Pacific North West Capital 20-F 2007 FY Annual report (foreign)

Exhibit 1

PACIFIC NORTH WEST

CAPITAL CORP.

(An Exploration Stage Company)

CONSOLIDATED FINANCIAL STATEMENTS

30 APRIL 2007 and 2006

(Expressed in Canadian Funds)

July 10, 2007

Management’s Responsibility for Financial Reporting

The accompanying consolidated financial statements of the Company have been prepared by management in accordance with Canadian generally accepted accounting principles, and contain estimates based on management’s judgment. Management maintains an appropriate system of internal control to provide reasonable assurance that transactions are authorized, assets safeguarded, and proper records maintained.

The Audit Committee of the Board of Directors has met with the Company’s auditors to review the scope and results of the annual audit and to review the consolidated financial statements and related financial reporting matters prior to submitting the consolidated financial statements to the Board for approval.

The Company’s auditors, PricewaterhouseCoopers LLP, are appointed by the shareholders to conduct an audit in accordance with Canadian generally accepted auditing standards, and their report follows.

Harry Barr

Gord Steblin

Chief Executive Officer

Chief Financial Officer

and Director

Report of Independent Registered Public Accounting Firm

To the Shareholders of Pacific North West Capital Corp:

We have audited the accompanying consolidated balance sheets of Pacific North West Capital Corp. (an Exploration Stage Company) (the “Company”) as at 30 April 2006 and 2005 and the related consolidated statements of shareholders' equity, loss and cash flows for each of the years ended 30 April 2006, 2005 and 2004.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the Canadian generally accepted auditing standards and with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the f inancial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as at 30 April 2006 and 2005, and the results of its operations and its cash flows for each of the years ended 30 April 2006, 2005 and 2004 in accordance with Canadian generally accepted accounting principles.

Vancouver, BC, Canada	STALEY, OKADA & PARTNERS
7 June 2006	CHARTERED ACCOUNTANTS

Pacific North West Capital Corp. (An Exploration Stage Company)	Statement 1
Consolidated Balance Sheets
As at 30 April
Canadian Funds

ASSETS		2007		2006
Current
Cash and cash equivalents	$	4,144,031	$	3,232,206
Accounts receivable		33,146		22,789
Due from River Valley Joint Venture(Note 4b)		101,165		104,734
Portfolio investments(Note 3)		115,772	��	115,772
Prepaid expenses, advances and deposits		44,103		63,716
		4,438,217		3,539,217
Mineral Property Costs- Schedule (Note 4)		2,795,717		2,072,383
Equipment(Note 5)		81,937		70,142
	$	7,315,871	$	5,681,742
LIABILITIES
Current
Accounts payable and accrued liabilities	$	139,441	$	63,657
Cash call payable		-		1,238
		139,441		64,895
Commitments(Note 4 & 10)
Subsequent events(Note 4i /7a)
SHAREHOLDERS’ EQUITY
Share Capital- Statement 2 (Note 7)
Authorized:
Unlimited number of common voting shares
Unlimited number of preferred voting shares
Issued and fully paid:
41,996,202 (2006 - 35,112,452) common shares		16,906,926		14,227,882
Contributed Surplus		1,267,228		1,155,925
Deficit -Statement 2		(10,997,724)		(9,766,960)
		7,176,430		5,616,847
	$	7,315,871	$	5,681,742

ON BEHALF OF THE BOARD:

“Harry Barr”	,	Director
“Bernard Barlin”	,	Director

- See Accompanying Notes -

Pacific North West Capital Corp. (An Exploration Stage Company)	Statement 2
Consolidated Statements of Changes in Shareholders’ Equity
Canadian Funds

	Common Shares				Contributed		Accumulated
	Number		Amount		Surplus		Deficit		Total
Balance – 30 April 2004	31,551,004		13,228,572		374,725		(6,527,841)		7,075,456
Issuance of shares for:
- Properties	110,000		67,800		-		-		67,800
- Exercise of options	18,000		8,720		-		-		8,720
- Exercise of warrants	38,400		19,200		-		-		19,200
- Performance shares	100,000		51,500		-		-		51,500
Share issuance costs	-		(205)		-		-		(205)
Stock-based compensation costs	-		-		582,434		-		582,434
Stock options exercised – transferred to share capital	-		6,113		(6,113)		-		-
Performance shares allotted	-		-		24,000		-		24,000
Loss for the year	-		-		-		(1,894,297)		(1,894,297)
Balance – 30 April 2005	31,817,404		13,381,700		975,046		(8,422,138)		5,934,608
Issuance of shares for:
- Private placements	2,956,000		1,136,800		-		-		1,136,800
- Properties	139,048		113,800		-		-		113,800
- Performance shares	200,000		72,250		-		-		72,250
Share issuance costs	-		(89,019)		-		-		(89,019)
Stock-based compensation costs(Note 7e)	-		-		204,879		-		204,879
Future income tax on flow-through(Note 8 c)	-		(387,649)		-		-		(387,649)
Performance shares allotted	-		-		(24,000)		-		(24,000)
Loss for the year	-		-		-		(1,344,822)		(1,344,822)
Balance – 30 April 2006	35,112,452	$	14,227,882	$	1,155,925	$	(9,766,960)	$	5,616,847
Issuance of shares for:
- Private placements	6,572,104		3,000,000		-		-		3,000,000
- Properties	154,538		8,000		-		-		8,000
- Exercise of warrants	45,600		13,680		-		-		13,680
- Performance shares	50,000		17,000		-		-		17,000
- Finder’s fees	61,508		28,909		-		-		28,909
Share issuance costs	-		(85,559)		-		-		(85,559)
Fair value assigned to warrants      (Note 7 f)	-		-		7,909		-		7,909
Stock-based compensation costs      (Note 7 e)	-		-		103,394		-		103,394
Future income tax on flow-through      (Note 8 c)	-		(302,986)		-		-		(302,986)
Loss for the year	-		-		-		(1,230,764)		(1,230,764)
Balance – 30 April 2007	41,996,202	$	16,906,926	$	1,267,228	$	(10,997,724)	$	7,176,430

- See Accompanying Notes -

Pacific North West Capital Corp. (An Exploration Stage Company)	Statement 3
Consolidated Statements of Loss
Canadian Funds

		Years Ended 30 April
		2007		2006		2005
General and Administrative Expenses
Consulting fees	$	228,572	$	239,645	$	344,139
Consulting fees – Stock compensation(Note 7e)		43,276		98,604		235,771
Investor and shareholder relations		459,587		194,637		240,438
Investor and shareholder relations – Stock compensation(Note 7e)		37,305		38,403		153,313
Travel, lodging and food		160,791		91,390		130,534
Management fees		94,052		92,026		101,240
Director fees		19,000		16,000		4,500
Director fees – Stock compensation(Note 7e)		22,610		49,550		152,260
Salaries and benefits		127,172		153,964		100,936
Salaries and benefits – Stock compensation(Note 7e)		203		18,322		41,090
Accounting and audit		67,037		78,133		82,994
Office		55,780		80,643		78,622
Transfer agent and regulatory fees		53,683		59,330		62,683
Rent		52,200		59,246		59,839
Telephone and utilities		29,695		29,688		25,852
Legal		16,068		21,957		25,171
Vehicle lease		13,021		12,904		20,242
Amortization		18,685		18,623		18,031
Insurance, licenses and fees		49,529		12,058		2,770
Loss Before the Undernoted		(1,548,266)		(1,365,123)		(1,880,425)
Mineral property costs written off		(167,183)		(416,766)		(270,083)
Portfolio investments written down		-		-		(66,332)
Foreign exchange, net		5,089		(167,069)		(130,514)
Loss on sale of equipment		-		-		(2,280)
Gain on sale of portfolio investments		-		8,850		38,978
Interest and other income		147,301		115,571		112,423
Project management fees		49,209		140,474		317,329
Interest and bank charges		(19,900)		(48,408)		(13,393)
Loss Before Income Taxes		(1,533,750)		(1,732,471)		(1,894,297)
Future tax recovery(Note 8 c)		302,986		387,649		-
Loss for the Year	$	(1,230,764)	$	(1,344,822)	$	(1,894,297)
Loss per Share – Basic and Diluted	$	(0.03)	$	(0.04)	$	(0.06)
Weighted Average Number of Shares Outstanding		37,743,307		34,553,930		31,733,575

- See Accompanying Notes -

Pacific North West Capital Corp. (An Exploration Stage Company)	Statement 4
Consolidated Statements of Cash Flows
Canadian Funds

		Years Ended 30 April
Cash Resources Provided By (Used In)		2007		2006		2005
Operating Activities
Loss for the year	$	(1,230,764)	$	(1,344,822)	$	(1,894,297)
Items not affecting cash
Mineral property costs written off		167,183		416,766		270,083
Stock-based compensation costs		103,394		204,879		582,434
Portfolio investments written down		-		-		66,332
Loss on sale of equipment		-		-		2,280
Amortization		18,685		18,623		18,031
Gain on sale of investments		-		(8,850)		(38,978)
Consulting fees – performance shares issued/allotted		16,500		46,250		74,500
Future income tax recovery on flow-through shares(Note 8c)		(302,986)		(387,649)		-
		(1,227,988)		(1,054,803)		(919,615)
Changes in non-cash working capital
Accounts receivable		(10,357)		30,802		(21,402)
Due from River Valley Joint Venture		3,569		(78,674)		(13,175)
Prepaid expenses and deposits		19,613		(63,716)		-
Accounts payable and accrued liabilities		27,741		1,770		(64,356)
Due to directors		-		(4,500)		4,500
		40,566		(114,318)		(94,433)
		(1,187,422)		(1,169,121)		(1,014,048)
Investing Activities
Lonmin PLC advances received		-		1,210,183		1,809,991
Kaymin Resources Limited advances received		-		23,029		370,493
Sale of investments		-		14,550		74,960
Purchase of equipment		(30,480)		(8,530)		(32,802)
Sale of equipment		-		-		3,300
Purchase of portfolio investments		-		(20,117)		(79,114)
Cash call payable		(1,238)		(23,029)		5,509
Mineral property costs		(834,473)		(2,317,567)		(3,121,092)
		(866,191)		(1,121,481)		(968,755)
Financing Activities
Share capital issued, net of issuance costs		2,965,438		1,049,781		28,715
Net Increase (Decrease) in Cash		911,825		(1,240,821)		(1,954,088)
Cash and cash equivalents position - Beginning of year		3,232,206		4,473,027		6,427,115
Cash and cash equivalents position - End of year	$	4,144,031	$	3,232,206	$	4,473,027
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Exploration expenditures included in accounts payable	$	48,044	$	25,921	$	71,275
Consulting fees – performance shares issued/allotted	$	16,500	$	46,250	$	74,500
Shares issued for mineral properties	$	8,000	$	113,800	$	67,800

Pacific North West Capital Corp. (An Exploration Stage Company)	Schedule
Consolidated Schedules of Mineral Property Costs
For the Years Ended 30 April
Canadian Funds

	2007
		Acquisition Costs		Exploration Costs		Total		2006 Total
Ontario Properties:
River Valley
Engineering and geological consulting	$	-	$	-	$	-	$	-
West Timmins Nickel
Staking		-		-		-		24,605
Drilling		-		28,779		28,779		269,492
Geophysical		-		116,186		116,186		229,407
Field expenses		-		12,539		12,539		144,010
Assays and geochemical		-		-		-		48,828
Engineering and geological consulting		-		27,001		27,001		248,016
		-		184,505		184,505		964,358
South Renfrew
Staking		6,017		-		6,017		-
Field expenses		-		2,156		2,156		-
Engineering and geological consulting		-		4,370		4,370		-
		6,017		6,526		12,543		-
Ontario Project
Staking		11,754		-		11,754		-
Field expenses		-		671		671		-
Engineering and geological consulting		-		5,560		5,560		-
		11,754		6,231		17,985		-
Sudbury - General
Engineering and geological consulting		-		34,903		34,903		30,264
Assays and geochemical		-		77		77		21,825
Field expenses		-		33,396		33,396		564
Wages		-		3,039		3,039		-
		-		71,415		71,415		52,653
Quebec Properties:
Glitter Lake
Shares issued for property		8,000		-		8,000		13,800
Field expenses		-		1,570		1,570		(1,215)
Engineering and geological consulting		-		19,482		19,482		-
Option payment		-		-		-		20,000
Quebec exploration tax credit		-		-		-		(97,063)
Geophysics		-		-		-		5,941
		8,000		21,052		29,052		(58,537)
Balance Carried Forward	$	25,771	$	289,729	$	315,500	$	958,474

Pacific North West Capital Corp. (An Exploration Stage Company)	Schedule (Continued)
Consolidated Schedules of Mineral Property Costs
For the Years Ended 30 April
Canadian Funds

	2007
		Acquisition Costs		Exploration Costs		Total		2006 Total
Balance Forward	$	25,771	$	289,729	$	315,500	$	958,474
Quebec Properties -Continued
Soquem
Engineering and geological consulting		-		137,516		137,516		-
North West Territories
Staking		52,250		-		52,250		-
Nickel plats - Saskatchewan
Staking		10,000		-		10,000		-
Alaska Properties:
Union Bay
Cash option payments		30,000		-		30,000		30,000
Treasury shares – option payment		-		-		-		100,000
Engineering and geological consulting		-		1,389		1,389		541,677
Field expenses		-		500		500		208,427
Assays and geochemical		-		-		-		109,552
Drilling		-		-		-		327,602
Property fees		-		4,584		4,584		12,685
Lonmin PLC advances		-		-		-		(1,210,183)
		30,000		6,473		36,473		119,760
Kane
Filing fee		-		4,142		4,142		4,425
Engineering and geological consulting		-		315		315		1,181
		-		4,457		4,457		5,606
Balance Carried Forward	$	118,021		438,175	$	556,196	$	1,083,840

Pacific North West Capital Corp. (An Exploration Stage Company)	Schedule (Continued)
Consolidated Schedules of Mineral Property Costs
For the Years Ended 30 April
Canadian Funds

	2007
		Acquisition Costs		Exploration Costs		Total		2006 Total
Balance Forward	$	118,021	$	438,175	$	556,196	$	1,083,840
Alaska Properties –Continued
Alaska – Good News Bay
Cash payments		67,980		-		67,980		-
Amounts recovered or received		(58,500)		-		(58,500)		-
Option payment		-		-		-		27,750
Engineering and geological consulting		-		45,370		45,370		5,205
Wages		-		45,688		45,688		6,077
Assays and geochemical		-		5,361		5,361		-
Field expenses		-		54,705		54,705		1,569
		9,480		151,124		160,604		40,601
Tonsina
Staking		17,345		-		17,345		-
Filing fee		-		2,652		2,652		-
Engineering and geological consulting		-		24,747		24,747		-
Wages		-		57,975		57,975		-
Assays and geochemical		-		11,607		11,607		-
Field expenses		-		35,065		35,065		-
		17,345		132,046		149,391		-
S.E. Alaska
Engineering and geological consulting		-		5,308		5,308		-
Wages		-		5,175		5,175		-
Field expenses		-		61		61		-
		-		10,544		10,544		-
New Zealand
Filing fee		-		2,286		2,286		17,854
Engineering and geological consulting		-		396		396		4,008
Assays and geochemical		-		-		-		6,498
		-		2,682		2,682		28,360
General exploration and property examination		-		11,100		11,100		-
Costs for the Year		144,846		745,671		890,517		1,152,801
Balance – Beginning of year		611,072		1,461,311		2,072,383		1,336,348
Mineral property costs written off		(1,984)		(165,199)		(167,183)		(416,766)
Balance – End of Year	$	753,934		2,041,783	$	2,795,717	$	2,072,383

- See Accompanying Notes -

Pacific North West Capital Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

30 April 2007 and 2006

Canadian Funds

1.

Significant Accounting Policies

a)

Nature of Operations

The Company was incorporated under the Business Corporations Act (Alberta) on 29 May 1996 and on 13 July 2004, the Company continued out of the Province of Alberta into the Province of British Columbia. The Company is in the process of acquiring, exploring and developing precious metal mineral properties.  The Company will attempt to bring the properties to production, structure joint ventures with others, option or lease properties to third parties, or sell the properties outright.  The Company has not determined whether these properties contain ore reserves that are economically recoverable and the Company is considered to be in the exploration stage.

b)

Basis of Consolidation

These consolidated financial statements include the accounts of the Pacific North West Capital Corp. (“the Company”) and its wholly owned US subsidiary, Pacific Northwest Capital Corp. USA. Inter-company balances are eliminated upon consolidation.  The consolidated financial statements of the Company and the accompanying notes have been prepared in accordance with generally accepted accounting principles in Canada (“Canadian GAAP”) which as described in note 11, differ in certain respects from accounting principles generally accepted in the United States of America.

c)

Cash and Cash Equivalents

For purposes of reporting cash flows, the Company considers cash and cash equivalents to include amounts held in banks and highly liquid investments with remaining maturities at point of purchase of 90 days or less.  The Company places its cash and cash investments with institutions of high-credit worthiness.

d)

PortfolioInvestments

Investments are recorded at the lower of cost and quoted market value.   Investments are written down to market value when the decline in market value is deemed to be other than temporary.

e)

Mineral Properties and Deferred Exploration Expenditures

Direct costs related to the acquisition and exploration of mineral properties held or controlled by the Company are deferred on an individual property basis until the viability of a property is determined. Administration costs and general exploration costs are expensed as incurred. When a property is placed in commercial production, deferred costs will be depleted using the units-of-production method. Management of the Company periodically reviews the recoverability of the capitalized mineral properties. Management takes into consideration various information including, but not limited to, results of exploration activities conducted to date, estimated future metal prices, and reports and opinions of outside geologists, mine engineers and consultants. When it is determined that a project or property will be abandoned then the costs are written-off, or if its carrying value has been impaired, then the mineral properties and deferred cost s are written down to fair value.

Although the Company has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee the Company's title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.  

Pacific North West Capital Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

30 April 2007 and 2006

Canadian Funds

1.

Significant Accounting Policies- Continued

e)

Mineral Properties and Deferred Exploration Expenditures- Continued

From time to time, the Company acquires or disposes of properties pursuant to the terms of option agreements. Options are exercisable entirely at the discretion of the optionee and, accordingly, are recorded as mineral property costs or recoveries when the payments are made or received. After costs are recovered, the balance of the payments received are recorded as a gain on option or disposition of mineral property.

f)

Asset Retirement Obligations

The Company recognizes the legal liability for obligations relating to retirement of property, plant, and equipment, and arising from the acquisition, construction, development, or normal operation of those assets. Such asset retirement cost must be recognized at fair value, when a reasonable estimate of fair value can be estimated, in the period in which it is incurred, added to the carrying value of the asset, and amortized into income on a systematic basis over the related assets useful life.

There are no asset retirement obligations as at 30 April 2007 and 2006.

g)

Mineral Exploration Tax Credits (“METC”)

The Company recognizes METC amounts and applies those amounts against exploration costs when the Company’s application for tax credits is approved by the Canada Revenue Agency.  Assessments, if any for taxes, penalties and interest are deducted from the tax credits when assessed.

h)

Equipment and Amortization

Equipment is valued at cost less accumulated amortization.  The Company provides amortization of furniture and office equipment, and automotive equipment using the declining balance method at 20% and 30% respectively.  One-half of the above rates are applied in the year of acquisition.

i)

Income Taxes

Income taxes are accounted for using the asset and liability method.  Future taxes are recognized for the tax consequences of “temporary differences” by applying enacted or substantively enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and tax basis of existing assets and liabilities.  The effect on future taxes for a change in tax rates is recognized in income in the period that includes the date of enactment or substantive enactment.  In addition, the method requires the recognition of future tax benefits to the extent that realization of such benefits is more likely than not.  A valuation allowance is provided to the extent that it is more likely than not that future income tax assets will not be realised.

Pacific North West Capital Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

30 April 2007 and 2006

Canadian Funds

1.

Significant Accounting Policies- Continued

j)

Foreign Currency Translation

The Company's subsidiaries are integrated foreign operations and their results and financial position are translated into the Company’s functional currency, the Canadian dollar, using the temporal basis as follows:

·

Monetary assets and liabilities at year-end rates,

·

All other assets and liabilities at historical rates, and

·

Expense and exploration and development items at the average rate of exchange prevailing during the year.

Exchange gains and losses arising from these translations are reflected in income or expense in the year that they occur.

k)

Stock-Based Compensation

All stock-based awards made to employees and non-employees are measured and recognized using a fair value based method.  For employees, the fair value of the options is measured at the date of the grant. For non-employees, the fair value of the options is measured on the earlier of the date at which the counterparty performance is complete or the date the performance commitment is reached or the date at which the equity instruments are granted if they are fully vested and non-forfeitable. For employees and non-employees, the fair value of the options is accrued and charged to operations, with the offsetting credit to contributed surplus, on a straight-line basis over the vesting period.  If and when the stock options are ultimately exercised, the applicable amounts of contributed surplus are transferred to share capital.

l)

Loss per Share

Basic earnings (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted average number of common shares outstanding during the year.  The computation of diluted earnings per share which assumes the conversion, exercise or contingent issuance of securities only when such conversion, exercise or issuance would have a dilutive effect on earnings per share.  The dilutive effect of convertible securities is reflected in diluted earnings per share by application of the "if converted" method.  In years in which a loss is incurred, the effect of potential issuances of shares under options and warrants would be anti-dilutive, and therefore basic and diluted loss per share are the same.

m)

Management's Estimates

The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reported periods.  Actual results could differ from those estimates.

Pacific North West Capital Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

30 April 2007 and 2006

Canadian Funds

1.

Significant Accounting Policies- Continued

n)

Flow-Through Shares

Canadian Income Tax Legislation permits an enterprise to issue securities referred to as flow-through shares, whereby the investor can claim the tax deductions arising from the renunciation of the related resource expenditures.  When resource expenditures are renounced to the investors and the Company has reasonable assurance that the expenditures will be completed, future income tax liabilities are recognized with a corresponding reduction in share capital.

If a Company has sufficient unused tax losses and deductions (“losses”) to offset all or part of the future income tax liabilities and no future income tax assets have been previously recognized on such losses, a portion of such unrecognized losses (losses multiplied by the effective corporate tax rate) is recorded as income up to the amount of the future income tax liability that was previously recognized on the renounced expenditures.

o)

Joint Venture

Certain of the Company’s properties were the subject of joint venture agreements.  Where joint venture agreements exist, the Company’s proportionate share of assets, liabilities, revenues, costs and expenditures relating to these properties have been recorded in the accounts.

p)

Performance shares

The Company grants performance shares to attract consultants and/or employees to the Company. Performance shares are valued at market price on the date of issuance and charged to operations with the offsetting credit to share capital.

2.

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, portfolio investments, amount due from River Valley Joint Venture, accounts payable, accrued liabilities, and cash call payable.  Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from the financial instruments.  The fair value of these financial instruments approximates their carrying values, due to their short-term maturity or capacity of prompt liquidation.

The Company is exposed to currency risk on its acquisition and exploration expenditures on its US properties since it has to convert Canadian dollars raised through equity financing in Canada to US dollars.  The Company’s expenditures will be negatively impacted if the US dollar increases versus the Canadian dollar.

Pacific North West Capital Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

30 April 2007 and 2006

Canadian Funds

3.

Portfolio Investments - Details are as follows:

	2007					2006
		Book Value		Market Value	Book Value			Market Value
485,688 (2006 – 485,688) common shares of Freegold Ventures Limited (“Freegold”)	$	70,840	$	437,119	$    70,840		$	242,844
196,600 (2006 – 196,600) common shares of CanAlaska Uranium Ltd (“CanAlaska”)		37,432		131,722	37,432			108,130
150,000 (2005 - 150,000) common shares of Consolidated Venturex Holdings Ltd. (“Venturex”)		7,500		24,000	7,500			22,500
	$	115,772	$	592,841	$       115,772		$	373,474

The above investments have been accounted for using the cost method. All investments represent less than a 5% ownership of the respective companies.   Freegold, CanAlaska and the Company have certain directors in common. During the year, the Company had a net gain on sale of CanAlaska shares of $ Nil (2006 - $8,850, 2005 - $38,978).

4.

Mineral Properties

a)

Details are as follows:

		Acquisition (Net of option payments received)		Exploration		Exploration Advances/ refunds		Write-off of Mineral Property Costs		Total 2007		Total 2006
Ontario Properties:
River Valley Joint Venture	$	1	$	5,053,099	$	(5,053,099)	$	-	$	1	$	1
Sargesson and Kelly/Davis		27,900		11,954		-		-		39,854		39,854
West Timmins Nickel		56,596		1,749,370		-		-		1,805,966		1,621,461
South Renfrew		6,017		6,526		-		-		12,543		-
Ontario Project		11,754		6,231		-		-		17,985		-
Sudbury General		-		71,415		-		(71,415)		-		-
Quebec Properties:
Glitter Lake		80,600		150,226		(120,940)		-		109,886		80,834
Soquem		-		137,516		-		-		137,516		-
North West Territories		52,250		-		-		-		52,250		-
Saskatchewan Nickel		10,000		-		-		-		10,000		-
Alaska Properties:
Union Bay		441,593		4,023,781		(4,251,162)		-		214,212		177,739
Kane		10,601		23,762		-		-		34,363		29,906
Good News Bay		95,730		163,975		(58,500)		-		201,205		40,601
Tonsina		17,345		132,046		-		-		149,391		-
S.E. Alaska		-		10,544		-		-		10,544		-
Labrador		1		-		-		-		1		1
New Zealand Property		1,984		82,684		-		(84,668)		-		81,986
General		-		11,100		-		(11,100)		-		-
	$	812,372	$	11,634,229	$	(9,483,701)	$	(167,183)	$	2,795,717	$	2,072,383

Pacific North West Capital Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

30 April 2007 and 2006

Canadian Funds

4.

Mineral Properties-Continued

b)

River Valley Farm-In and Joint Venture

By agreement dated 14 July 1999, the Company granted to Kaymin Resources Limited (“Kaymin”), a wholly owned subsidiary of Anglo American Platinum Corporation Ltd., an option to earn up to a 65% interest in the Company’s portion of certain properties, including the River Valley property, the Goldwright property, the Frontier property, the Washagami property, the Razor property and the Western Front property(Notes 4b(i) - 4b(vi) respectively), in the Sudbury Region of Ontario.  During a prior year, Kaymin elected to vest obtaining a 50% interest in the properties upon having paid the Company $300,000 (received in a prior year) and advanced and spent in excess of $4,000,000 for exploration on the properties.

A joint venture is now in force.  Under this joint venture agreement Kaymin is responsible for funding all exploration until a feasibility study is completed, which earns Kaymin an additional 10% interest.  In addition, if Kaymin arranges financing for a mine it receives an additional 5% interest, increasing its ownership up to a possible 65% interest. As Kaymin controls all financing, investing and operating decisions during this second earn-in phase, the consolidated financial statements of the River Valley Joint Venture have not been incorporated on a proportionate basis into these consolidated financial statements.  As at 30 April 2007, $101,165 (2006 - $104,734) is receivable from the joint venture for an unsecured advance ($100,000) payable on demand and management fees ($1,165).

The above agreement is subject to various Net Smelter Return (“NSR”) royalties under the terms of the underlying agreements ranging from 2% to 3%.

i)

River Valley Property, Ontario

By agreement dated 15 January 1999 and amended 11 March 1999, the Company acquired a 100% interest in 226 claim units, known as the River Valley Property, located in the Dana and Pardo Townships, Sudbury Mining District, Ontario.  As consideration, the Company paid $265,000 and issued 600,000 common shares to the optionors.  In addition, minimum annual exploration expenditures of $100,000 were completed.

The property is subject to a 3% NSR.  The Company, at its option, can purchase up to 2% of the NSR from the vendors for $2,000,000.

ii)

Goldwright Property, Ontario

By agreement dated 30 June 1998 and subsequently amended, the Company earned a 25% interest in certain mineral claims known as the Janes property, located in the Janes Township, Sudbury Mining District, Ontario, by incurring in excess of $350,000 of exploration expenditures on the properties by 31 May 2001.

Certain of the above claims are subject to a 2% NSR.

iii)

Frontier Property, Ontario

The Company acquired a 100% interest in certain properties located in the Kelly and Davis Townships, Sudbury Mining District, Ontario for consideration of $30,000.  

The property is subject to a 2% NSR.

Pacific North West Capital Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

30 April 2007 and 2006

Canadian Funds

4.

Mineral Properties-Continued

b)

River Valley Farm-In and Joint Venture-Continued

iv)

Washagami Property, Ontario

The Company acquired a 100% interest in certain mineral claims, known as the Washagami property located in the Davis and Janes Townships, Sudbury Mining District, Ontario for consideration of $28,200.

The property is subject to a 2% NSR.

v)

Razor Property, Ontario

The Company acquired a 100% interest in certain mineral claims located in the Dana Township, Sudbury Mining District, Ontario for consideration of $30,000.

The property is subject to a 2% NSR.

vi)

Western Front Property, Ontario

By agreement dated 16 November 2001, the Company earned a 70% interest in certain mineral claims known as the Western Front property from a Company (the “optionor”) with certain directors in common, for consideration of $55,000 and issuance of 20,000 shares.  In addition, an exploration expenditure of $50,000 was completed.

The Company has the right to purchase an additional 30% interest in the property by paying $750,000 to the optionor.

The property is subject to a 3% NSR, the first 1% of which the Company can purchase for $1,000,000; the second 1% can be purchased for $2,000,000.  The Company and the optionor will share the NSR buyout privileges in proportion to their respective interests.

c)

Sargesson and Kelly/Davis Properties, Ontario

The Company acquired a 100% interest in certain mineral claims, known as the Sargesson and Kelly/Davis properties, located in the Janes, Davis and Kelly Townships, Sudbury Mining District, Ontario.  As consideration, the Company paid $68,400 and incurred $30,000 in exploration expenditures.

The property is subject to a 2% NSR.  The Company can purchase 1% of the NSR from the vendors for $400,000 and has the right of first refusal on the remaining 1% NSR.

Pacific North West Capital Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

30 April 2007 and 2006

Canadian Funds

4.

Mineral Properties- Continued

d)

West Timmins Nickel Project, Ontario

By agreement dated 28 October 2004, the Company may earn up to a 100 % interest in the West Timmins Nickel Project from Xstrata Nickel (“Xstrata”) (formerly Falconbridge Inc.).  The project is located in the Timmins region of Ontario.

Under the terms of the Agreement, the Company, at its option, will spend $4,000,000 over a four-year period in order to vest with a 100% interest in the project.  Xstrata, for its part, will retain a 2% NSR and may, under certain circumstances, back in and earn a 50% interest by spending two and a half times the aggregate expenditure incurred by the Company within four years.  Xstrata may further elect to earn an additional 10% interest by completing a feasibility study or incurring $20,000,000 expenditures on the property.  Under the agreement, the Company will act as operator effective 1 January 2005.

Minimum aggregate exploration expenditures of $4,000,000 must be completed by 31 December 2008, as follows:

On or before 31 December 2005

(completed)

$

750,000

On or before 31 December 2006

(completed)

$

1,500,000

On or before 31 December 2007

($1,749,370 incurred)

$

2,500,000

On or before 31 December 2008

$

4,000,000

e)

South Renfrew Property, Ontario

During the year, the Company acquired 6 claims by staking in Ontario.

f)

Glitter Lake Property, Quebec

By agreement dated 15 August 2003, amended on 30 April 2005 and amended on 30 April 2006, the Company can acquire, from CanAlaska Ventures Ltd. (“CanAlaska”), a Company with directors in common, a 50% interest in certain mineral claims known as the Glitter Lake property, located in the province of Quebec.

As consideration, the Company, at its option, must issue shares, make payments and incur exploration expenditures as follows:

				Payments	Shares	Exploration Expenditures
On or before 15 April 2003	(completed)		$	-	-	$	50,000
Upon execution of agreement		(paid)		10,000	-		-
On or before 4 June 2004		(issued)		-	20,000		-
On or before 15August 2004		(paid)		15,000	-		-
On or before 28 May 2005		(issued)		-	20,000		-
On or before 15August 2005		(paid)		20,000	-		-
On or before 28 May 2006		(issued)		-	20,000		-
On or before 15 April 2007				-	-		150,000
On or before 15 April 2008				-	-		200,000
On or before 15 April 2009				-	-		300,000
Total			$	45,000	60,000	$	700,000

Pacific North West Capital Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

30 April 2007 and 2006

Canadian Funds

4.

Mineral Properties- Continued

f)

Glitter Lake Property, Quebec -Continued

Upon the Company having vested with a 50% interest by completing the aforementioned payments and obligations, the Company may elect within 45 days to increase its interest to 60% by completing a bankable feasibility study within 24 months.  In the event the Company does not complete a bankable feasibility study within two years, the Company agrees to make cash payments in the amount of $50,000 per annum for each year the feasibility study is not completed. Upon vesting with a 60% interest the Company may elect within 90 days to earn a 70% interest in the property by placing the property into commercial production within 2 years from the date of this election. In the event that the bankable feasibility study indicates an IRR in excess of 15%, the Company agrees to make annual cash payments of $50,000 to the Optionor for each year the project is not placed into commercial production.  

In the event that a major mining Company elects to participate in the project before the Company vests with a 50% interest, the Company will issue shares to the value of $100,000 to CanAlaska, within 15 days of the Company becoming vested, or pay such amount that will result in the Company having spent $1,000,000 in exploration expenditures.

The property is subject to a 1.5% NSR payable to a third party.  The Company and CanAlaska will share the NSR buyout privileges in proportion to their respective interests.

g)

Soquem agreement, Quebec

On 30 June 2006, the Company entered into a 50:50 Cooperation Agreement with Soquem Inc. in order to conduct research on platinum properties in the province of Quebec.  Field work was carried out and subsequently certain mineral claims were staked.

h)

North West Territories

During the year, the Company acquired certain mineral claims by staking in the North West Territories.

i)

Nickel Plats, Saskatchewan

By agreement dated 30 April 2007, the Company can acquire, from Diamond Hunter Ltd. (“Hunter”), a 100% interest in certain mineral claims known as the Nickel Plats property, located in the province of Saskatchewan.

As consideration, the Company, at its option, must issue shares, make payments and incur exploration expenditures as follows:

			Payments	Shares	Exploration Expenditures
Upon execution of agreement	(paid)	$	10,000	75,000	$	-
On or before 30 June 2007	(paid subsequent to year-end)		20,000	-		-
On or before 30 April 2008			30,000	75,000		200,000
On or before 30 April 2009			30,000	75,000		250,000
On or before 30 April 2010			-	75,000		300,000
On or before 30 April 2011			40,000	-		-
On or before 30 April 2012			40,000	-		-
On or before 30 April 2013			40,000	-		-
Total		$	210,000	300,000	$	750,000

Pacific North West Capital Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

30 April 2007 and 2006

Canadian Funds

4.

Mineral Properties- Continued

i)

Nickel Plats, Saskatchewan- Continued

An additional 100,000 shares will be issued upon vesting of 100% interest if the results of feasibility studies are positive.

The property is subject to a 2.0% NSR.  The Company shall have the right to purchase a 1% NSR for $750,000.

Subsequent to year-end, by agreement dated 16 May 2007, the Company can acquire for $10,000 (paid), from Diamond Hunter Ltd. (“Hunter”), a 100% interest in certain mineral claims known as the Nickel Plats adjunct property, located in the province of Saskatchewan.

The Nickel Plats adjunct property is subject to a 2.0% NSR.  The Company shall have the right to purchase a 1% NSR for $750,000.

j)

Union Bay Property, Alaska, USA

By agreement dated 1 October 2002 and amended 2 April 2003 and 4 February 2004, the Company could acquire, from Freegold, a company with certain directors and officers in common, an option to earn up to a 70% interest in the Property.  

In order to earn its 50 % interest, the Company, purchased a private placement of $165,000 (2002) and made cash payments, issued shares and incurred exploration expenditures as follows:

		Payments	Shares		Exploration Expenditures
- Within 5 days from approval date (issued)	$	-	30,000	$	-
- On or before 1 July 2003 (paid / incurred		20,000	-		30,000
- On or before 30 January 2004 (issued)		-	30,000		-
- On or before 1 July 2004 (paid / incurred)		20,000	-		30,000
- On or before 1 July 2005 (paid / incurred)		30,000	-		340,000
- On or before 1 July 2006 (paid / incurred)		30,000	-		600,000
	$	100,000	60,000	$	1,000,000

Following vesting with a 50% interest on 1 July 2006, the Company had the right to elect within 45 days to increase its interest to 60% by completing a feasibility study within 12 months of  vesting with 50%. This election was not made.

As a term of the Agreement, the Company upon vesting with 50%, issued 253,586 shares at market value for $100,000 to Freegold. 134,538 shares were issued during the current year, the value of which was accounted in the previous year.

By Memorandum of Agreement dated 4 May 2007 Freegold and the Company confirmed their 50:50 interest in the Property. The Company will be the Project Operator.

k)

Kane Property, Alaska

In a prior year the Company acquired certain mineral claims by staking in Alaska.  

Pacific North West Capital Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

30 April 2007 and 2006

Canadian Funds

4.

Mineral Properties- Continued

l)

Goodnews Bay, Alaska

By agreement dated 1 January 2006, the Company can acquire, from Calista Corporation (“Calista”), a 100% interest in certain mineral claims known as the Goodnews Bay property, located on the west coast of Alaska.

As consideration, the Company, at its option, must make payments and incur exploration expenditures as follows:

			Payments	Exploration Expenditures
Upon execution of agreement	(paid)	US$	25,000	US$	-
On or before 31 December 2006	(paid/incurred)		45,000		200,000
On or before 31 December 2007			55,000		250,000
On or before 31 December 2008			75,000		350,000
On or before 31 December 2009*			100,000		450,000
On or before 31 December 2010					700,000
Total		US$	300,000	US$	1,950,000

*US$100,000 annual payments to be made thereafter until completion of a feasibility study

  US$250,000 annual payments to be made following completion of a feasibility study

The Company has elected to expend the required US$200,000 - 2006 exploration expenditures. The Company shall have until December 1^st of each year the lease is in effect to commit to the following year's exploration expenditures.

After the Company has completed US$1.95 million expenditures on the property, it shall have a grace period of two years without obligation to perform additional work commitments, after which it will be required to expend a minimum of US$700,000 per annum, until a feasibility study is completed.

Once the Company completes a feasibility study the Company shall have no further work obligations for a subsequent period of four years in addition to the time remaining of the grace period of two years. After five years, the Company will continue to make cash payments of US $100,000 until such time as the feasibility study is completed. Upon completion of a feasibility study and until such time as the commencement of commercial production the Company will make cash payments of US $250,000 per annum.  In addition, the Company will donate US$3,000 (paid in current year) to the Calista Corporation Scholarship Fund each year the lease is in effect, until such time as a feasibility study is completed at which time the donation shall increase to US$5,000 per year. Following commencement of commercial production, the Company will provide US$10,000 per annum to the scholarship fund.

The Company will pay a NSR to Calista of 1.5% or US$100,000 per annum whichever is the greater from the commencement of commercial production for a period of five years or until payback of all capital expenditure on the project whichever is shorter; thereafter the royalty shall be tied to the price of platinum.  Upon receipt of the feasibility study, Calista shall have one hundred and eighty (180) days in which to elect to acquire up to fifteen percent (15%) but in no event less than five percent (5%) operating interest in the project. At the time Calista elects to acquire an operating interest Calista shall pay the joint venture an initial contribution of two hundred percent (200%) of the agreed-upon pro-rata portion of exploration costs incurred by the Company, minus anniversary cash payments and scholarship contributions paid to Calista.

Pacific North West Capital Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

30 April 2007 and 2006

Canadian Funds

4.

Mineral Properties- Continued

l)

Goodnews Bay, Alaska- Continued

On 7 February 2007, the Company entered into a Letter of Agreement with Stillwater Mining company (“Stillwater”) pertaining to ongoing exploration on the property. Under the terms of the Agreement, Stillwater will spend US$4 million to earn 50% of the property by December 31, 2010.  Stillwater may elect to increase its interest to 60% by incurring an additional US$8 million in exploration expenditures within an additional two year period or upon completion of a feasibility study, whichever occurs first.  Stillwater may increase its interest to 65% by arranging for 100% of the project financing required to place the property into commercial production within an additional three years. The final agreement is still pending.

The Company will be the project manager during the option period, as defined in the Letter of Agreement and will receive a management fee. US$50,000 was received upon execution of this agreement.

m)

Tonsina Property, Alaska

During the year, the Company acquired certain mineral claims by staking in Alaska.

n)

S.E. Property, Alaska

During the year, the Company acquired certain mineral claims by staking in Alaska.

Subsequent to year-end on 6 June 2007, the Company entered into an option agreement with Stillwater Mining company (“Stillwater”) pertaining to ongoing exploration on the property. Under the terms of the Agreement, Stillwater will spend US$3.5 million to earn 50% of the first selected property  and US$4.0 million on each subsequent selected property by December 31, 2011.  Stillwater may elect to increase its interest to 60% by incurring an additional US$8 million in exploration expenditures within an additional two year period or upon completion of a feasibility study, whichever occurs first.  Stillwater may increase its interest to 65% by arranging for 100% of the project financing required to place the property into commercial production within an additional three years.

The Company will be the project manager during the option period, as defined in the Option Agreement and will receive a management fee.

o)

New Zealand Property

During a previous year, the Company was granted two exploration permits in New Zealand. During the period, the Company allowed one permit to lapse and transferred title on the other permit to Mainland Resources Ltd (a private company registered in New Zealand) while retaining a 2% NSR. Accordingly, all acquisition and exploration costs previously incurred have been written-off.

Pacific North West Capital Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

30 April 2007 and 2006

Canadian Funds

5.

Equipment

Details are as follows:

		Cost	Accumulated Amortization	2007 Net Book Value
Automotive equipment	$	13,017	11,157	1,860
Furniture and office equipment		184,527	104,450	80,077
	$	197,544	115,607	81,937

	��	Cost		Accumulated Amortization		2006 Net Book Value
Automotive equipment	$	13,017	$	10,360	$	2,657
Furniture and office equipment		154,047		86,562		67,485
	$	167,064	$	96,922	$	70,142

6.

Related Party Transactions

Except as disclosed elsewhere in these financial statements, related party transactions are as follows:

a)

During the year, fees for consulting services in the amount of $28,727 (2006 - $30,648; 2005 - $42,538) were paid to a company controlled by the Corporate Secretary.

b)

During the year, management fees of  $94,052 (2006 - $92,026; 2005 - $101,240) were paid to a company controlled by a director and Chairman.

c)

During the year, rent in the amount of $31,352 (2006 - $53,746; 2005 - $53,746) was paid to a company controlled by a director and Chairman.

d)

During the year, accounting fees of $33,331 (2006 - $38,970; 2005 - $46,100) were paid to a company controlled by the Chief Financial Officer.

e)

During the year, engineering and consulting fees of $48,000 (2006 - $45,300; 2005 -$39,800) were paid to company controlled by the Vice-President of Business Development.

f)

During the year, engineering and consulting fees of $48,150 (2006 - $50,500; 2005 -$76,226) were paid to a company controlled by the Vice-President of Exploration.

g)

During the year, wages of $32,042 (2006 - $36,450; 2005 - Nil) were paid to the former Vice-President, Corporate Finance.

h)

Effective 1 February 2005, each outside director is entitled to receive $500 per month, $500 per directors meeting and $500 per committee meeting. During the year, $19,000 (2006 - $16,000; 2005 - $4,500) was paid to directors.

i)

During the year, management fees of $49,209 (2006 - $66,992; 2005 - $168,397) were received from the River Valley Joint Venture.

The above transactions, occurring in the normal course of operations, are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

Pacific North West Capital Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

30 April 2007 and 2006

Canadian Funds

7.

Share Capital

a)

Private Placements

On 8 December 2006, the Company completed a non-brokered private placement of 4,444,444 common shares at a price of $0.45 per common share for gross proceeds of $2,000,000 with Stillwater Mining Company. No finder’s fee or commission have been paid.

On 22 December 2006, the Company completed a non-brokered private placement of up to 2,127,660 shares at $0.47 per share. 1,889,362 flow-through common shares were issued for gross proceeds of $888,000 and 238,298 common shares were issued for gross proceeds of $112,000 to Stillwater Mining Company. A finder’s fee of 61,508 shares fair valued at $28,909 were issued.

Subsequent to year-end, the Company closed a non-brokered private placement of 6,687,950 units for gross proceeds of $3,343,975.   Each unit was priced at $0.50 and consists of one common share and one-half of one non-transferable share purchase warrant.  Each warrant entitles the holder to purchase one additional common share at a price of $0.60 per share exercisable until 1 December 2008.  

Subsequent to year-end, the Company announced a non-brokered private placement of 4,285,714 units for gross proceeds of $3,000,000.   Each unit is priced at $0.70 and consists of one common share and one-half of one non-transferable share purchase warrant.  Each warrant entitles the holder to purchase one additional common share at a price of $0.90 per share exercisable until eighteen months from the closing date.  

Subsequent to year-end, the Company announced a non-brokered private placement of 1,500,000 flow-through units for gross proceeds of $1,200,000.   Each unit is priced at $0.80 and consists of one flow-through common share and one-half of one non-transferable, non-flow-through share purchase warrant.  Each warrant entitles the holder to purchase one additional common share at a price of $1.00 per share exercisable until twelve months from the closing date.  

During the previous year, the Company issued 2,500,000 flow-through shares at a price of $0.40 per share for gross proceeds of $1,000,000. A finder’s fee of $70,000 was paid.  The Company also issued 456,000 flow-through shares at a price of $0.30 per share for gross proceeds of $136,800.

b)

Flow-Through Shares

Flow-through shares are shares issued by a Company that incurs certain resource expenditures and then renounces them for Canadian tax purposes.  This allows the expenditures to flow through to the subscriber for tax purposes.  The subscribers may in turn claim the expenditure as a deduction on their personal or corporate tax returns.

The total amount of funds raised through the flow-through shares must be spent on qualified mineral exploration.  The use of proceeds from flow-through shares is restricted to certain Canadian Exploration Expenditures under Canadian Income Tax Legislation.  

c)

Exercise of Warrants and Options

i)

During the year, 45,600 warrants were exercised at $0.30 for gross proceeds of $13,680.

ii)

During the year, no options were exercised.

Pacific North West Capital Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

30 April 2007 and 2006

Canadian Funds

7.

Share Capital -Continued

d)

Performance Shares

A total of 2,697,990 performance shares were reserved for issue.  At the discretion of the board of directors (“Board”), these shares may be issued to such arm’s length parties as the Board considers desirable to attract consultants to the Company.

During a previous year, the Board authorized the issuance of up to 300,000 performance shares at an exercise price of $0.01 per share to attract a new officer to the Company.  These shares are to be granted as follows:

Shares	Date
50,000	15 January 2004	(issued)
50,000	30 June 2004	(issued)
50,000	31 October 2004	(issued)
50,000	28 February 2005	(allotted as at 30 April 2005 )(Issued June 2005)
50,000	1 July 2005	(issued)
50,000	1 December 2005	(issued)
300,000

During a previous year, the Board authorized the issuance of up to 300,000 performance shares at an exercise price of $0.01 per share to attract a new officer to the Company.  These shares are to be granted as follows:

Shares	Date
25,000	24 May 2005	(issued)
25,000	24 November 2005	(issued)
50,000	28 August 2006	(issued*)
50,000	28 February 2007	(cancelled December 2006)
75,000	28 August 2007	(cancelled December 2006)
75,000	28 February 2008	(cancelled December 2006)
300,000

*

50,000 performance shares were issued at $0.01 per share for total proceeds of $500.  The fair market value of the performance shares at the date of the issuance was $17,000.  The difference between the issue price and the fair market value ($16,500) was recorded in the accounts as consulting fees.  The offsetting entry is to share capital.

Pacific North West Capital Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

30 April 2007 and 2006

Canadian Funds

7.

Share Capital -Continued

e)

Share Purchase Options

The Company has established a share purchase option plan whereby the board of directors may from time to time grant options to directors, officers, employees or consultants.  Options granted must be exercised no later than ten years from date of grant or such lesser period as determined by the Company’s board of directors.  The exercise price of an option is to be not less than the closing price on the Toronto Stock Exchange (“TSX”) on the last trading day preceding the grant date.  

A summary of the Company’s options at 30 April 2007 and the changes for the year are as follows:

Number outstanding 30 April 2006	Granted	Exercised	Expired	Cancelled	Number outstanding 30 April 2007	Exercise price per share	Expiry date
200,000	-	-	(200,000)	-	-	$0.60	21 December 2006
90,000	-	-	(90,000)	-	-	$1.00	10 February 2007
150,000	-	-	-	-	150,000	$0.60	1 July 2007
795,000	-	-	-	(55,000)	740,000	$0.60	31 December 2007
585,000	-	-	-	(40,000)	545,000	$0.76	10 September 2008
1,835,000	-	-	-	(260,000)	1,575,000	$0.60/$.70	5 November 2007/2009
419,500	-	-	-	-	419,500	$0.83	28 February 2010
380,000	-	-	-	-	380,000	$0.60	3 May 2010
100,000	-	-	-	-	100,000	$0.40	13 July 2010
350,000	-	-	-	(40,000)	310,000	$0.40	3 February 2011
440,000	-	-	-	(100,000)	340,000	$0.40	19 April 2011
-	50,000	-	-	-	50,000	$0.50	8 May 2011
-	20,000	-	-	-	20,000	$0.50	19 May 2011
-	50,000	-	-	(50,000)	-	$0.50	20 June 2011
-	75,000	-	-	-	75,000	$0.45	12 October 2011
-	150,000	-	-	-	150,000	$0.47	14 February 2009
-	150,000	-	-	(50,000)	100,000	$0.47	14 February 2012
5,344,500	495,000	-	(290,000)	(595,000)	4,954,500

Pacific North West Capital Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

30 April 2007 and 2006

Canadian Funds

7.

Share Capital -Continued

e)

Share Purchase Options-Continued

During the year, the Company granted the following options and recognized the following costs with respect to options granted :

Grant date	Granted	Exercise price	Fair Value	2007 Vested Amount
8 May 2006	50,000	$0.50	$9,216	$8,479
19 May 2006	20,000	$0.50	2,960	1,480
12 October 2006	75,000	$0.45	3,050	1,255
14 February 2007	250,000	$0.47	39,576	5,620
Total	395,000		$54,802	$16,834

The total estimated fair value of the 395,000 options is $54,802.  Since the options were granted under a graded vesting schedule, $16,834 of the total fair value has been recorded in the Company accounts as stock-based compensation expenses during the year.  The offsetting entry is to contributed surplus.

During prior years, the Company granted the following options and recognized the 2007 vested amount as follows:

Grant date	Granted	Exercise price	Fair Value	2007 Vested Amount
5 November 2004	2,000,000	$0.64	$433,335	$2,167
13 July 2005	100,000	$0.40	$16,959	$5,653
3 February 2006	350,000	$0.40	47,052	22,100
19 April 2006	440,000	$0.40	69,730	56,640
Total	2,890,000		$567,076	$86,560

The total estimated fair value of the 2,890,000 options is $567,076.  Since the options were granted under a graded vesting schedule, $86,560 of the total fair value has been recorded in the Company accounts as stock-based compensation expenses during 2007.  The offsetting entry is to contributed surplus.

Pacific North West Capital Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

30 April 2007 and 2006

Canadian Funds

7.

Share Capital -Continued

e)

Share Purchase Options-Continued

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

	2007	2006	2005
Expected dividend yield	0.00%	0.00%	0.00%
Expected stock price volatility	51.49%	49.0%	47.87%
Risk-free interest rate	4.08%	4.10%	4.06%
Expected life of options	5.0 years	5.0 years	5.0 years

Option pricing models require the input of highly subjective assumptions including the expected price volatility.  Changes in the subjective input assumptions can materially affect the fair value estimate, and therefore the existing models do not necessarily provide a reliable single measure of the fair value of the Company’s stock options.

Subsequent to the year-end, 1,500,000 stock options were granted at an exercise price of $0.55 per common share for a period of five years.

f)

Share Purchase Warrants

As at 30 April 2007, the following share purchase warrants were outstanding:

Warrants	Exercise Price	Expiry Date
55,555	$0.45	6 November 2007
175,736	$0.47	22 December 2007
231,291

During the year, 175,736 common share purchase warrants having a fair value of $7,909 were issued relating to a private placement.

The relative pro rata allocation of the fair value of the stock purchase warrants included in unit offerings is estimated on the date of issuance of the unit using the Black-Scholes option-pricing model with the following weighed average assumptions:

	April 30, 2007
Average risk-free interest rate	3.95%
Expected dividend yield	NIL
Expected stock price volatility	36.24%
Average expected warrant life	1.0 years

Pricing models require the input of highly subjective assumptions including the expected stock price volatility.  Changes in the subjective input assumptions can materially affect the fair value estimate, and therefore, the existing models do not necessarily provide a reliable single measure of the fair value of the Company’s stock purchase warrants.

Pacific North West Capital Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

30 April 2007 and 2006

Canadian Funds

8.

Income Taxes

a)

A reconciliation of income taxes at statutory rates with the reported taxes is as follows:

		2007		2006
Loss before income taxes	$	(1,230,764)	$	(1,344,822)
Canadian federal and provincial income tax rates		34.12%		34.12%
Expected income tax (recovery)	$	(419,835)	$	(458,853)
Items not deductible for income tax purposes		88,321		300,491
Income tax benefit recognized on issuance of flow-through shares		(302,986)		(387,649)
Unrecognized benefit of non-capital losses		331,514		158,362
Total income taxes (recovery)	$	(302,986)	$	(387,649)
Represented by:
Current income tax	$	-	$	-
Future income tax recovery	$	(302,986)	$	(387,649)

Pacific North West Capital Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

30 April 2007 and 2006

Canadian Funds

8.

Income Taxes -Continued

b)

The significant components of the Company's future income tax assets and liabilities are as follows:

		2007		2006
Future income tax assets (liabilities)
Non-capital loss carry forwards	$	1,797,337	$	1,362,444
Share issue costs		64,550		76,037
Undepreciated capital cost in excess of accounting net book value		40,620		35,391
Mineral properties		(516,746)		(251,415)
		1,385,761		1,222,457
Valuation allowance		(1,385,761)		(1,222,457)
Net future income tax assets	$	-	$	-

The Company has non-capital losses for Canadian tax purposes of approximately $5,267,693 available to offset against taxable income in future years, which, if unutilized, will expire through to 2027.  Subject to certain restrictions, the Company also has resource exploration expenditures of approximately $1,281,220 available to reduce taxable income of future years.

c)

Future Income Tax Recovery

During the year, flow-through shares totalling $888,000 (2006 - $1,136,800) were issued, which funds are required to be spent on certain Qualifying Canadian Exploration Expenditures.  Because the Company no longer has the ability to use the expenditures for tax purposes, the Company is required to record a future tax liability which is equal to the renunciation, times the corporation tax rate when expenditures are renounced. This amounted to $302,986 (2006 - $387,649). However, because the Company has unused tax losses and resource pools in excess of the renunciation, the future tax liability becomes a future income tax recovery.

Pacific North West Capital Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

30 April 2007 and 2006

Canadian Funds

9.

Segmented Information

Details on a geographic basis as at 30 April 2007 are as follows:

		U.S.A.	Canada	New Zealand	Total
Assets	$

609,715

6,706,156

-

7,315,871

Mineral property costs

$

609,715

2,186,002

-

2,795,717

Loss for the year

$

(297)

(1,145,799)

(84,668)

(1,230,764)

Details on a geographic basis as at 30 April 2006 are as follows:

		U.S.A.		Canada		New Zealand		Total
Assets	$	248,246	$	5,351,510	$	81,986	$	5,681,742
Mineral property costs	$	248,246	$	1,742,151	$	81,986	$	2,072,383
Loss for the year	$	-	$	(1,344,822)	$	-	$	(1,344,822)

Details on a geographic basis as at 30 April 2005 are as follows:

		U.S.A.		Canada		New Zealand		Total
Assets	$	82,279	$	5,934,711	$	53,626	$	6,070,616
Mineral property costs	$	82,279	$	1,200,443	$	53,626	$	1,336,348
Loss for the year	$	-	$	(1,894,297)	$	-	$	(1,894,297)

10.

Commitments

a)

By agreement effective 1 December 2005, the Company entered into a five-year management agreement with a Company controlled by a director and chairman.  Compensation is $7,350 per month for the first year, with a 5% increase on each anniversary date plus benefits.  The chairman and director is also entitled to receive up to 20% of all stock options granted during the period that the agreement is in place.  This agreement is automatically renewable for two-year periods.  The Company may terminate the agreement at any time but will be responsible to pay the greater of the remaining amount under the contract or two years compensation.  

b)

By agreement dated 1 December 2006, the Company entered into a five-year lease for office premises with the following lease payments to the expiration of the lease on 30 November 2011:

		Amount
2008	$	42,379
2009		42,379
2010		42,379
2011 (expiry in November 2011)		24,721
Total	$	151,858

Pacific North West Capital Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

30 April 2007 and 2006

Canadian Funds

11.

Differences Between Canadian and United States

    Generally Accepted Accounting Principles ("GAAP")

Canadian generally accepted accounting principles (“Canadian GAAP”) vary in certain significant respects from the principles and practices generally accepted in the United States (“US GAAP”). The effect of the principal measurement differences on the Company’s consolidated financial statements is quantified below and described in the accompanying notes:

a)

SEC staff have interpreted US GAAP to require that mineral property exploration and land use costs must be expensed as incurred, until commercially mineable deposits are determined to exist within a particular property.  Accordingly, for US GAAP purposes, for all periods presented, the Company has expensed all land use costs for mineral properties and deferred exploration costs, which have been incurred by the Company, for which commercially mineable revenues do not exist. Under Canadian GAAP, such costs have been deferred.  For Canadian GAAP, cash flows relating to mineral property exploration and land use costs are reported as investing activities.  For US GAAP, these costs would be characterized as operating activities’.

b)

United States GAAP requires that the fair market value of contributed executive services be recorded as an expense, even when they are not paid. For the year ended 1998, the fair market value of contributed executive services of $98,000 was expensed for United States GAAP purposes.

c)

Under Canadian GAAP a premium to market on the issuance of flow-through shares would be recorded in share capital.  For US GAAP purposes, SFAS 109, “Accounting for Income Taxes” the proceeds should be allocated between the offering of the shares and the sale of tax benefits when the shares are offered.  The allocation is made based on the difference between the quoted price of the shares and the amount the investor pays for the flow-through shares.  A future tax liability is recognized for the premium paid by the investors.  For the years ended 2007 and 2006, there was no premium on the issuance of flow-through shares. For the year ended 1998, the Company recorded a flow –through discount of $127,890.

d)

Under United States GAAP, investments held for re-sale are recorded at market value.  The difference between the market value and the cost of the investment is recorded as a separate shareholders’ equity category named comprehensive income.  Once the investment is sold, the comprehensive income for that investment is cleared out to income.  Under Canadian GAAP, investments held for re-sale are recorded at the lower of cost or market.  There is no comprehensive income category in Canada prior to the adoption of CICA 3855 “Financial instruments – Recognition and measurement’ and CICA 1530 “Comprehensive Income”

Pacific North West Capital Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

30 April 2007 and 2006

Canadian Funds

11.

Differences Between Canadian and United States GAAP -Continued

e)

Prior year restatement

Certain of the comparative numbers in this Canadian to US GAAP reconciliation have been restated to reflect errors in the previous year’s presentation arising due to flow through share future tax recovery accounting and the accounting for fair market value of contributed executive services. As a result of the restatement for flow through share future tax recovery, loss for the year 2006 under US GAAP increased by $387,649. Basic and diluted loss per share under US GAAP increased from $0.06 to $0.07 as a result of the restatement.  As a result of the restatement for fair market value of contributed executive services, deficit for 2006 and 2005 under US GAAP decreased by $98,000 with a corresponding decrease to contributed surplus.

f)

Restricted cash

Under US GAAP, funds raised from the issuance of flow-through shares, which have not yet been disbursed on qualifying exploration expenditures, would be disclosed as restricted cash and excluded from current assets.  Accordingly, cash and cash equivalents under US GAAP would be reduced by $730,872 at April 30, 2007 and $140,359 at April 30, 2006.

g)

The impact of the above differences between Canadian and United States GAAP on loss for the period is as follows:

	Years Ended 30 April
	2007		2006 (As restated)		2005
Loss for the year as reported	$	(1,230,764)	$	(1,344,822)	$	(1,894,297)
Write-off of mineral exploration costs(Note 11a)		(723,334)		(736,035)		(801,819)
Future tax recovery(Note 11c)		(302,986)		(387,649)		-
Primary loss for the year in accordance with United States GAAP	$	(2,257,084)	$	(2,468,506)	$	(2,696,116)
Change in unrealized gain on available for sale securities ((Note 11d)		219,367		226,072		31,630
Comprehensive Loss for the years under US GAAP	$	(2,037,717)	$	(2,242,434)	$	(2,664,486)
Primary loss per share for the year in accordance with United States GAAP	$	(0.06)	$	(0.07)	$	(0.08)

h)

The impact of the above differences between Canadian and United States GAAP on the deficit, as reported, is as follows:

	Years Ended 30 April
	2007		2006 (As restated)		2005 (As restated)
Deficit - As reported	$	(10,997,724)	$	(9,766,960)	$	(8,422,138)
Flow-through discount(Note 11c)		127,890		127,890		127,890
Write-off of mineral exploration costs(Note 11a)		(2,795,717)		(2,072,383)		(1,336,348)
Future tax recovery(Note 11c)		(690,635)		(387,649)		-
Deficit in accordance with United States GAAP	$	(14,356,186)	$	(12,099,102)	$	(9,630,596)

Pacific North West Capital Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

30 April 2007 and 2006

Canadian Funds

11.

Differences Between Canadian and United States GAAP –Continued

i)

The impact of the above differences between Canadian and United States GAAP on the statement of changes in shareholders’ equity, as reported, is as follows:

	Common Shares				Accumulated			Contributed	Accumulated Comprehensive
		Number		Amount		Deficit (As restated)	Surplus (As restated)			Income		Total
Shareholders’ equity balance as reported at 30 April 2005		31,817,404	$	13,381,700	$	(8,422,138)	$	975,046	$	-	$	5,934,608
Flow-through discount(Note 11c)		-		-		127,890		-		-		127,890
Investment held for resale(Note 11d)		-		-		-		-		31,630		31,630
Fair market value of contributed executive services(Note 11b)		-		-		-		(98,000)		-		(98,000)
Write-off of mineral exploration costs(Note 11a)		-		-		(1,336,348)		-		-		(1,336,348)
Shareholders’ equity in accordance with United States GAAP at 30 April 2005		31,817,404	$	13,381,700	$	(9,630,596)	$	877,046	$	31,630	$	4,659,780
Shareholders’ equity balance as reported at 30 April 2006		35,112,452	$	14,227,882	$	(9,766,960)	$	1,155,925	$	-	$	5,616,847
Flow-through discount(Note 11c)		-		-		127,890		-		-		127,890
Investment held for resale(Note 11d)		-		-		-		-		257,702		257,702
Fair market value of contributed executive services(Note 11b)		-		-		-		(98,000)		-		(98,000)
Write-off of mineral exploration costs(Note 11a)		-		-		(2,072,383)		-		-		(2,072,383)
Future tax recovery(Note 11c)		-		387,649		(387,649)		-		-		-
Shareholders’ equity in accordance with United States GAAP at 30 April 2006		35,112,452	$	14,615,531	$	(12,099,102)	$	1,057,925	$	257,702	$	3,832,056
Shareholders’ equity balance as reported at 30 April 2007		41,996,202	$	16,906,926	$	(10,997,724)	$	1,267,228	$	-	$	7,176,430
Flow-through discount(Note 11c)		-		-		127,890		-		-		127,890
Investment held for resale(Note 11d)		-		-		-		-		477,069		477,069
Fair market value of contributed executive services(Note 11b)		-		-		-		(98,000)		-		(98,000)
Write-off of mineral exploration costs(Note 11a)		-		-		(2,795,717)		-		-		(2,795,717)
Future tax recovery(Note 11c)		-		690,635		(690,635)		-		-		-
Shareholders’ equity in accordance with United States GAAP at 30 April 2007		41,996,202	$	17,597,561	$	(14,356,186)	$	1,169,228	$	477,069	$	4,887,672

Pacific North West Capital Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

30 April 2007 and 2006

Canadian Funds

11.

Differences Between Canadian and United States GAAP –Continued

j)

The impact of the above differences between Canadian and United States GAAP on the statement of cash flows, as reported, is as follows:

	Years Ended 30 April
	2007		2006		2005
Cash used in operating activities under Canadian GAAP	$	(1,187,422)	$	(1,169,121)	$	(1,014,048)
Mineral property exploration and development expenditures(Note 11a)		(835,711)		(1,107,384)		(935,099)
Cash used in operating activities under United States GAAP	$	(2,023,133)	$	(2,276,505)	$	(1,949,147)
Cash used in investing activities under Canadian GAAP	$	(866,191)	$	(1,121,481)	$	(968,755)
Mineral property exploration and development expenditures(Note 11a)		835,711		1,107,384		935,099
Flow-through funds not disbursed during the year (Note 11f)		(730,872)		(140,359)		-
Flow-through funds realized from previous year (Note 11f)		140,359
Cash used in investing activities under United States GAAP	$	(620,993)	$	(154,456)	$	(33,656)
Cash generated by financing activities under Canadian and United States GAAP	$	2,965,438	$	1,049,781	$	28,715
Cash and cash equivalents end of year under Canadian GAAP	$	4,144,031	$	3,232,206	$	4,473,027
Restricted cash - Flow-through shares (Note 11f)		(730,872)		(140,359)		-
Cash and cash equivalents end of year under United States GAAP	$	3,413,159	$	3,091,847	$	4,473,027

k)

New Accounting Pronouncements

In June 2006, FASB issued Accounting for Uncertain Tax Positions - an Interpretation of FASB Statement No. 109, FIN 48 which prescribes a recognition and measurement model for uncertain tax positions taken or expected to be taken in the Company’s tax returns.  FIN 48 provides guidance on recognition, classification, presentation and disclosure of unrecognized tax benefits. Management is required to adopt this statement effective January 1, 2007 and is currently assessing the impact on the Company’s financial statements.  

In September 2006, FASB issued SFAS 157, Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value and expands fair value disclosures.  The standard does not require any new fair value measurements.  This standard is effective for fiscal years beginning after November 15, 2007.  Management is currently assessing the impact on the Company’s financial statements.  

Pacific North West Capital Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

30 April 2007 and 2006

Canadian Funds

11.

Differences Between Canadian and United States GAAP –Continued

j)

New Accounting Pronouncements –Continued

In April 2005, the Canadian Accounting Standards Board issued new accounting standards dealing with the recognition, measurement and disclosure of financial instruments, hedges and comprehensive income, together with many consequential changes throughout the CICA Handbook.  These new standards will affect the company’s Canadian GAAP interim and annual financial statements beginning in the first quarter of 2007.  The most significant new standards are as follows:

i) Financial Instruments – Recognition and Measurement, Section 3855

This standard prescribes when a financial asset, financial liability, or non-financial derivative is to be recognized on the balance sheet and whether fair value or cost-based methods are used to measure the amounts.  It also specifies how financial instrument gains and losses are to be presented.  Management is currently finalizing its evaluation of the impact of this standard on the Company’s Canadian GAAP financial statements.

ii) Hedges, Section 3865

This standard is applicable when a company chooses to designate a hedging relationship for accounting purposes.  The adoption of this standard is not expected to impact the company.

iii) Comprehensive Income, Section 1530

This standard requires the presentation of a statement of comprehensive income and its components.  Comprehensive income includes both net earnings and other comprehensive income.  Other comprehensive income for the company will include holding gains and losses on investments designated as available for sale.