10-Q 1 f10q.htm F10Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X]         Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
               For the quarterly period ended April 30, 2009

or

[  ]         Transition Report Pursuant to 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 registrant as specified in its charter)

 

NEVADA

 

98-0399476

(State or other jurisdiction of incorporation of organization)

 

(I.R.S. Employer Identification No.)

     

9801 Anderson Mill Road, Suite 230, Austin, Texas

 

78750

(Address of principal executive offices)

   

 

(512) 828-6980

 
 

(Registrant's telephone number, including area code)

 

Indicate by check mark whether the registrant has (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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  S    No  £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of "large accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act:

£   Large accelerated filer

S   Accelerated filer

£   Non-accelerated filer (Do not check
       if smaller reporting company)

£   Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes  £    No  S

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:  46,634,894 shares of common stock outstanding as of June 8, 2009.

__________


URANIUM ENERGY CORP.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

1

 

Item 1.

Financial Statements

1

 

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

21

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

36

 

Item 4.

Controls and Procedures

36

PART II - OTHER INFORMATION

37

 

Item 1.

Legal Proceedings

37

 

Item 1A.

Risk Factors

37

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

38

 

Item 3.

Defaults Upon Senior Securities

39

 

Item 4.

Submission of Matters to a Vote of Security Holders

39

 

Item 5.

Other Information

39

 

Item 6.

Exhibits

39

SIGNATURES

40

 

 

 

 

 

ii


PART I - FINANCIAL INFORMATION

Item 1.     Financial Statements

 

 

 

 

 

 

1


 

 

 

 

 

 

 

 

URANIUM ENERGY CORP.
(An Exploration Stage Company)

CONSOLIDATED FINANCIAL STATEMENTS


APRIL 30, 2009
(Unaudited)

 

 

 

 

 

2


URANIUM ENERGY CORP.
(An Exploration Stage Company)

CONSOLIDATED BALANCE SHEETS
(Unaudited)

 

April 30, 2009

July 31, 2008

 

CURRENT ASSETS

      Cash and cash equivalents

$ 5,693,840 

$ 13,137,318 

      Restricted cash (Note 3)

25,721 

164,376 

      Available-for-sale securities

54,100 

      Accounts and interest receivable

9,986 

48,745 

      Due from related parties

10,157 

      Prepaid expenses and deposits

144,014 

254,594 

 

5,927,661 

13,615,190 

     

MINERAL RIGHTS AND PROPERTIES (Note 4)

12,146,218 

13,376,497 

DATABASES (Note 5)

795,908 

970,354 

LAND USE AGREEMENTS (Note 6)

43,687 

41,920 

PROPERTIES AND EQUIPMENT (Note 7)

926,161 

1,127,222 

 

$ 19,839,635 

$ 29,131,183 

 

CURRENT LIABILITIES

      Accounts payable and accrued liabilities

$ 542,713 

$ 865,390 

      Due to related parties (Note 8)

21,818 

 

564,531 

865,390 

     

DEFERRED TAX LIABILITY

13,706 

 

578,237 

865,390 

 

STOCKHOLDERS' EQUITY

      Capital stock (Note 9)

      Common stock $0.001 par value: 750,000,000 shares authorized

            46,537,817 shares issued and outstanding

             (July 31, 2008 - 46,318,739)

46,539 

46,319 

      Additional paid-in capital

69,758,349 

68,619,362 

      Deficit accumulated during the exploration stage

(50,566,284)

(40,399,888)

      Accumulated other comprehensive income

22,794 

 

19,261,398 

28,265,793 

 

$ 19,839,635 

$ 29,131,183 

 

COMMITMENTS AND CONTINGENCIES (Notes 4 and 10)

 

The accompanying notes are an integral part of these consolidated financial statements.

3


URANIUM ENERGY CORP.
(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

 

Three Months
Ended
April 30,
2009

Three Months
Ended
April 30,
2008

Nine Months
Ended
April 30,
2009

Nine Months
Ended
April 30,
2008

For the
Period from
May 16, 2003
(inception) to
April 30, 2009

 

EXPENSES

    Consulting fees

$52,022

$110,049

$170,562

$412,107

$1,654,861

    Consulting fees - stock based (Note 9)

161,852

185,071

241,567

503,304

6,758,725

    Depreciation and amortization

132,068

122,911

396,482

273,865

910,380

    General and administrative (Note 8)

728,883

1,474,735

2,480,259

3,980,742

13,099,631

    Impairment loss on mineral
        properties (Note 4)

1,182,096

-

1,223,038

-

1,526,508

    Interest and finance charges

-

25,642

-

25,642

171,730

    Management fees (Note 8)

145,255

190,383

594,819

620,536

2,509,920

    Management fees - stock
        based (Notes 8 and 9)

-

1,752,250

170,250

2,019,250

4,887,253

    Mineral property expenditures (Note 4)

951,577

1,803,677

3,889,878

5,084,304

15,600,332

    Professional fees

62,035

190,276

354,682

512,383

1,837,364

    Wages and benefits - stock
        based (Note 9)

211,256

275,724

682,120

1,028,446

2,675,806

 

3,627,044

6,130,718

10,203,657

14,460,579

51,632,510

 

LOSS BEFORE OTHER ITEMS

(3,627,044)

(6,130,718)

(10,203,657)

(14,460,579)

(51,632,510)

OTHER ITEMS

     (Loss) gain on sale of assets

(14,370)

-

(14,370)

-

349,387

    Gain on sale of investments

-

34,168

-

34,168

47,548

    Interest income

3,141

25,983

51,631

157,410

617,761

    Other income

-

-

-

10,355

51,530

 

LOSS BEFORE INCOME TAXES

(3,638,273)

(6,070,567)

(10,166,396)

(14,258,646)

(50,566,284)

INCOME TAXES

    Deferred income tax expense

-

(69,802)

-

(187,681)

-

 

NET LOSS FOR THE PERIOD

(3,638,273)

(6,140,369)

(10,166,396)

(14,446,327)

(50,566,284)

OTHER COMPREHENSIVE INCOME
  (LOSS) (NET OF INCOME TAXES)

22,794

(102,633)

22,794

(275,957)

22,794

 

TOTAL COMPREHENSIVE LOSS
  FOR THE PERIOD

$(3,615,479)

$(6,243,002)

$(10,143,602)

$(14,722,284)

$(50,543,490)

 

BASIC AND DILUTED NET
  LOSS PER SHARE

$ (0.08)

$ (0.15)

$ (0.22)

$ (0.37)

 

WEIGHTED AVERAGE NUMBER
  OF SHARES OUTSTANDING,
  BASIC AND DILUTED

46,453,940

39,780,823

46,398,960

38,709,387

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

4


URANIUM ENERGY, CORP.
(An Exploration Stage Company)

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)

 

Common Stock

Additional

Accumulated

Accumulated
Other
Comprehensive

Stockholders'

Shares

Amount

Paid-in Capital

Deficit

Income

Equity

 

Balance, July 31, 2008

46,318,739

$46,319

$68,619,362

$(40,399,888)

$        -

$28,265,793

             

Common stock

   Issued on the exercise of options

40,000

40

14,460

-

-

14,500

   Issued pursuant to mineral rights
      and property acquisitions

44,000

45

15,275

-

-

15,320

   Issued pursuant to service agreements

135,078

135

92,190

-

-

92,325

             

Stock based compensation

   Options issued for consulting services

-

-

164,692

-

-

164,692

   Options issued for management fees

-

-

170,250

-

-

170,250

   Options issued for wages and benefits

-

-

682,120

-

-

682,120

             

Net loss for the period

-

-

-

(10,166,396)

-

(10,166,396)

             

Unrealized gain on available-for-sale
   securities

-

-

-

-

22,794

22,794

 

Balance, April 30, 2009

46,537,817

$46,539

$69,758,349

$(50,566,284)

$22,794

$19,261,398

 

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.

 

5


URANIUM ENERGY CORP.
(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 

Nine Months
Ended
April 30, 2009

Nine Months
Ended
April 30, 2008

For the Period
From May 16, 2003
(inception) to
April 30, 2009

 

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss for the period

$(10,166,396)

$(14,446,327)

$(50,566,284)

    Adjustments to reconcile net loss to net cash
    from operating activities:

        Stock based compensation

1,093,937

3,551,000

14,321,784

        Stock based mineral property expenditures

-

-

138,750

        Impairment loss on mineral properties

1,223,038

-

1,526,508

        Non-cash interest and finance charges

-

25,642

171,730

        Depreciation and amortization

396,482

273,866

910,380

        Gain on sale of assets

14,370

-

(349,387)

        Gain on sale of investments

-

(34,168)

(47,548)

    Changes in operating assets and liabilities:

        Accounts and interest receivable

38,759

(44,366)

(9,986)

        Prepaid expenses and deposits

110,580

(108,054)

(123,487)

        Accounts payable and accrued liabilities

(307,227)

455,414

539,811

 

NET CASH FLOWS USED IN OPERATING ACTIVITIES

(7,596,457)

(10,139,312)

(33,487,729)

 

CASH FLOWS FROM FINANCING ACTIVITIES

    Issuance of shares for cash

14,500

6,582,685

46,457,092

    Recovery of short swing profits

-

119,138

119,138

    Advances (to) from related parties

31,975

(10,320)

21,818

 

NET CASH FLOWS FROM FINANCING ACTIVITIES

46,475

6,691,503

46,598,048

 

CASH FLOWS FROM INVESTING ACTIVITIES

    Net investment in mineral rights and properties

14,771

(1,655,090)

(5,457,697)

    Acquisition of databases

(6,500)

(600,000)

(908,250)

    Acquisition of land use rights

-

-

(15,000)

    Proceeds from sale of assets

10,275

-

160,275

    Proceeds from sale of investments

-

186,228

282,588

    Purchase of property and equipment

(50,697)

(757,647)

(1,452,674)

    Restricted cash

138,655

(154,458)

(25,721)

 

NET CASH FLOWS FROM (USED IN)
  INVESTING ACTIVITIES

106,504

(2,980,967)

(7,416,479)

 

(DECREASE) INCREASE IN CASH AND
  CASH EQUIVALENTS

(7,443,478)

(6,428,776)

5,693,840

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

13,137,318

9,083,453

-

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

$5,693,840

$2,654,677

$5,693,840

 

SUPPLEMENTAL CASH FLOW INFORMATION AND NONCASH INVESTING
  AND FINANCING ACTIVITIES
(Note 11)

The accompanying notes are an integral part of these consolidated financial statements.

 

6


URANIUM ENERGY CORP.
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2009 (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 or by way of option, for the purposes of exploring for economic deposits of uranium in the States of Arizona, Colorado, New Mexico, Texas, Utah, and Wyoming. As at April 30, 2009 the Company has interests in approximately 38,796 net acres of mineral properties which have been staked, leased or optioned.

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 April 30, 2009 the Company has working capital of $5,363,130 and an accumulated deficit of $50,566,284. Existing cash resources are currently expected to provide sufficient funds through the upcoming year. The continuation of the Company as a going concern for a period of longer than the upcoming year 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 (refer to Note 2). The continued operations of the Company and the recoverability of the carrying value of its assets are ultimately dependent upon the ability of the Company to achieve profitable operations. As at April 30, 2009 the Company has completed private placements and received funding through the exercise of stock options and share purchase warrants for net proceeds of $46,457,092 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. They may 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 audited consolidated financial statements for the year ended July 31, 2008 included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission. The interim unaudited consolidated financial statements should be read in conjunction with those consolidated financial statements included in the Form 10-K. 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 nine months ended April 30, 2009 are not necessarily indicative of the results that may be expected for the year ending July 31, 2009.

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.

7


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 rights and property acquisitions, databases, land use agreements, and property and equipment, and the valuation of stock-based compensation. 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. Periodically, 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 reserve.

Mineral property exploration costs are expensed 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.

Databases

Costs related to internally developed databases are expensed as incurred. Costs of acquired mineral property databases are capitalized upon acquisition. Mineral property databases are tested for impairment whenever events or changes indicate the carrying value amount may not be recoverable. An impairment loss is recognized if it is determined that the carrying amount is not recoverable and exceeds fair value. Mineral property databases are amortized over five years using the straight-line method.

Restoration and Remediation Costs (Asset Retirement Obligations)

Various federal and state mining laws and regulations require the Company to reclaim the surface areas and restore underground water quality for its mine projects to the pre-existing mine area average quality after the completion of mining.

Future reclamation and remediation costs, which include production equipment removal and environmental remediation, 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 the Company's engineering studies calculating the cost of future surface and groundwater activities, current regulations, actual expenses incurred, and technology and industry standards.

In accordance with Statement of Financial Accounting Standards No. 143 "Accounting for Asset Retirement Obligations," the Company will capitalize the measured fair value of asset retirement obligations to mineral rights and properties. The asset retirement obligations would be accreted to an undiscounted value until the time at which it they are expected to be settled. Actual retirement costs will be recorded against the asset retirement obligations when incurred. Any difference between the recorded asset retirement obligations and the actual retirement costs incurred will be recorded as a gain or loss in the period of settlement.

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. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability of these assets is measured by comparison of its carrying amount to future undiscounted cash flows the assets are expected to generate. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.

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.

8


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 reflect 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.

Foreign Currency Translation

The functional currency of the Company, including its subsidiary, is United States dollars. 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 consolidated 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 April 30, 2009 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, requiring such transactions to be accounted for using the fair value method. The Company uses the Black-Scholes-Merton ("BSM") option-pricing model to determine the grant date fair-value of stock-based awards under SFAS No. 123R. The fair value is recorded in income depending on the terms and conditions of the award, and the nature of the relationship of the recipient of the award to the Company. The Company records the grant date fair value in income in line with the period over which it was earned. For employees and management this is typically considered to be the vesting period of the award. For consultants the fair value of the award is recorded in income over the term of the service period, and unvested amounts are revalued at each reporting period over the service period. The Company estimates the expected forfeitures and updates the valuation accordingly.

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
Exploration Equipment
Furniture and Fixtures
Leasehold Improvements
Vehicles

3 years
5 years
5 years
Term of lease
5 years

Recently Adopted Accounting Policies

Effective August 1, 2008, the Company adopted SFAS No. 157 "Fair Value Measurements". In February 2008, the FASB issued FASB Staff Position No. FAS 157-2, "Effective Date of FASB Statement No. 157, which provides a one year deferral of the effective date of SFAS No. 157 for non-financial assets and non-financial liabilities, except those that are recognized or disclosed in the financial statements at fair value at least annually. In October 2008, the FASB issued FASB Staff Position No. SFAS 157-3, "Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active," which clarifies the application of SFAS 157 for markets that are not active and illustrates key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. The Company adopted the provisions of SFAS No. 157 on a prospective basis for financial assets and liabilities which require that the Company determine the fair value of financial assets and liabilities using the fair value hierarchy established in SFAS No. 157. The adoption of SFAS No. 157 did not have a material impact on the Company's results of operations and financial condition for the period ended April 30, 2009 however, this change may have an impact on the financial condition and the results of operations in future periods.

9


SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" is effective August 1, 2008 for the Company. The fair value option established by SFAS 159 permits, but does not require, all entities to choose to measure eligible items at fair value at specified election dates. An entity would report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. The Company did not elect to use the option and as such SFAS 159 has not impacted the Company's financial position and results of operations.

In May 2008, the FASB issued SFAS No. 162 "The Hierarchy of Generally Accepted Accounting Principles" ("SFAS 162"). SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States. SFAS 162 is effective sixty days following the SEC's approval of PCAOB amendments to AU Section 411, "The Meaning of 'Present fairly in conformity with generally accepted accounting principles' " which occurred on September 16, 2008. The adoption of SFAS 162 did not have a material impact on the consolidated financial position, results of operations or cash flows.

Recent Accounting Pronouncements

In December 2007, the FASB issued SFAS No. 141 (Revised 2007), "Business Combinations," or SFAS No. 141R. SFAS No. 141R will change the accounting for business combinations. Under SFAS No. 141R, an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. SFAS No. 141R will change the accounting treatment and disclosure for certain specific items in a business combination. SFAS No. 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company does not expect that SFAS No. 141R will have a material impact on the consolidated financial position, results of operations or cash flows.

In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements -- An Amendment of ARB No. 51," or SFAS No. 160. SFAS No. 160 establishes new accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160 is effective for fiscal years beginning on or after December 15, 2008. The Company does not expect that SFAS No. 160 will have a material impact on the consolidated financial position, results of operations or cash flows.

In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities." SFAS No. 161 amends and expands the disclosure requirements of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. It requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. In September 2008, the FASB issued FASB Staff Position ("FSP") FSP FAS 133-1 and FIN 45-4, "Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date of FASB Statement No. 161". This FSP amends FASB Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities", to require disclosures by sellers of credit derivatives, including credit derivatives embedded in a hybrid instrument. This FSP also amends FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of indebtedness of Others", to require an additional disclosure about the current status of the payment/performance risk of a guarantee. Further, this FSP clarifies the Board's intent about the effective date of FASB Statement No. 161, "Disclosures about Derivative Instruments and Hedging Activities". This statement is effective for financial statements issued for fiscal years beginning after November 15, 2008. The Company does not expect that these pronouncements will have a material impact on the consolidated financial position, results of operations or cash flows.

In April 2008, the FASB issued FASB Staff Position FAS 142-3, "Determination of Useful Life of Intangible Assets" (FSP 142-3). FSP 142-3 amends the factors that should be considered in developing the renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FAS 142, "Goodwill and Other Intangible Assets." FSP 142-3 also requires expanded disclosure regarding the determination of intangible asset useful lives. FSP 142-3 is effective for fiscal years beginning after December 15, 2008. Earlier adoption is not permitted. The Company does not believe the adoption of FSP 142-3 will have a material impact on the consolidated financial statements.

In May 2008, the FASB issued FASB FSB Accounting Principles Board ("APB") Opinion No. 14-1, "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)" ("FSB APB 14-1"). The FSP will require cash settled convertible debt to be separated into debt and equity components at issuance and a value to be assigned to each. The value assigned to the debt component will be the estimated fair value, as of the issuance date, of a similar bond without the conversion feature. The difference between the bond cash proceeds and this estimated fair value will be recorded as a debt discount and amortized to interest expense over the life of the bond. FSP APB 14-1 will become effective January 1, 2009. The Company does not expect that FSB APB 14-1 will have a material impact on the consolidated financial position, results of operations or cash flows.

10


In June 2008, the FASB issued FSP EITF 03-6-1, "Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities" ("FSP EITF 03-6-1"). FSP EITF 03-6-1 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share under the two-class method as described in SFAS No. 128, "Earnings per Share." Under the guidance in FSP EITF 03-6-1, unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. FSP EITF 03-6-1 is effective for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. All prior-period earnings per share amounts presented shall be adjusted retrospectively. The Company does not expect that FSP EITF 03-6-1 will have a material impact on the consolidated financial position, results of operations or cash flows.

In June 2008, the FASB ratified the consensus reached by the EITF on Issue No. 07-5, "Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity's Own Stock" ("EITF No. 07-5"). EITF No. 07-5 provides guidance for determining whether an equity-linked financial instrument (or embedded feature) is indexed to an entity's own stock. EITF No. 07-5 applies to any freestanding financial instrument or embedded feature that has all of the characteristics of a derivative or freestanding instrument that is potentially settled in an entity's own stock (with the exception of share-based payment awards within the scope of SFAS 123(R)). To meet the definition of "indexed to own stock," an instrument's contingent exercise provisions must not be based on (a) an observable market, other than the market for the issuer's stock (if applicable), or (b) an observable index, other than an index calculated or measured solely by reference to the issuer's own operations, and the variables that could affect the settlement amount must be inputs to the fair value of a "fixed-for-fixed" forward or option on equity shares. EITF No. 07-5 is effective for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The Company does not expect the adoption of EITF No. 07-5 to change the classification or measurement of its financial instruments.

NOTE 3:             RESTRICTED CASH

Restricted cash included certificates of deposit issued to the Wyoming Department of Environmental Quality, Land Quality Division ("Wyoming DEQ, LQD"), in lieu of a surety bond. The certificates of deposit accrue interest at 3.5% and 2.0% per annum, are automatically renewable and are protected by federal insurance up to $100,000. Additionally, the Company has deposits of $15,000 with the Arizona State Land Department pursuant to exploration activities in the State of Arizona, and a deposit of $5,418 with the State of Colorado pursuant to exploration activities in that state. During the nine months ended April 30, 2009 the Company was notified that the two certificates of deposits were released by the Wyoming DEQ, LQD as the majority of land reclamation was completed to the satisfaction of the Wyoming DEQ, LQD. Accordingly a total of $138,658 has been removed from restricted cash. An amount of $5,300 remains held by the Wyoming DEQ, LQD.

NOTE 4:             MINERAL RIGHTS AND 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 at April 30, 2009 the Company has interests in 46,325 gross acres (38,796 net mineral acres) of mineral properties that 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 $12,146,218 including $8,207,500 representing 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 at April 30, 2009 total yearly recurring maintenance payments of $143,411 are required to maintain existing mineral leases.

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 was transferred to the Company.

Acquisition costs for the Moore Option total $8,407,500 as at April 30, 2009 and include the following: (i) cash payments of $200,000, (ii) 750,000 restricted common shares issued on October 11, 2005 with a fair value of $250,000, (iii) 500,000 restricted common shares issued on April 10, 2006 with a fair value of $1,150,000, (iv) 250,000 restricted common shares issued on September 28, 2006 with a fair value of $462,500, (v) 750,000 restricted common shares issued on October 10, 2006 with a fair value of $975,000, and (vi) 750,000 restricted common shares issued on April 11, 2007 with a fair value of $5,370,000. Additionally, the Company has incurred $284,498 in other mineral right and property acquisition charges on the Goliad project, for a cumulative cost of $8,691,998 as at April 30, 2009.

11


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:

    1. an initial payment of $25,000 on the execution date (paid);
    2. a payment of $100,000 on March 28, 2007 (paid);
    3. a payment of $475,000 on or before April 27, 2007 (paid);
    4. a further payment of $500,000 on or before April 27, 2008 ($475,000 paid); and
    5. 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. Additionally, the Company has incurred $12,068 in other mineral right and property acquisition charges related to the Holley Option, for a cumulative cost of $1,181,758 as at April 30, 2009.

On April 30, 2009, the Company decided to terminate the Holley Option. Accordingly, $1,176,748 in mineral rights and properties were written down to impairment.

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:

    1. initial payments of $3,000,000 (paid by NEI, of which 49% was reimbursed to NEI by the Company);
    2. an additional cash payment of $2,000,000 six months from the effective date of the Lease ($980,000 paid, being the Company's 49% portion);
    3. 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);
    4. 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;
    5. a production royalty of between 4.50% and 8.0% depending upon the sale price of uranium; and
    6. 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 $930,593 in exploration costs on behalf of Cibola for a cumulative contribution of $3,417,343. As an exploration stage company, Cibola has no liabilities as at April 30, 2009 and accordingly, $2,450,000 in mineral right and property acquisition costs in addition to $36,750 in database 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.

12


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").

On August 25, 2008 the Company entered into an agreement amending the underlying Agreement to Purchase Assets from Melvin O. Stairs, Jr. Under the terms of the Amending Agreement, the Purchase Price Payment has been amended to the following:

a)   Purchase Price Payments: pay to the order and direction of Mr. Stairs the following Purchase Price Payments in the aggregate sum of $300,000 in the following manner and at the following times:

i)         an initial and non-refundable Purchase Price Payment of $10,000 immediately upon the Acceptance Date of the Agreement (paid);

ii)        a further non-refundable Purchase Price Payment of $95,000 on or before January 10, 2008 (paid); and

iii)       a further non-refundable Purchase Price Payment of $95,000 immediately upon the Acceptance Date of the Amending Agreement in the following manner:

a.   an initial $57,000 cash payment (paid); and

b.   the $38,000 balance by way of issuance of an aggregate of 19,000 fully paid and non-assessable restricted common shares at a deemed issuance price of $2.00 per share (issued); and

iv)        a further non-refundable Purchase Price Payment of $100,000 payable on or before October 31, 2009 in the following manner:

a.   an initial $50,000 cash payment; and

b.   the $50,000 balance by way of issuance of an aggregate number of fully paid and non-assessable restricted common shares at a deemed issuance price calculated as the previous five-day trading average immediately prior to October 31, 2009, which would equate to the said balance of $50,000; and

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 the Company's 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 the Company's 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.

Additionally, the Company has incurred $13,000 in other mineral right and property acquisition charges on the New River project, for a cumulative cost of $195,070 as at April 30, 2009.

F-33 Acquisition (Todilto)

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 (paid), 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. On December 12, 2008 the Company entered into an agreement amending the aforementioned underlying agreement to acquire mineral leases to the following: 1) $5,000 on or before December 31, 2008 (paid) and $45,000 on or before December 31, 2009. At the Company's option, the final installment may be paid in stock, based on the average trading price of its common stock over the 10 days immediately preceding the due date.

13


Uran Joint Venture

On January, 14, 2009, the Company entered into an option and joint venture agreement (the "Agreement") with Uran Limited ("Uran") of Perth, Australia, in connection with the proposed exploration and development of certain tenements comprising the Company's "Grants Ridge" uranium project located in New Mexico. The Agreement was subject to Uran's satisfactory completion of due diligence work on the Grants Ridge project which was completed in February of 2009 in accordance with terms of the Agreement. Upon completion of the following terms of the Agreement, Uran can earn a 65% interest in the Grants Ridge project by: (a) making an initial cash payment of $75,000 (received); (b) incurring project exploration expenditures of $100,000 in year one, $200,000 in year two, $300,000 in year three, $400,000 in year four and $500,000 in year five, for total aggregate exploration expenditures of $1,500,000 over the 5 year option period; (c) completing a feasibility study; and (d) issuing and delivering an initial 1,000,000 Uran ordinary shares to the Company (received) plus issue a further 750,000 shares staged over the next 3 years for total aggregate issuance of 3,250,000 Uran ordinary shares. Uran can withdraw from the Agreement after expenditures of $250,000.

Additionally, the Company has incurred $90,897 in other mineral right and property acquisition charges on the Todilto project, for a cumulative cost of $295,897 as at April 30, 2009. Pursuant to the Uran joint venture agreement, the Company received a cash payment of $75,000 and 1,000,000 ordinary shares of Uran Limited with a fair value of $17,600 on the date of receipt. Accordingly, cumulative acquisition costs have been reduced by $92,600 as of April 30, 2009.

 
   

April 30, 2009

July 31, 2008

 
       

Mineral Rights and Properties, Unproven

     

      Cibola Resources, New Mexico

 

$ 2,450,000

$ 2,450,000

      Goliad, Texas

 

8,691,998

8,684,750

      Holley Option, Colorado, New Mexico and Utah

 

1,181,758

1,181,661

      New River, Arizona

 

195,070

121,600

      Todilto, New Mexico

 

203,603

291,681

       

      Other Property Acquisitions

 

950,297

950,275

 
     

13,679,967

      Write Down for Loss on Impairment

 

(1,526,508)

(303,470)

 
   

$ 12,146,218

$ 13,376,497

 

During the nine months ended April 30, 2009 the Company decided not to renew or continue certain lease and option agreements in Arizona, New Mexico and Texas. Additionally, the Company decided to terminate the Holley Option. Accordingly, $1,223,038 in mineral rights and properties have been written down to impairment.

Mineral property exploration costs on a regional basis are as follows:

 
 

Three Months
Ended
April 30,
2009

Three Months
Ended
April 30,
2008

Nine Months
Ended
April 30,
2009

Nine Months
Ended
April 30,
2008

For the Period
From May 16,
2006
(inception) to
April 30, 2009

 

Exploration Costs

         

      Arizona

$ 4,380

$ 100

$14,130

$16,442

$ 107,513

      Colorado

-

72,320

54,960

124,405

283,125

      Nevada

-

-

-

-

963

      New Mexico

266,508

1,632

587,540

132,151

1,383,733

      Texas

680,017

1,712,065

3,140,846

4,473,830

12,771,267

      Utah

-

1,529

4,741

10,520

45,642

      Wyoming

672

16,031

87,661

326,956

1,008,089

 
 

$951,577

$1,803,677

$3,889,878

$5,084,304

$15,600,332

 

NOTE 5:             DATABASES

Database acquisition costs consist of the following:

14


 
   

April 30, 2009

July 31, 2008

 

Mineral Property Databases

     

      Moore

 

$ 141,890

$ 141,890

      Brenniman

 

209,000

209,000

      Halterman

 

166,500

166,500

      Jebsen

 

100,000

100,000

      Tronox, LLC

 

500,000

500,000

       

      Other Database Acquisitions

 

93,250

86,750

 
   

1,210,640

1,204,140

      Accumulated Amortization

 

(414,732)

(233,786)

 
   

$ 795,908

$ 970,354

 

NOTE 6:             LAND USE AGREEMENTS

Land use acquisition costs, including right-of-way and easement agreements consist of the following:

 
   

April 30, 2009

July 31, 2008

 

Land Use Agreements

     

      Real Pipeline Right-of-Way

 

$ 15,000

$ 15,000

      Stanford Utility Right-of-Way

 

33,770

28,520

 
   

48,770

43,520

      Accumulated Amortization

 

(5,083)

(1,600)

 
   

$ 43,687

$ 41,920

 

NOTE 7:             PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

 
   

April 30, 2009

July 31, 2008

 

Property and Equipment

     

      Computer Equipment

 

$ 227,782

$ 239,217

      Exploration Equipment

 

247,828

232,322

      Furniture and Fixtures

 

49,280

59,997

      Land

 

175,144

175,144

      Leasehold Improvements

 

8,728

8,728

      Vehicles

 

672,988

686,569

   

1,381,750

1,401,977

 

      Accumulated Depreciation

 

(455,589)

(274,755)

 
   

$ 926,161

$ 1,127,222

 

NOTE 8:             RELATED PARTY TRANSACTIONS

During the nine months ended April 30, 2009 the Company had transactions with certain officers and directors of the Company as follows:

    1. incurred $594,819 in management fees paid to directors and officers during the period, of which $21,818 is outstanding as at April 30, 2009 and reported as due to related parties;
    2. incurred $170,250 in stock based compensation for the incremental fair value of options granted to directors and officers that were repriced during the period; and
    3. incurred $81,118 in general and administrative costs 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.

NOTE 9:             STOCKHOLDERS' EQUITY

Share Capital

The Company's capital stock as at April 30, 2009 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.

15


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.

2009 Share Transactions

On August 13, 2008 the Company issued 7,500 restricted common shares pursuant to a financial consulting agreement. At the time of issuance, the shares had a value of $2.06 per share and $15,450 was recorded as stock-based consulting fees. Additionally, on October 23, 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 $0.53 per share and $3,975 was recorded as stock-based consulting fees.

On October 23, 2008 the Company issued 19,000 restricted common shares pursuant to an asset purchase agreement (refer to Note 4). At the time of issuance, the shares had a value of $0.53 per share and $10,070 was recorded as stock-based mineral rights and properties acquisitions.

On December 5, 2008 the Company issued 25,000 restricted common shares pursuant to a land use agreement. At the time of issuance, the shares had a value of $0.21 per share and $5,250 was recorded as stock-based land use agreements.

On February 13, 2009 the Company issued 13,039 restricted common shares pursuant to a financial consulting agreement. At the time of issuance, the shares had a value of $0.47 per share and $6,128 was recorded as stock-based consulting fees. Additionally, on April 7, 2009 the Company issued 13,039 restricted common shares pursuant to the same agreement. At the time of issuance, the shares had a value of $0.55 per share and $7,171 was recorded as stock-based consulting fees.

On March 17, 2009 the Company issued 29,000 restricted common shares pursuant to a consulting agreement. At the time of issuance, the shares had a value of $0.53 per share and $15,370 was recorded as stock-based consulting fees. Additionally, on April 21, 2009 the Company issued 29,000 restricted common shares pursuant to the same agreement. At the time of issuance, the shares had a value of $0.65 per share and $18,850 was recorded as stock-based consulting fees.

On March 17, 2009 the Company issued 6,000 restricted common shares pursuant to a consulting agreement. At the time of issuance, the shares had a value of $0.53 per share and $3,180 was recorded as stock-based consulting fees.

On March 27, 2009 the Company issued 20,000 restricted common shares pursuant to a consulting agreement. At the time of issuance, the shares had a value of $0.56 per share and $11,200 was recorded as stock-based consulting fees. Additionally, on April 27, 2009 the Company issued 10,000 restricted common shares pursuant to the same agreement. At the time of issuance, the shares had a value of $1.10 per share and $11,000 was recorded as stock-based consulting fees.

During the nine months ended April 30, 2009 a total of 40,000 common stock options were exercised for aggregate proceeds of $14,500.

Share Purchase Warrants

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 fails to maintain the effectiveness of the registration statement for the three year period, additional warrants could be issuable 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 at April 30, 2009 1,349,540 additional warrants could be issuable as liquidated damages through the three year period expiring December 12, 2010.

The July 7, 2008 and July 18, 2008 private placements included a registration rights agreement, requiring a registration statement respecting the investors' securities within the Company declared effective by the SEC by September 25, 2008. 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 two years from the original date of issuance. If the Company fails to maintain the effectiveness of the registration statement for the two year period, additional warrants could be issuable 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 at April 30, 2009 2,331,690 additional warrants could be issuable as liquidated damages through the two year period expiring July 7, 2010 and July 18, 2010.

16


A summary of the Company's common share purchase warrants as at January 31, 2009 and changes during the period is presented below:

 
 

Number of
warrants

Weighted average
exercise price

Weighted average
remaining
life (years)

 

Balance, July 31, 2008

9,202,661

$ 3.16

1.25

Expired

(5,329,243)

(3.37)

-

 

Balance, April 30, 2009

3,873,418

$ 2.87

1.88

 

The aggregate intrinsic value ("AIV") under the provisions of SFAS No. 123R of the 500,000 compensation warrants previously issued to consultants as at April 30, 2009 was estimated at $160,000.

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 options. 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, the number of common shares available for issuance under the Plan was increased from 5,250,000 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 October 10, 2006, a total of 650,000 stock options were granted to employees, consultants, directors and officers at an exercise price of $1.30 per share. The term of these options is ten years. The fair value of these options at the date of grant of $754,000 was estimated using the Black-Scholes option pricing model with an expected life of 1 year, a risk free interest rate of 4.09%, a dividend yield of 0%, and an expected volatility of 264.00%. On November 1, 2008 and December 19, 2008 the Company approved the repricing of certain stock options from $1.30 per share to $0.95 and $0.45 respectively. During the nine months ended April 30, 2009 the $31,500 value of the options repriced during the period has been recorded as stock based consulting fees and management fees.

On January 2, 2007, a total of 565,000 stock options were granted to employees, consultants, and officers at an exercise price of $3.30 per share. The term of these options is ten years. The fair value of these options at the date of grant of $1,548,100 was estimated using the Black-Scholes option pricing model with an expected life of 5 years, a risk free interest rate of 5.22%, a dividend yield of 0%, and an expected volatility of 113%. On November 1, 2008 and December 19, 2008 the Company approved the repricing of certain stock options from $3.30 per share to $0.95 and $0.45 respectively. During the nine months ended April 30, 2009 the $63,900 value of the options repriced during the period has been recorded as stock based consulting fees, management fees and wages.

On March 30, 2007, a total of 415,000 stock options were granted to employees, consultants, and officers at an exercise price of $5.70 per share. The term of these options is ten years. The fair value of these options at the date of grant of $1,962,950 was estimated using the Black-Scholes option pricing model with an expected life of 5 years, a risk free interest rate of 5.26%, a dividend yield of 0%, and an expected volatility of 116%. On November 1, 2008 and December 19, 2008 the Company approved the repricing of certain stock options from $5.70 per share to $0.95 and $0.45 respectively. During the nine months ended April 30, 2009 the $91,554 value of the options earned and repriced during the period has been recorded as stock based consulting fees and wages.

On November 1, 2007 a total of 660,000 stock options were granted to employees, consultants and a director 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%. On November 1, 2008 and December 19, 2008 the Company approved the repricing of certain stock options from $3.80 per share to $0.95 and $0.45 respectively. During the nine months ended April 30, 2009 the $533,305 value of the options earned and repriced 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 consultants 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%. On November 1, 2008 and December 19, 2008 the Company approved the repricing of certain stock options from $2.45 per share to $0.95 and $0.45 respectively. During the nine months ended April 30, 2009 the $19,015 value of the options earned and repriced during the period has been recorded as stock based consulting fees.

17


On February 11, 2008 a total of 65,000 stock options were granted to consultants at an exercise price of $2.68 per share. The term of these options is ten years. The fair value of these options at the date of grant of $125,450 was estimated using the Black-Scholes option pricing model with an expected life of 5 years, a risk free interest rate of 3.00%, a dividend yield of 0%, and an expected volatility of 92%. On November 1, 2008 and December 19, 2008 the Company approved the repricing of certain stock options from $2.68 per share to $0.95 and $0.45 respectively. During the nine months ended April 30, 2009 the $11,392 value of the options earned and repriced during the period has been recorded as stock based consulting fees.

On April 7, 2008 a total of 1,150,000 stock options were granted to employees, directors and officers at an exercise price of $2.50 per share. The term of these options is ten years. The fair value of these options at the date of grant of $1,874,500 was estimated using the Black-Scholes option pricing model with an expected life of 5 years, a risk free interest rate of 2.23%, a dividend yield of 0%, and an expected volatility of 80%. On November 1, 2008 and December 19, 2008 the Company approved the repricing of certain stock options from $2.50 per share to $0.95 and $0.45 respectively. During the nine months ended April 30, 2009 the $136,116 value of the options earned and repriced during the period has been recorded as stock based management fees and wages.

On May 15, 2008 a total of 90,000 stock options were granted to employees at an exercise price of $2.35 per share. The term of these options is ten years. The fair value of these options at the date of grant of $127,800 was estimated using the Black-Scholes option pricing model with an expected life of 5 years, a risk free interest rate of 1.96%, a dividend yield of 0%, and an expected volatility of 73%. On November 1, 2008 and December 19, 2008 the Company approved the repricing of certain stock options from $2.35 per share to $0.95 and $0.45 respectively. During the nine months ended April 30, 2009 the $51,399 value of the options earned and repriced during the period has been recorded as stock based wages.

On November 7, 2008 a total of 240,000 stock options were granted to consultants and an employee at an exercise price of $0.95 per share. The term of these options is ten years. The fair value of these options at the date of grant of $57,600 was estimated using the Black-Scholes option pricing model with an expected life of 5 years, a risk free interest rate of 0.28%, a dividend yield of 0%, and an expected volatility of 105.16%. On December 19, 2008 and January 14, 2009 the Company approved the repricing of certain stock options from $0.95 per share to $0.45. During the nine months ended April 30, 2009 the $57,850 value of the options earned and repriced during the period has been recorded as stock based consulting fees and wages.

On January 14, 2009 a total of 20,000 stock options were granted to a consultant at an exercise price of $0.45 per share. The term of these options is ten years. The fair value of these options at the date of grant of $7,400 was estimated using the Black-Scholes option pricing model with an expected life of 5 years, a risk free interest rate of 0.10%, a dividend yield of 0%, and an expected volatility of 136.59%. During the nine months ended April 30, 2009 the $5,133 value of the options earned during the period has been recorded as stock based consulting fees and wages.

On November 1, 2008, December 19, 2008 and January 14, 2009 the Company approved the repricing of certain stock options issued to consultants, management and employees. On November 1, 2008 options with exercise prices ranging from $2.35 to $5.70 per share were repriced to $0.95 per share. The fair value of the repricing was estimated using the Black-Scholes option pricing model with an expected life ranging from 3.2 to 4.6 years, a risk free interest rate of 0.24%, a dividend yield of 0%, and an expected volatility of 105%. On December 19, 2008 options with exercise prices ranging from $0.95 to $3.80 per share were repriced to $0.45 per share. The fair value of the repricing was estimated using the Black-Scholes option pricing model with an expected life ranging from 2.9 to 4.9 years, a risk free interest rate of 0.11%, a dividend yield of 0%, and an expected volatility of 117%. On January 14, 2009 options with an exercise price of $0.95 per share were repriced to $0.45 per share. The fair value of the repricing was estimated using the Black-Scholes option pricing model with an expected life of 4.8 years, a risk free interest rate of 0.10%, a dividend yield of 0%, and an expected volatility of 137%. As at April 30, 2009 the remaining unvested incremental fair value of repriced options issued to employees was $8,940.

On February 5, 2009 a total of 50,000 stock options were granted to a consultant at an exercise price of $0.46 per share. The term of these options is ten years. The fair value of these options at the date of grant of $18,500 was estimated using the Black-Scholes option pricing model with an expected life of 5 years, a risk free interest rate of 0.23%, a dividend yield of 0%, and an expected volatility of 113.08%. During the nine months ended April 30, 2009 the $12,000 value of the options earned during the period has been recorded as stock based consulting fees and wages.

On March 30, 2009 a total of 25,000 stock options were granted to a consultant at an exercise price of $0.56 per share. The term of these options is ten years. The fair value of these options at the date of grant of $10,750 was estimated using the Black-Scholes option pricing model with an expected life of 5 years, a risk free interest rate of 0.16%, a dividend yield of 0%, and an expected volatility of 107.02%. During the nine months ended April 30, 2009 the $3,896 value of the options earned during the period has been recorded as stock based consulting fees and wages.

A summary of the Company's stock options as at April 30, 2009 and changes during the period is presented below:

18


 
 

Number of
options

Weighted average
exercise price

Weighted average
remaining
life (years)

 

Balance, July 31, 2008

5,462,500 

$ 1.97 

8.46 

Issued

335,000 

0.46 

10.00 

Exercised

(40,000)

(0.33)

(7.27)

Expired

(379,500)

(0.83)

 

Balance, April 30, 2009

5,378,000 

$ 0.65 

7.73 

 

The AIV under the provisions of SFAS No. 123R of all outstanding options as at April 30, 2009 was estimated at $4,341,143. The AIV of options exercised during the nine months ended April 30, 2009 was estimated at $32,700.

Stock Based Compensation

A summary of stock based compensation expense for the nine months ended April 30, 2009:

 
 

Nine Months
Ended
April 30, 2009

Nine Months
Ended
April 30, 2008

For the Period
From May 16, 2003
(inception) to
January 31, 2009

 

Stock Based Consulting

     

      Amortization of deferred compensation

$            -

$            -

$ 1,157,500

      Common stock issued for consulting services

76,875

110,525

283,824

      Options issued to consultants

164,692

392,779

3,698,874

      Warrants issued for consulting services

-

-

1,618,526

 
 

241,567

503,304

6,758,724

 

Stock Based Management Fees

     

      Amortization of deferred compensation

-

-

650,000

      Options issued to management

170,250

2,019,250

4,237,253

 
 

170,250

2,019,250

4,887,253

 

Stock Based Wages and Benefits

     

      Options issued to employees

682,120

1,028,446

2,675,806

 
 

$ 1,093,937

$ 3,551,000

$ 14,321,783

 

NOTE 10          COMMITMENTS

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. For the nine months ended April 30, 2009, services have been provided in the amount of $100,000 and no further amounts are outstanding or will become payable under this agreement.

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. On August 25, 2008 the Company entered into an agreement amending the underlying Agreement to Purchase Assets. Under the terms of the Amending Agreement, the Company will pay total consideration of $300,000 including i) a $10,000 deposit upon execution (paid), ii) an installment of $95,000 cash on January 10, 2008 (paid), iii) an installment of $95,000 on August 25, 2008 consisting of $57,000 cash (paid) and the issuance of 19,000 fully paid and non-assessable restricted common shares (issued), and iv) a further installment totaling $100,000 on or before October 31, 2009 consisting of $50,000 cash and the $50,000 balance by way of issuance of an aggregate number of fully paid and non-assessable restricted common shares at a deemed issuance price calculated as the previous five-day trading average immediately prior to October 31, 2009. 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 (paid), 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 December 12, 2008, the Company entered into an agreement amending the aforementioned underlying agreement to acquire mineral leases to the following: 1) $5,000 on or before December 31, 2008 (paid) and $45,000 on or before December 31, 2009. At the Company's option, the final installment may be paid in stock, based on the average trading price of its common stock over the 10 days immediately preceding the due date.

The Company is committed to pay its key executives a total of approximately $468,500 per year for management services.

19


The Company is currently leasing office premises in New Mexico, Texas, and Wyoming with total monthly payments of $6,321 with all agreements having a remaining term of no more than two years. Additionally, the Company is renting office space in Vancouver, Canada on a month to month basis at approximately $3,631 per month.

The aggregate minimum payments over the next five years are as follows:

 

April 30, 2009

 

$ 368,995

April 30, 2010

 

4,500

 
   

$ 373,495

 

Goliad County Notice

As disclosed in the Company's Current Report on Form 8-K filed on March 20, 2008 with the SEC, a lawsuit has been filed in U.S. District Court by Goliad County, Texas and an individual landowner alleging infractions of the United States Safe Drinking Water Act of 1974 in connection with its exploration activities in Goliad County. The Company believes this claim regarding its exploration activities to be completely without merit and will be vigorously defended. The responsible state agency with sole jurisdiction over the Company's exploration activities previously investigated a similar claim by the County and found the Company 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 "[t]o 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 stating 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."

The Company's 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". The Company is dedicated to full compliance with all aspects of the state regulatory process and will continue to focus its attention and efforts on obtaining all necessary authorizations for its Goliad Project.

The lawsuit, which was commenced by the filing of the plaintiffs' Original Complaint on or about March 17, 2008, follows on a notice of intent to file litigation issued by counsel for Goliad County and an individual landowner which was disclosed in the Company's current report filed with the SEC on Form 8-K on March 3, 2008. The plaintiffs have requested that the Court grant the following relief: (a) that the Court exercise jurisdiction over the lawsuit; (b) an order enjoining the Company from further exploration activities in the Weesatche Project in Goliad County; (c) an order requiring the Company to clean up the alleged contamination of the aquifer; (d) an order enjoining initiation of the aquifer exemption process until the Company has cleaned up the alleged contamination; (e) an order prohibiting the Company from using any water quality data for purposes of establishing baseline water quality if such data was collected after initiation of mining activity (although the Company has not commenced any mining activity); (f) an order granting Goliad County payment of its expert fees incurred in the prosecution of the lawsuit; (g) an order granting Goliad County payment of its attorney fees; and (h) such additional relief as the Court may deem just, proper and equitable, including an award of reasonable attorneys' fees, expenses and costs.

NOTE 11          SUPPLEMENTAL CASH FLOW INFORMATION AND
                           NONCASH INVESTING AND FINANCING ACTIVITIES

On October 23, 2008 the Company issued 19,000 restricted common shares pursuant to an asset purchase agreement (refer to Note 4). At the time of issuance, the shares had a value of $0.53 per share and $10,070 was recorded as stock-based mineral rights and properties acquisitions.

On December 5, 2008 the Company issued 25,000 restricted common shares pursuant to a land use agreement. At the time of issuance, the shares had a value of $0.21 per share and $5,250 was recorded as stock-based land use acquisitions.

On March 11, 2009 the Company received 1,000,000 ordinary shares of Uran Limited pursuant to a joint venture agreement. At the time of receipt, the shares had a value of $0.0176 per share and $17,600 was recorded as a reduction in stock-based mineral rights and properties acquisitions.

 

April 30, 2009

July 31, 2008

 

Cash and Cash Equivalents Consist of:

      Cash in bank

$ 536,444

$ 974,407

      Term deposits

5,157,396

12,162,911

 

$ 5,693,840

$13,137,318

 

20


NOTE 12          SUBSEQUENT EVENTS

On May 1, Craig and Luann Duderstadts voluntarily and unconditionally dismissed all their allegations, claims and causes of actions against the Company. The dismissal was "with prejudice", which means that the Duderstadts may not re-file the claims at a later date. No money or other consideration was paid to the Duderstadts for this dismissal.

On May 28, 2009, the Company and Uran Limited ("Uran") entered into an agreement in respect to the addition of certain surface rights and mineral rights owned by Uran into the joint venture proposed to be formed by the Company and Uran pursuant to the terms of the option and joint venture agreement compromising the Company's mineral claims known and described as the Grants Ridge project located in New Mexico, U.S.A.

Pursuant to the Variation Agreement, the Additional Tenement will form part of the joint venture contemplated by the Joint Venture Agreement on the following terms:

    1. the earn-in requirements of the Joint Venture Agreement shall be increased by US$100,000 such that Uran will be required to incur Exploration Expenditure of US$200,000 by March 17, 2010;
    2. the cost of the Additional Tenement (being US$100,000) will form part of the Exploration Expenditure required to be incurred as amended by (a) above;
    3. the cost of the Additional Tenement or the Exploration Expenditure incurred by Uran on the Additional Tenement will not be included in Uran's commitment to spend a minimum of US$250,000 in Exploration Expenditure on the Tenements prior to termination of the Joint Venture Agreement;
    4. Uran will be responsible for paying all Outgoings (that is, rents, rates, survey fees and other fees and charges relating to or in connection with the Additional Tenement) and the maintenance of the Additional Tenement and ensuring that it is kept in good standing until the Joint Venture is formed;
    5. if a Joint Venture is formed by Uran earning a 65% Joint Venture Interest, the Company will have an option to acquire a 35% interest in the Additional Tenement by reimbursing Uran the proportionate share of the original cost of the Additional Tenement (that is, US$35,000) plus the proportionate share of any Exploration Expenditure incurred by Uran on the Additional Tenement during the five-year Earn-in Period; and
    6. if Uran terminates the Joint Venture Agreement the Additional Tenement will be solely owned by Uran. The Company and the Joint Venture will have no interest in or right to the Additional Tenement or any part of the Additional Tenement.

On June 8, 2009 the Company entered into an option and joint venture agreement with Strategic Resources Inc. ("Strategic"), a TSXV listed company to earn up to a 60% interest in 20 lode mining claims located on Catron County, NM. Strategic Resources Inc. is required to pay the Company $7,500, issue a total aggregate of 2,500,000 shares and complete $825,000 of exploration expenditures to earn a 50% interest in the property according to the following terms:

    1. Upon receipt of TSX Venture Exchange approval and formal execution of the Option Agreement, Strategic will make a cash payment of $7,500 and issue an initial 500,000 of its common shares to the Company;
    2. On or before the first anniversary of the agreement, Strategic will issue a further 500,000 of its common shares to the Company and complete $25,000 of exploration expenditures on the property;
    3. On or before the second anniversary of the agreement, Strategic will issue a further 500,000 of its common shares to the Company and complete $200,000 of exploration expenditures on the property;
    4. On or before the third anniversary of the agreement, Strategic will issue a further 500,000 of its common shares to the Company and complete $200,000 of exploration expenditures on the property;
    5. On or before the fourth anniversary of the agreement, Strategic will issue a further 500,000 of its common shares to the Company and complete $200,000 of exploration expenditures on the property;
    6. On or before the fifth anniversary of the agreement, Strategic will complete $200,000 of exploration expenditures on the property;
    7. Upon completing the above share issuances and work commitments, Strategic will then be eligible to earn an additional 10% interest (taking its total interest up to 60%) by issuing an additional 1,000,000 of its common shares to the Company.

The agreement remains subject to TSX Venture Exchange approval and accordingly the Company has not adjusted its consolidated financial statements to reflect any terms of this agreement.

21


On June 5, 2009, the United States District Court issued an order dismissing the lawsuit filed by Goliad County commissioners against the Company. The lawsuit alleged infractions of the Safe Drinking Water Act ("SDWA") nearby to areas where the Company has conducted exploration activities. In his June 5, 2009 order dismissing the case, the Judge stated that the County's case failed to pass the threshold jurisdictional requirements, even when considered in the light most favorable to the County. As the Judge noted, the Texas Railroad Commission stated in an April 2007 letter to the County's attorney that an agency hydrologist "...concluded from the available information that no ground-water contamination has occurred as a result of the drilling activities." The Judge concluded that "...the touchstone of Goliad County's SDWA claim is its allegation that UEC 'converted' the exploratory boreholes into 'injection wells' and/or an 'injection activity,'...the Court has concluded that no such conversion or injection activity took place..."

 

 

 

 

 

22


Item 2.     Management's Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

This Form 10-Q for the quarterly period ended April 30, 2009 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-K for the period ended July 31, 2008. 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.

OVERVIEW

As used in this Quarterly Report: (i) the terms "we", "us", "our", "Uranium Energy" and the "Company" mean Uranium Energy Corp. and its wholly owned subsidiary, UEC Resources Ltd., unless the context otherwise requires; (ii) "SEC" refers to the Securities and Exchange Commission; (iii) "Securities Act" refers to the Securities Act of 1933, as amended; (iv) "Exchange Act" refers to the Securities Exchange Act of 1934, as amended; and (v) all dollar amounts refer to United States dollars unless otherwise indicated.

The following discussion of our plan of operations, results of operations and financial condition as at and for the nine months ended April 30, 2009 should be read in conjunction with our unaudited interim consolidated financial statements and related notes for the nine months ended April 30, 2009 included in this Quarterly Report, as well as our Annual Report on Form 10-K for the year ended July 31, 2008.

General

Our company was incorporated under the laws of the State of Nevada on May 16, 2003 under the name "Carlin Gold Inc." During 2004 we changed our business operations and focus from precious metals exploration in the State of Nevada to the exploration for economic reserves of uranium throughout the United States. On January 24, 2005, we filed an amendment to our Articles of Incorporation changing our name to "Uranium Energy Corp.". On December 31, 2007, UEC Resources Ltd., a wholly-owned subsidiary of Uranium Energy Corp. was incorporated under the laws of the Province of British Columbia, Canada.

On January 24, 2004, we completed a reverse stock split of our shares of common stock on the basis of one share for each two outstanding shares. Effective February 28, 2006, we completed a forward split of our shares of common stock on the basis of 1.5 shares for each outstanding share to increase liquidity for our shares of common stock. Effective February 28, 2006, we amended our Articles of Incorporation with the Nevada Secretary of State increasing our authorized capital stock from 75,000,000 shares of common stock, with a $0.001 par value, to 750,000,000 shares of common stock with a similar par value.

In June 2007, we determined to change our fiscal year end from December 31 to July 31. Accordingly, on October 29, 2007, we filed a Transition Report on Form 10-KSB for the period year ended July 31, 2007, as subsequently amended, with the SEC and commenced a new reporting period.

Our principal offices are located at 9801 Anderson Mill Road, Suite 230, Austin Texas, U.S.A., 78750, and our telephone number is (512) 828-6980, and our web site address is www.uraniumenergy.com.

23


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 interests in uranium exploration mineral properties totaling 46,325 gross acres (38,796 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. These properties are subject to varying royalty interests, some of which are indexed to the sale price 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. 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 are summarized as follows:

 
   
 

Gross Acres

Net Acres (*)

 

Arizona

2,251.48 

2,251.48 

Colorado

2,623.49 

2,623.49 

New Mexico

21,689.94 

15,004.60 

Texas

9,802.06 

8,959.12 

Utah

5,642.23 

5,642.23 

Wyoming

4,315.37 

4,315.37 

 
 

46,324.57 

38,796.29 

 

(*)   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.

We use our database of exploration data in order to target additional exploration properties for acquisition. For the remainder of the 2009 fiscal year, we may 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. See "Risk Factors" below. These potential acquisition properties have not yet been specifically identified.

Our properties do not have any known 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.

24


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 2009 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.

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, we have completed a further 901 exploration, confirmation and delineation holes totaling 332,354 feet, 36 new core holes totaling 9,408 feet, 66 monitor wells totaling 13,636 feet and 8 fault pump testing wells totaling 1,702 feet.

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 has been filed under our company's profile on the Canadian Securities Administrators public disclosure website, at www.sedar.com. 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 report 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 the Technical Report are economically or legally mineable.

25


RESULTS OF OPERATIONS

There has been a significant amount of market uncertainty over the past eighteen months, due to a number of factors including changes in the international credit market and the global economic condition. This uncertainty may impact the Company's ability to fund working capital and other capital requirements and accordingly, the Company has implemented a generalized cost reduction program in an effort to preserve its existing working capital. Capital preservation implementations include the closure and downsizing of some regional offices, staff reductions, corporate wide salary reductions, non-core asset reductions, renegotiation of agreements and corresponding property payments and joint venture of projects. The program, which is designed to have a minimal effect on the Company's core operations, is reflected in the changes to cash expenditures from the prior year.

Three Months Ended April 30, 2009 Compared to Three Months Ended April 30, 2008

 

Three Months
Ended
April 30, 2009

Three Months
Ended
April 30, 2008

 

EXPENSES

      Consulting fees

$ 52,022

$ 110,049

      Consulting fees - stock based (Note 9)

161,852

185,071

      Depreciation

132,068

122,911

      General and administrative

728,883

1,474,735

      Impairment loss on mineral properties (Note 4)

1,182,096

-

      Interest and finance charges

-

25,642

      Management fees

145,255

190,383

      Management fees - stock based (Note 9)

-

1,752,250

      Mineral property expenditures (Note 4)

951,577

1,803,677

      Professional fees

62,035

190,276

      Wages and benefits - stock based (Note 9)

211,256

275,724

 

3,627,044

6,130,718

 

LOSS BEFORE OTHER ITEMS

(3,627,044)

(6,130,718)

OTHER ITEMS

      Loss on sale of assets

(14,370)

-

      Gain on sale of investments

-

34,168

      Interest income

3,141

25,983

 

LOSS BEFORE INCOME TAXES

(3,638,273)

(6,070,567)

INCOME TAXES

      Deferred income tax expense

-

(69,802)

 

NET LOSS FOR THE PERIOD

$(3,638,273)

$(6,140,369)

 

We are an exploration stage company and net production revenues during the three months ended April 30, 2009 and 2008 were $Nil.

Operating expenses incurred during the three months ended April 30, 2009 decreased to $3,627,044 from $6,130,718 over the same period ended April 30, 2008. The decrease is primarily due to a reduction in consulting, administration and exploration costs, in addition to a decrease in stock-based compensation expenses. Significant expenditures and changes are outlined as follows:

  • Consulting fees decreased to $52,022 during the three months ended April 30, 2009 from $110,049 during the same period ended April 30, 2008 due primarily to a reduction in the reliance on third party service providers as we reduced some of our operations.
  • Consulting fees - stock based decreased to $161,852 during the three months ended April 30, 2009 from $185,071 during the same period ended April 30, 2008. The current and prior period expense consists of the fair value of option grants earned during the period. Additionally, the current period expense includes the fair value of option grants issued to consultants that were repriced during the quarter.

26


  • General and administrative costs decreased to $728,883 during the three months ended April 30, 2009 from $1,474,735 during the same period ended April 30, 2008 due to the general reduction in some of our operations and personnel, including salary reductions, in the current period as compared to the prior period.
  • Impairment loss increased to $1,182,096 during the three months ended April 30, 2009 from $Nil during the same period ended April 30, 2008. During the quarter, we decided to terminate the Holley Option and accordingly, an impairment loss was recorded as of April 30, 2009 to reflect the change in valuation.
  • Interest and finance charges decreased to $Nil during the three months ended April 30, 2009 from $25,642 during the same period ended April 30, 2008, due to an expense realized on the issuance of warrants resulting from delays in an S-1 Registration Statement becoming effective that occurred in the prior period.
  • Management fees decreased to $145,255 during the three months ended April 30, 2009 from $190,383 during the same period ended April 30, 2008 due primarily to a 20% reduction in executive compensation applicable to all officers and directors during the current period.
  • Management fees - stock based decreased to $Nil during the three months ended April 30, 2009 from $1,752,250 during the same period ended April 30, 2008. The prior period expense consists of the fair value of option grants earned during the period.
  • Mineral property expenditures decreased to $951,577 during the three months ended April 30, 2009 from $1,803,677 during the same period ended April 30, 2008 due to the reduction in some of our exploration activities over the prior period.
  • Professional fees decreased to $62,035 during the three months ended April 30, 2009 from $190,276 during the same period ended April 30, 2008. The decrease results primarily from the reduction in some of our operations over the prior period.
  • Wages and benefits - stock based decreased to $211,256 during the three months ended April 30, 2009 from $275,724 during the same period ended April 30, 2008. The current and prior year expenses consist of the fair value of option grants earned during the period. The current period expense also consists of the incremental fair value of option grants issued to employees that were repriced during the quarter.

Loss on sale of assets increased to $14,370 during the three months ended April 30, 2009 from $Nil during the same period ended April 30, 2008, due to a charge realized on the disposal of property and equipment during the current period.

Gain on sale of investments decreased to $Nil during the three months ended April 30, 2009 from $34,168 during the same period ended April 30, 2008. There were no investment related transactions during the current period.

Interest and other income decreased to $3,141 during the three months ended April 30, 2009 from $25,983 during the same period ended April 30, 2008 due to significantly lower investment rates during the current period.

Deferred tax expense decreased to $Nil during the three months ended April 30, 2009 from $69,802 during the same period ended April 30, 2008. The deferred tax benefit (expense) is calculated on the estimated unrealized gain on available-for-sale securities in the fiscal period which is reflected in other comprehensive income.

Our net loss during the three months ended April 30, 2009 was $3,638,273 or ($0.08) per share compared to a net loss of $6,140,369 or ($0.15) per share during the same period ended April 30, 2008. The weighted average number of shares outstanding was 46,453,940 for the three months ended April 30, 2009 compared to 39,780,823 for the same period ended April 30, 2008.

Transactions with Officers and Directors

Of the $3,627,044 incurred as operating expenses during the three months ended April 30, 2009 an aggregate of $145,255 was incurred payable to certain officers and directors and recorded as management fees. At April 30, 2009 a balance of $21,818 is owing to some of our officers.

Nine Months Ended April 30, 2009 Compared to Nine Months Ended April 30, 2008

27


 

Nine Months
Ended
April 30, 2009

Nine Months
Ended
April 30, 2008

 

EXPENSES

      Consulting fees

$ 170,562

$ 412,107

      Consulting fees - stock based (Note 9)

241,567

503,304

      Depreciation

396,482

273,865

      General and administrative

2,480,259

3,980,742

      Impairment loss on mineral properties (Note 4)

1,223,038

-

      Interest and finance charges

-

25,642

      Management fees

594,819

620,536

      Management fees - stock based (Note 9)

170,250

2,019,250

      Mineral property expenditures (Note 4)

3,889,878

5,084,304

      Professional fees

354,682

512,383

      Wages and benefits - stock based (Note 9)

682,120

1,028,446

 

10,203,657

14,460,579

 

LOSS BEFORE OTHER ITEMS

(10,203,657)

(14,460,579)

OTHER ITEMS

      Loss on sale of assets

(14,370)

-

      Gain on sale of investments

-

34,168

      Interest income

51,631

157,410

      Other income

-

10,355

 

LOSS BEFORE INCOME TAXES

(10,166,396)

(14,258,646)

INCOME TAXES

      Deferred income tax expense

-

(187,681)

 

NET LOSS FOR THE PERIOD

$(10,166,396)

$(14,446,327)

 

We are an exploration stage company and net production revenues during the nine months ended April 30, 2009 and 2008 were $Nil.

Operating expenses incurred during the nine months ended April 30, 2009 decreased to $10,203,657 from $14,460,579 over the same period ended April 30, 2008. The decrease is primarily due to a reduction in consulting, administration and exploration costs, in addition to a decrease in stock-based compensation expenses. Significant expenditures and changes are outlined as follows:

  • Consulting fees decreased to $170,562 during the nine months ended April 30, 2009 from $412,107 during the same period ended April 30, 2008 due primarily to a reduction in the reliance on third party service providers as we reduced some of our operations.
  • Consulting fees - stock based decreased to $241,567 during the nine months ended April 30, 2009 from $503,304 during the same period ended April 30, 2008. The current and prior period expense consists of the fair value of option grants earned during the period. Additionally, the current period expense includes the fair value of option grants issued to consultants that were repriced during the quarter.
  • Depreciation increased to $396,482 during the nine months ended April 30, 2009 from $273,865 during the same period ended April 30, 2008 due to significant investments in property, equipment and databases during the prior fiscal year that were not subject to amortization in the comparable period.
  • General and administrative costs decreased to $2,480,259 during the nine months ended April 30, 2009 from $3,980,742 during the same period ended April 30, 2008 due to the general reduction in some of our operations and personnel, including salary reductions, in the current period as compared to the prior period.
  • Impairment loss increased to $1,223,038 during the nine months ended April 30, 2009 from $Nil during the same period ended April 30, 2008. During the period, we opted not to renew certain mineral claims and leases in the States of Arizona, New Mexico and Texas, and decided to terminate the Holley Option. Accordingly, an impairment loss was recorded to reflect the change in valuation.

28


  • Interest and finance charges decreased to $Nil during the nine months ended April 30, 2009 from $25,642 during the same period ended April 30, 2008, due to an expense realized on the issuance of warrants resulting from delays in an S-1 Registration Statement becoming effective that occurred in the prior period.
  • Management fees decreased to $594,819 during the nine months ended April 30, 2009 from $620,536 during the same period ended April 30, 2008 due to a 20% reduction in executive compensation applicable to all officers and directors during a portion of the current period.
  • Management fees - stock based decreased to $170,250 during the nine months ended April 30, 2009 from $2,019,250 during the same period ended April 30, 2008. The current period expense consists of the incremental fair value of option grants issued to management that were repriced during the period. The prior period expense consists of the fair value of option grants earned during the period.
  • Mineral property expenditures decreased to $3,889,878 during the nine months ended April 30, 2009 from $5,084,304 during the same period ended April 30, 2008 due to the reduction in some of our exploration activities over the prior period.
  • Professional fees decreased to $354,682 during the nine months ended April 30, 2009 from $512,383 during the same period ended April 30, 2008 due primarily to the reduction in some of our operations over the prior period.
  • Wages and benefits - stock based decreased to $682,120 during the nine months ended April 30, 2009 from $1,028,446 during the same period ended April 30, 2008. The current and prior year expenses consist of the fair value of option grants earned during the period. Additionally, the current period expense includes the incremental fair value of option grants issued to employees that were repriced during the period.

Loss on sale of assets increased to $14,370 during the nine months ended April 30, 2009 from $Nil during the same period ended April 30, 2008, due to a charge realized on the disposal of property and equipment during the current period.

Gain on sale of investments decreased to $Nil during the nine months ended April 30, 2009 from $34,168 during the same period ended April 30, 2008. There were no investment related transactions during the current period.

Interest and other income decreased to $51,631 during the nine months ended April 30, 2009 from $157,410 during the same period ended April 30, 2008 due to significantly lower investment rates during the current period.

Deferred tax expense decreased to $Nil during the nine months ended April 30, 2009 from $187,681 during the same period ended April 30, 2008. The deferred tax benefit (expense) is calculated on the estimated unrealized gain on available-for-sale securities in the fiscal period which is reflected in other comprehensive income.

Our net loss during the nine months ended April 30, 2009 was $10,166,396 or ($0.22) per share compared to a net loss of $14,446,327 or ($0.37) per share during the same period ended April 30, 2008. The weighted average number of shares outstanding was 46,398,960 for the nine months ended April 30, 2009 compared to 38,709,387 for the same period ended April 30, 2008.

Transactions with Officers and Directors

Of the $10,203,657 incurred as operating expenses during the nine months ended April 30, 2009 an aggregate of $594,819 was incurred payable to certain officers and directors and recorded as management fees, and $170,250 was recorded as stock based compensation for the incremental fair value of option grants issued to management that were repriced during the period. At April 30, 2009 a balance of $21,818 is owing to some of our officers.

LIQUIDITY AND CAPITAL RESOURCES

 

April 30,

2009

2008

 

Cash and cash equivalents

$ 5,693,840

$ 2,654,677

Working capital (deficit)

5,363,130

2,419,585

Total assets

19,839,635

18,537,322

Total liabilities

578,237

825,945

Shareholders' equity

19,261,398

17,711,377

 

29


Our consolidated 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 April 30, 2009 we had $5,693,840 in cash and working capital of $5,363,130. Generally, we have financed our operations through proceeds from the private placement of equity securities and debt instruments and the exercise of stock options and warrants. We used $7,443,478 net cash during the nine months ended April 30, 2009 compared to $6,428,776 net cash during the same period ended April 30, 2008. See "Plan of Operation and Funding" below.

Operating Activities

Net cash used in operating activities during the nine months ended April 30, 2009 was $7,596,457 compared to $10,139,312 during the same period ended April 30, 2008. 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 nine months ended April 30, 2009 was $46,475 compared to $6,691,503 during the same period ended April 30, 2008. During the current period, we received net proceeds of $14,500 from the exercise of stock options. In the prior period, we completed a private placement for gross proceeds of $6,750,000.

Investing Activities

Net cash provided by investing activities during the nine months ended April 30, 2009 was $106,504 compared to net cash used of $2,980,967 in the same period ended April 30, 2008. In the current period we recovered $138,658 in restricted cash. Significant investing expenditures during the prior period included mineral property acquisitions, including a $980,000 payment related to the Cibola Resources LLC agreement.

Stock Options and Warrants

As at April 30, 2009 we had 5,378,000 stock options and 3,873,418 share purchase warrants outstanding. The outstanding stock options have a weighted average exercise price of $0.65 per share and the outstanding warrants have a weighted average exercise price of $2.87 per share. Accordingly, as at April 30, 2009 the outstanding options and warrants represented a total of 9,251,418 shares issuable for proceeds of $14,612,410 if these options and warrants were exercised in full. The exercise of these options and warrants is at the discretion of the holders and, accordingly, there is no assurance that any of these options or warrants will be exercised.

Plan of Operation and Funding

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 to incur 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 may 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.

Going Concern

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.

30


We commenced operations on May 16, 2003, and have not realized any significant revenues since inception. As at April 30, 2009 we have working capital of $5,363,130 and an accumulated deficit of $50,566,284. Existing cash resources are currently expected to provide sufficient funds through the upcoming year. The continuation of the Company as a going concern for greater than 12 months 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 are ultimately dependent upon our ability to achieve profitable operations. To date we have completed private placements and exercised stock options and warrants for net proceeds of $46,457,092 from the issuance of shares of our common stock. See "Risk Factors" below.

Material Commitments

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:

    1. an initial payment of $25,000 on the execution date (paid);
    2. a payment of $100,000 on March 28, 2007 (paid);
    3. a payment of $475,000 on or before April 27, 2007 (paid);
    4. a further payment of $500,000 on or before April 27, 2008 ($475,000 paid); and
    5. 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.

On April 30, 2009, we decided to terminate the Holley Option. Accordingly, $1,176,748 in mineral rights and properties were written down to impairment.

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:

    1. $2,000,000 six months from the effective date of the Letter Agreement (paid $980,000, being the Company's portion);
    2. $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);
    3. $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;
    4. 4.50% to 8.00% production royalty payments depending upon the uranium sale price; and
    5. $30,000 per year towards a scholarship fund.

31


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 $2,450,000 in acquisition costs, $36,750 in database acquisition costs, and an additional $930,593 in exploration costs on behalf of Cibola for a cumulative contribution of $3,417,343.

Consulting Agreement

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. As of April 30, 2009, services have been provided in the amount of $100,000 and no further amounts are outstanding or will become payable under this agreement.

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. On August 25, 2008 we entered into an agreement amending the underlying Agreement to Purchase Assets. Under the terms of the Amending Agreement, the Company will pay total consideration of $300,000 including i) a $10,000 deposit upon execution (paid), ii) an installment of $95,000 cash on January 10, 2008 (paid), iii) an installment of $95,000 on August 25, 2008 consisting of $57,000 cash (paid) and the issuance of 19,000 fully paid and non-assessable restricted common shares (issued), and iv) a further installment totaling $100,000 on or before October 31, 2009 consisting of $50,000 cash and the $50,000 balance by way of issuance of an aggregate number of fully paid and non-assessable restricted common shares at a deemed issuance price calculated as the previous five-day trading average immediately prior to October 31, 2009. Additionally, we have granted Mr. Stairs 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 (paid), 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. On December 12, 2008 we entered into an agreement amending the aforementioned underlying agreement to acquire mineral leases to the following: 1) $5,000 on or before December 31, 2008 (paid) and $45,000 on or before December 31, 2009. At our option, the final installment may be paid in stock, based on the average trading price of its 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 $468,500 per year for management services.

Office Leases

We are currently leasing office premises in New Mexico and Texas for monthly payments totaling $6,321. All office lease agreements have maximum remaining terms of no more than two 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.

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.

32


Mineral Property Costs

We are 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, we assess 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 reserve.

Mineral property exploration costs are expensed 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.

Databases

Costs related to internally developed databases are expensed as incurred. Costs of acquired mineral property databases are capitalized upon acquisition. Mineral property databases are tested for impairment whenever events or changes indicate the carrying value amount may not be recoverable. An impairment loss is recognized if it is determined that the carrying amount is not recoverable and exceeds fair value. Mineral property databases are amortized over five years using the straight-line method.

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.

Future reclamation and remediation costs, which include production equipment removal and environmental remediation, 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 engineering studies calculating the cost of future surface and groundwater activities, current regulations, actual expenses incurred, and technology and industry standards.

In accordance with Statement of Financial Accounting Standards No. 143 "Accounting for Asset Retirement Obligations," we will capitalize the measured fair value of asset retirement obligations to mineral rights and properties. The asset retirement obligations would be accreted to an undiscounted value until the time at which it they are expected to be settled. Actual retirement costs will be recorded against the asset retirement obligations when incurred. Any difference between the recorded asset retirement obligations and the actual retirement costs incurred will be recorded as a gain or loss in the period of settlement.

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. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability of these assets is measured by comparison of its carrying amount to future undiscounted cash flows the assets are expected to generate. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.

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. Our operations and financing activities are conducted primarily in United States dollars, and as a result we are not subject to significant exposure to market risks from changes in foreign currency rates. Management has determined that we are not exposed to significant credit risk.

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Foreign Currency Translation

Our functional currency, including our subsidiary, 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 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.

Stock-Based Compensation

On January 1, 2006, we adopted SFAS No. 123 (revised 2004) (SFAS No. 123R), Share-Based Payment, which addresses the accounting for stock-based payment transactions, requiring such transactions to be accounted for using the fair value method. We use the Black-Scholes-Merton ("BSM") option-pricing model to determine the grant date fair-value of stock-based awards under SFAS No. 123R. The fair value is recorded in income depending on the terms and conditions of the award, and the nature of the relationship of the recipient of the award to us. We record the grant date fair value in income in line with the period over which it was earned. For employees and management this is typically considered to be the vesting period of the award. For consultants the fair value of the award is recorded in income over the term of the service period, and unvested amounts are revalued at each reporting period over the service period. We estimate the expected forfeitures and update the valuation accordingly.

Recently Adopted Accounting Policies

Effective August 1, 2008, we adopted SFAS No. 157 "Fair Value Measurements". In February 2008, the FASB issued FASB Staff Position No. FAS 157-2, "Effective Date of FASB Statement No. 157, which provides a one year deferral of the effective date of SFAS No. 157 for non-financial assets and non-financial liabilities, except those that are recognized or disclosed in the financial statements at fair value at least annually. In October 2008, the FASB issued FASB Staff Position No. SFAS 157-3, "Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active," which clarifies the application of SFAS 157 for markets that are not active and illustrates key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. We adopted the provisions of SFAS No. 157 on a prospective basis for financial assets and liabilities which require that we determine the fair value of financial assets and liabilities using the fair value hierarchy established in SFAS No. 157. The adoption of SFAS No. 157 did not have a material impact on our results of operations and financial condition for the period ended April 30, 2009 however, this change may have an impact on the financial condition and the results of operations in future periods.

SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" is effective August 1, 2008 for us. The fair value option established by SFAS 159 permits, but does not require, all entities to choose to measure eligible items at fair value at specified election dates. An entity would report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. We did not elect to use the option and as such SFAS 159 has not impacted our financial position and results of operations.

In May 2008, the FASB issued SFAS No. 162 "The Hierarchy of Generally Accepted Accounting Principles" ("SFAS 162"). SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States. SFAS 162 is effective sixty days following the SEC's approval of PCAOB amendments to AU Section 411, "The Meaning of 'Present fairly in conformity with generally accepted accounting principles' " which occurred on September 16, 2008. The adoption of SFAS 162 did not have a material impact on the consolidated financial position, results of operations or cash flows.

Recent Accounting Pronouncements

In December 2007, the FASB issued SFAS No. 141 (Revised 2007), "Business Combinations," or SFAS No. 141R. SFAS No. 141R will change the accounting for business combinations. Under SFAS No. 141R, an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. SFAS No. 141R will change the accounting treatment and disclosure for certain specific items in a business combination. SFAS No. 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We do not expect that SFAS No. 141R will have a material impact on the consolidated financial position, results of operations or cash flows.

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In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements -- An Amendment of ARB No. 51," or SFAS No. 160. SFAS No. 160 establishes new accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160 is effective for fiscal years beginning on or after December 15, 2008. We do not expect that SFAS No. 160 will have a material impact on the consolidated financial position, results of operations or cash flows.

In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities." SFAS No. 161 amends and expands the disclosure requirements of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. It requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. In September 2008, the FASB issued FASB Staff Position ("FSP") FSP FAS 133-1 and FIN 45-4, "Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date of FASB Statement No. 161". This FSP amends FASB Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities", to require disclosures by sellers of credit derivatives, including credit derivatives embedded in a hybrid instrument. This FSP also amends FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of indebtedness of Others", to require an additional disclosure about the current status of the payment/performance risk of a guarantee. Further, this FSP clarifies the Board's intent about the effective date of FASB Statement No. 161, "Disclosures about Derivative Instruments and Hedging Activities". This statement is effective for financial statements issued for fiscal years beginning after November 15, 2008. We do not expect that these pronouncements will have a material impact on the consolidated financial position, results of operations or cash flows.

In April 2008, the FASB issued FASB Staff Position FAS 142-3, "Determination of Useful Life of Intangible Assets" (FSP 142-3). FSP 142-3 amends the factors that should be considered in developing the renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FAS 142, "Goodwill and Other Intangible Assets." FSP 142-3 also requires expanded disclosure regarding the determination of intangible asset useful lives. FSP 142-3 is effective for fiscal years beginning after December 15, 2008. Earlier adoption is not permitted. We do not believe the adoption of FSP 142-3 will have a material impact on the consolidated financial statements.

In May 2008, the FASB issued FASB FSB Accounting Principles Board ("APB") Opinion No. 14-1, "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)" ("FSB APB 14-1"). The FSP will require cash settled convertible debt to be separated into debt and equity components at issuance and a value to be assigned to each. The value assigned to the debt component will be the estimated fair value, as of the issuance date, of a similar bond without the conversion feature. The difference between the bond cash proceeds and this estimated fair value will be recorded as a debt discount and amortized to interest expense over the life of the bond. FSP APB 14-1 will become effective January 1, 2009. We do not expect that FSB APB 14-1 will have a material impact on the consolidated financial position, results of operations or cash flows.

In June 2008, the FASB issued FSP EITF 03-6-1, "Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities" ("FSP EITF 03-6-1"). FSP EITF 03-6-1 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share under the two-class method as described in SFAS No. 128, "Earnings per Share." Under the guidance in FSP EITF 03-6-1, unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. FSP EITF 03-6-1 is effective for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. All prior-period earnings per share amounts presented shall be adjusted retrospectively. We do not expect that FSP EITF 03-6-1 will have a material impact on the consolidated financial position, results of operations or cash flows.

In June 2008, the FASB ratified the consensus reached by the EITF on Issue No. 07-5, "Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity's Own Stock" ("EITF No. 07-5"). EITF No. 07-5 provides guidance for determining whether an equity-linked financial instrument (or embedded feature) is indexed to an entity's own stock. EITF No. 07-5 applies to any freestanding financial instrument or embedded feature that has all of the characteristics of a derivative or freestanding instrument that is potentially settled in an entity's own stock (with the exception of share-based payment awards within the scope of SFAS 123(R)). To meet the definition of "indexed to own stock," an instrument's contingent exercise provisions must not be based on (a) an observable market, other than the market for the issuer's stock (if applicable), or (b) an observable index, other than an index calculated or measured solely by reference to the issuer's own operations, and the variables that could affect the settlement amount must be inputs to the fair value of a "fixed-for-fixed" forward or option on equity shares. EITF No. 07-5 is effective for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. We do not expect the adoption of EITF No. 07-5 to change the classification or measurement of its financial instruments.

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Item 3.     Quantitative and Qualitative Disclosures About Market Risk

We are currently not subject to any material market risks.

Item 4.     Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is accumulated and communicated to management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based on such evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are not effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act.

It should be noted that any system of controls is based in part upon certain assumptions designed to obtain reasonable (and not absolute) assurance as to its effectiveness, and there can be no assurance that any design will succeed in achieving its stated goals.

Changes in Internal Controls

On October 22, 2008 we filed a Form 10-K for the period ended July 31, 2008. In the Form 10-K, management concluded that: (1) inadequate entity level controls due to: (i) weak tone at the top to implement an effective control environment, and (ii) failure in the operation of our whistle blower policy; (2) inadequate segregation of duties consistent with control objectives; (3) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (4) ineffective controls over period end financial disclosure and reporting processes represented material weaknesses in our internal control over financial reporting as at July 31, 2008. Accordingly, our management concluded that our disclosure controls and procedures and internal controls over financial reporting were not effective as at July 31, 2008.

We are committed to improving our financial organization. As part of this commitment, in August 2008 we hired additional staff and engaged consultants who assisted in the preparation, implementation and monitoring of sufficient written policies and checklists from August 2008 to present, including the redesign of staffing responsibilities, and set forth procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements. Management believes that the preparation and implementation of sufficient written policies and checklists, including a redesign of staffing responsibilities, and the monitoring of those procedures from September 2008 to present have remedied the weaknesses of inadequate segregation of duties consistent with control objectives, insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements and, ineffective controls over period end financial close and reporting processes.

Management is in the process of or has remediated the deficiencies in our disclosure controls and procedures related to: (1) inadequate entity level controls; (2) inadequate segregation of duties consistent with control objectives; (3) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (4) ineffective controls over period end financial disclosure and reporting processes.

There have been no other changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended April 30, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II - OTHER INFORMATION

Item 1.     Legal Proceedings

We have been informed that counsel for Goliad County, Texas and an individual landowner has issued a notice of intent to file litigation citing us for alleged infractions of the United States Safe Drinking Water Act of 1974, in connection with our exploration activities in Goliad County. We believe this proposed claim regarding our exploration activities is without merit and will be vigorously defended by us. 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. On May 1, 2009, individual landowners, Craig and Luann Duderstadt voluntarily and unconditionally dismissed all their allegations, claims and causes of actions against the Company. The dismissal was "with prejudice", which means that the Duderstadts may not re-file the claims at a later date. No money or other consideration was paid to the Duderstadts for this dismissal. On June 5, 2009, the United States District Court issued an order dismissing the lawsuit filed by Goliad County commissioners against the Company. The lawsuit alleged infractions of the Safe Drinking Water Act ("SDWA") nearby to areas where the Company has conducted exploration activities. In his June 5, 2009 order dismissing the case, the Judge stated that the County's case failed to pass the threshold jurisdictional requirements, even when considered in the light most favorable to the County. As the Judge noted, the Texas Railroad Commission stated in an April 2007 letter to the County's attorney that an agency hydrologist "...concluded from the available information that no ground-water contamination has occurred as a result of the drilling activities." The Judge concluded that "...the touchstone of Goliad County's SDWA claim is its allegation that UEC 'converted' the exploratory boreholes into 'injection wells' and/or an 'injection activity,'...the Court has concluded that no such conversion or injection activity took place..."

We were informed that we had 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 were highly unreasonable for the work performed by the plaintiff. As of the date of this Quarterly Report the Company has settled this claim for legal fees in the amount of $13,000 and considers the matter concluded.

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 proceeding. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.

Item 1A.   Risk Factors

Except for the risk factor outlined below, there have been no material changes from the risk factors as previously disclosed in our Annual Report on Form 10-K for the year ended July 31, 2008 which was filed with the SEC on October 22, 2008.

Recent market events and conditions, including disruptions in the U.S. and international credit markets and other financial systems and the deterioration of the U.S. and global economic conditions, has, among other things, impeded access to capital or increased the cost of capital, which has had an adverse effect on our ability to fund our working capital and other capital requirements.

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In 2007 and into 2008, the U.S. credit markets began to experience serious disruptions due to a deterioration in residential property values, defaults and delinquencies in the residential mortgage market (particularly, subprime and non-prime mortgages) and a decline in the credit quality of mortgage backed securities. These problems led to a slow-down in residential housing market transactions, declining housing prices, delinquencies in non-mortgage consumer credit and a general decline in consumer confidence. These conditions continued and worsened in 2008, causing a loss of confidence in the broader U.S. and global credit and financial markets and resulting in the collapse of, and government intervention in, major banks, financial institutions and insurers and creating a climate of greater volatility, less liquidity, widening of credit spreads, a lack of price transparency, increased credit losses and tighter credit conditions. Notwithstanding various actions by the U.S. and foreign governments, concerns about the general condition of the capital markets, financial instruments, banks, investment banks, insurers and other financial institutions caused the broader credit markets to further deteriorate and stock markets to decline substantially. In addition, general economic indicators have deteriorated, including declining consumer sentiment, increased unemployment and declining economic growth and uncertainty about corporate earnings.

These unprecedented disruptions in the current credit and financial markets have had a significant material adverse impact on a number of financial institutions and have limited access to capital and credit for many companies. These disruptions have, among other things, made it more difficult for us to obtain, and have increased our cost of obtaining, capital and financing for our operations. Our access to additional capital may not be available on terms acceptable to us or at all.

Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds

Consulting Services Agreements

On February 1, 2007 we entered into a one year consulting services agreement, which was renewed for a second term effective February 1, 2008. In accordance with the terms and provisions of the agreement, on August 13, 2008 we issued 7,500 shares of our restricted common stock, and on October 23, 2008 we issued an additional 7,500 shares of our restricted common stock, pursuant to Rule 506 of Regulation D to accredited investors.

Effective October 25, 2008 we entered into a consulting services agreement. In accordance with the terms of the agreement on February 13, 2009 we issued 13,039 shares of our restricted common stock, and on April 7, 2009 we issued 13,039 shares of our restricted common stock pursuant to Rule 506 of Regulation D and/or Section 4(2) of the Securities Act of 1933, as amended.

Effective January 29, 2009 we entered into a consulting services agreement. In accordance with the terms of the agreement on March 17, 2009 we issued 6,000 shares of our restricted common stock pursuant to Rule 506 of Regulation D and/or Section 4(2) of the Securities Act of 1933, as amended.

Effective January 29, 2009 we entered into a consulting services agreement. In accordance with the terms of the agreement on March 17, 2009 we issued 29,000 shares of our restricted common stock, on April 21, 2009 we issued 29,000 shares of our restricted common stock, and on May 13, 2009 we issued 29,000 shares of our restricted common stock pursuant to Rule 506 of Regulation D and/or Section 4(2) of the Securities Act of 1933, as amended.

Effective February 9, 2009 we entered into a consulting services agreement. In accordance with the terms of the agreement on March 27, 2009 we issued 20,000 shares of our restricted common stock, on April 27, 2009 we issued 10,000 shares of our restricted common stock, and on May 27, 2009 we issued 10,000 shares of our restricted common stock pursuant to Rule 506 of Regulation D and/or Section 4(2) of the Securities Act of 1933, as amended.

Effective April 21, 2009 we entered into a consulting services agreement. In accordance with the terms of the agreement on May 29, 2009 we issued 23,077 shares of our restricted common stock pursuant to Rule 506 of Regulation D and/or Section 4(2) of the Securities Act of 1933, as amended.

Asset Purchase Agreement

Effective November 1, 2007 we entered into a binding letter Agreement to Purchase Assets, and on August 25, 2008 we entered into an agreement amending the underlying Agreement to Purchase Assets. In accordance with the terms of the amending agreement on October 23, 2008 we issued 19,000 shares of our restricted common stock pursuant to Rule 506 of Regulation D and/or Section 4(2) of the Securities Act of 1933, as amended.

Land Use Agreement

Effective October 13, 2008 we entered into a utility easement agreement. In accordance with the terms of the agreement on December 5, 2008 we issued 25,000 shares of our restricted common shares pursuant to Rule 506 of Regulation D and/or Section 4(2) of the Securities Act of 1933, as amended.

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Item 3.     Defaults Upon Senior Securities

None.

Item 4.     Submission of Matters to a Vote of Security Holders

None.

Item 5.     Other Information

None.

Item 6.     Exhibits

The following exhibits are included with this Quarterly Report on Form 10-Q:

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.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly 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:  June 11, 2009

/s/ "Pat Obara"

Pat Obara
Secretary, Treasurer and Chief Financial Officer
Date: June 11, 2009

 

 

 

 

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