raising additional funds as necessary due to a number of uncertainties and risk factors, including uncertainty in credit markets, fluctuation in commodity prices and general economic downturns. See Liquidity and Capital Resources and Risk Factors for a discussion of risk factors that may impact the Company s ability to raise funds. Information about the Company s commitments relating to the Company's mineral property is discussed above under Nature of Business Mineral Properties. Additional information about the risks and uncertainties relating to the Company s business and financial performance is discussed below under Risk Factors. Summary of Quarterly Results The following table provides selected quarterly unaudited financial data for the eight most recently completed interim quarters: