| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Note
3 – SUMMARY OF Significant Accounting Policies Basis of Presentation and Principles of Consolidation
These consolidated financial statements
are presented in United States dollars and have been prepared in accordance with United States generally accepted accounting principles
(“U.S. GAAP”). The accompanying 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 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. Exploration Stage In accordance with U.S. GAAP, expenditures
relating to the acquisition of mineral rights are initially capitalized as incurred while exploration and pre-extraction expenditures
are expensed as incurred until such time the Company exits the Exploration Stage by establishing proven or probable reserves. Expenditures
relating to exploration activities such as drill programs to search for additional mineralized materials are expensed as incurred.
Expenditures relating to pre-extraction activities such as the construction of mine wellfields, ion exchange facilities and disposal
wells are expensed as incurred until such time proven or probable reserves are established for that uranium project, after which
subsequent expenditures relating to mine development activities for that particular project are capitalized as incurred. Companies in the Production Stage as defined
under Industry Guide 7, having established proven and probable reserves and exited the Exploration Stage, typically capitalize
expenditures relating to ongoing development activities, with corresponding depletion calculated over proven and probable reserves
using the units-of-production method and allocated to future reporting periods to inventory and, as that inventory is sold, to
cost of goods sold. The Company is in the Exploration Stage which has resulted in the Company reporting larger losses than if it
had been in the Production Stage due to the expensing, instead of capitalizing, of expenditures relating to ongoing mine development
and extraction activities. Additionally, there would be no corresponding amortization allocated to future reporting periods of
the Company since those costs would have been expensed previously, resulting in both lower inventory costs and cost of goods sold
and results of operations with higher gross profits and lower losses than if the Company had been in the Production Stage. Any
capitalized costs, such as expenditures relating to the acquisition of mineral rights, are depleted over the estimated extraction
life using the straight-line method. As a result, the Company’s consolidated financial statements may not be directly comparable
to the financial statements of companies in the Production Stage. Use of Estimates The preparation of these 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 consolidated 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 shares, assessment of the useful life and evaluation for impairment
of Kinetic Separation intellectual property, valuation and impairment assessments on mineral properties and equipment, deferred
contingent consideration, the reclamation liability, valuation of stock-based compensation, and valuation of available-for-sale
securities. 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 consolidated balance sheets. Segment Information The Company determines its reporting units
in accordance with FASB ASC 280, “ Segment Reporting Cash The Company considers all highly-liquid
instruments with an original maturity of three months or less at the time of issuance to be cash equivalents. As of December 31,
2020 and 2019, the Company had no cash equivalents. Marketable Securities The Company classifies its marketable securities
as available-for-sale securities, which are carried at their fair value based on the quoted market prices of the securities with
unrealized gains and losses reported as accumulated comprehensive income (loss), a separate component of shareholders’ equity.
Realized gains and losses on available-for-sale securities are included in net earnings in the period earned or incurred. Restricted Cash Certain cash balances are restricted as
they relate to deposits with banks that have been assigned to state reclamation authorities in the United States to secure various
reclamation guarantees with respect to mineral properties in Utah, Wyoming and Colorado. As these funds are not available for general
corporate purposes and secure the long term reclamation liability (see Note 4), they have been separately disclosed and classified
as long-term for the majority of the Company’s mines. As of December 31, 2020 and 2019, the Company has determined that the
Van 4 Mine is now considered to be in reclamation. The Company recognized the Van 4 Mine’s reclamation liability and its
restricted cash in full on the Company’s consolidated balance sheet as current. 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 will be recognized as revenues when received. Fair Values of Financial Instruments The carrying amounts of cash, restricted
cash, accounts payable, accrued liabilities, and loan 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 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: 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
Quoted Significant
Marketable securities as of December 31, 2020 $ 2,405 $ - $ -
Marketable securities as of December 31, 2019 $ 2,759 $ - $ - Mineral Properties Acquisition costs of mineral properties
are capitalized as incurred while exploration and pre-extraction expenditures are expensed as incurred until such time the Company
exits the Exploration Stage by establishing proven or probable reserves, as defined by the SEC under Industry Guide 7, through
the completion of a “final” or “bankable” feasibility study. Expenditures relating to exploration activities
are expensed as incurred and expenditures relating to pre-extraction activities are expensed as incurred until such time proven
or probable reserves are established for that project, after which subsequent expenditures relating to development activities for
that particular project are capitalized as incurred. Where proven and probable reserves have
been established, the project’s capitalized expenditures are depleted over proven and probable reserves upon commencement
of production using the units-of-production method. Where proven and probable reserves have not been established, such capitalized
expenditures are depleted over the estimated production life upon commencement of extraction using the straight-line method. The
Company has not established proven or probable reserves for any of its projects. The carrying values of the mineral properties
are assessed for impairment by management. Impairment of Long-Lived Assets The Company reviews and evaluates its long-lived assets and kinetic separation
technology for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Impairment
is considered to exist if the total estimated future cash flows on an undiscounted basis are less than the carrying amount of the assets.
An impairment loss is measured and recorded based on discounted estimated future cash flows or upon an estimate of fair value that may
be received in an exchange transaction. Future cash flows are estimated based on estimated quantities of recoverable minerals, expected
uranium (“U3O8”) prices (considering current and historical prices, trends and related factors), production levels, operating
costs of production and capital and restoration and reclamation costs, based upon the projected remaining future uranium production from
each project. The Company’s long-lived assets (which include its mineral assets and Kinetic Separation intellectual property) were
acquired during the end of 2014 and in 2015 in arms-length transactions. As of December 31, 2020, the Company evaluated the total estimated
future cash flows on an undiscounted basis for its mineral properties, equipment, and Kinetic Separation intellectual property and determined
that no impairment was deemed to exist. Estimates and assumptions used to assess recoverability of the Company’s long-lived assets
and measure fair value of our uranium properties are subject to risk uncertainty. Changes in these estimates and assumptions could result
in the impairment of its long-lived assets. In estimating future cash flows, assets are grouped at the lowest level for which there are
identifiable cash flows that are largely independent of future cash flows from other asset groups. 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 December 31, 2020 and December 31, 2019, 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 years ended December 31, 2020 and 2019. 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
Canadian and United States tax returns and its state tax returns in Colorado and Utah as its “major” tax jurisdictions,
and such returns for the years 2016 through 2020 remain subject to examination. Restoration and Remediation Costs (Asset Retirement Obligations) Various federal and state mining laws and
regulations require the Company to reclaim the surface areas and restore underground water quality for its mine projects to the
pre-existing mine area average quality after the completion of mining. Future reclamation and remediation costs,
which include extraction equipment removal and environmental remediation, are accrued at the end of each period based on management’s
best estimate of the costs expected to be incurred for each project. Such estimates are determined by the Company’s engineering
studies which consider the costs of future surface and groundwater activities, current regulations, actual expenses incurred, and
technology and industry standards. In accordance with ASC 410, Asset Retirement
and Environmental Obligations, the Company capitalizes the measured fair value of asset retirement obligations to mineral properties.
The asset retirement obligations are accreted to an undiscounted value until the time at which they are expected to be settled.
The accretion expense is charged to earnings and the actual retirement costs are recorded against the asset retirement obligations
when incurred. Any difference between the recorded asset retirement obligations and the actual retirement costs incurred will be
recorded as a gain or loss in the period of settlement. At each reporting period, the Company reviews
the assumptions used to estimate the expected cash flows required to settle the asset retirement obligations, including changes
in estimated probabilities, amounts and timing of the settlement of the asset retirement obligations, as well as changes in the
legal obligation requirements at each of its mineral properties. Changes in any one or more of these assumptions may cause revision
of asset retirement obligations for the corresponding assets. Deferred Financing Costs Deferred financing costs represent costs
incurred in connection with the issuance of debt. Once the associated debt instrument is issued, these costs would be recorded
as a debt discount and amortized to interest expense using the effective interest method over the term of the related debt instrument.
Upon the abandonment of a pending financing transaction, the related deferred financing costs would be charged to general and administrative
expense. The Company may also issue warrants or
other equity instruments in connection with the issuance of debt instruments. The equity instruments are recorded at their relative
fair market value on the date of issuance which results in a debt discount which is amortized to interest expense using the effective
interest method. Stock-Based Compensation The Company follows ASC 718, Compensation
- Stock Compensation, which addresses the accounting for stock-based payment transactions, requiring such transactions to be accounted
for using the fair value method. Awards of shares for property or services are recorded at the more readily measurable of the fair
value of the stock and the fair value of the service. The Company uses the Black-Scholes option-pricing model to determine the
grant date fair value of stock-based awards under ASC 718. The fair value is charged to earnings depending on the terms and conditions
of the award, and the nature of the relationship of the recipient of the award to the Company. The Company records the grant date
fair value in line with the period over which it was earned. For employees and consultants, this is typically considered to be
the vesting period of the award. The Company estimates the expected forfeitures and updates the valuation accordingly. In November 2019, the FASB issued ASU 2019-08, Compensation –
Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606), which clarifies that an entity must measure and
classify share-based payment awards granted to a customer by applying the guidance in Topic 718. ASU 2019-08 is effective for annual reporting
periods beginning after December 15, 2019, including interim reporting periods within those annual reporting periods. The Company adopted
ASU 2019-08, and has determined that there was no material impacts on its consolidated financial statements. Warrant Modification Expense In accordance with ASC 718, a modification of the terms or conditions
of an equity award shall be treated as an exchange of the original award for a new award. The incremental cost is measured as the excess
of the fair value of the modified award determined in accordance with ASC 718 over the fair value of the original award immediately before
its terms are modified, measured based on the share price and other pertinent factors. The resulting difference is recorded as a warrant
modification expense. See Note 8 for additional information. Loss per Share Basic net loss per share is computed by
dividing net loss by the weighted average number of common shares outstanding during the year. Diluted earnings per share is computed
using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the year. 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 diluted net loss per share for the years ended December 31, 2020 and 2019 excludes potentially
dilutive securities. The computations of net loss per share for each year 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
Years Ended
2020 2019
Warrants to purchase common shares 8,533,582 8,602,913
Options to purchase common shares 2,808,000 2,208,000
Total potentially dilutive securities 11,341,582 10,810,913 Leases 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 was no impact to the consolidated financial
statements. Recent Accounting Standards Management does not believe that any recently
issued, but not yet effective accounting standards, when adopted, will have a material effect on the accompanying consolidated
financial statements. The Company has adopted the recent accounting standards that are 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 non-credit 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 standard became effective for the Company beginning January 1, 2021.
The adoption of this standard did not have a material impact on the Company’s results of operations, financial condition, cash flows,
and financial statement disclosure. In December 2019, FASB issued ASU No. 2019-12, Income Taxes (Topic
740): Simplifying the Accounting for Income Taxes. ASU 2019-12 eliminated certain exceptions and changed guidance on other matters. The
exceptions relate to the allocation of income taxes in separate company financial statements, tax accounting for equity method investments
and accounting for income taxes when the interim period year-to-date loss exceeds the anticipated full year loss. Changes relate to the
accounting for franchise taxes that are income-based and non-income-based, determining if a step up in tax basis is part of a business
combination or if it is a separate transaction, when enacted tax law changes should be included in the annual effective tax rate computation,
and the allocation of taxes in separate company financial statements to a legal entity that is not subject to income tax. The new standard
is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted.
The Company is currently evaluating the potential impact but does not believe there will be an impact of the adoption of this standard
on its results of operations, financial position and cash flows and related disclosures. In June 2020, the American Institute of Certified Public Accountants
in conjunction with FASB developed Technical Question and Answer (“TQA”) 3200.18, “Borrower Accounting for a Forgivable
Loan Received Under the Small Business Administration Paycheck Protection Program”, which is intended to provide clarification on
how to account for loans received from the Paycheck Protection Program (“PPP”). TQA 3200.18 states that an entity may account
for PPP loans under ASC 470, “Debt” or, if the entity is expected to meet PPP eligibility criteria and the PPP loan is expected
to be forgiven, the entity may account for the loans under International Accounting Standards (“IAS”) 20, “Accounting
for Government Grants and Disclosure of Government Assistance”. The Company has accounted for PPP loan proceeds under ASC 470 as
allowed by TQA 3200.18. |
