NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Stated
in $USD)
(Unaudited)
NOTE
1 – BUSINESS
Nature
of operations
Western
Uranium & Vanadium Corp. (“Western” or the “Company”, formerly Western Uranium Corporation) was incorporated
in December 2006 under the Ontario Business Corporations Act. On November 20, 2014, the Company completed a listing process on
the Canadian Securities Exchange (“CSE”). As part of that process, the Company acquired 100% of the members’
interests of Pinon Ridge Mining LLC (“PRM”), a Delaware limited liability company. The transaction constituted a reverse
takeover (“RTO”) of Western by PRM. Subsequent to obtaining appropriate shareholder approvals, the Company reconstituted
its Board of Directors and senior management team. Effective September 16, 2015, Western completed its acquisition of Black Range
Minerals Limited (“Black Range”).
The
Company has registered offices at 330 Bay Street, Suite 1400, Toronto, Ontario, Canada, M5H 2S8 and its common shares are listed
on the CSE under the symbol “WUC.” On April 22, 2016, the Company’s shares of common stock began trading on
the OTC Pink Open Market, and on May 23, 2016, the Company’s common stock was approved for the commencement of trading on
the OTCQX Best Market. Its principal business activity is the acquisition and development of uranium and vanadium resource properties
in the states of Utah and Colorado in the United States of America (“United States”).
On
June 28, 2016, the Company’s registration statement became effective and Western became a United States reporting issuer.
Thereafter, the Company was approved for Depository Trust Company eligibility through the Depository Trust and Clearing Corporation,
which facilitates electronic book-entry delivery, settlement and depository services for shares in the United States.
On
June 29, 2018, the shareholders of the Company approved the name change of the Company from “Western Uranium Corporation”
to “Western Uranium & Vanadium Corp.” The name change became effective in Ontario, Canada on October 1, 2018;
thereafter on October 4, 2018 Western’s shares started trading under the new name on the CSE and OTCQX and the Company announced
the name change by news release.
Note
2 – Liquidity and going concern
The
Company has incurred continuing losses from its operations and as of March 31, 2019, the Company had an accumulated deficit of
$7,103,217 and working capital of $268,304.
Since
inception, the Company has met its liquidity requirements principally through the issuance of notes and the sale of its shares
of common stock.
The
Company’s ability to continue its operations and to pay its obligations when they become due is contingent upon the Company
obtaining additional financing. Management’s plans include seeking to procure additional funds through debt and equity financings,
to secure regulatory approval to fully utilize its ablation technology and to initiate the processing of ore to generate operating
cash flows.
There are no assurances that the Company will be able to raise
capital on terms acceptable to the Company or at all, or that cash flows generated from its operations will be sufficient to meet
its current operating costs. If the Company is unable to obtain sufficient amounts of additional capital, it may be required to
reduce the scope of its planned product development, which could harm its financial condition and operating results, or it may
not be able to continue to fund its ongoing operations. These conditions raise substantial doubt about the Company’s ability
to continue as a going concern to sustain operations for at least one year from the issuance of these condensed consolidated financial
statements. The accompanying condensed consolidated financial statements do not include any adjustments that might result from
the outcome of these uncertainties.
WESTERN
URANIUM & VANADIUM CORP.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Stated
in $USD)
(Unaudited)
Note
3 – SUMMARY OF Significant Accounting Policies
Basis
of Presentation and Principles of Consolidation
The
accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10–Q and Rule 10 of Regulation S–X. Accordingly,
they do not include all of the information and notes required by accounting principles generally accepted in the United States
of America. However, in the opinion of the management of the Company, all adjustments necessary for a fair presentation of the
financial position and operating results have been included in these statements. These condensed consolidated financial statements
should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual
Report on Form 10–K for the fiscal year ended December 31, 2018, as filed with the SEC on April 1, 2019. Operating results
for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected for any subsequent
quarters or for the year ending December 31, 2019.
The
accompanying condensed consolidated financial statements include the accounts of Western and its wholly-owned subsidiaries, Western
Uranium Corp. (Utah), PRM, Black Range, Black Range Copper Inc., Ranger Resources Inc., Black Range Minerals Inc., Black Range
Minerals Colorado LLC, Black Range Minerals Wyoming LLC, Haggerty Resources LLC, Ranger Alaska LLC, Black Range Minerals Utah
LLC, Black Range Minerals Ablation Holdings Inc. and Black Range Development Utah LLC. All significant inter-company transactions
and balances have been eliminated upon consolidation.
The
Company has established the existence of mineralized materials for certain uranium projects. The Company has not established proven
or probable reserves, as defined by the United States Securities and Exchange Commission (the “SEC”) under Industry
Guide 7, through the completion of a “final” or “bankable” feasibility study for any of its uranium projects.
Use
of Estimates
The
preparation of these condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and revenues
and expenses during the periods reported. By their nature, these estimates are subject to measurement uncertainty and the
effects on the financial statements of changes in such estimates in future periods could be significant. Significant areas requiring
management’s estimates and assumptions include determining the fair value of transactions involving common stock, assessment
of the useful life and evaluation for impairment of intangible assets, valuation and impairment assessments on mineral properties,
deferred contingent consideration, and the reclamation liability, valuation of stock-based compensation, valuation of available-for-sale
securities and valuation of long-term debt. Other areas requiring estimates include allocations of expenditures, depletion and
amortization of mineral rights and properties. Actual results could differ from those estimates.
Foreign
Currency Translation
The
reporting currency of the Company, including its subsidiaries, is the United States dollar. The financial statements of subsidiaries
located outside of the U.S. are measured in their functional currency, which is the local currency. The functional currency of
the parent (Western Uranium & Vanadium Corp. (Ontario)) is the Canadian dollar. Monetary assets and liabilities of these subsidiaries
are translated at the exchange rates at the balance sheet date. Income and expense items are translated using average monthly
exchange rates. Non-monetary assets are translated at their historical exchange rates. Translation adjustments are included in
accumulated other comprehensive loss in the condensed consolidated balance sheets.
WESTERN
URANIUM & VANADIUM CORP.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Stated
in $USD)
(Unaudited)
Note
3 – SUMMARY OF Significant Accounting Policies, continued
Revenue
Recognition
The
Company leases certain of its mineral properties for the exploration and production of oil and gas reserves. The Company accounts
for lease revenue in accordance with ASC 842 “Leases”. Lease payments received in advance are deferred and recognized
on a straight – line basis over the related lease term associated with the prepayment. Royalty payments are recognized as
revenues when received.
Fair
Values of Financial Instruments
The
carrying amounts of cash, restricted cash, accounts payable, accrued liabilities, and notes payable approximate their fair value
due to the short-term nature of these instruments. Marketable securities are adjusted to fair value at each balance sheet date
based on quoted prices which are considered level 1 inputs. The reclamation deposits, which are reflected in restricted cash on
the consolidated balance sheets, are deposits mainly invested in certificates of deposit at major financial institutions and their
fair values were estimated to approximate their carrying values. The Company’s operations and financing activities are conducted
primarily in United States dollars and as a result, the Company is not subject to significant exposure to market risks from changes
in foreign currency rates. The Company is exposed to credit risk through its cash and restricted cash, but mitigates this risk
by keeping these deposits at major financial institutions.
ASC
820 “Fair Value Measurements and Disclosures” provides the framework for measuring fair value. That framework provides
a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the
highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and
the lowest priority to unobservable inputs (level 3 measurements).
Fair
value is defined as an exit price, representing the amount that would be received upon the sale of an asset or payment to transfer
a liability in an orderly transaction between market participants. Fair value is a market-based measurement that is determined
based on assumptions that market participants would use in pricing an asset or liability. A three-tier fair value hierarchy is
used to prioritize the inputs in measuring fair value as follows:
Fair
Values of Financial Instruments
Level
1 Quoted prices in active markets for identical assets or liabilities.
Level
2 Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities
in markets that are not active, or other inputs that are observable, either directly or indirectly.
Level
3 Significant unobservable inputs that cannot be corroborated by market data.
The
fair value of the Company’s financial instruments are as follows:
|
|
Quoted
Prices in Active Markets for Identical Assets or Liabilities
(Level 1)
|
|
|
Quoted
Prices for
Similar
Assets or Liabilities in Active
Markets
(Level 2)
|
|
|
Significant
Unobservable Inputs
(Level 3)
|
|
Marketable
securities as of March 31, 2019
|
|
$
|
4,886
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable securities
as of December 31, 2018
|
|
$
|
4,781
|
|
|
$
|
-
|
|
|
$
|
-
|
|
WESTERN
URANIUM & VANADIUM CORP.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Stated
in $USD)
(Unaudited)
Note
3 – SUMMARY OF Significant Accounting Policies, continued
Income
Taxes
The
Company utilizes an asset and liability approach for financial accounting and reporting for income taxes. The provision for income
taxes is based upon income or loss after adjustment for those permanent items that are not considered in the determination of
taxable income. Deferred income taxes represent the tax effects of differences between the financial reporting and tax basis of
the Company’s assets and liabilities at the enacted tax rates in effect for the years in which the differences are expected
to reverse.
The
Company evaluates the recoverability of deferred tax assets and establishes a valuation allowance when it is more likely than
not that some portion or all the deferred tax assets will not be realized. Management makes judgments as to the interpretation
of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In management’s
opinion, adequate provisions for income taxes have been made. If actual taxable income by tax jurisdiction varies from estimates,
additional allowances or reversals of reserves may be necessary.
Tax benefits are recognized only for tax positions that are
more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount
of benefit that is greater than 50 percent likely to be realized upon settlement. A liability for “unrecognized tax
benefits” is recorded for any tax benefits claimed in the Company’s tax returns that do not meet these recognition
and measurement standards. As of March 31, 2019 and December 31, 2018, no liability for unrecognized tax benefits was required
to be reported.
The Company’s policy for recording interest and penalties
associated with tax audits is to record such items as a component of general and administrative expense. There were no amounts
accrued for penalties and interest for the periods ended March 31, 2019 and 2018. The Company does not expect its uncertain tax
position to change during the next twelve months. Management is currently unaware of any issues under review that could result
in significant payments, accruals or material deviations from its position.
The
Company has identified its federal tax return and its state tax returns in Colorado and Utah as its “major” tax jurisdictions,
and such returns for the years 2015 through 2018 remain subject to examination.
Loss
per Share
Basic
net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during
the period. Diluted earnings per share is computed using the weighted average number of common shares and, if dilutive, potential
common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the
exercise of stock options and warrants (using the treasury stock method). The computation of basic net loss per share for the
three months ended March 31, 2019 and 2018 excludes potentially dilutive securities. The computations of net loss per share for
each period presented is the same for both basic and fully diluted.
Potentially
dilutive securities outlined in the table below have been excluded from the computation of diluted net loss per share because
the effect of their inclusion would have been anti-dilutive.
|
|
For the Three Months
Ended March 31,
|
|
|
|
2019
|
|
|
2018
|
|
Warrants to purchase shares of common stock
|
|
|
6,778,876
|
|
|
|
4,095,563
|
|
Options to purchase shares of common stock
|
|
|
2,416,664
|
|
|
|
1,783,664
|
|
Total potentially dilutive securities
|
|
|
9,195,540
|
|
|
|
5,879,227
|
|
WESTERN
URANIUM & VANADIUM CORP.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Stated
in $USD)
(Unaudited)
Note
3 – SUMMARY OF Significant Accounting Policies, continued
Recent
Accounting Pronouncements
Management
does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material
effect on the accompanying condensed consolidated financial statements, other than those disclosed below.
In June 2016, the FASB issued ASU No. 2016-13, “Financial
Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”).
ASU 2016-13 replaces the incurred loss model with an expected loss model, which is referred to as the current expected credit loss
(CECL) model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost,
including loan receivables, held-to-maturity debt securities, and reinsurance receivables. It also applies to off-balance sheet
credit exposures not accounted for as insurance (such as loan commitments, standby letters of credit, financial guarantees, and
other similar instruments) and net investments in leases recognized by a lessor. For public business entities that meet the definition
of an SEC filer, the standard will be effective for fiscal years beginning after December 15, 2019, including interim periods in
those fiscal years. For debt securities with other-than-temporary impairment, the guidance will be applied prospectively. Existing
purchased credit impaired (PCI) assets will be grandfathered and classified as purchased credit deteriorated (PCD) assets at the
date of adoption. The asset will be grossed up for the allowance for expected credit losses for all PCD assets at the date of adoption
and will continue to recognize the noncredit discount in interest income based on the yield of such assets as of the adoption date.
Subsequent changes in expected credit losses will be recorded through the allowance. For all other assets within the scope of CECL,
a cumulative-effect adjustment will be recognized in retained earnings as of the beginning of the first reporting period in which
the guidance is effective. The Company does not believe ASU 2016-13 will have a material effect on its condensed consolidated financial
statements.
In July 2018, the FASB issued ASU 2018-10 Leases (Topic 842),
Codification Improvements and ASU 2018-11 Leases (Topic 842), Targeted Improvements, to provide additional guidance for the adoption
of Topic 842. ASU 2018-10 clarifies certain provisions and correct unintended applications of the guidance such as the application
of implicit rate, lessee reassessment of lease classification, and certain transition adjustments that should be recognized to
earnings rather than to stockholders’ (deficit) equity. ASU 2018-11 provides an alternative transition method and practical
expedient for separating contract components for the adoption of Topic 842. In February 2016, the FASB issued ASU 2016-02 Leases
(Topic 842) which requires an entity to recognize assets and liabilities arising from a lease for both financing and operating
leases with terms greater than 12 months. ASU 2018-11, ASU 2018-10, and ASU 2016-02 (collectively, “the new lease standards”)
are effective for fiscal years beginning after December 15, 2018, with early adoption permitted. On Janaury 1, 2019, the Company
adopted ASU 2018-10, and has determined that there are no material impacts to the condensed consolidated financial statements.
WESTERN
URANIUM & VANADIUM CORP.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Stated
in $USD)
(Unaudited)
NOTE
4 - MINERAL ASSETS, ABLATION INTELLECTUAL PROPERTY AND OTHER PROPERTY
The Company’s mining properties acquired on August 18, 2014 that the Company retains as of March 31, 2019, include: San
Rafael Uranium Project located in Emery County, Utah; The Sunday Mine Complex located in western San Miguel County, Colorado;
The Van 4 Mine located in western Montrose County, Colorado; The Sage Mine project located in San Juan County, Utah, and San Miguel
County, Colorado. These mining properties include leased land in the states of Colorado and Utah. None of these mining properties
were operational at the date of acquisition.
The Company’s mining properties acquired on September
16, 2015 that the Company retains as of March 31, 2019, include Hansen, North Hansen, High Park, Hansen Picnic Tree, a nd Taylor
Ranch, located in Fremont and Teller Counties, Colorado. The Company also acquired the Keota project located in Weld County, Wyoming
and the Ferris Haggerty project located in Carbon County Wyoming. These mining assets include both owned and leased land in the
states of Utah, Colorado and Wyoming. All of the mining assets represent properties which have previously been mined to different
degrees for uranium.
As
the Company has not formally established proven or probable reserves on any of its properties, there is inherent uncertainty as
to whether or not any mineralized material can be economically extracted as originally planned and anticipated.
The
Company’s mineral properties and ablation intellectual property are:
|
|
As
of
|
|
|
|
March
31, 2019
|
|
|
December
31, 2018
|
|
Mineral
properties
|
|
$
|
11,681,720
|
|
|
$
|
11,681,720
|
|
Ablation
intellectual property
|
|
$
|
9,488,051
|
|
|
$
|
9,488,051
|
|
Oil
and Gas Lease and Easement
On
July 18, 2017, an oil and gas lease became effective with respect to minerals and mineral rights owned by the Company of approximately
160 surface acres of the Company’s property in Colorado. As consideration for entering into the lease, the Company received
$120,000 during the third quarter of 2017. The lease will be in force for an initial term of three years and may be extended by
the lessee at 150% of the initial rate. The lessee has also agreed to pay the Company a royalty of 18.75% of the lessee’s
revenue attributed to oil and gas produced, saved, and sold attributable to the net mineral interest. The Company is recognizing
the initial payment incrementally over the term of the lease.
On
February 26, 2018, the Company entered into a further agreement with the same entity as the oil and gas lease to provide them
with an easement to an additional part of the Company’s property solely for the purposes of transporting the oil and gas
extracted via a pipeline. As consideration for the easement, the Company received $36,960 during the first quarter of 2018. The
Company is recognizing this payment incrementally over the eight year term of the easement.
During the periods ended March 31, 2019 and 2018 the Company
recognized aggregate revenue of $11,155 and $11,155, respectively, under these oil and gas lease arrangements.
Reclamation
Liabilities
The
Company’s mines are subject to certain asset retirement obligations, which the Company has recorded as reclamation liabilities.
The reclamation liabilities of the United States mines are subject to legal and regulatory requirements, and estimates of the
costs of reclamation are reviewed periodically by the applicable regulatory authorities. The reclamation liability represents
the Company’s best estimate of the present value of future reclamation costs in connection with the mineral properties.
The Company determined the gross reclamation liabilities of the mineral properties as of March 31, 2019 and December 31, 2018,
to be approximately $889,155 and $889,030, respectively. During the three months ended March 31, 2019 and 2018, the accretion
of the reclamation liabilities was $3,294 and $2,575, respectively. The Company expects to begin incurring the reclamation liability
after 2054 and accordingly, has discounted the gross liabilities over their remaining lives using a discount rate of 5.4% to net
discounted aggregated values as of March 31, 2019 and December 31, 2018 of $227,939 and $224,645, respectively. The gross reclamation
liabilities as of March 31, 2019 and December 31, 2018 are secured by certificates of deposit in the amount of $889,155 and $889,030,
respectively.
WESTERN
URANIUM & VANADIUM CORP.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Stated
in $USD)
(Unaudited)
NOTE
4 - MINERAL ASSETS, ABLATION INTELLECTUAL PROPERTY AND OTHER PROPERTY, CONTINUED
Reclamation
liability activity for the months ended March 31, 2019 and 2018 consists of:
|
|
For
the Months Ended
March 31,
|
|
|
|
2019
|
|
|
2018
|
|
Beginning
balance
|
|
$
|
224,645
|
|
|
$
|
196,821
|
|
Accretion
|
|
|
3,294
|
|
|
|
2,575
|
|
Ending Balance
|
|
$
|
227,939
|
|
|
$
|
199,396
|
|
NOTE
5 - Accounts Payable and Accrued Liabilities
Accounts
payable and accrued liabilities consisted of:
|
|
As
of
|
|
|
|
March
31, 2019
|
|
|
December
31, 2018
|
|
Trade
accounts payable
|
|
$
|
389,146
|
|
|
$
|
326,250
|
|
Accrued
liabilities
|
|
|
167,386
|
|
|
|
167,070
|
|
|
|
$
|
556,532
|
|
|
$
|
493,320
|
|
NOTE
6 - SHARE CAPITAL AND OTHER EQUITY INSTRUMENTS
Authorized
Capital
The
holders of the Company’s common stock are entitled to one vote per share. Holders of common stock are entitled to receive
ratably such dividends, if any, as may be declared by the Board of Directors out of legally available funds. Upon the liquidation,
dissolution, or winding up of the Company, holders of common stock are entitled to share rateably in all assets of the Company
that are legally available for distribution. As of March 31, 2019 and December 31, 2018, an unlimited number of common shares
were authorized for issuance.
Incentive
Stock Option Plan
The
Company maintains an Incentive Stock Option Plan (the “Plan”) that permits the granting of stock options as incentive
compensation. Shareholders of the Company approved the Plan on June 30, 2008 and amendments to the Plan on June 20, 2013, and
the Board of Directors approved additional changes to the Plan on September 12, 2015.
The
purpose of the Plan is to attract, retain and motivate directors, management, staff and consultants by providing them with the
opportunity, through stock options, to acquire a proprietary interest in the Company and benefit from its growth.
The
Plan provides that the aggregate number of common shares for which stock options may be granted will not exceed 10% of the issued
and outstanding common shares at the time stock options are granted. As of March 31, 2019 and December 31, 2018, a total of 25,976,837
common shares were outstanding, and at that date the maximum number of stock options eligible for issue under the Plan was 2,597,684.
WESTERN
URANIUM & VANADIUM CORP.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Stated
in $USD)
(Unaudited)
NOTE
6 - SHARE CAPITAL AND OTHER EQUITY INSTRUMENTS, CONTINUED
Stock
Options
|
|
Number
of Shares
|
|
|
Weighted
Average Exercise Price (USD)
|
|
|
Weighted
Average Contractual Life (years)
|
|
|
Weighted
Average Grant Date Fair Value (USD)
|
|
|
Intrinsic
Value
(USD)
|
|
Outstanding
- January 1, 2019
|
|
|
2,416,664
|
|
|
$
|
1.67
|
|
|
|
|
|
|
$
|
0.48
|
|
|
|
|
|
Outstanding -
March 31, 2019
|
|
|
2,416,664
|
|
|
$
|
1.70
|
|
|
|
3.48
|
|
|
$
|
0.48
|
|
|
$
|
10,063
|
|
Exercisable - March
31, 2019
|
|
|
2,416,664
|
|
|
$
|
1.70
|
|
|
|
3.48
|
|
|
$
|
0.48
|
|
|
$
|
10,063
|
|
The
Company’s stock based compensation expense related to stock options for the three months ended March 31, 2019 and 2018 was
$180,269 and $69,832, respectively. As of March 31, 2019, the Company had $0 in unamortized stock option expense.
Warrants
|
|
Number of Shares
|
|
|
Weighted Average Exercise Price (USD)
|
|
|
Weighted Average Contractual Life (years)
|
|
|
Intrinsic Value (USD)
|
|
Outstanding, January 1, 2019
|
|
|
6,798,401
|
|
|
$
|
1.49
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(19,525
|
)
|
|
$
|
2.52
|
|
|
|
|
|
|
|
|
|
Outstanding - March 31, 2019
|
|
|
6,778,876
|
|
|
$
|
1.52
|
|
|
|
2.05
|
|
|
$
|
-
|
|
Exercisable - March 31, 2019
|
|
|
6,778,876
|
|
|
$
|
1.52
|
|
|
|
2.05
|
|
|
$
|
-
|
|
Note
7 - Mining Expenditures
|
|
For the Three Months Ended March 31,
|
|
|
|
2019
|
|
|
2018
|
|
Permits
|
|
$
|
35,366
|
|
|
$
|
45,455
|
|
Maintenance
|
|
|
8,480
|
|
|
|
-
|
|
Contract Labor
|
|
|
-
|
|
|
|
3,600
|
|
|
|
$
|
43,846
|
|
|
$
|
49,055
|
|
WESTERN
URANIUM & VANADIUM CORP.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Stated
in $USD)
(Unaudited)
NOTE
8 - Related Party Transactions
The
Company has transacted with related parties pursuant to service arrangements in the ordinary course of business, as follows:
Prior
to the acquisition of Black Range, Mr. George Glasier, the Company’s CEO, who is also a director, transferred his interest
in a former joint venture with Ablation Technologies, LLC to Black Range. In connection with the transfer, Black Range issued
25 million shares of Black Range common stock to Seller and committed to pay AUD $500,000 (USD $354,309 as of March 31, 2019)
to Seller within 60 days of the first commercial application of the ablation technology. Western assumed this contingent payment
obligation in connection with the acquisition of Black Range. At the date of the acquisition of Black Range, this contingent obligation
was determined to be probable. Since the deferred contingent consideration obligation is probable and the amount estimable, the
Company recorded the deferred contingent consideration as an assumed liability in the amount of $354,309 and $352,361 as of March
31, 2019 and December 31, 2018, respectively.
Note
9 – Subsequent event
Private
placement
On April 16, 2019, the Company completed a private placement
of 3,914,632 units at a price of CAD $0.98 (USD $0.73) per unit for gross proceeds of CAD $3,836,340 (USD $2,873,986). Each unit
consisted of one share of common stock and a warrant to purchase one-half of one share of common stock. Each warrant is immediately
exercisable at a price of CAD $1.70 and expires two years from the date of issuance.