MAX Resource Corp. — Interim / Quarterly Report 2021

Aug 31, 2021

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Condensed Interim Consolidated Financial Statements (Unaudited)

For the three and six months ended June 30, 2021 and 2020

Expressed in Canadian Dollars

Max Resource Corp. Table of Contents (Expressed in Canadian Dollars - Unaudited)

Notice to Readers .................................................................................................................................. 2 Financial Statements

Condensed Interim Consolidated Statements of Financial Position .............................................. 3 Condensed Interim Consolidated Statements of Loss and Comprehensive Loss .......................... 4 Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity ....................... 5 Condensed Interim Consolidated Statements of Cash Flows ....................................................... 6 Notes to the Condensed Interim Consolidated Financial Statements ............................................ 7

1

NOTICE OF NO AUDITOR REVIEW OF CONDENSED INTERIM FINANCIAL STATEMENTS

Under National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of the condensed interim consolidated financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.

The accompanying unaudited condensed interim consolidated financial statements have been prepared by and are the responsibility of management.

The Company's independent auditor has not performed a review of these financial statements in accordance with the standards established by the Chartered Professional Accountants of Canada for a review of condensed interim financial statements by an entity's auditor.

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Max Resource Corp. Condensed Interim Consolidated Statements of Financial Position (Expressed in Canadian Dollars - Unaudited)

		June 30	December 31,
	Note	2021	2020
		$	$
ASSETS
Current
Cash and cash equivalents		2,442,529	4,697,156
Taxes recoverable		93,950	170,952
Prepaids	5	258,159	235,412
		2,794,638	5,103,520
Equipment	3	120,685	124,198
Exploration and evaluation assets	4	1,164,681	742,531
		4,080,004	5,970,249
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payables and accrued liabilities	6,8	374,683	734,841
Shareholders' equity
Share capital	7	32,448,940	31,808,024
Reserves	7	3,828,006	3,876,054
Deficit		(32,571,625)	(30,448,670)
		3,705,321	5,235,408
		4,080,004	5,970,249

Nature of operations and going concern (Note 1) Contingency (Note 11) Subsequent events (Note 13)

Approved and authorized for issue on behalf of the Board on August 30, 2021

DIRECTOR	“PaulJohn” DIRECTOR Paul John	“Brett Matich”
		Brett Matich

See accompanying notes to the condensed interim consolidated financial statements

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Max Resource Corp.

Condensed Interim Consolidated Statements of Loss and Comprehensive Loss (Expressed in Canadian Dollars - Unaudited)

		Three Months Ended	Three Months Ended	Six Months Ended	Six Months Ended
			June 30,		June 30,
	Note	2021	2020	2021	2020
		$	$	$	$
OPERATING EXPENSES
Consulting	8	121,956	22,465	339,842	342,816
Depreciation	3	4,392	1,507	8,732	3,014
Exploration and evaluation
expenditures	4	262,731	498,587	635,853	698,196
Foreign exchange (gain)		(31,869)	206	23,643	(892)
Interest expense		-	(84)	-	-
Management fees	8	88,000	96,000	208,000	194,179
Marketing		62,466	3,616	232,536	43,783
Office and miscellaneous		125,805	1,095	195,404	31,759
Professional fees		84,133	45,426	145,364	94,440
Property investigation costs	5	87,274	-	145,456	12,000
Salaries and benefits	7	76,383	-	148,453	-
Share-based compensation		-	-	-	220,111
Transfer agent and filing fees		13,462	15,500	25,378	31,074
Travel		701	1,400	19,724	49,632
		(895,434)	(685,718)	(2,128,385)	(1,720,112)
Interest income		1,978	-	5,430	-
Gain on debt settlement	7	-	72,755	-	72,755
		1,978	72,755	5,430	72,755
Loss and comprehensive loss for
the period		(893,456)	(612,963)	(2,122,955)	(1,647,357)
Loss per share-basic and diluted		$ (0.01)	$ (0.02)	$ (0.02)	$ (0.05)
Weighted average number of common
shares outstanding		91,200,528	33,944,186	90,181,081	30,925,171

See accompanying notes to the condensed interim consolidated financial statements

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Max Resource Corp.

Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity (Expressed in Canadian Dollars - Unaudited)

Note	Share capital Number of shares Amount	Reserves Warrants Share options Total Deficit Total
Balance at December 31, 2019 Units issued for private placements 7 Shares issued for debt 7 Shares issued for exploration assets 4,7 Shares issued on exercise of warrants 7 Share issuance costs Share-based compensation Loss for the period	$ 27,906,155 22,611,032 3,971,001 297,825 3,637,750 291,020 2,950,000 250,750 200,000 20,000 - (42,826) - - - -	$ $ $ $ $ 512,684 2,225,732 2,738,416 (25,241,705) 107,743 - - - - 297,825 - - - - 291,020 - - - - 250,750 - - - - 20,000 12,901 - 12,901 - (29,925) - 220,111 220,111 - 220,111 - - - (1,647,357) (1,647,357)
Balance at June 30, 2020 Units issued for private placements 7 Shares issued for debt 7 Shares issued on exercise of warrants 7 Shares issued on exercise of share options 7 Share issuance costs Share-based compensation Loss for the period	38,664,906 23,427,801 37,083,332 7,550,000 120,000 27,600 10,807,862 1,138,493 900,000 212,433 - (548,303) - - - -	525,585 2,445,843 2,971,428 (26,889,062) (489,833) - - - - 7,550,000 - - - - 27,600 (46,383) - (46,383) - 1,092,110 - (77,433) (77,433) - 135,000 184,399 - 184,399 - (363,904) - 844,043 844,043 - 844,043 - - - (3,559,608) (3,559,608)
Balance at December 31, 2020 Shares issued on exercise of warrants 7 Shares issued on exercise of share options 7 Loss for the period	87,576,100 31,808,024 4,052,631 563,604 250,000 77,312 - -	663,601 3,212,453 3,876,054 (30,448,670) 5,235,408 (8,236) - (8,236) - 555,368 - (39,812) (39,812) - 37,500 - - - (2,122,955) (2,122,955)
Balance at June 30, 2021	91,878,731 32,448,940	655,365 3,172,641 3,828,006 (32,571,625) 3,705,321

See accompanying notes to the condensed interim consolidated financial statements

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Max Resource Corp. Condensed Interim Consolidated Statements of Cash Flows (Expressed in Canadian Dollars - Unaudited)

	Six Months	Ended June 30,
	2021	2020
	$	$
Cash flows used in operating activities
Loss for the period	(2,122,955)	(1,647,357)
Items not affecting cash:
Depreciation	8,732	3,014
Gain on debt settlement	-	(72,755)
Share-based compensation	-	220,111
Shares issued for exploration assets	-	250,750
Changes in non-cash working capital items:
Taxes recoverable	77,002	32,815
Prepaids	(22,747)	-
Trade payables and accrued liabilities	(360,158)	355,433
	(2,420,126)	(857,989)
Cash flows used in investing activities
Exploration asset expenditures	(422,150)	-
Purchase of equipment	(5,219)	-
	(427,369)	-
Cash flows from financing activities
Shares issued for cash	-	297,825
Proceeds from exercise of options	37,500	-
Proceeds from exercise of warrants	555,368	20,000
Share issue costs	-	(29,925)
	592,868	287,900
Change in cash during the period	(2,254,627)	(570,089)
Cash, beginning of period	4,697,156	685,025
Cash, end of period	2,442,529	114,936

Supplemental cash flow information (Note 10)

See accompanying notes to the condensed interim consolidated financial statements

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Max Resource Corp. Notes to the Condensed Interim Consolidated Financial Statements (Expressed in Canadian Dollars - Unaudited) June 30, 2021

1. NATURE OF OPERATIONS AND GOING CONCERN

Max Resource Corp. (the “Company” or “Max Resource”) was incorporated on April 25, 1994, under the laws of the province of Alberta, Canada, and continued its jurisdiction of incorporation into British Columbia on February 5, 2019. The Company’s principal activity is the acquisition and exploration of mineral properties in South America and Canada. The Company’s shares are traded on the TSX Venture Exchange (“TSX-V”) under the symbol “MXR”.

The Company’s head office is located at #1188 - 1095 West Pender Street, Vancouver, British Columbia, Canada, V6E 2M6 and its registered and records office is located at 25[th] Floor, 700 West Georgia Street, Vancouver, British Columbia, Canada, V7Y 1B3.

These condensed interim consolidated financial statements have been prepared on the assumption that the Company will continue as a going concern, meaning that it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations. Different basis of measurement may be appropriate if the Company is not expected to continue operations for the foreseeable future. As at June 30, 2021, the Company had an accumulated deficit of $32,571,625 and working capital of $2,419,955 and, to date, the Company has not generated any revenues to meet its operating and administrative expenses or its other obligations. The Company’s continuation as a going concern is dependent upon its ability to raise equity capital or borrowings sufficient to meet current and future obligations and ultimately to attain profitable operations. These material uncertainties may cast significant doubt on the ability of the Company to continue operations as a going concern. Management intends to finance operating costs over the next twelve months with private placements of the Company’s common shares and loans from related parties.

These condensed interim consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.

2. SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PREPARATION

Statement of compliance with International Financial Reporting Standards

These condensed interim financial statements, including comparatives, have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and International Accounting Standards (“IAS”) 34 “Interim Financial Reporting” as issued by the International Accounting Standards Board (“IASB”). Accordingly, certain disclosures included in the December 31, 2020 audited financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the IASB have been condensed or omitted and these unaudited condensed interim financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2020.

The accounting policies applied in these condensed interim financial statements are consistent with those applied and disclosed in the Company’s audited consolidated financial statements for the year ended December 31, 2020. The Company’s interim results are not necessarily indicative of its results for a full year.

These condensed interim financial statements were approved by the Board of Directors of the Company and authorized for issuance on August 30, 2021.

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Max Resource Corp. Notes to the Condensed Interim Consolidated Financial Statements (Expressed in Canadian Dollars - Unaudited) June 30, 2021

2. SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PREPARATION (continued)

Basis of preparation

These condensed interim consolidated financial statements have been prepared on a historical cost basis except for certain financial instruments that are measured at fair value. In addition, the condensed interim consolidated financial statements have been prepared using the accrual basis of accounting except for cash flow disclosure.

The consolidated financial statements are presented in Canadian dollars, which is also the functional currency of the Company, unless otherwise noted.

Basis of consolidation

The consolidated financial statements include the financial statements of the Company and the following subsidiaries:

Name	Jurisdiction
Gachala Colombia Corp.	British Columbia, Canada
Gachala Colombia Corp Sucursal Colombia (“Gachala”)	Colombia
PGE Americas Metals Corp.	British Columbia, Canada
Valleduper Colombia Corp.	British Columbia, Canada
Valleduper Colombia S.A.S. (“Valleduper”)	Colombia
Baccancas Colombia Corp.	British Columbia, Canada
Baccancas Colombia S.A.S. (“Baccancas”)	Colombia
Bocono Colombia Corp.	British Columbia, Canada
Bocono Colombia Corp S.A.S. (“Bocono”)	Colombia
TUCO Resource Corp.	British Columbia, Canada
TUCO Resource Corp. S.A.C (“TUCO”)	Peru

Inter-company balances and transactions, including unrealized income and expenses arising from intercompany transactions, are eliminated on consolidation.

Use of estimates

The preparation of financial statements in conformity with IFRS requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported revenues and expenses during the period.

Although management uses historical experience and its best knowledge of the amount, events or actions to form the basis for judgments and estimates, actual results may differ from these estimates.

The most significant accounts that require estimates as the basis for determining the stated amounts include the uncertainty of COVID-19 pandemic, recoverability of exploration and evaluation assets, determination of functional currency, valuation of share-based compensation and other equity based payments, and the recoverability and measurement of deferred tax assets and liabilities.

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Max Resource Corp. Notes to the Condensed Interim Consolidated Financial Statements (Expressed in Canadian Dollars - Unaudited) June 30, 2021

2. SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PREPARATION (continued)

Use of estimates (continued)

Critical judgment exercised in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements is as follows:

- Uncertainty of COVID 19 pandemic

In March 2020 the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, customers, economies, and financial markets globally, potentially leading to an economic downturn. It has also disrupted the normal operations of many businesses, including Max Resource. This outbreak could decrease spending, adversely affect the raising of capital and harm Max Resource’s business and results of operations. It is not possible for management to predict the duration or magnitude of the adverse results of the outbreak and its effects on the business or results of operations at this time.

Economic recoverability and probability of future economic benefits of mineral exploration and evaluation assets

Management has determined that exploration, evaluation, and related costs incurred which were capitalized may have future economic benefits and may be economically recoverable. Management uses several criteria in its assessments of economic recoverability and probability of future economic benefits including, geologic and other technical information, a history of conversion of mineral resources with similar characteristics to its own properties to proven and probable mineral reserves, the quality and capacity of existing infrastructure facilities, evaluation of permitting and environmental issues and local support for the project.

Functional currency

The functional currency of the Company and its wholly owned subsidiaries is the Canadian dollar (“CAD”); however, determination of functional currency may involve certain judgments to determine the primary economic environment which is re-evaluated for each new entity or if conditions change.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in material adjustments are as follows:

Valuation of share-based compensation

The Company uses the Black-Scholes Option Pricing Model for valuation of share-based compensation and other equity-based payments. Option pricing models require the input of subjective assumptions including expected price volatility, interest rate, and forfeiture rate. Changes in the input assumptions can materially affect the fair value estimate and the Company’s earnings and equity reserves.

Income taxes

In assessing the probability of realizing income tax assets, management makes estimates related to expectation of future taxable income, applicable tax opportunities, expected timing of reversals of existing temporary differences and the likelihood that tax positions taken will be sustained upon examination by applicable tax authorities. In making its assessments, management gives additional weight to positive and negative evidence that can be objectively verified.

Foreign currency translation

Functional and presentation currency:

The functional currency of each entity is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Canadian dollars which is the parent company and its subsidiaries’ functional and presentation currency.

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Max Resource Corp. Notes to the Condensed Interim Consolidated Financial Statements (Expressed in Canadian Dollars - Unaudited) June 30, 2021

2. SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PREPARATION (continued)

Foreign currency translation (continued)

Transactions and balances:

Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate in effect at the balance sheet date. Non-monetary assets and liabilities, expenses and other income arising from foreign currency transactions are translated at the exchange rate in effect at the date of the transaction. Exchange gains or losses arising from the translation are included in the determination

Equipment

Equipment is stated at historical cost less accumulated depreciation and accumulated impairment losses. Subsequent costs directly related to a recognized asset are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of significant replaced parts are derecognized. All other repairs and maintenance costs are charged to the statement of loss and comprehensive loss during the financial period in which they are incurred.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized in profit or loss. Depreciation is calculated using the declining balance method or straight-line basis to write off the cost of the assets to their residual values over their estimated useful lives. The depreciation rates applicable to each category is as follows:

Class	Depreciation rate
Computers	55%
Equipment	20%
Office furniture	20%
Vehicles	10 yrs

Future accounting standards, amendments and interpretations

The Company has performed an assessment of new standards issued by the IASB that are not yet effective and has determined that any standards that have been issued would have no or very minimal impact on the Company’s financial statements.

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Max Resource Corp. Notes to the Condensed Interim Consolidated Financial Statements (Expressed in Canadian Dollars - Unaudited) June 30, 2021

3. EQUIPMENT

	Computers Equipment Office Furniture Vehicles Total
Cost: At December 31, 2019 Additions	$ $ $ $ $ - - - 52,764 52,764 - 39,869 - 47,320 87,189
At December 31, 2020 Additions	- 39,869 - 100,084 139,953 1,388 2,961 870 - 5,219
At June 30, 2021	1,388 42,830 870 100,084 145,172
Depreciation: At December 31, 2019 Additions	- - - 5,703 5,703 - 3,987 - 6,065 10,052
At December 31, 2020 Additions	- 3,987 - 11,768 15,755 - 3,641 87 5,004 8,732
At June 30, 2021	- 7,628 87 16,772 24,487
Net book value: At December 31, 2020	- 35,882 - 88,316 124,198
At June 30, 2021	1,388 35,202 783 83,312 120,685

4. EXPLORATION AND EVALUATION ASSETS AND EXPENDITURES

A continuity of exploration and evaluation assets is as follows:

	RT Gold	EBAY
	Project	Project	Total
	$	$	$
Balance, December 31, 2019	-	-	-
Property acquisition/staking costs	509,769	275,750	785,519
Exploration costs
Geological	232,762	392,504	625,266
Subtotal	742,531	668,254	1,410,785
Write-off of exploration asset	-	(668,254)	(668,254)
Balance, December 31, 2020	742,531	-	742,531
Property acquisition/staking costs	-	-	-
Exploration costs
Geological	422,150	-	422,150
Subtotal	422,150	-	422,150
Balance, June 30, 2021	1,164,681	-	1,164,681

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Max Resource Corp. Notes to the Condensed Interim Consolidated Financial Statements (Expressed in Canadian Dollars - Unaudited) June 30, 2021

4. EXPLORATION AND EVALUATION ASSETS AND EXPENDITURES (continued)

RT Gold Project

On September 16, 2020, the Company optioned the RT Gold property which consists of two contiguous mineral concessions within the district of Tabaconas, Peru. To earn a 100% interest in the property, the Company must:

• pay US$300,000 to the vendors on execution of the agreement (paid);

• pay US$300,000 on or before each of the first, second, third, and fourth anniversary; and

• pay US$3,000,0000 on or before the fifth anniversary.

Upon acquiring a 100% interest in the RT Gold property, the vendors will retain a 2.5% net smelter royalty on the commercial production of the RT Gold property.

EBAY Project

On May 11, 2020, the Company optioned the EBAY property located in Quebec, Canada. To earn a 100% interest in the property, the Company must:

• pay $25,000 (paid) to the vendor on signing of the agreement;

• issue 2,950,000 common shares of the Company (issued at a value of $250,750) to the vendor within seven days of TSX-V approval;

• pay a further $25,000, issue additional common shares of the Company having a market value of $75,000, and incur $200,000 of expenditures on or before May 11, 2021;

• pay a further $25,000, issue additional common shares of the Company having a market value of $75,000, and incur a further $200,000 of expenditures on or before May 11, 2022; and

• pay a further $75,000, issue additional common shares of the Company having a market value of $225,000, and incur a further $500,000 of expenditures on or before May 11, 2023.

The number of common shares to be issued under the EBAY agreement shall be computed by dividing the common share issuance value by the share price defined as the volume weighted average price of the common shares on the TSX-V over the 30 day period prior to the share issuance.

Management decided not to proceed with the EBAY Project; as such, the option agreement was terminated and the project was written off during the year ended December 31, 2020.

Other Projects

For the six months ended June 30, 2021, the Company incurred exploration and evaluation expenditures on projects as follows:

	CESAR
	Project	Total
	$	$
Geological	635,853	635,853
Balance, June 30, 2021	635,853	635,853

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Max Resource Corp. Notes to the Condensed Interim Consolidated Financial Statements (Expressed in Canadian Dollars - Unaudited) June 30, 2021

4. EXPLORATION AND EVALUATION ASSETS AND EXPENDITURES (continued)

For the six months ended June 30, 2020, the Company incurred exploration and evaluation expenditures on projects as follows:

	CESAR	EBAY
	Project	Project	Total
	$	$	$
Licensing/acquisition costs	4,707	275,750	280,457
Geological	372,564	45,175	417,739
Balance, June 30, 2020	377,271	320,925	698,196

These amounts have been expensed as they do not meet the criteria for capitalization under IFRS 6 as the Company does not yet have title to the licenses which are currently in the application phase with the ANM (the Colombian National Mining Agency). Applications made in the Choco area are in the final stage of approval but have been delayed due to the disruption caused by COVID-19. The expectation for the approval of all applications is the end of 2021.

Choco Project (aka Novita Project)

As at June 30, 2021, the Company holds 0 (December 31, 2020 - 5) initial mineral license applications within the Choco Department, Colombia.

North Choco Project

As at June 30, 2021, the Company holds 0 (December 31, 2020 - 0) initial mineral license applications within the Choco, Caldas, Antioquia and Risaralda Departments, Colombia.

CESAR Project

As at June 30, 2021, the Company holds 67 (December 31, 2020 – 52) initial mineral license applications within the northern Andean copper belt in northeastern Colombia.

In October 2020, the Company agreed to cancel an agreement between Gachala and a consultant in respect to locating prospective properties and data acquisition. Under the terms of the agreement, the Company is required to make annual payments of US$50,000 to the former consultant for 10 years. As at June 30, 2021, $66,175 (US$50,000) (year ended December 31, 2020 - $66,175 (US$50,000)) has been paid.

5. PROPERTY INVESTIGATION COSTS

During the six months ended June 30 2021 and the year ended December 31, 2020, the Company considered several potential acquisition targets in Colombia where the Company did not proceed after the evaluation process. Additionally, on January 27, 2021, the Company signed a consulting agreement with a consultant to help identify and acquire additional mineral claims around the Company’s CESAR Project. Under the agreement, the consultant will be paid $320,000 upon signing of the agreement (paid), of which $174,545 is included in prepaids at June 30, 2021, and will be granted a 3% net smelter royalty (“NSR”) on all mineral claims currently registered to Valleduper and Baccancas and any claims registered to these companies during 2021. The Company has the right to purchase 100% of the NSR for US$4,000,000 any time prior to production

During the six months ended June 30, 2021, $148,453 (June 30, 2020 - $12,000) was charged to property investigation costs in the statement of loss and comprehensive loss.

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Max Resource Corp. Notes to the Condensed Interim Consolidated Financial Statements (Expressed in Canadian Dollars - Unaudited) June 30, 2021

6. TRADE PAYABLES AND ACCRUED LIABILITIES

	June 30,	December 31,
	2021	2020
	$	$
Trade payables (Note 8)	319,878	734,841
Accrued liabilities	6,500	40,000
Payroll liabilities	48,305	-
	374,683	734,841

7. SHARE CAPITAL AND RESERVES

Authorized and issued share capital

Unlimited number of common shares without par value. At June 30, 2021, there were 91,878,731 (December 31, 2020 – 87,576,100) issued and fully paid common shares outstanding.

Shares issued

During the six months ended June 30, 2021:

The Company issued 4,052,631 common shares for gross proceeds of $555,368 in connection with the exercise of 300,000 warrants at $0.10 per warrant and 3,752,631 warrants at $0.14 per warrant. Upon exercise, $8,236 was reallocated from reserves to share capital.

The Company issued 250,000 common shares for gross proceeds of $37,500 in connection with the exercise of 250,000 share options at $0.15 per option. Upon exercise, $77,433 was reallocated from reserves to share capital.

During the year ended December 31, 2020:

The Company issued 11,007,862 common shares for gross proceeds of $1,112,110 from the exercise of warrants with an average exercise price of $0.10. Upon exercise, $46,383 was reallocated from reserves to share capital.

The Company issued 900,000 common shares for gross proceeds of $135,000 from the exercise of share options with an average exercise price of $0.15. Upon exercise, $39,812 was reallocated from reserves to share capital.

On October 22, 2020 the Company closed a non-brokered private placement financing by issuing 27,083,333 units at $0.24 per unit for total gross proceeds of $6,500,000. Each unit is comprised of one common share and one-half of one warrant with each whole warrant entitling the holder to purchase one additional common share for a period of one year at a price of $0.40 per share, subject to accelerated expiry. In the event that the Company's common shares trade at a closing price at or greater than $0.80 per share for a period of 10 consecutive trading days, the Company may accelerate the expiry date of the warrants by giving notice to the holders thereof, and in such case, the warrants will expire on the 30th day after the date on which such notice is given by the Company. In addition, the Company paid finders' fees totaling $302,035 and issued 1,242,481 finders' warrants valued at $150,700 and recognized $27,422 as share issuance costs. Each finders' warrant is exercisable into one common share for a period of up to one year at a price of $0.40 per share. The fair value of the finder warrants was calculated using the Black-Scholes Option Pricing Model and the following assumptions: Average exercise price $0.40, Expected life – 1 year, Risk-free rate – bond equivalent yield – 0.17%, Annualized volatility – 141%, Dividend yield – 0%.

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Max Resource Corp. Notes to the Condensed Interim Consolidated Financial Statements (Expressed in Canadian Dollars - Unaudited) June 30, 2021

7. SHARE CAPITAL AND RESERVES (continued)

Shares issued (continued)

On August 19, 2020 the Company closed a non-brokered private placement financing by issuing 10,000,000 units at $0.105 per unit for total gross proceeds of $1,050,000. Each unit is comprised of one common share and one warrant with each warrant entitling the holder to purchase one additional common share for a period of one year at a price of $0.14 per share. In addition, the Company paid finders' fees totaling $20,301 and issued 193,340 finders' warrants valued at $33,700 and recognized $10,125 as share issuance costs. Each finders' warrant is exercisable into one common share for a period of up to one year at a price of $0.14 per share. The fair value of the finder warrants was calculated using the Black-Scholes Option Pricing Model and the following assumptions: Average exercise price $0.14, Expected life – 1 year, Risk-free rate – bond equivalent yield – 0.21%, Annualized volatility –180.04%, Dividend yield – 0%.

On August 19, 2020, the Company issued 120,000 common shares to a consultant of the Company to extinguish $12,000 in trade payables. The shares were issued with a fair value of $27,600, resulting in a loss of $15,600.

On May 25, 2020 the Company issued 2,950,000 with a fair value of $250,750 in relation to an option agreement to acquire 100% of the EBAY project (Note 4).

On May 8, 2020, the Company issued a total of 3,637,750 common shares to consultants of the Company to extinguish a total of $363,775 in trade payables. The shares were issued with a fair value of $291,020, resulting in a gain of $72,755.

On May 1, 2020, the Company issued 3,971,001 flow-through units (the “FT Units”) at a price of $0.075 per FT Unit for total proceeds of $297,825. Each FT Unit is comprised of one flow-through common share and one-half of one warrant with each whole warrant entitling the holder to purchase one nonflow through common share for a period of two years at a price of $0.10 per share. In addition, the Company has paid finder’s fees of $29,926 and issued 265,680 finder’s warrants valued at $12,900 and recognized $4,021 as share issuance costs. Each finders warrant is exercisable into one common share for a period of up to two years at a price of $0.10 per share. The fair value of the finder warrants was calculated using the Black-Scholes Option Pricing Model and the following assumptions: Average exercise price $0.10, Expected life – 2 years, Risk-free rate – bond equivalent yield – 0.30%, Annualized volatility – 100%, Dividend yield – 0%.

Share options

The Company has adopted an incentive stock option plan, which provides that the Board of Directors of the Company may from time to time, in its discretion, and in accordance with the TSX-V requirements, grant to directors, officers, employees and consultants of the Company, non-transferable share options to purchase common shares, provided that the number of common shares reserved for issuance will not exceed 20% of the Company’s issued and outstanding common shares. Such options will be exercisable for a period of up to 5 years from the date of grant. Options granted typically vest on the grant date.

During the year ended December 31, 2020, the Company granted 6,150,000 share options to officers, directors, and consultants exercisable at an average price of $0.21 for a period of five years. The fair value of the options was calculated to be $1,058,818 using the Black-Scholes Option Pricing Model and the following weighted average assumptions: Expected life – 5 years, Risk-free rate – bond equivalent yield – 0.91%, Annualized volatility – 122%-146%, Dividend yield – 0%. During the year ended December 31, 2020, the Company recognized share-based compensation expense of $1,058,818 in respect to these options.

15

Max Resource Corp. Notes to the Condensed Interim Consolidated Financial Statements (Expressed in Canadian Dollars - Unaudited) June 30, 2021

7. SHARE CAPITAL AND RESERVES (continued)

Share options (continued)

During the year ended December 31, 2019, the Company granted 75,000 share options to a consultant exercisable at $3.60 for a period of five years. The fair value of the options was calculated to be $97,645 using the Black-Scholes Option Pricing Model and the following assumptions: Expected life – 5 years, Risk-free rate – bond equivalent yield – 1.43%, Annualized volatility – 113%, Dividend yield – 0%. The options vest as to 25% on grant date and 25% on every three months thereafter. During the year ended December 31, 2020, the Company recognized share-based compensation expense of $5,336 in respect to these options.

The share option continuity schedule is as follows:

		Weighted	Weighted
	Number of	average	average share
	options	exercise price	price on exercise
		$	$
Balance, December 31, 2019	75,000	3.60	-
Granted	6,150,000	0.21	-
Exercised	(900,000)	0.15	0.41
Balance, December 31, 2020	5,325,000	0.27	0.41
Exercised	(250,000)	0.15	0.30
Balance, June30, 2021	5,075,000	0.28	-

Details of the share options outstanding and exercisable as at June 30, 2021 are as follows:

Number of options	Number of options
outstanding	exercisable	Exercise price	Expiry date
		$
75,000	75,000	3.60	March 20, 2024
1,550,000	1,550,000	0.15	January 3, 2025
2,450,000	2,450,000	0.21	August 24, 2025
1,000,000	1,000,000	0.40	November 9, 2025
5,075,000	5,075,000

The weighted average life of stock options outstanding at June 30, 2021 was 3.98 years.

16

Max Resource Corp. Notes to the Condensed Interim Consolidated Financial Statements (Expressed in Canadian Dollars - Unaudited) June 30, 2021

7. SHARE CAPITAL AND RESERVES (continued)

Warrants

The warrant continuity schedule is as follows:

		Weighted
	Number of	average
	warrants	exercise price
		$
Balance, December 31, 2019	16,592,346	0.34
Issued	27,228,671	0.28
Exercised	(11,007,862)	0.10
Expired	(1,672,561)	1.49
Balance, December 31, 2020	31,140,594	0.31
Exercised	(4,052,631)	0.14
Balance, June 30, 2021	27,087,963	0.33

Details of the warrants outstanding as at June 30, 2021 are as follows:

Number of
warrants
outstanding	Exercise price	Expiry date
	$
895,833	0.45	January 17, 2023
641,667	0.72	February 6, 2023
1,133,467*	0.90	July 9, 2021
2,887,727	0.10	December 30, 2021
587,500	0.10	May 1, 2022
6,157,618**	0.14	August 19, 2021
14,784,151	0.40	October 22, 2021
27,087,963

*expired unexercised subsequent to June 30, 2021

**482,250 expired unexercised subsequent to June 30, 2021

The weighted average life of warrants outstanding at June 30, 2021 is 0.37 years.

8. RELATED PARTY TRANSACTIONS

Key management personnel are the persons responsible for the planning, directing, and controlling of the activities of the Company and include both executives and non-executive directors, and entities controlled by such persons. The Company considers all directors and officers of the Company to be key management personnel.

As at June 30, 2021, the Company owed $37,113 (December 31, 2020 - $13,123) to directors and officers of the Company for reimbursement of expenses, and accrued fees which are included in trade payables and accrued liabilities.

17

Max Resource Corp. Notes to the Condensed Interim Consolidated Financial Statements (Expressed in Canadian Dollars - Unaudited) June 30, 2021

8. RELATED PARTY TRANSACTIONS (continued)

A summary of key management personnel compensation is as follows:

	For the six	months ended
		June 30,
	2021	2020
	$	$
Consulting	18,000	15,000
Management fees	208,000	194,179
	226,000	209,179

9. FINANCIAL RISK AND CAPITAL MANAGEMENT

The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitors the risk management processes. The type of risk exposure and the way in which such exposure is managed is provided as follows:

Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company’s primary exposure to credit risk is on its cash held in bank accounts. The Company’s cash is deposited with a major bank in Canada and Peru. This risk is managed by using a major bank that is a high credit quality financial institution as determined by rating agencies.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company has a planning and budgeting process in place to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis.

Historically, the Company's primary source of funding has been the issuance of equity securities for cash, primarily through private placements and the advance of loans. The Company’s access to equity financing is dependent upon market conditions and market risks. There can be no assurance of continued access to equity funding.

As at June 30, 2021, the Company had a cash balance of $2,442,529 to settle current liabilities of $374,683.

Currency risk

Currency risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because they are denominated in currencies that differ from the respective functional currency. The Company is exposed to currency risk as it incurs expenditures that are denominated in United States dollars, Colombian Pesos, and the Peruvian Sol while its functional currency is the Canadian dollar. The Company does not hedge its exposure to fluctuations in foreign exchange rates. The majority of cash is held in Canadian dollars.

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Max Resource Corp. Notes to the Condensed Interim Consolidated Financial Statements (Expressed in Canadian Dollars - Unaudited) June 30, 2021

9. FINANCIAL RISK AND CAPITAL MANAGEMENT (continued)

The following is a summary of Canadian dollar equivalent financial assets and liabilities that are denominated in United States dollars, Colombian Pesos, or Peruvian Sol:

	June 30,	December 31,
	2021	2020
	$	$
Cash	112,955	144,481
Taxes recoverable	15,955	-
Trade payables	(81,559)	(3,415)
Net assets (liabilities)	47,351	141,066

Based on the above net exposures, there would be a nominal impact on the Company’s net loss should there be a significant change in the Canadian dollar exchange rate compared to with the United Sates dollars, Colombian Pesos, or Peruvian Sol.

Interest rate risk

Interest rate risk is the risk due to variability of interest rates. The Company is exposed to interest rate risk on its bank account. The income earned on the bank account is subject to the movements in interest rates. The Company has cash balances and fixed interest-bearing debt, therefore, interest rate risk is nominal.

Capital management

The Company's policy is to maintain a capital base sufficient to maintain investor and creditor confidence and to sustain future development of the business. The capital structure of the Company consists of working capital and share capital. There were no changes in the Company's approach to capital management during the period. The Company is not subject to any externally imposed capital requirements.

Fair value

Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:

• Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;

• Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and

• Level 3 – Inputs that are not based on observable market data.

The Company’s financial instruments consist of cash and cash equivalents, taxes recoverable, and accounts payables. The fair value of taxes recoverable and accounts payables approximates their carrying values. Cash and cash equivalents is measured at fair value using level 1 inputs.

19

Max Resource Corp. Notes to the Condensed Interim Consolidated Financial Statements (Expressed in Canadian Dollars - Unaudited) June 30, 2021

10. SUPPLEMENTAL DISCLOSURES WITH RESPECT TO CASH FLOWS

	For the six months ended	For the six months ended
		June 30,
	2021	2020
	$	$
Supplemental non-cash disclosures
Shares issued for debt	-	291,020
Shares issued for exploration assets	-	250,750
Reallocation of value of options upon exercise	39,812	-
Reallocation of value of warrants upon exercise	8,236	-

11. CONTINGENCY

During the year ended December 31, 2019, certain Colombian employees of Noble Metals Ltd. were registered under the Company’s name with the Colombian tax authorities, without the consent of the Company. The Company has hired a Colombian law firm to unwind this unauthorized registration; however, the Company may face potential claims from these employees with respect to taxes, salaries and social security. The Company intends to vigorously defend against any potential claims, which cannot be reasonably estimated at this time.

12. SEGMENTED INFORMATION

The Company and its subsidiaries are considered to be operating in one operating segment that being the exploration of resource properties. The Company’s corporate offices are located in Canada and its mineral exploration activities are conducted in Colombia and Peru. Assets by geographical region are:

			As at	June30, 2021
	Canada	Colombia	Peru	Total
	$	$	$	$
Equipment	32,294	88,391	-	120,685
Exploration assets	-	-	1,164,681	1,164,681
Current assets	2,711,936	16,409	66,293	2,794,638
	2,744,230	104,800	1,230,974	4,080,004
			As at December31, 2020
	Canada	Colombia	Peru	Total
	$	$	$	$
Equipment	35,882	88,316	-	124,198
Exploration assets	-	-	742,531	742,531
Current assets	4,953,599	-	149,921	5,103,520
	4,989,481	88,316	892,452	5,970,249

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Max Resource Corp. Notes to the Condensed Interim Consolidated Financial Statements (Expressed in Canadian Dollars - Unaudited) June 30, 2021

13. SUBSEQUENT EVENTS

• a) Subsequent to June 30, 2021, the Company issued 5,725,368 common shares for gross proceeds of $799,552 in connection with the exercise of 5,675,368 warrants with an exercise of $0.14 per common share and 50,000 warrants with an exercise price of $0.10 per common share.

21