Mena - Going Concern on Sedar Going concern
The Company has insufficient cash resources and liquidity at March 31, 2013 and May 29, 2013 to
operate as a going concern in the near term. The Company had a working capital deficit of $6.4
million at March 31, 2013 and continues to rely upon the support of significant shareholders, directors
and creditors. There is considerable risk that the Company’s existing creditors will cease to provide
their ongoing support.
The current market conditions have resulted in significant reduction in the Company’s ability to
access capital. The Company has had and continues to be in discussions with various parties that
may result in additional capital being raised sufficient to finance operations in the short-term. To date,
the Company has attempted to, but has been unable to finalize agreements to raise capital either
through issuing shares or selling assets.
If support from existing creditors is discontinued and/or if a re-financing scenario is not successful
very soon, the Company will likely be forced into creditor protection and liquidation.
The condensed consolidated financial statements have been prepared on a going concern basis,
which presume the realization of assets and discharge of liabilities in the normal course of business
MENA Hydrocarbons Inc.
Management’s Discussion & Analysis
Page | 3 Three Months-Ended March 31, 2013
for the foreseeable future. Cash resources at March 31, 2013 are not sufficient to fund neither the
existing working capital deficit, nor the Company’s obligations over the next 12 months and this
condition creates a material uncertainty that casts a significant doubt about the Company’s ability to
operate as a going concern. The Company’s ability to continue as a going concern is dependent upon
obtaining necessary funds to meet its current obligations, fund ongoing contractual commitments
under its various farm-in and concession agreements and ultimately achieving profitable operations.
While the Company is expending its best efforts, the raising of the necessary funds is not assured.
The condensed consolidated financial statements do not include any adjustments to the amounts and
classification of assets and liabilities that might be necessary should the Company be unable to
continue in business.
2013 Highlights
? Production from the above wells totaled 5,185 bbls (64 bbl/d) for the quarter ended March 31,
2013
? 9,241 barrels trucked to Egyptian General Petroleum Company to date
? On March 5, 2013, MENA announced that it completed the issuance of 9,434,292 common shares
of the Company in connection with the term loans announced on November 30, 2012, and the
issuance of 25,000,000 units of the Company in connection with the private placement announced
on December 14, 2012.
MENA Hydrocarbons Inc.
Corporate History
MENA was incorporated on May 11, 2010 and is engaged in oil and gas exploration, development
and acquisition of properties focused in the Middle East, Northern Africa, and the Mediterranean.
On September 1, 2010, MENA agreed to participate with Kulczyk Oil Ventures Ltd. (“Kulczyk”) in the
exploration of Block IX in Syria.
On November 12, 2010, MENA acquired a 75% working interest in an Egyptian Central Sinai property
known as the Lagia Development Concession (“Lagia”). The Company completed the acquisition of
the remaining 25% working interest in Lagia on May 20, 2011.
On December 17, 2010, MENA and SKANA Capital Corp. (“SKANA”) entered into an agreement
providing for an amalgamation between MENA and a wholly-owned subsidiary of SKANA pursuant to
which MENA shareholders received 0.86 SKANA shares for each common share of MENA. All
convertible securities of MENA outstanding on closing of the transaction became exercisable to
acquire securities of SKANA, and the exercise prices thereof adjusted based on the exchange ratio.
This transaction resulted in a reverse take-over of SKANA and closed on May 20, 2011.
Outlook