| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 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 six months ended June 30, 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. 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 Quoted Prices for Similar Assets or Liabilities in Active Markets Significant Unobservable Inputs
Marketable securities as of June 30, 2019 $ 4,969 $ - $ -
Marketable securities as of December 31, 2018 $ 4,781 $ - $ - 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 June 30, 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 June 30,
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 and six months ended June 30, 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 Six Months Ended
2019 2018
Warrants to purchase shares of common stock 8,838,701 4,587,124
Options to purchase shares of common stock 2,416,664 1,783,664
Total potentially dilutive securities 11,255,365 6,370,788 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. The Company adopted ASU 2018-10, and has determined that there are no material impacts to the condensed
consolidated financial statements. |
