The accompanying notes are an integral part
of these condensed consolidated financial statements
The accompanying notes are an integral part
of these condensed consolidated financial statements
The accompanying notes are an integral part
of these condensed consolidated financial statements
The accompanying notes are an integral part
of these condensed consolidated financial statements
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
January 31, 2017
(Unaudited)
|
NOTE 1:
|
NATURE OF OPERATIONS
|
Uranium Energy Corp. was incorporated in
the State of Nevada on May 16, 2003. Uranium Energy Corp. and its subsidiary companies and a controlled partnership (collectively,
the “Company” or “we”) are engaged in uranium mining and related activities, including exploration, pre-extraction,
extraction and processing of uranium concentrates, on projects located in the United States and Paraguay.
Although planned principal operations have
commenced from which significant revenues from sales of uranium concentrates were realized for the fiscal years ended July 31,
2015 (“Fiscal 2015”), 2013 (“Fiscal 2013”) and 2012 (“Fiscal 2012”), the Company has yet to
achieve profitability and has had a history of operating losses resulting in an accumulated deficit balance since inception. No
revenue from uranium sales was realized for the six months ended January 31, 2017, or for the fiscal years ended July 31, 2016
(“Fiscal 2016”) and 2014 (“Fiscal 2014”). Historically, we have been reliant primarily on equity financings
from the sale of its common stock and, during Fiscal 2014 and Fiscal 2013, on debt financing in order to fund our operations, and
this reliance is expected to continue for the foreseeable future.
On January 20, 2017, we completed a public
offering of 17,330,836 units at a price of $1.50 per unit for gross proceeds of $25,996,254, which has effectively increased our
working capital as at January 31, 2017 to $26.6 million including cash and cash equivalents of $27.7 million. Consequently, our
existing cash resources as at January 31, 2017 are expected to provide sufficient funds to carry our planned operations for the
next twelve months from the date that our condensed consolidated financial statements are issued. Our continuation as a going concern
for a period beyond twelve months will be dependent upon our ability to obtain adequate additional financing, as our operations
are capital intensive and future capital expenditures are expected to be substantial. Our continued operations, including the recoverability
of the carrying values of our assets, are dependent ultimately on our ability to achieve and maintain profitability and positive
cash flow from our operations.
|
NOTE 2:
|
BASIS OF PRESENTATION
|
The accompanying unaudited interim condensed
consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles
(“U.S. GAAP”) for interim financial information and are presented in U.S. dollars. Accordingly, they do not include
all of the information and footnotes required under U.S. GAAP for complete financial statements. These unaudited interim condensed
consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in
our Annual Report on Form 10-K for the Fiscal 2016. In the opinion of management, all adjustments of a normal recurring nature
and considered necessary for a fair presentation have been made. Operating results for the six months ended January 31, 2017 are
not necessarily indicative of the results that may be expected for the fiscal year ending July 31, 2017 (“Fiscal 2017”).
Exploration Stage
We have established the existence of mineralized
materials for certain uranium projects, including our Palangana Mine. We have not established proven or probable reserves, as defined
by the United States Securities and Exchange Commission (the “SEC”) under Industry Guide 7, through the completion
of a “final” or “bankable” feasibility study for any of our uranium projects, including the Palangana Mine.
Furthermore, we have no plans to establish proven or probable reserves for any of our uranium projects for which we plan on utilizing
in-situ recovery (“ISR”) mining, such as our Palangana Mine. As a result, and despite the fact that we commenced extraction
of mineralized materials at our Palangana Mine in November 2010, we remain in the Exploration Stage as defined under Industry Guide
7, and will continue to remain in the Exploration Stage until such time proven or probable reserves have been established.
Since we commenced extraction of mineralized
materials at the Palangana Mine without having established proven or probable reserves, any mineralized materials established or
extracted from the Palangana Mine should not in any way be associated with having established or produced from proven or probable
reserves.
URANIUM
ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
January 31, 2017
(Unaudited)
In accordance with U.S. GAAP, expenditures
relating to the acquisition of mineral rights are initially capitalized as incurred while exploration and pre-extraction expenditures
are expensed as incurred until such time we exit the Exploration Stage by establishing proven or probable reserves. Expenditures
relating to exploration activities such as drill programs to establish mineralized materials are expensed as incurred. Expenditures
relating to pre-extraction activities such as the construction of mine wellfields, ion exchange facilities and disposal wells are
expensed as incurred until such time proven or probable reserves are established for that project, after which expenditures relating
to mine development activities for that particular project are capitalized as incurred.
Companies in the Production Stage as defined
under Industry Guide 7, having established proven and probable reserves and exited the Exploration Stage, typically capitalize
expenditures relating to ongoing development activities, with corresponding depletion calculated over proven and probable reserves
using the units-of-production method and allocated to future reporting periods to inventory and, as that inventory is sold, to
cost of goods sold. We are in the Exploration Stage which has resulted in our Company reporting larger losses than if it had been
in the Production Stage due to the expensing, rather than capitalization, of expenditures relating to ongoing mill and mine development
activities. Additionally, there would be no corresponding amortization allocated to future reporting periods of the Company since
those costs would have been expensed previously, resulting in both lower inventory costs and cost of goods sold and results of
operations with higher gross profits and lower losses than if we had been in the Production Stage. Any capitalized costs, such
as expenditures relating to the acquisition of mineral rights, are depleted over the estimated extraction life using the straight-line
method. As a result, our consolidated financial statements may not be directly comparable to the financial statements of companies
in the Production Stage.
Recently Adopted Accounting Standards
In August 2014, Financial Accounting Standards
Board (“FASB”) issued ASU 2014-15: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going
Concern, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements
(“ASU 2014-15”). ASU 2014-15 requires management to perform interim and annual assessments of an entity’s ability
to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain
disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. ASU
2014-15 applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter,
with early adoption permitted. Our Company has adopted this standard effective August 1, 2016 for the fiscal year ending
July 31, 2017. Adoption of this standard has not had a significant impact on these unaudited interim condensed consolidated financial
statements.
In March 2016, the FASB issued Accounting
Standards Update No. 2016-09: Improvement to Employee Share-Based Payment Accounting (“ASU 2016-09”), as part of its
simplification initiative. ASU 2016-09 allows an entity to make an entity-wide accounting policy election to either estimate the
number of awards that are expected to vest (current U.S. GAAP) or account for forfeitures when they occur. For public business
entities, ASU 2016-09 is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early
adoption permitted. Our Company has made an election to account for forfeitures when they occur for Fiscal 2017. This election
has not had a significant impact on these unaudited interim condensed consolidated financial statements.
URANIUM
ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
January 31, 2017
(Unaudited)
|
NOTE 3:
|
PREPAID EXPENSES AND DEPOSITS
|
Prepaid expenses and deposits represent
future expenditures our Company pays in advance, which usually expire with the passage of time or through use and consumption.
At January 31, 2017, prepaid expenses and deposits consisted
of the following:
|
|
January 31, 2017
|
|
|
July 31, 2016
|
|
Prepaid Property Renewal Fees
|
|
$
|
353,070
|
|
|
$
|
149,066
|
|
Prepaid Insurance
|
|
|
108,576
|
|
|
|
101,270
|
|
Prepaid Listing and Subscriptions
|
|
|
35,742
|
|
|
|
60,605
|
|
Prepaid License Fees
|
|
|
112,778
|
|
|
|
20,283
|
|
Prepaid Surety Bond Premium
|
|
|
97,379
|
|
|
|
38,271
|
|
Deposits and Expense Advances
|
|
|
127,077
|
|
|
|
87,996
|
|
Other Prepaid Expenses
|
|
|
94,464
|
|
|
|
76,486
|
|
|
|
$
|
929,086
|
|
|
$
|
533,977
|
|
URANIUM
ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
January 31, 2017
(Unaudited)
|
NOTE 4:
|
MINERAL RIGHTS AND PROPERTIES
|
Mineral Rights
At January 31, 2017, we had mineral rights
in the States of Arizona, Colorado, New Mexico and Texas and in the Republic of Paraguay. These mineral rights were acquired through
staking, purchase or lease agreements and are subject to varying royalty interests, some of which are indexed to the sale price
of uranium. At January 31, 2017, annual maintenance payments approximately $1,358,000 will be required to maintain these mineral
rights.
Mineral rights and property acquisition costs consisted of the
following:
|
|
January 31, 2017
|
|
|
July 31, 2016
|
|
Mineral Rights and Properties
|
|
|
|
|
|
|
|
|
Palangana Mine
|
|
$
|
6,443,028
|
|
|
$
|
6,443,028
|
|
Goliad Project
|
|
|
8,689,127
|
|
|
|
8,689,127
|
|
Burke Hollow Project
|
|
|
1,495,750
|
|
|
|
1,495,750
|
|
Longhorn Project
|
|
|
116,870
|
|
|
|
116,870
|
|
Salvo Project
|
|
|
14,905
|
|
|
|
14,905
|
|
Nichols Project
|
|
|
-
|
|
|
|
154,774
|
|
Anderson Project
|
|
|
9,154,268
|
|
|
|
9,154,268
|
|
Workman Creek Project
|
|
|
1,520,680
|
|
|
|
1,472,008
|
|
Los Cuatros Project
|
|
|
257,250
|
|
|
|
257,250
|
|
Slick Rock Project
|
|
|
615,650
|
|
|
|
615,650
|
|
Yuty Project
|
|
|
11,947,144
|
|
|
|
11,947,144
|
|
Oviedo Project
(1)
|
|
|
1,133,412
|
|
|
|
1,133,412
|
|
Other Property Acquisitions
|
|
|
91,080
|
|
|
|
234,248
|
|
|
|
|
41,479,164
|
|
|
|
41,728,434
|
|
Accumulated Depletion
|
|
|
(3,929,884
|
)
|
|
|
(3,929,884
|
)
|
|
|
|
37,549,280
|
|
|
|
37,798,550
|
|
|
|
|
|
|
|
|
|
|
Databases
|
|
|
2,410,038
|
|
|
|
2,410,038
|
|
Accumulated Amortization
|
|
|
(2,385,698
|
)
|
|
|
(2,364,019
|
)
|
|
|
|
24,340
|
|
|
|
46,019
|
|
|
|
|
|
|
|
|
|
|
Land Use Agreements
|
|
|
404,310
|
|
|
|
404,310
|
|
Accumulated Amortization
|
|
|
(295,142
|
)
|
|
|
(274,928
|
)
|
|
|
|
109,168
|
|
|
|
129,382
|
|
|
|
$
|
37,682,788
|
|
|
$
|
37,973,951
|
|
|
(1)
|
Formerly Coronel Oviedo Project.
|
We have not established proven or probable
reserves, as defined by the SEC under Industry Guide 7, for any of our mineral projects. We have established the existence of mineralized
materials for certain uranium projects, including our Palangana Mine. Since we commenced uranium extraction at the Palangana Mine
without having established proven or probable reserves, there may be greater inherent uncertainty as to whether or not any mineralized
material can be economically extracted as originally planned and anticipated.
During the six months ended January 31,
2017, we issued 46,800 restricted shares with a fair value of $48,672 as an advance royalty payment for our Workman Creek Project,
which was capitalized as Mineral Rights & Properties on our consolidated balance sheet as at January 31, 2017.
URANIUM
ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
January 31, 2017
(Unaudited)
During the three months ended January 31,
2017, we abandoned our Nichols Project located in Texas with an acquisition cost of $154,774. During the six months ended January
31, 2017, we abandoned certain non-core mineral interests at projects located in Arizona, Colorado and New Mexico with a combined
acquisition cost of $143,168. As a result, an impairment loss on mineral properties of $154,774 and $297,942, respectively, was
reported on our consolidated statements of operations for the three and six months ended January 31, 2017.
During the three months and six ended January
31, 2016, we abandoned certain mineral interests at the projects located in Colorado and New Mexico with a combined acquisition
cost of $86,535. As a result, an impairment loss on mineral properties of $86,535 was reported on the consolidated statement of
operations for the three and six months ended January 31, 2016.
During the three months ended January 31,
2016, the asset retirement obligations (“ARO”) of the Palangana Mine were revised due to changes in the estimated timing
of restoration and reclamation of the Palangana Mine, resulting in the corresponding mineral rights and properties being reduced
by $24,787, and a credit amount of re-valuation of ARO totaling $184,381 being recorded against the mineral property expenditures
for the Palangana Mine.
During the three and six months ended January
31, 2017 and 2016, we continued with reduced operations at our Palangana Mine to capture residual uranium only. As a result, no
depletion for the Palangana Mine was recorded on our consolidated financial statements for the three and six months ended January
31, 2017 and 2016, respectively.
Mineral property expenditures incurred
by major projects were as follows:
|
|
Three Months Ended January 31,
|
|
|
Six Months Ended January 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Mineral Property Expenditures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Palangana Mine
|
|
$
|
184,277
|
|
|
$
|
366,131
|
|
|
$
|
385,649
|
|
|
$
|
751,280
|
|
Goliad Project
|
|
|
19,849
|
|
|
|
24,022
|
|
|
|
49,879
|
|
|
|
44,831
|
|
Burke Hollow Project
|
|
|
110,675
|
|
|
|
204,708
|
|
|
|
150,316
|
|
|
|
926,252
|
|
Longhorn Project
|
|
|
906
|
|
|
|
781
|
|
|
|
1,053
|
|
|
|
4,373
|
|
Salvo Project
|
|
|
6,843
|
|
|
|
2,912
|
|
|
|
15,009
|
|
|
|
17,075
|
|
Anderson Project
|
|
|
269
|
|
|
|
55,083
|
|
|
|
15,504
|
|
|
|
167,216
|
|
Workman Creek Project
|
|
|
7,673
|
|
|
|
1,001
|
|
|
|
15,920
|
|
|
|
31,691
|
|
Slick Rock Project
|
|
|
12,206
|
|
|
|
5,036
|
|
|
|
24,552
|
|
|
|
53,861
|
|
Yuty Project
|
|
|
102,037
|
|
|
|
91,526
|
|
|
|
191,712
|
|
|
|
202,543
|
|
Oviedo Project
|
|
|
68,402
|
|
|
|
153,833
|
|
|
|
215,070
|
|
|
|
286,732
|
|
Alto Parana Project
|
|
|
409,865
|
|
|
|
-
|
|
|
|
522,633
|
|
|
|
-
|
|
Other Mineral Property Expenditures
|
|
|
144,444
|
|
|
|
173,173
|
|
|
|
370,267
|
|
|
|
381,372
|
|
Revaluation of Asset Retirement Obligations
|
|
|
-
|
|
|
|
(184,381
|
)
|
|
|
-
|
|
|
|
(184,381
|
)
|
|
|
$
|
1,067,446
|
|
|
$
|
893,825
|
|
|
$
|
1,957,564
|
|
|
$
|
2,682,845
|
|
During the three and six months ended January
31, 2017, and pursuant to a share purchase and option agreement effective March 4, 2016 to acquire the Alto Parana Project, a titanium
project located in the departments of Alto Parana and Canindeyú in the Republic of Paraguay, we accrued total costs of $409,865
and $522,633, respectively, related to maintenance and assessment work required to keep the Alto Parana Project in good standing.
Refer to Note 6: Other Long-Term Asset.
URANIUM
ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
January 31, 2017
(Unaudited)
|
NOTE 5:
|
PROPERTY, PLANT AND EQUIPMENT
|
Property, plant and equipment consisted of the following:
|
|
January 31, 2017
|
|
|
July 31, 2016
|
|
|
|
Cost
|
|
|
Accumulated
Depreciation
|
|
|
Net Book
Value
|
|
|
Cost
|
|
|
Accumulated
Depreciation
|
|
|
Net Book
Value
|
|
Hobson Processing Facility
|
|
$
|
6,819,088
|
|
|
$
|
(773,933
|
)
|
|
$
|
6,045,155
|
|
|
$
|
6,819,088
|
|
|
$
|
(773,933
|
)
|
|
$
|
6,045,155
|
|
Mining Equipment
|
|
|
2,426,385
|
|
|
|
(2,330,347
|
)
|
|
|
96,038
|
|
|
|
2,438,920
|
|
|
|
(2,256,901
|
)
|
|
|
182,019
|
|
Logging Equipment and Vehicles
|
|
|
1,936,252
|
|
|
|
(1,803,233
|
)
|
|
|
133,019
|
|
|
|
1,962,895
|
|
|
|
(1,801,811
|
)
|
|
|
161,084
|
|
Computer Equipment
|
|
|
576,617
|
|
|
|
(557,203
|
)
|
|
|
19,414
|
|
|
|
586,116
|
|
|
|
(555,972
|
)
|
|
|
30,144
|
|
Furniture and Fixtures
|
|
|
170,701
|
|
|
|
(167,842
|
)
|
|
|
2,859
|
|
|
|
172,348
|
|
|
|
(167,966
|
)
|
|
|
4,382
|
|
Land
|
|
|
519,520
|
|
|
|
-
|
|
|
|
519,520
|
|
|
|
519,520
|
|
|
|
-
|
|
|
|
519,520
|
|
|
|
$
|
12,448,563
|
|
|
$
|
(5,632,558
|
)
|
|
$
|
6,816,005
|
|
|
$
|
12,498,887
|
|
|
$
|
(5,556,583
|
)
|
|
$
|
6,942,304
|
|
During the three and six months ended January
31, 2017 and 2016, no uranium concentrate was processed at the Hobson Processing Facility due to the reduced operations at our
Palangana Mine. As a result, no depreciation for the Hobson Processing Facility was recorded on our consolidated financial statements
for the three and six months ended January 31, 2017 and 2016.
|
NOTE 6:
|
OTHER LONG-TERM ASSET
|
On March 4, 2016, we entered into a share
purchase and option agreement (the “SPOA”) with CIC Resources Inc. (the “Vendor”) pursuant to which we
acquired (the “Acquisition”) all of the issued and outstanding shares of JDL Resources Inc. (“JDL”), a
wholly-owned subsidiary of the Vendor, and was granted an option to acquire all of the issued and outstanding shares of CIC Resources
(Paraguay) Inc. (“CIC”; the “Option”), another wholly-owned subsidiary of the Vendor. JDL’s
principal assets include land located in the department of Alto Parana in the Republic of Paraguay. CIC is the beneficial
owner of Paraguay Resources Inc. which is the 100% owner of the Alto Parana Project, comprising of certain titanium mineral concessions
located in the departments of Alto Parana and Canindeyú in the Republic of Paraguay.
Pursuant to the SPOA, the Company issued
1,333,560 restricted common shares in the capital of the Company and paid $50,000 in cash to complete the Acquisition. If the Company
pays or causes to pay on the Vendor’s behalf certain maintenance payments and assessment work required to keep the Alto Parana
Project in good standing as directed by the Vendor, during the one-year period following completion of the Acquisition (the “Option
Period”), the Company may elect in its discretion to exercise the Option at any time, or if, in accordance with the SPOA,
the Vendor satisfies certain conditions precedent to exercise, the Company will be deemed to have exercised the Option. Upon
exercise of the Option the Company is required to pay, subject to certain adjustments, $250,000 in cash to the Vendor and to grant
to the Vendor a 1.5% net smelter returns royalty (the “Royalty”) on the Alto Parana Project as contemplated by a proposed
net smelter returns royalty agreement (the “Royalty Agreement”) to be executed by the parties upon exercise of the
Option. Pursuant to the proposed Royalty Agreement, the Company has the right, exercisable at any time for a period of six
years following exercise of the Option, to acquire one-half percent (0.5%) of the Royalty at a purchase price of $500,000.
By way of an amending letter dated March
3, 2017, the Company and the Vendor agreed to extend the Option Period by one year to March 4, 2018.
We hold a variable interest in CIC as a
result of the Option, however, we are not the primary beneficiary due to the fact that we do not have the power over decisions
that significantly affect CIC’s economic performance. Accordingly, we do not consolidate the results of CIC and therefore,
the other long-term asset effectively represents the amount paid in advance for CIC’s assets totaling $1,303,388 and $250,000
to be paid upon the exercise of the Option for the acquisition of CIC.
URANIUM
ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
January 31, 2017
(Unaudited)
At January 31, 2017, the carrying value
of the Other Long-Term Asset and our maximum exposure to loss from the unconsolidated variable interest entity, which would arise
if we are unable to exercise the Option, is as follows:
|
|
January 31, 2017
|
|
|
July 31, 2016
|
|
Other Long-Term Asset
|
|
$
|
1,553,388
|
|
|
$
|
1,553,388
|
|
Cash Payable Upon Exercise of the Option
|
|
|
(250,000
|
)
|
|
|
(250,000
|
)
|
Maximum Exposure to Loss
|
|
$
|
1,303,388
|
|
|
$
|
1,303,388
|
|
|
NOTE 7:
|
DUE TO RELATED PARTIES AND RELATED PARTY TRANSACTIONS
|
During the three and six months ended January
31, 2017, the Company incurred $68,736 and $103,851 (three and six months ended January 31, 2016: $68,469 and $98,593), respectively,
in general and administrative costs paid to Blender Media Inc. (“Blender”), a company controlled by Arash Adnani, the
brother of our President and Chief Executive Officer, for various services including information technology, corporate branding,
media, website design, maintenance and hosting, provided to our Company.
During the six months ended January 31,
2017, the Company issued 88,822 restricted common shares with a fair value of $91,488 as settlement of certain amounts owed to
Blender.
At January 31, 2017, the amount owing to
Blender was $11,528 (July 31, 2016: $Nil).
On February 9, 2016, we entered into the
second amended and restated credit agreement (the “Second Amended Credit Agreement”) with our lenders, Sprott Resource
Lending Partnership, CEF (Capital Markets) Limited and Resource Income Partners Limited Partnership (collectively, the “Lenders”),
under which we had previously drawn down the maximum $20,000,000 in principal.
As at January 31, 2017, long-term debt
consisted of the following:
|
|
January 31, 2017
|
|
|
July 31, 2016
|
|
Principal amount
|
|
$
|
20,000,000
|
|
|
$
|
20,000,000
|
|
Unamortized discount
|
|
|
(200,254
|
)
|
|
|
(801,822
|
)
|
Long-term debt, net of unamortized discount
|
|
$
|
19,799,746
|
|
|
$
|
19,198,178
|
|
For the three and six months ended January
31, 2017 and 2016, the amortization of debt discount totaled $306,239 and $601,568 (three and six months ended January 31, 2016:
$347,723 and $683,390), respectively, which was recorded as interest expense and included in our condensed consolidated statements
of operations and comprehensive loss.
The aggregate yearly maturities of long-term
debt based on principal amounts outstanding at January 31, 2017 are as follows:
Fiscal 2017
|
|
$
|
-
|
|
Fiscal 2018
|
|
|
-
|
|
Fiscal 2019
|
|
|
10,000,000
|
|
Fiscal 2020
|
|
|
10,000,000
|
|
Total
|
|
$
|
20,000,000
|
|
Subsequent to January 31, 2017, and pursuant
to the terms of the Second Amended Credit Agreement, we issued 738,503 shares with a fair value of $1,100,000, representing 5.5%
of the $20,000,000 principal balance outstanding at January 31, 2017, as payment of anniversary fees to the Lenders.
URANIUM
ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
January 31, 2017
(Unaudited)
|
NOTE 9:
|
ASSET RETIREMENT OBLIGATIONS
|
The Company’s asset retirement obligations (“ARO”)
relate to future remediation and decommissioning activities at our Palangana Mine and Hobson Processing Facility.
Balance, July 31, 2016
|
|
$
|
3,746,464
|
|
Accretion
|
|
|
112,436
|
|
Balance, January 31, 2017
|
|
$
|
3,858,900
|
|
The estimated amounts and timing of cash
flows and assumptions used for ARO estimates are as follows:
|
|
January 31, 2017
|
|
|
July 31, 2016
|
|
Undiscounted amount of estimated cash flows
|
|
$
|
6,650,255
|
|
|
$
|
6,650,255
|
|
|
|
|
|
|
|
|
|
|
Payable in years
|
|
|
4.1 to 15
|
|
|
|
4.1 to 15
|
|
Inflation rate
|
|
|
1.15% to 2.25%
|
|
|
|
1.15% to 2.25%
|
|
Discount rate
|
|
|
5.02% to 8.00%
|
|
|
|
5.02% to 8.00%
|
|
The undiscounted amounts of estimated cash
flows for the next five fiscal years and beyond are as follows:
Fiscal 2017
|
|
$
|
-
|
|
Fiscal 2018
|
|
|
-
|
|
Fiscal 2019
|
|
|
139,052
|
|
Fiscal 2020
|
|
|
414,058
|
|
Fiscal 2021
|
|
|
667,984
|
|
Remaining balance
|
|
|
5,429,161
|
|
|
|
$
|
6,650,255
|
|
Equity Financing
We filed a Form S-3 shelf registration
statement, which was declared effective on January 10, 2014 (the “2014 Shelf”). The 2014 Shelf provided for the public
offer and sale of certain securities of our Company from time to time, at our discretion, up to an aggregate offering amount of
$100 million.
On January 20, 2017, we completed a public
offering of 17,330,836 units at a price of $1.50 per unit for gross proceeds of $25,996,254 (the “Equity Financing”)
pursuant to a prospectus supplement to the 2014 Shelf. Each unit is comprised of one share of the Company and one-half of one share
purchase warrant. Each whole warrant entitles its holder to acquire one share at an exercise price of $2.00 per share, exercisable
in six months and expiring in three years from the date of issuance. In connection with the Equity Financing, we also issued compensation
share purchase warrants to agents as part of share issuance costs, to purchase 906,516 shares of our Company, exercisable at a
price of $2.00 per share from six months to three years from the date of issuance.
The Equity Financing shares were valued
at the Company’s closing price of $1.54 per share at January 20, 2017. The share purchase warrants were valued using the
Black-Scholes option pricing model with the following assumptions:
URANIUM
ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
January 31, 2017
(Unaudited)
Expected Risk Free Interest Rate
|
|
|
1.50
|
%
|
Expected Annual Volatility
|
|
|
76.96
|
%
|
Expected Contractual Life in Years
|
|
|
3.00
|
|
Expected Annual Dividend Yield
|
|
|
0.00
|
%
|
The net proceeds from the Equity Financing
were allocated to the fair values of the shares and share purchase warrants as presented below:
Fair Value of Shares
|
|
$
|
26,689,487
|
|
Fair Value of Share Purchase Warrants
|
|
|
5,873,932
|
|
Total Fair Value Before Allocation to Net Proceeds
|
|
$
|
32,563,419
|
|
|
|
|
|
|
Gross Proceeds
|
|
$
|
25,996,254
|
|
Share Issuance Costs - Cash
|
|
|
(1,550,843
|
)
|
Net Cash Proceeds Received
|
|
$
|
24,445,411
|
|
|
|
|
|
|
Relative Fair Value Allocation to:
|
|
|
|
|
Shares
|
|
$
|
20,035,841
|
|
Share Purchase Warrants
|
|
|
4,409,570
|
|
|
|
$
|
24,445,411
|
|
At January 31, 2017, a total of $80.2 million
of the 2014 Shelf was utilized through the following registered offerings and sales of units, with a remaining available balance
of $19.8 million under the 2014 Shelf.
|
·
|
on
June 25, 2015: $10.0 million in gross proceeds through an offering of units consisting of the Company’s shares and
share purchase warrants and $6.7 million representing the aggregate exercise price of those share purchase warrants and agents’
share purchase warrants should they be exercised in full;
|
|
·
|
on March 10, 2016: $10.5 million in gross proceeds through
an offering of units consisting of the Company’s shares and share purchase warrants and $7.9 million representing the aggregate
exercise price of those share purchase warrants and agents’ share purchase warrants should they be exercised in full; and
|
|
·
|
on January 20, 2017: $26.0 million in gross proceeds through
the Equity Financing offering of units consisting of the Company’s shares and share purchase warrants and $19.1 million
representing the aggregate exercise price of those share purchase warrants and compensation share purchase warrants should they
be exercised in full.
|
On January 5, 2017, we also filed a Form
S-3 shelf registration statement (the “2017 Shelf”), which when declared effective by the SEC, will replace the 2014
Shelf and the 2014 Shelf will be deemed terminated. When the 2017 Shelf is declared effective, it will provide for the public
offer and sale of certain securities of the Company from time to time, at our discretion, up to an aggregate offering amount of
$100 million.
URANIUM
ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
January 31, 2017
(Unaudited)
Share Transactions
A summary of the Company’s share
transactions for the six months ended January 31, 2017 are as follows:
|
|
Common
|
|
|
Value per Share
|
|
|
Issuance
|
|
Period / Description
|
|
Shares Issued
|
|
|
Low
|
|
|
High
|
|
|
Value
|
|
Balance, July 31, 2016
|
|
|
116,670,457
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mineral Property
|
|
|
46,800
|
|
|
$
|
1.04
|
|
|
$
|
1.04
|
|
|
$
|
48,672
|
|
Consulting Services
|
|
|
166,926
|
|
|
|
0.90
|
|
|
|
1.06
|
|
|
|
175,908
|
|
Options Exercised
(1)
|
|
|
133,125
|
|
|
|
0.45
|
|
|
|
0.45
|
|
|
|
59,906
|
|
Settlement of Current Liabilities
|
|
|
88,822
|
|
|
|
1.03
|
|
|
|
1.03
|
|
|
|
91,488
|
|
Shares Issued Under Stock Incentive Plan
|
|
|
292,957
|
|
|
|
0.93
|
|
|
|
1.09
|
|
|
|
291,770
|
|
Balance, October 31, 2016
|
|
|
117,399,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Financing
|
|
|
17,330,836
|
|
|
|
1.50
|
|
|
|
1.50
|
|
|
|
25,996,254
|
|
Consulting Services
|
|
|
156,666
|
|
|
|
0.86
|
|
|
|
1.35
|
|
|
|
177,366
|
|
Options Exercised
(2)
|
|
|
87,050
|
|
|
|
0.45
|
|
|
|
0.93
|
|
|
|
40,862
|
|
Warrants Exercised
|
|
|
1,179,493
|
|
|
|
1.20
|
|
|
|
1.20
|
|
|
|
1,415,392
|
|
Shares Issued Under Stock Incentive Plan
|
|
|
243,769
|
|
|
|
0.88
|
|
|
|
1.49
|
|
|
|
236,323
|
|
Balance, January 31, 2017
|
|
|
136,396,901
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
100,000 options were exercised
on a forfeiture basis, of which 46,875 shares with a value of $21,094 were forfeited as payment for the exercise value resulting
in 53,125 net shares being issued with a value of $23,906 as a consequence of such exercise.
(2)
142,134 options were exercised
on a forfeiture basis, of which 57,584 shares with a value of $26,624 were forfeited as payment for the exercise resulting in 84,550
net shares being issued with a value of $38,537 as a consequence of such exercise.
Share Purchase Warrants
In connection with the Equity Financing
closed on January 20, 2017, we issued 8,665,418 share purchase warrants and 906,516 compensation warrants to agents as issuance
costs with an exercise price of $2.00 per share, exercisable in six months and expiring three years from the date of issuance.
A continuity schedule of outstanding share
purchase warrants for the six months ended January 31, 2017 is as follows:
|
|
Number of
Warrants
|
|
|
Weighted Average
Exercise Price
|
|
|
Weighted Average
Remaining Contractual
Term (Years)
|
|
Balance, July 31, 2016
|
|
|
13,953,872
|
|
|
|
1.65
|
|
|
|
2.31
|
|
Issued
|
|
|
9,571,934
|
|
|
|
2.00
|
|
|
|
2.97
|
|
Exercised
|
|
|
(1,179,493
|
)
|
|
|
1.20
|
|
|
|
-
|
|
Expired
|
|
|
(1,859,524
|
)
|
|
|
2.60
|
|
|
|
-
|
|
Balance, January 31, 2017
|
|
|
20,486,789
|
|
|
$
|
1.75
|
|
|
|
2.52
|
|
URANIUM
ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
January 31, 2017
(Unaudited)
A summary of share purchase warrants outstanding and exercisable
at January 31, 2017 are as follows:
Weighted
Average
Exercise Price
|
|
|
Number of Warrants
Outstanding
|
|
|
Expiry Date
|
|
Weighted Average
Remaining Contractual
Life (Years)
|
|
$
|
1.20
|
|
|
|
5,414,855
|
|
|
March 10, 2019
|
|
|
2.10
|
|
|
1.35
|
|
|
|
2,600,000
|
|
|
January 30, 2020
|
|
|
3.00
|
|
|
1.95
|
|
|
|
50,000
|
|
|
June 3, 2018
|
|
|
1.34
|
|
|
2.00
|
|
|
|
9,571,934
|
*
|
|
January 20, 2020
|
|
|
2.97
|
|
|
2.35
|
|
|
|
2,850,000
|
|
|
June 25, 2018
|
|
|
1.40
|
|
$
|
1.75
|
|
|
|
20,486,789
|
|
|
|
|
|
2.52
|
|
*These share purchase
warrants will be exercisable on July 20, 2017 pursuant to the Equity Financing.
Stock Options
At January 31, 2017, we had one stock option
plan, its 2016 Stock Incentive Plan (the “2016 Plan”). The 2016 Plan provides for not less than
18,892,856 shares of the Company that may be issued and consists of (i) 10,467,134 shares issuable pursuant to awards previously
granted that were outstanding under our 2015 Stock Incentive Plan (the “2015 Plan”); (ii) 7,225,722 shares remaining
available for issuance under the 2015 Plan; and (iii) 1,200,000 additional shares that may be issued pursuant to awards that may
be granted under the 2016 Plan. The 2016 Plan supersedes and replaces the Company’s 2015 Plan, which superseded and replaced
the Company’s prior 2014, 2013, 2009 and 2006 Stock Incentive Plans (collectively the “Stock Incentive Plan”),
such that no further shares are issuable under those prior plans.
A summary of stock options granted by the
Company during the six months ended January 31, 2017, including corresponding grant date fair values and assumptions using the
Black Scholes option pricing model is as follows:
Date
|
|
Options
Issued
|
|
|
Exercise
Price
|
|
|
Term
(Years)
|
|
|
Fair
Value
|
|
|
Expected
Life (Years)
|
|
|
Risk-Free
Interest Rate
|
|
|
Dividend
Yield
|
|
|
Expected
Volatility
|
|
August 2, 2016
|
|
|
182,500
|
|
|
$
|
0.93
|
|
|
|
5.00
|
|
|
$
|
90,222
|
|
|
|
2.90
|
|
|
|
0.78
|
%
|
|
|
0.00
|
%
|
|
|
84.14
|
%
|
August 12, 2016
|
|
|
190,000
|
|
|
|
1.12
|
|
|
|
5.00
|
|
|
|
106,339
|
|
|
|
2.90
|
|
|
|
0.81
|
%
|
|
|
0.00
|
%
|
|
|
78.07
|
%
|
December 9, 2016
|
|
|
50,000
|
|
|
|
1.07
|
|
|
|
5.00
|
|
|
|
25,999
|
|
|
|
2.50
|
|
|
|
1.29
|
%
|
|
|
0.00
|
%
|
|
|
80.90
|
%
|
December 9, 2016
|
|
|
100,000
|
|
|
|
1.07
|
|
|
|
5.00
|
|
|
|
53,819
|
|
|
|
2.90
|
|
|
|
1.40
|
%
|
|
|
0.00
|
%
|
|
|
77.87
|
%
|
Total
|
|
|
522,500
|
|
|
|
|
|
|
|
|
|
|
$
|
276,379
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
URANIUM
ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
January 31, 2017
(Unaudited)
A continuity schedule of outstanding stock
options for the underlying common shares for the six months ended January 31, 2017 is as follows:
|
|
Number of Stock
Options
|
|
|
Weighted Average
Exercise Price
|
|
|
Weighted Average
Remaining Contractual
Term (Years)
|
|
Balance, July 31, 2016
|
|
|
12,105,858
|
|
|
$
|
1.34
|
|
|
|
3.36
|
|
Issued
|
|
|
372,500
|
|
|
|
1.03
|
|
|
|
4.77
|
|
Exercised
|
|
|
(180,000
|
)
|
|
|
0.45
|
|
|
|
-
|
|
Expired
|
|
|
(10,724
|
)
|
|
|
5.13
|
|
|
|
-
|
|
Balance, October 31, 2016
|
|
|
12,287,634
|
|
|
$
|
1.34
|
|
|
|
3.21
|
|
Issued
|
|
|
150,000
|
|
|
|
1.07
|
|
|
|
4.85
|
|
Exercised
|
|
|
(144,634
|
)
|
|
|
0.47
|
|
|
|
-
|
|
Expired
|
|
|
(40,000
|
)
|
|
|
2.46
|
|
|
|
-
|
|
Balance, January 31, 2017
|
|
|
12,253,000
|
|
|
$
|
1.35
|
|
|
|
3.02
|
|
At January 31, 2017, the aggregate intrinsic
value under the provisions of ASC 718 of all outstanding stock options was estimated at $5,036,190 (vested: $4,101,020 and unvested:
$935,170).
At January 31, 2017, unrecognized stock-based
compensation expense related to the unvested portion of stock options granted under the Stock Incentive Plan totaled $451,034 to
be recognized over the next 0.74 years.
A summary of stock options outstanding and exercisable at January
31, 2017 is as follows:
|
|
Options Outstanding
|
|
|
Options Exercisable
|
|
Range of Exercise Prices
|
|
Outstanding at
January 31, 2017
|
|
|
Weighted Average
Exercise Price
|
|
|
Exercisable at
January 31, 2017
|
|
|
Weighted Average
Exercise Price
|
|
$0.45 to $0.96
|
|
|
2,755,500
|
|
|
$
|
0.77
|
|
|
|
1,804,625
|
|
|
$
|
0.69
|
|
$0.97 to $2.45
|
|
|
8,662,500
|
|
|
|
1.34
|
|
|
|
8,095,000
|
|
|
|
1.36
|
|
$2.46 to $5.70
|
|
|
835,000
|
|
|
|
3.33
|
|
|
|
835,000
|
|
|
|
3.33
|
|
|
|
|
12,253,000
|
|
|
$
|
1.35
|
|
|
|
10,734,625
|
|
|
$
|
1.40
|
|
Stock-Based Compensation
A summary of stock-based compensation expense
is as follows:
|
|
Three Months Ended January 31,
|
|
|
Six Months Ended January 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Stock-Based Compensation for Consultants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for consulting services
|
|
$
|
252,895
|
|
|
$
|
633,180
|
|
|
$
|
522,027
|
|
|
$
|
958,775
|
|
Stock options issued to consultants
|
|
|
199,979
|
|
|
|
62,143
|
|
|
|
278,251
|
|
|
|
70,778
|
|
|
|
|
452,874
|
|
|
|
695,323
|
|
|
|
800,278
|
|
|
|
1,029,553
|
|
Stock-Based Compensation for Management
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued to management
|
|
|
54,693
|
|
|
|
20,932
|
|
|
|
142,893
|
|
|
|
36,196
|
|
Stock options issued to management
|
|
|
122,326
|
|
|
|
265,010
|
|
|
|
367,345
|
|
|
|
445,325
|
|
|
|
|
177,019
|
|
|
|
285,942
|
|
|
|
510,238
|
|
|
|
481,521
|
|
Stock-Based Compensation for Employees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued to employees
|
|
|
106,101
|
|
|
|
30,303
|
|
|
|
216,447
|
|
|
|
30,303
|
|
Stock options issued to employees
|
|
|
93,046
|
|
|
|
50,781
|
|
|
|
287,338
|
|
|
|
147,414
|
|
|
|
|
199,147
|
|
|
|
81,084
|
|
|
|
503,785
|
|
|
|
177,717
|
|
|
|
$
|
829,040
|
|
|
$
|
1,062,349
|
|
|
$
|
1,814,301
|
|
|
$
|
1,688,791
|
|
URANIUM
ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
January 31, 2017
(Unaudited)
The following table reconciles the weighted
average number of shares used in the calculation of the basic and diluted loss per share:
|
|
Three Months Ended January 31,
|
|
|
Six Months Ended January 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Numerator
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss for the Period
|
|
$
|
(4,332,369
|
)
|
|
$
|
(4,801,505
|
)
|
|
$
|
(8,585,063
|
)
|
|
$
|
(9,873,539
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Weighted Average Number of Shares
|
|
|
119,891,769
|
|
|
|
99,644,030
|
|
|
|
118,495,845
|
|
|
|
99,105,173
|
|
Dilutive Stock Options and Warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Diluted Weighted Average Number of Shares
|
|
|
119,891,769
|
|
|
|
99,644,030
|
|
|
|
118,495,845
|
|
|
|
99,105,173
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss per Share, Basic and Diluted
|
|
$
|
(0.04
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.10
|
)
|
For the three and six months ended January
31, 2017 and 2016, all outstanding stock options and share purchase warrants were excluded from the calculation of the diluted
loss per share since we reported net losses for those periods and their effects would be anti-dilutive.
|
NOTE 12:
|
SEGMENTED INFORMATION
|
Our Company currently operates in a single
reportable segment and is focused on uranium mining and related activities, including exploration, pre-extraction, extraction and
processing of uranium concentrates.
At January 31, 2017, our long-term assets
located in the United States totaled $32,759,718 or 69% of our Company’s total long-term assets of $47,758,208.
The table below provides a breakdown of
our Company’s long-term assets by geographic segments:
|
|
January 31, 2017
|
|
|
|
United States
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Items
|
|
Texas
|
|
|
Arizona
|
|
|
Other States
|
|
|
Canada
|
|
|
Paraguay
|
|
|
Total
|
|
Mineral Rights and Properties
|
|
$
|
12,964,073
|
|
|
$
|
10,932,198
|
|
|
$
|
705,962
|
|
|
$
|
-
|
|
|
$
|
13,080,555
|
|
|
$
|
37,682,788
|
|
Property, Plant and Equipment
|
|
|
6,451,458
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12,715
|
|
|
|
351,832
|
|
|
|
6,816,005
|
|
Reclamation Deposits
|
|
|
1,690,209
|
|
|
|
15,000
|
|
|
|
818
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,706,027
|
|
Other Long-Term Assets
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,553,388
|
|
|
|
1,553,388
|
|
Total Long-Term Assets
|
|
$
|
21,105,740
|
|
|
$
|
10,947,198
|
|
|
$
|
706,780
|
|
|
$
|
12,715
|
|
|
$
|
14,985,775
|
|
|
$
|
47,758,208
|
|
|
|
July 31, 2016
|
|
|
|
United States
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Items
|
|
Texas
|
|
|
Arizona
|
|
|
Other States
|
|
|
Canada
|
|
|
Paraguay
|
|
|
Total
|
|
Mineral Rights and Properties
|
|
$
|
13,191,408
|
|
|
$
|
10,891,861
|
|
|
$
|
810,127
|
|
|
$
|
-
|
|
|
$
|
13,080,555
|
|
|
$
|
37,973,951
|
|
Property, Plant and Equipment
|
|
|
6,573,079
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14,909
|
|
|
|
354,316
|
|
|
|
6,942,304
|
|
Reclamation Deposits
|
|
|
1,690,209
|
|
|
|
15,000
|
|
|
|
818
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,706,027
|
|
Other Long-Term Assets
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,553,388
|
|
|
|
1,553,388
|
|
Total Long-Term Assets
|
|
$
|
21,454,696
|
|
|
$
|
10,906,861
|
|
|
$
|
810,945
|
|
|
$
|
14,909
|
|
|
$
|
14,988,259
|
|
|
$
|
48,175,670
|
|
URANIUM
ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
January 31, 2017
(Unaudited)
The tables below provide a breakdown of
our Company’s operating results by geographic segments for the three and six months ended January 31, 2017. All intercompany
transactions have been eliminated.
|
|
Three Months Ended January 31, 2017
|
|
Statement of Operations
|
|
United States
|
|
|
|
|
|
|
|
|
|
|
|
|
Texas
|
|
|
Arizona
|
|
|
Other States
|
|
|
Canada
|
|
|
Paraguay
|
|
|
Total
|
|
Sales
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Inventory write-down
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Mineral property expenditures
|
|
|
449,523
|
|
|
|
22,751
|
|
|
|
14,868
|
|
|
|
-
|
|
|
|
580,304
|
|
|
|
1,067,446
|
|
General and administrative
|
|
|
1,607,974
|
|
|
|
5,340
|
|
|
|
1,068
|
|
|
|
614,851
|
|
|
|
12,014
|
|
|
|
2,241,247
|
|
Depreciation, amortization and accretion
|
|
|
127,022
|
|
|
|
-
|
|
|
|
249
|
|
|
|
1,991
|
|
|
|
(1,007
|
)
|
|
|
128,255
|
|
Impairment loss on mineral properties
|
|
|
154,774
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
154,774
|
|
|
|
|
2,339,293
|
|
|
|
28,091
|
|
|
|
16,185
|
|
|
|
616,842
|
|
|
|
591,311
|
|
|
|
3,591,722
|
|
Loss from operations
|
|
|
(2,339,293
|
)
|
|
|
(28,091
|
)
|
|
|
(16,185
|
)
|
|
|
(616,842
|
)
|
|
|
(591,311
|
)
|
|
|
(3,591,722
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
(744,042
|
)
|
|
|
(4,768
|
)
|
|
|
-
|
|
|
|
(399
|
)
|
|
|
2
|
|
|
|
(749,207
|
)
|
Loss before income taxes
|
|
$
|
(3,083,335
|
)
|
|
$
|
(32,859
|
)
|
|
$
|
(16,185
|
)
|
|
$
|
(617,241
|
)
|
|
$
|
(591,309
|
)
|
|
$
|
(4,340,929
|
)
|
|
|
Three Months Ended January 31, 2016
|
|
Statement of Operations
|
|
United States
|
|
|
|
|
|
|
|
|
|
|
|
|
Texas
|
|
|
Arizona
|
|
|
Other States
|
|
|
Canada
|
|
|
Paraguay
|
|
|
Total
|
|
Sales
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Inventory write-down
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Mineral property expenditures
|
|
|
564,316
|
|
|
|
56,379
|
|
|
|
27,771
|
|
|
|
-
|
|
|
|
245,359
|
|
|
|
893,825
|
|
General and administrative
|
|
|
2,098,910
|
|
|
|
42,538
|
|
|
|
708
|
|
|
|
661,608
|
|
|
|
2,047
|
|
|
|
2,805,811
|
|
Depreciation, amortization and accretion
|
|
|
227,361
|
|
|
|
-
|
|
|
|
750
|
|
|
|
2,386
|
|
|
|
1,689
|
|
|
|
232,186
|
|
Impairment loss on mineral properties
|
|
|
-
|
|
|
|
-
|
|
|
|
86,535
|
|
|
|
-
|
|
|
|
-
|
|
|
|
86,535
|
|
|
|
|
2,890,587
|
|
|
|
98,917
|
|
|
|
115,764
|
|
|
|
663,994
|
|
|
|
249,095
|
|
|
|
4,018,357
|
|
Loss from operations
|
|
|
(2,890,587
|
)
|
|
|
(98,917
|
)
|
|
|
(115,764
|
)
|
|
|
(663,994
|
)
|
|
|
(249,095
|
)
|
|
|
(4,018,357
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
(785,298
|
)
|
|
|
(4,768
|
)
|
|
|
-
|
|
|
|
818
|
|
|
|
6
|
|
|
|
(789,242
|
)
|
Loss before income taxes
|
|
$
|
(3,675,885
|
)
|
|
$
|
(103,685
|
)
|
|
$
|
(115,764
|
)
|
|
$
|
(663,176
|
)
|
|
$
|
(249,089
|
)
|
|
$
|
(4,807,599
|
)
|
|
|
Six Months Ended January 31, 2017
|
|
Statement of Operations
|
|
United States
|
|
|
|
|
|
|
|
|
|
|
|
|
Texas
|
|
|
Arizona
|
|
|
Other States
|
|
|
Canada
|
|
|
Paraguay
|
|
|
Total
|
|
Sales
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Inventory write-down
|
|
|
60,694
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
60,694
|
|
Mineral property expenditures
|
|
|
948,807
|
|
|
|
46,512
|
|
|
|
32,830
|
|
|
|
-
|
|
|
|
929,415
|
|
|
|
1,957,564
|
|
General and administrative
|
|
|
3,265,437
|
|
|
|
26,983
|
|
|
|
2,135
|
|
|
|
1,193,708
|
|
|
|
35,222
|
|
|
|
4,523,485
|
|
Depreciation, amortization and accretion
|
|
|
275,067
|
|
|
|
-
|
|
|
|
498
|
|
|
|
3,968
|
|
|
|
74
|
|
|
|
279,607
|
|
Impairment loss on mineral properties
|
|
|
185,942
|
|
|
|
8,334
|
|
|
|
103,666
|
|
|
|
-
|
|
|
|
-
|
|
|
|
297,942
|
|
|
|
|
4,735,947
|
|
|
|
81,829
|
|
|
|
139,129
|
|
|
|
1,197,676
|
|
|
|
964,711
|
|
|
|
7,119,292
|
|
Loss from operations
|
|
|
(4,735,947
|
)
|
|
|
(81,829
|
)
|
|
|
(139,129
|
)
|
|
|
(1,197,676
|
)
|
|
|
(964,711
|
)
|
|
|
(7,119,292
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
(1,473,252
|
)
|
|
|
(9,535
|
)
|
|
|
-
|
|
|
|
(399
|
)
|
|
|
39
|
|
|
|
(1,483,147
|
)
|
Loss before income taxes
|
|
$
|
(6,209,199
|
)
|
|
$
|
(91,364
|
)
|
|
$
|
(139,129
|
)
|
|
$
|
(1,198,075
|
)
|
|
$
|
(964,672
|
)
|
|
$
|
(8,602,439
|
)
|
URANIUM
ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
January 31, 2017
(Unaudited)
|
|
Six Months Ended January 31, 2016
|
|
Statement of Operations
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|
United States
|
|
|
|
|
|
|
|
|
|
|
|
|
Texas
|
|
|
Arizona
|
|
|
Other States
|
|
|
Canada
|
|
|
Paraguay
|
|
|
Total
|
|
Sales
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Inventory write-down
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Mineral property expenditures
|
|
|
1,851,518
|
|
|
|
209,903
|
|
|
|
132,150
|
|
|
|
-
|
|
|
|
489,274
|
|
|
|
2,682,845
|
|
General and administrative
|
|
|
3,648,603
|
|
|
|
74,992
|
|
|
|
1,663
|
|
|
|
1,350,986
|
|
|
|
4,960
|
|
|
|
5,081,204
|
|
Depreciation, amortization and accretion
|
|
|
466,348
|
|
|
|
-
|
|
|
|
1,500
|
|
|
|
3,632
|
|
|
|
3,605
|
|
|
|
475,085
|
|
Impairment loss on mineral properties
|
|
|
-
|
|
|
|
-
|
|
|
|
86,535
|
|
|
|
-
|
|
|
|
-
|
|
|
|
86,535
|
|
|
|
|
5,966,469
|
|
|
|
284,895
|
|
|
|
221,848
|
|
|
|
1,354,618
|
|
|
|
497,839
|
|
|
|
8,325,669
|
|
Loss from operations
|
|
|
(5,966,469
|
)
|
|
|
(284,895
|
)
|
|
|
(221,848
|
)
|
|
|
(1,354,618
|
)
|
|
|
(497,839
|
)
|
|
|
(8,325,669
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
(1,553,694
|
)
|
|
|
(9,535
|
)
|
|
|
-
|
|
|
|
818
|
|
|
|
11
|
|
|
|
(1,562,400
|
)
|
Loss before income taxes
|
|
$
|
(7,520,163
|
)
|
|
$
|
(294,430
|
)
|
|
$
|
(221,848
|
)
|
|
$
|
(1,353,800
|
)
|
|
$
|
(497,828
|
)
|
|
$
|
(9,888,069
|
)
|
|
NOTE 13:
|
SUPPLEMENTAL CASH FLOW INFORMATION
|
During the six months ended January 31,
2017 and 2016, we issued 323,592 and 856,403 restricted shares with a fair value of $353,274 and $913,775, respectively, for consulting
services.
During the six months ended January 31,
2017 and 2016, we issued 536,726 and 104,903 shares with a fair value of $528,093 and $111,499, respectively, as compensation to
certain management, employees and consultants of the Company under the Stock Incentive Plan.
During the six months ended January 31,
2017 and 2016, we paid $817,778 and $817,778, respectively, in cash for interest on its long-term debt.
During the six months ended January 31,
2017, we issued 88,822 restricted shares with a fair value of $91,488 as settlement of certain of the Company’s accounts
payable.
During the six months ended January 31,
2017, we issued 46,800 restricted shares with a fair value of $48,672 as an advance royalty payment for our Workman Creek Project.
Subsequent to January 31, 2017, we issued
738,503 shares with a fair value of $1,100,000 as payment of anniversary fees to our Lenders.
|
NOTE 14:
|
COMMITMENTS AND CONTINGENCIES
|
We are renting or leasing various office or storage space located
in the United States, Canada and Paraguay with total monthly payments of $18,602. Office lease agreements expire between May 2017
and March 2021 for the United States and Canada.
The aggregate minimum payments over the next five fiscal years
are as follows:
Fiscal 2017
|
|
$
|
106,672
|
|
Fiscal 2018
|
|
|
198,153
|
|
Fiscal 2019
|
|
|
87,203
|
|
Fiscal 2020
|
|
|
87,816
|
|
Fiscal 2021
|
|
|
58,544
|
|
|
|
$
|
538,388
|
|
We are committed to pay our key executives
a total of $823,000 per year for various management services.
URANIUM
ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
January 31, 2017
(Unaudited)
The Company is subject to ordinary routine
litigation incidental to its business. Except as disclosed below, the Company is not aware of any material legal proceedings pending
or that have been threatened against the Company.
On or about March 9, 2011, the Texas Commission
on Environmental Quality (the “TCEQ”) granted the Company’s applications for a Class III Injection Well Permit,
Production Area Authorization and Aquifer Exemption for its Goliad Project. On or about December 4, 2012, the U.S. Environmental
Protection Agency (the “EPA”) concurred with the TCEQ issuance of the Aquifer Exemption permit (the “AE”).
With the receipt of this concurrence, the final authorization required for uranium extraction, our Goliad Project achieved fully-permitted
status. On or about May 24, 2011, a group of petitioners, inclusive of Goliad County, appealed the TCEQ action to the 250
th
District
Court in Travis County, Texas. A motion filed by the Company to intervene in this matter was granted. The petitioners’
appeal lay dormant until on or about June 14, 2013, when the petitioners filed their initial brief in support of their position.
On or about January 18, 2013, a different group of petitioners, exclusive of Goliad County, filed a petition
for review with the Court of Appeals for the Fifth Circuit in the United States (the “Fifth Circuit”) to appeal the
EPA’s decision. On or about March 5, 2013, a motion filed by the Company to intervene in this matter was granted. The
parties attempted to resolve both appeals, to facilitate discussions and avoid further legal costs. The parties jointly agreed,
through mediation initially conducted through the Fifth Circuit on or about August 8, 2013, to abate the proceedings in the State
District Court. On or about August 21, 2013, the State District Court agreed to abate the proceedings. The EPA subsequently
filed a motion to remand without vacatur with the Fifth Circuit wherein the EPA’s stated purpose was to elicit additional
public input and further explain its rationale for the approval. In requesting the remand without vacatur, which would allow
the AE to remain in place during the review period, the EPA denied the existence of legal error and stated that it was unaware
of any additional information that would merit reversal of the AE. The Company and the TCEQ filed a request to the Fifth
Circuit for the motion to remand without vacatur, and if granted, to be limited to a 60-day review period. On December 9,
2013, by way of a procedural order from a three-judge panel of the Fifth Circuit, the Court granted the remand without vacatur
and initially limited the review period to 60 days. In March of 2014, at the EPA’s request, the Fifth Circuit extended the
EPA’s time period for review and additionally, during that same period, the Company conducted a joint groundwater survey
of the site, the result of which reaffirmed the Company’s previously filed groundwater direction studies. On or about June
17, 2014, the EPA reaffirmed its earlier decision to uphold the granting of the Company’s existing AE, with the exception
of a northwestern portion containing less than 10% of the uranium resource which was withdrawn, but not denied, from the AE area
until additional information is provided in the normal course of mine development. On or about September 9, 2014, the petitioners
filed a status report with the State District Court which included a request to remove the stay agreed to in August 2013 and to
set a briefing schedule (the “Status Report”). In that Status Report, the petitioners also stated that they had decided
not to pursue their appeal at the Fifth Circuit. The Company continues to believe that the pending appeal is without
merit and is continuing as planned towards uranium extraction at its fully-permitted Goliad Project.
On or about April 3, 2012, the
Company received notification of a lawsuit filed in the State of Arizona, in the Superior Court for the County of Yavapai, by
certain petitioners (the “Plaintiffs”) against a group of defendants, including the Company and former management
and board members of Concentric Energy Corp. (“Concentric”). The lawsuit asserts certain claims relating to the
Plaintiffs’ equity investments in Concentric, including allegations that the former management and board members of
Concentric engaged in various wrongful acts prior to and/or in conjunction with the merger of Concentric. The lawsuit
originally further alleged that the Company was contractually liable for liquidated damages arising from a pre-merger
transaction which the Company previously acknowledged and recorded as an accrued liability, and which portion of the lawsuit
was settled in full by a cash payment of $149,194 to the Plaintiffs and subsequently dismissed. The court dismissed several
other claims set forth in the Plaintiffs’ initial complaint, but granted the Plaintiffs leave to file an amended
complaint. The court denied a subsequent motion to dismiss the amended complaint, finding that the pleading met the
minimal pleading requirements under the applicable procedural rules. In October 2013, the Company filed a formal
response denying liability for any of the Plaintiffs’ remaining claims. The court set the case for a four-week jury
trial that was to take place in Yavapai County, Arizona, in April 2016. In November 2015, after the completion of
discovery, the Company and the remaining defendants filed motions for summary judgment, seeking to dismiss all of the
Plaintiffs’ remaining claims. While those motions were pending, the parties reached a settlement agreement
with respect to all claims asserted by the Plaintiffs in that lawsuit. A formal settlement and release agreement was
subsequently executed, pursuant to which all of the Plaintiffs’ claims in the Arizona lawsuit were dismissed with
prejudice. Pursuant to the terms of the settlement agreement, the Defendants collectively paid $500,000 to the
Plaintiffs, of which $50,000 was paid by the Company.
URANIUM
ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
January 31, 2017
(Unaudited)
On June 1, 2015, the Company received notice that Westminster
Securities Corporation (“Westminster”) filed a suit in the United States District Court for the Southern District
of New York, alleging a breach of contract relating to certain four-year warrants issued by Concentric in December
2008. Although the Concentric warrants expired by their terms on December 31, 2012, Westminster bases its claim upon
transactions allegedly occurring prior to UEC’s merger with Concentric. The Company believes that this claim
lacks merit and intends to vigorously defend the same.
On or about June 29, 2015, Heather M. Stephens
filed a class action complaint against the Company and two of its executive officers in the United States District Court, Southern
District of Texas, with an amended class action complaint filed on November 16, 2015 (the “Securities Case”), seeking
unspecified damages and alleging the defendants violated Section 17(b) of the Securities Act of 1933 and Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934. The Company filed a motion to dismiss and on July 15, 2016, the U.S. District Court for
the Southern District of Texas entered a final judgement dismissing the case in its entirety with prejudice. On September 22, 2016,
the plaintiffs voluntarily dismissed their appeal of the district court’s judgment and on September 26, 2016 the United States
Court of Appeals for the Fifth Circuit dismissed the Securities Case pursuant to the plaintiffs’ motion. As a result, the
judgment in favor of the Company is final.
No settlement payments or any other consideration
was paid by the Company to the plaintiffs in connection with the Securities Case’s dismissal.
On or about September 10, 2015, John Price
filed a stockholder derivative complaint on behalf of the Company against the Company’s Board of Directors, executive management
and three of its vice presidents in the United States District Court, Southern District of Texas, with an amended stockholder derivative
complaint filed on December 4, 2015 (the “Federal Derivative Case”), seeking unspecified damages on behalf of the Company
against the defendants for allegedly breaching their fiduciary duties to the Company with respect to the allegations in the Securities
Case. The Company filed a motion to dismiss. The plaintiff ultimately decided to abandon his case, which the court dismissed on
or about November 17, 2016. No settlement payments or any other consideration was paid by the Company to the plaintiff in connection
with the plaintiff’s abandonment of his case.
On or about October 2, 2015, Marnie W.
McMahon filed a stockholder derivative complaint on behalf of the Company against the Company’s Board of Directors, executive
management and three of its vice presidents in the District Court of Nevada (the “Nevada Derivative Case”) (collectively,
with the Federal Derivative Case, the “Derivative Cases”) seeking unspecified damages on behalf of the Company against
the defendants for allegedly breaching their fiduciary duties to the Company with respect to the allegations in the Securities
Case. On January 21, 2016, the court granted the Company’s motion to stay the Nevada Derivative Case pending the outcome
of the Federal Derivative Case. Following the voluntary dismissal of the Federal Derivative Case, Ms. McMahon filed an amended
complaint on February 10, 2017, which again asserted that the Company’s directors breached their fiduciary duties relating
to the factual allegations in the Securities Case. The Company believes that the Nevada Derivative Case is without merit and intends
to vigorously defend the same.
The Company’s Board of Directors
received a shareholder demand letter dated September 10, 2015 relating to the allegations in the Securities Case (the “Shareholder
Demand”). The letter demands that the Board of Directors initiate an action against the Company’s Board of Directors
and two of its executive officers to recover damages allegedly caused to the Company. The Board of Directors appointed a committee
of independent directors to evaluate the allegations in the demand letter. Subsequently, the federal district court dismissed the
Securities Case, which was based on similar factual allegations, and the Federal Derivative Case was abandoned. The committee of
independent directors has now completed its evaluation and recommended that the Board reject the demand. After considering the
committee’s recommendation and all other material information relevant to the investigation, the Board voted to reject the
demand letter.
At any given time, the Company may enter
into negotiations to settle outstanding legal proceedings and any resulting accruals will be estimated based on the relevant facts
and circumstances applicable at that time. The Company does not expect that such settlements will, individually or in
the aggregate, have a material effect on its financial position, results of operation.