UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934 for the quarterly period ended JANUARY 31, 2008
[ ] Transition Report Under Section13 or 15(d) of the Securities Exchange Act of
1934 for the transition period from _____ to _____
Commission File Number: 001-33706
URANIUM ENERGY CORP.
_________________________________________________________________
(Exact name of small business issuer as specified in its charter)
NEVADA 98-0399476
_______________________________ ___________________
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
SUITE 230, 9801 ANDERSON MILL ROAD
AUSTIN, TEXAS 78750
________________________________________ __________
(Address of Principal Executive Offices) (Zip Code)
(512) 828-6980
___________________________
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by checkmark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act) Yes [ ] No [X]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 39,807,823 SHARES OF COMMON STOCK AS
OF MARCH 13, 2008.
Transitional Small Business Disclosure Format: (Check one) Yes [ ] No [X]
__________
URANIUM ENERGY CORP.
QUARTERLY REPORT ON FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2008
FORWARD-LOOKING STATEMENTS
This Form 10-QSB for the quarterly period ended January 31, 2008 contains
forward-looking statements that involve risks and uncertainties. Forward-looking
statements in this document include, among others, statements regarding our
capital needs, business plans and expectations. Such forward-looking statements
involve assumptions, risks and uncertainties regarding, among others, the
success of our business plan, availability of funds, government regulations,
operating costs, our ability to achieve significant revenues, our business model
and products and other factors. Any statements contained herein that are not
statements of historical fact may be deemed to be forward-looking statements. In
some cases, you can identify forward-looking statements by terminology such as
"may", "will", "should", "expect", "plan", "intend", "anticipate", "believe",
"estimate", "predict", "potential" or "continue", the negative of such terms or
other comparable terminology. In evaluating these statements, you should
consider various factors, including the assumptions, risks and uncertainties set
forth in reports and other documents we have filed with or furnished to the SEC,
including, without limitation, our Form 10-KSB for the period ended July 31,
2007, as amended. These factors or any of them may cause our actual results to
differ materially from any forward-looking statement made in this document.
While these forward-looking statements, and any assumptions upon which they are
based, are made in good faith and reflect our current judgment regarding future
events, our actual results will likely vary, sometimes materially, from any
estimates, predictions, projections, assumptions or other future performance
suggested herein. The forward-looking statements in this document are made as of
the date of this document and we do not intend or undertake to update any of the
forward-looking statements to conform these statements to actual results, except
as required by applicable law, including the securities laws of the United
States.
__________
2
URANIUM ENERGY CORP.
TABLE OF CONTENTS
PART 1. FINANCIAL INFORMATION..................................................4
Item 1. Financial Statements................................................4
Item 2. Management's Discussion and Analysis or Plan of Operations.........22
Item 3. Controls and Procedures............................................32
PART II. OTHER INFORMATION....................................................33
Item 1. Legal Proceedings..................................................33
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds........33
Item 3. Defaults Upon Senior Securities....................................34
Item 4. Submission of Matters to a Vote of Security Holders................34
Item 5. Other Information..................................................34
Item 6. Exhibits...........................................................34
SIGNATURES....................................................................35
__________
3
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
URANIUM ENERGY CORP.
(An Exploration Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2008
(UNAUDITED)
4
URANIUM ENERGY CORP.
(An Exploration Stage Company)
CONSOLIDATED BALANCE SHEETS (NOTE 1)
(UNAUDITED)
____________________________________________________________________________________________________________
January 31, 2008 July 31, 2007
____________________________________________________________________________________________________________
CURRENT ASSETS
Cash and cash equivalents $ 6,788,969 $ 9,083,453
Restricted cash (Note 3) 158,958 4,500
Available-for-sale securities (Note 4) 425,995 717,198
Accounts and interest receivable 25,415 4,415
Due from related parties (Note 7) 9,020
Prepaid expenses and deposits 249,997 163,240
____________________________________________________________________________________________________________
7,658,354 9,972,806
PROPERTY AND EQUIPMENT (Notes 5 and 6) 1,066,122 553,530
____________________________________________________________________________________________________________
$ 8,724,476 $ 10,526,336
============================================================================================================
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 551,366 $ 379,156
____________________________________________________________________________________________________________
STOCKHOLDERS' EQUITY
Capital stock (Note 8)
Common stock $0.001 par value: 750,000,000 shares authorized
39,672,823 shares issued and outstanding
(July 31, 2007 - 37,612,088) 39,673 37,612
Additional paid-in capital 50,972,033 42,950,985
Common share and warrant proceeds - 34,750
Deficit accumulated during the exploration stage (42,952,259) (33,163,154)
Accumulated other comprehensive income 113,663 286,987
____________________________________________________________________________________________________________
8,173,110 10,147,180
____________________________________________________________________________________________________________
$ 8,724,476 $ 10,526,336
============================================================================================================
COMMITMENTS (Notes 5, 6 and 10)
The accompanying notes are an integral part of these consolidated financial statements.
5
URANIUM ENERGY CORP.
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
__________________________________________________________________________________________________________________________________
For the Period
Three Months Three Months Six Months Six Months from May 16,
Ended Ended Ended Ended 2003
January 31, January 31, January 31, January 31, (inception) to
2008 2007 2008 2007 January 31, 2008
__________________________________________________________________________________________________________________________________
EXPENSES
Consulting fees $ 147,169 $ 86,023 $ 302,058 $ 120,887 $ 1,263,639
Consulting fees - stock based (Note 8) 213,279 544,544 318,233 1,373,428 6,372,266
Depreciation 49,137 9,049 88,873 14,735 158,172
General and administrative 1,358,013 247,190 2,506,007 1,056,987 7,399,234
Impairment loss on mineral
Properties (Note 5) 435,154 267,214 1,608,673 1,988,830 13,542,909
Interest and finance charges - - - - 116,396
Management fees 286,455 514,432 430,153 597,082 1,553,559
Management fees - stock based (Note 8) 267,000 1,737,253 267,000 1,899,753 2,964,753
Mineral property expenditures (Note 5) 1,426,276 701,920 3,217,182 1,022,912 7,752,949
Professional fees 201,974 111,491 322,107 185,997 1,064,936
Wages and benefits - stock
based (Note 8) 525,090 472,178 752,722 472,178 1,420,013
__________________________________________________________________________________________________________________________________
4,909,547 4,691,294 9,813,008 8,732,789 43,608,826
__________________________________________________________________________________________________________________________________
LOSS BEFORE OTHER ITEMS (4,909,547) (4,691,294) (9,813,008) (8,732,789) (43,608,826)
OTHER ITEMS
Interest income 53,031 74,660 131,427 104,385 527,745
Other income 10,355 20,020 10,355 29,713 51,530
__________________________________________________________________________________________________________________________________
LOSS BEFORE INCOME TAXES (4,846,161) (4,596,614) (9,671,226) (8,598,691) (43,029,551)
INCOME TAXES
Deferred income tax (expense) benefit (90,101) - (117,879) - 77,292
__________________________________________________________________________________________________________________________________
NET LOSS FOR THE PERIOD (4,936,262) (4,596,614) (9,789,105) (8,598,691) (42,952,259)
OTHER COMPREHENSIVE (LOSS)
INCOME (NET OF INCOME TAXES) (132,480) - (173,324) - 113,663
__________________________________________________________________________________________________________________________________
TOTAL COMPREHENSIVE LOSS $(5,068,742) $(4,596,614) $(9,962,429) $(8,598,691) $ (42,838,596)
FOR THE PERIOD
==================================================================================================================================
BASIC AND DILUTED NET
LOSS PER SHARE $ (0.13) $ (0.14) $ (0.26) $ (0.29)
================================================================================================================
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING,
BASIC AND DILUTED 38,751,900 31,781,849 38,185,316 30,047,284
================================================================================================================
The accompanying notes are an integral part of these consolidated financial statements.
6
URANIUM ENERGY, CORP.
(An Exploration Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(UNAUDITED)
__________________________________________________________________________________________________________________________________
Accumulated
Common Stock Additional Other
_____________________ Paid-in Subscriptions Accumulated Comprehensive Stockholders'
Shares Amount Capital Received Deficit Income Equity
__________________________________________________________________________________________________________________________________
Balance, July 31, 2007 37,612,088 $ 37,612 $42,950,985 $ 34,750 $(33,163,154) $ 286,987 $ 10,147,180
Common stock
Issued for cash at $3.75
per share 1,800,000 1,800 6,748,200 - - - 6,750,000
Issued on the exercise of
options 195,000 195 161,440 - - - 161,635
Issued on the exercise of
warrants 48,235 48 137,707 (34,750) - - 103,005
Issued pursuant to service
agreements 17,500 18 62,732 - - - 62,750
Share issuance costs - - (505,000) - - - (505,000)
Stock based compensation
Options issued for consult-
ing services - - 264,109 - - - 264,109
Options issued for manage-
ment fees - - 267,000 - - - 267,000
Options issued for wages
and benefits - - 752,722 - - - 752,722
Recovery of short swing
profits - - 132,138 - - - 132,138
Net loss for the period - - - - (9,789,105) - (9,789,105)
Unrealized loss on available-
for-sale securities - - - - - (173,324) (173,324)
__________________________________________________________________________________________________________________________________
Balance, January 31, 2008 39,672,823 $ 39,673 $50,972,033 $ - $(42,952,259) $ 113,663 $ 8,173,109
==================================================================================================================================
All share amounts have been restated to reflect the 2:1 reverse share
consolidation in January 2005 and the 1.5:1 forward share split as of the date
of record, February 28, 2006.
The accompanying notes are an integral part of these consolidated financial statements.
7
URANIUM ENERGY CORP.
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
_________________________________________________________________________________________________________________________________
Six Months Six Months For the Period
Ended Ended From May 16, 2003
January 31, January 31, (inception) to
2008 2007 January 31, 2008
_________________________________________________________________________________________________________________________________
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period $(9,789,105) $(8,598,691) $(42,952,259)
Adjustments to reconcile net loss to net cash from operating
activities:
Stock based compensation 1,337,955 3,745,359 10,757,032
Impairment loss on mineral properties 1,608,673 1,988,830 13,542,909
Non-cash interest and finance charges - - 116,396
Non-cash reduction of mineral property expenditures - (235,040) (235,040)
Depreciation 88,873 14,735 158,172
Deferred income tax expense (benefit) 117,879 - (77,292)
Changes in operating assets and liabilities:
Accounts and interest receivable (21,000) (3,348) (25,415)
Prepaid expenses and deposits (86,757) (92,449) (229,470)
Accounts payable and accrued liabilities 180,836 (123,982) 548,463
_________________________________________________________________________________________________________________________________
NET CASH FLOWS USED IN OPERATING ACTIVITIES (6,562,647) (3,304,586) (18,396,505)
_________________________________________________________________________________________________________________________________
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of shares for cash 6,509,640 14,219,450 31,624,536
Convertible debenture proceeds - - 20,000
Share issuance costs - - (329,700)
Recovery of short swing profits 132,138 - 132,138
Advances (to) from related parties (9,020) 65,000 (9,020)
_________________________________________________________________________________________________________________________________
NET CASH FLOWS FROM FINANCING ACTIVITIES 6,632,758 14,284,450 31,437,954
_________________________________________________________________________________________________________________________________
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of mineral properties (1,608,673) (316,830) (4,869,230)
Purchase of property and equipment (601,464) (150,670) (1,224,292)
Restricted cash (154,458) (136,478) (158,958)
_________________________________________________________________________________________________________________________________
NET CASH FLOWS USED IN INVESTING ACTIVITIES (2,364,595) (603,978) (6,252,480)
_________________________________________________________________________________________________________________________________
(DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (2,294,484) 10,375,886 6,788,969
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 9,083,453 3,597,009 -
_________________________________________________________________________________________________________________________________
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 6,788,969 $13,972,895 $ 6,788,969
=================================================================================================================================
CASH AND CASH EQUIVALENTS CONSIST OF:
Cash in bank $ 239,040 $ 195,838 $ 239,040
Term deposits 6,549,929 13,777,057 6,549,929
_________________________________________________________________________________________________________________________________
$ 6,788,969 $13,972,895 $ 6,788,969
=================================================================================================================================
SUPPLEMENTAL CASH FLOW INFORMATION AND NONCASH INVESTING AND FINANCING ACTIVITIES (Note 11)
The accompanying notes are an integral part of these consolidated financial statements.
8
URANIUM ENERGY CORP.
(An Exploration Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2008 (UNAUDITED)
NOTE 1: NATURE OF OPERATIONS
________________________________________________________________________________
Uranium Energy Corp. (the "Company") was incorporated on May 16, 2003 in the
State of Nevada. The Company owns a 100% interest in UEC Resources Ltd. ("UEC
Resources"), a private company incorporated in the province of British Columbia,
Canada on December 21, 2007. Since November 1, 2004, the Company has acquired
mineral leases and entered into joint venture agreements, directly and under
options, for the purposes of exploring for economic deposits of uranium in the
States of Arizona, Colorado, New Mexico, Texas, Utah, and Wyoming. To January
31, 2008, interests in approximately 59,756 net acres of mineral properties have
been staked, leased or are under option by the Company, including 6,717 gross
acres leased by Cibola Resources LLC of which the Company holds a 49% interest
equating to 3,291 net acres.
These consolidated financial statements have been prepared in accordance with
generally accepted accounting principles in the United States of America.
The Company commenced operations on May 16, 2003 and has not realized any
significant revenues since inception. As at January 31, 2008, the Company has
working capital of $7,106,987 and an accumulated deficit of $42,952,259.
Existing cash resources are currently not expected to provide sufficient funds
through the upcoming year, the capital expenditures required to achieve planned
principal operations may be substantial. The continuation of the Company as a
going concern is dependent upon the ability of the Company to obtain necessary
financing to continue operations. The Company is in the exploration stage of its
mineral property development and to date has not yet established any proven
mineral reserves on its existing properties. The continued operations of the
Company and the recoverability of the carrying value of its assets is ultimately
dependent upon the ability of the Company to achieve profitable operations. To
date, the Company has completed private placements and received funding through
the exercise of stock options and share purchase warrants for net proceeds of
$31,437,954 from the issuance of shares of the Company's common stock.
UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited interim consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB of Regulation
S-B. They do not include all information and footnotes required by United States
generally accepted accounting principles for complete financial statements.
However, except as disclosed herein, there have been no material changes in the
information disclosed in the notes to the financial statements for the seven
months ended July 31, 2007 included in the Company's Annual Report on Form
10-KSB, Form 10-KSB/A, and Form 10-KSB/A2 filed with the Securities and Exchange
Commission. The interim unaudited consolidated financial statements should be
read in conjunction with those financial statements included in the Form 10-KSB,
Form 10-KSB/A, and Form 10-KSB/A2. In the opinion of management, all adjustments
considered necessary for a fair presentation, consisting solely of normal
recurring adjustments, have been made. Operating results for the six months
ended January 31, 2008 are not necessarily indicative of the results that may be
expected for the year ending July 31, 2008.
NOTE 2: 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 accounting principles generally
accepted in the United States of America.
The accompanying consolidated financial statements include the accounts of
Uranium Energy Corp. (incorporated in the State of Nevada, USA) and its
wholly-owned subsidiary, UEC Resources Ltd. (incorporated in the province of
British Columbia, Canada). All significant inter-company transactions and
balances have been eliminated upon consolidation.
CASH AND CASH EQUIVALENTS
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.
9
USE OF ESTIMATES
The preparation of financial statements in conformity with United States
generally accepted accounting principles 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 period
reported. By their nature, these estimates are subject to measurement
uncertainty and the effect on the financial statements of changes in such
estimates in future periods could be significant. Significant areas requiring
management's estimates and assumptions are determining the fair value of
transactions involving common stock, valuation and impairment losses on mineral
property acquisitions, valuation of stock-based compensation, and valuation of
available-for-sale securities. Other areas requiring estimates include
allocations of expenditures to resource property interests and depreciation of
property and equipment. Actual results could differ from those estimates.
MINERAL PROPERTY COSTS
The Company is primarily engaged in the acquisition, exploration and development
of mineral properties.
Mineral property acquisition costs are initially capitalized as tangible assets
when purchased. At the end of each fiscal quarter end, the Company assesses the
carrying costs for impairment. If proven and probable reserves are established
for a property and it has been determined that a mineral property can be
economically developed, costs will be amortized using the units-of-production
method over the estimated life of the probable reserve.
Mineral property exploration costs are expensed as incurred.
Estimated future removal and site restoration costs, when determinable are
provided over the life of proven reserves on a units-of-production basis. Costs,
which include production equipment removal and environmental remediation, are
estimated each period by management based on current regulations, actual
expenses incurred, and technology and industry standards. Any charge is included
in exploration expense or the provision for depletion and depreciation during
the period and the actual restoration expenditures are charged to the
accumulated provision amounts as incurred.
As of the date of these consolidated financial statements, the Company has not
established any proven or probable reserves on its mineral properties and
incurred only acquisition and exploration costs.
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. In August 2001, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 143, "Accounting for Asset Retirement Obligations," which
established a uniform methodology for accounting for estimated reclamation and
abandonment costs.
Future reclamation and remediation costs are accrued based on management's best
estimate at the end of each period of the costs expected to be incurred at each
project. Such estimates are determined by the Company's engineering studies
calculating the cost of future surface and groundwater activities.
IMPAIRMENT OF LONG-LIVED ASSETS
Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate the carrying amount of an asset may not be recoverable.
Recoverability of these assets is measured by comparison of its carrying amount
to future undiscounted cash flows the assets are expected to generate.
FINANCIAL INSTRUMENTS
The fair values of cash and cash equivalents, restricted cash, other current
monetary assets, accounts payable and accrued liabilities were estimated to
approximate their carrying values due to the immediate or short-term maturity of
these financial instruments. 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. Management has determined that the Company is not exposed to
significant credit risk.
LOSS PER COMMON SHARE
Basic loss per share includes no dilution and is computed by dividing loss
attributable to common stockholders by the weighted average number of common
shares outstanding for the period. Diluted earnings per share reflects the
potential dilution of securities that could share in the earnings (loss) of the
Company. The common shares potentially issuable on conversion of outstanding
convertible debentures and exercise of stock options were not included in the
calculation of weighted average number of shares outstanding because the effect
would be anti-dilutive.
10
FOREIGN CURRENCY TRANSLATION
The functional currency of the Company is United States dollars. UEC Resources
Ltd. maintains its accounting records in their local currency (Canadian dollar).
In accordance with SFAS No. 52, "Foreign Currency Translation", the financial
statements of the Company's subsidiary is translated into United States dollars
using period end exchange rates as to monetary assets and liabilities and
average exchange rates as to revenues and expenses. Non-monetary assets are
translated at their historical exchange rates. Net gains and losses resulting
from foreign exchange translations and foreign currency exchange gains and
losses on transactions occurring in a currency other than the Company's
functional currency are included in the determination of net income in the
period.
INCOME TAXES
The Company follows the liability method of accounting for income taxes. Under
this method, deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
balances. Deferred tax assets and liabilities are measured using enacted or
substantially enacted tax rates expected to apply to the taxable income in the
years in which those differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the date of enactment or
substantive enactment. As at January 31, 2008 the Company had net operating loss
carry forwards; however, due to the uncertainty of realization, the Company has
provided a full valuation allowance for the potential deferred tax assets
resulting from these losses carry forwards.
STOCK-BASED COMPENSATION
On January 1, 2006, the Company adopted SFAS No. 123 (revised 2004) (SFAS No.
123R), Share-Based Payment, which addresses the accounting for stock-based
payment transactions in which an enterprise receives employee services in
exchange for (a) equity instruments of the enterprise or (b) liabilities that
are based on the fair value of the enterprise's equity instruments or that may
be settled by the issuance of such equity instruments. In January 2005, the
Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB)
No. 107, which provides supplemental implementation guidance for SFAS No. 123R.
SFAS No. 123R eliminates the ability to account for stock-based compensation
transactions using the intrinsic value method under Accounting Principles Board
(APB) Opinion No. 25, Accounting for Stock Issued to Employees, and instead
generally requires that such transactions be accounted for using a
fair-value-based method. The Company uses the Black-Scholes-Merton ("BSM")
option-pricing model to determine the fair-value of stock-based awards under
SFAS No. 123R, consistent with that used for pro forma disclosures under SFAS
No. 123, Accounting for Stock-Based Compensation. The Company has elected the
modified prospective transition method as permitted by SFAS No. 123R and
accordingly prior periods have not been restated to reflect the impact of SFAS
No. 123R. The modified prospective transition method requires that stock-based
compensation expense be recorded for all new and unvested stock options,
restricted stock, restricted stock units, and employee stock purchase plan
shares that are ultimately expected to vest as the requisite service is rendered
beginning on January 1, 2006 the first day of the Company's fiscal year 2006.
Stock-based compensation expense for awards granted prior to January 1, 2006 is
based on the grant date fair-value as determined under the pro forma provisions
of SFAS No. 123. On a quarerly basis, the Company estimates expected forfeitures
and updates the valuation accordingly.
Prior to the adoption of SFAS No. 123R, the Company measured compensation
expense for its employee stock-based compensation plans using the intrinsic
value method prescribed by APB Opinion No. 25. The Company applied the
disclosure provisions of SFAS No. 123 as amended by SFAS No. 148, Accounting for
Stock-Based Compensation - Transition and Disclosure, as if the fair-value-based
method had been applied in measuring compensation expense. Under APB Opinion No.
25, when the exercise price of the Company's employee stock options was equal to
the market price of the underlying stock on the date of the grant, no
compensation expense was recognized.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost and are amortized using the
straight-line method over their estimated useful lives at the following rates:
Computer Equipment 3 years
Exploration Equipment 5 years
Furniture and Fixtures 5 years
Leasehold Improvements term of lease
Vehicles 5 years
11
RECENT ACCOUNTING PRONOUNCEMENTS
In July 2006, FASB issued Interpretation No. 48. This interpretation clarifies
the accounting for uncertainty in income taxes recognized in an enterprise's
financial statements in accordance with SFAS Statement No. 109, "Accounting for
Income Taxes" ("FIN 48"). This Interpretation prescribes a recognition threshold
and measurement attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax return.
This Interpretation also provides guidance on de-recognition, classification,
interest and penalties, accounting in interim periods, disclosure, and
transition. The Company adopted FIN 48 as of January 1, 2007. The adoption of
FIN 48 did not have an impact on the Company's consolidated financial statements
during the current period.
In September 2006, FASB issued SFAS No. 157, "Fair Value Measurements" ("SFAS
157"). The objective of SFAS 157 is to increase consistency and comparability in
fair value measurements and to expand disclosures about fair value measurements.
SFAS 157 defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles, and expands disclosures about fair
value measurements. SFAS 157 applies under other accounting pronouncements that
require or permit fair value measurements and does not require any new fair
value measurements. The provisions of SFAS 157 are effective for fair value
measurements made in fiscal years beginning after November 15, 2007. The Company
is currently assessing the impact of SFAS 157 on its financial position and
results of operations.
In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities". This Statement permits entities to
choose to measure many financial assets and financial liabilities at fair value.
Unrealized gains and losses on items for which the fair value option has been
elected are reported in earnings. SFAS No. 159 is effective for fiscal years
beginning after November 15, 2007. The Company is currently assessing the impact
of SFAS No. 159 on its financial position and results of operations.
NOTE 3: RESTRICTED CASH
________________________________________________________________________________
Restricted cash included certificates of deposit issued to the Wyoming
Department of Environmental Quality, Land Quality Division, in lieu of a surety
bond. The certificates of deposit accrue interest at 3.5% and 3.75% per annum,
are automatically renewable and are protected by federal insurance up to
$100,000. During the six months ended January 31, 2008, the Company transferred
certificates of deposits from the AB Claims project in the total aggregate
amount of $136,458 under the same terms as above for drill hole reclamation
bonding on the Burnt Wagon exploration project, Natrona county, Wyoming.
Additionally, the Company has placed additional deposits of $18,000 with the
Arizona State Land Department pursuant to exploration activities in the State of
Arizona.
NOTE 4: AVAILABLE-FOR-SALE SECURITIES
________________________________________________________________________________
Available-for-sale securities consist of shares in a publicly traded company
listed on the Toronto and Johannesburg Stock Exchanges. As of January 31, 2008
the Company reported the available-for-sale securities at market value and
accordingly, recorded a $113,663 unrealized gain which has been reported in
other comprehensive income, net of income taxes.
NOTE 5: MINERAL EXPLORATION PROPERTIES
________________________________________________________________________________
URANIUM EXPLORATION
Since November 1, 2004, the Company has been acquiring mineral leases for the
purpose of exploring for economic deposits of uranium in the states of Arizona,
Colorado, New Mexico, Texas, Utah, and Wyoming.
As of January 31, 2008, a total of 67,491 gross acres (59,756 net mineral acres)
of mineral properties have been staked. leased or optioned pursuant to
agreements by the Company in the States of Arizona, Colorado, New Mexico, Texas,
Utah, and Wyoming for the purposes of uranium exploration for a total cost of
$4,869,230 excluding the fair value of non-cash compensation. The totals include
3,291 net acres (6,717 gross acres leased by Cibola Resources LLC of which the
Company holds a 49% interest). These leases are subject to varying royalty
interests, some of which are indexed to the sale price of uranium. As of January
31, 2008, total yearly recurring maintenance payments of $282,246 are required
to maintain existing mineral leases.
12
GOLIAD PROJECT
On October 11, 2005, the Company entered into a mineral asset option agreement
(the "Moore Option") granting the Company the option to acquire certain mineral
property leases in the State of Texas for total consideration of $200,000 and
3,000,000 post-split restricted common shares at a fair value of $0.33 per
share. In consideration for the Moore Option and its partial exercise over the
option term, the Company has made cash payments totaling $200,000 and issued
3,000,000 post-split shares of restricted common stock. Upon completion of the
terms of the Moore Option title to the leases were transferred to the Company.
HOLLEY OPTION
On March 28, 2007 the Company entered into a letter option agreement (the
"Holley Option") granting the Company the option to acquire certain mineral
property leases, which are located in the States of Colorado, New Mexico, and
Utah, together with certain historical database records for total consideration
of $1,594,690. Under the terms of the Holley Option, and in order to maintain
its option to acquire the assets, the Company is required to make the following
option payments totaling $1,500,000 to the order and direction of the Holley
Option holders in the following manner:
(a) an initial payment of $25,000 on the execution date (paid);
(b) a payment of $100,000 on March 28, 2007 (paid);
(c) a payment of $475,000 on or before April 27, 2007 (paid);
(d) a further payment of $500,000 on or before April 27, 2008; and
(e) a final payment of $400,000 on or before April 27, 2009.
Upon execution of the Holley Option the Company also reimbursed the Holley
Option holders with approximately $95,000 in prior regulatory fees and property
payments. In addition, the Company will be required to pay a royalty of 2% or 3%
of the gross proceeds received from the sale of any uranium or vanadium produced
in relation to any mineral claim covered under the Holley Option and, at any
time during the option period or thereafter, the Company may elect to purchase
the royalty interest at a base cost of $300,000 for each 1% interest it wishes
to acquire.
CIBOLA RESOURCES LLC
On April 27, 2007, with a reference date of April 26, 2007, the Company entered
into a joint venture with Neutron Energy Inc. ("NEI"), a Wyoming corporation, in
connection with the exploration of a property covering 6,717 acres located in
Cibola County, New Mexico (the "Property") for uranium resources. In connection
with the joint venture, Cibola Resources LLC ("Cibola"), a limited liability
company under the laws of the State of Delaware, was formed to undertake the
exploration activities as contemplated by the parties.
NEI acquired a ten year mining lease (the "Lease") to the Property from La
Merced del Pueblo de Cebolleta ("Cebolleta"), a private entity that has the
authority over the natural resources of the Property, pursuant to a Mining Lease
and Agreement between Cebolleta and NEI effective April 6, 2007 (the "Mining
Lease Agreement"), and has contributed the Lease to Cibola. Terms of the Lease
provide for:
(a) initial payments of $3,000,000 (paid by NEI, of which 49% was
reimbursed to NEI by the Company);
(b) an additional cash payment of $2,000,000 six months from the effective
date of the Lease ($980,000 paid, being the Company's portion);
(c) every year after April 6, 2007 until uranium production begins, an
advance royalty of $500,000 (to be deducted from any royalties paid in
that same year);
(d) a recoverable reserve payment of $1 per pound of recoverable uranium
reserves upon the completion of a feasibility study by an independent
mining engineering firm, which will be reduced by all prior payments
as described in clause (a) through (c) above;
(e) a production royalty of between 4.50% and 8.0% depending upon the sale
price of uranium; and
(f) the funding of a $30,000 per year scholarship program.
The Company has reimbursed an aggregate of $2,450,000 to NEI (49%) of the
capital invested to date. As a result, NEI and the Company hold a 51% and 49%
interest, respectively, in Cibola and the Company is obligated to pay 49% of all
future commitments under the terms of the Lease. Additionally, the Company has
paid $119,137 in exploration costs on behalf of Cibola for a cumulative
contribution of $2,569,137. As an exploration stage company, Cibola has no
assets or liabilities as of January 31, 2008 and accordingly, $2,486,750 in
acquisition costs have been capitalized while other contributions of exploration
costs have been charged to mineral property expenditures.
In December 2003, FASB issued FIN 46(R) "Consolidation of Variable Interest
Entities" which requires investors to consolidate the financial information of
investees in which they are the primary beneficiary. The Company is not the
primary beneficiary in Cibola and accordingly, no consolidated financial
information is required.
13
NEW RIVER PROJECT
Effective November 1, 2007, the Company entered into a binding letter Agreement
to Purchase Assets (the "Agreement") with Melvin O. Stairs, Jr. ("Mr. Stairs"),
whereby the Company acquired from Mr. Stairs an undivided 100% legal, beneficial
and registered interest in and to a certain mineral exploration claim
represented by permit number 08-111678, which is located at T7N R3E, Section 32,
in Maricopa County, Arizona (the "Mineral Claim"), together with a certain
database containing various material information respecting the subject Mineral
Claim (the Mineral Claim and its database, collectively, the "Assets"). As
consideration for acquisition of the Assets, the Company has agreed to make the
following payments (each a "Purchase Price Payment") and the following Mineral
Claim maintenance payments (each a "Purchase Price Maintenance Payment") to Mr.
Stairs in the following manner at the following times after November 1, 2007
(the "Acceptance Date"):
(a) Purchase Price Payments: pay to the order and direction of Mr. Stairs
the following Purchase Price Payments in the aggregate sum of U.S.
$1,200,000 in the following manner and at the following times:
i) an initial and non-refundable Purchase Price Payment of U.S.
$10,000 immediately upon the Acceptance Date of the Agreement
(paid);
ii) further non-refundable Purchase Price Payments of U.S. $95,000 on
or before January 10, 2008 (paid) and August 15, 2008; and
iii) further non-refundable Purchase Price Payments of U.S. $100,000
every six months commencing on or before January 10, 2009 and
ending August 15, 2013.
(b) Purchase Price Maintenance Payments: pay, or cause to be paid, all
outstanding, existing and future underlying regulatory and
governmental fees, payments and assessment work required to keep the
Mineral Claim interests comprising the Assets in good standing during
the continuance of the Agreement and prior to our satisfaction of the
entire Purchase Price consideration and including, without limitation,
all permitting costs, transfer fees and any reclamation costs
associated in any manner with the Mineral Claim interests comprising
the Assets.
Pursuant to the terms of the Agreement, in order to secure the complete and
timely payment of our purchase price obligations to Mr. Stairs under the
Agreement, the Company granted a security interest in and to, a lien upon and a
right of set-off against its right, title and interest in and to the Assets.
In addition, and pursuant to the terms of the Agreement, at any time prior to
the earlier of the payment of the entire Purchase Price by us to Mr. Stairs or
the termination of the Agreement for any reason, the Company has a right of
first refusal to acquire all or any portion of any interest in the Agreement or
to any mineral property interest which Mr. Stairs may have an interest in at
anytime and which Mr. Stairs desires to dispose of (collectively, the
"Holding"). If Mr. Stairs receives a BONA FIDE offer to purchase from, or where
a sale is solicited by Mr. Stairs, then upon settling the proposed terms thereof
with a third party for the purchase or sale of the Holding, Mr. Stairs shall
offer to sell the Holding to the Company. The offer to sell to the Company shall
be on the same terms and conditions and of equivalent dollar value as those
contained in the offer to the third party; provided, however, that should Mr.
Stairs and the Company fail to agree upon a determination of the equivalent
dollar value for any such offer, such equivalent dollar value shall be
determined by arbitration under the provisions of the Agreement. The Company
shall be entitled to elect, by notice to Mr. Stairs within 30 calendar days from
the date of receipt of the offer to sell, to acquire the Holding, on the same
terms and conditions as those set forth in the offer to the third party. If the
Company does not exercise its right to acquire the Holding, Mr. Stairs may, for
a period of 60 calendar days following the last date upon which it could have
made the election, dispose of the Holding, but only on the same terms and
conditions as set forth in that offer.
F-33 ACQUISITION
On November 13, 2007, the Company entered into an agreement to acquire certain
mineral property leases located in Cibola County, New Mexico for total
consideration of $400,000. Under the terms of the agreement, the Company paid an
initial deposit of $100,000 upon closing with the remaining balance due in three
installments of $100,000 due on March 31, 2008, December 31, 2008, and December
31, 2009. At the Company's option, the final two installments may be paid in
stock, based on the average trading price of its common stock over the 10 days
immediately preceding the due date.
14
Mineral property acquisition costs on a regional basis are as follows:
________________________________________________________________________________________________________________________________
For the Period
Three Months Three Months Six Months Six Months From May 16,
Ended Ended Ended Ended 2006
January 31, January 31, January 31, January 31, (inception) to
2008 2007 2008 2007 January 31, 2008
________________________________________________________________________________________________________________________________
CAPITALIZED ACQUISITION COSTS
Arizona $ 105,200 $ - $ 115,428 $ - $ 134,095
Colorado - - 1,762 - 171,913
Nevada - - - - 4,250
New Mexico 168,108 98,352 1,158,335 197,500 3,539,196
Texas 103,206 24,692 192,874 1,645,809 8,977,246
Utah 24 - 1,390 - 91,594
Wyoming 58,616 144,170 138,884 145,521 624,615
________________________________________________________________________________________________________________________________
435,154 267,214 1,608,673 1,988,830 13,542,909
Write Down for Loss on Impairment (435,154) (267,214) (1,608,673) (1,988,830) (13,542,909)
________________________________________________________________________________________________________________________________
$ - $ - $ - $ - $ -
================================================================================================================================
Mineral property exploration costs on a regional basis are as follows:
________________________________________________________________________________________________________________________________
For the Period
Three Months Three Months Six Months Six Months From May 16,
Ended Ended Ended Ended 2006
January 31, January 31, January 31, January 31, (inception) to
2008 2007 2008 2007 January 31, 2008
________________________________________________________________________________________________________________________________
EXPLORATION COSTS
Arizona $ 2,240 $ - $ 16,342 $ 28 $ 93,282
Colorado 3,528 - 52,085 - 103,110
Nevada - - - - 963
New Mexico 6,289 16,809 130,519 19,551 365,869
Texas 1,368,331 660,074 2,711,768 795,206 6,323,728
Utah 2,200 - 8,991 - 16,348
Wyoming 43,688 25,037 297,477 208,127 849,650
________________________________________________________________________________________________________________________________
$1,426,276 $ 701,920 $ 3,217,182 $ 1,022,912 $ 7,752,950
===============================================================================================================================
NOTE 6: PROPERTY AND EQUIPMENT
________________________________________________________________________________
________________________________________________________________________________________________________________________________
January 31, 2008 July 31, 2007
________________________________________________________________________________________________________________________________
Computer Equipment $ 173,576 $ 98,897
Exploration Equipment 208,688 126,951
Furniture and Fixtures 58,388 43,723
Land 115,644 -
Leasehold Improvements 8,728 8,728
Vehicles 659,269 344,529
________________________________________________________________________________________________________________________________
1,224,293 622,828
Less: accumulated depreciation (158,171) (69,298)
________________________________________________________________________________________________________________________________
$ 1,066,122 $ 553,530
================================================================================================================================
15
NOTE 7: DUE TO RELATED PARTIES AND RELATED PARTY TRANSACTIONS
________________________________________________________________________________
During the six months ended January 31, 2008, the Company had transactions with
certain officers and directors of the Company as follows:
(a) incurred $430,153 in management fees, and recorded $267,000 in stock
based compensation for the fair value of options granted to directors
and officers during the period;
(b) incurred $9,020 in general and administrative costs to be reimbursed
by companies controlled by direct family members of current officer
and a currect director; and
(c) incurred $56,583 in consulting fees and $45,276 in general and
administrative costs, including $15,011 in rental charges and $16,707
in media and website development fees, paid to companies controlled by
a direct family member of a current officer.
All related party transactions involving provision of services or tangible
assets were recorded at the exchange amount, which is the value established and
agreed to by the related parties reflecting arms length consideration payable
for similar services or transfers.
NOTE 8: CAPITAL STOCK
________________________________________________________________________________
SHARE CAPITAL
The Company's capital stock as at January 31, 2008 was 750,000,000 authorized
common shares with a par value of $0.001 per share. On January 9, 2006, a
majority of shareholders voted to amend the Company's Articles of Incorporation
to increase the authorized capital from 75,000,000 shares of common stock to
750,000,000 shares of common stock. The increase in authorized capital was
effective on February 1, 2006.
On February 14, 2006, the Company's Board of Directors, pursuant to minutes of
written consent in lieu of a special meeting, authorized and approved a forward
stock split on a 1.5 new for one old basis of the Company's total issued and
outstanding shares of common stock (the "Forward Stock Split"). The Forward
Stock Split was effectuated with a record date of February 28, 2006, upon filing
the appropriate documentation. The Forward Stock Split increased the Company's
issued and outstanding shares of common stock from 14,968,222 to approximately
22,452,338 shares of common stock. The common stock continued to have a $0.001
par value after the Forward Stock Split.
2008 SHARE TRANSACTIONS
On December 12, 2007 the Company completed a private placement in the amount of
1,800,000 Units at a subscription price of $3.75 for gross proceeds to the
Company of $6,750,000. Each Unit is comprised of one common share and one
non-transferable share purchase warrant of the Company. Each warrant entitles
the holder to purchase an additional common share of the Company for a period of
one year from the date of issuance at an exercise price of $4.25 per share.
The December 12, 2007 private placement included a registration rights
agreement, requiring a registration statement respecting the investors'
securities within the Company declared effective by the SEC within four months
from the original date of issuance by the Company of the securities underlying
the original subscription agreements. Under the terms of the registration rights
agreement, the Company shall use its reasonable best efforts to maintain the
effectiveness of the registration statement for a period of not less than three
years from the original date of issuance. If the Company failed to maintain the
effectiveness of the registration statement for the three year period,
additional warrants could be issuable as as liquidated damages. Any additional
warrant issuance is provided for under the terms of the registration rights
agreement whereby 1/100 of an additional warrant was issuable to each such
investor for each $1.00 in aggregate subscription price funds paid by the
investor to the Company under the private placement and in respect of each 30
day period (or partial period thereof) of delay of the aforementioned
registration statement effectiveness. As of January 31, 2008, 2,160,000
additional warrants could be issuable as liquidated damages through the three
year period expiring December 12, 2010.
On November 6, 2007 the Company issued 10,000 restricted common shares pursuant
to a financial consulting agreement (refer to Note 10). At the time of issuance,
the shares had a value of $4.46 per share and $44,600 was recorded as
stock-based consulting fees. Additionally, on January 24, 2008 the Company
issued 7,500 restricted common shares pursuant to the same agreement. At the
time of issuance, the shares had a value of $2.42 per share and $18,150 was
recorded as stock-based consulting fees.
During the six months ended January 31, 2008, 48,235 common share purchase
warrants were exercised for total proceeds of $137,755 and 195,000 common stock
options were exercised for total proceeds of $161,635.
16
SHARE PURCHASE WARRANTS
On June 15, 2007 the Company issued to certain investors an aggregate of 59,998
non-transferable common share purchase warrants to acquire an equivalent number
of common shares of the Company pursuant to the investors' respective December
22, 2006 private placement subscription agreements with the Company. These
warrants were issued as liquidated damages resulting from the Company's delay in
not having a registration statement respecting the investors' securities within
the Company declared effective by the SEC within four months from the original
date of issuance by the Company of the securities underlying the original
subscription agreements. This additional warrant issuance was provided for under
the terms of the original subscription agreements whereby 1/100 of an additional
warrant was issuable to each such investor for each $1.00 in aggregate
subscription price funds paid by the investor to the Company under the private
placement and in respect of each 30 day period (or partial period thereof) of
delay of the aforementioned registration statement effectiveness. Each resulting
warrant now entitles the holder thereof to purchase an additional share of the
Company's restricted common stock under the same terms as the original warrants
issued at the closing of the private placement in December of 2006. Under the
terms of the subscription agreements, the Company shall use its reasonable best
efforts to maintain the effectiveness of the registration statement for a period
of not less than nine months from the June 15, 2007 effective date. If the
Company failed to maintain the effectiveness of the registration statement for a
period of eight months from the initial deadline of April 22, 2007, additional
warrants could be issuable. As of January 31, 2008 no additional warrants are
issuable as liquidated damages through the eight month period expired December
22, 2007.
A summary of the Company's common share purchase warrants as of January 31, 2008
and changes during the period is presented below:
________________________________________________________________________________
Weighted average
Number of Weighted average remaining
warrants exercise price life (years)
________________________________________________________________________________
Balance, July 31, 2007 4,009,998 $ 2.66 1.70
Issued 1,800,000 4.25 1.00
Exercised (48,235) (2.86) (0.50)
________________________________________________________________________________
Balance, January 31, 2008 5,761,763 $ 3.15 1.19
________________________________________________________________________________
The aggregate intrinsic value ("AIV") under the provisions of SFAS No. 123R of
the 500,000 compensation warrants previously issued to consultants as at January
31, 2008 was estimated at $1,016,800.
STOCK OPTIONS
On December 19, 2005 the Board of Directors of the Company ratified, approved
and adopted a Stock Option Plan for the Company in the amount of 5,250,000
shares at $0.333 per share. On April 10, 2006 the Company amended its 2005 Stock
Option Plan whereby, subject to adjustment from time to time as provided in
Article 11.1, whereby the number of common shares available for issuance under
the Plan was increased from 3,500,000 shares to 7,500,000 shares. On October 10,
2006 the Company ratified the 2006 Stock Incentive Plan whereby, subject to
adjustment from time to time as provided in Article 18.1, the number of common
shares available for issuance under the Plan was increased to 10,000,000 shares.
On November 1, 2007, a total of 660,000 stock options were granted to employees
and officers at an exercise price of $3.80 per share. The term of these options
is ten years. The fair value of these options at the date of grant of $1,762,200
was estimated using the Black-Scholes option pricing model with an expected life
of 5 years, a risk free interest rate of 4.33%, a dividend yield of 0%, and an
expected volatility of 87%. During the six months ended January 31, 2008, the
$827,701 value of the options earned during the period has been recorded as
stock based consulting fees, management fees, and wages.
On January 25, 2008, a total of 100,000 stock options were granted to employees
at an exercise price of $2.45 per share. The term of these options is ten years.
The fair value of these options at the date of grant of $162,000 was estimated
using the Black-Scholes option pricing model with an expected life of 5 years, a
risk free interest rate of 3.50%, a dividend yield of 0%, and an expected
volatility of 80%. During the six months ended January 31, 2008, the $32,400
value of the options earned during the period has been recorded as stock based
consulting fees.
A summary of the Company's stock options as of January 31, 2008 and changes
during the period is presented below:
________________________________________________________________________________
Weighted average
Number of Weighted average remaining
options exercise price life (years)
________________________________________________________________________________
Balance, July 31, 2007 3,832,500 $ 1.44 8.90
Issued 760,000 3.62 10.00
Exercised (195,000) (0.83) (8.46)
________________________________________________________________________________
Balance, January 31, 2008 4,397,500 $ 1.85 8.57
________________________________________________________________________________
The AIV under the provisions of SFAS No. 123R of all outstanding options at
January 31, 2008 was estimated at $6,919,408. Additionally, the AIV of options
exercised during the six months ended January 31, 2008 was estimated at
$527,583.
17
STOCK BASED COMPENSATION
A summary of stock based compensation expense as of January 31, 2008:
___________________________________________________________________________________________________________________
For the Period
Six Months Six Months From May 16, 2003
Ended Ended (inception) to
January 31, 2008 January 31, 2007 October 31, 2007
___________________________________________________________________________________________________________________
Stock Based Consulting
Amortization of deferred compensation $ - $1,128,259 $ 1,157,500
Common stock issued for consulting services 54,124 - 135,100
Options issued to consultants 264,109 255,169 3,461,140
Warrants issued for consulting services - - 1,618,526
___________________________________________________________________________________________________________________
318,233 1,373,428 6,372,266
___________________________________________________________________________________________________________________
Stock Based Management Fees
Amortization of deferred compensation - 325,000 650,000
Options issued to management 267,000 1,574,753 2,314,753
___________________________________________________________________________________________________________________
267,000 1,899,753 2,964,753
___________________________________________________________________________________________________________________
Stock Based Wages and Benefits
Options issued to employees 752,722 472,178 1,420,013
___________________________________________________________________________________________________________________
$1,337,955 $3,745,359 $10,757,032
===================================================================================================================
NOTE 9: INCOME TAXES
________________________________________________________________________________
As of January 31, 2008 the Company had net operating loss carry forwards of
approximately $25,438,681 that may be available to reduce future years' taxable
income. These carry forwards will begin to expire, if not utilized, commencing
in 2023. Future tax benefits which may arise as a result of these losses have
not been recognized in these financial statements, as their realization is
determined not likely to occur and accordingly, the Company has recorded a
valuation allowance for the deferred tax asset relating to these tax loss carry
forwards.
The Company reviews its valuation allowance requirements on an annual basis
based on projected future operations. When circumstances change and this causes
a change in management's judgment about the recoverability of future tax assets,
the impact of the change on the valuation allowance is generally reflected in
current income.
A reconciliation of income tax computed at the federal and state statutory tax
rates and the Company's effective tax rate is as follows:
____________________________________________________________________________________________
Six Months Six Months
Ended Ended
January 31, 2008 January 31, 2007
____________________________________________________________________________________________
Federal income tax provision at statutory rate (35.00)% (35.00)%
States income tax provision at statutory rates,
net of federal income tax effect (5.48)% (5.48)%
____________________________________________________________________________________________
Total income tax provision (40.48)% (40.48)%
============================================================================================
The actual income tax provisions differ from the expected amounts calculated by
applying the combined federal and state corporate income tax rates to the
Company's loss before income taxes. The components of these differences are as
follows:
__________________________________________________________________________________________
Six Months Six Months
Ended Ended
January 31, 2008 January 31, 2007
__________________________________________________________________________________________
Loss before income taxes $(9,671,226) $(8,598,691)
Corporate tax rate 40.48% 40.48%
__________________________________________________________________________________________
Expected tax expense (recovery) (3,914,779) (3,480,750)
Increase (decrease) resulting from:
Permanent differences 572,973 1,403,760
True-up adjustment 1,755 -
Non-qualified stock options - -
Change in valuation allowance 3,457,926 2,076,990
__________________________________________________________________________________________
From Operations 117,875 -
Unrecognized gain, other comprehensive income (117,875) -
__________________________________________________________________________________________
Future income tax provision (recovery) $ - $ -
==========================================================================================
18
The Company's deferred tax assets are as follows:
____________________________________________________________________________
January 31, 2007 July 31, 2007
____________________________________________________________________________
Deferred tax assets
Mineral property acquisitions $ 5,439,225 $ 4,782,209
Exploration costs 2,399,439 1,398,264
Permitting fees and expenditures 157,844 87,655
Stock option expense 579,202 1,195,355
Depreciable property 10,122 7,230
Charitable donations 7,475 7,475
Loss carry forwards 10,297,228 8,716,371
____________________________________________________________________________
18,890,536 16,194,559
Valuation allowance (18,813,240) (15,999,388)
____________________________________________________________________________
Net Deferred Tax Assets 77,296 195,171
Deferred tax liability, other
comprehensive income (77,296) 195,171
____________________________________________________________________________
Net Deferred Income Tax Assets $ - $ -
============================================================================
As the criteria for recognizing future income tax assets have not been met due
to the uncertainty of realization, a valuation allowance of 100% has been
recorded for the current and prior year.
The Company's net operating loss carryforwards expire as follows:
________________________________________________________________________________
July 31, 2023 $ 24,132
July 31, 2024 74,499
July 31, 2025 403,227
July 31, 2026 13,113,235
July 31, 2027 7,918,175
July 31, 2028 3,905,412
________________________________________________________________________________
$25,438,681
================================================================================
For U.S. federal income tax purposes a change in ownership under IRC Section 382
may have occurred in a prior year. If an ownership change has occurred, the
utilization of these losses against future income would be subject to an annual
limitation. The annual limitation would be equal to the value of the Company
immediately prior to the change in ownership multiplied by the IRC Section 382
rate in effect during the month of the change.
NOTE 10 COMMITMENTS
________________________________________________________________________________
On February 1, 2007 the Company entered into a financial consulting agreement
for a 12 month term. The Consultant will: i) disseminate the Company's news
releases, investor packages, research reports and corporate and industry sector
materials; ii) promote investor awareness and manage financial public relations
to the investment community; and iii) arrange meetings with industry sector
analysts, stock brokers and portfolio managers. The Company will pay the
Consultant $6,500 and 2,500 restricted common shares per month. As of January
31, 2008, issuances of 2,500 shares for each of the months of July through
January (inclusive) have been accrued, and accordingly, an expense of $54,124
has been included in stock-based consulting fees based on the fair value of the
15,000 shares issuable during the period.
On April 6, 2007 the Company entered into a twelve month consulting services
agreement at $10,000 per month. The consultant will provide representation
before the executive and legislative branches of the federal government and
state governments in addition to providing consulting services on political
matters. As of December 1, 2007 the monthly fee has been reduced to $5,000 per
month.
19
On September 6, 2007 the Company entered into an agreement for media
distribution services valued at approximately $270,000. Under the terms of the
agreement, the Company paid a retainer of $100,000, with the balance of the
agreement due upon completion of the services. As of January 31, 2008 no
services had been provided and accordingly, the $100,000 retainer is classified
as a prepaid expense.
On November 1, 2007 the Company entered into an asset purchase agreement for a
mineral exploration claim and related database information located in Maricopa
County, Arizona. Under the terms of the agreement, the Company will pay total
consideration of $1,200,000 including i) a $10,000 deposit upon execution
(paid), ii) installments of $95,000 cash on January 10, 2008 (paid) and August
15, 2008, and iii) installments totaling $100,000 on January 10 and August 15 of
each year for the period from January 10, 2009 through August 15, 2013.
Additionally, the Company has granted the seller security interest on the
acquired assets until the agreement is paid in full.
On November 13, 2007 the Company entered into an agreement to acquire certain
mineral property leases located in Cibola County, New Mexico for total
consideration of $400,000. Under the terms of the agreement, the Company paid an
initial deposit of $100,000 upon closing with the remaining balance due in three
installments of $100,000 due on March 31, 2008, December 31, 2008, and December
31, 2009. At the Company's option, the final two installments may be paid in
stock, based on the average trading price of the Company's common stock over the
10 days immediately preceding the due date.
On January 17, 2008 the Company entered into a twelve month consulting services
agreement at $6,000 per month. The consultant will provide services for
legislative, administrative, executive and regulatory matters in the State of
Texas. As requested, the consultant may also assist in discussions with
appropriate federal executive and legislative officials.
The Company is committed to pay its key executives a total of approximately
$450,000 per year for management services.
The Company is currently leasing office premises in New Mexico, Texas, and
Wyoming with total monthly payments of $10,882 with all agreements having a
maximum term of no more than three years. Additionally, the Company is renting
office space in Vancouver, Canada on a month to month basis at approximately
$2,600 per month.
The aggregate minimum payments over the next five years are as follows:
________________________________________________________________________________
January 31, 2009 $1,056,449
January 31, 2010 475,028
January 31, 2011 204,051
January 31, 2012 200,000
January 31, 2013 200,000
Thereafter 100,000
________________________________________________________________________________
$2,235,528
================================================================================
NOTE 11 SUPPLEMENTAL CASH FLOW INFORMATION AND
NONCASH INVESTING AND FINANCING ACTIVITIES
________________________________________________________________________________
Six Months Ended
January 31, 2008 January 31, 2007
_______________________________________________________________
Interest paid $ - $ -
Income taxes paid $ - $ -
===============================================================
NOTE 12: SUBSEQUENT EVENTS
_______________________________________________________________
(a) On February 1, 2008 the Company entered into a financial consulting
agreement for a 6 month term. The Consultant will: i) disseminate the
Company's news releases, investor packages, research reports and
corporate and industry sector materials; ii) promote investor
awareness and manage financial public relations to the investment
community; and iii) arrange meetings with industry sector analysts,
stock brokers and portfolio managers. The Company will pay the
Consultant $6,000 per month and issue 2,500 restricted common shares
per month.
20
(b) On February 13, 2008 the Company entered into an asset purchase
agreement for mapping and database information for geographic areas
throughout the US and international locations. Under the terms of the
agreement, the Company paid total consideration of $500,000.
(c) In February 2008 the Company was informed that it has been named as a
defendant in a claim filed in the United States District Court for the
Eastern District of New York for $33,000 in legal fees in connection
with the January 30, 2008 settlement of a short-swing profit matter
under Section 16(b) of the United States Securities Exchange Act of
1934, as amended, by a non-management shareholder of the Company. The
plaintiff acted as counsel for the shareholder. The Company believes
that the legal fees sought are highly unreasonable for the work
performed by the plaintiff and it intends to vigorously defend against
the claim.
__________
21
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
In this Quarterly Report, references to "we," "our," "us," the "Company," or
"Uranium Energy," refer to Uranium Energy Corp. and its subsidiaries, unless the
context requires otherwise.
The following discussion should be read in conjunction with (i) our Annual
Report on Form 10-KSB for the year ended December 31, 2006, including our
audited financial statements and the related notes contained therein; (ii) our
Transition Report on Form 10-KSB for the period ended July 31, 2007, as amended,
including our audited financial statements and the related notes contained
therein; and (iii) our unaudited interim financial statements for the
three-month period January 31, 2008 and the related notes included herein. The
following discussion contains forward-looking statements that reflect our plans,
estimates and beliefs. Our actual results could differ materially from those
discussed in the forward looking statements. Our financial statements are stated
in United States dollars and are prepared in accordance with United States
generally accepted accounting principles.
GENERAL
We were organized under the laws of the State of Nevada, USA on May 16, 2003.
Our shares of common stock commenced trading on the American Stock Exchange
under the symbol "UEC" on September 28, 2007, prior to which they traded on the
OTC Bulletin Board under the symbol "URME".
OUR BUSINESS OPERATIONS
We are a natural resource exploration and development company engaged in the
exploration and development of properties that may contain uranium minerals in
the United States. Our strategy is to acquire properties that are thought to
contain economic quantities of uranium ore and have undergone some degree of
uranium exploration but have not yet been mined. As of the date of this
Quarterly Report, we have acquired interests in uranium exploration mineral
properties totaling 67,491 gross acres (59,756 net mineral acres) of leased,
staked or optioned mineral properties, consisting of claim blocks located in the
States of Arizona, Colorado, New Mexico, Texas, Utah, and Wyoming, which we
intend to explore for economic deposits of uranium. The totals include 3,291 net
acres (6,717 gross acres) leased by Cibola Resources LLC in which the Company
holds a 49% interest. These leases are subject to varying royalty interests,
some of which are indexed to the sale price of uranium. Many of these properties
have been the subject of historical exploration by other mining companies. We
believe that our properties are prospective for mineral exploration based on
either prior exploration conducted by other companies, or management information
and work products derived from various reports, maps, radioactive rock samples,
exploratory drill logs, state organization reports, consultants, geological
study, and other exploratory information.
Our principal mineral properties are the Goliad project in Goliad County, Texas
and the Cibola Resources LLC Cebolleta joint venture project in Cibola County,
New Mexico.
The acreage and location of our mineral properties is summarized as follows:
____________________________________________________
GROSS ACRES NET ACRES (*)
____________________________________________________
Arizona 2,871.28 2,871.28
Colorado 5,041.04 5,041.04
New Mexico 29,872.06 22,986.86
Texas 10,015.24 9,165.25
Utah 2,226.94 2,226.94
Wyoming 17,464.23 17,464.23
____________________________________________________
67,490.79 59,755.61
====================================================
(*) Certain of our interests in our mineral properties in Texas and New Mexico
are less than 100%. Accordingly, we have presented the acreage of our mineral
properties on a net acre basis.
22
During the 2008 fiscal year through the date of this Quarterly Report, we
acquired an additional 12,495 gross acres (12,063 net acres) in the States of
Arizona, New Mexico, Texas and Wyoming for an aggregate paid consideration of
$1,608,673.
We plan to use our database of exploration data in order to target additional
exploration properties for acquisition. For the remainder of the 2008 fiscal
year, we plan to acquire further acres of mineral properties consisting of claim
blocks located in, but not limited to the states of Arizona, Colorado, New
Mexico, Texas, Utah and Wyoming. Our ability to complete these acquisitions will
be subject to obtaining sufficient financing and being able to conclude
agreements with the property owners on terms that are acceptable to us. These
potential acquisition properties have not yet been specifically identified.
Our properties do not have any reserves. We plan to conduct exploration programs
on these properties with the objective of ascertaining whether any of our
properties contain economic concentrations of uranium that are prospective for
mining. As such, we are considered an exploration or exploratory stage company.
Since we are an exploration stage company, there is no assurance that a
commercially viable mineral deposit exists on any of our properties, and a great
deal of further exploration will be required before a final evaluation as to the
economic and legal feasibility for our future exploration is determined. We have
no known reserves of uranium or any other type of mineral. Since inception, we
have not established any proven or probable reserves on our mineral property
interests.
OUR MINERAL EXPLORATION PROPERTIES
We are participating in our mineral properties in the States of Arizona,
Colorado, New Mexico, Texas, Utah and Wyoming by way of mining claims and
mineral leases. Certain properties were staked and claimed by us and registered
with the United States Bureau of Land Management ("BLM"). Claim blocks acquired
in this manner exist in Arizona, Colorado, New Mexico and Wyoming. We have
surface access and complete mineral rights to an unlimited depth below surface.
The claims are in effect for an indefinite period provided the claims are kept
in good standing with the BLM and the counties. Annual maintenance fees to be
paid to the BLM are relatively nominal. We will also be required to remediate
the land upon release of the claim - bringing the land back into the state it
was originally, prior to the commencement of our exploration activities. These
costs are determined by the BLM and bonded accordingly.
In the States of New Mexico, Utah and Texas, we are participating in our mineral
properties by way of property lease directly from the owners of the land/mineral
rights. These leases give us similar access and privileges as described above,
however with some important differences. Although we will have access to the
surface, the mineral rights below surface are restricted to uranium and
associated fissionable minerals only, with any other minerals and hydro carbons,
including, for example, petroleum, retained by the lessor. The lease terms are
for five years, and include five-year renewal periods. After the expiration of
the second five-year term, the leases will be either held by production or the
leases will be terminated. These leases are subject to varying royalty
interests, some of which are indexed to the sale price of uranium at the time of
production. Royalty payments must be made to the lessor in the event that we
extract uranium ore from the properties. All royalties are based on the gross
sales revenue less certain charges and fees.
These properties do not have any indicated or inferred minerals or reserves. We
plan to conduct exploration programs on these properties with the intent to
prove or disprove the existence of economic concentrations of uranium. Since
inception, we have not established any proven or probable reserves on our
mineral property interests.
RECENT EXPLORATION ACTIVITIES
GOLIAD
During the 2008 fiscal year and through the date of this Quarterly report, we
continued the initial confirmation drilling at our 100% controlled Goliad
project in Goliad County, Texas (the "Goliad Lease"). Our drilling program
consists of ongoing drilling in order to confirm and expand the existence of
historically drill-indicative resources on the property (as identified by Moore
Energy Corporation during the 1980's) and extending historically identified
mineralized trends.
23
As of the date of this Quarterly Report, current drilling is filling in gaps and
defining boundaries within the historically delineated ore bodies as originally
developed by Moore Energy Corporation in the 1980s based on 190,000 feet of
drilling in approximately 450 holes. To date, our drilling has concentrated in
the areas of the A and B Sand ore bodies, with a further total of 743 holes
drilled, consisting of 258,595 feet.
On March 4, 2008, we issued a news release entitled "Uranium Energy Corp Reports
Independent NI 43-101 Resource Estimate at Goliad Project." This news release is
attached as Exhibit 99.1 to our Current Report on Form 8-K filed with the SEC on
the same day.
As described in more detail in the news release, we have received an updated
technical report (the "Technical Report") in accordance with the provisions of
National Instrument 43-101, Standards of Disclosure for Mineral Projects ("NI
43-101"), of the Canadian Securities Administrators for our Goliad Project
located in Goliad County, Texas. The complete Technical Report is expected to be
filed under our company's profile on the Canadian Securities Administrators
public disclosure website, at WWW.SEDAR.COM, within 45 days of the date the news
release was disseminated. The Technical Report is authored by Thomas A.
Carothers, P.Geo., a qualified person as defined in NI 43-101, who has over 30
years of uranium experience, substantially in the South Texas Uranium trend. His
experience includes working directly for two operating ISR mining companies in
South Texas, US Steel and Tenneco Uranium, during the 1970s and 1980s.
As required by NI 43-101, the Technical Report contains certain disclosure
relating to measured, indicated and inferred mineral resource estimates for the
Company's Goliad Project. Such mineral resources have been estimated in
accordance with the definition standards on mineral resources of the Canadian
Institute of Mining, Metallurgy and Petroleum referred to in NI 43-101. Measured
mineral resources, indicated mineral resources and inferred mineral resources,
while recognized and required by Canadian regulations, are not defined terms
under the SEC's Industry Guide 7, and are normally not permitted to be used in
reports and registration statements filed with the SEC. Accordingly, we have not
reported them in this prospectus or otherwise in the United States.
Investors are cautioned not to assume that any part or all of the mineral
resources in these categories will ever be converted into mineral reserves.
These terms have a great amount of uncertainty as to their existence, and great
uncertainty as to their economic and legal feasibility. In particular, it should
be noted that mineral resources which are not mineral reserves do not have
demonstrated economic viability It cannot be assumed that all or any part of
measured mineral resources, indicated mineral resources or inferred mineral
resources discussed in the news release and Technical Report will ever be
upgraded to a higher category. In accordance with Canadian rules, estimates of
inferred mineral resources cannot form the basis of feasibility or other
economic studies. Investors are cautioned not to assume that any part of the
reported measured mineral resources, indicated mineral resources or inferred
mineral resources referred to in this news release and in the Technical Report
are economically or legally mineable.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JANUARY 31, 2008 COMPARED TO THREE MONTHS ENDED JANUARY 31,
2007
We are an exploration stage company and net revenues during the three months
ended January 31, 2008 and 2007 were $Nil. Our net loss for the three months
ended January 31, 2008 was $4,936,262 compared to a net loss of $4,596,614
during the same period ended January 31, 2007.
Operating expenses incurred during the three months ended January 31, 2008
increased to $4,909,547 from $4,691,294 over the same period ended January 31,
2007. The increase is primarily due to the expansion of current operations and
the corresponding change in administration and exploration costs associated with
the increased acquisition and development of our uranium properties and related
infrastructure, which was partially offset by the decrease in stock-based
compensation expenses. Significant expenditures and changes are outlined as
follows:
o Consulting fees increased to $147,169 during the three months ended
January 31, 2008 from $86,023 during the same period ended January 31,
2007 due primarily to increased reliance on third party service
providers as we expand our operations.
24
o Consulting fees - stock based decreased to $213,279 during the three
months ended January 31, 2008 from $544,544 during the same period
ended January 31, 2007. The current period expense consists of the
fair value of option grants earned during the period, whereas the
prior period consisted of the amortization of significant stock and
warrant grants issued to consultants.
o Depreciation increased to $49,137 during the three months ended
January 31, 2008 from $9,049 during the same period ended January 31,
2007 due to significant investments in property and equipment during
the current period, the seven month period ended July 31, 2007, and
the last half of the 2006 calendar year.
o General and administrative costs increased to $1,358,013 during the
three months ended January 31, 2008 from $247,190 during the same
period ended January 31, 2007 due to the general expansion in
operations and personnel in the current period as compared to the
prior period, and significant marketing activities in the current
period.
o Impairment loss on mineral properties increased to $435,154 during the
three months ended January 31, 2008 from $267,214 during the same
period ended January 31, 2007. Current year costs that have been
written off to impairment include payments pursuant to our New River
and F-33 acquisitions.
o Management fees decreased to $286,455 during the three months ended
January 31, 2008 from $514,432 during the same period ended January
31, 2007 due primarily to year-end bonuses and the inclusion of an
additional officer in the prior year.
o Management fees - stock based decreased to $267,000 during the three
months ended January 31, 2008 from $1,737,253 during the same period
ended January 31, 2007. The current period expense consists of the
fair value of option grants earned during the period, whereas the
prior period consisted of the fair value of significant option grants
issued to management.
o Mineral property expenditures increased to $1,426,276 during the three
months ended January 31, 2008 from $701,920 during the same period
ended January 31, 2007 due to the expansion of exploration activities
over the prior period, primarily in the Goliad project.
o Professional fees increased to $201,974 during the three months ended
January 31, 2008 from $111,491 during the same period ended January
31, 2007 due primarily to increases in audit and review costs in
addition to increases in counsel fees associated with the growth in
our operations.
o Wages and benefits - stock based increased to $525,090 during the
three months ended January 31, 2008 from $472,178 during the same
period ended January 31, 2007. The current and prior year expenses
consists of the fair value of option grants earned during the period.
Interest and other income decreased to $63,386 during the three months ended
January 31, 2008 from $94,680 during the same period ended January 31, 2007 due
to higher cash balances maintained during the prior period.
Deferred tax expense increased to $90,101 during the three months ended January
31, 2008 from $Nil during the same period ended January 31, 2007. The deferred
tax benefit is calculated on the estimated unrealized gain on available-for-sale
securities in the current fiscal period which is reflected in other
comprehensive income.
Our net loss during the three months ended January 31, 2008 was $4,936,262 or
($0.13) per share, compared to a net loss of $4,596,614 or ($0.14) per share
during the same period ended January 31, 2007. The weighted average number of
shares outstanding was 38,751,900 for the three months ended January 31, 2008
compared to 31,781,849 for the same period ended January 31, 2007.
TRANSACTIONS WITH OFFICERS AND DIRECTORS
Of the $4,909,547 incurred as operating expenses during the three months ended
January 31, 2008 an aggregate of $286,455 was incurred payable to certain
officers and directors and recorded as management fees. Additionally, an
aggregate of $267,000 was incurred as stock-based compensation based on the fair
value of options granted to officers and directors during the period. At January
31, 2008 there were no amounts due and owing to our directors and officers. A
balance of $9,020 for the reimbursement of administrative costs at January 31,
2008 is due from companies controlled by direct family members of a current
officer and a current director.
SIX MONTHS ENDED JANUARY 31, 2008 COMPARED TO SIX MONTHS ENDED JANUARY 31, 2007
We are an exploration stage company and net revenues during the six months ended
January 31, 2008 and 2007 were $Nil. Our net loss for the six months ended
January 31, 2008 was $9,789,105 compared to a net loss of $8,598,691 during the
same period ended January 31, 2007.
25
Operating expenses incurred during the six months ended January 31, 2008
increased to $9,813,008 from $8,732,789 over the same period ended January 31,
2007. The increase is primarily due to the expansion of current operations and
the corresponding change in administration and exploration costs associated with
the increased acquisition and development of our uranium properties and related
infrastructure, which was partially offset by the decrease in stock-based
compensation expeneses. Significant expenditures and changes are outlined as
follows:
o Consulting fees increased to $302,058 during the six months ended
January 31, 2008 from $120,887 during the same period ended January
31, 2007 due primarily to increased reliance on third party service
providers as we expand our operations.
o Consulting fees - stock based decreased to $318,233 during the six
months ended January 31, 2008 from $1,373,428 during the same period
ended January 31, 2007. The current period expense consists of the
fair value of option grants earned during the period, whereas the
prior period consisted of the amortization of significant stock and
warrant grants issued to consultants.
o Depreciation increased to $88,873 during the six months ended January
31, 2008 from $14,735 during the same period ended January 31, 2007
due to significant investments in property and equipment during the
current period, the seven month period ended July 31, 2007, and the
last half of the 2006 calendar year.
o General and administrative costs increased to $2,506,007 during the
six months ended January 31, 2008 from $1,056,987 during the same
period ended January 31, 2007 due to the general expansion in
operations and personnel in the current period as compared to the
prior period, and more significant marketing activities in the current
period.
o Impairment loss on mineral properties decreased to $1,608,673 during
the six months ended January 31, 2008 from $1,988,830 during the same
period ended January 31, 2007. Current year acquisition costs that
have been written off to impairment include the Company's $980,000
portion of Cibola payment due in the current period and payments
pursuant to our New River and F-33 acquisitions. Prior period
acquisition costs written off to impairment include $1,437,500 in
stock based costs on the issuance of shares pursuant to the Moore
Option agreement.
o Management fees decreased to $430,153 during the six months ended
January 31, 2008 from $597,082 during the same period ended January
31, 2007 due primarily to year-end bonuses and the inclusion of an
additional officer in the prior year.
o Management fees - stock based decreased to $267,000 during the six
months ended January 31, 2008 from $1,899,753 during the same period
ended January 31, 2007. The current period expense consists of the
fair value of option grants earned during the period, whereas the
prior period consisted of the fair value of significant option grants
issued to management.
o Mineral property expenditures increased to $3,217,182 during the six
months ended January 31, 2008 from $1,022,912 during the same period
ended January 31, 2007 due to the expansion of exploration activities
over the prior period, primarily in the Goliad project.
o Professional fees increased to $322,107 during the six months ended
January 31, 2008 from $185,997 during the same period ended January
31, 2007 due primarily to increases in audit and review costs in
addition to increases in counsel fees associated with the growth in
our operations.
o Wages and benefits - stock based increased to $752,722 during the six
months ended January 31, 2008 from $472,178 during the same period
ended January 31, 2007. The current and prior year expenses consists
of the fair value of option grants earned during the period.
Interest and other income increased to $141,782 during the six months ended
January 31, 2008 from $134,098 during the same period ended January 31, 2007 due
to higher cash balances maintained during the period.
Deferred tax expense increased to $117,879 during the six months ended January
31, 2008 from $Nil during the same period ended January 31, 2007. The deferred
tax benefit is calculated on the estimated unrealized gain on available-for-sale
securities in the current fiscal period which is reflected in other
comprehensive income.
Our net loss during the six months ended January 31, 2008 was $9,789,105 or
($0.26) per share, compared to a net loss of $8,598,691 or ($0.29) per share
during the same period ended January 31, 2007. The weighted average number of
shares outstanding was 38,185,316 for the six months ended January 31, 2008
compared to 30,047,284 for the same period ended January 31, 2007.
26
TRANSACTIONS WITH OFFICERS AND DIRECTORS
Of the $9,813,006 incurred as operating expenses during the six months ended
January 31, 2008 an aggregate of $430,153 was incurred payable to certain
officers and directors and recorded as management fees. Additionally, an
aggregate of $267,000 was incurred as stock-based compensation based on the fair
value of options granted to officers and directors during the period. At January
31, 2008 there were no amounts due and owing to our directors and officers. A
balance of $9,020 for the reimbursement of administrative costs at January 31,
2008 is due from companies controlled by direct family members of a current
officer and a current director.
LIQUIDITY AND CAPITAL RESOURCES
Our financial statements have been prepared assuming that we will continue as a
going concern and, accordingly, do not include adjustments relating to the
recoverability and realization of assets and classification of liabilities that
might be necessary should we be unable to continue in operation.
At January 31, 2008 we had $6,788,969 in cash and working capital of $7,106,988.
Generally, we have financed our operations through the proceeds from the private
placement of equity securities and the exercise of stock options and warrants.
We used $2,294,484 net cash during the six months ended January 31, 2008.
OPERATING ACTIVITIES
Net cash used in operating activities during the six months ended January 31,
2008 was $6,562,647 compared to $3,304,586 during the same period ending January
31, 2007. Significant operating expenditures during the current period included
mineral property expenditures, and general and administrative costs.
FINANCING ACTIVITIES
Net cash provided by financing activities during the six months ended January
31, 2008 was $6,632,758 compared to $14,284,450 during the same period ending
January 31, 2007. During the current period, we received net proceeds of
$6,201,198 primarily from the sale our our common stock pursuant to private
placements.
INVESTING ACTIVITIES
Net cash used in investing activities during the six months ended January 31,
2008 was $2,364,595 compared to $603,978 in the same period ending January 31,
2007. Significant investing expenditures during the current period included
mineral property acquisitions, including the $980,000 payment related to the
Cibola Resources LLC agreement, and purchases of property and equipment.
STOCK OPTIONS AND WARRANTS
At January 31, 2008 we had 4,397,500 stock options and 5,761,763 share purchase
warrants outstanding. The outstanding stock options have a weighted average
exercise price of $1.85 per share and the outstanding warrants have a weighted
average exercise price of $3.15 per share. Accordingly, as of January 31, 2008
the outstanding options and warrants represented a total of 10,159,263 shares
issuable for proceeds of approximately $26,300,000 if these options and warrants
were exercised in full. The exercise of these options and warrants is completely
at the discretion of the holders. There is no assurance that any of these
options or warrants will be exercised.
PLAN OF OPERATION AND FUNDING
Existing working capital is not expected to be adequate to fund our operations
over the next twelve months. We have no lines of credit or other bank financing
arrangements. Generally, we have financed operations to date through the
proceeds of the private placement of equity and debt instruments and the
exercise of Stock Options and Warrants. In connection with our business plan,
management anticipates additional increases in operating expenses and capital
expenditures relating to: (i) uranium exploration operating activities; (ii)
possible future reserve definition; (iii) possible future mining initiatives on
current and future properties; and (iv) future possible property acquisitions.
We intend to finance these expenses with further issuances of securities, and
debt issuances. We expect we will need to raise additional capital to meet
long-term operating requirements. Additional issuances of equity or convertible
debt securities will result in dilution to our current shareholders. Further,
such securities might have rights, preferences or privileges senior to our
common stock. Additional financing may not be available upon acceptable terms,
or at all. If adequate funds are not available or are not available on
acceptable terms, we may not be able to take advantage of prospective new
business endeavors or opportunities, which could significantly and materially
restrict our business operations.
27
GOING CONCERN
We commenced operations on May 16, 2003, and have not realized any significant
revenues since inception. As at January 31, 2008 we have working capital of
$7,106,988 and an accumulated deficit of $42,952,259. Existing cash resources
are currently not expected to provide sufficient funds through the upcoming
year, the capital expenditures required to achieve planned principal operations
may be substantial. The continuation of the Company as a going concern is
dependent upon the ability of the Company to obtain necessary financing to
continue operations. We are in the exploration stage of our mineral property
development and to date have not yet established any known mineral reserves on
any of our existing properties. Our continued operations and the recoverability
of the carrying value of our assets is ultimately dependent upon our ability to
achieve profitable operations. To date we have completed private placements and
exercised stock options for net proceeds of $31,437,954 from the issuance of
shares of the our common stock.
MATERIAL COMMITMENTS
EPOCH FINANCIAL CONSULTING AGREEMENT
On February 1, 2007, we entered into a financial consulting agreement with Epoch
Financial Group, Inc. ("Epoch") for a twelve month term (the "Epoch Financial
Consulting Agreement"). In accordance with the terms and provisions of the Epoch
Financial Consulting Agreement: (i) Epoch will disseminate our news releases,
investor packages, research reports and corporate and industry sector materials;
ii) Epoch will promote investor awareness to the investment community; (iii)
Epoch will arrange meetings with industry sector analysts, stock brokers and
portfolio managers; and (iv) we will pay Epoch a monthly fee of $6,500 and issue
to Epoch an aggregate of 2,500 restricted common shares per month.
HOLLEY OPTION
On March 28, 2007, we entered into the Holley Option granting us the option to
acquire certain mineral property leases, which are located in the States of
Colorado, New Mexico, and Utah, together with certain historical database
records for total consideration of $1,594,690. Under the terms of the Holley
Option, and in order to maintain our option to acquire the assets, we are
required to make the following option price payments totaling $1,500,000 to the
order and direction of the Holley Option holders in the following manner:
(a) an initial payment of $25,000 on the execution date (paid);
(b) a payment of $100,000 on March 28, 2007 (paid);
(c) a payment of $475,000 on or before April 27, 2007 (paid);
(d) a further payment of $500,000 on or before April 27, 2008;
(e) a final payment of $400,000 on or before April 27, 2009.
Upon execution of the Holley Option, we also reimbursed the Holley Option
holders approximately $95,000 for prior regulatory property payments having been
made to the New Mexico Bureau of Land Management. In addition, we will be
required to pay a royalty of 2% or 3% of the gross proceeds received from the
sale of any Uranium or Vanadium produced in relation to any mineral claim
covered under the Holley Option and, at any time during the option period or
thereafter, we may elect to purchase the royalty interest at a base cost of
$300,000 for each 1% royalty interest it wishes to acquire.
CONSULTING AGREEMENT
On April 6, 2007 the Company entered into a twelve month consulting services
agreement valued at $10,000 per month. The consultant will provide
representation before the executive and legislative branches of the federal
government and state governments in addition to providing consulting services on
political matters. As of December 1, 2007 our monthly fee paid to the consultant
has been reduced to $5,000 per month.
28
CIBOLA RESOURCES LLC
On April 27, 2007, we entered into a joint venture (the "Joint Venture") with
Neutron Energy Inc., a Wyoming corporation ("NEI") in connection with
exploration of property covering 6,717 acres located in Cibola County, New
Mexico (the "Property") for uranium resources. In connection with the Joint
Venture, Cibola Resources LLC, a Delaware limited liability company ("Cibola"),
was formed for purposes of undertaking exploration activities contemplated by
the Joint Venture.
On April 6, 2007, NEI and La Merced del Pueblo de Cebolleta, a private entity
that has authority over the natural resources of the Property ("Cebolleta"),
entered into a mining lease agreement (the "Mining Lease Agreement"), pursuant
to which NEI acquired the mining lease to the Property from Cebolleta (the
"Lease") for cash payments of $3,000,000. As of June 30, 2007, we have
reimbursed NEI an aggregate of $1,470,000. As a result, we have a 49% equity
interest in Cibola and NEI has a 51% equity interest in Cibola, respectively.
NEI contributed the Lease to Cibola Resources LLC.
Under terms of a Letter Agreement (the "Letter Agreement") between Cebolleta and
NEI, further payments to the order and direction of Cebolleta are required as
follows:
(a) $2,000,000 six months from the effective date of the Letter Agreement
(paid $980,000, being the Company's portion);
(b) $500,000 representing an advanced royalty, every 12 months from the
effective date of the Letter Agreement until uranium production begins
(to be deducted from any royalties paid in that same year);
(c) $1.00 per pound upon an independent mining engineering firm's
completion of a feasibility study, and all prior payments made to
Cebolleta will be credited to the recoverable reserve payment;
(d) 4.50% to 8.00% production royalty payments depending upon the uranium
sale price; and
(e) $30,000 per year towards a scholarship fund.
We are required to contribute 49% of the aforementioned payments in order to
retain our interest in the Joint Venture. Through the date of this Quarterly
Report, the Company has paid $2,486,750 in acquisition costs and an additional
$119,137 in exploration costs on behalf of Cibola for a cumulative contribution
of $2,569,137.
CONSULTING AGREEMENTS
On September 6, 2007 we entered into an agreement for media distribution
services valued at approximately $270,000. Under the terms of the agreement, we
paid a retainer of $100,000, with the balance of the agreement due upon
completion of the services.
NEW RIVER PROJECT ACQUISITION
On November 1, 2007 we entered into a binding letter Agreement to Purchase
Assets with Melvin O. Stairs, Jr. ("Mr. Stairs"), for a mineral exploration
claim and related database information located in Maricopa County, Arizona.
Under the terms of the agreement, the Company will pay total consideration of
$1,200,000 including i) a $10,000 deposit upon execution (paid), ii)
installments of $95,000 cash on January 10, 2008 (paid) and August 15, 2008, and
iii) installments totaling $100,000 on January 10 and August 15 of each year for
the period from January 10, 2009 through August 15, 2013. Additionally, the
Company has granted the seller security interest on the acquired assets until
the agreement is paid in full.
F-33 ACQUISITION
On November 13, 2007, we entered into an agreement to acquire certain mineral
property leases located in Cibola County, New Mexico for total consideration of
$400,000. Under the terms of the agreement, we paid an initial deposit of
$100,000 upon closing with the remaining balance due in three installments of
$100,000 due on March 31, 2008, December 31, 2008, and December 31, 2009. At our
option, the final two installments may be paid in stock, based on the average
trading price of our common stock over the 10 days immediately preceding the due
date.
MANAGEMENT FEES
We are committed to pay our key executives a total of approximately $450,000 per
year for management services.
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OFFICE LEASES
We are currently leasing office premises in New Mexico, Texas, and Wyoming for
monthly payments totaling $10,882. All office lease agreements having a maximum
term of no more than three years.
OFF-BALANCE SHEET ARRANGEMENTS
As of the date of this Quarterly Report, we do not have any off-balance sheet
arrangements that have or are reasonably likely to have a current or future
effect on our financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or capital
resources that are material to investors. The term "off-balance sheet
arrangement" generally means any transaction, agreement or other contractual
arrangement to which an entity unconsolidated with us is a party, under which we
have: (i) any obligation arising under a guaranteed contract, derivative
instrument or variable interest; or (ii) a retained or contingent interest in
assets transferred to such entity or similar arrangement that serves as credit,
liquidity or market risk support for such assets.
CRITICAL ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with United States
generally accepted accounting principles 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 period
reported. By their nature, these estimates are subject to measurement
uncertainty and the effect on the financial statements of changes in such
estimates in future periods could be significant. Significant areas requiring
management's estimates and assumptions are determining the fair value of
transactions involving common stock, valuation and impairment losses on mineral
property acquisitions, valuation of stock-based compensation, and valuation of
available-for-sale securities. Other areas requiring estimates include
allocations of expenditures to resource property interests and depreciation of
property and equipment. Actual results could differ from those estimates.
MINERAL PROPERTY COSTS
We are primarily engaged in the acquisition, exploration and development of
mineral properties.
Mineral property acquisition costs are initially capitalized when incurred in
accordance with EITF 04-2, "Whether Mineral Rights are Tangible or Intangible
Assets". At the end of each fiscal quarter end, we assesses the carrying costs
for impairment under SFAS 144, "Accounting for Impairment or Disposal of Long
Lived Assets". If proven and probable reserves are established for a property
and it has been determined that a mineral property can be economically
developed, costs will be amortized using the units-of-production method over the
estimated life of the probable reserve.
Mineral property exploration costs are expensed as incurred.
Estimated future removal and site restoration costs, when determinable are
provided over the life of proven reserves on a units-of-production basis. Costs,
which include production equipment removal and environmental remediation, are
estimated each period by management based on current regulations, actual
expenses incurred, and technology and industry standards. Any charge is included
in exploration expense or the provision for depletion and depreciation during
the period and the actual restoration expenditures are charged to the
accumulated provision amounts as incurred.
As of the date of this Quarterly Report, we have not established any proven or
probable reserves on our mineral properties and incurred only acquisition and
exploration costs.
RESTORATION AND REMEDIATION COSTS (ASSET RETIREMENT OBLIGATIONS)
Various federal and state mining laws and regulations require us to reclaim the
surface areas and restore underground water quality for our mine projects to the
pre-existing mine area average quality after the completion of mining. In August
2001, the FASB issued Statement of Financial Accounting Standards ("SFAS") No.
143, "Accounting for Asset Retirement Obligations," which established a uniform
methodology for accounting for estimated reclamation and abandonment costs.
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In March 2005, the FASB issued Interpretation 47 ("FIN 47"), "Accounting for
Conditional Asset Retirement Obligations"--an interpretation of FASB No. 143.
FIN 47 clarifies that the term "conditional asset retirement obligation" as used
in SFAS No. 143 refers to a legal obligation to perform an asset retirement
activity in which the timing and/or method of settlement are conditional on a
future event that may or may not be within the control of the entity. The
obligation to perform the asset retirement activity is unconditional even though
uncertainty exists about the timing and/or method of settlement. FIN 47 requires
a liability to be recognized for the fair value of a conditional asset
retirement obligation if the fair value of the liability can be reasonably
estimated.
Future reclamation and remediation costs are accrued based on management's best
estimate at the end of each period of the costs expected to be incurred at each
project. Such estimates would be determined by our engineering studies
calculating the cost of future surface and groundwater activities.
IMPAIRMENT OF LONG-LIVED ASSETS
Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate the carrying amount of an asset may not be recoverable.
Recoverability of these assets is measured by comparison of its carrying amount
to future undiscounted cash flows the assets are expected to generate.
FOREIGN CURRENCY TRANSLATION
Our functional currency is United States dollars. Our subsidiary, UEC Resources
Ltd. maintains its accounting records in their local currency (Canadian dollar).
In accordance with SFAS No. 52, "Foreign Currency Translation", the financial
statements of our subsidiary is translated into United States dollars using
period end exchange rates as to monetary assets and liabilities and average
exchange rates as to revenues and expenses. Non-monetary assets are translated
at their historical exchange rates. Net gains and losses resulting from foreign
exchange translations and foreign currency exchange gains and losses on
transactions occurring in a currency other than our functional currency are
included in the determination of net income in the period.
RECENT ACCOUNTING PRONOUNCEMENTS
In July 2006, FASB issued Interpretation No. 48. This interpretation clarifies
the accounting for uncertainty in income taxes recognized in an enterprise's
financial statements in accordance with SFAS Statement No. 109, "Accounting for
Income Taxes" ("FIN 48"). This Interpretation prescribes a recognition threshold
and measurement attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax return.
This Interpretation also provides guidance on de-recognition, classification,
interest and penalties, accounting in interim periods, disclosure, and
transition. We adopted FIN 48 as of January 1, 2007. The adoption of FIN 48 did
not have an impact on our consolidated financial statements during the current
period.
In September 2006, FASB issued SFAS No. 157, "Fair Value Measurements" ("SFAS
157"). The objective of SFAS 157 is to increase consistency and comparability in
fair value measurements and to expand disclosures about fair value measurements.
SFAS 157 defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles, and expands disclosures about fair
value measurements. SFAS 157 applies under other accounting pronouncements that
require or permit fair value measurements and does not require any new fair
value measurements. The provisions of SFAS 157 are effective for fair value
measurements made in fiscal years beginning after November 15, 2007. We are
currently assessing the impact of SFAS 157 on our financial position and results
of operations.
In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities". This Statement permits entities to
choose to measure many financial assets and financial liabilities at fair value.
Unrealized gains and losses on items for which the fair value option has been
elected are reported in earnings. SFAS No. 159 is effective for fiscal years
beginning after November 15, 2007. We are currently assessing the impact of SFAS
No. 159 on our financial position and results of operations.
__________
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ITEM 3. CONTROLS AND PROCEDURES
Our management is responsible for establishing and maintaining a system of
disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e)
under the Exchange Act) that is designed to ensure that information required to
be disclosed by us in the reports that we file or submit under the Exchange Act
is recorded, processed, summarized and reported, within the time periods
specified in the Commission's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by an issuer in the reports
that it files or submits under the Exchange Act is accumulated and communicated
to the issuer's management, including its principal executive officer or
officers and principal financial officer or officers, or persons performing
similar functions, as appropriate to allow timely decisions regarding required
disclosure.
In accordance with Exchange Act Rules 13a-15 and 15d-15, an evaluation was
completed under the supervision and with the participation of our management,
including Mr. Amir Adnani, our Chief Executive Officer, and Mr. Pat Obara, our
Chief Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures as of the end of the period covered by this
Quarterly Report. Based on that evaluation, our management including the Chief
Executive Officer and Chief Financial Officer, concluded that our disclosure
controls and procedures are effective, to provide reasonable assurance that
information required to be disclosed in our reports filed or submitted under the
Exchange Act is recorded, processed, summarized, and reported within the time
periods specified in the Commission's rules and forms. There have been no
changes to our internal controls over financial reporting (as defined in Rule
13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) that occurred
during our three-month quarterly period ended January 31, 2008, that materially
affected, or were reasonably likely to materially affect, our internal controls
over financial reporting.
AUDIT COMMITTEE REPORT
The Board of Directors has established an audit committee. The members of the
audit committee are Mr. Erik Essiger, Mr. Ivan Obolensky and Mr. Vincent Della
Volpe. The three members of the audit committee are "independent" within the
meaning of Rule 10A-3 under the Exchange Act. The audit committee was
reorganized in July 2007 and operates under a written charter adopted by our
Board of Directors.
The audit committee has reviewed and discussed with management our unaudited
financial statements as of and for the three month period ended January 31,
2008. The audit committee has also discussed with Ernst & Young LLP the matters
required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, as amended, by the Auditing Standards Board
of the American Institute of Certified Public Accountants. The audit committee
has received and reviewed the written disclosures and the letter from Ernst &
Young LLP required by Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees, as amended, and has discussed with Ernst &
Young LLP their independence.
Based on the reviews and discussions referred to above, the audit committee has
recommended to the Board of Directors that the unaudited financial statements
referred to above be included in our Quarterly Report on Form 10-QSB for the
three month period ended January 31, 2008 filed with the Securities and Exchange
Commission.
__________
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We have recently been informed that counsel for Goliad County has issued a
notice of intent to file litigation citing us for alleged infractions of the
Safe Drinking Water Act in connection with our exploration activities in Goliad
County. This proposed claim regarding our exploration activities is completely
without merit and will be vigorously defended by us, if filed. The responsible
state agency with sole jurisdiction over our exploration activities has already
thoroughly investigated the County's complaint and has found us to be in
compliance with all applicable regulatory and environmental requirements.
Specifically, as the agency noted in an April 2007 letter to the County's
attorney, the State agency hydrologist "concluded from the available information
that no ground-water contamination has occurred as a result of the drilling
activities." The state agency concluded its letter by noting that "to date, the
Commission's investigation of your complaint has not revealed any practice or
activity within the approved permit area that has adversely affected the wells
identified in your complaint or the related aquifer, or is out of compliance
with the Texas Uranium Mining Regulations...." Later in a September 2007 letter
to the Goliad groundwater district, the agency reiterated its findings: the
agency's "investigation of your complaint has not revealed any practice or
activity at UEC's Uranium Exploration Permit No. 123 that is out of
compliance.... We consider this investigation to be closed." Our Goliad Project
has been inspected on a monthly basis since the close of the investigation, and
no violations have been noted. In fact, an inspection report from November of
2007 observed that "prompt attention" to site restoration during exploration was
apparent and "the area inspected looked very good." We are dedicated to full
compliance with all aspects of the state regulatory process and will continue to
focus our attention and efforts on obtaining all necessary authorizations for
our Goliad Project.
We have also been recently informed that we have been named as a defendant in a
claim filed in the United States District Court for the Eastern District of New
York for $33,000 in legal fees in connection with our prior and amicable
settlement of a short-swing profit matter under Section 16(b) of the United
States Securities Exchange Act of 1934, as amended, by a non-management
shareholder of the Company. The plaintiff acted as counsel for the shareholder.
We believe that the legal fees sought are highly unreasonable for the work
performed by the plaintiff and intend to vigorously defend against the claim.
As of the date of this Quarterly Report, no director, officer or affiliate is
(i) a party adverse to us in any legal proceeding, or (ii) has an adverse
interest to us in any legal proceedings. Management is not aware of any other
legal proceedings pending or that have been threatened against us or our
properties.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
PRIVATE PLACEMENT OFFERING
During the six months ended January 31, 2008, and through the date of this
Quarterly Report, we engaged in a private placement offering under Regulation D
and Regulation S of the Securities Act. Pursuant to the terms of the private
placement, we issued aggregate amounts of our restricted common stock at
subscription prices and under terms as follows:
On December 12, 2007 we closed a private placement offering in the aggregate
amount of 1,800,000 units (the "Unit(s)") at a subscription price of $3.75 per
Unit. Each Unit is comprised of one share of our restricted common stock and one
non-transferable common share purchase warrant (the "Warrant"), with each such
resulting Warrant entitling the holder thereof to purchase an additional share
of our restricted common stock (the "Warrant Share") for the period commencing
upon the date of issuance of the Units and ending on the day which twelve months
from the date of issuance of the Units at an exercise price of $4.25 per Warrant
Share. The per share price of the offering was arbitrarily determined by our
Board of Directors based upon analysis of certain factors including, but not
limited to, stage of development, industry status, investment climate, perceived
investment risks, our assets and net estimated worth. We issued Units to
investors who are non-U.S. residents. The investors executed subscription
agreements and acknowledged that the securities to be issued have not been
registered under the Securities Act, that they understood the economic risk of
an investment in the securities, and that they had the opportunity to ask
questions of and receive answers from our management concerning any and all
matters related to acquisition of the securities.
33
EPOCH FINANCIAL GROUP, INC.
On February 1, 2007 the Company entered into the Epoch Financial Consulting
Agreement. In accordance with the terms and provisions of the Epoch Financial
Consulting Agreement, on November 6, 2007 we issued 10,000 shares of our
restricted common stock and on January 24, 2008 we issued an additional 7,500
shares of our restricted common stock.
SHARE PURCHASE WARRANTS
During the six months ended January 31, 2008 and through the date of this
Quarterly Report, we issued an aggregate of 48,235 shares of our common stock
pursuant to the exercise of 48,235 stock purchase warrants for net proceeds of
$137,755.
STOCK OPTIONS
On November 27, 2007, the Company filed a registration statement on Form S-8
with the SEC to register for resale an aggregate of 5,500,000 shares of the
Company's common stock, par value $0.001 per share, issuable by the Company
pursuant to awards to eligible participants under its 2006 Stock Incentive Plan.
As a result all 10,000,000 shares of the Company's common stock both issued and
available for issuance under the Company's 2006 Stock Incentive Plan have now
been registered for resale with the SEC.
During the six months ended January 31, 2008 and through the date of this
Quarterly Report, we issued an aggregate of 330,000 restricted shares of our
common stock pursuant to the exercise of 330,000 stock options for net proceeds
of $206,667.
During the six months ended January 31, 2008 and through the date of this
Quarterly Report, we granted an aggregate amount of 760,000 stock options to
certain officers, directors, employees and consultants. Of the 760,000 stock
options granted, 660,000 have an exercise price of $3.80 per share and a 10 year
expiry period, and 100,000 have an exercise price of $2.45 and a 10 year expiry
period.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
No report required.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No report required.
ITEM 5. OTHER INFORMATION
No report required.
ITEM 6. EXHIBITS
EXHIBIT DESCRIPTION OF EXHIBIT
________________________________________________________________________________
31.1 Certification of Chief Executive Officer pursuant to Securities
Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a).
31.2 Certification of Chief Financial Officer pursuant to Securities
Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a).
32.1 Certifications pursuant to Securities Exchange Act of 1934 Rule 13a-
14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
________________________________________________________________________________
34
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
URANIUM ENERGY CORP.
/s/ "AMIR ADNANI"
_____________________________________________________
Amir Adnani
President, Chief Executive Officer and Principal
Executive Officer
Date: March 13, 2008
35