Canadian Quantum Energy Corporation
NEX BOARD : CQM

Canadian Quantum Energy Corporation

August 30, 2005 18:20 ET

Canadian Quantum Energy Corporation: Changes in Accounting Policies and Restatement of Previously Issued Financial Statements

LONDON, ONTARIO--(CCNMatthews - Aug. 30, 2005) - Douglas J. Brett, President of Canadian Quantum Energy Corporation (NEX:CQM) (the "Company"), announces that the Company has re-filed its April 30, 2004 audited financial statements in response to deficiencies noted by the Ontario Securities Commission as a result of a full review it has undertaken of the Company's continuous disclosure record.

The previously-issued financial statements were examined by a firm of Chartered Accountants who were not registered with the Canadian Public Accountability Board ("CPAB"), contrary to the requirements of the National Instrument policy 52-108 on auditor oversight. Consequently, the Company has engaged another firm of Chartered Accountants who are CPAB-registered and they have re-examined the April 30, 2004 financial statements. A summary of the restatements included in the re-filed financial statements resulting from their examination follows:

(a) Stock-based compensation

The Company has adopted new Canadian accounting standards for stock-based compensation and other stock-based payments. This standard requires that the fair value of each option granted be valued using an option pricing model. Previously, the Corporation used the intrinsic value method to account for such compensation. Under the intrinsic method, expenses were recognized in the financial statements for options granted when the options are issued at market value.

As a result of the restatement, the previously reported loss for the year ended April 30, 2004 increased by 46,000 or $0.01 per share. There was no impact on cash flow as result of adopting this standard.

(b) Asset retirement obligations

The Company has adopted new Canadian accounting standards for asset retirement obligations. The cumulative effect of adopting this new policy has been recorded retroactively with restatement of prior periods. The opening deficit for the years ended April 30, 2004 and 2003 has been increased by $12,200 or $0.003 per share, and an asset retirement obligation of $14,030 has been recorded. There was no impact on cash flow as a result of this restatement.

(c) Restated depletion expense

The Company applied its depletion policy to its undepleted Oil and Gas Properties balances including estimated Asset Retirement Obligation costs and determined depletion and asset retirement expenses for the year ended April 30, 2004 to be $18,555 or $0.005 per share. The Company therefore restated its April 30, 2004 financial statements to reflect this additional expense. There was no impact on cash flow as a result of this restatement.

(d) Expanded disclosure of Full Cost Oil and Gas Accounting

Note disclosure has been expanded to include certain technical details employed in the Company's accounting for depletion expense and ceiling test calculations.

(e) Expanded disclosure of related party balances

The Company has disclosed $13,941 of amounts due from related parties and $51,817 of amounts payable to related parties, instead of the net balance payable of $37,876 previously reported.

(f) Reclassification of account payable with repayment terms greater than one year

The Company has reclassified $35,096 of current accounts payable to a long-term liability category to better reflect the term repayment nature of the trade liability in monthly installments.

A full set of the revised April 30, 2004 financial statements are available for viewing at www.sedar.com or alternatively by contacting the Company directly.

CANADIAN QUANTUM ENERGY CORPORATION

Douglas J. Brett, President

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Canadian Quantum Energy Corporation
    Douglas J. Brett
    President
    (519) 657-9303
    (519) 657-3633 (FAX)