10-Q 1 uec20210430_10q.htm FORM 10-Q uec20210430_10q.htm
 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒         QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended April 30, 2021

 

or

 

☐         TRANSITION REPORT PURSUANT TO SECTION 13 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.)

     

1030 West Georgia Street, Suite 1830, Vancouver, B.C., Canada

 

 V6E 2Y3

(Address of principal executive offices)

 

       (Zip Code)

 

 

(604) 682-9775

 
 

(Registrant’s telephone number, including area code)

 

 

 

N/A

 
  (Former name, former address and former fiscal year, if changed since last report)  

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

UEC

NYSE American

 

Indicate by check mark whether the registrant (1) has 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 ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

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

 

☐ Large accelerated filer ☐ Accelerated filer
   
☒ Non-accelerated filer   ☒ Smaller reporting company
   
☐ Emerging growth company  

              

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 233,248,398 shares of common stock outstanding as of June 7, 2021.

 

 

 
 

 

 

URANIUM ENERGY CORP.

 

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION

3

Item 1.

Financial Statements

3

Item 2.

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

25

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

34

Item 4. 

Controls and Procedures

35

PART II – OTHER INFORMATION

36

Item 1.

Legal Proceedings

36

Item 1A.

Risk Factors

37

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

48

Item 3.

Defaults Upon Senior Securities

49

Item 4.

Mine Safety Disclosures

49

Item 5.

Other Information

49

Item 6.

Exhibits

49

SIGNATURES

50

 

2

 

 

 

PART I FINANCIAL INFORMATION

 

Item 1.         Financial Statements

 

 

3

 

 

 

 

URANIUM ENERGY CORP.

 

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

FOR THE NINE MONTHS ENDED APRIL 30, 2021

 

(Unaudited Expressed in U.S. Dollars)

 

 

 

 

 

 

4

 

 

URANIUM ENERGY CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited  Expressed in U.S. Dollars)

 

   

Note(s)

   

April 30, 2021

   

July 31, 2020

 
                         

CURRENT ASSETS

                       

Cash and cash equivalents

    7     $ 43,930,316     $ 5,147,703  

Term deposits

    3       4,000,000       -  

Inventories

    4       26,405,480       211,662  

Prepaid expenses and deposits

            1,961,448       1,111,152  

Other current assets

            133,265       119,362  

TOTAL CURRENT ASSETS

            76,430,509       6,589,879  
                         

MINERAL RIGHTS AND PROPERTIES

    5       63,734,378       63,655,503  

PROPERTY, PLANT AND EQUIPMENT

    6       7,399,366       7,019,817  

RESTRICTED CASH

    7       2,037,677       1,839,216  

EQUITY-ACCOUNTED INVESTMENT

    8       13,324,548       11,515,327  

OTHER NON-CURRENT ASSETS

            648,895       769,875  

TOTAL ASSETS

          $ 163,575,373     $ 91,389,617  
                         
                         

CURRENT LIABILITIES

                       

Accounts payable and accrued liabilities

          $ 2,104,028     $ 1,858,499  

Due to a related party

    9       -       31,334  

Other current liabilities

    13       87,129       147,569  

Current portion of other loans payable

    11       189,143       -  

Current portion of long-term debt

    10       9,821,573       -  

TOTAL CURRENT LIABILITIES

            12,201,873       2,037,402  
                         

LONG-TERM DEBT

    10       -       19,869,477  

OTHER LOANS PAYABLE

    11       114,737       307,092  

ASSET RETIREMENT OBLIGATIONS

    12       3,887,569       3,734,314  

OTHER NON-CURRENT LIABILITIES

    13       488,691       479,714  

DEFERRED TAX LIABILITIES

            542,206       545,000  

TOTAL LIABILITIES

            17,235,076       26,972,999  
                         

STOCKHOLDERS' EQUITY

                       

Capital stock

                       

Common stock $0.001 par value: 750,000,000 shares authorized, 232,365,705 shares issued and outstanding (July 31, 2020 - 184,635,870)

    14       232,365       184,636  

Additional paid-in capital

            434,908,779       341,059,972  

Share issuance obligation

            103,554       103,554  

Accumulated deficit

            (289,826,057 )     (276,811,300 )

Accumulated other comprehensive income (loss)

            921,656       (120,244 )

TOTAL EQUITY

            146,340,297       64,416,618  

TOTAL LIABILITIES AND EQUITY

          $ 163,575,373     $ 91,389,617  
                         

SUBSEQUENT EVENTS

    4,8,14                  

 

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

 

5

 

 

URANIUM ENERGY CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited  Expressed in U.S. Dollars)

 

           

Three Months Ended April 30,

   

Nine Months Ended April 30,

 
   

Note(s)

   

2021

   

2020

   

2021

   

2020

 

COSTS AND EXPENSES

                                       

Mineral property expenditures

    5     $ 1,478,754     $ 956,564     $ 3,141,772     $ 3,803,338  

General and administrative

    9,14       3,286,201       2,127,887       8,336,593       6,837,851  

Depreciation, amortization and accretion

    5,6,12       98,186       74,060       294,964       232,198  

LOSS FROM OPERATIONS

            (4,863,141 )     (3,158,511 )     (11,773,329 )     (10,873,387 )
                                         

OTHER INCOME (EXPENSES)

                                       

Interest income

            15,950       30,403       30,313       171,925  

Interest expenses and finance costs

    10       (636,178 )     (835,683 )     (2,356,819 )     (2,579,971 )

Income from equity-accounted investment

    8       870,013       684,443       767,321       3,048,219  

Gain on loan extinguishment

    11       7,759       -       286,376       -  

Other income

            16,632       4,475       30,720       21,693  

(Loss) gain on disposition of assets

            (2,133 )     216       (2,133 )     2,016  

OTHER INCOME (EXPENSES)

            272,043       (116,146 )     (1,244,222 )     663,882  

LOSS BEFORE INCOME TAXES

            (4,591,098 )     (3,274,657 )     (13,017,551 )     (10,209,505 )
                                         

DEFERRED TAX BENEFITS

            937       1,013       2,794       4,623  

NET LOSS FOR THE PERIOD

            (4,590,161 )     (3,273,644 )     (13,014,757 )     (10,204,882 )
                                         

OTHER COMPREHENSIVE INCOME (LOSS),

                                       

NET OF INCOME TAXES

    8       493,101       (479,148 )     1,041,900       (528,690 )

TOTAL COMPREHENSIVE LOSS FOR THE PERIOD

          $ (4,097,060 )   $ (3,752,792 )   $ (11,972,857 )   $ (10,733,572 )
                                         

NET LOSS PER SHARE, BASIC AND DILUTED

    15     $ (0.02 )   $ (0.02 )   $ (0.06 )   $ (0.06 )
                                         

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING, BASIC AND DILUTED

            218,822,085       183,896,944       202,304,157       182,637,673  

 

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

 

6

 

 

URANIUM ENERGY CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited  Expressed in U.S. Dollars)

 

           

Nine Months Ended April 30,

 
   

Note(s)

   

2021

   

2020

 

NET CASH PROVIDED BY (USED IN):

                       
                         

OPERATING ACTIVITIES

                       

Net loss for the period

          $ (13,014,757 )   $ (10,204,882 )

Adjustments to reconcile net loss to cash flows in operating activities

                       

Stock-based compensation

    14       3,764,300       2,411,281  

Depreciation, amortization and accretion

    5,6,12       294,964       232,198  

Amortization of long-term debt discount

    10       1,122,096       1,244,032  

Loss (gain) on disposition of assets

            2,133       (2,016 )

Gain on loan extinguishment

    11       (286,376 )     -  

Income from equity-accounted investment

    8       (767,321 )     (3,048,219 )

Deferred tax benefits

            (2,794 )     (4,623 )

Changes in operating assets and liabilities

                       

Inventories

            (26,193,818 )     -  

Prepaid expenses and deposits

            (402,017 )     248,845  

Other current assets

            (13,903 )     130,877  

Accounts payable and accrued liabilities

            256,028       (1,222,616 )

Due to a related party

    9       (31,334 )     (52,505 )
Other liabilities             22,591       (65,028 )

NET CASH USED IN OPERATING ACTIVITIES

            (35,250,208 )     (10,332,656 )
                         

FINANCING ACTIVITIES

                       

Proceeds from share issuances, net of issuance costs

    14       88,551,751       -  

Repayments of long-term debt

    10       (10,000,000 )     -  

Repayments of other loans

    11       (98,203 )     -  

Proceeds from a government loan

            -       28,756  

NET CASH PROVIDED BY FINANCING ACTIVITIES

            78,453,548       28,756  
                         

INVESTING ACTIVITIES

                       

Investment in mineral rights and properties

            (80,000 )     (80,000 )

Purchase of property, plant and equipment

    6       (142,266 )     (83,841 )

Investment in term deposits

            (10,000,000 )     -  

Proceeds from redemption of term deposits

            6,000,000       11,831,671  

Proceeds from disposition of assets

            -       2,800  

NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES

            (4,222,266 )     11,670,630  
                         

NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

            38,981,074       1,366,730  

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD

      6,986,919       7,879,578  

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD

    7     $ 45,967,993     $ 9,246,308  

 

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

 

7

 

 

URANIUM ENERGY CORP.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

(Unaudited  Expressed in U.S. Dollars)

 

                            Accumulated Other        
   

Common Stock

   

Additional Paid-in

   

Share Issuance

   

Accumulated

   

Comprehensive Income

   

Stockholders'

 
   

Shares

   

Amount

    Capital     Obligation     Deficit     (Loss)     Equity  

Balance, July 31, 2020

    184,635,870     $ 184,636     $ 341,059,972     $ 103,554     $ (276,811,300 )   $ (120,244 )   $ 64,416,618  

Common stock

                                                       

Issued for equity financing, net of issuance costs

    12,500,000       12,500       12,455,787       -       -       -       12,468,287  

Issued upon exercise of stock options

    13,532       15       9,294       -       -       -       9,309  

Stock-based compensation

                                                       

Common stock issued under Stock Incentive Plan

    227,390       226       235,043       30,321       -       -       265,590  

Amortization of stock-based compensation

    -       -       1,046,175       -       -       -       1,046,175  

Warrants

                                                       

Issued for equity financing

    -       -       1,518,432       -       -       -       1,518,432  

Issued for equity financing as issuance costs

    -       -       134,937       -       -       -       134,937  

Net loss for the period

    -       -       -       -       (4,963,537 )     -       (4,963,537 )

Other comprehensive income

    -       -       -       -       -       62,761       62,761  

Balance, October 31, 2020

    197,376,792       197,377       356,459,640       133,875       (281,774,837 )     (57,483 )     74,958,572  

Common stock

                                                       

Issued under ATM offering, net of issuance costs

    632,487       632       1,073,705       -       -       -       1,074,337  

Issued as anniversary fees for credit facility

    1,249,039       1,249       1,168,751       -       -       -       1,170,000  

Issued upon exercise of stock options

    559,528       559       211,566       -       -       -       212,125  

Issued upon exercise of warrants

    1,050       1       1,889       -       -       -       1,890  

Stock-based compensation

                                                       

Common stock issued for consulting services

    -       -       -       40,009       -       -       40,009  

Common stock issued under Stock Incentive Plan

    323,660       324       358,359       (30,321 )     -       -       328,362  

Amortization of stock-based compensation

    -       -       836,569       -       -       -       836,569  

Net loss for the period

    -       -       -       -       (3,461,059 )     -       (3,461,059 )

Other comprehensive income

    -       -       -       -       -       486,038       486,038  

Balance, January 31, 2021

    200,142,556       200,142       360,110,479       143,563       (285,235,896 )     428,555       75,646,843  

Common stock

                                                       

Issued under ATM offering, net of issuance costs

    13,036,419       13,036       28,058,564       -       -       -       28,071,600  

Issued under direct offerings, net of issuance costs

    13,636,364       13,636       40,059,512       -       -       -       40,073,148  

Issued upon exercise of stock options

    1,511,547       1,512       1,085,332       -       -       -       1,086,844  

Issued upon exercise of warrants

    3,598,200       3,598       3,395,705       -       -       -       3,399,303  

Stock-based compensation

                                                       

Common stock issued for consulting services

    291,005       291       890,482       (40,009 )     -       -       850,764  

Common stock issued under Stock Incentive Plan

    149,614       150       307,981       -       -       -       308,131  

Amortization of stock-based compensation

    -       -       674,196       -       -       -       674,196  

Warrants

                                                       

Issued for equity financing as issuance costs

    -       -       326,528       -       -       -       326,528  

Net loss for the period

    -       -       -       -       (4,590,161 )     -       (4,590,161 )

Other comprehensive income

    -       -       -       -       -       493,101       493,101  

Balance, April 30, 2021

    232,365,705     $ 232,365     $ 434,908,779     $ 103,554     $ (289,826,057 )   $ 921,656     $ 146,340,297  

 

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

 

8

 

URANIUM ENERGY CORP.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

(Unaudited  Expressed in U.S. Dollars)

 

 

                            Accumulated Other        
   

Common Stock

   

Additional Paid-in

   

Share Issuance

   

Accumulated

   

Comprehensive Income

   

Stockholders'

 
   

Shares

   

Amount

    Capital     Obligation     Deficit     (Loss)     Equity  

Balance, July 31, 2019

    180,896,431     $ 180,896     $ 336,047,595     $ 187,100     $ (262,200,784 )   $ 12,461     $ 74,227,268  

Stock-based compensation

                                                       

Common stock issued for consulting services

    29,167       29       31,763       -       -       -       31,792  

Common stock issued under Stock Incentive Plan

    435,348       436       410,026       (187,100 )     -       -       223,362  

Amortization of stock-based compensation

    -       -       662,232       -       -       -       662,232  

Net loss for the period

    -       -       -       -       (5,042,577 )     -       (5,042,577 )

Other comprehensive loss

    -       -       -       -       -       (9,894 )     (9,894 )

Balance, October 31, 2019

    181,360,946       181,361       337,151,616       -       (267,243,361 )     2,567       70,092,183  

Common stock

                                                       
Issued as anniversary fees for credit facility     1,743,462       1,743       1,398,257       -       -       -       1,400,000  

Stock-based compensation

                                                       

Common stock issued for consulting services

    313,201       313       277,644       -       -       -       277,957  

Common stock issued under Stock Incentive Plan

    256,206       257       234,535       -       -       -       234,792  

Amortization of stock-based compensation

    -       -       485,268       -       -       -       485,268  

Warrants

                                                       

Issued for consulting services

    -       -       22,733       -       -       -       22,733  

Net loss for the period

    -       -       -       -       (1,888,661 )     -       (1,888,661 )

Other comprehensive loss

    -       -       -       -       -       (39,648 )     (39,648 )

Balance, January 31, 2020

    183,673,815       183,674       339,570,053       -       (269,132,022 )     (37,081 )     70,584,624  

Stock-based compensation

                                                       

Common stock issued under Stock Incentive Plan

    376,298       376       246,826       -       -       -       247,202  

Amortization of stock-based compensation

    -       -       381,694       -       -       -       381,694  

Net loss for the period

    -       -       -       -       (3,273,644 )     -       (3,273,644 )

Other comprehensive loss

    -       -       -       -       -       (479,148 )     (479,148 )

Balance, April 30, 2020

    184,050,113     $ 184,050     $ 340,198,573     $ -     $ (272,405,666 )   $ (516,229 )   $ 67,460,728  

 

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

 

9

 

URANIUM ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2021

(Unaudited Expressed in U.S. Dollars)


 

 

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 and titanium mining and related activities, including exploration, pre-extraction, extraction and processing of uranium concentrates and titanium minerals, on projects located in the United States, Canada and the Republic of Paraguay.

 

As at April 30, 2021, we had a working capital of $64.2 million including cash and cash equivalents of $43.9 million, term deposits of $4.0 million and uranium inventory holdings of $26.2 million. During the three months ended and subsequent to April 30, 2021, we entered into agreements to purchase 2.505 million pounds of uranium inventories for a total purchase price of $75.9 million, of which $18.1 million will become due in the next 12 months from the date that our condensed consolidated financial statements are issued (refer to Note 4: Inventories).  In addition, as at April 30, 2021, we had $10.0 million of term debt with a maturity date of January 31, 2022.  However, we believe our existing cash resources and if necessary, cash generated from the sale of the Company’s current assets will provide sufficient funds to fulfill our uranium inventory purchase commitments, repay the $10.0 million principal debt amount when it becomes due, and carry out our planned operations for 12 months from the date that our condensed consolidated financial statements are issued.  Our continuation as a going concern for a period beyond those 12 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. 

 

Historically, we have been reliant primarily on equity financings from the sale of our common stock and on debt financing in order to fund our operations, and this reliance is expected to continue for the foreseeable future. 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:

SUMMARY OF SIGNIFICANT POLICIES

 

Basis of Presentation

 

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with United States (“U.S.”) 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 year ended July 31, 2020 (“Fiscal 2020”). 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 nine months ended April 30, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending July 31, 2021 (“Fiscal 2021”).

 

Exploration Stage

 

We have established the existence of mineralized materials for certain uranium projects, including for 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 (“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 the Palangana Mine. As a result, and despite the fact that we commenced extraction of mineralized materials at the 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 that proven or probable reserves have been established.

 

10

 

URANIUM ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2021

(Unaudited Expressed in U.S. Dollars)


 

Since we commenced the 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.

 

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 drilling 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 us reporting larger losses than if we had been in the Production Stage due to the expensing, rather than capitalizing, of expenditures relating to ongoing mill and mine development activities.  Additionally, there would be no corresponding amortization allocated to future reporting periods of our Company since those costs would have been expensed previously, resulting in both lower produced 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.

 

 

NOTE 3:

TERM DEPOSITS

 

As of April 30, 2021, term deposits totaled $4,000,000 (July 31, 2020: $Nil), which are held at a major financial institution with an initial term of four to six months bearing interest rate at 0.25%.

 

 

NOTE 4:

INVENTORIES

 

During the three months ended April 30, 2021, we entered into agreements to purchase 2,305,000 pounds of uranium inventories, of which 900,000 pounds of uranium inventory were received.

 

As at April 30, 2021, costs of inventories consisted of the following:

 

   

April 30, 2021

   

July 31, 2020

 

Supplies and work-in-progress

  $ 33,781     $ 33,781  

Uranium concentrates from production

    177,881       177,881  

Purchased uranium inventories

    26,193,818       -  
    $ 26,405,480     $ 211,662  

 

As of April 30, 2021, our uranium inventory purchase commitments for the next two fiscal years are as the follows:

 

   

Purchase Commitments
in Pounds

   

Total Purchase Price

 

Fiscal 2021

    100,000     $ 2,745,000  

Fiscal 2022

    600,000       18,065,000  

Fiscal 2023

    705,000       22,674,000  

Total

    1,405,000     $ 43,484,000  

 

11

 

URANIUM ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2021

(Unaudited Expressed in U.S. Dollars)


 

Subsequent to April 30, 2021, we received 100,000 pounds of uranium inventories at a purchase price of $2,745,000, and entered into agreements to purchase 200,000 pounds of uranium inventories.

 

 

NOTE 5:

MINERAL RIGHTS AND PROPERTIES

 

Mineral Rights

 

As of April 30, 2021, we had mineral rights in the States of Arizona, Colorado, New Mexico, Wyoming and Texas, in Canada 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 and titanium.  As of April 30, 2021, annual maintenance payments of approximately $2.7 million will be required to maintain these mineral rights.

 

Mineral rights and property acquisition costs consist of the following:

 

   

April 30, 2021

   

July 31, 2020

 

Mineral Rights and Properties

               

Palangana Mine

  $ 6,027,784     $ 6,027,784  

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  

Anderson Project

    3,470,373       3,470,373  

Workman Creek Project

    849,854       799,854  

Los Cuatros Project

    257,250       257,250  

Slick Rock Project

    60,000       30,000  

Reno Creek Project

    31,527,870       31,527,870  

Diabase Project

    546,938       546,938  

Yuty Project

    11,947,144       11,947,144  

Oviedo Project

    1,133,412       1,133,412  

Alto Paraná Titanium Project

    1,433,030       1,433,030  

Other Property Acquisitions

    91,080       91,080  
      67,661,387       67,581,387  

Accumulated Depletion

    (3,929,884 )     (3,929,884 )
      63,731,503       63,651,503  
                 

Databases and Land Use Agreements

    2,458,808       2,458,808  

Accumulated Amortization

    (2,455,933 )     (2,454,808 )
      2,875       4,000  
    $ 63,734,378     $ 63,655,503  

 

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 mineral 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 three and nine months ended April 30, 2021 and 2020, we continued with reduced operations at the Palangana Mine to capture residual uranium only. As a result, no depletion for the Palangana Mine was recorded on our condensed consolidated financial statements for the three and nine months ended April 30, 2021 and 2020.

 

12

 

URANIUM ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2021

(Unaudited Expressed in U.S. Dollars)


 

Mineral property expenditures incurred on our projects were as follows:

 

   

Three Months Ended April 30,

   

Nine Months Ended April 30,

 
   

2021

   

2020

   

2021

   

2020

 

Mineral Property Expenditures

                               

Palangana Mine

  $ 216,791     $ 260,438     $ 648,459     $ 1,109,164  

Goliad Project

    51,437       54,486       168,493       151,293  

Burke Hollow Project

    626,695       154,672       942,311       1,024,345  

Longhorn Project

    2,289       2,289       6,866       14,735  

Salvo Project

    7,672       7,843       23,537       21,813  

Anderson Project

    19,469       19,519       58,360       49,004  

Workman Creek Project

    8,168       8,168       24,533       24,533  

Slick Rock Project

    12,994       13,123       39,123       39,527  

Reno Creek Project

    215,725       159,088       485,791       451,312  

Yuty Project

    7,129       27,664       21,457       58,578  

Oviedo Project

    109,676       69,446       256,091       298,505  

Alto Paraná Titanium Project

    88,796       36,323       134,710       202,656  

Other Mineral Property Expenditures

    111,913       143,505       332,041       357,873  
    $ 1,478,754     $ 956,564     $ 3,141,772     $ 3,803,338  

 

 

NOTE 6:

PROPERTY, PLANT AND EQUIPMENT

 

Property, plant and equipment consist of the following:

 

 

   

April 30, 2021

   

July 31, 2020

 
   

Cost

   

Accumulated
Depreciation

   

Net Book
Value

   

Cost

   

Accumulated
Depreciation

   

Net Book
Value

 

Hobson Processing Facility

  $ 6,642,835     $ (831,789 )   $ 5,811,046     $ 6,642,835     $ (773,933 )   $ 5,868,902  

Mining Equipment

    2,355,379       (2,314,364 )     41,015       2,393,579       (2,342,518 )     51,061  

Logging Equipment and Vehicles

    1,923,983       (1,761,956 )     162,027       1,924,969       (1,736,806 )     188,163  

Computer Equipment

    333,318       (285,517 )     47,801       550,243       (486,467 )     63,776  

Furniture and Fixtures

    184,941       (171,462 )     13,479       170,701       (169,946 )     755  

Land and Buildings

    1,377,601       (53,603 )     1,323,998       889,606       (42,446 )     847,160  
    $ 12,818,057     $ (5,418,691 )   $ 7,399,366     $ 12,571,933     $ (5,552,116 )   $ 7,019,817  

 

During the nine months ended April 30, 2021, we purchased 100 acres of land (the “Goliad Land Purchase”) within our Goliad Project located in Goliad County, Texas, for total consideration of $487,995, of which $380,000 was financed with a promissory note. Refer to Note 11: Other Loans Payable herein.

 

 

NOTE 7:

RESTRICTED CASH

 

Restricted cash includes cash and cash equivalents and money market funds pledged as collateral for various bonds posted in favor of applicable state regulatory agencies in Arizona, Texas and Wyoming, and for estimated reclamation costs associated with our Anderson Project, Palangana Mine, Hobson Processing Facility and Reno Creek Project.  Restricted cash will be released upon the completion of reclamation of a mineral property or the restructuring of a surety and collateral arrangement.

 

13

 

URANIUM ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2021

(Unaudited Expressed in U.S. Dollars)


 

During the three months ended April 30, 2021, we paid an additional $198,377 as surety bond collateral for inflation adjustments upon renewal of various surety bonds relating to our Palangana Mine and Hobson Processing Facility.

 

   

April 30, 2021

   

July 31, 2020

 

Restricted cash, beginning of period

  $ 1,839,216     $ 1,821,392  

Additional surety bond collateral

    198,377       -  

Interest received

    84       17,824  

Restricted cash, end of period

  $ 2,037,677     $ 1,839,216  

 

Cash, cash equivalents and restricted cash are included in the following accounts as of April 30, 2021 and 2020:

 

   

April 30, 2021

   

April 30, 2020

 

Cash and cash equivalents

  $ 43,930,316     $ 7,407,189  

Restricted cash

    2,037,677       1,839,119  

Total cash, cash equivalents and restricted cash

  $ 45,967,993     $ 9,246,308  

 

 

NOTE 8:

EQUITY-ACCOUNTED INVESTMENT

 

As of April 30, 2021, we owned 14,000,000 shares of Uranium Royalty Corp. (“URC”), representing a 18.8% (July 31, 2020: 19.5%) interest in URC. In addition, two of our officers are members of URC’s board of directors, and one of which is also an executive officer of URC. As a consequence, our ability to exercise significant influence over URC’s operating and financing policies continued to exist during the three and nine months ended April 30, 2021. URC is a public company listed on the TSX Venture Exchange with the trading symbol “URC.V” and on NASDAQ with the trading symbol “UROY”.

 

For the three and nine months ended April 30, 2021 and 2020, income (loss) from investment in URC consisted of the following:

 

   

Three Months Ended April 30,

   

Nine Months Ended April 30,

 
   

2021

   

2020

   

2021

   

2020

 

Share of income (loss) from URC

  $ 456,132     $ 684,443     $ 353,440     $ (8,437 )

Gain on ownership interest dilution

    413,881       -       413,881       3,056,656  

Total

  $ 870,013     $ 684,443     $ 767,321     $ 3,048,219  

 

For the three and nine months ended April 30, 2021 and 2020, we recorded a gain on ownership interest dilution as a result of URC issuing more shares from the exercises of URC’s share purchase warrants.

 

For the three and nine months ended April 30, 2021, we recorded translation gains of $493,101 and $1,041,900, respectively, and for three and nine months ended April 30, 2020, we recorded translation losses of $479,148 and $528,690, respectively, as a result of translating the ending balance of the investment in URC denominated in Canadian Dollars to U.S. Dollars using the period end exchange rate, which was included in other comprehensive income (loss) in our condensed consolidated statements of operations and comprehensive loss. 

 

During the nine months ended April 30, 2021, the change in carrying value of our investment in URC is summarized as follows:

 

Balance, July 31, 2020

  $ 11,515,327  

Income from investment in URC

    353,440  

Gain on ownership interest dilution

    413,881  

Translation gain

    1,041,900  

Balance, April 30, 2021

  $ 13,324,548  

 

As of April 30, 2021, the fair value of our investment in URC was approximately $49.3 million.

 

14

 

URANIUM ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2021

(Unaudited Expressed in U.S. Dollars)


 

Subsequent to April 30, 2021, on May 20, 2021, we participated in an equity financing and acquired an additional 1,000,000 common shares of URC at a price of CAD$4.10 per share for total consideration of $3,396,852.

 

 

NOTE 9:

RELATED PARTY TRANSACTIONS

 

During the three and nine months ended April 30, 2021, we incurred $17,900 and $52,041 (three and nine months ended April 30, 2020: $36,849 and $105,339), respectively, in general and administrative costs paid to Blender Media Inc. (“Blender”), a company controlled by Arash Adnani, a direct family member of our President and Chief Executive Officer, for various services, including information technology, financial subscriptions, corporate branding, media, website design, maintenance and hosting, provided by Blender to the Company.

 

As of April 30, 2021, the amount owing to Blender was $nil (July 31, 2020: $31,334).

 

 

NOTE 10:

LONG-TERM DEBT

 

As of April 30, 2021, our long-term debt consisted of the following:

 

   

April 30, 2021

   

July 31, 2020

 

Principal amount

  $ 10,000,000     $ 20,000,000  

Unamortized discount and accrued fees

    (178,427 )     (130,523 )

Long-term debt, net of unamortized discount

  $ 9,821,573     $ 19,869,477  

Current portion

    9,821,573       -  

Long-term debt, net of current portion

  $ -     $ 19,869,477  

 

For the three and nine months ended April 30, 2021, amortization of debt discount totaled $296,401 and $1,122,096 (three and nine months ended April 30, 2020: $399,231 and $1,244,032), respectively, which was recorded as interest expense and included in our condensed consolidated statements of operations and comprehensive loss. During the three and nine months ended April 30, 2021, we paid $274,222 and $1,051,111 (three and nine months ended April 30, 2020: $400,000 and $1,217,778), respectively, in cash to our lenders (the “Lenders”) for interest on the long-term debt.

 

During the nine months ended April 30, 2021, we made voluntary principal payments totaling $10,000,000 to certain Lenders, which decreased the principal balance outstanding to $10,000,000 under our credit facility (the “Credit Facility”).

 

During the nine months ended April 30, 2021, and pursuant to the terms of our Third Amended and Restated Credit Agreement with our Lenders, we issued an aggregate of 1,249,039 shares with a fair value of $1,170,000, representing 6.5% of the $18,000,000 principal balance outstanding at the time, as payment of anniversary fees to our Lenders.

 

The Company’s Credit Facility with our remaining Lender has a maturity date on January 31, 2022, with an interest rate of 8% per annum and an underlying effective interest rate of 18.10%.

 

As of April 30, 2021, our working capital ratio, excluding the current portion of the long-term debt, was 32:1, which was in compliance with the debt covenant requirement under our Credit Facility being a working capital ratio, excluding any current portion of the long-term debt, of not less than 1:1.

 

The aggregate yearly maturities of long-term debt based on principal amounts outstanding as at April 30, 2021 are as follows:

 

Fiscal 2021

  $ -  

Fiscal 2022

    10,000,000  

Total

  $ 10,000,000  

 

15

 

URANIUM ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2021

(Unaudited Expressed in U.S. Dollars)


 

 

NOTE 11:

OTHER LOANS PAYABLE

 

During Fiscal 2020, we applied for a Paycheck Protection Program loan and received the proceeds of $277,250 (the “PPP Loan”). During the nine months ended April 30, 2021, we received a Notice of Paycheck Protection Program Forgiveness Payment from the Small Business Administration regarding the approval of our application for forgiveness of our PPP Loan of $277,250 and accrued interest. As a result, we recognized a gain on extinguishment of the PPP Loan of $278,617 during the nine months ended April 30, 2021.

 

During Fiscal 2020, our Canadian subsidiary received a loan of $29,842 (CAD$40,000) under the Canadian Emergency Business Account Program (“CEBA”), which provides financial relief for Canadian small businesses during the COVID-19 pandemic (the “CEBA Loan”).  During the three months ended April 30, 2021, we repaid CAD$30,000 of the CEBA Loan, 75% of the total CEBA Loan principal before its initial term date on December 31, 2022 and received a CEBA Loan Closure Confirmation for forgiveness of CAD$10,000. As a result, we recognized a gain on extinguishment of the CEBA Loan of $7,759 during the three months ended April 30, 2021.

 

During the nine months ended April 30, 2021, in connection with the Goliad Land Purchase, we issued a promissory note with a principal amount of $380,000 to a landowner (the “Promissory Note”). The Promissory Note carries an interest rate of 5% per annum with principal and interest payable in 24 monthly installments with a maturity date of November 1, 2022. We may prepay the Promissory Note in any amount at any time before the maturity date without penalty.

 

During the three and nine months ended April 30, 2021, we paid $4,124 and $7,235, respectively, in cash for interest on the Promissory Note.

 

As of April 30, 2021, other loans payable consisted of the following:

 

   

April 30, 2021

   

July 31, 2020

 

Government loan payable

  $ -     $ 307,092  

Promissory note payable

    303,880       -  
    $ 303,880     $ 307,092  
                 

Current portion

               

Government loan payable

  $ -     $ -  

Promissory note payable

    189,143       -  
    $ 189,143     $ -  

Non-current portion

               

Government loan payable

  $ -     $ 307,092  

Promissory note payable

    114,737       -  
    $ 114,737     $ 307,092  

 

 

NOTE 12:

ASSET RETIREMENT OBLIGATIONS

 

Asset retirement obligations (“ARO”s) relate to future remediation and decommissioning activities at our Palangana Mine, Hobson Processing Facility, Reno Creek Project and Alto Paraná Titanium Project.

 

Balance, July 31, 2020

  $ 3,734,314  

Accretion

    153,255  

Balance, April 30, 2021

  $ 3,887,569  

 

16

 

URANIUM ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2021

(Unaudited Expressed in U.S. Dollars)


 

The estimated amounts and timing of cash flows and assumptions used for ARO estimates are as follows:

 

   

April 30, 2021

   

July 31, 2020

 

Undiscounted amount of estimated cash flows

  $ 8,221,018     $ 8,221,018  
                         

Payable in years

    9 to 21       9 to 21  

Inflation rate

     1.56% to 2.17%       1.56% to 2.17%  

Discount rate

    5.50% to 5.96%       5.50% to 5.96%  

 

The undiscounted amounts of estimated cash flows for the next five fiscal years and beyond are as follows:

 

 

       

Fiscal 2022

  $ -  

Fiscal 2023

    -  

Fiscal 2024

    -  

Fiscal 2025

    -  

Fiscal 2026

    -  

Remaining balance

    8,221,018  
    $ 8,221,018  

 

 

NOTE 13:

LEASE LIABILITIES

 

The Company primarily has operating leases for corporate offices and a processing facility with a remaining term of 0.3 to 18.1 years. The lease for the processing facility has an evergreen option that can continue for so long as it is in operation.

 

During the three and nine months ended April 30, 2021 and 2020, total lease expenses include the following components:

 

   

Three Months Ended April 30,

   

Nine Months Ended April 30,

 
   

2021

   

2020

   

2021

   

2020

 

Operating leases

  $ 56,195     $ 63,073     $ 163,028     $ 182,012  

Short-term leases

    365,027       23,289       407,982       420,318  

Total Lease Expenses

  $ 421,222     $ 86,362     $ 571,010     $ 602,330  

 

As at April 30, 2021, the weighted average remaining lease term was 16.1 years and the weighted average discount rate was 4.74%.

 

During the nine months ended April 30, 2021, cash paid for amounts included in the measurement of operating lease liabilities totaled $170,276.

 

17

 

URANIUM ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2021

(Unaudited Expressed in U.S. Dollars)


 

Minimum future lease payments under operating leases with terms longer than one year are as follows:

 

Fiscal 2021

  $ 68,956  

Fiscal 2022

    249,829  

Fiscal 2023

    20,000  

Fiscal 2024

    20,000  

Fiscal 2025

    20,000  

Thereafter

    300,000  

Total lease payments

    678,785  

Less: imputed interest

    (146,670 )

Present value of lease liabilities

  $ 532,115  
         

Current portion of lease liabilities

  $ 78,050  

Non-current portion of lease liabilities

  $ 454,065  

 

Current lease liabilities are included in Other Current Liabilities, and non-current lease liabilities are included in Other Non-Current Liabilities in our consolidated balance sheets.

 

 

NOTE 14:

CAPITAL STOCK

 

Equity Financing

 

On September 23, 2020, we completed a public offering of 12,500,000 units at a price of $1.20 per unit for gross proceeds of $15,000,000 (the “September 2020 Offering”).  Each unit consisted of one share of our Company and one-half of one share purchase warrant, and each whole warrant entitles its holder to acquire one share of our Company at an exercise price of $1.80 per share and expiring 24 months from the date of issuance.  In connection with the September 2020 Offering, we also issued compensation share purchase warrants to agents as part of share issuance costs to purchase 583,333 shares of our Company exercisable at an exercise price of $1.80 per share and expiring 24 months from the date of issuance.

 

The shares were valued at the Company’s closing price of $0.96 per share on September 23, 2020.  The share purchase warrants were valued using the Black-Scholes option pricing model with the following assumptions.

 

Expected Risk Free Interest Rate

    0.14 %

Expected Annual Volatility

    76.81 %

Expected Contractual Life in Years

    2.00  

Expected Annual Dividend Yield

    0.00 %

 

18

 

URANIUM ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2021

(Unaudited Expressed in U.S. Dollars)


 

The net proceeds from the September 2020 Offering were allocated to the fair values of the shares and share purchase warrants as presented below.

 

Fair Value of Shares

  $ 12,000,000  

Fair Value of Share Purchase Warrants

    1,445,756  

Total Fair Value Before Allocation to Net Proceeds

  $ 13,445,756  
         

Gross Proceeds

  $ 15,000,000  

Share Issuance Costs - Cash

    (878,344 )

Net Cash Proceeds Received

  $ 14,121,656  
         

Relative Fair Value Allocation to:

       

Shares

  $ 12,603,224  

Share Purchase Warrants

    1,518,432  
    $ 14,121,656  

 

During Fiscal 2019, we entered into an At The Market Offering Agreement (the “ATM Offering Agreement”) with H.C. Wainwright & Co., LLC and certain co-managers as set forth in the ATM Offering Agreement (collectively, the “ATM Managers”), as amended in Fiscal 2020, under which the Company may, from time to time, sell shares of its common stock having an aggregate offering price of up to $30 million through the ATM Managers (collectively, the “ATM Offering”).

 

During the nine months ended April 30, 2021, we issued 13,668,906 shares of the Company’s common stock at a weighted average price of $2.19 per share under the ATM Offering for net cash proceeds of $29,320,949.

 

On March 19, 2021, we completed a registered direct offering of 10,000,000 shares of the Company’s common stock at a price of $3.05 per share for net proceeds of $29,083,710 (the “March 2021 Offering”).

 

On April 8, 2021, we completed a registered direct offering of 3,636,364 shares of the Company’s common stock at a price of $3.30 per share for net proceeds of $11,315,966 (the “April 2021 Offering”). In connection with the April 2021 Offering, we also issued, on a private placement basis, 181,818 common stock purchase warrants (each, an “Agent Warrant”) to the agent as partial compensation, and each Agent Warrant entitles its holder to acquire one share of common stock at an exercise price of $4.125 per share and expiring five years from the date of issuance.

 

The Agent Warrants were valued at $1.80 per share using the Black-Scholes option pricing model with the following assumptions.

 

Expected Risk Free Interest Rate

    0.85 %

Expected Annual Volatility

    72.17 %

Expected Contractual Life in Years

    5.00  

Expected Annual Dividend Yield

    0.00 %

 

19

 

URANIUM ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2021

(Unaudited Expressed in U.S. Dollars)


 

Share Purchase Warrants

 

A continuity schedule of outstanding share purchase warrants for the nine months ended April 30, 2021, is as follows:

 

   

Number of
Warrants

   

Weighted Average
Exercise Price

 

Balance, July 31, 2020

    7,721,981     $ 2.03  

Issued in connection with September 2020 Offering

    6,833,333       1.80  

Balance, October 31, 2020

    14,555,314       1.92  

Exercised

    (1,050 )     1.80  

Expired

    (300,000 )     1.38  

Balance, January 31, 2021

    14,254,264       1.93  

Issued in connection with April 2021 Offering

    181,818       4.13  

Exercised

    (8,145,840 )     1.99  

Expired

    (809,304 )     2.05  

Balance, April 30, 2021

    5,480,938     $ 1.90  

 

During the three and nine months ended April 30, 2021, we received cash proceeds of $3,399,303 and $3,401,193, and issued 3,598,200 and 3,599,250 shares, respectively, from the exercise of 8,145,840 and 8,146,890 share purchase warrants, respectively.

 

A summary of share purchase warrants outstanding and exercisable as of April 30, 2021, is as follows:

 

Weighted Average
Exercise Price

   

Number of Warrants
Outstanding

   

Weighted Average

Remaining Contractual
Life (Years)

 

Expiry Date

$ 2.30       308,728       1.28  

August 9, 2022

  1.64       25,000       2.06  

May 21, 2023

  1.80       4,965,392       1.40  

September 23, 2022

  4.13       181,818       4.93  

April 5, 2026

$ 1.90       5,480,938       1.51    

 

Stock Options

 

As of April 30, 2021, we had one stock option plan, our 2020 Stock Incentive Plan, which superseded and replaced our 2019 Stock Incentive Plan.

 

A continuity schedule of outstanding stock options for the underlying shares for the nine months ended April 30, 2021, is as follows:

 

   

Number of Stock

Options

   

Weighted Average

Exercise Price

 

Balance, July 31, 2020

    15,514,750     $ 1.13  

Exercised

    (28,500 )     0.93  

Expired

    (1,315,000 )     1.43  

Balance, October 31, 2020

    14,171,250       1.10  

Exercised

    (1,100,782 )     1.11  

Balance, January 31, 2021

    13,070,468       1.10  

Granted

    42,490       2.26  

Exercised

    (1,942,848 )     1.11  

Balance, April 30, 2021

    11,170,110     $ 1.11  

 

20

 

URANIUM ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2021

(Unaudited Expressed in U.S. Dollars)


 

During the three and nine months ended April 30, 2021 and 2020, the total number of stock options exercised, the number of shares issued upon exercise of those options and the cash received from such exercises are as follows:

 

   

Three Months Ended April 30,

   

Nine Months Ended April 30,

 
   

2021

   

2020

   

2021

   

2020

 

Number of Options Exercised on Forfeiture Basis

    988,909       -       1,930,691       -  

Number of Options Exercised on Cash Basis

    953,939       -       1,141,439       -  

Total Number of Options Exercised

    1,942,848       -       3,072,130       -  
                                 

Number of Shares Issued on Cash Exercise

    953,939       -       1,141,439       -  

Number of Shares Issued on Forfeiture Basis

    557,608       -       943,168       -  

Total Number of Shares Issued Upon Exercise of Options

    1,511,547       -       2,084,607       -  
                                 

Cash Received from Exercise of Stock Options

  $ 1,086,844     $ -     $ 1,308,278     $ -  

Total Intrinsic Value of Options Exercised

  $ 3,026,602     $ -     $ 3,855,217     $ -  

 

Subsequent to April 30, 2021, we received further cash proceeds of $380,776 and issued 704,423 shares of the Company upon the exercise of 888,251 stock options.

 

A continuity schedule of outstanding unvested stock options as of April 30, 2021, and the changes during the period, is as follows:

 

   

Number of Unvested

Stock Options

   

Weighted Average

Grant-Date Fair Value

 

Balance, July 31, 2020

    6,797,471     $ 0.46  

Vested

    (718,755 )     0.46  

Balance, October 31, 2020

    6,078,716       0.46  

Vested

    (1,042,559 )     0.48  

Balance, January 31, 2021

    5,036,157       0.45  

Granted

    42,490       1.29  

Vested

    (229,229 )     0.46  

Balance, April 30, 2021

    4,849,418     $ 0.46  

 

As of April 30, 2021, unrecognized stock-based compensation expense related to the unvested portion of stock options totaled $922,396 to be recognized over the next 1.06 years.

 

As of April 30, 2021, the aggregate intrinsic value under the provisions of ASC 718 of all outstanding stock options was $20,034,091 (vested: $10,709,934 and unvested: $9,324,157).

 

A summary of stock options outstanding and exercisable as of April 30, 2021, is as follows:

 

       

 

 

Options Outstanding

   

Options Exercisable

 

Range of Exercise

Prices

 

Outstanding at

April 30, 2021

   

Weighted

Average

Exercise Price

   

Weighted Average

Remaining

Contractual Term

(Years)

   

Exercisable at
April 30, 2021

   

Weighted

Average Exercise

Price

   

Weighted Average

Remaining

Contractual Term

(Years)

 
$ 0.80 to $

0.99

    6,577,995     $ 0.92       7.73       3,108,567     $ 0.92       6.28  
$ 1.00 to $

1.49

    2,752,625       1.17       5.13       1,415,125       1.25       1.33  
$ 1.50 to $

2.81

    1,839,490       1.68       2.21       1,797,000       1.66       2.03  
              11,170,110     $ 1.11       6.18       6,320,692     $ 1.20       3.96  

 

21

 

URANIUM ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2021

(Unaudited Expressed in U.S. Dollars)


 

Restricted Stock Units

 

A summary of outstanding and unvested restricted stock units (“RSU”s) as of April 30, 2021, is as follows:

 

Grant Date

 

Number of Restricted

Stock Units

   

Grant Date

Fair Value

   

Remaining Life

(Years)

   

Aggregate Intrinsic

Value

 

July 30, 2019

    310,000     $ 0.94       1.25     $ 899,000  

July 16, 2020

    1,305,000       0.91       2.21       3,784,500  
      1,615,000     $ 0.92       2.03     $ 4,683,500  

 

During the three and nine months ended April 30, 2021, stock-based compensation relating to RSUs totaled $262,970 and $806,638 (three and nine months ended April 30, 2020: $66,928 and $200,784), respectively. As of April 30, 2021, outstanding unvested RSUs totaled 1,615,000 (July 31, 2020: 1,615,000), and unrecognized compensation costs relating to unvested RSUs totaled $508,861, which is expected to be recognized over a period of approximately 1.14 years.

 

Performance Based Restricted Stock Units

 

During the three and nine months ended April 30, 2021, stock-based compensation relating to target performance based restricted stock units (“PRSU”s) totaled $37,544 and $112,632 (three and nine months ended April 30, 2020: $68,165 and $204,495), respectively. As of April 30, 2021, outstanding unvested PRSUs totaled 333,750 (July 31, 2020: 333,750), and unrecognized compensation costs relating to unvested PRSUs totaled $126,720, which is expected to be recognized over a period of approximately 0.72 years.

 

Stock-Based Compensation

 

A summary of stock-based compensation expense is as follows:

 

   

Three Months Ended April 30,

   

Nine Months Ended April 30,

 
   

2021

   

2020

   

2021

   

2020

 

Stock-Based Compensation for Consultants

                               

Common stock issued to consultants

  $ 229,047     $ 131,516     $ 468,364     $ 365,274  

Amortization of stock option expenses

    54,593       57,130       224,295       157,655  
      283,640       188,646       692,659       522,929  

Stock-Based Compensation for Management

                               

Common stock issued to management

    -       24,308       -       93,115  

Amortization of stock option expenses

    154,531       100,317       614,579       506,422  

Amortization of RSU & PRSU expenses

    300,514       135,093       919,270       405,279  
      455,045       259,718       1,533,849       1,004,816  

Stock-Based Compensation for Employees

                               

Common stock issued to employees

    264,484       158,127       738,996       416,152  

Amortization of stock option expenses

    164,558       89,154       798,796       482,573  
      429,042       247,281       1,537,792       898,725  
                                 

Settlement of share issuance obligation

    -       -       -       (15,189 )
    $ 1,167,727     $ 695,645     $ 3,764,300     $ 2,411,281  

 

22

 

URANIUM ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2021

(Unaudited Expressed in U.S. Dollars)


 

 

NOTE 15:

LOSS PER SHARE

 

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 April 30,

   

Nine Months Ended April 30,

 
   

2021

   

2020

   

2021

   

2020

 

Numerator

                               

Net Loss for the Period

  $ (4,590,161 )   $ (3,273,644 )   $ (13,014,757 )   $ (10,204,882 )
                                 

Denominator

                               

Basic Weighted Average Number of Shares

    218,822,085       183,896,944       202,304,157       182,637,673  

Dilutive Stock Options, RSUs, PRSUs and Warrants

    -       -       -       -  

Diluted Weighted Average Number of Shares

    218,822,085       183,896,944       202,304,157       182,637,673  
                                 

Net Loss per Share, Basic and Diluted

  $ (0.02 )   $ (0.02 )   $ (0.06 )   $ (0.06 )

 

For the three and nine months ended April 30, 2021 and 2020, all outstanding stock options, RSUs, PRSUs and share purchase warrants were excluded from the calculation of the diluted loss per share since their effects would be anti-dilutive.

 

 

NOTE 16:

SEGMENTED INFORMATION

 

We currently operate in one reportable segment which is focused on uranium mining and related activities, including exploration, pre-extraction, extraction and processing of uranium concentrates.

 

As of April 30, 2021, our long-term assets located in the United States totaled $58,294,295 or 67% of our total long-term assets of $87,144,864.

 

The table below provides a breakdown of the long-term assets by geographic segments:

 

   

April 30, 2021

 

 

 

United States

   

 

   

 

   

 

 
Balance Sheet Items  

Texas

   

Arizona

   

Wyoming

   

Other States

    Canada     Paraguay     Total  

Mineral Rights and Properties

  $ 12,421,536     $ 4,577,477     $ 31,527,870     $ 146,971     $ 546,938     $ 14,513,586     $ 63,734,378  

Property, Plant and Equipment

    6,682,983       -       316,482       -       37,768       362,133       7,399,366  

Restricted Cash

    1,948,704       15,000       73,973       -       -       -       2,037,677  

Equity-Accounted Investment

    -       -       -       -       13,324,548       -       13,324,548  

Other Non-Current Assets

    565,799       -       17,500       -       65,596       -       648,895  

Total Long-Term Assets

  $ 21,619,022     $ 4,592,477     $ 31,935,825     $ 146,971     $ 13,974,850     $ 14,875,719     $ 87,144,864  

 

   

July 31, 2020

 

 

 

United States

   

 

   

 

   

 

 
Balance Sheet Items  

Texas

   

Arizona

   

Wyoming

   

Other States

    Canada     Paraguay     Total  

Mineral Rights and Properties

  $ 12,422,661     $ 4,527,477     $ 31,527,870     $ 116,971     $ 546,938     $ 14,513,586     $ 63,655,503  

Property, Plant and Equipment

    6,299,786       -       327,639       -       29,677       362,715       7,019,817  

Restricted Cash

    1,750,243       15,000       73,973       -       -       -       1,839,216  

Equity-Accounted Investment

    -       -       -       -       11,515,327       -       11,515,327  

Other Non-Current Assets

    703,312       -       22,000       -       44,563       -       769,875  

Total Long-Term Assets

  $ 21,176,002     $ 4,542,477     $ 31,951,482     $ 116,971     $ 12,136,505     $ 14,876,301     $ 84,799,738  

 

23

 

URANIUM ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2021

(Unaudited Expressed in U.S. Dollars)


 

The tables below provide a breakdown of our operating results by geographic segments for the three and nine months ended April 30, 2021 and 2020. All intercompany transactions have been eliminated.

 

   

Three Months ended April 30, 2021

 

Statement of Operations

 

United States

   

 

   

 

   

 

 
   

Texas

   

Arizona

   

Wyoming

   

Other States

    Canada     Paraguay     Total  

Costs and Expenses:

                                                       

Mineral property expenditures

  $ 1,010,005     $ 30,996     $ 215,725     $ 16,335     $ 92     $ 205,601     $ 1,478,754  

General and administrative

    2,601,113       3,720       26,513       230       645,028       9,597       3,286,201  

Depreciation, amortization and accretion

    89,415       -       3,719       -       3,858       1,194       98,186  

Loss from operations

    (3,700,533 )     (34,716 )     (245,957 )     (16,565 )     (648,978 )     (216,392 )     (4,863,141 )
                                                         

Other income (expenses)

    (613,705 )     (4,611 )     (2,770 )     -       893,129       -       272,043  

Loss before income taxes

  $ (4,314,238 )   $ (39,327 )   $ (248,727 )   $ (16,565 )   $ 244,151     $ (216,392 )   $ (4,591,098 )

 

   

Three Months Ended April 30, 2020

 

Statement of Operations

 

United States

   

 

   

 

   

 

 
   

Texas

   

Arizona

   

Wyoming

   

Other States

    Canada     Paraguay       Total  

Costs and Expenses:

                                                       

Mineral property expenditures

  $ 619,892     $ 27,686     $ 159,087     $ 16,462     $ -     $ 133,437     $ 956,564  

General and administrative

    1,513,764       3,389       22,358       345       587,015       1,016       2,127,887  

Depreciation, amortization and accretion

    65,809       -       3,720       249       2,497       1,785       74,060  

Loss from operations

    (2,199,465 )     (31,075 )     (185,165 )     (17,056 )     (589,512 )     (136,238 )     (3,158,511 )
                                                         

Other income (expenses)

    (826,432 )     (4,663 )     995       -       713,467       487       (116,146 )

Loss before income taxes

  $ (3,025,897 )   $ (35,738 )   $ (184,170 )   $ (17,056 )   $ 123,955     $ (135,751 )   $ (3,274,657 )

 

   

Nine Months Ended April 30, 2021

 

Statement of Operations

 

United States

   

 

   

 

   

 

 
   

Texas

   

Arizona

   

Wyoming

   

Other States

    Canada     Paraguay     Total  

Costs and Expenses:

                                                       

Mineral property expenditures

  $ 2,089,848     $ 93,472     $ 485,791     $ 52,740     $ 7,663     $ 412,258     $ 3,141,772  

General and administrative

    6,664,190       11,545       64,232       948       1,563,657       32,021       8,336,593  

Depreciation, amortization and accretion

    268,159       -       11,157       -       13,138       2,510       294,964  

Loss from operations

    (9,022,197 )     (105,017 )     (561,180 )     (53,688 )     (1,584,458 )     (446,789 )     (11,773,329 )
                                                         

Other income (expenses)

    (2,031,541 )     (14,146 )     (8,336 )     -       804,800       5,001       (1,244,222 )

Loss before income taxes

  $ (11,053,738 )   $ (119,163 )   $ (569,516 )   $ (53,688 )   $ (779,658 )   $ (441,788 )   $ (13,017,551 )

 

   

Nine Months Ended April 30, 2020

 

Statement of Operations

 

United States

   

 

   

 

   

 

 
   

Texas

   

Arizona

   

Wyoming

   

Other States

    Canada     Paraguay       Total  

Costs and Expenses:

                                                       

Mineral property expenditures

  $ 2,665,242     $ 73,858     $ 451,312     $ 53,187     $ -     $ 559,739     $ 3,803,338  

General and administrative

    4,927,762       10,217       77,549       1,407       1,775,036       45,880       6,837,851  

Depreciation, amortization and accretion

    205,742       -       11,157       747       7,551       7,001       232,198  

Loss from operations

    (7,798,746 )     (84,075 )     (540,018 )     (55,341 )     (1,782,587 )     (612,620 )     (10,873,387 )
                                                         

Other income (expenses)

    (2,545,544 )     (14,198 )     1,695       -       3,218,765       3,164       663,882  

Loss before income taxes

  $ (10,344,290 )   $ (98,273 )   $ (538,323 )   $ (55,341 )   $ 1,436,178     $ (609,456 )   $ (10,209,505 )

 

24

 

 

Item 2.         Managements Discussion and Analysis of Financial Condition and Results of Operations

 

The following managements discussion and analysis of the Companys financial condition and results of operations (the MD&A) contain forward-looking statements that involve risks, uncertainties and assumptions including, among others, statements regarding our capital needs, business plans and expectations. In evaluating these statements you should consider various factors, including the risks, uncertainties and assumptions set forth in reports and other documents we have filed with or furnished to the SEC and, including, without limitation, this Form 10-Q Quarterly Report for the nine months ended April 30, 2021, and our Form 10-K Annual Report for the fiscal year ended July 31, 2020, including the consolidated financial statements and related notes contained therein. These factors, or any one of them, may cause our actual results or actions in the future to differ materially from any forward-looking statement made in this Quarterly Report. Refer to Cautionary Note Regarding Forward-looking Statements as disclosed in our Form 10-K Annual Report for the fiscal year ended July 31, 2020, and Item 1A, Risk Factors, under Part II - Other Information, of this Quarterly Report.

 

Introduction

 

This MD&A is focused on material changes in our financial condition from July 31, 2020, our most recently completed year end, to April 30, 2021, and our results of operations for the three and nine months ended April 30, 2021, and should be read in conjunction with Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, as contained in our Form 10-K Annual Report for Fiscal 2020.

 

Business

 

We are predominantly engaged in uranium mining and related activities, including exploration, pre-extraction, extraction and processing, on uranium projects located in the United States and Paraguay, as more fully described in our Form 10-K Annual Report for Fiscal 2020.

 

We utilize in-situ recovery (“ISR”) mining where possible which we believe, when compared to conventional open pit or underground mining, requires lower capital and operating expenditures with a shorter lead time to extraction and a reduced impact on the environment.  We have one uranium mine located in the State of Texas, the Palangana Mine, which utilizes ISR mining and commenced extraction of U3O8, or yellowcake, in November 2010.  We have one uranium processing facility located in the State of Texas, the Hobson Processing Facility, which processes material from the Palangana Mine into drums of U3O8, our only sales product and source of revenue, for shipping to a third-party storage and sales facility.  As of April 30, 2021, we had no uranium supply or off-take agreements in place.

 

Our fully-licensed and 100%-owned Hobson Processing Facility forms the basis for our regional operating strategy in the State of Texas, specifically the South Texas Uranium Belt where we utilize ISR mining. We utilize a “hub-and-spoke” strategy whereby the Hobson Processing Facility acts as the central processing site (the “hub”) for the Palangana Mine and future satellite uranium mining activities, such as our Burke Hollow and Goliad Projects, located within the South Texas Uranium Belt (the “spokes”). The Hobson Processing Facility has a physical capacity to process uranium-loaded resins up to a total of two million pounds of U3O8 annually and is licensed to process up to one million pounds of U3O8 annually.

 

We acquired the fully permitted Reno Creek Project in August 2017 and expanded our operations to the strategic Powder River Basin in Wyoming.

 

We also hold certain mineral rights in various stages of development in the States of Arizona, Colorado, New Mexico, Texas and Wyoming, in Canada and in the Republic of Paraguay, many of which are located in historically successful mining areas and have been the subject of past exploration and pre-extraction activities by other mining companies. We do not expect, however, to utilize ISR mining for all of the uranium mineral rights in which case we would expect to rely on conventional open pit and/or underground mining techniques.

 

Since we completed the acquisition of the Alto Paraná Titanium Project located in Paraguay in July 2017, we are also involved in titanium mining and related activities, including exploration, development, extraction and processing of titanium minerals such as ilmenite.

 

Our operating and strategic framework is based on expanding our uranium and titanium extraction activities, which includes advancing certain projects with established mineralized materials towards extraction and establishing additional mineralized materials on our existing uranium and titanium projects or through the acquisition of additional projects.

 

25

 

Uranium Market Developments

 

Over the past few years, global uranium market fundamentals have been improving as the market transitions from an inventory driven to more of a production driven market. The spot market bottomed in November 2016 at about $17.75 per pound U3O8 and stood at about $29.05 per pound at April 30, 2021 (UxC Broker Average Price). Production curtailments, and more recently, mine closures from several global producers, have lowered uranium supply over the past few years. In 2020, total global production was reduced from 2019 levels of about 142 million pounds to about 123 million pounds, primarily as a result of COVID-19 shutdowns. This event has accelerated a rebalancing in the market, resulting in about 19 million pounds of supply being removed that will not be made up. Supply and demand projections show a structural deficit between production and utility requirements of more than 40 million pounds per year through 2026 with the gap growing to more than 55 million pounds by 2030. The gap is being filled with secondary market sources, including finite inventory that is projected to decline in upcoming years.

 

Higher priced contracts that have supported production are continuing to roll out of producer and utility supply portfolios. These higher priced contracts are not replaceable with current market prices below production costs for the vast majority of western producers. This will likely continue the trend of production cuts and deferrals until prices rise sufficiently to sustain long-term mining operations. In addition, some of the more significant global projects have recently shut down or are in their final stages of production as their resources become depleted.

 

On the demand side of the equation, the global nuclear energy industry continues robust growth, with 55 new reactors connected to the grid since the start of 2013 and another 52 reactors under construction as of May 2021. Nuclear generation has continued to increase over the past several years and has eclipsed pre-Fukushima production levels. In the 2020 edition (World Energy Outlook 2020), the International Energy Agency “Stated Policies Scenario” sees installed nuclear capacity growth of over 15% from 2019 to 2040, reaching about 480 GWE. Further upside market pressure also appears likely as utilities finally return to a longer-term contracting cycle to replace expiring contracts, something the market has not experienced for several years. In a more recent market development, financial entities and various producers, including our Company, began purchasing significant quantities of drummed uranium inventory, further removing excess supplies that will likely not re-enter the market unless bundled in longer term contracts at much higher prices.

 

In the United States, significant political developments are improving the outlook for American uranium producers. In September 2020, for the first time in 48 years, the Democratic Party platform endorsed nuclear power, creating a solid base of bipartisan political support for the nuclear industry. In October 2020, the U.S. Department of Commerce concluded an amendment to the Agreement Suspending the Antidumping Investigation on Uranium from the Russian Federation that reduces the United State’s dependence on Russian natural uranium concentrates up to 75% from prior levels. In December, the U.S. Federal Government omnibus spending bill passed by Congress included $75 million for initial funding of the 10-year U.S. Uranium Reserve (the “Uranium Reserve”). More recently, the Nuclear Prosperity and Security Act was reintroduced in the U.S. House of Representative that would direct the Secretary of Energy to establish and operate a U.S. Uranium Reserve. The Uranium Reserve is designed as a 10-year, $1.5 billion program to purchase newly mined U.S. origin uranium that fits well with the Company’s production ready, fully licensed domestic mining capabilities. In late March of this year, additional support for nuclear energy also emerged from the current administration as a proposed component of a “Clean Energy Standard” under a plan to revitalize U.S. infrastructure.

 

Uranium Inventory Initiative

 

The Company is investing inbuilding the next generation of low-cost and environmentally friendly uranium projects that will be competitive on a global basis. Despite our focus on low cost ISR mining with its low capital requirements, we saw a unique opportunity to purchase drummed uranium at prevailing spot prices which are below most global industry mining costs. Hence, we recently established a physical uranium inventory initiative (the “Initiative Program”) and have entered into agreements to purchase 2.505 million pounds of U.S. warehoused uranium. Various deliveries have or are scheduled to occur in March 2021 into June 2023 at the ConverDyn conversion facility located in Metropolis, Illinois, at a volume weighted average price of approximately $30 per pound.

 

26

 

This Initiative Program will support three objectives for our Company: (i) to bolster our balance sheet as uranium prices appreciate; (ii) to provide strategic inventory to support future marketing efforts with utilities that could compliment production and accelerate cashflows; and (iii) to increase the availability of our Texas and Wyoming production capacity for emerging U.S. origin specific opportunities which may command premium pricing due to scarcity of domestic uranium. One such U.S. origin specific opportunity is the Company’s plan to participate in supplying the Uranium Reserve, as outlined in the Nuclear Fuel Working Group report published by the U.S. Department of Energy.

 

As of the date of this Quarterly Report, we have received 1,000,000 pounds of uranium inventory under our Initiative Program.

 

Response to COVID-19 Pandemic

 

In response to the COVID-19 pandemic and for the protection of our employees, we have arranged for our teams at our Vancouver, Corpus Christi and Paraguay offices to work remotely. In the meantime, we continued to operate our Palangana Mine at a reduced pace to capture residual uranium only and we continue to advance our ISR projects with engineering and geologic evaluations that support the Company’s extraction readiness strategy.

 

Results of Operations

 

For the three and nine months ended April 30, 2021, we recorded net losses of $4,590,161 ($0.02 per share) and $13,014,757 ($0.06 per share) and losses from operations of $4,863,141 and $11,773,329, respectively. For the three and nine months ended April 30, 2020, we recorded net losses of $3,273,644 ($0.02 per share) and $10,204,882 ($0.06 per share) and losses from operations of $3,158,511 and $10,873,387, respectively.

 

During the three and nine months ended April 30, 2021, we continued with our strategic plan for reduced operations at our Palangana Mine to capture residual pounds of U3O8 only.  As a result, no U3O8 extraction or processing costs were capitalized to inventories during the three months ended April 30, 2021.

 

During the three months ended April 30, 2021, as part of the Initiative Program, we received 900,000 pounds of uranium inventory at a total cost of $26,193,818. As of April 30, 2021, the total value of inventories was $26,405,480 (July 31, 2020: $211,662).

 

During the three months ended April 30, 2021, we commenced the 2021 drilling campaign and drilled 57 exploration holes totaling 27,285 feet at our Burke Hollow Project.

 

Costs and Expenses

 

Mineral Property Expenditures

 

Mineral property expenditures primarily consisted of costs relating to permitting, property maintenance, exploration and pre-extraction activities and other non-extraction related activities on our projects.

 

During the three and nine months ended April 30, 2021, mineral property expenditures totaled $1,478,754 and $3,141,772, respectively, of which $238,015 and $678,082, respectively, were directly related to maintaining operational readiness and permitting compliance for our Palangana Mine and Hobson Processing Facility. During the three and nine months ended April 30, 2020, mineral property expenditures totaled $956,564 and $3,803,338, respectively, of which $258,628 and $908,878, respectively, were directly related to maintaining operational readiness and permitting compliance for our Palangana Mine and Hobson Processing Facility.

 

27

 

The following table provides mineral property expenditures on our projects for the periods indicated:

 

   

Three Months Ended April 30,

   

Nine Months Ended April 30,

 
   

2021

   

2020

   

2021

   

2020

 

Mineral Property Expenditures

                               

Palangana Mine

  $ 216,791     $ 260,438     $ 648,459     $ 1,109,164  

Goliad Project

    51,437       54,486       168,493       151,293  

Burke Hollow Project

    626,695       154,672       942,311       1,024,345  

Longhorn Project

    2,289       2,289       6,866       14,735  

Salvo Project

    7,672       7,843       23,537       21,813  

Anderson Project

    19,469       19,519       58,360       49,004  

Workman Creek Project

    8,168       8,168       24,533       24,533  

Slick Rock Project

    12,994       13,123       39,123       39,527  

Reno Creek Project

    215,725       159,088       485,791       451,312  

Yuty Project

    7,129       27,664       21,457       58,578  

Oviedo Project

    109,676       69,446       256,091       298,505  

Alto Paraná Titanium Project

    88,796       36,323       134,710       202,656  

Other Mineral Property Expenditures

    111,913       143,505       332,041       357,873  
    $ 1,478,754     $ 956,564     $ 3,141,772     $ 3,803,338  

 

General and Administrative

 

During the three and nine months ended April 30, 2021, general and administrative expenses totaled $3,286,201 and $8,336,593, respectively, which increased by $1,158,314 and $1,498,742, respectively, compared to $2,127,887 and $6,837,851, respectively, for the three and nine months ended April 30, 2020. The increases primarily resulted from increases in corporate development and stock-based compensation expenses.

 

The following summary provides a discussion of the major expense categories including analyses of the factors that caused significant variances compared to the same period last year:

 

 

for the three months ended April 30, 2021, salaries and management fees totaled $516,883, which increased by $106,788 compared to $410,095 for the three months ended April 30, 2020, primarily as a result of reinstatement of salaries and fees which had been reduced during the initial months of the COVID-19 pandemic.  For the nine months ended April 30, 2021, salaries and management fees totaled $1,262,153, which was consistent with $1,291,306 for the nine months ended April 30, 2020;

 

 

for the three and nine months ended April 30, 2021, office, insurance, filing and listing fees, investor relations, corporate development and travel expenses totaled $1,400,984 and $2,803,230, respectively, which increased by $616,975 and $367,444, respectively, compared to $784,009 and $2,435,786, respectively, for the three and nine months ended April 30, 2020, primarily as a result of increases in consulting fees and corporate development expenses;

 

 

for the three and nine months ended April 30, 2021, professional fees totaled $200,607 and $506,910, respectively, which decreased by $37,531 and $192,568, respectively, compared to $238,138 and $699,478, respectively, for the three and nine months ended April 30, 2020. The decrease primarily resulted from decrease in general legal fees and accounting and audit fees. Professional fees are primarily comprised of legal services related to certain transactional activities and regulatory compliance, in addition to audit and tax services; and

 

 

for the three and nine months ended April 30, 2021, stock-based compensation totaled $1,167,727 and $3,764,300, respectively, which increased by $472,082 and $1,353,019, respectively, compared to $695,645 and $2,411,281, respectively, for the three and nine months ended April 30, 2020.  During the three and nine months ended April 30, 2021, in response to the financial market uncertainty as a result of the COVID-19 pandemic, we continued to expand the scope of equity-based payments, including shares issued in lieu of cash for certain salaries and fees under our Stock Incentive Plan, to compensate certain employees and consultants.  During Fiscal 2020, we granted approximately 6.2 million stock options to our directors, officers, employees and certain consultants and awarded 1.3 million RSUs to certain of our directors and officers.  The stock-based compensation expenses included the fair value of compensation shares at the time of issuance and the amortization of the fair value of various stock awards granted in Fiscal 2020 and prior fiscal years using the graded vesting method.

 

28

 

Depreciation, Amortization and Accretion

 

During the three and nine months ended April 30, 2021, depreciation, amortization and accretion totaled $98,186 and $294,964, respectively, which increased by $24,126 and $62,766, respectively, compared to $74,060 and $232,198, respectively, for the three and nine months ended April 30, 2020.

 

Depreciation, amortization and accretion include depreciation and amortization of long-term assets acquired in the normal course of operations and accretion of asset retirement obligations.

 

Other Income and Expenses

 

Interest and Finance Costs

 

During the three and nine months ended April 30, 2021, interest and finance costs totaled $636,178 and $2,356,819, respectively, which decreased by $199,505 and $223,152, respectively, compared to $835,683 and $2,579,971, respectively, for the three and nine months ended April 30, 2020.

 

For the three and nine months ended April 30, 2021, interest paid on long-term debt totaled $274,222 and $1,051,111, respectively, which decreased by $125,778 and $166,667, respectively, compared to $400,000 and $1,217,778, respectively, for the three and nine months ended April 30, 2020. For the three and nine months ended April 30, 2021, amortization of debt discount totaled $296,401 and $1,122,096, respectively, which decreased by $102,830 and $121,936, respectively, compared to $399,231 and $1,244,032, respectively, for the three and nine months ended April 30, 2020. The decreases in interest on long-term debt and amortization of debt discount are a result of the decrease in the outstanding principal amount of our long-term debt to $10,000,000 from $20,000,000 in the comparable periods of last year.

 

For the three and nine months ended April 30, 2021, surety bond premium totaled $48,718 and $138,797, respectively, which increased by $19,648 and $46,031, respectively, compared to $29,070 and $92,766, respectively, for the three and nine months ended April 30, 2020. The increases were primarily a result of increases in surety bond collateral amounts and the annual premium rate.

 

Income from Equity-Accounted Investment

 

During the three and nine months ended April 30, 2021, we recorded income of $456,132 and $353,440, respectively, as a result of the equity income pick up from URC’s operations.  During the three months ended April 30, 2020, we recorded income of $684,443 as a result of the equity income pick up from URC’s operations, and during the nine months ended April 30, 2020, we recorded income of $3,048,219 primarily due to a dilution gain of $3,056,656 recognized as a result of the change of our ownership interest in URC due to URC’s initial public offering in December 2019, offset by a loss pick up totaling $8,437 from URC’s operations.

 

Gain on Loan Extinguishment

 

During the nine months ended April 30, 2021, we received a Notice of Paycheck Protection Program Forgiveness Payment from the Small Business Administration regarding the approval of our application for forgiveness of the PPP Loan amount of $277,250 and associated interest. As a result, we recognized a gain on loan extinguishment of $278,617.  During the three months ended April 30, 2021, we repaid the CEBA Loan of CAD$30,000, 75% of the total CEBA Loan principal before its initial term date on December 31, 2022 and received a CEBA Loan Closure Confirmation for forgiveness of CEBA loan principal of CAD$10,000.  As a result, we recognized a gain on loan extinguishment of $7,759.

 

29

 

Summary of Quarterly Results

 

   

For the Quarters Ended

 
   

April 30, 2021

   

January 31, 2021

   

October 31, 2020

   

July 31, 2020

 

Net loss

  $ (4,590,161 )   $ (3,461,059 )   $ (4,963,537 )   $ (4,405,634 )

Total comprehensive loss

    (4,097,060 )     (2,975,021 )     (4,900,776 )     (4,009,649 )

Basic and diluted loss per share

    (0.02 )     (0.02 )     (0.03 )     (0.02 )

Total assets

    163,575,373       100,142,619       102,213,761       91,389,617  

 

   

For the Quarters Ended

 
   

April 30, 2020

   

January 31, 2020

   

October 31, 2019

   

July 31, 2019

 

Net loss

  $ (3,273,644 )   $ (1,888,661 )   $ (5,042,577 )   $ (6,334,132 )

Total comprehensive loss

    (3,752,792 )     (1,928,309 )     (5,052,471 )     (6,199,949 )

Basic and diluted loss per share

    (0.02 )     (0.01 )     (0.03 )     (0.04 )

Total assets

    93,647,447       96,514,311       96,696,496       101,040,242  

 

Liquidity and Capital Resources

 

   

April 30, 2021

   

July 31, 2020

 

Cash and cash equivalents

  $ 43,930,316     $ 5,147,703  

Term deposits

    4,000,000       -  

Current assets

    76,430,509       6,589,879  

Current liabilities

    12,201,873       2,037,402  

Working capital

    64,228,636       4,552,477  

 

During the nine months ended April 30, 2021, we received net proceeds of $83,842,281 from various equity financings and $4,709,470 from the exercise of stock options and share purchase warrants, which significantly strengthened our working capital position.  As at April 30, 2021, we had working capital of $64,228,636, which increased by $59,676,159 from the working capital of $4,552,477 as at July 31, 2020.

 

During the three months ended and subsequent to April 30, 2021, we entered into agreements to purchase 2.505 million pounds of uranium inventories with a total purchase price of $75.9 million with delivery dates from March 2021 to June 2023, of which $18.1 million will become due in the next 12 months from the date that this Quarterly Report is issued. In addition, as of April 30, 2021, we had $10,000,000 of debt with a maturity date of January 31, 2022. However, we believe our existing cash resources and, if necessary, cash generated from the sale of the Company’s current assets, will provide sufficient funds to fulfill our uranium inventory purchase commitments, repay the $10,000,000 principal amount of the term debt when it becomes due and carry out our planned operations for 12 months from the date of this Quarterly Report. Our continuation as a going concern beyond 12 months from the date of this Quarterly Report 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.

 

Historically we have been reliant primarily on equity financings from the sale of our common stock and on debt financings in order to fund our operations. We have also relied, to a limited extent, on cash flows generated from our mining activities during the years ended July 31, 2015 (“Fiscal 2015), 2013 (“Fiscal 2013) and 2012 (“Fiscal 2012”). However, we have yet to achieve profitability or develop positive cash flow from operations and we do not expect to achieve profitability or develop positive cash flow from operations in the near term. Our reliance on equity and debt financings is expected to continue for the foreseeable future, and their availability whenever such additional financing is required, will be dependent on many factors beyond our control including, but not limited to, the market price of uranium, the continuing public support of nuclear power as a viable source of electrical generation, the volatility in the global financial markets affecting our stock price and the status of the worldwide economy, any one of which may cause significant challenges in our ability to access additional financing, including access to the equity and credit markets. We may also be required to seek other forms of financing, such as asset divestitures or joint venture arrangements, to continue advancing our uranium projects which would depend entirely on finding a suitable third party willing to enter into such an arrangement, typically involving an assignment of a percentage interest in the mineral project. However, there is no assurance that we will be successful in securing any form of additional financing when required and on terms favorable to us.

 

30

 

Our operations are capital intensive and future capital expenditures are expected to be substantial. We will require significant additional financing to fund our operations, including continuing with our exploration and pre-extraction activities and acquiring additional mineral projects. In the absence of such additional financing, we would not be able to fund our operations, including continuing with our exploration and pre-extraction activities, which may result in delays, curtailment or abandonment of any one or all of our mineral projects.

 

Our anticipated operations, including exploration and pre-extraction activities, will be dependent on and may change as a result of our financial position, the market price of uranium and other considerations, and such change may include accelerating the pace or broadening the scope of reducing our operations as originally announced in September 2013.

 

Our ability to secure adequate funding for these activities will be impacted by our operating performance, other uses of cash, the market price of commodities, the market price of our common stock and other factors which may be beyond our control. Specific examples of such factors include, but are not limited to:

 

 

if the market price of uranium weakens;

 

if the market price of our common stock weakens;

 

if the COVID-19 pandemic worsens or continues over an extended period and causes further financial market uncertainty; and

 

if a nuclear incident, such as the events that occurred at Fukushima in March 2011, is to occur, continuing public support of nuclear power as a viable source of electrical generation may be adversely affected, which may result in significant and adverse effects on both the nuclear and uranium industries.

 

Our long-term success, including the recoverability of the carrying values of our assets and our ability to acquire additional mineral projects and to continue with exploration and pre-extraction activities and mining activities on our existing mineral projects, will depend ultimately on our ability to achieve and maintain profitability and positive cash flow from our operations by establishing ore bodies that contain commercially recoverable minerals and to develop these into profitable mining activities.

 

Equity Financings

 

On February 21, 2020, we filed a Form S-3 shelf registration statement under the Securities Act which was declared effective by the SEC on March 3, 2020 (the “2020 Shelf”) providing for the public offer and sale of certain securities of the Company from time to time, at our discretion, of up to an aggregate offering amount of $100 million. As a result of the 2020 Shelf, our March 10, 2017 Form S-3 registration statement was then deemed terminated and, as a consequence, our then April 9, 2019 ATM Offering Agreement and its related offering terminated unless renewed under the 2020 Shelf.

 

On March 19, 2020, we entered into an Amending Agreement to the ATM Offering Agreement with the ATM Managers under which the Company may, from time to time, sell shares of its common stock having an aggregate offering price of up to $30 million through the ATM Managers under its ATM Offering through the 2020 Shelf.

 

On September 23, 2020, we completed our September 2020 Offering of 12,500,000 units at a price of $1.20 per unit for gross proceeds of $15,000,000.  Each unit was comprised of one share of the Company and one-half of one share purchase warrant, and each whole warrant entitles its holder to acquire one share at an exercise price of $1.80 per share exercisable immediately upon issuance and expiring 24 months from the date of issuance.  In connection with the September 2020 Offering, we also issued compensation share purchase warrants to agents as part of share issuance costs to purchase 583,333 shares of our Company exercisable at an exercise price of $1.80 per share and expiring 24 months from the date of issuance.

 

During the nine months ended April 30, 2021, we issued 13,668,906 shares of the Company’s common stock at a weighted average price of $2.19 per share under our ATM Offering for net cash proceeds of $29,320,949.

 

On March 19, 2021, we completed the March 2021 Offering of 10,000,000 shares of the Company’s common stock at a price of $3.05 per share for net proceeds of $29,083,710.

 

On April 8, 2021, we completed the April 2021 Offering of 3,636,364 shares of the Company’s common stock at a price of $3.30 per share for net proceeds of $11,315,966. In connection with the April 2021 Offering, we also issued, on a private placement basis, 181,818 Agent Warrants to the agent as partial compensation, and each Agent Warrant entitles its holder to acquire one share of common stock at an exercise price of $4.125 per share and expiring five years from the date of issuance.

 

31

 

As of April 30, 2021, $30 million of the 2020 Shelf was utilized under our ATM Offering and $69.8 million was utilized under our September 2020 Offering, March 2021 Offering and April 2021 Offering; and therefore, all but $200,000 was utilized under our 2020 Shelf.

 

On May 17, 2021, we filed a Form S-3 shelf registration statement under the Securities Act which was declared effective by the SEC on June 1, 2021 providing for the public offer and sale of certain securities of the Company from time to time, at our discretion, of up to an aggregate offering amount of $200 million (the “2021 Shelf”), which included an at-the-market offering agreement prospectus (the “2021 ATM Offering”) covering the offering, issuance and sale of up to a maximum offering of $100 million as part of the $200 million under the 2021 Shelf.

 

On May 14, 2021, we entered into an At The Market Offering Agreement (the “2021 ATM Offering Agreement”) with H.C. Wainwright & Co., LLC and certain co-managers (collectively, the “2021 ATM Managers”) as set forth in the 2021 ATM Offering Agreement under which we may, from time to time, sell shares of our common stock having an aggregate offering price of up to $100 million from time to time through the 2021 ATM Manager selected by us.

 

Credit Facility

 

On December 5, 2018, we entered into the Third Amended and Restated Credit Agreement with our Lenders, whereby we and the Lenders agreed to certain further amendments to our Credit Facility, under which initial funding of $10,000,000 was received by the Company upon closing of the Credit Facility on July 30, 2013, and additional funding of $10,000,000 was received by the Company upon closing of the amended Credit Facility on March 13, 2014. The Credit Facility is non-revolving with an amended term of 8.5 years since inception maturing on January 31, 2022, subject to an interest rate of 8% per annum, compounded and payable on a monthly basis.

 

The Third Amended and Restated Credit Agreement superseded, in their entirety, our Second Amended and Restated Credit Agreement dated and effective February 9, 2016, our Amended and Restated Credit Agreement dated and effective March 13, 2014 and our Credit Agreement dated and effective July 30, 2013 with our Lenders.

 

During the nine months ended April 30, 2021, we made voluntary payments totaling $10,000,000 to certain Lenders, which decreased the principal balance outstanding to $10,000,000.

 

During the nine months ended April 30, 2021, and pursuant to the terms of the Third Amended and Restated Credit Agreement, we issued an aggregate of 1,249,039 shares with a fair value of $1,170,000, representing 6.5% of the $18,000,000 principal balance outstanding at the time, as payment of anniversary fees to our Lenders.

 

Government Loans

 

During Fiscal 2020, our Canadian subsidiary received a loan of $29,842 (CAD$40,000) under the CEBA Program. During the three months ended April 30, 2021, we repaid CAD$30,000 of the CEBA Loan, 75% of the total CEBA Loan principal before its initial term date on December 31, 2022 and received a CEBA Loan Closure Confirmation for forgiveness of CAD$10,000.

 

During Fiscal 2020, we entered into a business loan agreement with Kleberg Bank, N.A., under the Paycheck Protection Program administered by the Small Business Administration, which is a part of the Coronavirus Aid, Relief, and Economic Security Act enacted by the U.S. Congress in response to the COVID-19 pandemic. On May 5, 2020, we received the PPP Loan in the amount of $277,250. During the nine months ended April 30, 2021, we received a Notice of Paycheck Protection Program Forgiveness Payment from the Small Business Administration regarding the approval of our application for forgiveness of the PPP Loan amount of $277,250 and associated interest.

 

Promissory Note

 

During the nine months ended April 30, 2021, in connection with the Goliad Land Purchase, we issued the Promissory Note with a principal amount of $380,000 to a landowner.  The Promissory Note carries an interest rate of 5% per annum with principal and interest payable in 24 monthly installments with a maturity date of November 1, 2022.  We may prepay the Promissory Note in any amount at any time before the maturity date without penalty.

 

32

 

Operating Activities

 

During the nine months ended April 30, 2021, net cash used in operating activities was $35,250,208, of which $26,193,818 was for purchases of uranium inventories. Other significant operating expenditures included mineral property expenditures, general and administrative expenses and interest payments. During the nine months ended April 30, 2020, net cash used in operating activities was $10,332,656 for mineral property expenditures, general and administrative expenses and interest payments.

 

Financing Activities

 

During the nine months ended April 30, 2021, net cash provided by financing activities totaled $78,453,548, primarily from the net proceeds of $83,842,281 from various share offerings, and net proceeds of $4,709,470 from the exercise of stock options and share purchase warrants, which were offset by $10,000,000 in voluntary payments to our Lenders under our Credit Facility, $22,083 repayment for the CEBA Loan and payments of $76,120 for the Promissory Note. During the nine months ended April 30, 2020, cash provided by financing activities was $28,756 from the CEBA Loan.

 

Investing Activities

 

During the nine months ended April 30, 2021, net cash used by investing activities totaled $4,222,266, primarily for cash used for the investment in term deposits of $10,000,000, cash used for the purchase of property, plant and equipment of $142,266, and cash used for investment in mineral rights and properties of $80,000, offset by cash received from the redemption of term deposits of $6,000,000. During the nine months ended April 30, 2020, net cash provided by investing activities totaled $11,670,630, primarily from cash received from the redemption of term deposits totaling $11,831,671, offset by cash used for the purchase of property, plant and equipment of $83,841 and cash used for investment in mineral rights and properties of $80,000.

 

Stock Options and Warrants

 

As of April 30, 2021, we had stock options outstanding representing 11,170,110 shares at a weighted-average exercise price of $1.11 per share, and share purchase warrants outstanding representing 5,480,938 shares at a weighted-average exercise price of $1.90 per share.  As of April 30, 2021, outstanding stock options and warrants represented a total 16,651,048 shares issuable for gross proceeds of approximately $22.7 million should these stock options and warrants be exercised in full on a cash basis. As of April 30, 2021, outstanding in-the-money share purchase warrants and stock options represented a total of 16,469,230 shares exercisable for gross proceeds of approximately $22.0 million should these in-the-money share purchase warrants and stock options be exercised in full on a cash basis.  The exercise of stock options and warrants is at the discretion of the respective holders and, accordingly, there is no assurance that any of the stock options or warrants will be exercised in the future.

 

Transactions with a Related Party

 

During the three and nine months ended April 30, 2021, we incurred $17,900 and $52,041 (three and nine months ended April 30, 2020: $36,849 and $105,339), respectively, in general and administrative costs, paid to Blender, a company controlled by Arash Adnani, a direct family member of our President and Chief Executive Officer, for various services, including information technology, financial subscriptions, corporate branding, media, website design, maintenance and hosting, provided by Blender to the Company.

 

As of April 30, 2021, the amount owing to Blender was $nil (July 31, 2020: $31,334).

 

Material Commitments

 

Uranium Purchase Commitments

 

During the three months ended and subsequent to April 30, 2021, we entered into agreements to purchase 2.505 million pounds of uranium inventories under our Initiative Program, of which 1.0 million pounds have been delivered and paid for with the remaining 1.505 million pounds being delivered from December 2021 to June 2023.

 

33

 

Our uranium purchase commitments at the date of this Quarterly Report are as follows:

 

For MDA

               
   

Purchase Commitments
in Pounds

   

Total Purchase Price

 

Fiscal 2022

    600,000     $ 18,065,000  

Fiscal 2023

    905,000       29,179,000  

Total

    1,505,000     $ 47,244,000  

 

Long-Term Debt Obligations

 

At April 30, 2021, we have made all scheduled payments and complied with all covenants under our Credit Facility, and we expect to continue complying with all scheduled payments and covenants during Fiscal 2021.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

 

Critical Accounting Policies

 

For a complete summary of all of our significant accounting policies refer to Note 2: Summary of Significant Accounting Policies of the Notes to the consolidated financial statements as presented under Item 8, Financial Statements and Supplementary Data, in our Annual Report on Form 10-K for Fiscal 2020.

 

Refer to “Critical Accounting Policies” under Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for Fiscal 2020.

 

Subsequent Events

 

Subsequent to April 30, 2021, we received cash proceeds of $380,776 and issued 704,423 shares upon the exercise of 888,251 stock options.

 

Subsequent to April 30, 2021, we entered into agreements to purchase 200,000 pounds of uranium inventories under our Initiative Program.

 

Subsequent to April 30, 2021, on May 20, 2021, we participated in an equity financing by URC and acquired an additional 1,000,000 common shares of URC at a price of CAD$4.10 per share for a total consideration of $3,396,852.

 

Item 3.         Quantitative and Qualitative Disclosures About Market Risk

 

Refer to Item 7A. Quantitative and Qualitative Disclosures About Market Risk in our Annual Report on Form 10-K for Fiscal 2020.

 

34

 

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 internal controls over financial reporting and disclosure controls and procedures (as such terms are defined in Rules 13a-15(e) and 15d-15(e) under the United States Securities Exchange Act of 1933, as amended (the “Exchange Act”) and, as of the end of the period covered by this Quarterly Report, our Principal Executive Officer and Principal Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were effective.

 

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

 

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our fiscal quarter ended April 30, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

35

 

 

PART II OTHER INFORMATION

 

Item 1.         Legal Proceedings

 

As of the date of this Quarterly Report, other than as disclosed below, there are no material pending legal proceedings, other than ordinary routine litigation incidental to our business, to which the Company or any of its subsidiaries is a party or of which any of their property is subject, and no director, officer, affiliate or record or beneficial owner of more than 5% of our common stock, or any associate or any such director, officer, affiliate or security holder is: (i) a party adverse to us or any of our subsidiaries in any legal proceeding; or (ii) has an adverse interest to us or any of our subsidiaries in any legal proceeding. Other than as disclosed below, management is not aware of any other material legal proceedings pending or that have been threatened against us or our properties.

 

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, the 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 250th 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.

 

The Company has had communications and filings with the Ministry of Public Works and Communications (the “MOPC”), the mining regulator in Paraguay, whereby the MOPC is taking the position that certain concessions forming part of the Company’s Yuty Project and Alto Parana Project are not eligible for extension as to exploration or continuation to exploitation in their current stages. While we remain fully committed to its development path forward in Paraguay, we have filed certain applications and appeals in Paraguay to reverse the MOPC’s position in order to protect the Company’s continuing rights in those concessions.

 

36

 

Item 1A.         Risk Factors

 

In addition to the information contained in our Annual Report on Form 10-K for Fiscal 2020, and this Quarterly Report on Form 10-Q, we have identified the following material risks and uncertainties which reflect our outlook and conditions known to us as of the date of this Quarterly Report. These material risks and uncertainties should be carefully reviewed by our stockholders and any potential investors in evaluating the Company, our business and the market value of our common stock. Furthermore, any one of these material risks and uncertainties has the potential to cause actual results, performance, achievements or events to be materially different from any future results, performance, achievements or events implied, suggested or expressed by any forward-looking statements made by us or by persons acting on our behalf. Refer to Cautionary Note Regarding Forward-looking Statements as disclosed in our Annual Report on Form 10-K for Fiscal 2020.

 

There is no assurance that we will be successful in preventing the material adverse effects that any one or more of the following material risks and uncertainties may cause on our business, prospects, financial condition and operating results, which may result in a significant decrease in the market price of our common stock. Furthermore, there is no assurance that these material risks and uncertainties represent a complete list of the material risks and uncertainties facing us. There may be additional risks and uncertainties of a material nature that, as of the date of this Quarterly Report, we are unaware of or that we consider immaterial that may become material in the future, any one or more of which may result in a material adverse effect on us. You could lose all or a significant portion of your investment due to any one of these material risks and uncertainties.

 

Risks Related to Our Company and Business

 

Evaluating our future performance may be difficult since we have a limited financial and operating history, with significant negative operating cash flow and an accumulated deficit to date. Our long-term success will depend ultimately on our ability to achieve and maintain profitability and to develop positive cash flow from our mining activities.

 

As more fully described under Item 1, Business, in our Annual Report on Form 10-K for Fiscal 2020, Uranium Energy Corp. was incorporated under the laws of the State of Nevada on May 16, 2003, and since 2004 we have been engaged in uranium mining and related activities, including exploration, pre-extraction, extraction and processing, on projects located in the United States, Canada and Paraguay.  In November 2010 we commenced uranium extraction for the first time at our Palangana Mine utilizing ISR methods and processed those materials at our Hobson Processing Facility into drums of U3O8, our only sales product and source of revenue.  We also hold uranium projects in various stages of exploration and pre-extraction in the States of Arizona, Colorado, New Mexico, Texas and Wyoming, in Canada and the Republic of Paraguay.  Since we completed the acquisition of our Alto Paraná Project located in the Republic of Paraguay in July 2017, we are also involved in mining and related activities, including exploration, pre-extraction, extraction and processing of titanium minerals.

 

As more fully described under “Liquidity and Capital Resources” of Item 2, Management’s Discussion and Analysis of Financial Condition and Result of Operations herein, we have a history of significant negative cash flow and net losses, with an accumulated deficit balance of $289.8 million as of April 30, 2021. Historically, we have been reliant primarily on equity financings from the sale of our common stock and on debt financing in order to fund our operations. Although we generated revenues from sales of U3O8 during Fiscal 2015, Fiscal 2013 and Fiscal 2012 of $3.1 million, $9.0 million and $13.8 million, respectively, we have yet to achieve profitability or develop positive cash flow from our operations, and we do not expect to achieve profitability or develop positive cash flow from operations in the near term.  As a result of our limited financial and operating history, including our significant negative cash flow and net losses to date, it may be difficult to evaluate our future performance.

 

As of April 30, 2021, we had working capital of $64.2 million including cash and cash equivalents of $43.9 million, term deposits of $4.0 million and uranium inventory holdings of $26.2 million. During the three months ended and subsequent to April 30, 2021, we entered into agreements to purchase 2.505 million pounds of uranium inventories with delivery dates from March 2021 to June 2023, of which $18.1 million will become due in the next 12 months from the date of this Quarterly Report.  In addition, as of April 30, 2021, we had $10 million term debt with a maturity date of January 31, 2022.   However, we believe our existing cash resources and, if necessary, cash generated from the sale of the Company’s current assets will provide sufficient funds to fulfill our uranium inventory purchase commitments, repay the $10 million principal amount when it becomes due and carry out our planned operations for 12 months from the date of this Quarterly Report.  Our continuation as a going concern beyond those 12 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.

 

37

 

Our reliance on equity and debt financings is expected to continue for the foreseeable future, and their availability whenever such additional financing is required will be dependent on many factors beyond our control including, but not limited to, the market price of uranium, the continuing public support of nuclear power as a viable source of electrical generation, the volatility in the global financial markets affecting our stock price and the status of the worldwide economy, any one of which may cause significant challenges in our ability to access additional financing, including access to the equity and credit markets. We may also be required to seek other forms of financing, such as asset divestitures or joint venture arrangements, to continue advancing our uranium projects which would depend entirely on finding a suitable third party willing to enter into such an arrangement, typically involving an assignment of a percentage interest in the mineral project.

 

Our long-term success, including the recoverability of the carrying values of our assets and our ability to acquire additional uranium projects and continue with exploration and pre-extraction activities and mining activities on our existing uranium projects, will depend ultimately on our ability to achieve and maintain profitability and positive cash flow from our operations by establishing ore bodies that contain commercially recoverable uranium and to develop these into profitable mining activities. The economic viability of our mining activities, including the expected duration and profitability of our Palangana Mine and of any future satellite ISR mines, such as our Burke Hollow and Goliad Projects, located within the South Texas Uranium Belt, and our Reno Creek Project located in the Powder River Basin, Wyoming, and our projects in Canada and in the Republic of Paraguay, have many risks and uncertainties. These include, but are not limited to: (i) a significant, prolonged decrease in the market price of uranium and titanium minerals; (ii) difficulty in marketing and/or selling uranium concentrates; (iii) significantly higher than expected capital costs to construct the mine and/or processing plant; (iv) significantly higher than expected extraction costs; (v) significantly lower than expected mineral extraction; (vi) significant delays, reductions or stoppages of uranium extraction activities; and (vii) the introduction of significantly more stringent regulatory laws and regulations. Our mining activities may change as a result of any one or more of these risks and uncertainties and there is no assurance that any ore body that we extract mineralized materials from will result in achieving and maintaining profitability and developing positive cash flow.

 

Our operations are capital intensive and we will require significant additional financing to acquire additional mineral projects and continue with our exploration and pre-extraction activities on our existing projects.

 

Our operations are capital intensive and future capital expenditures are expected to be substantial. We will require significant additional financing to fund our operations, including acquiring additional mineral projects and continuing with our exploration and pre-extraction activities which include assaying, drilling, geological and geochemical analysis and mine construction costs. In the absence of such additional financing we would not be able to fund our operations or continue with our exploration and pre-extraction activities, which may result in delays, curtailment or abandonment of any one or all of our projects.

 

If we are unable to service our indebtedness, we may be faced with accelerated repayments or lose the assets securing our indebtedness. Furthermore, restrictive covenants governing our indebtedness may restrict our ability to pursue our business strategies.

 

During Fiscal 2019, we entered into the Third Amended and Restated Credit Agreement under our Credit Facility with our Lenders under which we had previously drawn down the maximum $20 million in principal. During the nine months ended April 30, 2021, we made voluntary payments totaling $10 million to certain Lenders, reducing the principal outstanding to $10 million as at April 30, 2021. The Credit Facility requires monthly interest payments calculated at 8% per annum and other periodic fees. Our ability to continue making these scheduled payments will be dependent on and may change as a result of our financial condition and operating results.  Failure to make any of these scheduled payments will put us in default with the Credit Facility which, if not addressed or waived, could require accelerated repayment of our indebtedness and/or enforcement by the Lenders against our assets.  Enforcement against our assets would have a material adverse effect on our financial condition and operating results.

 

Furthermore, our Credit Facility includes restrictive covenants that, among other things, limit our ability to sell our assets or to incur additional indebtedness other than permitted indebtedness, which may restrict our ability to pursue certain business strategies from time to time. If we do not comply with these restrictive covenants, we could be in default which, if not addressed or waived, could require accelerated repayment of our indebtedness and/or enforcement by the Lenders against our assets.

 

38

 

Our uranium extraction and sales history is limited, with our uranium extraction to date originating from a single uranium mine. Our ability to continue generating revenue is subject to a number of factors, any one or more of which may adversely affect our financial condition and operating results.

 

We have a limited history of uranium extraction and generating revenue. In November 2010 we commenced uranium extraction at our Palangana Mine, which has been our sole source of revenues from the sales of U3O8 during Fiscal 2015, Fiscal 2013 and Fiscal 2012, with no revenues from sales of U3O8 generated during the nine months ended April 30, 2021, and any other fiscal years.

 

During the nine months ended April 30, 2021, we continued to operate our Palangana Mine at a reduced pace since implementing our strategic plan in September 2013 to align our operations to a weak uranium commodity market in a challenging post-Fukushima environment. This strategy has included the deferral of major pre-extraction expenditures and remaining in a state of operational readiness in anticipation of a recovery in uranium prices.  Our ability to continue generating revenue from the Palangana Mine is subject to a number of factors which include, but are not limited to: (i) a significant, prolonged decrease in the market price of uranium; (ii) difficulty in marketing and/or selling uranium concentrates; (iii) significantly higher than expected capital costs to construct the mine and/or processing plant; (iv) significantly higher than expected extraction costs; (v) significantly lower than expected uranium extraction; (vi) significant delays, reductions or stoppages of uranium extraction activities; and (vii) the introduction of significantly more stringent regulatory laws and regulations. Furthermore, continued mining activities at the Palangana Mine will eventually deplete the Palangana Mine or cause such activities to become uneconomical, and if we are unable to directly acquire or develop existing uranium projects, such as our Burke Hollow and Goliad Projects, into additional uranium mines from which we can commence uranium extraction, it will negatively impact our ability to generate revenues. Any one or more of these occurrences may adversely affect our financial condition and operating results.

 

Exploration and pre-extraction programs and mining activities are inherently subject to numerous significant risks and uncertainties, and actual results may differ significantly from expectations or anticipated amounts. Furthermore, exploration programs conducted on our projects may not result in the establishment of ore bodies that contain commercially recoverable uranium.

 

Exploration and pre-extraction programs and mining activities are inherently subject to numerous significant risks and uncertainties, with many beyond our control and including, but not limited to: (i) unanticipated ground and water conditions and adverse claims to water rights; (ii) unusual or unexpected geological formations; (iii) metallurgical and other processing problems; (iv) the occurrence of unusual weather or operating conditions and other force majeure events; (v) lower than expected ore grades; (vi) industrial accidents; (vii) delays in the receipt of or failure to receive necessary government permits; (viii) delays in transportation; (ix) availability of contractors and labor; (x) government permit restrictions and regulation restrictions; (xi) unavailability of materials and equipment; and (xii) the failure of equipment or processes to operate in accordance with specifications or expectations. These risks and uncertainties could result in: (i) delays, reductions or stoppages in our mining activities; (ii) increased capital and/or extraction costs; (iii) damage to, or destruction of, our mineral projects, extraction facilities or other properties; (iv) personal injuries; (v) environmental damage; (vi) monetary losses; and (vii) legal claims.

 

Success in mineral exploration is dependent on many factors, including, without limitation, the experience and capabilities of a company’s management, the availability of geological expertise and the availability of sufficient funds to conduct the exploration program. Even if an exploration program is successful and commercially recoverable material is established, it may take a number of years from the initial phases of drilling and identification of the mineralization until extraction is possible, during which time the economic feasibility of extraction may change such that the material ceases to be economically recoverable. Exploration is frequently non-productive due, for example, to poor exploration results or the inability to establish ore bodies that contain commercially recoverable material, in which case the project may be abandoned and written-off. Furthermore, we will not be able to benefit from our exploration efforts and recover the expenditures that we incur on our exploration programs if we do not establish ore bodies that contain commercially recoverable material and develop these projects into profitable mining activities, and there is no assurance that we will be successful in doing so for any of our projects.

 

39

 

Whether an ore body contains commercially recoverable material depends on many factors including, without limitation: (i) the particular attributes, including material changes to those attributes, of the ore body such as size, grade, recovery rates and proximity to infrastructure; (ii) the market price of uranium, which may be volatile; and (iii) government regulations and regulatory requirements including, without limitation, those relating to environmental protection, permitting and land use, taxes, land tenure and transportation.

 

We have not established proven or probable reserves through the completion of a final or bankable feasibility study for any of our 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 ISR mining, such as the Palangana Mine. Since we commenced extraction of mineralized materials from the Palangana Mine without having established proven or probable reserves, it may result in our mining activities at the Palangana Mine, and at any future projects for which proven or probable reserves are not established, being inherently riskier than other mining activities for which proven or probable reserves have been established.

 

We have established the existence of mineralized materials for certain projects, including the Palangana Mine. We have not established proven or probable reserves, as defined by the SEC under Industry Guide 7, through the completion of a “final” or “bankable” feasibility study for any of our projects, including the Palangana Mine. Furthermore, we have no plans to establish proven or probable reserves for any of our projects for which we plan on utilizing ISR mining, such as the 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. 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.

 

Since we are in the Exploration Stage, pre-production expenditures including those related to pre-extraction activities are expensed as incurred, the effects of which may result in our consolidated financial statements not being directly comparable to the financial statements of companies in the Production Stage.

 

Despite the fact that we commenced uranium extraction at the 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, which may never occur. We prepare our consolidated financial statements in accordance with U.S. GAAP under which acquisition costs of mineral rights are initially capitalized as incurred while pre-production expenditures are expensed as incurred until such time we exit the Exploration Stage.  Expenditures relating to exploration activities are expensed as incurred and expenditures relating to pre-extraction activities are expensed as incurred until such time proven or probable reserves are established for that uranium project, after which subsequent expenditures relating to mine development activities for that particular project are capitalized as incurred.

 

We have neither established nor have any plans to establish proven or probable reserves for our uranium projects for which we plan on utilizing ISR mining, such as the Palangana Mine. Companies in the Production Stage as defined by the SEC 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. As we are in the Exploration Stage it has resulted in us reporting larger losses than if we had been in the Production Stage due to the expensing, instead of capitalization, of expenditures relating to ongoing mill and mine pre-extraction activities. Additionally, there would be no corresponding amortization allocated to our future reporting periods 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 acquisition costs 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.

 

40

 

Estimated costs of future reclamation obligations may be significantly exceeded by actual costs incurred in the future. Furthermore, only a portion of the financial assurance required for the future reclamation obligations has been funded.

 

We are responsible for certain remediation and decommissioning activities in the future primarily for our Hobson Processing Facility, our Palangana Mine, our Reno Creek Project and our Alto Paraná Project and have recorded a liability of $3.9 million on our balance sheet as of April 30, 2021 to recognize the present value of the estimated costs of such reclamation obligations.  Should the actual costs to fulfill these future reclamation obligations materially exceed these estimated costs, it may have an adverse effect on our financial condition and operating results, including not having the financial resources required to fulfill such obligations when required to do so.

 

During Fiscal 2015 we secured $5.6 million of surety bonds as an alternate source of financial assurance for the estimated costs of the reclamation obligations of our Hobson Processing Facility and Palangana Mine, of which we have $1.7 million funded and held as restricted cash for collateral purposes as required by the surety. We may be required at any time to fund the remaining $3.9 million or any portion thereof for a number of reasons including, but not limited to, the following: (i) the terms of the surety bonds are amended, such as an increase in collateral requirements; (ii) we are in default with the terms of the surety bonds; (iii) the surety bonds are no longer acceptable as an alternate source of financial assurance by the regulatory authorities; or (iv) the surety encounters financial difficulties. Should any one or more of these events occur in the future, we may not have the financial resources to fund the remaining amount or any portion thereof when required to do so.

 

We cannot provide any assurance that our Initiative Program involving the strategic acquisition of physical uranium will be successful, which may have an adverse effect on our results of operations.

 

We have used or allocated a large portion of our cash on hand in order to fund the acquisition of drummed uranium. This strategy will be subject to a number of risks and there is no assurance that the strategy will be successful. Future deliveries are subject to performance by other parties and there is a possibility of default by those parties, thus depriving us of potential benefits.

 

Due to the fluctuation of uranium prices, the price of uranium will fluctuate and we will be subject to losses should we ultimately determine to sell the uranium at prices lower than the acquisition cost. The primary risks associated with physical uranium will be the normal risks associated with supply and demand fundamentals affecting price movements.

 

We may be required to sell a portion or all of the physical uranium accumulated to fund our operations should other forms of financing not be available to meet our capital requirements.

 

Since there is no public market for uranium, selling the uranium may take extended periods of time and suitable purchasers may be difficult to find, which could have a material adverse effect on our financial condition and may have a material adverse effect on our securities.

 

There is no public market for the sale of uranium, although there are several trading and brokerage houses that serve the industry with bid and ask data as well as locations and quantities. The uranium futures market on the New York Mercantile Exchange does not provide for physical delivery of uranium, only cash on settlement, and that trading forum does not offer a formal market but rather facilitates the introduction of buyers to sellers.

 

The pool of potential purchasers and sellers is limited, and each transaction may require the negotiation of specific provisions. Accordingly, a sale may take several weeks or months to complete. If we determine to sell any physical uranium that we have acquired, we may likewise experience difficulties in finding purchasers that are able to accept a material quantity of physical uranium at a price and at a location that is compatible with our interests. The inability to sell on a timely basis in sufficient quantities and at a desired price and location could have a material adverse effect on our securities.

 

As part of our Initiative Program, we have entered into commitments to purchase U3O8 and may purchase additional quantities. There is no certainty that any future purchases contemplated by us will be completed.

 

Storage arrangements, including the extension of storage arrangements, along with credit and operational risks of uranium storage facilities may result in the loss or damage of our physical uranium which may not be covered by insurance or indemnity provisions and could have a material adverse effect on our financial condition.

 

Currently, the uranium we purchased will be stored at the licensed uranium conversion facility of ConverDyn owned by Honeywell. There can be no assurance that storage arrangements that have been negotiated will be extended indefinitely, forcing actions or costs not currently contemplated. Failure to negotiate commercially reasonable storage terms for a subsequent storage period with ConverDyn may have a material adverse effect on our financial condition.

 

41

 

By holding our uranium investments at the ConverDyn conversion facility we are exposed to the credit and operational risks of the facility. There is no guarantee that we can fully recover all of our investment in uranium held with the facility in the event of a disruptive event. Failure to recover all uranium holdings could have a material adverse effect on our financial condition. Any loss or damage of the uranium may not be fully covered or absolved by contractual arrangements with ConverDyn or our insurance arrangements, and we may be financially and legally responsible for losses and/or damages not covered by indemnity provisions or insurance. Such responsibility could have a material adverse effect on our financial condition.

 

The uranium industry is subject to influential political and regulatory factors which could have a material adverse effect on our business and financial condition.

 

The international uranium industry, including the supply of uranium concentrates, is relatively small, competitive and heavily regulated. Worldwide demand for uranium is directly tied to the demand for electricity produced by the nuclear power industry, which is also subject to extensive government regulation and policies. In addition, the international marketing and trade of uranium is subject to political changes in governmental policies, regulatory requirements, and international trade restrictions (including trade agreements, customs, duties and/or taxes). International agreements, governmental policies and trade restrictions are beyond our control. Changes in regulatory requirements, customs, duties or taxes may affect the availability of uranium, which could have a material adverse effect on our business and financial condition.

 

We do not insure against all of the risks we face in our operations.

 

In general, where coverage is available and not prohibitively expensive relative to the perceived risk, we will maintain insurance against such risk, subject to exclusions and limitations. We currently maintain insurance against certain risks including securities and general commercial liability claims and certain physical assets used in our operations, subject to exclusions and limitations, however, we do not maintain insurance to cover all of the potential risks and hazards associated with our operations.  We may be subject to liability for environmental, pollution or other hazards associated with our exploration, pre-extraction and extraction activities, which we may not be insured against, which may exceed the limits of our insurance coverage or which we may elect not to insure against because of high premiums or other reasons. Furthermore, we cannot provide assurance that any insurance coverage we currently have will continue to be available at reasonable premiums or that such insurance will adequately cover any resulting liability.

 

Acquisitions that we may make from time to time could have an adverse impact on us.

 

From time to time we examine opportunities to acquire additional mining assets and businesses. Any acquisition that we may choose to complete may be of a significant size, may change the scale of our business and operations, and may expose us to new geographic, political, operating, financial and geological risks. Our success in our acquisition activities depends on our ability to identify suitable acquisition candidates, negotiate acceptable terms for any such acquisition, and integrate the acquired operations successfully with those of our Company. Any acquisitions would be accompanied by risks which could have a material adverse effect on our business. For example: (i) there may be a significant change in commodity prices after we have committed to complete the transaction and established the purchase price or exchange ratio; (ii) a material ore body may prove to be below expectations; (iii) we may have difficulty integrating and assimilating the operations and personnel of any acquired companies, realizing anticipated synergies and maximizing the financial and strategic position of the combined enterprise, and maintaining uniform standards, policies and controls across the organization; (iv) the integration of the acquired business or assets may disrupt our ongoing business and our relationships with employees, customers, suppliers and contractors; and (v) the acquired business or assets may have unknown liabilities which may be significant. In the event that we choose to raise debt capital to finance any such acquisition, our leverage will be increased. If we choose to use equity as consideration for such acquisition, existing shareholders may suffer dilution. Alternatively, we may choose to finance any such acquisition with our existing resources. There can be no assurance that we would be successful in overcoming these risks or any other problems encountered in connection with such acquisitions.

 

42

 

The uranium and titanium industries are subject to numerous stringent laws, regulations and standards, including environmental protection laws and regulations. If any changes occur that would make these laws, regulations and standards more stringent, it may require capital outlays in excess of those anticipated or cause substantial delays, which would have a material adverse effect on our operations.

 

Uranium and titanium exploration and pre-extraction programs and mining activities are subject to numerous stringent laws, regulations and standards at the federal, state and local levels governing permitting, pre-extraction, extraction, exports, taxes, labor standards, occupational health, waste disposal, protection and reclamation of the environment, protection of endangered and protected species, mine safety, hazardous substances and other matters. Our compliance with these requirements requires significant financial and personnel resources.

 

The laws, regulations, policies or current administrative practices of any government body, organization or regulatory agency in the United States or any other applicable jurisdiction, may change or be applied or interpreted in a manner which may also have a material adverse effect on our operations. The actions, policies or regulations, or changes thereto, of any government body or regulatory agency or special interest group, may also have a material adverse effect on our operations.

 

Uranium and titanium exploration and pre-extraction programs and mining activities are subject to stringent environmental protection laws and regulations at the federal, state and local levels. These laws and regulations include permitting and reclamation requirements, regulate emissions, water storage and discharges and disposal of hazardous wastes. Uranium mining activities are also subject to laws and regulations which seek to maintain health and safety standards by regulating the design and use of mining methods. Various permits from governmental and regulatory bodies are required for mining to commence or continue, and no assurance can be provided that required permits will be received in a timely manner.

 

Our compliance costs, including the posting of surety bonds associated with environmental protection laws and regulations and health and safety standards have been significant to date and are expected to increase in scale and scope as we expand our operations in the future. Furthermore, environmental protection laws and regulations may become more stringent in the future, and compliance with such changes may require capital outlays in excess of those anticipated or cause substantial delays, which would have a material adverse effect on our operations.

 

To the best of our knowledge, our operations are in compliance, in all material respects, with all applicable laws, regulations and standards. If we become subject to liability for any violations, we may not be able or may elect not to insure against such risk due to high insurance premiums or other reasons. Where coverage is available and not prohibitively expensive relative to the perceived risk, we will maintain insurance against such risk, subject to exclusions and limitations. However, we cannot provide any assurance that such insurance will continue to be available at reasonable premiums or that such insurance will be adequate to cover any resulting liability.

 

We may not be able to obtain, maintain or amend rights, authorizations, licenses, permits or consents required for our operations.

 

Our exploration and mining activities are dependent upon the grant of appropriate rights, authorizations, licences, permits and consents, as well as continuation and amendment of these rights, authorizations, licences, permits and consents already granted, which may be granted for a defined period of time, or may not be granted or may be withdrawn or made subject to limitations. There can be no assurance that all necessary rights, authorizations, licences, permits and consents will be granted to us, or that authorizations, licences, permits and consents already granted will not be withdrawn or made subject to limitations.

 

Major nuclear and global market incidents may have adverse effects on the nuclear and uranium industries.

 

The nuclear incident that occurred in Japan in March 2011 had significant and adverse effects on both the nuclear and uranium industries. If another nuclear incident were to occur, it may have further adverse effects for both industries. Public opinion of nuclear power as a source of electrical generation may be adversely affected, which may cause governments of certain countries to further increase regulation for the nuclear industry, reduce or abandon current reliance on nuclear power or reduce or abandon existing plans for nuclear power expansion. Any one of these occurrences has the potential to reduce current and/or future demand for nuclear power, resulting in lower demand for uranium and lower market prices for uranium, adversely affecting the operations and prospects of our Company. Furthermore, the growth of the nuclear and uranium industries is dependent on continuing and growing public support of nuclear power as a viable source of electrical generation.

 

43

 

In March 2020 the COVID-19 pandemic has resulted in a black swan event impacting about 50% of the world’s uranium production and has accelerated the market rebalancing. The timing for the return of global uranium production to pre-COVID-19 levels is highly uncertain as of the date of this Quarterly Report. Recent and significant production cuts were announced in response to the global COVID-19 pandemic, including uranium facilities in Canada, Kazakhstan, and Namibia. It is unknown at this time exactly how long the shutdowns will last or how much uranium production will ultimately be removed from the market as a result of these shutdowns. It is the Company’s belief that the recent shutdowns are only going to further tighten the market. The Company also believes that a large degree of uncertainty exists in the market, primarily due to the size of mobile uranium inventories, transportation issues, premature reactor shutdowns in the U.S. and the length of time of any uranium mine, conversion or enrichment shutdowns.

 

The marketability of uranium concentrates will be affected by numerous factors beyond our control which may result in our inability to receive an adequate return on our invested capital.

 

The marketability of uranium concentrates extracted by us will be affected by numerous factors beyond our control. These factors include macroeconomic factors, fluctuations in the market price of uranium, governmental regulations, land tenure and use, regulations concerning the importing and exporting of uranium and environmental protection regulations. The future effects of these factors cannot be accurately predicted, but any one or a combination of these factors may result in our inability to receive an adequate return on our invested capital.

 

The titanium industry is affected by global economic factors, including risks associated with volatile economic conditions, and the market for many titanium products is cyclical and volatile, and we may experience depressed market conditions for such products.

 

Titanium is used in many "quality of life" products for which demand historically has been linked to global, regional and local GDP and discretionary spending, which can be negatively impacted by regional and world events or economic conditions. Such events are likely to cause a decrease in demand for products and, as a result, may have an adverse effect on our results of operations and financial condition. The timing and extent of any changes to currently prevailing market conditions is uncertain, and supply and demand may be unbalanced at any time. Uncertain economic conditions and market instability make it particularly difficult for us to forecast demand trends. As a consequence, we may not be able to accurately predict future economic conditions or the effect of such conditions on our financial condition or results of operations. We can give no assurances as to the timing, extent or duration of the current or future economic cycles impacting the industries in which we operate.

 

Historically, the market for large volume titanium applications, including coatings, paper and plastics, has experienced alternating periods of tight supply, causing prices and margins to increase, followed by periods of lower capacity utilization resulting in declining prices and margins. The volatility this market experiences occurs as a result of significant changes in the demand for products as a consequence of global economic activity and changes in customers’ requirements. The supply-demand balance is also impacted by capacity additions or reductions that result in changes of utilization rates. In addition, titanium margins are impacted by significant changes in major input costs such as energy and feedstock. Demand for titanium depends in part on the housing and construction industries. These industries are cyclical in nature and have historically been impacted by downturns in the economy. In addition, pricing may affect customer inventory levels as customers may from time to time accelerate purchases of titanium in advance of anticipated price increases or defer purchases of titanium in advance of anticipated price decreases. The cyclicality and volatility of the titanium industry results in significant fluctuations in profits and cash flow from period to period and over the business cycle.

 

The uranium industry is highly competitive and we may not be successful in acquiring additional projects.

 

The uranium industry is highly competitive, and our competition includes larger, more established companies with longer operating histories that not only explore for and produce uranium, but also market uranium and other products on a regional, national or worldwide basis. Due to their greater financial and technical resources, we may not be able to acquire additional uranium projects in a competitive bidding process involving such companies. Additionally, these larger companies have greater resources to continue with their operations during periods of depressed market conditions.

 

44

 

The titanium industry is concentrated and highly competitive, and we may not be able to compete effectively with our competitors that have greater financial resources or those that are vertically integrated, which could have a material adverse effect on our business, results of operations and financial condition.

 

The global titanium market is highly competitive, with the top nine producers accounting for approximately 60% of the world’s production capacity. Competition is based on a number of factors, such as price, product quality and service. Competition is based on a number of factors, such as price, product quality and service. Among our competitors are companies that are vertically-integrated (those that have their own raw material resources). Changes in the competitive landscape could make it difficult for us to retain our competitive position in various products and markets throughout the world. Our competitors with their own raw material resources may have a competitive advantage during periods of higher raw material prices. In addition, some of the companies with whom we compete may be able to produce products more economically than we can. Furthermore, some of our competitors have greater financial resources, which may enable them to invest significant capital into their businesses, including expenditures for research and development.

 

We hold mineral rights in foreign jurisdictions which could be subject to additional risks due to political, taxation, economic and cultural factors.

 

We hold certain mineral rights located in the Republic of Paraguay through Piedra Rica Mining S.A., Transandes Paraguay S.A., Trier S.A. and Metalicos Y No Metalicos S.R.L., which are incorporated in Paraguay. Operations in foreign jurisdictions outside of the United States and Canada, especially in developing countries, may be subject to additional risks as they may have different political, regulatory, taxation, economic and cultural environments that may adversely affect the value or continued viability of our rights. These additional risks include, but are not limited to: (i) changes in governments or senior government officials; (ii) changes to existing laws or policies on foreign investments, environmental protection, mining and ownership of mineral interests; (iii) renegotiation, cancellation, expropriation and nationalization of existing permits or contracts; (iv) foreign currency controls and fluctuations; and (v) civil disturbances, terrorism and war.

 

In the event of a dispute arising at our foreign operations in Paraguay, we may be subject to the exclusive jurisdiction of foreign courts or may not be successful in subjecting foreign persons to the jurisdiction of the courts in the United States or Canada. We may also be hindered or prevented from enforcing our rights with respect to a government entity or instrumentality because of the doctrine of sovereign immunity. Any adverse or arbitrary decision of a foreign court may have a material and adverse impact on our business, prospects, financial condition and results of operations.

 

The title to our mineral property interests may be challenged.

 

Although we have taken reasonable measures to ensure proper title to our interests in mineral properties and other assets, there is no guarantee that the title to any of such interests will not be challenged. No assurance can be given that we will be able to secure the grant or the renewal of existing mineral rights and tenures on terms satisfactory to us, or that governments in the jurisdictions in which we operate will not revoke or significantly alter such rights or tenures or that such rights or tenures will not be challenged or impugned by third parties, including local governments, aboriginal peoples or other claimants. The Company has had communications and filings with the MOPC, the mining regulator in Paraguay, whereby the MOPC is taking the position that certain concessions forming part of the Company’s Yuty Project and Alto Paraná Project are not eligible for extension as to exploration or continuation to exploitation in their current stages. While we remain fully committed to our development path forward in Paraguay, we have filed certain applications and appeals in Paraguay to reverse the MOPC’s position in order to protect the Company’s continuing rights in those concessions. Our mineral properties may be subject to prior unregistered agreements, transfers or claims, and title may be affected by, among other things, undetected defects. A successful challenge to the precise area and location of our claims could result in us being unable to operate on our properties as permitted or being unable to enforce our rights with respect to our properties.

 

Due to the nature of our business, we may be subject to legal proceedings which may divert managements time and attention from our business and result in substantial damage awards.

 

Due to the nature of our business, we may be subject to numerous regulatory investigations, securities claims, civil claims, lawsuits and other proceedings in the ordinary course of our business including those described under Item 1, Legal Proceedings. The outcome of these lawsuits is uncertain and subject to inherent uncertainties, and the actual costs to be incurred will depend upon many unknown factors. We may be forced to expend significant resources in the defense of these suits, and we may not prevail. Defending against these and other lawsuits in the future may not only require us to incur significant legal fees and expenses, but may become time-consuming for us and detract from our ability to fully focus our internal resources on our business activities. The results of any legal proceeding cannot be predicted with certainty due to the uncertainty inherent in litigation, the difficulty of predicting decisions of regulators, judges and juries and the possibility that decisions may be reversed on appeal. There can be no assurances that these matters will not have a material adverse effect on our business, financial position or operating results.

 

45

 

We depend on certain key personnel, and our success will depend on our continued ability to retain and attract such qualified personnel.

 

Our success is dependent on the efforts, abilities and continued service of certain senior officers and key employees and consultants. A number of our key employees and consultants have significant experience in the uranium industry. A loss of service from any one of these individuals may adversely affect our operations, and we may have difficulty or may not be able to locate and hire a suitable replacement.

 

Certain directors and officers may be subject to conflicts of interest.

 

The majority of our directors and officers are involved in other business ventures including similar capacities with other private or publicly-traded companies. Such individuals may have significant responsibilities to these other business ventures, including consulting relationships, which may require significant amounts of their available time. Conflicts of interest may include decisions on how much time to devote to our business affairs and what business opportunities should be presented to us. Our Code of Conduct and Ethics provides for guidance on conflicts of interest.

 

The laws of the State of Nevada and our Articles of Incorporation may protect our directors and officers from certain types of lawsuits.

 

The laws of the State of Nevada provide that our directors and officers will not be liable to our Company or to our stockholders for monetary damages for all but certain types of conduct as directors and officers. Our Bylaws provide for broad indemnification powers to all persons against all damages incurred in connection with our business to the fullest extent provided or allowed by law. These indemnification provisions may require us to use our limited assets to defend our directors and officers against claims, and may have the effect of preventing stockholders from recovering damages against our directors and officers caused by their negligence, poor judgment or other circumstances.

 

Several of our directors and officers are residents outside of the United States, and it may be difficult for stockholders to enforce within the United States any judgments obtained against such directors or officers.

 

Several of our directors and officers are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons’ assets are located outside of the United States. As a result, it may be difficult for investors to effect service of process on such directors and officers, or enforce within the United States any judgments obtained against such directors and officers, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof. Consequently, stockholders may be effectively prevented from pursuing remedies against such directors and officers under United States federal securities laws. In addition, stockholders may not be able to commence an action in a Canadian court predicated upon the civil liability provisions under United States federal securities laws. The foregoing risks also apply to those experts identified in this document that are not residents of the United States.

 

Disclosure controls and procedures and internal control over financial reporting, no matter how well designed and operated, are designed to obtain reasonable, and not absolute, assurance as to its reliability and effectiveness.

 

Management’s evaluation on the effectiveness of disclosure controls and procedures is designed to ensure that information required for disclosure in our public filings is recorded, processed, summarized and reported on a timely basis to our senior management, as appropriate, to allow timely decisions regarding required disclosure.

 

Management’s report on internal control over financial reporting is designed to provide reasonable assurance that transactions are properly authorized, assets are safeguarded against unauthorized or improper use and transactions are properly recorded and reported. However, any system of controls, no matter how well designed and operated, is based in part upon certain assumptions designed to obtain reasonable, and not absolute, assurance as to its reliability and effectiveness. Any failure to maintain effective disclosure controls and procedures in the future may result in our inability to continue meeting our reporting obligations in a timely manner, qualified audit opinions or restatements of our financial reports, any one of which may affect the market price for our common stock and our ability to access the capital markets.

 

46

 

Risks Related to Our Common Stock

 

Historically, the market price of our common stock has been and may continue to fluctuate significantly.

 

On September 28, 2007 our common stock commenced trading on the NYSE American (formerly known as the American Stock Exchange, the NYSE Amex Equities Exchange and the NYSE MKT) and prior to that, traded on the OTC Bulletin Board.

 

The global markets have experienced significant and increased volatility in the past and have been impacted by the effects of mass sub-prime mortgage defaults and liquidity problems of the asset-backed commercial paper market, resulting in a number of large financial institutions requiring government bailouts or filing for bankruptcy. The effects of these past events and any similar events in the future may continue to or further affect the global markets, which may directly affect the market price of our common stock and our accessibility for additional financing. Although this volatility may be unrelated to specific company performance, it can have an adverse effect on the market price of our shares which, historically, has fluctuated significantly and may continue to do so in the future.

 

In addition to the volatility associated with general economic trends and market conditions, the market price of our common stock could decline significantly due to the impact of any one or more events, including, but not limited to, the following: (i) volatility in the uranium market; (ii) occurrence of a major nuclear incident such as the events in Fukushima in March 2011; (iii) changes in the outlook for the nuclear power and uranium industries; (iv) failure to meet market expectations on our exploration, pre-extraction or extraction activities, including abandonment of key uranium projects; (v) sales of a large number of our shares held by certain stockholders including institutions and insiders; (vi) downward revisions to previous estimates on us by analysts; (vii) removal from market indices; (viii) legal claims brought forth against us; and (ix) introduction of technological innovations by competitors or in competing technologies.

 

A prolonged decline in the market price of our common stock could affect our ability to obtain additional financing which would adversely affect our operations.

 

Historically we have relied on equity financing and, more recently, on debt financing, as primary sources of financing. A prolonged decline in the market price of our common stock or a reduction in our accessibility to the global markets may result in our inability to secure additional financing which would have an adverse effect on our operations.

 

Additional issuances of our common stock may result in significant dilution to our existing shareholders and reduce the market value of their investment.

 

We are authorized to issue 750,000,000 shares of common stock of which 232,365,705 shares were issued and outstanding as of April 30, 2021. Future issuances for financings, mergers and acquisitions, exercise of stock options and share purchase warrants and for other reasons may result in significant dilution to and be issued at prices substantially below the price paid for our shares held by our existing stockholders. Significant dilution would reduce the proportionate ownership and voting power held by our existing stockholders and may result in a decrease in the market price of our shares.

 

We are subject to the Continued Listing Criteria of the NYSE American and our failure to satisfy these criteria may result in delisting of our common stock.

 

Our common stock is currently listed on the NYSE American.  In order to maintain this listing, we must maintain certain share prices, financial and share distribution targets, including maintaining a minimum amount of shareholders’ equity and a minimum number of public shareholders.  In addition to these objective standards, the NYSE American may delist the securities of any issuer: (i) if, in its opinion, the issuer’s financial condition and/or operating results appear unsatisfactory; (ii) if it appears that the extent of public distribution or the aggregate market value of the security has become so reduced as to make continued listing on the NYSE American inadvisable; (iii) if the issuer sells or disposes of principal operating assets or ceases to be an operating company; (iv) if an issuer fails to comply with the NYSE American’s listing requirements; (v) if an issuer’s common stock sells at what the NYSE American considers a “low selling price” and the issuer fails to correct this via a reverse split of shares after notification by the NYSE American; or (vi) if any other event occurs or any condition exists which makes continued listing on the NYSE American, in its opinion, inadvisable.

 

47

 

If the NYSE American delists our common stock, investors may face material adverse consequences, including, but not limited to, a lack of trading market for our securities, reduced liquidity, decreased analyst coverage of our securities and an inability for us to obtain additional financing to fund our operations.

 

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

 

During our fiscal quarter ended April 30, 2021, we issued the following securities that were not registered under the Securities Act:

 

 

on February 12, 2021, we issued an aggregate of 24,545 shares of common stock to a consultant in consideration for services under a consulting agreement at a deemed issuance price of $1.10 per share.  We relied on exemptions from registration under the Securities Act provided by Regulation S and/or Section 4(a)(2) with respect to the issuance of these shares;

 

 

on February 22, 2021, we issued an aggregate of 3,982 shares of common stock to a consultant in consideration for services under a consulting agreement at a deemed issuance price of $2.26 per share.  We relied on exemptions from registration under the Securities Act provided by Regulation S and/or Section 4(a)(2) with respect to the issuance of these shares;

 

 

on March 19, 2021, we issued 9,375 shares of common stock pursuant to the net (cashless) exercise of outstanding warrants at a deemed price of $2.05 per share.  We relied on exemptions from registration under the Securities Act provided by Rule 506(b) of Regulation D and/or Section 4(a)(2) with respect to the issuance of the shares;

 

 

on April 1, 2021, we issued an aggregate of 9,600 shares of common stock pursuant to the net (cashless) exercise of outstanding warrants at a deemed price of $2.05 per share.  We relied on exemptions from registration under the Securities Act provided by Regulation S and/or Section 4(a)(2) with respect to the issuance of the shares to the non-U.S. persons and exemptions from registration under the Securities Act provided by Rule 506(b) of Regulation D and/or Section 4(a)(2) with respect to the issuance of shares to U.S. persons;  

 

 

on April 8, 2021, we issued an aggregate of 150,000 shares of common stock to a consultant in consideration for services under a consulting agreement at a deemed issuance price of $2.65 per share.  We relied on exemptions from registration under the Securities Act provided by Regulation S and/or Section 4(a)(2) with respect to the issuance of these shares;

 

 

on April 8, 2021, in connection with the April 2021 Offering, we issued, on a private placement basis, 181,818 Agent’s Warrants to the agent as partial compensation, and each Agent Warrant entitles its holder to acquire one share of common stock at an exercise price of $4.125 per share and expiring five years from the date of issuance. We relied on exemptions from registration under the Securities Act provided by Section 4(2) with respect to the issuance of these Agent’s Warrants;

 

 

on April 14, 2021, we issued an aggregate of 26,666 shares of common stock to a consultant in consideration for services under a consulting agreement at a deemed issuance price of $2.04 per share.  We relied on exemptions from registration under the Securities Act provided by Regulation S and/or Section 4(a)(2) with respect to the issuance of these shares;

 

 

on April 28, 2021, we issued 10,409 shares of common stock pursuant to the net (cashless) exercise of outstanding warrants having a deemed exercise price of $1.64 per share.  We relied on exemptions from registration under the Securities Act provided by Rule 506(b) of Regulation D and/or Section 4(a)(2) with respect to the issuance of the shares; and

 

 

on April 29, 2021, we issued an aggregate of 85,812 shares of common stock to a consultant in consideration for services under a consulting agreement at a deemed issuance price of $2.81 per share.  We relied on exemptions from registration under the Securities Act provided by Regulation S and/or Section 4(a)(2) with respect to the issuance of these shares.

 

48

 

Item 3.         Defaults Upon Senior Securities

 

None.

 

Item 4.         Mine Safety Disclosures

 

Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States, and that is subject to regulation by the Federal Mine Safety and Health Administration under the Mine Safety and Health Act of 1977 (“Mine Safety Act”), are required to disclose in their periodic reports filed with the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions and mining-related fatalities. During the quarter ended April 30, 2021, the Company’s Palangana Mine was not subject to regulation by the Mine Safety Act.

 

Item 5.         Other Information

 

None.

 

Item 6.         Exhibits

 

The following exhibits are included with this Quarterly Report:

 

Exhibit

Description of Exhibit

   

31.1

Certification of Chief Executive Officer pursuant to the Securities Exchange Act of 1934 Rule 13a-14(a) or 15d‑14(a).

   

31.2

Certification of Chief Financial Officer pursuant to the Securities Exchange Act of 1934 Rule 13a-14(a) or 15d‑14(a).

   

32.1

Certifications pursuant to the 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.

   

101.1NS

XBRL Instance Document

   
101.SCH XBRL Taxonomy Extension Schema Document
   
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
   
101.DEF XBRL Taxonomy Extension Definitions Linkbase Document
   
101.LAB XBRL Taxonomy Extension Label Linkbase Document
   
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

 

49

 

 

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.

 

 

 

 

 

 

By:

/s/ Amir Adnani

 

 

 

Amir Adnani

 

 

 

President, Chief Executive Officer (Principal

 

    Executive Officer) and Director  
    Date: June 8, 2021  
       
  By: /s/ Pat Obara  
    Pat Obara  
    Chief Financial Officer (Principal Financial Officer)  
    Date: June 8, 2021  

 

 

50