REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Directors of CanAlaska Ventures Ltd.:
We have audited the accompanying consolidated balance sheets of CanAlaska Ventures Ltd.
(An Exploration Stage Company)
as at 30 April 2004 and 2003 and the related consolidated statements of changes in shareholders equity, loss and cash flows for the years ended 30 April 2004, 2003 and 2002. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with Canadian generally audited standards and with the Standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes 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, these financial statements present fairly, in all material respects, the financial position of the Company as at 30 April 2004 and 2003 and the changes in shareholders equity, results of its operations and its cash flows for the years ended 30 April 2004, 2003 and 2002 in accordance with Canadian generally accepted accounting principles.
Staley, Okada & Partners
Vancouver, B.C.
STALEY, OKADA & PARTNERS
19 May 2004,
except as to Note 5(a)(i) and 5(e)(ii) which are at 28 May 2004
CHARTERED ACCOUNTANTS
CanAlaska Ventures Ltd.
(An Exploration Stage Company)
Statement 1
Consolidated Balance Sheets
As at 30 April
Canadian Funds
ASSETS
2004
2003
Current
Cash and cash equivalents
$
1,280,871
$
147,469
Accounts and advances receivable
10,819
24,958
Portfolio investments
(Note 3)
401,244
412,575
1,692,934
585,002
Restricted Cash - Flow-Through
(Note 8b)
731,006
65,886
Long-Term Investments
(Note 4)
1
1
Mineral Property Costs
-
Schedule (Note 5)
2,033,644
1,760,186
Property, Plant and Equipment
(Note 6)
53,404
50,216
$
4,510,989
$
2,461,291
LIABILITIES
Current
Accounts payable and accrued liabilities
$
67,298
$
54,710
Loan payable
(Note 7)
-
7,350
67,298
62,060
Commitments
(Note 11)
SHAREHOLDERS' EQUITY
Share Capital
- Statement 2 (Note 8)
Authorized:
100,000,000 common shares without par value
Issued and fully paid:
27,314,439 (2003 14,675,117) shares outstanding
21,463,867
18,706,926
Deficit
-
Statement 2
(17,020,176)
(16,307,695)
4,443,691
2,399,231
$
4,510,989
$
2,461,291
ON BEHALF OF THE BOARD:
Harry Barr
, Director
Bernard Barlin
, Director
- See Accompanying Notes -
CanAlaska Ventures Ltd.
(An Exploration Stage Company)
Statement 2
Consolidated Statements of Changes in Shareholders Equity
Canadian Funds
Common Shares
Accumulated
Deficit
Number
Amount
Total
Balance - 30 April 2001
10,220,783
$
18,126,970
$
(14,691,704)
$
3,435,266
Issuance of shares for:
- Private placements
1,900,000
190,000
-
190,000
- Properties
720,000
161,600
-
161,600
- Finders' fee on property
75,000
13,500
-
13,500
Share issuance costs
-
(22,444)
-
(22,444)
Loss for the year
-
-
(1,057,328)
(1,057,328)
Balance - 30 April 2002
12,915,783
18,469,626
(15,749,032)
2,720,594
Issuance of shares for:
- Private placements
1,466,667
170,000
-
170,000
- Properties
235,000
60,550
-
60,550
- Finders' fee on property
25,000
6,750
-
6,750
- Finders' fee
32,667
-
-
-
Loss for the year
-
-
(558,663)
(558,663)
Balance - 30 April 2003
14,675,117
18,706,926
(16,307,695)
2,399,231
Issuance of shares for:
- Private placements
11,118,944
2,401,630
-
2,401,630
- Properties
350,000
122,000
-
122,000
- Exercise of warrants
738,333
102,417
-
102,417
- Exercise of options
40,000
6,000
-
6,000
- Finders fees
392,045
-
-
-
Share issuance costs
-
(32,106)
-
(32,106)
Stock-based compensation
-
157,000
-
157,000
Loss for the year
-
-
(712,481)
(712,481)
Balance 30 April 2004
27,314,439
$
21,463,867
$
(17,020,176)
$
4,443,691
- See Accompanying Notes -
CanAlaska Ventures Ltd.
(An Exploration Stage Company)
Statement 3
Consolidated Statements of Loss
Canadian Funds
Cumulative
From Inception
(8 June 1987)
to 30 April 2004
Years Ended 30 April
2004
2003
2002
General and Administrative Expenses
Consulting fees
$
1,557,957
$
286,981
$
90,548
$
56,880
Management fees
1,685,544
95,243
88,200
86,000
Accounting and audit
563,967
34,650
42,172
54,821
Insurance, licenses and filing
554,411
51,295
41,131
40,067
Rent
459,182
40,015
40,015
40,015
Shareholder relations
1,907,115
83,118
39,567
52,094
Wages, commissions and benefits
734,135
41,405
31,031
23,744
Office and miscellaneous
1,034,727
49,653
27,030
33,331
Travel, food and lodging
1,254,739
34,268
19,892
15,515
Amortization
546,507
16,883
16,049
21,138
Bank charges and interest
60,385
4,844
6,200
3,872
Legal fees
489,839
4,567
2,871
3,594
(10,848,508)
(742,922)
(444,706)
(431,071)
Other Income (Expense)
Mineral property costs written off
(5,270,886)
(24,855)
(211,946)
(622,336)
Write-down of investments
(Note 3)
(822,858)
(55,463)
(35,153)
(72,517)
Foreign exchange,
net
22,657
5,709
(9,071)
(1,414)
Loss from equity investments
(579,839)
-
-
-
Corporation capital tax
(28,926)
-
-
-
Gain on sale of property, plant and equipment
24,141
15,118
-
-
Insurance proceeds
250,000
-
-
-
Reimbursement of administration costs
290,652
-
-
-
Mineral property recoveries in excess of expenditures
220,951
-
-
-
Interest and other income
605,860
15,308
2,823
10,514
Gain (loss) on sale of portfolio investments
(908,420)
49,624
139,390
59,496
Option payment received on properties written off
25,000
25,000
-
-
(6,171,668)
30,441
(113,957)
(626,257)
Loss for the Period
$
(17,020,176)
$
(712,481)
$
(558,663)
$
(1,057,328)
Loss per Share - Basic and Diluted
$
(0.03)
$
(0.04)
$
(0.09)
Weighted Average Number of Shares Outstanding
20,468,864
13,760,332
11,278,715
- See Accompanying Notes -
CanAlaska Ventures Ltd.
(An Exploration Stage Company)
Statement 4
Consolidated Statements of Cash Flows
Canadian Funds
Cumulative
From Inception
(8 June 1987)
to 30 April 2004
Years Ended 30 April
Cash Resources Provided By (Used In)
2004
2003
2002
Operating Activities
Loss for the period
$
(17,020,176)
$
(712,481)
$
(558,663)
$
(1,057,328)
Items not affecting cash
Loss (gain) on sale of portfolio investments
908,420
(49,624)
(139,390)
(59,496)
Loss from equity investments
579,839
-
-
-
Write-down of portfolio investments
822,858
55,463
35,153
72,517
Mineral property costs written off
5,270,886
24,855
211,946
622,336
Amortization
546,507
16,883
16,049
21,138
Gain on sale of property, plant and equipment
(24,141)
(15,118)
-
-
Stock-based compensation expense
(Note 8(d)(ii))
157,000
157,000
-
-
Option payment received on properties written off
(25,000)
(25,000)
-
-
(8,783,807)
(548,022)
(434,905)
(400,833)
Changes in non-cash working capital
169,323
26,727
28,061
(65,945)
(8,614,484)
(521,295)
(406,844)
(466,778)
Investing Activities
Proceeds from (purchase of) portfolio investments,
net
(1,802,253)
15,492
179,035
305,837
Proceeds from (purchase of) long-term investments
(853,978)
-
-
(21,500)
Mineral property expenditures
(9,916,414)
(171,313)
(261,805)
(273,611)
Recovery of mineral property expenditures
3,073,548
-
64,822
94,905
Option payments received
1,056,556
10,000
-
12,500
Proceeds from sale of property, plant and equipment
31,500
31,500
-
-
Purchase of property, plant and equipment
(607,272)
(36,453)
(2,701)
(2,478)
(9,018,313)
(150,774)
(20,649)
115,653
Financing Activities
Loan payable
-
(7,350)
(8,186)
(7,330)
Shares issued for cash
19,644,674
2,477,941
170,000
167,556
19,644,674
2,470,591
161,814
160,226
Net Increase (Decrease) in Cash and Cash Equivalents
2,011,877
1,798,522
(265,679)
(190,899)
Cash and cash equivalents - Beginning of period
-
213,355
479,034
669,933
Cash and Cash Equivalents - End of Period
$
2,011,877
$
2,011,877
$
213,355
$
479,034
Cash and Cash Equivalents Consists of:
Cash
1,280,871
1,280,871
147,469
435,608
Restricted cash flow-through
731,006
731,006
65,886
43,426
$
2,011,877
$
2,011,877
$
213,355
$
479,034
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Shares issued for mineral properties
$
1,378,750
$
122,000
$
60,550
$
161,600
Shares issued for services
$
60,997
$
-
$
-
$
-
Shares issued for debt
$
51,848
$
-
$
-
$
-
Shares issued for finders fees
$
170,598
$
-
$
6,750
$
13,500
Shares received for mineral properties
$
(56,128)
$
(10,000)
$
(15,000)
$
(31,128)
Stock-based compensation expense included in share capital
$
157,000
$
157,000
$
-
$
-
- See Accompanying Notes -
CanAlaska Ventures Ltd.
(An Exploration Stage Company)
Schedule
Consolidated Schedules of Mineral Property Costs
For the Years Ended 30 April
Canadian Funds
2004
Acquisition
Costs
Exploration
Costs
Total
2003
Total
Alaska Properties
Acquisition
$
9,807
$
-
$
9,807
$
11,234
General exploration costs
-
6,333
6,333
5,831
9,807
6,333
16,140
17,065
Manitoba Property
Starlight
Acquisition
-
-
-
24,000
Reimbursement of exploration costs
-
-
-
(25,000)
-
-
-
(1,000)
Ontario Properties
Baird and Birch-Uchi
Acquisition
5,000
-
5,000
3,000
General exploration costs
-
9,101
9,101
4,800
Option payments received
(10,000)
-
(10,000)
(15,000)
(5,000)
9,101
4,101
(7,200)
Quebec Properties
Otish Mountain
Geophysical
-
6,947
6,947
30,948
Claim rentals
-
12,125
12,125
-
-
19,072
19,072
30,948
Glitter Lake
Acquisition
-
-
-
2,800
General exploration costs
-
-
-
440
Option payments received
(10,000)
-
(10,000)
-
(10,000)
-
(10,000)
3,240
Raglan
Acquisition
-
-
-
10,240
Balances Carried Forward
$
(5,193)
$
34,506
$
29,313
$
53,293
- See Accompanying Notes -
CanAlaska Ventures Ltd.
(An Exploration Stage Company)
Schedule
(Cont.)
Consolidated Schedules of Mineral Property Costs
For the Years Ended 30 April
Canadian Funds
2004
Acquisition
Costs
Exploration
Costs
Total
2003
Total
Balances Brought Forward
$
(5,193)
$
34,506
$
29,313
$
53,293
Newfoundland Properties
Botwood Basin and Gander
Acquisition
-
-
-
60,500
Staking
-
-
-
24,000
Drilling
-
-
-
56,799
Consulting
-
-
-
58,540
Geophysics
-
-
-
33,784
General exploration costs
-
-
-
819
Government assistance
-
-
-
(39,822)
-
-
-
194,620
British Columbia Property
Zeballos
Staking
4,661
-
4,661
-
General exploration costs
-
37,344
37,344
1,370
Assays
-
16,945
16,945
-
Mineral taxes
-
1,211
1,211
-
4,661
55,500
60,161
1,370
New Zealand Properties
Acquisition
143,600
-
143,600
-
Engineering and consulting
-
27,149
27,149
-
General exploration costs
-
10,138
10,138
-
143,600
37,287
180,887
-
General Exploration
-
2,952
2,952
-
Costs for the Year
143,068
130,245
273,313
249,283
Balance - Beginning of year
330,100
1,430,086
1,760,186
1,722,849
Mineral property costs written off
(12,800)
(12,055)
(24,855)
(211,946)
Option payment received on properties written off
25,000
-
25,000
-
Balance - End of Year
$
485,368
$
1,548,276
$
2,033,644
$
1,760,186
- See Accompanying Notes -
CanAlaska Ventures Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
30 April 2004 and 2003
Canadian Funds
1.
Significant Accounting Policies
a)
Consolidation
These consolidated financial statements include the accounts of the Companys wholly-owned subsidiaries, CanAlaska Resources Ltd. USA, and International CanAlaska de Mexico S.A. de C.V. (inactive). These subsidiaries have been accounted for using the purchase method.
b)
Cash and Cash Equivalents
For the purposes of reporting cash flows, the Company considers cash and cash equivalents to include amounts held in banks and highly liquid investments with maturities at point of purchase of 90 days or less. The Company places its cash with institutions of high credit worthiness.
c)
Investments
Investments are recorded at the lower of cost or market value. Investments are written down to market value when the decline in market value is deemed to be other than temporary.
d)
Mineral Properties and Deferred Exploration Expenditures
The Company is in the process of exploring its mineral properties and has not yet determined whether these properties contain ore reserves that are economically recoverable.
Mineral exploration and development costs are capitalized on an individual prospect basis until such time as an economic ore body is defined or the prospect is abandoned. Amounts received for the sale of a resource properties, for option payments and for exploration advances are treated as reductions of the cost of the property. Costs for a producing prospect are amortized on a unit-of-production method based on the estimated life of the ore reserves, while those costs for the prospects abandoned are written off.
The recoverability of the amounts capitalized for the undeveloped mineral properties is dependent upon the determination of economically recoverable ore reserves, confirmation of the Company's interest in the underlying mineral claims, the ability to obtain the necessary financing to complete their development, and future profitable production or proceeds from the disposition thereof.
Title to mineral properties involves inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently unreliable conveyancing history characteristic of many mineral properties. The Company has investigated title to all of its mineral properties and, to the best of its knowledge, all of its properties are in good standing.
e)
Environmental Expenditures
The operations of the Company may in the future be affected from time to time in varying degree by changes in environmental regulations, including those for future removal and site restoration costs. Both the likelihood of new regulations and their overall effect upon the Company vary greatly and are not predictable. The Company's policy is to meet or, if possible, surpass standards set by relevant legislation, by application of technically proven and economically feasible measures.
CanAlaska Ventures Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
30 April 2004 and 2003
Canadian Funds
1.
Significant Accounting Policies
-
Continued
e)
Environmental Expenditures
-
Continued
Environmental expenditures that relate to ongoing environmental and reclamation programs are charged against earnings as incurred or capitalized and amortized depending on their future economic benefits. Estimated future removal and site restoration costs, when the ultimate liability is reasonably determinable, are charged against earnings over the estimated remaining life of the related business operation, net of expected recoveries.
f)
Property, Plant and Equipment and Amortization
Property, plant and equipment are carried at cost less accumulated amortization. The Company provides for amortization on the following basis:
One-half of the above rate is applied in the year of acquisition.
g)
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 deferred 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.
h)
Share Capital
i)
The proceeds from the exercise of stock options, warrants and escrow shares are recorded as share capital in the amount for which the option, warrant or escrow share enabled the holder to purchase a share in the Company.
ii)
Share capital issued for non-monetary consideration is recorded at an amount based on fair market value as determined by management.
CanAlaska Ventures Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
30 April 2004 and 2003
Canadian Funds
1.
Significant Accounting Policies
-
Continued
i)
Stock-Based Compensation - Change in Accounting Policy
The Company adopted the recommendation of CICA Handbook Section 3870, Stock-Based Compensation and Other Stock-Based Payments, effective for all awards granted on or after 1 May 2002. This established standards for the recognition, measurement and disclosure of stock-based compensation and other stock-based payments made in exchange for goods and services.
As encouraged Section 3870, the Company has enacted prospectively early adoption of the fair value based method of accounting for awards to employees for the fiscal year beginning 1 May 2003.
The new standard requires that all stock-based awards made to employees and non-employees be measured and recognized using a fair value based method. In prior years, stock-based compensation expense was only recognized when stock-based compensation awards were made to non-employees, while pro-forma disclosure was acceptable for awards made to employees.
j)
Loss per Share
Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the year. The computation of diluted earnings per share 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. The dilutive effect of outstanding options and warrants and their equivalents is reflected in diluted earnings per share by application of the treasury stock method.
k)
Foreign Currency Translation
The accounts of the Company's foreign operations have been translated into Canadian dollars as follows:
Monetary assets and liabilities at year-end rates,
All other assets and liabilities at historical rates, and
Revenue 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.
l)
Flow-through Shares
The Company has adopted the new accounting pronouncement relating to flow-through shares effective for all flow-through share agreements dated after 19 March 2004. Canadian Income Tax Legislation permits an enterprise to issue securities referred to as flow-through shares whereby the investor may claim the tax deductions arising from 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 (renounced expenditures multiplied by the effective corporate tax rate) thereby reducing share capital. As the Companys current flow-through share agreement is dated 15 December 2003, there is no impact on the financial statements for the current year.
CanAlaska Ventures Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
30 April 2004 and 2003
Canadian Funds
1.
Significant Accounting Policies
-
Continued
l)
Flow-through Shares
-
Continued
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.
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.
2.
Fair Value of Financial Instruments
The Companys financial instruments consist of cash and cash equivalents, accounts and advances receivable, portfolio investments, restricted cash - flow-through, accounts payable and loan payable. Unless otherwise noted, it is managements 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 value due to their short-term maturity or capacity of prompt liquidation.
3.
Portfolio Investments
Details are as follows:
2004
2003
Book
Value
Market Value
Book
Value
Pacific North West Capital Corp. ("PFN")
$
238,879
$
619,080
$
227,035
Freegold Ventures Ltd. ("ITF")
87,902
87,902
100,647
Other portfolio investments
74,463
135,214
84,893
$
401,244
$
842,196
$
412,575
These investments have been accounted for using the lower of cost and market valuation method. Both PFN and ITF are companies with certain directors in common with the Company. During the year, the Company had a gain on sale on portfolio investments of $49,624 (2003 - $139,390) of which $4,240 (2003 - $4,933) was on the sale of PFN shares and $20,426 (2003 - loss of $59,880) was on the sale of ITF shares. The maximum percentage owned of PFN or ITF by the Company at any time during the year was less than 10%.
CanAlaska Ventures Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
30 April 2004 and 2003
Canadian Funds
3.
Portfolio Investments
-
Continued
Write-down of investments consists of the following:
Portfolio:
Write-down of ITF
$
46,063
Write-down of other portfolio investments
9,400
$
55,463
4.
Long-Term Investments
Pursuant to a Financing and Management Agreement dated February 2000, the Company invested $546,658 representing a 40% interest in WebDispatchers, a British Columbia private company involved in software development.
Due to the ongoing losses of the investment, as well as market conditions, management wrote down its investment in WebDispatchers, in fiscal 2001, to a nominal value.
5.
Mineral Property Costs
Details are as follows:
2004
Acquisition
Costs
-
Exploration
Costs
-
Total
-
2003
Total
Alaska Properties
$192,865
$
1,297,683
$
1,490,548
$
1,474,408
British Columbia Properties
Quesnel Canyon
1
-
1
1
Zeballos
4,661
55,500
60,161
-
Ontario Properties
Baird and
Birch-Uchi
-
-
-
(7,200)
Quebec Properties
Otish Mountain
90,376
88,541
178,917
159,846
Glitter Lake
43,625
69,265
112,890
122,891
Raglan
10,240
-
10,240
10,240
New Zealand Properties
143,600
37,287
180,887
-
$485,368
$
1,548,276
$
2,033,644
$
1,760,186
a)
Alaska Properties
The Company has acquired several mineral claims in the Valdez Creek Mining District, Talkeetna Recording District, Alaska, U.S.A.
i)
Rainbow Hills Claims
The Company has a 100% interest in eleven lode mining claims acquired by staking.
CanAlaska Ventures Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
30 April 2004 and 2003
Canadian Funds
5.
Mineral Property Costs
-
Continued
a)
Alaska Properties
Continued
i)
Rainbow Hills Claims
Continued
By agreement dated 28 August 2003 the Company granted Freegold Ventures Ltd. (ITF) a company with certain directors and officers in common, the right to earn up to a 65% interest in certain mineral claims known as the Rainbow Hill Property located in Valdez Mining District central Alaska. To acquire a 50% interest in the property, ITF, at its option, must complete the following:
Shares
Cash Payments
(US Funds)
Exploration
Expenditures
(US Funds)
Upon execution of the agreement *
-
$
10,000
$
-
Within 5 days of regulatory approval *
50,000
-
-
On or before 31 December 2003 *
-
20,000
10,000
On or before 28 May 2005
50,000
-
-
On or before 31 December 2004
-
30,000
150,000
On or before 28 May 2006
50,000
-
-
On or before 31 December 2005
-
50,000
250,000
On or before 28 May 2006
50,000
-
-
On or before 31 December 2006
-
50,000
450,000
On or before 28 May 2008
50,000
-
-
On or before 31 December 2007
-
-
550,000
On or before 28 May 2009
50,000
-
-
On or before 31 December 2008
-
-
590,000
300,000
$
160,000
$
2,000,000
*
At 30 April 2004, these cash payments and exploration expenditures had not been paid/incurred since the Company and ITF had not received regulatory approval. Regulatory approval was received subsequent to year-end. The $10,000 cash payment upon execution of the agreement and 50,000 shares payment within 5 days of regulatory approval are obligatory obligations.
ITF will be the operator of the project and is responsible for the annual rents due on the property. Once vested, ITF may increase its interest to 60% by completing a feasibility study within two years. An additional 5% may be earned by commencing commercial production two years after a positive feasibility study. In the event that a bankable feasibility study indicates an internal rate of return (IRR) in excess of 15%, ITF will be required to make cash payments of $250,000 per year for each year the project is not put into commercial production.
In the event that a major mining company (Major) elects to participate in the project before ITF vests with a 50% interest (with ITF having expended less than US$1,000,000), ITF will issue up to a million shares to the Company. In the event that a Major elects to participate in the project before ITF vests with a 50% interest (after ITF has expended US$1,000,000 but has not expended US$2,000,000), ITF will issue up to 750,000 shares to the Company.
CanAlaska Ventures Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
30 April 2004 and 2003
Canadian Funds
5.
Mineral Property Costs
-
Continued
ii)
Gold Hills Claims
By agreements dated November 1989, September 1994, November 1995 and October 1999, the Company has the option to earn up to a 50% interest in 51 mining claims. Under the terms of the agreements, the Company, at its option, must pay US$28,500 and incur US$250,000 (approximately US$50,000 incurred to date) by July 2005 on exploration and development on the property.
The optionor is controlled by a director of the Company.
b)
British Columbia Properties
i)
Quesnel Canyon
The Company has a 100% interest in a placer lease located in the Cariboo Mining Division, British Columbia.
Due to a lack of exploration undertaken on the property, management wrote down the costs on this property to $1 in a prior year.
ii)
Zeballos
Pursuant to an option and Joint Venture Agreement dated 23 August 1988, and amended November 1998, the Company earned a 50% interest in 22 Crown-granted and 11 reverted Crown-granted mineral claims in the Alberni Mining Division of British Columbia by expending in excess of $500,000 on the properties. Due to market conditions at that time and lack of exploration undertaken on the property, management wrote off the costs on the property in a prior year. The Company acquired a 100% interest in the property on 10 December 2002, and in December 2003, an exploration program was undertaken.
c)
Ontario Properties
i)
Baird Property, Ontario
By agreement dated 24 February 2003, the Company may earn a 100% interest in certain properties in the Red Lake greenstone belt, known as the Baird property. As consideration, the Company, at its option, must issue 100,000 shares (25,000 issued) and make cash payments of $71,000 ($3,000 paid).
During the year, the Company terminated the agreement. Accordingly, all acquisition and exploration costs previously incurred have been written off.
By an agreement dated 9 April 2003, the Company entered into an agreement with Hawkeye Gold International Inc. (Hawkeye), by which Hawkeye could earn a 50% interest in the Baird property by issuing 300,000 shares (62,500 received), making cash payments totalling $90,000 and completing $362,500 in exploration expenditures over three years.
Under the terms of the agreement, Hawkeye was to advance $37,500 for the Year 1 expenditures by 15 July 2003, otherwise the agreement would become null and void. Hawkeye did not advance the funds and the agreement has been terminated.
CanAlaska Ventures Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
30 April 2004 and 2003
Canadian Funds
5.
Mineral Property Costs
-
Continued
c)
Ontario Properties
-
Continued
ii)
Birch-Uchi Property, Ontario
By agreement dated 24 February 2003, the Company may earn a 100% interest in certain properties known as the Birch-Uchi property. As consideration, the Company, at its option, must issue 100,000 shares (25,000 issued) and make cash payments of $68,000 ($Nil paid).
During the year, the Company terminated the agreement. Accordingly, all acquisition and exploration costs previously incurred have been written off.
By an agreement dated 9 April 2003, the Company entered into an agreement with Hawkeye, by which Hawkeye could earn a 50% interest in the Birch-Uchi property by issuing 300,000 shares (62,500 received), making cash payments totalling $90,000 and completing $362,500 in exploration expenditures over three years.
Under the terms of the agreement, Hawkeye was to advance $37,500 for the Year 1 expenditures by 15 July 2003, otherwise the agreement would become null and void. Hawkeye did not advance the funds and the agreement has been terminated.
d)
Quebec Properties
i)
Otish Mountain
By agreement dated 6 December 2001, the Company has the option to acquire a 100% interest in the Otish Mountain Projects, located in Quebec. In order to complete the terms of the agreement, the Company, at its option, must complete the following:
Pay $46,456 for reimbursement of staking and transfer costs (paid)
Issue 200,000 common shares (issued)
Incur $300,000 of exploration and development expenditures on or before 1 February 2005. As at 30 April 2004 the Company has incurred approximately $179,000.
In addition, the Company agreed to pay the
optionor:
a 10% fee for being the field manager (up to $250,000)
an additional $25,000 in the event the Company intersects kimberlite in a drill program
$50,000 in the event two or more macro diamonds are recovered
The property is subject to a 3% net smelter returns royalty (NSR). The Company has the option to reduce the NSR to 1% by making payments of U.S. $3,000,000 within 90 days of commercial production.
CanAlaska Ventures Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
30 April 2004 and 2003
Canadian Funds
5.
Mineral Property Costs
-
Continued
d)
Quebec Properties
-
Continued
ii)
Glitter Lake
The Company acquired a 100% interest in certain mineral claims located near Glitter Lake, Quebec for payment of $32,667 in staking costs and the issuance of 40,000 common shares of the Company.
The property is subject to a 1.5% NSR.
By agreement dated 15 August 2003, the Company granted Pacific North West Capital Corp. (PFN) a company with directors in common, the right to earn a 70% interest in the Glitter Lake property.
To earn a 50% interest in the property, PFN, 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
-
-
Within 5 business days of receiving regulatory approval
(issued)
-
20,000
-
On or before 15
August 2004
15,000
-
-
On or before 28 May 2005
-
20,000
-
On or before 28 January 2005
-
-
150,000
On or before 15 April 2005
-
-
200,000
On or before 15
August 2005
20,000
-
-
On or before 28 May 2006
-
20,000
-
On or before 15 April 2006
-
-
300,000
Total
$
45,000
60,000
$
700,000
Upon PFN having vested with a 50% interest by completing the aforementioned payments and obligations, PFN may elect within 45 days to increase its interest to 60% by completing a bankable feasibility study within two years. In the event PFN does not complete a bankable feasibility study within two years, PFN 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 PFN may elect within 90 days to earn a 70% interest in the property by placing the property into commercial production within two years from the date of this election. In the event that the bankable feasibility study indicates an IRR in excess of 15%, PFN agrees to make annual cash payments of $50,000 to the optionor for each year the project is not placed into commercial production.
CanAlaska Ventures Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
30 April 2004 and 2003
Canadian Funds
5.
Mineral Property Costs
-
Continued
d)
Quebec Properties
-
Continued
ii)
Glitter Lake
-
Continued
In the event that a major mining company elects to participate in the project before PFN vests with a 50% interest, PFN will issue shares with a value of $100,000 to the Company, within 15 days of PFN becoming vested, or pay such amount that will result in PFN having spent $1 million in exploration expenditures.
The property is subject to a 1.5% NSR payable to a third party. The Company and PFN will share the NSR buyout privileges in proportion to their respective interests.
Subsequent to the year-end, this agreement received regulatory approval.
iii)
Raglan
During the prior year, the Company acquired 128 mineral claims (5,306 ha) in the Raglan area of Northern Quebec through staking. Total consideration for the acquisition was $10,240.
e)
Newfoundland Properties
i)
Botwood Basin
By agreement dated 4 June 2002, the Company had the option to acquire a 51% interest in the Paradise Lake, Rolling Pond and Chiouk Brook properties located in Newfoundland.
ii)
Gander
The Company acquired by staking, 400 claims located in the Gander area of Newfoundland, subject to a 1% NSR.
During the prior year, all amounts relating to the Newfoundland properties were written off.
CanAlaska Ventures Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
30 April 2004 and 2003
Canadian Funds
5.
Mineral Property Costs
-
Continued
f)
New Zealand Properties
Cascade Projects
By agreement dated 28 November 2003, the Company may earn a 100% interest in the Cascade Projects and 100% interest in a New Zealand company. In order to complete the terms of the agreement, the Company must, at its option, make payments, and issue shares as follows:
Cascade Project A
Payments
Shares
Within 5 days of regulatory approval (paid/issued)
US$
20,000
150,000
On or before 17 March 2005
-
75,000
On or before 17 March 2006
-
75,000
US$
20,000
300,000
Cascade Project B
Payments
Shares
Within 5 days of regulatory approval (issued)
US$
-
150,000
On or before 17 March 2005
-
75,000
On or before 17 March 2006
10,000
75,000
On or before 17 March 2007
10,000
-
US$
20,000
300,000
Other Projects
In addition to the Cascade Projects, the Company has also been granted the following two prospecting permits: Granite Dome which covers 1544 sq km and Greymouth North which covers 235 sq km. The Company has also made application for two additional permits which have not been granted as at the year end.
6.
Property, Plant and Equipment
Details are as follows:
Cost
Accumulated
Amortization
2004
Net Book
Value
2003
Net Book
Value
Office equipment
$
195,633
$
172,433
$
23,200
$
29,674
Automotive equipment
35,535
5,331
30,204
16,382
Mining equipment
215,516
215,516
-
4,160
$
446,684
$
393,280
$
53,404
$
50,216
CanAlaska Ventures Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
30 April 2004 and 2003
Canadian Funds
7.
Loan Payable
The loan payable bears interest at 10.75% per annum and is repayable in monthly payments of $777. During the year, the loan matured and was paid in full.
8.
Share Capital
a)
Private Placements
During the year, the Company issued 1,500,000 units at a price of $0.10 for gross proceeds of $150,000. Each unit consists of one common share and one share purchase warrant exercisable for three years after the issue date at $0.12 per share. A total of 645,000 units were purchased by related parties.
During the year, the Company issued 3,500,000 at a price of $0.10 for gross proceeds of $350,000. Each unit consists of one common share and one share purchase warrant exercisable for two years after the issue date at $0.12 per share. The agents received 245,000 finders units. Each finders unit consists of one common share and one share purchase warrant having the same terms as the issued warrants.
During the year, the Company issued 2,000,000 units at a price of $0.23 for gross proceeds of $460,000. Each unit consists of one common share and one-half share purchase warrant exercisable for 12 months after the issue date at $0.33 per share. The agents received 16,555 common shares of the Company. A total of 47,583 units were purchased by related parties.
During the year, the Company issued 2,118,944 flow-through units at a price of $0.35 for gross proceeds of $741,630. Each flow-through unit consists of one common share and one-half non-flow-through share purchase warrant exercisable for 12 months after the issue date at $0.45 per share. The agents received 60,000 finders units and 8,540 common shares of the Company. Each finders unit consists of one common share and one share purchase warrant having the same terms as the issued warrants.
During the year, the Company issued 2,000,000 units at a price of $0.35 for gross proceeds of $700,000. Each unit consists of one common share and one-half share purchase warrant exercisable for 12 months after the issue date at $0.45 per share. The agents received 61,950 common shares of the Company.
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 (CEE) under Canadian Income Tax Legislation. Restricted Cash - Flow-Through represents funds received from the flow-through issuance that have not been spent on qualifying CEE as at the balance sheet date.
CanAlaska Ventures Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
30 April 2004 and 2003
Canadian Funds
8.
Share Capital
-
Continued
c)
Exercise of Warrants and Options
i)
During the year, 738,333 warrants were exercised for gross proceeds of $102,417. Of these, 250,000 warrants were exercised by related parties for proceeds of $26,000.
ii)
During the year, 40,000 options were exercised for gross proceeds of $6,000.
d)
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 the date of grant or such lesser period as determined by the Company's board of directors. The exercise price of an option is not less than the closing price on the TSX Venture Exchange on the last trading day preceding the grant date.
i)
A summary of the Companys options at 30 April 2004 and the changes for the year are as follows:
Number outstanding 30 April 2003
Granted
Exercised
Expired / Cancelled
Number outstanding
30 April 2004
Exercise price per share
Expiry date
48,000
-
-
48,000
-
$0.50
21 May 2003
37,000
-
-
37,000
-
$0.50
2 February 2004
20,000
-
-
16,000
4,000
$0.50
31 May 2004
202,000
-
-
48,000
154,000
$0.50
23 February 2005
85,000
-
-
7,000
78,000
$0.50
18 April 2006
10,000
-
-
-
10,000
$0.50
7 August 2006
22,500
-
6,500
16,000
$0.50
28 August 2006
38,900
-
-
9,400
29,500
$0.50
15 May 2007
36,665
-
-
-
36,665
$0.50
24 November 2007
-
40,000
40,000
-
-
$0.15
1 September 2004
-
40,000
-
-
40,000
$0.20
1 September 2004
-
40,000
-
-
40,000
$0.25
1 September 2004
-
40,000
-
-
40,000
$0.30
1 September 2004
-
150,000
-
-
150,000
$0.32
1 May 2005
-
230,000
-
100,000
130,000
$0.35
10 February 2007
-
100,000
-
-
100,000
$0.10
26 May 2008
-
1,000,000
-
-
1,000,000
$0.25
10 September 2008
500,065
1,640,000
40,000
271,900
1,828,165
As at 30 April 2004, 603,000 options out of the 1,640,000 options granted have fully vested.
CanAlaska Ventures Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
30 April 2004 and 2003
Canadian Funds
8.
Share Capital
-
Continued
d)
Share Purchase Options
-
Continued
ii)
Stock-Based Compensation
Effective 1 May 2003, the Company adopted the new recommendation of CICA Handbook Section 3870
(Note 1i)
. This standard requires that stock-based awards made to employees and non-employees are to be measured and recognized using a fair value based method.
During the year, the Company granted options to purchase up to 1,640,000 shares of the Company at exercise prices between $0.10 to $0.35 per share. Of these options, 450,000 were granted to officers and directors of the Company.
The total fair value of the options granted was calculated to be $224,000 on the grant date. Since the options were granted under a graded vesting schedule, $157,000 of the fair value has been recorded in the Company accounts under consulting fees during the year. The offsetting entry is to share capital.
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:
Expected dividend yield
0.00%
Expected stock price volatility
114.12%
Risk free interest rate
3.62%
Expected life of options
4 years
e)
Share Purchase Warrants
As at 30 April 2004, the following share purchase warrants are outstanding:
Number
Exercise Price
Expiry Date
1,000,000
$0.33
4 November 2004
1,089,472
$0.45
18 December 2004
950,000
$0.45
26 January 2005
50,000
$0.45
28 January 2005
3,745,000
$0.12
2 October 2005
2,495,000
$0.35
10 April 2006
1,300,000
$0.12
9 September 2006
1,600,000
$0.10
15 January 2007
1,000,000
$0.12
14 November 2007
13,229,472
CanAlaska Ventures Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
30 April 2004 and 2003
Canadian Funds
9.
Related Party Transactions
Except as disclosed elsewhere in these consolidated financial statements, related party transactions are as follows:
During the year, the Company paid:
2004
2003
2002
Consulting fees to a company controlled by an officer of the Company
$
15,937
$
15,397
$
17,810
Management fees to a company controlled by a director of the Company
$
95,243
$
88,200
$
86,000
Rent to a company controlled by a director of the Company
$
40,015
$
40,015
$
40,015
Accounting fees to a company controlled by an officer of the Company
$
13,200
$
10,950
$
NIL
10.
Income Taxes
The Company has non-capital losses for income tax purposes of approximately $4,732,000 that may be applied against taxable income in future years and expire as follows:
Amount
2005
$
772,000
2006
523,000
2007
625,000
2008
417,000
2009
1,079,000
2010
591,000
2011
725,000
$
4,732,000
The Company also has approximately $3,271,000 in Canadian and foreign exploration and development expense pools available for carryforward.
The potential future tax benefits of these expenditures and tax losses have not been recognized in these consolidated financial statements.
11.
Commitments
a)
By an agreement effective 1 June 1995, the Company entered into a three-year management agreement with a company controlled by a director and officer. Compensation due under the agreement is currently $7,718 per month plus benefits. The officer 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 renewable at three-year periods with mutual consent. The current three-year agreement expires in 2007. The Company may terminate the agreement at any time but will be responsible to pay one year's compensation.
CanAlaska Ventures Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
30 April 2004 and 2003
Canadian Funds
11.
Commitments
-
Continued
b)
By an agreement dated 1 July 2000, the Company entered into a five-year lease for premises with a company controlled by a director and officer. Minimum basic rent is as follows:
Amount
2005
$
25,272
2006 (expires in June 2005)
$
4,212
In addition to the basic rent, the Company is responsible for its proportionate share of property taxes and operating costs.
12.
Segmented Information
Details on a geographic basis at 30 April 2004 are as follows:
Canada
U.S.A.
New Zealand
Total
Assets
$
2,839,554
$
1,490,548
$
180,887
$
4,510,989
Capital Expenditures
$
112,741
$
16,140
$
180,887
$
309,768
Loss for the Year
$
(712,481)
$
-
$
-
$
(712,481)
Details on a geographic basis at 30 April 2003 are as follows:
Canada
U.S.A.
New Zealand
Total
Assets
$
984,171
$
1,477,120
$
-
$
2,461,291
Capital Expenditures
$
246,267
$
18,239
$
-
$
264,506
Loss for the Year
$
(558,663)
$
-
$
-
$
(558,663)
Details on a geographic basis at 30 April 2002 are as follows:
Canada
U.S.A.
New Zealand
Total
Assets
$
1,338,878
$
1,457,342
$
-
$
2,796,220
Capital Expenditures
$
297,589
$
-
$
-
$
297,589
Loss for the Year
$
(1,057,328)
$
-
$
-
$
(1,057,328)
CanAlaska Ventures Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
30 April 2004 and 2003
Canadian Funds
12.
Segmented Information
-
Continued
Details on an industry basis at 30 April 2004 are as follows:
Software
Development
Resource
Exploration
Total
Assets
$
-
$
4,510,989
$
4,510,989
Capital Expenditures
$
-
$
309,768
$
309,768
Loss for the Year
$
-
$
(712,481)
$
(712,481)
Details on an industry basis at 30 April 2003 are as follows:
Software
Development
Resource
Exploration
Total
Assets
$
-
$
2,461,291
$
2,461,291
Capital Expenditures
$
-
$
264,506
$
264,506
Loss for the Year
$
-
$
(558,663)
$
(558,663)
Details on an industry basis at 30 April 2002 are as follows:
Software
Development
Resource
Exploration
Total
Assets
$
61,163
$
2,735,057
$
2,796,220
Capital Expenditures
$
21,500
$
276,089
$
297,589
Income (Loss) for the Year
$
8,926
$
(1,066,254)
$
(1,057,328)
13.
Differences between Canadian and United States Generally Accepted Accounting
Principles (GAAP)
These consolidated financial statements are prepared in accordance with accounting principles generally accepted in Canada. The United States Securities and Exchange Commission (SEC) requires that financial statements of foreign companies contain a reconciliation presenting the statements on the basis of accounting principles generally accepted in the United States. Any differences in accounting principles as they pertain to the accompanying consolidated financial statements are not material except as follows:
a)
Under Canadian GAAP, the mineral properties are carried at cost and written off or written down if the properties are abandoned, sold or if management decides not to pursue the properties. Under United States GAAP, the Company would periodically review and obtain independent reports in determining adjustments to the mineral properties and record properties at net realizable value. The Company has not yet obtained an independent report for United States GAAP purposes, therefore, the Companys mineral property costs have been written off.
CanAlaska Ventures Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
30 April 2004 and 2003
Canadian Funds
13.
Differences between Canadian and United States Generally Accepted Accounting
Principles (GAAP)
-
Continued
b)
Under United States GAAP, stock compensation expense is recorded as shares held in escrow become eligible for release, at the market value of the shares at that time. Under Canadian GAAP, no value is attributed to such shares released and no compensation expense is recorded. Shares previously held in escrow were performance shares which were issued to certain directors who reorganized the Companys business affairs and raised financing sufficient to fund the Companys business plan.
c)
Until 1 May 2002, the Company was not required, under Canadian GAAP, to record the effect of non-employee stock-based compensation expense in the consolidated financial statements. Commencing 1 May 2002, Canadian GAAP treatment is consistent with United States GAAP treatment. Under United States GAAP, stock compensation expense is recorded for non-employees based upon a fair value method. The Company elected to continue to measure compensation cost for employees under Accounting Principles Board (APB) Opinion No. 25, including interpretations provided in Interpretation (FIN) No. 44. Generally, under APB No. 25 compensation expense is recognized for the difference between the market price of the underlying common stock and the exercise price of the stock options. Effective from the date of the modification, the Company regularly re-measures compensation expense for the options where there has been a substantive change or modification to such options. During the years ended 30 April 2003 and 2002, there were no employee options granted.
Effective 1 May 2003, the Company adopted the new Canadian standards for stock compensation
(Note 1(i)) and Note 8(d))
which mirrors in all material respects SFAS 123. Accordingly, no reconciling item exists between Canadian and United States accounting for stock options after 1 May 2003.
d)
Under United States GAAP, investments available for sale are recorded at market value. The difference between the market value and the carrying value of investments is recorded as a separate shareholder equity category named comprehensive income. Once the investment is sold, the comprehensive income relating to that investment is cleared out to income. Under Canadian GAAP, investments available for sale are recorded at the lower of cost or market. There is no comprehensive income category in Canada.
e)
The impact of the above differences between Canadian and United States GAAP on loss for the period are as follows:
Cumulative
From Inception
(8 June 1987)
Years Ended 30 April
to 30 April 2004
2004
2003
2002
Loss for the period as reported
$
(17,020,176)
$
(712,481)
$
(558,663)
$
(1,057,328)
Stock compensation expense on release of performance shares
(442,500)
-
-
-
Stock compensation expense
(1,016,332)
-
-
-
Recovery (write-off) of mineral property costs
(2,033,644)
(273,458)
(37,337)
312,158
Loss on write-down of portfolio investments
276,201
55,463
35,153
51,017
Primary loss for the period in accordance with United States GAAP
$
(20,236,451)
$
(930,476)
$
(560,847)
$
(694,153)
Primary loss per share for the period in accordance with United States GAAP
$
(0.05)
$
(0.04)
$ (0.07)
CanAlaska Ventures Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
30 April 2004 and 2003
Canadian Funds
13.
Differences between Canadian and United States Generally Accepted Accounting
Principles (GAAP)
-
Continued
f)
The impact of the above differences between Canadian and United States GAAP on the deficit, as reported, is as follows:
Years Ended 30 April
2004
2003
2002
Deficit - As reported
$
(17,020,176)
$
(16,307,695)
$
(15,749,032)
Stock compensation expense on release of performance shares
(442,500)
(442,500)
(442,500)
Stock compensation expense
(1,016,332)
(1,016,332)
(1,016,332)
Write-off of mineral property costs
(2,033,644)
(1,760,186)
(1,722,849)
Deficit in accordance with United States GAAP
$
(20,512,652)
$
(19,526,713)
$
(18,930,713)
CanAlaska Ventures Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
30 April 2004 and 2003
Canadian Funds
13.
Differences between Canadian and United States Generally Accepted Accounting
Principles (GAAP)
-
Continued
a)
The impact of the above differences between Canadian and United States GAAP on the consolidated statements of changes in shareholders equity, as reported, are as follows:
Common Shares
Accumulated
Comprehensive
Number
Amount
Deficit
Income
Total
Shareholders equity balance as reported at 30 April 2002
12,915,783
$
18,469,626
$
(15,749,032)
$
-
$
2,720,594
Stock compensation expense on release of performance shares
-
-
(442,500)
-
(442,500)
Stock compensation expense
-
1,016,332
(1,016,332)
-
-
Write-off of mineral property costs
-
-
(1,722,849)
-
(1,722,849)
Unrealized holding gains on portfolio investments
-
-
-
530,583
530,583
Shareholders equity in accordance with United States GAAP at 30 April 2002
12,915,783
$
19,485,958
$
(18,930,713)
$
530,583
$
1,085,828
Shareholders equity balance as reported at 30 April 2003
14,675,117
$
18,706,926
$
(16,307,695)
$
-
$
2,399,231
Stock compensation expense on release of performance shares
-
-
(442,500)
-
(442,500)
Stock compensation expense
-
1,016,332
(1,016,332)
-
-
Write-off of mineral property costs
-
-
(1,760,186)
-
(1,760,186)
Unrealized holding gains on portfolio investments
-
-
-
209,541
209,541
Shareholders equity in accordance with United States GAAP at 30 April 2003
14,675,117
$
19,723,258
$
(19,526,713)
$
209,541
$
406,086
Shareholders equity balance as reported at 30 April 2004
27,314,439
$
21,463,867
$
(17,020,176)
$
-
$
4,443,691
Stock compensation expense on release of performance shares
-
-
(442,500)
-
(442,500)
Stock compensation expense
-
1,016,332
(1,016,332)
-
-
Write-off of mineral property costs
-
-
(2,033,644)
-
(2,033,644)
Unrealized holding gains on portfolio investments
-
-
-
440,952
440,952
Shareholders equity in accordance with United States GAAP at 30 April 2004
27,314,439
$
22,480,199
$
(20,512,652)
$
440,952
$
2,408,499
CanAlaska Ventures Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
30 April 2004 and 2003
Canadian Funds
13.
Differences between Canadian and United States Generally Accepted Accounting
Principles (GAAP)
-
Continued
h)
New Accounting Pronouncements
In June 2001, the FASB issued SFAS No. 141,
Business Combinations
. SFAS No. 141 mandates the purchase method of accounting for all business combinations initiated after 30 June 2001. In addition, SFAS No. 141 addresses the accounting for intangible assets and goodwill acquired in business combinations completed after 30 June 2001. The Company adopted SFAS No. 141, as required, with no material impact on its financial statements.
In June 2001, the FASB issued SFAS No. 142,
Goodwill and Other Intangible Assets
, which revises the accounting for purchased goodwill and other intangible assets. Under SFAS No. 142, goodwill and other intangible assets with indefinite lives will no longer be systematically amortized into operating results. Instead, each of these assets will be tested, in the absence of an indicator of possible impairment, at least annually, and upon an indicator of possible impairment, immediately. The Company adopted SFAS No. 142, as required, on 1 May 2002, with no material impact on its financial statements.
In August 2001, the FASB issued SFAS No. 143, "
Accounting for Asset Retirement Obligations
". SFAS No. 143 requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is a cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related obligation for its recorded amount or incurs a gain or loss upon settlement. The Company adopted SFAS No. 143, as required, on 1 May 2003, with no material impact on its financial statements.
In August 2001, the FASB issued SFAS No. 144,
Accounting for the Impairment or Disposal of Long-lived Assets
. SFAS No. 144 was issued to resolve certain implementation issues that had arisen under SFAS No. 121. Under SFAS No. 144, a single uniform accounting model is required to be used for long-lived assets to be disposed of by sale, whether previously held and used or newly acquired, and certain additional disclosures are required. The Company adopted SFAS No. 144, as required, with no material impact on its financial statements.
In April 2002, the FASB issued SFAS No. 145,
Rescission of FASB Statements Nos. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections
. SFAS No. 145 updates, clarifies and simplifies existing accounting pronouncements, by rescinding SFAS No. 4, which required all gains and losses from extinguishment of debt to be aggregated and, if material, classified as an extraordinary item, net of related income tax effect. As a result, the criteria in APB No. 30 will now be used to classify those gains and losses. Additionally, SFAS No. 145 amends SFAS No. 13 to require that certain lease modifications that have economic effects similar to sale-leaseback transactions be accounted for in the same manner as sale-leaseback transactions. Finally, SFAS No. 145 also makes technical corrections to existing pronouncements. While those corrections are not substantive in nature, in some instances, they may change accounting practice. The Company adopted the provisions of SFAS No. 145 that amended SFAS No. 13, as required, on 15 May 2002 for transactions occurring after such date with no material impact on its financial statements. The Company adopted the remaining provisions of SFAS No. 145, as required, on 1 May 2003, with no material impact on its financial statements.
CanAlaska Ventures Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
30 April 2004 and 2003
Canadian Funds
13.
Differences between Canadian and United States Generally Accepted Accounting
Principles (GAAP)
-
Continued
h)
New Accounting Pronouncements
-
Continued
In June 2002, the FASB issued SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal Activities
. SFAS No. 146 was issued to address the financial accounting and reporting for costs associated with exit or disposal activities, unless specifically excluded. SFAS No. 146 requires that a liability for a cost associated with a covered exit or disposal activity be recognized and measured initially at its fair value in the period in which the liability is incurred, except for a liability for one-time termination benefits that is incurred over time. If employees are not required to render service until they are terminated in order to receive the one-time termination benefits or if employees will not be retained to render service beyond the minimum retention period (as dictated by existing law, statute or contract, or in the absence thereof, 60 days), a liability for the termination benefits shall be recognized and measured at its fair value at the communication date. If employees are required to render service until they are terminated in order to receive the one-time termination benefits and will be retained to render service beyond the minimum retention period, a liability for the termination benefits shall be measured initially at the communication date based on the fair value of the liability as of the termination date. The liability shall be recognized rateably over the future service period. SFAS No. 146 also dictates that a liability for costs to terminate an operating lease or other contract before the end of its term shall be recognized and measured at its fair value when the entity terminates the contract in accordance with the contract terms. A liability for costs that will continue to be incurred under a contract for its remaining term without economic benefit to the entity is to be recognized and measured at its fair value when the entity ceases using the right conveyed by the contract. SFAS No. 146 further dictates that a liability for other covered costs associated with an exit or disposal activity be recognized and measured at its fair value in the period in which the liability is incurred. The Company adopted SFAS No. 146, as required, on 1 May 2003 with no material impact on its financial statements.
In November 2002, the FASB issued FASB interpretation No. 45 (FIN 45),
Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.
FIN 45 requires that a liability be recorded in the guarantors balance sheet upon issuance of certain guarantees. FIN 45 also requires disclosure about certain guarantees that an entity has issued. The disclosure requirements of FIN 45 were effective for fiscal years ending after 15 December 2002. The Company adopted the provisions of FIN 45, as required, on 1 January 2002 with no material impact on its financial statements.
In December 2002, the FASB issued SFAS No. 148,
"Accounting for Stock-Based Compensation -- Transition and Disclosure"
. SFAS 148 amends SFAS No. 123, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. SFAS 148 is effective for fiscal years beginning after 15 December 2002. The interim disclosure provisions are effective for financial reports containing financial statements for interim periods beginning after 15 December 2002. The Company adopted SFAS No. 148, as required, on 1 January 2003 with no material impact on its financial statements.
CanAlaska Ventures Ltd.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
30 April 2004 and 2003
Canadian Funds
13.
Differences between Canadian and United States Generally Accepted Accounting
Principles (GAAP)
-
Continued
h)
New Accounting Pronouncements
-
Continued
In January 2003, the FASB issued FASB Interpretation No. 46 (FIN 46),
Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51.
FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 is effective for all new variable interest entities created or acquired after 31 January 2003. For variable interest entities created or acquired prior to 1 February 2003, the provisions of FIN 46 must be applied for the first interim or annual period beginning after
15 June 2003. The Company adopted the provisions of FIN 46, as required, with no material impact on its financial statements
On 30 April 2003, the FASB issued SFAS No. 149,
"Amendment of Statement 133 on Derivative Instruments and Hedging Activities."
. SFAS No. 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133. The new guidance amends SFAS No. 133 for decisions made as part of the Derivatives Implementation Group (
"DIG"
) process that effectively required amendments to SFAS No. 133, and decisions made in connection with other FASB projects dealing with financial instruments and in connection with implementation issues raised in relation to the application of the definition of a derivative and characteristics of a derivative that contains financing components. In addition, it clarifies when a derivative contains a financing component that warrants special reporting in the statement of cash flows. SFAS No. 149 is effective for contracts entered into or modified after 30 June 2003 and for hedging relationships designated after 30 June 2003. The Company adopted SFAS 149, as required, on 1 July 2003, with no material impact on its financial statements.
In May 2003, the FASB issued SFAS 150,
"Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity"
. SFAS No. 150 establishes standards for classifying and measuring as liabilities certain financial instruments that embody obligations of the issuer and have characteristics of both liabilities and equity. SFAS No. 150 is effective for all financial instruments created or modified after 31 May 2003 and otherwise is effective at the beginning of the first interim period beginning after 15 June 2003. The Company adopted SFAS 150, as required, with no material impact on its financial statements.